George Par v. Wolfe Clinic, P.C. ( 2023 )

United States Court of Appeals
For the Eighth Circuit
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No. 22-2286
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George Par; IVYR, PLLC, doing business as Par Retina
Plaintiffs - Appellants
v.
Wolfe Clinic, P.C.; Jared S. Nielsen; Kyle J. Alliman; David D. Saggau
Defendants - Appellees
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Appeal from United States District Court
for the Southern District of Iowa - Central
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Submitted: January 10, 2023
Filed: June 5, 2023
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Before GRUENDER, BENTON, and SHEPHERD, Circuit Judges.
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BENTON, Circuit Judge.
Dr. George J. Par (and IVYR PLLC, doing business as Par Retina) sued Wolfe
Clinic, P.C. (and three of its owner-physicians). Par alleged that the Clinic
monopolized or attempted to monopolize the vitreoretinal care market. On the
merits, the district court 1 initially dismissed the monopolization, fraudulent
1
The Honorable Rebecca Goodgame Ebinger, United States District Judge for
the Southern District of Iowa.
inducement, and recission claims, while remanding the remaining state law claims.
In an amended judgment, the district court denied Par’s motion to amend the
complaint, affirmed the dismissal of the monopolization claims, but declined to
exercise supplemental jurisdiction, dismissing all state law claims. Par appeals.
Having jurisdiction under 28 U.S.C. § 1291, this court affirms.
I.
Dr. Par, an ophthalmologist, specializes in vitreoretinal surgery. After the
Clinic fired him, he founded Par Retina to provide retinal eye care services in Des
Moines, Spencer, and Ft. Dodge, Iowa. Believing that the Clinic harmed his
business, Par sued for monopolization and attempted monopolization, asserting 12
state law claims.
Wolfe Clinic moved to dismiss the monopolization, attempted
monopolization, fraudulent inducement, and recission claims. In May 2022, the
district court dismissed the monopolization claims, ruling that Par failed to plead a
plausible claim under the Sherman Act because he did not allege an antitrust injury
or state a proper geographic market. The district court also dismissed the fraudulent
inducement and recission claims on their merits, but remanded the other state law
claims. Par then moved to amend his complaint.
A month later, the district court entered an amended judgment, denying Par’s
motion and again dismissing the monopolization claims. The district court,
however, ruled it could not remand the state law claims. It instead declined to
exercise supplemental jurisdiction over any of the state law claims, dismissing all of
them. Par argues that the district court erred in dismissing the antitrust, fraudulent
inducement, and recission claims on their merits and refusing to grant his post-
judgment motion to amend the complaint.
This court “review[s] de novo the grant of a motion to dismiss, accepting as
true all factual allegations in the complaint and drawing all reasonable inferences in
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favor of the non-moving party.” Richter v. Advance Auto Parts, Inc., 686 F.3d 847,
850 (8th Cir. 2012). “We affirm a Rule 12(b)(6) dismissal if ‘it appears beyond
doubt that the plaintiff can prove no set of facts in support of his claim which would
entitle him to relief.’” Double D Spotting Serv. v. Supervalu, Inc., 136 F.3d 554,
557 (8th Cir. 1998), quoting Hafley v. Lohman, 90 F.3d 264, 266 (8th Cir. 1996).
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009), quoting Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 570 (2007). A plausible claim for relief “allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id.II.
The Sherman Act authorizes two types of antitrust claims: Section 1 generally
prohibits contracts that unreasonably restrict trade. See 15 U.S.C. § 1. Section 2
prohibits the monopolization of a given market. See 15 U.S.C. § 2. Here, Par alleges
a monopolization claim under Section 2. Section 2 of the Sherman Act makes it
unlawful to “monopolize, or attempt to monopolize . . . any part of the trade or
commerce among the several States . . . .” 15 U.S.C. § 2. Monopolization requires:
“(1) the possession of monopoly power in the relevant market and (2) the willful
acquisition or maintenance of that power as distinguished from growth or
development as a consequence of a superior product, business acumen, or historic
accident.” United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966). “[I]t is
axiomatic that the antitrust laws were passed for ‘the protection
of competition, not competitors.’” Brooke Group Ltd. v. Brown & Williamson
Tobacco Corp., 509 U.S. 209, 224 (1993), quoting Brown Shoe Co. v. United States,
370 U.S. 294, 320 (1962). “The law directs itself not against conduct which is
competitive, even severely so, but against conduct which unfairly tends to destroy
competition itself.” Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 458 (1993).
Courts are “careful to avoid constructions of § 2 which might chill competition,
rather than foster it.” Id.
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Par alleges injuries to himself and his business—competitors of the Clinic.
Par claims the Clinic interfered with his referral network by purchasing small
optometry practices and by falsely disparaging Par to patients and referring
physicians and optometrists. “As the Supreme Court has noted repeatedly, Congress
enacted the antitrust laws to protect competition, not competitors.” Midwest
Commc’ns v. Minnesota Twins, Inc., 779 F.2d 444, 450 (8th Cir. 1985).
Par argues he does not have to state a relevant market because the complaint
alleges an “actual adverse effect on competition.” To the contrary, to prevail on a
Section 2 claim, a plaintiff must adequately plead a relevant market. See Spectrum
Sports, Inc., 506 U.S. at 455-56, 459 (“We stated that, to establish monopolization
or attempt to monopolize under § 2 of the Sherman Act, it would be necessary to
appraise the exclusionary power . . . in terms of the relevant market for the product
involved.”) (“We hold that petitioners may not be liable for attempted
monopolization under § 2 of the Sherman Act absent proof of a dangerous
probability that they would monopolize a particular market and specific intent to
monopolize.”). See also, e.g., Little Rock Cardiology Clinic PA v. Baptist Health,
591 F.3d 591, 596 (8th Cir. 2009) (“The four counts at issue on appeal raise federal
antitrust claims under Sections 1 and 2 of the Sherman Antitrust Act. . . . LRCC . .
. has the burden of alleging a relevant market in order to state a plausible antitrust
claim. Without a well-defined relevant market, a court cannot determine the effect
that an allegedly illegal act has on competition.”); Southeast Mo. Hosp. v. C.R.
Bard, Inc., 642 F.3d 608, 612-13 (8th Cir. 2011) (“According to Saint Francis,
Bard’s sole-source GPO contracts, share-based discounts, and bundled discounts
unreasonably restrain trade in violation of sections 1 and 2 of the Sherman Act . . . .
The [Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039 (8th Cir. 2000)] case
makes clear that the threshold requirement for Saint Francis’s antitrust claims is
determining the relevant market.”); HDC Med., Inc. v. Minntech Corp., 474 F.3d
543, 547 (8th Cir. 2007) (“To establish that a defendant possesses the requisite
market power required for monopolization liability, a plaintiff must establish that
the defendant has a dominant market share in a well-defined relevant market.”).
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The briefs discuss only one case in our Circuit that references Section 2 and
the “actual adverse effect” standard: Minnesota Ass’n of Nurse Anesthetists v. Unity
Hospital, 208 F.3d 655, 662 (8th Cir. 2000) (“But plaintiffs have failed to prove
actual adverse effects on competition in that market, such as increased prices for
anesthesia services, or a decline in either the quality or quantity of such services
available to surgery patients. Absent concrete evidence of this nature, plaintiffs must
prove market power in a relevant geographic market.”). But in that case, the court
conducted a Section 1 analysis. See id. (noting that plaintiffs “virtually
abandon[ed]” their Section 2 claims on appeal).
Even assuming the “actual adverse effect” standard applied to Par’s
monopolization claims, the complaint states that the Clinic prevented new retinal
care clinics from entering the market, without further detail. This conclusory
allegation is insufficient to show an adverse effect on the competition in a market.
See Ashcroft, 556 U.S. at 678 (“Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not suffice.”). The complaint
fails to state an actual adverse effect on competition, such as an increase in prices
for vitreoretinal services or a decline in the quantity of services provided. Par must
plead a relevant market.
“The definition of the relevant market has two components—a product market
and a geographic market.” Bathke v. Casey’s Gen. Stores, Inc., 64 F.3d 340, 345
(8th Cir. 1995). “Antitrust claims often rise or fall on the definition of the relevant
market.” Id. “The burden of establishing that a specified area constitutes a relevant
geographic market in a particular case rests with the plaintiff.” Morgenstern v.
Wilson, 29 F.3d 1291, 1296 (8th Cir. 1994). The court must determine whether the
plaintiff has alleged a geographic market that includes: (1) “the area in which a
defendant supplier draws a sufficiently large percentage of its business” and (2) “a
geographic market in which only a small percentage of purchasers have alternative
suppliers to whom they could practicably turn in the event that a defendant supplier’s
anticompetitive actions result in a price increase.” Little Rock Cardiology, 591 F.3d
at 598.
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A geographic market fails if it is too narrow, excluding regions where the
defendant conducts sufficient business. See Morgenstern, 29 F.3d at 1297 (ruling
that the plaintiff’s proposed geographic market, which excluded Omaha, was
insufficient because the record showed the defendant conducted significant business
in Omaha). A plaintiff fails to plead a plausible claim for monopolization where the
proposed geographic market does not represent the area where the defendant
supplier draws a “sufficiently large percentage of its business.” Little Rock
Cardiology, 591 F.3d at 599. The complaint in Little Rock Cardiology alleged that
Baptist Health conspired with Blue Cross to monopolize or attempt to monopolize
the market for cardiology procedures and private health insurance. Id. at 595. Little
Rock Cardiology defined the relevant geographic market as Little Rock because that
is where patients traveled for cardiology procedures. Id. at 598. This court
determined that a geographic market consisting of only Little Rock was too narrow
because the complaint showed Baptist Health also operated in other cities, such as
Hot Springs, Pine Bluff, Conway, Searcy, and El Dorado. Id. The Little Rock
Cardiology decision clarified that a city is not a per se improper geographic market,
but “the boundaries of a relevant market will turn on the factual allegations presented
in any given case.” Id. at 599.
Par proposes two different approaches to defining a geographic market. He
first claims that the cities of Des Moines, Ft. Dodge, and Spencer are each a proper
geographic market (the cities are about 90, 92, and 179 miles apart, respectively).
As in Little Rock Cardiology, these geographic markets are too narrow because the
complaint says, “Wolfe Clinic has offices across the state of Iowa.” These three
cities thus fail to account for the area where the Clinic “draws a sufficiently large
percentage of its business.” Id. at 598. Par argues that each city is a proper
geographic market because it is where patients prefer, or have the ability, to travel.
The proper inquiry is not where customers prefer to travel, but instead, where there
are actual alternatives for services. See Morgenstern, 29 F.3d at 1296 (“The
geographic market encompasses the geographic area to which consumers can
practically turn for alternative sources of the product and in which the antitrust
defendants face competition.”). Based on the factual allegations here, drawing a
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market boundary around three distant cities fails to allege that the Clinic possessed
monopolized power.
Par alternatively proposed “Central Iowa” as a geographic market. This
geographic market is insufficient because the complaint does not describe alternative
suppliers of retinal eye care in Central Iowa. See id. (ruling that the plaintiff did not
establish a claim for monopolization because the “evidence regarding the relevant
geographic market failed to address a critical legal question: where could consumers
of the product (adult cardiac surgery) practicably turn for alternative sources of the
product.”). The complaint here focuses only on the characteristics of retinal patients,
describing them as elderly or infirm; relatively immobile; and dependent on
caregivers. Because it does not address the alternative sources of vitreoretinal care
in Central Iowa, the complaint cannot plausibly allege the Clinic monopolized this
proposed market.
Courts are reluctant to dismiss antitrust complaints before the parties have had
an opportunity to fully conduct discovery. Little Rock Cardiology, 591 F.3d at 601.
Here, dismissal is appropriate because the defects in Par’s complaint would not be
cured by additional discovery. See id. (stating that dismissal of the monopolization
claims was appropriate where “more discovery in this case could not cure the defects
in LRCC’s legal theory as to either the relevant product or geographic market”).
Without allegations of a proper geographic market, Par’s antitrust claims must be
dismissed because there can be no inference of monopoly power. See Morgenstern,
29 F.3d at 1297 (affirming dismissal of antitrust claim when “within the properly
defined relevant geographic market, no permissible inference of monopoly power
can be drawn”).
III.
This court “review[s] an order denying leave to amend a complaint for abuse
of discretion.” Roberson v. Hayti Police Dep’t, 241 F.3d 992, 995 (8th Cir. 2001).
“[D]istrict courts in this circuit have considerable discretion to deny a post judgment
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motion for leave to amend because such motions are disfavored, but may not ignore
the Rule 15(a)(2) considerations that favor affording parties an opportunity to test
their claims on the merits . . . .” U.S. ex rel. Roop v. Hypoguard USA, Inc., 559
F.3d 818, 824 (8th Cir. 2009). “However, interests of finality dictate that leave to
amend should be less freely available after a final order has been entered.” Id. at
823. See United States v. Metro. St. Louis Sewer Dist., 440 F.3d 930, 933 (8th Cir.
2006) (“[R]ule 59(e) motions serve the limited function of correcting ‘manifest
errors of law or fact or to present newly discovered evidence.’”), citing Innovative
Home Health Care v. P.T.-O.T. Assoc. of the Black Hills, 141 F.3d 1284, 1286 (8th
Cir. 1998).
“Unexcused delay is sufficient to justify the court’s denial . . . if the party is
seeking to amend the pleadings after the district court has dismissed the claims it
seeks to amend, particularly when the plaintiff was put on notice of the need to
change the pleadings before the complaint was dismissed, but failed to do so.”
Moses.com Sec., Inc. v. Comprehensive Software Sys., Inc., 406 F.3d 1052, 1065
(8th Cir. 2005). See, e.g., Uradnik v. Inter Fac. Org., 2 F.4th 722, 727 (8th Cir.
2021) (explaining that unexcused delay justifies denying leave to amend “when the
party knew of the need to change the pleadings and then had her claim dismissed”).
This court has affirmed the denial of a Rule 59(e) motion filed two days after the
judgment was entered. See Ash v. Anderson Merchandisers, LLC, 799 F.3d 957,
964 (8th Cir. 2015). This court there concluded that the district court did not abuse
its discretion in finding the plaintiffs “inexcusably delayed in requesting leave to
amend and denying their request.” Id.The district court here dismissed Par’s motion, explaining he had not pointed
“to errors of law or fact in the Court’s order warranting amendment of the judgment.”
Par argues the court abused its discretion because the amended complaint would
have stated a claim under the Sherman Act, which would resolve the case on its
merits. See FRCP 15(a)(2) (“The court should freely give leave [to amend] when
justice so requires.”).
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The district court did not abuse its discretion by denying Par’s motion to
amend the complaint. The information in the amended complaint was previously
available to Par and should have been pleaded before the judgment was entered. See
Innovative Home Health Care, Inc., 141 F.3d at 1286 (Rule 59(e) motions “cannot
be used to . . . raise arguments which could have been offered or raised prior to the
entry of judgment.”). See also Metro. St. Louis Sewer Dist., 440 F.3d at 934 (ruling
that the district court did not abuse its discretion by denying motion to amend the
complaint because the evidence introduced was previously available, but the party
failed to plead it). Par was on notice about the deficiencies in his complaint when
the Clinic filed its motion to dismiss. Despite this, Par inexcusably delayed filing
the Rule 59(e) motion—waiting over five months after the motion to dismiss was
filed, and almost a month after the district court dismissed the complaint. See Ash,
799 F.3d at 963-64 (ruling that the district court did not abuse its discretion denying
the Rule 59(e) motion filed two days after the judgment because the plaintiffs “had
the opportunity to request leave to amend at any time before the district court ruled
on the motion to dismiss”).
IV.
Both parties’ arguments focus on the district court’s first judgment of May 10,
2022. This court, however, has jurisdiction to review only the district court’s final
decision—the amended judgment entered on June 16, 2022. See 28 U.S.C. § 1291(“The courts of appeals . . . shall have jurisdiction of appeals from all final decisions
of the district courts of the United States . . . .”). The amended judgment again
dismissed the monopolization claims but declined to exercise supplemental
jurisdiction over the state law claims, dismissing all of them. The district court
explained the amended judgment: “after dismissing Plaintiffs’ antitrust claims
giving rise to federal question jurisdiction, the Court should have dismissed the
remaining state law claims for lack of jurisdiction.” The district court added:
“dismissal of Plaintiff’s antitrust claim constituted dismissal of Plaintiffs’ action for
lack of subject matter jurisdiction.” Par’s challenge to the first judgment’s dismissal
of the fraudulent inducement and recission claims is moot.
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V.
Par failed to plead a plausible claim for monopolization or attempted
monopolization because he did not allege a relevant geographic market. The district
court did not abuse its discretion by denying Par’s post-judgment motion to amend
the complaint or by not exercising supplemental jurisdiction over the state law
claims.
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The judgment is affirmed.
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