Judge Lucy Koh, nominated by President Biden to the court of appeals for the Ninth Circuit, wrote a 2-1 decision, joined by Biden Judge Roopali Desai, which reversed a lower court judgment finding a large California health care network innocent of state antitrust violations and giving consumers another opportunity to obtain damages and other relief. Trump Judge Patrick Bumatay dissented in favor of the network. The June 2024 decision was in Sidibe v Sutter Health.
What is the background of this case?
In 2012, Djeneba Sidibe and other individuals and small businesses in Northern California filed an antitrust class action against Sutter Health, a large healthcare system that “spans 24 hospitals” and 40 ambulatory surgery centers. The plaintiffs contended that Sutter abused its market power to charge “supra competitive rates” to health plans from which they purchased health care, and those plans in turn charged “higher premiums” to them. They sought money damages and injunctive relief under federal and state law.
The case went to trial on the damages issue under the state’s Cartwright Act. After significant pretrial disputes on jury instructions and other issues, a jury found in favor of Sutter and the claims against it were dismissed. Sidibe and his co-plaintiffs appealed to the Ninth Circuit.
How did Judge Koh and the Ninth Circuit Rule and Why is it Important?
Judge Koh wrote a 2-1 ruling joined by Judge Desai that reversed the decision in favor of Sutter. They focused on two primary legal errors by the court below. Initially, contrary to the usual jury instructions in such cases, the jury was not told that the plaintiffs could prove that Sutter had committed an “unreasonable course of conduct” by demonstrating either “anticompetitive purpose or effect.” Instead, proof was required “solely of anticompetitive effect.”
Koh explained that although proof of anticompetitive effect is important, precedent makes clear that purpose is a “relevant factor” that should be considered in determining whether conduct is anticompetitive. The dissent “mischaracterizes” the decision below, she went on, and it “was error” for the court to fail to instruct the jury that “it could consider anticompetitive purpose.”
Koh and Desai also ruled that the lower court committed error by” excluding pre-2006 evidence” from the case. Based on a careful review of the record, Koh wrote that the plaintiffs had evidence that between 2001 and 2005, Sutter began including in systemwide contracts several specific contract terms “as a means to charge higher prices.” In fact, she went on, evidence showed that after “imposing the challenged contract terms, Sutter began charging much higher rates to health plans, as much as 40 to 50 percent higher.” After careful analysis of the record and past precedent, Koh concluded that it was an “abuse of discretion” for the court below to exclude this important evidence.
Accordingly, Judges Koh and Desai reversed the judgment in favor of Sutter and sent the case back so that Djeneba Sidibe and the other plaintiffs will have a fair opportunity to prove their claims and recover damages at a new trial. In addition to the importance of this result to the victims of Sutter’s anticompetitive behavior, the decision provides important precedent concerning the proper interpretation of state antitrust law in California. It also serves as an important reminder of the significance of continuing to expeditiously confirm fair-minded judges to our federal bench.