Case 3:12-cv-04854-LB Document 962 Filed 03/09/21 Page 1 of 16
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`San Francisco Division
`
`DJENEBA SIDIBE, et al.,
`Plaintiffs,
`
`v.
`
`SUTTER HEALTH,
`Defendant.
`
`Case No. 12-cv-04854-LB
`
`ORDER GRANTING SUTTER’S
`MOTION FOR SUMMARY JUDGMENT
`FOR 2008 TO 2010 AND FOR THE § 2
`CLAIMS AND OTHERWISE DENYING
`THE MOTION
`Re: ECF Nos. 838 and 838-1
`
`
`
`INTRODUCTION
`In this certified class action, the named plaintiffs — four persons who paid for health insurance
`and two companies who paid for health insurance for their employees — challenge Sutter Health’s
`allegedly anticompetitive practices as (1) unlawful tying and an unlawful course of conduct in
`violation of the Sherman Antitrust Act § 1 and California’s Cartwright Act, (2) monopolization and
`attempted monopolization in violation of the Sherman Act § 2, and (3) a violation of California’s
`Unfair Competition Law (UCL). The plaintiffs allege that through its contracts with health plans,
`Sutter uses its market power for inpatient services in seven Northern California markets (the Tying
`Markets, where it is the only or dominant hospital) to force health plans in four other geographic
`markets (the Tied Markets, where it faces competition from other providers) to include (in their
`networks) Sutter’s inpatient services at hospitals in the Tied Markets, resulting in higher prices. The
`plaintiffs challenge contract terms — such as high rates for out-of-network Sutter services in the Tied
`
`ORDER – No. 12-cv-04854-LB 
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`Northern District of California
`United States District Court
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`Case 3:12-cv-04854-LB Document 962 Filed 03/09/21 Page 2 of 16
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`Markets and the inability to change Sutter’s status as a preferred provider without Sutter’s permission
`— as anticompetitive because the terms allegedly prevented health plans from steering their enrollees
`away from high-cost Sutter hospitals to lower-priced providers. As a result, the plaintiffs allege,
`health-plan enrollees (including the plaintiffs) pay higher premiums.1
`Sutter moved for summary judgment. It contends that its contracts with the health plans did not
`condition the purchase of any service on the purchase of any other service and instead gave
`discounted rates to the plans for including Sutter’s tied hospitals in the plans’ networks. That in-
`network status, it contends, justifies the lower rates because health plans incentivize members to
`choose in-network hospitals by paying most or all in-network expenses (and few or no out-of-
`network expenses). Volume discounting, Sutter asserts, is not anticompetitive conduct, and the
`contract terms protected the benefit of the bargain. Sutter also contends that there is no evidence
`that it willfully maintained monopoly power in the Tying Markets or that there is a dangerous
`probability of monopolization in the Tied Markets. Finally, it contends that it is entitled to summary
`judgment on claims for 2008 to 2010 because the plaintiffs did not show class-wide damages.2
`Triable issues of material fact preclude summary judgment on the Sherman Act § 1 and the
`Cartwright Act claims. For one, there are fact disputes about whether Sutter’s power in the Tying
`Market allowed it to force insurers to accept Sutter’s higher prices in the Tied Markets. The court
`grants summary judgment on the Sherman Act § 2 claims because the plaintiffs did not produce
`evidence showing disputed issues of material fact and on the 2008–2010 claims because the
`plaintiffs did not show damages.
`
`STATEMENT
`The main issue is whether Sutter forces insurers — through its systemwide contracts with them
`— to include (in their networks) inpatient services at Sutter hospitals in the Tied Markets as a
`condition to access to inpatient services at Sutter hospitals in the Tying Markets (where Sutter is the
`
`
`1 Fourth Am. Compl. (4AC) – ECF No. 204; Orders – ECF Nos. 714, 823 (certifying classes). Citations
`refer to material in the Electronic Case File (ECF); pinpoint citations are to the ECF-generated page
`numbers at the top of documents.
`2 Mot. – ECF No. 838-1 at 10–11.
`
`ORDER – No. 12-cv-04854-LB
`
`2 
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`Northern District of California
`United States District Court
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`

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`Case 3:12-cv-04854-LB Document 962 Filed 03/09/21 Page 3 of 16
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`only or dominant hospital), resulting in higher prices. (In this motion, Sutter does not dispute that it
`has power in the Tying Markets for the time periods relevant to the lawsuit.3)
`Before 2002, insurers negotiated with Sutter hospitals individually when they assembled their
`provider networks.4 Then, Sutter moved to systemwide contracts, forcing insurers to participate.5
`For example, when one insurer (Anthem) pushed back, Sutter terminated its individual hospital
`contracts with Anthem. Anthem then folded and entered into a systemwide contract.6
`The systemwide contracts had allegedly anticompetitive provisions: (1) penalty non-par rates;
`(2) anti-steering and anti-tiering terms; and (3) secrecy provisions about price and quality.
`First, for Sutter hospitals that were out of network, the contracts imposed a rate (called a non-
`participating provider rate or “non-par rate”) that generally was 95% of billed charges.7 The health
`plans/insurers in this case objected to the provisions but ultimately acceded to them.8 The non-par
`rates were higher than the insurers’ customary out-of-network rates.9 As a result, the health plans
`could not build narrow networks that excluded Sutter because there were no costs saved in the
`narrow network (compared to a network that included Sutter hospitals).10
`
`
`3 Opp’n – ECF No. 861-1 at 12–13 (evidence regarding Sutter’s market power in the Tying Markets);
`Reply – ECF No. 877-1 at 7 (challenging only whether there is a tie, not whether there is market power).
`4 Joyner Decl., Ex. P75 to Cantor Decl. – ECF No. 862-3 at 4–5 (¶ 7).
`5 Id. at 5 (¶ 8).
`6 Sutter Health Mem. P27 to Cantor Decl. – ECF No. 791-4 at 153; Sutter 1/12/1998 Letter, P25 to id.
`– ECF No. 791-4 at 116–18; Johnson Dep., P35 to id. – ECF No. 791-4 at 221–22.
`7 See, e.g., 2015 Blue Shield Systemwide Agreement – ECF No. 887-2 at 13 (§ 2.01.2); Aetna 2016
`Systemwide Agreement – ECF No. 887-3 at 12 (§ 2.01.2).
`8 See, e.g., Brendt Dep., P138 to Cantor Decl. – ECF No. 863-6 at 25; Welsh Dep., P120 to id. – ECF
`No. 863-1 at 305.
`9 See, e.g., Barnes Decl., Ex. P74 to Cantor Decl. – ECF No. 862-2 at 6 (¶ 16) (Sutter’s rates “are
`much higher than the ‘reasonable and customary’ rates or its contracted rates”); Melody Decl., Ex. P71
`to id. – ECF No. 862-1 at 7 (¶ 18).
`10 See, e.g., Miranda Dep., P141 to id. – ECF No. 863-6 at 66–67 (“the practical implication of [the
`non-par rate] was for Blue Shield is that there were effectively two choices: You either included Sutter
`in a product, which typically drove the cost of that product up, or you excluded Sutter from that
`product, which, because of that 95 percent penalty, also drove the cost of that product up”); Joyner
`Decl., Ex. P75 to id. – ECF No. 862-3 at 14 (¶ 40) (“payment of 95% of Sutter’s full billed charges
`erases any possible benefit of excluding some higher-priced Sutter providers from a network”); De La
`Torre Email, Ex. P148 to id. – ECF No. 863-7 at 68–69 (“When members land in the [non-
`participating] Sutter ER we are exposed to 100% of billed charges . . . the result is that the savings
`[between narrow and full network] begin to evaporate”).
`
`ORDER – No. 12-cv-04854-LB
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`3 
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`Northern District of California
`United States District Court
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`

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`Case 3:12-cv-04854-LB Document 962 Filed 03/09/21 Page 4 of 16
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`Second, the plaintiffs challenge contract terms that prevented the insurers from changing
`Sutter’s status in the networks (by, for example, putting Sutter providers into less preferred tiers)
`without Sutter’s consent:
`Provider Participation in Company Benefit Programs/Networks. Sutter has negotiated this
`Agreement, including the rates and terms applicable to Payers, on behalf of an integrated
`network of Providers and based on the assumption that Payers will treat Providers,
`individually and collectively, in the same manner that it treats all of their participating
`providers. In order to assure that Sutter and the Providers continue to obtain the benefit of
`the agreement that the Parties have negotiated and that the assumptions made by both
`Parties continue to apply, the Parties agree that Providers shall participate in Payer’s
`programs, Benefit Programs and participating provider networks . . . in accordance with
`the following provisions:
`2.06.1 No Change to Provider Status. During the term of this Agreement, Payer shall not
`make any changes to any Provider’s participating status in Payer’s Benefit Programs and
`Networks without Sutter’s prior written consent.
`. . .
`2.06.3 Equal Treatment. Payer shall treat Provider as an equal member of all of the
`provider panels for all Benefit Programs and Networks in which that Provider participates
`and shall make the services of each Provider equally available within the Benefit Programs
`and Networks covered by this Agreement. In no event shall the Member be financially
`penalized for accessing any Provider that participates in the Member’s Benefit Program
`and Network.
`2.06.4 Tiered Products, Restricted or Limited Networks. Providers have not agreed to
`participate in any tiered products, plans, benefit designs, Benefit Programs or Networks
`offered by a Payer that ranks participating Providers, and the rank directly affects the
`Member’s cost share(s), the employer’s premium or both or restricts or limits network
`access . . . . Further, Providers have not agreed to participate in any restricted or limited
`network or products that would require Members (or those who pay for their coverage) to
`pay more for the same (or substantially similar) product or benefit design to access all
`Sutter Providers compared to a network that did not include all Providers. If a Payer wants
`some or all Sutter Providers to participate in such New Plans, Company will provide prior
`written notice to Sutter that explains in detail how the New Plan or new Network and
`benefit design will work, including specifically the basis for determining the tiers or
`establishing the Provider’s rank or inclusion in the restricted network. Company and Sutter
`shall then meet and confer to determine which, if any, Providers will participate in such
`New Plan or new Network, and the terms and conditions that will apply to their
`participation. Notwithstanding the foregoing, nothing in this Agreement shall limit a
`BlueCard Plan from being able to develop and/or market; Tiered Restricted or Limited
`Networks or products within its own home service area, outside of California.11
`
`
`11 2015 Blue Shield Systemwide Agreement – ECF No. 887-2 at 22 (§§ 2.06, 2.06.1, 2.06.3–2.06.4);
`Aetna 2016 Systemwide Agreement – ECF No. 887-3 at 22–23 (§§ 2.06, 2.06.1, 2.06.3–2.06.4).
`
`ORDER – No. 12-cv-04854-LB
`
`4 
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`Northern District of California
`United States District Court
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`

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`Case 3:12-cv-04854-LB Document 962 Filed 03/09/21 Page 5 of 16
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`The health plans/insurers in this case objected to the provisions but ultimately acceded to
`them.12 The provisions allegedly prevented the health plans from steering their enrollees away
`from high-cost Sutter plans to lower-priced providers (called tiering) — through means such as
`higher co-pays or deductibles — without Sutter’s permission.13 Sutter’s expert confirmed that
`tiered networks (with lower-cost providers) can lower hospital prices.14 Sutter denied the health
`plans’ requests to put Sutter hospitals in non-preferred tiers.15 When the health plans tried to
`market tiered networks that did not include Sutter in the most-favored tier, Sutter threatened to
`terminate the contracts and to initiate litigation.16
`Third, the contracts blocked the health plans from disclosing Sutter’s prices to plan members
`to inform their choice of provider.17 Blue Shield stated that “Sutter was restricting our ability to be
`transparent with our customers regarding their relevant cost, quality, or clinical data.”18
`The complaint has six counts: (1) unlawful tying in violation of Sherman Act § 1 and the
`Cartwright Act (counts I and III); (2) an unlawful course of conduct in violation of Sherman Act §
`1 and Cartwright Act (counts II and III); (3) monopolization and attempted monopolization in
`violation of Sherman Act § 2 (counts IV and V); and (4) a violation of the UCL (count VI).19
`
`
`12 See, e.g., Joyner Decl., Ex. P75 to Cantor Decl. – ECF No. 862-3 at 15–18 (¶¶ 45–55); Lundbye
`Decl., Ex. P78 to Id. – ECF No. 862-6 at 6 (¶ 12), 8–9 (¶¶ 17–19).
`13 Chipty Report, Ex. P2 to id. – ECF No. 791-3 at 313 (¶ 160), 317 (¶ 164).
`14 Willig Dep., Ex. P154 to id. – ECF No. 863-7 at 334.
`15 E.g. Brendt 10/22/2008 Email, Ex. P162 to id. – ECF No. 863-7 at 426; Vine 12/6/2001 Letter, Ex.
`P167 to id. – ECF No. 863-7 at 466.
`16 See, e.g., Joyner Decl., Ex. P75 to id. – ECF No. 862-3 at 15–18 (¶¶ 45–55) (describing Blue
`Shield’s inability to put Sutter hospitals into lower tiers despite Sutter’s higher prices); Lundbye Decl.,
`Ex. P78 to id. – ECF No. 862-6 at 8–9 (¶¶ 17–19) (UnitedHealthcare objected to Sutter’s anti-tiering
`and equal treatment provisions because the provisions “prevented United from launching products it
`otherwise would have launched”); Brendt 12/5/2003 Letter, P174 to id. – ECF No. 863-7 at 522–23
`(excluding Sutter from a network without Sutter’s written consent could be “an anticipatory breach of
`the Systemwide Amendment” and noting that “Sutter is hopeful that the parties can resolve this issue
`without having to resort to the dispute resolution procedures”).
`17 2015 Blue Shield Systemwide Agreement – ECF No. 887-2 at 38–40 (§ 6.06), 41–43 (§ 6.08).
`18Joyner Decl., Ex. P75 to Cantor Decl. – ECF No. 862-3 at 21 (¶ 64).
`19 4AC – ECF No. 204 at 38–43 (¶¶ 124–170).
`
`ORDER – No. 12-cv-04854-LB
`
`5 
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`Case 3:12-cv-04854-LB Document 962 Filed 03/09/21 Page 6 of 16
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`After the court certified Rule 23(b)(2) and Rule 23(b)(3) classes, the plaintiffs moved for
`partial summary judgment on the “distinct products” element of their tying claims under the
`Sherman Act and Cartwright Act, and Sutter moved for summary judgment on the ground that its
`contracts were not unlawful.20 The court held a hearing on October 22, 2020.21 The court granted
`the plaintiffs’ unopposed partial summary-judgment motion and held that inpatient hospital
`services at Sutter’s tying hospitals, on the one hand, and inpatient hospital services offered at
`Sutter’s tied hospitals, on the other, are distinct or separate products under the Cartwright and
`Sherman Acts.22 The court deferred issuing its ruling on Sutter’s summary-judgment motion until
`the opt-out period ended to prevent one-way intervention and held — for the reasons stated on the
`record — that Sutter had not waived the issue.23 The opt-out period ended March 8, 2021.24
`
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`SUMMARY-JUDGMENT STANDARD
`
`The court must grant a motion for summary judgment if the movant shows that there is no
`genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of
`law. Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986). Material
`facts are those that may affect the outcome of the case. Anderson, 477 U.S. at 248. A dispute about
`a material fact is genuine if there is enough evidence for a reasonable jury to return a verdict for
`the non-moving party. Id. at 248–49.
`The party moving for summary judgment has the initial burden of informing the court of the
`basis for the motion and identifying portions of the pleadings, depositions, answers to
`interrogatories, admissions, or affidavits that demonstrate the absence of a triable issue of material
`
`
`20 Mots. – ECF Nos. 791-1, 838-1.
`21 Minute Entry – ECF No. 882.
`22 Order – ECF No. 886.
`23 Mot. – ECF No. 838-1 at 2 (raising the one-way intervention issue); Scharzschild v. Tse, 69 F.3d
`293, 295 (9th Cir. 1995) (unless a defendant waives the issue by obtaining summary judgment before
`class notice is sent, district courts should “not grant summary judgment on the merits of a class action
`until the class has been properly certified and notified”).
`24 Order – ECF No. 955 at 3.
`
`ORDER – No. 12-cv-04854-LB
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`6 
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`Northern District of California
`United States District Court
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`

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`Case 3:12-cv-04854-LB Document 962 Filed 03/09/21 Page 7 of 16
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`fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). To meet its burden, “the moving party
`must either produce evidence negating an essential element of the nonmoving party’s claim or
`defense or show that the nonmoving party does not have enough evidence of an essential element
`to carry its ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210
`F.3d 1099, 1102 (9th Cir. 2000); Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001)
`(“When the nonmoving party has the burden of proof at trial, the moving party need only point out
`‘that there is an absence of evidence to support the nonmoving party’s case.’”) (quoting Celotex,
`477 U.S. at 325).
`If the moving party meets its initial burden, the burden shifts to the non-moving party to
`produce evidence supporting its claims or defenses. Nissan Fire, 210 F.3d at 1103. The non-moving
`party may not rest upon mere allegations or denials of the adverse party’s evidence but instead must
`produce admissible evidence that shows there is a genuine issue of material fact for trial.
`Devereaux, 263 F.3d at 1076. If the non-moving party does not produce evidence to show a genuine
`issue of material fact, the moving party is entitled to summary judgment. Celotex, 477 U.S. at 323.
`In ruling on a summary-judgment motion, inferences drawn from underlying facts are viewed in
`the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio
`Corp., 475 U.S. 574, 587 (1986).
`
`ANALYSIS
`The court grants summary judgment to Sutter for 2008 to 2010 because the plaintiffs’ failure
`to prove damages means that they failed to establish injury. Weinberg v. Whatcom Cty., 241 F.3d
`746, 751 (9th Cir. 2001) (“summary judgment is appropriate where appellants have no expert
`witnesses or designated documents providing competent evidence from which a jury could fairly
`estimate damages”) (cleaned up). The court denies summary judgment for the Sherman Act § 1
`and Cartwright Act claims because disputes of material fact preclude summary judgment. The
`court grants summary judgment on the Sherman Act § 2 claims because the plaintiffs did not
`produce evidence showing disputes of material fact.
`The next sections address (1) the Sherman Act § 1 and Cartwright Act tying claims (counts I
`and III), (2) the Sherman Act § 1 and Cartwright Act course-of-conduct claims (counts II and III),
`
`ORDER – No. 12-cv-04854-LB
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`7 
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`Northern District of California
`United States District Court
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`

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`Case 3:12-cv-04854-LB Document 962 Filed 03/09/21 Page 8 of 16
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`(3) the Sherman Act § 2 claims for monopolization and attempted monopolization (counts IV and
`V), and (4) the UCL claim (count VI).
`
`1. Tying Claims — Sherman Act § 1 and Cartwright Act (Counts I and III)
`Sutter contends that it never conditioned access to inpatient services in the Tying Markets to the
`health plans’ including inpatient services in the Tied Markets in their networks, and it never required
`health plans to pay for one service as a condition for accessing another service. Instead, it gave
`discounted rates to the health plans for including Sutter’s hospitals in their networks. A systemwide
`contract is not necessarily unlawful. But the theory of liability is that Sutter used its market power for
`inpatient services in the Tying Market to force the health plans to include (in their networks) Sutter
`inpatient services in the Tied Markets and then had terms that prevented the health plans from
`excluding Sutter tied hospitals from the networks or establishing lower-cost networks.25 Fact disputes
`about how Sutter exercised its market power preclude summary judgment on the tying claims.
`A tying arrangement occurs where “a seller with market power in one product market []
`extend[s] its market power to a distinct product market.” Cascade Health Sols. v. PeaceHealth,
`515 F.3d 883, 912 (9th Cir. 2008). “To accomplish this objective, the seller conditions the sale of
`one product (the tying product) on the buyer’s purchase of a second product (the tied product).” Id.
`“The essential characteristic of an invalid tying arrangement lies in the seller’s exploitation of its
`control over the tying product to force the buyer into the purchase of a tied product that the buyer
`either did not want at all, or might have preferred to purchase elsewhere on different terms.” Id. at
`913–14 (cleaned up) (quoting Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 12 (1984)).
`The elements of a tying claim are as follows: “(1) [] the defendant tied together the sale of two
`distinct products or services; (2) [] the defendant possesses enough economic power in the tying
`product market to coerce its customers into purchasing the tied product; and (3) [] the tying
`arrangement affects a not insubstantial volume of commerce in the tied product market.” Id. at 913
`
`
`25 4AC – ECF No. 204 at 4 (¶ 6), 38 (¶ 126).
`
`ORDER – No. 12-cv-04854-LB
`
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`United States District Court
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`Case 3:12-cv-04854-LB Document 962 Filed 03/09/21 Page 9 of 16
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`(cleaned up); Suburban Mobile Homes, Inc. v. AMFAC Communities, Inc., 101 Cal. App. 3d 532,
`542 (1980) (similar elements for a tying claim under California’s Cartwright Act).26
`Sutter contends that its systemwide contracts do not impose a tie because it does not condition
`the sale of one product to a health plan’s purchase of another product. Instead, its contracts are its
`mechanism for setting prices, giving discounted rates to a plan if it is in a network and non-
`discounted non-par rates if it is not in a network.27 But the facts are disputed. First, the contracts
`were systemwide and required health plans to include Sutter inpatient services in the Tied Markets.
`There are fact disputes about whether this was merely Sutter’s setting its prices, or rather, whether
`Sutter forced higher prices in the Tied Markets that were passed through to consumers through
`insurance premiums. For example, the 95-percent non-par rates were higher than the insurers’
`customary out-of-network rates. As a result, the health plans allegedly could not build narrow
`networks (at a lower cost) that excluded Sutter because there was no cost advantage (compared to a
`network that included Sutter hospitals). Second, the contracts prevented insurers from changing
`Sutter’s status in the health plans’ networks (by, for example, putting Sutter providers into less
`preferred tiers resulting in lower costs) without Sutter’s consent. There is evidence that Sutter
`permitted health plans to exclude or tier Sutter hospitals.28 But there is evidence that it was
`occasional, that Sutter denied requests to put Sutter hospitals in non-preferred tiers, and that when
`health plans tried to market lower-cost tiered networks that did not include Sutter in the favored tier,
`Sutter threatened to terminate the contracts and sue the plans. There is evidence too that the plans
`objected to the provisions and ultimately acceded to them because they had no choice.
`In sum, disputed facts about the combined effect of the contract provisions precludes summary
`judgment. On similar facts, another court reached the same conclusion. UFCW & Emp. Benefit Tr.
`v. Sutter Health, No. CGC-14-538451, 2019 WL 3856011, at *8–9 (Super. Ct. Cal. June 13, 2019).
`
`
`26 The analysis applies under the Sherman Act and the Cartwright Act. Cty. of Tuolumne v. Sonora Cmty.
`Hosp., 236 F.3d 1148, 1160 (9th Cir. 2001) (“The analysis under California’s antitrust law mirrors the
`analysis under federal law because the Cartwright Act . . . was modeled after the Sherman Act.”).
`27 Mot. – ECF No. 838-1 at 12–23; Reply – ECF No. 877-1 at 7–14.
`28 Burnside Decl. – ECF No. 838-3 at 11–17 (¶¶ 83–88).
`
`ORDER – No. 12-cv-04854-LB
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`9 
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`Northern District of California
`United States District Court
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`

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`Case 3:12-cv-04854-LB Document 962 Filed 03/09/21 Page 10 of 16
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`2. Course-of-Conduct Claims — Sherman Act § 1 and Cartwright Act (Counts II–III)
`The plaintiffs predicate the course-of-conduct claims on (1) the same systemwide contracts
`that allegedly condition the insurers’ access to inpatient services in the Tying Markets to their
`including inpatient services in the Tied Markets in their network and (2) the same contract terms
`that allegedly result in higher prices: the 95-percent sub-par rate, the contractual impediments to
`tiering, and the confidentiality provisions. Sutter contends that these are the same claims, “in
`slightly different garb,” as the tying claims and challenges them on the grounds addressed in the
`last section.29 For the reasons in the last section, disputes of fact preclude summary judgment on
`these claims too. See id. (reaching the same conclusion).
`
`3. Monopolization and Attempted Monopolization Claims — Sherman Act § 2 (Counts IV–V)
`Sutter moved for summary judgment on the Sherman Act § 2 monopolization and attempted
`monopolization on the ground that the plaintiffs alleged only conduct that does not raise a triable
`issue on the Sherman Act § 1 claim. If a § 2 claim is predicated only on facts “insufficient to
`withstand summary judgment” on a § 1 claim, then the § 2 claim does not survive a summary-
`judgment motion either. Thomsen v. W. Elec. Co., 680 F.2d 1263, 1267 (9th Cir. 1982); Sicor Ltd.
`v. Cetus Corp., 51 F.3d 848, 856 (9th Cir. 1995). Because disputed issues of fact preclude
`summary judgment on the § 1 claims, the court denies summary judgment on this ground.
`Sutter also moved for summary judgment on the monopolization claim (primarily because there
`is no evidence of its willful maintenance of market power in the Tying Markets) and on the
`attempted monopolization claim (primarily because there is no dangerous probability of
`monopolization in the Tied Markets).30 The court grants summary judgment on both claims.
`
`
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`29 Mot. – ECF No. 838-1 at 23–30. The plaintiffs advance the same arguments to support liability for
`all Sherman Act § 1 and Cartwright Act claims. Opp’n – ECF No. 861-1 at 24–34 (addressing claims
`in one section). Sutter splits the analysis, at least in part, addressing tying claims (I and III) and course-
`of-conduct claims (II and III) separately. Mot. – ECF No. 838-1 at 15–30.
`30 Mot. – ECF No. 831-1 at 31–37; Reply – ECF No. 877-1 at 16–20.
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`ORDER – No. 12-cv-04854-LB
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`10 
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`Northern District of California
`United States District Court
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`3.1 Monopolization in Tying Markets
`Sutter contends there is no evidence that it willfully acquired or maintained monopoly power
`in the Tying Markets or that it had market power in four Tying Markets (the Antioch, Auburn,
`Jackson, and Lakeport HSAs).31 Because the plaintiffs did not produce evidence showing disputed
`issues of material fact that Sutter willfully acquired or maintained monopoly power, the court
`grants summary judgment on the § 2 monopolization claim.
`A § 2 monopolization claim has the following elements: “(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.” Eastman Kodak Co. v. Image Tech. Servs., Inc. 504 U.S. 451, 480 (1992).
`Market power can be established through direct evidence, such as “evidence of restricted
`output and supracompetitive prices, that is direct proof of the injury to competition which a
`competitor with a market power may inflict, and thus, of the actual exercise of market power.”
`Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421, 1434 (9th Cir. 1995) (cleaned up). Market power
`also can be can be shown circumstantially: the plaintiff must (1) define the relevant market, (2)
`show that the defendant owns a dominant share of that market, and (3) show that there are
`significant barriers to entry and show that existing competitors lack the capacity to increase their
`output in the short run. Id. (citations omitted).
`3.1.1 Willful Acquisition or Maintenance of Market Power
`Sutter contends that there is no evidence that its contracting practices led to its acquiring or
`maintaining market power in the Tying Markets. Instead, as the plaintiffs’ expert opines, the
`undisputed facts establish that Sutter’s market power exists because nearly all hospitals are in rural
`areas, and the operator of those hospitals automatically has some degree of market power.32
`The plaintiffs respond (in a single paragraph) that “by forcing the [health plans] to accept its
`anticompetitive contract provisions, Sutter has maintained its monopoly power over [inpatient
`
`
`31 Mot. – ECF No. 831-1 at 31–34.
`32 Id. at 31–32 (citing Chipty Report, Exs. D17 to Burnside Decl., ECF No. 838-4 at 97 (pt. VI), D18 at
`388 (pt. IV); Chipty Dep, Ex. D101 to id. – ECF No. 838-12 at 46–47.
`
`ORDER – No. 12-cv-04854-LB
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`11 
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`Northern District of California
`United States District Court
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`Case 3:12-cv-04854-LB Document 962 Filed 03/09/21 Page 12 of 16
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`hospital services] in its Tying Markets, particularly at Alta Bates in the Berkeley-Oakland
`market.”33 The plaintiffs cite Sutter’s contention during the Alta Bates/Summit merger — that
`health plans could steer away from Alta Bates to constrain prices — and contrast it with Sutter’s
`subsequent imposition of the anti-steering/anti-tiering terms in its contracts that prevented health
`plans from steering members away from the more expensive tied hospitals and Alta Bates (a tying
`hospital) and launching more inexpensive, tiered networks that put Sutter in a less-preferred tier.34
`
`The plaintiffs have the burden of proof at trial, and Sutter points to the absence of evidence to
`support their case. Celotex, 477 U.S. at 325; Devereaux, 263 F.3d at 1076. The plaintiffs offer no
`evidence for six of the seven Tying Markets (and the corresponding hospitals). For those markets
`and hospitals, the evidence is undisputed that Sutter’s power exists because the markets are rural.
`As to Alta Bates, the plaintiffs identify evidence — through their expert — that more steering
`would have resulted in lower prices there.35 But that is not the equivalent of preventing other
`hospitals from entering or expanding in the Berkeley-Oakland HSA (meaning, hospital-service
`area) Tying Market. Instead, the theory of liability in the complaint is that Sutter used its market
`power in the Tying Markets (where it faced no competition) to force health plans to include Sutter
`hospitals in the Tied Markets (where it faced competition).
`In sum, the plaintiffs have not produced evidence that shows disputed material facts about
`