1) Read the case study (“Contract Violates Antitrust Laws”) on pages 100-101 in the textbook and answer the two discussion questions.
2) Write a paper (1,000-1,500 words) that addresses the discussion questions. Include a detailed rationale for your answers.
3) Prepare this assignment according to the APA guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.
4) This assignment uses a grading rubric. Instructors will be using the rubric to grade the assignment; therefore, students should review the rubric prior to beginning the assignment to become familiar with the assignment criteria and expectations for successful completion of the assignment.
Citation: Oltz v. St. Peter’s Community Hosp.,
19 F.3d 1312 (9th Cir. 1994)
Facts
Oltz, a nurse anesthetist, brought an antitrust
action against physician anesthesiologists and St.
Peter’s
Community Hospital after he was terminated.
Oltz had a billing agreement with the hospital,
which provided 84% of the surgical services
in the rural community that it served. The anesthesiologists
did not like competing with the nurse
anesthetist’s lower fees and, as a result, entered
into an exclusive contract with the hospital on April
29, 1980, in order to squeeze the nurse anesthetist
out of the market. This resulted in cancellation of
the nurse anesthetist’s contract with the hospital.
Oltz filed a suit against the anesthesiologists and
hospital for violation of the Sherman Antitrust Act,
15 U.S.C. § 1. The anesthesiologists settled for
$462,500 before trial.
The case against the hospital proceeded to trial.
The jury found that the hospital conspired with
the anesthesiologists and awarded the plaintiff
$212,182 in lost income and $209,649 in future
damages. The trial judge considered the damage
award to be excessive
and ordered a new trial.
The hospital motioned the court to exclude all
damages after June 26, 1982, which was the date
that the hospital renegotiated its exclusive contract
with the anesthesiology group. The court decided
that Oltz failed to prove that the renegotiated contract
also violated antitrust laws, thus ruling that
Oltz was not entitled to damages after June 26,
1982. Because
Oltz conceded that he could not
prove damages greater than those offset by his
settlement
with the physicians, his claim for damages
against the hospital was disposed of by summary
judgment.
The judge who presided over Oltz’s request for
attorneys’ fees restricted the amount that he could
claim. Because Oltz had been denied damages
from the hospital, the judge refused to award attorneys’
fees or costs for work performed after the
1986 liability trial.
Issue
Was Oltz entitled to seek recovery for all damages
resulting from destruction of his business after
June 26, 1982?
Holding
The US Court of Appeals for the Ninth Circuit
held that Oltz was entitled to seek recovery for all
damages.
Reason
Oltz introduced evidence that the initial exclusive
contract violated antitrust laws and that such
violation destroyed his practice. “Because the initial
conspiracy destroyed his practice, Oltz is entitled
to seek recovery for all damages resulting from the
destruction of his business. . . . The legality of any
subsequent agreements between the conspirators
is irrelevant, because the April 29, 1980, contract
severed the lifeline to Oltz’s thriving practice. . .”
Discussion
1. What should parties to a contract be aware of
when negotiating exclusive contracts?
2. What remedies are available when one party
breaches a contract by refusing to perform an
agreed-upon service?
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