The petitions for writs of certiorari are denied.
#p489429 U.S. at 489,
97 S.Ct. 690 — because the conspiracy enabled them to purchase milk at lower costs and thus to sell cheese to consumers at lower prices.
Knevelbaard Dairies, 232 F.3d at 988. The Ninth Circuit properly rejected this argument:
The fallacy of th[e defendants'] argument becomes clear when we recall that the central purpose of the antitrust laws . . . is to preserve competition. It is competition — not the collusive fixing of prices at levels either low or high — that these statutes recognize as vital to the public interest. The Supreme Court's references to the goals of achieving "the lowest prices, the highest quality and the greatest material progress," [
N. Pac. Ry. Co. v. United States, 356 U.S. 1, 4,
78 S.Ct. 514,
2 L.Ed.2d 545 (1958)], and of "assur[ing] customers the benefits of price competition," [
Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 538,
103 S.Ct. 897,
74 L.Ed.2d 723 (1983)], do not mean that conspiracies among buyers to depress acquisition prices are tolerated. Every precedent in the field makes clear that the interaction of competitive forces, not price-rigging, is what will benefit consumers.
Id.; see also Mandeville, 334 U.S. at 235, 68 S.Ct. 996. Similar reasoning applies here. Highmark's improperly motivated exercise of monopsony power, like the collusive exercise of oligopsony power by the cheese makers in
Knevelbaard, was anticompetitive and cannot be defended on the sole ground that it enabled Highmark to set lower premiums on its insurance plans.
Having concluded that paying West Penn artificially depressed reimbursement rates was an anticompetitive aspect of the alleged conspiracy, it follows that the underpayments constitute an antitrust injury. See Atl. Richfield, 495 U.S. at 334, 110 S.Ct. 1884 (holding that an antitrust injury is an injury that is "attributable to an anti-competitive aspect of the practice under scrutiny"); Brunswick, 429 U.S. at 489, 97 S.Ct. 690; Areeda Hovenkamp, supra, ¶ 350, at 235 (noting that "sellers receiving illegally low prices . . . suffer antitrust injury").
D. Statute of Limitations
Although Federal Rule of Civil Procedure 8(c) suggests that "a statute of limitations defense cannot be used in the context of a Rule 12(b)(6) motion to dismiss," Oshiver v. Levin, Fishbein, Sedran Berman, 38 F.3d 1380, 1384 n. 1 (3d Cir. 1994), our cases recognize that a defendant may raise a limitations defense in a motion to dismiss, Robinson v. Johnson, 313 F.3d 128, 135 n. 3 (3d Cir. 2002) (citing cases). For the defendant to prevail, though, the plaintiff's tardiness in bringing the action must be apparent from the face of the complaint. Id.
Highmark argues that the conspiracy claims are time-barred. Under 15 U.S.C. § 15b, a suit to recover damages for a violation of the Sherman Act must be "commenced within four years after the cause of action accrued." In Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971), the Supreme Court declared that an antitrust cause of action generally "accrues and the statute [of limitations] begins to run when a defendant commits an act that injures a plaintiff's business." Id. at 338, 91 S.Ct. 795. However, "[i]n the context of a continuing conspiracy to violate the antitrust laws, . . . each time a plaintiff is injured by an act of the defendants a cause of action accrues to [it] to recover the damages caused by that act and . . . as to those damages, the statute of limitations runs from the commission of the act." Id.; Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392 U.S. 481, 502 n. 15, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968); In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144, 1172 (3d Cir. 1993) ("[A]n injurious act within the limitations period may serve as a basis for an antitrust suit."); see also Klehr v. A.O. Smith Corp., 521 U.S. 179, 189-90, 117 S.Ct. 1984, 138 L.Ed.2d 373 (1997).
West Penn initiated this lawsuit on April 21, 2009, and so the limitations period extends back to April 21, 2005. See 15 U.S.C. § 15b. The complaint adequately alleges that the defendants performed injurious acts in furtherance of the conspiracy within the limitations period. The complaint alleges, for example, that as part of the conspiracy, Highmark refused to increase West Penn's reimbursement rates in 2006. On a straightforward reading of Zenith, it therefore appears that West Penn may, consistent with the statute of limitations, recover damages for the acts that occurred within the limitations period. See 401 U.S. at 338, 91 S.Ct. 795.
Highmark acknowledges all of this, but urges us to adopt a limitation on Zenith. Citing persuasive authority, Highmark asks us to hold that no cause of action accrues based on injurious acts that occur within the limitations period, if those acts are merely "reaffirmations" of acts done or decisions made outside the limitations period. See Highmark Br. at 38-46 (citing, e.g., Grand Rapids Plastics, Inc. v. Lakian, 188 F.3d 401, 406 (6th Cir. 1999)). Highmark says that under this standard West Penn's conspiracy claims are time-barred, because the acts that allegedly occurred within the limitations period were merely manifestations of decisions made or acts done outside the limitations period. We reject Highmark's proposed standard, as it is inconsistent with controlling precedent.
We start with Hanover Shoe. There, a shoe manufacturer sued a shoemaking machinery company for monopolization under section 2 of the Sherman Act. The manufacturer asserted that in 1912, the machinery company had established a lease-only policy for its most important equipment, under which it would lease — but would not sell — the equipment to manufacturers. 392 U.S. at 483, 88 S.Ct. 2224. The manufacturer claimed that the lease-only policy had enabled the machinery company to maintain a monopoly in the market for shoemaking equipment, and that as a result, it had incurred artificially inflated costs in carrying out its business. Id. at 484, 88 S.Ct. 2224. Although the manufacturer asserted that the lease-only policy had been established in 1912, it did not file suit against the machinery company until 1955. Citing the time gap, the machinery company asserted that the suit was time-barred. The Supreme Court disagreed:
[The machinery company] has . . . advanced the argument that because the earliest impact on [the manufacturer] of [the machinery company's] lease only policy occurred in 1912, [the manufacturer's] cause of action arose during that year and is now barred by the applicable . . . statute of limitations. . . . [But w]e are not dealing with a violation which, if it occurs at all, must occur within some specific and limited time span. . . . Rather, we are dealing with conduct which
constituted a continuing violation of the Sherman Act and which inflicted continuing and accumulating harm on [the manufacturer]. Although [the manufacturer] could have sued in 1912 for the injury then being inflicted, it was equally entitled to sue in 1955.
Id. at 502 n. 15,
88 S.Ct. 2224. The Court so held even though the injurious acts that took place within the limitations period —
i.e., instances in which the machinery company persisted in its refusal to offer its equipment for sale — were simply manifestations of the lease-only policy, which had been established in 1912, well before the start of the limitations period.
See id.; see also Klehr, 521 U.S. at 189-90, 117 S.Ct. 1984 (noting that in the context of a price-fixing conspiracy, any given sale gives rise to a cause of action to recover the damages caused by that sale);
Harold Friedman, Inc. v. Thorofare Mkts., 587 F.2d 127, 138-39 (3d Cir. 1978) (section 1 suit challenging shopping center's refusal to lease space to grocery store deemed timely, even though refusal was "grounded upon an exclusivity clause in a lease that was entered into [between the shopping center and a rival grocery store] more than four years before the commencement of the suit").
Our decision in Lower Lake Erie is along the same lines. There the plaintiffs, which included docking and transportation companies, sued a railroad under section 1 of the Sherman Act. The companies proved that the defendant had participated in a conspiracy among railroads to exclude the companies from the market for the handling and transportation of iron ore. 998 F.2d at 1153-54. The railroads had excluded the companies by, among other things, refusing to lease them dock property suitable for the shipment of iron ore, and by overcharging the companies to use the railroads to ship ore. Id. The defendant argued that because the conspiracy had gotten under way outside the limitations period, the companies' claims were time-barred. We disagreed, reasoning that the companies' claims were timely because the railroads' exclusionary conduct, including refusing to lease dock property and overcharging for use of the railroads, had continued into the limitations period. See id. at 1172; accord Bell v. Dow Chem. Co., 847 F.2d 1179, 1186-87 (5th Cir. 1988); Imperial Point Colonnades Condo., Inc. v. Mangurian, 549 F.2d 1029, 1035, 1041-43 (5th Cir. 1977), followed in Harold Friedman, 587 F.2d at 139 nn. 43-45; Poster Exch., Inc. v. Nat'l Screen Serv. Corp., 517 F.2d 117, 127-28 (5th Cir. 1975). But see, e.g., David Orgell, Inc. v. Geary's Stores, Inc., 640 F.2d 936, 937-38 (9th Cir. 1981). Taken together, Hanover Shoe and Lower Lake Erie leave no room for Highmark's proposed rule. In each case, the plaintiff's suit was timely even though the acts that occurred within the limitations period were reaffirmations of decisions originally made outside the limitations period.
Finally, we note that the policies underlying limitations statutes — namely, providing potential defendants with repose and avoiding prejudice caused by lost evidence, faded memories, and unavailable witnesses, see Wilson v. Garcia, 471 U.S. 261, 271-72, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985) — do not counsel in favor of recognizing Highmark's proposed rule. As for repose, the Fifth Circuit said it well in Poster Exchange, where it rejected a rule strikingly similar to the one Highmark proposes here:
[Adopting the defendant's rule] would . . . improperly transform the limitations statute from one of repose to one of continued immunity. For according to [the defendant's] argument, a plaintiff who suffers [damage from a continuing antitrust violation] is barred not only
from proving violations and damages more than four years old, but is barred forever from complaining of [the continuation] of the unlawful conduct. The function of the limitations statute is simply to pull the blanket of peace over acts and events which have themselves already slept for the statutory period, thus barring the proof of wrongs embedded in time-passed events. Employing the limitations statute additionally to immunize recent repetition or continuation of violations and damages occasioned thereby not only extends the statute beyond its purpose, but also conflicts with the policies of vigorous enforcement of private rights through private actions.
517 F.2d at 127-28 (internal citations omitted). With regard to the policy of avoiding prejudice, the defendants "hardly are in a position to argue for the protection of the statute of limitations on the traditional ground that evidence has been lost, memories have faded, and witnesses have disappeared . . . when it is the defendants' own recent conduct that results in a finding of a newly accruing cause of action."
Imperial Point, 549 F.2d at 1041 (internal citations and punctuation omitted).
We thus end up where we started: Zenith should be applied on its terms. Under Zenith, West Penn's conspiracy claims are not time-barred because the complaint adequately alleges that the defendants performed injurious acts in furtherance of the conspiracy within the limitations period.
VI. The Attempted Monopolization Claim
In addition to the conspiracy claims, West Penn alleges that UPMC violated section 2 of the Sherman Act by attempting to monopolize the Allegheny County market for specialized hospital services. The elements of attempted monopolization are (1) that the defendant has a specific intent to monopolize, and (2) that the defendant has engaged in anticompetitive conduct that, taken as a whole, creates (3) a dangerous probability of achieving monopoly power. Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993); Swift Co. v. United States, 196 U.S. 375, 396, 25 S.Ct. 276, 49 L.Ed. 518 (1905); LePage's Inc. v. 3M, 324 F.3d 141, 162 (3d Cir. 2003) (en banc) (holding that a court should consider a defendant's anticompetitive conduct "as a whole rather than considering each aspect in isolation") (citing Cont'l Ore Co. v. Union Carbide Carbon Corp., 370 U.S. 690, 699, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962)). The District Court dismissed the attempted monopolization claim on the ground that the complaint fails to allege anticompetitive conduct, and the parties have addressed only that issue here. We limit our review accordingly.
Broadly speaking, a firm engages in anticompetitive conduct when it attempts "to exclude rivals on some basis other than efficiency," Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 605, 105 S.Ct. 2847, 86 L.Ed.2d 467 (1985) (internal quotation marks omitted), or when it competes "on some basis other than the merits," LePage's, 324 F.3d at 147. "Conduct that impairs the opportunities of rivals and either does not further competition on the merits or does so in an unnecessarily restrictive way may be deemed anticompetitive." Broadcom, 501 F.3d at 308. The line between anticompetitive conduct and vigorous competition is sometimes blurry, but distinguishing between the two is critical, because the Sherman Act "directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself." McQuillan, 506 U.S. at 458, 113 S.Ct. 884; United States v. Aluminum Co. of Am., 148 F.2d 416, 429-30 (2d Cir. 1945).
"`Anticompetitive conduct' can come in too many different forms, and is too dependent upon context, for any court or commentator ever to have enumerated all the varieties." LePage's, 324 F.3d at 152 (quoting Caribbean Broad Sys., Ltd. v. Cable Wireless PLC, 148 F.3d 1080, 1087 (D.C. Cir. 1998)). For present purposes, it is sufficient to note that anticompetitive conduct can include a conspiracy to exclude a rival, Areeda Hovenkamp, supra, ¶ 806f3, at 428; see LePage's, 324 F.3d at 157, hiring a rival's employees not to use them but to deny them to the rival, Universal Analytics, Inc. v. MacNeal-Schwendler Corp., 914 F.2d 1256, 1258 (9th Cir. 1990) (per curiam); Areeda Hovenkamp, supra, ¶ 702, at 205, a hospital's coercing providers not to refer patients to a rival, Potters Med. Ctr. v. City Hosp. Ass'n, 800 F.2d 568, 576-77, 580 (6th Cir. 1986); see M M Med Supplies Serv., Inc. v. Pleasant Valley Hosp., 981 F.2d 160, 166-67 (4th Cir. 1992) (en banc), and making false statements about a rival to potential investors and customers, see LePage's, 324 F.3d at 153 (citing Int'l Travel Arrangers, Inc. v. Western Airlines, Inc., 623 F.2d 1255 (8th Cir. 1980)); Caribbean, 148 F.3d at 1087; see generally Maurice E. Stucke, Symposium, When a Monopolist Deceives, 76 Antitrust L.J. 823 (2010).
We previously recognized — though perhaps in overly broad terms — that making false statements about a rival, without more, rarely interferes with competition enough to violate the antitrust laws. See Santana Prods., Inc. v. Bobrick Washroom Equip., Inc., 401 F.3d 123, 132 (3d Cir. 2005) (stating, in the context of a section 1 case, that "`deception, reprehensible as it is, can be of no consequence so far as the Sherman Act is concerned'"). But in some cases, such defamation, which plainly is not competition on the merits, can give rise to antitrust liability, especially when it is combined with other anticompetitive acts. See LePage's, 324 F.3d at 153, 162; Int'l Travel, 623 F.2d at 1268, 1270; Caribbean, 148 F.3d at 1087.
The complaint alleges the following anticompetitive conduct. First, the defendants engaged in a conspiracy, a purpose of which was to drive West Penn out of business. Second, UPMC hired employees away from West Penn by paying them bloated salaries. UPMC admitted to hiring some of the employees not because it needed them but in order to injure West Penn; UPMC could not absorb some of the employees and had to let them go; and UPMC incurred financial losses as a result of the hiring. These allegations are sufficient to suggest that at least some of the hirings were anticompetitive. See Universal Analytics, 914 F.2d at 1258 (Anticompetitive or predatory hiring "can be proved by showing the hiring was made with [anticompetitive] intent, i.e. to harm the competition without helping the [defendant], or by showing a clear nonuse in fact."). Relatedly, UPMC tried unsuccessfully to lure a number of employees away from West Penn; UPMC could not have absorbed the additional employees, and although the employees remained with West Penn, they did so only after West Penn raised their salaries to supracompetitive levels. Third, UPMC approached community hospitals and threatened to build UPMC satellite facilities next to them unless they stopped referring oncology patients to West Penn and began referring all such patients to UPMC. Nearly all of the community hospitals caved in, which deprived West Penn of a key source of patients. Moreover, under pressure from UPMC, several of the community hospitals have stopped sending any of their tertiary and quaternary care referrals to West Penn and have begun sending them all to UPMC. Finally, on several occasions, UPMC made false statements about West Penn's financial health to potential investors, which caused West Penn to pay artificially inflated financing costs on its debt.
UPMC argues that we may not consider hirings made outside the limitations period in determining whether the new hirings were anticompetitive. Not so. Toledo Mack, 530 F.3d at 217 (holding that it is proper to consider pre-limitations period conduct in determining whether conduct within the limitations period violated the antitrust laws).
Viewed as a whole, these allegations plausibly suggest that UPMC has engaged in anticompetitive conduct, i.e., that UPMC has competed with West Penn "on some basis other than the merits." LePage's, 324 F.3d at 147. The District Court erred in concluding otherwise.
West Penn also claims that UPMC's acquisition of Mercy Hospital was anticompetitive. It says that, besides West Penn, Mercy was UPMC's only other competitor in the market for specialized hospital services, and that the acquisition brought UPMC one step closer to monopoly. As UPMC points out, however, West Penn has failed to allege that it sustained an antitrust injury as a result of the acquisition, and thus may not challenge it. See Alberta Gas, 826 F.2d at 1241-42 (gas producer sustained no antitrust injury as a result of an acquisition of a potential competitor by another competitor); Areeda Hovenkamp, supra, ¶ 348b, at 204.
VII. The State-Law Claims
After dismissing the federal claims, the District Court declined to exercise supplemental jurisdiction over the state-law claims. Having determined that the federal claims were improperly dismissed, we will vacate the dismissal of the state-law claims for reconsideration by the District Court.
VIII. Conclusion
For the reasons set forth above, the judgment of the District Court will be reversed in part and vacated in part, and the case will be remanded for further proceedings.