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Roberts v. Legacy Meridian Park Hospital, Inc.

United States District Court, Ninth Circuit

January 24, 2014

DR. WARREN G. ROBERTS, M.D., F.A.A.N.S., an individual, and ASPEN SPINE AND NEUROSURGERY CENTER, P.C., an Oregon professional corporation, Plaintiffs,
v.
LEGACY MERIDIAN PARK HOSPITAL, INC., an Oregon non-profit corporation, d/b/a/LEGACY MERIDIAN PARK MEDICAL CENTER, an Oregon assumed business name; DR. FRANCISCO X. SOLDEVILLA, M.D., an individual; NORTHWEST NEUROSURGICAL ASSOCIATES, LLC, an Oregon limited liability corporation, DR. ROBERT L. TATSUMI, M.D., an individual; DR. TIMOTHY L. KEENAN, M.D., an individual; PACIFIC SPINE SPECIALISTS, LLC, an Oregon limited liability corporation; and DR. ANDREW B. CRAMER, M.D., an individual, Defendants.

Matthew A. Levin, Lawson E. Fite, and Lauren F. Blaesing, Markowitz, Herbold, Glade & Mehlhaf, P.C., Portland, OR, Attorneys for Plaintiffs.

Keith S. Dubanevich and Keil M. Mueller, Stoll Stoll Berne Lokting & Shlachter, P.C., Portland, OR. Attorneys for Defendants Legacy Meridian Park Hospital, Inc. and Dr. Andrew B. Cramer, M.D.

Robert D. Scholz and Megan L. Farris, MacMillan Scholz & Marks, P.C., Portland, OR. Attorneys for Defendants Northwest Neurosurgical Associates, LLC and Dr. Francisco X. Soldevilla, M.D.

Elizabeth E. Lampson and Christopher M. Parker, Davis Rothwell Earle & Xochihua, P.C., Portland, OR. Attorneys for Defendant Pacific Spine Specialists, LLC.

Karen M. O'Kasey and Calliste J. Korach, Hart Wagner, LLP, Portland, OR. Attorneys for Defendant Dr. Timothy L. Keenan, M.D.

Jeffrey W. Hansen, Stephen R. Rasmussen, and Joseph A. Rohner, IV, Smith Freed & Eberhard P.C., Portland, OR, and James L. Dumas and Michael J. Estok, Lindsay Hart Neil & Weigler, LLP, Portland, OR. Attorneys for Defendant Dr. Robert L. Tatsumi, M.D.

OPINION AND ORDER

MICHAEL H. SIMON, District Judge.

Dr. Warren G. Roberts, M.D., F.A.A.N.S. ("Dr. Roberts") and Aspen Spine and Neurosurgery Center, P.C. ("Aspen Spine") (collectively, "Plaintiffs") assert 13 claims against the following seven Defendants: Legacy Meridian Park Hospital, Inc. ("Meridian Park"), Dr. Andrew B. Cramer ("Dr. Cramer"), Dr. Francisco X. Soldevilla, M.D. ("Dr. Soldevilla"), Dr. Timothy L. Keenen, M.D. ("Dr. Kennen"), Dr. Robert L. Tatsumi, M.D. ("Dr. Tatsumi"), Northwest Neurosurgical Associates, LLC ("Northwest Neurosurgical"), and Pacific Spine Specialists, LLC ("Pacific Spine"). Defendants Meridian Park, Dr. Cramer, and Pacific Spine filed separate motions to dismiss. Dkts. 33, 38, and 47. In addition, Defendant Dr. Tatsumi filed a motion to strike Plaintiffs' initial disclosures or to compel the filing of additional disclosures, Dkt. 53, and Plaintiffs filed a motion to disqualify counsel for Dr. Keenen. Dkt. 41. This Opinion and Order addresses each of these motions.

BACKGROUND

In their Third Amended Complaint ("TAC"), Dkt. 28, Plaintiffs allege the following facts, which the Court accepts as true for purposes of the pending motions to dismiss. Dr. Roberts is an accomplished African-American neurological surgeon who practices medicine in Oregon. Dr. Roberts owns Aspen Spine. TAC ¶¶ 1-2. Dr. Roberts is board certified by the American Board of Neurological Surgery, is a published journal author, and has handled hundreds of cases, including complex spine, vascular, tumor, and skull base procedures. TAC ¶ 13. After serving as chief resident in the Department of Neurological Surgery at Oregon Health Sciences University from 2006 to 2007, Dr. Roberts moved to Colorado to practice medicine. TAC ¶ 14. In March 2011, Dr. Roberts returned to Portland and obtained clinical privileges at both Meridian Park and Columbia Memorial Hospital in Astoria. TAC ¶ 18. He provides care at both of these hospitals as well as at Crosian Ridge Surgery Center and at Aspen Spine, which is adjacent to Meridian Park. TAC ¶ 18. Dr. Roberts is the first African-American neurological surgeon to practice at Meridian Park. TAC ¶ 13.

Meridian Park is an Oregon non-profit corporation that operates a hospital in Tualatin, Oregon. TAC ¶ 3. Dr. Cramer has clinical privileges at Meridian Park, is the chair of Meridian Park's Surgery Department Executive Committee, and serves on Meridian Park's Medical Executive Committee. TAC ¶ 8. Dr. Soldevilla also has clinical privileges at Meridian Park and serves on its Surgery Department Executive Committee. TAC ¶ 4. Dr. Soldevilla is a member of Northwest Neurosurgical, which is based in Tualatin. TAC ¶ 5. Dr. Tatsumi also has clinical privileges at Meridian Park and serves on its Surgery Department Executive Committee. TAC ¶ 6. Dr. Keenen, too, has clinical privileges at Meridian Park. TAC ¶ 7. Both Dr. Tatsumi and Dr. Keenen are members of Pacific Spine, which is based in Tualatin. TAC ¶ 8.

At all material times, Dr. Soldevilla, Dr. Tatsumi, and Dr. Keenen were the only spine surgeons with clinical privileges at Meridian Park, other than Dr. Roberts. TAC ¶ 15. Dr. Soldevilla, Dr. Tatsumi, and Dr. Keenen all directly compete with Dr. Roberts. TAC ¶ 28. In addition, Dr. Cramer is part-owner of South Portland Surgical Center, where Dr. Tatsumi and Dr. Keenen often perform medical procedures. TAC ¶ 28.

Before coming to Portland, Dr. Roberts asked Dr. Soldevilla and Dr. Keenan if they would be willing to provide back-up coverage for Dr. Roberts if he were to begin practicing at Meridian Park. TAC ¶ 16. Although both refused, Dr. Roberts was able to obtain coverage from a surgeon at another hospital in North Portland. TAC ¶ 16. Dr. Roberts alleges that during their initial conversation, Dr. Soldevilla falsely informed Dr. Roberts that there was no demand for neurological surgeons at Meridian Park. TAC ¶ 17. Shortly after his return to Portland, Dr. Roberts met Dr. Keenen in person. Dr. Roberts alleges that Dr. Keenen refused to shake hands with Dr. Roberts and that Dr. Keenen turned, walked away, and muttered a highly-charged racial epithet. TAC ¶ 19.

By July 2011, just four months after arriving back in Portland, Dr. Roberts' practice was thriving. He alleges that he had "rocketed to the top of the number of spine procedures being performed" at Meridian Park and was its "most popular neurological surgeon." TAC ¶ 22. According to Dr. Roberts, Dr. Soldevilla, Dr. Tatsumi, and Dr. Keenen "all became openly hostile toward Dr. Roberts as he became more successful." TAC ¶ 22. Dr. Roberts alleges that Dr. Soldevilla, Dr. Tatsumi, and Dr. Keenen "made false and derogatory statements regarding Dr. Roberts' skill and competence as a surgeon" to patients, referring physicians, and hospital staff. TAC ¶ 23.

In October 2011, Meridian Park initiated a "peer review, " under the supervision of Meridian Park's Medical Executive Committee, of Dr. Robert's care of a specific surgical patient. TAC ¶ 26. As a member of the Medical Executive Committee and chair of the Surgery Department at Meridian Park, Dr. Cramer has responsibility over determinations to initiate peer review of surgeons at the hospital. TAC ¶ 27. In addition, because Dr. Soldevilla and Dr. Tatsumi are members of the Surgery Department's Executive Committee, they also have responsibilities relating to peer review. TAC ¶ 28. Meridian Park used an "external physician" to review Dr. Roberts' care of the patient who was the subject of the peer review. TAC ¶ 29. Dr. Roberts alleges that Meridian Park and Dr. Cramer gave the external reviewer "incomplete records." TAC ¶ 29.[1]

In November 2011, Meridian Park issued a "precautionary" suspension of Dr. Roberts' clinical privileges to perform lumbar surgeries, which accounted for approximately 70 percent of Plaintiffs' revenues. TAC ¶¶ 30-31. This required Plaintiffs to cancel six pending surgeries. TAC ¶ 34. During the precautionary suspension period, Meridian Park appointed an ad hoc investigating committee to review Dr. Roberts' clinical privileges. TAC ¶ 35. At the recommendation of the ad hoc committee, Meridian Park lifted the precautionary suspension, but continued to imposed restrictions on Dr. Roberts' ability to perform lumbar procedures, including a requirement that Dr. Roberts have a "proctor" for his next five lumbar surgeries. TAC ¶ 36. During the next six months, Meridian Park failed to accept Dr. Roberts' proposed "proctoring arrangement, " thereby precluding Dr. Roberts from performing lumbar surgeries during that period. TAC ¶ 40. Although Meridian Park eventually approved a proctor, Dr. Roberts' clinical privileges "remained restricted." TAC ¶ 41.

Dr. Roberts alleges that Meridian Park's "peer review process was affected by systematic racial bias." TAC ¶ 41. According to Dr. Roberts, he "was subjected to a peer review process, month-long suspension, and year-long restrictions and proctoring requirement" based on his race. TAC ¶ 42. In addition, Dr. Roberts alleges that confidential patient medical records concerning two of his patients were improperly disclosed by Meridian Park to Dr. Soldevilla and Dr. Tatsumi. TAC ¶¶ 44-45.

Dr. Roberts also asserts that Defendants "encouraged, instigated or allowed" a complaint to be made about Dr. Roberts in which the complainant alleged that Dr. Roberts engaged in misconduct during a surgery conducted in March 2013. TAC ¶ 53. The complaint was made by a radiology technician "sitting some distance from the operating table, " and "[n]one of the three people at the operating table corroborated the accusation." TAC ¶ 54. While this complaint was being investigated, Dr. Roberts' clinical privileges were placed on "active provisional" status. TAC ¶ 57. In April 2013, the investigation exonerated Dr. Roberts, and Meridian Park "renewed" his privileges and removed the "provisional" label from his active privileges.

DISCUSSION

A. DEFENDANTS' MOTIONS TO DISMISS FOR FAILURE TO STATE A CLAIM

1. Standards

A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint's factual allegations, the Court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint "may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).

A complaint must contain sufficient factual allegations to "plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Baca, 652 F.3d at 1216. "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 663 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).

2. Overview of Plaintiffs' Claims and Defendants' Motions to Dismiss

In Plaintiffs' Third Amended Complaint, Plaintiffs allege the following claims for relief: (1) Intentional Interference with Economic Relations; (2) Breach of Contract; (3) Breach of the Duty of Good Faith and Fair Dealing; (4) Race Discrimination; (5) Aiding and Abetting Discrimination; (6) Intentional Infliction of Severe Emotional Distress; (7) Unlawful Retaliation; (8) Unlawful and Unfair Business Practices; (9) Unlawful Conspiracy in Restraint of Trade; (10) Attempted Monopolization; (11) Civil Conspiracy; (12) Conspiracy to Discriminate; and (13) Neglect to Prevent Discrimination.

Defendants' motions to dismiss challenge the legal sufficiency of seven of Plaintiffs' claims: Claims 4, 5, 7, 8, 9, 10, and 12. Meridian Park's motion to dismiss (Dkt. 33) challenges Plaintiffs' Claims 7, 8, and 9. Dr. Cramer's motion to dismiss (Dkt. 38) challenges Plaintiffs' Claims 4, 5, 7, 8, 9, and 12. Pacific Spine's motion to dismiss (Dkt. 47) challenges Plaintiffs' Claims 4, 5, 7, 8, 9, and 10. Each of Plaintiffs' challenged claims are discussed below. In addition, the Court, sua sponte, also discusses Plaintiffs' Claim 11.

a. Plaintiffs' Fourth and Fifth Claims (Race Discrimination)

As a preliminary matter, Defendants assert that Plaintiffs' Fourth and Fifth Claims should be plead as a single claim under Or. Rev. Stat. § 659A.885(7), which creates a civil cause of action for violations of Or. Rev. Stat. § 659A.403 and Or. Rev. Stat. § 659A.406. Specifically, Or. Rev. Stat. § 659A.885(7) provides a cause of action for:

Any individual against whom any distinction, discrimination, or restriction on account of race... has been made by any place of public accommodation... against the operator or manager of [a] place [of public accommodation], [an] employee or person acting on behalf of the place or [an] aider or abettor of the place or person.

The Court agrees that Plaintiffs' racial discrimination and aiding and abetting claims are not correctly brought as separate claims. Plaintiffs may replead their Fourth and Fifth Claims as a single claim under Or. Rev. Stat. § 659A.885(7).

i. Pacific Spine's Motion to Dismiss Plaintiffs' Fourth and Fifth Claims

Pacific Spine moves to dismiss Plaintiffs' Fourth and Fifth Claims for failure to state a claim. Pacific Spine argues that neither Pacific Spine nor Meridian Park is a place of "public accommodation" with respect to Dr. Roberts under Oregon's public accommodations statute. Plaintiffs respond that hospitals are places of public accommodation under Oregon law and that although Dr. Roberts is not a consumer of hospital services, Oregon discrimination law protects "all people within the jurisdiction of this state." See Or. Rev. Stat. § 659A.403(1).

Or. Rev. Stat. § 659A.403(1) provides:

All persons within the jurisdiction of this state are entitled to the full and equal accommodations, advantages, facilities and privileges of any places of public accommodation, without any distinction, discrimination or restriction on account of race, color, religion, sex, sexual orientation, national origin, marital status or age if the individual is 18 years of age or older.

A place of public accommodation means "any place or service offering to the public accommodations, advantages, facilities or privileges whether in the nature of goods, services, lodgings, amusements, transportation or otherwise." Or. Rev. Stat. § 659A.400(1)(a). Exempted from the definition of "public accommodation" is any "institution, bona fide club or place of accommodation that is in its nature distinctly private." Or. Rev. Stat. § 659A.400(2)(e).

Meridian Park provides medical services to the public and is therefore a public accommodation within the definition stated in Or. Rev. Stat. 659A.400(a)(1). Pacific Spine does not contest that a hospital is a place of public accommodation, but instead argues that Dr. Roberts is not a "consumer" of the services that a hospital offers to the general public. Clinical privileges to practice neurosurgery, Pacific Spine argues, are offered only to a very narrow class of persons and, therefore, are "distinctly private."

Looking to the plain text of the statute, Oregon's public accommodation laws do not protect only the general public or "consumers." The words used in Or. Rev. Stat. § 659A.403 provide broad protection from discrimination by places of public accommodation to "all persons within the jurisdiction of the state." See Or. Rev. Stat. § 659A.403(1). Nowhere within § 659A.403 is there a requirement that the discrimination by the public accommodation be regarding a service offered to the general public. Instead, the statute states that all persons are "entitled to full and equal accommodations, advantages, facilities and privileges" of any place of public accommodation. Id. Therefore, the fact that neurosurgery privileges are not offered to the general public as a whole, but only to licensed physicians, does remove Dr. Roberts from the protection of the Oregon's public accommodation laws.

Although the term "customer" does appear in a later subsection of Or. Rev. Stat. § 659A, the definition of "all persons" as used in § 659A.403(1) is not so restricted. Or. Rev. Stat. § 659A.411(1) defines "customer" as "an individual who is lawfully on the premises of a place of public accommodation." This definition, however, is explicitly limited to sections § 659A.411 through § 659A.415, which all deal with a customer's use of an employee-only restroom. See Or. Rev. Stat. § 659A.411. The word "customer" does not appear anywhere in the general public accommodation discrimination prohibition set forth in § 659A.403.[2]

Ninth Circuit case law interpreting the substantially similar federal public accommodations law, Title III of the Americans with Disabilities Act of 1990 ("ADA"), 42 U.S.C. § 12101, et seq., supports this interpretation. The "general rule, " as stated in 42 U.S.C. § 12182(a), provides:

No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.

42 U.S.C. § 12182(a). Subparagraphs § 12182(b)(i)-(iii) then add several specific prohibitions that protect "an individual or class of individuals, " and subparagraph § 12182(b)(iv) defines that phrase, for purposes of clauses (i)-(iii) only, as "the clients or customers of the covered public accommodation that enters into the contractual, licensing or other arrangement." 42 U.S.C. § 12182(b)(1)(A)(iv).

In Molski v. M.J. Cable, Inc., 481 F.3d 724 (2007), the Ninth Circuit rejected the argument that the "general rule" of the disability public accommodation statute, 42 U.S.C. § 12182(a), should be limited by this narrow definition of "an individual or class of individuals." The court held that "clause (iv) of subparagraph (b)(1)(A) is not literally applicable to Title III's general rule prohibiting discrimination against disabled individuals." Molski, 481 F.3d at 733 (quoting PGA Tour v. Martin, 532 U.S. 661, 679 (2001). It is not just "clients or customers" that are protected by the federal public accommodations law because "Title III's broad general rule contains no express clients or customers' limitation." Id. The Ninth Circuit's holding that "one need not be a client or customer of a public accommodation to feel the sting of its discrimination" and to be protected by Title III supports a similar and consistent interpretation of Oregon's public accommodation statute, concluding that Oregon's law also protects more than just consumers of public services. Id. at 733. This is especially so because Oregon's public accommodation statute, like the general rule under the federal ADA, contains no "client or customer" limiting provision. See Or. Rev. Stat. § 659A.400, et seq. [3]

Also of note in the Molski opinion is the court's reliance on the Third Circuit decision in Menkowitz v. Pottstown Mem'l Med. Ctr., 154 F.3d 113, 122 (3d Cir. 1998). Molski, 481 F.3d at 733. In Menkowitz, the Third Circuit applied the federal public accommodation disability antidiscrimination laws to a physician working as an independent contractor at a hospital who had lost his privileges because of alleged discrimination. The Third Circuit, consistent with the Ninth Circuit, held that both the text and legislative history of Title III "clearly demonstrate that the phrase clients or customers, ' which only appears in 42 U.S.C. § 12182(b)(1)(A)(iv), is not a general circumscription of Title III and cannot serve to limit the broad rule announced in 42 U.S.C. § 12182(a)." Menkowitz, 154 F.3d at 121.

At oral argument, Pacific Spine argued that the definition of "public accommodation" in Title III of the ADA was significantly broader than in the Oregon public accommodation statute and, therefore, the Court should not look to Ninth Circuit precedent under the ADA in determining how to interpret Or. Rev. Stat. § 659.403. Pacific Spine asserted that Title III (the ADA statute) applied to "private" organizations and that the Oregon statute does not.

Pacific Spine's interpretation of Title III and the Oregon statute is not persuasive. Section 12181(7) of the ADA defines "public accommodation" by listing numerous "private entities" that are to be considered as public accommodations. In this context, "private entities, " is defined in § 12181(6) as "any entity other than a public entity (as defined in section 12131(1) of this title)." 42 U.S.C. § 12181(6). A "public entity" is defined as "(A) any state or local government; (B) any department, agency, special purpose district, or other instrumentality of a State or States or local government; and (C) the National Railroad Passenger Corporation, and any commuter authority." 42 U.S.C. § 12131(1). Thus, Title III essentially defines a private entity as a non-government entity. Moreover, Or. Rev. Stat. § 659A.403, like Title III, exempts governmental entities from the protections of the public accommodation statute. See Or. Rev. Stat. § 659A.400(2). Therefore, the Court is not persuaded that Title III of the ADA is materially distinguishable and, therefore is persuaded by the Ninth Circuit's holding in Molski. 481 F.3d at 733.[4]

Both the text of Or. Rev. Stat. § 659A.403 and the Ninth Circuit case law interpreting federal public accommodation disability discrimination law support the interpretation that Oregon's public accommodation laws protect more than just "consumers." In the Third Amended Complaint, Plaintiffs allege that Dr. Roberts is a physician with privileges at Meridian Park, Meridian Park is a place of public accommodation, and that the Defendants deprived Dr. Roberts of the opportunity fully to use the privileges provided by Meridian Park based on Dr. Roberts' race. These allegations are sufficient to state a claim under Or. Rev. Stat. § 659A.403. Thus, Pacific Spine's motions to dismiss Plaintiffs' Fourth and Fifth Claims are denied.[5]

ii. Dr. Cramer's Motion to Dismiss Plaintiffs' Fourth and Fifth Claims

Dr. Cramer also moves to dismiss Plaintiffs' Fourth and Fifth Claims, arguing that Plaintiffs have not alleged sufficient facts to support either individual or aider and abettor liability on the part of Dr. Cramer. In order to state a claim against Dr. Cramer, he argues, Plaintiffs must make "some allegation from which one could infer that the defendant intended to support race-based discrimination or acted with racial bias." Dkt. 39 at 4. Plaintiffs respond that their allegations that Dr. Cramer participated in a process that was racially discriminatory and that he inappropriately initiated the peer review process are sufficient to state a claim.[6] Citing Allen v. U.S. Bancorp, 264 F.Supp.2d 945, 954 (D. Or. 2003), Plaintiffs argue that they do not need to allege racial animus as long as they allege racially discriminatory treatment. Dkt. 52 at 4.

Although Oregon courts have not articulated what elements a plaintiff must plead to state a claim under Or. Rev. Stat. § 659A.885(7), the text of the statute provides guidance. Subsection (7) creates a cause of action for any individual whom "any distinction, discrimination or restriction on account of race" has been made by: (1) "a place of public accommodation;" (2) "any employee or person acting on behalf of the place of accommodation;" or (3) "any person aiding or abetting the place or person in violation of [Or. Rev. Stat. §] 659A.406." Or. Rev. Stat. § 659A.885(7). Therefore, because Dr. Cramer is not a place of public accommodation and is not an employee of Meridian ...


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