United States District Court, D. Oregon
DR. ERIK NATKIN, DO PC, a Utah corporation; and DR. ERIK NATKIN, DO, an individual, Plaintiffs,
AMERICAN OSTEOPATHIC ASSOCIATION, et al., Defendants.
Benjamin Natkin, Law Offices of Benjamin Natkin Clark E.
Rasche, Watkinson Laird Rubenstein Of Attorneys for
F. McGrory, Jr. and Blake J. Robinson, Davis Wright Tremaine
LLP, Of Attorneys for Defendants Samaritan Health Services,
Inc., Good Samaritan Hospital Corvallis, Albany General
Hospital, Mid-Valley Healthcare, Inc., Samaritan Pacific
Health Services, Inc., Samaritan North Lincoln Hospital, and
Dr. Luis R. Vela, DO.
Michael Porter, Miller Nash Graham & Dunn LLP, Mark H.
Meyerhoff and Christopher S. Frederick, Liebert Cassidy
Whitmore, Of Attorneys for Defendant Western University of
Michael C. Lewton, Cosgrave Vergeer Kester LLP, John R.
Danos, Wilson, Elser, Moskowitz, Edelman & Dicker LLP, Of
Attorneys for Defendant American Osteopathic Association.
R. Rask, III, Kell Alterman & Runstein, LLP, Robert P.
Johnston, Law Offices of Vera and Barbosa, Of Attorneys for
Defendant Osteopathic Postdoctorial Training Institute,
OPTI-West Educational Consortium.
OPINION AND ORDER
Michael H. Simon. United States District Judge.
States Magistrate Judge Stacie Beckerman issued Findings and
Recommendation (“F&R”) in this case on August
30, 2017. ECF 126. Judge Beckerman recommended that the
motions to dismiss filed by Defendants Samaritan Health
Services, Inc. (“SHS”), Good Samaritan Hospital
Corvallis (“Good Sam”), Albany General Hospital,
Mid-Valley Healthcare, Inc., Samaritan Pacific Health
Services, Inc., Samaritan North Lincoln Hospital,
(collectively, the “Samaritan Entities”) and Dr.
Luis R. Vela, DO (collectively with the Samaritan Entities,
the “Samaritan Defendants”), American Osteopathic
Association (“AOA”), and Western University of
Health Sciences (“Western”) (collectively, the
“Moving Defendants”) be granted in part and
denied in part.
timely filed an objection (ECF 136), as did the Samaritan
Defendants (ECF 135). The Court reviews de novo
those portions of Judge Beckerman's F&R to which
Plaintiffs and the Samaritan Defendants have objected. In so
doing, the Court has considered the objections, the
responses, the F&R, the First Amended Complaint
(“FAC”), and the underlying briefing before Judge
Beckerman. For the reasons discussed below, the Court adopts
in part the F&R. The motions to dismiss are granted in
part and denied in part.
Review of a Magistrate's Findings and
the Federal Magistrates Act (“Act”), the Court
may “accept, reject, or modify, in whole or in part,
the findings or recommendations made by the
magistrate.” 28 U.S.C. § 636(b)(1). If a party
files objections to a magistrate's findings and
recommendations, “the court shall make a de novo
determination of those portions of the report or specified
proposed findings or recommendations to which objection is
made.” Id.; Fed.R.Civ.P. 72(b)(3).
those portions of a magistrate's findings and
recommendations to which neither party has objected, the Act
does not prescribe any standard of review. See Thomas v.
Arn, 474 U.S. 140, 152 (1985) (“There is no
indication that Congress, in enacting [the Act], intended to
require a district judge to review a magistrate's report
to which no objections are filed.”); United States.
v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en
banc) (holding that the court must review de novo
magistrate's findings and recommendations if objection is
made, “but not otherwise”). Although in the
absence of objections no review is required, the Magistrates
Act “does not preclude further review by the district
judge sua sponte . . . under a de novo or
any other standard.” Thomas, 474 U.S. at 154.
Indeed, the Advisory Committee Notes to Fed.R.Civ.P. 72(b)
recommend that “[w]hen no timely objection is filed,
” the Court review the magistrate's recommendations
for “clear error on the face of the record.”
Motion to Dismiss
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).
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.” Starr, 652 F.3d at 1216. “A
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Iqbal, 556 U.S. at 678 (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556
Court adopts the Background section of the F&R, including
the terms used therein. Briefly, Plaintiff Dr. Erik E. Natkin
was a resident at Good Sam, a subsidiary of SHS and
sister-hospital to the other Samaritan Entities. Plaintiffs
allege that Dr. Natkin was unfairly targeted by Dr. Vela, a
Residency Program Director and Director of Medical Education
(“DME”) at Dr. Natkin's residency program.
After receiving positive performance reviews, Dr. Vela
accused Dr. Natkin of colluding with another resident to
portray an attending physician in a negative light. Dr. Vela
also allegedly violated the bylaws and other governing
documents of the residency program by having Dr. Natkin
suspended and ultimately terminated, without appropriate
Vela and SHS allegedly conveyed false and misleading
information about Dr. Natkin to the Oregon Medical Board,
which required Dr. Natkin to undergo a six-month
investigation to clear his medical license. Dr. Vela and SHS
also allegedly conveyed false and misleading information
about Dr. Natkin to the Federation of State Medical
Boards' Credential Verification Service
(“FCVS”), which allegedly precluded Dr. Natkin
from completing his residency in orthopedic surgery and
obtaining Board certification. In addition, these actions
have caused difficulty for Dr. Natkin in obtaining medical
licenses in other states and in practicing as a covered
doctor under certain insurance plans. Finally, Dr. Vela
allegedly defamed Dr. Natkin to numerous other doctors
throughout the country, preventing Dr. Natkin from obtaining
other jobs, including a fourth-year orthopedic surgical
residency that was specially-created for Dr. Natkin in
Philadelphia. The program director in Philadelphia withdrew
the job offer after he contacted Dr. Vela, who allegedly
conveyed false and misleading information about Dr.
object to the F&R's analysis and conclusions
regarding: (1) sustaining the evidentiary objection to the
Declaration of Dr. Natkin submitted in support of
Plaintiffs' response brief; (2) dismissing
Plaintiffs' antitrust claim; (3) applying Oregon law to,
and dismissing, Plaintiffs' breach of fiduciary duty
claims against AOA, Osteopathic Postdoctorial Training
Institute, OPTI-West Educational Consortium
(“Opti-West”), and Western; (4) dismissing
Plaintiffs' breach of fiduciary duty claims against the
Samaritan Defendants; (5) dismissing the breach of contract
claims against the Samaritan Entities other than Good Sam;
(6) dismissing Plaintiffs' third-party beneficiary
contract claims; (7) dismissing Plaintiffs' defamation
claims; and (8) dismissing Plaintiffs' California Fair
Practices Act Claim. The Samaritan Defendants object to the
F&R's analysis and conclusions regarding: (1) denying
their motion to dismiss Dr. Natkin's breach of contract
claim against Good Sam; (2) denying their motion to dismiss
Dr. Natkin's claim for breach of the covenant of good
faith and fair dealing (“GFFD”) against Good Sam;
and (3) denying their motion to dismiss Plaintiffs'
wrongful termination claim. The Court discusses the
objections, organized by the claims as alleged in the FAC,
after discussing the portions of the F&R to which no
objections were filed and the evidentiary objection of
Portions of the F&R to which No Objections Were
portions of the F&R which no party has objected, the
Court follows the recommendation of the Advisory Committee
and reviews those matters for clear error on the face of the
record. No such error is apparent and the Court adopts these
portions of the F&R. For clarity, the Court sets forth
below these portions:
1. The F&R's recommendation to apply Oregon law to
all of the Samaritan Defendants' claims-both contract and
2. The F&R's recommendation to dismiss Plaintiff
Natkin PC's breach of contract claim (count 11) as
against the Samaritan Defendants.
3. The F&R's recommendation to dismiss Plaintiff
Natkin PC's breach of the implied covenant of GFFD claims
(counts 12 and 13).
4. The F&R's recommendation to dismiss Plaintiff Dr.
Natkin's breach of the implied covenant of GFFD claims
(counts 12 and 13) as against the Samaritan Defendants other
than Good Sam.
5. The F&R's recommendation to deny AOA's motion
to dismiss Plaintiffs' breach of contract claim (counts
five through eight) against AOA.
6. The F&R's recommendation to dismiss counts 12 and
13 as against AOA, for breach of the implied covenant of
GFFD. In counts 12 and 13, Plaintiffs do not allege against
AOA the breach of the covenant of GFFD with respect to the
alleged contract between Plaintiffs and AOA as set forth in
counts five through eight. Instead, counts 12 and 13 focus
solely on the contract between the Samaritan Entities,
specifically, Good Sam and Dr. Natkin. If Plaintiffs intend
to allege breach of the covenant of GFFD by AOA with respect
to the contract between AOA and Dr. Natkin, Plaintiffs must
specifically so plead. The allegations relating to the
alleged breach of the duty of GFFD contained in counts 12 and
13 do not encompass the alleged contract between AOA and Dr.
7. The F&R's recommendation to dismiss counts five
through eight (breach of contract) as against Western. The
Court notes for clarification that for the same reasons Judge
Beckerman dismissed these counts against Western, the Court
also dismisses counts five through eight against the
Samaritan Defendants and Opti-West. Thus, counts five through
eight only remain against AOA.
8. The F&R's recommendation to dismiss counts 12 and
13 (breach of the implied covenant of GFFD) as against
9. The F&R's recommendation to dismiss
Plaintiffs' wrongful termination claim (count 10) against
all Defendants other than Good Sam.
10. The F&R's conclusion to consider the additional
evidence offered by the Moving Defendants, as evidence
appropriate under the incorporation-by-reference doctrine.
F&R sustained the Samaritan Defendants' objections to
Plaintiffs' proffered evidence because Plaintiffs
provided no argument why the evidence should be considered.
In their objection, Plaintiffs explain that the motions to
dismiss were briefed in California, before this case was
transferred, and under the local rules in California
Plaintiffs were not provided an opportunity to file a
response to the evidentiary objections raised by the
Samaritan Defendants in their reply filings (unlike in this
District). Plaintiffs therefore object to the F&R's
sustaining the Samaritan Defendants' objection to the
declaration of Dr. Natkin and provide their argument for why
the evidence should be considered.
argue that Dr. Natkin's declaration introduces the
“compendium” of the Samaritan Entities'
written policies in effect during the year of Dr.
Natkin's termination and are referenced in the FAC, and
that declaration avers facts that could be alleged in an
amended complaint. Whether the facts stated by Dr. Natkin in
his declaration could be alleged in an amended complaint is
irrelevant to whether the declaration is admissible in
response to a motion to dismiss. Dr. Natkin's declaration
primarily discusses his ties to California and his personal
belief about the facts of his experience at Good Sam and the
underlying factual encounters that were the basis of his
termination. See, e.g., ECF 46 at 2-4 ¶¶
3-13 (discussing Dr. Natkin's connections to California);
15 (“I think it was wrong for me to get fired”);
16 (“I have never deliberately set out to make
any attending physician look bad or incompetent: not Dr.
Richard Stanley, DO, nor any other attending.”
(emphasis in original)); 18 (“I have never met or seen
or seen Doug Boysen”). These are facts outside the
pleadings and are not properly considered in motion under
Rule 12 of the Federal Rules of Civil Procedure.
Natkin's declaration does, however, attach as an exhibit
a copy of the written policies of the Samaritan Entities, and
Dr. Natkin authenticates the exhibit in paragraph 17 of his
declaration. The Samaritan Defendants object that paragraph
17 lacks authentication and foundation. Dr. Natkin avers,
however, that he makes his declaration based on personal
knowledge and there is no indication that a resident would
not have knowledge (or copies) of the Resident Handbook or
the Good Sam medical staff rules and regulations. To the
contrary, it makes sense that a resident would have knowledge
of, and copies of, these documents. Further, the Samaritan
Defendants do not state that the exhibit does not contain
accurate copies of the policies in place during Dr.
Natkin's residency. The Court therefore finds that the
authentication of the document is not sufficiently
challenged. Accordingly, the exhibit attached to the
declaration of Dr. Natkin is properly considered on a motion
to dismiss because it is incorporated by reference in the
also object to the F&R sustaining the objection to the
declaration of Plaintiffs' counsel and its attached
exhibit, an agreement between Opti-West and Good Samaritan
Regional Medical Center. Plaintiffs argue that the agreement
supports Plaintiffs' third-party beneficiary claim and
that the declaration demonstrates Plaintiffs' diligence
in attempting to obtain documents in discovery. This
agreement, however, is not incorporated by reference in the
FAC. If Plaintiffs choose to file a second amended complaint,
Plaintiffs may incorporate this document by reference (or
attach it as an exhibit). More importantly, however,
Plaintiffs' efforts in discovery are outside the
pleadings and not germane to the consideration of a motion
under Rule 12.
Samaritan Defendants' objection is sustained in part and
overruled in part. It is sustained with respect to the
declaration of counsel and its exhibit and the declaration of
Dr. Natkin, except for paragraph 17 authenticating the
written policies of the Samaritan Defendants. It is overruled
with respect to the written policies themselves.
Court notes that Defendant Opti-West did not file a motion to
dismiss, but instead filed an answer. Nonetheless, the Court
sua sponte applies its analyses below to the claims
alleged against Opti-West. A trial court may sua
sponte dismiss claims under Federal Rule of Civil
Procedure 12(b)(6), even shortly before trial. See,
e.g., Omar v. Sea-Land Serv., Inc., 813 F.2d
986, 991 (9th Cir. 1987). Moreover, a trial court “may
properly on its own motion dismiss an action as to defendants
who have not moved to dismiss where such defendants are in a
position similar to that of moving defendants or where claims
against such defendants are integrally related.”
Silverton v. Dep't of Treasury, 644 F.2d 1341,
1345 (9th Cir. 1981). Although Silverton involved a
nonmoving defendant who had not yet appeared, the decision
did not limit its holding, and the cases it cited to support
its holding involved defendants who had appeared but had not
filed a motion or joined in the motions filed by other
defendants. Thus, the Court does not find Silverton
and its progeny limited only to cases where the nonmoving
defendant has not yet appeared, which is also consistent with
allege that Defendants collectively acted to prevent Dr.
Natkin from completing his residency, which precluded him
from becoming board certified, from obtaining a fellowship in
orthopedic hand surgery, and from entering the market
anywhere in the United States as an orthopedic surgeon, with
or without a subspecialty in orthopedic hand surgery or other
orthopedic subspecialty. Plaintiffs also allege that the
actions by Defendants have prevented patients from receiving
the benefit of Dr. Natkin's care as an orthopedic
surgeon, orthopedic hand surgeon, or other orthopedic
surgical specialty. Plaintiffs further allege that Dr. Natkin
and patients have been harmed because a growing number of
medical insurance companies require a physician with whom
they contract to have board certification. Thus, Dr. Natkin
cannot contract with those insurers, and their insureds do
not have the option of being treated by Dr. Natkin.
Plaintiffs claim that the actions by Defendants constitute an
unlawful combination in restraint of trade affecting
interstate commerce in violation of Section 1 of the Sherman
Antitrust Act, 15 U.S.C. § 1.
Moving Defendants argue that Plaintiffs fail to state a claim
for an antitrust violation because Plaintiffs fail to allege
“antitrust injury.” The Samaritan Defendants also
argue that Plaintiffs fail to allege a restraint of trade
because Dr. Natkin is free to practice medicine anywhere
other than with the Samaritan Defendants. Western also argues
that Plaintiffs fail to sufficiently allege facts
demonstrating that Western was part of any conspiracy or
engaged in conduct that unreasonably restrained trade.
have standing as an antitrust plaintiff, a party must
demonstrate antitrust injury, meaning it must show
‘injury of the type the antitrust laws were intended to
prevent and that flows from that which makes defendants'
acts unlawful.'” Int'l Longshore &
Warehouse Union v. ICTSI Oregon, Inc., 863 F.3d 1178,
1186 (9th Cir. 2017) (quoting Atl. Richfield Co. v. USA
Petroleum Co., 495 U.S. 328, 334 (1990)). “An
injury caused by an antitrust violation will not count as an
antitrust injury ‘unless it is attributable to an
anti-competitive aspect of the practice under
scrutiny.'” Id. (quoting Atl.
Richfield, 495 U.S. at 334). “The antitrust laws
were enacted for the protection of competition, not
competitors.” Atl. Richfield, 495
U.S. at 338 (emphasis in original) (quotation marks omitted).
Thus, personal economic injury, such as loss of income from
market exclusion, is not enough to support a claim under
Section 1 of the Sherman Act. Les Shockley Racing, Inc.
v. Nat'l Hot Rod Ass'n, 884 F.2d 504, 508 (9th
Cir. 1989). When considering antitrust standing on a motion
to dismiss, the Court must determine whether Plaintiffs
“could show any set of facts, consistent with the
allegations of [the] complaint, that would constitute a
violation of the antitrust laws.” Rutman Wine Co.
v. E. & J. Gallo Winery, 829 F.2d 729, 735 (9th Cir.
1987) (quotation marks omitted).
Summit Health, Ltd. v. Pinhas, the Supreme Court
addressed the issue of the interstate commerce requirement in
a Section 1 antitrust claim with regard to the alleged
exclusion of a single ophthalmologist from the Los Angeles
market. 500 U.S. 322 (1991). Although Summit
Health involved the interstate commerce requirement
of an antitrust claim, it touched upon the anticompetitive
effect of the alleged conduct, noting that:
For if a violation of the Sherman Act occurred, the case is
necessarily more significant than the fate of “just one
merchant whose business is so small that his destruction
makes little difference to the economy.” The case
involves an alleged restraint on the practice of
ophthalmological services. The restraint was accomplished by
an alleged misuse of a congressionally regulated peer review
process, which respondent characterizes as the gateway that
controls access to the market for his services. The gateway
was closed to respondent, both at Midway and at other
hospitals, because petitioners insisted upon adhering to an
unnecessarily costly procedures. The competitive significance
of respondent's exclusion from the market must be
measured, not just by particularized evaluation of his own
practice, but rather, by a general evaluation of the impact
of the restraint on other participants and potential
participants in the market from which he has been excluded.
Id. at 332 (citation omitted).
Summit Health, courts sometimes have struggled with
when, in the context of a doctor or other medical
professional being denied privileges at hospital or similar
circumstances, a claim will be sufficient under Section 1 of
the Sherman Act. The Court has reviewed numerous cases
involving allegations in the medical context similar to
Plaintiffs' claim. The Court notes that most of these
cases arise in the context of summary judgment, because
“[a]fter Summit Health, the adequacy of a
physician's contentions regarding the effect on
competition is typically resolved after discovery, either on
summary judgment or after trial.” Brader v.
Allegheny Gen. Hosp., 64 F.3d 869, 876 (3d Cir. 1995).
Circumstances may, however, ...