Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738 (1976)

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

Syllabus

Petitioner corporation, which operates a 49-bed proprietary hospital (Mary Elizabeth) in Raleigh, N.C. brought this antitrust action alleging that respondents, a private, tax-exempt hospital (Rex) in Raleigh, two of its officers, and a health planning officer, had violated the Sherman Act by conspiring along with others to block the relocation and expansion within Raleigh of Mary Elizabeth, for the purpose of enabling Rex to monopolize the business of providing hospital services in Raleigh. Petitioner alleged that a substantial portion of its medicines and supplies comes from out-of-state sellers; that a large portion of its revenue comes from out-of-state insurance companies or the Federal Government; that it pays a management service fee to its parent company, a Georgia-based Delaware corporation; and that the planned expansion would be largely financed through out-of-state lenders. Concluding that petitioner’s business was strictly local, and that respondents’ alleged conduct only incidentally and insubstantially affected interstate commerce, the District Court granted respondents’ motion to dismiss the complaint. The Court of Appeals affirmed.

Held: Petitioner’s complaint states a cause of action upon which relief can be granted under the Sherman Act, the combination of factors involving petitioner in interstate commerce being sufficient to establish a "substantial effect" on interstate commerce, within the meaning of the Sherman Act, as a result of respondents’ alleged conduct. Pp. 743-747.

(a) That respondents may not have had the intentional goal of affecting interstate commerce does not exempt their conduct from Sherman Act coverage. Burke v. Ford, 389 U.S. 320. Pp. 744-745.

(b) The "substantial effect" test can be satisfied even if the impact on interstate commerce of the conduct alleged falls short of causing petitioner’s out-of-state suppliers to go out of business or the market price to be affected by the conspiracy. Pp. 745-746.

511 F.2d 678, reversed and remanded.

MARSHALL, J., delivered the opinion for a unanimous Court.