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From Antitrust Law Daily, September 16, 2013

Court grants RNs’ request for class certification in antitrust litigation related to wages paid to RNs by Detroit area hospitals,(Sep. 16, 2013)

By Susan L. Smith, JD, MA

Two registered nurses (RNs) successfully sought class certification of RNs who provided direct patient care in short term acute care facilities while employed by eight Detroit area hospitals from December 12, 2002, through the present by demonstrating that the questions of law or fact common to class members predominate over any questions affecting only individual members and class action is superior to other methods for adjudicating the controversy (Cason-Merenda v. VHS of Michigan, Inc., September 13, 2013, Rosen, G). The RNs alleged that the hospitals violated sec. 1 of the Sherman Act by agreeing to regularly exchanging compensation-related information among themselves in a manner that reduced competition among Detroit-area hospitals in the wages paid to RNs (rule of reason claim). The court found that the RNs met the numerosity, commonality, typicality, and adequacy of representation prerequisites under Federal Rule of Civil Procedure 23(a) and the action is maintainable under Rule 23(b)(3). The court concluded that all three elements of the RNs’ rule of reason claim, a violation of antitrust law, antitrust impact, and damages, may be established through predominantly common evidence and individualized inquiries will not play a significant role as to these three elements of the RNs’ claim.

Background. The RNs sought to recover on behalf of themselves and a class of RNs against eight Detroit area hospitals alleging that the health care providers violated sec. 1 of the Sherman Act by conspiring among themselves and with other local hospitals to hold down the wages of the RNs employed by the hospitals (per se claim) and the rule of reason claim. In a prior ruling, the court granted summary judgment to the hospitals on the per se claim. The court also granted final approval to settlements reached between the RNs and three of the hospitals and preliminarily approved settlements with four additional hospitals, leaving VHS as the sole hospital against which the RNs are litigating their antitrust claims.

Prerequisites. To obtain the certifications, the RNs first had to establish that (1) the class is so numerous that joinder of all members is impractical; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. The RNs and their expert estimated that the proposed class has over 20,000 members, thus satisfying the numerosity requirement. In addition, the RNs’ rule of reason claim raises a number of common issues, including a common course of action, namely, the hospitals agreed to exchange wage information to use in the RN wage determinations; an antitrust injury, a depression in RN wages flowing from an anticompetitive aspect of the hospitals exchange of wage data; and a common question, does the claim of each class member depend upon whether the benchmark analysis of the RNs’ expert offers a viable and permissible measure of the wage loss suffered by this particular member of the RN class.

Because the claims of the named RNs and the remaining members of the proposed class all arise from the same conspiracy and are based on the same theory of liability under the Sherman Act, the typicality standard was met. The court found that the named RNs met the adequacy of representation standard in that the RNs have interests in common with the unnamed class members as hospital nurses, in seeking to recover damages related to depressed wages, and in demonstrating their willingness to pursue the interest of the RN class.

Rule 23(b)(3). To satisfy Rule 23(b)(3), “a plaintiff must establish that the issues in the class action that are subject to generalized proof, and thus applicable to the class as a whole predominate over those issues that are subject only to individualized proof.” Although VHS identified other court cases where the court declined to certify classes in antitrust suits featuring wage suppression, the court found that each of the cases were distinguishable from the RNs’ claim. The court found that VHA’s challenges did not lead to the conclusion that the RNs’ showing of antitrust impact, causation, or the damage elements of their antitrust claim will entail predominantly individualized inquiries directed at the characteristics of each member of the proposed class. Therefore, the court concluded that the RNs satisfied both the predominance and superiority prongs of Rule 23(b)(3).

The RNs’ expert described a broad outline of a benchmark methodology through which harm to the proposed class could (theoretically) be examined and measured and produced a report in which he applies his benchmark approach to the record. Rather than relying on averages to demonstrate antitrust impact or measure harm allegedly suffered by the proposed RN class, he has derived what he characterized as a “conservative estimate” of the “but-for” hourly pay rate that each member of the proposed RN class would have received in a competitive market, at a minimum, in the absence of the hospitals’ alleged agreement to regularly share RN compensation data.

Quoting its earlier opinion (Cason-Merenda v Detroit Medical Center, 2013-1 Trade Cases ¶78,350 (E.D. Mich. April 22, 2013)), the court stated “so long as [the expert] is able to persuade the trier of fact that his benchmark provides a truly conservative estimate of “but-for” wages …this will suffice to establish that the Defendants’ alleged antitrust violations had a common impact on the members of the plaintiff class, even if this benchmark might not accurately measure the precise harm suffered by each individual class member.” In addition, the court agreed with the RNs that the variations in certain components of the hospitals’ pay structures and the disparities in the amounts of compensation received by the members of the proposed class do not defeat the RNs alternative effort to indirectly establish the antitrust impact through common proof of shared or similar features among the wage structures implement by the hospitals.

The case number is 06-15601.

Attorneys: Stephen F. Wasinger (Stephen F. Wasinger PLC) for Cason-Merenda. Kenneth J. McIntyre (Dickinson Wright) for VHS of Michigan, Inc., d/b/a Detroit Medical Center. David Marx , Jr. (McDermott Will & Emery LLP) for Henry Ford Health System. David A. Ettinger (Honigman, Miller, Schwartz and Cohn LLP) for Mount Clemens General Hospital.

Companies: VHS of Michigan, Inc.; Henry Ford Health System; Mount Clemens General Hospital.

MainStory: TopStory Antitrust MichiganNews

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