Motions by Duke and the University of North Carolina at Chapel Hill to dismiss an antitrust lawsuit filed against the universities last year were denied in federal court Friday.
In the lawsuit filed last May, Dr. Danielle Seaman—Duke assistant professor of radiology—alleged that an illegal no-hire agreement between Duke and UNC administrators prevented her from receiving a parallel position at the UNC School of Medicine. Seaman’s original lawsuit contended that the alleged no-hire agreement between Duke and UNC prohibited the lateral hiring of each other’s medical staff and faculty, which had the “intended and actual effect” of suppressing competition and employee wages, and was in violation of federal and state antitrust laws.
The defendants—Duke University, Duke University Health System and William Roper, dean of the UNC medical school—filed motions to dismiss the case Oct. 15, claiming immunity on the grounds that UNC is a state institution and thus is exempt from antitrust litigation. Duke is also arguing for dismissal on the basis of UNC’s immunity to these antitrust allegations.
“[UNC] is exempt from the Sherman Act under the doctrine of state-action immunity because UNC is a state representative that acts for the State of North Carolina in its sovereign capacity. That decision governs here, and Dr. Seaman’s claims therefore fail as a matter of law,” reads the October motion to dismiss on Roper’s behalf.
After a hearing Jan. 28, U.S. District Court Judge Catherine Eagles decided to deny Duke and UNC’s motions to dismiss Friday in the North Carolina Middle District court, allowing the case to move forward and the prosecutors to begin collecting evidence and summoning witnesses. The news was first reported by the Durham Herald-Sun.
The 1943 U.S. Supreme Court case Parker v. Brown originally established precedence for exempting state governments from the Sherman Act, which prohibits anti-competitive business activity.
“The Court concludes that the University’s status as a constitutionally-established entity is not enough to entitle it and its employees to ipso facto state action immunity from antitrust liability under Parker v. Brown,” Eagles wrote in an order filed Friday.
Eagles also granted the defendants permission to apply to the Fourth U.S. Circuit Court of Appeals for permission to appeal—which they have until Feb. 22 to do—due to the complex nature of the case’s key question of whether UNC, and by extension Duke, is immune to antitrust violations as a state agent.
“To the extent the motions to dismiss were based on ipso facto immunity under Parker v. Brown, the Court’s decision to deny the motion involves a controlling question of law as to which there is substantial ground for difference of opinion and an immediate appeal from the order may materially advance the ultimate termination of the litigation,” reads Eagles’ order.
Eagles added that a Fourth Circuit decision could simplify evidence-gathering for Seaman and her lawyers if it sided with them, and could still prevent “significant unnecessary expense” for both prosecution and defendants if it sided with the defendants.
“The litigation has significant potential to be protracted and complex,” she wrote. “If the question of ipso facto immunity depends on the facts and is more appropriate for resolution at summary judgment, then clarification of the applicable legal test will allow the parties to focus on discovery, reduce costs and facilitate earlier resolution of the case.”
In November, experts analyzed the case and told The Chronicle Seaman could face challenges proving the existence of an explicit agreement and not just loose guidelines between administrators of Duke and UNC.
Eagles’ order also noted that an initial mediated settlement conference will take place within 30 days.
Lawyers for Seaman and the defendants could not be reached for comment in time for publication.
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