Crafty Lobbying Tactics Are Also Free Speech

CHICAGO (CN) - The First Amendment protects allegedly disingenuous lobbying tactics employed by an Illinois hospital that tried to prevent nearby construction by a competitor, the 7th Circuit ruled.

In 2004, Mercatus Group partnered with Evanston Northwestern Healthcare and began efforts to open a physician center in the village of Lake Bluff, a short distance away from the almost 70-year-old Lake Forest Hospital.

Recognizing the "huge threat" that a competing facility would pose, Lake Forest Hospital began a lobbying and public-relations campaign to prevent the center's launch.

The hospital directly lobbied the village board and community members and offered incentives to keep physician-practice groups from leaving the hospital to join the new center.

After the village board ultimately refused to rezone the land for medical use, the physicians stayed at the hospital, killing the Mercatus center.

Mercatus sued Lake Forest Hospital, alleging anti-competitive practices under the Sherman Act. U.S. District Judge Blanche Manning determined that the efforts were constitutionally protected speech and granted summary judgment for the hospital.

On appeal, Mercatus argued that the hospital had made misrepresentations to the board, the public and the physicians it pulled away from the center - negating constitutional protection and violating antitrust laws.

The 7th Circuit rejected the arguments on May 26, finding that antitrust litigation "'cannot be used to chill [the] constitutional right' to 'petition without fear of sanctions.'"

Because the village board proceedings were legislative - not adjudicatory - in nature, evidence presented by the hospital was not subject to strict rules of admissibility.

"The antitrust laws are designed to protect competition," Judge David Hamilton wrote for the court. "They are not a guarantee of good government... And they certainly are not a license for the federal courts to displace the State of Illinois to sit in review of what is entirely a matter of local law."

A misleading public-relations campaign also does not necessarily violate the Sherman Act, the court ruled.

"To make such injuries from public relations campaigns actionable under the antitrust laws would 'be tantamount to outlawing all such campaigns,'" Hamilton wrote.

Finally, though the hospital allegedly lied to physicians that Mercatus had violated certain anti-kickback regulations, antitrust laws do not prohibit "conduct that is only unfair, impolite, or unethical," the court held.

"[T]his is an example of the very type of competition the antitrust laws are designed to protect," according to the 48-page decision. "It would be perverse if Mercatus' failure to prevail in that competition gave it a grievance cognizable under the Sherman Act." (Emphasis in original.)

"To the extent Mercatus was harmed by the Hospital's actions, any remedies might arise under Illinois tort law, not federal antitrust law," Hamilton wrote.

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