                                                                                                                           Opinions of the United
1999 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-16-1999

Angelico v. Lehigh Valley Hosp
Precedential or Non-Precedential:

Docket 97-1927




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Filed July 16, 1999

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 97-1927

RICHARD J. ANGELICO, M.D.,
       Appellant

v.

LEHIGH VALLEY HOSPITAL, INC.; SAINT LUKE'S
HOSPITAL OF BETHLEHEM PENNSYLVANIA; EASTON
HOSPITAL; PANEBIANCO-YIP HEART SURGEONS;
BETHLEHEM CARDIOTHORACIC SURGICAL
ASSOCIATES, P.C.; BRIAN M. PETERS, ESQ.;
POST & SCHELL, P.C.

Caption amended pursuant to 2/10/98 order

APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

(D.C. No. 96-cv-02861)
District Judge: The Honorable J. Curtis Joyner

ARGUED December 4, 1998

BEFORE: SLOVITER, NYGAARD, and
WOOD,* Circuit Judges.

(Filed: July 16, 1999)



_________________________________________________________________

* The Honorable Harlington Wood, Jr., Circuit Judge of the United States
Court of Appeals for the Seventh Circuit, sitting by designation.
Henry F. Siedzikowski, Esq. (Argued)
Elliott, Reihner, Siedzikowski
 & Egan
925 Harvest Drive
Union Meeting Corporate Center V
Blue Bell, PA 19422

 Attorney for Appellant

Richard F. Stevens, Esq. (Argued)
Stevens & Johnson
740 Hamilton Mall
Allentown, PA 18101

Edward C. Mengel, Jr., Esq.
David E. Edwards, Esq.
White & Williams
One Liberty Place, Suite 1800
Philadelphia, PA 19103

Wayne A. Mack, Jr.
Duane, Morris & Heckscher
4200 One Liberty Place
Philadelphia, PA 19103-7396

Donald H. Lipson, Esq.
Tallman, Hudders & Sorrentino
1611 Pond Road
The Paragon Centre, Suite 300
Allentown, PA 18104

Mark H. Scoblionko, Esq.
Scoblionko, Scoblionko, Muir
 & Bartholomew
40 South 5th Street
Allentown, PA 18101

Frederick B. Buck, III, Esq.
Rawle & Henderson
One South Penn Square
The Widener Building
Philadelphia, PA 19107

                          2
       Jeffrey G. Weil, Esq. (Argued)
       Dechert, Price & Rhoads
       1717 Arch Street
       4000 Bell Atlantic Tower
       Philadelphia, PA 19103

        Attorneys for Appellees

OPINION OF THE COURT

NYGAARD, Circuit Judge.

Dr. Richard Angelico appeals a summary judgment for
the defendants, Lehigh Valley Hospital, St. Luke's Hospital
of Bethlehem, Pennsylvania, Easton Hospital, the
Panebianco-Yip Heart Surgeons, and Bethlehem
Cardiothoracic Surgical Associates ("Bethlehem")
(collectively, the "hospital defendants") on his antitrust
claims. The District Court held that Angelico did not have
standing to assert antitrust claims because he had not
shown an injury to competition. We will reverse and
remand for further proceedings.

Angelico also appeals the dismissal of his due process
claims under 42 U.S.C. S 1983 against Brian M. Peters,
Esq., his law firm Post & Schell, P.C., and the firm's client,
Lehigh Valley Hospital (collectively, the "attorney
defendants"). Finally, he appeals the District Court's
sanction in the form of attorney's fees for Peters. We will
affirm the dismissal and attorney's fees award.

I. Facts and Procedural History

Angelico is a cardiothoracic surgeon. The three hospitals
are located in the Lehigh Valley area in Pennsylvania.
Panebianco-Yip and Bethlehem are physician practice
groups specializing in thoracic and cardiothoracic surgery
in the same area. Angelico began his career in the Lehigh
Valley area with a group of cardiovascular specialists and
became a member of the active medical staff of Lehigh
Valley Hospital, where he performed cardiothoracic surgery.
Just over a year later, Angelico left his original practice

                                  3
group, joined Panebianco-Yip as that practice group's
primary surgeon, and acquired active privileges at St.
Luke's.

In 1989, Angelico resigned from Panebianco-Yip and
established his own practice. He maintained his privileges
at both Lehigh Valley and St. Luke's until January of 1991,
when he requested that his active privileges at Lehigh
Valley be reduced to "courtesy" privileges, which allowed
him to perform only a limited number of operations there
each year. He maintained his courtesy privileges at Lehigh
Valley until October 15, 1995.

In March 1994, Angelico notified St. Luke's that he was
resigning his staff privileges. He then attempted to apply for
staff privileges at Easton. Easton, however, informed him
that it had adopted a temporary moratorium on
applications in its newly established heart program because
it was considering whether to award an exclusive contract.
Later, Easton informed Angelico that it had awarded an
exclusive contract to another surgeon from outside of the
region.

Angelico asserts that he resigned from St. Luke's because
the hospital willfully failed to provide him with competent
surgical support and that he was therefore constructively
terminated. He further contends that the hospital
defendants had a sufficient share of the relevant market to
control it and that they conspired to eliminate him as a
competitor through "various predatory acts," including
circulating defamatory remarks regarding his interpersonal
and patient care skills. Angelico claims that his courtesy
privileges at Lehigh Valley were improperly terminated as a
part of this conspiracy and that he has now been
"blackballed" by the three hospitals.

Angelico sued the three hospitals and two practice
groups, alleging that they had violated the Sherman Act by
conspiring to eliminate him as a competitor. Specifically, he
claims that the hospital defendants engaged in exclusive
dealing and a group boycott in violation of section 1 of the
Sherman Act, 15 U.S.C. S 1, and that they control a
dominant (monopoly) share of the market in violation of
section 2 of the Sherman Act, 15 U.S.C. S 2. He seeks treble

                               4
damages under section 4 of the Clayton Act, 15 U.S.C. S 15.
Angelico also argues that the attorney defendants violated
his constitutional rights through their use of the state
subpoena process and that the District Court improperly
assessed attorney's fees against him.

The District Court dismissed Angelico's claims against
the attorney defendants and granted the attorney
defendants' motion for sanctions. See Angelico v. Lehigh
Valley Hosp., Inc., No. Civ.A. 96-2861, 1996 WL 524112
(E.D. Pa. Sept. 13, 1996) ("Angelico I"). On Angelico's
antitrust claims, the District Court granted a motion by the
hospital defendants for limited discovery on the issues of
antitrust standing and antitrust injury. Following discovery,
the court granted the hospital defendants summary
judgment on the antitrust claims, holding that Angelico had
failed to establish standing to pursue them. See Angelico v.
Lehigh Valley Hosp., Inc., 984 F. Supp. 308 (E.D. Pa. 1997)
("Angelico II").

The District Court noted that Angelico suffered significant
lost income but held that "an injury to Dr. Angelico
personally does not confer standing upon him without a
showing that his absence from the relevant product and
geographic markets injured competition and/or the
consumers of cardiothoracic surgical services in these
markets." Id. at 313. Focusing on the effect of Angelico's
removal on the market, the court found "no evidence" that
there were any fewer competing surgeons or that the
quality of cardiothoracic care had been reduced by his
absence, see id., and "insufficient evidence of a negative
impact on price." Id. at 314. Based on these findings, the
District Court concluded that Angelico had not "suffered
the type of injury that the antitrust laws were designed to
prevent . . . [or] that Dr. Angelico is the most efficient
enforcer of those laws." Id.

On appeal, Angelico argues that the District Court erred
by: (1) holding that he failed to establish antitrust standing
because he could not show an effect on the prices, quantity
or quality in the relevant market; (2) failing to declare that
the hospital defendants' acts were illegal "per se"; (3)
holding that he failed to state a section 1983 claim upon
which relief could be granted against the attorneys for

                               5
Lehigh Valley, and (4) imposing sanctions against him
without holding a hearing. We have plenary review of the
antitrust standing question, see McCarthy v. Recordex
Serv., Inc., 80 F.3d 842, 847 (3d Cir. 1996), and of the
summary judgment on Angelico's claims against the
hospital defendants. See Bixler v. Central Pa. Teamsters
Health & Welfare Fund, 12 F.3d 1292, 1297 (3d Cir. 1993).
We review an assessment of attorney's fees for abuse of
discretion if the court applied the correct legal standard.
See In re Tutu Wells Contamination Litig., 120 F.3d 368, 387
(3d Cir. 1997).

II. The Antitrust claims

In this case, we must distinguish the antitrust injury that
is required for a plaintiff to have standing to bring an
antitrust claim from the anticompetitive market effect
element of a claim under section 1, which is also generally
referred to as "antitrust injury."

A. Antitrust Standing

Section 4 of the Clayton Act, 15 U.S.C. S 15, provides
that "any person who shall be injured in his business or
property by reason of anything forbidden in the antitrust
laws may sue therefor in any district court of the United
States . . . without respect to the amount in controversy,
and shall recover threefold the damages by him sustained,
and the cost of suit, including a reasonable attorney's fee."
Id. Antitrust standing, however, is narrower than the
statute's wording indicates. See Associated Gen. Contractors
of Cal. v. California State Council of Carpenters , 459 U.S.
519, 103 S. Ct. 897 (1983) ("AGC"); II Phillip E. Areeda &
Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust
Principles and Their Application P 360, at 192 (rev. ed. 1995)
("The limitations on antitrust standing are only hinted at by
the simple and apparently broad language of S4 of the
Clayton Act.").

An antitrust injury is an " `injury of the type the antitrust
laws were intended to prevent and that flows from that
which makes the defendants' acts unlawful.' " Cargill, Inc. v.
Monfort, Inc., 479 U.S. 104, 109, 107 S. Ct. 484, 489 (1986)
(citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S.

                               6
477, 489, 97 S. Ct. 690, 697 (1977)); see also In re Lower
Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144, 1163 n.9
(3d Cir. 1993) (standing analysis involves consideration of
"the nexus between the antitrust violation and the
plaintiff 's harm" and "whether the harm alleged is of the
type for which Congress provides a remedy"). The focus is
broader than the injury suffered by the potential plaintiff.
Although a showing of antitrust injury is necessary, it is
"not always sufficient[ ] to establish standing under
[section] 4, because a party may have suffered antitrust
injury but may not be a proper plaintiff under [section] 4
for other reasons." Cargill, 479 U.S. at 110 n.5, 107 S. Ct.
at 489 n.5.

Drawing on AGC, we have stated the factors to be
employed in a standing analysis under section 4 of the
Clayton Act. These are:

       (1) the causal connection between the antitrust
       violation and the harm to the plaintiff and the intent by
       the defendant to cause that harm, with neither factor
       alone conferring standing; (2) whether the plaintiff 's
       alleged injury is of the type for which the antitrust laws
       were intended to provide redress; (3) the directness of
       the injury, which addresses the concerns that liberal
       application of standing principles might produce
       speculative claims; (4) the existence of more direct
       victims of the alleged antitrust violations; and (5) the
       potential for duplicative recovery or complex
       apportionment of damages.

In re Lower Lake Erie Iron, 998 F.2d at 1165-66 (citing
AGC, 459 U.S. at 545, 103 S. Ct. at 912). We hold that,
applying these factors, Angelico has standing to challenge
the alleged conspiracy, boycott and monopoly.

First, because no discovery was allowed on the issue, we
must assume Angelico's allegation that the defendants
acted in concert and with an anticompetitive motive, i.e.,
conspired, is true. Following this assumption, Angelico's
harm clearly resulted from the conspiracy that prevented
him from competing in the market and thereby earning a
living. At this stage, therefore, the causal
connection/defendant intent element of the standing
analysis is satisfied.

                                7
Turning to the second element, whether Angelico's
alleged injury is of the type the antitrust laws were meant
to redress, we conclude that the injury he suffered, when
shut out of competition for anticompetitive reasons, is
indeed among those the antitrust laws were designed to
prevent. In Brader v. Allegheny General Hospital , 64 F.3d
869 (3d Cir. 1995), a doctor sued a hospital and individual
physicians, alleging similar claims under sections 1 and 2
of the Sherman Act. The district court dismissed the
claims, and we reversed, holding that Brader, as a potential
competitor shut out of a market by a purported group
boycott, had alleged the type of injury protected by the
antitrust laws. We stated: "the type of injury alleged by
Brader (the loss of income due to an inability to practice in
the relevant market area) is directly related to the illegal
activity in which the defendant allegedly engaged: a
conspiracy to exclude Brader from the relevant market." Id.
at 877.1 Angelico, like Brader, alleges a concerted effort to
exclude him from the market for cardiothoracic surgery and
his injury flows directly from this action. See In re Lower
Lake Erie, 998 F.2d at 1164 n. 14 ("Because the [plaintiffs]
themselves were direct competitors of the [defendants] and
because they were injured by the conspiracy's goal to
preclude them from market entry, no standing problem is
posed by their quest for damages."); Fuentes v. South Hills
_________________________________________________________________

1. Appellees assert that only persons with the same interests as
consumers have standing under the antitrust laws and cite Brunswick
Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488 (1977), in which the
Supreme Court stated:

       The antitrust laws . . . were enacted for the protection of
competition
       not competitors . . . . The injury should reflect the
anticompetitive
       effect either of the violation or of anticompetitive acts made
possible
       by the violation. It should, in short, be the type of loss that the
       claimed violations . . . would be likely to cause.

429 U.S. 477, 488-89, 97 S. Ct. 690, 697 (internal quotes omitted)
(emphasis added). Nevertheless, the fact that the antitrust laws are
intended to protect competition rather than competitors does not mean
that a competitor is never a proper antitrust plaintiff. Indeed,
protecting
a competitor's ability to compete from a conspiracy, the sole purpose of
which is to decrease competition by eliminating that competitor, is
clearly in the interest of competition.

                               8
Cardiology, 946 F.2d 196, 202 (3d Cir. 1991) (not
addressing standing directly, but noting that similar
allegations by a doctor were sufficient to state a claim and
to avoid a motion to dismiss).

Angelico also satisfies the third, fourth andfifth elements
of the AGC standing analysis. The injury to Angelico from
the assumed conspiracy is clearly direct (and substantial).
Angelico's injury is the direct result of the alleged
conspiracy. In contrast, the harm to consumers is less
direct because it will only arise from higher costs or poorer
treatment that result from the removal of a strong
competitor from the market. A consumer would be highly
unlikely to sue for a loss of this type. Finally, there is no
potential for duplicative recovery or complex apportionment
of damages, see, e.g., Illinois Brick Co. v. Illinois, 431 U.S.
720, 97 S. Ct. 2061 (1977), because Angelico's injury has
not been passed along to others.

In sum, we hold that Angelico has standing. This is not
a case, however, in which we grant standing to a competitor
who was simply harmed by strong competition. Rather,
Angelico has asserted facts indicating that he was harmed
by a conspiracy with an illegal anticompetitive intent. He
has standing because he has asserted an injury of "the type
the antitrust laws were designed to prevent" flowing from
"that which makes the defendants' acts unlawful." Cargill,
479 U.S. at 109, 107 S. Ct. at 489. Because the District
Court's determination was based on its premise that
Angelico did not have standing, we must remand the cause.2

B. Anticompetitive market effect

Section 1 of the Sherman Act, 15 U.S.C. S 1, prohibits
"contracts, combinations or conspiracies `in restraint of
trade.' " City of Pittsburgh v. West Penn Power Co., 147 F.3d
_________________________________________________________________

2. The District Court erred by incorporating the issue of anticompetitive
market effect into its standing analysis, confusing antitrust injury with
an element of a claim under section 1 of the Sherman Act, 15 U.S.C. S 1,
which prohibits "contracts, combinations or conspiracies `in restraint of
trade.' " The court's approach may have been the result of the similar
"antitrust injury" label which is applied to the injury component of
antitrust standing analysis and to the marketplace harm element under
section 1.

                               9
256, 267 (3d Cir. 1998). To establish a section 1 claim
under the rule of reason test,3 plaintiffs must prove,

       (1) that the defendants contracted, combined, or
       conspired among each other; (2) that the combination
 953<!>or conspiracy produced adverse, anti-competitive

       effects within relevant product and geographic
       markets; (3) that the objects of and the conduct
       pursuant to that contract or conspiracy were illegal;
       and (4) that the plaintiffs were injured as a proximate
       result of that conspiracy.

Tunis Bros., 952 F.2d at 722 (citations omitted). The second
element may be satisfied in two ways:

       The plaintiff may satisfy this burden by proving the
       existence of actual anticompetitive effects, such as
       reduction of output, increase in price, or deterioration
       in quality of goods and services. Due to the difficulty of
       isolating the market effects of the challenged conduct,
       however, such proof is often impossible to make.
_________________________________________________________________

3. We reject Angelico's assertion (citing Klors, Inc. v. Broadway-Hale
Stores, Inc., 359 U.S. 207, 212 (1959)) that the hospital defendants' acts
should be held illegal per se. Courts follow one of two lines of analysis
to assess the validity of section 1 claims. See Arizona v. Maricopa County
Med. Soc'y, 457 U.S. 332, 342-47, 102 S. Ct. 2466, 2472-74 (1982). The
first, "rule of reason" analysis, applies in most cases under this
section,
while the second, "per se" analysis, applies only to "agreements whose
nature and necessary effect are so plainly anticompetitive that no
elaborate study of the industry is needed to establish their illegality."
National Soc'y of Prof. Eng'rs v. United States, 435 U.S. 679, 692, 98 S.
Ct. 1355, 1365 (1978).

Group boycotts or concerted refusals to deal are not always per se
violations of the Sherman Act; rather, the analysis turns on the facial
effects of the challenged practice. See Northwest Wholesale Stationers,
Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 105 S. Ct. 2613
(1985). Similar cases involving medical professionals have utilized the
"rule of reason" analysis. See Betkerur v. Aulthman Hosp. Ass'n, 78 F.3d
1079, 1088-93 & n. 9 (6th Cir. 1996) (discussing and rejecting
application of per se analysis to a doctor's claims under section 1 and
citing, in the footnote, Lie v. St. Joseph Hosp., 964 F.2d 567, 570 (6th
Cir.1992), and other cases holding that rule of reason analysis is
normally applied to claims by physicians in the position of Angelico). We
see no reason to depart from this approach.

                               10
       Accordingly, the courts allow proof of the defendant's
       "market power" instead. Market power--the ability to
       raise prices above those that would prevail in a
       competitive market--is essentially a " `surrogate for
       detrimental effects.' "

Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1367 (3d
Cir. 1996) (citations omitted); see also VII Phillip E. Areeda,
Antitrust Law: An Analysis of Antitrust Principles and Their
Application P 1511, at 429 (1986).

Although the District Court considered Angelico's
proffered evidence of an actual anticompetitive market
effect, we will not address that evidence because it is
appropriate that the District Court reconsider it within the
legal framework we have outlined.4 This will give the court
the opportunity to address Angelico's claim that he need
not show actual anticompetitive market effect in this
instance because of the Appellees' alleged market power.5
_________________________________________________________________

4. We note in this regard that Angelico's counsel conceded at oral
argument that he did not need further discovery into the element of
marketplace harm.

We likewise decline the hospital defendants' suggestion that we affirm
the District Court's holding on the ground that Angelico failed to
properly define or prove the relevant product and geographic markets
because the District Court did not address the issue. See Angelico II, 984
F. Supp. at 313 (assuming for the purposes of the limited motion for
summary judgment that the relevant product market was "cardiothoracic
surgical services" and that the relevant geographic market was "the
greater Lehigh Valley consisting of Carbon, Monroe, Lehigh,
Northampton and Schuylkill Counties").

5. Moreover, a finding of no anticompetitive market effect would not
suffice to dispose of Angelico's claim under section 2 of the Sherman Act.
See Mahone v. Addicks Util. Dist., 836 F.2d 921, 939 (5th Cir. 1988)
("[P]roving an injury to competition is not an element of a
monopolization-based antitrust claim."). It is sufficient to note that it
remains for the District Court to further assess these issues at the
summary judgment stage. See Brader, 64 F.3d at 876 ("[T]he adequacy
of a physician's contentions regarding the effect on competition is
typically resolved after discovery, either on summary judgment or after
trial.").

                               11
III. The section 1983 claim

Angelico asserts that the District Court erred by holding
that he failed to state a claim upon which relief could be
granted against the attorney defendants under section
1983. This claim arises out of the litigation of a related
state court suit that was resolved during the course of this
litigation. Geoffrey Toonder, a cardiothoracic surgeon, sued
Lehigh Valley Hospital, claiming that it improperly denied
Toonder an "active manpower slot" that would have been
filled by Angelico. See Toonder v. Lehigh Valley Hosp., No.
Civ.A. 94-E-18 (Pa. Ct. of Common Pleas May 31, 1995)
[the "Toonder litigation"]. Toonder was represented by the
same attorneys who represent Angelico. Lehigh Valley,
through its attorneys -- defendants Peters and hisfirm,
Post & Schell, P.C. -- subpoenaed various members of St.
Luke's staff, seeking information regarding Angelico's
resignation from that hospital. Angelico claims that,
through the use of the subpoenas, the attorney defendants
violated his constitutionally protected property and liberty
interests. The District Court dismissed these claims. See
Angelico I, 1996 WL 524112.

Under 42 U.S.C. S 1983, Angelico must show that the
attorney defendants acted under the color of state law and
denied him a federally protected constitutional or statutory
right. See Lugar v. Edmondson Oil Co., 457 U.S. 922, 930,
102 S. Ct. 2744, 2750 (1982); Jordan v. Fox, Rothschild,
O'Brien & Frankel, 20 F.3d 1250, 1264 (3d Cir. 1994).
Because Angelico sued private individuals for actions taken
in their roles as attorneys, he must point to some action
that is "fairly attributable" to the state. Lugar, 457 U.S. at
937, 102 S. Ct. at 2753. To do this, Angelico must show (1)
that the attorney defendants' acts were "the exercise of
some right or privilege created by the State or by a rule of
conduct imposed by the state or by a person for whom the
State is responsible" and (2) that the attorney defendants
may fairly be said to be state actors. Id.

A person may be found to be a state actor when (1) he is
a state official, (2) "he has acted together with or has
obtained significant aid from state officials," or (3) his
conduct is, by its nature, chargeable to the state. Id. at
937, 102 S. Ct. at 2753-54. The Supreme Court noted that

                                12
"[w]ithout a limit such as this, private parties could face
constitutional litigation whenever they seek to rely on some
state rule governing their interactions with the community
surrounding them." Id. at 937, 102 S. Ct. at 2754.

Attorneys performing their traditional functions will not
be considered state actors solely on the basis of their
position as officers of the court. See, e.g., Polk County v.
Dodson, 454 U.S. 312, 318, 102 S. Ct. 445, 450 (1981) ("[A]
lawyer representing a client is not, by virtue of being an
officer of the court, a state actor `under color of state law'
within the meaning of S 1983."); Barnard v. Young, 720
F.3d 1188, 1189 (10th Cir. 1983) ("[P]rivate attorneys, by
virtue of being officers of the court, do not act under color
of state law within the meaning of section 1983."). Angelico
asserts, however, that the attorneys acted as state officers
in issuing the subpoenas because the "state subpoena
procedures now empower the attorneys, as officers of the
state, to use subpoenas to seize property without a hearing
before a state court judge and without participation by the
sheriff." Appellant's Br. at 44. Angelico, however, offers no
authority to support this statement. Nor does Pennsylvania
law provide any indication that attorneys have been granted
elevated powers to use subpoenas.6
_________________________________________________________________

6. The Pennsylvania Rules of Procedure state:

       (a) A subpoena is an order of the court commanding a person to
       attend and testify at a particular time and place. It may also
require
       the person to produce documents or things which are under the
       possession, custody or control of that person.

       * * *

       (b) A subpoena may be used to command a person to attend and to
       produce documents or things only at

        (1) a trial or hearing in an action or proceeding pending in the
       court, or

        (2) the taking of a deposition in an action or proceeding pending
       in the court.

       (c) A subpoena may not be used to compel a person to appear or to
       produce documents or things ex parte before an attorney, a party or
       a representative of the party.

Pa. R. Civ. P. 234.1 (emphasis added).

                               13
As we said in Jordan, "[b]efore private persons can be
considered state actors for purposes of section 1983, the
state must significantly contribute to the constitutional
deprivation, e.g., authorizing its own officers to invoke the
force of law in aid of the private persons' request." 20 F.3d
at 1266. Angelico claims that by issuing a subpoena,
private attorneys use "the same compulsive powers of the
state." Appellant's Br. at 45. We disagree. In Jordan,
attorneys, on behalf of a client, entered a judgment by
confession and then executed on that judgment. See id. at
1264-67. We held that an "entry of the judgment is not a
state action involving the force of law to an extent sufficient
to hold that private persons become state actors." Id. at
1266. Then, focusing on the role of the sheriff, a state
official, in the execution of the judgment, we stated:

       a private individual who enlists the compulsive powers
       of the state to seize property by executing on a
       judgment without pre-deprivation notice or hearing
       acts under color of law and so may be held liable under
       section 1983 if his acts cause a state official to use the
       state's power of legal compulsion to deprive another of
       property.

Id. at 1267 (emphasis added).

In dismissing Angelico's claim, the District Court properly
applied Jordan by focusing on the distinction between the
potential for state involvement and actual state
involvement.

       Although plaintiff notes that there are potential legal
       consequences attached to failure to obey a subpoena
       which might ultimately involve invoking the assistance
       of state officials, such possibility serves only to
       highlight the difference between resorting to an
       available state procedure and actually using state
       officials to enforce or carry out that procedure. The
       potential for involving the coercive power of the state
       likewise exists when a judgment by confession is
       entered, yet . . . a private party is not converted into a
       state actor as long as the assistance of state officials
       remains merely a potential threat. It is only when, and
       if, such potential is realized that a private party may be

                                14
       converted into a state actor for purposes of satisfying
       the state action element of a S 1983 claim.

Angelico I, 1996 WL 524112, at *2. The court's analysis is
sound and consistent with the Supreme Court's analysis in
Lugar. We hold, therefore, that an attorney does not
become a state actor simply by employing the state's
subpoena laws. See Barnard, 720 F.3d at 1189 ("If an
attorney does not become a state actor merely by virtue of
instigating state court litigation, then the attorney does not
become a state actor merely by employing state authorized
subpoena power." (citations omitted)). Angelico's section
1983 claim against the attorney defendants therefore fails.7

IV. Sanctions

In the same order in which it dismissed the section 1983
claims, the District Court agreed to award sanctions to the
attorney defendants in the form of attorney's fees. See
Angelico I, 1996 WL 524112. In his complaint, Angelico
stated his antitrust claims against "all defendants," thereby
including the attorney defendants as defendants to the
antitrust claims. Angelico declined to dismiss the charges
against them despite their verbal request that he do so.
Only after the attorney defendants filed their motion to
dismiss, addressing the antitrust claims, did Angelico
voluntarily dismiss these claims. Angelico's counsel then
informed the attorney defendants that the antitrust claims
had not been intentionally asserted against them. Following
a motion for sanctions and the filing of an affidavit of costs
_________________________________________________________________

7. Because Angelico has not demonstrated that the attorney defendants
were state actors, we need not address the balance of the section 1983
analysis. We also reject Angelico's claim that his due process rights were
violated by the attorney defendants' actions in regards to the subpoenas.
Finally, we reject Angelico's allegation that the District Court engaged
in
improper fact finding. This allegation apparently refers to the District
Court's understanding that no actual state officials were called upon to
enforce the subpoenas in the Toonder litigation. However, the District
Court was entitled to take judicial notice of the facts of that decision.
See
Oneida Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414, 416 n.3
(3d Cir. 1988); 5A Charles A. Wright & Arthur R. Miller, Federal Practice
and Procedure S 1364, at 479 n.36 (2d ed. 1990).

                               15
by the defendants, a Motion to Vacate, Reconsider or
Certify Pursuant to 28 U.S.C. S 1292(b) by Angelico, and a
response thereto by the attorney defendants, the District
Court awarded $1,000 to attorney Peters for his costs in
preparing to defend the withdrawn antitrust claims against
him and his firm.8

Awarding attorney's fees as a means of sanctioning a
party is within the District Court's inherent power. See
Chambers v. NASCO, Inc., 501 U.S. 32, 45, 111 S. Ct. 2123,
2133 (1991). The District Court can assess attorney's fees
when a party has acted in bad faith. See Chambers, 501
U.S. at 45, 111 S. Ct. at 2133. Here the District Court
found that Angelico and his attorneys acted in bad faith by
failing to dismiss the antitrust claims against the attorney
defendants, by mischaracterizing the defendants' pleadings,
and by failing to inform the court of a significant change in
the Toonder litigation (its dismissal). See Angelico v. Lehigh
Valley Hosp., No. Civ.A.96-2861, Order (E.D. Pa. Nov. 1,
1996). The District Court applied the correct legal standard
to determine whether sanctions were in order and carefully
stated the acts by Angelico's counsel upon which the order
is based.9

Although, "like other sanctions, attorney's fees certainly
should not be assessed lightly or without fair notice and an
opportunity for a hearing on the record," Roadway Express,
Inc. v. Piper, 447 U.S. 752, 767, 100 S. Ct. 2455, 2464
(1980), we have not interpreted the "opportunity for a
hearing on the record" discussed by the Supreme Court to
require an evidentiary hearing in every case. See Rogal v.
_________________________________________________________________

8. The original decision stated that the court would award "modest
monetary sanctions" and required the attorney defendants to submit a
record of their costs. Upon receiving the submissions, the District Court
found that the costs were far greater than it had anticipated and elected
to award only the $1,000.

9. We reject Angelico's assertion that the attorney defendants should
have realized that they were not subject to the antitrust claims because
it implies that the nonfiling side should bear the burden of an allegedly
inadvertent pleading mistake. The attorney defendants requested that
the claims against them be dropped. The fact that the attorney
defendants did not specifically address the antitrust claims does not
serve as an escape hatch for the defendants.

                                16
American Broad. Cos., 74 F.3d 40, 44 (3d Cir. 1996); see
also G.J.B. & Assocs. v. Singleton, 913 F.2d 824, 830 (10th
Cir. 1990) (while counsel generally deserve an opportunity
to brief the issue, the imposition of sanctions does not
necessarily mandate an oral or evidentiary hearing). Rather,
the concept of due process is flexible and whether a hearing
is required depends upon the circumstances. See Rogal, 74
F.3d at 44. Application of this flexible standard is generally
left to the District Court's discretion. See Jones v.
Pittsburgh Nat'l Corp., 899 F.2d 1350, 1359 (3d Cir. 1990)
(noting that this approach "permits some cases to be
disposed of on the record").

Here, the District Court decided that further factfinding
was unnecessary. Appellant had both fair notice of the
charges and an opportunity to respond because the motion
for sanctions was made along with attorney defendants'
motion to dismiss. All of the acts by Angelico and his
counsel that were at issue were part of the record and
could be considered without an evidentiary hearing. We
find no abuse of discretion.10

V. Conclusion

We conclude that the District Court did not err by
dismissing the section 1983 claims against the attorney
defendants, and that it was well within its considerable
discretion when it imposed sanctions. Angelico, however,
has standing to assert his antitrust claims, and we will
remand the cause for further proceedings.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit
_________________________________________________________________

10. In addition, the District Court made additional findings of bad faith.
In choosing not to sanction Appellant for this other conduct, the court
doubtless took into account that it was already sanctioning him for the
antitrust claims.

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