Smilecare Dental Group v. Delta Dental Plan of California, Inc.

88 F.3d 780 65 USLW 2029 , 1996-2 Trade Cases P 71,464 , 97 Cal. Daily Op. Serv. 5071 , 96 Daily Journal D.A.R. 8154 SMILECARE DENTAL GROUP, Plaintiff-Appellant, v. DELTA DENTAL PLAN OF CALIFORNIA, INC., Defendant-Appellee. No. 94-56191. United States Court of Appeals, Ninth Circuit. Argued and Submitted March 4, 1996. Decided July 5, 1996. Maxwell M. Blecher, Blecher & Collins, Los Angeles, California, for plaintiff-appellant. Matthew L. Larrabee, Heller, Ehrman, White & McAuliffe, San Francisco, California, for defendant-appellee. Appeal from the United States District Court for the Central District of California; Richard A. Gadbois, Jr., District Judge, Presiding. D.C. No. CV-93-05437-RG. Before PREGERSON and T.G. NELSON, Circuit Judges, and LYNCH, * District Judge. T.G. NELSON, Circuit Judge: 1 SmileCare Dental Group ("SmileCare") and Delta Dental Plan of California, Inc. ("Delta Dental") are dental insurers offering health care plans to employers, labor unions, and individuals. Delta Dental offers a co-payment plan under which it pays participating dentists a portion of their fee and requires them in return to collect the remainder, or co-payment, from their patients…

SmileCare Dental Group (“SmileCare”) and Delta Dental Plan of California, Inc. (“Delta Dental”) are dental insurers offering health care plans to employers, labor unions, and individuals. Delta Dental offers a co-payment plan under which it pays participating dentists a portion of their fee and requires them in return to collect the remainder, or co-payment, from their patients at the time of service. SmileCare offers a supplemental plan which provides coverage for the co-payment. Delta Dental does not recognize co-payments made by supplemental in *782 surers as contractually valid, and deems participating dentists who accept such payments to be in breach of contract.

SmileCare appeals the district court’s dismissal for failure to state a claim, alleging that Delta Dental’s policy violates Section 2 of the Sherman Act, 15 U.S.C. § 2 , because it illegitimately restricts competition and is aimed at eliminating SmileCare’s supplemental dental plan. Amici Travelers Insurance Co., Prudential Insurance Co. of America and Golden Rule Insurance Co. appear in support of Delta Dental. We have jurisdiction pursuant to 28 U.S.C. § 1291 , and we affirm.

FACTS AND PROCEDURAL HISTORY

Both…

dissenting:

Because I believe that certain acts allegedly committed by Delta Dental, if proved, could constitute anticompetitive and predatory conduct within the meaning of the antitrust laws, I dissent.

The majority opinion holds that Delta’s conduct forcing SmileCare and other supplemental plans out of the dental insurance market cannot be interpreted as anticompeti-tive because Delta and SmileCare are not true competitors and because the business policy by which Delta justifies its allegedly anticompetitive conduct is legitimate. Based on the procedural posture of this appeal, I disagree.

On a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), facts alleged by the nonmoving party are presumed to be true. Everest & Jennings v. American Motorists Ins. Co., 23 F.3d 226, 228 (9th Cir.1994). The district court contravened this rule when it made the “finding”— without any evidence — that “SmileCare’s supplemental insurance plan does not compete with Delta’s primary plans.” Smilecare, 858 F.Supp. at 1039. The majority opinion now erroneously concludes that Delta and SmileCare are not true competitors based solely on the district court’s “finding.”

Both the…