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Liljeberg v. Health Services Acquisition Corp.

United States Supreme Court
486 U.S. 847 (1988)


Health Services Acquisition Corporation (Health Services) (plaintiff) was a Louisiana company in the business of operating hospitals. Health Services entered negotiations with business promoter John Liljeberg, Jr. (defendant) to purchase the rights to operate a hospital to be built in Kenner, Louisiana. While negotiating the deal with Health Services, Liljeberg was under the impression that he would remain an employee of St. Jude after the rights to operate the hospital were sold to Health Services. Liljeberg sold the business to Health Services, though Health Services correctly noted that there was no written support for Liljeberg’s claim of an agreement for his continued employment. At the same time as he was negotiating the deal with Health Services, Liljeberg was negotiating with Loyola University to build a hospital on land he would purchase from the university. This deal would be separate from the deal with Health Services and Liljeberg would only be able to build one of the hospitals due to a license from the state making the operation of such a hospital possible. Health Services sued Liljeberg in federal court, seeking a declaratory judgment regarding the alleged agreement to employ Liljeberg with St. Jude. The case was heard by Judge Robert Collins, who decided the case without a jury. Judge Collins ruled in Liljeberg’s favor, giving Liljeberg the opportunity to sell the hospital business to Loyola. The decision was upheld by a divided court of appeals. Ten months later, Health Services learned that Judge Collins sat on the Board of Trustees for Loyola University and he was aware that his ruling benefitted the university by allowing it to sell land to Liljeberg, though he only learned of this connection a few days after Judge Collins handed down his decision. Health Services moved to vacate the decision and Judge Collins denied the motion. Health Services appealed and the court of appeals remanded to a different judge on the district court to perform fact-finding regarding Health Service’s claims. The district court again denied Health Service’s motion to vacate. The court of appeals reversed. Liljeberg appealed.

Rule of Law


Holding and Reasoning (Stevens, J.)

Dissent (Rehnquist, C.J.)

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