Atlantic & Pacific Ins. Co. v. Combined Insurance Co., 6848.

• Decision Date: 21 November 1962
• Docket Number: No. 6848.,6848.
• Citation: 312 F.2d 513
• Parties: ATLANTIC & PACIFIC INSURANCE COMPANY, a Colorado insurance corporation; and Hollis H. Marshall, Appellants, v. COMBINED INSURANCE COMPANY OF AMERICA, an Illinois insurance corporation, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

312 F.2d 513 (1962)

ATLANTIC & PACIFIC INSURANCE COMPANY, a Colorado insurance corporation; and Hollis H. Marshall, Appellants, v. COMBINED INSURANCE COMPANY OF AMERICA, an Illinois insurance corporation, Appellee.

No. 6848.

United States Court of Appeals Tenth Circuit.

November 21, 1962.

William A. Black, Denver, Colo., for appellants.

Russell P. Kramer, Denver, Colo. (Thomas T. Grimshaw, Denver, Colo., was with him on the brief), for appellee.

Before LEWIS, BREITENSTEIN and SETH, Circuit Judges.

SETH, Circuit Judge.

This is an action for unfair competition between insurance companies and relates to sales methods, forms of policies, and to lists of policyholders and renewal dates in possession of salesmen who changed employment from the appellee to the corporate appellant, allegedly through improper efforts of this appellant's officers. The appellee seeks money damages and injunctive relief. Jurisdiction is based on diversity of citizenship.

The trial court found that the corporate appellant and the individual appellant, who is one of its officers, wrongfully induced appellee's salesmen to quit and to come to work for the appellant corporation for the purpose of securing confidential information in their possession, and used it to sell comparable insurance to appellee's policyholders. The court considered this to be unfair competition and awarded damages. The court also found other wrongful acts on the part of appellants but stated there was no remedy for them in this action.

Appellants here assert that the trial court was in error in (1) admitting an exhibit (No. 28) which was a summary of certain of appellee's records; (2) in taking jurisdiction in spite of the McCarran Act (15 U.S.C.A., §§ 1011-1015); (3) in finding appellants guilty of conspiracy to commit civil contempt involving a state court proceeding; and (4) in its findings as to the pirating of appellee's employees to secure information and in awarding damages therefor.

As to the application of the McCarran Act (15 U.S.C.A. §§ 1011-1015), the appellants argue that it, together with certain Colorado statutes (Ch. 72-15-1 to 72-15-13, 1953 Colo.Rev.Stats.), removes unfair competition suits involving insurance companies from the jurisdiction of federal district courts in Colorado.

The United States Supreme Court, in United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440, held that the business of insurance was within the scope of the commerce clause of the United States Constitution, and consequently subject to federal regulation. As a result of this decision, the McCarran Act was passed with its general purpose stated in 15 U.S.C.A. § 1011, as follows:

"Congress declares that the continued regulation and taxation by the several States of the business of insurance is in the public interest, and that silence on the part of the Congress shall not be construed to impose any barrier to the regulation or taxation of such business by the several States."

The Supreme Court has commented on the passage of the Act in Maryland Casualty Co. v. Cushing, 347 U.S. 409, 74 S.Ct. 608, 98 L.Ed. 806, where it said:

"Suffice it to say that even the most cursory reading of the legislative history of this enactment makes it clear that its exclusive purpose was to counteract any adverse effect that this Court\'s decision in United States v. South-Eastern Underwriters Association, 322 U.S. 533 64 S.Ct. 1162, 88 L.Ed. 1440, might be found to have on State regulation of insurance. The House Report on the Bill as enacted is decisive:

"`It is not the intention of Congress in the enactment of this legislation to clothe the States with any power to regulate or tax the business of insurance beyond that which they had been held to possess prior to the decision of the United States Supreme Court in the Southeastern Underwriters Association case.\' H. R.Rep. No. 143, 79th Cong., 1st Sess. 3."

Appellants point out that the Colorado statutes on insurance do have provisions on unfair competition (§§ 72-15-1 to 72-15-13, 1953 Colo.Rev.Stats.). These provide for hearings to be initiated by the state insurance commissioner, with appeal therefrom to the Colorado courts. Appellant argues that these statutes provide an exclusive remedy for appellee and further that only the Colorado officials and Colorado courts on appeal have jurisdiction. The McCarran Act serves to limit the authority of federal regulatory agencies as to practices in the insurance business in the face of state acts and in the absence of specific federal law (Federal Trade Comm. v. National Casualty Co., 357 U.S. 560, 78 S.Ct. 1260, 2 L.Ed.2d...