Bankers Ins. Co. v. Florida Residential Property and Cas. Joint Underwriting Ass'n

• Decision Date: 26 March 1998
• Docket Number: No. 97-2334,97-2334
• Citation: 137 F.3d 1293
• Parties: 11 Fla. L. Weekly Fed. C 1170 BANKERS INSURANCE CO., Plaintiff-Appellant, v. FLORIDA RESIDENTIAL PROPERTY AND CASUALTY JOINT UNDERWRITING ASSOCIATION, James W. Newman, Jr., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1293

137 F.3d 1293

11 Fla. L. Weekly Fed. C 1170

BANKERS INSURANCE CO., Plaintiff-Appellant, v. FLORIDA RESIDENTIAL PROPERTY AND CASUALTY JOINT UNDERWRITING ASSOCIATION, James W. Newman, Jr., et al Defendants-Appellees.

No. 97-2334.

United States Court of Appeals Eleventh Circuit.

March 26, 1998.

John F. Rudy, II, Richard K. Fueyo, Bush, Ross, Gardner, Warren & Rudy, P.A., Tampa, FL, for Plaintiff-Appellant.

A. Margaret Hesford, Colodny, Fass & Talenfeld, P.A., Ft. Lauderdale, FL, for Florida Residential Property & Cas. Joint Underwriting Ass'n.

Herbert T. Schwartz, Crowley & Douglas, Houston, TX, for Defendants-Appellees.

Appeal from the United States District Court for the Middle District of Florida.

Before COX and CARNES, Circuit Judges, and FAY, Senior Circuit Judge.

PER CURIAM:

Bankers Insurance Company sued the Florida Residential Property and Casualty Joint Underwriting Association (the Association) and several of its officers and counsel, alleging a conspiracy to restrain trade in violation of federal and Florida antitrust law. The district court granted the Association judgment on the pleadings. Bankers appeals, and we affirm.

I. Background

Florida's legislature reacted to Florida's post-Hurricane Andrew insurance crisis by creating an involuntary association of all Florida residential-property insurers. See Fla. Stat. § 627.351(6)(a). This association, the Florida Residential Property and Casualty Joint Underwriting Association, is directed to write policies for citizens who are unable to obtain property and casualty insurance on the "voluntary" insurance market. Id. The insurers required to participate in the Association make up the Association's losses pro rata, according to each insurer's market share. See id. § 627.351(6)(b)(3).

The Association is authorized to contract for the servicing of policies it has written. See Fla. Stat. § 627.351(6)(c). Bankers, a Florida insurer, provided a substantial part of these services from the Association's inception in 1993. In 1995, the Association announced competitive bidding for servicing contracts. The Association ultimately accepted three of the ten bids; Bankers was one of the disappointed bidders. Bankers alleges that the rejection of its bid was unjustifiable because the Association revised bid standards in mid-review and because the Association disregarded the preferences of the independent insurance agents who sell the Association's policies.

After Bankers' bid was refused, Bankers pursued its administrative remedies. When those failed, it sued the Association and the committee that controlled the bidding process for violations of the Sherman Antitrust Act and Florida Antitrust Act of 1980, Fla. Stat. § 542.15 et seq. Bankers makes no monopoly- or monopsony-related claims under § 2 of the Sherman Antitrust Act; it claims only that the Association and the four individual defendants conspired to restrain trade in violation of § 1 of that Act.

The district court granted the defendants judgment on the pleadings. It reasoned that the Association was protected by the Parker doctrine, see Parker v. Brown, ¹ which excludes from the Sherman Act's scope anticompetitive conduct by a state as sovereign, or by state political subdivisions under certain circumstances. Alternatively, the district court ruled that the Association and its agents could not conspire to restrain trade as a matter of law under the doctrine of Copperweld Corp. v. Independence Tube Co. ² because they lack the requisite diversity of interests. Bankers appeals. It contends that the district court erred in treating the Association as a political subdivision of the state and in viewing the Association as a single entity incapable of conspiring with itself. ³ We review the district court's grant of judgment on the pleadings de novo. See Slagle v. ITT Hartford, 102 F.3d 494, 497 (11th Cir.1996).

II. Discussion

Judgment on the pleadings is appropriate when material facts are not in dispute and judgment can be rendered by looking at the substance of the pleadings and any judicially noticed facts. See id.; Hebert Abstract Co. v. Touchstone Properties, Ltd., 914 F.2d 74, 76 (5th Cir.1990). For these purposes, we accept the facts alleged in the complaint as true and draw all inferences that favor the nonmovant, here Bankers. See Slagle, 102 F.3d at 497.

A. Ability to Conspire

Purely unilateral action does not violate § 1 of the Sherman Antitrust Act; therefore, agents and employees of a single entity cannot conspire to restrain trade, as a matter of law. See Tiftarea Shopper, Inc. v. Georgia Shopper, Inc., 786 F.2d 1115, 1118 (11th Cir.1986); see also Copperweld, 467 U.S. at 769, 104 S.Ct. at 2740-41. The district court thus correctly granted judgment in favor of the four individual defendants. The complaint alleges that the individual defendants are the executive director, counsel, and director of operations of the Association. As officers and counsel of the Association, they are its agents and submitted to its control in all matters relating to the Association. Their interests are, therefore, to that extent aligned, and the "plurality of persons" needed for a § 1 violation is missing. See Copperweld, 467 U.S. at 769, 104 S.Ct. at 2740-41. We need not address whether a different conclusion would be appropriate if the individual defendants also represented other interests, cf. St. Joseph's Hosp., Inc. v. Hospital Corp. of Am., 795 F.2d 948, 956 (11th Cir.1986), because the complaint contains no such allegations.

The question for the Association itself is more difficult. As Bankers argues, associations differ from corporations or other unitary entities enough that they may sometimes fall outside this intraenterprise conspiracy rule. See Chicago Prof'l Sports, Ltd. v. National Basketball Ass'n, 95 F.3d 593, 598-99 (7th Cir.1996). We decline to reach this issue, however, because in any event the Association is entitled to state action immunity, as discussed below.

B. State Action Immunity

Out of federal deference to state sovereignty, states are immune from federal antitrust law for their actions as sovereign. Parker v. Brown, 317 U.S. 341, 351-53, 63 S.Ct. 307, 314, 87 L.Ed. 315 (1943). Three rules limit this immunity, according to the antitrust defendant's status. See Crosby v. Hospital Auth., 93 F.3d 1515, 1521-22 (11th Cir.1996), cert. denied, --- U.S. ----, 117 S.Ct. 1246, 137 L.Ed.2d 328 (1997). First, state legislatures and courts are completely immune from antitrust liability. Hoover v. Ronwin, 466 U.S. 558, 569, 104 S.Ct. 1989, 1995, 80 L.Ed.2d 590 (1984). Second, political subdivisions such as municipalities are immune from antitrust liability if their anticompetitive acts follow a "clearly articulated and affirmatively expressed state policy." See Town of Hallie v. City of Eau Claire, 471 U.S. 34, 44, 105 S.Ct. 1713, 1719, 85 L.Ed.2d 24 (1985) (quoting City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 415, 98 S.Ct. 1123, 1138, 55 L.Ed.2d 364 (1978) (opinion of Brennan, J.)); Crosby, 93 F.3d at 1522-23. Third, private actors benefit from state immunity only if they act pursuant to a "clearly articulated and affirmatively expressed state policy" and the state actively supervises the anticompetitive conduct. Southern Motor Carriers Rate Conference v. United States, 471 U.S. 48, 57, 105 S.Ct. 1721, 1727, 85 L.Ed.2d 36 (1985); California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 104, 100 S.Ct. 937, 943, 63 L.Ed.2d 233 (1980). The central dispute in this case is into which category--political subdivision or private actor--the Association falls, and thus whether the Association must show active state supervision to obtain Parker immunity.

No simply stated rule draws the line between the two categories. Cases before the Supreme Court have concerned only municipalities, the paradigm of a political subdivision. See City of Columbia v. Omni Outdoor Advertising, 499 U.S. 365, 111 S.Ct. 1344, 113 L.Ed.2d 382 (1991); Town of Hallie, 471 U.S. at 34, 105 S.Ct. at 1713. This circuit, however, has found hospital and transit authorities to be political subdivisions. See, e.g., Crosby, 93 F.3d at 1523-26; FTC v. Hospital Bd. of Dirs., 38 F.3d 1184, 1188 (11th Cir.1994); Askew v. DCH Reg'l Health Care Auth., 995 F.2d 1033, 1038 (11th Cir.1993); Bolt v. Halifax Hosp. Med. Ctr., 980 F.2d 1381, 1386 (11th Cir.1993); Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1460-62 (11th Cir.1991); Commuter Transp. Sys., Inc. v. Hillsborough County Aviation Auth., 801 F.2d 1286, 1290 (11th Cir.1986). Other circuits have conferred political-subdivision status on a state bar organization, Hass v. Oregon State Bar, 883 F.2d 1453, 1461 (9th Cir.1989), a transportation authority, Interface Group v. Massachusetts Port Auth., 816 F.2d 9, 13 (1st Cir.1987), and a rural electric cooperative, Fuchs v. Rural Elec. Convenience Coop., 858 F.2d 1210, 1217 (7th Cir.1988).

Each of these cases has focused on the government-like attributes of the defendant entity. Factors favoring political-subdivision treatment include open records, ⁴ tax exemption, ⁵ exercise of governmental functions, ⁶ lack of possibility of private profit, ⁷ and the composition of the entity's decisionmaking structure. See Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law p 212.7, at 208-10 (1997 Supp.). The presence or absence of attributes such as these tells us whether the nexus between the State and the entity is sufficiently strong that there is little real danger that the entity is involved in a private anticompetitive arrangement. See Crosby, 93 F.3d at 1524. The more public the entity looks, the less we worry that it represents purely private competitive interests, and the less need there is for active state supervision to ensure that the entity's anticompetitive actions are indeed state actions and not those of an alliance of interests that properly should be competing. See Town of...