Card v. National Life Ins. Co.
| Decision Date | 21 August 1979 |
| Docket Number | No. 78-1180,78-1180 |
| Court | U.S. Court of Appeals — Tenth Circuit |
| Parties | , 1979-2 Trade Cases 62,804 CA 79-3160 Robert W. CARD and R. W. Card & Associates, Inc., a Colorado Corporation, Plaintiffs-Appellants, v. NATIONAL LIFE INSURANCE COMPANY, a Vermont Corporation, Defendant-Appellee, Equity Services, Inc., a Vermont Corporation, Lawrence Leland and William Ryan, Defendants. |
Mary Lou Godbe, Salt Lake City, Utah (Alan E. Walcher, Ford G. Scalley, of Morgan, Scalley, Lunt & Kimble, Salt Lake City, Utah, Francis P. King and Robert A. Wherry, Jr., of Lentz, Evans & King, Denver, Colo., on the brief), for plaintiffs-appellants.
James E. Hautzinger, of Dawson, Nagel, Sherman & Howard, Denver, Colo. (Cassandra G. Sasso, of Dawson, Nagel, Sherman & Howard, Denver, Colo., on the brief), for defendant-appellee.
Before McWILLIAMS, DOYLE and McKAY, Circuit Judges.
The issue presented in this antitrust action by an insurance agent and his firm against the defendant-appellee life insurance company and others is whether the trial court erred in its construction and application of the McCarran-Ferguson 1 exception, the result of which was a holding that it was inapplicable to the facts of the case. The allegation in the complaint is that the insurance company, which acted in concert with Equity Services, Inc. and the National Life General Agents Association, refused to deal with the plaintiffs.
Robert W. Card had been associated with National Life Insurance Company since 1966, and had been authorized to solicit applications for life insurance and annuity contracts issued by National Life and had been authorized, in addition, to sell shares of mutual funds, etc., through an associated company, a broker-dealer called Equity Services, Inc.
The dispute came to a head when Card and his corporation, R. W. Card & Associates, sought to become a general agent for an insurance company other than National Life, which action was contrary to the contract between Card and National Life. The other insurance company was Provident Life & Accident Insurance Company. It was the signing of this general agent's contract with Provident Life that brought about the termination by National Life of Card's general agency with it. This occurred in February 1974.
The coconspirators in this alleged Sherman Act boycott are: National Life Insurance Company; an unnamed party, the General Agents Association of National Life, which consists of all of the general agents of that company; Lawrence Leland, an executive vice-president of National Life Insurance Company; and William Ryan, a general agent for National Life Insurance Company, who resides in San Francisco, California. It is said that other persons, firms and corporations participated in the unlawful combinations, conspiracies and agreements to boycott, coerce and intimidate.
The allegations in respect to § 1 of the Sherman Act are somewhat extensive, but they boil down to the conspiracy to terminate and the termination of Card's contract with National Life as a general agent.
The thread which runs through National Life's answer is that the company is exempt from the Sherman Act because it is an insurance company which is regulated by the laws of the several states, and is therefore covered by the exemption provisions of the McCarran-Ferguson Act and not subject to the exception set forth in that Act.
There seems to be little question but that Card, under his contract with National Life as a general agent, was precluded from entering into a general agency agreement with any other company. Card recognizes this, but makes the claim that his agreement with Provident was a personal producing general agent's contract which was limited in its terms and did not run contrary to his general agent contract with National Life.
The main contention of plaintiffs-appellants is that the McCarran Act, 15 U.S.C. §§ 1012-1013, does not exempt National Life's activity from the Sherman Act because the action taken by National Life in terminating the contract and refusing to deal with Card was in fact and in law an act which constituted boycott, coercion and intimidation.
The trial court gave careful consideration to this contention and concluded that in essence the action, if any, was in the nature of breach of contract, a suit which is subject to state court jurisdiction, but which falls short of being an act of boycott, coercion or intimidation. The district court decided this by applying the law on the subject, and particularly the exemption statutes referenced, 2 to the undisputed facts.
The thrust of the governing statute, as shown, is to remove the business of insurance from federal antitrust regulation. It provides that the Sherman Act, the Clayton Act and the Federal Trade Commission Act are not applicable to the business of insurance to the extent that such business is regulated by state law. Section 1013 carves out a single exception to nonapplicability of the antitrust laws, which is the agreement to boycott, coerce, intimidate, or acts of boycott, coercion or intimidation.
Additional facts regarded as important by the plaintiffs must be mentioned. Plaintiffs say that they are engaged in the business of providing insurance consulting services specializing in the use of insurance in corporate and estate planning. Card had been affiliated with the National Life Insurance Company of Vermont since 1964, and had held an Agent's Appointment Agreement with the said company since 1966. The most recent contract had been executed in 1971. Card states that he was regarded as an independent contractor and not an employee. Card, as an individual National Life Insurance Company is said to be one of the largest life insurance companies in the United States. It has a general agency system for marketing its insurance. The insurer appoints general agents who are responsible for actually merchandising products in the territory and also for training agents. The compensation is commissions.
assigned his rights to commissions to Robert W. Card and Associates, Inc. As a consultant he had acquired considerable recognition not only from National Life but also from other insurance companies, had received awards, was a member of the President's Club, etc.
The general agents of National Life have a corporation known as the General Agents Association, an entity said to be owned, controlled and financed by general agents with National Life. The general agents meet with the officers of National Life and the officers of National Life consult with the general agents about all major policy decisions. The agents are permitted to hold agent appointment agreements with competing insurance companies on a brokerage basis. The general agents are not allowed by National Life to hold any type of General agent's contract with a competing insurance company.
In January 1974, Card met with National Life's Vice-President, Lawrence W. Leland, and reached an informal agreement, whereby he would be allowed to place business with other companies so long as he gave fifty-one percent of the business to National Life.
In February 1974, Card met with Vice-President Johnston of Provident Life & Accident Insurance Company and negotiated a personal producing general agent's contract. He was told at that time that National Life would terminate him if he signed a general agent's contract with Provident. Such a contract was executed with Provident to be effective March 1, 1974.
Following some disagreements which Card had with one William Ryan, a San Francisco general agent who communicated to the home office that Card was contracting with companies other than National, and after having been told by one of Ryan's agents that "Ryan was out to get Card's contract with National Life terminated," Card contacted Leland at National Life, who said that his contract was not in jeopardy.
Following a meeting in Puerto Rico in April 1974, Leland was told by Ryan that Card had a general agent's contract with Provident. Leland verified this, and it was then that he terminated the Card contract.
Plaintiffs-Appellants make the following contentions:
First, that summary judgment should be sparingly used in antitrust litigation, and in essence had it been sparingly used, it would not have been granted here.
Second, that the trial court erred in concluding that plaintiffs had failed to allege or establish a Sherman Act boycott. Although some circuits have given the exception a very narrow interpretation which holds that the boycott exception should be limited to situations where agents or insurance companies have been blacklisted by combinations of insurance companies or agents, other circuits have taken a less restricted view. They have held that an antitrust action can be brought in cases amounting to boycott in accordance with the Sherman Act generally. Appellants say that under this latter approach they can recover. We must disagree.
In their brief appellants cite some factual material which they regard as particularly cogent in establishing the existence of a conspiracy having the object of boycotting Card and his associates, as follows: the policy of National Life prohibiting its agents from holding general agent's contracts with competing companies; participation of the general agents in the formulation of that policy; complaints by general agent William Ryan concerning Card's interest in representing insurers other than National Life; discussions among officers and general agents of National Life with Ryan at a General Agents' Association meeting immediately prior to the termination
of Card's contract; the revelation by Provident Life to National Life that Card had signed a general agent's contract; the refusal of National Life to deliver agreed upon contracts to Card at the behest of the general agents; motivation for...
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