Fischer, Spuhl, Herzwurm & Associates, Inc. v. Forrest T. Jones & Co., 60720

• Decision Date: 11 September 1979
• Docket Number: No. 60720,60720
• Citation: 586 S.W.2d 310
• Court: Missouri Supreme Court
• Parties: 1979-2 Trade Cases P 62,924 FISCHER, SPUHL, HERZWURM & ASSOCIATES, INC., et al., Appellants, v. FORREST T. JONES & COMPANY, et al., Respondents.

Page 310

586 S.W.2d 310

1979-2 Trade Cases P 62,924

FISCHER, SPUHL, HERZWURM & ASSOCIATES, INC., et al., Appellants, v. FORREST T. JONES & COMPANY, et al., Respondents.

No. 60720.

Supreme Court of Missouri, En Banc.

Sept. 11, 1979.

Rehearings Denied Oct. 10, 1979.

Harvey M. Tettlebaum, Jefferson City, Theodore S. Schechter, Schechter & Zerman, Clayton, for appellants.

Cullen Coil, Carson, Monaco, Coil & Riley, Jefferson City, John T. Martin, William G. Zimmerman, Robert E. Northrip, Shook, Hardy & Bacon, Kansas City, Forrest T. Jones & Co., Inc., David A. Yarger, Woolsey & Yarger, Versailles, Alex Bartlett, Hendren & Andrae, Jefferson City, American Health & Life Ins., Veryl L. Riddle, John J. Hennelly, Jr., Lee H. Wagman, St. Louis, Robert J. Quigley, Eldon, New York Life & Health Ins., for respondents.

John D. Ashcroft, Atty. Gen., Roger Bern, Nanette K. Laughrey, Asst. Attys. Gen., Jefferson City, for amicus curiae.

SEILER, Judge.

This is an appeal in a suit wherein plaintiffs sought damages for lost commissions in the sale of insurance allegedly caused by defendants' acts in restraint of trade, claimed to be unlawful under both the former and new Missouri antitrust statutes, and for tortious interference with plaintiffs' business relations. The trial court held that the former antitrust law did not apply to the types of insurance involved in this case, that all activities of the insurance industry are exempt from the Missouri antitrust law of 1974 under § 416.041.2, RSMo 1978, and that plaintiffs failed to assert a cause of action for tortious interference with business relations. The trial court granted defendants' motion to dismiss the actions. Plaintiffs appealed and filed a motion to transfer the case prior to opinion from the court of appeals, western district, to this court under rule 83.06. We granted the motion to transfer because of the general interest and importance of the questions presented and we will treat the case as though here on original appeal. Mo.Const. art. V, § 10.

Appellants are insurance brokers who filed a petition in the circuit court of Miller County alleging that over the years respondents had violated § 416.010, RSMo 1969, of the former antitrust statute and § 416.031, RSMo 1978, of the new antitrust statute, by engaging in unlawful contracts, combinations, undertakings or conspiracies that constitute an unreasonable restraint of trade or commerce. Appellants also allege that respondents' activities constituted tortious interference with appellants' business relations. Respondents are as follows: Forrest T. Jones & Co., an insurance brokerage company; Missouri State Teachers Association (MSTA), a corporation organized to represent the interests of teaching and nonteaching personnel of elementary and secondary schools in Missouri; American Health and Life Insurance Co., Fidelity Security Life Insurance Co., and New York Life Insurance Co., past or present underwriters of group insurance coverage for teachers employed by Missouri school districts; Forrest T. Jones, Dorothy M. Jones, Richard F. Jones, and M. M. Morrison, officers and directors of Forrest T. Jones & Co.; J. A. Kinder, officer, and Everett Keith, former officer of MSTA; James E. Woodruff, licensed insurance agent and director of the MSTA Group Insurance Plan; and, Warren P. Gardner, officer and director of Fidelity Security Life Insurance Co.

Specifically, appellants allege in their petition, among other things, that respondent Forrest T. Jones & Co., had made gifts to and provided entertainment for persons in positions of authority with MSTA or its affiliated groups, that respondent Forrest T. Jones & Co. had entered into agreements with MSTA and its agents and school districts to withhold necessary statistical data, or to provide incomplete or false data, concerning MSTA members employed by particular school districts from potential competitors of Forrest T. Jones & Co., and that Forrest T. Jones & Co. entered into agreements with school districts pursuant to which districts could obtain group accident and health insurance only if they also purchased group life insurance. Appellants allege that Forrest T. Jones & Co. acted as agents of American Health and Life Insurance Co., Fidelity Security Life Insurance Co., and New York Life Insurance Co. in the above anticompetitive activities.

On appeal, appellants contend that the trial court improperly dismissed the action. Appellants submit that the former antitrust statute did apply to life, health and accident insurance, and that § 416.041.2 of the new statute does not exempt entire industries. Rather, appellants contend, § 416.041.2 of the new statute merely codifies the "state action" doctrine of federal antitrust law and exempts only specific anticompetitive activities and arrangements in fact expressly approved or regulated by the state. Appellants contend further that the alleged anticompetitive activities of the respondents were not expressly approved or regulated by the division of insurance and are therefore outside of the scope of the exemption granted in § 416.041.2. Moreover, appellants argue that they have stated a cause of action for respondents' tortious interference with appellants' business relations. Respondents answer that the former antitrust statute was limited in its application to activities related to products, commodities, articles or things and did not apply to insurance, except for the express inclusion of insurance of property against loss or damage by fire, lightning or storm in the statute. As to the new antitrust statute, respondents answer that the statutes relating to the regulation and supervision of the insurance industry are an exclusive and complete code. Accordingly, respondents submit, the insurance industry's activities are regulated by the state and therefore are exempt under § 416.041.2. Respondents also submit that the appellants' failure to allege the existence of a contract or a pre-existing business relationship is fatal to the claim of tortious interference with appellants' business relations. We will discuss these issues in the order that they are set out above.

The "old" antitrust statute, originally enacted in 1907, did not apply to restraints in trade occurring in connection with service activities. Almstead and Tyler, State Antitrust Laws: New Directions in Missouri, 39 Mo.L.Rev. 489, 489-90 (1974). The statute applied only to activities relating to products, commodities, articles and things. See §§ 416.010 through 416.040, RSMo 1969, and Bond, The Antitrust Laws of Missouri, 27 J.Mo.B. 61, 62 (1971). Section 416.040 of the old antitrust statute, however, expressly included insurance of property against loss or damage by fire, lightning or storm within the purview of the statute. The statute did not otherwise apply to services or other types of insurance, such as the life, health and accident insurance contracts involved in this case. The trial court correctly held that the old antitrust statute did not apply to the insurance contracts and activities which are the subject of this litigation.

Arguably in part because the old antitrust statute did not apply to service contracts, but whatever the reason, the General Assembly enacted the Missouri antitrust law of 1974 (the Act), §§ 416.011 to 416.161, RSMo 1978, with a much broader scope of application. See Almstead and Tyler, 39 Mo.L.Rev. at 490-91. The Act closely parallels provisions of the Sherman and Clayton Acts of federal antitrust law. Section 416.031.1 of the Act makes unlawful every contract, combination or conspiracy in restraint of trade or commerce, conduct which is prohibited by § 1 of the Sherman Act, 15 U.S.C. § 1 (1976). Section 416.031.2 of the Act makes unlawful monopolization, attempted monopolization, and conspiracy to monopolize trade or commerce, conduct which is prohibited by § 2 of the Sherman Act, 15 U.S.C. § 2 (1976). Section 416.031.3 of the Act makes unlawful specified acts that substantially lessen competition or tend to create a monopoly, conduct which is prohibited by § 3 of the Clayton Act, 15 U.S.C. § 14 (1976). Like the federal antitrust laws, the Act applies to "any individual, corporation, firm, partnership, incorporated or unincorporated association of any other legal or commercial entity", § 416.021(2), RSMo 1978, and "any economic activity involving or relating to any commodity or service." § 416.021(4), RSMo 1978.

The Act expressly exempts, with some qualifications, labor, agricultural and horticultural organizations in § 416.041.1, RSMo 1978, the same organizations expressly exempted from federal antitrust laws by § 6 of the Clayton Act, 15 U.S.C. § 17 (1976). In § 416.041.2, the Act exempts "activities or arrangements expressly approved or regulated by any regulatory body or officer acting under statutory authority of this state or of the United States." At issue is whether this provision is a codification of the "state action" doctrine of federal antitrust law, which exempts anticompetitive conduct which is required or approved by state law, or whether, as respondents contend, this provision exempts the insurance industry because its activities are regulated by state law.

The Act directs that its provisions "shall be construed in harmony with ruling judicial interpretations of comparable federal antitrust statutes." § 416.141, RSMo 1978. The legislature, through this section and the Act's substantive provisions based on federal antitrust laws, intended to provide a ready body of precedent for interpreting the law and a single standard of business conduct already known and acquiesced in by businesses in Missouri. See Almstead and Tyler, 39 Mo.L.Rev. at 519.

The United States Supreme Court has spoken clearly as to the construction to be given to exemptions to the federal antitrust laws and therefore provides guidance for the construction to be given to exemptions under the Act. In Abbott Laboratories v....