In re Insurance Antitrust Litigation

• Decision Date: 10 October 1989
• Docket Number: No. MDL 767.,MDL 767.
• Citation: In re Insurance Antitrust Litigation, 723 F.Supp. 464 (N.D. Cal. 1989)
• Parties: In re INSURANCE ANTITRUST LITIGATION.
• Court: U.S. District Court — Northern District of California

723 F. Supp. 464

In re INSURANCE ANTITRUST LITIGATION.

No. MDL 767.

United States District Court, N.D. California.

October 10, 1989.

Edwin A. Heafey, Jr., Raoul D. Kennedy, Richard de Saint Phalle, Dolores A. Dalton, Crosby, Heafey, Roach & May, Oakland, Cal., for Administrative Liaison.

John G. Harkins, Jr., Eleanor Morris Illoway, Pepper, Hamilton & Scheetz, Philadelphia, Pa., for Aetna Cas. and Sur. Co.

Alan H. Silberman, Stuart Altschuler, Sonnenschein Carlin Nath & Rosenthal, Chicago, Ill., for Allstate Ins. Co.

Richard E. Sherwood, John G. Niles, O'Melveny & Myers, Los Angeles, Cal., for CIGNA Corp.

David W. Slaby, Robert L. Maines, Pettit & Martin, San Jose, Cal., for CNA Re (U.K.) Ltd.

Lewis A. Kaplan, Allan Blumstein, Maria Bainor, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, for Constitution Reinsurance Corp.

Martin Frederic Evans, Donald F. Donovan, Colby A. Smith, Debevoise & Plimpton, New York City, for Continental Reinsurance Corp. (U.K.) Ltd. and Unionamerica Ins. Co., Ltd.

Barry L. Bunshoft, Audbin K. Barthold, William J. Casey, Eric J. Sinrod, Hancock, Rothert & Bunshoft, San Francisco, Cal., for Edwards & Payne (Underwriting Agencies) Ltd. (sued herein as Edwards and Payne Management (U.A.), Ltd.)

Jerome N. Lerch, Martin W. Johnson, Wilson, Elser, Moskowitz, Edelman & Dicker, San Francisco, Cal., for Excess Ins. Co., Ltd. and Excess Ins. Group, Ltd.

Stephen M. Axinn, Shepard Goldfein, Michael L. Weiner, Skadden, Arps, Slate, Meagher & Flom, New York City, for General Reinsurance Corp.

Robert B. Green, Irwin, Kerr, Green, McDonald and Dexter, Baltimore, Md., for Thomas A. Greene & Co., Inc.

William A. Montgomery, Thomas P. Luning, William M. Hannay, Marci A. Eisenstein, Kevin D. Evans, John H. Ehrlich, Schiff, Hardin & Waite, Chicago, Ill., for Hartford Fire Ins. Co.

Bartlett H. McGuire, Michael P. Carroll, Douglas I. Brandon, Washington, D.C., for Insurance Services Office, Inc. Michael L. McCluggage, David L. Schiavone, James T. Nyeste, Wildman, Harrold, Allen & Dixon, Chicago, Ill., for Kemper Reinsurance London, Ltd.

David L. Foster, Barbara Hink, Anne Johnson, Wilkie, Farr & Gallagher, New York City, for Mercantile & General Reinsurance Co. of America.

Frederick B. Lacey, Molly S. Boast, Lawrence W. Pollack, Stephen H. Orel, LeBoeuf, Lamb, Leiby & Macrae, New York City, for Peter N. Miller; Robin A.G. Jackson; Merrett Underwriting Agency Management Ltd. (sued herein as Merrett Underwriting Agencies Mgt., Ltd.); Three Quays Underwriting Management Ltd. (sued herein as Three Quays Underwriting, Ltd.); Janson Green Management Ltd. (sued herein as Janson, Green, Ltd.); C.J.W. (Underwriting Agencies) Ltd. (sued herein as C.J. Warrilow-Hine & Butcher, Ltd.); Lambert Bros. (Underwriting Agencies) Ltd. (sued herein as J. Brian Hose & Others, Ltd.); Murray Lawrence & Partners (sued herein as Harvey Bowring, Ltd. — Murray Lawrence & Partners); D.P. Mann Underwriting Agency Ltd. (sued herein as D.P. Mann & Others (U.A.), Ltd.); Ballantyne, McKean & Sullivan Ltd. (sued herein as Ballantyne, McKean & Sullivan, Ltd.); R.K. Carvill & Co., Ltd.

Eugene F. Bannigan, M. Breeze McMennamin, Mary Corrarino, Lord Day & Lord, Barrett Smith, New York City, for North American Reinsurance Corp.

Barry Ostrager, Mark Cunha, Mary Kay Vyskocil, David A. Martland, Simpson, Thacher & Bartlett, New York City, for Oxford Syndicate Management Ltd. (sued herein as K.F. Adler & Others, (U.A.) Ltd. & Others, (U.A.) Ltd.)

John S. Kingdon, John DeQ. Briggs, John C. Pierce, James M. Burns, Howrey & Simon, Washington, D.C., for Prudential Reinsurance Co.

Robert M. Mitchell, Jeffery Anne Tatum, Adams, Duque & Hazeltine, San Francisco, Cal., for Reinsurance Ass'n of America.

Paul R. Haerle, James T. Hendrick, Kathleen McKinley, Nina M. Brooks, Thelen, Marrin, Johnson & Bridges, San Francisco, Cal., for Terra Nova Ins. Co., Ltd.

Philip H. Curtis, William H. Voth, Hughes, Hubbard & Reed, New York City, for Winterthur Swiss Ins. Co.

Thomas Greene, Deputy Atty. Gen., San Francisco, Cal., for plaintiff State of Cal.

Guido Saveri, John A. Kithas, Saveri & Saveri, San Francisco, Cal., for private plaintiffs.

Holly Lee Wiseman, Asst. Atty. Gen., Montgomery, Ala., for State of Ala.

Richard D. Monkman, Asst. Atty. Gen., Dept. of Law, Juneau, Alaska, for State of Alaska.

Alison J. Butterfield, Chief Counsel, Antitrust Div., Arizona Atty. Gen., Phoenix, Ariz., for State of Ariz.

James R. Lewis, Asst. Atty. Gen., Antitrust Unit, Denver, Colo., for State of Colo.

William M. Rubenstein, Asst. Atty. Gen., Hartford, Conn., for State of Conn.

Michael F. Brockmeyer, Asst. Atty. Gen. and Chief, Antitrust Div., Baltimore, Md., for State of Md.

George K. Weber, Asst. Atty. Gen., Chief, Antitrust Div., Boston, Mass., for State of Mass.

Robert C. Ward, Jr., Asst. Atty. Gen., Lansing, Mich., for State of Mich.

Lisa Tiegel, Sp. Asst. Atty. Gen., St. Paul, Minn., for State of Minn.

Joe R. Roberts, Asst. Atty. Gen., Helena, Mont., for State of Mont.

Laurel A. Price, Deputy Atty. Gen., Trenton, N.J., for State of N.J.

George Sampson, Asst. Atty. Gen., New York City, for State of N.Y.

Marc B. Bandman, Asst. Atty. Gen., Columbus, Ohio, for State of Ohio.

Eugene F. Waye, Deputy Atty. Gen., Harrisburg, Pa., for State of Pa.

James M. Beaulaurier, Asst. Atty. Gen., Seattle, Wash., for State of Wash.

Daniel Huck, Asst. Atty. Gen., Charleston, W.Va., for State of W. Va. Kevin J. O'Connor, Matthew J. Frank, Asst. Attys. Gen., Madison, Wis., for State of Wis.

Jerry S. Cohen, Cohen, Milstein & Hausfeld, Washington, D.C., for Anastasios Markos T/A Mun. Exxon.

Jeremiah F. Hallisey, Hallisey and Johnson, San Francisco, Cal., for Bay Harbor Park Homeowner's Ass'n, Inc.

Nicholas E. Chimicles, Denise Davis Schwartzman, Greenfield & Chimicles, Haverford, Pa., for Big D Building Supply Corp.

Robert A. Skirnick, Mark W. Gaffney, Kaplan, Kilsheimer & Foley, New York City, for Environmental Aviation Sciences, Inc.

Arnold Levin, Levin, Fishbein, Sedran & Berman, Philadelphia, Pa., for Carlisle Day Care Center, Inc.

Lawrence Walner, Lawrence Walner & Associates, Inc., Chicago, Ill., for P & J Casting Corp.

David Berger, Harold Berger, H. Laddie Montague, Jr., Howard Langer, Jeffrey Rockman, Berger & Montague, P.C., Philadelphia, Pa., for Henry L. Rosenfeld.

Stanley Nemser, David L. Weisberg, Wolf, Popper, Ross, Wolf & Jones, New York City, for Ace Check Cashing, Inc.

Judah I. Labovitz, Cohen, Shapiro, Poliser, Shiekman & Cohen, Philadelphia, Pa., for Discount Plywood Centers, Inc.

Warren Rubin, Gross, Sklar & Metzger, Philadelphia, Pa., for Acme Corrugated Box Co., Inc.

Robert M. Roseman, Mark S. Goldman, Rudolph, Seidner, Goldstein, Rochestie & Salmon, P.C., Philadelphia, Pa., for Bensalem Township Authority, et al.

J. Daniel Sagarin, Hurwitz & Sagarin, Milford, Conn., for Durawood, Inc.

Charles R. Van De Walle, Martin, Van De Walle, Guarino & Donohue, Great Neck, N.Y., for Keyboard Communications, Inc.

Louis M. Tarasi, Jr., Tarasi & Johnson P.C., Pittsburgh, Pa., for Carmella M. "Boots" Liberto Trading and R.J. Liberto, Inc.

Marvin Miller, Patrick E. Cafferty, Washlow, Chertow & Miller, Chicago, Ill., for Glabman Paramount Furniture Mfg., Co., Inc.

Daniel Berger, Bernstein, Litowitz, Berger & Grossman, New York City, for Jerry Grant Chemical Associates, Inc.

Zell Davis, Jr., McGee, Jordan, Shuey, Koons, Schroeder & Morris, P.A., Lake Worth, Fla., for Les-Ray Bobcat, Inc. and Kirlington Park, Inc.

                   REVISED MEMORANDUM OF
                                     DECISION AND ORDER
                  I.  INTRODUCTION ......................................................................... 468
                 II.  FACTUAL BACKGROUND ................................................................... 468
                III.  THE FEDERAL LAW VIOLATIONS CHARGED ................................................... 470
                 IV.  THE MOTIONS BEFORE THE COURT ......................................................... 471
                  V.  DISCUSSION ........................................................................... 472
                      A. The McCarran-Ferguson Act Defense ................................................. 472
                         (1) The Business of Insurance ..................................................... 473
                         (2) Regulation by the States ...................................................... 474
                         (3) The Exclusion of Boycott, Coercion, and Intimidation .......................... 475
                       B. State Action Immunity, Statutory Interpretation, and Causation ................... 479
                          (1) State Action Immunity ........................................................ 479
                              (a) State Policy ............................................................. 479
                              (b) State Supervision ........................................................ 480
                          (2) Statutory Interpretation ..................................................... 481
                          (3) Causation .................................................................... 482
                       C. Standing ......................................................................... 482
                       D. Global Conspiracy Claim .......................................................... 483
                       E. Subject Matter Jurisdiction and Comity ........................................... 484
                          (1) The Factual Background ....................................................... 485
                          (2) Subject Matter Jurisdiction .................................................. 486
                          (3) International Comity ......................................................... 487
                

              (a) Degree of Conflict With Foreign Law or Policy ......................... 487
                              (b) The Nationality or Allegiance of the Parties and the Locations
                                    of Principal Places of Business of Corporations ..................... 489
                              (c) The Extent to Which Enforcement by Either State

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