Manufacturers Life Ins. Co. v. Superior Court, S031022

CourtUnited States State Supreme Court (California)
Writing for the CourtBAXTER; LUCAS; MOSK
Citation10 Cal.4th 257,41 Cal.Rptr.2d 220
Parties, 895 P.2d 56, 1998-1 Trade Cases P 72,195 MANUFACTURERS LIFE INSURANCE COMPANY, et al., Petitioners, v. The SUPERIOR COURT of the City and County of San Francisco, Respondent. WEIL INSURANCE AGENCY, INC., Real Party in Interest. WEIL INSURANCE AGENCY, INC., Petitioner, v. The SUPERIOR COURT of the City and County of San Francisco, Respondent; MANUFACTURERS LIFE INSURANCE COMPANY, et al., Real Parties in Interest.
Docket NumberNo. S031022,S031022
Decision Date01 June 1995

Khourie, Crew & Jaeger, Townsend and Townsend Khourie and Crew, Eugene C. Crew, Daniel J. Furniss, Louise E. Ma, Timothy F. Perry, Amy Slater, Theodore T. Herhold and Paul F. Kirsch, San Francisco, for Petitioner and Real Party in Interest Weil Insurance Agency, Inc.

Daniel E. Lungren, Attorney General, Roderick E. Walston, Chief Assistant Attorney General, Sanford Gruskin and Thomas Greene, Assistant Attorneys General, Thomas P. Dove, Jesse W. Markham, Jr., Dave Stirling, Richard N. Light and Kathleen E. Foote, Deputy Attorneys General, Gil Garcetti, District Attorney (Los Angeles), Thomas A. Papageorge and Alan Yengoyan, Deputy District Attorneys, as Amici Curiae on behalf of Petitioner and Real Party in Interest Weil Insurance Agency, Inc.

James D. Biernat, Foster City, Howard, Rice, Nemerovski, Canady, Robertson & Falk, Jerome B. Falk, Jr., H. Joseph Escher III, Pauline E. Calande, Theresa M. Beiner, Sheppard, Mullin, Richter & Hampton, Dale E. Fredericks, Darryl M. Woo, San Francisco, Adams, Duque & Hazeltine, James L. Moak, David R. Shane, Ann Sparkman, Musick, Peeler & Garrett, R. Joseph De Briyn, Jon C. Cederberg, Los Angeles, Crosby, Heafy, Roach & May, Raoul D. Kennedy, Oakland, Weld, Freeland, Cooper & LeHocky, Mark LeHocky, Robert R. Verber, San Francisco, Peter E. Davis, San Ramon, Sidley & Austin, Peter I. Ostroff, Elroy H. Wolff, Munger, Tolles & Olson, Charles D. Siegal, Allison B. Stein, Los Angeles, Parcel, Mauro, Hultin & Spaanstra and Malcolm Wheeler, Denver, CO, for Petitioners and Real Parties in Interest Manufacturers Life Insurance Company, et al.

Buchalter, Nemer, Fields & Younger, Marcus M. Kaufman, Newport Beach, Hugh A. Linstrom, Los Angeles, Morrison & Foerster, James J. Garrett, Lori A. Schechter, Walnut Creek, Thelen, Marrin, Johnson & Bridges, Steven L. Hock, Hilary N. Rowen, Marta R. Pierpoint, San Francisco, Richard E. Barnsback and Philip E. Stano, Washington, DC, as Amici Curiae on behalf of Petitioners and Real Parties in Interest Manufacturers Life Insurance Company, et al.

No appearance for Respondent.

BAXTER, Justice.

We granted review in this matter to consider the holding of the Court of Appeal that the Unfair Insurance Practices Act (Ins.Code, § 790 et seq.) does not supersede or displace insurance-industry-related claims under the Cartwright Act (Bus. & Prof.Code, § 16720-16770) and/or the Unfair Competition Act (Bus. & Prof.Code, § 17200 et seq.) Simply stated, the issue is whether life insurance, which was not affected by Proposition 103, the 1988 initiative measure which expressly declares that other lines of insurance are subject to antitrust and unfair business practice laws (Ins.Code, § 1861.03, subd. (a)), is exempt from such laws.

We conclude that the decision of the Court of Appeal should be affirmed. Contrary to dictum in three decisions subsequent to Chicago Title Ins. Co. v. Great Western Financial Corp. (1968) 69 Cal.2d 305, 70 Cal.Rptr. 849, 444 P.2d 481 (Greenberg v. Equitable Life Assur. Society (1973) 34 Cal.App.3d 994, 999, fn. 2, 110 Cal.Rptr. 470; Liberty Transport, Inc. v. Harry W. Gorst Co. (1991) 229 Cal.App.3d 417, 280 Cal.Rptr. 159; Karlin v. Zalta (1984) 154 Cal.App.3d 953, 201 Cal.Rptr. 379), this court did not hold there that the Legislature had granted the insurance industry a general exemption from state antitrust and unfair business practices statutes. Rather, the Legislature intended that rights and remedies available under those statutes were to be cumulative to the powers the Legislature granted to the Insurance Commissioner to enjoin future unlawful acts and impose sanctions in the form of license and certificate suspension or revocation when a member of the industry violates any applicable statute, rule, or regulation. (See, e.g., Ins.Code, §§ 704, 704.5, 790.05, 790.07, 10433, 10435, 10450.6, 12900 et seq.)

I Background

These related petitions for writ of mandate are directed to several counts in the underlying superior court action by plaintiff Weil Insurance Agency, Inc. (Weil). The defendants are Manufacturers Life Insurance Company, other insurers, competing insurance brokers, trade associations, and an officer of one group of competing brokers (defendants). In the counts at issue here, Weil's complaint asserted statutory causes of action for violation of Business and Professions Code sections 16720, 16721.5, and 17200, and Insurance Code section 790.03. 1 Business and Professions Code sections 16720 and 16721.5 are provisions of the Cartwright Act. Business and Professions Code section 17200 is part of the Unfair Competition Act (UCA). Section 790.03 is part of the Unfair Insurance Practices Act (UIPA).

The complaint alleged 2 that Weil operated a successful insurance brokerage and consulting business in which it advised attorneys regarding settlement annuities. After Weil disclosed to those clients the actual costs of such annuities, the defendant insurance companies boycotted plaintiff's brokerage and conspired to prevent claimants from obtaining the information Weil provided. Allegedly they did so because the information plaintiff provided to attorneys and injury victims had an adverse impact on the ability of liability insurance carriers to settle personal injury claims below their cash settlement value. The complaint alleged that pursuant to the conspiracy, defendants denied injury victims and their attorneys critical information regarding annuities used to fund settlement of their claims; boycotted any broker, agent or consultant who provided information and/or consulting services to injury victims and their attorneys; refused to appoint brokers and consultants who did provide the information and/or services; prohibited their brokers, agents and consultants from providing the information and services; falsely disparaged brokers who did provide the information; gave bogus reasons for not dealing with brokers who offered consulting services to injury victims and their attorneys; threatened and intimidated brokers to coerce compliance with their scheme; and caused the trade association (defendant National Structured Settlements Trade Association) to adopt and enforce rules, guidelines and policies in furtherance of their scheme.

The purpose of these actions was to depress the cost of personal injury settlements below their cash value. The complaint alleged that, in furtherance of the conspiracy, and in retaliation for plaintiff's interference with it through its consulting and brokerage practices and efforts to educate the bar and insurance industry through articles authored by one of plaintiff's senior executives, defendants boycotted Weil and used coercion, intimidation, threats, and false disparagement of Weil to cause structured settlement annuity brokers and agents with whom Weil did business to discontinue that relationship, and to cause other annuity brokers to refuse all business dealings with Weil. Plaintiff's settlement annuity business was destroyed as a result of defendants' conduct.

The complaint asserted that the conduct also harmed the public in that it constituted price fixing, concerted output restriction, and a boycott, all of which were claimed to be per se violations of the Cartwright Act; its requirement that brokers refrain from dealing with Weil was a per se violation of the Cartwright Act; it constituted an unreasonable restraint intended to monopolize the business of insurance in violation of the UIPA; and it therefore involved unlawful, unfair or fraudulent business practices which violated the UCA.

The trial court sustained defendants' demurrers to Weil's first amended complaint with leave to amend as to the Cartwright Act causes of action, but overruled the demurrers with respect to the UCA and UIPA claims. Defendants then petitioned for a writ of mandate to compel the trial court to sustain the demurrers to those counts and the Court of Appeal issued an order directing the real party in interest to show cause why the peremptory writ should not issue as prayed.

Weil then filed an amended complaint in which it again attempted to state the Cartwright Act claims. The life insurance defendants demurred to the second amended complaint on the ground that the complaint failed to state a cause of action as to those counts. They argued in support of the demurrers that the Cartwright Act had been superseded in the business of insurance by Insurance Code section 790.03, a provision of the UIPA. It relied for that claim on Chicago Title Ins. Co. v. Great Western Financial Corp., supra, 69 Cal.2d 305, 322, 70 Cal.Rptr. 849, 444 P.2d 481 (hereafter Chicago Title ), and Greenberg v. Equitable Life Assur. Society, supra, 34 Cal.App.3d 994, 110 Cal.Rptr. 470. The trial court sustained those demurrers, and Weil petitioned for writ of mandate to compel the court to overrule the demurrers.

After the Court of Appeal summarily denied Weil's petition, this court granted review and transferred the matter back to the Court of Appeal with directions to issue an alternative writ. Although the two petitions had not previously been formally consolidated, the Court of Appeal joined them for purposes of argument and opinion. (See 9 Witkin, Cal.Procedure (3d ed. 1985) Appeal, § 539, p. 528-529; cf. Pacific Legal Foundation v. California Coastal Com. (1982) 33 Cal.3d 158, 165, fn. 3, 188 Cal.Rptr. 104, 655 P.2d 306.)

II The Court of Appeal Opinion

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