NASSAU CTY. ASS'N OF INS. AGTS., INC. v. AETNA LIFE & C. CO.

• Decision Date: 24 July 1973
• Docket Number: No. 72 Civ. 4678.,72 Civ. 4678.
• Parties: The NASSAU COUNTY ASSOCIATION OF INSURANCE AGENTS, INC., et al., Plaintiffs, v. AETNA LIFE & CASUALTY CO. et al., Defendants.
• Court: U.S. District Court — Southern District of New York

361 F. Supp. 967

The NASSAU COUNTY ASSOCIATION OF INSURANCE AGENTS, INC., et al., Plaintiffs, v. AETNA LIFE & CASUALTY CO. et al., Defendants.

No. 72 Civ. 4678.

United States District Court, S. D. New York.

July 24, 1973.

Donner, Fagelson & Hariton, Bay Shore, N.Y., for plaintiffs Nassau County Ass'n of Ins. Agents, and others; Frederick Fagelson, Bay Shore, N.Y., of counsel.

Davis, Polk & Wardwell, New York City, for defendants American Fidelity Fire Ins. Co., and others; Henry L. King, Richard M. Berman, Sheila T. McMeen, New York City, of counsel.

Cordes, Purcell, Jewell & Ingrao, Mineola, N.Y., for defendant Farm Family Mutual Ins. Co.; Stephen A. Fritz, Mineola, N.Y., of counsel.

Covington & Burling, Washington, D. C., for defendants Bay State Ins. Co., and others; Edwin M. Zimmerman, Washington, D.C., of counsel.

Crowe, McCoy, Agoglia, Mineola, N. Y., for defendants Jamestown Mutual Ins. Co., and others; Harold V. McCoy, Mineola, N.Y., of counsel.

Donovan, Donovan, Maloof & Walsh, New York City, for defendants Great American Ins. Co. and Zurich American Ins. Cos.; John P. Walsh, New York City, of counsel.

Leonard W. Ferris, Utica, N.Y., for defendant Utica Fire Ins. Co.

Gottesman, Wolgel & Smith, New York City, for defendants Peerless Ins. Co. and Netherlands Ins. Co.; Harold H. Wolgel, New York City, of counsel.

Hart & Hume, New York City, for defendants American Gen. Ins. Co., and others; William D. Hand, Jr., New York City, of counsel.

LeBoeuf, Lamb, Leiby & MacRae, New York City, for defendants Mich. Mutual Liability Ins. Co. and others; Taylor R. Briggs, Kimba Wood Lovejoy, New York City, of counsel.

Lee, McCarthy & DeRosa, New York City, for defendants American Home Assurance Co., and others; Florindo M. DeRosa, New York City, of counsel.

Lord, Day & Lord, New York City, for defendants Lumbermens Mutual Casualty Co., and others; Gordon B. Spivack, New York City, of counsel.

Joseph F. Murphy, New York City, for defendants Continental Ins. Co., and others.

Paul, Weiss, Rifkind, Wharton & Garrison, New York City, for defendants Aetna Life & Casualty Co., and others; Morris B. Abram, Sidney S. Rosdeitcher, New York City, of counsel.

Shearman & Sterling, New York, for defendants Continental Cas. Co., and others; Werner L. Polak, New York City, of counsel.

White & Case, New York City, for defendants Employers Commercial Union Co., and others; Thomas McGanney, New York City, of counsel.

MEMORANDUM

STEWART, District Judge:

Four insurance trade associations bring this private suit under the authority of 15 U.S.C. § 15 on their own behalf, on behalf of their members and on behalf of other described classes comprising independent insurance agents and insurance policyholders in the State of New York. Jurisdiction is predicated under the provisions of the Sherman Act, 15 U.S.C. §§ 1-7, the Clayton Act, 15 U.S.C. §§ 12-27, the Federal Trade Commission Act, 15 U.S.C. § 44 and the McCarran-Ferguson Act, 15 U.S.C. §§ 1011-1015. The action is presently before us on defendants' insurance companies' motion to dismiss.

In September, 1971 three of the present four plaintiffs, the Nassau County Association of Insurance Agents, Inc., the Suffolk County Association of Insurance Agents, Inc. and the Independent Insurance Agents Association of Queens County, Inc. commenced an action in this Court (71 Civ. 4101) against approximately 180 insurance companies. Each of the 164 defendants at bar was a defendant in that suit. In that action, defendants moved to dismiss on two grounds: under Rule 12(b)(6) of the Federal Rules of Civil Procedure that the plaintiffs, three associations of independent insurance agents, lacked a claim cognizable under the antitrust laws because the injury they claimed to have sustained as a result of defendants' conduct was purely derivative in nature and legally remote under § 4 of the Clayton Act; or, in the alternative, that plaintiffs' attempt to join 184 insurance companies failed to satisfy the standards for joinder of defendants as provided by Rule 20(a) of the Federal Rules of Civil Procedure and therefore this misjoinder was sufficiently unfair so as to justify the dismissal of the action pursuant to Rule 41(b) of the Federal Rules of Civil Procedure.

In an opinion delivered on the record at the close of oral argument, Judge Pollack dismissed the complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim without reaching the joinder issue. Judge Pollack's decision, 345 F.Supp. 645 (S.D.N.Y., 1972), fully details the allegations of the complaint and for purposes of this memorandum we adopt and incorporate that statement. On the motion now before us, defendants reassert their previous arguments for dismissal and add a third basis for the motion to dismiss, to wit, since plaintiffs previously brought a virtually identical suit in this Court before Judge Pollack against the same defendants, judgment should be entered pursuant to Rule 56 of the Federal Rules of Civil Procedure barring them from maintaining this action.

Essentially, plaintiffs aver that termination of insurance agents, and the threat of termination by the defendants on the basis of balanced book requirements, inadequate volume of sales by the agents and poor loss ratios on policies sold by the agents, are allegedly unlawful under the antitrust laws as tie-in arrangements, coercive tactics or a combination of both. In an attempt to remedy the defects in their prior complaint, and to put before this Court legal arguments which plaintiffs contend were not fully considered by the Court in the original action, plaintiffs have filed this new lawsuit seeking similar relief. The complaint has been amended to include an additional plaintiff association, the Richmond County Association of Insurance Agents, and further, alleges with particularity the injury claimed to have been sustained by the plaintiff associations as a direct result of defendants' illegal conduct.

The courts in this circuit have strictly applied the general rule that an association lacks standing to assert an antitrust claim on behalf of its members under § 4 of the Clayton Act. Cordova v. Bache, 321 F.Supp. 600 (S.D.N.Y., 1970); Billy Baxter Inc. v. Coca-Cola Co., 431 F.2d 183 (2d Cir. 1970). Nevertheless, plaintiffs urge this Court to allow them to bring this representative suit because of their identity of interest with their members and because they are asserting fundamental rights attaching to the individual agents which, under the circumstances of this case, merit special consideration by this Court in permitting a derivative type action. To counter defendants' contentions, and to bring this action within the language of § 4 of the Clayton Act, plaintiffs assert that the Associations themselves sustained direct injury when agencies were terminated and put out of business, thereby causing the Associations to suffer substantial loss of membership and loss of income. As discussed herein, under the law of this Circuit we cannot agree with the plaintiffs that the Associations suffered direct injury in their "business or property" as contemplated by § 4 of the Clayton Act. Accordingly, we concur with Judge Pollack that plaintiffs fail to state a claim.

The law in this Circuit is clear that private antitrust plaintiffs must meet the burden of demonstrating that they were within the "target area" of the alleged illegal conduct in order to establish standing to sue under the Clayton Act. Calderone Enterprises v. United Artists Theatre Circuit, Inc., 454 F. 2d 1292 (2d Cir. 1971); Billy Baxter Inc. v. Coca-Cola Co., supra.

"In a series of decisions over the last 15 years, in all of which certiorari was denied by the Supreme Court, this court has committed itself to the

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