Odishelidze v. Aetna Life & Cas. Co.
| Decision Date | 21 August 1987 |
| Docket Number | Civ. No. 85-2293 (JAF). |
| Citation | 668 F. Supp. 94 |
| Court | U.S. District Court — District of Puerto Rico |
| Parties | Alexander ODISHELIDZE, Plaintiff, v. AETNA LIFE & CASUALTY CO., Aetna Variable Annuity Life Insurance Company; Aetna Financial Services, Inc., Aetna Life Insurance Company, William O. Bailey, Dean E. Wolcott, James R. Bailey, Thomas L. West, Edward F. Dwight, and Stanley W. Thompson, Defendants. |
Harry Anduze Montaño, José R. Ortiz Vélez, San Juan, P.R., for plaintiff.
David P. Freedman, O'Neill & Borges, San Juan, for defendants.
We have before us a motion to dismiss filed by defendants. Fed.R.Civ.P. 12(b). Defendants challenge plaintiff's jurisdictional allegations. In so doing, they also claim that plaintiff failed to plead facts upon which federal relief can be granted. We have considered the record as a whole in the light most favorable to the non-moving party, drawing all reasonable inferences to support his contention. Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir. 1977). We find for defendants. Diversity jurisdiction is lacking; there is no cognizable antitrust claim, and no actionable civil RICO cause of action. Under the circumstances, we cannot entertain pendent state claims under Law 75 (Dealers' Act), 10 L.P.R.A. secs. 278(a)- 278(d), or the Puerto Rico Insurance Code.
Plaintiff was an independent insurance agent for Aetna. The agency relationship began in 1971.1 As Aetna's agent, he was in charge of selling Aetna's insurance policy programs in Puerto Rico. The agreement was modified in 1982 as a result of a general national corporate reorganization implemented by Aetna. As part of their business reorganization, Aetna informed plaintiff that all independent agents were being terminated. Aetna offered to hire plaintiff as its employee in the position of manager of the newly-created Personal Financial Security Division (PFSD), with a salary of about $60,000. Aetna, through the individual defendants, also proposed an automobile and expense account, plus a yearly bonus ranging from 15% to 40%, averaging not less than 25% yearly.
Odishelidze accepted the offer. In 1984, Aetna decided to close its Puerto Rico branch office. As a result thereof, on December 14, 1984, Odishelidze was offered a position with the regional office in Florida. Odishelidze declined and Aetna terminated him from employment.
On April 23, 1985, Odishelidze filed the instant judicial action. He alleges that defendants conspired to deprive him of his vested interest, property, and contractual rights as an "exclusive general agent." He intends to frame his claim in the context of the federal antitrust laws by claiming that the fraudulent scheme was a concerted activity to unlawfully control the flow of interstate commerce, causing severe economic and financial losses to the plaintiff, as well as loss of his economic activity as an independent agent. Complaint, docket document No. 1, paras. 8-12.
A second cause of action pleads that defendants are also liable under the Racketeer Influenced and Corrupt Organizations' Act of 1970, 18 U.S.C. secs. 1961-1968. The facts to sustain this allegation are:
20. The promises ... made by Aetna to induce plaintiff to enter into an employment contract were part of a fraudulent scheme which sic purpose was to terminate exclusive general agency agreements throughout the United States. The ... scheme to defraud, perpetrated in part by use of the U.S. mails and interstate wire communications, constituted operations of Aetna Corporation by defendants through a pattern of racketeering activity within the meaning of 18 U.S.C. sec. 1962(c).
Complaint, docket document No. 1, para. 20.
In addition thereto, plaintiff pleads as a matter of law more than as an averment of fact, two additional causes of action under Puerto Rico's Dealers' Act, Law No. 75, of June 24, 1964, 10 L.P.R.A. sec. 278. He further claims a breach to Puerto Rico's Law No. 17, of April 17, 1931, as amended, 29 L.P.R.A. sec. 175.
The complaint alleges that federal jurisdiction exists pursuant to 28 U.S.C. secs. 1331, 1332; 18 U.S.C. sec. 1961; 15 U.S.C. sec. 1; 10 L.P.R.A. sec. 257; the Insurance Code of Puerto Rico (1976); Law No. 77, of June 25, 1964, 10 L.P.R.A. sec. 257; 29 L.P.R.A. sec. 171; and under the provisions of the Civil Code of Puerto Rico (1930).
Under this carte of allegations, defendants move this court to dismiss plaintiff's action under Fed.R.Civ.P. 12(b). They allege that (a) the complaint fails to state a claim upon which relief may be granted; (b) process was not duly served upon defendants Stanley W. Thompson, Edward F. Dwight, and James R. Bailey; (c) William O. Bailey and Thomas L. West are not amenable to service of process for in personam jurisdiction; and (d) federal subject matter jurisdiction is lacking.
Federal courts exercise limited jurisdiction. A plaintiff cannot activate federal-court jurisdiction by just citing federal laws which he tries to use as a sack to put in all the facts he sees fit. The sack would result too small to collect adequately his extended view of the case. Prima facie, the facts as alleged by plaintiff do not serve to establish diversity between the parties, a RICO claim, or a federal antitrust violation. Therefore, the case must be dismissed without prejudice of Odishelidze instituting a different action before an appropriate forum.
Plaintiff avers that defendants conspired to squeeze him out of the market. Relevant to this allegation is Aetna's modus operandi. The companies here sued are: Aetna Life and Casualty Co.2 and its subsidiaries Aetna Variable Annuity Life Insurance Company, Aetna Financial Services, Inc., and Aetna Life Insurance Company. The other individual defendants are all officers of Aetna Life and Casualty Co. It is clear from the record that Aetna Life and Casualty's reorganization was nationwide, see docket document No. 9, Exh. 15, Florida Association of Insurance Newsletter, August 7, 1981. The reorganization affected subsidiaries and independent agents. Plaintiff alleges that "Aetna's conspiracy should be viewed as one of vertical proportions ... directed to gain exclusive control of the market while eliminating general agents, which were outside Aetna's corporate structure."3 Defendants' position is that the antitrust claim does not contain the requisite degree of factual specificity. The complaint does not identify which section of the Sherman Act has allegedly been violated and also fails to allege any contract, combination in restraint of trade, or any attempt to monopolize. In plaintiff's "Surreply to Defendants Reply," it is alleged that the violation ensued under the Sherman Act, sec. 1, 15 U.S.C. sec. 1. It is claimed that:
defendant's reorganization plan was not of a totally intracorporate character. It included in its scope both corporate affiliates, employees, and non-employees; to wit: the general agents which were under contract such as plaintiff.
Docket document No. 14, p. 16. Both parties agree that between Aetna Casualty and the other companies existed a parent-subsidiary relationship. In this context, the applicable law follows the general rule that a violation of a Sherman Act section 1 will accrue only when concerted action is present, Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984).4 Accordingly, Sherman Act section 1 does not apply to a single firm behavior. There must be some form of agreement or collaboration between two or more actors. L. Sullivan, Handbook of the Law of Antitrust at 311 (1977). This rule has expanded to accommodate business realities where a sole corporation engages in predatory commercial activity by shielding itself under various affiliated and subsidiary companies. Therefore, Sherman Act section 1 has been applied in situations where "conspirators" consist of wholly-owned subsidiaries of a single corporation. Timkin Roller Bearing v. United States, 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199 (1951); Kiefer-Stewart v. Seagram & Sons, Inc., 340 U.S. 211, 71 S.Ct. 259, 95 L.Ed. 219 (1951) (). This rule does not extend to unincorporated divisions of a corporation. Unincorporated divisions, not being legally independent entities, cannot be held to have conspired under Sherman 1. See Albrecht v. The Herald, 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968). To find a Sherman 1 violation, the questioned action is different from one emanating from independent action and, therefore, it has been established that something more than a simple unilateral termination is required before it is considered illegal. Malley-Duff & Assoc. v. Crown Life Ins. Co., 734 F.2d 133 (3rd Cir), cert. denied, 469 U.S. 1072, 105 S.Ct. 564, 83 L.Ed.2d 505 (1984). The additional ingredient is usually satisfied when an understanding or meeting of the minds among other similarily-situated or benefited parties is present, Harold Friedman, Inc. v. Thorofore Markets, Inc., 587 F.2d 127, 142 (3rd Cir.1978).5
Plaintiff attacks defendant's 1982 nationwide reorganization as a conspiracy to eliminate independent agents from their insurance market. The court must look for the effect on competition which defendant's action may have had. Aetna's action constituted a vertical integration, whereby they eliminated their contractual relationship with independent agents, creating their own division to provide the same services. The "conspiracy," if any, had the net effect of resolving their commercial dealings with a vertically-localized, contractually-related person. The same did not affect their control or market power in the relevant geographic market.6 There being no cognizable antitrust claim, we now pass upon the sufficiency of the RICO allegations from the standpoint of federal jurisdiction.
The Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. secs. 1961-1968, recognizes a person's...
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Odishelidze v. Aetna Life & Cas Co., 87-1901
...federal claims in its Rule 12(b)(6) motion. On August 26, 1987, the district court dismissed the complaint. Odishelidze v. Aetna Life & Casualty Co., 668 F.Supp. 94 (D.P.R. 1987). It found that Odishelidze had failed to state both a cognizable antitrust claim and an actionable civil RICO ca......