Romac Resources, Inc. v. Hartford Accident & Indem. Co., Civ. No. 11386

• Court: U.S. District Court — District of Connecticut
• Writing for the Court: BLUMENFELD
• Citation: Romac Resources, Inc. v. Hartford Accident & Indem. Co., 378 F. Supp. 543 (D. Conn. 1974)
• Decision Date: 18 June 1974
• Docket Number: 11464.,Civ. No. 11386
• Parties: ROMAC RESOURCES, INC., and Modern Home Institute, Inc. v. HARTFORD ACCIDENT AND INDEMNITY COMPANY et al.

378 F. Supp. 543

ROMAC RESOURCES, INC., and Modern Home Institute, Inc. v. HARTFORD ACCIDENT AND INDEMNITY COMPANY et al.

Civ. Nos. 11386, 11464.

United States District Court, D. Connecticut.

June 18, 1974.

Leonard A. Schine, Joel C. Karp, Robert L. Julianelle, Thomas C. Gerety, Ronald Bozelko, J. Daniel Sagarin, Bridgeport, Conn., for plaintiffs.

Ralph C. Dixon, Richard M. Reynolds, Hartford, Conn., David Goldstein, Bridgeport, Conn., George D. Brodigan, Hartford, Conn., William Piel, Jr., New York City, J. Read Murphy, Robert E. Cohn, George Levine, John J. Kenny, Hartford, Conn., John L. Warden, New York City, for defendants.

RULING ON MOTIONS FOR SUMMARY JUDGMENT

BLUMENFELD, District Judge.

This is an action for treble damages by two related plaintiffs against several Hartford-based casualty insurance companies charging them with Sherman Act violations predicated on an alleged group boycott.

The action was begun by Romac Resources, Inc. (No. 11,386) on April 15, 1966. Seven weeks later another action was brought by Modern Home Institute, Inc. (No. 11,464), the parent of Romac. Both complaints named the same defendants, and, since their allegations were identical, the two cases were consolidated on June 29, 1966. The case has a long history, not unusual in cases of this nature. When it reached its present stage, which calls for rulings on the several defendants' motions for summary judgment, the judge before whom it had been pending and the parties agreed that the case should be transferred to me and that I might decide the pending motions on the papers and briefs without the benefit of oral argument.

The gist of the complaint in both cases is that twelve insurance companies, Hartford Accident and Indemnity Company and Hartford Fire Insurance Company ("The Hartford"), The Aetna Casualty and Surety Co. ("The Aetna"), The Travelers Insurance Company and The Travelers Indemnity Co. ("The Travelers"), Allstate Insurance Company, Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company, Liberty Mutual Insurance Company and Liberty Mutual Fire Insurance Company, State Farm Mutual Insurance Company and State Farm Fire and Casualty Company, and The Connecticut Association of Independent Insurance Agents, Inc. ("CAIA"), contracted, contrived and conspired with each other in refusing to purchase from the plaintiffs a list of the names of holders of automobile insurance policies with the dates on which their policies expired ("X-dates").

Five years later, in 1971, the plaintiffs filed an Amended Substituted Consolidated Complaint. This added allegations as to separate conspiracies among the direct writers, among the agency companies, among the agency companies and their individual agents, and among the agency companies and CAIA. Plaintiffs also interjected into the pleadings the theory that the defendants were liable under the doctrine of conscious parallelism. At the second pre-trial conference on September 28, 1972, the plaintiffs advised the Court that they had decided to dismiss the action against the "direct writers" of insurance since under the plaintiffs' theory of the case only those "agency" companies dealing with independent agents were involved in the alleged conspiracy. Stipulations were subsequently filed dismissing all of the direct writer defendants. The remaining defendants are The Hartford, The Travelers, The Aetna, and CAIA. The litigation to date has consumed seven years, reflected by roughly 150 pleadings, numerous exhibits, affidavits, and approximately 5,000 pages of deposition testimony.

I.

A. Nature of Plaintiffs' Business

Modern Home Institute, Inc. is a New York corporation; its wholly owned subsidiary, Romac Resources, Inc., was organized in New York in 1962 with a capitalization of approximately $500, to act as an agent for the sale of X-dates. From 1958 until 1962 Modern Home was engaged in the business of gathering information known as "family profiles" and selling this information to various merchants. For example, an individual would be contacted by telephone and requested to give such information as his name, address, number of children, the number of automobiles and appliances his family owned, and other similar information. The data so compiled was sold to retail merchants at ten cents per name.

In September 1960, Modern Home established an office in Cleveland, Ohio in furtherance of its family profile business, and Mr. Robert D'Arpa, who is the Secretary and a director of the corporation, was placed in charge of the operation. Mr. D'Arpa leased an office and obtained personnel on a part-time basis to gather necessary information by telephone. Mr. D'Arpa ran this office for only seven months, until April of 1961.

It was during this seven-month period of time that the idea of acquiring lists of X-dates of automobile insurance policies and selling such lists to insurance companies was explored. An agent from Nationwide Insurance Company in Cleveland approached Mr. D'Arpa and asked if Modern Home could acquire expiration dates for automobile insurance policies. It was by virtue of this chance request that Modern Home first entered into the business of acquiring and selling expiration dates. Modern Home furnished the Nationwide agent with some expiration dates, but shortly thereafter it was forced to close its Cleveland office and abandon its family profile business. Mr. D'Arpa thereupon returned to New York to concentrate on soliciting and selling expiration dates.

A year went by and then, between May and August of 1962, the plaintiffs sought to market lists of expiration dates by attempting to sell them to, inter alia, the insurance companies who remain as named defendants in this case. The business did not go very well. Romac had taxable income of only $515.46 in 1962, and never engaged in business after that year.

B. Plaintiffs' Approaches to Defendants

In 1962, the plaintiffs approached several insurance companies in an attempt to sell the X-dates. They would sell a very limited number of X-dates on a trial basis, and if the purchaser contracted for their product, they would thereafter seek to recruit personnel and obtain a larger quantity of X-dates: their thought was that they would sell the same list of X-dates to two—and only two—insurance companies. One would be a "direct writer," such as Allstate, Nationwide or State Farm, and the other would be a "stock" or "agency" company, such as The Hartford, The Travelers, or The Aetna.¹ The sale price would be 45 cents a name to each of the two companies, so that the plaintiffs would realize 90 cents a name. It was stipulated by the plaintiffs that the purchasing companies would have to take the entire output of X-dates generated by the plaintiffs. Mr. D'Arpa testified that the plaintiffs contacted "approximately 30" insurance companies.

Every one of the 30 insurance companies, without exception, rejected the plaintiffs' offer. The rejections took place in 1962, the year the offers were extended. More detailed information with respect to the circumstances under which the three insurance companies being sued rejected the plaintiffs' proposal was obtained during the course of pretrial proceedings.

1. The Aetna Casualty and Surety Company

The Aetna Casualty and Surety Company was first contacted by the plaintiffs on or about May 8, 1962. Mr. D'Arpa came to The Aetna's Home Office at Hartford and presented the plaintiffs' proposed plan to Mr. Ellis, Secretary at The Aetna, whose responsibility was mainly sales of private passenger automobile insurance. Mr. D'Arpa proposed to sell private passenger automobile expiration dates to "one so-called direct writer, and the same list to one so-called stock agency company." He made it clear that he would not be in a position to contract to sell their X-dates until he talked to other companies since he wanted to sell to the one that could use the greatest number. A quantity of X-dates was offered on a trial basis and Mr. Ellis agreed to buy 100 for a trial test. Mr. D'Arpa asked about the automobile insurance business, how it was sold and marketed and so on. Mr. Ellis told him everything he wanted to know.

Mr. Ellis arranged for Mr. Healy, Manager of the Agency Department in The Aetna's Newark Branch Office, to conduct a trial test of X-dates. On or about May 12, 1962, Mr. Healy received 100 X-dates from Mr. D'Arpa and on May 14, 1962, Mr. Ellis received the invoice from Romac in the amount of $30 for 100 X-dates at 30 cents each.

The plaintiffs next contacted The Aetna in late June or early July 1962. At that meeting Mr. D'Arpa introduced Mr. Ellis to Mr. Max Wallach, the President, controlling stockholder and a director of Modern Home Institute, Inc. In response to inquiries by the plaintiffs, Mr. Ellis explained the relationship of an agency company to its agents and the standard provision of a stock agency company's agency agreement with its agents concerning expirations.² Shortly before this meeting the Connecticut State Insurance Commissioner had made a public statement against the sale of X-dates which was disturbing to Mr. Wallach and to Mr. D'Arpa.³ This was discussed.

There was no discussion of a contract for X-dates because no contract was contemplated while the trial X-dates were being tested in Newark and while the plaintiffs were still investigating or considering the markets for their products. Neither at the initial interview on May 8, 1962, nor at this luncheon was any estimate given of numbers of X-dates the plaintiffs proposed to offer. There was a discussion of different geographical areas for which they could supply X-dates. Mr. Ellis ruled out Massachusetts because The Aetna was not selling its automobile liability policies there. Mr. Wallach and Mr. D'Arpa were vague about supplying X-dates on a national scale as they did not then have the organization but thought they could build one in places where they were then active.

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