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In re Ins. Brokerage Antitrust Litig.

United States Court of Appeals for the Third Circuit

April 21, 2009, Argued; August 16, 2010, Filed

No. 07-4046, Nos. 08-1455 & 08-1777



SCIRICA, Circuit Judge.

This appeal from orders of dismissal under Federal Rule of Civil Procedure 12(b)(6) involves multiple  [**9] putative class actions alleging massive conspiracies throughout the insurance industry. Plaintiffs are purchasers of commercial and employee benefit insurance, and defendants are insurers and insurance brokers that deal in those lines of insurance. According to plaintiffs, defendants entered into unlawful, deceptive schemes to allocate purchasers among particular groups of defendant insurers. The complaints assert that conspiring brokers funneled unwitting clients to their co-conspirator insurers, which were insulated from competition; in return, the insurers awarded the brokers contingent commission payments--concealed from the insurance purchasers and surreptitiously priced into insurance premiums--based on the volume of premium dollars steered their way. As a result of this scheme, plaintiffs allege they paid inflated prices for their insurance coverage and were generally denied the benefits of a competitive market. The question on appeal is whether plaintiffs have adequately pled either a per se violation of § 1 of the Sherman Act (plaintiffs have foresworn a full-scale rule-of-reason analysis) or a violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act. Concluding  [**10] they had not, the District Court dismissed the complaints. We will affirm in large part, vacate in part, and remand for further proceedings.

I. Procedural History and Plaintiffs' Allegations

This litigation followed on the heels of a public investigation and enforcement action.  [*309]  In October 2004, the New York State Attorney General filed a civil complaint in state court against insurance broker Marsh & McLennan ("Marsh"), alleging "that Marsh had solicited rigged bids for insurance contracts, and had received improper contingent commission payments in exchange for steering its clients to a select group of insurers." In re Ins. Brokerage Antitrust Litig., Nos. 04-5184, 05-1079, 2006 U.S. Dist. LEXIS 73055, 2006 WL 2850607, at *1 (D.N.J. Oct. 3, 2006) (citing People v. Marsh & McLennan Cos., No. 04/403342 (N.Y. Sup. Ct. Oct. 14, 2004)). The next month, a group of attorneys general and state insurance departments began a broader investigation of insurance-industry practices. Private parties also filed numerous federal actions, which are the subject of this appeal.

The private actions were transferred by the Judicial Panel on Multidistrict Litigation to the United States District Court for the District of New Jersey for  [**11] consolidated pretrial proceedings. In re Ins. Brokerage Antitrust Litig., 360 F. Supp. 2d 1371 (J.P.M.L. 2005); see 28 U.S.C. § 1407. The District Court severed and realigned the actions into two consolidated dockets--the first pertaining to claims regarding property and casualty insurance (the "Commercial Case"), and the second pertaining to claims regarding employee benefits insurance (the "Employee Benefits Case").

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618 F.3d 300 *; 2010 U.S. App. LEXIS 17107 **; 2010-2 Trade Cas. (CCH) P77,135

IN RE: INSURANCE BROKERAGE ANTITRUST LITIGATION (MDL No. 1663); OptiCare Health Systems, Inc., Comcar Industries, Inc., Sunburst Hospitality Corporation, Robert Mulcahy, Golden Gate Bridge, Highway and Transportation District, Glenn Singer, Redwood Oil Company, Omni Group of Companies, Bayou Steel Corporation, Clear Lam Packaging, Inc., Cellect, LLC, Enclave, LLC, Gateway Club Apartments, Ltd., Michigan Multi-King, Inc., City of Stamford, Belmont Holdings Corporation, Tri-State Container Corporation, Appellants; IN RE: EMPLOYEE BENEFIT INSURANCE BROKERAGE ANTITRUST LITIGATION (MDL 1663); Maryann Waxman, on behalf of herself and all others similarly situated, Golden Gate Bridge, Highway and Transportation District, Christopher Bare, David Boros, Cynthia Brandes, Hans Fuson, Sharon Gehringer, Larry Hayes, Brannen Henn, Robert H. Kimball, Wayne Moran, Alicia A. Pombo, Clear Lam Packaging Inc., Connecticut Spring & Stamp Company, City of Danbury, Connecticut, Fire District of Sun City West, Hollander Home Fashions Corporation, Appellants

Subsequent History: Class certification granted by, Settled by In re Ins. Brokerage Antitrust Litig., 2012 U.S. Dist. LEXIS 46496 (D.N.J., Mar. 30, 2012)

Related proceeding at Seaboard Corp. v. Marsh Inc., 2012 Kan. LEXIS 462 (Kan., Aug. 31, 2012)

Prior History:  [**1] On Appeal from the United States District Court for the District of New Jersey. D.C. Civil Action No. 04-cv-5184. MDL No. 1663. D.C. Civil Action No. 05-cv-1079. MDL No. 1663. (Honorable Honorable Garrett E. Brown, Jr.).

In re Ins. Brokerage Antitrust Litig., 2007 U.S. Dist. LEXIS 64767 (D.N.J., Aug. 31, 2007)In re Ins. Brokerage Antitrust Litig., 2007 U.S. Dist. LEXIS 73220 (D.N.J., Sept. 28, 2007)


insurers, brokers, enterprise, conspiracy, bid, horizontal, allegations, plaintiffs', contingent, insurance business, district court, antitrust, defendants', broker-centered, insurer-partners, incumbent, premium, rigging, compete, commissions, customers, entities, pattern of racketeering activity, vertical, Sherman Act, exemption, quotation, marks, pled, bid-rigging

Civil Procedure, Appeals, Standards of Review, De Novo Review, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Pleadings, Complaints, Requirements for Complaint, Antitrust & Trade Law, Sherman Act, General Overview, Claims, Regulated Practices, Price Fixing & Restraints of Trade, Per Se Rule & Rule of Reason, Per Se Rule Tests, Manifestly Anticompetitive Effects, Evidence, Types of Evidence, Circumstantial Evidence, Per Se Violations, Cartels & Horizontal Restraints, Sherman Act, Responses, Motions to Dismiss, Scope, Exemptions & Immunities, McCarran-Ferguson Act Exemption, Business & Corporate Compliance, Industry Practices, Federal Regulations, Antitrust Regulations, McCarran-Ferguson Act, Governments, Legislation, Interpretation, Private Actions, Racketeer Influenced & Corrupt Organizations, Scope, Claims, Criminal Law & Procedure, Fraud Against the Government, Mail Fraud, Fraud, Wire Fraud, Subject Matter Jurisdiction, Supplemental Jurisdiction