HARTFORD FIRE INSURANCE CO ET AL PETITIONERS 91 1111 V CALIFORNIA ET AL AND MERRETT UNDERWRITING AGENCY MANAGEMENT LIMITED ET AL PETITIONERS 91 1128 V CALIFORNIA ET AL No 91 1111 SUPREME COURT OF THE UNITED STATES 509 U S 764 113 S Ct 2891 125 L Ed 2d 612 1993 U S LEXIS 4404 61 U S L W 4855 1993 1 Trade Cas CCH P70 280 93 Cal Daily Op Service 4830 93 Daily Journal DAR 8186 7 Fla L Weekly Fed S 638 February 23 1993 Argued June 28 1993 Decided Together with No 91 1128 Merrett Underwriting Agency Management Ltd et al v California et al also on certiorari to the same court PRIOR HISTORY ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT DISPOSITION 938 F 2d 919 affirmed in part reversed in part and remanded View References Turn Off Lawyers Edition Display DECISION Conspiracy claims under Sherman Act against domestic and foreign insurers held 1 cognizable as within McCarran Ferguson Act s boycott exception and 2 not barred by international comity SUMMARY According to complaints filed in multiple federal actions by 19 states and many private plaintiffs certain members of the insurance industry had conspired to restrict the terms of coverage of commercial general liability CGL insurance available in the United States in violation of 1 of the Sherman Act 15 USCS 1 Among the allegations made in the complaints it was claimed that four domestic primary insurers had conspired with domestic and foreign reinsurers insurance brokers and insurance associations to procure desired changes with respect to insurance coverage in the terms of the standard CGL forms used in the United States and in particular that 1 some reinsurers had threatened to withdraw from reinsuring primary insurers who used a CGL form which the reinsurers disfavored 2 reinsurers had threatened to boycott reinsuring North American CGL risks 3 foreign and domestic reinsurers had presented positions at an insurance association meeting that the standard CGL forms had to be changed or else there would be no reinsurance 4 insurers and reinsurers had told insurance brokers and agents that a reinsurance boycott would ensue if revised CGL forms were not approved 5 the largest domestic reinsurer had agreed either to coerce the adoption of demands for changes in CGL forms or to derail the forms program and 6 domestic reinsurers had agreed to boycott the CGL forms unless certain terms were added The complaints also alleged that 1 a group of reinsurers and brokers based in London England had conspired to coerce primary insurers in the United States to offer CGL coverage only for claims made during the policy period 2 a group of London reinsurers had conspired to withhold reinsurance for certain coverage 3 a group of domestic primary insurers the association which issued the CGL forms and foreign reinsurers had conspired to restrain trade in the markets for excess and umbrella insurance and 4 a group of London and domestic retrocessional reinsurers that is insurers of the risks of reinsurers had conspired to withhold retrocessional reinsurance for certain risks The actions were consolidated for litigation in the United States District Court for the Northern District of California The District Court granted the defendants motions to dismiss the Sherman Act claims for failure to state a cause of action 723 F Supp 464 On appeal the United States Court of Appeals for the Ninth Circuit reversing expressed the view that 1 the domestic defendants were not exempt from federal antitrust liability under 2 b of the McCarran Ferguson Act 15 USCS 1012 b which provides that the Sherman Act applies to the business of insurance to the extent that such business is not regulated by state law because the domestic defendants forfeited their exemption when they conspired with the foreign reinsurers who were not exempt 2 even if the defendants alleged conduct was exempt from Sherman Act liability under 2 b such conduct was within the exception to immunity under the McCarran Ferguson Act provided by 3 b 15 USCS 1013 b for any act of boycott coercion or intimidation and 3 the principle of international comity did not bar the exercise of federal jurisdiction against the foreign defendants 938 F2d 919 On certiorari the United States Supreme Court affirmed in part reversed in part and remanded the case for further proceedings It was held with different majorities of the Justices for each holding that 1 the domestic insurers were immune from antitrust liability under 2 b 2 there were sufficient allegations of a boycott under 3 b defined as the refusal to deal with another in unrelated transactions in order to achieve the terms desired in a targeted transaction to sustain several counts of complaint against a motion to dismiss and 3 international comity did not counsel against exercising jurisdiction over the London based reinsurers In those portions of the opinion of Souter J which constituted the opinion of the court it was held in pertinent part 1 in a portion Part II A expressing the unanimous view of the court that domestic insurers did not lose their immunity from antitrust liability under 2 b by acting in concert with foreign insurers that were assumed for the sake of argument not to be regulated by state law within the meaning of 2 b and 2 in a portion Part III joined by Rehnquist Ch J and White Blackmun and Stevens JJ that even assuming that in a proper case a court could decline to exercise Sherman Act jurisdiction over foreign conduct the principle of international comity did not counsel against exercising jurisdiction with respect to allegations that the London based reinsurers had engaged in unlawful conspiracies to affect the market for insurance in the United States and that their conduct in fact had produced substantial effect because there was no conflict with British law where the London reinsurers did not claim that a British law required them to act in some fashion prohibited by the law of the United States or b their compliance with the laws of both countries was otherwise impossible Also Souter J in a portion Part II B joined by White Blackmun and Stevens J expressed the view that 1 neither the Supreme Court s precedents nor 3 b warranted a definition of boycott which was confined to refusals to deal that were unrelated or collateral to the objective sought by those refusing to deal and 2 those claims which asserted a conspiracy among the primary insurers reinsurers brokers and associations to procure changes in
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