HARTFORD FIRE INSURANCE CO., ET AL., PETITIONERS 91-1111 V. CALIFORNIA ETAL.; 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 DAR8186; 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. Californiaet 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 duringthe 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) therewere 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 didnot 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 inconcert 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
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