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Nassau County Association of Insurance Agents Inc. v. Aetna Life & Casualty Co.

decided: May 29, 1974.


Appeal from a judgment of the District Court for the Southern District of New York, Charles E. Stewart, Judge, dismissing plaintiffs' class action against 164 insurance companies alleging violations of the federal antitrust laws. Affirmed.

Lumbard and Hays, Circuit Judges, and Jameson, District Judge.*fn* Hays, Circuit Judge (concurring in the result).

Author: Lumbard

LUMBARD, Circuit Judge:

Seeking to recover over $3,750,000,000 in treble damages from 164 insurance companies, four unincorporated associations of insurance agents, the Nassau County Association of Insurance Agents, the Suffolk County Association of Insurance Agents, the Independent Insurance Agents Association of Queens, and the Richmond County Association of Insurance Agents, commenced this class action on behalf of member and independent insurance agents and their policyholders in the Southern District on November 3, 1972, alleging that the defendants had terminated or threatened to terminate thousands of agency contracts with the insurance agents on grounds violative of the federal antitrust laws.*fn1 Specifically, it was alleged that agents were required regularly to sell new lines of insurance, meet higher minimum volume requirements, and maintain a low pay-out ratio on policies sold or face termination. Plaintiffs contended that enforcement of these requirements by the defendant insurance companies represented "illegal coercion, illegal intimidation, illegal restraints of trade, all of which are in violation of the Clayton Act, the Sherman Act, [and] the McCarran-Ferguson Act. . . ."*fn2

On July 24, 1973, Judge Stewart dismissed the action on the ground that the plaintiff associations lacked standing to sue under the antitrust laws in either their own or a representative capacity, 361 F. Supp. 967. He emphasized that under § 4 of the Clayton Act, 15 U.S.C. § 15, a plaintiff must demonstrate that it has either sustained direct injury in its "business or property" or that it was in the "target area" of the alleged illegal conduct, that is, a party against whom the illegal activity was aimed.*fn3 We affirm for the reasons given by Judge Stewart and because of the misjoinder of parties.


Section 4 of the Clayton Act, 15 U.S.C. § 15, provides that "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefore . . . ." As we emphasized in Billy Baxter, Inc. v. Coca-Cola Co., 431 F.2d 183, 187 (2d Cir. 1970), cert. denied, 401 U.S. 923, 91 S. Ct. 877, 27 L. Ed. 2d 826 (1971):

"The statutory requirement that treble damage suits be based on injuries which occur 'by reason of' antitrust violations expressly restricts the right to sue under this section. . . . [A] plaintiff must allege a causative link to his injury which is 'direct' rather than 'incidental' or which indicates that his business or property was in the ' target area' of the defendant's illegal act."

Plaintiffs here have pointed to no direct injury suffered as a result of the practices engaged in by defendants. Nor have they shown that they were in the target area of the actions by the defendants. Plaintiffs neither do business with the defendant insurance companies nor compete with them. Indeed the only loss alleged by plaintiffs is a decrease in membership and dues as a result of the termination of contracts with certain agents by defendants. This injury is too remote, however, to confer standing under the Clayton Act. In Calderone Enterprises Corp. v. United Artists Theatre Circuit, Inc., 454 F.2d 1292 (2d Cir. 1971), cert. denied, 406 U.S. 930, 32 L. Ed. 2d 132, 92 S. Ct. 1776 (1972), we affirmed the trial court's dismissal of an antitrust suit brought by the lessor of a movie theatre, who alleged that the defendant motion picture distributors had conspired to deny his lessee certain profitable first-run films. The plaintiff claimed that as a result of the defendants' practices it had suffered considerable losses, since the rent paid by the lessee was based on a percentage recapture of gross receipts from the exhibition of movies. We held, however, that this was not a sufficiently direct injury to confer standing on the plaintiff and stressed that a line had to be drawn between "those who have suffered economic damage by virtue of their relationships with 'targets'" and those who are the " 'targets' themselves." Id. at 1295.

The Ninth Circuit had previously adopted the same position in a case closely resembling the present one. In Conference of Studio Unions v. Loew's Inc., 193 F.2d 51 (9th Cir. 1951), cert. denied, 342 U.S. 919, 96 L. Ed. 687, 72 S. Ct. 367 (1952), the court of appeals affirmed the district court's dismissal of a complaint by a conference of trade unions which alleged that as a result of illegal anticompetitive practices engaged in by major motion picture producers and a rival union aimed at lessening competition from independent producers, members of its member unions had lost their jobs and withdrawn from the unions with a resultant loss in the conference's revenues. The court rejected this claim, finding the damage alleged too incidental to confer standing.

Plaintiffs, nevertheless, argue that they should be afforded standing since their members fear "reprisal and retaliatory action" should they be named individually in a suit against the defendant insurance companies. Plaintiffs maintain that the McCarran-Ferguson Act was intended to protect against such intimidation and allude to N.A.A.C.P. v. Alabama, 357 U.S. 449, 2 L. Ed. 2d 1488, 78 S. Ct. 1163 (1958), in which the Supreme Court upheld the standing of the N.A.A.C.P. to represent the interests of its members.

There is no merit whatever to this argument. As Judge Weinfeld emphasized in Free World Foreign Cars, Inc. v. Alfa Romeo, S.P.A., 55 F.R.D. 26 (S.D.N.Y. 1972) in rejecting a similar argument:

"The history of antitrust litigation records instance after instance where small dealers have not hesitated to take on giant corporations in antitrust litigation, and there is no basis to assume that if any dealer for whom plaintiff professes to speak believes the franchise agreement violative of our antitrust laws, he is not capable or would not hesitate to bring suit to vindicate his rights." 55 F.R.D. at 29.

Moreover, the situation here is unlike the one in N.A.A.C.P. v. Alabama, supra, in which the very right which plaintiff sought to preserve was the anonymity of its membership, so that having required individual members to bring suit would have resulted "in nullification of the right at the very moment of ...

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