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March 8, 2002


The opinion of the court was delivered by: Alvin K. Hellerstein, U.S.D.J.:



Plaintiff brings this antitrust action against five major companies in the life insurance industry: Massachusetts Mutual Life Insurance Company, John Hancock Life Insurance Company, Principal Life Insurance Company, Times Square Capital Management, Inc. (f/k/a Cigna Investments, Inc.), and Nationwide Mutual Insurance (collectively, the "Insurance Company Defendants"). Plaintiff also names PricewaterhouseCoopers LLP ("PwC") and Sagamore Advisors ("Sagamore") as defendants.

Plaintiff alleges that the Insurance Company Defendants "have combined in a cartel known as `the Working Group' to attempt — with the assistance of the other two defendants — to monopolize the market for studies of investment performance by life insurance companies in the United States." Amended Complaint (hereinafter, "Compl.") ¶ 1.

Accepting the allegations in the complaint as true, as I must on a motion to dismiss, the facts of this case are as follows. The Insurance Company Defendants, acting together as the Working Group, have spearheaded, since 1993, an annual study of investment performance in the life insurance industry, the Intercompany Investment Performance Study ("IIPS"). The Working Group collects confidential and proprietary investment performance information from life insurance companies which choose to be part of the study and then provides this data to an independent third party. The third party "vendor" analyzes the data to create the IIPS, which reports on such things as comparative investment management practices, asset allocation strategies, performance and credit quality, investment risk profiles, etc. The IIPS is the only study of investment performance of life insurance companies in the United States.

An insurance company which wants to participate in the IIPS must first sign a "Letter Agreement" with the Working Group. By signing the Letter Agreement, a participant agrees, inter alia: (1) that only the Working Group may determine whether any future similar studies are to be performed and make arrangements for such studies; (2) that only the Working Group may use the data, the IIPS and any instrument used in connection with the IIPS for any similar study; (3) that the Working Group owns all copyright in the IIPS and all instruments used in connection with the IIPS; (4) that it will not give the results of the IIPS to any third-party investment managers retained to assist the participant in improving its investment performance, unless the Working Group unanimously agrees; and (5) that any individual company's participation in the IIPS can be terminated upon the unanimous vote of the Working Group. In sum, the terms of the Letter Agreement give the Working Group perpetual control over all participants' historical data. Once a company signs on to participate in the IIPS, that company can never give the same historical investment performance data to any other consultant. In other words, through the Letter Agreement, the Working Group has locked up the information necessary to perform competing studies.

Plaintiff complains that defendants' control of the investment performance information collected from the various life insurance companies violates federal and state antitrust laws. According to Intellective, the Working Group has prevented the creation of competing studies by using the Letter Agreement permanently to restrict access to data, to coerce other insurance companies not to give investment performance information to any other entity, and to prevent other entities from performing competing studies. Intellective charges that, by using the restrictive Letter Agreement, the Working Group has erected "tremendous barriers of entry for anyone who wishes to compete" because "[a]ny investment performance survey which does not include data from the Working Group companies will be much less valuable than one that does."

Intellective claims that, as a result of the above, it has been injured in its capacity as a potential producer of a competing study. The Working Group's actions have restricted Intellective's ability to obtain the data needed to produce a similar study, thereby either preventing Intellective from producing a competing study at all or causing any study which Intellective could manage to produce to be far less valuable than it otherwise would have been. Basically, Intellective contends that the activities of the Working Group have prevented Intellective from competing freely and vigorously with the Working Group in the production of investment performance studies of life insurance companies.

Second, Intellective complains that the defendants have refused to deal with Intellective, both by denying it access to the data and by replacing Intellective with Sagamore for the IIPS contract.

Third, Intellective complains that defendants have instigated a suit in New York state court to prevent Intellective from producing a competing study. The state court case alleges that Intellective breached its vendor contract with the Working Group and PwC by retaining data and software after the contract terminated.

Six counts of the Amended Complaint set forth appellants' various theories of antitrust liability. Count One of the Complaint states that the defendants' conduct is an attempt to monopolize in violation of Section 2 of the Sherman Act. Count Two alleges a conspiracy to monopolize, also in violation of Section 2. Count Three states that defendants have engaged in a concerted refusal to deal, in violation of Section 1 of the Sherman Act. Count Four contends that defendants' activities constitute a group boycott, also in violation of Section 1. Count Five alleges illegal "tying" under Section 3 of the Clayton Act. And, finally, Count Six alleges violation of New York's antitrust statute, the Donnelly Act, based on all of the above.

Defendants have moved to dismiss the Amended Complaint under Fed.R.Civ.P. 12(b)(6) for failure to state a legally sufficient claim. One motion was filed by the Insurance Company Defendants, in which defendant Sagamore has joined, and a separate motion was filed by defendant PwC. Defendants offer three arguments for dismissal. First, they argue that the Amended Complaint, or at least part of it, should be dismissed under the Noerr-Pennington Doctrine. Second, they argue that Intellective lacks "antitrust standing" because the Amended Complaint fails to allege either (1) an adequate relevant product market or (2) "antitrust injury." Third, they argue that Intellective has failed to plead facts adequate to satisfy certain elements of the violations claimed.

The motions to dismiss defendants PwC and Sagamore from the case are granted. Intellective has not alleged anti-competitive conduct on the part of either of these entities. The motion of the Insurance Company Defendants is denied. At this early stage of the proceedings, Intellective has satisfied the pleading requirements to make out an antitrust action against these entities.


On a motion to dismiss for failure to state a claim, I must accept the complaint's allegations as true and read them in the light most favorable to the plaintiff. Todd v. Exxon Corp. et al.,275 F.3d 191, 197 (2d Cir. 2001). A complaint should not be dismissed for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957) (footnote omitted). "The issue is not whether plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).

In antitrust cases, as in all federal cases, only "a short plain statement of a claim for relief which gives notice to the opposing party" is required of the complaint. George C. Frey Ready-Mixed Concrete, Inc. v. Pine Hill Concrete Mix Corp., 554 F.2d 551, 554 (2d Cir. 1977). However, it is improper to assume that "the defendants have violated the antitrust laws in ways that have not been alleged." Associated Gen. Contractors of California, Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). Nonetheless, the Supreme Court has warned that in antitrust cases "dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very sparingly." Hospital Bldg. Co. v. Trustees of Rex Hospital, 425 U.S. 738, 746 (1976).

I. Noerr-Pennington Doctrine

The Noerr-Pennington Doctrine, wholly created by case law, is a limitation upon the scope of the Sherman Act, and provides that the Act does not apply to joint efforts by competitors to petition the government. First established in the context of concerted petitions for anti-competitive legislation, see Eastern Railroad President Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); United Mine Workers of America v. Pennington, 381 U.S. 657 (1965), the doctrine has been held to cover court petitions (i.e., lawsuits) as well. See Bill Johnson's Restaurants v. NLRB, 461 U.S. 731, 741 (1983) ("The right of access to the courts is an aspect of the First Amendment right to petition the Government for redress of grievances. Accordingly, we construe[] the antitrust laws as not prohibiting the filing of a lawsuit, regardless of the plaintiff's anticompetitive intent or purpose in doing so, unless the suit was a `mere sham' filed for harassment purposes.") (citing California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 510-11 (1972)).

Defendants argue that Intellective's complaint should be dismissed because "the central allegation" in the Complaint relates to a lawsuit filed by the Insurance Company Defendants and PwC. The Amended Complaint alleges that, after Intellective announced its intention to conduct an IIPS-like study, the Working Group and PwC, "with the specific intent of maintaining the Working Group's monopoly . . ., immediately took steps to keep Intellective from competing with the Working Group and its new agent Sagamore." Compl. ΒΆ 25. Only one of these "steps" is alleged in the Amended Complaint: the commencement by the Insurance Company Defendants and PwC of an action against Intellective in the New York State Supreme Court to prevent Intellective from ...

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