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Global Reinsurance Corp. v. Equitas Ltd.

March 3, 2009

GLOBAL REINSURANCE CORPORATION - U.S. BRANCH F/K/A GERLING GLOBAL REINSURANCE CORPORATION U.S. BRANCH, PLAINTIFF,
v.
EQUITAS LTD.; EQUITAS REINSURANCE LTD.; AND EQUITAS POLICYHOLDERS TRUSTEE LTD., DEFENDANTS.



The opinion of the court was delivered by: Bernard J. Fried, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Before me is a motion to dismiss the second amended complaint pursuant to CPLR §§ 3211(a)(2) and (a)(7). The second amended complaint, filed August 6, 2008, sets forth three counts: tortious interference with contract,*fn1 violation of the Donnelly Act, Gen. Bus. Law § 340, and injunctive relief. For the reasons that follow, the motion is granted and the second amended complaint is dismissed with prejudice.

In reviewing a motion to dismiss under CPLR § 3211(a)(7), I must accept the pleading's allegations as true. A more complete statement of the factual allegations underlying the Donnelly Act claim can be found in my July 3, 2008 decision deciding defendants' motion to dismiss the first amended complaint. Global Reins. Corp. U.S. Branch v. Equitas Ltd., 20 Misc 3d 1115(A), 2008 WL 2676805, **1-3 (Sup. Ct. Jul 03, 2008) ("July 3, 2008 Decision"). Since those factual allegations are substantially preserved in the second amended complaint, I will not reiterate them.

The Donnelly Act prohibits any agreement or arrangement by which a monopoly is established or competition is restrained. Gen. Bus. Law § 340(1). To state a claim under the Donnelly Act, a plaintiff must: (1) identify the relevant product market; (2) describe the nature and effects of the purported conspiracy; (3) allege how the economic impact of that conspiracy is to restrain trade in the market in question; and (4) show that there is a conspiracy or reciprocal relationship between two or more entities. Creative Trading Co., Inc. v. Larkin-Pluznick-Larkin, Inc., 136 AD2d 461, 461-62 (1st Dep't 1988). In interpreting the Donnelly Act, New York courts generally follow federal caselaw analyzing the Sherman Act of 1890, 15 U.S.C. §§ 1-39. People v. Rattenni, 81 NY2d 166, 171 (1993).

"No heightened pleading requirements apply in antitrust cases. [A] short plain statement of a claim for relief which gives notice to the opposing party is all that is necessary.'" Todd v. Exxon Corp., 275 F.3d 191, 198 (2d Cir. 2001) (quoting George C. Frey Ready-Mixed Concrete, Inc. v. Pine Hill Concrete Mix Corp., 554 F.2d 551, 554 (2d Cir.1977)). "Because market definition is a deeply fact-intensive inquiry, courts hesitate to grant motions to dismiss for failure to plead a relevant product market." Todd, 275 F.3d at 199-200. Nevertheless, it is "improper to assume that the [plaintiff] can prove facts that it has not alleged or that the defendants have violated the antitrust laws in ways that have not been alleged.'" Id. at 198 (quoting Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983)) (plaintiff's allegation that the relevant market was the market for the services of certain professional and technical employees in the oil and petrochemical industry in the continental U.S. was plausible enough to survive motion to dismiss, based on allegation that those employees "accumulate industry-specific knowledge that renders them more valuable to employers in the oil and petrochemical industry than to employers in other industries"); see also Theatre Party Assocs., Inc. v. Shubert Org., Inc., 695 F. Supp. 150, 154-55 (S.D.NY 1988) (granting motion to dismiss plaintiff's monopolization claim, which was based on an alleged market of advance sales of selected tickets to the early run of "Phantom of the Opera," where plaintiff failed to explain why other Broadway shows or entertainment events were not adequate substitute products).

Thus, to survive a motion to dismiss, it is sufficient for the complaint to allege "specific facts that support a narrow product market in a way that is plausible and bears a rational relation to the methodology courts prescribe to define a market for antitrust purposes." Todd, 275 F.3d at 203. While "market definition is most often a factual inquiry," a motion to dismiss may be granted, however, "if the alleged market makes no economic sense under any set of facts.'" Pepsico, Inc. v. Coca-Cola Co., 1998 WL 547088, *6 (S.D.NY Aug 27, 1998) (quoting National Communications Ass'n v. Am. Tel. & Tel. Co., 808 F. Supp. 1131, 1134 (S.D.N.Y.1992)).

Defendant's principal arguments on its motion to dismiss for failure to state a claim are that Global has failed to allege either a relevant product market or a restraint of trade in that market. I will first address the adequacy of the relevant product market allegations.

The second amended complaint, under the heading, "The Worldwide Market for Non-Life Retrocessional Reinsurance and the Lloyd's Submarket," alleges that the relevant product market is the worldwide market for non-life retrocessional coverage: i.e., the purchase, sale, and servicing of retrocessional coverage for risks written by reinsurers, with respect to property, casualty, and related lines of insurance business. (Compl.*fn2 ¶ 28.) The complaint also alleges that this market is recognized within the reinsurance industry as a distinct product market, as it involves specialized sellers and products, because its products are not interchangeable with other insurance products. (Compl. ¶¶ 29-30.) The complaint further alleges that the Lloyd's marketplace is a distinct submarket of this market. (Compl. ¶ 34.)

As a preliminary matter: plaintiff has asserted in its opposition brief and at oral argument that the second amended complaint pleads in the alternative that Lloyd's is a relevant product market in its own right. Plaintiff also argues that I am constrained by "law of the case" to uphold the adequacy of this alternative theory, because I sustained the adequacy of the product market allegations in the first amended complaint. I disagree with both contentions.

In my July 3, 2008 decision, I held that the first amended complaint had alleged a relevant product market with a geographic scope consisting only of Lloyd's. (July 3, 2008 Dec'n at *13-14.) In deciding the motion to dismiss the first amended complaint, I was limited to the factual allegations in that complaint, which alleged a market for non-life retrocessional reinsurance within Lloyd's and nowhere alluded to a broader geographic market outside Lloyd's. There were no factual allegations in the first amended complaint that suggested that any product market existed outside of Lloyd's. Therefore, I refused to consider the parties' arguments in their briefs and at oral argument that Lloyd's was only a subset of a worldwide market.

Plaintiff sought permission, however, to move for leave to amend its first amended complaint to allege a broader geographic market. I granted its request. (July 3, 2008 Dec'n at *14.) Plaintiff so moved, leave was granted, and the second amended complaint is now before me.

An amended complaint supersedes the original pleading. See Dragon Inv. Co. II LLC v. Shanahan, 49 AD3d 403, 405 (1st Dept. 2008) (original complaint was superseded by amended complaint and was therefore no longer before the court); Hayes v. Utica Mut. Ins. Co., 16 AD2d 732, 732 (4th Dept. 1962) (since amended complaint superseded and replaced original complaint, "the original complaint... is not before us").*fn3

It is clear that plaintiff's second amended complaint amends and replaces the first amended complaint. Not only is the second amended complaint styled as an "amended" complaint, but plaintiff was even careful to replead the tortious interference cause of action, which had been dismissed from the first amended complaint, in the expectation that the earlier complaint would not be considered in an appeal from the order of dismissal. (2d Am. Compl. ΒΆ 1 n.1.) Because the first amended complaint has been amended, it is no ...


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