Insurer, Broker Might Have Conspired to Allocate Customers, Divide Markets

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The Ohio Attorney General sufficiently pled claims of conspiracy to allocate customers, divide markets, and restrain competition against insurance companies and an insurance broker, an Ohio state trial court has ruled.

The attorney general outlined a scheme in which the insurers communicated through the broker in order to provide protection and receive protection for renewal policies that generated lucrative premiums.

Communications Between Parties

The complaint described communications from employees of the broker who were seeking inflated and fictitious quotes from defendant insurers to feign competition. Additionally, the broker allegedly perpetrated the conspiracy by seeking communication from defendant insurers declining to quote insurance.

The court ruled that the state's allegations met the standard of review specified by the U.S. Supreme Court's decision in Conley v. Gibson (1957), 355 U.S. 41, which held that a Rule 12(B)(6) motion would not be granted "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."

Twombly Standard Rejected

Rejected was the defendants' contention that the court adhere to the standard of review applied by the U.S. Supreme Court's 2007 decision in Bell Atlantic Corp. v. Twombly (2007-1 Trade Cases ¶75,709). Twombly, which held that in order to survive a motion to dismiss the complaint had to allege "enough facts to state a claim to relief that is plausible on its face, "was not applicable. The scheme outlined by the attorney general was not merely one in which there was an allegation of parallel conduct, as the complaint alleged in Twombly. The circumstances established more than parallel conduct, according to the court.

The court also rejected contentions that the attorney general had standing under the Ohio Valentine Act to seek injunctive relief, equitable relief, and statutory forfeiture and that the statute of limitations barred the action. While the statute did not specifically provide for any tolling of the statute of limitations, the "discovery rule" was applied to situations, such as this one, where the defendants purportedly concealed their acts from being discovered.

The June 30 decision is State of Ohio v. American International Group, Inc., Ohio Court of Common Pleas, Cuyahoga County, 2008-2 Trade Cases ¶76,202.