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PIERUCCI v. CONTINENTAL CAS. CO.

September 1, 1976

Donal Pierucci
v.
Continental Casualty Co.


Knox, D. J.

KNOX, D. J.:

This suit was brought by plaintiff on behalf of himself and others similarly situated versus Continental Casualty Company, on its own behalf and on behalf of all other similarly situated claiming that a conspiracy and restraint of trade has existed and still exists in violation of the antitrust laws with respect to contracts of professional liability insurance issued to architects, engineers and others, providing professional liability protection. The complaint in paragraphs 4-7 inclusive contains allegations seeking a class action to consist of plaintiffs of all past and present architects and engineers who have purchased policies of professional liability insurance from the representative defendant or other members of the class of defendants. Defendant has filed a motion to dismiss claiming that a class action should not be permitted and also claiming that the defendant is exempt from the operation of the antitrust laws as an insurance company pursuant to the provisions of the McCarran Ferguson Act, 15 U.S.C. §§ 1011-1015.

 I. Class Action.

 The class action will be denied. Pursuant to Rule 23(c) the court determines that the case cannot be maintained as a class action, because it is not shown that the claims of the plaintiffs are typical of those of the other members of the class and with respect to the allegations of coercion and tying, it would appear that to the extent a class action is sought under 23(b)(3), the same would become unmanageable.

 This court has held that where there are claims of tying resulting in coercion, a class action cannot be maintained because the claims of the individual plaintiffs are not necessarily typical of those of the class and for the further reason the result would be a myriad of mini law suits to determine the exact extent of coercion in each individual case. Therefore, the class action is not superior to other available means for determining the controversy and it further does not appear in view of the allegations of coercion that the party opposing the class has acted or refused to act on grounds generally applicable to the class.

 There has as yet been no motion to certify a class action under our Rule 34(c)*but nevertheless under Rule 23(c) FRCP, the court is required to determine the matter as soon as practical. The question has already been fully argued to the court and we now determine that the case shall not be maintained as a class action. See Stavrides v. Mellon Bank, NA, 69 F.R.D. 424 (W.D. Pa. 1975) FRD and Ungar v. Dunkin' Donuts, 531 F.2d 1211 (3d Cir. 1976), wherein the court held that a class action was inappropriate where there was a claim of tying arrangement in a franchise case.

 II. Application of the Insurance Exemption to the Antitrust Laws.

 The relevant sections of the McCarran Ferguson Act are found at 15 U.S.C. Chapter 20, §§ 1011, 1012 and 1013:

 
§ 1011. "Congress declares that the continued regulation and taxation by the several States of the business of insurance is in the public interest, and that silence on the part of the Congress shall not be construed to impose any barrier to the regulation or taxation of such business by the several States. Mar. 9, 1945, c. 20, § 1, 59 Stat. 33."
 
§ 1012. "(a) The business of insurance, and every person engaged therein shall be subject to the laws of the several States which relate to the regulation or taxation of such business.
 
"(b) No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance: Provided, That after June 30, 1948, the Act of July 2, 1890, as amended, known as the Sherman Act, and the Act of October 15, 1914, as amended known as the Clayton Act, and the Act of September 26, 1914, known as the Federal Trade Commission Act as amended, shall be applicable to the business of insurance to the extent that such business is not regulated by State law. Mar. 9, 1945, c. 20, § 2, 59 Stat. 34; July 25, 1947 c. 326, 61 Stat. 448."
 
§ 1013. "(a) Until June 20, 1948, the Act of July 2, 1890, as amended, known as the Sherman Act and the Act of October 15, 1914, as amended, known as the Clayton Act, and the Act of September 26, 1914, known as the Federal Trade Commission Act, and the Act of June 19, 1936, known as the Robinson-Patman Anti-Discrimination Act, shall not apply to the business of insurance or to acts in the conduct thereof.
 
(b) Nothing contained in this chapter shall render the said Sherman Act inapplicable to any agreement to boycott, coerce, or intimidate, or act of boycott, coercion, or intimidation. Mar. 9, 1945, c. 20, § 3, 59 Stat. 34; July 25, 1947, c. 326, 61 Stat. 448."

 It is common knowledge that this act limiting the effect of the antitrust laws upon the insurance business was passed by Congress to alleviate the effect upon the insurance companies of the case of U.S. v. South-Eastern Underwriters Assn., 322 U.S. 533, 88 L. Ed. 1440, 64 S. Ct. 1162 (1944) which undermined the early decision of the U.S. Supreme Court in Paul v. Virginia, 75 U.S. 168, 8 Wall. U.S. 168, 19 L. Ed. 357 (1869) holding that contracts of insurance were not commerce at ...


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