October 2, 2007
On September 28, the United States District Court for the District of New Jersey dismissed remaining racketeering claims brought by over three dozen policyholders against dozens of insurance brokers and carriers, including Willkie client Marsh & McLennan, the world’s largest insurance broker. Suing on behalf of a nationwide class, the plaintiffs in In Re Insurance Brokerage Antitrust Litigation alleged that the companies engaged in a conspiracy in which they allocated clients, fixed prices and restrained trade in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO) and the Sherman Antitrust Act. The ruling follows Judge Garrett E. Brown Jr.’s August 31 decision to dismiss (for the third time) antitrust claims asserted in this Multidistrict Class Action Litigation, all of which arose out of the New York Attorney General’s 2004 investigation of the insurance industry.
In dismissing the RICO claims with prejudice, Judge Brown noted that the plaintiffs had been given three opportunities to state a claim ("three bites at the apple"), with the benefit of substantial discovery, and still failed to cure the pleading deficiencies. In his 73-page decision he wrote, “Plaintiffs’ allegations offer nothing more than a kaleidoscope of acts executed by a kaleidoscope of actors, and combine broker-defendants and insurer-defendants in such a fashion that the court is unable to discern any systemic permutation…..While discussing dozens of transactions and hundreds of actors, plaintiffs fail to outline even a single set of actors that interacted with each other and executed their transactions systemically.”
Accordingly, he concluded that granting the plaintiffs leave to replead would be futile, unduly prejudicial to the defendants and not in the interests of justice. He then declined to exercise supplemental jurisdiction over the state law claims asserted by the plaintiffs. Coupled with the favorable antitrust ruling, dismissal of the RICO and pendent state law claims ends (subject to appeal) the nationwide policyholder class action against Marsh.
The Willkie team on the RICO portion of the case included partners Mitchell Auslander, John Oller and Christopher St. Jeanos, and associates Kristin Branson, Deirdre Norton Hykal and Rachel Owens. The case received widespread media attention, including coverage in the September 29 New York Times. Mr. Auslander, lead partner on the matter, told the Times that this is “a huge victory for the defendants.”
