Sanger Insurance Agency v. HUB International, Limi
2015 U.S. App. LEXIS 16863
5th Cir.2015Background
- Sanger Insurance Agency sought to enter veterinary professional liability insurance market via the AVMA Program run by HUB as Broker of Record, alleging exclusive dealing with insurers to foreclose competition.
- Program is a risk purchasing group with master policy; HUB marketing, servicing, claims monitoring, policy form development, and rate negotiation for insurers underwriting through the Program.
- Insurers (Zurich, Hartford, Travelers, Continental, etc.) provided coverage under master polices; Sanger claimed HUB’s exclusive arrangements kept insurers from writing veterinary policies through other brokers.
- Sanger had begun limited sales (about ten policies) and sought endorsements from veterinary associations; HUB learned of Sanger’s attempts and allegedly acted to suppress competition.
- District court granted summary judgment, holding McCarran-Ferguson exemption for federal antitrust claims and lack of standing; Texas claims treated similarly; Sanger appealed.
- Fifth Circuit held Sanger had antitrust standing (sufficient preparedness to enter the market) but found HUB’s alleged conduct within the McCarran-Ferguson exemption; state antitrust and tortious interference claims reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Antitrust standing | Sanger was prepared to enter market. | Sanger lacked preparedness and standing. | Sanger has standing; prepared to enter market |
| McCarran-Ferguson exemption—business of insurance | Exclusive dealing affects insurance allocation and is within business of insurance. | Exemption applies only to the business of insurance; analysis limits to insurance domain. | Exclusive dealing potentially within business of insurance; exemption applicable |
| McCarran-Ferguson exemption—regulated by state law | State regulation supports exemption in Texas and other states. | Regulation must be shown; district court found state regulation satisfied. | Regulated by state law; exemption satisfied |
| Boycott, coercion, or intimidation under McCarran | HUB’s conduct constitutes boycott benefiting its monopoly. | Individual actor cannot be a boycott; lack of concerted action. | No boycott; exemption applies |
| Impact on Texas claims following standing and exemption ruling | State claims should proceed if federal claims barred or exempted. | Federal exemption compels dismissal of federal claims but not state law claims. | Affirm dismissal of federal antitrust claims; reverse and remand state antitrust and tortious interference claims |
Key Cases Cited
- Jayco Sys., Inc. v. Savin Bus. Machs. Corp., 777 F.2d 306 (5th Cir.1985) (standing based on preparedness and potential entry into market)
- Hayes v. Solomon, 597 F.2d 958 (5th Cir.1979) (nascent competitor preparedness standard)
- Martin v. Phillips Petroleum Co., 365 F.2d 629 (5th Cir.1966) (capital or investment as factor in preparedness)
- In re Insurance Brokerage Antitrust Litig., 618 F.3d 300 (3d Cir.2010) (whether broker-insurer conduct falls within business of insurance)
- Royal Drug Co. v. Group Life & Health Ins. Co., 440 U.S. 205 (1979) (scope of 'business of insurance' exemption; risk transfer context)
- Pireno v. Group Life & Health Ins. Co., 458 U.S. 119 (1982) (three criteria for business of insurance exemption)
- Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993) (definition of boycott; collateral transactions requirement)
- St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531 (1978) (concerted action required for boycott)
- Genuine related citations from text: In re Insurance Brokerage Antitrust Litig., 618 F.3d 300 (3d Cir.2010) (exemption analysis in broker-insurer context)