In an effort to defeat plaintiffs' claims for a third -- and hopefully final -- time, insurer and broker defendants recently filed motions to dismiss the Second Consolidated Amended Class Action Complaints filed in In re Insurance Brokerage Antitrust Litigation, Civil Action No. 04-5184, MDL 1663 (D.N.J.) (GEB) ("MDL 1663"). MDL 1663 is the putative class action that followed then-New York Attorney General Eliot Spitzer's investigation into contingent commission arrangements between insurers and brokers. A central theme reiterated throughout the briefs in support of defendants' motions to dismiss the antitrust and RICO claims is the plaintiffs' failure to allege anything more than mere parallel conduct by the defendants. Relying on Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (2007), the Supreme Court's recent decision regarding antitrust pleading requirements, the defendants argue that such allegations are insufficient to state a claim, especially in light of the plaintiffs' extensive discovery efforts over the last two years. At long last, the defendants argue, plaintiffs' fishing expedition for a viable theory of liability should be terminated.

With respect to plaintiffs' antitrust claims, the class defendants make three main arguments. First, citing Twombly, the defendants note that an antitrust complaint must do more than merely "open the possibility" that a plaintiff might later establish some set of undisclosed facts to support recovery. Rather, in order to survive a motion to dismiss, such a complaint must allege facts that provide plausible grounds to infer an unlawful agreement. It is this that plaintiffs have failed to do, the defendants argue, because the complaints do not allege an agreement among insurers (as opposed to parallel agreements between particular insurers and brokers). As a result, plaintiffs have not sufficiently alleged the requisite "rim" of "hub-and-spoke" broker-centered conspiracies. Second, defendants argue that plaintiffs fail to meet the criteria for a per se violation because plaintiffs do not allege a plausible market allocation scheme and the other alleged restraints (i.e., strategic partnerships between insurers and brokers, as well as brokers' provision of first and last looks to certain insurers) may have procompetitive effects and are therefore not treated as per se violations under the antitrust laws. Finally, the defendants argue that the conduct at issue falls within the McCarran-Ferguson Act and is thus exempted from federal antitrust laws. (This argument was rejected by the Court in its decision on the defendants' first motion to dismiss. The defendants have renewed the argument on the grounds that plaintiffs' amended pleadings now make it clear that conduct challenged is within the purview of McCarran-Ferguson's exemption.) In an effort to soften the blow of plaintiffs' factual allegations regarding bid-rigging, the briefs emphasize that the class plaintiffs have not predicated their claims on a bid-rigging conspiracy, pointing out that the bid-rigging allegations are by and large isolated to a single broker and a single line of insurance and that none of the named plaintiffs has standing to assert a bid-rigging claim because none is alleged to have been injured by any bid rigging.

With respect to the RICO claims, the defendants note that, "[d]espite two years of discovery and the guidance of two opinions from this Court, Plaintiffs . . . continue to play a shell game with their RICO Enterprise allegations, shuffling between theories in the hopes that one of them will finally work." In particular, the class defendants argue that the plaintiffs' amended pleadings fail to meet both the heightened pleading standard for fraud claims, as well the standard for simple notice pleading, as elucidated by the Supreme Court in Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (2005), another recent Supreme Court decision, and Twombly. Focusing on the lack of factual allegations regarding both the structure and operation of the alleged RICO enterprises, as well as the conclusory allegations of fraud, the class defendants argue that plaintiffs fail to plead the following elements of a RICO claim adequately: (1) that the defendants participated in a RICO enterprise; (2) that the defendants operated the alleged RICO enterprise; (3) that the defendants carried out the alleged predicate acts of mail and wire fraud; and (4) that the defendants proximately caused injury to the named plaintiffs. Although the Court's decision on the last motion to dismiss held out the possibility of the plaintiffs successfully alleging a RICO claim, the defendants' briefs put forward strong arguments for dismissal.

Click here and here to view copies of the omnibus briefs filed by the defendants. The class plaintiffs' opposition is due on July 19th, and the class defendants' reply is due on July 31st. Chief Judge Brown has indicated that he hopes to issue a decision in the fall.