The Third Circuit came out last week with a 200-page rumination on the post-Twombly plausibility of conspiracies under section 1 of the Sherman Act (and the Racketeer-Influenced and Corrupt Organizations Act). In re Ins. Brokerage Antitrust Litig., No. 07-4046 (3d Cir. Aug. 16, 2010).
The court upheld dismissal of hub-and-spoke conspiracy claims that accused big insurance brokers (the hubs of different wheels) of conspiring with insurers (the spokes on each wheel) to limit competition for coverage-buyers' business. The decision turned on the panel's view that no plausible rim connected the spokes. A rimless wheel, the court noted, may make out a vertical conspiracy (between a broker-hub and the insurer-spokes) but not a horizontal one. Because a vertical agreement doesn't get per se illegal treatment (see here) and because the plaintiffs disclaimed a rule of reason claim (check here), the court concluded that Twombly mandated crushing the claims.
But the panel vacated rejection of a less ambitious theory — one that put a single broker, Marsh, at the hub of an at least tacit agreement (between Marsh and insurers and among the insurers) to let Marsh steer customers to incumbent insurers, killing competition between upstarts and incumbent on incumbement business. The court found plausible the idea that the incumbents would serve self-interest by agreeing to help Marsh maintain the status quo by submitting fake bids for non-incumbent business.
That Marsh more or less admitted the conspiracy may have helped.
For a Brilliant Analysis of In re Ins. Brokerage, please see Guest Post: Sam Simon.
[Warning: Blawgletter's firm represented a group of defendants-appellees in the case.]