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WARNICK v. WASHINGTON EDUCATORS ASSN.

June 8, 1984

John R. Warnick, Educators Financial Services Corp., Lorentzen & Associates Financial Services, Staudacher Agency, Dinan Agency, Assurance Marketing Services, Inc., J. Cameron Cutler, M. Delmar Green, Hans G. Lorentzen, Ray Staudacher, Brendan M. Dinan, Cheryl J. Warnick, Pete W. Warnick, James C. Freeby, Randy B. Martin, Steve A. Wilson, and Dan C. Cummings, Plaintiffs
v.
Washington Educators Association and Frank B. Hall & Co. of Washington Defendants



The opinion of the court was delivered by: MCNICHOLS

 MCNICHOLS, D.J.:

 In this action the plaintiffs allege that the defendants' activities are in violation of sections 1 and 2 of the Sherman Act and that they have been damaged thereby. They further allege various state claims on the basis of pendent jurisdiction.

 Jurisdiction of this court is based upon section 4 of the Clayton Act, 15 U.S.C. § 15.

 The defendants have moved to dismiss the complaint on several grounds. Voluminous memoranda and supporting material have been filed and the matter was fully argued. The motions are now ripe for disposition.

 I. Factual Background

 The underlying facts are undisputed. Plaintiffs, Educators Financial Services Corporation, Assurance Marketing Services, Inc., and their employees, officers and agents, seek treble damages resulting from alleged antitrust violations. In addition, plaintiffs maintain that this Court has pendent jurisdiction over various state tort claims.

 Plaintiffs contend that defendant Washington Education Association (WEA) and its broker (Frank B. Hall & Co.) and agents (Greenco Services, Inc.) have conspired to restrain trade in the sale of tax sheltered annuities (TSA's) to Washington State school district employees. The alleged conspiracy consists of the sponsorship and endorsement by WEA of the TSA program as well as insurance sold by the defendant Hall and his agents.

 Defendant WEA is a public sector union representing school teachers in the State of Washington. The union "endorses" defendant insurance brokers as the exclusive annuity contractor for the school employee TSA program. These union-sponsored insurance agents have access to teacher mail boxes and to teacher lounges to the exclusion of other insurance agents.

 The participation by school employees in the Union sponsored plan is optional. Those employees who decide to participate, authorize premiums to be deducted from their salary through a "salary reduction agreement" and paid by WEA to the annuity supplier.

 It is clear that the employees are not forced to buy TSA's from the defendant agents; they are free to purchase them in the market or not purchase them at all.

 Plaintiffs are challenging the union's exclusive endorsement practice as violative of federal antitrust laws. Defendants contend (1) that the individual plaintiffs as employees, officers and agents of the plaintiff insurance broker, lack the requisite standing to sue under section 4 of the Clayton Act, and (2) that in any case, they are exempt from liability under the "labor exemption" to the antitrust laws.

 II. Antitrust Injury

 Section 4 of the Clayton Act, 15 U.S.C. § 15, provides a private treble-damage cause of action for parties injured by antitrust violations. The threshold inquiry is whether plaintiffs have stated sufficient facts to support their allegations that an antitrust violation has ...


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