Appeals from the United States District Court for the Northern District of California. D.C. No. CV-91-3111-SC. D.C. No. CV-91-3112-SC. D.C. No. CV-91-3113-SC. Samuel Conti, District Judge, Presiding.
Before: Mary M. Schroeder, Warren J. Ferguson and Pamela Ann Rymer, Circuit Judges. Opinion by Judge Rymer.
These appeals require us to decide whether consultants who advise tort plaintiffs on structured settlements have suffered antitrust injury when they can't get information about premiums and rating practices from, or serve as brokers to arrange annuities to fund structured settlements with, life insurance carriers because of an alleged boycott by life insurance carriers and brokers who specialize in arranging annuities in behalf of tort defendants.
A structured settlement takes place when a tort defendant or its liability carrier purchases an annuity, with the tort plaintiff as the beneficiary, to settle a civil lawsuit. Legal Economic Evaluations, Inc., IBAR Settlement Co., and Weil Insurance Agency, Inc. (collectively Weil) are structured settlement consultants to tort plaintiffs. They have sued a number of life insurance carriers*fn1 and brokers*fn2 (Life Carriers and Brokers) under § 4 of the Clayton Act, 15 U.S.C. § 15, alleging that the Life Carriers and Brokers conspired to drive consultants and brokers for tort plaintiffs out of the annuity brokering business, thereby ensuring that only brokers for tort defendants would place annuities to fund structured settlements.
The district court granted summary judgment for Life Carriers and Brokers on the footing that if their policy harmed anyone, it was tort plaintiffs, and that the only possible injury was depriving tort plaintiffs of a stronger negotiating position in settlement negotiations. Weil Ins. Agency, Inc. v. Manufacturers Life Ins. Co., 815 F. Supp. 1320 (N.D. Cal. 1992). Meanwhile, the court had declined to stay this action, at Weil's request, in deference to a state court action Weil had previously filed asserting a violation of the Cartwright Act, Cal. Bus. & Prof. Code §§ 16720 and 16721.5, California's antitrust statute. Weil appeals both rulings.
We have jurisdiction, 28 U.S.C. § 1291, and we hold that Weil's motion to stay was properly denied as federal jurisdiction over the Clayton Act claim is exclusive and the district court lacked discretion to abstain. With respect to its antitrust claim, Weil's injury from being unable to obtain information about tort defendants' annuity calculations, or to place annuities while consulting for tort plaintiffs, does not flow from the harm to competition it alleges: decreased annuity benefits to tort plaintiffs, and increased annuity costs to liability carriers. Nor has Weil suffered antitrust injury on account of being denied the business opportunity of working both sides of the street; the antitrust laws are concerned about injury to competition, not competitors. Because Weil has not shown antitrust injury, we affirm.
For purposes of the summary judgment, the facts are not in dispute. During the late 1970s and early 1980s, parties to tort actions turned with increasing frequency to the structured settlement as a means of resolving their disputes. Rather than pay a lump-sum cash settlement, a tort defendant or its casualty insurer will purchase an annuity, with the tort plaintiff named as the beneficiary. A structured settlement has something to offer each party. For the defendant (or its liability carrier), the annuity may be cheaper than paying the plaintiff the present value of the stream of future payments. The tort plaintiff, in turn, receives the guarantee of predictable future payments. The plaintiff also obtains a tax advantage: The future payments are not taxable income, whereas the future income a plaintiff would receive from investing a lump-sum payment would be taxed. See I.R.C. § 104(a)(2); Rev. Ruls. 79-200, 79-313.
The premium for an annuity is determined by applying the issuer's premium rate to the annuitant's age. The issuer may also apply a "rate-up" in quoting an annuity; this occurs when the issuer determines that the annuitant's chronological age does not reflect (in the issuer's judgment) the number of years that payments may be made, and the annuitant is given a "rated age" that corresponds to the issuer's estimation of her or his future longevity. Only a licensed broker is authorized to quote the cost of a given annuity.
Weil Insurance, Legal Economics and IBAR either lost business, or went out of business, as a result of the market differentiation that Weil attributes to a conspiracy by Life Carriers and Brokers to reduce the cost of structured settlements below the cash value of tort claims. In furtherance of this conspiracy, Life Carriers and Brokers blocked tort plaintiffs and their attorneys from gaining access to annuity price information, and boycotted companies, such as Weil, who were consulting with tort plaintiffs.
The complaint*fn3 alleges "two relevant product markets: (a) annuities sold to fund structured settlements of personal injury claims and (b) professional consulting services provided to (i) the injury victim and his/her attorney or (ii) the liability carrier regarding the use of annuities to fund structured settlements of personal injury claims." It then alleges that competition was injured in that the conspiracy among Life Carriers and Brokers depressed the consideration liability carriers paid to settle claims below the cash value of those claims; reduced the sale of annuities by withholding annuity information from tort plaintiffs, their counsel, and those who acted as their brokers, consultants, and agents; and produced a boycott of consultants and agents (such as Weil) who provided services to tort plaintiffs.
Weil argues that it has shown antitrust injury because Life Carriers and Brokers acted with the purpose and effect of denying access to competition in the structured settlement brokerage and consulting market as well as access to the relationships with life insurers necessary to compete in those markets. In addition, Weil contends, the boycott suppressed information critical to the proper competitive working of the structured settlement market place; distorted the price paid by property and casualty ...