Reply Brief — Agency Holding Corp. v. Malley-Duff & Associates, Inc.

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No. 84-340 CLERK

IN THE

Supreme Court of the United States

October Term, 1984

CROWN LIFE INSURANCE COMPANY, et al.,

Petitioners,

v.

MALLEY-DUFF & ASSOCIATES, INC.,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Third Circuit

PETITIONERS’ REPLY BRIEF

ALEXANDER BLACK

(Counsel of Record)

ROBERT L. FRANTZ

BUCHANAN INGERSOLL

Professional Corporation

57th Floor, 600 Grant Street

Pittsburgh, PA 15219

(412) 562-8800

Counsel for Petitioners Crown

Life Insurance Company and

Clarke Burton Lloyd

November 1984

HERBICK & HELD PRINTING COMPANY, PITTSBURGH, PA. 15233

Table of Contents.

TABLE OF CONTENTS

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Petitioners’ Reply Brief

There Is No Factual Foundation For Respon-

dent’s Claim That It Was Put Out Of Business

By The Termination Of Its General Agency

EES oe cpu Ded os bk cahoots oo ode ee 990°

See ARC: ae a ara ee

TABLE OF AUTHORITIES

CASES

Copperweld Corp. v. Independent Tube Corp., 104

NE EE I Fe eee

DeFillippo v. Ford Motor Co., 516 F.2d 1313 (3d

Cir.), cert. denied, 423 U.S. 912 (1975) .........

Hood v. Tenneco Texas Life Insurance Co., 739 F.2d

EE EE ne

Klor’s Inc. v. Broadway-Hale Stores, Inc., 359 U.S.

ee eee a epee ade 5s

Larry V. Muko, Inc. v. Southwest Pennsylvania

Building and Construction Trades Council, 670

aa (3d Cir.), cert. denied, 459 U.S. 916

Marrese v. American Academy of Orthopedic Sur-

geons, 726 F.2d 1150 (7th Cir.), cert. granted, 104

ee eee by heb sc ve eee ces eenes

Poller v. Columbia Broadcasting System, Inc., 368

Ee ree

Spray-Rite Service Corp. v. Monsanto Co., 684 F.2d

1226 (7th Cir. 1982), aff'd, 104 S. Ct. 1464 (1984)

United States v. General Motors Corp., 384 U.S. 127

et a Re Sin at nk a seh we 0 0.0%

————EeEE ee

PETITIONERS’ REPLY BRIEF

There Is No Factual Foundation For Respondent’s Claim

That It Was Put Out Of Business By The Termination Of

Its General Agency Contract.

In its effort to get away from the great weight of

authority to the effect that there must be a price motiva-

tion for an alleged group boycott to be given per se

treatment, the Respondent argues for the first time that

no price aspect is required if the purpose is to put the

target out of business. That argument is not open to the

Respondent in this case because there is no evidence to

show that Malley-Duff was put out of business as a result

of the alleged group boycott. The fact is that the only

effect the termination of Malley-Duff’s general agency

contract had on its business was that it could no longer

sell Crown products through brokers. It was still entirely

free to sell Crown products directly to consumers. The

fact that it did not do so was purely the choice of Malley

and Duff, its principals. It was also perfectly free to

become general agent for any of the hundreds of life

insurance companies doing business in Pennsylvania and

in fact Mr. Duff did just that, but under a different corpo-

rate name. Malley and Duff quite plainly let their corpo-

ration die in order to enable them to claim that their

corporation had been put out of business and thus to

increase their claimed damages.

The fact that Malley-Duff was still free to sell Crown

insurance policies directly to policyholders makes such

cases as United States v. General Motors Corp., 384 U.S.

127, 145-46 (1966), and Klor’s Inc. v. Broadway-Hale

Stores, Inc., 359 U.S. 207, 211 (1959) inapposite, as is also

the boycott aspect of the Monsanto case in the Seventh

Circuit: Spray-Rite Service Corp. v. Monsanto Co., 684

F.2d 1226 (1982), aff'd, 104 S. Ct. 1464 (1984). Respon-

2 Petitioner’s Reply Brief.

dent’s reliance on Larry V. Muko, Inc. v. Southwest

Pennsylvania Building and Construction Trades Coun-

cil, 670 F.2d 421, 430 (3d Cir.), cert. denied, 459 U.S. 916

(1982) is misplaced for the same reason.

The only case relied on by the Respondent, which it

claims did not involve the price aspect, is Poller v. Co-

lumbia Broadcasting System, Inc., 368 U.S. 464 (1962),

and there by a five to four vote this Court reversed the

granting of a summary judgment, the majority indicating

that, particularly in antitrust cases, summary judgment

should be granted very sparingly. In the case at bar, the

defendant’s motion for summary judgment was refused

and it was not until the plaintiff had had full opportunity

to prove its case that a directed verdict on the antitrust

counts was granted to the Petitioners, at trial after the

Respondent had rested its case. More than that, Poller is

not a boycott case—no boycott was claimed, and neither

the majority opinion nor the dissent mentions boycott.

Of course, in the case at bar a boycott is claimed to

escape the McCarran-Ferguson exemption.

The case of DeFillippo v. Ford Motor Co., 516 F.2d

1313 (3d Cir.), cert. denied, 423 U.S. 912 (1975), cannot be

authority for the Respondent, because it was found that

no boycott existed. Respondent misstates the holding in

Marrese v. American Academy of Orthopedic Surgeons,

726 F.2d 1150 (7th Cir.), cert. granted, 104 S. Ct. 3553

(1984), as the following from the opinion (p. 1155)

demonstrates:

...“‘boycotts are illegal per se only if used to enforce

agreements that are themselves illegal per se—for

example price-fixing agreements”...

Petitioner’s Reply Brief. 3

The complaint in the present case charges either

a conspiracy to fix prices or limit output, a per se

offense under federal as under Illinois law, or, more

likely, a non-price conspiracy to exclude rivals from

a professional association, which under our

precedents must be tested under the Rule of Reason

—and the state law is again the same.

Two other points the Respondent seeks to make de-

serve brief mention. While it is true that this Court’s

decision in Copperweld Corp. v. Independent Tube Corp.,

104 S. Ct. 2731 (1984) was not urged upon the Court of

Appeals for the Third Circuit, that is because the deci-

sion had not been handed down until after the briefs

were in and the case was argued. However, the argument

was made that the requisite multiplicity of parties was

not present.

The statement on page 6 of Respondent’s brief that

“Crown Life was not attempting to improve its competi-

tive posture,” is untrue. That is demonstrated by the

Respondent’s own exhibit, relevant portions of which are

set forth in Appendix H1-3, which makes plain the rea-

son for the Respondent’s termination as Crown’s general

agent in Western Pennsylvania. Although Crown’s per-

centage of the United States market in individual sales in

1977 reached a level of .53%, Malley-Duif’s percentage of

the Western Pennsylvania market was only 11%. Even

with the addition of the personal production of the

Ehrman Agency, the total percentage of market sales

came to less than .2%. Thus the Respondent’s own ex-

hibit proved the justification for Crown’s termination of

the Respondent; that is, that it had failed to make an

adequate penetration of the Pittsburgh market.

A decision by the United States Court of Appeals for

the Fifth Circuit, that had not been reported when the

4 Conclusion.

Petition for Writ of Certiorari was served, deserves men-

tion. It is the case of Hood v. Tenneco Texas Life Insur-

ance Co., 739 F.2d 1012 (5th Cir. 1984), where summary

judgment was granted to the insurance company in the

District Court and the Court of Appeals for the Fifth

Circuit affirmed, relying on this Court’s opinion in

Copperweld.

CONCLUSION

For the foregoing reasons, as well as the reasons

advanced in the Petition For a Writ of Certiorari,

Petitioners Crown Life Insurance Company and Clarke

Burton Lloyd respectfully ask that the Petition For a

Writ of Certiorari be granted.

Respectfully submitted,

November 1984

ALEXANDER BLACK

(Counsel of Record)

ROBERT L. FRANTZ

BUCHANAN INGERSOLL

Professional Corporation

57th Floor, 600 Grant Street

Pittsburgh, PA 15219

(412) 562-8800

Counsel for Petitioners Crown

Life Insurance Company and

Clarke Burton Lloyd