# Supplemental Brief — Winterthur Reinsurance Corp. of America v. California

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_0029%3A7

## Record

- **Collection:** Supreme Court brief
- **Document type:** Supplemental Brief
- **Published:** January 1, 1993
- **Citation:** 509 U.S. 921

## Text

r

No. 91-1131

Euoreme Court, U.S, |

FILED

|
IN THE
Sigreme Court of the UWuited Sta

AUG 25 1992 |
iPr OF THE CLERK

OCTOBER TERM, 1992

WINTERTHUR REINSURANCE CorRP. OF AMERI(

V.

STATE OF CALIFORNIA, et al.,

Re sponde ny: :

On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Ninth Circuit

SUPPLEMENTAL MEMORANDUM FOR PETIT
PURSUANT TO RULE 15.7

RONALD C. REDCAY
ad ot Bann ng
ARNOLD & PORTER
777 South Figueroa Street
Forty-Fourth Floor
Los Angeles, California 9'

(213) 243-4000

PHILIP H. CURTIS

[_- ————

<

IONER

WILSON - Epes PRINTING Co., INC. - 789 96 - WASHINGTON, D.C

TABLE OF AUTHORITIES

Cases: Page

issociated General Contractors of Califernia \
California State Council of Carpenters, 459 U.S.
519 (1983) passim
Blue Shield of Va. v. McCready, 457 U.S. 465
(1982) 3, 4

A

IN THE
Suprenwe Court of the United Siates

OCTOBER TERM, 1992
No. 91-1131

WINTERTHUR REINSURANCE CORP. OF AMERICA,
Petitioner,
v.

STATE OF CALIFORNIA, et al.,

Respondents.
On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Ninth Circuit

SUPPLEMENTAL MEMORANDUM FOR PETITIONER
PURSUANT TO RULE 15.7

Petitioner. Winterthur Reinsurance Corp. of America
(“Winterthur”), respectfully submits this supplemental
memorandum in response to the brief filed by the Solicitor
General as amicus curtae on behalf of the United States.

1. What Antitrust Standing Test Did The Ninth Cir-
cuit Apply? The Ninth Circuit’s ruling on antitrust stand-
ing in this case is as confused as the general state of
antitrust standing law in the lower courts. In its deci-
sion, the Ninth Circuit explicitly states that plaintiffs have
standing to sue because “|a]lmost all of the Associated
General Coniractors factors” are satisfied. Winterthur
Pet. App. 16a. Needless to say, if the antitrust standing
test established by Associated General Contractors of Cali-
fornia, Inc. Vv. California State Council of Carpenters, 459
U.S. 519 (1983), requires a plaintiff to satisfy all the

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( at POW@r applcactlon if he s<issociated Geh-
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That is precisely why this Court should grant certiorari,
In the nine years since Associated Creneral Contractors

was decided, the lower courts have failed to come to any
consensus as to how the Associated General Contractors
standing test should be applied. This Court should not
forgo this opportunity to ensure that the lower courts
properly apply the analytical framework set. forth in
Associated General Contractors. The Solicitor General’s
ittempted reconciliation of the interna] inconsistencies
in the Ninth Circuit's analysis should not be the basis
for denying certiorari.

2. This Case Is Not Controlled By This Court's Deci-
sion In The McCready Case. The Solicitor General also
argues that certiorari should be denied because plaintiffs’

position in this case is comparable to the position of the
samba who was granted ae ae in Blue Shield of
Va. McCready, 457 U.S. 465 (1982). This is simply

not so. In McCready, the plaintiff had standing to sue
Blue Shield because she was directly injured by Blue
Shield’s refusal to reimburse her for payments that she
had made to her psychologist. There was no other direct
Victim in the Met ‘yeady ecuse, As the McCready Court
expressiy ruled the plaintiff’s psychologist (the alleged
arget”’ of the Blue Shield boycott) could assert “no
claim of injury,” because the psychologist had been “full ly
paid” by the plaintiff and was not affected by Blue Shield’s
refusal to reimburse the plaintiff. /d. at 475.

“In another footnote, the Solicitor General also suggests that “it

is not clear” that Winterthur preserved its standing arguments on
appeal, since the standing issue was addressed in a footnote rather
than in the text of petitioners’ brief in the court of appeals. U.S. Br.
18 n.15. Yet, as the Solicitor General] concedes, the court of appeals
in fact decided the supposedly en issue-—“the ee

have standing to maintain this antitrust suit against all defendants

Winterthur Pet. App. 17a (emphasis added). Moreover, as noted in
its Petition for Certiorari, Winterthur also filed a separate, independ
ent joinder to the petition for rehearing in the court of appeal

that expressly raised the standing issue. Winterthur Pet. 5-6 n.4.

d

In short, in McCready, the plaintiff clearly suffered a
direct injury; the other potential plaintiff (her psychol-
ogist! suffered no such injury. The facts of McCready
aie a far cry from the facts of this case, where “the
action of the reinsurers took effect through the primary
insurers” (Winterthur Pet. App. 15a), and where the
alleged direct victims (i.e., the primary insurers) could
sue if they were so inclined."

3. Plaintiffs’ Alleged Injuries Were Not Direct. It is
undisputed that Winterthur never sold (or refused to
sell) insurance to plaintiffs or other consumers. Winter-
thur soid reinsurance only to other insurers. Neverthe-
less, the Solicitor General argues that plaintiffs should
have standing to sue Winterthur because Winterthur and
other reinsurers allegedly conspired with four primary
insurers, who sell directly to consumers. In the Solicitor
General’s view, the allegation that four primary insurers
conspired with Winterthur and other reinsurers makes
this case “analogous to resale price maintenance” cases—
Where consumers have been granted standing to sue both
the dealer from whom they purchased and the manufac-
turer who engaged in the vertical price-fixing conspiracy
with the direct-selling dealer. U.S. Br. 20-21,

The Solicitor General’s characterization of the case,
however, cannot withstand analysis. Plaintiffs do not
allege that Winterthur conspired with each primary in-
surer who sold (or refused to sell) to plaintiffs. Far from
it. There are over 1400 primary insurers nationwide.
see U.S. Br. 2. Only four of these primary insurers are
*Thus, the risk of duplicative recovery was not present in
McCready. Here, however, that risk is clearly present. since non-
defendant primary insurers might well file suit. The Solicitor Gen-
eral, acknowledging the risk that primary insurers might also sue,
secks to minimize this risk by speculating that primary insurers
“presumably would allege a different type of injury.” U.S. Br. 21.
In fact, it is more likely that primary insurers would allege exactly
the same type of injury as insurance consumers —i.e., that the alleged
conspiracy made it impossible or more costly to obtain the insurance
product they wanted.

on

0

alleged to have conspired with Winterthur; the remainder
were allegedly the victims of this purported conspiracy.
According to plaintiffs’ allegations, the four defendant
primary insurers induced Winterthur (and other reinsur-
ers! to refuse to offer reinsurance to the 1400 noncon-
spiring primary insurers.

Thus, Winterthur’s alleged misconduct consists of its
refusal—induced by the defendant primary insurers—
to sell reinsurance to the nondefendant primary insurers.
None of the primary insurers is alleged to have partici-
pated in a “vertical conspiracy” that is analogous to a
“resale price maintenance” scheme. The 1400 nonde-
fendant primary insurers are alleged victims, not con-
spirators; they—not plaintiffs—suffered the most direct
alleged injury. As a result, the problems of complex
damage apportionment and the risks of duplicative recov-
eries are present notwithstanding the allegations that
four of the primary insurers induced the alleged refusal
to sell reinsurance.

Indeed, even the four defendant primary insurers are
not in the same position as a direct-selling dealer in a
vertical price-fixing case. Plaintiffs’ allegation is not
that the reinsurers induced the four defendant primary
insurers to refuse to offer insurance policies to consum-
ers; rather, plaintiffs’ allegation is that the four defend-
ant primary insurers induced the reinsurers to refuse
to offer reinsurance to other primary insurers. There is
simply no vertical link between the reinsurers and the
consumer plaintiffs.

By the same token, plaintiffs should not be able to
create standing simply by alleging that Winterthur’s re-
fusal to sell reinsurance was “intended to disrupt” the
primary insurance market. U.S. Br. 19. Intent alone
is insufficient as a matter of law to create standing, even
when combined with a claim of consequential harm flow-
ing from an alleged antitrust violation. See, e.g., Asso-
ciated General Contractors, 459 U.S. at 545. Moreover,
the fact that a refusal to sell in one market has reper-

6

cussions in an adjacent market cannot suffice to confer
standing upon all consumers in the adjacent market. See
Winterthur Pet, 23-24. When all is said and done, plain-
tiffs are still consumers of primary insurance, and Win-
terthur and other reinsurers are stil! sellers only of re-
insurance. Plaintiffs are not consumers of the product
sold by reinsurers; any injury suffered by them is by
definition an “indirect” injury.

* * * *

In the final analysis, it remains undisputed that the
Associated General Contractors test for antitrust stand-
ing is currently being applied in divergent ways by the
lower courts. This case presents an opportunity for this
Court to eliminate the confusion that is reflected in the
lower courts’ application of that test. Winterthur re-
spectfully submits that its petition for certiorari should
be granted.

Respectfully submitted,

RONALD C, REDCAY
Counsel of Record
ARNOLD & PORTER
777 South Figucroa Street
Forty-Fourth Floor
Los Angeles, California 90017
(218) 243-4000

PHILIP H. CurTIS

WILLIAM H. VoTH
ARNOLD & PORTER
399 Park Avenue
New York, NY 10022
(212) 715-1000

DouGLAS L. WALD
ANNETTE M. LANG
ARNOLD & PORTER
1200 New Hampshire Ave., N.W.
Washington, D.C. 20036
(202) 872-6700

August 1992 Counsel for Petitioner

A= yee

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_0029%3A7. Public record. Not legal advice.