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Judge Tells Bid-Rigging Plaintiffs To Revise Complaint

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A federal judge in Newark, N.J., has dismissed a policyholder class-action suit accusing brokers, insurers and reinsurers of antitrust and racketeering activity, but he has given the plaintiffs 30 days to come back with a revised version of their allegations.

The plaintiff class, which includes dozens of large commercial customers, municipalities and individuals that did business with the brokers and insurers between 1994 and 2005, has accused the defendants of conspiring to rig bids and fix prices in the employee benefits market and other insurance markets.

To proceed with litigation of conspiracy allegations, the plaintiffs must show reason to believe that the insurers themselves were joining in some way to allocate business illegally, not simply steering business to preferred parties, U.S. District Court Judge Garrett Brown Jr. writes in a ruling released Thursday.

The complaint must provide evidence of a horizontal conspiracy between competitors, not efforts to restrain trade by parties at different levels of the distribution system, the judge writes.

At this point, the judge writes, the complaints lack a showing of a “common plan or scheme to divide the market among the alleged conspirators in some unlawful manner.”

The judge is giving the plaintiffs more time to amend their complaint “because so much time has been invested in this case by all parties, and because courts should construe [a] plaintiff’s allegations liberally at this stage of the proceeding, the judge writes.

The policyholder suit is based on many of the allegations made by state attorneys general in civil suits and regulatory actions initiated in a number of states.

In October 2006, Brown ruled that the plaintiffs’ complaints lacked “insufficient particularity” and gave the plaintiffs permission to file a supplemented statement.


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