Arroyo-Melecio v. Puerto Rican American Insurance

United States Court of Appeals
For the First Circuit

No. 04-1045

RAFAEL ARROYO-MELECIO; DANIEL ESPINOSA-DE-LEÓN; ANGEL M.
ORTIZ-QUIÑONES; CELIA RODRÍGUEZ-RIVERA; CONJUGAL PARTNERSHIP
ORTIZ-RODRÍGUEZ,

Plaintiffs, Appellants,

v.

PUERTO RICAN AMERICAN INSURANCE COMPANY; UNIVERSAL INSURANCE
COMPANY; PREFERRED RISK INSURANCE COMPANY; INTEGRAND ASSURANCE
COMPANY; COOPERATIVA DE SEGUROS MULTIPLES DE PUERTO RICO; ROYAL &
SUN ALLIANCE OF PUERTO RICO, INC.; SEGUROS TRIPLE SSS, INC.;
NATIONAL INSURANCE COMPANY; AMERICAN INTERNATIONAL INSURANCE
COMPANY OF PUERTO RICO, INC.; CARIBBEAN ALLIANCE INSURANCE
COMPANY; ALLSTATE INSURANCE COMPANY; ASOCIACIÓN DE SUSCRIPCÍON
CONJUNTA DE SEGURO DE RESPONSABILIDAD OBLIGATORIO,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

[Hon. Hector M. Laffitte, U.S. District Judge]

Before

Lynch, Circuit Judge,
Stahl, Senior Circuit Judge,
and Howard, Circuit Judge.

Antonio J. Amadeo-Murga for appellants.
Heidi L. Rodríguez, with whom Néstor M. Méndez-Gómez, Kevin M.
Acevedo-Carlson, and Pietrantoni Mendez & Alvarez LLP were on
brief, for appellees Puerto Rican American Insurance Company &
Preferred Risk Insurance Company.
 Arturo J. García-Solá, with whom Luz Nereida Carrero, Mario
Arroyo, Fiddler González & Rodríguez, Roberto C. Quiñones-Rivera,
Nannette Berríos-Haddock and McConnell Valdés were on brief, for
all appellees except Puerto Rican American Insurance Company &
Preferred Risk Insurance Company.

February 14, 2005
 LYNCH, Circuit Judge. In 1995, in order to address the

problem of the large number of drivers in the Commonwealth of

Puerto Rico without vehicle liability insurance, the commonwealth

enacted the Compulsory Motor Vehicle Liability Insurance Act, Law

253 ("Law 253"), codified at 26 P.R. Laws Ann. §§ 8051 et seq.

This federal antitrust suit challenged certain conduct of

private insurers and the new state-created entity under Law 253,

the Joint Underwriting Association ("JUA"), in the compulsory

insurance program. The suit was dismissed at the pleadings stage

under Fed. R. Civ. P. 12(b)(6). The plaintiffs, who purport to

represent a class of harmed consumers, appeal.

In sum, the plaintiffs allege that the defendants,

private insurers and the JUA, have agreed to and created a monopoly

in the JUA as to all forms of low-cost compulsory insurance and

have boycotted and coerced at least one broker in order to maintain

that monopoly. The private insurers and the JUA argue that this

monopoly is a result required by the state law. That is untrue.

The Puerto Rico statute contemplates (at least as to non-high-risk

policies) competition, but then, oddly, creates incentives for

defendants to create just such a monopoly as alleged. The claims

before us are a different matter: a federal antitrust suit raises

different issues than issues of compliance with local statutes. As

to one claim only, we reverse the dismissal and remand; we affirm

the dismissal of all other claims.

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 I.

We describe the statutory scheme. Before the enactment

of Law 253, uninsured drivers caused over $110 million in damages

to other vehicles each year in Puerto Rico, and it was estimated

that only 25 percent to 30 percent of the vehicles in Puerto Rico

were covered under some type of liability insurance.

Law 253 created a compulsory automobile liability

insurance system, which, beginning in 1998, provides each insured

vehicle owner with $3000 of coverage for damages caused to third

parties per accident in exchange for a uniform premium, initially

set at $99 for each private passenger vehicle and $148 for each

commercial vehicle. 26 P.R. Laws Ann. §§ 8052(j), 8056(a). All

"private insurers," defined as insurers with more than 1 percent of

the commonwealth's total volume of vehicle liability premiums, id.

§ 8052(b), are required to offer the compulsory liability insurance

in two ways: both as private insurers to a defined class of drivers

and as members of the JUA, to which they must belong. Id. §§

8053(d), 8054(a), 8055(a). Law 253 allows private insurers to

reject certain applicants for the compulsory insurance pursuant to

regulations promulgated by the Insurance Commissioner. Id. §

8054(b). The criteria for rejection are defined by the Insurance

Commissioner's Puerto Rican Insurance Rule LXX ("Rule LXX"),

promulgated in Regulation No. 6254 in December of 2000. Most of

the criteria in Rule LXX for permissible rejections identify

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applicants who are bad drivers or otherwise of high risk.1 See

Rule LXX, Art. 8.

The JUA itself provides compulsory liability insurance to

all drivers,2 including those high-risk drivers whom private

insurers are not required to insure. 26 P.R. Laws Ann. § 8055(b).

Vehicle owners may opt out of the compulsory liability insurance

scheme by purchasing traditional liability insurance with

comparable or better coverage. See id. § 8061; Rule LXX, Art.

1
Rule LXX allows private insurers to reject applicants when
(1) the motor vehicle is used as a public vehicle; (2) the motor
vehicle is a racing vehicle or super rapid; (3) the owner or main
driver of the motor vehicle has accumulated five or more points for
violations of the Vehicle and Traffic Act of Puerto Rico, during
the three years prior to the date of the application for the
compulsory liability insurance; (4) the owner or main driver of the
motor vehicle has been convicted of driving a motor vehicle under
the influence of alcohol or drugs, or of participating in any type
of drag racing or races on public roads; (5) the license of the
owner or main driver of the vehicle has been revoked or suspended
during the year prior to the effective date when the compulsory
liability insurance is requested; (6) the motor vehicle is not
insurable according to the private insurer's written criteria for
underwriting traditional insurance policies; (7) the owner of the
vehicle has not requested the insurance; and (8) the application
form as adopted by the Insurance Commissioner was not properly
filled out. Rule LXX, Art. 8.
2
A vehicle owner must pay the premium for the compulsory
liability insurance to the Secretary of the Treasury at the time he
acquires or renews the vehicle's license. 26 P.R. Laws Ann. §§
8051, 8053(a). The Secretary then turns over the total amount of
the premiums so received to the JUA, which is then responsible for
distributing the premiums among its members and itself, as the case
may be. Id. § 8055(c); Rule LXX, Art. 19. In fact, under Rule
LXX, every vehicle for which the requisite compulsory liability
insurance premium has been paid is considered to be insured by the
JUA unless the owner of the vehicle opts out by selecting a private
insurer or purchasing a traditional insurance policy. Rule LXX,
Art. 12(a).

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12(a). Law 253 appears to require the private insurers also to

offer the policy despite the availability of coverage from the JUA,

see 26 P.R. Laws Ann. §§ 8054(a), 8055(b), and allows private

insurers to apply for approval to sell the compulsory insurance at

less than the rate set by the commonwealth. See id. § 8056(c)

("Any private insurer may submit for the approval of the

[Insurance] Commissioner a variation of a uniform percentage to

reduce the uniform compulsory liability insurance premium . . .

."). Some legislative history suggests that Law 253 was meant to

encourage competition "between insurance companies wanting to have

a greater number of insured, who will have to extend offers in

order to attract them." Certified translation of the Daily

Sessions Record, Senate of Puerto Rico, Monday, October 9, 1995.

As a result, the statutory scheme contemplates competition in

compulsory insurance, at least for non-high-risk drivers, between

private insurers themselves and between them and the JUA. It also

contemplates, but does not mandate, the possibility of a monopoly

in the JUA as to compulsory insurance for high-risk drivers.

All members of the JUA share in its profits and losses.

26 P.R. Laws Ann. § 8055(e). To compensate for the fact that the

JUA must insure drivers considered too risky by private insurers,

all the JUA's profits, including those distributed to private

insurers, are exempt from income taxes. Id. § 8055(j). Through

the JUA, the risk of insuring these high-risk drivers is thus

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spread among all the private insurers. The profits distributed to

the JUA members (the private insurers) also encompass the profits

from the sale of non-high-risk policies insured by the JUA.

Though created by law, the JUA is "private in nature, for

profit, and . . . subject to the provisions of the [Insurance] Code

applicable to insurers." Rule LXX, Art. 2(c). The JUA is under

some direction by the commonwealth. The Insurance Commissioner is

directed to establish the manner of distribution of the total

amount of premiums received by the JUA, 26 P.R. Laws Ann. §

8055(c); Rule LXX, Art. 20(e)(3), and the structure and operation

of the JUA, and its direction by a board of directors, so that the

JUA may accomplish its goals in a "cost-effective, fair and

nondiscriminatory" manner. 26 P.R. Laws Ann. § 8055(f). The plan

of operations may be amended only with the approval of the

Insurance Commissioner. Rule LXX, Art. 20(c)(1)(xv).

On the other hand, the Insurance Commissioner is not made

a member of the board of directors of the JUA, id., Art.

20(c)(1)(iii), and does not appear to have active supervision over

the day-to-day affairs of the JUA. Four of the five directors on

the JUA's board of directors are elected by the members of the JUA,

while the fifth director is the officer in charge of the JUA. Id.

None of these directors are defined as a state official. The JUA

is not an agency of the commonwealth. It has "general corporate

powers," such as the power to sue and be sued, to enter into

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contracts, to hold and use property, etc. See Rule LXX, Art.

20(a); 26 P.R. Laws Ann. § 2905.

For both private insurers and the JUA, the commonwealth,

through the Insurance Commissioner, sets the terms of the

compulsory policy itself, the premium rate, and the amount of

coverage. The Puerto Rico Mandatory Liability Insurance Uniform

Policy, the policy defining the terms of the compulsory liability

insurance, is set forth in the Insurance Commissioner's rules.

Rule LXX, Art. 22. This policy is "the sole contract between [the

insured] and [the JUA]." The policy does not contain any

specification for the type of repair parts that may be used or

provisions governing repair practices.

The Insurance Commissioner has established, through

regulation, a uniform initial liability determination system to

facilitate the investigation, adjustment, and resolution of claims

arising under the compulsory liability insurance scheme. See P.R.

Laws Ann. § 8057; Puerto Rico Insurance Rule LXXI ("Rule LXXI").

Rule LXXI sets out portions of the claims making process, including

the use of diagrams, which are made part of the regulation, to

allocate fault for accidents. Rule LXXI, Arts. 2, 6, 7. However,

there is nothing in Rule LXXI concerning the insurers' auto repair

arrangements or practices; nor does the Rule govern all claims

practices.

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 A few points bear emphasis. First, the statute,

apparently unusually,3 contemplates competition with respect to at

least the non-high-risk drivers between the private insurers and

also between the private insurers and the JUA. Second, the statute

provides a means for insurers who are in competition to seek to

sell the compulsory insurance at a lower price than the "uniform

premium." 26 P.R. Laws Ann. § 8056(c). Third, the supervision

over the JUA does not cover at least some of the complained-of

activities. For example, the Insurance Commissioner, by statute,

has considerable supervision over the operating plan and the method

of premium distribution, id. §§ 8055, 8056; by contrast, there

appears to be little supervision of the JUA's specific business

decisions (such as how it minimizes its costs in repairs and claims

adjustment).

II.

The plaintiff motor vehicle owners, as consumers of the

compulsory insurance, brought a putative class action against

3
Our own survey found no other comparable compulsory insurance
scheme which contemplates competition of like kind. Cf., e.g.,
Ala. Code § 32-7-35 (granting Commissioner of Insurance authority
to set up assigned risk plans to apportion drivers who are unable
to obtain insurance through the regular market "equitably" among
all insurers); Alaska Stat. § 28.20.580 (same); Fla. Stat. Ann. §
627.351(1) (same); Ga. Code Ann § 40-9-100 (same); see also Ga.
Comp. R. & Regs. r. 120-2-14-.09 (insureds in assigned risk plan
are assigned to insurers); Weaver v. Champion Ins. Co., 567 So.2d
380, 382 (Ala. Civ. App. 1990) (assignment of insureds to insurers
in assigned risk plan is semi-random).

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eleven private insurers and the JUA, alleging that the defendants

violated the Sherman Act, 15 U.S.C. § 1 et seq., the Clayton Act,

15 U.S.C. § 12 et seq., and also Puerto Rico antitrust laws.4 The

plaintiffs allege that the private companies, qua companies, have

agreed not to sell the compulsory insurance; this, in turn, forces

customers to buy from the JUA and puts the JUA in a monopoly

position. The plaintiffs allege that the insurance companies

choose not to compete with the JUA at least in part because of the

tax benefits that non-competition creates. The JUA is tax-exempt;

its monopoly over the compulsory liability insurance policies

allows all the profits from the premiums, including those from non-

high-risk drivers, to accrue tax free to the JUA for later

distribution to the member insurance companies. Further, by

dealing only through the JUA, the private insurers lower their own

costs and inflate their profit by not providing paper copies of

policies to insureds and by not utilizing the services of brokers.

The plaintiffs allege that Puerto Rico law requires both that

policies be provided and that brokers be used. 26 P.R. Laws Ann.

§§ 329, 1123. The plaintiffs admit that policies are available

both online and at licensing offices. But they argue that these

omissions in services reduce the services provided to the insureds.

The omissions also, it may be inferred, harm consumers in another

way. The plaintiffs allege that the defendants save $4.00 per

4
The text of the relevant allegations are reproduced in the
Appendix.

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policy from not having to issue a paper copy of the policy and

about 8 percent of the premium per policy for not having to pay a

broker's commission. These savings are not passed on to the

consumers as they would likely be if the companies in fact competed

with each other and with the JUA. Indeed, Law 253 contemplated

exactly such a benefit from competition to consumers when it

provided that private companies could apply to sell such policies

at lower rates. See 26 P.R. Laws Ann. § 8056(c). But for the acts

of the defendants in creating a monopoly, the plaintiffs allege

that the premiums for compulsory liability insurance could have

been fixed to be "at least 12% less than the one established." The

plaintiffs do not challenge the rate set by the legislature.

In addition to these horizontal agreements not to

compete, the plaintiffs also allege that the private insurers

acting in concert coerced brokers to refrain from selling

compulsory insurance through private companies. The plaintiffs

allege that one broker, Casellas and Co. ("Casellas"), attempted to

present around 40,000 applications for compulsory insurance to the

defendant insurance companies in the year 2000, and the

applications were all rejected. The monopoly was evidently not

complete since the plaintiffs also allege that one of the

defendants, Seguros Triple SSS, Inc., did issue 128 compulsory

insurance policies in 2000 (and paid the broker, Casellas, a

commission of only 3 percent instead of 8 percent). The plaintiffs

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allege that the defendants (1) threatened clients of Casellas that

they should not do business with Casellas if Casellas continued to

attempt to sell compulsory insurance through the private companies

and (2) told other members in the insurance community that

Casellas's attempts to sell compulsory insurance through private

insurers were illegal and that people who did business with

Casellas would go to jail.

The plaintiffs also allege that since the JUA has a

monopoly in the compulsory insurance market, the JUA is able to use

burdensome claims procedures and to require the use of the cheapest

car parts, or "junker parts," for repairs, thus harming the

consumers. The plaintiffs argue that if the JUA did not have such

a monopoly, there would be competition which would produce better

options as to the quality of repair parts.

Attempting to come within the boycott/coercion exception

to the insurance business exemption from federal antitrust laws

contained in the McCarran-Ferguson Act, the plaintiffs' complaint

alleges that the acts of the defendants -- (1) agreements among the

private insurers and between them and the JUA not to compete with

the JUA and (2) the threats of harm to Casellas -- constitute a

boycott and coercion and have caused injuries to consumers.

Taking all inferences in the plaintiffs' favor, the

complaint may be read to establish four categories of injuries, at

least with respect to non-high-risk compulsory insurance, to

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consumers being forced to buy through the JUA's monopoly: (1)

consumers do not receive copies of written insurance policies; (2)

consumers do not receive the assistance of brokers; (3) these are

costs the private insurers would otherwise incur if the private

insurers offered comparable compulsory coverage as the JUA; private

companies thus save on those costs and could then apply to offer

the compulsory policy at an approved rate which is less than the

rate set by regulators for the JUA; (4) in any event, the JUA's

monopoly means it can, as it does, (a) require that repairs be made

only with "junker" parts which are inferior to parts which might

otherwise be made available in a competitive system, (b) require

consumers to go through an unfair process of adjustment of claims

based on unreasonable depreciation percentages, (c) require

consumers to submit to an unfair system of determining fault with

diagrams.

The district court, on report and recommendation from a

magistrate judge, dismissed the complaint upon Fed R. Civ. P.

12(b)(6) motions from the defendants.5 The district court held

that there was a lack of antitrust injury and that the action was

precluded by the filed rate doctrine. The plaintiffs timely

5
The district court granted the defendants' motions to dismiss
and entered judgment dismissing "this case" with prejudice. In
light of the magistrate judge's recommendation, which the district
court adopted in full, that the district court decline to exercise
supplemental jurisdiction over the Puerto Rico law claims, we
understand the district court to have meant that only the federal
antitrust law claims are dismissed with prejudice and the
commonwealth law claims are dismissed without prejudice.

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appealed. The defendants present six alternate grounds on appeal

for affirming the dismissal: (1) there was no antitrust injury so

the plaintiffs lack standing to sue under the antitrust laws, (2)

the state action immunity doctrine, (3) the filed rate doctrine,

(4) the doctrine of primary jurisdiction, which purportedly

requires referral to the Puerto Rico Insurance Commissioner, (5)

the McCarran-Ferguson Act exemption of the business of insurance

from federal antitrust liability, and (6) the lack of involvement

of substantial interstate commerce.

III.

Orders granting motions to dismiss under Rule 12(b)(6)

are subject to de novo review. Rodi v. S. New Eng. Sch. Of Law,

389 F.3d 5, 12 (1st Cir. 2004). A reviewing court accepts all

well-pleaded allegations of the plaintiffs as true and affords all

inferences in the plaintiffs' favor. Rosenberg v. City of Everett

328 F.3d 12, 15 (1st Cir. 2003). "The issue is whether the

complaint states a claim under the Sherman Act, assuming the

factual allegations to be true and indulging to a reasonable degree

a plaintiff who has not yet had an opportunity to conduct

discovery." DM Research, Inc. v. Coll. of Am. Pathologists, 170

F.3d 53, 55 (1st Cir. 1999).

Given the Congressional policy of deference to state law

embodied in the McCarran-Ferguson Act, Group Life & Health Ins. Co.

v. Royal Drug Co., 440 U.S. 205, 220 (1979), we think it

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appropriate to begin with that statutory defense, and then turn to

the other defenses.

Under the McCarran-Ferguson Act, we consider whether the

two main allegations -- (1) horizontal agreements by the private

insurers not to compete and not to use broker services; and (2) the

JUA's practice of not permitting repairs using original equipment

manufacturers' ("OEM") parts -- are within the "business of

insurance," before we turn to the boycott/coercion exception. We

conclude that both allegations fall within the business of

insurance.

We then turn to the boycott/coercion exception to the

McCarran-Ferguson Act's business of insurance exemption. We reject

plaintiffs' argument that the horizontal non-competition agreement,

even if it has created a monopoly in the JUA, is a boycott. We

reject the defendants' argument that coercion against a brokerage

firm, at the Rule 12(b)(6) stage, does not state a claim of

boycott. We also reject the defendants' argument that the boycott

activities are nonetheless protected by the state immunity doctrine

under Parker v. Brown, 317 U.S. 341 (1943).

Because the plaintiffs are consumers and thus usually the

preferred plaintiffs in antitrust claims of this sort, we reject

the argument that, as to the boycott, the pleadings can determine

that the plaintiffs lack standing and have not suffered any

antitrust injury. We find that the plaintiffs' boycott claim does

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not implicate the filed rate doctrine or the primary jurisdiction

defenses. We also reject the defendants' contention that, as to

the boycott, the substantial impact on interstate commerce

requirement of the antitrust laws has not been met.

The McCarran-Ferguson Act

Under section 1 of the Sherman Act, "[e]very contract,

combination in the form of trust or otherwise, or conspiracy, in

restraint of trade or commerce among the several States . . . is .

. . illegal." 15 U.S.C. § 1. "The usual section 2 [Sherman Act]

claim requires monopoly or near monopoly power in some market, and

a wrongful exclusionary act designed to enhance such power in that

market or to achieve an improper advantage in another market."

Town of Norwood v. New Eng. Power Co., 202 F.3d 408, 420-21 (1st

Cir. 2000).

The insurance industry, however, receives special

treatment under the antitrust laws by virtue of the 1945 McCarran-

Ferguson Act, codified at 15 U.S.C. § 1011 et seq.:

No Act of Congress shall be construed to
invalidate, impair, or supersede any law
enacted by any State for the purpose of
regulating the business of insurance, or which
imposes a fee or tax upon such business,
unless such Act specifically relates to the
business of insurance: Provided, That . . .
[the antitrust laws and the FTC Act] shall be
applicable to the business of insurance to the
extent that such business is not regulated by
State law.

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15 U.S.C. § 1012(b) (emphasis in original). Thus the McCarran-

Ferguson Act exempts the "business of insurance" from review under

the federal antitrust laws to the extent that it is "regulated by

State law."6 Puerto Rico is considered to be a state for purposes

of sections 1 through 3 of the Sherman Act, as amended and codified

at 15 U.S.C. §§ 1-3. See R.W. Int'l Corp. v. Welch Food, Inc., 13

F.3d 478, 489 (1st Cir. 1994); Cordova & Simonpietri Ins. Agency

Inc. v. Chase Manhattan Bank N.A., 649 F.2d 36, 42 (1st Cir. 1981).

The McCarran-Ferguson Act also goes on to carve out, in

a separate section, an exception to the "business of insurance"

exemption from antitrust liability: "Nothing contained in this

chapter shall render the said Sherman Act inapplicable to any

agreement to boycott, coerce, or intimidate, or act of boycott,

coercion, or intimidation." 15 U.S.C. § 1013(b).

This appeal is largely about the interplay between §

1012(b), the basic McCarran-Ferguson Act exemption from federal

antitrust liability, and § 1013(b), the "boycott, coercion, or

intimidation" exception to the McCarran-Ferguson Act exemption.

This court has summarized the interplay as follows, "The McCarran-

Ferguson Act . . . exempts from the antitrust laws all conduct that

6
In fact, the term "business of insurance" is used twice in
15 U.S.C. § 1012(b). The first clause "commits laws 'enacted . .
. for the purpose of regulating the business of insurance' to the
States, while the second clause exempts only 'the business of
insurance' itself from the antitrust laws." U.S. Dep't of Treasury
v. Fabe, 508 U.S. 491, 504 (1993). The scope of the first clause
is not as "narrowly circumscribed" as the second. See id.

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is (1) part of the 'business of insurance'; (2) 'regulated by State

law'; and (3) not in the form of 'boycott, coercion, or

intimidation.'" Ocean State Physicians Health Plan, Inc. v. Blue

Cross & Blue Shield of R.I., 883 F.2d 1101, 1107 (1st Cir. 1989).7

7
We quickly dispose of two possible objections to application
of the McCarran-Ferguson exemption here. The literal language of
the McCarran-Ferguson Act exemption contained in the first sentence
in § 1012(b) precludes application of federal statutes which
"invalidate, impair, or supersede any law enacted by any State for
the purpose of regulating the business of insurance." 15 U.S.C. §
1012(b). An argument could easily be made by the plaintiffs that
their claims are entirely consistent with and not in conflict with
state law and so the first proviso is not met and there is no
McCarran-Ferguson exemption. Any such argument is foreclosed by
judicial construction of the McCarran-Ferguson Act. The McCarran-
Ferguson Act has generally been construed to cover arguments that
the defendants failed to comply with state law, so long as the
state law concerns the regulation of the business of insurance. As
the treatise by Areeda and Hovenkamp puts it, "if the state's
insurance industry is 'regulated by state law,' then the antitrust
laws simply do not apply, notwithstanding that the application of
antitrust law in the particular case in no way 'invalidate[s],
impair[s], or supersede[s]' state law and may even be consistent
with it." I Areeda and Hovenkamp, Antitrust Law, ¶ 219c, at 339
(2d ed. 2000) (alterations in original). Further, "[a]lthough state
insurance regulation is not invalidated or impaired [by application
of the Sherman Act], the mere presence of the regulation is
sufficient to oust the federal antitrust claim." Id. at 340.
We dispose of another contention. The final sentence of §
1012(b) provides that federal antitrust law shall nonetheless be
applicable "to the extent such business is not regulated by State
law." That clause is not helpful to plaintiff on their primary
claim of injury -- that the private insurers have agreed not to
offer private compulsory insurance -- because the state law
precisely covers that topic. Indeed, it requires the provision of
the compulsory insurance.

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A. The "Business of Insurance"

A key argument by the plaintiffs is that the challenged

acts are not within the "business of insurance." The McCarran-

Ferguson Act exemption encompasses only those state laws which are

enacted "for the purpose of regulating the business of insurance,

or which impose[] a fee or tax upon such business" and exempts only

the regulated "business of insurance" from the antitrust laws. 15

U.S.C. § 1012(b).

The Court in Union Labor Life Insurance Co. v. Pireno,

458 U.S. 119, 129 (1982), articulated three criteria to test

whether a particular practice is the business of insurance exempted

from the antitrust laws under the McCarran-Ferguson Act: (1)

"whether the practice has the effect of transferring or spreading

a policyholder's risk"; (2) "whether the practice is an integral

part of the policy relationship between the insurer and the

insured"; and (3) "whether the practice is limited to entities

within the insurance industry." Id.

1. Business of Insurance -- Agreements Not To Sell and Not To
Use Brokers

Under Royal Drug, the McCarran-Ferguson Act protects

wholly intra-industry horizontal arrangements, even as to price, as

part of the business of insurance. 440 U.S. at 221, 224 n.32.

"[E]ven if the alleged horizontal agreement between the defendant

insurers [in writing estimates at the same rate] did exist, it

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would be immune from antitrust scrutiny under the McCarran-Ferguson

Act." Quality Auto Body, Inc. v. Allstate Ins. Co., 660 F.2d 1195,

1201 (7th Cir. 1981).

The requirements under the "business of insurance" clause

are tested not by the mere identity of the defendant as an

insurance company but rather by whether the activity constitutes

the business of insurance. Hartford Fire Ins. Co. v. California,

509 U.S. 764, 781-82 (1993). The shorthand version is that the

exemption is for the "'business of insurance,' not the 'business of

insurers.'" Royal Drug, 440 U.S. at 211.

Horizontal agreements among insurers to fix the price and

to issue policies only through the residual market are within the

business of insurance. See Slagle v. ITT Hartford, 102 F.3d 494,

497-98 (11th Cir. 1996) (Insurers' collective arrangement to issue

windstorm insurance in parts of Florida only through joint

underwriting association is within the "business of insurance.");

Uniforce Temp. Pers., Inc. v. Nat'l Council on Comp. Ins., Inc., 87

F.3d 1296, 1299-1300 (11th Cir. 1996) (Insurers' collective rate-

making activities to make workers' compensation insurance available

to temporary employee provider only in the assigned risk or

residual market is within the "business of insurance.").

It is also clear that the "business of insurance" covers

the allegations concerning the effect on pricing that would occur

if insurers did not use brokers and agents and kept any saved

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expenses. While Royal Drug left open the question of whether the

"business of insurance" includes the fixing of brokers'

commissions, it read the legislative history of the McCarran-

Ferguson Act to suggest that "'the business of insurance' may have

been intended to include dealings within the insurance industry

between insurers and agents." 440 U.S. at 224 n.32. Circuit

courts have explicitly held that the decision to use or not use

agents to market and solicit for policies, the very behavior which

the plaintiffs attack here, is within the "business of insurance."

See, e.g., Owens v. Aetna Life & Cas. Co., 654 F.2d 218, 225-26 (3d

Cir. 1981) (holding that "business of insurance" includes

"authorizing agents to solicit individual or group policies").

Thus, the gravamen of plaintiffs' complaint -- that the

insurers, among themselves and with the JUA, agreed not to provide

compulsory insurance as private insurers and not to use brokers to

sell policies -- deals with the business of insurance and is within

the scope of the McCarran-Ferguson Act.

2. Business of Insurance -- The JUA's Prohibition on the Use
of OEM parts.

The plaintiffs' allegations about the JUA's repair

practices are as follows:

55.C.(a) The monopoly has allowed the [JUA] to
freely dictate the practices relating to the
adjustment of claims allowing said [JUA] to
establish unreasonable depreciation
percentages for the replacement of new parts

-21-
 to be replaced; repairing vehicles with old
parts obtained from "[j]unkers"; creating a
complicated and unfair system of diagrams for
the determination of fault to the detriment of
the affected member[s] of the class. This
monopoly and absence of competition has
resulted in the diminution of the quality of
service as the insureds have became [sic]
captives of the [JUA] without any possibility
of escaping.

Although the terms of the standard insurance policy of the

compulsory insurance program do not specify practices on repair

parts, we understand the allegations to mean that the JUA subjects

consumers to certain depreciation practices and to a non-OEM parts

requirement. It is not clear how this is carried out: conceivably

the requirements are imposed directly on the policyholders or

perhaps the JUA refers consumers to garages which adhere to these

practices. The precise mechanism makes no difference.

This claim is essentially a contract dispute between the

policyholder and the JUA; the claim is about the "business of

-22-
insurance."8 See Gilchrist v. State Farm Mut. Auto. Ins. Co., 390

F.3d 1327, 1332-34 (11th Cir. 2004).

More significantly, no serious antitrust claim is

presented. The plaintiffs argue that the JUA is using its monopoly

to increase its profits through using cheap parts without charging

cheaper prices. But a monopolist is entitled to exploit a monopoly

in order to maximize its profits. See III Areeda and Hovenkamp,

Antitrust Law, ¶ 720a (2d ed. 2000). "Monopoly pricing and

monopoly profits are neither 'exclusionary' acts nor 'abuses' of

monopoly power under §2 [of the Sherman Act]." Id. at 254. A

monopolist "is free to exploit whatever market power it may possess

when that exploitation takes the form of charging uncompetitive

prices." Kartell v. Blue Shield of Mass., Inc., 749 F.2d 922, 927

(1st Cir. 1984) (holding it was lawful for health insurer to

8
We distinguish between this case and the different situation
when an excluded third party provider, say an automobile repair
shop, challenged an agreement between the JUA and auto shops. No
such claim is made here. See Royal Drug, 440 U.S. at 232-33. Even
while horizontal agreements fixing maximum prices have been held to
be within the McCarran-Ferguson Act exemption, vertical agreements
between the car insurers and the repair shops on maximum prices are
not. See Proctor v. State Farm Mut. Auto. Ins. Co., 675 F.2d 308,
312, 336-37 (D.C. Cir. 1982); Quality Auto Body, Inc. v. Allstate
Ins. Co., 660 F.2d 1195, 1201-02 (7th Cir. 1981); see also
Brillhart v. Mut. Med. Ins., Inc., 768 F.2d 196, 199-200 & n.3 (7th
Cir. 1985) (finding health insurer-physician agreements to be
vertical agreements for the purchase of services and not the
business of insurance); Liberty Glass Co. v. Allstate Ins. Co., 607
F.2d 135, 136-38 (5th Cir. 1979) (finding arrangements between auto
insurers and certain car glass installers for the insurers to
contract only with those glass installers to install glass for the
insurers' policyholders did not fall within the "business of
insurance.").

-23-
require participating physicians to refrain from billing insurer's

subscribers extra charges even assuming that health insurer had

market power in the buying market); see also Berkey Photo, Inc. v.

Eastman Kodak Co., 603 F.2d 263, 297 (2d Cir. 1979) ("[M]ore than

monopoly power is necessary to make the charging of a

noncompetitive price unlawful.").

B. The Boycott Exception: Agreement Not To Sell and Coercion of
Casellas

We turn to the exception to the McCarran-Ferguson Act

exemption for "boycott, coercion, or intimidation" contained in 15

U.S.C. § 1013(b).

Recall that the plaintiffs allege two different types of

concerted actions. The first (and main claim) is a concerted

action by private insurers horizontally to agree not to provide

compulsory low-risk insurance to consumers, but to force consumers

to buy through the JUA. The second is a claim that the private

insurers coerced and intimidated an insurance broker, Casellas, in

several ways, such as threatening clients of Casellas not to do

business with the broker if the broker continued to attempt to sell

compulsory insurance, and telling other members in the insurance

community that Casellas's attempts to sell compulsory insurance

through private companies were illegal. The plaintiffs allege that

the private insurers did so in order to retaliate against the

broker for attempting to place customers' orders for compulsory

-24-
insurance with the private insurers (and not the JUA) and, it may

be inferred (taking all inferences in the plaintiffs' favor), to

punish Casellas for successfully inducing one insurance company,

Seguros Triple SSS, Inc., to accept 128 policies from consumers

(thus breaking ranks with the other insurers who had agreed to stay

out of the market). The complaint does not allege retaliation

directly against Seguros Triple SSS, Inc., the insurer who broke

ranks, but only against the broker who induced it to do so.

1. Boycott: Private Insurers' Agreement Not To Sell

Assuming there was an agreement not to sell, as alleged,

these allegations do not show a boycott. It has been repeatedly

held that insurers' refusal to sell insurance other than at rates

fixed through intra-industry rate-making associations do not

constitute a boycott. See, e.g., Slagle, 102 F.3d at 499

(Insurers' collective refusal to issue windstorm insurance on open

market in parts of Florida except through joint underwriting

association is not a boycott.); Uniforce Temp. Pers., Inc., 87 F.3d

at 1300 (Insurers' collective refusal to sell workers' compensation

insurance to temporary employee provider except in the assigned

risk or residual market is not a boycott.). It may be a violation

of state law for private insurers to reject applications from

qualified applicants for the compulsory insurance when Law 253 says

that they must provide such coverage. 26 P.R. Laws Ann. § 8054(a).

-25-
But it was not a boycott for the insurers collectively to agree

that they would not offer compulsory vehicle insurance except

through the JUA.

Rather, such an agreement, if there was one, created a

permissible cartel. See Hartford, 509 U.S. at 802 (The members of

a cartel "are not engaging in a boycott, because: They are not

coercing anyone, at least in the usual sense of that word; they are

merely (though concertedly) saying 'we will deal with you only on

the following trade terms.'" (internal quotation marks and citation

omitted)); I Areeda and Hovenkamp, supra, ¶ 220a, at 351-52. As a

result, their activities also do not constitute coercion or

intimidation. See Hartford, 509 U.S. at 808 n.6 ("Once it is

determined that the actions of the []insurers did not constitute a

'boycott,' . . . it follows that their actions do not constitute

'coercion' or 'intimidation' within the meaning of the statute.

That is because . . . such concerted agreements do not coerce

anyone, at least in the usual sense of that word . . . ." (internal

quotation marks, citation, and alteration omitted)).

The boycott exception must mean something other than the

usual horizontal agreement, when it is part of the business of

insurance of the state, to fix rates and terms of coverage. See I

Areeda and Hovenkamp, supra, ¶ 220b, at 347. The McCarran-Ferguson

Act's "primary concern that cooperative ratemaking would be

protected from the antitrust laws" and protection of "cooperative

-26-
rate regulation" within the industry further argue against finding

a "boycott" in these allegations. Royal Drug, 440 U.S. at 223-24.

In Hartford Fire Insurance Co., the Supreme Court

emphasized that it is crucial "to distinguish between a conditional

boycott and a concerted agreement to seek particular terms in

particular transactions." 509 U.S. at 801-02. A conditional

boycott seeks to coerce the target of the boycott into acceding to

certain demands by means of refusal to deal with the target in

collateral, unrelated transactions. See id. at 801-03.9 "It is

this expansion of the refusal to deal beyond the targeted

transaction that gives great coercive force to a commercial

boycott: unrelated transactions are used as leverage to achieve the

terms desired." Id. at 802-03. The Hartford Court found that it

was not a boycott for reinsurers to collectively refuse to reinsure

certain types of commercial general liability (CGL) insurance

policies because those policies contain undesirable terms: that is

because the refusal is limited to the CGL reinsurance transaction

itself. Id. at 806. So too here.10

9
This is more consistent with standard usage of the term
"boycott." See Black's Law Dictionary 198 (8th ed. 2004) (defining
"boycott" as "[a] refusal to deal in one transaction in an effort
to obtain terms desired in a second transaction").
10
One further twist about pressure on rivals unwilling to join
should be addressed. "The McCarran Act allows rivals to come
together and eliminate competition among themselves but not to
compel unwilling rivals to join their cartel." I Areeda and
Hovenkamp, supra, § 220a, at 352. When cartel members attempt to
coerce recalcitrant members through devices involving pressure on
third parties and their relationships, concerns about boycott are

-27-
 2. Boycott: Coercion Targeted At Casellas

The allegations about coercion and threats targeted at

the broker, Casellas, and the broker's clients, fit more squarely

within the boycott exception. See Hartford, 509 U.S. at 810-11

(holding that allegation that defendant insurers and reinsurers

told "groups of insurance brokers and agents . . . that a

reinsurance boycott, and thus loss of income to the agents and

brokers who would be unable to find available markets for their

customers, would ensue" if the terms desired by defendants in

commercial general liability insurance were not approved, was a

boycott under the McCarran-Ferguson Act). Such allegations of

coercion on Casellas are within the boycott exception to the

McCarran-Ferguson act's insurance exemption.11

heightened. See In re Workers' Comp. Ins. Antitrust Litig., 867
F.2d 1552, 1560, 1567 (8th Cir. 1989). However, plaintiffs do not
make any allegations that there were acts of retaliation against
Seguros Triple SSS, Inc., the insurance company who broke ranks and
sold the private compulsory insurance to Casellas's customers. Nor
do they allege other enforcement activity against recalcitrant
members of the cartel.
11
The defendants include a letter in the record from the Office
of the Insurance Commissioner, indicating that an investigation of
Casellas's allegations revealed no evidence of wrongdoing by the
defendants. For purposes of the Rule 12(b)(6) analysis, we assume
the plaintiffs' allegations are true and do not take this letter
into account.

-28-
 IV.

State Action Immunity

The defendants argue that they are nonetheless entitled

to dismissal of all claims on state action immunity grounds. We

disagree.

To obtain state action immunity under Parker v. Brown,

317 U.S. 341 (1943), the state must manifest intent to intervene in

the market, displacing antitrust laws and must engage in active

supervision of the challenged conduct. I Areeda and Hovenkamp,

supra, ¶ 221c, at 362. Stated another way: first, "the challenged

restraint [on trade] must be one clearly articulated and

affirmatively expressed as state policy"; and second, "the policy

must be actively supervised by the State itself." Cal. Retail

Liquor Dealers Ass'n v. Midcal Aluminum, Inc. 445 U.S. 97, 105

(1980) (internal quotation marks omitted). The requirements for

Parker immunity are significantly more stringent than the

requirements for state regulation of the business of insurance

under the McCarran-Ferguson Act. I Areeda and Hovenkamp, supra, ¶

219c, at 342. Mere availability of state insurance regulation is

insufficient to confer Parker immunity. A state's general

authority over or passive acceptance of a regulated firm's position

does not confer Parker immunity. Id.

There is a more important point. Since the surviving

boycott claim now does not call into question the acts of the

-29-
commonwealth or the Insurance Commissioner, and the JUA is not a

state agency, Parker immunity is not applicable. Cantor v. Detroit

Edison Co., 428 U.S. 579, 591-92 (1976). Further, none of the

boycott conduct complained of was mandated or even authorized by

the state. Id. at 594-95.

V.

Although we may affirm the district court's dismissal on

any grounds supported by the record, Aldridge v. A.T. Cross Corp.,

284 F.3d 72, 84 (1st Cir. 2002), none of the defendants' remaining

grounds for dismissal of the boycott claim are persuasive.

A. Antitrust Standing

There are six nonexclusive factors to consider in

determining whether a plaintiff has antitrust standing: "(1) the

causal connection between the alleged antitrust violation and harm

to the plaintiff; (2) an improper motive; (3) the nature of the

plaintiff's alleged injury and whether the injury was of a type

that Congress sought to redress with the antitrust laws ('antitrust

injury'); (4) the directness with which the alleged market

restraint caused the asserted injury; (5) the speculative nature of

the damages; and (6) the risk of duplicative recovery or complex

apportionment of damages." Sullivan v. Tagliabue, 25 F.3d 43, 46

(1st Cir. 1994) (citing Associated Gen. Contractors of Cal., Inc.

v. Cal. State Council of Carpenters, 459 U.S. 519, 537-45 (1983)).

-30-
 In many ways the standing question is the most difficult

issue in the case. Whether the alleged boycott of Casellas has in

fact caused any injury to the plaintiffs is hard to know.

We deal only with the lack of standing arguments

articulated by the defendants. The defendants concede improper

motives were alleged, but argue that this alone is insufficient to

give standing. They argue any damages were speculative and that

the damages sought will require complex apportionment. Finally,

they argue that this case would involve duplicative recovery

because there are two pending state actions about the system. But

it is far from clear what is at issue in these actions. This

argument is also inconsistent with their argument that any damages

would be too speculative or difficult to apportion.

We cannot say, at the Rule 12(b)(6) stage, that the

plaintiffs have no antitrust standing. See Morales-Villalobos v.

Garcia-Llorens, 316 F.3d 51, 55-56 (1st Cir. 2003). As to several

of the criteria, we note that the plaintiffs here are consumers and

as such are presumptively favored as appropriate plaintiffs to

assert antitrust injury. SAS of P.R., Inc. v. P.R. Tel. Co., 48

F.3d 39, 45 (1st Cir. 1995).

As to the surviving boycott allegation, typically the

plaintiffs in such cases, unlike here, are themselves the targets

of the boycotts, but status as the target is by no means necessary.

See, e.g., Hartford, 509 U.S. at 770 (The plaintiffs, nineteen

-31-
states and private parties, sued CGL insurers and reinsurers whose

alleged boycott was against recalcitrant insurers.); In re Workers'

Comp. Ins. Antitrust Litig., 867 F.2d at 1554 (The plaintiffs,

private employers, sued workers' compensation insurers and

insurers' collective rating association for using a cooperative

agreement not to charge less than the maximum lawful rate; the

agreement was a boycott because it may be enforced against

recalcitrant rating association members by expelling them so that

they can no longer sell workers' compensation insurance.); see also

Blue Shield of Va. v. McCready, 457 U.S. 465, 478 (1982) (rejecting

argument that patients of psychologists have no antitrust injury

and no standing to sue under the antitrust laws where the alleged

conspiracy between health insurer and organization of psychiatrists

was aimed to keep psychologists out of the market).

At the Rule 12(b)(6) stage, we cannot conclude that the

alleged antitrust activities could not be proven to be a but-for

cause of the harm the consumers allegedly suffered. See SAS of

P.R., Inc., 48 F.3d at 46 (affirming dismissal of case because,

even assuming harm-causing antitrust violation, the plaintiff was

not the appropriate plaintiff). Such causation issues are often

decided at summary judgment, not on the pleadings, precisely

because they depend on some factual development. See, e.g.,

Morales-Villalobos, 316 F.3d at 55-56; RSA Media, Inc. v. AK Media

Group, Inc., 260 F.3d 10, 15 (1st Cir. 2001) (finding against

-32-
plaintiff on causation issue at summary judgment); Sullivan, 25

F.3d at 51 (same). Dismissal at the pleadings stage is more often

associated with disfavored plaintiffs, not consumers, such as

distributors or suppliers injured by anti-competitive threats

directed towards others. See Serpa Corp. v. McWane, Inc., 199 F.3d

6, 13 (1st Cir. 1999); SAS of P.R., Inc., 48 F.3d at 44.

B. Filed Rate Doctrine

The defendants argue that the plaintiffs' claims are

barred by the filed rate doctrine because the claims are really an

attack on the reasonableness of the "uniform premium" set by Law

253 and overseen by the Insurance Commissioner. See 26 P.R. Laws

Ann. § 8056. The plaintiffs are emphatic that they are not

attacking the rate which the Puerto Rico legislature has set for

compulsory insurance, and there is no claim in the complaint that

the JUA's rate is unreasonable.

The filed rate doctrine has its origins as a judicially

created bar to antitrust damages claims in the context of the

Interstate Commerce Commission's regulation of common carrier

rates. Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 476

U.S. 409 (1986); Keogh v. Chicago & N.W. Ry. Co., 260 U.S. 156

(1922). The doctrine "is actually a set of rules that have evolved

over time but revolve around the notion that [where regulated

entities are required to file rates with the regulatory agency],

-33-
utility filings with the regulatory agency prevail over unfiled

contracts or other claims seeking different rates or terms than

those reflected in the filings with the agency." Town of Norwood

v. F.E.R.C., 217 F.3d 24, 28 (1st Cir. 2000). All that is left of

the plaintiffs' federal antitrust action are the claims of boycott

of Casellas. We think that boycott has little to do with the filed

rate doctrine, a famously complex and sometimes criticized set of

rules. See Town of Norwood v. New Eng. Power Co., 202 F.3d 408,

420 (1st Cir. 2000) ("[T]he law on the filed rate doctrine is

extremely creaky."). There is no direct relationship at all and it

is simply not the case that any action which might arguably and

coincidentally implicate rates, much less those determined by a

state, rather than a federal agency, is governed by the doctrine.

See In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144,

1159 (3d Cir. 1993).

C. Primary Jurisdiction

Similarly, the primary jurisdiction doctrine has little

to do with this case and it certainly does not go to the subject

matter jurisdiction of the federal court. P.R. Mar. Shipping Auth.

v. Fed. Mar. Comm'n, 75 F.3d 63, 67 (1st Cir. 1996). It is not

appropriately used here as a defense in any event.

Generally, the doctrine's application depends on three

factors: "(1) whether the agency determination lay at the heart of

-34-
the task assigned the agency by [the legislature]; (2) whether

agency expertise was required to unravel intricate, technical

facts; and (3) whether, though perhaps not determinative, the

agency determination would materially aid the court." Mashpee

Tribe v. New Seabury Corp., 592 F.2d 575, 580-81 (1st Cir. 1979).

None of these conditions are met here.

D. Lack of Substantial Impact on Interstate Commerce

Defendants finally argue that the jurisdictional

requirements of the Sherman Act are not satisfied here because the

activities described in the complaint do not substantially affect

interstate commerce. See McLain v. Real Estate Bd. of New Orleans,

Inc., 444 U.S. 232, 242 (1980).

This argument is frivolous in its own terms. The

plaintiffs allege that the defendants, some of whom are global

insurers, have invested the extra profits from their monopoly

scheme outside of Puerto Rico and made it more difficult for the

plaintiffs to purchase, repair, and maintain cars obtained in

interstate commerce. In light of the allegation that some "1.5

million to 2 million" vehicle owners in Puerto Rico are

policyholders of the compulsory insurance, "as a matter of

practical economics," the complaint, at least for Rule 12(b)(6)

purposes, states a "not insubstantial effect on the interstate

commerce" sufficient for the Sherman Act. Cordova & Simonpietri

-35-
Ins. Agency Inc. v. Chase Manhattan Bank, N.A., 649 F.2d 36, 45

(1st Cir. 1981) (quoting McLain, 444 U.S. at 246).

Conclusion

It was the defendants who chose to test the plaintiffs'

case on the pleadings, and we hold no more than that, as to the

Casellas boycott federal antitrust claims, the case survives.

We reverse the judgment of dismissal with respect to that

one claim and remand the case for further proceedings consistent

with this opinion. No costs are awarded.

-36-
 Appendix

The plaintiffs' complaint contains the following relevant

allegations:

12. The defendant insurance companies acting
jointly, in concert and in agreement with each
other and with [the directors of the JUA],
agreed to implement a boycott against all
motor vehicle owners whereby none of the ten
[sic] private insurance companies would issue
to the owners of motor vehicles covered by Law
253, supra, the compulsory insurance policy .
. . and would cause and achieve that all said
motor vehicle owners be insured with respect
to said compulsory insurance policies only by
the [JUA].

13. The main and principal reason for such
concerted scheme and boycott was of course the
obtention [sic] of larger profits for all of
the defendants. As the [JUA] is exempted from
income and other taxes, if the [JUA] became
the sole insurer of all vehicles having only
compulsory insurance, all the premiums would
accrue tax free to the [JUA] to be later
distributed among the defendant's [sic]
participating insurance companies members of
the [JUA]. The monopoly obtained by a
successful boycott would lower their costs as
no written insurance policies would be issued
with a savings of around $4.00. They would
also economize in the payment of the
commission to the brokers and agents with
another savings of 8% of the insurance premium
as they would cover the insured directly
without the intervention of an agent or broker
as required by law when coverage is issued by
a private insurer. Other economies would be
obtained by the monopolization in the
adjustment of the claims and other
administrative expenses. As herein further
alleged, they have been successful and have
been able to accumulate extraordinary profits.

-37-
19. By April 1999, a "super syndicate" was
created and the [JUA] was issuing compulsory
insurance on virtually the whole universe of
vehicle owners operating in Puerto Rico not
having traditional insurance. . . .

21. Not only did they concertedly remain
inactive in promoting the offering of the
compulsory insurance but also went further in
their concerted boycott and each of them
systematically rejected all applications by
brokers and agents to the ten [sic] defendant
insurance companies.

26. On August 31[st], 2000 it was co-
defendant Seguros Triple S, [sic] Inc. who
rejected the applications for compulsory
insurance submitted by Casellas and Co. [a
broker] This company later agreed to issue
128 policies but limiting the commission to
Casellas to only 3% instead of 8% as
established in the premium distribution.

32. By October 16th, 2000 Casellas and Co.
had around 40,000 insurance applications
including broker designation for compulsory
insurance that the defendants had consistently
refused to accept.

38. [The defendants' agents] represented to
be private detectives investigating insurance
fraud. They would take photos and make[]
statements to the employees and owners of the
inspection centers to the effect that Casellas
and Co. was committing fraud; that he was
forcing and coercing vehicle owners to sign
applications; that he was doing illegal acts;
that the persons who did business with
Casellas could go to jail; that Casellas
promises could not be trusted; and other
similar disparaging comments casting
aspersions against Casellas and Co. with the
purpose of intimidating potential customers of
compulsory insurance policies and dissuade
them from doing to business with Casellas and
Co.

-38-
40. The plan and efforts of intimidation and
coercion were also practiced by the defendants
who threatened clients of Casellas and Co. not
to do business with said broker if he would
continue with his attempts to sell compulsory
insurance and telling members of the insurance
business community that what he was doing was
illegal.

55.C.(a) The monopoly has allowed the [JUA] to
freely dictate the practices relating to the
adjustment of claims allowing said [JUA] to
establish unreasonable depreciation
percentages for the replacement of new parts
to be replaced; repairing vehicles with old
parts obtained from "[j]unkers"; creating a
complicated and unfair system of diagrams for
the determination of fault to the detriment of
the affected member[s] of the class. This
monopoly and absence of competition has
resulted in the diminution of the quality of
service as the insureds have became [sic]
captives of the [JUA] without any possibility
of escaping.

63. [The plaintiffs] have been deprived of
the right to receive written policies and the
services and quality of service based on a
system of competition. Had the law intended
that no written policies were to be issued and
no brokers or competing insurance companies
would participate, the premiums could have
been fixed lower (at least 12% less than the
one established). . . .

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