The defendants, who are compensated either by flat fees or by contingency fees based on percentages of the premiums that their clients pay to their insurers, allegedly entered into agreements with their insurers that resulted in the insurers paying percentage-based bonuses to the defendants in exchange for their steering a certain percentage of their clients to the insurers.
According to the state, these agreements created a conflict of interest between the defendants and their clients, as they had the purpose and effect of elevating prices in the market for excess casualty insurance. Insurers who refused to enter into agreements with the defendants were allegedly denied access to the defendants’ clients nationwide. As a result, it is alleged, insurers typically consented to the agreements, which resulted in increased premium prices ultimately paid by the defendants’ clients. The state further alleged that the defendants’ bid rigging and price fixing scheme resulted in artificially increased premium rates, which allegedly harmed some of Connecticut’s largest corporations, universities, hospitals, municipalities, and the state government.
The trial court struck the antitrust claim on the basis that the state lacked standing to pursue a parens patriae claim for damages to its general economy. The supreme court reversed the trial court.
The supreme court held that it was not required to incorporate the federal preclusion of general economy damages into the state antitrust scheme, and that the trial court incorrectly held that the state statute had a federal statutory parallel that required the court to adopt and apply the federal principles as a matter of state law. The state statute permits the state attorney general to bring a parens patriae action, and the federal parallel turns perpendicular at that point because there is a crucial substantive linguistic difference, namely the state statute authorizes for the attorney general to seek damages to the state’s general economy.
Nor did the supreme court accept the defendants’ argument that the statutory bar against the recovery of duplicative damages precludes the state’s claim for general economy damages because there have been earlier settlement agreements in the case between the defendants and certain affected companies. The court concluded that the state has adequately pleaded a cause of action for damages to its general economy, and that the defendants’ arguments with respect to the potentially duplicative nature of the damages and injuries pleaded in the state’s complaint implicate potential problems with proof rather than pleading.