## Facts

- Nineteen states led by California and private plaintiffs sued domestic insurers, domestic reinsurers, trade associations, a reinsurance broker, and London-market reinsurers, alleging conspiracies to restrict commercial general liability (CGL) policy terms in the United States in violation of Sherman Act § 1.
- Plaintiffs alleged defendants used reinsurance market power to pressure primary insurers to adopt more restrictive CGL coverage terms, including shifting from occurrence-based coverage to claims-made coverage.
- The district court dismissed, holding the alleged conduct was immunized under McCarran-Ferguson Act § 2(b) as “the business of insurance” regulated by state law and that plaintiffs had not alleged a § 3(b) “boycott.”
- The Ninth Circuit reversed, holding foreign reinsurers were outside § 2(b), domestic defendants forfeited § 2(b) immunity by conspiring with nonexempt foreign reinsurers, much of the conduct fit § 3(b)’s boycott exception, and international comity did not bar Sherman Act jurisdiction over the London defendants.
- The Supreme Court granted review and issued a mixed disposition.

## Issues

1. Whether domestic defendants covered by McCarran-Ferguson Act § 2(b) lose that antitrust immunity by conspiring with foreign reinsurers allegedly outside § 2(b).
2. Whether the alleged coordinated conduct constituted an “act of boycott, coercion, or intimidation” under McCarran-Ferguson Act § 3(b), making the Sherman Act applicable.
3. Whether the Sherman Act applies to foreign reinsurers’ conduct intended to and actually producing substantial effects in U.S. commerce.
4. Whether international comity required U.S. courts to decline jurisdiction over the foreign defendants.

## Decision

- The Court affirmed in part, reversed in part, and remanded.
- It rejected the Ninth Circuit’s rule that domestic insurers forfeit § 2(b) immunity merely by conspiring with entities not entitled to that immunity.
- It held most of the alleged conduct plausibly fell within § 3(b)’s boycott proviso and therefore was not shielded from Sherman Act scrutiny by McCarran-Ferguson.
- It held the Sherman Act applies to foreign conduct “meant to produce and did in fact produce some substantial effect in the United States,” and the pleadings satisfied that standard at the dismissal stage.
- It held international comity did not bar jurisdiction because there was no “true conflict” requiring defendants to violate one sovereign’s law to comply with the other.

## Legal Principles

- McCarran-Ferguson Act § 2(b) immunity turns on statutory criteria (whether the challenged activity is the “business of insurance” and is regulated by state law), not on the identity of alleged co-conspirators; cooperation with nonimmune actors does not, by itself, eliminate § 2(b) protection.
- McCarran-Ferguson Act § 3(b) preserves Sherman Act applicability to agreements involving “boycott, coercion, or intimidation,” including coercive refusals to deal in collateral transactions to force acceptance of desired terms in a target transaction.
- The Sherman Act reaches foreign conduct intended to and actually producing substantial effects in the United States.
- International comity may warrant restraint only where there is a true conflict of law; if defendants can comply with both U.S. law and foreign law, comity does not require dismissal.

## Conclusion

The Court limited McCarran-Ferguson forfeiture theories, treated coercive refusals to deal as potential § 3(b) boycotts outside insurance antitrust immunity, and sustained Sherman Act jurisdiction over foreign reinsurers where the alleged conduct targeted and substantially affected U.S. commerce without creating a true conflict with foreign law.


Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993)