A federal judge in Newark, N.J., has dismissed a massivepolicyholders' class-action suit accusing brokers and insurers ofantitrust and racketeering activity, saying plaintiffs need to showa more complete scheme was in place.

However, U.S. District Court Judge Garrett E. Brown Jr. gave theplaintiffs 30 days to revise their complaint, “because so much timehas been invested in this case by all parties, and because courtsshould construe plaintiff's allegations liberally at this stage ofthe proceedings…”

The case combines class actions alleging bid-rigging andprice-fixing in both the sale of commercial property-casualtyinsurance as well as employee benefit plans.

The allegations were also made in civil suits brought byattorneys general in various states, led by New York's formerattorney general (now governor), Eliot Spitzer.

Those legal actions led the nation's major insurance brokers toagree to forego commercial insurance contingent commissions thatallegedly served as hidden payoffs for participation in bid-riggingand account-steering schemes.

In addition to obtaining billions in settlement restitution frombrokers and insurers that were sued, the New York AttorneyGeneral's Office secured guilty pleas from more than a dozenbrokerage and insurance executives.

Judge Brown's ruling was the second time he has found againstthe plaintiffs. In October, he ruled their complaints had“insufficient particularity,” but let them file a supplementedstatement.

The plaintiffs, in their statement, describe seven allegedbroker-centered conspiracies in the commercial case and threebroker-centered conspiracies in the employee benefits case, withthe brokers serving as hubs and insurers as spokes.

However, the judge found that while plaintiffs claimed theinsurers were the scheme's ringmasters, “it is not clear whetherthe insurers themselves were collaborating or agreeing in some wayto further this per se illegal market or customer allocationscheme.”

Rather than a vertical restraint of trade between parties atdifferent levels of the distribution system, there must be ashowing of a horizontal conspiracy among competitors, Judge Brownruled.

The policyholders' complaints, the judge wrote, must come upwith “conduct which constitutes market or customer allocation, andnot just the steering of business to preferred partners.” At thispoint, the judge wrote, the complaints lack a showing of a “commonplan or scheme to divide the market among the alleged conspiratorsin some unlawful manner.”

Plaintiffs in the case involve dozens of major brokers andinsurers, including AIG, ACE Ltd., Aon, Arthur J. Gallagher &Company, Hartford Financial Services Group, and Willis GroupHoldings.