A federal judge in Newark, N.J., has dismissed a massive policyholders’ class-action suit accusing brokers and insurers of antitrust and racketeering activity, saying plaintiffs need to show a more complete scheme was in place.

However, U.S. District Court Judge Garrett E. Brown Jr. gave the plaintiffs 30 days to revise their complaint, “because so much time has been invested in this case by all parties, and because courts should construe plaintiff’s allegations liberally at this stage of the proceedings…”

The case combines class actions alleging bid-rigging and price-fixing in both the sale of commercial property-casualty insurance as well as employee benefit plans.

The allegations were also made in civil suits brought by attorneys general in various states, led by New York’s former attorney general (now governor), Eliot Spitzer.

Those legal actions led the nation’s major insurance brokers to agree to forego commercial insurance contingent commissions that allegedly served as hidden payoffs for participation in bid-rigging and account-steering schemes.

In addition to obtaining billions in settlement restitution from brokers and insurers that were sued, the New York Attorney General’s Office secured guilty pleas from more than a dozen brokerage and insurance executives.

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

The plaintiffs, in their statement, describe seven alleged broker-centered conspiracies in the commercial case and three broker-centered conspiracies in the employee benefits case, with the brokers serving as hubs and insurers as spokes.

However, the judge found that while plaintiffs claimed the insurers were the scheme’s ringmasters, “it is not clear whether the insurers themselves were collaborating or agreeing in some way to further this per se illegal market or customer allocation scheme.”

Rather than a vertical restraint of trade between parties at different levels of the distribution system, there must be a showing of a horizontal conspiracy among competitors, Judge Brown ruled.

The policyholders’ complaints, the judge wrote, must come up with “conduct which constitutes market or customer allocation, and not just the steering of business to preferred partners.” At this point, the judge wrote, the complaints lack a showing of a “common plan or scheme to divide the market among the alleged conspirators in some unlawful manner.”

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