Opinion
No. 471359
September 10, 2003
I. INTRODUCTION
The motions to strike now before the Court test the sufficiency of allegations contained in three counts of a twelve-count Revised Complaint filed in a dispute between an insurance company and three of its erstwhile agents. To state the matter briefly, the corporate plaintiff, American Progressive Life Health Insurance Company of New York ("American"), alleges that it employed the three individual defendants — Michael Klein, William Barry, and Marc Sullivan — as agents. Unbeknownst to American, Klein, Barry, and Sullivan were, at the same time, owners of the corporate defendant, Better Benefits, LLC ("Better Benefits"). American alleges that the four defendants conspired to deprive American of business in a variety of ways. The individual plaintiff, William Daly, has an additional claim against Barry discussed below.
The action was commenced on December 3, 2002, by service of process. American filed its Revised Complaint on June 3, 2003. Better Benefits, Barry, and Klein filed the motions to strike now before the Court on July 25 and 30, 2003. The motions were argued in a consolidated hearing on September 8, 2003. (Sullivan, who also participated in the argument, claims to have filed a third motion to strike of his own, but after a thorough search, his motion has not been located by the Clerk; because the Court's decision on the motions before it grants the relief that Sullivan seeks anyway, there is no need to resolve this confusion.)
The counts in question will now be addressed in turn.
II. NINTH COUNT — CONSPIRACY
The Ninth Count alleges that the four defendants conspired to perform a number of acts by unlawful means. The attack on this count raises a narrow question of pleading concerning the intracorporate conspiracy doctrine. It is well established that, "Employees of a corporation acting in the scope of their employment cannot conspire with one another or with the corporation that employs them; each acts for the corporation and the corporation cannot conspire with itself." Day v. General Electric Credit Corp., 15 Conn. App. 677, 684, 546 A.2d 315 (1988), cert. denied, 209 Conn. 819, 551 A.2d 755 (1989). See Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 770-71 (1984). The doctrine only applies to employees "acting in the scope of their employment." American argued at the hearing that the individual defendants here were not so acting. The problem, however, is that the Revised Complaint does not expressly state that the individual defendants were not acting in the scope of their employment. The question is whether it must.
The answer to this question is Yes. In addition to its other allegations, "[t]he plaintiff must also allege that [the defendants] acted other than in the normal course of their corporate duties." Cole v. University of Hartford, 391 F. Sup. 888, 893 (D. Conn. 1975). For recent appellate authority to this effect, see General Refractories Co. v. Fireman's Fund Insurance Co., 337 F.3d 297, 313-14 (3d Cir. 2003); Leasehold Expense Recovery, Inc. v. Mothers Work, Inc., 331 F.3d 452, 463 (5th Cir. 2003); Jackson v. City of Columbus, 194 F.3d 737, 753 (6th Cir. 1999). The reason for this rule of pleading is that, while the intracorporate conspiracy doctrine is sometimes loosely referred to as a defense, it is actually part of the substantive law of conspiracy. As the Appellate Court explained in Day, the "[e]mployees of a corporation acting in the scope of their employment cannot conspire with one another or with the corporation that employs them." 15 Conn. App. at 684 (emphasis added). Because a combination of employees acting in the scope of their employment is not a conspiracy, a plaintiff alleging a conspiracy of employees must specifically allege and prove that the employees have not acted in the scope of their employment. The plaintiff has failed to make such an allegation here.
III. TENTH COUNT — CUIPA
The Tenth Count alleges a violation of the Connecticut Unfair Insurance Practices Act ("CUIPA"), Conn. Gen. Stat. §§ 38a-815, et seq. The question presented by the motions to strike is whether there is an independent private cause of action under CUIPA. Our Supreme Court has repeatedly declined to consider this question. See Napoletano v. CIGNA Healthcare of Connecticut, Inc., 238 Conn. 216, 221 n. 5, 680 A.2d 127 (1996), cert. denied, 520 U.S. 1103 (1997), and authorities cited therein. Under these circumstances, lower court judges must read the tea leaves as best they can. Although reasonable judges can and do disagree on the subject, I agree with the majority of Superior Court Judges who have found that CUIPA does not establish an independent cause of action. Lander v. Hartford Life Annuity Insurance Co., 251 F.3d 101, 119 n. 7 (2d Cir. 2001).
Napoletano articulates a three-pronged test for such inquiries. "First is the plaintiff one of the class for whose . . . benefit the statute was enacted . . .? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? . . . Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff?" 238 Conn. at 249 (internal quotation marks and citation omitted). These criteria must now be applied to CUIPA.
The first criterion favors the plaintiff. CUIPA is intended to protect insurance companies from unfair methods of competition. The remaining criteria, however, favor the defendants.
CUIPA was enacted in 1955. 1955 Conn. Pub. Acts. No. 365. Like similar statutes adopted throughout the nation, it is based on the Model Unfair Claims Practices Act drafted by the National Association of Insurance Commissioners in the wake of the 1947 passage of the McCarran-Ferguson Act subjecting the insurance industry to federal regulation only to the extent not regulated by state law. Morris v. American Family Mutual Insurance Co., 386 N.W.2d 233, 234 (Minn. 1986). The manifest purpose of the Act is to provide for state governmental regulation of the insurance industry rather than the creation of private attorneys general. This is clear from the remarks of the sponsor of CUIPA in the House:
The Federal Trade Commission has issued complaints against seventeen accident and health insurance companies because of advertising practices. It seems that an act should be put on our books which spells out in greater detail the powers of the insurance commissioner or insurance department of Connecticut in this respect. This will bar the Federal Trade Commission from entering into the field of supervising which properly belongs to the insurance commissioner. A similar bill has been passed in almost all eastern states and it is necessary for us to take the initiative to clarify the situation.
6 H.R.Proc., Pt. 2, 1955 Sess., p. 1037 (remarks of Rep. Bitzer).
The remarks just quoted clearly address both the legislative intent and the underlying purposes of the legislative scheme. As Goettel, J. has recently observed:
The text of CUIPA, as well as its legislative history, established its regulatory nature. The Act specifically authorizes the Commissioner of Insurance to investigate unfair insurance practices and to enforce its provisions, yet it makes no mention of a private right of action. The Act also establishes an administrative procedure through which the Commissioner can take action against a person engaging in an unfair insurance practice.
Martin v. American Equity Insurance Co., 185 F. Sup.2d 162, 166 (D. Conn. 2002). I adopt this reasoning.
This conclusion is consistent with that reached by the great majority of state courts considering the various state versions of the Model Act on which CUIPA was based. These state courts have concluded that the versions of the Act adopted by their respective jurisdictions do not create private causes of action. See Hunt v. First Insurance Company of Hawaii, Ltd., 922 P.2d 976, 985 (Hawaii Ct.App. 1996), and cases cited therein. Morris v. American Family Mutual Insurance Co., supra, and Moradi-Shalal v. Fireman's Fund Insurance Companies, 758 P.2d 58 (Cal. 1988), are especially influential decisions to this effect. The United States Court of Appeals for the Second Circuit has construed CUIPA in accordance with this analysis. Lander v. Hartford Life Annuity Insurance Co., supra. Although there can be no certainty in predicting such matters, it is likely that the Connecticut Supreme Court will eventually rule in accordance with the overwhelming weight of national authority. CUIPA does not create a private cause of action.
IV. TWELFTH COUNT — ASSAULT
The Twelfth Count alleges assault. It specifically alleges that, "On or about October 12, 2002, William Barry made a profane and threatening telephone call to the cell phone of William Daly, the Marketing Vice President of American Progressive, in which he threatened to harm Mr. Daly, his home and his family." Whatever else this telephone call may have been, it was not an "assault."
It is well established that, "mere words, however violent, do not amount to an assault." PROSSER KEETON ON THE LAW OF TORTS 44-45 (5th ed. 1984). As Prosser Keeton colorfully point out, the "mere words" doctrine dates to the swashbuckling days of yore when "taking cognizance of all the belligerent language which the foul months of merrie England could dispense was simply beyond" the capacity of the King's courts to handle. Id. at 45. Whatever its origin, the doctrine has persisted to modern times. See RESTATEMENT (SECOND) OF TORTS § 31 (1965). An illustration provided by the Second Restatement captures the modern approach in a nutshell:
A, known to be a resolute and desperate character, threatens to waylay B on his way home on a lonely road on a dark night. A is not liable to B for an assault . . . A may, however, be liable to B for the infliction of severe emotional distress by extreme and outrageous conduct . . .
Id. cmt. a, illus. 1. The suggestion of the appropriate cause of action contained in this illustration should serve as a word to the wise.
V. CONCLUSION
The motions to strike — directed against the Ninth, Tenth, and Twelfth Counts — are granted.
Jon C. Blue Judge of the Superior Court