SAN DIEGO (Legal Newsline) - A title-insurance salesman who tried to win customers by warning them about the anticompetitive effects of a pending merger has no case, a California court ruled, saying he wasn’t the right party to make an antitrust claim.
Steve Ahn sued Stewart Title Guaranty Co., claiming he was fired from his job at competitor Chicago Title after he tried to steer customers to his company by warning that Stewart’s underwriting practices would get tighter when the two companies merged. Ahn had been a title insurance salesman at Stewart for 15 years before Chicago Title, a unit of Fidelity National Financial, recruited him in 2014.
The two companies announced a merger in 2018 but abandoned the plan after the Federal Trade Commission challenged it in 2019, saying it would harm consumers. Stewart had carved out a niche in offering title insurance policies for solar and wind farms with fewer conditions than competitors, which required waivers from each property owner against claims by holders of subsurface mineral rights.
Soon after the merger was announced in 2018, Joe Goodman, Ahn’s supervisor at Chicago Title, told him Stewart would likely have to conform to Fidelity’s tighter underwriting guidelines after the merger. Ahn turned that into a sales pitch, telling his old customers at Stewart they should switch insurers now to avoid complications later.
Goodman didn’t object to his pitch but a senior underwriter at Stewart, complained to her superiors that Ahn was threatening the loss of a major wind farm project they’d been working on for months. Her email made its way to Fidelity’s top executives, who discussed “issues with Steve Ahn.” Feeling he was in “hot water,” Goodman told Ahn to “stand down” and stop talking about the merger. Six days after shareholders approved the merger, Ahn was fired.
Stewart moved to dismiss his case, saying the underlying antitrust claim was invalid. A trial court agreed, finding Ahn didn’t have standing to challenge the merger. California’s Cartwright Act allows so-called “indirect purchaser” claims, which the U.S. Supreme Court rejected in its 1977 decision Illinois Brick, but doesn’t allow claims based on pre-merger activities. With no antitrust claim, the court ruled, Ahn couldn’t sue Stewart for wrongful acts stemming from it.
On appeal to California’s Fourth Appellate District, Ahn argued he was injured because he couldn’t make a sales pitch to lure customers away from Stewart. But the appeals court agreed Ahn wasn’t the right party to sue. It cited a 1977 U.S. Supreme Court decision, Brunswick Corp. v. Pueblo Bowl–O–Mat, rejecting standing for a bowling alley that complained Brunswick Corp. was buying up failing bowling alleys and keeping the open, costing Pueblo profits it would have earned if they closed.
Ahn “cannot show that his lost sales or termination stemmed from a competition-reducing aspect of Stewart’s behavior,” the court concluded in a July 5 decision. “Instead, it was Ahn who attempted to profit from the competition-reducing market consolidation aspects of the proposed merger.”