*

Honorable Ann Aldrich, Senior U.S. District Judge for the

Northern District of Ohio, sitting by designation. 

United States Court of Appeals,

Eleventh Circuit.

No. 95-3257.

Jeanine SLAGLE, For Herself and All Others Similarly Situated,

Plaintiff-Appellant,

v.

ITT HARTFORD, State Farm Fire and Casualty Company, Allstate

Insurance Company, Aetna Casualty & Surety Company, and Florida

Windstorm Underwriting Association, The Hartford Company,

Defendants-Appellees.

Dec. 31, 1996.

Appeal from the United States District Court for the Northern

District of Florida. (No. 94-40563-WS), William Stafford, Judge.

Before EDMONDSON, Circuit Judge, FAY, Senior Circuit Judge, and

ALDRICH*

, Senior District Judge.

ANN ALDRICH, Senior District Judge:

The appellant, Jeanie Slagle, a consumer of windstorm

insurance in the state of Florida, brought the instant antitrust

action against the appellees, insurance companies licensed to

transact business in Florida and members of the Florida Windstorm

Underwriting Association (FWUA). Slagle's complaint alleged that

the appellants' business practices in the insurance industry limit

competition in violation of section 1 of the Sherman Act, 15 U.S.C.

§ 1. Thereafter, the appellees moved for judgment on the pleadings,

contending that their alleged conduct was exempt under the

McCarran-Ferguson Act, 15 U.S.C. § § 1011-1015. The magistrate

judge assigned to the case agreed, and recommended granting the

motion. Upon review of that decision and the filed objections, the
 1

Fla.Stat. § 627.351(2)(b) reads:

The department shall require all insurers licensed to

transact property insurance on a direct basis in this

state to provide windstorm coverage to applicants from

areas determined to be eligible pursuant to paragraph

(c) who in good faith are entitled to, but are unable

to procure, such coverage through ordinary means; or

it shall adopt a reasonable plan or plans for the

equitable apportionment or sharing among such insurers

of windstorm coverage. The commissioner shall

promulgate rules which provide a formula for the

recovery and repayment of any deferred assessments. 

district court adopted the magistrate judge's decision as its own

and dismissed Slagle's complaint. Slagle appealed. For the

reasons that follow, we AFFIRM.

I.

Briefly, the FWUA is a joint underwriting association

comprised of property insurers licensed to do business in Florida.

The Florida legislature created the FWUA in 1970 in response to the

voluntary market's inability to provide windstorm-only insurance in

Florida's high-risk coastal areas. Fla.Stat. § 627.351 (1993).

State law mandates that the described insurers belong to the FWUA

and provide windstorm coverage to eligible applicants who are

unable to obtain such coverage through ordinary means. See

American Ins. Assoc. v. Florida Dep't of Ins., 646 So.2d 784, 785

(Fla.Dist.Ct.App.1994) (construing Fla.Stat. § 627.351(2)(b)1

).

Member insurers are required to pay for the FWUA's losses on a

proportionate basis. Fla.Stat. § 627.351(2). Moreover, Florida's

Department of Insurance may regulate the rates charged by the FWUA.

Id. § 627.351(2)(a).

Slagle brought this action on behalf of herself and others as

part of an insured class alleging that the appellee insurers, as
members of the FWUA, violated the antitrust laws by refusing to

issue windstorm insurance on an open market in certain Florida

coastal areas. Specifically, Slagle alleged that the appellees

have engaged in concerted anticompetitive conduct by the "fixing,

pegging or stabilizing of insurance premiums and prices among

ostensible competitors through horizontal price fixing and unlawful

allocation of markets, customers and territories and the

establishment and agreement upon a boycott." According to Slagle,

the appellees have agreed among themselves on the rates charged for

windstorm insurance coverage sold to the public. Consumers

desiring to purchase windstorm insurance coverage in designated

coastal areas of Florida are directed by the insurance carrier,

issuing their other coverages, to the FWUA as the only source for

the issuance of windstorm coverage. None of the insurance

companies which combined to form the FWUA will offer for sale any

windstorm insurance coverage to their customers, or the marketplace

of customers for whom they would otherwise compete. Consequently,

the sole source of windstorm insurance coverage for those customers

is the FWUA. See Appellant's Brief, p. 10-11. Slagle maintains

that such conduct violates the Sherman Act, as provided in 15

U.S.C. § 1, and falls within the "boycott" exception in § 3(b) of

the McCarran-Ferguson Act.

The Sherman Act establishes that "[e]very contract,

combination in the form of trust or otherwise, or conspiracy, in

restraint of trade or commerce among the several States, or with

foreign nations, ... to be illegal." 15 U.S.C. § 1. As applicable

to the present case, and notwithstanding the antitrust laws of the
Sherman Act, the McCarran-Ferguson Act provides that regulation of

the insurance industry is generally a matter for the states, 15

U.S.C. § 1012(a), and that "[n]o Act of Congress shall be construed

to invalidate, impair, or supersede any law enacted by any State

for the purpose of regulating the business of insurance." Id. §

1012(b). Section (3)(b) of the McCarran-Ferguson Act creates an

exception to the Act's antitrust exemption, stating that the

Sherman Act shall remain applicable, in any event, "to any

agreement to boycott, coerce, or intimidate, or act of boycott,

coercion, or intimidation." 15 U.S.C. § 1013(b). In effect,

section 3(b) creates an exception to the general rule that state

regulated insurance activities are immune from federal regulation

under the Sherman Act.

Prior to discovery, the appellees moved for judgment on the

pleadings reasoning that the McCarran-Ferguson Act bars Slagle's

federal antitrust claims because the alleged activity involves the

"business of insurance," and is currently regulated by Florida

state law. The appellees further maintained that the alleged

conduct did not fall within the "boycott" exception to the

McCarran-Ferguson Act. After a review of the magistrate judge's

report and recommendation, which agreed with the appellees on both

issues, the district court granted that motion. See Slagle v. ITT

Hartford Ins. Group, 904 F.Supp. 1346 (N.D.Fla.1995).

On appeal, Slagle contends that the appellees' alleged conduct

is not entitled to McCarran-Ferguson immunity because such conduct

in refusing to deal with consumers relates to the "business of

insurers" and not the "business of insurance." Alternatively,
Slagle argues that the appellees' conduct constitutes a "boycott"

and thus falls within the exception to the McCarran-Ferguson Act's

bar on antitrust claims.

In response, the appellees assert that the district court

correctly ruled that the challenged conduct pertains to the

"business of insurance" as applicable to § 2(b) of the McCarranFerguson Act, 15 U.S.C. § 1012(b). Moreover, the appellees argue

that Slagle fails to plead the type of conduct which would

constitute a "boycott" as that term has been defined by the Supreme

Court in the context of § 3(b) of the McCarran-Ferguson Act, 15

U.S.C. § 1013(b).

II.

 Judgment on the pleadings is appropriate when "no issues of

material fact exist, and the movant is entitled to judgment as a

matter of law." Ortega v. Christian, 85 F.3d 1521, 1524 (11th

Cir.1996) (citing Fed.R.Civ.P. 12(c)). The complaint may not be

dismissed "unless it appears beyond doubt that the plaintiff can

prove no set of facts in support of his claim which would entitle

him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99,

102, 2 L.Ed.2d 80 (1957). See also Hartford Fire Ins. Co. v.

California, 509 U.S. 764, 811, 113 S.Ct. 2891, 2917, 125 L.Ed.2d

612 (1993). "When reviewing a judgment on the pleadings, we accept

the facts in the complaint as true and view them in the light most

favorable to the nonmoving party." Ortega, 85 F.3d at 1524 (citing

Swerdloff v. Miami Nat'l Bank, 584 F.2d 54, 57 (5th Cir.1978));

see also Hartford, 509 U.S. at 770, 113 S.Ct. at 2895; General

Conference Corp. of Seventh-Day Adventists v. Seventh-Day Adventist
 2

The opinion issued by the district court incorporates the

entire decision of the magistrate judge. 

Congregational Church, 887 F.2d 228, 230 (9th Cir.1989), cert.

denied, 493 U.S. 1079, 110 S.Ct. 1134, 107 L.Ed.2d 1039 (1990).

Accordingly, as a decision on the merits, we review a judgment on

the pleadings de novo. Ortega, 85 F.3d at 1524-25 (citing General

Conference Corp., 887 F.2d at 230).

III.

 As stated above, the McCarran-Ferguson Act exempts conduct

from the federal antitrust laws if it is "the business of

insurance" and is "regulated by state law." 15 U.S.C. § 1012(b).

However, under Section 3(b), the exemption does not apply if the

challenged conduct involves an act or agreement of "boycott,

coercion, or intimidation." 15 U.S.C. § 1013(b).

A. The Business of Insurance and the McCarran-Ferguson Act

The district court concluded2

 that the appellees' conduct as

alleged in the complaint is the "business of insurance." Slagle v.

ITT Hartford Ins. Group, 904 F.Supp. 1346, 1349 (N.D.Fla.1995).

According to the district court, the appellees' conduct pertains to

transferring and spreading a policyholder's risk, and that "[t]he

setting of premium rates and terms is an integral part of the

policy relationship between the insurer and the insured, and that

activity is limited to entities in the insurance industry." Id.

Consequently, because the conduct is also regulated by the State of

Florida, Fla.Stat. § 627.062 (1993), the McCarran-Ferguson Act

exemption is applicable. Slagle challenges the district court's

conclusion by asserting that the appellees' alleged boycott and
enforcement activities are not the "business of insurance," but are

more accurately characterized as the "business of insurers." We

disagree.

The Supreme Court has developed a three-part test for

determining whether particular conduct constitutes the "business of

insurance." See Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119,

129, 102 S.Ct. 3002, 3008, 73 L.Ed.2d 647 (1982). Here, this Court

examines:

first, whether the practice has the effect of transferring or

spreading a policyholder's risk; second, whether the practice

is an integral part of the policy relationship between the

insurer and the insured; and third, whether the practice is

limited to entities within the insurance industry.

Uniforce Temp. Personnel v. National Council on Compensation Ins.,

Inc., 87 F.3d 1296, 1300 (11th Cir.1996) (quoting Pireno, 458 U.S.

at 129, 102 S.Ct. at 3008) (emphasis in the original).

In this case, we find, as did the district court, that

appellees' conduct fulfills each of these requirements. There is

no doubt that the appellees' conduct in setting the FWUA premium

rate has the effect of spreading and transferring a policyholder's

risk. See In re Workers' Compensation Ins. Antitrust Litig., 867

F.2d 1552, 1556 (8th Cir.) ("it is axiomatic that the fixing of

rates is central to transferring and spreading the insurance

risk"), cert. denied, 492 U.S. 920, 109 S.Ct. 3247, 106 L.Ed.2d 593

(1989). Nor can it be questioned that this practice, which affects

only the parties within the insurance industry, remains an

essential part of the policy relationship. Accordingly, we

conclude that appellees' alleged rate-fixing conduct is the

"business of insurance." See Group Life & Health Ins. v. Royal
Drug Co., 440 U.S. 205, 224 n. 32, 99 S.Ct. 1067, 1080 n. 32, 59

L.Ed.2d 261 (1979) ("It is clear from the legislative history [of

the McCarran-Ferguson Act] that the fixing of rates is the

"business of insurance.' "); SEC v. National Sec., Inc., 393 U.S.

453, 460, 89 S.Ct. 564, 568, 21 L.Ed.2d 668 (1969) ("Certainly the

fixing of rates is part of the business [of insurance].");

Uniforce, 87 F.3d at 1300 (holding that the rate-making activity of

insurers in allegedly depriving temporary help industry of access

to voluntary market for workers compensation insurance and

providing coverage under assigned risk policies involved "business

of insurance"); Ocean State Physicians Health Plan v. Blue Cross

& Blue Shield, 883 F.2d 1101, 1108 (1st Cir.) (the marketing and

pricing of insurance policies is the business of insurance), cert.

denied, 494 U.S. 1027, 110 S.Ct. 1473, 108 L.Ed.2d 610 (1990).

B. The Boycott Exception

 In the alternative, Slagle argues that appellees' conduct

falls within the "boycott" exception to the McCarran-Ferguson Act's

antitrust exemption. Specifically, Slagle contends that the

appellees have "stepped out from under the cloak of McCarranFerguson protection by agreeing upon and carrying out a plan to

create a cartel and foreclose the windstorm insurance market by

boycotting and refusing to deal with customers within the windstorm

prone coastal counties of Florida." Slagle therefore claims that

the McCarran-Ferguson Act does not entitle the appellees to

immunity from her antitrust claims. In response, the appellees

argue that Slagle's complaint alleges nothing more than a

"cartelization," and the allegations, taken as true, do not amount
 3

As acknowledged by the district court in this case, the

Hartford Court explained that "no one would call [a labor strike]

a boycott, because the conditions of the "refusal to deal'

related directly to the terms of the refused transaction (the

employment contract)." Slagle v. ITT Hartford Ins. Group, 904

F.Supp. 1346, 1350 (N.D.Fla.1995) (quoting Hartford, 509 U.S. at

805, 113 S.Ct. at 2913). Here, "[a] refusal to work changes from

strike to boycott only when it seeks to obtain action from the

employer unrelated to the employment contract." Id. (quoting

Hartford, 509 U.S. at 805, 113 S.Ct. at 2913). 

to a "boycott." We agree.

In Hartford Fire Ins. v. California, 509 U.S. 764, 113 S.Ct.

2891, 125 L.Ed.2d 612 (1993), the Supreme Court explained the term

"boycott" for purposes of the McCarran-Ferguson Act. Conduct

constitutes a "boycott" where, in order to coerce a target into

certain terms on one transaction, parties refuse to engage in

other, unrelated or collateral transactions with the target. Id.

at 802-03, 113 S.Ct. at 2912. Specifically, it is "the refusal to

deal beyond the targeted transaction that gives great coercive

force to a commercial boycott: unrelated transactions are used as

leverage to achieve the terms desired." Id. at 802-03, 113 S.Ct.

at 2912; Uniforce, 87 F.3d at 1298 (establishing that a "boycott"

is the "refusal to deal in a collateral transaction as a means to

coerce terms respecting a primary transaction"). In terms of the

McCarran-Ferguson Act, the term "boycott" means more than just "an

absolute refusal to deal on any terms." Id. at 801, 87 F.3d at

2911.3

In this case, Slagle contends that the appellees refuse to

deal with her directly in her attempt to purchase windstorm

insurance. However, such alleged conduct does not constitute a

boycott because the conditions of their refusal to deal relate
 4

Here, the Court noted that "if a concerted agreement, say,

to include a security deposit in all contracts is a "boycott'

because it excludes all buyers who won't agree to it, then by

parity of reasoning every price fixing agreement would be a

boycott also. The use of the single concept, boycott, to cover

agreements so varied in nature can only add to confusion." 

Hartford, 509 U.S. at 802, 113 S.Ct. at 2912 (quoting L.

Sullivan, Law of Antitrust 257 (1977)). 

directly to the terms of the purchase of windstorm insurance, the

primary transaction, and not to some collateral transaction. In

essence, Slagle claims that the appellees conspired to fix prices

at an unlawful rate, but as clearly announced in Hartford, a

conspiracy to charge an inflated price is not a "boycott". Id. at

802, 113 S.Ct. at 2912.4 Slagle simply fails to allege that the

appellees are using "unrelated transactions ... as leverage to

achieve the terms desired." Hartford, 509 U.S. at 803, 113 S.Ct.

at 2912. Accordingly, we conclude that the acts alleged in

Slagle's complaint do not come within the "boycott" exception to

the McCarran-Ferguson Act.

This conclusion is supported by our recent decision in

Uniforce Temporary Personnel, Inc. v. National Council on

Compensation Ins., 87 F.3d 1296 (11th Cir.1996). In Uniforce,

temporary employment companies brought an action against a workers

compensation insurance rating organization, insurers, and a

reinsurance pool. The plaintiffs alleged that the defendants'

conduct in depriving the temporary help industry of access to the

voluntary market for workers compensation insurance and providing

coverage under assigned risk policies constituted a "boycott" under

the McCarran-Ferguson Act, and thereby permitted the application of

the Sherman Act. The Uniforce court disagreed. Examining the
plaintiffs' claim using the Hartford definition of "boycott," the

court concluded that the primary transaction in that case concerned

the purchase of workers compensation insurance. Id. at 1300.

Because the plaintiffs were unable to allege that the defendants

refused to deal with them in a collateral transaction (i.e., the

purchase of health insurance), the court held that the alleged

conduct did not constitute a "boycott" within the meaning of the

McCarran-Ferguson Act. Id. Consequently, the McCarran-Ferguson Act

barred the plaintiffs' antitrust claims. Id. The factual

similarities in the present case lead us to the same conclusion as

that reached in Uniforce.

IV.

For the reasons stated herein, we hold that the McCarranFerguson Act bars Slagle's antitrust claims. Accordingly, the

district court's order dismissing Slagle's claims is AFFIRMED.