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. e du/thir dc ir c uit_1998/33Filed February 23, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 96-3663

RICHARD SABO, Appellant

v.

METROPOLITAN LIFE INSURANCE COMPANY; GARY
ANTONINO; JOEL SHERMAN; RONALD SCHRAM; UNITED

FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, AFL-CIO, CLC.

On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. No 94-cv-00307)

Argued October 16, 1997

Before: STAPLETON, ALITO, and SEITZ, Circuit Judges

.

(Opinion Filed: February 23, 1998)

Stanley M. Stein, Esquire (Argued) Michelle S. Katz, Esquire Jeffrey B. Yao, Esquire Feldstein, Grinberg, Stein & McKee
428 Boulevard of the Allies Pittsburgh, PA 15219

ATTORNEYS FOR APPELLANT

RICHARD SABOFrederick N. Egler, Jr., Esquire

(Argued) J. Stephen Purcupile, Esquire Egler, Garrett & Egler
428 Forbes Avenue 2100 Lawyers Building Pittsburgh, PA 15219

ATTORNEYS FOR APPELLEE

METROPOLITAN LIFE INSURANCE

COMPANY

Kim M. Watterson, Esquire Richard M. Smith, Esquire
Katarincic & Salmon 625 Liberty Avenue

2600 CNG Tower Pittsburgh, PA 1522

ATTORNEYS FOR APPELLEE

GARY ANTONINO

OPINION OF THE COURT

Seitz, Circuit Judge.

This appeal primarily presents an issue that divide s sister Courts of Appeals and is of first impression in our court -- namely, whether the McCarran Ferguson Act, 15 U.S.C. SS 1011-1015 (1994) ("The Act"), precludes a cause of action under the Racketeer Influenced and Corrup t Organizations Act ("RICO"), 18 U.S.C. SS 1961-1968 (1994), where the challenged predicate acts arise out of th e defendant's insurance business. The district court exercised jurisdiction over plaintiff 's federal claims pursu ant to 28 U.S.C. S 1331 and over supplemental state tort clai ms under 28 U.S.C. S 1367. Our appellate jurisdiction arises
under 28 U.S.C. S 1291 to review the district court 's final

orders.

I. Factual Background

The Metropolitan Life Insurance Company ("MetLife") terminated the employment of Richard Sabo as an

2insurance sales agent in alleged retaliation for hi s refusal to

participate in illegal trading activity. Mr. Sabo ( "Plaintiff ") then sued MetLife and several MetLife employees ("Antonino", "Sherman", and "Schram") in the distri ct court, alleging causes of action under RICO as well as a c laim based on the common law tort of defamation. In part icular, the complaint recited the existence of three predic ate acts under RICO: (1) a "churning" scheme, whereby MetLi fe encouraged and coerced agents to fraudulently trade insurance policies in order to accumulate commissio ns and decrease the value of outstanding policies; (2) a"5 0/50" insurance plan that MetLife fraudulently advertised as a retirement savings plan; and (3) an organized poli cy of intimidation and harassment by MetLife management directed toward its insurance agents to participate in these
fraudulent activities.

The district court first granted a motion by all de fendants to dismiss the RICO claims on the ground that the McCarran-Ferguson Act precluded such claims where t he
causes of action arose from MetLife's insurance bus iness. At the close of discovery, the district court, unde r a summary judgment standard, dismissed the remaining defamation action on the ground that the alleged defamatory statements were not sufficiently directe d toward the plaintiff so that a jury could reasonably concl ude that they referred to him. Plaintiff now appeals these t wo orders.

II. The McCarran-Ferguson Act

Because the central issue in plaintiff 's RICO clai ms implicates an application of the McCarran-Ferguson Act, we turn first to that Act. Our standard of reviewing t he district court's grant of a motion to dismiss is plenary. Ch ester County Intermediate Unit v. Pennsylvania Blue Shiel d, 896 F.2d 808, 810-811 (3d Cir. 1990).

Section 2 of the Act, codified at 15 U.S.C. S 1012, reads

as follows:

Regulation by State law; Federal law relatin g specifically to insurance; applicability of certain Federal laws after June 30, 1948

3(a) State regulation. The business of insura nc e, and

every person engaged therein, shall be subje ct to the
laws of the several States which relate to t he regulation
or taxation of such business.

(b) Federal regulation. No Act of Congress shall be construed to invalidate, impair, or supersed e any law enacted by any State for the purpose of regu lating the business of insurance, or which imposes a fe e or tax upon such business, unless such Act specific ally
relates to the business of insurance: Provid ed, That after June 30, 1948, the Act of July 2, 1890 , as amended, known as the Sherman Act, and the A ct of October 15, 1914, as amended, known as the C layton Act, and the Act of September 26, 1914, know n as the Federal Trade Commission Act, as amended, sh all be applicable to the business of insurance to t he extent that such business is not regulated by State law.

The stated purposes of the Act, as expressed in sec tion 1, are to leave regulation and taxation of the insuran ce business to the states and to ensure that "silence on the part of the Congress shall not be construed to impo se any barrier to the regulation or taxation of such busin ess by the
several States." 15 U.S.C. S 1011.

In considering the defendants' motion to dismiss th e RICO claims, the district court adopted a four-part test announced in Wexco Inc. v. IMC, Inc., 820 F.Supp. 1 94, 198 (M.D.Pa. 1993) which provides that the McCarran-Fer guson Act precludes federal litigation if:

(1) the federal statute under which the alle gedly precluded action is brought ... does not spe cifically relate to the "business of insurance"; (2) the complained-of activities constitute the "bus iness of insurance"; (3) the relevant state has enact ed laws for the purpose of regulating these complained-o f activities; and (4) the application of the f ederal statute would, "invalidate, impair[,] or supersede" such laws.

Applying this test, the district court held that RI CO does not specifically relate to the business of insuranc e, thus satisfying the first element of preclusion. As to t he second element, the district court found that the plaintif f's

4complained-of activities did indeed constitute acti vity within

the "business of insurance." Although plaintiff's c omplaint alleged fraud and coercion under RICO, the district court reasoned that the defendants' "underlying activity" involves the "promotion and sale of insurance policies to Me tLife customers," which is central to the insurance busin ess. Next, the district court found that Pennsylvania ha d enacted a comprehensive system of insurance regulat ion so that the third element of the preclusion analysis w as met. Finally, the district court held that the applicati on of RICO in an insurance context would "invalidate, impair, or supersede" Pennsylvania's insurance laws. The court arrived at this conclusion by comparing the remedia l provisions of civil RICO (namely treble damages, at torney's fees, and costs) with Pennsylvania's insurance laws primarily providing for administrative remedies. It thus reasoned that all the elements of preclusion under the McCarran-Ferguson Act were satisfied which mandated a dismissal of the plaintiff's RICO claims.

The parties to this appeal focus their arguments on two rulings of the district court. First, they disagree as to the scope of the "insurance business" covered by the st atute, and whether it applies to the conduct alleged in th e complaint. Plaintiff emphasizes that the alleged pr edicate acts of racketeering activity stem from systematic behavior of "coercive and intimidating tactics" and thus can not be
construed to embrace the business of insurance. Defendants, on the other hand, assert that plaintif f's complaint necessarily relates to the insurance busi ness because it attacks the heart of the insurance indus try -- specifically, how MetLife manages the licensing of its agents, the agents' authority to solicit insurance, and how agents receive commissions.

Second, both sides contest the proper construction of the "invalidate, impair, or supersede" phrase in 15 U.S .C. S 1012(b) quoted above. Plaintiff urges this court to adopt a "direct conflict" test, in which a federal statute would not "invalidate, impair, or supersede" a state law unle ss the federal legislation directly conflicts with substan tive duties governed by state insurance law. Conversely, the defendants argue that any analysis of the Act's imp airment

5should not focus on substantive conflict but instea d should

compare the plaintiff's broad federal RICO remedies with the exclusively administrative scheme adopted under Pennsylvania insurance laws. We will address these two arguments in turn.

A. Preclusion Analysis Under the McCarranFerguson Act

As with any other issue of statutory construction, the starting point in the Act's interpretation is the l anguage of the statute itself. Group Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 210 (1979). Section 2(a) of the statute, by its terms, affirmatively subjects the business o f insurance to state regulation. 15 U.S.C. S 1012(a). The statute then takes the further step of proscribing
unintended federal interference of state insurance laws by a general mandate that no federal law "shall . . . invalidate, impair, or supersede" any state law enacted "for th e purpose of regulating the business of insurance." 1 5 U.S.C. S 1012(b). This preclusionary mandate does not appl y when the federal statute in question "specifically relat es to the business of insurance," in which case normal suprem acy rules control and the federal statute trumps confli cting

state law.1

The Supreme Court has extensively reviewed the Act' s legislative history, see, e.g., United States Dep't of the Treasury v. Fabe, 508 U.S. 491, 499-500 (1993), Sec urities and Exchange Comm'n v. National Securities, Inc., 3 93 U.S. 453, 458-59 (1969), and has fully explained the leg islative intent behind the statute's preclusionary approach to
federal intrusion on state insurance laws:

[C]ongress' purpose was broadly to give supp ort to the existing and future state systems for regula ting and taxing the business of insurance. This was d one in two

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1. Because the plaintiff 's complaint is not ground ed in federal antitrust laws, we focus our analysis on the first clause of section 1012(b). As the Supreme Court noted, the language of the Act distin guishes preclusion analysis where antitrust laws are at issue. United States Dep't of the Treasury v. Fabe, 508 U.S. 491, 504 (1993).

6ways. One was by removing obstructions which might

be thought to flow from its own power, wheth er dormant or exercised, except as otherwise pr ovided in the Act itself or in future legislation. The other was by declaring expressly and affirmatively that c ontinued state regulation and taxation of this busine ss is in the public interest and that the business and al l who engage in it "shall be subject to" the laws of the several states in these respects.

Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 429- 30 (1946) (footnote omitted); see also Lac D'Amiante d u Quebec, Ltee v. American Home Assurance Co., 864 F. 2d 1033, 1038-39 (3d Cir. 1988).

If it is determined that the alleged conduct at iss ue broadly constitutes the "business of insurance," an d is therefore subject to state regulation under section 1012(a), the next issue is whether the anti-preemption manda te of section 1012(b) precludes a federal cause of action . Here, the statute makes clear that a party is barred from suing under federal law if three distinct requirements ar e met. First, the federal law at issue does not "specifica lly relate" to the business of insurance. Second, the state law regulating the challenged conduct was "enacted for the purpose of regulating the business of insurance." F inally, an application of federal law would "invalidate, im pair, or supersede" such state law.2 Fabe, 508 U.S. at 501.

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2. We note at the outset that federal courts have s eemingly disagreed as to the proper analytic inquiry into McCarran-Fergus on Act preclusion. See, e.g., Dornberger v. Metropolitan Life Ins. Co. , 961 F.Supp. 506, 516 n.4 (S.D.N.Y. 1997); Ambrose v. Blue Cross & Blue S hield of Virginia,
Inc., 891 F.Supp. 1153, 1158 n.4 (E.D. Va. 1995), aff'd, 95 F.3d 41 (4th Cir. 1997) (unpublished per curiam). Some courts draw up on a four-part inquiry similar to that used by district court and the Wexco court. See Kenty v. Bank One, Columbus, N.A., 92 F.3d 384, 391 -92 (6th Cir. 1996); American Deposit Corp. v. Schacht, 84 F.3d 834, 838 -43 (7th Cir. 1996); Merchants Home Delivery Service, Inc. v. Frank B. H all & Co., 50 F.3d 1486, 1489 (9th Cir. 1995); Cochran v. Paco, Inc. 6 06 F.2d 460, 464 (5th Cir. 1979). Other courts have announced a more trun cated three-part test that does not require a specific conclusion th at the defendant's
conduct constitutes the business of insurance. See Doe v. Norwest Bank Minn., 107 F.3d 1297, 1305 n.8 (8th Cir. 1997); Uni ted States. v. Rhode Island Insurers' Insolvency Fund, 80 F.3d 616, 619 (1st Cir. 1996). Because of this apparent divergence, it is importan t to discuss our analysis in detail.

7The threshold question in determining whether the a ntipreemption mandate of 15 U.S.C. S 1012(b) applies i s whether the challenged conduct broadly constitutes the "business of insurance" in the first place. 15 U.S. C. S 1012(a). If the contested activities are wholly u nrelated to the insurance business, then the McCarran-Ferguson Act has no place in analyzing federal regulation becaus e only when "[insurance companies] are engaged in the `bus iness of insurance' does the act apply." National Securit ies, 393

U.S. at 459-60.

In addressing the issue of preclusion under S 1012( b), we read no more into the statute than what it says: un less a federal law specifically relates to the business of insurance, it will not be applied when it "invalidates, impair s, or supersedes" a state law "enacted for the purpose of regulating the business of insurance." If the defen dant's
conduct does not constitute "the business of insura nce," then the Act simply does not apply and there is no need to confront preclusion issues under S 1012(b). We cann ot imagine how section 1012(b) protects a state law en acted for the purpose of regulating the insurance busines s when the activity in question does not relate to insuran ce. To hold otherwise would require us to abandon the stru cture and purpose of the McCarran-Ferguson Act.

Our reading of the Act is amply supported by its legislative history and Supreme Court precedent. As explained by the Supreme Court:

The statute did not purport to make the Stat es supreme in regulating all the activities of insurance companies; its language refers not to the pe rsons or companies who are subject to state regulatio n, but to laws "regulating the business of insurance." Insurance companies may do many things which are subje ct to paramount federal regulation; only when they are engaged in the "business of insurance" does the statute apply. Certainly the fixing of rates is part of this business. . . . The selling and advertising of policies, and the licensing of companies and their age nts are also within the scope of the statute. Congre ss was concerned with the type of state regulation that centers around the contract of insurance, the transa ction

8which [the Court has previously held] was no t

"commerce." The relationship between insurer and insured, the type of policy which could be i ssued, its reliability, interpretation, and enforcement --these were
the core of the "business of insurance." Und oubtedly, other activities of insurance companies rela te so closely
to their status as reliable insurers that th ey too must be placed in the same class. But whatever th e exact scope of the statutory term, it is clear whe re the focus was--it was on the relationship between the insurance company and the policyholder. Statutes aimed at protecting or regulating this relationship, directly or indirectly are laws regulating the "business of
insurance."

National Securities, 393 U.S. at 459-60 (citations omitted). Thus, under S 1012(a), the Act initially recognizes that regulating the "business of insurance" rests in the hands of

the states.

Of these state "laws relat[ing] to the regulation o r taxation" of the insurance business, 15 U.S.C. S 10 12(a), the next subsection protects from federal preemptio n a special class of state laws "enacted . . . for the purpose of regulating the business of insurance." 15 U.S.C. S 1012(b). But as explained by the Supreme Court, the categori es of laws protected by S 1012(b) "necessarily encompasse s more than just the `business of insurance' " and include those laws that possess the " `end, intention, or aim' of adjusting, managing, or controlling the business of insurance. " Fabe, 508 U.S. at 505 (citation omitted). The focus of se ction 1012(b) is not directed toward the business of insu rance itself, but rather toward a certain subset of laws relating to insurance regulation under section 1012(a). That demarcation line is found in S 1012(b) as laws "ena cted . . . for the purpose of regulating the business of insur ance." Thus, even though the state has a law regulating th e challenged activity, a court must still address whe ther that
law was meant to fall within the ambit of the Act's protection. This is achieved by deciding whether th e activity in question constitutes the business of insurance a nd whether the specific state law was enacted with the " `end, intention, or aim' of adjusting, managing, or contr olling the business of insurance." Fabe, 508 U.S. at 505.

9B. Application of the McCarran-Ferguson Act

We first ask whether the challenged activity allege d in the complaint constitutes the "business of insurance" i n order to determine whether the Act applies. The Supreme C ourt has provided guidance as to what conduct falls with in "business of insurance" for purposes of the McCarra nFerguson Act. In National Securities, the Court hel d that the
core of the insurance business "centers around the contract
of insurance." 393 U.S. at 460. The Court further s et forth typical activity that would unquestionably constitu te the business of insurance: "[t]he relationship between insurer and insured, the type of policy which could be issu ed, its reliability, interpretation, and enforcement." Id.

Similarly, in Group Life & Health Ins. Co. v. Royal Drug Co., the Supreme Court formulated a three part inqu iry in interpreting the phrase "business of insurance": (1) whether the practice has the effect of transfe rring or spreading a policyholder's risk; (2) whether the p ractice is an integral part of the policy relationship between the insurer and the insured; and (3) whether the pract ice is limited to entities within the insurance industry. 440 U.S. 205, 211-21 (1979); see also Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129 (1982). While this inquir y was directed to the antitrust clause in section 1012(b) , it may nevertheless provide guidance in a more generalized analysis under this Act. See Fabe, 508 U.S. 503-504 .3

In this case, we agree with MetLife and its named employees that their activity constitutes the busin ess of insurance. The challenged conduct appearing in the plaintiff 's complaint unquestionably centers aroun d the insurance contract, and specifically the activities surrounding its sale and marketing. MetLife's "50/5 0 plan,"

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3. Some courts have concluded that this three part test is simply not relevant in determining what constitutes the busine ss of insurance in a non-antitrust context. See, e.g., Doe, 107 F.3d at 1305 n.8. We disagree. As Fabe makes clear, the Royal Drug test is only a starting point in the analysis for non-antitrust cases. 508 U.S. at 503-5 . However, because laws "enacted . . . for the purpose of regulating t he business of insurance" necessarily encompass more than just the insurance business, the analysis here is broader.

10"churning" trades, and management's organized

intimidation of sales agents, all strike at the ins urance business "core" enumerated in National Securities b ecause they directly impact on the sale of insurance polic ies and ultimately affect the relationship between insurer and insured. 393 U.S. at 460. Indeed, whatever the prec ise contours of the insurance business phrase may be, t here is nothing more basically "insurance" than the sale of an insurance contract and the insurer's unique approac h in trading, advertising, or valuing that product. We n eed not delve into a sophisticated three part analysis unde r Royal Drug or Pireno to reach this conclusion, but instea d look to
the defendants' conduct to ascertain whether it cen ters
around the contract of insurance and the relationsh ip
between insurer and insured.

Plaintiff's assertion that the challenged activity cannot
constitute the business of insurance because it is illegal is unpersuasive. By pointing to a practice that may vi olate federal law, and claiming that it is not the "busin ess of insurance," plaintiff demonstrates a fundamental misunderstanding of the Act. The language and purpo se of the Act speak not of legal insurance transactions, but instead seek to allow states to regulate and enforc e the
insurance business without fear of unintended feder al interference. We agree with the Court of Appeals fo r the
Ninth Circuit that if we were to construe the "busi ness of insurance" phrase by reference to federal legality, the statute would be read out of existence. Merchants, 50 F.3d at 1490. As noted by the Seventh Circuit Court of A ppeals, "it is not helpful to point to a practice forbidden by federal law . . . and observe that this practice is not its elf insurance." NAACP v. American Family Mut. Ins. Co., 978 F.2d 287, 294 (7th Cir. 1992). It is not surprising
, therefore, that the majority of courts have rejecte d this same argument advanced here by the plaintiff, and s o do we. See Dornberger, 961 F.Supp. at 517 (surveying c ases).

C. Preclusion of RICO Claims Under the McCarranFerguson Act

Having found that the activity challenged in the complaint constitutes the business of insurance, an d is

11therefore within the ambit of the Act, we consider whether

plaintiff 's RICO cause of action is precluded unde r S 1012(b). No party to the appeal argues that RICO specifically relates to insurance. Indeed, virtuall y every court considering this issue has held that RICO is not a federal statute exempt from the McCarran-Ferguson A ct. See, e.g., Kenty, 92 F.3d at 391; Merchants, 50 F.3 d at 1489; Dornberger, 961 F.Supp. at 516. Nor is it dis puted that the applicable Pennsylvania insurance statute is a state law enacted for the purpose of regulating the insurance business. Thus, all that is left for us t o consider under the Act is whether an application of RICO to the instant case would "invalidate, impair, or supersed e" state

law.

1. Pennsylvania Insurance Laws and RICO

In order to determine whether a cause of action und er RICO would "invalidate, impair, or supersede" Penns ylvania insurance law, we must initially juxtapose RICO wit h a specific state law enacted for the purpose of regul ating the insurance business. The district court, along with both sides on appeal, point to Pennsylvania's Unfair Ins urance Practices Act, 40 Pa. Cons. Stat. Ann. SS 1171.1 to 1171.15 (West 1992) ("UIPA"), as the relevant state law gov erning MetLife's challenged activity. The Act prohibits pe rsons from engaging in unfair or deceptive practices in t he
business of insurance. Id. S 1171.4. An exhaustive list of activity is set forth in section 1171.5 as deceptiv e or unfair practices forbidden under section 1171.4. The UIPA further empowers the Pennsylvania insurance commissioner to investigate illegal insurance practices and to take certain remedial actions including the imposition of moneta ry penalties, "cease and desist" orders, the suspensio n or revocation of an insurance license, or additional i njunctive
relief. Id. SS 1171.7 to 1171.11.

By judicial precedent, the Pennsylvania Insurance Commissioner alone may seek to enforce the UIPA. Se e Wright v. North Am. Life Assurance Co., 372 Pa. Sup er. 272, 279, 539 A.2d 434, 438 (1988) ("[T]he provisions of this statute were not intended to confer a right of priv ate action. Rather, the Unfair Insurance Practices Act vests

12enforcement powers in the Pennsylvania Insurance

539<!>Commissioner."); Wexco, 820 F.Supp. at 203-2 04.

Pennsylvania courts, however, have not barred commo n law actions for fraud and deceit arising out of insuran ce practices even though the UIPA does not allow priva te causes of action. Wright, 372 Pa. Super. at 279, 53 9 A.2d at 438. These private lawsuits, in addition to othe r private actions authorized by Pennsylvania law,4 provide t he only judicial remedies available to plaintiffs victimize d by illegal insurance practices.

RICO, on the other hand, grants a private cause of action to any person injured as a result of a pattern of racketeering activity. 18 U.S.C. S 1964(c). The sta tute also authorizes the award of treble damages, attorney's fees, and costs. Id. Pursuant to 18 U.S.C. S 1961(2), a patte rn of racketeering activity is defined as at least two ac ts of illegal activity identified in section 1961(1) and includes both mail fraud and wire fraud. Beyond the general classes of crimes enumerated in section 1961(1), RICO does not specif ically address insurance practices.

2. "Invalidate, Impair, or Supersede"

Given this comparison of RICO with the UIPA, the le gal question before us is whether allowing plaintiff 's suit under RICO would "invalidate, impair, or supersede" Penns ylvania law as that phrase is understood under the Act. The phrase "invalidate, impair, or supersede" is not defined a nywhere
in the Act and we are faced with the considerable t ask of grappling with its construction in the present cont ext.

Courts of Appeals jurisprudence is in disarray as t o the extent and meaning of invalidate, impair, or supers ede under the Act. One line of cases, spearheaded by th efirst, seventh, and ninth circuit Courts of Appeals, looks to a

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4. In addition to common law fraud and deceit, Penn sylvania courts have sanctioned the use of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons. Stat. Ann. SS 201-1 to 201-9.2 (West 1993), to allow aggrieved insureds recovery a gainst insurance fraud. See Pekular v. Eich, 355 Pa. Super. 276, 285 -90, 513 A.2d 427, 432-41 (1986).

13direct conflict in the substantive provisions of th e federal

and state statutes at issue. See Merchants Home Del ivery Service, Inc. v. Frank B. & Hall Co., 50 F.3d 1486, 1491-92 (9th Cir. 1995); NAACP v. American Family Mut. Ins. Co., 978 F.2d 287, 295-97 (7th Cir. 1992); Villafane-Ner iz v. FDIC, 75 F.3d 727, 736 (1st Cir. 1996). These court s typically reason that the Act is a form of inverse preemption where federal laws must yield to state laws when th e state enacts a statute for the purpose of regulating the insurance business and the federal statute does not specifica lly apply to insurance. Logic then drawn from ordinary rules of federal preemption under the supremacy clause is re versed so that a state law will not preempt a federal law unless the laws of both sovereigns directly conflict in terms of governing the behavior of insurance carriers. See A merican Family, 978 F.2d at 296 (citing Silkwood v. Kerr-Mc Gee Corp., 464 U.S. 238 (1984)). The Act's preemption i s appropriate, these courts will conclude, where it i s simply not possible for the insurance carrier to comply wi th both state and federal law. However, because "duplicatio n is not conflict," differences in state remedies and federa l remedies could not be the basis of preemption when both stat utes proscribe the same insurance practices. Id.

In further support for the foregoing analysis, thes e courts
reason that the Act was not intended to cede the en tire field of insurance regulation to the states. Where a stat e law or regulation is silent as to remedy, or does not prov ide a private cause of action, federal regulation will no t be preempted. Merchants, 50 F.3d 1492. A contrary interpretation of the statute, these courts will co nclude, would essentially rewrite the Act to read: No feder al statute shall be construed to apply to the business of insu rance, unless such federal statute specifically relates to the business of insurance. The Congress did not so prov ide and therefore state silence surrounding the assurance o f a private remedy does not provide the basis for feder al preemption. Id.

The fourth, eighth, and to a certain extent the six th, circuit Courts of Appeals disagree. When state insu rance laws provide for enforcement through an administrat ive process to the exclusion of private damage actions, treble

14damages, attorney's fees, and costs, these courts r eason

that RICO's expanded remedial framework cannot coex ist with state law based on a plain meaning of the word s "invalidate," "impair," and "supersede."5 See Doe v . Norwest Bank Minn., 107 F.3d 1297, 1307 (8th Cir. 1997); Am brose v. Blue Cross & Blue Shield of Virginia, Inc., 891 F.Supp. 1153, 1165 (E.D.Va. 1995), aff'd, 95 F.3d 41 (4th C ir. 1997) (unpublished per curiam). They say the Act wa s designed to allow state legislatures to adopt their own regulatory framework governing how insurance grieva nces are redressed. If a state chose a private forum for redress through administrative enforcement, then the Act wo uld protect such a decision and federal law would not b e allowed to upset this balance. Thus, they conclude that the drastic nature of federal remedies is directly rele vant to assessing the application of the "invalidate, impai r, or supersede" phrase in the Act. See Doe, 107 F.3d at 1307; Kenty v. Bank One, Columbus, N.A., 92 F.3d 384, 392 (6th cir. 1996).

To be sure, a direct conflict in the substantive pr ovisions of RICO with those provided for in the UIPA would f all within the ambit of laws that invalidate, impair, o r supersede state insurance law. If, for example, Pennsylvania explicitly authorizes certain insuranc e practices that RICO would clearly prohibit, the McC arranFerguson Act would eviscerate the federal cause of action. Cf. American Family, 978 F.2d at 297 ("If Wisconsin wants to authorize redlining, it need only say so; if it does, any challenge to that practice under the auspices of th e Fair Housing Act becomes untenable."). This would be the case no matter how the phrase "invalidate, impair, or su persede" is to be construed, as we cannot imagine any more impairment then an absolute contradiction in legalf iat concerning insurance practices. But we cannot find any such conflict in the UIPA when compared to RICO, at least in the present context. Consequently, the more crit ical

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5. "Invalidate" is defined as "to weaken or make va lueless"; "impair" means to "make worse . . . diminish in quantity, va lue, excellence or strength"; "supersede" means to "make obsolete, inf erior, or outmoded". Webster's Third New International Dictionary 1199, 1131, 2295 (1986). See Ambrose, 891 F.Supp. at 1165.

15issue is whether we may look to divergent state and federal

implementation of similar legal norms.

Part of this puzzle has been answered by the Suprem e Court in National Securities. There, the Securities and Exchange Commission sought to unwind a merger betwe en two insurance companies based on violations of Rule 10b-5. The merger had already been approved by the Arizona State Director of Insurance in his capacity as licensor of insurers within the state. This approva l was predicated upon a finding that the merger would not "substantially reduce the security of and service t o be rendered to policyholders." 393 U.S. at 462 (quotin g Ariz. Rev. Stat. Ann. S 20-731(B)(3) (1969)).

Upon the foregoing factual scenario, the Supreme Co urt phrased the issue as whether the "McCarran-Ferguson Act bars a federal remedy which affects a matter subjec t to state insurance regulation." Id. The Court reasoned that any "impairment" in the case would be indirect--the federal government sought to protect security holders while the Arizona sought to safeguard insurance policy holder s. Id. at
463.

Moreover, the Court noted that there was no true
"conflict" in remedies at all because "Arizona has not commanded something which the Federal Government seeks to prohibit." Id. at 463. The Court also foun d that the paramount federal interest in prohibiting securitie s fraud was perfectly compatible with the state interest in protecting policyholders. Thus, because of the natu re of the indirect impairment, and because "the remedy the Commission seeks does not affect a matter predomina ntly of concern to policyholders alone," the Court held that it saw no reason to emasculate securities laws through an application of the McCarran-Ferguson Act. In the en d, the Supreme Court "simply [could] not see the conflict" and allowed the federal government to unwind the merger notwithstanding Arizona's explicit approval. Id.

We too cannot see the conflict in this case andfind no invalidation, impairment, or supersedence, however defined, of Pennsylvania insurance law. The federal policies embodied in RICO, namely, the grant of a liberal fe deral

16remedy to those who have been victimized by organiz ed

crime, see Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 487 (1985), are in no way inconsistent with the stated purpose of the UIPA, which is to "regulate trade practices in the business of insurance . . . by defining . . . such practices . . . which constitute unfair methods of competition or u nfair or deceptive acts . . . ." 40 Pa. Cons. Stat. Ann. S 1 171.2; see also D'Ambrosio v. Pennsylvania Nat. Mut. Cas. Ins. Co., 494 Pa. 501, 508, 431 A.2d 966, 970 (1981) (stating that
the UIPA serves to deter bad faith conduct in the i nsurance business). Borrowing from the Supreme Court's analy sis in National Securities, the RICO remedy does not exclu sively affect matters predominantly of concern to those pr otected only by the UIPA. 393 U.S. at 463. RICO, whether in effect or purpose, is not an attempt to regulate the "sphe re reserved primarily to the States by the McCarran-Fe rguson Act." Id.

Of course, this court would be remiss not to recogn ize MetLife's argument that an application of RICO may affect, in a more abstract sense, Pennsylvania's overall implementation of insurance norms and its decision to
enforce certain insurance violations in an administ rative context. As acknowledged by the Court of Appeals fo r the
Seventh Circuit:

Undoubtedly there is a sense in which any ov erlap between state and federal law upsets a balan ce struck by one of the two legislatures. . . . Laws e nforced only be administrative agencies with limited budg ets are less potent than laws enforced by both agencies a nd private litigants. One could say that a federal rule increasing the probability that a state norm will be vi ndicated (or augmenting the damages assessed in the event of a violation) conflicts with a decision by the state that
remedies should be limited or rare.

American Family, 978 F.2d at 295 (citations omitted ). While such an argument may be compelling, there is no pla ce for it in the present context. We find no indication, t hrough legislative intent or judicial interpretation, that Pennsylvania's non-recognition of a private remedy under the UIPA represents a reasoned state policy of excl usive
administrative enforcement or that the vindication of UIPA

17norms should be limited or rare. Private actions fo r fraud

and deceit in the insurance business coexist with t he UIPA even though the same conduct may be covered by both the common law and the UIPA. See, e.g., 40 Pa. Cons. St at. Ann. SS 1171.5(1) to 1171.5(3) (generally prohibiti ng "false", "misleading" or misrepresentative statements and omissions). In addition, Pennsylvania courts have h eld that the state's general consumer protection statute, 73 Pa. Cons. Stat. Ann. SS 201-1 to 201-9.2, provides a pr ivate remedy and treble damages for victims of insurance fraud. See Peckular, 355 Pa. Super. at 285-90, 512 A.2d at 430-41. This certainly undercuts any purported bala nce struck by the Pennsylvania legislature favoring administrative enforcement to the exclusion of priv ate damages actions and we see no reason why a federal private right of action cannot coexist with the UIP A in these
circumstances.

We therefore conclude that a RICO cause of action a nd remedy would not "invalidate, impair, or supersede" Pennsylvania's scheme of insurance regulation in th is context. Because we need not reach the issue here, we will leave for another day the question of whether diffe rent
federal and state remedies could ever be the basis for preclusion under the Act. Accordingly, the district court's dismissal of the plaintiff 's RICO claims for failu re to state
a claim will be reversed to the extent it relied on the McCarran-Ferguson Act as a basis for preclusion. We will
also reverse the district court's denial of the mot ion to amend the complaint since the amendment would no lo nger be futile under our application of the McCarran-Fer guson Act. In so doing, however, we express no opinion as to whether the plaintiff has stated proper claims unde r RICO
law itself.

III. The Defamation Claim

The plaintiff 's complaint also included a defamati on claim against MetLife alone based on Pennsylvania l aw. In due course, MetLife filed a motion for summary judg ment on such a claim which was granted. We will review plaintiff 's appeal of this order under a summary j udgment standard. The district court's grant of summary jud gement

18will be affirmed if, after a plenary review of the record, there

is no genuine issue of material fact. Fed. R. Civ. P. 56(c). This court will not weigh the evidence in the recor d itself, but instead determine whether there is a genuine is sue for trial. See Anderson v. Liberty Lobby, Inc., 447 U.S . 242, 247 (1986); Petruzzi's IGA v. Darling-Delaware, 998 F.2 d 1224, 1230 (3d Cir. 1993). An issue is "genuine" if the e vidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson, 477 U.S. at 248.

Plaintiff's defamation claim arises out of the foll owing
circumstances as set forth in the affidavit of Fred Newstrom ("Newstrom"), a sales agent for MetLife who worked with plaintiff at one time. The affidavit is based on pe rsonal knowledge, as required by Fed. R. Civ. P. 56(e).

About August 23, 1993, MetLife convened a meeting o f its sales agents in the Pittsburgh region. Several hund red agents were in attendance, including Newstrom. Ther e were various speakers, including Gary Antonino ("Antonin o"), Pittsburgh Regional Manager, and Robert Crimmons,
MetLife Executive Vice President for Personal Insur ance. Other senior managers of MetLife were also on the d ais.

During the course of an address given to the agents by Antonino, a brief clip from the movie Ghostbusters was shown. In the clip, an animated ghost figure known to those familiar with the movie as "slimer" charges d own a long hallway and attacks one of the other character s. "Slimer" is a short, fat, malformed green ghost who attacks his victims by covering them with a slimy or gooey material.

Immediately following the showing of the movie clip
, Antonino made statements to the audience about the way the media were portraying MetLife.

The affidavit then goes on:

At or about the time of this meeting at the Royce Hotel, MetLife was the subject of an ongoing investigative report on the Channel 11 news, in which
statements were made that MetLife was under investigation by the Pennsylvania Insurance Department for illegal deceptive sales and t rade practices.

19Also during this time period, Antonino was l etting it

be known through the region that he "had it in" for Sabo, and that Sabo was at fault for all of MetLife's
difficulties.

Based upon the showing of the movie clip and the statements made by Antonino immediately ther eafter, Herrmann understood Antonino to be saying th at it was Sabo [plaintiff] who was spreading false inf ormation to the media, and that Sabo was attempting to w rongfully bring about the demise of MetLife.

App. at 487 (alteration in original). After the mee ting, other MetLife agents who attended the meeting informed Newstrom that they also believed that Antonino's me ssage was that Sabo was responsible for the information a bout
MetLife in the media. Id.

In addition to the affidavit of Newstrom, an affida vit by agent Ronald Herrmann was filed. It also was based on personal knowledge. In it he recited that he also a ttended the meeting and that he also understood Sabo to be Slimer and the evil presence at MetLife. However, Herrmann did not state that Antonino "had it in" for the plainti ff.

A copy of the Report and Recommendation of the Magistrate Judge who heard the matter recommended t o the district court that summary judgment be granted to MetLife on the defamation claim based solely on the ground that there was no support in the record for a findi ng that plaintiff was the intended target of any comments m ade during the "Ghostbuster" presentation. Thereafter, the district court granted MetLife's motion for summary judgment on the defamation claim solely on the grou nd recommended by the Magistrate Judge.

We note at the outset of this appeal that in an act ion for defamation under Pennsylvania law, the plaintiff ha s the burden of proving: (1) the defamatory character of the communications; (2) its publication by the defenda nt; (3) its application to the plaintiff; (4) the u nde rstanding by the recipient of its defamatory meaning; (5) under standing by the recipient of it as intended to be applied to the plaintiff; (6) special harm resulting to the plain tiff from its

20publication; and (7) abuse of a conditionally priv ileged

occasion. 42 Pa. Cons. Stat. Ann. S 8343(a).

We analyze the record keeping in mind that we are reviewing summary judgment and that the sole basis for granting the motion in the district court was the a bsence of evidence to meet this fifth requirement of the Penn sylvania statute, viz., understanding by the recipients of i t that it was intended to be applied to plaintiff.

Plaintiff concedes that the alleged defamatory matt er, standing on its own, is insufficient to support a j ury finding that it refers to him. However, he argues that the defamation analysis must nevertheless proceed as to the fifth element if the defamatory statements may poin t to the defamed through "description or circumstances tendi ng to identify him." Cosgrove Studio & Camera Shop, Inc. v. Pane, 408 Pa. 314, 319, 182 A.2d 751, 753 (1962). We turn to
that contention.

Taking the recited contents of the affidavits as tr ue, we think it reasonable to infer at this point that the affiants were aware at the time of the meeting of rumors wit h respect to MetLife's controversy with the plaintiff . When
this circumstance is combined with the contents of the movie clip and Antonino's remarks thereafter, a gen uine issue of material fact was created with respect to the fifth requirement of the Pennsylvania statute. Consequent ly, the
resolution of that factual issue was for the finder of fact. Thus, summary judgment should not have been granted based on a failure to meet this requirement.

But our conclusion that the district court erred in its ruling on the foregoing issue does not end the matt er. We
cannot tell from the record whether MetLife asserte d grounds other than a failure to meet the fifth elem ent of the Pennsylvania statute in support of its summary judg ment motion. Thus, we conclude that our reversal of the order granting summary judgment must be without prejudice to the district court's right to consider other assert ed grounds for summary judgment, if any, that are still before it.

IV. Conclusion

The order of the district court dismissing plaintif f 's RICO claim will be reversed, and the order denying plain tiff 's

21motion to amend the complaint will be vacated. The order

of the district court granting MetLife's motion for summary judgment on plaintiff's defamation claim will be re versed to the extent it was based on the ground relied on by the
district court. It is further ordered that this rul ing is without prejudice to a consideration by the distric t court of other asserted grounds, if any, for summary judgmen t.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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