509 U.S. 764 (1993)

HARTFORD FIRE INSURANCE CO. et al.
v.
CALIFORNIA et al.

No. 91-1111.

United States Supreme Court.

Argued February 23, 1993. Decided June 28, 1993.^[*] CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

*765 *766 Souter, J., announced the judgment of the Court and delivered the opinion for a unanimous Court with respect to Parts I and IIโ€”A, the opinion of the Court with respect to Parts III and IV, in which Rehnquist, C. J., and White, Blackmun, and Stevens, JJ., joined, and an opinion concurring in the judgment with respect to Part IIโ€”B, in which White, Blackmun, and Stevens, JJ., joined. Scalia, J., delivered the opinion of the Court with respect to Part I, in which Rehnquist, C. J., and O'Connor, Kennedy, and Thomas, JJ., joined, and a dissenting opinion with respect to Part II, in which O'Connor, Kennedy, and Thomas, JJ., joined, post, p. 800.

Stephen M. Shapiro argued the cause for petitioners in No. 91-1111. With him on the briefs were Kenneth S. Geller, Mark I. Levy, Roy T. Englert, Jr., Timothy S. Bishop, Ronald A. Jacks, Richard E. Sherwood, William A. Montgomery, William M. Hannay, John G. Harkins, Jr., Eleanor Morris Illoway, Bartlett H. McGuire, Douglas I. Brandon, James S. Greenan, Raoul D. Kennedy, Alan H. Silberman, Stuart Altschuler, Peter O. Glaessner, David L. Foster, Gregory L. Harris, Frank Rothman, Timothy E. Carr, Kent E. Keller, Lewis A. Kaplan, Allan Blumstein, Ronald C. Redcay, Michael M. Uhlmann, Robert B. Green, Stephen M. Axinn, Michael L. Weiner, James M. Burns, Eugene F. Bannigan, Christine C. Burgess, Robert M. Mitchell, Philip H. Curtis, Zoe Baird, Jane Kelly, Joseph P. Giasi, Jr., Joseph A. Gervasi, Debra J. Anderson, Michael S. Wilder, Jeffrey L. Morris, Edmond F. Rondepierre, and John J. Hayden. Molly S. Boast argued the cause for petitioners in No. 91โ€” 1128. With her on the briefs for petitioners Merrett Underwriting Agency Management Ltd. et al. were Lawrence W. Pollack, Andreas F. Lowenfeld, Barry L. Bunshoft, Eric J. Sinrod, David W. Slaby, Michael L. McCluggage, James T. Nyeste, Michael R. Blankshain, Jerome N. Lerch, Paul R. Haerle, Martin Frederic Evans, Donald Francis Donovan, and Colby A. Smith. Barry R. Ostrager, Eleanor M. Fox, Mary Kay Vyskocil, and Kathryn A. Clokey filed briefs for petitioner Sturge Reinsurance Syndicate Management Ltd.

*767 Laurel A. Price, Deputy Attorney General of New Jersey, argued the cause for respondents in both cases. With her on the brief for state respondents in No. 91-1111 and on the brief for state respondents in No. 91-1128 were J. Joseph Curran, Jr., Attorney General of Maryland, Ellen S. Cooper, Assistant Attorney General, James H. Evans, Attorney General of Alabama, Charles E. Cole, Attorney General of Alaska, Jim Forbes, Assistant Attorney General, Grant Woods, Attorney General of Arizona, Suzanne M. Dallimore, Assistant Attorney General, Daniel E. Lungren, Attorney General of California, Roderick E. Walston, Chief Assistant Attorney General, Sanford N. Gruskin, Assistant Attorney General, Thomas Greene, Supervising Deputy Attorney General, Kathleen E. Foote, Deputy Attorney General, Gale A. Norton, Attorney General of Colorado, James R. Lewis, Assistant Attorney General, Richard Blumenthal, Attorney General of Connecticut, Robert M. Langer and William M. Rubenstein, Assistant Attorneys General, Richard T. Ieyoub, Attorney General of Louisiana, Jenifer Schaye, Assistant Attorney General, Scott Harshbarger, Attorney General of Massachusetts, Thomas M. Alpert and George K. Weber, Assistant Attorneys General, Frank J. Kelley, Attorney General of Michigan, Hubert H. Humphrey III, Attorney General of Minnesota, Thomas F. Pursell, Deputy Attorney General, Lisa Tiegel, Special Assistant Attorney General, Marc Racicot, Attorney General of Montana, Paul Johnson, Assistant Attorney General, Robert J. Del Tufo, Attorney General of New Jersey, Robert Abrams, Attorney General of New York, Jerry Boone, Solicitor General, George Sampson, Richard L. Schwartz and Gary J. Malone, Assistant Attorneys General, Lee Fisher, Attorney General of Ohio, Doreen C. Johnson and Marc B. Bandman, Assistant Attorneys General, Ernest D. Preate, Jr., Attorney General of Pennsylvania, Thomas L. Welch and David R. Weyl, Deputy Attorneys General, Kenneth O. Eikenberry, Attorney General of Washington, John R. Ellis, Deputy Attorney General, Tina *768 E. Kondo, Assistant Attorney General, Mario J. Palumbo, Attorney General of West Virginia, Donald L. Darling, Deputy Attorney General, Donna S. Quesenberry, Senior Assistant Attorney General, James E. Doyle, Attorney General of Wisconsin, and Kevin J. O'Connor, Assistant Attorney General. H. Laddie Montague, Jr., Howard Langer, Nicholas E. Chimicles, Eugene Gressman, Jerry S. Cohen, and Robert Miller filed a brief for private respondents in both cases.

Deputy Solicitor General Wallace argued the cause for the United States as amicus curiae urging affirmance. With him on the brief were Acting Solicitor General Bryson, Acting Assistant Attorney General Clark, Robert A. Long, Jr., Robert B. Nicholson, Marion L. Jetton, Charles S. Stark, and Edward T. Hand.^[โ€”]

*769 Justice Souter announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I, IIโ€”A, III, and IV, and an opinion concurring in the judgment with respect to Part IIโ€”B.^[*]

The Sherman Act makes every contract, combination, or conspiracy in unreasonable restraint of interstate or foreign commerce illegal. 26 Stat. 209, as amended, 15 U. S. C. ง 1. These consolidated cases present questions about the application of that Act to the insurance industry, both here and abroad. The plaintiffs (respondents here) allege that both domestic and foreign defendants (petitioners here) violated the Sherman Act by engaging in various conspiracies to affect the American insurance market. A group of domestic defendants argues that the McCarran-Ferguson Act, 59 Stat. 33, as amended, 15 U. S. C. ง 1011 et seq., precludes application of the Sherman Act to the conduct alleged; a group of foreign defendants argues that the principle of international comity requires the District Court to refrain from exercising jurisdiction over certain claims against it. We hold that most of the domestic defendants' alleged conduct is not immunized *770 from antitrust liability by the McCarran-Ferguson Act, and that, even assuming it applies, the principle of international comity does not preclude District Court jurisdiction over the foreign conduct alleged.

I

The two petitions before us stem from consolidated litigation comprising the complaints of 19 States and many private plaintiffs alleging that the defendants, members of the insurance industry, conspired in violation of ง 1 of the Sherman Act to restrict the terms of coverage of commercial general liability (CGL) insurance^[1] available in the United States. Because the cases come to us on motions to dismiss, we take the allegations of the complaints as true.^[2]

A

According to the complaints, the object of the conspiracies was to force certain primary insurers (insurers who sell insurance directly to consumers) to change the terms of their *771 standard CGL insurance policies to conform with the policies the defendant insurers wanted to sell. The defendants wanted four changes.^[3]

First, CGL insurance has traditionally been sold in the United States on an "occurrence" basis, through a policy obligating the insurer "to pay or defend claims, whenever made, resulting from an accident or `injurious exposure to conditions' that occurred during the [specific time] period the policy was in effect." App. 22 (Cal. Complaint ถ 52). In place of this traditional "occurrence" trigger of coverage, the defendants wanted a "claims-made" trigger, obligating the insurer to pay or defend only those claims made during the policy period. Such a policy has the distinct advantage for the insurer that when the policy period ends without a claim having been made, the insurer can be certain that the policy will not expose it to any further liability. Second, the defendants wanted the "claims-made" policy to have a "retroactive date" provision, which would further restrict coverage to claims based on incidents that occurred after a certain date. Such a provision eliminates the risk that an insurer, by issuing a claims-made policy, would assume liability arising from incidents that occurred before the policy's effective date, but remained undiscovered or caused no immediate harm. Third, CGL insurance has traditionally covered "sudden and accidental" pollution; the defendants wanted to eliminate that coverage. Finally, CGL insurance has traditionally provided that the insurer would bear the legal costs of defending covered claims against the insured without regard to the policy's stated limits of coverage; the defendants *772 wanted legal defense costs to be counted against the stated limits (providing a "legal defense cost cap").

To understand how the defendants are alleged to have pressured the targeted primary insurers to make these changes, one must be aware of two important features of the insurance industry. First, most primary insurers rely on certain outside support services for the type of insurance coverage they wish to sell. Defendant Insurance Services Office, Inc. (ISO), an association of approximately 1,400 domestic property and casualty insurers (including the primary insurer defendants, Hartford Fire Insurance Company, Allstate Insurance Company, CIGNA Corporation, and Aetna Casualty and Surety Company), is the almost exclusive source of support services in this country for CGL insurance. See id., at 19 (Cal. Complaint ถ 38). ISO develops standard policy forms and files or lodges them with each State's insurance regulators; most CGL insurance written in the United States is written on these forms. Ibid. (Cal. Complaint ถ 39); id., at 74 (Conn. Complaint ถ 50). All of the "traditional" features of CGL insurance relevant to this litigation were embodied in the ISO standard CGL insurance form that had been in use since 1973 (1973 ISO CGL form). Id., at 22 (Cal. Complaint ถถ 51-54); id., at 75 (Conn. Complaint ถถ 56โ€” 58). For each of its standard policy forms, ISO also supplies actuarial and rating information: it collects, aggregates, interprets, and distributes data on the premiums charged, claims filed and paid, and defense costs expended with respect to each form, id., at 19 (Cal. Complaint ถ 39); id., at 74 (Conn. Complaint ถถ 51-52), and on the basis of these data it predicts future loss trends and calculates advisory premium rates, id., at 19 (Cal. Complaint ถ 39); id., at 74 (Conn. Complaint ถ 53). Most ISO members cannot afford to continue to use a form if ISO withdraws these support services. See id., at 32-33 (Cal. Complaint ถถ 97, 99).

Second, primary insurers themselves usually purchase insurance to cover a portion of the risk they assume from the *773 consumer. This so-called "reinsurance" may serve at least two purposes, protecting the primary insurer from catastrophic loss, and allowing the primary insurer to sell more insurance than its own financial capacity might otherwise permit. Id., at 17 (Cal. Complaint ถ 29). Thus, "[t]he availability of reinsurance affects the ability and willingness of primary insurers to provide insurance to their customers." Id., at 18 (Cal. Complaint ถ 34); id., at 63 (Conn. Complaint ถ 4(p)). Insurers who sell reinsurance themselves often purchase insurance to cover part of the risk they assume from the primary insurer; such "retrocessional reinsurance" does for reinsurers what reinsurance does for primary insurers. See ibid. (Conn. Complaint ถ 4(r)). Many of the defendants here are reinsurers or reinsurance brokers, or play some other specialized role in the reinsurance business; defendant Reinsurance Association of America (RAA) is a trade association of domestic reinsurers.

B

The prehistory of events claimed to give rise to liability starts in 1977, when ISO began the process of revising its 1973 CGL form. Id., at 22 (Cal. Complaint ถ 55). For the first time, it proposed two CGL forms (1984 ISO CGL forms), one the traditional "occurrence" type, the other "with a new `claims-made' trigger." Id., at 22-23 (Cal. Complaint ถ 56). The "claims-made" form did not have a retroactive date provision, however, and both 1984 forms covered "`sudden and accidental' pollution" damage and provided for unlimited coverage of legal defense costs by the insurer. Id., at 23 (Cal. Complaint ถถ 59-60). Within the ISO, defendant Hartford Fire Insurance Company objected to the proposed 1984 forms; it desired elimination of the "occurrence" form, a retroactive date provision on the "claims-made" form, elimination of sudden and accidental pollution coverage, and a legal defense cost cap. Defendant Allstate Insurance Company also expressed its desire for a retroactive date provision on *774 the "claims-made" form. Id., at 24 (Cal. Complaint ถ 61). Majorities in the relevant ISO committees, however, supported the proposed 1984 CGL forms and rejected the changes proposed by Hartford and Allstate. In December 1983, the ISO Board of Directors approved the proposed 1984 forms, and ISO filed or lodged the forms with state regulators in March 1984. Ibid. (Cal. Complaint ถ 62).

Dissatisfied with this state of affairs, the defendants began to take other steps to force a change in the terms of coverage of CGL insurance generally available, steps that, the plaintiffs allege, implemented a series of conspiracies in violation of ง 1 of the Sherman Act. The plaintiffs recount these steps as a number of separate episodes corresponding to different claims for relief in their complaints;^[4] because it will become important to distinguish among these counts and the acts and defendants associated with them, we will note these correspondences.

The first four Claims for Relief in the California Complaint, id., at 36-43 (ถถ 111-130), and the Second Claim for Relief in the Connecticut Complaint, id., at 90-92 (ถถ 120โ€” 124), charge the four domestic primary insurer defendants and varying groups of domestic and foreign reinsurers, brokers, and associations with conspiracies to manipulate the ISO CGL forms. In March 1984, primary insurer Hartford persuaded General Reinsurance Corporation (General Re), the largest American reinsurer, to take steps either to procure desired changes in the ISO CGL forms, or "failing that, [to] `derail' the entire ISO CGL forms program." Id., at 24 (Cal. Complaint ถ 64). General Re took up the matter with its trade association, RAA, which created a special committee that met and agreed to "boycott" the 1984 ISO CGL forms unless a retroactive-date provision was added to the *775 claims-made form, and a pollution exclusion and defense cost cap were added to both forms. Id., at 24-25 (Cal. Complaint ถถ 65-66). RAA then sent a letter to ISO "announc[ing] that its members would not provide reinsurance for coverages written on the 1984 CGL forms," id., at 25 (Cal. Complaint ถ 67), and Hartford and General Re enlisted a domestic reinsurance broker to give a speech to the ISO Board of Directors, in which he stated that no reinsurers would "break ranks" to reinsure the 1984 ISO CGL forms. Ibid. (Cal. Complaint ถ 68).

The four primary insurer defendants (Hartford, Aetna, CIGNA, and Allstate) also encouraged key actors in the London reinsurance market, an important provider of reinsurance for North American risks, to withhold reinsurance for coverages written on the 1984 ISO CGL forms. Id., at 25-26 (Cal. Complaint ถถ 69-70). As a consequence, many London-based underwriters, syndicates, brokers, and reinsurance companies informed ISO of their intention to withhold reinsurance on the 1984 forms, id., at 26-27 (Cal. Complaint ถถ 71-75), and at least some of them told ISO that they would withhold reinsurance until ISO incorporated all four desired changes, see supra, at 771, and n. 3, into the ISO CGL forms. App. 26 (Cal. Complaint ถ 74).

For the first time ever, ISO invited representatives of the domestic and foreign reinsurance markets to speak at an ISO Executive Committee meeting. Id., at 27-28 (Cal. Complaint ถ 78). At that meeting, the reinsurers "presented their agreed upon positions that there would be changes in the CGL forms or no reinsurance." Id., at 29 (Cal. Complaint ถ 82). The ISO Executive Committee then voted to include a retroactive-date provision in the claims-made form, and to exclude all pollution coverage from both new forms. (But it neither eliminated the occurrence form, nor added a legal defense cost cap.) The 1984 ISO CGL forms were then withdrawn from the marketplace, and replaced with forms (1986 ISO CGL forms) containing the new provisions. Ibid. *776 (Cal. Complaint ถ 84). After ISO got regulatory approval of the 1986 forms in most States where approval was needed, it eliminated its support services for the 1973 CGL form, thus rendering it impossible for most ISO members to continue to use the form. Id., at 32-33 (Cal. Complaint ถถ 97, 99).

The Fifth Claim for Relief in the California Complaint, id., at 43-44 (ถถ 131-135), and the virtually identical Third Claim for Relief in the Connecticut Complaint, id., at 92-94 (ถถ 125-129), charge a conspiracy among a group of London reinsurers and brokers to coerce primary insurers in the United States to offer CGL coverage only on a claims-made basis. The reinsurers collectively refused to write new reinsurance contracts for, or to renew longstanding contracts with, "primary . . . insurers unless they were prepared to switch from the occurrence to the claims-made form," id., at 30 (Cal. Complaint ถ 88); they also amended their reinsurance contracts to cover only claims made before a "`sunset date,' " thus eliminating reinsurance for claims made on occurrence policies after that date, id., at 31 (Cal. Complaint ถถ 90-92).

The Sixth Claim for Relief in the California Complaint, id., at 45-46 (ถถ 136-140), and the nearly identical Fourth Claim for Relief in the Connecticut Complaint, id., at 94-95 (ถถ 130-134), charge another conspiracy among a somewhat different group of London reinsurers to withhold reinsurance for pollution coverage. The London reinsurers met and agreed that all reinsurance contracts covering North American casualty risks, including CGL risks, would be written with a complete exclusion for pollution liability coverage. Id., at 32 (Cal. Complaint ถถ 94-95). In accordance with this agreement, the parties have in fact excluded pollution liability coverage from CGL reinsurance contracts since at least late 1985. Ibid. (Cal. Complaint ถ 94).

*777 The Seventh Claim for Relief in the California Complaint, id., at 46-47 (ถถ 141-145), and the closely similar Sixth Claim for Relief in the Connecticut Complaint, id., at 97-98 (ถถ 140โ€” 144), charge a group of domestic primary insurers, foreign reinsurers, and the ISO with conspiring to restrain trade in the markets for "excess" and "umbrella" insurance by drafting model forms and policy language for these types of insurance, which are not normally offered on a regulated basis. Id., at 33 (Cal. Complaint ถ 101). The ISO Executive Committee eventually released standard language for both "occurrence" and "claims-made" umbrella and excess policies; that language included a retroactive date in the claims-made version, and an absolute pollution exclusion and a legal defense cost cap in both versions. Id., at 34 (Cal. Complaint ถ 105).

Finally, the Eighth Claim for Relief in the California Complaint, id., at 47-49 (ถถ 146-150), and its counterpart in the Fifth Claim for Relief in the Connecticut Complaint, id., at 95-97 (ถถ 135-139), charge a group of London and domestic retrocessional reinsurers^[5] with conspiring to withhold retrocessional reinsurance for North American seepage, pollution, and property contamination risks. Those retrocessional reinsurers signed, and have implemented, an agreement to use their "`best endeavors' " to ensure that they would provide such reinsurance for North American risks "`only . . . where the original business includes a seepage and pollution exclusion *778 wherever legal and applicable.' " Id., at 35 (Cal. Complaint ถ 108).^[6]

C

Nineteen States and a number of private plaintiffs filed 36 complaints against the insurers involved in this course of events, charging that the conspiracies described above violated ง 1 of the Sherman Act, 15 U. S. C. ง 1. After the actions had been consolidated for litigation in the Northern District of California, the defendants moved to dismiss for failure to state a cause of action, or, in the alternative, for summary judgment. The District Court granted the motions to dismiss. In re Insurance Antitrust Litigation, 723 F. Supp. 464 (1989). It held that the conduct alleged fell within the grant of antitrust immunity contained in ง 2(b) of the McCarran-Ferguson Act, 15 U. S. C. ง 1012(b), because it amounted to "the business of insurance" and was "regulated by State Law" within the meaning of that section; none of the conduct, in the District Court's view, amounted to a "boycott" within the meaning of the ง 3(b) exception to that grant of immunity. 15 U. S. C. ง 1013(b). The District Court also dismissed the three claims that named only certain London-based defendants,^[7] invoking international comity and applying the Ninth Circuit's decision in Timberlane Lumber Co. v. Bank of America, N. T. & S. A., 549 F. 2d 597 (1976).

The Court of Appeals reversed. In re Insurance Antitrust Litigation, 938 F. 2d 919 (CA9 1991). Although it held the conduct involved to be "the business of insurance" within the meaning of ง 2(b), it concluded that the defendants could *779 not claim McCarran-Ferguson Act antitrust immunity for two independent reasons. First, it held, the foreign reinsurers were beyond the regulatory jurisdiction of the States; because their activities could not be "regulated by State Law" within the meaning of ง 2(b), they did not fall within that section's grant of immunity. Although the domestic insurers were "regulated by State Law," the court held, they forfeited their ง 2(b) exemption when they conspired with the nonexempt foreign reinsurers. Second, the Court of Appeals held that, even if the conduct alleged fell within the scope of ง 2(b), it also fell within the ง 3(b) exception for "act[s] of boycott, coercion, or intimidation." Finally, as to the three claims brought solely against foreign defendants, the court applied its Timberlane analysis, but concluded that the principle of international comity was no bar to exercising Sherman Act jurisdiction.

We granted certiorari in No. 91-1111 to address two narrow questions about the scope of McCarran-Ferguson Act antitrust immunity,^[8] and in No. 91-1128 to address the application of the Sherman Act to the foreign conduct at issue.^[9] 506 U. S. 814 (1992). We now affirm in part, reverse in part, and remand.

*780 II

The petition in No. 91-1111 touches on the interaction of two important pieces of economic legislation. The Sherman Act declares "[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. ง 1. The McCarran-Ferguson Act provides that regulation of the insurance industry is generally a matter for the States, 15 U. S. C. ง 1012(a), and (again, generally) 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," ง 1012(b). Section 2(b) of the McCarranFerguson Act makes it clear nonetheless that the Sherman Act applies "to the business of insurance to the extent that such business is not regulated by State Law," ง 1012(b), and ง 3(b) provides that nothing in the McCarran-Ferguson Act "shall render the . . . Sherman Act inapplicable to any agreement to boycott, coerce, or intimidate, or act of boycott, coercion, or intimidation," ง 1013(b).

Petitioners in No. 91-1111 are all of the domestic defendants in the consolidated cases: the four domestic primary insurers, the domestic reinsurers, the trade associations ISO and RAA, and the domestic reinsurance broker Thomas A. Greene & Company, Inc. They argue that the Court of Appeals erred in holding, first, that their conduct, otherwise immune from antitrust liability under ง 2(b) of the McCarranFerguson Act, lost its immunity when they conspired with the foreign defendants, and, second, that their conduct amounted to "act[s] of boycott" falling within the exception to antitrust immunity set out in ง 3(b). We conclude that the Court of Appeals did err about the effect of conspiring with foreign defendants, but correctly decided that all but one of the complaints' relevant Claims for Relief are fairly read to allege conduct falling within the "boycott" exception to McCarran-Ferguson Act antitrust immunity. We therefore *781 affirm the Court of Appeals's judgment that it was error for the District Court to dismiss the complaints on grounds of McCarran-Ferguson Act immunity, except as to the one claim for relief that the Court of Appeals correctly found to allege no boycott.

A

By its terms, the antitrust exemption of ง 2(b) of the McCarran-Ferguson Act applies to "the business of insurance" to the extent that such business is regulated by state law. While "business" may mean "[a] commercial or industrial establishment or enterprise," Webster's New International Dictionary 362 (2d ed. 1942), the definite article before "business" in ง 2(b) shows that the word is not used in that sense, the phrase "the business of insurance" obviously not being meant to refer to a single entity. Rather, "business" as used in ง 2(b) is most naturally read to refer to "[m]ercantile transactions; buying and selling; [and] traffic." Ibid.

The cases confirm that "the business of insurance" should be read to single out one activity from others, not to distinguish one entity from another. In Group Life & Health Ins. Co. v. Royal Drug Co., 440 U. S. 205 (1979), for example, we held that ง 2(b) did not exempt an insurance company from antitrust liability for making an agreement fixing the price of prescription drugs to be sold to Blue Shield policyholders. Such activity, we said, "would be exempt from the antitrust laws if Congress had extended the coverage of the McCarran-Ferguson Act to the `business of insurance companies.' But that is precisely what Congress did not do." Id., at 233 (footnote omitted); see SEC v. National Securities, Inc., 393 U. S. 453, 459 (1969) (the McCarran-Ferguson Act's "language refers not to the persons or companies who are subject to state regulation, but to laws `regulating the business of insurance' ") (emphasis in original). And in Union Labor Life Ins. Co. v. Pireno, 458 U. S. 119 (1982), we explicitly framed the question as whether "a particular practice is part of the `business of insurance' exempted from the antitrust *782 laws by ง 2(b)," id., at 129 (emphasis added), and each of the three criteria we identified concerned a quality of the practice in question: "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," ibid. (emphasis in original).

The Court of Appeals did not hold that, under these criteria, the domestic defendants' conduct fell outside "the business of insurance"; to the contrary, it held that that condition was met.^[10] See 938 F. 2d, at 927. Nor did it hold the domestic defendants' conduct to be "[un]regulated by State Law." Rather, it constructed an altogether different chain of reasoning, the middle link of which comes from a sentence in our opinion in Royal Drug Co. "[R]egulation . . . of foreign reinsurers," the Court of Appeals explained, "is beyond the jurisdiction of the states," 938 F. 2d, at 928, and hence ง 2(b) does not exempt foreign reinsurers from antitrust liability, because their activities are not "regulated by State Law." Under Royal Drug Co., "an exempt entity forfeits antitrust exemption by acting in concert with nonexempt parties." 440 U. S., at 231. Therefore, the domestic insurers, by acting in concert with the nonexempt foreign insurers, lost their McCarran-Ferguson Act antitrust immunity. See 938 F. 2d, at 928. This reasoning fails, however, because even if we were to agree that foreign reinsurers were not subject to state regulation (a point on which we express no opinion), the quoted language from Royal Drug Co., read *783 in context, does not state a proposition applicable to this litigation.

The full sentence from Royal Drug Co. places the quoted fragment in a different light. "In analogous contexts," we stated, "the Court has held that an exempt entity forfeits antitrust exemption by acting in concert with nonexempt parties." 440 U. S., at 231. We then cited two cases dealing with the Capper-Volstead Act, which immunizes from liability under ง 1 of the Sherman Act particular activities of certain persons "engaged in the production of agricultural products."^[11] Capper-Volstead Act, ง 1, 42 Stat. 388, 7 U. S. C. ง 291; see Case-Swayne Co. v. Sunkist Growers, Inc., 389 U. S. 384 (1967); United States v. Borden Co., 308 U. S. 188 (1939). Because these cases relied on statutory language referring to certain "persons," whereas we specifically acknowledged in Royal Drug Co. that the McCarranFerguson Act immunizes activities rather than entities, see 440 U. S., at 232-233, the analogy we were drawing was of course a loose one. The agreements that insurance companies made with "parties wholly outside the insurance industry," id., at 231, we noted, such as the retail pharmacists involved in Royal Drug Co. itself, or "automobile body repair shops or landlords," id., at 232 (footnote omitted), are unlikely *784 to be about anything that could be called "the business of insurance," as distinct from the broader "`business of insurance companies,' " id., at 233. The alleged agreements at issue in the instant litigation, of course, are entirely different; the foreign reinsurers are hardly "wholly outside the insurance industry," and respondents do not contest the Court of Appeals's holding that the agreements concern "the business of insurance." These facts neither support even the rough analogy we drew in Royal Drug Co. nor fall within the rule about acting in concert with nonexempt parties, which derived from a statute inapplicable here. Thus, we think it was error for the Court of Appeals to hold the domestic insurers bereft of their McCarran-Ferguson Act exemption simply because they agreed or acted with foreign reinsurers that, we assume for the sake of argument, were "not regulated by State Law."^[12]

B

That the domestic defendants did not lose their ง 2(b) exemption by acting together with foreign reinsurers, however, is not enough reason to reinstate the District Court's dismissal order, for the Court of Appeals reversed that order on two independent grounds. Even if the participation of foreign reinsurers did not affect the ง 2(b) exemption, the Court of Appeals held, the agreements and acts alleged by the plaintiffs constitute "agreement[s] to boycott" and "act[s] of boycott [and] coercion" within the meaning of ง 3(b) of the McCarran-Ferguson Act, which makes it clear that the Sherman Act applies to such agreements and acts regardless of the ง 2(b) exemption. See 938 F. 2d, at 928. I agree with *785 the Court that, construed in favor of the plaintiffs, the First, Second, Third, and Fourth Claims for Relief in the California Complaint, and the First and Second Claims for Relief in the Connecticut Complaint, allege one or more ง 3(b) "act[s] of boycott," and are thus sufficient to survive a motion to dismiss. See infra, at 789-790; post, at 811.

In reviewing the motions to dismiss, however, the Court has decided to use what I believe to be an overly narrow definition of the term "boycott" as used in ง 3(b), confining it to those refusals to deal that are "unrelated" or "collateral" to the objective sought by those refusing to deal. Post, at 803. I do not believe that the McCarran-Ferguson Act or our precedents warrant such a cramped reading of the term.

The majority and I find common ground in four propositions concerning ง 3(b) boycotts, as established in our decisions in St. Paul Fire & Marine Ins. Co. v. Barry, 438 U. S. 531 (1978), and United States v. South-Eastern Underwriters Assn., 322 U. S. 533 (1944). First, as we noted in St. Paul, our only prior decision construing "boycott" as it appears in ง 3(b), only those refusals to deal involving the coordinated action of multiple actors constitute ง 3(b) boycotts: "conduct by individual actors falling short of concerted activity is simply not a `boycott' within [the meaning of] ง 3(b)." 438 U. S., at 555; see post, at 800 ("`boycott' " used "to describe . . . collective action"); post, at 801 ("To `boycott' means `[t]o combine in refusing to hold relations' " (citation omitted)).

Second, a ง 3(b) boycott need not involve an absolute refusal to deal.^[13] A primary goal of the alleged conspirators in South-Eastern Underwriters, as we described it, was "to force nonmember insurance companies into the conspiracies." ^[14] 322 U. S., at 535; cf. Joint Hearing on S. 1362, H. R. *786 3269, and H. R. 3270 before the Subcommittees of the Senate Committee on the Judiciary, 78th Cong., 1st Sess., pt. 2, p. 335 (1943) (statement of Edward L. Williams, President, Insurance Executives Association) ("[T]he companies that want to come into the Interstate Underwriters Board can come in there. I do not know of any company that is turned down"). Thus, presumably, the refusals to deal orchestrated by the defendants would cease if the targets agreed to join the association and abide by its terms. See post, at 801 ("The refusal to deal may . . . be conditional" (emphasis omitted)).

Third, contrary to petitioners' contentions, see Brief for Petitioners in No. 91-1111, pp. 32, n. 14, 34, 38-39, a ง 3(b) boycott need not entail unequal treatment of the targets of the boycott and its instigators. Some refusals to deal (those, perhaps, which are alleged to violate only ง 2 of the Sherman Act^[15]) may have as their object the complete destruction of the business of competitors; these may well involve unconditional discrimination against the targets. Other refusals to deal, however, may seek simply to prevent competition as to the price or features of the product sold; and these need not depend on unequal treatment of the targets. Assuming, *787 as the South-Eastern Underwriters Court appears to have done, that membership in the defendant association was open to all insurers, the association is most readily seen as having intended to treat all insurers equally: they all had the choice either to join the association and abide by its rules, or to be subjected to the "boycotts," and acts of coercion and intimidation, alleged in that case. See post, at 808 (describing South-Eastern Underwriters as involving a "boycott, by primary insurers, of competitors who refused to join their price-fixing conspiracy").

Fourth, although a necessary element, "concerted activity" is not, by itself, sufficient for a finding of "boycott" under ง 3(b). Were this the case, we recognized in Barry, ง 3(b) might well "`devour the broad antitrust immunity bestowed by ง 2(b),' " 438 U. S., at 545, n. 18 (quoting id., at 559 (Stewart, J., dissenting)), since every "contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce," 15 U. S. C. ง 1, involves "concerted activity." Thus, we suggested, simple price fixing has been treated neither as a boycott nor as coercion "in the absence of any additional enforcement activity." 438 U. S., at 545, n. 18; see post, at 804 (contending that simple concerted agreements on contract terms are not properly characterized as boycotts).

Contrary to the majority's view, however, our decisions have suggested that "enforcement activity" is a multifarious concept. The South-Eastern Underwriters Court, which coined the phrase "boycotts[,] . . . coercion and intimidation," 322 U. S., at 535; see n. 14, supra, provides us with a list of actions that, it finds, are encompassed by these terms. "Companies not members of [the association]," it states, "were cut off from the opportunity to reinsure their risks, and their services and facilities were disparaged; independent sales agencies who defiantly represented non[association] companies were punished by a withdrawal of the right to represent the members of [the association]; and persons needing insurance who purchased from non[association] *788 companies were threatened with boycotts and withdrawal of all patronage." 322 U. S., at 535-536. Faced with such a list, and with all of the other instances in which we have used the term "boycott," we rightly came to the conclusion in Barry that, as used in our cases, the term does not refer to a "`unitary phenomenon.' " 438 U. S., at 543 (quoting P. Areeda, Antitrust Analysis 381 (2d ed. 1974)).

The question in this litigation is whether the alleged activities of the domestic defendants, acting together with the foreign defendants who are not petitioners here, include "enforcement activities" that would raise the claimed attempts to fix terms to the level of ง 3(b) boycotts. I believe they do. The core of the plaintiffs' allegations against the domestic defendants concern those activities that form the basis of the First, Second, Third, and Fourth Claims for Relief in the California Complaint, and the Second Claim for Relief in the Connecticut Complaint: the conspiracies involving both the primary insurers and domestic and foreign brokers and reinsurers to force changes in the ISO CGL forms. According to the complaints, primary insurer defendants Hartford and Allstate first tried to convince other members of the ISO that the ISO CGL forms should be changed to limit coverage in the manner we have detailed above, see supra, at 773-774; but they failed to persuade a majority of members of the relevant ISO committees, and the changes were not made. Unable to persuade other primary insurers to agree voluntarily to their terms, Hartford and Allstate, joined by Aetna and CIGNA, sought the aid of other individuals and entities who were not members of ISO, and who would not ordinarily be parties to an agreement setting the terms of primary insurance, not being in the business of selling it. The four primary insurers convinced these individuals and entities, the reinsurers, to put pressure on ISO and its members by refusing to reinsure coverages written on the ISO CGL forms until the desired changes were made. Both domestic and foreign reinsurers, acting at the behest of the four primary *789 insurers, announced that they would not reinsure under the ISO CGL forms until changes were made. As an immediate result of this pressure, ISO decided to include a retroactive-date provision in its claims-made form, and to exclude all pollution coverage from both its claims-made and occurrence forms. In sum, the four primary insurers solicited refusals to deal from outside the primary insurance industry as a means of forcing their fellow primary insurers to agree to their terms; the outsiders, acting at the behest of the four, in fact refused to deal with primary insurers until they capitulated, which, in part at least, they did.

This pattern of activity bears a striking resemblance to the first act of boycott listed by the South-Eastern Underwriters Court; although neither the South-Eastern Underwriters opinion, nor the underlying indic