Can a terminated employee file an antitrust claim?

In a recent case, a man alleged that a title insurance company terminated him for trying to actively compete with a similar company for clients in the period leading up to a proposed merger between the two companies.

The plaintiff in the case was a senior account executive at Stewart Title Guaranty Company for 15 years. In 2014, Chicago Title – a subsidiary wholly owned by Fidelity National Financial, Inc. – recruited him as vice president for energy services, supposedly for the purpose of competing with Stewart’s title business in renewable energy.

In March 2018, a proposed merger between Fidelity and Stewart was announced, subject to shareholder and regulatory approval. The plaintiff’s supervisor at Chicago Title told him that, after the merger, Stewart would likely have to follow Chicago/Fidelity’s tighter underwriting guidelines.

The plaintiff considered this an opportunity because he believed that adopting stricter standards would end Stewart’s competitive advantage and would enable him to convince his old contacts to choose Chicago. He attempted to lure Stewart’s clients by informing them about the tentative merger and about the potential underwriting issues.

According to the plaintiff, Chicago Title responded with hostility to his efforts and told him to stop telling Stewart’s clients about the anticipated merger. However, the plaintiff continued what he was doing, with his supervisor’s approval.

Stewart’s and Chicago Title’s senior executives allegedly became concerned as several major Stewart clients expressed interest in moving their projects to Chicago Title. The companies’ executives passed around an email by the plaintiff to a client about the possible underwriting shifts.

In October 2018, Stewart’s shareholders approved the merger. The plaintiff circulated the press releases to potential clients with his supervisor’s authorization. In November 2018, Chicago Title fired him.

Read more: Can an employee be terminated for failure to submit to a drug test?

In 2019, the Federal Trade Commission challenged the proposed merger because it would consolidate the “Big 4” dominating the U.S. title insurance industry into three main players and would likely cause anticompetitive harm. In the end, the merger fell through.

The plaintiff sued Stewart, Chicago Title, Fidelity, and Fidelity’s executive vice president. He made an antitrust claim. He alleged the following:

• Stewart violated the Cartwright Act by conspiring with Fidelity and Chicago Title to restrict competition in wind, solar, and renewable energy projects among them
• While the merger was pending, the companies agreed to allocate customers and to refrain from competing for each other’s clients so that Stewart could maintain its market share, earnings, and customer base
• The companies attempted to restrain the plaintiff’s sales tactics to prevent him from competing with Stewart for clients
• He would have brought several of Stewart’s clients to Chicago Title if the companies had let him compete in the way that he wanted
• Stewart tortiously interfered with his contractual relations and with his prospective economic advantage

Ex-employee’s antitrust claim fails

Stewart filed a summary judgment motion. The trial court granted summary judgment in its favor.

In the case of Ahn v. Stewart Title Guaranty Company, the California Court of Appeal for the Fourth District affirmed the judgment of the trial court.

To sue under the Cartwright Act, someone should have suffered “antitrust injury” and harm stemming from the anticompetitive aspect of the defendant’s alleged conduct.

In this case, the plaintiff had no standing to sue under the Cartwright Act because his allegation that he could not lure customers with a pitch about their restricted options after the merger did not amount to an antitrust injury, the appellate court held.

The appellate court accepted the plaintiff’s claim that Stewart and Fidelity agreed not to fully compete for each other’s customers during the premerger period. However, it found that the plaintiff was claiming injury from conduct emphasizing competitive differences, not injury from the agreement’s alleged anticompetitive aspects.

The appellate court noted that many of the parties’ other arguments in this case focused on the issue of whether the plaintiff’s loss of employment could support a claim under the Cartwright Act. However, the appellate court did not rule upon this issue because the plaintiff’s other claims depended on his antitrust claim, which was rejected.