A three-judge panel, including Judges Ralph K. Winter, John M. Walker Jr. and José A. Cabranes, met in New Haven, Conn., at the U.S. District Court to hear a number of cases, including Safelite versus Jepsen. Safelite is seeking to enjoin the enforcement of the Connecticut law requiring third-party administrators (TPAs) who own glass shops to list a second glass shop when recommending repair at their own shop. The questioning lasted less than 30 minutes.
Safelite was represented by Jay Lefkowitz of elite law firm Kirkland and Ellis, who also represented Safelite in the District Court arguments. He confirmed that Safelite is complying with the disclosure requirement of the law and said that the disclosure requirement has not made a difference in the percentage of referrals that Safelite gets.
When Judge Walker asked, “Then why are we here?” Lefkowitz stated that it was because of first amendment principles.
Judge Walker questioned attorney Lefkowitz about the state interest in the statute. There are three state interests that were mentioned in the legislative history: protecting locally-owned shops, consumer choice and preventing an unfair advantage/allowing Safelite undue influence in the decision.
Judge Walker seemed to allow the local protection argument was protection of in-state businesses against out-of-state Safelite. Lefkowitz said that this was the state’s real motivation. Safelite argued that if the unfair advantage argument prevailed, then there are better legislative remedies.
Connecticut seems to base its argument on consumer choice.
Judges Walker and Winter’s questions of Connecticut Assistant Attorney General Joseph Chambers focused on the consumer choice issue. They seemed to suggest that consumers’ principle interest is in price and quality. Merely disclosing a second shop, according to Judge Winter, does not further that interest. The judges asserted that since Connecticut is a zero deductible state, the consumer doesn’t really care about price.
While Connecticut requires insurers to offer no-deductible glass coverage as an option, Connecticut residents do not always purchase that option as the cost of glass repair or replacement often may be less than the deductible on insurance policies. In those situations any price difference benefits the policyholder.
The judge’s questioning suggested that consumers really don’t have any way to gauge quality differences between two shops or even that there are quality difference between shops. The judges did not seem to be aware of the availability of AGRSS™ and ROLAGS™ standards or about reviews on social media.
Trying to predict outcomes of cases based on judges questioning is often wrong. That said, the tenor of the questioning suggests serious skepticism of the state’s argument that the law fosters consumer choice. The court’s ruling is expected soon.
Stay tuned to glassBYTES.com for more on this case as it becomes available.
Stuart Zimmerman is an occassional journalist and a former attorney/advisor for the U.S. Department of Justice. He currently works as an information technology consultant.