HOT NEWS: Circuit Court Orders a Preliminary Injunction Against Connecticut Anti-Steering Law

The Second Circuit Court ordered a preliminary injunction on First Amendment grounds that temporary halts enforcement of Public Act 13-67—An Act Concerning Automotive Glass Work.

Safelite had sued Connecticut Attorney General George Jepsen and State Insurance Commissioner Thomas Leonardi and asked for an injunction to halt enforcement of PA 13-67. After the District Court judge decided against an immediate injunction to halt enforcement, Safelite had appealed this decision to the Appellate Court.

“Safelite claims that the Act violates the First Amendment because it is an impermissible constraint on commercial speech. We hold that the District Court erred in applying rational basis review under Zauderer versus Office of Disciplinary Counsel of the Supreme Court of Ohio … but rather should have applied intermediate scrutiny under Central Hudson Gas & Electric Corp. versus Public Service Commission of New York. Concluding that the statute cannot survive such scrutiny on the present record, we vacate and order an injunction preventing enforcement of Public Act 13-67(c)(2),” according to Circuit Court documents.

Safelite’s attorneys say PA-13-67(c)(2), “[p]rohibits an insurance claims administrator (TPA) from informing policyholders about an affiliated glass repair business unless the administrator simultaneously refers policyholders to a local competitor’s glass repair business.”

They had argued this goes against the company’s First Amendment rights.

“On a cursory review, our precedent arguably supports the District Court’s conclusion that this law simply requires disclosure of accurate, factual information,” the Circuit Court judges write. “But all of our case law applying to Zauderer review to factual, commercial disclosure—indeed, as far as we know, all federal cases applying to Zauderer in that context—has dealt with disclosure requirements about a company’s own products or services. … This distinction is important, indeed, dispositive in this case.”

The Circuit Court goes on to write, “There is no claim, much less evidence that Safelite’s communications to its customers were false, misleading or illegal. Indeed, there is no claim of consumer complaints about the effect of Safelite’s business model. We must therefore conclude that PA 13-67 does not meet the first prong of Central Hudson’s intermediate scrutiny test.

“We turn now to whether Connecticut’s interest in restricting Safelite’s speech is substantial, and whether PA 13-67 directly and materially advances that interest. Appellees argue that the government has a substantial interest in ‘protecting consumer choice, preventing steering and combatting the undue influence of self-interested insurance claims adjusters.’ … We are skeptical that the government’s asserted consumer protection interests are genuine and not merely post-hoc rationalizations,” according to the court’s decision.

“[F]inally, we conclude that PA 13-67 is also under-inclusive because it only applies to third-party insurance claims administrators that also own an affiliated glass shop. It does not apply to insurance companies themselves or to claims administrators who do not own an affiliated glass shop,” the court adds.

The court remands the “cause” to the District Court with instructions to enter a preliminary injunction and “for such further proceedings as may be appropriate in the circumstances and consistent with this opinion.”

Safelite declined to comment since litigation in the case is pending.

To view a copy of the Circuit Court’s decision, click here.

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14 Responses to HOT NEWS: Circuit Court Orders a Preliminary Injunction Against Connecticut Anti-Steering Law

  1. Baffled says:

    I ALWAYS HAD HOPE THAT EVERYBODY COULDNT BE BOUGHT WELL GUESS I WAS WRONG.

  2. Sue Kuiti says:

    Seems like Judge’s can also be bought by the monster with the money.

  3. Baffled says:

    I agree.
    The saddest thing for me is that Connecticut only proved that the law only works for the person that can afford it.

  4. NY says:

    Can anyone tell me if having a monopoly is legal or not?

  5. Daveycrewcut says:

    “The Circuit Court goes on to write, “There is no claim, much less evidence that Safelite’s communications to its customers were false, misleading or illegal. Indeed, there is no claim of consumer complaints about the effect of Safelite’s business model. We must therefore conclude that PA 13-67 does not meet the first prong of Central Hudson’s intermediate scrutiny test.” (I guess the circuit judge doesn’t watch NBC)

    I suggest that customers that were redirected to Safelite Solutions via an insurance company’s auto attendant were sent illegally. According to to new law, the insurance companies are required to notify the policyholders of their right to choose their own glass repair facility during the initial contact. If the insurance companies can program their auto attendants to ask if the claim is a “glass only claim” then they can just as easily program the auto attendant to notify the caller of their right to choose before forwarding the call to Safelite. The new law requires it!

    “(a) The speech at issue is “commercial speech” entitled to First Amendment protection. Commercial speech that is not false or deceptive and does not concern unlawful activities may be restricted only in the service of a substantial governmental interest, and only through means that directly advance that interest. Pp. 471 U. S. 637-638.” according to Zauderer.

    When dealing with insurance claims, commercial speech needs to be controlled simply because the insured is already fearful of denied claims, premium increases if not policy cancellations. Insurance companies should not be allowed to use undue influence to coerce policyholders into using repair facilities that may be cutting corners and affecting policyholder safety in order to meet the price discount demands of the insurers. The above quote mentions deceptive speech and the scripting used by insurers and their TPA’s certainly is deceptive. It also mentions unlawful activities. If the insurance company is not following the law when an auto attendant directs the caller to Safelite without the required notice then the resulting commercial speech does involve illegal activity.

    The “Central Hudson” test asks:
    (1) whether the speech at issue concerns lawful activity and is not misleading; (2) whether the asserted government interest is substantial; and, if so, (3) whether the regulation directly advances the governmental interest asserted; and (4) whether it is not more extensive than is necessary to serve that interest.

    Here again in (1) above we have the word “misleading”. The scripting used by the insurance companies and their TPA’s is very misleading. Policyholders are lead to believe that they must not use their chosen shop if it has not capitulated to the insurance company pricing. Policyholders are deceived into thinking that there may be something wrong with their shop of choice. (The same argument that Safelite is using in this case!)

    It is an unlawful claims practice to use coercion. It is unlawful to steer policyholders. It is unlawful to fix and depress pricing. It is unlawful to not advise the policyholder of their absolute right to choose their own repair shop and it is unlawful to interfere with a contract between a repair shop and a policyholder.

    Come on judge. Take off the blinders and look at what is going on!

  6. AGD says:

    Why is it everytime someone challenges safelite on this business practice they always sqworm their way out of it. Its ridiculous that they control everything and us small shops continue to make less and less everyday. I just love when the customer is pressured into using safelite even when they have a high deductible and its not even covered. “My insurance said i should use them anyways”

  7. Tom says:

    I guess the only solution is for people to switch there insurance to companies that are represented through lynx services or any insurer that does not sleep with scrapelite

  8. Pingback: CT Glass Companies and Attorney General Take Stock After Preliminary Injunction Decision | glassBYTEs.com

  9. J.W. says:

    Ok, here it is, Everybody just sell out to Safelight. I would rather get some money now than have nothing later. They are the Walmart of auto glass and the biggest poker player with the most money. They will take the market in just a couple a years, which has been their plan from six years ago. Our states & so called government will always side with the larger companies with deeper pockets, period. May all that have betrayed us for the greed of money go straight to …………

  10. NY says:

    I think Connecticut should publish in all their newspapers an ad asking how many policy holders felt they had no other choice but to use safelite.
    We all know fear and intimidation are their key factors in making sure they don’t use anybody else.
    I have heard them several times say to customers well we don’t guarantee any of the work so if there is a problem we wont help you or using our shop you will pay nothing if you use the shop you mentioned earlier you might have out of pocket expenses. My personal favorite is after the customer tells them what shop they want to use three to five times safelite solutions says well here is a number in case you want to change your mind.

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