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.