A U.S. District judge in Florida recommends many of the antitrust complaints by collision repair companies throughout the country against dozens of insurers be dismissed without prejudice, meaning attorneys for the repair shops can file amended complaints. Collision repair shops from 12 Federal District Courts had alleged “steering and price fixing” by dozens of insurers. The cases are consolidated before a Florida U.S. District Court judge.
A&E Auto Body Inc. v. 21st Century Centennial Insurance Co. appears to have sparked the court battle. In it, a group of Florida collision repair shops filed a complaint against State Farm and dozens of other insurers, alleging the insurers use their direct repair programs to illegally control and depress rates and they say if the shops don’t comply, customers are steered away.
On the heels of this court filing, other similar cases cropped up in Arizona, Michigan, Alabama, California, Illinois, New Jersey, Oregon, Washington, Pennsylvania and additional states. On December 3, 2014, the United States Judicial Panel on Multidistrict Litigation (JPML) transferred these cases to the U.S. District Court for the Middle District of Florida, Orlando division.
Given all of the states and allegations involved, the presiding U.S. District Court judge asked a U.S. magistrate judge to help review and research the cases and offer recommendations.
“After due consideration, I respectfully recommend that the motions be granted in part and denied in part, that the complaints in the pending cases be dismissed, that the dismissals be without prejudice and with leave to amend except as otherwise stated in this report and recommendations, and that plaintiffs be afforded 21 days’ leave to file amended complaints,” writes the judge in his report.
“In each case, plaintiffs allege that defendants conspired to fix prices and boycott plaintiffs in violation of the Sherman Act. Plaintiffs also assert a variety of state common law and statutory claims including unjust enrichment, tortious interference, conversion, quasi-estoppel, violations of state antitrust law and unfair trade practices,” according to the court report.
The allegations against the defendants are not “specific” enough, the judge writes.
“The only specific allegations about most of the defendants in the pending cases are that they are insurers who are licensed to do business in particular states. … Panel, plaintiffs’ complaints do not include specific allegations linking each defendant to a price-fixing conspiracy. Nor have plaintiffs explained how the conduct of one defendant in steering a customer away from one plaintiff is related in any way to the conduct of a different defendant in steering a different customer away from the same or a different plaintiff,” according to court documents.
“This is not to say that I believe plaintiffs must name, for every body shop and insurer, a customer who was steered by that particular insurer away from that particular body shop. … But, at a minimum, plaintiffs should allege sufficient facts specific to each defendant, or at least each corporate family of defendants, to tie that defendant to the wrongdoing alleged,” the judge writes.
The only allegation the judge recommends dismissed with prejudice is “quasi-estoppel.”
“Finally, plaintiffs in several cases argue that the court should recognize a cause of action for quasi-estoppel because no state-court precedent holds that it is not a cause of action,” according to the report. “The court should decline this invitation. … After due consideration, I conclude that the laws of Arizona, Michigan, Pennsylvania, Alabama, Illinois, New Jersey, Oregon, Kentucky, Virginia and Missouri do not recognize quasi-estoppel as a cause of action. Therefore, I recommend that these claims be dismissed with prejudice,” according to the judge.
The presiding judge has not yet issued a decision based on the report. Attorneys can file objections to the report and recommendations until next week.
To read a full copy of the U.S. magistrate’s recommendations, click here.