A U.S. District Court judge in the Middle District of Florida, Orlando division, has upheld the report of a magistrate judge who recommended many of the antitrust complaints by collision repair companies throughout the country against dozens of insurers be dismissed. However, he gave leave for attorneys to 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.
The judge noted that the case Louisiana filed against State Farm has a pending request to be moved back to the state jurisdiction.
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 had asked a U.S. magistrate judge to help review and research the cases and offer recommendations.
Plaintiffs and defendants had the opportunity to file rebuttal reports.
“This is a multidistrict litigation case involving two dozen suits, consolidated for pretrial purposes, in which collision repair shops have accused most of the automobile insurers in their states of conspiring to suppress the reimbursement rates for collision repairs in violation of Section I of the Sherman Antitrust Act and various state laws,” writes the U.S. District Court judge.
“At the outset of the June 3, 2015 report, Judge Smith discusses the issue of group pleading, a problem that has plagued these cases from the outset,” according to court documents. “Throughout their pleadings, the plaintiffs make collective allegations about the conduct of defendants, even in scenarios (such as the alleged steering of an insured away from one of the plaintiffs to a lower-priced shop) where it would seem that any defendant doing so would have acted singly—even if every defendant sometimes steered its own insureds. After noting that group pleading is permissible in some instances, Judge Smith concludes that to satisfy the notice requirement of Fed.R.Civ.P. 8(a), ‘at a minimum, plaintiffs should allege sufficient facts specific to each defendant, or at least to each corporate family of defendants to tie that defendant to the wrongdoing alleged.”
Reviewing the antitrust claims raised in the 14 cases, the magistrate judge concluded that the price fixing and group boycott claims are “indistinguishable from those that had been asserted in the Florida case and should be dismissed for the same reasons expressed by this court in its order dismissing the amended complaint in that action.”
The magistrate judge also concluded that the state law antitrust claims in the Michigan, New Jersey, Washington and Virginia cases should be dismissed for “failure to plausibly plead the existence of an agreement between the defendants.”
The U.S. District Court judge agreed with the report.
“Plaintiffs’ omnibus objection to magistrate’s report and recommendation is overruled,” writes the U.S. District Court judge. “The report and recommendation is confirmed and adopted as part of this order.”
To read the U.S. District Court judge’s decision, click here.