Safelite, LYNX and Insurer Defendants Respond
to New York Restraint of Trade Suit, Including Short Payment and
June 15, 2011
Safelite, LYNX Services and Pittsburgh Glass Works, along with
14 different insurers named in a recent
restraint of trade suit filed by a New York Glass shop owner,
have responded to the suit by way of endorsed memos to the court
requesting a pre-motion to dismiss conference. David Harner, owner
of Auto Glass of Westchester Windshield Doctor, filed the suit in
April and alleges those involved have committed breach of contract,
fraud, unfair claims settlement practices, restraint of trade, anti-trust,
and coercion, among other charges, through their alleged actions
in dealing with his business and his customers.
While the judge has agreed to the pre-motion conference, which
will be held on July 11, the two letters (one
of which was sent on behalf of the insurers by Douglas Dunham, corporate
counsel for State Farm, and the other
of which was sent on behalf of the third-party administrators (TPAs)
involved by Safelite counsel Fiona Schaeffer) outline the defendants'
initial arguments as to the reasons they believe the case should
In the letter from Safelite, submitted jointly for the non-insurer
defendants, including PGW and LYNX, the companies point out that
the "crux of [Harner's] complaint-asserted as a breach of contract
claim-appears to be that he has not received full payment on invoices
submitted to certain insurer defendants for work performed for their
insureds." The companies allege that these claims should not
be made against non-insurers or TPAs, as they "are not independent
actors, but act as 'agent[s]' and 'intermediaries' of certain insurers
under individual contracts with certain insurer defendants."
With regard to Harner's steering allegations, the companies write,
"Plaintiff does not deny that insureds can and do use [his]
repair shop, which admittedly is not in any insurer defendant's
'network;' nor does plaintiff allege that he has lost a single job
because of the defendants' alleged actions."
The non-insurer defendants also suggest that there is an "underlying
theme" in Harner's complaint: "that his business should
be protected from competition with other glass repair shops and
that consumers should not be informed about lower-cost alternatives."
They claim in response that "competing through lower prices
is the essence of competition."
"Furthermore, plaintiff's 'predatory' pricing objection bears
no resemblance to an actionable predatory pricing claim, which requires
pricing below costs by a monopolist with a 'dangerous probability'
of recouping lost profits by eliminating the competition,"
writes Schaeffer. "
Plaintiff does not allege that the
non-insurer defendants are monopolists in any relevant market, or
that plaintiff has been excluded from such a market, or even that
plaintiff has lost any identifiable sale."
Safelite, LYNX and PGW further allege that "lower prices are,
of course, good for competition and consumers," citing a 1990
case involving USA Petroleum Co.
The insurers make a similar argument against the case in their
letter, much of which deals with Harner's steering and short payment
allegations. The companies allege that New York law permits insurance
companies to recommend glass repair facilities to their insureds,
and that insurers in the state "are not obligated to pay for
glass repair charges exceeding the amount a recommended facility
would have charged."
They also claim that Harner's breech of contract claim is invalid
as he has no contract with any of the insurers and has not specified
any contract that has been broken.
With regard to his anti-trust claims, the insurers allege that
the claims are "deficient because [Harner] fails to allege
any antitrust injury or antitrust standing," and that "he
has not alleged any harm to competition at all, much less connected
any harm to competition with an injury [to himself]."
Harner alleges in his original suit that "all the defendants
actions, individually, combined, and in concert, are unreasonable
under the circumstances, [and] have denied [him] the right to earn
income, his ability to create a sound business reputation, and have
denied him his right to continue to operate his business without
interference, in a free, unfettered, and profitable manner, within
the framework of the law."
He further claims that the TPAs noted "together, through planning
and foresight, have created a contract an/or combination and/or
conspiracy in the form of trust or otherwise, amongst and between
those defendant insurers, by using the defendant PGW and/or the
defendant LYNX, or the defendant Belron and/or the defendant Safelite,
as intermediaries in an attempt to restrain trade or commerce, and
to enforce a mandate to set and/or fix and/or stabilize prices,
and/or to restrain trade, and/or whereby a monopoly is or may be
established or maintained
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