Ruling in IGA v. Safelite Case: Judge Allows Anti-Steering Suit to Go Forward, Dismisses Other Claims

The judge overseeing the Independent Glass Association (IGA) v. Safelite lawsuit ruled on Friday to allow the anti-steering aspect suit to continue while dismissing the remaining claims.

In a 21-page opinion issued on August 26, 2005, Judge Ann D. Montgomery of the U.S. District Court of Minnesota ruled that Safelite's Motion to Dismiss and to Compel Joinder "is granted in part and denied in part," allowing Plaintiff Jeff "Winter's false advertising and deceptive trade practice claims (counts II and V) and Roe's deceptive trade practice claim (count v)" to continue, while "all other claims are dismissed and Defendant's Motion to Compel is denied."

The judge ruled that one claim of false advertising, that brought by Jeff Winters, would remain in tact, though all other false advertising claims brought by the IGA would be dismissed. The deceptive trade practices claims against Safelite by co-plaintiffs Jeff Winter and Jane Roe will also go forward. Though Safelite argued in its Motion to Dismiss that plaintiff Jane Roe's arguments should not be accepted because her true identity has not been revealed, the court ruled that "Safelite's Motion to Dismiss the deceptive trade practice claims of Winter and Rowe is denied," allowing both claims to go forward as the case progresses.

Additionally, Safelite's Motion to Compel Joinder and bring insurance companies into the case was denied. The court found that "there is no evidence adduced that Safelite's contracts with the insurance companies require it to engage in 'steering' or other allegedly illegal business practices." Montgomery wrote that "while Safelite might have been faced with inconsistent obligations if this Court found its third party administrator functions constituted unlicensed insurance adjusting, this claim has been dismissed." The judge further ruled that "At this time … there is no evidence before the Court to suggest that the content of the scripts is dictated by the contracts between the insurance companies and Safelite. As a result, Safelite has not shown it could not comply with an injunction prohibiting it from steering customers to Safelite glass shops without violating its contractual obligations to the insurance companies. Consequently, Safelite's Motion to Compel Joinder is denied."

Dismissal of several issues followed Judge Montgomery's ruling that the IGA, in fact, does not meet all three requirements for associational standing as defined by the Supreme Court; according to the ruling, the IGA "cannot satisfy the third prong" of the test as required by the Court, which requires that "neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit." Per Judge Montgomery's ruling, "several statements made in the Complaint indicate that Safelite's alleged representations are not false to all IGA member glass shops, thus indicating that individualized proof is required and that associational standing is inappropriate in this case" (emphasis original).

Additionally, because Safelite argued that "several glass shops on the list [of IGA member companies that will not charge customers the difference in short paid invoices, provided by the IGA] require customers to sign invoices with language obliging them to pay," and because during oral arguments earlier in the case, IGA counsel "admitted that it cannot say all of its member guarantee and warranty their work or promise that they will not bill the customer for the cost of glass repair not covered by the customer's insurance company" and because "Safelite is entitled to require the glass shops to present individualized proof before being faced with a blanket injunction applicable to its statements regarding all IGA member glass shops," Judge Montgomery ruled that "granting IGA associational standing to bring its Lanham Act claim is inappropriate in light of the specific nature of the allegations" and that "the Lanham Act claims are dismissed."

Several of the ensuing arguments posed by the IGA in the initial suit were dismissed for lack of associational standing due to that ruling. Among the consecutive issues that were dismissed on these grounds is the false advertising claim. Montgomery cited that the claim fails for lack of associational standing, but also because "Minnesota courts have held Minnesota Statute § 325F.67 does not apply where the plaintiff is not a consumer" and that the "IGA does not purchase or obtain services or products from Safelite and is suing in its capacity as an association not a consumer."

However, the court did not agree with Safelite's interpretation of "public benefit," as the third party administrator defined it in its Motion to Dismiss filed in May (see glassBYTES May 5, 2005, Safelite Responds to the IGA Lawsuit with Motion to Dismiss). Citing the description as narrow, Montgomery wrote in her opinion that "while consumers and their insurance companies might hypothetically face higher costs if this suit is successful, Safelite's alleged business practices impact consumers in diverse ways ... If successful, this suit might also encourage more competition in the auto glass replacement industry and ultimately drive prices down." Montgomery ruled that the false advertising claim as brought by Plaintiff Jeff Winters can proceed.

IGA's common law fraud claims were also dismissed for lack of associational standing, and the same claims as brought by Winter and co-plaintiff Tim Weber were also dismissed because "they fail to plead that they actually relied upon [the information provided by the Safelite call center regarding additional charges they may incur] and switched glass shops. Instead, despite Safelite's alleged steering, both Winter and Weber repaired their auto glass at non-member glass shops."

All the claims of consumer fraud brought against Safelite were dismissed, as well. The opinion cites both the IGA's lack of associational standing and the fact that the IGA is not a consumer of any product or service offered by Safelite as the reason the claims as brought by the IGA fail; the consumer fraud claims as brought by Winter were dismissed because "Winter's CFA claim derives from Safelite's alleged statements made as a third party administrator, not from its role as an auto glass manufacturer, repair and replacer. Safelite's conduct as a third party administrator, the only conduct relevant to Winter's CFA claim, does not constitute the sale of 'merchandise.' Any 'services' Safelite performed as a third party administrator were performed as an intermediary for the benefit of the insurance company clients."

The IGA's failure to meet associational status in the eyes of the court also forced the ruling that the claims of deceptive trade practices as brought by the IGA were dismissed, and though Safelite argued that "Roe's deceptive trade practice claim must be dismissed because her anonymous pleading is improper," the court opted not to dismiss the claim. Rather, it gives the unnamed plaintiff 60 days to "amend the Compliant to identify herself as a properly named Plaintiff or submit evidence to the Court that establishes a significant privacy interest or threat of physical harm. The record to date does not meet this standard. Further, her claim to be representative of a group of similarly licensed insurance adjusters requires her identity to be disclosed so a comparison can be made to others."

All the claims of unlicensed claims adjusting as brought against Safelite were dismissed because "neither the Insurance Adjuster statute, Minnesota Statute § § 72B.01-.14, nor the private AG act, Minnesota Statute §8.31, provides a private right of action for unlicensed insurance adjusting," and rather, "under certain circumstances, the private AG act allows individuals to bring a claim when the relevant statute does not provide a private right of action. Unlike false advertising, consumer fraud and deceptive trade practices, the private AG act does not provide a private right of action for unlicensed claims adjusting."

The conversion claim brought by the IGA regarding the paper invoice fee was dismissed by the court because "the glass shops' voluntary decision is to submit paper invoices and not utilize the electronic invoice system offered by Safelite does not state a conversion claim."

Further, Montgomery ruled in Safelite's favor with regard to all counts related to named defendant Safelite Fulfillment Inc., "because plaintiffs seek only injunctive relief, Safelite Fulfillment is not a proper party to this case," and "any potential relief to Plaintiffs would enjoin the practices of Safelite Group and Safelite Solutions and would not reference Safelite Fulfillment," which according to the company is only "engaged in the business of providing automobile glass repair and replacement products."

Both sides could claim the ruling as victory, and the IGA has already done so, issuing a Beacon Bulletin today quoting association president Dave Zoldowski.

"This is huge! The auto glass industry finally has a chance to make Safelite change their scripts and stop lying to consumers about the business practices of their competitors in order to steer jobs," said David Zoldowski, president of the IGA.

"This suit has always been about steering and the steering case goes forward," says executive director Marc Anderson, "that had been our expectation."

At press time, Safelite had not issued a statement regarding the ruling.

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