N.Y. Auto Repair Shop’s Lawsuit Against Progressive Allowed to Proceed

October 24, 2012

A New York-based auto body shop has been allowed to move forward with its lawsuit that accuses Progressive Insurance Group Company and its affiliates of deceptive acts and practices.

The ruling last week by the Appellate Division of the Supreme Court of New York denied the Progressive’s motion for a summary judgment, allowing the lawsuit filed by the auto body shop North State Autobahn Inc. to move forward.

North State Autobahn argues in its complaint that Progressive dissuaded policyholders from using repair shops that are not part of the insurer’s favored network.

North State Autobahn sued Progressive under New York’s deceptive acts and practices statute for allegedly misleading consumers into taking their damaged vehicles away from North State to competing body shops within Progressive’s network. The lawsuit alleges that the insurer coaxed customers away by maligning the shop’s work and pricing.

According to Dennis Artese, an insurance attorney from law firm Anderson Kill & Olick who represents North State, the latest ruling confirmed a business’ standing to recover for direct harm caused to it by another business’ deceptive acts and practices — even if that business is a competitor.

The appellate court held that North State’s allegations concerning Progressive’s acts depriving consumers of their choice of body shop satisfied the statute’s requirement that the deceptive acts at issue have an impact on consumers at large. The court further held that the law does not require that North State identify specific consumers who were harmed.

“This is a significant decision that enables businesses to pursue ‘deceptive acts and practices’ claims in business-to-business disputes — even between competitors — that have an impact on consumers at large,” said Artese.

The case is North State Autobahn Inc. v. Progressive Insurance Group Company, Appellate Division of the Supreme Court of New York, Second Department, decided on Oct. 17, 2012.

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