A federal appellate court threw out most of the claims by automotive body shops in Indiana, Utah and Mississippi that alleged that major insurers violated antitrust laws and engaged in anticompetitive practices by steering policyholders to “approved” shops.
The 11th Circuit Court of Appeals recently found that claims filed by body shops in Indiana and Utah must be dismissed for procedural reasons. The appellate panel also upheld the dismissal of most of the claims filed by the Mississippi body shops, but it revived specific tortious interference claims by two of the Mississippi body shops against Progressive Insurance.
The panel decision, which was made by three appellate judges, follows last year’s en banc ruling by all seven 11th Circuit judges that dismissed separate lawsuits that alleged antitrust violations by insurance carriers. That case was Quality Auto Painting Center of Roselle v. State Farm.
Defense attorneys worried that a ruling in favor of the body shops in Quality Auto would have allowed plaintiffs to merely cite parallel conduct by competitors as sufficient basis for pleading an antitrust violation.
The decision stems from multi-district litigation that had been referred to the federal court for the Middle District of Florida. The body shops claimed that State Farm group was the leader of a conspiracy involving several insurance carriers to conduct “market rate surveys” that actually were shams intended to reduce the cost of auto body work.
The body shops alleged that the carriers refused to pay for necessary repairs and procedures, and required body shops to use subpar “aftermarket” parts instead of new parts. They also steer their insureds away from noncompliant body shops and toward body shops that comply with their pricing demands and other requirements, the lawsuits alleged.
The 11th Circuit said the complaint was very similar to the price-fixing allegations made in the Quality Auto case and must be dismissed for the same reasons. The court found that that the body shops in Quality Auto did not prove that the carriers had colluded on price simply because they used similar practices and each had set the same top rates.
The 11th Circuit didn’t address the merit of the complaints filed by the Utah and Indiana body shop’s arguments in the Automotive Alignment case. The panel found instead that the plaintiffs had not met the deadline to file amended complaints after those suits were dismissed by the district court.
The Mississippi plaintiffs did amend their complaints on time, but the 11th Circuit dismissed most of the complaints for the same reasoning stated in Quality Auto. “We have already held that this allegation of ‘price leadership’—'[f]ollowing the example set by a competitor, without agreeing to do so in advance’—’is insufficient to establish the existence of an agreement,'” the court said.
On the other hand, the panel said that Autoworks Collision Specialist and Walkers Collision Center had adequately played their claims against Progressive Insurance.
Each body shop claimed it had lost one customer because Progressive misled customers by telling that it would guarantee the repair work if they used Progressive’s preferred shops, leading those customers to presume that their shops would not guarantee their work.
The court said the body shops stated a plausible allegation that Progressive had conspired to harm them with malicious intent and without justifiable cause. The 11th Circuit vacated the district court’s decision to vacate those specific complaints and remanded the case for further proceedings.
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