On January 21, 2015, Judge Gregory Presnell, the presiding Judge
in the In re Auto Body Shop Antitrust Litigation (M.D.
Fla), a consolidated proceeding that brought together over a dozen
antitrust cases against a large number of auto insurers, issued an
order dismissing the plaintiffs' complaint in the lead case,
A& E Auto Body v. 21st Century Centennial Insurance
Company. While Judge Presnell's decision does not
terminate the litigation – because he granted plaintiffs
leave to replead their claims – it does constitute a
significant early victory for the insurance industry defendants in
the closely-followed litigation.
As Judge Presnell explained in his ruling, the A&E
case centers around claims by approximately 20 Florida auto body
shops that approximately 40 auto insurers in the state conspired to
depress the price of auto repairs through the use of direct repair
programs, and that the defendants also unlawfully "steer"
insureds to preferred shops and away from the plaintiffs. Similar
claims have been asserted by auto shops in other states, and over
the last six months all of the cases have been consolidated before
Judge Presnell in the Middle District of Florida for further
action.
In ruling on defendants' motion to dismiss the
A&E complaint, Judge Presnell began his analysis of
plaintiffs' price fixing claim by noting that plaintiffs pled
that all of the defendants agreed to "conform to State
Farm's unilaterally imposed payment structure." For this
reason, the "crucial question," the Court explained, is
whether "the challenged anticompetitive conduct stems from
independent decision or from an agreement, tacit or express,"
and noted that plaintiffs are required to plead "enough
factual matter (taken as true) to suggest that an agreement was
made." Otherwise, the claim fails as a matter of law.
Examining plaintiffs' complaint, Judge Presnell held
"plaintiffs' allegations in this case fall far short of
meeting this standard."
Specifically, Judge Presnell concluded that "aside from
conclusory allegations that it exists, plaintiffs offer no details
at all . . . about the alleged agreement, such as how the
defendants entered into it, or when. While not fatal to their
Sherman Act claims, this bears noting." Judge Presnell then
explained that "The defendants' statements about paying no
more than State Farm pays for labor do nothing to demonstrate that
the plaintiffs are entitled to relief. It is not illegal for a
party to decide it is unwilling to pay a higher hourly rate than
its competitors have to pay, and the fact that a number of
defendants made statements to this effect does not tip the scales
toward illegality." Finally, Judge Presnell concluded that
"the fact that a number of defendants have indicated an
unwillingness to pay more than State Farm has to pay does not,
itself, raise Sherman Act concerns [because] in the words of the
Supreme Court, lawful parallel conduct fails to bespeak unlawful
agreement. Bell Atlantic v. Twombly, 550 U.S. 544, 556
(2007)."
Turning to plaintiffs' boycott claim, Judge Presnell found
that plaintiffs' allegations here were equally insufficient.
Judge Presnell stated that "plaintiffs allege (in conclusory
fashion) that the defendants 'steer customers away" by
badmouthing shops that seek to charge higher prices," but held
that "there is no allegation that any defendant refused to
allow any of its insureds to obtain a repair from such a shop, or
refused to pay for repairs performed at such a shop." In
addition, Judge Presnell added that to state a "boycott"
claim under the antitrust laws, plaintiffs are also required to
allege agreement, and "plaintiffs offer even less evidence of
an agreement to boycott than they did of an agreement to fix
prices." Accordingly, Judge Presnell dismissed this claim as
well.
Undeterred by Judge Presnell's ruling, on February 11,
plaintiffs filed a Second Amended Complaint, again asserting
antitrust claims for price fixing and "boycott." Seeking
to bolster the claims that had previously been held to be
insufficient, plaintiffs' new complaint now contains numerous
allegations concerning defendants' alleged
"opportunity" and "motive" to conspire,
including allegations about interactions at various trade
association meetings. Whether plaintiffs' new allegations will
suffice remains to be seen. Defendants will undoubtedly file a new
motion seeking to dismiss these amended claims as well. A ruling on
that motion will likely not issue until this summer. When it does,
depending on the ruling, it will likely either put an end to the
litigation, once and for all, or it will lead to the beginning of
discovery which, in this matter, would likely be both far-reaching
and expensive for the defendants. Stay tuned.
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