In early March, the auto insurer defendants in the In re Auto
Body Shop Antitrust Litigation renewed their motions seeking
the dismissal of plaintiffs' action, this time directed at
plaintiffs' Second Amended Complaint. The insurer defendants
urged the Court to dismiss the action with prejudice, maintaining
that, despite three attempts, the plaintiff auto body shops have
still failed to include sufficient facts to make their claim of
conspiracy plausible.
The action, commenced well over year ago as A&E Auto Body
v. 21st Century Centennial Insurance Co. and subsequently
transformed into a multidistrict litigation proceeding (In re
Auto Body Shop Antitrust Litigation, MDL 2557) after similar
cases were filed in a multitude of states, centers upon a claim
that many of the leading auto insurers in the country conspired to
reduce rates for the repair of damaged vehicles and to steer
insureds away from auto repair shops that refused to accept lower
reimbursement rates for their services. The cases were consolidated
before Judge Gregory Presnell (M.D. Fla.) in late 2014, and in
early 2015 Judge Presnell dismissed plaintiffs' First Amended
Complaint, finding that the plaintiffs had failed to plead an
antitrust conspiracy with the degree of specificity required under
Bell Atlantic v. Twombly, 550 U.S. 544 (2007).
In February, plaintiffs filed their Second Amended Complaint,
seeking to cure the deficiencies in the complaint identified in
Judge Presnell's prior rulings. In March, the defendants filed
several new motions to dismiss the action. One group of defendants
(including State Farm, Allstate, Progressive and 21st Century)
maintained that the plaintiffs' allegations still
failed to include sufficient factual support to plead an actionable
antitrust conspiracy, which they described as the "crucial
question" in the case. Claiming that the plaintiffs'
allegations demonstrated nothing more that "parallel
conduct" towards the plaintiffs, not agreement, these
defendants renewed their request to have the action dismissed as to
them. Another group of defendants (which includes Hartford,
Nationwide and Zurich American) went a step further, arguing that
the plaintiffs had failed to allege any material facts
specifically about them, despite Judge Presnell's express
instruction in his prior dismissal order in January (without
prejudice, on that occasion) that plaintiffs provide detailed
allegations about each defendant's involvement in the alleged
conspiracy. Finally, one defendant (Old Republic) filed a separate
motion not only seeking dismissal, but sanctions as well, based on
the claim that the plaintiffs had been put on notice by the Court
that particularized allegations as to each defendant's alleged
conduct was required, and that plaintiffs' failure to include
any additional factual support for their claims against Old
Republic was sanctionable conduct.
In late March, the plaintiffs filed an "omnibus" response
to all of the defendants' motions, arguing that dismissal of
the case at this juncture was not warranted. Asserting that
"the Second Amended Complaint complies in every respect with
the Court's [January] Order," the plaintiffs urged the
Court to permit them to proceed into discovery. Specifically, the
plaintiffs maintained that the parallel conduct alleged in the
Second Amended Complaint constitutes "circumstantial evidence
of conspiracy" and that the Supreme Court has never expressly
held how many "plus factors" supporting a claim of
conspiracy are required to satisfy a plaintiff's pleading
obligations. Plaintiffs contended, therefore, that they are not
required to "set out specific facts establishing the time,
place or persons involved in the conspiracy" nor are they
required to allege an "express agreement." Instead, they
maintained, their allegations of parallel conduct, coupled with
their allegations about the defendants' collective market
share, motive to conspire and opportunity to do so are more than
sufficient to meet their pleading obligations.
In early April, the auto insurers filed reply briefs responding to
the plaintiffs' contentions. Perhaps most significantly, those
defendants that had argued that the Second Amended Complaint still
failed to contain any significant allegations about their specific
conduct noted that the plaintiffs' response had failed to
refute that assertion in any meaningful way ("Rather than
simply admit that they failed to allege anything against the moving
defendants under the Sherman Act . . . plaintiffs point to
allegations against the other defendants . . . ." emphasis
in original).
The entire set of motions are now before Judge Presnell for
consideration, with the defendants urging the Court to take a
"three strikes, you're out" approach to the
plaintiffs' case. Whether Judge Presnell will adopt
defendants' baseball analogy and dismiss the case, with
prejudice, as to all or some of the defendants remains to be seen.
What is certain is that this matter will continue to be a
significant focus of attention for the entire auto insurance
industry over the coming months. Stay tuned.
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