In response, the Texas Attorney General's office has filed a cross appeal on District Judge Ed Kinkeade's ruling that certain sections of the law violate Allstate's First Amendment rights, according to Jack Hoengarten, attorney for the Attorney General's office.
On April 7, 2006, Allstate and Sterling Autobody Centers filed its Notice of Appeal. "The portion of the ruling with which we strongly disagree, and which we are appealing, is the Judge's decision to continue to uphold provisions of Texas HB 1131, that we believe violate the commerce clause of the United States Constitution. These provisions allow the state of Texas to limit our right to conduct fair and competitive commerce in Texas," explained Allstate spokesman Michael Siemienas.
"Allstate supports customer choice when choosing a repair facility and we believe Sterling should be an option available to all consumers."
Hoengarten said he was not surprised that Allstate appealed, since the court's judgment and opinion was favorable to the state and intervenors. However, since the Allstate appeal will bring the case back before the court, the cross appeal seemed a natural step for the state.
"There is very little downside for us to raise the first amendment issue since Allstate has elected to proceed with an appeal. The state was ready to accept the decision," he continued.
Siemienas responded to the notice of cross appeal for Allstate, saying "Given that Allstate is appealing the commerce clause issue we are not surprised by this appeal. We believe the judges ruling with respect to the first amendment issues will be upheld on appeal and our constitutional right to free speech will be protected. This protection is important for consumers. It protects their ability to receive important information about products and services enabling them to make informed decisions."
Allstate's Sterling shops in Texas have been "grandfathered" so they can continue to operate the shops that currently exist. They are prohibited from acquiring any new Sterling facilities in Texas. "The main thrust of the statute is now in effect as far as state law is concerned except for those provisions regarding the First Amendment," said Hoengarten.
The Notice of Appeal is not the actual appeal itself, but must be filed to preserve the right to do so. It basically starts the clock running.
Former city councilman Alan Walne, a body shop owner himself,summed up the situation: "Allstate thinks the judge is half right in rejecting portions of HB 1131 relative to freedom of speech. The state of Texas thinks the judge is half right in upholding the ban on insurer-owned collision repair shops
"Judge Ed Kinkeade, in his ruling, did find that there was probably good reason for the state legislature to enact HB 1131. Now both sides must appear before the judges of the 5th Circuit to decide the outstanding issues."