Saturday, 17 January 2015 00:00

Final Appeal in CT Hartford Case: the Hartford Seeks to Overthrow $35M Verdict

On Tuesday, January 13, 2015, the Connecticut Supreme Court heard the final appeal in the class-action lawsuit brought against The Hartford Fire Insurance Company by more than 1000 collision repair facilities in CT over a decade ago. Previously, a jury found that the insurer violated Connecticut Unfair Trade Practices Act (CUTPA) by attempting to fix collision repair labor rates in the state. Now, The Hartford has appealed the ruling in order to ask the CT Supreme Court to overrule the lower court’s verdict that would award $34.7 million to the plaintiffs.

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Although the CT Supreme Court will not issue their decision for up to four months, Tony Ferraiolo, President of the Auto Body Association of Connecticut (ABAC), was present at the appeal and shares his thoughts: “Both sides presented their arguments with our side focusing on the merits of the case and the fact that a CT jury found The Hartford guilty of unfair trade practices. By contrast, The Hartford tried to argue that it should get a free pass by changing the law of CUTPA that has been applied in CT for over forty years, even though the evidence showed at trial that The Hartford intentionally ignored the law and then tried to cover it up. I believe that the merits of our case are strong and we had the better arguments, and I remain hopeful that the Supreme Court will agree.”

This long process with The Hartford began in 2003 when over 1000 independent auto body shops in CT filed a class-action lawsuit against the insurer, claiming The Hartford had lowered pricing in their state by suppressing the labor rate through their appraisers and by unfairly steering consumers to preferred shops on their direct repair program. When the trial was brought before a jury in November 2009, a $14.7 million verdict was delivered against The Hartford, though legal counsel for the insurer says the jury rejected the claim of unfair steering practices.

During the 2009 trial, the judge explained the “Cigarette Rule” which was developed during cases that challenged tobacco products’ television advertisements. The Cigarette Rule requires certain criteria be met before a jury can determine that a defendant engaged in unfair trade practices, and the jury determined that The Hartford had violated the rule by offending public policy as a statute within the Regulations of CT State Agencies requires that each insurance appraiser deliver fair, impartial appraisals.
Although The Hartford filed a post-trial motion arguing that jurors should have focused on whether the alleged CUTPA violation caused substantial injury to consumers, competitors or other businesspeople, and that the evidence was insufficient, even under the Cigarette Rule, to support a CUTPA violation, the trial court denied the post-trial motions and awarded a judgment in the amount of $14.7 million to the plaintiffs.

In June 2013, Stamford Superior Court Judge Alfred Jennings added an additional $20 million in punitive damages to the ruling, claiming that no specific statute must be violated for there to be a CUTPA violation if plaintiffs can prove a blend of various unfair acts.

Despite these rulings, The Hartford appealed the ruling, arguing that, as labor rates were negotiated with and agreed upon by the collision repair facilities that brought the lawsuit against the insurer, their actions were not illegal or in violation of CUTPA. The Hartford’s lawyers also regard the Cigarette Rule as overly broad and insufficient in providing a clear definition of “unfairness” to businesses trying to act in accordance with the law.

Now, a decade-long battle between The Hartford and over 1000 auto body shops is finally drawing to its conclusion. The final appeal has been heard, and everyone involved anxiously awaits a decision. Will The Hartford be forced to pay $34.7 million, or will the ruling be overturned to the chagrin of the state’s collision repair professionals (and possibly to the detriment of the state’s collision repair industry as a whole)? Stay tuned to Autobody News for the final decision!

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