Monday, 13 June 2016 21:09

MS Lawsuit Alleging “Steering” and “Price Fixing” by Insurers Ordered Closed by Judge

For updated information on this case, click here.

 

A Florida judge has closed the case brought forth by body shops in Mississippi against insurers for alleged “steering” and “price fixing.” On May 27, Judge Gregory Presnell dismissed the state claims in Capitol Body Shop et al, v. State Farm et al, with prejudice, meaning they cannot be refiled.

The lawsuit was the first of 24 filed as part of the multi-district lawsuit that involves more than 500 shops across the country. The cases were eventually consolidated for pretrial purposes.

According to industry reports, collision repairers across the United States are watching with anticipation to find out the national implications this recent ruling may have.

A similar judgment was made in 2015 when Judge Presnell dismissed all claims in Florida’s A&E Auto Body et al, v. 21st Century et al, with prejudice.

Both cases can be appealed to the Eleventh Circuit Court by Eaves Law Firm, the lead attorneys on the case. The Jackson, Mississippi law firm could not be reached for comment when Autobody News went to press.

The body shops have accused insurance companies of violating the Sherman Antitrust Act and state laws “…by conspiring to suppress the amounts they are obligated to pay for automobile repairs,” according to court documents.

The court dismissed the claims in the Mississippi case on February 27, 2015 and the plaintiffs filed a second amended complaint. They alleged violations of the Sherman Antitrust Act, state law claims for tortious interference with business relations, quantum meruit, and a violation of Mississippi Code.

In 2015, Magistrate Judge Thomas Smith was asked by Judge Presnell to prepare a Report and Recommendation on whether or not the lawsuits’ should be allowed to move forward.

Except for four tortious interference claims, Judge Smith recommended that the state law claims be dismissed with prejudice in the Mississippi lawsuit. However, on May 27, Judge Presnell dismissed all of the state claims in the case.

In regards to tortious interference, “…the plaintiffs contend that the defendants tortiously interfered with their prospective business relationships by ‘steering’ insureds who intended to have repairs performed by one of the plaintiffs of a competing shop,” court documents stated.

 

According to Mississippi law, there are four elements to prove this claim:
1) The acts were intentional and willful;
2) The acts were calculated to cause damage to the plaintiffs in their lawful business;
3) The acts were done with the unlawful purpose of causing damage and loss, without right or justifiable cause on the part of the defendant (which constitutes malice);
4) Actual damage and loss resulted.

 

According to court documents, Judge Smith determined that most were too vague and conclusory to state a claim. However, he did note in his Report and Recommendation four instances when the plaintiffs alleged that a defendant steered its insured away from a plaintiff’s shop and recommended that the claims not be dismissed. Judge Presnell disregarded this recommendation and dismissed the claim of tortious interference with prejudice.

“To state a claim for tortious interference, the plaintiffs must allege that the acts were done with malice—that is, with the unlawful purpose of causing damage and loss,” said Presnell in court documents. “There are no allegations that these plaintiffs had complained about the payment ceilings set by the defendants, so punishment could not have been the driving force behind the steering.”

The plantiffs based their quantum meruit claim “…on the defendants’ refusal to pay what the plaintiffs believed to be the true market price for the repairs they performed,” according to court documents.

In order to establish grounds for quantum meruit under Mississippi law, a prerequisite is a “claimant’s reasonable expectation of compensation.” In his Report and Recommendation, Judge Smith concluded that the plaintiffs knew the cost the defendant was willing to pay when performing a repair, so there couldn’t have been an expectation to be paid more.

In regards to the statutory claim, the plaintiffs argued that according to Mississippi Code, insurers are prohibited from having vehicles be repaired at certain shops and are required to pay for a proper and fair repair of the insured’s vehicle. Planitiffs alleged that the defendants violated these obligations.

“Judge Smith found that the statutory provision did not impose a duty upon insurers to pay the price of a ‘proper and fair repair’ and, in addition, it did not provide for a private right of action,” court documents stated.

The Sherman Antitrust Acts were resolved by a different order.

 

Autobody News will continue to report on developments with the multi-district lawsuit.

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