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Weil Secures Major Victory for Farmers Insurance in Lead Case in Auto Body Shop Antitrust MDL

On January 21, 2015, Weil obtained a victory for several affiliates of Farmers Insurance when a Florida federal court dismissed a complaint brought against Farmers and more than two dozen other insurance companies. The Court held that the plaintiffs – more than 20 Florida-based auto body repair shops – failed to adequately state a claim, and dismissed all five of plaintiffs’ state law claims and both of their claims alleging violations of the Sherman Act.

Plaintiffs alleged in their amended complaint that Farmers and other insurance companies engaged in anticompetitive behavior and other unlawful conduct in Florida to control and reduce what they pay Plaintiffs for automobile damage repair, labor, and material costs in violation of the federal antitrust laws and other state laws.  Plaintiffs asserted a number of state law claims, including quantum meruit, unjust enrichment, quasi-estoppel, tortious interference with a business relationship, and conversion, as well as violations of the price-fixing and boycott provisions of the Sherman Act.  Among other things, the plaintiffs claimed that defendants entered into “direct repair programs” with the auto body shops that exerted control over their operations and unfairly manipulated the prices that plaintiffs were permitted to charge for repairs.  They also claimed that the insurance companies violated other state laws by improperly compensating the body shops for work performed, steering business away from their businesses, and suppressing labor rates.

The Court’s order is a significant victory for Farmers and the other defendants. Though the Court dismissed all but one claim – for quasi-estoppel – without prejudice, it strongly suggested that plaintiffs would have difficulty remedying their remaining claims in an amended complaint.  Additionally, this decision dismissed claims based on allegations similar to those contained in approximately 20 other cases in a consolidated multi-district litigation pending in Florida, entitled In re Auto Body Shop Antitrust Litigation.

The Weil team representing Farmers’ affiliates 21st Century Centennial Insurance Company, 21st Century Indemnity Insurance Company, Foremost Insurance Company Grand Rapids, Michigan, Bristol West Insurance Company, and Security National Insurance Company includes partners David L. Yohai, John P. Mastando III, and Eric Hochstadt, and associates Luna Ngan, Robert Swenson, Tracy Ederer, and Ryan Goodland in the New York office, and associate Brian D’Amico in the Miami office.

Legalese