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Weil Wins Dismissal with Prejudice for Farmers Insurance in Auto Body Antitrust MDL

On August 13, 2021, Weil won the dismissal with prejudice of Lee Pappas Body Shop, Inc. et al. v. State Farm Mutual Automobile Insurance Company et al. on behalf of Farmers Insurance Company, Inc. This dismissal is the latest in a string of more than two dozen won by Weil on behalf of Farmers and its various affiliates in the multidistrict litigation, In re Auto Body Shop Antitrust Litigation

Lee Pappas was first filed in 2014, along with more than two dozen other cases, against Farmers and most other major insurers, all of which were consolidated for pretrial proceedings in an MDL in the U.S. District Court for the Middle District of Florida. Lee Pappas and the other cases alleged that the insurer defendants engaged in anticompetitive and other unlawful conduct to artificially control and reduce payment to plaintiff auto body shops for reimbursement of auto repair, labor and material costs. The plaintiffs sought treble damages, as well as various forms of injunctive relief. 

After successfully arguing before the Judicial Panel on Multidistrict Litigation to consolidate the cases in the Middle District of Florida, Weil won the dismissal with prejudice of all claims in the lead case in the MDL, and, over the course of that year, 13 additional related cases. The plaintiffs in five of the earliest-dismissed cases, including Lee Pappas, appealed to the Eleventh Circuit, which issued a 2-1 panel decision, reversing and remanding to the trial court. Sitting en banc (after a rare grant of a rehearing petition prepared by Weil), in March 2019, the Eleventh Circuit vacated the earlier panel decision, and affirmed the district court’s dismissal with prejudice for all federal claims and all but one state law claim. The cases were then remanded and stayed, as another round of dismissed cases from the MDL went before the Eleventh Circuit, which again ruled in the defendants’ favor.

Subsequently, Lee Pappas was remanded to the U.S. District Court for the Eastern District of Virginia to determine whether the plaintiffs had adequately pled a claim for tortious interference under Virginia law. Ruling on our motion to dismiss, the court held that the plaintiffs’ complaint consisted of “entirely conclusory statements merely reciting the elements of a tortious interference claim.” The court agreed that the plaintiffs had failed to identify any “specific prospective customer or a reasonably certain expectancy,” nor did the plaintiffs allege “that Defendants acted improperly [or explain] how they were actually damaged.” Moreover, the plaintiffs failed to allege they were in a competitive relationship with the defendants (an “unstated element of tortious interference under Virginia law”). The court thus granted our motion to dismiss with prejudice.

The Weil team is led by Complex Commercial Litigation partners David Yohai and John Mastando, and counsel Tracy Gelles. Greg Silbert, Co-Head of the Complex Commercial Litigation and Appellate practices, and Litigation partners Eric Hochstadt and Luna Barrington assisted, including with certain appeals, at earlier phases of the case.

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