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Weil Wins Dismissal with Prejudice of RICO Class Action for Farmers Insurance in Auto Body Shop MDL

On May 8, 2017, Weil obtained the dismissal with prejudice of a putative RICO class action on behalf of Farmers Insurance and several of its affiliates in the U.S. District Court for the Middle District of Florida. The case is part of a larger, insurance industry-wide multi-district litigation involving reimbursement of auto body shop repair costs, in which Weil has already secured the dismissal of more than a dozen related cases for Farmers.

The plaintiffs in this component case are auto repair shops located in North Carolina and Pennsylvania that asserted federal extortion- and fraud-based RICO claims against a group of more than 70 auto insurance companies, including Farmers and its affiliates, as well as fraud and unjust enrichment claims under state law. The plaintiffs alleged in their second amended complaint that the defendant insurers, including our client, conspired to create a “prevailing rate” for auto repairs, which led the repair shops to accept suppressed compensation for the repair services they provided to the defendants’ insured vehicle owners.

In its ruling granting defendants’ motion to dismiss with prejudice, the Court noted that the plaintiffs failed to meet the required elements for a RICO claim, stating that the specific workings of the alleged RICO enterprise were never defined by the plaintiffs, nor were the roles that the defendants allegedly played in the furtherance of that enterprise. Additionally, the Court held that the plaintiffs failed to allege any material gain or misrepresentations made by our client that would constitute RICO fraud. The Court dismissed the plaintiffs’ state law claims, as well. This is the second time the Court has dismissed the plaintiffs’ complaint in this case, the first coming in November 2015.

The Weil team representing Farmers Insurance and its affiliates includes partners David L. Yohai, John P. Mastando III, and Eric Hochstadt, and associates Luna Barrington and Tracy Ederer in the New York office.