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Three Wisconsin Body Shops Sue State Farm Over Labor Rate Cuts

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Sept. 7, 2017—Three shops in Wisconsin are suing State Farm, which cut the labor rates for Select Service shops in 2015.

FenderBender reported on the issues that spawned the lawsuit back in February 2016. On Nov. 5, 2015, Christy Hayes found out her and her husband’s shop was suddenly considered to be part of the Chicago market (the shop is roughly 70 miles west of the city). It was a change brought on by the insurance giant’s effort in “refining certain market boundaries utilized to determine prevailing competitive prices (PCPs),” according to a copy of the email notification FenderBender obtained through a shop source.

And that PCP? For body work and refinishing, it was now $50—a $6 cut. Paint and material pricing was now $30. Each of those new rates marked decreases of more than 10 percent for Hayes’ shop, which generates roughly 30–35 percent of its $2 million in overall sales through the Select Service program.

Three other shops affected by that change—Pulera Collision, Armando’s Collision Center and Jay-Bee Collision Repair Center—are now suing State Farm. The original multi-part complaint alleged State Farm had engaged in “wrongful conduct” that harmed the three businesses, reported Kenosha News.

“There were two main counts,” said David Novoselsky, the attorney representing the body shops. “One was breach of contract, the other was tortious interference. The breach of contract was straight forward. The other was (about) interference with the business. Our position is that (State Farm) was steering business away from (the three collision repair centers). Those were the two key counts.”

 

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