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Antitrust, Steering Claims Against State Farm Move on After Federal Court Appeal

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Sept. 8, 2017—Several body shops that filed five different complaints against State Farm for steering and violating antitrust laws have had their cases resurrected after a federal appeals court reversed a lower court's dismissal of the case.

In their complaints, the body shops argue that the insurance companies engaged in two lines of tactics in pursuit of a single goal: to depress the shops’ rates for automobile repair. The first line of tactics was designed to set a “market rate,” which reflected not the forces of the market but an artificial rate that would benefit only the insurance companies.

The second line of tactics was designed to pressure the body shops into accepting the market rate by steering insureds away from the non-compliant shops that charged more than the rate. The body shops argue that the insurance companies’ concurrent lines of tactics violated both federal antitrust and state tort laws.

The body shops argue two types of antitrust violations. First, the body shops argue that the insurance companies engaged in horizontal price fixing, an illegal agreement among competitors to fix prices. Instead of pleading facts that directly support the existence of an agreement, the body shops plead facts supporting circumstances—such as parallel conduct, adoption of a uniform price despite variables that would ordinarily result in divergent prices, and uniform practices— from which the shops infer the existence of an agreement.

Second, the body shops argue that the insurance companies boycotted the non-compliant shops that charged more than the fixed prices by enlisting unwitting insureds into their scheme. Specifically, the body shops argue that the insurance companies steered insureds away from the non-compliant shops with misleading or false statements about the shops’ business integrity and quality.

FenderBender will continue to track the case as it moves forward.

 

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