Allstate files appeal to U.S. Supreme Court

The appeal comes after the U.S. Court of Appeals, 5th Circuit, New Orleans, affirmed the District Court ruling in the case of Allstate vs. the state of Texas and the Automotive Service Association, on Aug. 1, 2007. That ruling prevented Allstate from expanding its Sterling Autobody Centers business any further in Texas. It did allow Allstate to communicate and market the benefits of its existing insurer-owned repair facilities to customers.

Allstate's appeal asks the U.S. Supreme Court to reverse the U.S. Court of Appeals decision that prohibits it from expanding its Sterling Autobody Centers business. It said that House Bill (H.B.) 1131 was drafted by the state to protect a predominantly local industry from out-of-state competition.

ASA's response was that this case is about the regulation of the business of insurance. "This is not a case about "Anti-Wal-Mart Legislation," the reply said. "The State of Texas enacted H.B. 1131 based on a concern that vertical integration by insurance companies into the auto collision repair market would result in a conflict of interest and anti-competitive conduct that would harm consumers and competition as a whole."

It also cited the district court's finding that Allstate placed its own financial interests in Sterling above those of its policyholders who often turned to Allstate for guidance and recommendations about where to take their vehicles for repair following an accident.

Bob Redding, ASA's Washington D.C. representative who handles all federal and state legislation, declined to make any further comment on ASA's reply. However, he said that this case is of interest in several other states facing the same issue.

"California and Michigan had legislation on this," he says. "Those states and others want to wait to see how this plays out before they pursue any legislation."

In Allstate's U.S. Supreme Court reply brief it contends that the Fifth Circuit Court of Appeal's departed from the Supreme Court's settled Commerce Clause jurisprudence, "establishing a dangerous precedent giving states enhanced power to pass protectionist legislation."

Redding said he did not know when the Supreme Court would decide whether or not to hear Allstate's appeal.

To view Allstate's appeal, ASA's response or Allstate's reply brief, visit www.TakingTheHill.com, ASA's legislative Web site, click the "Press Center" tab and then "References and Bills."