Auto Body MDL Defendants Receive Favorable Decision

Recall Lawyer News

The presiding judge's acceptance of a report advising dismissal of plaintiffs claims written by a magistrate judge is a win for insurance companies fighting claims of antitrust behavior.

Friday, September 4, 2015 - Defendants in the auto body antitrust multidistrict litigation scored a victory in their MDL after U.S. District Judge Gregory A. Presnell sided with a magistrate judge‘s opinion that the plaintiffs claims related to antitrust abuses by auto insurers auto be dismissed. The lawsuits, which were initially consolidated less than one year ago, claim that a number of major auto insurers intentionally lowered the reimbursement rates they would pay auto bodies after fixing their client‘s vehicles.

The opinion from Magistrate Judge Thomas Smith claimed that the plaintiffs lacked sufficient facts in relation to the claims made against the auto insurers and did not have enough evidence to proceed in pursuing their claims in the MDL. The district judge presiding over the case had requested the help of the magistrate judge after a large volume of lawsuits and legal questions had come up in the multidistrict litigation.

The plaintiffs reaction to the district court judge‘s upholding of the report made by the magistrate judge came in the form of a 45-page brief that objected to the opinion that the cases should be dismissed, it is likely that they will drop the antitrust claims against the auto insurers in the near future.

The multidistrict litigation related to the auto body antitrust litigation by insurance companies began with a single lawsuits filed in the Middle District of Florida federal court, where the MDL proceedings are taking place. An auto body shop claimed claimed that the insurance company 21st Century Centennial had conspired with other car insurance companies to lower the rates they paid to reimburse shops for fixing damaged vehicles. If an auto body shop did not accept the rates offered to them by the insurers, the insurers would suggest that their clients not use those particular shops to get their vehicles fixed.

Auto body shops claimed that they were not receiving the proper amount of money to make sound repairs for the insured cars coming into their shop, and were having to take the choice to either put a car that wasn‘t safe on the roads or turn away business. The antitrust claims state that the plaintiffs believe that the insurance companies were working in tandem in order to save money on reimbursements rates and force those extra costs onto the auto body shops where the work was taking place.

The U.S. district judge agreed with the magistrate judge‘s report that the state antitrust claims that came from Michigan, New Jersey, Virginia and Washington would not prove that an agreement between the companies took place to intentionally reduce reimbursement rates and punish auto body shops who did not comply with those measures. The state from which lawsuits had been filed in the MDL thus far included a number of other states in addition to the ones just mentioned including Arizona, Alabama, California, Illinois and Oregon to name a few. The widespread nature of the claims initially made the lawsuits eligible for multidistrict litigation, but now that antitrust measures may be off the table, plaintiffs are expected to take their litigation back to their state courts and pursue separate legal recourse that does not require claims of antitrust violations.