Louisiana Becomes 15th State To Join Auto Body Antitrust MDL

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Louisiana has joined into multidistrict litigation with 14 other states across the country against a number of auto insurers that allegedly suppressed reimbursement rates auto body shops receive for collision repairs.

Wednesday, December 31, 2014 - The latest state to be added to the Auto Body Antitrust Litigation is Louisiana, which joins 14 others in a lawsuit against auto insurers that allegedly conspired in a price-fixing scheme that suppressed reimbursement rates due to repair shops for collision repairs. The first case in the multidistrict litigation was filed in February of 2014 in the Middle District of Florida Federal Court, and since then all subsequently-filed cases have been added. In addition to Florida and Louisiana, the other states involved in the MDL are Alabama, California, Illinois, Indiana, Michigan, Mississippi, Missouri, New Jersey, Oregon, Tennessee, Utah, Virginia and Washington. Hundreds of auto body shops throughout these states are involved in the lawsuit.

The December 12th transfer of the Louisiana case however differs from the ones already filed in that it was filed originally in the state court, then transferred to its current federal court standing. The Lousiana courts objected to this maneuver, but the Judicial Panel on Multidistrict Litigation ruled that matters of jurisdiction do not restrict the transferring of a case to the federal level. The state argued that the case was an enforcement action, making it unique among the lawsuits already transferred which were classified as private party actions. The JPML ruled that the state‘s argument was "unconvincing" and posited that the plaintiffs could keep the case in federal court by presenting their argument to a transferee judge.

The MDL looks into the claims that more than 35 auto insurers, including Allstate, Geico, Nationwide and State Farm, conspired to suppress reimbursement rates for collision repairs meant to be paid to repair shops. The plaintiffs claim that the insurers took advantage of business agreements they had with the shops to exert unwanted influence over their businesses operations, which included artificially lowering the costs for automotive repairs. The plaintiffs claim that lowering these costs translates to the auto body shops not being able to properly repair the cars they are working on, but at the same time the presence of the payments frees the insurers of any liability if the underfunded work does not adequately repair the vehicles.

If repairs for the vehicles are reduced, the insurers would be able to proportionately lower the payments they had to make on the car owner‘s behalf while the repair shops incurred the loss in revenue. The plaintiffs claim that all the automotive insurers acted unilaterally in imposing these regulations, violating antitrust laws.

The plaintiffs were able to argue that their cases were similar enough for the Judicial Panel on Multidistrict Litigation to consolidate the cases into an MDL, however the insurers won a battle over where the case would be heard. All of the auto boy shops are being represented by the Mississippi-based Eaves Law Firm, thus the plaintiffs wished for the cases to be transferred to the federal court in the Southern District of Mississippi. However, the JPML ruled that the MDL would be heard in the Middle District of Florida where there was a judge was already familiar with the automotive antitrust issues in question.