Price Fixing Claim Against Insurers Survives Dismissal

In Quality Auto Painting Center of Roselle, Inc. v. State Farm Indemnity Co., Case No. 15-14160 (decided September 7, 2017), the United States Court of Appeals for the Eleventh Circuit reversed the dismissal of a price fixing claim against auto insurers brought by repair shops.

The appeal arose out of a collection of cases consolidated in a multi-district proceeding. The plaintiffs were automobile body shops. The defendants were writers of automobile insurance. The auto body shops challenged the conduct of the auto insurers in reimbursing body shops for insured repairs. Among other challenges, the auto body shops contended that the largest of the insurers had arbitrarily set a labor reimbursement rate that did not reflect market realities and that other insurers had agreed to use that same reimbursement rate. The plaintiffs also alleged that the insurance companies made misleading statements to their insureds in order to force the body shops to comply with the insurers’ allegedly unreasonable practices.

Among other claims, the plaintiffs contended that the insurance companies’ practices amounted to a horizontal price-fixing agreement in violation of Section 1 of the Sherman Antitrust Act.

The district court had dismissed the antitrust claims and other claims, and the Court of Appeals reversed the dismissal of the alleged price fixing claim. The Court concluded that the plaintiffs had plead sufficient facts to establish that the parallel conduct of the insurers in their reimbursement practices, when considered with two “plus factors,” were enough to establish “a plausible inference of an illegal agreement.” However, a dissenting judge concluded that the alleged “plus factors” merely evidenced parallel conduct, not an agreement.

The Opinion is available here.

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