Antitrust Law Daily Wrap Up, ANTITRUST—J.P.M.L.: Suits alleging conspiracy among auto insurers centralized for pretrial proceedings, (Aug 12, 2014)

By Jeffrey May, J.D.

Actions brought by collision repair shops around the country over an alleged conspiracy in the automobile insurance industry to suppress the reimbursement rates for automobile collision repairs will be consolidated in the federal district court in Orlando for pretrial proceedings. The Judicial Panel on Multidistrict Litigation (JPML) concluded that centralization, pursuant to 28 U.S.C. § 1407, of five actions pending in five districts was appropriate (In re: Auto Body Shop Antitrust Litigation, August 8, 2014, Rendell, M.).

All of the actions shared common factual questions relating to the allegation of an industry-wide conspiracy spearheaded by State Farm to suppress the reimbursement rates applicable to automobile collision repair shops, including complex issues concerning the role of “direct repair programs” in furtherance of the alleged scheme, according to the JPML. The suits named over 80 insurers as defendants. The overwhelming majority of the responding defendants supported the federal district court in Orlando as their first or second choice for centralization.

“Transfer under Section 1407 will offer the benefit of placing all related actions before a single judge who can structure pretrial proceedings to accommodate all parties’ legitimate discovery needs while ensuring that common witnesses are not subjected to duplicative discovery demands,” the JPML decided. It was noted that the presence of non-overlapping defendants could give rise to individualized discovery and that state-specific issues could be prominent. However, the JPML was not convinced that these considerations weighed strongly against centralization. Transfer under Section 1407 did not require a complete identity of common factual issues or parties as a prerequisite to transfer, and the presence of additional facts or differing legal theories was not significant because the actions arose from a common factual core, the JPML explained.

Pending RICO action. The JPML did not decide whether a putative nationwide class action pending in the Northern District of Illinois and alleging a similar course of conduct by the top insurance carriers in violation of federal anti-racketeering laws should be included in the MDL. The parties to the disputes were in disagreement about whether the RICO case also should be centralized. Because the RICO action was not included in the motion for centralization, many parties had not had an opportunity to present their arguments to the Panel. Thus, the JPML decided to consider arguments concerning transfer of the RICO case as an opposition to a conditional transfer order covering the action, if issued.

The case is MDL No. 2557.

Attorneys: Alan Brent Geohagan (A. Brent Geohagan, PA) for A & E Auto Body, Inc. Johanna W. Clark (Carlton Fields Jorden Burt, PA) for State Farm Mutual Automobile Ins. Co. Ellie F. Turnage (Dockins, Turnage & Banks, PLLC) and Halbert E. Dockins, Jr. (Law Offices of Halbert E. Dockins Jr.) for Capitol Body Shop, Inc. Allison Perry Fry (John Arthur Eaves, Attorneys at Law) for Indiana Autobody Association, Inc. Halbert Dockins (Dockins Turnage & Banks, PLLC) for Brewer Body Shop, LLC. Mark L. Shurtleff (Shurtleff Law Firm) for Alpine Straightening Systems.

Companies: A & E Auto Body, Inc.; State Farm Mutual Automobile Ins. Co.; Capitol Body Shop, Inc.; Indiana Autobody Association, Inc.; Brewer Body Shop, LLC; Alpine Straightening Systems

Cases: Antitrust RICO