In early March, the auto insurer defendants in the In re Auto Body Shop Antitrust Litigation
renewed their motions seeking the dismissal of plaintiffs’ action, this time
directed at plaintiffs’ Second Amended Complaint. The insurer defendants urged
the Court to dismiss the action with prejudice, maintaining that, despite three
attempts, the plaintiff auto body shops have still failed to include sufficient
facts to make their claim of conspiracy plausible.
The action, commenced well over a year ago as A&E Auto Body v. 21st Century Centennial
Insurance Co. and subsequently transformed into a multidistrict litigation
proceeding (In re Auto Body Shop
Antitrust Litigation, MDL 2557) after similar cases were filed in a
multitude of states, centers upon a claim that many of the leading auto
insurers in the country conspired to reduce rates for the repair of damaged
vehicles and to steer insureds away from auto repair shops that refused to
accept lower reimbursement rates for their services. The cases were
consolidated before Judge Gregory Presnell (M.D. Fla.) in late 2014, and in
early 2015 Judge Presnell dismissed plaintiffs’ First Amended Complaint,
finding that the plaintiffs had failed to plead an antitrust conspiracy with
the degree of specificity required under Bell
Atlantic v. Twombly, 550 U.S. 544 (2007).
In February, plaintiffs filed their Second Amended
Complaint, seeking to cure the deficiencies in the complaint identified in
Judge Presnell’s prior rulings. In March, the defendants filed several new
motions to dismiss the action. One group of defendants (including State Farm,
Allstate, Progressive and 21st Century) maintained that the plaintiffs’
allegations still failed to include
sufficient factual support to plead an actionable antitrust conspiracy, which they
described as the “crucial question” in the case. Claiming that the plaintiffs’
allegations demonstrated nothing more than “parallel conduct” towards the
plaintiffs, not agreement, these defendants renewed their request to have the
action dismissed as to them. Another group of defendants (which includes
Hartford, Nationwide and Zurich American) went a step further, arguing that the
plaintiffs had failed to allege any
material facts specifically about them, despite Judge Presnell’s express
instruction in his prior dismissal order in January (without prejudice, on that
occasion) that plaintiffs provide detailed allegations about each defendant’s
involvement in the alleged conspiracy. Finally, one defendant (Old Republic)
filed a separate motion not only seeking dismissal, but sanctions as well,
based on the claim that the plaintiffs had been put on notice by the Court that
particularized allegations as to each defendant’s alleged conduct was required,
and that plaintiffs’ failure to include any additional factual support for
their claims against Old Republic was sanctionable conduct.
In late March, the plaintiffs filed an “omnibus” response to
all of the defendants’ motions, arguing that dismissal of the case at this
juncture was not warranted. Asserting that “the Second Amended Complaint
complies in every respect with the Court’s [January] Order,” the plaintiffs
urged the Court to permit them to proceed into discovery. Specifically, the
plaintiffs maintained that the parallel conduct alleged in the Second Amended
Complaint constitutes “circumstantial evidence of conspiracy” and that the
Supreme Court has never expressly held how many “plus factors” supporting a
claim of conspiracy are required to satisfy a plaintiff’s pleading obligations.
Plaintiffs contended, therefore, that they are not required to “set out
specific facts establishing the time, place or persons involved in the conspiracy”
nor are they required to allege an “express agreement.” Instead, they
maintained, their allegations of parallel conduct, coupled with their
allegations about the defendants’ collective market share, motive to conspire
and opportunity to do so are more than sufficient to meet their pleading
obligations.
In early April, the auto insurers filed reply briefs
responding to the plaintiffs’ contentions. Perhaps most significantly, those
defendants that had argued that the Second Amended Complaint still failed to
contain any significant allegations about their specific conduct noted that the
plaintiffs’ response had failed to refute that assertion in any meaningful way
(“Rather than simply admit that they failed to allege anything against the
moving defendants under the Sherman Act…plaintiffs point to allegations against
the other defendants….” emphasis in original).
The entire set of motions are now before Judge Presnell for
consideration, with the defendants urging the Court to take a “three strikes,
you’re out” approach to the plaintiffs’ case. Whether Judge Presnell will adopt
defendants’ baseball analogy and dismiss the case, with prejudice, as to all or
some of the defendants remains to be seen. What is certain is that this matter
will continue to be a significant focus of attention for the entire auto
insurance industry over the coming months. Stay tuned.