Attorney John Eaves Jr. officially filed a complaint on Jan. 7, 2014 against various insurance companies on behalf of 21 Mississippi collision repair facilities for a litany of alleged offenses.
The complaint was filed in the U.S. District Court for the Southern District of Mississippi, Northern Division-Jackson. Defendants named included: State Farm; Progressive; Allstate; Nationwide; GEICO; United Services Automobile Association; USAA; Safeco; Shelter Mutual Insurance Co.; Direct General Insurance Company of Mississippi; Mississippi Farm Bureau; and Shelter General Insurance Co.
"The entire collision repair industry is caught between a rock and a hard place," said Eaves. "On one hand, they’re trying to maintain the safety and quality of repairs for the customers in a time when the manufacturers are trying to develop more sophisticated, more fuel efficient and safer cars, but yet the insurance industry is trying to force them to cut corners on their repairs. So Mississippi repairers have felt like they have been backed into a corner, and now they have to start to reclaim some of these costs and send a message to the insurance industry."
Eaves said the complaint is currently being modified for use in seven other states. Meanwhile, 22 other states are preparing to join the fight. While his law firm is leading the effort, it’s also partnering with "talented" attorneys in each state who have experience in asbestos, tobacco and natural disaster litigation.
"We’re looking to go to all 50 states," Eaves said. "What we need is a few committed shops in each of the 50 states that are willing to take the industry back and join us."
The complaint states that “over the course of several years, the defendants have engaged in an ongoing, concerted and intentional course of action and conduct with State Farm acting as the spearhead to improperly and illegally control and depress automobile damage repair costs.”
It also states that the defendants “have engaged in an ongoing pattern and practice of coercion and implied threats to the pecuniary health of the individual plaintiff businesses in order to force compliance with unreasonable and onerous concessions.”
The complaint then goes on to detail other specific offenses, including: suppression of labor rates; suppression of repair and material costs; steering; and tortious interference. It also mentions the 1963 Consent Decree that has been on the books for 50 years and is well-known within the insurance industry, and that “the actions described in the present cause fall squarely within those prohibited by the Decree.”
It also accuses the defendants of violating the Sherman Act through price fixing.
Used/recycled parts are also mentioned in discussing the insurers going against the repairers’ expert opinions and therefore “compromising the safety of both the driver and passengers as well as other members of the traveling public.”
Another count in the complaint references “quantum meruit,” a concept that states that a party is not allowed to enrich itself at the expense of another.
“Plaintiffs have performed valuable services and expended material resources with the reasonable expectation of payment/compensation for those services and materials. This is their business,” the complaint reads. “Performing said services and expending material resources benefitted Defendants and Defendants’ insured/claimants for whom Defendants are required to provide payment for repairs.”
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