Earlier this year, a New York auto glass repair dealer brought an antitrust action against a collection of auto insurers and third-party glass claims administrators, contending that the insurers’ refusal to compensate him for auto glass repairs at his standard rates, which exceed those charged by the repair shops in the insurers’ glass networks, violates the antitrust laws. Harner v. Allstate Insurance Co., case no. 11cv-02933-CS (S.D.N.Y.). After the defendants announced their intention to file a motion to dismiss the complaint, outlining the grounds for the motion in a position paper to the court (as required under the court’s local rules), the plaintiff chose to file an amended complaint rather than having the court rule on the motion.
In October, plaintiff filed his amended complaint, but, despite modifying some of his original allegations, the defendants maintain that plaintiff’s antitrust allegations still fail as a matter of law. Accordingly, on December 12 the defendants filed motions to dismiss the amended complaint, asserting that the plaintiff’s antitrust claim fails sufficiently to allege either (1) antitrust injury or (2) the existence of an antitrust conspiracy among the defendants. Specifically, with respect to antitrust injury, the non-insurer defendants (Pittsburgh Glass Works, LYNX Services and Safelite Group), maintain that plaintiff’s antitrust claim is fundamentally, and fatally, flawed because “plaintiff’s real complaint is that there is too much – not too little – competition, which may erode his profits” and that “because the basic injury he complains of – lower prices – is the antithesis of antitrust injury,” his claim fails as a matter of law. Echoing this sentiment, the insurers contend that, “Because plaintiff’s losses result from beneficial competition from other glass repair shops, they are the opposite of antitrust injury and, thus, cannot be salvaged by further repleading.” Defendants further note that several courts have previously held that an insurer’s establishment of “customary rates” for the purchase of third party services on behalf of insureds is typically not actionable because the establishment of such rates is usually beneficial to competition. See, e.g., Quality Auto Body, Inc. v. Allstate Insurance Co., 660 F.2d 1195 (7th Cir. 1981) (affirming dismissal of claim challenging “prevailing rates” on antitrust injury grounds).
Defendants also contend that plaintiff’s antitrust claim fails because his conspiracy allegations fail adequately to plead an illegal agreement. The insurer defendants note that the Supreme Court’s Twombly decision requires a plaintiff to allege how, when and why each defendant joined the alleged conspiracy, and the role played by each defendant in it, which they maintain are absent from plaintiff’s amended complaint. Moreover, they contend that each insurer has a “strong, independent economic incentive to obtain automobile glass repair and replacement services from reputable providers at competitive rates, as all insurer defendants share their insured customers’ interest in buying quality services at a favorable price,” and thus no inference of joint conduct is appropriate based solely upon the fact that several insurers have created similar glass repair networks. Finally, the third party glass administrator defendants argue that, as agents for the insurers, they are not capable of conspiring with them. See, e.g., F.B. Leopold Co. v. Roberts Filter Manufacturing Co., 882 F. Supp. 433 (W.D. Pa. 1995) (corporation legally incapable of conspiring with its independent sales representatives under Section 1 of the Sherman Act).
Plaintiff’s response to the defendants’ motions to dismiss the amended complaint is due in February. Accordingly, a ruling by the court will likely arrive sometime this Spring, bringing some additional clarity to this often-litigated (and somewhat muddled) legal issue. Stay tuned.