Weil Obtains En Banc Appellate Victory for Farmers Insurance in Antitrust Multidistrict Litigation

The U.S. Court of Appeals for the Eleventh Circuit affirmed the dismissal with prejudice of federal antitrust claims in an en banc review of a consolidated appeal in the multidistrict litigation (MDL) entitled In re Auto Body Shop Antitrust Litigation. The court’s 8-1 ruling in favor of the defendants, including Weil client Farmers Insurance and various affiliates, rejected a prior opinion by a divided panel of the Eleventh Circuit (with one judge sitting by designation from an out-of-circuit district court) that overturned key victories on motions to dismiss in a number of component cases.

The MDL is centralized in Florida federal court and comprises dozens of cases across the country brought by auto repair shops alleging that Farmers and a number of other insurers artificially suppress reimbursement rates for auto body repairs, in violation of antitrust, RICO, and other federal and state statutes. In September 2015, Weil won the dismissal with prejudice of all claims in the lead case of the MDL, and over the course of the following year, Weil secured the dismissal of 13 related cases in the MDL. Plaintiffs in five of the dismissed cases appealed these decisions to the Eleventh Circuit, which in September 2017 issued a 2-1 panel decision, over a vigorous dissent, reversing the trial court rulings and remanding for further proceedings. The defendants then petitioned the Eleventh Circuit for a full rehearing en banc.

The majority of the Eleventh Circuit concluded that the auto body repair shops failed to allege plausible facts of a price-fixing conspiracy or a group boycott orchestrated by the insurers. As for the plaintiffs’ alleged price-fixing conspiracy, the court of appeals concluded that the challenged conduct – of insurers telling body shops they will pay no more than State Farm and using aftermarket replacement parts instead of new parts – could not plausibly infer a conspiracy because the alleged commercial conduct is a “rational and legitimate business strategy” of “follow-the-leader practices.” As for the group boycott claim, the court of appeals remarked that those allegations were “even weaker” than the allegations of price-fixing because the supposed “boycotting methods” would “logically be employed by any insurer to dissuade its insureds from using a disfavored shop.” The Eleventh Circuit also affirmed the dismissal of the auto body repair shops’ various unjust enrichment and quantum meruit state law claims, and vacated the dismissal of, and remanded for further proceedings, the state law tortious interference claims.

The Weil en banc team was led by David L. Yohai, John P. Mastando II and Gregory Silbert, and included associate Tracy Gelles. Assisting on the case at the district court level and in related appeals were partner Eric S. Hochstadt and associate Luna Barrington.