945 F.3d 1150
11th Cir.2019Background
- Plaintiffs Crawford’s Auto Center, Inc. and K & M Collision, LLC are non‑DRP auto body shops; defendants are multiple insurer groups that operate direct repair programs (DRPs) and use estimating software to set "prevailing rates."
- Plaintiffs allege insurers and unjoined "Information Providers" manipulated estimating‑software data (via DRP shop inputs and "scrubbing") to create artificial prevailing rates, misrepresenting rates and coercing non‑DRP shops to accept suppressed payments.
- Causes asserted: RICO (18 U.S.C. § 1962(c)) based on wire fraud and Hobbs Act extortion predicate acts; state common‑law fraud and unjust enrichment (Pennsylvania, North Carolina).
- Procedural posture: second amended complaint dismissed with prejudice by district court for failure to state claims and for failure to plead fraud with particularity; district court excluded Exhibits E1–E7; plaintiffs appealed.
- On appeal the Eleventh Circuit affirmed: plaintiffs failed to plead predicate acts (fraud/extortion), failed to plead state‑law fraud with Rule 9(b) particularity or reliance, unjust enrichment barred by controlling Quality Auto precedent, exclusion of exhibits was not erroneous, and amendment would be futile.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs alleged predicate acts of wire fraud sufficient for RICO | Plaintiffs: insurers made actionable misrepresentations/omissions via estimates and data that misled shops into accepting suppressed rates | Defendants: plaintiffs knew estimates and payment terms before repairs; allegations are vague and omit duty to disclose | Held: Dismissed — fraud not pleaded with Rule 9(b) particularity; no duty to disclose shown and plaintiffs were not misled. |
| Whether plaintiffs alleged Hobbs Act extortion as RICO predicate | Plaintiffs: insurers coerced shops (threat to steer customers to DRP shops) inducing acceptance of suppressed compensation | Defendants: conduct is hard bargaining/legitimate market behavior and insurers did not obtain plaintiffs' property | Held: Dismissed — no wrongful obtaining of property and threatened economic harm was not extortion under Hobbs Act. |
| Whether state‑law common‑law fraud pleadings satisfy Rule 9(b) and reliance element (PA & NC) | Plaintiffs: same facts supporting RICO fraud also support common‑law fraud; allegations are material | Defendants: plaintiffs failed to plead the who/what/when/where/how; reliance not adequately alleged | Held: Dismissed — fraud claims fail for lack of particularity and failure to plead justifiable reliance. |
| Whether unjust enrichment is available | Plaintiffs: insurers were unjustly enriched by retaining benefits of underpayment | Defendants: shops knew payment limits before performing repairs; no inequitable retention | Held: Dismissed — unjust enrichment defeated by Quality Auto rationale: knowing acceptance of repair under stated estimate makes payment non‑unjust. |
| Whether Magistrate properly excluded Exhibits E1–E7 at 12(b)(6) stage | Plaintiffs: exhibits demonstrate specific misrepresentations and should be considered | Defendants: exhibits were not central to the pleading and authenticity was disputed | Held: Affirmed — exclusion permissible; exhibits not central to claims and did not cure pleading defects. |
| Whether dismissal with prejudice and denial of leave to amend was proper | Plaintiffs: requested leave to amend and could add specifics to cure defects | Defendants: plaintiffs neither filed a proper proposed amendment nor could cure legal deficiencies | Held: Affirmed — plaintiffs failed to properly move with proposed amendment; further amendment would be futile. |
Key Cases Cited
- Quality Auto Painting Ctr. of Roselle, Inc. v. State Farm Indem. Co., 917 F.3d 1249 (11th Cir. 2019) (en banc) (repair‑shop unjust enrichment and antitrust claims failed where shops knew insurer payment limits before performing repairs)
- Sekhar v. United States, 570 U.S. 729 (2013) (extortion requires acquisition of property; mere deprivation without defendant obtaining property is insufficient)
- Levitt v. Yelp! Inc., 765 F.3d 1123 (9th Cir. 2014) (economic threats that leverage a lawful claim to property typically constitute hard bargaining, not wrongful extortion)
- Ziemba v. Cascade Int’l, Inc., 256 F.3d 1194 (11th Cir. 2001) (Rule 9(b) standards: specify statements/omissions, who made them, when, how they misled, and what defendants obtained)
- Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283 (11th Cir. 2010) (RICO pattern requires at least two predicate racketeering acts)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard governing Fed. R. Civ. P. 8(a))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (complaint must contain factual content permitting reasonable inference of liability)
- Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364 (11th Cir. 1997) (Rule 9(b) applies to RICO mail/wire fraud allegations)
- Burger King Corp. v. Weaver, 169 F.3d 1310 (11th Cir. 1999) (leave to amend may be denied as futile when amended complaint would still be subject to dismissal)