Quality Auto Painting Center of Roselle, Inc. v. State Farm Indemnity Co.
870 F.3d 1262
| 11th Cir. | 2017Background
- Independent auto body shops in KY, MO, NJ, and VA sued major insurers alleging coordinated tactics to depress repair reimbursement rates and to steer insureds away from shops that charged more than the insurers’ "market rate."
- Plaintiffs allege insurers used State Farm’s unverified "half plus one" method (and data manipulation) to set a market labor rate, depressed materials costs (requiring repaired/used parts and discounts), and then refused to pay above that rate.
- Plaintiffs allege insurers enforced compliance by steering insureds via misleading or false statements about non‑compliant shops (e.g., quality, speed, guarantees), effectively boycotting those shops.
- Claims asserted: Sherman Act §1 horizontal price‑fixing and unlawful boycott (per se antitrust claims), and state tort claims (unjust enrichment, quantum meruit, tortious interference).
- The district court dismissed several consolidated complaints for failure to state claims; the Eleventh Circuit panel reversed dismissal as to the antitrust claims and the three state torts for the five appeals at issue and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether allegations plausibly infer a horizontal price‑fixing agreement under §1 | Parallel adoption of a uniform labor/materials "market rate" based on State Farm’s method, plus uniform idiosyncratic practices, support inference of agreement (parallel + plus factors). | Alleged uniformity is price leadership/conscious parallelism, common business practices, or a mere ceiling; plaintiffs failed to plead an agreement’s formation, timing, or direct evidence. | Reversed dismissal — complaints sufficiently alleged parallel conduct plus factual enhancements (uniform price despite expected divergence; uniform idiosyncratic practices) to plausibly infer agreement. |
| Whether allegations state a per se unlawful boycott (concerted steering) | Insurers targeted non‑compliant shops and used identical misleading statements to keep insureds away, effectuating a boycott. | Steering is unilateral or common practice; plaintiffs fail to plead an agreement to boycott or identical tactics. | Reversed dismissal — court found allegations plausibly show coordinated boycott (per se) because insureds were kept away by similar misleading tactics. |
| Whether unjust enrichment / quantum meruit claims survive where plaintiffs knew payment terms in advance | Plaintiffs allege they were coerced/forced to provide services at the artificed market rate; retention of benefits without payment is unjust; reasonable expectation of full value exists. | Plaintiffs knew pre‑repair what insurers would pay (no bargaining); claims amount to buyer’s remorse or impermissible post‑hoc valuation; unjust enrichment/quantiumnot available where parties could have contracted. | Reversed dismissal — court concluded pleadings plausibly allege forced conferral of benefits and artificial prices such that unjust enrichment and quantum meruit survive pleading stage (dissent disagreed). |
| Whether tortious interference adequately pled where insurers steered insureds away | Plaintiffs allege insureds had chosen shops and insurers knowingly and improperly induced insureds to abandon those choices by false/misleading statements, causing lost business. | District court found group pleading and insufficient specificity; defendants argued conduct was lawful steering. | Reversed dismissal — court found state‑law tortious interference plausibly pled with individualized allegations of market share, insurer control and steering practices. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard requires allegations that plausibly suggest an agreement; parallel conduct plus additional factual enhancement).
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (courts accept well‑pleaded facts as true and draw inferences favoring plaintiff at motion to dismiss).
- FTC v. Cement Inst., 333 U.S. 683 (1948) (uniform pricing among competitors can support inference of conspiracy where divergent pricing would otherwise be expected).
- Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993) (describes "conscious parallelism" and market interdependence).
- United States v. Socony‑Vacuum Oil Co., 310 U.S. 150 (1940) (agreements to fix, raise, or depress prices are per se illegal).
- St. Paul Fire & Marine Ins. v. Barry, 438 U.S. 531 (1978) (boycott concept: pressuring target by withholding or enlisting others to withhold patronage; can be per se illegal when horizontal).
- NYNEX Corp. v. Discon, Inc., 525 U.S. 128 (1998) (per se illegality of horizontal group boycotts).
- Williamson Oil Co. v. Philip Morris USA, 346 F.3d 1287 (11th Cir. 2003) (parallel conduct alone insufficient; plus‑factor framework explained).