Monday, 02 September 2013 00:00

Mississippi Collision Repair Association and Parts Suppliers File Suit Against PartsTrader

The Mississippi Collision Repair Association and Parts Suppliers are seeking industry support in suit against State Farm and PartsTrader. Over 30 plaintiffs, mostly Mississippi body shop owners, have filed an injunction against State Farm and PartsTrader in an attempt to prohibit the insurer from forcing any Select Service shop in Mississippi to use PartsTrader.

The suit was filed Aug. 28 by Jackson, MS-based attorney for the nearly three dozen plaintiffs, John Arthur Eaves, Jr., in the Hinds County, MS, Chancery Court against State Farm Mutual Automobile Insurance Company and PartsTrader LLC.

Plaintiff include the Mississippi Collision Repair Association (MSCRA) OEM parts dealers and other parts suppliers and dozens of collision repair principals, including prominent local repairers John Mosley (Clinton Body Shop) and Doug White (Capitol Body Shop).

The suit seeks the court’s declatory judgment and injuction to block State Farm from requiring the PartsTrader ordering process in Mississippi. The requested injunction is to

1) Prohibit the Defendants from forcing implementation of PartsTrader in the State Farm Select Service shops,

2) Finding the Defendants in breach of the 1963 Federal Consent Decree (and thereby voiding the Select Service agreements), and

3) Stopping the Defendants from interfering in the relationship between customer and shop by delaying service payments or otherwise limiting the use of rentals.

The suit alleges that State Farm’s implementation of the PartsTrader system tortiously interferes with prior business relationships that collision repair facilities have with their long standing parts suppliers. (Tortious interference occurs when a person intentionally damages the plaintiff’s contractual or other existing business relationships.)

In addition, the suit contends that State Farm is attempting to force the Plaintiffs to breach their legal fiduciary (trustworthiness) duty to their customers, ie. compromising a safe and reliable repair. “The relationship between consumer and repairman has been all but destroyed. The repairman must do as instructed by the insurance company, not the consumer.”

Said attorney Eaves Jr., “PartsTrader and State Farm will effectuate a ‘race to the bottom’ in quality and safety.” And though he says the case very likely will go to court, he is hoping for an out-of-court resolution.

“We would love for them not to bring it (the Parts Trader system) to Mississippi. But it would be up to them,” he said. Cheaper parts have indeed been responsible for multiple injuries, said Eaves Jr., who is a former candidate for governor of Mississippi.

“Nobody likes to be forced into filing a lawsuit but this is the largest automobile insurer in the country and we have a lot of mutual customers that will be impacted by this,” said John Mosely, president of MSCRA from Clinton Body Shop and a plaintiff in the suit. “We have invested tons of money in our business and State Farm telling us we have to buy through PartsTrader system, is not the best thing for the repair or the customer.”

Mosely currently participates in the Select Service program with State Farm.

In addition to seeking an injunction against implementation of the PartsTrader system, the suit seeks a declaratory judgment that State Farm is operating against the 1963 Consent Decree, entered into by several insurance company associations and the Federal Government, limiting insurer’s activities in collision repair to influence customers. Because of this conflict, the suit seeks to void the Select Service agreements between repair facilities and State Farm.

Finally, the suit seeks to keep State Farm from interfering in the contract between the customer and body shops by “causing or implying delay in service payments, appraisal or limitation on the usage of rental automobiles.”

State Farm is requiring use of PartsTrader for specified shops in its Select Service DRP but insists using the service is strictly voluntary because membership in Select Service is voluntary.

State Farm’s public affairs representative Roszell Gadson said, “Repairers participate in Select Service® on a voluntary basis. Parts Trader is a company that provides an electronic parts ordering platform to repairers nationwide. State Farm guidelines for the use of parts and part types have not changed due to electronic parts ordering. Estimates are written and part types are chosen by repairers based on consistent guidelines,” said State Farm’s public affairs representative Roszell Gadson.

Barry Lewis of Ridgeland, MS, and owner of European Coachworks, says participating in the lawsuit was simple common sense for his business.

“I’m just trying to cover us for the future,” says Lewis, “because eventually it’s going to affect us whether you’re in the program or not.”

The “program” to which Lewis is referring is also a company doing business as Parts Trader LLC, which was named in the lawsuit as well. While Parts Trader’s website states that the repairer has the final say in which part they should use, the MCRA maintains that State Farm insists their insured drivers receive the cheapest parts available in order to cut repair and replacement costs.

State Farm neither confirmed nor denied whether parts purchased through the Parts Trader service were inferior to those the repair shops claim to use.

“There are thousands of examples where inferior parts led to injury,” Eaves Jr. said, citing his considerable experience as a trial lawyer. “This PartsTrader program is the first time this has been implemented. Most of the cheaper parts will be made in countries where quality is not as important,” he continued.

But State Farm says the suit is without merit and that the Parts Trader system is not yet a reality for Mississippi. Preventing it from being implemented in Mississippi is, of course, the point of the suit.

“State Farm recently received notice of a lawsuit in Hinds County, Mississippi, related to our electronic parts ordering initiative and our Select Service® program. We believe the suit is without merit. We intend to vigorously defend the suit,” said Roszell. “The Parts Trader program has not yet even been implemented in Mississippi.”

MCRA President Mosley argues that parts ordered from off-shore sites are not upheld to the same standards of safety as are American-made parts. But the PartsTrader website states unequivocally that it does not recommend specific parts or manufacturers.

“Collision parts suppliers providing pricing within PartsTrader must be nominated by repairers like you before we invite them to participate in this market,” says the PartsTrader website.

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