Latest in Lawsuits Involving Shops, Insurers and an Auto Recycler

Latest in Lawsuits Involving Shops, Insurers and an Auto Recycler

There was activity recently in three legal battles involving body shops, insurance companies, an auto recycler and consumers.

A U.S. District Court judge in Florida this summer agreed that a lawsuit in which two Mississippi shops are suing Progressive Insurance for tortious interference should be returned to a federal court in the shops’ state.

The two shops were part of a larger federal antitrust lawsuit, originally brought against multiple insurers in 2014, consolidated to the Florida court with about two dozen similar suits involving shops in other states.

The Mississippi shops’ suit was largely dismissed earlier this year, but because AutoWorks Collision Specialists in Jackson, MI, and Walker Collision Center in Picayune, MI, each pointed to a specific customer they said they lost because of steering tactics they say Progressive used, dismissal of their portion of the lawsuit was overturned on appeal.

Progressive argued the Florida court should continue to oversee the lawsuit, but Judge Gregory Presnell said it should return to the Mississippi federal court where it was originally filed. In remanding the case to Mississippi, however, Presnell indicated that court might choose not to allow it to proceed because the federal antitrust claims in the original lawsuit have been dismissed. That leaves Progressive facing only accusations of violating Mississippi state anti-steering laws.

“Since no federal claims remain, that court may decide that it is prudent to decline to exercise jurisdiction over the state law claims,” Presnell said.

He also ruled this summer on GEICO’s request that the other Mississippi shops---and their attorneys---involved in the portion of the lawsuit that was dismissed cover GEICO’s legal fees fighting the case since 2015. That’s when Mississippi attorney John Eaves Jr.’s firm filed its third version of the lawsuit, after the first two were dismissed.

Presnell granted GEICO’s motion, noting Eaves’ firm failed to file an opposition to GEICO’s fee request. But Presnell reduced the amount owed to $30,298---GEICO had sought just over $40,000---and said only the attorneys, who he said pursued the matter “unreasonably and vexatiously,” must pay those fees, not the shops.

Another insurer, Nationwide, also got a court victory in August. The Pennsylvania Supreme Court announced it was deadlocked in its review of a lower court’s decision that overturned a $21 million bad faith verdict against Nationwide related to repairs made by one of the insurer’s “Blue Ribbon” direct repair shops.

Because the six justices---a seventh justice didn’t participate in the case---were “divided in a fashion which prevents a majority disposition,” the lower court’s decision to throw out the 2014 verdict against Nationwide stands.

The lawsuit arose after Daniel and Sharon Berg took their collision-damaged 1996 Jeep Grand Cherokee to a Nationwide Blue Ribbon shop. An appraiser there recommended the vehicle be declared a total loss, but the Bergs alleged that Nationwide, without informing them, had the vehicle moved to another Blue Ribbon shop where it was repaired. The Bergs sued over the condition of the repaired vehicle, claiming Nationwide knowingly returned an unsafe vehicle to them as part of an effort to avoid totaling the vehicle.

The couple won an $18 million verdict, plus $3 million in attorney fees, but a three-judge Superior Court panel in 2018 overturned that decision. The Bergs appealed to the state’s Supreme Court. Two of those justices issued an opinion in August saying they were in favor of reversing the lower court’s dismissal and reinstating the verdict, while two others said they believe the dismissal should be upheld; the views of the remaining two Pennsylvania Supreme Court justices is not known, but it would seem they were likely split in their views, giving neither side a majority.

The justices arguing to reverse the Superior Court’s decision said such verdicts should be overturned only “in the most egregious of cases when the trial court has committed reversible error.”

The justice’s arguing to uphold the reversal of the verdict said there was some question about the trial judge’s impartiality, pointing to that judge’s “protracted we-the-consumer discourse spanning six pages of the opinion,” in which he appeared to step beyond his “judicial role and align himself personally with the interests of insurance consumers.”

In yet another legal matter that could provide a lesson for all employers, an auto recycler is being sued by the U.S. Equal Employment Opportunity Commission (EEOC), which says the company violated federal law by denying an employee’s requests for reasonable accommodations---and then fired her---while she was undergoing chemotherapy for cancer.

According to the EEOC’s lawsuit, the employee immediately notified the owner of K&L Auto Crushers in Tyler, TX, when she was diagnosed, and told the company the estimated length of her chemotherapy treatment. Shortly after starting chemotherapy, the owner told the employee, who was K&L’s comptroller, the company had secured temporary help and that she should stay home until she was finished with her chemotherapy.

The comptroller asked the owner if she could work from home, and later requested a modified work schedule, while she was undergoing chemotherapy, but K&L denied both requests. K&L fired her, but did not tell her she had been terminated until she finished chemotherapy.

Such alleged conduct violates the Americans with Disabilities Act (ADA.) The EEOC, which filed suit after first attempting to reach a settlement with K&L, seeks back pay and compensatory and punitive damages, as well as an order barring K&L from engaging in discriminatory treatment in the future.

“This comptroller was a hardworking, loyal employee who sought multiple avenues to continue working during her illness and chemotherapy treatment,” said Meaghan Kuelbs, senior trial attorney with the EEOC. “Employers should fairly consider an employee’s accommodation request and deny an accommodation only if it would create an undue hardship.”

John Yoswick

John Yoswick is a freelance writer and Autobody News columnist who has been covering the collision industry since 1988, and the editor of the CRASH Network... Read More

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