A & E Auto Body, Inc. v. 21st Century Centennial Ins. Co.

Decision Date17 August 2015
Docket NumberCase No. 6:14–md–2557–orl–31TBS.
Parties A & E AUTO BODY, INC., et al., Plaintiffs, v. 21ST CENTURY CENTENNIAL INSURANCE COMPANY, et al., Defendants.
CourtU.S. District Court — Middle District of Florida

120 F.Supp.3d 1352

A & E AUTO BODY, INC., et al., Plaintiffs,

Case No. 6:14–md–2557–orl–31TBS.

United States District Court, M.D. Florida. Orlando Division.

Signed Aug. 17, 2015.

120 F.Supp.3d 1354

Alan Brent Geohagan, A. Brent Geohagan, PA, Lakeland, FL, Allison P. Fry, John Arthur Eaves, Jr., John Arthur Eaves, Attorneys at Law, Jackson, MS, Scottie McPherson, Tucker H. Byrd, Tucker H. Byrd & Associates, PA, Winter Park, FL, for Plaintiffs.

Hal K. Litchford, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Orlando, FL, for Defendants.


GREGORY A. PRESNELL, District Judge.

I. Preface

This is an MDL case involving two dozen suits, consolidated for pretrial purposes, in which collision repair shops have accused most of the automobile insurers in their states of conspiring to suppress the reimbursement rates for collision repairs in violation of Section I of the Sherman Antitrust Act and various state laws.

The first of these suits was filed in this Court on February 24, 2014. (Case No. 6:14–cv–310). The initial complaint in that matter was dismissed on June 11, 2014. An amended complaint was filed on June 28, 2014. On August 8, 2014, this MDL was created and four cases were transferred to this Court: one from Mississippi (Case No. 6:14–cv–6000); one from Indiana (Case No. 6:14–cv–6001); one from Tennessee (Case No. 6:14–cv–6002); and one from Utah (Case No. 6:14–cv–6003).

Following oral argument, the amended complaint in the Florida case was dismissed. A second amended complaint was filed in the Florida case on February 11, 2015. Motions to dismiss that second amended complaint are pending. With respect to the Mississippi, Indiana, Tennessee and Utah cases, Magistrate Judge Smith issued Reports and Recommendations

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(henceforth, "Reports") recommending the dismissal of those complaints. Plaintiffs' objections to those Reports were overruled and the complaints were dismissed. Amended complaints were filed and are the subject of pending motions to dismiss.

Nineteen other tag-along cases have been transferred to this Court. Two of those were originally filed in Louisiana: Case No. 6:14–cv–6004 and Case No. 6:14–cv–6005. On March 10, 2015, Magistrate Judge Smith recommended that the complaints in the Louisiana cases be dismissed. This Court overruled Plaintiffs' objections to that recommendation and dismissed the complaints. Plaintiffs filed amended complaints and motions to dismiss are pending.

On June 3, 2015, Magistrate Judge Smith issued a 59–page Report (Doc. 192 in Case No. 6:14–md–2557) (henceforth, the "June 3 Report") with respect to 14 cases, originally filed in 12 different states, all of which had pending motions to dismiss:1 Case No. 6:14–cv–6006 (Arizona); Case No. 6:14–cv–6007 (Michigan); Case No. 6:14–cv–6008 (Pennsylvania); Case No. 6:14–cv–6009 (Alabama); Case No. 6:14–cv–6010 (California); Case No. 6:14–cv–6011 (Illinois); Case No. 6:14–cv–6012 (New Jersey); Case No. 6:14–cv–6013 (New Jersey); Case No. 6:14–cv–6014 (Oregon); Case No. 6:14–cv–6015 (Washington); Case No. 6:14–cv–6018 (Kentucky); Case No. 6:14–cv–6019 (Virginia); Case No. 6:14–cv–6020 (Pennsylvania); and Case No. 6:15–cv–6022 (Missouri). Judge Smith recommended that all of the claims be dismissed without prejudice except for Plaintiffs' claims for quasi estoppel, which he recommended dismissing with prejudice. On June 29, 2015, Plaintiffs filed an omnibus objection (Doc. 205 in Case No. 6:14–md–2557) (henceforth, the "Omnibus Objection") to the June 3 Report. Defendants have responded to the Omnibus Objection2 and the matter is ripe for this Court's consideration.

II. Standard of Review

A district judge may designate a magistrate judge to submit to the court proposed findings of fact and recommendations for the disposition of, inter alia, motions to dismiss. 28 U.S.C. § 636(b)(1)(B). A party may file written objections to such proposed findings and recommendations. 28 U.S.C. § 636(b)(1). A judge of the court shall make a de novo determination of those portions of the report or specified proposed findings to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. Id.

III. The June 3 Report

a. Group Pleading

At the outset of the June 3 Report, Judge Smith discusses the issue of group pleading, a problem that has plagued these cases from the outset. Throughout their pleadings, the Plaintiffs make collective allegations about the conduct of "Defendants,"

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even in scenarios (such as the alleged steering of an insured away from one of the Plaintiffs to a lower-priced shop) where it would seem that any Defendant doing so would have acted singly—even if every Defendant sometimes steered its own insureds. After noting that group pleading is permissible in some instances, Judge Smith concludes that to satisfy the notice requirement of Fed.R.Civ.P. 8(a), "at a minimum, Plaintiffs should allege sufficient facts specific to each Defendant, or at least to each corporate family of Defendants,3 to tie that Defendant to the wrongdoing alleged." (June 3 Report at 5–11).

b. Antitrust

After addressing group pleading, Judge Smith then assesses the antitrust claims raised in these 14 cases. He concludes that the price fixing and group boycott claims are indistinguishable from those that had been asserted in the Florida case and should be dismissed for the same reasons expressed by this Court in its order (Doc. 291 in Case No. 6:14–cv–310) dismissing the amended complaint in that action. (June 3 Report at 12–13). Judge Smith also concludes that the state law antitrust claims in the Michigan, New Jersey, Washington and Virginia cases should be dismissed for failure to plausibly plead the existence of an agreement between the Defendants. (June 3 Report at 14).

c. Unjust Enrichment and Quantum Meruit

At pages 15–33 of the June 3 Report, Judge Smith provides an extensive analysis of the flaws in the Plaintiffs' claims for unjust enrichment and quantum meruit. After summarizing the historic development of these equitable remedies, he sets forth the basic elements for an unjust enrichment claim—a showing that the defendant obtained a benefit at the plaintiff's expense and that the defendant's enrichment was "unjust" or "inequitable." (June 3 Report at 22).

With respect to the benefit requirement, this Court held in the Florida case that the Plaintiff auto body repair shops were conferring a benefit on their customers (the insureds) and not the insurance company that paid for the repairs. (Doc. 291 at 9 in Case No. 6:14–cv–310). In the June 3 Report, Judge Smith noted that some states define "benefit" more broadly in this context. Because the courts are divided on this issue, he assumes for purposes of his analysis that a benefit has been conferred on the insurance company. Nevertheless, he recommends dismissal of the unjust enrichment claims on the grounds that "the Plaintiffs have failed to allege facts showing that it would be unjust to allow Defendants to retain any benefit Plaintiffs may have conferred." (June 3 Report at 24). Quoting from the Restatement (Third) of Restitution and Unjust Enrichment, he notes that "there is no liability in restitution for an unrequested benefit voluntarily conferred, unless the circumstances of the transaction justify the claimant's intervention in the absence of a contract." (June 3 Report at 24). Thus, those who confer a benefit officiously, with no reasonable expectation of compensation, are not entitled to this equitable (quasi-contractual) relief. And the fact that the repair shops have contracted with the insureds, rather than the insurers, is not justification for failing to bargain with the insurers, because a "plaintiff is not entitled to employ the legal fiction of quasi-contract to substitute one promisor or debtor for another. (June 3 Report at 27).

Judge Smith also discusses the substantial overlap between unjust enrichment

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and quantum meruit, noting that in several of the states whose laws are at issue here, there is no substantive difference between the two. (June 3 Report at 28). As to those that recognize a distinction—Alabama, Illinois, New Jersey, Kentucky, Washington and Virginia—he concludes that Plaintiffs have failed to state an actionable claim, generally because they have not alleged that the Defendants (as opposed to the Defendants' insureds) requested the work for which compensation (or additional compensation) is now sought. (June 3 Report at 29–33). Accordingly, he recommends dismissal of all of the quantum meruit claims.

d. Tortious Interference

All Plaintiffs in these 14 cases assert claims for tortious interference with business relationships or prospective advantage. Although the elements of these claims vary slightly from state to state, the basic fabric...

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