Kirby's Spectrum Collision Inc. v. Gov't Employees Ins. Co., Civil Action No. 09–0663–WS–B.

• Court: United States District Courts. 11th Circuit. United States District Court of Southern District of Alabama
• Writing for the Court: ORDER
• Citation: 744 F.Supp.2d 1220
• Parties: KIRBY'S SPECTRUM COLLISION, INC., Plaintiff,v.GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant.
• Docket Number: Civil Action No. 09–0663–WS–B.
• Decision Date: 29 September 2010

744 F.Supp.2d 1220

KIRBY'S SPECTRUM COLLISION, INC., Plaintiff,
v.
GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant.

Civil Action No. 09–0663–WS–B.

United States District Court, S.D. Alabama, Southern Division.

Sept. 29, 2010.

[744 F.Supp.2d 1222]

David Michael Huggins, Turner, Onderdonk, Kimbrough & Howell, Mobile, AL, for Plaintiff.Jason Robert Watkins, Ball, Ball, Matthews & Novak, P.A., Mobile, AL, Gerald C. Swann, Jr., Ball, Ball, Matthews & Novak, P.A., Montgomery, AL, for Defendant.

ORDER WILLIAM H. STEELE, Chief Judge.

This matter comes before the Court on defendant's Motion for Summary Judgment (doc. 77). The Motion has been briefed and is now ripe for disposition.

I. Background Facts.¹

Plaintiff, Kirby's Spectrum Collision, Inc. (“Spectrum”), brought this action against defendant, Government Employees Insurance Company (“GEICO”), pursuing state-law claims of intentional interference with contractual/business relations and injunctive relief.² The allegations and legal theories at issue in this action have shifted over time (thanks to discovery revelations and the parties' proactive efforts to narrow their dispute via settlement of various portions), rendering plaintiff's claims something of a moving target. However, the parties are in agreement that this litigation now centers on the legality of GEICO's Automobile Repair Xpress Program (the “ARX Program”) insofar as it affects Spectrum's contractual and business relationships with its customers.³ The Court therefore need not and will not wade into

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now-extraneous allegations concerning the genesis of the bad blood between the parties, Spectrum's billing practices, GEICO's limits on paint and materials reimbursements, the parties' heated face-to-face confrontations, and alleged disparaging remarks by GEICO representatives about Spectrum, except insofar as such facts provide helpful context or background for the issues now in play.

A. The ARX Program in Theory.

Spectrum is an automobile collision center/repair shop located in Mobile, Alabama. GEICO is an automobile insurance provider that issues policies to cover certain vehicle repair claims for and on behalf of its insureds. In approximately 2005 or 2006, GEICO launched its ARX Program in the Mobile market. (Gaskin Dep., at 47; Garner Dep., at 161–62; Jackson Dep., at 61.) Internal GEICO documents describe the ARX Program as one “which delivers the convenience of one stop claim handling, the efficiency of priority repairs, and peace of mind knowing that GEICO guarantees the repairs for as long as the customer owns the vehicle.” (Pl. Exh. 23, at 11.) In implementing the ARX Program in this area, GEICO designated a single repair shop (non-party Cockrell's Body Shop on the I–65 Beltline) as the only ARX facility in Mobile. (Gaskin Dep., at 47, 49–50; Garner Dep., at 73–74, 78, 80, 161.) GEICO arranged for one of its adjusters to be stationed full-time at the Cockrell's location to inspect GEICO customers' vehicles, for estimates to be prepared on-site, and for rental cars to be readily available at that location to accommodate GEICO customers. (Stringfellow Dep., at 44–46; Garner Dep., at 78–79.)

With this infrastructure in place, the way the ARX Program is designed to work is as follows: If a Mobile-area GEICO customer (whether an insured or a third party whose vehicle was damaged by a GEICO insured) makes a claim for a damaged but drivable vehicle, GEICO directs the customer to take the car to Cockrell's (the designated ARX shop) for GEICO's adjuster to inspect it and prepare an estimate. (Garner Dep., at 72.) ⁴ Plaintiff's evidence is that this “drive-by” requirement is unique to GEICO, in that other insurance companies do not mandate that customers go to a competitor's shop for inspection. (D. Kirby Dep., at 439–40.) In any event, upon the vehicle's arrival at Cockrell's, the GEICO adjuster meets with the customer, inspects the vehicle, and explains the benefits of the ARX Program. If the customer elects to allow Cockrell's to complete the repairs, then the customer leaves the car there, picks up a rental car from an on-site rental agency, and departs.

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If, however, the customer elects to have another body shop perform the repairs, then the customer may take the vehicle to that shop. Even if the customer knows from the outset that she wants a non-ARX shop to perform the repairs, she is generally required to bring her vehicle (so long as it can be safely driven) to Cockrell's for the inspection and meeting with the adjuster, and then return it to her shop of choice to complete the repairs. (Gaskin Dep., at 79; Jackson Dep., at 55.)

In GEICO's view, having an adjuster on-site at its Mobile ARX location makes GEICO more efficient in providing services at lower cost,⁵ and should improve customer service by minimizing customer headaches and inconvenience in the claims process. (Garner Dep., at 204.) ⁶ The idea is that the ARX Program provides a kind of “one-stop shop” where the customer can meet with an adjuster, have an estimate prepared, leave the car for repairs, and pick up a rental car, all in a single location. (Gaskin Dep., at 76.) At the ARX shop, the GEICO customer receives priority treatment, which GEICO does not provide at non-ARX shops. (Jackson Dep., at 64, 77.) Another benefit of the program is that ARX shop repairs are guaranteed for as long as the customer owns the vehicle, but GEICO provides no such guarantee for other shops' repairs. ( Id. at 64, 68–70.) Thus, GEICO does not provide any warranty for repairs performed by Spectrum. (Stringfellow Dep., at 35.) And at the ARX shop, unlike non-ARX locations, a GEICO adjuster is present throughout the repair process to oversee the work, address problems as they arise, and act as a liaison between the customer and the collision center. (Jackson Dep., at 64–65.)

GEICO believes its ARX Program adds value for its customers; therefore, the company endeavors to educate them about that program so that customers can understand their options and make an informed decision. (Garner Dep., at 209–11.) ⁷ That said, GEICO agrees that, while it is appropriate to apprise its customers of the ARX Program and to encourage them to avail themselves of its benefits, it is not appropriate to “steer” customers away from other shops or to “unduly pressure[ ]” them to choose the ARX shop for repairs. ( Id. at 150–51; Thomas Dep., at 37–38.) ⁸ GEICO agrees that its customers

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have an absolute right to select the repair shop of their choice, and that GEICO should not dictate that shop to customers or pressure them to use a particular shop. (Garner Dep., at 65; Thomas Dep., at 36; Gaskin Dep., at 72.) GEICO customer service representatives are instructed to “offer[ ] the ARX program to the customer after advising them that they can use the shop of their choice. They can't make the customer go.” (Jackson Dep., at 102–03.) Should a customer state that she has decided that she wants her car repaired at another location, after being apprised of the benefits of the ARX Program, then GEICO representatives should honor that request. (Gaskin Dep., at 73–74.) ⁹ Thus, according to GEICO, “[i]f they have heard about what our ARX process was and they said no, I want to go to Kirby's Spectrum, absolutely the vehicle should go to Kirby's Spectrum Collision.” (Garner Dep., at 85.)

The metrics by which GEICO evaluates its customer service representatives include their “capture” rate for ARX opportunities, meaning the frequency with which they succeed in persuading customers to have their cars inspected at an ARX shop, and their “retention” rate, meaning the frequency with which those customers agree to have repairs done via the ARX Program. (Jackson Dep., at 38–41.) As a result, GEICO call center employees have a direct interest in encouraging customers to use the ARX Program and in emphasizing the benefits of that program, in hopes of improving their personal capture and retention rates. ¹⁰

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B. The ARX Program in Practice.

Spectrum maintains that GEICO's ARX Program is unique in the auto insurance business. To be sure, plaintiff acknowledges that many insurers have implemented preferred shop arrangements, and that it participates in such programs; however, it insists that GEICO's arrangement is qualitatively different than those of other carriers. (Doc. 92, at 2–3, 17; J. Kirby Dep., at 276.) The critical aspect of the ARX Program to which Spectrum objects is the notion that GEICO compels customers to bring their vehicles to the ARX shop (Cockrell's) for inspection by a GEICO adjuster (who makes a hard sell to encourage the customer to allow Cockrell's to repair the car), rather than allowing vehicles to be examined at a neutral location or via field inspection. (Doc. 92, at 11.) Plaintiff's position is that other insurers with drive-by programs allow field inspections upon request, but that GEICO does not. (D. Kirby Dep., at 436, 439–40.) Of course, GEICO's evidence is that the ARX Program specifically provides for field inspections upon request, in lieu of the customer bringing the vehicle to Cockrell's; however, plaintiff's summary judgment evidence is that the program has not, in fact, functioned in that manner in practice.

Notwithstanding GEICO's insistence that customer choice and satisfaction are paramount virtues of the ARX Program, there is evidence that its customers have been intimidated or strong-armed into hauling damaged vehicles to the ARX shop. In that regard, the record contains testimony and affidavits from a number of GEICO customers concerning their experiences with the ARX Program, as it relates to the inspection or repair of their vehicles. This evidence, like all other exhibits in the summary judgment record, is construed in the light most favorable to the non-movant, Spectrum. It is Spectrum's position that these customer testimonials demonstrate that GEICO was in fact...