Safelite Group, Inc. v. Jepsen

988 F. Supp. 2d 199, 2013 WL 6709240, 2013 U.S. Dist. LEXIS 177707
CourtDistrict Court, D. Connecticut
DecidedDecember 18, 2013
DocketCivil No. 3:13cv1068 (JBA)
StatusPublished
Cited by1 cases

This text of 988 F. Supp. 2d 199 (Safelite Group, Inc. v. Jepsen) is published on Counsel Stack Legal Research, covering District Court, D. Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Safelite Group, Inc. v. Jepsen, 988 F. Supp. 2d 199, 2013 WL 6709240, 2013 U.S. Dist. LEXIS 177707 (D. Conn. 2013).

Opinion

RULING DENYING PLAINTIFFS’ MOTION FOR A PRELIMINARY INJUNCTION

JANET BOND ARTERTON, District Judge.

On June 3, 2013, Connecticut Daniel Governor Malloy signed House Bill 5072, “An Act Concerning Automotive Glass Work,” into law as Public Act 13-67 (“PA 13-67”) to take effect on January 1, 2014. The law is targeted at insurance companies doing business in Connecticut and third-party claims administrators or adjusters that also own automotive glass-repair shops, and mandates that if such entities recommend the use of their affiliated glass repair shop to insurance policyholders, they must also provide the name of at least one non-affiliated repair shop. Plaintiffs Safelite Group, Inc. and Safelite Solutions LLC (collectively “Safelite” or Plaintiffs) seek declaratory and injunctive relief, contending that portions of PA 13-67 violate their rights under the First and Fourteenth Amendments (Count One) and the Dormant Commerce Clause (Count Two). Plaintiffs now move [Doc. # 2] for a preliminary injunction enjoining Defendants (the “State”) from implementing or enforcing PA 13-67(c)(2).1 For the reasons that follow, Plaintiffs’ motion is denied.

I. Facts

A. Background

Safelite, based in Columbus, Ohio, owns Safelite Solutions, which provides claims management services for 18 of the top 30 insurance companies. (O’Mara Decl. ¶ 3, Ex. 1 to Pis.’ Mem. Supp.) Safelite Solutions typically manages the entire claims process for an insurance company, main-[201]*201taming a telephone hotline for policyholders to report claims and schedule appointments for repairs. (Id. ¶ 6.) Safelite also owns Safelite AutoGlass, the largest vehicle-glass repair company in the United States, serving more than 4.5 million customers each year. (Id.)

If a policyholder does not express a preference for a particular vehicle glass repair shop, Safelite operators will recommend a glass repair shop based on the policyholder’s location and the preferences of his or her insurance company. Many insurance companies that employ Safelite Solutions as their claims administrator have selected Safelite AutoGlass as one of their preferred glass repair shops, and Safelite operators recommend that policyholders use Safelite AutoGlass for then-repairs because Safelite believes that its own shops provide the best customer service and are the most reliable. (Id. ¶ Sill.) If there is no Safelite AutoGlass location near the claimant, Safelite operators may refer him or her to an independent glass repair shop from Safelite’s network of non-affiliated shops, which have agreed to certain pricing terms and other conditions regarding their work. (Id ¶ 7.) Because most customers do not frequently utilize vehicle glass repair services and rely upon Safelite’s telephone operators, Safelite contends that its recommendations provide policyholders with “an extremely valuable service.” (Id. ¶ 10.)

Although there are over 70 non-affiliated repair shops in Connecticut that are part of Safelite’s network, from January 1, 2012 to June 30, 2013, insureds selected Safelite AutoGlass for their repairs approximately 55% of the time. (See Pis.’ Amend. Resp. and Obj. to Def. Inter, and Req. for Prod, at Inter. No. 13., Ex. A to Defs.’ Mem. Opp’n.) Some of Safelite’s insurance company clients require Safelite to provide policyholders with the name of a non-Safe-lite affiliated repair shop in addition to Safelite AutoGlass. In such instances, the rate at which customers utilize Safelite AutoGlass drops to as low as 41%. (Id.)

Against this background, the Connecticut General Assembly debated PA 13-67. The Insurance and Real Estate Committee of the Connecticut General Assembly heard testimony that only two third-party insurance claims administrators maintained relationships with auto glass repair shops in Connecticut: Safelite Solutions and a Massachusetts-based company, which was associated with a Massachusetts-based automotive glass repair shop. (See Comm. Hearing, Ex. 5 to Pis.’ Mem. Supp. at 61.)

Existing Connecticut law already prohibits “steering” — the practice of an insurer or claims administrator requiring a customer to use a particular auto repair shop — and further mandates that written estimates for repairs contain boldface disclosures to customers of their right to select a repair shop of their choice. See Conn. Gen.Stat. § 38a-354. The Connecticut Insurance Department submitted written testimony to the Committee stating that no customers had complained of being coerced into using a particular repair shop against their will, and opined that PA 13-67 was “unnecessary” because “consumers are adequately protected by current law.” (State of Conn. Ins. Dep’t, Testimony Before the Ins. and Real Estate Comm., Conn. Gen. Assembly (Jan. 31, 2013), Ex. 3 to Pis.’ Mem. Supp. at 1.)

Numerous Connecticut legislators advocated for the law on the basis that it would benefit in-state businesses over out-of-state companies, while some legislators’ statements also indicate that the law was motivated to protect consumers from the undue influence of insurance company-affiliated repair shops. For example, Rep. Robert W. Megna explained that “the es[202]*202sence of this bill” was that insurance companies and third-party claims administrators “can’t tell an individual to have their automotive glass replaced at a particular shop.” (Conn. Gen. Assembly House of Rep. Session Unofficial Tr. (May 7, 2013), Ex. 4 to Defs.’ Mem. Supp. at 62.) Rep. Megna expanded his explanation that the bill would “help out those small businesses that employ people, spend money, do economic development — in our state while at the same time preventing] an insurer from essentially trying to influence the place where your automobile gets fixed which is in their best financial interest.” (Id.)

B. Public Act 13-67

In May 2013, the General Assembly adopted PA 13-67, which provides in relevant part:

No glass claims representative for an insurance company doing business in this state or a third-party claims administrator for such company shall provide an insured with the name of, schedule an appointment for an insured with or direct an insured to, a licensed glass shop that is owned by (A) such company, (B) such claims administrator, or (C) the same parent company as such insurance company or claims administrator, unless such representative or claims administrator provides the insured with the name of at least one additional licensed glass shop in the area where the automotive glass work is to be performed.

PA 13-67(c)(2).2

The State contends that “[i]mplicit in Connecticut’s enactment of P.A. 13-67 is the legislative determination that Connecticut’s existing statutes did not adequately protect consumer choice or prevent insurance claims administrators with affiliated repair shops from steering work to their affiliated shops.” (Defs.’ Mem. Opp’n at 4.) Safelite contends that the true purpose of the law was to help out local small businesses at the expense of large out-of-state companies and that this purpose was expressly stated by multiple legislators during debate over the bill.

II. Discussion

“[A] preliminary injunction is an extraordinary remedy that should not be granted as a routine matter.”

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Related

Safelite Group, Inc. v. Jepsen
764 F.3d 258 (Second Circuit, 2014)

Cite This Page — Counsel Stack

Bluebook (online)
988 F. Supp. 2d 199, 2013 WL 6709240, 2013 U.S. Dist. LEXIS 177707, Counsel Stack Legal Research, https://law.counselstack.com/opinion/safelite-group-inc-v-jepsen-ctd-2013.