Case 6:14-cv-06001-GAP-TBS Document 145 Filed 02/25/15 Page 1 of 13 PageID 1065

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
INDIANA AUTOBODY ASSOCIATION,
INC., et al.,
Plaintiffs,
v.

Case No: 6:14-cv-6001-Orl-31TBS

MDL Case No: 6:14-md-2557-GAP-TBS

STATE FARM MUTUAL AUTOMOBILE

INSURANCE COMPANY, et al.,
Defendants.
REPORT AND RECOMMENDATION
Pending before me, on referral from the presiding district judge, are Defendants
motions to dismiss (Docs. 131-135). Upon due consideration, I respectfully recommend
that the motions be GRANTED and that Plaintiffs First Amended Complaint be
DISMISSED without prejudice, with leave to amend.
I. Background
Plaintiffs are 25 Indiana auto body repair shops and a not-for-profit trade
organization that represents Indiana businesses engaged in the collision repair of
automobiles (Doc. 123 at 5-31). Defendants are 26 insurance companies that write
automobile insurance in the state of Indiana (Id., 32-58). Plaintiffs allege that
Defendants conspired to fix prices and boycott Plaintiffs in violation of 1 of the Sherman
Act, 15 U.S.C. 1 (Id., 153-172). They also assert claims for damages based upon
quantum meruit, tortious interference with contractual relationships, and tortious
interference with business relationships (Id., 126-152). The allegations in this case
are similar to the allegations made by the plaintiffs in A&E Auto Body, Inc. v. 21st Century

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Centennial Insurance Co., No. 6:14-cv-00310-Orl-31TBS, which the Court summarized in

its Order granting the motions to dismiss in that case:
The Defendants in this case are alleged to exert control over
the Plaintiffs businesses (and the hourly rates paid by the
Defendants) in a number of ways, beginning with agreements
generally referred to as direct repair programs or DRPs.
To participate in a particular insurers DRP, a repair shop
typically agrees to certain concessions in regard to such
things as the prices it will charge and the priority given to
vehicles owned by people who have insurance through that
insurer. In exchange, the repair shop is listed as a preferred
provider. However, the Plaintiffs complain that the prices
that they were permitted to charge under the DRPs were
unfairly manipulated, that even repair shops that were not
participating in DRPs were restricted to those price ceilings,
and that repair shops that complained about these practices or
tried to charge higher prices faced intimidation and boycotts
from the insurers.
As a general proposition, each DRP contains language
obligating the repair shop to charge the insurance company
no more than the market rate for repairs in the general area.
State Farm Mutual Automobile Insurance Company (State
Farm), a Defendant in this case, determines this market rate.
State Farm surveys the repair shops in a given area,
determines the hourly rate charged by each repair technician,
and then designates a rate just above the midpoint of all rates
charged to be the market rate. However, the Plaintiffs
complain that State Farm alters the survey results to achieve a
wholly artificial market rate and uses this artificially lowered
result to negotiate price decreases from repair shops. If a
repair shop attempts to raise its hourly rate, State Farm will,
among other things, remove it or threaten to remove it from
the DRP.
The other Defendants, who do not perform such surveys,
specifically advised the Plaintiffs that they will pay no more
than State Farm pays for labor. The Defendants refuse to
pay a higher labor rate even to Plaintiffs who are not
participating in a DRP.
The Plaintiffs also allege that the Defendants improperly
lowered the amounts that they paid for repairs by, among
other things, refusing to pay for replacement parts even where
the repair shop thought replacement was a better option than
repair and by requiring utilization of used parts even where

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new parts were available. The Plaintiffs also complain that

the Defendants (1) are refusing to abide by the estimates set
forth in the industrys leading collision-repair-estimating
databases; (2) that they are refusing to pay for certain
required materials and practices on the grounds that those
items are included in the price of the repair; and (3) that they
have imposed arbitrary caps on the amount they are willing to
pay for paint as part of a repair.
2015 WL 304048, at *12 (M.D. Fla. Jan. 21, 2015).
Plaintiffs filed this lawsuit in the United States District Court for the Southern
District of Indiana on April 2, 2014 (Doc. 1). On August 12, 2014, the United States
Judicial Panel on Multidistrict Litigation transferred the case to this district for coordinated
or consolidated pretrial proceedings before District Judge Gregory A. Presnell. In re
Auto Body Shop Antitrust Litigation, __ F. Supp. 3d. __, 2014 WL 3908000 (J.P.M.L. Aug.
8, 2014). Six days later, Plaintiffs filed their First Amended Complaint (Doc. 123).
Defendants moved to dismiss the First Amended Complaint and on November 14,
2014, the Court held a hearing on the motions to dismiss in this and six other related
cases (Case No. 6:14-cv-310, Doc. 282). On January 21, 2015, the Court entered its
Order dismissing the amended complaint in the Florida case. A&E Auto Body, Inc. v.
21st Century Centennial Ins. Co., No. 6:14-cv-00310-Orl-31TBS, 2015 WL 304048 (M.D.
Fla. Jan. 21, 2015). On February 25, Judge Presnell referred the pending motions to
dismiss in this case to me for preparation of a report and recommendation pursuant to 28
U.S.C. 636(b)(1)(B).
II. Legal Standards
Federal Rule of Civil Procedure 8(a)(2) requires a short and plain statement of the
claim showing that the pleader is entitled to relief so as to give the defendant fair notice
of what the claim is and the grounds upon which it rests, Conley v. Gibson, 355 U.S. 41,

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47 (1957), overruled on other grounds, Bell Atlantic Corp. v. Twombly, 550 U.S. 544
(2007). A Rule 12(b)(6) motion to dismiss for failure to state a claim merely tests the
sufficiency of the complaint; it does not decide the merits of the case. Milbum v. United
States, 734 F.2d 762, 765 (11th Cir.1984). In ruling on a motion to dismiss, the court
must accept the factual allegations as true and construe the complaint in the light most
favorable to the plaintiff. SEC v. ESM Group, Inc., 835 F.2d 270, 272 (11th Cir.1988).
The court must also limit its consideration to the pleadings and any exhibits attached to
the pleadings. FED.R.CIV.P. 10(c); see also GSW, Inc. v. Long County, Ga., 999 F.2d
1508, 1510 (11th Cir.1993).
A plaintiff must provide enough factual allegations to raise its right to relief above
the speculative level, Twombly, 550 U.S. at 555, and to indicate the presence of the
required elements, Watts v. Fla. Intl Univ., 495 F.3d 1289, 1302 (11th Cir.2007).
Conclusory allegations, unwarranted factual deductions, or legal conclusions
masquerading as facts will not prevent dismissal. Davila v. Delta Air Lines, Inc., 326
F.3d 1183, 1185 (11th Cir.2003).
In Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme Court explained that a
complaint need not contain detailed factual allegations but it demands more than an
unadorned, the-defendant-unlawfully-harmed-me accusation. A pleading that offers
labels and conclusions or a formulaic recitation of the elements of a cause of action will
not do. Nor does a complaint suffice if it tenders naked assertions devoid of further
factual enhancement. Id. 678 (internal citations and quotations omitted). [W]here the
well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has allegedbut it has not show[n]that the plaintiff is entitled
to relief. Id. at 679 (quoting FED.R.CIV.P. 8(a) (2)).

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III. Discussion
Count I: Quantum Meruit
Indiana recognizes a cause of action based upon a constructive contract, also
known as quantum meruit. Bayh v. Sonnenburg, 573 N.E.2d 398, 408 (Ind. 1991)
(Plaintiffs sole common law claim is unjust enrichment, also referred to as quantum
meruit, contract implied-in-law, constructive contract, or quasi contract.); Coleman v.
Coleman, 949 N.E.2d 860, 866 (Ind. App. 2011) (In Indiana, unjust enrichment is a label
given to so-called constructive contracts, which are not actually contracts at all; such
contracts are also called quantum meruit, contracts implied-in-law, or quasi contracts.).
The elements of a cause of action for quantum meruit under Indiana law are (1) a
benefit conferred upon another at the express or implied request of this other party; (2)
allowing the other party to retain the benefit without restitution would be unjust; and (3)
the plaintiff expected payment. Woodruff v. Indiana Family & Social Services Admin.,
964 N.E.2d 784, 791 (Ind. 2012). In cases where the plaintiff cannot prove the defendant
expressly or impliedly requested the benefit, the first element can be satisfied by a
showing that provision of the benefit was necessary to protect the interests of the
defendant or another. Coleman., 949 N.E.2d at 868.
Indiana appellate courts have uniformly held that the existence of a valid express
contract for services ... precludes implication of a contract covering the same subject
matter. The rights of the parties are controlled by the contract and under such
circumstances recovery cannot be had on the theory of quantum meruit. Industrial
Dredging & Engineering Corp. v. Southern Indiana Gas & Electric Co., 840 F.2d 523, 525
(7th Cir. 1988) (quoting Kincaid v. Lazar, 405 N.E.2d 615, 619 (Ind. App. 1980))

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(alterations in original). Defendants argue that Plaintiffs quantum meruit claim must be
dismissed because Plaintiffs have alleged the existence of valid, express contracts
between themselves and Defendants. Plaintiffs categorically deny this assertion. They
maintain that [b]eyond the use of program agreements and industry jargon, such as
DRPs, Plaintiffs never assert the existence of a contract, let alone a valid and enforceable
contract. Indeed, the only contracts mentioned in the [First Amended Complaint] are
those between the Plaintiffs and consumers who have their vehicles repaired by
Plaintiffs. (Doc. 136 at 16).
The First Amended Complaint alleges:
64. One method by which the Defendants exert
control over Plaintiffs businesses is by entering program
agreements with each individual Plaintiffs [sic] and other body
shops that are similarly situated. Although each Defendants
program agreements have unique titles, such agreements are
known generally and generically within the collision repair
industry as Direct Repair Program agreements (DRPs).
65. DRPs were presented and characterized by the
Defendants to the Plaintiffs as a mutually beneficial
opportunity. In exchange for providing certain concessions of
price, priority and similar matters, the individual Defendant
would list the body shop as a preferred provider.
66. However, the concessions demanded by the
Insurers in exchange for remaining on the Direct Repair
Program were not balanced by the purported benefits. The
Defendants, particularly State Farm, have utilized the DRPs
to exert control over the Shops in a variety of manners, and
well beyond the constraints imposed by an ordinary business
agreement.[1]
***
73. Generally, each DRP usually contains a statement
to the effect that the body shop will charge the respective
insurance company no more for any particular repair than the
Insurers are defined as [t]he insurance companies, and Shops are defined as [t]he body
shops (Doc. 123, 1).
1

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going rate in the market area (also referred to as the Market

Rate).
In the First Amended Complaint, whenever Plaintiffs use the term Defendants
they mean each and every Defendant as if they had been individually named (Doc. 123
at 2). Based upon these averments, I conclude that the First Amended Complaint does
allege that Plaintiffs have entered into contracts with the Defendants and therefore, as
pled, Plaintiffs quantum meruit claim must be dismissed.
Even if I looked past Plaintiffs use of group pleading and accepted that not all
Plaintiffs have DRPs with all Defendants, I would still recommend dismissal of Count I.
Under Indiana law, someone who provides work without a reasonable expectation of
payment cannot recover in quantum meruit, see Woodruff, 964 N.E.2d at 792 (affirming
judgment for defendant on quantum meruit claim because the plaintiff could not, under
any level of reasonableness, have expected payment from [the defendant] once it had
been decertified), and Plaintiffs have pled facts showing that any expectation of payment
they had was unreasonable. Like the Mississippi case, see Capitol Body Shop, Inc. v.
State Farm Mutual Automobile Ins. Co., No. 6:14-cv-6000, Doc. 82 at 9 (M.D. Fla. Feb. 9,
2015) (report and recommendation on motions to dismiss), the First Amended Complaint
case alleges that Defendants told Plaintiffs what they would pay for repairs (Doc. 123,
66, 73, 7580). And, in their memorandum in opposition to the motions to dismiss,
Plaintiffs argue that every Defendant enforced the terms of the DRPs against every
Plaintiff, whether or not there was a DRP between the particular Plaintiff and Defendant
(Doc. 136 at 3). Here, as in the Mississippi case, Defendants repeated and persistent
refusal to pay the amounts demanded by Plaintiffs makes unreasonable any expectation

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on the part of Plaintiffs that Defendants would abruptly begin paying the amounts
Plaintiffs believe their services are worth. See Capitol Body Shop, Doc. 82 at 10.
Finally, some Defendants argue, relying largely on case law from Florida, that
Plaintiffs have failed to allege any benefit that they conferred on Defendants. (See
Doc. 132 at 21; Doc. 135 at 1718). Plaintiffs do not address this argument in their
response. Given Plaintiffs failure to rebut Defendants argument, I recommend
dismissal on this basis as well.
Counts II: Tortious Interference with Contractual Relationship
To establish a right to relief for tortious interference with contractual relationship
under Indiana law, a plaintiff must show (i) the existence of a valid and enforceable
contract; (ii) defendants knowledge of the existence of the contract; (iii) defendants
intentional inducement of breach of the contract; (iv) the absence of justification; and (v)
damages resulting from defendants wrongful inducement of the breach. Winkler v. V.G.
Reed & Sons, Inc., 638 N.E.2d 1228, 1235 (Ind. 1994).
Plaintiffs tortious interference claim fails because they did not plead sufficient
factual matter to show that any Defendant caused any insured or claimant to fail to
perform a contractual duty owed to any Plaintiff. Iqbal, 556 U.S. at 677. Plaintiffs only
generally allege the existence of contracts between themselves and Defendants
insureds. (See Doc. 123, 62 (Each Plaintiff has done business ... with at least one
Defendants policyholders and claimants by providing to them motor vehicle collision
repair services.); 139 (Multiple contractual relationships exist, or have existed,
between Plaintiffs and consumers...)). Plaintiffs fail to specify any contractual duty or
any other duty owed to them by an insured. Assuming these generalized allegations
about the existence of contracts can support a claim for tortious interference, Plaintiffs

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have still not pled facts showing that any insured failed to perform any of these contracts.
Instead, Plaintiffs complain repeatedly that Defendantsnot the insuredshave a duty to
pay for repairs, and that Defendantsnot the insuredshave breached their duty to make
those payments. (See Doc. 123, 62 (Defendant Insurers are generally individually
responsible for payment of those repairs....); 71 ([T]he vast majority of the Plaintiffs
business is generated by customers for whom the Defendants are responsible to pay
repair costs.); 103 (The Defendants refuse to pay and/or pay in full for a large number
of [necessary repairs].); 111 (State Farm has failed to perform as promised....
[Defendants] have continued to refuse to make payment and/or full payment for
necessary and proper repairs.)). Because Plaintiffs have not alleged that any third party
failed to perform a contractual duty owed to a Plaintiff, they cannot show that
Defendants induced any breach or nonperformance, and thus cannot plausibly plead a
claim for tortious interference with contract. Accordingly, I recommend that the Court
dismiss Count II without prejudice.
Count III: Tortious Interference with Business Relationship
Indiana courts recognize a cause of action in tort for interference with business
relationship where the defendant wrongfully prevents the plaintiff and a third party from
forming a contract, rather than performing an existing contract. The elements of the tort
are similar to the elements of tortious interference with contract, with two differences:
tortious interference with business relationship requires only a valid business
relationship rather than a valid and enforceable contract, but it also requires illegal
conduct by the defendant. Melton v. Ousley, 925 N.E.2d 430, 440 n. 9 (Ind. App. 2010).
Thus, to prevail, the plaintiff must demonstrate (1) the existence of a valid business
relationship; (2) of which the defendant knew; (3) in which the defendant intentionally

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and illegally interfered; (4) without justification2; and (5) damage to the plaintiff resulting
from the defendants interference. Economation, Inc. v. Automated Conveyor Systems,
Inc. 694 F. Supp. 553, 556 (S.D. Ind. 1988) (citing Flintridge Station Associates v.
American Fletcher Mortgage Co., 761 F.2d 434, 44041 (7th Cir. 1985)).
In A & E Auto Body, the Court dismissed the plaintiffs tortious interference claims
on the grounds that the generalized allegations in that case that defendants interfered
with plaintiffs customer base in general simply could not support a tortious interference
claim under Florida law:
[W]hile a plaintiff may properly bring a cause of action alleging
tortious interference with present or prospective customers, no
cause of action exists for tortious interference with a
businesss relationship to the community at large. Ethan
Allen, Inc. v. Georgetown Manor, Inc., 647 So.2d 812, 815
(Fla.1994). As a general rule, an action for tortious
interference with a business relationship requires a business
relationship evidenced by an actual and identifiable
understanding or agreement which in all probability would
have been completed if the defendant had not interfered. Id.
The Amended Complaint cannot plausibly be read to allege
that the individuals to whom the Defendants made their
misrepresentations about poor quality work and the like had
actual or identifiable understandings or agreements with one
or more of the Plaintiffs that likely would have been completed
but for those misrepresentations. So far as the Amended
Complaint discloses, the insureds to whom the Defendants
made misrepresentations never had any contact with the
repair shop that was being disparaged, much less an actual
and identifiable understanding or agreement. See, e.g.,
Sarkis v. Pafford Oil Co., 697 So.2d 524, 526 (Fla. 1st DCA
1997) (affirming dismissal with prejudice of tortious
interference claim for failure to identify the customers who
were the subject of the alleged interference).
2015 WL 304048, at *8.

2
It is not clear what independent significance this element adds given the requirement of illegal
conduct. Cf. Winkler, 638 N.E.2d at 1236 (arguably implying that illegal acts cannot be justified in tortious
interference cases (citing Bochnowski v. Peoples, 571 N.E.2d 282, 275 (Ind. 1991); Miller v. Ortman, 136
N.E.2d 17 (Ind. 1956))).

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In the Mississippi case, I declined to recommend dismissal on this basis because

Mississippi law does not require but for causation at the individual customer level.
Capitol Body Shop, Doc. 82, at 14 n. 4 (citing MBF Corp. v. Century Business
Communications, Inc., 663 So. 2d 595, 600 (Miss. 1995)). While Indiana courts have not
directly considered whether a cause of action for tortious interference lies for interference
in a plaintiffs relationship with its customer base, MBF Corp., 663 So. 2d at 600, I am
fairly confident they would not. Indiana law, like Florida law, defines the elements of
tortious interference with business relationships in terms of specific, individual
relationships between the plaintiff and third parties in which the defendant interferes.
Compare Economation, Inc., 694 F. Supp. at 556; with Tamiami Trail Tours, Inc. v.
Cotton, 463 So. 2d 1126, 1127 (Fla. 1985) (Under Florida law, the elements of tortious
interference with a business relationship are: (1) the existence of a business relationship,
not necessarily evidenced by an enforceable contract; knowledge of the relationship on
the part of the defendant; (3) an intentional and unjustified interference with the
relationship by the defendant; and (4) damage to the plaintiff as a result of the breach of
the relationship.). Mississippi cases, by contrast, cast the elements of the tort much
more generally. See, e.g., Biglane v. Under the Hill Corp., 949 So. 2d 9, 16 (Miss. 2007)
(elements of tortious interference are (1) intentional and willful acts, (2) calculated to
cause damage to plaintiffs in lawful business, (3) malice, and (4) actual damage and loss
as a result).
Moreover, Indiana courts have applied the requirement of a valid business
relationship to limit relief to plaintiffs who can demonstrate a sufficiently well-defined
expectation that a contract would be created before the defendant interfered. For
example, in Comfax Corp. v. North American Van Lines, Inc., 587 N.E.2d 118 (Ind. App.

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1992), an Indiana appellate court upheld a grant of summary judgment for a counterdefendant on a tortious interference claim because the counter-plaintiff failed to show
that [it] had a valid business relationship with a third party with which [the counterdefendant] interfered. Id. at 124. The court emphasized that a valid business
relationship required more than bald assertions of possible business opportunities. Id.
See also Government Payment Service, Inc. v. Ace Bail Bonds, 854 N.E.2d 1205, 1209
10 (Ind. App. 2006) (finding no business relationship between bail agents and local
governments); Computers Unlimited, Inc. v. Midwest Data Systems, 657 N.E.2d 165, 168
69 (Ind. App. 1995) (finding no business relationship as a matter of law where contract
between plaintiff and third party had terminated and there was no reason to believe that
continued negotiations to resolve disputes arising from expired contract constituted a
continuance of the business relationship).
Here, Plaintiffs First Amended Complaint offers little more than bald assertions of
possible business opportunities in the form of return visits from past customers. Comfax
Corp., 587 N.E.2d at 124. This is not enough to show the existence of the valid
business relationship necessary to support a claim for tortious interference with a
business relationship under Indiana law. Accordingly, I recommend that Count III be
dismissed without prejudice.3
Counts IV and V: Federal Antitrust Claims
Plaintiffs antitrust claims are indistinguishable from the claims asserted by the
plaintiffs in A&E Auto Body. On January 21, 2015, the Court dismissed those claims
without prejudice, with leave to amend. A&E Auto Body, 2015 WL 304048, at *912
In the Mississippi case, I recommended dismissal of a similar claim because Plaintiffs use of
group pleading rendered the complaint implausible. Capitol Body Shop, Doc. 82 at 1214. The same
rationale supports dismissal of Count III in this case.
3

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(M.D. Fla. Jan. 21, 2015). Because the Courts reasoning in A&E Auto Body applies to
Plaintiffs First Amended Complaint in this case, I recommend that Counts VII and VIII be
dismissed without prejudice, for the reasons stated in the dismissal order in A&E Auto
Body.
IV. Recommendation
Upon consideration of the foregoing, I respectfully recommend that Defendants
Motions to Dismiss be GRANTED and that Plaintiffs First Amended Complaint be
DISMISSED without prejudice, with 21 days leave to amend.
Specific written objections to this report and recommendation may be filed in
accordance with 28 U.S.C. 636, and M.D. Fla. R. 6.02, within fourteen (14) days after
service of this report and recommendation. Failure to file timely objections shall bar the
party from a de novo determination by a district judge and from attacking factual findings
on appeal.
RESPECTFULLY RECOMMENDED at Orlando, Florida on February 25, 2015.

Copies furnished to:

Presiding United States District Judge
Counsel of Record

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