Safelite Group and Safelite Solutions have asked the U.S. District Court of Minnesota to issue a preliminary junction to temporarily halt enforcement of a Minnesota statute it contends prohibits “insurers and insurance claims processors from engaging in truthful commercial speech.”
“Because some businesses feel disadvantaged by the insurer’s right to refer, some states and state agencies have—as Minnesota has done here—sought to restrict the speech of insurance companies and claims processors. Every court to consider these efforts has concluded that such speech restrictions are unconstitutional,” Safelite attorneys write in the court documents.
At the heart of the legal battle is a settlement between the Minnesota Department of Commerce, Insurance division, and Auto Club Group that provides for the Auto Club Group to pay a civil penalty of $150,000 and “cease and desist from using Safelite Solutions, or any other subsidiary of Safelite Group Inc. as its administrator of automobile glass claims in Minnesota,” according to the settlement agreement.
Further, the Auto Club Group cannot inform insureds that they “may not receive a proper warranty from and/or may be balance-billed by non-preferred glass vendors, unless respondents have specific information proving the assertions to be true for a certain vendor,” the state insurance commissioner writes in the settlement agreement, citing the statute in question.
In their argument to the U.S. District Court against the cease and desist order, Safelite’s attorneys cite Safelite Group versus Jepsen as precedence. In the Jepsen case, the Second Circuit Court ordered a preliminary injunction on First Amendment grounds that temporary halted enforcement of PA 13-67—An Act Concerning Automotive Glass Work in September 2014. The U.S. District Court soon after issued a permanent injunction.
“[H]ere, it is the defendants who must overcome an unbroken line of cases striking down statutes that are, in key respects, even less onerous than the speech restrictions the Minnesota Department of Commerce is now enforcing,” Safelite’s attorney write.
“[S]pecifically, the [Minnesota Commerce] Commissioner claims the statute prohibits an insurer or claims processor from ‘advis[ing] insureds that they may not receive a warranty … for work performed by non-preferred glass vendors’ and from ‘advis[ing] that insureds may be balance billed by non-preferred glass vendors’—even when those statements are true,’” Safelite’s attorneys contend in court documents.
Safelite’s attorneys say the company was excluded from conducting business in Minnesota without notice of the commissioner’s interpretation of the law, an opportunity to challenge the interpretation or the chance to conform its conduct to that interpretation.
“Rather than pursuing an action against Safelite—which would have given Safelite the opportunity to defend itself—the commissioner ran an end-run around due process by adopting a strategy of targeting one of Safelite’s clients in Minnesota and threatening it with litigation unless the client entered into a consent order agreeing to cease doing business with Safelite—regardless of Safelite’s conduct or Safelite’s conformity with the law,” according to the court documents.
Attorneys contend that without a preliminary injunction, Safelite will “suffer irreparable harm to its constitutional rights and to its business. By contrast, if the preliminary injunction is granted, the state will suffer no harm. It will only be required to defend its interpretation and enforcement before being able to inflict further penalties on Safelite and Safelite’s clients.”
A motion hearing is set for May 12, 2014 at 11:00 a.m. at the U.S. District Court of Minnesota.
Safelite first argued its case on the state level before attempting to take it to U.S. District Court.
After the settlement agreement was made public, Safelite filed a petition for writ of certiorari with the Appellate Court of Minnesota. The appellate court reviewed Safelite’s petition for writ of certiorari and issued a decision that said the settlement agreement was not open to certiorari review.
“Because the January 8, 2015 consent order does not meet any of the three indicia of quasi-judicial act under MCEA, certiorari review is not available. … The writ of certiorari is discharged and this appeal is dismissed,” according the Minnesota Appellate Court’s decision.
Safelite then petitioned the Minnesota Supreme Court to review the decision.
“This case presents an important question on which this court should rule,” Safelite’s attorneys write in their petition to the Minnesota Supreme Court. “Contracts are important property rights that cannot be taken without due process. Here, the commissioner of commerce ordered an insurance company to terminate its valid, legal, contract with petitioners, and ordered it to never again do business with petitioners.”
Meanwhile, the Minnesota’s Department of Commerce, Insurance division, has asked the Minnesota Supreme Court to deny Safelite’s petition for review.
“[T]he Court of Appeals properly concluded that none of the three indicia of quasi-judicial actions are present in this case. First, there is no disputed claim or weighing of evidentiary facts because the consent order represents a voluntary settlement of the issue,” write the attorneys for the state Department of Commerce to the Minnesota Supreme Court. “Rather, there was an administrative investigation, followed by an informal resolution. Indeed, the consent order specifically provides that it is an informal resolution without a hearing. … To the contrary, the regulated party entered into an agreement with a regulatory agency to avoid quasi-judicial factual findings or legal conclusions.”
The Minnesota Supreme Court has not yet issued a decision at press time.
So why, if the Minnesota Supreme Court has not yet ruled, has Safelite filed its case with U.S. District Court?
“In general, many lawyers believe that state courts would be more likely to favor local parties over national ones. It also seems likely that the state courts would be more likely to uphold their state government’s action than a Federal Court. In this case, given that the Minnesota Appellate Court wouldn’t hear the case, there is a pretty good chance that the state Supreme Court wouldn’t hear the case anyway and they might as well get started in Federal Court,” explains Stuart Zimmerman, a former journalist and former attorney/advisor for U.S. Department of Justice, who has been following Safelite’s battles with Connecticut.
The Minnesota Department of Commerce had not yet responded to Safelite’s complaint in the U.S. District Court at press time.
To read Safelite’s Motion for a Preliminary Injunction to the U.S. District Court, click here.