by Debra Levy

It may have been a little later than planned, but the Independent Glass Association (IGA) made good its promise to file a lawsuit designed to settle the legalities of steering in the auto glass industry.

"We need a court to take a look at steering," said then-incoming executive director Marc Anderson at the association's annual convention last April in Columbus.

"Steering is the biggest single issue destroying our profitability," he had said at the time. "We don't believe the practices being used now are legal, and we want the courts to give us their opinion."

At the direction of the IGA board of directors, Anderson had promised a suit would be filed by the end of the year. He missed the target by just a few weeks.

IGA bills itself as the country's only association dedicated to meeting the needs of independent glass shops with 100 locations or less. The association has its roots in the auto glass business, but began outreach last year to expand its membership to include and serve the architectural glass industry. The Minneapolis-based association currently represents more than 1,600 locations in the country involved with auto glass installation.

The association has filed its lawsuit today with the U.S. District Court in Minnesota against the Safelite Group, Inc. of Delaware and a number of its related companies. In addition to the IGA itself, the suit is being brought by three other plaintiffs; two are insurance adjustors in Nebraska and Minnesota. All are identified with pseudonyms to "preclude any attempt or tendency for professional retaliation by the defendants or any of their insurance clients."

Alleged Illegal Activity
The suit includes a number of unexpected strategies. First, the fact that IGA itself is a plaintiff is a surprise to many. IGA was expected to facilitate the lawsuit, but not be a party to it. Secondly, recitation of both alleged Lanham Act violations and illegal claims adjusting took some by surprise. Finally, the fact that no damages were requested was a shock to others.
"This case has never been about damages," says Anderson. "We want illegal steering to stop once and for all. We want their practices to change, so the playing field is level. Give independents a fair shot at competition and they'll win, but it has to be fair," he told the group at its 2004 meeting.

The group's annual convention, scheduled this year for February 24-26 in Orlando, Fla., will also include an update on the lawsuit.

The suit details four major areas of alleged illegal activities by Safelite:
1. Illegal steering by the Safelite Call Centers;
2. A systematic policy of short payments to independents;
3. An illegal $15 invoice service fee that was deducted from non-affiliated shops for a few months before Safelite "suspended" the practice; and
4. Unlicensed insurance adjusting.

Steering
The complaint details ways in which IGA believes Safelite engages in unlawful steering. It says that, if an insured requests that its auto glass work be done by an unaffiliated shop, representatives at Safelite's call centers will say one or more of the following:

The 22-page suit further alleges:
"In October of 2004 and November of 2004, the IGA wrote to Safelite to notify Safelite that its business practice and script contained false and misleading information, especially concerning at least the list of IGA member glass shops contained on a list included with the letter. The IGA demanded that Safelite thereafter accurately reflect the true practice of the glass shops on the list and cease leading insured customers to believe that they may be billed for Safelite short pays of the glass shop's invoice when that was not true, in fact. (A copy of the letter was attached.)

"Despite having been put on notice that it was disseminating false and misleading information or misleading insured customers with respect to the glass shops on the list, Safelite nevertheless has refused to modify its script and it currently continues to make said misrepresentations to call center customers."

Short Payments
IGA alleges that " … when Safelite receives direct billing on behalf of its insurance company clients for processing and payment, Safelite undertakes an independent evaluation of the glass damage and repairs undertaken and makes its own "determination" as to the price that should be paid to the glass shop for the repair or replacement. Safelite's unilateral determination as to the proper payment amount is systematic, based on a secret formula and unsupported by any public objective, or independent economic market data, and is virtually always less than the price actually charged in the Invoice by the independent glass shop.

" …. despite the amount of any invoice, despite whatever payment Safelite does or could receive or authorize to be paid from the relevant insurance company in respect of any job or invoice, and despite whatever amount is truly due and owing under an insured customer's policy or the local law governing amounts due thereunder, Safelite never pays more than said set, pre-determined amount to the glass shop in respect of any job - all as determined and administered by Safelite pursuant to the authority contained in its contracts with insurance companies. Such process results in the systematic short paying and delay of payment of virtually every invoice for every job performed by IGA glass shops on every claim adjusted by Safelite,"

Illegal Actions
The complaint alleges six counts of illegal activity:
1. Lanham Act violations-"Safelite's statements are made with the intent and for the purpose of getting insurance customers to switch their choice of glass shop from an independent unaffiliated glass show to a Safelite network provider," says the complaint.
2. False advertising;
3. Common law fraud;
4. Consumer law fraud;
5. Unlicensed claims adjusting; and
6. Conversion-wrongly retaining possession of the independent glass shops' $15 that Safelite had been deducting from non-affiliated shops.

Surprisingly, the suit does not ask for a huge monetary award. It instead asks for payment of attorney's fees only, what the court finds fair, and that Safelite be enjoined and restrained from:

a. "Misrepresenting the nature, characteristics or qualities of IGA member independent glass shop goods or services to insured customers; namely misrepresenting that the work performed by IGA member independent glass shops may not be guaranteed or warranteed where it has reason to know otherwise, that the materials used by independent glass shops is in some manner substandard or unsafe, that the installation technicians at independent glass shops are not experienced or properly trained or certified, that insurance customers may have to pay additional, out-of-pocket charges if the Job is performed by an independent glass shop, and that independent glass shop work may not be covered by the customer's insurance policy because the glass shop is not approved, authorized, or recommended by the insurance company or its claims administrator.

b. Performing insurance claims adjusting services for others without first obtaining a license in Minnesota or any other state where a license is required for the adjusting of auto insurance claims;

c. Collecting or retaining the invoice paper service fee, or any other fees or amounts from the insurance payments that IGA member glass shops are due and owed from the insurance companies for whom Safelite provides bill processing and payment services."

Court papers were being filed at press time, so no response from Safelite has yet been filed. AGRR will keep you informed. The U.S. District Court in Minnesota is expected to have documentation posted on its website this evening, possibly within the hour. We will post a link to the appropriate website when it becomes available. Check back for more information.

Debra Levy is the publisher of AGRR magazine