Campfield, Ultra Bond Lawsuit Against State Farm and LYNX Dismissed

The lawsuit filed by Richard Campfield and his company, Ultra Bond Inc., against State Farm and LYNX over long-crack repair has been dismissed. The judge said that "a reasonable fact finder could not conclude that the defendants have knowingly and intentionally deceived Sate Farm insureds in implementing State Farm's six-inch criterion … could not conclude that the alleged misrepresentation has had a significant public impact in the past, or will have such an impact in the future," and "absent evidence of a breach of an Ultra Bond license contract, or evidence that the defendants used any wrongful means to interfere with Ultra Bond's at will licensing contracts …"

Campfield and Ultra Bond filed the suit in the U.S. District Court of Colorado in February, 2003, alleging "unfair or deceptive trade practices in violation of the Colorado Consumer Protection Act (CCPA) and tortious interference with contract and with prospective business relations" on the part of State Farm and LYNX. The plaintiffs allege that when a State Farm insured calls in a claim for a cracked windshield, if the crack is determined to be longer than six inches (considered a "long crack"), the insured is encouraged to have the windshield replaced rather than repaired and that the benefits of repair are not fully explained. By doing so, they further state, State Farm and LYNX have interfered with the licensing of the Ultra Bond method of repairing long cracks.

In July, State Farm and LYNX both filed motions for summary judgments. They assert that a CCPA claim is subject to a three-year statute of limitations that begins "within three years of the date 'on which the false, misleading or deceptive act or practice occurred,'" and the tortious interference claim should have been "brought within two years after the cause of action accrues."

According to the Order Concerning Defendants' Motion for Summary Judgement, "the defendants note that the plaintiffs were aware of the facts on which they base their claims more than three years before the plaintiffs filed their Complaint." In discussion the statute of limitations, Judge Robert E. Blackburn noted that in the State Farm motion for summary judgment that "between February 1997, and January 2000, Campfield wrote twelve letters … complaining that the defendants' six inch criterion was illegal and was injuring the plaintiffs' business."

Countering this argument, Campfield and Ultra Bond stated that they were basing their tortious interference claims on the defendants' actions from February 19 2001, forward and the CCPA claims from February 19, 2000 to present.

Noting that State Farm and LYNX had implemented the six-inch criterion in 1997 and that Campfield and Ultra Bond were aware of the policy by 1999, Blackburn referred particularly to the case of Harmon v. Fred S. James & Co., as being of similar circumstances; in doing so, he related the ruling from that case that "a series of unlawful acts can be viewed properly as a 'continuing violation' only if their character was not apparent when they were committed but became so when viewed in the light of later acts."

Using the Harmon case as precedent, Blackburn wrote "in this case … the nature of the defendants' later actions did not serve to clarify the nature of the defendants' actions. Thus, the continuing violation doctrine does not serve to expand the time period encompassed by the plaintiffs claims beyond the applicable statutory limitations periods. The plaintiffs do not seek such an expansion."

However, outlining the problems that arise with statutes of limitations, Blackburn did note that "absent such an application of the periods of limitation, the defendants could continue their pattern of allegedly wrongful action with impunity once the period of limitations expired on actions more than three years in the past. Periods of limitations are not meant to shield current or recent conduct in such a fashion."

Despite this, Blackburn outlined what the plaintiffs had to show in order to prove a "privte cause of action under the CCPA," of which there are five main points. He cited the case of Rhino Linings USA Inc. v. Rocky Mountain Rhino Linings, stating that Campfield and Ultra Bond would have had to prove that State Farm and LYNX were "1) engaged in an unfair or deceptive trade practice; 2) in the course of their business; 3) which significantly impacted the public as actual or potential customers of State Farm or LYNX's goods or services; 4) the plaintiffs suffered an injury in fact to a legally protected interest; and 5) the practice caused injury.

In applying the law, Blackburn wrote that LYNX argued that the CCPA does not apply because "the public is not an actual or potential customer of LYNX's services," but rather that State Farm is the customer. Judge Blackburn disagreed with this assessment, stating that "although State Farm insureds with glass claims do not pay directly for LYNX's claim processing services, those insureds do use or consumer LYNX's claims processing services when the insureds make claims for glass coverage."
LYNX also stated in its motion for summary judgement that it "cannot have the requisite knowledge or intent when it is State Farm that determines the rules for claims processing, and what statements are to be made to policy holders who make claims," an assertion with which Blackburn also disagrees, noting that "if a LYNX representative knows that a statement is a misrepresentation, then the representative knowingly makes a representation anytime the LYNX representative passes on such information. The fact that a person knowingly makes an inaccurate statement at the direction of another does not make the statement any more accurate, and does not necessarily mean that the person did not know of the inaccuracy."

Rather, Blackburn once again referred to the Rhino Linings case, noting that "To form the basis of a CCPA claim, a misrepresentation must be made 'either with knowledge of its untruth, or recklessly and willfully made without regard to its consequences, and with an intent to mislead and deceive …'" and concluded that "a reasonable fact finder could not find that State Farm's recommendation that a windshield with a long crack be replaced is a knowing and intentional misrepresentation of State Farm's insurance services." Citing State Farm's motion for summary judgment that mentions the lack of an industry standard that recommends windshield repairs longer than six inches, Blackburn opined that "State Farm and LYNX's use of the words recommend and/or consider clearly indicate that alternatives are available." As there was no question that if a policyholder inquires further about repair that the information is shared, Blackburn ruled that "a reasonable fact finder could not find that State Farm or LYNX knowingly and intentionally conceal the nature of State Farms' coverage, but instead recommend a particular resolution to the problem." This recommendation, Blackburn says, "does not amount to knowing and intentional concealment or misrepresentation."

Regarding how much "significant public impact" was affected by the 6-inch criteria used by State Farm and LYNX's, Blackburn wrote that Campfield and Ultra Bond cited "almost no evidence to support their claim of public impact."

Specifically, he noted that of the 30-40 million policyholders with glass coverage and resulting 1.7 million glass claims per year that the plaintiffs' discussed in their response to LYNX's motion for summary judgment, there is no indication just how many of those claims are for long cracks in their windshield.

"Apparently, the plaintiffs ask the court to indulge in the presumption that many State Farm insureds make claims based on long cracks in their windshields," writes Judge Blackburn. "Such a presumption is not a basis on which a reasonable finder of fact could conclude that a significant number of consumers are adversely affected by the defendants' practice."

Blackburn ruled that a reasonable fact finder could neither conclude that State Farm and LYNX "have knowingly and intentionally deceived State Farm insureds," nor that "the alleged misrepresentation has had a significant public impact in the past, or will have such an impact in the future and granted both defendants' motions for summary judgment on the CCPA claim.

Plaintiffs had to prove five separate points to prove the claims of tortious interference, showing that "1) plaintiffs had a contract with a third party; 2) defendants knew or reasonably should have known of the contract; 3) defendants intentionally induced the other party to the contract not to perform its contractual duty; 4) the defendants' actions were improper; and 5) the defendants' actions caused the plaintiffs' damage." To this end, Blackburn ruled that "plaintiffs have not come forward with evidence that demonstrates a genuine issue of material fact concerning elements three and four," and that given the lack of evidence in these areas, he did not further study the other aspects of the tortious interference claim.

Regarding the breach of contract aspect of the suit, according to the order, Campfield and Ultra Bond indicated that they would "show at trial that hundreds of licnesees have breeched or terminated their license contracts due to the restrictive long crack repair criteria," and included the affidavits of three supporting witnesses: Kerry Wanstrath, part owner of Glass Technology Inc., Joel Morse and Gerald Holcomb.

Despite their written statements, in which two of the witnesses said they had to cancel contracts with Ultra Bond due to a lack of long crack repair criteria, Blackburn ruled that "nothing in the record demonstrates that any of these Ultra Bond licensees breached their license contract."

Blackburn ruled that "in the context of competitive business relations," the contracts, which are terminable at will, have only limited protection from tortious interference that the plaintiffs claimed. Citing Amoco Oil Co. v. Ervin, Judge Blackburn ruled that the allegations that State Farm and LYNX "systematically steer[ed] insureds away from long crack repair and toward windshield replacement" is "analogous to Amoco giving economic incentives to its company-owned dealers while imposing costly lease terms on its independent dealers." Ultimately, he ruled that the defendants' practices "constitute economic pressure, a legitimate tool in economic competition," and are not considered "the kind of wrongful action that must be proven to establish intentional interference with contractual relations or prospective contractual relations."

Campfield and Ultra Bond twice filed motions to supplement the record, once in October and again in November. According to the Order, they sought to add affidavits of two former LYNX representatives. State Farm and LYNX objected to the motion, citing the plaintiffs' failure to "file a motion under FED. R. CIV. P 56(f) seeking additional time to supply affidavits that were not available to permit the presentation of affidavits essential to the party's opposition." State Farm and LYNX also argued that Campfield and Ultra Bond were slow in obtaining the affidavits, a point with which Judge Blackburn acknowledged but he allowed their admittance anyway.

However, upon reviewing the additional affidavits, he decided that "they do not change my findings or conclusions," and don't add to the claims to which Blackburn wished to see additional support.

As the case stood at that time, Blackburn granted both defendants' motions for summary judgment and the plaintiffs' motions to supplement, denied all motions that had yet to be heard or considered and cancelled (vacated) both the trial prep conference and the trial scheduled for January 20 and 23, respectively. The judge also ruled that Campfield and Ultra Bond pay the the defendants' legal costs.