Antitrust case against State Farm brought by La. AG, campaign treasurer transferred to MDL

ORLANDO, Fla. – Louisiana Attorney General Buddy Caldwell’s antitrust lawsuit against State Farm that was brought with help from a campaign supporter has been sent to a multidistrict litigation proceeding in Florida federal court.

On Dec. 12, the Judicial Panel on Multidistrict Litigation entered an order transferring Caldwell’s case, which was filed in a Louisiana state court and alleges the insurance company tried to control the auto repair industry, to U.S. District Court for the Middle District of Florida.

The company used scare tactics to steer consumers to State Farm-preferred repair shops, Caldwell said.

Listed as counsel for Louisiana is Edmond Wade Shows of Shows, Cali & Walsh in Baton Rouge.

According to followthemoney.org, Shows gave $5,000 to Caldwell’s campaign fund in 2011. He also served as Caldwell's campaign treasurer.

Melissa Landry, executive director of the legal reform group Louisiana Lawsuit Abuse Watch, said the role private plaintiffs attorneys have played in state litigation has increased under Caldwell.

"This process, dubbed the 'Buddy System,' has raised serious concerns about political supporters reaping windfall rewards from no-bid state contracts with little or no public accountability," Landry said.

"Obviously, this case is another high profile example of that. Even though its being moved out of the judicial hellhole we know as Louisiana’s legal system over to Florida, we will continue to monitor the litigation and the activities of the attorneys involved.”

State Farm allegedly forced shops to perform vehicle repairs quickly and cheaply instead of complying with consumer safety and vehicle manufacturer performance standards.

“State Farm has created a culture of unsafe business practices in which consumer vehicle repairs are performed with cost-savings as the primary goal rather than safety and reliability,” Caldwell said when announcing the lawsuit.

State Farm allegedly directed consumers to repair providers that signed agreements with the insurer. Caldwell alleged that under the terms of the agreements, the repair shops must comply with State Farm’s standards of repair. State Farm allegedly dictated the quality of replacement parts and what types of repairs could be made.

Caldwell said the suit is meant to change the culture of unsafe business practices in the auto insurance and repair industry.

State Farm removed the case, filed in August, to federal court in September. The allegations, it claimed, are based on the alleged violations of a 1963 consent decree entered in a federal court.

Caldwell responded by asking that the case be remanded to the East Baton Rouge state court in which it was originally filed. His response also said he was opposed to transfer to the MDL, which consists of lawsuits brought by private body shops against State Farm and other insurers.

“By simply referencing the 1963 Consent Decree in its Petition, the State does not automatically trigger federal jurisdiction,” the AG’s office argued.

The MDL panel said Caldwell’s lawsuit should proceed with the other private actions in the MDL instead of separate from them and that two of the cases already in the MDL concern the Louisiana market.

Judge Gregory Presnell is presiding over the MDL. He will decide if the case should be remanded to state court.

From Legal Newsline: Reach editor John O’Brien at jobrienwv@gmail.com.