Se 1013 issue web

by Barrett Smith

Eddie Quintela, Owner and Presidentof Collision Concepts of DelrayBeach, FL has once again found itnecessary to file a lawsuit against 21stCentury Insurance on behalf of hiscustomer who made a claim undertheir policy with the carrier.

In 2012, on behalf of his com-pany’s customers, Quintela filed threeseparate lawsuits against 21st Centuryof which the insurer agreed to settlebefore the trial dates. In addition tothe disputed amounts, the insurer paidall of Eddie’s legal fees and costs.

In spite of recent claims whereasthe insurer has provided full pay-ments, as of late, 21st Century claimsrepresentatives have elected to onceagain deny payments for the repairer’s

posted labor rates, processes and pro-cedures as deemed to be reasonable

and necessary toproperly restoretheir customer’svehicle. As Such,Quintela, on be-half of and withthe full support ofhis customer, hasfound it necessary

to once again file a lawsuit against theinsurer on his customer’s behalf forsuch denials.

“As in the past with this com-pany”, states Eddie, “they pay us onlyafter we file suit but before they gobefore a judge and/or jury. Thereafterthey pay in full for every needed ma-terial, process and rates for a while…

by Chasidy Rae Sisk

Arguably, the most important roles ofcollision industry associations is to ad-vocate for its members rights and keepmembers educated on and informed ofchanges, both potential and real, in theindustry. The Georgia Collision Indus-try Association (GCIA) agrees withthis philosophy which is why theyfocus much of their efforts on hostingmeetings and events to provide mem-bers with current information that mayimpact their businesses. This fall, theyplan to be quite busy with their up-coming meeting, annual golf tourna-ment and First Responder EmergencyExtrication Program.

Executive Director, HowardBatchelor, explains their goals: “wewant to educate members on the newproducts and information available inthe industry, in hopes of helping themimprove their businesses.” EachGCIA meeting is broken into varioussegments to focus on specific issues.

One of the association’s main fo-cuses is to be their members’ voicewhen it comes to legislative issues.Currently, GCIA is interested in Mis-sissippi’s recent lawsuit against Part-sTrader and shop owners’ right topurchase parts from the supplier oftheir choice. They are also trying toput together a class-action lawsuit for

GCIA Sees Role as to Educate and SupportSee Quintela, Page 4

See GCIA Events, Page 6

Quintela Sues 21st Century A Second Timefor Short-Pays, Makes ‘Cents out of Sense’

by John Yoswick

Whether or not they participate inState Farm’s Select Service program,shops and parts vendors still have lotsof questions and concerns about Part-sTrader as State Farm continues itsroll-out of the program. Here is someadditional information addressingsome of those questions that repre-sentatives of State Farm or Part-sTrader have provided.

Roll-out schedule. PartsTraderrolled out in September in major mar-kets in California, Nevada and Utah,and in will do so in October in Michi-gan and Ohio. It will reach major mar-kets in Wisconsin, Illinois, Indiana,Kentucky and Tennessee later thisyear.

Vendor choice. Shops are notrequired to get price quotes fromanyone beyond their designated pre-

ferred dealer. In fact, Partstrader’sDale Sailer said, the system defaultsto sending a job’s parts list only tothe shop’s preferred dealer, thoughthe shop can expand the search fromthis default. State Farm does not getdata about whether a Select Serviceshop’s parts list for a job went onlyto the shop’s preferred dealer forquotes.

A shop can “direct order” a partthrough the system without waitingfor any parts quotes; State Farm doesknow, however, if a Select Serviceshop does this.

And if a dealer always gives ashop the same discount, the dealer canset the system up to automatically re-spond with that discount to all re-quests for quotes from that shop.

“Dealers don’t have to hire awhole bunch of people to fill out

State Farm and PartsTrader Offer More Infoon Roll-Out, Use of the System

Special SNAPSHOT of the Collision Industry, survey byCollision Repair Educational Foundation and I-CAR p. 22

See More on PartsTrader, Page 28

Eddie Quintela

The Mississippi Collision Repair As-sociation and Parts Suppliers are seek-ing industry support in suit againstState Farm and PartsTrader. Over 30plaintiffs, mostly Mississippi bodyshop owners, have filed an injunctionagainst State Farm and PartsTrader inan attempt to prohibit the insurer fromforcing any Select Service shop inMississippi to use PartsTrader.

The suit was filed Aug. 28 byJackson, MS-based attorney for thenearly three dozen plaintiffs, JohnArthur Eaves, Jr., in the HindsCounty, MS, Chancery Court againstState Farm Mutual Automobile Insur-ance Company and PartsTrader LLC.

Plaintiff include the MississippiCollision Repair Association (MSCRA)OEM parts dealers and other parts sup-pliers and dozens of collision repairprincipals, including prominent local re-pairers John Mosley (Clinton BodyShop) and Doug White (Capitol BodyShop).

The suit seeks the court’s decla-tory judgment and injuction to blockState Farm from requiring the Part-sTrader ordering process in Missis-sippi. The requested injunction is to

1) Prohibit the Defendants fromforcing implementation of Part-sTrader in the State Farm Select Serv-

Mississippi Collision Repair Association andParts Suppliers File Suit Against PartsTrader

See Suit Against PartsTrader, 6

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AutoNation Chevrolet Coral Gables . 39BASF . . . . . . . . . . . . . . . . . . . . . . . . . 7Car Bench America. . . . . . . . . . . . . . 5Car-Part Pro. . . . . . . . . . . . . . . . . . . 24Certified Automotive PartsAssociation (CAPA). . . . . . . . . . . 25

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Forklift Wrecker . . . . . . . . . . . . . . . . 10GM Wholesale Parts Dealers . . . . . 36Gray-Daniels Auto Family . . . . . . . . 13Gus Machado Ford. . . . . . . . . . . . . 32Honda-Acura Wholesale PartsDealers. . . . . . . . . . . . . . . . . . 20-21

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Mercedes-Benz. . . . . . . . . . . . . . . . 17Mercedes-Benz Wholesale PartsDealers . . . . . . . . . . . . . . . . . . . . 33

Mitchell International. . . . . . . . . . . . 12MOPAR Wholesale Parts Dealers . . 27Motor Guard Corporation . . . . . . . . . 4Nalley BMW. . . . . . . . . . . . . . . . . . . 18Nissan Wholesale Parts Dealers. . . 37Porsche Wholesale Parts Dealers . 32PPG . . . . . . . . . . . . . . . . . . . . . . . . . . 2PreFab Ads . . . . . . . . . . . . . . . . . . . . 6Preval Spray Gun . . . . . . . . . . . . . . 40Rare Parts, Inc. . . . . . . . . . . . . . . . . 10SATA Spray Equipment . . . . . . . . . . 8Sherwin-Williams AutomotiveFinishes. . . . . . . . . . . . . . . . . 14, 15

Southtowne Hyundai . . . . . . . . . . . 30Starlite Coatings . . . . . . . . . . . . . . . 28Subaru of Gwinnett . . . . . . . . . . . . . 30Subaru Wholesale Parts Dealers . . 37Tameron Hyundai . . . . . . . . . . . . . . 18Valspar Automotive . . . . . . . . . . . . . 19Walcom USA. . . . . . . . . . . . . . . . . . 26

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Contents

REGIONAL

Allstate Pays Labor Rate to Settle 12

Pending Claims . . . . . . . . . . . . . . . . . . . 4

CarGuys Opens 2nd Location in Crystal

River, Florida . . . . . . . . . . . . . . . . . . . . . 4

CARSTAR Opens Another Atlanta-Area

Shop . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

GA and CA Most Expensive States to

Own a Car . . . . . . . . . . . . . . . . . . . . . . 12

GCIA Sees Role as to Educate and

Support . . . . . . . . . . . . . . . . . . . . . . . . . 1

Mississippi Collision Repair Association

and Parts Suppliers File Suit Against

PartsTrader . . . . . . . . . . . . . . . . . . . . . . 1

Quintela Sues 21st Century A Second

Time for Short-Pays, Makes ‘Cents

out of Sense’ . . . . . . . . . . . . . . . . . . . . . 1

COLUMNISTS

Attanasio - Is Radio Advertising a Sound

Decision For Body Shops?. . . . . . . . . . 26

Insider - Eliminating the “Have Not”

Shops Will Help the “Haves” . . . . . . . . 36

NATIONAL

AASP/NJ Announces Support of MCRA

Suit Against PartsTrader. . . . . . . . . . . . 15

ABRA Helps Raise $30,000 for Veterans’

Service Dogs . . . . . . . . . . . . . . . . . . . . 14

AMI and ASA Give the 2013 Emil Stanley

Merit Award . . . . . . . . . . . . . . . . . . . . . . 4

ASA Launches New Website, Improves

Repairer Tools . . . . . . . . . . . . . . . . . . . 10

ASA President Risley Writes to State

Farm’s Ed Rust Jr. on Mandates. . . . . . 15

ASRW’s New Format Will Be ‘Vastly

Different Experience’ . . . . . . . . . . . . . . 14

Attorney Spearheads Suit Against Carfax . . 37

Automotive Instructors Get Special

AAPEX 2013 Invite . . . . . . . . . . . . . . . 10

Automotive Service and Technology Expo:

Networking and Training to Occur Last

Weekend of September in Cary, NC . . . . 6

Best Way to Research New Product

at SEMA Show. . . . . . . . . . . . . . . . . . . 10

BLS Says Collision Industry Production

Rose in June . . . . . . . . . . . . . . . . . . . . 12

Caliber Collision Opens Two New

Locations in CO and CA . . . . . . . . . . . . 10

Daimler to Sell Self-Driving Production

Car by 2020 . . . . . . . . . . . . . . . . . . . . 12

Illinois Newest State with Electronic

Insurance Proof . . . . . . . . . . . . . . . . . . 38

Indiana Autobody Association Expresses

Support for SCRS Position Statement. . . 6

MD Shop Owners Prevail Against Short

Pays—No DRP, No Problem. . . . . . . . . 30

Mitchell Announces its New Reputation

Manager Package . . . . . . . . . . . . . . . . 14

Mitchell International Sold to Asset

Management firm KKR. . . . . . . . . . . . . 38

NABC Partners with ATT on Anti-Texting

Campaign . . . . . . . . . . . . . . . . . . . . . . 12

New SRS Checklist Available . . . . . . . . . . 27

SCRS Issues Position Statement on

Insurer Mandates. . . . . . . . . . . . . . . . . . 8

Sherwin-Williams and Online Blueprint

Provider Team Up . . . . . . . . . . . . . . . . 14

Snapshot of the Collision Repair Industry . 22

State Farm and PartsTrader Offer More

Info on Roll-Out, Use of the System . . . . 1

Tesla Motors Surges, Only Two ‘Galleries’

in Texas Where Legacy of Franchises

Holds . . . . . . . . . . . . . . . . . . . . . . . . . 33

The 1963 Federal Consent Decree . . . . . . 18

Three CARSTAR Stores Get Praise for

Outstanding CSI. . . . . . . . . . . . . . . . . . 38

www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 3

Contact: Barbara Davies, General Manager * (800) 699-8251

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then abruptly change back to their oldways. I’m puzzled; as I am confidenttheir company share-holders wouldbe as well, since the insurer has oftenpaid 20 times the amounts in dispute,often paying upwards of $2,500.00 inlegal fees and costs for a dispute thatmay be under $100.00!”

“I don’t care” said Eddie Quin-tela; “it would be much easier fortheir policyholder if they just paidwhat they owe without the need forlitigation, but when they don’t, I’ll behelping my customer to have their‘day in court.’

As I see it, they [insurers] can ei-ther pay fairly now… or pay muchmore later! “It doesn’t make a lot ofsense and even makes less ‘cents’says Quintela. “It’s no wonder insur-ance rates continue to climb and it hasabsolutely nothing to do with the costof proper repair as the insurers wouldhave people believe!”


Dave Mitchell, former president and CEOof Master Collision Repair, has announcedthe opening of the second CarGuys Auto-motive. CarGuys opened its first locationin Seffner, FL, earlier this year. The newestfacility, formerly Greg’s Car Care, is lo-cated in Crystal River, about an hour northof Tampa. The location is 20,000 squarefeet and sits on nearly 3.5 acres. This newlocation will provide full-service collisionas well as mechanical repairs. A third lo-cation is expected to open in Lady Lakesome time during the fourth quarter.

Mitchell sold Master Collision Re-pair, an eight-location operation, to Ger-ber Collision and Glass in early 2012 andworked with the group throughout 2012to help Gerber further develop theFlorida market. He left the company ear-lier this year to start this new venture.

Mitchell feels there is still plenty ofroom in Central Florida for professionalcollision repair centers. CarGuys’ growthwill be achieved through acquisition aswell as brownfield locations.

When asked about competing withlarger groups, Mitchell said, “I’ve alwayssaid that a good local operator can easilycompete with larger groups. The inde-pendent is able to make decisions muchquicker and will have a much better feelfor the local market. The larger a com-pany gets, the harder it is to identify theneed for change, let alone implement it.”

CarGuys Opens 2nd Loca-tion in Crystal River, Florida

Allstate Pays Labor Rate to Settle 12 Pending Claimsby Barrett Smith

In June 2013, Allstate claim’s manage-ment contacted Ray Gunder and re-quested a meeting to discuss Allstate’sinterest in bringing closure to the law-suits of which Ray had filed against thenation’s second largest insurer on be-half of a dozen of his customers.

During the meeting with Allstate’sTom Travis and Greg Ashley it wasagreed, based upon service and quality,that Gunder’s Auto Center was indeedentitled to their labor rate, however, notall repairers deserve the same laborrate, and concern was expressed, thatshould the word get out, how Allstatewould pay Gunder’s labor rate withouthaving to do so for other shops. Rayadvised he would continue to share hisjourney with the industry, and regard-less, if a settlement with Allstate wasreached or litigation continued, otherswould find out as his intent was that allrepairers and their technical staff wouldbe compensated fairly for their efforts,not just Gunder’s.

In July Gunder’s was advised thatAllstate would settle all twelve pendinglawsuits by paying the full labor rateand all related attorney fees and costs.Full payments for each were receivedlast week. Allstate makes the 44th in-surer to date which has agreed to pay

Gunder’s full labor rates and materials.“I am very appreciative of the

way this was handled by Allstate,”says Gunder. “No one wants litigation;however, sometimes it is needed to getdisputes resolved. My hope is that thisis truly a new way Allstate does busi-ness nationwide and they speak to theentire industry with one voice.”

The largest payment from All-state was for $1,575, while the small-est payment was for $198.

“Enclosed please find payment inthe amount of $1,575.24 for your losson 10/28/2012,” an Allstate representa-tive wrote in documents included withthe payments to Gunder Auto Center.

Gunder has an ongoing trackrecord of suing insurers on behalf ofhis customers over short pays.

“We’ll be in depositions all weekwith Geico representatives and havecontinued lawsuits with State Farm,”Gunder says. “Perhaps [Allstate] agree-ing to our rates will encourage GEICOand State Farm to pay rates and al-lowances that are fair and reasonable.One can be sure that we’ll continue topound the rock until they do.”

Gunder Auto Center settled asimilar case with State Farm in 2012.The collision center offers auto glassreplacement and repair services for itscustomers. This service is outsourced.

Continued from Cover

Quintela

www.autobodynews.comCHECK IT OUT!


CARSTAR has announced the open-ing of a new collision repair facility inthe Atlanta area. ACE CARSTAR Col-lision, owned by Virginia Patel, is lo-cated at 3320 Laventure Drive inChamblee, GA. Patel has been in theauto body repair business for morethan 15 years. The location has beenaround for 25 years and formerly op-erated as Alfa Romeo, a car dealership.

“The CARSTAR brand addstremendous value to my business,”said Patel. “As a woman in this in-dustry, I appreciate the national net-work of family business owners andexpanded resources that will help myshop grow and succeed.”

Added David Byers, CARSTARCEO, “We congratulate VirginiaPatel on joining the CARSTAR fam-ily and her commitment to opera-tional excellence. We are thrilled toexpand our collision repair family’spresence in Atlanta with this top-notch collision repair center.”

CARSTAR Opens AnotherAtlanta-Area Shop

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The Automotive Management Institute(AMI) and the Automotive Service As-sociation (ASA) have announced thatMark Steinke, production manager forRydell Collision Center, Grand Forks,N.D., is the recipient of this year’s EmilStanley Merit Award. Steinke hasworked in the collision repair industryfor more than nine years. He is cur-rently completing the necessary re-quirements to earn his AccreditedAutomotive Manager (AAM) designa-tion. When not working in the shop, hecontributes his time to various com-munity and industry organizations. Asthe scholarship recipient, Steinke willreceive $1,000 to be applied towardexpenses to attend educational sessionsand view the latest repair technologiesand equipment during the 2013 Inter-national Autobody Congress & Expo-sition (NACE), Oct. 16-18 in LasVegas. “I am honored to be selected asthe recipient of this scholarship.," saidSteinke. "I’m looking forward to thetraining and networking opportunitiesthat this scholarship makes possible.This opportunity will provide me withnew knowledge acquired from manyof the best instructors in the industry.”The Emil Stanley Award is made pos-sible by a grant from ASA to AMI.

AMI and ASA Give the 2013Emil Stanley Merit Award


During the last weekend of Septem-ber, September 27-29, the Independ-ent Garage Owners of North Carolina(IGONC) are hosting their Automo-tive Service and Technology Expo(ASTE) at the Embassy Suites Hoteland Convention Center in Cary, NC.Their website boasts this event as the“largest automotive aftermarketevent in the Carolinas.”

According to IGONC President,John Hill, the event, previously theIGONC Expo, was dissociated fromthe association five years ago to ap-peal to a wider audience by renamingit ASTE. Typically, between 400 to600 shops register to visit the 50+vendors on the exposition floor.

Hill notes that the most impor-tant benefit of the exposition is theopportunity for networking; “atten-dees are able to learn from one an-other’s experiences as people openup and are willing to discuss theirbusiness. They develop relation-ships, all while receiving afford,worthwhile training that they cantake back to their shop and benefittheir jobs.”

The three days of automotivetraining will include 25 managementand training sessions, featuring some

of the nation’s top trainers deliveringthe most current information in thecollision repair industry. Speakers in-clude Gary Gunn, Danny Sanchez,Scott Brown, Bob Beckmann, JoeKnight, Alvin Tyson and Sam Strick-land.

The seminars cover all aspectsof the collision repair industry, frombudgeting and marketing to customerservice, modern technology and evendiagnostics. Saturday night, anawards banquet will be held at 6:30pm, followed by a casino night be-ginning at 9 pm.

Those interested in registeringcan visit http://www.asteshow.com/where the registration form is lo-cated. Attendees can register for oneday or the entire weekend.

IGONC was established in 1959and has since grown to include 560members statewide. They have nineactive chapters across NC, and eachholds monthly meetings.

[email protected] Box 90426Raleigh, NC 2767580-243-1560

Automotive Service and Technology Expo: Networking andTraining to Occur Last Weekend of September in Cary, NC

shortpays with the goal of helpingshops get compensated for the thingsinsurers refuse to pay for, causingshop owners to complete these itemsat their own expense.

GCIA will hold their next meet-ing on September 19, from 6:30 to 9pm. The meeting will include a catereddinner for members. They also plan tomeet in January 2014 when Jake Ro-denrot of AES Modules is scheduledto present on the company’s new codereader. GCIA brings the value of edu-cation to its members, and Batcheloremphasizes the importance of such in-formation.

“Vehicles are becoming increas-ingly high-tech, so repairers need thetools and education to fix these vehi-cles properly.” Batchelor also notesthat, in conjunction with educatingshops on the newest technology andproducts, GCIA also focuses on edu-cating the consumer; however, be-cause it is a non-profit organization,GCIA relies solely on the funds gath-ered from members and raisedthrough their various events.

One such event is their 17th an-nual golf tournament which will beheld on Wednesday, October 2 from

11am to 5pm at the Trophy Club ofAtlanta in Alpharetta, GA. Registra-tion costs $75 per person and in-cludes lunch, dinner and a chance atover $1000 in door prizes. The golftournament usually attracts around80 attendees, but Batchelor hopes tosee an increase this year since theproceeds from this year’s event willbe donated to two local collision re-pair schools. This is significant be-cause, according to Batchelor, “thechildren in these programs are the fu-ture of our industry, so we want toensure that they are provided withthe tools, equipment and trainingnecessary for success.”

GCIA’s belief in the importanceof education is also why they sup-port and promote their member,Sports & Import Collision Center,who is hosting a First ResponderEmergency Extrication Program onOctober 8 from 9am to 1pm at theirfacility in Dulith, GA. Though thisyear’s program will be smaller thanin the past, it is being co-hosted bythe National Auto Body Council, andBatchelor is confident that muchuseful information will be dissemi-nated through the program.

For information on GCIA or anyof their sponsored events, contact Ex-ecutive Director Howard Batchelor at:770-367-9816 or [email protected].


GCIA Events

The Indiana Autobody Association(IABA) has announced its full supportof the Society of Collision RepairSpecialists' (SCRS) recent positionstatement on insurer mandates (see p.8 this issue).

The IABA believes that all repairdecisions, vendor selections and busi-ness processes should be left to thecollision repair professionals whowork on vehicles and have been en-trusted by the vehicle owners to makecorrect repair decisions.

The IABA also believes that theintent of these mandated programs isnot to improve efficiency in any cur-rent business process, or for the bene-

fit of the vehicle owner. It believesthese attempts are solely driven by in-surers and other third parties seekingto make additional profits and gaincontrol of the collision repair businessthrough practices that can be consid-ered extortion and tortious interfer-ence, as previously identified in the1963 Consent Decree (see page 18),and the IABA will pursue to deterthese actions using the fullest extentof the law.

ASA President Dan Risley hasalso made ASA’s position clear that itis against all forms of direct repairprogram requirements to use specificsuppliers or products (see p. 15.)

Indiana Autobody Association ExpressesSupport for SCRS Position Statement

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The Society of Collision Repair Spe-cialists (SCRS) has issued a positionstatement regarding insurer mandates.It reads as follows:

In representation of collision re-pair businesses across the UnitedStates, The Society of Collision Re-pair Specialists (SCRS) takes excep-tion to business mandates thatproperty and casualty insurers imposeupon collision repair businesses; par-ticularly those that specify requiredvendors, business platforms or inter-nal processes that must be followed inorder to be included in, or avoid beingexcluded from, certain lines of work.As an example, insurer mandates sur-rounding parts procurement platformsmay inhibit independent collision re-pair businesses from utilizing partsvendors with whom they have an ex-isting relationship, providing insurerswith greater influence and controlover the parts supply chain. SCRS be-lieves this control falls outside of thescope of the insurance business. Someinsurers are stipulating agreement tothese terms, as a condition of beingrecognized in Direct Repair Programs(DRP). SCRS supports efforts that

rightfully seek to eliminate such in-trusion into the collision repair busi-ness, and enforcement of existinglaws, regulations and codes that cur-rently prohibit such actions. It is theopinion of SCRS that voluntary agree-ments cannot include stipulationswhich violate existing laws, rules andregulations.

SCRS believes that collisionbusinesses are capable of establishingsuccessful vendor relationships andinternal processes that will best ac-commodate the needs of the con-sumer, and that service providers willcontinue to respond to the market withincreasingly creative solutions thatdrive performance for their customersand the respective market entities. Webelieve that solutions with tangiblevalue propositions will be utilized andsupported by the marketplace withoutthe undue influence of insurer man-date.

The encouragement to embraceopen platforms to enhance perform-ance, rather than rely on exclusionaryprogram agreements influenced byone or more of the participants, fol-lows an acknowledgement from State

Farm Insurance that the nation’slargest carrier is transitioning from“piloting” the requirement to use thePartsTrader online part sourcing andordering program, in select market-places, to a tiered national rollout.State Farm had previously included aprovision in its Select Service Agree-ment requiring participating repairersto agree to utilize automated replace-ment parts locating services or appli-cations, as specified by the insurer, forordering and/or sourcing replacementparts.

According to SCRS, as the pro-gram rollout developed, so did therules of engagement surrounding it.The organization provided a brief run-down of the history of the program:

● In May of 2012, State Farm is-sued a video on its B2B website whereAuto Estimatics Consultant GeorgeAvery expressed:

“... repairers are in control of whoprovides your parts, regardless of thepart type. We have worked with Part-sTrader on a process that [enables]you to maintain your relationships andnegotiated deals with your vendors.We understand that relationships with

your suppliers are important in man-aging your business, much in the sameway we value our relationship withyou.”

● In an email distributed withinthe same month, PartsTrader commu-nicated to suppliers who had declinedthe offer to participate in the quotingprocess that:

“State Farm Select Service re-pairers will be placing all parts ordersrelated to State Farm claims via thePartsTrader application from [date].During our discussion you indicatedthat this was not in your interest toregister online with PartsTrader toparticipate in the intended parts pro-curement process. We respect yourchoice and want to make sure you arestill able to receive those State Farmorders. With that stated, it is not ourintent to come between the relation-ships you have built with the shops.This email is to confirm that we havenow modified your company’s con-figuration to be a ‘Fax Only Supplier.’This means that a repairer can placean order to your company in Part-sTrader, and we will send that order toyou at the fax number... Note: This

SCRS Issues Position Statement on Insurer Mandates


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process means you will not participatein the quoting process, and repairersmay order from suppliers that havequoted first, then direct order any re-maining parts to you via the ‘directonly’ option.”● Just over a year later, the option tonot be a fully active participating sup-plier was revoked. In an email com-munication issued in July of 2013,PartsTrader advised Select Service re-pair facilities in certain markets that:

“As you were notified in a previ-ous email, PartsTrader is discontinu-ing the fax only option for supplierswho choose not to utilize the Part-sTrader platform as a fully active par-ticipating supplier... When you usePartsTrader after July 31, supplierswhich you have nominated to usePartsTrader but have not yet begun touse the PartsTrader application to pro-vide quotes or accept orders, will nolonger appear on your system as anavailable vendor, and therefore willno longer be able to receive ordersplaced in PartsTrader via fax.... Wewould of course like you to encouragethese suppliers to participate, but youshould also identify suppliers forthose makes who are participating toavoid any purchasing issues on Au-

gust 1 or later. We can assure you thatwe do have participating dealers cov-ering every major vehicle make in the[market] area.”

According to SCRS, “The rulesof the game are changing and it is ap-parent that maintaining the relation-ships and negotiated deals ofparticipating repair facilities is only apriority, so long as all involved sub-mit to do business in the manner pre-scribed by State Farm Insurance, andother carriers with similar programs.Today these mandates address partssourcing and ordering, but there isvalid concern that they open the doorto future market manipulation and in-fluence over other similarly criticalcollision businesses purchasing habitsas well.”

e-mail:[email protected]

800-699-8251

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www.autobodynews.com

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The SEMA Show annually features aNew Products Showcase to provideexhibitors with a designated displayto highlight new product debuts,yearly updates and the latest versionsof their best sellers. All of the prod-ucts entered into the New ProductShowcase are photographed and in-clude product details and key infor-mation on how to locate and contactexhibiting manufacturers. Buyers canobtain a wealth of product informa-tion that will be relevant well into2014 by taking advantage of the freescanners available. Provided via “FreeScanner Pickup” booths locatedaround the New Products Showcase,buyers can scan all of the productsthey are interested in, while examin-ing and researching additional prod-ucts exhibitors have to offer. There isno limit to the number of scans buyerscan conduct, and the information isgathered electronically, allowing forit to be retrieved or printed immedi-ately. With new exhibitor and productinformation in hand, buyers can con-centrate on making deals and spendmore time on the Show floor con-necting with existing partners andnew suppliers. More information isavailable at www.SEMAShow.com.

Best Way to Research NewProduct at SEMA Show

Caliber Collision Centers contin-ues its aggressive expansion withthe announcement today that it hasacquired Mattocks Brothers Auto-body in Denver, CO and opened anew location in Tustin, CA.

“Today’s opening of two newCaliber locations in Colorado andCalifornia reinforces our commit-ment to add centers that providethe operational consistency, cus-tomer focus and cost managementour clients require in today’s com-petitive insurance marketplace,”said Steve Grimshaw, CEO of Cal-iber Collision Centers.

Caliber Collision’s new 13,000square foot West Denver locationopened today at 4171 MorrisonDrive, Denver, CO. Caliber’s new16,000 square foot Tustin locationalso opened today at 5 Auto CenterDrive, Tustin, CA.

“Our new Denver and Tustincenters increases Caliber Colli-sion’s locations to 132 as wecontinue to restore our customersto the rhythm of their lives inColorado and California,” addedMark Sanders, Caliber Colli-sion Centers’ Chief OperatingOfficer.

Caliber Collision Opens TwoNew Locations in CO and CA

The Automotive Service Association(ASA) has provided independent re-pairers access to a web-based advo-cacy program at the federal and statelevels for a number of years. Afterresearching various online advocacyprograms, ASA has been working toremodel its legislative and regulatorywebsite, www.TakingTheHill .com.The new website is more user-friendly and designed to move infor-mation quickly to members and topolicymakers. ASA members are en-couraged to visit the newly designedsite and sign up for free legislativealerts. “With our Washington, D.C.,office on Capitol Hill looking out forrepairers, the industry looks to ASAfor grassroots advocacy and infor-mation. Redesigning this site is onemore step in the association’s com-mitment to provide members withthe tools they need to stay informedand be heard on Capitol Hill,” saidAngie Wilson, ASA’s vice presidentof marketing and communications.The TakingTheHill.com website re-design was donated by Autoshop So-lutions, the website design andInternet marketing agency that re-cently redesigned ASA’s main web-site, www.ASAshop.org.

ASA Launches New Website,Improves Repairer Tools

Automotive instructors are invitedto attend Inside AAPEX for Auto-motive Instructors on Wednesday,Nov. 6 and Thursday, Nov. 7 at theAutomotive Aftermarket ProductsExpo (AAPEX) in Las Vegas, Nev.Attendees will learn about newtechnology, meet with manufacturerproduct managers and trainers, andearn National Automotive Techni-cians Education Foundation(NATEF) credit hours. The programfeatures education sessions offeredas part of the AAPEX LearningForum that address new technologyand timely repair issues including“Direct Injection Update,” “WalletFlushing?” “New Exhaust Tech-nologies Including the New CleanDiesel,” “Wiring Diagram ColorCoding: A Tool for UnderstandingElectrical Circuits” and “TPMSSmart Maintenance and Repair.” Allof the sessions have been approvedby NATEF for continuing educationcredit hours. Each session is ac-credited for one hour. Attendancecertificates will be available at theconclusion of each session. Instruc-tors will have access to the AAPEXshow floor to view products andtalk with manufacturers.

Automotive Instructors GetSpecial AAPEX 2013 Invite


The cost of buying and operating acar varies from state to state and youmight be surprised to learn whichstate is the most expensive.

Driving in Georgia will take abite out of your pocketbook. A newsurvey by BankRate.com has foundthat Georgia is the most expensivestate in the U.S. to operate a motorvehicle, followed by California.Oregon is said to be the most af-fordable for those hitting the roadseveryday.

The cost of gas, insurance, re-pairs, taxes and fees are all factoredinto what it costs Georgia residentsan average of more than $4,000 pervehicle per year.

Residents of Oregon benefitfrom the lack of a state sales tax, lowauto insurance and the fact that theydrive 16-percent fewer miles thanthe national average. Those factorsland the state on the bottom of thelist at $2,204 annually.

The national average for oper-ating a car is $3,201 according to thesurvey.

GA and CA Most ExpensiveStates to Own a Car

As an advocate of the ‘It Can Wait’movement, the National Auto BodyCouncil issued a call for its membersand others in the collision industryto join the nationwide effort to curbtexting and driving on Drive 4Pledges Day, September 19. Drive 4Pledges Day is a national day of ac-tion that aims to have every drivermake a personal commitment tonever text and drive and to also re-cruit others to do the same. TheNABC is urging drivers to make thepledge online at go-att.us/NABC, adedicated link created by AT&Tspecifically for the National AutoBody Council’s efforts. The cam-paign is a collaborative effort be-tween major wireless carriers AT&T,Verizon, Sprint and T-Mobile. Aspart of the nationwide Drive 4Pledges Day, NABC member com-panies will be implementing a vari-ety of promotional events to educateemployees and the public—particu-larly teens—about the dangers oftexting while driving. While textingis by far the biggest distraction onthe road, NABC notes that any dis-traction is dangerous, includingphone calls, reading e-mails, eating,changing CDs, fixing makeup, etc.

NABC Partners with ATT onAnti-Texting Campaign

According to the latest data from theU.S. Department of Labor Bureau ofLabor Statistics (BLS), the total pro-duction for the auto body repair in-dustry rose in June after declines inboth April and May. The total aver-age weekly production in June in-creased to 6.59 million man hours.The industry’s total production,which we define as the total averageweekly hours by month multiplied bythe total number of production andnon-supervisory workers employedeach month, closed June, 2013 at6.59 million man hours. This repre-sents an increase. from the 6.5 mil-lion man hours reported in May.Production hours in June 2013 stoodat 1.4 percent above 2012. The de-cline came chiefly from an increasein average hours worked each weekby production employees, up to 38.7hours in June from 37.4 hours inMay. The number of production andnon-supervisory employees actuallydeclined in June to 170,300 from173,800 in May. Added together, theaverage weekly production over thepast twelve months now totals 78.96million man hours. That is 3.5 per-cent higher than the 12 month total ayear ago.

BLS Says Collision IndustryProduction Rose in June

Daimler plans to start selling a self-driving car by 2020 to help its Mer-cedes-Benz brand regain the topspot among premium carmakers, de-velopment chief Thomas Webersaid. “We want to be the first tolaunch autonomous functions in pro-duction vehicles. You can be sure wewill accomplish that in this decade,”Weber said. Carmakers and suppli-ers are working on ways to makedriving safer and more comfortablethrough automation and the race ison to bring the technology to themass market. Daimler is focusing onso-called highly automated driving,in which cars master situations suchas cruising the highway or maneu-vering through traffic jams while thedriver relaxes. The car would recog-nize difficult situations such as deal-ing with traffic lights or urbandriving among pedestrians and cy-clists, and hand control back to thehuman behind the wheel. Daimler isnot alone in its ambitions. Nissan,for example, has also announcedplans to launch a car completelyguided by computers this decade.The technology was shown at theFrankfurt auto show, with produc-tion estimate to take 10 to 15 years.

Daimler to Sell Self-DrivingProduction Car by 2020




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Announces:2013 Fourth QuarterTraining Schedule

Classes consist of multiple courses designed to increase shop productivity and include sessions focusing on painter certi�-

cation, AWX Performance Plus™ waterborne system, color adjustment and blending, commercial �eet re�nishing,

accurate estimating, workshop e�ciency and much more.

TrainingCenter

Numberof DaysDate Training Course Description

Atlanta 10/14/13 Jobber Level 1 2

Atlanta 10/16/13 Jobber Level 1 2

Atlanta 12/03/13 Estimating Solutions for Profit 1

Atlanta 12/03/13 Painter Certification 3

Atlanta 12/04/13 Achieving Service Excellence 1

Atlanta 12/04/13 Improving Workshop Efficiency 1

A22TT

For more information about Sherwin-WilliamsAutomotive Finishes training or other products,visit the training section at:http://www.sherwin-automotive.com/Training/TrainingCourseSchedule.aspxor call 1-800-SWULTRA (1-800-798-5872).

Sherwin-Williams Automotive Fin-ishes A-Plus™ Network and Vehi-cleOwnersGuide.com, an onlineprovider of blueprint documents thathelp collision repair shops identifyany missed revenues, are providingaccess to the provider’s OpenClaims Gateway™, a full featureclaims portal that includes claimsworkflow, dispatching, estimate re-view, vendor e-Coupons, consumertranslations and analytics. The newdispatching system is already popu-lated with the A-Plus Network’sleading collision repair facilities andwill provide a turnkey repair net-work for insurance companiesthroughout the U.S. and Canada.The Open Claims Gateway portalwill dispatch cars to A-Plus shops,and then these facilities and insur-ance companies can use the systemto manage the claims. “Open ClaimsGateway will be provided free ofcharge to A-Plus Network facilities,and there is no contract to sign. SaysTroy Neuerburg, Director of SalesExcellence at Sherwin-Williams Au-tomotive Finishes, “This system of-fers numerous benefits.” Forinformation call call 1-800-SWUL-TRA (1-800-798-5872).

Sherwin-Williams and OnlineBlueprint Provider Team Up

The Opening General Session, spon-sored by Axalta Coating Systems,will now offer two concurrent ses-sions, one for Collision, one for Me-chanical, that will combine the bestcomponents of a keynote presenta-tion with the industry-specific focusof a forum. The forum’s headliningguest speaker will be Mike Ander-son. Admission to the new OpeningGeneral Session/Industry Forums areincluded in all registrations, and allattendees are invited to attend.

“Vastly different from pastyears, we’ve completely redesignedthe Opening General Session and at-tendees can expect a much differentexperience. Mike Anderson is ex-tremely well-respected, and atten-dees are going to want to hear hismessage,” says Dan Risley, ASApresident. “The format of this keyevent also aligns with our mission tocreate exceptional value for our au-dience and provide invaluable net-working opportunities for theindustry and by the industry.”

“Axalta Coating Systems is ho-noured to sponsor this year’s Open-ing General Session,” said MikeBennett, North America marketingdirector, Axalta Coating Systems.

ASRW’s New Format Will Be‘Vastly Different Experience’

Mitchell has announced the generalavailability of RepairCenter™ Rep-utation Manager. The new packageoffering combines real-time text andemail updates with advanced cus-tomer insights from satisfaction sur-veys and social media data toimprove the repair shop and vehicleowner processes. The tool shouldhelp increase repeat business and re-ferrals by providing actionable in-sight into the customer experience.By adding online customer satisfac-tion surveys and incorporating com-prehensive reporting and analyticstechnology, repair shops can betteridentify steps during the repairprocess that can be improved. “Cus-tomer retention and business growthgo hand-in-hand, but until recently,repair shops haven’t had the breadthof automated tools needed to im-prove upon the customer experi-ence,” said Anlin Sethi, SeniorManager of Product Management,Auto Physical Damage solutions.“By incorporating real-time interac-tion and engagement, alongside ro-bust survey analytics, ReputationManager allows repair shops to im-prove their reputation and buildstronger customer bases.”

Mitchell Announces its NewReputation Manager Package

ABRA Auto Body & Glass helpedto raise more than $30,000 duringthe first annual Bent Creek CharityGolf Tournament to benefit Help-ing Paws Inc. More than 100golfers and guests gathered at TheBent Creek Golf Course in EdenPrairie, MN, on August 12 to sup-port Helping Paws of Hopkins,MN, according to officials.

This inaugural golf event ispart of Helping Paws’ initiative toconnect the healing power of serv-ice dogs with disabled veterans suf-fering from Post Traumatic StressDisorder. The cost of raising andtraining a service dog is estimatedat $30,000. These canine compan-ions can help to transition returningveterans back to civilian life.

“We are absolutely thrilledand proud to partner with importantcharitable organizations like Help-ing Paws,” said Duane Rouse,president and CEO of ABRA. “Werecognize the amazing accomplish-ments of our military veterans whoserved with courage and their un-ending drive to make a differencefor our country. Supporting thesetraining dogs to help heal our he-roes is a privilege.”

ABRA Helps Raise $30,000for Veterans’ Service Dogs

The Alliance of Automotive ServiceProviders of New Jersey (AASP/NJ)has announced its support of the Mis-sissippi Collision Repair Association’s(MSCRA) recently filed suit againstState Farm and PartsTrader in an at-tempt to prevent the insurer frombringing the PartsTrader program toMississippi.

“What part of ‘no’ doesn’t StateFarm understand?” asks AASP/NJExecutive Director Charles Bryant.“The collision industry has clearly re-jected the concept of PartsTrader, yetState Farm is taking the position thatthey are going to force PartsTrader onthe collision industry—like it or not!This lawsuit should be a wake-up call

for State Farm. State Farm’s attemptto create the appearance that they aretrying to help the collision industrysolve a problem has clearly failed.

“The collision industry hasclearly rejected the concept of Part-sTrader, yet State Farm is taking theposition that they are going to forcePartsTrader on the collision industry,”said Bryant. “State Farm’s attempt tocreate the appearance that they are try-ing to help the collision industry solvea problem has clearly failed.”

On Aug. 28, MSCRA and twodozen collision repair facility operatorsfiled a lawsuit in the Hinds County,Miss., Chancery Court against StateFarm and PartsTrader, stating the re-

quired PartsTrader program can dam-age their cycle time and therefore,harm customer satisfaction.

“If PartsTrader was good for thecollision industry, State Farm wouldhave been able to convince the indus-try to accept the concept by now,” saidBryant.

Said State Farm spokespersonRoszell Gadson, “State Farm recentlyreceived notice of a lawsuit in HindsCounty, Mississippi.... We believe thesuit is without merit. We intend to vig-orously defend the suit,” said Roszell.“The Parts Trader program has not yeteven been implemented in Missis-sippi,” he added, seemingly unawarethat that is the point of the lawsuit.


ASA’s Dan Risley has made ASA’sposition clear that it is against allforms of direct repair program re-quirements to use specific suppliers orproducts. In a letter dated September11 to Ed Rust Jr., chairman of theboard and chief executive officer ofState Farm Mutual, Risley commendsthe U.S.’s leading private passengerautomobile insurer for its past decisionto eliminate its requirement to use aspecific estimating platform by its di-rect repair shops. The association alsoacknowledges State Farm’s scoringsystem that promotes competitionamong Select Service repair facilities.

However, the association comesout firmly against State Farm’s recentrequirement to use the PartsTrader on-line parts marketplace, stating it willincrease a State Farm shops cycletime, negatively impacting customersatisfaction and increasing the insur-ance company’s costs in the long run.

The letter states, “ASA wouldlike to acknowledge State Farm as oneof the first companies in the country tonot mandate that a collision repair fa-cility utilize a specific estimating plat-form. For many years, several top 10insurance carriers required a specificestimating platform to participate intheir direct repair program. In addition,State Farm was one of the first to im-plement a scoring system that allowsSelect Service repair facilities to com-pete against each other in a transpar-ent and real-time environment. Thesedecisions clearly elevated State Farm’sposition in the industry as a thoughtleader and facilitated positive change.

The letter continues, “In light ofthe recent announcement of the na-tional rollout of Parts Trader, ASA istaking a firm stance against insurancecompany mandates that limit a re-pairer’s right to choose their vendors,distributors and suppliers.”

ASA included three suggestionsfor State Farm to consider as a startingpoint to address the industry’s concerns.● Immediately eliminate mandates re-quiring collision repair facilities topurchase or source parts using a spe-cific third-party vendor.● Encourage the use of these types ofprograms on a voluntary basis with afinancial incentive.● Heavily weight your scoring systemto reward repair facilities that are lead-ing their respective markets in partscost, alternative parts usage, length ofrental and cycle time. All of which arekey operational metrics that driveoverall repair costs.

The complete text of the lettercan be read and downloaded at:www.autobodynews.com.

ASA President Risley Writesto State Farm’s Ed Rust Jr.on Mandates

AASP/NJ Announces Support of MCRA Suit Against PartsTrader


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ice shops,2) Finding the Defendants in

breach of the 1963 Federal ConsentDecree (and thereby voiding the Se-lect Service agreements), and

3) Stopping the Defendants frominterfering in the relationship betweencustomer and shop by delaying serv-ice payments or otherwise limiting theuse of rentals.

The suit alleges that State Farm’simplementation of the PartsTradersystem tortiously interferes with priorbusiness relationships that collisionrepair facilities have with their longstanding parts suppliers. (Tortious in-terference occurs when a person in-tentionally damages the plaintiff’scontractual or other existing businessrelationships.)

In addition, the suit contends thatState Farm is attempting to force thePlaintiffs to breach their legal fiduci-ary (trustworthiness) duty to their cus-tomers, ie. compromising a safe andreliable repair. “The relationship be-tween consumer and repairman hasbeen all but destroyed. The repairman

must do as instructed by the insurancecompany, not the consumer.”

Said attorney Eaves Jr., “Part-sTrader and State Farm will effectuatea ‘race to the bottom’ in quality andsafety.” And though he says the casevery likely will go to court, he is hop-ing for an out-of-court resolution.

“We would love for them not tobring it (the Parts Trader system) toMississippi. But it would be up tothem,” he said. Cheaper parts haveindeed been responsible for multipleinjuries, said Eaves Jr., who is a for-mer candidate for governor of Mis-sissippi.

“Nobody likes to be forced intofiling a lawsuit but this is the largestautomobile insurer in the country andwe have a lot of mutual customersthat will be impacted by this,” saidJohn Mosely, president of MSCRAfrom Clinton Body Shop and a plain-tiff in the suit. “We have investedtons of money in our business andState Farm telling us we have to buythrough PartsTrader system, is notthe best thing for the repair or thecustomer.”

Mosely currently participates inthe Select Service program with StateFarm.

In addition to seeking an in-junction against implementation ofthe PartsTrader system, the suitseeks a declaratory judgment thatState Farm is operating against the1963 Consent Decree, entered intoby several insurance company asso-ciations and the Federal Govern-ment, limiting insurer’s activities incollision repair to influence cus-tomers. Because of this conflict, thesuit seeks to void the Select Serviceagreements between repair facilitiesand State Farm.

Finally, the suit seeks to keepState Farm from interfering in thecontract between the customer andbody shops by “causing or implyingdelay in service payments, appraisalor limitation on the usage of rental au-tomobiles.”

State Farm is requiring use ofPartsTrader for specified shops in itsSelect Service DRP but insists usingthe service is strictly voluntary be-cause membership in Select Service isvoluntary.

State Farm’s public affairs repre-sentative Roszell Gadson said, “Re-pairers participate in Select Service®on a voluntary basis. Parts Trader is acompany that provides an electronic

parts ordering platform to repairersnationwide. State Farm guidelines forthe use of parts and part types have notchanged due to electronic parts order-ing. Estimates are written and parttypes are chosen by repairers based onconsistent guidelines,” said StateFarm’s public affairs representativeRoszell Gadson.

Barry Lewis of Ridgeland, MS,and owner of European Coachworks,says participating in the lawsuit wassimple common sense for his busi-ness.

“I’m just trying to cover us forthe future,” says Lewis, “becauseeventually it’s going to affect uswhether you’re in the program or not.”The “program” to which Lewis is re-ferring is also a company doing busi-ness as Parts Trader LLC, which wasnamed in the lawsuit as well. WhileParts Trader’s website states that therepairer has the final say in which partthey should use, the MCRA maintainsthat State Farm insists their insureddrivers receive the cheapest partsavailable in order to cut repair and re-placement costs.

State Farm neither confirmed nordenied whether parts purchased


Suit Against PartsTrader

See Suit Against PartsTrader, Page 18

through the Parts Trader service wereinferior to those the repair shops claimto use.

“There are thousands of exam-ples where inferior parts led to injury,”Eaves Jr. said, citing his considerableexperience as a trial lawyer. “This

PartsTrader program is the first timethis has been implemented. Most ofthe cheaper parts will be made incountries where quality is not as im-portant,” he continued.

But State Farm says the suit iswithout merit and that the Parts Tradersystem is not yet a reality for Missis-sippi. Preventing it from being imple-mented in Mississippi is, of course,the point of the suit.

“State Farm recently received no-tice of a lawsuit in Hinds County, Mis-sissippi, related to our electronic partsordering initiative and our Select Serv-ice® program. We believe the suit iswithout merit. We intend to vigorouslydefend the suit,” said Roszell. “TheParts Trader program has not yet evenbeen implemented in Mississippi.”

MCRA President Mosley arguesthat parts ordered from off-shore sites

are not upheld to the same standardsof safety as are American-made parts.But the PartsTrader website states un-equivocally that it does not recom-mend specific parts or manufacturers.

“Collision parts suppliers provid-ing pricing within PartsTrader must benominated by repairers like you be-fore we invite them to participate inthis market,” says the PartsTraderwebsite.


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Collision repairers and their representa-tives have come up with numerous differ-ent legal theories about why insurersshouldn’t be allowed to create networks.One of them is based on the now little-known Consent Decree.

In November 1963, the U.S. JusticeDepartment settled a class action suit thatit brought against the associations repre-senting some 265 insurance companies,which resulted in their officers signing a“Federal Antitrust Consent Order,” knownas the Consent Decree. A consent decreein general is a written agreement in whicha company or organization under investi-gation by a governmental agency agree to

do or not do something in the future – with-out admitting any past wrong-doing. In thiscase it settled the class action suit withouttrial. The signers, three insurance trade as-sociations and their members agreed toforever refrain from several practices, in-cluding setting prices and steering. Theyadmitted no wrongdoing but agreed toabide by its terms in perpetuity, meaningit’s still binding on its signatories today.

The DOJ filed an action against theassociations alleging that they had formu-lated an “Independent Appraisal Plan” in1947 “to depress and control automobilematerial damage repair cost.” The heart ofthe plan was a scheme to control the work

of independent appraisers who preparedestimates of repair costs and got bodyshops to agree to them. The Govern-ment’s case focused on an insurance in-dustry invention called the CombinedClaims Committee (CCC) which was es-tablished to control collision repair prices.Basically, each CCC member-insurer se-lected one favored appraiser or appraisalfirm in each market area, to the exclusionof others, to receive all of the participat-ing insurer’s adjusting work, as long asthis adjuster worked within the guidelinesthat the CCC established and controlled.

Under the plan, committees ap-pointed by the trade groups would spon-

sor individuals or partnerships to act asappraisers in assigned territories for all as-sociation members. In return for the in-surers’ agreement to use them exclusively,the appraisers would agree to depress andcontrol repair costs by arranging (whenpossible) for shops to agree to estimatesbefore they had examined the damagedvehicles, by “establish[ing] strict labortime allowances,” and by “obtain[ing] thelowest possible hourly labor rate.” TheDOJ alleged that the plan violated theSherman Act. In November 1963 (lessthan a week after John F. Kennedy’s as-sassination) the Government’s case was

The 1963 Federal Consent Decree (www.ican2000.com/documents/1963/)

See Consent Decree, Page 24

Continued from Page 16

Suit Against PartsTrader


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dismissed, pursuant to an agreed orderunder which the defendant associationswere enjoined from pursuing any programthat had the purpose or effect of “exercis-ing any control over the activities of anyappraiser.”

The Independent Appraisal Plan hasnever been revived, nor has any programor practice which favors chosen damageappraisers or excludes others.

In the words of Silvie Licitra, well-respected collision industry writer and acollision repairer at the time, resultant pay-offs and corruption were rampant becausethe selected appraiser fixed the labor rates,required arbitrary discounts on parts, andheld firm to the labor times published in aguide. These appraisers also had shopswith which they had unwritten agreementsthat their estimates would be accepted,sight unseen. “Those appraisers all hadtheir hands out and if you didn’t pay themoff, they’d write lousy estimates (creating)a take-it-or-leave-it situation, the shopbeing faced with losing the job if they did-n’t play ball (with insurers).”

Frank Stepanek, chairman of theNational Body Shop Committee of the In-dependent Garage Owners (IGO) of Amer-ica (precursor to the Automotive ServiceAssociation), was quoted in a November1963 industry publication: “It’s no longerlegal for many insurance companies to de-mand discounts, set the hourly rates, boy-cott repair shops [and] use specificappraisers.”

A number of trade associations weretargeted in the years following the signingof the Consent Decree. In March of 1964,Allstate Insurance Company filed suitagainst 109 members of the Central JerseyAuto Body Association (CJABA), chargingthem with antitrust violations, conspiracyand price fixing. In July of that year, a judgeordered the association members to sign aconsent decree of their own. The embit-tered members reluctantly settled with All-state, citing lack of funds to finance aprotracted legal battle with the company.

In support of the CJABA, an associa-tion of central New York body shop ownersset up a legal defense fund for the CJABA.

Their spokesman was quoted as saying:“It’s with deep regret that this spirit was notnationwide. I strongly urge every body shopor garageman who looks forward to free-dom in his business to alert himself andseek remedies that will maintain our rightsand freedoms in the industry.”

The legal wrangling went back andforth until the summer of 1967, when acongressional committee called for an in-vestigation into the auto insurance busi-ness. U.S. Sen. Philip Hart of Michiganproposed federal oversight of the indus-try and an amendment to the 1945 Mc-Carran-Ferguson Act as a way to curbinsurance domination of the collision re-pair industry. McCarran-Ferguson effec-tively shielded the insurance industryfrom federal antitrust laws by grantingstates the primary responsibility for regu-lating insurance. Sen. Warren Magnuson,chairman of the Senate Commerce Com-mittee, made additional calls for inves-tigative probes and even threatened tolaunch an independent investigation by aspecial counsel.

Between congressional pressuresand Transportation Secretary Don Boyd’sinsistence the matter be studied by his de-partment, the White House was promptedto step in. In a message to Congress inearly 1968, President Lyndon Johnsoncalled for a thorough investigation into theauto insurance business.

“The Consent Decree was like a Band-Aid,” said Dick Hogg, a suburban Philadel-phia body shop owner who remembered the‘63 action, as well as the business condi-tions that led to its signing. Hogg also re-members that its signing didn’t usher in agolden age for body shops. “It only gave ustemporary relief because like some otherlaws, there was no enforcement. The termsof the Consent Decree were diluted by thestate regulations that are, for the most part,unenforced. The insurance departmentsgive the benefit of the doubt to the insurers.”

Since insurance companies hedgedtheir bets with their chosen appraisal firm,they had control. No auto damage claimswere settled unless they passed through

The 1963 Federal Consent Decree (continued from p. 18)

See Consent Decree, Page 32

Even thought the Internet is continu-ing to explode and cable TV advertis-ing is flourishing, radio is still aliveand well and more body shops areusing it, according to people whoknow—such as: advertising agencies,media buying companies radio sta-tions and body shops themselves.

According to Kantar Media,there are nearly 5,000 AM stations androughly 9,000 FM stations in thiscountry and last year radio advertisingdollars increased by 8 percent at thenational level and 3 percent locally.While the collision industry is alwayslooking for new forms of advertisingand marketing, the word out on thestreet is that good old broadcast radiois still a viable form for body shops,both MSOs and independents.

Phil D’Angelo is a sales managerfor three radio stations in northernCalifornia (KUIC, KKIQ and KKDV)and has seen how radio advertisinghas worked well for body shops in his

regions. “We currently have five bodyshops advertising on KUIC in Vacav-ille, CA, and they’re happy with theresults,” D’Angelo said.

“Radio is more popular now, be-cause it offers so many options forcompanies of all sizes. For regionalcompanies, you’re going to get morebang for your buck with radio, as op-posed to other forms of advertising ormarketing. People wake up in themorning with the radio; drive to workwith the radio and listen to the radioall day at work, so radio travels every-where and some people listen to it8–10 hours and more every day. Also,we’ve discovered that the Internet andbroadcast radio work hand-in-hand,because radio creates demand and theInternet fulfills that demand. If theyhear you on the radio and then see youonline, there’s a good chance you’llget them as a customer.”D’Angelo had to learn the collisiongame in order to better serve his body

shop clients, he explained. “When westarted working with body shops, wediscovered that their business modelis unique, because from what they’vetold us, 80% of all the work comesthrough the insurance companies. So,the advertising we’ve designed forthem conveys a specific message, butbranding is also a big part of it. Wewant the body shop’s name to be inthe listener’s head.

In the radio business, we call itthe consumer’s ‘top-of-mind aware-ness,’ and it’s very important in thecollision repair industry, because get-ting your car fixed is not an impulsebuy. So, when people do get in an ac-cident, they’ve already heard theshop’s name over and over on one ofour stations and that’s who they willmention it to their insurance agent.”

Chuck Jessen is the owner ofPreFab Ads in San Francisco, a com-pany that licenses professionally-pro-duced TV spots to body shops on an

exclusive-by-market basis. Thesecommercials have appeared on 260local television markets throughoutthe country and several have won in-ternational advertising awards andhave been featured on such nationalTV programs as “Reel TV” and“World’s Funniest.”

Jessen is currently producing aseries of radio ads to add to his menuof offerings, because his clients areasking more and more for 30 and 60-second spots they want to air on localstations. “Some body shops areswitching from TV to radio, so thatthey can target their customers morespecifically,” Jessen said.

“In the bigger markets, the costof TV advertising is prohibitive formany independent body shops withmodest advertising budgets. If you’repaying to advertise to a certain marketand a large majority of it is out of yourarea, it doesn’t make sense for any re-gional business to advertise outside


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Social Media for Shops

Ed Attanasio is an automotive journalist based inSan Francisco, California. He can be reached [email protected].

that area. With radio, body shops canget more saturation and coverage insmaller to mid-size markets, so it’sideal for body shops that draw cus-tomers from no more than 10 milesaway.”

Radio has a captive audience andJessen knows from his 30 years of ex-perience what types of radio ads willwork in any market, he said. “Peopleare in their cars a lot and commutersaren’t going away any time soon.We’re producing several differenttypes of radio ad, including humorousand instructional. With our TV ads, wealready know humor works and com-munity service type themes are alwayswell-suited for the collision industry.We produced a radio ad that conveysan anti-texting message and it getsgood reviews, because it’s a warm andfuzzy type of ad that listeners will finduseful.”

Sharon Wicks is the president ofSilicon Valley Media Consulting inSan Jose, CA and has seen a recentspike in her clients’ interest in buyingmore radio advertising time, she said.“Radio is thriving, because it justmakes sense for regional businessesthat can’t afford a heavy television ad-vertising schedule. Radio has gone

full circle and now it’s back in a bigway, especially for companies thatvalue a highly targeted approach.”

Wicks has seen more and more ofher clients asking about Pandora In-ternet Radio, an automated music rec-ommendation service that playsmusical selections of a certain genrebased on the user’s artist selections.The user then provides positive ornegative feedback for songs chosen bythe service, which are taken into ac-count when Pandora selects futuresongs.

“Advertisers like Pandora, be-cause it is more targeted than conven-tional radio,” Wicks said. “Pandorahas specific demographic informationabout every one of its users, so you’regetting exactly who you want to reach.When your ad runs, it appears in apop-up banner-type ad with audio thatcan be either 15 or 30 seconds inlength. Either way, it’s less invasivethan a 60-second radio ad and ofcourse, it’s paired with a visual, whichgives it more impact.”

Rich Villanueva is the marketingmanager at Michael J’s Body Shop,Inc., with three very busy locations inSan Jose, CA. After much planningand research, Villanueva decided that

radio was the best plan for this bur-geoning regional MSO, for severalreasons.

“We found a local FM station(KEZR) that offered a package wewere very comfortable with, so wehired an advertising agency (Kilburg& Associates) that does ads for theSan Jose Sharks NHL hockey team,”Villanueva said. “We decided to gowith humorous ads and almost imme-diately we received a lot of positivefeedback. We’re basically doingbranding with these radio spots, ratherthan doing promotions. Since this isour first radio schedule, we want toget the name out there and connect thedots with our audience.”

Michael J’s had their agency pro-duce seven different ads to run in ro-tation on KEZR and is now going tocreate more ads to leverage the factthat one of their owners is a woman.“We’re targeting women with thesenew commercials, because they repre-sent a large portion of our customerbase,” Villanueva said. “Jamie Ryan isone of our co-owners and she’s a greatspokesperson for what we’re trying todo. In these ads, we position her as anexpert and an advocate, especially forour female market. The message is we

will treat our customers well from be-ginning to end, by providing themwith a stress-free, non-threatening en-vironment when they bring their car toMichael J’s.”


Airbag Solutions recently released anew Supplemental Restraints Sys-tems (SRS) estimating checklist de-signed to allow damage appraisersto more easily identify each of thecomponents required to remain incompliance with OEM service re-quirements surrounding restraintsystems. The free SRS servicechecklist is available online as a fill-in PDF or as a printed download.Douglas Gan, COO of Airbag Solu-tions, said this brings the companyone step closer to its goal of offeringa standardized, one-step source forcritical OEM requirements to thecollision industry. “With the use ofthis checklist [and our database], ap-praisers are now able to addresseach of the critical questions neededto ensure a proper and timely repair.Knowing the answers to SRS relatedquestions before the repair hasbegun will help to eliminate supple-ments, reduce cycle times and fol-low OEM procedures.”

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quotes,” Sailer said.More details on rating system.

Vendors and shops using PartsTraderrate one another using a feedback sys-tem. Shops answer five questions torate a supplier based on parts and serv-ice quality; vendors answer four ques-tions to rate shops in terms of paymentpractices, return rates, etc.

Sailer said users of the systemcan expect to spend about one minuteper day responding to feedback ratingquestions about companies withwhich they have conducted partstransactions. Participating in theanonymous feedback rating system ismandatory, he said, because a ratinggiven to a vendor by a shop, for ex-ample, is weighted based on howmuch business that shop does withthat vendor.

“If you represent 50 percent ofsomebody’s business, your feedbackhas to be worth 50 percent of their rat-ings,” Sailer said. “So as a supplier, ifa shop has only ordered from youonce, and he didn’t like you andtrashes you in the feedback, that’s

only one piece of feedback. He can’tbe 50 percent of your feedback be-cause he’s not that relevant to yourbusiness.”

Feedback is not required on everypurchase, however, and the number ofsurveys a shop or vendor must com-plete may vary day-to-day but shouldtake an average of about five minutesa week, Sailer said.

Users can request to providefeedback on a transaction even if notasked, he said.

Only a company’s star-based rat-ing is visible to users of the system,Sailer said, but any additional com-ments that are made about a shop orvendor are batched and sent to thatshop or vendor.

Bad ratings cannot be challenged,he said, but someone giving you a badreview isn’t likely to continue to dobusiness with you, so the reviewwon’t be weighted as heavily in youroverall rating as feedback from thosedoing more business with you.

Customers don’t have to wait.Select Service shops don’t have towait the half-hour to receive quotes ifa customer wants an estimate rightaway, State Farm’s George Avery said.

“There’s no problem with writing

your estimate like you do today andgiving it to them,” he said. “In theevent you’re awarded the job, you cantake that estimate and do your directbuy, or you may choose to put it outfor some quotes. But we certainly un-derstand there are times when a cus-tomer just wants an estimate.”

Buying from non-participatingvendors. Occasionally, Avery acknowl-edged, a shop may need to use a partsvendor who is not on PartsTrader, suchas when an uncommon custom wheelor flare is needed.

“If it’s a guy down the street whoyou buy from once or twice a year,just an odd part, you’re more thanwelcome to buy that part from him,”Avery said.

Because that part will be shownas not having gone through the sys-tem, it will be flagged as an order notin compliance with Select Serviceguidelines, Avery said, but local man-agement will have leeway to decidehow far from 100 percent complianceis acceptable for shops on the pro-gram.

Getting vendors on the system.The only way a vendor can partici-pate in PartsTrader is if they are“nominated” by a shop using the sys-

tem. Avery said during the initial test-ing of the system in five markets, ashop complained that a vendor fromFlorida – where PartsTrader hasn’tbeen rolled-out – showed up on thesystem. Avery reiterated that onlyshops – not State Farm nor Part-sTrader – control which vendors areon the system.

“It turns out a repairer (on thesystem in another state) had a rela-tionship with that vendor in Florida,”Avery said.

If a shop nominates a vendor,then is unhappy with that vendor, canthe nomination be rescinded? Sailersaid no.

“Two reasons: First, the odds arepretty darn good that someone elsenominated them as well,” Sailer said.“And let’s say no one else did, butsomebody else started using them.The last thing I’m going to do is say tomy users, ‘Well, because Joe doesn’twant to do business with that vendor,you can’t do business with them ei-ther.’ We’re not going to take awayyour choice if they’re already onthere. But no one will make you dobusiness with them.”

Not part of a Select Service


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See More on PartsTrader, Page 32


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by Chasidy Rae Sisk

Anyone who has been involved withthe collision repair industry for anyamount of time knows how frustratingit can be when insurers refuse to paythe full amount billed for a repair.Many repairers count their losses andmove on to the next vehicle, butMark Schaech Jr., co-owner ofMark’s Body Shop in Baltimore, MD,refuses to take this insult lying down.While he and his partner, his father,would prefer to avoid the necessity oftaking legal action, he’s definitely“not taking it anymore!” Schaechknows this is a common problem thatshop owners face, so he’s glad to sharehis experience and advice with colli-sion repairers across the nation.

In May 2013, Schaech won hisfirst short-pay lawsuit against GEICOfor $392.95. Since then, Schaech wona case against State Farm when the in-surer filed a replevin lawsuit (replevinis a legal remedy for a person to re-cover goods unlawfully withheld fromhis or her possession) against him,claiming his charges for storage wereunreasonable and not competitive

within the market area. Mark’s BodyShop was holding a car while await-ing payment, but when State Farm set-tled with the car’s owner and tooktitle, they refused to pay Schaech. Therepair contract was the deciding fac-

tor in Schaech’s victory, playing ahuge role “like it does in any othercase,” according to Schaech, whoadded that “it is so important that yourdocuments are in line.” In addition tobeing paid the full amount owed,Schaech was also reimbursed for hisattorney’s fees. He feels the victorywas very important since a loss wouldhave given State Farm, and possiblyother insurers, precedent for refusal topay on total losses.

Schaech credits the CCRE (Coali-tion for Collision Repair Excellence)for his knowledge of such legal actions,noting that “the first time I heard of ashop taking control of their businesswas at a CCRE meeting.” He followedthat up by hiring an industry consult-ant, Barrett Smith, of Auto DamageExperts and a good Maryland attorney,Anthony DiPaula to support his ef-forts to take control of his own busi-ness. He is also grateful to all of the“attorneys fighting a successful fight.”His next case involved an assignmentof proceeds, ammunition he obtainedfrom industry lawyer Erica Evers-man, but it doesn’t stop there! Schaechis currently pursuing numerous law-suits, including one involving an olderclaim of two short-pays from GEICOand a similar suit against State Farm.

The lawsuits that Schaech is cur-rently pursuing are older claims sincehe has not had any recent problemswith GEICO, which he attributes tohis successful case in May. Most in-surers are paying his operation costs,though labor rates with insurers refus-ing to pay his full labor rate continueto be a problem. The one exception he

notes is State Farm who always leavesa short-pay, but for now, the customersare paying the difference. Schaech isnot taking any additional assignmentsof proceeds at this time as he has sev-eral in progress.

Schaech notes, “I would say that90% of the time, insurers in our marketrefuse to reimburse our customer fortheir entire repair bill. These short paysare for reasonable and necessary ratesand procedures required to repair ourcustomers’ vehicles to pre-loss condi-tion to the best of human ability. Itseems that the larger the carrier, theworse the behavior. It seems like asopposed to fairly paying claims, thesecarriers would prefer to spend thosedollars on advertising campaigns.”

Regarding what may cause him tohesitate before filing a lawsuit, Schaechadmits that it can be expensive andtime-consuming to sue an insurancecarrier, especially when the short-paysare small amounts, but one way to com-bat that is to pile several claims into onecase, making it more efficient. His ul-timate goal is to handle these cases onhis own; as he attends the trials, he iseducating himself via his attorney in


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MD Shop Owners Prevail Against Short Pays—No DRP, No Problem

Mark Schaech Sr. with his son Mark, Jr.

hopes of being able to handle futuresuits in small claims court on his own.“All I will have to spend is time whichI’m more than willing to do in order toensure my customers are being takencare of,” Schaech notes.

The short-pay lawsuit in Maywas the first that Schaech actually pur-sued to trial. Because these types ofcases are new to the Maryland courtsystem, “it takes a bit of educating thecourts that we are contracted by ourcustomers to provide a proper and saferepair and do not have any contractwith any insurance companies. Butthe misconception is that, because theinsurance company is paying the bill,they have a right to inject themselvesinto the repair process when this issimply not the case. Because we arethe experts, we carry all of the liabil-ity associated with the repair. We arethe ones who have to provide a war-ranty to our customers and stand be-hind the repairs. We are the ones whoknow our cost of doing business.Therefore, only a shop can know whatto charge for a given repair. The dutyof the insurance company, by contract,is to make the customer whole, not tocontrol the price or dictate the repairmethodology, all while not sharing in

the liability for those repairs.”Though most insurance compa-

nies insist that they don’t pay for cer-tain operations or that a shop isovercharging, Schaech insists, “thecollision repair community knows thatthese are word tracks that insuranceadjusters have been trained to use foryears, and in most cases, these carri-ers do pay for that, and the shops thatare asking to be compensated are notthe only ones asking for these opera-tions and rates.”

Schaech was happy when thejudge ruled in his favor: “It felt goodthat the Judge got it. I also feel confi-dent that the courts will continue to findin our favor as courts are in many otherstates all over the country. It takes aclose look at the law and the insurancepolicies to realize that determining thecost of repairs and the repair methodol-ogy is not the business of insurance. Inmany policies, the insurance companyhas the option to take the customer’s ve-hicle and repair it themselves, but ifthey chose that option, they would haveto accept all of the liability that goesalong with the repair which is why theydo not select that option.”

As a proud member of CCRE andSCRS, Schaech strongly encourages

other collision repair experts to stand upfor their rights. “I would encourageother shop owners to know their statelaws and get a good attorney to workwith. There are many shop ownersacross the country who have beenforced to go legal, and these repairershave been an inspiration and have al-ways made time to answer my questionsand lend advice. There is unbelievablesupport available to those who want tolearn.” Schaech’s desire to become moreinvolved has also led him to become in-volved with the Washington Metropoli-tan Auto Body Association (WMABA)where he sits on the Board of Directors.

Schaech also assures other shopowners that the trial itself was not verydifficult. “It was easy for us to explainwho the expert repair professional isand who decides what the Final Billshould be, and the judge agreed thatbecause GEICO doesn’t know ourcosts, they cannot possibly determinewhat we are able to charge.”

It is also important to note thatSchaech’s lawsuit has not really af-fected his relationship with GEICO orany other insurers. His problem isn’twith the individuals that he deals withbut the company’s policies on han-dling claims.

Schaech also takes issue with hisstate’s laws regarding insurance com-panies breaching contracts and howthis affects consumers’ rights.

“If a Maryland Insurance Com-pany breaches their contract with thepolicy holder, and the consumer wantsto hold them accountable in a court oflaw, the consumer is not able to recoverattorney’s fees in our state. This reallyinhibits consumers from taking action,even when it is obvious that they are inthe right… I wish the carrier wouldspend some of those billions of dollarsthey spend on marketing to properlycompensate consumers for quality andsafe repairs. I see a lot of poor repairsthat have been completed in shops whowere not properly compensated for re-pairs, and this is a consumer problem,especially as it relates to consumers’safety and the value of their vehicles.”

When asked what measuresshould be enforced to prevent the ne-cessity of short-pay lawsuits, Schaechnotes, “If insurers would get back tothe business of insurance, selling poli-cies and paying claims, and stay out ofthe collision business, we would nothave to go this route. The reality isthat, by law, consumers have the right


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See MD Short Pays, Page 37

reduction. Some shops in severalmarkets have dropped out of the Se-lect Service program rather than usePartsTrader. But Avery said the pro-gram is not part of any plan to re-duce the number of shops on theprogram or shift work toward largeMSOs.

“That could happen, but this is notan effort to drive the number of SelectService repairers we have,” Avery said.

He also noted that more than 50percent of Select Service shops are in-dependent single-location businesses,a higher percentage than any otherlarge insurer’s program.

“That’s not a signal to me thatI’m trying to dump the independents,”Avery said. “They are great businesspartners.”

Lawsuit filed. PartsTrader hasn’trolled into Mississippi yet, but repair-ers and parts vendors there have al-ready filed suit in an effort to preventshops from having to use it. The Mis-sissippi Collision Repair Associationand more than two dozen body shops,dealers and other parts suppliers al-

lege in the suit, filed in Hinds CountyChancery Court, that State Farm’s im-plementation of PartsTrader tortiouslyinterferes with existing business rela-tionships that shops have with theirparts vendors.

In addition to an injunction halt-ing State Farm’s implementation ofPartsTrader, the suit seeks a rulingthat State Farm is violating the termsof the 1963 Consent Decree, whichplaced limits on more than 260 in-surer’s activities related to auto in-surance and claims. The suit alsoseeks to prevent State Farm from in-terfering in the relationship betweena shop and its customers by delayingpayments or appraisals, or by placinglimitations on the use of rental vehi-cles.

State Farm said the case is with-out merit and that it will vigorouslydefend against it. See related story thisissue.

John Yoswick, a freelance writerbased in Portland, Oregon, who hasbeen writing about the automotive in-dustry since 1988, is also the editor of theweekly CRASH Network (for a free 4-week trial subscription, visit www.Crash-Network.com). He can be contacted byemail at jyoswick@ SpiritOne.com.


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More on PartsTraderThe Plan’s sieve, and as you might ex-pect, the dollars that passed throughwere only those deemed allowable by theinsurance industry at large. The typicallabor rate for collision repair was be-tween $5 and $6 per hour.

Essentially, the selected appraiserfixed the labor rates, required arbitrarydiscounts on parts and held firm to thelabor times published in a guide. In addi-tion, the appraiser had shops with whichone had unwritten agreements to accepttheir estimates sight unseen. Accordingto Silvie Licitra, a well-known collision in-dustry writer whose experience datesfrom that era, payoffs and corruptionwere rampant at that time.

“It was a real crazy business backthen,” wroteLicitra. “Those appraisers allhad their hands out, and they were takingmoney like crazy. If you didn’t pay themoff, they’d write lousy estimates. It was atake it or leave it situation because abody shop was faced with losing the jobif they didn’t play ball.”

In question, however, is the specificityof the Consent Decree to individual insur-

ance companies today. The Decree wassigned by representatives of the three majorinsurance associations at the time: Associ-ation of Casualty and Surety Companies(ACSC); American Mutual Insurance Al-liance (AMIA); and National Association ofMutual Casualty Companies (NAMCC), allof which are now defunct.

Also, despite their seniority in busi-ness the majority of the dominant compa-nies today are not on the list of signatoriesso represented. State Farm (1922), Farm-ers (1928) and GEICO (1936) do not, forexample, appear on the list of companiesrepresented.

In addition, communication fromthe DOJ’s Antitrust Division claims thatthe consent decree cannot be enforcedagainst individual insurance companies,since the companies themselves werenot signatories to the decree.

Read the 1963 Consent Decreeht tp : / /www. ican2000.com/docu-ments/1963/

Content herein draws upon articlespublished by Charlie Barone and JohnYoswick.

The 1963 Federal Consent Decree (from p. 24)

Tesla has chosen to skip the middle-man and open its own dealerships tosell its pricey Model S electric car. Instates like Texas where manufacturer-owned dealerships are not allowed,prospective Tesla customers must re-sort to buying the car online.

StateImpact Texas explains thereason that law has not changed boilsdown to money and a powerful auto-motive dealership lobby which out-spent Tesla in Texas. According to theTesla Motors website, the nearest Tesladealership is in suburban Denver. Al-though you can't purchase a Tesla inTexas, you can have your Tesla serv-iced in Austin, Dallas, or Houston.

Tesla Motors fought legislativefranchise battles with dealers on anumber of fronts this year, but Texasbecame the only state in which theelectric vehicle maker mounted a vig-orous challenge to existing franchiselaws. Tesla lost its fight outright.

Tesla Motors has two Texasshowrooms for its luxury electric cars,one in Austin, the other in Houston,but you can’t call them stores. Texaslaw prohibits carmakers from sellingdirectly to customers, as Tesla does

elsewhere. Instead, the companiesmust sell through franchise dealer-ships, something Tesla so far refuses todo. Tesla tried to get the state’s lawchanged, to no avail. So instead ofstores, Tesla’s Texas facilities are “gal-leries,” where customers can examinethe company’s $62,400-plus Model Ssedan and talk with Tesla reps aboutthe car’s features. And that’s about it.

“They can’t tell you the price ofthe car, how to buy the car or give youa test drive,” said Diarmuid O’Con-nell, Tesla’s vice president of businessdevelopment. “All they can really dois tell you about electric cars.”

As Tesla expands across the coun-try, the company has run into a doggedfoe: the traditional auto dealership andits franchise model. Dealer associa-tions in several states have tried to shutout Tesla with lawsuits and legislation,viewing the company’s direct-salesmodel as a challenge to their way ofdoing business. They aren’t necessar-ily worried about Tesla itself. The PaloAlto company delivered 5,150 cars inthe second quarter against a forecast of4,500 and turned a profit of 5 cents pershare while analysts expected a loss of

17 cents. It remains tiny by the auto in-dustry’s standards, planning to sell just21,000 cars worldwide this year. Thecar dealers don’t want other automak-ers to follow Tesla’s lead, openingcompany-run stores that would com-pete with franchisees.

“They feel threatened by this, asthey have when other companies havetried to do this in the past,” said JackNerad, editorial director and executiveanalyst at Kelley Blue Book. “Dealersare part of a well-developed supplychain, and they want to keep it thatway.”

To Tesla, the fight represents aclassic Silicon Valley story—an inno-vative startup disrupts an establishedindustry and faces resistance. Thedealer associations, Tesla executivessay, are trying to stifle change in astodgy marketplace that could use a lit-tle shaking up.

“They go to the legislature andsay, ‘We need protection from innova-tion,’ “ O’Connell said. “There’s reallya fundamental question here: Shouldthe government be prescribing a busi-ness model for automotives? Applythat argument, and we’d still be riding

horses and delivering messages byhand.”

To the dealer associations, directsales could destroy a franchise systemthat they say works for manufacturersand consumers alike, even if manybuyers don’t realize it.

Texas, for example, has auto deal-erships in 284 cities and towns, ac-cording to the Texas AutomobileDealers Association. Of those, 163towns have fewer than 15,000 resi-dents. If the auto industry switched todirect sales, the car companies would-n’t maintain stores and service centersin the smaller communities, said theassociation’s president, Bill Wolters.

“The manufacturers would do ex-actly like the big-box stores have donewith all the other products—theywould only be in the metropolitanareas and big cities,” Wolters said.“The franchise system provides amuch broader network of dealers thanyou’d have if manufacturers controlledthe outlets.”

The ability to sell cars in the hin-terlands was, in fact, one of the mainreasons the auto industry adopted thefranchise model.


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Snapshot of Industry

It wasn’t so long ago that all shopswere created equal. If you had tools,four walls and a sign, you could be abody shop. Actually, I should remove“four walls” from the list; there weremany “shops” repairing cars that did-n’t have one wall, let alone four.

At any rate, thequalifications to repaira car didn’t includespecial equipment ortraining. Starting abody shop business re-quired not much morethan proclaiming thatyou were a body man.

At that time,thankfully, direct re-pair programs werevirtually non-exis-tent. I can’t imaginewhat we would have done during thattime period if direct repair programswere prevalent. How would an insur-ance company identify which shops torefer their customers to?

Even though shops have evolvedsignificantly since that time, the samedilemma exists for insurance compa-nies today: Which shops do we referour customers to? Without having theintimate knowledge of your shop oryour competitors, finding the mostqualified shops in a market is as aboutas easy as developing a national healthcare plan.

Why does an insurance companycare where their insureds have the ve-hicles fixed? There are a lot of reasons.The cost of the repair is a motivatingfactor in finding the right shop, al-though it no longer is the most impor-tant. Back in the early 1980s whenthere were more than 70,000 shops inthe United States, price was the biggestconcern. Customer service wasn’teven on our radar. The quality of therepair was assumed to be no better orworse at one shop than at anotherdown the street. In fact, the biggestconcern I had with a shop was deter-mining whether or not the dog in backlot was chained up so I could write myestimate. Everyone was assumed to beable to perform a proper repair.

For the younger generation read-ing this, it’s probably difficult for youto understand what I’m talking about.

To put it in proper perspective, someshops would need to wet down the dirtfloor before painting a car. It wasn’tuncommon to see shops pulling full-frame vehicles with anything that wasstationary. And one of my personal fa-vorites was watching the old-time

body men use a torch. A torch in thelate 1970s and early 1980s was aboutas useful as duct tape.

The industry has changed dramat-ically over the past few decades and theunprofessional, uneducated shop ownerhas been replaced. Professional, edu-cated and astute operators have takenthe industry to the next level.

Now customer service is reli-giously the topic of conversation. In-surance executives are facing increasedscrutiny and pressure to improve cus-tomer service scores. Policyholder re-tention is the lowest the industry hasseen. Insurance has become a com-modity where price is the single mostmotivating factor to consumers. Thereare intense battles happening betweenthe Top 10 carriers for policyholders,as evidenced by the marketing dollarsbeing spent.

Ironically, our biggest challengeisn’t finding new customers; it’s keep-ing the ones we have. Retention is di-rectly correlated to customer service.Unfortunately, the collision repair fa-cility and insurance company typi-cally share a common fate relative tocustomer service. If the customer likesthe shop, more often than not, the cus-tomer will like the insurance com-pany. Conversely, if they don’t likeyou, they don’t like us. Thus, the im-portance to us of finding the rightshop to repair our insureds’ vehicles.

Repairing vehicles today poses a

significant challenge to the collisionrepair industry as well as the insuranceindustry. Collision repair shops need tomake significant investments in train-ing to remain current with the latesttechnology and repair methodologies.We recognize that this is critically im-portant to a safe and proper repair.There are still over 40,000 shops in theU.S. How do we find the shops that arethe best trained and have invested intheir people?

The new and specialty equipmentrequired to properly repair many oftoday’s vehicle should help foster a re-duction in the number of shops in theindustry. The days of opening up ashop with a tool box and a sign infront of the building are a distant“bad” memory. The challenge is elim-inating those shops from the market-place. We don’t want our insureds’vehicles in shops that are ill-equipped.

Collision repair shops need towork closely with insurance compa-

nies and state and national regulatorsto eliminate the “haves” from the“have-nots.” Those that have theequipment and training must survivewhile those that “have-not” shouldnot. The insurance industry can’t dothis alone. We need help identifyingthe “haves.”

The industry continues to evolveand the upper class of the industry isgrowing exponentially. The middleand lower tier shops are shrinking. Itwould be our desire to increase thepace of this, with the thought that thesurviving shops would be bettertrained and equipped. The sooner weeliminate the “have-nots,” the better itwill be for everyone in the industry.

The Insider is a corporate-levelexecutive with a Top 10 auto insurerin the U.S.. Got a comment or ques-tion you’d like to see him address in afuture column? Email him at [email protected].


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Bellavia Blatt announced today that asof Aug. 23, 2013, more than 420plaintiffs, up from 120, have joinedthe mass action lawsuit filed againstCarfax. The additional plaintiffs re-sulted in Carfax’s increased potentialliability of more than $150 Million, upfrom $50 million previously.

The lawsuit contends that Car-fax’s exclusive contracts with indus-try insiders—among them, Cars.comand AutoTrader.com forced auto deal-ers to sign costly agreements for ve-hicle history reports. The allegedillegal, anticompetitive practices en-abled Carfax to overcharge dealers.

Establishing a monopolistic cli-mate enabled Carfax to publish inaccu-rate and outdated reports. Customers’demands for free Carfax reports, as ad-vertised on television, compelled deal-ers to subscribe to Carfax’s service.Carfax’s anticompetitive practices in-creased costs to dealers, and ultimatelyconsumers, by hundreds of millions ofdollars.

The lawsuit demands a jury trialand seeks treble (three times) dam-ages, interest and attorney’s fees.Consequently, a small dealer would

potentially recover $105,000; amedium size dealer, $216,000; and alarge dealer, $324,000; plus interestand attorney’s fees.

Because of the potential gain,dealers are joining the lawsuit on adaily basis. The lawsuit’s key objec-tives are permitting competition andimproving the accuracy of the reports.

Leonard A. Bellavia of Mine-ola-based Bellavia Blatt is leading thelawsuit. Bellavia serves as generalcounsel to several national, state andregional dealer associations and rep-resents many of the largest dealergroups in the country. The firm hasextensive experience in auto-industrylitigation and serves as co-lead coun-sel in a lawsuit against the federalgovernment on behalf of 150 termi-nated Chrysler dealers.

“Dealers may still join the lawsuitagainst Carfax,” Mr. Bellavia said.“However, they must act quickly.”

To learn more about the lawsuitand to join it, call Bellavia Blatt at516.873.3000, and ask for Brad Stern.For more information, visit Dealer-Law.com. Carfax did not respond to arequest for comment.

to choose the body shop that they feelwill do the best job, and by contract,the insurance company is supposed toindemnify the policy holder whenthere is a loss. So, I say ‘just pay thebill Mr. Insurance Company.’”

In 1975, Schaech’s father openedMark’s Body Shop in a two-baygarage. After six years of refinishingcars through high school and college,Schaech managed the family businessfrom 1999–2002 when they movedinto their current 17,000 square footfacility. At that point, Schaech Jr. be-came his father’s partner.

Though Mark’s Body Shop re-pairs approximately 1000 cars annu-ally, grossing around $3 million insales, they do not participate in anyDRPs, but that wasn’t always thecase. “There was a time when we par-ticipated in as many as five DRP pro-grams, but over the years, theseprograms developed into bargainbasement repair programs. We wereasked to use more aftermarket andjunk yard parts which we find to be alower quality alternative to new OEM

parts. We were instructed to utilize re-manufactured wheel and junkyardsuspension components which we be-lieve to put our customers in harm’sway. Finally, we were asked to workso cheaply that it became difficult toinvest in new equipment and trainingwhich is imperative to repair today’smodern vehicles.”

To shops that are currently facingdifficulties obtaining full payment on re-pairs, Schaech offers the following ad-vice: “There are numerous organizationsand individuals in our industry who re-ally care about consumers and repair fa-cilities. These leaders are only a phonecall or email way and willing to providesound advice when a shop owner or con-sumer needs some sound advice.”

“The reality is not all shops arethe same; we all have different costs,different levels of quality, differentequipment and training, different cer-tifications, and different fixed costs. Itjust doesn’t make sense that we can allwork for the same price.”

Mark’s Body Shop4025 Mortimer Ave.Baltimore, MD 21215410-358-5155www.marksbodyshop.com


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MD Short PaysAttorney Spearheads Suit Against Carfax

San Diego-based Mitchell Interna-tional, which makes software for theauto collision industry, that it’s beingsold to private equity firm KKR & Co.of New York for an undisclosed price.However, Bloomberg News reportedthe deal valued Mitchell at about $1.1billion. Bloomberg cited sources whorequested anonymity.

Mitchell’s current owner, AuroraCapital of Los Angeles, agreed to sellthe company after several months oflooking for a buyer. Aurora, also a pri-vate equity firm, acquired Mitchell in2007 for more than $500 million.

Aurora acquired Mitchell infrom Hellman & Friedman LLC. Alittle over a year later, in April 2008,Mitchell and CCC Information Serv-ices announced an agreement tomerge the two companies. The Fed-eral Trade Commission filed suit toblock the merger and in March 2009,a judge ruled in favor of the govern-ment and the companies terminatedtheir agreement to merge.

Mitchell employs about 900workers in San Diego writing soft-ware that helps insurance companiesand body shops manage vehicle re-

pairs. It also makes software for han-dling medical insurance claims fromauto accidents. Finally, it has a prod-uct that helps workers’ compensationinsurers spot claims abuses.

Alex Sun, president and chief ex-ecutive of Mitchell, said the owner-ship change will help the companyexpand globally and boost its productline.

“The current management teamwill stay in place,” Sun said. “Therereally will be no change in the opera-tions or strategy of the company.”

Mitchell expects revenue of $350million to $400 million this year, Sunsaid. Mitchell has annual earnings be-fore interest, tax, depreciation andamortization (EBITDA) of about $90million, other sources said.

Three companies dominate theauto claims software business—Mitchell, Solera Holdings’ AudaEx-plore division in San Diego, and CCCInformation Services of Chicago. InJanuary, Leonard Green & PartnersLP, another buyout firm, acquiredCCC from Investcorp, one of the Mid-dle East's largest private equity houses,for more than $550 million.

The buyers face a consolidatingauto collision repair market that’s see-ing fewer accidents—thanks to backupcameras and other accident-avoidancetechnology.

“That claims shrinkage isn’t overyet,” said Stephen Applebaum, sen-ior analyst at industry consulting firmAite Group. “So you have a lot of peo-ple in this business trying to figure outwhat they’re going to do next.”

For Mitchell, the strategy in-volves expanding into additionalareas of property and casualty insur-ance. That approach mirrors whatMitchell did over the past decade tobreak into the injury claims softwarebusiness.

The company also has growthpotential overseas. Today, the bulkof its business is centered in NorthAmerica.

“There are some health care op-portunities because that industry ischanging rapidly, and Mitchell hassome good expertise,” Applebaumsaid. “Then there is the internationalpiece. Mitchell’s name is Mitchell In-ternational, but they are not really in-ternational.”

Mitchell has recently beefed upits international footprint through aninvestment in GT Motive, an autoclaims software firm serving Spainand other parts of Europe.

Mitchell International traces itsroots in San Diego to 1946, whenGlenn Mitchell managed a Chryslermotor parts distributorship and sawthat body shops needed better parts in-formation and pricing data. Hefounded Mitchell Manuals, an autoparts information publishing firm.

Mitchell died in 1971. The com-pany has been sold several times overthe years, as it morphed from papermanuals to digital software and data-bases. Today, Mitchell employs about1,700 people worldwide.

KKR has $83.5 billion in assetsunder management and invests a sig-nificant chunk of its money in tech-nology firms. The sale is expected tobe completed this winter.

KKR & Co LP and Warburg Pin-cus LLC were among the private eq-uity firms competing for Mitchell.Advent International Corp and Black-stone Group LP also participated inthe auction for Mitchell.


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CARSTAR Auto Body Repair Expertsshop owners gathered recently in LasVegas to celebrate the company’s 24thanniversary and honor its top perform-ers from across the U.S. Customerservice is a foundation of the culture,and CARSTAR says it maintains anaverage customer satisfaction index(CSI) rating of 98 percent or better.Each year, CARSTAR honors the topstores in customer satisfaction in threetiered sales levels. The CSI ranking re-flects the ongoing survey feedback re-ceived from customers based on theirCARSTAR experiences. For level 1,the winner was City CARSTAR inJanesville, WI, owned by MichaelBuggs. For level 2, the winner wasChampion CARSTAR Collision inHightstown, NJ, owned by Paul Edge-comb. For level 3, the winner wasUtzig CARSTAR Collision Service inJanesville, WI, owned by Al Utzig.

Said David James, vice presi-dent of marketing for CARSTAR,“Customer surveys and our own ob-servations tell us the three store own-ers and their employees receivingthese honors have generated an ex-ceptional level of positive awarenessin their communities and created re-peat customers for CARSTAR.”

Three CARSTAR Stores GetPraise for Outstanding CSI

Mitchell International Sold to Asset Management firm KKR

Gov. Pat Quinn signed a new billinto law that allows drivers to pro-vide law enforcement officers withelectronic proof of insurance onsmartphones and other similar de-vices when prompted. Effective im-mediately, drivers will no longer berequired to have the traditional paperproof of insurance to avoid a ticket.The option for digital proof of insur-ance is growing in popularity. Moreand more insurance companies offerapps for customers to download onelectronic devices.

The trend toward electronic in-surance cards is seen throughout thenation. Illinois is one of 27 states toadopt the policy, according to theProperty Casualty Insurers Associa-tion of America.

Seventeen states have approvedelectronic proof in 2013. Missouri’snew law takes effect now and Texas’rule will be implemented Sunday,Sept. 1.

The Illinois law relieves law en-forcement from any liability fordamage to an electronic device whenit’s presented as proof of insurance.However, law enforcement is pro-hibited from accessing any other in-formation on the phone or device.

Illinois Newest State withElectronic Insurance Proof


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