syracuse new york and we represent next kharaj which is a collision and auto repair facility that's been in business in our community for over sixty years and i are in our case next raja standing in the shoes of fifty nine consumers who took their vehicles for repairs to next garage for which nationwide or progressive were obligated to pay and the the standard for both is the amount that was necessary to return the vehicle in each of these cases nationwide a progressive failed to pay the proper amount there were four components of these and with your honor's indulgence subject to any questions that you may have and really like to focus on the labor rate com if the labor rate in front and that's just to clarify that there's a reference to a labor rate in labor hours labor hours are basically  operations the way these estimates are set out they list operations that are needed and then the number of hours required for that operation out and all of the it and multiply by the respectively rate so operations and labor hours are are the same thing but that here i focusing on the rate the obligation under the contract for progressive explicitly says that they will pay the prevailing competitive rate which you know it needs to be reasonably determined now the word competitive is very important in that i think that you'll probably hear quite a bit about the hope prevailing rates but a prevailing rate does not necessarily mean that it's a competitive rate and that i think is one of the the first errors that was made by the district  into citing these cases is failing to understand that distinction with respect to the evidence and a nationwide obligation although it's not as explicitly stated it's our position that that is that the same obligation under the policy and with respect to third parties where you don't have a specific insurance policy issue again this is the same standard that that once having accepted liability on behalf of therefore these are that's the standard to which they're obligated now we put in to evidence a quite a bit of evidence with respect to whether or not this rate was competitive and first we did and it estimates from other insurer showing  more and then in addition there was the report of dr jennings who is a harvard and stanford trained economist and who was applying a very well accepted method of analysis that arises out of the i regulations mr x i dr jennings it began his career oh working for accounting firms and and looking at cross border transactions the i r s is concerned that companies with related entit across borders would it would shift income one way or the other language in transactions to shift that income and those transactions wouldn't be at the fair market rate so the i rest of elop a method by which they said let's look and see if these transactions are competitive fair market rate dr jennings was very familiar with that it's it's well accepted it set forth in iris regulations and he simply said you know what i can use the same analysis to say whether the greatest competitive in this context with respect to auto repair and the reasons he's able to do this is because auto repair as evidence bow is broken down into two segments and this is supported both by it's supported by all the depositions of nationwide and professors only representatives it's really going to spew to that it within the industry you have mechanical repair shops and collision care shops that's not to say that there isn't occasionally slow flap between them i believe that's actually perhaps a misunderstanding about what i mean when i say labor and so he thought this is not talking about the rate that's paid to the technicians that's not that's not the labor rate that i'm talking about when i'm saying there's a disagreement about the labor rate the labor rate is what is the labor rate that nationwide and aggressive and in these cases were just the customers generally ok with respect to pay to the shop for the operations so yes the standard is that you require to pay the amount necessary to put the vehicle back to the accident condition but the end in our the evidence that we put forward where we are saying they failed to do that in this case for the ease of the court we broke it down and said look let me detail for you why we think that they failed to pay a sufficient amount and therefore categories we think they failed to pay that if those cars were taken to that suppose that other shot they would still have the right to ask for mount a bomb of progress and in the progress of a nation like estimates with respect to additional operations right none of those people have even done it but that's that's awfully progressive it was offering prevailing can come back prevailing rates it seems to me from looking at the record that that's not what they showed at all because if you look at the way they constructed their guide that reviewing labor rates do market research out of rates that shops are accepting within the region so what they are saying is because we prevail upon garages to repair at at this labor rate rather than sue us that's the prevailing labor well that's not necessarily the prevailing really labor rate the fact that insurers with all its market power can prevail  garage to accept rather than sue who's going to sue for three hundred dollars or a difference of four hundred dollars they're saying the rate that we can get garages to agree to satisfies our obligation and that seems to me not to warn they are a burden to show in the first instance that they're in that they have shown that they are offering prevailing wind your honor i think you understand very well my argument and have said it i think better than i could say myself i would even simply add to that with respect to the issue of of why this is actually a deceptive practice and i think if you put these two things side by side it helps to understand and understand this the method of right writing the appraisal systematically under reports the true labor rate paid so what we have is a sense of it and the nation wide and progressive are intentionally introducing inaccurate data into the stream of information available within the industry and they go back and they rely on that industry data to say hey look this rate is the prevailing rate in the marketplace so it's a garbage in garbage out type of  ger their designated representative said that he admitted in his deposition that his adjusters were padding the labor hours allowed because the labor rate was too low and this was i see a eight zero seven and so so what he's saying there is look we because we don't want to change the labor rate that's in the summary section on the estimate we're going to have our adjusters because we we don't let them do that and we don't want them to do not they're going to allow extra hours it should only take an hour to pay is not a rate good the insurance company can use its muscle to get the car repair for but the prevailing went through and prevailing labor rate surely encompasses or it seems to me what two incom what a customer of a customer walks into it was a one car loan or a two car owners of my car my car's damage what will you repair it for well here's what you know we charge so much this is our labor charge and that's at least a part of prevailing labor way and the fact that the insurance companies show they can get it repaired for less doesn't make that the repair the available yes your honor i think that is absolutely correct and i would also say that where the insurer is asking the customer to pay the difference out of pocket the effect of that is to allow indirect steering i want to be clear because you probably hear it we have not made a steering claim or not a lead these people came to us we're not saying they were steered otherwise and if they tried it wasn't such but what i'm talking about is not a claim on our part but the effect of a standard not the nationwide and progressive the court to adopt and that is to say if a customer has to pay out of pocket even if that repair shops charges are reasonable then effectively what you're doing in the industry as a whole is your movie you're steering customers away new york has made a legislative choice that that's not what they want to have happen therefore the interpretation of the obligation in disc case needs to be done to interpret it consistent with that that was be accepted was not really what was governing the transaction because the insurance company was throwing in some extra non specified manner but passing it back there were two additional that you have the one he's very significant procedure which is that you never had notice that you were defending the labor rate the district judge ruled the motion was made on a completely different basis and the district court without ever giving you don't is that you had to defend on the labor rate basis and then went into a nap analysis similar to the analysis in the progressive case to decide the case against  defined to mean the amount of what the customer what what the what they claim can reasonably expect to get the car repaired and all the test correct and in the procedural portion that you noticed i think you can see a difference in the record on and that was done in no small part due to not fact with respect to the breach of contract not not  they were moving or that we were expected to defend the part that we'd stipulated to was was for the if you're asking how can the actual line items reads when you're negotiating the repairs the whole be part of a breach of contract claim when it's really the to the progressive and next body shop that's actually negotiating the contract as a whole that geographic area and progressive has a set practice as to how it determines what that prevailing competitive labor rate is in that year graphic area and progressive put forth evidence that shows that not only does it have that process the progressive follows that process sixty two and that's from that's how the rate is just a fact it says and says don't look at the rate don't look at reviewing the rates first of all first of all i'm not aware that you put in any evidence as to how those rates were initially established what what sort of research was the research that resulted in those and in those rates that were in the guide but then as time goes by and things change you explicitly says do not review the labor rates review to raise them unless when you are not reaching agreed rates on a regular unless you are not reaching that read rates on a regular basis or at a minimum on walks into the door walked into her shop off the street and says what will you repair this for that's not the rate they're going to look at that's actually that's right your honor next actually quotes a much lower rate than it's posted labor rate when it's customers off the street or if it's cuz i don't i have no idea what the truth is with respect i have no idea and no bias as to what the truth is with respect to labor the point i'm making is that your paper submitted to the court on wage you showed rage that you can get the car repaired for because you will come to a garage and say as you came to next and say ok this is what will give you are you going to accept it or are you going to sue us and helpful to step back and apply the lavery reference guide as we did in summary judgment leverage reference guide sets forth across his policy for when a labor rate review is conducted an elaborate reference guide which which your honor was referring to was in place during the entire satchell imitations during that period there were two reviews that were took place in the sarah hughes area which governed the rates as part of the process what progressive does is it collects data from three different sources it collects data from local body sho as to what they're charging it collects data from subrogation which shows not only what other insurance companies are negotiating with adi shops but what other body shops are accepting and it also it also used industry data from various vendors which contain both insurance information and body shop information all of that data is then put together in a labor rate review which we submitted to the court as well and that information is analyzed by the managers in the syracuse area and then sent to a director in cleveland to review that's correct adjusters are having daily negotiations with the shops and the managers are talking to those adjusters on a daily basis when the managers are hearing that there's body shops there's that requesting a higher labor rate then at that point that's when the labor rate review just an economical they would have in order to occupy our such a dominant position as the insurer if they were i can't as an economic matters to you because you're giving them two hundred determined by progressive and what the district court did is the district court looked at our process saw that we followed our process and determined it was a reasonable process which shifted the burden to next and next couldn't create an issue of fact to show that the rate that we charged wasn't unfair that it wasn't reasonable and that's why the district parts opinion was correct but even if you disagree that the labor a process was competitive it wasn't deceptive the labor rate the progressive paid was disclosed at the time it rhodes initial estimate and given to nix before the vehicles were liner that's right that's right your honor with respect to three forty nine there's no deceptive conduct here progressive disclosed in its policy that was going to pay the prevailing labor rate as determined by progressive and it disclosed in its estimate the labor it was going to pay for next began repairing the vehicles so there's no deception here it's slim it's the claim it seems to me is one that involves the terms of the policy they're presented to customers by because the the policy said we're going to we're going to pay pay prevailing we're going to pay prevailing labor rate and if what is being done is not prevailing not paying prevailing neighbor rates but paying rates that  that the insurer can you can effectively command by using its market power and of the improbability that that a repair shop will sue were refused to agree over a prevailing labor rate by using a process which collects data from three different sources it's not just what progresses estimates are written as it's from three different sources which it then analyzes and then reviews in order to determine whether or not the labor rate is reasonable he's negotiating on behalf of the assigner and we're speaking to the assigner through text that's correct but even if you found the conduct was deceptive there's still no independent injury distinct from him three independent three forty nine injury distinct from the br faith as your honor pointed out we were giving them more money as part of an overall negotiation about the cost of repairing that vehicle when we write our national estimate next then reviews that estimate say that the garage is greedy that way great and that validates the labor when the garage was being given extra money to retrieve your honor in perverse case rogers were given extra money here what it was was a negotiation about things progressive assessment an initial estimate mixed with then write a notice a deficiency which contained additional line items and then progressed it was supplement once twice sometimes four or five times and so you actually if you compare every line item you can see where progress is a said ok you're right we'll pay you an additional point five to repair quarter panel so here it's very clear that it's not additional money for labor rate it's not a labor a type concession what it is is it's additional hours where it's an interpretation of the regulation as a nation i will pay actual caf which is defined as the lesser to include what a claim and that would be the policyholder the third party claim it can be reasonably expected to repair the property to its condition immediately prior to last that we've heard about the pre x new condition sufficient payment and so when we're talking about burden of proof and whether or not the the movement carry the burden of proof i encourage the court to look closely at the nationwide record the next sources nationwide record which i respectfully submit does indicate or does not include nationwide having carried its burden of demonstrating as a matter of law that the payments a nationwide made even though disputed by next to be sufficient for next purposes is judged corman point out what's the sufficiency is it sufficient to repair the car or is it s you pointed to and the actually the deposition testimony of kevin reynolds one of the material damage appraisers that came in actually in opposition papers from appellants council demonstrated that notice issue in just a moment your honor at that point in time the burden shifted to nics to controvert that nationwide had underpaid had not paid enough to restore the  reynolds and i and i went during the earlier argument and i looked at what elemental says and what he says is not that yes he does say nationwide had these other shops that would have or could have done the repairs for what nationwide paid but the point is it's clearly that that not that nationwide would have done the repairs or had the repairs done for the policyholders and the third party claimants but that the people who own the car would have been able to go to the shop so that's the claimant reasonably being expected for the monies and nationwide pay for the amounts it estimated for the monies it paid go to these other shops and have those vehicles restored p x in a condition that is what nationwide established the standard of the country is not what a claim and with the muscle of the insurance company behind you can expect to get repair for its what a claim and can get it reasonably expect to get a car repaired and that's interrupter and i'm sort of at a price at which they can make some profit because they want nationwide business because that's huge business respect i think it is i'd respectfully disagree with you and i do i believe that it is one in the same with the purpose of a notice of rights letter and the district court correctly noted that we have those two office of general counsel opinion letters out there that predated or actually actually were issued in or around the same time frame of two thousand and seven to two thousand and twelve and those opinion letters say things like the first one said that if the insured really elects to repair the the vehicle at the higher costing the cop the shop that that charges more the insurer is not the insurance company is not financially responsible to increase its offer under the precepts of regulation sixty four that's the first point the second one which dovetails with them is that with respect to the concept of  deceptive act or practice of nationwide is refusing to negotiate that's the allegation or the accusation this disconnect between it's saying you know here's here's a labor way we allow and and that's it is that the an insurance permit came out and said there's no requirement that either side moved off its initial numbers or national offer implying that it was not a violation of regulation sixty four not to do so now that that relates somewhat to the to the general business l except the plaintiffs and want to but that means that they accept them when we come in and say and say this is what we're going to give you they accept it it doesn't even address what a one of a player who does not have the muscle of the insurance company behind him can get the car repaired so i just don't see how the reynold's affidavit how you how you met the standard of showing that that your rates were at work where the rates that were called for by the insurance we don't know well nationwide could get another words that these vehicles could be taken to other shops within the syracuse marketplace but to and have their vehicles repaired to pre  testimony of bud ballinger also indicated that there was serving both of the nationwide in in program shops as well as the out of program shops  ends company but from the standpoint of the consumer why why does the consumer care that through the exercise of the bargaining power of his insurance company they got the bedfellows i don't know why the shop and i want the car repaired there but the consumer is required in that case to accept a good condition in which the consumer will be liable for the  because that's what the policy requires and that's what the regulation requires that's right your honor that the consumer will have to accept that just because the good the policy doesn't the ballasts the requires if the the the rate is the a customer can reasonably expect to get the pre x in a condition which in this case nationwide demonstrated could have been done in all one thousand repairs and in this case instead of and on the issue very very briefly  notice your honor which you brought up as being a significant issue or problem i think is fair as you put it of something the district court respectfully initially we respectfully submit that the district court really didn't grant the summary judgment on the breach of contract on different grounds because one of nationwide's argument was that the knicks had not been injured because the us ignores had not been injured and intrinsic to that argument was a fact that the vehicles had been repaired for nationwide's payment to pre accident condition and in recognition of that both the appellant's nics memorandum a law in opposition to nationwide's motion and as noted by the the district court in its decision pointed out this it's on page p a special appendix of page eleven is page eleven of the auditor court's decision in response to the motion plaintiff contends it has both lay an expert evidence that the fended did not pay the reasonable cost of repairing the vehicles to pre x mint condition and yet absent from the submissions for the record low that was the contention there was no actual evidence pointed either from from the principal you think if there had been any complaints tunics the next would have put in some evidence of that by any evidence or at declarations of the policyholders or third party s ignores and yet the record is bare of any such indication either that  the consumers or the the the vehicle owners complained about build yes i believe you are exactly your honor nixon did charger build them but then say or indicate that they were not going to pursue collection of those over charge thirty's and just briefly i want to touch on the general business law issue because it is an important issue to the industry this court in conboy and broder held that a plane of cannot circum contend what's going on here judge the district court correctly noted that this is not a case where there are independent claims common law claims of court outside the parameters of twenty six zero one and general business law three forty nine and on that basis are ruling respectfully submit was exactly correct and in line with this court's decisions in time when broder secondly with respect to the deceptive matter there is a case  d one six six the two thirty thousand and thirteen case in which the new york court of appeals held that mere illegal or alleged illegal behavior by a business is not in and of itself enough to constitute a deceptive that to practice for purposes of of three forty nine and so therefore on the basis of that case we respectfully submit that whatever nics contends is being nationwide's dishonest or disingenuous conduct does not in and of if i may start at the end just cracked a couple things were especially was that for the record the suggestion that nix didn't charge the customers in fact not only did nick's issue final bill and charge the customers the only reason they're not pursuing the collection against the customers but that they didn't expect those customers pay is because they got this assignment write it so it was a was a fair bargain for consideration we will not collect against use long as you give us the right to collect against directly against the insurer because frankly that's that's who would have to be paying for it anyway in these particular circumstances and assignment doesn't destroy the claim those customers still have a claim against the insured under g p l three forty nine  at the argument that the vehicles had been repaired and therefore there was no injury and that somehow that sufficient basically they're saying if we paid ten dollars and the and the shoplift through the repairs that that would be sufficient i mean it's first whole it's not even standard because under the under the new york insurance law on these contracts it's clear the customer didn't even have to get the car repaired to be entitled to the money they're not allowed and they're prohibited by new york law from acquiring the customer to get the car repaired so whether or not the car got repaired is is completely not just not it's not helpful  case only because next is sad we are in a better position to it we can we will do this for you right any individual consumer any individual consumer has such a small claims not going to be worth it for them to take it to  i mean this is a business that ben there since one nine hundred fifty four to lot of people in the street or syracuse area that have a great deal of trust for this particular the particular business and they do quality work when i first moved to the area that's what i was told go to next the people who do the best work and there they've got integrity so i respectfully would say we have affidavits from one customer supporting that and i don't think that innocent thank you