Opinion ID: 395210
Heading Depth: 2
Heading Rank: 1

Heading: Horizontal Price Fixing

Text: 15 Quality Auto's horizontal price-fixing claim arises under Section 1 of the Sherman Act, which proscribes any contract, combination ... or conspiracy in restraint of trade or commerce. 15 U.S.C. § 1. It is well settled that no liability can be predicated on Section 1 in the absence of some type of concerted action. United States v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919). In order to establish the existence of concerted action in the instant case, plaintiff had to submit evidence from which a jury could reasonably infer that (defendants) ... had a conscious commitment to a common scheme designed to achieve an unlawful objective. Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d 105, 111 (3d Cir. 1980), cert. denied, --- U.S. ----, 101 S.Ct. 1981, 68 L.Ed.2d 300 (1981). See also Klein v. American Luggage Works, Inc., 323 F.2d 787 (3d Cir. 1963); United States v. Standard Oil Co., 316 F.2d 884 (7th Cir. 1963). 16 Quality has consistently admitted, that there is no evidence (in the record) of horizontal agreements as such between State Farm and Allstate. Appellant's Br. at 29. Quality maintains, however, that an agreement should be inferred from defendants' alleged adherence to a common formula for calculating damage estimates. We do not find this argument persuasive. The uncontroverted affidavits and deposition testimony submitted by defendants establish that each company has unilaterally developed its own claim-handling procedures. 17 As the district court noted, each defendant uses a different method for determining the lowest prevailing competitive rate for repair work. 2 Allstate relies on informal contacts between claim adjusters and body shops. State Farm prefers to conduct periodic garage surveys. Quality Auto, 1980-2 Trade Cases at 76,696. At times, these methods produce identical results and both companies write estimates using the same competitive rate. But plaintiff concedes that the rates used by the defendants frequently differ. For example, in 1976, Allstate computed estimates at a $10.00 per hour labor rate while State Farm calculated labor costs at $14.00 per hour. Similarly, in 1979, Allstate set its labor rate at $12.00 per hour, but State Farm used $14.00 per hour. Supp.App. at 92-93. The existence of these variances in the rates used by the two defendants minimizes the possibility of any concerted action to fix the price of auto repair. 18 The fact that both companies occasionally write estimates at the same rate does not require a contrary result. After all, both defendants are attempting to assess prevailing market conditions, and it would not be surprising for each company on occasion to independently reach identical results. Even if we were to assume, however, that Allstate and State Farm somehow adhered to the same formula for calculating repair costs (nothing else being shown), there would be insufficient evidence here to establish the existence of concerted action or an antitrust conspiracy. Parallel behavior without more (a plus factor) 3 is not enough to establish a Sherman Act violation. Theatre Enterprises, Inc. v. Paramount Film Distributing Corp., 346 U.S. 537, 74 S.Ct. 257, 98 L.Ed. 273 (1954). In any event, the district court properly observed that even if the alleged horizontal agreement between the defendant insurers did exist, it would be immune from antitrust scrutiny under the McCarran-Ferguson Act, 15 U.S.C. § 1011 et seq., which exempts the business of insurance from the antitrust laws. Quality Auto, 1980-2 Trade Cases at 76,693-4. 4 19 As a result, we believe the undisputed facts support a conclusion that the defendants unilaterally chose to estimate damage claims at the lowest prevailing competitive rate and instituted separate systems to calculate this rate. Independent action of this nature (even if it were somehow shown to harm competition) does not violate Section 1 of the Sherman Act. Sweeney, 637 F.2d at 110; Overseas Motors, Inc. v. Import Motors, Ltd., 375 F.Supp. 499, 531 (E.D.Mich.1974), aff'd, 519 F.2d 119 (6th Cir.), cert. denied, 423 U.S. 987, 96 S.Ct. 395, 46 L.Ed.2d 304 (1975). In the absence of any proof of concerted action, we conclude that summary judgment is appropriate on the horizontal price-fixing claim. See, e. g., Lamb's Patio Theatre, Inc. v. Universal Film Exchange, Inc., 582 F.2d 1068 (7th Cir. 1978); Scranton Construction Co. v. Litton Industries Leasing Corp., 494 F.2d 778 (5th Cir. 1974), cert. denied, 419 U.S. 1105, 95 S.Ct. 774, 42 L.Ed.2d 800 (1975).