WILLIAM H. STEELE, Chief Judge.
This matter comes before the Court on defendant's Motion for Summary Judgment (doc. 77). The Motion has been briefed and is now ripe for disposition.
Plaintiff, Kirby's Spectrum Collision, Inc. ("Spectrum"), brought this action against defendant, Government Employees Insurance Company ("GEICO"), pursuing state-law claims of intentional interference with contractual/business relations and injunctive relief.
Spectrum is an automobile collision center/repair shop located in Mobile, Alabama. GEICO is an automobile insurance provider that issues policies to cover certain vehicle repair claims for and on behalf of its insureds. In approximately 2005 or 2006, GEICO launched its ARX Program in the Mobile market. (Gaskin Dep., at 47; Garner Dep., at 161-62; Jackson Dep., at 61.) Internal GEICO documents describe the ARX Program as one "which delivers the convenience of one stop claim handling, the efficiency of priority repairs, and peace of mind knowing that GEICO guarantees the repairs for as long as the customer owns the vehicle." (Pl. Exh. 23, at 11.) In implementing the ARX Program in this area, GEICO designated a single repair shop (non-party Cockrell's Body Shop on the I-65 Beltline) as the only ARX facility in Mobile. (Gaskin Dep., at 47, 49-50; Garner Dep., at 73-74, 78, 80, 161.) GEICO arranged for one of its adjusters to be stationed full-time at the Cockrell's location to inspect GEICO customers' vehicles, for estimates to be prepared on-site, and for rental cars to be readily available at that location to accommodate GEICO customers. (Stringfellow Dep., at 44-46; Garner Dep., at 78-79.)
With this infrastructure in place, the way the ARX Program is designed to work is as follows: If a Mobile-area GEICO customer (whether an insured or a third party whose vehicle was damaged by a GEICO insured) makes a claim for a damaged but drivable vehicle, GEICO directs the customer to take the car to Cockrell's (the designated ARX shop) for GEICO's adjuster to inspect it and prepare an estimate. (Garner Dep., at 72.)
In GEICO's view, having an adjuster on-site at its Mobile ARX location makes GEICO more efficient in providing services at lower cost,
GEICO believes its ARX Program adds value for its customers; therefore, the company endeavors to educate them about that program so that customers can understand their options and make an informed decision. (Garner Dep., at 209-11.)
The metrics by which GEICO evaluates its customer service representatives include their "capture" rate for ARX opportunities, meaning the frequency with which they succeed in persuading customers to have their cars inspected at an ARX shop, and their "retention" rate, meaning the frequency with which those customers agree to have repairs done via the ARX Program. (Jackson Dep., at 38-41.) As a result, GEICO call center employees have a direct interest in encouraging customers to use the ARX Program and in emphasizing the benefits of that program, in hopes of improving their personal capture and retention rates.
Spectrum maintains that GEICO's ARX Program is unique in the auto insurance business. To be sure, plaintiff acknowledges that many insurers have implemented preferred shop arrangements, and that it participates in such programs; however, it insists that GEICO's arrangement is qualitatively different than those of other carriers. (Doc. 92, at 2-3, 17; J. Kirby Dep., at 276.) The critical aspect of the ARX Program to which Spectrum objects is the notion that GEICO compels customers to bring their vehicles to the ARX shop (Cockrell's) for inspection by a GEICO adjuster (who makes a hard sell to encourage the customer to allow Cockrell's to repair the car), rather than allowing vehicles to be examined at a neutral location or via field inspection. (Doc. 92, at 11.) Plaintiff's position is that other insurers with drive-by programs allow field inspections upon request, but that GEICO does not. (D. Kirby Dep., at 436, 439-40.) Of course, GEICO's evidence is that the ARX Program specifically provides for field inspections upon request, in lieu of the customer bringing the vehicle to Cockrell's; however, plaintiff's summary judgment evidence is that the program has not, in fact, functioned in that manner in practice.
Notwithstanding GEICO's insistence that customer choice and satisfaction are paramount virtues of the ARX Program, there is evidence that its customers have been intimidated or strong-armed into hauling damaged vehicles to the ARX shop. In that regard, the record contains testimony and affidavits from a number of GEICO customers concerning their experiences with the ARX Program, as it relates to the inspection or repair of their vehicles. This evidence, like all other exhibits in the summary judgment record, is construed in the light most favorable to the non-movant, Spectrum. It is Spectrum's position that these customer testimonials demonstrate that GEICO was in fact steering customers away from Spectrum and to the ARX shop, notwithstanding nominal policies to the contrary.
In particular, Spectrum identifies two individuals whom it contends GEICO misled or bullied into having repairs performed at Cockrell's rather than at Spectrum. First, customer Kimberly Brown indicates that when she phoned in her claim to GEICO and said that she wanted Spectrum to repair her vehicle, the GEICO representative responded that "our insurance adjuster's at Cockrell's and ... we send all of our claims to Cockrell's." (Brown Dep., at 11.) According to Brown, she told the GEICO representative repeatedly that she wanted Spectrum to perform the repairs and that she did not want to use Cockrell's because of a previous bad experience there. (Id. at 12-15.) Brown indicated that she "finally ... just gave up" because the rep said that Cockrell's was "where GEICO did all their repairs." (Id.)
Spectrum also offers evidence that other customers were encouraged or compelled by GEICO to take their vehicles to Cockrell's for inspection, even though Cockrell's did not ultimately perform the repairs. For example, a customer named Robert Byrne said that he had his vehicle at Spectrum awaiting repairs when a GEICO representative informed him that "repairs couldn't start until the vehicle was inspected by ... Cockrell's Body Shop on I-65. We had to go in, we had to have it inspected." (Byrne Dep., at 77.) Byrne pleaded with the representative to be exempted from that requirement and did not wish to take his vehicle to Cockrell's, but the GEIO representative was "[t]otally inflexible" and never offered him a field inspection at Spectrum. (Id. at 78.) Over his strenuous objection, Byrne arranged for his damaged car to be moved to Cockrell's for the inspection, then returned it to Spectrum for repairs. (Id. at 61-62.)
Yet another witness, Denise Cobb, contends that the GEICO adjuster at Cockrell's was "real persistent" that she should allow Cockrell's to repair her vehicle even after she had stated her desire to use Spectrum. (Cobb Dep., at 10.)
Despite this parade of witnesses, Spectrum offers evidence of an alleged contractual relationship with respect to only two.
As to Byrne, the signed work authorization form and other paperwork reflect that he granted Spectrum permission to perform repair work on his 2000 Honda CRV on an unspecified date, that the repairs were completed on January 20, 2010, and that Spectrum received more than $3,600 from GEICO for the project. (Id.) Boggan's work authorization form is blank
Plaintiff maintains that GEICO began using its ARX Program to choke off GEICO-insured business at Spectrum in 2007, in the wake of strident disagreements between Darrell DeSpain, who was GEICO's auto damage supervisor in the Mobile market, and Spectrum principals John and David Kirby. During one such conversation, DeSpain angrily told David Kirby, "[S]ee if you get any more of GEICO work." (D. Kirby Dep., at 39.) Another time, DeSpain and John Kirby became embroiled in a verbal altercation that nearly turned physical, with DeSpain vowing that Spectrum "wouldn't get any more work from GEICO." (J. Kirby Dep., at 127.)
Empirical evidence lends at least superficial support to Spectrum's contention. Indeed, data presented by Spectrum reflect that its volume of GEICO-insured repairs declined from more than $88,000 in 2006 and more than $75,000 in 2007 to just
Summary judgment should be granted only if "there is no genuine issue as to any material fact and ... the movant is entitled to judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. The party seeking summary judgment bears "the initial burden to show the district court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial." Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). Once the moving party has satisfied its responsibility, the burden shifts to the nonmovant to show the existence of a genuine issue of material fact. Id. "If the nonmoving party fails to make `a sufficient showing on an essential element of her case with respect to which she has the burden of proof,' the moving party is entitled to summary judgment." Id. (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)) (footnote omitted). "In reviewing whether the nonmoving party has met its burden, the court must stop short of weighing the evidence and making credibility determinations of the truth of the matter. Instead, the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 999 (11th Cir.1992) (internal citations and quotations omitted). "Summary judgment is justified only for those cases devoid of any need for factual determinations." Offshore Aviation v. Transcon Lines, Inc., 831 F.2d 1013, 1016 (11th Cir.1987) (citation omitted).
As noted, Spectrum's only remaining substantive causes of action against GEICO sound in theories of tortious interference with contractual or business relations. Under Alabama law, these are separate and distinct torts that must be analyzed independently. See White Sands Group, L.L.C. v. PRS II, LLC, 998 So.2d 1042, 1054 (Ala.2008) ("White Sands I") ("It is widely recognized that tortious interference with a contractual relationship is a claim separate and distinct from interference with a business relationship or expectancy."). GEICO now seeks summary judgment on these claims, arguing that the record cannot sustain essential elements
With respect to Spectrum's claim for tortious interference with contractual relations, GEICO raises a threshold objection that there is no evidence of any contracts. Defendant is correct that "[a] claim of tortious interference with a contractual relationship presupposes the existence of an enforceable contract." White Sands I, 998 So.2d at 1054; see also Weathers Auto Glass, Inc. v. Alfa Mut. Ins. Co., 619 So.2d 1328, 1329 (Ala.1993) (affirming entry of summary judgment for defendant on claim of intentional interference with a contract "because there was no contractual relationship to be interfered with"). Spectrum counters that the work authorizations signed by Byrne and Boggan are contracts, but does not explain how these open-ended, non-specific documents (which appear to be in the nature of acknowledgments or disclosures) constitute valid and enforceable contracts under Alabama law. See generally White Sands I, 998 So.2d at 1051 (no contract formation "unless the terms of the contract are reasonably certain," in that "they provide a basis for determining the existence of a breach and for giving an appropriate remedy") (citations omitted). In the Spectrum work authorization forms, Byrne and Boggan did not promise to do or refrain from doing anything; rather, they simply acknowledged that Spectrum can perform repair work on the vehicle and operate the vehicle for testing purposes, that Spectrum will have a mechanic's lien, and that Spectrum disclaims responsibility for certain loss or damage. Under the circumstances, it is difficult to see how this document meets the legal definition of an enforceable contract; certainly, Spectrum has made no attempt in its lengthy summary judgment brief to develop such an argument, beyond its unhelpful conclusory statement that these work authorization forms "are contractual relationships for repair of the vehicles involved." (Doc. 92, at 19-20.)
Assuming (without deciding) that the Byrne and Boggan work authorizations are in fact enforceable contracts as needed to establish a claim for tortious interference with contractual relations, the Court agrees with GEICO that Spectrum's cause of action still fails as a matter of law. Simply put, there is no evidence that GEICO had knowledge of any such contractual relationships at the time of the alleged interference, or that any interference took place. In addition to establishing the existence of a valid contract, a plaintiff proceeding on a tortious interference with contractual relations claim under Alabama law must show, inter alia, "the defendant's knowledge of the contract" and "intentional interference with the contract." MAC East, LLC v. Shoney's, 535 F.3d 1293, 1297 (11th Cir.2008). Plaintiff has done neither. Despite GEICO expressly questioning the knowledge element on summary judgment (doc. 78, at 27), Spectrum identifies not a shred of evidence which might support a reasonable inference that GEICO knew Byrne and Boggan had signed work authorization forms for Spectrum's benefit before it required them to take their vehicles to the ARX shop for inspection. Certainly, Byrne and Boggan do not say that they notified GEICO of any signed contract with Spectrum, and no other record evidence suggests that they did. Without knowledge of those purported contracts, GEICO could not interfere with them in a manner that gives rise to Alabama tort liability. See, e.g., Waddell & Reed Inc. v. United Investors Life Ins. Co., 875 So.2d 1143, 1153 (Ala.2003) ("to establish tortious interference with contractual or business relations a plaintiff must prove ... the
To meet its burden of showing knowledge, plaintiff offers a sleight of hand by stating in the vaguest of terms that "Geico's asserted lack of knowledge ignores the evidence and is not based upon undisputed facts." (Doc. 92, at 21.) Such a cursory statement is wholly inadequate to meet Spectrum's burden on summary judgment of identifying facts that might support a reasonable inference that GEICO knew of Byrne and Boggan's work authorizations.
Because the record and briefing demonstrate that Spectrum has not satisfied several elements of the cause of action, the Court finds that GEICO's Motion for Summary Judgment is properly
Spectrum's alternative theory of liability sounds in tortious interference with business relations. "Under Alabama law, the tort of wrongful interference with a business relationship has five elements: (1) the existence of a protected business relationship; (2) of which the defendant knew; (3) to which the defendant was a stranger; (4) with which the defendant intentionally interfered; and (5) damage." Edwards v. Prime, Inc., 602 F.3d 1276, 1302 (11th Cir.2010); see also White Sands Group, L.L.C. v. PRS II, LLC, 32 So.3d 5, 14 (Ala.2009) ("White Sands II") (same).
The analysis of this cause of action turns on the "stranger" requirement. The Alabama Supreme Court recently confirmed that one element of the tort of the tortious interference with a business relationship which a plaintiff must prove "is that the defendant be a stranger to the relationship." White Sands II, 32 So.3d at 14; see also Edwards, 602 F.3d at 1302 (plaintiff has burden "to establish ... that the defendant was a stranger to the protected business relationship with which the defendant interfered," and not "a party in interest to the allegedly injured business relationship"). GEICO asserts that it cannot be liable for tortiously interfering with Spectrum's customer relationships because GEICO, as payor for services provided by Spectrum to its customers on GEICO-insured repairs, has a bona fide beneficial or economic interest in those relationships. In GEICO's words, "Because GEICO must indemnify Spectrum's customers for the repairs Spectrum performs, GEICO has an economic interest in the relationship between Spectrum and those customers who make a claim with GEICO. Thus, Spectrum's relationship with its customers is interwoven with GEICO's relationship, as payor, with its customers that make automobile claims." (Doc. 78, at 29-30.)
There is considerable support for GEICO's position in authorities applying Alabama law. For tortious interference purposes, "a defendant is a party in interest to a business or contractual relationship if the defendant has any beneficial or economic interest in, or control over, that relationship." Edwards, 602 F.3d at 1302 (quoting Tom's Foods, Inc. v. Carn, 896 So.2d 443, 454 (Ala.2004)); see also Waddell & Reed, 875 So.2d at 1154 (same). "When the defendant is an essential party to the allegedly injured business relationship, the defendant is a participant in that relationship instead of a stranger to it." Edwards, 602 F.3d at 1302 (citations omitted); see also MAC East, 535 F.3d at 1297 (under Alabama law, "[a] defendant is not a stranger to a contract or business relationship when (1) the defendant is an essential entity to the purported injured relations; (2) the allegedly injured relations are inextricably a part of or dependent upon the defendant's contractual or business relations; ... or (4) both the defendant
Confronted with this compelling argument, Spectrum's initial response is that GEICO does not actually have an interest in the Spectrum/customer relationship because GEICO is attempting to force the customer to use the ARX shop (not Spectrum) to complete the repairs. In addition to being inconsistent with much of its own evidence (which shows that GEICO did nothing more than require Spectrum customers to transport their vehicles for the ARX shop for inspections, while assuring them of their right to choose whatever shop they wish to perform the work), Spectrum's argument does not make sense. It cannot reasonably dispute that GEICO has a direct financial obligation to pay for its customers' collision repair work. That obligation remains intact whether the vendor is Spectrum, the designated ARX shop, or some third party shop. As such, whatever shop its customer does business with, that customer/vendor relationship is bound up in, and intertwined with, the customer's relationship with GEICO and, for that matter, the shop's relationship with GEICO. No matter who the selected shop is, GEICO is footing the bill; therefore, GEICO is an essential entity to the customer/collision center relationship, the very relationship with which Spectrum claims interference. Given this inescapable fact, there is simply no reasonable way to view GEICO as a stranger to the business relations at issue here.
As a fallback position, Spectrum asserts that even if GEICO is not a stranger to the subject business relationships, "[t]hat argument cannot be used to insulate a Defendant from inappropriate conduct."
Even if Spectrum were correct that tortious interference is actionable against defendants who are not strangers, so long as they engaged in "inappropriate conduct" (doc. 92, at 24), there is no indication of any pattern of systematic, inappropriate conduct by GEICO towards its customers in this regard. It is surely not inappropriate for GEICO to have an ARX Program or to apprise its customers of the benefits of that program (which involve one-stop shopping, an on-site adjuster to oversee the repairs, on-site rental car facilities, priority service, a lifetime guarantee, and so on), in the interest of maximizing customer satisfaction and utilization. Nor is it inappropriate per se for GEICO to pursue the efficiency benefits of having customers bring their vehicles to a single location for inspection, as opposed to more time-consuming field inspections, when circumstances reasonably allow. As these types of conduct are acceptable, plaintiff's allegations of inappropriate conduct hinge largely on the theory that customers were forced or manipulated by GEICO to give business to the ARX shop over the shop of their choice. But most of plaintiff's own witnesses say only that GEICO asked or required them to bring their vehicles to Cockrell's for inspection, while acknowledging and honoring their right to have their vehicles repaired wherever they want. Plaintiff identifies only two witnesses (Brown and Deas) who were told by GEICO representatives that they had to repair their cars at Cockrell's. This conduct may be inappropriate, but it is also isolated and contrary to GEICO's training materials (which require, among other things, that GEICO representatives always tell customers of their right to choose the body shop of their choice and provide customers with all necessary information to make an educated decision as to the ARX Program) and the testimony of GEICO officials stressing the primacy of the customer's right to utilize the collision center of his or her choice for repairs. Plaintiff simply has not come forward with evidence showing a pattern of inappropriate interference by GEICO with Spectrum's business relationships with its customers; therefore, defendant is entitled to summary judgment on that basis as well, separate and apart from the "stranger" requirement.
Plaintiff's only remaining cause of action is styled "Injunctive Relief," and requests preliminary and permanent injunctive relief as a remedy for GEICO's alleged tortious interference. (Doc. 1-1, ¶¶ 26-30.) This claim is not a freestanding cause of action in its own right, but is entirely derivative of GEICO's substantive claims. See Alabama v. U.S. Army Corps of Engineers, 424 F.3d 1117, 1127 (11th Cir.2005) ("any motion or suit for either a preliminary or permanent injunction must be based upon a cause of action, such as a constitutional violation, a trespass, or a nuisance. There is no such thing as a suit for a traditional injunction in the abstract.") (citations and internal quotation marks omitted); Sierra Club v. Tennessee Valley Authority, 592 F.Supp.2d 1357,
Plaintiff's tortious interference claims are a classic example of attempting to fit a square peg into a round hole. The docket sheet and record reflect that plaintiff is upset about various of defendant's business practices which plaintiff perceives as unfair. But not every unfair act equates to liability. In one telling passage of its summary judgment brief, plaintiff decries the lack of availability of remedy under the Alabama Insurance Code or the Alabama Deceptive Trade Practices Act, and explains that "[t]he tort of interference is the only mechanism Spectrum has" to combat the alleged unfairness. (Doc. 92, at 25.) But the purported absence of any other recourse does not mean that plaintiff's chosen claims have merit, or that they fit the facts and circumstances about which plaintiff complains. Plaintiff's summary judgment argument is long on inflammatory rhetoric (i.e., use of terms like "predatory," "theft," "steal," and "unethical" to describe GEICO's program), and short on evidence establishing genuine issues of material fact as to fundamental elements of tortious interference under Alabama law.
Simply put, plaintiff has not shown that defendant was aware of, or interfered with, any valid, enforceable contracts between plaintiff and its customers. Plaintiff has not shown that defendant was a stranger to the contractual and business relationships at issue. And the vast majority of the interference about which plaintiff complains consists of benign conduct (i.e., having customers take their car to a third-party location for inspection, telling customers about the advantages of the ARX Program) that falls well short of tortious interference, as a matter of law. Despite interviewing and/or deposing numerous witnesses and conducting comprehensive discovery, plaintiff has identified only two customers whose business plaintiff lost because of alleged misrepresentations by defendant's customer service representatives (which misrepresentations, if made, were contrary to their training and defendant officials' explanation of how the program was designed to work).
For all of the foregoing reasons, defendant's Motion for Summary Judgment (doc. 77) is
A separate judgment will enter.