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Safelite Group, Inc. v. Jepsen

United States Court of Appeals, Second Circuit

September 4, 2014

SAFELITE GROUP, INC., SAFELITE SOLUTIONS LLC, Plaintiffs-Appellants,
v.
GEORGE JEPSEN, in his official capacity as Attorney General for the State of Connecticut, THOMAS LEONARDI, in his official capacity as the Commissioner of the Connecticut Insurance Department, Defendants-Appellees

Argued May 19, 2014

Appeal from the denial by the United States District Court for the District of Connecticut (Janet Bond Arterton, Judge) of a preliminary injunction against enforcement of Connecticut's law, " An Act Concerning Automotive Glass Work," Public Act 13-67. We vacate and order a preliminary injunction on First Amendment grounds.

JAY P. LEFKOWITZ (Steven J. Menashi, Kirkland & Ellis LLP, New York, NY; Benjamin Carl Jensen, Robinson & Cole LLP, Hartford Connecticut, on the brief), Kirkland & Ellis LLP, New York, NY, for Plaintiffs-Appellants.

JOSEPH J. CHAMBERS, Assistant Attorney General (Matthew J. Budzik, Assistant Attorney General, on the brief) for George Jepsen, Attorney General for the State of Connecticut, Hartford, CT, for Defendants-Appellees.

Before: WINTER, WALKER, and CABRANES, Circuit Judges.

OPINION

Page 259

WINTER, Circuit Judge.

Safelite Group, Inc., and its subsidiary, insurance-claims administrator Safelite Solutions LLC, (collectively " Safelite" ), appeal from a denial of a preliminary injunction against enforcement of Connecticut's Public Act 13-67 (" PA 13-67" ), " An Act Concerning Automotive Glass Work." Safelite claims that the Act violates the First Amendment because it is an impermissible constraint on commercial speech.

We hold that the district court erred in applying rational basis review under Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 U.S. 626, 105 S.Ct. 2265, 85 L.Ed.2d 652, 17 Ohio B. 315 (1985), but rather should have applied intermediate scrutiny under Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980). Concluding that the statute cannot survive such scrutiny on the present record, we vacate and order an injunction preventing enforcement of Public Act 13-67(c)(2).

BACKGROUND

We begin by describing the commercial context. Safelite operates an insurance claims management company throughout the United States. Its affiliate, Safelite AutoGlass, operates in Connecticut and provides auto-glass repair and replacement.

When car owners with a claim concerning auto-glass call their insurance company, they may, depending on the insurance company, be connected to Safelite Solutions. During this call, a Safelite Solutions representative reads a script that explains the consumer's repair options. If practicable, the script recommends Safelite AutoGlass to do the auto-glass repairs. If a Safelite AutoGlass facility is not available, the agent may recommend a shop that is on a list of seventy non-affiliated glass-repair shops pre-approved by Safelite Solutions. In order to be included on this list, the local repair shop must meet certain criteria and qualifications, and sign a participation agreement.

Under pre-existing Connecticut law, Conn. Gen. Stat. § 38a-354 (2014), automobile insurers and claims administrators are prohibited from requiring where repairs should be made and must give a notice of a right to choose on appraisals or estimates.

Page 260

According to the statute, appraisers may not " require that appraisals or repairs . . . be made in a specified facility or repair shop or shops." Id. § 38a-354(a). Moreover,

[n]o insurance company doing business in [Connecticut], or agent or adjuster for such company shall (1) require any insured to use a specific person for the provision of automobile physical damage repairs, automobile glass replacement, glass repair service or glass products, or (2) state that choosing a facility other than a motor vehicle repair shop participating in a motor vehicle program established by such company will result in delays in repairing the motor vehicle or a lack of guarantee for repair work.

Id. § 38a-354(b). Furthermore, any written appraisal or estimate must contain the following language in bold and in no less than ten-point font:

YOU HAVE THE RIGHT TO CHOOSE THE LICENSED REPAIR SHOP WHERE THE DAMAGE TO YOUR MOTOR VEHICLE WILL BE REPAIRED.

Id. ยง 38a-354(c). Safelite alleges its compliance with this law. Although not required by law, the Safelite Solutions script informs consumers of ...


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