Auto Parts Class-Action Suit Compromises Consumer Choice
The NAII, along with several insurance and consumer groups, were denied their request that the Supreme Court reverse an Illinois court's ruling certifying a nationwide class-action lawsuit from a case originally filed in Illinois. Plaintiffs in the original case claimed that State Farm defrauded its policyholders by requiring them to use cost-effective "after-market" parts instead of original manufacturer parts.
"In the long run, the Supreme Court's decision to open this issue up to a nationwide class-action suit will be detrimental to consumers," said Robert J. Hurns, associate counsel for the NAII. "It will stifle competition and shore up the monopoly of auto manufacturers for unnecessarily expensive replacement parts. The only real winner in this case will be the trial bar, which has developed a novel way of getting its hand into the deep pockets of the insurance industry."
The Supreme Court's decision is disturbing on several other levels, especially in its unprecedented application of Illinois law to all 50 states. "We still believe the lower court erred in its ruling," Hurns said. "This move violates the insurer's due process rights and compromises the ability of the states to regulate insurance."
Additionally, the original case is factually flawed in its assumption that all after-market parts are inferior. Most insurers offer their policyholders a choice between original manufacturer parts and after-market parts, and many consumers choose the latter because of the significant cost reduction.
"Any after-market parts used in insurer-approved auto repair must be approved by the Certified Automotive Parts Association (CAPA), a nonprofit watchdog group that monitors manufacturing and quality," Hurns said. "Over the years, CAPA parts have stood up repeatedly to side-by-side comparisons with original manufacturer parts. Today's sophisticated consumers demand choice in virtually all of their purchasing decisions. Auto parts should be no exception."