A Florida judge has ruled that State Farm will not be held liable for allegedly defamatory statements made about a repair shop to its customers. On March 26, Judge Steven Merryday granted State Farm's motion for summary judgment in the case, ruling that the statements in question were privileged and that the Gunder's Auto Center had failed to show that the insurer had acted with "express malice."
Ray Gunder, owner of the Lakeland, Fla., body shop, filed suit against State Farm in November 2008 for tortious interference and slander after, he claims, representatives of the insurance company made false statements to customers about the shop in an effort to steer them to competing collision shops.
According to the suit, State Farm allegedly told customers that Gunder's overcharged customers, and repaired vehicles in an "untimely, inefficient and 'sub-standard' manner." The original complaint identified three customers insured by State Farm that chose other repair shops because of those claims.
Gunder and his attorney filed an appeal and the Federal Court of Appeals in Atlanta ordered mediation between the two parties. "We've got overwhelming evidence that they said everything we claim they said about the shop," Gunder says.
State Farm spokesperson Dick Luedke says that the company was "pleased with the (original) verdict," adding that, "It is our customer's choice to determine where they take their vehicle for repairs. We do talk to our customers with claims about our Select Service program, and that's part of providing all of the information they need to make their decision."
Gunder's problems with State Farm actually began in 2004, when his shop was removed from State Farm's direct repair program (DRP) after numerous disagreements over charges, and Gunderson's questioning of the insurers method for determining the prevailing market rate for repairing vehicles. Not long after being terminated, Gunder began hearing from clients that State Farm representatives were making derogatory statements about the shop.
When he was still on the DRP, State Farm accounted for nearly 40 percent of Gunder's business. Once Gunder's was off the DRP and, according to Gunder, the insurance company began steering customers away from the shop, that business dropped to just 4 percent.
Interestingly, instead of denying that representatives made the statements, State Farm's motion countered that the statements were privileged conversations with customers, which granted them an exception to any liability under Florida law.
In his ruling, Merryday said that the statements would only be actionable if they were made with "express malice," a fairly high standard of proof that would have required Gunder to show that State Farm acted ill will, hostility or evil intention to defame and injure his business. To meet the standard, Gunder would have had to prove that State Farm was motivated more by a desire to harm his shop than by any purpose that would protect the personal or social interest that gave rise to the privilege in the first place.
"The plaintiff fails to present evidence showing that State Farm's 'primary motive' was to harm the plaintiff rather than to further State Farm and the insured's mutual interest in securing timely, quality repairs to the insured's automobile," the ruling says.
"In the case comparison, the judge said that State Farm never called me a murderer or rapist," Gunder says. "I agree they didn't call me any of those things, but their statements did reach what we think is a high degree of slander."
Gunder's attorney, Brent Geohagan, says that his appeal will attempt to prove malice. "These statements were malicious in nature, and not said in good faith," Geohagan says. "Based on the evidence we put into the record, the people making these statements in the estimatics department knew none of this was true."
Florida currently has fairly weak anti-steering protections. If the original ruling stood, Gunder said he fears insurance companies would have carte blanche to make false statements about any shop as a way to steer customers.
"They think they have a right to interfere with a shop using slander," Gunder says. "In my opinion it's very scary that they can target any shop and say these kinds of things, and be protected under Florida law."
While State Farm initially prevailed in court, Gunder said that the insurer is no longer knocking his shop to potential customers. "They have lightened up considerably over the past few months," Gunder says.
Still, Gunder is not sure he'll be able to undo the damage he said has been inflicted on his business. "I don't know how long it's going to take me to recover from this," he says. "I don't have any idea how many years it will take, if ever, to recover that business."
"We were extremely disappointed in the original ruling," he continues. "It took me about 24 hours to get my mind straightened out again, and I made the decision that I'll quit this when they throw my lifeless old dead body in the dumpster. This amazes me. I thought this was an open and shut case. The legal journey I've been on has opened my eyes in a lot of ways."
