Connecticut Auto Body Shops Awarded Millions In Connecticut Unfair Trade Practices Act Class Action Against The Hartford

In a closely-watched Connecticut state court action that has dragged on for almost ten years, on June 5, Waterbury Superior Court Judge Alfred Jennings ordered The Hartford to pay $20 million in punitive damages to a class of auto body shops, finding that the insurer had "knowingly and purposefully" violated the Connecticut Unfair Trade Practices Act. The punitive damages award is in addition to an award of $14.7 million in compensatory damages awarded to the plaintiffs during a jury trial in the matter conducted in 2009, and is reportedly the largest award ever under the Connecticut Unfair Trade Practices Act.

The case, Artie's Auto Body v. The Hartford, centered upon a claim that The Hartford had influenced insurance appraisers, who are required by statute to provide unbiased estimates of repair costs, to utilize below-market hourly labor rates in their calculations. The appraisers' conduct resulted in a reduction in the compensation paid to the plaintiffs when making repairs for the insurer's insureds. Plaintiffs alleged that the Hartford's conduct violated public policy and thus was unlawful under the Connecticut Unfair Trade Practices Act.

The court's punitive damages ruling comes approximately four years after a jury found that The Hartford's efforts to induce the appraisers to violate the "code of ethics" that Connecticut law imposes upon them constituted "unfair" conduct under the Connecticut Unfair Trade Practices Act. Notably, pretrial, the court had rejected The Hartford's argument that because the Connecticut Unfair Trade Practices Act is based upon Section 5 of the FTC Act, and the FTC has issued enforcement guidelines indicating that a Section 5 violation should require a showing of "substantial injury to consumers," this requirement should be implied into the Connecticut statute as well. (The FTC's modification to its Section 5 enforcement guidelines occurred almost twenty years after the Connecticut statute was enacted; no corresponding change to...