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Mississippi Collision Repair Association and Parts Suppliers File Suit Against PartsTrader The Mississippi Collision Repair Association and Parts Suppliers are seeking industry support in suit against State Farm and PartsTrader. Over 30 plaintiffs, mostly Mississippi body shop owners, have filed an injunction against State Farm and PartsTrader in an attempt to prohibit the insurer from forcing any Select Service shop in Mississippi to use PartsTrader. The suit was filed Aug. 28 by Jackson, MS-based attorney for the nearly three dozen plaintiffs, John Arthur Eaves, Jr., in the Hinds County, MS, Chancery Court against State Farm Mutual Automobile Insurance Company and PartsTrader LLC.

Plaintiff include the Mississippi Collision Repair Association (MSCRA) OEM parts dealers and other parts suppliers and dozens of collision repair principals, including prominent local repairers John Mosley (Clinton Body Shop) and Doug White (Capitol Body Shop). The suit seeks the court’s declatory judgment and injuction to block State Farm from requiring the PartsTrader ordering process in Mississippi. The requested injunction is to 1) Prohibit the Defendants from forcing implementation of PartsTrader in the State Farm Select ServSee Suit Against PartsTrader, Page 28

California Supreme Court Action in Piece-Rate Pay Case Puts Focus on Alternative Pay

In April of 2013, the California Court of Appeal decided automobile service technicians should be paid while waiting between jobs. The court held that the technicians, who were paid on a “piece-rate” basis, must also be paid at least the minimum hourly wage for the time that they are required to wait between their piece-rate paid repair jobs. The California Court of Appeal case held that piece-ratepaid employees are entitled to separate hourly pay for “waiting” time. On July 19, the California Supreme Court refused to review the See Piece-Rate Pay in CA, Page 8

Change Service Requested

P.O. BOX 1516, CARLSBAD, CA 92018

Under federal law, employers can meet minimum wage requirements for piecerate workers by paying them enough so that their total pay meets the minimum wage, on average, for the hours they work in a work week, regardless of whether each hour was productive. But now the California Court of Appeal says that’s not true in California. In Gonzalez v. Downtown LA Motors, the Court of Appeal held that employers who pay on a piece-rate basis for certain compensable tasks must also pay a separate minimum wage for non-productive time spent between those tasks.

VOL. 31 ISSUE 10 OCTOBER 2013

Employer Found Liable for Employee’s DUI Fatal Crash After Employee Got Home According to a recent California appellate court decision, an employer can be liable for an employee who drank too much at a company party, made it home safely, and then killed a man in a drunk driving accident after he left his house again to drive another employee home. “It is irrelevant that foreseeable effects of the employee’s negligent conduct (here, the car accident) occurred at a time the employee was no longer acting within the scope of his or her employment,” the court ruled. Michael Landri was a bartender at the Marriott Del Mar Hotel. He attended the hotel’s annual holiday party in December 2009, beginning his celebration with a beer and a shot of Jack Daniels at home. He also

filled a five-ounce flask with Jack Daniels and took it with him to the party, held at the hotel. At the party, one of the managers acted as a bartender. She filled Landri’s flask on at least one occasion. Another employee drove a group to Landri’s house. Roughly 20 minutes later (and not having consumed any more alcohol) Landri left his house to drive another coworker home. En route, while driving over 100 mph, he rear-ended another car, killing the driver. Landri had a 0.16 blood alcohol level. He pleaded guilty to gross vehicular manslaughter and was sentenced to six years in prison. The deceased’s parents brought suit against Landri and Marriott. A See Employer Liable in DUI, Page 22

Special SNAPSHOT of the Collision Industry, survey by Collision Repair Educational Foundation and I-CAR p. 6

State Farm and PartsTrader Offer More Info on Roll-Out, Use of the System by John Yoswick

Whether or not they participate in State Farm’s Select Service program, shops and parts vendors still have lots of questions and concerns about PartsTrader as State Farm continues its roll-out of the program. Here is some additional information addressing some of those questions that representatives of State Farm or PartsTrader have provided. Roll-out schedule. PartsTrader rolled out in September in major markets in California, Nevada and Utah, and in October in Michigan and Ohio. It will reach major markets in Wisconsin, Illinois, Indiana, Kentucky and Tennessee later this year. Vendor choice. Shops are not required to get price quotes from anyone beyond their designated preferred dealer. In fact, Partstrader’s

Dale Sailer said, the system defaults to sending a job’s parts list only to the shop’s preferred dealer, though the shop can expand the search from this default. State Farm does not get data about whether a Select Service shop’s parts list for a job went only to the shop’s preferred dealer for quotes. A shop can “direct order” a part through the system without waiting for any parts quotes; State Farm does know, however, if a Select Service shop does this. And if a dealer always gives a shop the same discount, the dealer can set the system up to automatically respond with that discount to all requests for quotes from that shop. “Dealers don’t have to hire a whole bunch of people to fill out quotes,” Sailer said. See More on PartsTrader, Page 16

Presorted Standard US Postage PAID San Bernardino, CA Permit #2244

2 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com

Contents CA Air Resources Board Passes Windshield

Requirement to Reduce A/C Usage . . . . . . . . 4

Caliber Collision’s New San Diego Location . . 10

Headlight Wiring . . . . . . . . . . . . . . . . . . . . . 48

Franchitti Reunites with The Henry Ford and the Jim Clark Lotus-Ford 38/1

Indianapolis Winner . . . . . . . . . . . . . . . . . . 64

California Supreme Court Action in Piece-Rate

GM is Recalling Some Chevy Suburbans

CARSTAR Opens First Anaheim Location . . . . 10

Group 1 Auto Hits New Highs . . . . . . . . . . . . . 69

Pay Case Puts Focus on Alternative Pay . . . . 1

Employer Found Liable for Employee’s DUI

Fatal Crash After Employee Got Home . . . . . 1

and Tahoes . . . . . . . . . . . . . . . . . . . . . . . . . 9

Houston’s Randy McGinty First to Complete

Every Collision Course at Chief University . . 46

Everyday Paint Operations Result in Explosion

Indiana Autobody Association Expresses

GA and CA Most Expensive States to

Long Island’s Irv Gordon is about to Pass the

New Body Shop Opens in Yerington, NV . . . . . 10

MD Shop Owners Prevail Against Short

and Fatality that Rocks the Collision Industry . 14 Own a Car . . . . . . . . . . . . . . . . . . . . . . . . . 66

What Does Tesla’s Record-setting Safety

Rating Say to the Collision Industry?. . . . . . 34

COLUMNS

Attanasio - Is Radio Advertising a Sound

Decision For Body Shops? . . . . . . . . . . . . . 20

Franklin - Development-Appropriate Marketing . 26

Support for SCRS Position Statement . . . . . 43 3,000,000 Mile Mark in his 1966 Volvo . . . 58 Pays—No DRP, No Problem . . . . . . . . . . . . 60

Mississippi Collision Repair Association and Mitchell Announces its New Reputation

Manager Package. . . . . . . . . . . . . . . . . . . . 68

Mitchell International Sold to Asset Management

firm KKR For Estimated $1.1B . . . . . . . . . . 57

NABC Partners with ATT on Anti-Texting

The 1963 Federal Consent Decree . . . . . . . . . 30

New SRS Checklist Available . . . . . . . . . . . . . 21

the Collision Industry . . . . . . . . . . . . . . . . . 52

NATIONAL

AASP/NJ Announces Support of MCRA Suit . . 18 ABRA Helps Raise $30,000 for Veterans’

Campaign . . . . . . . . . . . . . . . . . . . . . . . . . 66

Nissan Will Have Self-Driver Cars on

Road by 2020 . . . . . . . . . . . . . . . . . . . . . . 48 Insurance Co. Parts Mandates Illegal . . . . . 50

Ohio Dealership Group is Faced with

Class Action Claim . . . . . . . . . . . . . . . . . . . 40

Recall: Chrysler's 2012 RAMs . . . . . . . . . . . . 69

Merit Award . . . . . . . . . . . . . . . . . . . . . . . . 56

Recall: GM for 2013-14 Silverados . . . . . . . . . 49

ASA Launches New Website, Improves

Repairer Tools . . . . . . . . . . . . . . . . . . . . . . 65

ASA President Risley Writes to State Farm’s

Ed Rusk Jr.. . . . . . . . . . . . . . . . . . . . . . . . . 62

ASRW’s New Format Will Be ‘Vastly

Different Experience’. . . . . . . . . . . . . . . . . . 68

Attorney Spearheads Suit Against Carfax . . . . 56 Automotive Instructors Get Special

Recall: Ford Recalls 370K Sedans . . . . . . . . . 49

Recall: GM Recalls Some Cruzes . . . . . . . . . . 69

Recall: Hyundai 2013 Santa Fe’s . . . . . . . . . . 49

Recall: Jaguar 2013 Land Rovers . . . . . . . . . . 49

Recall: KIA for Sorrentos . . . . . . . . . . . . . . . . 49

Recall: Nissan 2014 Versas . . . . . . . . . . . . . . 49

Recall: Subaru for Legacys/Outbacks . . . . . . . 49

Recall: Toyota Tacoma Access Cabs. . . . . . . . 49 Record Fundraiser for Education Foundation . . 27

AAPEX 2013 Invite . . . . . . . . . . . . . . . . . . 65

Sherwin-Williams and Online Blueprint

at SEMA Show . . . . . . . . . . . . . . . . . . . . . . 65

Snapshot of the Collision Repair Industry . . . . . 6

Best Way to Research New Product

Provider Team Up . . . . . . . . . . . . . . . . . . . . 68

BLS Says Collision Industry Production

State Farm and PartsTrader Offer More Info

BMW Recalls Diesel X5s. . . . . . . . . . . . . . . . . 47

State Farm Donates $70K to CREF, Lifetime

Rose in June . . . . . . . . . . . . . . . . . . . . . . . 66

Caliber Collision Opens Two New Locations

in CO and CA . . . . . . . . . . . . . . . . . . . . . . . 65

California Teen Dies in Lock-Jammed Car . . . . . 4

on Roll-Out, Use of the System. . . . . . . . . . . 1

Over $1M. . . . . . . . . . . . . . . . . . . . . . . . . . 53

Team PRP Succeeds Because There’s

No “I” in Team . . . . . . . . . . . . . . . . . . . . . . 54

Car Bench America Says Shops Not Ready

Tesla Motors Surges, Only Two ‘Galleries’ in

CCC Launches TRUE® Parts Network,

Three CARSTAR Stores Get Praise for

Chrysler for 2013 Fiat 500e’s . . . . . . . . . . . . . 47

Toyota Highlander Hybrid & RX400h

Daimler to Sell Self-Driving Production

Toyota Recalls About 780K Crossovers/Hybrids

to Repair Newest Cars . . . . . . . . . . . . . . . . 32 Integrated with CCC ONE® . . . . . . . . . . . . . 12

Chrysler’s Great August . . . . . . . . . . . . . . . . 69 Car by 2020 . . . . . . . . . . . . . . . . . . . . . . . . 66

Ford Recalls 2012-13 Focus BEVs for

Come t sa visit u oth o NACE B 50 5 1 #N

Texas Where Legacy of Franchises Holds . . 44

Outstanding CSI . . . . . . . . . . . . . . . . . . . . . 56

Inverter Trouble . . . . . . . . . . . . . . . . . . . . . 48

Again . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

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Come t sa visit u ooth B A SEM 29 #164

Contact: Barbara B Davies, General Manager * (800) 699-8251 Autobody News | P.O. Box 1516 | Carlsbad, CA 92018 | bdavies@autobodynews.com

NY Assembly and Senate Hear Bills to Make

Service Dogs . . . . . . . . . . . . . . . . . . . . . . . 68

AMI and ASA Give the 2013 Emil Stanley

Target Ta arget Success S with Autobody y News. News

Indexof Advertisers

Yoswick - October Retrospective on

• Autobody News has a 32-year track record of providing more in-depth regional news than any other collision repair publication • Targeted 100% to collision repair • Featuring the collision industry’s top regional columnists, experts and reporters • Read by 35,000 collision professionals every month in five regional editions • Advertising packages that get results by reaching your target market

Parts Suppliers File Suit Against PartsTrader . 1

Insider - Eliminating the “Have Not” Shops

Will Help the “Haves” . . . . . . . . . . . . . . . . . 42

Hitting H itti tthe h ttargett ffor 3 32 2 years

Publisher & Editor: Jeremy Hayhurst General Manager: Barbara Davies Contributing Writers: Tom Franklin, David Brown, John Yoswick, Rich Evans, Janet Chaney, Toby Chess, Ed Attanasio, Chasidy Sisk Advertising Sales: Joe Momber, Sean Hartman, Bill Doyle (800) 699-8251 Sales Assistant: Louise Tedesco Art Director: Rodolfo Garcia

Altracolor Systems . . . . . . . . . . . . . . . . .10 Audi Wholesale Parts Dealers . . . . . . . .44 Automotive ID . . . . . . . . . . . . . . . . . . . .40 Automotive Recyclers Association . . . .33 AutoNation Chrysler-Jeep-DodgeRam of North Phoenix . . . . . . . . . . . .20 AutoNation Chrysler-Jeep-DodgeRam-Fiat . . . . . . . . . . . . . . . . . . . . . . .45 Axalta Coating Systems . . . . . . . . . . . . . .5 BASF . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Bill Luke Chrysler-Jeep-Dodge . . . . . . .32 Bill Luke Fiat . . . . . . . . . . . . . . . . . . . . . .32 Bill Luke Suzuki . . . . . . . . . . . . . . . . . . .33 BMW Wholesale Parts Dealers . . . . . . .63 Bob Smith BMW . . . . . . . . . . . . . . . . . .12 Bob Smith MINI . . . . . . . . . . . . . . . . . . .12 Car Bench America . . . . . . . . . . . . . . . .15 Car-Part Pro . . . . . . . . . . . . . . . . . . . . . .18 Celette, Inc. . . . . . . . . . . . . . . . . . . . . . . .9 Certified Automotive Parts Association (CAPA) . . . . . . . . . . . . . .31 Chief Automotive . . . . . . . . . . . . . . . . . .27 Classifieds . . . . . . . . . . . . . . . . . . . . . . .70 DCH Chrysler-Jeep-Dodge-Ram . . . . . .22 DCH Kia of Temecula . . . . . . . . . . . . . . .22 DJS Fabrications, Inc. . . . . . . . . . . . . . .19 Downtown Motors of LA (Audi, VW, Porsche) . . . . . . . . . . . . . .55 Drew Hyundai . . . . . . . . . . . . . . . . . . . .60 East Bay BMW-MINI . . . . . . . . . . . . . . . .52 Elk Grove Toyota . . . . . . . . . . . . . . . . . .44 Enterprise Rent-A-Car . . . . . . . . . . . . . .66 Equalizer Industries . . . . . . . . . . . . . . . .10 Extractor . . . . . . . . . . . . . . . . . . . . . . . . .16 Ford Wholesale Parts Dealers AZ, CA, & NV . . . . . . . . . . . . . . . . . . .59 Forklift Wrecker . . . . . . . . . . . . . . . . . . .66 Galpin Motors . . . . . . . . . . . . . . . . .26, 43 GM Wholesale Parts Dealers . . . . . . . . .64 Herkules Equipment Corporation . . . . .48 Honda-Acura Wholesale Parts Dealers . . . . . . . . . . . . . . . . . . . . .36-37 Hyundai Wholesale Parts Dealers . . . . .40 Infinity 3D Laser Measuring . . . . . . . . . .23

Serving California, Nevada and Arizona, Autobody News is a monthly publication for the autobody industry. Permission to reproduce in any form the material published in Autobody News must be obtained in writing from the publisher. ©2013 Adamantine Media LLC. Autobody News P.O. Box 1516, Carlsbad, CA 92018 (800) 699-8251 (760) 721-0253 Fax www.autobodynews.com Email: news@autobodynews.com

Western

REGIONAL

Innovative Tools & Technology, Inc . . . .61 KBS Coatings . . . . . . . . . . . . . . . . . . . . .21 Kearny Mesa Subaru-Hyundai . . . . . . .28 Kia Motors Wholesale Parts Dealers . . . .67 LKQ . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 Los Gatos Luxury Cars . . . . . . . . . . . . .57 Maita Subaru . . . . . . . . . . . . . . . . . . . . .34 Malco . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Mazda Wholesale Parts Dealers . . . . . .68 Mercedes-Benz . . . . . . . . . . . . . . . . . . .29 MINI Wholesale Parts Dealers . . . . . . . .62 Mitchell International . . . . . . . . . . . . . . . .8 Mitsubishi Wholesale Parts Dealers . . . .68 Momentum Auto Group . . . . . . . . . . . . .47 MOPAR Wholesale Parts Dealers . . . . .51 Moss Brothers Chrysler-Jeep-Dodge . . . .11 Motor Guard Corporation . . . . . . . . . . . .4 Nicolosi Imports . . . . . . . . . . . . . . . . . . .21 Nissan/Infiniti Wholesale Parts Dealers . . . . . . . . . . . . . . . . . . . . . . . .54 PPG . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 PreFab Ads . . . . . . . . . . . . . . . . . . . . . . .4 Preval Spray Gun . . . . . . . . . . . . . . . . . .72 Renick Subaru . . . . . . . . . . . . . . . . . . . .46 Replica Plastics . . . . . . . . . . . . . . . . . . .46 Riverside Metro VW-Honda-HyundaiNissan-Mazda . . . . . . . . . . . . . . . . . .56 SATA Spray Equipment . . . . . . . . . . . . .14 Sherwin-Williams Automotive Finishes . . . . . . . . . . . . . . . . . . . .34, 35 Shingle Springs Nissan-Subaru . . . . . .53 Sierra Chevrolet-Honda-Mazda-Subaru .49 Sonnen BMW . . . . . . . . . . . . . . . . . . . . .30 SprayZone.net . . . . . . . . . . . . . . . . . . . .17 Starlite Coatings . . . . . . . . . . . . . . . . . .16 Subaru Wholesale Parts Dealers . . . . . .69 Timmons VW-Subaru . . . . . . . . . . . . . . .65 Toyota Wholesale Parts Dealers . . . . . .58 Tsunami Compressed Air Solutions . . . .30 Valspar Automotive . . . . . . . . . . . . . . . .13 Volkswagen Wholesale Parts Dealers . . . .50 Volvo Wholesale Parts Dealers . . . . . . .58 Walcom USA . . . . . . . . . . . . . . . . . . . . .42 Weatherford BMW . . . . . . . . . . . . . . . . .41

www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 3

CA Air Resources Board Passes Windshield Requirement to Reduce A/C Usage

The California Air Resources Board recently passed another mandate for auto manufacturers selling vehicles in California. As of 2014, all vehicles sold in California will be required to have windshields which reflect the sun. The windows would have a metallic coating, a window technology said to be in use for some 20 years now. The board passed the mandate in hopes of not only reducing greenhouse gas emissions but also improving fuel efficiency. By using the sun-reflecting windows, vehicles will maintain a cooler temperature and therefore drivers will use less air conditioning. Apparently the windows are able to keep sedan interiors 14 degrees Fahrenheit cooler, while keeping a truck or SUV about 12 degrees cooler. Starting in 2012, one-quarter of vehicles sold in the state of California will require the sun-reflecting windshields. These windshields must block fifty percent of the sun’s heat when a car is parked. By 2014, all vehicles will be required to have such windshields. Starting in 2016, all vehicles will be required to block sixty percent of

the sun’s heat. However, car manufacturers will be allowed to compensate for the temperature control in some other way, as long as it meets the increased standard. According to statistics involved in the decision, the windshield change will prevent 700,000 metric tons of carbon dioxide from being emitted in the year 2020. This is equal to removing 140,000 vehicles from the road all year. However, this is just a drop in the bucket when you consider the 22 million vehicles in California. Some are concerned that the metallic coating on the windshields will interfere with the working of cell phones, GPS and toll road electronic passes. However, the windshields are going to have a small area in which the metallic coating is not placed. This is expected to alleviate the problem, although many are still skeptical.

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California Teen Dies in Lock-Jammed Car

The death of a California teen is under investigation after she was found dead inside a locked car, and police suspect a jammed lock may have led to the teen’s death. The 14-year-girl was found dead inside a hot car where temperatures reached 130 degrees after faulty locks apparently left her trapped inside. Graciela Martinez was found dead in the backseat of her brother’s BMW outside Madera South High School in Madera, CA, hours after he had gone inside to class. He drove his sister to school that morning and left her alone in the vehicle because he had a 6.40 am class while her first lesson began at 7.40 am. She had no cellphone, food or water with her. When he and another sister finished classes at the end of the day, they found Graciela white and unresponsive in the back seat. For the family of Graciela Martinez, there are questions that may never be answered, and at the top of the list is how someone young and healthy could be taken from them so suddenly. “They took her to the hospital but they couldn’t save her,” said the victim’s sister, Patricia Martinez.

Police said it now appears the Madera South freshman was accidentally locked inside her car and was unable to escape. “People don’t think of that, I don’t think of that even after this investigation started, that was the furthest thing from my mind,” said Madera detective Dan Foss. But things quickly changed when Foss made a disturbing discovery about the car’s locking system. He said investigators found the doors will sometimes lock on both the inside and outside when the key is used, disabling the horn and making it almost impossible to escape. “Would she feasibly be able to get out of the car? It would be very difficult, she would have to try very hard,” Foss said. Officers demonstrated how the car can unknowingly turn into a death trap. Investigators said Graciela’s brother was unaware of the risk when he locked her in only to find her dead hours later. “It’s just sad, you never really know when it is going to happen.” said classmate Brandon Hernandez. “She was my only sister. I don’t know if I can ever get through it,” Patricia Martinez said.

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www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 5

6 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com

See Snapshot of Industry, Page 24

www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 7

Continued from Cover

Piece Rate Pay in CA

appeal court ruling, making it binding precedent. (Gonzalez v. Downtown LA Motors, LP, B235292, April 2, 2013). In its ruling, the Court of Appeal noted that California law requires that employees be paid “not less than the applicable minimum wage for all hours worked in the payroll period, whether the remuneration is measured by time, piece, commission, or otherwise.” In its decision, the appellate court noted that California law provides: “Every employer shall pay to each employee, on the established payday for the period involved, not less than the applicable minimum wage for all hours worked in the payroll period, whether the remuneration is measured by time, piece, commission, or otherwise.” This requirement really means, the court ruled, that the minimum hourly wage must be paid for each and every hour worked, no matter how the employee is normally compensated. This means that employers can no longer show that the required minimum wage has been paid by averaging the total

compensation over the total number of hours worked in the pay period as permitted by the Fair Labor Standards Act (FLSA) and all other states. “Hours worked” is defined as “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” Downtown LA Motors (DTLA) had argued that its method of paying technicians complied with the plain language of the wage order because under the pay agreement technicians were paid “not less than” the applicable minimum wage for “all hours worked,” and that compliance was achieved by paying the difference if a technician’s piece compensation for all hours on the clock fell below the applicable minimum wage. The court noted: “Under DTLA’s flag hour system, technicians earn significantly more by working on cars than waiting for vehicles to repair. They will still have the financial incentive to accrue flag hours in order to increase their earnings.” DTLA technicians accrue flag hours only when working on a repair order. But the technicians argued that

8 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com

public policy does not permit piecerate wages to be averaged across the waiting time in satisfying the minimum wage because the term “all hours worked” really means “each and every hour” worked only on piece-rate work, and that technicians should have been paid separately, at the applicable minimum wage, for “each and every” hour of time on the nonpiece rate work or time spent waiting for repair work. The appellate court held the general rule that “employers must pay for all hours worked and may not average paid, productive hours with non-paid, non-productive hours” applies to piecerate employees. Therefore, the class of technicians was “entitled to separate hourly compensation for time spent waiting for repair work or performing other non-repair tasks directed by the employer during their work shifts.”

Federal District Court Concurs This requirement of the California courts for piece-rate compensated workers was also recently adopted by a federal district court in a trucking case. Con-Way Freight v. Quezada, 3:09-cv03670-JSW (June 27, 2013). In that case, the court held that drivers who

were paid a piece-rate based on a pre-set mileage rate and who were also paid on an hourly rate for work performed such as loading and unloading had not been paid any wages for certain non-driving tasks, such as vehicle inspections and some waiting time at each stop. This time spent on non-driving tasks is time that the company had contended was properly included in the piece-rate compensation system. As in the Downtown LA Motors case, the court ruled that California law required that this non-driving time be paid at a separate hourly rate, equal to at least the minimum wage.

Court Extension to Commission Sales Last year, a federal trial court reached a similar result regarding a salesperson commission plan in the Balasanyan v. Nordstrom case. Nordstrom commission-paid salespersons were required to engage in stocking, pre-opening, and post-closing activities. The court held that those hours were uncompensated because “compensation must be directly tied to the activity being done, whether it is selling on commission or preparing to sell on commission,” and that “activities only indirectly related to sales or services must also be compensated.”

These cases may have a profound impact upon all commission sales work in that the plaintiffs had contended, and the court appeared to agree, that “stocking” time includes all time other than face-to-face customer interaction work, which would make all such time separately compensable on an hourly basis. In a footnote to these cases, the district court indicated that it felt it was constrained by California law to reach this “peculiar result,” which “forces employers to craft hybrid compensation systems for commissioned employees where they are also paying employees per hour for any activity that is not directly related to earning a commission, even when that activity might assist in generating future profits.” As a consequence of these decision, all California employers who pay employees on a piece rate or commission basis, including flat-rate technicians and salespersons, should review their pay plans to mitigate the risks posed by the Gonzalez v. Downtown LA Motors and Balasanyan decisions. California employers paying on a piece-rate or commission basis must consider revamping their pay systems to separately pay the minimum wage

rate for hours during which employees are subject to the employer’s control and not earning a piece rate or commission. Employers should closely monitor the further judicial developments in both the Gonzalez and Nordstrom cases. At a minimum, attorneys consulted on this issue recommend: ● Consulting qualified labor and employment counsel to determine whether piece rate and commission pay plans require modification, and whether any other action is appropriate to mitigate risk based on the Gonzalez and Balasanyan cases. ● Modifying piece rate and commission compensation to avoid so-called “uncompensated” hours, but paying at least minimum wage directly for each hour worked (including non-piece rate work and work indirectly related to sales); ● Reviewing itemized pay statements to ensure compliance with Labor Code section 226, which requires pay statements to show information, including total hours worked by employees, the number of piece rate units earned and any applicable piece rate, and all applicable hourly rates in effect during the pay period and the cor-

responding number of hours worked.

Additional Case Remains Up for Supreme Court Review One additional possible chance for review of the issues related to the requirement that minimum wages be paid for each and every hour worked by employees who are currently compensated on piece-rate and commission systems remains under consideration by the California Supreme Court. That case is Bluford v. Safeway Stores, Inc., C066074 (May 24, 2013). In Bluford, the Court of Appeal held that an employer must separately compensate piece-rate workers at the minimum or contracted hourly wage for the two 10minute rest breaks per day that must be authorized and permitted by their employers under California law. Prior to this decision, such rest breaks had always been permitted to be included as part of piece-rate and commission plans. This article is for informational purposes only and should not be considered as any form of legal advice. Always consult a qualified attorney before acting on any such news-based information.

GM is Recalling Some Chevy Suburbans and Tahoes

General Motors is recalling certain model year 2014 Chevrolet Suburban vehicles manufactured July 9, 2013, through July 22, 2013; and 2014 Chevrolet Tahoe vehicles manufactured July 16, 2013, through July 23, 2013; and model year 2014 GMC Yukon vehicles manufactured July 13, 2013, through July 18, 2013; and model year 2014 GMC Yukon XL vehicles manufactured on July 22, 2013. The rear brake caliper bolts may not be fully tightened. Thus, these vehicles fail to conform to the requirements of Federal Motor Vehicle Safety Standard (FMVSS) No. 135, “Light Vehicle Brake Systems.” Loose caliper bolts may cause reduced braking performance and result in lengthened stopping distances, increasing the risk of a crash. GM will notify owners, and dealers will inspect the bolts on both rear brake caliper brackets. Any bolts found loose will be replaced and tightened. This service will be performed, at no charge. Owners may contact Chevrolet at 1-800-222-1020 and GMC at 1800-462-8782. GM’s recall number is 13247.

www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 9

Caliber Collision’s New San Diego Location

Caliber Collision Centers continues to expand in the Greater San Diego area with its acquisition of San Diego Collision. It will now operate as Caliber’s San Diego North Park. “Today’s opening of our new San Diego North Park center increases our total locations in the San Diego region to 14 as we continue to grow organically and through strategic acquisitions across the Southwest,” said Steve Grimshaw, CEO of Caliber. “As our clients continue to look for improved customer retention, we are committed to adding centers that provide the operational consistency, customer focus and cost management they need to compete in today’s highly competitive insurance market.” Caliber Collision’s newest 8,000square-foot collision repair facility is located at 2505 University Avenue. Added Mark Sanders, chief operating officer for Caliber, “Our new San Diego center brings Caliber Collision’s locations to 130 as we continue to grow as the collision repair provider of choice in every community we serve.”

CARSTAR Opens First Anaheim Location

CARSTAR Auto Body Repair Experts is entering the Anaheim, CA, market with its first location – Kraemer CARSTAR Collision. Owned by Joel, JoAnne and Jorge Cuevas, Kraemer CARSTAR Collision is located at 1361 N. Kraemer Blvd in Anaheim. In 1979, Jorge “George” Cuevas started his dream of creating a successful family run auto body shop in a world of corporate competitors. His shop has been providing one of a kind customer service for 34 years. By joining the CARSTAR network, Kraemer CARSTAR Collision will now offer an array of services and products for collision repair, including the latest in repair technology, rental cars, national warranties on repairs and turnkey service for customers. “Southern California, with its heavy traffic, has a high demand for quality collision repair, and the CARSTAR network is growing rapidly throughout the region,” said David Byers, CEO of CARSTAR Auto Body Repair Experts. “We are thrilled to welcome the Cuevas family and Kraemer CARSTAR Collision as our first collision repair center in the Anaheim area.”

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New Body Shop Opens in Yerington, NV

Filling what he saw as a need, Doug Ferrin and his partner decided to open Valley Collision Center in July. Ferrin owns Fernley Auto Body with his partner and moved into the site of the former Mark’s Collision at 705 W. Bridge Street, which closed earlier this year. Valley Collision Center does “all aspects of the auto body trade,” he said. A Fernley resident, as his wife works in Reno, Ferrin said he liked this opportunity as he is from a small town and likes the small-town atmosphere. He and his partner—who mainly runs the Fernley shop while Ferrin runs the Yerington location–each have 24 years experience in auto painting and auto body business. Ferrin said they decided to open their own shop and then opened Fernley Auto Body in 2008. Then more recently he said they were looking to expand and found the local location “and thought

it would be a good fit,” and they saw growth opportunities here. He said they are picky about what they do in their business and quality is more important than quantity. His two local employees, Jose and Tony, have plenty of experience locally in the auto body business. He said the two worked at their Fernley shop first to be sure about their skills. “We definitely pride ourselves on the work we do.” He said the local shop will also be an Enterprise rental car outlet. Ferrin said he is a people person and likes to spend money and support his community. “I’m a pretty community-oriented kind of guy.” Ferrin said he was raised on a cotton and alfalfa farm in southern Arizona, where his grandfather farmed for about 75 years. As for his free time, Ferrin, the father of two, said he is very family oriented and he likes to work on cars.

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www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 11

CCC Launches TRUE® Parts Network, Integrated with CCC ONE®

CCC Information Services has announced the launch of its CCC TRUE™ Parts Network, a parts-focused initiative that is connecting the industry’s parts suppliers with CCC’s expansive customer base of repairers and insurance carriers. The CCC TRUE Parts Network integrates with the CCC ONE® Platform, providing parts suppliers of all sizes with a suite of solutions to display their parts, provide real time price quotes and electronically sell their available parts inventories as estimates are being written. Insurance carriers using CCC ONE can view parts and receive real time quotes. Repairers using the CCC ONE™ Repair Workflow solution have the same functionality, plus the ability to electronically purchase parts. CCC customers write more than 10 million repair orders each year and purchase billions of dollars in parts annually. The CCC TRUE Parts Network is the first in a suite of offerings developed by CCC for auto parts suppliers. “The dialogue around auto parts has commanded a lot of attention from all corners of the industry,” said

David Boden, Vice President of CCC’s Parts Services Group. “As we listened to what was being said, it became clear that convenience, control and choice were shared concerns. Because CCC already connects repairers and insurance carriers, supporting millions of claims-related transactions, the CCC TRUE Parts Network is a natural extension of our core business, and one that can create additional value for our existing customers, while creating new opportunities for parts suppliers. Early results from the CCC TRUE Parts Network are very positive and show that parts suppliers are benefitting from an integrated channel to parts buyers and repairers are seeing parts performance improvements.”

CCC TRUE Parts Network Early Results The United Recyclers Group (URG) was an early participant of the CCC TRUE Parts Network. URG’s recycled parts data listing service, which includes data from its more than 500 auto recycler members, has been integrated with the CCC ONE Platform, providing users with direct and imme-

diate access to comprehensive recycled parts inventory, availability and pricing. According to Don Porter, Executive Director for URG, “Since URG members began displaying their recycled parts inventory within CCC ONE we’ve seen more of our members’ recycled parts being added to repair estimates. We’re excited with the early traction we’ve had and look forward to future integration with CCC.” LKQ/Keystone Aftermarket Parts was also an early participant of the CCC TRUE Parts Network. The company has been working with CCC to introduce quoting and electronic procurement of its salvage and aftermarket parts with repair facilities across the country. According to Terry Fortner, Vice President, Industry Relations and Market Development for LKQ, “Participation in the CCC TRUE Parts Network has put LKQ’s salvage parts and Keystone’s aftermarket parts directly in front of repairers as they are making parts purchasing decisions. Because the parts quoting and procurement are integrated functions within the CCC ONE Repair Workflow solution, we’re already seeing

more parts orders and fewer parts returns.” From a repairer perspective, obtaining quotes and purchasing parts has never been easier. Michael Castillo, Manager of Auto Art Collision Specialists in Escondido, CA, an early user of the parts procurement functionality stated: “I logged into CCC ONE and the parts quoting and electronic procurement function just appeared—I didn’t have to do anything to start buying the parts I need, when I need them. My Keystone sales rep has been great and is still there if I need him and my guys are saving time since they no longer have to fax or phone-in any orders or follow-up on delivery status.”

Joining the CCC TRUE Parts Network Participation in the CCC TRUE Parts Network is open to all parts suppliers. The current offerings of the CCC TRUE Parts Network include the ability to display parts inventories, provide real time quoting of parts pricing and the ability for suppliers to sell parts electronically. Parts suppliers inSee CCC True Parts, Page 43

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Everyday Paint Operations Result in Explosion and Fatality that Rocks the Collision Industry

A recent vapor explosion in Missoula, from the explosion, Hughes said. He MT, has led to the death of one body was hospitalized then released. Hughes said several items in the shop employee and the injury of another. Both OSHA and the local Mis- shop also caught on fire, but the auto soula fire department are investigating body shop itself sustained minimal damage. the tragic incident. “We’ll be looking at things like Two employees of Rick’s Auto Body were injured the morning of Aug what kind of protective system they 19, one fatally, after lacquer thinner fumes exploded in an enclosed area in the back of the shop. Bruce Hall, 44, died early the following morning at Harborview Medical Center in Seattle from third-degree burns suffered over 95% of his body. Missoula City Fire Marshal Gordy Hughes said the Employees of Rick’s Auto Body on Missoula’s west side two workers were caught in gather outside the shop after the fatal explosion. the fire when static electricity Credit: Kurt Wilson, Missoulian caused paint fumes to ignite, and explode. have in place,” Hughes said. Hughes said two other employees Rick Booth, who owns Rick’s rushed to the area after they heard Auto Body, said the entire shop is devsomeone yell fire, and doused the astated by the death of a co-worker. flames with a fire extinguisher. Hall, who lived in Missoula, had The other man had minor burns worked at the shop for five years in and injuries related to inhaling fumes the detail department and provided

14 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com

customers with rides when their vehicles were in the shop, Booth said. Customers were very fond of Hall, whom Booth described as a quiet guy who liked his job. “It’s a tragedy,” Booth said. “It’s not what we expect to have happen when we come to work.” He said he isn’t sure what OSHA or the fire department will be investigating, but said he assumes they are looking at what caused the elements to ignite. They may also be looking at a faulty piece of equipment, he said. Booth said there may be a mechanical issue with part of the fan that shuts off when it senses fire. “I want to find out what it was, so we can fix the right thing,” Booth said. Hughes said his inspectors would be looking into the ventilation system and other safety measures in the building. The fire department’s investigation won’t be completed until next week. Hughes said Rick’s Auto Body is “not negligent as far as the fire department [is concerned.]” He said that OSHA’s investigation to determine if the building’s

safety code was up to standards will be released in a couple of weeks, and potentially an exhaust fan may be part of the issue. While the shop had safety measures, including training, in place, management acknowledges that the ventilation and equipment is still being investigated. There are a few things to retain from this incident: ● When transferring flammable liquids in a metal container, the container must always be grounded and bonded. ● When transferring flammable liquids, ensure it is being done away from potential ignition sources. ● Ensure all containers are capped when not being used. ● Just because many paints are now waterborne does not mean that paint operations are without hazards; most clearcoats are still very flammable. ● Employees must be trained on the workplace hazards of their work environment. This horrific event is a reminder of the seriousness and significance that attention to safety has, particularly with paint and spray operations.

www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 15

Continued from Cover

More on PartsTrader

markets have dropped out of the Select Service program rather than use PartsTrader. But Avery said the program is not part of any plan to reduce the number of shops on the program or shift work toward large MSOs. “That could happen, but this is not an effort to drive the number of Select Service repairers we have,” Avery said. He also noted that more than 50 percent of Select Service shops are independent single-location businesses, a higher percentage than any other large insurer’s program. “That’s not a signal to me that I’m trying to dump the independents,” Avery said. “They are great business partners.” Lawsuit filed. PartsTrader hasn’t rolled into Mississippi yet, but repairers and parts vendors there have already filed suit in an effort to prevent shops from having to use it. The Mississippi Collision Repair Association and more than two dozen body shops, dealers and other parts suppliers al-

lege in the suit, filed in Hinds County Chancery Court, that State Farm’s implementation of PartsTrader tortiously interferes with existing business relationships that shops have with their parts vendors. In addition to an injunction halting State Farm’s implementation of PartsTrader, the suit seeks a ruling that State Farm is violating the terms of the 1963 Consent Decree, which placed limits on more than 260 insurer’s activities related to auto insurance and claims. The suit also seeks to prevent State Farm from interfering in the relationship between a shop and its customers by delaying payments or appraisals, or by placing limitations on the use of rental vehicles. State Farm said the case is without merit and that it will vigorously defend against it. See related story this issue. John Yoswick, a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network (for a free 4week trial subscription, visit www.CrashNetwork.com). He can be contacted by email at jyoswick@ SpiritOne.com.

18 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com

AASP/NJ Announces Support of MCRA Suit The Alliance of Automotive Service Providers of New Jersey (AASP/NJ) has announced its support of the Mississippi Collision Repair Association’s (MSCRA) recently filed suit against State Farm and PartsTrader in an attempt to prevent the insurer from bringing the PartsTrader program to Mississippi. “The collision industry has clearly rejected the concept of PartsTrader, yet State Farm is taking the position that they are going to force PartsTrader on the collision industry,” said Charles Bryant, AASP/NJ executive director. “State Farm’s attempt to create the appearance that they are trying to help the collision industry solve a problem has clearly failed.” On Aug. 28, MSCRA and two dozen collision repair facility opera-

tors filed a lawsuit in the Hinds County, Miss., Chancery Court against State Farm and PartsTrader, stating the required PartsTrader program can damage their cycle time and therefore, harm customer satisfaction. See next related story. “If PartsTrader was good for the collision industry, State Farm would have been able to convince the industry to accept the concept by now,” said Bryant. “We believe the suit is without merit and we intend to vigorously defend the suit,” said State Farm spokesperson Roszell Gadson. See also SCRS position statement on parts procurement (this issue) and ASA letter to State Farm’s Ed Rusk, Jr. (this issue). The Indiana Autobody Association also commented (this issue.)

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www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 19

Social Media for Shops

Ed Attanasio is an automotive journalist based in San Francisco, California. He can be reached at era39@aol.com.

Is Radio Advertising a Sound Decision For Body Shops? with Ed Attanasio

Even thought the Internet is continuing to explode and cable TV advertising is flourishing, radio is still alive and well and more body shops are using it, according to people who know—such as: advertising agencies, media buying companies radio stations and body shops themselves. According to Kantar Media, there are nearly 5,000 AM stations and roughly 9,000 FM stations in this country and last year radio advertising dollars increased by 8 percent at the national level and 3 percent locally. While the collision industry is always looking for new forms of advertising and marketing, the word out on the street is that good old broadcast radio is still a viable form for body shops, both MSOs and independents. Phil D’Angelo is a sales manager for three radio stations in northern California (KUIC, KKIQ and KKDV) and has seen how radio advertising has worked well for body shops in his

regions. “We currently have five body shops advertising on KUIC in Vacaville, CA, and they’re happy with the results,” D’Angelo said. “Radio is more popular now, because it offers so many options for companies of all sizes. For regional companies, you’re going to get more bang for your buck with radio, as opposed to other forms of advertising or marketing. People wake up in the morning with the radio; drive to work with the radio and listen to the radio all day at work, so radio travels everywhere and some people listen to it 8–10 hours and more every day. Also, we’ve discovered that the Internet and broadcast radio work hand-in-hand, because radio creates demand and the Internet fulfills that demand. If they hear you on the radio and then see you online, there’s a good chance you’ll get them as a customer.” D’Angelo had to learn the collision game in order to better serve his body

20 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com

shop clients, he explained. “When we started working with body shops, we discovered that their business model is unique, because from what they’ve told us, 80% of all the work comes through the insurance companies. So, the advertising we’ve designed for them conveys a specific message, but branding is also a big part of it. We want the body shop’s name to be in the listener’s head. In the radio business, we call it the consumer’s ‘top-of-mind awareness,’ and it’s very important in the collision repair industry, because getting your car fixed is not an impulse buy. So, when people do get in an accident, they’ve already heard the shop’s name over and over on one of our stations and that’s who they will mention it to their insurance agent.” Chuck Jessen is the owner of PreFab Ads in San Francisco, a company that licenses professionally-produced TV spots to body shops on an

exclusive-by-market basis. These commercials have appeared on 260 local television markets throughout the country and several have won international advertising awards and have been featured on such national TV programs as “Reel TV” and “World’s Funniest.” Jessen is currently producing a series of radio ads to add to his menu of offerings, because his clients are asking more and more for 30 and 60second spots they want to air on local stations. “Some body shops are switching from TV to radio, so that they can target their customers more specifically,” Jessen said. “In the bigger markets, the cost of TV advertising is prohibitive for many independent body shops with modest advertising budgets. If you’re paying to advertise to a certain market and a large majority of it is out of your area, it doesn’t make sense for any regional business to advertise outside

that area. With radio, body shops can get more saturation and coverage in smaller to mid-size markets, so it’s ideal for body shops that draw customers from no more than 10 miles away.” Radio has a captive audience and Jessen knows from his 30 years of experience what types of radio ads will work in any market, he said. “People are in their cars a lot and commuters aren’t going away any time soon. We’re producing several different types of radio ad, including humorous and instructional. With our TV ads, we already know humor works and community service type themes are always well-suited for the collision industry. We produced a radio ad that conveys an anti-texting message and it gets good reviews, because it’s a warm and fuzzy type of ad that listeners will find useful.” Sharon Wicks is the president of Silicon Valley Media Consulting in San Jose, CA and has seen a recent spike in her clients’ interest in buying more radio advertising time, she said. “Radio is thriving, because it just makes sense for regional businesses that can’t afford a heavy television advertising schedule. Radio has gone

full circle and now it’s back in a big way, especially for companies that value a highly targeted approach.” Wicks has seen more and more of her clients asking about Pandora Internet Radio, an automated music recommendation service that plays musical selections of a certain genre based on the user’s artist selections. The user then provides positive or negative feedback for songs chosen by the service, which are taken into account when Pandora selects future songs. “Advertisers like Pandora, because it is more targeted than conventional radio,” Wicks said. “Pandora has specific demographic information about every one of its users, so you’re getting exactly who you want to reach. When your ad runs, it appears in a pop-up banner-type ad with audio that can be either 15 or 30 seconds in length. Either way, it’s less invasive than a 60-second radio ad and of course, it’s paired with a visual, which gives it more impact.” Rich Villanueva is the marketing manager at Michael J’s Body Shop, Inc., with three very busy locations in San Jose, CA. After much planning and research, Villanueva decided that

radio was the best plan for this burgeoning regional MSO, for several reasons. “We found a local FM station (KEZR) that offered a package we were very comfortable with, so we hired an advertising agency (Kilburg & Associates) that does ads for the San Jose Sharks NHL hockey team,” Villanueva said. “We decided to go with humorous ads and almost immediately we received a lot of positive feedback. We’re basically doing branding with these radio spots, rather than doing promotions. Since this is our first radio schedule, we want to get the name out there and connect the dots with our audience.” Michael J’s had their agency produce seven different ads to run in rotation on KEZR and is now going to create more ads to leverage the fact that one of their owners is a woman. “We’re targeting women with these new commercials, because they represent a large portion of our customer base,” Villanueva said. “Jamie Ryan is one of our co-owners and she’s a great spokesperson for what we’re trying to do. In these ads, we position her as an expert and an advocate, especially for our female market. The message is we

will treat our customers well from beginning to end, by providing them with a stress-free, non-threatening environment when they bring their car to Michael J’s.”

New SRS Checklist Available

Airbag Solutions recently released a new Supplemental Restraints Systems (SRS) estimating checklist designed to allow damage appraisers to more easily identify each of the components required to remain in compliance with OEM service requirements surrounding restraint systems. The free SRS service checklist is available online as a fillin PDF or as a printed download. Douglas Gan, COO of Airbag Solutions, said this brings the company one step closer to its goal of offering a standardized, one-step source for critical OEM requirements to the collision industry. “With the use of this checklist [and our database], appraisers are now able to address each of the critical questions needed to ensure a proper and timely repair. Knowing the answers to SRS related questions before the repair has begun will help to eliminate supplements, reduce cycle times and follow OEM procedures.” See Airbag Solutions at: www.airbagsolutions.com.

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ter position, the appellate court said its decision was also in accord with state precedent. “[E]xisting California case law clearly establishes that an employer may be found liable for its employee’s torts as long as the proximate cause of the injury occurred within the scope of employment,” the court wrote. “It is irrelevant that foreseeable effects of the employee’s negligent conduct occurred at a time the employee was no longer acting within the scope of his or her employment.” Turning to the specific facts of the case, the court determined that a reasonable trier of fact could find that Landri was acting within the scope of his employment when he became intoxicated at the party. The consumption of alcoholic beverages by employees at the hotel “was a customary incident to the employment relationship,” the court said. Employees were allowed to finish alcohol left over after parties while on shift, taste new drinks or have drinks purchased for them; at the party, managers served hard alcohol and did shots with employees. Marriott also benefited from the party because it furthered employeremployee relations and improved employee morale, the court noted.

Continued from Cover

Employer Liable in DUI

trial court judge granted summary judgment to the hotel. But the appellate court reversed. Marriott’s respondeat superior liability followed the risk created by the intoxication, the court said, no matter where it proximately caused harm. Because he became intoxicated at an employee-sponsored party that benefited Marriott, he was acting within the scope of his employment and the employer could be liable. The court reviewed two divergent doctrines of liability from different jurisdictions addressing similar factual scenarios. In Arizona, Illinois, and Kansas, the court noted, an employer is liable only if the accident itself occurs at a time when the employee is acting within the scope of his or her employment. Another group of states – including Hawaii, Oregon, and Washington—have found it sufficient, for respondeat superior liability purposes, that the alcohol consumption occurred within the scope of employment. Aligning California with the lat-

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Marriott argued that allowing it to be liable under the facts of the case would open the doors to broad potential liability for employers. Its responsibility as a result of serving alcohol at the party, it asserted, should have ended when Landri arrived at his home safely. The panel rejected that contention. “[A] trier of fact could conclude that the proximate cause of the accident, Landri’s intoxication, occurred within the scope of Landri’s employment,” the court said. “[W]e focus on the act on which vicarious liability is based and not on when the act results in injury.” No reasonable justification exists for “cutting off an employer’s potential liability as a matter of law simply because an employee reaches home,” the court added. Instead, “the employer’s potential liability under these circumstances continues until the risk that was created within the scope of the employee’s employment dissipates.” The Purton decision opens employers up to potentially broad liability under the court’s analysis, focusing the scope of employment “on the act on which vicarious liability is based

and not on when the act results in injury.” Marriott argued that the decision would judicially legislate new law that employees drinking at an employer function must be escorted home and kept there by escort, in violation of personal privacy and liberties, for employers to avoid liability. “Not so,” the court said. The employer “created the risk of harm at its party by allowing an employee to consume alcohol to the point of intoxication.” The court added that Marriott could have lessened its risk by enforcing a drink-ticket policy, serving drinks for only a limited time period, serving food or instituting a policy prohibiting smuggled alcohol. “Alternatively, it could have eliminated the risk by forbidding alcohol.” After the court’s decision, many employers may choose the last option to similarly eliminate the risk of liability. “[I]f a commercial enterprise chooses to allow its employees to consume alcoholic beverages for the benefit of the enterprise, fairness requires that the enterprise should bear the burden of injuries proximately caused by the employees’ consumption,” the court concluded.

www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 23

Continued from Page 6

Snapshot of Industry

24 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com

See Snapshot of Industry, Page 38

www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 25

On Creative Marketing

Tom Franklin has been a sales and marketing consultant for fifty years. He has written numerous books and provides marketing solutions and services for many businesses. He can be reached at (323) 871-6862 or at tbfranklin@aol.com. See Tom’s columns at www.autobodynews.com under Columnists > Franklin

Development-Appropriate Marketing with Thomas Franklin

A while back several new shops opened in my area. When I asked what they were doing about marketing, almost everyone said Yellow Pages and 800 number first. Some had bought into advertising mailer packages and others local magazine ads. Naturally some were focused on putting together a presentation package to send to DRP coordinators in the hope of getting insurance work. Some were also going around taking business cards to agents. Almost no one was doing any direct solicitation to get immediate jobs in the door. It occurred to me that many shop owners believe there is a general marketing setup that everyone should include right away. It seems no one takes into consideration how marketing should differ depending on the stage of growth and development of the shop. I’ve always viewed the development of a business much like the developing stages of a trade profes-

sional: Beginner, Apprentice, Journeyman, Professional, and Leader. At each stage, both professional procedures and marketing procedures must change too. I know of one leading body shop that runs no ads, does no phone solicitation, has no program for contacting prior customers, and has no DRPs. It is allied with multiple dealerships and has an estimating office at many of them. It employs a full-time marketing professional to maintain optimum relationships with all of the dealership principals. A shop at a lesser level of development couldn’t survive this way. A beginning—and even what I would call an “apprentice” shop—is also unlikely to do phone solicitation. If it is just starting out and has no customer base, it won’t have a program for contacting prior customers. And it is unlikely to have DRPs at this point. The beginning shop owner needs to

26 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com

focus on one target public at a time. Dealerships and DRPs may be great sources of volume business, but competition is keen for these sources of business and pursuing them can be a waste of time unless the owner has friends in high places who can help get a deal. A better use of time would be direct selling: Going to mechanical shops, commercial firms, government agencies, charitable agencies, and other organizations that use vehicles that will require body damage repair from time to time is much better idea. The key principle at this point is to concentrate financial and personnel resources on specific contacts that can bring in immediate, actual work. I would consider a “journeyman” shop one that has survived the initial critical phase — that eliminates many beginners — and is now getting organized for the long haul. Building a base of repeat customers should be primary. Gathering in-depth informa-

tion from each new customer opens the door to follow-up calls, mailings, special offers, and probing for referrals. Some limited ads may be appropriate but should not take financial resources away from commission or bonus plans that encourage estimator/salespeople to tap the customer database and referral sources for immediate new business. A shop at this point is not yet completely secure. Marketing resources can’t be wasted. Broad, long-term projects like a website and social media sites are necessary but should not take away from directly focused job-mining efforts. The well-established professional shop is in a position to employ a wider range of marketing efforts. A steady flow of repeat customers and probable referral sources like DRPs and dealerships ensure sufficient cash flow to afford name-recognition marketing. A lesser shop would be foolish to waste money on ads that do little more than

keep the shop’s name in the public eye, but at the professional level, it’s possible the owner is considering opening other locations. At that point name-recognition is essential. This might include radio and TV ads, sponsoring sports and other activities, and participating in professional groups like the Chamber of Commerce. The leadership shop markets itself like any outstanding professional shop, but takes it a step further. The owner is likely to hold an officer position in an autobody trade association and be involved in making industry advances through CIC meetings and other venues. This is not to say that shop owners at earlier development stages shouldn’t participate in industry forums and activities. But the collision repair industry is highly competititve these days and marketing is a very costly activity. Ad salespeople with expensive promotional schemes are beating at the door all the time. Until a shop is very well established, every marketing move must produce a real job coming in the door. When enough of those jobs are sure to come, there will be plenty of time to play with those expensive ads and promotional schemes. But until that

happens, it would be wise to recognize what stage of development a shop has really reached and employ marketing resources appropriately.

Record Fundraiser for CREF

The Collision Repair Education Foundation announced that its 12th annual industry fundraiser golf outing raised $70,000, a record high for the event. The fundraiser was a day of golf at South Shore Country Club in Hingham, MA. A new aspect of the event, a helicopter golf ball drop, raised $12,000 alone. Golf balls, sponsored by individuals, were dropped from a helicopter above a green. Closest to the pin won a $1,000 American Express gift card. The winning ball was sponsored by Gerber Collision & Glass president and COO Tim O’Day, who graciously donated the prize back to the foundation. All funds will go toward supporting scholarships and grants for collision schools and students. Said Clark Plucinski, executive director. “We would like to thank all of the attendees, sponsors, and specifically PPG Automotive Refinish for their co-hosting sponsorship as this event has progressed from raising $19,000 in 2009 to $70,000 this year.”

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Continued from Cover

Suit Against PartsTrader

ice shops, 2) Finding the Defendants in breach of the 1963 Federal Consent Decree (and thereby voiding the Select Service agreements), and 3) Stopping the Defendants from interfering in the relationship between customer and shop by delaying service payments or otherwise limiting the use of rentals. The suit alleges that State Farm’s implementation of the PartsTrader system tortiously interferes with prior business relationships that collision repair facilities have with their long standing parts suppliers. (Tortious interference occurs when a person intentionally damages the plaintiff’s contractual or other existing business relationships.) In addition, the suit contends that State Farm is attempting to force the Plaintiffs to breach their legal fiduciary (trustworthiness) duty to their customers, ie. compromising a safe and reliable repair. “The relationship between consumer and repairman has been all but destroyed. The repairman

must do as instructed by the insurance company, not the consumer.” Said attorney Eaves Jr., “PartsTrader and State Farm will effectuate a ‘race to the bottom’ in quality and safety.” And though he says the case very likely will go to court, he is hoping for an out-of-court resolution. “We would love for them not to bring it (the Parts Trader system) to Mississippi. But it would be up to them,” he said. Cheaper parts have indeed been responsible for multiple injuries, said Eaves Jr., who is a former candidate for governor of Mississippi. “Nobody likes to be forced into filing a lawsuit but this is the largest automobile insurer in the country and we have a lot of mutual customers that will be impacted by this,” said John Mosely, president of MSCRA from Clinton Body Shop and a plaintiff in the suit. “We have invested tons of money in our business and State Farm telling us we have to buy through PartsTrader system, is not the best thing for the repair or the customer.” Mosely currently participates in the Select Service program with State Farm.

parts ordering platform to repairers nationwide. State Farm guidelines for the use of parts and part types have not changed due to electronic parts ordering. Estimates are written and part types are chosen by repairers based on consistent guidelines,” said State Farm’s public affairs representative Roszell Gadson. Barry Lewis of Ridgeland, MS, and owner of European Coachworks, says participating in the lawsuit was simple common sense for his business. “I’m just trying to cover us for the future,” says Lewis, “because eventually it’s going to affect us whether you’re in the program or not.” The “program” to which Lewis is referring is also a company doing business as Parts Trader LLC, which was named in the lawsuit as well. While Parts Trader’s website states that the repairer has the final say in which part they should use, the MCRA maintains that State Farm insists their insured drivers receive the cheapest parts available in order to cut repair and replacement costs. State Farm neither confirmed nor denied whether parts purchased See Suit Against PartsTrader, Page 30

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In addition to seeking an injunction against implementation of the PartsTrader system, the suit seeks a declaratory judgment that State Farm is operating against the 1963 Consent Decree, entered into by several insurance company associations and the Federal Government, limiting insurer’s activities in collision repair to influence customers. Because of this conflict, the suit seeks to void the Select Service agreements between repair facilities and State Farm. Finally, the suit seeks to keep State Farm from interfering in the contract between the customer and body shops by “causing or implying delay in service payments, appraisal or limitation on the usage of rental automobiles.” State Farm is requiring use of PartsTrader for specified shops in its Select Service DRP but insists using the service is strictly voluntary because membership in Select Service is voluntary. State Farm’s public affairs representative Roszell Gadson said, “Repairers participate in Select Service® on a voluntary basis. Parts Trader is a company that provides an electronic

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Continued from Page 28

Suit Against PartsTrader through the Parts Trader service were inferior to those the repair shops claim to use. “There are thousands of examples where inferior parts led to injury,” Eaves Jr. said, citing his considerable experience as a trial lawyer. “This

PartsTrader program is the first time this has been implemented. Most of the cheaper parts will be made in countries where quality is not as important,” he continued. But State Farm says the suit is without merit and that the Parts Trader system is not yet a reality for Mississippi. Preventing it from being implemented in Mississippi is, of course, the point of the suit.

“State Farm recently received notice of a lawsuit in Hinds County, Mississippi, related to our electronic parts ordering initiative and our Select Service® program. We believe the suit is without merit. We intend to vigorously defend the suit,” said Roszell. “The Parts Trader program has not yet even been implemented in Mississippi.” MCRA President Mosley argues that parts ordered from off-shore sites

are not upheld to the same standards of safety as are American-made parts. But the PartsTrader website states unequivocally that it does not recommend specific parts or manufacturers. “Collision parts suppliers providing pricing within PartsTrader must be nominated by repairers like you before we invite them to participate in this market,” says the PartsTrader website.

The 1963 Federal Consent Decree (www.ican2000.com/documents/1963/)

Collision repairers and their representatives have come up with numerous different legal theories about why insurers shouldn’t be allowed to create networks. One of them is based on the now littleknown Consent Decree. In November 1963, the U.S. Justice Department settled a class action suit that it brought against the associations representing some 265 insurance companies, which resulted in their officers signing a “Federal Antitrust Consent Order,” known as the Consent Decree. A consent decree in general is a written agreement in which a company or organization under investigation by a governmental agency agree to

do or not do something in the future – without admitting any past wrong-doing. In this case it settled the class action suit without trial. The signers, three insurance trade associations and their members agreed to forever refrain from several practices, including setting prices and steering. They admitted no wrongdoing but agreed to abide by its terms in perpetuity, meaning it’s still binding on its signatories today. The DOJ filed an action against the associations alleging that they had formulated an “Independent Appraisal Plan” in 1947 “to depress and control automobile material damage repair cost.” The heart of the plan was a scheme to control the work

of independent appraisers who prepared estimates of repair costs and got body shops to agree to them. The Government’s case focused on an insurance industry invention called the Combined Claims Committee (CCC) which was established to control collision repair prices. Basically, each CCC member-insurer selected one favored appraiser or appraisal firm in each market area, to the exclusion of others, to receive all of the participating insurer’s adjusting work, as long as this adjuster worked within the guidelines that the CCC established and controlled. Under the plan, committees appointed by the trade groups would spon-

sor individuals or partnerships to act as appraisers in assigned territories for all association members. In return for the insurers’ agreement to use them exclusively, the appraisers would agree to depress and control repair costs by arranging (when possible) for shops to agree to estimates before they had examined the damaged vehicles, by “establish[ing] strict labor time allowances,” and by “obtain[ing] the lowest possible hourly labor rate.” The DOJ alleged that the plan violated the Sherman Act. In November 1963 (less than a week after John F. Kennedy’s assassination) the Government’s case was See Consent Decree, Page 33

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Car Bench America Says Shops Not Ready to Repair Newest Cars by Ed Attanasio

Government mandates for more fuel efficient and safer vehicles have forced changes in the design and construction of all vehicles. The collision industry is changing faster than most body shops can keep up and staying on the cutting-edge can be expensive and time-consuming. And just as importantly, you may no longer be performing proper repairs on today’s newer models altogether, by either rejecting new training, systems and equipment, according to Ray Zitzloff, the president of Car Bench America (CBA). “The OEMs are reducing the weight of these new vehicles by integrating a variety of lighter multistrength materials into their designs,” Zitzloff said. “High strength steel and aluminum will be common in all vehicles and they require different repair procedures and equipment. Aluminum and MIG brazing, riveting and bonding, aluminum clean rooms with vacuum systems are all required. If you’re a body shop owner, you already know this all too well, and acutely aware of

meet the changing needs of the 21st century vehicle, including welders, aluminum steel kits, plasma cutters, SPR guns, induction heaters, laser measuring etc., and more shops will settle for making improper repairs on the newer vehicles, because to do them right will require more training and more sophisticated equipment, according to Zitzloff. Zitzloff can see the future of structural collision repair and the role his company will be playing in this whole new Car Bench America’s universal system is now available approach to fixing cars, he for use on Ford light trucks and cars. From left, Car Bench International Director of Marketing Lorenzo Manfredi; Sr. said. “Car Bench is the most Engineer for Ford’s Paint and Technology Center Jerry versatile, accurate, and costBonanni; President of Car Bench International Silvano effective structural repair Pietrelli and Car Bench America’s President Ray Zitzoloff system in the world, with unveiled the system more OEM approvals than CBA has introduced a full line of any other system,” Zitzloff explained. equipment called Revolution from 3M “We’ve all heard this statement: ‘Once bench to 5.2M all sharing and using the a vehicle has been damaged it will same universal hardware with state-of- never drive the same again,’ but Car the art laser measuring for virtually all Bench can make that statement obsolight trucks and cars sold in North lete. Vehicles are built on fixtures at the factory to ensure structural dimenAmerica To complement the Revolution CBA has added a complete line of sional accuracy and ease of assembly. products from Europe necessary to Repairing them on fixtures has always the fact that most of these new materials can no longer be heated or pulled to fit. The removal and replacement of sections of various types of materials is required.”

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done the same thing, but that’s not the end of the story.” When asked why Car Bench America’s Universal fixture system is the best way to repair today’s cars, Zitzloff is quick to respond. “First off, the Car Bench prototype equipment is used by more OEMs for designing and building vehicles than any other systems. The same prototype equipment used by body shops is also used by the OEMs for performing repairs. This means that the same cars that were built using Car Bench are being repaired by using the same equipment. When doing sectioning and replacement repairs, the tech is essentially rebuilding the vehicle.” Zitzloff also praised other features of the Car Bench system. “Our systems provide fast accurate Laser Measuring (self leveling, no recalibration, 1MM tolerance) for blueprinting, estimates from virtually any lift,” he said. “And they save time, because they’re faster and provide more accurate repairs without re-measuring. For the finest structural repair system in the world, Car Bench America is leading the way.”

The 1963 Federal Consent Decree (continued from p. 30)

dismissed, pursuant to an agreed order under which the defendant associations were enjoined from pursuing any program that had the purpose or effect of “exercising any control over the activities of any appraiser.” The Independent Appraisal Plan has never been revived, nor has any program or practice which favors chosen damage appraisers or excludes others. In the words of Silvie Licitra, wellrespected collision industry writer and a collision repairer at the time, resultant payoffs and corruption were rampant because the selected appraiser fixed the labor rates, required arbitrary discounts on parts, and held firm to the labor times published in a guide. These appraisers also had shops with which they had unwritten agreements that their estimates would be accepted, sight unseen. “Those appraisers all had their hands out and if you didn’t pay them off, they’d write lousy estimates (creating) a take-it-or-leave-it situation, the shop being faced with losing the job if they didn’t play ball (with insurers).”

Frank Stepanek, chairman of the National Body Shop Committee of the Independent Garage Owners (IGO) of America (precursor to the Automotive Service Association), was quoted in a November 1963 industry publication: “It’s no longer legal for many insurance companies to demand discounts, set the hourly rates, boycott repair shops [and] use specific appraisers.” A number of trade associations were targeted in the years following the signing of the Consent Decree. In March of 1964, Allstate Insurance Company filed suit against 109 members of the Central Jersey Auto Body Association (CJABA), charging them with antitrust violations, conspiracy and price fixing. In July of that year, a judge ordered the association members to sign a consent decree of their own. The embittered members reluctantly settled with Allstate, citing lack of funds to finance a protracted legal battle with the company. In support of the CJABA, an association of central New York body shop owners set up a legal defense fund for the CJABA.

Their spokesman was quoted as saying: “It’s with deep regret that this spirit was not nationwide. I strongly urge every body shop or garageman who looks forward to freedom in his business to alert himself and seek remedies that will maintain our rights and freedoms in the industry.” The legal wrangling went back and forth until the summer of 1967, when a congressional committee called for an investigation into the auto insurance business. U.S. Sen. Philip Hart of Michigan proposed federal oversight of the industry and an amendment to the 1945 McCarran-Ferguson Act as a way to curb insurance domination of the collision repair industry. McCarran-Ferguson effectively shielded the insurance industry from federal antitrust laws by granting states the primary responsibility for regulating insurance. Sen. Warren Magnuson, chairman of the Senate Commerce Committee, made additional calls for investigative probes and even threatened to launch an independent investigation by a special counsel.

Between congressional pressures and Transportation Secretary Don Boyd’s insistence the matter be studied by his department, the White House was prompted to step in. In a message to Congress in early 1968, President Lyndon Johnson called for a thorough investigation into the auto insurance business. “The Consent Decree was like a BandAid,” said Dick Hogg, a suburban Philadelphia body shop owner who remembered the ‘63 action, as well as the business conditions that led to its signing. Hogg also remembers that its signing didn’t usher in a golden age for body shops. “It only gave us temporary relief because like some other laws, there was no enforcement. The terms of the Consent Decree were diluted by the state regulations that are, for the most part, unenforced. The insurance departments give the benefit of the doubt to the insurers.” Since insurance companies hedged their bets with their chosen appraisal firm, they had control. No auto damage claims were settled unless they passed through See Consent Decree, Page 40

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What Does Tesla’s Record-setting Safety Rating Say to the Collision Industry? by Ed Attanasio

Tesla’s recent perfect 5-star safety rating is unprecedented and the highest in the history of automotive safety testing. It took all the former numbers and crushed them, when independent testing by the National

Arduous testing of the Tesla resulted in a 5-star rating, the highest in the history of automotive safety testing

Highway Traffic Safety Administration (NHTSA) awarded the Tesla Model S a five-star safety rating in every subcategory without exception. Only one percent of all cars tested by the federal government have achieved five stars across the board. Furthermore, NHTSA does not just hand out top ratings, so these scores are significant and have caught the

attention of other carmakers, the press and the public, as well as collision and mechanical repair shops that want to work on these elite vehicles. Tesla Motors, Inc. is a Palo Alto, California-based company that designs, manufactures and sells electric cars and electric vehicle powertrain components. The Tesla Model S is the first premium sedan built from the ground up as an electric vehicle. The company sold 10,500 Model S sedans during the first six months of 2013, and forecasts that they will be selling 40,000 models annually by fourth quarter 2014. Of all vehicles tested, including every major make and model approved for sale in the United States, the Tesla Model S set a new record for the lowest likelihood of injury to occupants. While the Model S is a sedan, it also exceeded the safety score of all SUVs and minivans. This score takes into account the probability of injury from front, side, rear and rollover accidents, according to a press release recently released by Tesla. Now the $64,000 question out there is—how can body shops get cer-

tified to work on these increasingly popular and very safe cars? Tesla’s Communications Manager Shanna Hendriks recently addressed these in-

Amato’s Auto Body is proud of the fact that they will soon be the only Tesla-certified collision facility in the San Diego area, according to Body Shop Manager Perry Anderson. “It’s an exciting time for Tesla, so we’re very happy to be involved,” he explained. “These vehicles are becoming more and more popular and we’re seeing more of them here in our shop. Right now, we have six Amato’s Auto Body is proud of the fact that they will Teslas that we’re working soon be the only Tesla-certified collision facility in the on. It’s definitely a privilege San Diego, CA area to be able to work on these quiries about the manufacturer’s newly exceptional cars.” developed certification program. If other body shops are inquiring “Tesla has a dedicated repair and about how to become Tesla-certified, training program that interested body they may have to wait for a while, Anshops can go through to become recderson said. “It’s invitation-only, from ognized as a Tesla Approved Collision what they’ve told us. Tesla is pretty Repair Center. One of the things that much in a position where they can makes the Model S unique is that the pick and choose who they want workcar is made of aluminum, so body ing on these cars. Tesla contacted us shops need to have aluminum-based because we were already certified to repair abilities. Body shops can inwork on a lot of other high-end luxury quire about the training program by vehicles, so they knew the learning sending an email to Collisio-techcurve would not be daunting for us. info@teslamotors.com.” We are factory-trained and certified to

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work on six luxury brands, including Aston Martin. I think the people at Tesla were attracted to us because of our Aston Martin certification, because both car makers use similar materials and obviously some of the repair techniques are alike in some ways. Both of them are made of aluminum, so the bonding technology used is very similar. With both, you need special rivet guns and glue guns and with aluminum, you have to have a clean room as well. “The people from Tesla came here and inspected our facility to make sure we were capable of repairing these cars,” Anderson said. “Once we were onboard, we had to invest in some new equipment, including a Fronius welder, but the biggest thing has

been the training. Tesla wants us to training within the next few months, know these cars inside; be able to we’ll be officially certified and have completely disassemble them and then the plaque on the wall.” put them back together perfectly.” What does Anderson think about By putting several of their shop’s 41 Tesla’s recent safety numbers? “I’m technicians through the Tesla training, Amato’s now has a core group that can work on the cars, but the process is ongoing. “We have two technicians that have gone through the Tesla Fit and Finish class and now have 80 hours under their belts,” Anderson said. “Tesla just recently rolled out new training this summer, so once we complete the rest of the A Tesla pictured with Founder Elon Musk

not surprised,” he said. “One came into the shop one day and it had obviously been hit pretty seriously. The front end was caved in and it was a total loss, but the woman walked away without a scratch and even the car doors opened and closed perfectly. All we said was ‘wow.’ ” Other interesting facts about the astounding safety ratings earned recently by Tesla include: The Model S has the advantage in the front of not having a large gasoline engine block, thus creating a much longer crumple zone to absorb a high speed impact. This is fundamentally a force over distance problem—the longer the crumple zone, the more time there is to slow down occupants at g-loads that do not cause injuries. Just like jumping into a pool of water from a tall height, it is better to have the pool be deep and not contain rocks. The Model S motor is only about a foot in diameter and is mounted close to the rear axle, and the front section that would normally contain a gasoline engine is used for a second trunk. The rear crash testing was particularly important, given the optional third row children’s seat. For this, Tesla factory installs a double bumper if the third row seat is ordered. This was needed in order to protect against a highway speed impact in the rear with no permanently disabling injury to the third row occupants. The third row is already the safest location in the car for frontal or side injuries. The Model S was also substantially better in rollover risk, with the other top vehicles being approximately 50 percent worse. During testing at an independent facility, the Model S refused to turn over via the normal methods and special means were needed to induce the car to roll. The reason for such a good outcome is that the battery pack is mounted below the floor pan, providing a very low center of gravity, which simultaneously ensures exceptional handling and safety. In addition, the lithium-ion battery in the Model S did not catch fire at any time before, during or after the NHTSA testing. It is worth mentioning that no production Tesla lithiumion battery has ever caught fire in the Model S or Roadster, despite several high speed impacts. While this is statistically unlikely to remain the case long term, Tesla is unaware of any Model S or Roadster occupant fatalities in any car ever.

www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 35

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www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 37

Continued from Page 24

Snapshot of Industry

38 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com

www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 39

Ohio Dealership Group is Faced with Class Action Claim The Ohio Court of Appeals has upheld class certification in a suit alleging that the arbitration clause in a Clevelandarea dealership group’s sales agreement was unconscionable and unenforceable, according to Eric Freedman writing in Automotive News. The 2-1 ruling against Ganley Chevrolet and Ganley Automotive Stores came in a spot delivery-related dispute that began in March 2001, after Jeffrey and Stacy Felix purchased a 2000 Chevy Blazer. Ganley has asked the appellate court for reconsideration and, if that’s unsuccessful, may seek state Supreme Court review, says dealership lawyer Steven Dever of Lakewood, Ohio. The plaintiffs contend that Ganley told them they were approved for 0 percent financing and let them take home the Blazer. But a few days later, Ganley told them GMAC would approve only 1.9 percent financing, which they accepted. More than a month later, they were told GMAC had rejected them. The dealership then found a bank that would provide a 9.4 percent loan, but the Felixes refused to sign a new agreement at that rate, the decision said. The suit alleges “bait-and-switch tactics,” violation of the state Consumer Sales Practices Act, misrepresentation, and emotional

distress. It includes individual and classaction claims and challenges the validity of the arbitration provision in the sales agreement. A lower-court judge rejected Ganley’s request for arbitration and approved class-action status on behalf of all consumers whose sales agreement with any Ganley store had the same provision. Ganley Automotive Stores has 34 franchises in northern Ohio. The judge found the provision ambiguous and misleading and awarded $200 in damages to each of the “thousands of members” of the class. It covers customers who signed such agreements from two years before the lawsuit was filed in June 2001 until the company changed the provision in 2007, said plaintiffs’ lawyer Mark Schlachet of Cleveland Heights, Ohio. However, only a “handful” of those customers went to arbitration, Dever said. He added: “How can you quantify the harm when people had no complaint? The analysis is fundamentally flawed.” The appeals court held that class-action status was appropriate under the consumer protection law. Appeals Judge Mary Kilbane said the trial judge, who handled the case for 11 years, had “conducted a rigorous analysis into whether the prerequisites for class certification have been satisfied.”

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The 1963 Federal Consent Decree (from p. 33)

The Plan’s sieve, and as you might expect, the dollars that passed through were only those deemed allowable by the insurance industry at large. The typical labor rate for collision repair was between $5 and $6 per hour. Essentially, the selected appraiser fixed the labor rates, required arbitrary discounts on parts and held firm to the labor times published in a guide. In addition, the appraiser had shops with which one had unwritten agreements to accept their estimates sight unseen. According to Silvie Licitra, a well-known collision industry writer whose experience dates from that era, payoffs and corruption were rampant at that time. “It was a real crazy business back then,” wroteLicitra. “Those appraisers all had their hands out, and they were taking money like crazy. If you didn’t pay them off, they’d write lousy estimates. It was a take it or leave it situation because a body shop was faced with losing the job if they didn’t play ball.” In question, however, is the specificity of the Consent Decree to individual insur-

ance companies today. The Decree was signed by representatives of the three major insurance associations at the time: Association of Casualty and Surety Companies (ACSC); American Mutual Insurance Alliance (AMIA); and National Association of Mutual Casualty Companies (NAMCC), all of which are now defunct. Also, despite their seniority in business the majority of the dominant companies today are not on the list of signatories so represented. State Farm (1922), Farmers (1928) and GEICO (1936) do not, for example, appear on the list of companies represented. In addition, communication from the DOJ’s Antitrust Division claims that the consent decree cannot be enforced against individual insurance companies, since the companies themselves were not signatories to the decree. Read the 1963 Consent Decree http://www.ican2000.com/documents/1963/ Content herein draws upon articles published by Charlie Barone and John Yoswick.

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parts@weatherfordbmw.com www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 41

The Insider is a corporate-level executive with a Top 10 auto insurer in the U.S.. Got a comment or question you’d like to see him address in a future column? Email him at Auto.Insurance.Insider@gmail.com

Inside Insurance

Eliminating the “Have Not” Shops Will Help the “Haves” with The Insurance Insider

It wasn’t so long ago that all shops were created equal. If you had tools, four walls and a sign, you could be a body shop. Actually, I should remove “four walls” from the list; there were many “shops” repairing cars that didn’t have one wall, let alone four. At any rate, the qualifications to repair a car didn’t include special equipment or training. Starting a body shop business required not much more than proclaiming that you were a body man. At that time, thankfully, direct repair programs were virtually non-existent. I can’t imagine what we would have done during that time period if direct repair programs were prevalent. How would an insurance company identify which shops to refer their customers to? Even though shops have evolved significantly since that time, the same dilemma exists for insurance companies today: Which shops do we refer

our customers to? Without having the intimate knowledge of your shop or your competitors, finding the most qualified shops in a market is as about as easy as developing a national health care plan.

Why does an insurance company care where their insureds have the vehicles fixed? There are a lot of reasons. The cost of the repair is a motivating factor in finding the right shop, although it no longer is the most important. Back in the early 1980s

when there were more than 70,000 shops in the United States, price was the biggest concern. Customer service wasn’t even on our radar. The quality of the repair was assumed to be no better or worse at one shop than at another down the street. In fact, the biggest concern I had with a shop was determining whether or not the dog in back lot was chained up so I could write my estimate. Everyone was assumed to be able to perform a proper repair. For the younger generation reading this, it’s probably difficult for you to understand what I’m talking about. To put it in proper perspective, some shops would need to wet down the dirt floor before painting a car. It wasn’t uncommon to see shops pulling full-frame vehicles with anything that was stationary. And one of my personal favorites was

watching the old-time body men use a torch. A torch in the late 1970s and early 1980s was about as useful as duct tape. The industry has changed dramatically over the past few decades and the unprofessional, uneducated shop owner has been replaced. Professional, educated and astute operators have taken the industry to the next level. Now customer service is religiously the topic of conversation. Insurance executives are facing increased scrutiny and pressure to improve customer service scores. Policyholder retention is the lowest the industry has seen. Insurance has become a commodity where price is the single most motivating factor to consumers. There are intense battles happening between the Top 10 carriers for policyholders, as evidenced by the marketing dollars being spent. Ironically, our biggest challenge isn’t finding new customers; it’s keep-

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ing the ones we have. Retention is directly correlated to customer service. Unfortunately, the collision repair facility and insurance company typically share a common fate relative to customer service. If the customer likes the shop, more often than not, the customer will like the insurance company. Conversely, if they don’t like you, they don’t like us. Thus, the importance to us of finding the right shop to repair our insureds’ vehicles. Repairing vehicles today poses a significant challenge to the collision repair industry as well as the insurance industry. Collision repair shops need to make significant investments in training to remain current with the latest technology and repair methodologies. We recognize that this is critically important to a safe and proper repair. There are still over 40,000 shops in the U.S. How do we find the shops that are the best trained and have invested in their people? The new and specialty equipment required to properly repair many of today’s vehicle should help foster a reduction in the number of shops in the industry. The days of opening up a shop with a tool box and a sign in front of the building are a distant

“bad” memory. The challenge is eliminating those shops from the marketplace. We don’t want our insureds’ vehicles in shops that are ill-equipped. Collision repair shops need to work closely with insurance companies and state and national regulators to eliminate the “haves” from the “have-nots.” Those that have the equipment and training must survive while those that “have-not” should not. The insurance industry can’t do this alone. We need help identifying the “haves.” The industry continues to evolve and the upper class of the industry is growing exponentially. The middle and lower tier shops are shrinking. It would be our desire to increase the pace of this, with the thought that the surviving shops would be better trained and equipped. The sooner we eliminate the “have-nots,” the better it will be for everyone in the industry.

Indiana Autobody Association Expresses Support for SCRS Position Statement The Indiana Autobody Association (IABA) has announced its full support of the Society of Collision Repair Specialists' (SCRS) recent position statement on insurer mandates (see p. 8 this issue). The IABA believes that all repair decisions, vendor selections and business processes should be left to the collision repair professionals who work on vehicles and have been entrusted by the vehicle owners to make correct repair decisions. The IABA also believes that the intent of these mandated programs is not to improve efficiency in any current business process, or for the ben-

efit of the vehicle owner. It believes these attempts are solely driven by insurers and other third parties seeking to make additional profits and gain control of the collision repair business through practices that can be considered extortion and tortious interference, as previously identified in the 1963 Consent Decree (see page 15), and the IABA will pursue to deter these actions using the fullest extent of the law. ASA President Dan Risley has also made ASA’s position clear that it is against all forms of direct repair program requirements to use specific suppliers or products (this issue.)

Continued from Page 12

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Tesla Motors Surges, Only Two ‘Galleries’ in Texas Where Legacy of Franchises Holds Tesla has chosen to skip the middleman and open its own dealerships to sell its pricey Model S electric car. In states like Texas where manufacturerowned dealerships are not allowed, prospective Tesla customers must resort to buying the car online. StateImpact Texas explains the reason that law has not changed boils down to money and a powerful automotive dealership lobby which outspent Tesla in Texas. According to the Tesla Motors website, the nearest Tesla dealership is in suburban Denver. Although you can't purchase a Tesla in Texas, you can have your Tesla serviced in Austin, Dallas, or Houston. Tesla Motors fought legislative franchise battles with dealers on a number of fronts this year, but Texas became the only state in which the electric vehicle maker mounted a vigorous challenge to existing franchise laws. Tesla lost its fight outright. Tesla Motors has two Texas showrooms for its luxury electric cars, one in Austin, the other in Houston, but you can’t call them stores. Texas law prohibits carmakers from selling

directly to customers, as Tesla does elsewhere. Instead, the companies must sell through franchise dealerships, something Tesla so far refuses to do. Tesla tried to get the state’s law changed, to no avail. So instead of stores, Tesla’s Texas facilities are “galleries,” where customers can examine the company’s $62,400-plus Model S sedan and talk with Tesla reps about the car’s features. And that’s about it. “They can’t tell you the price of the car, how to buy the car or give you a test drive,” said Diarmuid O’Connell, Tesla’s vice president of business development. “All they can really do is tell you about electric cars.” As Tesla expands across the country, the company has run into a dogged foe: the traditional auto dealership and its franchise model. Dealer associations in several states have tried to shut out Tesla with lawsuits and legislation, viewing the company’s direct-sales model as a challenge to their way of doing business. They aren’t necessarily worried about Tesla itself. The Palo Alto company delivered 5,150 cars in the second quarter against a forecast of 4,500 and

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turned a profit of 5 cents per share while analysts expected a loss of 17 cents. It remains tiny by the auto industry’s standards, planning to sell just 21,000 cars worldwide this year. The car dealers don’t want other automakers to follow Tesla’s lead, opening company-run stores that would compete with franchisees. “They feel threatened by this, as they have when other companies have tried to do this in the past,” said Jack Nerad, editorial director and executive analyst at Kelley Blue Book. “Dealers are part of a well-developed supply chain, and they want to keep it that way.” To Tesla, the fight represents a classic Silicon Valley story—an innovative startup disrupts an established industry and faces resistance. The dealer associations, Tesla executives say, are trying to stifle change in a stodgy marketplace that could use a little shaking up. “They go to the legislature and say, ‘We need protection from innovation,’ “ O’Connell said. “There’s really a fundamental question here: Should the government be prescribing a business

model for automotives? Apply that argument, and we’d still be riding horses and delivering messages by hand.” To the dealer associations, direct sales could destroy a franchise system that they say works for manufacturers and consumers alike, even if many buyers don’t realize it. Texas, for example, has auto dealerships in 284 cities and towns, according to the Texas Automobile Dealers Association. Of those, 163 towns have fewer than 15,000 residents. If the auto industry switched to direct sales, the car companies wouldn’t maintain stores and service centers in the smaller communities, said the association’s president, Bill Wolters. “The manufacturers would do exactly like the big-box stores have done with all the other products—they would only be in the metropolitan areas and big cities,” Wolters said. “The franchise system provides a much broader network of dealers than you’d have if manufacturers controlled the outlets.” The ability to sell cars in the hinterlands was, in fact, one of the main reasons the auto industry adopted the franchise model.

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Houston’s Randy McGinty First to Complete Every Collision Course at Chief University Randy McGinty has worked in the collision repair industry for more than 25 years. He got his start working in independent body shops before moving to dealerships and eventually

UTI Houston collision repair instructor Randy McGinty is the first person to complete every collision repair training course offered by Chief University

owning his own body shop. After more than a decade of owning and operating his own body shop, McGinty lost the lease on his building, which left him wondering what to do next. His wife suggested he try his hand at being an instructor and apply for an open teaching position at the Universal Technical Institute in Houston. “I didn’t really know what I wanted to do next,” McGinty said. “I had been teaching people that worked

for me and that I worked beside… I took all my credentials and everything else and presented it to UTI and, after a series of tests, they decided to hire me. They taught me how to teach, and I’ve been here ever since.” McGinty teaches both structural and non-structural automotive repair classes at UTI Houston. Earlier this year, McGinty made history by being the first person to complete every collision repair training course offered by Chief University, the technical training arm of Chief Automotive Technologies. For his efforts, he was granted the advanced master structural technician and advanced master structural damage analysis professional certifications. It took McGinty more than 120 course hours and nearly 10 years to complete all of the collision repair training. It’s a feat that McGinty said just wouldn’t have been possible without the support he received from UTI Houston. “The only reason I was able to take all of these classes was due to my education managers and education di-

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rectors here at the Universal Technical Institute,” he said. “Without their help and blessings, this would have never ever happened.” When he’s not busy taking classes or teaching students, McGinty and his wife enjoy riding Harley Davidson motorcycles, camping, grilling and watching movies. For more information on Randy McGinty or UTI Houston, call 281443-6262 or visit www.uti.edu. You can also connect with UTI on Facebook and Twitter. To learn more about Chief University classes, call 800-445-9262 or visit www.chiefautomotive.com. You can also connect with Chief Automotive Technologies on Facebook, Twitter and YouTube.

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BMW Recalls Diesel X5s

BMW is recalling certain model year 2009-2010 X5 xDrive35d vehicles equipped with a diesel engine and manufactured from June 13, 2009, through November 9, 2009. The fuel filter heater, which is used for warming up the diesel fuel during vehicle operation at low outside temperatures, could experience an electrical overload condition and become permanently activated. The fuel filter heater could remain activated even when the ignition is off and lead to a dead battery. The unit could also overheat, possibly resulting in a vehicle fire.

Chrysler for 2013 Fiat 500e’s

Chrysler is recalling certain model year 2013 Fiat 500e electric vehicles manufactured December 16, 2012, through August 13, 2013. The half shaft joints may loosen and separate causing noise and a loss of driving capability. A loss of driving capability increases the risk of a crash. Chrysler will notify owners and Fiat dealers will replace the fasteners attaching the half shaft inboard joints, free of charge. The recall will begin in August 2013. Owners may contact Fiat at 1-888-242-6342. Chrysler's recall number is N51.

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Parts: 707-402-5700 2775 Auto Mall Parkway • Fairfield, CA 94533 www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 47

Toyota Recalls About 780K Crossovers/Hybrids Again

Toyota Motor Corp. is recalling about 780,000 crossovers and hybrid sedans for a second time to fix looseness on rear-suspension lower arms that could cause the threads to rust and wear out, the NHTSA said. The recall covers 2010 Lexus HS 250h hybrids and 2006-11 Toyota RAV4 crossovers. The original recall for both vehicles was launched in November, but Toyota said it received reports from dealers that some vehicles experienced the same symptoms as before. Drivers reported hearing abnormal noises from the rear of the vehicles. Toyota said wear on the threaded part of the arm could cause the arm to separate, which could result in the loss of vehicle control and a crash. Toyota and Lexus sent similar letters to their dealers on Tuesday, Sept. 3, notifying them of the second recall. “Upon investigation, it was discovered that some inspections were not adequate and portions of the repair procedure may not have been performed correctly,” the Toyota letter stated. Toyota said it has revised the inspection and remedy procedures and is asking owners to go to dealerships to have the revised procedures performed.

Nissan Will Have Self-Driver Cars on Road by 2020 Nissan Motor Co., Ltd. announced that the company will be ready with multiple, commercially-viable Autonomous Drive vehicles by 2020. Nissan announced that the company’s engineers have been carrying out intensive research on the technology for years, alongside teams from the world’s top universities, including MIT, Stanford, Oxford, Carnegie Mellon and the University of Tokyo. Work is already underway in Japan to build a dedicated autonomous driving proving ground, to be completed by the end of fiscal year 2014. Featuring real townscapes - masonry not mock-ups - it will be used to push vehicle testing beyond the limits possible on public roads to ensure the technology is safe. Nissan’s autonomous driving will be achieved at realistic prices for consumers. The goal is availability across the model range within two vehicle generations. Said CEO Carlos Ghosn. “ I am committing to be ready to introduce a new ground-breaking technology, Autonomous Drive, by 2020, and we are on track to realize it.”

48 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com

Ford Recalls 2012-13 Focus BEVs for Headlight Wiring

Ford is recalling certain model year 2012-2013 Focus BEV vehicles equipped with High Intensity Discharge (HID) headlights, manufactured September 15, 2011, through May 6, 2013; and model year 2013 Focus ST vehicles equipped with High Intensity Discharge (HID) headlights, manufactured February 16, 2012, through May 7, 2013. Due to a wiring incompatability, the front side marker lamps may not function. Thus, these vehicles fail to comply to the requirements of Federal Motor Vehicle Safety Standard (FMVSS) No. 108, “Lamps, Reflective Devices, and Associated Equipment.” Without the proper illumination of the side maker lamps, the vehicle may be less visible in night time conditions, increasing the risk of a crash. Ford will notify owners, and dealers will modify the headlamp assembly wiring, free of charge. The recall began on August 16, 2013. Owners may contact the Ford customer relationship center at 1-866-436-7332. Ford’s recall number is 13C04.

Toyota Highlander Hybrid & RX400h Inverter Trouble

Toyota announced that it will conduct a voluntary safety recall. This involves approximately 133,000 MY 2006-2010 Highlander Hybrid and MY 2006-2008 Lexus RX 400h vehicles. In the involved Toyota Highlander Hybrid and Lexus RX 400h vehicles, IGBT or transistors within the hybrid system’s inverter assembly can experience heat damage due to variations in characteristics of the transistors’ parallel circuits. Should this occur, various warning lights on the instrument panel will illuminate, and in most cases the vehicle will enter “limp home mode.” In limited instances, the hybrid system will shut down and resulting in the vehicle stopping while the vehicle is being driven. Owners of vehicles subject to these recalls will receive a notification by first class mail. This inverter shown above has been at class for years explaining why these hybrids were having trouble.

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Toyota Tacoma Access Cabs

Subaru for Legacys/Outbacks

Subaru of America is recalling certain model year 2014 Legacy 3.6R and Outback 3.6R and 2013 Tribeca vehicles manufactured June 12, 2013, through June 28, 2013 and equipped with 5-speed automatic transmissions. The parking rod may come loose inside the automatic transmission. If the parking rod detaches, the transmission may prevent the vehicle from being moved or driven. The parking mechanism may not engage, and the vehicle may roll while in the “park” position, increasing the risk of a crash.

Nissan is recalling certain model year 2014 Versa Note vehicles manufactured April 23, 2013, through July 5, 2013. The rear seat latch bolts may have been manufactured incorrectly, reducing their strength. If the rear seat latch bolts break, the rear seats may not perform as designed in a crash, increasing the risk of injury to back seat occupants. Nissan will notify owners, and dealers will replace the rear seat latch bolts, free of charge. The recall began August 19, 2013. Owners may contact Nissan at 1-800-647-7261.

Kia Motors Corp. is recalling certain model year 2014 front wheel drive Sorento vehicles manufactured January 7, 2013, through March 12, 2013; and equipped with 2.4 liter engines. Due to a manufacturing issue, the right front axle shaft may fracture. A fractured front axle may result in a loss of power to the wheels. Additionally, if the vehicle is parked without the parking brake applied, it may roll away. Either condition increases the risk of a crash. Kia will notify owners, and dealers will replace the front axle shaft assembly, free of charge in September.

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Toyota is recalling certain model year 2005-2010 Tacoma Access Cab vehicles manufactured September 14, 2004, through March 29, 2010; and model year 2011 Tacoma Access Cab vehicles manufactured July 1, 2010, through September 7, 2011. If the access doors are repeatedly and forcefully closed, the screws that attach the seat belt pre-tensioner to the seat belt retractor can loosen over time. If the screws loosen completely, the seat belt pre-tensioner and the retractor spring cover could detach from the seat belt retractor. Jaguar Land Rover North America, LLC (Jaguar) is recalling certain model year 2013 XF 2.0L GTDi vehicles manufactured July 2012 through May 2013. The hose clamp for the Charge Air Cooler (CAC) hose may be out of position and loose, allowing the hose to detach. If the CAC hose detaches, the engine may stall, increasing the risk of a crash. Additionally, steering and brake assistance may be lost further increasing the risk. Jaguar will notify owners, and dealers will inspect the CAC hose to make sure its clamp is in the correct position and tight, free of charge.

Hyundai is recalling certain model year 2013 front wheel drive Santa Fe Sport vehicles manufactured July 13, 2012, through March 12, 2013; and equipped with 2.4 liter engines. Due to a manufacturing issue, the right front axle shaft may fracture. A fractured front axle may result in a loss of power to the wheels. Additionally, if the vehicle is parked without the parking brake applied, it may roll away. Either condition increases the risk of a crash. Hyundai will notify owners, and dealers will replace the front axle shaft assembly, free of charge.

Nissan 2014 Versas

General Motors is recalling certain model year 2014 Chevrolet Silverado trucks manufactured June 1, 2013, through June 30, 2013; and model year 2014 GMC Sierra trucks manufactured June 4, 2013, through June 30, 2013. Welding on the passenger airbag inflator may fracture when the airbag is deployed, allowing some gas from the air bag inflator to vent behind the instrument panel, instead of into the air bag. As a result the air bag may not fully inflate, increasing the risk of injury. GM will notify owners and dealers will replace the passenger air bag module for free.

KIA for Sorrentos

Ford Motor Co. is recalling 370,000 Crown Victoria, Mercury Grand Marquis and Lincoln Town Car vehicles from the 2005-11 model years to inspect and repair the lower steering shaft. Ford said corrosion of the lower intermediate steering shaft could cause a “loss of steering.” The recall covers 355,000 vehicles sold in the United States and 15,000 sold in Canada. Dealers will inspect the vehicle, replace the lower intermediate steering shaft, and if needed, will affix a lower steering column bearing and replace the upper intermediate steering shaft, Ford said.

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www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 49

NY Assembly and Senate Hear Bills to Make Insurance Co. Parts Mandates Illegal Two bills before the New York legislature seek to make insurance company requirements to use specific vendors or process for parts or materials procurement illegal. Assembly Bill 7234 (A7234), Introduced by Sen. John DeFrancisco and titled ‘An act to amend the insurance law, in relation to collision and comprehensive coverage on motor vehicles’ and Senate Bill 5786 (S5786), also sponsored by Sen. DeFrancisco, propose to amend Section 1, Subsection (a) of Section 2610 of the New York insurance law generally known as the anti-steering section that currently makes it illegal for an insurer to require a specific repair shop. The bills seek to ban insurance company requirements for collision repair parts and materials procurement programs, clearly aimed to block PartsTrader (see all cover stories this issue.)

AB 7234 AB 7234 amends the insurance law directing that no insurer providing collision or comprehensive loss shall require a repair facility to use a specific vendor or process for the procure-

ment of parts or other materials necessary for the repair of a motor vehicle. The proposed language below for the subsection adds a prohibition against specifying vendors or processes. The text in all capitals includes the proposed amendment. (a) Whenever a motor vehicle collision or comprehensive loss shall have been suffered by an insured, no insurer providing collision or comprehensive coverage therefor shall require that repairs be made to such vehicle in a particular place or shop or by a particular concern, NOR REQUIRE A REPAIR FACILITY TO USE A SPECIFIC VENDOR OR PROCESS FOR THE PROCUREMENT OF PARTS OR OTHER MATERIALS NECESSARY FOR THE REPAIR OF A MOTOR VEHICLE. SB 5786, introduced on June 14, prohibits insurers, providing collision or comprehensive coverage of motor vehicles, from requiring repair shops to use specific vendors or processes for acquisition of vehicle repair parts and materials. “These bills seek to clearly address within the insurance laws of New York

State that insurance company requirements to use specific-vendors should be illegal,” said Ed Kizenberger, executive director of the New York State Automotive Collision Technicians (NYSACT). “Requiring repair facilities to use an online marketplace to purchase parts or materials based upon the lowest price could force millions of dollars of business to move outside New York State. Repairers should continue to source parts and materials from vendors they know and trust to best serve the interest of the consumers.” Kizenberger said that his association supports efforts around the country to eliminate insurer mandates. However, while insurers should understand the potential impact mandating specific vendors or processes would have on a collision repairer’s efficiency when faced with multiple mandates, crafting legislation that would seek to make the mandates illegal is the only way to assure an efficient market. “Historically, when it comes to mandated products and processes, insurance companies don’t see the impact these requirements have on the industry as a whole,” stated Kizenberger. “When

multiple insurers implement multiple requirements, everyone loses, and ultimately the consumer is left footing the added cost created by the insurance companies that engage in this practice.” The bills add a prohibition against specifying materials purchases, going beyond making the specification of parts procurement processes illegal. “We wanted to make sure that the bill would address future concerns for the industry,” Kizenberger added. “There are already examples of insurance companies requiring repair facilities to use specific brands of paint in other parts of the world.” The bills have been referred to www.autobodynews.com the Assembly and Senate’s respective CHECK IT OUT! insurance committees.

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Historical Snapshot

—John Yoswick is a freelance writer based in Portland, Oregon, who has a body shop in the family and has been writing about the automotive industry since 1988. He is the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com). Contact him by email at jyoswick@SpiritOne.com.

October Retrospective on the Collision Industry with John Yoswick

20 years ago in the collision repair industry (October 1993) A proposal was introduced at the Collision Industry Conference (CIC) in Denver to develop a third-party evaluation of how shops are reimbursed for refinish and other materials. Steve Nadler, the owner of Painters Supply Company in Denver, distributed a 2-page memo suggesting that a national certified public accounting firm be hired to study the materials reimbursement issue. Nadler said this study could address the accuracy of such practices as basing materials reimbursement on paint labor hours, and establishing “ceilings” or “caps” on material charges. No data has been identified that can be used “to support the present reimbursement methods,” Nadler’s memo states. He suggested that a CIC subcommittee be formed to develop a request for proposals for the study from the

nation’s top CPA firms. Nadler said Rick Tuuri of ADP said his company that this step would provide the in- is all too aware of the expense and risk dustry with estimates of the cost of the of undertaking such a research project. 1- to 2-year project. ADP completed a massive revamping “I could say it’s not going to be of its paint labor system several years $5,000. I don’t think it would be ago, only to meet with unprecedented $500,000,” Nadler said when asked for industry resistance. some projection of costs. “On a full-fee basis, it might be anywhere from $100,000 to $150,000. But that’s purely speculative on my part, and depends on the scope of the project.” Joe Landolfi of Kemper Insurance said the study may put to rest an issue that has been hotly debated in reParticipants at the Collision Industry Conference (CIC) in cent years. “We have listened for the fall of 1998 had a chance to evaluate OEM and nonOEM parts that were installed on a vehicle during the quite a while about paint ma- Denver, CO, meeting terials reimbursement practices,” Landolfi said. “This may be a “This is just my personal opinion, chance to finally (establish) some denot the ADP company line, but it just finitive explanations and patterns.” But seems to me that you can spend an

52 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com

awful lot of money studying something to find an answer that nobody really wants to hear,” Tuuri said. - The project, at least how Nadler outlined it, does not appear to have ever moved forward.

15 years ago in the collision repair industry (October 1998) Jack Gillis of CAPA perhaps best summed up a demonstration of nonOEM parts at the Collision Industry Conference (CIC) in October when he said, “Not one of our better days.” The demonstration, arranged by the CIC Parts and Airbags Committee, involved installing several non-OEM parts, including a hood and fender that bore the CAPA-certified sticker, on an undamaged 1994 Toyota Camry. Fit and other problems with the parts were obvious, and after the demonstration Gillis said neither of the parts would be listed as certified in the next Certified Automotive Parts Associa-

tion (CAPA) directory. The fender, he said, had been decertified earlier in the week because of more than 20 complaints, including one the week of the CIC demonstration that was the second complaint after the manufacturer had supposedly fixed earlier problems with the part. —Test fits of parts continued at CIC meetings over the next two years; OEM parts generally were found to score higher in attendees’ evaluations of fit and finish, but occasionally nonOEM parts were rated as equal to—and in one case, better than—the OEM.

10 years ago in the collision repair industry (October 2003) In a special 2-year study of the autobody repair industry, the California Department of Consumers Affairs’ Bureau of Automotive Repair (BAR) documented that, in nearly half the transactions it studied, consumers were charged for parts and labor they didn’t receive. The BAR inspected 1,315 vehicles that qualified as part of a pilot program mandated by legislation. Of those, 551, or 42 percent, had parts or labor listed on the invoice that were

not actually supplied or performed. The average dollar amount of overbilling was $811.93. “We’re disturbed by the pattern of problems we found in some shops,” said BAR Chief Patrick Dorais. – As reported in Autobody News. While the “42 percent” statistic received a lot of attention, the National Auto Body Council (NABC) noted (in the article) that the vehicles inspected were not randomly selected among all those repaired in California but rather were vehicles brought to the BAR by owners concerned about possible fraud. “Considering the way the sample was skewed by the BAR’s methodology, it is more surprising that 57 percent of the repaired vehicles showed no problems at all,” Chuck Sulkala of the NABC said at the time.

5 years ago in the collision repair industry (October 2008) At least six shops in the Temple, Texas, area (about 70 miles north of Austin, population about 60,000) each notified State Farm they no longer would participate in the insurer’s Select Service program. Mark Holladay, manager of the Don Ringler Chevrolet body shop,

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said the final factor contributing to his decision was what he viewed as State Farm’s unwillingness to postpone a training class (on how to process total losses for State Farm) that the insurer was requiring the shops to attend at a time when Holladay and his five technicians were working 60- and 70-hour weeks repairing vehicles damaged in a recent hailstorm. “All we asked from the very beginning was that we be allowed to postpone this (class) for a month or two until things kind of got worked down after that hailstorm,” Holladay said. “We were all just at our max. We were told straight up, it was just, “No.” He said he has not seen any significant change in the amount of State Farm work the shop is doing. “I think it was a good decision,” Holladay said. Gene Sneed, who along with his wife Barbara, owns and operates B&G Collision and B&G Paint & Body in Temple, also removed his two shops from the Select Service program. This summer, he and about eight other shops in the area began jointly sponsoring newspaper ads urging consumers to use the shop of their choice.

“They will promise you the world in order to persuade you to go to one of their direct repair or network shops,” one of the ads states about insurers. “Don’t be steered wrong.” —from CRASH Network (www.CRASHnetwork.com), October 6, 2008.

State Farm Donates $70K to CREF, Lifetime Over $1M

State Farm Insurance Company recently donated $70,000 to the Collision Repair Education Foundation, pushing the company’s lifetime contributions to the foundation above $1 million. The donation will help support high school and technical college school programs, students and teachers nationwide. “State Farm’s support of collision repair education is consistent with our long-term commitment to education overall,” said Russ Hoffbauer, State Farm claims director. “Collision repair education is very important to State Farm and to our customers. As technology in the automotive industry changes rapidly, it is critical to have students entering the field and learning the latest repair methods to be able to provide remarkable service to our customers.”

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Team PRP Succeeds Because There’s No “I” in Team by Ed Attanasio

By realizing that there’s power in numbers, a small group of auto parts recyclers from Texas, Arizona and Minnesota started Team PRP (Premium Recycled Parts) in 2000, for the purpose of strengthening their role in the market and providing a seStacy Bartnik is ries of warranties Team PRP’s execuand other assurtive director. She ances body shops works closely with all of her 134 mem- can take advantage bers and reaches of and benefit out to body shops from. After startnationwide on an ing with just 16 loongoing basis cations, Team PRP now consists of 134 independentlyowned recyclers, covering every state in the Union and maintaining a combined inventory of approximately five million parts, with 60 percent consisting of collision parts. Each member of the team has been added over the years by invitation-only, after adhering to a stringent series of require-

ments and illustrating its ability to follow the group’s precepts. Stacy Bartnik is Team PRP’s executive director and a 24-year veteran of the collision industry and believes in the organization’s high standards, she explained. “It all starts with our nationwide standards, because body shops want to know that every one of our members uses an identical assurance program that ensures a top level of quality across the board,” Bartnik said. “Through our nationwide label, repairers can rest assured that they’re going to receive high-quality parts, delivered on-time and that their orders are going to be correct.” By getting recycled parts faster than their competition, body shops can reap a definite advantage by using Team PRP, Bartnik said. “All of our members share inventories regionally and nationally, with a nationwide delivery system that is both fast and dependable. Immediate parts availability with a 24-hour in-stock shipping policy means collision centers get what they need quickly. And by paying any supplements on our parts and communicating with the estimator and re-

pairer there are never any unpleasant surprises.” By backing every recycled part sold by its members, Team PRP brings an additional level of support to body shops that buy through the collective, Bartnik said. “Every single part purchased for an insurance claim comes with a minimum six-month, unlimited

tion, we’re currently offering Team PRP brand remanufactured engines and transmissions, complete with 3 year/ 100,000 mile warranties. The bottom line is, we back all of our parts and aren’t going to abandon you if they’re not ideal for a repair.” The parts are always guaranteed and any price quote from a Team PRP member is also valid for a minimum of seven days. “If the part we quoted has been sold to another customer, we’ll find you another part,” Bartnik said. “It’s all based on availability, but with our extensive nationwide cumulative inventory, it’s likely that we’ll have the part for Team PRP’s Northeast Region recently held their training you. Your call or e-mail will conference at Chuck’s Auto Salvage in Douglassville, PA elicit a quick response from mileage parts and labor warranty and one of our expert salespeople. And most members also offer one-year, with our hassle-free return policy, if three- year and lifetime parts and labor you get a part you don’t want, we’ll guarantees. We also offer limited replace it without question.” rental car coverage in the case of warTo find out more about Team ranty claim or delayed delivery. Every PRP and how they can help you to insheet metal part sold through Team corporate more recycled and re-manuPRP comes with a lifetime guarantee factured parts into your repairs, visit against corrosion perforation. In additheir web site at: www.teamprp.com.

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Attorney Spearheads Suit Against Carfax Bellavia Blatt announced today that as of Aug. 23, 2013, more than 420 plaintiffs, up from 120, have joined the mass action lawsuit filed against Carfax. The additional plaintiffs resulted in Carfax’s increased potential liability of more than $150 Million, up from $50 million previously. The lawsuit contends that Carfax’s exclusive contracts with industry insiders—among them, Cars.com and AutoTrader.com forced auto dealers to sign costly agreements for vehicle history reports. The alleged illegal, anticompetitive practices enabled Carfax to overcharge dealers. Establishing a monopolistic climate enabled Carfax to publish inaccurate and outdated reports. Customers’ demands for free Carfax reports, as advertised on television, compelled dealers to subscribe to Carfax’s service. Carfax’s anticompetitive practices increased costs to dealers, and ultimately consumers, by hundreds of millions of dollars. The lawsuit demands a jury trial and seeks treble (three times) damages, interest and attorney’s fees. Consequently, a small dealer would

potentially recover $105,000; a medium size dealer, $216,000; and a large dealer, $324,000; plus interest and attorney’s fees. Because of the potential gain, dealers are joining the lawsuit on a daily basis. The lawsuit’s key objectives are permitting competition and improving the accuracy of the reports. Leonard A. Bellavia of Mineola-based Bellavia Blatt is leading the lawsuit. Bellavia serves as general counsel to several national, state and regional dealer associations and represents many of the largest dealer groups in the country. The firm has extensive experience in auto-industry litigation and serves as co-lead counsel in a lawsuit against the federal government on behalf of 150 terminated Chrysler dealers. “Dealers may still join the lawsuit against Carfax,” Mr. Bellavia said. “However, they must act quickly.” To learn more about the lawsuit and to join it, call Bellavia Blatt at 516.873.3000, and ask for Brad Stern. For more information, visit DealerLaw.com. Carfax did not respond to a request for comment.

AMI and ASA Give the 2013 Emil Stanley Merit Award

The Automotive Management Institute (AMI) and the Automotive Service Association (ASA) have announced that Mark Steinke, production manager for Rydell Collision Center, Grand Forks, N.D., is the recipient of this year’s Emil Stanley Merit Award. Steinke has worked in the collision repair industry for more than nine years. He is currently completing the necessary requirements to earn his Accredited Automotive Manager (AAM) designation. When not working in the shop, he contributes his time to various community and industry organizations. As the scholarship recipient, Steinke will receive $1,000 to be applied toward expenses to attend educational sessions and view the latest repair technologies and equipment during the 2013 International Autobody Congress & Exposition (NACE), Oct. 16-18 in Las Vegas. “I am honored to be selected as the recipient of this scholarship.," said Steinke. "I’m looking forward to the training and networking opportunities that this scholarship makes possible. This opportunity will provide me with new knowledge acquired from many of the best instructors in the industry.” The Emil Stanley Award is made possible by a grant from ASA to AMI.

Three CARSTAR Stores Get Praise for Outstanding CSI

CARSTAR Auto Body Repair Experts shop owners gathered recently in Las Vegas to celebrate the company’s 24th anniversary and honor its top performers from across the U.S. Customer service is a foundation of the culture, and CARSTAR says it maintains an average customer satisfaction index (CSI) rating of 98 percent or better. Each year, CARSTAR honors the top stores in customer satisfaction in three tiered sales levels. The CSI ranking reflects the ongoing survey feedback received from customers based on their CARSTAR experiences. For level 1, the winner was City CARSTAR in Janesville, WI, owned by Michael Buggs. For level 2, the winner was Champion CARSTAR Collision in Hightstown, NJ, owned by Paul Edgecomb. For level 3, the winner was Utzig CARSTAR Collision Service in Janesville, WI, owned by Al Utzig. Said David James, vice president of marketing for CARSTAR, “Customer surveys and our own observations tell us the three store owners and their employees receiving these honors have generated an exceptional level of positive awareness in their communities and created repeat customers for CARSTAR.”

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Mitchell International Sold to Asset Management firm KKR For Estimated $1.1B

San Diego-based Mitchell International, which makes software for the auto collision industry, that it’s being sold to private equity firm KKR & Co. of New York for an undisclosed price. However, Bloomberg News reported the deal valued Mitchell at about $1.1 billion. Bloomberg cited sources who requested anonymity. Mitchell’s current owner, Aurora Capital of Los Angeles, agreed to sell the company after several months of looking for a buyer. Aurora, also a private equity firm, acquired Mitchell in 2007 for more than $500 million. Aurora acquired Mitchell in from Hellman & Friedman LLC. A little over a year later, in April 2008, Mitchell and CCC Information Services announced an agreement to merge the two companies. The Federal Trade Commission filed suit to block the merger and in March 2009, a judge ruled in favor of the government and the companies terminated their agreement to merge. Mitchell employs about 900 workers in San Diego writing software that helps insurance companies and body shops manage vehicle re-

pairs. It also makes software for handling medical insurance claims from auto accidents. Finally, it has a product that helps workers’ compensation insurers spot claims abuses. Alex Sun, president and chief executive of Mitchell, said the ownership change will help the company expand globally and boost its product line. “The current management team will stay in place,” Sun said. “There really will be no change in the operations or strategy of the company.” Mitchell expects revenue of $350 million to $400 million this year, Sun said. Mitchell has annual earnings before interest, tax, depreciation and amortization (EBITDA) of about $90 million, other sources said. Three companies dominate the auto claims software business— Mitchell, Solera Holdings’ AudaExplore division in San Diego, and CCC Information Services of Chicago. In January, Leonard Green & Partners LP, another buyout firm, acquired CCC from Investcorp, one of the Middle East's largest private equity houses, for more than $550

million. The buyers face a consolidating auto collision repair market that’s seeing fewer accidents—thanks to backup cameras and other accidentavoidance technology. “That claims shrinkage isn’t over yet,” said Stephen Applebaum, senior analyst at industry consulting firm Aite Group. “So you have a lot of people in this business trying to figure out what they’re going to do next.” For Mitchell, the strategy involves expanding into additional areas of property and casualty insurance. That approach mirrors what Mitchell did over the past decade to break into the injury claims software business. The company also has growth potential overseas. Today, the bulk of its business is centered in North America. “There are some health care opportunities because that industry is changing rapidly, and Mitchell has some good expertise,” Applebaum said. “Then there is the international piece. Mitchell’s name is Mitchell International, but they are not really international.”

Mitchell has recently beefed up its international footprint through an investment in GT Motive, an auto claims software firm serving Spain and other parts of Europe. Mitchell International traces its roots in San Diego to 1946, when Glenn Mitchell managed a Chrysler motor parts distributorship and saw that body shops needed better parts information and pricing data. He founded Mitchell Manuals, an auto parts information publishing firm. Mitchell died in 1971. The company has been sold several times over the years, as it morphed from paper manuals to digital software and databases. Today, Mitchell employs about 1,700 people worldwide. KKR has $83.5 billion in assets under management and invests a significant chunk of its money in technology firms. The sale is expected to be completed this winter. KKR & Co LP and Warburg Pincus LLC were among the private equity firms competing for Mitchell. Advent International Corp and Blackstone Group LP also participated in the auction for Mitchell.

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www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 57

Long Island’s Irv Gordon is about to Pass the 3,000,000 Mile Mark in his 1966 Volvo In a journey that has lasted nearly half a century, spanned the globe and elicited awe from generations of car lovers, Long Island’s Irv Gordon has a phenomenal achievement in his sight: driving 3,000,000 miles in the same shiny red 1966 Volvo P1800. When he drove off the lot in 1966, Gordon began a movement that continues to grow through the collective experience and passion of current Volvo owners. As Gordon approaches the milestone, Volvo Cars of North America (VCNA) is bringing the nation along for the journey with a special campaign in the months ahead. Consumers can visit 3MillionReasons.com for additional information about Gordon’s story and a map and image gallery from his road trip. “It’s not about getting to the three million miles; it’s about the trips that got me to the three million miles,” Gordon said. “I never had a goal to get to one million, to two million. I just enjoyed driving and experiencing life through my Volvo. “The best way to explore America is by car,” Gordon added. “I challenge everyone to go out and see as much as possible. Find your own journey and reason to believe because you only have one

life to live. No matter how many roads I’ve been on, there’s always one I haven’t taken. That’s what makes it exciting.” Gordon, a 74-year-old retired science teacher from Patchogue, N.Y., holds the Guinness Book of World Records recognition for most miles driven by a single owner in a non-commercial vehicle, and has driven more than 2.99 million miles in his shiny red Volvo.

Irv Gordon made the Guiness Book of Records for most miles driven back in 1998. Now the same car has nearly doubled that mileage

“I bought my Volvo P1800 on a Friday, and immediately fell in love,” Gordon recalled. “I couldn’t stop driving the car. It was a long holiday weekend, and I brought the car back to the dealership the following Monday for its 1,500-mile service.” With a 125-mile round-trip daily commute, a fanatical dedication to ve-

hicle maintenance and a passion for driving, Gordon logged 500,000 miles in 10 years. Besides being a Volvo, one of the main reasons the car has lasted so long is that Gordon has brought his P1800 to the same certified Volvo technician for more than 15 years. Nino Gambino, a technician with an “A” rating at Volvoville in Huntington, NY, the same dealership where Gordon purchased his car in 1966, said, “Because Irv follows the owner’s manual and truly cares for and loves his car, I have no doubt he’ll reach three million. Irv always says he takes better care of the car than himself! And he’s fun to ride with on trips because you don’t need a map.” In 1998, with a mere 1.69 million miles, Gordon made the Guinness Book of World Records for most miles driven by a single owner in a non-commercial vehicle. In 2002, he drove the car's two-millionth mile down Times Square to international media attention. For more information on Gordon’s journey, visit 3millionreasons.com/timeline. As Gordon points his car to its three-millionth mile, “I’m realizing this will be a record that no one will surpass,” he said. “So, these next few

thousands of miles will be special and sentimental for me. I’m looking forward to visiting my favorite places in big, beautiful America – from national parks to roadside cafes, from the Pacific Coast Highway to small roads that are miles from the Interstate. Send me an invite and maybe I’ll meet you for a cup of coffee.” Based on his calculations, Gordon plans to reach three million miles in Alaska this September. America’s last frontier is one of two U.S. states Gordon has never visited and a fitting backdrop for his three million mile moment. “For every mile Irv has logged in his Volvo, there have been just as many reasons why he’s been able to do it—from his meticulous care, onschedule oil changes and his safe driving practices—all the way to Volvo’s legendary attention to engineering,” said John Maloney, president and CEO of Volvo Cars of North America. “A distant predecessor to today’s models, the Volvo P1800 and Irv are the living embodiment that Volvos are enduring and designed around you. We look forward to following him on this journey, and finding ways to bring our customers and car enthusiasts everywhere along for the ride.”

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Trust your order to the collision parts specialists at these fine Dealers 58 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com

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www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 59

MD Shop Owners Prevail Against Short Pays—No DRP, No Problem by Chasidy Rae Sisk

Anyone who has been involved with the collision repair industry for any amount of time knows how frustrating it can be when insurers refuse to pay the full amount billed for a repair. Many repairers count their losses and move on to the next vehicle, but Mark Schaech Jr., co-owner of Mark’s Body Shop in Baltimore, MD, refuses to take this insult lying down. While he and his partner, his father, would prefer to avoid the necessity of taking legal action, he’s definitely “not taking it anymore!” Schaech knows this is a common problem that shop owners face, so he’s glad to share his experience and advice with collision repairers across the nation. In May 2013, Schaech won his first short-pay lawsuit against GEICO for $392.95. Since then, Schaech won a case against State Farm when the insurer filed a replevin lawsuit (replevin is a legal remedy for a person to recover goods unlawfully withheld from his or her possession) against him, claiming his charges for storage were unreasonable and not competitive

within the market area. Mark’s Body Shop was holding a car while awaiting payment, but when State Farm settled with the car’s owner and took title, they refused to pay Schaech. The repair contract was the deciding fac-

Mark Schaech Sr. with his son Mark, Jr.

tor in Schaech’s victory, playing a huge role “like it does in any other case,” according to Schaech, who added that “it is so important that your documents are in line.” In addition to being paid the full amount owed, Schaech was also reimbursed for his attorney’s fees. He feels the victory was very important since a loss would have given State Farm, and possibly other insurers, precedent for refusal to pay on total losses.

Schaech credits the CCRE (Coalition for Collision Repair Excellence) for his knowledge of such legal actions, noting that “the first time I heard of a shop taking control of their business was at a CCRE meeting.” He followed that up by hiring an industry consultant, Barrett Smith, of Auto Damage Experts and a good Maryland attorney, Anthony DiPaula to support his efforts to take control of his own business. He is also grateful to all of the “attorneys fighting a successful fight.” His next case involved an assignment of proceeds, ammunition he obtained from industry lawyer Erica Eversman, but it doesn’t stop there! Schaech is currently pursuing numerous lawsuits, including one involving an older claim of two short-pays from GEICO and a similar suit against State Farm. The lawsuits that Schaech is currently pursuing are older claims since he has not had any recent problems with GEICO, which he attributes to his successful case in May. Most insurers are paying his operation costs, though labor rates with insurers refusing to pay his full labor rate continue to be a problem. The one exception he

notes is State Farm who always leaves a short-pay, but for now, the customers are paying the difference. Schaech is not taking any additional assignments of proceeds at this time as he has several in progress. Schaech notes, “I would say that 90% of the time, insurers in our market refuse to reimburse our customer for their entire repair bill. These short pays are for reasonable and necessary rates and procedures required to repair our customers’ vehicles to pre-loss condition to the best of human ability. It seems that the larger the carrier, the worse the behavior. It seems like as opposed to fairly paying claims, these carriers would prefer to spend those dollars on advertising campaigns.” Regarding what may cause him to hesitate before filing a lawsuit, Schaech admits that it can be expensive and time-consuming to sue an insurance carrier, especially when the short-pays are small amounts, but one way to combat that is to pile several claims into one case, making it more efficient. His ultimate goal is to handle these cases on his own; as he attends the trials, he is educating himself via his attorney in

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hopes of being able to handle future suits in small claims court on his own. “All I will have to spend is time which I’m more than willing to do in order to ensure my customers are being taken care of,” Schaech notes. The short-pay lawsuit in May was the first that Schaech actually pursued to trial. Because these types of cases are new to the Maryland court system, “it takes a bit of educating the courts that we are contracted by our customers to provide a proper and safe repair and do not have any contract with any insurance companies. But the misconception is that, because the insurance company is paying the bill, they have a right to inject themselves into the repair process when this is simply not the case. Because we are the experts, we carry all of the liability associated with the repair. We are the ones who have to provide a warranty to our customers and stand behind the repairs. We are the ones who know our cost of doing business. Therefore, only a shop can know what to charge for a given repair. The duty of the insurance company, by contract, is to make the customer whole, not to control the price or dictate the repair methodology, all while not sharing in

the liability for those repairs.” Though most insurance companies insist that they don’t pay for certain operations or that a shop is overcharging, Schaech insists, “the collision repair community knows that these are word tracks that insurance adjusters have been trained to use for years, and in most cases, these carriers do pay for that, and the shops that are asking to be compensated are not the only ones asking for these operations and rates.” Schaech was happy when the judge ruled in his favor: “It felt good that the Judge got it. I also feel confident that the courts will continue to find in our favor as courts are in many other states all over the country. It takes a close look at the law and the insurance policies to realize that determining the cost of repairs and the repair methodology is not the business of insurance. In many policies, the insurance company has the option to take the customer’s vehicle and repair it themselves, but if they chose that option, they would have to accept all of the liability that goes along with the repair which is why they do not select that option.” As a proud member of CCRE and SCRS, Schaech strongly encourages

other collision repair experts to stand up for their rights. “I would encourage other shop owners to know their state laws and get a good attorney to work with. There are many shop owners across the country who have been forced to go legal, and these repairers have been an inspiration and have always made time to answer my questions and lend advice. There is unbelievable support available to those who want to learn.” Schaech’s desire to become more involved has also led him to become involved with the Washington Metropolitan Auto Body Association (WMABA) where he sits on the Board of Directors. Schaech also assures other shop owners that the trial itself was not very difficult. “It was easy for us to explain who the expert repair professional is and who decides what the Final Bill should be, and the judge agreed that because GEICO doesn’t know our costs, they cannot possibly determine what we are able to charge.” It is also important to note that Schaech’s lawsuit has not really affected his relationship with GEICO or any other insurers. His problem isn’t with the individuals that he deals with but the company’s policies on handling claims.

Schaech also takes issue with his state’s laws regarding insurance companies breaching contracts and how this affects consumers’ rights. “If a Maryland Insurance Company breaches their contract with the policy holder, and the consumer wants to hold them accountable in a court of law, the consumer is not able to recover attorney’s fees in our state. This really inhibits consumers from taking action, even when it is obvious that they are in the right… I wish the carrier would spend some of those billions of dollars they spend on marketing to properly compensate consumers for quality and safe repairs. I see a lot of poor repairs that have been completed in shops who were not properly compensated for repairs, and this is a consumer problem, especially as it relates to consumers’ safety and the value of their vehicles.” When asked what measures should be enforced to prevent the necessity of short-pay lawsuits, Schaech notes, “If insurers would get back to the business of insurance, selling policies and paying claims, and stay out of the collision business, we would not have to go this route. The reality is that, by law, consumers have the right See MD Short Pays, Page 62

www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 61

ASA President Risley Writes to State Farm’s Ed Rusk Jr.

ASA’s Dan Risley has made ASA’s position clear that it is against all forms of direct repair program requirements to use specific suppliers or products. In a letter dated September 11 to Ed Rust Jr., chairman of the board and chief executive officer of State Farm Mutual, Risley commends the U.S.’s leading private passenger automobile insurer for its past decision to eliminate its requirement to use a specific estimating platform by its direct repair shops. The association also acknowledges State Farm’s scoring system that promotes competition among Select Service repair facilities. However, the association comes out firmly against State Farm’s recent requirement to use the PartsTrader online parts marketplace, stating it will increase a State Farm shops cycle time, negatively impacting customer satisfaction and increasing the insurance company’s costs in the long run. The letter states, “ASA would like to acknowledge State Farm as one of the first companies in the country to not mandate that a collision repair facility utilize a specific estimating platform. For many years, several top 10 insurance carriers required a specific estimating platform to participate in their direct repair program. In addition, State Farm was one of the first to implement a scoring sys-

tem that allows Select Service repair facilities to compete against each other in a transparent and real-time environment. These decisions clearly elevated State Farm’s position in the industry as a thought leader and facilitated positive change. The letter continues, “In light of the recent announcement of the national rollout of Parts Trader, ASA is taking a firm stance against insurance company mandates that limit a repairer’s right to choose their vendors, distributors and suppliers.” ASA includes three suggestions for State Farm to consider as a starting point to address the industry’s concerns. ● Immediately eliminate mandates requiring collision repair facilities to purchase or source parts using a specific third-party vendor. ● Encourage the use of these types of programs on a voluntary basis with a financial incentive. ● Heavily weight your scoring system to reward repair facilities that are leading their respective markets in parts cost, alternative parts usage, length of rental and cycle time. All of which are key operational metrics that drive overall repair costs. The complete text of the letter can be read and downloaded at www.autobodynews.com.

Continued from Page 61

MD Short Pays

to choose the body shop that they feel will do the best job, and by contract, the insurance company is supposed to indemnify the policy holder when there is a loss. So, I say ‘just pay the bill Mr. Insurance Company.’” In 1975, Schaech’s father opened Mark’s Body Shop in a two-bay garage. After six years of refinishing cars through high school and college, Schaech managed the family business from 1999–2002 when they moved into their current 17,000 square foot facility. At that point, Schaech Jr. became his father’s partner. Though Mark’s Body Shop repairs approximately 1000 cars annually, grossing around $3 million in sales, they do not participate in any DRPs, but that wasn’t always the case. “There was a time when we participated in as many as five DRP programs, but over the years, these programs developed into bargain basement repair programs. We were asked to use more aftermarket and junk yard parts which we find to be a lower quality alternative to new OEM

parts. We were instructed to utilize remanufactured wheel and junkyard suspension components which we believe to put our customers in harm’s way. Finally, we were asked to work so cheaply that it became difficult to invest in new equipment and training which is imperative to repair today’s modern vehicles.” To shops that are currently facing difficulties obtaining full payment on repairs, Schaech offers the following advice: “There are numerous organizations and individuals in our industry who really care about consumers and repair facilities. These leaders are only a phone call or email way and willing to provide sound advice when a shop owner or consumer needs some sound advice.” “The reality is not all shops are the same; we all have different costs, different levels of quality, different equipment and training, different certifications, and different fixed costs. It just doesn’t make sense that we can all work for the same price.” Mark’s Body Shop 4025 Mortimer Ave. Baltimore, MD 21215 410-358-5155 www.marksbodyshop.com

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www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 63

Franchitti Reunites with The Henry Ford and the Jim Clark Lotus-Ford 38/1 Indianapolis Winner as Part of Clark Tribute at 2013 Goodwood Revival

Three years after an emotional run at Indianapolis Motor Speedway, IndyCar Series star Dario Franchitti has been selected by The Henry Ford to once again drive one of Jim Clark’s most famous race vehicles in the 2013 edition of the Goodwood Revival in England, September 13-15. The popular Scottish driver and three-time Indianapolis 500 winner, was previously chosen to drive this historic car in 2010 when it returned to the Indy track for the first time since Clark drove the car to victory there in 1965.That victory, the first for a rear-engine car, and the first Indy win for Ford Motor Company, helped changed the sport of IndyCar forever. “We are thrilled that Dario accepted the offer to drive the Lotus at Goodwood,” said Christian Overland, executive vice president of The Henry Ford. “We know how much the car means to him, and also how much the chance to help honor his hero Jim Clark means to him and his family.” “The drive at Indy was a highlight of my life,” said Franchitti, who currently drives for Target Chip

Ganassi Racing. “I’ve won the Indy 500 three times, but to drive that car there that day was something very, very special. Back in 1965, that car was cutting edge technology. It still feels very sharp and is bloody quick, especially in a straight line. You open

up the four-cam Ford and hear that glorious noise, it’s just incredible. I was driving the car that day in Indy very much below its capability because it is a one-off, special piece of history. The drive that day was a very personal thing for me.” In 1965, the Lotus-Ford, driven by Scottish-born Formula One star

Jim Clark, won the Indianapolis 500. The Henry Ford acquired the car in 1977 and in 2009, the Ford engine was removed from the vehicle and shipped to Indianapolis, where conservation work began at Race Car Restorations, Inc. The chassis was restored by Classic Team Lotus run by Clive Chapman, son of Colin Chapman, founder of Lotus. The creation of the Lotus-Ford stands as an excellent example of innovation and collaboration. Lotus and Ford Motor Company were ultimately brought together in the early 1960s by legendary American road-racer Dan Gurney. At that time, Gurney thought that the sleek, front-engine American Indianapolis race cars could be defeated by proper application of rear-engine, European Formula One technology. He introduced Ford engineers to Colin Chapman, founder of Lotus and one of the world’s most innovative

race car builders. The result was a lightweight, aircraft-inspired Lotus chassis, with four-wheel independent suspension and powerful rearmounted Ford V8 engine. The LotusFord effectively killed the traditional Indy car and established a new paradigm for American race cars. “The drive this weekend at Goodwood will be about demonstrating the car for all those fans of Jimmy, and I am excited about doing it,” said Franchitti, currently seventh in the IndyCar Series standings with two races left. “Goodwood is a fast, fast track that hasn’t changed much since back in the day, so I’ll be taking it very easy. It’s a demonstration run with a bunch of cars that were very important to Jimmy’s life and his career. I can’t tell you how privileged I feel to be able to do this.” Franchitti will take the Lotus 38/1 on the course during the Jim Clark Tribute Parade throughout the weekend. The Lotus-Ford 38/1 Indy car will be on display all weekend at Goodwood in the paddock area of the event.

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Automotive Instructors Get Special AAPEX 2013 Invite

ASA Launches New Website, Improves Repairer Tools

The Automotive Service Association (ASA) has provided independent repairers access to a web-based advocacy program at the federal and state levels for a number of years. After researching various online advocacy programs, ASA has been working to remodel its legislative and regulatory website, www.TakingTheHill .com. The new website is more userfriendly and designed to move information quickly to members and to policymakers. ASA members are encouraged to visit the newly designed site and sign up for free legislative alerts. “With our Washington, D.C., office on Capitol Hill looking out for repairers, the industry looks to ASA for grassroots advocacy and information. Redesigning this site is one more step in the association’s commitment to provide members with the tools they need to stay informed and be heard on Capitol Hill,” said Angie Wilson, ASA’s vice president of marketing and communications. The TakingTheHill.com website redesign was donated by Autoshop Solutions, the website design and Internet marketing agency that recently redesigned ASA’s main website, www.ASAshop.org.

Automotive instructors are invited to attend Inside AAPEX for Automotive Instructors on Wednesday, Nov. 6 and Thursday, Nov. 7 at the Automotive Aftermarket Products Expo (AAPEX) in Las Vegas, Nev. Attendees will learn about new technology, meet with manufacturer product managers and trainers, and earn National Automotive Technicians Education Foundation (NATEF) credit hours. The program features education sessions offered as part of the AAPEX Learning Forum that address new technology and timely repair issues including “Direct Injection Update,” “Wallet Flushing?” “New Exhaust Technologies Including the New Clean Diesel,” “Wiring Diagram Color Coding: A Tool for Understanding Electrical Circuits” and “TPMS Smart Maintenance and Repair.” All of the sessions have been approved by NATEF for continuing education credit hours. Each session is accredited for one hour. Attendance certificates will be available at the conclusion of each session. Instructors will have access to the AAPEX show floor to view products and talk with manufacturers.

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Caliber Collision Opens Two New Locations in CO and CA

The SEMA Show annually features a New Products Showcase to provide exhibitors with a designated display to highlight new product debuts, yearly updates and the latest versions of their best sellers. All of the products entered into the New Product Showcase are photographed and include product details and key information on how to locate and contact exhibiting manufacturers. Buyers can obtain a wealth of product information that will be relevant well into 2014 by taking advantage of the free scanners available. Provided via “Free Scanner Pickup” booths located around the New Products Showcase, buyers can scan all of the products they are interested in, while examining and researching additional products exhibitors have to offer. There is no limit to the number of scans buyers can conduct, and the information is gathered electronically, allowing for it to be retrieved or printed immediately. With new exhibitor and product information in hand, buyers can concentrate on making deals and spend more time on the Show floor connecting with existing partners and new suppliers. More information is available at www.SEMAShow.com.

Caliber Collision Centers continues its aggressive expansion with the announcement today that it has acquired Mattocks Brothers Autobody in Denver, CO and opened a new location in Tustin, CA. “Today’s opening of two new Caliber locations in Colorado and California reinforces our commitment to add centers that provide the operational consistency, customer focus and cost management our clients require in today’s competitive insurance marketplace,” said Steve Grimshaw, CEO of Caliber Collision Centers. Caliber Collision’s new 13,000 square foot West Denver location opened today at 4171 Morrison Drive, Denver, CO. Caliber’s new 16,000 square foot Tustin location also opened today at 5 Auto Center Drive, Tustin, CA. “Our new Denver and Tustin centers increases Caliber Collision’s locations to 132 as we continue to restore our customers to the rhythm of their lives in Colorado and California,” added Mark Sanders, Caliber Collision Centers’ Chief Operating Officer.

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BLS Says Collision Industry Production Rose in June

According to the latest data from the U.S. Department of Labor Bureau of Labor Statistics (BLS), the total production for the auto body repair industry rose in June after declines in both April and May. The total average weekly production in June increased to 6.59 million man hours. The industry’s total production, which we define as the total average weekly hours by month multiplied by the total number of production and non-supervisory workers employed each month, closed June, 2013 at 6.59 million man hours. This represents an increase. from the 6.5 million man hours reported in May. Production hours in June 2013 stood at 1.4 percent above 2012. The decline came chiefly from an increase in average hours worked each week by production employees, up to 38.7 hours in June from 37.4 hours in May. The number of production and non-supervisory employees actually declined in June to 170,300 from 173,800 in May. Added together, the average weekly production over the past twelve months now totals 78.96 million man hours. That is 3.5 percent higher than the 12 month total a year ago.

Daimler to Sell Self-Driving Production Car by 2020

Daimler plans to start selling a selfdriving car by 2020 to help its Mercedes-Benz brand regain the top spot among premium carmakers, development chief Thomas Weber said. “We want to be the first to launch autonomous functions in production vehicles. You can be sure we will accomplish that in this decade,” Weber said. Carmakers and suppliers are working on ways to make driving safer and more comfortable through automation and the race is on to bring the technology to the mass market. Daimler is focusing on so-called highly automated driving, in which cars master situations such as cruising the highway or maneuvering through traffic jams while the driver relaxes. The car would recognize difficult situations such as dealing with traffic lights or urban driving among pedestrians and cyclists, and hand control back to the human behind the wheel. Daimler is not alone in its ambitions. Nissan, for example, has also announced plans to launch a car completely guided by computers this decade. The technology was shown at the Frankfurt auto show, with production estimate to take 10 to 15 years.

GA and CA Most Expensive States to Own a Car

The cost of buying and operating a car varies from state to state and you might be surprised to learn which state is the most expensive. Driving in Georgia will take a bite out of your pocketbook. A new survey by BankRate.com has found that Georgia is the most expensive state in the U.S. to operate a motor vehicle, followed by California. Oregon is said to be the most affordable for those hitting the roads everyday. The cost of gas, insurance, repairs, taxes and fees are all factored into what it costs Georgia residents an average of more than $4,000 per vehicle per year. Residents of Oregon benefit from the lack of a state sales tax, low auto insurance and the fact that they drive 16-percent fewer miles than the national average. Those factors land the state on the bottom of the list at $2,204 annually. The national average for operating a car is $3,201 according to the survey.

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NABC Partners with ATT on Anti-Texting Campaign

As an advocate of the ‘It Can Wait’ movement, the National Auto Body Council issued a call for its members and others in the collision industry to join the nationwide effort to curb texting and driving on Drive 4 Pledges Day, September 19. Drive 4 Pledges Day is a national day of action that aims to have every driver make a personal commitment to never text and drive and to also recruit others to do the same. The NABC is urging drivers to make the pledge online at go-att.us/NABC, a dedicated link created by AT&T specifically for the National Auto Body Council’s efforts. The campaign is a collaborative effort between major wireless carriers AT&T, Verizon, Sprint and T-Mobile. As part of the nationwide Drive 4 Pledges Day, NABC member companies will be implementing a variety of promotional events to educate employees and the public—particularly teens—about the dangers of texting while driving. While texting is by far the Give usbiggest your distraction opinion on on the road, NABC notes that any distraction is dangerous, including phone calls, reading e-mails, eating, changing CDs, fixing makeup, etc.

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ASRW’s New Format Will Be ‘Vastly Different Experience’

The Opening General Session, sponsored by Axalta Coating Systems, will now offer two concurrent sessions, one for Collision, one for Mechanical, that will combine the best components of a keynote presentation with the industry-specific focus of a forum. The forum’s headlining guest speaker will be Mike Anderson. Admission to the new Opening General Session/Industry Forums are included in all registrations, and all attendees are invited to attend. “Vastly different from past years, we’ve completely redesigned the Opening General Session and attendees can expect a much different experience. Mike Anderson is extremely well-respected, and attendees are going to want to hear his message,” says Dan Risley, ASA president. “The format of this key event also aligns with our mission to create exceptional value for our audience and provide invaluable networking opportunities for the industry and by the industry.” “Axalta Coating Systems is honoured to sponsor this year’s Opening General Session,” said Mike Bennett, North America marketing director, Axalta Coating Systems.

Mitchell Announces its New Reputation Manager Package

Mitchell has announced the general availability of RepairCenter™ Reputation Manager. The new package offering combines real-time text and email updates with advanced customer insights from satisfaction surveys and social media data to improve the repair shop and vehicle owner processes. The tool should help increase repeat business and referrals by providing actionable insight into the customer experience. By adding online customer satisfaction surveys and incorporating comprehensive reporting and analytics technology, repair shops can better identify steps during the repair process that can be improved. “Customer retention and business growth go hand-in-hand, but until recently, repair shops haven’t had the breadth of automated tools needed to improve upon the customer experience,” said Anlin Sethi, Senior Manager of Product Management, Auto Physical Damage solutions. “By incorporating real-time interaction and engagement, alongside robust survey analytics, Reputation Manager allows repair shops to improve their reputation and build stronger customer bases.”

What are the Best Parts of Driving? Mazda Parts.

Sherwin-Williams and Online Blueprint Provider Team Up Sherwin-Williams Automotive Finishes A-Plus™ Network and VehicleOwnersGuide.com, an online provider of blueprint documents that help collision repair shops identify any missed revenues, are providing access to the provider’s Open Claims Gateway™, a full feature claims portal that includes claims workflow, dispatching, estimate review, vendor e-Coupons, consumer translations and analytics. The new dispatching system is already populated with the A-Plus Network’s leading collision repair facilities and will provide a turnkey repair network for insurance companies throughout the U.S. and Canada. The Open Claims Gateway portal will dispatch cars to A-Plus shops, and then these facilities and insurance companies can use the system to manage the claims. “Open Claims Gateway will be provided free of charge to A-Plus Network facilities, and there is no contract to sign. Says Troy Neuerburg, Director of Sales Excellence at Sherwin-Williams Automotive Finishes, “This system offers numerous benefits.” For information call call 1-800-SWULTRA (1-800-798-5872).

ABRA Helps Raise $30,000 for Veterans’ Service Dogs

ABRA Auto Body & Glass helped to raise more than $30,000 during the first annual Bent Creek Charity Golf Tournament to benefit Helping Paws Inc. More than 100 golfers and guests gathered at The Bent Creek Golf Course in Eden Prairie, MN, on August 12 to support Helping Paws of Hopkins, MN, according to officials. This inaugural golf event is part of Helping Paws’ initiative to connect the healing power of service dogs with disabled veterans suffering from Post Traumatic Stress Disorder. The cost of raising and training a service dog is estimated at $30,000. These canine companions can help to transition returning veterans back to civilian life. “We are absolutely thrilled and proud to partner with important charitable organizations like Helping Paws,” said Duane Rouse, president and CEO of ABRA. “We recognize the amazing accomplishments of our military veterans who served with courage and their unending drive to make a difference for our country. Supporting these training dogs to help heal our heroes is a privilege.”

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Chrysler’s Great August

Chrysler Group LLC reported U.S. sales of 165,552 units, a 12 percent increase compared with sales in August 2012 (148,472 units), and the group’s best August sales since 2007. The Chrysler, Jeep®, Dodge, Ram Truck and FIAT brands each posted year-over-year sales gains in August vs. a year ago. The Ram Truck brand’s 29 percent increase was the largest sales gain of any Chrysler Group brand during the month, now 41-consecutive gains.

Group 1 Auto Hits New Highs

Shares of Group 1 Automotive Inc. are at a 52-week high of $61, hit on September 13, driven by solid second quarter results, accretive acquisitions and a marked recovery for its largest customer, Toyota Motor Corp. The $1.38 billion company is one of the country’s largest automotive retailers, selling new and used cars and light trucks; vehicle financing, service and insurance contracts; provides automotive maintenance and repair services; and sells parts.

GM Recalls Some Cruzes

GM is recalling certain model year 2011-2012 Chevrolet Cruze vehicles with 1.4L DOHC gas turbo engines and 6T40 front wheel drive automatic transmissions and an electric vacuum pump to provide supplemental vacuum for brake assist, when needed. In the affected vehicles, the pump may not activate, resulting in an intermittent reduction or loss of brake assist. A loss of braking assistance will require extra pedal force and/or distance to bring the vehicle to a stop.

Chrysler Recalls 2012 RAMs

Chrysler is recalling certain model year 2012 RAM 3500 trucks manufactured May 4, 2012, through August 7, 2012; and model year 2012 RAM 4500 and 5500 trucks manufactured May 3, 2012, through August 7, 2012. Due to a loose snap ring inside the transmission, there may be a loss of power transfer through the transmission to the wheels. An unexpected loss of power transfer may increase the risk of a crash.

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