Texas judge’s ruling partially favors Allstate and Sterling

Allstate and Sterling Autobody Centers can communicate benefits of its shops, a federal district judge in Texas has ruled.

In a news release, Allstate reported that on March 9, 2006, the judge in Allstate, et al. v. Abbott, et al. delivered a split-decision. The United States Federal District Court for the Northern District of Texas affirmed that while portions of Texas House Bill 1131 are constitutional, it also ruled that certain sections of the law violate Allstate’s and Sterling’s First Amendment rights to free speech. Allstate and Sterling are evaluating all options with respect to this ruling, including an appeal.

HB 1131, approved by the 78th Texas Legislature in 2003, addresses ownership of auto repair shops by insurance companies.

“The judge has upheld our constitutional right to free speech, meaning that Allstate and Sterling can communicate and market the benefits of an insurer-owned auto repair facility with our customers and claimants in the State of Texas,” said Jim Murray, assistant vice president of claims for Allstate.

“However, we strongly disagree with the judge’s decision to uphold provisions of Texas HB 1131, which we believe violate the commerce clause of the U.S. Constitution,” he continued.

While Allstate and Sterling must abide by the requirements of Texas HB 1131, including not opening any new Sterling stores in Texas, Allstate remains committed to Sterling and its employees. Sterling continues to provide the opportunity of a superior vehicle repair experience for Allstate customers and claimants. This is shown in a recent independent customer satisfaction survey where Sterling performs better than the industry in Texas.

“Allstate and Sterling continue to believe Texas HB 1131 unconstitutionally limits Texas consumers of access to a lawful and legitimate, high quality, customer-focused, cost-effective repair option,” Murray said. “We will continue to fight the special interests that are trying to suppress fair competition in a free marketplace.”

Allstate and Sterling filed a legal challenge to Texas HB 1131 on Aug. 29, 2003, alleging that Texas HB 1131 was unconstitutional because it violates both Allstate’s and Sterling’s First Amendment right of free speech and the commerce clause by interfering with interstate commerce.