Update September 2010: The Ninth Circuit has denied rehearing.
The Ninth Circuit has reversed the dismissal of a putative class action alleging that major auto insurers conspired to use inferior repair parts while telling their customers that they were providing premium repair service that would return cars to “pre-loss” condition. As a result of the conspiracy, the plaintiff’s alleged, they paid more for auto insurance than they would have in a competitive market, violating California’s state antitrust law. The district court had dismissed the case on the ground that it effectively challenged insurance rates approved by the state insurance commission, which cannot be challenged in court. The Ninth Circuit held that the state insurance commission does not take account of potentially anticompetitive behavior in deeming a rate reasonable, and thus plaintiffs were entitled to raise their antitrust claims. The appellate court made clear, however, that it was not determining whether the complaint otherwise stated a claim.