Volume 34, Number 3, March 1999



Texas Glass Shops Appeal

After U.S. District Judge Richard A. Schells dismissed their case last September, eight independent Texas glass shops have filed an appeal against four large networks, charging them with violations of the Sherman Antitrust Act and Clayton Act.

The eight glass shops filed their appeal in the Fifth Circuit Court of Louisiana on January 4. According to published reports, the defendants will have 30 days to respond to the appeal and then the plaintiffs will have 15 days to respond. The case will then be reviewed by three judges instead of one.

"Basically, our position is that there is sufficient evidence to precede with a jury trial," said Dennis Dylewski, attorney for the glass companies. "The judge said that there was not a fact issue to go to the jury. However, the basis of our appeal is that we believe the evidence submitted to the court is enough to warrant a fact issue."

"Whenever you are in the appeal process, arguments are legalistic and it is a question of the application of the law to the specific facts and whether or not it creates a trial for jury," said Dylewski. "In the Fifth Circuit Court of Appeals you have three judges and all three of them take a look at the case and determine whether or not there was a mistake made by the district court granting summary judgement."

Dylewski only has a vague idea of when the three judges will make a decision on his clients appeal. "We expect an oral argument in two to three months," he said. "After that we can expect a decision from anytime between one week or a few months."

The eight Texas-based glass companies are: Stewart Glass & Mirror, Inc. of Jasper; Texas Mobil Auto Glass Inc. of San Antonio; A-1 Glass Company of Beaumont; Freddy’s Auto Glass & Mirror Inc. of Waco; Nederland Glass Company Inc. of Nederland; Lone Star Glass Inc. of Houston; Auto Glass Specialists of Irving; and Allied San Jacinto Glass Company Inc. of Beaumont.

The suit alleged that four glass companies–U.S. Auto Glass Discount Centers Inc. of Chicago, IL; Windshields America Inc. of Bedford, NH; Safelite Glass Corporation of Columbus, OH; and Harmon Glass Company Inc. of Minneapolis, MN–formed and operated glass repair network systems that violate sections one and two of the Sherman Act, as well as Texas law. Three of the defendants, U.S. Auto Glass Discount Centers, Windshields America and Safelite have since been merged under the Safelite name.

The original suit was filed in September of 1995 in the Eastern District Court in Beaumont, TX. The plaintiffs sought to recover $10 million ($1.5 million each) in damages for boycott and tortuous interference with contracts. They claimed vertical agreements between the defendants and third-party insurance companies in restraint of trade and horizontal agreements between each defendant company in restraint of trade.

In September 1998, the defendants’ motion for summary judgement was granted with costs taxed against the plaintiffs. The opinion found that the plaintiffs’ evidence did not support their allegations of horizontal conspiracy through the network’s system of competing defendants shops. Regarding the claim on vertical agreements, the opinion said, "Contrary to plaintiffs’ arguments, they have not produced evidence that these vertical agreements were the product of illegal horizontal agreements between the defendants."

The plaintiffs decision to appeal was met with calm by the defendants. "We are just allowing the due process to take care of itself," said Gary Jacobson of Harmon Auto Glass. "There was a summary judgement the first time that said there was not enough to proceed and nothing has changed to alter our opinion of that."

"We believe the lower court made the right decision in the first place and we are confident we will prevail upon appeal," said Dee Uttermohlen of Safelite.

DuPont Introduces SentryGlas® Plus

DuPont Automotive is strongly advocating that the industry use an ionomeric interlayer in automobile windshields, in order to increase automobile safety. Responding to this need, the company announced the introduction of its SentryGlas Plus ionomeric interlayer, which DuPont says will deter vehicle thefts and allow manufacturers to meet glass-performance standards at a reasonable cost.

The product introduction is a result of the responses garnered from the fifth annual joint survey between DuPont Automotive and the Society of Automotive Executives which polled automotive engineers and designers. Thirteen percent of the respondents named safety regulations as the number one challenge facing the auto industry—a 50 percent increase from last year.

According to DuPont, the FBI estimates that forced entry is responsible for $7 billion in motor vehicle theft and $1.5 billion in lost articles. The company says SentryGlas Plus will deter vehicle theft, along with reducing the potential of passenger ejection from a vehicle in an accident.

"It’s time we stopped accepting the inherent fragility of glass," said Walter Fields, vice president of automotive engineering materials, DuPont Automotive.

Prosecutions Being Made for Insurance Fraud

While many may not know that insurance fraud is a serious crime, two recent convictions in the states of Pennsylvania and Massachusetts may highlight its severity.

Bruce Greenbarg, owner and operator of Windshield Wizard in Butler County, PA, an automobile windshield replacement company, was arrested and charged with 224 counts of insurance fraud by the Attorney General’s insurance fraud unit. Greenbarg submitted invoices that he replaced windshields on these occasions, when no windshields were replaced. Each individual claim was less than $2,000, but the total aggregate claim was over $170,000. The fraudulent activity occurred between 1995 and 1997.

He pled guilty and was sentenced to five to ten months incarceration, five years probation and ordered to pay a $1,000 fine and nearly $200,000 in restitution to Erie Insurance, according to The Commonwealth of Pennsylvania Insurance Fraud Prevention Authority.

In a Massachusetts case, the manager of a Quincy glass company was indicted on multiple counts of larceny and fraud in Norfolk Superior Court. The manager is accused of tinting his customers’ windows for free and paying for the work by submitting fraudulent broken glass claims on their behalf. The customer’s insurance companies would have paid the glass company directly.

The Insurance Fraud Bureau of Massachusetts received an anonymous tip from a customer. The bureau estimates that the manager was billing insurers up to $4,000 a week in claims.

The manager as well as three customers were indicted on September 17, 1998 in Norfolk Superior Court.

Safelite Suffers Net Loss of $11.2 million

Safelite Glass Cor-poration of Columbus, OH, has reported total sales of $186 million for the quarter ending January 2, 1999. This was an increase of 55 percent over the quarter ending the same time the previous year. The company’s earnings before interest, taxes, depreciation, amortization, restructuring and other one-time charges were $0.4 million. An operating loss of $5.2 million and a net loss of $11.2 million for the quarter was reported.

Total sales for the nine months ending January 1999 were $659 million, an increase of 76 percent over the same time the previous year.

JFTC Raids Auto Glass Distributors

The Japan Fair Trade Commission (JFTC) recently raided a number of Japanese auto glass distributors to gather evidence for its investigation of price fixing in the aftermarket industry. The JFTC is investigating members of the Japan Automobile Glass Parts Federation (JAGPF), whom it suspects of making illegal arrangements to fix the price of glass sold to auto dealers and repair shops.

Federation sources deny the commission’s charges.

Apogee Sells Midas Muffler

Apogee Enterprises Inc. of Minneapolis, MN, has announced the sale of all eight of its Midas Muffler franchises. The franchises had been included as part of its auto glass business segment. Terms of the agreement are not known.

"The sale of our Midas Muffler franchises reflects our ongoing strategy to focus on our core businesses," said Michael A. Bevilacqua, the company’s treasurer and senior director business development. "We are also very pleased that the current group of Midas Muffler employees will continue with the new ownership."

The Dwyer Group Inc. Acquires the Glass Doctor

The Dwyer Group of Waco, TX, has completed the acquisition of the Glass Doctor, a franchisor of glass replacement and repair businesses generating more than $33 million in annual sales. The Dwyer Group also sold two of its franchising businesses, General Business Services and E.K. Williams and Company.


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