First-of-its-kind class action antitrust case brought by Lieff Cabraser and Justice Catalyst Law, Public Counsel, the National Consumer Law Center, and Towards Justice alleging that insurance companies in California conspired to unlawfully inflate California bail bond premiums will move forward to discovery and trial
On April 13, 2020, Judge Jon S. Tigar of the U.S. District Court for the Northern District of California issued an Order rejecting an argument by 28 members of the California bail bonds industry that they are immune from liability under state and federal law for an alleged antitrust conspiracy to fix the price of bail bond premiums. The lawsuit, brought by Shonetta Crain and Kira Serna on behalf of a proposed class of California bail bond purchasers, alleges that arrested people and their family members paid inflated prices for bail bonds due to an illegal conspiracy by sureties, California bail agencies, bail industry associations, and two individual defendants “to keep default premium rates fixed at 10%, advertise them as legal minimums, and prevent discounting or rebating as much as possible” to effectively fix the price of bail bonds in California.
The suit alleges that “sureties”—the companies that back the bonds sold by retail bond agents—have orchestrated a default premium of 10% of the bond amount, and then worked to eliminate discounting that would otherwise have occurred if the market operated competitively. The class action seeks damages for the hundreds of thousands of Californians who overpaid for unlawfully inflated bail bond prices, and to prevent this unlawful overcharging to continue.
Judge Tigar’s Order holds that the plaintiffs have successfully overcome all but one of defendants’ claims of immunity from prosecution, and upheld even that one with respect to the alleged agreement not to discount. The Court further upheld plaintiffs’ Cartwright Act claim, allowing plaintiffs to proceed on both aspects of the conspiracy they alleged—the agreement to fix bond premium rates, and the agreement not to rebate. The Court denied defendants’ arguments that the plaintiffs’ California claims were barred by the California Insurance Code, and found that the plaintiffs had alleged sufficient facts of a plausible antitrust conspiracy.
“This is a significant victory moving the plaintiffs’ California bail bonds antitrust class action forward,” notes Lieff Cabraser partner Dean M. Harvey, who represents the plaintiffs in the lawsuit. “The law clearly recognizes the fact that everyone in our society deserves the benefits of competition, and this defeat of dismissal shows that insurers in California cannot conspire to inflate prices to consumers.”
“The ruling signifies that our system-involved clients and their families can continue their fight to expose the anti-competitive and deceptive practices used by the bail industry to profit from over-policing and the criminalization of poverty,” said Cindy Pánuco, of Public Counsel’s Consumer Rights & Economic Justice Project.
“This case shows how important antitrust law is,” said Ben Elga, Executive Director of Justice Catalyst Law. “When companies conspire to inflate prices, people can be literally forced to choose between paying unfair prices and their freedom.”
“This ruling reinforces the important role that the antitrust laws can play in leveling the playing field and advancing the cause of economic justice for everyone,” said David Seligman, Director of Towards Justice.
The plaintiff class is defined in the Complaint as: “All persons who, between February 24, 2004 and present, paid for part or all of a commercial bail bond premium in connection with a California state court criminal proceeding. Specifically excluded from this Class are Defendants; the officers, directors or employees of any Defendant; any entity in which any Defendant has a controlling interest; any affiliate, legal representative, heir or assign of any Defendant and any person acting on their behalf; any person who acted as a bail agent during the Class Period; any judicial officer presiding over this action and the members of his/her immediate family and judicial staff; and any juror assigned to this action.”
Judge Tigar’s Order granted certain defendants’ motions to dismiss on the basis that the plaintiffs had not alleged sufficient allegations that those defendants participated in the conspiracy. Plaintiffs have leave to amend to provide those allegations, and will file an amended complaint by May 13, 2020.
Dean M. Harvey
Lieff Cabraser Heimann & Bernstein, LLP