UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHI
O
RICHARD CAMPFIELD and ULTRA BOND, INC.,
Plaintiffs, Case No. 2:15-cv-2733
v.
SAFELITE GROUP, INC., SAFELITE SOLUTIONS LLC,
and SAFELITE FULFILLMENT, INC.,
Defendants.
AMENDED COMPLAINT
WITH JURY DEMAND
TABLE OF CONTENTS
Page
I. OVERVIEW OF THE ACTION
1
II. PARTIES
10
III. JURISDICTION AND VENUE
13
IV. FACTUAL ALLEGATIONS
14
A. Windshield Repair and Plaintiffs’ Patented Technology
14
B. The ROLAGS Established The Industry Standard That Windshield Cracks
Up to 14 Inches Can Be Safely Repaired
17
C. Safelite Knows That The Benefits Of Repairing A Cracked Windshield Do
Not End At Six Inches
19
D. Safelite Uses Its Market Dominance To Falsely “Define What Can Be
Repaired vs. Not Repaired” And To Spread the Misrepresentation That Six
Inches Is The Cutoff Length For Safe Windshield Crack Repair
21
E. Safelite Falsely Advertises Across the Entire Media Spectrum That Six
Inches Is A Universal Cutoff For Safe Windshield Crack Repair
24
1. Safelite’s Misrepresentations on its Website
27
2. YouTube Videos
31
3. Safelite Representatives’ Uniform Oral Point of Sale Communications
With Customers About the Dollar Bill Rule
31
4. Safelite Repair Brochures
33
5. Brochures and “Training” Bulletins Created by Safelite That
Deceptively Identify The Insurance Company, Not Safelite, And State
The “Dollar Bill” Rule As A Universal Standard For Safe Windshield
Repair
39
6. Safelite’s Additional Educational Materials For Insurance Companies
and Their Agents
46
7. Press Releases & TV/Radio Interviews
47
F. Safelite Has Caused Ultra Bond Significant Damage Due To Its False
Statements That Windshield Cracks Longer Than Six Inches Cannot Be
Safely Repaired Under Any Circumstances
48
V. CLAIM FOR RELIEF
52
A. Violations of Section 43(a) of the Lanham Act
52
Plaintiffs, Richard Campfield (“Campfield” ) and Ultra Bond, Inc.
(collectively “Ultra
Bond” or “Plaintiffs”), by and through their undersigned counsel,
bring this action against
Defendants Safelite Group, Inc., Safelite Solutions LLC, and
Safelite Fulfillment, Inc.
(collectively “Safelite”), and allege as follows based on (a) an analysis of
documents produced
by Safelite in this litigation including thousands of non-public internal
documents; (b) personal
knowledge; (c) the investigation of their counsel; and (d) information and
belief.
I. OVERVIEW OF THE ACTION
1. This action seeks damages and additional relief against
Safelite under Section
43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), which prohibits,
inter alia, any “false
or misleading description of fact, or false or misleading
representation of fact, which . . . in
commercial advertising or promotion, misrepresents the nature characteristics,
[or] qualities . . .
of . . . goods, services, or commercial activities.”
2. Defendant Safelite is the country’s largest retailer of
vehicle glass repair and
replacement (“VGRR”) services. Safelite sells it VGRR services to
individual consumers and
commercial fleet customers (which are companies that own fleets of vehicles).
Safelite is also
the nation’s largest third party administrator (“TPA”) for processing and
adjusting policyholders’
vehicle glass damage claims pursuant to the non-collision glass breakage
programs of Safelite’s
automobile insurance company customers. Safelite’s role as the nation’s
largest TPA gives it
unique access to and control over millions of individual consumers of VGRR
services.
3. VGRR services are a huge business. Safelite dominates the
VGRR market
controlling more than market share. Safelite touts
that it “has more than 7,800
MobileGlassShops™ and stores in all 50 states” that “Safelite AutoGlass® is the
nation’s largest
provider of vehicle glass repair and replacement services” and that “Safelite
Solutions manages a
network of approximately 9,000 affiliate providers”. In 2016, Safelite
served over
customers and had annual revenues exceeding and a trading
profit of
[SL0069031-48]. Moreover, the vast majority of Safelite’s VGRR profits stem
from the millions
of windshields that Safelite replaces each year, rather than repairs.
4. Safelite’s entire business model for influencing the
purchasing decisions by
individual and commercial consumers of its windshield VGRR services has
been built around
one central, but literally false, premise at the heart of Safelite’s
long-standing organized
marketing campaign: that a windshield must be replaced if a windshield crack in
it is longer the
six inches.
5. Discovery in this action has revealed just how sophisticated
and wide ranging
Safelite’s marketing scheme is. That marketing scheme maintains
Safelite’s highly profitable
windshield replacement business by flooding the market with false
advertisements and marketing
materials that span virtually every form of media to influence customers’
decision to urchase
windshield replacement (versus windshield repair) goods and services. Those
materials falsely
state: (i) that a windshield always requires a replacement when a crack is
longer than six inches;
and/or (ii) that only windshield cracks up to six inches can be repaired.
Safelite often refers to
this purported standard that it falsely promotes as the “six inch” or the
“dollar bill” rule (since a
dollar bill is about six inches long).
6. Safelite’s internal documents demonstrate that Safelite
knows there is no
scientific basis for stating that the cutoff for safe repair of windshield
cracks must follow the “six
inch” or “dollar bill” rule, thereby rendering their statements in their
marketing and advertising
materials literally false. In fact, Safelite’s documents demonstrate that
windshield cracks up to
even 24 inches can be safely repaired.
7. For decades prior to 2007, there were no industry standards
governing the length
of a windshield crack that could be safely repaired. Safelite’s early marketing
slogan was, “if it
fits under a buck, send the little red truck,” meaning Safelite’s Repair Medic
vehicle. Safelite’s
internal documents reveal that since the late 1990s, Safelite used
its market power and
“expertise” to convince its automobile insurance company clients and
other consumers of
windshield replacement or repair services that the six inch rule was the upper
limit for a “safe”
windshield repair and that windshield cracks exceeding six inches
required a replacement
windshield.
8. Any conceivable support for Safelite’s position regarding the
upper limit for a
safe repair vanished on June 20, 2007. Following more than two years of
deliberation and study
by a committee formed by the two leading VGRR industry associations
(the National Glass
Association and the National Windshield Repair Association), the American
National Standards
Institute (“ANSI”) approved industry standards for windshield repair and
replacement, entitled
the “Repair of Laminated Automotive Glass Standards” (“ROLAGS”).
The ROLAGS
established, inter alia, that windshield cracks up to and including 14 inches
are repairable.
9. Safelite’s designated representatives to the
aforementioned committee were
windshield repair specialists, not high level executives at Safelite
focused on the financial
implications of the ROLAGS. As members of the committee that developed these
standards, they
expressly approved the windshield repair standard in the ROLAGS. They made a
determination
based on evidence, not based on the financial implications for Safelite’s
business model. That
Safelite’s representatives proceeded as they did is not surprising. Safelite’s
internal documents
show that Safelite knew that the repair of windshield cracks “up to 24 [inches]
. . . can be safe
and is viable.” [SL0009620-23]. Further, Safelite’s internal documents show
that Safelite knows
[SL0055743-48].
13.
[SL0006939-40].
14.
15. Thus, decreasing the repairable crack length from six inches
would have little
effect on the number of Safelite replacements, but would negatively impact
Safelite’s profits due
to the unique nature of the
and
contract terms in Safelite’s contracts with its insurance
company customers. However, increasing the repairable crack length from
6 to 14 inches in
accordance with the ROLAGS would result in dramatically fewer
windshield replacements
because the majority of windshield cracks fell within that range. That would
significantly impact
Safelite’s bottom line. Safelite’s internal documents reflect that as of March
2012, its “average
margin” on a windshield replacement was
versus only
for a repair. That is almost
a difference in profit. [SL0011508-09].
16. Thus, Safelite decided to not only ignore the ROLAGS with its 14 inch
standard
for windshield repair, but it doubled down and increased its promotion of the
fictitious “dollar
bill” or “six inch” rule as a universal cutoff for safe repair of windshield
cracks.
17. Safelite spreads its literal falsehood about the six inch or dollar
bill rule not only
in its own advertisements to individual consumers about VGRR services
and but also in
marketing content that Safelite drafts and provides to third parties to
disseminate to consumers.
This includes brochures, bulletins and website content under the guise of the
third party -- often
without attribution to Safelite. Safelite’s deceptive advertising through third
parties is designed
by Safelite to further mislead individual consumers of VGRR services
to believe that a
windshield crack of six inches is a universal cutoff for safe
windshield repairs. These third
parties include insurance companies with whom Safelite has contracts,
commercial vehicle fleet
operators (like car rental companies), and organizations that serve consumers,
like the 50 million
member American Automobile Association (“AAA”).
18. As reflected in an April 21, 2011 PowerPoint
Presentation entitled “How
Marketing supports our Glass Programs” prepared by Safelite’s Marketing
Director and its B2B
Marketing Manager, Safelite disguises its marketing materials
generically as “educational”
content with such topics as: “Educate on what to look for in
reputable vehicle glass service
providers[;] Inform why high pressure, windshield bully tactics are
bad[; and] Most
windshield damage up to six inches can be repaired.” [SL0082417-36] (Emphasis
added).
19. Safelite characterizes these fictitious educational efforts as
a way to “[e]ducate
agencies on industry, glass program and Safelite AutoGlass value-added
information.” [Id.]
(Emphasis added). Safelite also “[t]each[es] Agent Continuing Education
(ACE) classes”
incorporating the false “six inch” or dollar bill” rule. [Id.]
20. Safelite distributes this “content” to “educate”, inter alia,
consumers, insurance
companies, and tens of thousands of insurance agents with the false
message that only
“windshield damage up to six inches can be repaired.” Safelite portrays this
“education[al] . . .
content” regarding the six inch or dollar bill rule as an objective universal
standard governing the
cutoff crack length for safe windshield repair. Notably, Safelite’s Media
Director characterized
the distinction between “content and advertising” in an August 2010
email as “crossing the
church and state . . . line.” [SL0009745-48].
21. Safelite even offered courses like “Windshield Repair . . .
Continuing Education
Course for Property and Casualty Insurance Agents and Staff” and “Agent
Continuing Education
Course: Controlling Vehicle Glass Losses” to indoctrinate insurance companies
and their agents
about the false “dollar bill” or “six inch” rule. [SL0005255-5293] &
[SL0008139-203].
22. Safelite uses these third parties as their conscripted agents to
parrot to potential
individual consumers of its VGRR services Safelite’s own false messaging about
the “six inch”
or “dollar bill” rule. The third parties oblige because Safelite
falsely tells them that, based on
Safelite’s expertise and internal studies, it is not safe to repair windshield
cracks longer than six
inches.
23. A PowerPoint slide from a February 2009 Belron US (which
includes Safelite)
presentation illustrates Safelite’s singular focus on maintaining the false
“dollar bill” rule as a
universal standard for safe windshield repair that cuts across all of its
advertising and marketing
materials and is directed to all Safelite employees who interact with
consumers:
Repair Selling Points
Repair Qualification
■ The Most Important Aspect of Our Repair Commitment
□ “CAN YOU COVER THE DAMAGE WITH A DOLLAR BILL”
□ Message must be consistent
□ Starts with the agents and their staff
□ Call centers
□ Repairing Associates
[SL0007254-78].
24. Further, as an integral part of Safelite’s false advertising
campaign, Safelite’s
documents show that Safelite instructs all employees to falsely tell
individual consumers,
insurance companies, and other third parties that serve potential Safelite
customers, that it is not
safe to repair a windshield with a crack longer than six inches. For example,
an internal Safelite
PowerPoint presentation dated November 1, 2011 instructs that:
Technicians/Repair Specialists, SR’s [service representatives], Services
Managers and
Retention Specialists recognize these instances [where cracks are longer than
six inches]
as replacement opportunities, as a replacement [is] the only option
for insuring the
structural integrity of the windshield within the vehicle’s overall safety
features.
[SL0055880-906 at slide 20] (Emphasis in original).
25. Safelite’s literally false statements have misled, and continue to
mislead, millions
of individual consumers who replace damaged windshields that could
have been repaired. In
most instances, these individual consumers foot the bill for these
unnecessary windshield
replacements. They pay for the replacement out of pocket either
because they don’t have
insurance coverage for glass breakage, because the deductible on their
insurance policy (if they
have insurance) is normally not waived in that circumstance, or simply because
they do not wish
to report a claim to their insurer that might potentially increase future
premiums.
26. Safelite’s deceptive advertising, which is intended to
maximize the number of
unnecessary windshield replacements it performs, harms individual
consumers in at least two
ways. First, consumers pay more than they otherwise would if they
were not misled into
believing that less expensive windshield repair cannot be performed on
cracks larger than the
size of a dollar bill. At the same time, Safelite profits handsomely from this
deception, raking in
hundreds of millions of dollars in ill-gotten profits. Second, Safelite’s
actions put consumers at
risk of greater injury in the event of a crash. Safelite’s internal documents
reflect that it knows
that unnecessarily replacing a windshield, as opposed to simply
repairing the factory installed
windshield whenever possible, makes vehicles less safe in a car crash.
Nonetheless, Safelite puts
its hundreds of millions in profits ahead of people.
27. Plaintiff Richard Campfield, the founder of Ultra Bond, is an
inventor who has
been actively involved in the windshield repair and replacement industry since
1986. Campfield
is a founder and past President of the National Windshield Repair Association.
Together, he and
Plaintiff Ultra Bond hold (or have held) several patents related to the repair
of windshield cracks
longer than six inches. The cracks are referred to in the VGRR industry as
“long cracks” (“Long
Cracks”). Campfield’s techniques and resins (for which he received patents) are
sold and used
worldwide to safely repair windshield cracks that are much longer than six
inches while costing
hundreds of dollars less than a windshield replacement.
28. Safelite’s unlawful conduct in falsely stating that windshield
cracks over six
inches are not repairable under any circumstances has directly damaged
the businesses of
Plaintiffs, who are competitors of Defendants, and who sell
products that safely repair
windshield cracks longer than six inches.
29. Plaintiffs seek relief under the Lanham Act for the damages
they sustained
including, but not limited to, lost profits, disgorgement of
Safelite’s inequitable profits, other
available equitable relief, and injunctive relief to prevent Safelite from
continuing to make false
and misleading statements that windshield cracks can be repaired only if the
crack is less than the
size of a dollar bill (or six inches in length) or conversely, that
a windshield must always be
replaced if the crack is longer than a dollar bill or six inches. Both
statements contradict (a) the
ROLAGS (approved by Safelite), which establish that a windshield crack up to 14
inches long
can be safely repaired; and (b) Safelite’s own internal conclusions. In
addition, given the breadth
of Safelite’s deceptive and ubiquitous marketing campaign, which has infected
the marketplace
with the false belief that windshield cracks over six inches in
length are never repairable,
Plaintiffs seek injunctive relief requiring Safelite to issue corrective
disclosures, consistent with
the ROLAGS and what Safelite knows internally to be true, to address
the harm caused to
Plaintiffs’ business and consumers.
II. PARTIES
30. Plaintiff Ultra Bond, Inc., is a California corporation, which has
its principal place
of business in Grand Junction, Colorado. Ultra Bond, Inc., is a windshield
repair manufacturer
that both licenses and sells its products to auto-glass shops and
related-businesses across the
country in order for them to be able to perform Long Crack repairs consistent
with the ROLAGS.
These shops and businesses, who are customers of Ultra Bond, Inc., compete to
provide VGRR
services to both individual and insurance customers.
31. Ultra Bond, Inc., sells repair kits consisting of specialized
tools, specially
manufactured resins, primers, additives, and pre-treatment chemicals used for
repairing (versus
replacing) windshields damaged by Long Cracks. Additionally, Ultra
Bond, Inc., sells stand-
alone resins to re-supply its customers. (The tools, resins, and
chemicals can also be used for
repair of cracks under six inches).
32. The tools and resins manufactured and sold by Ultra Bond, Inc., are
geared to be
utilized with unique methods developed and patented by Mr. Campfield.
Independent testing has
confirmed the effectiveness of the Ultra Bond method for repairing
windshields with Long
Cracks. Upon information and belief, Ultra Bond is the dominant provider of
Long Crack repair
products and services holding between 50-75% of the U.S. market for
Long Crack repair
products.
33. Plaintiff Richard Campfield (“Campfield”) is a citizen of
Pennsylvania, and 100%
stockholder of Ultra Bond, Inc., and the sole proprietor of a number of
additional businesses that,
in conjunction with the equipment and resins sold by Ultra Bond, Inc., sell
licenses related to
certain patented elements of the Ultra Bond Long Crack repair
process. Those additional
businesses are Ultra Bond Licensing and a retail glass repair and
replacement business doing
business as Ultra Bond Windshield Repair and Replacement in Grand
Junction, Colorado. In
addition, Campfield has expanded his retail repair business into the
Northeastern Pennsylvania
region.
34. On July 1, 2015, Campfield completed a two-and-one-half year
term as the
President of the National Windshield Repair Association (“NWRA”) (which is an
organization
whose members consist of vehicle glass repair shops from across the country).
35. Defendant Safelite Group (“Safelite”) is a Delaware Corporation with
its principal
place of business in Columbus, Ohio. Safelite Group is a
multi-faceted automobile glass and
claims management service organization that is (or has been)
composed of four major
operations: (1) Safelite Fulfillment, Inc. (operating under the name Safelite
AutoGlass®), which
provides VGRR services (such as windshield replacement and repair) to
consumers; (2) Service
Auto Glass, which provides wholesaler vehicle glass and vehicle
glass-related products; (3)
Safelite Solutions LLC, which serves as a third party administrator and
provides complete claims
management solutions for the nation's leading fleet and insurance
companies; and (4) Safelite
Glass Corp., which (until recently) manufactured aftermarket
windshields. Safelite Group is a
subsidiary of Belron S.A., which is the world’s dominant provider of
auto glass repair and
replacement services, operating globally in over 30 countries across five
continents.
36. Defendant Safelite Solutions LLC (“Safelite Solutions”) is a
Delaware limited
liability company with its headquarters in Columbus, Ohio. Among other
services, Safelite
Solutions processes automobile glass claims for its insurance company customers
as a third party
administrator. Upon information and belief, Safelite Solutions currently serves
as a third-party
administrator of auto glass claims for more than 175 insurance and fleet
companies, including a
majority of the top property and casualty insurance companies in the country.
37. Defendant Safelite Fulfillment is a Delaware Corporation with its
principal place
of business in Columbus, Ohio. Safelite Fulfillment is the largest retail VGRR
organization in
the United States, operating under the trade name Safelite AutoGlass®.
Safelite Fulfillment
operates in all 50 states, and is available to more than 95% of all drivers.
Safelite Fulfillment
serves more than 6 million consumers each year, and it has over 720 locations.
38. During all times relevant hereto, Safelite has operated, and
continues to operate, a
website which allows individual consumers of its VGRR services to schedule
on-line services,
either for windshield replacement or repair, to be performed by a Safelite
technician. As set forth
below, that website has contained embedded videos and/or textual statements
that were literally
false advertisements about the size of repairable windshield damage.
39. In addition to its website, Safelite has operated, and continues to
operate, multiple
national call centers, that are staffed 24/7 by customer service
representatives who are trained to
handle calls from individual consumers of its VGRR services (including
calls made by
individual consumers to Safelite Solutions’ insurance company clients
to report windshield
damage claims) who have questions about when to perform either
windshield repair or
replacement and who also want to schedule a Safelite technician to
perform either of those
services. These national call centers are staffed 24 hours a day,
365 days a year, seat
approximately 2,000 customer service representatives in total, and handle more
than 15 million
customer calls on average each year. [SL0000079-80].
40. As set forth below, these 2000 Safelite customer service
representatives and
Safelite technicians (of whom there are now about 6000) are all
trained by Safelite to tell
individual consumers, with whom they interact at the point-of-sale in real
time, the same literally
false information about the size of repairable windshield damage as
that which Safelite has
likewise falsely advertised in multiple forms of media, including the
embedded videos and/or
textual statements on its website, to influence individual consumers’
purchasing decisions about
its VGRR services.
41. There are generally only two means by which individual
consumers of Safelite
VGRR services book appointments: either by scheduling the work themselves
on-line through
Safelite’s website, or, by calling its dedicated army of customer
service representatives.
Moreover, documents produced by Safelite in response to document requests show
that in 2016
roughly of Safelite’s profits from the sale of its windshield
replacements services came
from on-line website scheduling and the remainder came from calls to
customer service
representatives. See [SL0084639-40].
III. JURISDICTION AND VENUE
42. This Court has proper subject matter jurisdiction over this action
pursuant to 28
U.S.C. § 1331. In addition, this Court has jurisdiction over this
action pursuant to 28 U.S.C.
§ 1332(a) because there is diversity of citizenship between Plaintiffs
and Defendants and the
amount in controversy exceeds $75,000.00.
43. Venue is proper in this Court pursuant to 28 U.S.C. §
1391, et seq., because
Defendants are located in this District, Defendants’ contacts are
sufficient to subject them to
personal jurisdiction in this District, and the acts giving rise to the claims
at issue in this lawsuit
occurred, among other places, in this District.
IV. FACTUAL ALLEGATIONS
A. Windshield Repair and Plaintiffs’ Patented Technology
44. By far, the highest percentage of all vehicle glass damage occurs to
windshields
as opposed to side or back window vehicle glass. Further, damage to windshields
is one of the
leading, if not the leading, cause of automotive insurance claims in the United
States. Windshield
breakage in the situation of non-collision glass damage typically
consists of a chip or crack
caused by a flying stone flicking up from a roadway and striking the vehicle’s
front window.
45. Windshields -- unlike side and back window vehicle glass --
are made of two
sheaths of safety glass that are designed to offer optimum safety by being
sandwiched around an
inner plastic (polyvinyl butyral, or PVB) film that acts as a barrier either to
prevent passenger
ejection from a vehicle in the case of a crash and to prevent
passenger injury from an object
penetrating the windshield when being driven.
46. A vehicle’s original factory sealed windshield glass (referred
to as “original
equipment manufactured” or “OEM” glass) is also an integral part of
a vehicle’s overall
passenger safety system. Among other things, a factory sealed windshield is
part of a vehicle’s
airbag crash pulse system and serves as an airbag backboard, which are both
necessary for proper
deployment of airbags in the event of a collision. A factory sealed windshield
also provides up to
60% of the roof’s support and serves as part of the vehicle’s structural
system to prevent roof
collapse in the event of a rollover crash. In fact, a Safelite Windshield
Safety Video states that,
“after your seatbelt and airbags what do you think is the next most important
safety feature on
your vehicle? Your brakes, your tires, . . . In fact, the answer
is right before your eyes, your
windshield. ”
47. When a vehicle windshield is damaged, three options exist: a)
replacing the entire
windshield, b) repairing the damage without replacing the windshield, or c)
leaving the damage
as is. Leaving the damage as is can be extremely dangerous because if left
untreated, windshield
damage will eventually spread and cause the inner PVB film to be
exposed to atmospheric
conditions, which in turn degrade the film’s strength as an effective barrier
to prevent passenger
ejection or object penetration. Untreated windshield damage can quickly
compromise the
structural integrity of a vehicle’s windshield and risk the safety of vehicle
occupants.
48. It had been historically believed since the beginning of the
windshield repair
industry in the 1970s that repair of windshield cracks longer than six inches
was infeasible. In
the VGRR industry, this arbitrary rule of thumb was always that a damaged
windshield had to be
replaced (and could not be repaired) if the damage was longer than six inches.
This eventually
became colloquialized in the industry as the size of a “dollar bill” rule. For
years, Safelite used
this standard as its marketing slogan “if it fits under a buck, send the little
red truck.” The red
truck was Safelite’s repair technician vehicle (what is now its
MobileGlassShops).
49. There was no inherent scientific basis for this dollar bill rule --
it was simply a
catchy marketing technique that was ingrained in Safelite’s business model and
in its contracts
with insurance carriers.
50. However, in 1989, Plaintiff Campfield invented groundbreaking
repair theories
and technologies that debunked the “six inch rule” and allowed any
automotive glass repair
technician to repair all cracks regardless of length (only using the
proper method, tools, and
resins).
51. Specifically, Campfield and/or Ultra Bond hold (or have held) several
patents that
cover (or have covered) methods of repairing windshield cracks longer than six
inches, the tools
to be utilized when repairing these cracks, and the specific viscosities of
chemical resins which
are suitable for repairing windshield cracks longer than six inches.
52. The method originally developed by Campfield is known as the
“Ultra Bond”
process, which uses Campfield’s invention of a previously unutilized
“multi-viscosity” resin
method.
53. As more fully outlined in United States Patent 5,116,441
(the “441” Patent),
5,425,827 (the “827” Patent), and 5,429,692 (the “692” Patent) issued between
May 26, 1992
and July 4, 1995, the Ultra Bond process involves using a series of specialized
tools and multi-
viscosity resins to repair windshield cracks longer than six inches, i.e. a
Long Crack. See Exhibit
A (collectively the “1990s Patents”).
54. The 1990s Patents have expired but, in September 2012, Campfield was
awarded
United States Patent 8,268,104 (the “2012 Patent”) which employs a
method of using UV
cationic epoxy to repair cracks and breaks in windshields. The UV
cationic epoxy method is
even easier to use by eliminating oxygen inhibition, shrinkage and dark cures
after any exposure
to UV. See Exhibit B.
55. Competitors have acknowledged that the Ultra Bond method of
using multiple
viscosities to safely repair windshield cracks longer than six inches (i.e.
Long Cracks) as covered
by the 1990s Patents is effective: Paul Syfko, an executive with Glass
Medic, which is a Belron-
owned sister company of Safelite that markets and sells Belron’s Glass Medic
repair system (the
repair system used by Safelite) has acknowledged in sworn deposition
testimony that Glass
Medic has told people looking to fix longer cracks that they should
use multiple viscosities
(which was covered under the 1990s Patents) to fix windshield cracks longer
than six inches. See
Exhibit C (exhibit highlighted in relevant part). As discussed
above, Safelite’s internal
documents also reflect that windshield cracks up to 24 inches can be safely
repaired.
56. The effectiveness of the Ultra Bond method is proven.
Testing has shown that
windshields with Long Cracks that have been repaired using the Ultra
Bond tools and repair
process pass the same visual and structural integrity tests (Federal
Motor Vehicle Safety
Standard 205 (American National Standards Institute (“ANSI”)
Z.26.1)) as new OEM
windshields, and also satisfy the ROLAGS crack resin test protocol.
In fact, they have been
tested to be as strong as new OEM windshields. Additionally, the
historical rates of customer
satisfaction, as judged by warranty claims and customer complaints, is over 99%
for windshields
repaired using the Ultra Bond method. The improved Long Crack repair method
covered by the
2012 Patent is even easier to use than the methods covered by the 1990s
Patents.
B. The ROLAGS Established The Industry Standard That Windshield Cracks
Up to 14 Inches Can Be Safely Repaired
57. By 2005, repair and replacement practitioners knew (but the public
did not) that
windshield repair technology had advanced to the stage where it was often more
safe and reliable
than windshield replacement. Accordingly, the stage was set for
discussion by a variety of
interested industry participants (in the form of a ROLAGS Standards Development
Committee
jointly sponsored by the National Glass Association and the National
Windshield Repair
Association) about when Long Crack repair (and windshield repair more
generally) was
advisable. Standards on this subject were needed for a variety of reasons,
including to establish
industry norms and to enhance customer knowledge.
58. The Standards Development Committee for ROLAGS included
Safelite
Fulfillment’s National Repair Development Manager, David Erwin
(“Erwin”), as well as Paul
Syfko, of Glass Medic America/Belron (“Syfko”). See Exhibit D Foreword
at p. iii (exhibit
highlighted in relevant part).
59. After more than two years of study and debate, the jointly
established Standards
Development Committee for ROLAGS (which again included both Erwin and
Syfko) voted
unanimously 16 to 0 on February 13, 2007 to approve the ROLAGS, including its
14 inch repair
standard. [SL0004978-80]. During its deliberations, the ROLAGS
Standards Development
Committee researched other international windshield repair standards and
testing used in
connection with the conclusions that supported those countries’ standards.
[NGA00000203-12].
Ultimately, the 14-inch standard was adopted by the Standards Development
Committee to track
the Australian/New Zealand standard of 13.78 inches. [Id.] Among other things,
no compelling
scientific evidence was presented that there was any safety mandated
maximum length for
windshield repairs. [Id.]
60. As stated above, on June 20, 2007, the American National
Standards Institute
subsequently approved the ROLAGS standard jointly developed by
the National Glass
Association and the National Windshield Repair Association. These
industry standards
established that windshield cracks up to and including 14 inches are
repairable. See Exhibit D at
p. 4 (exhibit highlighted in relevant part).
61. ROLAGS represents the auto glass industry’s statement of best
practices as
compiled under ANSI guidelines, by a committee of windshield repair
system manufacturers,
auto glass manufacturers, windshield repair and replacement retail
practitioners, the three auto
glass trade associations and other interested parties.
62. The 2007 standards expressly dictate that the intention
of the ROLAGS
committee was that the standards be used “to consistently evaluate damages on
laminated auto
glass in order to aid in the decision to repair or replace the glass.” They
furthermore state that the
“Scope of th[e] standard shall be to define: Repairable damages[.]” Exhibit D
at p. 1.
63. On February 11, 2014, the American National Standards
Institute approved an
updated version of ROLAGS that again established that cracks up to and
including 14 inches can
be repaired. See Exhibit E at p. 4 (exhibit highlighted in relevant part).
64. Safelite’s literally false advertising about the six inch or dollar
bill rule not only
continued without correction after the initial approval of ROLAGS by
the American National
Standards Institute on June 20, 2007, but it has also persisted without
abatement even after the
updated approval of ROLAGS by the American National Standards
Institute on February 11,
2014.
C. Safelite Knows That The Benefits Of Repairing A Cracked Windshield Do
Not End At Six Inches
65. Safelite admits that windshield repair -- not windshield replacement
-- is, in most
instances, the most preferable option for the consumer for both cost
and safety reasons. For
example, an August 2, 2011 internal Safelite PowerPoint slide
presentation states, without
reference to the “six inch” or dollar bill” rule, inter alia, that:
Windshield repair benefit #1: Safe & effective
• Can restore windshield’s structural integrity
- One of the most important structural reinforcement components of a
vehicle in
the event of crash or rollover
- When performed by well-trained, certified technician using quality tools
and
resins
• Will prevent chip or crack from spreading in more than 95% of cases
• Does not compromise original factory seal
Windshield repair benefit #2: Quick and convenient
• Only takes about 30 minutes to complete
• Immediate drive-away time
- Up to 48 hours for windshield replacements with some
vehicle glass
companies that use long-curing urethane
• Vehicle glass companies should offer mobile service for policyholder
convenience
Windshield repair benefit #3: Cost-effective
• Only takes about 30 minutes to complete
• Most insurance companies cover cost of windshield repair for
policyholders with
comprehensive coverage = no cost to policyholder
•
• Repairing before damage spreads prevents potential future need for full
replacement
[SL0008415-36] (Emphasis in original).
66. Indeed, in its brochure to businesses and companies that serve
consumers entitled,
“Improving your view: ‘How to Perform a Proper Repair’,” Safelite states, inter
alia, “Some
things a reputable vehicle glass company should not do during the repair
process. . . Insist
on windshield replacement when repair is a safe, effective solutions
(sic).” [SL0008022-23]
(Emphasis in original).
67. Another Safelite training presentation for Safelite’s CSRs, Repair
Specialists, and
Technicians makes the same point about not performing unnecessary windshield
replacements,
stating in relevant part :
“Would you go buy a new car if you had a scratch? Of course not, so why replace
your windshield when it could be REPAIRED!”
[SL0001131-69, at 34] (Emphasis in original).
68. Most people do not know what Safelite knows about the
importance of doing
repair whenever possible strictly from a “safety-first” point of view.
When a windshield is
repaired, it will be repaired without removing or destroying the
“factory seal” -- which is, as
previously stated, the bonding of an original equipment manufactured
windshield onto a new
vehicle during assembly at the factory. Safelite’s internal documents show that
“[t]he factory seal
is considered optimal because of the quality and environmental controls present
in the factory
setting.” [SL0004678-80]. In Safelite’s own words, “nothing can duplicate the
factory seal of the
original windshield.” [SL0004312-72]. Moreover, Safelite knows that
besides avoiding the
necessity of breaking the factory windshield seal by opting for
repair over replacement, the
repaired area will be twice as strong as the rest of the windshield.
[SL0004312-72].
D. Safelite Uses Its Market Dominance To Falsely “Define What Can Be
Repaired vs. Not Repaired” And To Spread the Misrepresentation That Six
Inches Is The Cutoff Length For Safe Windshield Crack Repair
69. As previously stated, Safelite has three primary
categories of customers:
insurance company clients for whom it serves as the third party
administrator of their glass
breakage coverage programs; commercial customers (such as businesses or
governmental
agencies who operate fleets of vehicles); and individual consumers (who may or
may not have
insurance that covers windshield damage or even decide to use it assuming they
do).
70. Safelite states that “[w]ith more than 7,800 MobileGlassShops™ and
stores in all
50 states, Safelite AutoGlass® is the nation’s largest provider of
vehicle glass repair and
replacement services.” Safelite’s internal documents reveal that, as of 2011,
Safelite:
(ii) had contracts with 23 of the “Top 30 Insurance
Companies” in the U.S. to provide “claims management” services with “direct
electronic access
to insurance company databases”; and (iii) in addition to its own
branded shops, had “an
affiliated network of 10,000 independent glass providers. [SL0063247-89].
71. Safelite has long used its dominant market position to flood
the VGRR market
through false advertisements and marketing materials with the false notion that
six inches is a
universal cutoff for safe windshield repair. Safelite also directly
misinforms its insurance
company customers about the viability of repairing cracks longer than
six inches, and uses
insurance companies and their agents as a pass-through to potential
Safelite consumers, by
falsely telling insurers that it is not possible to repair windshield cracks
longer than six inches
and then also having them parrot the false “six inch” or “dollar bill” rule to
their policyholders
through advertising and marketing content provided by Safelite.
72. Indeed, while discussing the “long term preservation of
our replacement
business,” Safelite executives admitted in an internal email chain dated
December 19-20, 2012
how “[o]ver the last 15 years, Safelite has helped the insurance
industry define what can be
repaired vs. not repaired” and further, that Safelite had the market power “to
move the [repair]
standard in the insurance industry.” [SL0080494-99] (Emphasis added).
73. This admission is not surprising. Safelite inundated insurance
companies and their
agents with “bulletins” and “continuing education” courses like
“Windshield Repair . . .
Continuing Education Course for Property and Casualty Insurance Agents and
Staff” and “Agent
Continuing Education Course: Controlling Vehicle Glass Losses,” which
Safelite used to
indoctrinate insurance companies about the false “dollar bill” or “six inch”
rule.
74. Indeed, as reflected in other Safelite internal documents
like Safelite’s “2010
Media Plan and P&L Impact” analysis relating to a Senior Leadership Team
meeting show that
Safelite sought to “educat[e] the market”. See [SL0043334-35] (also stating
that Safelite “saw
spikes in sales and opportunities from educating the market.”); see
also [SL0065955-56]
(Safelite TV ads are “educating the consumer about the option of repair vs
replacement.”). In
other words, Safelite markets the six inch or dollar bill rule under the guise
of “education” to
reinforce the false notion that this rule is a universal cutoff for safe
windshield repair.
75. When insurance companies began to ask Safelite about the
ROLAGS, Safelite
falsely told them that Safelite had disagreed with the 14 inch repair standard
and that it was not
safe to repair a windshield with a crack longer than six inches.
Safelite “had made it clear to insurance companies that it is not going to
change its repairable dimensions to include crack repair [in accordance with
ROLAGS] until we
research the safety implications.
[SL0084201] (Emphasis added).
76. The true reason that Safelite did not want to change the “six inch”
or “dollar bill”
rule had nothing to do with “safety,” which is what Safelite falsely
told insurance companies
(and others). Indeed, Safelite’s Media Director stated in an internal email
dated July 2, 2008, that
David Erwin, Safelite’s representative on the ROLAGS Standards Development
Committee, told
him that “up to 24 [inches] [crack] repair can be safe and is viable.”
[SL0009620-23].
77. Safelite continued this deception for years. For example, in August
2011, a major
Safelite client, a publicly traded company on the NYSE
that provides professional
vehicle fleet management services, asked its Safelite representative
whether its Certification
Standards Brochure could add a statement that it was ROLAGS compliant. Safelite
marketing
executives and Erwin exchanged multiple emails on this issue. Safelite’s PR
Manager stated that
“I guess the other opportunity we have is to educate clients on
why ROLAGS is an outdated
standard. . . .” (Emphasis added). The PR Manager also stated that:
Dave [Erwin] gave me a call with his background on this matter . .
. He says
ROLAGS is irrelevant. The standard is flawed and it was agreed upon
by
company leaders during the Tuscon NLM that we don’t want to be a part of it.
* * *
However, Dave feels comfortable saying something like Safelite’s
SafetechTM
certification aligns with and exceeds industry standards including ROLAGS with
the exception of ROLAGS recommendation to repair cracks up to 14
inches,
which Safelite’s research indicates is not safe. Therefore, Safelite limits
repairs to
cracks 6 inches or less.
[SL0008478-84] (Emphasis added).
78. In truth, Safelite’s research did not indicate the ROLAGS
repair standard was
unsafe. For example, in direct contrast to the underscored statement above, in
April 2011, Erwin
stated in an email to Belron executives that it was safe to repair
windshield cracks up to 14
inches in accordance with the ROLAGS. Specifically, Erwin stated: “The new
Belron proposed
standard has very little in common with the present ANSI/ROLAGS
standard. The ROLAGS
Standard presently allows cracks up to 14 inches and does not discriminate
where a repair can or
can not [sic] be done on the windshield. While there was much
debate on these final
qualifications, since there was no known published studies or data
showing that any of these
repairs were unsafe, ultimately it was decided not to
eliminate these types of repair.”
[SL0080669-74] (Emphasis added).
79. Safelite’s “safety” excuse was again simply a ruse to cover up the
facts that: (i) it
was too difficult for Safelite to change from the “six inch” or “dollar bill”
rule in light of, inter
alia, the long-standing
and
provisions in Safelite’s contracts with its insurance
company customers, discussed above; and (ii) moving to a 14 inch
standard (which Safelite
knew to be safe) would dramatically slash hundreds of millions of dollars in
profits made from
performing windshield replacements.
E. Safelite Falsely Advertises Across the Entire Media Spectrum That Six
Inches Is A Universal Cutoff For Safe Windshield Crack Repair
80. As discussed above, Safelite’s entire business model for influencing
the
purchasing decisions of individual consumers as well as other business
customers of its
windshield replacement goods and services has long been based on the false “six
inch” or “dollar
bill” rule. That business model would to go down the drain, and hundreds of
millions of dollars
in yearly profits were at risk, if individual consumers knew what Safelite knew
to be true, i.e.
that windshield cracks longer than six inches (which make up the vast majority
of windshield
cracks) can likely be repaired.
81. Thus, after the ROLAGS was approved in 2007, Safelite used its huge
market
share and annual advertising budgets of over a year
[SL0063247-89] to continue to
promote the “dollar bill” and/or “six inch” rules as a universally accepted
standard. Safelite
implemented an organized marketing campaign across virtually all forms of media
under its own
name, and also through third parties (such as insurance carriers and the AAA)
using advertising
materials that Safelite created for those third parties to distribute to
consumers. As shown below,
these third party materials often advertised the “six inch” or “dollar bill”
rule without any
attribution to Safelite.
82. Falsely portraying the “dollar bill” or “six inch” rule as a
universal cutoff crack
length for safe windshield repair -- as opposed to a Safelite-specific standard
-- is an intentional
decision that starts from the top executive level. For example, a Safelite
internal document shows
that Safelite conducts “Media Training” for its Senior Leadership Team” as well
as its district
managers and general managers using “Messaging Triangles” and
“one-on-one practice
interviews on camera.” [SL0000076]. As shown below, one such
messaging triangle,
“Windshield Repair Advantages” states: “Windshields are an important part of
car safety” and
“Usually a chip or crack less than 6 inches (smaller than the size of a dollar
bill) can quickly be
repaired.” [SL0000077-78]. This affirmative statement of fact is false
because it denotes that
any windshield damage greater than the size of a dollar bill can never be
repaired and must be
replaced -- a misrepresentation Safelite also repeatedly states in its
marketing materials and its
training materials for its personal to falsely disseminate.
83. Safelite also provides “supporting facts” for the
Messaging Triangle.
[SL0000077-78 at 78]. One such “supporting fact” is: “When a chip is smaller
than a dollar bill,
it can usually be repaired without replacing the windshield.” Again, this
affirmative statement of
fact is literally false because it denotes that any windshield damage
greater than the size of a
dollar bill can never be repaired and must be replaced. Safelight represents
this six inch cutoff as
an accepted general fact even though Safelite knows it to be false. As
discussed above, Safelite
admits internally that windshield cracks longer than a dollar bill or
six inches can be safely
repaired.
84. Discovery has revealed how Safelite floods the market with oral
statements and
written advertising and/or marketing materials conveying the false belief that:
(i) a windshield
always requires a replacement when a crack is longer than six inches; and/or
(ii) only windshield
cracks up to six inches can be repaired. These forms of advertising
including, among other
things:
• Safelite’s website which includes written text and oral statements in
videos posted
on the website;
• Videos posted on YouTube;
• Point of Sale oral communications;
• Safelite brochures containing pictures of dollar bills or 6 inch-long
rulers, which
also refer customers to Safelite’s website;
• Brochures and bulletins drafted by Safelite for insurers and
other third parties
(like the 50 million member AAA) to distribute to their agents and consumers;
• Websites of insurers and other third parties (like the AAA) for
which Safelite
provides the marketing content; and
• Interviews, TV, radio spots, and press releases.
1. Safelite’s Misrepresentations on its Website
85. Safelite’s website is a powerful tool, not just for marketing
Safelite’s services, but
actually for signing up customers for repair and replacement
appointments. According to
documentation produced in this litigation (in response to document
requests) in 2016 alone
Safelite sold over in replacement windshields via its
websites. See [SL0084639-40].
For extended periods of time, Safelite’s website has been replete
with false affirmative
misrepresentations of fact, in both textual and video format, that only
windshield cracks up to six
inches can be safely repaired and/or that longer cracks require that
the windshield be replaced.
86. For example, Safelite’s website has included affirmative textual
statements falsely
stating (against the guidance of the ROLAGS Standard and what
Safelite acknowledges
internally) that, “Your windshield helps keep you safe. If the damage
is larger than 6", it
cannot be repaired. You need a replacement.” (emphasis supplied in original
on-line text).
[UB052368-69]; [UB042433-34] (box added for emphasis).
87. Prior to that articulation, the website falsely stated in
text (to customers who
indicated, in response to certain questions posed by Safelite, that they had a
crack larger than the
size of a dollar bill) that: “It sounds like we need to replace your
windshield. This is because if
the damage is too big . . . the structural integrity of the glass is damaged
beyond repair.”
[UB042435].
88. Each of these textual misrepresentations is literally false.
89. Moreover, because the internet and Safelite’s website are key
components of
Safelite’s organized campaign to turn repairs into unnecessary replacements,
Safelite engaged a
digital marketing company, Fathom, to script videos that Safelite then placed
on its website and
elsewhere on the internet. [SL0006322-30]; [SL0006358-66].
90. Documentation shows that Safelite posted videos on its website which
contained
false statements about the necessity of a windshield replacement when a
repair was otherwise
viable. See, e.g., [SL0001442] (discussing scripting of “[w]eb videos
[that] live within our
conversion funnel on our website) and [SL0001624-56] (identifying
website Sitemap Page
Names where Safelite’s videos regarding repair or replacement were embedded).
91. Fathom created multiple web videos (containing false
statements) for Safelite,
instructing when a windshield crack can be repaired or when a
replacement is necessary. For
example, the scripts for Safelite’s web videos contain the following false
statements:
• “If the chip or crack is larger than six inches (or bigger than the size
of a dollar bill) it
cannot be repaired[] so you’ll need a full windshield replacement.”
[SL0006352-53];
• “If the damage spreads beyond the size of a dollar bill, a
replacement will be
necessary.” [SL0006327-38];
• “How do you know if your windshield can be repaired? The easiest way to
tell is to
hold a dollar bill against the chip or crack. If it covers the damage, it can
usually be
repaired.” [SL0006364];
• “[i]f the chip or crack is larger than six inches (or bigger than the size
of a typical
smart phone) it cannot be repaired so you’ll need a full replacement.”
[SL0001443-
44]; and
• “You’re probably wondering [if you get a windshield chip or crack], do I
repair it or
replace it with a whole new windshield? Is repair even an option? ... If the
damage is
small enough it can be repaired without removing the windshield. Repairable
damage
typically fits under a dollar bill.” [SL0001451-52].
92. In addition, at least one of the videos placed on Safelite’s website
expressly states
that “If the damage spreads beyond the size of a dollar bill a replacement will
be necessary.” It
also has an image that shows the outline of a dollar bill over a windshield.
It says in text: “a
replacement will be necessary” when the damage is bigger than a dollar bill.
[UB088614].
93. Safelite’s misrepresentations in both written text and in
these videos on its
website were viewable to individual consumers, who were deciding what they need
to do to fix
the type of windshield damage they have suffered; and further, if
they want to pay to fix the
windshield damage independent of or in conjunction with their
comprehensive insurance
coverage.
94. Upon information and belief, these web videos were also distributed
to many of
Safelite’s insurance company customers for viewing by their agents and
policyholders. See [SL
0008011-21].
2. YouTube Videos
95. Safelite also states the dollar bill rule in videos that
Safelite characterizes as
“Education videos” and places on other internet sites such as YouTube See,
e.g., [SL0001442-
54]; (discussing “[e]ducation videos [that] live on YouTube and within paid
search”).
96. For example, one video posted to YouTube with over 300,000 views, “A
Safelite
AutoGlass® Windshield Repair,” states, “If the damages spreads beyond the size
of a dollar bill,
a replacement will be necessary.”
https://www.youtube.com/watch?v=Ev2MEoXmz2Q. This
video appears to be the same video Safelite maintained on its website.
3. Safelite Representatives’ Uniform Oral Point of Sale Communications
With Customers About the Dollar Bill Rule
97. As discussed above, Safelite’s Call Center Service
Representative’s (“CSRs”),
Repairing Associates, Technicians/Repair Specialists, Services Managers,
Retention Specialists
Area Sales Managers, District Managers, and Senior Level Executives are all
instructed to follow
the same “consistent” marketing/advertising message when communicating
with customers
and/or the third parties that serve them. The message is that only windshield
cracks “up to six
inches” or the size of a “dollar bill” can be repaired, and that when the
crack is longer it is not
safe to repair the windshield and/or “a replacement [is] the only option for
insuring the structural
integrity of the windshield within the vehicle’s overall safety features.”
[SL0055880-906 at slide
20] (Emphasis in original).
98. The 6,000 Safelite repair technicians and 2,000 customer service
representatives
at Safelite “call centers” together constitute Safelite’s frontline salesforce
to consumers. Safelite
documents show that Safelite’s repair technicians and customer service
representatives are
required to routinely take on-line training courses that govern their
sales interactions with
customers. [SL0001131-32]; [SL0001133-69]. Among other things, as an instructed
selling point
for communication to individual customers at point–of-sale about what
can or cannot be
repaired, the training teaches as an affirmative statement of fact that the way
for a customer to
determine if a windshield is repairable or must be replaced is if the damage
can be covered by
the size of a dollar bill, and that any crack longer than that requires a
windshield replacement.
99. For example, in October of 2008, Paul Syfko explained how “[a]ll the
scripting
for the call centers [continued to use] the dollar bill when
determining a potential repair
candidate.” [SL0005646-47]. Similarly, David Erwin’s online Repair
Training course was
revamped in August of 2009 in the form of a “new Call Center CSR repair
training program,”
which was also to be used for training repair specialists and
replacement technicians in their
sales interactions with customers (but now with a video being attached,
entitled “Safelite Proper
Repair”). As before 2007, the training continues to instruct that the
“way to determine if the
windshield is repairable is to ask if the damage can be covered by
the size of a dollar bill”.
[SL0001131-69].
100. This false commercial advertising message is systematically
disseminated to
millions of consumers as an affirmative, but literally false, statement of fact
each year through
their interactions with front-line Safelite representatives.
Safelite’s goal is to influence
customers’ purchasing decisions about Safelite windshield replacement goods and
services.
4. Safelite Repair Brochures
101. Safelite distributes hundreds of thousands of repair
brochures annually to
individual consumers and to insurance agents, commercial vehicle fleet
accounts, and third
parties like the 50 million member AAA, who in turn send
them to their individual
clients/customers. The brochures prominently feature the dollar bill rule
and/or falsely state that
if a windshield crack is longer than six inches the windshield must be
replaced. These brochures
also refer the reader to Safelite’s website where Safelite makes the same
literally false statements
discussed above.
102. For example, below is the front and back of a standard Safelite repair
brochure
sent to consumers and commercial clients, like Penske Corp, which has
a fleet of tens of
thousands of vehicles. The brochure was to be used by individual drivers to
determine whether a
windshield crack can be safely repaired or if the windshield must be
replaced. The brochure
features a ruler measuring six inches and states: “Windshield damaged?
It may be repairable.
Use this guide to help decide.” Safelite then falsely states “Damage
to a windshield doesn’t
always mean the windshield needs to be replaced. many windshield chips
and cracks up to
the length of a dollar bill can be successfully repaired. (Emphasis added).
[SL0009104-05].
103. Another example, is the Safelite brochure entitled “Improving your
view: ‘How
to Perform a Proper Repair’,” which states in relevant part:
What is repairable?
Did you know that most windshield chips or cracks up to the size of a dollar
bill
(6 inches) can be repaired? Most certified repair specialists can
repair chips,
nicks, or cracks up to 6 inches long.
* * *
Some things a reputable vehicle glass company should not do during the
repair process
• Insist on windshield replacement when repair is a safe, effective
solution
(Emphasis in original)
104. The front and back of this brochure which Safelite distributed to,
inter alia, the
AAA (which has 50 million members) and many insurance companies is shown below:
[SL0008022-23].
105. Safelite’s statements that the cutoff for repair of windshield cracks
is the size of a
dollar bill or six inches, and that any longer crack will require that the
windshield be replaced for
the safety of the consumer, are literally false. In fact, Safelite
knows that cracks much longer
than six inches can be safely repaired. It knows, contrary to its own public
statements, that it is
safer and less expensive to repair windshields with cracks longer than six
inches than to replace
them.
5. Brochures and “Training” Bulletins Created by Safelite That
Deceptively Identify The Insurance Company, Not Safelite, And State
The “Dollar Bill” Rule As A Universal Standard For Safe Windshield
Repair
106. Safelite’s organized campaign to convince people to replace
windshields that are
repairable includes crafting brochures with the “dollar bill” or six
inch” rule for informative
distribution to insurance agents and consumers. These materials deceptively use
the names of the
insurance companies that Safelite has contracts with -- as if the
insurance company i.e. not
Safelite was making the statement that six inches was the cutoff for
safe windshield crack
repairs.
107. For example, below is a standard brochure that Safelite created for
Farm Bureau
Insurance of Idaho (“IDFB”) with the dollar bill rule being the
outer limit of repair. Their
brochure makes no mention of Safelite. Safelite’s internal documents
reflect that Safelite sent
IDFB tens of thousands of these brochures as late as 2012.
[SL0084917-18].
108. Safelite also drafts and sends tens of thousands of “bulletins” to
insurance agents
under the guise of being drafted by the insurance agent’s company, not
Safelite, such as bulletins
for Progressive Insurance, Alfa Insurance and Erie Insurance. In
each of these “bulletins,”
Safelite has the insurance company -- i.e. not Safelite -- repeat the “dollar
bill” rule as the upper
limit for safe windshield repair after which a windshield replacement will be
required.
109. For example, as shown below, Safelite created a bulletin for Alfa
Insurance (that
does nor even mention Safelite) stating, inter alia, “Did you know
that a certified repair
specialist can successfully repair cracks up to six inches long. (Think of the
size of a dollar bill.)
A trained Alfa Glass representative will offer your policyholder repair as a
viable option for any
break that falls within that size limit.”
[SL0000227].
110. Similarly, the ErieGlass Bulletin drafted by Safelite states
that it is to “Help
educate policyholders on the benefits of windshield repair,” and that “Safelite
AutoGlass has
raised windshield repair awareness through national advertising” and repeats
the false “dollar bill
rule.” (Emphasis in original). Specifically, as shown below, the ErieGlass
Bulletin states, inter
alia, that “small cracks (up to the size of a dollar bill) can be repaired
rather than replaced when
quick action is taken before the damage spreads.”
[SL0008030-35].
111. Safelite’s bulletin for Progressive Insurance’s agents is headed “What
you and
your policyholders should know about windshield repair.” (Emphasis in
original). But, like
the Alfa Insurance bulletin, it does not mention Safelite as the drafter of the
marketing content.
The bulletin states “damage to the windshield doesn’t always mean the
windshield needs to be
replaced. If addressed quickly, many windshield chips and even small cracks up
to the length of
a dollar bill can be successfully repaired.”
112. A September 2015 Safelite email from, Jim McMillan, Safelite’s Vice
President
of Client Sales and Support, to Progressive Insurance executives states that
Safelite’s Area Sales
Managers (“ASM”) would use this bulletin (shown below) as the “‘script’
they should follow
during their visit” with over 5,300 agent offices for “value-added training”
regarding windshield
repair.” In connection with this “training” effort for Progressive Insurance
agents, McMillan led
a “[n]ational conference call . . . with all [Area Sales Managers and]
District Managers to make
sure they clearly understand the subject matter of the bulletin and how it
should/should not be
presented to Progressive agents by their ASMs.” [SL0082623-27]; [SL0080960-62].
[SL0080962].
113. The bulletin also refers the Progressive insurance agents and/or
policyholders to a
website link that is the insurance company’s website, and the website
contains the same
misleading content as in the bulletin -- that only windshield cracks
up to six inches might be
repairable. See https://www.progressive.com/claims/glass-repair/. Additionally,
Safelite provided
insurance companies and other third parties like AAA for placement on
their websites the
repair/replacement videos and text with their misleading content that only
damage that can be
covered by a dollar bill is repairable. See [SL0000340]; [SL0008011-21].
6. Safelite’s Additional Educational Materials For Insurance Companies
and Their Agents
114. In addition to “training” bulletins discussed above, Safelite
also developed
PowerPoint presentations for insurance companies and their staff such as its
“Windshield Repair:
Continuing Education Course For Property and Casualty Insurance Agents
and Staff.” The
presentation states unequivocally that only “Cracks 6” or less can be
repaired.” [SL0005374-
415]; [SL0007935-78] (emphasis added).
115. Similarly, Safelite has another PowerPoint Presentation
entitled “Agent
Continuing Education Course: Controlling Vehicle Glass Losses” which repeats
the “dollar bill”
rule as the cutoff for repair, and also embeds the false and misleading
Safelite videos regarding
repair and replacement discussed above. Notably, this presentation purports to
educate insurance
agents generally about windshield repair and replacement and the VGRR industry
as an objective
presentation of facts i.e. the facts discussed therein are not
specific to Safelite. This format
misleadingly gives these false statements an appearance of objectivity.
Safelite refers internally
to the format as “de-branding.” [SL0008139-203]; [SL0008288-353].
116. Another example is a PowerPoint presentation Safelite created
in 2017 for
Progressive Insurance agents with slides instructing: “Repair
Disqualifiers Replacement
Recommended [-] Damages/crack larger than a dollar bill”; and
“Questions to Consider
Asking Policyholder [-] Can the overall damage be covered with a dollar bill?”
(Emphasis in
original). [SL0080736-59].
7. Press Releases & TV/Radio Interviews
117. Safelite’s organized campaign to spread its dollar bill message as a
blanket rule
also extends to news releases, guest columns, and radio interviews.
118. For example, in early 2009, Safelite was losing market share to
competitors that
were offering deep discounts and/or financial incentives. To counter this
loss of market share,
Safelite published advertisements questioning their competitors’ business
practices such as
“Don’t risk your safety for a few free dinners”; and “How much will a free
windshield really cost
you?” -- which falsely stated, inter alia, “The good news is that most chips or
cracks smaller
than the size of a dollar bill can be repaired.” [SL0009721-31]. Safelite
coupled these ads with
radio ads directing consumers to Safelite’s website.
119. For example, a 2010 “Guest Column” by Safelite’s Government &
Auction
Coordinator in a publication entitled “Police Fleet Manager”
discussing the benefits of
windshield repair, inter alia, states unequivocally: “Luckily, if the crack is
less than 6 inches, it
can be repaired.” [SL0009177-78].
120. Similarly, Safelite issued a news release on July 11, 2011
touting its new
windshield repair resin. The release quotes Tom Feeny, president and CEO of
Safelite, stating
“Drivers need to know most chips and cracks up to six inches can be repaired --
a service that
has many benefits including preserving the windshield’s structural
integrity & factory seal.”
[SL0006033].
121. Safelite also takes advantage of opportunities where its employees are
interviewed
on a radio or TV shows – one of the key components of Safelite’s
marketing strategy to
communicate its “dollar bill” rule. For example, consistent with the
“Messaging Triangle”
discussed above, when a Safelite executive was asked to appear on a
radio show to discuss
repairs in 2013 he was provided with Safelite’s “messaging on the advantages of
repairs.” This
messaging took the form of Safelite’s “Message Triangle,” which
states: “Usually, a chip or
crack less than six inches (smaller than the size of a dollar bill)
can quickly be repaired” as
discussed above. [SL0000067-69]; See also [SL0007583-89] (TV show “Talking
Points . . . .
When a chip is smaller than a dollar bill, it can usually be
repaired without replacing the
windshield”).
F. Safelite Has Caused Ultra Bond Significant Damage Due To Its False
Statements That Windshield Cracks Longer Than Six Inches Cannot Be
Safely Repaired Under Any Circumstances
122. Ultra Bond sells repair kits, resins, primers, additives and
pre-treatment chemicals
and tools necessary to repair windshield cracks longer than six inches using
the multi-viscosity
method. Additionally, Ultra Bond sells refills of the resins that function best
with its system of
repair.
123. Also, while the multi-viscosity method patent expired in 2012, Ultra
Bond and
Ultra Bond Licensing continues to “license” the “know how” required for
properly utilizing the
multi-viscosity method of repairing windshields, which requires
instruction for proper
performance.
124. As previously alleged, the benefits of repairing windshield cracks
longer than six
inches up to 14 inches (consistent with the ROLAGS), as opposed to windshield
replacement, are
significant to the consuming public, both in terms of safety and cost.
125. However, despite the early success of the Ultra Bond system
for repairing
windshield cracks longer than six inches when first introduced, Plaintiffs’
subsequent sales and
licenses to VGRR shops and related businesses in the United States
have been significantly
hampered.
126. The cause of Plaintiffs’ low sales and reduced licenses is not the
performance of
the Ultra Bond system; rather, it is the material false statements and
misrepresentations made by
Safelite to individual consumers and businesses that serve consumers, that only
cracks “up to six
inches” and/or the size of a “dollar bill” can be repaired, and that it is
unsafe to repair windshield
cracks longer than six inches. If consumers and the entities that
serve them were not told the
above false statements they would seek out shops that perform Long Crack repair
and, in turn,
VGRR shops and related businesses would purchase or license Plaintiffs’
products in order to be
able to offer this service.
127. Safelite uses its dominant position in the VGRR market to
convey the false
message that the “six inch” or “dollar bill” rule is an accepted
standard for safe windshield
repairs. Upon information and belief, if Safelite did not convey this false
message, over 90% of
individual consumers would choose to perform cheaper and safer Long Crack
repair rather than
more expensive and more dangerous windshield replacement.
Nevertheless, despite clear
industry guidelines in place since 2007, and Safelite’s own internal knowledge
that windshield
cracks far longer than six inches can safely be repaired, Safelite
falsely states that windshield
cracks longer than six inches cannot be repaired. It does this for its own
financial benefit and to
the detriment and harm of consumers, both in terms of cost and safety.
128. Because informed consumers would choose to repair windshield
cracks longer
than six inches if Safelite did not engage in making its literally
false statements of fact,
automotive shops and related businesses would have to purchase a system capable
of performing
satisfactory repairs of windshield cracks longer than six inches and up to at
least 14 inches in
length (i.e. consistent with the ROLAGS) to meet increased consumer demand.
Otherwise, they
would risk losing out on increased windshield repair business. This increased
customer demand
for, and satisfaction with, Long Crack repair would have resulted in more sales
(and profits) for
Plaintiffs were it not for the deceptive conduct of Safelite.
129. In addition to lost profits due to Ultra Bond’s inability to
sell its original Long
Crack repair system, Plaintiffs have not been able to develop, market or
license a more advanced
system for Long Crack repair for which Richard Campfield obtained a patent in
September of
2012.
130. The Ultra Bond repair system as originally patented utilized
an acrylate-hybrid
UV “radical” cure. However, as described above, in September of 2012, Ultra
Bond obtained
the 2012 Patent, which is a method of using UV cationic epoxy to repair cracks
and breaks in
windshields. The UV cationic epoxy method under the 2012 Patent is
even easier to use. It
eliminates oxygen inhibition, shrinkage and dark cures after any
exposure to UV. In addition,
once cured, UV cationic offers extreme clarity and greater temperature and
moisture resistance.
See Exhibit B. The 2012 Patent represents yet another breakthrough in the
technology of Long
Crack repairs.
131. However, because of the lost profits and destruction of the
Long Crack repair
market via Safelite’s false statements of fact in its advertising and
marketing materials, Ultra
Bond has been unable to bring this more advanced technology to market. This has
again resulted
in further lost profits.
132. In sum, Safelite’s material misrepresentations about the dollar
bill or six inch
rules have directly caused Plaintiffs significant lost profits by severely
weakening the market that
would otherwise exist for Ultra Bond’s products and services.
133. Plaintiffs have not sat by idly without protest while Safelite has
engaged in its
false advertising campaign, stating: (i) that a windshield always requires a
replacement when a
crack is longer than six inches; and/or (ii) that only windshield cracks up to
six inches can be
repaired. Rather, Plaintiffs (who have not previously been in an
economic position to pursue
litigation) have tried to turn to alternative means of protest to government
officials and directly
to Safelite to stop the false advertising.
134. These protest include (but are not limited to) the following:
• A letter sent by Campfield on April 12, 2010 to the CEO of Safelite
(Thomas Feeney)
addressing among other issues the six inch rule and requesting any
evidence that
would support it ([UB050404]);
• Correspondence directed by Campfield over a course of years (as President
and Vice
President of the National Windshield Repair Association) to the Attorney
Generals of
all 50 states, the Colorado Insurance Commissioner, the New Jersey
Divisions of
Criminal Justice Office of the Insurance Fraud Prosecutor discussing
inter alia
“adjusting criteria and repairable damage” and highlighting the falsity of the
“dollar
bill” adjusting criteria (see, e.g., [UB062418-21]);
• Correspondence, in July 2013, directed to Farmers Insurance concerning
adherence to
the ROLAGS repair criteria. ([UB075635-36]);
135. Moreover, nothing done by Plaintiffs has induced Safelite into
refraining from
taking corrective action to stop dissemination of its false
representations. Rather, Safelite has
continued to create and promulgate new false advertisements, stating: i) that a
windshield always
requires a replacement when a crack is longer than six inches; and/or (ii) that
only windshield
cracks up to six inches can be repaired.
V. CLAIM FOR RELIEF
A. Violations of Section 43(a) of the Lanham Act
136. Plaintiffs repeat and re-allege all allegations contained
in the preceding
paragraphs, as though fully set forth herein.
137. Section 43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B)
prohibits, inter
alia, any “false or misleading description of fact, or false or misleading
representation of fact,
which . . . in commercial advertising or promotion, misrepresents the nature
characteristics, [or]
qualities . . . of . . . goods, services, or commercial activities.”
138. As described above, Defendants advertise and/or promote their
windshield repair
and replacement services in interstate commerce, inter alia: (i) on
the worldwide web; (ii)
through multiple non-internet based media outlets such as print and
radio; and, (iii) through
Safelite’s customer service representatives and repair technicians who
interact directly with
customers in person and in recorded phone calls; and (iv) through
insurance companies and
their thousands of agents and staff who also deal
directly with millions of
policyholders/consumers.
139. As described above, Defendants knowingly and falsely state
that windshield
cracks longer than six inches cannot be repaired and require that the
windshield be replaced or,
conversely, that only windshield cracks up to six inches (or the size of a
dollar bill) can be safely
repaired.
140. Defendants made (and continue to make) these knowing literally false
statements
with the intention of inducing consumers enter into a windshield replacement
transaction when
their windshield crack is longer than six inches. As such, Defendants have
damaged Plaintiffs’
Long Crack repair services.
141. Safelite’s false statements are material because, inter alia,
windshields repairs are
both safer and cheaper for the consumer than a windshield replacement.
142. Defendants have full knowledge of the ROLAGS Standard for
repair of Long
Cracks -- as well as their own internal conclusions that windshield
cracks far longer than six
inches can be safely repaired -- but they knowingly choose to
misrepresent the length of
windshield cracks that can be safely repaired to the public. This is
done to mislead unwitting
consumers to purchase higher priced, less safe windshield replacements.
Defendants benefit
financially from performing as many windshield replacements as possible rather
than repairs.
143. Defendants’ literally false statements have deceived, and
continue to deceive, a
substantial segment of the buying public. Safelite’s misrepresentations
that cracks over six
inches are not repairable harm the public because Safelite’s
VGRR business replaces
approximately 3 million windshields a year, and absent Safelite’s
misrepresentations, many of
these replacements would result in cheaper and safer repairs.
144. Upon information and belief, many of the windshields replaced by
Safelite could,
in fact, have been repaired if Safelite not misrepresented that only windshield
cracks “up to six
inches” long can be repaired and that it is unsafe to repair cracks that are
longer. Data tabulated
by Ultra Bond, from its own business records, suggests that an artificial,
bright-line six inch rule
has resulted in a situation where 80-90% of total replacements could, in fact,
have been repaired
had the market for Long Crack repair not been suppressed and negatively
impacted by Safelite’s
false statements. For example, Ultra Bond’s repair and replacement business in
Grand Junction,
Colorado markets and advertises both crack repair and replacement and tells
every consumer the
truth on their options to repair or replace, resulting in an 80-90% crack
repair versus replacement
ratio.
145. Section 35 of the Lanham Act entitles a plaintiff, “subject
to the principles of
equity,” to recover (1) the defendant’s profits from the false
advertising, (2) any damages
sustained by the plaintiff, and (3) the costs of the action. In addition,
Section 35 permits a court
to award up to three times the amount of actual damages, and to
adjust an award of the
defendant’s profits as the court sees fit according to the circumstances of the
case. 15 U.S.C.A. §
1117.
146. Plaintiffs have suffered injury in the form of lost business
opportunities directly
caused by Safelite’s false statements, which have wiped out a large portion (if
not most) of the
market for Ultra Bond’s products and services.
147. Absent Safelite’s false statements, Ultra Bond, Inc. (and Ultra
Bond Licensing)
would have sold millions of dollars of tools, resins, licenses, and consulting
services related to
Long Crack repair. In addition, Ultra Bond Windshield Repair and
Replacement in Grand
Junction, Colorado and throughout Northeastern Pennsylvania would have
been able to repair
many of the windshields with Long Cracks that Safelite unfairly and
deceptively caused its
customers to replace their windshields.
148. Defendants’ misconduct has also caused Plaintiffs to delay marketing
and selling
the improved Long Crack repair method patented under the 2012 UV Epoxy Patent.
As a result,
Plaintiffs have suffered and will continue to suffer substantial lost
profits associated with the
delay in marketing and selling Ultra Bond’s products and services
associated with that
proprietary process.
149. Plaintiffs demand the amount of actual damages they have
sustained, together
with (if successful), the costs of this action together with reasonable
attorney fees as determined
by the Court.
150. In addition, because Safelite has wrongly benefited from its
deceptive practices
and knowing false statements by, inter alia, unfairly inducing
individual and commercial
customers to unnecessarily pay for more expensive and less safe windshield
replacements at its
VGRR shops, Plaintiffs demand damages in the form disgorgement of these
ill-gotten gains.
151. Lastly, Plaintiffs request that the Court impose an injunction
requiring Safelite to
desist from continuing to make false representations that windshield
cracks longer than six
inches cannot be repaired, and to issue corrective disclosures, consistent with
the ROLAGS, to
individual consumers and the businesses that serve them concerning windshield
repairs.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs, respectfully request that judgment be entered in their
favor and
against Defendants as follows:
A. Enter judgments against each of the Defendants and in favor of
Plaintiffs
predicated on Defendants’ violations of the Lanham Act on all claims as alleged
herein;
B. Enter an Order:
a. Permanently enjoining Defendants from disseminating or causing the
dissemination of any oral or written statements, expressly or by implication,
stating that only windshield cracks up to six inches long can be safely repaired
and/or that windshield cracks longer than six inches require that the
windshield be replaced rather than repaired.
b. Requiring Defendants to disseminate corrective advertising for the
misrepresentations in (a) above in a manner to be determined.
C. Enter an Order awarding Plaintiffs the ill-gotten profits Defendants
derived from
their wrongful acts as complained of herein, as allowed by the Lanham Act;
D. Enter an Order awarding Plaintiffs all damages sustained by them,
including
Plaintiffs’ lost profits, reasonable attorney’s fees, other costs of this suit,
and prejudgment and
post-judgment interest, as allowed by law; and
E. Enter an Order awarding such further and additional relief as the
Court may deem
just and proper.
DEMAND FOR JURY TRIAL
Pursuant to Federal Rule of Civil Procedure 38, Plaintiffs, on behalf of
themselves demand a
trial by jury on all issues so triable.
Respectfully submitted,
s/ Drew Legando
Drew Legando (0084209)
Jack Landskroner (0059227)
LANDSKRONER GRIECO MERRIMAN, LLC
1360 West 9th Street, Suite 200
Cleveland, Ohio 44113
T. (216) 522-9000
F. (216) 522-9007
E. drew@lgmlegal.com, jack@lgmlegal.com
Peter R. Kahana, Esq.
Michael Kane, Esq.
Y. Michael Twersky, Esq.
BERGER & MONTAGUE, P.C.
1622 Locust Street
Philadelphia, Pennsylvania 19103
T. (215) 875-3000
F. (215) 875-4604
E. pkahan@bm.net, mkane@bm.net
mitwerseky@bm.net
Kurt B. Olsen, Esq.
KLAFTER OLSEN & LESSER, LLP
1250 Connecticut Ave., NW, Suite 200
Washington DC 20036
T. (202) 261-3553
F. (202) 261-3533
E. ko@klafterolsen.com
Fran L. Rudich, Esq.
Michael Reed, Esq.
KLAFTER OLSEN & LESSER, LLP
Two International Drive, Suite 350
Rye Brook, New York 10573
T. (914) 934-9200
F. (914) 934-9220
E. fran@klafterolsen.com
Counsel for Plaintiffs
