Federal Court Permits Safelite to Move Forward with Counterclaims Against Diamond Triumph

Ohio-based Safelite Group Inc., a provider of property and casualty claims management solutions and auto glass repair and replacement products and services, announced several favorable rulings related to the company’s counterclaims filed against Diamond Triumph Auto Glass.

In a ruling issued on Nov. 12, 2004, the Honorable James Munley of the United States District Court for the Middle District of Pennsylvania denied Diamond Triumph’s attempt to dismiss commercial bribery and false advertising counterclaims filed by Safelite. The court dismissed one claim alleged under an Illinois statute but gave Safelite permission to restate the claim as a civil common law claim. In November 2002, Safelite filed a defamation counterclaim against Diamond Triumph, which Diamond did not seek to dismiss.

The first of Safelite’s counterclaims allege that letters Diamond Triumph sent to Safelite’s insurance customers, along with other conduct, constitute false advertising under the Lanham Act. Additional counterclaims allege Diamond Triumph illegally pays gratuities or gifts to insurance agency representatives in return for auto glass job referrals.

Safelite alleges these payments:

* Constitute commercial bribery under the Robinson-Patman Act;

* Are prohibited by common law unfair competition;

* Violate deceptive trade and commercial bribery statutes of certain

states; and

* Constitute a breach of the former network contract between the parties, which requires compliance with laws applicable to the auto glass business.

“We are very pleased with Judge Munley’s ruling,” said Mark Smolik, senior vice president & general counsel for Safelite Group. “We look forward to the opportunity to show that Diamond Triumph unlawfully engaged in commercial bribery and unfair trade practices by paying various insurance agency representatives for auto glass claim referrals.”