Minnesota Commerce Department must pay $1 million in legal fees to windshield-repair company

A federal judge has ordered the Minnesota Department of Commerce to pay nearly $1 million in legal fees racked up by a windshield-repair company the department had challenged over its business tactics.

The order issued earlier this month stems from a more than two-year dispute between state commerce officials and Safelite AutoGlass, an Ohio-based company with 11 locations and 165 employees in Minnesota. Commerce Commissioner Michael Rothman alleged that Safelite used sales strategies that quashed competition from other auto-glass businesses and hurt consumers, and tried to block insurance companies from doing business with Safelite. In response, Safelite sued the Department of Commerce.

In earlier rulings, an administrative law judge found that the Department of Commerce's investigation had not turned up wrongdoing by Safelite — prompting the company to try to recoup its extensive legal costs. The order for the state to pay the company's legal bills came from a different judge.

In a statement, Commerce Department spokesman Ross Corson said the agency "stands by its insurance company investigation to help protect consumers and small, local businesses from anti-competitive practices, and will continue to do its job even when companies hire out-of-state attorneys with fees in excess of $1,000 per hour."

Corson added that "the deck is stacked in favor of private industry while Minnesotans struggle to understand their rights and how to protect themselves from inappropriate industry practices."

Some Republican state lawmakers are criticizing Rothman and his department for leaving Minnesotans with the bill.

"This is unnecessarily costing taxpayers a lot of money," said Rep. Kelly Fenton, R-Woodbury. "They shouldn't have to be on the hook for this."

Corson said department officials are determining whether they'll appeal the order.

The department launched an investigation into Safelite after receiving complaints that the company and its vendors were pushing people who were filing insurance claims to use their services by telling them that they could end up paying extra fees if they had repairs done elsewhere. It then ordered the insurance companies working with Safelite to change the way they explained service options to customers — or risk enforcement action by the state.

After Safelite sued, a district judge found that the company and its vendors had not acted improperly, and that the Commerce Department violated the company's First Amendment rights by trying to change the way it interacted with customers.

And in an order issued this spring, Administrative Law Judge James E. LaFave found that the department overstepped its rights in gathering information from Safelite and then trying to penalize the company, writing that "the record lacks evidence that Safelite violated any 'law, rule, or order' and therefore the Department has no basis to impose a civil penalty."

Safelite said in a statement from spokeswoman Kathryn Salvator that it was pleased the court had ordered the Commerce Department to cover some of its attorney fees.

"Most importantly, we're glad to put this situation behind us and continue to focus on providing exceptional service for Minnesota customers who need windshield repair or replacement," she said.

Fenton said the Safelite case is one of a handful of issues prompting her and some other lawmakers to take a closer look at how the Commerce Department interacts with Minnesota businesses.

Earlier this year, she and Rep. Tony Albright, R-Prior Lake, sent a letter to Gov. Mark Dayton that pointed to what they called "a pattern of inappropriate behavior and abuse of power by high level officials at the department."

That letter points to a separate situation in which Rothman directed insurers to gather information about the gender and sexual orientation of their board members and suppliers.

A judge ultimately found that the department's request was improper under Minnesota law.

Fenton said she has not received a response from Dayton to her letter. The Governor's Office declined to comment on the Safelite case.

Erin Golden • 612-673-4790