Jurors Speak Out in State Farm vs. Pyorre and Wier Case

March 10, 2003

Mendocino County Superior Court Judge Richard Henderson recently overturned a jury’s $6 million award to former State Farm agents Rich Pyorre and John Wier, of Fort Bragg and Crescent City, Calif., respectively, in a six-week trial that pitted the former agents against the giant insurance company.

Additionally, Judge Henderson denied State Farm’s motion for a Judgment Notwithstanding of the Verdict (JNOV), which essentially would have reversed the jury’s decision in favor of State Farm.

Among the accusations included State Farm Automobile Mutual Insurance Company’s initial complaint in the form of a lawsuit against Pyorre and Wier, alleging the former agents were disclosing trade secrets from the company.

A counter-suit filed by Pyorre and Wier charged State Farm with wrongful termination and interference with contracts when the agents tried to place business with Mercury Insurance Company.

The damages, incidentally, were decided based on the jury’s conclusion that State Farm did indeed interfere with Pyorre and Wier’s contracts with Mercury, resulting in a loss of commissions and emotional distress. This judgment was actually based on Pyorre and Wier’s secondary damage claim, according to their lawyer, Washington D.C.-based William Tedards. Judge Henderson took the initial damage claim of wrongful termination from the jury during the middle of trial, and decided that portion of the case himself in favor of State Farm.

“That area, I think, is one of the most erroneous things that the judge did,” Tedards said. “I don’t think that he had a sound basis for taking it away from the jury, and I don’t think he ruled correctly in deciding it himself. What he decided basically is that the contract is terminable at will, so there are no complaints for it being terminated.”

In court documents, Judge Henderson stated “In retrospect, the jurors may have been confused by the verdict question of trade secret ownership when the agency agreements clearly stated that trade secret information was the property of State Farm. It is also possible that some jurors were confused or, perhaps, improperly influenced by the substantial amount of testimony that was presented on the reasons and motives for the agency terminations before the court itself determined that the terminations were proper. Some of the determinations the jury made in answering the specific questions in the special verdict forms were not supported by evidence.”

Many of the jurors who sat in on Pyorre and Wier’s trial expressed their discontent with the judge’s Jan. 17, 2003 decision to overturn the jury’s verdict. Chuck McFadin, a Covello, Calif.-based retired district ranger for the Mendocino County Forest, was one of the 12 jurors in the trial. McFadin said he was “surprised” and “confused” by Judge Henderson’s decision.

“I had expected the possibility of an appeal by State Farm, but I didn’t expect what the judge came up with that I read in the paper—which was ‘some of the determinations the jury made in answering the specific questions were not supported by evidence,'” McFadin said. “I assume he’s talking about a question form that the jury received and it had several sections. We [the jury] all looked at that and thought my, we don’t understand a lot of it, but we understood the evidence in the case. I think in answering some of the yes and no questions, that may have been where the confusion was. But the jury, I thought, deliberated well.”

Alternate juror Jim Matthews expressed similar disbelief. While Matthews, an educator hailing from Ukiah, Calif., was not privy to the jury’s deliberations, he took methodical notes throughout the trial and came to his own conclusion about the trial, which matched the verdict delivered by the jury. “I think that it’s a little bit disingenuous for the judge to come back at this point and cite jury’s lack of understanding in view of the fact that the judge gave the jury eight pages of instructions, which severally limited the jury’s capacity for interpreting what they heard over the six-week trial,” Matthews said.

“The jury had very specific instructions to answer questions either yes or no. If they answer to a given question with yes, then the jury went on to the next question. If the answer to a question was no, then the jury was instructed to go on to another page of questions. So it’s not as if the jury heard the testimony and then walked in to the jury room, and had the latitude to be able to discuss any and all aspects, and arrive at a conclusion simply based on everything that was testified to in the courtroom. In fact, the jury had to give specific answers to specific questions, so for the judge to come back and say the jury didn’t understand it puzzled me.”

Matthews came into the trial doubting the innocence of the former agents, as did McFadin. “My overall impression when I first started out was that these two guys had done something wrong, he said. “Over the six weeks, they and their attorneys persuaded me that it was in fact the company that was acting improperly.

“However, in trying to be a good juror in order to give a fair hearing to both sides, I didn’t reach any conclusions, I kept an open mind, and over the course of the next six weeks, Wier and Pyorre’s attorneys just took the State Farm case apart bit by bit by bit,” Matthews continued. “Meanwhile, building their own case until it got to the point at the end where I didn’t know why State Farm even let this go to a jury trial. I couldn’t imagine a sophisticated company with sophisticated attorneys letting such an outrageous case go to a jury, because State Farm, they had no case, they didn’t prove anything, and these other fellows showed that State Farm’s intent to exclude them from acting under the contracts which they signed when they went to work for the company. Those contracts established a certain set of relationships between the agents and the company, the agents and their prospects, their clients, and so forth.

“In fact, I thought that Wier and Pyorre’s attorneys really showed the base attitude of the company in dealing with its agents. They wanted them to sell a new kind of product—mutual funds. These fellows didn’t come on board to do that, they came on board with an understanding that they were going to sell auto and homeowners policies. It seems to me that the company then interfered with their pursuit of their contractual obligations and contractual rights under the agreements that they signed when they came on board with the company.”

For McFadin, it was the actions of State Farm field executive Vic Chaney that really turned the tables for him. When Wier was approached with a new contract to accept and sign, Chaney allegedly denied Wier a written statement saying that the provisions in his previous contract would not be voided. “It appeared to us that Chaney just really has a desire to get rid of that man,” McFadin said, based on the testimony of another witness, who had testified that Chaney granted her a request similar to Wier’s.

“I thought a jury was to basically take the evidence presented, take a look at those charges, and see whether or not those charges were upheld by the evidence,” McFadin added. “I do think our verdict was correct. I understand the appeal, I had no problems with that, but I was very surprised with the judge himself.”

The motivation driving Judge Henderson’s decision is unclear, although Tedards has some of his own theories. “The reason this can happen is because, in California, as in many states, the judge actually has the status of a 13th juror. He’s not supposed to substitute his judgment or his preference; what he’s supposed to do is weigh the evidence, and, if sitting like a juror, he decides that the weight of the evidence does not support what the jury said, he can give a new trial,” Tedards said. “He can’t say the other side wins, but he can make us try the case again. In this case, what the judge did, is he decided ‘I want to protect State Farm no matter what, and so wherever there’s been a conflict in the evidence, I am going to say that the other side didn’t have any evidence.'”

Tedards explained that in his experience, trial level judges “typically consider themselves kind of conservators of the establishment, so to speak.” In this case, State Farm’s contract and operations represent the well-established order, and as Tedards said, trial judges get upset when someone tries to disturb the established order.

“When you get to the appellate level, what you get is a mixed bag—you have a three judge panel, Tedards added. “So right away, I feel a lot better, because you have three differing viewpoints. What you have is much more of an open field with a bigger picture field at the appellate level. You can still get waxed at the appellate court level, but your odds are better.

“What I think is going to happen is that this case is going to be viewed at the appellate level as a decision by a judge who has decided in his own mind he wants to protect State Farm and their business and their contracts and so forth,” Tedards continued. “He has decided that in his own mind. One could say, well if that’s true, why didn’t he just grab the JNOV? And the reason he didn’t do it is because he knows that that would become the easiest thing to overturn. So granting a new trial is a way to protect them, but it’s something that is way harder to overturn.”

However confident Tedards is, the fact that the jury’s decision was overturned will remain an open wound for some time, especially for the jurors, who spent weeks carefully documenting evidence, facts, and testimony.

“A lot of us spent many nights in bed thinking about what we had heard,” McFadin said. “It wasn’t a matter of walking out of there and forgetting about it; this was a major part of our lives for six weeks. We were reviewing data in our minds, coming back the next day and reviewing our notes, trying to keep abreast of what was being said and by whom.”

“It was a jury which took it’s charge from the judge very seriously, was conscientious in listening to the testimony, and then, it seems to me, deliberated in a judicious way and came in with a verdict that was fair,” Matthews said. “To have the whole thing thrown out at this point is mind-boggling.”

“It’s disappointing because it’s kind of a jury nullification thing, but it doesn’t surprise me that it happens,” Tedards added.

Pyorre and Wier will take their case to the California Court of Appeals and await a decision there.

To comment on this story, e-mail: cbeisiegel@insurancejournal.com.

Topics Agencies

Was this article valuable?

Here are more articles you may enjoy.

From This Issue

Insurance Journal Magazine March 10, 2003
March 10, 2003
Insurance Journal Magazine

EPLI Issue/E&O/D&O