Five former State Farm Insurance agents were awarded $20 million by a Kansas City, Mo. jury that ruled they were improperly terminated for criticizing the way the company treated its policyholders.
The agents, whose contracts were terminated in January 2000, were awarded $9 million in actual damages and $11 million in punitive damages. After a three-week trial, the Jackson County jury took the case Thursday and deliberated about five hours before issuing its verdict on Aug. 5.
“At its heart, this case was about whether State Farm could terminate an agent in retaliation for speaking out publicly to protect policyholder interests,” said Norman Siegel of Kansas City, one of the plaintiffs’ lawyers.
John Wiscaver, a spokesman for Bloomington, Ill.-based State Farm, said the company was disappointed but declined further comment.
The company’s approximately 17,000 agents are independent contractors.
One of the plaintiffs, Joseph J. Kelly of Joplin, Mo., testified at trial that he was frequently concerned about the company’s treatment of its policyholders. In December 1999, the five agents allowed their names to be used in a letter critical of State Farm that was sent to the Texas insurance commissioner.
The letter alleged in part that the company overcharged for homeowner’s insurance, engaged in sales discrimination and attempted to defraud accident victims of the full amount they were due.
Two of the plaintiffs, Tana Glockner of California, Md., and Michael Lee Morgan of Centerville, Ohio, had already signed a similar letter to the Senate Commerce Committee and taken part in a news conference in Washington.
Both letters also alleged that State Farm specified the use of substandard replacement auto parts — an issue that prompted a class action lawsuit in Illinois in 1999 and a $1.18 billion verdict against the company.
That case is still on appeal, and the company suspended its use of replacement parts shortly after the Illinois verdict.
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