Shop owners sue State Farm for steering

This article, which originally appeared in the July issue, is being reprinted because of a printing company error that omitted the second half of the story.

Nine more shop owners are accusing a major insurer of steering, and this time the allegations are against State Farm Mutual Insurance Co.

Filed Dec. 14 in circuit court in the 22nd judicial district of Jefferson County, Mississippi, Errol Pierce et al. v. State Farm Mutual Automobile Insurance Co. et al. alleges that the company participated in steering by "illegally threatening to withhold payments for repairs," the lawsuit says. "Defendants unreasonably and deceptively demanded that policyholders and claimants take their damaged vehicles to repair facilities other than the plaintiffs' businesses."

It also accuses the insurer of"instituting a retaliatory campaign to harass, disparage and professionally discredit plaintiffs through false and malicious representations to plaintifs' potential customers regarding the quality of work performed by plaintiffs."

Dave Hurst, spokesperson for State Farm, says, "We deny the allegation. We do not engage in steering, and we are defending ourselves in court."

Four State Farm adjusters are also named individually as defendants in the lawsuit, meaning that they could personally be liable for any damages awarded. The adjusters include Dan Bell of Cleveland, Miss.; Paula Calcote of Vicksburg, Miss.; Godwin Dafe of Jackson, Miss.; and Ada Lauderdale of Vicksburg, Miss.

Several of the plaintiffs listed in this case were included in a similar steering lawsuit filed against Allstate on June 22, 2000 (See the sidebar, "The Plaintiffs").The plaintiffs are seeking compensatory and punitive damages, attorneys' fees and costs, and an injunction that prohibits the insurer from steering.

In January, State Farm asked to have the case moved to federal court, and the request was granted. Brian Herrington, a partner in Barrett Law Office in Lexington, Miss. and one of the attorneys for the plaintiffs, says State Farm wanted the case moved because a federal court has the potential to be more favorable to the insurer's side of the case.

The plaintiffs have appealed to have the case moved back to the state court, but the judge has not yet handed down a decision. "There is no basis for the case to be tried in federal court," Herrington says. "We're expecting an opinion any day now."

Herrington says some of the statements made to consumers by State Farm employees include telling them that they could not go to shops that were not on State Farm's list and that they couldn't guarantee the work if they went to such a shop. He adds that State Farm adjusters also disparaged his clients' reputations. "My [clients'] shops won't use aftermarket parts, which is one of the [reasons] for steering," Herrington says. "They won't agree to working for dirt cheap or cranking out repairs in a limited amount of time."

As for the adjusters involved in the case, he says "They're the ones out there doing the lying...and should be held accountable. They can't toe the company line."

This lawsuit is similar to one filed against Allstate last year that accuses the insurer of"engaging in a continuous pattern and practice of willfully requiring its insureds in the plaintiffs' local area to have repairs made at particular shops other than the plaintiffs' as a condition of defendant's payment of claims." (See "Shops File Steering Suit Against Allstate," News, November 2000.)

Lesly Gatheright, chief executive officer (CEO) of ABD ADV. Inc. & Associates, a private investigation and consulting firm, has helped bring together the plaintiffs in both of these cases.

In a prepared statement, Gatheright says, "No one is safe so long as this practice is permitted to continue. Even the shops that are randomly and arbitrarily picked by the insurance companies to participate and be placed on the referral list are not safe and secure.They can be taken off the list just as they were put on-at the discretion of the insurance companies."

The Plaintiffs

The State Farm steering lawsuit is not the only one of its kind-several of the plaintiffs listed in this case were included in a similar steering lawsuit filed against Allstate on June 22, 2000. Plaintiffs whose names are included in both lawsuits are marked with an asterisk. The list of plaintiffs suing State Farm includes:

* Errol Pierce,* individually and doing business as (d/b/a) The Southside Paint and Body Shop Business;

* Sammie Davis,* individually and d/b/a Sammie Davis Body Shop;

* Leon Green, individually and d/b/a Green's Body Shop;

* Martin Bryant, individually and d/b/a Bryant Body Shop;

* Willie G. Murriel, individually and dfb/a Murriel's Auto Body & Paint Shop Inc.;

* Perry Osbourne,* individually and d/b/a Ozzie Auto Center;

* Rev. Joe W. Pickett,* individually and d/b/a Joe's Paint and Body Shop;

* Mike Purnell, individually and d/b/a The Body Shop;

* Larry Glenn Robinson, individually and d/b/a Larry and James Body Shop.

[Author Affiliation]

By Lisa Greenberg

Senior Associate Editor