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Courtroom Case

Fogel v. Farmers Group, Inc

Case Status:
Active

Los Angeles Superior Court No. BC 300142

Consumer Watchdog is representing a former Farmers Group, Inc. customer ("Intervenor") who is challenging portions of a $455 million settlement of a national class action lawsuit against Farmers.

(For the most up-to-date information about this case, see CASE UPDATES to the right.)

Any person who was enrolled in a Farmers insurance policy between January 1, 1999 and December 31, 2010 may object to the settlement and/or show up in court on September 7, 2011. 

The case, known as Fogel v. Farmers Group, Inc., charges that Farmers required its policyholders to pay too much for a management fee ("attorney in fact fee")  that Farmers builds into its auto, home, and business insurance premiums. The company earned a 50% profit on the fee. Last October, the plaintiff and defendants announced a settlement of the case, which includes an award of $455 million to consumers and $90 million for the plaintiffs’ attorneys.

Consumer Watchdog counsel, on behalf of the Intervenor, opposes the proposed settlement on the following grounds:

1. Consumers would be required to fill out an unnecessary and complex form in order to collect the estimated $20 refund; courts are increasingly skeptical of such settlements because very few customers end up submitting a claim.

2. Any unclaimed settlement funds would go to insurance entities that are controlled by Farmers and were originally defendants in this case. The settlement provides no guarantee that the unclaimed funds will be used to benefit current policyholders, and giving the money to a Farmers affiliate clearly will not benefit policyholders who are no longer with the company.

3. The settlement bars claims by policyholders against the Farmers insurance affiliates, known as the Exchanges, the beneficiaries of the unclaimed settlement funds.  Releasing the Exchanges from claims that class members may have against them is fundamentally improper, especially in light of the fact that the Exchanges apparently played some role in approving the excessive attorney in fact fee. 

Discovery Request Denied.  On May 18, the Superior Court refused to allow the Intervenor, represented by Consumer Watchdog counsel, to conduct any discovery despite the fact that very little formal discovery had previously been conducted in the case.  Consumer Watchdog attorneys had sought documents, depositions of company officials, and other information about how Farmers' parent company, the Swiss-based Zurich Financial Services, intends to use approximately $400 million in class action settlement proceeds supposedly intended for consumers.