Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘Allstate’

Johnson v. Allstate Insurance Co.: drunk driving for profit

Wayne Davis, Jr., had a .203 blood-alcohol level, when he drove his pickup across the center line of a Camden County, Missouri, highway on March 24, 2000, and crashed head on into the compact car of Edward and Virginia Johnson.

You’ll be happy to hear that the Johnsons didn’t try to blame the beer company or the auto manufacturer, and simply sued Davis. Davis’s insurer, Allstate, contacted the Johnsons’ attorney, David Sexton, in April, and asked for access to the Johnsons’ medical record. Sexton responded by demanding the policy limits. Allstate requested the medical records three more times, and finally got the records on December 20. (A Dan Margolies Kansas City Star article (via Childs) incorrectly says Allstate did not respond, but the court’s opinion says otherwise.) Allstate immediately agreed to pay the settlement limits, but now Sexton refused, saying his April offer had expired, and he now wanted $3 million from Allstate. We’ll let the Missouri Court of Appeals explain what happened next:

Read On…

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Update: Fields v. Allstate

In October 2006, we reported on a $20 million jackpot justice verdict:

Ted Fields was injured in an auto accident with Jimmy Woodley; Woodley’s insurer went bankrupt, so Fields, on January 30, 1997, asked Allstate to pay $25,000 in medical bills and lost wages. Allstate sent Fields forms to fill out, and he did so three weeks later; when Allstate didn’t pay instantaneously, he sued them in March 1997 for bad faith. Fields turned the discovery process into a far-reaching investigation of all of Allstate’s claim procedures; the judge refused to constrain irrelevant deposition questioning, at which point in 1999 Allstate offered Fields the full amount of his $50,000 policy limit rather than waste hundreds of thousands in trial. Fields refused; his attorneys filed several separate motions of default rather than litigate the underlying issues after the trial court denied a summary judgment motion. An appellate court found that Allstate was entitled to summary judgment because of the lack of any evidence of bad-faith in responding to Fields’s claims; the Indiana Supreme Court overturned that ruling on a procedural technicality that the appeal was premature.

The trial court ruled that Allstate was not allowed to present evidence that it was not liable for actual or punitive damages or that it acted “with anything other than dishonest purpose, moral obliquity, furtive design, and/or ill will.” A jury, hearing this one-sided sham of a trial, awarded $20 million in damages, though one would hope the Court of Appeals, hearing a timely appeal, makes the same decision it made before. Press coverage fails to mention that Allstate wasn’t allowed to defend itself at trial; the plaintiff told the jury that the dispute caused high blood pressure, heart problems, and a stroke, though then the question becomes why he isn’t suing his attorney.

Today, the Court of Appeals of Indiana reversed.

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Class action settlement: credit ratings in insurance

Allstate used applicants’ credit ratings as one piece of information in rate-setting, a baldly rational policy if you accept that credit ratings do on average help predict future consumer behavior. Lawyers sued claiming that the credit ratings were really an improper proxy for race, and a federal judge has now approved a class action settlement in which Allstate will revamp its policies and pay six named plaintiffs $5,000 each, minority policyholders will be free to seek refunds of $50 to $150 if they get around to it and can prove they qualify, and plaintiff’s lawyers will get $11.7 million. (“Judge Approves Settlement in Allstate Class-Action Suit”, AP/WOAI, Feb. 17).

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Jackpot justice: $20M for $25,000 insurance claim

Ted Fields was injured in an auto accident with Jimmy Woodley; Woodley’s insurer went bankrupt, so Fields, on January 30, 1997, asked Allstate to pay $25,000 in medical bills and lost wages. Allstate sent Fields forms to fill out, and he did so three weeks later; when Allstate didn’t pay instantaneously, he sued them in March 1997 for bad faith. Fields turned the discovery process into a far-reaching investigation of all of Allstate’s claim procedures; the judge refused to constrain irrelevant deposition questioning, at which point in 1999 Allstate offered Fields the full amount of his $50,000 policy limit rather than waste hundreds of thousands in trial. Fields refused; his attorneys filed several separate motions of default rather than litigate the underlying issues after the trial court denied a summary judgment motion. An appellate court found that Allstate was entitled to summary judgment because of the lack of any evidence of bad-faith in responding to Fields’s claims; the Indiana Supreme Court overturned that ruling on a procedural technicality that the appeal was premature.

The trial court ruled that Allstate was not allowed to present evidence that it was not liable for actual or punitive damages or that it acted “with anything other than dishonest purpose, moral obliquity, furtive design, and/or ill will.” A jury, hearing this one-sided sham of a trial, awarded $20 million in damages, though one would hope the Court of Appeals, hearing a timely appeal, makes the same decision it made before. Press coverage fails to mention that Allstate wasn’t allowed to defend itself at trial; the plaintiff told the jury that the dispute caused high blood pressure, heart problems, and a stroke, though then the question becomes why he isn’t suing his attorney. (Ken Kosky, “Valpo man wins $20 million verdict v. Allstate”, Northwest Indiana Times, Oct. 6).

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Lawsuits of the future

John Michael Dunton of Anaheim was not criminally charged after his five-month-old died of heatstroke September 9 after her father left her in his van for four hours instead of at her babysitter. Dunton held a press conference with his attorney: “I hope that the auto industry or the car seat manufacturers will have some kind of alarm or bell so [parents] won’t forget their kid in a car.” (Wendy Thermos, “After Child’s Hot-Car Death, Father Backs Alarm Systems for Parents”, LA Times, Sep. 25). One awaits with trepidation the first parent/attorney combination with the chutzpah to sue the auto industry for this oversight. Readers of Romenesko are appalled, though Michael Kaufman, tongue firmly in cheek, writes

We really need these warning systems all over the house. For example, I can’t tell you how many times I have started doing laundry without realizing that little Jimmy was still wearing the clothes that I was throwing in the washing machine. If I only had an early warning system on my washer/dryer. Or when I made the bed with Suzie still sleeping. I am actually thinking of suing Allstate for not warning me when I moved and left all the kids behind.

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Madison County: Ms. Howell’s two hats

In an article about the controversial Lucent class action settlement ($84 million for the lawyers, $8 million for the class; see Apr. 5) the St. Louis Post-Dispatch talks with Joy Howell, spokeswoman for lead class counsel Stephen Tillery, who’s among Madison County’s most prominent class-action lawyers. Later in the piece it emerges that Ms. Howell “also serves as a spokeswoman for the Coalition to Preserve Access to Justice”, a group that vehemently opposes the reform-minded Class Action Fairness Act on behalf of “more than 80 national consumer, environmental and civil rights groups”. Hmmm. (Trisha L. Howard, “Nixon backs state role in class action suits”, St. Louis Post-Dispatch, Apr. 3). And the local press is casting a skeptical eye on what the Post-Dispatch calls “the strange little courthouse in Edwardsville” (Illinois) and the doings of Judge Nicholas C. Byron in particular (see “It’s a Mad, Mad, Mad Madison County”, Apr. 22) (“Madison County: What’s the judge hiding?” (editorial), St. Louis Post-Dispatch, May 1; Brian Brueggemann, “Judge Byron endures hot seat”, Belleville News-Democrat, May 3; “‘Judicial hellhole’ deepens with law firm’s banishment” (editorial), Bloomington Pantagraph, Apr. 27). Last month “Byron ordered a newspaper reporter to leave the courtroom Monday when [attorney Rex] Carr and Tillery began arguing about the apparently sensitive issue of how much money the firm has earned.” (Brian Brueggemann, “Class-action lawyers fight over money”, Belleville News-Democrat, Apr. 11, and how’s that for a quotidian headline?). Finally, visions of sugar plums seem to have gone a-glimmering for class action attorney Judy Cates, of columnist-suing fame, when a Belleville jury rejected her lawsuit demanding $300 million from Allstate because it does not reimburse its auto policyholders after crashes for the decline in the resale value of their fully repaired cars. According to defense attorney H. Sinclair “Rod” Kerr, the lead plaintiffs, Michael and Tiffany Sims of East St. Louis, Ill., “decided to sue only after a relative called their attention to a newspaper ad placed by Cates’ law firm seeking plaintiffs against Allstate.” (Robert Goodrich, “Jury rejects class-action suit over car repairs”, St. Louis Post-Dispatch, Apr. 29).

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Update: trial lawyers’ war against Allstate

Plaintiff’s lawyers have for years pursued a grudge match against the Allstate insurance company because of its “Do You Need An Attorney?” campaign, launched in the mid-1990s, by which the company suggests to persons with possible claims against its policyholders that it may not be absolutely necessary for them to sign up with a lawyer (see Apr. 18, 2000; Dec. 22, 1999). In the state of Connecticut, scene of some of the fiercest skirmishing, the attorneys’ fondest hopes have not been realized: in January a federal judge ruled in Allstate’s favor “on claims it breached an implied contract of good faith and fair dealing, and was engaging in unfair trade practice, unfair insurance practice, recklessness and fraud.” However, it’s not as if the insurer, which is based in Northbrook, Ill., is now free to say whatever it pleases in post-car-crash situations in the Nutmeg State: “In 1996, as president of the Connecticut Trial Lawyers Association, Reardon [New London plaintiffs’ attorney Robert I. Reardon] successfully lobbied for a new law that forbids insurers from discouraging their adversaries from hiring a lawyer.” (Thomas B. Scheffey, “Allstate Victorious in Anti-Lawyer Campaign”, Connecticut Law Tribune, Feb. 2).

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Archived legal ethics items, pre-July 2003

Bar discipline and client protection, 2003: “Probate’s misplaced trust” (Washington Post series), Jun. 16-17. 2002: “Crumbs from the table“, Feb. 8-10.  2001: “Law firm sued over fen-phen settlement practices“, Dec. 28; “Updates” (IOLTA), Dec. 15-16 (& Jan. 31); “Holiday special” (Canadian lawyer’s misconduct), May 28; “Mills of legal discipline” (updates on Brock, Hager, Fieger cases), Mar. 3; “Dangers of complaining about lawyers” (Ga. considers easing defamation counter-complaints by lawyers), Mar. 30-Apr. 1.  2000: “‘Judge Lenient With Perjurer, Cites Clinton Case’“, Oct. 16-17 (& May 16); “Disbarred, with an asterisk” (Mass. has let many attorneys resume practice), Sept. 20; “Funds that don’t protect” (client protection funds), Aug. 23-24; “Fit to practice?” (California bar disciplinary board), Aug. 21-22; “That Hager case” (American U. law professor Mark Hager, settlement of Warner-Lambert Nix lice treatment case), Feb. 23 (& update May 3, 2001: board recommends three-year suspension). 

“New legal ethics weblog” (ethicalEsq.?), Jun. 6-8, 2003.

Judicial conduct, 2003: “Year’s most injudicious judges”  (NLJ roundup), May 6. 2002: “‘Federal authorities say judge offered illegal payoff’“, Sept. 3-4; “‘Privileged chambers’” (Albany Times-Union series), May 30; “‘Injudicious conduct’” (NLJ roundup), May 1-2; “La. officials seek oyster judge recusal“, Mar. 25-26; “So depressed he stole $300K“, Mar. 19.  2001: “‘Pseudologica fantastica’ won’t fly” (judge’s resum?ibs), June 7 (& update Aug. 20-21); “‘Judges behaving badly’” (NLJ roundup), May 11-13.  2000: “Year’s most injudicious judges“, Jun. 5, 2000; “Brockovich story, cont’d: the judges’ cruise“, Apr. 18; “New Hampshire high court blowup“, Apr. 5 (& updates Oct. 11: chief justice acquitted at impeachment; May 3, 2001); “The costs of disclosure” (Washington state, Grant Anderson case), Jan. 19. 

“Class action lawyer takes $20 million from defendant’s side“, Mar. 15-16, 2003.

“Politico’s law associate suspended over ‘runner’ use” (Louisiana), Feb. 14-16, 2003.

Civility: “Law’s attraction for the bully“, Dec. 13-15, 2002; “‘Attorney Ordered To Pay Fees for “Rambo” Tactics’“, Oct. 5-7, 2001; “Mills of legal discipline” (Geoffrey Fieger tirade against judges), May 3, 2001 (& more on Fieger: Apr. 23-24, 2002, Sept. 14, 1999; “Another Mr. Civility nominee” (“dreck”, “scum”), June 2-4, 2000; “From the incivility frontier” (“gag a maggot off a meat wagon”, “proctology exam”), April 19; “Majesty of the law” (alleged threat to kill opposing counsel), March 13, 2000 (& update May 17: attorney sanctioned); “Bright future in some areas of practice” (“abusive, hostile” applicant for law license), Oct. 13, 1999 (update, Nov. 23). 

“Race-bias cases gone wrong“, Jan. 24-26, 2003.

“Lawyers fret about bad image” (Fla. bar plans to rate and monitor tone of journalists’ coverage), Oct. 3, 2002. 

“FTC cracks down on excessive legal fees“, Oct. 1-2, 2002. 

“Second Circuit: we mean business about stopping frivolous securities suits” (scope of Rule 11), Aug. 29-Sept. 2, 2002. 

“Lawyer’s 44-hour workday“, Jun. 28-30, 2002; “Charged $16,000 for brief he copied from book“, May 17-19, 2002; “Lending rules trip up litigation-finance firms“, Dec. 3, 2001; Letter to the editor (incremental billing disclosed?), Oct. 22, 2001; “Law-firm bill-padding?  Say it isn’t so!“, Nov. 18, 1999. 

“‘Student gets diploma after threatening lawsuit’“, Jun. 13, 2002.

Truth value, 2002: “Lying’s not nice, especially when representing the bar“, Jul. 30-31; “Columbia Law School survey on public attitude toward lawyers“, Apr. 26-28; “‘Ex-student sentenced for rape lie’” (wants to become attorney), Jan. 11-13 (& see May 26-29, 2000: Stephen Glass graduates Georgetown Law).  2001: Criminal defense attorneys, doing what they do best“, Dec. 15-16; “‘Lawyers pay price for cruel hoaxes’” (phony heir claims after plane crashes), Aug. 3-5; “‘Lie-tery winners’“, April 20-22.  2000: “What was the Florida court thinking?” (Boies-submitted affidavit), Dec. 11-12; “‘Judge Lenient With Perjurer, Cites Clinton Case’“, Oct. 16-17 (& May 16); “The judge wasn’t asleep” (sanctions for submission of dubious affidavits), June 14-15.  1999: “If true, then all the better” (excerpt from Campos, Jurismania), Dec. 3-5; and see witness coaching, below. 

“‘”Little” done for firm, Rendell says’” (law firms provide no-show jobs for politicians), May 9, 2002. 

“‘Former clients sue attorney O’Quinn’” (Kennedy Heights case), Apr. 8-9, 2002 (& Aug. 4, 1999).

“Gary & Co. shenanigans at Maris trial“, Apr. 1-2, 2002. 

“Lawyers stage sham trial aimed at inculpating third party“, Mar. 22-24, 2002. 

Disclosure: “Lending rules trip up litigation-finance firms“, Dec. 3, 2001; Letter to the editor (incremental billing disclosed?), Oct. 22, 2001; “Trial lawyers knew of tire failures, didn’t inform safety regulators“, June 25 (& June 28)(& letter to the editor, July 6); Letter to the editor (ghostwriting), June 13; “ABA’s toothless ethics proposals“, Jan. 17, 2001; “Contingency fee reform“, Nov. 1, 2000. 

Contingent fees, 2001: “Lending rules trip up litigation-finance firms“, Dec. 3; “Red-light cameras“, Sept. 6, 2001; “‘The Louima millions’“, July 24; “The rest of Justice O’Connor’s speech“, July 6-8; “Evils of contingent-fee tax collection, cont’d“, May 30; “Reclaiming the tobacco loot“, March 15; “Hugh Rodham’s ‘success fee’“, Feb. 23-25; “Dangers of tax farming“, Jan. 10 (& letter to the editor, Jan. 16).  2000: “Contingency fee reform“, Nov. 1; “‘Lawyer take all’” (equity stakes in clients), Oct. 27-29.  1999: “Piece of the action” (contingent fees for public officials), Dec. 3-5; “Reform stirrings on public contingency fees“, Oct. 15.

Witness coaching, 2001: “GAF sues asbestos lawyers“, Feb. 12-13, 2001 (& see Dec. 10).  2000: “‘N.Y. lawyer charged in immigrant smuggling’“, Sept. 22-24; “Sunday’s Times on Fred Baron“, June 5 (& see “Thanks for the memories” by Walter Olson, Reason, June 1998 and subsequent letters exchange with William Hodes).  1999: “State of legal ethics” (hey, what’s wrong with witness coaching?), Sept. 9. 

“‘The Great Mouthpiece’” (Manhattan’s Bill Fallon, 1920s), Dec. 28, 2001. 

“‘Halliburton shares plunge on verdict’” (law-firm whistleblowing), Dec. 10, 2001. 

“‘2d Circuit Upholds Sanctions Against Firms for Frivolous Securities Claims’“, July 23, 2001 (more on sanctions: Jul. 30-31, 2002). 

“Estate law temptations“, July 6-8, 2001; “Lawyers charged with $4.7 million theft from clients“, April 10, 2000; “Lawyers stealing less, clients say“, Dec. 21, 1999. 

“Lost his live client, had to substitute dead one instead“, April 11, 2001; “Turn of the screw” (lawyers alleged to have sued without client consent), Oct. 24, 2000; “Curious feature of lawyer’s retainer” (allowed him to settle case without client consent), Sept. 12, 2000. 

“‘It’s time to disarm the hired guns’” (Arianna Huffington), Feb. 28-March 1, 2001; “Trustworthy professionals” (survey of public confidence), Dec. 11-12, 2000. 

“Fed prosecutors chafe at state ethics rules“, Oct. 16-17, 2000. 

“Lenzner: ‘I think what we do is practice law’” (private investigator in Oracle scandal), July 28-30, 2000. 

“Access to something” (lawyer accused of working for Social Security Administration while helping clients sue it), July 13, 2000. 

“Ready to handle your legal needs” (Stephen Glass graduates Georgetown Law), May 26-29, 2000. 

“Steering the evidence” (DaimlerChrysler gets sanctions against lawyers for evidence and witness tampering), May 23, 2000 (& update June 26). 

“‘Ad deal links Coke, lawyer in suit’” (Willie Gary, suing Coca-Cola on behalf of clients, enters into a lucrative ad deal with it), May 11, 2000. 

“Splash of reality” (sanctions for frivolous litigation in case of claimed Jackson Pollock painting), May 4, 2000. 

“Brockovich story, cont’d: the judges’ cruise“, April 18, 2000; “Brockovich story breaks wide open“, April 17, 2000 (& see Dec. 21). 

“Majesty of the law” (Phila. attorney Marvin Barish could face sanctions for allegedly threatening to kill opposing counsel during trial break), March 13, 2000; “Relax, you’re being taken care of” (Barish advances injury client’s rent and expenses), Dec. 14, 1999. 

“Legal ethics meet medical ethics” (lawyers advise schizophrenic murder defendant to go off his medication for trial), Feb. 26-27, 2000. 

“Secrets of class action defense” (assisting cooperative opponent to draft complaint), Feb. 25, 2000. 

“Watchdogs could use watching” (fee-splitting in Florida securities cases), Jan. 20, 2000. 

“The costs of disclosure” (lawyer reveals misconduct by client, judge), Jan. 19, 2000; “Pack your toothbrush, son” (Ala. law-firm whistleblower), Dec. 20, 1999. 

“Popular CLE course: ‘How to Hammer Allstate’” (insurer charged with unauthorized practice of law), Dec. 22, 1999 (update, April 18, 2000). 

“Splitsville, N.Y.” (New York mag on divorce), Dec. 17-19, 1999. 

“Victory in Florida” (plaintiffs deliberately run up gunmakers’ costs for leverage), Dec. 14, 1999. 

“Weekend reading: evergreens” (St. Petersburg Times Pulitzer series on probate law), Dec. 3-5, 1999; “From the evergreen file: L.A. probate horror” (estate of art collector Fred Weisman), Nov. 20-21; “Weekend reading: evergreens” (Denver probate nightmare), Oct. 23-24, 1999. 

“Class action fee control: it’s not just a good idea, it’s the law“, Nov. 30, 1999; “Class action coupon-clippers“, Nov. 15; “$49 million legal fee okayed in case where clients got nothing“, Sept. 28, 1999. 

“Accommodating theft“, Nov. 11, 1999. 

“Who loves trusts-and-estates lawyers?“, Nov. 8, 1999. 

“Criticizing lawyers proves hazardous“, Nov. 4, 1999 (update, Nov. 30); “No spotlight on me, thanks” (Houston’s John O’Quinn), Aug. 4, 1999. 

“State of legal ethics” (lawyers take out glossy ad to stir up will-contest litigation), Oct. 5-6, 1999. 

“Weekend reading: evergreens” (lawyer-abetted accident fraud), Sept. 25-26, 1999; “Wages of wrongdoing” (Staten Island lawyers convicted), Sept. 8, 1999. 

“Join our new Verdict Rewards program” (checks for jurors), Sept. 13, 1999 (updates, Sept. 17-19, 1999 and Aug. 4-7, 2000). 

“Cook County law bills a secret“, Sept. 11-12, 1999. 

“My lawyer is an impostor“, Sept. 3, 1999. 

“ABA thinks it can discourage ‘pay-for-play’“, Aug. 11, 1999 (& Aug. 14-15 update). 

“Like calling the Orkin man to talk about bugs” (ABA convention), Aug. 10, 1999; “Weekend reading” (ABA choice of speakers), Aug. 28-29, 1999. 

“No need for speed“, Aug. 3, 1999. 

“Weekend reading” (at execution sale, law firm buys up client’s right to sue it for malpractice), July 31-Aug. 1, 1999. 

“Honey, you’ve got mail” (solicitations from divorce lawyers arrive before unsuspecting spouses know they’re being divorced), July 15, 1999.

Articles by Overlawyered.com editor Walter Olson:

“Thanks for the memories” (coaching of witnesses), June 1998 (& subsequent letters exchange with William Hodes) 

“Tobacco Analysts Meet the Plaintiff’s Lawyers” (abuse of pretrial discovery), Wall Street Journal, August 30, 1995. 

“Juries on Trial“, review of The Jury by Stephen J. Adler and We the Jury by Jeffrey Abramson, Reason, February 1995. 

“Sue City: The Case Against the Contingency Fee“, excerpt from The Litigation Explosion, Policy Review, Winter 1991 [in two parts] [part one] [part two] 

“Dentists, Bartenders, and Lawyer Unpopularity“, Manhattan Institute Civil Justice Memo #37, April 1999. 

“Lawyers with Stethoscopes: Clients Beware“, Manhattan Institute Civil Justice Memo #26, June 1996. 

“Taming the Litigators: Why Not More Disclosure?“, Manhattan Institute Civil Justice Memo #24, February 1996.

Codes of ethics:

ABA Center for Professional Responsibility
Overview — Rules of Lawyer Conduct
U.S. Judges Code of Conduct
California Rules of Professional Conduct
D.C. Rules of Professional Conduct

Some online articles of interest:

James McCauley, “The Ethics of Making Legal Services Affordable…” (Virginia bar; discusses unauthorized practice, pro se litigation) 

Rep. Chris Cox, Testimony on tobacco settlement (1997)

Lawrence Schonbrun, “Class Actions: The New Ethical Frontier” (Manhattan Institute, 1996)

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