Santa Monica, CA – A Sacramento Superior Court will hear arguments tomorrow on a lawsuit by Mercury Insurance Company billionaire George Joseph and his Prop 33 campaign to remove criticism of Prop 33 from the official ballot arguments and hide from voters the fact that Proposition 33 will allow insurance companies to surcharge California motorists who are responsible drivers.

Proposition 33 is funded 99% by George Joseph, whose company, Mercury Insurance, sponsored a nearly identical initiative (Proposition 17) just two years ago. It was rejected by the voters despite $16 million in campaign spending by Mercury.

In their response filed yesterday, lawyers for consumer and senior advocates who authored the ballot arguments against Prop 33 explain that Mercury was misleading the court by failing to acknowledge that the ballot initiative would repeal a civil rights protection against redlining enacted by voters in 1988.

“Proposition 33 will literally undo a critical part of the regulatory scheme governing automobile insurers by nullifying Insurance Code section 1861.02(c), which bars the practice of basing premiums on a motorist’s absence of prior insurance, and it will also nullify the Insurance Commissioner’s regulation that enforces that statutory bar,” according to the brief. “By nullifying the express prohibition against consideration of prior insurance coverage [in current California law] and authorizing prior insurance coverage as a rating factor, Proposition 33 will require insurers that use the new rating factor to impose surcharges along with any discounts.”

The ballot arguments against Proposition 33 were signed by Consumers Union, Consumer Federation of California, California Nurses Association, California Alliance For Retired Americans and Consumer Watchdog.

Mercury also asks the Court to edit the ballot label and ballot title and summary for Prop 33 prepared by the California Attorney General. The hearing will begin at 3:00 pm on Thursday, August 9, 2012.

“Supporters of an initiative financed by the Chairman of Mercury Insurance ask this Court to excise criticism of their initiative from the ballot pamphlet, so that California voters seeking an independent analysis of the measure are relegated to the one-sided and frequently deceptive propaganda that has been the hallmark of Mercury’s campaign, since 2002, to evade or overturn a consumer protection statute enacted by California voters,” states the advocates’ brief.

“In many instances – and this will be one of them – the Ballot Pamphlet is the only opportunity for opponents of a well-funded measure to speak directly to the voters. …The opponents whose statements are challenged here – all respected advocates for non-profit organizations – are entitled to present their analysis, projections and opinions to the voters as written.”

The fact that Prop 33 will give insurance companies new power to increase premiums for good drivers led the California Democratic Party to vote to oppose Prop 33 at its Executive Board meeting last month.



Joseph and his company Mercury Insurance have waged a decades-long war in the legislature and the courts against the consumer and civil rights protections enacted by voters in Proposition 103.  In 2010, state regulators revealed that the company was found to be violating numerous state laws including the provision of law that Joseph now seeks to repeal. Mercury has a “deserved reputation for abusing its customers and intentionally violating the law with arrogance and indifference,” according to a brief filed by the California Department of Insurance in an administrative lawsuit against Mercury. The initiative's official proponent, Michael D’Arelli, is an executive in a Sacramento insurance lobbying group comprised primarily of Mercury insurance agents, and is the official spokesperson for the Mercury measure.

“Mercury’s legal challenge comes as the company is about to begin a multi-million dollar campaign of dirty, deceptive TV and radio advertising backed by a horde of paid PR hacks and phony endorsers,” said Carmen Balber of Consumer Watchdog Campaign, the advocacy arm of Consumer Watchdog, a non-profit, non-partisan organization founded in 1985. “Forcing the courts to waste scarce taxpayer dollars is just another Mercury campaign gambit to try and hide the truth from voters.”

Copies of the Attorney General’s Official Title and Summary and the Ballot Arguments submitted by the Mercury initiative campaign and organizations opposed to it can be found at the Secretary of State website.

Consumer and senior advocates’ response to the Mercury lawsuit can be downloaded here.

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