Consumer Watchdog Campaign: Court Rejects Second Challenge to AG’s Neutral Ballot Language By Insurance Industry Backers of Prop 33

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Santa Monica, CA – The California Third District Court of Appeal summarily denied an appeal filed by the Mercury Insurance-backed Prop 33 campaign seeking to strike part of the impartial Ballot Label and Title and Summary prepared by California’s Attorney General. The decision was the campaign’s second failure in two days to convince a court to hide facts about Prop 33 from the Official Ballot Pamphlet sent to all California voters.

Prop 33’s proponents had appealed a Thursday decision by Sacramento Superior Court Judge Timothy Frawley denying the Mercury campaign’s effort to edit the neutral language of the Attorney General’s Ballot Label and Title and Summary, which read: “Changes current law to allow insurance companies to set prices based on whether the driver previously carried auto insurance with any insurance company.”

On Thursday, the court also rejected the attempt to strike portions of consumer advocates’ analysis of the initiative in the Ballot Pamphlet, including statements that Prop 33 would deregulate the insurance industry and raise rates for good drivers across the state. The Prop 33 campaign did not appeal that decision.

“When will Mercury learn it can’t hide that Prop 33 will raise rates on good drivers and those least able to afford it? Voters will now have the chance to read all the facts about Prop 33, and see for themselves that the insurance industry didn’t put Prop 33 on the ballot to save drivers money but to make more money for themselves,” said Carmen Balber with Consumer Watchdog Campaign.

Prop 33 will allow auto insurance companies to raise rates on Californians with perfect driving records who stop driving and have a lapse in insurance coverage for good reasons – such as going back to school, a serious illness, long-term unemployment or using public transit.

A blog about the court proceedings and lies from the Prop 33 campaign written by Harvey Rosenfield, a signer of the ballot arguments against Prop 33 and founder of Consumer Watchdog, can be read at the end of this press release and at this link:

Proposition 33 is funded 99.1% by George Joseph, chairman of Mercury Insurance, which sponsored a nearly identical initiative (Proposition 17) just two years ago. That measure was rejected by the voters despite $16 million in campaign spending by Mercury.

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.

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You Really Can’t Trust Mercury
August 10, 2012
By Harvey Rosenfield

The Mercury Insurance initiative’s lawsuit to stop the Attorney General and us opponents from telling the truth about Proposition 33 – how it will raise auto insurance rates – got tossed out of Sacramento Superior Court last Thursday. The Mercury campaign asked the court to rewrite the Official Ballot Pamphlet, which is sent to every voter’s home, so it would contain only Mercury’s false claim that everyone will get “discounts” if Proposition 33 passes.  After an hour-long argument, the judge said no.

But the ink was hardly dry on Thursday’s court order when Mercury told yet another lie – this time about what we said in court.

In a press release issued Friday morning, Mercury said: “CONSUMER WATCHDOG ARGUES IN COURT THAT THE TRUTH IS ELASTIC.”

We never said that, of course. (The release also called us “corporate lawyers,”which the corporations we take on would no doubt find bewildering.)

I guess we shouldn’t be surprised that George Joseph, the multi-billionaire Chairman of Mercury Insurance who has contributed 99.1% of the $8.29 million received by Proposition 33, can’t stop lying about his proposition and the consumer, citizen, senior and patient’s organizations who vehemently oppose it.  After all, according to the California Department of Insurance:

“Mercury [has a] lengthy history of serious misconduct, and its attitude – contempt towards and/or abuse of its customers, the Commissioner, its competition, and the Superior Court… Among Department staff, consumer attorneys, and consumer victims of its bad faith, Mercury has a deserved reputation for abusing its customers and intentionally violating the law with arrogance and indifference….”

Mercury’s dirty propaganda campaign didn’t work back in 2010, when the company mounted a nearly identical proposition to deregulate auto insurance, also sued the Attorney General and us, spent $16 million, and still lost. Joseph and the pigs at the Mercury trough (an assortment of PR hacks, phony non-profit groups, insurance agents and bought-and-paid-for politicians) think the voters are stupid. But they are wrong. California voters can smell a dirty, self-serving initiative a mile away.

The Mercury Insurance campaign might have gotten away with its Friday fabrication, except we were able to catch them red-handed.

Hours before Thursday’s hearing, I found out that Joseph’s lawyers had not requested a court reporter be there to take down everything that was said in court. (Thanks to severe budget cuts, state courts can no longer afford to pay for court reporters – the parties in a lawsuit have to pay.) It seemed odd that this mega-billionaire would not spring for someone to record the truth… and then I realized that the Mercury campaign might not want a transcript of what happened in court, so they could lie about it later.

So I pulled out my checkbook, went to a special window at the Sacramento Superior Court, and paid the $30 for the court reporter myself.

Good thing, as it turns out.

The court reporter’s transcript confirms that our lawyer, the highly respected James Harrison of Remcho, Johansen & Purcell, never uttered what Mercury quoted him as saying. Rather, citing the First Amendment and many legal decisions, he urged the court to reject Mercury’s attack on our conclusion that Proposition 33 will “deregulate” auto insurance premiums. Here are his words:

“Your Honor, as the Court noted, deregulation is an elastic and ideological concept. In the Huntington Beach case, for example, the Court refused to make a change to the argument that the measure requires AES, the electricity company, to pay its fair share. And the reason that the Court refused to intervene was that the term 'fair share' is a very elastic and ideological concept. What you understand to be a fair share might not be what I understand. The same is true of deregulation, your Honor. What I understand to be deregulation may have a very different meaning to someone else. It's a very elastic concept."

Mercury’s legal shenanigans wasted a lot of taxpayer money at a time when California courts are struggling to deliver justice fairly and efficiently despite a gaping hole that the Legislature has inflicted on the judicial branch budget. (Late Friday, Joseph’s lawyers filed an appeal, hoping to overturn the Superior Court’s decision.  It was summarily denied.)

Forcing the Attorney General to defend in court her summary of Proposition 33, which she is required by law to prepare for the ballot, was also an unnecessary drain on that law enforcement agency’s scarce resources. (Joseph was also furthering a strategy recently adopted by Wall Street and other corporate interests: Attacking Attorney General Kamala Harris in an attempt to intimidate and undermine her.)

The Mercury campaign’s public relations minions don’t care about the cost to taxpayers. To them, filing a lawsuit in court is just another gambit in their greed-driven, deceptive campaign to get the voters to pass a law allowing companies like Mercury Insurance to raise your auto insurance rates and make more money.


Carmen Balber
Carmen Balber
Consumer Watchdog executive director Carmen Balber has been with the organization for nearly two decades. She spent four years directing the group’s Washington, D.C. office where she advocated for key health insurance market reforms that were ultimately enacted into law as part of the Affordable Care Act.

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