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Take from Insurers, Give to State Courts: $455 Million Class Action Settlement Should Benefit Consumers and Courts, Not the Defendan
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Los Angeles, CA — Consumers and the courts, not an insurance company defendant, should benefit from a $455 million class action settlement, Consumer Watchdog argued at the settlement’s final approval hearing in Los Angeles Superior Court today. The unclaimed funds in the settlement of a consumer lawsuit against Farmers Insurance could help offset a $350 million budget shortfall that threatens to slam the courtroom door on aggrieved consumers seeking justice in future cases.

The case, known as Fogel v. Farmers Group, Inc. (BC 300142), charged that Farmers required its policyholders to pay too much for a management fee that Farmers builds into its auto, home, and business insurance premiums. The company earned a 50% profit on the fee.  Read more here: http://www.consumerwatchdog.org/case/fogel-v-farmers-group-inc



Due to an unnecessary and complicated claims process, only $150 million of the $455 million settlement fund has been claimed by consumers. Almost 70% of the settlement fund remains unclaimed. The remaining $305 million would go a long way to mitigate the state court funding shortfall that threatens to prevent consumers from having their day in court, said Consumer Watchdog.  Judicial system cutbacks due to the state budget shortfall are closing courtrooms, reducing hours and will delay trials. Read more about the state court budget cuts here: http://articles.latimes.com/2011/jul/23/local/la-me-court-cuts-20110723

Under the proposed settlement, the $305million in unclaimed funds would go to insurance groups under the control of the defendant Farmers Group Inc. (See court brief linked below for details.) Attorneys representing the plaintiffs are slated to receive an additional $90 million in attorneys’ fees.  Consumer Watchdog, which intervened in the suit and objected to the settlement on behalf of a former Farmers customer, has asked the judge in the case to direct the unclaimed funds to statewide court operations. 



“Consumers, not the defendants, should benefit from any class action settlement,” said Jerry Flanagan, staff counsel for Consumer Watchdog.  “To prevent an improper windfall for the defendants, Farmers should be required to use the unclaimed funds to benefit aggrieved consumers by ensuring continued access to the courts.”

Download Consumer Watchdog’s brief urging the unclaimed funds to be used for the court system: http://www.consumerwatchdog.org/resources/oppo_to_motion_for_final_approval_081811.pdf

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Consumer Watchdog is a nonprofit consumer organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org

Consumer Watchdog
Consumer Watchdoghttps://consumerwatchdog.org
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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