On Jan. 21, the 3rd Court of Appeals returned to district court the state’s $117.5 million settlement with Farmers Insurance, negotiated on behalf of overcharged policyholders, ruling that Attorney General Greg Abbott‘s office was wrong to assume that he could directly represent consumers in the dispute with the company. Former AG John Cornyn undertook the negotiation based on the premise that the AG’s office could be considered a representative member of the class action suit because the office represents all Texas residents. Last year a group of Farmers policyholders filed suit to block the settlement, claiming that it contained inadequate redress and that Abbott’s office did not have the right to negotiate on their behalf. On Friday, the 3rd Court agreed, sending the settlement back to district court – effectively rejecting the entire settlement since there is now no legal class of consumers who can collect damages.
Predictably, blame for the situation has shifted from the AG’s office to the plaintiffs (via their greedy trial attorneys): “A handful of class-action attorneys have derailed a settlement that would have greatly benefited Farmers policyholders,” Texas Department of Insurance spokesman Jim Hurley told the Associated Press. Plaintiffs’ attorney Joe Longley of Austin was undeterred. “They were settling this case on the cheap,” he said, since redress would be offered primarily “in the form of discounts on future premiums, and made you stay with the company that was supposed to be doing the harm.”
This article appears in February 4 • 2005.