people_uniteAgents Unite, Turn the Tide

Members attending the UFAA Annual Meeting and Convention in Las Vegas in June received a detailed update from UFAA General Counsel, Dirk Beamer, concerning the pending litigation in Los Angeles County between UFAA, Farmers, and the Management Company (FGI). UFAA is represented by a seasoned veteran, Los Angeles attorney Paul Mahoney, who has previous wins against Farmers to his credit. Here are some of the highlights of the update Beamer presented at the 2016 Annual Meeting:

Recall that UFAA initiated the lawsuit in late 2012. UFAA seeks a ruling from the Court that would stop the Defendants from:

• imposing production minimums and performance standards;
• disciplining agents based on the location, nature, hours, and the types of offices they maintain (“Smart Office”);
• using information acquired from agents to solicit current and prospective policyholders on behalf of 21st Century;
• relying on the unconscionable three month termination provision of the AAA to terminate agents without cause.

Beamer reminded the audience that the lawsuit will not cure all ills, but it focuses on some of the key grievances facing the Agency Force. Indeed, as a number of participants suggested, the suit has already borne fruit by curbing Farmers’ practices and the threat of 21st Century in particular.

Beamer walked the members through some of the key battles fought and won thus far. Two early victories stand out. First, as expected, Farmers and FGI challenged UFAA’s “standing” – its legal authority to speak on behalf of its agent members. Despite the overwhelming evidence (their applications, their dues, and their vocal support) of agents’ dependence on, and confidence in, UFAA, Farmers insisted on advancing the tired argument that UFAA does not represent the views of its own members. Fortunately, and properly, the Court rejected this arrogant attempt to silence thousands of Farmers agents and their association. Farmers’ motion to dismiss for lack of standing was denied. Victory UFAA.

Pulling out another familiar pony trick, FGI asked the Court to let it out of the lawsuit, arguing that it is merely a hired hand doing the bidding of the Exchanges and therefore not responsible for any of the Agency Force’s grievances. Zurich’s money-making puppet has made the same argument successfully in many cases previously. But armed with strong arguments from Mahoney and strong evidence from respected expert Charles Miller, the Court declined FGI’s request. The Management Company’s motion to dismiss the claims against it was denied. Victory UFAA.

During the course of the dispute, the parties repeatedly locked heads over UFAA’s attempt to gain information and Farmers’ attempts to hide it. Eventually, UFAA filed a motion to compel production of documents and information, which the Court granted. Victory UFAA. Plainly frustrated by their repeated setbacks, and specifically their failure to get the case dismissed for lack of standing, the defendants filed an emergency appeal, asking the California Court of Appeals to intervene and to set aside the trial court’s rulings. The result? Motion denied. Victory UFAA.

For much of the past year, the parties have been engaged in a series of depositions during which UFAA’s officers and its members have answered a mind-numbing series of questions from the defendants’ attorneys. Notably, multiple agent witnesses have testified to the fact that – since the lawsuit was filed – their managers have backed off their previously non-stop threats and attacks. Several agents credit the lawsuit with saving their agencies.

Of particular note was the deposition of UFAA President Tom Schrader. Hoping to get Mr. Schrader to acknowledge Farmers’ claim of unlimited authority, the Farmers lawyers presented a litany of questions involving outlandish hypotheticals. (For example, “Is it your view that if a Farmers agent shoots and kills a policyholder, that Farmers cannot terminate the AAA?”). Eventually, UFAA’s attorney, Paul Mahoney, called an end to the farcical line of questions and instructed Schrader not to answer. As expected, the defendants eventually filed a motion asking that the Court send Mr. Schrader back in front of the firing squad. Ultimately, the Court threw Farmers a bone and agreed to give them two more hours of limited questions. But it also affirmed many of Mr. Mahoney’s objections, noting “Some of the questions sought to be compelled are so far afield that the [Court] concludes answers should not be compelled.” Describing the ruling to the assembly, Beamer grudgingly called it a “draw,” noting that a draw against Farmers and its high-priced lawyers is a win for most.

Having failed to wear UFAA down through the lengthy and expensive discovery process, the defendants decided to take one more shot at getting a key portion of the lawsuit dismissed. They filed a motion challenging Count IV of the Complaint in which UFAA seeks to strike down the AAA’s three month, no-cause termination provision as “unconscionable.” Farmers argued that, unless UFAA can show specifically that each and every member agent received the exact same promise (consistent with ample evidence supporting it) that they would not be terminated unless they violated a deadly sin, then the entire Count must be dismissed. Farmers threw tremendous effort and argument behind this motion. (“It makes one wonder,” Beamer observed, “why they are so afraid to have a court decide whether this provision is fair?”) At the Convention, Beamer was able to share a tentative ruling in UFAA’s favor. Since the Convention, a formal, written ruling has been published by the Court. Motion denied. Victory UFAA.

What do these pre-trial victories for UFAA mean? On the one hand, some would say, they mean nothing if UFAA does not prevail at trial. On the other, they mean everything. They mean that agents – when acting in concert – can mount a serious, credible, unified defense in support of their common interests. Indeed, while a victory remains UFAA’s priority, equally important – win, lose, or draw – is UFAA’s ability to demonstrate to Farmers that agents will not be silenced, will not meekly run and hide, will not be penny-wise and pound-foolish when it comes to investing in their businesses and their families’ livelihoods and futures.

Trial is scheduled to commence in September. Please do your part. If you have given, give more. If you haven’t, ask yourself what you are waiting for? There’s no pay-out if you place your bet on the winning horse after the race. Invest in your business. Invest in your future. Invest in UFAA.