UFAA’s DRA LAWSUIT AGAINST FGI HELPING TO PROTECT THE RIGHTS OF MEMBER AGENTS

On December 17, 2012, UFAA filed a declaratory relief action (“DRA”) against FGI and its exchanges and subsidiaries to fight back against FGI’s unfair and oppressive actions targeting Farmers agents. A summary of UFAA’s claims follows:

 

Count I – FGI interferes with the contracts and expectancies of agents by using policyholder (and prospective policyholder) data and information acquired by agents to solicit car insurance business for 21st Century Insurance.

Why it matters: FGI is taking business away from agents by using information gathered through the efforts of those same agents! Left unchecked, FGI could eventually attempt to expand its unfair uses of data beyond car insurance.

Count II – FGI imposes an endless series of production minimums and performance standards violate the pre-2009 AAAs.

Why it matters: If FGI is permitted to impose an ever-changing litany of production minimums and performance standards upon agents, it will be able to keep agents running on a hamster wheel from which they cannot disembark.

Count III – FGI’s wrongfully terminates agents based on the location, nature, hours and types of offices they maintain violates the AAAs;

Why it matters: FGI’s oppressive actions are severely diminishing agents’ control over their agencies. The promise of “being your own boss” led many new agents to the industry; but this is an empty promise if FGI is allowed to dictate agency hours, office design, agency location, and other aspects of agents’ businesses.

Count IV – The 90-day “no cause” termination provision of the AAA is so unfair and one-sided that it is unconscionable and therefore unenforceable.

Why it matters: This provision gives FGI absolute discretion over the termination of agents, so long as it provides notice at least 90 days prior to the effective termination date. No agent is safe where FGI is permitted to arbitrarily terminate agents for any reason or no reason whatsoever.

As expected, FGI has pulled out all the stops in opposing UFAA’s litigation efforts, but UFAA has refused to back down. In an early battle, UFAA soundly defeated motions to dismiss filed by FGI. More recently, UFAA fought to obtain information and documents from FGI related to the case; and its attorneys have deposed several DMs to obtain testimony about their knowledge of and involvement in FGI’s unfair and oppressive actions. In particular, the testimony of the DMs further confirmed that FGI does indeed terminate agents based on production, performance, and the types and locations of offices maintained by agents. Members of UFAA’s Board have also gone to bat for the cause, sticking out their own necks to provide testimony about their personal knowledge of FGI’s wrongful actions.

Although any trial is still many months away, UFAA’s lawsuit has already provided significant value to member agents. According to the sworn testimony of multiple UFAA member agents, the DRA has prevented multiple indiscriminate terminations of agent contracts. In several instances following initiation of the lawsuit, agents who had had been threatened with termination – either for their inability to satisfy onerous production standards, or for maintaining offices that were not to FGI’s liking – were suddenly let “off the hook” and were allowed to continue doing business without further reprisal.

One thing is for sure: UFAA cannot achieve its important goals without continued support from members like you. Will you help UFAA to continue to protect the rights of its member agents by making a donation to the cause?