State Farm faces partial setbacks in recent Alabama court decisions
The Alabama Supreme Court’s decision in one case will require State Farm to share potential trade secrets, but implemented additional safeguards.
State Farm recently received two unfavorable rulings in ongoing Alabama court cases.
In an August 17 ruling in Arnold et al. v. State Farm Fire & Casualty Company et al., U.S. District Judge Emily Marks sided with the plaintiffs, remanding the case to state court after State Farm sought to move it to federal court. Marks declined to award the plaintiffs attorney fees.
“The Court cautions State Farm that this practice of risky removal, if continuing, is undertaken at its own peril,” Marks wrote in her opinion.
In a news release, Dustin Fowler, an attorney for the plaintiffs, pushed back on recent positive coverage of State Farm following its $5 billion dividend distribution.
“A dividend check for an auto customer is good news for the person receiving it,” Fowler wrote. “But it does not answer the question our clients are asking: What happens when an Alabama homeowner says a storm damaged the roof, files a homeowners claim, and believes the company did not honor the coverage that was sold to them? That question belongs in the courthouse, based on the facts of each case.”
Additionally, the Supreme Court of Alabama, in an August 14 decision, partially upheld a circuit court order requiring State Farm to share potentially confidential information with the litigants in Foor and Foor v. State Farm Fire & Casualty Company.
Writing for the court, Justice Brad Mendheim stressed that “there is a distinct difference between what information a party is entitled to receive in discovery and what a party is entitled to do with that information once it is received.”
While the ruling will allow the plaintiffs to access confidential information about how State Farm revises damage estimates, it also imposes additional restrictions on how they can use the information. Among other requirements, individuals who access the documents must agree in writing to the terms of the order and “submit to the jurisdiction of the Bullock Circuit Court for the purpose of enforcement of the protective order.”
A State Farm spokesperson said in an email to Insurance Journal that “while we would have preferred a different outcome, we appreciate the meaningful safeguards the Court placed around confidential information.”
“The ruling requires recipients of confidential information to abide by the protective order, and preserves the court’s authority to enforce those protections, including requirements to return or destroy materials when those cases conclude,” the spokesperson said.
