Rudy, Exelrod & Zieff, Attorneys For Claims Adjusters Announce $200+ Million For Resolution Of Eight-Year Overtime Case Against Farmers Insurance Exchange

Contact: Steven Zieff, Michael Rubin (Altshuler, Berzon, Nussbaum, Rubin & Demain)

OAKLAND, CALIFORNIA, September 3, 2004 – On Friday, September 3, 2004, at 2:00 p.m., Alameda Superior Court Judge Ronald M. Sabraw approved the parties’ plan for final resolution of the largest overtime pay class action ever tried in the United States. The lawsuit, Bell v. Farmers Insurance Exchange, No. 774013-0, was brought by Steven G. Zieff of the San Francisco law firm of Rudy, Exelrod & Zieff on October 1, 1996 on behalf of 2,402 claims adjusters who worked for Farmers Insurance Exchange in California. The jury entered a damages verdict on July 10, 2001 for about $90 million, which the Court of Appeal affirmed on February 9, 2004. The California Supreme Court denied further review on May 24, 2004, and Farmers has now agreed to pay the entire Judgment, including attorneys’ fees and accumulated interest, which adds approximately $80 million more to the claims adjusters’ recovery.

In the second part of the global resolution of the adjusters’ claims, Farmers agreed, effective September 1, 2004, to begin paying overtime to all California class members, and to pay up to $40 million more for overtime pay that was not included in the original Judgment, mostly for overtime hours worked after the 2001 trial. Although the total payment to be made by Farmers will not be calculated until March 2005 when the final distributions are anticipated, it is expected that it will exceed $200 million, making this the largest resolution of a class action overtime case in United States history.

Counsel for the plaintiffs are Steven G. Zieff of Rudy, Exelrod & Zieff and associated counsel Michael Rubin of Altshuler, Berzon, Nussbaum, Rubin & Demain, also of San Francisco.

“We have been working on behalf of Farmers’ California claims representatives for more than eight years,” said lead counsel Steven G. Zieff, “and are gratified to see that justice has finally been served. These hard-working, loyal employees have been owed millions of dollars in overtime wages pay dating back as far as 1993. Now they will be paid, and will receive a sizeable payment for interest as well,” he added. Plaintiffs’ counsel estimates that individual recoveries from the 2001 verdict will average over $50,000, with some class members getting substantially more.” Adds co-counsel Michael Rubin, “The legal principles in this case were settled by the Court of Appeal several years ago, but Farmers and its industry supporters kept fighting their workers’ claims with all their resources. We are delighted that the workers will finally be fairly compensated for their long hours of work on Farmers’ behalf.”

Bell v. Farmers Insurance Exchange, Alameda S. Ct. No. 774013, was filed as a class action on October 1, 1996. In 1999, the Superior Court in Oakland ruled that the claims adjusters were not exempt administrators and were therefore entitled to overtime pay. On July 10, 2001, after trial by jury on issues of damages, the jury returned a special verdict awarding the plaintiff class $90,009,208.12 for unpaid overtime compensation covering overtime hours worked up to the date of trial – June 26, 2001. On February 9, 2004, the Court of Appeal affirmed the damages verdict (except as to the jury’s award of double time overtime damages). The California Supreme Court denied review on May 12, 2004. On August 17, 2004, the parties signed an agreement that resolved the claims representatives’ claims against Farmers. Following eight years of legal battles with Farmers and the insurance industry, the plaintiffs have been completely successful in protecting the rights of Farmers’ workers in California to be paid premium overtime pay for all overtime hours worked.

The highlights of the agreement between Farmers and the class of claims representatives are as follows:

Farmers has agreed to pay the interest-adjusted Judgment and has deposited $120 million into the Class Damages Fund as an initial installment against the approximately $170 that plaintiffs estimate Farmers will eventually owe on the Judgment entered after the 2001 jury trial. Moneys will be paid to class members in accordance with a Plan of Distribution approved by both the trial court and the Court of Appeal.
Farmers will comply with all Court Orders requiring it to reclassify and to pay overtime to its claims representatives who work overtime, starting September 1, 2004.
Farmers has agreed not to pursue any further appeals.
Subject to court-approval, Farmers has agreed to a settlement of additional wage and hour claims arising largely in the period after the 2001 verdict for a maximum payment of $40 million. The settlement is intended to fully compensate Farmers’ California claims representatives who worked after June 26, 2001 for overtime hours that they worked, but for which they were not paid.

“This resolution, while long overdue, is a total victory for the claims adjusters who pursued their claims against Farmers, and represents a vindication of these workers’ statutory right to overtime pay. Many of these adjusters have been waiting eleven years to recover the overtime pay to which they are clearly entitled. Finally they will be compensated,” added Steven G. Zieff, lead counsel for plaintiffs.

A separate case against Farmers Insurance Exchange, on behalf of claims adjusters nationwide outside of California, is pending in the federal court in Portland, Oregon, and is entitled Farmers’ Insurance Exchange Claims Representatives’ Overtime Pay Litigation, MDL 1439.