Jury Awards $12.5 Million to Ex-Farmers Employee

For the fourth time in six weeks, a Los Angeles County Superior Court jury awarded a multimillion-dollar judgment against Farmers Insurance Group in a case related to the Northridge earthquake.

A jury on Tuesday awarded $12.5 million in punitive damages to a former district manager who was fired after speaking out about Farmers’ treatment of victims of the 1994 quake and complaining about the treatment of agents.

The same jury last week had awarded the former manager, 59-year-old Calabasas resident Phillip Alexander, $5 million in compensatory damages in the same case.

Jeff Beyer, vice president of corporate communications for Farmers, said Alexander was fired because he wasn’t managing the sales force in his Simi Valley territory.

“Phillip Alexander was an independent contractor who, quite frankly, refused to perform his job,” said Beyer, who said the company plans to appeal.

But Gary Paul, Alexander’s attorney, said the company had been seeking to fire his client even before the Northridge earthquake, in part for speaking out about the company’s treatment of agents.

According to Paul, company officials sought negative information about Alexander from subordinates and sent Alexander at least two letters suggesting he resign or go out on disability. He went out on a stress disability leave in May 1994.

After that, Paul said, the company accused Alexander of abandoning his Simi Valley district--which was grounds for dismissal.

“They acted intentionally to defraud him and drove him to disability and then used that disability to terminate him,” said Paul. “They were going to do whatever they could to get him out of that job. The jury found that it was malicious and oppressive.”

In February, another jury awarded $10 million in compensatory and punitive damages to former Farmers’ adjuster Kermith Sonnier, who was fired after he complained about the company’s handling of Northridge claims.

And on March 2, a jury ordered Farmers to pay nearly $4 million in compensatory damages to rebuild an earthquake-damaged condominium project in North Hills. Facing an even greater liability in the punitive phase, Farmers opted to settle for $20 million.

“I don’t think this is a coincidence at all,” Paul said. “I think it’s indicative of the way Farmers deals with both their internal people and their external people, their insured.

“And it’s indicative of how the company does not resolve cases.”

Days after the quake, Alexander, who was himself insured by Farmers, attended a staff meeting at which one Farmers’ executive made light of earthquake-weary residents sleeping in the streets, according to testimony at the trial.

Alexander testified that the executive said “it did not matter because [the people] were primarily Mexican and Central American,” not Farmers policyholders, according to a transcript of the case and a letter that was introduced as evidence.

Alexander testified that when he rose to object to the remark, he was told “to sit down and shut up.”

Beyer denied “flat out” that a Farmers executive had made a derogatory reference to quake victims. He called the jury’s verdict “a very, very bad thing.”

“We’re dumbfounded, shocked, outraged, whatever word you want to use,” said Beyer.

He declined to address specific allegations made by Alexander, citing the expected appeal. The company also plans to appeal the Sonnier case, he said.