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The NASFA Lawsuit Decision
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What's the Truth?
by Gabriel A. Nazziola, CLU,
LUTCF
Just a few days before
Christmas, Judge Braman rendered his decision on
the NASFA vs State Farm lawsuit, a ‘declaratory judgment
action’. His decision was 76 pages long. Generally
speaking, a declaratory judgment action asks the court
to determine the rights of the parties in light of the
contract wording
Shortly thereafter NASFA
sent out a NASFAX to our member agents advising them of
the decision on the six issues remaining in the lawsuit.
Later we sent out a NASFLASH advising the State Farm
agency force at large of the decision.
Then we learned from our
active agent members that Mike Davidson, State Farm Vice
Chairman and Chief Agency and Marketing Officer, had
sent an e-mail to the entire State Farm agency force on
December 21, 2005. It is this writer’s opinion that the
‘corporate spin’ put on the decision of Judge Braman on
several of the issues in that e-mail could well leave
you with your head spinning.
Therefore, it is our best
judgment, that in your best interest as a State Farm
agent, we recommend that you log on to the State Farm
website. You’re going to have to do it on your personal
computer because we have just been advised that State
Farm has blocked your ability to log on through the
State Farm computer in your office. They get a capital
“T” for timing on this one.
Click
here to read the judge's 76 page decision.
If you have the time, please
read all, If not, at least the first 41 pages which
deals wholly with the Partner Agent Program (PAP).
If you don’t have enough
time to read that much, may we suggest that you hit the
following more poignant statements by Judge Braman:
Page 6, Paragraph #15,
regarding the Partner Agent Program
“At all relevant times
State Farm was aware that its agents had no contractual
obligation to sell securities.”
Page 8, Paragraph #22,
regarding State Farm’s Grow or Go theme and its
perception from the field as an ultimatum
“No contrary evidence was
offered as to the 2000 Convention including the grow or
go theme, and I find the foregoing account accurate.”
Page 9, Paragraph #23
relates to the reasoning behind State Farm going to the
Partner Agent Program to improve the financial products
sales results
“However, as of June 22,
2001, the marketing of mutuals was disappointing.
Only 27.9% of the 9,419
registered agents sold at least one account.”
Page 20, Paragraph #41, with
respect to after our lawsuit started, including PAP as
an issue, State Farm alleged that the Registered
Representative Referral Database (which the Judge dubbed
as the “3RD” program) replaced the Partner Agent Program
(PAP)
“Further, 3RD never took
the place of PAP.”
Page 27, Paragraph #50, on
the same subject
“In sum, I find that PAP
was never ended.”
Page 27, Paragraph #50,
(Finding 43) on the same subject
“3RD was born, in part,
because the felt litigation necessity of dealing with a
challenge based upon the imposition of a “partner” on a
non-participating agent.”
Page 40, Paragraph #69 on
good faith and fair dealing
(Read the entire
paragraph slowly and completely)
Page 41, Paragraph #70, on
the same subject, read the last sentence
“State Farm’s conduct
meets the elements it has conceded constitute bad faith
in view of the agent expectations, and the commercial
advantage State Farm extracted.”
Now that you’ve taken this
little exercise in legal reading, you may draw your own
conclusions on the veracity of Mike Davidson’s e-mail of
December 21, 2005?
By the way, NASFA
voluntarily withdrew the internet issue from the case
once we learned from court testimony by a State Farm
witness that they had spent 30 million dollars
developing the State Farm internet website in order to
sell products direct and only sold 8,000 policies since
its inception. And further, the fact that internet
direct selling by State Farm agents would be happening
very soon, made it a competitive ‘non-issue’.
Sometimes it just pays to
read the facts yourself. |
