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A Proposal for GRASS-ACTION LITIGATION against Allstate Insurance Co.

[ Policyholder Awareness/Preparedness Forum ]

Posted by tonyb for K. Kay Shearin on April 8, 2003 at 14:07:22

A Proposal for GRASS-ACTION LITIGATION against Allstate Insurance Co.

I propose that about 150 of us who bought insurance policies from Allstate, only to have Allstate refuse to carry out its obligations under those policies, put our claims together and sue Allstate in federal court in the Northern District of Illinois. That's where Allstate is, and that court's webpage is at .

What I propose is a form of group litigation that uses the power of the Internet to allow the individual plaintiffs all over the U.S. to communicate with each other, thus achieving the administrative convenience of a class action. Because it's not a class action but is, instead, a grass-roots reaction to an intolerable situation, I call it "grass-action" litigation.

Like other large corporations that have deliberately chosen to take criminal advantage of their own investors and employees (not to mention customers) to enrich themselves, Allstate has for years sold insurance policies it had no intention of honoring -- instead of using our premiums to pay claims, it has used them to pay lawyers to litigate against us when we tried to make Allstate pay what it owed us under those policies. Alone, we cannot hope to hold Allstate to account; together, we can.

Class-action litigation won't work for us for many reasons, the main one being that you can't have a class action for fraud, and what Allstate has done is fraud in a big way. For the same legal reasons, no individual policy-holder can ever prove Allstate's pattern of deliberate fraud, because the legal issue of fraud can be presented to a trial court only as to the plaintiffs in that particular case. For us to prove in a court of law that Allstate defrauded a lot of people over a long time, we have to have a lot of plaintiffs. The Federal Rules of Civil Procedure provide for many people to join together as plaintiffs in one lawsuit against a defendant that has wronged them all.

Because we're complaining of a pattern of tortious conduct that continues into the present, we are not limited by the statute of limitations for breach of contract (usually about three years from when Allstate violated the policy terms). Therefore we can sue for claims that arose longer ago than that but that we didn't discover until more recently were part of a large pattern of Allstate's deliberate misconduct, because Allstate concealed the facts from us.

We don't meet the requirements for diversity-of-citizenship jurisdiction, but we do qualify for federal-question jurisdiction, because Allstate has violated various federal laws -- including consumer-protection ones and criminal ones, especially those against mail and wire fraud -- in the course of interfering with interstate commerce. For example, the McCarran Act, 15 U.S.C. §1012(b), says federal statutes govern the insurance business in any area where the states don't regulate it, and no state regulates deliberate interstate fraud.

The court's filing fee is $150, so if 150 of us join in, we'll each pay only $1 to file our complaint in court. We can arrange to serve all papers in the case on each other electronically, but Allstate will have to deliver to every one of us plaintiffs paper copies of every document it files with the court (so the more of us there are, and the more scattered around the country, the better). We can file our papers with the court by mail, but it would be more efficient if at least one of us plaintiffs was close enough to the courthouse to carry our filings in. (You never have to get papers notarized to file them in federal court, because 28 U.S.C. §1746 allows you to certify instead.)

Because this is a grass-roots movement, each plaintiff has to participate, mostly by responding to Allstate's requests for info about that plaintiff's policy and claims and by keeping track of their own damages and litigation expenses. Whoever coordinates the webpage will post forms the plaintiffs can use for that, as well as court papers filed by other plaintiffs that each plaintiff can adopt if they don't want to write their own. A plaintiff who consults a lawyer for advice about this case should include the lawyer's fee as one of the expenses of this case to be reimbursed by Allstate in any judgment or settlement.

This is a new way of applying the existing court rules and procedures, so it should generate some good publicity, which will benefit the public by warning other people not to be sucked into doing business with Allstate, and it might even cause the authorities to crack down on Allstate. Unlike a class action, which settles all the claims against the defendant, even for people who didn't participate in the lawsuit (or who did participate but didn't get any damages because there was nothing left after the lawyers got paid), this grass action will establish the fact that Allstate committed the fraud, but it won't keep anyone else from suing for being a victim of it -- in fact, it will make that easier for them.

I'm willing to participate and to put all my expertise at the group's disposal, but other people will have to handle the webpage and coordinate the plaintiffs' communications and activities. (Someone with good public relations skills needs to take care of that aspect, too.) If you're interested in the idea, please communicate with people you can find on the various webpages for people Allstate has screwed. Please don't talk anyone into joining, because it will take a little bit of participation every so often for what will probably be a long time, so we need people who are in it for the duration. But please do consider whether you're willing to join in getting some justice for yourself and other Allstate victims and in stopping Allstate from continuing to victimize more people.

If you have any questions for me about the concepts, you're welcome to e-mail me, but there's no need to preach to the choir: I'm ready to join the group once someone else organizes it.

K. Kay Shearin

A Proposal for GRASS-ACTION LITIGATION against Allstate Insurance Co.

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