Hearing over civil case against State Farm another step in a possible landmark case

What began with a damaged roof claim after a historic June 2023 storm that struck Comanche County has turned into a case that could rock state courts and the insurance industry.

On Thursday, the case of Neil and Lacy West against State Farm Fire and Casualty Company was before Comanche County District Judge Grant Sheperd regarding two motions: to unseal what attorneys have called the "hot" documents, internal State Farm records at the center of the litigation, and whether State Farm CEO John Farney can be deposed in the case, a ruling attorneys say would mean a sitting insurance company CEO would be forced to answer questions under oath about the company's claims-handling practices.

Under the first motion, attorneys for the Wests argued the State Farm legal counsel, Timila Rother and Paige A. Masters from Crowe and Dunlevy, were stalling the case by going against a protective order that is withholding discovery of what was described as 800,000 documents that have been sealed in the court.

State Farm marked every page and line of the documents, including blank pages, as confidential, according to the plaintiffs.

The plaintiffs allege the "hot" documents, 44 turned over during discovery, detail a scheme in which State Farm set a goal of cutting claim payments to homeowners, particularly for total roof replacements, by 50%.

Among the team including Reggie Whitten, Blake Sonne, Hannah Whitten, Michael Burrage of Whitten Burrage Law Firm representing the Wests, there were arguments that information in the blanketly sealed documents need to be unsealed and part of the court records for cross examination and further investigation, including depositions of top State Farm officials, including CEO John Farney. There were claims that as part of the protective order, which Judge Sheperd validated during a May 4 hearing, the plaintiffs requested the 44 documents be unsealed as being relevant to their claims.

At the heart of the matter is the denial of a claim by the Wests after the June 2023 storm that sent what is called gorilla hail, exceptionally massive hailstones – typically 4.5 inches or more in diameter and ranging from the size of tennis balls and baseballs to grapefruits and softballs – crashing over Comanche County. State Farm denied a claim for roof damage to the Wests' home. Rother claimed there is no evidence of extensive hail damage to the Wests' roof.

State Farm is facing a massive wave of active litigation in Oklahoma — consisting of nearly 800 to 900 individual homeowner lawsuits alongside a major state enforcement action — centering on accusations that the insurer systematically underpaid or denied valid wind and hail roof damage claims.

On top of that, in June, the state attorney general's office filed an independent enforcement action against State Farm. The state accuses the insurer of violating the Oklahoma Consumer Protection Act and the Racketeer-Influenced and Corrupt Organizations (RICO) Act, alleging a deliberate corporate scheme to reduce claim payouts and increase profits via restrictive internal standards.

While the defense argued the documents under blanket seal include trade secrets, the plaintiffs argued that among those documents, which were turned over in discovery, show a "scheme" to cut payouts on claims.

They cited the 44 specific documents as offering elements of the Fire Model Enhancement introduced between 2020 and 2022 and alleged to have carried over to property and automobiles between 2023-2024 that would impede payout for damages.

As part of asking the court to compel Farney's deposition, the plaintiffs asked the court to recognize he served as chief financial officerO for State Farm until 2024 and claimed the documents under wraps showed he was privy to modification of payouts.

While the defense offered that the plaintiffs were arguing a "bad faith case," Sonne argued the restricted paperwork showed a scheme to short State Farm clients of payouts for damage by cutting indemnity.

"Just read them," he argued. "They're in the documents."

While the press was removed from Sheperd's courtroom, Hannah Witten was heard from outside the courtroom to read from the documents. She read the payout ratio being reduced by "50.7%," to affect property, fire and automotive damages.

"The (State Farm) slogan, 'We pay what we owe' is not the case right now," she said.

During the argument for Farney's deposition, Rother said the plaintiffs were baiting the defense with his already filed declaration to get to the deposition stage. She called it an unfair tactic.

"It's always an exceptional circumstance when the CEO is to be deposed," she said.

Rother said that as the top tier of management, Farney would not be the person to be able to testify with information about an individual claim. She said there would be less obtrusive means to get to the facts and cited five others who have been ordered to be deposed for testimony as proper examples, calling them the quintessential group to offer testimony.

The plaintiffs argued that to test the declarations made to the court, it is essential to cross examine those involved, including Farney, especially as he is the highest-ranking officer for the company involved.

Sonne argued the defense was continuing to slow walk the process by objecting to releasing the documents and Farney's testimony. He noted among the sealed documents were charts showing tactics developed by the Fire Model Enhancement and, he claimed, were expanded with the Fixed Profit Task Force among the evidence shielded by the protective order's confidential status.

"When does it stop?" he asked.

Before the end of the day's hearing, Sonne asked for Sheperd to consider a motion filed by Rother for a consolidation of depositions by State Farm officials in Oklahoma County to accelerate the deposition process. Scheduled for the end of August and early September, she said it was a way to avoid multiple depositions.

Sonne argued this was another stall tactic and with cases in Oklahoma County, there is no room to consolidate it with the case in Comanche County.

In the end, Judge Sheperd said he would have a written decision for the motions on whether to de-designate the documents from confidential statuses as well as whether to compel Farney to undergo a deposition. A formal motion regarding the consolidation of depositions will be ruled on at a later date after it is filed in court.

Scott Rains has more than 30 years in the Oklahoma newspaper industry as a pressman, weekly newspaper publisher and with more than 20 years as an award-winning police, court, fire, Native Affairs, local music columnist and roller derby reporter for The Lawton Constitution where he serves as assistant editor. He can be reached at [email protected].