Hood, State Farm settlement includes venue stipulation

Jessica M. Karmasek Sep. 9, 2010, 12:51pm


HATTIESBURG, Miss. (Legal Newsline) - Mississippi Attorney General Jim Hood will now have to get the approval of a federal court if he ever decides to bring Hurricane Katrina-related claims against State Farm Insurance Cos. again.

The stipulation was dictated into the recently unsealed record at a settlement conference in February 2008.

"This court, being the U.S. District Court for the Southern District of Mississippi, would retain jurisdiction to enforce and conduct any necessary hearings relative to the settlement agreement; and should any future investigations arise that the Office of the Attorney General should desire to pursue or commence against State Farm, either State Farm entity in this case, arising from the handling of any Katrina claims, that those investigations would first -- as a mandatory condition, must first be submitted to the U.S. District Court for the Southern District of Mississippi with both parties, that being State Farm and the Attorney General's Office, having an opportunity to be heard as to whether or not that is, indeed, outside the scope of the January 23, 2007, letter agreement," Judge David Bramlette said, according to a transcript of the settlement conference.

Another provision included that each side would bear its own costs, including attorneys fees and all expenses, in the case, according to the transcript.

The stipulations, along with a few others, were part of a so-called "secret agreement" reached by Hood's office and the insurance company.

Various Mississippi media outlets had requested that Bramlette make public the agreement, which was executed hours after the attorney general was questioned under oath as a defendant in that case.

Bramlette granted the group's motion to unseal the settlement Sept. 3. Hood tried to fight the group in court, filing two separate objections, while State Farm's attorneys said the company was indifferent.

"A court-ordered unsealing of the agreement does not void any crucial terms of the settlement, and the parties have failed to show how unsealing the agreement could significantly harm either the plaintiffs or the defendant," Bramlette wrote.

"Under these circumstances, a generalized interest in encouraging settlements does not outweigh the public's common law right of access."

Jackson New Media, WLBT, WDAM and WLOX filed their motion to unseal in April 2009 after being granted intervenor status. Jackson New Media owns the political website Y'all Politics.

The lawsuit alleged Hood was unfairly threatening the company with criminal charges to force it to settle the civil suit filed by Hood weeks after 2005's Hurricane Katrina.

Hood had sued State Farm and four other insurance companies weeks after Katrina, claiming that they intentionally misrepresented to policyholders the amount of damage done by wind (covered by their policies) and water (covered by a federal program).

A proposed settlement with State Farm had the potential to affect more than 35,000 policyholders, but a federal judge did not approve of it for procedural reasons. A separate successful settlement of 640 claims was coupled with a $5 million payment to Hood with the agreement his criminal investigation would cease, the company said.

Hood eventually sued State Farm again for not making the rejected settlement work. State Farm then claimed he threatened it with the prospect of another criminal investigation.

The two sides disagreed heavily over the circumstances of the settlement. Hood wrote in a column that "allegations lodged against me by this insurer were shown to be false," while his press secretary wrote the only reason the outcome was referred to as a "settlement" is because "the details of the Attorney General's criminal investigation needed to be protected. The case was dismissed because the allegations were false."

According to the transcript of the settlement conference, Bramlette questioned both parties on how they would handle media inquiries following the sealed agreement.

Hood replied, "In order to protect the seal, certainly, the only comment would be that the case was dismissed. And, of course, they'll ask me about the criminal case; and I would not make any comment, which is always what I'm bound ethically to do, is not make any comment about the criminal case, say, 'I can't comment about that.'"

Sheila Birnbaum, a State Farm attorney, told the judge, "State Farm would say that the case was settled and resolved and will not divulge anything that is in the sealed agreement and may comment what is on the public record, but nothing that is sealed."

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.

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