Main

The purpose of the present blog is to tell my story and clarify for myself what is American justice, which I believe in and look up to. I need to sharpen my understanding of it, to broaden my perspective on it, and to correct my many misperceptions of it. I did talk to many attorneys on the legal issues under question, but it would be good that I reach out through the present blog to an audience of smart people, who could “chisel and polish” (in the words of Confucius) my comprehension of the subject matter. Among many memorable quotes, there is the widely circulated saying of Warren Buffett, which is, “It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.” I take his advice to hang out with the remarkable better-than-I crowds through this blog.

I use my story to link like a thread to many legal and social issues I want to discuss in this blog.

I spent well over ten thousand dollars to consult with a dozen or so attorneys to discuss my legal standing and concluded that it might be better to go pro se first to test the water before I spent 100 thousand dollars or more to have a full battle with Allstate. I am at an age to spend a dollar is to deplete my saving a dollar. Allstate’s appropriation of $200,000 or so from my economic interest of my book of business had already been an assault on my golden year, threatening to turn it into a greyish year of want. I must be careful.

Without any legal education and training, it is impossible for me to handle complex legal issues. I must settle down with a simple and very narrow issue, which I could bring to the court and ask for a verdict. The issue is: Could Allstate quash/take away one’s right of selling one’s economic interests in the land of America and replace it with seizure/appropriation, as a non-American tyrant does?

Many legal professionals including Judges and attorneys have tackled this issue in their complaints, memorandums, and orders (See Suits under MyData) through the lens of good faith and fair dealing in executing a binding contract. I would like to “thicken” the understanding of it to 3-D by the addition of background from the perspective of the industry/insurance norm and tradition. My 25 years’ experience as an insurance agent might help.

Let us start with IA (Independent Agents), who, can sell different companies’ products, if contracted. IA owns the insurance policies he/she has written – his/her economic interest. IA does not have a mother company who monitors the agent’s day-to-day operation such as office hours, performs, etc. However, an insurance carrier would sever relation with an agent if he/she fails to produce a minimum number of policies (annually) or has a high loss ratio (above 70%). The carrier would notify the agent its decision to cancel their contract and allow the agent to bring the insurance policies to another carrier to underwrite them, usually in the timeframe of two years. There is no non-compete clause in IA’s contractual agreement with the mother insurance carrier. This is crucial. By distributing its products to independent agents and acting as a super mega agency through direct sales, Allstate has violated the tacit agreement between the company and its agents for keeping each other “captive” as State Farm does. Allstate becomes a mother company of independent agencies like Travelers. Allstate thus forfeits its right to execute the non-compete clause in the E.A. contract for the violation, by itself in bad faith, of the norm and tradition of captive agent social agreement. Any agent who has been harmed by the legal fists of Allstate in regards to the non-compete clause should be able to punch back due to this bad faith violation of Allstate.

One point needs to be pointed out is that, even a policy written by an IA but taken over by the carrier from the care of the agent because of the termination of contract between the two, the carrier still must pay the agent, as dictated by, say, the New York insurance law.[1] Attorney DellUniversita pointed this out in Complaint (§118) and Amended Complaint (§158-60) of the Nocella case. The legal rationale behind this law is the IA still have an ownership right, which has not been severed by the non-compete clause of the contract, of the policyholder, which he has had an agent-customer relationship. Would then Allstate be obliged to pay agent commission and bonus after the termination?

Allstate fundamentally alters the concept of EA (Exclusive Captive Agent), invented, and championed by State Farm (as well as Nationwide and Farmers in 1920s), in two areas: 1. the SF vested economic interest of the book of business cannot be sold among agents within and without, whereas Allstate agent’s marketable economic interest of the book of business can be sold among Allstate agents and purchased from without by an outsiders, in both cases the transaction must be approved by Allstate; 2. Captive goes both ways for SF: agents cannot market non-SF products and the company would not distribute its products to outside independent agents, nor would the company become a super mega agency to market its products, whereas Allstate distributes its products to thousands outside IAs and the company itself becomes a super mega agency competing with its captive agents in customers and human resources. Here, we shall set aside the latter difference and concentrate only on the former.

In 1991, when I first became an insurance agent, what I learnt was that SF would have given you a fully staffed and well-equipped office with a 2 million book of premium, you were employed as a captive agent-employee, who had to meet very tough production quotas in order to be “graduated” or vested in two years to become an independent contractor with no quotas. A fraction of one’s commission would have been put into a retirement account, which belonged to the agent. At the termination of the IC contract, the agent gave the book back to the company and had no more claim on the book. However, he was entitled to cash in his retirement account. Then, the SF commission for a new homeowner policy was 20% and the renewed 15% if I remember correctly. Six years ago, a Nationwide agent’s daughter was recruited by SF to be given an office of a 5 million book of business with reduced commission of 5-8%. I have never had direct knowledge of SF’s business practices. I stand to be corrected by anyone with an intimate knowledge of SF. Nationwide had based its agency system on SF’s model. I did not have a marketable economic interest of the book I had, when I retired, but I did receive close to half a million dollars retirement funds from Nationwide.

When Allstate makes the economic interest of a book marketable, it would mean that Allstate does not own the economic interest of it. The buyer or the seller owns the economic interest of the book. The Agency Agreement has nothing to do with the ownership of the economic interest of the book. The termination of the contract does not give Allstate the right to appropriate an agent’s economic interest of the book under question. Even the Party/Government of the Communist China, emulating the US standard of free market, paid market value of the leasehold ownership of property to its citizens since 1992. (See under Bio.) Allstate should pay market value to reclaim the economic interest from its agent and pay agent the current commission on the book before taking possession of the right to the said economic interests through buying with a definite date of settlement – that is the American way!

Can Allstate appropriate the right to the economic interest, which an agent has paid a market rate to acquire? This is America, which stands for absolute property right and free market rules of game? This is the one and only one theme of my Pro Se complaint.

I shall take advantage of the dynamic nature of a blog to update blog development and feedback from time to time as Status Reports under the present section MAIN.

Before I get off MAIN, I encourage my fellow agents to join me to do a pro se lawsuit of his/her own. It is simple. If you do not want to spend the time to write a complaint, you can pay an attorney $2,000 to do one, a one-issue complaint, for you. File it and serve it and you are in business. Some court requires you to disclose that your complaint is written by a professional, who can also guide you through the court procedures. It matters little whether you win or lose or being stalled in the court like my case. The idea is to bury Allstate with lawsuits. If one thousand agents became pro se litigants, the American media will be on fire to report our grievances – as suggested by many agents in the FB All Agents Page platform to attract media attention. I was told that the Domino drivers individually filed a thousand lawsuits to defeat the mighty IRS in its attempt to classify them as employees.

By the way, I do not imply that we are going to lose in the court of law. I believe we will win at least on the issue of AAV. (See my discussion of it under Acronyms.)

In 2019, Allstate reduced our commission rate from 10% to 9% with the promise of reducing insurance rate for the policyholders. We talked, talked, talked. But did not stand up and fight. Now, Allstate raised the insurance rate 12% this year for the PHs[2], reduced agents’ renewal commission to 4-7%, and paid 3.3 million dollars to buy back its stocks to pushing up the stock value, so that the higher echelons could reap millions of dollars from the stock options benefitting them. Let us, fellow agents, punch back this time. Twenty years ago, 430 or so Allstate agents stood up and filed suits, preventing Allstate from instituting AAV and Production Quota for 16 years. (See my discussion of the Tabor case.) They had the 1776 spirit and tenacity. And we are not. As a result of our timidity and inaction, we are being rolled over by the tank which proclaims, “Greed is good!”

In contrast to the renewal commission rate of 4-7% paid to captive agents in 2023, the independent agents under Allstate would still receive the renewal commission of 15%. That is blatant discrimination pure and simple. (We again whine profusely like babies over the issue on our FB All Agents Page platform, complaining the cruel inequity of our mother Allstate.) Sue, my fellow agents! Let the myriad pro se flowers bloom! Then, could Spring be far away!

(Disclaimer: Unschooled and untrained in legal education, I am a layman, forced into studying legal matters. The views are amateurish. Please consult a legal professional for genuine legal opinions.)

[1] New York insurance law 3425 (j)(i)(D) provides, “[T]erminated agent or broker shall be entitled to receive commissions on accounts of all business continued or written, at the insurers prevailing commission rate.”

[2] Chicago Business reports, “Allstate hiked rates by 12% on average earlier this year – one of the largest one-time increases in memory.” (Steve Daniels, 7-11-22.)