Press Release March 8, 2000

Contact: Mark Savage, Public Advocates - 415-431-7430 Earl Lui, Consumers Union - 415-431-6747 Consumers Union's West Coast Regional Office

San Francisco, CA - San Francisco Superior Court Judge Ronald Quidachay today denied State Farm's latest attempt to hide its redlining data from the public. The judge also dismissed State Farm's case against a consumer advocate who had obtained the data, finding that the insurer violated state law against "SLAPP" ("Strategic Litigation Against Public Participation") suits.

Today's hearing represented State Farm's second try in this case to block release of the redlining data. State Farm today argued that Insurance Commissioner Chuck Quackenbush had no authority to disclose insurers' redlining data to the public. Earlier, Judge Quidachay rejected the insurer's request for an emergency restraining order on the grounds that the redlining data constituted a trade secret.

"If State Farm devoted its considerable resources to serving underserved communities rather than to financing lawsuits to hide its unacceptable record in California's low-income and minority communities, we might see real progress in ending redlining," said Mark Savage, Managing Attorney at Public Advocates, Inc., representing Consumers Union and the Southern Christian Leadership Conference in the case. These organizations entered the case to counter State Farm's attempts to hide its redlining data. Redlining is the practice of discriminating against consumers based on their race or where they live.

State Farm's lawsuit began in December 1999 when it sued Quackenbush and consumer advocate Birny Birnbaum after Birnbaum received the redlining data from the California Department of Insurance. State Farm's suit seeks to force Birnbaum to return the data and to block Quackenbush from giving it to any other member of the public.

Since 1995, companies that sell auto, homeowners, or small business commercial insurance have been required to file redlining data with the Department. The data includes race and gender of policyholders, as well as the number of policies sold and cancelled and location of offices and agents, all sorted by ZIP code. Under current law, the Department must issue an annual report summarizing the data filed for the previous calendar year. The reports summarize each insurer's record in all underserved ZIP codes combined, which makes it difficult to pinpoint where individual companies may be engaged in redlining. But even these summaries show great disparities between the rate at which insurance companies write policies in minority and low income communities versus the rate at which policies are written elsewhere in the state.

For example, in 1995 approximately one sixth (16.16%) of California's population lived in underserved communities, but State Farm's data revealed that State Farm had only 2.59% of its agents in underserved communities combined. While 16.16% of California's population lived in underserved ZIP codes, the average insurer wrote only 5.57% of its private passenger automobile liability policies, 6.62% of its homeowners policies, and 9.55% of its commercial multi-peril (non-liability) policies in these low-income, minority ZIP codes. State Farm's record was even worse, with only 4.31% of its private passenger automobile liability policies, 5.19% of its homeowners policies, and 9.13% of its commercial multi-peril (non-liability) policies in these low-income, minority ZIP codes combined. State Farm's lawsuit seeks to keep secret whether these percentages fall even further in certain low-income, minority ZIP codes such as inner-city Oakland, inner-city Los Angeles, and redlined communities in the Central Valley.

"It is outrageous that State Farm has gone to such great lengths to keep this important information secret," said Earl Lui, Senior Staff Attorney for Consumers Union. "We are confident that the court will eventually uphold the public's right to know."

The judge also granted a motion by Birnbaum to dismiss the case against him because the suit violated California's law against SLAPP suits. Birnbaum, a former Texas Associate Insurance Commissioner, argued that State Farm's lawsuit was part of a pattern of harassment to silence his First Amendment rights. State Farm had filed two other lawsuits in Texas against Birnbaum's consumer advocacy work. Enacted in 1992, the California anti-SLAPP law provides a means to promptly expose and dismiss abusive lawsuits aimed at preventing participation in public issues.

"State Farm has behaved like a bully and the Court has thankfully protected Mr. Birnbaum's and everyone's constitutional rights," said James Wheaton of the Oakland-based First Amendment Project, who represented Birnbaum.