Firm’s Suit Against Worker Dismissed
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A Los Angeles Superior Court judge on Thursday dismissed a lawsuit filed by State Farm Fire and Casualty Insurance that sought to silence an ex-employee alleging widespread fraud at the company.
State Farm in the court ruling was also denied an injunction against the employee, Amy Girod Zuniga, on grounds the action was intended to punish and prevent her from revealing State Farm’s alleged criminal practices.
The firm had contended that Zuniga had been revealing company trade secrets and flouting a “code of conduct” she had signed while working in State Farm’s litigation department.
In the court ruling, Judge Aviva Bobb said, “Any contract which acts to require an employee to remain silent as to her employer’s fraud is not just and reasonable. The Code of Conduct is not just and reasonable under the circumstances.”
Zuniga said in sworn testimony, quoted at length in a recent appellate court opinion, that State Farm had forged signatures on earthquake declination forms to avoid paying insurance claims following the 1992 Northridge earthquake.
“I am aware that there were many . . . State Farm claims arising out of the Northridge earthquake . . . involving unauthorized signatures by State Farm agents,” according to Zuniga’s sworn declaration in that case.
State Farm officials deny any wrongdoing.
Judge Bobb ruled that Zuniga could continue to speak freely about State Farm and that doing so does not amount to “the misappropriation of trade secrets and proprietary information.”
“Here, rather, [State Farm] simply runs the risk of having its alleged fraud being exposed,” the court ruled. “[State Farm] has not demonstrated the falsity of Zuniga’s allegations. Plantiff’s unclean hands are a bar to injunctive relief.”
State Farm attorneys, of the law firm Skadden, Arps, Slate, Meagher & Flom, contended the judge’s ruling.
“We believe the court was wrong,” said attorney Douglas Adler. “This was neither a slap suit nor was it a case where State Farm wanted to do anything other than protect privileged information.”
State Farm had not decided how it will respond to the ruling, Adler said, but “there are plenty of sufficient grounds for appeal.”
Zuniga’s attorney, John Rowell, urged other State Farm employees to follow his client’s example.
“State Farm is seeking to gag Amy and to punish her for coming forward with the truth about State Farm’s fraud and forgeries by State Farm agents,” Rowell said. “The law is designed to protect the Amy Zunigas of this world. Now those people who are at great risk of being financially destroyed by large corporations can come forward and tell the truth.”
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