Judge, in Reversal, Seals Documents in State Farm Suit

State Farm attorneys have persuaded a judge to reverse herself and keep under seal damaging statements made by a former company employee.

Joan Klein, presiding judge of the 2nd District Court of Appeals, ruled last week that she “improvidently denied” State Farm’s request to seal sworn declarations made by Amy Zuniga, a former member of the company’s litigation unit.

In her declarations, which are sealed in several other state courts, Zuniga alleges that State Farm routinely cheated customers by “omitting earthquake coverage” and denying benefits to some auto policyholders “regardless of whether liability was clear or not.” The statements were included as evidence in a lawsuit against the firm by a Sherman Oaks couple who contend they were cheated out of their earthquake insurance.

State Farm denies any wrongdoing.

Representatives of State Farm asked the court to seal the documents on the grounds they were protected by the attorney-client privilege. That request was denied by Klein on May 29.

The documents were then made public on June 2. That day, State Farm attorneys wrote a letter to the court saying the documents were “lodged” rather than “filed” with the court and asked for their return. State Farm attorney Julie Roback, at the suggestion of Court Clerk Joseph Lane, then sent a messenger to the court who retrieved the envelopes containing Zuniga’s declarations.

Senior deputy clerk Frank Stapleton had said last week the documents had been filed, and therefore were supposed to remain in the court file. Klein, learning the messenger had retrieved Zuniga’s statements, asked State Farm’s lawyers to return the documents, Stapleton said.

The envelopes containing Zuniga’s declarations were mistakenly stamped “filed,” but the court had in fact authorized their release to State Farm attorneys. Lane says said the documents were lodged, not filed with the court. He said there had been a misunderstanding among court personnel over the release of the documents.

“I gave them permission to take the files. In my estimation it was the right thing to do,” Lane said. “The court did not order those documents stamped. . . . They were stamped because of an error in the clerk’s office.”

In her most recent opinion on the matter, issued Thursday, Klein modified her initial denial of State Farm’s request for a seal and ordered the documents returned to the company.

Frank Rothman, an attorney with the firm representing State Farm, said the court has rectified its mistake by sealing the documents. Retrieval of the files from the court last week was “no crime of any kind. . . . We did nothing wrong.”

“I am very disappointed that the court has sealed these things again,” said Harvey Rosenfield, director of the Proposition 103 Enforcement Project, an insurance industry watchdog group. “But the genie is out of the bottle.”

The documents, now under seal, have been posted on the World Wide Web.