In a unanimous ruling on one of two actions stemming from Hursh v. State Farm, a bad-faith case that has come to represent hundreds of virtually identical cases across the state, the Oklahoma Supreme Court denied Attorney General Gentner Drummond’s effort to intervene but invited an independent action that could result in criminal charges against the insurance giant. In December, Oklahoma City District Court Judge Amy Palumbo was unequivocal in ruling that Drummond had the right to intervene. “I understand what State Farm wanted me to get distracted by, but I do not find it to be on point or relevant,” Palumbo said at the time. “Having given it extensive thought, I believe the law does allow the AG to intervene.” Nevertheless, the Court ruled that Palumbo exceeded her authority and that the AG’s intervention, calling on laws more typically associated with organized crime, changed the nature of the proceeding. “The Attorney General’s pursuit of RICO allegations introduce quasi-criminal elements that would not only impermissibly broaden the scope of this civil contract dispute but also the nature of the recovery sought,” the decision reads. The Court relied on a 1987 matter known as Gettler v. Cities Service Company, which established limits on interventions that expand the scope or character of litigation, the justices wrote. Nevertheless, the Court offered precise instructions on how the AG could proceed so as to avoid the limitations imposed by the Gettler decision. “The proper recourse could be for the Attorney General to bring his claims in a separate, independent lawsuit, which avoids the restraints of Gettler on intervention,” the decision reads. In other words, if at first you don’t succeed, try again. 1000 Identical Cases The Hursh matter harkened back to litigation that has been moving stealthily through Oklahoma courts for at least six years. Hints of an alleged State Farm scheme to arbitrarily reduce payouts on claims of wind and hail damage to Oklahoma roofs emerged last year when reports surfaced of settlements in 125 individual bad faith cases against Oklahoma’s largest writer of homeowners insurance. After attorneys representing policyholders won the right to examine critical documents and depose executives, State Farm quickly moved to settle all 125 cases. The amount of damage in each case was modest — around $30,000 — but just one of the 125 cases was revealed to have settled for $3 million. The total amount paid for all of the cases combined could only be estimated and the settlements once again hid the now infamous State Farm documents behind a protective order. But hail damage cases kept coming. The Hursh case, hinging on $22,000 in damage to a Broken Arrow home, burst into the news in December and quickly became emblematic of similar cases that now number as many as 1,000. Drummond filed to intervene in the Hursh case to expedite subpoenaing the same documents that triggered the settlement of the earlier cases. Drummond raised the stakes in the Hursh matter by invoking RICO laws. State Farm took the intervention to the Supreme Court, which prompted Drummond to assert that if the Court denied the civil application of RICO laws, he would not shy away from criminal charges for State Farm employees if crimes were uncovered. In the second action before the Supreme Court in the Hursh matter, the Court ruled in favor of policyholders seeking access to internal State Farm documents they believe will prove the company engaged in a scheme to defraud claimants. “Massive Fraud Perpetrated on Oklahomans” Within minutes of the announced decision, the office of the attorney general issued a three-sentence press release quoting Drummond. “I thank the Oklahoma Supreme Court for bringing clarity to the appropriate forum where the case needs to be filed,” Drummond said. “We will be filing a new lawsuit in the morning to hold State Farm accountable for the massive fraud perpetrated on Oklahomans.” In this, the AG appeared to act almost in concert with the Court, which had taken note of the AG’s insistence in his pleadings that he would not give up the fight if his effort at intervention was denied. “Indeed, the Attorney General admits his intent to file such an action,” the justices wrote. The Court’s equivocal decision is in keeping with a judicial practice variously known as signaling or roadmapping or preemptive dicta, in which a court may rule against a party while simultaneously suggesting how they might succeed in a further action. A 2006 paper by Emory University School of Law Professor Tonja Jacobi modeled judges’ attempts to influence their agendas as a game of covert or overt signaling. “Many judges attempt to shape their dockets by encouraging potential litigants to bring particular cases,” Jacobi wrote. “This encouragement takes the form of judges signaling their own positions on an issue as well as their colleagues’ expected support.” The motive for such signaling may be judicial efficiency. “Judges may wish to signal their attitudes on a particular issue to lower courts, beyond or before the bounds of precedent,” Jacobi wrote. Jacobi confirmed that the Hursh decision bore all the earmarks of judicial signaling. The clarity of the course of action prescribed by the Court, and even the fact that the decision was unanimous, could be signs that the justices wanted to make a clear statement that ran counter to the denial of the intervention. “This is not something that justices are required to do,” Jacobi said. “I think they are definitely signaling a way of making this case work in a different formulation.” Jacobi said that subsequent scholarship had revealed the practice of judicial signaling to be effective and widespread. “We are seeing this more and more as judges see bad behavior and they don’t want the party to get away with it on a technicality,” Jacobi said. Andy Spriopolous, the Robert S. Kerr, Sr. Professor of Constitutional Law at Oklahoma City University School of Law, agreed that it was not uncommon for courts to advise litigants on the proper way to seek relief when dismissing claims. “It is even more likely courts will provide this guidance when it is the representative of the people who seeks a remedy,” Spiropolous said in an email. Ill-Gotten Gains On Wednesday, Drummond filed a new action against State Farm in the District Court of Cleveland County. “Multiple acts of racketeering activity and deceptive practices described herein — including misrepresentations at sale and renewal, claim denials communicated by email and electronic means, and use of computer systems to execute the scheme — occurred in Cleveland County,” the petition reads. Although the new action is civil rather than criminal, the petition does not back away from the racketeering charge. “From at least in or about 2020, up to and including the present, in the state of Oklahoma and elsewhere, State Farm … engaged in, directly and indirectly, the conduct of the affairs of that enterprise through a pattern of racketeering activity,” the petition reads. The petition alleges numerous ways in which State Farm unjustly enriched itself at policyholders’ expense, including the sale of policies and the denial of claims under false pretenses. “Under principles of equity, State Farm should not be permitted to retain these ill-gotten gains,” the petition concluded. State Farm did not respond to an interview request. J.C. Hallman covers a variety of topics for Oklahoma Watch. Contact him at [email protected]. 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