Contempt order that triggered huge fines against Allstate to be lifted

An article in The Kansas City Star noted that since Allstate Insurance had finally produced documents in a bad-faith lawsuit that a contempt order against it will be lifted.

Jackson County Circuit Judge Michael Manners had ordered $25,000-a-day fines against Allstate for failing to produce internal documents in the hotly contested action. Over several months, the fines had grown to exceed $7 million.

The case was scheduled to go to trial Monday, but the parties settled on confidential terms. At a brief hearing Wednesday, attorneys told Manners that Allstate had produced the documents and that the contempt citation, and the fines, should be purged. Manners agreed.

The case stemmed from a collision on Interstate 70 near the U.S. 65 exit. On Sept. 15, 2000, Warrensburg resident Dale Deer stopped in a construction zone. Some time later, a car driven by Paul Aldridge of Hawaii and traveling an estimated 70 mph slammed into the rear of Deer’s pickup truck.

After long delays, Allstate, Aldridge’s insurer, eventually settled with Deer for about $1.2 million. Before that settlement, Aldridge sued Allstate for allegedly mishandling the case and acting in bad faith.

In his suit, Aldridge sought internal Allstate documents purporting to show how the company set up a claims payment system in the 1990s that low-balled clients and allowed the company to reap huge profits.

The documents included slides prepared in the early 1990s by the consulting firm McKinsey & Co. that allegedly advised Allstate to settle claims quickly for pennies on the dollar and fight claimants who resisted — for years, if necessary. One slide was titled “Good Hands or Boxing Gloves,” an allusion to the insurer’s “You’re in good hands with Allstate” slogan.

“Allstate litigates hundreds of bad faith cases each year,” Allstate stated in court documents.