Class-action lawsuit nets $100 million

By Tom Saul
The Quad City Times
December 28, 2005

Policyholders of a former Iowa insurance company could get a slice of a settlement totaling at least $100 million in a class-action lawsuit that was litigated and negotiated in part by attorneys with a Davenport law firm.

Nationwide Mutual Insurance Co., of Columbus, Ohio, agreed to the settlement while admitting no wrongdoing in the suit that initially was filed in Polk County District Court during 1997. Attorneys for Lane & Waterman of Davenport became involved in the case a year later and helped get it reinstated after the suit was thrown out, said Terry Giebelstein, a lawyer for the firm who was involved in the case.

“It is the largest class-action settlement in Iowa history,” he said Tuesday. “The settlement is $100 million minimum and a maximum of $135 million. The case was very complex and very novel and a handful legally.”

The settlement affects policyholders of Allied Mutual Insurance Co. who were customers as of Feb. 18, 1993. Allied merged with Nationwide in 1998. As of Tuesday, 62,000 policyholders were eligible, but Giebelstein said there may be as many as 300,000 able to share in the settlement. They have until Jan. 10 to file claims to be part of the class.

Nationwide “inherited” the suit when it merged with Allied, said Joe Case, a spokesman for the company. After nearly eight years in court, Nationwide decided it was in the best interests of the company, its shareholders and policyholders to settle the matter.

“Without admitting wrongdoing, we felt it was in the best interests of the parties to settle and move on,” he said. “The individuals against whom the claims were made are no longer with the company.”

According to the suit, Allied Mutual was an Iowa mutual insurance company in which policyholders had some ownership rights. A new publicly held firm called Allied Group Inc. was created as a subsidiary of Allied Mutual. The individual defendants named in the suit were managers, officers or directors of both companies.

The suit, filed by two policyholders of Allied Mutual, named as defendants Nationwide, Allied Group and 15 former managers, officers or directors whom they accused of making transactions between 1985 and 1993 to benefit Allied Group but, they claimed, harmed Allied Mutual.

The defendants “entered into a series of transactions that improperly transferred substantial assets and business opportunities from Allied Mutual to Allied Group and ... the individual defendants and Allied Group benefited from these transactions,” according to a Web site that explains the settlement.

Also, the suit states, the effect of the transactions was to convert Allied Mutual to a stock company without taking the proper steps required by law and without paying policyholders.

“We alleged that special deals were made available to the public company at the expense of the mutual company that offered substantial stock options and bonuses to the defendants,” Giebelstein said.

As part of the settlement, Lane & Waterman, Brady & O’Shea of Cedar Rapids, Iowa, and law firms in Boston and Philadelphia that represented the plaintiffs will be allowed to return to Polk County District Court to seek $28.5 million in legal fees and costs, according to the Web site.

The settlement itself will be administered by a professional claims handling firm that will compile claims, determine who gets what and mail checks, Giebelstein said.


Those who held policies issued by Allied Mutual Insurance Co. as of Feb. 18, 1993, are eligible to share in at least $100 million resulting from the settlement of a class-action lawsuit. The deadline for filing claims is Jan. 10. Further information on how to file a claim can be obtained by calling (800) 589-7679 or visiting the Web site

Copyright 2005, The Quad-City Times

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