Consumer Advocate Harvey Rosenfield Counter-Sues to Remove Mercury's False and Misleading Statements from Prop 17 Ballot Arguments

Mercury Wants to Use Taxpayer Money to Spread Lies to Voters on Prop 17, Consumer Group Says

SANTA MONICA, Calif., March 4 /PRNewswire-USNewswire/ -- Consumer advocate Harvey Rosenfield has filed a lawsuit in Sacramento Superior Court urging the court to remove false and misleading statements that Mercury Insurance Company has made in its ballot arguments that will appear in the Official Voter Guide for the June ballot.

Mercury is the sponsor of Proposition 17, the controversial initiative that "will allow insurance companies to increase cost of insurance to drivers who do not have a history of continuous insurance coverage," according to the ballot summary that Attorney General Jerry Brown has proposed to include in the Voter Guide.

"Mercury Insurance Company is attempting to put one over on the voters of California and this Court," the lawsuit says. "Mercury and its surrogates are entitled to use the space allotted to them in the official Ballot Pamphlet to make the most persuasive case they can in support of the initiative…But the law does not allow Mercury to use the official Ballot Pamphlet to propagate false and misleading statements regarding either the terms of its proposed initiative or the state of existing law. And that is exactly what Mercury has done…"

The 202-page lawsuit identifies numerous false and misleading statements made by Mercury's ballot signers. For example, responding to criticism of Prop 17 by military vets and USAA, an insurance company that serves the armed forces, Mercury claims in its argument that soldiers living stateside are exempted from Prop 17's surcharges, and that California consumers are currently charged using the "continuous coverage" factor that Prop 17 is promoting. These assertions are false, as explained in a brief summary below. The lawsuit can be downloaded at: http://www.consumerwatchdog.org/resources/RosenfieldProp17Suit.pdf

Prop 103, the 1988 insurance rate rollback and regulation measure, bans the surcharge Mercury is now asking voters to approve. The lawsuit details how Mercury Insurance and its chairman George Joseph first flouted Proposition 103, then tried to override it with legislation nearly identical to Prop 17. Each time, the state Insurance Commissioner and the courts rejected the same arguments contained in Mercury's Prop 17 ballot arguments, and concluded that the proposal would raise premiums for many motorists. (Recently released internal reports by the California Department of Insurance confirm that Mercury violated the law.)

"We already knew this corrupt insurance company would spend tens of millions of dollars to lie to voters about Prop 17 - it spent $3.5 million just to stick the measure on the June ballot," said Rosenfield. "Now Mercury is trying deceive the voters through devious lies in court and in the official state Voter Guide – Mercury wants to mislead voters at taxpayers' expense."

Accuracy of Voter Guide Key as Mercury Spends Millions on Deceptive Campaign

The Voter Guide contains official analyses of each ballot measure prepared by the Attorney General and the Legislative Analyst (which reports to the state legislature). It also contains arguments and rebuttals prepared by supporters and opponents of each initiative. The Guide is produced by the Secretary of State and mailed to registered voters at taxpayer expense. The Voter Guide is considered one of the most important sources of accurate information concerning ballot propositions. The truthfulness of statements about Prop 17 in the Voter Guide will be crucial because Mercury is expected to spend millions on deceptive radio and television advertising, consumer advocates say.

The challenge to Mercury's ballot arguments will be heard by Sacramento Superior Court on March 12th in conjunction with two other Prop 17 lawsuits: one filed by Mercury's campaign against Rosenfield, Elisa Odabashian of Consumers Union, former Attorney General John Van de Kamp, former Insurance Commissioner John Garamendi, and Jon Soltz, chair of VoteVets.org, who signed the ballot arguments against 17; and a second lawsuit filed by Attorney General Jerry Brown to correct and strengthen the official Prop 17 Title and Summary that will appear in the voter pamphlet. Mercury is expected to oppose the correction.

Fred Woocher of the Los Angeles-based law firm Strumwasser and Woocher is representing Harvey Rosenfield and other opponents of Prop 17 in the suits.

A copy of the lawsuit can be downloaded at: http://www.consumerwatchdog.org/resources/RosenfieldProp17Suit.pdf

Examples of false and misleading statements challenged by Rosenfield's lawsuit:

Impact on the military. Prop 17's surcharge for drivers who have not had five years of continuous insurance coverage has a limited exception for only those soldiers who are "absent from the United States while in military service." Soldiers serving the country on base in the states are not exempt, even though they might not need to have and pay for automobile insurance while on base. Nonetheless, the Rebuttal Argument falsely claims that the ballot measure exempts soldiers who "cancel insurance when serving overseas or in another state" from its surcharges. When Mercury sponsored SB 841 in 2003 to allow the same surcharge against California motorists, it included an exemption for soldiers serving in other states. But Prop 17 has no such protection for stateside soldiers.

Current law. Prop 17 creates a new rating factor in order to circumvent the consumer protections of current law and surcharge many good drivers in California. But throughout its ballot arguments, Mercury pretends that the new rating factor it proposes to create, "continuous coverage," already exists under current law. The Argument in Favor of 17 states: "Under current law, drivers who have maintained auto insurance with the same company are eligible for a continuous coverage discount." This is untrue. The language of Proposition 17 itself states that it creates a new rating factor "in addition to" and "notwithstanding" current law. Mercury is falsely equating discounts for motorists who remain with the same company for a period of years, which are permitted under Proposition 103, with a new rating factor the company wants to use to base premiums on whether or not people can show they have been continuously insured by any company with no lapses over 90 days over a five year period and have had no missed payments. Mercury has made the same false statements in previous court cases, and the courts have consistently rejected Mercury's effort to equate the two.

Surcharges. Mercury's ballot Argument in Favor claims that "Yes on 17 eliminates an existing surcharge for changing companies" and its Rebuttal says that Prop "17 would allow drivers to take your continuous coverage discount with you." There is no existing surcharge for changing companies, and there is no existing "continuous coverage discount." Mercury's claims are false. Prop 17 would create a surcharge on good drivers who have not had five years of continuous auto insurance and would override Proposition 103's ban on surcharges against the previously uninsured or those who have had a lapse in coverage, even if these motorists are good drivers.

For more information, please visit: http://www.stopprop17.org or find us on twitter at: http://twitter.com/stopmercury

SOURCE Campaign for Consumer Rights