Allstate settles bad faith lawsuit where Court issued $7,000,000 in fines for discovery abuse

Allstate recently settled a bad faith lawsuit where it had been held in contempt of court for refusing to produce documents pursuant to a court order. Allstate began racking up $25,000 in fines per day when it refused to follow the Judge’s order to produce the documents.

Apparently, Plaintiff sought internal Allstate documents supposedly showing how the company set up a claims payment system in the 1990s that low-balled clients and allowed Allstate to make huge profits.

Because a confidential settlement was reached it is not clear how much of the $7,000,000 fines were actually paid. Allstate claims that it was appalled when it learned last year that it was being threatened with contempt. Once again, one wonders how Allstate is able to operate in this manner and remain profitable.