|Termites on wood|
It takes a lot for a corporation's misconduct to make the conservative judges on the Alabama Supreme Court want to wretch.
But Orkin Pest Control and parent company Rollins Inc. accomplished that rare feat with a massive con they pulled on Artie Mae Jeter, an elderly black woman from Macon County, Alabama, who had signed a lifetime contract for termite protection on her home.
Court documents show that Orkin officials knew termites were eating Jeter's home to the point that it was on the verge of breaking apart, but they did not tell her and failed to fulfill their obligations under the contract. Jeter died before her lawsuit could go to trial, but an Alabama jury awarded her estate $80.8 million in damages.
The Alabama Supreme Court reduced the damages to $2.3 million for a variety of technical reasons, but language in the ruling indicates even the mostly pro-business justices were sickened by Orkin's behavior.
We have written extensively about Campus Crest Communities CEO Ted Rollins and the divorce case that caused his ex wife and their two daughters to wind up on food stamps because of a massive cheat job in an Alabama court. The judgment in that case came down in 2005, and it turns out that Ted Rollins was just following a family tradition--cheating people in Alabama.
Randall Rollins and Gary Rollins, Ted's cousins and the top executives at Atlanta-based Rollins Inc., oversaw a business scam on Artie Mae Jeter that made even Alabama judges want to puke--and that's hard to do.
How grotesque was the Orkin fraud? Consider the actions of several employees, according to the Alabama Supreme Court ruling. First up is a termite inspector named Clency Bowman:
In 1985, 1986, and 1987, Bowman reinspected Mrs. Jeter's home for termite damage. Although Bowman found termite damage, he reported to Mrs. Jeter that there was no evidence of termite damage and no evidence of moisture damage. In May 1988, Mrs. Jeter found termites swarming all over her house; she immediately contacted Orkin. Bowman reinspected and retreated Mrs. Jeter's home, reporting to Mrs. Jeter for the first time the termite damage. Bowman noted on his reinspection report that there was “[e]xtensive termite damage to about 90% of structure [and] [t]ermite swarmers in bathrooms.” Because of Orkin's policy of not discussing termite damage with the homeowners, Bowman did not provide Mrs. Jeter with a copy of his report.
A branch manager named Bill Eady took Bowman's information and actually did the right thing, filing a report showing "damage very evident" at Jeter's home. That report found its way to a district manager named Bill Maxwell, and the deceit hit new levels:
Maxwell visited Mrs. Jeter's home and saw the termite damage. Despite Bowman and Eady's findings to the contrary, on November 9, 1988, Maxwell drafted a document stating that the bathroom in Mrs. Jeter's home had “no visible signs of termite damage” and that the damage to Mrs. Jeter's bathroom could be either termite damage or water damage and that Orkin would not be responsible for repairing the damage if it was found to be caused by water. Maxwell had Mrs. Jeter sign this document.
The Alabama Supreme Court was not amused. Here is how it described Orkin's actions:
The record is replete with evidence indicating deceitful conduct by the Orkin defendants toward Mrs. Jeter, an elderly widow with little formal education. It is difficult to imagine a more damaging internal memorandum than the one presented in this case. There is evidence that Orkin knew of the serious termite damage to Mrs. Jeter's home as early as 1984 and that it engaged in a policy of fraudulently concealing that damage. . . . The evidence shows that Orkin's conduct was highly reprehensible.
The degree of reprehensibility in a defendant's conduct is a key factor in determining punitive damages, so the state's high court addressed that issue further:
Orkin's reprehensible conduct in regard to Mrs. Jeter's claim spanned almost 10 years. The evidence is overwhelming that Orkin actively engaged in a plan to deceive Mrs. Jeter about the condition of her home. It is clear that the scheme to deceive Mrs. Jeter spanned from lower level termite inspectors to a branch manager, a district manager, and a regional manager. In addition, there is evidence that Orkin engaged in a pattern of misconduct by failing to inform homeowners of termite damage for which Orkin would be liable to repair. The evidence of Orkin's reprehensible conduct overwhelmingly weighs in favor of a finding that substantial punitive damages are appropriate.
One justice did not sugar coat matters in a special comment to the main opinion:
I have served as a Justice on this Court for more than 16 years. The reprehensibility of the defendants' conduct was great--as great as any I remember. To save money, the defendants violated their duty to Mrs. Jeter and subjected her to bodily injury or death in what she thought was the safe sanctuary of her home. I have no hesitation in supporting a $2,000,000 punitive-damages award in this case, regardless of the ratio such award bears to the compensatory damages.
So why did the court greatly reduce the overall damages to the Jeter estate? It involves complicated issues related to the ratio of compensatory damages to punitive damages--and we will address those, along with strong signs of racism in the ranks at Orkin, in upcoming posts. But for now, this much is clear: Orkin's misconduct was as bad as any seen in Alabama for many years--and it was so gross that even staunchly pro-business judges could not tolerate it.
That's the family that produced Ted Rollins. We've reported extensively on his conduct in the Rollins v. Rollins divorce case, which indicates he has learned well the lessons on how to abuse others.
Based on family tradition, one can only wonder what kind of treatment awaits college students who sign up for housing with Campus Crest Communities, the latest Rollins venture. I'm betting that, in some cases, it will be reprehensible.