HOME, Nationwide settle race case

April 24, 2000
by Tracey McCartney
National Fair Housing Advocate Online

(RICHMOND, Va., April 24, 2000) -- Faced with the uncertainty of an impending Virginia Supreme Court decision, Nationwide Insurance and a Virginia fair housing organization have settled their long-standing race discrimination lawsuit for at least $17.5 million.

The settlement also calls for Nationwide to enter into a contract with the National Fair Housing Alliance for consulting, training and "self-evaluation" to make sure Nationwide's products are reaching African-American neighborhoods across the country.

Housing Opportunities Made Equal ("HOME") of Richmond, the plaintiff in the case, will use the settlement money to further its programs, which include counseling about housing discrimination, ownership and rental issues and providing financial assistance to homeowners for repairs.

"I am particularly pleased that Nationwide and HOME now will work together on a common agenda to benefit current and future homeowners, especially those in urban areas," said Galen R. Barnes, Nationwide's president and chief operating officer.

The parties filed a short document with the Virginia Supreme Court informing the court that the parties had reached an agreement and asking for dismissal, which the court granted. The detailed written agreement among the parties will not be made public, Barnes said.

The settlement stems from a suit HOME filed against Nationwide in 1996. After a trial in October 1998, a jury awarded HOME $500,000 in compensatory damages and $100 million to punish Nationwide for its conduct.

In January, the Virginia Supreme Court overturned the jury verdict, ruling that HOME lacked “standing,” or the right to sue Nationwide for its conduct. But last month, the court threw out that ruling and agreed to reconsider its decision.

Lawyers had been scheduled to make oral arguments before the court on April 20.

At trial, HOME presented the results of paired undercover tests HOME had conducted of Nationwide agents. In 13 of 15 tests, African-American testers inquiring about insuring homes in African-American neighborhoods were treated less favorably than white testers asking about homes in white neighborhoods.

HOME also presented Nationwide's own marketing materials, which indicated that the company sought to characterize zip codes within Virginia based on, among other factors, their racial makeup. The zip codes labeled "Remaining Diverse" were considered undesirable markets for selling homeowner's insurance.

The award, which is no longer in force, remains the largest in a housing discrimination case. Nationwide has been sued more than any other insurer for housing discrimination.

Barnes said the parties had been discussing possibilities for settlement since June 1999. He would not comment on whether Nationwide would have entered into the "partnership" with HOME and NFHA if the Virginia court's original decision to overturn the huge jury award were still in place. He also would not say whether Nationwide still takes the position that HOME never had the legal right to sue the company.

"Our view is to focus on the future," Barnes said.

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