Terminix Willing to Allow Customers To Obtain Fraud Judgment - February 7, 2008:

Terminix International, the country's largest termite protection company, announced through its lawyer in open court in Morrilton, Arkansas on February 5th that Terminix offered to allow two customers to obtain a fraud judgment against it in December 2005. The Plaintiffs, William and Gail Dickens, alleged in their official complaint that Terminix defrauded them as part of a corporate-wide pattern and practice to cheat its termite protectioncustomers by failing to follow procedures and requirements mandated by "statute, regulations, contracts, industry standards, and good practice ... and ... engaging in a pattern and practice of deceptive conduct designed to conceal their wrongdoing." The customers asked for punitive and compensatory damages.

In its pleading, Terminix said it would allow the court to enter a judgment on all of the allegations made in the complaint if the couple would allow Terminix to avoid a public trial by paying them only hundreds of thousands of dollars. The proposed judgment amount was over the maximum damage cap stated in Terminix's Termite Protection Guarantee. The customers refused. In later testimony, the company admitted it promised to provide a protective chemical barrier around 100% of the foundation of the home, failed to do so since 1978 (30 years), and never intended to bring the treatment up to standards required by law even after it knew the home was eaten up with termite damage. Terminix's representative testified that in keeping with its usual business practice, it applied chemicals around only ten percent of the foundation of the home. The official even admitted Terminix expected infestations to occur given its practice of performing inadequate chemical applications.

Terminix is expected to argue that the jury should not know of its offer to admit liability. It faces a March 20, 2008 trial date in Morrilton. Campbell Law is assisted by Little Rock lawyer Bobby Davidson in the litigation.

Terminix's lawyer also admitted that the company used a termite chemical called Pryfon in the 1990's that it knows does not prevent termites. The company has refused to retreat those homes across the U.S. despite knowing the homes will become infested, and charging annual contract renewal payments for contracts that promise to provide all "necessary services" to prevent termite attack. A class action case is pending concerning those allegations.

Terminix Loses Important Class Action Issue in Arkansas (01/17/08)

An arbitrator appointed by the American Arbitration Association ruled January 15, 2008 in favor of Arkansas consumers. The arbitrator ordered that the scope of mandatory arbitration clauses Terminix International (Terminix) uses in termite prevention contracts is broad enough to allow a potential class action on behalf over one hundred thousand current and former Arkansas termite customers. The consumers entered into, and annually renewed, termite prevention contracts.

The customers allege that Terminix never applied a complete or effective chemical barrier for termite prevention as the company was obligated to provide as long as the contracts were in force. Fixing the faulty treatments may cost up to thousands of dollars per home according to opinions of industry experts.

Terminix unsuccessfully argued that the language it slipped onto the backs of form contracts should insulate the company from facing class action allegations either in state and federal courts or expensive private arbitration forums. If Terminix's litigation scheme had worked as planned Terminix would never have to face serious allegations that it wrongfully took money from customers by failing to provide services as required by the terms of its contracts. Even if Terminix began admitting to current and former customers that it applied incomplete or ineffective termite chemical barriers, consumers would probably not file individual arbitration cases in great numbers. Legal fees and expenses would exceed the cost of retreating houses so few consumers would be willing to make claims and even fewer lawyers would be willing too take cases to recover less than $10,000 dollars each.

American Arbitration Association Arbitrator Edith Dinneen (from Florida) ruled on January 15, 2008 that Terminix's arbitration clause is broad enough to allow deciding a class action in the private arbitration forum. Additional proceedings will be held to determine if the case will be tried as a class action. Lawyers for the consumers are asking an Arkansas judge to certify that the arbitrator's ruling is valid.

The consumers in the Arkansas arbitration case are Dr. and Mrs. Norman Flaxman. The Flaxmans allege that Terminix failed to apply enough termite chemicals under and around the foundation of their home to prevent termites and that the small volume of the Pryfon chemical used was known to Terminix as an ineffective chemical for many, many years. Rather than confessing to the Flaxmans, other Arkansans, or Arkansas regulators that thousands of homes had been treated with worthless chemical (i.e., Pryfon), Terminix did just the opposite. Terminix sent mass mail notices to existing customers in which Terminix promised to reapply "any additional chemicals" that may be necessary to prevent termites. Terminix is the nation's largest termite company with annual revenue around one billion dollars.

Arkansas Judge Elizabeth Danielson on January 2, 2008 ordered Terminix International to select one or more company officials to provide sworn testimony on January 9, 2008 in a manner that would legally bind the firm. In that testimony, Terminix admitted that after using Pryfon for a few years it learned Pryfon was completely ineffective as a termite prevention chemical. Studies by others in the industry reached the same conclusion. Pryfon was withdrawn by the manufacturer as a termiticide. Despite knowing that Pryfon does not work, and despite applying new chemical barriers with a better product for some Memphis, Tennessee customers, Terminix never reapplied functioning chemical barriers for customers across the Mississippi River in the State of Arkansas.

In its Court-ordered testimony on January 9, 2008, Terminix revealed a possible motive for its decision to continue collecting annual premiums from customers whose homes had incomplete or ineffective chemical barriers. Terminix's designated official, Jim Maloch, a former divinity student and church employee, testified that the company believed regulators at the Arkansas Plant Board would never audit its termite control practices to determine if it was using effective chemicals in the correct amounts. As a result, the Terminix official admitted the company believed it would never get "caught" in the State of Arkansas. Likewise, the company believes consumers lack the specialized scientific knowledge to catch on to the truth. The unfortunate result for its Arkansas customers, according the company's testimony, is that the incomplete or ineffective barriers will result in damage to 100% of the affected houses over time. Terminix said it has no plans to fix faulty treatments in Arkansas. Consequently, success in the litigation is critical to over 100,000 families in Arkansas who rely upon Terminix to protect what is usually their largest most important tangible asset - the family home.

Campbell Law attorneys over the past eleven years (in conjunction with other firms) developed successful arguments which have lead judges and arbitrators to decide that consumer claims can be brought either in court or arbitration forums against Terminix International as class actions. Class actions that are heard in private arbitration under the rules of the American Arbitration Association can cost hundreds of thousands of dollars in payments to the AAA and the private arbitrator. Terminix's litigation strategy is to avoid a trial on the merits of class action claims in court or before a private arbitrator.

If your home has been under a Terminix termite contract in Arkansas or any other state, Campbell Law would be happy to discuss your situation. We can associate lawyers in your state to investigate what Terminix is doing or failing to do. The firm has handled and assisted other lawyers with claims against Terminix in numerous states. In this case, Campbell Law is working with Bobby Davidson and Associates of Little Rock, Arkansas and the Charleston, South Carolina firm of Richardson, Patrick, Westbrook and Brickman (www.rpwb.com).

Lawyers associated with the Richardson Patrick firm have handled class action and mass action cases over the past several years resulting in recoveries of many billions of dollars for victims of corporate wrongdoing.

Terminix’s New “No Treatment” Contracts -- Company Admits Under Oath That Homes Will Be Eaten Up By Termites

The nation’s largest termite company has been issuing termite prevention contracts for more than a year with a new and unbelievable twist -- pledges to protect homes without applying any chemicals, baits or traps to kill or repel termites. An Arkansas state regulatory agency is now investigating the practice.

In court-ordered testimony from an Arkansas fraud case, Terminix confessed on January 9, 2008 that it knew before issuing these contracts that failing to provide a complete treatment would result in termite infestations 100 percent of the time.  Nonetheless, Terminix issued the so-called “no treatment” agreements without telling customers of the potentially disastrous consequences.

As reported in the The Arkansas Democrat-Gazette on December 4, 2007, Terminix justifies charging consumers for these agreements, which it knows will not prevent termite damage, by concealing the consequences and getting consumers to sign a form waiver agreement.

Terminix defended its plan to make treatment optional under these plans at a public hearing held by the Arkansas State Plant Board in December. Terminix Vice President Steve Good called the plan a response to consumer demand for “environmentally responsible” pest control that uses the least amount of the lowest toxicity chemicals. No matter how seemingly attractive and environmentally friendly the company may make these plans sound, Terminix’s promotion of this type of contract is frighteningly deceptive and the company now has admitted under oath that it will result in untold property damage.

According to company testimony, Terminix does not tell customers the devastating truth that their homes will be damaged if they agree to these “no treatment” contracts. While Terminix pledges to pay for home repairs under some circumstances, consumers are left to fight the company in costly secret arbitration hearings if they are not treated fairly. These arbitration procedures are so lopsided in favor of Terminix that the country’s largest arbitration association, the American Arbitration Association, says they deny consumers “due process.”

The Arkansas State Plant Board voted to survey consumers about the practice of issuing contracts that promise to prevent termite infestation without taking preventive measures. However, Terminix’s deposition testimony (taken by Campbell Law’s Tom Campbell) already reveals that the company does not expect Arkansas consumers to know that the company’s failure to apply termite prevention chemicals may well result in their homes being eaten up by termites. Further, the company fully expects that consumers will not understand the problem.

Terminix testified in January that it has been offering no treatment contracts for about a year; and that the same contracts are offered in all but two to four other states in the U.S.

If you have been conned by one of these contracts, call Campbell Law and help us stop this corporate rip-off in Arkansas and elsewhere.