State Farm Rehires Many Agents Fired in Fund Scheme

State Farm Group has rehired more than half of the 53 insurance agents it fired for misusing funds from a company foundation after the agents admitted making mistakes, according to company documents obtained Wednesday by The Times.

But bringing 29 agents back in the fold won’t halt a legal battle in federal court in San Francisco initiated by most of the others, who assert that the issue was a pretext to fire them. They claim they were really terminated for protesting State Farm cutbacks.

The 53 had helped Contra Costa agent Don Soukup circumvent the foundation’s $1,000 limit on matching charitable donations. Soukup provided each agent with a $1,000 cashier’s check made out to his alma mater, Wayne State College in Nebraska. The 53 agents donated the funds in their names, then obtained matching donations from the foundation that together totaled $53,000.

In letters offering reinstatement, State Farm Chairman Edward B. Rust Jr. said the 29 agents had acknowledged a “severe error in judgment.� He added that the Bloomington, Ill., insurer is ready to talk about “how we can move forward in a spirit of mutual trust.�

Writing separately to other agents and employees, Rust said that 24 other agents “gave us no basis on which we could repair our trust.� He said their firings stand and become effective today.

On Wednesday, eight of the two dozen dismissed agents asked U.S. District Judge Charles Legge in San Francisco to put their firings on hold until their lawsuit against State Farm is settled. Legge declined, saying they’ll be compensated with monetary damages later if they win the suit. The suit, filed Tuesday, alleges breach of contract and unfair business practices. It was filed by 26 agents, 18 of whom are among the two dozen dismissed. The eight others weren’t involved in the donation flap.