Another Records Fire Is Revealed

[Richard Boyden <richard.boyden@sanbruno.nara.gov>]

Greeetings.  Here is a cross-posted message with an (apparently) edited
Wall St. Journal article about what sounds like another catastrophic
commercial records center fire in May.  You will recall that in March, Iron
Mountain lost 800,000 cubic feet of records to arson in their South
Brunswick, NJ facility.  There has been very little information since.

from the Wall Street Journal 11/12/97
Section A, page 4, col 3
<snip>
PRUDENTIAL INSURANCE SAYS DOCUMENTS TIED TO FRAUD SUIT
WERE LOST IN FIRE
by Scot J.Paltrow

Newark, N.J. - Prudential Insurance Co. of America said a warehouse
fire in May detroyed 4,653 boxes of documents the company was under
court order to preserve in a class-action suit that alleged fraud in the
sale of life-insurance policies.

Prudential hadn't publicly disclosed the loss, which occurred May 5 in a
records-storage facility in West Pittston, Pa., owned by Diversified
Records Services Inc. But a Prudential spokesman, Robert DeFillippo,
confirmed it in response to questions from The Wall Street Journal.

Mr. DeFillippo said Prudential still has electronic records that
summarize what was contained in the documents. So he said "it's not
necessary" to notify customers or the Prudential employees assigned to
evaluate the claims of the loss. However, some plaintiff's attorneys
said the loss of the documents could substantially increase Prudential's
liability in the litigation.

Mr. DeFillippo said 40,000 boxes of the company's records were
destroyed in the fire, most belonging to a subsidiary that offers 401(k)
retirement plans to companies. But he said 15,000 of the boxes
contained records relating to individual life-insurance policies, including
the 4,653 boxes he said were covered by a federal court order.

The fire burned for several days, destroying records owned by about 50
companies, including Bear, Stearns & Co., according to law-enforcement
officials and a Diversified Records spokesman. Trooper Andrew Petros
of the Pennsylvania State Police, who headed an investigation of th fire,
said the inquiry hasn't yielded evidence of what caused the blaze.

Mr. DeFillippo said the destroyed material included agent disciplinary
records, customer-complaint files, sales material and other records that
would be used in evaluating customer claims under a recent settlement
of the class-action suit. U.S. District Judge Alfred M. Wolin of New
Jersey, who presides over that case, had ordered Prudential to retain
all such records. Mr. DeFillippo said the destroyed material had been
consolidated in the warehouse after being collected from five regional
offices around the country that were closed in recent years.<snip>
<snip>
Mr. DeFillippo contended that customers wouldn't be harmed as a result
of the loss. He said the company disclosed the loss orally to Judge
Wolin several days after the fire. He also said that in May the company,
in writing, confidentially notified Melvyn I. Weiss, the lead
plaintiff's lawyer in the class action, and the New Jersey Insurance
Department<snip>
<snip>
When told of the loss yesterday by a reporter, several lawyers who
represent clients in the class action or are pursuing independent suits
against the nation's largest life insurer expressed surprise and
indignation that the company and Mr. Weiss hadn't disclosed the loss to
them. They said that the loss of the documents could have a substantial
negative impact on Prudential's legal position in all pending cases.

Under terms of the settlement, customers are entitled to increased
compensation if there is evidence that records relating to their
policies were destroyed, or if the agent who sold the policies had a
record of customer complaints or disciplinary action.<snip>
<snip>
Andy Dogali, of the St. Petersburg, Fla. law firm Blasingame, Forizs &
Smiljanich, which represents a group of Florida policyholders, said he
had been pressing the court for months to disclose information about the
alleged document destruction. Told yesterday of the fire, he said, "I'm
flabbergasted" that the company hadn't informed him. He said he believed
it was improper for the court not to disclose the destruction. A
spokesman for Florida's insurance department complained that Prudential
hadn't notified it of the fire, and said the department would make
inquiries.<<snip>

Peter A. Kurilecz CRM, CA
Woodside Summit Group, Inc.
Richmond, Va
Kurilecz_PA@vdot.state.va.us

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