Did self-storage giant Public Storage mislead tenants into buying their in-house insurance product?

That’s the central question at the heart of a class action trial that started in California on Monday. The suit seeks $100 million in restitution for the plaintiffs who claim that employees of the storage REIT told customers that they must buy an insurance plan from the company itself in order to rent a unit. As a result the company is accused of violating California’s unfair competition law.

Public Storage says in legal filings that the company requires tenants to have insurance, but doesn’t force customers to buy a plan from them. Tenants are free to obtain insurance from any qualified carrier, according to Public Storage attorneys. The company also says that employees do not give insurance advice, or check for proof of insurance.

Going off-script

According to reporting by Law360, Public Storage lawyers sought to decertify the class on Tuesday, arguing that plaintiff testimony points to a few isolated cases where employees went “off-script”. As such those examples are not enough to prove misconduct on a class wide-basis.

The class is made up of tenants who rented a Public Storage unit in California between February 3, 2012 and February 8, 2016. The case was filed in Superior Court of California for the County of Los Angeles.

Former CFO testifies

Law360 also reports that retired chief financial officer Edward Reyes testified on Tuesday that in-house insurance revenue only accounts for less than 5 percent of the company’s business.

District manager Clare Ingram also testified, according to Law360:

Clare Ingram, a district manager at the company, is in charge of about 18 to 20 people at 10 different Public Storage locations and said she oversees the training of property managers and sales employees. She testified that employees must follow specific scripts and procedures when helping customers rent storage units.

When explaining the insurance part of the lease agreement, Ingram said employees are instructed to tell customers that insurance is required and that one option is the in-house insurance program. She also said that if a customer elects to not buy the in-house coverage the company does not ask for proof of insurance.

Plaintiffs in the case testified Monday that employees told them otherwise, and that they were intentionally led to believe buying the company’s insurance was required.

The trial was expected to continue through Wednesday.

This isn’t the first time Public Storage has faced legal action over its insurance programs. In 2015, the company settled a class action suit in Florida. The plaintiffs in that case claimed that Public Storage misrepresented how it was using premiums collected by people who bought its insurance.

Advertisement
Alexander Harris