Orkin Man is a super con

Ernest and Dolores Warren are Marietta grandparents. “Just plain, good, middle-class, upstanding people,” says their attorney, Roy Barnes — yes, that Roy Barnes.

Artie Mae Jeter was an elderly widow living in Tuskegee, Ala. With little formal education, Jeter, who died in 1999, had one prized possession, her home.

Mark and Christine Butland — he’s a sales rep, she’s a student — have a growing family that lives in Tampa’s suburbs.

Collier and Peggy Black are millionaire semi-retirees living in the posh bedroom community of Ponte Vedra Beach, near Jacksonville, Fla. Their home cost them $1.7 million.

Elizabeth Allen, a neighbor of the Blacks and an accountant, paid about $500,000 for her home.

What unites the Warrens, Jeter, the Butlands, the Blacks and Allen — along with 1.6 million other customers, including 83,000 Georgia homeowners — is that they all trusted “the Orkin man.”

Yes, they bit the bait offered by the smiling man in well-pressed Orkin duds and company hardhat. The hook was a “guarantee” to regularly inspect homes for termites, kill the bugs if they’re found, and — this is important — “repair damage to structure and contents — no matter how high the cost.”

Collier Black says that’s why he went to Orkin. “I believed their sales pitch,” he recalls. “It was that simple.”

Orkin, owned by Atlanta’s Rollins Inc., is second among national exterminators to Terminix. But Orkin is probably the best-known name in the very lucrative termite control business, a familiarity fostered by a $30 million annual advertising campaign that, with humorous creativity, has a bug appear to crawl across your TV screen.

What’s truly buggy, however, is a series of multimillion-dollar lawsuits that infest Rollins/Orkin like, well, termites on soft wood.

The consumer litigation, most recently a $3 million arbitration award in August for the Blacks, has successfully argued that Rollins/Orkin not only ignores its own guarantees, but endangers homes and even lives by “patch and paint” cosmetic repairs when major reconstruction is the remedy.

“What they are doing is heinous,” Collier Black told me. “Ninety-nine percent of the homeowners don’t understand what they’re getting into when they sign a contract with Orkin. They believe they will be protected, that the company will make good on its guarantees. It just isn’t so.”

The Blacks fought Orkin for seven years. The couple says they were forced to move into temporary housing for five months and to spend $150,000 to make their house habitable — after a structural engineer found the home in danger of collapsing. “A balcony was in danger of collapsing on our daughter’s bedroom,” Black says. “She could have been killed.”

The Blacks’ neighbor, Allen, says her home has been rendered “totally impossible to sell” due to termite damage to 13 out of 15 rooms. “Orkin should have spotted and fixed the damage, but didn’t,” Allen contends.

Jeter’s home was destroyed by termites. And Orkin, while disingenuously trying to build the woman’s trust, sought to conceal the damage by propping up the house with jacks and concrete blocks, according to court documents and press reports. Jeter was so afraid her floor would cave in, she didn’t have her family over for what would be her last Thanksgiving.

After her death, Jeter’s family won an $81 million jury verdict. The Alabama Supreme Court reduced that to $2.3 million — but nonetheless scolded Orkin for a scheme that reached top regional management and was “replete with evidence indicating deceitful conduct.”

The Butlands’ home also was in danger of partial collapse, their lawyer, Dan Clark, told me. The family had to brace doors and roofs with two-by-fours. The Warrens of Marietta figured out something was wrong when their floor became noticeably unlevel.

The Butlands and Allen, are seeking class-action status in Florida — joining Orkin customers who have suffered similar treatment from the company into a single case. If successful, a class-action case could foreshadow possible company-busting financial awards to settle claims by tens of thousands of people who have seen their American dream turn into a nightmare.

The Warrens’ case — which gained a dose of star quality when former Gov. Roy Barnes joined the legal team — will have a hearing in January on whether it will have class-action status. “We’re talking about tens of thousands of Georgia families,” says Barnes’ co-counsel, Patrick Millsaps.

Otto Orkin began killing bugs in 1901 in Richmond, Va. On a trip to Atlanta in 1925, he noticed there were no exterminators listed in the phone book, so he opened up a business. Eventually, the company established its headquarters in Atlanta. Considered “eccentric,” Orkin had to fight his children to keep control of his business — the kids wanted dad declared insane. He was savvy enough to fend off his offspring and sell the pest control outfit to Rollins in 1964 for $62 million.

Orkin is now the sole operating subsidiary of Rollins, a corporate fixture in Atlanta since the 1940s. In the 1990s, Rollins sold off its other major enterprises — home security and lawn-care operations. Rollins, with $665 million in annual revenues and surging profit margins (from $17 million in 2001 to $27 million in 2002), is run by Gary Rollins, an Atlanta blueblood who pocketed a salary last year of $900,000 and total compensation of about $2.5 million.

Gary Rollins doesn’t return phone calls — either from me or from other reporters who are nosing around the Orkin lawsuits. Rollins’ spokeswoman, Martha Craft, is congenial and happily provides statistics on the company’s customers. But she won’t comment on the litigation beyond saying that Collier Black’s $3 million arbitration award plus attorneys’ fees was a “gross miscalculation” of damages. (The reason she says that is to provide a plausible reason for Rollins breaking another promise – it ignored its own contract that says arbitration is “final, binding and non-appealable” — and appealed the Black decision.)

The Rollins family has kicked in at least $25 million to Emory University — and has had a building named after the company’s founder, Wayne Rollins, and the School of Public Health named for Wayne’s wife, Grace. Gary Rollins now is an Emory trustee.

The corporate largesse to Emory has had paybacks. In 2000, Edward Carder of Cartersville won $2.5 million from Orkin after claiming the company’s misapplication of pesticides had made him ill. A physician who evaluated Carder’s case testified Emory officials pressured him to lay off the Rollins subsidiary in the future.

Glossing over the lawsuits, the company stresses ethics, claiming in its annual report for 2002: “The corporate culture at Rollins Inc. is one that promotes honesty and integrity as an integral part of the way we do business.” The claims against Rollins/Orkin fall into two categories. In most of the cases, homeowners claim that the company failed to live up to its contract, which promised that Orkin technicians would inspect homes annually, kill new infestations and repair damage caused after the initiation of the “guarantee.”

The problem was that Orkin rewarded managers with huge bonuses for finding new clients — but provided little incentive for re-inspections or “re-i’s” as the company calls them. Moreover, there were often only a handful of technicians for thousands of clients.

Customers were supposed to sign forms stating the inspections had taken place, but Atlanta attorney Millsaps says: “Some of the ‘re-i’ tickets have signatures that are not our clients’.”

In other cases, testimony came out about “re-i signing parties.” Black’s attorney, Christian Searcy of Palm Beach, told arbitrators: “With four techs for 8,000 customers, there’s not enough time to do much without being in a hurry all the time. And that’s why you’ve got these parties where they would just forge all of the plaintiffs’ names.”

Added to that were incentives to do cheap repairs. When homeowners reported damage, Rollins/Orkin would hire subcontractors based on low bids. To get the work, according to court documents, the subs would do only cosmetic work — “patch and paint.”

With Black’s case, Orkin was accused of a second scam. Testimony showed subcontractors seldom pulled building permits for the major repair jobs. Orkin, the contractor, was responsible for obtaining the permits, which generally means the work would be inspected by local officials. Inspectors likely would have detected that structural damage had not been remedied by the “patch and paint” jobs.

“Orkin is strenuously working to not do the right thing,” Roland Holt, a building official in Florida, testified in the Black case. “I think Orkin just made a business decision to not subject itself to the inspections of the building inspectors.”

Florida’s state laws require building permits for all but tiny repair jobs. Georgia has no such laws, although most metro counties have local ordinances mandating permits.

“Georgia has some of the weakest consumer protection laws in the nation,” Barnes says, “and that’s a problem.”

Meanwhile, Rollins/Orkin spokeswoman Craft touts the fact that in Georgia there were only 140 consumer complaints last year — or 0.2 percent of the company’s customers.

Black retorts: “You don’t know you have a problem until it’s too late. The Orkin guys come out and tell you everything is fine. We’d see new infestations, and they’d send out someone to patch and paint. Unlike a lot of people, we had enough money to hire our own structural engineer and get to the bottom of things. And what we found was that they were cheating us.”

Material from an Orlando Weekly investigation was used in this column. That article can be found at www.orlandoweekly.com/news/story.asp?ID=4098.

Senior Editor John Sugg can be reached at 404-614-1241 or at john.sugg@creativeloafing.com.

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