The Orkin Scam 


Collier Black's eight-year nightmare began simply enough. In February 1995, he and his wife Peggie discovered a swarm of termites covering a 100-square-foot section of their dining room's hardwood floor and pouring from a small exit hole in the wall.

Like 100,000 other Florida homeowners with pest or termite problems, Black called Orkin Exterminating Company, Inc. For $3,335, the "Orkin Man" -- in this case, sales representative Sidney Goldberg -- sold them a termite treatment and a lifetime-repair bond guaranteeing that if termites returned and damaged the Blacks' home, Orkin would repair the damage for free, provided the Blacks paid the $385 annual fee (it later rose to about $500).

Banking on Orkin's reputation, Black thought his problems were over. He thought the repair bond was superfluous salesmanship that his family would never need. He was wrong.

Termites returned the next February, swarming in both the dining room and the entry hallway of the Blacks' 6,200-square-foot, $1.7 million home in the Jacksonville suburb of Ponte Vedra Beach. Orkin technicians and contractors came out, sprayed, and replaced the damaged hardwood floors and structure-supporting studs.

The next February, the termites returned. And the February after that. Each time, Orkin came out, sprayed, and fixed the damage.

By 1998, Black just wanted the problem to go away. A former automotive and real-estate magazine publisher who moved to Ponte Vedra from Memphis in 1991, he told Orkin that he wanted to sell the house in four years, when his son went off to college -- and if his house had termites, no one would want to buy it.

At Orkin's request, he shelled out $4,000 to make his house less termite-friendly by removing stucco along the base of his house. That didn't work. Black paid another $900 to "trench" the perimeter of his house, again at Orkin's request. That didn't work either. Between 1996 and 2001, he says, termites swarmed his house 26 times.

Black exercised his arbitration rights -- the Orkin contract he signed allowed binding arbitration to resolve disputes, not a lawsuit -- and hired the law firm Holland & Knight to represent him. He says he tried to settle, for $15,000 and a three-year, termite-free guarantee. Orkin said no. Instead, that same year (2001), Orkin representatives told him the ongoing termite problem and related damage to the home was caused by moisture conditions, and thus not covered by the repair bond.

Black didn't believe them. So for $60 an hour, he hired a private contractor, Bob White, to look into Orkin's claims. What White discovered blew his mind.

"It turned out it wasn't something wrong with our house," Black says. "It was a 90-foot section in front of our house that was never treated." (This finding later became a key issue in the arbitration.)

"I noticed they were taking some drywall apart," White says. "It had been worked on before. It was not even remotely rebuilt to the current code."

White found more: Walls and floors that were supposed to be treated and repaired never were. Instead, contractors drilled "dummy holes," a time-saving yet wholly useless way around termite eradication. A bait system Orkin installed went unchecked for a year, Black says. Three of the six columns holding up the Blacks' balcony were completely eaten by termites, and the entire balcony was on the verge of collapse.

"Everywhere we opened up where there was repair work in the last six years was substandard, sub-code, incomplete work, patch-and-paint jobs where there was substantial termite damage," Black says. "They jury-rigged everywhere they went. It couldn't have passed inspection."

White agrees: "Some of [the repairs] were so dangerous I had to tape off some of the house."

But St. Johns County inspectors were never called. In the six years Orkin contractors worked on Black's house, no permits were ever pulled for the repair work, though Orkin was legally required to see that they were, according to depositions and arbitration documents. By skirting permitting laws, the subcontractors -- Ambassador Construction, D.R. Woods Construction and CEJAM Construction -- did Orkin's repair work without allowing county inspectors to ensure it was done properly.

In his complaint, Black argued the practice of not pulling permits was epidemic in Jacksonville, and most likely throughout the rest of the state.

After reviewing a week of testimony and dozens of depositions and documents, on Aug. 27 in Jacksonville, the three-member panel of lawyers from the American Arbitration Association awarded Black $3 million in compensatory and punitive damages, plus attorney's fees, and ruled that Orkin knew about the "widespread" practice of not pulling permits, and in fact "authorized" it to save money.

The arbitrators ruled that Orkin's employees repaired visible damage but left concealed problems untouched, even though they knew they existed, and told the Blacks their home was termite-free when they knew it wasn't. Moreover, arbitrators ruled that Orkin's compensation system gives managers an incentive to cut corners, and that Orkin doesn't pre-screen its subcontractors. In fact, two of the subcontractors that visited Black's home, Ari Myers of CEJAM and Charles Levering of Custom Renovation Specialist, Inc. (Levering helped prepare an estimate on the Black house for Orkin but didn't do any actual repair work) had substantial criminal records.

"[Orkin] recklessly exposed [the Blacks] to the endangerment of life and safety, including subjecting Plaintiff Collier Black and his family to living in a portion of the home that was demonstrably structurally unsound, which could have caused serious and permanent damage or death," arbitrators wrote.

The ruling wasn't as heavy-handed as it could have been. While arbitrators did find Orkin liable for breach of contract and deceptive and unfair trade practices, they rebuffed other allegations in Black's complaint, including misleading advertising, negligence and fraud. Arbitrators also turned down Black's efforts to find Rollins, Inc., Orkin's parent company, liable for Orkin's sins.

But the damage was done. Orkin appealed in federal court -- though its contract with Black declared the arbitration "binding and non-appealable" -- calling the ruling "irrational." Because of that clause, Black's lawyers are confident the appeal will be unsuccessful, but as of this writing the appeal is pending.

The ruling was a watershed, says Wayne Cowart, director of termite-damage claims for Rollins, Inc. from June 1999 to March 2001. "This is the largest individual [arbitration judgment] in the history of Orkin," Cowart says. "It's the first time punitive damages have been given in arbitration [against Orkin]."

The judgment wouldn't have happened, however, if the Blacks weren't wealthy enough to afford their own consultant -- White -- who in turn uncovered the permitting problems and the shoddy workmanship. If the Blacks hadn't moved into a condo for six months and sunk $150,000 into fixing their home -- sans Orkin -- in September 2001, and hadn't hired another company to rid it of termites once and for all, the house would likely still be in deplorable shape.

For those without such means, "They have no recourse," Black says. "They think they do, but they don't."

Adds Black's attorney, Harry Shevin: "There are literally thousands of people who have illegal and shoddy repair work, and none of them know they have that."

The big boys

Orkin is the most recognized name in the pest-control industry. Founded in Atlanta in 1901, it now has 1.6 million customers, 400 branch offices and 7,500 employees nationwide, making it the nation's second-largest pest-control company, behind Terminix. Orkin is a wholly owned subsidiary of Rollins, Inc., a publicly traded company based in Atlanta, and is worth about $665 million, according to the arbitration transcript.

The company spends about $30 million on advertising per year. Their ads -- specifically those featuring "the Orkin Man" -- promote a company dedicated to first-class service and top-shelf knowledge of the bug-killing trade.

"Whatever invader you have, [the Orkin Man's] advanced technology will stop them," announced a 1995 TV ad. And this one, from 1997: "They destroy your home from within. Termites! You need the Exterminator. The Orkin Man. He stops termites and they never return. Guaranteed!"

But Orlando Weekly's investigation of Orkin's business practices -- based on lawsuits, testimony, depositions, public documents and interviews -- portrays a company focused on maximizing profits, even when that means cutting corners.

"[Orkin has] a climate and culture to emphasize profits and create larger profit margins," says Pete Cardillo, a Tampa attorney who has sued Orkin several times. "The pressure is so intense it creates an atmosphere where people cheat. Management is encouraged to cheat customers. It's everywhere. They're doing the same crap all over the state."

Indeed, Orkin has faced a number of lawsuits. In May, Orkin settled a lawsuit by Tampa apartment complex Coachman Crossing for an undisclosed sum. Coachman's lawsuit sought $6.7 million and alleged that Orkin faked termite treatments and forged reinspection notices, meaning its sales inspectors never made the annual checks for termites required by Orkin's contract. In 1996, Orkin was ordered to pay $1.8 million to a Jacksonville apartment complex for failing to properly treat the complex and for not notifying the owners about the extent of the damage. A Port Richey woman sued Orkin last year, saying a home inspection turned up widespread damage and caused a prospective buyer to back out, despite Orkin's earlier assurances that her home was termite-free. That lawsuit was settled for an undisclosed sum, her attorney's office says.

There are also two potential class-action lawsuits making their way through the Florida court system. One of Black's neighbors, Elizabeth Allen, is seeking class-action certification -- or, if that fails because of the binding arbitration clause Orkin puts in its contracts, a class-action arbitration -- in Jacksonville, alleging the same things Black did in his arbitration, that Orkin workers did shoddy work and didn't pull permits.

And last year, a Tampa judge granted class-action status to a potential $100 million lawsuit that could affect as many as 65,000 Floridians with Orkin contracts. That 1999 suit accuses Orkin of forging reinspection tickets, not doing inspections, improperly applying chemicals and putting deceptive disclaimers in small print on the back of its contracts. Orkin appealed, and last month an appellate court sent the case back to Tampa on a technicality -- specifically, that the judge who certified the decision didn't list his findings of fact in the order. Attorney David Oliver expects the certification to go forward again, though the appeal will likely push the trial date back an additional 18 months.

Orkin's internal memos, which later became evidence in the 1999 class-action lawsuit, indicate the company was well aware of some of its local branch managers' problems treating customers fairly as early as 1996. They say, among other things, that customers are "being charged for services not rendered" and "reinspections are being falsified." The memos went so far as to instruct Orkin branch managers to stop forging customers' signatures on documents indicating that homes covered under service bonds had been reinspected.

Customers sign those notices -- or "re-i's," as they're called -- after Orkin technicians make their annual inspections for termites as outlined in retreatment and repair bond contracts. According to depositions taken for the class-action lawsuit and a similar case brought by a Tampa apartment complex, which both allege that Orkin sales reps forged reinspection notices, as of the mid-1990s, Orkin employees were only paid $3 to do reinspections, each of which takes about 45 minutes. It would have cost the workers money to do them properly, particularly sales reps who relied on commission. Moreover, Orkin offices were too understaffed -- the Jacksonville office had four technicians and 8,000 customers, according to the Black arbitration -- to get all the inspections done.

Meanwhile, Orkin's branch managers receive huge bonuses -- about 30 percent to 40 percent of their total salary (it maxes out at 50 percent), ex-director Cowart says -- based in part on making sure at least 95 percent of the re-i's in their district are done.

Depositions from former employees indicate the practice of forging reinspection notices was common.

"Sometimes we didn't have enough time to do them -- all that we were supposed to do -- [but] we were told we had to do them," former Orkin sales inspector Jack Cox said in a deposition in the Coachman Crossing case. "So that's -- that was the only way you could -- it could be done was to sit in the sales room and sign them off ... That has happened where [Orkin managers] come to us and given us the tickets and said, 'Get them done.' ... And I believe a ridiculous amount of tickets that no way you could get done ... just large stacks of them, you know."

Orkin employees would forge hundreds of reinspection tickets at a time, sometimes during what Cox and several other former employees labeled "signing parties."

"If you ran inspections all day, [as] opposed to going out and selling new business, you would make a big difference in your income," Cox said in his deposition. "So most guys would concentrate on new business because you make more commissions."

Stinking the door

Cox also said managers told techs to make it appear a property was being properly treated when it wasn't, including tenting houses slated for fumigation, but not using any termiticide; applying chemicals to an entry way to make it smell like an area was treated -- a process known as "stinking the door" -- and drilling false holes.

James Rein, a former Orkin branch manager, said in another deposition -- also from the Coachman case, which alleged Orkin faked treatments in addition to forging reinspection notices -- that, when it came to commercial properties, Orkin would only treat the outside of the property, though the business paid for both the inside and the outside to be treated. Asked whether or not treating the inside and outside was company policy, Rein said: "Was it the company standard? Yes. Did it happen in Florida? No."

In a 1999 affidavit to Coachman Crossing's lawyers, former Orkin employee Layton Kendrick said Orkin techs treated homes improperly by "only trenching homes that required drilling and trenching, placing false drill marks on homes instead of actually drilling holes, and chemicals usage on home being applied improperly. Branch managers and service managers were aware of this."

In fact, former Jacksonville Orkin employee Jeffrey Bennett said in a deposition for Black's arbitration, managers weren't merely aware of the problems; they instructed him to hide damage.

"After I opened up a wall for somebody and found damage, I got back to the branch, and I was instructed to never do that again ... I got my butt chewed."

"Were you specifically told that you shouldn't help a customer find termite damage?" attorney Shevin asked.

"Yes."

"And is it your feeling that the policy at Orkin is to never notify a customer when they have termite damage even if you know about it?"

"They tried to hide it."

Modus operandi

In 1980, according to Federal Trade Commission documents obtained by Orlando Weekly, Orkin president Gary Rollins prepared a memo to R.R. Rollins, president of Rollins, Inc., debating the pros and cons of raising the renewal rate for pre-1975 "lifetime termite protection plan" contracts. The pros included $2.2 million in profits. One of the cons: Orkin had promised customers their rates would never be increased. In fact, the guarantee reads, "The yearly premium for this lifetime protection is very modest and never increases (emphasis added.)"

(After February, 1975, Orkin's contracts retained the right to increase the annual fee. More recent contracts, such as the one given to Black, allow Orkin to increase its rates with written notice after three years.)

Rollins' memo acknowledged that raising the rates could get Orkin in trouble. "State regulatory agencies ... could interpret our contract in some cases to imply a renewal amount is fixed. Those who obtain old proposal information will discover we put this in writing."

No matter. A few months later, in August, Orkin sent out notices to 207,000 customers telling them their rates were going up by $25 a year or 40 percent, whichever was greater.

After customers complained, the FTC issued an administrative complaint against Orkin in 1984 alleging unfair trade practices. Orkin appealed, claiming its contracts were ambiguous. In 1988, a federal appeals court sided with the FTC and ordered Orkin to cease and desist.

In 2001, Orkin reached a settlement with the attorneys general of five states -- Florida, New York, North Carolina, Ohio and Texas -- plus the District of Columbia Corporation Counsel, after those states began investigating Orkin for airing misleading ads and not providing enough information about the arbitration clause of its contract, according to the settlement agreement. Orkin, while denying the states' claims, agreed in a settlement to make its arbitration information more visible on the contract and to not "represent, expressly or by implication, that its subterranean termite control services are certain to be effective ... ." Orkin also had to pay the states $150,000 for attorneys' fees, investigative costs and "consumer education, litigation, public protection or local consumer aid funds or other consumer protection purposes."

But the company's legal problems go even further back. According to court records, in 1977, an elderly black Alabama widow named Artie Mae Jeter bought a lifetime repair bond from Orkin. Over the next two decades, court documents indicate, Orkin failed to keep records and rejected necessary repairs because they were too expensive -- in one case, refusing carpentry repairs that would have totaled $28,826. Instead, Orkin told Jeter that she was responsible for her termite damage, but offered to pay $400. The Orkin manager-in-charge, Bill Maxwell, said he was demoted because Orkin said he was "spending too much money to repair Mrs. Jeter's home."

By 1988, Jeter's home was in danger of collapse. Maxwell, who by then had been demoted, issued a memo to his boss, Jim Turner, saying essentially that it would be "cheaper and quicker" to build Jeter a new house than to fix all the damage. "To my knowledge," he wrote, "no one has really told he[r] the true extent to which her house is infested. ... We took her money and never really told her the truth about the serious termite problem."

Instead, Maxwell writes to Turner, he hired an African-American contractor to help push his plan to "keep the house from falling down and enable the contractor to raise sunken floors but in no way [repair] termite damage. You simply cannot repair the termite damage in this house. ... She is starting to trust me and I have treated her with respect and have gained the confidence of the contractor involved. If we get her angry enough to call in the State Inspector (sic) or to contact an attorney who will have a contractor look at her house, the odds of the following happening are 99 [percent]. 1.) We will build her a new house. 2.) Pay over $100,000 in punitive damages. 3.) Thousands in attorney's fees.

"Ms. Jeter is 78 years old, black, in poor health, no money ... her house was improperly treated, we sold her twice with no documentation of existing conditions, [her] home is badly eaten up by termites to the point of breaking apart. ... [W]e can spend $5,000 now and have her put in small claims over the years until she dies and her children sell the house, or if any attorney get[s] involved, we will probably buy her a new house, thousands in punitive damages and attorney's fees."

Jeter didn't see the memo until 1999, when it surfaced as part of another Orkin-related lawsuit. She was never told how badly her house was damaged, and didn't know until she saw the memo. The same day Maxwell drafted the memo, however, he told Jeter Orkin would pay $4,660 to fix her home. The next year, Orkin told Jeter her home was fixed. She sued in May 1999, but died before the suit went to trial.

The jury awarded her estate $800,000 in compensatory damages, and $80 million in punitives. The trial judge reduced the amounts, to $400,000 and $4 million respectively. Although acknowledging that, "there is evidence that Orkin knew of the serious termite damage to Mrs. Jeter's home as early as 1984 and it engaged in a policy of fraudulently concealing that damage," the Alabama Supreme Court in its 2000-2001 term reduced the award to her estate to $300,000 in compensatory damages and $2 million in punitives.

The permit problem

In July 2001, Orkin thought it had Collier Black beat. In a separate case, Florida's Fifth District Court of Appeals had overturned a $300,000 verdict a judge had given in Seminole County to Christopher DelGuidice, who employed Orkin to keep his $1.3 million home termite-free. As with the Blacks and so many others, the termites kept coming back and eating away at DelGuidice's home.

DelGuidice sued -- and originally won -- on the grounds that Orkin's mistreatment and the repeated termite swarms created a stigma that diminished the value of his home. But the appellate court ruled that Florida law doesn't recognize "diminution of value" so long as Orkin was willing to "retreat and repair" DelGuidice's home. DelGuidice would have to fire Orkin, find another contractor to fix the home, then sue Orkin.

Orkin attorney Doug Brown of the Orlando law firm, Rumberger, Kirk & Caldwell -- the firm that spawned Republican congressmen Ric Keller and Bill McCollum -- pounced on the decision, firing off a letter to Black urging him to drop any litigation.

"As you can see, the court summarily rejected the argument that plaintiff could recover stigma damages under the [repair bond] contract," Brown writes. "It seems to me you should consider this opinion before you spend a lot of money on expert witnesses. ... In DelGuidice, plaintiff's counsel spent $750,000 litigating a claim in which there were no reasonable damages."

In other words, pursue this case and you'll lose 750 grand. Black took it as a less-than-subtle threat. Later in Black's arbitration, Brown would call that letter "unfortunate." Were it not for Black's discovery that Orkin contractors weren't pulling permits, however, Brown probably would have been right, and Black's chances at getting Orkin to pay up -- or, for that matter, to honor its contract -- would have likely evaporated.

It's unclear exactly how far-reaching Orkin's permitting problem is, because arbitrators only allowed Black's legal team to investigate Orkin's Jacksonville-area contractors and one Orlando contractor, Charles D. Levering, who helped prepare an estimate on termite damage on the Black's house for Orkin in 2001. (Levering never did any repair work for the Blacks. He is, however, one of Orkin's frequent go-to guys in Central Florida, according to his deposition.) What Black's lawyers did discover is that, in Jacksonville and with Levering, permits were almost never pulled for termite-repair jobs.

Levering testified in the DelGuidice case that he had done more than 7,000 termite-repair jobs for Orkin and other pest control companies. Black's investigation showed, however, that Levering had pulled fewer than 200 permits, and those weren't all for termite-damage repairs. In a deposition, Levering said he only pulled permits for large repairs, and thought the building code only mandated that he pull permits for repairs in excess of $2,500.

When Black's lawyers asked Levering to estimate what percentage of his Orkin jobs he pulled permits on, Orkin attorney Brown instructed him to plead the Fifth Amendment and not answer that nor any other question related to permits.

(According to his deposition, Levering has prior convictions for strong-arm robbery and drug trafficking. Ari Myers, a Jacksonville contractor who worked on Black's house for CEJAM, had convictions for cocaine possession and DUI, according to state records.)

A Jacksonville contractor, Gil Cloutier, testified at Black's arbitration hearing that he had done more than 300 jobs for Orkin and never pulled a permit.

Orkin's lawyers could have defused Black's calls for punitive damages by showing that these particular contractors were the exception to the rule, and providing other cases where its contractors from elsewhere in the state had operated aboveboard, pulled permits and allowed county inspectors to OK their work. Orkin never did that.

"From day one, we kept saying, 'Show us some pattern of permits being pulled and we'll give you the benefit of the doubt,'" says Black. "It turned out to be a pattern [not pulling permits], and that was what astounded us."

Orkin attorney Brown admitted in closing arguments that the company had a huge issue to address: "[It is] painfully apparent that we have a problem and we're going to have to do a better job on that because the permits weren't being pulled on a lot of jobs."

In testimony, Cloutier explained why permits often aren't pulled: "The reason why we didn't pull permits is we really didn't want the city government or the state government involved with the termite claim."

Cloutier explained that doing the kind of quality work that county inspectors sign off on would have cost more than Orkin was willing to pay. "If I bid too much on the claim," he said, "I didn't get the work. Another contractor would come in and get the work at a cheaper rate, so there was hardly any way to get through permitting."

In depositions, Orkin argued to Black's permitting expert, Palm Beach County head building official Roland Holt (who also helped write much of the current state building code while he was the head building official in St. Johns County), that it was the contractors' responsibility -- not Orkin's -- to make sure permits were pulled. In fact, its subcontractors' agreement mandates that the contractors get the permits.

While that would appear to shift the blame to the subcontractors, Holt said -- and the arbitrators later agreed -- that since Orkin took money to improve properties, and since Orkin holds the purse strings and declares which repairs get done and which don't, it is a contractor under Florida law, and thus is responsible for ensuring permits get pulled.

And the only reason a contractor wouldn't pull a permit, Holt tells the Weekly, "is they don't want anybody who knows what a proper repair looks like looking over their shoulder."

Taking on the industry

If Collier Black's attorneys -- West Palm Beach class-action specialists Shevin, Chris Searcy and Sean Domnick -- get their way, the $3 million arbitration award will be just the beginning. Last month, they were in federal court in Jacksonville arguing that Black's neighbor, Elizabeth Allen, should be allowed out of her arbitration clause and file a class-action lawsuit.

If Allen loses there, Shevin believes that a recent U.S. Supreme Court decision allows "class-action arbitration," which would allow tens of thousands of Orkin's other Florida customers to be represented in one court case. There is no other way for average Joes to take on "this 800-pound gorilla," Shevin says, and no other way to properly punish Orkin.

Without the potential for the big payoff class-actions can bring, it would be difficult to find an attorney who would sue the well-heeled Orkin on a contingency basis. In fact, part of the reason Searcy's firm represented Black was that they could use information gathered during the arbitration to help Allen's potential rainmaker.

In the last year, Allen has become something of a consumer advocate. She formed the nonprofit Homeowners Protection Association, and started a website, www.termitealert.org, to provide information on the termite industry and, essentially, tell property owners how not to get screwed.

She was also appointed to the Department of Agriculture's Pest Control Enforcement Advisory Council, which offered her an inside look into how the state regulates pest control companies. The short answer, she says: It doesn't.

"They're just bullied by the termite industry," Allen says.

Of the advisory board's 11 members, she is the only civilian. Eight others represent termite companies. One comes from the agriculture department. The other is a University of Florida entomologist.

The Department of Agriculture can randomly check new construction sites to make sure they're being properly treated for termites, Allen says, but it can't do that for existing homes unless there's a complaint. In most cases, if a home was poorly treated, a homeowner would have no idea about it until the next time the termites swarmed. And even if there's a complaint, and the department finds a home treated improperly, it can only hold the employee accountable, not the pest-control company, unless there's clear evidence the company didn't train its workers.

Unless people complain, it's doubtful Tallahassee will do anything to reign the industry in, Allen says. It is simply too powerful. "I think the public has to become aware and outraged and let legislators know," she says. "They definitely wouldn't do anything on their own."

The epidemic

In the 1980s, the Environmental Protection Agency banned chloridane, an ultra-effective yet highly carcinogenic termiticide that had until that time been the industry standard. Chloridane allowed termite companies plenty of room for error; it was so powerful that even if was applied sloppily, it stopped most infestations.

Newer termite treatments were weaker, and required technicians to apply them almost perfectly. When this didn't happen, the termites came back, year after year. And with them, termite companies' retreatment-and-repair agreements became increasingly expensive.

Branch managers, meanwhile, are only awarded their substantial bonuses if their branches turn a profit. And one big repair claim could sour the bottom line, says Cowart, who spent 26 years in the termite industry and now runs a Valdosta, Georgia company that investigates termite companies' work for homeowners. If repair-bond costs are higher because the termiticides are less effective, there's a motive to do things on the cheap.

If nothing else, Orkin certainly fears what Cowart could say. After he left Orkin in 2001 -- specifically, four days after his severance package expired in June 2001 -- he contacted attorneys David Oliver and J. Daniel Clark, who were suing Orkin, and became a consultant.

Orkin sued Cowart over breach of contract -- in his separation agreement, Cowart had "agree[d] not to disparage Rollins or [Orkin]" until the agreement expired in March 2003 -- and Orkin sought, and won, an injunction against him helping Oliver, Clark, Pete Cardillo and any of Black's attorneys.

"Mr. Cowart knows a great deal of information about how Rollins and Orkin investigate claims, negotiate claims, resolve claims, retain outside counsel, strategize about approaches to resolving and defending claims, weigh factors in negotiations and formulating defenses, and defend lawsuits," Orkin's complaint reads.

Orkin, despite its size, is a small part of the multibillion-dollar termite industry. It and Terminix combined comprise about 22 percent, Cowart says. Which raises the question: Is Orkin the only company doing business this way?

"It's epidemic in the pest-control industry," Cowart says. "It's one of the best-kept secrets in the business world in America."

Charles Levering, the Orlando-based contractor who did 7,000 termite-repair jobs but pulled fewer than 200 permits, according to Black's investigation, testified in a deposition that he did work not just for Orkin -- which made up about a quarter of his workload -- but for Terminix, Middleton, Truly Nolen and up to six others as well. And according to Black's investigation, he typically didn't pull permits for them, either.

"The laws in the state of Florida are very weak," says Allen, "and companies like Orkin are taking advantage of it. [Bigger companies] are less accountable. If a smaller company did this to Collier and he went to the press, they would be out of business."

But for now, the big legal guns are certainly pointed in Orkin's direction. "The industry has more than its share of corruption," says Cardillo, the Tampa attorney who has taken Orkin to court several times. "There's no question that Orkin is the worst."

Toward the end of Black's arbitration, with the hearing obviously tilting toward the plaintiff, Orkin put Chris Gorecki, its vice president of quality assurance and claims, on the stand to promise the company would try to do better.

Among his pledges: Orkin has instituted a business-abuse hotline and changed the way branches report claims to put more customers in touch with the Atlanta office. Reps are no longer paid just $3 to do reinspections; they're paid either 13 percent or 11 percent of the contract price, so it's more likely they'll get done. The legal department will screen its contractors better. And eventually, Orkin may have a process in place to force contractors to produce a permit before they're paid.

"It's just absolutely frustrating to me to think that we still have a lot to do when it comes to these situations," he said. "The work that was performed out there was not done in any way, shape or manner the way it was supposed to have been done, the treatment was not done correctly ... and it just means that we've still got a lot of work to do out there to get things straight so that people don't have to put up with these situations and ongoing problems."

Even though Gorecki called what happened to the Blacks "outrageous," he also admitted upon cross-examination that, despite the fact that Orkin has known for two years that its contractors don't pull permits it has done nothing tangible to remedy the problem, other than refer the problem to the company's legal department.

In the meantime, Searcy asked, "You don't know how many balconies are on the brink of collapse because your contractors did it wrong, do you?"

"I don't know," Gorecki answered.

In his closing argument, Searcy called Orkin's promises to do better hollow. "Although they're making a show of doing something about this, aren't doing anything that costs them money," he said. "You didn't hear one bit of evidence about them hiring more inspectors or more technicians so that they have time to do the proper treatments and the proper inspections."

Orkin's Atlanta press office did not return the Weekly's phone calls requesting comment. Spokeswoman Martha Craft did tell the Jacksonville Times-Union that the arbitration decision was a "gross disregard of the law" and that Orkin wouldn't comment on the panels findings because of the appeal. In closing arguments, Brown, Orkin's attorney, argued that while there may have been problems with the Blacks' house, Orkin didn't purposefully hide damage.

"I'm not saying we're perfect," he said, "but it doesn't come to the level of common-law fraud."

Part of the war

Reached by phone the day his award was announced, Black wasn't overjoyed.

"It ain't the $3 million, it's the principle of the matter. I'm financially comfortable," he says. "The absolute truth -- it is significant money -- but [most people] don't have the time, the energy to fight Orkin. I could. It took a lot of stamina. If what happens is these companies are exposed for what they are doing, I will feel what we have been through will be truly worthwhile. People really need to know this. It is wrong. It is illegal, it is theft, in my opinion."

"People think Collier's won the battle," Allen says. "But it's just part of the war."

The war, it seems, is ongoing. On Sept. 11, Orkin appealed the arbitration ruling -- even though its own contract says, "The award of the arbitrators issued pursuant hereto shall be final, binding and non-appealable." Orkin, in its appeal, didn't challenge the arbitrators' findings per se; instead, it questioned the $3 million amount, saying it was "issued in manifest disregard of the law."

"They think they're above the law," Black says. "Orkin is waiting to see what it's going to cost them to obey the law. We don't want it to blow over."


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