Allstate Class Action Lawsuit
U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
Kansas City Area
Allstate Employee Agents – Charging Party
Allstate Insurance Company – Respondent
I issue the following determination on the merits of the this charge.
Respondent is an employer within the meaning of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. 2000e; et seq., (“Title VII”); the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. 621 et seq.,(“ADEA”); and the Americans with Disabilities Act, 42 U.S.C. 12101 et seq.,(“ADA”). All requirements for coverage have been met.
Charging Party alleges that Respondent required that all employee-agents sign a waiver and release of all claims against Respondent, including all claims under Title VII, the ADEA and the ADA, in order to (1) remain as an insurance agent for Respondent, (2) receive an enhanced severance benefit upon the termination of their employment, or (3) to be able to sell their economic interest in their book of business. Charging Party also alleges that employee-agents who failed to sign the release and waiver were not allowed to continue as insurance agents for Respondent.
Respondent maintains that it implemented a reorganization of its business in order to convert all of its employee insurance agents to independent contractors. The reorganization was titled “Preparing for the Future Group Reorganization Program (“the Program”). Under the Program, Respondent acknowledges that in exchange for the employee-agents release and waiver of all their claims under the ADEA, the ADA, and Title VII, (as well as other claims not enforced by the Commission) the agent could elect to become an exclusive independent contractor agent for Respondent (Option 1), convert to an exclusive independent contractor agent status and sell the economic or other interest in their book of business, (Option 2), or elect enhanced severance pay including reimbursement for expenses after the close of the agent’s office (Option 3).Respondent admits that employee agents who did not sign a release and waiver were not allowed to continue as insurance agents for Respondent and would receive Respondent’s normal severance benefits. It is undisputed that employee-agents who did not sign a release and waiver which included their claims under Title VII, the ADEA and the ADA by June 1, 2000, were not allowed to continue as an insurance agent for Respondent after July 1, 2000. The refusal of employee agents to release their claims under Title VII, the ADEA and the ADA constitutes protected activity under these statutes. Respondent’s refusal to maintain these individuals as insurance agents constitutes unlawful retaliation under Title VII, the ADEA and the ADA and also constitutes the unlawful interference, coercion and intimidation in the exercise and enjoyment of rights granted by the ADA.
Moreover, Respondent’s threat to its employee-agents that they would lose their careers and livelihoods as insurance agents with Respondent if they did not release and waive their claims under Title VII, the ADEA and the ADA, constitutes unlawful retaliation against those individuals who signed releases and also constitutes the unlawful interference, coercion and intimidation in the exercise and enjoyment of rights granted by the ADA.
Upon finding that there is reason to believe that a violation has occurred, the Commission attempts to eliminate the alleged unlawful practice by informal methods of conciliation. Therefore, the Commission now invites you to join with it in a just resolution of this matter. Disclosure of information obtained by the Commission during the conciliation process will be made in accordance with Section 1601.26 of the Commission’s Procedural Regulations.
If Respondent declines to discuss settlement or when, for any other reason, a settlement acceptable to the Office Director is not obtained, the Director will provide this information and advise of the court enforcement alternative available to aggrieved person and the Commission.
A Commission representative will contact the Parties in the near future to begin conciliation.
IMPORTANT NEW DEVELOPMENTS
January 6, 2006
The proposed class action lawsuit brought by 29 plaintiffs, known as Romero I, seeks to recover pension, medical and other benefits estimated in the hundreds of millions of dollars, as well as compensatory and punitive damages and other relief, on behalf of about 6,200 current and former Allstate agents. The plaintiffs have alleged that the company betrayed its long-time “captive” employee agents by wrongfully terminating their employment contracts in order to deny them pension and other employee benefits and to rid itself of thousands of older employees. The suit claims that Allstate’s actions taken as part of the “Preparing for the Future” Group Reorganization Program violated the Employee Retirement Income Security Act (“ERISA”), the Age Discrimination in Employment Act (“ADEA”), and Allstate’s contractual and fiduciary duties. The plaintiffs also allege that Allstate wrongfully refused to rehire any of the terminated employee agents for a period of one year to reduce retirement benefits that former agents could earn in the future.
The U.S. Equal Employment Opportunity Commission has filed two lawsuits against Allstate on behalf of affected agents. The first, filed in December 2001, alleges that Allstate violated the anti-retaliation provisions of the ADEA, Title VII of the Civil Rights Act and the Americans with Disabilities Act by forcing its employee agents to sign a release and waiver that the EEOC previously determined to be unlawful. The EEOC’s lawsuit has been consolidated with Romero I. The second lawsuit, filed in October 2004, alleges that the one-year “rehiring moratorium” adopted by Allstate constituted a pattern and practice of unlawful age discrimination. According to the EEOC, the refusal to rehire employee agents had the intended effect of depriving individuals of the ability to continue to accrue the substantial pension and other benefits to which they had been entitled without a “break in service.”
On March 30, 2004, Senior District Judge John Fullam granted partial summary judgment in favor of plaintiffs in Romero I, holding that the release violated the ADEA because it barred the filing of “charges,” including challenges to the validity of the release. As Judge Fullam observed, “we have no way of knowing how many other employee-agents failed to pursue charges before the EEOC simply because they accepted the release language at face value.” The Court held further that Allstate had engaged in unlawful retaliation under the ADEA, Title VII and other laws in order to prevent agents from exercising their federally-protected rights. As part of its ruling, however, the Court concluded, based on the limited record before it, that there was “no basis” for plaintiffs’ age discrimination claims. Although the Court did not actually dismiss the ADEA claims, it held that agents who desire to have the release invalidated and pursue claims for damages or other relief would first have to repay or “tender back” to Allstate “any and all benefits received by the signer in exchange for the release.”
Plaintiffs filed a motion in April 2004 asking the Court to reconsider the “tender back” requirement. The EEOC also filed its own motion asking that the Court clarify its ruling.
In December 2005, Allstate filed a summary judgment motion asking the Court not only to reconsider its March 2004 decision and reverse itself by upholding the release. Allstate also is asking the Court to dismiss the claims the Romero plaintiffs are prosecuting under the ADEA and ERISA, including the claim that the release constitutes unlawful retaliation. CEO Liddy has joined in the request for summary judgment. Plaintiffs and the EEOC have opposed the motion on numerous grounds. In a 48-page brief filed with the Court under seal, plaintiffs lay out the reasons that Allstate is not entitled to seek reconsideration of the March 2004 ruling at this late date and, in any event, is not entitled to dismissal of the ADEA and ERISA claims or, indeed, any of their claims as a matter of law. In further support of their arguments, plaintiffs note, among other things, that they have not been able to undertake “merits” discovery because of Allstate’s unjustified refusal to produce documents responsive to their discovery requests. Plaintiffs therefore have requested that the Court deny the motions for summary judgment and that it instead grant the relief requested with respect to the “tender back” requirement in the motions that have been pending since April 2004.
Anyone seeking additional information about the case, including whether they are included in the class that plaintiffs seek to have certified, or any of the proposed subclasses, are encouraged to contact: Morgan, Lewis & Bockius LLP or Sprenger & Lang PLLC.