Updates From the Allstate Agents Litigation Website
July 7, 2016
Reported by Bloomberg, July 7, 2016: Judge Streamlines Allstate Agents' ERISA Claims Before Trial
Text of 7/6/2016 Court Opinion here.
February 16, 2016
On Thursday, Plaintiffs in the Romero case asked the recently assigned Pennsylvania federal judge to reconsider certain of the Court’s January 28, 2016 findings of fact and conclusions of law concerning Plaintiff’s unclean hands and unconscionability defenses to the Release and to amend the Court’s February 10, 2016 Amended Judgement Order.
The first jury trial on the issue of the Release commenced last June. The sole focus of the trial was whether ten Plaintiffs signed the Release that was part of Allstate's Preparing for the Future Program knowingly and voluntarily.
The Plaintiffs had additional defenses on the validity of the Release, including that the Plaintiffs signed the Release under duress, that the Release was unconscionable, that Allstate acted with unclean hands, and that the Release was part and parcel of an illegal scheme. However, none of these other theories was the focus of that trial. Allstate agreed that, if the verdict was that Plaintiffs did not sign the Release knowingly and voluntarily, then they also signed it under duress.
Eight of the 10 agents involved in that first trial prevailed. The jury found they had signed the Release only because they had no other choice. They were not acting voluntarily.
The court did not submit additional defenses to the jury. The judge was to determine if the Release was unconscionable and whether Allstate acted with unclean hands. In late January, Judge Buckwalter ruled in favor of Allstate.
“While the court sympathizes with plaintiffs’ undesirable predicament caused by Allstate’s decision to implement such a sweeping termination of its employee agent contracts, the use of the release in exchange for allowing plaintiffs to obtain one of several lucrative options under the program — albeit not an admirable tactic by a large and profitable company — is not unreasonably harsh, overreaching, or unfair,” the judge wrote. “Thus, the court declines to deem the release substantively unconscionable.”
On February 1, 2016, the case was reassigned to the Honorable Gerald J. Pappert.
The motion filed Thursday challenges Buckwalter’s conclusion that the eight Plaintiffs who prevailed at the trial “retained the viable option to not sign the Release” as contradictory to the jury's finding. Plaintiffs also take issue with the judge’s conclusion that “Allstate established that the Program and Release were business-related decisions that complied fully with federal statutory law and which made an effort to effectuate valid cost-savings.” This finding involves the merits of the claims, which weren’t at issue in this trial.
The dispute began more than 15 years ago when Allstate announced a program that would convert 6,200 employee sales agents into independent contractors. All but a handful of the agents signed a liability release to either stay on as independent contractors, or receive a severance package. The case is Gene R. Romero v. Allstate Insurance Co., suit number 2:01-cv-03894, in the U.S. District Court for the Eastern District of Pennsylvania.
November 4, 2015
The presiding judge in the Romero v. Allstate case will be retiring at the end of 2015. Consequently, the trial set to commence on November 9 has been cancelled and is expected to be rescheduled after a new judge is assigned to the case. The Romero case, filed in 2001, was assigned to the Honorable Ronald Buckwalter in January, 2010. He will be 79 years old on December 11.
September 9, 2015
The second of three trials on the enforceability of the Release in Romero v Allstate, involving the next ten plaintiffs has been re-scheduled and is expected to commence November 9, 2015. If you missed the last update from the Allstate Agents Litigation website, click here.
Trial Date: November 9, 2015
United States District Court for the Eastern District of Pennsylvania
James Byrne Courthouse
601 Market Street
August 11, 2015
On July 24, we filed two sets of documents concerning the enforceability of the Release on behalf of the Plaintiffs. We have alleged that the Release is unenforceable for six reasons: Plaintiffs did not sign it knowingly and voluntarily; Plaintiffs signed it under duress; the Release was part and parcel of an illegal scheme; the Release was illegally retaliatory; the Release was unconscionable; and Allstate should not be allowed to enforce the Release because it acted with unclean hands. The jury in the trial in June decided the first issue (knowing and voluntary) as to ten plaintiffs, and Allstate agreed that the second issue (duress) would be governed by the jury's determination. Judge Buckwalter ruled that the third issue (part and parcel) will be addressed later in the case. Judge Buckwalter and then the Third Circuit Court of Appeals ruled against the EEOC, and by extension us, on the fourth issue (retaliation).
The final two issues (unconscionability and unclean hands) remain, and are important for three reasons. First, if the judge rules in Plaintiffs' favor, the two Plaintiffs who lost in the first trial will be able to go forward with their claims notwithstanding the jury's verdict on the knowing and voluntary issue. Second, although the law in some states as to unconscionability and unclean hands may be less favorable than in the states in which the first ten Plaintiffs had their agencies, a favorable ruling eventually may apply to many or all of the Plaintiffs. Third, a favorable ruling would provide a buffer in case the jury verdict in favor of eight Plaintiffs is overturned on appeal for any reason.
At the start of the trial in June, Judge Buckwalter ruled that he, not the jury, would be the factfinder on the unconscionability and unclean hands defenses to the Release. This is because he determined that these two doctrines are "equitable," not "legal," and judges (not juries) are the factfinders on equitable issues.
Plaintiffs' Proposed Findings of Fact and Conclusions of Law Based on June 2015 Trial is the central document filed July 17. This lengthy document sets out the facts underlying our arguments that the Preparing for the Future Program and the Release were unfair in view of the manner in which Allstate had treated employee agents over the years. It also contains citations to the evidence supporting every factual assertion. The last 19 pages of the document contains the applicable legal principles and why, under those principles, the Court should rule that the Release was unconscionable and that Allstate has unclean hands in seeking to enforce the Release.
Along with the findings and conclusions we filed a Motion To Supplement the June 1, 2015 Trial Court Record and a supporting brief. During the trial Judge Buckwalter excluded a number of documents and other evidence that Plaintiffs sought to introduce on the basis that the evidence wasn't relevant to the issue before the jury, which is whether Plaintiffs signed the Release knowingly and voluntarily. Notwithstanding that ruling, we think that Judge Buckwalter should consider the evidence in deciding the unconscionability and unclean hands issues. Allstate filed its Opposition to the motion to supplement the record on August 10, contending that it is too late to introduce the excluded and additional evidence into the record.
Currently Allstate is scheduled to submit its proposed findings of fact and conclusions of law concerning unconscionability and unclean hands on August 21. But after seeing our submissions Allstate filed a motion asking to be allowed to postpone the filing of its proposed findings and conclusions until after the Court rules on our Motion to Supplement the Trial Court Record. We currently intend to oppose Allstate's motion.
In the meantime, on July 28, Allstate filed a motion and brief to dismiss certain of the claims in the Third Amended Complaint and in the complaints filed by the intervening former agents on five different bases. Some of the arguments raised by Allstate have been fought over before, while others are new. We are working on our response.
We are also continuing with preparations for the second trial on enforceability of the Release. Allstate has requested that the beginning of the trail be postponed by two weeks, from October 5 until October 19, to accommodate the schedule of Ed Liddy, whom Allstate intends to call as a witness. The third trial currently is scheduled to start November 30, less than a month after the second trial probably will end if the start is bumped back to October 19. If the second trial is postponed, the third trial may need to be delayed as well.
July 2, 2015
On June 1, 2015, we commenced the trial of whether ten Plaintiffs -- Roger Boyd, Craig Crease, Ron Harper, Mike Kearney, Sylvia Kelly, David Lawson, Ed Murray, Chris Perkins, Rick Peterson, and Paula Reinerio -- had signed the Release knowingly and voluntarily. That day, the parties picked a jury of eight persons, four men and four women. Judge Buckwalter presided over the trial.
The sole focus of the trial was whether those ten Plaintiffs signed the Release that was part of Allstate's Preparing for the Future Program knowingly and voluntarily. Plaintiffs have other attacks on the validity of the Release, including that the Plaintiffs signed the Release under duress, that the Release was unconscionable, that Allstate acted with unclean hands, and that the Release was part and parcel of an illegal scheme.
However, none of these other theories was the focus of the trial. Allstate agreed that, if the verdict was that Plaintiffs did not sign the Release knowingly and voluntarily, then they also signed it under duress, so we didn't have to separately litigate that theory. The judge, not the jury, will determine if the Release was unconscionable and whether Allstate acted with unclean hands. And the viability of the part and parcel theory will be decided later.
The significance of the knowing and voluntary theory is this: if the Plaintiffs did not sign the Release knowingly and voluntarily, then the Plaintiffs may proceed with their claims arising under federal law, namely, that Allstate engaged in age discrimination and violated ERISA, the law protecting employee benefits; but if the Plaintiffs did sign knowingly and voluntarily, then they may not assert their federal law claims.
Moreover, because Allstate also agreed that, if the jury determined that Plaintiffs did not sign the Release knowingly and voluntarily, then they signed it under duress, a verdict that Plaintiffs did not sign the Release knowingly and voluntarily also meant that Plaintiffs could proceed on their claims arising under state law, namely, that Allstate breached its contractual and fiduciary duties when it terminated the employment contracts of virtually all employee agents as part of the Preparing for the Future Program.
The trial lasted for over two weeks. All ten Plaintiffs who were the subject of the trial did an excellent job on the witness stand. It is very difficult to testify in front of a judge and jury with the knowledge that you will be subjected to cross-examination by very skilled lawyers representing Allstate. Every one of them told their story well when we questioned them and held up admirably under difficult cross-examination.
After the Plaintiffs finished their testimony, Allstate called its witnesses. The last witness, Edward Liddy, testified on Monday, June 15; the parties' lawyers made their closing arguments on Tuesday, June 16; and the jury deliberated and reached its verdict on Wednesday, June 17.
The jury ruled in favor of eight Plaintiffs -- that they did not sign the Release knowingly and voluntarily -- and against two Plaintiffs. Those eight Plaintiffs will be able to move on to the next stage of the case, trying to prove that Allstate violated federal law or Allstate's contractual or fiduciary duties to them when it terminated their contracts. The other two Plaintiffs still have the possibility of moving on to the same stage. For example, if the judge determines that the Release was unconscionable or that Allstate sought to invoke it with "unclean hands," that ruling will apply to those two Plaintiffs and allow them to proceed with their claims.
The parties will submit their papers on the unconscionability and "unclean hands" issues during July and August. It is unlikely that the Court will rule until September or October.
In the meantime, another group of ten Plaintiffs will be gearing up for a second trial before a different jury on whether the Release was signed knowingly and voluntarily and under duress. That trial will begin in early October.
Please understand that the verdict at the first trial applied only to the ten Plaintiffs who were subject to it. It did not dictate the results in the second trial or in a subsequent trial affecting any other Plaintiffs. And as we have stated repeatedly over the past nine months or so, the judge has ruled that we cannot litigate the validity of the Release on a class-wide basis. The verdict in the first trial does not affect any former agent who is not a Plaintiff. We will keep you apprised as the parties gear up for the second trial.
June 18, 2015
First Romero v Allstate Trial Concludes, Eight of Ten Agent Plaintiffs Prevail
By NAPAA Headquarters
The first of three trials on the validity of the Release in the Romero v. Allstate lawsuit began on June 1. The jury of four men and four women heard testimony for from both sides for just over two weeks. After deliberating for over a day, they delivered their verdict to the court. Eight plaintiffs prevailed; two did not.
Background: In 1999, Allstate announced its "Preparing for the Future" initiative. Approximately 6,200 employee agents would be terminated on June 30, 2000. All of the affected agents had worked at Allstate for more than ten years, building a book of customers and relationships in their communities. The terminated agents were then offered the R3001 independent contractor agreement to continue working in the agencies they had built as employees, but only if they signed a "Release" effectively waiving all rights to file any claim of any nature against the company. The independent contractor offer eliminated all of the company employee benefits, as well as employment protections mandated by law.
Confronted with the choice of signing the Release, or being fired with only 13 weeks' severance, only 19 agents departed without signing. Thousands of others thought the Release was unlawful, but felt they had no choice.
After waiting nearly 15 years for their day in court, the jury has determined that for eight of these first ten plaintiffs, the Release was indeed unlawful.
The decision opens the door for these agent plaintiffs to pursue the merits of the lawsuit which include, among other charges, violations of ADEA and ERISA, breach of contract and breach of fiduciary duty.
This has been provided for informational purposes only. NAPAA is not a party to the Romero lawsuit.
January 26, 2015
Reluctantly, we the attorneys have decided that we will not offer representation on an individual basis to any former employee agent who signed the Release and has not already signed a retainer agreement with us. We still hope to represent all or some subgroup of former employee agents as part of a class action concerning the substantive claims. However, the Court’s Order of January 6, 2015 states that agents first must invalidate their Release via an individual action.
In deciding not to extend representation to unrepresented employee agents wishing to individually challenge the validity of the Release, we considered many factors, including the impact that a large number of additional clients might have on our existing clients and our ability to represent on an individual basis potentially hundreds or thousands of new clients. Our decision has nothing to do with the merits of any agent’s challenge to the validity of the Release.
Our decision not to offer representation on an individual basis to agents whom we do not already represent does not mean that those agents have no recourse if they wish to challenge the validity of the Release and pursue substantive claims against Allstate. Agents can find lawyers throughout the United States who represent employees in lawsuits against employers at http://www.nela.org/. NELA is a national association of plaintiffs’ employment lawyers. A lawyer may be more interested in litigating against a large company like Allstate if several agents are willing to be represented jointly. Lawyers also may wish to review the filings on the http://www.allstatecase.com/ website, which may facilitate the preparation of necessary legal papers. We believe that agents should look for lawyers who have the resources to maintain potentially lengthy litigation and a record of handling complex litigation.
Remember that the Order of January 6, 2015 states that the statute of limitations on the claim of Release-signers starts running again on March 2, 2015. That does not necessarily mean that any agents’ claims expire on March 2, 2015, but it does mean that the limitations “clock” will start ticking once more. Agents should consult with the lawyers that they retain about when any potentially applicable statute of limitations will expire.
January 9, 2015
As stated in our update of December 22, 2014, Judge Buckwalter conducted a telephonic conference with the lawyers for plaintiffs and Allstate on Tuesday, January 6, in response to our efforts to clarify the impact of his Order of December 11, 2014. Later that day he issued a written Order.
The January 6 Order contains three important rulings:
- It denies our motion for clarification or reconsideration of the December 11 Order. As a result, any employee agent who signed the Release must affirmatively challenge the validity of the Release in order to pursue substantive claims against Allstate. The claims of any agent who does not challenge the validity of the Release before the statute of limitations expires would be subject to bar under the statute of limitations.
- It continues to toll the statute of limitations until March 2, 2015. Thus, the order contemplates that the statute of limitations will not resume running against any agent who challenges the validity of the Release on or before March 2, 2015.
- It denies our request that Allstate provide us with the names and addresses of the absent class members so that we could communicate the Court's ruling to as many agents as possible.
Approximately 500 former employee agents previously have retained our services to represent them in this litigation. We are currently evaluating how best to protect the interests of these roughly 500 clients. We will communicate with them soon about our plans.
Employee agents who have not retained our firms may wish to consult with a lawyer to evaluate how the Court's Order may impact their rights and whether they wish to take any actions on or before March 2, 2015.
December 22, 2014
Judge Buckwalter issued today an Order that should relieve pressure to take immediate action in response to his Order of December 11.
He has set a teleconference for January 6, 2015 to discuss the implications of his Order of December 11. Today's Order also stayed any running statute of limitations "pending the Court's January 6, 2015 conference and subsequent ruling on any outstanding issues." This portion of the Order again stopped the running of the statute of limitations, at least until the Judge issues a ruling after the January 6 conference. We are hopeful that the ruling issued after the January 6 conference will provide greater clarity as to the rights of putative class members and the actions (if any) that should be taken to preserve those rights.
December 19, 2014
We have received two significant rulings from Judge Buckwalter in the past eight days on motions that have been described in prior updates.
First, in our December 9 update, we described a motion we filed asking Judge Buckwalter to clarify that his October 6, 2014 Order denying class certification as to the validity of the Release did not resolve whether class treatment is appropriate on the merits of our substantive claims. The motion sought to confirm that the statutes of limitations applicable to those substantive claims remain tolled for all proposed class members who are not named plaintiffs.
On December 11, 2014, the judge entered an Order ruling on that motion. The meaning and implications of the December 11 Order for putative class members are unclear. The Order first grants the clarification we requested, concluding that "after concluding any currently scheduled trial with respect to Release issues, any party may move for certification . . . with respect to claims or issues involving the merits of Plaintiffs' claims." However, the Order also adds that the October 6 denial of class certification on the Release "restarted the running of the statute of limitations for any current or former employee-agent of Defendants who—between November 10, 1999 and June 30, 2000—signed the Release prepared by Defendants in connection with the Preparing for the Future Group Reorganization Program, and who now wishes to challenge the validity of the Release in order to pursue substantive claims against Defendants that would otherwise be contractually barred."
The Order does not make clear what actions Release signers must take to preserve their rights to challenge the Release and/or pursue their substantive claims and by when those actions must be taken. Under one interpretation – with which we disagree but which Allstate may espouse – the deadline for taking action to challenge the Release in order to preserve age discrimination claims may expire in early January 2015. We intend to seek clarification of this Order from Judge Buckwalter, but may not have any clarification from him by early January.
Employee agents who have not retained our firms should consult with a lawyer promptly to evaluate whether they wish to take any actions before early January, 2015.
Second, in our last three updates we described briefing concerning the structure of the trials on the validity of the Release to commence in May 2015. We are happy to announce that Judge Buckwalter, in a Case Management Order issued December 17, adopted our positions and rejected Allstate's on the various issues. As a result:
- There will be three trials on the validity of the Releases signed by the 31 named plaintiffs, to commence May 18, 2015, September 28, 2015, and November 30, 2015;
- Plaintiffs will open and close the case at each trial (Allstate had argued that it should open and close);
- The jury will deliberate only after the close of the case as to all of the plaintiffs who are the subject of that trial, not (as Allstate wished) after the evidence is presented as to each plaintiff; and
- Allstate will pick five plaintiffs to be the subject of the first and second trials, and then plaintiffs will pick the other five plaintiffs to be the subject of those trials.
December 09, 2014
Our October 24 update discusses filings by plaintiffs and Allstate concerning the structure of the trials on the validity of the Release. More recently, plaintiffs filed a response to which Allstate then filed a reply. Those issues are now fully briefed. Judge Buckwalter has not yet ruled on the issues in dispute. We will continue to get ready for trial while we wait for the decision.
In the meantime, we filed a motion that asks Judge Buckwalter to clarify that his ruling that we cannot litigate the validity of the Release on a class-wide basis does not address whether we can litigate the merits of the case on a class-wide basis. If the judge agrees with us, we still have the right to seek permission to litigate the merits issues, such as whether Allstate broke its contracts with the agents or violated federal laws, on a class-wide basis. Not surprisingly, Allstate opposes our motion. We filed a reply to Allstate's brief on Monday, December 8. That motion is now fully briefed and ready for a decision by Judge Buckwalter.
We have not heard any further news about the EEOC's appeal of the decision in March dismissing its claim. The Third Circuit Court of Appeals either can issue a decision based on the papers submitted by the parties or can schedule the appeal for oral argument. While we are not directly involved in the EEOC's appeal, we will let you know once we have additional information.
We realize that all of these motions and briefs may be difficult to follow. If you have questions or concerns, please feel free to email or call any of the lawyers working on the case.
October 24, 2014
In the October 11 update, we mentioned that the parties were required to submit briefs on October 20 concerning the structure of the trials that Judge Buckwalter has scheduled concerning the validity of the Release. While the judge has determined that juries will decide, not on a class basis, whether the Release that the named Plaintiffs signed is valid, he has not resolved questions such as: how many Plaintiffs will testify at each trial? Which party will present its evidence first at the trial? Will the jury issue a verdict immediately after the testimony is presented as to each Plaintiff or wait until all evidence is presented at a trial before issuing a verdict as to all plaintiffs who testify at that trial? These structural issues are addressed in the briefs presented by Plaintiffs and by Allstate.
We will of course post Judge Buckwalter's decision after it is issued.
October 11, 2014
The litigation has had several significant developments since our last posting on May 30.
Judge Buckwalter has decided that there will be several trials in which juries will determine whether the Release that the named Plaintiffs signed is valid. He has not yet decided whether each trial will concern eight or ten Plaintiffs. The first trial will start May 18, 2015, and a second trial will commence September 28. The third (and possibly fourth) trials are not yet scheduled. This structure contemplates that there could be a verdict that the Release was valid as to one Plaintiff and invalid as to another, instead of the same verdict for all employee agents. The parties will submit briefs October 20 concerning the structure of these trials.
The reason that the trials concerning the validity of the Release relate only to the named Plaintiffs is that Judge Buckwalter denied our motion to certify a class of approximately 6200 former employee agents to challenge the validity of the Release. Our prior posting contained a link to our initial brief in support of class certification; click on the links to access Allstate's opposition and our reply brief.
In the meantime the EEOC is proceeding with its appeal of Judge Buckwalter's decision in March 2014 that the Release was not illegally retaliatory. The EEOC's has filed its brief to the Third Circuit Court of Appeals and Allstate has filed an opposition. We will post the EEOC's reply brief after it is filed.
May 30, 2014
Last Friday, May 23, 2014, we filed a motion and supporting documents asking the judge to allow plaintiffs to litigate most of their challenges to the validity of the Release on behalf of the over 6200 employee agents who signed the Release as part of the so-called "Preparing for the Future Group Reorganization Program" in 2000. If the judge grants the motion, the outcome of the trial on the validity of the Release will affect the rights of all of those agents. If the judge "certifies" the class and the jury determines at trial that the Release is invalid, then the ruling will benefit all employee agents. On the other hand, if the jury found against us at trial, then there would be no classwide challenges to the validity of the Release for any class members. There then would be only challenges based on the individual circumstances of each agent.
If the judge grants the motion and a class trial on the validity of the Release occurs, all 6200 employee agents will not have to testify at trial. Instead, we will try to present sufficient evidence to convince the jury that the Release was invalid as to everyone. We believe that only a small number of agents will have to testify at trial.
But if the judge denies our motion and there is thus no class trial on the validity of the Release, the nature of the trial(s) that will occur is unclear. Possibly there would be a series of trials as to the validity of the Release as to each person whom we represent.
Allstate's opposition to our class certification motion is due in late June, and our reply in support of class certification is due in July. We do not know when the judge will rule on the motion, but we realize that this motion is important to many people, and we will post it as soon as received.
Click here to review the motion papers.
May 1, 2014
Yesterday the New York Times ran an article about the case on the first page of its Business section as well as on its online edition. The article featured quotes from three of the named plaintiffs -- Nathan Littlejohn, Craig Crease and Ron Harper -- and does a good job of making the facts of the case understandable to readers.
April 14, 2014
Two significant developments occurred in the case last week.
First, Judge Buckwalter issued an Opinion and Order on April 7 on each party's motion for clarification and/or reconsideration of his Order of February 27, 2014. We discussed those motions in our previous two updates for March 17 and April 1.
To summarize, Allstate filed a reconsideration motion that asked the judge to change his February 27 decision dramatically. Allstate re-argued that, supposedly, the federal standards for whether a release of federal rights is "knowing and voluntary" are identical to the state standards for whether a release was signed under duress or as a result of fraud, and that under those standards, the judge should have granted summary judgment to Allstate. Judge Buckwalter rejected every one of Allstate's arguments in denying the motion for reconsideration. He also denied Allstate's motion to provide greater clarity about what information was relevant in determining whether a release was signed knowingly and voluntarily. Finally, he also rejected Allstate's motion that he grant it summary judgment on our contentions that the Release was unconscionable.
Equally important, Judge Buckwalter granted our motion for clarification. He had stated in his February 27 opinion that your employment contracts were terminable at the will of either party by their express terms. If this ruling had applied to the merits of the case, it would have made it far harder to prove our breach-of-contract claims. At our request, he clarified that his statements were not binding on us at the merits stage, and we remained able to try to prove that Allstate breached your employment contracts when it terminated them as part of the Mass Termination Program.
We obviously are very pleased with his rulings.
Second, on April 8 we and the attorneys for Allstate met with Judge Buckwalter to discuss several matters. We had hoped to emerge with a firm date for trial on the validity of the Release. Unfortunately, the Judge concluded that too many issues remained open to schedule a trial, but indicated a desire to have a trial in late fall of this year.
At the conference Judge Buckwalter agreed that we could file a motion to certify a class to challenge the validity of the Release. At this time we will not be moving to certify a class as to the merits of plaintiffs' claims that Allstate breached your employment contracts and violated the Age Discrimination in Employment Act (ADEA) and the Employee Retirement Income Security Act (ERISA) when it terminated your employment contracts.
Although deadline dates still need to be finalized, our motion and supporting materials apparently will be due in mid-May, and the entire briefing process should be completed by the end of June. We intend to post our class certification brief after it is filed.
March 3, 2014
Validity of Release will go to trial. Read decision here.
August 9, 2013
The parties have now filed their opposition and reply memoranda to the motions for summary judgment filed on April 8. This concludes the scheduled briefing on the validity and applicability of the Release that all but about 19 of the roughly 6200 employee agents signed in 2000 as part of the "Preparing for the Future" Group Reorganization Program. As reported earlier, the Romero plaintiffs and the EEOC argued that the Release was invalid, while Allstate argued that the Release was valid.
We do not know when Judge Buckwalter will rule on the motions, or whether he will hold a hearing in which the lawyers can present their arguments orally. The parties together filed hundreds of pages of arguments and proposed facts, and thousands of pages of documents and deposition transcripts. It undoubtedly will take the Judge and his clerks considerable time to review all of the papers, perform any additional legal research that they deem appropriate, and write an opinion. We know that it has been over 13 years since the Program was implemented, but please be patient a little longer.
As mentioned in our prior update, our memoranda and the EEOC's memoranda discuss information that Allstate has designated as confidential. Accordingly, we have not posted the parties' memoranda on this website. But we hope to be able to convince Allstate that information that is 13 years old, or even more dated, is no longer sensitive and may be unsealed. If Allstate agrees, we will make all of the filings available. If you are interested in reading them, please check back on the website from time to time to see if they have been posted.
April 29, 2013
The parties filed their motions and initial memoranda of law on April 8 concerning the validity and applicability of the Release that all but about 19 of the roughly 6200 employee agents signed in 2000 as part of the "Preparing for the Future" Group Reorganization Program. The Romero plaintiffs and the EEOC argued that the Release was invalid, while Allstate obviously argued that the Release was valid.
The schedule approved by Judge Buckwalter calls for each party to file its response to the other's filing in 45 days (late May) and then a reply in another 45 days (mid-July). That will conclude the briefing on the validity and applicability of the Release, and the parties will wait for Judge Buckwalter to issue a decision.
The memoranda discuss information that Allstate has designated as confidential. Accordingly, we cannot post the memoranda on this website. To provide an idea of the points made in the filings, however, we reproduce on the pleadings page the table of contents from each memorandum: Romero plaintiffs' memorandum, EEOC's memorandum, Allstate's memorandum in Romero cases, and Allstate's memorandum in EEOC's case.
We cannot predict when Judge Buckwalter will issue his ruling, but it is likely to take several months. The filings were voluminous. In addition to our 78 page memorandum, for example, we filed a Statement of Undisputed Facts totaling 162 pages, and exhibits, including declarations (statements under penalty of perjury) from plaintiffs, totaling over 1000 pages. Allstate's filings were likewise voluminous. This is a lot of material for the Judge and his staff to review.
Before the motions were filed, Judge Buckwalter issued rulings on the outstanding motions arising out of the discovery on the Release, which were discussed in our prior update, dated October 17, 2012. The Judge's rulings can be found on the Orders page of the website.
We realize that this litigation was filed over 11 years ago. We are moving it forward as rapidly as we can, and realize that many of the former Allstate employee agents who may benefit from a successful outcome are moving on in years. Indeed, we mourn the loss of three of the original named plaintiffs - Doug Gafner of Wisconsin, Jim Pilchak of Michigan, and Dwight English of Tennessee - who have died during the course of the litigation. We thank you for your continuing interest, and ask for even more patience as the litigation continues.
We also want to take this opportunity to thank each of the named plaintiffs, including the representatives of their three deceased comrades. Most of them have sat through two grueling depositions. They collectively have produced over one hundred thousand pages of paper and electronic documents. They have answered written questions from Allstate. They have participated in numerous telephone calls with us, their lawyers. And throughout it all, not one has dropped out of the litigation. They remain remarkably committed to obtaining justice from Allstate.
October 17, 2012
Unless Judge Buckwalter orders additional "discovery," the plaintiffs and Allstate now have completed their discovery concerning the validity of the Release.
As explained in prior entries, discovery is the process by which lawyers can obtain information from the opposing party about facts relevant to the issues in a case. During the past two years, the parties have engaged in about 40 days of depositions, produced hundreds of thousands of pages of documents or electronic images, and devoted hundreds if not thousands of pages to answering interrogatories (written questions) and responding to requests for admission. This has meant a tremendous amount of work for the plaintiffs, for Allstate, and for the lawyers on both sides. The last deposition occurred in late July.
August 13 was the deadline for both sides to file any final motions arising out of the discovery disputes that arose along the way (as reported in prior updates, plaintiffs already filed and Judge Buckwalter already had ruled on several motions contending that Allstate had violated its discovery obligations). We filed two motions.
First, we filed a motion for entry of a spoliation inference. In that motion, we claim that Allstate permitted or caused a large number of relevant documents concerning the origination and implementation of the so-called Preparing for the Future Group Reorganization Program (the "Mass Termination Program") to be destroyed, and ask the Court to impose as a sanction the inference that the documents would have favored plaintiffs' position on the validity of the Release. We contend that Allstate reasonably should have anticipated litigation arising from the Mass Termination Program no later than June 1999, that Allstate's duty to preserve documents started at that time, and that necessary preservation instructions were not given. We also identify for the Court numerous relevant activities and numerous key employees for which Allstate failed to produce documents. Allstate's response, filed about a week ago, is that it did not anticipate litigation until February 2000, that it took appropriate steps to preserve documents promptly after then, and that we cannot identify how we were prejudiced by any documents that were lost.
Next, we filed a motion for sanctions or to compel testimony from three of Allstate's witnesses. These witnesses testified under a procedural rule that required Allstate to educate the witnesses with all of the information about certain designated topics reasonably available to the company. We contend that Allstate did not adequately prepare these witnesses so that they did not know the answers to numerous questions within the scope of the designated topics. In addition, one of the witnesses was obstructionist and another often read from a script prepared by his lawyers. In the motion, we ask Judge Buckwalter to impose as a sanction that Allstate is bound by the witnesses' lack of knowledge: Allstate will be deemed not to know any more than the witnesses did when they testified they did not know. Alternatively, we ask Judge Buckwalter to order the witnesses to be redeposed at Allstate's expense, and to give us more time to complete the questioning of one of the witnesses (Barry Hutton). Not surprisingly, Allstate contends that the witnesses were adequately prepared and not obstructionist.
Briefing on the motion for sanctions is now complete, and briefing on the motion for entry of a spoliation inference will conclude next Monday, October 22.
Allstate also filed two motions for which the briefing is already complete. First, it filed a motion to compel claiming that plaintiffs violated their duties by generally limiting the production of hard copy documents in response to Allstate's requests to documents dated no later than December 31, 2002. We contend that the parties agreed to the 2002 cutoff and that, even if there was no agreement about the cutoff date (as Allstate argues), Allstate should have raised this issue long ago. In its second motion, Allstate seeks leave to amend admissions that it made earlier in the case. Previously it had admitted that it had not instructed five key witnesses, including Ed Liddy, to preserve documents by May 1, 2000; now it wants to assert that it had instructed them to preserve documents, even though it has failed to produce any responsive documents from four of the five witnesses and even though Mr. Liddy separately admitted that he was not instructed.
The case is likely to be relatively quiet until after Judge Buckwalter rules on the four motions. We will post his decisions after they are received, which we do not anticipate until late 2012 or early 2013.
The scheduling order governing this case provides that the parties will file and brief motions for partial summary judgment motion concerning the validity of the Release within 45 days after the Judge rules on the discovery motions. All but about 19 of the over 6,200 agents (and all but one of the named plaintiffs) signed the Release as part of the Mass Termination Program. The ruling on the validity of the Release thus is very important to the plaintiffs and other employee agents.
January 23, 2012
Last week, Judge Buckwalter issued Orders on both of the pending discovery motions, which were described in the update of December 12, 2011.
In one of the pending motions, we asked Judge Buckwalter to order Allstate to answer properly our requests for admission concerning its preservation of email and other electronic documents. Allstate refused to answer most of the requests on a variety of bases, two of which were primary. First, it objected to many of the requests on the ground that they related to the Mass Termination Program instead of only to the validity of the Release, the issue that is the focus of the current round of discovery. Second, it objected to our request that it address the company's efforts to preserve the documents of each custodian (the person to whose account an electronic document was stored), contending that it should have to respond only as to the custodian's efforts to preserve his or her own documents.
As you will see, the judge agreed with us completely on the first issue, stating that our document preservation requests properly related to documents concerning the entire Program, not just the Release. On the second issue, the judge reached a compromise. Allstate needs to answer as to the efforts of the IT and Legal Departments, but not necessarily all of Allstate. The judge gave Allstate 20 days in which to answer the requests for admission properly. Click here (Order on Motion to Compel) to review Judge Buckwalter's Order on the requests to admit.
In the other pending motion, Allstate asked the judge for a protective order to limit the scope of a deposition that we intend to take. Again, the principal dispute was over whether topics had to be limited to "the Release," or whether they could concern "the Program." Judge Buckwalter looked at each topic individually. On the great majority of topics, he agreed with us; on a few, he thought our topics went too far and addressed the merits rather than the validity of the Release. In a few instances, he limited the temporal scope of the topics. Click here (Order on Motion for Protective Order) to review Judge Buckwalter's Order on the deposition.
We are gratified by both of these Orders, and hope that these two rulings will cause Allstate to alter its position on other pending disputes, allowing our discovery to move forward with fewer objections.
In the meantime, Allstate is deposing our plaintiffs. We expect that the next two months will be filled with discovery from both sides concerning the validity of the Release. We will update this site again when we have additional information to share about the progress of the discovery.
December 12, 2011
For the past year, the parties have been engaged in vigorous "discovery" concerning the validity of the Release. Discovery is the process by which each side in a civil lawsuit obtains information from the other. In response to Plaintiffs' discovery, Allstate has produced thousands of pages of documents to Plaintiffs (although Plaintiffs believe the production to be grossly inadequate), answered written questions, and responded to Plaintiffs' requests for admission. Similarly, Plaintiffs have produced many thousands of pages of documents to Allstate, answered Allstate's written questions, and responded to Allstate's requests for admission.
Of course, Allstate has resisted a substantial portion of Plaintiffs' discovery. There are two motions pending before the Court concerning Plaintiffs' discovery: Plaintiffs' motion challenging the adequacy of Allstate's responses to Plaintiffs' discovery, and Allstate's motion for a protective order to limit the topics about which Plaintiffs may inquire during an upcoming deposition. Click here for the Plaintiffs' Challenging Sufficiency of Allstate's Responses. Click here for Allstate's Motion for a Protective Order. It seems unlikely that Judge Buckwalter will decide the motions until early 2012.
While the parties wait for those decisions, they will move forward with depositions. During depositions, the parties can question the opposing parties or other witnesses outside the presence of the judge. The questions and answers are transcribed by a court reporter, and can in appropriate circumstances be used as evidence in subsequent proceedings in the case. We expect the depositions to last into early 2012 as well.
The discovery process, including the resolution of the parties' disputes, is taking longer than we had anticipated when the process started. Our best estimate now is that our motion challenging the validity of the Release will not be filed until late spring of 2012.
Although this delay is frustrating to Plaintiffs, we wish to assure everyone that the Plaintiffs and their lawyers are working as hard as they can to achieve a successful result in the case as quickly as possible.
November 18, 2010
In an opinion issued last week, Judge Buckwalter denied the motion of Allstate’s former CEO Edward Liddy to be dismissed from the case. As discussed in our updates of August 27, September 14 and October 5, plaintiffs are suing Mr. Liddy for violating ERISA section 510, which prohibits any person from taking an adverse employment action against a participant in an employee benefit plan for the purpose of preventing the participant from accruing additional benefits. Mr. Liddy principally argued that the word “person” under ERISA did not include corporate officers, so that he could not be liable under that statute. Judge Buckwalter rejected that argument, and Mr. Liddy will remain in the case.
October 22, 2010
Yesterday Judge Buckwalter issued an opinion and order on plaintiffs’ motion to compel. As described in our update of September 14, 2010, several months ago we served a series of requests to produce documents, Allstate refused to produce documents in response to most of the requests, and we asked Judge Buckwalter to order Allstate to produce the documents (a “motion to compel”). As his opinion makes clear, Judge Buckwalter agreed with us on almost every issue. He ordered Allstate to produce all of the requested documents and to cooperate with us in agreeing on the parameters to be used in searching for relevant documents maintained electronically, such as emails.
Also as described in our update of September 28, Allstate has refused to answer most of our written questions, called interrogatories. In response to our motion to compel responses to those interrogatories, Allstate filed a motion to stay briefing until after a decision had been issued on the motion to compel production of documents. In a brief order, Judge Buckwalter agreed that Allstate did not need to respond to our motion to compel responses to interrogatories until after the motion to stay was decided. We are hopeful, however, that his decision on the motion to compel production of documents will lead to a resolution of the dispute over the responses to our interrogatories.
October 5, 2010
Yesterday Edward Liddy, Allstate’s former CEO, filed his reply brief in support of his motion to dismiss the claims against him.
September 28, 2010
Plaintiffs yesterday filed a motion to compel answers to the interrogatories that they served on Allstate several months ago. Click here to review a copy of plaintiffs’ brief in support of their motion.
September 14, 2010
Plaintiffs yesterday filed their Opposition to Mr. Liddy’s Motion to Dismiss. As noted in our August 27 update, Mr. Liddy is arguing that he cannot be sued for acts committed while a corporate officer. As you will see from reading the brief, we believe that Judge Fullam rejected the same argument over eight years ago and that Mr. Liddy is in effect seeking reconsideration of that ruling without any proper basis. But if Judge Buckwalter does choose to reconsider the issue of whether plaintiffs have stated a claim against Mr. Liddy, we show in the brief that the language of the Employee Retirement Income Security Act (“ERISA”), the statute under which plaintiffs have brought suit, expressly allows suit against Mr. Liddy or any other “individual,” and there is no exception for corporate officers.
Also pending, and not mentioned in our earlier posts, is plaintiffs’ motion to compel Allstate to produce documents that plaintiffs have requested. Plaintiffs’ opening brief, defendants’ opposition, and plaintiffs’ reply can be read by clicking here or by opening the Pleadings page. We believe that the Court of Appeals has already indicated that we should have access to all of the requested documents, and that those documents are likely to be important for us to make the strongest possible arguments that the Release is invalid.
August 27, 2010
The Allstate defendants today filed their Answer and Affirmative Defenses to Plaintiffs’ Second Amended Complaint. In an answer, a defendant states whether it admits or denies each of the allegations in a complaint. Not surprisingly, Allstate denies most of the allegations in the Second Amended Complaint. In the affirmative defenses, a defendant identifies reasons why it contends it should prevail even if some or all of the facts alleged in a complaint are true. Plaintiffs do not have to respond to the answer, but may, if they choose, file a motion challenging some of the affirmative defenses.
At the same time, Edward Liddy filed a Motion to Dismiss. As a matter of law, an individual can be held liable for some types of actions committed as a corporate officer but not for others. Mr. Liddy contends that a corporate officer, such as a CEO, cannot be liable under the laws that form the basis of plaintiffs’ claims. We intend to file a brief opposing his arguments.
July 29, 2010
Judge Ronald Buckwalter Grants Plaintiff Motion for Leave to File a Second Amended Complaint:
Read the Memorandum here.
April 5, 2010
From the Allstate Agents Litigation Website
As directed by the United States Court of Appeals for the Third Circuit, the matters pending before Judge Fullam since 2001 were reassigned to the Honorable Ronald Buckwalter in January 2010. This includes the following cases:
Romero I, No 01-CV-3894, which challenges certain aspects of the Preparing for the Future Group Reorganization Program (Program) announced in November 1999, including (a) the validity of the General Release and Waiver Agreement (Release), (b) the termination of the R830 and R1500 contracts under which employee agents were hired and worked, and (c) Allstate's interference with pension and other employee benefits;
Romero II, No. 01-CV-6764, which challenges certain amendments to the Agents Pension Plan and alleged misrepresentations relating to eligibility for early retirement and other pension benefits; and
EEOC v. Allstate Insurance Company, No. 01-CV-7042, which challenges the validity of the Release under the Age Discrimination in Employment Act (ADEA), the Civil Rights Act of 1964 (Title VII), and the Americans with Disabilities Act (ADA).
Judge Buckwalter is an experienced jurist who has sat on the District Court for two decades.
At the Court's request, the attorneys for the respective parties met for a status conference on February 14, 2010, at which time Judge Buckwalter made clear that he would follow the mandate of the Court of Appeals and limit "merits" discovery to issues relating to the validity of the Release executed by nearly all of the 6,200 employee agents whose employment contracts were terminated as part of the Program. The parties subsequently were able to negotiate a proposed form of case management protocol under which certain issues relating to the validity and applicability of the Release can be decided by the Court. This will be presented to Judge Buckwalter so that it can be entered as an order of the Court. Plaintiffs already have provided Allstate with a copy of the discovery requests that will be served upon entry of the order.
We are pleased Judge Buckwalter has indicated a willingness to meet with the parties as frequently as necessary to ensure that progress can be made in these long-delayed cases.
July 29, 2009
From the Allstate Agents Litigation Website
On July 29, 2009, the United States Court of Appeals for the Third Circuit issued a per curium (unanimous) opinion in which it vacated Judge Fullam's ruling of June 20, 2007, by which he had dismissed all of the claims that had been asserted in the Romero and EEOC cases, and directed that, upon remand to the trial court, the case be reassigned. While the Third Circuit's opinion did not resolve many legal issues that were before it on appeal, including the merits of the ADEA, ERISA, and breach of contract claims the Romero plaintiffs have brought against former Allstate CEO Edward Liddy, The Allstate Corporation, and Allstate Insurance Company or the retaliation claims the EEOC has brought against Allstate Insurance Company, it found that the Romero plaintiffs are, at minimum, entitled to discovery concerning the validity of the General Release and Waiver Agreement that all but a handful of the 6,200 terminated employee agents were required to execute. The Third Circuit noted in this regard that if the newly-assigned district court judge determines that the Release is not valid, the trial court will need to address all of the claims that have been raised by the Romero plaintiffs, including the breach of contract and breach of fiduciary duty claims, as well as the "cutback" and misrepresentation claims asserted in Romero II.
The Court of Appeals additionally remanded the age discrimination and ERISA benefit claims asserted in Romero I so that the district court can determine whether plaintiffs were provided with sufficient discovery relating to those claims.
Finally, with respect to the Romero II claims, the Court of Appeals agreed with the Romero plaintiffs that the Scott and Swain decisions are not dispositive and those claims can move forward in the district court.
The Romero plaintiffs are pleased that the Third Circuit has vacated the case for further proceedings and look forward to arguing the merits of each of their claims to a new trial judge after being afforded the discovery to which they are entitled.
Appeal Court Opinion.
March 23, 2009
From the Allstate Agents Litigation Website
The parties appeared today before the United States Court of Appeals for the Third Circuit in Philadelphia to argue issues relating to Judge Fullam's ruling that dismissed the Romero I, Romero II, and EEOC lawsuits in June 2007. See link http://www.chicagobusiness.com/cgi-bin/news.pl?id=33427&ba=1 The Romero plaintiffs appreciate that they were afforded the opportunity to appear before the Court, and are encouraged that each of the three judges sitting on the panel had devoted substantial time familiarizing themselves with the facts of the case. No ruling is expected for at least several months. In the meantime, however, a transcript of the argument can be found here.
August 20, 2008
From the Allstate Agents Litigation Website
On August 12, Allstate filed their Briefs in the United States Court of Appeals for the Third Circuit. Three documents are available on the Agents Litigation websites:
Brief of Defendants Appellee (Pension Case)
Brief of Appellee Allstate (EEOC vs Allstate)
Brief of Appellee Allstate, Allstate Corporation, Edward M. Liddy (Romero).
June 2, 2008
Today, the Romero plaintiffs and EEOC each filed briefs in connection with the appeals taken from Judge Fullam’s decision of June 20, 2007, which granted summary judgment in favor of Allstate. Copies of the briefs can be downloaded here:
Brief of the Equal Employment Opportunity Commission as Appellant
Allstate will file its opposition within 30 days.
May 6, 2008
On June 20, 2007, the United States District Court for the Eastern District of Pennsylvania issued an order reversing its earlier ruling of March 30, 2004, in which it had concluded the Release and Waiver Agreement that Allstate required employee agents to sign as part of the "Preparing for the Future" Group Reorganization Program was retaliatory and in violation of applicable federal law and could be voided at the option of each employee agent who signed the Release. In addition to vacating its ruling concerning the validity of the Release, the District Court adopted the "tentative conclusions" set forth in its order dated March 21, 2007 (which is discussed below) and, as a result, granted summary judgment in favor of Allstate as to the discrimination and retaliation claims asserted by the plaintiff employee agents under the Age Discrimination in Employment Act and Employee Retirement Income Security Act. Finally, the District Court indicated its intention to close the case files.
Plaintiffs, together with the United States Equal Employment Opportunity Commission, have taken an appeal from the District Court's ruling and, in accordance with the scheduling order issued by the United States Court of Appeals for the Third Circuit will be filing briefs with the Court of Appeals by June 2, 2008. Allstate will have to file responsive briefs within 30 days. Copies of the parties' briefs will be posted after they are filed.
May 24, 2007
From the Allstate Agents Litigation Website
Plaintiffs have filed a Notice of Supplemental Authority to bring to Judge Fullam's attention a controlling decision issued by the United States Court of Appeals for the Third Circuit on May 14, 2007. Plaintiffs believe that this decision, known as Jakimas v. Hoffman-La Roche, Inc., demonstrates not only that the Court was wrong in imposing a "tender back" requirement with respect to the Release in its ruling of March 30, 2004, but also that the Court should not rule as a matter of law that execution of the Release was knowing and voluntary, that the Release was not part and parcel of an illegal scheme, or that the Release was not unconscionable and in violation of public policy. Plaintiffs argue further that Jakimas instructs that the Court should not dismiss the claims arising under Section 510 of ERISA without first affording plaintiffs the opportunity to conduct merits discovery. Because Judge Fullam limited additional briefing relating to the tentative conclusions issued on March 21, 2007, to 10 pages, plaintiffs have filed a motion asking the Court to accept for filing a supplemental memorandum .
April 2, 2007
Excerpt From the Allstate Agents Litigation Website
"Judge Fullam has denied plaintiffs' motion for reconsideration and, in a ruling dated March 21, 2007, advised the parties that he has reached a number of tentative conclusions in this case, the EEOC case and Romero II. As set forth in the memorandum opinion issued by the Court, Judge Fullam stated that he had concluded that his March 2004 ruling was "in error" insofar as he found that the Release was voidable and, in light of other tentative conclusions set forth in his ruling, that "the validity of the release has become moot." With respect to the other tentative conclusions, Judge Fullam stated that a 2005 decision issued by a United States Court of Appeals in Isbell v. Allstate Ins. Co. "warrants the conclusion that plaintiffs' claims of ERISA violations, age discrimination and retaliation must fail." It therefore appears that it is Judge Fullam's intention to uphold the Release and, in addition, dismiss the federal law claims brought under the ADEA and ERISA. Judge Fullam nevertheless has invited the parties to submit additional briefs that bring to the Court's attention any issues that he may have overlooked, as well as any argument or "other factor" that impugns the decision in Isbell. Plaintiffs believe that the tentative conclusions reached by Judge Fullam are not correct and will file a brief that attempts to explain why he is in error. We will keep you advised of any further rulings from the Court."
Both the Plaintiff and Defendant filed a response to Judge Fullam's Memorandum on April 10, 2007. The Responses are posted on the Allstatecase.com website:
March 21, 2007
Judge Fullam issued a memorandum and Order this date, with tentative conclusions on all three of the consolidated cases commonly known as Romero vs Allstate
Read the Memorandum here.
Romero I & II Summary
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 proposed class action lawsuit known as "Romero II" was filed by 32 individuals who had been employed by Allstate Insurance Company ("Allstate") under R830 and R1500 contracts and who remain participants in and/or beneficiaries of the Agents Pension Plan. The plaintiffs allege that the Allstate defendants sought to amend the Agents Pension Plan during the 1990's for the purpose of unlawfully "cutting back" retirement benefits. The lawsuit also alleges that Allstate knowingly misrepresented that agents who continued in the service of the company as so-called "independent contractors" could not accrue additional retirement benefits or become entitled to early retirement.