Deus v. Allstate Insurance

15 F.3d 506, 28 Fed. R. Serv. 3d 11, 40 Fed. R. Serv. 611, 1994 U.S. App. LEXIS 4021
CourtCourt of Appeals for the Fifth Circuit
DecidedMarch 8, 1994
Docket93-05226
StatusPublished
Cited by120 cases

This text of 15 F.3d 506 (Deus v. Allstate Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Deus v. Allstate Insurance, 15 F.3d 506, 28 Fed. R. Serv. 3d 11, 40 Fed. R. Serv. 611, 1994 U.S. App. LEXIS 4021 (5th Cir. 1994).

Opinion

JERRY E. SMITH, Circuit Judge:

I.

Plaintiff, Frank Deus, was an agent for defendant Allstate Insurance Co. (“Allstate”) in its Jackson, Mississippi, region from 1968 until August 1987, when he suffered a mental breakdown rendering him unable to work. He now suffers from severe tinnitus (ringing in the ears) and depression. He claims that Allstate intentionally inflicted severe emotional distress upon him, causing his breakdown. During the time at issue in the suit, Deus worked under the following managers: Dave Blankenhorn, Regional V.P.; Ken Ar-tiques, Human Resources; Dusty Rhodes, Territorial Sales Manager (“TSM”); and Scott Raley, Market Sales Manager (“MSM”).

Throughout his nineteen years with Allstate, Deus was a “company office agent,” or “COA.” His status as a COA was established through an employment agreement with Allstate, obligating Allstate to provide support for Deus and his office. Deus’s agreement stated that Allstate could not terminate him for unsatisfactory work unless it first gave him notice, pursuant to a specific multi-phase procedure to determine that his work was unsatisfactory and that his job was in jeopardy. After giving notice, Allstate was required to provide Deus a “reasonable opportunity to bring his performance up to satisfactory standards” and could not fire him for unsatisfactory work if he responded favorably.

In early 1985, Allstate began the Neighborhood Office Agent (“NOA”) program in the Jackson region. The NOA program was designed to place agents in customers’ neighborhoods by establishing smaller offices in multiple locations around town. The NOA program was part of an overall plan called Foundation for Growth, designed to increase Allstate’s business.

Under the old system, Allstate directly paid office expenses, while under the NOA system, Allstate provided money directly to the NOA (based upon the agent’s production) to spend in operating an office. An agent also could spend additional money to enlarge his office or staff. Existing agents entering the NOA program could either retain their old contract'and compensation schedule or convert to a new contract basing compensation upon new business production. After Allstate began the NOA program, all new agents were hired into that program.

Allstate realized that the NOA program would disrupt existing company offices and the agents who stayed in them, but it believed that the NOA system was the best way to facilitate growth and market reach for the company. Managers in the Jackson region notified their agents of the expected detrimental impact on the existing agents of the transition to the NOA system. Agents were made aware that the marketing advantages of the NOA system would result in stiffened competition.

As agents left the company offices, the most desirable NOA locations would be taken by those agents who first elected to enter the NOA program. The agents were warned that as agents left company offices to go into NOA offices, it could become necessary to close and/or consolidate those offices or move the remaining agents to more productive lo *512 cations. Further, as the number of agents in a particular office decreased, secretarial help and other administrative support probably would be cut back accordingly.

These statements were made as factual representations of what the company expected to see as a consequence of the development of the NOA program. Although some agents personally perceived these warnings as threats, there was no probative testimony to support the claim that it was Allstate’s goal to pressure existing agents to convert to the new program.

Groups of similarly-situated agents, called peer groups, formed the basis for the agent ranking, performance evaluation, and disciplinary procedures. As the NOA agents became established, the peer groups were changed to avoid comparisons among agents with disparate marketing advantages and production possibilities. Rate changes in rural areas also necessitated protecting those agents from comparisons with agents operating in a more competitive market. There was no probative testimony supporting Deus’s contention that his peer group was altered for the purpose of inflicting emotional distress on him.

Some veteran agents, such as Deus, were apprehensive about joining the NOA program, which could be more risky because of the need for more aggressive selling and its emphasis on new business. The advertising and other marketing advantages offered to agents entering the NOA program also caused apprehension for the remaining COA’s. There is no evidence, however, that Allstate’s actions were anything other than efforts to encourage participation in the NOA program and to exemplify its emphasis on developing new business.

In 1984, Allstate fired twenty percent of the managers in Deus’s office and brought in a number of new people. There is evidence that these changes increased tension for everyone in that office. But there is no indication that Deus was the only agent affected or that the changes were made with the intent of causing anyone emotional distress.

During the 1985-87 time period, Allstate’s disciplinary process in the Jackson region involved three steps: the unsatisfactory business analysis review, the corrective review (a ninety-day period during which an agent had to meet the sales averages of his peer group), and the job-in-jeopardy (a second ninety-day period during which an agent again had to meet specific sales goals), the last of which could lead to termination. The job-in-jeopardy could not be administered without the written approval of the Jackson managers as well as an agent’s territorial and district sales managers. At each step, if the goals were met, the disciplinary process would cease.

Deus was placed on corrective review in 1985 and 1987. At the end of his second corrective review term, he had not met his goals. He claims that his failure resulted from Allstate’s manipulating the deadline for submitting new accounts.

Nonetheless, Deus was taken off formal corrective review. Scott Raley placed Deus on an unofficial, verbal, local review program that could not result in Deus’s termination. Following this discussion with Raley, Deus left work and never returned.

During the period of time that Deus identifies as creating mounting stress, his preexisting tinnitus altered in character and intensified. He admitted to making errors and mistakes at work and having short-term memory problems to the point that he feared he was getting Alzheimer’s disease in the spring of 1986. He consulted a doctor but never informed any of his supervisors of his worsening condition, and he testified that he had no idea how his supervisors could have discovered it.

II.

In 1988, Deus filed suit against Allstate in both federal and state court, alleging intentional infliction of emotional distress, abuse of rights, defamation, breach of contract, negligent infliction of emotional distress, and worker’s compensation. He proceeded with his federal court case, withholding his state case until the eve of trial.

The district court granted summary judgment to Allstate on Deus’s claims for worker’s compensation, abuse of rights, negligent *513 infliction of emotional distress, and negligent misrepresentation.

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15 F.3d 506, 28 Fed. R. Serv. 3d 11, 40 Fed. R. Serv. 611, 1994 U.S. App. LEXIS 4021, Counsel Stack Legal Research, https://law.counselstack.com/opinion/deus-v-allstate-insurance-ca5-1994.