Romero v. Allstate Insurance

158 F. Supp. 3d 369, 2016 U.S. Dist. LEXIS 9968
CourtDistrict Court, E.D. Pennsylvania
DecidedJanuary 28, 2016
DocketCIVIL ACTION NO. 01-3894; CONSOLIDATED WITH NO. 01-6764, NO. 01-7042
StatusPublished
Cited by7 cases

This text of 158 F. Supp. 3d 369 (Romero v. Allstate Insurance) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Romero v. Allstate Insurance, 158 F. Supp. 3d 369, 2016 U.S. Dist. LEXIS 9968 (E.D. Pa. 2016).

Opinion

MEMORANDUM

RONALD L. BUCKWALTER, SENIOR JUDGE

From June 1, 2015 to June 17, 2015, the first of multiple jury trials was held in this case on the singular issue of whether ten of the Plaintiffs — Roger Boyd, Craig Crease, Ronald Harper, Mike Kearney, Sylvia Kelly, David Lawson, Ed Murray, Christopher Perkins, Rick Peterson, and Paula Reinerio — knowingly and voluntarily signed the Release of claims Allstate used in connection with the termination of Plaintiffs’ employment contracts as part of the Preparing for the Future Group Reorganization Program. The jury found that, as to eight of the Plaintiffs, the Release was not knowingly and voluntarily signed, but, as to the remaining two Plaintiffs,1 the Release had been knowingly and'voluntarily signed.

Plaintiffs -also posed two other Release defenses: unclean hands and unconsciona-bility. These equitable defenses, however, were reserved .for ruling by the Court and were not submitted to the jury. Following the trial, the parties submitted hundreds of pages of proposed-findings of .fact and conclusions of law, together with thousands of pages,.of exhibits, pursuant to Rule 52(a)(1) of the Federal Rules of Civil Procedure. The Court now issues the following Memorandum on the remaining issues.

I. FINDINGS OF FACT

By way of brief review, this case revolves around Allstate’s announcement and implementation -of its Preparing for the Future Group Reorganization Program (“the Program”). Prior to November 1999, the majority of Allstate’s captive agency force acted as employee agents, under either an R830 or an R1500 contract, and was entitled to a wide range of company-sponsored health, welfare, and retirement benefits. On November 10, 1999, Allstate announced the Program by noting that,, as part of a new business model, it was reorganizing its entire captive agency force into a single exclusive agency independent contractor program. With few exceptions, Allstate terminated the employment contracts of the 6,200-plus R830 and R1500 employee agents effective no later than June 30, 2000.

In connection with the termination of the R830 and R1500 employment contracts, Allstate offered the agents working under those contracts four options. The first three options were conditioned upon the agents’ agreement to execute a release of claims (the “Release”), while the fourth [374]*374option was not. The first “Release-based” option was the “EA Option.” According to the Program Information Booklet, this option would allow the agent to enter into an R3001C or R3001S Agreement, thereby-converting the agent from an employee to an Exclusive Agent (“EA”) independent contractor. The second option was the “Sale Option.” This option also permitted an agent to enter into an R3001C/S Agreement with Allstate, thus converting the agent to an EA independent contractor. In turn, the agent would receive a “conversion bonus” and Allstate would forgive any advances owed, assume certain lease and advertising obligations the agent incurred as an employee agent, and permit the agent, after thirty days’ service as an EA, to sell his or her book of business written while an R830 or R1500 agent. The third option was the “Enhanced Severance Option.” Under this option, Allstate would pay the agent “enhanced” severance equal to one year’s pay based on the greater of 1997 or 1998 total compensation, forgive debt and/or expenses that Allstate had advanced to the agent, and relieve the agent of certain lease and advertising obligations incurred as an R830 or R1500 agent. The final option was the “Base Severance Option.” If an agent elected this option, then Allstate paid him or her up to thirteen weeks of pay. The agent electing this option did not need to enter into the Release.

As to the remaining findings of fact, the Court remarks that this case has been in litigation for over fourteen years. The facts have been enumerated at length on multiple occasions and in numerous, extensive opinions from this Court. None of the trial evidence or testimony varied materially from these previous discussions.2 For the most part, the parties’ Proposed Findings of Fact and Conclusions of Law agree on the salient factual points that bear on the remaining issqes in this case. The proposed findings on which the parties disagree concern, for the most part, matters of legal interpretation rather than factual determination. In lieu of prolonging this matter further by engaging in yet another excruciatingly detailed discussion of the facts — a discussion which will have little bearing on the future of this case or the multitude of other trials through which the parties must proceed — the Court, for purposes of this Opinion only, accepts the Plaintiffs’ Findings of Fact as true, except as noted in the Conclusions of Law below, and engages ip a discussion of the remaining legal issues.

II. CONCLUSIONS OF LAW3

A. Whether the Release is Invalid Based op Unclean Hands

As a general principle, unclean hands is “a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith [375]*375relative to the matter in which he seeks relief, however improper may have been the behavior of the defendant.” Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814, 65 S.Ct. 993, 89 L.Ed. 1381 (1945). It is an equitable doctrine which applies “when a party seeking relief has committed an unconscionable act immediately related to the equity the party seeks in respect to the litigation.” Highmark, Inc. v. UPMC Health Plan, Inc., 276 F.3d 160, 174 (3d Cir.2001). As a general rule, a claim is barred under the doctrine of unclean hands when “(1) a party seeking affirmative relief (2) is guilty of conduct involving fraud, deceit, unconseionability, or bad faith (3) directly related to the matter in issue (4) that injures the other party and (5) affects the balance of equities between the litigants.” Imprisoned Citizens Union v. Shapp, 11 F.Supp.2d 586, 608 (E.D.Pa.1998) (citation and internal quotation marks omitted), aff'd, 169 F.3d 178 (3d Cir.1999); see also Lucey v. Workmen’s Comp. Appeal Bd., 557 Pa. 272, 732 A.2d 1201, 1204 (1999) (stating the doctrine of unclean heads “closes the doors of a court of equity to one tainted with inequity or bad faith relative to the matter in which he seeks relief”). The doctrine is to be applied “ ‘only where some unconscionable act of one coming for relief has immediate and necessary relation to the equity that he seeks in respect of the matter in litigation.’ ” Ne. Women’s Ctr., Inc. v. McMonagle, 868 F.2d 1342, 1354 (3d Cir.1989) (quoting Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 245-46, 54 S.Ct. 146, 78 L.Ed. 293 (1933)).

Plaintiffs now contend that the doctrine of unclean hands precludes Allstate from enforcing the Release.

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Cite This Page — Counsel Stack

Bluebook (online)
158 F. Supp. 3d 369, 2016 U.S. Dist. LEXIS 9968, Counsel Stack Legal Research, https://law.counselstack.com/opinion/romero-v-allstate-insurance-paed-2016.