In a legal battle stemming from actions Allstate Insurance Co. took in 1999 to launch its groundbreaking multi-channel sales strategy, a federal judge has absolved the company of age discrimination. But Allstate is not off the hook yet.The judge's ruling also has cleared the way for terminated Allstate agents to sue the Northbrook, Ill.-based carrier under class-action status for other charges, including breach of contract, breach of fiduciary duties and violation of other federal laws, including the Employee Retirement Income Security Act (ERISA).

Judge John. P. Fullam of the United States District Court for the Eastern District of Pennsylvania ruled in March on numerous claims former employee-agents brought against Allstate.

Some of the judge's rulings favor the company's position while others favor the agents'. "Overall, we are pleased with Judge Fullam's decision," says Michael Lieder, an attorney with Sprenger & Lang, the Washington, D.C.-based firm representing the agents.

"He ruled on numerous issues, and most rulings favored our clients," Lieder says. For example, Judge Fullam said Allstate's release and waiver form, which 99.7% of the agents signed when they were terminated, is "voidable." This removes Allstate's primary defense against the agents' claims, he says.

Release and waiver

In November 1999, Allstate launched its "Preparing for the Future" reorganization plan-a plan that would integrate its call centers, the Internet and its agents in a multi-channel sales strategy.

As part of the reorganization, 6,400 employee-agents were terminated as of June 30, 2000, and offered the choice of signing a release and waiver if they wished to continue service as independent contractors, to sell their books of business, or to receive an enhanced severance package.

Those who refused to sign the waiver-which released the company of all claims under Title VII, ERISA, the Age Discrimination in Employment Act (ADEA) and the Americans with Disabilities Act-were discharged with little or no severance pay.

Although Judge Fullam denied Allstate's request to dismiss the agents' claims and also ruled against Allstate by determining that the releases can be voided, he decided in favor of the carrier in finding no basis for the agents' claims of age discrimination.

"I have concluded, on the undisputed facts of record, there is no basis for claims of age discrimination, for the simple reason that employees of all ages were treated alike," he stated.

After being terminated, more than 400 agents filed complaints with the Equal Employment Opportunity Commission (EEOC) for retaliation and age discrimination. Eighty-nine percent of employee-agents terminated were 40 years or older.

"Judge Fullam is the second judge to reach this same conclusion," according to a statement issued by Allstate after the ruling. "Judge Herndon of the U.S. District Court for the Southern District of Illinois also ruled in favor of Allstate last year on an identical age discrimination claim."

Also, the carrier notes, although Judge Fullam determined the releases can be voided-by each employee-agent who signed one-he also clearly states that his judgment "does not . . . signify that any of the employees actually have valid claims to assert."

Chronology Of Legal Actions

August 1, 2001: Agents file class-action lawsuit against Allstate for age discrimination and violation of federal civil rights laws.

November 9, 2001: National Association of Professional Allstate Agents sues Allstate for contract violations.

December 20, 2001: Agents file a second lawsuit against Allstate for breach of duties under the Employment Retirement Income Security Act (ERISA).

December 27, 2001: The Equal Employment Opportunity Commission sues Allstate for illegally converting agents to independent contractors and for violating federal age discrimination and civil rights laws.

March 11, 2002: Allstate files counterclaims against agents for committing fraud.

March 30, 2004: Federal judge determines there is no basis for age discrimination claims against Allstate, but clears the way for an agent class-action suit against the carrier for other charges, including breach of contract, breach of fiduciary duties and violation of other federal laws such as ERISA.


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