Metropolitan News-Enterprise


Monday, November 1, 2010


Page 3


Court of Appeal Revives Insurance Agents’ Age Discrimination Suit


By STEVEN M. ELLIS, Staff Writer


The Sixth District Court of Appeal on Friday revived a lawsuit alleging that the California State Automobile Association fired employees who served it for more than 20 years in an attempt to escape its promise to relax sales quotas as the employees neared retirement age.

Reversing a grant of summary judgment, the panel said three former insurance agents stated a breach of contract cause of action where they alleged that they remained with the company for most of their working careers in reliance on a promise to relax work standards after they reached age 55. It also ruled that a trier of fact should decide whether the company had a legitimate, non-discriminatory reason under the Fair Employment and Housing Act for renouncing its promise.

Charles Luke, Francis McCaskey and John Mellen—who each worked in CSAA’s San Jose–Oakridge branch office as insurance agents—were terminated in 2005, four years after the company unilaterally changed its then-28-year-old policy of reducing quotas for agents who had reached age 55 and who had served the company for longer than 15 years.

The policy reduced quotas for thos e employees by 15 percent at age 55 and by another 25 percent at age 60.

McCaskey, who joined CSAA in 1971 at age 27, was terminated after he failed to meet the quotas expected of younger agents, while Luke, who joined in 1976 at the age of 31, and Mellen, who joined in 1969 at the age of 25, were discharged when they declined the company’s demand to sign an agreement acquiescing in the policy change.

Four-Year Stalemate

The three retained counsel and continued to work for CSAA during the course of a four-year stalemate following the company’s announcement of its decision. They filed suit following their discharge, rejecting the company’s explanation that the change of policy was intended to free them from their customer-service obligations and to “level the playing field” for younger employees.

Instead, the plaintiffs claimed, the move was a ploy to “clean house” of what another branch manager called “old slugs” and move sales functions to telephone call centers where employees were paid hourly, rather than by commission.

Santa Clara Superior Court Judge Neal A. Cabrinha granted the company’s motion for summary judgment on the plaintiffs’ claims of breach of contract and age discrimination, but the Court of Appeal reversed as to most of the counts in an opinion by Presiding Justice Conrad L. Rushing.

Addressing the breach of contract claim, Rushing rebuffed CSAA’s argument that it eliminated the plaintiffs’ rights in 2001 when it first announced the change, barring their claims under the statute of limitations. He agreed with the plaintiffs that the company’s conduct was at most an anticipatory breach, and said that the plaintiffs sustained no compensable harm until detrimental action in violation of the alleged contract was taken.

No Unilateral Withdrawal

Rushing noted that the lack of a specific expiration date for the promise did not, as a matter of law, give the company the right to unilaterally withdraw. A reasonable jury, he concluded, might determine that the company intended for the second, 25 percent, reduction in quotas to be in effect for five years, the same length of time as the initial, 15 percent, reduction, thus lasting until normal retirement age.

He also reasoned that the fact that the plaintiffs were employed “at will” did not give the company a right to terminate them for reasons that it specifically agreed not to terminate them for, and he said that the plaintiffs’ willingness to work during the stalemate did not constitute consent to a rescission of the promise.

Turning to the FEHA claims, the presiding justice similarly concluded that they ran from the date of termination, not from the date that the policy was changed.

The court affirmed dismissal on allegations of disparate impact for the plaintiffs’ failure to argue the claim on appeal, but he said that the company’s admission that senior agents with large books of business were usually given preferential treatment when changes in commission rates were considered, and sales quotas established, demonstrated an issue of fact as to whether the policy change was an incentive to get the plaintiffs to leave.

However, Rushing said, the plaintiffs’ claims that they were retaliated against for opposing the company’s withdrawal of its promise failed as to the issue of causation in light of undisputed evidence that employees who complained about the policy were not terminated until their performance fell below the unadjusted quotas.

Justices Eugene M. Premo and Franklin D. Elia joined Rushing in his opinion.

The case is McCaskey v. California State Automobile Association, 10 S.O.S. 6148.


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