Eskra v. Provident Life & Acc. Ins. Co.

• Decision Date: 27 October 1997
• Docket Number: 95-4090,Nos. 94-4838,s. 94-4838
• Citation: 125 F.3d 1406
• Parties: 76 Fair Empl.Prac.Cas. (BNA) 1745, 72 Empl. Prac. Dec. P 45,113, 47 Fed. R. Evid. Serv. 1389, 11 Fla. L. Weekly Fed. C 659 Michael J. ESKRA, Plaintiff-Counter-Defendant, Appellee/Cross-Appellant, v. PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, Defendant-Counter-Claimant, Appellant/Cross-Appellee. Michael J. Eskra, Plaintiff-Counter-Defendant-Appellee, v. Provident Life and Accident Insurance Company, Defendant-Counterclaimant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1406

125 F.3d 1406

76 Fair Empl.Prac.Cas. (BNA) 1745,

72 Empl. Prac. Dec. P 45,113,

47 Fed. R. Evid. Serv. 1389,

11 Fla. L. Weekly Fed. C 659

Michael J. ESKRA, Plaintiff-Counter-Defendant, Appellee/Cross-Appellant, v. PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY,

Defendant-Counter-Claimant, Appellant/Cross-Appellee.

Michael J. Eskra, Plaintiff-Counter-Defendant-Appellee, v. Provident Life and Accident Insurance Company,

Defendant-Counterclaimant-Appellant.

Nos. 94-4838, 95-4090.

United States Court of Appeals, Eleventh Circuit.

Oct. 27, 1997.

Rehearing Denied Jan. 27, 1998.

J. Alan Lips, Gregory Parker Rogers, Stettinius & Hollister, P.A., Cincinnati, OH, Patricia Elaine Lowry, Steel, Hector & Davis, West Palm Beach, FL, J. Hartly Echerd, Chattanooga, TN, for Provident Life and Accident Ins. Co.

James Ryan Hubbard, Ricci, Hubbard, Leopold, Frankel & Farmer, West Palm Beach, FL, Joel D. Eaton, Podhurst, Orseck, Josefsberg, Eaton, Meadow, Olin & Perwin, P.A., Miami, FL, for Eskra.

Appeals from the United States District Court for the Southern District of Florida.

Before HATCHETT, Chief Judge, BLACK, Circuit Judge, and CLARK, Senior Circuit Judge.

CLARK, Senior Circuit Judge:

Defendant Provident Life and Accident Insurance Company ("Provident") appeals the judgments for plaintiff Michael J. Eskra, and Eskra cross-appeals the denial of "front-pay." We affirm the judgments and the denial of front pay. We also grant Eskra's motion for an award of appellate attorney's fees, and remand with instructions to assess the amount of appellate attorney's fees to be awarded Eskra.

I. BACKGROUND

Eskra began his employment with Provident in 1961. In 1969, he was appointed manager of the Miami branch office over a territory that included most of South Florida. His performance was rated as "outstanding." As one of the Accident Department's most productive branch managers with business earnings of $25,000,000, Eskra personally earned about $700,000 in 1990. Under his tenure, the Miami business grew and he opened district offices in Fort Myers, Fort Lauderdale, and West Palm Beach. The Fort Myers and West Palm Beach offices were opened as a matter of Eskra's own judgment, and the expenses associated with their development were charged against his incentive compensation.

Provident's branch offices were managed by employees, like Eskra, who had no written contracts and were employed "at will," or were managed by "general agents" who had written contracts and were characterized as independent contractors.

Employees were compensated based on a percentage of premiums earned by Provident for the policies sold through their branch offices: 10% for the first five years, 5.5% for all annual renewals thereafter. The payments were based on the 1972 "Chandler Papers" accounting system: an "operating statement" was set up for each branch office in which the commissions earned by the manager ("allowances") were credited as a "percentage of earned premium" on both first year and renewal policies. From these "allowances," Provident deducted the operating expenses of the branch office and any divisional offices, and the manager's "salary"; the balance was paid quarterly as "incentive compensation" to the branch manager. Losses against the office were not deducted. An "allowance" was paid only while the manager was in charge of a territory; if the manager was terminated or transferred, or if the territory was split, the annual incentive compensation (net allowances) reverted to Provident.

The general agents were not employees of Provident. They were paid "commissions," "overwriting commissions," or "first year and renewal commissions," which were based on a percentage of premiums earned by Provident for both new and renewed policies, and each paid his or her own expenses. These agents were guaranteed a "vested" payout of the renewal commissions generated by their business for ten years if their contracts were terminated, and had a "claim on the stream of commission payments and overwrites" that would accrue during the future ten years. The amount was determined by a "vested commission evaluation," based on the present value of the renewal commissions which determined the "independent agent's future commissions receivable."

Under the Accident Department's Chief Officer David Fridl, Provident began in the 1980s "buying-out" managers when it assumed their territories. The buy-outs were based on a "vested commission evaluation" program used for general agents. Eskra and Fridl had a close relationship, and Fridl frequently confided in him. In 1985 or 1986 at a meeting between Fridl and a small group of senior managers, Eskra and another senior manager expressed concern over their security with Provident. Fridl put their fears to rest by telling them that they could rely upon the continuation of the buyout practice. John Barnes succeeded Fridl as Chief Officer in 1986, and continued the buyout of managers' blocks of business when their territories were assumed. In 1987, Provident proposed that buy-outs be based on the "vested commission evaluation," discounted by a 2% service fee and a persistency factor that "may be more or less than 30%," and cease if the manager died, retired, or was terminated during the payout term.

Ralph Christiana succeeded Barnes as the Chief Officer in 1989. In 1990, Christiana began restructuring the incentive compensation program for branch managers, and dividing more of their territories. Christiana stopped the buy-out practice and "vested commission evaluations," and substituted "transition payments," consisting of three, four or six quarters of the manager's current annual incentive compensation, based on what he thought fair. During 1990, the Fort Myers' division office was converted to a branch, and Eskra was paid credits for the lost business for six quarters. In November 1990, Eskra was advised that the Fort Lauderdale office would be converted to a branch.

Eskra was informed in January 1991 that the Fort Lauderdale office would be closed, and the West Palm Beach divisional office would be converted to a branch office, with the Fort Lauderdale business split between Miami and West Palm Beach. Eskra was offered credits generated by the lost business (about 25% of the Miami business) for four quarters. Provident hired a 44-year-old female with eight years' experience as the West Palm Beach office manager. She began work in July 1991.

Meanwhile, a Provident task force and the chief financial officer recommended that the Miami and Los Angeles offices be closed because they had a history of consistent and enormous losses over the past eleven years, and Provident had decided that there was no way to stop losses on newly written policies. Christiana decided to close the Miami office, and met with Eskra on June 27, 1991. Christiana offered Eskra a position as branch manager in Pittsburgh with a salary of $120,000; a one-year guarantee of $80,000 incentive compensation; a one-time "transition payment" of $600,000 (three quarters of Eskra's 1990 earnings); and no guarantees on the years after that, and informed him that he would be terminated if he did not accept the transfer. Although Eskra asked for a transfer to the West Palm Beach office, he was told the "decisions have already been made." Eskra responded that the proposed buyout was only part of a single year's business; he had been promised that his renewal commissions would be bought if he were ever replaced; Provident had a long history of buying renewal commissions; and he was willing to accept a transfer if Provident would be "fair in the buy out of my territory." In response, Christiana repudiated the buyout practice, and told Eskra that he could accept the Pittsburgh offer or be terminated. Eskra did not accept the transfer because the buyout issue was not resolved, and he was terminated on September 6, 1991.

Eskra, then 61 years old, filed this action against Provident, alleging violations under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621-33a, and Florida contract and tort law. ¹ Provident answered and counter-claimed various state law claims. ² The district court granted summary judgment on all of Eskra's claims except those under the ADEA and implied contract law and granted summary judgment or dismissed Provident's claims. Following a jury trial on the ADEA and implied contract claims, the jury returned verdicts for Eskra for $213,400 on his ADEA claim, and $5,632,000 on his implied contract claim. Provident moved for judgment notwithstanding the verdict as a matter of law on the claim for breach of implied contract and, alternatively, for a new trial on the issue of liability and/or damages. The district court denied Provident's motion for judgment notwithstanding the verdict, but found the award of compensatory damages for breach of implied contract excessive and unsupported by the evidence, and ordered a remittitur. The district court vacated the answer to interrogatory eight of the verdict (as to the monetary value of any breach of an implied contract), and granted a new trial on the issue of damages resulting from the breach of implied contract unless Eskra accepted a remittitur. ³ Eskra declined the remittitur. On retrial, the second jury awarded Eskra $4,432,258.00 and $1,696,050.60 interest on the contract claim. Provident appeals the judgments. Eskra cross-appeals the denial of "front pay" on the ADEA claim.

II. ISSUES

(A) Sufficiency of the evidence

(1) The ADEA claim

Provident argues that the evidence was insufficient to show that (1) Eskra was adversely affected since the transfer would have provided him more money initially than he was making in Miami, and he voluntarily stopped working for Provident; (2) he was not replaced with a younger employee; and (3) the reasons for changing the Miami office were not pretextual. Despite Eskra's argument to the contrary, Provident raised these issues in its ...