Allstate Ins. Co. v. Fougere
| Decision Date | 30 September 2019 |
| Docket Number | CIVIL ACTION NO. 16-11652-JGD |
| Parties | ALLSTATE INSURANCE COMPANY, Plaintiff/Counterclaim Defendant, v. JAMES FOUGERE, SARAH BRODY-ISBILL, and A BETTER INSURANCE AGENCY, INC., Defendants/Counterclaimants. |
| Court | U.S. District Court — District of Massachusetts |
The plaintiff, Allstate Insurance Company ("Allstate"), has brought this action against its former Exclusive Agents, James Fougere and Sarah Brody-Isbill, and an insurance agency formed by Fougere, A Better Insurance Agency, Inc. ("ABIA") (collectively, "defendants"). Fougere and Brody-Isbill sold Allstate insurance pursuant to Exclusive Agency Agreements ("EA Agreement") with Allstate. Allstate terminated their Agreements without notice, allegedly for cause. Allstate contends that Fougere and Brody-Isbill breached their EA Agreements, and misappropriated confidential and trade secret information, by failing to return customer information and thereafter using that information at ABIA. While Allstate's objections to the defendants' actions are far-ranging, for purposes of the pending motions, Allstate focuses its arguments on two spreadsheets, known as "TU Framingham" and "TU Auburn," and the information contained therein, including the names of thousands of Allstate customers along with their renewal dates, premiums, types of insurance, Allstate policy numbers, drivers' license numbers, home addresses, phone numbers, and email addresses. For their part, the defendants contend that Fougere created the spreadsheets, and that the information was theirs to take and use both as a matter of contract and statute. In addition, the defendants contend that they were statutorily entitled to 180 days notice prior to their terminations.
This matter is presently before the court on "Plaintiff's Motion for Summary Judgment" (Docket No. 130) and "Defendants/Counterclaimants' Motion for Partial Summary Judgment." (Docket No. 126). Allstate has brought an 11 count Amended Complaint against the defendants (Docket No. 11), and the parties have filed cross-motions for summary judgment on seven of those counts alleging breach of contract (Counts I & V) and misappropriation of trade secrets (Counts II & VI) by Fougere and Brody-Isbill, and violation of the Defend Trade Secrets Act of 2016, 18 U.S.C. §§ 1839 et seq. ("DTSA") by each of the defendants. (Counts III,VII & IX).1 The defendants have filed a Counterclaim (Docket No. 22), alleging breach of covenant of good faith and fair dealing (Count I) and violation of Mass. Gen. Laws ch. 175, § 163 (Count II) for failure to give statutory notice prior to terminating the EA Agreements, and violation of Mass. Gen. Laws ch. 175, § 162F (Count III) for claiming ownership in the client information that allegedly belongs to them pursuant to this statute. In addition, the defendants claim that Allstateviolated Mass. Gen. Laws ch. 93A in connection with the termination of their Agreements (Count V).2 Allstate has moved for summary judgment on all of these counterclaims, while the defendants have moved for summary judgment on the claim under ch. 175, § 163.
In connection with the motion for summary judgment, the defendants have moved to strike several paragraphs of an affidavit submitted by plaintiff's counsel, and to disqualify plaintiff's counsel. (Docket Nos. 150, 151). Plaintiff has countered with a motion for sanctions. (Docket No. 161).
After careful consideration of the very complex record, and the parties' written and oral arguments, and for the reasons detailed herein, this court rules as follows:
1. Defendants' motion to strike (Docket No. 150) is ALLOWED, defendants' motion to disqualify (Docket No. 151) is DENIED and plaintiff's motion for sanctions (Docket No. 161) is DENIED. In addition, the court will not consider the email purportedly obtained from counsel for the Massachusetts Division of Insurance and related arguments.
2. With respect to the Counterclaim, neither Mass. Gen. Laws ch. 175, § 163 nor ch. 175, § 162F apply to the defendants as Exclusive Agents of Allstate, so Allstate's motion for summary judgment is ALLOWED on Counts I, II and III of the Counterclaim, and defendants' motion for summary judgment on Count II of the Counterclaim is DENIED.
The court finds further that it is questionable that Mass. Gen. Laws ch. 93A applies to the parties' contractual arrangement, but for reasons different than those argued by the parties. Therefore, the plaintiff's motion for summary judgment on Count V of theCounterclaim is DENIED WITHOUT PREJUDICE. The court will allow the plaintiff to move for summary judgment on this claim again, if it believes it to be warranted.
3. With respect to Allstate's claims, this court finds that the TU Framingham and TU Auburn spreadsheets, and the information contained therein, are confidential and trade secret information belonging to Allstate. This court finds further that Fougere and Brody-Isbill breached their contract by failing to return this information to Allstate, and by using this information at ABIA, and misappropriated Allstate's trade secrets for the same reasons. However, the extent of such use after the termination of the EA Agreements and the extent of damages, if any, are in dispute. Therefore, Allstate's motion for summary judgment as to Counts I, II, III, V, VI, VII, and IX is ALLOWED AS TO LIABILITY ONLY, and the defendants' cross-motion as to those Counts is DENIED. This ruling is limited to the TU Framingham and TU Auburn spreadsheets and the information contained therein.
The parties' statements of fact, and responses thereto, include many allegations that are extraneous to the issues before the court in connection with the cross-motions for summary judgment, and are very argumentative. This court has carefully scrutinized thepleadings to determine if the facts alleged are actually material to the issues this court must decide, and, if so, the scope of the alleged disputes and whether the disputes are genuine or merely form over substance. The following recitation of facts reflects this court's best effort to distill the record to relevant facts, and they are undisputed unless otherwise indicated.
Allstate is in the business of providing insurance and other financial products and services to individuals and businesses. (PF ¶ 1). In or about 2009, Allstate began selling auto and causality insurance in Massachusetts through its call centers and agents in neighboring states. (PR ¶ 1). Three years later, in 2012, Allstate began to open "brick and mortar" locations in Massachusetts. (Id.).
Defendant Fougere began his insurance career with Liberty Mutual in 2010. (DEx. 3 at 37, 38). He continued to work as a licensed insurance agent with Liberty Mutual until he left to manage another insurance agency, the defendant A Better Insurance Agency ("ABIA"). (DF ¶ 6; PR ¶ 6). ABIA was formed on June 29, 2012 by Fougere's mother, Donna Fougere, who retained a 100 percent ownership interest in the company. . At the time ABIA was incorporated, Donna Fougere was working full time as a nurse and had no prior experience in the insurance industry. (PF ¶ 45). The parties dispute the extent to which Donna Fougere was involved with ABIA. (See DR ¶¶ 45-47; PR ¶ 6). It is undisputed, however, that Fougere managed ABIA before becoming affiliated with Allstate. (PR ¶ 6).
On or about February 1, 2013, Fougere became an Exclusive Agent for Allstate. (PR ¶ 7).As such, he entered into an Exclusive Agency Agreement with Allstate4 and began operating an Allstate agency under the name Local Agents, Inc. (PF ¶ 20; DR ¶ 20).5 It is undisputed that Fougere was an independent contractor under the terms of the Agreement. (EA Agreement ¶ I.D).
Fougere was a "scratch" insurance agent. (PR ¶ 7). As such, Fougere was not provided with existing Allstate customers or accounts when he began working for Allstate. (Id.). Instead, he was tasked with soliciting new clients for the company. (Id.). Fougere's obligation to develop business was reflected in the EA Agreement as follows:
Agency will meet certain business objectives established by the Company in the areas of profitability, growth, retention, customer satisfaction and customer service. Agency will build and maintain a profitable book of business, assist the Company in its efforts to achieve market penetration for all forms of insurance offered by the Company and other Company Business, and service the Company's customers in a manner consistent with the Company's goodwill, reputation, and overall business strategy.
(EA Agreement ¶ II.B (emphasis added)).
As detailed more fully below, the defendants contend that the customer information they gathered belonged to them, while Allstate contends that it belongs to Allstate. This court agrees with Allstate. The EA Agreement defines "confidential information" in part as including "information regarding the names, addresses, and ages of policyholders of the Company; types of policies; amounts of insurance; premium amounts; . . . the expiration or renewal dates ofpolicies; policyholder listings and any policyholder information subject to any privacy law[.]" (Id. ¶ IV.D). It further provides that "[a]ll such confidential information is wholly owned by the Company" and "may be used by Agency only for the purposes of carrying out the provisions of this Agreement." (Id.). Upon termination of the Agreement, the Agency was obligated to continue to treat the information as confidential (id. ¶ IV.B) and to return to Allstate all confidential information (id. ¶ XVIII.B), which included confidential information "recorded on paper, electronic data file, or other medium, whether provided by the Company or the Agency[.]" (Id. ¶ IV.E). For the reasons detailed below, this court concludes that the defendants' retention of such...
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