Jacob v. Nodak Mut. Ins. Co., 20040197.

• Decision Date: 08 March 2005
• Docket Number: No. 20040197.,20040197.
• Parties: Steve JACOB and Donald Huck, Plaintiffs and Appellants, v. NODAK MUTUAL INSURANCE COMPANY, Jon Livers, CEO, Keith Kinzler, President of the Board, and All Other Members of the Board, Individually, and as CEO and Members of the Board of Directors for Nodak Mutual Insurance Company, Defendants and Appellees, and Farm Bureau Life Insurance Company, Defendant.
• Court: North Dakota Supreme Court

693 N.W.2d 604

2005 ND 56

Steve JACOB and Donald Huck, Plaintiffs and Appellants, v. NODAK MUTUAL INSURANCE COMPANY, Jon Livers, CEO, Keith Kinzler, President of the Board, and All Other Members of the Board, Individually, and as CEO and Members of the Board of Directors for Nodak Mutual Insurance Company, Defendants and Appellees, and Farm Bureau Life Insurance Company, Defendant.

No. 20040197.

Supreme Court of North Dakota.

March 8, 2005.

Deborah J. Carpenter, Carpenter Law Offices, Bismarck, N.D., for plaintiffs and appellants.

Sarah Andrews Herman (argued) and Lynn Block (appeared), Dorsey & Whitney, Fargo, N.D., for defendants and appellees Nodak Mutual Insurance Company, Keith Kinzler, and Members of the Board of Directors.

Rebecca S. Thiem (argued) and Aaron K. Webb (on brief), Zuger Kirmis & Smith, Bismarck, N.D., for defendant and appellee Jon Livers.

KAPSNER, Justice.

[¶ 1] Steve Jacob and Donald Huck appeal from a judgment dismissing their claims against Nodak Mutual Insurance Company ("Nodak"), Jon Livers, CEO, Keith Kinzler, President of the Board, and all other members of the Board, individually, and as CEO and members of the Board of Directors for Nodak Mutual Insurance Company and Farm Bureau Life Insurance Company, and from an order denying their motions for reconsideration or relief from the judgment. We affirm.

I

[¶ 2] Jacob and Huck were employed by Nodak as two of six regional sales and training managers. On March 7, 2002, Nodak's Board of Directors adopted a motion to "accept the retirement offer of Jon M. Livers as Executive Vice President & CEO." On March 11, 2002, Nodak's Board of Directors adopted three motions: (1) to reconsider its acceptance of Livers' retirement; (2) to "amend the Main Motion to reject an offer of retirement from ... Livers;" and (3) to "instruct President Kinzler to take an active role in the management of the Company for the purpose of advising the Board of Directors" and to "begin an investigation and advise the Board."

[¶ 3] On March 15, 2002, Kinzler issued memoranda to Jacob and Huck, stating, in part:

Please be advised that effective immediately you are placed on a paid leave of absence pending an investigation by appropriate Company officials into your actions as Regional Sales & Training Manager. This investigation will be undertaken immediately to determine whether you have engaged in a course of conduct that is not in the Company's best interest. In addition, this investigation will aid in determining whether you have violated any provisions of the employee handbook, your job description, or other Company guidelines and rules.

Upon receipt of this memo, you are not permitted to enter upon Company property, including your office....

You will be advised as to your status in the near future and are instructed not to contact any Company Director, employee, officer, or agent pending further notification. Violation of the instructions in this memo will result in your immediate dismissal.

[¶ 4] In a letter of April 3, 2002, the attorney for Huck and Jacob advised the North Dakota Insurance Commissioner that "our firm has been retained by Donald Huck and Steve Jacob to represent them concerning the potential litigation arising from an `investigation' being conducted by Nodak Mutual." The letter requested the Insurance Commissioner to advise the attorney "when it will be convenient for you to have me inspect and copy the records and documents pertaining to: 1) Your meetings with the Board, its legal counsel, or senior management since January 1, 2002; ... 2) Corporate records on file with your department," and advised that "[w]hen we have this information, we will be in a better position to assess pursuit of our claims and complaints under the North Dakota Uniform Fair Trade Practices Act as embodied in N.D.C.C. 26.1-04."¹

[¶ 5] On April 24, 2002, Nodak's Board of Directors resolved to terminate its six regional sales and training managers and its vice president of sales and training immediately. By letter of May 3, 2002, Nodak's attorney advised the attorney for Huck and Jacob, in part:

The information obtained through the investigation was presented to the Board of Directors. The investigation revealed a number of reasons for concern regarding the company structure, particularly as it pertains to the management of our Career Producers. We believe that the current structure, including six managers over the Career Producers, has created significant inefficiencies, potential for miscommunication, and has created serious misunderstanding between the board, agents, and management. It has been an impediment to company initiatives regarding systems and risk management improvements, cooperation, and team work between our field and home office production and underwriting staff. It has improperly focused management energies on new sales rather than providing leadership which focused on optimizing profitability, persistency of renewals, and appropriate risk management in the current market. The Board of Directors has instructed Company management to restructure the Sales and Training Department to better meet the Company's current needs and goals.

As you likely know, all of Nodak's RSTMs [regional sales and training managers] became employed approximately two years ago. All are at will employees subject to the employment policies of Nodak Mutual. The Board has determined that the management structure involving six RSTMs is not appropriate. All of the current RSTMs will be terminated effective immediately. They will be continued for purposes of pay and benefits through May 15, 2002.... Although there is no notice or severance requirement under the policies of Nodak Mutual, your clients will specifically be offered the opportunity to receive a severance package equivalent to three months at their current compensation level. The severance package will be contingent upon their agreeing to sign a Confidential Release and Settlement Agreement with the Company.

[¶ 6] In a letter of June 19, 2002, the attorney for Huck and Jacob advised the North Dakota Insurance Commissioner: (1) "[t]his letter is to formally open the complaint process against Nodak Mutual for various and several violations of state law, policy, and court rulings;" (2) her clients'"firing and those of their fellow regional managers and state sales director were retaliation by the company for having raised the issue of their claims to your department, and also as an egregious power play in violation of the law;" and (3) of her view of the meaning and applicability of several subsections of N.D.C.C. § 26.1-04-03. The letter asserted "Nodak breached the policy of good faith and fair dealing ... committed the tort of `outrage' ... discriminated against older workers," and "retaliated against my clients for whistle-blowing to your department of the underhanded actions that were going on." The letter concluded by thanking the Insurance Commissioner "for any help you can provide in the formal filing of this complaint."

[¶ 7] Huck and Jacob sued, alleging six claims for relief, including the following age discrimination and retaliatory discharge assertions: "Plaintiffs were employees as defined by law in North Dakota Century Code Section 14-02.4-02 (North Dakota Human Rights Act), and both were over the age of 40 at the time of the adverse employer action" and the defendants' "actions in terminating Plaintiffs['] employment constitute a `discriminatory practice' as defined in North Dakota Century Code Section 14-02.4-03, not only on the basis of age, but as retaliation for the Plaintiffs having engaged in protected activity."

[¶ 8] In a memorandum opinion ruling on the defendants' motions for summary judgment, the trial court said, among other things:

While six of the seven employees eliminated in the restructuring were over the age of 40, the other indicia to indicate age discrimination does not exist in the record. The plaintiffs have also put forth the argument that their challenge to the defendants' decision to terminate them reflected in communication with the North Dakota Insurance Commissioner was also a basis for retaliation by the defendant company. This assertion is, likewise, unsupported by the evidentiary record which has been compiled....

The alleged discriminatory and retaliatory actions alleged on the part of the company and its Board are not supported by the record....

The Court concludes that the record does not contain sufficient facts to withstand the summary judgment motion. The defendant insurance company, through its Board, had the authority to restructure and to eliminate positions if it determined doing so was in its best interests. The evidence does not lead to a conclusion that i[t] conjured up a basis for termination of the plaintiffs and other employees in their classification because the positions were somehow protected contractually or otherwise. The record falls short of establishing a discriminatory purpose of any kind in the terminations, in spite of the "hard feelings" which may have existed between the various personalities involved.

The trial court also said, in part: "The record is desolate with regard to the contention that the Board was acting `at the behest of Livers' in its decision to eliminate the plaintiffs' positions, or that Livers was somehow directly involved in bringing about the restructuring." Finally, the court said, in part, that "the plaintiffs have failed to marshal sufficient evidence to raise genuine issues of material facts, or in other cases have sought relief under legal theories which are simply inapplicable to the record, which should be dismissed as a matter of law." The court ordered dismissal of the age discrimination and retaliation claims:

Sufficient indication of age discrimination does not exist in the record. Retaliation based on communications with the North Dakota Insurance Commissioner is, likewise, unsupported by the

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