Mccaskey v. Cal. State Auto. Ass'n, H032186.

CourtCalifornia Court of Appeals
Citation110 Fair Empl.Prac.Cas. (BNA) 1225,118 Cal.Rptr.3d 34,160 Lab.Cas. P 61, 078,189 Cal.App.4th 947
Docket NumberNo. H032186.,H032186.
PartiesFrancis A. MCCASKEY, Plaintiff and Appellant, v. CALIFORNIA STATE AUTOMOBILE ASSOCIATION et al., Defendants and Respondents. Charles Luke, Plaintiff and Appellant, v. California State Automobile Association et al., Defendants and Respondents.
Decision Date16 February 2011
189 Cal.App.4th 947
118 Cal.Rptr.3d 34
110 Fair Empl.Prac.Cas. (BNA) 1225
160 Lab.Cas. P 61,078
31 IER Cases 721
10 Cal. Daily Op. Serv. 13,869
2010 Daily Journal D.A.R. 16,651

Francis A. MCCASKEY, Plaintiff and Appellant,
Charles Luke, Plaintiff and Appellant,
California State Automobile Association et al., Defendants and Respondents.

No. H032186.

Court of Appeal, Sixth District, California.

Oct. 29, 2010.
Review Denied Feb. 16, 2011.*

**37 Daniel U. Smith, San Francisco, Ted W. Pelletier, San Anselmo, Law Offices of Daniel U. Smith, Patrick K. Tillman, Law Office of Patrick K. Tillman, San Jose, for Plaintiffs and Appellants Francis A. McCaskey et al.

Reed Smith, Paul D. Fogel, Raymond Cardozo, Littler Mendelson, John C. Fish, Jr., Laura E. Hayward, San Francisco, for Defendants and Respondents California State Automobile Association et al.


*952 Plaintiffs Charles Luke, Francis McCaskey, and John Mellen brought these actions against California State Automobile Association (CSAA) and California State Automobile Association Inter-Insurance Bureau charging breach of contract and age discrimination.1 The gist of the claims **38 was that defendant brought about plaintiff's discharges by breaching a promise to permit senior sales agents to continue in their employ under *953 relaxed sales quotas. The trial court entered summary judgment for defendants primarily on the grounds that they were contractually entitled to rescind the promise, and that plaintiffs failed to raise a triable issue of fact concerning defendants' claimed nondiscriminatory reasons for eliminating the policy. We find that the record raises a triable issue of fact on the contract claim over the question whether defendants honored the policy for an agreed time, or if no agreement as to time can be inferred from the terms and circumstances of the employment contract, for a reasonable time. The record also presents triable issues of fact concerning the genuineness of defendants' claimed reasons for eliminating the policy. Accordingly, we will reverse the judgment.


At the outset of the events giving rise to this suit, each of the plaintiffs was employed by CSAA as a sales agent (sales representative) at its San Jose-Oakridge branch office. CSAA hired plaintiff Mellen in 1969 at the age of 25, McCaskey in 1971 at the age of 27, and Luke in 1976 at the age of 31. When hired, each signed an "Appointment Agreement." Although the version signed by Mellen and McCaskey differed slightly from the one signed by Luke, both versions recited that CSAA would pay commissions on new and renewal business in accordance with a "Compensation Plan," which CSAA reserved the right to modify. Each provided that either party could terminate the agreement either "forthwith" or "without prior notice."

The compensation plan set out formulas for calculating the commissions plaintiffs would be paid for the various kinds of insurance they were expected to sell. The plan included sales quotas, called "Minimum Sales Quotas" in 1969, and later known as "minimum production requirements," "MPR's," or sometimes "MSPR's." In the early versions of the plan these were expressed as a minimum number of new or reinstated policies or memberships the agent was required to sell each month in four categories. By 2001 they had come to be expressed in the dollar value of "New Gross Written Premium," apparently meaning premiums on newly sold policies. At least some versions of the plan, including the 1969, 2001, and 2005 versions, expressly provided that failure to meet sales quotas was grounds for discipline or termination.2

In 1973 CSAA amended the compensation plan to provide that quotas would be reduced by 15 percent for agents who reached the age of 55 with at least 15 years of service, and by a further 25 percent (for a total of *954 40 percent) for agents who reached 60 with 20 years of service. The effect of this provision was to permit agents to work less hard to produce new business without risking termination of employment for failure to satisfy the MPR's. It remained in effect through 2000. By that time all of the plaintiffs had qualified for the MPR reductions; each had more than 20 years in service to **39 CSAA, and Mellen and McCaskey were 57 years old, while Luke was 55 years and 4 months old.

In early 2001, CSAA adopted a compensation plan that did not provide any reduction in MPR's for senior agents. Copies of this plan were transmitted to affected employees in late February. The plan included a signature page for agents to acknowledge that it was "Accepted and Approved." None of the plaintiffs signed it. Instead they engaged counsel, who wrote to CSAA on their behalf stating that elimination of the MPR reductions as to plaintiffs would violate the Fair Employment and Housing Act (FEHA) (see Gov.Code, § 12900 et seq.), as well as the existing employment agreement, and that they would not sign it. This triggered an exchange of correspondence culminating in a statement by CSAA that plaintiffs would not be fired for failing to sign the new plan, but that its terms would govern their compensation, and that the prior plan, including the reduction in MPR's based on age and seniority, was "no longer in effect."

Plaintiffs continued to work for CSAA. Mellen and Luke at all times continued to produce new business sufficient to meet quota with no adjustment for seniority. McCaskey, however, failed to do so, and CSAA "counseled" him on several occasions beginning in 2002. Each such occasion resulted in issuance of a "Corrective Action Form" with the recital that "[f]ailure to maintain minimum production will result in corrective action, up to and including termination." On February 22, 2005, CSAA discharged him for the stated reason that he had not met MPR's for the preceding month.

Meanwhile, CSAA had prepared a newly revised compensation plan, to take effect April 1, 2005. Copies of the plan were apparently transmitted to all agents in February, 2005. CSAA told agents they would have to choose between signing the agreement by its effective date or terminating their employment as of that date. Because the plan still allowed no reduction in MPR's for veteran employees, Luke and Mellen refused to sign it. As of April 1, 2005, CSAA viewed them as having "left [its] employ." 3

The compensation plans generally entitled agents to commissions not only on sales of new policies (new business), but also on renewals of policies *955 originally sold by them. Policies sold by an agent, and the customers who had bought them, were known as "book of business." Books of business could grow quite large as an agent's time in service lengthened.4

**40 Plaintiffs all declared that prior to 2001 it was CSAA's standard practice to transfer a departing sales representative's book of business to other representatives in the same office. From this it may be inferred that, prior to 2001, CSAA would generally owe a renewal commission to someone, whether or not the original seller of the policy was still in its employ. This approach apparently reflected a business model under which sales representatives bore significant if not primary responsibility for customer service. Defendant attempted below to depict this responsibility as a burden on sales representatives from which it sought to relieve them so that they could devote more time and energy to the development of new business. Plaintiffs attempted to depict it as a minimal burden but as an opportunity to generate new business from existing customers, which opportunity CSAA was intent on diverting to hourly employees so as to avoid any obligation to pay commissions on the resulting sales. Whatever part of the truth each side's depiction may constitute, it is undisputed that beginning in the 1990's CSAA began to move many of its customer service functions and at least some of its sales functions into telephonic "call centers" where hourly employees fielded calls from existing and potential customers. At the same time, the 2001 Compensation Plan *956 provided for a category of accounts, known as "House Accounts," on which "[c]ommissions are not payable to a Sales Representative." CSAA's chief witness, Matthew Newcomer, testified in deposition that when plaintiffs were discharged, none of their accounts were reassigned to anyone: "We don't reassign books of business any longer." It may be inferred that their existing books of business all became "house accounts," terminating any liability CSAA would otherwise have for renewal commissions.

Plaintiffs each filed an action against CSAA on June 6, 2005, asserting claims for breach of contract, age discrimination in violation of FEHA, and "Tortious Wrongful Termination—Retaliation." CSAA answered with a general denial and 36 affirmative defenses. The court ordered the three cases consolidated for trial. CSAA moved against each plaintiff for summary judgment or, in the alternative, summary adjudication on each cause of action. The trial court granted the motions. It entered judgment, and denied plaintiffs' motions for reconsideration. Plaintiffs filed timely notices of appeal.


I. Breach of Contract

A. Introduction.

"We summarized the principles governing an appeal of this type in Reeves v. Safeway Stores (2004) 121 Cal.App.4th 95, 106-107 [16 Cal.Rptr.3d 717] ( Reeves ): 'On appeal from an order granting summary**41 judgment "we must independently examine the record to determine whether triable issues of material fact exist. [Citations.]" [Citation.] The question is whether defendant " ' "conclusively negated a necessary element of the plaintiff's case or demonstrated that under no hypothesis is there a material issue of fact that requires the process of trial." [Citation.]' [Citation.]" [Citations]; (see Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 335, fn. 7 [100 Cal.Rptr.2d 352, 8 P.3d 1089], ... ( Guz )...

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  • Mccaskey v. Cal. State Auto. Ass'n, H032186.
    • United States
    • California Court of Appeals
    • February 16, 2011
    ...189 Cal.App.4th 947118 Cal.Rptr.3d 34Francis A. MCCASKEY, Plaintiff and Appellant,v.CALIFORNIA STATE AUTOMOBILE ASSOCIATION et al., Defendants and Respondents.Charles Luke, Plaintiff and Appellant,v.California State Automobile Association et al., Defendants and Respondents.No. H032186.Court......

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