McGrath v. Nationwide Mut. Ins. Co.

• Decision Date: 07 February 2018
• Docket Number: Case No.: 2:16–cv–284
• Parties: Debra MCGRATH, Plaintiff, v. NATIONWIDE MUTUAL INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

295 F.Supp.3d 796

Debra MCGRATH, Plaintiff,

v.NATIONWIDE MUTUAL INSURANCE COMPANY, et al., Defendants.

Case No.: 2:16–cv–284

United States District Court, S.D. Ohio, Eastern Division.

Filed February 7, 2018

Michael E. Scoliere, Kegler Brown Hill & Ritter—2, Columbus, OH, Ray F. Middleman, Pro Hac Vice, Todd R. Brown, Pro Hac Vice, Malone Middleman, P.C., Wexford, PA, for Plaintiff.

James P. Schuck, Pro Hac Vice, Quintin Franc Lindsmith, Pro Hac Vice, Sommer Lynn Sheely, Bricker & Eckler LLP, Columbus, OH, for Defendant.

OPINION AND ORDER

GEORGE C. SMITH, JUDGE, UNITED STATES DISTRICT COURT

This matter is before the Court upon the Motion of Defendants Nationwide Mutual Insurance Company and Nationwide Insurance Company of America for Summary Judgment ("Nationwide's Motion for Summary Judgment") (Doc. 79). The motion is fully briefed and ripe for disposition. For the following reasons, Nationwide's Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART .

I. FACTUAL BACKGROUND

A. McGrath works for various Nationwide agents

In 2005, Plaintiff Debra McGrath was hired by Anthony Colosimo, a Nationwide agent, as an associate in his agency in Sewickley, Pennsylvania. (Doc. 83–1, McGrath Dep. at 14–15, 18). Shortly after McGrath began working for him, Colosimo was diagnosed with cancer

. McGrath operated Colosimo's agency in his absence, and Colosimo passed away in February 2006. (Id. at 16–17). McGrath continued to operate the Colosimo agency and was also asked by Nationwide to service policies that had previously been serviced by another agency, until Nationwide transitioned both books of policies to two other agents, Scott Diemert and Richard Marnic, in May 2006. (Id. at 19–20, 31–32). McGrath expressed interest in buying the servicing rights for one of the books, and Nationwide's Sales Manager for the Western Pennsylvania territory, Jim Montelone, told her that she would be offered the servicing rights to one of the two books if either Diemert or Marnic declined. (Id. ). However, both accepted. (Id. at 33).

One of these agents, Marnic, hired McGrath as an associate at his agency in Beaver, Pennsylvania in June 2006. (Id. at 34, 36–37). About this time, McGrath alleges that Montelone promised her that she would receive the servicing rights to the next available book of policies. (Id. at 35). However, Montelone did not make any representations regarding the location of the book or how large it would be. (Id. at 36).

In February 2007, McGrath learned that the servicing rights to a book of policies that had been serviced by an agency in Chippewa, Pennsylvania had been sold to another agent. (Id. at 38–39). McGrath contacted Darryl Hohlbaugh, who had taken over as Sales Manager from Jim Montelone, to express her interest in obtaining the servicing rights for those policies. McGrath alleges that Hohlbaugh told her the servicing rights had already been sold, but that McGrath would receive the next available book of policies. (Id. at 39–40). In the meantime, McGrath continued to work for Marnic. (Id. ).

In the spring of 2007, Emmett Santillo, another Sales Manager for Nationwide, approached McGrath to discuss her possible participation in Nationwide's Agency Capital Builder Program ("ACB Program"). (Id. at 43–44). Nationwide describes this program as "a 24–month agent training program that allowed individuals like McGrath a pathway toward potentially owning and operating a Nationwide agency." (Doc. 79, Mot. for Summ. J. at 6). Participants in the ACB Program "worked as a Nationwide employee in an existing Nationwide agency, acquiring additional skills and training" needed for Nationwide's other agent programs. (Id. ). "Once an agent met the requirements of the ACB Program, the agent could then become eligible to participate in one of Nationwide's Successor Programs. This is the next step for agents desiring to transition toward becoming a non-program ‘career agent.’ " (Id. )

McGrath says that during this meeting with Santillo, she noted Montelone's and Hohlbaugh's promises that she would receive the servicing rights to the next available book of policies. (Id. ). Santillo allegedly told McGrath that she was not required to participate in the ACB Program before purchasing a book of servicing rights because she already had experience working with Nationwide. (Id. at 44).

In November 2007, McGrath learned that another book of policies had become available, and although she was in frequent contact with Hohlbaugh about her desire to purchase the servicing rights to this book, the rights were ultimately sold to another agent. (Id. at 44–45).

B. McGrath enters and successfully completes the ACB Program

In late 2007 or early 2008, Santillo visited McGrath and told her that she would now be required to participate in the ACB program before she would be permitted to purchase the servicing rights to a book of policies. (Id. at 49–50). McGrath interviewed for the ACB Program with Santillo and Carol Miller, then a Nationwide Assistant Vice President of Sales in Pennsylvania. (Id. at 50). During this interview, McGrath alleges that Miller expressed "that she didn't think [McGrath] was a good candidate for the ACB Program because it was a very difficult and stringent program, and it took a lot—it was going to take a lot of energy and stamina was the word she used, and she was concerned because of [McGrath's] age." (Id. at 52). Nationwide denies these remarks were made.

McGrath was accepted into the ACB Program in July 2008. (Id. at 53, 64). On July 25, 2008, McGrath and Nationwide entered into an Agency Capital Builder Agreement ("ACB Agreement") (Doc. 79–1 at PAGEID # 1513–29). The ACB Agreement set forth various production goals that McGrath was required to achieve within the 24–month term of the Program. (Id. at Exhibit B). Three other provisions of the ACB agreement are pertinent here:

• Section 4, stating that "Except as provided in Section 16, [McGrath] agrees and understands that Nationwide has exclusive use and control of all expirations and therefore has the right and obligation to service Nationwide customers at any and all times, even to the exclusion of [McGrath]."

• Section 16, stating that "In the event [McGrath] satisfies [certain production goals], applies to participate in a Successor Program, and is approved by Nationwide, [McGrath] shall also, at Nationwide's discretion, earn the right to service either: (1) the book of business [McGrath] has developed while working as a Nationwide employee, or (2) a book of business with an equivalent value in a different location."

• Section 34, stating that "The terms and conditions contained in this Agreement supersede all prior oral or written understandings between [McGrath] and Nationwide and constitute the entire agreement between them concerning the subject matter of [the ACB Agreement]."

During the ACB Program, Santillo allegedly referred to McGrath as "Mother Hen," because she "had three years of Nationwide experience and nobody else did in the office, as far as the program and underwriting and all that kind of stuff, he would always tell them to go ask [McGrath]." (Doc. 83–1, McGrath Dep. at 103). Other agents also allegedly referred to her as "Yoda," whom they explained to her was "this little old guy, but he was really smart." (Id. at 104).

McGrath successfully completed the requirements of the ACB Program in 19 months, allowing her to complete the ACB Program early, and for which she received a $40,000 bonus. (Id. at 72). McGrath admits that no adverse employment actions were taken against her during the ACB Program. (Id. at 104).

C. McGrath enters Nationwide's Agency Executive (AE) Program

Following completion of the ACB Program, agents may become eligible to participate in one of Nationwide's Successor Programs. Two such Successor Programs are the Agency Executive Program ("AE Program") and the Replacement Agency Executive Program ("RAE Program"). (Doc. 79, Mot. for Summ. J. at 8). In the AE Program, agents open a scratch agency (that is, they "start from scratch" with no or few policies), while agents in the RAE Program purchase the servicing rights to a Nationwide-owned book of policies, which they begin servicing right away. (Id. ).

In June 2010, Nationwide invited McGrath to participate in the AE Program.

McGrath accepted, and on June 29, 2010, McGrath and Nationwide entered into an Agency Executive Program Performance Agreement (the "AE Agreement"). (Doc. 83–6). McGrath's understanding was that, since there were no available books of policies at that time, her only option to "avoid ending her career as a Nationwide agent" was to enter into the AE Agreement. (Doc. 83, Mem. in Opp. to Mot. for Summ. J. at 7; Doc. 83–1, McGrath Dep. at 115).

The AE Agreement provided that McGrath was an independent contractor, responsible for paying all business expenses and federal, state, and local income and self-employment taxes, and having "independent judgment as to time, place, and manner of soliciting insurance [and] servicing policyholders." (Doc. 83–1, AE Agreement §§ 2–3). The AE Agreement also reserves to Nationwide "exclusive use and control of all policies and policy expirations and [Nationwide] therefore has the right to service Nationwide customers at any time." (Id. § 2).

McGrath was also subject to a Minimum Production Plan, performance under which was "calculated on a 12 month moving basis," and Nationwide "reserve[d] the right to change the Minimum Production Plan during the term of [the AE Agreement]." (Id. §§ 7–8). Finally, the AE Agreement also contained an integration clause, stating, "[t]he terms and conditions contained in this Agreement supersede all prior oral or written understandings between [McGrath] and Nationwide and constitute the entire agreement between them concerning the subject matter of [the AE Agreement]." (Id. § 38).

McGrath alleges that she was concerned "at the very beginning" with the production requirements for the second year of the AE program, as it...