Nicholas v. Allstate Ins. Co.

• Decision Date: 31 August 2000
• Docket Number: No. 99-C-2522.,99-C-2522.
• Citation: 765 So.2d 1017
• Parties: Rodney NICHOLAS, et ux. v. ALLSTATE INSURANCE COMPANY, et al.
• Court: Louisiana Supreme Court

765 So.2d 1017

Rodney NICHOLAS, et ux. v. ALLSTATE INSURANCE COMPANY, et al.

No. 99-C-2522.

Supreme Court of Louisiana.

August 31, 2000.

Rehearing Denied October 6, 2000.

Dona Jeanne Dew, Douglas Lanaux Grundmeyer, John Francis Olinde, Chaffe, McCall, Phillips, Tolar & Sarpy, New Orleans, Mark Lane Hornsby, John M. Madison, Jr., Michael Allyn Stroud, Wiener, Weiss & Madison, Shreveport, for Applicant.

Jody Todd Benson, Bernard Slattery Johnson, Jerald R. Harper, Dr. Saul Litvinoff, Nicole Montagnet Smith, Shreveport, for Respondent.

Thomas Harry Kiggans, Baton Rouge, for Amicus Curiae, Louisiana of Business & Industries.

Leslie Weill Ehretr, New Orleans, for Amicus Curiae, Louisiana Society and Human Resource.

KNOLL, J.¹

This case concerns an employee's suit against his employer and a supervisor for intentional infliction of emotional distress associated with his termination of employment. We wanted to examine the judgment of the appellate court which affirmed an award of $850,000 for emotional distress and loss of enjoyment of life, as well as $15,000 for loss of consortium, in light of our earlier pronouncement in White v. Monsanto, 585 So.2d 1205 (La.1991). We find that the appellate court erred in failing to find that the jury required specific instructions on the elements of liability recognized in White. After conducting a de novo review of the record in this limited regard, we reverse, finding that the evidence does not reach the high threshold for intentional infliction of emotional distress established in White.

FACTS

Rodney Nicholas ("Nicholas") began working on April 11, 1971, as an Allstate Insurance Company ("Allstate") agent in Shreveport, Louisiana. In its recruitment of Nicholas, Allstate presented him and his wife, Neva, with written materials and showed a filmstrip, "The Promise," which expounded upon the benefits of working for Allstate and explained his potential for earning substantial income from renewal commissions after he had developed a client base. Nicholas, who began his Allstate career as an agent in a booth at the Sears store in the St. Vincent Mall, signed an R-830 compensation agreement which outlined his commissions on new and renewal policies and further provided that either Nicholas or Allstate could terminate the agreement after giving written notice. Approximately ten years later on June 1, 1981, Nicholas signed an amended Allstate compensation agreement. The agreement maintained the right of either party to terminate after written notice. However, it further specified that Allstate would not terminate Nicholas' employment because of unsatisfactory work unless: (1) it notified him that his work was unsatisfactory and that his job was in jeopardy, and (2) he failed to upgrade his performance after being given a reasonable opportunity to improve.²

In Allstate's Jackson, Mississippi region, which encompassed Shreveport, a three-tiered review process preceded agent termination. At each level of review, Allstate particularized goals to be reached within certain time periods. Initially, an agent was placed on Corrective Review and, if the agent failed to meet the goals set, he was moved to Unsatisfactory Review. Finally, if the agent failed to remove himself from Unsatisfactory Review, he was placed on Personal, "Job in Jeopardy," Review.

Nicholas received annual performance reviews from Allstate, and on numerous occasions, Nicholas' district sales manager, Richard Ebbs ("Ebbs"), advised him that his production figures were not up to expectation. In August of 1984, Allstate's territorial sales manager, William Monie, Jr., ("Monie"), directed Ebbs to place Nicholas on Corrective Review for poor performance. After failing to meet the goals established for the first two tiers of review, Nicholas was placed on Personal Review on February 12, 1985, and was informed in writing that his job was in jeopardy. Although Nicholas only achieved one of the assigned insurance production goals in the initial period set for job in jeopardy review, the territorial sales manager extended Nicholas' review period by thirty days because Ebbs failed to regularly meet with Nicholas as outlined in Allstate's obligation to the agent during this process.

Each stage of Nicholas' review process was marked with Nicholas' failure to achieve all of the goals that supervisory personnel placed. Notwithstanding, Ebbs suggested to Larry Rhodes ("Rhodes"), the person who replaced Monie in April 1985 as territorial sales manager, that Nicholas be removed from Personal Review. After management rejected Ebbs' recommendation, Rhodes, with the approval of the Jackson regional office, recommended Nicholas' termination on June 27, 1985. This termination recommendation was then sent to Allstate's corporate headquarters in Illinois and was approved. After receiving notification of his termination, Nicholas requested a hearing before an Agent Review Board. This board was comprised of five members, two of whom Nicholas selected. After convening a hearing, the Agent Review Board unanimously voted to sustain Allstate's termination recommendation. On October 14, 1985, Allstate terminated Nicholas and paid him severance pay of $5,125.89.

In 1992, Nicholas learned of testimony that Ebbs gave in Deus v. Allstate Ins. Co., 800 F.Supp. 420 (W.D.La.1992),affirmed in part and vacated in part, 15 F.3d 506 (5 Cir.), cert. denied, 513 U.S. 1014, 115 S.Ct. 573, 130 L.Ed.2d 490 (1994), another case involving a former Allstate agent's claim for intentional infliction of emotional distress. In that case, Ebbs testified that Monie singled Nicholas out for termination and manipulated the peer group against which Allstate compared Nicholas' performance. Nicholas and his wife sued Allstate, Monie, and Rhodes on November 4, 1992, alleging breach of contract, fraud, intentional infliction of emotional distress, and detrimental reliance.

Nicholas' trial against Allstate, Monie, and Rhodes extended over a period of 17days. The jury returned a verdict against the defendants on all four theories of recovery. It also determined the question of prescription adverse to Allstate, Monie, and Rhodes, finding that Nicholas and his wife were unaware of the underlying facts necessary to file suit until November 4, 1992. The jury assessed damages against all defendants, awarding $440,000 for loss of salary or commissions, $159,000 for loss of retirement benefits, and $850,000 for emotional distress and loss of enjoyment of life. The jury further awarded Neva Nicholas $15,000 for loss of consortium.

The Court of Appeal, Second Circuit, affirmed the jury's determination of the prescription issue as well as its award for emotional distress and loss of enjoyment of life, but reversed the awards for lost salary or commissions and for the loss of retirement benefits.³ Nicholas v. Allstate Ins. Co., 30,735 (La.App. 2 Cir.5/28/99), 739 So.2d 830. The appellate court also reversed the jury's finding that Rhodes was liable with Monie and Allstate. Nicholas, 739 So.2d at 842.

The Nicholases and the defendants, Allstate and Monie, sought writs of certiorari to this Court. We denied Nicholas' writ application. 99-2537 (La.11/19/99), 749 So.2d 678. Thus, the judgment regarding the issues of Nicholas' lost salary or commissions, lost retirement benefits, and the reversal of Rhodes's liability is final. We granted the writ application of Allstate and Monie to address the issue of the tort of intentional infliction of emotional distress in this workplace setting. 99-2522 (La.11/19/99), 750 So.2d 208.⁴

INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS

Allstate and Monie contend that the lower courts erred in finding that their actions in the termination of Nicholas' employment with Allstate were sufficient to constitute the tort of the intentional infliction of emotional distress. Relying upon our decision in White v. Monsanto, 585 So.2d 1205 (La.1991), they argue that their conduct was not extreme and outrageous, that their actions did not cause Nicholas to suffer severe emotional distress, and that they neither desired to inflict emotional distress nor knew that severe emotional distress was substantially certain to follow their actions. They also contend that the trial judge erred in failing to give the jury specific instructions which would guide it through the elements enunciated in White.

As we recognized in White, the basis for the tort of the intentional infliction of emotional distress in Louisiana is LA. CIV.CODE art. 2315 as illuminated by the restrictions and guidelines enunciated in the American Institute's Restatement (Second) of Torts § 46.⁵ Comment D of Restatement (Second) of Torts § 46 provides It has not been enough that the defendant has acted with an intent which is tortuous or even criminal, or that he has intended to inflict emotional distress, or even that this conduct has been characterized by "malice" or a degree of aggravation which would entitle the plaintiff to punitive damages for another tort. Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community. Generally, the case is one in which the recitation of the facts to an average member of the community would arouse his resentment against the actor, and leave him to exclaim, "Outrageous!"

Drawing upon this background, we stated in White that:

[I]n order to recover for intentional infliction of emotional distress, a plaintiff must establish (1) that the conduct of the defendant was extreme and outrageous; (2) that the emotional distress suffered by the plaintiff was severe; and (3) that the defendant desired to inflict severe emotional distress or knew that severe emotional distress would be certain or substantially certain to result from his conduct.

White, 585 So.2d at 1209.

Applying that ...