Prudential Insurance Company of America v. Stella, CIVIL ACTION NO. 97-4163 (E.D. Pa. 2/__/1998)

• Decision Date: 01 February 1998
• Docket Number: CIVIL ACTION NO. 97-4163.
• Parties: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, v. Thomas M. STELLA.
• Court: U.S. District Court — Eastern District of Pennsylvania

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THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, v.Thomas M. STELLA.

CIVIL ACTION NO. 97-4163.

United States District Court, E.D. Pennsylvania.

February __, 1998.

Nathaniel H. Akerman, Seyfarth, Shaw, Fairweather & Geraldson, New York City, Sara A. Begley, Reed, Smith, Shaw & McClay, L.L.P., Philadelphia, PA, for Plaintiff.

Michael G. Trachtman, Powell, Trachtman, Logan, Carrle, Bowman & Lombardo, P.C., King of Prussia, PA, for Defendant.

DECISION

JOYNER, District Judge.

This case has been brought before the Court by motion of the plaintiff, Prudential Insurance Company for the issuance of a preliminary injunction against Thomas M. Stella, a former Prudential sales agent.Following a hearing on September 2, 1997 and the parties' submissions of briefs and proposed factual findings and legal conclusions, we now make the following:

FINDINGS OF FACT

1.PlaintiffPrudential Insurance Company of America is a corporation organized under the laws of the State of New Jersey with its principal place of business in Newark, New Jersey.Plaintiff has offices in Langhorne, Pennsylvania and is in the business of selling life insurance, annuities, mutual funds, and property and casualty insurance, among other products.(Pl's Complaint and Def's Answer thereto, at ¶ 1).

2.DefendantThomas M. Stella is an adult individual residing in Pipersville, Pennsylvania.(Pl's Complaint and Def's Answer thereto, at ¶ 2).

3.Thomas Stella began working as a sales representative and agent for Prudential on April 30, 1990 out of Prudential's Pennypack District offices primarily on Castor Avenue in Northeast Philadelphia and in Langhorne, Pennsylvania.Prior to his employment with Prudential, Stella had not had any experience in the insurance industry or in servicing insurance customers.(N.T. 4-5, 14, 18, 63-65, 112-113, 206, 210, 216, 235-236; Exhibit P-l).

4.As a Prudential sales agent, Stella sold and serviced Prudential property, casualty and life insurance.(N.T. 5).

5.Although Prudential's internal procedures dictated that new sales agents execute and return an "Agent's Agreement" by the date that they begin work for an assigned agency, Stella was not presented with and did not sign an Agent's Agreement until May 22, 1990, nearly one month after he commenced his employment with Prudential.Subsequent to his execution of the Agent's Agreement, plaintiff's rate of compensation remained the same and there were no changes in any of the terms and conditions of Defendant's employment with Plaintiff until September, 1991.(N.T. 89, 103-108, 114-116, 210-212; Exhibits P-l, D-1).

6.The Agent's Agreement which Defendant Stella signed on May 22, 1990 identifies his appointment "as an Agent of the Prudential Insurance Company of America" as the consideration for the agreement.Additional consideration in support of the agreement exists by virtue of the individual agent's pay and employee benefits provided pursuant to Article Four of the Collective Bargaining Agreement between Prudential and the United Food and Commercial Workers International Union (AFL-CIO & CLC).(N.T. 87, 97-98; P-l, P-2, P-3, P-4, P-5).

7.Prior to May 22, 1990 when he signed it, Defendant had neither seen the Agent's Agreement, nor had he discussed it with anyone.(N.T. 211).

8.The United Food & Commercial Workers International Union (AFL-CIO & CLC) is the exclusive representative for purposes of collective bargaining in respect to rates of pay, wages, hours of employment or other conditions of employment of all Prudential district agents in the Commonwealth of Pennsylvania, among other states.At the time Stella became employed as an agent with Prudential, the collective bargaining agreement dated September 25, 1989 was in full force and effect.(N.T. 85, 92, 95-96;Article I, Exhibits P-2 through P-5).

9.Although Defendant had no knowledge that the collective bargaining agreement existed and had no knowledge that there was a union until six months after he was hired by Prudential, he thereafter became a union member and accepted the benefits of and became subject to the collective bargaining agreement(s), as amended from time to time.(N.T. 92-101, 105-109, 116-120, 212-214; Exhibit P-117).

10.The collective bargaining agreement was re-negotiated on September 30, 1991, September 27, 1993 and September 25, 1995.Each agreement was effective for approximately two years each.(P-2, P-3, P-4 and P-5).

11.The Agent's Agreement which Stella executed on May 22, 1990 is an employment contract with Prudential.(N.T. 87).

12.Section 6 of the Agent's Agreement executed by Stella on May 22, 1990 provides, in pertinent part:

(b) That all books, records, documents and supplies, and all contractholder or product information of any kind whether furnished by the Company or obtained or prepared by me while employed by the Company shall be deemed exclusively Company property; and upon termination of this Agreement by either party, I will promptly deliver all such property, including all copies thereof to a proper representative of the Company.

(c) That all information which either identifies or concerns contractholders of the Company or its subsidiaries, including, but not limited to, contract values and beneficiary information is confidential and of special value to the Company; and therefore, I shall not provide to any person not in the Company's employ any information which may be used to solicit for sales on behalf of some other company or organization.

(N.T. 3-4; Exhibit P-l).

13.In addition, Section 14 of the Agent's Agreement states:

That for a period of two years from the termination date of this Agreement, I shall not directly or indirectly:

(1) Solicit, cause or induce any contractholder of the Company or its subsidiaries who became known to me during my employment with the Company to purchase services or products which compete, directly or indirectly, with those sold by the Company or its subsidiaries.

(2) Do anything to cause, persuade or encourage anyone to reduce, discontinue, or terminate any Company or subsidiary polity, contract, service, or product of

(3) Do anything to cause, persuade or encourage any Company or subsidiary employee to either:

a. terminate his/her employment with the Company for any reason; or

b. sell or solicit services or products on behalf of any other company which are in any way similar to those sold by the company or its subsidiaries.

(N.T. 3-4; Exhibit P-l).

14.Under the "Effect of Agreement"Article of the collective bargaining agreements, individual agent's agreements remain in full force and effect and are modified by the collective bargaining agreements only insofar as any of the agent's agreements' terms are specifically superseded or modified by the collective bargaining agreement(s).(N.T. 92-99; Exhibits P-2, P-3, P-4, P-5).

15.The language contained in Sections 6and14 of the Agent's Agreement which Defendant executed on May 22, 1990 was modified slightly in the collective bargaining agreements of September 25, 1989, September 30, 1991, September 27, 1993 and September 25, 1995.Those collective bargaining agreements, however, reflected changes to the foregoing provisions of the agent's agreements and stated, in relevant part:

". . . Section 7 of the Agent's Agreement (all editions prior to 1984) is hereby modified to read as follows:

7.(a) That upon termination of this Agreement either by myself or the Company, or at any other time upon request by the Company, I will immediately submit said books and records for an inspection and accounting, to be made in accordance with the rules of the Company then in force.

(b) That all books, records, documents, software, supplies and contractholder or production information of any kind, whether furnished to the Prudential Representative by the Company or obtained or prepared by the Prudential Representative while employed by the Company, shall be deemed exclusively Company property; and upon termination of my Agreement by either party, the Prudential Representative will promptly deliver all such property, including all copies thereof to a proper representative of the Company. . . . . ."

(c) That all information entrusted to the Prudential Representative which either identifies or concerns contractholders of the Company or its subsidiaries including, but not limited to contract values and beneficiary information is confidential and is of special value to the Company; and, therefore, the Prudential Representative shall not provide to any person not in the Company's employ any information which may be used to solicit for sales on behalf of some other company or organization.

". . . Section 13 of the Agent's Agreement is hereby modified as follows:

13.(a) That the appointment as Prudential Representative and this Agreement may be terminated either by the Prudential Representative or the Company at any time.

(b) That for a period of two years from the termination date of this Agreement, the Prudential Representative shall not directly or indirectly:

1.Do anything to cause, persuade or encourage anyone to reduce, discontinue or terminate any Company or subsidiary policy, contract, service, or product of any kind.

2.Do anything to cause, persuade or encourage any Company or subsidiary employee to either:

(a) terminate his or her employment with the Company for any reason; or (b) sell or solicit services or products on behalf of any other company which are in any way similar to those sold by the Company or its subsidiaries.

(N.T. 93-94; Exhibits P-2, P-3, P-4, P-5).

16.Thomas Stella resigned his position with Prudential, effective August 16, 1996, after having given two weeks notice of his intention to do so and began working for the Intieri Agency selling Allstate Insurance products on September 1, 1996.(N.T. 6, 11, 16, 25-27, 126).

17.When Defendant was employed with Prudential, he sold an average of 200 to 250 insurance policies,...