Raquet v. Allstate Corp.

• Citation: 348 F.Supp.3d 775
• Decision Date: 05 November 2018
• Docket Number: Case No. 18-cv-02347
• Parties: Jeanine M. RAQUET, Plaintiff, v. The ALLSTATE CORPORATION, Defendant.
• Court: U.S. District Court — Northern District of Illinois

348 F.Supp.3d 775

Jeanine M. RAQUET, Plaintiff,

v.The ALLSTATE CORPORATION, Defendant.

Case No. 18-cv-02347

United States District Court, N.D. Illinois, Eastern Division.

Signed November 5, 2018

Cory James Cassis, Yokoyama & Associates, P.C., Lori Susan Yokoyama, Lori S. C. Yokoyama and Associates, Chicago, IL, for Plaintiff.

Randall Marc Lending, Rebecca Lynn Dandy, Vedder Price P.C., Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

John Robert Blakey, United States District Judge

This diversity case arises out of a dispute over an equity incentive plan between Defendant Allstate Corporation and Plaintiff Jeanine Raquet, a former Allstate senior executive. Plaintiff alleges that Allstate improperly canceled stock awards that it previously granted Plaintiff under the plan when Plaintiff took a job at The Auto Club Group ("AAA") within weeks of retiring from Allstate. Plaintiff's amended complaint asserts claims for: breach of contract (Count I); implied covenant of good faith and fair dealing (Count II); negligent misrepresentation (Count III); action in equity for relief from fraud (Count IV); and common law fraud (Count V).

Defendant moves to dismiss all counts. [22]. Plaintiff moves to strike Defendant's affirmative defenses. [32]. For the reasons explained below, this Court grants in part and denies in part Defendant's motion to dismiss, and grants Plaintiff's motion to strike.

I. Background

Defendant markets itself as the largest publicly held personal lines property and casualty insurer in America. [21] ¶ 4.¹ Plaintiff worked a longtime employee for Defendant from January 2, 1985, until the date of her early retirement on December 31, 2016. Id. ¶ 6. For the last 9 years of her employment with Defendant, Plaintiff held the position of Senior Vice President, Field Business Conduct Officer. Id.

In May 2001, Defendant began offering its Equity Incentive Plan (the Plan). Id. ¶¶ 7, 9. The primary purpose of the Plan was to "provide a means by which employees ... can acquire and maintain stock ownership, thereby strengthening their commitment to the success of the Company and its Subsidiaries and their desire to remain employed by the Company." Id. ¶ 8.

Under the Plan, an employee could receive various awards, including nonqualified stock options, incentive stock options, stock appreciation rights, unrestricted stock, restricted stock, restricted stock units, performance units, and performance stock. Id. ¶ 14. In exchange for performing under the Plan, Plaintiff received various awards, including stock option awards, restricted stock unit awards, and performance stock awards. Id. ¶ 15.

In February 2012, Defendant amended the Plan, and included, for the first time, a "Non-Competition" provision (Non-Competition Provision), which provided:

17.3 Non-Competition . Any Participant who has received an Award under the Plan on or after February 21, 2012, that remains subject to a Period of Restriction or other performance or vesting condition, shall not, for the two-year period following Termination of Employment, directly or indirectly engage in, own or control an interest in or act as principal, director, officer, or employee of, or consultant to, any firm or company that is a Competitive Business. "Competitive Business" is defined as a business that designs, develops, markets, or sells a product, product line, or service that competes with any product, product line, or service of the division in which Participant works....A participant is not subject to this non-competition provision if: (1) employed in any jurisdiction where the applicable law prohibits such non-competition provision.

* * *

If a Participant violates the non-competition provision set forth above, the Board or a committee thereof may, to the extent permitted by applicable law, cancel or cause to be cancelled any or all of the Participant's outstanding Awards granted on or after February 21, 2012, that remain subject to a Period of Restriction or other performance or vesting condition as of the date on which the Participant first violated the non-competition provision.

[21] ¶ 17; [21-2] at 23–24.

In 2013, Allstate issued an updated version of the Plan. [21] ¶ 22. The 2013 version included a Non-Competition Provision that was substantially similar to that of the 2012 version, except that it restricted competition for a one-year period following termination of employment for awards issued on or after May 1, 2013. [21-3] at 23.

By the time she retired in December 2016, Defendant had granted Plaintiff several awards. [21] ¶ 32. Less than one month after she retired, on January 23, 2017, Plaintiff began a new position at AAA in Dearborn, Michigan. Id. ¶ 30.

In February 2017, shortly after Plaintiff began working for AAA, Defendant's Executive Vice President of Human Resources, Harriet Harty, sent Plaintiff a letter (the Harty letter), which stated:

As we discussed, your employment with a competitor of Allstate Insurance Company ... violates the terms of [the Plan] awards referenced below.... Pursuant to the terms of the Plan, if a Participant violates the Plan's non-competition provision, any outstanding Awards granted on or after February 21, 2012, that remain subject to a Period of Restriction or other performance or vesting condition will be cancelled.

[21-4] at 1. The Harty letter then detailed the various awards that Plaintiff accrued between 2013 and 2016 that Defendant canceled effective February 10, 2017. Id.

Defendant now moves to dismiss Plaintiff's amended complaint. [22]. Defendant also answered and asserted three affirmative defenses to Plaintiff's amended complaint, which Plaintiff moves to strike. [32].

II. Legal Standard

A. Rule 12(b)(6) Motion to Dismiss

To survive a motion to dismiss under Rule 12(b)(6), a complaint must provide a "short and plain statement of the claim" showing that the pleader merits relief, Fed. R. Civ. P. 8(a)(2), so the defendant has "fair notice" of the claim "and the grounds upon which it rests," Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson , 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) ). A complaint must also contain "sufficient factual matter" to state a facially plausible claim to relief—one that "allows the court to draw the reasonable inference" that the defendant committed the alleged misconduct. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). This plausibility standard "asks for more than a sheer possibility" that a defendant acted unlawfully. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. In evaluating a complaint under Rule 12(b)(6), this Court accepts all well-pleaded allegations as true and draws all reasonable inferences in the plaintiff's favor. Id. This Court does not, however, accept a complaint's legal conclusions as true. Brooks v. Ross , 578 F.3d 574, 581 (7th Cir. 2009).

B. Rule 12(f) Motion to Strike

Under Rule 12(f), this Court "may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f) ; Delta Consulting Grp., Inc. v. R. Randle Constr., Inc. , 554 F.3d 1133, 1141 (7th Cir. 2009). While motions to strike "are generally disfavored because of the likelihood that they may only serve to delay proceedings," when "striking portions of a pleading ‘remove[s] unnecessary clutter from the case,’ the motion may ‘serve to expedite, not delay.’ " Naylor v. Streamwood Behavioral Health Sys., No. 11 C 50375, 2012 WL 5499441, at *7 (N.D. Ill. Nov. 13, 2012) (quoting Heller Fin. Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1294 (7th Cir.1989) ).

An affirmative defense must satisfy three criteria to survive a motion to strike under Rule 12(f) : (1) it must be properly pleaded as an affirmative defense; (2) it must be adequately pleaded under Rules 8 and 9 ; and (3) it must withstand a Rule 12(b)(6) challenge. Hughes v. Napleton's Holdings, LLC , No. 15 C 50137, 2016 WL 6624224, at *2 (N.D. Ill. Nov. 9, 2016) ; Renalds v. S.R.G. Rest. Grp., 119 F.Supp.2d 800, 802–03 (N.D. Ill. 2000).

III. Analysis

A. Defendant's Motion to Dismiss

1. Count I: Breach of Contract

Plaintiff asserts that Defendant is liable for breach of contract because it canceled Plaintiff's 2013 through 2016 awards. [21] ¶¶ 43–54. Defendant moves to dismiss on the basis that Plaintiff's employment at AAA triggered the Non-Competition Provision of the 2012 and 2013 versions of the Plan, thus providing Defendant the right to cancel those awards. [23] at 6–11.

As a threshold matter, the parties dispute whether Illinois or Delaware law applies to Plaintiff's breach of contract claim. Plaintiff alleges in her amended complaint that Illinois law applies, see [21] ¶ 42, while Defendant argues that Delaware law applies because the Plan contains a choice-of-law clause providing that the "Plan, and all agreements hereunder, shall be construed in accordance with, and governed by, the laws of the State of Delaware, except with regard to conflicts of law provisions," [23] at 7 n.2; [21-1] at 24.

Federal courts sitting in diversity apply the choice-of-law rules of the state in which they sit. Dobbs v. DePuy Orthopedics, Inc. , 842 F.3d 1045, 1048 (7th Cir. 2016). In Illinois, a choice-of-law determination "is required only when a difference in law will make a difference in the outcome." Bridgeview Health Care Ctr., Ltd. v. State Farm Fire & Cas. Co. , 381 Ill.Dec. 493, 10 N.E.3d 902, 905 (Ill. 2014) (quoting Townsend v. Sears, Roebuck & Co. , 227 Ill.2d 147, 316 Ill.Dec. 505, 879 N.E.2d 893, 898 (2007) ). In this case, as detailed below, the application of Illinois or Delaware law does not yield different outcomes, rendering a choice-of-law determination unnecessary at this stage.

Under both Illinois and Delaware law, a plaintiff asserting a breach of contract claim must plead: (1) the existence of a valid and enforceable contract; (2) defendant's...