Rivera v. Allstate Ins. Co.
Decision Date | 29 September 2015 |
Docket Number | 10 C 1733 |
Citation | 140 F.Supp.3d 722 |
Parties | Daniel Rivera, Stephen Kensinger, Deborah Joy Meacock, and Rebecca Scheuneman, Plaintiffs, v. Allstate Insurance Company, Defendant. |
Court | U.S. District Court — Northern District of Illinois |
Robert D. Sweeney, RDS Law, Chicago, IL, for Plaintiffs.
Gerald L. Pauling, Asilia S. Backus, Barbara Holly Borowski, Uma Chandrasekaran, Seyfarth Shaw LLP, Chicago, IL, for Defendant.
Daniel Rivera, Stephen Kensinger, Deborah Joy Meacock, and Rebecca Scheuneman brought this suit against their former employer, Allstate Insurance Company, and their supervisor, Judy Greffin, for violating the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., defamation, and tortious interference with prospective economic advantage. Doc. 1. On a Rule 12(b)(6) motion directed at the defamation and tortious interference claims, the court dismissed the tortious interference claim but allowed the defamation claim to proceed. Docs. 27–28 (Grady, J.) (reported at Rivera v. Allstate Ins. Co., 2010 WL 4024873 (N.D.Ill. Oct. 13, 2010) ). Plaintiffs then filed an amended complaint adding a claim under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq . Doc. 29. Plaintiffs later voluntarily dismissed the ADEA claim, Docs. 68, 70, and all of their claims against Greffin, Doc. 46.
What remains are Plaintiffs' FCRA and defamation claims against Allstate. Allstate moved for summary judgment, Doc. 127, and after the motion was fully briefed, this case was reassigned to the undersigned judge, Doc. 162. With the parties' agreement, a jury trial has been set for January 11, 2016. Doc. 170. For the following reasons, Allstate's motion is granted as to the defamation claim insofar as it relies on a per se theory, and is denied as to the defamation claim insofar as it relies on a per quod theory and as to the FCRA claim.
The following facts are stated as favorably to Plaintiffs, the non-movants, as the record and Local Rule 56.1 allow. See Hanners v. Trent, 674 F.3d 683, 691 (7th Cir.2012). In considering Allstate's summary judgment motion, the court must assume the truth of those facts, but does not vouch for them. See Smith v. Bray, 681 F.3d 888, 892 (7th Cir.2012).
Plaintiffs worked for Allstate in the company's Equity Division, which managed equity portfolios for Allstate's property and casualty insurance businesses and its pension plans. Rivera was the Equity Division's managing director and Meacock, Kensinger, and Scheuneman were members of the growth group, which traded individual securities on behalf of the pension plans. Rivera reported to Greffin, Allstate's Chief Investments Officer. Doc 150 at ¶¶ 4–10. Plaintiffs were salaried employees and eligible to receive bonus compensation under Allstate's "pay-for-performance" plan. Id. at ¶¶ 11–14.
Sometime in Spring 2009, Trond Odegaard, Allstate's Chief Risk Officer and the Investment Department's Compliance Officer, became concerned about trading practices in the Equity Division. He suggested to Greffin that Equity Division employees might be timing trades to inflate their bonuses. Id. at ¶¶ 30–32. Odegaard's suspicions focused on an algorithm called the "Dietz method," which was used to estimate portfolio returns and calculate Plaintiffs' performance bonuses. The Dietz method is an approximation; it assumes that all cash flows into and out of the portfolio take place at the same time each day, and thus can overstate or understate a portfolio's true performance by a small amount. The error term, called the "Dietz effect," can be either positive or negative. Id. at ¶¶ 15–19. Theoretically, therefore, a trader with knowledge of the algorithm could time trades so as to make the Dietz estimate look better than the portfolio's true return and thereby inflate her bonus calculation.
After further work by Odegaard, Allstate decided to retain an outside law firm, Steptoe & Johnson, to investigate the allegations. Id. at ¶ 37. Steptoe engaged an economic consulting firm, NERA, to review trading data to determine the possible impact of timed trading on the portfolios. In addition, Steptoe lawyers reviewed Equity Division emails and trading data and interviewed Allstate employees, including Plaintiffs, about their understanding of the Dietz method, their trading processes, and Allstate's method for calculating bonuses. Id. at ¶¶ 37–47.
Around the time of Steptoe's investigation, Greffin informed the Equity Division that Allstate had decided to outsource to Goldman Sachs most of its equity portfolio management. Due to the outsourcing decision, all Equity Division employees, except for the group responsible for trading convertible bonds, would be disbanded. Id. at ¶¶ 23–25. On December 3, 2009, Human Resources Director Brett Winchell informed Plaintiffs that they were being terminated for cause for violating Allstate's ethics code. Because Plaintiffs were terminated for cause, they did not receive severance pay. Id. at ¶¶ 56–57, 59–65. The terminations took effect the following day. Id. at ¶ 66.
In February 2010, Allstate filed its annual Form 10–K with the Securities and Exchange Commission. The 10–K disclosed that Allstate had conducted an investigation into alleged trading improprieties and paid $91 million into the company's pension plans to cover the potential adverse impact. The 10–K stated, in relevant part:
The same day that Allstate filed its 10–K, Greffin sent a memorandum (the "Greffin Memorandum") to the Investment Department. It read:
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