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STRANGE v. NATIONWIDE MUT. INS. CO.

September 22, 1994

LAWRENCE STRANGE, et al., Plaintiffs,
v.
NATIONWIDE MUTUAL INSURANCE COMPANY, et al., Defendants.



The opinion of the court was delivered by: LOWELL A. REED, JR.

 Reed, J.

 September 22, 1994

 Currently before me is the motion of defendants to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted. (Document No. 4) This court has jurisdiction pursuant to 28 U.S.C.A. § 1331 (West 1993) as plaintiffs have stated causes of action under 29 U.S.C.A. §§ 621-34 (West 1985 & Supp. 1994) and 42 U.S.C.A. § 3604 (West Supp. 1994), and pursuant to 28 U.S.C.A. § 1332 (West 1993) as the parties are of diverse citizenship and the amount in controversy exceeds $ 50,000 exclusive of interest and costs for each plaintiff.

 For the reasons discussed below, the motion of defendants to dismiss will be granted as to Counts III, IV, and VIII, and denied as to Counts I, II, and V. In addition, the motion of defendants to dismiss will be denied without prejudice as to Counts VI and VII; plaintiffs will be given leave to amend their complaint with regard to Counts VI and VII and will also be given leave to amend in order to include a new claim of defamation. Finally, the claim of plaintiff Samuel Vassallo *fn1" under Count I will be stayed until November 4, 1994.

 I. FACTUAL BACKGROUND *fn2"

 Plaintiffs are Lawrence Strange, Howard Silver, Warren Pine, Edward Sheehan, and Samuel Vassallo, five former Nationwide insurance agents. The defendants are Nationwide Mutual Insurance Company, Nationwide Mutual Fire Insurance Company, Nationwide General Insurance Company, and Nationwide Property and Casualty Insurance Company (hereinafter collectively referred to as "Nationwide"). Plaintiffs brought this action against Nationwide after their agency contracts with Nationwide were terminated. At the time their agency contracts were terminated, all five plaintiffs were over the age of forty (40). Prior to filing this action, each plaintiff filed a complaint with the Equal Employment Opportunity Commission ("EEOC") and the Pennsylvania Human Relations Commission ("PHRC") charging Nationwide with violation of the Age Discrimination in Employment Act, 29 U.S.C.A. §§ 621-34 (West 1985 & Supp. 1994) ("ADEA"). The complaints of Lawrence Strange, Howard Silver, Warren Pine, and Edward Sheehan were referred to the EEOC for investigation; the EEOC dismissed their complaints, concluding that they were independent contractors and not employees within the meaning of the ADEA. The EEOC and PHRC complaints of plaintiff Samuel Vassallo are still pending.

 After filing their complaints with the EEOC and PHRC, the plaintiffs filed a complaint in this court alleging that Nationwide discriminated against them on the basis of age when Nationwide terminated their employment. The plaintiffs further allege that Nationwide engaged in discrimination in the writing of insurance policies on the basis of age, sex, race, color, financial ability, and geographic location *fn3" in violation of state and federal law. This discrimination had the effect of denying plaintiffs commissions and other monetary benefits and eventually resulted in their termination of employment. In addition, the plaintiffs state that their terminations (1) were procedurally defective due to lack of notice and opportunity for rehabilitation, (2) violated their contracts with Nationwide, (3) violated public policy, and (4) gave rise to claims for fraudulent misrepresentation and defamation. *fn4"

 II. DISCUSSION

 In determining whether or not to grant a motion to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted, I am required to accept "as true the facts alleged in the complaint and all reasonable inferences that can be drawn from them." Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990). Dismissal is allowed for failure to state a claim only in "those instances where it is certain that no relief could be granted under any set of facts that could be proved." Id.

 A. Count I -- Age Discrimination

 In Count I of their complaint, plaintiffs state that Nationwide discriminated against them on the basis of age in violation of the ADEA when Nationwide terminated their employment. Nationwide argues that the ADEA only protects persons who are "employees" and that the plaintiffs were not employees but independent contractors. Nationwide also argues that plaintiff Samuel Vassallo's ADEA claim is premature.

 1. Status of Plaintiffs Under the ADEA

 Nationwide correctly states, and plaintiffs do not contest, that the ADEA protects only employees and not independent contractors. 29 U.S.C.A. § 623 (a) (West 1985); EEOC v. Zippo Mfg. Co., 713 F.2d 32, 35 (3d Cir. 1983). In order to determine whether a person is an employee or an independent contractor for the purposes of the ADEA, the Court of Appeals for the Third Circuit has adopted a so-called "hybrid test," combining the traditional test for common-law agency with a modern economic realities test. Zippo, 713 F.2d at 38. *fn5" It is unnecessary for the purposes of this motion, however, to apply any test. The plaintiffs have alleged in their complaint that they were "employed" with Nationwide and that their "employment" was terminated. Complaint, at PP 16-22. Under the standard of review for a motion to dismiss, I must accept plaintiffs' factual allegations that they were "employed" by Nationwide as true, and therefore, plaintiffs' complaint adequately states a claim under the ADEA.

 2. Timeliness of Plaintiff Vassallo's ADEA Claim

 Plaintiffs state in their complaint that plaintiff Samuel Vassallo filed his complaints with the EEOC and the PHRC on or about November 22, 1993. *fn6" Complaint, at P 31. The plaintiffs filed their complaint in this court on December 8, 1993, sixteen days after Mr. Vassallo filed his EEOC and PHRC complaints.

 The ADEA provides that "no civil action may be commenced by an individual . . . until 60 days after a charge alleging unlawful discrimination has been filed with the Equal Employment Opportunity Commission." 29 U.S.C.A. § 626(d) (West 1985) ("Section 626(d)"). The ADEA further provides that "no suit may be brought . . . before the expiration of sixty days after proceedings have been commenced under the [applicable, if any] State law." 29 U.S.C.A. § 633(b) (West 1985) ("Section 633(b)").

 Since plaintiff Vassallo's ADEA claim is untimely under both of these sections, the question then becomes how this court should handle his ADEA claim. With regard to Section 633(b), the Court of Appeals for the Third Circuit has held that when a plaintiff does not comply with that provision's requirements, her suit must be stayed until compliance has been achieved. Smith v. Jos. Schlitz Brewing Co., 604 F.2d 220 (3d Cir. 1979). The Court of Appeals for the Third Circuit has not addressed a violation of Section 626(d). The Court of Appeals for the Second Circuit, however, has held that an ADEA claim that is barred by Section 626(d) should be stayed pending expiration of the statutory 60-day waiting period. Dalessandro v. Monk, 864 F.2d 6, 9 (2d Cir. 1988). *fn7"

 The courts in Smith and Dalessandro rested their decisions on Oscar Mayer & Co. v. Evans, 441 U.S. 750, 60 L. Ed. 2d 609, 99 S. Ct. 2066 (1979). In Evans, the Supreme Court of the United States held that when a plaintiff violated Section 633(b), the proper remedy was not dismissal but instead suspension of the plaintiff's claim pending satisfaction of Section 633(b)'s requirements. See 441 U.S. at 765 n.13; see also Dalessandro, 864 F.2d at 9; Smith, 604 F.2d at 220-21.

 Following the holdings in Evans, Smith and Dalessandro, I will stay plaintiff Vassallo's ADEA claim in order to allow the statutory waiting period to expire. Since more than sixty days has passed from when plaintiff Vassallo filed his EEOC and PHRC complaints, I will stay his ADEA claim from the date of this memorandum and order for 43 days, the amount of the waiting period that had not passed when the plaintiffs' filed their complaint in this court.

 Accordingly, Nationwide's motion to dismiss will be denied as to Count I. In addition, Plaintiff Samuel Vassallo's Count I claim will be stayed until November 4, 1994.

 B. Count II -- Violation of the Fair Housing Act

 In Count II of their complaint, plaintiffs allege that Nationwide has violated section 804 of the Fair Housing Act ("Section 804"), codified at 42 U.S.C.A. § 3604 (West Supp. 1994), by discriminating against individuals on the basis of age, sex, color, financial ability, and geographical location. *fn8" Defendants make two challenges to this count: first, that Section 804 does not apply to the business of insurance; and second, that the plaintiffs have failed to allege a causal link between the alleged discrimination in housing, which is covered by Section 804, and actual harm to the plaintiffs. *fn9"

 The first issue to be addressed is whether discrimination in insurance related to housing is covered by Section 804. Nationwide argues that under Mackey v. Nationwide Ins. Companies, 724 F.2d 419, 423-25 (4th Cir. 1984), Section 804 does not apply to such insurance.

 The Mackey court rested its decision on four grounds. First, that given 42 U.S.C.A. § 3605's (West Supp. 1994) ("Section 805") specific prohibition of discrimination in the financing of housing, Section 804 could not have been designed to reach every discriminatory act that might conceivably affect the availability of housing. Second, that Congress may not have intended to interfere with the insurance industry's classification of risk. Third, that Section 804 and its legislative history lacks any reference to insurance. And fourth, that Congress has ...


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