The opinion of the court was delivered by: JOHN FULLAM, Senior District Judge
The three above-captioned actions arise from a common set of facts,
and have, in effect, been consolidated. Civil action 01-3894 will be
referred to herein as "Romero I"; civil action 01-6764 will be referred
to as "Romero II," and civil action 01-7042 will be referred to as
"EEOC." This opinion deals with pending motions in all three cases.
For many years, Allstate Insurance Company hired, as its employees, all
of the agents who sold its insurance policies, handled claims, etc.
Management apparently came to believe that its interests would be better
served by agents who were independent contractors, rather than employees.
All newly-retained agents thereafter were deemed to be independent
contractors. The employee-agents operated under one or the other of two
types of employment contracts, designated the R830 and the R1500. The
independent-contractor agents operated under R3001 contracts (after a
brief period of actual employment, as trainees, under an R3000 contract).
Beginning in 1991, Allstate amended its pension plan, allegedly in
order to comply with the Tax Reform Act of 1986 and implementing IRS
regulations, to make clear that service as an independent-contractor
agent under an R3001 contract would not be credited toward pension
entitlements or calculations. The amendments also made it more difficult
for covered employees to qualify for early retirement benefits and
phased-out certain particularly favorable features of the early
retirement benefits (which had enabled some employees to retire at age
55, but have their retirement benefits calculated as if they had
continued to work until age 63).
After having adopted the policy of hiring only independent contractors
in the future, Allstate also embarked upon a plan to persuade employee
agents to switch to independent-contractor status, by offering financial
inducements (e.g., a payment of $5,000, and more generous commissions on
sales). Although some employee-agents made the switch, many others did
By 1999, the situation was as follows: of the approximately 15,000
agents nationwide, approximately 6,200 continued as employee-agents,
under either the R830 or the R1500 contract. In November 1999, Allstate
announced its "Preparing for the Future" Reorganization Plan, under which
the employment of all employee-agents would be terminated as of June 30,
2000. Each such employee-agent was offered a choice: if the agent signed
a comprehensive release, he or she could (1) sign an R3001 contract and
continue in the service of Allstate, (2) serve as an R3001
independent-contractor for a brief period, and then sell his or her
interest in their book of business to a buyer approved by Allstate
(frequently, another Allstate agent), or (3) sign an R3001 contract but
then immediately resign, in exchange for severance pay amounting to one
year's earnings, to be paid monthly over a period of two years. Agents
who refused to sign the release were simply discharged as of June 30,
2000, with little or no severance pay.
Confronted with these choices, most of the employee-agents (99.7%)
signed releases. Only 19 agents did not sign, and several of their cases
have been disposed of in the interim. As of the present date, the parties
estimate that there are 16 potential claimants who did not sign releases.
In Romero I, the 29 named plaintiffs seek to represent a class which
includes the 6,200 former employee-agents, to nullify all of the
releases, and to pursue a wide range of claims: for breach of contract,
for violations of the ADEA, ADA, Title VII and ERISA. As can readily be
seen from the foregoing recital, the proposed class includes persons who
did not sign the release, persons who signed the release and continue in
the service of Allstate as independent contractors, persons who sold
their blocks of business to other agents and then resigned, and persons
who not only continue in the service of Allstate as independent
contractors, but who have purchased blocks of business from retiring
former agents. The class-action issues will be addressed below.
In Romero II, plaintiffs seek to represent a class of persons whose
rights under ERISA were allegedly violated by the changes in the pension
plan, and by their changes in status.
In its case, the EEOC contends that requiring the employee-agents to
release all their claims under the ADEA, the
ADA and Title VII in order to continue working as sales agents
constituted retaliation in violation of § 4d of the ADEA, § 503a
of the ADA, and § 704a of Title VII, and also constituted
interference, coercion, and intimidation in violation of § 503b of
the ADA. Attached to the EEOC complaint is a list of the 300-odd persons
who filed charges with the EEOC on whose behalf, presumably, the
EEOC brought its lawsuit.
A. Validity of the Releases
An overarching issue in all of these cases is the validity and
enforceability of the releases signed by most of the affected
employee-agents. Obviously, if the releases are enforceable, only the 16
remaining agents who did not sign the releases could possibly prevail in
this litigation. Defendants contend that this issue is not appropriate
for class treatment, because of the conflicting interests of the putative
class members, many of whom have no desire to be restored to the
status quo ante. I believe, however, that the issue can properly
be addressed on a class-wide basis by way of a declaratory judgment. That
is, if the releases are found to be unenforceable, a declaratory ...