Opinion
CIVIL 3:20-CV-224
09-22-2022
REBECCA VASINDA, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INS. CO., et al., Defendants.
Mannion, Judge.
REPORT AND RECOMMENDATION
Martin C. Carlson, United States Magistrate Judge
I. Introduction
This case, which comes before us for consideration of cross motions for summary judgment, raises questions regarding the reach of state and federal workplace discrimination laws, as well as providing a cautionary tale regarding the perils of using email to comply with contractual notice obligations. The plaintiff, Rebecca Vasinda, was an insurance agent whose longstanding contractual relationship with State Farm Insurance came to a close in 2017. In her complaint, Vasinda attributes the termination of this relationship to age and gender based bias on the part of State Farm. Vasinda also alleges that State Farm violated the terms of her agreement with the defendant by failing to provide her with appropriate notice of a termination review meeting which she requested under her contract. That notice was apparently sent to Vasinda's State Farm work email, but was only transmitted after Vasinda was informed that she no longer could access that work email account.
State Farm has moved for summary judgment on Vasinda's age and gender discrimination claims, and as discussed below, we agree that those claims fail as a matter of law since Vasinda was an independent contractor whose activities do not fall within the reach of state and federal age and gender discrimination statutes. Both parties, in turn, have filed cross motions for summary judgment on Vasinda's breach of contract claim. In these cross motions, the parties advance two conflicting and irreconcilable positions, inviting the court to find as a matter of law on a murky factual record that State Farm either did, or did not, provide the plaintiff with appropriate notice of this termination review meeting.
As to these breach of contract issues, we recommend that the court deny both cross motions for summary judgment since the issue of the sufficiency of this notice is both fact-bound, and factually disputed.
II. Factual Background and Procedural History
With respect to these cross motions for summary judgment, the essential, undisputed facts are as follows:
The factual background of this Report and Recommendation is taken from the parties' submissions to the extent they are consistent with the evidence in the record. (Docs. 29, 20, 31, 32, 37, 38, 39, 40, 44, 45, 46, 48).
A. Vasinda's Contract With State Farm
At bottom, this case arises out of the dissolution of a twenty year working relationship between the plaintiff, Rebecca Vasinda, and the defendant, State Farm Insurance. On January 1, 1997, Vasinda and State Farm entered into a State Farm Agent's Agreement that governed the terms of the parties' business relationship. By its terms, the validity, enforceability, and interpretation of this agreement is construed according to the laws of the State of Illinois. (Doc. 29-2, at 7).
This agreement plainly identified Vasinda's working relationship with State Farm as that of an independent contractor. Thus, the preamble to the agreement stressed Vasinda's independent contractor status, stating that:
The purpose of this Agreement is to set forth the objections, obligations, and responsibilities essential to the relationship between the Agent, operating as an independent contractor, and State Farm. It is to our mutual interest to serve the insuring public, to comply with all applicable laws, to increase business on a profitable basis, and to maintain the Companies' financial strength to protect policyholders' interests. * * * The Companies' agents operating as independent contractors, within the scope of their authority, are best able to provide the creative selling, professional counseling, and prompt and skillful services essential to the creation and maintenance of successful multiple-line Companies and agencies. We do not seek, and you will not assert, control of your daily activities, but expect you to exercise your own judgment as to the time, place, and manner of soliciting insurance, serving policyholders, and otherwise carrying out the provisions of this Agreement. You have chosen this independent contractor relationship, with its opportunities for financial reward and personal satisfaction, in preference to one which would place you in employment status.(Doc. 31-3, Exhibit E, at 1) (emphasis added). The “Mutual Conditions and Duties” section of the Agreement further underscored Vasinda's status as an independent contractor emphasizing that:
You are an independent contractor for all purposes. You have full control of your daily activities, with the right to exercise independent judgment as to time, place, and manner of soliciting insurance, servicing policyholders, and otherwise carrying out the provisions of this Agreement.(Id., Exhibit E, at Section I, ¶ B) (emphasis added). The contract's designation of the duties of the agent also made it clear that agents, like Vasinda, were deemed independent contractors and, as such, were responsible for their own office expenses, stating that:
[T]he expense of any office, including rental, furniture, and equipment; signs; supplies not furnished by [State Farm]; the salaries of your employees; telephone; postage; advertising; and all other charges or expenses incurred by you in the performance of this Agreement shall be incurred at your discretion and paid by you.(Id., Exhibit E, at Section I, ¶ E).
While the agreement provided that either Vasinda or State Farm had the right to terminate this contract by written notice delivered to the other, the contract also provided Vasinda with the right to contest any proposed termination by State Farm, stating in clear and precise terms that:
In the event we terminate this Agreement, you are entitled upon request to a review in accordance with the termination review procedures approved by the Boards of Directors of the Companies, as amended from time to time.(Id., Exhibit E, Section III, ¶ B). It was with these express understandings that Vasinda and State Farm entered into this business relationship.
In fact, during the course of her business relationship with State Farm, Vasinda operated her insurance agency as an independent contractor. Within her insurance agency, Vasinda was responsible for hiring and firing staff, assigning work, and directing the day-to-day operations of the business. Moreover, in her federal income tax returns, Vasinda described herself as an independent businesswoman and did not report employee wages from State Farm as income. Thus, Vasinda's contract with State Farm and the economic realities of her business practices were entirely consistent with the characterization of Vasinda as an independent contractor.
B. State Farm Audits Vasinda's Agency
As a State Farm Insurance agent, Vasinda was required to maintain a Premium Fund Account (“PFA”). A PFA is a bank account into which customers' premium payments for insurance policies are deposited. When an agent's office receives premium payments, the agency is required to prepare bank deposit slips that fully reflect all of those payments, which must then be deposited into the PFA. Each bank deposit must be a premium payment associated with a specific insurance policy. Agents must also prepare a Final Deposit Listing (“FDL”) that lists the amount due on the premium for a particular policy, the amount of the remittance, whether remittance was made by cash or check (with the check number), and the number of the policy for which the premium was paid. When the FDL is transmitted to State Farm, it signals to State Farm that the money deposited into the PFA is available for State Farm to withdraw.
In 2013, State Farm reviewed Vasinda's PFA, as it regularly does for all agents, and identified what it believed to be deficits in that account. As a result, in 2014 State Farm conducted an audit of Vasinda's agency accounts. While the parties have contrasting positions regarding the procedures used in this audit and the accuracy of some audit findings, it is undisputed that this 2014 audit made the following findings: (1) The PFA for Vasinda's office had an adjusted balance of negative $3,265.25 as of May 31, 2013; (2) The PFA balance was often in the negative and deposits rarely matched amounts reflected in the FDL; (3) Vasinda would periodically make up for shortfalls with her personal checks or cash deposits that were not associated with any particular insurance policy, which led to mismatches between the deposits and the FDL; (4) Deposited premiums for customers' fire insurance policies were not applied to the policies until a much later date, causing substantial risk of liability for State Farm while artificially inflating the PFA's balance for prolonged periods; (5) While fire applications were required to be submitted with a picture of the electrical box from the insured premises, a large number of the applications were instead submitted with photographs of the electrical box in Vasinda's building; (6) Unauthorized/unlicensed employees were found to be taking improper actions as agents and sharing computer passwords; and (7) In one instance, while Plaintiff was remotely accessing her computer while on vacation in Virginia, the computers in her office were also being accessed locally with her same access information. That would have been impossible without Vasinda impermissibly sharing passwords with her employees.
In response to these audit findings, Vasinda provided State Farm with a proposed action plan to correct any adverse audit findings. In 2016, State Farm conducted a second audit of Vasinda's agency after State Farm's Premium Fund Account Review Team was unable to match deposits made into the PFA account with expected deposits on the Final Deposit Listing. While the parties, once again, have contrasting positions regarding the procedures used in this audit and the accuracy of some audit findings, it is uncontested that this August 2016 audit report contained the following adverse conclusions:
• Agent Vasinda's adjusted PFA balance was negative by more than the amount of the monthly bank fee for 7 of the 12 months reviewed for 2015. These negative balances were due to repeated and regularly-occurring instances of cash not being deposited into the account. In both September 2015 and November 2015, the adjusted balance of the account was negative in excess of $3,000.
• A large number of miscellaneous cash deposits not associated with a particular FOL or customer payment were also made into the account. These miscellaneous cash deposits resulted in the adjusted balance being $0 as of January 19, 2016.
• The noted cash shortages and miscellaneous cash deposits were also present during months in which the adjusted account balance was zero, or negative by only the amount of the monthly bank fee.
• Multiple instances were noted in which checks submitted for policy payments were either deposited but not credited to the customer's account until days later, or a customer was given credit for a payment that was not deposited until days later. In at least two instances, Agent Vasinda's personal policies were credited days before a payment was actually submitted.
• During an interview with Audit Consultant (AC) Troy Lung, Agent Vasinda advised she closes "most'' of the FDLs, ensures the cash and check totals on the document match the cash and checks being deposited, and is generally responsible for physically depositing funds at the bank. Vasinda also stated she reconciles the account on a monthly basis. Despite these assertions, Vasinda denied having any knowledge of cash shortages within the individual deposits, or of the account having a negative adjusted balance for the last six months of 2015.
• Agent Vasinda admitted that the majority of the shortages discussed during the interview could not be explained outside of funds being misappropriated. Vasinda also admitted the only persons potentially responsible for such misappropriation would be either her or one of her team members.
• While Vasinda remained adamant she was not responsible for any misappropriation of State Farm funds and was not aware of her team members misappropriating funds, she refused to allow AC Lung to discuss the matter with any of her team members.
• A fiduciary review, as well as reviews of other aspects of Agent Vasinda's office, was completed by Internal Audit in 2014. That review revealed similar PFA findings as the current review, including negative PFA balances in excess of $4,000, multiple instances of cash not being deposited, and personal checks written into the account by Vasinda to cover a portion of the shortage.(Doc. 31-7).
C. State Farm Terminates Its Contract with Vasinda
In the wake of this second adverse audit of Vasinda's agency, officials at State Farm reported that their trust-based relationship with Vasinda had failed. Accordingly, on January 3, 2017, State Farm notified Vasinda in writing of its intention to terminate this contract. (Doc. 29-2, at 22). This termination letter placed Vasinda on notice that she could request a termination review meeting, in accordance with the contract, and provided Vasinda a copy of the company's termination review procedures. Those procedures stated in part that, upon a request for a termination review meeting, “[a]ppropriate notice will be given to the Agent setting out the time and location of the meeting.” (Id., at 24). The following day, January 4, 2017, Vasinda was notified by a State Farm employee, Heather Burling, that she would “no longer have system access,” to State Farms' computer systems and would have to use a different computer in the future. (Id., at 27).
Having received this termination letter and been advised that her State Farm computer system access had been cut off, on January 5, 2017, Vasinda sent an email letter from her home email address to State Farm officials requesting a termination review meeting. (Id., at 28). This request was acknowledged in writing by State Farm officials. (Id., at 29).
What then followed were a series of mishaps and missteps. On January 9, 2017, State Farm sent an email notifying Vasinda than a termination review meeting was scheduled for her on January 20, 2017 in Vienna, Virginia. However, notwithstanding the fact that Vasinda had been informed on January 4, 2017 that her State Farm system access had been terminated, and despite the fact that Vasinda had sent her termination review meeting request from her home email address, this notice was only emailed to Vasinda's moribund State Farm work email address.
Vasinda insists that she never received notice of this meeting. Therefore, when the meeting took place on January 20, 2017, she was not present. The meeting was then conducted in her absence and without her input. Following this meeting, it was recommended that Vasinda's contract be terminated and this recommendation was adopted by State Farm. (Id., 44-63). However, shortly after this January 20, 2017 termination review meeting, John Antonacci, a Vice President at State Farm who had been dealing with Vasinda, reported that “something prompted me to say let me check where that notice [of Vasinda's termination review meeting] was sent.” (Id., at 68). Upon learning that the email had only gone to Vasinda's State Farm work email address, Antonacci requested that IT officials determine whether Vasinda had, in fact, received notice of this meeting. (Id., at 69).
The results of this computer forensics investigation were inconclusive. State Farm's IT department was able to confirm that the company email scheduling this termination review meeting had been opened by someone, but “was unable to determine if Vasinda read the message or if it was read by a delegate.” (Id., at 73). The State Farm IT inquiry also confirmed that Felicia Winters, an employee at Vasinda's insurance agency, had delegate access to Vasinda's work email account, and speculated that the message may have been opened by Winters and forwarded to Vasinda. (Id.) This speculative assertion was later flatly rebutted by Winters, who has filed an affidavit denying that she opened this email or forwarded its contents to Vasinda. (Id., at 76-77). Nonetheless, when Vasinda reached out to State Farm officials on February 1, 2017, inquiring about the scheduling of her termination review meeting, she was informed that the meeting had taken place in her absence and that State Farm “confirmed the [January 9] email [scheduling the termination review meeting] was read and that information from that email account was being shared with you.” (Id., at 78).
On February 7, 2017, Vasinda was notified in writing that the termination review committee recommendations had been adopted and her services under her agreement with State Farm had been terminated. (Id., at 79).
Vasinda was in her late 60s at the time of these events. While the evidence indicates that State Farm may have considered a number of agents who differed in age and gender to adopt Vasinda's former clientele, it appears that her clients were ultimately transferred to a younger, male agent.
This lawsuit then ensued.
D. Procedural History
On February 6, 2020, Vasinda filed this lawsuit. (Doc. 1). In her complaint, the plaintiff alleged that the termination of her agreement by State Farm constituted age and gender based discrimination against the plaintiff in violation of Title VII of the Civil Rights Act and the Age Discrimination in Employment Act. (Id., Counts II and IV). Vasinda brought parallel state law age and gender based discrimination claims under the Pennsylvania Human Relations Act. (Id., Counts III and V). Finally, Vasinda has leveled a breach of contract claim against State Farm, alleging that she was wrongfully terminated without the benefit of the termination review provided to her under her contract with State Farm. (Id., Count I).
The case now comes before us for consideration of cross motions for summary judgment filed by State Farm, (Doc. 31), and Vasinda. (Doc. 29). In its motion, State Farm seeks dismissal of the complaint in its entirety arguing that the statutory civil rights claims fail because Vasinda, an independent contractor, falls outside the ambit of these workplace discrimination statutes, which only extend protection to employees of an employer. State Farm further contends that these age and gender based discrimination claims fail on their merits.
As for Vasinda's breach of contract claim, State Farm invites us to enter summary judgment in favor of the defendants, asserting that, as a matter of law, it provided appropriate notice of the termination review meeting to Vasinda and further arguing that Vasinda cannot show as a matter of law any cognizable damages. Vasinda, in turn, has filed her own motion for partial summary judgment relating solely to her breach of contract claim. (Doc. 29). In this motion, Vasinda urges us to find as a matter of law that State Farm breached its contractual obligation to provide her with appropriate notice of the termination review meeting. These cross motions are fully briefed and are, therefore, ripe for resolution.
For the reasons set forth below, we conclude that State Farm is entitled to summary judgment on Vasinda's age and gender discrimination claims, since Vasinda was an independent contractor whose activities do not fall within the reach of state and federal age and gender discrimination statutes and State Farm has amply demonstrated a non-pretextual reason for terminating this agreement given the adverse audits findings. As to these breach of contract issues, we recommend that the court deny both cross motions for summary judgment since the issue of the sufficiency of this notice is both fact-bound, and factually disputed.
III. Discussion
A. Summary Judgement-Standard of Review
The parties have filed cross motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, which provides that the court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). Through summary adjudication, a court is empowered to dispose of those claims that do not present a “genuine dispute as to any material fact,” Fed.R.Civ.P. 56(a), and for which a trial would be “an empty and unnecessary formality.” Univac Dental Co. v. Dentsply Int'l, Inc., 702 F.Supp.2d 465, 468 (M.D. Pa. 2010). The substantive law identifies which facts are material, and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a material fact is genuine only if there is a sufficient evidentiary basis that would allow a reasonable fact finder to return a verdict for the non-moving party. Id., at 248-49.
The moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145-46 (3d Cir. 2004). Once the moving party has shown that there is an absence of evidence to support the non-moving party's claims, “the non-moving party must rebut the motion with facts in the record and cannot rest solely on assertions made in the pleadings, legal memoranda, or oral argument.” Berckeley Inv. Group. Ltd. v. Colkitt, 455 F.3d 195, 201 (3d Cir. 2006), accord Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). If the non-moving party “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden at trial,” summary judgment is appropriate. Celotex, 477 U.S. at 322. Summary judgment is also appropriate if the non-moving party provides merely colorable, conclusory, or speculative evidence. Anderson, 477 U.S. at 249. There must be more than a scintilla of evidence supporting the non-moving party and more than some metaphysical doubt as to the material facts. Id., at 252; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). In making this determination, the Court must “consider all evidence in the light most favorable to the party opposing the motion.” A.W. v. Jersey City Pub. Schs., 486 F.3d 791, 794 (3d Cir. 2007).
Moreover, a party who seeks to resist a summary judgment motion by citing to disputed material issues of fact must show by competent evidence that such factual disputes exist. Further, “only evidence which is admissible at trial may be considered in ruling on a motion for summary judgment.” Countryside Oil Co., Inc. v. Travelers Ins. Co., 928 F.Supp. 474, 482 (D.N.J. 1995). Similarly, it is well-settled that: “[o]ne cannot create an issue of fact merely by . . . denying averments . . . without producing any supporting evidence of the denials.” Thimons v. PNC Bank, NA, 254 Fed.Appx. 896, 899 (3d Cir. 2007) (citation omitted). Thus, “[w]hen a motion for summary judgment is made and supported . . ., an adverse party may not rest upon mere allegations or denial.” Fireman's Ins. Co. of Newark New Jersey v. DuFresne, 676 F.2d 965, 968 (3d Cir. 1982); see Sunshine Books, Ltd. v. Temple University, 697 F.2d 90, 96 (3d Cir. 1982). “[A] mere denial is insufficient to raise a disputed issue of fact, and an unsubstantiated doubt as to the veracity of the opposing affidavit is also not sufficient.” Lockhart v. Hoenstine, 411 F.2d 455, 458 (3d Cir. 1969). Furthermore, “a party resisting a [Rule 56] motion cannot expect to rely merely upon bare assertions, conclusory allegations or suspicions.” Gans v. Mundy, 762 F.2d 338, 341 (3d Cir. 1985) (citing Ness v. Marshall, 660 F.2d 517, 519 (3d Cir. 1981)).
Finally, it is emphatically not the province of the court to weigh evidence or assess credibility when passing upon a motion for summary judgment. Rather, in adjudicating the motion, the court must view the evidence presented in the light most favorable to the opposing party, Anderson, 477 U.S. at 255, and draw all reasonable inferences in the light most favorable to the non-moving party. Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir. 1992). Where the non-moving party's evidence contradicts the movant's, then the non-movant's must be taken as true. Id. Additionally, the court is not to decide whether the evidence unquestionably favors one side or the other, or to make credibility determinations, but instead must decide whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. Anderson, 477 U.S. at 252; see also Big Apple BMW, 974 F.2d at 1363. In reaching this determination, the Third Circuit has instructed that:
To raise a genuine issue of material fact . . . the opponent need not match, item for item, each piece of evidence proffered by the movant. In practical terms, if the opponent has exceeded the “mere scintilla” threshold and has offered a genuine issue of material fact, then the court
cannot credit the movant's version of events against the opponent, even if the quantity of the movant's evidence far outweighs that of its opponent. It thus remains the province of the fact finder to ascertain the believability and weight of the evidence.Id. In contrast, “[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal quotation marks omitted); NAACP v. North Hudson Reg'l Fire & Rescue, 665 F.3d 464, 476 (3d Cir. 2011).
In this case, we are presented with cross motions for summary judgment. In this setting:
“When confronted with cross-motions for summary judgment ... ‘the court must rule on each party's motion on an individual and separate basis, determining, for each side, whether a judgment may be entered in accordance with the summary judgment standard.' ” Transguard Ins. Co. of Am., Inc. v. Hinchey, 464 F.Supp.2d 425, 430 (M.D. Pa. 2006) (quoting Marciniak v. Prudential Fin. Ins. Co. of Am., 184 Fed.Appx. 266, 270 (3d Cir. 2006)). “If review of [the] cross-motions reveals no genuine issue of material fact, then judgment may be entered in favor of the party deserving of judgment in light of the law and undisputed facts.” Id. (citing Iberia Foods Corp. v. Romeo, 150 F.3d 298, 302 (3d Cir. 1998)).Pellicano v. Office of Pers. Mgmt., Ins. Operations, 8 F.Supp.3d 618, 625-26 (M.D. Pa. 2014), aff'd sub nom. Pellicano v. Office of Pers. Mgmt., 714 Fed.Appx. 162 (3d Cir. 2017).
It is against these benchmarks that we assess the parties' cross motions for summary judgment.
B. Vasinda's Title VII, ADEA and PHRA Claims Fail, as a Matter of Law.
Turning first to Vasinda's workplace discrimination claims under state and federal law, given the undisputed facts, we believe that these claims encounter a series of insurmountable legal obstacles. At the outset, we find that Vasinda may not claim the protections of these federal workplace discrimination statutes because, as an independent contractor, she does not fall within the ambit of these statutes.
Taken together, Title VII and the ADEA, the two federal workplace discrimination statutes relied upon by Vasinda, protect “employees” from age or gender based discrimination by their employers. However, the definition of an “employee” under these federal civil rights statutes is set forth in a singularly enigmatic manner. Thus, Title VII and the ADEA both state in a somewhat tautological fashion that: “The term ‘employee' means an individual employed by an[y] employer”. 42 U.S.C. § 2000e (f); 29 U.S.C. § 630 (f). Recognizing that this statutory definition is largely “devoid of content”, Faush v. Tuesday Morning, Inc., 808 F.3d 208, 213 (3d Cir. 2015), in Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322-23, 112 S.Ct. 1344, 1348, 117 L.Ed.2d 581 (1992), while construing a similar statute, the United States Supreme Court held that “when Congress has used the term ‘employee' without defining it, we have concluded that Congress intended to describe the conventional master-servant relationship as understood by commonlaw agency doctrine.” Id.
This doctrine, which is known as the Darden test, applies to workplace claims under both Title VII and the ADEA, and is used to identify the universe of persons deemed employees entitled to the protections of federal law. Faush, 808 F.3d at 213 (applying Darden test to Title VII); Pavlik v. Int'l Excess Agency, Inc., 417 Fed.Appx. 163, 166 (3d Cir. 2011) (applying Darden test to ADEA). Accordingly: 11
When evaluating whether a person is an employee [or an independent contractor] in a master-servant relationship for purposes of Title VII and ADEA, the common law of agency applies. Darden, 503 U.S. at 322-24, 112 S.Ct. 1344. To determine the nature of the relationship, the court should consider:
the hiring party's right to control the manner and means by which the product is accomplished[;] ... the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party's discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.
Id. at 323-24, 112 S.Ct. 1344 (internal quotations and citations omitted).Pavlik v. Int'l Excess Agency, Inc., 417 Fed.Appx. 163, 166 (3d Cir. 2011). When we consider the application of the Darden test to Title VII and ADEA claims made by insurance agents against insurance companies, like the claims advanced here, we most assuredly do not write upon a blank slate. Quite the contrary, over the years a broad consensus has emerged in the courts favoring the view that insurance agents are independent contractors, rather than employees, and therefore may not avail themselves of the protections of Title VII or the ADEA. See e.g., Pavlik v. Int'l Excess Agency, Inc., 417 Fed.Appx. 163, 166 (3d Cir. 2011); Murray v. Principal Fin. Grp., Inc., 613 F.3d 943, 946 (9th Cir. 2010); Wortham v. Am. Fam. Ins. Grp., 385 F.3d 1139, 1141 (8th Cir. 2004); Weary v. Cochran, 377 F.3d 522, 525 (6th Cir. 2004); Schwieger v. Farm Bureau Ins. Co. of NE, 207 F.3d 480, 485 (8th Cir. 2000); Barnhart v. New York Life Ins. Co., 141 F.3d 1310, 1313 (9th Cir. 1998); Deal v. State Farm Cnty. Mut. Ins. Co. of Texas, 5 F.3d 117, 119 (5th Cir. 1993); Oestman v. Nat'l Farmers Union Ins. Co., 958 F.2d 303, 305 (10th Cir. 1992); Knight v. United Farm Bureau Mut. Ins. Co., 950 F.2d 377, 380 (7th Cir. 1991).
Given this rising tide of case law, we have little difficulty concluding that Vasinda, as an insurance agent, was an independent contractor and not an employee of State Farm. At the outset, the plain language of the contract between State Farm and Vasinda clearly and repeatedly identified the plaintiff as an independent contractor of the defendant. While this is compelling proof of the nature of this relationship, we need not rely solely upon this contractual formalism. Vasinda's tax returns also reflect her independent contractor status since they show no wages paid by State Farm, but rather reflect earned business income consistent with the status of an independent contractor. Further, within her insurance agency, Vasinda was responsible for hiring and firing staff, assigning work, and directing the day-to-day operations of the business. All of these factors are badges of independent contractor status, and confirm what Vasinda's contract tells us-she was not a State Farm employee but rather was an independent contractor. As an independent contractor, Vasinda's Title VII and ADEA claims fail because her working relationship with State Farm falls beyond on the reach of these statutes. Therefore, these claims fail on this threshold ground and should be dismissed.
Vasinda's workplace discrimination claims under the Pennsylvania Human Relations Act (PHRA) fail for similar reasons. As a general rule, “‘[c]laims under the PHRA are interpreted coextensively with Title VII claims.'” Brown v. J. Kaz, Inc., 581 F.3d 175, 180 n. 1 (3d Cir. 2009) (quoting Atkinson v. LaFayette College, 460 F.3d 447, 454 n. 6 (3d Cir.2006)). Therefore, it follows that Vasinda can claim employee status “under the PHRA only if she is one under Title VII.” Id. Thus, our finding that Vasinda is not an “employee” under federal law forecloses a claim that she is an “employee” for purposes of the PHRA.
Nor can Vasinda save this state law claim by taking refuge under the PHRA's provisions which apply to some independent contractors. These statutory provisions only apply to independent contractors “subject to the provisions governing any of the professions and occupations regulated by State licensing laws enforced by the Bureau of Professional and Occupational Affairs in the Department of State, or is included in the Fair Housing Act.” 43 Pa. Stat. Ann. § 954 (x). It has been held that “the PHRA only applies,” to independent contractors in these specific regulated fields. Brown, 581 F.3d at 180 n. 1 (emphasis added). As an insurance agent, Vasinda's activities were regulated by the Pennsylvania Department of Insurance, and simply did not fall within the PHRA's purview as defined by statute. As one appellate court observed when affirming the denial of an insurance agent's efforts to bring claims under the PHRA's independent contractor provisions:
Insurance agent is not one of the professions or occupations regulated by the Bureau of Professional and Occupational Affairs in the Department of State of Pennsylvania. See 63 Pa. Cons.Stat. Ann. §§ 12334. In fact, the only insurance occupation listed as covered, that of insurance adjuster, specifically excludes insurance agent from its definition. Id. at § 1061. Insurance agents are regulated by a wholly separate agency, Pennsylvania's Insurance Department.
The class of independent contractors covered by the PHRA is specifically limited by the Act and cannot be expanded beyond the scope that was intended by the Pennsylvania legislature. See Velocity Express v. Pennsylvania Human Relations Comm'n, 853 A.2d 1182, 1186 (Pa.Commw.Ct.2004). Therefore, the district court did not err when it found that an insurance agent is not within the limited class of independent contractors covered by the PHRA.Kahn v. Am. Heritage Life Ins. Co., 233 Fed.Appx. 895, 897 (11th Cir. 2007). Therefore, this state law statutory claim also fails and should be dismissed.
But even if we found that Vasinda could colorably claim that she was covered by these workplace discrimination laws, we conclude on these undisputed facts that her claims would still fail on their merits. The legal benchmarks which apply to Title VII gender discrimination claims and ADEA claims are familiar ones.
Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating against and/or discharging their employees because of their sex. 42 U.S.C. § 2000e-2(a)(1). Title VII discrimination claims are governed by a familiar burden-shifting framework. See Jones v. Southeastern Pa. Transp. Auth., 796 F.3d 323, 325-26 (3d Cir. 2015). In brief, that framework requires that the plaintiff demonstrate that (1) she is a member of a protected class, (2) she suffered an adverse employment action, (3) under circumstances that give rise to an inference of unlawful sexbased discrimination. Sarullo v. U.S. Postal Serv., 352 F.3d 789, 797 (3d Cir. 2003). The last element also requires that the plaintiff demonstrate a causal connection between her protected status and the allegedly adverse action. Id. at 798. The key focus of theprima facie test is “always whether the employer is treating ‘some people less favorably than others because of their race, color, religion, sex, or national origin.' ” Id. (citation omitted). The elements of theprima facie case “must not be applied woodenly but must rather be tailored flexibly to fit the circumstances of each type of illegal discrimination.” Geraci v. Moody-Tottrup Int'l, Inc., 82 F.3d 578, 581 (3d Cir. 1996).Baylets-Holsinger v. Pennsylvania State Univ., No. 4:18-CV-60, 2020 WL 3892881, at *4 (M.D. Pa. July 10, 2020). Moreover:
Title VII claims are subject to the burden-shifting framework established in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). See Hare v. Potter, 220 Fed.Appx. 120, 127 (3d Cir. 2007). If the employee establishes a prima facie case of discrimination, the burden shifts to the employer to advance a legitimate, non-discriminatory reason for its conduct, and if the employer does so “the plaintiff must be able to convince the factfinder both that the employer's proffered explanation was false, and that [discrimination] ... was the real reason for the adverse employment action.” Moore, 461 F.3d at 342 (quoting Krouse v. Am. Sterilizer Co., 126 F.3d 494, 500-01 (3d Cir. 1997)).Id.
Likewise, the ADEA makes it unlawful for employers to “discharge any individual or otherwise discriminate against any individual with respect to [their],.. age” 29 U.S.C. § 631(a). A plaintiff alleging that she was subjected to adverse employment action in violation of the Act must show that her “age was the ‘but-for' cause of the employer's adverse action.” Gross v. FBL Fin. Servs., Inc., 557 U.S. 167, 177 (2009). It is not enough for a plaintiff to show that her age was a factor that motivated the employer's action, but instead must point to evidence that could support an inference that her age had a “determinative influence” on the decision. Id. at 176. This burden remains squarely with the plaintiff, who may prove her claims through direct or circumstantial evidence. Id. at 177.
Although a plaintiff may seek to prove a claim of age discrimination with direct evidence, such evidence is often unavailable, and courts permit proof of age discrimination to be made through circumstantial evidence. When a plaintiff relies on a circumstantial evidence, courts apply the familiar burden-shifting framework announced in McDonnell Douglas Corporation v. Green, 411 U.S. 792 (1973). The Third Circuit has explained the application of McDonnell Douglas in the context of ADEA discrimination claims as follows:
Under McDonnell Douglas, the plaintiff bears the burden of proof and the initial burden of production, having to demonstrate a prima facie case of discrimination by showing first, that the plaintiff is forty years
of age or older; second, that the defendant took an adverse employment action against the plaintiff; third, that the plaintiff was qualified for the position in question; and fourth, that the plaintiff was ultimately replaced by another employee who was sufficiently younger to support an inference of discriminatory animus. Once the plaintiff satisfies these elements, the burden of production shifts to the employer to identify a legitimate nondiscriminatory reason for the adverse employment action. If the employer does so, the burden of production returns to the plaintiff to demonstrate that the employer's proffered rationale was a pretext for age discrimination. At all times, however, the burden of persuasion rests with the plaintiff.Smith v. City of Allentown, 589 F.3d 684, 689 (3d Cir. 2009) (citations omitted); see also id. at 691 (holding that this standard does not conflict with Gross).
Under both Title VII and the ADEA once an employer has proffered a legitimate reason for the adverse action, in order to show pretext, “the employee must point to some evidence, direct or circumstantial, from which a factfinder could reasonably either (1) disbelieve the employer's articulated legitimate reasons; or (2) believe that an invidious discriminatory reason was more likely than not a ... determinative cause of the employer's action.” Fuentes v. Perskie, 32 F.3d 759, 764 (3d Cir. 1994). In order to “discredit the employer's proffered reason, however, the plaintiff cannot simply show that the employer's decision was wrong or mistaken, since the factual dispute at issue is whether discriminatory animus motivated the employer, not whether the employer is wise, shrewd, prudent, or competent.” Id. at 765. Rather,
[T]he non-moving plaintiff must demonstrate such weaknesses, implausibilities, inconsistencies, incoherencies, or contradictions in the
employer's proffered legitimate reasons for its action that a reasonable factfinder could rationally find them ‘unworthy of credence.' [Ezold v. Wolf, Block, Schorr & Solis-Cohen, 983 F.2d 509, 531 (3d Cir. 1992)], and hence infer ‘that the employer did not act for [the asserted] non-discriminatory reasons.' Josey v. John R. Hollingsworth Corp., 996 F.2d 632, 638 (3d Cir. 1993).”Id.
Here, Vasinda's prima facie claims of gender and age discrimination rest upon thin reeds consisting of little more than the assertion that the plaintiff was replaced by a younger male insurance agent. State Farm has submitted its own countervailing evidence regarding its treatment of comparable cases which casts doubt upon the sufficiency of this proof, but even if we accepted this evidence as sufficient to establish a prima facie case, State Farm has provided ample evidence of a legitimate business reason for terminating its working relationship with Vasinda; namely, the troubling 2014 and 2016 audits results. Presented with this evidence, Vasinda, the non-moving plaintiff, has not shown that this justification was pretextual by demonstrating such weaknesses, implausibilities, inconsistencies, incoherencies, or contradictions in State Farm's proffered legitimate reasons for its action that a reasonable factfinder could rationally find them unworthy of credence. Therefore, these discrimination claims also fail on their merits.
Vasinda also recounts a hearsay statement by another woman who was terminated as a State Farm agent that “you're next,” but this statement, which appears to be inadmissible hearsay, adds little weight to our overall analysis of these claims. Moreover, nothing about this isolated statement undermines the legitimate business justification for State Farm's actions, which was premised upon two troubling audits of Vasinda's agency bank accounts.
C. Disputed Issues of Fact Preclude Summary Judgment on Vasinda's Breach of Contract Claim.
Aside from these Title VII, ADEA and related PHRA discrimination claims, Vasinda has also brought a breach of contract claim against State Farm. The gist of this claim can be simply stated. According to Vasinda, her agreement with State Farm permitted her to request a review of any proposed termination in accordance with State Farm's termination review procedures. Under those procedures, once an agent requests a termination review, “appropriate notice will be given to the Agent setting out the time and location of the meeting.”
In this case, upon being notified of State Farm's intention to terminate its agreement with her, Vasinda requested a termination review meeting. According to Vasinda she requested this meeting using her private email address because she had been led to believe that she no longer had access to her work email with State Farm. The only timely notice of that meeting was sent to Vasinda's State Farm work email address. While Vasinda denies ever receiving this notice, State Farm contends that its IT department's computer forensics review indicates that someone opened this email, although State Farm cannot state with certainty who that individual might have been, and the one person aside from Vasinda that State Farm speculated might have accessed the email has denied doing so.
When the termination review meeting was conducted, Vasinda did not attend, despite having requested the review. State Farm went forward with the review in her absence, and concluded that it would terminate its contract with Vasinda.
On these facts, Vasinda contends that State Farm breached its contract with her by failing to give her appropriate notice of the termination review meeting, as it was required to do under its agreement with the plaintiff. Indeed, Vasinda has moved for a partial summary judgment as to liability on this breach of contract claim, arguing that as a matter of law it is clear that State Farm failed to give her appropriate notice of this meeting. (Doc. 29). State Farm disagrees, and argues instead that it is entitled to summary judgment on this breach of contract claims because: (1) as a matter of law it gave appropriate notice to Vasinda of this termination review meeting; and (2) as a matter of law Vasinda cannot show any damages flowing from this alleged failure to give her proper notice of this termination review meeting.
Upon consideration of these competing motions, we conclude that neither party is entitled to summary judgment on this breach of contract claim. Instead, the questions of whether State Farm breached this agreement by failing to provide Vasinda with appropriate notice of the termination review meeting, and whether any damages flowed from this alleged breach, are shrouded in disputed issues of fact, which meet be determined by a jury at trial. Since this claim presents the paradigm of a disputed issue of fact, summary judgment is inappropriate here, and both parties' motions for summary judgment on aspects of this claim should be denied.
The legal principles which govern this breach of contract claim are familiar ones. By its terms, the validity, enforceability, and interpretation of this agreement is construed according to the laws of the State of Illinois. (Doc. 29-2, at 7). Under Illinois law it is well-settled that the elements of a breach of contract claim are:
(1) the existence of a valid and enforceable contract; (2) performance by the plaintiff; (3) breach of the contract by the defendant; and (4) resultant injury to the plaintiff. Gallagher Corp. v. Russ, 309 Ill.App.3d 192, 199, 242 Ill.Dec. 326, 721 N.E.2d 605 (1999). A defendant's failure to comply with a duty imposed by the contract gives rise to the breach. Hickox v. Bell, 195 Dl.App.3d 976, 992, 142 Ill.Dec. 392, 552 N.E.2d 1133 (1990).Gonzalzles v. Am. Exp. Credit Corp., 315 Ill.App.3d 199, 206, 733 N.E.2d 345, 351 (2000). Moreover, “[d]amages are an essential element of a breach of contract action and a claimant's failure to prove damages entitles the defendant to judgment as a matter of law.” Ins. Benefit Grp., Inc. v. Guarantee Tr. Life Ins. Co., 2017 IL App (1st) 162808, ¶ 48, 91 N.E.3d 950, 964 (2017).
Further, under Illinois law it is clear that courts will consider whether the parties fully complied with contractual notice provisions when determining whether an actionable breach of contract occurred. 977 Oaklawn, LLC v. S. Water Signs, LLC, 2019 IL App (2d) 180281-U, ¶ 56, 2019 WL 635742 (2019); Short v. Hankins, 2015 IL App (3d) 130935-U, ¶ 23, 2015 WL 2354599 (2015); MHM Servs., Inc. v. Assurance Co. of Am., 2012 IL App (1st) 112171, ¶ 48, 975 N.E.2d 1139, 1152 (2012). The failure to provide proper notice under a contract may, therefore, constitute a breach of the agreement. Bellmer by Bellmer v. Charter Sec. Life Ins. Co., 140 Ill.App.3d 752, 760, 488 N.E.2d 1338, 1343 (1986).
Moreover, under Illinois law:
[A] terminable-at-will employment relationship is presumed, . . ., unless a contrary intent is sufficiently established. If a court determines that the parties intended to bestow the employee with the right to be terminated . . . only after a hearing on the grounds for discharge, the court will enforce the contract.Williams v. Chicago Hous. Auth., 217 Ill.App.3d 1055, 1059, 578 N.E.2d 71, 74 (1991).
For its part, State Farm has alleged that this contract was a terminable-at-will agreement, citing the fact that the agreement provided that either Vasinda or State Farm had the right to terminate this contract by written notice delivered to the other. However, in the case of a disputed termination, the contract also bestows upon the insurance agent the right to be terminated only after a hearing on the grounds for discharge. Indeed, the agreement between Vasinda and State Farm flatly states that Vasinda was entitled, upon request, to a review in accordance with the termination review procedures approved by the Boards of Directors of the Companies. Those procedures, in turn, required State Farm to provide appropriate advance notice of a termination review meeting to Vasinda. Under Illinois law, which controls here by the agreement of the parties, where a contract gives someone the right to be heard prior to termination, the court is bound to enforce that right. As we construe this agreement, it guaranteed Vasinda such an enforceable contractual right to a termination review and to appropriate notice of that review.
Recognizing the existence of this contractual right to be heard and to have appropriate notice of a termination review meeting, in this case, each party insists that it is entitled to summary judgment in its favor on the liability aspect of any breach of contract claim premised upon the nature of the notice that State Farm provided to Vasinda. These starkly contrasting, and irreconcilable, positions stem from the parties' competing views regarding whether as a matter of law “appropriate notice” of the termination review meeting was provided to Vasinda.
At the outset, we note that the question of what constitutes “appropriate” notice is often very fact-specific and fact driven. Therefore, determining what is “appropriate” in a given setting frequently entails questions of fact which are not amenable to summary judgment resolution. Moreover, as to this question, we find that there are disputed issues of fact which make summary judgment on behalf of any of the parties inappropriate. To be sure, Vasinda alleges that she did not receive the notice of this meeting which was sent to her former work email, and bolsters this claim by pointing to evidence that she was informed that she could no longer access that email at the time that the notice was sent to this work address. Vasinda also presents evidence which rebuts the suggestions that her assistant, Felicia Winters, provided her with notice of this meeting. Specifically, Ms. Winters has provided an affidavit denying that she gave Vasinda any such notice.
While this is substantial evidence supporting Vasinda's claim that she received no notice of this termination meeting, this evidence is not completely uncontroverted. Rather, State Farm points to other evidence which indicates that its emailed termination meeting notice was seen and read by someone at Vasinda's work email address, even though State Farm cannot definitively state who read this email message. While this proof is insufficient to support State Farm's summary judgment claim that Vasinda received “appropriate” notice of this meeting as a matter of law, this countervailing evidence creates a factual issue relating to whether Vasinda received appropriate notice of this meeting which defeats both parties' cross motions for summary judgment on this particular issue.
Finally, even if there was a failure to provide notice to Vasinda regarding this termination review meeting, State Farm still insists that it is entitled to summary judgment on this breach of contract claim. Noting that “[d]amages are an essential element of a breach of contract action and a claimant's failure to prove damages entitles the defendant to judgment as a matter of law,” Ins. Benefit Grp., Inc., 91 N.E.3d at 964, State Farm contends as a matter of law that Vasinda cannot prove any damages flowing from this alleged breach because Vasinda has not shown “any reasonable probability State Farm would have reversed its decision had Plaintiff appeared.” (Doc. 44, at 4).
In our view, there are at least two problems with this contention. First, while proof of contractual damages in this setting may be very challenging, we do not deem it to be legally impossible. Quite the contrary, we note that courts in Pennsylvania have permitted similar breach of contract claims based upon an alleged failure to abide by contract provisions that allowed the plaintiff to have a meaningful termination review prior to his discharge to proceed to trial. Babb v. Geisinger Clinic, No. 1229 MDA 2018, 2019 WL 5265300, at *16 (Pa. Super. Ct. Oct. 17, 2019). We believe that the Babb decision provides a useful paradigm regarding what must be proven in this context to sustain a breach of contract claim. Furthermore, Babb makes it clear that such claims are often fact-bound and not amenable to summary judgment resolution.
Moreover, as a factual matter, we are not prepared to embrace State Farm's suggestion and find as a matter of law that the termination review meeting would have been a wholly futile gesture had Vasinda received proper notice of the meeting and appeared. Our reluctance to embrace this view is a function of State Farm's own internal policies relating to this review process. These policies underscore that the company approaches termination review meetings with an open mind and a willingness to reassess initial termination decisions. Given State Farm's stated willingness to reassess these matters, we should decline the defendant's current invitation to declare the termination review process a completely futile nullity as a matter of law.
IV. Recommendation
For the foregoing reasons, IT IS RECOMMENDED that the Parties' cross motions for summary judgment (Docs. 29 and 31) be GRANTED, in part, and DENIED, in part as follows:
The defendants' motion for summary judgment on Counts II through V of the plaintiffs' complaint which allege age and gender based discrimination claims under Title VII, the ADEA and its state law analogues should be GRANTED. The cross motions for summary judgment on Count I of the complaint, Vasinda's breach of contract claim, should both be DENIED.
The Parties are further placed on notice that pursuant to Local Rule 72.3:
Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636 (b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, 35 however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall witnesses or recommit the matter to the magistrate judge with instructions.