Hart v. Farmers Insurance Exchange et al
Filing
25
OPINION AND ORDER: Defendants' 14 motion for summary judgment is granted in part and denied in part. Plaintiff's race discrimination claim, brought pursuant to 42 U.S.C. § 1981 and the Arkansas Civil Rights Act, is dismissed with prejudice, and plaintiffs claim for tortious interference with business expectancy is denied without prejudice. Signed by Judge Susan Webber Wright on 4/9/2015. (mcz)
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
WESTERN DIVISION
CHARLES G. HART,
*
*
Plaintiff,
*
*
vs.
*
*
FARMERS INSURANCE EXCHANGE,
*
TRUCK INSURANCE EXCHANGE, FIRE
*
INSURANCE EXCHANGE, MID-CENTURY *
INSURANCE COMPANY, FARMERS NEW *
WORLD LIFE INSURANCE COMPANY,
*
INC., PATRICIA GAYLE GRAVES, and
*
ROD JOHNSON,
*
*
Defendants.
*
No. 4:14CV00160 SWW
Opinion and Order
Plaintiff Charles G. Hart (“Hart”) brings this race discrimination action pursuant to 42
U.S.C. § 1981 and the Arkansas Civil Rights Act, Ark. Code Ann. §16-123-101 et seq.
(“ACRA”). He also brings a state law claim of tortious interference with a business expectancy.
The defendants are Farmers Insurance Exchange, Truck Insurance Exchange, Fire Insurance
Exchange, Mid-Century Insurance Company, Farmers New World Life Insurance Company,
Farmers Insurance Company, Inc. (collectively “Farmers”), Patricia Gayle Graves, and Rod
Johnson. Before the Court is defendants’ motion for summary judgment, Hart’s response, and
defendants’ reply. After careful consideration, and for the reasons that follow, defendants’
motion is granted in part and denied in part. Hart’s race discrimination claim is dismissed with
prejudice, and Hart’s supplemental claim is dismissed without prejudice.
Background1
Hart was an independent contractor agent appointed by Farmers to sell Farmers insurance
policies. He became a Farmers agent in 2001. The Agent Appointment Agreement
(“Agreement”) Hart signed provides, in part, that he has an obligation to “furnish insurance
services to all policyholders of the Companies . . . in such a manner as to advance the interests of
the policyholders, the Agent and the Companies.” The Agreement permits termination by either
party upon thirty days written notice in the event of a breach by the other party. It also permits
either the agent or Farmers to terminate the Agreement upon three months notice for any reason.
Separate Defendant Gayle Graves is an independent contractor Farmers District Manager
located in Little Rock, Arkansas. Hart’s Farmers agency was assigned to Graves’s Farmers
district. On July 18, 2013, Graves returned a telephone call from a Farmers customer, “Ms. R.”
Ms. R told Graves that Hart raped her in his Farmers agency office. According to Graves, Ms. R
told her that she reported the rape to law enforcement and gave Graves a police report number.
Hart knows Ms. R’s full name.
Graves says that within minutes of her conversation with Ms. R, she called Separate
Defendant Rod Johnson, the Agency Development Manager, to tell him of the allegations.
Johnson obtained a copy of the police report which identified the offense as rape and lists Hart as
the suspect. On July 22, 2013, Graves and Johnson met with Hart to discuss the allegations. At
that time, Hart denied raping Ms. R. According to Johnson’s notes from the July 22 meeting,
Hart admitted to having sex with Ms. R in his office. On July 24, 2013, Johnson sent an email to
1
The undisputed facts are taken from Defendants’ Statement of Undisputed Material Facts (ECF
No.16) and Hart’s Response to Defendants’ Statement of Undisputed Material Facts (ECF No. 18), unless
otherwise noted.
2
Paul Crosetti, who was the Head of Farmers Mid-Central Territory, and to Keith Gockel, a
consultant in Farmers Home Office Agencies, requesting authority to terminate Hart’s agency.
Johnson attached to the email his notes from the meeting with Hart and a summary of what Hart
said during the meeting. Johnson described Hart’s actions as “unacceptable and not normal
good business practices.” Crosetti gave Johnson permission to terminate Hart’s agency. By
letter dated August 2, 2013, Farmers notified Hart that it was terminating the Agreement upon
three months written notice.
In addition to claiming his termination was racially motivated, Hart alleges defendants
discriminated against him in 2011 in the re-assignment of policies. When Farmers terminated
Allen Kerr, an independent contractor Farmers agent, it re-assigned Kerr’s policies to other
Farmers agents. Graves was responsible for proposing policy re-assignments for the majority of
the policies assigned to Kerr’s agency. Johnson had to approve each proposed re-assignment.
Hart complains Graves assigned him only three of Kerr’s policies while the rest went to white
agents. He says one white agent received 224 of Kerr’s policies and another white agent
received 427. Hart claims race was a factor in the decision on re-distribution of the policies.
Standard of Review
Summary judgment is appropriate when “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). As a prerequisite to summary judgment, a moving party must demonstrate
“an absence of evidence to support the non-moving party’s case.” Celotex Corp. v. Catrett, 477
U.S. 317, 325 (1986). Once the moving party has properly supported its motion for summary
judgment, the non-moving party must “do more than simply show there is some metaphysical
3
doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986).
The non-moving party may not rest on mere allegations or denials of his pleading but
must “come forward with ‘specific facts showing a genuine issue for trial.’” Id at 587 (quoting
Fed.R.Civ.P. 56(e)). “[A] genuine issue of material fact exists if: (1) there is a dispute of fact;
(2) the disputed fact is material to the outcome of the case; and (3) the dispute is genuine, that is,
a reasonable jury could return a verdict for either party.” RBSI Aerospace, Inc. v. Affiliated FM
Ins. Co., 49 F.3d 399, 401 (8th Cir. 1995).
Discussion
Discrimination claims brought under 42 U.S.C. §1981 and the ACRA are analyzed in the
same manner as claims under Title VII. See Anderson v. Durham D & M, LLC, 606 F.3d 513,
520 -521 (8th Cir. 2010)(Title VII and § 1981 analyzed the same); Evance v. Trumann Health
Services, LLC, 719 F.3d 673, 677 (8th Cir. 2013)(disparate treatment claims under Title VII and
the ACRA analyzed in the same manner). To survive an employer’s motion for summary
judgment, an employee may produce direct evidence of discrimination. “If the employee lacks
direct evidence of discrimination, he can survive summary judgment by showing a genuine
dispute for trial under the burden-shifting framework established in McDonnell Douglas Corp. v.
Green, 411 U.S. 792 (1973).” McCullough v. Univ. of Arkansas for Med, Sciences, 559 F.3d
855, 860 (8th Cir. 2009).
Because there is no direct evidence of discrimination, the Court proceeds to the
McDonnell Douglas analysis, under which Hart first must establish a prima facie case of
discrimination. In order to do that, Hart must show that he: (1) is a member of a protected group;
4
(2) was meeting the legitimate expectations for his position; (3) suffered an adverse action; and
(4) the circumstances give rise to an inference of discrimination. See Davis v. Jefferson Hosp.
Ass’n, 685 F.3d 675, 680-81 (8th Cir. 2012). If Hart can establish a prima facie case, then the
burden of production shifts to Farmers to articulate a legitimate, nondiscriminatory reason for its
actions. If Farmers meets this burden, then Hart must show that Farmers’s proffered reason for
its actions is a pretext for unlawful discrimination. McCullough, 559 F.3d at 860.
Assuming Hart has established the first three elements of his prima facie case, the
question is whether he has presented evidence sufficient to create a genuine issue of material fact
as to the fourth element. “At the inference-of-discrimination stage, ‘[a] plaintiff may show
pretext, among other ways, by showing that an employer (1) failed to follow its own policies, (2)
treated similarly-situated employees in a disparate manner, or (3) shifted its explanation of the
employment decision.’” Young v. Builders Steel Co., 754 F.3d 573, 578 (8th Cir.2014)(quoting
Lake v. Yellow Transp., Inc., 596 F.3d 871, 874 (8th Cir. 2010). “This Court has two lines of
cases on the standard to determine whether employees are ‘similarly situated’ at the prima facie
stage of the McDonnell Douglas test.’ “One line sets a ‘low threshold,’ requiring only that the
employees are ‘involved in or accused of the same or similar conduct and are disciplined in
different ways.’ ‘The other line more rigorously requires that the employees be ‘similarly
situated in all respects.’’ Pye v. Nu Aire, Inc., 641 F.3d 1011, 1019 (8th cir. 2011)(internal
citations and quotations omitted).
Hart argues that unlike other agents who were terminated, he was not accused of a
serious offense, one that would directly impact the profitability of the company. He also argues
the agents were not terminated until an investigation confirmed that the agent actually engaged
5
in the wrongful conduct.2 Defendants argue that Hart admitted to having sex with a Farmers
customer in his Farmers office during business hours and that he cannot identify any other agent
who engaged in the same misconduct but received more favorable treatment. Although Hart
agrees that he admitted during his deposition that he had sex in his office with Ms. R, he did not
admit to that conduct during his meeting with Graves and Johnson. Hart said that on the advice
of his attorney, he told Graves and Johnson he could not talk about the rape allegation because it
was an ongoing investigation.3 He says he denied having ever had sex with Ms. R before and
said he told Johnson he had never had sex in the office before.4 Hart asserts Farmers could not
reasonably have concluded that he had engaged in that conduct at the time it terminated his
agency. He argues it was the allegation of rape that spurned the decision to terminate him. Hart
argues that if Johnson did not believe he had committed rape, Johnson would not have testified
that he was uncomfortable with having Graves accompany him to Hart’s office to provide him
with the termination letter. Hart argues that Johnson must have had a “racial bias [and]
implicitly believed that African-American Hart was guilty of rape and he felt uncomfortable for
his white colleague to be near him.”5
Hart also takes issue with Farmers’s assertion that Crosetti was the decision-maker and
asserts that the District Manager, Graves, is the person charged with recommending agent
termination, not Johnson, the Agency Development Manager. This “irregularity,” Hart argues,
2
Pl’s. Resp. to Defs.’ Mot. Summ. J. (ECF No. 17-10) at 4.
3
Defs.’ Mot. Summ. J., Ex. D (Hart Dep.) at 52. ECF No. 14-4 at 6.
4
Id. at 56. ECF No. 14-4 at 10.
5
Pl’s. Resp. to Defs.’Mot. Summ. J (ECF No. 17-10) at 14.
6
creates an inference of discrimination. Hart argues that Farmers did not engage in the kind of
investigation it typically does before terminating an agent, and asserts that other agents have
engaged in conduct much more serious than his and were not terminated. He cannot identify any
agents who engaged in the same conduct as he and were treated more favorably. The Court
concludes Hart has not shown circumstances that would give rise to an inference of racial
discrimination with regard to Farmers’s decision to terminate him.
Even if Hart could establish a prima facie case of discrimination, Farmers has articulated
a legitimate non-discriminatory reason for terminating Hart’s agency. It is undisputed that a
Farmers customer filed a complaint with the police accusing Hart of raping her in his office. At
the time of their decision to terminate his agency, defendants believed that Hart had sex in his
office on the date in question with a customer. Whether Crosetti carefully reviewed Johnson’s
request to terminate Hart before he gave his approval does not create a genuine dispute of
material fact as to pretext. “[E]mployers are free to make their own business decisions, even
inefficient ones, so long as they do not discriminate unlawfully.” Handebrink v. Brown Shoe
Co., 110 F.3d 644, 646 (8th Cir. 1997). The proper inquiry is not whether an employer was
wrong in its conclusions or reasoning. See Johnson v. AT&T Corp., 422 F.3d 756, 762-63 (8th
Cir. 2005). The proper inquiry is whether the employer honestly believed the employee engaged
in misconduct. Id.
The Court finds that Hart fails to establish a prima facie case of race discrimination and
fails to establish there is a genuine issue of material fact as to pretext as to his termination.
As to re-assignment of policies, Farmers contends Hart cannot establish a prima facie
case because he cannot show that similarly situated white agents were treated more favorably.
7
Hart argues that statistical evidence establishes an inference of discrimination. At the time
Kerr’s agency was terminated, he had approximately 4,159 policies in force.6 Of those 4,159
policies, 4,120 were re-assigned to non African-American agents. Only three AfricanAmericans in Hart’s district got any policies; he received three. He complains that several white
agents in his district received a very large number of policies. Hart argues the gross disparity in
the distribution of policies gives rise to an inference of discrimination.
Defendants argue that because all the agents were not similarly situated, Hart’s “bottom
line” tally is not sufficient to establish a prima facie case. In making the re-assignments, Graves
testified she took into account a number of factors, including whether the agent had a financial
services license, whether the agent employed one or more licensed and appointed staff members
to assist in handling an influx of policies, whether the agent’s office facilities were on par with
Kerr’s, and the geographic proximity of the policyholder to the agent, if the other factors
supported re-assignment.7 The plaintiffs in Morgan v. United Parcel Serv. of America, Inc., 380
F.3d 459 (8th Cir. 2004), were a class of black UPS center managers who complained that there
was racial disparity in promotions. The Eighth Circuit said: “To avoid summary judgment under
the disparate-treatment model through the use of statistics, Plaintiffs must show that ‘[w]hen the
proper labor market is considered, the statistical evidence is sufficient to raise an inference of
discrimination.’” Id. at 465 (citation omitted). The Morgan plaintiffs “offered evidence that in
thirty-five of UPS’s districts, there were no blacks promoted to division manager between 1989
and 1998.” Id. at 464. The Eighth Circuit noted that the district court properly found problems
6
Id., Ex. G. ECF No. 17-8.
7
Defs.’Mot.Summ.J., Ex. B (Graves Decl.). ECF No. 14-2.
8
with the analysis, including the fact that the “tally did not take into account whether there were
any qualified black employees available for promotion in those districts.” Id. The Eighth Circuit
explained: “The upward mobility classes consist of center managers who have not been
promoted to division manager. Thus, the probative inquiry involves a comparison between the
percentage of division managers who are black in the population from which division managers
are chosen. As the district court held, ‘plaintiff’s reliance on a bottom line racial imbalance in
the workforce is insufficient to establish that blacks are less likely to be promoted.’” Id. at 464465. In affirming summary judgment for UPS, the Eighth Circuit said that in order to be legally
sufficient, “the plaintiffs’ statistical evidence ‘must show a disparity of treatment, eliminate the
most common nondiscriminatory explanations of the disparity, and thus permit the inference
that, absent other explanation, the disparity more likely than not resulted from illegal
discrimination.’” Id. at 463-464 (citations omitted).
Here, Hart fails to raise an inference of discrimination. Nor can he establish a genuine
issue of material fact in dispute as to pretext. Farmers explained the method it used for
determining the reassignments and Hart has no proof to support a finding that the reasons were a
pretext for racial discrimination.
Because the Court finds no issues for trial with respect to Hart’s race discrimination
claim over which this Court has original jurisdiction, that claim will be dismissed, with
prejudice. The Court will dismiss Hart’s supplemental tortious interference with a business
expectancy claim, which he brings pursuant to state law, without prejudice. See 28 U.S.C. §
1367(c)(3)(“The district court may decline to exercise supplemental jurisdiction over a claim . . .
if . . . the district court has dismissed all claims over which it has original jurisdiction . . . .”.
9
Conclusion
IT IS THEREFORE ORDERED that defendants’ motion for summary judgment [ECF
No. 14] is granted in part and denied in part. Plaintiff’s race discrimination claim, brought
pursuant to 42 U.S.C. § 1981 and the Arkansas Civil Rights Act, is dismissed with prejudice, and
plaintiff’s claim for tortious interference with business expectancy is denied without prejudice.
A separate Judgment shall be entered.
DATED this 9th day of April, 2015.
/s/Susan Webber Wright
UNITED STATES DISTRICT JUDGE
10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?