Melin et al. v. Farmers Group Inc. et al

CASE NAME: Melin et al. v. Farmers Group Inc. et al.

TYPE OF CASE: Age discrimination

COURT: Alameda County Superior Court

JUDGE(S): Judge Brad S. Seligman

DEFENSE LAWYERS: Locke Lord LLP, Nina Huerta, Regina J. McClendon, Eric Herzog

PLAINTIFF LAWYERS: Gwilliam, Ovary, Chiosso, Cavalli & Brewer, J. Gary Gwilliam

Amid the ongoing gig economy tension between workers with employee status and those in the independent contractor category, a major insurance company avoided age discrimination claims by four of its former agents by persuading a state trial court jury, 10-2, that the agents were contractors not subject to California's Fair Employment and Housing Act.

Among the defendants was Farmers Group Inc., which provides administrative services to the Farmers insurance companies for whom the agents sold policies.

The win was especially significant because the trial was a test case with further litigation to follow by dozens of other former agents with similar claims. Melin et al. v. Farmers Group Inc. et al., RG19001677 (Alameda Co. Super. Ct., filed Jan. 8, 2019).

Leading the defense was Nina Huerta, the managing partner of Locke Lord LLP's Los Angeles office, joined by Eric A. Herzog and Regina J. McClendon. Christopher S. Maile of Tharpe & Howell LLP represented another Farmers entity defendant.

"Insurance agents have been recognized by courts for some time as independent contractors under California law," Huerta said. "These agents had held themselves out as owners of small business insurance agencies. So the suit was an about-face for them when they claimed to be Farmer's employees."

The four agents alleged that the company arbitrarily terminated them to give their clients to younger, cheaper agents. They argued that Farmers began to micromanage them through new performance standards and training -- a process that made them employees.

"The case boiled down to the evidence in their contracts," which identified the agents as independent contractors, Huerta said, "and the way they ran their agencies, hiring their own employees. It looked like a duck and walked like a duck, and the jury saw that."

Maile, who represented Farmers Group Inc., emailed, "Farmers Group, Inc. presented testimony by a former state commissioner of insurance regarding the extensive regulatory oversight of the defendants and how such oversight prevents the very type of conduct that must be shown for a court to disregard a corporation's separate entity. In rejecting the plaintiffs' claim they were misclassified as independent contractors, the jury also rejected the claim Farmers Group, Inc. is the alter ego of Farmers Insurance Exchange, et al."

Lead plaintiff lawyer J. Gary Gwilliam of Gwilliam, Ovary, Chiosso, Cavalli & Brewer said the case is far from over. "This outcome is not binding on my other plaintiffs, and we have strong appellate grounds. My hope is that as a result of this case, we will be in touch with the defendants for a possible settlement."

--John Roemer