A jury in Mahoning County, Ohio has determined that Nationwide Insurance must pay former agent Christine Lucarell $42.8 million in damages related to charges that the insurer breached its contract with Lucarell and fraudulently misrepresented the terms of her employment.
The complaint claims that Nationwide recruited Lucarell and other agents and then reneged on promises to provide resources and training, and set increasingly "unrealistic quotas" for the agents to hit, all as part of a plan to terminate the agents and profit from their books of business.
Nancy Smeltzer, communication consultant with Nationwide, says the insurer plans to appeal the Nov. 5 verdict. "The jury was not allowed to deliberate all the facts. We believe when all the facts are put on the table, it would substantially change the outcome," says Smeltzer. "Nationwide strongly disagrees with the jury verdict and we believe we have substantial grounds to file an appeal."
According to the complaint, Lucarell and other agents were recruited into Nationwide's Agency Executive (AE) Program as exclusive agents for the insurer. The agents would have the opportunity to become independent agents after the program's 36-month production period, the complaint continues.
"Nationwide's intent, however, was to fail the AE agents and terminate their agencies once the agents had generated a profitable book of business for Nationwide, but before the agents completed their production period," Lucarell's complaint states.
Lucarell was allegedly told she would earn commissions in excess of $200,000 per year. In order to cover expenses such as renting office space and building out, staging a grand opening party, etc., Nationwide allegedly required Lucarell to take out a loan from Nationwide Federal Credit Union (NFCU), and the complaint says Nationwide "devised a minimum production plan" requiring agents to hit monthly production quotas that "were not realistic or sustainable" in order to obtain the loan disbursements from NFCU.
"After plaintiff began operating her Nationwide agency on Feb. 1, 2006," says the complaint, "Nationwide withheld from her the training and support services she needed to succeed as a sales agent for Nationwide."
The complain further states that Lucarell was later required to sign successive revised business plans developed by Nationwide that increased monthly quotas and that were "flawed, unrealistic and inadequate to sustain plaintiff's agency."
The modified agreement required Nationwide to provide nine quarterly financial disbursements to finance Lucarell's agency, but the complaint says Nationwide stopped providing the disbursements in April 2009, meaning Lucarell was not able to pay loan interest payments to Nationwide. The company then allegedly informed Lucarell that it was withholding her next 120 commission payments to pay off the NFCU loan.
Lucarell then resigned from Nationwide in July 2009 just prior to being terminated. The complaint says Nationwide "eliminated approximately 90 percent of its AE agencies in a manner similar to that which it utilized to terminate plaintiff's agency."
The complaint charges, "The implied covenant of good faith and fair dealing obligated Nationwide to refrain from engaging in conduct that conferred an undue economic advantage upon Nationwide that was not contemplated by both plaintiff and Nationwide at the time of contracting."
Nationwide's Smeltzer contests the thrust of Lucarell's argument: that Nationwide recruited the agents with the intention of having them fail. She says, "It's important to note that our objective is to recruit agents and set them up to succeed, not to fail. It's in our best interests and the interests of our agency partners to build the most successful partnership possible to help us both achieve our goals."
The $42.8 million award to Lucarell includes $6.8 million in compensatory damages and $36 million in punitive damages, according to Caryn Groedel & Associates Co., LPA, the firm representing Lucarell.
The case is Christine Lucarell v. Nationwide Mutual Insurance Co. in the Court of Common Pleas, Mahoning County, Ohio.
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