Case: EEOC v. ALLSTATE INSURANCE COMPANY

On Oct. 7, 2004, the St. Louis District office of the EEOC brought this suit against Allstate Insurance Company, a major insurance provider, in the U.S. District Court for the Eastern District of Missouri. The complaint alleged that Allstate's rehire policy disproportionately and adversely impacted workers over the age of 40, in violation of the Age Discrimination in Employment Act (ADEA). The EEOC also brought a disparate treatment claim, alleging that Allstate refused to rehire certain former employees because of their age. The EEOC sought to permanently enjoin Allstate from discriminating on the basis age against individuals 40 years of age and older. The EEOC also wanted the court to order that Allstate implement policies, practices, and programs providing equal employment opportunities for individuals 40 years of age and older. Finally, the EEOC sought back wages and liquidated damages for adversely affected employees.

In 1999, Allstate implemented a Reorganization Plan, which eliminated all employee-agent positions and terminated the employment contracts of its employee-agents. In connection with the Reorganization Plan, Allstate implemented a rehire moratorium policy in 2000. Under the policy, former employee-agents who were subject to the Reorganization Plan were ineligible for rehire in non-agent positions for a period of one year after their termination, or after all severance benefits had been received. The EEOC alleged that the rehire moratorium policy had disparate impact on former employee-agents who were members of the protected age group and that Allstate engaged in disparate treatment of such members of the protected age group.

Both sides filed motions for partial summary judgment in June 2006, and in October 2006 District Judge E. Richard Webber denied Allstate's motion but granted in part the EEOC's motion. The court held that although no material issue of fact existed as to the EEOC's prima face case of disparate impact, Allstate had provided sufficient evidence that the challenged employment policy was adopted based on reasonable factors other than age. Since the EEOC had the ultimate burden of showing that Allstate's reasons for the policy were unreasonable, and had provided sufficient evidence of unreasonableness, the court held that question was not appropriate for summary judgment. 458 F. Supp. 2d 980 (E.D. Mo. 2006).

In Jan. 2007, Allstate was given leave in the district court to file an interlocutory appeal, at which point the case was stayed pending the result of that appeal. No. 4:04CV01359 ERW, 2007 WL 38675 (E.D. Mo. Jan. 4, 2007). Allstate appealed on two questions of law: (1) whether Allstate’s rehire policy is an “employment policy”

which can be challenged under a disparate impact theory of discrimination; and (2)

whether the statistics proffered by the EEOC and adopted by the district court

establish disparate impact as a matter of law. On June 10, 2008, Eighth Circuit Judge Myron H. Bright answered both questions in the affirmative, holding that Allstate's rehire policy could be challenged under ADEA and that the EEOC's statistical evidence established a prima facie case that the rehire policy had a disparate impact. 528 F.3d 1042 (8th Cir. 2008).

However, on September 8, 2008, the Eighth Circuit granted Allstate's Petition for Rehearing En Banc and vacated the June 10, 2008 judgment. That same day, the Eighth Circuit dismissed the appeal for lack of jurisdiction and the case went back to district court.

After proceedings resumed in the district court, there was additional discovery. On Sept. 11, 2009, the parties filed a joint motion to approve the parties' proposed Stipulated Order resolving all claims in this action. On Sept. 14, 2009, District Judge Webber issued a Stipulated Order containing the terms of the parties' settlement agreement.

With respect to injunctive relief, Allstate agreed that before adopting any new policy limiting the re-employment of former employees whose employment was terminated involuntarily as part of a reorganization or reduction-in-force, it will determine whether such a policy disproportionately affects individuals who are age 40 and above. If the policy does disproportionately impact those 40 or older, Allstate agreed to refrain from implementing the policy until it gives the EEOC 14 days written notice of its implementation, provides a list of reasons for the policy, and gives reasonable opportunity to meet and discuss with the EEOC. Additionally, Allstate agreed that any new policy would comply with the requirements of the ADEA. However, there was no admission of liability by Allstate.

With respect to monetary damages, Allstate agreed to pay a total of $4.5 million to individuals affected by the rehire policy. The settlement agreement required that the EEOC provide notice to all eligible claimants, giving them a chance to comment on or object to the methodology for allocating the $4.5 million settlement fund. The agreement specified that the court would retain jurisdiction over the case for three years.

Following the notice and comment period, Judge Webber issued a Settlement Allocation Order on Dec. 15, 2009. The Settlement Allocation Order approved of the proposed Distribution Plan, stating that it was a fair and reasonable allocation of the monetary relief provided under the Stipulated Order, and rejected all of the claimants' objections.

On Jan. 14, 2010, Judge Webber finalized the settlement. The three year period of the court's jurisdiction passed without further litigation, and the case is now closed.