Lucarell Jury Award May Lead to Class Action Lawsuit
YOUNGSTOWN, Ohio -- When you’re a lawyer who persuades a jury to award your client $42.8 million in damages, the world sits up and takes notice.
The phones in your offices ring more often and your e-mailbox fills more quickly.
In the aftermath of a Mahoning County Common Pleas Court jury finding Nov. 5 for former insurance agent Christine Lucarell of Boardman and against Nationwide Mutual Insurance Co., the offices of Caryn Groedel & Associates in Solon have received calls and emails from nearly 80 other Nationwide agents and former agents seeking representation, says attorney Matthew M. Ries.
Groedel and Ries represented Lucarell during the two-week trial before visiting Judge Thomas J. Pokorny. Because of Nationwide’s actions, Lucarell says, “My agency was terminated and I lost everything. I lost everything. My credit was ruined. My career was ruined. … I can’t even be appointed with certain insurance carriers because of my credit now.”
Indeed, the day after the jury of eight men awarded her $5.7 million in lost profits, $1 million for emotional distress, $100,000 for retaliation and $36 million in punitive damages, Lucarell’s house on Beachwood Drive in Boardman sold for $36,000 at a sheriff’s auction.
Groedel and Ries are weighing whether to file a class-action suit against the insurance giant based in Columbus. “Nationwide agents across the country, are all calling in and saying, ‘The exact same thing happened to me,’ ” Ries says. “All the phones in the office have been ringing off the hook. So we are taking their information.”
As news spread, Ries heard from agents, many of them “terminated,” in Arizona, California, Georgia, Florida, Missouri and Nevada. “Agents are telling me, ‘I’ve been waiting for something like this for years,’ ” the lawyer says. “Everyone had given up hope. Agents filed for bankruptcy. I was told of one suicide and heard about many divorces.”
Nationwide’s four lawyers, led by Quintin F. Lindsmith of Bricker & Eckler, Columbus, say they will appeal the verdict, contending that the losses Lucarell incurred as a Nationwide agent “were not caused by Nationwide, but rather were self-inflicted and caused by her own business decisions.”
During the trial, Groedel and Ries argued that Nationwide set impossibly high sales goals for Lucarell to meet, that no matter how hard she worked, she was set up to fail.
“It’s one thing to say Nationwide screwed up,” Lindsmith countered after the trial. “It’s another to say Nationwide did it with malice or ill-will.”
Asked to provide a spokesman to respond to Lucarell’s assertions, the insurance company issued this prepared statement: “Nationwide strongly disagrees with the jury verdict and we believe we have substantial grounds to file an appeal. 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.
“It is important to note that our objective is to recruit agents and set them up to succeed, not fail,” Nationwide’s statement continued. “It is 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.”
Judge Pokorny, who’s retired from the Cuyahoga County Court of Common Pleas, has set Feb. 19 for when he’ll hear the post-trial motions before the case can be appealed to the Ohio 7th District Court of Appeals. Groedel has filed for attorney fees and prejudgment interest.
Lucarell’s case was filed April 12, 2010, nine months after she was forced to resign.
Her resignation was not at all how she expected her career at Nationwide would end. In mid-2004, Lucarell enthusiastically became a “mentee” – her mentor was Lisa Kohler – in Nationwide’s two-year program to develop, train and establish agents.
Lucarell’s career in insurance began two decades earlier as a secretary in an agency office in California, she says. She returned here to be a state trooper, passing the Ohio Peace Officers training course only to encounter a hiring freeze upon graduation.
So Lucarell enrolled at Trumbull Business College, Niles, completing all but two courses to graduate, while working for the Lucas agency. She left to become the office manager for State Farm agent Jan Cefalu in Boardman. In 2003, Lucarell won State Farm’s Top Gun Award, recognition for selling policies, and applied to be an agent at that insurance company. Her name was put into a pool “and I could’ve had a two-year wait,” Lucarell recalls. So she looked at other insurance companies.
Nationwide responded and sent her to interview with Lisa Kohler who explained the two-year mentee program where “If you did well, they would put you in an agency where the agent was retiring,” Lucarell says, “and you paid for it.”
Lucarell began her tenure at Nationwide in May 2004 under Kohler’s supervision in the Kohler & Associates Inc. office in Austintown. “I exceeded all my goals and she wanted me to work for her [permanently],” Lucarell says. To persuade her to remain rather than enter the three-year agency-executive program, Kohler ”moved me to a claims office in Canfield [where] I was the only person located there and there was no sign” identifying it as a Nationwide office.
Efforts to reach Kohler were rebuffed.
Lucarell began the agency-executive program Nov. 1, 2005, and opened a storefront in the Boardman Plaza Feb. 1, 2006, with help from Nationwide. She took out a $290,000 loan from Nationwide Bank that she used to remodel the 1,600-square-foot storefront – “a complete build-out, which came out of the loan,” she says.
As part of her contract with Nationwide, Lucarell signed a waiver agreeing not to sue Nationwide if she failed to meet the goals the insurance company set. Groedel and Ries contend she signed that under duress.
Lucarell installed new carpet and a new ceiling in her office and hung Nationwide signage on the walls. “I had to purchase computers, furniture, even pencils branded Nationwide,” she says. And the Nationwide contract called for her to “hire two employees from Day One, even though there was no business.” One was a licensed agent, the other wasn’t, but “I had to pay and help her get her license,” Lucarell says.
The office heating bills ran $1,000 a month, Lucarell says, “so I bought space heaters” to lower her utility expense.
To draw attention to her fledging agency, she threw a grand opening party that cost her $5,000. Under the direction of the Nationwide sales manager, she bought advertising on television, a Nationwide requirement of her having her own office.
Nationwide approved a billboard to advertise her agency, which she paid for, and she bought advertising in the daily and weekly newspapers that serve Boardman. She advertised on pizza boxes, bought banners at the field where Boardman High School plays its home football games and gave away $10 gasoline cards to potential customers who walked into her office for a quote.
Her costliest advertising expense, she says, was $20,000 for an ad in the Yellow Pages.
The volume of business did not cover her expenses or result in Nationwide giving her credit toward meeting her contracted goal of selling $1.2 million in policies within three years. She had to achieve that goal to have half of her $290,000 loan forgiven. If she surpassed it, a greater portion of the loan was to be forgiven.
The dream of earning $200,000 a year, which seemed within reach when she signed her contract, became a nightmare as she found herself foundering in debt. When the Nationwide sales manager first approached her, “I was shown information that I could make well over $200,000 a year income with the agency,” Lucarell recalls.
Other Nationwide agents in the program elsewhere in the country have found themselves in nearly identical situations, Ries says.
Frustrated but hoping to climb out of her financial hole – she was putting in long hours and working six and seven days a week – Lucarell accepted Nationwide’s offer of a $50,000 cash infusion. She retained a certified public accountant to help her develop a business plan. Nationwide called the plan “garbage” during the 11-day trial, Lucarell says.
Nationwide “wouldn’t allow a CPA [from the outside],” she says. They wanted all Nationwide people.”
In her lawsuit against Nationwide, Groedel and Ries claimed three breaches of contract including her being compelled to sign a memorandum of understanding to replace the original contract.
The MOU was to be in effect until a Phase Two contract was in place.
Lucarell called the MOU “a cookie-cutter plan. … I didn’t want to sign the plan but I was told it was ‘non-negotiable,’ ” she says. “It was sign or lose the agency.”
The goals laid out in the Phase Two agreement, she contends, were far more challenging to reach than in the original contract, in part because she was given no credit for the sales she had made since opening the agency.
She also sought help from her sales manager and enrolled in the insurance company’s mandatory CEO school for which she paid tuition and hotel bills. She completed the coursework.
In his examination of the Phase Two agreement, Ries says, he saw it employed a 12-month moving basis, not a cumulative measure as in the original agreement. The moving basis denied her credit for her sales from the beginning.
Under those, Lucarell says, “The more I did, the worse off I became.”
“Their expert witness said she would have made zero over 25 years,” Groedel says, “not $2.8 million [in commissions].”
During the trial, Ries presented Lucarell as a good agent, one of Nationwide’s “top-performing agents who developed a larger book of business than more experienced agents. They couldn’t show that she did anything wrong,” he says.
Groedel and Ries also presented evidence that Nationwide forged information on the loan documents she signed. During the trial, Lucarell denied that it was her handwriting on those documents.
The jury found in Lucarell’s favor.
Afterward, the jurors agreed among themselves not to discuss the case or their deliberations, William L. Gueldner of Canfield informed a reporter. Five others simply did not return telephone calls.
In her summation to the jury, Lucarell’s lead attorney, Caryn Groedel, asked the jurors to award her client one month of Nationwide’s yearly profits, which she put at $386 million, in punitive damages.
They did. The jury rendered its verdict the day before the presidential election and coverage of the election eclipsed everything else.
The trial proved an ordeal for Lucarell as she discovered Nov. 6 that “I lost 12 pounds in the 11-day trial.” She pursued the case not just for herself, she says, but for the other Nationwide agents who found themselves in the same predicament. “I stood up for other families,” she says. The jury’s verdict, she believes “gave them hope.”
In the month since, Lucarell is working to ensure her story isn’t neglected or forgotten. “Never give up. Stand up for what you believe,” she says. “Justice will be served [if you] fight and pray for the others.”
This story appeared in the MidDecember edition of The Business Journal.
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Copyright 2012 The Business Journal, Youngstown, Ohio.