Class Certification Granted in Employment Status Dispute

A federal judge granted class certification on March 2, 2016 to insurance agents who claim that the company who hired them, American Family, mislabeled its sales force as “independent contractors” to avoid compliance with the requirements of the Employee Retirement Income Security Act (“ERISA”).

Walid Jammal and Dana LaRiche, on behalf of themselves and those similarly situated, filed the lawsuit, Jammal v. American Family Ins. Group, No. 1:13-cv-00437, N.D. Ohio, in February 2013. In the class action, the plaintiffs assert that American Family hired insurance agents as independent contractors to sell retirement product, as well as home, auto, life, umbrella, business, health and other policies. Despite American Family’s classification of the agents as independent contractors, the plaintiffs contend the agents, in fact, qualify as employees under ERISA because American Family “retained the right to exercise control over the manner and means by which they conducted every material aspect of their business.” Consequently, the plaintiffs argue they should have received retirement benefits and health, life, disability and dental plans like other employees of the company.

The plaintiffs proposed three classes in the case—two relating to termination benefits and one relating to health, dental and disability benefits. American Family opposed them all, arguing that the plaintiffs “failed to demonstrate commonality for any of the proposed classes,” and that the named plaintiffs did not satisfy the typicality requirement under Fed. R. Civ. Pro. 23(a)(3).

In finding in favor of certifying the class, Hon. Donald C. Nugent held American Family’s arguments as to issues of commonality among the class members was not supported by applicable case law. Further, Judge Nugent ruled that the plaintiffs satisfied the typicality requirement since the named plaintiffs had the same claims that will be determined by a common question: “were the agents misclassified as independent contractors rather than employees?” As such, Judge Nugent determined class certification in this case was appropriate.