Crueger Dickinson LLC is one of the lead counsel in the case of Jammal, et al. v. American Family Mutual Insurance, et al. which is currently pending in the Northern District of Ohio. The Court held a jury trial starting on April 3, 2017, and on April 18 the jury decided that American Family’s agents were employees for purposes of ERISA. On August 1 the Court issued an order siding with the jury and finding that the American Family employees were agents for purposes of ERISA.  The following list addresses some of the frequently asked questions we have received about the case:

Read the Judge's Decision

Q: What is the case about?

A: The case is primarily about the protection of the agents’ retirement benefits in their Termination Benefit plan (also known as Extended Earnings) under ERISA.  ERISA is the federal law protecting employee retirement benefits and it requires pension plans to meet minimum standards for, among other things, the vesting, accrual, and funding of employee retirement benefits. Plaintiffs and the Class contend that while American Family classified them as independent contractors, it retained a right to control them that makes the agents employees for purposes of ERISA. Plaintiffs and the Class also contend that the Termination Benefits plan does not meet ERISA’s minimum standards and protections and, therefore, must be reformed to comply with ERISA. In addition, Plaintiffs and the Class allege that they were also entitled to certain benefits under the health and other welfare benefits American Family offered to its employees.

Q: Am I a member of the class?

A: Click to read more  

Q: What did the judge decide?

A: The judge decided that Plaintiffs had proved that the agents were employees under ERISA.

Q: The Judge allowed American Family to take an interlocutory appeal. What does that mean and is it bad?

A: No, it is not bad. The judge allowed American Family to file a petition with the Sixth Circuit Court of Appeals to review the decision that the agents are employees for purposes of ERISA. The Sixth Circuit can decide whether it wants to hear the appeal. If it declines, then the case will go back to the district court to continue to the next phase to determine what relief the Class is entitled to. If the Court of Appeals decides to hear the appeal, then the parties will present their case to the appeals court. In that case, we are confident that the Court of Appeals will affirm the judge’s decision.

Q: What is next?

A: American Family is going to ask the Court of Appeals to hear of the case. See “The Judge allowed American Family to take an interlocutory appeal. What does that mean and is it bad,” above. If the Court of Appeals declines to hear the appeal, then the case will continue to the next phase to determine what relief the Class is entitled to.  Specifically, the Court will decide whether the Termination Benefits plan is a retirement plan and if that plan needs to be reformed to comply with ERISA’s minimum protections and requirements. (ERISA is the federal law protecting retirement benefits.) The Court will also have to decide whether the Class was entitled to participate in the health and other welfare benefits plans American Family offered to its employees.

Q: If I’m an American Family agent, does that mean that I am now an employee?

A: No. The Court’s decision does not automatically convert agents to employees for all purposes.  As we have said before, the case seeks ERISA benefits, including the protection and funding of retirement benefits.

Q: Is the Class also seeking benefits under the retirement and 401K plans American Family offers to its employees?

A: No. American Family wrote its retirement and 401K plans to exclude the agents even if they were employees.

Q: Now that the Judge found that the agents are employees for purposes of ERISA, what will I receive?

A: Nothing as of now.   No relief flows automatically from a finding that American Family misclassified that Class as independent contractors. There will be additional proceedings to determine what relief is available under ERISA.  See “What is next,” above.

Q: What are the prospects of settlement?

A: Plaintiffs and lead counsel have always been willing to resolve the case in a fair and reasonable manner. They also recognize that the case, like all lawsuits, has risk and that resolution is always preferred. American Family, however, chose to try the case to the jury. Hence, the jury’s decision.

Q: I’ve heard the case is “worth” $1 billion.  Is that accurate and where does that number come from?

A: The number comes from a report issued by Plaintiffs’ expert actuary in this case. The $1 billion number is a combination of two different numbers. The first number is American Family’s existing liability to pay benefits under the Termination Benefits plan.  This first number is approximately $500+ million. That liability is unfunded, however, and Plaintiffs contend ERISA would require American Family to fund that liability. The second number is the increase in pension liability from having to comply with ERISA’s minimum protections, such as vesting, accrual, and paying a level annuity. The second number is approximately $500+ million. American Family’s position is that even if ERISA applied, the Termination Benefits plan is a “top hat” plan maintained primarily for a “select group of management or highly compensated employees,” and it is therefore exempt from most of ERISA’s protections. Thus, American Family contends there would be no increase in liability if it had to comply with ERISA and it would not have to fund the liability. Plaintiffs dispute American Family’s “top hat” plan position and, if the Judge adopts the jury’s decision, the parties will move to the next phase of the case, which will address this issue.