STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LYNN CATTIN, )

)

Petitioner, )

)

v. ) CASE NO. 88-5687

)

GOVERNMENT EMPLOYEES )

INSURANCE COMPANY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William R. Cave, held a formal hearing in the above- styled case on March 13, 1989, in Tallahassee, Florida. On March 24, 1989, Petitioner filed a Petition To Reopen Charge of Sex Discrimination with the Division of Administrative Hearings. The petition was granted, and a formal hearing on the issue of sex discrimination was held on July 31, 1989 in Tallahassee, Florida.

APPEARANCES

For Petitioner: John F. MacLennan, Esquire

KATTMAN, ESHELMAN & MacLENNAN, P.A.

1920 San Marco Boulevard Jacksonville, Florida 32207

For Respondent: John S. Derr, Esquire

GRANGER, SANTRY, MITCHELL & HEATH, P. A.

Post Office Box 14129 Tallahassee, Florida 32317

STATEMENT OF THE ISSUES

1. Whether at any time material to this proceeding there was an employee- employer relationship between Respondent, Government Employees Insurance Company (GEICO) and GEICO's general field representatives (GFR).

   
   

2. Whether the close relationship referred to in GEICO's conflict of interest policy was limited solely to the close relationship as a result of a person's marital status or did it include any close relationship, and, in either case, was the conflict of interest policy based on a bona fide business necessity.

   
   

3. Whether GEICO's refusal to appoint Petitioner as the GFR in GEICO's office in Neptune Beach, Florida was based on either Petitioner's marital status or her sex.

PRELIMINARY STATEMENT

This cause had its inception when Petitioner, Lynn Cattin, was denied an appointment as a general field representative (GFR) with Respondent, Government Employees Insurance Company (GEICO). This refusal to appoint occurred in August, 1987. Thereafter, Petitioner filed a complaint. The complaint alleged discrimination on the basis of sex and marital status. Petitioner subsequently abandoned her charge of sex discrimination, and the cause proceeded to hearing solely on the charge of marital status discrimination.

At the hearing on March 13, 1989, the Petitioner testified on her own behalf but presented no other witnesses. Petitioner's exhibits 1 through 14 were received into evidence. Respondent presented the testimony of Carl John Kelle.

Respondent's exhibits 1 through 12 were received into evidence. The deposition of Frank Butterfield taken on February 27, 1989, was received into evidence as Joint Exhibit 1.

On March 24, 1989, Petitioner filed a Petition To Reopen Charge Of Sex Discrimination on the basis that earlier statements made by GEICO's witnesses before the Florida Commission On Human Relations, which resulted in Petitioner dropping the sex discrimination charge, were in fact incorrect as demonstrated by GEICO's witness at the hearing on March 13, 1989. After reviewing the petition, the response thereto and other portions of the record, the Petitioner was allowed to amend her petition to include the charge of sex discrimination in this proceeding. Additional discovery was allowed, and the formal hearing on the issue of sex discrimination was scheduled for July 31, 1989.

Petitioner presented no witnesses at the hearing on July 31, 1989.

Petitioner's exhibits 15 through 40 were received into evidence. Respondent presented the testimony of John Carl Kelle. Respondent's exhibits 13 and 14 were received into evidence.

A transcript of the first hearing was filed with the Division of Administrative Hearings on March 23, 1989 and the transcript of the second hearing was filed on August 24, 1989. The parties were granted 15 days from the mailing of the second transcript to file their respective posthearing Proposed Findings of Fact and Conclusions of Laws pursuant to Rule 221-6.031, Florida Administrative Code, with the understanding that the submission of the Recommended Order may extend beyond the thirty days provided by Rule 28-5.402, Florida Administrative Code, and in that regard the rule was waived. A ruling on each proposed

finding of fact has been made as reflected in an Appendix to the Recommended Order.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:

1. Petitioner, Lynn Cattin, has been married to her husband, Larry Cattin, continuously since June, 1972.

   
   

2. Larry Cattin has been employed as a senior account agent with Allstate Insurance Company (Allstate) since 1979 selling insurance products, including auto and homeowner's insurance.

3. Petitioner responded to a newspaper advertisement placed by Frank Butterfield's insurance agency and was employed by that agency in its Neptune Beach, Florida Branch Office (branch office) in March 1983. Petitioner continued to work for the Butterfield insurance agency until the end of the 1987 calendar year.

   
   

4. Frank Butterfield is now and was at all times material to this proceeding a general field representative (GFR) of Respondent, Government Employees Insurance Company (GEICO). Approximately 80% of Butterfield's branch office income was derived from GEICO products such as homeowner and automobile insurance.

   
   

5. Petitioner advised Butterfield of her husband's position with Allstate prior to her hiring, and requested that Butterfield advise GEICO of her husband's position with Allstate. Butterfield advised GEICO's zone manager, Hugh McClelland of Larry Cattin's position with Allstate, and was advised by GEICO that there was no objection to Butterfield hiring Petitioner while her husband was employed by Allstate. Carl Kelle and Harry Bond, both holding the position of vice-president with GEICO, and Warren Trumble, also a zone manager for GEICO were aware of Larry Cattin's position with Allstate.

   
   

6. Petitioner was the only employee in the branch office until May, 1986, and was basically in charge except when Butterfield was in the branch office. Butterfield was present in the branch office a good percentage of the time during 1983 through 1985 but his presence in the branch office was reduced to approximately 20% after 1985.

   
   

7. Petitioner's compensation was $13,000.00 per year when she began working for Butterfield in 1983. When Petitioner left Butterfield's employment at the end of 1987 her compensation was $20,000.00 per year. The clerical employee's compensation at the end of calendar year 1987 was $240.00 per week.

   
   

8. GEICO provided Petitioner with business cards which identified her as "Lynn F. Cattin, Representative".

   
   

9. During her employment with Butterfield, Petitioner had complete access to all sales information and other possible confidential information relating to GEICO in the branch office.

   
   

10. On occasion, Petitioner would refer potential customers of GEICO's to Allstate but only where GEICO did not offer insurance to meet the customer's needs and only after making Butterfield aware of the situation.

    
    

11. During her employment with Butterfield, Petitioner attended seminars conducted by GEICO for its GFRs.

    
    

12. The branch office had a gross commission income during the year 1987 of approximately $7,000.00 per month with expenses for the office of approximately $3,000.000 per month including Petitioner's salary and the salary of the clerical employee.

    
    

13. In the latter part of 1986, GEICO decided to require each office to have its own GFR. Therefore, the branch office was to have its own GFR since Butterfield would be GEICO's GFR in his office in Jacksonville, Florida. The appointment of the GFR for the branch office was to be effective January 1, 1988.

14. Butterfield recommended Petitioner for the position of GFR in the branch office, and Petitioner was interviewed by Mr. Carl Kelle, Mr. Harry Bond, and Mr. Warren Trumble, representatives of GEICO, at a Tampa, Florida seminar.

    
    

15. Applications of potential GFRs are presented to the GFR Board which makes the decision concerning which candidates will be appointed to the position of GFR.

    
    

16. When Petitioner's application was considered by the Board, Gene Mahan, president of GEICO, suggested there may be a problem with the conflict of interest policy.

    
    

17. Gene Mahan discussed the conflict of interest as it concerned Petitioner's application with William Snyder, Board Chairman of GEICO.

    
    

18. William Snyder disapproved Petitioner's application on the basis of her husband's representation of a competing carrier, Allstate.

    
    

19. Petitioner wrote a letter to Snyder dated July 29, 1987, requesting that he reconsider his decision. Snyder responded by letter dated August 19, 1987, assuring the Petitioner that GEICO had no concerns regarding her loyalty while employed by Butterfield and that GEICO's only concern was a "potential" concern for future problems, but that because of her husband's position with Allstate they could not consider her for the GFR position.

    
    

20. At no time was Petitioner given any other reason than her husband's employment status with Allstate for her having been denied the GFR position with GEICO.

    
    

21. Carl Kelle brought Petitioner's application to the GFR Board hoping there could be an exception made to the conflict of interest policy. Kelle was unaware of any exception having been made to that policy.

    
    

22. After Petitioner was denied the GFR appointment by GEICO, Morris Burbia was appointed GFR for the branch office by GEICO, and eventually Burbia contracted with Butterfield to purchase the branch office. Petitioner worked for Butterfield until the end of the calendar year 1987 when Butterfield's management of the branch office ended.

    
    

23. The history of GEICO's conflict of interest policy dates back to 1976. At that time GEICO was the preferred risk carrier in a group of companies. The standard company was Criterion Insurance company, now known as GEICO Indemnity. GEICO had more business than it had surplus to support, so it elected to terminate its agency appointment countrywide. The standard company, Criterion Indemnity, continued representation agreements with GFRs who were operating at the time. The GEICO companies recognized that after the withdrawal of GEICO, there were insufficient products for a GFR to continue to survive without having a preferred carrier, so permission was given to each of the GFRs to obtain a representation agreement with a preferred carrier other than GEICO. In 1978 GEICO returned to the market and offered a majority of the remaining GFRs new appointments. Part of the new agreement was that the GFRs would represent GEICO companies exclusively, and over time would cease handling the preferred risk carriers with whom they had been dealing. The GFRs were not to write new business for the other company, but could take a period of time to dispose of their old business. Over the next couple of years, the relationships with the other insurance companies were gradually disposed of by most of the GFRs.

24. While the majority of GFRs returned to exclusive representation of the GEICO companies, a few developed subterfuges which would allow them to continue representing the other preferred risk company while giving the appearance of exclusive representation of GEICO. These included selling the other company's book of business to a wife or girlfriend who would then handle those policies out of the same or a neighboring building.

    
    

25. At the time it was impossible for GEICO to police its GFRs adequately since there were only four zone managers covering one hundred locations around the country.

    
    

26. Production comparisons performed by GEICO indicate that when a GFR in a conflict of interest situation is replaced the business increases. However, it was not shown that the increased business was due entirely to the absence of the alleged conflict of interest situation.

    
    

27. There was substantial competent evidence to show that GEICO's conflict of interest policy is that GEICO prefers not to appoint an individual who has a close relationship with another individual employed by a competitor in a comparable position.

    
    

28. The purpose of the GFR program is to penetrate the military market. The largest carrier in that market is State Farm, followed by Allstate, with GEICO in third place.

    
    

29. There were at least three situations where male GFRs had a close relationship with another person in a comparable position that was employed by or representing competing insurance companies simultaneously with the GFR's representation of GEIC0. In first situation the GFR was terminated within the year after GEICO learned the GFR's violation of the exclusivity provision of the GFR agreement. It was only learned later that the GFR had sold this book of business to his girlfriend. In the second situation GEICO began pursuing a solution within a month after learning of the conflict. The wife of the GFR disposed of her book of business within the year, and the GFR retired within a year and a half. In the third situation there was no proof of joint representation between the GFR and his daughter. However, the situation resolved itself when the daughter took over her father's business, with GEICO's approval, after he became terminally ill. Although it took time to remedy each of these situations, there was no evidence that GEICO agreed to allow the conflict of interest to continue after learning of its existence.

    
    

30. There was no evidence that GEICO had ever appointed a GFR where, at the time of the appointment, it was known that the GFR had a close relationship with another individual who had a comparable position with a competing company.

    
    

31. The GFR agreement is uniform and the following are pertinent parts of GEICO's General Field Representative's Agreement (Agreement) for appointment:

    
    

    1. GENERAL

       1. Company appoints the G.F.R. to act as its representative....

          * * *

          The G.F.R. agrees to maintain an office from which to conduct Company's business....

       2. The G.F.R. accepts the appointment and agrees to sell. the

       lines of insurance offered by the Company...further agrees not to sell any lines of insurance directly competitive with those offered by Company....

       * * *

       e. The G.F.R. shall conduct herself in a prudent businesslike manner; she shall exercise her own judgment as to the time and manner of her performance under this Agreement, and she shall be

       free to exercise her own judgment as to the persons from whom she will solicit applications for the lines of insurance provided by Company and the time and place of such solicitation. Nothing contained herein shall be construed to create the relationship of employer and employee between Company and the G.F.R. (Emphasis Supplied).

       * * *

    2. ACCOUNTING

       1. The G.F.R. shall render to the Company a daily accounting of all business...shall pay over...shall maintain bank account. approved

          by Company...shall not use this account for any other purpose....

       2. The G.F.R. shall keep true and complete records and accounts of all of her transactions under this Agreement....

       Company may audit the accounts. of

       the G.F.R. at any time without prior notice of such audit being given to the G.F.R....

       * * *

       1. ADVERTISING

          1. Company may conduct independent advertising campaigns in the territory assigned to the G.F.R.

          2. The G.F.R. shall not insert any advertisements respecting Company... without first obtaining the consent of Company in writing....

       2. PROPERTY OF COMPANY

          Any forms or other supplies or equipment of Company...shall always remain the property of Company....

       3. EXPENSES OF GENERAL FIELD REPRESENTATIVES The G.F.R. shall pay all expenses

          which she incurs in connection with carrying out this Agreement....

       4. OTHER REPRESENTATION

       The G.F.R. may represent other companies, provided prior approval for such representation is secured in writing by the G.F.R. from Company.

       * * *

       9. TERMINATION OF AGREEMENT

       a. This Agreement may be terminated

       by either the Company or the G.F.R. upon

       60 days' written notice to the other.

       * * *

       11. BOND

       The G.F.R. shall be bonded in accordance with the requirements set

       forth by the Company. All bond premiums will be paid by the Company....

       
       

32. While GEICO may suggest office hours, it does not control the hours a GFR or his employers work or what hours the - office is open.

    
    

33. While GEICO must approve the location of the office, it does not exercise complete control over the office location.

    
    

34. The GFR is paid a salary based on the commissions earned as set forth in the schedule of commissions.

    
    

35. GEICO does not withhold income taxes or pay social security taxes for the GFR or the GFR's employees.

    
    

36. GEICO does not control:

    
    

    1. the hiring, firing, and salary of the G.F.R.'s employees;

    2. the office equipment purchased or the office decor;

    3. whether the GFR purchases or leases office space, and

    4. how much vacation or sick leave the

    G.F.R. takes or gives his employees.

    
    

37. Although GEICO has a pension plan, profit sharing plan and a health plan for its employees, the GFR are not in those plans.

    
    

38. Generally, GEICO sells insurance by direct mail and this is the bulk of its business. Therefore, does not spend, or is it required to spend, any significant amount of time with the GFRs and, as a result, GEICO's supervision of the GFRs is minimal.

    
    

39. The GFR program is the only area of GEICO's business in which there is agency representation.

    
    

40. The GFR business does not generally see growth because of renewals of previously sold policies. The GFR's only get renewal commissions for three years, therefore, there is no renewal commission after the fourth year.

    
    

41. There were no positions comparable to the GFR position available to Petitioner in the Jacksonville area at the time she left employment with Butterfield.

    
    

42. During time Petitioner was denied appointment as a GFR by GEICO, a number of women were appointed as GFR's by GEIC0, mainly in Texas.

43. There is substantial competent evidence to show that GEICO's conflict of interest policy was based on a bona fide business necessity in that a conflict of interest situation such as GEICO was attempting to avoid presents a real potential for abuse and is a legitimate basis for the policy.

    
    

    CONCLUSIONS OF LAW

    
    

44. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, this proceeding pursuant to Section 120.57(1), Florida Statutes.

    
    

45. Section 760.10(1)(a), Florida Statutes, makes it an unlawful employment practice for an employer to discriminate against a person with respect to terms or conditions of employment because of that individual's sex or marital status.

    
    

46. Unless it is determined that an independent contractor relationship exist between GEICO and its GFRs, then GEICO comes within the definition of an employer as that term is defined in Section 760.02(6), Florida Statutes, and, therefore, comes under the jurisdiction of the Florida Commission on Human Relations.

    
    

47. Applying the facts of this case to the test set out in the Restatement (Second) of Agency Section 220 (1958) for determining whether one is an employee or independent contractor that was approved by the Supreme Court in Cantor v. Cochran, 184 So 2d 173 (Fla. 1966), the weight of the evidence falls on the side of the GFRs being independent contractors rather than employees of GEICO. This is particularly so, when one considers the GFR's control as to the mode of doing the work, and the parties' intent of entering into a independent contractor's relationship by the terms of the GFR agreement and the course of dealing with each other. Kane Furniture Corp. v. Miranda, 506 So 2d 1061 (2 DCA Fla. 1987) and the cases cited therein.

    
    

48. However, assuming arquendo, that an "employee - employer" relationship does exist between GEICO and its GFRs, then the Petitioner has the initial burden of establishing a prima facie case of discrimination. If Petitioner succeeds in proving the prima facie case, the burden shifts to GEICO to articulate some legitimate reason for the action complained of. Should GEICO carry this burden, Petitioner must then have an opportunity to prove, by preponderance of the evidence, that the legitimate reasons offered by GEICO were not its true reasons, but were a pretext for discrimination. Texas Department of Community Affairs v. Burdine, 450 U. S. 248, 253, 101 S. Ct. 1089, 1093 (1981)

    
    

49. To present a prima facie case, the Petitioner must present facts which "raise an inference of discrimination only because we presume those acts, if otherwise unexplained, are more likely than not based on the consideration of impermissible factors". Id. 450 U.S. 254. The prima facie case serves to eliminate the most common nondiscriminatory reasons for the Petitioner's disparate treatment. See, Teamsters v. United States, 431 U. S. 324, 358 and N. 44, 97 S.Ct. 1843, 1866 (1977).

    
    

50. In order to establish a prima facie case, Petitioner must show: (1) that she is in a classification covered by Section 760.10, Florida Statutes; (2) that she is qualified for the position in question and; (3) that despite her qualifications she was treated in a discriminatory manner. Cf. McDonnell Douglas Corp. v. Greene, 441 U.S. 792, 93 S.Ct. 1817 (1973).

51. While Petitioner has shown that she is in a classification covered by Section 760.10, Florida Statutes, was qualified for the appointment as a GFR, and has demonstrated that the conflict of interest policy was applied to her because of her marital status, she has not demonstrated that GEICO's conflict of interest policy was applied toward her in a fashion different from that applied to all male GFRs or all male candidates for appointment as GFRs.

    
    

52. In any event, even if Petitioner had produced evidence sufficient to establish a prima facie case of sex discrimination, GEICO has articulated and substantiated a legitimate, nondiscriminatory reason for not appointing Petitioner as a GFR in general and as the GFR in the branch office in particular, notwithstanding Petitioner having established a prima facie case of discrimination based on her marital status.

    
    

53. GEICO's conflict of interest policy is clearly a business necessity because a conflict of interest situation, which GEICO is attempting to avoid with its policy, creates a potential for abuse and is a legitimate basis for the implementation of the policy.

    
    

54. GEICO has demonstrated by sufficient credible evidence that its refusal to appoint Petitioner as a GFR in general and as the GFR for the branch office was not motivated by Petitioner's marital status per se, but was motivated by the close relationship created as a result of her marital status. See. National Industrial, Inc. v. Commission on Human Relations, 527 So.2d 894 (5 DCA Fla. 1988).

    
    

55. Petitioner has presented no persuasive evidence that the reason articulated by GEICO is a pretext for discrimination because of Petitioner's sex or marital status. GEICO's policy was not applied to Petitioner in a fashion that was different than the way it was applied to males, married or unmarried, or to unmarried females and there is no other credible evidence to suggest that GEICO intentionally refused to appoint Petitioner as a GFR because of the fact that she is a female or because of her marital status.

RECOMMENDATION

Based upon the foregoing Findings of Fact, the Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, it is, therefore

RECOMMENDED that the Florida Commission on Human Relations enter a final order denying relief to the Petitioner, Lynn Cattin, and dismissing the Amended Petition For Relief.

DONE AND ENTERED this 1st day of November, 1989, in Tallahassee, Leon County, Florida.

WILLIAM R. CAVE

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division f Administrative Hearings this 1st day of November, 1989.

APPENDIX TO THE RECOMMENDED ORDER IN CASE NUMBER 88-5687

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case.

Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, Lynn Cattin

1. Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the Petitioner's proposed finding of fact: 1(1); 2(2); 3(3- 5); 4(6,7); 5(4); 6(8); 7(6,9,11) 8(10); 9(5); 10(12); 11(13); 12(14); 13(31); 14(15,16,18); 15(18,19); 16(19); 17(20); 18(20,21); 19(29); 20(19); 21(41); 22(21); 23-24(32- 36); 26(38) and 27(22).

   
   

2. Proposed finding of fact 25 is neither material nor relevant to the conclusion reached in the Recommended Order.

Specific Rulings on Proposed Findings of Fact Submitted by Respondent, GEICO

1. Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the Respondent's proposed finding of fact: 1(3); 2(4); 3(3); 4(1,2); 5(5,6); 6(13); 7-8(14); 9(15); 10(16); 11(17); 12 (16); 13(21); 15(31); 16(34-35); 17 (32-36); 20(38); 21(39); 22(36); 23(37); 25(40); 26(12) 28(12); 29(23); 30(24); 31(25); 32(26); 33-34(27); 35(28); 62*(42).

   *The last paragraph is numbered 52, however, it appears to be a "typo" and should be numbered 62.

   
   

2. Proposed findings of fact 14, 18, 19, 24, 27, and 54 are neither material nor relevant to the conclusion reached in the Recommended Order.

   
   

3. Proposed findings of fact 36-53 and 55-61 are unnecessary, but see Finding of Fact 29.

COPIES FURNISHED:

Donald A. Griffin, Executive Director Florida Commission on Human Relations

325 John Knox Road Building F, Suite 240

Tallahassee, Florida 32399-1925

Dana Baird, Esquire General Counsel

325 John Knox Road Building F, Suite 240

Tallahassee, Florida 32399-1925

Margaret Jones, Clerk

Florida Commission on Human Relations

325 John Knox Road Building F, Suite 240

Tallahassee, Florida 32399-1925

John F. MacLennan, Esquire

KATTMAN, ESHELMAN & MacLENNAN, P.A.

1920 San Marco Boulevard Jacksonville, Florida 32207

John S. Derr, Esquire GRANGER, SANTRY, MITCHELL

& HEATH, P.A.

Post Office Box 14129 Tallahassee, Florida 32317

Docket for Case No: 88-005687

Orders for Case No: 88-005687