In a recent verdict in a lingering lawsuit in Connecticut, a federal jury awarded $2.3 million in compensatory damages to a former Nationwide Insurance agent, finding that Nationwide terminated the agent's contract without good cause in violation of the Connecticut Franchise Act and the Connecticut Unfair Trade Practices Act. Nationwide claimed that the agent had violated state law in the performance of his duties as a Nationwide agent and that it had the right to terminate him. Nationwide also argued that its contract, like most insurance agency contracts, expressly provided that it could terminate "without cause" and that the agent was not a franchisee under the Connecticut Franchise Act.
In interpreting the Connecticut Franchise Act to cover this relationship, the jury essentially voided the "without cause" provision in the contract. Because most insurance companies work through agency relationships and do not provide FTC or state required disclosures, this verdict could have far-reaching implications for the insurance industry. The parties will submit post-trial motions and Nationwide is considering an appeal to the Second Circuit Court of Appeals.
Posted by franchiselawblog at December 20, 2004 09:29 AM