Court Erases Wrongful Termination Verdict, but Defamation Still Costs Allstate $4M

When Michael A. Tilkey pled guilty to disorderly conduct charges, Allstate Insurance Co. fired him from his job as a broker paying $200,000 per year. Tilkey’s resulting wrongful termination suit eventually reached the California appellate court where the court ruled Allstate was within their rights to fire Tilkey. However, this wasn’t the end of the story. 

Allstate’s Decision to Report the Reason for Tilkey’s Termination:

Upon firing Tilkey, Allstate reported that he was terminated due to reasons related to “domestic violence.” While the appellate court found in favor of the carrier in connection to the wrongful termination claims, they found in favor of the plaintiff regarding this announcement of the cause for termination qualifying as defamation. The 4th District Court of Appeal panel found the defamation deserving of an award totaling over $4 million in compensatory and punitive damages.

Jury’s Finding that Tilkey Was Wrongfully Terminated Reversed:

While the $4M defamation award is a stiff penalty, it could have been much worse for Allstate. The San Diego County jury that heard the case originally found in favor of Tilkey - finding that Tilkey was wrongfully terminated and awarding the plaintiff over $18.5M. The appellate court found merit in two of the six grounds Allstate listed in their appeal of the jury verdict, and after finding that Allstate was within their rights to fire Tilkey after he pled guilty to disorderly conduct charges, the appellate court slashed the $18.5M award from the jury significantly.

The Incident that Led to the Wrongful Termination & Defamation Case:

Tilkey was employed with Allstate for 30 years. In August 2014, he went out with his girlfriend and they had some drinks. Afterward, they went home and an argument began. Tilkey decided to leave, walked outside to the enclosed patio to get a cool he brought, and his girlfriend locked the patio door. Tilkey repeatedly banged on the glass patio door insisting she let him in so he could gather his things. The girlfriend responded by calling the police. When officers arrived on the scene, they noted the interior trim of the door frame was broken. When searching Tilkey’s travel bag, they discovered marijuana and a pipe. Tilkey was arrested on multiple charges including “criminal damage deface,” possession, and disorderly conduct/disruptive behavior. According to the opinion of the appellate panel, the “domestic violence” label was attached to the last misdemeanor.

Allstate’s Response to the Charges Against Tilkey:

Tilkey’s Allstate supervisors received emails from Tilkey’s ex-girlfriend that were flagged for review. Human Resources investigated the matter in December 2014, learned that Tilkey was arrested, and took a plea deal leading to the dismissal of two of the charges. HR reported to supervisors that Tilkey’s third charge would be dismissed once he completed a “domestic nonviolence diversion program” and that the incident did not include a violation of any company policies. After another email to the company from Tilkey’s ex-girlfriend, the Human Resources supervisor suggested a change made to the report, altering it to list that Tilkey was arrested on a “domestic violence” charge, and changing the report’s conclusion to state that Allstate had since “lost confidence” in Tilkey. Tilkey was terminated on May 27, 2015. The reason cited for Tilkey’s termination was, “the retention of the domestic violence charges suggests that Tilkey engaged in behavior that was construed as acts of physical harm or violence towards another person.” Allstate submitted a standard form regarding the termination to the Financial Industry Regulatory Authority (FINRA) which acts as a self-regulatory body for licensed insurance brokers. The standard form (Form U5) included the “reason” for Tilkey’s termination. In response, Tilkey filed suit alleging wrongful termination and defamation.

If you need to discuss employment law violations or have questions about how to file a California wrongful termination lawsuit, don't hesitate to contact Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in any one of various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.