CLEMENTE v. ALLSTATE INSURANCE COMPANY

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

ROBERTO CLEMENTE, JR., KIMBERLY

DSCHUHAN, RYAN NORTON, KAILEE

2:22-CV-00056-CCW

CLEMENTE, THE ROBERTO CLEMENTE

JR. FAMILY AGENCY LLC,

Plaintiffs,

v.

ALLSTATE INSURANCE COMPANY,

TOMAINO INSURANCE AGENCY, JOHN

TOMAINO,

Defendants.

OPINION

This case arises from the breakdown of the relationship between the Roberto Clemente Jr.

Family Agency, LLC (the “Clemente Agency”) and Allstate Insurance Company. Plaintiffs—the

agency itself, three of its owners (Roberto Clemente Jr., Kimberly Dschuhan, and Kailee

Clemente), and one of its non-owner agents (Ryan Norton)—allege that the breakdown was the

result of discrimination. Defendants include not only Allstate, but also the Tomaino Insurance

Agency and its owner, John Tomaino (collectively, the “Tomaino Agency”), who were allegedly

involved in the events giving rise to Plaintiffs’ operative Second Amended Complaint. See ECF

No. 36. Presently before the Court are Allstate’s and the Tomaino Agency’s Motions to Dismiss,

ECF Nos. 43 & 49, in which they separately argue under Federal Rule of Civil Procedure 12(b)(6)

that Plaintiffs have failed to state a claim for relief. For the reasons that follow, Allstate’s Motion

will be GRANTED IN PART and DENIED IN PART and the Tomaino Agency’s Motion will be

GRANTED in its entirety. The Court will grant Plaintiffs leave to amend their allegations to

address the deficiencies identified by Allstate and the Tomaino Agency.

I. BACKGROUND

The following facts are taken from the Second Amended Complaint, which the Court takes

as true for the purpose of ruling on the instant Motions to Dismiss. Although the Second Amended

Complaint spans 346 numbered allegations, the Court will address only those allegations necessary

to address the arguments raised in Allstate’s and the Tomaino Agency’s Motions.

Roberto Clemente played eighteen seasons for the Pittsburgh Pirates major league baseball

team before dying tragically in a plane crash while on a humanitarian mission to Nicaragua. He

was subsequently inducted into the National Baseball Hall of Fame. Roberto Clemente’s son,

Roberto Clemente Jr., is a licensed insurance agent. ECF No. 36 ¶ 7. Mr. Clemente Jr. is married

to Kailee Clemente, who is also a licensed insurance agent, as is her mother, Kimberly Dschuhan

(Mr. Clemente Jr.’s mother-in-law). Id. ¶¶ 8, 10. Ryan Norton, Mr. Clemente Jr.’s brother-in-

law, is also a licensed insurance agent. Id. ¶ 9. At all relevant times, Ms. Dschuhan, Mr. Clemente

Jr., and Ms. Clemente each had an ownership interest in the Clemente Agency, where Mr. Norton

was a non-owner agent. Id. ¶¶ 7–10.

The formation of the Clemente Agency begins with Ms. Dschuhan, who was formerly a

successful insurance agent for Nationwide Insurance. Id. ¶ 14. While working as a Nationwide

agent, she began exploring the purchase of a “book of business” from an existing agency, which

would enable her to own her own agency. See id. ¶¶ 14–16. After a search, Ms. Dschuhan entered

negotiations with Daniel Cone, an Allstate agent, resulting in a July 2017 Letter of Intent under

which Mr. Cone would sell his book of business to the Clemente Agency. Id. ¶¶ 16, 19–20. The

sale was contingent on Allstate’s approval and the Clemente Agency’s formal affiliation with

Allstate. Id. ¶ 21.

The approval and affiliation process did not go smoothly. According to Plaintiffs, Justin

Young, an Allstate representative, “consistently ‘moved the goal posts’ with respect as to [sic]

when [t]he [Clemente Agency] could complete its official affiliation with Allstate and open its

doors.” Id. ¶ 24. Among the issues was a dispute over whether the Clemente Agency could do

business as the “Roberto Clemente Jr. Family Agency, LLC,” because Mr. Clemente Jr. was a

“financial backer[]” and not “the person holding the licenses” for the agency. Id. ¶ 25. Despite

these issues, Allstate approved the sale and Mr. Cone sold his book of business to the Clemente

Agency pursuant to an Asset Purchase Agreement dated May 1, 2018. Id. ¶¶ 16, 34; ECF No. 36-

2.

The next month, the Clemente Agency and Allstate formalized their affiliation with an

Exclusive Agency Agreement (“EAA”) dated June 1, 2018. ECF No. 36-3. Pursuant to the EAA,

Allstate authorized the Clemente Agency to sell its insurance products to cover risks located in

Pennsylvania, and the Clemente Agency agreed not to sell any other insurer’s products. See

generally id. Allstate also agreed to provide signage and materials as it deemed “advisable.” Id.

§ IV(A). The EAA further provided that the relationship between the Clemente Agency and

Allstate was “that of an independent contractor for all purposes” and that employees of the

Clemente Agency were not Allstate employees. Id. §§ I(D), III. The EAA could be terminated

immediately for cause, or without cause upon ninety days written notice. Id. § XVII(B).

According to Plaintiffs, their experience with Allstate did not improve after the signing of

the EAA. For one thing, the name issues continued, and Allstate refused to update its listings and

provide signage that reflected the name “Roberto Clemente Jr. Family Agency, LLC.” ECF No.

36 ¶¶ 28, 45–50. Plaintiffs also allege that other Allstate agencies in the area were jealous of the

Clemente Agency’s association with “one of the most beloved Black athletes of all time,” which

gave the Clemente Agency a competitive advantage with minority customers and thus caused

friction with the other agencies. Id. ¶¶ 164–67. In one instance of alleged friction, Plaintiffs claim

that the Tomaino Agency “stole[] one of their customers,” by “g[iving] the client a lower quote

than the Plaintiffs had first provided.” Id. ¶¶ 82–83. Upon bringing the issue to Allstate’s

attention, an Allstate representative, Valerie Staudt, reached out to Mr. Tomaino, who “criticiz[ed]

the way that Plaintiffs quoted insurance” and told her that Plaintiffs, quote, “should have changed

this to this, and changed this to this,” with respect to certain unspecified discounts. Id. ¶ 87. Ms.

Staudt then trained Plaintiffs on those unspecified discount practices, which Plaintiffs began to

employ. Id. ¶ 101.

The issues between the Clemente Agency and Allstate came to a head on August 21, 2020,

when Allstate informed Ms. Dschuhan that it had decided to terminate the EAA. Id. ¶ 114. Allstate

told Ms. Dschuhan that the termination was “for fraud,” without “providing any analysis for its

decision.” See id. ¶¶ 116–17; see also 36-3 § XVII(B)(3) (Allstate may terminate EAA

immediately upon proving written notice for cause including fraud). Earlier that summer, an

Allstate fraud investigator had contacted Ms. Dschuhan and Mr. Norton “regarding the practice of

applying a widow discount to certain policies” (a practice that the Second Amended Complaint

does not further describe). ECF No. 36 ¶ 112. For its part, the Clemente Agency denies

committing any fraud, and claims that “[i]f there were any mistakes” it was because they relied on

certain representations by Mr. Tomaino and Ms. Staudt, apparently pertaining to widow discounts.

Id. ¶ 117. Although the Second Amended Complaint is not entirely clear on this point, it appears

that Plaintiffs are referring to what Ms. Staudt communicated to Plaintiffs in response to the

Tomaino Agency’s alleged theft of a Clemente Agency customer—i.e., that Plaintiffs “should have

changed this to this, and changed this to this,” with respect to certain unspecified discounts. Id. ¶

87.

The Clemente Agency had a qualified right to sell its book of business upon termination of

the EAA, which it invoked. ECF No. 36-4. Under its arrangement with Allstate, the Clemente

Agency had until December 1, 2020 to find a buyer, which had to “meet Allstate’s eligibility

requirements.” Id. Allstate retained an “absolute right of approval of the buyer.” Id. According

to Plaintiffs, they failed to sell the Clemente Agency’s book of business by December 1, 2020,

because “Allstate . . . interfered with and made this process impossible,” including by providing a

pretextual reason for blocking at least one potential sale. ECF No. 36 ¶¶ 127, 129. Plaintiffs

further contend that in October 2020, the Tomaino Agency agreed to receive “certain seeded

policies owned by [the Clemente Agency],” despite the fact that Plaintiffs still had until December

1, 2020 to sell the Clemente Agency’s book of business. Id. ¶ 138.

From there, the Second Amended Complaint moves ahead to August 26, 2021, when

Plaintiffs filed a Charge of Discrimination with the Equal Employment Opportunity Commission,

asserting that Allstate terminated the EAA and took various other actions against Plaintiffs for

discriminatory reasons. See generally ECF No. 36-1. The specifics of Plaintiffs’ allegations of

discrimination are discussed in detail below, but they rest largely upon Allstate’s alleged disparate

treatment of Plaintiffs because the Clemente Agency is minority owned (Mr. Clemente Jr. is Afro-

Hispanic) and the Clemente Agency’s use of the name associated with a famous Afro-Hispanic

baseball player, Roberto Clemente. See generally ECF No. 36. The EEOC ultimately did not

reach the merits of Plaintiffs’ Charge of Discrimination and dismissed it as untimely filed. ECF

No. 36-1 at 11.

Plaintiffs then turned to this Court for redress, filing their original Complaint on January

10, 2022. ECF No. 1. Plaintiffs filed a First Amended Complaint on April 20, 2022, see ECF

Nos. 19–20, 29, which Allstate and the Tomaino Agency moved to dismiss, ECF Nos. 32, 34.

Instead of opposing the motions, Plaintiffs filed their Second Amended Complaint. ECF No. 36.

In the Second Amended Complaint, Plaintiffs assert claims for: (1) a violation of 42 U.S.C. §

1981 (Count I, against all defendants); (2) a violation of Title VII of the Civil Rights Act of 1964

(Count II, against Allstate); (3) breach of contract (Count III, against Allstate); (4) fraud (Count

IV, against all defendants); (5) conversion (Count V, against Tomaino); (6) unjust enrichment

(Count VI, against all defendants); and (7) tortious interference (Count VII, against all

defendants). Allstate and the Tomaino Agency have separately moved to dismiss the Second

Amended Complaint for failure to state a claim. ECF Nos. 43, 49. With briefing complete, the

motions are now ripe for adjudication.1

II. LEGAL STANDARD

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of a claim. In reviewing

a motion to dismiss, the court accepts as true a complaint’s factual allegations and views them in

the light most favorable to the plaintiff. See Phillips v. Cnty. of Allegheny, 515 F.3d 224, 228 (3d

Cir. 2008). Although a complaint need not contain detailed factual allegations to survive a motion

to dismiss, it cannot rest on mere labels and conclusions. Bell Atl. Corp. v. Twombly, 550 U.S.

544, 555 (2007). That is, “a formulaic recitation of the elements of a cause of action will not do.”

Id. Accordingly, “[f]actual allegations must be enough to raise a right to relief above the

speculative level,” id., and be “sufficient . . . to ‘state a claim to relief that is plausible on its face,’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “The plausibility

1 The Court has jurisdiction over Counts I and II, which raise federal questions, under 28 U.S.C. § 1331. The Court

has supplemental jurisdiction over Counts III–VII under 28 U.S.C. § 1367.

standard is not akin to a ‘probability requirement,’ but it asks for more than the sheer possibility

that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556).

The United States Court of Appeals for the Third Circuit has established a three-step

process for district courts to follow in analyzing a Rule 12(b)(6) motion:

First, the court must “tak[e] note of the elements a plaintiff must

plead to state a claim.” Second, the court should identify allegations

that, “because they are no more than conclusions, are not entitled to

the assumption of truth.” Finally, “where there are well-pleaded

factual allegations, a court should assume their veracity and then

determine whether they plausibly give rise to an entitlement for

relief.”

Burtch v. Milberg Factors, Inc., 662 F.3d 212, 221 (3d Cir. 2011) (quoting Santiago v. Warminster

Twp., 629 F.3d 121, 130 (3d Cir. 2010)). That said, under Rule 8’s notice pleading standard, even

after the Supreme Court’s decisions in Twombly and Iqbal, a plaintiff need only “allege sufficient

facts to raise a reasonable expectation that discovery will uncover proof of her claims.” Connolly

v. Lane Constr. Corp., 809 F.3d 780, 788–89 (3d Cir. 2016) (finding that “at least for purposes of

pleading sufficiency, a complaint need not establish a prima facie case in order to survive a motion

to dismiss”).

III. ANALYSIS

Because Allstate’s alleged breaches of its contractual obligations to Plaintiffs factor into

each of Plaintiffs’ other claims, the Court will address the breach of contract claim against Allstate

(Count III) first. The Court will apply Pennsylvania law to the state-law claims because the parties

have cited only Pennsylvania law in their analysis and therefore implicitly agree that it controls.

See Commonwealth Cap. Corp. v. Getronics, Inc., 147 Fed. App’x 253, 254–55 (3d Cir. 2005)

(requiring federal courts sitting in diversity to apply the law that the parties “explicitly or

implicitly” have chosen).

A. The Court Will Deny Deny Allstate’s Motion to Dismiss Plaintiffs’ Breach of

Contract Claim

In Count III, Plaintiffs allege that Allstate failed to live up to various contractual

obligations. In Pennsylvania, a claim for breach of contract has three elements: “(1) the existence

of a contract, including its essential terms; (2) a breach of the contract; and (3) resultant damages.”

Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. L. Firm of Malone Middleman, P.C., 137

A.3d 1247, 1258 (Pa. 2016) (cleaned up). Allstate argues that Plaintiffs have not plausibly alleged

the second of those elements—breach. ECF No. 50 at 25–29.2 In response, Plaintiffs point to four

breaches that they claim to have plausibly alleged: (1) Allstate failed to provide the Clemente

Agency with signage under the EAA; (2) Allstate breached its duty to allow Plaintiffs to sell the

Clemente Agency’s book of business before December 1, 2020; (3) Allstate did not adhere to the

EAA’s termination provision; and (4) Allstate failed to provide Plaintiffs with its Blueprint

Service. ECF No. 58 at 2630. The Court agrees that these breaches are plausibly alleged, such

that the claim should proceed to discovery.

With respect to the first and second alleged breaches, Allstate relies heavily on the fact that

the relevant agreement vests Allstate with significant discretion regarding its performance. As to

signage, the EAA requires Allstate to provide the Clemente Agency with only “such signs, forms,

manuals, records, and other materials and supplies as the Company deems advisable to assist [the]

Agency.” ECF No. 36-3 § IV(A) (emphasis added). Similarly, Allstate purported to reserve “the

absolute right of approval of the buyer” for the Clemente Agency’s book of business post-

termination, with the buyer having to “meet Allstate’s eligibility requirements.” ECF No. 36-4 at

2 In its opening brief, Allstate argues briefly that Plaintiffs did not plead the “contractual obligations of Allstate that

were allegedly breached.” ECF No. 50 at 25–26. To the extent that Allstate is arguing that Plaintiffs failed to plausibly

allege the existence of a contract with respect to the four breaches at issue, that argument would fail (at least in light

of Allstate’s limited argument on the issue).

1. According to Allstate, these discretionary reservations are fatal to Plaintiffs’ claim because

“there can be no breach where a party is simply exercising its discretionary rights under a contract.”

ECF No. 61 at 7 & n.14.

Allstate’s argument overstates the bounds of its discretion. Every contract contains as an

implied term the duty of good faith and fair dealing. W. Run Student Hous. Assocs., LLC v.

Huntington Nat’l Bank, 712 F.3d 165, 170 (3d Cir. 2013). Consistent with that duty, “where

discretion is given under a contract, the discretion must be exercised reasonably.” Orange v.

Starion Energy PA, Inc., No. CV 15-773, 2016 WL 1043618, at *3 (E.D. Pa. Mar. 16, 2016), aff’d,

711 F. App’x 681 (3d Cir. 2017). Here, Plaintiffs have set forth sufficient factual matter to

plausibly allege that Allstate breached its agreements with Plaintiff despite the discretion those

agreements afforded Allstate.

First, Plaintiffs have plausibly alleged that Allstate unreasonably denied it signage owed

under the EAA. The signage dispute stems from the Clemente Agency’s acquisition of Mr. Cone’s

book of business. See ECF No. 36 ¶¶ 46–55. In taking on Mr. Cone’s book, Plaintiffs also took

over his storefront, which had a large blue awning that displayed the words “Allstate” and, in

smaller font, the words “Cone Agency” along with the Cone Agency’s phone number. Id. ¶¶ 49,

52; ECF No. 36-2 § 1. Despite numerous requests to provide the same signage for the Clemente

Agency, Allstate refused, and instead simply covered up the words “Cone Agency” and the phone

number as shown here:

□ ee

cm

ECF No. 36 § 52. These allegations give rise to the plausible inference that Allstate acted

unreasonably by denying the same signage to two agencies that were essentially identically

situated. In terms of the EAA itself, these allegations demonstrate that Allstate deemed the signage

“advisable” for the Cone Agency and was not reasonable in reaching the opposite conclusion as to

the Clemente Agency. ECF No. 36-3 § IV(4).

Second, Plaintiffs have plausibly alleged that Allstate unreasonably blocked Plaintiffs’ sale

of the Clemente Agency’s book of business. As alleged in the Second Amended Complaint,

Allstate failed to communicate with the Clemente Agency and its prospective buyers and provided

a pretextual reason for refusing to approve one potential buyer by refusing to approve a sale to an

independent agent when Allstate allowed other independent agents (including Mr. Young) to own

Allstate agencies. ECF No. 36 4] 127-31. Together, these allegations give rise to a plausible

inference that Allstate’s refusal to approve a sale of the Clemente Agency’s book of business was

not a reasonable exercise of its discretion. See Somers v. Somers, 613 A.2d 1211, 1213 (Pa. Super.

10

1992) (bad faith includes “lack of diligence and slacking off, willful rendering of imperfect

performance, abuse of a power to specify terms, and interference with or failure to cooperate in

the other party’s performance”).

Turning to Plaintiffs’ third alleged breach—Allstate’s termination of the EAA—Allstate

argues that it was entitled to terminate the EAA “immediately” for cause based on Plaintiffs’ fraud.

ECF No. 61 at 8. Plaintiffs respond that they committed no fraud, and thus, that the termination

was a breach of the EAA. ECF No. 36 ¶ 118; ECF No. 58 at 30. Implicit in this argument is an

interpretation of the EAA that would allow Allstate to terminate the agreement for fraud only if

Plaintiffs in fact committed fraud (as opposed to an interpretation of the EAA that, for example,

allowed Allstate to terminate for cause if it reasonably believed Plaintiffs committed fraud after

an appropriate inquiry). Because Allstate has not challenged that interpretation at this stage, the

Court will assume, without deciding, that Plaintiffs correctly interpret the EAA’s for-cause

termination provision.

With that interpretation in mind, Plaintiffs have plausibly alleged that they never

committed fraud and thus that Allstate breached the EAA by terminating the agreement without

providing the Clemente Agency ninety days written notice required where termination is not for

cause. See ECF No. 36-3 § XVIII. Although the Second Amended Complaint is sparse regarding

the charge of fraud against the Clemente Agency, it apparently concerned a “widow discount”

practice that the Tomaino Agency also employed. See ECF No. 36 ¶ 112. Because Plaintiffs

allege that Allstate was aware of this practice by the Tomaino Agency and actively encouraged

Plaintiffs to employ it, it is plausible that the practice was not fraudulent and thus could not serve

as a basis to terminate the EAA for cause. See id. ¶¶ 87–90. Plaintiffs, accordingly, have plausibly

alleged that Allstate breached the EAA’s termination provision.

Finally, Allstate does not address Plaintiffs’ fourth alleged breach, concerning the

Blueprint Program. Although the Second Amended Complaint contains limited information about

the program, Plaintiffs have plausibly alleged this breach, too. According to Plaintiffs, they paid

Allstate for its Blueprint Service program under which Allstate allotted Plaintiffs with “a

designated dollar amount that could only be used for the Blueprint program.” ECF No. 36 ¶ 42.

Despite having paid for the program, Plaintiffs “were never able to enjoy the full benefits of the

program,” which consistent primarily of marketing assistance. Id. These allegations set forth a

typical breach—Plaintiffs claim that they paid for performance they did not receive.

In sum, Plaintiffs have plausibly alleged at least four breaches of contract by Allstate.

Count III will therefore proceed to discovery.

B. The Court Will Dismiss Count I as to the Tomaino Agency but Not Allstate

In Count I of the Second Amended Complaint, Plaintiffs claim that Allstate and the

Tomaino Agency violated section 1981, which guarantees “[a]ll persons . . . the same right . . . to

make and enforce contracts . . . as is enjoyed by white citizens.” 42 U.S.C. § 1981(a). The

elements of a section 1981 claim are: (1) that the plaintiff is a member of a protected class; (2)

intent to discriminate based on race; (3) discrimination that concerns the right “to make and

enforce contracts”; and (4) but-for causation. Comcast Corp. v. Nat’l Ass’n of Afr. Am.-Owned

Media, 140 S. Ct. 1009, 1013 (2020); Brown v. Philip Morris Inc., 250 F.3d 789, 797 (3d Cir.

2001). Both Allstate and the Tomaino Agency argue that Count I must be dismissed because the

Clemente Agency has failed to plausibly allege intent to discriminate and but-for causation, and

Allstate further argues that any discrimination did not concern the right to make or enforce a

contract. ECF No. 44 at 5–9; ECF No. 50 at 9–16. Allstate also raises two threshold issues—that

the claim is time-barred as to conduct predating the EAA, and that Ms. Dschuhan, Ms. Clemente,

and Mr. Norton cannot bring a section 1981 claim because they are white. ECF No. 50 at 7–8,

19–20. The Court will address the two threshold issues first.

1. Plaintiffs’ Section 1981 Claim Is Not Time-Barred

Allstate’s first threshold argument is that Count I should be dismissed insofar as it concerns

“pre-contractual conduct (e.g., entering into contracts)” because the claim would be barred by a

two-year statute of limitations. ECF No. 50 at 8. Plaintiffs respond that they are “not bringing

any pre-contractual Section 1981 claim” but even if they were, that evidence of discrimination

outside the statute of limitations may still be used to prove later discriminatory intent. ECF No.

58 at 14. Based on Plaintiffs’ concession, and for the avoidance of doubt, Plaintiffs may not pursue

any pre-contractual section 1981 claims in this matter, to the extent that their allegations could be

construed as raising such a claim. At this juncture the Court need not rule on the question of

whether any pre-contractual conduct would be admissible to establish intent.

2. Ms. Dschuhan, Ms. Clemente, and Mr. Norton Are Not Precluded from

Bringing a Section 1981 Claim Because They Are White

Allstate’s next threshold argument is that Count I should be dismissed as to Ms. Dschuhan,

Ms. Clemente, and Mr. Norton because they are white. ECF No. 50 at 19–20. For support, Allstate

cites (1) caselaw from within the Third Circuit stating that the plaintiff being a “racial minority”

is an element of a section 1981 claim and (2) the statutory text, which guarantees all persons the

same rights to make and enforce contracts “as enjoyed by white citizens.” Id.19 (quoting Johnson

v. Dunkin’ Donuts Franchising L.L.C., No. 11-1117, 2012 WL 1828028, at *17 (W.D. Pa. May

18, 2012); 42 U.S.C. § 1981(a)). Plaintiffs respond that Ms. Dschuhan, Ms. Clemente, and Mr.

Norton, are bringing an association claim that is viable under section 1981, and would be

recognized by the Third Circuit. ECF No. 58 at 14–15. The Court agrees with Plaintiffs that such

a claim is viable.

Initially, Allstate is correct that courts within this circuit—including the Third Circuit

itself—have set forth the elements of a section 1981 claim to include that the plaintiff “is a member

of a racial minority.” Brown v. Philip Morris Inc., 250 F.3d 789, 797 (3d Cir. 2001). The Third

Circuit, however, made that statement in a case involving non-white plaintiffs, id. at 793, and

Allstate has not directed the Court to a case (nor has the Court found one on its own) where the

Third Circuit has answered the question presented here: whether a white plaintiff can bring an

associational discrimination claim under section 1981. Thus, the issue is one for this Court to

decide in the first instance.

Turning to the text of section 1981, Allstate’s argument is undermined by Supreme Court

precedent interpreting the statute. Allstate’s textual argument is straightforward: it argues that

because the statute guarantees all persons the same rights “‘as enjoyed by white citizens’ . . . . only

non-White individuals (racial minorities) may bring a § 1981 claim.” ECF No. 50 at 19. The

Supreme Court, however, rejected that very argument in McDonald v. Santa Fe Trail

Transportation Co., 427 U.S. 273, 286–87 (1986), where it held that section 1981 applied “to racial

discrimination in private employment against white persons.” The Supreme Court explained that

the phrase “as is enjoyed by white citizens” is one that simply emphasizes “the racial character of

the rights being protected” and that by its own terms the statute “applies to ‘All persons,’ including

white persons.” Id. at 287 (internal quotation marks omitted). Given the Supreme Court’s holding

in McDonald, this Court cannot conclude that Ms. Dschuhan, Ms. Clemente, and Mr. Norton are

barred from bringing a section 1981 claim simply because they are white.

Although McDonald did not concern an associational discrimination claim, and thus does

not conclusively resolve the viability of such a claim, the Court concludes that such a claim is

available under section 1981. For one thing, the Third Circuit recently acknowledged the viability

of such a claim in the Title VII context, see Kengerski v. Harper, 6 F.4th 531, 538–39 (3d Cir.

2021), and there is substantial overlap between section 1981 and Title VII, at least in cases (like

this one) involving employment disputes, Carvalho-Grevious v. Del. State Univ., 851 F.3d 249,

256–57 (3d Cir. 2017) (“The substantive elements of a [racial discrimination] claim under § 1981

are generally identical to the elements of an employment discrimination claim under Title VII.”

(quoting Brown v. J. Kaz, Inc., 581 F.3d 175, 181–82 (3d Cir. 2009))). For another, the courts of

appeals that have reached this question have found section 1981 associational discrimination

claims viable. Johnson v. Univ. of Cincinnati, 215 F.3d 561, 574–75 (6th Cir. 2000); Parr v.

Woodmen of the World Life Ins., 791 F.2d 888, 890 (11th Cir. 1986); Alizadeh v. Safeway Stores,

Inc., 802 F.2d 111, 114–15 (5th Cir. 1986); Fiedler v. Marumsco Christian Sch., 631 F.2d 1144,

1149 (4th Cir. 1980); DeMatteis v. Eastman Kodak Co., 511 F.2d 306, 312 (2d Cir.), on reh’g,

520 F.2d 409 (2d Cir. 1975).

The Court is persuaded by the reasoning of these cases. As a textual matter, a claim that

the plaintiff has been discriminated against because of their association with someone of another

race implicates the “racial character” of the rights protected by section 1981 as interpreted in

McDonald, 427 U.S. at 286–87 (quoting Georgia v. Rachel, 384 U.S. 780, 791 (1966)). The Court

perceives no material difference between such a claim and the one approved of in McDonald,

where a white plaintiff claims to have been discriminated against because of their own race. See

id. More broadly, the availability of an associational discrimination claim is harmonious with

Congress’s “intent to enact ‘sweeping legislation implementing the thirteenth amendment to

abolish all the remaining badges and vestiges of the slavery system.’” Brown, 250 F.3d at 797;

see also Johnson, 215 F.3d at 574. Holding that white plaintiffs cannot bring a claim under section

1981 to redress discrimination based on their association with racial minorities would be

antithetical to that Congressional purpose.

Accordingly, the Court concludes that white plaintiffs are not precluded from bringing an

associational discrimination claim under section 1981. Allstate’s Motion will therefore be denied

insofar as it seeks to dismiss the section 1981 claim brought by Ms. Dschuhan, Ms. Clemente, and

Mr. Norton because they are white.

3. Plaintiffs Have Plausibly Alleged that Allstate, but Not the Tomaino

Agency, Acted with Discriminatory Intent

Both Allstate and the Tomaino Agency contend that the Clemente Agency has failed to

plausibly allege the element of discriminatory intent, arguing that Plaintiffs’ allegations on the

issue are conclusory. Plaintiffs respond that they have plausibly alleged intent, pointing to the

following factual allegations from the Second Amended Complaint: (1) after terminating the

EAA, Allstate replaced the Clemente Agency with a white-owned agency (the Tomaino Agency);

(2) Allstate treated the Clemente Agency less favorably than white-owned agencies; (3) Allstate

failed to address instances of racism directed at Plaintiffs; (4) Allstate treated its minority

customers less favorably than its white customers; (5) the Tomaino Agency stole clients from the

Clemente Agency and “w[as] likely involved in having Plaintiffs falsely targeted for fraud”; and

(6) the Tomaino Agency acquiesced to Allstate’s discriminatory conduct. ECF No. 54 at 4–11;

ECF No. 58 at 4–12. The Court concludes that the factual allegations are sufficient to plead

discriminatory intent as to Allstate. The same, however, cannot be said as to the Tomaino Agency.

Before addressing these allegations, the Court notes that at this stage, all Plaintiffs must

establish is a plausible inference of intent to discriminate. Twillie v. Erie Sch. Dist., No. CIV.A.

11-165, 2013 WL 4666072, at *4 (W.D. Pa. Aug. 30, 2013), (citing Makky v. Chertoff, 541 F.3d

205, 214 (3d Cir.2008)), aff’d, 575 F. App’x 28 (3d Cir. 2014). At times, Allstate suggests that

the Supreme Court’s recent decision in Comcast Corp. v. National Ass’n of African American-

Owned Media, 140 S. Ct. 1009 (2020), heightened the standard for pleading discriminatory intent,

but the Court does not read the decision to do so. Instead, Comcast addresses the causation

standard that applies to section 1981 claims—which the Court discusses below—not the separate

discriminatory intent element of such a claim. 140 S. Ct. at 1019. The case therefore does not

disrupt the preexisting precedent that a plaintiff asserting a section 1981 claim need only allege

facts that give rise to a plausible inference of discriminatory intent, a standard which is consistent

with that ordinarily applied to pleading elements of a claim.

Turning to the allegations concerning Allstate, the Court concludes that Plaintiffs have

plausibly alleged intent to discriminate based on race. Although the Second Amended Complaint

is replete with conclusory allegations regarding Allstate’s discriminatory intent, there are

nevertheless enough specifically pleaded facts to allow the claim to proceed.

First, Plaintiffs have alleged that Allstate singled out the minority-owned Clemente Agency

for less favorable treatment than white-owned agencies, which contributes to the plausibility of

intentional discrimination. Rittenhouse Ent., Inc. v. City of Wilkes-Barre, 782 F. App’x 148, 154

(3d Cir. 2019) (singling out bar that served more minorities for policing than other bars with similar

complaints gave rise to inference of discrimination in section 1981 case); cf. Gross v. R.T.

Reynolds, Inc., 487 F. App’x 711, 716–17 (3d Cir. 2012) (dismissing a section 1981 claim where

plaintiff “fail[ed] to allege how [Defendant] treated non-minority contractors any differently than

it treated him”). For example, Plaintiffs have alleged that both the Clemente Agency and the

Tomaino Agency used the same “widow discount” practice but that only the Clemente Agency’s

EAA was terminated based on the discounts, despite the fact that Allstate was aware that the

Tomaino Agency also used the practice. ECF No. 36 ¶¶ 87–92. Plaintiffs also allege that Allstate

did not provide the Clemente Agency with the same signage as white-owned agencies—rather than

providing the same awning as it did for Mr. Cone, Allstate simply taped over references to the

Cone Agency. Id. ¶¶ 46–54. Finally, Plaintiffs include allegations that Allstate refused to allow

Plaintiffs to use the name Roberto Clemente Jr. Family Agency, LLC—associated with a famous

Afro-Hispanic athlete—despite other white-owned agencies using similar “Family Agency” style

names. ECF No. 36 ¶ 29.

Second, after terminating the EAA, Allstate allegedly replaced the minority-owned

Clemente Agency with the white-owned Tomaino Agency. In similar contexts, courts have

concluded that replacing a member of a protected class with someone from outside the protected

class can give rise to the inference of discriminatory intent. See Johnson v. Keebler-Sunshine

Biscuits, Inc., 214 F. App’x 239, 242 (3d Cir. 2007). Thus, the fact that Allstate had allegedly

replaced Plaintiffs with the Tomaino Agency contributes to the plausibility of Plaintiffs’

allegations regarding Allstate’s intent to discriminate.

Taken together, these two sets of factual allegations give rise to a plausible inference of

discrimination, which is all that is required at this stage of the proceedings. Thus, the Court need

not address whether Allstate’s response to alleged discrimination, and alleged instances of

discrimination by Allstate employees would contribute to such a conclusion.

Turning to the Tomaino Agency, Plaintiffs have failed to plead facts that give rise to the

same inference of discriminatory intent. Plaintiffs argue that the fact that the Tomaino Agency

replaced the Clemente Agency implicates not only Allstate, but also the Tomaino Agency. ECF

No. 58 at 4–6; ECF No. 54 at 1–2. But in the employment context, although an employer replacing

an employee from a protected class with someone from outside the protected class may give rise

to an inference of discrimination by the employer, it does not give rise to the same inference of

discrimination by the new employee. See Johnson, 214 F. App’x at 242. Here, accordingly,

Allstate replacing the Clemente Agency with the Tomaino Agency is probative of Allstate’s intent

to discriminate but not the Tomaino Agency’s.

Nor does the allegation that the Tomaino Agency stole clients from the Clemente Agency

or had it targeted for fraud add to the analysis, after setting aside the conclusory allegations that

the Tomaino Agency’s actions were racially motivated. Plaintiffs allege that the Tomaino Agency

stole their customer “because of the race of Roberto Clemente Jr. and the other individual

Plaintiffs’ association with him” and that “[i]f Mr. Clemente were white, Mr. Tomaino would not

have, upon information and belief, taken this client.” ECF No. 36 ¶ 97. These and the similar

allegations of intent that Plaintiffs set forth in the Second Amended Complaint are legal

conclusions that this Court must disregard in considering the Tomaino Agency’s Motion. See

Gross, 487 F. App’x at 716–17 (“While the Amended Complaint alleges an abundance of

wrongdoing by [defendant] and its employees, it fails to allege any facts supporting the conclusion

that those acts were motivated by discrimination on the basis of race. Instead, it alleges a series

of unfortunate events and then states, in conclusory fashion, that the reason for those events is that

[defendant] harbored discriminatory animus towards [plaintiffs].”).

Finally, Plaintiffs’ acquiescence theory fails, at least as presently presented. To support

this theory, Plaintiffs rely on one case, James v. TCA Health, Inc., No. 20-cv-4010, 2021 WL

2853395, at *4 (N.D. Ill. July 8, 2021), where the plaintiff plausibly alleged that an individual

defendant with authority to fire the plaintiff violated section 1981 when she acquiesced in the

plaintiff’s termination, even though she was not “personally involved.” Here, by contrast, there is

no allegation that the Tomaino Agency had the authority to terminate Plaintiffs’ relationship with

Allstate. The holding of James is therefore inapplicable.

In short, while Plaintiffs have set forth factual allegations that give rise to a plausible

inference that Allstate intended to discriminate against Plaintiffs based on Mr. Clemente Jr.’s race,

they have not done so as to the Tomaino Agency. The Court, accordingly, will dismiss Count I as

to the Tomaino Agency.

4. Plaintiffs Have Plausibly Alleged Discrimination as to Contractual

Rights

Allstate’s next argument is that the Clemente Agency has failed to plausibly allege that the

discrimination concerned the right to “make and enforce contracts.” ECF No. 50 at 7. Under

section 1981, “the term ‘make and enforce contracts’ includes the making, performance,

modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms,

and conditions of the contractual relationship.” 42 U.S.C. § 1981(b). The Clemente Agency points

to at least four contractual rights that Allstate allegedly denied them because of race: (1) the right

to appropriate signage under the EAA; (2) the right to sell their book of business on or before

December 1, 2020; (3) the right to training under Allstate’s “Blueprint program”; and (4) their

termination rights under the ESA. ECF No. 58 at 12–14. These arguments essentially overlap

with the breaches of contract alleged in Count III, and the Court has already concluded that the

Clemente Agency has plausibly alleged a claim for breach of contract on these points. See supra

at 8–12. Accordingly, Plaintiffs have plausibly alleged that Allstate’s discrimination impinged

Plaintiffs’ right to make and enforce contracts under section 1981.

Allstate separately argues that the individual plaintiffs’ section 1981 claims must be

dismissed because they are not a party to the EAA. ECF No. 50 at 8. Allstate is correct that

“Section 1981 offers relief . . . so long as the plaintiff has or would have rights under the existing

or proposed contractual relationship.” Domino’s Pizza, Inc. v. McDonald, 546 U.S. 470, 476

(2006). It is also correct that the only parties that were a party to the EAA were Allstate and the

Clemente Agency, not any of the individual plaintiffs. ECF No. 36-3. Accordingly, the individual

plaintiffs—Mr. Clemente, Jr., Ms. Dschuhan, Mr. Norton, and Ms. Clemente—may not bring any

section 1981 claims predicated on Allstate’s impairment of rights under the EAA.

That does not, however, entirely preclude the individual plaintiffs’ section 1981 claims

because the Second Amended Complaint leaves open the plausible possibility that the individual

plaintiffs were a party to the alleged agreement with Allstate concerning the “Blueprint program.”

See ECF No. 36 ¶ 42 (“Plaintiffs further paid for a service under the Blueprint Program. . . . Yet

Plaintiffs were never able to enjoy the full benefits of the program (primarily marketing) based on

the racial discrimination identified in this Complaint.”). Accordingly, the Court will dismiss Count

I as to the individual plaintiffs except to the extent that they allege interference with their rights

under the Blueprint program agreement.

5. Plaintiffs Have Plausibly Alleged Causation

Allstate’s final argument is that that Plaintiffs have failed to plausibly allege that but for

Mr. Clemente Jr.’s race (and the remaining Plaintiffs’ association with Mr. Clemente Jr.), they

would not have been deprived their contractual rights. ECF No. 50 at 13–16. Under the Supreme

Court’s decision in Comcast, this but-for standard applies at all stages of the case. 140 S. Ct. at

1014–15. Thus, to overcome Allstate’s Motion, Plaintiffs must show that they have plausibly

alleged but-for causation. The Court concludes that they have.

In conjunction with the above factual allegations concerning Allstate’s discriminatory

intent, Plaintiffs allege that as an agency with Spanish-speaking agents and associated with a

famous Afro-Hispanic baseball player, they were better positioned than their white competitors to

obtain business from minority customers in the Pittsburgh area. ECF No. 36 ¶¶ 164–68, 178. This,

according to Plaintiffs, caused white-owned agencies (such as the Tomaino Agency) to become

jealous, potentially upsetting Allstate’s relationships with its network of (all white) agents and

giving Allstate a compelling reason to terminate its relationship with Plaintiffs and otherwise fail

to perform under its agreements. Id. These allegations, while not dispositive on the issue of

discriminatory intent, are enough to allow the claim to proceed to discovery when taken together

with the facts that give rise to a plausible inference of discriminatory intent.

C. The Court Will Grant in Part and Deny in Part Allstate’s Motion to Dismiss

Plaintiffs’ Title VII Claim

In Count II, Plaintiffs allege that Allstate violated Title VII by terminating the individual

plaintiffs for discriminatory reasons—Mr. Clemente Jr.’s race, the other plaintiffs’ association

with Mr. Clemente Jr., and as retaliation for reporting discrimination. Title VII protects employees

from workplace discrimination. Covington v. Int’l Ass’n of Approved Basketball Offs., 710 F.3d

114, 118 (3d Cir. 2013). Thus, a Title VII claim is viable only if the defendant is an employer. Id.

at 119. Allstate argues that dismissal is warranted because Plaintiffs have failed to plausibly allege

that Allstate employed them and, separately, because Plaintiffs failed to timely file their Charge of

Discrimination with the EEOC. ECF No. 50 at 20–25. The Court concludes that Plaintiffs have

plausibly alleged an employment relationship, but that their claim is untimely as to adverse actions

predating November 3, 2020.3

1. Plaintiffs Have Plausibly Alleged an Employee-Employer Relationship

In moving to dismiss Count II, Allstate relies heavily on the EAA’s description of the

Clemente Agency and the individual plaintiffs as “independent contractor[s]” of Allstate and not

employees. ECF No. 50 at 20–21. However, the parties’ formal classification of their relationship

is not dispositive. See Stouch v. Bros. of Ord. of Hermits of St. Augustine, 836 F. Supp. 1134, 1139

3 Allstate also argues that Title VII and section 1981 share the same elements of discriminatory intent and causation,

such that the Court should dismiss Count II for the same reasons it gave as to Count I. ECF No. 50 at 25 n.14. Because

the Court has rejected those arguments as to section 1981, it will do the same as to Title VII.

(E.D. Pa. 1993). Instead, courts must conduct a wholistic inquiry into “the hiring party’s right to

control the manner and means by which the product is accomplished,” using the non-exhaustive

factors set forth in Nationwide Mutual Insurance Co. v. Darden, 503 U.S. 318 (1992). Faush v.

Tuesday Morning, Inc., 808 F.3d 208, 214 (3d Cir. 2015) (quoting Darden, 503 U.S. at 323).

Those factors include:

the skill required; the source of the instrumentalities and tools; the location of the

work; the duration of the relationship between the parties; whether the hiring party

has the right to assign additional projects to the hired party; the extent of the hired

party’s discretion over when and how long to work; the method of payment; the

hired party’s role in hiring and paying assistants; whether the work is part of the

regular business of the hiring party; whether the hiring party is in business; the

provision of employee benefits; and the tax treatment of the hired party.

Id. (quoting Darden, 503 U.S. at 323–24). Although courts “generally focus on which entity paid

the employees’ salaries, hired and fired them, and had control over their daily employment

activities,” no single factor is determinative and “all of the incidents of the relationship must be

assessed and weighed.” Id. (cleaned up). As demonstrated by the factors themselves, the inquiry

is a fact-intensive one and ill-suited to resolution on the pleadings. See Easterday v. USPack

Logistics LLC, No. 15-7559 (RBK/AMD), 2016 WL 11704552, at *6 (D.N.J. June 29, 2016).

Here, while Allstate correctly notes that it did not pay Plaintiffs’ salaries or hire and fire

individual employees, see ECF No. 36-3 § III, those facts are not determinative, and other

allegations demonstrate that Allstate exercised significant control over Plaintiffs’ work. For

example, Plaintiffs argue that Allstate: provided materials and other “instrumentalities” of the

business, such as email addresses, computer software, and a laptop; imposed substantial training

requirements; dictated working hours; restricted Plaintiffs’ means of communication with

customers (for example, Plaintiffs were not allowed to communicate with customers by text

message); and prevented Plaintiffs from selling non-Allstate products. See generally ECF No. 36

¶¶ 191–247. These factual allegations, in combination with others in the Second Amended

Complaint give rise to the plausible inference that Allstate employed the individual plaintiffs.

Discovery will provide an opportunity for further factual development of “all of the incidents of

the relationship” between Plaintiffs and Allstate, Faush, 808 F.3d at 214 (quoting Darden, 503

U.S. at 324), at which point Allstate will have the opportunity to raise this issue of an employment

relationship again.

2. Allstate’s Timeliness Argument Is Well Taken

Allstate also argues that the Court should dismiss Count II as untimely. Before filing a

Title VII claim in federal court, a plaintiff must “file a charge of discrimination with the EEOC

within 300 days of the alleged unlawful employment practice. A claim filed beyond this 300-day

lookback period is time-barred.” Donahue-Cavlovic v. Borough of Baldwin, Civil Action No.

2:15-cv-1649, 2017 WL 4862072, at *4 (W.D. Pa. Oct. 26, 2017) (citation omitted). Plaintiffs—

who filed their charge with the EEOC on August 30, 2021—acknowledge that their claim fails to

meet the 300-day lookback period insofar as it concerns conduct pre-dating November 3, 2020

(most notably, Allstate’s August 2020 termination of their alleged employment). ECF No. 58 at

23–26. Plaintiffs argue, however, that they have alleged timely claims pertaining to Allstate’s

post-termination conduct and that equitable tolling saves the otherwise untimely facets of their

claim.

Plaintiffs point to two post-termination actions by Allstate that fall within the 300-day

lookback period: (1) refusing to approve Plaintiffs’ sale of the Clemente Agency’s book of

business; and (2) “falsely report[ing] Plaintiffs to the insurance department” at some point in 2021.

ECF No. 58 at 24. The Court, however, will address only the first of those contentions because

the date of the second alleged action is not pleaded (as Plaintiffs themselves acknowledge). Id. at

24 n.15. As to Allstate’s refusal to approve a sale of the Clemente Agency’s book of business, the

Court agrees that this action falls within the limitations period, since Plaintiffs had until December

1, 2020 to complete a sale. Allstate argues that this post-termination action cannot serve as the

basis for a Title VII claim because it did not affect Plaintiffs’ “future employment opportunities,”

but the Court disagrees. ECF No. 50 at 24–25 (citing Robinson v. City of Pittsburgh, 120 F.3d

1286, 1301 n.15 (3d Cir. 1997), abrogated by Burlington N. & Santa Fe Ry. v. White, 548 U.S. 53

(2006)). At the very least, Allstate’s allegedly wrongful refusal to approve a sale of the book of

business plausibly delayed Plaintiffs’ finding new employment (though it did not necessarily).

Turning to the question of equitable tolling, Plaintiffs are correct that the doctrine can cure

an otherwise untimely EEOC filing. The Third Circuit has

instructed that there are three principal, though not exclusive, situations in which

equitable tolling may be appropriate: (1) where the defendant has actively misled

the plaintiff respecting the plaintiff's cause of action; (2) where the plaintiff in some

extraordinary way has been prevented from asserting his or her rights; or (3) where

the plaintiff has timely asserted his or her rights mistakenly in the wrong forum.

Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1387 (3d Cir. 1994). Excusable

neglect, however, is insufficient justification for equitable tolling. Pizio v. HTMT Glob. Sols., 555

F. App’x 169, 176 (3d Cir. 2014). The fact that the plaintiff was pro se when they filed a untimely

EEOC claim can make equitable tolling more appropriate. Merit v. Se. Pa. Transit Auth., 276 F.

Supp. 2d 382, 385 (E.D. Pa. 2003). In general, whether equitable tolling applies is a fact-intensive

issue that is “not generally amenable to resolution on a Rule 12(b)(6) motion.” In re Cmty. Bank

of N. Va., 622 F.3d 275, 301–02 (3d Cir. 2010).

Plaintiffs’ opposition to Allstate’s timeliness argument relies most heavily on

demonstrating that “in some extraordinary way” they were “prevented from asserting” their

rights. Oshiver, 38 F.3d at 1387 (emphasis added). In doing so, Plaintiffs point out that they were

pro se when they filed with the EEOC, were focused on selling the Clemente Agency’s book of

business, and were impacted by COVID-19. ECF No. 58 at 25. While there may be circumstances

in which specific impacts of COVID-19 could serve as a basis for equitable tolling, Plaintiffs have

pleaded nothing to demonstrate what about COVID-19 “prevented [them] from asserting” their

rights. Oshiver, 38 F.3d at 1387. Instead, they allege only that COVID-19 was ongoing at the

relevant time, without describing what impact it had on Plaintiffs and their effort to assert their

rights. ECF No. 36 ¶ 188. The mere existence of the COVID-19 pandemic is insufficient

justification for equitable tolling; otherwise, the 300-day limitations period would be meaningless

after March 2020 when the pandemic began because every plaintiff would be able to avail

themselves of equitable tolling. Congelio v. Univ. of Pittsburgh of Commonwealth Sys. of Higher

Educ., No. 2:21-cv-902-NR, 2022 WL 103284, *4 & n.5 (W.D. Pa. Jan. 11, 2022). Nor does the

fact that Plaintiffs were focused on selling the Clemente Agency’s book demonstrate how Plaintiffs

were prevented from exercising their rights. Plaintiffs’ opportunity to sell their book of business

terminated on December 1, 2020, leaving them with about 225 days to file a timely EEOC charge

encompassing Allstate’s termination of the EAA and their employment. That leaves Plaintiffs’

pro se status, which alone is insufficient to justify equitable tolling. Cf. Merit, 276 F. Supp. 2d at

385–86 (pro se status coupled with health issues justified tolling).

Plaintiffs also argue that they were misled by Allstate, but this argument fails to justify

equitable tolling because it concerns conduct that was within the 300-day deadline. According to

Plaintiffs, Allstate misled them into thinking that they would have a legitimate opportunity to sell

the Clemente Agency’s book of business. ECF No. 58 at 25. But Allstate’s failure to approve a

sale of the book culminated on December 1, 2020—within the limitations period for Plaintiffs’

EEOC charge, and thus there is no need to apply equitable tolling to save that facet of Plaintiffs’

Title VII claim. The alleged misrepresentation concerning the sale of the Clement Agency’s book

of business, however, does not concern the untimely facets of Plaintiffs’ claim—most notably,

Allstate’s termination of the EAA in August 2020. Thus, it does not justify tolling with respect to

the untimely portions of Plaintiffs’ Title VII claim.

Plaintiffs, therefore, have failed to plausibly allege facts that support the application of the

equitable tolling doctrine, and the Court will dismiss Count II except to the extent that it is based

on discriminatory actions taken after November 3, 2020.

D. The Court Will Dismiss Plaintiffs’ Fraud Claim

Turning to Count IV, Plaintiffs allege that Allstate and the Tomaino Agency defrauded

Plaintiffs by misrepresenting “certain discount techniques” in order to fabricate a pretextual reason

for terminating the EAA and usurping Plaintiffs’ business. ECF No. 36 ¶ 315. Both defendants

move to dismiss the fraud claim for failing to adhere to the heightened pleading standard set forth

in Federal Rule of Civil Procedure 9(b). The Court agrees with Defendants and will dismiss Count

IV.

In Pennsylvania, the six elements of fraud are: (1) a misrepresentation; (2) that is material;

(3) knowledge of or recklessness as to falsity; (4) intent to induce reliance; (5) actual, justifiable

reliance; and (6) resulting injury. SodexoMAGIC, LLC v. Drexel Univ., 24 F.4th 183, 205 (3d Cir.

2022). Under Rule 9(b), “[i]n alleging fraud or mistake, a party must state with particularity the

circumstances constituting fraud or mistake.” To satisfy the Rule, “the plaintiff must plead or

allege the date, time and place of the alleged fraud or otherwise inject precision or some measure

of substantiation into a fraud allegation.” Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir.

2007) (cleaned up). Further, the plaintiff must allege “the general content of the

misrepresentation.” Ne. Revenue Servs., LLC v. Maps Indeed, Inc., 685 F. App’x 96, 102 (3d Cir.

2017) (internal quotation marks omitted).

Here, Plaintiffs’ Second Amended Complaint is devoid of the particulars required under

Rule 9(b). According to Plaintiffs, Allstate “injured Plaintiffs when Valerie Staudt taught

Plaintiffs fraudulent discount techniques for the sole purpose of targeting Plaintiffs’ business for

fraud.” ECF No. 58 at 32 (citing ECF No. 36 ¶¶ 92, 170, 331, 344). This allegedly occurred when

Ms. Staudt condoned discount techniques employed by the Tomaino Agency and then taught them

to Plaintiffs. Id. (citing ECF No. 36 ¶¶ 92, 120). The Tomaino Agency is implicated in the fraud

because, Plaintiffs argue, Mr. Tomaino “told Plaintiffs through Ms. Staudt that they ‘should have

changed this to this, and changed this,’ specifically referencing that Plaintiffs should have changed

their discount practice.” ECF No. 54 at 12 (citing ECF No. 36 ¶¶ 87–88).

Absent from Plaintiffs’ allegations are any particulars about what made the relevant

discount practices improper; indeed, there is next to no detail in the allegations about what the

discount practice was, except that it involved undefined “widow” discounts. See ECF No. 36 ¶

112. Mr. Tomaino’s alleged “this to this” statement is unhelpful without some context from which

to glean what it is that Mr. Tomaino and Allstate told Plaintiffs to do and why it was incorrect or

otherwise improper. Plaintiffs, as parties to the conversation with Ms. Staudt where she relayed

the statement, presumably are aware of that context but have failed to plead it. Without this

information about the content of the alleged misrepresentation and further information about when

and in what context Allstate and Tomaino Agency made the misrepresentation, Defendants have

been deprived of “notice of the precise misconduct with which [they are] charged,” in violation of

Rule 9(b). Frederico, 507 F.3d at 200–01. To satisfy that Rule, Plaintiffs must do more than

reference “certain techniques” Defendants induced them to employ—Plaintiffs must describe

those techniques and why it was a misrepresentation to suggest that Plaintiffs could employ them.

ECF No. 36 ¶¶ 90, 170.

The Court, accordingly, will grant Allstate’s and the Tomaino Agency’s Motions and

dismiss Count IV. Because the Court concludes that Count IV is insufficiently pleaded, it will not

address Allstate’s alternative arguments that the claim is time barred or barred by the “gist of the

action doctrine.” ECF No. 50 at 29–30.

E. The Court Will Dismiss Plaintiffs’ Conversion Claim

In Count V—conversion—Plaintiffs allege that the Tomaino Agency unlawfully acquired

policies from the Clemente Agency’s book of business prior to the December 1, 2020 sale deadline.

The Tomaino Agency argues that Plaintiffs’ conversion claim fails because the allegations in the

Second Amended Complaint demonstrate that any acquisition of the policies took place after the

Clemente Agency lost any property interest it held in the policies. ECF No. 44 at 14–15. The

Court agrees with the Tomaino Agency.

In Pennsylvania, conversion “is widely understood as the deprivation of another’s right of

property in, or use or possession of, chattel, or other interference therewith, without the owner’s

consent and without lawful justification.” PTSI, Inc. v. Haley, 71 A.3d 304, 314 (Pa. Super. 2013)

(internal quotation marks omitted). Thus, “a person may incur liability for conversion by

unreasonably withholding possession from one who has the right to it.” Id. (quoting Martin v.

Nat’l Sur. Corp., 262 A.2d 672, 675 (Pa. 1970)) (cleaned up).

Initially, the Court notes that the Tomaino Agency does not challenge the propriety of

bringing a conversion claim with respect to Plaintiffs’ property interest in policies serviced by the

Clemente Agency. Thus, the Court will assume, without deciding, that such an interest can serve

as the basis for Plaintiffs’ conversion claim, despite the fact that conversion ordinarily concerns

tangible goods. See ECF No. 54 at 16 (describing “[a]cquiring possession of the goods” as an

element of conversion). Setting that issue to the side, Plaintiffs would still need to allege an interest

in the policies “at the time of the alleged conversion,” i.e., the time of the alleged interference with

Plaintiffs’ interest. Pittsburgh Const. Co. v. Griffith, 834 A.2d 572, 581 (Pa. Super. 2003) (quoting

Chrysler Cred. Corp. v. Smith, 643 A.2d 1098, 1100 (1994)). The instant dispute turns on whether

Plaintiffs can do so.

They key date in this regard is December 1, 2020. The Tomaino Agency argues that, at

the very least, by that date Plaintiffs lost any interest they had in the policies because that was their

deadline to sell the Clemente Agency’s book of business. ECF No. 44 at 18–19, 18–19 n.13.

According to the Tomaino Agency, any conversion did not occur until February 2021, when the

Tomaino Agency began servicing the policies. Id. at 18. Plaintiffs, for their part, appear to

concede the premise that they lost their interest in the policies after December 1, 2020. See ECF

No. 54 at 15–16. They argue instead that the conversion took place in October 2020, when “Mr.

Tomaino agreed to receive certain seeded policies owned by [the Clemente Agency] from

Allstate.” ECF No. 36 ¶ 138; see ECF No. 54 at 16.

Based on the allegations of the Second Amended Complaint, the Court concludes that any

conversion that occurred took place in February 2021, well after Plaintiffs lost their interest in the

policies allegedly converted. While Plaintiffs allege the existence of an agreement in October

2020 by which the Tomaino Agency would accept certain Clement Agency policies, they expressly

allege that the Tomaino Agency took no other action at that time. ECF No. 36 ¶ 138 (alleging that

Mr. Tomaino never asked Plaintiffs for client introductions, never had a discussion regarding the

transition, and never asked Plaintiffs why he was “getting these policies for free”). There is no

allegation that the Tomaino Agency began servicing these policies or acting upon any “agreement”

that existed with Allstate until February 2021, when “Plaintiffs’ clients received communications

from Mr. Tomaino, which stated that Mr. Tomaino was now Plaintiffs’ clients’ new agent.” Id. ¶

134. Thus, to the extent that there was some agreement between Allstate and the Tomaino Agency

in October 2020 to receive Clemente Agency policies at some unspecified time, the allegations

make clear that the Tomaino Agency took no action to interfere with Plaintiffs’ interest between

that date and December 1, 2020. Instead, the Tomaino Agency only began servicing the policies

over two months after Plaintiffs’ interest expired. To the extent that Plaintiffs allege that the

existence of the October 2020 agreement itself interfered with Plaintiffs’ interest in the seeded

policies, it has failed to substantiate its argument with factual allegations.

Accordingly, the Court will grant the Tomaino Agency’s Motion and dismiss Count V.

Because the Court concludes that Plaintiffs have failed to plausibly allege a property interest in

the policies at the time of the alleged conversion, it need not address the Tomaino’s alternative

arguments regarding the gist of the action and economic loss doctrines.

F. The Court Will Dismiss Plaintiffs’ Unjust Enrichment Claim

In Count VI, Plaintiffs bring a claim for unjust enrichment against both Allstate and the

Tomaino Agency. With respect to the Tomaino Agency, Plaintiffs describe the unjust enrichment

claim as a “companion” to their fraud and conversion claims, available “to divest the defendant of

a benefit obtained by committing the tort.” ECF No. 54 at 17 (quoting M3 U.S. Corp. v. Hart, 516

F. Supp. 3d 476, 505 (E.D. Pa. 2021)). Because the Court has dismissed those “companion”

claims, the Court will also dismiss Plaintiffs’ unjust enrichment claim against the Tomaino

Agency. See supra at 27–31. Allstate argues that the Court should do the same for it, and this

Court agrees.

In its opening brief, Allstate argued that Count VI must be dismissed because “unjust

enrichment is inapplicable when the relationship between parties is founded upon a written

agreement or express contract,” as is the case here. ECF No. 50 at 33 (quoting Betras v. Oli-Car

Inc., No. 2:21-CV-00873-CCW, 2021 WL 5239938, at *6 (W.D. Pa. Nov. 8, 2021)). In opposition,

Plaintiffs do not contest that principle of law and instead offer one of their own: “where a third-

party beneficiary of a contract receives a benefit from that contract under circumstances where it

would be inequitable for the third party to retain that benefit for free, the third party has been

unjustly enriched.” ECF No. 58 at 33. According to Plaintiffs, this principle applies because

“Allstate intentionally stymied Plaintiffs from selling their economic interests to third parties (not

Allstate) and then reaped the benefit of obtaining Plaintiffs’ Book and utilizing [sic] in the way in

which Allstate saw fit.” Id.

There are a few problems with Plaintiffs’ argument. Most obviously, Plaintiffs have failed

to plead the existence of any agreement under which Allstate was a third-party beneficiary and

received the benefit. Without such allegations, the legal principle presented by Plaintiffs is

inapplicable by its own terms. Apparently appreciating this problem, Plaintiffs suggest that they

can recover because Allstate prevented them from selling the Clemente Agency’s book of

business, thereby preventing the creation of the predicate agreement. See id. That argument,

however, fails because it runs headlong into the rule that unjust enrichment is unavailable where

the subject matter falls within the scope of a contractual agreement. Betras, 2021 WL 5239938,

at *6. At its core, Plaintiffs’ argument is that Allstate prevented Plaintiffs from selling the

Clemente Agency’s book of business, as they were allowed to under their agreement with Allstate.

Therefore, there is a contract that covers the subject matter of the dispute, and a claim for unjust

enrichment is unavailable. The Court, accordingly, will grant Allstate’s Motion and dismiss Count

VI.

G. The Court Will Dismiss Count VII as to the Tomaino Agency but Not Allstate

In Count VII, Plaintiffs’ final claim, they allege that Allstate and the Tomaino Agency

interfered with (1) Plaintiffs’ contract to purchase Mr. Cone’s book of business, (2) a standalone

agreement between Plaintiffs and Allstate’s loan company, and (3) the EAA. ECF No. 36 ¶¶ 338–

46. Both Allstate and the Tomaino Agency move to dismiss this Count in its entirety. The Court

will grant in part and deny in part Allstate’s motion and grant the Tomaino Agency’s Motion in

full as to Count VII.

To state a claim for tortious interference with contract under Pennsylvania law, a plaintiff

must plausibly allege the following elements: (1) a contract or prospective contract; (2) the

defendant’s “purposeful action” specifically intended to interfere with the contract or prospective

contract; (3) an absence of privilege or justification; and (4) actual legal damages. Crivelli v.

Gen. Motors Corp., 215 F.3d 386, 394 (3d Cir. 2000) (quoting Strickland v. Univ. of Scranton,

700 A.2d 979, 985 (Pa. Super. 1997)). In determining whether the defendant acted without

privilege or justification, courts consider various factors, including the nature of the defendant’s

conduct and their motive, the interests of the various parties involved, the relationship between the

parties, and the “social interests in protecting the freedom of action of the actor and the contractual

interests of the other.” Windsor Sec., Inc. v. Hartford Life Ins., 986 F.2d 655, 663 (3d Cir. 1993)

(quoting Restatement (Second) of Torts § 767 (1979)).

As to Allstate, the Court will dismiss Count VII except to the extent that it alleges Allstate’s

interference with the Clemente Agency’s purchase of the Cone book. Plaintiffs allege that Allstate

interfered with that agreement by unlawfully terminating the EAA, thereby depriving Plaintiffs of

the benefit of their bargain with Mr. Cone. ECF No. 58 at 33–34. Allstate’s only response is that

it justifiably terminated the EAA for fraud, but the Court has already ruled, in addressing Plaintiffs’

breach of contract claim, that they have plausibly alleged that the purported termination for fraud

was unwarranted. See supra at 11. Accordingly, Allstate has not provided grounds to dismiss

Count VII insofar as it alleges Allstate interfered with the Clemente Agency’s contract with Mr.

Cone. Otherwise, Count VII will be dismissed as to Allstate because Allstate cannot interfere with

the EAA, which it is a party to, see Sterling Nat’l Mortg. Co., Inc. v. Mortg. Corner, Inc., 97 F.3d

39, 45 (3d Cir. 1996), and because Plaintiffs have alleged no specifics about the nature of the

purported loan agreement or how Allstate interfered with it, see ECF No. 36 ¶ 133 (alleging only

that “[b]ecause of Defendants’ actions, Plaintiffs received notification that they were in default of

that loan”).

Turning to the Tomaino Agency, the Court will dismiss Count VII in its entirety for reasons

largely overlapping with the Court’s analysis of Plaintiffs’ other state-law claims. In response to

the Tomaino Agency’s Motion, Plaintiffs argue that the Tomaino Agency interfered with the EAA

and, by extension, the Cone agreement by teaching Plaintiffs discount techniques that served as

the basis for Allstate’s termination of the EAA for fraud. ECF No. 54 at 21–22. But, as explained

above, Plaintiffs have failed to allege specific facts concerning the nature of those discount

techniques, why they were improper, and what the Tomaino Agency’s role was, except that Mr.

Tomaino said to change “this to this” (without any further context). See supra at 27–29. Absent

further factual allegations, Plaintiffs’ allegation that the Tomaino Agency acted without privilege

or justification is entirely speculative. To the extent that Plaintiffs allege that the Tomaino Agency

interfered with its Allstate loan agreement, the claim fails for the same reasons that it fails as to

Allstate. Thus, Plaintiffs have failed to state their claim for tortious interference against the

Tomaino Agency.4

4 At the end of their tortious interference argument in opposition to the Tomaino Agency’s Motion, Plaintiffs briefly

argue that “[t]he Tomaino [Agency’s] actions spurred Plaintiffs’ wrongful termination, which apparently left Plaintiffs

In sum, Allstate’s Motion will be granted in part and denied in part as to Count VII. The

Court will dismiss Count VII as to the Tomaino Agency.

IV. Conclusion

For the foregoing reasons, Allstate’s Motion to Dismiss will be GRANTED IN PART and

DENIED IN PART. The Tomaino Agency’s Motion to Dismiss will be GRANTED. Plaintiffs

will be granted leave to amend their allegations to address the deficiencies discussed above. An

accompanying order will set forth the dismissal of Plaintiffs’ claims in further detail.

DATED this 28th day of December, 2022.

BY THE COURT:

/s/ Christy Criswell Wiegand

CHRISTY CRISWELL WIEGAND

United States District Judge

cc (via ECF email notification):

All Counsel of Record

bound to not compete with Allstate, inhibiting Plaintiffs’ ability to sell insurance and earn a living.” ECF No. 54 at

22. The Court will not address this argument, which Plaintiffs have not developed or supported with authority, and

because the Second Amended Complaint does not set forth corresponding allegations to make this claim part of Count

VII.