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Farmers hired Andrew Rudnicki in 1979. He worked his way up as a trial lawyer to supervising attorney, co-managing the Los Angeles office, and divisional supervisor. In 2013, he was promoted to senior vice president of claims litigation and led Farmers’s branch legal offices. The branch legal offices provide legal representation to Farmers’s insureds. In this role, Rudnicki was responsible for outside counsel that represented Farmers’s insureds, legal bill review, and legal vendors.

In 2013, Lisa Sepe-Wiesenfeld reported to Rudnicki, who tasked her with participating on a conference call with multiple attorneys to address some of their gender-based concerns regarding women in leadership/promotions. Participants included Catherine Meta Pugh, who worked in human resources, and attorneys Christine Campbell, Karen Wasson, and Bethany Soule. Rudnicki then had multiple phone conversations with these three attorneys regarding gender issues.

On April 29, 2015, Lynne Coates filed a class action lawsuit against Farmers, alleging that “Farmers systematically pays female attorneys less than similarly-situated male attorneys. Not only are male attorneys paid more, they are routinely given higher profile work assignments; are given raises and promotions more frequently; and are recognized for their accomplishments while female attorneys are not. In general, Farmers advances the careers of its male attorneys more quickly while treating its female attorneys more like support staff.” In October or November of that year, Wasson became the lead plaintiff in Coates. Farmers retained Paul Hastings, LLP to represent it in the Coates action.

In late 2015, Rudnicki went to Farmers chief claims officer, Keith Daly’s office to explain that he had been prepared by Paul Hastings and expected to give a deposition in Coates; he stated that he would be testifying about what he believed were some HR failures, specifically, the fact that the gender disparity issue had been raised and that HR denied his requests for gender demographics and pay disparity documents in 2013. Daly became red-faced and agitated. Daly unhappily said something like “I don’t see that you need to testify about that.” Rudnicki replied that he did not get to dictate which questions were asked of him.

Thereafter, Daly treated Rudnicki with an icy chill. For example, in February and March 2016, Daly did not ask Rudnicki to speak at Farmers’s big conference, even though he had spoken there every year for the preceding 10 years. At another event, when every other department head was asked to speak, Rudnicki was excluded.

The Coates litigation settled in principle on April 13, 2016, before Rudnicki was ever deposed. One month later, on May 13, 2016, Farmers terminated Rudnicki’s employment. When asked for a reason, Daly and Elliott told Rudnicki that there were “HR issues” and that he was responsible for the Coates settlement. Elliott told Rudnicki that his “behavior ha[d] become a risk to the organization.” But, Daly did not review Rudnicki’s personnel file before terminating his employment; he was only familiar with his own reviews of Rudnicki. Elliott also did not review Rudnicki’s personnel file before Rudnicki’s employment was terminated.

On August 10, 2016, Rudnicki filed a lawsuit, alleging nine causes of action against Farmers. Only five claims survived Farmers’s motion for summary judgment/adjudication: (1) age discrimination, (2) gender discrimination, (3) disability discrimination, (4) retaliatory termination, and (5) a derivative claim for wrongful termination.

Following a 24-day trial, the jury found in favor of Rudnicki on his claim for retaliation, awarding him $5.4 million in compensatory damages and $150 million in punitive damages. The trial court reduced the punitive damage award to $18.9 million, but left the rest of the verdict standing. The Court of Appeal affirmed in the unpublished case of Rudnicki v Farmers Insurance Exchange -B321691 (January 2024).

Farmers argued that the Court of Appeal should reverse the judgment on liability because (1) Rudnicki could not prevail on a claim for retaliation; and (2) the trial court issued certain erroneous evidentiary rulings. Alternatively, if it does not reverse on liability, Farmers asks it to eliminate or substantially reduce the damage award.

The Court of Appeal was not persuaded by these arguments. It found “Farmers engaged in misconduct that can be characterized as moderately reprehensible. It caused physical harm in a foreseeable manner.”