Dixon v. Nationwide Mutual Insurance

JAMES DICKSON PHILLIPS, Circuit Judge,

concurring in part and dissenting in part:

I concur in the majority’s decision in Beckham, and with that portion of the opinion that rejects the constitutional challenge in Dixon. Because I would give S.C.Code Ann. § 38-37-940(2) a reading different from that employed by the district court, however, I conclude that the district court in Dixon erred in failing to instruct the jury that it is illegal, under South Carolina law, to fire an insurance agent for unprofitability associated with the volume of insurance ceded to the state reinsurance facility.

Section 38-37-940(2) prohibits firings based on the volume of insurance written by an agent and reinsured under the state insurance plan, but as construed by the district court and the majority opinion, the protection for agents intended by the South Carolina General Assembly is lost. It is inconceivable that an agent would be fired for placing a high volume of insurance that was profitable, and thus it can be presumed that the volume of an agent’s insurance will only give rise to his termination if the insurance is also unprofitable. Given the reading of § 38-37-940(2) adopted by the majority, the statutory protection will have no effect, because in every case where an agent is fired because of volume his former *1183company will be able to point to his unprofitability as a separate legal justification for the firing. There will be no case in which the statute will afford the protection intended by the legislature.

The majority seems to recognize this problem, but suggests that any other reading of the statute would permit agents to become “mere order takers.” Of course, the failure of an agent to solicit new business in more profitable insurance lines would provide the employer with an independent basis for firing the agent. In Dixon ’s case, in fact, Nationwide alleged that Dixon had become an “order taker.” Even if the district court had properly instructed the jury that Dixon could not be fired for unprofitability associated with statutorily ceded coverage, then, the jury might have found that Nationwide had cause for firing Dixon despite the protection of the statute.1 Reading the statute in the manner that gives it a practical effect will not, therefore, lead to the “intolerable” agent habits envisioned by the majority.2

Because I conclude that the jury in Dixon should have been instructed that Dixon was illegally fired if his termination resulted from the unprofitability of insurance placed through him with the South Carolina reinsurance facility, I disagree with the majority’s conclusion that it is unnecessary to address whether the jury should also have been instructed that it could award punitive damages. Section 38-37-940(2) creates a new right of action in tort for wrongful termination by providing a new ground upon which a termination may be said to be wrongful. See G-H Insurance Agency v. Travelers Insurance Co., 270 S.C. 147, 241 S.E.2d 534, 536 (1978). Punitive damages should have been available to Dixon here, just as they would be in South Carolina to any other plaintiff alleging a cause of action arising in tort.

Accordingly, I dissent from that portion of the majority opinion that upholds the district court’s failure to properly instruct on liability and punitive damages.

. Because the jury was presented evidence on this theory, a directed verdict in Dixon’s favor would have been improper.

. The statutory interpretation of the state insurance commissioner referred to by the majority opinion similarly fails to give effect to § 38-37-940(2). Although an interpretation of the statute by an administrative official is normally accorded deference, we are not bound to adopt that interpretation if there are cogent reasons not to do so. See Faile v. South Carolina Employment Security Commission, 267 S.C. 536, 230 S.E.2d 219, 221-22 (1976). That the commissioner’s interpretation gives the statute no meaning provides a cogent reason to adopt a different reading of the statute. Cf. Bowles v. Seminole Rock Co., 325 U.S. 410, 414, 65 S.Ct. 1215, 1217, 89 L.Ed. 1700 (1945) (agency interpretation of its own regulations not entitled to deference if plainly erroneous or inconsistent).