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A “captive” insurance company lawyer, allegedly fired for excessive client loyalty, can sue for wrongful termination on public policy grounds, U.S. District Judge Robert N. Chatigny ruled March 18, answering what had been an open question “for most jurisdictions, including Connecticut.” Normally, an at-will employee can be fired for any reason, except in cases that clearly violate public policy, such as civil rights discrimination or whistleblowing. Furthermore, courts have repeatedly ruled that attorneys’ Rules of Professional Conduct — such as the duty of independent judgment and loyalty to a client’s interests — do not give rise to civil lawsuits. The insurer in the case before Chatigny, Larry H. Lewis v. Nationwide Mutual Insurance Co., argued this point strenuously. Chatigny wasn’t swayed, and denied Nationwide’s motion to dismiss the claim: “I conclude that the Connecticut Supreme Court would recognize the public policy violation here is sufficient to support a wrongful discharge cause of action,” he declared. SHOCKING SEND-OFF Since 1986, Lewis headed Nationwide’s “Law Offices of Larry H. Lewis,” eventually building the Meriden, Conn., captive firm to a 17-lawyer operation. He was paid a salary by Nationwide to represent its policyholders in settlements and court cases. As is typical in captive firms, the policyholders didn’t pay him, but were his clients, entitled to his loyalty and judgment. The case highlights the tensions and conflicts lawyers face in captive firm settings. In his complaint, Lewis alleges that Nationwide claims office personnel repeatedly interfered with legal decisions he made on behalf of clients, to the detriment of the clients’ best interests. For example, Lewis claims Nationwide objected to his advice that clients settle for a policy’s limits in certain personal injury cases. In loyalty to the client, Lewis was attempting to avoid the chance of a high plaintiff’s verdict, which could expose clients’ personal assets. Over time, Lewis’ complaint alleges, Nationwide claims managers made it increasingly difficult for him to exercise professional independence in serving his clients. The specific lawyer ethics rules he invoked are Rules 1.8(f)(2) and 5.4(c). The first rule states that a lawyer can’t accept payment from a third party unless “there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship.” The second prohibits lawyers from permitting someone who pays for services for another to “direct or regulate the lawyer’s professional judgment in rendering such legal services.” In addition to his wrongful-discharge claim, Lewis prevailed against Nationwide’s bid to dismiss a claim of intentional infliction of emotional distress. Part of Lewis’ alleged humiliation occurred post-firing. On Dec. 26, 2001, Lewis was unceremoniously sacked, as he was about to leave for vacation, according to his complaint. Numbed, he asked if he could leave personal office furniture and other effects temporarily. His successor at the office, the complaint contends, told him he could. But on Jan. 4, 2002, his wife, Lewis alleges, got 30 minutes’ notice that a moving company was on its way. It deposited Lewis’ hastily packed and damaged office furniture on his front lawn when he wasn’t home to deal with the matter, according to the complaint. Lewis also asserts that Nationwide agents opened his locked credenza and looted it of $1,100 in cash, a Mont Blanc pen and other books, pens, papers and photographs. Despite the allegations, the insurance company, in its motion to dismiss, argued Lewis had failed to allege extreme and outrageous conduct. Chatigny found otherwise. A juror might find Lewis’ “reasonable expectations were violated by the company’s malicious attempt to humiliate him and inflict emotional distress — to the point where a juror might well exclaim ‘Outrageous,’” as the test requires, he wrote. Within a week after Chatigny’s ruling, Nationwide settled the case. The company declined to comment on the matter last week.

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