                              In the

United States Court of Appeals
               For the Seventh Circuit

No. 08-3704

B ONNIE L. R OTH and C ONNIE S. R OTH,
                                                Plaintiffs-Appellants,
                                  v.

A MERICAN F AMILY M UTUAL
INSURANCE C OMPANY, et al.,
                                               Defendants-Appellees.


             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
              No. 05 C 3867—Ronald A. Guzmán, Judge.



        A RGUED M AY 6, 2009—D ECIDED JUNE 5, 2009




  Before E ASTERBROOK, Chief Judge, and P OSNER and W OOD ,
Circuit Judges.
  P OSNER, Circuit Judge. The plaintiffs were insurance
agents of the American Family insurance companies
(which we’ll refer to as the “company”). The company
terminated their agency agreement, precipitating this
diversity suit for breach of contract, governed by Illinois
law. The district court granted summary judgment in
favor of the company.
2                                               No. 08-3704

   The agency agreement provided that it could be termi-
nated by either party upon written notice, except that
after the agreement had been in effect for two years “the
Company will give you notice in writing of any undesirable
performance which could cause termination of this agree-
ment if not corrected. The Company will not terminate
this agreement for those reasons for a period of six months
after that written notice.” But notice is not required if the
agent engaged in any “dishonest, disloyal or unlawful”
conduct or “practices competitive with or prejudicial to the
Company.” If no such ground for termination is estab-
lished, and the agent’s performance is not “undesirable,”
the company still may terminate his agency without notice,
but only if it “terminates substantially all agreements of
this type throughout the Company or in a particular state
or area.”
  One of the plaintiffs signed the name of the applicant on
an application for an insurance policy. The other signed the
name of another insurance agent (on a different policy),
thereby certifying that the other agent had given the
insured required information and had seen him read
and sign the contract. One of the plaintiffs argues that
she was selling securities, not insurance contracts, and so
was governed by a different agency agreement. But the
contracts were “variable universal life” insurance policies.
They are both securities and insurance contracts, 215 ILCS
§ 5/500-35(a)(2); Elizabeth F. Browne, “The Tyranny of
the Multitude Is a Multiplied Tyranny: Is the United States
Financial Regulatory Structure Undermining U.S. Competi-
tiveness?,” 2 Brooklyn J. Corp. Financial & Commercial
Law 369, 377 (2008), and were covered by the agency
agreement.
No. 08-3704                                                 3

  The only other question presented by the appeal is
whether, as the district judge held, the plaintiffs’ signing
other persons’ names on insurance applications was
“dishonest” conduct within the meaning of the agency
agreement even though there is no suggestion that either
plaintiff derived a financial benefit from what she did. If it
was not dishonest conduct, the insurance company vio-
lated the agency agreement by terminating the plaintiffs
without notice.
  They were authorized to sign by the owners of the names
and indeed in one instance were requested by the owner to
sign for him. But they did not indicate, as by writing “by
Bonnie Roth” after the signature, that they were signing
another person’s name.
  Their conduct disserved the insurance company. The
insured whose name was signed by Connie Roth might
have refused to pay her insurance premiums on the ground
that her name had been forged, and the insured whose
application was witnessed by an agent whose name Bonnie
Roth signed might have tried to use the irregularity to
invalidate his insurance contract. The plaintiffs’ perfor-
mance of their agency duties was therefore “undesirable.”
But was it “dishonest”?
   It is odd that such a large insurance company (American
Family is number 352 on Fortune’s list of the 500 largest
American corporations, http://money.cnn.com/magazines/
fortune/fortune500/2008/full_list/301_400.html, visited May
18, 2009), should have such a poorly drafted contract with
its agents. (The contract keeps landing the company in
court. See, e.g., Clifton v. American Family Mutual Ins. Co.,
4                                                   No. 08-3704

507 F.3d 1102 (8th Cir. 2007); Teets v. American Family
Mutual Ins. Co., 272 S.W.3d 455 (Mo. App. 2008); McClure v.
American Family Mutual Ins. Co., 29 F. Supp. 2d 1046 (D.
Minn. 1998).) It is unclear whether after the agent has been
on board for two years the company can terminate the
agency for purely economic reasons, even with notice,
unless it terminates similar agreements with other agents.
(The Ninth Circuit, in an unpublished opinion, held that it
can, Adams v. American Family Mutual Ins. Co., 1999 WL
386913, at *3 (9th Cir. May 21, 1999), but over a dissent.)
Whether the agent is entitled to an opportunity to cure
“undesirable performance” is not spelled out either, but
has been left to be inferred from the phrase “if not cor-
rected.” Teets v. American Family Mutual Ins. Co., supra, 272
S.W.3d at 463-64; McClure v. American Family Mutual Ins.
Co., supra, 29 F. Supp. 2d at 1067; cf. Filmline (Cross-Coun-
try) Productions, Inc. v. United Artists Corp., 865 F.2d 513, 517
(2d Cir. 1989). No deadline for cure is specified. And one
might have expected the requirement of notice and of an
opportunity to cure to be intended for agents whose
performance was inadequate or unsatisfactory, rather
than “undesirable,” which has a hint of turpitude that
blurs the difference between “undesirable” and “dishon-
est” performance. The difference is further blurred by
the inclusion in the grounds for termination without
notice of any practices “prejudicial to” the insurance
company. One would think that “undesirable perfor-
mance” was such a practice, yet such an interpreta-
tion would make the requirement of six months’ notice
evaporate.
  The clumsy drafting that has given rise to this case is
the use of the word “dishonest” to designate the situations
No. 08-3704                                                  5

in which six months’ notice is not required. In the employ-
ment context the word has a primary connotation of theft
or fraud. See, e.g., Kathryn J. Filsinger, Employment Law for
Business and Human Resources Professionals 259 (2005);
Charles H. Fleischer, Employer’s Rights: Your Legal Handbook
from Hiring to Termination and Everything in Between 285
(2004); Shawn Smith & Rebecca Mazin, The HR Answer
Book: An Indispensable Guide for Managers and Human
Resources Professionals 184 (2004). To call an agent who
disobeys his principal’s directive (as the plaintiffs did, for
the company’s employee manual makes clear that signa-
tures on applications for insurance must be authentic)
“dishonest” if the agent had no pecuniary stake sounds a
little strange. But only a little; for among the other mean-
ings of “dishonesty,” two clusters describe the plaintiffs’
behavior: (1) “a breach of trust, a ‘lack of . . . probity or
integrity in principle,’ ‘lack of fairness,’ or a ‘disposition
to . . . betray,’ ” and (2) “deceitful behavior, a ‘disposition
to defraud [or] deceive,’ or a ‘disposition to lie, cheat, or
defraud.’ ” United States v. Brackeen, 969 F.2d 827, 829 (9th
Cir. 1992) (citations omitted); see also Midway School
District v. Griffeath, 172 P.2d 857, 860 (Cal. 1946); R. Bruce
McAfee & Paul J. Champagne, Effectively Managing Trouble-
some Employees 74-75 (1994); P.J. Fitzgerald, Criminal
Law and Punishment 37 (1962).
  We think the best interpretation is that the six months’
notice is required if the agent’s performance is unsatisfac-
tory, for example because he is slow or makes many
mistakes, but is not required if he engages in what could
reasonably be thought misconduct. And it is misconduct to
sign another person’s name to an insurance application
6                                                 No. 08-3704

without indication that it is not the applicant’s signature. It
is deceptive, since it is not the kind of deviation from
instructions that a supervisor would catch, and it could get
the company into trouble. It was also an unforced error,
because the manual clearly forbade such conduct and
because the plaintiffs could have asked their supervisors for
authorization to vary from the manual and did not do so.
  Suppose the plaintiffs had added after the signatures “by
Bonnie Roth” or “by Connie Roth,” as the case might be.
That would have been contrary to the instructions in the
agents’ manual, but it would not (we may assume without
deciding) have been dishonest, because it would not have
been deceptive. Compare that with Scirex Corp. v. Federal
Ins. Co., 313 F.3d 841, 848 (3d Cir. 2002), where nurses
employed by the plaintiff “understood that they were to
record their observations of test subjects every thirty
minutes for eight hours, yet in many cases their records
included ‘observations’ for times when the patients were
sitting at home. Even worse, these fictionalized records
falsely implied that the patients had remained in the clinic
for the full eight hours, and therefore that the tests had
proceeded according to protocol. Thus, not only did the
nurses fictionalize the records, they made it virtually
impossible to discover the fictionalization until disclosure
by the informant. Faced with such flagrant misrepresenta-
tion in a field characterized by strict adherence to proce-
dure, we conclude that the nurses’ conduct was clearly
dishonest, as well as highly unfaithful.” Ditto here.
                                                   A FFIRMED.

                             6-5-09
