TADC Employment Law Newsletter — Spring 2006

TADC EMPLOYMENT LAW NEWSLETTER — Spring 2006
R. Edward Perkins, Editor
Adam Robison, Assistant Editor
Tamara Ruen, Assistant Editor

Sheehy, Serpe & Ware, P.C. — Houston, Texas
I. TEXAS SUPREME COURT DECISIONS
A. At-Will Employment

In Matagorda County Hospital District v. Burwell, 49 Tex. Sup. Ct. J. 370 (February 24, 2006), Christine Burwell sued Matagorda County Hospital District for breach of contract and age discrimination after it terminated her employment. She claimed that the District’s policy manual limited the at-will nature of her employment such that the employer could only terminate her for cause. The manual provided that “employees may be dismissed for cause” and Burwell asserted that this statement was an agreement that employees would be dismissed only for cause.

The trial court initially granted summary judgment to the District on the contract claim. Burwell appealed. The court of appeals reversed and remanded. The jury then found in favor of Burwell on her contract claim but against her on the discrimination claim, and the court of appeals affirmed.

On review, however, the Supreme Court held that “the court of appeals misread the manual. It plainly provides that dismissal may be for cause, but it nowhere suggests that dismissal may be only for cause, and that limitation cannot simply be inferred.” According to the Supreme Court, Burwell’s subjective understanding that she could only be terminated for cause could not create a contract with the District, and the unambiguous plain language of the manual did not form an agreement to terminate only for cause. The Court reversed and rendered a take-nothing judgment for the District.

B. Texas Commission on Human Rights Act – “Comparable Seriousness

Test”

In Ysleta Indep. Sch. Dist. v. Monarrez, 177 S.W.3d 915 (Tex. 2005) (per curiam), Gustavo Monarrez and Jose Rodriguez (Mechanics) were hired by Ysleta Independent School District (District) as a bus mechanics. One evening, the pair went out drinking together. At some point, Rodriguez became concerned that he would not make it for work the following day. Consequently, he asked Monarrez if he would clock-in on his behalf. Monarrez agreed.

The following day, Rodriguez did not show up for work, and Monarrez clocked in for him, as planned. Later that same day, Rodriguez called Monarrez and informed him that he would be absent the entire day. Thus, at the end of Rodriguez’s shift, he clocked out for both he and Monarrez.

Several days later, both employees self-reported themselves to the District. The incident was then reported to a review committee. The committee recommended that both employees be terminated for their conduct.

Following their termination, both men brought suit under the Texas Commission on Human Rights Act, alleging gender discrimination. Specifically, the mechanics argued that they had been treated more severely than their female counterparts, who had also engaged in time card violations.

The trial court rendered a judgment in favor of the mechanics. The District appealed to the Eighth District Court of Appeals, which affirmed the judgment. The Texas Supreme Court granted review.

At the Supreme Court, the District argued that there was legally insufficient evidence that the female employees, who were not terminated for time card violations, were similarly situated to the mechanics.

The Supreme Court noted that the issue of the meaning of “similarly situated” was a matter of first impression. Therefore, the Supreme Court turned to “analogous federal case law for guidance.”

Adopting federal case law, the Supreme Court determined that employees are similarly situated under the Act if “their circumstances are comparable in all material respects, including similar standards, supervisors, and conduct. The “comparable seriousness” test does not require “precise equivalence.” Rather, it requires merely that the misconduct for which the employee is discharged be “nearly identical” to that engaged in by the allegedly similarly situated individual.

Under the foregoing test, the Supreme Court held that the females’ time clock violations were not of “comparable seriousness” to render the similarly situated to the mechanics. The Supreme Court reasoned that the female employees, unlike Rodriguez and Monarrez, had never completely failed to show up for work incident to their time card violations. Indeed, the evidence adduced at trial demonstrated that several of the females had simply clocked in on behalf of another female simply for the sake of convenience. Therefore, the Supreme Court found that the misconduct of the females was materially different in both nature and seriousness relative to the conduct of the mechanics. Accordingly, the Supreme Court agreed with the District that there was no evidence that the females were “similarly situated.”

As a result, the Supreme Court reversed the appeals court’s judgment and rendered a take nothing judgment for the District.

C. Arbitration Policy – Notice and Acceptance

In In re: Dillard Dept. Stores, Inc., 49 Tex. Sup. Ct. J. 411 (March 03, 2006), Delia Garcia filed a claim against her former employer, Dillard’s Department Stores, Inc. (Dillard’s) for retaliatory discharge following her request for worker’s compensation benefits. Dillard’s filed a motion to compel arbitration pursuant to an arbitration policy it adopted in 2000. The trial court denied Dillard’s motion to compel, holding that Garcia did not receive notice of the policy. Dillard’s petitioned the court of appeals for mandamus, which was denied. The Texas Supreme Court reversed the court of appeals, finding that the trial court abused its discretion in denying Dillard’s motion to compel arbitration. It granted a conditional writ of mandamus for the trial court to order arbitration.

In 2000, Dillard’s adopted the arbitration policy in question. It held a mandatory meeting at which employees were given a packet of materials including a copy of the policy, the arbitration rules, and an acknowledgement form. The acknowledgement form briefly explained the policy and warned that employees were deemed to accept the policy by continuing their employment. The forms were to be signed and stored in personnel files, but Dillard’s was unable to produce Garcia’s form or a witness who remembered that she attended the meeting.

However, in Garcia’s affidavit, she admits having received a “document during a sales meeting” which provided a short explanation of the program. She states that she refused to sign the document, because she did not agree to be bound by the arbitration agreement. She claims that she never received a copy of the policy itself or the rules, and that nobody told her that she would be deemed to have agreed to the policy by continuing her employment.

The court of appeals found that the document she described could not have been the acknowledgement form, because: 1) it constituted the cover page of the packet which included the policy and the rules, which Garcia claims never to have received; and 2) Garcia states that she did not agree to be bound by the agreement, and the acknowledgement form contained a conspicuous statement that she would be bound if she continued her employment.

The Supreme Court, however, found these points to be unconvincing. Because the packet containing the acknowledgement form, policy, and rules was the only material distributed to employees, the Court found that Garcia must have received the packet, if she received anything. They also found that the document she describes met the description of the acknowledgement form. Because she received these documents, and continued to work for Dillard’s, she was deemed to have accepted the arbitration policy as a matter of law, and the trial court abused its discretion in denying Dillard’s motion to compel arbitration. Accordingly, the Supreme Court conditionally granted the writ of mandamus, compelling arbitration of Garcia’s retaliatory discharge claims.

II. TEXAS APPELLATE COURT DECISIONS

A. Breach of Employment Contract – Vacation Pay

In Brown v. Sabre, Inc., 173 S.W.3d 581 (Tex. App.—Fort Worth 2005, no pet. h.), Paul Brown sued Sabre, Inc. (Sabre) for breach of employment contract. Following discovery, Sabre filed a traditional motion for summary judgment, arguing there was no employment contract and, therefore there could be no breach of contract. The trial court granted the motion. Brown appealed to the Fort Worth court of appeals.

Brown worked as an “at will” employee for Sabre until 2001. In 2001, Electronic Data Systems Corporation (EDS) purchased the part of Sabre’s operations division where Brown worked. Brown’s employment was set to be terminated with Sabre; however, he was offered a position with EDS. He accepted the position.

Sabre’s policy and procedures manual contained an explicit policy on vacation time. The policy provided that “[if] you leave the company, you will be paid for any earned but unused vacation days, as long as you provide two weeks’ resignation notice.” Brown did not give two weeks notice, but Sabre sent a memorandum to all transitioning employees about the policy. The memorandum assured Sabre employees that the contract between EDS and Sabre required EDS to honor their vacation time.

After Brown transitioned to EDS, he was given a final paycheck by Sabre. The paycheck did not compensate him for all of his earned vacation time. Consequently, Brown filed suit for breach of employment contract.

On appeal, the issue was whether either Sabre’s policy manual or the memorandum gave rise to an enforceable employment contract with respect to its vacation policy.

The court went through a historical analysis of the law regarding at-will employment, employee policy manuals, and disclaimers contained within the manuals. The court noted that: (1) Texas was an at-will employment state; (2) policy and procedure manuals generally do not alter the status of the at-will employee; and (3) this is particularly true when the procedure manual contains a specific disclaimer to that effect.

Here, the court found that the employee handbook contained a disclaimer. The disclaiming provision expressly provided that the policy and procedure manual was not a contract, and could be modified or amended at the company’s sole discretion. Based on the disclaimer, the court held that the vacation pay policy did not give rise to an employment contract. The disclaimer applied to the policy and procedure manual as a whole.

The court also found that the memorandum did not form an employment contract. The court held that the only contract that existed was between Sabre and EDS, not Sabre and its employees. Therefore, “the memorandum was merely explanatory and did not modify the voluntary nature of the policy.”

In conclusion, the court held that no contract existed between Brown and Sabre and, therefore affirmed the judgment of the trial court.

B. Administrative Remedies – Exhaustion

In Balli v. El Paso ISD, 2006 WL 565827 (Tex. App. – El Paso 2006), a school district was sued for alleged Title VII violations. El Paso ISD (EPISD) filed a plea to the jurisdiction, arguing that the trial court lacked subject matter jurisdiction because the Plaintiffs had failed to exhaust their administrative remedies as required by TEX. LAB. CODE ANN. §§ 21.201-262. After holding two hearings on the subject, the trial court granted EPISD’s plea to the jurisdiction and dismissed Plaintiffs’ case. The Plaintiffs appealed, and the Court of Appeals reversed and remanded.

TEX. LAB. CODE ANN. §§ 21.201-262, otherwise known as the Texas Commission on Human Rights Act, requires a person claiming employment discrimination to file a sworn, written complaint with the Commission within 180 days of the discriminatory act, and allow the Commission 180 days to dismiss or resolve the complaint before filing suit. Failure to comply with this procedure deprives a trial court of subject matter jurisdiction.

In support of their argument that they did comply with these procedures, Plaintiffs showed that they filed their complaints with the EEOC within the 180 day timeframe, and introduced evidence of a worksharing agreement between the EEOC and the Texas Human Rights Commission. The agreement provided that:

[T]he EEOC and the [Commission] each designate the other as its
agent for the purpose of receiving and drafting charges. . . EEOC’s
receipt of charges on the [Commission’s] behalf will automatically
initiate the proceedings of both EEOC and the [Commission] for
purposes of Section 706 (c) and (e)(1) of Title VII.

The Plaintiffs also called the director of the EEOC office as a witness. The director testified that, according to local procedure, each time a person files a discrimination charge with the EEOC office, the Commission is notified of the charge, regardless of whether the filer requests such “dual filing.” The evidence in each of Plaintiffs’ case files showed that the charge transmittal form was prepared and addressed to the Commission’s office, but the Commission had never acknowledged receipt of the forms.

The Court of Appeals found the Worksharing Agreement between the EEOC and the Commission was supported by the statutes. TEX. LAB. CODE ANN. §21.003 expressly provides the Commission with the authority to create local commissions on human rights. TEX. LAB. CODE ANN. § 21.153(a)(2) provides that a local commission may contract with a person, including an agency of the federal government. Finally, TEX. LAB. CODE ANN. § 21.155(a) provides a deferral system between the Commission and local commissions. From these three statutes, the Court found that the legislature had expressly empowered the Commission to enter into Worksharing Agreements such as the one here, and to designate the EEOC as its agent for the purposes of receiving charges on behalf of the Commission.

The Court of Appeals therefore held that the Plaintiffs had nominally filed their complaints with the Commission by filing them with the EEOC. The Court recognized that this case illustrates a breakdown of the Worksharing Agreement, but this did not affect the burden on Plaintiffs, because all they needed to show was that they timely filed their complaint, not that it have been received and investigated by the Commission. Having done so, they did exhaust their administrative remedies as required, and the trial court had subject matter jurisdiction over their case. The Court reversed and remanded for trial.

C. Texas Whistleblower’s Act – Adverse Employment Action

In Park v. Montgomery Co., Not Reported in S.W.3d, 2005 WL 2667488 (Tex. App.—Waco 2005, no pet. h.), Lieutenant David Park of the Montgomery County Sheriff’s Office sued Montgomery County under the Texas Whistleblower Act. He alleged that he suffered an adverse employment action incident to his reporting a sexual harassment complaint against the Montgomery County Commissioner, Ed Rinehart. Thereafter, Montgomery County filed a motion for summary judgment and a plea to the jurisdiction. The trial court granted the motion for summary judgment, and Lieutenant Park appealed to the Waco court of appeals.

Park is a lieutenant in the Montgomery County Sheriff’s Office. Incident to his duties with the Sheriff’s Office, Park worked as the security coordinator for the Montgomery County Convention Center. His duties as security coordinator included arranging for off duty officers to work security at the Convention Center.

At some point, Lieutenant Park attended a meeting with approximately six to eight other male employees of the county. The meeting was held to discuss office renovations. During the meeting, Commissioner Rinehart said, “we need to put a divider in there because he may want to do [Park’s secretary] on the desk.” Thereafter, Park interviewed his secretary and other female employee. Both of these individuals informed Park that they had been sexually harassed by the Commissioner. Park, believing that this conduct was unlawful, reported the Commissioner to the Sheriff, the personnel department, and the county attorney.

Shortly thereafter, the director of the convention center notified the Sheriff’s Office that security coordination for the Convention Center would be handled by the Constable’s Office. Park perceived this move as an adverse personnel action.

On appeal, Park argued that the trial court erred by granting summary judgment on all grounds. First, Park contended that the trial court committed error by finding that removing him from security coordinator of the convention center was not an adverse personnel action. The court agreed. The County had argued that divesting him from this position was not an adverse personnel action, because the position was unpaid and occupied only a small amount of Park’s time. However, the court, accepting Park’s contention as true, determined that a fact issue existed as to whether his removal as security coordinator deprived him of compensation. Specifically, the court agreed that this action may have constituted an adverse personnel action, because Park was deprived of compensation inasmuch as he sometimes appointed himself for security duty, in which case he was paid.

Second, Park contended that the trial court erred by determining that the Commissioner Rinehart was not “the employing government entity,” as required by the Whistleblower Act. The court found that this argument lacked merit. The court held that the County as a whole constitutes a governmental entity, and Commissioner Rinehart, as an elected official of the County, was likewise part of the governmental entity. Therefore, the court sustained error on this ground as well.

Third, Park requested the court to assign error to the trial court’s determination that he did not report in “good faith” a violation of law to “an appropriate law enforcement authority.” Again, the court sided with Park. Park contended that he believed that Rinehart’s conduct could constitute the offense of Official Oppression under Section 39.03 of the Texas Penal Code. The County tried to argue that Park’s affidavit, which set forth this belief, constituted a sham affidavit in that it conflicted with his prior deposition testimony. The court found this argument unpersuasive, sustaining error on this ground as well.

In conclusion, the Court reversed the trial court’s grant of Montgomery County‘s motion for summary judgment, and remanded the case back to the trial court for further proceedings.

III. FIFTH CIRCUIT DECISIONS

A. Family Medical Leave Act – “Mixed Motive” Framework

In Richardson v. Monitronics Inter’l, Inc., 434 F.3d 327 (5th Cir. 2005), Pamela Richardson started working in Monitronics’ customer service department in July of 2000. In January of 2001, Richardson was diagnosed with carpal tunnel syndrome. After she was denied leave under the Family Medical Leave Act (FMLA), she took two months paid leave under the company’s occupational injury program. In addition to the two months, Richardson was absent 12 times and tardy 22 times during the first four months of 2002. For this reason, Monitronics suspended her and issued her a written warning.

In April 2002, Richardson applied for and was granted FMLA leave. When she returned, she was required to take training classes on a new software program implemented in her absence. During this period, she was prohibited from working overtime. Subsequently, Richardson filed her first lawsuit against Monitronics arguing that the company had unlawfully denied her FMLA leave, and restricted her ability to work overtime. The district court denied Richardson any recovery.

After filing her first lawsuit, Richardson‘s attendance problems continued. For example, in April 2003, she was absent four days and tardy on five occasions. Consequently, she was issued another warning.

In May 2003, Monitronics implemented a new attendance policy. Pursuant to the policy, employees’ attendance was monitored on an “occurrence” basis. An occurrence consisted of, among other things, one attendance violation, two tardies, or a dress code violation. If an employee incurred one occurrence within a 180 day period, Monitronics would issue them an oral warning. Two occurrences would result in a written warning; three occurrences would result in a final warning; and four occurrences would result in termination. FMLA leave was not considered an occurrence.

During the month May, Monitronics issued Richardson a written warning after she was late four times, totaling two occurrences. At the end of May 2003, Richardson requested and was granted another FMLA leave. Over the summer, Richardson incurred an additional two occurrences after she was arrived tardy on four occasions. This made a total of four occurrences, and resulted in Richardson‘s final warning. On October 21, 2003, Richardson committed her final infraction after she failed to comply with Monitronics’ dress code.

Following her termination, Richardson filed the her second lawsuit against Monitronics. Specifically, she alleged that the company fired her in retaliation for filing her first FMLA lawsuit. Monitronics filed a motion for summary judgment. The trial court, applying the “traditional” McDonnell-Douglas burden-shifting framework, granted the motion. The court determined that Richardson had failed to prove that Monitronics fired her in retaliation for exercising her FMLA rights.

On appeal, Richardson argued, inter alia, that the trial court committed error by failing to apply the “mixed motive” framework in lieu of the “traditional” framework. She further contended that if the Court had properly applied the mixed motive framework, Monitronics motion for summary judgment would have been denied.

The Fifth Circuit agreed that the trial court applied the wrong test. Citing case law, the Fifth Circuit noted that the traditional McDonnell-Douglas framework does not always apply in FMLA retaliation cases. Rather, the mixed motive framework should be used where “the employee concedes that discrimination was not the sole reason for her discharge[.]” This rule had previously been recognized by the Fifth Circuit in an ADEA case.

Looking at this case, and the similarities between the FMLA specifically, the Fifth Circuit determined that the mixed-motive framework also applied to appropriate FMLA retaliation. The court set forth several grounds in support of its reasoning. First, the language of the FMLA prohibits discrimination for exercising rights under the FMLA. Second, the FMLA, like the ADEA, does not prohibit the mixed motive analysis. Lastly, although the FMLA’s text does not expressly authorize the use of the mixed motive framework, “the regulations promulgated under it clearly anticipate mixed-motive cases.” For these reasons, the Fifth Circuit held that the district court erred by applying the traditional McDonnell Douglas framework.

However, the Fifth Circuit determined that Monitronics was nevertheless entitled to summary judgment under the mixed motive framework. Under the mixed motive test, the court recognized that Richardson had raised a fact issue as to whether exercising her FMLA rights was a motivating factor in her discharge. Therefore, the burden shifted back to Monitronics to provide sufficient evidence to establish that it would have fired Richardson, despite any retaliatory motive. Siding with Monitronics, the Fifth Circuit acknowledged that its attendance policy unequivocally provided that four occurrences justified termination. Richardson had incurred more than four occurrences and, further had a history of attendance infractions. Consequently, the court held that it was “convinced that the only reasonable conclusion a jury could make is that Monitronics would have fired Richardson with or without retaliatory animus.”

Pursuant to the foregoing, the Fifth Circuit affirmed the trial court’s ruling.

B. Reasonable Accommodation – The Employer’s Obligation to Cooperate

with the Employee

In Cutrera v. Board of Supervisors of Louisiana State University, 429 F.3d 108 (5th Cir. 2005), Barbara Cutrera was terminated from her position as research assistant with the LSU foundation after a disease impaired her vision substantially. She filed suit alleging disability discrimination in violation of the ADA, but the district court granted summary judgment in favor of the employer, holding that she was not disabled as a matter of law.

Cutrera began working for LSU in 1989. In 1993, she was diagnosed with Stargardt’s disease, a form of macular degeneration that led to steadily deteriorating vision over the next several years. This disease cannot be corrected with surgery or lenses. As she realized that her condition was causing difficulty for her in reading small type or handwritten notes, she requested accommodation for her impairment, and was granted additional time to complete her assignments.

In 1998, Cutrera applied for a position as a research assistant, and was offered the job. She described her vision problems in her job interview. Shortly after beginning work for the Foundation, however, she discovered that she was unable to read much of the materials. She notified her supervisor, and had a meeting with a vocational rehabilitation counselor. The next week, she had a meeting with LSU’s ADA Coordinator. During this meeting, she informed the Coordinator that she had met with the vocational rehabilitation counselor and that she intended to continue working. But, she was unable to immediately identify an accommodation that would provide a solution for her. The Coordinator then terminated Cutrera’s employment.

LSU argued that the district court’s summary judgment was appropriate because Cutrera failed to request a reasonable accommodation, and it was therefore not obligated by the ADA to make accommodations for her and continue her employment.

However, the Fifth Circuit, reviewing the facts most favorable to Ms. Cutrera, held that she began an interactive process with LSU when she met with the vocational rehabilitation counselor and the ADA Coordinator. This triggered LSU’s obligation to participate with her to identify a reasonable accommodation that would enable her to continue work.

An employer may not stymie the interactive process of identifying a reasonable accommodation for an employee’s disability by preemptively terminating the employee before an accommodation can be considered or recommended.

The Fifth Circuit reversed the district court’s summary judgment and remanded.

Author: Ed Perkins
Phone: (713) 951-1004
Fax: (713) 951-1199
Website: www.sswpc.com