FALL 2010 NEWSLETTER EMPLOYMENT LAW UPDATE

by Francisco J. Valenzuela

Fifth Circuit

American International Specialty Lines Ins. Co. v. Rentech Steel LLC, 2010 U.S. App. LEXIS 19561 (September 21, 2010)

An insurance policy’s exclusion of coverage for obligations incurred under workers’ compensation laws does not apply to claims arising out of the nonsubscribing employer’s own negligence.

Rentech was sued when one of its employees received severe injuries while at work. Rentech was sued by the employee for negligence, gross negligence, and negligence per se. The jury found Rentech liable for negligence and negligence per se. American International Specialty Lines Insurance Company (“AISLIC”) filed a declaratory judgment action in federal court asserting that a coverage exclusion provision in its insurance policy with Rentech removed its obligation to defend or indemnify Rentech. Specifically, AISLIC argued that its policy excluded coverage for any “‘obligation of the Insured under…any workers’ compensation, disability benefits, or unemployment compensation law, or any similar law.’” The question before the court was whether an employee’s negligence suit against his employer that does not subscribe to the workers’ compensation system is an “obligation” under the Texas Workers’ Compensation Act (“TWCA”), which would be excluded under AISLIC’s policy exclusion.

In a case of first impression, the Fifth Circuit stated that its purpose was to determine how the Texas Supreme Court would decide the case, a task complicated by the fact that the Texas Supreme Court has not squarely addressed this issue. The Fifth Circuit analyzed the statutory text, as well as prior Texas Supreme Court cases and decided that a negligence claim against a nonsubscriber is a common law claim, not a claim under the TWCA. The Fifth Circuit found further support in a U.S. Supreme Court opinion from 1919 and a Northern District of Texas opinion from 1993, while finding other cases to be unpersuasive.

Jackson v. Watkins, 2010 U.S. App. LEXIS 19075 (5th Cir. September 13, 2010)

A plaintiff asserting a Title VII claim must rebut each of a defendant employer’s legitimate, non-discriminatory reason to survive summary judgment, and statistical evidence is not sufficient to raise a genuine issue of material fact in the absence of evidence tailored to rebut the specific legitimate, non-discriminatory reasons proffered by the defendant.

Jackson, a Caucasian, was a seventeen year prosecutor with the Dallas County District Attorney’s office. When Craig Watkins, an African American, was elected District Attorney, he terminated Jackson and initially replaced him with an African American. Jackson sued claiming race discrimination. Watkins asserted four alleged legitimate, non-discriminatory reasons for terminating Jackson: (1) Watkins wanted to bring a “new image” and sense of purpose to the District Attorney’s Office after the “fake drug scandal” which occurred under the previous administration; (2) Watkins did not believe that he could trust Jackson to follow his policies and practices; (3) Watkins’ experience with Jackson was “overwhelmingly negative”; and (4) Jackson’s reputation within the District Attorney’s Office and in the courts was that Jackson was “disrespectful, unnecessarily confrontational, and uncooperative.” The district court granted summary judgment because it found that Jackson failed to address the four proffered reasons, and that his evidence was insufficient to rebut two of the proffered reasons. Jackson appealed, arguing (1) that he did not have to rebut each proffered reason and (2) that he did provide evidence to do so.

In regards to his first argument, the Fifth Circuit re-stated its clear precedent requiring a rebuttal of each proffered legitimate, non-discriminatory reason offered by a defendant. If a plaintiff is unable to do so, summary judgment is appropriate. In regards to Jackson’s assertion that he presented statistical evidence of discrimination, the Fifth Circuit found that the district court considered the statistical evidence to be unreliable, but that, assuming that it was reliable, the evidence was not sufficient to raise a genuine issue of material fact “in the absence of evidence tailored to rebut Watkins’s specific reason of terminating Jackson – negative personal interactions.” Importantly, the Fifth Circuit noted in a footnote that it was not addressing the “difficult question” as to whether a “desire to create a ‘new image’ could ever be a legitimate, nondiscriminatory reason for termination.”

Songer v. Dillon Resources, Inc., 2010 U.S. App. LEXIS 18642 (5th Cir. September 3, 2010)

A staffing leasing company that provides employees for a motor carrier and operates as a joint employer with that carrier is subject to the jurisdiction of the Secretary of Transportation. Truck drivers are employed in positions affecting the operational safety of motor vehicles. The plaintiff truck drivers could have reasonably been expected to drive interstate routes consistent with their job duties. For all of these reasons, the plaintiffs’ fall under the Motor Carrier Act (“MCA”) exemption to the Fair Labor Standards Act (“FLSA”), which does not entitle the plaintiffs to overtime under the FLSA.

Plaintiffs were truck drivers assigned to work for trucking companies by Dillon Resources, Inc., a staffing leasing company who hired the drivers. Under the leasing agreements, Dillon and the trucking companies are joint employers of the drivers. Plaintiffs sued Dillon and their trucking company employers for failure to pay overtime pursuant to the FLSA. Defendants asserted that the MCA exemption to the FLSA applied and that they were not required to pay overtime.

In order for the MCA to apply, (1) an employee must be employed by a carrier subject to the jurisdiction of the Secretary of Transportation, and (2) an employee must be engaged in activities that directly affect operational safety of motor vehicles in the transport of property in interstate commerce. As to the first element, it was undisputed that the trucking companies who employed Plaintiffs were under the Secretary’s jurisdiction, and the Fifth Circuit held that “a staff leasing company who provides employees for a motor carrier and operates as a joint employer with the carrier meets” the regulatory requirements to be considered a carrier under the jurisdiction of the Secretary.

In regards to the second required element, it was undisputed that Plaintiff were truck drivers subject to Department of Transportation requirements and were employed in positions affecting the operational safety of motor vehicles. In this case, there was evidence that the drivers’ continuing duties were to accept assignments to, from, and within Texas and would be fired if they refused to do so, fitting within the regulatory definition of a driver. In other words, the Plaintiffs “could reasonably have been expected to drive in interstate commerce consistent with their job duties.”

Supreme Court of Texas

City of Elsa, Texas v. Gonzalez, 2010 Tex. LEXIS 693 (Tex. October 1, 2010)

At the direction of a council member, the city administrator distributed the city attorney’s letter containing the attorney’s opinion that the mayor had ipso facto resigned from being mayor upon the assumption of a position with a county urban program and discussing the mooting of any potential conflicts of interest, to the county judge, the director of the urban county program, the district attorney, and a local newspaper. The city administrator also reported to each of listed persons that the city council had accepted the resignation. These reports did not constitute a good faith violation of law under the Texas Whistleblower Act (“TWA”). Moreover, informing the city council that its meeting violated the Texas Open Meetings Act (“TOMA”) did not satisfy the TWA’s requirement to report a violation of law to an appropriate law enforcement authority.

Tony Barco, mayor of the City of Elsa, assumed the position of assistant director of the Hidalgo County Urban County Program (“HCUCP”). The city’s attorney prepared a letter explaining that under the common law and the Texas Constitution, Barco had ipso facto resigned his position as mayor with his assumption of this duties with the HCUCP and that the resignation mooted any potential conflicts of interest. The city council voted to accept Barco’s resignation. One of the city council members directed city administrator Joel Gonzalez to notify county authorities and the public about the results of the council meeting. Gonzalez delivered copies of the attorney’s letter to the county judge, the director of the urban county program, the district attorney, and a local newspaper and also told each of them that the council had accepted Barco’s resignation.

On July 14, 2003, notice was posted for a council meeting to be held on July 17, 2003 at which Gonzalez’s employment status was the only item to be considered. The type-written notice mistakenly stated that the meeting would be held on “Tuesday the 17th day of July 2003” instead of “Thursday the 17th day of July…” Two days prior to the meeting the word “Tuesday” was crossed out and the word “Thursday” was added. At the meeting, Gonzalez objected to the meeting on the grounds that it would be illegal because TOMA requires 72-hours notice of a meeting. The council moved forward and terminated Gonzalez for “No confidence to administer the City as a result of the City’s financial conditions.” Gonzalez sued the City under the TWA, claiming that he was being terminated for reporting violations of law.

Gonzalez’s testimony, however, was clear that at the time when he circulated the attorney’s letter and informed others about the council’s acceptance of Barco’s resignation, he did not think that Barco had violated any laws. Any considerations as to whether Barco would have violated laws in the future had he not resigned, do not satisfy the requirement that the report under the TWA be of existing or past violations of law. In regards to his objections to the city council about their holding a meeting in alleged violation of TOMA, the Court held that the council is not an appropriate law enforcement authority. The Court specifically found that the council’s being required to comply with TOMA did not equate to the council’s having authority to “regulate under or enforce” TOMA provisions as to itself. The Court noted that the TWA’s “limited definition of a law enforcement authority does not include an entity whose power is not shown to extend beyond its ability to comply with a law by acting or refusing to act or by preventing a violation of law by acting or refusing to act.” Finally, the Court found that, in the absence of other evidence, Gonzalez’s belief that the council had authority to postpone its meeting or otherwise prevent a TOMA violation from occurring did not satisfy the objective or subjective components of a good faith belief that the council was an appropriate law enforcement authority under the TWA.

Texas Court of Appeals

Flores v. City of Liberty, Texas, 318 S.W.3d 551 (Tex. App. – Beaumont August 5, 2010, no pet. h.)

A police officer who reported the killing of a cat by a fellow police officer did not have a reasonable good faith belief that the killing was a violation of law, based on his training, experience, and responsibilities, sufficient to satisfy the requirements of the Texas Whistleblower Act.

Beginning in February of 2006 and continuing throughout the remainder of the year, Flores was accused of multiple infractions by his employer. On or about November 2, 2006, Plaintiff Hugo Flores, a police officer, reported that Officer Pearson had committed animal cruelty by killing a cat. On December 11, 2006, Flores was terminated. The Court of Appeals, however, held that there was no evidence that he reported a violation of law by another city official. The Court of Appeals noted that while Flores may have had a subjective belief that the killing of the cat was a violation of law, the Court of Appeals ultimately found that the belief was not reasonable for an officer who possessed Flores’ training, experience, and responsibilities. The Court of Appeals specifically noted that there was no evidence that Flores witnessed the killing or that he knew the details of the killing. In fact, once an investigation was conducted, it was established that no crime had been committed.

Lueck v. State, 2010 Tex. App. LEXIS 5557 (Tex. App. – Austin July 16, 2010, no pet.)

A court lacks subject matter jurisdiction over claims under the Texas Commission on Human Rights Act when a plaintiff failed to file a charge of discrimination with the Texas Workforce Commission within 180 days of the allegedly discriminatory act.

George Lueck was terminated from the Texas Department of Transportation on November 12, 2003. On June 21, 2005, Lueck filed his first complaint of sex discrimination, claiming that the discrimination was “ongoing” and that TXDOT terminated him and refuses to re-hire or compensate him. In their plea to the jurisdiction, TXDOT presented evidence that Lueck did apply for four different jobs in July and August of 2004, TXDOT’s policy that jobs are filled within 60 days of the job’s closing date, and that the job postings to which Lueck applied expired no later than October 2, 2004. October 2nd was more than 180 days before he filed his charge of discrimination. Lueck’s attorney admitted that Lueck had not complied with the 180 day requirement. Lueck argued that the 180 day requirement was not jurisdictional, but only a requirement that is subject to estoppel and equitable tolling. The Court of Appeals held that the 180 day requirement under the TCHRA is jurisdictional based on both the statutory text and legal precedent from both the Texas Supreme Court and lower appellate courts.