Texas Employment Law Update : Texas Employment Lawyer & Attorney : Russell D. Cawyer : Kelly Hart & Hallman Law Firm : Dallas TX Labor Updates

In another cable splicer misclassification case arising in the aftermath of hurricane Katrina, the Fifth Circuit affirmed a trial court decision that Louis Thibault was an independent contractor rather than an employee. Therefore, he was not entitled to overtime under the FLSA.

Thibault owned a business in his home state of Delaware selling picnic tables, storage tables and golf carts. He also owned several rental properties and realized a small income from racing automobiles.  When hurricane Katrina seriously damaged the telephone infrastructure of BellSouth’s grid, Thibault and his friend Bill Peek, drove their RV to Louisiana to perform splicing work on behalf of BellSouth to rebuild the grid.  Peek was an experienced cable splicer but Thibault had never worked as a splicer.  He did have prior experience as a naval aircraft mechanic and according to him easily learned mechanical tasks if shown how to do the task.  Peek taught Thibault the basics of splicing in one evening and Thibault was able to learn the remainder of what he needed to know on the job.

Once in New Orleans, Thibault and Peek worked 14 days shifts (13 days on with 1 day off) 84 hours per week; received a fixed hourly wage ($68 per hour) and were required to provide their own trucks and tools.  BellSouth decided what jobs would be done daily and assigned BellSouth contractors to distribute the assignments. Thibault received his daily assignments from the BellSouth contractor. 

Thibault had intended to work 6-7 months and then return to his home in Delaware. After only three months; however, he was laid off. He earned $51,628 during the three month period. After he was released he sued BellSouth and its contractors for unpaid overtime claiming he was an employee rather than an independent contractor. The trial court concluded that Thibault was an independent contractor and granted summary judgment for the defendants.

A panel of the Fifth Circuit Court of Appeals affirmed the trial court decision. Applying the economic realities test, the panel found Thibault was not an employee. Significant to its decision was the fact that:

• Thibault owned his own business and therefore did not work exclusively for BellSouth and its contractors;
• Thibault intended to work on 7-8 months and then return to Delaware;
• Defendants considered him an independent contract and many other splicers also considered themselves contractors;
• Splicing required little skill and initiative as evidenced by the fact Thibault learned it in one evening;
• Thibault continued to oversee his primary business during the three months he performed splicing work.

In the panel’s opinion, there was insufficient evidence in the summary judgment record to create a genuine issue of material fact that Thibault was an employee. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The exercise of sound judgment and the uniform, mechanical application of employment policies are not always synonymous. Every FMLA-covered employer in Texas, Mississippi and Louisiana should be interested in the Fifth Circuit’s most recent FMLA case resulting from an employer’s uniform application of its internal FMLA reporting policy. In Saenz v. Harlington Medical Center, the Court decided, what it characterized as a “close question,” that an employee does not necessarily have to comply with an employer’s internally created, heighted notice provision to maintain FMLA protection and that in some cases the employee need only comply with the FMLA’s more relaxed notice requirements. 

The plaintiff in Saenz, suffered from partial complex epileptic seizures that caused her to lose consciousness and become unable to perform her job. This normally incapacitated her for two days at time. Saenz requested and was granted intermittent FMLA leave for this seizure condition. Her employer, Harlingen Medical Center (“Harlingen”) had a policy that required employees to contact its FMLA administrator not later than two days after each leave period pursuant to the intermittent leave request. Under Harlingen’s policy, failure to provide the required notice could lead to a loss of FMLA protection. In the following six months, Saenz used intermittent FMLA leave eleven times and provided the required notice each time.

Thereafter, Saenz began suffering from depression and bipolar disorder that caused hallucination and disorientation. She was admitted the hospital and later committed to a behavioral center for three days of evaluation. Saenz’s mother contacted her daughter’s supervisor to advise of the symptoms and that Saenz would not be reporting to work.   While at the emergency room (in the same hospital where she normally worked), another Harlingen supervisor personally visited Saenz and observed some of her treatment. In the nine days during which she was incapacitated, Saenz was hospitalized, placed under a judicially created guardianship and eventually released into her mother’s care.

Ten days after first becoming incapacitated, Saenz called Harlingen’s FMLA administrator to advise of her depression/bipolar diagnoses and to discuss the five work absences she suffered as a result of her condition. She also requested approval for intermittent FMLA for these new conditions. Eight days later, Saenz received two letters. The first was from the FMLA administrator advising her that her intermittent FMLA leave request was being processed. The second letter was from Harlingen advising her that her employment was being terminated for excessive absenteeism. The termination letter expressly referenced her failure to comply with the two-day call-in policy. 

Saenz sued Harlingen for violations of the FMLA. The trial court dismissed the case holding that that factual issues existed as to whether the employer could rely on its heightened notice provision, namely, the employer’s actual notice of the severity of Saenz’s condition and the lack of evidence that Saenz affirmatively refused to comply with the company’s heightened noticed provisions. The court of appeals also found that fact issues existed as to whether Saenz gave sufficient notice of her need for leave as soon as practicable as required by the FMLA because the evidence showed that her mother told two supervisors of her hallucinations; at least one supervisor visited her in the hospital emergency room and observed Saenz’s treatment; and her mother stayed in constant contact with the employer as to the status of Saenz’s treatment. Based on these facts and this evidentiary record, the court of appeals remanded the case to the trial court for further proceedings.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

I've previously written about the specific requirements that must be included in a covenant not to compete with a licensed physician to make the restrictive covenant enforceable.  The Dallas Court of Appeals recently affirmed a trial court's decision that a noncompetition agreement between a surgical practice and several limited-partner physicians was unenforceable because the agreement lacked one of the statutorily required provisions.  You can access the Court's opinion in Greenville Surgery Center Ltd. v. Beebe here.  In short, the noncompete lacked the buy-out clause required by the statute.  That defect alone was sufficient to render the noncompetition obligation unenforceable.

Beebe should remind Texas employers that when drafting noncompetition agreements, it is important to have a knowledgeable, Texas attorney review the agreement before having employees or partners sign it.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In its first FMLA opinion, the Texas Supreme Court held that agencies of the State of Texas cannot be sued for FMLA violations arising out of an employee's FMLA leave taken for his own serious health condition.   In University of Texas at El Paso v. Herrera, the Supreme Court of Texas held that, unlike the family care provisions of the FMLA, Congress did not abrogate Texas' sovereign immunity for violations of the FMLA self-care provision and therefore the State of Texas cannot be sued for such violations.

The underlying facts are as follows.  Alfredo Herrera was an HVAC technician for the University of Texas at El Paso.  Herrera sustained a work-related injury to his elbow requiring a nine month leave of absence.  One month after he returned to work, his employment was terminated.  He sued alleging that he was terminated for taking personal medical leave under the self-care provision of the FMLA and exercising his First Amendment rights by complaining about unsafe work conditions.  UTEP challenged the court's jurisdiction over the claim asserting that it was barred by sovereign immunity.  The trial court and court of appeals found that jurisdiction existed. 

Acknowledging that the U.S. Supreme Court held that Congress effectively abrogated state sovereign immunity for the FMLA family-care provisions, the Texas Supreme Court found that there was no evidence in the FMLA legislative history or Congressional findings that women took more personal medical leave (or were thought to do so) than men.  Because, according to the Court, the self-care provisions of the FMLA were not targeted at an identified pattern of gender discrimination on the part of the States, Congress overreached when it attempted to apply the self-care leave provisions to the states. 

While the opinion analyzes complex issues of state sovereignty and Congressional findings, the simple take away from Herrera is that the State of Texas cannot be sued for FMLA violations arising out of an employee's need for leave for self care.   

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The Supreme Court of Texas served up a significant victory for Waffle House in a case holding that a plaintiff alleging both a statutory sexual harassment claim and a negligent supervision and retention claim based on the same conduct is limited to recovering solely on the statutory remedy.  

Here are the facts as reported by the Court.  Cathie Williams worked as a Waffle House waitress for approximately eight months beginning in 2001.  During her employment she was subjected to offensive sexual comments from a  male co-worker cook.  These remarks were sometimes accompanied by physical gestures or attempts at unwelcome flirting.  Additionally, the harasser occasionally pushed Williams into the counters and grill; rubbed his arm against her breast; and on one occasion came up behind her, held her arms and pressed his body against hers.

Williams complained to the restaurant manager, but the conduct did not stop.  Williams then complained to the district manager.  According to Williams, little effort was made to investigate or remedy the offensive conduct.  Williams ultimately resignedly complaining that she was constructively discharged.

Williams filed her lawsuit against Waffle House alleging a statutory sexual harassment claim under the Texas Commission on Human Rights Act (TCHRA) and a common law negligent supervision and retention claim for retaining the harasser after Williams' complaints.  The jury returned a total verdict on both claims of approximately $3.89 million.  Williams elected her remedies under the common law negligence claim which provided her a greater recovery than the statutory claim (and its caps) allowed.  The trial court ultimately entered judgment in Williams' favor for $900,000.

Waffle House appealed arguing that Williams' common law negligent supervision and retention claims were completely preempted because her exclusive remedy for workplace sexual harassment was the statutory claim under the Texas Commission on Human Rights Act.  Waffle House argued that, at a minimum, the damages had to be reduced to reflect the lower damages caps provided for under the TCHRA.

In its analysis, the Court was persuaded that the statutory remedies should be the exclusive remedies under these facts given the comprehensive procedural rules and remedies the Texas Legislature crafted in creating a statutory sexual harassment claim.  Although not specifically articulated, the Court also appeared to be concerned that plaintiffs subjected to workplace harassment might forego the comprehensive administrative procedures under the TCHRA to pursue potentially more lucrative negligence claims, thereby rendering the Texas Workforce Commission's Civil Rights Division less relevant.

The Court held that a sexual harassment plaintiff cannot recover under a negligence theory where the negligence is entwined with the facts of the complained-of harassment.  Stated differently, where the "negligence is rooted in facts inseparable from those underlying the alleged harassment," the plaintiff's sole remedy is a statutory harassment claim.  However, where a negligence claim arises from facts unrelated to the sexual harassment (e.g., assault-based negligence claim), the TCHRA may not necessarily provide the sole remedy. 

You can download the majority opinion and dissent here. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Texas courts routinely enforce arbitration agreements between employers and their employees. In most parts of the state, lawyers representing employees agree to go to arbitration upon being presented with a copy of an arbitration agreement signed by the plaintiff-employee. On occasion, however, there are disputes over the enforceability of an arbitration agreement. The Supreme Court of Texas’ recent opinion spotlights another challenge to an employer’s alternative dispute resolution program.

In In re Odyssey Healthcare, Maria Morales sued her El Paso-based employer (and her supervisor) for negligence after she was injured at work when she tripped on an uneven step at a patient’s home. Odyssey is a non-subscriber (i.e., it does not have workers’ compensation insurance) and provides its employees with an “Occupational Injury Benefit Plan.” All Odyssey employees must enroll in the program as a condition of employment. The program requires that all disputes between the employer and employee must be resolved through mandatory, binding arbitration. The arbitration was to be conducted with an arbitrator selected from a panel based in Dallas. The employer reserved the right to modify or terminate the arbitration program, but only after providing the employees with advance notice.

The plaintiff challenged the arbitration program arguing that it was invalid, unenforceable and substantively unconscionable; it violated the Texas Workers Compensation Act’s non-waiver provisions; the Federal Arbitration Act violated the Tenth Amendment by encroaching on a state’s power to enact and regulate its workers’ compensation system; and the agreement was illusory. The Texas Supreme Court rejected each of these arguments and directed the trial court to vacate its prior order and grant the motion to compel arbitration.

You can access the full opinion here.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The Fifth Circuit Court of Appeals affirmed that an employer willfully violated the FLSA by excluding “per diem” from the employee’s regular rate of pay and thereby avoiding increased overtime wages. In Gagnon v. United Technisource, Inc., the employer separated the plaintiff’s compensation into straight time, an hourly per diem payable up to the first 40 hours worked each week, and an hourly overtime rate. After a year of employment, the employee received a “raise” for which the employer increased both the per diem and overtime rate by $1, but not the regular rate of pay.

The employee sued for unpaid overtime under the FLSA, while the employer argued that the overtime rate already exceeded that required and that the per diem should not fall under the regular rate of pay because it equaled reimbursable expenses. Rejecting those defenses, the Court agreed that a per diem could be excluded, but reasoned a legitimate per diem would not vary based on number of hours worked. The employer also tried to offset the back overtime wages by the amount of expenses saved when the employee moved closer to work. The employee’s change in address would have resulted in fewer per diem expenses, but the Court reasoned that since the hourly per diem should have been included in regular rate of pay in the first place, the employer could not offset the overtime pay owed.

Texas employers should review their methods of calculating overtime rates to ensure compliance with the FLSA, and specifically to ensure that per diem pay is included in the regular calculation. Failure to properly calculate these rates may render employers vulnerable to significant liabilities in the form of back overtime wages, attorney fees, costs, and liquidated damages. 

The Editor thanks Chandler Craig, a third year law student at the University of Texas who is clerking for the firm, for drafting this post.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The U.S. Supreme Court reversed and remanded a win the City of Chicago obtained against an African-American class of firefighter applicants seeking positions with the City.  In Lewis v. City of Chicago, a group of firefighter applicants filed a lawsuit against the City challenging the City's 1996 decision that it would only consider those applicants who scored "well-qualified" on the entrance examination.  Applicants who passed the test, but only scored "qualified" were not further considered for employment opportunities.

The plaintiffs challenged their exclusion from the screening process when the City exhausted its pool of well-qualified applicants but failed to begin considering those who scored "qualified" on the test.  The thrust of the plaintiffs' claim was that the arbitrary decision to only consider those "well-qualified" applicants had a disparate impact on racial minorities.  The plaintiffs won at  trial, but their victory was reversed when the court of appeals held that because none of the applicants filed a timely charge of discrimination from the date the decision was made to only hire applicants from the "well-qualified" list, their claims were untimely and barred.

The U.S. Supreme Court reversed the court of appeals holding that a plaintiff who does not file a timely charge of discrimination challenging the adoption of an allegedly unlawful practice may still assert a disparate impact claim in a later charge challenging the employer's use of that practice as long as the plaintiff alleges each of the elements of a disparate impact claim.  A complete copy of the Court's opinion can be accessed here. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In a non-employment case of significant importance to employers and employment lawyers, the U.S. Supreme Court held today that imposing class arbitration on parties who have not agreed to class arbitration is inconsistent with the Federal Arbitration Act and is therefore not permitted.  This case arose out of an MDL antitrust case alleging that certain competitors were engaged in a price-fixing scheme.  The parties to the underlying transaction were signatories to an arbitration agreement that was silent on whether the arbitrator had the authority to conduct class action arbitrations. For a more detailed review of the factual and procedural background of the case, see the SCOTUS Wiki on the case here. 

The significance of this case to employers is that many employment agreements containing arbitration provisions are also silent on the issue of class arbitration (and some specifically exclude class action arbitration).  Without doubt this opinion will be used to argue that an arbitrator lacks the authority under the FAA to arbitrate class action employment disputes where the parties' agreement, or other probative evidence, fails to establish that the parties agreed to arbitrate those claims collectively. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Yesterday the First District Court of Appeals in Houston issued an opinion I first thought was an April Fool's joke.  However, since this opinion hasn't been withdrawn, I presume the Court was serious in holding that the Lilly Ledbetter Fair Pay Act , an act of Congress that has the effect of extending the statute of limitations to certain pay practices, applies to claims filed under the Texas Commission on Human Rights Act.  The Court cites two federal district court opinions similarly holding, but this is the first state court of appeals to apply the federal amendment to Title VII to the state law.  This holding is even more surprising to me given that the Texas Legislature, in its last term, considered adopting provisions similar to the Ledbetter Act, but did not pass those provisions.

The effect of the Houston Court's opinion is to render state law claims that would have been previously time barred as timely. You can read the First District Court of Appeals' decision in Prairie View A & M University v. Chatha here.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In a discrimination case it is very important to determine whether the plaintiff is alleging direct or circumstantial evidence of discrimination.  This is important because the standard by which a court determines if the case should proceed to trial or not depends on this determination. In Jackson v. Cal-Western Packaging Corp., the U.S. Court of Appeals for the Fifth Circuit applied the Circuit's test for determining whether an age-related comment constitutes direct evidence of discrimination or is merely a stray remark that may constitute circumstantial evidence of discrimination. 

Jackson, a sixty-nine year old employee, had his employment separated following an internal and external harassment investigation that resulting in a determination that he violated the company's anti-harassment policy.   He brought suit alleging that he was terminated because of his age.  His primary piece of evidence supporting his claim was a comment the decisionmaker allegedly made a year earlier.  According to Jackson, the decisionmaker told another coworker that Jackson was an "old, gray-haired fart" and that the coworker would be in charge when Jackson retired.

As the Court reiterated, to constitute direct evidence of discrimination the comment must 1) relate to the protected class of persons that the plaintiffs belongs; 2) be proximate in time to the complained of adverse employment action; 3) made by a person with authority over the employment decision at issue; and 4) relate to the employment decision at issue. Because the comment was made more than a year before Jackson's termination and did not relate to the decision at issue, the court held the comment did not constitute direct evidence of age discrimination. 

Absent direct evidence of age discrimination Jackson was forced to prove, by circumstantial evidence, that the company's stated reasons for his termination were false or untrue.  Stated another way, he had to show that the company did not reasonably believe that he violated the anti-harassment policy (sometime referred to as the "honest belief rule").  Given that the company conducted both internal and external investigations and that witnesses of both sex corroborated the claims made against Jackson, there was no evidence that the company did not reasonably believe that he violated the anti-harassment policy nor evidence that the company's stated reasons for terminating Jackson's employment were false.  Consequently, the Court affirmed the judgment in favor of the employer.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

A trial court's order granting or denying a temporary injunction in a noncompete case is rarely reversed by the court of appeals.  This week the Fourteenth Court of Appeals took the unusual step of reversing a trial court's denial of an employer's application for temporary injunction seeking to prohibit a former employee from engaging in certain competitive activities.

In EMS USA, Inc. v. Shary, EMS brought suit against its former employee (Shary) to enforce the terms of a noncompetition agreement.  The agreement prohibited, in relevant part, Shary from soliciting any of the company's customers existing as of the date of termination.  The trial court issued a temporary restraining order and later held hearings on EMS's application for temporary injunction.  At two temporary injunction hearings the trial court did not take evidence but merely heard oral argument.  Shary argued that the noncompete was overly broad as a matter of law because it was not limited to the customers that he actually dealt with but instead included all customers existing on the date of his termination.  Without taking any evidence, the trial court concluded that EMS had not shown its entitlement to an injunction.

On appeal, EMS argued that the trial court abused its discretion in failing to take evidence addressing the reasonableness of the restrictions; whether the agreement should be reformed; and whether the restrictions were ancillary to or part of an otherwise enforceable agreement such as a personal services agreement. 

The Fourteenth Court of Appeals held that the trial court abused its discretion in denying the temporary injunction without first hearing evidence.  The appellate court found that the trial court should have heard evidence regarding the reasonableness of the restrictions; the circumstances surrounding the execution of the contract; and whether the former employee had dealings with all existing customers of EMS or only part of them.  Consequently, the court of appeals reversed the denial of the temporary injunction and remanded the case to the trial court for further proceedings.

A copy of the opinion is available here.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Last week, the El Paso Court of Appeals affirmed a judgment in favor of an employer on an unemployment benefit eligibility issue where the employee, abandoned his job.  The employee was a Nationwide Financed Agent from January 2003 until November 2005.  A Financed Agent is an employee-agent of Nationwide who starts an insurance agency and operates it to the point of economic self-sustainability.  At that point the Financed Agent becomes an independent contractor. 

In June 2005, the employee's supervisor met with the employee to discuss his poor job performance.  The employee continued to under perform and the employer attempted to meet with the employee on three successive occasions to address the continued poor performance; however, the employee failed to attend those meetings.  Ultimately, the supervisor telephoned the employee and left a message for him to return the call immediately.  The call went unreturned.  Further investigation revealed that the employee had not been to the office in two months and that he had removed computer equipment and all of his personal belongings from the office.  The supervisor wrote the employee to advise that Nationwide considered his employment to have been abandoned. 

The employee filed for unemployment benefits claiming he quit with good cause.  He contended that he quit with good cause because: 1) he was require to work overtime without being paid time -and-a half; 2) he believed he was about to be laid off; and 3) supervisor acted in bad faith to create a record for his eventual discharge.  The appellate court affirmed the judgment for the employer because:

Uranga had been employed by Nationwide from January of 2003 to November 2005. As an agent, Uranga would have a full day but he was able to set his own office hours. Uranga was aware at the time he was hired of the job responsibilities and the required time commitment. When Uranga's job performance became a problem, Scott met with him to discuss the deficiencies in his operation. Uranga's job performance did not improve and Scott attempted to meet with him again, but Uranga did not attend the scheduled meetings. Scott subsequently discovered that Uranga had been absent from the office for most of the two previous months and he had removed computer equipment and personal belongings. Scott determined Uranga had abandoned his employment and wrote Uranga a letter notifying him that Nationwide considered his employment at an end.

Given these facts, there is nothing surprising or controversial about about the fact the appellate court affirmed the conclusion that the claimant resigned without good cause.  Similarly, the opinion doesn't state any new rules of law.  However, the opinion emphasizes a few points about eligibility for unemployment benefits under Texas law including:

• Leaving a job when work is still available (even when a definite notice of layoff is given) constitutes a voluntary resignation.
• Claimant working under objectionable conditions for a prolonged period of time weighs against a finding that his eventual resignation was for good cause.

A copy of the court's opinion is available here.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

There has been a significant amount of litigation against employers over the compensability of work time for putting on and taking off safety-related clothing and equipment prior to the start of a shift but necessary for the work to be performed.  For example, Pilgrim's Pride Corporation recently agreed to pay $1 million in back wages to settle a donning and doffing case with the U.S. Department of Labor.  

The U.S. Court of Appeals for the Fifth Circuit (the federal appellate court hearing appeals from Texas, Mississippi and Louisiana) recently affirmed a trial court judgment in favor of McWane, Inc. (a cast iron pipe and fitting manufacturer) in a Fair Labor Standards Act collective action filed on behalf of 2,100 employees. The lawsuit sought unpaid wages for time spend putting on and taking off safety gear before and after employees' scheduled shift (i.e., hard hats, steel-toed boots, safety glasses and ear plugs). This is commonly referred to as donning and doffing pay. 

Employees at McWane worked at ten different plants. Three of the plants had collective bargaining agreements (CBA) that expressly excluded donning and doffing time from compensable time. The remaining seven plants had CBAs that were silent on the issue of donning and doffing pay. Employees were paid based on “line time,” which measures shift working time as starting when the first item hits the processing line and ends when the last item leaves the processing line. None of the plants had ever paid (in over 40 years) employees for pre-shift donning and doffing time and the issue had never been previously discussed at union meetings or during contact negotiations (and union officials and employees admitted that they never knew pre- and post-shift changing time was potentially compensable under the FLSA). 

The Fair Labor Standards Act generally requires that employees receive overtime pay for all hours worked in excess of 40 hours per week at one and one-half times the regular rate of pay. An exception exists for time spent changing clothes if it has been excluded by custom or practice under a bona fide collective-bargaining agreement. The McWane employees argued that donning and doffing was subject to exclusion as time worked only when it has been affirmatively bargained away in the labor contract, and therefore no waiver existed in this case because the union representatives did not have knowledge of the right to compensation for this changing time nor any knowledge of or agreement to a policy of nonpayment for that time.

The Fifth Circuit rejected these arguments and sided with other courts of appeals to hold that “even where negotiations never included the issue of non-compensation for changing time, a policy of non-compensation for changing time that has been in effect for a prolonged period of time, and that was in effect at the time the CBA was executed, satisfies the [FLSA’s] requirement of ‘ a custom or practice under a bona fide’ CBA.” The Court further held that burden of establishing the absence of a custom or practice under a CBA is on the plaintiff employees and is not an affirmative defense on which the employer bears the burden of proof.

Access the opinion here: Allen v. McWane, Inc., No. 08-41037 (5th Cir. 2010)

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In Physio GP, Inc. v. Naifeh, the Fourteenth Court of Appeals in Houston held, in a case of first impression, that an individual cannot be held personally liable for a Sabine Pilot cause of action.  A Sabine Pilot or public policy wrongful termination claim is a narrow exception to the general rule of at-will employment in Texas.  A claim may arise when an employee is terminated by his employer solely for refusing to perform an illegal act.  This type of claim was named after the first Texas Supreme Court case to recognize the cause of action.   See Sabine Pilots Serv., Inc. v. Hauck, 687 S.W.2d 733 (Tex. 1985).

In Physio, the plaintiff's claim arose after her employment was terminated, according to her, for refusing to sign altered patient medical treatment records showing medical services that were never provided and that would have led to higher insurance payments for the employer.  The employer contended that the plaintiff was terminated for various performance infractions, including unauthorized treatment on a patient and misuse of company time.  At trial, the employer and individual defendants elected not to defend the case further due to a lack of resources to pay their attorney.  The trial court conducted a bench trial and found that the plaintiff was terminated for refusing to perform an illegal act and entered judgment against the employer and individual defendants. 

On appeal the individual defendants raised an issue left open by Sabine Pilots and the lower court decisions applying the doctrine --i.e., whether an individual supervisor may be held liable for this type of claim.   The Court of Appeals, in a split decision, held that individual supervisors (absent a finding that the supervisor was the alter ego of the employer) cannot be held personally liable for a Sabine Pilot cause of action.

Majority Opinion Here

Dissenting Opinion Here

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The Fourteenth Court of Appeals in Houston recently held that it is the date the employee is provided notice of termination, and not the termination date itself, that commences the statute of limitations in a breach of contract case.  You can read the Memorandum Opinion in Malallah v. Noble Logistic Services, Inc. here.

Bader Malallah entered a three year employment contract with Noble Logistic Services, Inc. (“Noble”) that could be terminated earlier, without notice, for certain enumerated acts or omissions. Prior to the end of the three year term, Noble terminated Malallah’s employment. Four years and seven days after Malallah was first advised that his employment was terminated, but less than four years after his termination was memorialized in writing, Malallah sued for breach of contract.

Noble defended the suit on the grounds that the claims was not filed within the four year statute of limitations that applies to breach of contract claims because it was filed more than four years after Malallah was first given notice of his termination. At trial, the jury found that Malallah was terminated without good cause but also found that his termination occurred on March 2, 2001 (the date he was first given any notice of termination) rather than on March 16, 2001 (the date his termination was memorialized in writing). Therefore, despite the jury's finding that Malallah was terminated without good cause, the the trial court found that the claim was barred by the statute of limitations based on the jury's answer as to the date of termination and entered judgment for Noble. The Houston Court of Appeals [14^th Dist.] affirmed that judgment.

• Email This
• Print
• Comments
• Trackbacks
• Share Link