ZURICH AMERICAN INSURANCE COMPANY, Plaintiff,
TXEX ENERGY INVESTMENTS, LLC, Defendant.
Civil Action No. H-20-3622
Signed August 05, 2022
Attorneys & Firms
William Hunter Craven, Alicia G. Curran, Cozen O’Connor, Dallas, TX, for Plaintiff.
Brendan D. Cook, Omolola Omoshalewa Ojeniyi, Lindsay Wright Brett, Baker & McKenzie LLP, Houston, TX, for Defendant.
MEMORANDUM AND OPINION
Lee H. Rosenthal, Chief United States District Judge
*1 Zurich American Insurance Company issued three workers’ compensation policies to TxEx Energy Investments, LLC between 2016 and 2019. At the beginning of each policy period, Zurich provided TxEx with an estimated premium amount based on a coding system used in Texas. The amounts varied depending on a business’s operations and risk exposure to employees. TxEx was assigned code 4740 for the classification “Oil Refining—Petroleum & Drivers.” Under the policies, Zurich had three years after the policy periods ended to audit TxEx to determine the final premium amount and to request any additional premium payments resulting from the audit.
During the policy periods, TxEx brought a potential coding issue to Zurich’s attention in May 2018. In April 2019, Zurich and TxEx met to discuss whether TxEx’s initial code accurately reflected its business operations. Zurich investigated and determined that the TxEx code should be changed to 8350 for “Gasoline or Oil Dealer & Drivers.” TxEx agreed. Applying the new code resulted in an outstanding balance on TxEx’s final premiums of $1,392,395.71.
TxEx refused to pay. Zurich sued for breach of contract to collect the outstanding balance. (Docket Entry No. 1). TxEx counterclaimed that Zurich had previously breached the contract by failing to timely assign the proper code. (Docket Entry No. 7 at ¶¶ 76–78).
Zurich has moved for summary judgment on the claim and the counterclaim. (Docket Entry Nos. 26 and 27). TxEx responded, moved for leave to file an amended answer, and requested a continuance of Zurich’s motion for summary judgment under Rule 56(d) of the Federal Rules of Civil Procedure. (Docket Entry Nos. 33, 34, 35). Zurich replied to TxEx’s response, responded to TxEx’s motion for leave, and responded to TxEx’s Rule 56(d) request. (Docket Entry Nos. 37, 38, 39). TxEx replied to Zurich’s response to its motion for leave, and Zurich surreplied. (Docket Entry Nos. 40, 41, 42).
Based on the motions, responses, and replies; and the applicable law, the court grants the motion for summary judgment, for the reasons explained below. Zurich must submit a proposed final judgment no later than August 29, 2022.
TxEx is the parent company of a portfolio of companies that have been involved in various oil-related operations over the last two decades, including oil refining, petroleum logistics, and crude oil transportation. (Docket Entry No. 35-1 at ¶ 5). Zurich issued six insurance policies to TxEx between 2016 and 2018. Three of the policies provided workers’ compensation coverage, obligating Zurich to pay damages for covered bodily injuries to TxEx’s employees. These policies were:
• workers’ compensation policy no. WC 9819549-02, providing workers’ compensation and employer’s liability coverage from 4/27/16 to 4/27/17;
• workers’ compensation policy no. WC 9819549-03, providing workers’ compensation and employer’s liability coverage from 4/27/17 to 4/27/18; and
• workers’ compensation policy no. WC 9819549-04, providing workers’ compensation and employer’s liability coverage from 4/27/18 to 4/27/19.
*2 (Docket Entry No. 27-2 at 138–43; Docket Entry No. 27-3 at 75–80; Docket Entry NO. 27-4 at 114–19). Zurich also issued three commercial auto and general liability policies to TxEx, but those policies are not relevant to this dispute. (Docket Entry No. 1 at ¶ 6; Docket Entry No. 7 at ¶ 6).
The premiums in the workers’ compensation policies were not fixed at a set rate or amount at the beginning of each policy period. The final premium provision in the policy stated:
E. Final Premium
The premium shown on the Information Page, schedules, and endorsements is an estimate. The final premium will be determined after this policy ends by using the actual, not the estimated, premium basis and the proper classifications and rates that lawfully apply to the business and work covered by this policy. If the final premium is more than the premium you paid to us, you must pay us the balance. If it is less, we will refund the balance to you. The final premium will not be less than the highest minimum premium for the classifications covered by this policy.
(Docket Entry No. 27-2 at 142; Docket Entry No. 27-3 at 79; Docket Entry No. 27-4 at 118).
The policies also stated that Zurich could audit TxEx’s records relating to the policy within three years of the end date of that policy to determine the final premium. The policies stated:
You will let us examine and audit all your records that relate to this policy. These records include ledgers, journals, registers, vouchers, contracts, tax reports, payroll and disbursement records, and programs for storing and retrieving data. We may conduct the audits during regular business hours during the policy period and within three years after the policy period ends. Information developed by audit will be used to determine final premium. Insurance rate service organizations have the same rights we have under this provision.
(Docket Entry No. 27-2 at 142; Docket Entry No. 27-3 at 79; Docket Entry No. 27-4 at 118).
In Texas, employers are classified for workers’ compensation purposes based on “the exposure common to those employers.” See Texas Workers’ Compensation and Employers’ Liability Manual, Rule IV (Dec. 3, 2012), available at https://www.tdi.texas.gov/wc/regulation/documents/wcmanual.pdf. Insurance companies like Zurich must use these classifications to set premium rates or amounts. (Id., Rule VI). To determine the estimated amount of the premium, Zurich assigned four-digit codes set by the National Council on Compensation Insurance, referred to as “NCCI codes,” based on information provided by insureds. (Docket Entry No. 26 at 2). The codes reflect employer classifications based on their operations. (Id. at 7 n.1; see also Docket Entry No. 35-11 at ¶ 4). The classifications are based on risk exposure in a given business’s operations. (Docket Entry No. 26 at 7 n.2 (citing NCCI, ABCS OF EXPERIENCE RATING, available at https://www.ncci.com/Articles/Documents/UW_ABC_Exp_Rating.pdf); see also Docket Entry No. 35-11 at ¶¶ 4–5)). They affect the experience modification factor, a rating element used in premium determination. This factor recognizes “the differences among individual insureds with respect to safety and loss prevention, by comparing the experience of the individual insured with that of the average insured in the same classification.” (Docket Entry No. 26 at 7 n.2; see also Docket Entry No. 35-11 at ¶¶ 4–5). A safer-than-average workplace will receive an experience modification rating below 1.00, while a more dangerous workplace will have a score above 1.00. NCCI, ABCS OF EXPERIENCE RATING 7, available at https://www.ncci.com/Articles/Documents/UW_ABC_Exp_Rating.pdf. Businesses use the experience modification factors to evaluate workplace risks. (Docket Entry No. 35-11 at ¶ 5).
*3 The workers’ compensation policies contained a “classifications” provision, stating as follows:
Item 4 of the Information Page shows the rate and premium basis for certain business or work classifications. These classifications were assigned based on an estimate of the exposures you would have during the policy period. If your actual exposures are not properly described by those classifications, we will assign proper classifications, rates and premium basis by endorsement to this policy.
(Docket Entry No. 27-2 at 142; Docket Entry No. 27-3 at 79; Docket Entry No. 27-4 at 118).
The policies explained that Zurich would also assign TxEx an experience rating, which would affect TxEx’s experience modification factor:
Experience rating is mandatory for all eligible insureds. The experience rating modification factor, if any, applicable to this policy, may change if there is a change in your ownership or in that of one or more of the entities eligible to be combined with you for experience rating purposes....
You must report any change in ownership to us in writing within 90 days of such change. Failure to report such changes within this period may result in revision of the experience rating modification factor used to determine your premium.
(Docket Entry No. 27-2 at 158; Docket Entry No. 27-3 at 93; Docket Entry No. 27-4 at 134).
When Zurich issued the three workers’ compensation policies to TxEx in 2016, 2017, and 2018, it used NCCI code 4740 for the classification “Oil Refining—Petroleum & Drivers.” (Docket Entry No. 27-2 at 75; Docket Entry No. 27-3 at 64; Docket Entry No. 27-4 at 67). Zurich assigned TxEx’s code based in part on spreadsheets that TxEx’s broker, Lockton, prepared and provided to Zurich as late as 2016, stating that NCCI code 4740 was the applicable code. (Docket Entry Nos. 27-8, 27-9).
Despite the representation that 4740 was the correct coding, TxEx had sold the subsidiary that operated gas pipelines and gas processing plants. (Docket Entry No. 7 at ¶¶ 70–71; Docket Entry No. 26 at 11; Docket Entry No. 35-1 at ¶¶ 5–6). TxEx’s sale of that subsidiary eliminated all of TxEx’s gas midstream operations from its portfolio of businesses. (Docket Entry No. 35-1 at ¶¶ 5–6). On February 24, 2015, TxEx’s insurance broker with Lockton, Marcella Campana, emailed Glen Walla, the Senior Underwriter at Zurich, informing him of the sale, but Walla did not mention that the sale would affect TxEx’s NCCI coding. (Docket Entry No. 35-16). On March 5, 2015, Campana notified Walla that the sale was complete. (Docket Entry No. 35-17). On March 11, 2015, Campana emailed Walla and other Zurich employees with TxEx’s submission for a policy renewal for the 2015 to 2016 period, describing TxEx’s business:
[TxEx] currently has 3 divisions of operations, as it sold off its Midstream Operations in February of this year:
• Spark Energy – Independent retail energy services company
• Associated Energy Services – Purchases, sells, and markets crude oil, natural gas and NGLs
• Transoil – Crude Oil Hauling.
(Docket Entry No. 35-20).
On March 27, 2015, Walla, on behalf of Zurich, emailed Danny McIver, another Zurich employee, explaining that a call would be held with Campana to discuss TxEx’s “different (and changing) operations,” and “to get an idea on where they are today and where they’ll be in the future.” (Docket Entry No. 35-21). On June 9, 2015, Campana emailed Zurich asking it to remove the sold subsidiary from the policies. (Docket Entry No. 35-22). Although these communications discussed TxEx’s change in its composition and operations, they did not address the effect the change would have on TxEx’s NCCI coding.
*4 Due at least in part to TxEx’s classification, TxEx’s experience modification rate increased from .86 to 1.25 in 2017, from 1.25 to 1.86 in 2018, and from 1.86 to 2.43 in 2019. (Docket Entry No. 35-1 at ¶ 14–15; Docket Entry Nos. 35-5, 35-6). As a result of the high experience modification rates, Campana emailed Zurich on or around May 25, 2018, to receive clarification on the use of the 4740 classification, and Zurich responded that it thought the 4740 coding for the classification “Oil Refining—Petroleum & Drivers was correct, but that “[i]n order to review if the code should be changed, [Zurich] would normally do a mock audit.” (Docket Entry No. 35-8).
TxEx had been trying to procure a Master Services Agreement with Sundance Energy, but learned on May 3, 2018, that the deal could not proceed because Sundance had an experience modification rate cutoff of 1.0. (Docket Entry No. 35-10). On May, 10, 2018, TxEx and Lockton began discussing that TxEx may be coded incorrectly based on the 2015 change in the company’s operations. (Docket Entry No. 27-12).
Zurich and TxEx met in April 2019 to discuss the audits of TxEx’s premiums. (Docket No. 1 at ¶ 12; Docket No. 7 at ¶ 12). TxEx and its new broker, Marsh JLT Specialty, expressed to Zurich that the 4740 code was no longer applicable to TxEx, and that code 8350 for “Gasoline or Oil Dealer & Drivers” was more appropriate. (Docket No. 1 at ¶ 13; Docket Entry No. 7 at ¶ 13; Docket Entry No. 26 at 11–12).
Zurich investigated the requested code change, reopened the audits between May and June 2019, updated TxEx’s code to 8350, readjusted TxEx’s experience modification rates, and sent TxEx the revised audit of premiums. (Docket Entry No. 26 at 12; Docket Entry No. 34 at 13; Docket Entry No. 35-11 at ¶ 8; Docket Entry No. 35-13). The experience modification rates substantially decreased, as shown in the table below:
ERM Eff. Date
Revised % vs. Initial
(Docket Entry No. 35-11 at ¶ 8; Docket Entry No. 35-13).
Marsh, on TxEx’s behalf, agreed to pay the revised audited premium based on the new NCCI code in January 2020. (Docket Entry No. 27-5 at 1). Zurich sent a statement of account in February 2020 showing that TxEx owed Zurich $1,689,862.15 based on the new NCCI code retroactively applied to TxEx for the 2016 to 2019 policies. (Docket Entry No. 27-6). TxEx has not paid an outstanding amount of $1,392,395.71. (Docket Entry No. 27-7). Zurich seeks summary judgment to recover that amount.
II. The Summary Judgment Evidence
In support of its motion, Zurich submits the following summary judgment evidence:
• a declaration by Carla Flammini, Legal Collection Specialist of Financial Operations at Zurich, (Docket Entry No. 27-1);
• workers’ compensation policy no. WC 9819549-02, providing workers’ compensation and employer’s liability coverage for the policy period 4/27/16 to 4/27/17, (Docket Entry No. 27-2);
• workers’ compensation policy no. WC 9819549-03, providing workers’ compensation and employer’s liability coverage for the policy period of 4/27/17 to 4/27/18, (Docket Entry No. 27-3);
• workers’ compensation policy no. WC 9819549-04, providing workers’ compensation and employer’s liability coverage for the policy period of 4/27/18 to 05/11/19, (Docket Entry No. 27-4);
• January 2020 emails between Blake Alan, Senior Underwriter at Zurich, and Victor Chou, Vice President of Marsh JLT Specialty, (Docket Entry No. 27-5);
• January and February 2020 emails between Alan, Chou, Flammini, and Kelly M. Baston, Vice President of Energy and Power at Marsh JLT Specialty, (Docket Entry No. 27-6);
*5 • an August 27, 2020, letter from Cozen O’Connor on behalf of Zurich to TxEx and attached Statement of Account, (Docket Entry No. 27-7);
• March 2016 emails between Marcella Campana, Associate Account Executive at Lockton and Glen Walla, Senior Underwriter at Zurich, (Docket Entry No. 27-8);
• a Historical and Projected Exposure Workbook attachment to an email dated March 29, 2016, from Campana (Docket Entry No. 27-9);
• a declaration by Alicia G. Curran, attorney representing Zurich in this lawsuit, (Docket Entry No. 27-10);
• a January 2019 email between Jeffrey A. Henningsen, President and Partner of Lockton, Jeffrey Maronen, Vice President of Xcalibur Logistics, and Kyle A. Lanigan of Lockton, (Docket Entry No. 27-11); and
• May 10, 2018 emails between Nick Nixon, Environmental Health & Safety Manager at TxEx, and Campana, (Docket Entry No. 27-12).
In response to Zurich’s summary judgment motion, TxEx submits the following summary judgment evidence:
• a declaration by Todd Gibson, the Executive Vice President and Chief Financial Officer of TxEx, (Docket Entry No. 35-1);
• workers’ compensation policy no. 9819549-02, providing workers’ compensation and employer’s liability coverage for the policy period 4/27/16 to 4/27/17, (Docket Entry No. 35-2);
• workers’ compensation policy no. 9819549-03, providing workers’ compensation and employer’s liability coverage for the policy period 4/27/17 to 4/27/18, (Docket Entry No. 35-3);
• workers’ compensation policy no. WC 9819549-040, providing workers’ compensation and employer’s liability coverage for the policy period 4/27/18 to 4/27/19, (Docket Entry No. 35-4);
• the NCCI revised experience modification factor score sheet effective 4/27/2017, (Docket Entry No. 35-5);
• the NCCI workers’ compensation interstate experience rating score sheet effective 4/27/2018, (Docket Entry No. 35-6)
• May 2018 emails between Campana and Nixon, (Docket Entry Nos. 35-7, 35-8);
• September 2018 emails between Lanigan, Chelsea Werland, Nu-Devco’s Accounting Assistant at Nu-Devco, Mike Williams, Treasurer Spark Energy, Maronen, and Campana (Docket Entry No. 35-9);
• May 2018 emails between Deela Roe, Director of Credit at TxEx, and Robin Lucas, Executive Assistant at Sundance Energy, (Docket Entry No. 35-10);
• a declaration by Burl Daniel, an expert witness for TxEx, (Docket Entry No. 35-11);
• Daniel’s curriculum vitae, (Docket Entry No. 35-12);
• the expert report of Daniel, (Docket Entry No. 35-13);
• a declaration by Phillip Dye, attorney for TxEx, (Docket Entry No. 35-14);
• March and April 2019 email correspondence between Debora Mann, Senior Underwriting Associate at Zurich, Allan, and Ross Walton, Senior Premium Auditor at Zurich, (Docket Entry No. 35-15);
• February 2015 emails between Campana and Walla, (Docket Entry No. 35-16);
• March 2015 emails from Campana to Walla, (Docket Entry No. 35-17, 35-18, 35-20, 35-21);
• February to March 2015 emails between Campana and Walla, (Docket Entry No. 35-19);
• June to August 2015 emails between Campana and Walla, (Docket Entry No. 35-22);
*6 • a July 2015 audit by Walton, (Docket Entry No. 35-23); and
• a declaration by Robert Gwin, former President of Anadarko Petroleum Corporation, (Docket Entry No. 35-24).
III. The Legal Standard
“Summary judgment is appropriate only when ‘the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.’ ” Shepherd ex rel. Est. of Shepherd v. City of Shreveport, 920 F.3d 278, 282–83 (5th Cir. 2019) (quoting FED. R. CIV. P. 56(a)). “A material fact is one that might affect the outcome of the suit under governing law,” and “a fact issue is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Renwick v. PNK Lake Charles, LLC, 901 F.3d 605, 611 (5th Cir. 2018) (citations and internal quotation marks omitted). The moving party “always bears the initial responsibility of informing the district court of the basis for its motion,” and identifying the record evidence “which it believes demonstrate[s] the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
“When the moving party has met its Rule 56(c) burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings.” Duffie v. United States, 600 F.3d 362, 371 (5th Cir. 2010). The nonmovant must identify specific evidence in the record and articulate how that evidence supports that party’s claim. Willis v. Cleco Corp., 749 F.3d 314, 317 (5th Cir. 2014). “A party cannot defeat summary judgment with conclusory allegations, unsubstantiated assertions, or only a scintilla of evidence.” Lamb v. Ashford Place Apartments LLC, 914 F.3d 940, 946 (5th Cir. 2019) (citation and internal quotation marks omitted). In deciding a summary judgment motion, “the evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his or her favor.” Waste Mgmt. of La., LLC v. River Birch, Inc., 920 F.3d 958, 972 (5th Cir. 2019) (alterations omitted) (quoting Tolan v. Cotton, 572 U.S. 650, 656 (2014)).
A. TxEx Breach for Failure to Pay Premiums
Zurich argues that TxEx breached its contract because it has not paid the outstanding balance on final premiums due, which Zurich requested after it audited TxEx’s businesses in 2019 and updated its NCCI code. TxEx does not dispute the amount of final premiums due as a result of the change in its NCCI Code. Instead, TxEx argues that its breach is excused because Zurich also breached the contract by failing to assign the proper code at the outset. TxEx alternatively argues that, at a minimum, it needs time for discovery to defend its position that Zurich also breached the contract. The court first addresses whether TxEx breached the contract in the first instance.
Under Texas law, “a breach of contract action requires proof of four elements: (1) formation of a valid contract, (2) performance by the plaintiff, (3) breach by the defendant, and (4) ‘the plaintiff sustained damages as a result of the breach.’ ” S & S Emergency Training Sols., Inc., v. Elliot, 564 S.W.3d 843, 848 (Tex. 2018) (citation and internal quotation marks omitted).
*7 It is undisputed that Zurich issued TxEx three workers’ compensation policies in 2016, 2017, and 2018, and that TxEx had a duty to pay final premiums, not estimated premiums, under the contract based on its NCCI coding. The duty to pay final premiums based on the correct coding arises from both the contracts and Texas law.
The Texas Insurance Code authorizes the Texas Department of Insurance to “adopt and enforce all reasonable rules as are necessary to carry out” the Texas laws on workers’ compensation insurance. TEX. INS. CODE § 2051.201; see also id. § 2051.002. Workers’ compensation insurance policies are highly regulated. The Commissioner of the Texas Department of Insurance “prescribe[s] standard policy forms and a uniform policy for workers’ compensation insurance.” Id. § 2052.002; see also TEX. LAB. CODE § 406.501. As the Texas Court of Civil Appeals has explained:
[i]t was the intent and purpose of the [Texas] Legislature by these enactments to remove the amount of premiums on workmen’s compensation insurance policies from the field of bargaining. The establishment of premium rates is vested exclusively in the Commission and the rates promulgated by the Commission are not subject to alteration by agreement, waiver, estoppel, or any other device. As a matter of law, the insurance carrier agrees to collect, and the subscriber agrees to pay, the rate prescribed by the Commission. That rate is a part of every contract, regardless of any understanding by the parties. The insurance carrier cannot charge more, nor bind itself to take less, than the prescribed lawful rate of premium. A contract to rebate, directly or indirectly, any part of the prescribed premium is illegal and void, and cannot be a defense in a suit for the full premium. Where a rate is prescribed by one of the state’s regulatory bodies, it is the only rate the parties can contract for. To allow parties to fix any other rate would impair or destroy the state’s regulatory system and its policy of uniform and nondiscriminatory rates, in which system and policy the public has the paramount interest.
Assoc. Emp. Lloyds v. Dillingham, 262 S.W. 2d 544, 546 (Tex. Civ. App.—Fort Worth, 1953, writ ref’d) (collecting cases); see also Wayne Duddlesten, Inc. v. Highland Ins. Co., 110 S.W.3d 85, 94 (Tex. App.—Houston [1st Dist.] 2003, pet. denied) (explaining that the effect of the Texas Insurance Code provisions was to “keep the amount of premiums to be paid from the field of bargaining”). Texas courts have held that a “side agreement to a valid and enforceable workers’ compensation policy which violates a statutory or regulatory requirement is invalid and ineffective.” Patterson v. Mobil Oil Corp., Brookshire Grocery Co. v. Bomer, 959 S.W.2d 673, 676 (Tex. App.—Austin 1997)).
Silver Threads v. Ins. Co. of N. Am., 530 S.W.2d 874 (Tex. Civ. App.—Houston [1st Dist.] 1975, no writ.), is instructive. In Silver Threads, the Insurance Company of North America issued a workers’ compensation policy to Silver Threads, Inc., a nursing home, requiring an advanced estimated premium payment at the beginning of the policy, followed by payment of a premium amount determined by a retroactive audit at the end of the policy term. Id. at 874. The insurer incorrectly assigned Silver Threads the code for a hospital, resulting in an understated estimated premium. Id. at 874–75. The insurer sent Silver Threads a bill for the additional premium amount, but Silver Threads cancelled its coverage and refused to pay the charge. Id. at 875. The court held that Silver Threads had to pay the corrected premium amount because it was set by the State Board of Insurance Commissioners, making “defenses such as estoppel, waiver, and mutual mistake” unavailable. Id. at 875–76 (citing Associated Employers Lloyds v. Dillingham, 262 S.W.2d 544 (Tex. Civ. App.—Fort Worth 1953, writ ref.); Traders & Gen. Ins. Co. v. Frozen Food Express, 255 S.W.2d 378 (Tex. Civ. App.—Austin 1953, writ ref. n.r.e.); Brown & Root, Inc. v. Traders & General Ins. Co., 135 S.W.2d 534 (Tex. Civ. App.—Galveston 1939, writ dism. judg. cor.)).
*8 As in Silver Threads, TxEx was undercharged premiums based on an incorrect initial coding. By law, TxEx is required to pay the premium rate based on the correct coding, even if that coding was not corrected until after the policy period ended.
Under the contract and Texas law, TxEx must pay the final premiums owed based on correct coding. TxEx has failed to pay the outstanding amount of $1,392,395.71. The court now turns to whether TxEx is excused from payment on the basis that Zurich materially breached the insurance contracts by failing to assign the correct code earlier.
B. The Material Breach by Failing to Timely Set the Premium
TxEx filed a counterclaim alleging that Zurich materially breached the workers’ compensation contracts by not recoding TxEx in a timely manner, resulting in lost business due to inflated experience modification rates. TxEx moves for leave to file an amended answer clarifying that this is an affirmative defense to Zurich’s breach of contract claim. TxEx argues that “[i]t is a well-settled concept within contract law that when [a] party to a contract commits a material breach of that contract, the other party is discharged or excused from further performance.” (Docket Entry No. 34 at 21; see also Docket Entry No. 33).
“Insurance policies are controlled by rules of interpretation and construction which are applicable to contracts generally.” Richards v. State Farm Lloyds, 597 S.W.3d 492, 497 (Tex. 2020) (quoting Nat’l Union Fire Ins. Co. of Pittsburgh, Pennsylvania v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995)). A court must give effect to the parties’ intentions as expressed in the policy language. Colony Ins. Co. v. Robinson, No. CIV. A. H-09-3830, 2010 WL 3522983, at *2 (S.D. Tex. Sept. 8, 2010) (citing Ideal Lease Serv., Inc. v. Amoco Prod. Co., 662 S.W.2d 951, 953 (Tex.1983)). The language is given its plain, ordinary meaning, considering the policy as a whole, unless the policy itself shows that the parties intended the terms to have a different, technical meaning. Id. (citing Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex. 1984); Hartrick v. Great Am. Lloyds Ins. Co., 62 S.W.3d 270, 274 (Tex. Civ. App.—Houston [1st Dist.] 2001, no pet. h.) (“[W]e construe the terms of the policy as a whole, and consider all of its terms, not in isolation, but within the context of the policy.”).
All three workers’ compensation policies contain the following classification provision:
These classifications were assigned based on an estimate of the exposures you would have during the policy period. If your actual exposures are not properly described by those classifications, we will assign proper classifications, rates and premium basis by endorsement to this policy.
(Docket Entry No. 27-2 at 142; Docket Entry No. 27-3 at 79; Docket Entry No. 27-4 at 118). The final premium provision states:
The final premium will be determined after this policy ends by using the actual, not the estimated, premium basis and the proper classifications and rates that lawfully apply to the business and work covered by this policy.
(Id.). The audit provision states:
You will let us examine and audit all your records that relate to this policy. ... We may conduct the audits during regular business hours during the policy period and within three years after the policy period ends. Information developed by audit will be used to determine final premium. Insurance rate service organizations have the same rights we have under this provision.
*9 (Id.). Under these provisions, taken together, Zurich could charge TxEx a final premium, different from the estimated premium, and Zurich could conduct audits within three years of the date that a policy ended to determine that final premium. There are no policy provisions suggesting that the parties intended these terms to have any other meaning.
The question is not if, but when, Zurich had a duty under the workers’ compensation policies to correct TxEx’s coding. The earliest workers’ compensation policy was effective on April 27, 2016, and ended on April 27, 2017. (Docket Entry No. 27-2 at 212). Zurich had three years after the period ended—until April 27, 2020—to conduct audits to determine the final premium that TxEx owed under these policies.
In May 2019, Zurich reopened TxEx’s premium audits. (Docket Entry No. 35-11 at ¶ 8). This is within three years, as contractually permitted. TxEx does not dispute that the audits were conducted within a contractually permissible period. Instead, TxEx argues that because Zurich knew that TxEx had a change in business operations as early as 2015, Zurich should be liable for not auditing TxEx then and revising the code to take into account the change in TxEx’s operations resulting from the sale of its subsidiary. But TxEx points to no duty under Texas law or the workers’ compensation policies requiring Zurich to audit TxEx immediately after receiving notice that some change in business operations had occurred. Instead, the contract language gives Zurich three years from the time the policies ended to audit to determine the correct final premiums.
Zurich did not breach the contract. Because Zurich did not breach, TxEx is not excused from performing its obligations to pay final premiums.
C. TxEx’s Rule 56(d) Request
TxEx moves for additional discovery under Rule 56(d) of the Federal Rules of Civil Procedure, arguing that it would make a difference to TxEx’s ability to defend itself at this stage of litigation. Under Rule 56(d), a court may allow time for additional discovery if a nonmovant shows that without the discovery, it cannot present facts essential to justify its opposition to summary judgment. FED. R. CIV. P. 56(d). “Rule 56(d) permits ‘further discovery to safeguard non-moving parties from summary judgment motions that they cannot adequately oppose.’ ” Bailey v. KS Mgmt. Servs., L.L.C., 35 F.4th 397, 401 (5th Cir. 2022) (per curiam) (quoting Curtis v. Anthony, 710 F.3d 587, 594 (5th Cir. 2013)).
TxEx argues that it needs additional discovery on Zurich’s internal policies following TxEx’s 2015 notification that it had a change in business operations, and on whether TxEx suffered damages from lost business opportunities due to an inflated experience modification rating. (Docket Entry No. 34 at 5; see also Docket Entry No. 35-10). But discovery on these issues would not make a material difference to the court’s analysis or outcome. Zurich had up to three years under the contract after the end date of the policies to audit to determine the final premiums. Because Zurich did not breach the contracts, or any other identified duty, Zurich’s internal policies and TxEx’s asserted lost business opportunities are not material factual disputes on which discovery is needed to allow TxEx to respond to the summary judgment motion.
TxEx’s motion for additional discovery, (Docket Entry No. 34), is denied.
*10 Zurich’s motion for summary judgment, (Docket Entry No. 26), is granted. TxEx’s motion for additional discovery, (Docket Entry No. 34), is denied. TxEx’s motion for leave to file an amended answer clarifying its breach of contract defense, (Docket Entry No. 33), is moot. Zurich must submit a proposed final judgment no later than August 29, 2022.
MARIA ANTONIA DE LA ROSA, et al., Plaintiffs,
SWIFT TRANSPORTATION CO. OF ARIZONA, LLC, Defendant.
CIVIL ACTION NO. 7:19-CV-00100
ORDER GRANTING DEFENDANT’S MOTION TO RECONSIDER PARTIAL SUMMARY JUDGMENT AND DENYING AS MOOT PLAINTIFFS’ MOTION TO EXCLUDE DEFENDANT’S LATE-PRODUCED EVIDENCE
Randy Crane United States District Judge
*1 Now before the Court are Defendant’s “Motion to Reconsider Partial Summary Judgment” (Dkt. No. 73) and Plaintiffs’ “Motion to Exclude Defendant’s Late-Produced Evidence” (Dkt. No. 69).1 In this Texas-law wrongful death and survival action filed in Hidalgo County state court, and removed here, Plaintiffs Maria Antonia De La Rosa, individually and as administrator of the estate of Arnold De La Rosa (deceased), among others,2 seek to hold Defendant Swift Transportation Co. of Arizona liable in negligence for damages arising from a single-vehicle accident that resulted in the death of the driver, Arnold De La Rosa (De La Rosa). (Dkt. Nos. 1, 9). Plaintiffs allege that the accident occurred on February 27, 2017, in Bushland, Cotton County, Texas, where De La Rosa “was operating a red truck tractor with a semi-trailer attached when he drove off the road, travelled down the embankment,” “struck the pillars supporting the west bound overpass bridge,” and died on impact. (Dkt. No. 9 at ¶¶ 3, 5). Plaintiffs identify De La Rosa as an “employee truck driver” of Defendant, who is alleged to have breached its duty of care to De La Rosa by—among other theories—allowing De La Rosa to drive in excess of permitted hours, and while suffering from a medical condition affecting his ability to drive. (Id. at ¶¶ 8, 17, 22, 30, 31, 40). Both sides sought partial summary judgment on the issue of De La Rosa’s employment status—Defendant asserted that De La Rosa was not its common-law employee or “statutory” employee under the Federal Motor Carrier Safety Regulations (FMCSR), and Plaintiffs countered that he was—and on September 16, 2021, the Court entered its order recognizing De La Rosa as Defendant’s employee as matter of Texas common law. (Dkt. Nos. 34, 35, 39). Applying the common-law test, the Court determined that Defendant’s Contractor Agreement (Contract) with De La Rosa, when construed together with the “Equipment Lease Agreement” (Lease) through which Defendant’s affiliate leased the truck to De La Rosa, evinced Defendant’s right to control De La Rosa’s work. See (id. at pp. 6-14). The Court had no need, therefore, to consult evidence that Defendant exercised actual control inconsistent with the contractual terms, but observed that competent summary judgment evidence extrinsic to the Contract and Lease was at least consistent with a finding of employment status. See (id. at pp. 7, 14). The Court granted both sides’ motions in part, insofar as they sought partial summary judgment on the issue of De La Rosa’s common-law employment status, and denied as moot those portions of the motions that sought summary judgment on the issue of De La Rosa’s employment status under the FMCSR. See (id. at p. 16).
*2 A little over four months later, Defendant moved to reconsider the partial summary judgment,3 and Plaintiffs moved to exclude Defendant’s alleged late-produced evidence relevant to the request for reconsideration: what Defendant characterizes as a summary of previously produced evidence purporting to show that De La Rosa exercised actual control over his own work because he rejected multiple loads. (Dkt. Nos. 69, 71, 73). In seeking reconsideration, Defendant argues that the Texas Labor Code, rather than the common law, determines the question of employment status that is relevant to this case—whether De La Rosa was an employee of Defendant, a non-subscriber to Texas workers’ compensation insurance, for the purpose of determining whether Defendant may assert the defenses of contributory negligence and assumption of risk in Plaintiffs’ action against it—and resolves this question in Defendant’s favor. (Dkt. No. 73 at pp. 2-10). In the alternative, Defendant relies on Waste Management of Texas, Inc. v. Stevenson, 622 S.W.3d 273 (Tex. 2021), to argue that the summary judgment record creates a fact question regarding Defendant’s actual control over De La Rosa’s work, or that the Court should reconsider its reliance on Doe v. Swift Transportation Co., Inc., 2017 WL 67521 (D. Ariz. Jan. 6, 2017), in determining the extent to which the Contract and Lease evince Defendant’s right to control. (Id. at pp. 11-18). Upon consideration of the Motion to Reconsider and Motion to Exclude and the parties’ responsive briefing,4 in light of the relevant law, the Court finds that the Texas Labor Code and precedent applying it counsel in favor of reconsidering the partial summary judgment even absent consideration of evidence extrinsic to the Contract and Lease, including the evidence to which Plaintiffs object. Therefore, the Court will grant the Motion to Reconsider and deny the Motion to Exclude as moot.
A. Standard of Review for Motion to Reconsider
Where, as here, a party moves to reconsider an order that disposes of less than all claims, the Court analyzes the motion under Federal Rule of Civil Procedure 54(b), which states that such orders “may be revised at any time before the entry of a [final] judgment.” FED. R. CIV. P. 54(b); see Cabral v. Brennan, 853 F.3d 763, 766 (5th Cir. 2017) (partial summary judgment is interlocutory order subject to reconsideration under Rule 54(b)). Both sides proceed under the assumption that Rule 59(e), which governs motions to reconsider final judgments, provides the governing standard of review,5 but Rule 54(b) invokes its own, less stringent standard: “the trial court is free to reconsider and reverse its decision for any reason it deems sufficient, even in the absence of new evidence or an intervening change in or clarification of the substantive law.” Austin v. Kroger Texas, L.P., While the Court identified De La Rosa as an employee, relying on Texas common-law principles, Defendant clarifies that “the purpose of the parties’ cross-motions for summary judgment was to determine whether [Defendant] is entitled to raise contributory negligence and/or assumption of risk as a nonsubscriber to worker’s compensation insurance.” (Dkt. No. 73 at p. 1). No dispute exists that Defendant’s ability to raise these common-law defenses is controlled by the Texas Workers’ Compensation Act (TWCA), codified in the Texas Labor Code, Title V, subtitle A, and in particular, the following provision:
*3 (a) In an action against an employer by or on behalf of an employee who is not covered by workers’ compensation insurance obtained in the manner authorized by Section 406.003 to recover damages for personal injuries or death sustained by an employee in the course and scope of the employment, it is not a defense that:
(1) the employee was guilty of contributory negligence; [or]
(2) the employee assumed the risk of injury or death[.]
TEX. LAB. CODE § 406.033(a) (emphasis added). To summarize: if De La Rosa was Defendant’s employee, Defendant has no recourse to these defenses in the present action. If he was not, the defenses remain available.
In view of this, Defendant now asks the Court to eschew its common-law resolution of the employment question and “look to the Texas Labor Code to determine whether De La Rosa was [Defendant’s] ‘employee.’ ” (Dkt. No. 73 at p. 3). In taking the position that he was not, Defendant acknowledges the Code’s general definitions for “employer” and “employee,”6 but relies in principal part on certain other provisions in subtitle A that “specify whether particular persons are employers and employees in certain contexts.” See (id. at pp. 4-5). Apart from whether these provisions resolve the employment question in Defendant’s favor, the Court accepts the general premise—one Plaintiffs do not actively contest—that it must consult all relevant language in subtitle A to determine whether § 406.033(a) applies. See (id. at pp. 2-5); PlainsCapital Bank v. Martin, 459 S.W.3d 550, 556 (Tex. 2015) (“[W]hen a statute provides a definition for or uses a word or phrase in a particular manner, then courts must apply that definition or manner of use when interpreting the statute.”); Hayek v. W. Steel Co., 478 S.W.2d 786, 793 (Tex. 1972) (“When in the same Act the Legislature defines the meaning of a term, the courts should apply that meaning in interpreting subsequent sections of an act.”).
The relevant language, Defendant argues, appears mostly in § 406.121:
(2) “Independent contractor” means a person who contracts to perform work or provide a service for the benefit of another and who ordinarily:
(A) acts as the employer of any employee of the contractor by paying wages, directing activities, and performing other similar functions characteristic of an employer-employee relationship;
(B) is free to determine the manner in which the work or service is performed, including the hours of labor of or method of payment to any employee;
(C) is required to furnish or to have employees, if any, furnish necessary tools, supplies, or materials to perform the work or service; and
(D) possesses the skills required for the specific work or service.
(3) “Motor carrier” means a person who operates a motor vehicle over a public highway in this state to provide a transportation service or who contracts to provide that service.
(4) “Owner operator” means a person who provides transportation services under contract for a motor carrier. An owner operator is an independent contractor.
(6) “Transportation service” means providing a motor vehicle, with a driver under contract, to transport passengers or property.
(Dkt. No. 73 at pp. 4-5); TEX. LAB. CODE§ 406.121. The Code’s ensuing section contains the remaining provision on which Defendant relies:
(c) An owner operator and the owner operator’s employees are not employees of a motor carrier for the purposes of this subtitle if the owner operator has entered into a written agreement with the motor carrier that evidences a relationship in which the owner operator assumes the responsibilities of an employer for the performance of work.
(Dkt. No. 73 at p. 5); TEX. LAB. CODE § 406.122(c).
Defendant makes a series of arguments for why these provisions identify De La Rosa as an independent contractor rather than an employee. Defendant asserts, and Plaintiffs do not contest, that Defendant qualifies as a “motor carrier” under § 406.121(3)—that is, “a person7 who operates a motor vehicle over a public highway in [Texas] to provide a transportation service or who contracts to provide that service”—because the Contract states that Defendant is a “motor carrier, engaged in the interstate transportation of freight,” and that De La Rosa’s truck would be “operated by [Defendant] under [the Contract].” (Dkt. No. 73 at p. 7; Dkt. No. 34, Exh. A at p. 5-Contract Recitals, p. 14-Schedule A).8 Plaintiffs also do not contest that § 406.121(4) identifies De La Rosa as an “owner operator” (i.e., one who provides a “transportation service,” defined in subsection (6) as “a motor vehicle, with a driver under contract, to transport passengers or property”) because the Contract obligated De La Rosa to provide the equipment and labor “necessary for the transportation of the freight furnished by [Defendant] to [De La Rosa] from time to time.” (Dkt. No. 73 at p. 7; Dkt. No. 34, Exh. A at p. 5 ¶ 1). Since § 406.121(4), upon supplying the definition of owner operator, goes on to state that “[a]n owner operator is an independent contractor,” Defendant submits that “owner operators, like [De La Rosa], are independent contractors.” (Dkt. No. 73 at p. 7).9 However, Plaintiffs offer a decisive reason for declining to construe § 406.121(4) as a per se rule that applies throughout subtitle A: § 406.122(c), also cited by Defendant. See (Dkt. No. 78 at p. 4 n.2). Again, that provision states that an owner operator is not an employee of a motor carrier for the purposes of subtitle A “if the owner operator has entered into a written agreement with the motor carrier that evidences a relationship in which the owner operator assumes the responsibilities of an employer for the performance of work.” If an owner operator could never qualify as an employee for workers’ compensation purposes, by virtue of § 406.121(4)’s designation of an owner operator as an independent contractor, there would be no need for an additional provision setting forth the conditions under which an owner operator is not an employee. See (id.). Any perceived conflict between the two provisions is mitigated by construing § 406.121(4) to support the reading of subsection (1), which is concerned with defining “general contractor” to exclude “a motor carrier that provides transportation service through the use of an owner operator” for purposes of chapter 406, subchapter F, and in particular, § 406.123. See TEX. LAB. CODE § 406.121 (prefacing that section applies “[i]n this subchapter”)10; Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433 (Tex. 2009) (addressing connection between § 406.121(4)’s exclusion and § 406.123).11 In contrast, § 406.122(c) addresses an owner operator’s status as an employee “[f]or purposes of workers’ compensation coverage” under subtitle A as a whole, and therefore for the purpose of determining Defendant’s ability to raise the defenses of § 406.033(a), which appears in chapter 406, subchapter B. See TEX. LAB. CODE§§ 406.033(a), 406.122(a), (c). In adopting this reading, the Court respects “the starting point” for interpreting the Code under Texas rules of construction—the statute’s “plain language”—as well as the directive to consider the statute as a whole and give effect to both provisions when possible. Wright v. Ford Motor Co., 508 F.3d 263, 269 (5th Cir. 2007) (federal court interpreting Texas statute follows same rules of construction that Texas court would apply, beginning with analysis of statute’s plain language, which is presumed indicative of legislative intent); TIC Energy & Chem., Inc. v. Martin, 498 S.W.3d 68, 74-75 (Tex. 2016) (in order to ascertain and give effect to legislative intent as expressed in statute’s language, court must “consider the statute as a whole, giving effect to each provision so that none is rendered meaningless or mere surplusage”); TEX. GOV’T CODE § 311.026 (if statutory provisions conflict, they “shall be construed, if possible, so that effect is given to both”). To the extent that § 406.121(4) identifies an owner operator as an independent contractor, it does not determine Defendant’s ability to assert the defenses of § 406.033(a).
*5 Defendant also appeals to the provision that defeats its reliance on § 406.121(4), arguing that De La Rosa, as an owner operator, was not an employee within the meaning of § 406.122(c) (and therefore § 406.033(a)), because he entered into a written agreement with Defendant in which he “assumed the responsibilities of an employer for the performance of work.” (Dkt. No. 73 at pp. 5-8). According to Defendant, the Fifth Circuit’s decision in 571 F.3d 475 (5th Cir. 2009), instructs that the Contract alone determines this question, which must be answered in the affirmative. See (id.). According to Plaintiffs, Simpson offers room for the Court to equate the assumption of employer responsibilities with the “right to control,” the common-law test that the Court previously resolved in De La Rosa’s favor, finding that this right belonged to Defendant, not De La Rosa, upon consideration of both the Contract and the Lease. See (Dkt. No. 78 at pp. 4-5; Dkt. No. 39 at pp. 13-14).
In Simpson, the motor carrier defendant hired owner operator Rodgers Trucking to transport goods, and Rodgers Trucking supplied the tractor-trailer and two drivers, Rodgers and Simpson, pursuant to a lease agreement with the carrier that stated, “Neither Contractor, nor its employees, are to [be] considered employees of Carrier at any time under the circumstances or for any purpose.” Simpson, 571 F.3d at 476. After Simpson was seriously injured in the tractor-trailer while Rodgers was driving, Simpson brought suit on various theories against the carrier, who prevailed at trial when the jury found Rodgers 100 percent liable. Id. On appeal, Simpson argued that his status as a statutory employee under the FMCSR established an employer-employee relationship for purposes of § 406.033(a), foreclosing the non-subscriber carrier’s ability to assert the defense of contributory negligence. Id. The Fifth Circuit disagreed, first because a form executed by the carrier and Rodgers Trucking stated the contracting parties’ agreement that “the owner/operator assumes the responsibilities of an employer for the performance of work,” such that § 406.122(c) precluded the owner operator’s employee, Simpson, from asserting that the carrier was his employer for workers’ compensation purposes. Id. The Court also held that federal law did not preempt Texas workers’ compensation law on this issue, finding no conflict between § 406.122(c) on one hand, and the FMCSR and the statutes from which they arose on the other. Id. at 476-77. Since “the lease language, construed in conjunction with the [governing] statutes and regulations,” did not confer employee status on Simpson, and since he “conceded that he [had] no claim to employee status from the facts of his working relationship,” the Court held that Simpson had “failed to establish that he enjoyed the status of an employee[.]” Id. at 477-78.
Simpson directs that the “assumption of employer responsibilities” test of § 406.122(c) governs Defendant’s ability to raise the defenses of § 406.033(a),12 but the decision does not go so far as to require resolution of that test on the basis of the Contract alone, to the exclusion of the Lease. The Fifth Circuit’s analysis began and ended with the form executed by the motor carrier and owner operator because the form’s language parroted § 406.122(c), and was uncontradicted. Here, no such language exists in either the Contract or the Lease, both of which the Court has effectively interpreted as written agreements with Defendant that must be consulted to determine whether the contracting parties’ relationship, as a whole, evinces De La Rosa’s assumption of the responsibilities of an employer.13
*6 In making this determination without the benefit of the uncontradicted form language at issue in Simpson, the Court must address what constitutes the responsibilities of an employer within the meaning of § 406.122(c). As defined in relevant part by § 401.011(18), applicable to all of subtitle A, “employer” means “a person who makes a contract of hire, employs one or more employees, and has workers’ compensation insurance coverage.” In support of the argument that De La Rosa assumed these responsibilities, Defendant directs the Court to those portions of the Contract in which De La Rosa agreed that he “may, from time to time, employ, at [his] own expense, third parties such as drivers, driver helpers, and laborers,” that he would be “solely responsible for the payment of [his] employees’ wages and expenses as well as for the payment of all payroll taxes for such employees,” and “for the direction and control of [his] employees,” and that he would determine “the method, means, and manner of performing work and services” under the Contract. (Dkt. No. 73 at pp. 8-9; Dkt. No. 34, Exh. A at p. 7 ¶ 7(A), p. 8 ¶ 7(E), p. 11 ¶ 17). Defendant also points to a form within the contractual documents, the “Occupational Accident Enrollment Form” wherein De La Rosa requested insurance coverage as an owner operator, which advised De La Rosa that he would “not become a subscriber to the workers’ compensation system by purchasing the policy,” and that as a non-subscriber, he would be responsible for complying with workers’ compensation law. (Dkt. No. 73 at p. 8; Dkt. No. 34, Exh. A at p. 39). Standing alone, these documents reflect that De La Rosa contractually assumed the responsibilities to hire employees and, if not to have workers’ compensation insurance, to comply with the legal requirements placed on non-subscribing employers. As the Court has observed, the Lease placed restrictions on the exercise of certain of these responsibilities, allowing De La Rosa to hire a substitute driver only if he became “ill, disabled, or otherwise unable to drive” the truck leased from Defendant’s affiliate, and then only upon written notice and the affiliate’s approval. (Dkt. No. 39 at p. 11; Dkt. No. 34, Exh. A at p. 46 ¶ 6(a)). Plaintiffs maintain a strong argument that aspects of employee hiring thus fell within Defendant’s right of control, but their reliance on the common law must give way to the plain language of the statute. Defendant—at least through its affiliate—may well have controlled when De La Rosa could hire employees, and whom he could hire, but De La Rosa remained responsible for the hiring and payment of substitute drivers once approved, and for complying with workers’ compensation law as it applies to employers. That De La Rosa retained employer responsibilities is, in fact, reflected in the very same Lease provision that placed restrictions on his right to control when and whom to hire, in that it also provided that a substitute driver, if approved, would be “under [the lessee’s] control and direction[.]” (Dkt. No. 34, Exh. A at p. 46 ¶ 6(a)). Considered as a whole, the written contractual documents reflect that De La Rosa, as an owner operator, was not Defendant’s employee within the meaning of § 406.122(c), and therefore § 406.033(a).
The Court has no need, therefore, to consider Defendant’s alternate argument that the Texas Supreme Court’s recent decision in Waste Management, supra,14 at the very least creates a fact issue with respect to De La Rosa’s employment status. See (Dkt. No. 73 at pp. 11-16). Waste Management addressed the Texas Labor Code provision rendering workers’ compensation benefits the exclusive remedy of a covered employee, see TEX. LAB. CODE § 408.001(a), and the application of that provision in “dual-employment” cases involving plaintiff workers provided by employment agencies to client defendants. In particular, the Texas Supreme Court examined the extent to which contracts labeling plaintiff workers as independent contractors controlled whether the plaintiffs could bypass the exclusive remedy provision and sue client defendants for negligence, and ultimately adopted an approach that “looked instead to the factual question of who exercised the right to control as a practical matter in the course of the parties’ daily work,” which the Court found consistent with its dual-employment case precedent and with the Code’s general definition of “employee” as including “workers operating under a written contract, so long as they are ‘in the service of’ the employer.” Waste Mgmt., 622 S.W.3d at 279 (quoting TEX. LAB. CODE § 401.012(a)). In the context of this case—and as the Texas Supreme Court has observed, context matters—the Texas Labor Code’s general employee definition does not control whether De La Rosa, an owner operator, is prevented under § 406.122(c) from claiming employee status for the purpose of determining Defendant’s ability to the defenses of § 406.033(a), and the Court has no occasion to disregard an independent contractor label and look to extrinsic evidence, since § 406.122(c) expressly renders De La Rosa’s employee status contingent upon what the written agreements provide. See TIC Energy, 498 S.W.3d at 77 (recognizing that TWCA “defines the terms ‘employee’ and ‘employer’ in different ways depending on the context”). Waste Management is not controlling, although in view of the outcome of the Court’s analysis, it offers an observation that extends to this case: here, as in the dual-employment context, “construing the [TWCA’s] definitions is not always the same enterprise as determining employment under the common law.” Waste Mgmt., 622 S.W.3d at 282. Regardless of whether Defendant had the contractual right to control De La Rosa’s work to the degree sufficient to render him an employee under Texas common law, or whether Defendant actually exercised that right, De La Rosa’s contractual assumption of employer responsibilities precludes him from claiming that he is an employee within the meaning of § 406.122(c), and therefore § 406.033(a).
Accordingly, the Court need not reexamine its common-law analysis relying on Doe, supra, nor its assessment of the extrinsic evidence submitted in support of Plaintiffs’ partial summary judgment motion, nor must it determine whether to exclude Defendant’s alleged late-produced evidence of De La Rosa’s actual control over his work. See (Dkt. No. 73 at pp. 15-18). The Texas Labor Code’s “assumption of employer responsibilities” test and the contractual documents control, and secure Defendant’s ability to raise the defenses of contributory negligence and assumption of risk in Plaintiffs’ action against it.
C. Defendant’s Federal Statutory Argument
*7 Defendant argued when seeking partial summary judgment, and notes again now, that even if De La Rosa cannot be deemed an employee under Texas law, he qualified as a “statutory” employee under the FMCSR. See (Dkt. No. 78 at p. 3 n.1). As observed supra, the Fifth Circuit’s decision in Simpson expressly determined that the FMCSR did not preempt the very question answered here: whether an owner operator qualifies as an employee under Texas Labor Code § 406.122(c), and therefore § 406.033(a). Although the Court previously declined to reach the question of De La Rosa’s status as a federal statutory employee, it now concludes that De La Rosa cannot claim this status as a bar to the defenses of § 406.033(a).
For the foregoing reasons, the hereby ORDERS that Defendant’s Motion to Reconsider Partial Summary Judgment (Dkt. No. 73) is GRANTED, as follows: Defendant’s Motion for Partial Summary Judgment (Dkt. No. 34) is GRANTED, insofar as it seeks to establish its ability to raise the defenses of Texas Labor Code § 406.033(a); and Plaintiffs’ Motion for Partial Summary Judgment is DENIED to the extent that it seeks to bar Defendant’s assertion of these defenses.
The Court further ORDERS that Plaintiffs’ Motion to Exclude (Dkt. No. 71) is DENIED as moot.
SO ORDERED February 25, 2022, at McAllen, Texas.
Also pending are Defendant’s motion to bifurcate the trial, on which the Court has deferred ruling in full, and both sides’ motions in limine and Defendant’s motion to exclude Plaintiffs’ expert, Mark Respass, which motions the Court will address separately. See (Dkt. Nos. 55, 62-64).
Additional Plaintiffs are Abigail Moncivais, Shania De La Rosa, Arnold De La Rosa, Jr., Consuelo De La Rosa, and Alberto De La Rosa, Sr.
Defendant moved for leave to file the Motion to Reconsider, and the Court granted leave in the interest of considering the asserted grounds for reconsideration on the merits. See (Dkt. Nos. 71, 72).
(Dkt. Nos. 76, 78).
See (Dkt. No. 71 at ¶ 14; Dkt. No. 78 at pp. 1-2). Both sides also cite to Vlasek v. Wal-Mart Stores, Inc., at *1 (S.D. Tex. Jan. 16, 2008), for the district court’s observation that “[m]otions to reconsider interlocutory orders are left to the court’s discretion so long as not filed unreasonably late,” in apparent contrast to Rule 54(b)’s language and standard of review. See (Dkt. No. 71 at ¶ 14; Dkt. No. 78 at p. 2). Even assuming that the Court’s ability to reconsider its prior order hinges on the timeliness standard supplied by Vlasek, the Court finds that Defendant did not act unreasonably late in seeking leave to file the Motion to Reconsider within two weeks of a trial that, for other reasons, has since been rescheduled. See (Dkt. Nos. 39, 71; 01/03/2022 Minute Entry; Dkt. No. 81).
The Code defines “employer,” in relevant part and “unless otherwise specified,” as “a person who makes a contract of hire, employs one or more employees, and has workers’ compensation coverage,” and “employee” is defined as “each person in the service of another under a contract of hire, whether express or implied, or oral or written.” TEX. LAB. CODE §§ 401.011(18), 401.012(a).
The Texas Labor Code no longer defines the term “person,” necessitating resort to the Texas Government Code, which defines the term to “include[ ] corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity.” TEX. GOV’T CODE § 311.005(2). Defendant falls within this definition.
The contractual documents were submitted by both sides in support of their motions for partial summary judgment, and have again been attached to the Motion to Reconsider. See (Dkt. No. 34, Exh. A; Dkt. No. 35, Exh. 2; Dkt. No. 73, Exh. 1). For ease of reference, the Court will herein cite only to the exhibit initially provided by Defendant, and to the electronically assigned page numbers within that exhibit.
Defendant briefly likens this provision to a Colorado statutory exclusion analyzed in Scott v. Matlack, Inc., 1 P.3d 185, 188-90 (Colo. App. 1999), rev’d on other grounds, 39 P.3d 1160 (Colo. 2002). (Dkt. No. 73 at p. 7). The Colorado provision, however, expressly excludes drivers who lease vehicles from common carriers or contract carriers, pursuant to a lease that otherwise complies with various statutory requirements, from the definition of “employee,” whereas subtitle A of the Texas Labor Code does not. See COL. REV. STAT. § 8-40-301(5).
The definition of “independent contractor” to which Defendant further appeals, as set forth in § 406.121(2), also applies in subchapter F only. See (Dkt. No. 73 at pp. 9-10). Ultimately, since § 406.122(c) determines De La Rosa’s status as an employee, the Court need not resolve whether De La Rosa qualified as an independent contractor under § 406.121(2). See infra n. 12.
Section 406.121(1) states in full:
“General contractor” means a person who undertakes to procure the performance of work or a service, either separately or through the use of subcontractors. The term includes a “principal contractor,” “original contractor,” “prime contractor,” or other analogous term. The term does not include a motor carrier that provides a transportation service through the use of an owner operator.
TEX. LAB. CODE § 406.121(1). Under § 406.123, a general contractor’s written agreement to provide workers’ compensation coverage to a subcontractor and employees of the subcontractor makes the general contractor the statutory employer of the subcontractor and the subcontractor’s employees for purposes of § 408.001(a), rendering workers’ compensation benefits the employees’ exclusive remedy. See TEX. LAB. CODE §§ 406.123(a), (e), 408.001(a); Entergy Gulf States, 282 S.W.3d at 436. A motor carrier may enter into the same agreement, but § 406.123 does not similarly confer statutory employer status upon it. See TEX. LAB. CODE § 406.123(c); Entergy Gulf States, 282 S.W.3d at 487 (O’NEILL, J., dissenting).
This is consistent with § 406.122 as a whole, subsection (a) of which provides, in relevant part, that “[f]or purposes of workers’ compensation insurance coverage, a person who performs work or provides a service for a...motor carrier who is an employer until this subtitle is an employee of that...motor carrier, unless the person is...operating as an independent contractor.” TEX. LAB. CODE § 406.122(a)(1). If an owner operator qualifies as an independent contractor (defined in § 406.121(2)), this ends this inquiry, but if he qualifies as an employee under § 406.122(a), he cannot claim employee status for workers’ compensation purposes if the conditions of subsection (c) are met. See TEX. LAB. CODE § 406.122(c). Since the Court finds that they are, it need not determine whether De La Rosa is an employee or an independent contractor within the meaning of subsection (a).
Notably, Defendant has not argued that the Lease with its affiliate cannot be attributed to Defendant.
The decision post-dates Defendant’s motion for partial summary judgment, although not the Court’s ruling on the same.
United States District Court, S.D. Texas, Galveston Division.
Ricardo UGARTE, Plaintiff.
MID-AMERICA METAL ROOFING & SIDING INSTALLED, LLC, Defendant.
CIVIL ACTION NO. 3:20-cv-00080
Signed October 19, 2021
Attorneys & Firms
Jeffrey I. Avery, Michael Patrick Doyle, Patrick Mason Dennis, Doyle LLP, Houston, TX, for Plaintiff.
Melody G. Carrier, Pro Hac Vice, Carrier Allison Law Group PC, Beaumont, TX, for Defendant.
ORDER ON DEFENDANT’S MOTION IN LIMINE
ANDREW M. EDISON, UNITED STATES MAGISTRATE JUDGE
*1 Plaintiff Ricardo Ugarte (“Ugarte”) alleges in this lawsuit that Defendant Mid-America Metal Roofing & Siding Installed, LLC (“Mid-America”) terminated his employment in retaliation for: (1) instituting a proceeding under the Texas Workers’ Compensation laws; and (2) making a complaint related to the Fair Labor Standards Act. We are set to begin a jury trial on November 1, 2021.
Before me is Mid-America’s Motion in Limine. See Dkt. 29. Seeking to limit or exclude all manner of evidence from trial, Mid-America raises 25 distinct issues in its Motion in Limine.1 Ugarte has objected to many of the requests made by Mid-America. See Dkt. 32.
A motion in limine is “any motion, whether made before or during trial, to exclude anticipated prejudicial evidence before the evidence is actually offered.” Luce v. United States, 469 U.S. 38, 40 n.2 (1984). District courts have considerable discretion to manage the submission of evidence, including granting motions in limine. See id. at 41–42.
Although it is common in civil cases for each party to file a motion in limine prior to trial, I am not a fan of the practice. In my humble opinion, and in the view of a growing number of federal judges, “very few issues are truly appropriate subjects for a motion in limine.” D’Alton v. City of Billings, No. CV 03-159-BLG-RWA, 2006 WL 8431820, at *1 (D. Mont. Oct. 17, 2006). I think it is fair to say that “no practice is more misunderstood and abused in federal civil cases than the motion in limine practice.” Id. As one district court judge noted:
[M]otions in limine are not favored. Virtually any objection to the admissibility of evidence can and should be handled in the old-fashioned way, to wit: counsel objecting at the time the evidence is offered, thereby allowing the Court to rule on the objection in the context of the trial. In limine relief is warranted only in unusual situations, such as a matter so explosive or so incendiary that sustaining an objection in the routine way may not be sufficient to overcome the risk of undue prejudice.
Louis Vuitton Malletier v. Eisenhauer Rd. Flea Mkt., Inc., No. SA-11-CA-124, 2012 WL 13034079, at *1 (W.D. Tex. Jan. 4, 2012). See also EEOC v. First Metro. Fin. Serv., Inc., 515 F. Supp. 3d 573, 575 (N.D. Miss. 2021) (“[T]he purpose of motions in limine is not to re-iterate matters which are set forth elsewhere in the Rules of Civil Procedure or Rules of Evidence, but, rather, to identify specific issues which are likely to arise at trial, and which, due to their complexity or potentially prejudicial nature, are best addressed in the context of a motion in limine.” (quotation omitted)).
Motion in limine rulings are simply preliminary evidentiary decisions. Such rulings “are not binding on the trial judge, and the judge may always change his mind during the course of a trial.” Ohler v. United States, 529 U.S. 753, 758 n.3 (2000). Truth be told, an order granting a motion in limine merely requires “the proponent of the evidence to approach the bench and seek leave of court prior to offering the disputed evidence at trial.” Grant v. CRST Expedited, Inc., No. 1:18-CV-433, 2021 WL 2101741, at *1 (E.D. Tex. Apr. 7, 2021). As the Fifth Circuit has observed, “[m]otions in limine are frequently made in the abstract and in anticipation of some hypothetical circumstance that may not develop at trial.” Collins v. Wayne Corp., 621 F.2d 777, 784 (5th Cir. 1980), superseded by statute on other grounds as stated in Mathis v. Exxon Corp., 302 F.3d 448, 458 n.16 (5th Cir. 2002).
*2 With that legal backdrop out of the way, I now turn to the pending Motion in Limine. Mid-America makes many boilerplate requests that simply restate general legal principles or ask the parties to follow the law. By way of example, Mid-America requests that Plaintiff should not be permitted to present any witness he did not name in his disclosures, any evidence regarding settlement negotiations, or an expert opinion not supported by admissible facts. See Dkt. 29 at 2–3. In my view, there is no need to enter an order that simply recites these well-established legal principles. If, at trial, Mid-America believe that Ugarte is doing something improper or contrary to the law, it should timely object and obtain a ruling from the bench.
Mid-America also seeks several instructions that are, in my view, overbroad. For example, Mid-America asks that I prohibit Ugarte from mentioning that Mid-America has any insurance policies. See id. at 2. While I fully realize that evidence that a party was insured is inadmissible to prove that the party acted wrongfully, see FED. R. EVID. 411, Ugarte is making a workers’ compensation retaliation claim. Ugarte must be permitted to introduce evidence of workers’ compensation insurance because it is an essential element of his claim under the Texas Labor Code. See TEX. LAB. CODE § 451.001(1) (prohibiting employers from terminating or discriminating against an employee because the employee “filed a workers’ compensation claim in good faith”). Mid-America also asks that Ugarte’s counsel not be allowed to opine on the credibility of any witness. See Dkt. 29 at 4. But that is too expansive. A lawyer certainly has the right to argue in closing on whether particular witnesses are, in fact, credible. Overall, it seems to me that virtually all of Mid-America’s limine requests are unnecessary. Mid-America can make its objections to evidence or questioning at the proper time at trial. There is no need, at this time, for the broad limiting instructions Mid-America seeks.
Finally, there are a number of limine requests to which Ugarte agrees. I never stand in the way of agreements between counsel, and will not do so now. The following requests are granted: Nos. 4, 10–11, 14, 18, 20–22, and 24.
For the reasons stated above, Mid-America’s Motion in Limine is GRANTED with respect to Nos. 4, 10–11, 14, 18, 20–22, and 24. All other requests are denied.
It should be noted that Mid-America accidently misnumbered its limine requests. There are two 19s.
United States District Court, S.D. Texas, Houston Division.
CHARLES OTIS HERRING and PAMELA HERRING, Plaintiffs.
TRUEBLUE PEOPLE READY, INC. AND RENEWABLE ENERGY SYSTEMS AMERICAS, INC., Defendants.
CIVIL ACTION NO. 4:21-cv-00260
MEMORANDUM AND RECOMMENDATION
ANDREW M. EDISON UNITED STATES MAGISTRATE JUDGE
Pending before me is Plaintiffs’ motion to remand. See Dkt. 15. After carefully considering the briefing, the pleadings on file, and the applicable legal authorities, I recommend that the motion be DENIED.
On December 22, 2020, Plaintiffs Charles Otis Herring and Pamela Gary Herring filed this lawsuit against Renewable Energy Systems Americas, Inc. (“RES”) and People Ready, Inc. (“PeopleReady”) in the 329th Judicial District Court of Wharton County, Texas. Plaintiffs allege that Mr. Herring was injured working at a solar installation facility in Damon, Texas. According to the Original Petition, Mr. Herring endured a series of unfortunate events:
[Mr. Herring] had been specifically assigned to work on the Motor Crew, which was responsible for the proper elevating and securing of the torque tubes which supported the [solar] panels[’] spacing and elevation, as well as their alignment with the entire line. On the date of October 17, 20019, [Mr. Herring] suffered a ruptured inguinal column, as well as a herniated bladder when he manually lifted a motor mount and torque tube assembly weighing in excess of 340 pounds .... On the date in question, [Mr. Herring] was performing his normal duties when a torque tube assembly fell on his shoulders during the manual installation process.
Dkt. 1-3 at 6. Plaintiffs, representing themselves pro se, have brought causes of action for negligence and gross negligence against RES and PeopleReady. Plaintiffs seek both compensatory and punitive damages.
RES timely removed the instant lawsuit to this Court on the basis of diversity jurisdiction. The other defendant, PeopleReady, consented to the removal. Plaintiffs have now filed a motion to remand, arguing that their claims are non-removable under 28 U.S.C. § 1445(c) because such claims arise under the Texas Workers’ Compensation Act (“TWCA”).
Under 28 U.S.C. § 1441(a), a defendant may remove a civil action “brought in a State court of which the district courts of the United States have original jurisdiction.” District courts possess original jurisdiction if: (1) the complaint raises a federal question; or (2) there is diversity of citizenship between the parties and the amount in controversy exceeds $75,000. See 28 U.S.C. §§ 1331, 1332(a). Removal based on diversity jurisdiction requires complete diversity where “the citizenship of each plaintiff is diverse from the citizenship of each defendant.” Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 (1996). Even if federal question jurisdiction or diversity jurisdiction exists, Congress has determined that certain types of specifically enumerated actions are non-removable. See 28 U.S.C. § 1445.
District courts strictly construe the removal statute “because a defendant’s use of that statute deprives a state court of a case properly before it and thereby implicates important federalism concerns.” Frank v. Bear Stearns & Co., 128 F.3d 919, 922 (5th Cir. 1997). The party removing a case to federal court bears the burden of establishing that the district court possesses federal jurisdiction and that removal is proper. See Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). Any doubts as to removability should be resolved in favor of remand. See Gasch v. Hartford Accident & Indem. Co.,
Plaintiffs do not dispute that RES timely removed this action to federal court, that complete diversity of citizenship exists,1 or that the amount in controversy exceeds $75,000, exclusive of interests and costs. Plaintiffs’ argument in favor of remand is that this lawsuit is non-removable under 28 U.S.C. § 1445(c). Section 1445(c) bars removal of “[a] civil action in any State court arising under the workmen’s compensation laws of such State may not be removed to any district court of the United States.” 28 U.S.C. § 1445(c) (emphasis added). Congress enacted § 1445(c) “to stop the removal of [workers’] compensation cases which were increasing the already overburdened docket of the federal courts.” Jones v. Roadway Express, Inc.,
“For purposes of § 1445(c), a claim arises under the TWCA if: (1) the TWCA establishes the cause of action or (2) Plaintiff’s right to recovery requires the resolution of a substantial question of the TWCA.” Mendez v. Wal-Mart Assocs., Inc., No. EP-18-CV-189-PRM, 2018 WL 7288581, at *2 (W.D. Tex. Sept. 10, 2018). See also Patin v. Allied Signal,
A. DOES THE TWCA ESTABLISH PLAINTIFFS’ CAUSE OF ACTION?
The first question I need to address is whether the TWCA establishes Plaintiffs’ causes of action. To make that assessment, I turn at Plaintiffs’ Original Petition, which alleges claims for negligence and gross negligence. Nothing more. Specifically, the live pleading complains that RES and PeopleReady:
• “fail[ed] to inform [Mr. Herring] as to the inherently dangerous nature of the work which was being required of him on the Motor Mount Assembly Crew.”
• “fail[ed] to provide [Mr. Herring] with the necessary protective equipment for the job which he was performing, thereby contributing directly to his accident, and resulting injuries.”
• “deliberately create[ed] an atmosphere of fear, where workers were subject to threats of reprisal and intimidation for advocating workers’ rights, and had daily quotas for [Mr. Herring’s] team.”
• “deliberately, and maliciously required [Mr. Herring] to perform tasks which contravened OSHA standards relating to safety by assigning him to frequently lift excessive weight beyond the limitations imposed by Defendants[’] own policies, resulting in his injuries.”
Dkt. 1-3 at 10. Nowhere to be found in the live pleading is any reference to the TWCA, or any other relevant workers’ compensation statute. Likewise, the Original Petition is silent as far as the existence of any state workers’ compensation proceedings related to this matter.
Plaintiffs offer no argument that the source of their negligence and gross negligence claims is the TWCA. And for good reason. It appears clear from existing Fifth Circuit and Texas Supreme Court precedent that the negligence and gross negligence actions Plaintiffs assert in the Original Petition come from the common law, not from the Texas workers’ compensation laws. See, e.g., Am. Int’l Specialty Lines Ins. Co. v. Rentech Steel, L.L.C., 620 F.3d 558, 564 (5th Cir. 2010) (making an Erie-guess that an employee’s negligence claim against a non-subscribing employer is not preempted by the TWCA but arises under the common law); Kroger Co. v. Keng, 23 S.W.3d 347, 349–51 (Tex. 2000) (stating in dicta that a negligence claim against a non-subscriber is modified by the TWCA—e.g., by limiting the defenses a non-subscribing employer may raise—but remains a claim at common law). The TWCA provides a no-fault workplace-insurance scheme to compensate employees who are injured on the job. See Kroger, 23 S.W.3d at 349. Employers in the Lone Star State are afforded the opportunity to opt out of the statutory framework, “resulting in their employees retaining their common-law rights.” Id. at 350. To discourage employers from opting out, “the Legislature included within the [TWCA] a penalty provision, ... preclud[ing] nonsubscribing employers from relying on the traditional common-law defenses—contributory negligence, assumption of the risk, and fellow servant—in defending against their employees’ personal-injury actions.” Id. While the TWCA modifies the defenses available to a non-subscriber at common law, it “does not create a cause of action that usurps the common-law cause of action.” Rentech, 620 F.3d at 564. See also Kroger, 23 S.W.3d at 349–51.
Following Rentech and Kroger, federal district courts sitting in the State of Texas almost universally conclude that negligence and gross negligence claims are established by the common law, not the TWCA. See Kaspar v. Ryder Integrated Logistics, Inc., No. EP-20-CV-00245-RFC, 2020 WL 6741654, at *2 (W.D. Tex. Nov. 17, 2020) (“[T]he TWCA does not create Plaintiff’s [negligence] cause of action, but merely modifies aspects of it. Rather, Plaintiff’s negligence claim against Defendant arises from Texas common law.”); Varela v. Home Depot U.S.A., Inc., No. 4:18-CV-952-A, 2019 WL 1041335, at *1 n.3 (N.D. Tex. Mar. 4, 2019) (“Plaintiff also contends that her claims arise under Texas workers’ compensation laws, making this action non-removable under 28 U.S.C. § 1445(c). But, the only cause of action she alleged is negligence, which arises under Texas common law, not workers’ compensation laws.” (cleaned up)); Mendez, 2018 WL 7288581, at *3 (“[E]ven though the TWCA modifies the defenses available to an employer, this type of modification does not mean that a claim against a nonsubscribing employer is established by the TWCA.”); Mayes v. Home Depot USA, Inc., No. 4:15-CV-02390, 2015 WL 9319238, at *2 (S.D. Tex. Dec. 23, 2015) (“[Plaintiff’s] negligence claim arises under the common law, not the workers’ compensation laws of Texas. Therefore, removal of this action is not barred by § 1445(c).”). I join this large and growing list of federal judges holding that negligence and gross negligence claims are created by the common law, not the enactment of the Texas workers’ compensation scheme.
B. DO PLAINTIFFS’ NEGLIGENCE AND GROSS NEGLIGENCE CLAIMS REQUIRE THE RESOLUTION OF A SUBSTANTIAL QUESTION OF THE TWCA?
Having determined that the TWCA does not establish a cause of action for non-subscriber negligence, I must now ask whether Plaintiffs’ right to recovery requires the resolution of a substantial question of the TWCA. The answer is simple: No.
The sole issue in this lawsuit is whether, according to the facts Plaintiffs alleged in the Original Petition, Defendants were negligent. “The TWCA does not factor into this analysis.” Casas v. R & L Carriers, Inc., No. EP-17-CV-122-PRM, 2017 WL 11207252, at *4 (W.D. Tex. June 12, 2017). Put another way, “the essence of Plaintiff’s claims is not a dispute as to the meaning of any provision in the TWCA but rather about whether Defendants were negligent.” Gomez v. O’Reilly Auto. Stores, Inc., 283 F. Supp. 3d 569, 577 (W.D. Tex. 2017). To prevail in this lawsuit, Plaintiffs must prove all the elements of common-law negligence and gross negligence. Plaintiffs’ negligence-based claims do not implicate any question—much less a substantial question—of the TWCA.
Because (1) the TWCA does not establish Plaintiffs’ negligence and gross negligence causes of action; and (2) Plaintiffs’ right to recovery does not require the resolution of a substantial question of the TWCA, I conclude that Plaintiffs’ claims do not arise under the TWCA. As a result, § 1445(c) does not bar removal of this case or present any basis for remanding this matter back to state court. This case is properly in federal court.
For the reasons explained above, I recommend that Plaintiffs’ motion to remand (Dkt. 15) be DENIED.
The Clerk shall provide copies of this Memorandum and Recommendation to the respective parties who have 14 days from receipt to file written objections under Federal Rule of Civil Procedure 72(b) and General Order 2002–13. Failure to file written objections within the time period mentioned shall bar an aggrieved party from attacking the factual findings and legal conclusions on appeal.
SIGNED this 27th day of September 2021.
Plaintiffs are Texas residents; RES is a Delaware corporation with its principal place of business in Colorado; and PeopleReady is a Washington corporation with its principal place of business in Washington.
NICHOLE LEONARD, Plaintiff,
MESILLA VALLEY TRANSPORTATION and JOHN DOE, Defendants.
CIVIL ACTION H- 21-1091
MEMORANDUM OPINION AND ORDER
Gray H. Miller Senior United States District Judge
Pending before the court is a motion to dismiss filed by defendant Mesilla Valley Transportation (“MVT”), which the court has converted into a motion for summary judgment. Dkt. 7 (motion to dismiss); Dkt. 11 (order converting motion); Dkt. 12 (supplemental motion for summary judgment). Having considered the motion, response, supplemental motion, response, and record evidence, the court is of the opinion that the motion should be DENIED.
Plaintiff Nichole Leonard worked as a security guard and was employed by Sangar Cargo Security, Inc. (“Sangar”) in April of 2020. Dkt. 12, Ex. B; Dkt. 13, Ex. A. Sangar had a contract with MVT to provide security guards for MVT. Oasis Outsourcing, Inc., is a Professional Employer Organization that arranges for workers’ compensation insurance and provide payroll services for Sangar. See Dkt. 12, Ex. B; Dkt. 13, Ex. A. Leonard contends that she was working as a security guard at MVT’s Houston Terminal on April 27, 2020, and that defendant John Doe, who was operating an 18-wheeler at the terminal, made a wide and unsafe turn and struck the security booth where Leonard was working, causing her injuries. Dkt. 1-4 (state-court petition). She received treatment for her injuries under the workers’ compensation insurance Oasis arranged for Sangar. Dkt. 12, Ex. B. She subsequently filed this lawsuit against MVT and Doe in Harris County District Court. Dkt. 1-4. She alleges that Doe was negligent, MVT negligently entrusted its vehicle to Doe, MVT is responsible for Doe’s negligence under the respondeat superior doctrine, and MVT was negligent because it failed to properly train Doe. Id. She seeks more than $250,000 but less than $1,000,000 in damages. Id.
MVT removed the case to this court alleging diversity jurisdiction, filed an answer and an amended answer, and then moved to dismiss Leonard’s claims, arguing that Leonard was MVT’s borrowed servant and that the Texas Workers’ Compensation Act provided the exclusive remedy for her claims against MVT. Dkt. 7. Because MVT relied on information that was not discussed in Leonard’s complaint, the court converted the motion to dismiss into a motion for summary judgment and asked the parties to submit supplemental briefing and evidence. Dkt. 11. Both parties have provided additional briefing and evidence, and the motion is now ripe for disposition. See Dkt. 12 (supplemental motion for summary judgment); Dkt. 13 (response).
II. LEGAL STANDARD
A court shall grant summary judgment when a “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “[A] fact is genuinely in dispute only if a reasonable jury could return a verdict for the nonmoving party.” Fordoche, Inc. v. Texaco, Inc., 463 F.3d 388, 392 (5th Cir. 2006). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548 (1986). If the moving party meets its burden, the burden shifts to the non-moving party to set forth specific facts showing a genuine issue for trial. Fed. R. Civ. P. 56(e). The court must view the evidence in the light most favorable to the non-movant and draw all justifiable inferences in favor of the non-movant. Env’t Conservation Org. v. City of Dallas, 529 F.3d 519, 524 (5th Cir. 2008).
MVT notes that at the time of the accident, Leonard was working as a temporary security guard at MVT’s terminal, but she was an employee of Sangar. Dkt. 12. Sangar and MVT are both covered by a workers’ compensation insurance policies. Dkt. 12 & Exs. A, B. MVT asserts that Leonard was also the borrowed servant of MVT because MVT controlled the manner and details of Leonard’s work. Dkt. 12. MVT contends that because Sangar had workers’ compensation insurance and Leonard was MVT’s borrowed servant, MVT is immune from common law liability under the Texas Workers’ Compensation Act. Id. It provides affidavits, copies of MVT’s and Sangar’s workers’ compensation policies, the incident report, evidence of treatment under the worker’s compensation insurance claim, and the agreement between MVT and Sangar for security services. Dkt. 12, Exs. A–B.
Leonard does not disagree with MVT’s allegation that under the law MVT would be immune if she were its borrowed servant. Instead, she argues that she was not the borrowed servant of MVT because MVT did not control the manner and details of her work. Dkt. 13. Additionally, she asserts that there is no written agreement showing that MVT required Oasis or Sangar to secure workers’ compensation insurance for Leonard. Id. As evidence, Leonard provides her own affidavit in which she asserts that MVT did not instruct her how to perform her job, did not furnish any tools for her to perform her job, did not direct her about the order in which her services were performed, did no provide uniforms or name tags, did not oversee her work, and did not provide her with any written materials. Dkt. 13, Ex. A. She asserts that she was stationed at the only guard shack at the facility, she would check in with Oasis, not MVT, and her work was supervised by an employee of Sangar. Id. She contends that this evidence demonstrates she was employed by Sangar and was not MVT’s borrowed servant. Dkt. 13.
Under the Texas Workers’ Compensation Act, “Recovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage or a legal beneficiary against the employer or an agent or employee of the employer for the death of or a work-related injury sustained by the employee.” Tex. Lab. Code Ann. § 408.001(a). An employee of a temporary agency can have more than one employer for purposes of the Texas Workers’ Compensation Act. Wingfoot Enters. v. Alvarado, 111 S.W.3d 134, 140 (Tex. 2003). Texas courts use the right-of-control test to determine if an injured worker is a borrowed servant for purposes of the Texas Workers’ Compensation statute. Phillips v. Am. Elastomer Prods., L.L.C., 316 S.W.3d 181, 187 (Tex. App.—Houston [14th Dist.] 2010, pet. denied). Under this test, “an injured worker is held to be the employee of the employer who had the right to control the details of the work at the time of injury.” Id.
The “right of control is inferred from the facts and circumstances of the work.” Id. Courts consider “the nature of the work to be performed, the length of the employment, the type of machinery furnished, the acts representing an exercise of actual control, and the right to substitute another operator on a machine.” Id. This “includes determining when and where to begin and stop work, the regularity of hours, the amount of time spent on particular aspects of work, the tools and appliances used to perform the work, and the physical method or manner of accomplishing the end result.” Id. If the right of control is expressed in a contract, “a court can dispose of the borrowed servant issue without the necessity of considering the facts and circumstances of the project.” Marshall v. Toys-R-Us Nytex, Inc., 852 S.W.2d 193, 196 (Tex. App.—Houston [14th Dist.] 1992, writ denied).
Here, the contract between MSV and Sangar covers how much MVT would pay for security guards, when overtime rates applied, how MVT would go about adjusting pay rates, and the timeframe of the contract. Dkt. 12, Ex. B. It does not address the right to control other than noting that MVT could request additional personnel or hours. See id. MVT’s affidavits indicate that (1) neither Sangar nor Oasis controlled the facility or determined how to staff the facility, how many guards to staff, or where the guards should be located (Dkt. 12 Ex. B), and (2) the guards at MVT’s facility were under the control of MVT, which determined when and where the guards were to patrol, the manner in which they should perform the security function, how many guards were needed, and the times during which guards should be present (Dkt. 12, Ex. A). This evidence supports MVT’s assertion that Leonard was its borrowed servant.
Leonard, on the other hand, asserts she was not MVT’s borrowed servant. In her affidavit, she states that (1) nobody at MVT ever instructed her how to perform her job duties; (2) nobody at MVT ever furnished her with tools to perform her job; (3) she did not check in with anybody at MVT; (4) nobody at MVT directed the order in which security services were provided; (5) MVT did not provide a uniform or name tag; (6) she was stationed at the only guard shack at the facility and nobody at MVT told her where she should be stationed; (7) nobody at MVT was ever identified as her supervisor or manager; and (8) MVT did not provide her with any written materials. Dkt. 13, Ex. A. She asserts that (1) she checked in with Oasis to let them know when she started and ended her shift; (2) her uniform identified her as a employee of Sangar; (3) a supervisor employed by Sangar oversaw her work; (4) any written materials provided were from Sangar or Oasis; and (5) she believed any issues with her job performance would be addressed by Sangar or Oasis, not MVT. Id. This evidence supports Leonard’s contention that MVT did not control the facts and circumstances of her work.
While the court may be able to infer a right to control if MVT’s affidavits were taken in isolation, Leonard’s affidavit creates an issue of material fact on this issue, making summary judgment in MVT’s favor inappropriate. At this preliminary stage, it would appear that a jury is necessary to resolve the borrowed servant question. However, the court is aware that the parties have not yet engaged in significant discovery. The motion for summary judgment is DENIED WITHOUT PREJUDICE to re-filing if discovery reveals further evidence that clarifies the borrowed servant issue.
MVT’s motion to dismiss (Dkt. 7), which the court converted to a motion for summary judgment in the interest of judicial economy (Dkt. 12), is DENIED.
Signed at Houston, Texas on August 23, 2021.
United States District Court, W.D. Texas, San Antonio Division.
STEPHEN VOELTER, Plaintiff,
DAIMLER TRUCKS NORTH AMER-ICA, LLC, GLENN COLLINS, Defendants.
Case No. SA-19-CV-00731-JKP
MEMORANDUM OPINION AND ORDER
JASON PULLIAM UNITED STATES DISTRICT JUDGE
Before the Court is Defendants Daimler Trucks North America (DTNA) and Glenn Collins’s Motion for Summary Judgement and Plaintiff Stephen Voelter’s Response. ECF Nos. 93,100,103. Upon consideration, the Court concludes Defendants’ Motion for Summary Judgment shall be GRANTED.
Undisputed Factual Background
DTNA is a manufacturer of heavy trucks. DTNA leases a facility in Von Ormy, Texas, where it conducts quality checks and installs minor equipment, such as stickers and mirrors, on trucks manufactured offsite. Glenn Collins is employed by DTNA and serves as the “Shop Floor Supervisor” of DTNA’s Von Ormy facility, and Alex Villareal is employed by DTNA and serves as Collins’s assistant. Express Services, Inc. (“Express Services”) is a staffing agency that provides temporary employees to fill positions at client companies.
On January 10, 2018, Express Services entered a “Staffing Agreement” signed by Glenn Collins as representative for Custom Truck Services. The “New Account Information” form which accompanied the Staffing Agreement states the client as “Daimler dba Custom Truck Services” and lists the client address as the DTNA facility in Von Ormy.
Voelter, an Express Services employee, began working at the DTNA facility in Von Ormy in January 2018, under the terms of this Staffing Agreement.
The terms of the Staffing Agreement provide:
1. We hire associates as Express employees, and provide all wages, taxes, with-holding, workers’ compensation, and unemployment insurance.... We recruit and assign associates to you to perform the job duties you specify. You agree to notify us if those duties or the workplace of an associate changes....
6.....All services performed by our associates shall be under your direction, supervision and control and you shall be responsible for ensuring that the services meet your requirements....
9. You supervise, direct, and control the work performed by Express associates, and assume responsibility for all operational results, including losses or damage to property or data in the care, custody, or control of an Express associate. You agree to indemnify and hold us harmless from any claims or damages that may be caused by your negligence or misconduct, and agree on behalf of your insurer(s) to waive all rights of recovery (subrogation) against us.
On February 7, 2018, Voelter was injured while installing a mirror on a truck at DTNA’s Von Ormy facility. Collins backed a tow truck into the truck Voelter was working on, and the impact caused the hood to fall onto Voelter, pinning him. Voelter suffered injuries to his neck, back and ribs as a result.
Express Services and DTNA both subscribe to separate workers’ compensation insurance policies. Voelter filed for workers’ compensation benefits under Express Services’s policy and received $7,000 benefits for impairment and $26,000 benefits for workers’ compensation. Later, Voelter brought this lawsuit in Texas state court against DTNA and Collins asserting causes of action for negligence and gross negligence. Defendants removed the suit to this federal court based upon diversity jurisdiction and now seek summary judgment contending Voelter’s exclusive remedy is his workers’ compensation benefits received under Express Services’s policy.
Summary judgment is appropriate if the record shows “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Rodriguez v. Pacificare, Inc., 980 F.2d 1014, 1019 (5th Cir. 1993).1 “A fact is material only if its resolution would affect the out-come of the action.” Wiley v. State Farm Fire & Cas. Co., 585 F.3d 206, 210 (5th Cir. 2009). A genuine dispute for trial exists if the record taken as a whole could lead a reasonable trier of fact to find for the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Bayle v. Allstate Ins. Co., 615 F.3d 350, 355 (5th Cir. 2010). Because there must be a genuine dispute of material fact, “the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
The moving party bears the initial burden of informing the court of the basis for the motion and of identifying those portions of the record which demonstrate the absence of a genuine dispute of material fact or the appropriateness of judgment as a matter of law. Celotex Corp., 477 U.S. at 323; Adams v. Travelers Indem. Co., 465 F.3d 156, 163 (5th Cir. 2006). The movant is not required to negate the elements of the nonmovant’s case but may satisfy its summary judgment burden by demonstrating the absence of facts supporting specific elements of the non-movant’s cause(s) of action. Little v. Liquid Air Corp., 37 F. 3d 1069, 1075, 1076 n. 16 (5th Cir. 1994).
To satisfy this burden, the moving party must provide affidavits or identify any portion of the pleadings, discovery or admissions that demonstrate the absence of a triable dispute of material fact. Celotex Corp., 477 U.S. at 323; Rodriguez, 980 F.2d at 1019. “If the moving party fails to meet this initial burden, the motion must be denied, regardless of the nonmovant’s response.” Pioneer Expl., L.L.C. v. Steadfast Ins. Co., 767 F.3d 503, 511 (5th Cir. 2014)(internal citation omitted).
If the movant carries its initial burden, the burden shifts to the nonmovant to present competent summary judgment evidence showing the existence of a genuine dispute of material fact. Matsushita, 475 U.S. at 586-87; see also Fed. R. Civ. P. 56(c). Upon the shifting burden, “[u]nsubstantiated assertions, improbable inferences, and unsupported speculation are not sufficient to defeat a motion for summary judgment.” Brown v. City of Houston, Tex., 337 F.3d 539, 541 (5th Cir. 2003); see also Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). The party opposing summary judgment must identify specific evidence in the record and articulate the precise manner in which this evidence raises a genuine dispute of material fact. Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998)(citing Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994)). Further, should the nonmoving party fail “to address or respond to a fact raised by the moving party and supported by evidence, the court may consider the fact as undisputed” and “[s]uch undisputed facts may form the basis for a summary judgment.” Broadcast Music, Inc. v. Bentley, SA-16-CV-394-XR, 2017 WL 782932, at *2 (W.D. Tex. Feb. 28, 2017).
In its analysis of the merits of a motion for summary judgment, a court has no duty to search the record for material fact issues or to find a party’s ill-cited evidence. Hernandez v. Yellow Transp., Inc., 670 F.3d 644, 651 (5th Cir. 2012); Ragas, 136 F.3d at 458. In addition, a court may not make credibility determinations or weigh the evidence and must view all evidence and draw all reasonable inferences in the light most favorable to the party opposing the motion. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir. 2005)(citations omitted).
A. Defendants’ Summary Judgement Burden
Defendants contend they are entitled to summary judgment as a matter of law because the Texas Workers’ Compensation Act’s (TWCA) exclusive-remedy provision bars Voelter’s tort claims asserted against them. Defendants contend Voelter was under DTNA’s direct control and supervision at all times while working in its facility and at the time of the accident, and therefore, was its “employee” within the context of TWCA. Voelter’s status as DTNA’s employee under the TWCA invoked the exclusive-remedy provision therein. Because Voelter qualified as an employee of both Express Services and DTNA, and he chose to pursue workers’ compensation benefits under Express Services’ policy, this compensation is his exclusive remedy as a matter of law.
Recovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance who suffers a work-related injury. Texas Workers’ Compensation Act, Tex. Lab. Code Ann. § 408.001(a) (“exclusive remedy provision”); 111 S.W.3d 134, 139-40 (Tex. 2003). Under this exclusive-remedy provision, where an employee of a staffing provider works under the direction and control of the staffing provider’s client and both employers maintain workers’ compensation policies, the employee may pursue benefits from either, but those benefits pursued will be his exclusive remedy. McQuagge, 602 Fed. Appx. at 980; Waste Mgmt. of Tex., Inc. v. Stevenson, 622 S.W.3d 273, 277-78 (Tex. 2021); Wingfoot Enters., 111 S.W.3d at 142–43. Consequently, the TWCA exclusive-remedy provision precludes an employee who pursues workers’ compensation through one employer from asserting common-law negligence claims against another employer, unless this other employer elected not to subscribe to workers’ compensation insurance. McQuagge, 602 Fed. Appx. at 979-80; Waste Mgmt. of Tex., Inc., 622 S.W.3d at 277; Wingfoot Enters., 111 S.W.3d at 142–43.
In a recent decision, the Texas Supreme Court determined the issue whether an injured employee of a temporary agency could proceed with a tort claim against the client defendant, who argued the worker qualified as its employee under the Workers’ Compensation Act. Waste Mgmt. of Tex., Inc., 622 S.W.3d at 276. In this factual scenario, when determining whether an employee of a temporary employment agency, such as Express Services, is also the employee of the client employer, here DTNA, the test is whether the client employer has the right to control the progress, details, and methods of operations of the work. Id. at 279; see also McQuagge, 602 Fed. Appx. at 979-80. The court must look to the extent to which the plaintiff worker’s and the client party’s “conduct at the jobsite demonstrated the client’s right to control the plaintiff’s daily work.” Waste Mgmt. of Tex., Inc., 622 S.W.3d at 279. To determine the meaning of “right to control” in this dual-employee context, a court must focus on “the factual question of who exercised the right to control as a practical matter in the course of the employee’s daily work.” Id.
Following this guidance, to be entitled to summary judgment under the TWCA exclusive remedy provision, DTNA must show Voelter was its employee. To do so, DTNA must show the undisputed facts demonstrate it held the right to control the progress, details, and methods of operations of Voelter’s day-to-day activities at the time he was injured. See id. at 279; see also McQuagge, 602 Fed. Appx. at 979. To support its argument, DTNA presents the “Staffing Agreement” signed by Express Services, Inc. and Glenn Collins for Custom Truck Services described above, as well as Voelter’s and Collins’s depositions.
The Staffing Agreement clearly states all services performed by Voelter shall be under “your direction, supervision and control and you shall be responsible for ensuring that the services meet your requirements,” and “[y]ou supervise, direct, and control the work performed by [Voelter], and assume responsibility for all operational results.” ECF No. 93-3.
In his deposition, Voelter admits DTNA held the right to control his daily activities, and he was under the direct supervision and control of DTNA at the time of the accident in the following colloquies:
Q: And who – how did you get your instruction when you showed up to – to know to do that?
Q: He told you what to do?
A: He told us what to do. Or Glenn would tell us in the morning.
ECF No. 93-2, p. 92: 17-23.
Q: ... on the day of the accident, you were assigned to do what?
A: We—I was assigned to put on the mirrors
Q: By Alex?
A: By Alex, Alex and Glenn.
ECF No. 93-2, p.93: 6-10.
Q: So you were just mounting two mirrors per truck?
A: That’s all I was doing that day.
Q: Okay. So after you got done, the mirror on truck 1 in Bay 1, you’d go to a different truck?
A: I’d go to a different truck, if – if we had – if we had another truck to do. Or I would do something else, whatever they wanted me to do.
Q: Okay. And who is they?
A: Alex and Glenn
ECF No. 93-2, p. 94:9-17.
Voelter then states that on the day of the accident he put mirrors on a truck in Bay 1, “[a]nd then Alex told me to go over and put the mirrors on this truck” in Bay 2. ECF No. 93-2, p. 125 3-7. In his Accident Report, Voelter states, “At 10:30 Alex told me to go put mirrors on a truck in the passenger side.... ECF No. 93-7.
In his deposition, Glenn Collins stated “there was always a meeting in the morning. So everybody knew where – what – who was in what bay ... So there was always a meeting of who was doing what.” ECF No. 93-1, p. 45:10-12,24-25. Collins stated he supervised the employees from Express Service and gave them job assignments daily. ECF No. 93-1, p. 24:7-23, 58:16-23.
As in Waste Management, this evidence demonstrates Express Services and DTNA intended Voelter to be under DTNA’s direct supervision and control, that is, these parties intended DTNA to have the right to control the progress, details, and methods of operations of Voelter’s work. Voelter, himself, admitted his daily activities were directed and controlled by DTNA supervisors. Even without the express provisions of the Staffing Agreement, the consistent testimony regarding the daily relationship between DTNA supervisory employees and Voelter at the DTNA facility demonstrate Voelter was DTNA’s employee in the context of the TWCA exclusiveremedy test. See Waste Mgmt. of Tex., Inc., 622 S.W.3d at 279-80.
Based upon this summary judgment evidence, Defendants satisfied their summary judgment burden to demonstrate the absence of a genuine dispute of material fact whether Voelter was DTNA’s employee at the time of the accident, and consequently, the appropriateness of judgment as a matter of law pursuant to the TWCA’s exclusive-remedy provision.
B. Voelter’s Response
The burden shifts to Voelter to identify specific evidence in the record and articulate the precise manner in which this evidence raises a genuine dispute of material fact. See Ragas, 136 F.3d at 458.
First, Voelter contends DTNA was not a party to the subject Staffing Agreement which Defendants present as the controlling document to prove the two employers intended Voelter to be under DTNA’s supervision and control. Because DTNA was not a party to the contract, it necessarily cannot use the document to demonstrate it exercised “contractual control” over Voelter.
Second, Voelter contends a genuine dispute of material fact exists whether he was an employee of DTNA at the time of the accident because he was paid and employed by Express Services, and DTNA failed to comply with the duties of an employer under the TWCA to invoke the exclusive remedy protection. For these reasons, Voelter contends DTNA cannot demonstrate it exercised “actual control” over Voelter to invoke the exclusive-remedy provision under the TWCA.
Based upon these arguments, Voelter contends he presents a genuine dispute of material fact whether he qualifies as DTNA’s employee within the context of the TWCA. Consequently, the exclusive-remedy provision does not automatically preclude him from suing DTNA for state-law tort claims as a matter of law. Voelter contends a jury must determine the factual dispute whether he was an employee of DTNA.
(1) Whether Voelter was under the “contractual control” of DTNA
In support of his argument refuting summary judgment, Voelter contends the Staffing Agreement cannot establish any “contractual control” because DTNA is not a party to the contract. Voelter contends the Staffing Agreement is a contract between “Custom Truck Services” and Express Services, only. Further, Voelter argues Custom Trucks has no legal status in Texas because the name “Custom Truck Services” is not registered with the Texas Secretary of State as a legal entity or a “d/b/a” of any legal entity. Because the face of the contract shows DTNA is not a party as a matter of law, Voelter argues Defendants cannot establish Express Services intended DTNA to have “contractual control” of Voelter.
The face of the contract at issue shows Glenn Collins signed on behalf of “Custom Truck Services.” The “New Account Information” form submitted at the same time shows the client to be “Daimler dba Custom Truck Services” and the client address to be DTNA’s Von Ormy facility. The deposition testimony conclusively shows the Von Ormy facility operated by DTNA was known as “Custom Trucks”, and the parties, including Voelter, operated under this understanding. In his deposition, Voelter referred to the facility where he performed work and where he was injured as the “Custom Trucks” facility. ECF No. 103-1, p.78 16-25. The undisputed summary judgment evidence establishes the facility known as “Custom Trucks” was leased and operated by DTNA. ECF No. 93-10. Glenn Collins testified and attested by Declaration that he was directed to sign the subject Staffing Agreement by his employer, DTNA, to secure temporary staff to perform work for DTNA Custom Trucks facility in Von Ormy. ECF No. 93-3.
Under Texas law, “[t]he designation ‘doing business as’ or ‘d/b/a’ is merely a descriptive indication of a person or corporation that does business under some alternative name.” Scottsdale Ins. Co. v. Knox Park Constr., Inc., 488 F.3d 680, 688 n.5 (5th Cir. 2007); Thiesen v. Royal Neighbors of Am., 6:10-CV-496, 2010 WL 11556549, at *4 (E.D. Tex. Nov. 23, 2010). Thus, the use of a fictitious name does not create a separate legal entity. Thiesen, 2010 WL 11556549, at *4 (quoting Snowden v. CheckPoint Check Cashing, 290 F.3d 631, 634 n.2 (4th Cir. 2002)). While a business must register a “d/b/a” or assumed name, the failure to so comply does not impair the validity of any contract. Tex. Bus. & Com. Code Ann. §§ 71.101, 71.201(a); see also Broemer v. Houston Lawyer Referral Serv., 407 S.W.3d 477, 482 (Tex. App.—Houston [14th Dist.] 2013, no pet.).
In addition, the Texas Supreme Court instructs, “[r]ather than focus on the legal question of who had the contractual right to control the plaintiff’s work,” the Court’s primary focus should be “the parties’ daily relationship on the job—to whether the plaintiff was ‘in the service of’ the defendant, as the Act puts it—not to contractual arrangements between the staffing agency and the client company.” See Waste Mgmt. of Tex., Inc., 622 S.W.3d at 282. The result should not turn on the contractual relationship between the staffing agency and its client, but instead, upon examination of the parties’ conduct at the jobsite. Waste Mgmt. of Tex., Inc., 622 S.W.3d at 279-80.
Here, the undisputed summary judgment evidence demonstrates the Staffing Agreement controlled the parties’ actions in this case, and the parties all considered this Agreement to be the authorization and basis for Voelter’s work for DTNA at the Von Ormy facility. The undisputed evidence demonstrates the name “Custom Trucks” was for identification, only, and was the name under which DTNA conducted its operations in the Von Ormy facility.
Voelter failed to dispute or dispel the validity of this contract as a matter of law to preclude its consideration. Consequently, Voelter failed to present a genuine dispute of material fact whether DTNA is a party to the subject contract. Further, these arguments do not raise a genuine dispute of material fact whether DTNA exercised supervisory control over Voelter at the time of the accident to dispel application of the exclusive-remedy doctrine under the TWCA. Accordingly, this Court will examine the Staffing Agreement as competent evidence in conjunction with other arguments and evidence in consideration of the Motion for Summary Judgment. See Waste Mgmt. of Tex., Inc., 622 S.W.3d at 279-82.
(2) Whether Voelter was under the “actual control” of Daimler Trucks
In support of his summary judgment argument, Voelter contends DTNA’s evidence is not sufficient to establish “actual control” because Defendants fail to show DTNA engaged in any of the traditional activities of an employer. Voelter contends Defendants present no clear and convincing evidence and have no records showing DTNA ever trained Voelter; Defendants have no records DTNA controlled Voelter’s specific work; Defendants have no records DTNA ever provided Voelter with any safety training; after Voelter’s injury, DTNA failed to comply with its duties under the TWCA as an employer, and; Voelter received workers’ compensation benefits from Express Services, not DTNA.
These arguments and indications of lack of evidence do not pertain to the Court’s determination whether Voelter was DTNA’s employee for purposes of the TWCA exclusive remedy provision. See Waste Mgmt. of Tex., Inc., 622 S.W.3d at 279-82. The TWCA exclusive-remedy test is whether DTNA had the right to control Voelter’s day-to-day activities, not whether it engaged in any of the traditional activities of an employer. See id. Nor do Voelter’s arguments and evidence presented pertain to or present a genuine dispute of material fact on the issue whether DTNA held the right to exercise control over his daily activities to qualify as an employer under the TWCA. The fact that the client party did not directly employ the injured worker provided by the staffing agency does not factor into the analysis whether the worker is an employee of the client party. Id. at 279. Instead, the court must examine the parties’ conduct at the jobsite. Id.
Voelter failed to raise a genuine dispute of material fact as to whether DTNA had the right to exercise “actual control” over his daily activities and his work at the time of the accident. Although Voelter points to several indicia that Express Services retained some control over his working relationship with DTNA, such as it paid his wages and provided the workers’ compensation benefits, these arguments were dispelled in Waste Management. Id. at 279-82. Consequently, the arguments and evidence Voelter presents do not suggest Express Services exercised any control over the day-to-day details of Voelter’s work or the manner in which he performed his work for DTNA. Nor do the evidence or arguments raise a genuine dispute of material fact whether DTNA exercised supervisory control over Voelter’s daily work and actions.
The evidence consisting of the Staffing Agreement and Voelter’s and Collins’s depositions are clear and undisputed that at the time he was injured, Voelter was performing DTNA’s work, at DTNA’s facility, and was under the instruction and supervision of DTNA’s employees Glenn Collins and Alex Villarreal. As a result, as a matter of law, Voelter’s exclusive remedy for recovery due to this work-related accident was the workers’ compensation benefits he recovered under Express Services’s policy. See McQuagge, 602 Fed. Appx. at 980. As a matter of law, because DTNA has workers’-compensation insurance, and Voelter’s exclusive remedy is the workers’ compensation benefits he received under Express Services’s policy, he is barred from pursuing the asserted tort remedies against DTNA. See Tex. Lab. Code Ann. § 408.001(a); McQuagge, 602 Fed. Appx. at 978.
For the reasons stated, Defendants are entitled to a summary judgment precluding Voelter’s tort claims asserted against them. Defendants’ Motion for Summary Judgment is GRANTED. Voelter shall take nothing against Defendants in this action, and the claims asserted are DISMISSED WITH PREJUDICE to their refiling. A final judgment consistent with this opinion will issue this same day.
It is so ORDERED.
SIGNED this 2nd day of July, 2021.
Although 2010 amendments replaced “issue” with “dispute,” the summary judgment standard “remains unchanged.” Fed. R. Civ. P. 56 advisory committee notes (2010 amend.).
United States District Court, S.D. Texas, Houston Division.
Nichole LEONARD, Plaintiff,
MESILLA VALLEY TRANSITION CO. et al., Defendants.
CIVIL ACTION H-21-1091
Attorneys & Firms
Jibraeel Zaidi, Shelly Tomlin Greco, Witherite Law Group, PLLC, Dallas, TX, for Plaintiff.
Melanie R. Cheairs, Lorance Thompson, Houston, TX, for Defendant Mesilla Valley Transportation, Inc.
Gray H. Miller, Senior United States District Judge
Pending before the court is defendant Mesilla Valley Transportation’s (“Mesilla Valley”) motion to dismiss. Dkt. 7. Plaintiff Nichole Leonard responded. Dkt. 10. After reviewing the motion, response, and applicable law, the court is of the opinion that Mesilla Valley’s motion to dismiss should be converted to a motion for summary judgment, and the parties should be given an opportunity to supplement their filings.
Leonard alleges that she was involved in “a motor vehicle collision that occurred on or about Monday, April 27, 2020 at or near the Mesilla Valley Transportation Houston Terminal.” Dkt. 1 at 15. She contends that while “working as a security guard in a security booth at the [terminal],” defendant John Doe, who was driving an eighteen-wheeler, negligently made “a wide, unsafe turn leaving the Terminal, striking the security booth.” Id. Leonard asserts that “[a]s a result of the collision, [she] was injured and continues to suffer injuries and damages from this incident.” Id.
Specifically, Leonard gives four reasons for John Doe’s negligence: he (1) “failed to keep such proper lookout and attention to the roadway as a person o[f] ordinary prudence would have kept under the same or similar circumstances”; (2) “failed to keep an assured safe distance from Plaintiff’s location”; (3) “made an unsafe left turn”; (4) “failed to safely operate his commercial vehicle.” Dkt. 1 at 16. Leonard asserts that these acts or omissions were proximate causes of the motor vehicle collision that injured her. Id.
Leonard contends that because (1) Mesilla Valley “was the owner of the vehicle driven by [Doe]” and “entrusted the vehicle to [Doe],” and (2) Doe was “unlicensed, incompetent, and/or reckless and [Mesilla Valley] knew or should have known that [Doe] was unlicensed, incompetent, and/or reckless,” Mesilla Valley negligently entrusted Doe with the vehicle he was using at the time of the collision in question. Id. at 17. Leonard claims that because Doe was “in the course and scope of his employment with [Mesilla Valley],” Mesilla Valley is “liable under the doctrine of Respondeat Superior.” Id. Finally, Leonard asserts that Mesilla Valley was negligent because of its failure to “properly train and/or supervise [Doe] in order to prevent such a collision.” Id.
Leonard filed this complaint in the 334th Judicial District Court of Harris County, Texas, on March 10, 2021. Dkt. 1. On April 2, 2021, Leonard timely removed the case to this court based on diversity jurisdiction pursuant to 28 U.S.C. § 1332. Id. On May 14, 2021, Mesilla Valley moved to dismiss, contending that Leonard’s claim is barred by the Texas Workers’ Compensation Act; Mesilla Valley attached unauthenticated copies of its subscription and Leonard’s direct employer’s subscription to the workers’ compensation program with its motion. Dkt. 7. Leonard responded to Mesilla Valley’s motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) on June 2, 2021, asserting that it should be denied because “none of Defendant’s assertions supporting dismissal are contained in documents submitted with the Petition; and none of MVT’s allegations about the applicability of the workers’ compensation exclusivity bar to the facts of this case are matters of which a court may take judicial notice.” Dkt. 10. Leonard also notes the evidence is not authenticated. Id. The motion to dismiss is now ripe for disposition.
In considering a motion to dismiss under Rule 12(b)(6), the court does not look beyond the face of the pleadings in determining whether the plaintiff has stated a claim. Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999). “If, on a motion under Rule 12(b)(6) ..., matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56.” Fed. R. Civ. P. 12(d). In incorporating a workers’ compensation claim and including unauthenticated evidence of its workers compensation and employer’s liability insurance policies to support its motion, Mesilla Valley is presenting matters outside of the pleadings. See Dkt. 7 & Exs. A, B. The court finds in the interest of judicial efficiency that it should convert the motion to a motion for summary judgment so that it may consider this evidence. “All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed. R. Civ. P 12(d). Therefore, Mesilla Valley may supplement its motion to include admissible summary judgment evidence relating to the alleged workers’ compensation bar, but it must do so within ten days of the date of this order. Leonard may file a response and supporting evidence; she shall do so within twenty days of Mesilla Valley’s supplement.
For the aforementioned reasons, Mesilla Valley’s motion to dismiss (Dkt. 7) is hereby CONVERTED to a motion for summary judgment. Mesilla Valley shall file a supplement that includes any admissible summary judgment evidence it wishes the court to consider within ten days of the date of this order. Leonard shall file a response along with any evidence to support her claims in light of the evidence presented by Mesilla Valley within twenty days of Mesilla Valley’s supplement.
United States District Court, S.D. Texas, Houston Division.
RODDIE MORGAN, Plaintiff.
GOODMAN MANUFACTURING COMPANY, L.P., Defendant.
CIVIL ACTION NO. 4:19-CV-00850
ANDREW M. EDISON UNITED STATES MAGISTRATE JUDGE
Before me are competing motions for summary judgment. See Dkts. 28 and 36. Having reviewed the motions, the responsive briefing, and the applicable law, I recommend that both motions be DENIED, and that this case proceed to trial.
Plaintiff Roddie Morgan (“Morgan”) worked as a forklift operator for Goodman Manufacturing, L.P. (“Goodman”) for roughly six and a half years—from January 2011 through July 27, 2017. For the first five of those years, Morgan worked for Goodman through a third-party staffing company. In January 2016, Goodman cut out the middleman and hired Morgan to work directly for Goodman.
In May 2016, Goodman declared Morgan eligible for intermittent leave under the Family Medical Leave Act (“FMLA”) so that he could provide care for his adult stepson, who lives with developmental disabilities.1 As part of his intermittent FMLA leave, Morgan agreed that when he needed to take an FMLA day off, he would (1) “call Cheryl Kennedy, the FMLA Coordinator,” and (2) call either his supervisor, Mike Shoemaker, or the company’s absentee hotline. Dkt. 29-31 at 2. He agreed that failure to abide by these terms would result in an unexcused absence. On a separate note, Section 12 of Goodman’s employee handbook provides the disciplinary consequences for accruing too many unexcused absences and tardies. Under Section 12, employees should receive their first written warning at four unexcused absences or tardies during a rolling 12-month period; a final warning at five absences or six tardies during a rolling 12-month period; and “termination would result when an employee accumulates six absent occurrences or eight tardy occurrences in a rolling 12 month period.” Dkt. 29-5 at 3.
On April 13, 2016, Goodman issued Morgan a “Written Warning for Failure to Call the Absentee Hotline.” Dkt. 29-6 at 2. Goodman then sent Morgan a “Final Warning” in October 2016. Dkt. 29-7 at 2. This notification stated: “On Wednesday evening October 12, 2016 you texted your immediate supervisor Mike Shoemaker but failed to call the absentee hotline ... 30 minutes prior to the start of your shift to report that you would be absent today.” Id. The Final Warning failed to detail any prior violations of the company’s absentee or tardiness policy other than a single failure by Morgan to call the absentee hotline in April 2016.
The next time Morgan received a formal notification about any attendance issues was in February 2017. In a February 24, 2017 First Warning, Goodman informed Morgan that he had accrued eight unexcused absences within a rolling 12-month period. Two weeks later, Morgan received a First Warning for accruing eight unexcused tardies within a rolling 12-month period. Although the employee handbook explained that Goodman would provide Morgan with a First Warning at four unexcused absences or tardies within a 12-month period, that company policy was certainly not followed here. Goodman did not issue any Final Warnings to Morgan in 2017 for absenteeism or tardiness.
On July 22, 2017, Morgan suffered injuries to his lower back and hip when he tripped over a bolt protruding from the warehouse floor. Unable to work his scheduled shift on June 24 due to severe pain from the accident, Morgan called Goodman’s hotline to let the company know that he would not be reporting to work. Over the next few days, Morgan visited two doctors of his choosing. On July 25, one of those doctors said that he could return to work “TBD after x-ray evaluation by employer doctors.” Dkt. 29-17 at 2. Goodman directed Morgan to Next Level Urgent Care where he was seen by Dr. Terence M. Chang on the afternoon of July 25. Dr. Chang provided Goodman with a work status report on the morning of July 26, releasing Morgan to return to work with certain mobility restrictions. Also on July 26, Goodman filed a Texas workers’ compensation claim on Morgan’s behalf and placed Morgan on FMLA leave “[b]ecause of a qualifying injury, illness[,] or other qualifying event.” Dkt. 38-2 at 1.
Morgan did not report to work on July 26 or 27. He contends that he called the Goodman hotline each day to let the company know that he would be absent from work. Goodman alleges that a company representative called Morgan on July 26 and left Morgan a voicemail “stating [that Goodman] had a light duty position for him and he could come to his regular schedule.” Dkt. 29-23 at 3. Morgan testified at his deposition, however, that he never received this call or a voicemail from Goodman. On July 27, Goodman sent Morgan a “Bona Fide Offer of Employment” requesting that Morgan return to work. Dkt. 29-22 at 2. The letter stated that if Morgan failed to sign and return the letter in seven days, Goodman would consider the offer rejected.
Around 5:30 p.m. on the evening of July 27, George Taylor, a Human Resources Manager for Goodman, sought permission to terminate Morgan for failing to return to work on July 26 and 27. Goodman’s Director of Human Resources, Mark Clark, approved the termination, noting “George, looks like you’ve done a good job establishing his reason to be out was not [w]orker’s [c]omp—but rather a continuing attendance issue.” 29-24 at 2.
The summary judgment evidence shows that Morgan visited a fourth doctor, Dr. Sergio Wong, on August 2—six days after Goodman made the decision to terminate Morgan’s employment. Dr. Wong faxed a Work Status Report to Goodman on August 9, saying that Morgan’s workplace injury prevented him from working from July 28 through September. Dr. Wong eventually revised the Work Status Report to reflect that Morgan’s workplace injury prevented him from working from July 27 through September 1. From July 27 through late August 2017, Morgan attests that he called the Goodman hotline each day to notify the company that he would not be at work due to his injury. On August 24, Goodman formally terminated Morgan’s employment over the telephone.
Morgan originally filed suit against Goodman in state district court in February 2018. Goodman then removed the case to federal court. The First Amended Petition is the live pleading. See Dkt. 1-9 at 2. It alleges three claims: (1) Texas Workers’ compensation retaliation; (2) FMLA retaliation; and (3) FMLA interference. Both parties have filed motions for summary judgment on Morgan’s Texas workers’ compensation claim and his FMLA claims. Morgan has also filed a motion for a judgment on the pleadings as to four of Goodman’s affirmative defenses.
A party should prevail on a motion for summary judgment when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). A genuine dispute of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The party moving for summary judgment bears the burden “of informing the district court of the basis for its motion.” Brandon v. Sage Corp., 808 F.3d 266, 269–70 (5th Cir. 2015) (quotation omitted). If the nonmoving party bears the burden of production at trial, the party moving for summary judgment “must merely demonstrate an absence of evidentiary support in the record for the nonmovant’s case.” Lyles v. Medtronic Sofamor Danek, USA, Inc., 871 F.3d 305, 311 (5th Cir. 2017) (quotation omitted). If the movant is successful, “the burden shifts to the non-movant to produce evidence of the existence of such an issue for trial.” Brandon, 808 F.3d at 270 (quotation omitted). The nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts,” instead the nonmoving party “must go beyond the pleadings and come forward with specific facts indicating a genuine issue for trial to avoid summary judgment.” Id. (quotations omitted).
In evaluating the party’s arguments in favor and against summary judgment, “the court may not undertake to evaluate the credibility of witnesses, weigh the evidence, or resolve factual disputes.” Matter of Green, 968 F.3d 516, 520 (5th Cir. 2020) (quotation omitted). The court “must instead view all facts in favor of the non-moving party,” and draw all reasonable inferences in the nonmovant’s favor. Id. On cross-motions for summary judgment, the court must “review each party’s motion independently, viewing the evidence and inferences in the light most favorable to the nonmoving party.” A.A. v. Northside Indep. Sch. Dist., 951 F.3d 678, 684 (5th Cir. 2020) (quotation omitted).
Morgan first alleges that Goodman retaliated against him in connection with the filing of a workers’ compensation claim. Chapter 451 of the Texas Labor Code provides that a “person may not discharge or in any other manner discriminate against an employee because the employee has ... filed a workers’ compensation claim in good faith.” TEX. LAB. CODE § 451.001(1). The purpose of this statutory scheme is “to protect persons entitled to benefits under the Workers’ Compensation Act and to prevent them from being discharged for filing claims to collect those benefits.” Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 312 (Tex. 1997).
Texas courts analyze claims brought under § 451.001(1) using the well-established McDonnell Douglas burden shifting framework. See Parker v. Valerus Compression Servs., LP, 365 S.W.3d 61, 66 (Tex. App.—Houston [1st Dist.] 2011, pet. denied). Under the McDonnell Douglas analytical approach, Morgan must first make a prima facie case of retaliation. To make a prima facie showing of retaliation under § 451, Morgan must show: (1) he engaged in a protected activity; (2) he suffered an adverse employment action; and (3) there is a causal connection between the filing of a workers’ compensation claim and his termination. See Cristain v. Hunter Buildings & Mfg., LP, No. H-16-2462, 2017 WL 2633565, at *5 (S.D. Tex. June 19, 2017); Cardenas v. Bilfinger TEPSCO, Inc., 527 S.W.3d 391, 399 (Tex. App.—Houston [1st Dist.] 2017, no pet.). If Morgan establishes a prima facie case, the burden shifts to Goodman to produce evidence that its underlying employment action was based on a legitimate nondiscriminatory reason. See Williams v. AT & T, Inc., No. H-07-0559, 2009 WL 938495, at *16 (S.D. Tex. Apr. 6, 2009). Once Goodman produces a legitimate, nonretaliatory reason for terminating Morgan, the burden shifts back to Morgan “to raise a fact issue as to the employer’s retaliatory motive, by either direct or circumstantial evidence.” Id. If Morgan is successful in raising a fact issue as to the employer’s retaliatory motive, summary judgment is inappropriate.
The first two elements of Morgan’s prima facie case are not in dispute. A workers’ compensation claim was filed on Morgan’s behalf, and he was subsequently terminated. It is the third element—whether Morgan has shown the necessary causal link—where the rubber meets the road.
Courts on both the state and federal level have recognized that an employee’s burden at the prima facie stage is not onerous. See Evans v. City of Houston, 246 F.3d 344, 354 (5th Cir. 2001) (“the ‘causal link’ required in prong three of the prima facie case for [Title VII] retaliation is not as stringent as the ‘but for’ standard”); Tawil v. Cook Children’s Healthcare Sys., 582 S.W.3d 669, 683 (Tex. App.—Fort Worth 2019, no pet.) (“[W]e impose only a slight burden on the employee to establish a prima facie case in the first step of the burden-shifting process.”). At the prima facie stage, “the plaintiff merely has to prove that the protected activity and the negative employment action are not completely unrelated.” United States ex rel. Dyson v. Amerigroup Tex., Inc., No. CIV.A. H-03-4223, 2005 WL 2467689, at *3 (S.D. Tex. Oct. 6, 2005) (quotation omitted) (applying McDonnell Douglas to retaliation claim under the False Claims Act). To this end, courts routinely hold that an employee meets his prima facie burden with proof that the protected activity was followed shortly by an adverse employment action. See Strong v. Univ. Healthcare Sys., L.L.C., 482 F.3d 802, 808 (5th Cir. 2007) (explaining that “temporal proximity alone, when very close, can in some instances establish a prima facie case of retaliation” under Title VII); Swanson v. Gen. Servs. Admin., 110 F.3d 1180, 1188 (5th Cir. 1997) (“Close timing between an employee’s protected activity and an adverse action against him may provide the ‘causal connection’ required to make out a prima facie case of retaliation” under Title VII.); Salas v. Fluor Daniel Servs. Corp., --- S.W.3d ---, 2020 WL 7711332, at *10 (Tex. App.— Houston [14th Dist.] Dec. 29, 2020, pet. filed) (“Close timing between an employee’s protected activity [under Texas Labor Code § 451.001] and the adverse action can provide the causal connection required for a prima facie case.” (quotation omitted)); Tawil, 582 S.W.3d at 683 (explaining that, under § 451.001, an “employee meets [his] prima facie burden with proof that the protected activity was followed shortly by an adverse employment action,” and compiling cases).
The temporal proximity here firmly supports a prima facie showing of causation. Morgan suffered his workplace injury on July 22, 2017, Goodman filed the workers’ compensation claim on Morgan’s behalf on July 26, and Goodman decided to terminate Morgan’s employment the very next day. To be clear, just one day passed between the time the workers’ compensation claim was filed and the time Goodman decided to terminate Morgan’s employment. Five days passed between Morgan’s injury and the time Goodman decided to terminate Morgan’s employment. The temporal proximity between Morgan’s injury, Goodman’s filing of the claim, and Goodman’s decision to terminate Morgan easily satisfies the low hurdle to establish a prima facie case of retaliation under § 451.001. See Evans, 246 F.3d at 354 (finding that a time lapse of 5 days was sufficient to provide causal connection for a prima facie case of Title VII retaliation); Salas, 2020 WL 7711332, at *10 (finding that a time lapse of 11 days was sufficient to “provide the causal connection required for a prima facie case” of retaliation under § 451.001).
Once Morgan establishes a prima facie case of retaliation, the burden shifts to Goodman to “articulate—not prove—a legitimate, non-retaliatory reason” for its actions. Tex. Dep’t of Cmty. Affairs v. Burdine, 450 U.S. 248, 258 (1981). See also Salas, 2020 WL 7711332, at *4 (“Once the employee establishes a causal link, the burden shifts to the employer to rebut the alleged discrimination by showing there was a legitimate reason behind the discharge.” (quotation omitted)). If Goodman “produces any evidence which, taken as true, would permit the conclusion that there was a nondiscriminatory reason for the adverse action,” then Goodman will have carried its burden of production. Daigle v. Liberty Life Ins. Co., 70 F.3d 394, 396 (5th Cir. 1995) (quotation omitted). See also Patrick v. Ridge, 394 F.3d 311, 315 (5th Cir. 2004) (stating that “the employer need not prove that it was actually motivated by its proffered reason”); Greenway v. Buffalo Hilton Hotel, 143 F.3d 47, 52 (2d Cir. 1998) (“The employer need not persuade the court that it was motivated by the reason it provides; rather, it must simply articulate an explanation that, if true, would connote lawful behavior.” (emphasis omitted)).
Goodman argues that it terminated Morgan because he failed to show up for work on July 26 and 27, 2017, in violation of Goodman’s attendance policy. These absences were, according to Goodman, unexcused because medical professionals had examined Morgan and cleared him to return to work. The Fifth Circuit has regularly held that absenteeism is a legitimate, non-retaliatory reason for an employee’s termination. See Trautman v. Time Warner Cable Tex., L.L.C., 756 F. App’x 421, 428 (5th Cir. 2018) (“[A]s should go without saying, an employee’s failure to show up for work is a legitimate reason for firing her.”); Powers v. Woodlands Religious Cmty. Inc., 323 F. App’x 300, 302 (5th Cir. 2009) (“[The employer’s] stated reason for [the employee’s] termination—absenteeism—is a legitimate nondiscriminatory reason for its decision.”); Richardson v. Monitronics Int’l, Inc., 434 F.3d 327, 335 (5th Cir. 2005) (finding that “a lengthy history of attendance problems” constitutes “a legitimate, nondiscriminatory reason for firing” an employee). Goodman has met its burden.
Once an employer produces a legitimate, nondiscriminatory reason for termination, “the burden shifts back to the plaintiff to raise a fact issue as to the employer’s retaliatory motive.” Chollet v. Patterson-UTI Drilling Servs. LP, No. V-08-27, 2009 WL 4667575, at *11 (S.D. Tex. Dec. 1, 2009). See also Parker, 365 S.W.3d at 67 (explaining that the burden reverts “to the employee to produce controverting evidence of a retaliatory motive in order to survive a motion for summary judgment” (quotation omitted)). As plaintiff, Morgan “must demonstrate that [he] would not have been discharged but for [his] assertion of a workers’ compensation claim.” Lopez v. Sonic Components, LLC, No. 3:14-cv-0283-D, 2015 WL 6549583, at *7 (N.D. Tex. Oct. 28, 2015). See also Williams v. Square D Co., No. 3:04-cv-0162-D, 2005 WL 2219237, at * 3 (N.D. Tex. Sept. 13, 2005) (“[T]o survive summary judgment, [plaintiff] must produce controverting evidence of [the employer’s] retaliatory motive. Specifically, he must show that he would not have been discharged but for his assertion of a workers’ compensation claim.”).
Generally, the plaintiff must show “that the employer’s asserted reason for the discharge or other adverse employment action was pretextual or challenge the employer’s summary judgment evidence as failing to prove as a matter of law that the reason given was a legitimate, nondiscriminatory reason.” Parker, 365 S.W.3d at 67–68 (quotation omitted)). “The ultimate question will be whether the evidence of a causal link is so strong as to justify a finding that the employer had a retaliatory motive.” Jones v. NRG Tex., LLC, No. 10-16-00260-CV, 2017 WL 1540690, at *2 (Tex. App.—Waco Apr. 26, 2017, no pet.). “[A]n employee’s subjective belief that the employer acted in retaliation for the filing of a claim has no probative force because such beliefs are no more than conclusions.” Tawil, 582 S.W.3d at 682.
A plaintiff may present evidence of retaliatory motive by either direct or circumstantial evidence. See Chollet, 2009 WL 4667575, at *11. Circumstantial evidence showing a link between termination and the filing of a workers’ compensation claim generally includes:
(1) knowledge of the compensation claim by those making the decision on termination; (2) expression of a negative attitude toward the employee’s injured condition; (3) failure to adhere to established company policies; (4) discriminatory treatment in comparison to similarly situated employees; and (5) evidence that the stated reason for the discharge was false.
Cont’l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 451 (Tex. 1996) (quotation omitted). Temporal proximity is another factor to be considered in determining whether a causal chain exists between the filing of a workers’ compensation claim and a termination. See Burfield v. Brown, Moore & Flint, Inc., 51 F.3d 583, 590 (5th Cir. 1995) (“Texas courts have frequently looked at the temporal proximity between the protected activity and the adverse employment action for circumstantial evidence of retaliatory motive.”).
Here, it is undisputed that Goodman’s decision makers, Mark Clark and George Taylor, had knowledge of Morgan’s workers’ compensation claim at the time they decided to terminate his employment. Indeed, Goodman actually filed the workers’ compensation claim on Morgan’s behalf. But this fact “standing alone is insufficient to raise a genuine issue of material fact” as to whether Goodman terminated Morgan because of his compensation claim. Williams, 2009 WL 938495, at *17 (quotation omitted). To create a fact issue and avoid summary judgment, Morgan must point to something more.
Through his own affidavit, Morgan contends that Goodman had “a relaxed attendance and absence policy” and that “Goodman did not adhere to its own attendance and absence policy.” Dkt. 38-4 at 1. Although Goodman argues that “Morgan’s affidavit is hearsay, conclusory, and fails to provide evidence of disparate treatment,” Dkt. 52 at 17, Morgan’s affidavit is supported by other evidence in the summary judgment record creating a factual issue as to whether Goodman failed to abide by its own attendance policies. As discussed above, Section 12 of Goodman’s employee handbook sets forth a detailed attendance and tardiness policy. Important to this discussion, the employee handbook provides for a First Warning at four absences or tardies within a rolling 12-month period; a Final Warning at five absences or six tardies within a rolling 12-month period; and termination at six absences or eight tardies within a rolling 12-month period. The policy expressly states that absences or tardies “ ‘roll off’ one year after they were accumulated.” Dkt. 29-5 at 3.
On February 24, 2017, Goodman sent Morgan a First Warning. Although four unexcused absences are supposed to trigger a First Warning, the February 24, 2017 First Warning referenced eight alleged unexcused absences. Approximately two weeks later, on March 10, 2017, Morgan received a First Warning for tardiness. That First Warning for tardiness referenced eight unexcused tardies within a rolling 12-month period, not the four unexcused occurrences that the employee handbook says will be in a First Warning. Those First Warnings issued in February and March 2017 were the last written warnings Morgan received before his termination in July. Morgan never received a Final Warning in 2017 for absences or tardies. He was simply terminated on July 27, 2017. The internal Goodman email seeking authorization to terminate Morgan confirms Goodman’s inability to institute a clear and accurate attendance policy. It noted that Morgan had attendance and punctuality issues in the past, “however due to the untimeliness of the notification by the supervisor he was given written warnings to provide him with an additional opportunity to recover.” Dkt. 29-24 at 3. Why Goodman did not follow its own employee handbook and issue both a First Warning and a Final Warning to Morgan before termination is left unanswered by the summary judgment record.
Morgan did receive a Final Warning back on October 13, 2016, for allegedly failing “to call the absentee hotline ... 30 minutes prior to the start of” his shift. Dkt. 29-7 at 2. But, as already noted, Goodman’s policy specifically provides that absences and tardies “roll off” one year after they were accumulated. As such, many of the absences and tardies taken into consideration as part of the October 13, 2016 Final Warning were no longer “live” by the time Goodman terminated Morgan on July 27, 2017. Indeed, on the date of his firing, Morgan only had six unexcused absences (assuming you count July 27) within a 12-month rolling period, and five unexcused tardies within a 12-month rolling period. See Dkts. 29-8 at 2; 29-9 at 1.
Goodman contends that “[t]o the extent Goodman deviated from any of its policies, it was overly generous in failing to terminate Morgan when he reached an unacceptable number of absences and tardies.” Dkt. 28 at 20. But the trouble here is that Goodman’s decision to accelerate its disciplinary action coincides with Morgan’s workplace injury. If Goodman terminated Morgan for failing to report to work on July 27, it did so without ever issuing Morgan a Final Warning—a deviation from its standard company policies. If, on the other hand, Goodman terminated Morgan “for failing to use the call-in line as instructed” in the Final Warning issued in October 2016, Morgan has pointed to other summary judgment evidence that might convince a jury that the reason is pretextual. Morgan has provided telephone records showing that he did call in around 4:30 a.m. on both July 26 and July 27. And a July 27 email exchange between Goodman employees George Taylor and Mark Clark confirms that Morgan “did use the call in line” and “indicated that he was ‘too sore’ to report to work.” Dkt. 29-24 at 2. Morgan has also pointed to summary judgment evidence showing that Goodman reported the workplace accident to its insurance carrier as an “unwitnessed accident” when, in reality, a witness statement had been submitted by Clifton Smith. See Dkt. 29-15 at 7. In the same vein, Morgan contends that Goodman filed two witness statements allegedly provided by Clifton Smith, one of which was altered. Compare Dkt. 38-11, with 38-12. Taken together and in the light most favorable to Morgan, these three alleged facts (terminating Morgan based on his failure to call-in, noting the accident as unwitnessed, and producing two conflicting witness statements with potentially conflicting testimony) could lead a reasonable jury to conclude that Goodman’s stated reason for termination is false. And while it is true that notifying Goodman’s insurance carrier that the injury was the result of an “unwitnessed accident” “could be a mistake, or it could be that the claim examiner was unaware of Mr. Smith’s statements,” those kinds of disputes and determinations are best reserved for the factfinder. Dkt. 52 at 19–20. At the summary judgment stage, Morgan need only present evidence that raises a genuine issue of material fact.
In sum, Morgan has pointed to summary judgment evidence showing that Goodman knew about his participation in an activity protected by Texas law, and that Goodman terminated his employment shortly thereafter. He has also pointed to summary judgment evidence showing that he may not have been terminated pursuant to the attendance policy, casting doubt on Goodman’s legitimate, nondiscriminatory reason for termination. Viewing all the evidence in the light most favorable to Morgan, Goodman’s motion for summary judgment on Morgan’s workers’ compensation retaliation claim should be denied. Because a genuine issue of material fact remains, Morgan’s motion for summary judgment should likewise be denied.2
*7 The FMLA entitles employees to take leave for “a serious health condition that makes the employee unable to perform” their duties. 29 U.S.C. § 2612(a)(1)(D). Two types of claims arise under the FMLA: (1) “interference” or “(a)(1)” claims in which the employee alleges that an employer denied or interfered with his substantive rights under the FMLA, and (2) “retaliation” or “(a)(2)” claims in which the employee alleges that the employer discriminated against him for exercising FMLA rights. See id. § 2615(a)(1)–(2). Morgan alleges both.
The McDonnel Douglas burden-shifting analysis discussed above also applies to FMLA retaliation claims. See Wheat v. Fla. Parish Juv. Just. Comm’n, 811 F.3d 702, 705 (5th Cir. 2016). Under that approach, Morgan must first make a prima facie case of retaliation after which Goodman has an opportunity to “articulate a legitimate nondiscriminatory or nonretaliatory reason for the employment action.” Hunt v. Rapides Healthcare Sys., LLC, 277 F.3d 757, 768 (5th Cir. 2001). Once Goodman produces a nonretaliatory reason for terminating Morgan, the burden shifts back to Morgan to “show by a preponderance of the evidence that [Goodman’s] reason is a pretext for retaliation.” Id. To make a prima facie case of unlawful FMLA retaliation Morgan must show “(1) [he] was protected under the FMLA; (2) [he] suffered an adverse employment action; and (3) the adverse [employment] action was taken because [he] took FMLA leave.” Garcia v. Penske Logistics, L.L.C., 631 F. App’x 204, 210 (5th Cir. 2015). It is undisputed that the first two elements have been satisfied: Morgan was covered by the FMLA on a temporary and continuous basis and he unquestionably suffered an adverse employment action.
As for the causation element, the Supreme Court has held that temporal proximity by itself can establish prima facie causation where the proximity is “very close.” Clark Cnty. Sch. Dist. v. Breeden, 532 U.S. 268, 273–74 (2001) (quotation omitted) (collecting cases). Morgan contends that he was terminated while on continuous FMLA leave for his workplace injury. This is sufficient to establish a prima facie case of retaliation. See Leal v. BFT, Ltd. P’ship, 423 F. App’x 476, 479–80 (5th Cir. 2011) (“Because Leal was terminated during her exercise of FMLA rights, we conclude that the ‘temporal proximity’ between her FMLA leave and the adverse action was ‘very close’ and is sufficient to establish the necessary causal link for a prima facie case.”). Because Morgan was terminated shortly after Goodman placed him on continuous FMLA leave, Morgan has established a prima facie case of FMLA retaliation.
Goodman alleges the same legitimate, nondiscriminatory reason discussed above—that Morgan was terminated for violating Goodman’s leave policy. Because Goodman has produced a legitimate, nonretaliatory reason for terminating Morgan, Morgan’s motion for summary judgment should be denied. To avoid Goodman’s motion for summary judgment, Morgan must point to summary judgment evidence showing that there is a fact issue as to whether Goodman’s legitimate reason is merely pretext for unlawful retaliation.
Morgan has pointed to summary judgment evidence that: (1) Goodman declared him eligible for continuous FMLA leave starting July 26 due to his workplace injury; (2) Goodman’s George Taylor and Mark Clark both knew that Morgan was on FMLA leave; (3) Morgan’s supervisors had expressed frustration with his use of intermittent FMLA as far back as June 2016, or one month after he was declared eligible; and (4) Goodman had allegedly papered his file with attendance infractions based on days protected by his intermittent FMLA (compare Dkt. 29-9 at 1, with Dkt. 38-20). Viewing this evidence in the light most favorable to Morgan, there is a genuine issue of fact as to whether Goodman’s justification for terminating Morgan is merely pretext for unlawful retaliation.
The FMLA’s interference provision makes it “unlawful for any employer to interfere with, restrain, or deny the exercise of or ... attempt to exercise,” any substantive FMLA right. 29 U.S.C. § 2615(a)(1). An “interference claim merely requires proof that the employer denied the employee his entitlements under the FMLA.” Acker v. Gen. Motors, L.L.C., 853 F.3d 784, 788 (5th Cir. 2017) (quotation omitted). Morgan claims Goodman interfered with his FMLA rights by refusing to recognize his July 27, 2017 absence as FMLA leave.
To make a prima facie case for FMLA interference, Morgan must show that “(1) he was an eligible employee; (2) his employer was subject to FMLA requirements; (3) he was entitled to leave; (4) he gave proper notice of his intention to take FMLA leave; and (5) his employer denied him the benefits to which he was entitled under the FMLA.” Caldwell v. KHOU-TV, 850 F.3d 237, 245 (5th Cir. 2017). Elements 1–3 are not in dispute. Goodman argues that Morgan cannot satisfy elements 4 and 5 of the prima facie case for FMLA interference.
The fourth element requires Morgan to show that he gave proper notice of his intention to take FMLA leave. The FMLA regulations “explicitly permit[ ] employers to condition FMLA-protected leave upon an employee’s compliance with the employer’s usual notice and procedural requirements.” DeVoss v. Sw. Airlines Co., 903 F.3d 487, 490 (5th Cir. 2018).
Goodman contends summary judgment is proper on Morgan’s FMLA interference claim because he failed to call “Cheryl Kennedy or the hotline to indicate that he was taking FMLA leave” on July 27, 2017. Dkt. 28 at 26. In making this argument, Goodman insists that it instructed Morgan to call Cheryl Kennedy and the absentee hotline in a letter dated May 5, 2016. But that letter is related to Morgan’s request for intermittent FMLA leave to care for his stepson. The company issued a different letter to Morgan on July 26, 2017, declaring him eligible for continuous FMLA leave due to his workplace injury. The July 26 letter does not mention Cheryl Kennedy or the absentee hotline. Instead, it requires Morgan to contact Martha Sommer once per week to provide “a current status of [his] medical condition” and to provide “a current work status report from [his] treating physician at least once a month.” Dkt. 38-2 at 1. Goodman does not explain the distinction between these two letters anywhere in its summary judgment briefing. Nonetheless, even if, as Goodman maintains, Morgan was required to call “Cheryl Kennedy or the hotline to indicate that he was taking FMLA leave,” there is a factual dispute which precludes summary judgment. Dkt. 28 at 26. Morgan says that he did call the hotline and report that he would be taking FMLA leave. That, alone, is a sufficient reason to deny summary judgment because I am required to view “all the facts and evidence in the light most favorable to” Morgan, the nonmovant. Ortega Garcia v. United States, 986 F.3d 513, 524 (5th Cir. 2021). Goodman maintains that the substance of the alleged phone call to the absentee hotline was insufficient, but I am unwilling to make that determination at this time. That is a fact question best left for the jury to decide.
As to element 5, Goodman argues “there is zero evidence Goodman acted in a way to deny Morgan his FMLA rights” because it “placed him on FMLA for a short time [on] July 26, 2017, before it found out he had been released to work.” Dkt. 28 at 26. To avoid wading into the factual dispute regarding the sequence of events, I merely note that Goodman’s chronology is disputed. Viewing the summary judgment evidence in the light most favorable to Morgan, as I must, there is a genuine issue of material fact as to whether Goodman denied Morgan the benefits to which he was entitled under the FMLA.
Morgan also asks me to dismiss four of Goodman’s affirmative defenses as insufficiently pled under Rule 12(c). Because I find that Goodman’s Answer provides Morgan notice of the affirmative defenses Goodman intends to raise, I recommend that Morgan’s motion be denied.
Federal Rule of Civil Procedure 12(c) permits parties to obtain a judgment on the pleadings “[a]fter the pleadings are closed—but early enough not to delay trial.” FED. R. CIV. P. 12(c). Although Morgan characterizes his motion as proceeding under Rule 12(c), “a motion to strike defenses under Rule 12(f) is more appropriate when a plaintiff disputes the sufficiency of some of a defendant’s defenses.” Franks v. Tyhan, Inc., No. H-15-191, 2016 WL 1531752, at *2 (S.D. Tex. Apr. 15, 2016). See also 5C CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 1369 (3d ed. 2008) (“If a plaintiff seeks to dispute the legal sufficiency of fewer than all of the defenses raised in the defendant’s pleading, he should proceed under Rule 12(f) rather than under Rule 12(c) because the latter leads to the entry of a judgment.”). I will, therefore, construe Morgan’s Rule 12(c) motion as a Rule 12(f) motion to strike. See Franks, 2016 WL 1531752, at *2 (construing a motion to dismiss affirmative defenses under Rule 12(c) as a motion to strike under Rule 12(f)). Under Rule 12(f), a district court may, at its discretion, “strike from a pleading an insufficient defense.” FED. R. CIV. P. 12(f)(1).
A defendant responding to a lawsuit must “state in short and plain terms its defenses to each claim asserted against it” and “affirmatively state any ... affirmative defense[s].” FED. R. CIV. P. 8(b)(1), (c)(1). In 1999, the Fifth Circuit held that a defendant “must plead an affirmative defense with enough specificity or factual particularity to give the plaintiff ‘fair notice’ of the defense that is being advanced.” Woodfield v. Bowman, 193 F.3d 354, 362 (5th Cir. 1999). The Supreme Court issued its seminal opinions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009) a decade later, establishing that a plaintiff seeking to avoid dismissal must plead “enough facts to a state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. To date, the Fifth Circuit has not addressed whether Twombly and Iqbal effectively overruled Woodfield, leaving unsettled the pleading standard a district court should apply to affirmative defenses. See Franks, 2016 WL 1531752, at *2. Naturally, the parties dispute which standard should apply here. Morgan contends that the heightened pleading standard established by Twombly and Iqbal applies to affirmative defenses, while Goodman argues that simple notice pleading will suffice.
Before he was elevated to the Fifth Circuit, Judge Gregg Costa noted that there are four compelling reasons in the aftermath of the Twombly and Iqbal decisions for applying the fair notice pleading standard to affirmative defenses:
First, Iqbal and Twombly interpreted the text of Rule 8(a)(2), which requires a statement “showing the pleader is entitled to relief,” which differs from Rule 8(c)’s requirement that the defendant “affirmatively state any avoidance or affirmative defense.” Second, a defendant only has 21 days to serve an answer. Third, while a motion to dismiss can resolve a case, thereby avoiding discovery entirely, motions to strike only prolong pre-discovery motion practice; as such, raising the standard for pleading affirmative defenses would only encourage more motions to strike.
* * * *
[Fourth, the] ‘insufficient defense’ language in Rule 12(f) has traditionally been read to allow challenges to the legal sufficiency of an asserted defense, as opposed to whether the defense contains sufficient factual matter, [as required under Rule 12(b)(6)].
United States ex rel. Parikh v. Citizens Med. Ctr., 302 F.R.D. 416, 418–19 (S.D. Tex. 2014) (Costa, J.) (cleaned up). The authority in this District also weighs heavily in favor of finding that affirmative defenses are subject to a fair notice pleading standard. See, e.g., Fernandes v. VMOC LLC, No. H-18-1544, 2018 WL 4901033 (S.D. Tex. Oct. 9, 2018) (“While complaints must satisfy the Iqbal and Twombly standard, the defendants’ answer must only ‘identify the affirmative defense in question and provide notice of its basis.’ ” (quoting Woodfield, 193 F.3d at 362)); Trevino v. RDL Energy Servs., L.P., No. H-14-1936, 2016 WL 11477431, at *4 (S.D. Tex. July 21, 2016) (applying the fair notice pleading standard to any affirmative defenses); T.R.M. v. GlaxoSmithKline LLC, No. 4:14-cv-00452, 2015 WL 12551485, at *2 (S.D. Tex. Aug. 21, 2015) (“Affirmative defenses are not subject to the heightened pleading requirements stated in [Twombly].”). I will not deviate from this line of authority. Goodman’s affirmative defenses need only provide Morgan “enough specificity or factual particularity to give [Morgan] ‘fair notice’ of the defense that is being advanced.” T.R.M., 2015 WL 12551485, at *2 (quotation omitted).
Striking an affirmative defense is rare and only warranted when a defense “cannot, as a matter of law, succeed under any circumstance.” Moody Nat’l CI Grapevine S., L.P. v. TIC Texas Two 23, L.L.C., No. H-19-0711, 2019 WL 5595332, at *2 (S.D. Tex. Oct. 30, 2019) (quotation omitted). “Merely pleading the name of some affirmative defenses may be sufficient to provide the plaintiff with fair notice.” McNeely v. Trans Union LLC, No H-18-849, 2019 WL 338127, at *2 (S.D. Tex. Jan. 28, 2019).
According to Morgan, Goodman’s Answer contains “no facts to support the proposition that: (1) Plaintiff failed to mitigate damages[;] (2) Defendant discovered after-acquired evidence[;] (3) Plaintiff did not engage in protected activity[;] and (4) Defendant had a legitimate, non-discriminatory, non-retaliatory, and non-pretextual reason for” terminating Morgan’s employment. Dkt. 36 at 21.
Goodman alleged in its Answer to Morgan’s First Amended Petition that Morgan “failed to mitigate his alleged damages.” Dkt. 14 at 6. Morgan argues that this affirmative defense should be struck because “Defendant’s Answer pleads no facts at all or even remotely suggests that substantially equivalent employment was available.” Dkt. 36 at 24.
Having already determined that Goodman need only provide “fair notice” of an affirmative defense, I now conclude that Goodman’s defense that Morgan “failed to mitigate his alleged damages” meets that lenient standard. Dkt. 14 at 6. Other courts have found the same language satisfactory. See Tran v. Thai, No. H-08-3650, 2010 WL 723633, at *1–2 (S.D. Tex. Mar. 1, 2010) (finding “[t]he plaintiff has failed to mitigate damages, if any, as required by law” sufficient to provide fair notice). Morgan’s motion to strike or otherwise dismiss Goodman’s failure to mitigate defense should be denied.
Goodman alleged in its Answer that Morgan’s “claims for damages are barred, in whole or in part, by the after acquired evidence doctrine.” Dkt. 14 at 6. Morgan seeks to strike this affirmative defense because “Goodman’s Answer alleged no facts establishing or even suggesting the existence of such wrongdoing by Roddie Morgan, let alone that Goodman discovered it or that it was so severe that he would have been terminated if Goodman learned of it earlier.” Dkt. 36 at 25.
“The after-acquired evidence doctrine shields an employer from liability or limits available relief where, after a termination, the employer learns for the first time about employee wrongdoing that would have caused the employer to discharge the employee.” Tomasini v. Mt. Sinai Med. Ctr. of Fla., Inc., 315 F. Supp. 2d 1252, 1257 (S.D. Fla. 2004) (quotation omitted); accord Norman v. Valv Techs., Inc., No. H-09-3997, 2011 WL 13318414, at *2 (S.D. Tex. Jan. 19, 2011) (finding on a Rule 12(f) motion to strike that “questions of fact and law exist[ed] regarding the applicability of this defense” to plaintiff’s FLSA retaliation claims).
Neither party has briefed whether the after-acquired evidence doctrine applies in the FMLA or Texas Workers’ Compensation context, but Goodman suggests in its summary judgment response that the doctrine could limit Morgan’s damages because Goodman would have terminated Morgan when he allegedly submitted a backdated chiropractor’s note in February 2018. At this juncture, I need only observe that Goodman’s Answer effectively notified Morgan of its intent to raise the after-acquired evidence defense. My hesitance to strike this defense is enough to allow it to remain. See Moody Nat’l, 2019 WL 5595332, at *2 (“Striking an affirmative defense is warranted if it cannot, as a matter of law, succeed under any circumstance.” (quotation omitted)).
Next, Morgan contends that “Defendant’s Answer pleads no specific facts setting forth the basis for its supposed contention that Mr. Morgan did not engage in protected activity.” Dkt. 36 at 26. Goodman does not respond to this allegation, but I have reservations about whether this issue is truly an affirmative defense or rather an element of Morgan’s prima facie case. In any case, given the low pleading standard applied to affirmative defenses, Morgan’s motion to strike this portion of Goodman’s Answer should be denied.
Goodman’s Answer contends that it “had legitimate, non-discriminatory, non-retaliatory, and non-pretextual reasons for” terminating Morgan’s employment, and that “Plaintiff would have been terminated even in the absence of any alleged discrimination and/or retaliation on the part of defendant.” Dkt. 14 at 7. Morgan argues that these statements fail to provide “specific facts setting forth the basis for its supposed contention that it would have made the same [employment] decision,” and requests that Morgan be granted judgment on the pleadings as to Goodman’s “mixed-motives defense.” Dkt. 36 at 26.
As discussed earlier, Goodman’s Answer need only provide Morgan “fair notice” of its intent to raise an affirmative defense. Although a close call, Morgan was able to glean from Goodman’s Answer that it intended to raise a mixed-motives defense. That is enough to survive a motion to strike or dismiss.
For the reasons identified above, I recommend that both motions for summary judgment be DENIED and that this case proceed to trial on the merits.
The Clerk shall provide copies of this Memorandum and Recommendation to the respective parties who have fourteen days from receipt to file written objections pursuant to Federal Rule of Civil Procedure 72(b) and General Order 2002–13. Failure to file written objections within the time period mentioned shall bar an aggrieved party from attacking the factual findings and legal conclusions on appeal.
SIGNED on this 10th day of March 2021.
Although employers have no obligation to provide employees with FMLA leave until the employee has worked for the employer for more than a year, Goodman credited Morgan for his time spent working for Goodman through the third-party contractor.
As an aside, it “is highly unusual for a plaintiff in a [retaliation] case to move for summary judgment. One could read hundreds if not thousands of decisions in these cases without coming across one in which a plaintiff moved for summary judgment, much less prevailed.” Day v. City of Baraboo, No. 06-C-188-C, 2007 WL 5633174, at *6 (W.D. Wis. Jan. 31, 2007).
United States District Court, S.D. Texas, Brownsville Division.
JOSHUA PARKS, Plaintiff,
NORDEX USA, INC., et al., Defendants.
CIVIL ACTION NO. 1:19-CV-222
*1 Plaintiff Joshua Parks brings this action against 12 parties involved in the operation of a wind farm in Willacy County, Texas. (First Am. Compl., Doc. 42) He seeks recovery for injuries he suffered from a fall while employed at the wind farm. (Id. at 24)
In part, Parks sues his employer, Axis Renewable Group, Inc., alleging a negligence claim based on vicarious liability, due to the alleged failure of Axis’s employees to provide and maintain a safe working environment.1 (First Am. Compl., Doc. 42, ¶¶ 5.6–5.7) Axis moves for summary judgment on the grounds that its workers’ compensation benefits are Parks’s exclusive remedy from Axis for the injuries he allegedly sustained. (Motion, Doc. 68)
Parks alleges that in November 2017, he fell and suffered injuries while in the course and scope of his employment. (First Am. Compl., Doc. 42, ¶ 4.1) At the time, Axis employed Parks, (B. Moore Decl., Doc. 68-3, ¶ 3), and carried workers’ compensation insurance covering its Texas employees, which included Parks. (C. Reichardt Aff., Doc. 68-4, ¶ 2; Doc. 68-4, 31) Parks offers no evidence controverting these facts.
Summary judgment is proper if the evidence, viewed in the light most favorable to the nonmoving party, shows that no genuine dispute of material fact exists and that the movant is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A genuine dispute over material facts exists if the evidence presents an issue “that properly can be resolved only by a finder of fact because [it] may reasonably be resolved in favor of either party,” and the fact at issue might affect the outcome of the case. Anderson v. Liberty Lobby, Inc. 47 U.S. 242, 248, 250 (1986). The moving party “bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact.” Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir. 2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322–25 (1986)). When a movant bears the burden on an issue, such as with respect to an affirmative defense, the movant must prove an absence of a genuine issue of material fact to carry its burden, even where the nonmovant has not filed a response. See Hibernia Nat. Bank v. Administracion Cent. Sociedad Anonima, 776 F.2d 1277, 1279 (5th Cir. 1985). In considering a motion for summary judgment, “[t]he court need consider only the cited materials, but it may consider other materials in the record.” FED. R. CIV. P. 56(c)(3).
*2 Under the Texas Workers Compensation Act, the “[r]ecovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage...against the employer...for the death of or a work-related injury sustained by the employee.” TEX. LABOR CODE § 408.001(a) (effective Sept. 1, 2005) (emphasis added). This provision “exempts the employer, its agents, and its employees from common-law liability claims based on negligence or gross negligence.” Warnke v. Nabors Drilling USA, L.P., 358 S.W.3d 338, 343 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (citing TEX. LABOR CODE § 408.001(a)); see also Exxon Corp. v. Perez, 842 S.W.2d 629, 630 (Tex. 1992) (stating employer is “immune”); Castleberry v. Goolsby Bldg. Corp., 617 S.W.2d 665, 666 (Tex. 1981) (stating employer is “exempt”). The exclusive remedy provision is an affirmative defense an employer must plead and prove. Perez, 842 S.W.2d at 630; Warnke, 358 S.W.3d at 343.
To invoke the protections that Section 408.001 provides, the employer must show the injured worker was: (1) an employee of the company at the time at which the work-related injury occurred, and (2) covered by workers’ compensation insurance. Garza v. Exel Logistics, Inc., 161 S.W.3d 473, 475 (Tex. 2005); Warnke, 358 S.W.3d at 343. If the employer successfully demonstrates as much, “employee claims of work-related negligence and gross negligence are barred.” Warnke, 358 S.W.3d at 343; see also Perez, 842 S.W.2d at 630 (“[A]n employer who pleads and proves subscriber status is immune from liability for common-law negligence and the employee’s exclusive remedy is under the Act.”). The exclusive recovery bar also applies to claims of premises liability based on respondeat superior. See Lockett v. HB Zachry Co., 285 S.W.3d 63, 75 (Tex. App.—Houston [1st Dist.] 2009, no pet.) (affirming summary judgment on a premises liability claim for the defendant employer on the basis of the exclusive remedy bar of the TWCA); Mosqueda v. G & H Diversified Mfg., Inc., 223 S.W.3d 571, 583–84 (Tex. App.—Houston [14th Dist.] 2007, pet. denied) (same).
Here, Parks alleges that when he suffered his alleged injuries, he was acting in the course and scope of his employment. (First Am. Compl., Doc. 42, ¶ 4.1) Axis submits competent summary judgment evidence demonstrating that it employed Parks at the time of the incident, (B. Moore Aff., Doc. 68-3, ¶ 3), and held a workers’ compensation insurance policy covering its Texas employees. (C. Reichardt Aff., Doc. 68-4, ¶ 2; Doc. 68-4, 31)
Parks filed no response to the Motion, which renders Axis’s summary judgment evidence uncontroverted. As a result, Axis has demonstrated that as a matter of law, Section 408.001 of the TWCA applies and bars Parks’s cause of action for negligence and his alternative claim for premises liability.
For these reasons, it is:
ORDERED that Defendants Axis Renewable Group, Inc. and Campo Lujano Axis Grupo, Inc.’s Motion for Summary Judgment Under the Exclusive Remedy Doctrine (Doc. 68) is GRANTED; and
ORDERED that Plaintiff Joshua Parks’s causes of action against Defendants Axis Renewable Group, Inc. and Campo Lujano Axis Grupo, Inc. are DISMISSED WITH PREJUDICE.
Signed on January 21, 2021.
Fernando Rodriguez, Jr.
United States District Judge
In January 2019, Axis Renewable Group, Inc. changed its name to Campo Lejano Axis Grupo, Inc. (B. Moore Decl., Doc. 68–3, ¶ 3) Parks sued both Axis Renewable and Campo Lejano, but presents no evidence controverting that they are one and the same entity. The Court’s use of “Axis” refers to Campo Lejano Axis Grupo, Inc., formerly known as Axis Renewable Group, Inc.
In its Motion, Axis invokes the no-evidence summary judgment standard under Texas Rule of Civil Procedure 166a. (Motion, Doc. 68, 2) However, as the matter is before this Court based on diversity jurisdiction, the Court will apply federal procedural law, including the summary judgment standard in Federal Rule of Civil Procedure 56. Cates v. Sears, Roebuck & Co., 928 F.2d 679, 687 (5th Cir. 1991); see also Royal Surplus Lines Ins. Co. v. Brownsville Indep. Sch. Dist., 404 F. Supp. 2d 942, 947 (S.D. Tex. 2005) (applying the federal summary judgment standard rather than the state standard).
United States District Court, S.D. Texas, Houston Division.
BILLY JOHNSON, Plaintiff,
SAN JACINTO COLLEGE, Defendant.
Civil Action No.: 4:20-cv-2948
This matter is before the Court on Plaintiff’s Motion to Remand (Dkt. 5) and Defendant’s Motion to Dismiss Plaintiff’s state law claims (Dkt. 7). Having considered the pleadings, the parties’ filings, and the law, it is ORDERED that Plaintiff’s claim for workers’ compensation retaliation under Chapter 451 of the Texas Labor Code is SEVERED from this cause of action and REMANDED to the 215th Judicial District Court for Harris County, Texas. It is, further, ORDERED that Defendant’s Motion to Dismiss (Dkt. 7) is DENIED in part as MOOT and GRANTED in part.
Plaintiff Billy Johnson, who is currently 71 years old, began working for Defendant in December 2006. Dkt. 1-2 at 3. In August 2016, Johnson fell off a forklift while on the job and filed a workers’ compensation claim shortly thereafter. Id. Plaintiff alleges that, following the injury, “it became clear that Defendant had no interest in employing him anymore; not only because he had filed a workers’ compensation claim but also because of his age.” Id. Plaintiff alleges we was eventually “forced” to retire in June 2018. Id.
Plaintiff filed the pending action in the 215th Judicial District Court for Harris County, Texas on May 21, 2019, bringing three causes of action against Defendant under the Texas Labor Code. Dkt. 1-2 at 2-9. Plaintiff filed his First Amended Petition in state court on August 1, 2020 adding multiple federal law claims. Dkt. 1-10 at 2-11. Plaintiff’s Amended Petition includes claims for age discrimination and retaliation under the Age Discrimination in Employment Act (“ADEA”) and Texas Commission on Human Rights Act (“TCHRA”) codified in Chapter 21 of the Texas Labor Code; disability discrimination and retaliation under the Americans with Disabilities Act (“ADA”); and workers’ compensation retaliation in violation of the Texas Workers’ Compensation Act (“TWCA”), codified in Chapter 451 of the Texas Labor Code. Id.
Defendant filed a timely Notice of Removal (Dkt. 1) on August 21, 2020 based on federal question jurisdiction. Plaintiff filed the pending Motion to Remand (Dkt. 5), in which Plaintiff requests the Court sever his workers’ compensation retaliation claim and remand it to the 215th Judicial District Court of Harris County, Texas. Dkt. 5 ¶ 7. Defendant filed the pending Motion to Dismiss Plaintiff’s state law claims on September 22, 2020. Dkt. 7.
Plaintiff argues his workers’ compensation retaliation claim must be severed and remanded to state court because it is non-removable. Dkt. 5 at 3-4. Federal courts have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States. 28 U.S.C. § 1331. A defendant may remove an action subject to the original jurisdiction of the federal courts to the district court embracing the place where the action is pending in state court. Id. § 1441. Claims brought under the ADA and ADEA are removable claims subject to the original jurisdiction of the federal courts because they arise under the laws of the United States. Workers’ compensation claims, on the other hand, are non-removable pursuant to 28 U.S.C. § 1445(c), which provides that civil actions in state court arising under the workers’ compensation laws of that state may not be removed to the federal courts. Id. § 1445(c). Where a civil action includes both claims subject to the original jurisdiction of the federal courts and claims that have been made non-removable by statute, upon removal based on federal question jurisdiction, the district court must sever from the action all non-removable claims and remand them to the state court. Id. § 1441(c)(A)-(B).
In this case, Plaintiff alleges that he hired an attorney to represent him in a workers’ compensation claim, filed a claim in good faith, and was then “wrongfully discharged by forced retirement, discriminated, and/or retaliated against.” Dkt. 1-10 at 8. The claim for workers’ compensation retaliation clearly arises under Texas workers’ compensation laws.1 See Jackson v. Wal-Mart Stores Texas, LLC, 925 F. Supp. 2d 810, 813 (N.D. Tex. Feb. 25, 2013) (quoting Sherrod v. Am. Airlines, Inc., 451.001 is a claim arising under Texas worker’s compensation laws.”). The parties do not dispute that, assuming the Court orders remand of the workers’ compensation claim, the claim should be severed, leaving Plaintiff’s remaining claims in federal court. The Court agrees. See 28 U.S.C. § 1441(c)(1)-(2) (stating when a civil action includes claims arising under the laws of the United States and claims that have been nonremovable by statute, the district court should sever and remand the nonremovable claims); Jackson, 925 F. Supp. 2d at 814 (“[I]f a court has federal question jurisdiction over one claim in a case and Congress has made another independent claim in the same case nonremovable, the court may sever and remand only the nonremovable claim.”)
However, Defendant argues that remand is improper because Defendant is immune from workers’ compensation retaliation claims based on its status as a political subdivision of the state. Dkt. 13 at 2-3. Defendant suggests it would be “improper to remand this matter to state court based upon the pleading of a legal theory from which the Defendant has immunity[,]” but cites no authority for the position. Id. at 3. The plain language of 28 U.S.C. § 1441(c)(1)-(2) requires the Court to sever the non-removable workers’ compensation retaliation claims:
(c) Joinder of Federal law claims and State law claims.
(1) If a civil action includes--
(A) a claim arising under the Constitution, laws, or treaties of the United States (within the meaning of section 1331 of this title), and
(B) a claim not within the original or supplemental jurisdiction of the district court or a claim that has been made nonremovable by statute, the entire action may be removed if the action would be removable without the inclusion of the claim described in subparagraph (B).
(2) Upon removal of an action described in paragraph (1), the district court shall sever from the action all claims described in paragraph (1)(B) and shall remand the severed claims to the State court from which the action was removed...
28 U.S.C. § 1441(c)(1)-(2) (emphasis added). Therefore, the workers’ compensation claims will be severed and remanded, leaving the immunity issue to be decided by the state court.
In its Motion to Dismiss, Defendant argues Plaintiff’s claims under Chapter 21 of the Texas Labor Code, (the “TCHRA claims”) and Chapter 451 of the Texas Labor Code (the “TWCA claims”) must be dismissed. As discussed above, the Court must sever and remand the TWCA/workers’ compensation claims. Therefore, Defendant’s motion to dismiss the TWCA/workers’ compensation claims is DENIED as MOOT.
With respect to Plaintiff’s TCHRA claims, Defendant argues Plaintiff cannot state a claim for age discrimination or retaliation because he failed to timely file a charge of discrimination.2“[T]he Texas Labor Code requires those claiming employment discrimination to file an administrative complaint with the [Texas Workforce Commission (“TWC”) ] before filing an action in court[.]” Hinkley v. Envoy Air, Inc., 968 F.3d 544, 552 (5th Cir. 2020) (citations omitted). The TWC investigates the administrative complaint and determines whether there is a reasonable basis to believe the employer engaged in the practice alleged in the administrative complaint. Id. (citations omitted). The employee or complainant may bring a civil action against the employer, but only if he complies with the statutory requirements for exhausting administrative remedies, one of which is that the administrative complaint be filed no later than the 180th day after the alleged unlawful employment practice occurred. Id. (citations omitted) (citing TEX. LAB. CODE § 21.202(a)). The Texas Labor Code makes the exhaustion of remedies provision mandatory and provides for dismissal of untimely claims. Id. at 553. Thus, § 21.202(a) of the Texas Labor Code creates a statute of limitations defense to a TCHRA claim when the administrative charge is not filed within 180 days of the act alleged to be an unlawful employment practice.
Defendant attached to its Motion to Dismiss a copy of Plaintiff’s Charge of Discrimination (the “TWC Charge”) filed with the TWC.3 Dkt. 7-1 at 2. Plaintiff alleges the discrimination and retaliation against him began on October 27, 2016 and ended on June 1, 2018 when he was forced to retire. Id. Thus, in order to exhaust administrative remedies for violations of the TCHRA prior to filing suit against Defendant, Johnson was required to file the charge of discrimination within 180 days of his forced retirement, or by December 1, 2018. The Charge of Discrimination was not filed until February 14, 2019, a date clearly beyond the mandatory 180-day deadline. Plaintiff failed to comply with the mandatory deadline for filing the administrative charge of discrimination. As a result, his claims against Defendant for discrimination and retaliation in violation of the TCHRA are time-barred and should be dismissed with prejudice. See Hinkley, 968 F.3d at 554-55 (affirming district court’s dismissal with prejudice of plaintiff’s TCHRA claims where plaintiff failed to file a complaint with the EEOC or TWC within 180 days of the allegedly discriminatory action).
Pursuant to 28 U.S.C. §§ 1445(c) and 1441(c), Plaintiff’s Motion to Remand his workers’ compensation retaliation claims under Texas Labor Code § 451 is GRANTED. Plaintiff’s workers’ compensation retaliation claims are SEVERED from this cause of action and REMANDED to 215th Judicial District Court of Harris County, Texas.
Defendant’s Motion to Dismiss Plaintiff’s workers’ compensation retaliation claims is DENIED AS MOOT. Defendant’s Motion to Dismiss Plaintiff’s claims under the TCHRA is GRANTED and the TCHRA claims are DISMISSED WITH PREJUDICE.
Signed on January 5, 2021 at Houston, Texas.
Christina A. Bryan
United States Magistrate Judge
Section § 451 of the Texas Labor Code prohibits employers from discharging or discriminating against employees because they have (1) filed a workers’ compensation claim in good faith; (2) hired a lawyer to represent them in a workers’ compensation claim; (3) instituted in good faith a proceeding under the Texas Workers’ Compensation Act; or (4) testified in a proceeding under the Texas Workers’ Compensation Act. TEX. LABOR CODE § 451.001.
Plaintiff’s Response to Defendant’s Motion to Dismiss addresses only the motion to dismiss the workers’ compensation retaliation claims. Dkt. 14. Because Plaintiff failed to respond to Defendant’s argument regarding the TCHRA claims, the Court will consider the motion to dismiss those claims as unopposed. See Jackson v. Ferretis, Civil Action No. H-17-1922, 2017 WL 4221089, at *2 (S.D. Tex. Sep. 21, 2017) (citations omitted) (treating an argument for dismissal of the plaintiff’s claims as unopposed where the plaintiff failed to address the arguments in her response).
Typically, this Court’s review of a motion to dismiss is limited to the allegations in the complaint and attachments thereto. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000) (quotations omitted). However, the Court may consider attachments to a motion to dismiss and consider them part of the pleadings where “they are referred to in the plaintiff’s complaint and are central to her claim.” Id. (quotations omitted). In this case, Plaintiff did not attach a copy of the TWC Charge to his Amended Petition, but his complaint refers to it. Dkt. 1-10 at 3 (“[A] charge of discrimination was jointly filed with the Equal Employment Opportunity Commission (“EEOC”) and the Texas Workforce Commission Civil Rights Division (“TWC-CRD”)....”). Therefore, the Court will consider the TWC Charge when deciding Defendant’s Motion to Dismiss.