United States District Court, S.D. Texas, Houston Division.
CHARLES OTIS HERRING, et al., Plaintiffs.
RENEWABLE ENERGY SYSTEMS AMERICAS, INC., et al., Defendants.
CIVIL ACTION NO. 4:21-cv-00260
MEMORANDUM AND RECOMMENDATION/ORDER
ANDREW M. EDISON UNITED STATES MAGISTRATE JUDGE
*1 Pending before me are a number of outstanding motions. PeopleReady, Inc. (“PeopleReady”) and Renewable Energy Systems Americas, Inc. (“RES”) (collectively, “Defendants”) have each filed a motion for summary judgment. Dkts. 56, 58. Plaintiff Charles Otis Herring (“Herring”) has filed a motion to strike summary judgment evidence (Dkt. 60), a request to supplant a witness affidavit (Dkt. 67), and a motion for leave to file a new response to the summary judgment motions (Dkt. 70). RES moves to strike and objects to certain summary judgment evidence submitted by Herring (Dkt. 64), and both defendants move to strike Herring’s sur-replies to their summary judgment motions (Dkts. 72–73).
PeopleReady is a temporary employment service. RES is a renewable energy company. PeopleReady and RES entered a temporary staffing agreement whereby PeopleReady would provide contract workers for construction of an RES solar farm. In September 2019, Herring, a black man, started work at this solar farm. Herring was initially assigned to the Tracking Crew’s Elevation Team, where he and his fellow workers ensured that the torque tube assemblies were properly aligned and raised. When PeopleReady employee Justin Thompson (“Thompson”) referred to Herring as an “old nigger,” Herring complained to RES field supervisor Pat Gallardo (“Gallardo”)1 and PeopleReady liaison officer Mo Avalos (“Avalos”). Dkt. 59-3 at 10. He was subsequently reassigned to work on the motor mount crew. In this new role, Herring was required to assist in lifting heavy steel tubes. On October 17, 2019, one of the steel tubes that Herring was attempting to lift fell on his shoulders, resulting in serious personal injuries. This lawsuit followed.
Herring and his wife, Pamela Gary Herring (“Ms. Herring”), representing themselves pro se, originally filed this lawsuit against RES and PeopleReady in Texas state district court. Plaintiffs’ Original Petition asserts negligence and gross negligence causes of action arising out of the injury that Herring sustained while working at the solar farm.
RES timely removed this case to federal court on the basis of diversity jurisdiction. I later allowed Plaintiffs to file a Supplemental Complaint, adding a claim for racial discrimination under 42 U.S.C. § 1981. Defendants moved to dismiss the § 1981 claim, and I recommended that Defendants’ motions be granted in part and denied in part. In particular, I held that Ms. Herring’s § 1981 claim should be dismissed, and that Herring’s § 1981 claim survive the pleading stage. Defendants now move for summary judgment on all of Plaintiffs’ claims. Before I reach the merits though, I must address a host of evidentiary and briefing issues to determine what I will consider in analyzing Defendants’ summary judgment motions.
A. HERRING’S MOTION TO STRIKE SUMMARY JUDGMENT EVIDENCE (DKT. 60)
*2 Herring moves to strike summary judgment evidence that addresses “previous litigation efforts” by Herring in this district. Dkt. 60 at 2. RES first argues that “[i]t is unclear what specific evidence Plaintiffs seeks to strike, as the same is not specifically identified in Plaintiffs’ Motion.” Dkt. 65 at 1. RES knows good and well the evidence to which Herring is referring because RES goes on to discuss said evidence throughout its response. See id. at 2 (discussing Dkt. 58 at 26 n.105, Dkt. 58-9). RES also highlights that “the facts cited in Note 105 are the same as those referenced in [PeopleReady’s] Motion for Summary Judgment ... to which [Herring has] lodged no objection,” and that “the evidence presumably referred to by [Herring] will still be before the Court for consideration.” Id. But Herring has objected to this evidence, and quite thoroughly. See Dkt. 83 at 10–11. (objecting to PeopleReady’s exhibits D and I “on the grounds that they are not relevant” and “the prejudicial impact of their inclusion outweighs any probative value which they could ever possess”). I agree with Herring.
RES and PeopleReady do not seek to present evidence of Herring’s other litigation efforts for permissible reasons, such as establishing issue or claim preclusion. Even if such evidence were permissible, it would, at best, be evidence for the trier of fact to weigh in assessing Herring’s credibility. But in no way does Herring’s familiarity with the litigation process or his prior claims in other cases demonstrate that Defendants are entitled to judgment as a matter of law at the summary judgment stage of this litigation. Accordingly, evidence of Herring’s familiarity with the litigation process and proceedings in other cases he has instituted are wholly irrelevant to the merits of Defendants’ summary judgment motions in this case. Thus, Herring’s motion to strike (Dkt. 60) is GRANTED.
B. RES’S MOTION TO STRIKE SUMMARY JUDGMENT EVIDENCE (DKT. 64)
1. Declaration of Jaylon Tolbert
In support of his response to RES’s motion for summary judgment, Herring filed a witness declaration by Jaylon Tolbert (“Tolbert”). See Dkt. 59-3 at 12–13. In the declaration, Tolbert swears under penalty of perjury that he was employed at the solar farm where Herring was injured from “September 2019 through December 2020” and “witnessed when [Herring] was injured” on October 17, 2019. Id. at 12. RES moves to strike this declaration as fraudulent. See Dkt. 64 at 4–7. In doing so, RES has conclusively demonstrated that Tolbert did not begin work at the solar farm where Herring was injured until December 2019, nearly two months after Herring’s injury. See Dkt. 66-1 at 6. Given this timeline, Herring now admits that “Mr. Tolbert did not have personal knowledge of the facts to which he attests.” Dkt. 74 at 1. Herring requests “to opportunely withdraw Mr. Tolbert’s prior declaration.” Id. I understand Herring’s desire for Tolbert’s declaration to be “nullified” (Dkt. 67 at 2), but I cannot and will not overlook perjury. See Dickinson v. Wainwright, 626 F.2d 1184, 1186 (5th Cir. Unit B 1980) (“One who subscribes to a false statement under penalty of perjury pursuant to [28 U.S.C. § 1746] may be charged with perjury under [18 U.S.C. § 1621], just as if the statement were made under oath.”). Accordingly, RES’s motion to strike the perjurious declaration of Jaylon Tolbert (Dkt. 64) is GRANTED.
2. Herring’s Affidavit
Herring swore out an affidavit in support of his response in opposition to RES’s motion for summary judgment. See Dkt. 59-3 at 10–11. RES moves to strike portions of this affidavit, arguing that it “includes conclusory statements, legal and medical conclusions, speculation and hearsay.” Dkt. 64 at 2.
“An affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.” FED. R. CIV. P. 56(c)(4). “The substance of an affidavit must demonstrate the affiant has personal knowledge of the facts contained therein.” Wojciechowski v. Nat’l Oilwell Varco, L.P., 763 F. Supp. 2d 832, 846 (S.D. Tex. 2011). “[C]onclusory assertions cannot be used in an affidavit on summary judgment.” Salas v. Carpenter, 980 F.2d 299, 305 (5th Cir. 1992). “If the affidavit fails to meet any of the procedural requirements, a motion to strike that sets forth specific objections is the proper method for the opposing party to challenge the affidavit.” Wojciechowski, 763 F. Supp. 2d at 846. “The rule is settled that on a motion for summary judgment a court will disregard only the inadmissible portions of a challenged affidavit offered in support of or opposition to the motion and will consider the admissible portions in determining whether to grant or deny the motion.” Lee v. Nat’l Life Assurance Co. of Can., 632 F.2d 524, 529 (5th Cir. 1980).
*3 The following table summarizes my rulings on each of the statements in Herring’s affidavit that RES challenges:
CHALLENGED STATEMENT ¶3 – “I was injured as a result of the gross negligence of Defendant People Ready, Inc. while working at the WAGYU Solar Installation Facility in Damon, Texas on October 17, 2019.” ¶4 – “I maintain that were it not for the discriminatory policies, practices, and procedures of Defendant People Ready’s employees, I would not have suffered my injuries which consisted of a ruptured inguinal column, and a herniated bladder.” ¶4 “As a direct result of this injury, I have suffered additional hernia which derived from the initial injury. As a result thereon, I shall endure long-term disability, pain, discomfort, loss of sexual function, and loss of consortium as it relates to my injuries[.]” ¶5 – “I allege that were it not for the discriminatory policies, practices, and procedures of Defendant People Ready, Inc.’s employees, which allowed a white supervisor named Justin Thompson to harass, intimidate, belittle and to refer to me as an ‘old nigger’, I would have continued to work for said company.” ¶5 - “Furthermore, I was assigned a more dangerous position working on the motor mount crew when I complained to RES field supervisor Pat [Gallardo] and People Ready liaison officer Mo Avalos about my supervisor.” ¶5 – “I allege that no corrective action was taken to address Justin Thompson’s harassment, but rather, I was placed on a more dangerous work assignment, given a daily quota of eighty-five (85) units to install, or required to meet, and was not given the requisite personal protective equipment in which to work this more dangerous position.” ¶6 – “I allege that when I attempted to report the fact that I was being required to lift more than I had previously agreed to, during the orientation process, the liaison officer for People Ready, Mo Avalos stated that he would call corporate office to report the matter. No corrective measures were ever taken.” ¶7 – “I maintain that I have several witnesses who may attest to the strenuous working conditions on the job, and the highly discriminatory practices utilized by Defendant RES Americas, Inc. in terms of determining which employees received less physically demanding work, or promotion consideration versus which ones were fired for feigned violations of policy.” ¶8 – “I allege that the determination made by Defendant’s own expert witness, Dr. Michael Dooer, indicated that my secondary hernia were [sic] derivative of my initial injuries and that I should have only been released to work with extensive limitations imposed upon my work detail.” ¶10 – “I maintain that I shall suffer long-term disability as it relates to this matter.” RULING SUSTAINED. This is an impermissible conclusory assertion. See Salas, 980 F.2d at 305. SUSTAINED. This is an impermissible conclusory assertion. See id. SUSTAINED. This is an impermissible conclusory assertion. See id. Additionally, Herring is not qualified as a medical expert. See FED. R. EVID. 702. SUSTAINED as to the impermissible conclusory assertion that Herring would have continued his employment but for PeopleReady’s actions. See Salas, 980 F.2d at 305. OVERRULED to the extent Herring states that Thompson referred to him as an “old nigger” and that Herring perceived that language as harassing, intimidating, or belittling—such facts are clearly within Herring’s personal knowledge.2 SUSTAINED as to the impermissible conclusory assertion that Herring’s assignment to the motor mount crew was a result of his complaining to Gallardo and Avalos. See Salas, 980 F.2d at 305. OVERRULED to the extent Herring is stating that he complained to Gallardo and Avalos about Thompson’s conduct. Such facts are clearly within Herring’s personal knowledge. SUSTAINED to the extent Herring claims that no corrective action was taken to address Thompson’s harassment, because the affidavit does not demonstrate how Herring has personal knowledge of such a fact. See Wojciechowski, 763 F. Supp. 2d at 846. OVERRULED to the extent Herring is stating his daily quota and lack of personal protective equipment. Such facts are clearly within Herring’s personal knowledge. SUSTAINED to the extent Herring claims that no corrective measures were taken, because the affidavit does not demonstrate how Herring has personal knowledge of such a fact. See Wojciechowski, 763 F. Supp. 2d at 846. OVERRULED to the extent Herring is stating that Avalos told him he would “call corporate.” This testimony is clearly within Herring’s personal knowledge. SUSTAINED. See infra at 17. SUSTAINED. This is an impermissible conclusory assertion. See Salas, 980 F.2d at 305. Additionally, Herring is not qualified as a medical expert. See FED. R. EVID. 702. SUSTAINED. This is an impermissible conclusory assertion. See Salas, 980 F.2d at 305. Additionally, Herring is not qualified as a medical expert. See FED. R. EVID. 702.
C. HERRING’S REQUEST TO SUPPLANT THE DECLARATION OF JAYLON TOLBERT (DKT. 67)
*4 Herring asks to supplant Tolbert’s perjurious declaration with a new one. See Dkt. 67; Dkt. 68-1 at 4–5. I need not address the laundry list of reasons that RES and PeopleReady provide in opposition to Herring’s request. The new declaration that Herring seeks to provide from Tolbert pertains exclusively to events that post-date Herring’s injury and his employment with PeopleReady and RES. The new declaration has nothing to do with Herring’s claims; it is simply irrelevant. Herring’s request to supplant Tolbert’s declaration (Dkt. 67) is DENIED.
D. HERRING’S MOTION FOR LEAVE TO AMEND (DKT. 70)
Herring has filed a Motion Seeking Leave to Amend His Original Answer to Defendant RES Americas, Inc.’s Motion for Summary Judgment. Dkt. 70. No amended answer or response was attached to this three-page document, but on the same day this motion was filed, the clerk’s office docketed an Amended Response in Opposition to Defendant People Ready Inc.’s Motion for Summary Judgment. See Dkt. 71. I recently informed the parties that “I assume that the title of Herring’s motion (see Dkt. 70) is a typo because his amended response is clearly directed toward PeopleReady, not RES.” Dkt. 84 at 1. I gave Herring the opportunity to correct this assumption and he did not. RES and PeopleReady both advance valid arguments as to why no amended response or sur-reply should be permitted. Nevertheless, I will permit Herring to advance these arguments so he can be assured that this matter has been decided on the merits. Accordingly, Herring’s request to amend his response to PeopleReady’s motion for summary judgment (Dkt. 70) is GRANTED.
E. DEFENDANTS’ MOTIONS TO STRIKE HERRING’S SUR-REPLIES (DKTS. 72, 73)
Defendants move to strike Herring’s sur-replies to their motions for summary judgment. It is true that sur-replies are heavily disfavored, including by me. But at this point in the litigation, it hopefully comes as a surprise to no one that I like to decide the issues on their merits. For the reasons I discuss below, Defendants are entitled to summary judgment on Plaintiffs’ negligence and gross negligence claims even if I consider Herring’s sur-replies and the evidence attached to those sur-replies.3 Accordingly, Defendants’ motions to strike Herring’s sur-replies (Dkts. 72, 73) are DENIED.
F. HERRING’S REMAINING EVIDENTIARY OBJECTIONS
I must address one final matter before turning to the merits of this case. Herring lodges a blanket objection against all of RES’s exhibits because RES’s motion for summary judgment “does not contain a proper Appendix, with page numbers, exhibit numbers, or alphabetized designations of each exhibit so that they may be located or identified within the record as required by Rule 7(B)(3) of the local rules of this court.” Dkt. 59 at 6. As to PeopleReady, Herring objects that “there are no page numbers listed on the right hand tab” of PeopleReady’s appendix. Dkt. 83 at 10. These are not valid evidentiary objections. They are simply procedural “gotchas.” Herring has benefitted greatly from my refusal to “play procedural ‘gotchas’ ” in this litigation. Dkt. 44 at 1 n.1. He should not expect me to start now. Even if the failure to comply with a local filing rule were a valid basis to discount a party’s summary judgment evidence—and to be clear, it is not—it still would not matter because RES and Herring substantially complied with this court’s local rules. RES provided a table of contents for its exhibits in Section V to its motion for summary judgment. See Dkt. 58 at 7–8. Moreover, the rule that Herring cites regarding tabbing appendices to the right applies only to “courtesy copies of appendices or those filed conventionally (i.e. not electronically).” Dkt. 83 at 16 (emphasis added). Both RES and PeopleReady filed electronically, so this rule does not apply to them. Accordingly, Herring’s blanket procedural objections to the entirety of RES and PeopleReady’s summary judgment exhibits are OVERRULED.
MOTIONS FOR SUMMARY JUDGMENT
A. SUMMARY JUDGMENT STANDARD
*5 “The court shall grant summary judgment if 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.” FED. R. CIV. P. 56(a). Facts are material when they “might affect the outcome of the suit,” and disputes are genuine “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). Defendants initially bear the burden of demonstrating that there is no genuine dispute of material fact, and they carry that burden if they can demonstrate that Plaintiffs have failed to prove “an essential element of [their] case.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If Defendants meet their burden, Plaintiffs “must point to specific facts showing that there is a genuine dispute for trial.” Owens v. Circassia Pharm., Inc., 33 F.4th 814, 824 (5th Cir. 2022) (quotation omitted). I construe all the evidence and make all reasonable inferences in the light most favorable to Herring. See Scott v. Harris, 550 U.S. 372, 378 (2007).
B. PLAINTIFFS’ NEGLIGENCE AND GROSS NEGLIGENCE CLAIMS
Defendants argue that Plaintiffs’ negligence and gross negligence claims against them are barred by the exclusive remedy provision of the Texas Workers’ Compensation Act (“TWCA”). That provision states that “[r]ecovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage.” TEX. LABOR CODE ANN. § 408.001(a). The TWCA further provides that “if a temporary employment service elects to obtain workers’ compensation insurance, the client of the temporary employment service and the temporary employment service are subject to Section[ ] ... 408.001.” Id. § 93.004(b). It is undisputed that PeopleReady is a temporary employment service; that RES was its client; that PeopleReady elected to carry workers’ compensation insurance coverage; and that Herring sought and received benefits under that insurance. Accordingly, both PeopleReady and RES are entitled to assert the exclusive remedy provision as a bar to Herring’s claims. That ought to be the end of the discussion. Nevertheless, Herring advances a number of arguments as to why he believes PeopleReady and RES are not entitled to the exclusive remedy.
First, Herring argues that Defendants are not entitled to the exclusive remedy because PeopleReady’s “Insurance Carrier did not comply with the provisions of the TWCA.” Dkt. 83 at 7. I will assume for the sake of argument that this is true, but it has no bearing on whether Defendants are entitled to the exclusive remedy. PeopleReady’s insurance carrier is not a party to this case, and this is not an appeal pursuant to the TWCA’s dispute resolution process. All that matters for the purpose of determining whether Defendants are entitled to the exclusive remedy is whether Herring was “covered by workers’ compensation insurance coverage.” TEX. LABOR CODE ANN. § 408.001(a). Herring cannot dispute that he was covered by workers’ compensation insurance because he admits that he “receive[d] workers’ compensation benefits.” Dkt. 58-7 at 152; see Martinez v. Bally’s La., Inc., 244 F.3d 474, 476 (5th Cir. 2001) (“A judicial admission is a formal concession in the pleadings or stipulations by a party or counsel that is binding on the party making them.”).
Nevertheless, in his amended summary judgment response, Herring argues that PeopleReady “has presented no evidence to demonstrate that it had purchased Workmen’s Compensation Insurance independently, but was relying upon its relationship with TrueBlue Inc. as the subsidiary of the [arguably] insured company True Blue.” Dkt. 71 at 6 (alteration in original). This argument fails for several reasons, but I will start with the most obvious: by its plain language, the TWCA requires only that PeopleReady “maintain[ed] a policy of workers’ compensation insurance,” not that it purchased workers’ compensation insurance. TEX. LABOR CODE ANN. § 93.004(a). The declaration of Sylvia Rey Flores, a Senior Resolution Manager for Gallagher Bassett, Inc., establishes that PeopleReady is an additional named insured on Policy No. WC 014-64-9290, which “provided workers’ compensation and employer’s liability coverage” in Texas during the time of Herring’s injury. Dkt. 57-2 at 2. This affidavit is “sufficient evidence ... to demonstrate subscriber status under the Act.” Warnke v. Nabors Drilling USA, L.P., 358 S.W.3d 338, 344 (Tex. App.—Houston [1st Dist.] 2011, no pet.). That PeopleReady maintained workers’ compensation insurance as an additional named insured on a policy that its parent company purchased, rather than purchasing the insurance itself, does not change the fact that PeopleReady maintained workers’ compensation insurance and that Herring was covered by that insurance, which is all the exclusive remedy provision requires. Moreover, Herring “does not contest [PeopleReady’s] recitations regarding ... [its] enrollment in Workers Comp. insurance.” Dkt. 83 at 17. Accordingly, there is no genuine dispute that PeopleReady maintained workers’ compensation insurance; that Herring received the benefits of that insurance because he was covered by it; and that PeopleReady—and RES, as PeopleReady’s client—are entitled to the exclusive remedy.
*6 Herring next argues that because he was a temporary worker, the exclusive remedy extended to professional employer organizations who obtain workers’ compensation coverage does not apply. See Dkt. 71 at 6 (citing TEX. LABOR CODE ANN. § 91.001(14)). Herring is correct that temporary workers are excluded from the definition of “professional employers services” under Chapter 91 of the Texas Labor Code (the “Professional Employer Organizations Act”). And Herring is also correct that the exclusive remedy is not available to a professional employer service or its client when the employee is a temporary worker. But none of these arguments are relevant to this dispute. As Herring himself has admitted, he “was a temporary worker.” Id. Temporary workers fall under Chapter 93 of the Texas Labor Code, not Chapter 91. Under Chapter 93, when a temporary employment service like PeopleReady “elects to obtain workers’ compensation insurance, the client of the temporary employment service and the temporary employment service are subject to Section[ ] 408.001.” TEX. LABOR CODE ANN. § 93.004(b). As we have already established, PeopleReady obtained workers’ compensation insurance.
Thirdly, Herring argues that the exclusive remedy does not apply to PeopleReady because his claims are subject to the intentional injury exception. See Dkt. 83 at 7. PeopleReady counters that Herring has not raised a claim of intentional injury before and cannot do so for the first time in his response to a motion for summary judgment. It is true that Herring did not raise a claim of intentional injury in either his Original Petition or his Supplemental Complaint. It is also true that “[a] claim which is not raised in the complaint but, rather, is raised only in response to a motion for summary judgment is not properly before the court.” Cutrera v. Bd. of Supervisors of La. State Univ., 429 F.3d 108, 113 (5th Cir. 2005). These two points dispose of Herring’s argument. But I will go one step further and explain why, even if Herring could raise an intentional injury claim at this late juncture in the case, he has not done so.4
The Texas Supreme Court has held “that the intentional failure to furnish a safe place to work does not rise to the level of intentional injury except when the employer believes his conduct is substantially certain to cause the injury.” Reed Tool Co. v. Copelin, 689 S.W.2d 404, 407 (Tex. 1985). Herring has not alleged intentional conduct under this standard. Herring complains about the behavior of Gallardo, Avalos, and Thompson. But none of these men were the ones lifting the steel tube with Herring when he was injured. Herring was working with “his two normal co-workers named Charles Felder [(“Felder”)], and Roy Sandoval [(“Sandoval”)].” Dkt. 36 at 6. Yet, Herring makes no allegations that there was a specific known risk to him that did not apply to Felder or Sandoval. Nor does Herring allege that either Felder or Sandoval intentionally caused or contributed to his injury. This is important because Herring was lifting the tube with Felder.
The Texas Supreme Court has held “that for the intentional-tort exception to the exclusive remedy to apply, the employer must believe that its actions are substantially certain to result in a particular injury to a particular employee, not merely highly likely to increase overall risks to employees in the workplace.” Mo-Vac Serv. Co., Inc. v. Escobedo, 603 S.W.3d 119, 130 (Tex. 2020). Herring does not explain why PeopleReady should have believed that Herring, and only Herring, would be injured when Herring acknowledges that another worker of his same “stature” was lifting the tube with him. Dkt. 36 at 6. Moreover, Herring asserts that at least one worker could “deadlift a torque tube shaft by himself,” undercutting his argument that the work was inherently dangerous. Id. at 5. Herring simply has not alleged facts suggesting that PeopleReady believed that Herring’s transfer to the motor mount crew was “substantially certain” to result in his injuries.
*7 Lastly, Herring asks whether § 401.022 of the TWCA creates an exception to the exclusive remedy provision. It does not. Section 401.022 provides that the TWCA “may not be applied to discriminate because of race, sex, national origin, or religion.” TEX. LABOR CODE ANN. § 401.022(a). By its plain language, Section 401.022 has no impact on the exclusive remedy provision. Herring has not cited any legal authority suggesting otherwise, and I have not been able to locate any. Furthermore, reading the provision in full assures me that this statutory provision is meant to prohibit discrimination in the evaluation of workers’ compensation claims. See id. § 401.022(b) (“This section does not prohibit consideration of an anatomical difference in application of the impairment guidelines under Chapter 408 in rating an injury or a disease such as, but not limited to, breast cancer or an inguinal hernia. If an impairment rating assigns different values to the same injury for males and females, the higher value shall be applied.”). For all these reasons, Plaintiffs’ negligence and gross negligence claims are barred by the exclusive remedy provision of the TWCA.
C. HERRING’S § 1981 CLAIM
To establish a claim for relief under § 1981, Herring must “show that (1) he is a member of a racial minority; (2) the defendant[s] had an intent to discriminate on the basis of race; and (3) the discrimination concerned one or more of the activities enumerated in the statute, such as the making and enforcing of a contract.” See Perry v. VHS San Antonio Partners, L.L.C., 990 F.3d 918, 931 (5th Cir. 2021). Defendants do not dispute that Herring is a member of a racial minority or that the alleged discrimination concerns an enumerated activity. Rather, Defendants contend that Herring cannot establish the second element—an intent to discriminate. There are three possible claims under § 1981: discrimination, retaliation, and hostile work environment. See West v. Honeywell Int’l Inc., 558 F. Supp. 3d 369, 377–83 (S.D. Tex. 2021) (addressing all three types of claims under § 1981). Before I analyze whether Herring can establish discriminatory intent through any of these avenues, however, I must address a procedural matter.
PeopleReady argues that I have “observed” that “Herring’s potentially colorable allegations of intentional discrimination concern retaliation.” Dkt. 56 at 18. Not so. My Memorandum and Recommendation on Defendants’ Motions to Dismiss never mentions the word “retaliation.” See Dkt. 44. Nor does it mention the phrase “hostile work environment.” See id. By PeopleReady’s logic, Herring “did not cognizably plead [a hostile work environment]” any more than he pleaded retaliation. Dkt. 61 at 25. Admittedly, Herring “does not do a great job explaining the conduct allegedly demonstrating a discriminatory intent.” Dkt. 44 at 6. What matters, though, is that Herring has clearly stated a claim for relief under § 1981. If that claim is to survive summary judgment, Herring must establish that each defendant “had an intent to discriminate on the basis of race.” Perry, 990 F.3d at 931. There are a number of ways that Herring can establish discriminatory intent, and Defendants are wise to have addressed each of them in their motions for summary judgment. I will now consider each in turn.
1. Herring Cannot Establish Discrimination or Retaliation Because He Did Not Suffer an Adverse Employment Action.
To establish a claim of discrimination under § 1981, Herring must demonstrate that: (1) he “is a member of a protected class”; (2) he “was otherwise qualified for the position”; (3) he “suffered an adverse employment action”; and (4) “the action took place under conditions establishing an inference of discrimination.” Matthews v. Int’l House of Pancakes, Inc., 597 F. Supp. 2d 663, 675 (E.D. La. 2009). To establish a claim of retaliation under § 1981, Herring must prove that: (1) “he engaged in a protected activity”; (2) he suffered an adverse employment action; and (3) “a causal link exists between the protected activity and the adverse employment action.” Wantou v. Wal-Mart Stores Tex., L.L.C., 23 F.4th 422, 436–37 (5th Cir. 2022). Both Defendants argue that Herring cannot establish discrimination or retaliation because he did not suffer an adverse employment action.
*8 An adverse employment action is one that affects “job duties, compensation, or benefits.” Rahman v. Exxon Mobil Corp., 56 F.4th 1041, 1046 (5th Cir. 2023) (quotation omitted). Herring claims that his transfer from the tracking crew to the motor mount crew constituted an adverse employment action. See Dkt. 59-3 at 10 (“Furthermore, I was assigned a more dangerous position working on the motor mount crew when I complained [about Justin Thompson’s actions].”). I will assume, without deciding, that transfer to a more dangerous position may constitute an adverse employment action. But even so, Herring has not pointed to any evidence demonstrating that work on the motor mount crew was actually more dangerous than work on the tracking crew.
Simply saying that the position was “more dangerous” is not sufficient. See King v. Dogan, 31 F.3d 344, 346 (5th Cir. 1994) (“[T]he plaintiff cannot rest on his allegations to get to a jury without any significant probative evidence tending to support the complaint.” (quotations omitted)). Nor is it sufficient for Herring to say that he “was not given the requisite personal protective equipment in which to work this more dangerous position.” Dkt. 59-3 at 11. Herring does not specify what equipment he was not provided and why that equipment was required. In his Supplemental Complaint, Herring states that he was not given “a hernia belt, or any type of hydraulic lift equipment to assist him in lifting.” Dkt. 36 at 6. But this is not competent summary judgment evidence because the Supplemental Complaint is unverified. See Dogan, 31 F.3d at 346 (“[B]ecause [the complaint] is unverified, it does not constitute competent summary judgment evidence.”). Even if it were competent summary judgment evidence, Herring does not offer evidence showing why or whether a hernia belt or hydraulic lift equipment is actually required; nor does Herring offer evidence that such equipment was regularly provided to other employees but not to him. Without more, Herring has not offered enough evidence to establish that his transfer to the motor mount crew was an adverse employment action.
In his affidavit, Herring states:
I maintain that I have several witness[es] who may attest to the strenuous working conditions on the job, and the highly discriminatory practices utilized by Defendant RES Americas, Inc. in terms of determining which employees received less physically demanding work, or promotion consideration versus which ones were fired for feigned violations of policy.
I aver that the reason that I have not obtained witness affidavits from my witnesses is due to the fact that Defendants had requested the opportunity to depose my witnesses, and I did not want to interfere with their discovery.
Dkt. 59-3 at 11. Discovery is, literally, the time to discover evidence—to disclose witnesses and obtain affidavits or deposition testimony from them. This is why Rule 26 requires initial disclosures. See FED. R. CIV. P. 26(a)(1). On summary judgment, “[a] party asserting that a fact cannot be or is genuinely disputed must support the assertion by: citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations ..., admissions, interrogatory answers, or other materials.” See id. Rule 56(c)(1). Accordingly, Herring’s sworn statement that he has witnesses to support his claims is simply insufficient at summary judgment. Accordingly, Herring cannot establish the discriminatory intent required to prevail on a § 1981 claim through either discrimination or retaliation.
2. There Is a Genuine Issue of Material Fact Concerning Herring’s Hostile Work Environment Claim.
*9 To survive summary judgment on a hostile work environment claim under § 1981, Herring must show that “(1) he is a member of a protected class; (2) he suffered unwelcomed harassment; (3) the harassment was based on his membership in a protected class; (4) the harassment affected a term, condition, or privilege of employment; and (5) the employer knew or should have known about the harassment and failed to take prompt remedial action.” Wantou, 23 F.4th at 433 (quotation omitted). Defendants contest only the fourth and fifth elements.
(a) There is a genuine issue of material fact that the harassment Herring suffered affected a term, condition, or privilege of employment (Element 4).
Regarding the fourth element of a hostile work environment claim under § 1981, the Fifth Circuit has instructed:
Harassment affects a term, condition, or privilege of employment if it is sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment. Workplace conduct is not measured in isolation. In order to deem a work environment sufficiently hostile, all of the circumstances must be taken into consideration. This includes the frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee’s work performance. To be actionable, the work environment must be both objectively and subjectively offensive, one that a reasonable person would find hostile or abusive, and one that the victim in fact did perceive to be so. Hernandez v. Yellow Transp., Inc., 670 F.3d 644, 651 (5th Cir. 2012) (cleaned up).
Herring testified that Justin Thompson, “the lead worker that they had assigned over [Herring’s] crew was calling [Herring] a nigger.” Dkt. 58-7 at 138; see also id. (Herring testified that Thompson “was referring to [Herring] as an old nigger. That old nigger. Come here, old nigger.”). Herring testified that he found this language offensive whether it was being uttered by Thompson or “some of the young Black workers.” Id. at 177; see also id. at 67 (“And if you don’t think that a supervisor referring [to] you as a nigger openly to your face and nothing being done about it is discriminatory, then I submit to you then, sir, that you might want to examine your own makeup.”); id. at 138 (“It’s not funny. It’s not nothing to play about. I’m not going to ever allow you to use that type of language towards me.”); id. at 140 (testifying that Thompson’s language was “diminishing [Herring’s] self-worth” and “making [Herring] feel inferior or making [Herring] feel somehow compromised when [Herring] was working out there”).6 Herring testified that “when [Thompson] began to address [Herring] in that manner and refer to [him] as ... an old nigger,” Herring said: “Stop it. Don’t use that type of language towards me. It’s not okay.” Id. at 177–78. Herring testified that Thompson “was unrelenting with it.” Id. at 178. Herring also testified that even after he “no longer worked for [Thompson],” that Thompson “still came over there while I was working and still harassed me. He would make me leave what I was assigned to do, and I didn’t have any recourse.” Id. at 139. Construing this testimony in the light most favorable to Herring, I find sufficient evidence to raise a fact issue as to whether the harassment complained of affected a term, condition, or privilege of employment. The cases that Defendants cite in support of a contrary holding are all unavailing.
*10 In support of its argument that Thompson’s slurs did not affect Herring’s employment, PeopleReady cites to Mendoza v. Helicopter, 548 F. App’x 127 (5th Cir. 2013), an unpublished and non-precedential opinion that is silent as to the race-based comments at issue. In Mendoza, the court found no hostile work environment where “the complained of conduct occurred sporadically over a several year period” and could “not accurately be described as pervasive.” Id. at 129. PeopleReady also cites to Anderson v. Sikorsky Support Servs., 66 F. Supp. 3d 863 (S.D. Tex. 2014), in which the court found no hostile work environment where plaintiff alleged being called “the ‘N’ word” one time by a co-worker in April 2011, while the other three quarters of the complained-of conduct was “not directed at Plaintiff.” Id. at 874. Similarly, in Frazier v. Sabine River Auth. La., 509 F. App’x 370 (5th Cir. 2013)—a case cited by RES—the Fifth Circuit found that because the conduct at issue was not directed toward the plaintiff, there was no hostile work environment. See id. at 371–72. Here, Herring’s testimony is admittedly silent as to the frequency of Thompson’s conduct, but Herring’s employment with Defendants lasted only a few months, and Herring has testified that that Thompson “was unrelenting,” seeking Herring out even after Herring no longer worked for Thompson. This is certainly more pervasive than the nondescript, sporadic conduct discussed in Mendoza, the isolated single remark described in Anderson, or the secondhand harassment observed in Frazier.
In reading their motions for summary judgment, I fear that both defendants have conflated the fourth and fifth elements of a hostile work environment claim. Recall that the fourth element requires Herring to show that “the harassment affected a term, condition, or privilege of employment,” while the fifth element requires Herring to show that “the employer knew or should have known about the harassment and failed to take prompt remedial action.” Wantou, 23 F.4th at 433 (quotation omitted). For example, PeopleReady argues that “[Herring] does not allege that Mr. Avalos committed any act of harassment, let alone an act sufficient to impute an intent to discriminate on the basis of race.” Dkt. 56 at 19. Similarly, RES argues that “Herring’s conclusory allegations that [Gallardo] assigned him to the Motor Mount Crew for complaining about racial harassment are insufficient to establish a prima facie case of hostile work environment under Section 1981.” Dkt. 58 at 18 (cleaned up). But Herring does not have to allege that Avalos discriminated against him or that Gallardo retaliated against him. Herring has testified that he was subjected to offensive, unrelenting, and humiliating harassment by Thompson—a PeopleReady employee working with Herring for RES at an RES work site—and that this conduct continued even after Herring told Thompson to stop. That testimony is sufficient to create a genuine dispute of material fact regarding whether Thompson’s conduct affected a term or condition of Herring’s employment. What Avalos or Gallardo did or did not do upon learning of Thompson’s conduct speaks to the fifth element—Defendants’ knowledge and subsequent action (or lack thereof).
(b) There is a genuine issue of material fact concerning whether Defendants knew or should have known of Thompson’s harassment and failed to take prompt remedial action (Element 5).
(1) People Ready
“An employer can be put on notice of harassment, and therefore be required to take remedial action, if a person within the organization who has the authority to address the harassment problem or an affirmative duty to report harassment learns of the harassment in question.” Abbt v. City of Houston, 28 F.4th 601, 607 (5th Cir. 2022). By his own admission, Avalos was “PeopleReady’s senior representative on the Wagyu Project” who had the responsibility to “investigate [a complaint involving protected rights] and document it with statements from the complaining employee and witnesses before referring the issue for action.” Dkt. 57-1 at 3, 5. PeopleReady does not seriously contest that Herring’s testimony—that he reported Thompson’s harassment to Avalos—is sufficient to establish that PeopleReady knew or should have known of Thompson’s harassment.7 Rather, PeopleReady contends that “Herring cannot establish that PeopleReady failed to take prompt remedial action” because Herring “complained to PeopleReady, [then] complained to RES before PeopleReady had the opportunity to investigate the issue (resulting in alleged remedial action by RES), and never advised PeopleReady of an issue with the alleged corrective measures.” Dkt. 56 at 22–23.
*11 Tellingly, PeopleReady cites no case law for the proposition that where a temporary employee complains to one of his temporary employment service’s on-site representatives, and then later to a foreman at the company to whose worksite he has been assigned, that the subsequent complaint relieves the temporary employment service from investigating the employee’s complaint or taking any further action. Even if RES’s allegedly remedial action—saying nothing to Thompson and simply transferring Herring to a different crew where Thompson continued to contact Herring—was sufficient, I could hardly impute that action to PeopleReady. PeopleReady offers no evidence whatsoever that it did anything to investigate Herring’s complaint, much less assess the efficacy of RES’s allegedly remedial action. Of course, the reason PeopleReady offers no such evidence is because PeopleReady maintains that Herring never complained to Avalos, so PeopleReady was never on notice. But Herring and Avalos each offer conflicting testimony on this point. Accordingly, I find Herring’s testimony sufficient to create a genuine dispute of material fact regarding whether PeopleReady knew or should have known of Thompson’s harassment.8
Interestingly, RES disclaims both knowledge and failure to take prompt remedial action. RES does not dispute that Herring reported Thompson’s harassment to Gallardo. Rather, RES contends that “foremen, including [Gallardo] are craft employees and are not considered RES management.” Dkt. 58 at 20. Yet, RES next contends that because “[Gallardo] removed [Herring] from under [Thompson]’s supervision and placed him in the Motor Mount Crew to avoid an escalation in conflict ... it is implausible to argue that RES failed to take proper remedial action.” Id. at 21. RES cannot disclaim in one breath that Herring’s report to Gallardo was insufficient to put RES on notice, and then, in the very next breath, claim that Gallardo’s actions following Herring’s report constituted prompt remedial action. If Gallardo had “authority to address the harassment problem,” then Herring’s report to Gallardo was sufficient to put RES on notice of the harassment. See Abbt, 28 F.4th at 607 (quotation omitted). Moreover, whether Gallardo’s “remedial” action was sufficient is a genuinely disputed material fact in light of Herring’s testimony that even after Herring “no longer worked for [Thompson],” that “[Thompson] still harassed [Herring]” and “would make [Herring] leave what [Herring] was assigned to do.” Dkt. 58-7 at 139. For this reason alone, I find Herring’s testimony sufficient to establish a genuine dispute of material fact regarding whether RES knew or should have known of Thompson’s harassment and failed to take prompt remedial action.9 Alas, there are other disputed issues.
RES makes much ado of its contention that “Herring did not make any formal complaint to RES management about discrimination or take advantage of the resources made available to him by RES to report such discrimination, including reporting the alleged racial harassment via the confidential hotline provided by RES.” Dkt. 58 at 20. In support, RES cites to “posters around [the] jobsite” attached to the affidavit of project manager Jeremy Teresinski (“Teresinski”). Id. nn.73–74. There are a couple of problems with these pieces of evidence. First, Herring has testified that “they didn’t give us no 1-800 number to call about no racial discrimination.” Dkt. 58-7 at 146. The conflict between this testimony and Teresinski’s affidavit regarding the jobsite posters creates a disputed fact. Second, while it is true that the posters provide a confidential hotline to call, the posters also say: “Or speak to your line manager.” Dkt. 58-6 at 1–4. Perhaps foremen and line managers are something different at RES, but in common parlance they are one in the same, and RES offers no evidence otherwise. Moreover, RES’s own evidence suggests that Gallardo was a line manager with authority to make decisions like transferring personnel upon receiving complaints on discrimination. Thus, whether Gallardo was a line manager to whom Herring should have brought his complaints of harassment in accordance with RES policy is also a disputed fact. For all these reasons, Herring’s § 1981 claim against RES should be resolved by the trier of fact.
*12 For the reasons discussed above, I issue the following orders:
• Herring’s motion to strike (Dkt. 60) is GRANTED;
• RES’s motion to strike the declaration of Jaylon Tolbert (Dkt. 64) is GRANTED;
• Herring’s request to supplant Tolbert’s declaration (Dkt. 67) is DENIED;
• Herring’s request to amend his response to PeopleReady’s motion for summary judgment (Dkt. 70) is GRANTED; and
• Defendants’ motions to strike Herring’s sur-replies (Dkts. 72–73) are DENIED.
Finally, I recommend that PeopleReady’s motion for summary judgment (Dkt. 56) and RES’s motion for summary judgment (Dkt. 58) be GRANTED as to Plaintiffs’ negligence and gross negligence claims, but DENIED as to Herring’s § 1981 claim.
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 11th day of July 2023.
RES states that the man identified by Herring as “Pat Guajardo” is actually named “Patrick Gallardo.” Dkt. 58 at 11–12.
RES contends—without citation to any legal authority—that “I allege” or “I maintain” statements are not statements of fact. See Dkt. 64 at 8–9. This is silly. Herring executed this affidavit under oath.
I do not consider the new Tolbert declaration because I deny Herring’s request to supplant Tolbert’s earlier, perjurious declaration.
For whatever reason, Herring does not advance this argument as to RES. But even if he did, the analysis would be the same and the claim would fail.
PeopleReady points to Herring’s deposition testimony that “unnamed minority co-workers ... apparently did not consider [“nigger”] offensive.” Dkt. 56 at 21. Thankfully, beyond this aside, neither Defendant seriously contests that “nigger” is both a subjectively and objectively offensive term. Needless to say, if they did, I would disagree with them.
PeopleReady highlights that Herring “could not have raised complaints on the date specified” in his interrogatory responses. Dkt. 56 at 22 n.60. But Herring’s response shows this date was only approximate. See Dkt. 57-5 at 5 (“Plaintiff conveyed to [Avalos] on or about September 15, 2019 that [Thompson] was harassing and berating Plaintiff, and frequently directing racial epithets toward him and many of the black employees while at work.” (emphasis added)). Herring’s sworn testimony that he reported Thompson’s harassment to Avalos—despite Avalos’s affidavit to the contrary—creates a genuine dispute of a material fact.
Because Herring’s testimony is sufficient, on its own, to survive summary judgment on his § 1981 claim against PeopleReady, I do not reach PeopleReady’s objections to the rest of Herring’s evidence. See Dkt. 61 at 11–15. These objections can be revisited at trial.
Because Herring’s testimony (via his deposition and the portions of his affidavit to which RES’s objections have been overruled) is sufficient, on its own, to survive summary judgment on his § 1981 claim against RES, I do not reach RES’s objections to the rest of Herring’s evidence. See Dkt. 64 at 10. These objections can be revisited at trial.
United States District Court, S.D. Texas, Houston Division.
LARRY WARD, Plaintiff,
BENTHIC USA LLC, et al., Defendants.
CIVIL ACTION NO. 4:22-CV-2974
MEMORANDUM AND RECOMMENDATION
Sam S. Sheldon United States Magistrate Judge
*1 Pending before the Court1 is Plaintiff’s Motion to Remand the case to the 125th Judicial District of Harris County, Texas. (Dkt. No. 16.) Based on a thorough review of the pleadings, motions, and relevant law, the Court RECOMMENDS Plaintiff’s Motion to Remand be DENIED.
Plaintiff Larry Ward (“Plaintiff”) filed this lawsuit in the 125th Judicial District of Harris County, Texas on March 16, 2021, making various allegations against Defendants Benthic USA LLC (“Benthic”) and Tammy Jenkins (“Jenkins”). On October 14, 2021, Plaintiff filed his First Amended Petition naming Zurich American Insurance Company (“Zurich”) as a Defendant for the first time. (Dkt. No. 2 at 27.) Zurich later filed a third-party petition against Acteon US Holdings, Inc (“Aceton”). On August 25, 2022, Plaintiff filed a Notice of Non-Suit as to Defendant Jenkins, the only non-diverse defendant. (Dkt. No. 1.)
In the Amended Petition, Plaintiff brought claims for negligence, gross negligence, breach of fiduciary duty, declaratory judgment, and violations of Texas Insurance Code stemming from his employment in Pemba, Mozambique with Benthic. (Dkt. No. 2 at 36–39.) Plaintiff alleges that while he was in Africa, he contracted a persistent urinary tract infection, and its inadequate treatment caused him to fall and lacerate his head. (Id. at 30 ¶¶ 11–21.) He then received contaminated blood in a blood transfusion and subsequently contracted a life altering disease. (Id.) Plaintiff asserted that Benthic failed to provide: a safe workplace; adequate medical treatment on and off site; evacuation and repatriation upon the onset of his illness; and rules prohibiting primitive medical treatment after contracting his illness. (Id.)
Plaintiff alleges that at the time of his sustained illness, Benthic failed to obtain workers’ compensation insurance between June 30, 2019, through June 29, 2020, as agreed to by the terms of his employment contract. (Id. at 29 ¶ 9.) Acteon, who acquired Benthic, renewed its workers’ compensation policies with Zurich for twelve of its subsidiaries on June 30, 2019, however, Benthic was not included in the policy as a named covered insured on the information page. (Id. at 29 ¶ 10.) Plaintiff asserts that, during this period, Benthic should be considered a non-subscriber to workers’ compensation insurance because at the time of his injury and the filing of his lawsuit Benthic was not named on Acteon’s subsidiary policy with Zurich. (Id. at 37–40 ¶¶ 31, 37–42.) On March 29, 2021, Zurich backdated Acteon’s subsidiary workers’ compensation policy to include coverage for Benthic. (Id. at 34 ¶ 22.)
On September 1, 2022, Zurich removed this case to this Court. (Dkt. No. 1.) Zurich asserts the Court has original jurisdiction based on a diversity of citizenship pursuant to 28 U.S.C. § 1332. (Dkt. No. 1 ¶ 5.) Plaintiff is an individual residing in, and a citizen of, Texas. (Id.) Zurich is a New York corporation with its principal place of business in Illinois. (Id.) Benthic is an LLC solely owned by Benthic Geotech Pty Ltd.2 Benthic Geotech Pty Ltd. is incorporated in Australia and its principal place of business is in Australia. (Dkt. No. 1 ¶ 5.) Zurich asserts the citizenship of third-party defendant Acteon US Holdings, Inc. does not affect diversity jurisdiction here.3 The amount in controversy exceeds $75,000 as stated in Plaintiff’s Amended Petition, which alleges damages in excess of $1,000,000. See 28 U.S.C. § 1446(c)(2)(A). All Defendants consent to this removal and it is timely filed in accordance with 28 U.S.C. §§ 1446(b) & (c). (Ex. E.)
*2 Plaintiff does not contest diversity jurisdiction in his motion to remand. Plaintiff insists the resolution of his claims contains a substantial question of law that arises under the Texas Workers’ Compensation Act (“TWCA”). Accordingly, Plaintiff asserts removal is precluded under 28 U.S.C. § 1445(c), which provides that “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). Defendants dispute Plaintiff’s claims “arise under” the TWCA and assert that the case does not involve disagreements about how to construe or apply the TWCA, thus the statute is not substantially implicated. (Dkt. No. 23 at 3.) Defendants assert that this is a matter of contract reformation which requires a factually specific analysis under established law. (Id.)
At the heart of Plaintiff’s dispute is Acteon’s acquisition of workers’ compensation insurance for its subsidiaries, including Benthic. Aceton employs individuals from several countries in multiple locations abroad. (Dkt. No. 23 at 4.) Aceton secured both a domestic policy, which covers certain qualifying U.S. employees, and a foreign policy, which covers employees not eligible for coverage under the domestic policy. (Id.) The two insurance policies at issue are mutually exclusive. (Id. at 5.) Plaintiff seeks a declaratory judgment that Benthic is not a named insured for the domestic workers’ compensation policy. (Id. at 6.) Plaintiff seeks all other remaining relief under the foreign workers’ compensation policy. (Id. at 5.) Plaintiff’s relief under the foreign policy depends on whether the domestic policy is reformed to reflect Benthic as a named insured. (Id.)
Thus, the issue before the Court is to determine whether Plaintiff’s claims arise under the TWCA. The Court finds they do not and recommends that the Motion to Remand be denied.
II. LEGAL STANDARDS
“Federal courts are courts of limited jurisdiction” and their power cannot be expanded by judicial decree. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); see also Energy Mgmt. Servs., LLC v. City of Alexandria, 739 F.3d 255, 257 (5th Cir. 2014). As a result, a defendant may remove a civil case from state to federal court only when the federal court maintains original jurisdiction over the action, either through diversity or federal question jurisdiction. 28 U.S.C. § 1441(a); Halmekangas v. State Farm Fire & Cas. Co., 603 F.3d 290, 294 (5th Cir. 2010) (“Where ... the plaintiff files an action in state court with no federal question or complete diversity, the original jurisdiction necessary for removal under § 1441 does not exist.”). If original jurisdiction exists, the court may then exercise supplemental jurisdiction over state law claims. Halmekangas, 603 F.3d at 294-95; see 28 U.S.C. § 1367.
“The party seeking to remove bears the burden of showing that federal jurisdiction exists and that removal was proper.” Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 397 (5th Cir. 2013). 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). “[B]ecause removing an action duly filed in state court raises federalism concerns, removal statutes are strictly construed against removal and in favor of remand.” Monzon v. Lowe’s Cos., Inc., No. 16-CV-482, 2017 WL 10743000, at *2 (W.D. Tex. May 26, 2017); see Vantage Drilling Co. v. Hsin-Chi Su, 741 F.3d 535, 537 (5th Cir. 2014). The notice of removal must be accompanied by “a copy of all process, pleadings, and orders served upon” the defendants in the state court. 28 U.S.C.A. § 1446(a). “The concept of plaintiff as master of his claim is especially pertinent in removal cases” because it is a Plaintiff’s pleadings that determine the propriety of removal. Aaron v. Nat’l Union Fire Ins. Co. of Pittsburg, Pa., 876 F.2d 1157, 1161 (5th Cir. 1989). A party who believes a case has been improperly removed may seek to remand it to state court. 28 U.S.C. § 1447(c).
*3 There are several statutory exceptions to removal jurisdiction, one of which bars removal for those actions in state court arising under the workers’ compensation laws of the state. 28 U.S.C. § 1445(c). “Section 1445(c) denotes an effort by Congress to restrict the district courts’ diversity jurisdiction in order to relieve the collectively overburdened docket of the federal courts. Courts have therefore construed section 1445(c) broadly in order to further this purpose.” Am. Int’l Specialty Lines Ins. Co. v. Rentech Steel LLC, “[T]he ‘arising under’ standard expressed in § 1445(c) should be interpreted broadly and in a manner consistent with our interpretation of that standard under § 1331, which governs federal question jurisdiction.” Patin v. Allied Signal, Inc., 931 F.2d 1086, 1092 (5th Cir. 1991) (holding that a case arises under the workers’ compensation laws if “the cause of action is created by the workers’ compensation statute”)). In the federal question context, “ ‘arising under’ means (1) federal law creates the cause of action or (2) the plaintiff’s right to relief necessarily depends on the resolution of a substantial question of federal law.” Gomez, 283 F. Supp. 3d at 572 (citing Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677, 690 (2006)). Thus, there exist “two bases that potentially bar removal to federal court—and, in turn, necessitate remand of cases removed from state court—under § 1445(c): (1) the TWCA creates Plaintiff’s cause of action; or (2) Plaintiff’s right to relief necessarily depends on resolution of a substantial question of the TWCA.” Id. (citing McVeigh, 547 U.S. at 690). “[C]laims arise under the TWCA if an issue of the TWCA is (1) necessarily raised (2) actually disputed (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.” Id. at 575 (citing S.F. Bay Area Rapid Transit Dist. v. Gen. Reinsurance Corp., No. 14-CV-01866-JSC, 2014 WL 2960015, at *3 (N.D. Cal. June 30, 2014)). An action can arise under the TWCA even if the question is embedded in a declaratory judgment action. See Trahan v. Liberty Mut. Ins. Co., 571 F. App’x 319, 321 (5th Cir. 2014) (finding plaintiff’s declaratory requests revolving around the payment of benefits and the subrogation of the payor, both “unambiguously arise under Texas workers’ compensation law”).
Workers’ compensation insurance coverage is elective for employers in Texas. See Tex. Labor Code Ann. § 406.002. Employers who purchase workers’ compensation coverage benefit from no-fault and limited financial liability. See id. at § 406.031. An employer that elects not to obtain workers’ compensation coverage for its employees is a nonsubscriber. Id. at §§ 406.003, 406.033.4 Because a nonsubscriber’s employees are not covered by workers’ compensation insurance, the employee must sue their nonsubscribing employer for negligence to recover damages for an injury sustained in the course of employment. See id. at § 406.033. A nonsubscriber must defend itself without the benefit of several common law defenses. See id.
*4 Yet, an employee whose employer has elected to participate in the workers’ compensation program is limited to workers’ compensation benefits for a work-related injury. See id. at § 408.001. The provisions describe what benefits are available, how to compute the benefits, how to file a claim, and how to receive payment of such benefits. See id. at §§ 408.001–408.022; 409.001–409.024.
At issue here is whether Bethnic was a subscriber or a nonsubscriber to determine what provisions of the TWCA apply. In Plaintiff’s view, his claims necessarily require the Court to resolve a substantial question of the TWCA because the Court must refer to the TWCA’s provisions to determine whether Defendants are nonsubscribers, which defenses Defendants can assert, and what Plaintiff must prove to succeed on his claims. Mere reference to these codes, the definitions contained therein, and the defense limitations, however, do not automatically meet the requirements for arising under the TWCA as acknowledged by many courts in this circuit. Herring v. TrueBlue People Ready, Inc., No. 4:21-CV-00260, 2021 WL 4427245, at *2 (S.D. Tex. Sept. 27, 2021) (collecting cases), report and recommendation adopted, 2021 WL 4949275 (Oct. 25, 2021).
While Defendants recognize the necessity of answering the threshold subscriber/nonsubscriber question, they characterize Plaintiff’s lawsuit as a matter of contract reformation. It is seemingly Defendants’ position that Benthic was always believed to be a subscriber of a workers’ compensation policy. It was only when this lawsuit materialized, that it was understood by all Defendants that there was an error in Acteon’s policy covering its subsidiaries, specifically, that Benthic was not listed.
“At issue is the central question: ‘Which came first, the chicken, or the egg?’ ” Bradford Realty Servs., Inc. v. Hartford Fire Ins. Co., No. 3:20-CV-1659-C, 2021 WL 4955911, at *1 (N.D. Tex. Sept. 13, 2021), aff’d, No. 21-11047, 2022 WL 1486779 (5th Cir. May 11, 2022). More precisely, the parties dispute whether the Court must first use traditional tenets of contract law to determine reformation of the insurance contract; or first use the TWCA to determine if the insurance contract is allowed to be reformed. The Court is persuaded by Defendants’ argument to the former which analytically cuts against the threshold question of whether Plaintiff’s claim arises under the TWCA.
A. Does Plaintiff’s claim arise under the TWCA?
“[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). Plaintiff only argues the second option, that his right to recovery requires the resolution of a substantial question of the TWCA.5 (Dkt. No. 16 at 6.)
a. Does Plaintiff’s claim for declaratory relief require a resolution of a substantial question of the TWCA?
Plaintiff seeks a declaration that Benthic was not a subscriber to workers’ compensation at the time of Plaintiff’s injuries and illness because it failed to obtain a policy or register for self-insurance. Plaintiff argues that this question’s resolution implicates a substantial question of the TWCA. Thus, the Court must apply the four-factor test to determine if Plaintiff’s right to recovery requires the resolution of a substantial question of the TWCA. See Gunn v. Minton, 568 U.S. 251, 258 (2013) (explaining the parallel framework for arising under analysis asks whether the federal question is “(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress”). As an initial matter, Zurich does not dispute the first factor, that the TWCA is “necessarily raised” by Plaintiff’s Petition. (Dkt. No. 23 at 9 n.8.) Here, as in Gomez, Plaintiff alleges in his Petition that Defendants are nonsubscribers under the TWCA. (Dkt. No. 16 at 6.) See Gomez, 283 F. Supp. 3d at 575 (citing Tex. Labor Code § 408.001). If Defendants are subscribers, Plaintiff is covered by workers’ compensation insurance, and workers’ compensation benefits would be his exclusive remedy. Plaintiff can prevail on his claims in court only if Defendants are nonsubscribers. See Tex. Labor Code § 406.003. As this conflict is not in dispute, the Court will begin with analysis of the second factor.
i. “Actually disputed” application or meaning of a TWCA provision
*5 “A question is actually disputed where the parties disagree regarding the law’s effect on the outcome of the case.” Nava v. Knight Transp., No. EP-21-CV-00274-FM, 2022 WL 19302946, at *3 (W.D. Tex. Jan. 5, 2022) (citing Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 315 (2005)). Plaintiff asserts that the dispute centers on whether Benthic had workers’ compensation coverage at the time of Plaintiff’s injury. (Dkt. No. 16 at 21.) Benthic asserts while this is true, the resolution of this question does not rely on the application or meaning of a TWCA provision. (Dkt. No. 23 at 9–10.) Defendant does not contest any provision of the TWCA, but instead, argues that Plaintiff and it dispute the fundamental tenets of contract law, specifically, the application of reformation to the workers’ compensation insurance policy. (Id. at 10.) The Court agrees.
While Plaintiff’s Amended complaint frames the questions for declaratory judgment as arising under the TWCA, the application of those provisions does not resolve the question of whether Benthic should be considered a subscriber or nonsubscriber to workers’ compensation. Instead, to determine whether Section 406.033 or Section 408.001 apply to Plaintiff’s other claims the Court would first have to analyze whether Defendants are entitled to reformation. See Fid. & Cas. Co. of N.Y. v. Ind. Lumbermen’s Mut. Ins. Co., 382 F.2d 839, 843 (5th Cir. 1967) (holding where the party seeking reformation of an insurance contract has shown “that the policy as written did not reflect the true intent of the parties ... is a proper case for reformation”). Plaintiff urges that the Court must interpret § 406.031 to determine if reformation is statutorily inapplicable. Tex. Labor Code Ann. § 406.031. This specific question is not included in Plaintiff’s Amended Petition but seems to have materialized from the on-going dispute prior to removal. (Dkt. No. 2 at 37–40 ¶¶ 31, 37–42.) Even so, the Court disagrees because the answer to this question does not require reference to the TWCA or a court interpretation of it. “Reformation of a contract is a proper remedy when the parties reach a definite agreement, understood in the same sense by both, but through mutual mistake the written contract fails to express the parties’ true intent.” Donias v. Old Am. Cnty. Mut. Fire Ins. Co., 649 S.W.3d 789, 794 (Tex. App. 2022); see also In re Liljeberg Enters., Inc., 304 F.3d 410 (5th Cir. 2002) (applying Louisiana law).
Defendant does not dispute the meaning of § 406.031 as Plaintiff alleges, nor does it dispute the application of the provision. Here, the parties disagree regarding the availability of reformation, not on the TWCA’s effect on the outcome of this case. The parties do not actually dispute the effect of the TWCA provisions raised in Plaintiff’s Petition. Plaintiff and Defendants acknowledge the fork in the road presented by the question of the availability of reformation. Accordingly, the Court does not find a provision of the TWCA is actually disputed because there is no dispute as to the meaning of the TWCA’s provision that would require judicial resolution.
ii. Substantial question of the TWCA
“[W[hen a case presents primarily legal questions, it is more likely to require the resolution of a substantial question ... of a state’s workers’ compensation statute in the context of § 1445(c).” Scalza v. Green Bay Packaging, Inc., No. EP-18-CV-337-PRM, 2019 WL 13199716, at *4 (W.D. Tex. Jan. 25, 2019). The Supreme Court considered the substantial question doctrine as applied in the § 1331 context. See Empire Healthchoice Assur., Inc., 547 U.S. at 700 (discussing Grable, 545 U.S. at 313 (2005)). The Supreme Court determined that there was a substantial question of federal law in Grable, but no substantial question in McVeigh. “Grable presented a nearly pure issue of law, the resolution of which would establish a rule applicable to numerous ... cases.” McVeigh, 547 U.S. at 681. McVeigh presented a “fact-bound and situation-specific” claim. Id. at 700. “The substantiality inquiry under Grable looks ... to the importance of the issue to the federal system as a whole.” Gunn, 568 U.S. at 260 (explaining that the court “primarily focused not on the interests of the litigants themselves, but rather on the broader significance of the notice question for the Federal Government”).
*6 The dispute here, is if Zurich is entitled to contract reformation, is necessarily a fact-based inquiry. If Zurich proves sufficient facts to reform the contract, one provision of the labor code would apply, and if it does not, then another provision of the labor code would apply. Plaintiff’s right to relief depends on the circumstances that are limited to this case. The dispute centers on the specific facts necessary to determine this threshold question. Here, the resolution would not be controlling in numerous TWCA cases. Once this issue is resolved, Plaintiff will have to prove the standard elements of negligence to recover or recover under the settled TWCA statutory framework. Scalza, 2019 WL 13199716, at *4 (quoting Gomez, 283 F. Supp. 3d at 577) (explaining that “[p]laintiff’s claim is fact-centered because “whether Defendant[’s] acts were negligent is, by nature, a factual inquiry”). Here, Plaintiff’s claims raise the question of Defendants’ nonsubscriber status under the TWCA, the resolution of which, will not impact the workers’ compensation system as a whole. Accordingly, the Court does not find there is a substantial question under the TWCA because the resolution has no broader significance beyond this case and is relevant only to the parties to this suit.
iii. Balance of Federal and State Judicial Responsibilities
The removal of Plaintiff’s claim does not disturb any balance between federal and state judicial responsibilities because the common law questions that require resolution are properly in federal court on the basis of diversity jurisdiction. Accordingly, the Court concludes that § 1445(c) casts no doubt on whether a federal court may decide Plaintiff’s claim.
Based on the foregoing, the Court RECOMMENDS Plaintiff’s Motion to Remand (Dkt. No. 16) be DENIED.
The Clerk shall send copies of this Memorandum and Recommendation to the respective parties who have fourteen days from the receipt thereof to file written objections thereto 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.
The original of any written objections shall be filed with the United States District Clerk electronically. Copies of such objections shall be mailed to opposing parties and to the chambers of the Undersigned, 515 Rusk, Suite 7019, Houston, Texas 77002.
SIGNED in Houston, Texas on June 6, 2023.
On May 2, 2023, the District Judge referred the entire case to the Magistrate Judge for all purposes pursuant to 28 U.S.C. § 636(b)(1)(A) and (B) and Federal Rule of Civil Procedure 72. (Dkt. No. 14.)
See Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008) (holding the citizenship of a limited liability company (LLC) is determined by the citizenship of all of its members).
See Velazquez v. De La Rose Martinez, No. 21-40282, 2021 WL 6140246, at *1 (5th Cir. Dec. 29, 2021) (citing Fawvor v. Texaco, Inc., 546 F.2d 636, 638 (5th Cir. 1977) (“Rule 14 of the Federal Rules of Civil Procedure governs third-party practice. Under this rule, where there is diversity between the plaintiff and the defendant, the defendant may implead a third-party of the same citizenship as the plaintiff.”)).
The TWCA provides, in part, “that in an action against a nonsubscribing employer for personal injuries or death sustained by an employee, the employer may not rely upon certain common law defenses, and the employee must prove negligence.” Pyle v. Beverly Enters.-Tex., Inc., 826 F. Supp. 206, 209 (N.D. Tex. 1993) (citing. Tex. Labor Code Ann. § 406.033)).
Federal district courts in Texas almost universally conclude that the TWCA does not establish a cause of action for nonsubscriber negligence. Rather, it is a right arising under common law. Herring, 2021 WL 4427245, at *2. Thus, the bulk of Plaintiff’s claims do not arise under the TWCA. The remaining claim is Plaintiff’s claim for declaratory judgment.
United States District Court, W.D. Texas, San Antonio Division.
MARY ANN ELLIS, Plaintiff
GOODHEART SPECIALTY MEATS, BLUEBONNET FOODS, AMALIA PALMAZ, FLORENCIA PALMAZ, ELIZABETH JOHNSON, TEXAS MUTUAL INSURANCE, ERICA GOMEZ, TEXAS DEPARTMENT OF INSURANCE, WORKER’S COMPENSATION DIVISION, AND CHIEF CLERK OF PROCEEDINGS, TEXAS DEPARTMENT OF INSURANCE, WORKER’S COMPENSATION DIVISION; Defendants
ORDER ADOPTING REPORT AND RECOMMENDATIONS
Xavier Rodriguez United States District Judge
*1 On this date, the Court considered the Report and Recommendations (“R&R”) of Magistrate Judge Elizabeth S. Chestney (ECF No. 8) and pro se Plaintiff’s Objection to the R&R (ECF No. 13). After careful consideration, the Court issues the following order.
A. Employment with GoodHeart Brand Specialty Foods and Injury
Plaintiff Mary Ann Ellis filed this case on December 1, 2021 against Defendants GoodHeart Brand Specialty Foods (“GBSF”),1 Texas Mutual Insurance Company (“Texas Mutual”), Elizabeth Johnson (a claims adjuster working for Texas Mutual), the Texas Department of Insurance Division of Workers’ Compensation (“TDI/DWC”), and Erica Gomez (the “ombudsman” for TDI/DWC). ECF No. 1-1 at 3–4. Plaintiff is proceeding pro se.
Plaintiff was hired by GBSF on January 6, 2017. ECF No 7 at 3. On June 8, 2017, Plaintiff was pouring cleaning chemicals into a container when chemicals seeped into her glove, injuring her right hand. ECF No. 13 at 65. The chemicals later transferred to her foot when she removed her boots and socks. Id. Plaintiff claims that she reported the injury to her supervisors and that GBSF, instead of encouraging her to seek immediate medical attention, directed her to wait. ECF No. 7 at 4. Almost one week later, GBSF sent Plaintiff to Texas Medical Clinic, where she was treated for a chemical burn. Id. This treatment was paid for by Defendant Texas Mutual, GBSF’s workers’ compensation insurance company. Id. Plaintiff continued to receive medical treatment after she was released from the medical clinic, and was eventually diagnosed with onychogryphosis of the fingernails, onychomycosis/onychogryphosis of toenails and dermatitis, reflex sympathetic dystrophy of right upper extremity, and complex pain syndrome. Id. at 3; ECF No. 13 at 33–34. Plaintiff alleges that, almost four months later, on October 17, 2017, GBSF discharged her because of a previous back injury.2 ECF No. 7 at 3.
On March 24, 2021, a TDI/DWC benefit review officer held a benefit review conference. ECF No. 14 at 64. Because the parties could not agree regarding the disputed issues, the case was referred to a TDI/DWC Administrative Law Judge (“ALJ”). Id. The ALJ held a hearing and, ultimately, TDI/DWC found that Plaintiff sustained a compensable injury in the form of right-hand dermatitis on June 8, 2017, but that the injury was not a producing cause of onychogryphosis of the fingernails, onychomycosis/onychogryphosis of toenails, dermatitis of the lower extremity, or complex pain syndrome. Id.
Plaintiff brought suit in federal court, claiming that she was wrongly denied treatment and medication, and that she still suffers complications from her injury.3 ECF No. 7 at 5. Plaintiff sought review of the TDI/DWC’s decisions, and also brought claims of negligence and racial discrimination. ECF No. 5.
B. The Report and Recommendations
*2 Upon filing in federal court, Plaintiff’s case was referred to Magistrate Judge Elizabeth Chestney pursuant to 28 U.S.C. § 636(b)(1)(B). After reviewing the complaint, the Magistrate Judge ordered Plaintiff to file a More Definite Statement (“Statement”) addressing the Magistrate Judge’s specific factual questions.4 ECF No. 4. The Magistrate Judge also directed Plaintiff to provide any orders denying workers’ compensation benefits, documentation of the injury, communications from Defendants leading up to this lawsuit, and complaints she filed with the Equal Employment Opportunity Commission (“EEOC”), the Texas Workforce Commission (“TWC”), or any other governmental agency regarding racial discrimination. Id. at 5.
Plaintiff timely filed her Statement on January 21, 2022.5 ECF No. 7. Plaintiff responded to some, but not all, of the Court’s questions and failed to supply any material supporting her claims. Importantly, Plaintiff failed to describe the circumstances surrounding the chemical spill and how exactly she was injured. Furthermore, Plaintiff did not provide evidence or documentation that she filed a workers’ compensation claim or appealed her denial of benefits. Plaintiff also failed to attach charges of discrimination that she allegedly filed with the EEOC. Finally, in her Statement, Plaintiff also added claims of retaliation and disability discrimination.6 ECF No. 7 at 6.
*3 On February 7, 2022, the Magistrate Judge issued her Report and Recommendations advising the Court to dismiss the case pursuant to 28 U.S.C. § 1915(e), which allows a court at any time to dismiss cases filed by IFP plaintiffs in which the claims presented: (1) are frivolous or malicious; (2) fail to state a claim on which relief may be granted; or (3) seek monetary relief against a defendant who is immune from such relief. See 28 U.S.C. § 1915(e)(2)(B).7
First, the Magistrate Judge found that Plaintiff did not plead a plausible claim of racial discrimination under Title VII of the Civil Rights Act, 42 U.S.C. § 2000e-2, concluding that the withholding or improper issuance of medical attention did not constitute an “adverse employment action.” ECF No. 8 at 4 (citing Welsh v. Fort Bend Indep. Sch. Dist., 941 F.3d 818, 824 (5th Cir. 2019)). Furthermore, although race is a protected status and Plaintiff was terminated, Plaintiff did not plead that her termination occurred because of her protected status.8 Finally, because Plaintiff failed to provide the Court with any documentation of her EEOC claim, the Magistrate Judge determined that Plaintiff failed to exhaust her administrative remedies as required. Id. (citing Pacheco v. Mineta, 448 F.3d 783, 788 (5th Cir. 2006)).
Second, the Magistrate Judge found that Plaintiff’s negligence claim was barred under Texas state law. ECF No. 8 at 6. Because GBSF has workers’ compensation insurance, Plaintiff’s sole remedy for any workplace injury was under the Texas Workers’ Compensation Act. See TEX. LAB. CODE § 408.001(a) (“Recovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage ...”). Moreover, the Magistrate Judge noted that Plaintiff’s negligence claim was barred by the state’s two-year statute of limitations. ECF No. 8 at 6.
Finally, the Magistrate Judge determined that this Court lacked subject matter jurisdiction over Plaintiff’s remaining state law workers’ compensation claim. Id. at 6. Because Plaintiff’s federal Title VII claim failed, there was no diversity of parties, and Plaintiff failed to plead the required amount in controversy, the Court had no basis for supplemental jurisdiction over this claim. As a practical matter, Plaintiff also failed to provide the Court with the requested documentation to facilitate judicial review of the Texas Workers’ Compensation Commission’s decision.
The Magistrate Judge concluded that Plaintiff’s claims should be dismissed.
C. Plaintiff’s Objections
On February 17, 2022, Plaintiff moved for an extension of time to file objections to the R&R and provide additional documentation. ECF No. 12. Plaintiff’s request was granted and on March 14, 2022, Plaintiff filed an 85-page Objection (the “Objection”). ECF No. 13. The Objection included Plaintiff’s account of her injury, a list of defendants, and approximately 80 pages of additional documentation that were not presented to the Magistrate Judge.9 Plaintiff states that she “totally disagree[s] with the Report and Recommendation that my case (complaint) be dismissed” and argues that her “time should not be barred” because Defendants have “railroaded” her claim. Id. at 1, 3. Finally, she restates that “my claims for negligence, non-compensation, racial discrimination, retaliation and more should not be barred.” Id. at 4.
*4 Now before this Court are Plaintiff’s Objections. ECF No. 13. This Court construes Plaintiff’s Objections as a motion to supplement her Statement (ECF No. 7), and grants the motion. See Erickson v. Pardus, 551 U.S. 89, 94 (2007) (instructing courts to liberally construe pro se submissions). In her Objections, Plaintiff objects to the Magistrate Judge’s findings regarding the timeliness of her negligence and TDI/DWC claims.10 ECF No. 13 at 3–4.
I. Standard of Review
A party may serve and file objections to a Report and Recommendations within fourteen days. FED. R. CIV. P. 72(a), (b)(2). “Parties filing objections must specifically identify those findings objected to. Frivolous, conclusive [sic] or general objections need not be considered by the district court.” Nettles v. Wainwright, 677 F.2d 404, 410 n.8 (5th Cir. 1982), overruled on other grounds by Douglass v. United States Auto. Ass’n, 79 F.3d 1415 (5th Cir. 1996).
Courts must review de novo any of the Magistrate Judge’s conclusions to which a party has specifically objected. See 28 U.S.C. § 636(b)(1) (“A judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.”). Any sections that were not clearly objected to are reviewed for clear error to determine whether they are contrary to law. Id.; see also United States v. Wilson, 864 F.2d 1219, 1221 (5th Cir. 1989), cert. denied, 492 U.S. 918 (1989).
Plaintiff’s claims regarding the Texas Workers’ Compensation Commission, negligence, and racial discrimination were before the Magistrate Judge. Because Plaintiff specifically objected to the timeliness findings of her negligence and workers’ compensation claims, we review those claims de novo; the Magistrate Judge’s findings on Plaintiff’s racial discrimination claim is reviewed for clear error. Because the Magistrate Judge did not evaluate Plaintiff’s retaliation and disability discrimination claims, this Court will review them at this time.
II. 28 U.S.C. § 1915(e) Standard
“The language of § 1915(e)(2)(B)(ii) tracks the language of Federal Rule of Civil Procedure 12(b)(6).” Black v. Warren, 134 F.3d 732, 733–34 (5th Cir. 1998) (per curiam). Courts generally apply the Rule 12(b)(6) analysis set out above to dismissals under that provision of the IFP statute. Such a dismissal therefore “turns on the sufficiency of the ‘factual allegations’ in the complaint,” Smith v. Bank of Am., N.A., 615 F. App’x 830, 833 (5th Cir. 2015) (per curiam) (quoting Johnson v. City of Shelby, 574 U.S. 10, 12 (2014) (per curiam)), as neither the IFP statute nor the Federal Rules of Civil Procedure “countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted,” Johnson, 574 U.S. at 11.
*5 Federal Rule of Civil Procedure 12(b)(6) allows a party to move for the dismissal of a complaint for “failure to state a claim upon which relief can be granted.” To survive a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. A claim for relief must contain: (1) “a short and plain statement of the grounds for the court’s jurisdiction;” (2) “a short and plain statement of the claim showing that the pleader is entitled to the relief;” and (3) “a demand for the relief sought.” FED. R. CIV. P. 8(a). A plaintiff “must provide enough factual allegations to draw the reasonable inference that the elements exist.” Innova Hosp. San Antonio, L.P. v. Blue Cross & Blue Shield of Ga., Inc., 995 F. Supp. 2d 587, 602 (N.D. Tex. Feb. 3, 2014) (citing Patrick v. Wal– Mart, Inc.-Store No. 155, 681 F.3d 614, 617 (5th Cir. 2012)); see also Torch Liquidating Trust ex rel. Bridge Assocs. L.L.C. v. Stockstill, 561 F.3d 377, 384 (5th Cir. 2009) (“[T]he complaint must contain either direct allegations or permit properly drawn inferences to support every material point necessary to sustain recovery”) (internal quotation marks and citations omitted).
In considering a motion to dismiss under Rule 12(b)(6), all factual allegations from the complaint should be taken as true, and the facts are to be construed in the light most favorable to the nonmoving party. Fernandez-Montes v. Allied Pilots Assoc., 987 F.2d 278, 284 (5th Cir. 1993). Still, a complaint must contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. “ ‘[N]aked assertions’ devoid of ‘further factual enhancement,’ ” and “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,” are not entitled to the presumption of truth. Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557); see also R2 Invs. LDC v. Phillips, 401 F.3d 638, 642 (5th Cir. 2005) (stating that courts should neither “strain to find inferences favorable to plaintiffs” nor accept “conclusory allegations, unwarranted deductions, or legal conclusions”). “Pro se complaints receive a liberal construction. Even so, mere conclusory allegations on a critical issue are insufficient[.]” Brown v. Tarrant Cnty., 985 F.3d 489, 494 (5th Cir. 2021) (quotations and citations omitted).
A. Subject Matter Jurisdiction
Federal district courts have original jurisdiction “over two general types of cases: cases that arise under federal law ... and cases in which the amount in controversy exceeds $75,000 and there is diversity of citizenship among the parties.” Home Depot U.S.A., Inc. v. Jackson, 139 S. Ct. 1743, 1746 (2019) (citing 28 U.S.C. §§ 1331 and 1332(a)). The former is known as “federal-question jurisdiction” and the latter as “diversity jurisdiction.”
To determine whether the District Court has subject matter jurisdiction over each claim, courts utilize the “well-pleaded complaint rule,” which states that the basis for federal jurisdiction, whether that be federal question or diversity, must be “presented on the face of the plaintiff’s properly pleaded complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (internal citations omitted). For claims that do not have either federal question or diversity jurisdiction, federal courts may exercise supplemental jurisdiction so long as they form part of the same case or controversy as the federal claims, 28 U.S.C. § 1367, in that they “derive from a common nucleus of operative fact.” Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966).
Of Plaintiff’s five claims, her racial discrimination, retaliation, and disability discrimination claims arise under federal law and thereby qualify for federal question jurisdiction. See 42 U.S.C. §§ 2000e, et seq. and 42 U.S.C. §§ 12102, et seq. Because the Texas Workers’ Compensation and negligence claim stems from the same facts that give rise to the discrimination and retaliation claims, this Court exercises supplemental jurisdiction over those claims. However, should the federal claims fail, this Court must determine whether supplemental jurisdiction remains appropriate. See Carnegie–Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7, (1988) (“In the usual case in which all federal-law claims are eliminated before trial, the balance of factors to be considered under the pendent jurisdiction doctrine, such as judicial economy, convenience, fairness, and comity, all point toward this Court’s declining to exercise jurisdiction over the remaining state-law claims.”).
*6 Plaintiff specifically objected to the Magistrate Judge’s finding that her negligence claim was barred by Texas state law and the statute of limitations. This Court reviews the Magistrate Judge’s determination de novo. “Under Texas law, the elements of a negligence claim are (1) a legal duty on the part of the defendant; (2) breach of that duty; and (3) damages proximately resulting from that breach.” Lane v. Halliburton, 529 F.3d 548, 565 (5th Cir. 2008).
After Plaintiff came in contact with the chemicals, she states that GHBF instructed her to wait six days before sending her to a physician. ECF No. 7 at 4. Plaintiff alleges that the conditions surrounding the chemical spill breached the legal duty of an employer to an employee and created a toxic or unsafe work environment. She states that the six-day delay exacerbated her injuries and led to permanent damage. See generally ECF No. 7.
Plaintiff failed to allege adequate facts before the Magistrate Judge in support of this claim. After Plaintiff was asked for more specific information, she still failed to “describe the injury, how it occurred, when it occurred, and [her] medical history and condition related to the injury.” ECF No. 4. No court can sustain claims in negligence without basic information regarding the injury.
Furthermore, regardless of any additional information provided in her Objection (ECF No. 13), Plaintiff’s claim fails as a matter of law. The Texas Workers’ Compensation Act (“TWCA”) “provides the exclusive remedy for injuries sustained by an employee in the course of his employment as a result of his employer’s negligence.” Johnson v. Caroli, No. 21-20231, 2022 WL 1499280, at *2 (5th Cir. May 12, 2022); see also TEX. LAB. CODE § 408.001(a) (“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.”). The TWCA covers all “compensable injur[ies]” that arise during the “course and scope of employment.” TEX. LAB. CODE § 401.011(10). “Course and scope of employment” means an activity of any kind or character that has to do with and originates in the work ... of the employer and that is performed by an employee while engaged in or about the furtherance of the affairs or business of the employer.” Id. § 401.011(12). Because Plaintiff sustained her injury at work during the normal course of her duties, her injury falls within the TWCA’s purview, and her negligence claim is barred by the exclusive remedy provision.
Plaintiff’s negligence claim is also barred by the applicable statute of limitations. Texas has a two-year limitations period for personal injury claims. TEX. CIV. PRAC. & REM. CODE § 16.003(a). Negligence claims are governed by the same limitations period as personal injury claims. Under Texas’s “legal injury rule,” the two-year period commences on the day the “wrongful act causes a legal injury, even if the fact of injury is not discovered until later, and even if all resulting damages have not yet occurred.” Schlumberger Tech. Corp. v. Pasko, 544 S.W.3d 830, 834 (Tex. 2018). Plaintiff was injured on June 8, 2017. ECF No. 8 at 6. She filed this lawsuit in December 2021, over two years after the injury occurred. Therefore, the Magistrate Judge was correct in holding that Plaintiff’s negligence claim was barred both by the TWCA and the statute of limitations.
C. Workers’ Compensation Claim
*7 Plaintiff also objected to the Magistrate Judge’s finding on her workers’ compensation claim, arguing that Defendants “railroaded” her claim. ECF No. 13. The Magistrate Judge dismissed Plaintiff’s workers’ compensation claim after finding that the Court lacked subject matter jurisdiction over the claim. In the alternative, the Magistrate Judge noted that the Court was unable to evaluate the claim for timeliness because Plaintiff had not provided the Court with the requested filings made to the EEOC or TDI/DWC. These determinations will be reviewed de novo.
Although federal Courts have authority to hear appeals from the Texas Department of Insurance, TEX. LAB. CODE § 410.252, federal courts must have subject matter jurisdiction over every case that comes before them. 28 U.S.C. §§ 1331–32. As discussed above, supra Section III(A), this Court has federal question jurisdiction over Plaintiff’s federal claims and may exercise supplemental jurisdiction over Plaintiff’s workers’ compensation claim. However, supplemental jurisdiction cannot be maintained without an anchoring federal claim or separate diversity jurisdiction. There is no diversity of parties, ECF No. 8, and because Plaintiff’s Title VII and ADA claims fail, see infra Sections D, E, and F, there is no remaining federal question to which Plaintiff can anchor her appeal. Thus, it is inappropriate to retain the claim on the basis of supplemental jurisdiction.11
D. Racial Discrimination
This Court will review the Magistrate Judge’s findings regarding Plaintiff’s racial claim for clear error. The Court has reviewed the documentation provided and the Magistrate Judge’s Report and Recommendation stating that this claim should be dismissed and finds this determination to be neither clearly erroneous nor contrary to law. United States v. Wilson, 864 F.2d 1219, 1221 (5th Cir. 1989). Plaintiff failed to show that she was terminated because of her race. Instead, her pleadings allege that she was terminated because of an unrelated back injury.
Plaintiff also asserts a claim for retaliation under 42 U.S.C. § 2000e-3(a). ECF No. 7 at 6. In her Objection, Plaintiff elaborated that “my accident to me [sic] was just a set up. I had made several formal and informal reports to the administration and to state, local, federal agencies and nothing was corrected.” ECF No. 13 at 2. Plaintiff later states that she “was constantly harassed by employees and upper management.” Id. at 2.
Title VII prevents employers from discriminating against its employees for opposing or complaining about an unlawful employment practice. See 42 U.S.C. § 2000e-3(a) (prohibiting discrimination because the employee “has opposed any practice made an unlawful employment practice by this subchapter, or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter”). To establish a retaliation claim under Title VII, plaintiffs must show (1) that they engaged in a protected activity; (2) they suffered an adverse employment action; and (3) a causal link exists between the protected activity and the adverse employment action. See Wright v. Union Pac. R.R. Co., 990 F.3d 428, 433 (5th Cir. 2021). Plaintiffs do not have to submit evidence at the pleading stage, id., but must “plead sufficient facts on all of the ultimate elements of a disparate treatment claim to make their case plausible.” Cicalese v. Univ. of Texas Med. Branch, 924 F.3d 762, 766 (5th Cir. 2019) (internal citation omitted).
*8 Plaintiff states that she reported GBSF both formally and informally. EC No. 13 at 1. Even if this Court assumes that these reports were a protected activity, Plaintiff does not plead sufficient facts to indicate that her ultimate termination was because of the reports. Instead, Plaintiff clearly states that she was terminated because of her back injury. ECF No. 7 at 3 (“I was wrongfully terminated from [GBSF] due to a previous back injury.”). Thus, Plaintiff has pled insufficient facts on the ultimate issue of causation and, consequently, has failed to state a viable claim for retaliation.
F. Disability Discrimination
Plaintiff claims that she was denied reasonable accommodations and was wrongfully terminated because of a pre-existing back injury in violation of the Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12101 et seq. ECF No. 7 at 3; ECF No. 13. The ADA prohibits discrimination “against a qualified individual on the basis of disability in regard to ... [the] discharge of employees.” Id. § 12112(a). Such discrimination may also include “not making reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability.” Id. § 12112 (b)(5)(A).
To establish a prima facie case of employment discrimination under the ADA, a plaintiff must prove that he has a disability, that he is qualified for the job, and that he suffered an adverse employment decision because of his disability. Turco v. Hoechst Celanese Corp., 101 F.3d 1090, 1092–93 (5th Cir. 1996); see also Pinkerton v. Spellings, 529 F.3d 513, 517–19 (5th Cir. 2008) (clarifying the ADA’s causation standard). To prevail on a failure-to-accommodate claim, a plaintiff must show (1) the plaintiff is a “qualified individual with a disability;” (2) the disability and its consequential limitations were known by the plaintiff’s employer; and (3) the employer failed to make reasonable accommodations for such known limitations. Feist v. La. Dep’t of Justice, 730 F.3d 450, 452 (5th Cir. 2013).
On both counts, Plaintiff’s claim fails at the outset because she has not properly alleged that she has a disability. The ADA defines “disability,” in relevant part, as “a physical or mental impairment that substantially limits one or more major life activities.” 42 U.S.C. § 12102(1)(A). “[M]ajor life activities include, but are not limited to, caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working.” Id. § 12102(2)(A).
While Plaintiff’s pre-existing back injury may very well constitute a disability, the Court cannot reasonably infer from the factual allegations in the complaint how her injury limits a major life activity. Innova Hosp., 995 F. Supp. 2d at 602; Stockstill, 561 F.3d at 384. Accordingly, Plaintiff’s pleadings fail to state a plausible claim for violation of the ADA under either a wrongful termination or failure-to-accommodate theory of liability. See Hale v. King, 642 F.3d 492, 500 (5th Cir. 2011) (concluding that plaintiff’s allegations of chronic back pain, chronic Hepatitis-C, and a psychiatric condition were—despite being supported by medical records attached to the complaint—insufficient to support an ADA claim because they “did not contain facts regarding the impact of [his] ailments on his ability to perform major life activities.”). Even liberally construed, such conclusory allegations as to the “critical issue” of Plaintiff’s disability are insufficient under Rule 12(b)(6), Brown, 985 F.3d at 494, and will be dismissed pursuant to 28 U.S.C. § 1915(e).
*9 Having reviewed the Report and Recommendation of the Magistrate Judge, Plaintiff’s objections, and the record, the Court will ACCEPT the Magistrate Judge’s recommendation to DISMISS this case pursuant to 28 U.S.C. § 1915(e) as frivolous and for failing to state a claim. Accordingly, this case is DISMISSED pursuant to 28 U.S.C. § 1915(e). A final judgment pursuant to Rule 58 will follow.
The Clerk is DIRECTED to mail a copy of this Order to Mary Ann Ellis at P.O. Box 2694, San Antonio, Texas 78299.
It is so ORDERED.
SIGNED this 20th day of March, 2023.
Plaintiff misidentifies Defendant as GoodHeart Specialty Meats. Defendant’s correct name is GoodHeart Brand Specialty Foods Co, and is owned by Bluebonnet Foods, L.P. Defendants Amalia and Florencia Palmaz own Bluebonnet Foods, L.P.
It appears from the pleadings that Plaintiff’s back injury is unrelated to the chemical spill.
These causes of actions are found throughout three filings: ECF Nos. 5, 7, and 13. The pleadings also stated claims of an “unsafe working environment” (ECF No. 5), “improper medical attention” (ECF No. 5), “toxic work environment” (ECF No. 7). This Court has an obligation to liberally construe Plaintiff’s filings because she is proceeding pro se. Thus, the Magistrate Judge interpreted Plaintiff’s claims of unsafe work environment and improper medical attention as theories of negligence. See ECF No. 8 at 5–6. This Court agrees with the Magistrate Judge’s interpretation and also considers the toxic work environment claim also falling under the rubric of negligence.
These questions included (1) details and dates of her employment with GoodHeart Brand Specialty Foods and the details of her termination, the nature of her injury, how it occurred, when it occurred, and her medical condition; (2) details and dates of her attempt to obtain workers’ compensation benefits, any hearings held, the reasons for denial of benefits, and whether she attempted to appeal the decision; (3) an explanation of the racial discrimination she allegedly suffered and description of specific discriminatory actions taken against her; and (4) a description of each named Defendant and the unlawful conduct attributed to that specific Defendant.
Plaintiff was originally ordered to file the Statement on or before January 7, 2022. Plaintiff moved for an extension of time to file the more definite statement (ECF No. 6) and the Magistrate Judge gave her until January 21, 2022. (Text Order dated 1/11/22). Thus, Plaintiff timely filed on January 21.
Plaintiff also phrases this claim as one for “wrongful termination” and “non-compensation.” ECF Nos. 7, 13. However, the substance of her claim indicates that she believes GBSF discriminated against her for her disability, a back injury, by not providing reasonable accommodations. See ECF No. 7 at 3 (“I was wrongfully terminated from [GBSF] due to a previous back injury (October 17, 2017)[.] I asked for a reasonable accommodation from [GBSF] administration[.] I was denied by the administration.”). Accordingly, the Court construes Plaintiff’s wrongful termination and non-compensation claims as one for disability discrimination under the Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12101 et seq. See Moton v. Halff Assocs., Inc., No. 3:13-CV-4588-D, 2014 WL 642764, at *1 (N.D. Tex. Feb. 19, 2014) (construing wrongful termination claim as claims under various state and federal employment statutes because “[i]t [was] apparent from [the plaintiff]’s complaint that she [was] alleging wrongful termination based on [state and federal anti-discrimination statutes] rather than a ‘free-standing claim for wrongful termination under Texas law.’ ”); Darden v. Mario Sinacola & Sons Exacavting, Inc., No. 4:17-CV-00389, 2017 WL 4583777, at *2 (E.D. Tex. Sept. 20, 2017), report and recommendation adopted, No. 4:17-CV-00389, 2017 WL 4574583 (E.D. Tex. Oct. 13, 2017) (analyzing wrongful termination claim under Title VII and Chapter 21 of the Texas Labor Code); cf. Garvin v. Sw. Corr., L.L.C., 391 F. Supp. 3d 640, 653 (N.D. Tex. 2019) (considering plaintiff’s claims of Title VII gender discrimination and wrongful termination together because both involved allegations of constructive discharge).
The Report and Recommendations addressed Plaintiff’s claims of racial discrimination, negligence, and denial of workers’ compensation benefits. It did not address Plaintiff’s claims of disability discrimination or retaliation. See ECF No. 7.
As previously mentioned, Plaintiff admitted she was terminated due to a prior back injury. ECF No. 7.
The supporting documentation includes: (1) a copy of an overdue medical bill from the University of Texas Health system for $316 (labeled “Document A”); (2) a bill from S.A. Infectious Diseases Consultants for $654 (labeled “Document B”); (3) a Notice of Disputed Issues and Refusal to Pay issued by Texas Mutual Worker’s Compensation (labeled “Document C”); (4) two letters: one from the San Antonio Infectious Disease Consultants, claiming that Plaintiff’s work accident is a substantial factor that contributed to her dermatitis and a second letter requesting a follow up appointment (both referred to as “Document D”); (5) a letter of clarification from the Texas Department of Insurance (labeled “Document E”); (6) a May 10, 2021 Order from the Commissioner of the Texas Department of Insurance issuing a re-examination of Plaintiff’s right hand dermatitis (labeled “Document F”); (7) a bill from a collection agency for $340 (labeled “Document G”); (8) a June 11, 2021 Order from the Commissioner of the Texas Department of Insurance issuing a re-examination of Plaintiff’s right hand dermatitis (labeled “Document H”); (9) a screenshot of the US Department of Labor Occupational Safety and Health Administration Whistleblower Complaint Form (labeled “Document I”); (10) a July 29, 2021 Decision from the Texas Department of Insurance Division of Workers’ Compensation denying that the compensable injury of June 8, 2017 was a contributory cause of Plaintiff’s ongoing dermatitis and an October 19, 2021 Appeals Panel determination, stating that the July 29, 2021 Decision was final (labeled “Document J”); (11) the EEOC’s Dismissal and Notice of Rights (labeled “Document K”); (12) a notice from Texas Mutual that Plaintiff’s Impairment Income Benefits ceased on 4/28/2021 (labeled “Document L”); (13) a letter from Texas Mutual, dated 3/25/2021, denying a one-year refill of a topical ointment because the topical ointment was neither effective nor intended for long term use (labeled “Document M”).
This Court understands Plaintiff’s references to “barred” claims as objecting to the Magistrate Judge’s finding that Plaintiff’s negligence claim was time-barred, ECF No. 8 at 6 (“Even if her negligence claims were not barred by the exclusive remedy provision of the Texas Workers’ Compensation Act, they would also be time-barred.”), as well as the Court’s inability to assess if judicial review of the TDI/DWC decision was time-barred, id. at 7–8 (“Moreover, even if the requirements of diversity jurisdiction were satisfied, Plaintiff has not provided the Court with any of the requested information regarding her workers’ compensation claim so that the Court might be able to evaluate it for timeliness.”).
Moreover, Plaintiff failed to satisfy the procedural requirements to facilitate judicial review. The Texas Labor Code requires that parties seeking judicial review of workers’ compensation claims to file suit “no later than the 45th day after the date on which the division mailed the party the decision of the appeals panel.” TEX. LAB. CODE § 410.252 (a). The “mailing date is considered to be the fifth day after the date the decision of the appeals panel was filed with the division.” Id. Plaintiff provided the Court with documentation showing that the appeals panel ruled on her case on July 29, 2021 and the opinion was mailed to her on August 5, 2021. ECF No. 13 at 57–60. Thus, Plaintiff needed to seek judicial review by September 19, 2021, 45 days after the decision was mailed to her. However, Plaintiff did not file her case until December 1, 2021. Therefore, her petition for review was untimely.
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.