United States District Court, S.D. Texas, Houston Division.
RODDIE MORGAN, Plaintiff.
GOODMAN MANUFACTURING COMPANY, L.P., Defendant.
CIVIL ACTION NO. 4:19-CV-00850
ANDREW M. EDISON UNITED STATES MAGISTRATE JUDGE
Before me are competing motions for summary judgment. See Dkts. 28 and 36. Having reviewed the motions, the responsive briefing, and the applicable law, I recommend that both motions be DENIED, and that this case proceed to trial.
Plaintiff Roddie Morgan (“Morgan”) worked as a forklift operator for Goodman Manufacturing, L.P. (“Goodman”) for roughly six and a half years—from January 2011 through July 27, 2017. For the first five of those years, Morgan worked for Goodman through a third-party staffing company. In January 2016, Goodman cut out the middleman and hired Morgan to work directly for Goodman.
In May 2016, Goodman declared Morgan eligible for intermittent leave under the Family Medical Leave Act (“FMLA”) so that he could provide care for his adult stepson, who lives with developmental disabilities.1 As part of his intermittent FMLA leave, Morgan agreed that when he needed to take an FMLA day off, he would (1) “call Cheryl Kennedy, the FMLA Coordinator,” and (2) call either his supervisor, Mike Shoemaker, or the company’s absentee hotline. Dkt. 29-31 at 2. He agreed that failure to abide by these terms would result in an unexcused absence. On a separate note, Section 12 of Goodman’s employee handbook provides the disciplinary consequences for accruing too many unexcused absences and tardies. Under Section 12, employees should receive their first written warning at four unexcused absences or tardies during a rolling 12-month period; a final warning at five absences or six tardies during a rolling 12-month period; and “termination would result when an employee accumulates six absent occurrences or eight tardy occurrences in a rolling 12 month period.” Dkt. 29-5 at 3.
On April 13, 2016, Goodman issued Morgan a “Written Warning for Failure to Call the Absentee Hotline.” Dkt. 29-6 at 2. Goodman then sent Morgan a “Final Warning” in October 2016. Dkt. 29-7 at 2. This notification stated: “On Wednesday evening October 12, 2016 you texted your immediate supervisor Mike Shoemaker but failed to call the absentee hotline ... 30 minutes prior to the start of your shift to report that you would be absent today.” Id. The Final Warning failed to detail any prior violations of the company’s absentee or tardiness policy other than a single failure by Morgan to call the absentee hotline in April 2016.
The next time Morgan received a formal notification about any attendance issues was in February 2017. In a February 24, 2017 First Warning, Goodman informed Morgan that he had accrued eight unexcused absences within a rolling 12-month period. Two weeks later, Morgan received a First Warning for accruing eight unexcused tardies within a rolling 12-month period. Although the employee handbook explained that Goodman would provide Morgan with a First Warning at four unexcused absences or tardies within a 12-month period, that company policy was certainly not followed here. Goodman did not issue any Final Warnings to Morgan in 2017 for absenteeism or tardiness.
On July 22, 2017, Morgan suffered injuries to his lower back and hip when he tripped over a bolt protruding from the warehouse floor. Unable to work his scheduled shift on June 24 due to severe pain from the accident, Morgan called Goodman’s hotline to let the company know that he would not be reporting to work. Over the next few days, Morgan visited two doctors of his choosing. On July 25, one of those doctors said that he could return to work “TBD after x-ray evaluation by employer doctors.” Dkt. 29-17 at 2. Goodman directed Morgan to Next Level Urgent Care where he was seen by Dr. Terence M. Chang on the afternoon of July 25. Dr. Chang provided Goodman with a work status report on the morning of July 26, releasing Morgan to return to work with certain mobility restrictions. Also on July 26, Goodman filed a Texas workers’ compensation claim on Morgan’s behalf and placed Morgan on FMLA leave “[b]ecause of a qualifying injury, illness[,] or other qualifying event.” Dkt. 38-2 at 1.
Morgan did not report to work on July 26 or 27. He contends that he called the Goodman hotline each day to let the company know that he would be absent from work. Goodman alleges that a company representative called Morgan on July 26 and left Morgan a voicemail “stating [that Goodman] had a light duty position for him and he could come to his regular schedule.” Dkt. 29-23 at 3. Morgan testified at his deposition, however, that he never received this call or a voicemail from Goodman. On July 27, Goodman sent Morgan a “Bona Fide Offer of Employment” requesting that Morgan return to work. Dkt. 29-22 at 2. The letter stated that if Morgan failed to sign and return the letter in seven days, Goodman would consider the offer rejected.
Around 5:30 p.m. on the evening of July 27, George Taylor, a Human Resources Manager for Goodman, sought permission to terminate Morgan for failing to return to work on July 26 and 27. Goodman’s Director of Human Resources, Mark Clark, approved the termination, noting “George, looks like you’ve done a good job establishing his reason to be out was not [w]orker’s [c]omp—but rather a continuing attendance issue.” 29-24 at 2.
The summary judgment evidence shows that Morgan visited a fourth doctor, Dr. Sergio Wong, on August 2—six days after Goodman made the decision to terminate Morgan’s employment. Dr. Wong faxed a Work Status Report to Goodman on August 9, saying that Morgan’s workplace injury prevented him from working from July 28 through September. Dr. Wong eventually revised the Work Status Report to reflect that Morgan’s workplace injury prevented him from working from July 27 through September 1. From July 27 through late August 2017, Morgan attests that he called the Goodman hotline each day to notify the company that he would not be at work due to his injury. On August 24, Goodman formally terminated Morgan’s employment over the telephone.
Morgan originally filed suit against Goodman in state district court in February 2018. Goodman then removed the case to federal court. The First Amended Petition is the live pleading. See Dkt. 1-9 at 2. It alleges three claims: (1) Texas Workers’ compensation retaliation; (2) FMLA retaliation; and (3) FMLA interference. Both parties have filed motions for summary judgment on Morgan’s Texas workers’ compensation claim and his FMLA claims. Morgan has also filed a motion for a judgment on the pleadings as to four of Goodman’s affirmative defenses.
A party should prevail on a motion for summary judgment when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). A genuine dispute of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The party moving for summary judgment bears the burden “of informing the district court of the basis for its motion.” Brandon v. Sage Corp., 808 F.3d 266, 269–70 (5th Cir. 2015) (quotation omitted). If the nonmoving party bears the burden of production at trial, the party moving for summary judgment “must merely demonstrate an absence of evidentiary support in the record for the nonmovant’s case.” Lyles v. Medtronic Sofamor Danek, USA, Inc., 871 F.3d 305, 311 (5th Cir. 2017) (quotation omitted). If the movant is successful, “the burden shifts to the non-movant to produce evidence of the existence of such an issue for trial.” Brandon, 808 F.3d at 270 (quotation omitted). The nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts,” instead the nonmoving party “must go beyond the pleadings and come forward with specific facts indicating a genuine issue for trial to avoid summary judgment.” Id. (quotations omitted).
In evaluating the party’s arguments in favor and against summary judgment, “the court may not undertake to evaluate the credibility of witnesses, weigh the evidence, or resolve factual disputes.” Matter of Green, 968 F.3d 516, 520 (5th Cir. 2020) (quotation omitted). The court “must instead view all facts in favor of the non-moving party,” and draw all reasonable inferences in the nonmovant’s favor. Id. On cross-motions for summary judgment, the court must “review each party’s motion independently, viewing the evidence and inferences in the light most favorable to the nonmoving party.” A.A. v. Northside Indep. Sch. Dist., 951 F.3d 678, 684 (5th Cir. 2020) (quotation omitted).
Morgan first alleges that Goodman retaliated against him in connection with the filing of a workers’ compensation claim. Chapter 451 of the Texas Labor Code provides that a “person may not discharge or in any other manner discriminate against an employee because the employee has ... filed a workers’ compensation claim in good faith.” TEX. LAB. CODE § 451.001(1). The purpose of this statutory scheme is “to protect persons entitled to benefits under the Workers’ Compensation Act and to prevent them from being discharged for filing claims to collect those benefits.” Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 312 (Tex. 1997).
Texas courts analyze claims brought under § 451.001(1) using the well-established McDonnell Douglas burden shifting framework. See Parker v. Valerus Compression Servs., LP, 365 S.W.3d 61, 66 (Tex. App.—Houston [1st Dist.] 2011, pet. denied). Under the McDonnell Douglas analytical approach, Morgan must first make a prima facie case of retaliation. To make a prima facie showing of retaliation under § 451, Morgan must show: (1) he engaged in a protected activity; (2) he suffered an adverse employment action; and (3) there is a causal connection between the filing of a workers’ compensation claim and his termination. See Cristain v. Hunter Buildings & Mfg., LP, No. H-16-2462, 2017 WL 2633565, at *5 (S.D. Tex. June 19, 2017); Cardenas v. Bilfinger TEPSCO, Inc., 527 S.W.3d 391, 399 (Tex. App.—Houston [1st Dist.] 2017, no pet.). If Morgan establishes a prima facie case, the burden shifts to Goodman to produce evidence that its underlying employment action was based on a legitimate nondiscriminatory reason. See Williams v. AT & T, Inc., No. H-07-0559, 2009 WL 938495, at *16 (S.D. Tex. Apr. 6, 2009). Once Goodman produces a legitimate, nonretaliatory reason for terminating Morgan, the burden shifts back to Morgan “to raise a fact issue as to the employer’s retaliatory motive, by either direct or circumstantial evidence.” Id. If Morgan is successful in raising a fact issue as to the employer’s retaliatory motive, summary judgment is inappropriate.
The first two elements of Morgan’s prima facie case are not in dispute. A workers’ compensation claim was filed on Morgan’s behalf, and he was subsequently terminated. It is the third element—whether Morgan has shown the necessary causal link—where the rubber meets the road.
Courts on both the state and federal level have recognized that an employee’s burden at the prima facie stage is not onerous. See Evans v. City of Houston, 246 F.3d 344, 354 (5th Cir. 2001) (“the ‘causal link’ required in prong three of the prima facie case for [Title VII] retaliation is not as stringent as the ‘but for’ standard”); Tawil v. Cook Children’s Healthcare Sys., 582 S.W.3d 669, 683 (Tex. App.—Fort Worth 2019, no pet.) (“[W]e impose only a slight burden on the employee to establish a prima facie case in the first step of the burden-shifting process.”). At the prima facie stage, “the plaintiff merely has to prove that the protected activity and the negative employment action are not completely unrelated.” United States ex rel. Dyson v. Amerigroup Tex., Inc., No. CIV.A. H-03-4223, 2005 WL 2467689, at *3 (S.D. Tex. Oct. 6, 2005) (quotation omitted) (applying McDonnell Douglas to retaliation claim under the False Claims Act). To this end, courts routinely hold that an employee meets his prima facie burden with proof that the protected activity was followed shortly by an adverse employment action. See Strong v. Univ. Healthcare Sys., L.L.C., 482 F.3d 802, 808 (5th Cir. 2007) (explaining that “temporal proximity alone, when very close, can in some instances establish a prima facie case of retaliation” under Title VII); Swanson v. Gen. Servs. Admin., 110 F.3d 1180, 1188 (5th Cir. 1997) (“Close timing between an employee’s protected activity and an adverse action against him may provide the ‘causal connection’ required to make out a prima facie case of retaliation” under Title VII.); Salas v. Fluor Daniel Servs. Corp., --- S.W.3d ---, 2020 WL 7711332, at *10 (Tex. App.— Houston [14th Dist.] Dec. 29, 2020, pet. filed) (“Close timing between an employee’s protected activity [under Texas Labor Code § 451.001] and the adverse action can provide the causal connection required for a prima facie case.” (quotation omitted)); Tawil, 582 S.W.3d at 683 (explaining that, under § 451.001, an “employee meets [his] prima facie burden with proof that the protected activity was followed shortly by an adverse employment action,” and compiling cases).
The temporal proximity here firmly supports a prima facie showing of causation. Morgan suffered his workplace injury on July 22, 2017, Goodman filed the workers’ compensation claim on Morgan’s behalf on July 26, and Goodman decided to terminate Morgan’s employment the very next day. To be clear, just one day passed between the time the workers’ compensation claim was filed and the time Goodman decided to terminate Morgan’s employment. Five days passed between Morgan’s injury and the time Goodman decided to terminate Morgan’s employment. The temporal proximity between Morgan’s injury, Goodman’s filing of the claim, and Goodman’s decision to terminate Morgan easily satisfies the low hurdle to establish a prima facie case of retaliation under § 451.001. See Evans, 246 F.3d at 354 (finding that a time lapse of 5 days was sufficient to provide causal connection for a prima facie case of Title VII retaliation); Salas, 2020 WL 7711332, at *10 (finding that a time lapse of 11 days was sufficient to “provide the causal connection required for a prima facie case” of retaliation under § 451.001).
Once Morgan establishes a prima facie case of retaliation, the burden shifts to Goodman to “articulate—not prove—a legitimate, non-retaliatory reason” for its actions. Tex. Dep’t of Cmty. Affairs v. Burdine, 450 U.S. 248, 258 (1981). See also Salas, 2020 WL 7711332, at *4 (“Once the employee establishes a causal link, the burden shifts to the employer to rebut the alleged discrimination by showing there was a legitimate reason behind the discharge.” (quotation omitted)). If Goodman “produces any evidence which, taken as true, would permit the conclusion that there was a nondiscriminatory reason for the adverse action,” then Goodman will have carried its burden of production. Daigle v. Liberty Life Ins. Co., 70 F.3d 394, 396 (5th Cir. 1995) (quotation omitted). See also Patrick v. Ridge, 394 F.3d 311, 315 (5th Cir. 2004) (stating that “the employer need not prove that it was actually motivated by its proffered reason”); Greenway v. Buffalo Hilton Hotel, 143 F.3d 47, 52 (2d Cir. 1998) (“The employer need not persuade the court that it was motivated by the reason it provides; rather, it must simply articulate an explanation that, if true, would connote lawful behavior.” (emphasis omitted)).
Goodman argues that it terminated Morgan because he failed to show up for work on July 26 and 27, 2017, in violation of Goodman’s attendance policy. These absences were, according to Goodman, unexcused because medical professionals had examined Morgan and cleared him to return to work. The Fifth Circuit has regularly held that absenteeism is a legitimate, non-retaliatory reason for an employee’s termination. See Trautman v. Time Warner Cable Tex., L.L.C., 756 F. App’x 421, 428 (5th Cir. 2018) (“[A]s should go without saying, an employee’s failure to show up for work is a legitimate reason for firing her.”); Powers v. Woodlands Religious Cmty. Inc., 323 F. App’x 300, 302 (5th Cir. 2009) (“[The employer’s] stated reason for [the employee’s] termination—absenteeism—is a legitimate nondiscriminatory reason for its decision.”); Richardson v. Monitronics Int’l, Inc., 434 F.3d 327, 335 (5th Cir. 2005) (finding that “a lengthy history of attendance problems” constitutes “a legitimate, nondiscriminatory reason for firing” an employee). Goodman has met its burden.
Once an employer produces a legitimate, nondiscriminatory reason for termination, “the burden shifts back to the plaintiff to raise a fact issue as to the employer’s retaliatory motive.” Chollet v. Patterson-UTI Drilling Servs. LP, No. V-08-27, 2009 WL 4667575, at *11 (S.D. Tex. Dec. 1, 2009). See also Parker, 365 S.W.3d at 67 (explaining that the burden reverts “to the employee to produce controverting evidence of a retaliatory motive in order to survive a motion for summary judgment” (quotation omitted)). As plaintiff, Morgan “must demonstrate that [he] would not have been discharged but for [his] assertion of a workers’ compensation claim.” Lopez v. Sonic Components, LLC, No. 3:14-cv-0283-D, 2015 WL 6549583, at *7 (N.D. Tex. Oct. 28, 2015). See also Williams v. Square D Co., No. 3:04-cv-0162-D, 2005 WL 2219237, at * 3 (N.D. Tex. Sept. 13, 2005) (“[T]o survive summary judgment, [plaintiff] must produce controverting evidence of [the employer’s] retaliatory motive. Specifically, he must show that he would not have been discharged but for his assertion of a workers’ compensation claim.”).
Generally, the plaintiff must show “that the employer’s asserted reason for the discharge or other adverse employment action was pretextual or challenge the employer’s summary judgment evidence as failing to prove as a matter of law that the reason given was a legitimate, nondiscriminatory reason.” Parker, 365 S.W.3d at 67–68 (quotation omitted)). “The ultimate question will be whether the evidence of a causal link is so strong as to justify a finding that the employer had a retaliatory motive.” Jones v. NRG Tex., LLC, No. 10-16-00260-CV, 2017 WL 1540690, at *2 (Tex. App.—Waco Apr. 26, 2017, no pet.). “[A]n employee’s subjective belief that the employer acted in retaliation for the filing of a claim has no probative force because such beliefs are no more than conclusions.” Tawil, 582 S.W.3d at 682.
A plaintiff may present evidence of retaliatory motive by either direct or circumstantial evidence. See Chollet, 2009 WL 4667575, at *11. Circumstantial evidence showing a link between termination and the filing of a workers’ compensation claim generally includes:
(1) knowledge of the compensation claim by those making the decision on termination; (2) expression of a negative attitude toward the employee’s injured condition; (3) failure to adhere to established company policies; (4) discriminatory treatment in comparison to similarly situated employees; and (5) evidence that the stated reason for the discharge was false.
Cont’l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 451 (Tex. 1996) (quotation omitted). Temporal proximity is another factor to be considered in determining whether a causal chain exists between the filing of a workers’ compensation claim and a termination. See Burfield v. Brown, Moore & Flint, Inc., 51 F.3d 583, 590 (5th Cir. 1995) (“Texas courts have frequently looked at the temporal proximity between the protected activity and the adverse employment action for circumstantial evidence of retaliatory motive.”).
Here, it is undisputed that Goodman’s decision makers, Mark Clark and George Taylor, had knowledge of Morgan’s workers’ compensation claim at the time they decided to terminate his employment. Indeed, Goodman actually filed the workers’ compensation claim on Morgan’s behalf. But this fact “standing alone is insufficient to raise a genuine issue of material fact” as to whether Goodman terminated Morgan because of his compensation claim. Williams, 2009 WL 938495, at *17 (quotation omitted). To create a fact issue and avoid summary judgment, Morgan must point to something more.
Through his own affidavit, Morgan contends that Goodman had “a relaxed attendance and absence policy” and that “Goodman did not adhere to its own attendance and absence policy.” Dkt. 38-4 at 1. Although Goodman argues that “Morgan’s affidavit is hearsay, conclusory, and fails to provide evidence of disparate treatment,” Dkt. 52 at 17, Morgan’s affidavit is supported by other evidence in the summary judgment record creating a factual issue as to whether Goodman failed to abide by its own attendance policies. As discussed above, Section 12 of Goodman’s employee handbook sets forth a detailed attendance and tardiness policy. Important to this discussion, the employee handbook provides for a First Warning at four absences or tardies within a rolling 12-month period; a Final Warning at five absences or six tardies within a rolling 12-month period; and termination at six absences or eight tardies within a rolling 12-month period. The policy expressly states that absences or tardies “ ‘roll off’ one year after they were accumulated.” Dkt. 29-5 at 3.
On February 24, 2017, Goodman sent Morgan a First Warning. Although four unexcused absences are supposed to trigger a First Warning, the February 24, 2017 First Warning referenced eight alleged unexcused absences. Approximately two weeks later, on March 10, 2017, Morgan received a First Warning for tardiness. That First Warning for tardiness referenced eight unexcused tardies within a rolling 12-month period, not the four unexcused occurrences that the employee handbook says will be in a First Warning. Those First Warnings issued in February and March 2017 were the last written warnings Morgan received before his termination in July. Morgan never received a Final Warning in 2017 for absences or tardies. He was simply terminated on July 27, 2017. The internal Goodman email seeking authorization to terminate Morgan confirms Goodman’s inability to institute a clear and accurate attendance policy. It noted that Morgan had attendance and punctuality issues in the past, “however due to the untimeliness of the notification by the supervisor he was given written warnings to provide him with an additional opportunity to recover.” Dkt. 29-24 at 3. Why Goodman did not follow its own employee handbook and issue both a First Warning and a Final Warning to Morgan before termination is left unanswered by the summary judgment record.
Morgan did receive a Final Warning back on October 13, 2016, for allegedly failing “to call the absentee hotline ... 30 minutes prior to the start of” his shift. Dkt. 29-7 at 2. But, as already noted, Goodman’s policy specifically provides that absences and tardies “roll off” one year after they were accumulated. As such, many of the absences and tardies taken into consideration as part of the October 13, 2016 Final Warning were no longer “live” by the time Goodman terminated Morgan on July 27, 2017. Indeed, on the date of his firing, Morgan only had six unexcused absences (assuming you count July 27) within a 12-month rolling period, and five unexcused tardies within a 12-month rolling period. See Dkts. 29-8 at 2; 29-9 at 1.
Goodman contends that “[t]o the extent Goodman deviated from any of its policies, it was overly generous in failing to terminate Morgan when he reached an unacceptable number of absences and tardies.” Dkt. 28 at 20. But the trouble here is that Goodman’s decision to accelerate its disciplinary action coincides with Morgan’s workplace injury. If Goodman terminated Morgan for failing to report to work on July 27, it did so without ever issuing Morgan a Final Warning—a deviation from its standard company policies. If, on the other hand, Goodman terminated Morgan “for failing to use the call-in line as instructed” in the Final Warning issued in October 2016, Morgan has pointed to other summary judgment evidence that might convince a jury that the reason is pretextual. Morgan has provided telephone records showing that he did call in around 4:30 a.m. on both July 26 and July 27. And a July 27 email exchange between Goodman employees George Taylor and Mark Clark confirms that Morgan “did use the call in line” and “indicated that he was ‘too sore’ to report to work.” Dkt. 29-24 at 2. Morgan has also pointed to summary judgment evidence showing that Goodman reported the workplace accident to its insurance carrier as an “unwitnessed accident” when, in reality, a witness statement had been submitted by Clifton Smith. See Dkt. 29-15 at 7. In the same vein, Morgan contends that Goodman filed two witness statements allegedly provided by Clifton Smith, one of which was altered. Compare Dkt. 38-11, with 38-12. Taken together and in the light most favorable to Morgan, these three alleged facts (terminating Morgan based on his failure to call-in, noting the accident as unwitnessed, and producing two conflicting witness statements with potentially conflicting testimony) could lead a reasonable jury to conclude that Goodman’s stated reason for termination is false. And while it is true that notifying Goodman’s insurance carrier that the injury was the result of an “unwitnessed accident” “could be a mistake, or it could be that the claim examiner was unaware of Mr. Smith’s statements,” those kinds of disputes and determinations are best reserved for the factfinder. Dkt. 52 at 19–20. At the summary judgment stage, Morgan need only present evidence that raises a genuine issue of material fact.
In sum, Morgan has pointed to summary judgment evidence showing that Goodman knew about his participation in an activity protected by Texas law, and that Goodman terminated his employment shortly thereafter. He has also pointed to summary judgment evidence showing that he may not have been terminated pursuant to the attendance policy, casting doubt on Goodman’s legitimate, nondiscriminatory reason for termination. Viewing all the evidence in the light most favorable to Morgan, Goodman’s motion for summary judgment on Morgan’s workers’ compensation retaliation claim should be denied. Because a genuine issue of material fact remains, Morgan’s motion for summary judgment should likewise be denied.2
*7 The FMLA entitles employees to take leave for “a serious health condition that makes the employee unable to perform” their duties. 29 U.S.C. § 2612(a)(1)(D). Two types of claims arise under the FMLA: (1) “interference” or “(a)(1)” claims in which the employee alleges that an employer denied or interfered with his substantive rights under the FMLA, and (2) “retaliation” or “(a)(2)” claims in which the employee alleges that the employer discriminated against him for exercising FMLA rights. See id. § 2615(a)(1)–(2). Morgan alleges both.
The McDonnel Douglas burden-shifting analysis discussed above also applies to FMLA retaliation claims. See Wheat v. Fla. Parish Juv. Just. Comm’n, 811 F.3d 702, 705 (5th Cir. 2016). Under that approach, Morgan must first make a prima facie case of retaliation after which Goodman has an opportunity to “articulate a legitimate nondiscriminatory or nonretaliatory reason for the employment action.” Hunt v. Rapides Healthcare Sys., LLC, 277 F.3d 757, 768 (5th Cir. 2001). Once Goodman produces a nonretaliatory reason for terminating Morgan, the burden shifts back to Morgan to “show by a preponderance of the evidence that [Goodman’s] reason is a pretext for retaliation.” Id. To make a prima facie case of unlawful FMLA retaliation Morgan must show “(1) [he] was protected under the FMLA; (2) [he] suffered an adverse employment action; and (3) the adverse [employment] action was taken because [he] took FMLA leave.” Garcia v. Penske Logistics, L.L.C., 631 F. App’x 204, 210 (5th Cir. 2015). It is undisputed that the first two elements have been satisfied: Morgan was covered by the FMLA on a temporary and continuous basis and he unquestionably suffered an adverse employment action.
As for the causation element, the Supreme Court has held that temporal proximity by itself can establish prima facie causation where the proximity is “very close.” Clark Cnty. Sch. Dist. v. Breeden, 532 U.S. 268, 273–74 (2001) (quotation omitted) (collecting cases). Morgan contends that he was terminated while on continuous FMLA leave for his workplace injury. This is sufficient to establish a prima facie case of retaliation. See Leal v. BFT, Ltd. P’ship, 423 F. App’x 476, 479–80 (5th Cir. 2011) (“Because Leal was terminated during her exercise of FMLA rights, we conclude that the ‘temporal proximity’ between her FMLA leave and the adverse action was ‘very close’ and is sufficient to establish the necessary causal link for a prima facie case.”). Because Morgan was terminated shortly after Goodman placed him on continuous FMLA leave, Morgan has established a prima facie case of FMLA retaliation.
Goodman alleges the same legitimate, nondiscriminatory reason discussed above—that Morgan was terminated for violating Goodman’s leave policy. Because Goodman has produced a legitimate, nonretaliatory reason for terminating Morgan, Morgan’s motion for summary judgment should be denied. To avoid Goodman’s motion for summary judgment, Morgan must point to summary judgment evidence showing that there is a fact issue as to whether Goodman’s legitimate reason is merely pretext for unlawful retaliation.
Morgan has pointed to summary judgment evidence that: (1) Goodman declared him eligible for continuous FMLA leave starting July 26 due to his workplace injury; (2) Goodman’s George Taylor and Mark Clark both knew that Morgan was on FMLA leave; (3) Morgan’s supervisors had expressed frustration with his use of intermittent FMLA as far back as June 2016, or one month after he was declared eligible; and (4) Goodman had allegedly papered his file with attendance infractions based on days protected by his intermittent FMLA (compare Dkt. 29-9 at 1, with Dkt. 38-20). Viewing this evidence in the light most favorable to Morgan, there is a genuine issue of fact as to whether Goodman’s justification for terminating Morgan is merely pretext for unlawful retaliation.
The FMLA’s interference provision makes it “unlawful for any employer to interfere with, restrain, or deny the exercise of or ... attempt to exercise,” any substantive FMLA right. 29 U.S.C. § 2615(a)(1). An “interference claim merely requires proof that the employer denied the employee his entitlements under the FMLA.” Acker v. Gen. Motors, L.L.C., 853 F.3d 784, 788 (5th Cir. 2017) (quotation omitted). Morgan claims Goodman interfered with his FMLA rights by refusing to recognize his July 27, 2017 absence as FMLA leave.
To make a prima facie case for FMLA interference, Morgan must show that “(1) he was an eligible employee; (2) his employer was subject to FMLA requirements; (3) he was entitled to leave; (4) he gave proper notice of his intention to take FMLA leave; and (5) his employer denied him the benefits to which he was entitled under the FMLA.” Caldwell v. KHOU-TV, 850 F.3d 237, 245 (5th Cir. 2017). Elements 1–3 are not in dispute. Goodman argues that Morgan cannot satisfy elements 4 and 5 of the prima facie case for FMLA interference.
The fourth element requires Morgan to show that he gave proper notice of his intention to take FMLA leave. The FMLA regulations “explicitly permit[ ] employers to condition FMLA-protected leave upon an employee’s compliance with the employer’s usual notice and procedural requirements.” DeVoss v. Sw. Airlines Co., 903 F.3d 487, 490 (5th Cir. 2018).
Goodman contends summary judgment is proper on Morgan’s FMLA interference claim because he failed to call “Cheryl Kennedy or the hotline to indicate that he was taking FMLA leave” on July 27, 2017. Dkt. 28 at 26. In making this argument, Goodman insists that it instructed Morgan to call Cheryl Kennedy and the absentee hotline in a letter dated May 5, 2016. But that letter is related to Morgan’s request for intermittent FMLA leave to care for his stepson. The company issued a different letter to Morgan on July 26, 2017, declaring him eligible for continuous FMLA leave due to his workplace injury. The July 26 letter does not mention Cheryl Kennedy or the absentee hotline. Instead, it requires Morgan to contact Martha Sommer once per week to provide “a current status of [his] medical condition” and to provide “a current work status report from [his] treating physician at least once a month.” Dkt. 38-2 at 1. Goodman does not explain the distinction between these two letters anywhere in its summary judgment briefing. Nonetheless, even if, as Goodman maintains, Morgan was required to call “Cheryl Kennedy or the hotline to indicate that he was taking FMLA leave,” there is a factual dispute which precludes summary judgment. Dkt. 28 at 26. Morgan says that he did call the hotline and report that he would be taking FMLA leave. That, alone, is a sufficient reason to deny summary judgment because I am required to view “all the facts and evidence in the light most favorable to” Morgan, the nonmovant. Ortega Garcia v. United States, 986 F.3d 513, 524 (5th Cir. 2021). Goodman maintains that the substance of the alleged phone call to the absentee hotline was insufficient, but I am unwilling to make that determination at this time. That is a fact question best left for the jury to decide.
As to element 5, Goodman argues “there is zero evidence Goodman acted in a way to deny Morgan his FMLA rights” because it “placed him on FMLA for a short time [on] July 26, 2017, before it found out he had been released to work.” Dkt. 28 at 26. To avoid wading into the factual dispute regarding the sequence of events, I merely note that Goodman’s chronology is disputed. Viewing the summary judgment evidence in the light most favorable to Morgan, as I must, there is a genuine issue of material fact as to whether Goodman denied Morgan the benefits to which he was entitled under the FMLA.
Morgan also asks me to dismiss four of Goodman’s affirmative defenses as insufficiently pled under Rule 12(c). Because I find that Goodman’s Answer provides Morgan notice of the affirmative defenses Goodman intends to raise, I recommend that Morgan’s motion be denied.
Federal Rule of Civil Procedure 12(c) permits parties to obtain a judgment on the pleadings “[a]fter the pleadings are closed—but early enough not to delay trial.” FED. R. CIV. P. 12(c). Although Morgan characterizes his motion as proceeding under Rule 12(c), “a motion to strike defenses under Rule 12(f) is more appropriate when a plaintiff disputes the sufficiency of some of a defendant’s defenses.” Franks v. Tyhan, Inc., No. H-15-191, 2016 WL 1531752, at *2 (S.D. Tex. Apr. 15, 2016). See also 5C CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 1369 (3d ed. 2008) (“If a plaintiff seeks to dispute the legal sufficiency of fewer than all of the defenses raised in the defendant’s pleading, he should proceed under Rule 12(f) rather than under Rule 12(c) because the latter leads to the entry of a judgment.”). I will, therefore, construe Morgan’s Rule 12(c) motion as a Rule 12(f) motion to strike. See Franks, 2016 WL 1531752, at *2 (construing a motion to dismiss affirmative defenses under Rule 12(c) as a motion to strike under Rule 12(f)). Under Rule 12(f), a district court may, at its discretion, “strike from a pleading an insufficient defense.” FED. R. CIV. P. 12(f)(1).
A defendant responding to a lawsuit must “state in short and plain terms its defenses to each claim asserted against it” and “affirmatively state any ... affirmative defense[s].” FED. R. CIV. P. 8(b)(1), (c)(1). In 1999, the Fifth Circuit held that a defendant “must plead an affirmative defense with enough specificity or factual particularity to give the plaintiff ‘fair notice’ of the defense that is being advanced.” Woodfield v. Bowman, 193 F.3d 354, 362 (5th Cir. 1999). The Supreme Court issued its seminal opinions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009) a decade later, establishing that a plaintiff seeking to avoid dismissal must plead “enough facts to a state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. To date, the Fifth Circuit has not addressed whether Twombly and Iqbal effectively overruled Woodfield, leaving unsettled the pleading standard a district court should apply to affirmative defenses. See Franks, 2016 WL 1531752, at *2. Naturally, the parties dispute which standard should apply here. Morgan contends that the heightened pleading standard established by Twombly and Iqbal applies to affirmative defenses, while Goodman argues that simple notice pleading will suffice.
Before he was elevated to the Fifth Circuit, Judge Gregg Costa noted that there are four compelling reasons in the aftermath of the Twombly and Iqbal decisions for applying the fair notice pleading standard to affirmative defenses:
First, Iqbal and Twombly interpreted the text of Rule 8(a)(2), which requires a statement “showing the pleader is entitled to relief,” which differs from Rule 8(c)’s requirement that the defendant “affirmatively state any avoidance or affirmative defense.” Second, a defendant only has 21 days to serve an answer. Third, while a motion to dismiss can resolve a case, thereby avoiding discovery entirely, motions to strike only prolong pre-discovery motion practice; as such, raising the standard for pleading affirmative defenses would only encourage more motions to strike.
* * * *
[Fourth, the] ‘insufficient defense’ language in Rule 12(f) has traditionally been read to allow challenges to the legal sufficiency of an asserted defense, as opposed to whether the defense contains sufficient factual matter, [as required under Rule 12(b)(6)].
United States ex rel. Parikh v. Citizens Med. Ctr., 302 F.R.D. 416, 418–19 (S.D. Tex. 2014) (Costa, J.) (cleaned up). The authority in this District also weighs heavily in favor of finding that affirmative defenses are subject to a fair notice pleading standard. See, e.g., Fernandes v. VMOC LLC, No. H-18-1544, 2018 WL 4901033 (S.D. Tex. Oct. 9, 2018) (“While complaints must satisfy the Iqbal and Twombly standard, the defendants’ answer must only ‘identify the affirmative defense in question and provide notice of its basis.’ ” (quoting Woodfield, 193 F.3d at 362)); Trevino v. RDL Energy Servs., L.P., No. H-14-1936, 2016 WL 11477431, at *4 (S.D. Tex. July 21, 2016) (applying the fair notice pleading standard to any affirmative defenses); T.R.M. v. GlaxoSmithKline LLC, No. 4:14-cv-00452, 2015 WL 12551485, at *2 (S.D. Tex. Aug. 21, 2015) (“Affirmative defenses are not subject to the heightened pleading requirements stated in [Twombly].”). I will not deviate from this line of authority. Goodman’s affirmative defenses need only provide Morgan “enough specificity or factual particularity to give [Morgan] ‘fair notice’ of the defense that is being advanced.” T.R.M., 2015 WL 12551485, at *2 (quotation omitted).
Striking an affirmative defense is rare and only warranted when a defense “cannot, as a matter of law, succeed under any circumstance.” Moody Nat’l CI Grapevine S., L.P. v. TIC Texas Two 23, L.L.C., No. H-19-0711, 2019 WL 5595332, at *2 (S.D. Tex. Oct. 30, 2019) (quotation omitted). “Merely pleading the name of some affirmative defenses may be sufficient to provide the plaintiff with fair notice.” McNeely v. Trans Union LLC, No H-18-849, 2019 WL 338127, at *2 (S.D. Tex. Jan. 28, 2019).
According to Morgan, Goodman’s Answer contains “no facts to support the proposition that: (1) Plaintiff failed to mitigate damages[;] (2) Defendant discovered after-acquired evidence[;] (3) Plaintiff did not engage in protected activity[;] and (4) Defendant had a legitimate, non-discriminatory, non-retaliatory, and non-pretextual reason for” terminating Morgan’s employment. Dkt. 36 at 21.
Goodman alleged in its Answer to Morgan’s First Amended Petition that Morgan “failed to mitigate his alleged damages.” Dkt. 14 at 6. Morgan argues that this affirmative defense should be struck because “Defendant’s Answer pleads no facts at all or even remotely suggests that substantially equivalent employment was available.” Dkt. 36 at 24.
Having already determined that Goodman need only provide “fair notice” of an affirmative defense, I now conclude that Goodman’s defense that Morgan “failed to mitigate his alleged damages” meets that lenient standard. Dkt. 14 at 6. Other courts have found the same language satisfactory. See Tran v. Thai, No. H-08-3650, 2010 WL 723633, at *1–2 (S.D. Tex. Mar. 1, 2010) (finding “[t]he plaintiff has failed to mitigate damages, if any, as required by law” sufficient to provide fair notice). Morgan’s motion to strike or otherwise dismiss Goodman’s failure to mitigate defense should be denied.
Goodman alleged in its Answer that Morgan’s “claims for damages are barred, in whole or in part, by the after acquired evidence doctrine.” Dkt. 14 at 6. Morgan seeks to strike this affirmative defense because “Goodman’s Answer alleged no facts establishing or even suggesting the existence of such wrongdoing by Roddie Morgan, let alone that Goodman discovered it or that it was so severe that he would have been terminated if Goodman learned of it earlier.” Dkt. 36 at 25.
“The after-acquired evidence doctrine shields an employer from liability or limits available relief where, after a termination, the employer learns for the first time about employee wrongdoing that would have caused the employer to discharge the employee.” Tomasini v. Mt. Sinai Med. Ctr. of Fla., Inc., 315 F. Supp. 2d 1252, 1257 (S.D. Fla. 2004) (quotation omitted); accord Norman v. Valv Techs., Inc., No. H-09-3997, 2011 WL 13318414, at *2 (S.D. Tex. Jan. 19, 2011) (finding on a Rule 12(f) motion to strike that “questions of fact and law exist[ed] regarding the applicability of this defense” to plaintiff’s FLSA retaliation claims).
Neither party has briefed whether the after-acquired evidence doctrine applies in the FMLA or Texas Workers’ Compensation context, but Goodman suggests in its summary judgment response that the doctrine could limit Morgan’s damages because Goodman would have terminated Morgan when he allegedly submitted a backdated chiropractor’s note in February 2018. At this juncture, I need only observe that Goodman’s Answer effectively notified Morgan of its intent to raise the after-acquired evidence defense. My hesitance to strike this defense is enough to allow it to remain. See Moody Nat’l, 2019 WL 5595332, at *2 (“Striking an affirmative defense is warranted if it cannot, as a matter of law, succeed under any circumstance.” (quotation omitted)).
Next, Morgan contends that “Defendant’s Answer pleads no specific facts setting forth the basis for its supposed contention that Mr. Morgan did not engage in protected activity.” Dkt. 36 at 26. Goodman does not respond to this allegation, but I have reservations about whether this issue is truly an affirmative defense or rather an element of Morgan’s prima facie case. In any case, given the low pleading standard applied to affirmative defenses, Morgan’s motion to strike this portion of Goodman’s Answer should be denied.
Goodman’s Answer contends that it “had legitimate, non-discriminatory, non-retaliatory, and non-pretextual reasons for” terminating Morgan’s employment, and that “Plaintiff would have been terminated even in the absence of any alleged discrimination and/or retaliation on the part of defendant.” Dkt. 14 at 7. Morgan argues that these statements fail to provide “specific facts setting forth the basis for its supposed contention that it would have made the same [employment] decision,” and requests that Morgan be granted judgment on the pleadings as to Goodman’s “mixed-motives defense.” Dkt. 36 at 26.
As discussed earlier, Goodman’s Answer need only provide Morgan “fair notice” of its intent to raise an affirmative defense. Although a close call, Morgan was able to glean from Goodman’s Answer that it intended to raise a mixed-motives defense. That is enough to survive a motion to strike or dismiss.
For the reasons identified above, I recommend that both motions for summary judgment be DENIED and that this case proceed to trial on the merits.
The Clerk shall provide copies of this Memorandum and Recommendation to the respective parties who have fourteen days from receipt to file written objections pursuant to Federal Rule of Civil Procedure 72(b) and General Order 2002–13. Failure to file written objections within the time period mentioned shall bar an aggrieved party from attacking the factual findings and legal conclusions on appeal.
SIGNED on this 10th day of March 2021.
Although employers have no obligation to provide employees with FMLA leave until the employee has worked for the employer for more than a year, Goodman credited Morgan for his time spent working for Goodman through the third-party contractor.
As an aside, it “is highly unusual for a plaintiff in a [retaliation] case to move for summary judgment. One could read hundreds if not thousands of decisions in these cases without coming across one in which a plaintiff moved for summary judgment, much less prevailed.” Day v. City of Baraboo, No. 06-C-188-C, 2007 WL 5633174, at *6 (W.D. Wis. Jan. 31, 2007).
United States District Court, S.D. Texas, Brownsville Division.
JOSHUA PARKS, Plaintiff,
NORDEX USA, INC., et al., Defendants.
CIVIL ACTION NO. 1:19-CV-222
*1 Plaintiff Joshua Parks brings this action against 12 parties involved in the operation of a wind farm in Willacy County, Texas. (First Am. Compl., Doc. 42) He seeks recovery for injuries he suffered from a fall while employed at the wind farm. (Id. at 24)
In part, Parks sues his employer, Axis Renewable Group, Inc., alleging a negligence claim based on vicarious liability, due to the alleged failure of Axis’s employees to provide and maintain a safe working environment.1 (First Am. Compl., Doc. 42, ¶¶ 5.6–5.7) Axis moves for summary judgment on the grounds that its workers’ compensation benefits are Parks’s exclusive remedy from Axis for the injuries he allegedly sustained. (Motion, Doc. 68)
Parks alleges that in November 2017, he fell and suffered injuries while in the course and scope of his employment. (First Am. Compl., Doc. 42, ¶ 4.1) At the time, Axis employed Parks, (B. Moore Decl., Doc. 68-3, ¶ 3), and carried workers’ compensation insurance covering its Texas employees, which included Parks. (C. Reichardt Aff., Doc. 68-4, ¶ 2; Doc. 68-4, 31) Parks offers no evidence controverting these facts.
Summary judgment is proper if the evidence, viewed in the light most favorable to the nonmoving party, shows that no genuine dispute of material fact exists and that the movant is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A genuine dispute over material facts exists if the evidence presents an issue “that properly can be resolved only by a finder of fact because [it] may reasonably be resolved in favor of either party,” and the fact at issue might affect the outcome of the case. Anderson v. Liberty Lobby, Inc. 47 U.S. 242, 248, 250 (1986). The moving party “bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact.” Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir. 2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322–25 (1986)). When a movant bears the burden on an issue, such as with respect to an affirmative defense, the movant must prove an absence of a genuine issue of material fact to carry its burden, even where the nonmovant has not filed a response. See Hibernia Nat. Bank v. Administracion Cent. Sociedad Anonima, 776 F.2d 1277, 1279 (5th Cir. 1985). In considering a motion for summary judgment, “[t]he court need consider only the cited materials, but it may consider other materials in the record.” FED. R. CIV. P. 56(c)(3).
*2 Under the Texas Workers Compensation Act, the “[r]ecovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage...against the employer...for the death of or a work-related injury sustained by the employee.” TEX. LABOR CODE § 408.001(a) (effective Sept. 1, 2005) (emphasis added). This provision “exempts the employer, its agents, and its employees from common-law liability claims based on negligence or gross negligence.” Warnke v. Nabors Drilling USA, L.P., 358 S.W.3d 338, 343 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (citing TEX. LABOR CODE § 408.001(a)); see also Exxon Corp. v. Perez, 842 S.W.2d 629, 630 (Tex. 1992) (stating employer is “immune”); Castleberry v. Goolsby Bldg. Corp., 617 S.W.2d 665, 666 (Tex. 1981) (stating employer is “exempt”). The exclusive remedy provision is an affirmative defense an employer must plead and prove. Perez, 842 S.W.2d at 630; Warnke, 358 S.W.3d at 343.
To invoke the protections that Section 408.001 provides, the employer must show the injured worker was: (1) an employee of the company at the time at which the work-related injury occurred, and (2) covered by workers’ compensation insurance. Garza v. Exel Logistics, Inc., 161 S.W.3d 473, 475 (Tex. 2005); Warnke, 358 S.W.3d at 343. If the employer successfully demonstrates as much, “employee claims of work-related negligence and gross negligence are barred.” Warnke, 358 S.W.3d at 343; see also Perez, 842 S.W.2d at 630 (“[A]n employer who pleads and proves subscriber status is immune from liability for common-law negligence and the employee’s exclusive remedy is under the Act.”). The exclusive recovery bar also applies to claims of premises liability based on respondeat superior. See Lockett v. HB Zachry Co., 285 S.W.3d 63, 75 (Tex. App.—Houston [1st Dist.] 2009, no pet.) (affirming summary judgment on a premises liability claim for the defendant employer on the basis of the exclusive remedy bar of the TWCA); Mosqueda v. G & H Diversified Mfg., Inc., 223 S.W.3d 571, 583–84 (Tex. App.—Houston [14th Dist.] 2007, pet. denied) (same).
Here, Parks alleges that when he suffered his alleged injuries, he was acting in the course and scope of his employment. (First Am. Compl., Doc. 42, ¶ 4.1) Axis submits competent summary judgment evidence demonstrating that it employed Parks at the time of the incident, (B. Moore Aff., Doc. 68-3, ¶ 3), and held a workers’ compensation insurance policy covering its Texas employees. (C. Reichardt Aff., Doc. 68-4, ¶ 2; Doc. 68-4, 31)
Parks filed no response to the Motion, which renders Axis’s summary judgment evidence uncontroverted. As a result, Axis has demonstrated that as a matter of law, Section 408.001 of the TWCA applies and bars Parks’s cause of action for negligence and his alternative claim for premises liability.
For these reasons, it is:
ORDERED that Defendants Axis Renewable Group, Inc. and Campo Lujano Axis Grupo, Inc.’s Motion for Summary Judgment Under the Exclusive Remedy Doctrine (Doc. 68) is GRANTED; and
ORDERED that Plaintiff Joshua Parks’s causes of action against Defendants Axis Renewable Group, Inc. and Campo Lujano Axis Grupo, Inc. are DISMISSED WITH PREJUDICE.
Signed on January 21, 2021.
Fernando Rodriguez, Jr.
United States District Judge
In January 2019, Axis Renewable Group, Inc. changed its name to Campo Lejano Axis Grupo, Inc. (B. Moore Decl., Doc. 68–3, ¶ 3) Parks sued both Axis Renewable and Campo Lejano, but presents no evidence controverting that they are one and the same entity. The Court’s use of “Axis” refers to Campo Lejano Axis Grupo, Inc., formerly known as Axis Renewable Group, Inc.
In its Motion, Axis invokes the no-evidence summary judgment standard under Texas Rule of Civil Procedure 166a. (Motion, Doc. 68, 2) However, as the matter is before this Court based on diversity jurisdiction, the Court will apply federal procedural law, including the summary judgment standard in Federal Rule of Civil Procedure 56. Cates v. Sears, Roebuck & Co., 928 F.2d 679, 687 (5th Cir. 1991); see also Royal Surplus Lines Ins. Co. v. Brownsville Indep. Sch. Dist., 404 F. Supp. 2d 942, 947 (S.D. Tex. 2005) (applying the federal summary judgment standard rather than the state standard).
United States District Court, S.D. Texas, Houston Division.
BILLY JOHNSON, Plaintiff,
SAN JACINTO COLLEGE, Defendant.
Civil Action No.: 4:20-cv-2948
This matter is before the Court on Plaintiff’s Motion to Remand (Dkt. 5) and Defendant’s Motion to Dismiss Plaintiff’s state law claims (Dkt. 7). Having considered the pleadings, the parties’ filings, and the law, it is ORDERED that Plaintiff’s claim for workers’ compensation retaliation under Chapter 451 of the Texas Labor Code is SEVERED from this cause of action and REMANDED to the 215th Judicial District Court for Harris County, Texas. It is, further, ORDERED that Defendant’s Motion to Dismiss (Dkt. 7) is DENIED in part as MOOT and GRANTED in part.
Plaintiff Billy Johnson, who is currently 71 years old, began working for Defendant in December 2006. Dkt. 1-2 at 3. In August 2016, Johnson fell off a forklift while on the job and filed a workers’ compensation claim shortly thereafter. Id. Plaintiff alleges that, following the injury, “it became clear that Defendant had no interest in employing him anymore; not only because he had filed a workers’ compensation claim but also because of his age.” Id. Plaintiff alleges we was eventually “forced” to retire in June 2018. Id.
Plaintiff filed the pending action in the 215th Judicial District Court for Harris County, Texas on May 21, 2019, bringing three causes of action against Defendant under the Texas Labor Code. Dkt. 1-2 at 2-9. Plaintiff filed his First Amended Petition in state court on August 1, 2020 adding multiple federal law claims. Dkt. 1-10 at 2-11. Plaintiff’s Amended Petition includes claims for age discrimination and retaliation under the Age Discrimination in Employment Act (“ADEA”) and Texas Commission on Human Rights Act (“TCHRA”) codified in Chapter 21 of the Texas Labor Code; disability discrimination and retaliation under the Americans with Disabilities Act (“ADA”); and workers’ compensation retaliation in violation of the Texas Workers’ Compensation Act (“TWCA”), codified in Chapter 451 of the Texas Labor Code. Id.
Defendant filed a timely Notice of Removal (Dkt. 1) on August 21, 2020 based on federal question jurisdiction. Plaintiff filed the pending Motion to Remand (Dkt. 5), in which Plaintiff requests the Court sever his workers’ compensation retaliation claim and remand it to the 215th Judicial District Court of Harris County, Texas. Dkt. 5 ¶ 7. Defendant filed the pending Motion to Dismiss Plaintiff’s state law claims on September 22, 2020. Dkt. 7.
Plaintiff argues his workers’ compensation retaliation claim must be severed and remanded to state court because it is non-removable. Dkt. 5 at 3-4. Federal courts have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States. 28 U.S.C. § 1331. A defendant may remove an action subject to the original jurisdiction of the federal courts to the district court embracing the place where the action is pending in state court. Id. § 1441. Claims brought under the ADA and ADEA are removable claims subject to the original jurisdiction of the federal courts because they arise under the laws of the United States. Workers’ compensation claims, on the other hand, are non-removable pursuant to 28 U.S.C. § 1445(c), which provides that civil actions in state court arising under the workers’ compensation laws of that state may not be removed to the federal courts. Id. § 1445(c). Where a civil action includes both claims subject to the original jurisdiction of the federal courts and claims that have been made non-removable by statute, upon removal based on federal question jurisdiction, the district court must sever from the action all non-removable claims and remand them to the state court. Id. § 1441(c)(A)-(B).
In this case, Plaintiff alleges that he hired an attorney to represent him in a workers’ compensation claim, filed a claim in good faith, and was then “wrongfully discharged by forced retirement, discriminated, and/or retaliated against.” Dkt. 1-10 at 8. The claim for workers’ compensation retaliation clearly arises under Texas workers’ compensation laws.1 See Jackson v. Wal-Mart Stores Texas, LLC, 925 F. Supp. 2d 810, 813 (N.D. Tex. Feb. 25, 2013) (quoting Sherrod v. Am. Airlines, Inc., 451.001 is a claim arising under Texas worker’s compensation laws.”). The parties do not dispute that, assuming the Court orders remand of the workers’ compensation claim, the claim should be severed, leaving Plaintiff’s remaining claims in federal court. The Court agrees. See 28 U.S.C. § 1441(c)(1)-(2) (stating when a civil action includes claims arising under the laws of the United States and claims that have been nonremovable by statute, the district court should sever and remand the nonremovable claims); Jackson, 925 F. Supp. 2d at 814 (“[I]f a court has federal question jurisdiction over one claim in a case and Congress has made another independent claim in the same case nonremovable, the court may sever and remand only the nonremovable claim.”)
However, Defendant argues that remand is improper because Defendant is immune from workers’ compensation retaliation claims based on its status as a political subdivision of the state. Dkt. 13 at 2-3. Defendant suggests it would be “improper to remand this matter to state court based upon the pleading of a legal theory from which the Defendant has immunity[,]” but cites no authority for the position. Id. at 3. The plain language of 28 U.S.C. § 1441(c)(1)-(2) requires the Court to sever the non-removable workers’ compensation retaliation claims:
(c) Joinder of Federal law claims and State law claims.
(1) If a civil action includes--
(A) a claim arising under the Constitution, laws, or treaties of the United States (within the meaning of section 1331 of this title), and
(B) a claim not within the original or supplemental jurisdiction of the district court or a claim that has been made nonremovable by statute, the entire action may be removed if the action would be removable without the inclusion of the claim described in subparagraph (B).
(2) Upon removal of an action described in paragraph (1), the district court shall sever from the action all claims described in paragraph (1)(B) and shall remand the severed claims to the State court from which the action was removed...
28 U.S.C. § 1441(c)(1)-(2) (emphasis added). Therefore, the workers’ compensation claims will be severed and remanded, leaving the immunity issue to be decided by the state court.
In its Motion to Dismiss, Defendant argues Plaintiff’s claims under Chapter 21 of the Texas Labor Code, (the “TCHRA claims”) and Chapter 451 of the Texas Labor Code (the “TWCA claims”) must be dismissed. As discussed above, the Court must sever and remand the TWCA/workers’ compensation claims. Therefore, Defendant’s motion to dismiss the TWCA/workers’ compensation claims is DENIED as MOOT.
With respect to Plaintiff’s TCHRA claims, Defendant argues Plaintiff cannot state a claim for age discrimination or retaliation because he failed to timely file a charge of discrimination.2“[T]he Texas Labor Code requires those claiming employment discrimination to file an administrative complaint with the [Texas Workforce Commission (“TWC”) ] before filing an action in court[.]” Hinkley v. Envoy Air, Inc., 968 F.3d 544, 552 (5th Cir. 2020) (citations omitted). The TWC investigates the administrative complaint and determines whether there is a reasonable basis to believe the employer engaged in the practice alleged in the administrative complaint. Id. (citations omitted). The employee or complainant may bring a civil action against the employer, but only if he complies with the statutory requirements for exhausting administrative remedies, one of which is that the administrative complaint be filed no later than the 180th day after the alleged unlawful employment practice occurred. Id. (citations omitted) (citing TEX. LAB. CODE § 21.202(a)). The Texas Labor Code makes the exhaustion of remedies provision mandatory and provides for dismissal of untimely claims. Id. at 553. Thus, § 21.202(a) of the Texas Labor Code creates a statute of limitations defense to a TCHRA claim when the administrative charge is not filed within 180 days of the act alleged to be an unlawful employment practice.
Defendant attached to its Motion to Dismiss a copy of Plaintiff’s Charge of Discrimination (the “TWC Charge”) filed with the TWC.3 Dkt. 7-1 at 2. Plaintiff alleges the discrimination and retaliation against him began on October 27, 2016 and ended on June 1, 2018 when he was forced to retire. Id. Thus, in order to exhaust administrative remedies for violations of the TCHRA prior to filing suit against Defendant, Johnson was required to file the charge of discrimination within 180 days of his forced retirement, or by December 1, 2018. The Charge of Discrimination was not filed until February 14, 2019, a date clearly beyond the mandatory 180-day deadline. Plaintiff failed to comply with the mandatory deadline for filing the administrative charge of discrimination. As a result, his claims against Defendant for discrimination and retaliation in violation of the TCHRA are time-barred and should be dismissed with prejudice. See Hinkley, 968 F.3d at 554-55 (affirming district court’s dismissal with prejudice of plaintiff’s TCHRA claims where plaintiff failed to file a complaint with the EEOC or TWC within 180 days of the allegedly discriminatory action).
Pursuant to 28 U.S.C. §§ 1445(c) and 1441(c), Plaintiff’s Motion to Remand his workers’ compensation retaliation claims under Texas Labor Code § 451 is GRANTED. Plaintiff’s workers’ compensation retaliation claims are SEVERED from this cause of action and REMANDED to 215th Judicial District Court of Harris County, Texas.
Defendant’s Motion to Dismiss Plaintiff’s workers’ compensation retaliation claims is DENIED AS MOOT. Defendant’s Motion to Dismiss Plaintiff’s claims under the TCHRA is GRANTED and the TCHRA claims are DISMISSED WITH PREJUDICE.
Signed on January 5, 2021 at Houston, Texas.
Christina A. Bryan
United States Magistrate Judge
Section § 451 of the Texas Labor Code prohibits employers from discharging or discriminating against employees because they have (1) filed a workers’ compensation claim in good faith; (2) hired a lawyer to represent them in a workers’ compensation claim; (3) instituted in good faith a proceeding under the Texas Workers’ Compensation Act; or (4) testified in a proceeding under the Texas Workers’ Compensation Act. TEX. LABOR CODE § 451.001.
Plaintiff’s Response to Defendant’s Motion to Dismiss addresses only the motion to dismiss the workers’ compensation retaliation claims. Dkt. 14. Because Plaintiff failed to respond to Defendant’s argument regarding the TCHRA claims, the Court will consider the motion to dismiss those claims as unopposed. See Jackson v. Ferretis, Civil Action No. H-17-1922, 2017 WL 4221089, at *2 (S.D. Tex. Sep. 21, 2017) (citations omitted) (treating an argument for dismissal of the plaintiff’s claims as unopposed where the plaintiff failed to address the arguments in her response).
Typically, this Court’s review of a motion to dismiss is limited to the allegations in the complaint and attachments thereto. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000) (quotations omitted). However, the Court may consider attachments to a motion to dismiss and consider them part of the pleadings where “they are referred to in the plaintiff’s complaint and are central to her claim.” Id. (quotations omitted). In this case, Plaintiff did not attach a copy of the TWC Charge to his Amended Petition, but his complaint refers to it. Dkt. 1-10 at 3 (“[A] charge of discrimination was jointly filed with the Equal Employment Opportunity Commission (“EEOC”) and the Texas Workforce Commission Civil Rights Division (“TWC-CRD”)....”). Therefore, the Court will consider the TWC Charge when deciding Defendant’s Motion to Dismiss.
United States District Court, S.D. Texas, Houston Division.
MARIA DE LA LUZ BARRON MARTINEZ, Plaintiff,
VALASSIS SALES & MKTG. SERVS., INC. and VALASSIS DATA MGMT., INC. Defendants.
CIVIL ACTION NO. H-20-178
Filed on 10/08/2020 in TXSD
Lee H. Rosenthal Chief United States District Judge
*1 Valassis Communications, Inc. had a staffing services agreement with EmployBridge, LLC,1 under which EmployBridge assigned temporary employees to Valassis. EmployBridge agreed to, and did, carry workers’ compensation insurance for its assigned workers. As part of the staffing services agreement, EmployBridge agreed to designate Valassis as an alternate employer under the workers’ compensation policy. Valassis paid EmployBridge a “mark-up” of 37.10% for the policy premium. (Docket Entry No. 18-1 (Exhibit A), 18-5 (Exhibit E)).
In February 2019, EmployBridge assigned Maria de la Luz Barron Martinez as a temporary worker for Valassis. In May 2019, a Valassis employee allegedly pushed a pallet into Barron Martinez’s ankle, causing injury. Barron Martinez filed a claim for workers’ compensation with EmployBridge. (Docket Entry No. 18-2 (Exhibit F), 18-7 (Exhibit G), 18-8 (Exhibit H)).
In December 2019, Barron Martinez filed this action in state court against Valassis Sales & Marketing Services, Inc. and Valassis Data Management, Inc., and the defendants timely removed. Barron Martinez then filed an amended petition, replacing those defendants with Valassis Communications, Inc. Barron Martinez seeks damages for medical expenses, loss of support, pain and suffering, mental anguish, loss of consortium, pre- and post-judgment interest, and court costs.2 Valassis has moved for summary judgment. (Docket Entry No. 1-1, 1-3 (Exhibit A), 15, 18).
“Summary judgment is appropriate only if there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Vann v. City of Southaven, Miss., 884 F.3d 307, 309 (5th Cir. 2018) (per curiam) (internal quotation marks omitted); accord FED. R. CIV. P. 56(a). “A genuine dispute of material fact exists when the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Burrell v. Prudential Ins. Co. of Am., 820 F.3d 132, 136 (5th Cir. 2016) (internal quotation marks omitted). “The moving party ... bears the initial responsibility of informing the district court of the basis for its motion,” Brandon v. Sage Corp., 808 F.3d 266, 269–70 (5th Cir. 2015) (internal quotation marks omitted), and “identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact,” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
“Where the non-movant bears the burden of proof at trial, the movant may merely point to the absence of evidence and thereby shift to the non-movant the burden of demonstrating ... that there is an issue of material fact warranting trial.” Kim v. Hospira, Inc., 709 F. App’x 287, 288 (5th Cir. 2018) (per curiam) (internal quotation marks omitted). While the party moving for summary judgment must demonstrate the absence of a genuine and material factual dispute, it does not need to negate the elements of the nonmovant’s case. Austin v. Kroger Tex., L.P.,
*2 “ ‘When the moving party has met its ... burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings.’ ” Bailey v. E. Baton Rouge Parish Prison, 663 F. App’x 328, 331 (5th Cir. 2016) (per curiam) (quoting 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). “This burden will not be satisfied by some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.” Jurach v. Safety Vision, LLC, 642 F. App’x 313, 317 (5th Cir. 2016) (internal quotation marks omitted)). In deciding a summary judgment motion, the court draws all reasonable inferences in the light most favorable to the nonmoving party. Darden v. City of Fort Worth, 880 F.3d 722, 727 (5th Cir. 2018), cert. denied sub. nom. City of Fort Worth, Tex. v. Darden, 139 S. Ct. 69 (2018).
Section 408.001(a) of the Texas Labor Code provides that “[r]ecovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage ... for ... a work-related injury sustained by the employee.” “[A]n employee can have more than one employer for purposes of the [Texas Workers’ Compensation Act], and each employer may raise the defense of exclusive remedy as to an employee’s claims.” Gustafson v. Complete Mfg. Servs. Inc., No. 09-18-00415-CV, 2020 WL 4210499, at *3 (Tex. App. July 23, 2020) (citing Western Steel Co. v. Altenburg, 206 S.W.3d 121, 123 (Tex. 2006)). Valassis asserts that Section 408.001(a) applies because Valassis was a client of a temporary employment service and because Valassis was designated as an alternate employer on EmployBridge’s workers’ compensation insurance policy. The court addresses each argument in turn.
As Barron Martinez’s temporary employer, Valassis is entitled to summary judgment under Section 408.001(a) if it establishes that “(1) it was the client company of a temporary employment service; (2) the temporary employment service carried workers’ compensation insurance; and (3) that [Barron Martinez] was an employee covered by that workers’ compensation insurance coverage.” Robles v. Mount Franklin Food, L.L.C., 591 S.W.3d 158, 166 (Tex. App. 2019), review denied (June 12, 2020) (citing Texas Lab. Code §§ 93.004(b), 408.001(a)).
The uncontested evidence establishes that Valassis was a client company of a “temporary employment service.” Section 93.001(2) of the Texas Labor Code defines a “temporary employment service” as “a person who employs individuals for the purpose of assigning those individuals to the clients of the service to support or supplement the client’s workforce in a special work situation.” The staffing services agreement between Valassis and EmployBridge shows that EmployBridge was engaged to provide temporary employees to Valassis. (Docket Entry No. 18-2 (Exhibit B)). In their declarations, Deborah Guy-Girbovan, the Director of Insurance for EmployBridge, and Ruby Hernandez, the Human Resources Generalist for Valassis, testified that “EmployBridge provided temporary employees to Valassis” and that “[EmployBridge] assigned ... Barron Martinez ... to work for Valassis on a temporary on-call basis.” (Docket Entry No. 18-1 (Exhibit A), 18-6 (Exhibit F)). EmployBridge is a “temporary employment service,” and Valassis is a client.
The record also establishes that EmployBridge carries workers’ compensation insurance. See (Docket Entry No. 18-1 (Exhibit A), 18-3 (Exhibit C) (Certificate of Liability Insurance)). Finally, the record establishes that Barron Martinez was covered by EmployBridge’s workers’ compensation insurance policy. Barron Martinez admits that she filed a workers’ compensation claim, and the record shows that the claim was filed under EmployBridge’s policy. (Docket Entry No. 18-3 (Exhibit C), 18-7 at 4 (Exhibit G), 18-8 (Exhibit H)).
*3 Valassis is also entitled to summary judgment under Section 408.001(a) if “(1) it was [Barron Martinez’s] employer within the meaning of the [Texas Workers’ Compensation Act], and (2) it was covered by a workers’ compensation insurance policy.” Altenburg, 206 S.W.3d at 123.
The uncontested evidence establishes that Valassis was Barron Martinez’s “employer” for workers’ compensation purposes. Whether a “general employee of a temporary employment agency is also an employee of a client company for purposes of the [TWCA]” depends on “traditional indicia, such as the exercise of actual control over the details of the work that gave rise to the injury.” Garza v. Exel Logistics, Inc., 161 S.W.3d 473, 477 (Tex. 2005); accord Burton v. Freescale Semiconductor, Inc., 798 F.3d 222, 242 & n.21 (5th Cir. 2015). In her declaration, Hernandez testified that Barron Martinez “was working on [Valassis’s] premises, in furtherance of [Valassis’s] day-to-day business, and the details of her work were directed by [Valassis].” Hernandez further testified that Barron Martinez was trained and supervised by Valassis employees. (Docket Entry No 18-6 (Exhibit F)). And Barron Martinez admits that Valassis “controlled the details of [her] work at the time of the accident.” (Exhibit 18-7 at 4–5 (Exhibit G)). Valassis was Barron Martinez’s employer for workers’ compensation purposes.
The record establishes that Valassis was covered by a workers’ compensation policy. EmployBridge’s insurance policy contained an “alternate employer” endorsement that applied the policy to “those alternate employers as specifically required by contract.” (Docket Entry No. 18-4 (Exhibit D)). The staffing services agreement between EmployBridge and Valassis required EmployBridge to “provide alternate employer status to Valassis under its workers’ compensation policy.” (Docket Entry No. 18-2 at 11 (Exhibit B)). In her declaration, Guy-Girbovan testified that Valassis paid a “37.10% ‘mark-up,’ which covered, among other things, the premium for the Alternate Employer Endorsement.” (Docket Entry No. 18-1 (Exhibit A), 18-5 (Exhibit E)). That alternate employer coverage is sufficient. See Tractor Supply Co. of Texas, L.P. v. McGowan, No. 10-14-00132-CV, 2016 WL 1722873, at *3 (Tex. App. Apr. 28, 2016) (a temporary employer had workers’ compensation insurance coverage through an alternate employer endorsement in a temporary employment service’s insurance policy); Robles, 591 S.W.3d at 167 n.5 (same).
On the uncontested facts in the summary judgment record, Valassis is entitled, as a matter of law, to summary judgment on its defense under Section 408.001(a). Valassis’s motion for summary judgment, (Docket Entry No. 18), is granted. Final judgment will be entered by separate order.
SIGNED on October 8, 2020, at Houston, Texas.
EmployBridge operates under various trade names. (Docket Entry No. 18-1 (Exhibit A), 18-2 (Exhibit B)). The court does not refer to EmployBridge by those trade names.
Although the First Amended Petition does not provide an exact amount for damages, the original petition asserted damages of “over $200,000.00 but less than $1,000,000.00.” (Docket Entry No. 1-3 at 2).
MARIA RAWLS, Plaintiff,
OLD REPUBLIC GENERAL INSURANCE GROUP, INC., et al, Defendants.
CIVIL ACTION NO. 5:19-CV-159
Diana Saldaña United States District Judge
*1 This is a personal injury case arising from the injuries, and eventual death, of Roger Rawls (“Rawls”). (Dkt. 1, Ex. 4 at ¶ 14.)1 The injury and death were allegedly caused by a workplace accident that occurred on October 26, 2017 in Luling, Texas, at a facility owned by Defendant Quality Carriers, Inc (“Quality Carriers”).2 (Id.) Rawls was employed by Quality Carriers as a trailer truck driver and operator at the time of the incident. (Id.; see Dkt. 17 at ¶ 13.) Plaintiffs are Maria Rawls, individually, as the representative of the Estate of Rawls, and as next friend of Rawls’s minor children. (Dkt. 1, Ex. 4 at ¶ 2.) Maria Rawls is the surviving spouse of Rawls. (Id.) Plaintiffs allege that Rawls was injured while conducting a pre-trip inspection of a Quality Carriers-owned International-brand truck (the “Tractor”)3 when his foot fell through a gap in the Tractor’s catwalk and that these injuries ultimately led to his death on November 3, 2017. (Dkt. 1, Ex. 4 at ¶ 16.) Plaintiffs are thus suing Quality Carriers for negligence, alleging that Quality Carriers breached its duty of care to Rawls with regard to his workplace safety. (Id. at ¶¶ 21–23.) Plaintiffs are also suing Defendant Navistar, Inc. (“Navistar”)4 on products liability grounds, alleging that Navistar improperly designed and/or manufactured the Tractor on which Rawls was injured. (Id. at ¶¶ 24–28.) Plaintiffs further allege that Defendant Old Republic General Insurance Group, Inc. (“Old Republic”) has wrongfully refused to pay the claim related to Rawls’s death, for which a decision by the Texas Workers’ Compensation Commission is forthcoming. (Id. at ¶ 17.) As of the date this case was removed to federal court, the “final appeals denial [for Plaintiffs’ workers’ compensation claim] has not yet been made.”5 (Dkt. 8 at 5.)
*2 Now pending are Plaintiffs’ Motion to Remand (Dkt. 3) and Navistar’s Motion to Dismiss for Lack of Personal Jurisdiction, Motion to Dismiss for Failure to State a Claim Upon Which Relief Can be Granted, and Motion to Dismiss or Transfer Venue (collectively, the “Motion to Dismiss”). (Dkt. 2).
Plaintiffs originally filed this suit in Texas State court in Webb County, but in November of 2019, Navistar removed the case to the Laredo Division of the Southern District of Texas. (Dkt. 1 at 1–2.) Navistar’s removal invokes the Court’s diversity jurisdiction under 28 U.S.C. § 1332. (Id. at 3.) Navistar alleges that Plaintiffs are citizens of Texas, all Defendants are citizens of other States, and the amount in controversy exceeds $75,000. (Id. at 3–4.) Plaintiffs’ Motion to Remand (Dkt. 3) does not contest these allegations, but rather hinges on the statutory non-removability of workers’ compensation claims under 28 U.S.C. § 1445(c). (Dkt. 3 at 4.) According to Plaintiffs, because the suit includes a workers’ compensation claim related to an alleged wrongful denial of Rawls’s death benefits, it must be remanded to state court.6 (Id.) In its response (Dkt. 7), Navistar counters that Plaintiffs’ workers’ compensation claim was improperly7 joined to defeat removal and the Court must therefore dismiss the claim and dispose of Plaintiffs’ sole justification to remand the case. (Id. at 1–2.)
Regarding the Motion to Dismiss (Dkt. 2), because the Court finds that Navistar’s motion to dismiss for lack of personal jurisdiction (Dkt. 2 at 4–9) should be granted, it need not address arguments made for and against dismissal on other grounds. However, over the course of multiple responses, replies, and supplements, the issue of personal jurisdiction has evolved as the parties alleged more jurisdictional facts and provided relevant evidence of such facts. (See Dkts. 2, 4, 6, 11, 12, 15.) In its most current form, the question has boiled down to whether Navistar should have expected the Tractor to be purchased or used in Texas given Navistar’s affiliations with both the State itself and the entities to which the Tractor was transferred prior to its eventual arrival in Texas. Plaintiffs also ask that the Court provide opportunity for jurisdictional discovery on these topics. (See Dkt. 12 at 9–10.)
Having considered Parties’ filings and the applicable law, the Court concludes that Plaintiffs’ Motion to Remand (Dkt. 3) must be denied, and Navistar’s Motion to Dismiss for Lack of Personal Jurisdiction (Dkt. 2) must be granted. The Court also concludes that transfer of venue would not be proper either pursuant to Navistar’s Motion to Dismiss or Transfer Venue (Dkt. 2) or as a matter of the Court’s sua sponte authority at this time. See Caldwell v. Palmetto State Sav. Bank of S.C., 811 F.2d 916, 919 (5th Cir. 1987) (holding that “a district court may transfer a case upon a motion or sua sponte” under both 28 U.S.C. § 1404 and § 1406). Because Plaintiffs’ claims against Navistar are dismissed for lack of personal jurisdiction, the Court does not reach Navistar’s Motion to Dismiss for Failure to State a Claim (Dkt. 2). See Mejia v. Travis Buquet Constr., LLC, No. CV 6:16-01504, 2017 WL 946715, at *1 (W.D. La. Mar. 8, 2017) (“Generally the court should not consider challenges under Rule 12(b)(6) until after jurisdiction and venue challenges are resolved.”)
*3 “Customarily, a federal court first resolves doubts about its jurisdiction over the subject matter” before addressing objections to personal jurisdiction. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 578 (1999). Keeping with this custom, the Court first considers Plaintiffs’ Motion to Remand (Dkt. 3) before turning to Navistar’s Motion to Dismiss (Dkt. 2).
Diversity jurisdiction exists where the amount in controversy exceeds $75,000 and no plaintiff is a citizen of the same state as any defendant. 28 U.S.C. § 1332(a)(1); Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005) (citing Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 267 (1806)). Here, Plaintiffs do not argue that the amount in controversy and diversity of citizenship requirements are not met, and the Court finds that they are. (See Dkt. 3.) Thus, the only question for the Court is whether the inclusion of a non-removable workers’ compensation claim requires that the entire action be remanded to state court.
As a preliminary note, most federal courts deciding an improper joinder issue are faced with an alleged improper joinder of parties, rather than an improper joinder of claims, as is the case here. However, the few courts that have addressed improper joinder of claims have applied improper joinder of parties jurisprudence. See Parent v. Murphy Expl. & Prod. Co. - USA, No. CIV. A. 07-446-C, 2008 WL 191636, at *5 (M.D. La. Jan. 22, 2008) (“[T]he court can see no reason not to apply [an improper joinder of parties] analysis to an assertion of [improper] joinder of claims.”); see also Dagon v. BNSF Ry. Co., No. 19-CV-00417-JPG, 2020 WL 4192348, at *5 Ill. July 21, 2020) (concluding that the same jurisprudence should be used for “these analogous doctrines” because any reason to apply different evidentiary standards was “not readily apparent”). Joining with these sister courts, the Court applies the Fifth Circuit jurisprudence on improper joinder of parties to the alleged improper joinder of claims here.8
1. Legal Standard
The removing party bears the heavy burden of demonstrating improper joinder. Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 574 (5th Cir. 2004) (en banc). To establish improper joinder, the removing party must demonstrate either (1) actual fraud in the pleading of jurisdictional facts, or (2) the plaintiff’s inability to establish a cause of action in state court against the party or claim alleged to be improperly joined. Id. at 573 (citing Travis v. Irby, 326 F.3d 644, 646-47 (5th Cir. 2003)). Only the second prong, which requires the removing party to show that there is “no possibility of recovery by the plaintiff” on the claim meant to defeat federal jurisdiction, is relevant here. See id.
To determine whether a plaintiff has any possibility of recovery, a court should “conduct a Rule 12(b)(6)-type analysis, looking initially at the allegations of the complaint to determine whether the complaint states a claim under state law against the in-state defendant. Id. Ordinarily, if a plaintiff can survive a Rule 12(b)(6) challenge, there is no improper joinder.” Id. But in some cases, a court may, in its discretion, “pierce the pleadings and conduct a summary inquiry.” Id. Regardless of which route it takes, “the district court must examine the plaintiff’s possibility of recovery against the defendant at the time of removal.” Flagg v. Stryker Corp., 819 F.3d 132, 137 (5th Cir. 2016) (emphasis added).
*4 In this case, the Court need not look past the face of the pleadings because Plaintiffs’ workers’ compensation claim is barred by the Fifth Circuit’s en banc opinion in Flagg and should be dismissed as having been improperly joined. See Flagg, 819 F.3d at 139.
In Flagg, the Fifth Circuit considered a malpractice and products liability case in Louisiana where the plaintiff sued the medical professionals who had allegedly botched his toe implant surgery and the manufacturers of the implant itself. 819 F.3d at 134. The manufacturing defendants were not Louisiana citizens, but the medical defendants, like the plaintiff, were all Louisiana citizens. Id. at 135. The diverse manufacturing defendants removed the case under diversity jurisdiction despite the apparent lack of subject matter jurisdiction due to the inclusion of the non-diverse medical defendants. Id. at 134. The manufacturing defendants argued that removal was still proper because the plaintiff had not yet exhausted his administrative remedies against the non-diverse defendants, as required by the Louisiana Medical Malpractice Act (“LMMA”), so those defendants should be dismissed as improperly joined. Id. at 134–35. The Fifth Circuit agreed and held that the medical defendants had been improperly joined because “the LMMA explicitly prohibited [the plaintiff] from suing the Medical Defendants in any court .... [, so he] had no possibility of recovery against [them].” Id. at 139. The Flagg Court emphasized that “if a statute requires the plaintiff to exhaust his administrative remedies before filing suit, we enforce that statutory mandate as written.” Id.
The situation before the Court presents a nearly identical legal question. While Plaintiffs’ Motion to Remand (Dkt. 3) rests on a non-removable workers’ compensation claim rather than non-diverse parties, the issue of exhaustion requires no distinguishing analysis. Plaintiffs argue that their action cannot be removed because the workers’ compensation claim is nonremovable under 28 U.S.C. § 1445(c). (Dkt. 3 at 4.) Title 28, United States Code, Subsection 1445(c) states 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.” Navistar does not dispute Plaintiffs’ statement that “[a] claim seeking wrongful denial of workers’ compensation benefits under the Texas Labor Code is a suit arising under the workers’ compensation laws of Texas which is nonremovable based on section 1445(c).” (Dkt. 3 at 4 (citing Jones v. Roadway Express, Inc.,
Under Flagg, the Court must first examine Texas State law to determine whether an exhaustion requirement exists that bars Plaintiffs from filing suit under a workers’ compensation claim. If an exhaustion requirement exists, the Court must then decide whether Plaintiffs have fulfilled it. If they have not, Plaintiffs have no possibility of recovery, and the Court must dismiss the claim as improperly joined. 410.251 Texas Labor Code § 410.251 states that “[a] party that has exhausted its administrative remedies under this subtitle and that is aggrieved by a final decision of the appeals panel may seek judicial review.” Texas courts, both federal and state, have interpreted that language to mean “[a] party must exhaust their administrative remedies and there must be a final decision of the [Texas Workers’ Compensation Commission’s] Appeals Panel before a party may seek a judicial remedy.” Evaro v. Cont’l Cas. Co., 118 F. App’x 867, 870 (5th Cir. 2005) (citing Cervantes v. Tyson Foods, Inc., 130 S.W.3d 152, 157 (Tex.App.2003)); see also Hinkly v. Envoy Air, Inc., 968 F.3d 544, 552 (5th Cir. 2020) (“[T]he Texas Labor Code’s administrative-exhaustion requirement is ... mandatory and, therefore, requires Texas courts to dismiss the Texas Labor Code claim where defendant shows it has not been satisfied.”); LaBlanche v. Spring ISD, 2017 WL 6409030, 2017 WL 6409030, at *3 (S.D. Tex. June 22, 2017) (holding that “[a] plaintiff must both exhaust her administrative remedies, and there must be a final DWC appeals panel decision” for judicial review to be available). A trial court must therefore dismiss a case if the plaintiff has not exhausted the available administrative remedies pursuant to the Texas Workers’ Compensation Act because the trial court has no jurisdiction over the matter.9 See id. at 929 (citing City of Houston v. Rhule, 417 S.W.3d 440, 442 (Tex. 2013)).
*5 By Plaintiffs’ own admission, they had not exhausted their administrative remedies at the time of removal.10 (See Dkt. 1, Ex.4 at ¶ 17; Dkt. 3 at 3; Dkt. 8 at 5.) Accordingly, if Defendants “had not removed this case to federal court, there is no doubt that the state court would have been required to dismiss” Plaintiffs’ workers’ compensation claim. See Flagg, 819 F.3d at 138. Even if Plaintiffs’ administrative appeal process has concluded since the removal of the case to this Court, the Fifth Circuit has made clear that “jurisdictional facts are determined at the time of removal.” Id. at 140 (citing Louisiana v. Am. Nat. Prop. Cas. Co., 746 F.3d 633, 635 (5th Cir. 2014)). Because Plaintiffs have “no possibility of recovery” under the workers’ compensation claim, the Court must dismiss Plaintiffs’ workers’ compensation claim as improperly joined, and the Court must therefore deny Plaintiffs’ Motion to Remand (Dkt. 3). Moreover, Plaintiffs’ worker’s compensation claim seems to be their only claim against Old Republic. (Dkt. 1, Ex. 4 at ¶ 17.) The Court will therefore dismiss Old Republic from this suit.11
Navistar also claims that Plaintiff should be “subject to Rule 11 sanctions” and requests that “the Court award it the reasonable and necessary attorneys’ fees it incurred” in litigating Plaintiff’s Motion to Remand (Dkt. 3). (Dkt. 7 at 8.) “Typically[,] the fraudulent joinder of a defendant merely results in the non-inclusion of the fraudulently joined defendant in the diversity analysis.” Phillips ex rel. Estate of Fullingim v. First Nat. Bank of Weatherford, 258 F. Supp. 2d 501, 506 (N.D. Tex. 2002). The exceptional situations where sanctions are warranted involve attempts to mislead the opposing party or the court and acts made in bad faith. See id. (“Plaintiffs’ counsel have at least twice committed a fraud on Defendants and on the district court of the Northern District of Texas.”). Plaintiffs and Plaintiffs’ counsel’s actions do not bear the hallmarks of fraud or bad faith. Navistar has proven no actual fraud by Plaintiffs in joining the workers’ compensation claim; it has only shown that Plaintiffs have no possibility of recovery for that claim. Plaintiffs assert that they have “been transparent with the parties” about their failure to exhaust remedies, and the Court agrees. (Dkt. 8 at 5.) While Plaintiffs’ transparency means their Motion to Remand (Dkt. 3) must be denied, it is also evidence of their lack of bad faith. Navistar’s request for sanctions and attorneys’ fees should therefore be denied.
Turning next to the issue of personal jurisdiction, Navistar asserts that no personal jurisdiction exists over it, so the claims against it must therefore be dismissed. (Dkt. 2 at 4.) Finding no jurisdiction over Navistar, the Court concludes that Plaintiffs’ claims against Navistar should be dismissed for lack of personal jurisdiction.
When a defendant challenges a court’s exercise of personal jurisdiction and the deciding court, like here, has not conducted an evidentiary hearing, the plaintiff “bears the burden of establishing only a prima facie case of personal jurisdiction.” Sangha v. Navig8 ShipManagement Private Ltd., 882 F.3d 96, 101 (5th Cir. 2018). To determine whether a prima facie case has been made, the Court “must accept the plaintiff’s uncontroverted allegations, and resolve in his favor all conflicts between the facts contained in the parties’ affidavits and other documentation.” Int’l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 211 (5th Cir. 2016). However, the district court “is not obligated to consult only the assertions in the plaintiff’s complaint,” and it “may consider the contents of the record at the time of the motion.” Sangha, 882 F.3d at 101 (citing Paz v. Brush Engineered Materials, Inc., 445 F.3d 809, 812 (5th Cir. 2006)).
*6 In a diversity case, a federal court may exercise jurisdiction over a non-resident corporate defendant only if “the forum state’s long-arm statute [confers] personal jurisdiction” and “the exercise of jurisdiction [does] not exceed the boundaries of the Due Process Clause of the Fourteenth Amendment.” Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 270 (5th Cir. 2006). Texas’s long-arm statute authorizes personal jurisdiction over foreign defendants to the fullest extent allowed by the federal Constitution. Tex. Civ. Prac. & Rem. Code Ann. § 17.042; see Religious Tech. Ctr. v. Liebreich, 339 F.3d 369, 373 (5th Cir. 2003). Thus, questions of personal jurisdiction in Texas federal court require only a single, federal due process inquiry. Sangha, 882 F.3d at 101. To satisfy the demands of due process, a plaintiff “must establish that the non-resident defendant purposely availed himself of the benefits and protections of the forum state by establishing minimum contacts with the state and that the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice.” Zoch v. Magna Seating (Germany) GmbH, 810 F. App’x 285, 288 (5th Cir. 2020) (internal quotation marks omitted). Personal jurisdiction within the bounds of due process can be either “general” or “specific.” Mink v. AAAA Dev., LLC, 190 F.3d 333, 336 (5th Cir. 1999). By moving to dismiss for lack of personal jurisdiction, Navistar asserts that the Court has neither. (Dkt. 2 at 5–9.) The Court agrees and addresses both in turn.
For a court to exercise general jurisdiction over a corporate defendant, it must have affiliations with a state that are “so continuous and systematic as to render [it] essentially at home in the forum State.” Frank v. P N K (Lake Charles) L.L.C., 947 F.3d 331, 337 (5th Cir. 2020) (citing Daimler AG v. Bauman, 571 U.S. 117, 138–39 (2014)). The continuous and systematic test is a “difficult one to meet, requiring extensive contacts between a defendant and a forum.” Johnston v. Multidata Systems Intern. Corp., 523 F.3d 602, 609 (5th Cir. 2008) (citing Submersible Sys., Inc. v. Perforadora Cent. S.A., 249 F.3d 413, 419 (5th Cir. 2001)). If, however, a court finds such continuous and systematic affiliations, “the court may exercise ‘general’ jurisdiction over any action brought against the defendant” regardless of whether the action is related to the forum contacts. Luv N’ Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006) (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414–15 (1984)).
Accordingly, the Court must determine if Navistar has contacts so “continuous and systematic, as to render [it] essentially at home” in Texas. See Daimler, 571 U.S. at 139 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). Both the Supreme Court and Fifth Circuit have recognized that it is only in an exceptional case that “a corporation’s operation in a forum other than its formal place of incorporation or principal place of business may be so substantial and of such a nature as to render [it] subject to general jurisdiction” in the forum state. See Whitener v. Pliva, Inc., 606 F.App’x 762, 765 (5th Cir. 2015) (citing Daimler, 571 U.S. at 139 n. 19) (internal quotation marks omitted).
As described by the Supreme Court, the “textbook case of general jurisdiction” is Perkins v. Benguet Consol. Mining Co. See Daimler, 571 U.S. at 129. In Perkins, the Supreme Court found that general jurisdiction existed in Ohio over a company incorporated in the Philippines. Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 448 (1952). The company in question had ceased its mining operations in the Philippines due to Japanese occupation during WWII. Id. at 447. As a result, the president of the company returned to his home in Ohio where he: (1) maintained an office from which he essentially ran the company during that period; (2) retained company files; (3) carried out correspondence related to the business of the company and its employees; (4) maintained two active bank accounts holding a substantial amount of company funds; and (5) held directors’ meetings. Id. at 447–48. Looking at all these contacts together, the Supreme Court concluded that there were sufficient contacts to establish general jurisdiction in Ohio. Id. As the Supreme Court would note about Perkins in a later case, the president’s activities made Ohio “the corporation’s principal, if temporary, place of business.” Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 780 n. 11 (1984).
*7 The Supreme Court’s more recent decisions in both Daimler and BNSF Railway, demonstrate just how much of an “exceptional case” Perkins was. In Daimler, the Supreme Court considered whether “a foreign corporation may be subjected to a court’s general jurisdiction based on the contacts of its in-state subsidiary.” Daimler, 571 U.S. at 134. Ultimately, however, the Supreme Court found that it did not need to answer that question because even with the subsidiary’s contacts imputed to the defendant corporation, Daimler AG, “there would still be no basis to subject Daimler to general jurisdiction.” See id. at 136. The subsidiary had “multiple California-based facilities” and was “the largest supplier of luxury vehicles to the California market,” but the Supreme Court still refused to find general jurisdiction over the parent company. Daimler, 571 U.S. at 136. In summing up its previous cases involving general jurisdiction, the Supreme Court explained that for a court to exercise general jurisdiction over a foreign corporation, the corporation’s contacts with the forum state must make it “comparable to a domestic enterprise in that state.” Id. at 133 n. 11.
Similarly, in BNSF Railway Co. v. Tyrrell, the Supreme Court held that defendant BNSF was not subject to general jurisdiction in Montana despite extensive contacts with the state. 137 S. Ct. 1549, 1559 (2017). The BNSF Court first found that BNSF was neither incorporated nor had its principal place of business in Montana and was therefore not a “paradigm forum” to find general jurisdiction. See id. at 1558–59 (holding that a corporation is paradigmatically “at home” where it is incorporated or has its principal place of business). The Supreme Court then acknowledged that BNSF did have an automotive facility, “over 2,000 miles of railroad track and more than 2,000 employees in Montana.” See id. at 1555–59. Despite those connections, the Supreme Court still found no general jurisdiction. Id. at 1559. The Supreme Court explained that a general jurisdiction inquiry must look at “a corporation’s activities in their entirety” because a corporation “that operates in many places,” like BNSF, cannot be “at home” in all of them. See id. (citing Daimler, 571 U.S. at 139 n. 20).
Fifth Circuit case law on general jurisdiction provides Plaintiffs no respite on this issue. In Johnston, the Fifth Circuit emphasized that it “has consistently imposed the high standard set by the Supreme Court when ruling on general jurisdiction issues.” Johnson, 523 F.3d at 611; see, e.g., Cent. Freight Lines Inc. v. APA Transp. Corp., 322 F.3d 376, 381 (5th Cir. 2003) (holding that routine shipments to and from Texas and regularly sending salespeople to Texas for the purpose of doing business were not enough to establish general jurisdiction); Bearry v. Beech Aircraft Corp., 818 F.2d 370, 372–73 (5th Cir. 1987) (holding that nearly $250 million in goods sent to Texas, $72 million worth of manufacturing work done in Texas, the existence of an in-state indirect subsidiary, and visits with Texas dealers were not enough to establish general jurisdiction). Decisions from other courts in the Southern District of Texas have consistently applied this exceedingly narrow reading of general jurisdiction as well. See Garcia Hamilton & Assocs., L.P. v. RBC Capital Markets, LLC, No. 4:19-CV-4141, 2020 WL 3078330, at *5 (S.D. Tex. June 10, 2020) (“[T]he Court is not convinced, given the standards set in [BNSF Railway Co. v. Tyrrell], that four offices, a division focused on wealth management in Texas, 240 employees, and a business presence in Texas ... are substantial enough to render [the defendant] at home here.”); Aziz v. MMR Grp., Inc., No. CV H-17-3907, 2018 WL 3439637, at *4 (S.D. Tex. July 17, 2018) (refusing to exercise general jurisdiction over a foreign defendant that owned and operated four permanent facilities and employed multiple people in the forum state).
In the instant case, Navistar is incorporated in Delaware and has its principal place of business in Illinois. (Dkt. 2 at 7.) Consequently, Texas is not a “paradigm forum” in which the Court may exercise general jurisdiction over Navistar. See BNSF Railway, 137 S. Ct. at 1558–59. The Court must therefore determine whether Navistar is nonetheless “essentially” at home due to its contacts with Texas. It is not. Even if the Court resolves all facts in Plaintiffs’ favor, the contacts between Navistar and Texas do not present an “exceptional case.”
*8 Plaintiffs assert contacts in three general categories, which the Court will address in order: (1) Physical presence in Texas; (2) Business presence in Texas; and (3) Previous or future contacts with Texas. First, Plaintiffs claim that Navistar’s physical presence consists of over 80 Navistar-owned dealer locations throughout Texas where it sells and services Navistar trucks and also “multiple official Navistar Factory Service Centers.” (Dkt. 12 at 4–5.) Defendant responds through affidavit that the dealerships are not owned by Navistar but are instead “independently-owned and operated dealerships authorized to sell and/or service” Navistar’s products.12 (Dkt. 15, Ex. 1 at ¶ 9.) While the Court must resolve factual conflicts in favor of Plaintiffs at this stage, it must only do so where factual conflicts occur between affidavits or other documentation. See Zoch, 810 F.App’x at 287. The Court will therefore take Navistar’s affidavit as true on this matter because Plaintiffs’ documentation consists only of a link to Navistar’s “Find a Dealer” webpage, which does not indicate that the dealers listed are anything more than independent entities entitled to sell Navistar products. Find a Dealer, International Trucks, https://www.internationaltrucks.com/dealer-locator (last visited Sept. 18, 2020).
It is unclear whether “Navistar Factory Service Centers” are different from these independent dealers. Yet, even if they are, their presence in Texas would not affect the Court’s lack of general jurisdiction over Navistar. If the defendant in BNSF is not “at home” in a state that contains facilities, employees, and instruments of its primary business, multiple Navistar service facilities will not make Navistar “at home” in the state. See BNSF, 137 S. Ct. at 1559. Moreover, unlike in Perkins, where the president was essentially running the company from Ohio, Plaintiffs have not shown that Navistar is in some way directing its operations from Texas or that Navistar even has an office or physical location in Texas from which that would be possible. See Perkins, 342 U.S. at 448. At best, the operation of these dealerships and service centers are reminiscent of a company selling its goods in a state through a subsidiary, but the Court declines to find that the sales operations of independent dealers and service centers are enough when the Supreme Court found far greater subsidiary-like contacts to be insufficient in Daimler. Daimler, 571 U.S. at 136. Finally, Plaintiffs are silent on Navistar’s claim that it “does not own any manufacturing plants in the State of Texas,” so Navistar’s contacts with Texas, as presented, do not extend to its primary manufacturing business. (See Dkt. 11 at 13.)
Second, Plaintiffs claim that Navistar’s business presence in Texas can be used to establish general jurisdiction. This presence includes sale of Navistar goods in Texas, its Texas-facing advertisement, and the fact that it is registered to do business and maintains a registered agent for service of process in Texas. (See Dkt. 4 at 8–9.) While these contacts evidence that Navistar does business with Texas, the Fifth Circuit has made clear that “in order to confer general jurisdiction a defendant must have a business presence in Texas.” See Johnston, 523 F.3d at 611. Substantial sales of goods, advertisement, and business registration, even with other contacts, have not been found to confer general jurisdiction. See Frank v. P N K (Lake Charles) L.L.C., 947 F.3d 331, 339 (5th Cir. 2020) (holding that extensive advertisements targeted at the forum state and a subsidized shuttle service were not enough to confer general jurisdiction over defendant casino); Wenche Siemer v. Learjet Acquisition Corp., 966 F.2d 179, 183 (5th Cir. 1992) (holding that “the mere act of registering an agent [does] not create [defendant’s] general business presence in Texas); Bearry, 818 F.2d at 372–73 (5th Cir. 1987) (finding that nearly $250 million in goods sent to Texas was not enough to establish general jurisdiction, despite numerous other in-state contacts with the forum state). Even considered alongside Navistar’s limited physical presence in Texas, these business contacts do not make Navistar’s affiliations “comparable to a domestic enterprise in that state.” Daimler, 571 U.S. at 133 n. 11.
*9 Finally, Plaintiffs argue that the Court should look to Navistar’s past and future contacts with Texas to exercise general jurisdiction. Relevant to this argument are “a manufacturing or assembly plant in Garland, Texas” that Navistar “appears to have had”13 and a “$250 million manufacturing or assembly plant in San Antonio, Texas” that Navistar is planning to build. (See Dkt. 4 at 8–9.) These claims, regardless of truth, do not support general jurisdiction. Using a defendant’s prior, but now non-existent, contacts with the forum state to establish general jurisdiction would demonstrate neither continuous nor systematic affiliations. It would, in fact, demonstrate the opposite. Consideration of a potential future contact would be no less improper. Such an inquiry would force courts to speculate on the possible existence and extent of a defendant’s future contacts when determining current jurisdiction over the defendant. See Quazzani-Chahdi v. Greensboro News & Record, Inc., No. CIV.A. H-05-1898, 2005 WL 2372178, at *3 (S.D. Tex. Sept. 27, 2005) (“Any future plans that Defendant may have to expand its business into Texas are irrelevant to the Court’s existing jurisdiction over Defendant.”). The Court declines to make that gamble.
Taken together, the contacts between Navistar and Texas that Plaintiffs allege could be fairly categorized as “continuous and systematic.” But that is not enough. For the Court to exercise general jurisdiction over it, Navistar must be “essentially at home” in Texas, but independent dealerships, service facilities, and even extensive business with customers in Texas are not enough to demonstrate general jurisdiction given the winnowing of that standard by the higher courts over the past decades. See generally Daimler, 571 U.S. at 128 (“[S]pecific jurisdiction has become the centerpiece of modern jurisdiction theory, while general jurisdiction [has played] a reduced role.” (citing Goodyear, 564 U.S. at 925)). Accordingly, the Court does not find general jurisdiction over Navistar and now turns to the issue of specific jurisdiction.
If the defendant’s contacts with the state do not reach the requisite level of “continuous and systematic” for general jurisdiction, a court “may still exercise specific jurisdiction in a suit arising out of or related to the defendant’s contacts with the forum.” Luv N’ Care, 438 F.3d at 469 (internal quotations omitted). The Fifth Circuit has established a three-part test to determine whether a court may exercise specific jurisdiction, which requires the court to consider:
(1) whether the defendant has minimum contacts with the forum state, i.e., whether it purposely directed its activities toward the forum state or purposefully availed itself of the privileges of conducting activities there; (2) whether the plaintiff’s cause of action arises out of or results from the defendant’s forum-related contacts; and (3) whether the exercise of personal jurisdiction is fair and reasonable.
Carmona v. Leo Ship Mgmt., Inc., 924 F.3d 190, 193 (5th Cir. 2019). As to the first and second prongs, “there must be an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.” Zoch, 810 F. App’x at 288 (citing Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty., 137 S. Ct. 1773, 1780 (2017)). “Such activity or occurrence must ‘create a substantial connection with the forum State.’ ” Id. (citing Walden v. Fiore, 571 U.S. 277, 284 (2014)). “Absent this connection, ‘specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the State.’ ” Id.; see Bristol-Myers, 137 S. Ct. at 1781 (“[A] defendant’s general connections with the forum are not enough.”). If a plaintiff satisfies the first two prongs, the burden then shifts to the defendant to make a “compelling case” that the exercise of jurisdiction is not fair or reasonable. Id.
*10 In products liability cases, like the present case, “[the stream of commerce doctrine] is often employed to assess whether the non-resident defendant has minimum contacts with the forum.” Zoch, 810 F. App’x at 289. This doctrine “recognizes that a defendant may purposely avail itself of the protection of a state’s laws—and thereby will subject itself to personal jurisdiction—‘by sending its goods rather than its agents’ into the forum.” In re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Prod. Liab. Litig., 888 F.3d 753, 778 (5th Cir. 2018) (citing J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 882 (2011)). Pursuant to Fifth Circuit precedent, minimum contacts are satisfied under the doctrine “so long as the court determines ‘that the defendant delivered the product into the stream of commerce with the expectation that it would be purchased by or used by consumers in the forum state.’ ” Zoch, 810 F. App’x at 290 (citing Ainsworth v. Moffett Eng’ring, Ltd., 716 F.3d 174, 177 (5th Cir. 2013)). As a result, “mere foreseeability or awareness [is] a constitutionally sufficient basis for personal jurisdiction if the defendant’s product made its way into the forum state while still in the stream of commerce.” Id. However, when a product exits the stream of commerce by, for example, a consumer’s purchase, “[the] consumer’s unilateral decision to take a product to a distant state, without more, is insufficient to confer personal jurisdiction over the manufacturer or distributor.” Seiferth, 472 F.3d at 273.
The Court now evaluates the information provided on the record to examine the Tractor’s journey through the stream of commerce. In its Supplement in Support of its 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction (Dkt. 11), Navistar attached documents that recorded the Tractor’s sale “to [Hunter Truck Sales & Service, Inc. (“Hunter Sales”) ] in Pennsylvania to specifications requested by Hunter Leasing, LLC (“Hunter Leasing”), a Pennsylvania company.” (Dkt. 11 at 2, 14.) From there, Hunter Leasing purchased and leased the Tractor to a Texas company, J3 Oil & Gas. (Dkt. 11 at 2, 23; Dkt. 15 at 6.) In 2017, Quality Carriers purchased the tractor and titled it in Illinois. (Dkt. 11 at 2, 25.) Navistar makes two primary arguments in relation to these facts. First, “the tractor exited the stream of commerce when it was purchased by Hunter Leasing in Pennsylvania,” so any further movement of the tractor by another party would be a unilateral action by that party which cannot be considered in determining specific jurisdiction. (Dkt. 15 at 6.) See ITL Intern., Inc. v. Constenla, S.A., 669 F.3d 493, 498–99 (5th Cir. 2012) (“The defendant’s contacts with the forum state must be more than random, fortuitous, or attenuated, or of the unilateral activity of another party or third person.” (internal quotations omitted)). Second, even if the tractor did not leave the stream of commerce when purchased by Hunter Leasing, Navistar did not deliver the tractor “into the stream of commerce with the expectation that it would be purchased by or used by consumers” in Texas. (Dkt. 11 at 2 (citing Ainsworth, 716 F.3d at 177).)
In response to Navistar’s first argument that the Tractor had left the stream of commerce once it was purchased by Hunter Leasing, Plaintiffs argue that Hunter Leasing was “not a consumer but an entity in the business of selling and leasing International trucks,” so “the tractor never left the stream of commerce in its path to Quality Carriers.”14 (Dkt. 12 at 8 (comparing the present case to Eddy v. Printers House (P) Ltd., 627 F. App’x 323, 327 (5th Cir. 2015)).) In response to Navistar’s second argument, Plaintiffs make several contentions about why Navistar should have expected that the Tractor would be purchased or used in Texas. First, Plaintiffs claim that “Hunter leases and sells International tractors around the United States and conducts advertising and promotional marketing for Navistar’s products that are specifically directed at consumers in the State of Texas.” (Dkt. 12 at 2.) Given this wide-ranging network of sales, Plaintiffs claim that Navistar could have reasonably expected or foreseen that the Tractor would reach Texas, given the “extensive business relations” between Navistar and Hunter Sales. (Id. at 7 (citing Ainsworth, 716 F.3d at 177).)
*11 Generally, the question of where the product exits the stream of commerce is quite obvious. Exit takes place where the product is purchased or used by consumers. See Goodyear Dunlop Tires Operations, S.A., 564 U.S. at 926 (describing the stream of commerce doctrine as one concerned with a product traveling through “an extensive chain of distribution before reaching the ultimate consumer”); Zoch, 810 F. App’x at 289 (citing Goodyear); see also Istre v. Montco Offshore, Inc., No. CIV.A. 12-2054, 2014 WL 790872, at *4 (E.D. La. Feb. 26, 2014) (citing Seiferth, 472 F.3d at 273). Here, however, there is a question of what entity should be categorized as the “consumer.” Navistar maintains that “Hunter Leasing was the end consumer,” whereas Plaintiffs argue that Hunter Leasing could not have been the consumer given that it is “in the business of selling and leasing International trucks.” (Compare Dkt. 15 at 4 with Dkt. 12 at 8.) Fortunately, the Court need not dive into the question of whether the purchase of a product by a company that intends to lease the product is enough to push the product out of the stream of commerce. Cf. Seiferth, 472 F.3d 266 at 273–74 (declining to extend the stream of commerce doctrine to leased products). Instead, because the Court finds that even if the Tractor’s purchase by Hunter Leasing did not end the stream of commerce, Navistar did not reasonably expect or foresee the purchase or use of the Tractor in Texas. See id. at 274 (“The exercise of personal jurisdiction would not be proper even if the stream-of-commerce theory applied to leased products, because [the defendant] did not expect the lessee to take the [product] to [the forum state].”)
The question of whether Navistar could have foreseen or was aware that the tractor would end up in Texas is a fact-intensive question. See Zoch, 810 F. App’x at 293 (“Specific jurisdiction should be determined on a case-by-case basis under the facts of each individual case.”) However, several Fifth Circuit cases are instructive to the situation presented.
The expectation that the Tractor would reach Texas consumers turns on Navistar’s relationship with Hunter Sales, a dealer that would eventually send the tractor to its end-destination in the stream of commerce. (See Dkt. 15 at 3.) This kind of dealer or distribution relationship has been played out in the specific jurisdiction context a number of times in the higher court. Plaintiffs ask that we look to the Fifth Circuit’s decision in Ainsworth as dispositive. (See Dkt. 12 at 6.) In Ainsworth, the Fifth Circuit found specific jurisdiction over the defendant, Moffet, for an allegedly defective forklift Moffet had manufactured and designed. 716 F.3d at 179. The Ainsworth court determined that Moffet had contracted with a distributor that sold or marketed Moffett products in all fifty states, and “Moffett [made] no attempt to limit the territory in which [the distributor] [sold] its products.” Id. Additionally, the circuit court noted that even without specific knowledge of its product sales in the forum state, it should have reasonably expected those sales because the forum state had a significant poultry-producing industry, for which Moffett’s forklifts were specifically created. Id.
The Fifth Circuit recently qualified the Ainsworth holding with its opinion in Zoch. In Zoch, the Fifth Circuit held that a German manufacturer of an automobile seat that had allegedly contributed to injuries arising from a car accident was not amenable to specific jurisdiction in Texas. Zoch, 810 F.App’x at 293. Despite a number of similarities to the defendant in Ainsworth, including a distribution network to the United States as a whole, the Fifth Circuit noted that specific jurisdiction requires a plaintiff to allege more than just that a defendant’s circumstances “might lead to [their] products being sold in any of the fifty states.” Id. at 292 (citing McIntyre, 564 U.S. at 890–91 (Breyer, J.)). It specifically pointed to the fact that the Ainsworth defendant, unlike the defendant seat manufacturer, had reason to know that its product would end up in a state with strong ties to the industry the defendant was serving. Id.
The Court finds the instant situation to be more akin to Zoch than Ainsworth. The record reflects that Navistar would have not actually expected the Tractor to end up in Texas. To prove this, Navistar has provided: (1) screenshots from the Hunter Sales website containing relevant information about Hunter Sales and its geographical market (Dkt. 15, Ex. 2); and (2) the Dealer Agreement15 between Navistar and Hunter Sales (Dkt. 15, Ex. 1).
*12 The screenshots from the Hunter Sales website evince a dealership that provides its goods and services to a limited geographical portion of the United States, not including the State of Texas. Hunter Sales describes itself as the “Northeast’s Largest Heavy Commercial Truck Provider” and notes that it serves “the entire mid-Atlantic region with a footprint extending across 19 locations throughout Pennsylvania, New York, New Jersey and West Virginia.” (Dkt. 15, Ex. 2 at 5.) The website also provides a map of the dealership locations, and there are none in or near the State of Texas.16 (See id. at 7–11.)
The Dealer Agreement supports this characterization of Hunter Sales and demonstrates that Navistar’s relationship with Hunter Sales was based upon the same limited geographical expectations. The Dealer Agreement refers to “the Trade Area where the Dealer’s retail establishment is located.” (Dkt. 15, Ex. 1 at 7.) The agreement lists these retail establishments as four locations in Pennsylvania and one in New Jersey. (Id.) The agreement then goes on to lay out various requirements regarding this “Trade Area” such as “[t]o achieve a reasonable share of the market for the goods and services covered by the Agreement, in the Trade Area served by Dealer’s location.” (Dkt. 15, Ex. 1 at 16.)
Thus, although Plaintiffs assert that Hunter Sales is a dealer that “sells, leases, markets, advertises and distributes around the United States and Texas, with Navistar’s knowledge,” the documentation provided by Navistar shows otherwise and remains uncontroverted. (See Dkt. 11 at 7.) Regardless, the Court need not credit Plaintiffs’ conclusory allegations about Hunter Sales’ seemingly extensive contacts with Texas and Navistar’s knowledge of these undocumented contacts. See Panda Brandywine Corp. v. Potomac Elect. Power, 253 F.3d 865, 868–69 (5th Cir. 2001) (holding that a district court need not “credit conclusory allegations, even if uncontroverted”).
Finally, the case here presents a crucial distinction from both Ainsworth and Zoch. In both, the Fifth Circuit was contending with situations where the defendant had agreements with, and sent their products to, nationwide distributors with no clear geographical limit on their sales network. See Zoch, 810 F.App’x at 292; Ainsworth, 716 F.3d at 179. This meant that the Ainsworth court, in particular, had to look past the distribution agreements and dive into the minutiae of the poultry industry’s strength in a given state. Id. The situation before the Court does not require that much work. Instead, the network of sales that Hunter Sales provides to Navistar is limited both by geographical constraints in dealership location and formal agreement. Navistar could not have foreseen and would not have expected that the Tractor would end up in Texas and give rise to the instant cause of action. The Court therefore finds that it does not have specific jurisdiction over Navistar.
Plaintiffs also ask that the Court “grant leave to conduct personal jurisdiction discovery” on “(1) Navistar’s knowledge of Hunter’s business and marketing ploys in Texas, (2) the nature and quality of the commercial contacts between Navistar, Hunter and Texas, and (3) Navistar’s [allegedly] extensive contacts with Texas that Plaintiffs believe rise to the level of continuous and systematic such as to render Navistar essentially at home.” (Dkt. 12 at 9.)
*13 A district court has “broad discretion in all discovery matters,” and may decline to permit discovery on matters of personal jurisdiction where no issue of material fact exist and when “the lack of personal jurisdiction is clear.” Wyatt v. Kaplan, 686 F.2d 276, 283–84 (5th Cir. 1982). The party moving for jurisdictional discovery should specify “what facts they expect to discover and how that information would support jurisdiction.” Evergreen Media Holdings, LLC v. Safran Co., 68 F. Supp. 3d 664, 685 (S.D. Tex. 2014). Finally, discovery rulings on personal jurisdiction are reviewed for abuse of discretion and “will not be disturbed ordinarily unless there are unusual circumstances showing a clear abuse.” Seiferth, 472 F.3d at 270 (5th Cir. 2006) (citing Wyatt, 686 F.2d at 283).
Exercising its “broad discretion,” the Court declines to allow further discovery on the issue of personal jurisdiction. Although Plaintiffs have listed the topics they would like to investigate, the Court finds that the absence of personal jurisdiction is clear. Even so, the Court will address each of Plaintiffs’ request in turn. First, Plaintiffs ask for additional discovery on Navistar’s knowledge of Hunter’s business and marketing in Texas. (Dkt. 12 at 9.) Plaintiffs’ description of either Hunter Leasing or Hunter Sales’ contacts with Texas as “extensive dealings” is conclusory and unsupported. Discovery on that matter would constitute nothing more than a search of the public domain for marketing materials created by either Hunter entity, something that does not require the formality or procedure of discovery. Further, the Court has no reason to believe that Hunter’s marketing departments are in possession of a smoking gun that will confer jurisdiction over Navistar.
Second, Plaintiffs ask for discovery to look into “the nature and quality of the commercial contacts between Navistar, Hunter and Texas.” (Dkt. 12 at 9.) However, specific jurisdiction concerns “the relationship among the defendant, the forum, and the litigation.” Zoch, 810 F. App’x at 288. Vaguely requesting discovery on a third-party’s “commercial contacts” with Texas would only provide information on that third-party’s “unilateral activity,” which does not matter for specific jurisdiction purposes. See Eddy, 627 F. App’x at 326. To the extent that Plaintiffs ask the Court for discovery on these contacts to find out Navistar’s knowledge of Hunter Leasing or Hunter Sales’ contacts with Texas, the Court has already declined to provide discovery on that topic.
Third, Plaintiffs request discovery on “Navistar’s extensive contacts with Texas that Plaintiffs believe rise to the level of continuous and systematic such as to render Navistar essentially at home.” (Dkt. 12 at 9.) The Court declines this request as well. Plaintiffs have not made a preliminary showing of general jurisdiction that would warrant the need for discovery, especially in light of the high threshold to find general jurisdiction. For these reasons, Plaintiffs’ request for jurisdictional discovery should be denied.
Prior to ordering the dismissal of the claims against Navistar, the Court turns next to the transfer of venue. See Herman v. Cataphora, Inc., 730 F.3d 460, 463–64 (5th Cir. 2013) (holding that a district court’s dismissal of an action “mak[es] a transfer invalid because the court no longer has authority over the matter”). It is settled law in the Fifth Circuit that “[w]here a court finds it lacks personal jurisdiction, it may dismiss the action pursuant to Federal Rule of Civil Procedure 12(b)(2). In the alternative, a federal court is authorized under 28 U.S.C. § 1406(a) to transfer the action to ‘any district or division in which it could have been brought [and where personal jurisdiction is proper]’ if the court finds that it is ‘in the interest of justice’ to transfer the action.” Herman, 730 F.3d at 466. Thus far, Navistar is the only party who requested that the action be transferred to the Western District of Texas—Austin Division if dismissal was not granted on other grounds. (Dkt. 2 at 1.) Yet, transferring this suit to another district court in Texas would not cure the jurisdictional defect over Navistar.
*14 More importantly, it would not be in the “interest of justice” for the Court to make the decision on where Plaintiffs’ claims should be brought given that the Court has determined that Navistar is subject to personal jurisdiction in at least Delaware and Illinois.17 See Fogarty v. USA Truck, Inc., 242 F. App’x 152, 154 (5th Cir. 2007) (holding that a district court may, but is not required to, transfer a case when the court lacks personal jurisdiction over the defendant(s)). The Court therefore declines to transfer Plaintiffs’ claims against Navistar and will dismiss the claims instead.
For the foregoing reasons, Plaintiffs’ Motion to Remand (Dkt. 3) is hereby DENIED, and Navistar, Inc.’s Motion to Dismiss for Lack of Personal Jurisdiction (Dkt. 2) is GRANTED. Navistar, Inc.’s alternative motions to dismiss for improper venue and failure to state a claim (Dkt. 2) are DENIED AS MOOT.
Plaintiffs’ claims against Old Republic General Insurance Group, Inc., Old Republic Insurance Company, Navistar, Inc. and Navistar International Corporation are hereby DISMISSED without PREJUDICE.
The Clerk is directed to TERMINATE “Navistar, Inc.,” “Navistar International Corporation,” “Navistar International Transportation,” “International Truck and Engine Corporation,” “Old Republic General Insurance Group, Inc.,” and “Old Republic Insurance Company” from the list of defendants.
IT IS SO ORDERED.
SIGNED this 25th day of September, 2020.
Exhibit numbers refer to the numbers automatically generated by the Electronic Court Filing System (ECF), not to the exhibit numbers generated by Parties. For instance, “Dkt. 1, Ex. 4” is a citation to Plaintiffs’ “Original Petition.” Similarly, page citations refer to the page numbers automatically generated by ECF.
Plaintiffs allege in their Original Petition (Dkt. 1, Ex. 4) that Quality Carriers is a “common or assumed name” of Quality Distribution, Inc. (“Quality Distribution”), who is also a defendant in this case. (Dkt. 1, Ex. 4 at ¶ 3.) This assertion is denied by both Quality Carriers and Quality Distribution in their Original Answer (Dkt. 17). (Id. at ¶ 4.) However, both Quality Carriers and Quality Distribution admit the fact that Rawls was employed by Quality Carriers at the time of his injury. (Id. at ¶ 9.) Accordingly, for purposes of this Order, the distinction is irrelevant.
Defendant Navistar, Inc. admits that it was involved in the manufacture of the tractor portion of the tractor trailer upon which Rawls was injured but claims not to have manufactured any trailer portion that may or may not have been attached. (Dkt. 11 at 2, 14.) Plaintiffs seem not to dispute this fact and refer to the automobile in question as “the tractor” or “the subject tractor” in subsequent pleadings. (See Dkt. 12.) Because the incident involving Rawls seems to have taken place on the tractor portion of the vehicle in question, the Court adopts the language used by Navistar and Plaintiffs for the purposes of this order. (See Dkt. 4 at 3.)
Plaintiffs, in their Original Petition (Dkt. 1, Ex. 4) state that Navistar International Corporation (“NIC”), Navistar International Transportation and International Truck and Engine Corporation are names by which Navistar was formerly known. (Id. at 1.) Navistar, in its Motion to Dismiss (Dkt. 2), admits that the latter two are former names for Navistar but claims that NIC is, in fact, a separate entity that “serves as a holding company and does not manufacture, sell, lease or distribute motor vehicles.” (Dkt. 2 at 2; Dkt. 1, Ex. 11 at ¶¶ 3–6.) Plaintiff has made no claim that she sought to sue NIC since being given notice of its separate status, so the Court assumes any reference to Navistar, by itself or any other party, is directed at Defendant Navistar, Inc.
The Texas Workers’ Compensation Commission prescribes a step-by-step appeal process for workers’ compensation claims at the administrative level. See Texas Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430, 437 (Tex. 2012) (citing 410.021 Tex. Labor Code Ann. §§ 410.021, 410.151 >410.151, 410.202 410.202, 410.251). The Court clarifies this process in a later section of this Order.
The Court notes that Plaintiffs also ask that the workers’ compensation claim not be severed and that the entire action be remanded. (Dkt. 3 at 5.) Because the Court finds that the workers’ compensation claim was improperly joined and should be dismissed, the Court need not address the severance issue.
Navistar uses the term “fraudulent joinder” to describe its argument against remand. (See Dkt. 7.) While “there is no substantive difference between” the terms fraudulent joinder and improper joinder, the Fifth Circuit has adopted the term “improper joinder,” so the Court will do the same, except in situations where it is quoting other authorities. See Hoyt v. Lane Constr. Corp., 927 F.3d 287, 292 n.1 (5th Cir. 2019), as revised (Aug. 23, 2019).
Arguably, Navistar is alleging an improper joinder of parties because Plaintiffs’ workers’ compensation claim is only brought against Old Republic, but given the identical analysis, there is no need to parse Navistar’s response (Dkt. 7) to find a distinction. (Dkt. 1, Ex. 4 at ¶ 17.)
Exhaustion of remedies through the Texas Workers’ Compensation Act requires three steps prior to seeking judicial review: (1) a benefit review conference; (2) a contested case hearing; and (3) review by an administrative appeals panel. Texas Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430, 437 (Tex. 2012) (citing Tex. Labor Code Ann. §§ 410.021, 410.151, 410.202, 410.251).
It is unclear how close Plaintiffs are to satisfying the exhaustion requirement. (Dkt. 1, Ex.4 at ¶ 17 (“A decision by the Texas Workers’ Compensation Commission through the DWC Contested Case Hearing process is forthcoming and appeal imminent.”); Dkt. 3 at 3 (“Because the Texas Workers’ Compensation Commission through the DWC Contested Case Hearing process denied Plaintiffs their proper compensation ....”).) Regardless, Plaintiffs’ filings clearly demonstrate that they had not exhausted their remedies at the time of removal. (See Dkt. 3 at 3.)
Plaintiffs appear to have listed “Old Republic Insurance Company” as either a name that Old Republic is “also known as” or as a separate defendant. (Dkt. 1, Ex. 4 at 2.) Even if Old Republic Insurance Company is a separate entity, absent any indication that Plaintiffs have alleged anything besides the workers’ compensation claim against it, the Court will dismiss Old Republic Insurance Company as a defendant as well.
Navistar makes this claim in the “2nd Declaration of Richard Van Laar.” (Dkt. 15 at Ex. 1 at 2–4.) Richard Van Laar declares that he is “a Product Integrity and Compliance Manager” at Navistar. (Id. at ¶ 2.)
To clarify Plaintiffs’ somewhat ambiguous statement on a Garland plant, Navistar did have a plant in Garland, Texas, but it closed in 2013. Tammy Mutasa, Navistar Closing Garland Plant, 900 Employees Out of Work, NBC DFW (Apr. 8, 2013, 7:42 PM), https://www.nbcdfw.com/news/local/navistar-closing-garland-plant-900-employees-out-of-work/2073472/.
Plaintiffs refer to Hunter Leasing as “Hunter” in their Response in Opposition to Defendant Navistar’s Motion to Dismiss (Dkt. 12) and seems to conflate Navistar’s relationship with Hunter Leasing and Hunter Sales as one and the same. (Id. at 7.) Navistar clarifies in its reply (Dkt. 15) that Hunter Leasing “has no direct business relationship with Navistar” and is an affiliate of Hunter Sales, which is an “independently-owned dealer authorized to sell and service” Navistar vehicles. (Id. at 3.) The Court will not speculate into the business relationship of Hunter Leasing and Hunter Sales, but the Court notes that Plaintiffs’ conflation of the two does not affect its stream of commerce analysis.
According to the agreement, Navistar and Hunter Sales entered into the Dealer Agreement on April 13, 2015. (Dkt. 15, Ex. 1 at 7.) The Court is cognizant of the fact that this is after the date the Tractor was transferred from Navistar to Hunter Sales. (Dkt. 11 at 21 (showing a transfer date of January 11, 2015).) Given the possibility that the terms of agreement were different at the time that Navistar sold the Tractor to Hunter Sales, the Court will not treat the agreement as dispositive, as it might otherwise, but will still view the Dealer Agreement as illustrative of the relationship between Navistar and Hunter Sales.
For the sake of due diligence, the Court notes that the exhibit provided by Navistar (Dkt. 15, Ex. 2) is identical to the current state of the Hunter Sales website, but both list 20, not 19, locations—none of which are in or near Texas. See Hunter Truck, https://huntertruck.com/hunterlocator/ (last visited on Sept. 19, 2020).
“Typically, courts employ 28 U.S.C. § 1406(a) transfers to protect plaintiffs against procedural bars to refiling claims, such as a statute of limitations bar.” Garcia Hamilton & Assocs., L.P. v. RBC Capital Markets, LLC, No. 4:19-CV-4141, 2020 WL 3078330, at *8 (S.D. Tex. June 10, 2020). No such concerns have been alleged here and, at the very least, both Delaware and Illinois appear to have statutes that would effectively toll the statute of limitations period for an action that had previously been dismissed due to lack of personal jurisdiction. See Ill.Rev.Stat.1991, ch. 110, ¶ 13-217; Del. Code Ann. tit. 10, § 8118; Valentin v. Ocean Ships, Inc., 38 F. Supp. 2d 511, 514 (S.D. Tex. 1999) (holding that State “saving clauses” that effectively toll statute of limitations periods can be applied by federal courts in diversity actions).
United States District Court, S.D. Texas, Corpus Christi Division.
Jose Romero PEREZ, Plaintiff,
BROOKS COUNTY, TEXAS, Defendant.
Civil Action No. 2:19-CV-391
Attorneys & Firms
Charles C. Smith, Attorney at Law, Corpus Christi, TX, for Plaintiff.
Rebecca S. Hayward, Ricardo J. Navarro, Denton Navarro Rocha Bernal & Zech, P.C., Harlingen, TX, for Defendant.
NELVA GONZALES RAMOS, UNITED STATES DISTRICT JUDGE
*1 Plaintiff Jose Romero Perez filed this action against his former employer, Defendant Brooks County, Texas, alleging causes of action arising from his termination after suffering on-the-job injuries. D.E. 1, 14. Before the Court is Defendant’s Rule 12 Motion to Dismiss Plaintiff’s Second Amended Complaint for Failure to State a Claim. D.E. 15. Plaintiff responded (D.E. 16) and Defendant replied (D.E. 17). For the reasons stated below, the motion is GRANTED IN PART and DENIED IN PART.
STANDARD OF REVIEW
The test of pleadings under Rule 12(b)(6) is devised to balance a party’s right to redress against the interests of all parties and the court in minimizing expenditure of time, money, and resources devoted to meritless claims. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007). Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” Furthermore, “Pleadings must be construed so as to do justice.” Fed. R. Civ. P. 8(e). The requirement that the pleader show that he is entitled to relief requires “more than labels and conclusions[;] a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)).
Factual allegations are required, sufficient to raise the entitlement to relief above the level of mere speculation. Twombly, 550 U.S. at 555. Those factual allegations must then be taken as true, even if doubtful. Id. In other words, the pleader must make allegations that take the claim from conclusory to factual and beyond possible to plausible. Id. at 557. The Twombly court stated, “[W]e do not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face.” Id. at 570.
The Supreme Court, elaborating on Twombly, stated, “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. In dismissing the claim in Iqbal, the Supreme Court stated, “It is the conclusory nature of respondent’s allegations, rather than their extravagantly fanciful nature, that disentitles them to the presumption of truth.” Id. at 681.
*2 Taking the facts alleged as true pursuant to the standard of review, the salient events set out in Plaintiff’s second amended complaint form the following timeline:
February 1, 2002 Brooks County hired Plaintiff to work as a full-time operator for its Road and Bridge Department.
February 2003 Plaintiff sustained an on-the-job injury to his back while operating a backhoe. Plaintiff’s supervisor, Ruben Gutierrez, filled out an injury report and told him to seek medical attention.
Pursuant to his orthopedic surgeon’s treatment plan, Plaintiff was off work for two months for physical therapy.
Plaintiff declined surgery for his herniated disc.
Two Months Later Plaintiff returned to work for the Road and Bridge Department and, after sitting too long as a driver-operator, he complained of back pain.
The Next Day Gutierrez assigned Plaintiff to light duty as a spotter at the County Landfill, where his duties included checking trash, directing others as to where to put the trash, and infrequently operating a backhoe.
The Next Several Years Plaintiff continued to work at the County Landfill, through a succession of supervisors, including Alan Hernandez and ending with David Guerra.
June 9, 2017 Plaintiff experienced an on-the-job injury to his right shoulder.He reported the injury to Supervisor Hernandez and filed a Texas workers’ compensation claim.
The Next Several Months Plaintiff was under the care of Doctor Pechero and the Rio Grande Valley Orthopedic Center. He was examined, tested, and diagnosed with a physiological condition affecting his neurological and ambulatory systems. This has an effect on his ability to perform certain manual tasks and is at least part of the cause of a rotator cuff problem. He was treated for this, with appropriate periodic work status reports being provided and signed by his physician.
September 2017 Plaintiff had surgery to repair four torn ligaments from his June 9, 2017 injury.
March 9, 2018 Plaintiff continued with follow-up appointments with the Orthopedic Center and the resulting series of status reports indicated that his injury had prevented his return to work and that he could not return until May 4, 2018.
April 3, 2018 A Senior Workers’ Compensation Adjuster for the Texas Association of Counties Risk Management Pool began a review of Plaintiff’s injury and treatment, communicating with Defendant’s Human Resources (HR) representative regarding an intention to seek an independent medical examination.
May 1, 2018 There were no medical findings that Plaintiff had healed from his June 9, 2017 injury. Nevertheless, he claims that, despite his medical condition and failure to return to work, he was able to perform the essential functions of his job as a spotter at the County Landfill.
First Week of May 2018 Plaintiff had an MRI at the Orthopedic Center, which indicated that he would need a second shoulder surgery and that he could not return to work until May 21, 2018.
May 21, 2018 Plaintiff obtained another status report signed by his physician, indicating that he could not return to work until August 20, 2018.
May 23, 2018 Supervisor Guerra contacted Plaintiff and instructed him to report to work for the Road and Bridge Department (not the County Landfill) on May 29, 2018.
As a result of the unexplained change in assignment and supervisor, Plaintiff was concerned that his prior light duty accommodation had been rescinded. Plaintiff requested an accommodation from Defendant, but his request was refused by its supervisory staff.
May 24, 2018 The adjuster for the Risk Management Pool informed Defendant’s HR department that Plaintiff’s recent MRI confirmed a recurrent full thickness tear associated with his shoulder injury. The plan at that time was to hold off on the independent medical examination and, instead, obtain peer review of Plaintiff’s medical records.
Plaintiff confronted Supervisor Guerra about an unverified, unsubstantiated, and unsigned “amended” status report on which Guerra was apparently relying in formulating his directive that Plaintiff was to return to work. And Plaintiff disputed a manufactured claim that he had stated that he would injure himself (as he had never said such a thing and was already injured).
*3 Plaintiff went to Guerra’s office and produced his May 21, 2018 status report, revealing work restrictions through August 20, 2018. In particular, Plaintiff’s work restrictions included no pushing, pulling, overhead reaching, lifting, or carrying. Guerra made a copy of it and indicated that there was something wrong with the documentation of Plaintiff’s injury, but he nevertheless insisted that Plaintiff return to work on May 29, 2018.
May 29, 2018 Plaintiff reported to work and was assigned to pick up trash while carrying a bucket and a trash grabber. Plaintiff asked Guerra to call his superiors to ask why he was being put to work despite his unresolved injury. After working several hours, Plaintiff’s right hand and wrist became noticeably swollen. Before clocking out for lunch, he reported his condition to Guerra. About one hour after Plaintiff clocked back in after lunch, Guerra took him to HR where his employment was terminated with allegations that Plaintiff had followed through on a threat to hurt himself.
June 4, 2018 The Risk Management Pool adjuster informed HR that Plaintiff was in need of additional surgery and that temporary income benefits would continue.
August 21, 2018 Noting that the last status report indicated that Plaintiff could return to work on August 20, 2018, HR emailed the Risk Management Pool adjuster about the DWC Form 1.
September 6, 2018 Plaintiff had a surgical procedure involving “right shoulder subacromial decompressions with RCT repair.”
November 18, 2018 Plaintiff filed his EEOC complaint.
September 25, 2019 The EEOC provided Plaintiff with a right to sue letter.
Defendant complains at the outset of its motion that, while Plaintiff’s second amended complaint sets out five numbered recitations of claims, it discerns only three causes of action. Comparing the amended complaint, motion to dismiss, and response, the Court reads Plaintiff as attempting to claim:
1. Disability discrimination in the form of a violation of equal rights under unspecified law, which could include the Equal Protection Clause of the Fourteenth Amendment (D.E. 14, ¶¶ 48-52);
2. Disability discrimination under the basic anti-discrimination provision of the Americans with Disabilities Act (ADA), § 12112(a) (D.E. 14, ¶¶ 48-52);
3. Disability discrimination in the form of failure to accommodate Plaintiff’s disability under the ADA, §§ 12111(9), 12112(b) (D.E. 14, ¶¶ 53-58; D.E. 15, p. 2; D.E. 16, ¶¶ 11, 14);
4. Disability discrimination in the form of failure to engage in an interactive process to generate an accommodation for Plaintiff’s disability (D.E. 14, ¶ 33);
5. Retaliation for complaints made to Supervisor Guerra upon being ordered back to work (D.E. 14, ¶¶ 59-63; D.E. 15, p.5; D.E. 16, ¶ 17);
6. Deliberate indifference to Plaintiff’s unspecified constitutional rights (D.E. 14, ¶¶ 64-66; D.E. 16, ¶ 17); and
7. Violation of Plaintiff’s First Amendment rights, through 42 U.S.C. § 1983 (D.E. 14, ¶¶ 67-69; D.E. 15, p.1).
The viability of each is discussed below.
A. Disability Discrimination in the Form of a Violation of Equal Protection
*4 On its face, Plaintiff’s first cause of action is pled in the form of an equal protection challenge under the Fourteenth Amendment, although it does not use those terms. He claims that his disability placed him in a protected class and that he was treated differently than those who were similarly situated outside the protected class. D.E. 14, p. 15. Setting aside Plaintiff’s failure to name a single similarly situated comparator, it is clear that Plaintiff has not alleged a viable equal protection claim under the United States Constitution.
Disability is not a class that supports an equal protection challenge.
[T]he result of Cleburne is that States are not required by the Fourteenth Amendment to make special accommodations for the disabled, so long as their actions toward such individuals are rational. They could quite hardheadedly—and perhaps hardheartedly—hold to job-qualification requirements which do not make allowance for the disabled. If special accommodations for the disabled are to be required, they have to come from positive law and not through the Equal Protection Clause.
Bd. of Trustees of Univ. of Ala. v. Garrett, 531 U.S. 356, 367–68 (2001) (referring to City of Cleburne, Tex. v. Cleburne Living Ctr., 473 U.S. 432 (1985)). To the extent that Plaintiff seeks to raise an equal protection challenge, the motion is GRANTED IN PART and the claim is DISMISSED.
B. Disability Discrimination under ADA § 12112(a)
The “positive law” that protects a disabled individual from employment discrimination is embodied in the ADA. The general rules states:
No covered entity shall discriminate against a qualified individual on the basis of disability in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment.
42 U.S.C. § 12112(a). When relying on circumstantial evidence of discrimination,1 a prima facie case involves four elements: (1) plaintiff is disabled or is regarded as disabled; (2) he is qualified for the job; (3) he was subjected to an adverse employment action on account of his disability; and (4) he was replaced by or treated less favorably than non-disabled employees. Gowesky, 321 F.3d at 511.
Mindful that this case is at the pleading stage, the Court liberally construes the second amended complaint to satisfy the first and third elements of his discrimination claim. He pleads that he has a physical impairment that substantially limits his ability to perform manual tasks, lift, and work and that affects his neurological and ambulatory function. See 42 U.S.C. § 12102(1)(A) & (2). He suffered termination immediately after complaining that his disability was exacerbated by his work assignment, which is a classic adverse employment action. See, 42 U.S.C. § 12112(a); EEOC v. Chevron Phillips Chem. Co., LP, 570 F.3d 606, 622 (5th Cir. 2009).
The second and fourth elements, however, are not adequately pled. With respect to whether he is qualified for the job, his pleading is conclusory and contradicted by his other factual pleadings. Specifically, he pleads:
• He has a physiological condition that makes him prone to physical injury;
*5 • He sustained a major back injury while assigned to the Road and Bridge Department;
• He sustained a major shoulder injury while assigned to light duty at the County Landfill;
• He had not yet recovered from the shoulder injury and thus could not return to his County Landfill job;
• He vehemently objected to reassignment to the Road and Bridge Department because he could not perform the essential functions of the job there; and
• In the course of working one-half day in the Road and Bridge Department, he exacerbated his shoulder injury, when he should not have been working at all because of his disability.
D.E. 14. These are not facts that would support a finding that Plaintiff was a qualified individual for any of Defendant’s relevant positions.
To be qualified, Plaintiff must, with or without reasonable accommodation, be able to perform the essential functions of the employment position that he holds or desires. 42 U.S.C. § 12111(8). Plaintiff pleads that he cannot perform the essential functions of work in the Road and Bridge Department and he has actively resisted his assignment to that department. He further pleads that, even with his accommodation of light duty with the County Landfill, he got injured performing the basic functions of the job and was not medically released to return to work.
The Supreme Court has defined an otherwise qualified person as “one who is able to meet all of a program’s requirements in spite of his handicap.” Southeastern Cmty. Coll. v. Davis, 442 U.S. 397, 406 (1979). “The definition of a qualified handicapped individual also includes a personal safety requirement—an otherwise qualified handicapped individual is defined as one who ‘can perform the essential functions of the position in question without endangering the health and safety of the individual or others.’ ” Chandler v. City of Dallas, 2 F.3d 1385, 1393 (5th Cir. 1993) (quoting Chiari v. City of League City, 920 F.2d 311, 317 (5th Cir. 1991)).
Plaintiff does not allege that he can safely perform the essential functions of either position. Rather, he has pled that, while performing those essential functions, he was and will continue to be injured because of his underlying disability. He has affirmatively pled himself out of the required element of being qualified.
Last, as noted above, Plaintiff does not name a comparator or describe other circumstances to satisfy the fourth element: that he was replaced by, or treated less favorably than, a non-disabled employee. Thus, Plaintiff has failed to plead a prima facie case of disability discrimination under ADA § 12112(a). The motion is GRANTED IN PART and the Court DISMISSES Plaintiff’s claim for disability discrimination by disparate treatment.
C. Disability Discrimination Under ADA § 12112(b): Failure to Accommodate/Failure to Engage in Interactive Process
In addition to the basic disability discrimination case addressed above, an individual can claim discrimination in the form of a failure to accommodate a disability under ADA § 12112(b):
As used in subsection (a), the term “discriminate against a qualified individual on the basis of disability” includes—
(5)(A) not making reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability who is an applicant or employee, unless such covered entity can demonstrate that the accommodation would impose an undue hardship on the operation of the business of such covered entity; or
(B) denying employment opportunities to a job applicant or employee who is an otherwise qualified individual with a disability, if such denial is based on the need of such covered entity to make reasonable accommodation to the physical or mental impairments of the employee or applicant;
42 U.S.C. § 12112 (emphasis added). The elements of a failure to accommodate claim are: (1) plaintiff is a qualified individual with a disability; (2) defendant knew of the disability and its consequential limitations; and (3) defendant failed to reasonably accommodate those known limitations. Anderson v. Harrison Cnty., Miss., 639 Fed. App’x 1010, 1015 (5th Cir. 2016) (citing Feist v. La. Dep’t of Justice, Office of the Attorney Gen., 730 F.3d 450, 452 (5th Cir. 2013)).
As noted above, Plaintiff has not pled that he is a qualified individual. In connection with his failure-to-accommodate claim, he appears to imply that he would be qualified if extended a reasonable accommodation. After all, “The term ‘qualified individual’ means an individual who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires.” 42 U.S.C. § 12111(8) (emphasis added).
In that regard, Defendant challenges Plaintiff’s pleadings as failing to allege that (a) he made a request for an accommodation2 and (b) a specific reasonable accommodation was available. These are issues on which Plaintiff bears the burden of proof. See generally, Johnson v. Gambrinus Co., 116 F.3d 1052, 1059 (5th Cir. 1997). While he pled that he requested an accommodation at the time that his supervisor required him to return to work and then terminated him, he did not plead any particular reasonable accommodation that would render him qualified for the position. The only accommodation he mentions is the transfer to the County Landfill, which was insufficient—by facts apparent in his own pleadings—to qualify him for work. And requesting an indefinite amount of time off (paid or unpaid) is not a reasonable accommodation. Delaval v. PTech Drilling Tubulars, L.L.C., 824 F.3d 476, 481 (5th Cir. 2016). So Plaintiff has not pled a failure to accommodate. The motion is GRANTED IN PART and that claim is DISMISSED.
*7 Plaintiff contends that his allegations that Defendant failed to engage in an interactive fact-gathering process to generate a reasonable accommodation is a separate claim. This position is supported by Gardea v. DialAmerica Mktg., Inc., EP-12-CV-158-KC, 2013 WL 1855794, at *6 (W.D. Tex. Apr. 30, 2013). “Under the ADA, once the employee presents a request for an accommodation, the employer is required to engage in the interactive process so that together they can determine what reasonable accommodations might be available.” Chevron, 570 F.3d at 622.
Defendant has failed to address this as a separate claim. Neither has Defendant briefed any basis for not treating it as a separate claim or for treating the request as futile. For that reason, the motion is DENIED IN PART and the Court RETAINS Plaintiff’s claim for failure to engage in an interactive process toward an accommodation of his disability.
D. Retaliation for Complaints of Discrimination
The elements of a claim for retaliation under the ADA are that (1) plaintiff participated in a protected activity; (2) defendant took an adverse employment action against him; and (3) a causal connection exists between the protected activity and the adverse action.” Clark v. Charter Commc’ns, L.L.C., 775 Fed. App’x 764, 767 (5th Cir. 2019) (citing Feist, 730 F.3d at 454). Plaintiff has not set out the specific facts on which he relies for his retaliation claim. Reading his complaint generously, there are three different events that could conceivably trigger a retaliation claim:
• He filed a workers’ compensation claim for his February 2003 back injury;
• He filed a workers’ compensation claim for his June 2017 shoulder injury; and
• He objected to the May 23, 2018 order to return to work.
As a result of both workers’ compensation claims, Plaintiff was directed to seek medical attention and received time off from work. Nothing in the pleading or briefing asserts an adverse employment action causally related to either of his compensation claims. In fact, his complaint states, “Plaintiff’s employment with Brooks County was not placed in jeopardy until after May 23, 2018 and May 24, 2018 when Plaintiff questioned and challenged the May 23, 2018 notice to return to work.” D.E. 14, ¶ 44.
That leaves the objection to the order to return to work. Defendant challenges the retaliation claim arising from this event on the basis that Plaintiff complains of unspecified policies, his allegations are conclusory, and he fails to show how his complaints amount to a protected activity. Defendant reads the complaint too narrowly, in violation of the standard of review. Plaintiff’s outcry included not only objections based on Defendant’s own policies, but the fact that he was not yet medically released to return to his job and the work order involved being placed in a position with greater physical demands than the position he had left. Plaintiff clearly pleads that he wanted to avoid returning to the Road and Bridge Department and to remain in his less demanding job at the County Landfill.
This outcry can be construed as a request for an accommodation. Requesting an accommodation is a protected activity. Jenkins v. Cleco Power, LLC, 487 F.3d 309, 316 & n.3 (5th Cir. 2007). As mentioned, termination is an adverse employment action—a proposition Defendant does not contest. And while Defendant challenges the pleading of a causal connection, it is clear from the allegations that the termination followed just a few days after the protected activity, which is sufficient to support causation. Clark Cnty. Sch. Dist. v. Breeden, 532 U.S. 268, 273 (2001) (holding that a “very close” temporal relationship between the protected activity and the adverse action can support a prima facie case of causation, citing cases with temporal proximity of three to four months as sufficient).
*8 Thus, in the context of Rule 12(b)(6), the Court finds that Plaintiff has adequately pled a cause of action for retaliation based on his objection to returning to work in May 2018. The motion is DENIED IN PART and the Court RETAINS the retaliation claim.
E. First Amendment Violations
The outcry does not fare as well in the context of a First Amendment claim. A prima facie free-speech retaliation claim requires pleading “four elements: (1) he suffered an adverse employment action; (2) his speech involved a matter of public concern; (3) his interest in commenting on matters of public concern outweighs the employer’s interest in promoting efficiency; and (4) his speech motivated the employer’s adverse employment action.” Salge v. Edna Indep. Sch. Dist., 411 F.3d 178, 184 (5th Cir. 2005).
While satisfying the first and fourth elements, Plaintiff’s pleading does not address any public concern as required by the second element. Neither does it suggest that any public concern outweighs the employer’s legitimate interests regarding its workforce as required by the third element. The issue was a private one: whether it was appropriate to order Plaintiff back to work before he was medically released and whether the position to which he would return should involve some accommodation of his particular physical needs. This failure to meet the second and third requirements for this First Amendment claim was not addressed in Plaintiff’s response to the motion to dismiss. In fact, there was no mention of this claim whatsoever in his defense of the complaint.
Plaintiff has failed to state a First Amendment claim. He has cited no other constitutional claim, and thereby has failed to state a claim under 42 U.S.C. § 1983. Consequently, the motion is GRANTED IN PART and the Court DISMISSES the claims that he lists in his second amended complaint as his fourth and fifth causes of action. D.E. 14.
For the reasons set out above, the motion to dismiss (D.E. 15) is GRANTED IN PART and the Court DISMISSES: (1) Plaintiff’s claim for disability discrimination to the extent that it is couched in terms of equal protection; (2) Plaintiff’s claim for disability discrimination under ADA § 12112(a); (3) Plaintiff’s claim for failure to accommodate his disability under ADA § 12112(b); (4) Plaintiff’s claim for retaliation based on his exercise of free speech; and (5) Plaintiff’s unspecified constitutional claims brought under 42 U.S.C. § 1983. The motion is DENIED IN PART and the Court RETAINS: (1) Plaintiff’s claim for failure to engage in an interactive process to generate potential accommodations for his disability; and (2) Plaintiff’s claim for retaliation for seeking an accommodation for his disability. The Court DENIES without prejudice Plaintiff’s general request for leave to amend his complaint because Plaintiff has failed to apprise the Court of the substance of any intended amendment so as to demonstrate that it would not be futile.
ORDERED this 24th day of July, 2020.
|1||Plaintiff has pled his disability discrimination claim in the form prescribed for a claim based on circumstantial evidence. Such a claim uses the McDonnell Douglas burden-shifting framework. Gowesky v. Singing River Hosp. Sys., 321 F.3d 503, 511 (5th Cir. 2003); McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973). He does not plead or argue a direct evidence discrimination claim.|
|2||When an employee’s limitations caused by a disability are not “open and obvious” to the employer, it is the employee’s responsibility to notify the employer of the limitations and suggest a reasonable accommodation. Chevron, 570 F.3d at 621 (citing Taylor v. Principal Fin. Grp., Inc., 93 F.3d 155, 165 (5th Cir.1996)). We need not be concerned with this rule because, whether or not Plaintiff’s disability was open and obvious, he did plead that he made the request for an accommodation.|
United States District Court, S.D. Texas, Houston Division.
Jason PARKER, Plaintiff,
HOME DEPOT USA, INC., Defendant.
Civil Action H-19-706
Attorneys & Firms
Benjamin Cook Kennedy, Kiernan Angus McAlpine, Matthew Garrett Menter, John Arthur Daspit, Daspit Law Firm, Houston, TX, for Plaintiff.
Jason R. Bernhardt, Kathleen Marie Bell Banks, Winstead PC, Houston, TX, for Defendant.
MEMORANDUM OPINION & ORDER
Gray H. Miller, Senior United States District Judge
*1 Pending before the court is a motion for summary judgment filed by defendant Home Depot USA, Inc. Dkt. 13. Plaintiff Jason Parker responded. Dkt. 15. Home Depot replied. Dkt. 16. Having considered the motion, response, reply, and applicable law, the court is of the opinion that the motion should be DENIED.
In this personal injury case, Parker sued his former employer, Home Depot, after he was hurt while trying to move a water heater. Dkt. 1-2 at 4–5.
When Home Depot hired Parker as an overnight freight associate, he had no previous job-related experience. Dkt. 15-1 at 15–17. In that role, Parker: (1) unloaded freight from the merchandise delivery trucks; (2) stocked freight items on the sales floor; and (3) prepared the store to open. Id.
Home Depot trained Parker for his job by showing him videos on lifting, cleaning up spills, and using a pallet jack to unload merchandise trucks. Id. at 18. Additionally, the company directed Parker to ask for help if he needed assistance lifting or moving freight items. Id. at 20.
Although Home Depot required multiple employees to lift certain items, it did not tell Parker how much weight he could move or lift on his own. Id. Beyond the training videos, Parker did not receive any hands-on training on moving or lifting. Id. at 28–29.
Home Depot scheduled ten to sixteen employees to work during overnight shifts. Id. at 20. During most of those shifts, Parker worked alone in the plumbing section. Id. And, like most overnight associates, he worked without oversight. Id. at 20, 28.
Throughout his employment, Parker asked his supervisors for help. Id. at 30. In particular, he asked for more training on moving freight items situated on the sales floor because he could not lift those items. Id. The supervisors promised “a solution.”1 Id. But they did not provide additional training or direction. Id. He also asked his supervisors to give him back support because he felt that he needed it to do his job.2 Id. at 41. He did not receive that, either. Id. at 42. Home Depot does not explain why it did not honor Parker’s requests.
Because the company did not address those requests, Parker developed ways of moving “large boxes, large totes, [and] anything that [was] large” on his own. Id. at 30–32, 45. He moved those items by shimmying them from side-to-side with his hands and feet. Id. at 32. If he could not lift or shimmy the items, Parker left them in place. Id. at 30.
*2 On February 11, 2018, Parker saw a water heater sticking out into the aisle. Id. at 32. Parker did not ask for help moving it back into place because he believed he “didn’t need it.” Id. at 45. Instead, to move it back a few feet, Parker used his hands and feet to shimmy the heater. Id. Parker believed he could use that method to safely move the item because it was “large [but] not heavy.”3 Id. at 32–38, 45. But, while shimmying the heater, he felt a sharp pain in his groin area. Id. at 32. He reported that injury to the on-duty supervisor. Id.
After his groin injury, Parker started to experience back stiffness and soreness. Id. at 53. Later, a corrective surgery helped his groin injury, but he continued to experience back pain. Id. at 48; Dkt. 13-13 at 59. To address that pain, he received several treatments, including physical therapy. Dkt. 13-11 at 4–33; Dkt. 15-1 at 73–74.
On September 6, 2018, Parker sued Home Depot in state court for negligence.4 Dkt. 1-2; Dkt. 15 at 7. Specifically, he alleged that Home Depot failed to provide: (1) a safe workspace; (2) adequate safety policies and practices; (3) proper assistance and training; and (4) properly trained supervisors and directors. Dkt. 1-2 at 4–5. Parker also alleged that the company did not follow adequate safety policies and practices. Id. Home Depot removed to this court. Dkt. 1. Now, Home Depot moves for summary judgment. Dkt. 13.
II. LEGAL STANDARD
A court shall grant summary judgement when a “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgement 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., 436 F.3d 388, 392 (5th Cir. 2006).
Home Depot bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where Parker bears the burden of proof at trial, Home Depot need only point to the absence of evidence to support an essential element of Parker’s case; it does not have to support its motion with evidence negating Parker’s case. See Williamson v. Am. Nat’l Ins. Co., 695 F. Supp. 2d 431, 441 (S.D. Tex. 2010) (Harmon, J.) (citing Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)). If it meets that burden, Parker must 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 its favor. Envtl. Conservation Org. v. City of Dall., 529 F.3d 519, 524 (5th Cir. 2008).
Additionally, if Home Depot moves for summary judgment on an affirmative defense, it “must establish each element of that defense as a matter of law.” See Crescent Towing & Salvage Co. Inc. v. M/V Anax, 40 F.3d 741, 744 (5th Cir. 1994).
Home Depot challenges each element of Parker’s duty-to-train claim. Dkt. 13 at 2. But, because triable fact issues exist, Home Depot fails to meet its initial burden on that claim. Home Depot also asks the court to grant summary judgment on a purportedly unpleaded necessary-instrumentalities claim. But, the court cannot grant summary judgment on an unpleaded claim.
*3 Home Depot concedes that it owes Parker “a general duty to provide a safe workplace,” but contends that it does not “owe a specific duty to [Parker], such as a duty to train, warn, monitor, or provide assistance.”5 Dkt. 13 at 14. The company argues that it lacked a duty to provide Parker with additional training because his job was not specialized or hazardous. Id. at 17.
To recover for a workplace injury against a nonsubscriber employer like Home Depot, an employee like Parker must establish a negligence claim. See supra n.4. Here, that means that at trial, Parker must prove that Home Depot: (1) owed him a duty; (2) breached that duty; and (3) proximately caused his injury. Werner v. Colwell, 909 S.W.2d 866, 869 (Tex. 1995). As a nonsubscriber, Home Depot cannot defend this lawsuit by invoking contributory negligence or assumption of the risk. See Tex. Lab. Code Ann. § 406.033(a); Keng, 23 S.W.3d at 350.
“Under Texas law, the existence of a legal duty is a question of law for the court to decide from the facts surrounding the occurrence in question.” Austin v. Kroger Tex., L.P., Kroger Co. v. Elwood, 197 S.W.3d 793, 794 (Tex. 2006) (per curiam).
That duty requires it to adequately train and instruct employees if: (1) the employees lack experience; (2) the work is hazardous; or (3) if the job involves non-obvious dangers. Patino v. Complete Tire, Inc., 158 S.W.3d 655, 660 (Tex. App.—Dallas 2005, pet. denied) (explaining that employers must adequately train employees and instruct inexperienced ones); see also Allen v. A & T Transp. Co., 79 S.W.3d 65, 70 (Tex. App.—Texarkana 2002, pet. denied) (“An employer’s duty includes providing rules and regulations for the safety of employees, warning employees of the hazards of their employment, and supervising employees’ activities.”); Nat’l Convenience Stores, Inc. v. Matherne, 987 S.W.2d 145, 149 (Tex. App.—Houston [14th Dist.] 1999, no pet.) (an employer has a duty to train if an employee lacks experience, the dangers are not obvious and fully understood, or the job is hazardous).
To satisfy the breach and proximate cause elements at trial, Parker “must show that a reasonably prudent employer would have provided training beyond that which was given and that failure to do so caused his injuries.” See Baird v. Shagdarsuren, No. 3:17-CV-2000-B, 2020 WL 208815, at *10 (N.D. Tex. Jan. 14, 2020). To meet proximate cause, Parker must prove cause-in-fact and foreseeability. McLaurin v. Waffle House, Inc., 178 F. Supp. 3d 536, 563 (S.D. Tex. 2016) (Lake, J.). For the former, Parker must show that Home Depot’s “act or omission was a substantial factor in causing the injury without which the harm would not have occurred.” Id. For the latter, Parker must show that Home Depot anticipated, or should have anticipated the danger that its negligence created. See id. “Texas courts have consistently held that foreseeability turns on existence of a general danger, not awareness of the exact sequence of events that produces the harm.” Austin, 864 F.3d at 333.
*4 Parker: (1) lacked experience moving freight items; (2) received video training from Home Depot on how to safely lift freight items; and (3) did not receive hands-on training. Dkt. 15-1 at 15-17, 20; 28–29. Home Depot: (1) trained employees to ask for help if the employees perceived a need; and (2) ignored Parker’s repeated requests for more training. Id. at 20-21, 28-29. No evidence shows that Home Depot trained its employees on how much weight an individual could safely lift or move. Id. at 21.
Home Depot points to Parker’s self-developed methods—shimmying or not moving—as conclusive evidence that the company lacked a duty to train its employee. Dkt. 13 at 17.
The company argues that because Parker failed to ask for help, he assumed the risk by moving the item. Id. at 21. Texas law bars nonsubscribers like Home Depot from using assumption-of-the-risk to defend against a claim like Parker’s. Tex. Lab. Code Ann. § 406.033(a); see also Keng, 23 S.W.3d at 350.
Relying mainly on three cases, Home Depot also argues that Parker’s methods foreclosed the need for more training. Dkt. 13 at 10–18 (discussing Great Atl. & Pac. Tea Co. v. Evans, 175 S.W.2d 249 (Tex. 1943); Werner, 909 S.W.2d at 866; and Elwood, 197 S.W.3d at 793). However, a recent Fifth Circuit case rejects the basis for that argument. Compare Austin, 864 F.3d at 332, with Dkt. 13 at 10–18. Indeed, the cases that Home Depot relies on “only stand for the general proposition that an employer cannot be liable for breaching its duty to an employee by merely requiring the employee to perform his usual and customary work with the instrumentalities necessary to safely perform the job.” Austin, 864 F.3d at 332. Home Depot has not met its initial burden on the duty element.
Even so, because triable fact issues exist on the remaining elements, the court cannot grant summary judgment on Parker’s duty-to-train claim. See Werner, 909 S.W.2d at 869.
First, at least one triable fact exists on breach. To defeat summary judgment, Parker must raise a triable fact on whether “a reasonably prudent employer would have provided training beyond that which was given[.]” See Baird, 2020 WL 208815, at *10. Home Depot showed Parker training videos. And, it trained Parker to ask for help. But, it ignored Parker’s repeated requests for help (e.g., for more training). Home Depot argues that no breach occurred because Parker did not ask for help moving on the night of his injury. Dkt. 16 at 2. That argument disregards Parker’s requests for help learning how to do the type of task that allegedly caused his injury. Reasonable jurors could disagree about whether a reasonably prudent employer would have provided training beyond the videos.
Parker also raises a fact issue on whether Home Depot’s failure to provide adequate training proximately caused Parker’s injuries. Reasonable jurors could disagree about whether Home Depot could have anticipated a “general danger” created by its failure to train Parker, especially when the company did not address his repeated requests for more training. See Austin, 864 F.3d at 333.
B. Necessary Instrumentalities
Nonsubscriber employers have a “duty to provide necessary instrumentalities[.]” Id. To recover for a breach of that duty, Parker must show that Home Depot “failed to provide instrumentalities to [him] that were necessary for the safe performance of the [his] customary work[.]” Id. If the “employer failed to provide necessary instrumentalities to the employee[,]” then the “employee’s injuries sustained during the performance of ... customary work” cannot be unforeseeable as a matter of law. Id. Under Texas law, “[f]oreseeability means that an actor, as a person of ordinary intelligence, should have anticipated the dangers that [its] negligent act created for others.” Id. And, “[t]he general danger created by failing to provide necessary instrumentalities is obvious to any person of ordinary intelligence, and it is not dependent on whether the employee is performing customary work.” Id.
*5 Home Depot asks the court to grant summary judgment on the necessary-instrumentalities claim because Parker did not plead it. Dkt. 16 at 4. However, “[s]ummary judgment cannot be entered on a claim not pleaded in the complaint, as that claim is not fairly before the Court.” Wildhorse Res. Mgmt. Co., LLC v. G&C Constr. Int’l, LLC, No. CV H-18-2456, 2019 WL 5684228, at *7 (S.D. Tex. Oct. 31, 2019) (Miller, J.). Parker did not plead any facts about necessary instrumentalities (i.e., back support). See Dkt. 1-2. Without those facts, the live pleading fails to give Home Depot fair notice of a claim based on its alleged failure to provide necessary instrumentalities. See La Union del Pueblo Entero v. Fed. Emergency Mgmt. Agency, 141 F. Supp. 3d 681, 698–99 (S.D. Tex. 2015) (Tagle, J.) (evaluating unpleaded claim against Fed. R. Civ. P. 8). Because Parker did not plead that claim, the court cannot grant summary judgment on it. See Wildhorse, 2019 WL 5684228, at *7.
Because triable fact issues exist on Parker’s duty-to-train claim, Home Depot’s motion for summary judgment (Dkt. 13) is DENIED.
Q. Did you tell [Patrick] specifically what you were having trouble moving?
A. He - his answer was, you know, We’ll [sic] come up with a solution, or I’ll get back to - Kurlanders [sic] and he will let you know.
Dkt. 15-1 at 30.
Q. Okay. So talking specifically about the incident ...
Were there any types of tools or equipment you needed that were not provided to you?
A. Umm, I would say probably some type of support, like back support and all that stuff.
Q. Did you ever ask for that?
Q. Who did you ask?
A. [Supervisors] Linwood, Kurlander, Patrick.
Dkt. 15-1 at 41.
Q. And any specific training that would have prevented this incident?
A. I believe so.
Q. Okay. What training is that?
A. How to move certain stuff.
Q. What certain things?
A. Like large boxes, large totes, anything that’s large even though it’s not heavy. Dkt. 15-1 at 45.
When a nonsubscriber’s employee seeks to recover for on-the-job injuries, that employee must sue the nonsubscriber for negligence as the employee does not receive protections under the Texas Workers’ Compensation Act (“TWC”). Tex. Lab. Code Ann. § 406.000; Kroger Co. v. Keng, 23 S.W.3d 347, 350 (Tex. 2000).
Home Depot does not cite any law in support of this proposition. In any event, authority supports the opposite result. “This duty includes an obligation to provide adequate help under the circumstances for the performance of required work.” Werner, 909 S.W.2d at 869. An employer also owes a duty to warn of hazards that are not commonly known or unappreciated by the employee and a duty to provide equipment which is necessary to the job’s safe performance. See Elwood, 197 S.W.3d at 794–95.
United States District Court, S.D. Texas, Houston Division.
David CRUZ, Individually and for Others Similarly Situated, Plaintiff,
3F TECHNOLOGIES, L.L.C. d/b/a Progressive Technologies, L.L.C., Fernando Fernandez, Raul Rodriguez and Roman Coronado, Defendants.
Case No. 4:19-cv-4386
Attorneys & Firms
Amanda E. McGowen, Scott Earl Brady, Philip Bohrer, Bohrer Brady, LLC, Baton Rouge, LA, Trang Q. Tran, Tran Law Firm LLP, Houston, TX, for Plaintiff.
Christopher M. Cammack, Attorney at Law, Houston, TX, for Defendants.
MEMORANDUM AND ORDER
NANCY F. ATLAS, SENIOR UNITED STATES DISTRICT JUDGE
*1 Before the Court in this Fair Labor Standards Act (“FLSA”) case is David Cruz’s (“Plaintiff”) Motion to Dismiss 3F Technologies, LLC’s and Fernando Fernandez’s First Amended Counterclaims (“Motion”) [Doc. # 21]. 3F Technologies, LLC (“3F”) and Fernando Fernandez (collectively, “Counterclaimants”) have responded.1 Plaintiff has not replied, and the time for him to do so has elapsed.2 The motion is ripe for consideration. Based on the parties’ briefing, pertinent matters of record, and relevant legal authority, the Court grants Plaintiff’s Motion to Dismiss.
Plaintiff filed this action on November 7, 2019, seeking to recover unpaid overtime compensation from his former employer, 3F.3 Plaintiff filed suit against 3F and three individuals, Fernandez, Rodriguez, and Coronado. Plaintiff alleges these individual Defendants each hold ownership interests in 3F and are joint employers as defined by 29 U.S.C. § 203(d).4 Plaintiff alleges that he was misclassified as an independent contractor, and was only paid “straight time,” or his standard hourly wage, for all hours worked, including those in excess of 40 hours per week.5
On December 11, 2019, Counterclaimants filed answers and counterclaims seeking attorneys’ fees and declaratory judgment that 3F and Fernandez did not fall within the FLSA’s definition of “employer” and that Plaintiff did not fall within the FLSA’s definition of “employee.”6 On January 31, 2020, Counterclaimants filed amended counterclaims.7
Counterclaimants allege that Plaintiff was an independent contractor retained by 3F from June 2019 to September 2019, based on two contracts executed by Plaintiff and Counterclaimants on June 4, 2019, a Joint Agreement to Affirm Independent Relationship (“Joint Agreement”) and a Master Trade Agreement (“MTA”), in which the parties stated that they agreed that Plaintiff was an independent contractor.8 Copies of these agreements are attached as Exhibits A and B, respectively, to Counterclaimants’ First Amended Counterclaims (the “FACCs”).9 The Joint Agreement states that “[Plaintiff] meets the qualifications of an Independent Contractor under Texas Workers’ Compensation Act” and that “[Plaintiff] is not an employee of [Counterclaimants].”10 The MTA states that “[Plaintiff] is an independent contractor and not an employee of [Counterclaimants].”11 The MTA also contains dispute resolution procedures providing that “[a]ny and all claims by and between the parties hereto shall first be submitted to mediation and, if not resolved in mediation then to binding arbitration,” and that “[i]n the event of any dispute between [Counterclaimants] and [Plaintiff], the prevailing party in any litigation related thereto shall be entitled to recover its attorneys’ fees and costs.”12
*2 Counterclaimants claim that Plaintiff breached the MTA by claiming in this lawsuit that he was an employee of 3F, in violation of his contractual agreement that he was an independent contractor, and by filing this lawsuit instead of submitting the dispute first to mediation and then arbitration, as required by the MTA.13Counterclaimants also seek attorneys’ fees and costs pursuant to the fee shifting provision in the MTA.14
II. MOTION TO DISMISS STANDARD
A motion to dismiss under Rule 12(b)(6) is viewed with disfavor and is rarely granted. Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011) (citing Harrington v. State Farm Fire & Cas. Co., 563 F.3d 141, 147 (5th Cir. 2009)). The complaint must be liberally construed in favor of the plaintiff, and all facts pleaded in the complaint must be taken as true. Harrington, 563 F.3d at 147. The complaint must, however, contain sufficient factual allegations, as opposed to legal conclusions, to state a claim for relief that is “plausible on its face.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Patrick v. Wal-Mart, Inc., 681 F.3d 614, 617 (5th Cir. 2012).
When there are well-pleaded factual allegations, a court should presume they are true, even if doubtful, and then determine whether they plausibly give rise to an entitlement to relief. Iqbal, 556 U.S. at 679. Rule 8 “generally requires only a plausible ‘short and plain’ statement of the plaintiff’s claim, not an exposition of his legal argument.” Skinner v. Switzer, 562 U.S. 521, 530 (2011). Additionally, regardless of how well-pleaded the factual allegations may be, they must demonstrate that the plaintiff is entitled to relief under a valid legal theory. See Neitzke v. Williams, 490 U.S. 319, 327 (1989); McCormick v. Stalder, 105 F.3d 1059, 1061 (5th Cir. 1997).
Counterclaimants argue that Plaintiff breached the MTA two ways: (1) by claiming in this lawsuit that he was an employee of Counterclaimants; and (2) by filing this lawsuit instead of submitting the dispute first to mediation and then binding arbitration. Counterclaimants also seek recovery of attorneys’ fees pursuant to a fee shifting provision in the MTA.
A. Whether the Counterclaims are Compulsory or Permissive
Under Rule 13(a)(1), a compulsory counterclaim is one that “(A) arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim; and (B) does not require adding another party over whom the court cannot acquire jurisdiction.” Fed. R. Civ. P. 13(a)(1). Counterclaims that are not compulsory are permissive. Fed. R. Civ. P. 13(b).
A counterclaim arises out of the same transaction and occurrence as the original claim if: (1) both the counterclaim and the original claim largely raise the same issues of fact or law; (2) claim preclusion would bar a subsequent suit on the counterclaim apart from the compulsory counterclaim rule; (3) the same evidence will support or refute the respective claims; or (4) there is a logical relation between the original claim and the counterclaim. RPV, Ltd. as Tr. For Village Tr. v. Netsphere, Inc., 771 F. App’x 532, 535 (5th Cir. 2019); Tank Insulation Int’l, Inc. v. Insultherm, Inc., 104 F.3d 83, 85–86 (5th Cir. 1997). The general rule in the Fifth Circuit is that a claim is compulsory if one of these tests is met. RPV, 771 F. App’x at 535; Tank, 104 F.3d at 86; Coronado v. D N.W. Houston, Inc., No. H-13-2179, 2014 WL 2779548, at *2 (S.D. Tex. June 19, 2014).15
*3 As discussed below, Counterclaimants’ breach of contract counterclaims are not compulsory because their resolution requires a different legal and factual analysis from Plaintiff’s FLSA claim. Counterclaimants’ claim for attorneys’ fees is also not compulsory because that claim has not fully matured.
1. Plaintiff’s Claim that He Was an Employee
Counterclaimants argue that Plaintiff’s claim in this action that he was their employee is “in violation of his contractual stipulation that he was an independent contractor.”16 Plaintiff argues that Counterclaimants’ breach of contract claim must be dismissed because the MTA is unconscionable and unenforceable as in conflict with the FLSA.17 Counterclaimants sidestep the unconscionability issues, arguing simply that it does not matter if the MTA conflicts with the FLSA because Plaintiff’s agreement that he was an independent contractor prevented him from ever having rights under the FLSA.
The parties’ arguments miss the mark. “[P]utting on an ‘independent contractor’ label does not take the worker from the protection of the [FLSA].” Rutherford Food Corp. v. McComb, 331 U.S. 722, 729 (1947). Neither the subjective intent of the worker and employer nor the label they use to describe their relationship controls whether the worker is an employee or an independent contractor. See Watson v. Graves, 909 F.2d 1549, 1554 (5th Cir. 1990) (“We must ...look to the substantive realities of the relationship, not to mere forms or labels ascribed to the laborer by those who would avoid coverage.”); Coronado, 2014 WL 2779548, at *2 (“The fact that a worker and her employer use the ‘independent contractor’ label does not determine the outcome of the economic realities test or the application of the FLSA.”) (Rosenthal, J.).
Courts in the Fifth Circuit use “the ‘economic reality’ test to evaluate whether there is an employer/employee relationship.” Gray v. Powers, 673 F.3d 352, 354 (5th Cir. 2012). Courts applying this test consider “whether the putative employer: (1) possessed the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.” Williams v. Henagan, 595 F.3d 610, 620 (5th Cir. 2010).
The statement in the MTA that “[Plaintiff] is an independent contractor and not an employee of [Counterclaimants]” is nothing more than a label representing the parties’ subjective intent.18 The parties’ putative (or actual) subjective intent is not relevant to the economic reality test. See Watson, 909 F.2d at 1554; Real v. Driscoll Strawberry Assocs., Inc., 603 F.2d 748, 755 (9th Cir. 1979) (“[T]he subjective intent of the parties to a labor contract cannot override the economic realities reflected in the factors described above.”) (citing Usery v. Pilgrim Equip. Co., 527 F.2d 1308, 1315 (5th Cir. 1976)).
Because the parties’ intent in executing the MTA is not probative of the economic realities of the parties’ relationship, counterclaims based on wording in the MTA require a different legal and factual analysis than Plaintiff’s FLSA claim. Plaintiff’s FLSA claim requires the Court to apply the economic reality test. Counterclaimants’ claims against Plaintiff require the Court to construe the language of the MTA and determine its scope and enforceability.
*4 As a result of this different legal and factual analysis, Plaintiff’s FLSA claim and Counterclaimants’ claims would not be supported or refuted by common evidence. Plaintiff’s FLSA claim will be supported or refuted by evidence of Plaintiff’s relationship with Defendants at his job after he signed the MTA. Counterclaimants’ claims, on the other hand, will be supported or refuted by the language of the MTA and possibly evidence of the parties’ conduct and intent priorto signing the MTA. Accordingly, there is no logical relationship between Plaintiff’s FLSA claim and Counterclaimants’ claims.
Counterclaimants’ claims would not be barred by claim preclusion or res judicata in a subsequent suit. “Res judicata ‘precludes the parties or their privies from relitigating issues that were or could have been raised’ in a prior proceeding that was decided on the merits.” Butler v. Endeavor Air, Inc., --- F. App’x ---, 2020 WL 1061336, at *2 (5th Cir. 2020) (quoting Allen v. McCurry, 449 U.S. 90, 94 (1980)). “In Texas, for res judicata to apply, three elements must be present: ‘(1) a prior final judgment on the merits by a court of competent jurisdiction; (2) identity of parties or those in privity with them; and (3) a second action based on the same claims that were raised or could have been raised in the first action.’ ” Calderon v. Bank of N.Y. Mellon, 791 F. App’x 453, 456 (5th Cir. 2019) (quoting Citizens Ins. Co. of Am. v. Daccach, 217 S.W.3d 430, 449 (Tex. 2007)). Counterclaimants’ claims would not meet the third element of this test because they are for breach of contract, a claim different from Plaintiff’s FLSA claim. See Cortes v. Distribuidora Monterrey Corp., No. 3:08–CV–1077–M, 2008 WL 5203719, at *1 (N.D. Tex. Dec. 11, 2008) (holding that employer’s counterclaims for breach of contract, conversion, and theft “would not be barred by res judicata if brought in a later suit, because they do not involve the same claim or cause of action as the FSLA claim.”).
Counterclaims based on Plaintiff’s classification in the MTA therefore do not arise out of the same transaction and occurrence as Plaintiff’s FLSA claim, would not be supported or refuted the same evidence as Plaintiff’s FLSA claim, are not logically related to Plaintiff’s FLSA claim, and would not be barred by res judicata if brought in a subsequent suit. The counterclaims are permissive under Rule 13.
2. Plaintiff’s Failure to Submit This Dispute to Mediation and Arbitration
Counterclaimants further argue that Plaintiff breached the MTA by filing this lawsuit instead of submitting the dispute to mediation and then binding arbitration as required by the MTA.19 The MTA provides that “[a]ny and all claims by and between the parties hereto shall first be submitted to mediation and if not resolved in mediation then to binding arbitration.”20
*5 Determining whether a dispute falls within the scope of a mediation or arbitration agreement requires two separate determinations: First, a court considers “whether there is a valid agreement to arbitrate [or mediate] between the parties.” Tittle v. Enron Corp., 463 F.3d 410, 418 (5th Cir. 2006). If the court finds that a valid arbitration or mediation agreement does exist, the court must then determine “whether the dispute in question falls within the scope of that arbitration agreement.” Id. Courts apply state law to determine contract validity, First Options v. Kaplan, 514 U.S. 938, 944 (1995), and apply federal law to decide whether the parties’ dispute is within the scope of an arbitration agreement. Wash. Mut. Fin. Grp., L.L.C. v. Bailey, 364 F.3d 260, 263 (5th Cir. 2004).
Counterclaimants’ claim that Plaintiff breached the MTA by filing this lawsuit thus requires the Court to apply state principles of contract law to determine the validity of the MTA, and federal law to determine the scope of the dispute resolution clause in that agreement. As discussed above, resolution of Plaintiff’s FLSA claim turns on the economic reality test. Gray, 673 F.3d at 354. Because the economic reality test does not require the Court to determine the validity or scope of the dispute resolution provision in the MTA, counterclaims alleging violations of that provision require different legal and factual analyses from that involved in resolving Plaintiff’s FLSA claim. In sum, the counterclaims based on alleged violations of the dispute resolution provision in the MTA do not arise out of the same transaction and occurrence as Plaintiff’s FLSA claim. Such counterclaims are permissive.
3. Attorneys’ Fees
Counterclaimants also seek a judgment against Plaintiff for the attorneys’ fees and costs they have accrued and will accrue in defending this litigation. Counterclaimants rely on the MTA’s fee shifting clause that provides “[i]n the event of any dispute between [Counterclaimants] and [Plaintiff], the prevailing party in any litigation related thereto shall be entitled to recover its attorneys’ fees and costs.”21
Counterclaimants claim for attorneys’ fees and costs is not yet mature. This claim is contingent upon the adjudication of alleged breaches of the MTA. Since the breach of contract counterclaims have not been adjudicated, there is no “prevailing party” to whom attorneys’ fees and costs may be awarded. Additionally, as Counterclaimants note, attorneys’ fees and costs are continuing to accrue.
“Under Rule 13(e), a counterclaim that does not mature at the time of the initial pleading need not be asserted, ‘even if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim’ because ‘the after-acquired claim is not considered a compulsory counterclaim under Rule 13(a) and a failure to interpose it will not bar its assertion in a later suit.’ ” Coronado, 2014 WL 2779548, at *3 (quoting 6 CHARLES A. WRIGHT, ARTHUR R. MILLER, MARY KAY KANE, FEDERAL PRACTICE & PROCEDURE § 1428 at 246 (3d ed. 2010)); see also Welsh v. Fort Bend Ind. Sch. Dist., 860 F.3d 762, 766 (5th Cir. 2017) (“We also find instructive Texas’s compulsory counterclaim rule, under which a party must assert as a counterclaim any action arising out of the same transaction as the claim so long as the action is mature at the time of filing the pleading.”) (citing Tex. R. Civ. P. 97(a)). Counterclaimants’ claim for attorneys’ fees and costs is permissive because that claim has not yet matured.
B. Whether There Is Supplemental Jurisdiction Over the Counterclaims
*6 Because Counterclaimants’ claims are permissive, there must be an independent jurisdictional basis for this Court to act on the claims. Plaintiff and Counterclaimants each are citizens of Texas.22 The counterclaims are state law causes of action. Therefore, there is no original federal subject matter jurisdiction over the counterclaims.
Supplemental jurisdiction requires the claims to be “so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367(a). More specifically, a court has supplemental jurisdiction over state claims “when the state and federal claims ‘derive from a common nucleus of operative fact’ and are so linked that the plaintiff ‘would ordinarily be expected to try them all in one judicial proceeding.’ ” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 580 (2005) (citation omitted); see also Saenz v. Austin Roofer’s Supply, LLC, 664 F. Supp. 2d 704, 707 (W.D. Tex. 2009) (for federal courts “to decide state claims that lack an independent basis of jurisdiction, [they] must find that the state and federal claims ‘derive from a common nucleus of operative facts....’ ”) (quoting United Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966)).
In response to Plaintiff’s motion, Counterclaimants allege superficially that their counterclaims are part of the same case or controversy as Plaintiff’s FLSA claim, but offer no further explanation.23 For reasons similar to the permissive/compulsory counterclaim analysis, the Court concludes the exercise of supplemental jurisdiction over the counterclaims is not warranted. Courts in this district and elsewhere have held that an employer’s counterclaim claim for breach of an employment contract is not part of the “same case or controversy” as an employee’s FLSA suit.24 Counterclaims for breach of an employment contract “require a different legal and factual analysis than the FLSA claims.” Coronado, 2014 WL 2779548, at *4. “FLSA claims turn on whether, under the economic realities of the [plaintiffs’] relationship with [defendants], they are employees, not how they were labeled in [a contract]. By contrast, [breach of contract] counterclaims turn on the contract language and issues of consideration, conscionability, and defendant’s damages, including attorney fees.” Id.
*7 Chief Judge Rosenthal’s analysis in Coronado is persuasive here. Counterclaimants’ causes of action are not part of the same case or controversy as Plaintiff’s FLSA claim. Plaintiff’s FLSA claim turns on the economic reality test, that is, the conditions and duties of Plaintiff’s work, and Defendants’ payment policies while Plaintiff was employed. On the other hand, Counterclaimants’ claims require the Court to determine the parties’ intent at the time of contracting, and the enforceability and scope of various provisions in the MTA. The provisions in the MTA relevant to Counterclaimants’ claims have no bearing on the economic reality test and are thus unrelated to resolution of Plaintiff’s FLSA claim.
Even if Counterclaimants’ claims arguably could be deemed part of the same case or controversy as Plaintiff’s FLSA claim, the Court would exercise its discretion to decline to exercise supplemental jurisdiction. “[D]istrict courts may decline to exercise supplemental jurisdiction” when “there are other compelling reasons for declining jurisdiction.” 28 U.S.C. § 1367(c)(4). “In FLSA cases, the Fifth Circuit has ‘been hesitant to permit an employer to file counterclaims...for money the employer claims the employee owes it, or for damages the employee’s tortious conduct allegedly caused.’ ” Coronado, 2014 WL 2779548, at *4 (quoting Martin v. PepsiAmericas, Inc., 628 F.3d 738, 740 (5th Cir. 2010)). The Fifth Circuit has explicitly acknowledged that its own precedent “suggests that [breach of contract counterclaims] should not be addressed in a FLSA action.” Gagnon v. United Technisource, Inc., 607 F.3d 1036, 1042 (5th Cir. 2010) (affirming district court’s refusal to hear employer’s breach of contract counterclaim in employee’s FLSA case); see also Brennan v. Heard, 491 F.2d 1, 4 (5th Cir. 1974) (noting that the only function of the federal judiciary under the FLSA “is to assure to the employees of a covered company a minimum level of wages” and holding that “[a]rguments and disputations over claims against those wages are foreign to the genesis, history, interpretation, and philosophy of the [FLSA].”), overruled on other grounds, McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988).
The Court concludes that there is no independent jurisdictional basis to exercise subject matter jurisdiction over the counterclaims in this case. Even if there were, this Court would decline to exercise supplemental jurisdiction over the permissive counterclaims advanced against Plaintiff in this case.
IV. CONCLUSION AND ORDER
The Court concludes that the counterclaims asserted by Counterclaimants are permissive under Rule 13. The Court further concludes that there is no independent subject matter jurisdiction over the counterclaims. Even if supplemental jurisdiction existed, the Court finds compelling reasons why the exercise of supplemental jurisdiction over the counterclaims is not warranted.
For the foregoing reasons, it is hereby
ORDERED that Plaintiff’s Motion to Dismiss Defendants’ First Amended Counterclaims is GRANTED and 3F’s and Fernandez’s First Amended Counterclaims are DISMISSED with prejudice. It is further
ORDERED that on or before April 21, 2020, Plaintiff shall present evidence of service on Defendants Raul Rodriguez and Roman Coronado. Plaintiff is advised that failure to comply by the April 21, 2020, deadline will result in dismissal of this case pursuant to Rule 4(m) of the Federal Rules of Civil Procedure as against any unserved Defendant.
Defendants, 3F Technologies, L.L.C. d/b/a Progressive Technologies, L.L.C.’s and
Fernando Fernandez’s Response to Plaintiff’s Motion to Dismiss Defendants’ First Amended Counterclaims [Doc. # 26].
See S.D Tex. Loc. R. 7.4(E).
Original Complaint [Doc. # 1] ¶ 1.
Id. ¶¶ 9-11.
Id. ¶¶ 25, 30, 61.
See 3F Technologies, L.L.C. d/b/a Progressive Technologies, L.L.C.’s Original
Answer and Original Counterclaim [Doc. # 14] ¶¶ 76-77, and Defendant, Fernando Fernandez’s Original Answer and Original Counterclaim [Doc. # 15] ¶¶ 76-77 (together, “Counterclaims”).
Defendants Rodriguez and Coronado have not answered or appeared in this matter. Fernandez alleges that he is the sole member of 3F.
3F Technologies, L.L.C. d/b/a Progressive Technologies, L.L.C.’s First Amended
Counterclaim [Doc. # 17] (“3F’s FACC”); Fernando Fernandez’s First Amended Counterclaim [Doc. # 18] (“Fernandez’s FACC”). 3F’s FACC and Fernandez’s FACC are virtually identical and citations to them will be to them jointly for ease of reference.
FACCs ¶¶ 4-6.
Courts reviewing motions to dismiss may consider “the complaint, its proper
attachments, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Greater Houston Transp. Co. v. Uber Techs., Inc., 155 F. Supp. 3d 670, 680 (S.D. Tex. Dec. 18, 2015), citing Wolcott v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011).
Ex. A to FACCs.
Ex. B to FACCs at 4.
Id. at 9.
FACCs ¶¶ 7-8. Counterclaimants do not contend Plaintiff breached the Joint
Agreement, but argue that that contract is probative of the parties’ intent in executing the MTA.
Id. ¶ 9.
Other circuits view the four elements as factors to be considered in the overall
analysis. See, e.g., Equitrans, L.P. v. Moore, 725 F. App’x 221, 224 (4th Cir. 2018) (“We ‘need not answer all these questions in the affirmative for the counterclaim to be compulsory’ because the inquiries ‘are less a litmus, more a guideline.’ ”) (quoting Painter v. Harvey, 863 F.2d 329, 331 (4th Cir. 1988)).
FACCs ¶ 7.
The Court does not reach the question of whether the MTA is unconscionable and
Ex. B to FACCs at 4.
Counterclaimants argue by implication that the dispute resolution provisions in the
MTA are binding and enforceable. Yet, Counterclaimants have not initiated mediation or arbitration, and have not move to compel such proceedings in the face of Plaintiff’s suit. Dispute resolution clauses like the one at issue can be waived if not invoked within a reasonable amount of time of the filing of a dispute subject to the clause. Miller Brewing Co. v. Fort Worth Distrib. Co., Inc., 781 F.2d 494, 497 (5th Cir. 1986) (“ ‘The right to arbitration, like any other contractual right, can be waived.’ ”) (quoting Cornell & Co. v. Barber & Ross Co., 360 F.2d 512, 513 (D.C. Cir. 1966) (per curiam)). These circumstances may raise serious questions, but the Court does not decide whether the dispute resolution provisions in the MTA are enforceable or whether Counterclaimants have waived rights under those clauses.
Ex. B to FACCs at 9.
FACCs ¶ 6; Ex. B to FACCs at 9.
See FACCs ¶¶ 2-3.
See FACCs ¶ 1. The parties did not address in their briefing the question of whether
the Court has jurisdiction to hear the claims asserted by Counterclaimants. The Court nevertheless considers the issue sua sponte. MCG, Inc. v. Great W. Energy Corp., 896 F.2d 170, 173 (5th Cir. 1990) (“Federal courts, both trial and appellate, have a continuing obligation to examine the basis for their subject-matter jurisdiction. The issue may be raised by parties, or by the court sua sponte, at any time.”).
See Coronado, 2014 WL 2779548, at *3 (concluding that counterclaim alleging
breach of a contract stating that plaintiff was an independent contractor was permissive counterclaim); Anderson v. P.F. Chang’s China Bistro, Inc., NO. 16- 14182, 2017 WL 3616475, at *6 (E.D. Mich. Aug. 23, 2017) (“Although there would be some evidentiary overlap regarding the type of duties that [plaintiff] performed as a Sous Chef, the Counterclaims would involve a substantial amount of additional evidence that would not be necessary to prove or defend [plaintiff’s] claim.”); Sneed v. Wireless PCS Ohio #1, LLC, No. 1:16-cv-1875, 2017 WL 879591, at *2 (N.D. Ohio Mar. 6, 2017) (finding counterclaims were permissive and declining to exercise supplemental jurisdiction over them because “Plaintiff’s claim will focus on how many hours he worked, how much he was paid, and whether he was considered an employee under the FLSA. Defendants’ counterclaims will involve questions of whether plaintiff...failed to perform the requirements of his oral employment agreement with defendants.”); Hose v. Henry Indus., Inc., No. 13– cv–2490, 2014 WL 1356039, at *2 (D. Kan. Apr. 7, 2014) (concluding that the court lacked jurisdiction to hear a counterclaim alleging breach of contract “premised on a written document which will carry minimal weight in the classification of Hose for FLSA purposes.”); see also Iniesta v. Ula’s Washington, LLC, No. H-17-2668, 2018 WL 3912256, at *3 (S.D. Tex. July 18, 2018) (report and recommendation adopted, 2018 WL 3880286 (S.D. Tex. Aug. 15, 2018)) (concluding that restaurant’s counterclaims for theft, conversion and fraud were related to the allegation that employee pocketed money paid by the restaurant’s customers which had “nothing to do with the number of hours Plaintiff worked or the manner in which his tips were calculated.”).
United States District Court, S.D. Texas, Houston Division.
MAXIM CRANE WORKS, L.P., Plaintiff,
ZURICH AMERICAN INSURANCE COMPANY Defendant.
Civil Action No. H-18-3667
Signed June 19, 2019
Attorneys & Firms
*732 Alexa Leigh Sendukas, Peter D. Laun, Sidney Smith McClung, Jones Day, Dallas, TX, for Plaintiff.
Benjamin David Evans, Christopher Blair Dancy, Cain & Skarnulis PLLC, Austin, TX, for Defendant.
MEMORANDUM AND ORDER
Lee H. Rosenthal, Chief United States District Judge
In September 2018, Maxim Crane Works, LP sued Zurich American Insurance Company in Texas state court, alleging breach of contract and seeking a declaratory judgment that Zurich must reimburse Maxim for defense costs, a $3.5 million judgment, and other losses Maxim sustained in a related lawsuit. (Docket Entry No. 1-3). Zurich timely removed. (Docket Entry No. 1). The parties cross-moved for summary judgment, responded, and replied. (Docket Entry Nos. 20, 22, 25, 26, 29, 31).
Based on the motions, responses, and replies; the record evidence; and the applicable law, the court grants Zurich’s summary judgment motion, (Docket Entry No. 22), and denies Maxim’s summary judgment motion. (Docket Entry No. 20). Final judgment is entered by separate order.
The reasons for these rulings are detailed below.
A. The Construction Project and Accident
In 2013, Skanska USA Building, Inc., a general contractor, was constructing an office campus in Houston and hired Berkel & Company Contractors as a subcontractor. (Docket Entry No. 19 at ¶¶ 1–3). Skanska had a contractor-controlled insurance program that included worker’s compensation coverage. (Id. at ¶ 4). Skanska required Berkel and other subcontractors to enroll and obtain coverage for the project. *733 (Id.). Berkel enrolled and obtained coverage under the program effective from August to October 2013. (Id.). Berkel also had a separate commercial general liability policy with Zurich (the “Berkel Policy”), effective from August 2013 to August 2014. (Id. at ¶ 8).
Berkel leased a crane from Maxim for the project. (Id. at ¶ 5). Berkel’s Lease Agreement with Maxim stated:
THE EQUIPMENT IS RENTED TO LESSEE ON A BARE RENTAL BASIS ONLY, in its “As Is” condition. Lessee, at its own expense, shall transport, operate, inspect, maintain and repair the Equipment....LESSEE IS RESPONSIBLE FOR ENSURING COMPLIANCE BY IT AND ITS EMPLOYEES/AGENTS, AND OF THE EQUIPMENT ITSELF, WITH ALL APPLICABLE LAWS, REGULATIONS AND ORDINANCES....Lessor shall have no responsibility of any kind for compliance with any such laws, regulations or ordinances during the period the Equipment is in Lessee’s possession or control.
(Docket Entry No. 19-1 at 514). Although Maxim had a separate Commercial General Liability policy with Zurich (the “Maxim Policy”), the Lease Agreement for the crane required Berkel to add Maxim as an additional insured under the Berkel Policy. (Docket Entry No. 19 at ¶¶ 7, 10; Docket Entry No. 19-1 at 514). The parties have stipulated that Maxim is an “Additional Insured” under the Berkel Policy. (Docket Entry No. 19 at ¶ 9). As an Additional Insured, Maxim was a “person or organization to whom or to which [Berkel is] required to provide additional insured status in a written contract or written agreement prior to the loss except where such contract or agreement is prohibited by law.” (Docket Entry No. 19-1 at 617; see Docket Entry No. 19 at ¶¶ 6–8). Maxim did not enroll in Skanska’s contractor-controlled insurance program. (Docket Entry No. 19 at ¶ 4).
Later in 2013, a Berkel employee overtaxed the crane, causing it to fall over. Part of the crane fell on Tyler Lee, the project superintendent and a Skanska employee. (Id. at ¶ 11); Berkel & Co. Contractors, Inc. v. Lee, 543 S.W.3d 288, 293 (Tex. App.—Houston [14th Dist.] 2018). Lee’s leg was amputated. He received worker’s compensation benefits through the contractor-controlled insurance program. (Docket Entry No. 19 at ¶¶ 11–12).
B. The State-Court Litigation
In 2014, Lee sued Berkel, Maxim, and other defendants in state court, alleging negligence and other state-law claims. (Id. at ¶ 13). When the state court litigation began, Maxim sought coverage from Zurich under the Berkel Policy as an Additional Insured, but Zurich denied coverage. (Id. at ¶ 14). Maxim also cross-claimed against Berkel for breach of contract, arguing that Berkel was required to defend Maxim and indemnify or contribute to any loss to Maxim. (Id. at ¶ 15).
In 2015, a jury awarded Lee more than $35 million in damages, allocating 90% of the fault to Berkel and 10% to Maxim. (Id. at ¶ 16). Maxim settled with Lee for $3,444,300.60, and Zurich paid Lee that amount under the Maxim Policy. (Id. at ¶ 17). Maxim reimbursed Zurich for $3,000,000 of the settlement costs, as required under the Maxim Policy’s Deductible Endorsement. (Id.). Zurich also paid Maxim’s defense costs under Maxim’s individual policy, and Maxim reimbursed Zurich for the $824,839.38 Zurich paid in defense costs. (Id. at ¶ 19).
After the jury verdict, Maxim moved for entry of judgment on its cross-action against Berkel. (Id. at ¶ 18). The state trial court entered an amended final judgment *734 in July 2015, stating that “Maxim is not entitled to reimbursement of Maxim’s Defense Fees, Costs, and Expenses of and from Berkel,” and rendered judgment in favor of Berkel in Maxim’s cross action. (Docket Entry No. 19-2 at 169). The court later vacated that final judgment based on Berkel’s objections and entered a new final judgment stating that “Maxim’s motion for entry of judgment is denied, and Maxim takes nothing on its claims against Berkel.” (Id. at 189).
In September 2015, Berkel appealed. (Docket Entry No. 19 at ¶ 20). In 2018, the Texas court of appeals reversed the judgment against Berkel, concluding that because Berkel and Skanska were covered under the contractor-controlled insurance program, “Skanska is Berkel’s statutory employer” under the Texas Workers’ Compensation Act and “Lee, as Skanksa’s actual employee, is Berkel’s co-employee.” Berkel & Co. Contractors, 543 S.W.3d at 296. Because Skanska was immune under the Act’s exclusive-remedy provision, Berkel, as a “co-employee,” was also immune. Id.
Maxim also appealed the state-court judgment. (Docket Entry No. 19 at ¶ 22; Docket Entry No. 19-4 at 125–72). The Texas appellate court concluded that Maxim had “not preserv[ed] error as to its issues regarding the applicability of [the Texas Anti-Indemnity Act],” and the Texas Supreme Court denied review. Maxim Crane Works, L.P. v. Berkel & Co. Contractors, Inc., No. 14-15-00614-CV, 2016 WL 4198138, at *2 (Tex. App.—Houston [14th Dist.] Aug. 9, 2016).
Maxim again demanded that Zurich cover its defense and settlement costs under the Berkel Policy. Zurich denied coverage because the Texas Anti-Indemnity Act prohibited Maxim’s additional-insured coverage under the Berkel Policy. (Docket Entry No. 19 at ¶ 24; Docket Entry No. 19-4 at 261–62). This lawsuit followed.
C. The Federal-Court Litigation
In September 2018, Maxim sued Zurich in state court, seeking coverage under the Berkel Policy. (Docket Entry No. 1-3). Zurich timely removed, and the parties agreed to file cross-motions for summary judgment with a joint stipulation of facts because the disputed issue is one of law. (See Docket Entry Nos. 1, 13).
II. The Legal Standard for Summary Judgment
“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 on Behalf of Estate 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, L.L.C., 901 F.3d 605, 610 (5th Cir. 2018) (quotations 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 the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
“Where the non-movant bears the burden of proof at trial, ‘the movant may merely point to the absence of evidence and thereby shift to the non-movant the burden of demonstrating’ ” that “there is an issue of material fact warranting trial.” Kim v. Hospira, Inc., 709 F. App’x 287, 288 (5th Cir. 2018) (quoting *735 Nola Spice Designs, LLC v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015)). The moving party must demonstrate the absence of a genuine issue of material fact, but it need not need to negate the elements of the nonmovant’s case. Austin v. Kroger Tex., L.P., 1. “Coemployee” and “Coemployer” Under the Texas Workers’ Compensation Act
Maxim and Zurich agree that Lee was a Skanska employee in 2013. (Docket Entry No. 19 at ¶ 12). Berkel appealed from the underlying lawsuit judgment. The Texas court of appeals concluded that Berkel was Lee’s coemployee and Skanska’s employee under the Act. The court explained that because of this coemployee status, Berkel was “immune from suit under the ‘exclusive remedy’ provision of [that Act].” (Docket Entry No. 20 at 21–22 (citing TEX. LAB. CODE § 408.001(a); Berkel v. Lee, 543 S.W.3d at 296); Docket Entry No. 19-4 at 114). The Texas court of appeals did not state that Berkel was Lee’s employer or that Berkel was Lee’s “coemployer” with Skanska. Maxim and Zurich debate whether, under the Workers’ Compensation Act, Berkel’s “coemployee” status with Lee also makes Berkel a “coemployer” of Lee.
Under the Texas Workers’ Compensation Act, an employer is “a person who makes a contract for hire, employs one or more employees, and has workers’ compensation coverage.” TEX. LAB. CODE § 401.012. An employee is a “person in the service of another under a contract for hire, whether express or implied, or oral or written,” and includes:
(1) an employee employed in the usual course and scope of the employer’s business who is directed by the employer temporarily to perform services outside the usual course and scope of the employer’s business;
*743 (2) a person, other than an independent contractor or the employee of an independent contractor, who is engaged in construction, remodeling, or repair work for the employer at the premises of the employer; and
(3) a person who is a trainee under the Texans Work program established under Chapter 308.
TEX. LAB. CODE § 401.012.
Under these definitions, Lee was not Berkel’s employee, nor was Berkel Lee’s employer. Maxim has not offered or identified record evidence that Berkel directed Lee to perform services, that Lee worked at Berkel’s premises, that Lee was Berkel’s trainee, or that Berkel had a contract with, employed, or provided workers’ compensation coverage, to Lee.
Section 406.123 of the Texas Workers’ Compensation Act provides that in certain circumstances, a general contractor may be deemed the statutory employer of a subcontractor and the subcontractors’ employees. TEX. LAB. CODE § 406.123. If a general contractor and a subcontractor have a written contract for the general contractor to “provide[ ] workers’ compensation insurance coverage to the subcontractor and the employees of the subcontractor,” that contract “makes the general contractor the employer of the subcontractor and the subcontractor’s employees.” Id. § 406.123(a), (e). But this statutory relationship exists “only for the purposes of the workers’ compensation laws of this state.” Id. § 406.123(e).
Maxim argues that the Texas appellate court’s conclusion that Berkel was Lee’s coemployee under § 406.123 was “functionally identical to a determination that Berkel was Lee’s employer,” because Berkel was found to be immune under the Texas Workers’ Compensation Act. (Docket Entry No. 20 at 22). According to Maxim, the “co-employee” versus “co-employer” labels are interchangeable. Maxim points to state-court cases that have used both labels to refer to the same relationships among tiers of contractors under insurance programs. (Id. at 22 (citing Austin Bridge & Road, LP v. Suarez, 556 S.W.3d 363, 387 (Tex. App.—Houston [1st Dist.] 2018, pet. filed)). Zurich responds that while the Act acknowledges that “a statutory ‘co-employer’ relationship [may be] created between the general contractor and the subcontractor with relation to the subcontractor’s and sub-subcontractor’s employees,” it does not give “authority for a subcontractor to become a deemed employer of the general contractor’s employees.” (Docket Entry No. 26 at 14 (emphasis in original)).
Maxim relies on Austin Bridge & Road, LP v. Suarez, 556 S.W.3d 363 (Tex. App.—Houston. [1st Dist.] 2018, pet. filed), to argue the interchangeability of “coemployer” and “coemployee.” (Docket Entry No. 20 at 22). Maxim asserts that the Austin Bridge court used “the terms co-employer and co-employee interchangeably and conclude[d] that ‘because Austin Bridge can be considered a deemed co-employer or co-employee of Derr & Isbell, it is entitled to the benefit of the [Texas Workers’ Compensation Act’s] exclusive remedy defense.’ ” (Id. (emphasis in original)).
In Austin Bridge, Baylor University owned the worksite of a construction project and maintained an owner-controlled insurance program that covered the project’s general contractor, subcontractors, and sub-subcontractors. Austin Bridge, 556 S.W.3d at 369–70. Baylor University hired Austin Commercial as the general contractor. Id. at 369. Austin Commercial subcontracted with its subsidiary, Austin Bridge, and Austin Bridge sub-subcontracted with Derr & Isbell. Id. at 371. Austin Commercial, Austin Bridge, and Derr & Isbell were each enrolled in Baylor’s owner-controlled insurance program. *744 Id. at 371–73. A Derr & Isbell employee died while working on the project. Id. at 369. His family sued Austin Commercial, Austin Bridge, and Derr & Isbell for negligence and gross negligence. Id. at 374. Austin Bridge moved for summary judgment on the basis that it was the statutory employer of the Derr & Isbell employee, because the project was insured under the Baylor University insurance program. Id. The trial court denied the motion, a jury found Austin Bridge 100% liable, and Austin Bridge appealed. Id.
The Texas appellate court acknowledged that § 406.123 can make a general contractor the “statutory ‘employer’ of [a] subcontractor and its employees for purposes of applying the exclusive-remedy provision of the [Texas Workers’ Compensation Act].” Id. at 377. In examining cases interpreting the Act, the court explained that there are situations in which a contractor may be simultaneously both a coemployer and a coemployee under § 406.123. See id. at 386. A “deemed employer/employee relationship [may] extend[ ] throughout all tiers of subcontractors when the general contractor has purchased workers’ compensation insurance that covers all workers on the site.” Id. (citing Etie v. Walsh & Albert Co., 135 S.W.3d 764, 768 (Tex. App.—Houston [1st Dist.] 2004, pet. denied)). Because Baylor University’s written agreement with Austin Commercial to provide workers’ compensation insurance coverage was “expressly incorporated into the lower-tier contracts, the [Act’s] deemed employer/employee relationship extended throughout all tiers of Subcontractors in the Project.” Id.
Maxim stretches the Austin Bridge court’s interpretation of § 406.123. The court’s conclusion that Austin Bridge was “a deemed co-employee/co-employer” does not make the terms interchangeable. The specific contractual relationships among the parties were critical. Austin Bridge was its subcontractor’s coemployer by virtue of its contract with Austin Commercial, which incorporated the provision in Austin Commercial’s contract with Baylor University that required enrollment in the owner-controlled insurance program that included workers’ compensation coverage. See id. at 386. Austin Bridge was also a coemployee with Derr & Isbell because Austin Bridge’s contract with Derr & Isbell incorporated the requirement that the subcontractor enroll in the owner-controlled insurance program. See id. The injured employee was the employee of the lowest-tiered subcontractor, and the contractual requirement for workers’ compensation benefits was incorporated into the contracts down the tiers of subcontractors.
In contrast to Austin Bridge, the injured employee here is not the employee of the lowest-tiered subcontractor, Berkel. Instead, Lee was the employee of the general contractor, Skanska. (See Docket Entry No. 19 at ¶ 12). Skanska subcontracted with Berkel. That subcontract required Berkel to enroll in Skanska’s contractor-controlled insurance program. (Id. at ¶¶ 4–5). Because Berkel enrolled, Berkel can be Skanska’s deemed employee under § 406.123(e). TEX. LAB. CODE § 406.123(a), (e). It was that status that led the Texas court of appeals to conclude that Berkel was Lee’s coemployee. See Berkel & Co. Contractors, Inc. v. Lee, 543 S.W.3d 288, 296 (Tex. App—Houston [14th Dist.] 2017, pet. filed). Unlike in Austin Bridge, in this case, there was no straight line through the subcontracting tiers from Berkel to Lee that would support Maxim’s claim that Berkel was Lee’s coemployer.
A survey of cases in which Texas courts have found subcontractors to be deemed coemployers of workers suggests that Berkel cannot be Lee’s coemployer under § 406.123(e). To have that status, *745 Lee would have to be either Berkel’s actual employee or employed by a Berkel subcontractor enrolled in the contractor-controlled insurance program. See, e.g., TIC Energy & Chem., Inc. v. Martin, 498 S.W.3d 68, 74, 78 (Tex. 2016) (a lower-tier subcontractor was a coemployee of an injured worker because the worker’s employer agreed in writing to provide worker’s compensation insurance to the subcontractor); Austin Bridge, 556 S.W.3d at 386. Instead, Lee was the employee of a higher-tiered contractor. (See Docket Entry No. 19 at ¶ 12). Maxim has not identified, and the court has not found, a case in which a lower-tiered subcontractor is deemed under § 406.123(e) to be the statutory employer of a higher-tiered contractor’s employee. In sum, the statutory language and the Texas cases interpreting that language show that the terms “coemployer” and “coemployee” are not interchangeable and that the court cannot deem Berkel to be Lee’s coemployer.
2. Whether “Coemployer” Status Can Be Imported to the Texas Anti-Indemnity Statute
Even if Maxim succeed in arguing that Berkel was also Lee’s statutory “coemployer,” the question remains whether an employee of a deemed “coemployer” under the Texas Workers’ Compensation Act is also deemed an employee under the Texas Anti-Indemnity Statute. The Employee Exception under the Statute states that the general rule against indemnification for an indemnitee’s own negligence “does not apply to a provision...that requires a person to indemnify ...another party to the construction contract or a third party against a claim for the bodily injury or death of an employee of the indemnitor, its agent, or its subcontractor of any tier.” TEX. INS. CODE § 151.103.
Maxim does not address whether “coemployer” or “coemployee” status can be imported to the Texas Anti-Indemnity Statute. Instead, Maxim appears to assume that once a subcontractor is deemed a “coemployer” of a worker under the Texas Workers’ Compensation Act, the subcontractor is also then a coemployer under the Texas Anti-Indemnity Statute as well. (See Docket Entry No. 20 at 22–23; Docket Entry No. 31 at 8). Zurich responds that “even if [the Texas Workers’ Compensation Act] deemed Berkel the statutory employer of Lee, such status would be limited to workers’ compensation laws and would not extend to other statutes such as the Texas Anti-Indemnity Statute.” (Docket Entry No. 26 at 7). Maxim argues that “the Texas legislature intended the [Workers’ Compensation Act] and the [Anti-Indemnity Statute] to work together,” pointing to the Workers’ Compensation Exclusion in the Anti-Indemnity Statute. (Docket Entry No. 25 at 22 (citing TEX. INS. CODE § 151.105(5))).
The Texas Workers’ Compensation Act has a qualifier in § 406.123, the section stating that “the general contractor shall be treated as the employer of the subcontractor” under specific circumstances. The qualifier states “[a]n agreement under this section makes the general contractor the employer of the subcontractor and the subcontractor’s employees only for purposes of the workers’ compensation laws of this state.” TEX. LAB. CODE § 406.123(e). This language supports Zurich’s interpretation that “coemployer” and “coemployee” status are limited to laws specifically concerning workers’ compensation. Neither party argues that the Texas Anti-Indemnity Statute is a workers’ compensation law. While Maxim is correct that the Anti-Indemnity Statute provides that it “does not affect...the benefits and protections under the workers’ compensation laws of this *746 state,” that language sets the Statute apart from workers’ compensation laws.
Neither party has pointed to cases applying deemed “coemployees” or “coemployers” outside the Workers’ Compensation Act. Other Texas laws use different definitions of “employee,” suggesting that “coemployee” status is not universal across Texas law. See TEX. CIV. PRAC. & REM. CODE § 101.001 (defining “employee”); TEX. HEALTH & SAFETY CODE § 312.007(a) (same).
Because the Texas Workers’ Compensation Act supports finding the terms “coemployer” or “coemployee” apply only to that context, and because Maxim has not offered a persuasive argument or precedent supporting the exportation of that status to the Anti-Indemnity Statute, Maxim has not succeeded in showing that, if Berkel is Lee’s “coemployer,” it would also be Lee’s coemployer under the Anti-Indemnity Statute. Without that connection, Maxim’s argument that the Employee Exception in the Anti-Indemnity Statute applies to Lee’s claims against Maxim fails.
D. The Workers’ Compensation Exception
The Workers’ Compensation Exclusion is a second exception to the Texas Anti-Indemnity Statute’s broad prohibition against indemnification in construction contracts for an indemnitee’s own negligence. The Statute excludes from its coverage agreements that affect “the benefits and protections under the workers’ compensation laws of this state.” TEX. INS. CODE § 151.105(5). It appears that no court has yet construed this section.
Maxim argues that the Act’s Workers’ Compensation Exclusion requires Zurich to cover its claims and “provid[es] an independent basis for concluding that [the Act] does not void Maxim’s coverage as an Additional Insured under the Berkel CGL Policy.” (Docket Entry No. 20 at 24). According to Maxim, the exclusion is meant “to allow full indemnification (and insurance for such indemnification) for claims arising from third-party over actions, like the Lee Suit, where workers’ compensation is available to the injured party.” (Docket Entry No. 20 at 24). Maxim contends that because “Lee and Berkel received benefits and protections under the [Texas Workers’ Compensation Act],” full indemnification is proper here. (Docket Entry No. 20 at 24).
Zurich responds that the exclusion is inapplicable because it “applies solely to the benefits and protections under Texas’s workers’ compensation laws,” and because “Maxim has not shown any benefit or protection that is affected by the application of the Texas Anti-Indemnity Statute” because both Lee and Berkel have received the benefits of the Texas Workers’ Compensation Act. (Docket Entry No. 26 at 20). Zurich argues that Maxim’s interpretation of the Workers’ Compensation Exclusion would make it “superfluous and meaningless” because it would be “redundant” with the Employee Exception. (Id. at 20–21). According to Zurich, the Employee Exception is meant to “eliminat[e] liability and coverage disputes between [defendants] and streamlin[e] personal injury suits.” (Id. at 21). The goal is to protect workers, not third parties that might be sued.
The lack of legislative history, case law, and secondary sources discussing the Anti-Indemnity Statute make this or any purposive reading of this section difficult. See Beaver, 45 ST. MARY’S L.J. at 538 n.21 (“There is little legislative intent or history on this Act, as is typical in Texas. The only statement of intent given concerns the duration of insurance programs currently in place, in that there is no requirement as to how long a contractor must maintain insurance for a given construction contract.” *747 (citing House Comm. on Insurance, Bill Analysis, Tex. H.B. 2093, 82d Leg., R.S. 1 (2011), http:// www.lrl.state.tx.us/scanned/srcBillAnalyses/82-0/HB2093ENG.pdf)); see also id. at 546 (“[A] complete lack of clarity in drafting the statute and lack of legislative intent leaves courts to decipher what the statute in fact covers.”). The parties’ arguments on how to read the law based on legislative intent are largely unsupported.
The statutory language itself shows that the court need not try to decipher the few clues about the legislators’ intent. The Statute states that it is not meant to affect “the benefits and protections under the workers’ compensation laws.” TEX. INS. CODE § 151.105(5). A party seeking to avoid the Statute must identify some preexisting workers’ compensation benefit or protection under Texas law and explain how making the indemnification agreement void would affect that benefit or protection.
Maxim has not identified a preexisting benefit or protection that the Anti-Indemnity Statute would undermine or vitiate here. Maxim argues only that “[t]his case is deeply intertwined with workers’ compensation” because “Berkel received the protection of immunity under the [Texas Workers’ Compensation Act], and Lee received the benefit of workers’ compensation payments.” (Docket Entry No. 31 at 10). But applying the Statute to relieve Zurich of the obligation to indemnify Maxim would not affect a benefit or protection of the Texas workers’ compensation laws. Lee would have, and did, receive his workers’ compensation benefits in any event. Maxim has not explained how a ruling for Zurich would alter or substantively impact that result.
Because Maxim has not shown that applying the Anti-Indemnity Statute would affect a benefit or protection of the Texas workers’ compensation laws, the Workers’ Compensation Exclusion does not apply to Maxim’s claims for coverage under the Berkel Policy, entitling Zurich to summary judgment.
VI. The Berkel Policy
Because the court concludes that the Texas Anti-Indemnity Act voids Maxim’s Additional-Insured coverage under the Berkel Policy for the damages and losses in the underlying litigation, the court need not address whether the Berkel Policy precludes or limits Maxim’s recovery.
The court grants Zurich’s summary judgment motion, (Docket Entry No. 22), and denies Maxim’s summary judgment motion, (Docket Entry No. 20). Final judgment is separately entered.
Maxim looks beyond the Maxim Policy language to argue that Zurich’s assertion that Maxim lacks standing is precluded by the unclean-hands doctrine. Maxim argues Zurich has not performed its duty under the policy in good faith. (Docket Entry No. 25 at 18). Because the court concludes that the Policy does not deprive Maxim of standing, it does not consider these arguments.
Zurich also argues that if the court finds that Maxim has standing to pursue its claims, “Zurich remains entitled to a reimbursement” or a “setoff for any and all reimbursable amounts paid by Zurich to Maxim under the Maxim CGL Policy that have not [been] previously reimbursed to Zurich by Maxim.” (Docket Entry No. 22 at 26–27). Because, as discussed below, the court concludes that Texas law bars Maxim’s recovery, this argument need not be addressed.
The Statute went into effect in 2012. Few courts have reviewed it. See, e.g., Union Pac. R.R. Co. v. Brown, No. 04-17-00788-CV, 2018 WL 6624507 (Tex. App.—San Antonio Dec. 19, 2018, no pet. h.) (mem. op.); Beazley Ins. Co. v. Eaton Corp., No. 5:16-CV-1255-OLG, 2017 WL 9362564, at *2 (W.D. Tex. Nov. 17, 2017); United States of Am. for the Use & Benefit of E J Smith Constr. Co. v. Travelers Cas. & Sur. Co., No. 5:15-CV-971-RP, 2016 WL 1030154, at *6 (W.D. Tex. Mar. 10, 2016); United States of Am. for the Use & Benefit of EJ Smith Constr., Co. v. Travelers Cas. & Sur. Co., W-14-CV-427, 2015 WL 12734070, at *1 (W.D. Tex. June 25, 2015); Maxim Crane Works L.P., 2016 WL 4198138, at *2.
United States District Court, S.D. Texas, Houston Division.
Mallory JACKSON, Plaintiff,
ALSCO, INC., Defendant.
Civil Action No. H-19-1101
Attorneys & Firms
Joseph Michael Gourrier, Attorney at Law, Houston, TX, for Plaintiff.
Michael Jacobellis, Wilson Elser Moskowitz Edelman & Dicker LLP, Houston, TX, for Defendant.
MEMORANDUM AND ORDER
NANCY F. ATLAS, SENIOR UNITED STATES DISTRICT JUDGE
*1 This case is before the Court on the Motion to Remand (“Motion”) [Doc. # 6] filed by Plaintiff Mallory Jackson, to which Defendant Alsco, Inc. (“Alsco”) filed a Response [Doc. # 8]. Having reviewed the full record and applicable legal authorities, the Court finds that the Notice of Removal was untimely pursuant to 28 U.S.C. § 1446(c)(1). On that basis, the Court grants the Motion to Remand.
Plaintiff worked for Defendant as a Route Service Representative. Plaintiff alleges that in January 2016, he suffered a serious knee injury when he slipped and fell at work. Plaintiff’s employer was a nonsubscriber to the Texas Workers’ Compensation Insurance System.
Plaintiff filed the Original Petition in Texas state court on January 7, 2017, naming “Admiral Linen and Uniform Service, Inc. by Alsco” as the Defendant. See Original Petition, Exh. A to Motion. On November 29, 2017, Plaintiff filed his First Amended Petition, changing the name of the Defendant to “Admiral Linen and Uniform Service, Inc.” (“Admiral Linen”). See First Amended Petition, Exh. B to Motion. In both the Original Petition and the First Amended Petition, there was only a single defendant.
On December 18, 2017, Defendant sent Plaintiff’s counsel a copy of the Motion to Abate and to Compel Arbitration (“Motion to Abate”) filed in the state court lawsuit by Admiral Linen. See Motion to Abate, Exh. C to Motion. The state court judge denied the Motion to Abate on March 27, 2018. See Order, Exh. D to Motion.
On August 20, 2018, Admiral Linen served its Response to Plaintiff’s Request for Disclosure in the state court lawsuit. The first request was for the correct name of the parties in the lawsuit, to which Admiral Linen answered “The parties have been correctly named.” See Response to Request for Disclosure, Exh. E to Motion, p. 3.
On December 5, 2018, Admiral Linen filed a First Amended Answer, stating that “Plaintiff has sued the wrong entity” because Admiral Linen had been acquired by Alsco in April 2015. See First Amended Answer, Exh. G to Motion. That same day, Admiral Linen filed an Amended Response to Plaintiff’s Request for Disclosure, stating:
Admiral Linen & Uniform Service, Inc. is not the proper party. In April 2015, ALSCO, Inc. purchased Admiral Linen & Uniform Service, Inc., and at all pertinent times ALSCO, Inc. was the employer of the Plaintiff Mallory Jackson.
Amended Response to Request for Disclosure, Exh. H to Motion, p. 3.
On March 5, 2019, counsel for the parties entered into an agreement for Plaintiff to substitute Alsco for Admiral Linen as the Defendant in the state court lawsuit. See Letter Agreement, Exh. I to Motion. In return, Defendant’s counsel agreed to accept service on Alsco’s behalf, and agreed “not to raise the defense of statute of limitations and agree[d] that the amended petition relates back to the date of original filing.” See id. (emphasis added). On March 18, 2019, Plaintiff filed the Second Amended Petition, naming Alsco, Inc. as the Defendant. See Second Amended Petition, Exh. J to Motion. On March 25, 2019, Alsco filed its Notice of Removal.
*2 On April 19, 2019, within thirty days after the Notice of Removal was filed, Plaintiff filed his Motion to Remand. Plaintiff argues that the removal was untimely and, therefore, the case should be remanded to state court. The Motion to Remand has been briefed and is now ripe for decision.
Where, as here, removal is based on diversity of citizenship, the case may not be removed “more than 1 year after commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.” 28 U.S.C. § 1446(c)(1).
Alsco notes correctly that § 1446(c)(1) applies only to cases that are not originally removable. See Johnson v. Heublein Inc., 227 F.3d 236, 241 (5th Cir. 2000) (citing New York Life Ins. Co. v. Deshotel, 142 F.3d 873, 886 (5th Cir. 1998)). The Original Petition and the First Amended Petition each named only one Defendant, named first as “Admiral Linen and Uniform Service, Inc. by Alsco” and later as “Admiral Linen and Uniform Service, Inc.” In each pleading, Plaintiff alleged that the lone defendant was a Texas corporation. It is undisputed that Plaintiff and Admiral Linen are both citizens of Texas. As a result, the lawsuit filed in state court was not originally removable.
Section 1446(c)(1) requires that the Notice of Removal be filed within one year after the commencement of the state court lawsuit. See 28 U.S.C. § 1446(c)(1). “A civil action is commenced by filing a complaint with the court.” FED. R. CIV. P. 3; New York Life, 142 F.3d at 885; Perez v. Lancer Ins. Co., 2006 WL 2850065 (S.D. Tex. Oct. 4, 2006). Plaintiff filed the Original Petition in state court on January 7, 2017, more than one year before the Notice of Removal was filed. On March 5, 2019, before Plaintiff filed the Second Amended Petition, counsel entered into a written agreement under which Plaintiff would amend the petition to name Alsco as the defendant and the amended petition would “relate[ ] back to the date of original filing.” See Letter Agreement, Exh. I to Motion. Plaintiff filed his Second Amended Complaint on March 18, 2019. Pursuant to the parties’ Letter Agreement, the Second Amended Complaint naming Alsco as the correct defendant relates back to the date of original filing, January 7, 2017. The Notice of Removal was filed March 25, 2019, well more than one year after the commencement of the action. Therefore, Alsco’s Notice of Removal was untimely pursuant to § 1446(c)(1).
As noted above, § 1446(c)(1) contains an exception to the one-year removal requirement where the plaintiff “has acted in bad faith in order to prevent a defendant from removing the action.” 28 U.S.C. § 1446(c)(1). Alsco argues that Plaintiff acted in bad faith because he knew that Alsco was his employer. The removing defendant has the burden of showing that plaintiffs acted in bad faith to prevent removal. See Jones v. Ramos Trinidad, ––– F. Supp. 3d ––––, 2019 WL 2022534, *3 (E.D. La. May 8, 2019).
Section 1446(c)(1) essentially codified the equitable tolling principle previously recognized by the Fifth Circuit in Tedford v. Warner-Lambert Co., 327 F.3d 423 (5th Cir. 2003). See Sampson v. Miss. Valley Silica Co., 268 F. Supp. 3d 918, 926 (S.D. Miss. 2017). In Tedford, the Fifth Circuit held that “[w]here a plaintiff has attempted to manipulate the statutory rules for determining federal removal jurisdiction, thereby preventing the defendant from exercising its rights, equity may require that the one-year limit in § 1446(b) be extended.” Tedford, 327 F.3d at 428-29. Although the Fifth Circuit has not defined “bad faith” in the context of § 1446(c)(1), courts within the circuit have opined that the standard for showing bad faith is comparable to the standard for establishing equitable tolling under Tedford. See id. (and cases cited therein).
*3 Alsco has failed to present evidence of bad faith. Plaintiff named Admiral Linen as the originally-named Defendant. Admiral Linen filed a Motion to Abate in its own name, and responded to a request for disclosure by stating that the parties “have been correctly named.” It was not until December 5, 2018, that Admiral Linen first stated that it was not, in fact, the correctly named defendant. Plaintiff filed his Second Amended Petition shortly thereafter, subject to the parties’ Letter Agreement, naming the correct Defendant. Although there is evidence that Plaintiff knew before filing suit that there was a relationship between Admiral and Alsco, there is no evidence that Plaintiff manipulated the state court lawsuit in an attempt to preclude Alsco from removing the case within one year from the date it was filed. Therefore, Alsco has failed to establish the “bad faith” exception to the one-year requirement of § 1446(c)(1).
III. CONCLUSION AND ORDER
The Notice of Removal was filed more than one year after the commencement of the lawsuit. As a result, removal was untimely pursuant to 28 U.S.C. § 1446(c)(1). Absent a showing that Plaintiff acted in bad faith in order to prevent timely removal, it is hereby
ORDERED that the Motion to Remand [Doc. # 6] is GRANTED and this case is REMANDED to the 11th Judicial District Court of Harris County, Texas. The Court will issue a separate Order of Remand. It is further
ORDERED that Defendant’s Motion to Compel Arbitration [Doc. # 3] is DENIED without prejudice to being reurged, if appropriate, following remand.