Michael Massengale

On Appeal from the 164th District Court

Harris County, Texas

Trial Court Case No. 2008-56913

MEMORANDUM OPINION

Wayne D. Culver and Caryn Cain bring this appeal from the trial court's grant of summary judgment in favor of their former employer, Gulf Coast Window & Energy Products, Inc., on their employment-discrimination claims. In their sole issue, Culver and Cain argue that GCW was not entitled to summary judgment on either the traditional or no-evidence grounds that GCW raised in the motion. Because Culver and Cain demonstrate on appeal that GCW was not entitled to summary judgment on any ground raised, we reverse the judgment of the trial court and remand for further proceedings.

Background

Before their respective terminations at GCW, Culver served as the Vice President of Production and Cain served as the Chief Financial Officer. Initially, only Culver sued GCW for breach of a written employment agreement. Once Cain joined the suit as co-plaintiff, Culver added a claim for employment discrimination on the basis of age, while Cain sued for employment discrimination on the basis of age and gender. See TEX. LAB. CODE ANN. § 21.051 (West 2006) (providing cause of action for employment discrimination).

GCW moved for partial summary judgment on Culver and Cain's employment discrimination claims under the traditional and no-evidence standards. See TEX. R. CIV. P. 166a(c) (traditional standard), 166a(i) (no-evidence standard). In the no-evidence part of its summary-judgment motion, GCW asserted that the plaintiffs had no evidence showing that the company ever employed 15 or more employees at one time, and therefore it was not an "employer" within the meaning of the relevant statute. See TEX. LAB. CODE ANN. § 21.002(8) (West 2006) (defining "employer"). GCW also asserted that the plaintiffs had no evidence of discrimination. To support this assertion, GCW attached the plaintiffs' responses to interrogatories, in which the plaintiffs admitted that they have no documents showing that the GCW had any animus against older or female workers.

Under the traditional standard, GCW argued that the evidence conclusively negated at least one element of the employment-discrimination claims, specifically, that GCW was not an "employer" covered by the statute because the evidence showed that GCW never had 15 or more employees at any time. To support this summary-judgment ground, GCW attached quarterly reports filed with the Texas Workforce Commission showing that it employed between 8 and 12 persons each month during the last two calendar years of Culver's and Cain's employment. GCW also attached the affidavit of its president, James Fiume, stating that the company never had more than 12 employees at a single time during the relevant period.

In response to GCW's motion, Culver and Cain asserted that GCW kept its employee headcount under 15 by classifying its sales staff and installers as independent contractors when they were, in reality, employees under the relevant legal test. They argued that if these workers were counted, GCW would have much more than the minimum 15 employees. In support, they attached Culver's sworn affidavit describing facts purportedly showing that the sales staff were employees; however, the affidavit did not indicate anything about installers. Culver and Cain also attached an undated, single-page spreadsheet reflecting the names and phone numbers for 38 individuals under headings for "OFFICE," "SALES," and "INSTALLERS." This document was accompanied by Cain's sworn affidavit, stating that this exhibit was "a true and correct copy of a company directory for GCW during my employment." GCW employed Cain between 2003 and 2008. Culver and Cain additionally argued that the GCW's annual sales of $10 million and gross profit of $5 million, as shown in the company's financial statements, make it "difficult to believe" that GCW employed only "a handful of office workers."

Addressing GCW's no-evidence grounds for summary judgment, Culver and Cain argued, first, that the motion was "procedurally defective" because it was conclusory and failed to identify the specific elements of the employment-discrimination claims not supported by evidence, and that a no-evidence motion in this form is impermissible. See TEX. R. CIV. P. 166a(i) & cmts. ("The motion must state the elements as to which there is no evidence."). They argued, second, that they had evidence for each element of a prima facie employment-discrimination claim, and they attached sworn affidavits by Culver and Cain purporting to substantiate each element.

Two days before the summary-judgment hearing, GCW filed a reply in which it argued that its salespeople were contractors, and it attached a new sworn affidavit by Fiume describing facts purporting to show their status as such. Culver and Cain filed an objection the next day, arguing that Fiume's affidavit was submitted too late under the rules of civil procedure, and therefore it should be disregarded. See TEX. R. CIV. P. 166a(c) ("[T]he motion and any supporting affidavits shall be filed and served at least twenty-one days before the time specified for hearing.").

The trial court signed an order granting GCW's motion for summary judgment on the employment discrimination claims, without indicating the basis for the ruling. GCW subsequently settled Culver's remaining breach-of-contract claim, and the trial court signed a final judgment. Culver and Cain brought this appeal to challenge the trial court's dismissal of their employment-discrimination claims.

Analysis

I. Standards of review

We review a trial court's decision to grant a motion for summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). When a party moves for summary judgment under both the traditional and no-evidence standards, we first review under the no-evidence standard of Rule 166a(i). Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004); TEX. R. CIV. P. 166a(i). If the nonmovant fails to produce more than a scintilla of evidence under that burden, then there is no need to analyze whether the movant's proof satisfies the Rule 166a(c) burden. Ridgway, 135 S.W.3d at 600. When we examine a traditional or no-evidence motion for summary judgment, we review the summary-judgment evidence in the light most favorable to the nonmovant, crediting evidence favorable to that party if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009) (citing City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005)).

A no-evidence motion for summary judgment under Rule 166a(i) is essentially a directed verdict granted before trial, to which we apply a legal-sufficiency standard of review. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750-51 (Tex. 2003). In general, a party seeking a no-evidence summary judgment must assert that no evidence exists as to one or more of the essential elements of the nonmovant's claim on which the nonmovant would have the burden of proof at trial. Finger v. Ray, 326 S.W.3d 285, 289-90 (Tex. App.—Houston [1st Dist.] 2010, no pet.). Once the movant specifies the elements on which there is no evidence, the burden shifts to the nonmovant to raise a fact issue on the challenged elements. See TEX. R. CIV. P. 166a(i) ("The court must grant the motion unless the respondent produces summary judgment evidence raising a genuine issue of material fact."). A no-evidence summary judgment will be sustained on appeal when (1) there is a complete absence of evidence of a vital fact, (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered by the nonmovant to prove a vital fact, (3) the nonmovant offers no more than a scintilla of evidence to prove a vital fact, or (4) the nonmovant's evidence conclusively establishes the opposite of a vital fact. King Ranch, 118 S.W.3d at 751. More than a scintilla of evidence exists when the evidence supporting the finding, as a whole, rises to a level that would enable reasonable and fair-minded people to differ in their conclusions. Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995). If the evidence is so weak as to do no more than create a mere surmise or suspicion of its existence, its legal effect is that it is no evidence. Ridgway, 135 S.W.3d at 601.

Under the traditional summary-judgment standard of Rule 166a(c), the movant has the burden to show that no genuine issues of material fact exist and that it is entitled to judgment as a matter of law. See TEX. R. CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). In determining whether there are disputed issues of material fact, we take as true all evidence favorable to the nonmovant and indulge every reasonable inference in the nonmovant's favor. Nixon, 690 S.W.2d at 548-49. A defendant moving for summary judgment under Rule 166a(c) must conclusively negate at least one essential element of each of the plaintiff's causes of action or conclusively establish each element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 912 (Tex. 1997).

If the summary judgment does not specify the grounds on which it was granted, the appealing party must demonstrate on appeal that none of the proposed grounds is sufficient to support the judgment. Rogers v. Ricane Enters., Inc., 772 S.W.2d 76, 79 (Tex. 1989); Tilotta v. Goodall, 752 S.W.2d 160, 161 (Tex. App. Houston [1st Dist.] 1988, writ denied). Because the trial court in this case did not specify the ground upon which it relied for its ruling, we will affirm if any theory advanced by GCW in its summary-judgment motion is meritorious. See Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004).

II. TCHRA "employer" status

The employment-discrimination claims asserted by Culver and Cain arise under Chapter 21 of the Texas Labor Code, commonly referred to as the Texas Commission on Human Rights Act. See TEX. LAB. CODE ANN. §§ 21.001-.556 (West 2006 & Supp. 2011); Waffle House, Inc. v. Williams, 313 S.W.3d 796, 798 n.1 (Tex. 2010). The purposes of the TCHRA include providing for the execution of the policies embodied in Title VII of the Civil Rights Act of 1964 and its subsequent amendments (42 U.S.C. § 2000e et seq.). See TEX. LAB. CODE ANN. § 21.001(1); NME Hosps., Inc. v. Rennels, 994 S.W.2d 142, 144 (Tex. 1999). Because the TCHRA seeks to promote federal civil rights policy, it is proper to look to analogous federal precedent for guidance when interpreting the Act. NME Hosps., 994 S.W.2d at 144; Farrington v. Sysco Food Servs., Inc., 865 S.W.2d 247, 251 (Tex. App.—Houston [1st Dist.] 1993, writ denied).

An entity is not subject to liability under the TCHRA unless the plaintiff proves, among other conditions, that the entity meets the statutory definition of "employer." NME Hosps., 994 S.W.2d at 147; Miles v. Lee Anderson Co., 339 S.W.3d 738, 742 (Tex. App.—Houston [1st Dist.] 2011, no pet.); Ancira Enters., Inc. v. Fischer, 178 S.W.3d 82, 88 (Tex. App.—Austin 2005, no pet.); cf. Latimer v. Wise, 193 F. Supp. 2d 899, 901 (E.D. Tex. 2001) ("[T]he fifteen-employee requirement is a jurisdictional threshold in a Title VII employment discrimination case."). The TCHRA defines an "employer" to include "a person who is engaged in an industry affecting commerce and who has 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year." TEX. LAB. CODE ANN. § 21.002(8)(A). "The 'current year' refers to the year of the alleged discriminatory or retaliatory act, not the date of the judgment." Ancira Enters., 178 S.W.3d at 88-89 (citing Vance v. Union Planters Corp., 279 F.3d 295, 297 (5th Cir. 2002) (interpreting meaning of "current year" under Title VII)). Thus, breaking the statutory definition of "employer" into its elements as applicable to this case, Culver and Cain must prove that GCW (1) was engaged in an industry affecting commerce and (2) had 15 or more employees (a) for each working day in each of 20 or more calendar weeks, and (b) in calendar years 2007 or 2008. See id. at 89.

Culver and Cain produced a company directory in response to GCW's summary-judgment motion. Twelve people are listed under "SALES," and 11 people are listed under "INSTALLERS." Additionally, 15 people are listed under "OFFICE." Although the directory is not dated, Cain's affidavit states that the company directory "is a true and correct copy of a company directory for GCW during my employment." Cain worked at GCW between 2003 and 2008.

Culver and Cain argue that when the salespersons and installers in the directory are added to the number of people GCW admits are employees, GCW had many more than 15 employees during the requisite period. They argue that the company directory, at a minimum, creates a genuine issue of material fact with respect to the number of employees that GCW had during a 20-week period. GCW challenges the admissibility and sufficiency of the company directory to prove that GCW employed 15 or more persons during any 20-week period.

A. Admissibility of company directory

As to admissibility, GCW argues that the company directory must be excluded because Culver and Cain did not produce it during discovery, and, alternatively, the directory was inadmissible hearsay. GCW concedes that it did not object in the trial court, but contends that no objection was necessary because Culver and Cain had represented in response to requests for production that they would produce evidence of GCW's employee headcount, but did not. Culver and Cain respond that they had, in fact, produced the company directory to GCW, noting that the copy of the directory offered as summary-judgment evidence bears a label showing that it was used as an exhibit during Cain's deposition. They also argue that GCW waived the admissibility issue by failing to object in the trial court.

An objection to the admissibility of summary-judgment evidence is a challenge to the form of that evidence. ABT Galveston Ltd. P'ship v. Galveston Cent. Appraisal Dist., 137 S.W.3d 146, 158 n.26 (Tex. App.—Houston [1st Dist.] 2004, no pet.). Failure to object in the trial court to defects in the form of summary-judgment evidence results in waiver of the issue on appeal. TEX. R. CIV. P. 166a(f); Grand Prairie Indep. School Dist. v. Vaughan, 792 S.W.2d 944, 945 (Tex. 1990). Given that GCW concedes that it did not object to the admission of the company directory in the trial court, it has waived the objection on appeal.

B. Salespersons as employees

The parties disagree as to whether GCW's sales staff should be classified as employees for the purpose of satisfying the TCHRA. To determine whether an employment relationship exists for the purposes of the TCHRA, Texas courts have adopted the "hybrid economic realities/common law control test." See Johnson v. Scott Fetzer Co., 124 S.W.3d 257, 263 (Tex. App.—Fort Worth 2003, pet. denied); De Santiago v. W. Tex. Comty. Supervision & Corr. Dep't, 203 S.W.3d 387, 396 (Tex. App.—El Paso 2006, no pet.); Thompson v. City of Austin, 979 S.W.2d 676, 681 (Tex. App.—Austin 1998, no pet.); Guerrero v. Refugio Cnty., 946 S.W.2d 558, 566 (Tex. App.—Corpus Christi 1997, no writ), disapproved of on other grounds, NME Hosps., 994 S.W.2d at 146-47. This test has been developed and applied by federal courts in relation to Title VII claims. See Sizova v. Nat'l Inst. of Standards and Tech., 282 F.3d 1320, 1328-29 (10th Cir. 2002); Birchem v. Knights of Columbus, 116 F.3d 310, 312-13 (8th Cir. 1997); Fields v. Hallsville Indep. School Dist., 906 F.2d 1017, 1019-20 & n.4 (5th Cir. 1990); Spirides v. Reinhardt, 613 F.2d 826, 831-32 (D.C. Cir. 1979); cf. Schultz v. Capital Int'l Sec., Inc., 466 F.3d 298, 304-05 (4th Cir. 2006) (applying six-factor "economic realities" test).

The "hybrid economic realities/common law control test" has two components: the alleged employer's right to control the employee's conduct, and the economic realities of the relationship. Johnson, 124 S.W.3d at 263; Fields, 906 F.2d at 1019-20. The control component, which is the more important component of the test, focuses on whether the alleged employer has the right to hire, fire, supervise, and set the schedule of the alleged employee. Johnson, 124 S.W.3d at 263; Fields, 906 F.2d at 1019. The economic-realities component considers the following factors:

1) the kind of occupation, with reference to whether the work usually is done under the direction of a supervisor;
2) the skill required in the particular occupation;
3) whether the "employer" or the individual in question furnishes the equipment used and the place of work;
4) the length of time during which the individual has worked;
5) the method of payment, whether by time or by the job;
6) the manner in which the work relationship is terminated; i.e., by one or both parties, with or without notice and explanation;
7) whether annual leave is afforded;
8) whether the work is an integral part of the business of the "employer";
9) whether the worker accumulates retirement benefits;
10) whether the "employer" pays social security taxes; and
11) the intention of the parties.

Culver's affidavit alleges several facts about GCW's sales staff that are relevant to the hybrid test: GCW told sales staff where to go, when to work, and how to do their jobs; the sales staff performed their jobs in the manner that GCW directed; Fiume set their hours; sales staff often wore shirts bearing the GCW name; GCW could and did fire sales staff members; the sales staff worked at GCW's facility on a permanent basis; sales staff worked full-time every day of the week, except when taking leave for sick days, holidays, and vacations; and GCW's customers paid GCW directly, and GCW in turn paid the sales staff. Fiume's affidavit filed in reply to this summary-judgment evidence disputes many of these facts. However, because we must consider the summary-judgment evidence in the light most favorable to Culver and Cain as nonmovants, see Fielding, 289 S.W.3d at 848, Culver's affidavit provides more than a scintilla of evidence in favor of classifying GCW's sales staff as employees under both the control component and the economic realities component of the hybrid test. Thus, summary judgment in favor of GCW would not have been appropriate on either the no-evidence basis— that there is no evidence that GCW's salespersons were employees—or the traditional basis—that GCW had conclusively negated the employee-status of its salespersons. See Ridgway, 135 S.W.3d at 600; Martinez, 941 S.W.2d at 911.

C. Number of employees during a 20-week period

Assuming that the salespersons should be counted as employees, we next consider what the summary-judgment evidence showed concerning the total number of GCW's employees. GCW contends that the company directory "is the only way to reach a count of fifteen employees," and that because the company directory does not show the listed individuals' status as employees or their dates of employment, Culver and Cain have not met their burden to prove GCW's employee headcount during any 20-week period. Culver and Cain argue that GCW did not advance this argument as a ground for summary judgment in the trial court, because the dispute there concerned whether GCW's salespersons and installers should be deemed employees for the purpose of the TCHRA, not whether the plaintiffs could prove that GCW had the requisite number of employees during the requisite period.

We will first examine whether GCW advanced the minimum headcount and time period issues in its summary-judgment motion. In the traditional section of GCW's summary-judgment motion, GCW stated:

In order for Gulf Coast to qualify as an employer for jurisdictional purposes under Title 7, it must have had at least 15 employees on its payroll for at least twenty weeks during a single calendar year.
. . .
Gulf Coast's Partial Summary Judgment evidence shows that it never had as many as 15 employees in a single quarter. It follows that it never had fifteen employees in a single week. It certainly never had 15 employees for at least 20 weeks in a single year.

On or about November 9, 2009—fourteen months after this suit was filed—Plaintiffs made a Response to Request for Production. See
Exhibit 3. Request No. 15 asks for "All documents in your possession or control which you assert show that Defendant had fifteen (15) or more employers at the time [Plaintiffs] filed [their] EEOC complaint[s]:" Plaintiffs responded "Plaintiffs will produce the documents in question." No documents were attached to the Response or have been produced.
. . .
Defendant would respectfully show that Plaintiffs have no evidence that Defendant ever had fifteen or more employees.

To support its argument that Culver and Cain have provided insufficient evidence of its employee headcount, GCW relies on Ancira Enterprises, Inc. v. Fischer, 178 S.W.3d 82 (Tex. App.—Austin 2005, no pet.). The Third Court of Appeals in Ancira Enterprises considered whether there was legally and factually sufficient evidence to uphold a plaintiff's verdict on a TCHRA claim against an employer who disputed that it had 15 or more employees during 20 calendar weeks. Ancira Enters., 178 S.W.3d at 90. The company's phone list, reflecting the names and phone numbers of 32 employees, formed part of the trial record. Id. at 91. In the end, the court of appeals upheld the jury's verdict against the legal and factual sufficiency challenges, but its disposition rested on much more than the phone list. Extensive trial testimony and exhibits demonstrated that at least 15 specific individuals had been employed by the company during the requisite period. Id. at 90-91. Reviewing this evidence, the court of appeals meticulously reconstructed a list of 15 employees and their respective dates of employment to show the legal and factual sufficiency of the evidence. Id. By contrast, the court observed that the phone list and other non-specific evidence about employees and their employment dates, "standing alone," was insufficient to establish the company as a statutory employer. Id. at 91 -92.

The summary-judgment evidence in this case is distinguishable from the phone list in Ancira Enterprises, because the purported company directory does not stand alone. Cain's affidavit states that the company directory is a true and correct copy of GCW's directory during her employment, and Culver's affidavit states facts that, if true, classify the salespersons as employees. In reviewing summary-judgment evidence, we must credit all evidence in favor of Culver and Cain as the nonmovants. See Fielding, 289 S.W.3d at 847. When the company directory and Cain's affidavit are considered in the light most favorable to Culver's and Cain's claims, the evidence permits an inference that there were 12 salespersons working for GCW during the last two calendar years of Culver's and Cain's employment. Upon adding these 12 salespersons to the number of undisputed GCW employees, the totality of summary-judgment evidence permits an inference that GCW had over 15 employees on each working day for 20 or more calendar weeks in calendar years 2007 or 2008. Because there was more than a scintilla of evidence creating a question of material fact on whether GCW had 15 or more employees during the requisite period, summary judgment in favor of GCW would not have been appropriate on either the no-evidence or traditional basis. See Ridgway, 135 S.W.3d at 600; Martinez, 941 S.W.2d at 911.

III. No evidence of discrimination

As an alternative ground in its summary-judgment motion, GCW argued that Culver and Cain had no evidence of discrimination. Culver and Cain argue that this part of the motion is defective because it is conclusory and does not state the elements for which there is allegedly no evidence. They alternatively argue that their affidavits presented evidence on each element of a prima facie case for discrimination. GCW argues that it sufficiently specified the basis of its no-evidence motion, and that Culver and Cain's affidavits are not adequate summary-judgment proof because they contain only conclusory statements and opinions.

A no-evidence motion for summary judgment "must state the elements as to which there is no evidence." TEX. R. CIV. P. 166a(i). As the comments to Rule 166a(i) explain, "The motion must be specific in challenging the evidentiary support for an element of a claim or defense; paragraph (i) does not authorize conclusory motions or general no-evidence challenges to an opponent's case." TEX. R. CIV. P. 166a(i) cmt. 1997. The underlying purpose of this requirement is to provide the opposing party with adequate information for opposing the motion, and to define the issues for the purpose of summary judgment. Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 311 (Tex. 2009). This purpose is analogous to the purpose of the fair-notice pleading requirement. Id.; see TEX. R. CIV. P. 45(b) & 47(a). "A no-evidence challenge that only generally challenges the sufficiency of the non-movant's case and fails to state specific elements is fundamentally defective and insufficient to support summary judgment as a matter of law." Mott v. Red's Safe & Lock Servs., Inc., 249 S.W.3d 90, 98 (Tex. App.—Houston [1st Dist. 2007, no pet.). Additionally, if the motion challenges the nonmovant's proof on a matter that is not an element of its case, the challenge is insufficient. See id.

The elements of a prima facie case of employment discrimination under the TCHRA are: (1) plaintiff was a member of a protected class; (2) plaintiff suffered an adverse employment action; and (3) non-protected class employees were not treated similarly. Greathouse v. Alvin Indep. School Dist., 17 S.W.3d 419, 423 (Tex. App.—Houston [1st Dist.] 2000, no pet.) (citing McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S. Ct. 1817, 1824 (1973)). Once a plaintiff has established a prima facie case of unlawful discrimination, the employer then has the burden of producing evidence of legitimate reasons for its actions. Tex. Dep't

of Human Servs. v. Hinds, 904 S.W.2d 629, 636 (Tex. 1995) (citing McDonnell Douglas, 411 U.S. at 802-805, 93 S. Ct. at 1824-26). After the employer has met its burden of producing evidence of legitimate reasons, then the burden returns to the employee to present either evidence showing that the given reasons are pretexts for discrimination, or direct evidence of discriminatory animus. Quantum Chem. Corp. v. Toennies, 47 S.W.3d 473, 476 (Tex. 2001); Hinds, 904 S.W.2d at 636. If the employee presents direct evidence of discriminatory animus, the burden of proof shifts once again to the employer to show that legitimate reasons would have led to the same decision regardless of any discriminatory motives. Toennies, 47 S.W.3d at 476 (citing Price Waterhouse v. Hopkins, 490 U.S. 228, 244-45, 109 S. Ct. 1775, 1787-88 (1989)).

GCW articulated its no-evidence challenge to Culver's and Cain's employment-discrimination claims as follows:

. . . In Response to Requests 12, 13 and 14—which ask for documents showing Defendant's alleged animus against older workers, female workers and older female workers, respectively—Plaintiffs answered "None."
. . . They have no evidence of discrimination. The allegations of discrimination in this case are frivolous and more in the nature of a conspiracy to blackmail Defendant than a legitimate cause of action.

Because none of the grounds presented in GCW's motion for summary judgment are meritorious, GCW was not entitled to summary judgment. Accordingly, we sustain Culver and Cain's sole issue.

Conclusion

We reverse the judgment of the trial court and remand the cause for proceedings consistent with this opinion.

Michael Massengale

Justice
Panel consists of Justices Keyes, Higley, and Massengale.