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Tex. Dep't of Agric. v. Latting

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
Mar 21, 2018
NO. 03-17-00603-CV (Tex. App. Mar. 21, 2018)

Opinion

NO. 03-17-00603-CV

03-21-2018

Texas Department of Agriculture, Appellant v. Shelia Latting, Appellee


FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT
NO. D-1-GN-16-000284 , HONORABLE GISELA D. TRIANA, JUDGE PRESIDING MEMORANDUM OPINION

In this interlocutory appeal, the Texas Department of Agriculture (the Department) appeals the trial court's denial of its plea to the jurisdiction as to Shelia Latting's claim asserting employment discrimination based on race. See Tex. Lab. Code § 21.051 (discrimination by employer). We will reverse the trial court's denial of the Department's plea to the jurisdiction and dismiss the case for lack of subject-matter jurisdiction.

BACKGROUND

Latting, who is African-American, began her employment with the Department in June 2012 when she was hired as its Deputy Chief Financial Officer. Latting's petition alleges that the following events led to the termination of her employment in January 2015. In late 2014, soon after Sid Miller was elected Commissioner of Agriculture, she was called into the Commissioner's office to meet with Commissioner Miller and his campaign manager Todd Smith. Commissioner Miller and Smith questioned Latting at length about the Department's budget. Impressed by Latting's knowledge of the budget, Commissioner Miller offered her the job of Chief Financial Officer of the Department to replace its then-CFO Heather Griffith Peterson. Latting was told that the newly appointed Assistant Commissioner of Agriculture for Operations, Kellie Housewright-Smith, would work with her the following week and would call her to discuss details of the transition. After discussing and approving Latting's proposed team members, Latting was told to assemble her team and await a call from Housewright-Smith. Latting called her team together and worked on restructuring the budget to accommodate Commissioner Miller's request for additional funds for salaries for his new executive staff. In late December, Housewright-Smith arranged a meeting with Latting and Walt Roberts, the newly appointed Assistant Commissioner of Agriculture for Legislative Affairs and External Relations, to discuss Latting's promotion and transition into the CFO position. The Department's human resources department told Housewright-Smith that Latting could be promoted immediately to the CFO position but that the Deputy CFO position that she would be leaving had to be posted for a minimum of five days before it could be filled.

In an affidavit attached to the Department's plea to the jurisdiction, Commissioner Miller averred that he was impressed by Latting's knowledge of the budget but that he did not recall offering her a job as the Department's CFO.

Latting alleged that she worked over the holidays to prepare for her promotion and transition to CFO, but when she returned to the Department offices on January 5, 2015, she found Peterson still working in what had been her office. Latting called, emailed, and texted Housewright-Smith seeking clarification but received no response. On January 12, Latting was called into a meeting with Housewright-Smith, Peterson, and Cynthia Mendoza, a representative from the human resources department. According to Latting, she was given a letter stating that the Department was going through a reduction in force and her position was being eliminated, that she would remain on the payroll until April 12, and that her services were no longer needed and she could leave that day. The following day, Peterson announced she was resigning as CFO. The Department then posted two positions that, according to Latting, "mirrored" her job description but divided the job responsibilities she previously had between the two positions. Latting alleged that the job openings were only posted for three days and were filled by two Caucasian women, April Bacon and Rebecca Sanchez.

Latting asserted that Bacon and Sanchez were brought to the Department by Terry Keel, who left the Texas Facilities Commission to join the Department after being appointed Assistant Commissioner of Agriculture for Administration. Bacon and Sanchez had worked with Keel at the Texas Facilities Commission. According to Latting, "Keel, who has a long history of cronyism in his career with the State, especially at the [Texas Facilities Commission], evidently insisted on bringing at least six of his colleagues from the [Texas Facilities Commission] to [the Department]." Latting asserted in her petition that "[w]hile cronyism violates basic public policy, it is not necessarily against the law, unless the victims of cronyism are chosen because of their race." Latting alleged that "[w]hile Keel [] brought in Bacon and Sanchez as a part of his pattern of cronyism, [she] was clearly replaced because of her race, despite her exceptional qualifications and career with the State of Texas."

Latting filed a charge of discrimination based on race and age with the Equal Employment Opportunity Commission. After conducting an investigation, the EEOC notified Latting that it would take no further action on the charge and dismissed it. Latting then filed suit against the Department alleging unlawful employment discrimination based on race. See Tex. Lab. Code § 21.051. The Department filed a combined plea to the jurisdiction and motion for summary judgment, both traditional and no-evidence, asserting that because there was no genuine issue of material fact regarding each of the essential elements of Latting's claim, the case should be dismissed for lack of subject-matter jurisdiction. See Mission Consol. Indep. Sch. Dist. v. Garcia, 372 S.W.3d 629, 635-36 (Tex. 2012) ("In a suit against a governmental employer, the prima facie case implicates both the merits of the claim and the court's jurisdiction because of the doctrine of sovereign immunity."). The Department also argued that it had a non-discriminatory reason for terminating Latting's employment that she failed to rebut or otherwise demonstrate was pretextual. After the trial court denied the Department's combined motion for summary judgment and plea to the jurisdiction, the Department perfected this interlocutory appeal. See Tex. Civ. Prac. & Rem. Code § 51.014(a)(8) (permitting appeal of interlocutory order denying plea to jurisdiction by governmental unit).

DISCUSSION

Sovereign immunity protects the State from lawsuits and liability for money damages. Harris Cty. v. Sykes, 136 S.W.3d 635, 638 (Tex. 2004). The Legislature has waived immunity for suits in which the plaintiff alleges a violation of the Texas Commission on Human Rights Act (TCHRA) by pleading facts that state a claim thereunder. Garcia, 372 S.W.3d at 636; see also In re United Servs. Auto. Ass'n, 307 S.W.3d 299, 307 (Tex. 2010) (citing State v. Lueck, 290 S.W.3d 876, 880 (Tex. 2009), for proposition that "when elements of a statutory claim involve 'the jurisdictional inquiry of sovereign immunity from suit,' those elements can be relevant to both jurisdiction and liability"). "Chapter 21 of the Labor Code waives immunity from suit only when the plaintiff actually states a claim for conduct that would violate the TCHRA." Garcia, 372 S.W.3d at 637.

A plea to the jurisdiction typically challenges whether the plaintiff has alleged facts that affirmatively demonstrate the court's jurisdiction to hear the case. Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993). However, a plea to the jurisdiction can also properly challenge the existence of those very jurisdictional facts. Garcia, 372 S.W.3d at 635. In those cases, a court can consider evidence as necessary to resolve any dispute over those facts, even if that evidence "implicates both the subject-matter jurisdiction of the court and the merits of the case." Texas Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). To the extent the jurisdictional issue and accompanying evidence implicate the merits of the plaintiff's case, at the pretrial stage the defendant is put to a burden very similar to that of a movant for summary judgment:

If the evidence creates a fact question regarding the jurisdictional issue, then the trial court cannot grant the plea to the jurisdiction, and the fact issue will be resolved by the fact finder [at trial]. However, if the relevant evidence is undisputed or fails to raise a fact question on the jurisdictional issue, the trial court rules on the plea to the jurisdiction as a matter of law.
Id. at 227-28. The trial court's determination in such a case is a purely legal one and is, on appeal, reviewed de novo, with the appellate court indulging every reasonable inference and resolving any doubts in the nonmovant's favor. Id.; University of Tex. v. Poindexter, 306 S.W.3d 798, 807 (Tex. App.—Austin 2009, no pet.).

The Department's plea to the jurisdiction challenged the existence of jurisdictional facts implicating the merits—i.e., whether Latting had stated a claim for conduct that would violate the TCHRA such that the Department's immunity was waived. See Garcia, 372 S.W.3d at 637. The Department's plea to the jurisdiction included evidence, and Latting also presented evidence to the trial court in her responsive pleading. The trial court denied the plea to the jurisdiction, indicating its determination that the evidence presented a fact question regarding a jurisdictional fact. We review this determination de novo. See City of Austin v. Leggett, 257 S.W.3d 456, 462 (Tex. App.—Austin 2008, pet. denied) ("Whether the evidence presents a fact question regarding a jurisdictional fact is a question of law that we review de novo.").

Under the TCHRA, "an employer commits an unlawful employment practice if because of race, color, disability, religion, sex, national origin, or age the employer . . . discharges an individual or discriminates in any other manner against an individual in connection with compensation or the terms, conditions, or privileges of employment." Tex. Lab. Code § 21.051. Because one of the purposes of the TCHRA is to "provide for the execution of the policies of Title VII of the Civil Rights Act of 1964," see id. § 21.001(1), the Texas Supreme Court has consistently held that the analogous federal statutes and the cases interpreting them guide our reading of the TCHRA. See Quantum Chem. Corp. v. Toennies, 47 S.W.3d 473, 476 (Tex. 2001). Consequently, Texas courts follow the settled approach of the United States Supreme Court in recognizing two alternative methods of proof in discriminatory treatment cases. See id. The first method involves proving discriminatory intent using direct evidence of what the defendant did or said. Id. However, the Supreme Court has recognized that "motives are often more covert than overt, making direct evidence of forbidden animus hard to come by." Garcia, 372 S.W.3d at 634 (citing United States Postal Serv. Bd. of Governors v. Aikens, 460 U.S. 711, 716 (1983) (noting difficulty of that issue)). To make matters easier for plaintiffs in discrimination cases, the Supreme Court, in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 793 (1973), developed a presumption that supplements the traditional framework. The presumption operates as follows: If a plaintiff makes use of the McDonnell Douglas presumption, she initially does not need to present direct evidence from which the trier of fact could conclude that the adverse employment action taken against her was caused by improper discrimination. Instead, she need only establish a "prima facie" case of discrimination. See Garcia, 372 S.W.3d at 634. Broadly stated, the "prima facie" case is made if a plaintiff with a particular personal characteristic (e.g., gender, age, race, religion) establishes that (1) an adverse employment action was taken against her, (2) she was qualified for the job position in question, and (3) different treatment was given to someone who differs in regard to the relevant personal characteristic. See Wright v. Southland Corp., 187 F.3d 1287, 1291 & n.3 (11th Cir. 1999); see also Garcia, 372 S.W.3d at 638. The precise elements of the "prima facie" showing vary depending on the circumstances, and "lower courts have been left to grapple with the specifics of how the test should be applied to particular types of claims." See Garcia, 372 S.W.3d at 634, 638-39 ("There is no prima facie case requirement in the text of the TCHRA; the statute simply proscribes discrimination 'because of race, color, disability, religion, sex, national origin, or age.'"). Once the plaintiff has met the "minimal" initial burden of establishing a "prima facie" case, she is entitled to a presumption of discrimination. Id. The defendant employer can rebut, and thereby eliminate, this presumption of discrimination by articulating a legitimate, non-discriminatory reason (or reasons) for the adverse employment action. McDonnell Douglas, 411 U.S. at 802; Texas Dep't of Cmty. Affairs v. Burdine, 450 U.S. 248, 254 (1981). "The burden then shifts back to the complainant to show that the employer's stated reason was a pretext for discrimination." Quantum Chem. Corp., 47 S.W.3d at 477. The plaintiff can provide evidence of discriminatory intent by showing that the employer's proffered reason for the adverse action is false. Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 141-49 (2000).

In the Title VII and TCHRA context, the phrase "prima facie" case denotes the establishment of a legally mandatory, rebuttable presumption. See Texas Dep't of Cmty. Affairs v. Burdine, 450 U.S. 248, 254 n.1 (1981).

For example in McDonnell Douglas, a case in which the plaintiff alleged that he was not hired because of his race and the position remained unfilled, the Court stated that the plaintiff must establish that (1) he belongs to a racial minority, (2) he applied for and was qualified for a job for which the employer was seeking applications, (3) despite his qualifications he was rejected, and (4) after his rejection the position remained open and the employer continued to seek applicants from persons of complainant's job qualifications. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973).

The McDonnell Douglas presumption, therefore, is "merely an evidence-producing mechanism that can aid the plaintiff in his ultimate task of proving illegal discrimination." Wright, 187 F.3d at 1293. "The prima facie case 'raises an inference of discrimination only because we presume these acts, if otherwise unexplained, are more likely than not based on the consideration of impermissible factors.'" Garcia, 372 S.W.3d at 634 (quoting Furnco Constr. Corp. v. Waters, 438 U.S. 567, 577 (1978)). The presumption is rebutted and eliminated when the defendant articulates a legitimate, non-discriminatory reason for the adverse employment action. At that point, "the case is placed back into the traditional framework—in other words, the plaintiff still bears the burden of proving that, more probably than not, the employer took an adverse employment action against him on the basis of a protected personal characteristic." Wright, 187 F.3d at 1291 (citing St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 206-08 (1993)).

As the Wright court observed, the McDonnell Douglas presumption "has made the plaintiff's task somewhat easier: The plaintiff now has evidence of the employer's proffered reasons for the adverse employment action, and can attempt to show that these proffered reasons are a pretext for discrimination." Wright v. Southland Corp., 187 F.3d 1287, 1291 (11th Cir. 1999); see also St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 516-17 (1993) ("[P]roving the employer's [proffered] reason false becomes part of (and often considerably assists) the greater enterprise of proving that the real reason was intentional discrimination.").

To state a claim of conduct that would violate the TCHRA and thereby waive the Department's sovereign immunity, Latting was required to plead facts demonstrating that the Department took an adverse employment action against Latting because of her race. See Tex. Lab. Code § 21.051. In her petition, Latting alleged that she (1) is a member of a protected class; (2) was discharged; (3) was qualified for the position from which she was discharged; and (4) was replaced by someone outside the protected class. Relying on Baker v. Gregg Cty., 33 S.W.3d 72, 80 (Tex. App.—Texarkana 2000, pet. dism'd), Latting asserts that these allegations constitute a "prima facie" case of race discrimination. This, she contends, raised a presumption of discrimination and, consequently, she stated a claim under the TCHRA that waives the Department's immunity.

The Department, however, argued and presented evidence to the trial court that the termination of Latting's employment was not because of her race but instead resulted from a reorganization of the Department in early January as Commissioner Miller was assuming his new role and assembling the Department's management team. The Department's evidence included the affidavit of Commissioner Miller, who averred in pertinent part:

I was elected Agriculture Commissioner in November 2014. As I worked with my transition team, I learned of problems in [the Department's] Financial Services Division. The Financial Services Division had submitted an incorrect Legislative Appropriations Request ("LAR") to the Legislative Budget Board ("LBB"). I had heard that because the Financial Services Division was failing to timely answer the LBB's questions about the LAR, [the Department] was at risk of getting a "zeroed-
out" budget from the LBB (meaning no money being initially appropriated for [the Department] in the 2015 legislative session, so we would need to fight for every dollar of agency funding).

After the December 23, 2014 meeting, my staff and I learned more information about how badly the Financial Services Division had been mismanaged. At some point I learned that [the Department's] proposed budget was $7-8 million in the red, and another $8-10 million used for the budget had actually come from "salary savings," even though [the Department] had around 100 vacancies it needed to fill.

I became so concerned about this financial mismanagement being blamed on my administration that I asked the state auditor to audit my own agency. The state auditor eventually issued a report identifying some issues with financial reporting and contract management in the Financial Services Division.

I soon came to believe that a complete change of the Financial Services Division's leadership was necessary, and that also included both the CFO and the Deputy CFO. Because the 2015 legislative session was starting soon (with the budget as the first item to be taken up), I needed to find an experienced CFO to fix the mess as soon as possible. I asked my friend Terry Keel for recommendations.

Mr. Keel recommended Diana Warner, his prior CFO when he was Executive Director at [the Texas Facilities Commission].

I decided to hire Ms. Warner as CFO in early January, and I gave her wide latitude to reorganize the Financial Services Division to fix its problems. [The CFO] Ms. Peterson was permitted to resign as CFO, having obtained a new position at another state agency. My understanding is that as part of Ms. Warner's reorganization of the Financial Services Division, Ms. Latting's Deputy CFO position was eliminated, and Ms. Latting did not apply for a new position. My understanding from reviewing HR records is that other employees of varying ethnicities were also terminated as part of the reorganization including Judy Bottoms (white), Ed Kelly (white), and Ron Baker (white/hispanic).
The Department also attached to its plea the affidavit of Diana Warner, who averred:
When I was hired as CFO at [the Department], I was given wide latitude to reorganize the Financial Services Division to fix its problems. I decided to reorganize the leadership structure of the Financial Services Division to eliminate the Deputy CFO position, and replace it with two administrators directly reporting to me. This was
due to my preference of not having to rely on getting information from only one direct report. This was the way I had it at [the Texas Facilities Commission].

Both of two new administrator positions had different titles, classifications, qualifications, pay, and responsibilities from the prior Deputy CFO position. My preferred choice for these two administrators were April Bacon and Rebecca Sanchez—two very talented individuals who were already working for me at [the Texas Facilities Commission]. I knew them both to be capable and trustworthy. However, I understood these administrator positions were subject to open posting. The two positions were posted for three days, and various people applied. My understanding is that Shelia Latting did not apply to either position.

Assuming that Latting alleged a prima facie case that raised a presumption of discrimination, the Department's explanation that it was concerned about mismanagement of the budget by the financial services division and that it eliminated the Deputy CFO position as part of a resulting reorganization of the division constitutes a reasonable, non-discriminatory reason for the termination of her employment. That there had been mismanagement of the Department's budget and that the financial services division was reorganized was undisputed and amply supported by evidence in the record. Thus, the Department rebutted the presumption of discrimination created by Latting's prima facie case and that presumption was eliminated. See Burdine, 450 U.S. at 255 n.10 ("A satisfactory explanation by the defendant destroys the legally mandatory inference of discrimination arising from the plaintiff's initial evidence.").

In the absence of a presumption of discrimination, Latting was required to present evidence creating a fact issue on the jurisdictional element that an adverse employment action was taken against her because of her race. See Miranda, 133 S.W.3d at 228-32 (if plaintiff fails to raise fact issue on jurisdictional issue after defendant presents evidence demonstrating that court has no subject-matter jurisdiction, court must grant plea to jurisdiction). Latting could do this in one of two ways: (1) present "direct" evidence of discrimination based on race; i.e., evidence creating a fact issue on whether the Department's decision was more probably than not based on illegal discrimination, see, e.g., Haynes v. W.C. Caye & Co., Inc., 52 F.3d 928, 930 (11th Cir. 1995) (statement to female employee that women "were simply not tough enough to do the job" could constitute direct evidence of discriminatory intent), or (2) present evidence creating a fact issue regarding whether the Department's articulated non-discriminatory reason for terminating her employment was untrue and was given as a mere pretext for unlawful discrimination. See Elgahil v. Tarrant Cty. Junior Coll., 45 S.W.3d 133, 139 (Tex. App.—Fort Worth 2000, pet. denied). The record reveals, and Latting identifies, no "direct" evidence of discrimination based on race. To the contrary, Latting herself testified that after her initial meeting with Commissioner Miller he indicated a desire to promote her to the CFO position. In his affidavit, Commissioner Miller averred that he "was impressed by how knowledgeable and helpful [Latting] was with her answers to my questions." Latting testified in her deposition that "other than that [she] was replaced" she had no evidence of discrimination based on her race, and that "if it wasn't racism, then Commissioner Miller could have stepped up and said, wait a minute. Now, this lady, I know she knows her stuff; I know she knows her job, so what can we do. Or—and I feel like Terry was like, nope, I don't want her." Latting testified that she had no evidence that Keel made his employment decisions based on race rather than based on his familiarity with certain people. And, in her petition Latting alleged that Keel engaged in "cronyism" when making hiring decisions, which she agreed did not alone constitute employment discrimination.

We next consider whether Latting created a fact issue regarding whether the Department's proffered reason for terminating her employment was false and a mere pretext, which, in turn, could create an inference that the real reason for terminating her employment was racial discrimination. See Hicks, 509 U.S. at 516-17 (demonstrating that stated reason for adverse employment action is false and a pretext assists in showing that real reason was intentional discrimination). "To create a fact question on the issue of pretext, the [plaintiff] must present evidence indicating that the non-discriminatory reason given by the employer is false or not credible, and that the real reason for the employment action was unlawful discrimination." Id. Taken as a whole, the evidence must create a fact issue as to whether the employer's stated reason was not what actually motivated the employer and support a reasonable inference that race was a determinative factor in the actions the plaintiff is complaining about. Id. Having reviewed the evidence presented to the trial court, we conclude that it does not meet this standard. Latting points to the fact that the letter informing her that her position was eliminated had a subject line stating "Reduction in force." According to Latting, there was no "reduction in force" and the Department simply used a "reduction in force" as a pretext for firing her. But the body of the letter states: "Due to a reorganization of the Financial Services Division, your position will be eliminated effective April 12, 2015." The Deputy CFO position Latting held was, in fact, eliminated as part of the reorganization and her job responsibilities were divided between two separate administrative positions. Latting also states that she was not hired to fill either of these positions, which were filled by Bacon and Sanchez, people she considered to be "lesser-qualified." But, as previously stated, Latting herself alleged that Keel had a practice of hiring people he had worked with before, which she labeled "cronyism." Moreover, it was undisputed that Latting did not apply for either of the two positions created as part of the reorganization of the financial services division. In sum, the evidence does not create an issue of fact that the elimination of the Deputy CFO position as part of the reorganization of the financial services division was a pretext for terminating Latting's employment. Nor does the evidence create an issue of fact with regard to whether Latting was not chosen for one of the two positions created as part of the reorganization, neither of which she applied for, because of her race. Instead, the evidence establishes that Commissioner Miller desired to reorganize the financial services division because of perceived mismanagement of the Department's budget and that Keel's and Warner's employment decisions were based on nondiscriminatory reasons. We conclude that the evidence, taken as a whole, does not create an issue of fact on one of the jurisdictional elements of Latting's claim—that an adverse employment action was taken against her because of her race. The trial court erred in denying the Department's plea to the jurisdiction. See Miranda, 133 S.W.3d at 227-28 (holding that if relevant evidence fails to raise fact question on jurisdictional issue, trial court must grant plea to jurisdiction as matter of law).

Latting asserted that she was not aware of the two new positions, but the evidence is undisputed that both positions were posted publicly for at least three days.

CONCLUSION

For the foregoing reasons, we reverse the trial court's order denying the Department's plea to the jurisdiction and dismiss Latting's claims for lack of subject-matter jurisdiction.

/s/_________

David Puryear, Justice Before Justices Puryear, Pemberton, and Bourland Reversed and Dismissed for Want of Jurisdiction Filed: March 21, 2018


Summaries of

Tex. Dep't of Agric. v. Latting

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
Mar 21, 2018
NO. 03-17-00603-CV (Tex. App. Mar. 21, 2018)
Case details for

Tex. Dep't of Agric. v. Latting

Case Details

Full title:Texas Department of Agriculture, Appellant v. Shelia Latting, Appellee

Court:TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

Date published: Mar 21, 2018

Citations

NO. 03-17-00603-CV (Tex. App. Mar. 21, 2018)

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