Court Opinion

ID: 9676813
Source: CourtListenerOpinion
Date Created: 2023-08-24 05:34:49.007592+00
Date Added: 2024-06-11T18:16:51.474575
License: Public Domain

OPINION
CUMMINGS, Justice.
Federal Express Corporation appeals an $89,000 judgment entered on a jury verdict in favor of Marcie Dutschmann, a former Federal Express employee. The jury found that Federal Express had terminated Dutschmann in retaliation for making complaints of sexual harassment by other Federal Express employees. The jury also found that Federal Express had agreed to provide her a Guaranteed Fair Treatment Procedure (GFTP) following her termination and that it failed to exercise good faith in conducting the GFTP. Although Federal Express attempted to show that *806Dutschmann had falsified records and was thus discharged, the jury was convinced otherwise. The judgment awarded Dutsch-mann $20,000 actual damages, $50,000 exemplary damages, $19,000 attorney’s fees, pre-judgment and post-judgment interest, and attorney’s fees in the event of an appeal. We affirm the judgment.
Federal Express asserts five points on appeal: (1) the court erred in submitting and entering judgment on question one inquiring about retaliatory discharge because the evidence is legally insufficient and because the jury’s affirmative finding is against the great weight and preponderance of the evidence; (2) the court erred as a matter of law in submitting question two which asked whether an express or implied contract existed between Federal Express and Dutschmann to provide her a GFTP because Texas courts do not recognize an express or implied contract arising from an employee handbook; (3) the court erred in submitting question two and in refusing to submit Federal Express’ requested question two and instructions four and five because the trial court failed to submit a question regarding breach of contract; (4) the court erred as a matter of law in submitting question three because Texas courts do not recognize the doctrine of good faith and fair dealing in the employment context; and (5) the court erred in submitting question ten regarding attorney’s fees because the question was not properly limited to recovery for authorized causes of action. Also, as a part of points one, two and four, Federal Express complains of the court denying its motion for summary judgment and its motion for directed verdict. Federal Express conceded during oral argument that it had waived its factual-sufficiency points due to its failure to include them in its Motion for a New Trial. See Tex.R.Civ.P. 324.
Marcie Dutschmann had been employed by Federal Express, chiefly as a courier, from August 3, 1984, to October 26, 1987. The record indicates that on numerous occasions during her employment, she complained of sexual harassment, including uninvited sexual advances by Aristeo Cuevas, one of her immediate supervisors, sexually suggestive jokes and innuendos, and obscenities scratched into the paint of her delivery truck. On March 18,1986, Cuevas masturbated in the Federal Express vehicle Dutschmann was driving, and he attempted to force her to participate. She reported this incident and other instances of harassment to Nate Jackson, the senior manager at the Waco station. According to Dutsch-mann, she was not one of Jackson’s favored employees. She also reported Cue-vas’ inappropriate behavior of March 18th to Dan Kinsinger, operations manager at that time. She notified Jackson’s superior in Dallas of the ongoing abuse and discriminatory treatment; however, Jackson told her that she was the source of the problem. Jackson admitted at trial that Dutschmann had complained since 1986 about the way she was treated at Federal Express and that her work had been adversely affected.
Federal Express terminated Dutsch-mann’s employment in October 1987, for allegedly falsifying delivery records. Her employment had previously been terminated on August 18, 1987, under the same charge but was reinstated on September 4. Following her second termination, Dutsch-mann appealed through the company’s internal appeals process, the GFTP. Dutsch-mann progressed through every step of the grievance process and focused at trial on the manner in which Federal Express administered the GFTP, particularly the Board of Review proceeding. She argues that Federal Express failed to “ensure her fair and equitable treatment” throughout the proceedings and to ensure her “the benefits of due process.” Following the Board of Review, Dutschmann filed a complaint against Federal Express with the Texas Commission on Human Rights. She then filed this suit against Federal Express and Nate Jackson, the senior manager at the time of her discharge.
Federal Express asserts in point one that there is no evidence to support the jury’s affirmative finding that it terminated Dutschmann in retaliation for making complaints of sexual harassment against other Federal Express employees. Federal Express asserts that Dutschmann failed to set forth and prove a cause of action for retaliatory discharge pursuant to the Texas *807Commission on Human Rights Act. See Tex.Rev.Civ.Stat.Ann. art. 5221k § 5.05 (Vernon 1987). However, Federal Express has waived its complaint to the jury’s affirmative response to question one because it failed to distinctly point out to the court any objectionable matter as well as the specific grounds of the objection. See Tex.R.Civ.P. 274. The objections made by Federal Express to the charge are as follows in their entirety:
COUNSEL: Your Honor, first of all, we would object to the questions and instructions posed in the jury Questions Nos. 2, 3, and 4. We feel like these deal with areas that are inappropriate on the same basis that I have mentioned in my Motion for Instructed Verdict; and, likewise, we would object to the Court’s failure to include certain instructions that we have posed to the Court and certain questions.
Those instructions posed, that we would object to the Court’s not including them, would be Instructions Nos. 3, 4, 5, 7, and 13. And the questions, that we would object to the Court not including them, would be Questions 2, 3, 5, 10, and 16.
Even if counsel’s objections had included an objection to question one, Rule 274 expressly prohibits adoption of objections made to prior questions or instructions in the charge. See id. Counsel’s attempt in this instance to adopt by reference oral objections presented to the court during the trial and presumably before the jury charge was prepared do not meet the Rule 274 specificity requirements. Id.; Castleberry v. Branscum, 721 S.W.2d 270, 276 (Tex.1986). Nor does Appellant’s Motion for Instructed Verdict, Motion for Judgment NOV, or its Amendment to the Motion for Judgment NOV reference Federal Express’ “no evidence” complaint on appeal regarding the submission or substance of question one. See Steves Sash & Door Co. v. Ceco Corp., 751 S.W.2d 473, 477 (Tex.1988).
Even if the complaint had been preserved, the record contains more than a scintilla of probative evidence of a continuing pattern of violations with the employer’s knowledge. See Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex.1987); In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951). We must accept Dutschmann’s testimony as true and totally disregard any contrary testimony; that is, we cannot substitute our view of the credibility of the witnesses for that of the jury in a “no evidence” challenge. See Benoit v. Wilson, 150 Tex. 273, 239 S.W.2d 792, 797 (1951). See Stafford, 726 S.W.2d at 16. Considering only the evidence and reasonable inferences that tend to support the jury’s finding and disregarding all evidence and inferences to the contrary, we hold that Dutschmann’s testimony about the repeated sexual harassment she experienced, her attempts to fend off same, and her complaints to management constitutes more than a scintilla of probative evidence to support the affirmative answer to question one. See Davis v. City of San Antonio, 752 S.W.2d 518, 522 (Tex.1988). Point one is overruled.
Federal Express complains in point two that, because Texas courts do not recognize an express or implied employment contract arising from an employment handbook, the court erred as a matter of law in submitting question two. It complains in point three that the court erred in submitting questions two and in failing to submit Federal Express’ requested question two and requested instructions four and five because the trial court failed to submit a question regarding breach of contract.
At the inception of her employment, Dutschmann received an Employment Handbook and Personnel Policy and Procedure Manual that expressly stated that her employment was at-will and “would continue as long as it was mutually satisfactory to both parties.” The manual specified that no contractual rights were created by the handbook, its use intended only as “a reference.” The Policy and Procedures Manual stated under the “Purpose” section that the manual was intended solely as a “guide” for management and employees, that it was “not a contract of employment, and [that] no such contract may be implied from its provisions.” (Emphasis added). The manual further stated that it could be “modified, amended or deleted by the Com*808pany at any time at its sole discretion without prior notice.”
Dutschmann acknowledged in writing that she had received the handbook, that she understood it did not constitute a contract, and that the information provided might need to be changed by Federal Express from time to time. Nevertheless, the section labeled “Guaranteed Fair Treatment Policy” stated that the company would provide an internal grievance process, the GFTP, to “all Federal Express employees and ex-employees” and that it would administer the process fairly. The pertinent procedures for the GFTP as contained in the Policy and Procedure Personnel Manual are:
POLICY It is the policy of Federal Express to have a procedure for handling complaints which ensures fair and equitable treatment.
SCOPE All Federal Express Employees and Ex-Employees
GUIDELINES
Eligibility Any employee who is the recipient of discipline for any reason will not be denied access to the Guaranteed Fair Treatment Procedure.
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BOARD of Review/Initiation A Board of Review is generally appropriate under the following circumstances:
If there is a substantial question as to fairness and/or accuracy in the matter at hand.
If the matter concerns ... termination in cases in which there is a substantial disagreement of fact.
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BoaRd of Review/Responsibilities The Chairman of the Board of Review and its members will adhere to the following specific guidelines with respect to proper, ethical, expeditious handling of the hearing:
Ensure that the action in question was, in fact, consistent with established Company policy and ensure that the employee has received the benefit of due process.
Provide a fair and equitable recommendation based on facts and not on supposition.
Act in an ethical and expeditious manner in providing a decision and a recommendation, which will be based on all evidence presented.
Complainant/Responsibilities The complainant will participate and be in attendance at all times throughout the hearing with the exception of the vote, the explanation of the reasoning behind the need for the vote, and discussion of the Committee as deemed necessary by the Chairman.
(Emphasis added).
Notwithstanding the disclaimers and Dutschmann’s written acknowledgment, the court submitted question two that inquired whether an express or implied contract existed by which Federal Express contracted to provide her a Guaranteed Fair Treatment Procedure. The jury was instructed:
You are instructed that express contracts arise when the terms are stated by the parties and there is mutual intent to contract; implied contracts arise from the acts and conduct of the parties and that a meeting of the minds is implied from and evidenced by their conduct and course of dealing.
The jury found that such a contract existed.
We recognize and support the long-standing rule that employment relationships in Texas are at-will, i.e., terminable by either party at any time, with or without cause. East Line R.R.R. Co. v. Scott, 72 Tex. 70, 10 S.W. 99, 102 (1888). We also recognize the general rule that an employee handbook that does not provide a written representation regarding procedures for discharge of employees does not modify the at-will relationship. Hicks v. Baylor University Medical Center, 789 S.W.2d 299, 301 (Tex.App. — Dallas 1990, writ denied). However, our courts hold that the at-will rule recognizes the possibility that the relationship can be modified when an employee establishes a contract whereby the employer gives up the right to terminate the employment at will. Wal-Mart Stores, Inc. v. Coward, 829 S.W.2d *809340, 343 (Tex.App.—Beaumont 1992, no writ).
Federal Express made extensive written representations to Dutschmann regarding a post-termination right to a review of the reasons for her termination. The jury, by its affirmative answer to question number two, found as a fact that the employment-at-will relationship between Federal Express and Dutschmann was modified by the handbook’s post-termination rights and procedure. The court instructed the jury:
You are instructed that unless the employer and employee have entered into an employment contract, the parties have an employment-at-will relationship. The effect of establishing an employment-at-will relationship is that either the employer or employee may terminate the relationship at any time. The termination can be for any reason, or for no reason, as long as the reason is not an unlawful one. It can be with or without cause. However, a written or implied contract containing specific limiting disciplinary procedural requirements can change the application of the at-will doctrine.
(Emphasis added). We hold that, under the particular facts of this case arising from the express language that Federal Express used to grant Dutschmann the GFTP, the court properly submitted question two. Thus, she established a contract whereby Federal Express gave up the right to terminate her at will. See Wal-Mart Stores, Inc., 829 S.W.2d at 343; Hicks, 789 S.W.2d at 301; see also Mansell v. Texas & Pac. Ry. Co., 135 Tex. 31, 137 S.W.2d 997, 999-1000 (1940) (holding that a contract between a railroad and its employees negated the at-will nature of the relationship and limited the right of the employer to discharge the employees); Morgan v. Jack Brown Cleaners, Inc., 764 S.W.2d 825, 826 (Tex.App.—Austin 1989, writ denied) (holding that the at-will relationship can be modified by the parties’ agreement, including an oral agreement, and that an employer is not entitled to a summary judgment if a fact issue is raised concerning an agreement that modifies the at-will relationship); Ramos v. Henry C. Beck Company, 711 S.W.2d 331, 336 (Tex.App.—Dallas 1986, no writ); United Transp. Union v. Brown, 694 S.W.2d 630, 632 (Tex.App.—Texarkana 1985, writ ref’d n.r.e) (holding that a jury finding had the effect of limiting the employer’s right to terminate an employment relationship, thus taking the case out of the general employment-at-will rule).
Federal Express advances a position that is, in our opinion, untenable. Its handbook would, if read literally, grant its employees a post-termination right to a formal review of the facts leading up to termination and a possible right of reinstatement and at the same time deny that the at-will relationship had been modified.1 Such an interpretation would render the post-termination rights and procedure meaningless. We believe that a distinction can be drawn between employee handbooks that establish policies and procedures to be observed during the employment relationship and those that grant such post-termination rights. The former do not modify the at-will relationship; the latter may modify the relationship. Hicks, 789 S.W.2d at 301.
Federal Express should not be allowed to unilaterally disclaim post-termination rights that it has granted to its employees nor be allowed to require the employees, as a condition of employment, to negate the legal effect of the language of its own handbook. On the one hand, Federal Express wants to recruit and retain employees by offering them specific rights, including the GFTP. On the other hand, it wants to say that it is not bound by the grant of those rights. An employer simply cannot have it both ways.
Neither are we persuaded by Federal Express’ argument that, because it retained the right to modify or even withdraw the post-termination rights, the relationship could not have been altered. If, prior to termination, it had modified or withdrawn the right to the post-termination *810review, the employee could accept the new terms or quit. See Hathaway v. General Mills, Inc., 711 S.W.2d 227, 229 (Tex.1986). When it had not modified or withdrawn the right to the post-termination review at the time it terminated Dutschmann as an employee, it should not be permitted to claim that the right never existed; fairness dictates this rule. See id.
Federal Express relies on the wrongful discharge cases of Stiver v. Texas Instruments, Inc., 750 S.W.2d 843 (Tex.App.—Houston [14th Dist.] 1988, no writ); Berry v. Doctor’s Health Facilities, 715 S.W.2d 60 (Tex.App.—Dallas 1986, no writ); and Vallone v. Agip Petroleum Co., Inc., 705 S.W.2d 757 (Tex.App.—Houston [1st Dist.] 1986, writ ref'd n.r.e.). In Stiver the court affirmed a summary judgment in favor of the employer, but recognized that an employee might prove a written contract that modifies the right to terminate the relationship in “a meaningful and special way.” Stiver, at 750 S.W.2d at 846. Although it recognized the employee's right to show “an express agreement to the contrary,” the Berry court affirmed a summary judgment in favor of the employer. Berry, 715 S.W.2d at 61. In Vallone, the court held that, absent a specific contract term to the contrary, a summary judgment against Vallone must be affirmed. These cases are distinguishable because of the express language that Federal Express used to grant the post-termination right of review to Dutschmann and because the jury found that the at-will relationship was modified.
Federal Express also relies on Reynolds Mfg. Co. v. Mendoza for the proposition that even handbooks that discuss “good cause” for termination do not modify the at-will doctrine. Reynolds Mfg. Co. v. Mendoza, 644 S.W.2d 536 (Tex.App.—Corpus Christi 1982, no writ). The language of the handbook in Reynolds is factually distinguishable from that used by Federal Express to grant to Dutschmann a post-termination right of review of the reasons for her termination. Federal Express relies on Joachim v. AT & T Information Systems, 793 F.2d 113 (5th Cir.1986). The court, without quoting the provision of the employee handbook that Joachim relied on, determined that the Reynolds opinion represented the status of the law in Texas at the time and upheld a summary judgment in favor of AT & T. Thus, we distinguish Joachim for the same reasons that we distinguish Reynolds.
Finally, Federal Express relies on two federal district court cases in support of its position. They are: White v. Federal Exp. Corp., 729 F.Supp. 1536 (E.D.Va.1990) and Bowser v. McDonald’s Corporation, 714 F.Supp. 839 (S.D.Tex.1989). In each case, the district court granted a summary judgment on the basis that an employee handbook cannot alter the at-will relationship. In Bowser, the district judge states, “[t]here is no dispute that Plaintiffs employment by Defendant was ‘at-will....”’ Here the jury found that the at-will relationship had been modified. The holding in White is more difficult to reconcile, because it involves virtually the same Federal Express handbook as was furnished to Dutschmann. Two factors, however, distinguish the White opinion from the facts at hand: the federal district judge determined that no fact issue existed about a modification of the at-will relationship, whereas a jury has found that Federal Express contracted with Dutschmann to alter the at-will relationship and the federal district judge found that “the uncontradicted record shows no breach” of contract, whereas this record demonstrates that Federal Express intentionally violated the express provisions of the GFTP.
Due to the lack of specificity of its objections and the tendering of its requests “en masse,” Federal Express waived the complaints asserts in point three. See Tex.R.Civ.P. 274; Tempo Tamers, Inc. v. Crow-Houston Four, Ltd., 715 S.W.2d 658, 666-67 (Tex.App.—Dallas 1986, writ ref’d n.r.e.); Crisp v. Southwest Bancshares Leasing Co., 586 S.W.2d 610, 616 (Tex.Civ.App.—Amarillo 1979, writ ref’d n.r.e.). Although no question was included in the charge expressly addressing a breach of contract by Federal Express, the question of the existence of a contract was submitted and no sufficient objection or tender was made to the omission of a question on breach; thus the element of breach *811is deemed found in support of the judgment. See Tex.R.Civ.P. 274, 279; Tempo Tamers, Inc., 715 S.W.2d at 666-67.
We overrule points two and three.
In point four, Federal Express asserts that the court erred in submitting question number three because Texas does not recognize the doctrine of good faith and fair dealing in the employment context. Although we agree with the general proposition that such a covenant has never been recognized in Texas, we believe that Federal Express has, by granting the GFTP, imposed such a duty upon itself.
The manual states that it is the “policy” of Federal Express to provide an employee “who was the recipient of discipline for any reason” a procedure “which ensures fair and equitable treatment.” (Emphasis added.) An integral part of the procedure is a Board of Review, which the manual states is appropriate if the matter concerns “termination” and there exists “a substantial disagreement of fact.” The manual specified that the Board of Review (1) would adhere to specific guidelines, (2) provide a fair and equitable recommendation based on facts and not on supposition, (3) ensure that every employee received the benefit of due process, and (4) act in an ethical and expeditious manner. The manual further guaranteed Dutschmann the right to “participate and be in attendance at all time throughout the hearing.” By implementing the GFTP after her employment was terminated, including the detailed “guidelines” and the Board of Review, Federal Express acknowledged its duty to administer the grievance procedure fairly and equitably.
The record supports the conclusion that Federal Express intentionally manipulated the Board of Review procedure, over which it had exclusive control, to Dtitsch-mann’s detriment by (1) denying her first choices for employee-representation on the Board of Review, (2) removing documents from the case file book after Dutschmann requested that they be included, (3) submitting edited versions of documents, (4) not permitting her to call witnesses, (5) not allowing her to cross-examine witnesses, (6) asking her to leave the meeting in violation of its express representation that she had the right to be present, and (7) including its position on her harassment claims in the case file book after telling her that it would not be discussed.
According to the written procedure guidelines, Dutschmann was allowed to submit the names of six co-workers as potential voting members to hear the case before the Board of Review, three of whom would be selected by the Board of Review Chairman to serve as voting members on the case. Federal Express denied Dutsch-mann’s initial slate of nominees, and she was forced to submit another list of six names of Federal Express employees.
A case file book had been jointly prepared by Dutschmann and a personnel representative of Federal Express assigned to assist Dutschmann in preparing for the Board of Review. The case file book ostensibly contained all materials which Dutsch-mann deemed relevant to a fair presentation of the case. The case file book actually delivered to Dutschmann and presented to the Board for use during the hearing differed from Dutschmann’s compilation in that certain documents which Dutschmann considered relevant had been removed in whole or in part. Portions of documents which Dutschmann had submitted in clean copies had been blacked out in the case file books of the Board members. The day before the proceedings began, thirteen new documents had been inserted, which Dutschmann did not have sufficient time to study and research in order to prepare a response. As a result of Dutschmann’s protests, Federal Express finally agreed to delete the new items.
Witnesses for Dutschmann were not allowed to testify, and she was not allowed to cross-examine Cuevas or Jackson, in direct violation of Board of Review procedures specified in the manual.
Dutschmann was told before the Board of Review began that her sexual harassment claims would not be discussed and that she was not to refer to them. Nevertheless, the copy of the case file book Federal Express had forwarded to Dutsch-mann and those provided to the Board con*812tained a statement of Federal Express’ position on the issue. It stated that “the allegations of sexual harassment have been investigated by Ron Watkins of the internal EEO Department and according to Watkins he found no basis [in] fact in these charges.” Although she complained, the statement was not deleted.
In addition, the topic of sexual harassment was raised by members of the Review Board asking questions and seeking answers regarding the statement of Federal Express’ position contained in the case file book. Dutschmann was asked by the chairman to leave the room during these discussions as well as during Aristeo Cue-vas’ testimony. Although she voluntarily complied with the chairman’s request, such procedure directly contravened the explicit guidelines mandating Dutschmann’s presence at all Board proceedings. The same procedure was followed during Nate Jackson’s testimony.
Having determined that Federal Express imposed upon itself a duty of good faith and fair dealing by the express language of its Policy and Procedure Manual, we conclude that the court was justified in submitting question number three to the jury. Based on the jury’s finding that Federal Express failed to exercise good faith and fair dealing in the conduct of the GFTP, we turn to the propriety of the award of punitive damages.
In circumstances where the duty of good faith and fair dealing is imposed by law, e.ff., denial of insurance benefits, the rule is that a breach of the duty of good faith and fair dealing alone will not support an award of punitive damages. Auto Ins. Co. of Hartford v. Davila, 805 S.W.2d 897, 908 (Tex.App.—Corpus Christi 1991, writ denied). Punitive damages are recoverable for such a breach under the same principles allowing recovery of those damages in other tort actions — that is, the injured party must show the other party acted with conscious indifference to his rights. Id.; Trenholm v. Ratcliff, 646 S.W.2d 927, 933 (Tex.1983).
As we have demonstrated, this record supports the conclusion that Federal Express intentionally manipulated the Board of Review procedure and was thus consciously indifferent to Dutschmann’s rights. See Trenholm, 646 S.W.2d at 933. We are mindful that no question was presented to the jury inquiring whether Federal Express was consciously indifferent to Dutschmann’s rights. However, the jury found that Federal Express did not act in good faith in administering the “Guaranteed Fair Treatment Procedure” and it also found that she is entitled to punitive damages. Because there is factually-sufficient evidence to support a finding that Federal Express was consciously indifferent to her rights, it is deemed in support of the judgment. See Tex.R.Civ.P. 279.
We also rely on a prior decision of this court. In K.W.S. Mfg. Co. Inc. v. McMahon, this court held that an employer’s actions in connection with a wrongful termination were “harsh and oppressive” and were not only a breach of contract but a tort which authorized an award of punitive damages. K.W.S. Mfg. Co. Inc. v. McMahon, 565 S.W.2d 368, 373 (Tex.Civ.App.—Waco 1978, writ ref’d n.r.e.). Federal Express’ conduct of the GFTP was, as we have demonstrated, “harsh and oppressive.”
Finally, the jury’s finding and the undisputed facts distinguish this case from others holding that an employee handbook does not per se alter the at-will relationship. At a minimum, Federal Express owed Dutschmann the common-law duty to perform its own grievance procedure — the Guaranteed Fair Treatment Procedure— with care, skill, reasonable expedience, and faithfulness. See Montgomery Ward & Co. v. Scharrenbeck, 146 Tex. 153, 204 S.W.2d 508 (1947). Point four is overruled.
Federal Express complains in point five that the trial court erred in submitting question number ten regarding attorney's fees because the question was not properly limited to recovery of attorney’s fees for authorized causes of action. However, Federal Express has waived any complaint it might have had to the submission because it failed to specifically object as re*813quired by the rules of procedure. See Tex. R.App.P. 52.
The judgment is affirmed.

. We fail to see how there could be a "substantial disagreement of fact" or "a substantial question as to fairness” concerning the reasons for termination of an employee, thereby invoking the Board of Review procedure, if the employment was truly "at-will.”