Court Opinion

ID: 2678090
Source: CourtListenerOpinion
Date Created: 2014-06-12 05:00:47.344774+00
Date Added: 2024-06-11T12:12:12.484260
License: Public Domain

Case: 11-40454   Document: 00512660590     Page: 1   Date Filed: 06/11/2014

        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT   United States Court of Appeals
                                                                      Fifth Circuit

                                                                     FILED
                                 No. 11-40454                     June 11, 2014
                                                                  Lyle W. Cayce
                                                                       Clerk

GARY SAWYER; DOUG KEMPF; PETER BARNABA, SR.; GEOFF
RORREV; TIM GREGORY; ET AL,

             Plaintiffs - Appellants

v.

E I DUPONT DE NEMOURS & COMPANY,

             Defendant - Appellee

                Appeal from the United States District Court
                     for the Southern District of Texas

Before DeMOSS, CLEMENT, and ELROD, Circuit Judges.
PER CURIAM:
      Sixty-three former employees (collectively “appellants”) of E.I. DuPont
de Nemours and Company’s (“DuPont”) La Porte, Texas manufacturing facility
sued DuPont, alleging that the company fraudulently induced them to
terminate their employment with DuPont and accept employment with a
wholly-owned subsidiary. The district court granted summary judgment in
favor of DuPont. For the following reasons, we AFFIRM.
       Case: 11-40454    Document: 00512660590         Page: 2    Date Filed: 06/11/2014

                                      No. 11-40454
                                            I.
        Appellants were hourly-wage employees in the Terathane Products Unit
of DuPont’s LaPorte facility. 1 Fifty-nine of them (“covered employees”) were
covered by a collective bargaining agreement (“CBA”) between the Local 900C
of the International Chemical Workers Union Counsel, AFL-CIO (“the Union”)
and DuPont’s LaPorte facility.
        In February 2002, DuPont announced its intention to spin off a segment
of its operation (including appellants’ unit) into a wholly-owned subsidiary,
DuPont Textiles and Interiors, Inc. (“DTI”). DuPont and the Union reached an
agreement wherein the employees could choose between staying with DuPont
but transferring to a different unit of the LaPorte facility, or remaining with
their unit and becoming DTI employees. Appellants allege that, at various
meetings, DuPont worked hard to persuade them to transfer with their unit
and become DTI employees. According to them, DuPont represented that DTI
would remain a part of DuPont and not be sold to a third party. They allege
that DuPont also represented that their pension, pay, and benefits would
remain the same. But months after their elections to move with the Terathane
Unit to DTI became final, DuPont announced that it was negotiating the sale
of DTI. On May 1, 2004, DuPont sold DTI to Koch Industries, after which
appellants claim their pensions, pay, and benefits materially changed for the
worse.
                                            II.
        On November 7, 2006, appellants sued DuPont in federal district court,
bringing state-law claims of fraud, fraudulent inducement, and fraud by
omission. After dismissing two claims on the basis of the statute of limitations,

   1 Our prior opinions contain more thorough recitations of the facts. Sawyer v. E I DuPont
De Nemours & Co. (“Sawyer II”), 689 F.3d 463 (2012); Sawyer v. E.I. DuPont de Nemours &
Co. (“Sawyer I”), 678 F.3d 379 (2012).
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       Case: 11-40454    Document: 00512660590         Page: 3    Date Filed: 06/11/2014

                               No. 11-40454
the district court granted summary judgment in favor of DuPont, holding that
appellants were at-will employees and thus could not bring fraud claims under
Texas law. Appellants asked this court to reverse the district court’s grant of
summary judgment.
        On April 20, 2012, we issued an opinion affirming the district court’s
grant of summary judgment in favor of DuPont. Because Sawyer’s claims are
in federal court based on diversity jurisdiction, we made an “Erie guess” as to
how the Supreme Court of Texas would rule on the issues of Texas law. 2 We
held that both the covered and non-covered employees were at-will employees,
and that under Texas law at-will employees could not sue their employers for
fraud based on the loss of their employment. Sawyer I, 678 F.3d at 385, 387.
        On July 27, 2012, we withdrew our opinion in Sawyer I and certified the
following questions to the Supreme Court of Texas:
        1. Under Texas law, may at-will employees bring fraud claims
        against their employers for loss of their employment?

        2. If the above question is answered in the negative, may
        employees covered under a 60-day cancellation-upon-notice
        collective bargaining agreement that limits the employer’s ability
        to discharge its employees only for just cause, bring Texas fraud
        claims against their employer based on allegations that the
        employer fraudulently induced them to terminate their
        employment?
Sawyer II, 689 F.3d at 470.
        The Texas Supreme Court answered our certified questions in an opinion
issued on April 25, 2014. It answered our first question in the negative. In

   2 “Where, as here, the proper resolution of the case turns on the interpretation of Texas
law, we are bound to apply Texas law as interpreted by the state’s highest court.” Am. Int’l
Specialty Lines Ins. Co. v. Rentech Steel LLC, 620 F.3d 558, 564 (5th Cir. 2010) (internal
quotation marks and alteration omitted). “[W]e must make an ‘Erie guess’ as to how the
Texas Supreme Court would rule” based on, inter alia, Texas Supreme Court decisions in
analogous cases, its analysis on related issues, and lower state court decisions. Id.
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                                  No. 11-40454
relevant part, the court stated: “To recover for fraud, one must prove justifiable
reliance on a material misrepresentation.          A representation dependent on
continued at-will employment cannot be material because employment can
terminate at any time. Nor can one justifiably rely on the continuation of
employment that can be terminated at will.” Sawyer v. E. I. du Pont de
Nemours & Co., No. 12-0626, 2014 WL 1661492, at *3 (Tex. Apr. 25, 2014)
(footnotes omitted). It continued: “To allow a promise that is contingent on
continued at-will employment to be enforced in a suit for fraud would mock the
refusal of enforcement in a suit for breach of contract, making the non-
existence of a contract action largely irrelevant, and would significantly impair
the at-will rule.” Id.

           The Texas Supreme Court answered our second question in the negative
as well. The court explained that “[t]he CBA . . . modified the Employees’ at-
will employment relationship.” Id. at *4. But, treating appellants’ allegations
that they were fraudulently induced into terminating their employment as
allegations of constructive discharge without just cause, the court held that
appellants’ remedies were limited to those contained in the CBA itself. Id. at
*5. 3 It reasoned:

           To allow a fraud action when Employees had a contractual remedy
           would not only be unnecessary, it would defeat the parties’
           bargain. An employee discharged for refusing to go to DTI would
           clearly have been limited to his remedies under the CBA. To allow
           an employee fooled into going to DTI to recover for fraud would
           defeat the CBA.
Id.

     The CBA established procedures wherein a grievance for an “unjust discharge” would
      3

be considered by DuPont and Union Committees. It also established procedures for when
grievances are instead arbitrated.
                                          4
       Case: 11-40454   Document: 00512660590        Page: 5    Date Filed: 06/11/2014

                                    No. 11-40454
                                         III.

        The Texas Supreme Court’s answers to our certified questions dictate
the disposition of this appeal.          The non-covered employees are at-will
employees who, under Texas law, may not bring fraud claims for the
termination of their employment. And while the CBA altered the covered
employees’ at-will status, they too cannot bring fraud actions because their
remedies are limited to those provided in the CBA. As such, we AFFIRM the
district court’s grant of summary judgment in favor of DuPont. 4

   4 The Texas Supreme Court left for us to decide “[w]hether the Employees’ rights under
the CBA have been lost.” Id. at *6. But, as we have previously noted, “Appellants’ claims
[are] not based on any alleged violation of the CBA between the Union and DuPont or the
CBA between the Union and DTI,” and the Union is not party to this litigation. Sawyer II,
689 F.3d at 466 & n.3.
                                           5