Court Opinion

ID: 3155556
Source: CourtListenerOpinion
Date Created: 2015-11-18 01:01:00.467641+00
Date Added: 2024-06-11T07:38:37.625206
License: Public Domain

Case: 14-10249         Document: 00513275391         Page: 1     Date Filed: 11/17/2015

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

                                        No. 14-10249                                    FILED
                                                                                November 17, 2015
                                                                                     Lyle W. Cayce
DAVID O. PETERSON,                                                                        Clerk

                                                    Plaintiff - Appellee

v.

BELL HELICOPTER TEXTRON, INCORPORATED,

                                                    Defendant - Appellant

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

                                  Click here to enter text.
                                   Opinion on Rehearing
Before JONES and HAYNES, Circuit Judges, and CRONE ∗, District Judge.
EDITH H. JONES, Circuit Judge:
      The court withdraws its opinion filed on June 4, 2015, and substitutes
the following, which is amended only as to Part IV:
      After losing his job during a reduction-in-force, David Peterson sued his
erstwhile employer Bell Helicopter Textron for age discrimination. A jury
found that the company harbored some discriminatory motive, but that
Peterson would have been fired anyway. After rendering a take-nothing money
judgment on the verdict, the district court, acting on Peterson’s post-trial

      *   District Judge of the Eastern District of Texas, sitting by designation.
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motion, enjoined Bell Helicopter from discriminating on the basis of age
anywhere, anytime, “especially during reductions in force,” and awarded
Peterson attorneys’ fees. We reverse.
                                             I. 1
       David Peterson was a regional sales manager for Bell Helicopter
Textron, Inc. (“Bell”), from 1989 through 2008, when he was one of many
employees terminated under a reduction-in-force (“RIF”) that Bell undertook
after it lost an important contract with the Department of the Army. The Army
notified Bell of this bad news on October 16, 2008, and Bell executives met
within days to chart the company’s course. On advice of the Human Resources
(“HR”) and Finance departments, the company decided to set a fixed
percentage of employees for layoff in the RIF by applying pre-defined selection
criteria, which included annual performance review scores, rankings for the
employee’s impact on the organization, and any negative performance
documentation in the employee’s file.                 The RIF required eliminating
approximately 500 employees, including 19 in Marketing and Sales, Peterson’s
division. According to Bell, among Regional Sales Managers in the North
American Sales unit, Peterson had the lowest performance scores for 2006 and
2007. On October 31, 2008, the company formally notified Peterson that his
last day would be January 1, 2009.
       Peterson disputes that the decision was adopted so straightforwardly.
He especially makes much of the corporate blame-shifting and the resulting
difficulty he had in determining who made the decision to lay him off.
Peterson’s version runs something like this. On October 23, the Executive

       1 Because this case went to trial and verdict, this court “accepts as true that version
of the testimony the jury might reasonably have adopted in reaching its verdict[.]” Liberty
Mut. Ins. Co. v. Falgoust, 386 F.2d 248, 253 (5th Cir. 1967).
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Director of North American Sales called him and said, “Dave, I don’t know
what they’re doing. You’re my best guy, but you’re on the list to be laid off.”
This supervisor also allegedly told Peterson that “it’s not related to
performance at all.”     At a formal meeting, with a Human Resources
representative also present, that same supervisor disclaimed being “privy to
how these decisions were made.” The HR representative said that she did not
know how the decision was made but “it was decided at the top.” Peterson
specifically elicited assurances that his performance was not one of the
reasons.
      Peterson contended that, once the lawsuit was underway, “Bell came up
with a reason that sounded like performance.” During discovery, the company
averred that Peterson’s termination was based solely on his declining
performance, which Peterson argues must be pretextual because his
performance ratings, whatever their absolute numbers, were not in decline.
Then, in support of its motion for summary judgment, Bell cited the fact that
Peterson “had the lowest performance scores for 2006 and 2007.” Peterson
further alleges that his performance was objectively excellent, quantitative
metrics notwithstanding: “[Performance] evaluations are one thing and
performance as a helicopter sales person is another.” Bell not unreasonably,
however, decided to use the former as one metric of the latter.
      Peterson sued Bell under the federal Age Discrimination in Employment
Act, 29 U.S.C. § 623(a)(1), and the Texas Commission on Human Rights Act
(“TCHRA”), Tex. Lab. Code § 21.051(1), as well as on common law contract
claims arising from disputed commissions. The district court dismissed the
federal age discrimination claim, holding that Peterson failed to create a fact
issue to rebut Bell’s nondiscriminatory reason for termination. See Crawford
v. Formosa Plastics Corp., La., 234 F.3d 899, 903 (5th Cir. 2000) (evidence must

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be capable of supporting a “reasonable inference of discrimination”). After the
parties resolved the disputes over unpaid commissions, the district court
dismissed those as well. Peterson has not noticed an appeal on these or any
other issues.
       The district court, however, found Peterson’s age discrimination claim
withstood summary judgment under the TCHRA, which requires evidence only
that age was a “motivating factor” for termination. 2 The case went to trial, and
the jury answered two questions: 3
       Question Number 1: Has Mr. Peterson demonstrated by a
       preponderance of the evidence that age was a motivating factor in
       Bell Helicopter’s decision to terminate Mr. Peterson’s
       employment?

       Question Number 2: Would Bell have terminated Mr. Peterson’s
       employment when it did even in the absence of its consideration of
       his age?

Following affirmative answers to both questions, the jury could not award
damages, so the district court entered final judgment and dismissed Peterson’s
claim.
       Both parties filed post-trial motions. Peterson renewed his motion for
judgment as a matter of law, which requested damages and, for the first time,
sought declaratory and injunctive relief; he also asked for fees and costs. Bell
also moved for judgment as a matter of law as to whether age was a motivating

       2 The “motivating factor” standard applies “in all TCHRA unlawful employment
practice claims[.]” Quantum Chem. Corp. v. Toennies, 47 S.W.3d 473, 480 (Tex. 2001). But
in federal law, a “but-for” causation standard applies to age discrimination claims. Gross v.
FBL Fin. Servs., Inc., 557 U.S. 167, 175-76, 129 S. Ct. 2343, 2350 (2009).

       3 Shortly before returning the verdict, the jury submitted a question to the judge
asking if it could award costs and fees to the plaintiff even if it found that he had failed to
prove age discrimination. The district court responded that answering the first question in
the negative precluded awarding costs or fees.
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factor in terminating Peterson. The district court denied almost all of this
relief, except that it enjoined Bell from discriminating on the basis of age in
determining whom to terminate in future RIFs. The district court relied on a
provision of the TCHRA explicitly authorizing injunctions in some
circumstances. See Tex. Lab. Code § 21.125(b). The court also cited a Title VII
case that held injunctive relief mandatory “absent clear and convincing proof
of no reasonable probability of further noncompliance with the law[.]” James
v. Stockham Valves & Fittings Co., 559 F.2d 310, 354 (5th Cir. 1977) (citing
EEOC v. Rogers Bros., 470 F.2d 965, 966 (5th Cir. 1972)).
      The court’s injunction states:
      Bell is hereby ENJOINED from henceforth discriminating against
      any employee because of his or her age, particularly in its decisions
      regarding which employees to terminate as part of any future
      reductions-in-force.
The district court then also awarded Peterson attorneys’ fees totaling
$339,987.50, because he had “prevailed in proving that his termination was
motivated in part by unlawful age discrimination.” Bell timely appealed.

                                       II.
      On appeal, Bell challenges the district court’s injunction on two grounds.
The company renews its argument that there was no evidence to support the
jury verdict finding discrimination. Without such a finding, the district court
would have no basis to award any relief under the TCHRA. Bell’s second
argument challenges the propriety and scope of the injunction itself and, if
successful, obviates this court’s need to review the soundness of the jury’s
verdict.
      We need only address injunctive relief. “We review the trial court’s
granting or denial of permanent injunction for abuse of discretion.” Peaches
Entm’t Corp. v. Entm’t Repertoire Assocs., Inc., 62 F.3d 690, 693 (5th Cir. 1995).

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When “the district court’s decision turns on the application of statutes or
procedural rules, our review of that interpretation is de novo.” United States
v. Holy Land Found. for Relief & Dev., 493 F.3d 469, 472 (5th Cir. 2007) (en
banc).
                                        III.
   The TCHRA creates liability for discrimination “even if other factors also
motivated the practice[.]” Tex. Lab. Code § 21.125(a). Further:
         In a complaint in which a complainant proves a violation under
         Subsection (a) and a respondent demonstrates that the respondent
         would have taken the same action in the absence of the
         impermissible motivating factor, the court may grant declaratory
         relief, injunctive relief except as otherwise provided by this
         subsection, and attorney's fees and costs demonstrated to be
         directly attributable only to the pursuit of a complaint under
         Subsection (a), but may not award damages or issue an order
         requiring an admission, reinstatement, hiring, promotion, or back
         pay.
Id. § 21.125(b). The jury found that age was a motivating factor in Bell’s
decision, even though the company would have fired Peterson anyway. This is
the basis on which the district court entered the injunction and granted
attorneys’ fees.     Bell contends that Peterson waived his right to seek an
injunction and, if he did not waive, the district court abused its discretion in
awarding injunctive relief. For reasons unique to this case, we agree with both
contentions.
         Peterson did not specifically request injunctive relief until after final
judgment, but his complaint’s prayer for relief requests “[a]ny further legal and
equitable relief to which Peterson may be justly entitled.” Before trial, the
district court ordered the parties to “file a trial brief . . . setting out the law
applicable to the facts in this case, including the elements of each claim or
defense raised[.]” Bell argues that Peterson’s failure to include any mention of
injunctive relief in his trial brief or to mention injunctive relief at an extensive
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pretrial hearing on May 13, 2013 waived the request. Further, Peterson did
not mention injunctive relief during trial or in his initial Fed. R. Civ. P. 50(a)
motion for judgment as a matter of law, which itself can result in a party’s
waiver of the issue. See Roman v. Western Mfg., 691 F.3d 686, 699 (5th Cir.
2012); Bay Colony Ltd. v. Trendmaker, Inc., 121 F.3d 998, 1003 (5th Cir. 1997).
Bell unsurprisingly states that the subsequent request for injunctive relief,
filed a month after the final judgment was signed, was a complete surprise.
   Rejecting Bell’s waiver arguments, the district court relied on Fed. Rule of
Civ. Proc. 54(c), which provides that “final judgment should grant the relief to
which each party is entitled, even if the party has not demanded that relief in
its pleadings.” The court also cited an unpublished Eleventh Circuit case that
held that “the district court has broad discretion in fashioning relief to achieve
the broad purposes of” federal antidiscrimination laws. Carter v. Diamondback
Gold Club, Inc., 222 F. App’x 929, 931 (11th Cir. 2007) (citing Fitzgerald v.
Sirloin Stockade, Inc., 624 F.2d 945, 957 (10th Cir. 1980)).
   The district court is correct to the extent that Rule 54(c) authorizes district
courts to grant any appropriate relief following a general prayer by the
plaintiff, even if the plaintiff did not specifically seek it, but only where relief
is otherwise legally permitted. Accordingly, this court has held that “[a] party
may be awarded the damages established by the pleadings or the facts proven
at trial even though only injunctive relief was demanded in the complaint[.]”
Sapp v. Renfroe, 511 F.2d 172, 176 n.3 (5th Cir. 1975). Sapp carefully qualifies
Rule 54(c)’s latitude by referring to the other case pleadings or facts proven at
trial, and later expresses the caveat that damages not pled are permitted
“. . . unless the failure to demand such relief prejudiced the opposing party.”
Sapp, 511 F.2d at 176 n.2. See also Int’l Harvester Credit Corp. v. E. Coast
Truck, 547 F.2d 888, 891 (5th Cir. 1977). More recently, this court explained

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that under Rule 54(c), although a plaintiff may seek relief not requested in his
complaint or throughout trial, “failure to seek a form of permissible relief in
his pleadings may operate to the prejudice of the opposing party when that
relief is finally sought at a much later stage of the proceedings. Denial of relief
is then also appropriate.” Engel v. Teleprompter Corp., 732 F.2d 1238, 1242
(5th Cir. 1984). Conversely, there is no prejudice when “all of the elements
justifying such relief were fully established before the district court.” Id. Were
such qualifications not in place, the aims of the Federal Civil Rules to eliminate
trial by ambush and afford full and fair litigation of disputed issues would be
placed at risk. The discretion afforded by Rule 54(c) thus assumes that a
plaintiff’s entitlement to relief not specifically pled has been tested
adversarially, tried by consent, or at least developed with meaningful notice to
the defendant. 4
   This litigation is a paradigm of how Rule 54(c) should not have been
employed.     In this case, Bell was severely prejudiced by Peterson’s post-
judgment request for injunctive relief. For the entirety of the litigation, from
service of process through final judgment, Bell believed it was only defending
against a suit for Peterson’s personal money damages. Peterson resorted to
requesting equitable relief only after judgment, when it was apparent that he
was at risk of not recovering attorneys’ fees. Bell explains why the company
“was not afforded an opportunity to effectively defend itself.” Specifically,
      Bell would be prejudiced by only having available the evidence it
      put on at trial, which Bell assumed was an action for money
      damages and did not involve broad-sweeping injunctive relief.
      Had Bell known that Peterson intended to seek [such] relief, it
      would have called additional witnesses or elicited additional

      4 See 10 CHARLES ALAN WRIGHT, ARTHUR MILLER & MARY KAY KANE, FEDERAL
PRACTICE & PROCEDURE § 2662 (4th ed. 2014), at 165 (explaining that Rule 54(c) relief “must
be based on what is alleged in the pleadings and justified by plaintiff’s proof, which the
opposing party has had an opportunity to challenge” (footnote omitted)).
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       testimony and would have prepared a defense to the claims for
       relief.
This is a common sense articulation of the prejudice a defendant experiences
when the plaintiff seeks a completely new form of relief long after the jury is
discharged. 5

   Decisions of other circuits take the same approach to Rule 54(c).                          In
Alexander v. Riga, the plaintiffs had actually sought injunctive relief in their
complaint. Alexander, 208 F.3d 419, 434 (3d Cir. 2000). They did not raise it
again through the trial until six days after the verdict. Id. The Third Circuit
“agree[d] with the District Court that the issue is waived by the failure of
counsel to raise the issue of injunctive relief prior to the conclusion of trial.”
Id. In a Fourth Circuit case, the plaintiff never pursued injunctive relief in the
district court at all. Imperial v. Suburban Hosp. Ass’n, Inc., 37 F.3d 1026, 1031
(4th Cir. 1994). The court there held that the plaintiff had abandoned its
request because injunctive “relief was never pursued even in the face of a
motion to dismiss the entire complaint which included that relief.” Id. As in
that case, Peterson serially failed to raise his claim for injunctive relief. 6

       5Bell’s prejudice was magnified here when the district court awarded an injunction
not simply in favor of Peterson, but against Bell generally, unlimited in time or location.

       6 Peterson makes a tit-for-tat argument, pointing to the trial court’s earlier
determination that allowed Bell to add an affirmative defense through amendment with
leave of court, only two months before trial. The trial court held that Peterson was not
prejudiced because Bell’s initial answer put him on notice of the elements of the defense.
Peterson argues that he deserves “the same leniency” in construing whether his pleadings
gave notice to Bell. Whether this is true or not, the question before us is not how Bell’s timely
motion was treated, but the propriety of the court’s ordering this untimely sought relief.

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    In sum, Peterson’s failure to seek injunctive relief until after the judgment
was entered unduly prejudiced Bell and waived Peterson’s claim, which cannot
be salvaged by Rule 54(c). 7
                                             IV.
       The district court also awarded Peterson attorneys’ fees under
§ 21.125(b). Peterson argues that, unlike many other fees provisions, the
TCHRA provision is not predicated on prevailing-party status, a legal term of
art whose use is well understood. See Buckhannon Bd. & Care Home, Inc. v.
W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 603, 121 S. Ct. 1835, 1839
(2001). Under a traditional prevailing-party fees provision, “[t]he plaintiff
must obtain an enforceable judgment against the defendant from whom fees
are sought[.]” Farrar v. Hobby, 506 U.S. 103, 111, 113 S. Ct. 566, 573 (1992).
Because we vacate the injunction, Peterson has not obtained any “relief on the
merits,” id., and he would not be a prevailing party according to Farrar.
       In making his argument, Peterson focuses on the following language:
“the court may grant . . . attorney’s fees and costs” when “a plaintiff proves a

       7 Had we not found the waiver argument compelling, we would have had to address
three additional issues, one not briefed by the parties and two raised by Bell. Not briefed by
the parties, though implicitly raised by the authorities they cited, is whether this federal
court, acting in diversity jurisdiction post-Erie, follows our inherent equity jurisprudence or
is bound by Texas law regarding the issuance of an injunction in this case. See, e.g.,
19 CHARLES ALAN WRIGHT, ARTHUR MILLER & EDWARD H. COOPER, FEDERAL PRACTICE &
PROCEDURE § 4513 (2d ed. 1996); see also David Crump, The Twilight Zone of the Erie
Doctrine: Is There Really a Different Choice of Equitable Remedies in the “Court a Block
Away”?, 1991 Wis. L. Rev. 1233, 1238 (1991)(describing “an underlying confusion concerning
the application of Erie to equitable remedies--a confusion that continues to the present day”).
The second issue is the absence of Texas law permitting, under § 21.125(b), an injunction
that does not help Peterson personally, since he no longer works for Bell, but that
nevertheless proscribes Bell from committing age discrimination “particularly” in reduction
in force cases. Compare Tex. Health & Human Servs. Comm’n. v. Wolfe, No. 03-08-00413-
CV, 2010 WL 2789777, at *9 (Tex. App. July 14, 2010), with Jones v. Jefferson County,
15 S.W.3d 206, 213 (Tex. App. 2000). The final issue is whether the injunction issued here
was overbroad or unduly vague. See McClain v. Lufkin Indus., 519 F.3d 264, 284 (5th Cir.
2008) (vacating a vague, overbroad injunction against racial discrimination).
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violation under Subsection (a) and a respondent demonstrates that the
respondent would have taken the same action in the absence of the
impermissible motivating factor[.]”          Tex. Lab. Code § 21.125(b).          Peterson
argues that this is all the “prevailing” he needs to do in order to receive fees
under the provision.
       Peterson, however, fails to read this section in the context of the
statutory chapter where it reposes.            Chapter 21 is entitled “Employment
Discrimination.”        Subchapter “F” of Chapter 21 addresses “Judicial
Enforcement” and contains a section on attorneys’ fees that requires
“prevailing party” status. Tex. Lab. Code § 21.259(a)(“In a proceeding under
this chapter [referencing Chapter 21], a court may allow the prevailing party
. . . a reasonable attorney’s fee as part of the costs.”)(emphasis added). In turn,
the Texas Supreme Court has interpreted this provision to require that a party
recover some actual relief, whether damages or other relief, and not merely
“prevail” on one jury question.              Sw. Bell Mobile Sys., Inc. v. Franco,
971 S.W.2d 52, 56 (Tex. 1998) (per curiam). 8
       Subchapter C of Chapter 21, where § 21.125 is found, is called
“Application; Exception” and provides, as expected, various limitations and
applications on relief under Chapter 21. Thus, rather than being a section
wholly disconnected from other sections, it must be read in pari materia with
Subchapter F.        See Tex. Gov’t. Code § 311.026 (Provisions [should] be
construed, if possible, so effect is given to each). That approach, in substance,
was taken by a Texas intermediate appellate court in Burgmann Seals Am.,
Inc. v. Cadenhead, 135 S.W.3d 854, 858 (Tex. App. 2004). The plaintiff in that

       8  The Texas Supreme Court later clarified Franco in Intercontinental Grp. P’ship v.
KB Home Lone Star L.P., 295 S.W.3d 650, 656 (Tex. 2009) (“we disagree with Franco that a
plaintiff who recovers no money and receives no equitable relief can be a prevailing party”).
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case likewise received jury findings that his age was a motivating factor in the
denial of promotion, but the employer would have refused promotion anyway.
He “was not awarded any actual damages as a result of his age-discrimination
claims and was not awarded any non-monetary relief, such as reinstatement
or an injunction.” The state appeals court held that allowing such a plaintiff
to recover fees under § 21.125 was “contrary to the Supreme Court's holding in
Farrar.” Id. The Cadenhead court concluded that “the effect of Franco . . . is
to deny [plaintiff] attorney’s fees . . . whether [he] is seeking attorney’s fees
under section 21.259 or section 21.125.” Cadenhead, 135 S.W.3d at 861. See
also Becerra v. Mikeska Bar-B-Q, Inc., 2012 Tex. App. LEXIS 2249 (Tex. App.
Mar. 22, 2012). Reading §§ 21.125 and 21.259 together in light of Texas
authorities, we conclude that a party must receive a favorable judgment in
order to obtain attorneys’ fees under Chapter 21 of the Texas Labor Code. See
also Tex. Health & Human Servs. Comm’n v. Wolfe, No. 03-08-00413CV,
2010 WL 2789777, at *9 (Tex. App. July 14, 2010)(unpublished)(citing
Cadenhead and noting that the plaintiff had obtained “meaningful relief”).
      Peterson urges, however, that Title VII contains a “mixed-motive”
attorneys’ fee provision that permits the award for a plaintiff who proves
discrimination was a motivating factor in an employer’s adverse employment
decision. 42 U.S.C. § 2000e-5(g)(2)(B). This court construed the provision to
authorize a plaintiff a fee award when he received no other relief. Garcia v.
City of Houston, 201 F.3d 672, 678-79 (5th Cir. 2000). Texas law holds that the
federal and state provisions should be interpreted harmoniously, Quantum
Chem. Corp. v. Toennies, 47 S.W.3d 473, 474 (Tex. 2001), and adopts analogous
federal case law. Specialty Retailers, Inc., v. DeMoranville, 933 S.W.2d 490,

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492 (Tex. 1996). Consequently, Peterson argues, this court must follow Garcia
as if Texas courts would do so. We disagree.
       This logic fails to account for the Texas Supreme Court’s more recent
decisions requiring a party who seeks fees to have obtained some meaningful
relief, and it fails to acknowledge that Cadenhead is an on-point Texas
authority that this court ordinarily is bound to follow under Erie. Cadenhead
requires the plaintiff to obtain meaningful relief, whether or not he is
designated a prevailing party, and regardless “whether [a plaintiff] is seeking
attorney’s fees under § 21.259 or § 21.125.” Cadenhead, 135 S.W.3d at 861.
State appellate court decisions are controlling on federal courts under Erie
unless we are “convinced by other persuasive data that the highest court of the
state would decide otherwise[.]” Arete Partners, L.P. v. Gunnerman, 643 F.3d
410, 418 (5th Cir. 2011)(internal quotation omitted). 9
                                      CONCLUSION
       Peterson did not seek injunctive relief until his case was effectively
concluded. This delay deprived Bell of the ability to present relevant evidence
and defend itself from what turned out to be a sweeping and indeterminate
injunction. Further, because we vacate the only relief on which Peterson
“prevailed,” he was not entitled to recover attorneys’ fees. The judgment is
REVERSED.

       9  Moreover, it is far from clear that even if we followed this court’s Title VII precedent
rather than that of the Texas court Peterson would have a better outcome. Garcia, upon
which Peterson strongly relies, actually offers little solace to Peterson. Garcia adopted the
Fourth Circuit’s test for fees in Sheppard v. Riverview Nursing Ctr., 88 F.3d 1332 (4th Cir.
1996), which in turn applied the principles articulated in Farrar v. Hobby, 506 U.S. 103, 109,
113 S. Ct. 566, 571 (1992). Pursuant to these authorities, the degree of the plaintiff’s success
would have strong bearing on Peterson’s recovery of attorney fees. Since he didn’t succeed
here in any way, his claim to fees should be minimal. Sheppard’s rule was designed to
prevent “a situation in which a client receives a pyrrhic victory and the lawyers receive a pot
of gold.” Sheppard, 88 F.3d at 1339.
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