Court Opinion

ID: 9795567
Source: CourtListenerOpinion
Date Created: 2023-08-31 03:31:36.106033+00
Date Added: 2024-06-11T08:30:18.752024
License: Public Domain

SERNA, Chief Justice (concurring in result). {41} I concur in the result. However, I respectfully disagree with the majority’s analysis of several issues in this case. I write separately to indicate my position on these issues and to provide some guidance to trial courts and practitioners in formulating jury instructions in Human Rights Act cases. {42} With respect to individual liability under the Act, I believe that the majority, in dicta, uses overly broad language that could be subject to misinterpretation. The majority states, “Defendants also argue that the owner of a corporation cannot be sued in a personal capacity for a violation of the NMHRA.” The majority then rejects this argument. By using the phrase, “owner of a corporation,” in construing Shaw’s argument, the majority opens the door to shareholder liability for discrimination under the Act. Because Shaw’s argument against individual liability focused on his role as an employee of the Corporation rather than as an owner of the Corporation, I presume that the majority’s characterization of this issue is unintentional. Otherwise, it could be misinterpreted as expanding liability under the Act beyond what was contemplated by the Legislature. Section 28-l-7(A), the provision under which Sonntag brought her claim, prohibits discrimination by “an employer.” The Act defines an “employer” as “any person employing four or more persons and any person acting for an employer.” Section 28-l-2(B). Thus, Shaw is liable only to the extent that he acted for the Corporation in the discriminatory acts. He is not individually liable solely because of his ownership in the Corporation. I do not believe that the Legislature intended for courts to disregard an employer’s corporate structure in determining liability under Section 28-1-7(A). See generally Garcia v. Coffman, 1997-NMCA-092, ¶¶ 14-25, 124 N.M. 12, 946 P.2d 216 (discussing the requirements for piercing the corporate veil in order to hold a shareholder personally liable). In any event, because Sonntag did not exhaust her administrative remedies against Jerry Shaw individually, the majority’s discussion of this matter is not necessary to the resolution of this case. As dicta, I believe it is not binding in future cases.1  {43} I also believe that the majority’s discussion of subsidiaries expands liability under the Act beyond the intent of the Legislature. I am in complete agreement with the majority’s rejection of the single establishment requirement from the Equal Pay Act. However, I believe that the majority lacks a sound basis for rejecting the federal tests that determine whether a parent corporation and a subsidiary should be considered a single entity. The majority claims that these tests are inapposite because they only determine whether a parent corporation is liable for the acts of its subsidiaries and because Plaintiff does not seek to hold the parent liable in this ease for acts of the subsidiary. I respectfully believe the majority is mistaken on two counts. First, Plaintiff is attempting to hold the parent corporation liable for its subsidiary’s act of paying the subsidiary’s managers a higher salary than the parent’s manager. Second, the federal tests go beyond the limited use asserted by the majority. These tests are designed more generally to determine whether the different acts at issue in the ease are those of a “single employer” for purposes of Title VII. See Romano v. U-Haul Int’l, 233 F.3d 655, 662-67 (1st Cir.2000). Because Section 28-1-7(A) requires the act of “an employer,” these tests seem particularly appropriate for the interpretation of the Human Rights Act. This Court has previously looked to federal courts for guidance in the interpretation of the Act, and the majority provides no reason to reject the federal approach in this circumstance. {44} With respect to the parent-subsidiary relationship, the majority asserts that Defendants and Amicus failed to cite any authority that would preclude a comparison of earnings between an employee of a parent corporation and employees of its subsidiaries. On the contrary, however, Defendants relied on this Court’s opinion in Cmttenden. Under that case, a subsidiary and a parent are viewed as independent corporations, and thus, the Scottsdale and San Diego managers were employees of Jerry Shaw and Associates, Inc., an Arizona corporation, and not of Shaw and Associates, Inc., the New Mexico corporation. Because, for a disparate treat- ’ ment claim under the Act, an employee must demonstrate that the employer took adverse employment action against the plaintiff in comparison with another employee who is similarly situated, the plaintiff must show, as an initial matter, that the comparison individuals are employees of the employer. In this case, the Act required Plaintiff to show that the Scottsdale and San Diego managers were employees of Shaw and Associates, Inc. Thus, Plaintiff had to demonstrate why the employees of the Arizona corporation should be considered the employees of the New Mexico corporation for purposes of Section 28-l-7(A), despite the parent-subsidiary structure. The federal tests summarily dismissed by the majority would seem particularly helpful in resolving this question. {45} Even though I believe that the trial court should have instructed the jury concerning the parent-subsidiary structure of the corporation in accordance with either the instrumentality or integrated enterprise tests discussed in Frank, 3 F.3d at 1362 & n. 2, I believe that the failure to give this instruction was harmless error in the present case. Under the federal test, “there is near unanimity that control of labor operations i.e., control of employment decisions, is the most important ... factor[ ].” Romano, 233 F.3d at 666. “[T]he ultimate question [is] whether the parent corporation was a final decision-maker in connection with the employment at issue.” Id. Shaw did not contest that he was responsible for fixing the salary of all three managers. The Scottsdale and San Diego managers received stock in the parent corporation in exchange for their management of the subsidiary, and they were officers of the parent corporation. In addition, because Shaw and Associates, Inc., owns all of the stock in Jerry Shaw and Associates, Inc., Shaw indicated that, through his majority ownership in Shaw and Associates, Inc., he “control[s]” both companies. Thus, there was no true jury question as to whether the fixing of the salaries for these three individuals could be considered the act of “an employer” for purposes of Section 28-l-7(A). {46} The final issue on which I hold a different view from the majority is the trial court’s instructions to the jury concerning the requisite facts Plaintiff had to prove in order to support a claim of discrimination. Initially, I respectfully disagree with the majority’s interpretation of Rule 1-051(1) and its conclusion that the Corporation failed to preserve this issue. The majority’s interpretation conflicts with case law discussing this rule and with precedent from this Court discussing a nearly identical rule of criminal procedure. The purpose of the preservation requirements in Rule 1-051(1) is similar to the purpose of the requirement of preservation in Rule 12-216(A): to ensure that a ruling by the trial court is fairly invoked by the parties. In Andrus, the Court of Appeals stated that “[t]o preserve error in instructing the jury, the gas company was required to object or tender a correct instruction.” 110 N.M. at 597, 798 P.2d at 198 (emphasis added). The tendering of a correct instruction, even more than an objection, adequately advises the trial court of the party’s position and the alleged error in the given instructions, and it fairly invokes a ruling from the trial court. See Hinger, 120 N.M. at 441, 902 P.2d at 1044 (“Defendants failed to submit their own instruction on the point which would have advised the court more specifically of the ‘claimed vice.’ ”). In Santillanes v. State, 115 N.M. 215, 218, 849 P.2d 358, 361 (1993), this Court held that the defendant preserved the issue of an erroneous instruction under an almost identical rule of criminal procedure, Rule 5-608(D), by tendering his own instruction. The Court further concluded that, even though the tendered instruction was an incorrect statement of law, it was adequate to preserve the issue because the judge instructed on the subject and the tendered instruction “informed the trial judge of the claimed vice in the charge given to the jury.” Id. {47} In this case, Defendants tendered numerous instructions outlining Plaintiffs burden in proving discrimination under the Human Rights Act, specifically the burden to prove that the comparison employees were similarly situated and that Defendants’ proffered reason was false. For example, Defendants’ Instruction 1 would have informed the jury of Defendants’ claim “that [Plaintiffs] job was not substantially the same, nor did she have the same responsibilities or apply the same effort or have the same authority or job skills as the managers of the subsidiary corporation. Shaw states that Sonntag was not a manager in the same sense as the managers of the offices in the subsidiary corporation.” Defendants’ Instruction 9 provided: You must consider any legitimate, nondiseriminatory reason or explanation stated by Shaw and Associates for its decision. If you find that Shaw and Associates has stated a valid reason, then you must decide in favor of Shaw and Associates unless Sonntag proves by a preponderance of the evidence that the stated reason was not the true reason but is only a pretext or excuse for discriminating against Sonntag because of her gender. The trial court instructed the jury as follows: To establish a claim of discrimination on the part of defendant Shaw, Ms. Sonntag has the burden of proving the following contentions: 1. That Shaw paid Ms. Sonntag a lower salary than would have been paid if she had been male; or 2. That Shaw committed to issue to Ms. Sonntag less stock in Shaw and Associates than would have been issued or committed if she had been male; and 3. That Shaw’s actions were, more likely than not, motivated by the plaintiffs sex. Defendants objected to the court’s refusal of their instructions. Presumably, the trial court rejected Defendants’ proffered instructions based on its apparent belief that this given instruction and a single sentence articulating a general denial by Defendants adequately informed the jury about the nature of a discrimination claim under the Act. The trial court clearly considered and ruled on Defendants’ proffered instructions. Defendants therefore fairly invoked a ruling from the trial court as to whether to instruct the jury on the requirement that the other managers be similarly situated with Plaintiff and whether to instruct the jury that Plaintiff bore the burden of proving pretext. Defendants preserved this issue under both the plain language and the underlying purpose of Rule 1-051(1). {48} I believe that the trial court erred in refusing Defendants’ tendered instructions. As indicated by the majority, this Court has adopted the McDonnell Douglas test in our interpretation of Section 28-l-7(A). As a result, a plaintiff attempting to demonstrate discrimination through disparate treatment must prove that the employer treated the plaintiff differently from other employees who are not members of the relevant protected class and who are similarly situated in all relevant respects with the plaintiff. The plaintiff must also prove that the employer’s proffered reason for the adverse employment action is false. The McDonnell Douglas test is a bm'den-shifting mechanism that assists courts in deciding whether a case should be submitted to a jury. As a result, courts have uniformly held that it is improper to include the entire McDonnell Douglas test in instructions to the jury due to the potential for juror confusion over the highly technical burden-shifting aspect of the test. See, e.g., Dudley v. Wal-Mart Stores, Inc., 166 F.3d 1317, 1321-22 (11th Cir.1999). However, some courts have approved instructions that include the plaintiffs burden to prove the facts necessary to establish a prima facie case and pretext. See, e.g., Watson v. Southeastern Pa. Transp. Auth., 207 F.3d 207, 221 (3d Cir.2000) (“[I]t is clearly proper to instruct the jury that it may consider whether the factual predicates necessary to establish the prima facie case have been shown.”). {49} I believe this approach is consistent with the United States Supreme Court’s opinions in St. Mary’s Honor Center and Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000), both of which this Court has applied in our interpretation of Section 28-l-7(A). Under these cases, a jury can properly infer the ultimate fact of intentional discrimination from disparate treatment only if it finds that the plaintiff satisfied all elements of the prima facie case and that the employer’s proffered reason for the adverse employment action is false. See Reeves, 530 U.S. at 148, 120 S.Ct. 2097. Thus, it would seem logical that the jury be specifically instructed on these matters. Such an instruction would also make the jury aware of the Legislature’s directive that discrimination is not unlawful if it is due to “bona fide occupational qualifications.” Section 28-1-7(A). Therefore, I believe that trial judges presiding over discrimination claims under Section 28-l-7(A) based on disparate treatment should instruct jurors that they are “entitled to infer, but need not, that the plaintiffs ultimate burden of demonstrating intentional discrimination by a preponderance of the evidence can be met if they find that the facts needed to make up the prima facie case have been established and they disbelieve the employer’s explanation for its decision,” but the instruction should not include the burden-shifting aspect of McDonnell Douglas. Smith v. Borough of Wilkinsburg, 147 F.3d 272, 280 & n. 4 (3d Cir.1998). {50} Moreover, this Court has long held that a party is entitled to an instruction on a proper theory of the ease as long as the theory is supported by the evidence. In this case, Defendants had two theories of the case that were supported by the evidence: (1) that the San Diego and Scottsdale managers were not similarly situated with Plaintiff; and (2) that the difference in pay was based on bona fide job qualifications such as education and experience. The given instructions did not inform the jury of these theories. Thus, I believe that the trial court erred in refusing Defendants’ tendered instructions concerning Plaintiffs burden in proving her claim of discrimination. {51} Nonetheless, I do not believe that the instructional error in this ease requires reversal. The instructions given by the trial court placed the ultimate question contained in Section 28-l-7(A) before the jury. In addition, the jury had the benefit of arguments by the parties concerning the different aspects of Plaintiffs claim of discrimination. While I believe that the jury would have benefitted from greater detail in the instructions and that Defendants were entitled to have the jury instructed on their theory of the case, I would conclude that the failure to instruct the jury with greater specificity on Plaintiffs burden amounted to harmless error. Cf. White v. N.H. Dep’t of Corr., 221 F.3d 254, 264-65 (1st Cir.2000) (rejecting a claim that the failure to instruct the jury that the plaintiff had the burden to prove the falsity of the employer’s proffered reason constituted reversible error because the court’s instruction adequately presented the ultimate question under Title VII). Therefore, I concur in the result. I CONCUR: JOSEPH F. BACA, Justice.  . Additionally, I do not believe that Luboyeski and Mitcheil-Carr decided the issue of individual liability. See, e.g., Fernandez v. Farmers Ins. Co., 115 N.M. 622, 627, 857 P.2d 22, 27 (1993) (stating that cases are not authority for propositions not considered).