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Employment Law – Requisite Proof For Gender Discrimination Claims

By Fred A. Simpson

In Ysleta Independent School District v. Monarrez et al., 48 Tex. Sup. Ct. J. 1014 (Aug. 26, 2005)(per curiam), the Supreme Court of Texas considered employee claims of wrongful termination. Under legal sufficiency of evidence standards of review, both lower courts were reversed.
Plaintiffs were two school bus mechanics required to punch time cards at work in order to be paid by the school district for their hours worked. After a work shift one day, the two plaintiff/mechanics stopped at a bar for an evening of drinking. Afterwards, one became concerned about his ability to get to work on time the next day and asked the second mechanic to punch his time card to prove timely attendance. The second mechanic made it to work on time the next morning and recorded the two as both being “in.” Later that day, the first mechanic/plaintiff called the second one to say that he would not be able to get to work at all that day. With this news, the second mechanic/plaintiff clocked out both himself and the first mechanic at the end of the work shift. However, several days later, both plaintiff/mechanics went to their supervisor and confessed their violations of the school district’s time clock procedures.
Both mechanics were fired after the incident was reported up the chain of command. The mechanics then sued the school district, alleging gender discrimination and violations of the Texas Commission on Human Rights Act, based on a complaint that female employees in their department did the same thing and were never terminated for their misconduct. The trial court found in favor of the plaintiffs/mechanics and awarded approximately $500,000 in damages. The El Paso Court of Appeals affirmed.
At the Supreme Court of Texas, standards for proving gender discrimination claims were reviewed. Plaintiffs must prove that: (1) they were members of a class protected by the Act (males); (2) they were qualified for their positions; (3) they were terminated; and (4) they were treated less favorably than similarly situated members of the opposing class (females).
The plaintiff/mechanics failed to meet requirements of the fourth prong. No evidence showed that time card recording violations by the district’s female employees included any conspiracy to conceal another employee’s total absence from work. In each reported situation where one female employee punched in for another, the second employee actually did appear for work, even if sometimes tardy. The nature and degree of the female violations, for which written and verbal reprimands were given to them by the school district, were incomparable to the higher degree of culpability of the male mechanics. The respective misconduct was found not to be of “comparable seriousness.”

Fred A. Simpson is a litigation partner at Jackson Walker L.L.P. He is an associate editor for The Houston Lawyer.

College Student Athletes Lack Constitutionally Protected Interests

By Fred A. Simpson

In N.C.A.A. v. Yeo, 48 Tex. Sup. Ct. J. 1016 (Aug. 26, 2005), the Supreme Court of Texas construed the “due course of law” guarantees of the Texas Constitution in the context of a student athlete’s right to participate in intercollegiate competition.
Lower courts distinguished this case from earlier Texas holdings that students have no constitutionally protected interest in extracurricular activities. However, the high court disagreed by finding no particular differences between this and the earlier cases, and reversed and rendered the athlete a take nothing judgment.
Ms. Joscelin Yeo claimed a unique status as “the most decorated athlete in the history of the Republic of Singapore.” Ms. Yeo first attended school in the Untied States at the University of California at Berkeley where she won numerous awards for her swimming ability and was a member of the 1999 world-record-setting relay team. When her coach left Berkeley for the University of Texas at Austin, she followed him.
However, the N.C.A.A. requires trans-ferring students to sit out one year before resuming intercollegiate competition. Berkeley could have been waived this provision but refused. After a complex series of injunctions, appellate procedures, and mandami, Ms. Yeo finally competed in 2002. A trial court also awarded her over $160,000 in attorney fees.
UT-Austin appealed from the judgment, and the NCAA appealed from an order striking its intervention at trial. The Supreme Court of Texas found that Ms. Yeo asserted no constitutionally protected interests. The Court also admonished lower courts to avoid becoming “superior referees” in the resolution of student athletic disputes.

Fred A. Simpson is a litigation partner at Jackson Walker L.L.P. He is an associate editor for The Houston Lawyer.

Substituted Service Under Rule 106 Requires Strict Compliance

By Michael J. Hickerson
 
The First Court of Appeals recent-ly reviewed, de novo, the rules for substituted service, reversing and remanding a no-answer default judgment because the trial court lacked personal jurisdiction under Rule 106 of the Texas Rules of Civil Procedure. Furst v. Smith, No. 01-03-00137-CV, 2005 Tex. App. LEXIS 7942, 2005 WL 2385545 (Tex. App. – Houston [1st Dist.] Sept. 29, 2005).
Rule 106(b) governs substituted service and Rule 107 states the standards by which the trial court evaluates a return of service. Under the rules, substituted service is obtainable on motion, supported by an affidavit showing that personal service has been “unsuccessful,” and that the requested substitute service will be “reasonably effective” as notice to the named defendant. See Tex. R. Civ. P. 106; 107.
Defendants in Furst challenged the grant of substitute service because the record did not show that the method of service would be “reasonably effective” as notice of the lawsuit. Defendants moved from Texas to California: address unknown. The trial court authorized service through defendant Diane Furst’s father at the father’s office in Pittsburgh, Pennsylvania. Plaintiffs’ motion for substituted service averred only that the father was “familiar with the case” and had reimbursed some of the money defendants owed plaintiffs. The appellate court held that despite the family relationship, the father’s mere involvement by sending funds did not demonstrate how serving him at his office in Pennsylvania would be “reasonably effective” to accomplish notice to the defendants in California. Substituted service authorized by the trial court was therefore ineffective to establish personal jurisdiction over defendants.
Defendants further contended that there was error because the record failed to show that substituted service included delivery of the live petition as required by Rule 106. The return of service from the father for each of the Furst defendants did not state that plaintiffs’ live petition was included. The appellate court held that service was therefore defective and the trial court had no jurisdiction over the defendants. Plaintiffs should be sure that returns of service filed with the court clearly show that the process server complied with Rule 106.

Michael J. Hickerson is an associate in the Business Litigation section of Haynes and Boone, LLP. He is a 2004 cum laude graduate from the Tulane University School of Law.

Contracts For Deed Under The Property Code

By Joel Iglesias

The Supreme Court of Texas recently construed Section 5.077 of the Texas Property Code, concluding that: (i) sellers under contracts for deed who send annual accounting statements to purchasers, (as required in subsection (a)) that are timely but omit some information required under subsection (b) are not liable for liquidated damages under subsection (c); and (ii) such liquidated damages are penal in nature and therefore purchasers need not show actual harm to recover. Flores v. Millennium Interests, Ltd., No. 04-1003, 2005 Tex. LEXIS 733 (Tex. Sept. 30, 2005). In executory contracts (sometimes called contracts for deed), sellers retain title to properties until purchasers pay in full, unlike traditional sales with purchase money loans in which purchasers receive title at closing. Section 5.077(a) requires sellers under such executory contracts to provide purchasers with annual accounting statements, postmarked not later than January 31 if mailed. Subsection (b) lists seven items that statements “must” include.
At the time the underlying facts of Flores v. Millennium, subsection (c) stated that “[a] seller who fails to comply with Subsection (a) is liable to the purchaser for” liquidated damages of $250 each day after January 31 that the seller fails to provide the statement, plus reasonable attorney’s fees. Millennium (the seller), sent its purchasers annual accounting statements that failed to include two of the items required by subsection (b), specifically, “the amount paid under the contract” and the number of payments remaining. Three purchasers sued for these omissions, demanding statutory damages in excess of the purchase prices of their respective properties. Millennium won summary judgment in the trial court. On appeal, the Fifth Circuit certified three questions to the Supreme Court of Texas: (i) whether an accounting statement lacking items required by subsection (b) invokes the liquidated damages provision of subsection (c); (ii) whether a purchaser need show actual harm to receive these damages; and (iii) whether the damages are “exemplary damages” as defined in the Texas Civil Practice and Remedies Code.
The Supreme Court examined legislative history and concluded that statutory damages under subsection (c) are penal in nature, and that under the Court’s own precedent, penal statutes must be strictly construed. The Court agreed with Millennium’s interpretation of Section 5.077- that subsection (c) requires compliance with subsection (a), but not (b), concluding that, because Millennium’s statements were not a blatant attempt to circumvent the disclosure requirements, those statements were not invalidated by Millennium’s failure to comply with subsection (b). As for the second question, the Court followed a strict construction reasoning that a purchaser need not show actual harm or injury to recover damages. Because of the Court’s answers to the first two questions, the Court declined to address the third and final question.
As a side note, the Texas Legislature amended Section 5.077(c), effective September 1, 2005, to limit damages for noncompliance with subsection (a) to $100 plus attorney’s fees for sellers who only conduct one “transaction” a year. A new subsection (d) was added that caps damages, applicable to sellers who conduct two or more “transactions” a year, at the fair market value of the property, preserving the $250 a day penalty, plus attorney’s fees. See H.B. 1823, 79th Leg., Reg. Sess. (Tex. 2005). However, the Legislature failed to clarify the meaning of “transaction,” e.g., whether a pending sale was a considered a transaction. These changes probably would not have changed the outcome of Millennium.

Joel R. Iglesias is an associate in the real estate group of Haynes and Boone, LLP. He is a 2004 magna cum laude graduate from the University of Houston Law Center. Before completing law school, he practiced as a mechanical engineer for nine years.

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