Chavez v. New Mexico

• Decision Date: 02 February 2005
• Docket Number: No. 02-2224.,02-2224.
• Citation: 397 F.3d 826
• Parties: Maria Consuelo CHAVEZ, Diane Contreras, Lori Lucero, Olga Rodriguez, and Teresa Smith, Plaintiffs-Appellants, and Melanie Schipper, Plaintiff, v. State of NEW MEXICO d/b/a Children, Youth and Families Department; Deborah L. Hartz, Secretary, New Mexico Children Youth and Families Department; Art Murphy, individually and as Director, Juvenile Justice Division, New Mexico Children, Youth and Families Department; Leroy Garcia, individually and as Deputy Director, Juvenile Justice Division, New Mexico Children, Youth and Families Department, New Mexico Boys' School; Martin B. Bochenek, individually and as Correction Administrator II, New Mexico Children, Youth and Families Department, Juvenile Justice Division, New Mexico Boys' School; Danny Cruz, individually and as Correction Administrator II, New Mexico Children, Youth and Families Department, Juvenile Justice Division, New Mexico Boys' School; Glen Hill, individually and as Staff Development Specialist, New Mexico Children, Youth and Families Department; Karl Koch, individually and as a Juvenile Corrections Officer of the New Mexico Children, Youth and Families Department, Juvenile Justice Division, New Mexico Boys' School, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

397 F.3d 826

Maria Consuelo CHAVEZ, Diane Contreras, Lori Lucero, Olga Rodriguez, and Teresa Smith, Plaintiffs-Appellants, and Melanie Schipper, Plaintiff, v. State of NEW MEXICO d/b/a Children, Youth and Families Department; Deborah L. Hartz, Secretary, New Mexico Children Youth and Families Department; Art Murphy, individually and as Director, Juvenile Justice Division, New Mexico Children, Youth and Families Department; Leroy Garcia, individually and as Deputy Director, Juvenile Justice Division, New Mexico Children, Youth and Families Department, New Mexico Boys' School; Martin B. Bochenek, individually and as Correction Administrator II, New Mexico Children, Youth and Families Department, Juvenile Justice Division, New Mexico Boys' School; Danny Cruz, individually and as Correction Administrator II, New Mexico Children, Youth and Families Department, Juvenile Justice Division, New Mexico Boys' School; Glen Hill, individually and as Staff Development Specialist, New Mexico Children, Youth and Families Department; Karl Koch, individually and as a Juvenile Corrections Officer of the New Mexico Children, Youth and Families Department, Juvenile Justice Division, New Mexico Boys' School, Defendants-Appellees.

No. 02-2224.

United States Court of Appeals, Tenth Circuit.

February 2, 2005.

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Dennis W. Montoya, Albuquerque, NM, for Plaintiffs-Appellants.

Mark E. Comer, (Judith C. Herrera, on the brief) Herrera, Long, Pound & Komer, P.A., Santa Fe, NM, for Defendants-Appellees.

Before LUCERO, McCONNELL, and ANDERSON, Circuit Judges.

McCONNELL, Circuit Judge.

This case stems from the harassing and allegedly discriminatory conduct that male employees of the New Mexico Boys' School ("School") inflicted on their female colleagues and subordinates. The School is operated by New Mexico's Children, Youth and Families Department ("CYFD"). Plaintiffs Maria Consuelo Chavez, Diane Contreras, Lori Lucero, Olga Rodriguez, and Teresa Smith (collectively "Plaintiffs") appeal three district court rulings. First, they appeal the district court's refusal to enforce an alleged settlement agreement in which Defendants promised to pay Plaintiffs $60,000 in exchange for Plaintiffs' release of all claims. Second, Plaintiffs claim the district court erred by granting summary judgment in Defendants' favor on Plaintiffs' race discrimination, sexual harassment, retaliation, and 42 U.S.C. § 1983 claims. Third, Plaintiffs claim the district court erred when it refused to disqualify Defendants' attorney for potential conflicts of interest resulting from the fact that one defense attorney represented both the CYFD and the multiple individual Defendants in their individual and official capacities.

Exercising jurisdiction under 28 U.S.C. § 1291, we AFFIRM the district court's refusal to enforce the settlement agreement. We also AFFIRM its grant of summary judgment on Plaintiffs' racial discrimination, retaliation, and § 1983 claims. We REVERSE in part, however, the district court's grant of summary judgment on Plaintiffs' sexual harassment claims. Finally, we AFFIRM the district court's refusal to disqualify Defendants' attorney.

I.

Plaintiffs Chavez, Contreras, Lucero, and Smith were all state employees at the New Mexico Boys' School. Ms. Chavez was a human resources administrator, Ms. Contreras was a social worker supervisor, Ms. Lucero was a social worker, and Ms. Smith was a psychologist. Plaintiff Rodriguez worked for a private corporation, Best's Inc., which operated the School's food services division.

The Defendants central to the case were also state employees at the School. Martin Bochenek and Danny Cruz were both correctional administrators, Glen Hill was a staff development specialist, and Karl Koch was a juvenile corrections officer. Deborah Hartz was Secretary of the CYFD during the events in question, and Art Murphy was Juvenile Justice Division neither had any personal involvement. The CYFD is also a defendant.

The New Mexico Boys' School hired defendant Martin Bochenek in 1999 to implement a new program known as EQUIP. The harassing conduct on which Plaintiffs base their suit began shortly after Mr. Bochenek was hired, and continued until at least April 2000 and possibly as late as May 2001. As we will discuss in greater detail below, Plaintiffs' evidence demonstrates that Mr. Bochenek engaged in at least some gender-based harassment, as well as numerous acts that were hostile and threatening but not necessarily based on gender. Mr. Bochenek also uttered two opprobrious racial epithets that Plaintiffs allege rose to the level of actionable racial discrimination.

These episodes led Plaintiffs to file multiple claims with the EEOC. As a result of these filings, New Mexico's Children, Youth and Families Department ("CYFD") conducted internal investigations at the School. Plaintiffs eventually received an EEOC right to sue notice and filed a complaint on March 22, 2000, and an amended complaint on June 6, 2000. Defendants moved for summary judgment in July 2001. The parties reached a settlement agreement on October 8, 2001. Defendants agreed to pay $60,000, and Plaintiffs agreed to release all claims. But on October 5, 2001 — while the parties were negotiating the final details of the October 8 settlement — Plaintiff Contreras filed a second discrimination lawsuit against the CYFD. Defendants' attorney did not learn of this second suit until shortly after the parties reached the October 8 agreement. On October 19, 2001, Defendants' attorney refused to pay the $60,000 unless Ms. Contreras dropped her second suit. Ms. Contreras insisted on pursuing the second claim, and the settlement fell apart.

Following the meltdown, Plaintiffs moved to enforce the settlement agreement. The district court denied their motion. Their case thus revived, Plaintiffs responded to the summary judgment motion Defendants had filed in July 2001. Soon after, Plaintiffs filed a motion to disqualify Defendants' attorney, claiming the State's decision to abandon settlement conflicted with the individual Defendants' best interests. The district court, unpersuaded, denied Plaintiffs' disqualification motion at the same time it granted summary judgment for Defendants. This appeal followed.

II.

A. The Settlement Agreement

Plaintiffs claim the district court erred when it refused to enforce the October 8, 2001 settlement agreement. We review a district court's decision on the enforcement of a settlement agreement for abuse of discretion, Feerer v. Amoco Prod. Co., 242 F.3d 1259, 1262 (10th Cir.2001), but its interpretation of a settlement agreement de novo. Scrivner v. Sonat Exploration Co., 242 F.3d 1288, 1291 (10th Cir.2001).

Generally, "the enforcement and interpretation of settlement agreements in Title VII cases are governed by federal common law because such settlements are `inextricably linked' to the underlying law of Title VII." Heuser v. Kephart, 215 F.3d 1186, 1190 (10th Cir.2000), quoting Snider v. Circle K Corp., 923 F.2d 1404, 1407 (10th Cir.1991). In Heuser, however, we construed a Title VII settlement agreement under New Mexico law because the parties agreed state law governed and, more importantly, the "applicable principles of contract law are not different in federal and New Mexico law." Id. at 1191. In this case, all parties agree that New Mexico contract law applies, See Appellants' Br. at 14; Appellees' Br. at 13, and we proceed accordingly.

Contracts in New Mexico, like other states, "must be factually supported by an offer, an acceptance, consideration, and mutual assent." Heye v. Am. Golf Corp., Inc., 134 N.M. 558, 80 P.3d 495, 498 (2003). Even if a valid contract is formed, however, "rescission is allowed where there has been a misrepresentation of a material fact, the misrepresentation was made to be relied on, and has in fact been relied on." Hendren v. Allstate Ins. Co., 100 N.M. 506, 672 P.2d 1137, 1140 (1983). If a material misrepresentation is made or material information withheld, it does not matter whether the culpable party acted fraudulently, negligently, or innocently; rescission may follow. Id.

Although the district court offered no reason for its denial of the Plaintiffs' motion, we may affirm on any grounds supported by the record, V-1 Oil Co. v. Utah State Dept. of Public Safety, 131 F.3d 1415, 1422 (10th Cir.1997), and there are plenty. To pick just one, the record indicates that Plaintiffs' counsel withheld material information from Defendants' attorney while negotiating the October 8, 2001 settlement: namely, that Ms. Contreras had filed a second suit on October 5, 2001. The existence of a second, undisclosed suit, similar to the one the parties were attempting to settle, was obviously a material fact. Thus, whether Plaintiffs' counsel acted "fraudulently, negligently, or innocently" by withholding that fact, Defendants were entitled to rescind the agreement, Hendren, 672 P.2d at 1140, and the district court properly refused to enforce it.

Plaintiffs now ask the Court to view the $60,000 settlement agreement as five separate agreements, presumably $12,000 per plaintiff. According to this view, "settlement was achieved, at [a] minimum with respect to four out of five Plaintiffs, as to all Defendants," Reply Br. at 2, and the four agreements should be enforced accordingly. At the hearing on Plaintiffs' motion to enforce the settlement, however, Plaintiffs took precisely the opposite position. When asked by the court whether each plaintiff had an agreement to receive $12,000 out of the $60,000 settlement, Plaintiffs' counsel demurred: "I received joint authority from all five Plaintiffs.... It is not an agreement that each one gets a settlement." Appellants' App. at 262. Moreover, Plaintiffs cite no evidence suggesting that the parties contemplated anything short of a global settlement that would discharge the liabilities of all Defendants and satisfy...