Dall. Area Rapid Transit & Nancy K. Johnson v. Amalgamated Transit Union Local No. 1338
| Decision Date | 27 November 2018 |
| Docket Number | No. 05-17-01051-CV,05-17-01051-CV |
| Parties | DALLAS AREA RAPID TRANSIT AND NANCY K. JOHNSON, Appellants v. AMALGAMATED TRANSIT UNION LOCAL NO. 1338, Appellee |
| Court | Texas Court of Appeals |
On Appeal from the 95th Judicial District Court Dallas County, Texas
Before Justices Lang, Fillmore, and Schenck
Opinion by Justice Fillmore
Included in the Dallas Area Rapid Transit's (DART's)1 hourly employment manual are grievance and appeal procedures that, under certain circumstances, provide a mechanism for hourly employees of DART to pursue complaints regarding DART's operations and disciplinary actions. The first three steps of the grievance and appeal process currently consist of a hearing conducted by employees of DART at different levels of management. Following the Step 3 hearing, some, but not all, complaints may be appealed to the "Trial Board," which is a neutral hearing officer.
The Amalgamated Transit Union Local No. 1338 (ATU 1338) represents hourly employees of DART. In 2000, ATU 1338 sued DART and Nancy K. Johnson, the Secretary of the Trial Board, alleging they were improperly refusing to forward appeals to the Trial Board. To resolve the litigation, Kenneth Day, the President of ATU 1338, Gary Thomas, the President/Executive Director of DART, and Johnson, the Secretary of the Trial Board, signed a settlement agreement that required the implementation of new procedures pertaining to appeals to the Trial Board.
ATU 1338 subsequently filed this suit, alleging DART and Johnson breached the settlement agreement by failing to forward to the Trial Board an appeal of a grievance filed by ATU 1338 and Richard Katz and by failing to comply with the agreed-upon procedures. ATU 1338 also sought declaratory and injunctive relief. After the trial court instructed the jury that DART and Johnson had breached the settlement agreement, the jury awarded ATU 1338 $2,520,000 for damages to its reputation in the past and $20,000 for out-of-pocket costs it incurred due to the breach. It also found ATU 1338 had incurred reasonable and necessary attorneys' fees of $280,325. The trial court granted ATU 1338's request for injunctive and declaratory relief and rendered judgment in favor of ATU 1338 for the damages and attorneys' fees found by the jury.
In three issues, DART and Johnson argue the trial court erred by awarding ATU 1338 damages for past injury to its reputation, excluding certain evidence, and awarding attorneys' fees under the Texas Uniform Declaratory Judgment Act, TEX. CIV. PRAC. & REM. CODE ANN. §§ 37.001-.011 (UDJA). We conclude (1) the evidence is legally insufficient to support the damages awarded to ATU 1338 for past injury to its reputation, (2) a portion of the attorneys' fees awarded as out-of-pocket damages are not recoverable on the breach of contract claim, and (3) the trial court did not err by awarding ATU 1338 attorneys' fees on its claims under the UDJA. We, therefore, reverse the trial court's award of damages for past injury to ATU 1338's reputation, render judgment ATU 1338 take nothing on its claim for injury to its reputation in the past, andaffirm the remainder of the trial court's judgment, conditioned on ATU 1338's agreement to remit all out-of-pocket damages other than $16,156.01.
Since at least November 22, 1988, DART has had in place procedures pursuant to which employees can file grievances and appeal disciplinary actions.2 The procedures applicable at the time of the events at issue here involved three "step" hearings before DART employees at different levels of management. With certain exceptions, an employee who completes the "final grievance and appeal procedure step applicable" may appeal to the Trial Board by submitting a written request to the Secretary of the Trial Board (the Secretary). As relevant in this case, the Trial Board may not consider appeals of "general grievances," which are grievances regarding the establishment of, or failure to establish, specified wages, hours or conditions of work, or of the discharge of an employee during the employee's probationary period.
Johnson became the Secretary in June of 1999. In 2000, ATU 1338 sued DART and Johnson, alleging they were failing to forward to the Trial Board grievances that were within its jurisdiction. The litigation was settled by Johnson, as Secretary, DART, and ATU 1338 agreeing to new procedures for processing appeals to the Trial Board. The parties agreed that, with the exception of "corrective actions" that were not used in the issuance of a suspension without pay, demotion, or discharge, the Secretary was required to accept and process all appeals to the Trial Board other than those that the Secretary determined, in good faith, were either general grievances or, for any other reason, were "improper and/or outside the jurisdiction of the Trial Board." The Secretary was required to return a "questioned grievance" to the employee, who could then choose to submit the issue of whether the Trial Board had jurisdiction over the questioned grievance to anarbitrator. The parties agreed the decision of the arbitrator regarding whether the Trial Board had jurisdiction over the grievance would be "final and binding."
Katz was hired by DART as a Train Operator Student on August 2, 2010. After completing training and obtaining the required certifications, Katz was hired as a Full Time Rail Operator on September 17, 2010. As a new hire, Katz was on probation for a period of six months. On December 10, 2010, Katz "tripped on a red signal" while operating a train. After an investigation, Arturo Torres, the Manager of Central Rail Operations, issued Katz a written warning for a safety violation and placed Katz under a "corrective action period" until February 16, 2011. During the corrective action period, Katz was provided additional training.
On December 27, 2011, Katz, who was a member of ATU 1338, filed a grievance seeking to have the written warning removed from his file. Torres conducted the Step 1 hearing on Katz's grievance. During the hearing, William Fellows, a member of ATU 1338 who accompanied Katz, argued DART was partially at fault for the red signal violation due to the design of the system. Torres determined DART had followed established rules and procedures in issuing the written warning and denied Katz's grievance and request for resolution. Although Katz sought a Step 2 hearing before an assistant vice president and a Step 3 hearing before a vice president, those requests were denied on the ground he did not have grievance rights because he was still in his probationary period.
On February 17, 2011, Torres informed Katz that he had completed the corrective action period for the red signal violation. On February 23, 2011, Torres notified Katz that he was being discharged for unsatisfactory performance during his probationary period. The only specific conduct cited by Torres was that Katz incurred the red signal violation, failed to "take accountability" for his actions, and blamed DART for the violation. Torres stated he found that Katz's "overall performance" during the probationary period was "unsatisfactory."
Katz and ATU 1338 filed a grievance on March 3, 2011 (the March 3rd grievance), complaining DART had terminated Katz in retaliation for his use of the grievance or appeal procedures. Although the March 3rd grievance specifically stated it was not an appeal of a disciplinary action, it sought Katz's reinstatement. In each of the three steps of the grievance process, the March 3rd grievance was denied on the ground that Katz was on probation at the time of his discharge and could not appeal the termination. Katz and ATU 1338 filed an appeal to the Trial Board. After considering DART's procedures on grievances and probationary employees and the Step 3 denial of the grievance on the ground that probationary employees were not entitled to the "Appeal process," Johnson determined the grievance was questionable and returned it to ATU 1338 on March 28, 2011.
On April 27, 2011, Katz and ATU 1338 requested an arbitrator determine whether the Trial Board had jurisdiction over the March 3rd grievance. Dr. William L. McKee was appointed as the arbitrator to consider the issue. McKee found that probationary hourly employees were eligible to use the grievance and appeal process, but had no right to appeal following discharge and could not appeal a disciplinary action, which includes reprimand, suspension, demotion, and discharge. McKee also found the March 3rd grievance was not a general grievance and the Trial Board had jurisdiction to consider whether DART refused to comply with the timelines set out in the grievance and appeal procedures or retaliated against Katz for attempting to utilize the grievance and appeal procedure.3
After McKee's decision, Johnson processed the March 3rd grievance to the Trial Board, and Dr. Otis H. King was selected as the hearing officer. DART filed a motion to dismiss the appeal, arguing the March 3rd grievance "ultimately appeals a disciplinary action" and should bedismissed because probationary employees were precluded from appealing disciplinary matters. King granted the motion and dismissed the appeal.
ATU 1338 filed this suit, alleging DART and Johnson breached the parties' settlement agreement by returning the March 3rd grievance as questionable without a good faith basis for doing so and by not accepting as final McKee's determination that the Trial Board had jurisdiction to hear portions of the grievance. At the close of evidence, the trial court granted ATU 1338's motion for directed verdict and instructed the jury that DART and Johnson had breached the settlement agreement by failing to submit the March 3rd grievance to the Trial Board for a determination on the merits and by refusing to accept as final and binding McKee's decision that the Trial Board had jurisdiction to hear some of the complaints...
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