NME Hosp. Inc. v. Rennels

• Decision Date: 01 July 1999
• Citation: 994 S.W.2d 142
• Parties: (Tex. 1999) NME HOSPITALS, INC. D/B/A SIERRA MEDICAL CENTER, PETITIONER v. MARGARET A. RENNELS, M.D., RESPONDENT NO. 98-0487
• Court: Texas Supreme Court

Page 142

994 S.W.2d 142 (Tex. 1999)

NME HOSPITALS, INC. D/B/A SIERRA MEDICAL CENTER, PETITIONER v. MARGARET A. RENNELS, M.D., RESPONDENT

NO. 98-0487

IN THE SUPREME COURT OF TEXAS

Argued December 9, 1998

Decided June 3, 1999

Rehearing Overruled July 1, 1999.

ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE EIGHTH DISTRICT OF TEXAS

JUSTICE HANKINSON delivered the opinion of the Court.

Today we consider an issue of first impression for our Court: whether a plaintiff may sue someone other than her own employer for an unlawful employment practice under Texas Labor Code 21.055, the Texas Commission on Human Rights Act. Dr. Margaret Rennels sued NME Hospitals, Inc. d/b/a Sierra Medical Center (the Hospital), for unlawful employment discrimination under the Act and conspiracy to violate the Act. The Hospital moved for summary judgment on the ground that Rennels could not sue it under section 21.055 because it was not her direct employer. The trial court granted the Hospital's motion. A divided court of appeals reversed and remanded, concluding that the Act may apply even absent a direct employer-employee relationship between the plaintiff and the defendant. 965 S.W.2d 736, 739-40. We affirm the court of appeals' judgment.

The summary judgment evidence reveals the following facts. Rennels worked as a pathologist for Sierra Laboratory Associates as a paid associate. The Hospital was Sierra's primary client. The relationship between Sierra and the Hospital was governed by two agreements. Under the "Pathology Agreement," Sierra had the exclusive right to set up the Hospital's pathology department and perform all pathology work for the Hospital. According to the agreement, among other things, the Hospital designated Sierra's duties and dictated how the department was to be set up, retained approval authority over the director of the department, retained the right to reject any substitute pathologists, controlled how Sierra prepared all financial, statistical, and medical reports, and prohibited Sierra and its pathologists from contracting to perform services for any other hospital without prior consent. Sierra and the Hospital also entered into a "Directorship Agreement," under which the Hospital detailed the pathology department director's duties, including how many pathologists the director was required to keep on staff. That agreement also permitted the Hospital to terminate the pathology agreement if Sierra transferred any ownership interest in Sierra without the Hospital's prior written consent.

Sierra terminated Rennels on September 9, 1993, citing difficulties between Rennels and another associate, Dr. Jorge Bilbao. Rennels alleged that the termination constituted sex discrimination, as evidenced by the fact that Bilbao was in a position similar to Rennels', yet received bonuses and financial information like a shareholder, was named the successor to the exclusive agreement with the Hospital, and was allowed to participate in decisions about Rennels' future employment with Sierra. Rennels was reinstated on September 18, 1993, but on September 22, Sierra advised Rennels to take a paid leave of absence. On October 7, 1993, Rennels' attorney notified the Hospital that Rennels was opposing Sierra's alleged discriminatory practice.

Rennels returned to work later that year, and in early 1994, Sierra informed her by letter that she would be made a shareholder once the necessary paperwork was completed. On April 4, 1994, Rennels overheard a conversation between Marcus Fry, the Hospital's chief executive officer, and Dr. Judy Pester, a Sierra shareholder. She heard Fry tell Pester that he would not allow Rennels to become a Sierra shareholder, and heard Pester respond that she would do whatever was needed to prevent Rennels from becoming a shareholder. Nearly four weeks later, Sierra's attorneys informed Rennels that she would not be made a shareholder, and that Rennels could continue her employment only if she signed a release of any sex discrimination claims against both Sierra and the Hospital. Rennels refused to sign a release, and later filed a discrimination claim with the Equal Employment Opportunity Commission. Sierra terminated Rennels on May 25, 1994.

Rennels sued the Hospital for retaliatory discharge under section 21.055 and for conspiracy to violate the Act. The Hospital moved for summary judgment on both claims. As to the section 21.055 claim, the Hospital alleged that Rennels could not sue the Hospital for violation of section 21.055 because the Hospital was not her direct employer. As to the civil conspiracy claim, the Hospital alleged that Rennels did not have standing to bring that claim because she did not have standing to sue under section 21.055. The trial court rendered summary judgment in favor of the Hospital on both claims.

The court of appeals reversed the summary judgment and remanded the case to the trial court. 965 S.W.2d at 740. The court first held that a plaintiff need not allege a direct employment relationship with a defendant-employer in order to maintain standing to sue under section 21.055. Rather, the court concluded that a plaintiff can proceed on a showing that the defendant in some way interfered with the plaintiff's employment opportunities with her employer. As Rennels could maintain her section 21.055 claim, the court then held that she could also maintain her civil conspiracy claim. We granted the Hospital's petition for review. We examine first the section 21.055 claim, and then the civil conspiracy claim.

The Hospital complains that the court of appeals improperly concluded that Rennels has standing to sue under section 21.055 in the absence of a current or potential employment relationship with the Hospital. Rennels responds that she need not show that she worked directly for the Hospital, but rather that the Hospital had sufficient power, control, or influence so as to be able to adversely affect her employment relationship with Sierra. We agree that Rennels need not show that she worked directly for the Hospital to maintain standing under section 21.055.

Section 21.055 provides that:

An employer, labor union, or employment agency commits an unlawful employment practice if the employer, labor union, or employment agency retaliates or discriminates against a person who, under this chapter:

(1) opposes a discriminatory practice;

(2)makes or files a charge;

(3) files a complaint; or

(4) testifies, assists, or participates in any manner in an investigation, proceeding, or hearing.

TEX. LAB. CODE 21.055. The Texas Commission on Human Rights Act is modeled after federal civil rights law. One express purpose of the Act is to "provide for the execution of the policies of Title VII of the Civil Rights Act of 1964 and its subsequent amendments." TEX. LAB. CODE 21.001(1). The Act purports to correlate "state law with federal law in the area of discrimination in employment." Schroeder v. Texas Iron Works, Inc., 813 S.W.2d 483, 485 (Tex. 1991); City of Austin v. Gifford, 824 S.W.2d 735, 739 (Tex. App.-Austin 1992, no writ). Thus, in light of the Legislature's express purpose, we look to analogous federal precedent for guidance when interpreting the Texas Act. See Schroeder, 813 S.W.2d at 485; Holt v. Lone Star Gas Co., 921 S.W.2d 301, 304 (Tex. App.-Fort Worth 1996, no writ); Farrington v. Sysco Food Servs., Inc., 865 S.W.2d 247, 251 (Tex. App.-Houston [1st Dist.] 1993, writ denied).

Title VII prohibits an "employer" from discriminating against an "individual," and allows a "person claiming to be aggrieved" to file suit. See 42 U.S.C. 2000e-2, 2000e-5. While a plaintiff must show an employment relationship to sue under Title VII, see Broussard v. L.H. Bossier, 789 F.2d 1158, 1159 (5th Cir. 1986), many courts have held that a direct employment relationship between a plaintiff and defendant is not necessary, so long as the plaintiff can show that the defendant-employer controlled access to the plaintiff's employment opportunities and denied or interfered with that access based on unlawful criteria. The seminal case allowing suit under Title VII in the absence of a direct employment relationship between the plaintiff and defendant is Sibley Memorial Hospital v. Wilson, 488 F.2d 1338 (D.C. Cir. 1973).

In Sibley, the District of Columbia Circuit held that a plaintiff maintained standing to sue under Title VII, despite the absence of a direct employment relationship between the plaintiff and the defendant. Id. at 1341-42. The court reasoned that, because Title VII uses the term "person aggrieved" instead of "employee," and provides no words of limitation to the contrary, it "purports to provide remedies for a class broader than direct employees." Id. at 1341. The court emphasized that the statute applies explicitly to labor unions and employment agencies, which would not directly employ a particular plaintiff, but which nonetheless have "a highly visible nexus with the creation and continuance of direct employment relationships between third parties." Id. at 1342. The court further explained why limiting standing to the defendant's employees would contravene the intent of Congress:

To permit a covered employer to exploit circumstances peculiarly affording it the capability of discriminatorily interfering with an individual's employment opportunities with another employer, while it could not do so with respect to employment in its own service, would be to condone continued use of the very criteria for employment that Congress has prohibited. Id. at 1341.

Every federal circuit to squarely address this issue has followed Sibley's lead.¹ See Bender v. Suburban Hosp. Inc., 159 F.3d 186, 188 (4th Cir. 1998) (collecting cases). These courts have adopted Sibley's reasoning in recognizing that a plaintiff has standing when the plaintiff can show that the defendant interfered with the plaintiff's employment relationship, despite the absence of a direct employment...