Pruitt v. Levi Strauss & Co.

• Decision Date: 03 June 1991
• Docket Number: No. 90-1449,90-1449
• Parties: 119 Lab.Cas. P 56,720 Billy Kirk PRUITT, Plaintiff-Appellant, v. LEVI STRAUSS & CO., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 458

932 F.2d 458

119 Lab.Cas. P 56,720

Billy Kirk PRUITT, Plaintiff-Appellant, v. LEVI STRAUSS & CO., Defendant-Appellee.

No. 90-1449.

United States Court of Appeals, Fifth Circuit.

June 3, 1991.

Rehearing and Rehearing En Banc Denied

June 25, 1991.

James L. Hicks, Jr., Hicks, James & Preston, Dallas, Tex., for plaintiff-appellant.

Joshua Floum, argued, Robert J. Vizas, William J. Carroll, Heller, Ehrman, White & McAuliffe, San Francisco, Cal., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before JOHNSON, WIENER, and BARKSDALE, Circuit Judges.

PER CURIAM:

Plaintiff-Appellant Billy Kirk Pruitt filed this action challenging the termination of his employment with a division of Defendant-Appellee, Levi Strauss & Co. (Levi Strauss). Specifically, Pruitt alleged that Levi Strauss fraudulently induced him to leave his former employment, breached oral and written contracts of employment and breached a covenant of good faith and fair dealing. The district court granted Levi Strauss summary judgment on all claims, and we affirm.

I. FACTS AND PROCEDURAL HISTORY

Early in 1980, Levi Strauss & Co., a California corporation which is one of the world's largest apparel manufacturers, opened a separate division to market women's blouses (the Tops division). Levi Strauss recruited Pruitt to work as an account executive in the Tops division. Pruitt maintains that Levi Strauss lured him from a comfortable position at another company with promises that it would provide Pruitt employment for as long as he performed his job satisfactorily. Pruitt commenced employment in the Dallas office of Tops in February 1980. After five months, Levi Strauss promoted Pruitt to regional sales manager.

Levi Strauss entered the womenswear market with expectations that never materialized. Despite financial support from Levi Strauss, the Tops division lost fifteen million dollars in the first three years of its operation. Levi Strauss's senior management reluctantly decided to stop the financial hemorrhaging by dissolving the Tops division. In November 1983, Levi Strauss announced its decision to halt operations in the Tops division. Two months later, Levi Strauss eliminated all employment positions in the division, including Pruitt's.

On November 14, 1986, Pruitt filed a diversity action in federal district court challenging his termination of employment. Pruitt alleged four causes of action: (1) breach of the covenant of good faith and fair dealing; (2) fraudulent inducement; (3) breach of a written contract of employment; and (4) breach of an oral contract of employment. The district court granted Levi Strauss summary judgment on all of Pruitt's claims and dismissed the suit. First, the court determined that Texas law, which does not recognize a covenant of good faith and fair dealing in employment relations, governed Pruitt's complaints. Second, the court determined that Pruitt had failed to adduce any evidence that Levi Strauss had deliberately or recklessly made false statements to him. Third, the court determined as a matter of law that no written contract of employment existed for Levi Strauss to breach. Finally, the court determined that the statute of frauds foreclosed Pruitt's reliance on the alleged oral contract.

II. DISCUSSION

A. Standard of Review

This court reviews the grant of summary judgment motion de novo, using the same criteria used by the district court in the first instance. Walker v. Sears, Roebuck & Co., 853 F.2d 355, 358 (5th Cir.1988). We "review the evidence and inferences to be drawn therefrom in the light most favorable to the non-moving party." Baton Rouge Bldg. & Constr. Trades Council v. Jacobs Constructors, Inc., 804 F.2d 879, 881 (5th Cir.1986) (per curiam) (citing Southmark Properties v. Charles House Corp., 742 F.2d 862, 873 (5th Cir.1984)). Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct.

                2505, 2510, 91 L.Ed.2d 202 (1986).  "Material facts" are "facts that might affect the outcome of the suit under the governing law."    Id
                

B. Breach of the Covenant of Good Faith and Fair Dealing

Pruitt argues that the district court erroneously failed to apply California employment law to resolve the dispute between the parties. California law imposes on employers a covenant of good faith and fair dealing. Cleary v. American Airlines, Inc., 111 Cal.App.3d 443, 456, 168 Cal.Rptr. 722 (1980). On the other hand, Texas law, the only alternative asserted by Levi Strauss, does not recognize a covenant of good faith and fair dealing in the employment relationship. English v. Fischer, 660 S.W.2d 521 (Tex.1983).

In a diversity action in federal court, the district court is required to follow the choice of law rules of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941). Texas has adopted the "most significant relationship" approach to choice of law, as detailed in the Restatement (Second) of Conflict of Laws. DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 678 (Tex.1990). Under this approach, "in all choice of law cases, except those contract cases in which the parties have agreed to a valid choice of law clause, the law of the state with the most significant relationship to the particular substantive issue will be applied to resolve that issue." Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 421 (Tex.1984). ¹

In cases involving contracts for the rendition of services, the Texas Supreme Court has particularly relied on section 196 of the Restatement. DeSantis, 793 S.W.2d at 679. Section 196 requires the application of the law of the state in which a "major portion" of the contractual services were performed, unless a different state has a more significant relationship to the transaction and the parties. Restatement (Second) of Conflict of Laws Sec. 196 (1980). ² As a general rule, the place in which a services contract is performed "is conclusive in determining what state's law is to apply." DeSantis, 793 S.W.2d at 679. In the instant case, Pruitt performed the major portion of his employment obligations in Texas. Thus, Texas law applies to any complaints arising from this employment except in the rare situation in which a different state has a more significant relationship to the transaction and the parties.

This court cannot discern that any state has a more significant relationship to the transaction and the parties than the State of Texas. The application of the most significant relationship approach to the resolution of choice of law questions does "not turn on the number of contacts, but more importantly on the qualitative nature of those contacts as affected by the policy factors enumerated in Section [6 of the Restatement]." Gutierrez v. Collins, 583 S.W.2d 312, 319 (Tex.1979). In effect, the most significant relationship approach examines the relative interests of the states sharing a relationship with the transaction and the parties. Texas has a compelling interest in the application of its employment law to its own residents and the employment activities that occur within its borders. Garcia v. Total Oilfield Servs., Inc., 703 S.W.2d 411, 415 (Tex.App.--Amarillo), writ ref'd n.r.e. per curiam, 711 S.W.2d 237 (Tex.1986). Other states, including California, might have similar interests in the application of their respective

employment laws, but these interests are much more attenuated when the aggrieved party is an out-of-state resident who suffered an out-of-state injury. Abston v. Levi Strauss & Co., 684 F.Supp. 152, 155 (E.D.Tex.1987). Thus, under the guidelines of section 196 of the Restatement, the district court properly applied Texas law. Accordingly, this court is unable to conclude that the district court improperly granted summary judgment against Pruitt's claim for breach of the covenant of good faith and fair dealing in the employment relationship, as that claim is not recognized in Texas.

C. Fraudulent Inducement

Pruitt argues that the district court erroneously granted Levi Strauss summary judgment on Pruitt's fraudulent inducement claim. To withstand summary judgment, the plaintiff in a fraud action must adduce some evidence that the purported misrepresentation was deliberately or recklessly false at the time it was made. Levine v. Loma Corp., 661 S.W.2d 779, 783 (Tex.App.--Fort Worth 1983, no writ); Torres v. Texas Real Estate Comm'n, 605 S.W.2d 394, 396 (Tex.Civ.App.--Beaumont 1980, no writ). "A promise to do an act in the future is actionable fraud when made with the intention, design and purpose of deceiving, and with no intention of performing the act." Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex.1986). Pruitt has failed to introduce any summary judgment evidence that Levi Strauss possessed the requisite fraudulent intent at the time of the alleged misrepresentation.

Pruitt complains that the requisite intent may be supplied by an inference of fraudulent intent. "While a party's intent is determined at the time the party made the representation, it may be inferred from the party's subsequent acts after the representation is made." Id. at 434. Even if such an inference is applicable, however, it is insufficient to warrant reversal of the district court's grant of summary judgment. The only "subsequent act" of Levi Strauss that tends to support an inference of fraudulent intent is the corporation's alleged denial of the deceptive employment promises it made to Pruitt, despite the testimony...