Quinn v. NAFTA Traders, Inc.

• Decision Date: 21 February 2012
• Docket Number: No. 05–07–00340–CV.,05–07–00340–CV.
• Citation: 360 S.W.3d 713
• Parties: Margaret A. QUINN, Appellant/Cross–Appellee, v. NAFTA TRADERS, INC., Appellee/Cross–Appellant.
• Court: Texas Court of Appeals

360 S.W.3d 713

Margaret A. QUINN, Appellant/Cross–Appellee,

v.NAFTA TRADERS, INC., Appellee/Cross–Appellant.

No. 05–07–00340–CV.

Court of Appeals of Texas, Dallas.

Feb. 21, 2012.

Janette Johnson, Christine Neill Huffman, Janette Johnson & Associates, for Appellant.

Alan L. Busch, Robert Ruotolo, Busch Ruotolo & Simpson, LLP, Dallas, for Appellee.

Before Justices MORRIS, FITZGERALD, and LANG.

OPINION ON REMAND

Opinion by Justice MORRIS.

This is an appeal from a trial court order confirming an arbitration award in favor of Margaret A. Quinn on a sex discrimination claim she brought under Texas law against her former employer, Nafta Traders, Inc. In our original opinion, we denied cross-appellant Nafta's request for an expanded judicial review of the award based on the parties' arbitration agreement and held that parties seeking judicial review of an arbitration award covered under the Texas Arbitration Act were limited to a review based on the statutory grounds enumerated in the Act. The Texas Supreme Court disagreed and reversed our decision. It then remanded the case to us to conduct the review to which the parties contractually agreed. We now address Nafta's complaints of reversible error with respect to the arbitrator's award. For the reasons that follow, we conclude Nafta's complaints lack merit. We affirm the trial court's order confirming the arbitrator's award.

I.

Nafta hired Quinn in December 2001 to manage the company's operations. At the time she was hired, Quinn became Nafta's only female manager and reported directly to Nafta's owners Marc and Robert Schlachter. Although hired to replace Steve Parsons, Nafta's vice president of operations, Quinn was not immediately given Parsons's title. She began work as director of operations but immediately requested and received approval to change her title to vice president of operations. Nine months later, in September 2002, the company hired Ken Holbrook as chief operating officer. Quinn then began reporting to Holbrook. Quinn testified in detail about Holbrook's derogatory and disparate treatment of women, use of profanity, and gender-based humor in the workplace. Some examples of Holbrook's conduct included his denial of Quinn's vacation requests while granting male managers' requests, reference to another manager's wife's breasts as “big knockers” at a managers' luncheon meeting, and entertaining customers and vendors, along with other male Nafta employees, at topless men's clubs.¹ There was also evidence of Holbrook's reference to Nafta female sales representative Lorraine Jaso's client Kotimex as “Kotex” and his frequent use of the word “bitch” when referring to a female client of Beatrice Cruz–Brown, another female sales representative. There was testimony that even though Jaso and Cruz–Brown tried to get Holbrook to stop using the terms “Kotex” and “bitch,” he did not. Cruz–Brown testified that when she had trouble selling a certain product, Holbrook responded, “I'll just give it to Randy, a man can do it.”

Quinn also recounted an incident when Holbrook helped make a Halloween costume for Marc Schlachter that represented a female breast. According to Quinn, Schlachter put a shirt on over some balls and wrote “boob” on the shirt. Nafta presented evidence that the costume represented a jack-o-lantern as depicted in a photo of the costume that was presented at the hearing. Quinn further testified to an incident relayed to her by Jaso in which Holbrook asked Jaso and another female employee to get something from his desk. When the two women opened his desk drawer, they found a picture of Holbrook on a golf course with two topless women.

Toward the end of 2003 and early 2004, Jaso learned that half of her territory was being redistributed to a male sales representative resulting in her loss of commissions. Holbrook admitted that he recommended the redistribution as a business strategy. When Jaso complained, Marc Schlachter told her that things would not change and “there's the door.”

Both Schlachters testified that they began to discuss reducing the staff in 2003. They testified that all members of management were considered in connection with their plans to reduce staff. The Schlachters did not tell anyone about the reduction until they informed Holbrook in December 2003. Holbrook hand-wrote two memos criticizing Quinn's performance. Quinn was terminated from her position on January 8, 2004. She was the only manager to be terminated in January 2004 under the alleged layoff plan. Schlachter testified that Quinn was first because he could fill her position from within the company. Steve Parsons once again became vice president of operations.

Although Nafta asserted that Quinn's termination was part of a reduction in force as a result of a contraction in available products and lower sales, the parties stipulated that Nafta's future was bright on January 8, 2004. The Schlachters received Holbrook's views with respect to the decision to fire Quinn. Holbrook told Marc Schlachter only negative things about Quinn's performance. Marc Schlachter testified that, although Holbrook gave his opinion about Quinn, he denied that Holbrook played a role in making the ultimate decision to terminate her.

When Holbrook informed Quinn of her termination, he indicated there was an organizational restructure of which Quinn was not a part. She was not given any advance notice of her termination and left the premises the same day. Holbrook then sent out an email to Nafta employees that Quinn left to pursue “other opportunities.” Nafta ultimately terminated other upper level male managers, including Holbrook. But unlike Quinn, they were given several months' notice before they were required to leave the company.

Holbrook did not recall the specifics of many events about which he was questioned. The arbitrator found that Holbrook was not a credible witness and that he “stated almost ninety times during cross-examination that he did not recall various events.” Holbrook admitted to taking clients to men's clubs. He admitted to taking a particular client to a men's club at the client's request but said he did not take Cruz–Brown and did not recall whether Cruz–Brown was the sales representative for that client at the time. He also testified that he granted some of Quinn's requests for time off but denied one of her vacation requests because it was made with very short notice. There was evidence that Holbrook granted and denied vacation requests from both male and female employees when they were made with short notice. According to Holbrook, in the latter part of 2003, the Schlachters told him changes in the inventory from suppliers would cause a decrease in sales and result in layoffs. Holbrook testified that when the Schlachters asked his opinion on Quinn's termination, he told them his opinion about her strengths and weaknesses. After hearing the evidence, the arbitrator found in favor of Quinn on her sex discrimination claim and awarded her $30,000 in back pay, $29,031 in special damages, $30,000 for emotional injury, $104,828 for attorney's fees, and $9,482 in costs.

II.

On appeal, Nafta complains that the arbitrator incorrectly applied federal law to Quinn's sex discrimination claim. It also claims the evidence was legally and factually insufficient to support the arbitrator's finding of sex discrimination and mental anguish. And it challenges the arbitrator's award of “special damages” and attorney's fees.

According to the arbitration agreement between Nafta and Quinn, an arbitrator appointed to resolve disputes between them “does not have authority (i) to render a decision which contains a reversible error of state or federal law, or (ii) to apply a cause of action or remedy not expressly provided for under existing state or federal law.” It is under this provision that Nafta challenges the legal and factual sufficiency of the evidence to support the arbitrator's findings of sexual discrimination and mental anguish. It is also under this provision that Nafta asserts that the arbitrator erroneously awarded Quinn attorney's fees and “special damages” and applied the wrong law to the case. Quinn responds that Nafta has waived most, if not all, of its arguments on appeal because it failed to present them to the arbitrator.

We begin our analysis by determining whether Nafta has preserved the various errors it contends compel us to set aside the arbitration award. As noted by the Texas Supreme Court, “[a]n arbitration award is not susceptible to full judicial review merely because the parties have agreed.” Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 101 (Tex.2011). A reviewing court must have a sufficient record of the arbitration proceedings and the party challenging the award must have properly preserved its complaint “just as if the award were a court judgment on appeal.” Quinn, 339 S.W.3d at 101–02. When ruling on motions to confirm, alter, or vacate an arbitration award based on reversible error, the trial court serves an appellate function. See id. at 101 n. 79. As such, our rules for preserving complaints for appeal will also apply to our review of arbitration awards and generally require a party to present a complaint to the arbitrator by timely request, objection, or motion with sufficient specificity as a prerequisite to judicial review. See Tex.R.App. P. 33.1(a)(1); Quinn, 339 S.W.3d at 101 n. 80.

Our rules on preservation of error conserve judicial resources, promote fairness among litigants, and further the goal of accuracy in judicial decision-making. See In re B.L.D., 113 S.W.3d 340, 350 (Tex.2003). And these considerations are equally important in the review of an arbitration award. See Gateway Techs., Inc. v. MCI Telecomms. Corp., 64 F.3d 993, 998 (5th Cir.1995), abrogated on other grounds by Hall St. Assoc., L.L.C. v. Mattel, Inc., 552 U.S. 576, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008) (arbitrators would rarely be apprised of the issues before...