Sawyer v. E.I. Dupont De Nemours & Co.

• Decision Date: 20 April 2012
• Docket Number: No. 11–40454.,11–40454.
• Citation: 678 F.3d 379,33 IER Cases 1185
• Court: U.S. Court of Appeals — Fifth Circuit
• Parties: Gary SAWYER; Doug Kempf; Peter Barnaba, Sr.; Geoff Rorrev; Tim Gregory; et al., Plaintiffs–Appellants, v. E.I. DUPONT DE NEMOURS & CO., Defendant–Appellee.

678 F.3d 379

33 IER Cases 1185

Gary SAWYER; Doug Kempf; Peter Barnaba, Sr.; Geoff Rorrev; Tim Gregory; et al., Plaintiffs–Appellants,

v.E.I. DUPONT DE NEMOURS & CO., Defendant–Appellee.

No. 11–40454.

United States Court of Appeals, Fifth Circuit.

April 20, 2012.

Michael P. Cash (argued), Wade Thomas Howard (argued), Gardere, Wynne, Sewell, L.L.P., Houston, TX, for Plaintiffs–Appellants.

Russell Joe Manning (argued), Hornblower Firm, Corpus Christi, TX, for Defendant–Appellee.

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

Before DeMOSS, CLEMENT and ELROD, Circuit Judges.

DeMOSS, Circuit Judge:

Appellants are sixty-three former employees of E.I. du Pont de Nemours and Company (“DuPont”) who worked at the company's manufacturing facility in La Porte, Texas. They filed suit against DuPont alleging that they were fraudulently induced to terminate their employment with DuPont and accept employment with a wholly owned subsidiary. The district court granted summary judgment dismissing Appellants' claims and entered a take-nothing final judgment in favor of DuPont. For the following reasons, we affirm.

BACKGROUND

The appellants worked in the Terathane Products Unit at DuPont's manufacturing facility in La Porte, Texas. In February 2002, DuPont announced plans to spin off a portion of its operations to form a wholly owned subsidiary to be known as DuPont Textiles and Interiors (“DTI”). The Terathane Unit was one of the units slated to be transferred to DTI, and was the only unit being transferred from the La Porte facility.

The mechanics and operators at the La Porte facility, including those in the Terathane Unit, were represented by Local 900C of the International Chemical Workers Union Council (“Union”) and were employed under a single collective bargaining agreement (“CBA”) between DuPont and the Union. The CBA contained a detailed seniority system and provided that employees could only be terminated or suspended for just cause. The CBA also included a provision allowing either party to cancel the agreement at anytime with 60 days' written notice. Of the sixty-three appellants in this case, fifty-nine were mechanics or operators in the Terathane Unit and were covered by the CBA when they worked for DuPont (“covered employees”). The other four appellants, Jesse Blancas, James Svoboda, Jessie Lloyd, and Tracy Hedrick–Thomas, were administrative staff or laboratory technicians in the Terathane Unit and were not covered by the CBA (“non-covered employees”).

In September 2002, DuPont management and the Union began negotiations on how to handle the labor aspect of the Terathane Unit separation. Because DTI would be an independent legal entity, employees who transferred to DTI with the Terathane Unit would no longer be employed by DuPont. However, the CBA's seniority system gave employees with higher seniority the right to transfer to other units at the La Porte facility. This raised the possibility that some of the Terathane Unit employees would exercise that right in order to stay with DuPont when the Terathane Unit transferred. If that happened, DuPont would need to train new operators for the Terathane Unit and could have been forced to lay off lower seniority employees in other units at the plant. DuPont considered cancelling the plant-wide CBA and bargaining for two new CBAs, one between the Union and DTI for the Terathane Unit employees, and another between the Union and DuPont for the rest of the La Porte employees, but decided against that option out of concern that it would create tension between management and labor and increase the risk of a strike.

DuPont and the Union eventually agreed on a two-phase process. During the first phase, the Terathane Unit employees would be allowed to choose whether to stay with DuPont or join DTI. The employees who stayed with DuPont would leave the Terathane Unit and transfer to another unit at the La Porte facility. Those who joined DTI would remain with the Terathane Unit and would be covered by a new CBA identical to their existing CBA, providing the same pay and benefits they received at DuPont. The second phase consisted of another round of negotiations between management and the Union, which would only be necessary if a significant number of Terathane Unit employees decided to stay with DuPont. The employees were required to make their decision between November 15 and December 16, 2002.

Between October and December 2002, DuPont management began holding meetings with the Terathane Unit employees to explain the details of the separation arrangement. These meetings were led by Phil Anderson, the Terathane Unit manager, Roslyn Cacciotti, the Terathane Unit human resources manager, and Johnny Ponder, a Terathane Unit first line supervisor. At these meetings, the Terathane Unit employees expressed concerns that DuPont might sell DTI to a third party. Many of the employees had worked for DuPont for a long time and wanted to protect their compensation and retirement packages by remaining a part of the DuPont family. Appellants allege that they were repeatedly assured that DTI would remain a part of DuPont. The parties agree that Phil Anderson told the employees that a sale of DTI was “highly unlikely.” Anderson used charts and graphs to show that DTI was too large to be sold because it was bigger than any of its potential buyers. He often explained, by way of analogy, that “we're the whale, and fish don't eat whales.”

By the end of Phase one, virtually all of the Terathane Unit employees had signed agreements voluntarily transferring to DTI. The new CBA between DTI and the Union became effective on February 1, 2003. On April 14, 2003, DuPont announced that it was in the early stages of negotiations for the sale of DTI with a third party. The third party turned out to be Koch Industries (“Koch”) and the sale was finalized roughly a year later on May 1, 2004. It was later revealed that DuPont and Koch discussed a possible sale of DTI as early as June 2002. Appellants maintain that their “pensions, pay, and benefits materially changed in a negative way” after Koch acquired DTI.¹

On November 7, 2006, Appellants filed suit against DuPont in the United States District Court for the Southern District of Texas on the basis of diversity jurisdiction. Appellants brought state-law claims of fraud, fraudulent inducement, and fraud by omission, alleging that DuPont fraudulentlymisrepresented that DTI would not be sold and that they relied on those misrepresentations and suffered damages as a result. On September 3, 2010, the district court granted summary judgment dismissing appellants John Clark's and Tony Dahlquist's claims, holding that they are barred by the statute of limitations. On February 3, 2011, the district court filed two opinions granting summary judgment against all remaining plaintiffs. The court concluded that Appellants were at-will employees when they worked for DuPont and are therefore unable to assert fraud claims against DuPont under Texas law. Appellants timely appealed.

STANDARD OF REVIEW

This court reviews the grant of summary judgment de novo, applying the same standard used by the district court. Hill v. Carroll Cnty., Miss., 587 F.3d 230, 233 (5th Cir.2009). Summary judgment is appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A fact is ‘material’ if its resolution in favor of one party might affect the outcome of the lawsuit under governing law.” Sossamon v. Lone Star State of Tex., 560 F.3d 316, 326 (5th Cir.2009) (quoting Hamilton v. Segue Software, Inc., 232 F.3d 473, 477 (5th Cir.2000)). “An issue is ‘genuine’ if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party.” Id. (quoting Hamilton, 232 F.3d at 477). When determining whether a fact issue exists, the court views “the facts and the inferences to be drawn therefrom in the light most favorable to the nonmoving party.” Reaves Brokerage Co. v. Sunbelt Fruit & Vegetable Co., 336 F.3d 410, 412 (5th Cir.2003).

Because jurisdiction in this case is based on diversity, we apply the substantive law of the forum state. Holt v. State Farm Fire & Cas. Co., 627 F.3d 188, 191 (5th Cir.2010). Accordingly, Texas law applies to this appeal. We look to final decisions of the Texas Supreme Court to determine issues of Texas law. Chaney v. Dreyfus Serv. Corp., 595 F.3d 219, 229 (5th Cir.2010). “In the absence of such ... decision[s], we must make an Erie guess and determine, in our best judgment, how that court would resolve the issue if presented with the same case.” Id. (quoting Six Flags, Inc. v. Westchester Surplus Lines Ins. Co., 565 F.3d 948, 954 (5th Cir.2009)). “In making an Erie guess, we defer to intermediate state appellate court decisions, unless convinced by other persuasive data that the higher court of the state would decide otherwise.” Cerda v.2004–EQR1 L.L.C., 612 F.3d 781, 794 (5th Cir.2010) (quoting Mem'l Hermann Healthcare Sys., Inc. v. Eurocopter Deutschland, GMBH, 524 F.3d 676, 678 (5th Cir.2008)).

DISCUSSION

Appellants argue that the district court erred in concluding that they were at-will employees under Texas law when they worked for DuPont and that they are therefore barred from bringing Texas fraud claims against their former employer. Appellants John Clark and Tony Dahlquist, who were both covered employees while at DuPont, additionally argue that the district court erred in dismissing their claims as barred by the statute of limitations.

At-will employees in Texas are precluded from bringing fraud claims against their employers for loss of their employment. See Cahak v. Rehab Care Group, Inc., No. 10–06–00399–CV, 2008 WL 3112083, at *3, 2008 Tex.App. LEXIS 6011, at *7 (Tex.App.—Waco Aug. 6, 2008, no pet.) (“An at-will employee's claim for fraudulent inducement is ... precluded as a matter of law.”); Miller...