Starnes v. Wallace

• Decision Date: 24 February 2017
• Docket Number: No. 15-41341,15-41341
• Citation: 849 F.3d 627
• Parties: Leann STARNES, Plaintiff-Appellant v. Michael G. WALLACE; Michael A. Rich ; Donna Rich; Sherri Cunningham; Donna Marez; Daybreak Partners, L.L.C. ; Daybreak Venture, L.L.C.; Daybreak Healthcare, Incorporated; Daybreak Therapy, L.L.C.; Hea Management Group, Incorporated; Cold Spring Holdings, L.L.C. ; Canyon River Holdings, L.L.C.; Denton River Holdings, L.L.C.; Seven Falls Holdings, L.L.C.; Red Pine Holdings, L.L.C., Defendants-Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

849 F.3d 627

Leann STARNES, Plaintiff-Appellant

v.Michael G. WALLACE; Michael A. Rich ; Donna Rich; Sherri Cunningham; Donna Marez; Daybreak Partners, L.L.C. ; Daybreak Venture, L.L.C.; Daybreak Healthcare, Incorporated; Daybreak Therapy, L.L.C.; Hea Management Group, Incorporated; Cold Spring Holdings, L.L.C. ; Canyon River Holdings, L.L.C.; Denton River Holdings, L.L.C.; Seven Falls Holdings, L.L.C.; Red Pine Holdings, L.L.C., Defendants-Appellees

No. 15-41341

United States Court of Appeals, Fifth Circuit.

Filed February 24, 2017

Hartson Dustin Fillmore, III, Charles William Fillmore, Attorney, Fillmore Law Firm, L.L.P., Fort Worth, TX, for Plaintiff-Appellant.

Scott M. McElhaney, Arthur Moritz Meyer, Jr., Esq., Jackson Walker, L.L.P., Dallas, TX, James David Apple, Apple & Fink, L.L.P., Coppell, TX, for Defendants-Appellees.

Before DAVIS, SOUTHWICK, and COSTA, Circuit Judges.

GREGG COSTA, Circuit Judge:

The Fair Labor Standards Act (FLSA), passed during the New Deal to set a federal minimum wage for certain workers, is one of the earliest federal statutes to contain the antiretaliation provisions that in the years since have become common in employment laws (the contemporaneous National Labor Relations Act is another early example). The plaintiff brought this case contending that the antiretaliation provision was violated when she was terminated after raising concerns about whether a coworker's pay complied with the FLSA. We decide whether there is sufficient evidence in support of her claim to reach a jury. We also consider whether a Texas statute dealing with health facilities prohibits retaliation for reporting FLSA violations.

I.

LeAnn Starnes worked at Daybreak Ventures, L.L.C., a company that employs thousands of individuals to work at nursing homes in Texas.¹ Starnes was a Risk Manager in the corporate office, which involved investigating work-related injuries and reviewing any liability for the company, providing information to the Texas Workforce Commission, reviewing and denying work-related injury claims, working on the opposition statements for EEOC discrimination cases, and attending mediation for lawsuits when they involved the Risk Management Department.

Sometime in late October or early November of 2010, coworker Ludy Estrada complained to Starnes that Daybreak was not paying Estrada's husband Vincent, a maintenance worker, for his travel time or overtime. Although Starnes reviewed the information Ludy² provided, she referred Ludy to Andy Shelton who was the Director of Human Resources because Starnes believed FLSA claims were handled exclusively by his department. Ludy refused to speak to Shelton, expressing concern that she might lose her job if she reported the violation. Starnes then met with Shelton herself on Ludy's behalf. During the meeting, which took place just a few days after Ludy had approached Starnes, Starnes told Shelton that Daybreak was "violating the law by the way [it was] paying Vincent."

Before New Year's, Daybreak President Mike Rich pulled Starnes aside to discuss Vincent's situation. Starnes again reiterated that "it looked to [her] like Daybreak was breaking the law" by the way it was paying Vincent. Rich assured her that they would resolve the situation.

The sequence of the events that followed is disputed, but around this time, Daybreak began requiring each employee to sign a job description. Starnes's own "Job Description" was dated October, 25, 2010, but she did not sign it until March 11, 2011. According to this document, Starnes was required to report "all allegations and findings related to violations of Federal and State law including Anti-Kickback and fraud." This differs from an earlier "Job Analysis" of Starnes's position, which appears to be written by Starnes herself and describes the amount of time she spent on various duties, none of which involved reporting violations of law.

Daybreak also began reclassifying maintenance workers like Vincent Estrada from salaried employees to hourly ones who are covered by the FLSA. Despite the reclassification, Vincent's claim for backpay remained unresolved for most of 2011. Moreover, Daybreak was still not paying Vincent for his travel time.

In November 2011, Ludy became frustrated that Vincent's claim still had not been resolved. She went to Shelton, the HR Director, and demanded that Vincent be paid. Shelton asked her to put the request in writing so that it could be presented to Rich. The Estradas ultimately requested $68,713.38 in owed wages, and Shelton told Ludy that he would relay the request to Rich. On December 9, 2011, Rich called Ludy into his office to talk about the amount of Vincent's request.³ Starnes, who had not had any involvement with the pay dispute in the year since she had reported it to HR and discussed it with Rich, was not present. Yet Rich indicated during the negotiations that he believed that Starnes "was to blame" for the problems with Vincent's wage claim. The discussion between Rich and Ludy became "heated" because they disagreed as to whether the law required payment for Vincent's travel time. The conversation was so loud that Starnes could overhear Rich's angry raised voice from her own office. After Ludy became visibly upset during the meeting, Rich agreed to resolve Vincent's claim and assured Ludy that she would not lose her job. The last week of 2011, Daybreak finally settled its dispute with Vincent for $40,000.

Just ten days later, on January 6, 2012, Daybreak laid off five employees, including Starnes and Ludy, purportedly due to financial difficulties related to cuts in Medicaid reimbursement rates. Yet one of these employees, Rich's son, had already accepted another position with a different company before being "let go." Two other employees were soon rehired in different positions within Daybreak.

The two who were left without a job, Starnes and Ludy, then filed this lawsuit asserting claims for retaliation under both the FLSA and section 260A.014(b) of the Texas Health and Safety Code, which regulates nursing homes. Daybreak filed a 12(b)(6) motion that sought dismissal of the state law claim and also sought a ruling that damages for emotional distress and punitive damages are not available under the FLSA retaliation provision. The district court granted that motion in full.

After discovery, Daybreak moved for summary judgment on liability under the FLSA. The district court denied the motion with respect to Ludy. It found that she had established a prima facie case of retaliation and that a jury could conclude that the "cost cutting" justification for her termination was pretextual primarily because she and Starnes were the only employees who wanted to stay, but were "permanently let go" as a result of the supposed downsizing. The district court reached a different result as to Starnes, finding that she could not establish a prima facie case for two reasons. First, it concluded she did not engage in protected activity because she did not act outside her job duties in reporting the wage dispute. Second, it concluded that she could not establish causation because more than a year elapsed between her reporting activity and termination.

Ludy settled with Daybreak before trial. Starnes timely appealed all of the district court's rulings except the one about punitive damages.

II.

We begin with our de novo review of the district court's summary judgment ruling on the FLSA retaliation claim, viewing the evidence "in the light most favorable to the non-moving party." Gray v. Powers , 673 F.3d 352, 354 (5th Cir. 2012). We will affirm summary judgment only "if the movant shows that 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).

As with most federal employment statutes that require a showing of improper motive for which direct evidence is usually lacking, courts evaluate FLSA retaliation claims relying on circumstantial evidence under the evidentiary framework of McDonnell Douglas Corp. v. Green , 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). See Hagan v. Echostar Satellite, L.L.C. , 529 F.3d 617, 624 (5th Cir. 2008). The first question is whether Starnes has made a prima facie showing of: (1) participation in a protected activity under the FLSA; (2) an adverse employment action; and (3) a causal link between the activity and the adverse action. Id. If she has, the burden then shifts to Daybreak to articulate a legitimate, nonretaliatory reason for the adverse action. Id. Once it has done so, then the burden shifts back to Starnes to identify evidence from which a jury could conclude that Daybreak's proffered reason is a pretext for retaliation. Id.

A.

As to Starnes's prima facie case, the parties do not dispute that her termination was an adverse action, but they disagree about the protected activity and causal link elements.

To engage in protected activity, the plaintiff must make a "complaint." Hagan , 529 F.3d at 626. We have held that:

In order for an employee's communication to constitute a "complaint," the "employer must have fair notice that an employee is making a complaint that could subject the employer to a later claim of retaliation" and the "complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the [FLSA] and a call for their protection."

Lasater v. Tex. A & M Univ.-Commerce , 495 Fed.Appx. 458, 461 (5th Cir. 2012) (per curiam) (quoting Kasten v. Saint–Gobain Performance Plastics Corp. , 563 U.S. 1, 131 S.Ct. 1325, 1334–35, 179 L.Ed.2d 379 (2011) ). We have also explained that such an assertion of rights requires that an employee step outside of his normal job role and assert a right adverse to the company.⁴ Hagan , 529 F.3d at 627. Because a manager's job duties often include "being mindful of the needs and concerns of both sides and appropriately expressing them" when it comes...