Tyler v. Re/Max Mountain States

• Decision Date: 21 November 2000
• Docket Number: No. 99-1421,99-1421
• Citation: 232 F.3d 808
• Parties: (10th Cir. 2000) EDWARD TYLER, Plaintiff-Appellee, v. RE/MAX MOUNTAIN STATES, INC., Defendant-Appellant
• Court: U.S. Court of Appeals — Tenth Circuit

Page 808

232 F.3d 808 (10th Cir. 2000)

EDWARD TYLER, Plaintiff-Appellee, v. RE/MAX MOUNTAIN STATES, INC., Defendant-Appellant.

No. 99-1421

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

November 21, 2000

Appeal from the United States District Court for the District of Colorado. (D.C. No. 96-WY-734-AJ) [Copyrighted Material Omitted] Todd J. McNamara (Kristina James with him on the brief) of Todd J. McNamara, P.C., Denver, Colorado, for Plaintiff-Appellee.

Andrew M. Low (Thomas P. Johnson and Victoria V. Johnson with him on the briefs) of Davis, Graham & Stubbs LLP, Denver, Colorado, for Defendant-Appellant.

Before BRORBY, McWILLIAMS and KELLY, Circuit Judges.

BRORBY, Circuit Judge.

This case requires us to review the trial court's denial of defendant's motion for judgment as a matter of law, pursuant to Federal Rule of Civil Procedure 50(b), after an adverse jury verdict. The jury found RE/MAX intentionally discriminated against Mr. Tyler on the basis of race by denying his franchise application, in violation of 42 U.S.C. 1981 and the Federal Housing Act, 42 U.S.C. 3601. This court has jurisdiction pursuant to 28 U.S.C. 1291. We affirm.¹

FACTUAL BACKGROUND

Mr. Tyler is an African American real estate agent and broker. Since 1991, he has owned and operated his own real estate practice ("Cheyenne Springs Realty") south of Colorado Springs. At all times relevant to this appeal, his real estate practice included a furnished office, office equipment, one or more licensed sales agents, and an administrative assistant.

The chain of events leading up to this litigation began in 1992, at a Colorado Association of Realtors convention, when a RE/MAX representative informed Mr. Tyler the normal franchise fee was reduced to $10,000 in an effort to increase the company's market share. In 1993, Mr. Tyler became interested in securing a RE/MAX franchise in the same area as his current real estate practice. In September of that year, he completed and submitted to RE/MAX his personal history form, income statement, and statement of financial condition. The personal history form sought information on each applicant's educational and business background, the number of sales associates employed, and the number of listings and sales closed in the last year. Mr. Tyler's income statement showed a net profit (income minus expenses) equaling $62,858.81. His statement of financial condition listed his business, personal, and total net worth. The final column calculated the "owner's [total] net worth" as $194,372.26.

After submitting these documents, Mr. Tyler contacted Ms. Bond, the Regional Director of RE/MAX Mountain States, to set an appointment to discuss his franchise application. During his visit to the corporate offices, he informed Ms. Bond of two IRS tax liens filed against him, but, he explained, the liens had been paid. Mr. Tyler testified at trial that he forwarded the tax lien releases to her in November.

In the spring of 1994, Mr. Tyler compiled a lengthy document for a Small Business Association loan titled "RE/MAX Franchise, Preliminary Purchase Proposal, Phase I" ("Phase I Proposal"). The Phase I Proposal detailed his operating plan, financial statements, and sales and census information for his current practice and prospective franchise. In his operating plan, Mr. Tyler graphed his 1992 residential sales in excess of $3.1 million, and his commercial sales at $95,000, with a total of $142,626 in commission. In 1993, his residential sales increased to over $3.5 million, while his commercial sales rose to $770,000, with $170,062 in commission. Most notable for this litigation, the Phase I Proposal included financial statements for the 1993 calendar year. The balance sheet for Cheyenne Springs Realty listed the business' "net worth" as negative $10,419.95. The actual "income and expense" statement showed a loss of $5,932.45.

In April 1994, Ms. Bond visited Mr. Tyler's Cheyenne Springs Realty office. Mr. Tyler testified at trial that during her visit, Ms. Bond did not ask about the releases on his tax liens, the number of agents on staff, the number of sales he had in the first quarter of 1994, or suggest there were any abnormalities in his business financial statements. The two did not speak to each other again until May.

In early May 1994, Ms. Bond telephoned Mr. Tyler to inform him his franchise application was denied. He requested her reasons for the rejection. Days after the telephone call, he sent Ms. Bond a letter which listed the four reasons she had allegedly given, refuted each in detail, and requested reconsideration of his application. More than two months later, Ms. Bond penned her own letter articulating seven reasons for the rejection.

Mr. Tyler sued RE/MAX for intentional racial discrimination, in violation of 42 U.S.C. 1981 and 42 U.S.C. 3601. The trial court denied RE/MAX's motion for summary judgment, and the case proceeded to trial. (App. Vol. I at 6.) RE/MAX raised its motion for judgment as a matter of law at the close of the plaintiff's case and again at the close of all the evidence. The jury found in favor of Mr. Tyler, and awarded him damages.² RE/MAX renewed its motion for judgment as a matter of law or in the alternative a new trial, after the entry of judgment; the trial court denied the motion.

STANDARD OF REVIEW

We review the district court's denial of a Rule 50(b) motion for judgment as a matter of law de novo, applying the same legal standard as the district court. Baty v. Willamette Indus., Inc., 172 F.3d 1232,1241 (10th Cir. 1999). We shall review all the evidence in the record, construe the evidence and inferences most favorably to the nonmoving party, and refrain from making credibility determinations and weighing evidence. Reeves v. Sanderson Plumbing Prod., Inc., 120 S. Ct. 2097, 2110 (2000); see also Deters v. Equifax Credit Info. Servs., Inc., 202 F.3d 1262, 1268 (10th Cir. 2000). Judgment as a matter of law is appropriate "only if the evidence points but one way and is susceptible to no reasonable inferences which may support the opposing party's position." Finley v. United States, 82 F.3d 966, 968 (10th Cir. 1997) (quotation marks and citation omitted). Applying this standard of review, we must determine whether the district court erred in denying RE/MAX's motion for judgment as a matter of law after a trial on the merits.

DISCUSSION

42 U.S.C. 1981 ensures, among other rights, that persons of all races shall have equal rights to make and enforce contracts. A 1981 plaintiff alleging racial discrimination may prove intentional discrimination through either direct or circumstantial evidence. Kendrick v. Penske Transp. Servs., 220 F.3d 1220, 1225 (10th Cir. 2000). Mr. Tyler presented no direct evidence, and thus, our review is limited to indirect evidence of discrimination.

Our approach in this context is governed by our analysis in Stewart v. Adolph Coors Co., 217 F.3d 1285, 1288 (10th Cir. 2000). Specifically, in our review of the sufficiency of the evidence to support the jury's verdict, we assume Mr. Tyler met his burden of proving a prima facie 1981 claim, and the claim properly went to trial. See id. After a full trial on the merits, "'the sequential analytical model adopted from McDonnell Douglas ... drops out and we are left with the single overarching issue whether plaintiff adduced sufficient evidence to warrant a jury's determination that adverse employment action was taken against' the plaintiff" based on his race. Kendrick, 220 F.3d at 1226 (quoting Fallis v. Kerr-McGee Corp., 944 F.2d 743, 744 (10th Cir. 1991)); see also Reeves, 120 S. Ct. at 2106. In other words, after a verdict on the merits, the "burden shifting framework of McDonnell Douglas is largely irrelevant and the issue is whether the adverse employment action was motivated by race."³ Stewart, 217 F.3d at 1288 (citing Sanchez, 992 F.2d at 246).

The burden of persuasion is at all times borne by the plaintiff. Reeves, 120 S. Ct. at 2106. The Reeves case explained a plaintiff can meet the burden of persuasion through a combination of a prima facie case and "'sufficient evidence to find that the employer's asserted justification is false.'" Stewart, 217 F.3d at 1288 (quoting Reeves, 120 S. Ct. at 2108). Having assumed the prima facie case was shown, we review the record to determine whether Mr. Tyler presented sufficient evidence to show RE/MAX's asserted justifications were pretextual.⁴ Stewart, 217 F.3d at 1288.

Mr. Tyler wrote a letter to Ms. Bond just days after he learned over the telephone his application was denied. At trial, he presented the letter and testified Ms. Bond listed four reasons for the rejection: (1) lack of market share; (2) RE/MAX already has five percent market share in the area; (3) no qualified agents on staff; and (4) he was not currently working for a RE/MAX franchise.

Two months later, on July 11, 1994, Ms. Bond wrote a response letter listing her reasons for the rejection. She admits, "[a]lthough it is not our practice to respond in writing to franchise prospects regarding acceptance or denial, we are responding to your request for a written response." She wrote, at the conclusion of her letter, "We have not addressed a number of the areas you brought up in your May 9, 1994 correspondence. Much of the information cited in your letter is not correct." She listed seven justifications for denying Mr. Tyler's application, under the two main headings "credit/financial resources" and "conversion criteria". On appeal, RE/MAX argues Mr. Tyler failed to show five of Ms. Bond's reasons were pretextual:⁵ (1) negative net worth on balance sheet; (2) "losses of income reflected on the income statement"; (3) market share; (4) sales volume; and (5) lack of sales associates.⁶

This presents an unusual situation because both parties have presented documentary evidence of RE/MAX's justifications. We are hesitant to allow an employee (or applicant) to frame the employer's (or...