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Texas appellate court rejects employee’s claim of age discrimination, affirming arbitrator’s award in favor of employer

On July 30, 2019, the Texas Court of Appeals for the Eighth District issued a written opinion in a Texas employment discrimination lawsuit discussing whether an arbitrator correctly determined that the employee’s claim was not filed on time. The case is important for Texas employees and employers because it illustrates the need to act in a timely manner, and the deference that courts give to arbitrators’ decisions.

According to the court’s opinion, the plaintiff was hired as a trainer for Xerox in 2009. In 2016, the plaintiff was laid off. The plaintiff filed an age discrimination claim against Xerox, claiming that younger trainers with less seniority were not laid off. He also claimed that, during his tenure with the company, younger workers were given pay raises, while he was not.

The plaintiff initially filed a claim with the Equal Employment Opportunity Commission (EEOC) and the Texas Workforce Commission. On November 3, 2016, the EEOC provided the plaintiff with a right to sue letter, and the next day, the plaintiff filed a lawsuit. Xerox responded by seeking to compel arbitration of the claim under the company’s “Dispute Resolution Procedure,” (DRP) which required all claims that were not informally resolved to be handled through arbitration.

First, the parties argued over whether the plaintiff was required to arbitrate his claim. However, on May 5, 2017, the plaintiff withdrew his case and submitted his claim to an arbitrator of his choice. Xerox, however, objected to the plaintiff’s choice of arbitrator, arguing that the DRP specified the arbitrators that must hear claims against the company. Finally, on August 16, 2017, the plaintiff submitted his case to one of the arbitrators in the DRP.

The DRP provided that a plaintiff who files a claim for arbitration must bring a claim “within the time allowed by applicable law.” If a plaintiff files a case in court rather than proceeding directly to arbitration, the plaintiff must file within “ninety days after the date a party is ordered by the court to arbitration … or ninety days after the date the parties agree to submit the dispute to arbitration under the DRP.” Additionally, under the Texas Labor Code, the plaintiff had to file his claim within 60 days of receiving the right to sue letter from the EEOC.

Xerox claimed that the plaintiff filed his claim too late. The plaintiff argued that he filed his initial complaint with his chosen arbitrator within 60 days of receiving the right to sue letter. However, Xerox argued that by withdrawing his case, the plaintiff “wiped the slate clean” because there was no longer an active case to base the 60-day time period. Additionally, there was never a court order or agreement to arbitrate the claim, making the 90-day time limits mentioned above inapplicable. Thus, Xerox argued that the plaintiff was required to file his claim within 60 days of November 3, 2016, the day he received the right to sue letter. Xerox argued that the plaintiff’s initial claim with his selected arbitrator did not constitute “filing” under the DRP because it was not with the correct arbitrator.

The arbitrator found in favor of Xerox, holding that the plaintiff failed to bring a case against Xerox in the appropriate amount of time. The plaintiff filed a motion in district court to set aside the arbitrator’s award based on the alleged bias and misconduct of the arbitrator. The trial court agreed with the plaintiff and reversed the arbitrator’s decision. However, an appellate court reversed the trial court’s decision, finding that there was no actual conflict of interest, and the arbitrator did not limit the plaintiff’s ability to present evidence. Thus, the court ordered that the arbitrator’s decision in favor of Xerox be reinstated.

Texas Supreme Court rejects plaintiff’s breach-of-contract claim in unambiguous oil and gas farmout agreement

In Barrow-Shaver Resources Co. v. Carrizo Oil & Gas, Inc., on June 28, 2019, the state’s high court issued an opinion in a Texas breach-of-contract case involving a farmout agreement. Generally, a farmout agreement is one in which a party that owns rights to drill for oil on a property agrees to allow another entity to drill on the property in exchange for defined rights. While the underlying claim arose in the context of a dispute involving Texas oil and gas law, the court ultimately resolved the case by applying fundamental contract law.

According to the court’s opinion, the plaintiff was a company that engaged in oil and gas drilling, and the defendant was a current leaseholder of a tract of land. The parties entered into an agreement whereby the plaintiff would drill on the leasehold property. Among other terms included in the contract was a consent-to-assign term, which is the focus of this appeal.

Initially, the contract provided that, “The rights provided to [the plaintiff] under this Letter Agreement may not be assigned, subleased or otherwise transferred in whole or in part, without the express written consent of [the defendant] which consent shall not be unreasonably withheld.” However, the agent for the defendant later submitted a revised draft of the contract, eliminating the phrase “which consent shall not be unreasonably withheld.”

The plaintiff took issue with the removal of this phrase, and was verbally reassured by the defendant that, even without the term in the contract, consent would not be withheld. Ultimately, the final version of the contract provided that, “The rights provided to [the plaintiff] under this Letter Agreement may not be assigned, subleased or otherwise transferred in whole or in part, without the express written consent of [the defendant].”

The plaintiff spent $22 million drilling wells, but was unsuccessful in establishing production. At that time, another company approached the plaintiff interested in purchasing the plaintiff’s drilling rights. The plaintiff negotiated an agreement with the company, and submitted the agreement to stakeholders, all of which approved the assignment of the plaintiff’s rights except for the defendant. As a result of the defendant’s refusal to consent to the assignment, the deal fell through. The plaintiff then sued the defendant for breach-of-contract, fraud and tortious interference.

The Court’s Decision

Ultimately, the court rejected each of the plaintiff’s claims against the defendant, first discussing the breach-of-contract claim. The court explained that when a contract is unambiguous, interpretation of the agreement is a matter of law which is to be resolved by a judge. Despite the plaintiff’s arguments to the contrary, the court concluded that the contract was unambiguous because it provided an unqualified right for the defendant to refuse to consent to the assignment of the plaintiff’s drilling rights. In so holding, the court rejected the plaintiff’s request to read in an implied requirement of good faith, noting that Texas contract law imposes no such duty.

The court then discussed the plaintiff’s fraud claim, holding that the plaintiff could not rely on the defendant’s oral assurances that consent would not be withheld and therefore, the defendant was not liable for fraud. The court noted that it is a basic principle of contract law that “a written contract vitiates any oral promises.” Here, the court explained that regardless of what the defendant may have told the plaintiff during contract negotiations, the only relevant agreement between the parties was the written document. The court went on to hold that because there was no limitation included in the contract regarding the defendant’s ability to withhold consent, the plaintiff’s fraud claim must fail.

Are You Involved in a Texas Oil and Gas Dispute?

Texas oil and gas law can be exceedingly complex. The Law Offices of Gregory D. Jordan helps individuals and businesses effectively navigate the legal system to resolve their claims efficiently and practically. Through his Austin oil and gas practice, Attorney Jordan confidently serves clients throughout the State of Texas, including those involved in the Eagle Ford Shale and in the Permian Basin, and he has been doing so since 1989.

Texas High Court Holds Limitation-Of-Liability Clause Can Effectively Bar a Party From Obtaining Punitive Damages

In November 2018, the state supreme court issued a written opinion in a Texas breach of contract case discussing whether a clause purporting to limit the availability of punitive damages in a contract between two business was enforceable. Ultimately, the court concluded that the term was enforceable and reversed the lower court’s award of punitive damages.

According to the court’s opinion, the plaintiffs planned to purchase an aircraft from the defendant manufacturer, Bombardier. The nature of the transaction was somewhat complex in that it involved several purchasing companies and subsidiaries; however, in essence, the transaction was for the sale of an aircraft.

During negotiations, Bombardier required the plaintiffs to execute a management agreement so that Bombardier could handle preliminary matters such as inspection and registration of the aircraft. The contract contained a clause stating that neither party could be held liable to the other party for any “indirect, special or consequential damages and/or punitive damages for any reason, including delay or failure to furnish the aircraft or by the performance or non-performance of any management services covered by this Management Agreement.”

While Bombardier marketed the plane as new, the aircraft’s engines were previously installed on other planes. When the plaintiffs found this out, they filed several claims against Bombardier, including a claim for punitive damages. The case proceeded to trial, and the jury awarded $2,694,160 in actual damages for fraud and $5,388,320 in exemplary (punitive) damages.

Bombardier appealed, making several arguments including that the award for punitive damages was improper based on the valid agreement signed by the plaintiffs. Initially, the court agreed with the plaintiffs that, absent the agreement, punitive damages would have been appropriate. However, the court explained that it has “long recognized the strongly embedded public policy favoring freedom of contract,” and that the parties in this case indisputably entered into a contract agreeing to waive any right to pursue punitive damages.

The plaintiffs argued that Bombardier knew that the engines were not new and violated a fiduciary duty when it failed to inform them that the engines were used. However, the court held that the plaintiffs’ general claim that Bombardier fraudulently concealed this information did not specifically mention the violation of a fiduciary duty. Thus, the court did not consider whether the violation of a fiduciary duty eliminated any protection the contract provided to Bombardier. Instead, the court held that any fraud on Bombardier’s part did not void the agreement because the court must “respect and enforce terms of a contract that parties have freely and voluntarily entered.”

Contact an experienced business litigation attorney

When success matters, every decision you make for your business is important. Choosing which Austin business litigation firm to handle the unique issues your business faces is no exception. At the Law Offices of Gregory D. Jordan, we have over 25 years of experience assisting businesses in dealing with the full range of issues they confront, including breached contracts and business fraud cases. We also provide guidance and advice to companies looking to anticipate their future needs. To learn more about how we can help your business through the issues it faces, call 512-419-0684 to schedule a consultation today.

Are Texas Arbitration Agreements Between Employers and Their Employees Always Enforceable?

Over the past decade, it has become common to see arbitration agreements in a variety of business agreements. Indeed, arbitration is the preferred method for many businesses to resolve all kinds of Texas business disputes, whether a dispute is between a company and its customers, employees, suppliers or another business.

Recently, forced arbitration clauses have come under fire, with appellate courts across the country hearing a wide range of cases involving the circumstances in which arbitration agreements are valid. Last year, the U.S. Supreme Court issued an opinion strengthening a business’ ability to compel arbitration based on a validly executed arbitration agreement.

The case consisted of three separate cases that were consolidated before the Court. In each case, employees signed agreements before or during their employment, agreeing that they would resolve any claims that arose during their employment individually and through arbitration, rather than through the court system.

Each of the three cases was based on a dispute that is not relevant to the issue at hand. What is important is that an employee filed a claim against his employer in federal court. The case was filed as a “class action lawsuit,” meaning that a single employee filed the claim, but did so on behalf of other similarly situated employees. The employers sought dismissal of the plaintiff’s claims against them, asking the court to enforce the agreement in which the employees agreed to resolve their grievances through arbitration.

The employees argued that the clause in the agreement requiring they resolve their claim individually violated their rights under the National Labor Relations Act (NLRA). Specifically, the right to take “concerted action” with fellow employees against an employer. The lower court agreed with the employees. On appeal to the Ninth Circuit, the court added that, because the agreement violated the NLRA, the entire contract was invalid, including the arbitration portion of the agreement. The employers appealed the case to the United States Supreme Court.

In its opinion, the Court noted that the terms of the agreement were clear in that the contract called for employees’ claims to be resolved individually and through arbitration. The Court acknowledged that the National Labor Review Board (the federal agency that is responsible for enforcing the NLRA) believed that compelling individualized dispute resolution was a violation of the NLRA. However, the Court added that this was a recent change in the National Labor Review Board’s policy.

The U.S. Supreme Court ultimately reversed the lower courts’ decisions, notwithstanding the National Labor Review Board’s agreement with the employees. The Court explained that the Federal Arbitration Act (FAA) instructs federal courts “to enforce arbitration agreements according to their terms” and that the NLRA “does not mention class or collective action procedures.” Thus, the Court determined that the NLRA does not “displace” the FAA.

The Court reasoned that, when presented with two acts of Congress that could possibly be read to conflict with one another, if possible, the Court must read both in a manner such that there is no conflict. Thus, the Court based its decision on the fact that the FAA explicitly condones individualized dispute resolution and the NLRA does not confer a right to pursue a class action lawsuit.

Are you involved in a Texas business dispute?

When success matters, every decision you make is important. Choosing which Texas business law firm will handle your case is no exception. At the Law Offices of Gregory D. Jordan, we have over 25 years of experience assisting businesses in dealing with the full range of issues they confront, including breach of contract, employment law and franchise litigation. To learn more about how we can help your business through the issues it faces, call 512-419-0684 to schedule a consultation today.

The Duties of the Holder of the Executive Right to Minerals

In the case of Texas Outfitters, LLC vs. Nicholson, the Texas Supreme Court examined the holder of the executive right’s duty of utmost good faith and fair dealing to non-participating mineral interest owners. In Texas Outfitters, the holder of the executive right to lease minerals refused to sign a lease which the owner of a non-participating mineral interest alleged it should have signed.

A company called Texas Outfitters, LLC purchased over a thousand acres, including 1/24th of the mineral rights, as well as the exclusive right to lease 11/24th of the mineral rights retained by the sellers of the property. At the time, the land was not leased and had no oil and gas production. Approximately a decade after the sale of the land, the owners of the remaining 50 percent of the minerals leased to El Paso Oil Exploration and Production Company. El Paso made the same offer to Texas Outfitters; however, Texas Outfitters refused to lease even though the sellers made it clear to Texas Outfitters that they wanted Texas Outfitters to lease. Ultimately, the sellers filed suit against Texas Outfitters for breaching its duty of good faith and fair dealing as the executive holder of the right to lease the mineral rights. The sellers sought damages in the amount that they lost due to Texas Outfitters refusing to lease the mineral rights.

At a bench trial, the trial court found in favor of the sellers, holding that Texas Outfitters did not act in good faith and breached its duty as the holder of the executive right. The case was eventually appealed to the Texas Supreme Court. The Court looked at the history of the executive right and ultimately held that, in this case, Texas Outfitters breached its duty of good faith and fair dealing where it engaged in acts of self-dealing to the benefit of its interest in the surface estate and to the detriment of the owners of the mineral estate. The Court stated that Texas Outfitters, in refusing to lease the mineral rights, did so “in acts of self-dealing that unfairly diminished the value of the non-executive interest.” This action “crossed the line” bringing Texas Outfitters, LLC into the realm of breaching its duty to the non-executive rights holder.

Attorney Gregory D. Jordan is an oil and gas attorney with offices in the Austin area. To learn more, visit http://www.theaustintriallawyer.com/

Law Offices of Gregory D. Jordan
5608 Parkcrest Drive, Suite 310
Austin, Texas 78731
Call: 512-419-0684

Texas fines a cryptocurrency investment firm

An investment firm that marketed cryptocurrency in Texas has been fined and ordered to provide restitution to its investors. Texas security regulators reported that Mintage Mining LLC has agreed to pay the penalties and restitution. This agreement came on the heels of an 18 month long investigation by Texas security regulators of what they characterized as increasing fraud in the new cryptocurrency industry.

The Texas State Securities Board had initially alleged that the company was committing fraudulent and misleading advertising in relation to the trading and the creation (“mining”) of cryptocurrencies such as Bitcoin. The Board also alleged that one of Mintage Mining’s affiliates was illegally offering its members commissions if they recruited more members.

Mintage Mining LLC, with its headquarters in Utah, is the first cryptocurrency investment firm to be ordered to pay fines and restitution in the state of Texas. The company was fined $25,000 and the restitution to investors was approximately $100,000, as estimated by the company. “We got this one stopped early,” said Joe Rotunda, director of enforcement at the Texas State Securities Board. “This thing would have continued to sell and could have spread like wildfire throughout Texas. It didn’t have that opportunity.”

A spokesperson for Mintage Mining LLC stated that the company was agreeing to the order of the Texas State Securities Board in order to clear its name and argued that the order did not mention fraud charges but merely a registration violation. The company spokesperson argued that the new “digital coins” were not financial products that actually needed to be registered in the state.

The Texas State Securities Board has reported that there has been a significant increase in potential cryptocurrency fraud in the state. The instances of alleged fraud in this burgeoning industry have arguably now surpassed the claims of fraud in the oil and gas industry, real estate industry and stock trading industries.

Jury awards no damages in sex discrimination trial against Baker Tank

A Federal jury awarded no damages to a plaintiff who sued her employer for sexual discrimination and harassment. The trial was held in Marshall, Texas’ Federal Courthouse and was presided over by U.S. Chief District Judge Rodney Gilstrap. The trial lasted three days.

The case began when the plaintiff filed a complaint with the Equal Employment Opportunity Commission (EEOC) alleging her employer, Smith County Baker Tank, ignored her complaints of sexual harassment, discrimination and a hostile work environment. The lawsuit alleged violations of Title VII, the Lilly Ledbetter Fair Pay Act, the Equal Pay Act and the Texas Employment Discrimination Act. The lawsuit claimed that throughout the plaintiff’s employment at Baker Tank’s Arp facility, she earned less than her male co-workers with similar jobs and was also subjected to sexual harassment and a hostile work environment. She alleged that male co-workers and supervisors would make sexist and inappropriate comments and engage in inappropriate behavior in her presence.

The plaintiff was seeking punitive damages between $48,000 and $480,000 as well as $15,000 in compensatory damages for lost pay. Further, the plaintiff sought damages for physical and emotional pain due to the discrimination and hostile working environment in the amount of $50,000 to $150,000, which represented her yearly salary for the three years she worked at Baker Tank.

The jury denied the plaintiff’s pay gap claim and found that she did not prove that she was paid less than her male counterparts because she was female. The jury also found that although she did prove that more than one co-employee harassed her because of her sex, this harassment did not rise to the level of creating a hostile work environment that would alter the terms of her employment. Therefore, the jury awarded no damages to the plaintiff.

Attorney Gregory D. Jordan is an employment attorney who represents employers and employees with offices in the Austin area. To learn more, visit http://www.theaustintriallawyer.com/

Texas jury awards $60 million in oil and gas royalty fraud case

A jury in Roby, Texas has awarded a group of oil and gas investors $60 million, making it the largest verdict ever in Fisher County. The case stemmed from a fraudulent scheme concocted by two men to cut other partners out of profits from the sale of oil and gas leases, thus keeping the profits for themselves. The fraud was allegedly planned and performed by attorney Kerwin Stephens and oilman Chester Carroll.

The issue began when Richard Roughton and Lowry Hunt, along with other investors, acquired mineral and property rights to 25,000 acres in the Three Finger/Black Shale region of the Cline Shale in West Texas. Roughton then brought in as additional investors his attorney, Stephens, and Roughton’s best friend, Carroll. They created a partnership called the Alpine Group. The leases were then transferred from Roughton and Hunt to the Alpine Group. It was then that Stephens and Carroll allegedly conspired to cut the other partners out of any profits obtained from subsequently selling the leases.

Stephens and Carroll were accused of fraudulently convincing Roughton and Hunt to lower their percentages of ownership in the leases, indicating to the two that Stephens and Carroll were also lowering their interests, but they actually did not. This was done by allegedly convincing Roughton and Hunt that there was no buyer for any of the leases, but actually there was a buyer lined up by Stephens and Carroll. Instead of lowering their ownership interest, Stephens and Carroll purportedly increased their ownership interest in the leases. Then, unbeknownst to Roughton and Hunt, Stephens and Carroll allegedly sold an additional 17,000 acres of leases to a buyer, splitting the money for themselves.

The verdict on behalf of Hunt and Raughton includes $3 million in actual damages plus more than $7 million in returned profits and $18 million in punitive damages. Two additional plaintiffs in the trial, Tiburon Land and Cattle and Trek Resources, both of Dallas, were awarded $33.1 million, including $24 million in actual damages and $9 million in exemplary damages.

Attorney Gregory D. Jordan is an oil and gas litigation attorney with offices in the Austin area. To learn more, visit http://www.theaustintriallawyer.com/

Co-owner dispute at Spider House in Austin, Texas gets serious

The Spider House Cafe and Ballroom has been a famous Austin college hang-out since it opened its doors in 1995. Most customers, however, probably do not know of the legal battle between the two co-owners of the business, John Dorgan and Conrad Bejarano. In October of 2018, Dorgan filed a lawsuit against Bejarano and an employee of Spider House, Jeremy Rogers. The lawsuit accuses both men of libel and slander against Dorgan and Spider House. The lawsuit has brought to light many instances of alleged impropriety in the business and on the premises.

The lawsuit stems from a social media post by Rogers and his wife asserting that Dorgan sexually assaulted his wife in 2014. A day after the post, Bejarano stated that he was banning Dorgan from the property, of which he is still a co-owner. In the lawsuit, Dorgan is seeking monetary damages as well as a declaratory judgment that Bejarano has no legal authority to ban Dorgan or constrain his ownership. There is no record of Bejarano filing any kind of legal document restricting Dorgan from the property.

Motion to Dismiss
On December 21, 2018, Bejarano filed a motion to dismiss Dorgan’s lawsuit, arguing that the lawsuit is inhibiting Bejarano’s free speech. The motion relies on the Texas Citizens Participation Act, which specifically protects free speech made in connection with a “matter of public concern.” Bejarano also filed an answer to the lawsuit denying the substantive claims.

Attorney Gregory D. Jordan is a business litigation and corporate law attorney with offices in Austin who has handled matters under the Texas Citizens Participation Act. To learn more, visit http://www.theaustintriallawyer.com/

Retaliation claim over firing that took place soon after workplace injury should have gone to jury

The close proximity in time between a construction worker’s termination and his filing of a workers’ compensation claim, along with other factors that called the employer’s justification into question, should have been enough to get the employee past the employer’s motion for a judgment in their favor, the U.S. Court of Appeals for the Fifth Circuit held recently in a retaliatory termination case.

Reversing the trial court in a case in which the worker was fired just 15 days after he injured himself in a fall from a scaffold, and 11 days after he filed a workers’ compensation claim, the court said that the worker had presented enough evidence to get his case to the jury. The court, in an opinion written by Judge Catharina Haynes, called the judge’s decision to direct a verdict in favor of the employer “unexplained and difficult to discern.”

The Texas Supreme Court, in Cont’l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 451 (Tex. 1996), set out a list of factors for trial courts to consider when deciding whether unlawful retaliation played a role in a termination following a workers’ compensation claim:

  • Did the manager making the decision on the termination have knowledge of the compensation claim?
  • Did the manager express a negative attitude toward the employee’s injured condition?
  • Did the manager fail to adhere to established company policies?
  • Is there evidence of discriminatory treatment in comparison to similarly situated employees?
  • Is there evidence that the stated reason for the discharge was false?

Here, the Fifth Circuit, without passing on the merits of the employee’s retaliation claim, found more than enough evidence to withstand the employer’s motion for judgment as a matter of law.

First, the firing took place two weeks after the injury, and the manager was aware of both the injury and the subsequent filing of a worker’s compensation claim.

Second, the manager failed to follow the company’s progressive discipline policy — he jumped from Step One (verbal warning) to Step Five (termination), skipping the intermediate steps.

Third, the manager expressed a negative attitude toward the employee, describing his injury as a “supposed injury” and his physical restrictions as “self-imposed.”

Fourth, the manager — who in fact was the employer’s safety officer and not the employee’s direct supervisor at the time of the accident — offered several, shifting explanations for why the employee was fired. The employee was initially verbally warned for failing to pick up paperwork, then later fired after the manager accused him of being profane and insubordinate on a single occasion. However, the company’s documentation of the firing mentioned only “Violation of Safety Rules” and “Violation of Company Policy/Practices.” It described the employee’s injury as an occasion in which the employee “took it upon himself to utilize a scaffold of which he was not trained or authorized to use.”

The court decided that the circumstances surrounding the employee’s termination were circumstantial evidence of retaliatory motive.

“[The employee] has presented evidence to support the notion that the stated reason for discharge was false,” the court ruled, sending the retaliation claim back to the lower court for retrial.

The case is Cristain v. Hunter Buildings and Manufacturing LP, No. 17-20667 (5th Cir., decided Nov. 14, 2018).

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