by Kelsi White
Rolls v. Packaging Corp. of Am. Inc., 34 F.4th 431 (5th Cir. 2022).
In Rolls, the Fifth Circuit affirmed (1) the denial of a motion to remand and (2) the grant of summary judgment on a Louisiana plaintiff’s wrongful-death claims for the death of her husband in a workplace explosion. This case is useful for review if you are making improper-joinder arguments or handling a case involving the workers’ compensation bar, particularly in Louisiana.
The plaintiff’s husband was employed by a company called Elite but was performing repairs at a mill owned by defendant PCA when he died in an explosion at the mill. PCA had removed the Louisiana plaintiff’s state-court case against PCA and a PCA supervisor-employee, arguing that the supervisor-employee had been improperly joined to destroy diversity jurisdiction. The district court agreed and denied the plaintiff’s motion to remand.
PCA then moved for summary judgment, arguing that the plaintiff’s claims were barred by the exclusive-remedy provision of the Louisiana Workers’ Compensation Act (LWCA) because PCA was the decedent’s statutory employer. The plaintiff argued that PCA was not a statutory employer, and even if it were, her claims fell under the intentional-acts exception to the LWCA’s exclusive-remedy provision. The district court granted summary judgment for PCA.
On appeal, the plaintiff first argued that the district court erred in analyzing improper joinder. She contended that the district court erred by piercing the pleadings and weighing evidence like a trier of fact would in deciding that the PCA supervisor-employee was improperly joined to defeat diversity jurisdiction. In rejecting the plaintiff’s procedural argument, the Fifth Circuit emphasized its prior holding in Smallwood v. Illinois Central Railroad Co., 385 F.3d 568, 573 (5th Cir. 2004), which permits district courts to pierce the pleadings and make a summary inquiry as to whether “discrete and undisputed facts” preclude recovery against the non-diverse defendant. The Fifth Circuit disagreed with the plaintiff’s characterization that the district court weighed any evidence; instead, the district court credited statements in a declaration that were not contravened, akin to a summary-judgment inquiry.
After confirming the district court properly followed the Smallwood procedure, the Fifth Circuit decided that the plaintiff did not have a plausible claim against the PCA supervisor-employee. The plaintiff could not establish the supervisor-employee’s personal liability under Louisiana law in light of a declaration that the supervisor-employee had submitted and the plaintiff had failed to contravene.
The Fifth Circuit then turned to the plaintiff’s challenge to the district court’s grant of summary judgment based on the LWCA’s exclusive-remedy provision. The Fifth Circuit decided that PCA was a statutory employer of the decedent pursuant to a provision of a “purchase order” for the repair work that the decedent’s employer, Elite, was providing to PCA. The terms and conditions of that purchase order were detailed on a website, referenced in the purchase order itself, where Elite and PCA agreed that PCA was the statutory employer of Elite’s employees while they were performing work under the purchase order. After deciding PCA was a statutory employer, the Fifth Circuit then rejected the plaintiff’s argument that her claims fell under the intentional-acts exception to the LWCA. That exception requires proof that the relevant actor was substantially certain that the injury would result from his action, and the plaintiff could not meet this high threshold.
Owens v. Circassia Pharmaceuticals, Inc., 33 F.4th 814 (5th Cir. 2022).
In this case, the Fifth Circuit discusses the type of evidence required to meet the “unworthy of credence” standard for pretext in employment-discrimination cases under Reeves v. Sanderson Plumbing Products., Inc., 530 U.S. 133, 147 (2000).
The plaintiff, Owens, sued her employer, Circassia, alleging that she was passed over for promotions and discriminated against based on her ethnicity and gender. Owens’ complaints arose after a prolonged period of critical feedback between Owens and her employer about her performance in different areas, and she had been placed on a Performance Improvement Plan (PIP). She was a strong performer as a salesperson, but had trouble managing others. After a human resources employee investigated her discrimination allegations and found them unsubstantiated, she also alleged that Circassia was involved in unlawful kickbacks and illegal conduct, allegations which were also unsubstantiated following an investigation. Eventually, Circassia terminated Owens based on her failure to meet the PIP.
The district court granted summary judgment for Circassia on all of Owens’ claims (discrimination, retaliation, wrongful-discharge based on whistleblower status, among others). On appeal, Owens challenged the district court’s grant of summary judgment on her discrimination claims under Title VII and 42 U.S.C. § 1981. The Fifth Circuit held that she had forfeited or waived challenges on her other claims.
The Fifth Circuit held that Owens could make out a prima facie case for discrimination, particularly because she was qualified for her job and replaced by a white male. As for Circassia’s burden to offer a legitimate non-discriminatory reason for adverse action against Owens, Circassia claimed it fired Owens for her poor performance, and Owens did not dispute that this justification satisfied Circassia’s burden on this step. The Fifth Circuit then focused on pretext, which was the “crux” of the appeal.
In seeking to prove pretext to survive summary judgment, Owens argued that Circassia’s justification was “unworthy of credence” based on her solid performance at her job. The Fifth Circuit held that proving an employer’s justification is false is not “necessarily enough,” although the Court recognized in a footnote that the United States Supreme Court in Reeves held that it could be enough in some cases with sufficient evidence to support a rational inference of discrimination.
The Fifth Circuit held that this case was one contemplated by Reeves, in which, even if a reasonable fact-finder agreed that the purported justification was false, there was no evidence to support that discrimination was the real reason for the adverse action. In reaching that conclusion, the Fifth Circuit extensively analyzed and rejected each category of Owens’s proffered evidence of pretext: (i) disparate treatment, (ii) a failure to investigate her discrimination claims, and (iii) an illogical and inconsistent basis for termination.
This case is an important one for any plaintiff seeking to overcome summary judgment and demonstrate pretext based on attacking the employer’s purported justification as false. The plaintiff must focus on presenting evidence of discriminatory motivation—not just creating a fact dispute that the employer is lying.
ETC Sunoco Holdings, L.L.C. v. United States of America, 36 F.4th 646 (5th Cir. 2022).
In this tax-refund dispute, the Fifth Circuit provides clarity on the “special circumstances” exception to collateral estoppel.
Sunoco, the plaintiff, had sued the IRS for a partial refund on its income tax payments for 2010 and 2011. The district court held that the refund argument Sunoco raised had been fully and actually litigated in an earlier case before the Court of Federal Claims and was therefore subject to dismissal under collateral estoppel.
Sunoco had developed a creative argument that it was entitled to over $300 million in refunds for 2005-2008 and nearly $150 million for 2010-2011 based on a blended-fuel credit in the American Jobs Creation Act for excise-tax liability for motor fuel. The Court of Federal Claim and the Federal Circuit, however, had rejected Sunoco’s argument for refunds for those years.
Sunoco then sued the IRS again five years later, seeking a refund for 2010 and 2011, making the same argument as before but in the Northern District of Texas. The district court held that issue preclusion barred Sunoco’s suit.
On appeal, Sunoco argued that the district court erred in applying issue preclusion by failing to consider a fourth factor: whether “special circumstances” would render preclusion “inappropriate or unfair.” The Fifth Circuit had previously held that such special circumstances can exist when there has been an intervening change in controlling legal principles. Sunoco argued that this exception should apply because since Sunoco lost in the Federal Circuit, two of Sunoco’s competitors had appealed similar rulings to other circuits, which are pending. Sunoco argued that eventually these other cases could make their way up to the Supreme Court and create an intervening change in the law.
The Fifth Circuit squarely rejected Sunoco’s attempt to fit this case into the “change in the law” exception based on a hypothetical, future change in the law. If a hypothetical, future change in the law could constitute a special circumstance, “then preclusion would never apply.”
The Fifth Circuit then offered further clarification on when the “special circumstances” exception to collateral estoppel applies: only when there is non-mutuality of parties. Because the IRS and Sunoco had both been parties to the previous case, there was mutuality, and so the “special circumstances” exception was inapplicable.