Exhaustion of Administrative Remedies under Texas Law is Condition Precedent, not Jurisdictional Prerequisite: Fifth Circuit

Practical Law Legal Update 5-569-8185 (Approx. 5 pages)

Exhaustion of Administrative Remedies under Texas Law is Condition Precedent, not Jurisdictional Prerequisite: Fifth Circuit

by Practical Law Labor & Employment

Background

The plaintiff worked in government sales for Verizon Wireless Texas, LLC and its related entities. In September 2009, after her team failed to meet sales quotas, she was advised by her supervisor, Jason Smith, to consider moving to a less prestigious role with no managerial responsibilities. The plaintiff lodged a complaint with human resources, claiming that Smith discriminated against her based on her sex. Verizon conducted an investigation into the plaintiff's complaint, but concluded that it had no basis.

Around the same time, Verizon learned that several of its employees, including the plaintiff, had engaged in a manipulative scheme to enlarge their commissions at Verizon's expense. After conducting an investigation into the scheme, Verizon terminated all those involved for violating Verizon's honesty policy in its code of conduct in July 2010.

After her termination, the plaintiff filed charges of gender discrimination and retaliation with the EEOC and the TWC. Once she received her EEOC right to sue letter, but before she received her TWC right to sue letter, the plaintiff filed suit in Texas state court.

Verizon removed the case to federal court and moved for dismissal, or in the alternative, summary judgment. The district court declined to dismiss the plaintiff's claims for her failure to receive the TWC right to sue letter before filing suit. The court held that her eventual receipt of the letter cured her initial failure because the requirement was not jurisdictional. However, the court granted summary judgment in favor of Verizon because she failed to:

Make a prima facie case for her gender discrimination and retaliation claims.
Rebut Verizon's non-pretextual reason for terminating her.

The plaintiff appealed her retaliation claim to the Fifth Circuit.

Outcome

The Fifth Circuit affirmed the district court's holding that, under Texas law, the plaintiff's failure to receive a right to sue letter was not a jurisdictional defect, but was a condition precedent that was cured by her eventual receipt of the letter. In reaching this conclusion, the Fifth Circuit noted:

In Re USAA, the Texas Supreme Court overruled Schroeder v. Texas Iron Works, Inc. (813 S.W.2d 483 (Tex. 1991)), which held that the failure to exhaust administrative remedies was a jurisdictional prerequisite. Instead, the court held that:
- since Schroeder, courts are reluctant to find that a provision is jurisdictional without clear legislative intent mandating it;
- the requirement that plaintiffs exhaust their state remedies, which incorporates the right to sue requirement, was not expressly required by the TCHRA and therefore lacked the requisite clear legislative intent;
- the US Supreme Court consistently construed Title VII's requirements to be condition precedents, not jurisdictional prerequisites; and
- Title VII's interpretations should be relied on when construing the TCHRA, and the statutes' requirements should be harmonized.
(307 S.W.3d 299 (Tex. 2010).)

The Fifth Circuit then evaluated the plaintiff's claim based on the merits, holding that she failed to prove the causation element of her retaliation claim and noting that:

She lacked close temporal proximity between the time she lodged her complaint and the time she alleged she was retaliated against because:
- she was fired ten months after she made her complaint;
- she provided no justification for why Verizon would wait so long to retaliate against her; and
- the record showed no evidence that she was subjected to any other adverse treatment aside from her termination.
The supervisor who was the sole decisionmaker in the plaintiff's termination had no knowledge of her complaint, and therefore the only way she could prove causation is if she could show that the decisionmaker merely rubber stamped Smith's decision to terminate her.
There was no evidence that the decisionmaker merely rubber stamped Smith's decision because:
- Smith was part of a three-person team that informed the decisionmaker about the manipulative scheme in which the plaintiff was involved; and
- the decisionmaker relied on an independent investigation when making his decision to terminate those involved in the scheme, which was a superseding cause of the decision to terminate the plaintiff.
The Fifth Circuit affirmed the district court's decision to grant summary judgment to Verizon.

Practical Implications

In this decision, the Fifth Circuit eases the administrative burden on plaintiffs filing claims under the TCHRA and makes it more difficult for employers in Texas to evade discrimination and retaliation claims by claiming jurisdictional defects. Employers in all circuits should note the court's reliance on how Title VII's administrative requirements are construed and anticipate that other circuit courts may rule similarly.

Exhaustion of Administrative Remedies under Texas Law is Condition Precedent, not Jurisdictional Prerequisite: Fifth Circuit | Practical Law