Frank Sabatelli v. Baylor Scott & White Health, et ( 2020 )

Case: 19-50047 Document: 00515610925 Page: 1 Date Filed: 10/21/2020
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
October 21, 2020
No. 19-50047 Lyle W. Cayce
Clerk
Frank Sabatelli, on behalf of himself and on behalf of all
others similarly situated,
Plaintiff—Appellant,
versus
Baylor Scott & White Health; Scott & White Clinic,
Defendants—Appellees.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:16-CV-596
Before Owen, Chief Judge, and Haynes and Costa, Circuit Judges.
Per Curiam:*
*
Pursuant to 5th Circuit Rule 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5th Circuit Rule 47.5.4.
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Frank Sabatelli was forced to resign from his job as a radiologist. He
brought claims of age and disability discrimination in federal court. The
district court rejected those claims at the summary judgment stage.
Meanwhile, long after he brought this suit, Sabatelli filed an arbitration
demand claiming that his forced termination violated the terms of his
employment agreement. But the district court held that he could not pursue
that arbitration after having first brought this lawsuit. We affirm the merits
rulings on the discrimination claims and conclude that Sabatelli waived his
right to arbitrate.
I.
Frank Sabatelli began working as a radiologist for the Scott & White
Clinic (SWC) in the Baylor Scott & White Medical Center when he was 52.
Sabatelli’s employment contract gave SWC authority to terminate him on
60-days’ written notice if two-thirds of the board found he was “perceived
as uncooperative, difficult to get along with,” or “incompatible” with
coworkers. It also required that “[a]ny controversies, disputes or claims
arising out of or relating to this Agreement, or breach thereof” be “resolved
solely by arbitration.” It would not take long for controversy about his
employment to arise.
We recite the history of Sabatelli’s employment at the hospital in the
light most favorable to him given the summary judgment posture. See Wease
v. Ocwen Loan Serv., L.L.C., 915 F.3d 987, 992 (5th Cir. 2019). But on any
account, his two-year tenure did not go well.
Coworkers frequently complained about Sabatelli, describing him as
“consistently hostile,” “difficult to work with,” and “demeaning.” He
made two colleagues cry. And several doctors spoke to him about complaints
that he had “either yelled at or belittled [others] in a condescending
manner.” While Sabatelli cannot dispute that these complaints were made,
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he disputes the underlying characterization of his conduct and says that the
interpersonal issues were not his fault. 1
Yet even Sabatelli acknowledges he had disagreements with nurse
Jennifer Varner and technician Matt Alvarado. He believed that they were
not only unprofessional, but also ageist. For instance, Varner once called
Sabatelli an “old fart,” and Alvarado said that he “was getting old and
forgetful like [Sabatelli].” Sabatelli also said that Varner implied he, unlike
the rest of the staff, was “old dead wood.” To make things worse, Sabatelli
had “routine conflicts” with Varner and Alvarado’s supervisor. And
although Sabatelli’s own supervisor was normally courteous, the supervisor
said several times that Sabatelli’s medical terminology was an “old thing”
from his “generation.”
After dealing with these conflicts for two years, Dr. Rob Watson—
SWC’s chief medical officer and the person who had hired Sabatelli—met
with Sabatelli and gave him the option of resigning or being terminated.
Sabatelli remembers Watson saying during the meeting that he “d[id]n’t
know what [Sabatelli was] discussing with [his] psychiatrist.” He also claims
that Watson gave him no explanation for the decision. Watson, on the other
hand, says he explained that Sabatelli had “continue[d] to have an abrasive
personality” despite being counseled on his interpersonal problems.
Whatever was said, all agree Sabatelli resigned the next day. SWC hired a
doctor in his early forties to replace Sabatelli.
Sabatelli sued SWC in federal court, alleging that his forced
resignation violated the Age Discrimination in Employment Act (ADEA) and
1
Several doctors testified that they had not seen Sabatelli be argumentative or
inappropriate in the workplace. And a former radiology manager testified that Sabatelli did
not yell at or belittle other employees.
3
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Americans with Disabilities Act (ADA). 2 SWC denied those allegations and
noted that the claims fell within the employment agreement’s broad
arbitration provision. Yet no one moved to compel arbitration at the pleading
stage. Nor did anyone seek arbitration during discovery, which culminated
in SWC filing a summary judgment motion.
Sixteen months into the lawsuit, with summary judgment pending,
Sabatelli filed an arbitration demand. He did not want to arbitrate the
discrimination claims. He instead alleged for the first time that SWC
breached the employment agreement by not giving him proper notice before
terminating him. SWC asked the arbitrator to dismiss on the ground that
Sabatelli had waived his right to arbitrate the breach-of-contract issue by
litigating his discrimination claims for over a year.
Back in federal court, the district court granted SWC’s motion for
summary judgment on the discrimination claims. Meanwhile, the arbitrator
denied SWC’s motion to dismiss and stayed proceedings until the federal suit
was completed.
SWC then filed a motion arguing that arbitration was not available on
the contract theory because Sabatelli had been pursuing his lawsuit for more
than a year. The court ruled in SWC’s favor, holding that Sabatelli could not
split his claims by pursuing some in court and a related one in arbitration.
II.
We first review the district court’s summary judgment dismissal of
the discrimination claims. Sabatelli tried to get his age discrimination claim
to trial using circumstantial evidence. There is a prima facie case of age
2
Sabatelli styled the suit as a class action on behalf of terminated SWC employees
over 40, but he never moved to certify that class.
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discrimination because he was qualified for the position and replaced by
someone younger. See Jackson v. Cal-Western Packaging Corp., 602 F.3d 374,
378 (5th Cir. 2010). But the hospital says it constructively terminated
Sabatelli because of his poor treatment of staff and failure to improve those
relationships after being told of the problem. An inability to get along with
coworkers, whoever is at fault for the problem, is a nondiscriminatory
justification. Shackelford v. DeLoitte & Touche, LLP, 190 F.3d 398, 408 (5th
Cir. 1999). So as is often the case with the McDonnell Douglas framework for
evaluating a circumstantial case of discrimination, Sabatelli’s ability to get to
a jury depends on whether he can produce evidence that the hospital’s
reasons were pretextual. Jackson, 602 F.3d at 378–79.
We agree with the district court that there is not a fact dispute on
pretext or the ultimate question of causation. Id. SWC did not give
inconsistent reasons for terminating his employment. Its story has never
changed: Sabatelli created workplace conflicts and refused to change his
behavior. SWC’s failing to give Sabatelli 60-days written notice of his
termination does not negate that, especially because he chose to resign in lieu
of termination. See EEOC v. Tex. Instr. Inc., 100 F.3d 1173, 1182 (5th Cir.
1996). And while Sabatelli tries to use the discriminatory comments of
Varner and Alvarado under a “cat’s paw” theory, he has not shown that they
exercised any leverage over Watson, who belongs to the same protected age
group as Sabatelli. Harville v. City of Houston, 935 F.3d 404, 413 n.30 (5th
Cir. 2019); Reed v. Neopost USA, Inc., 701 F.3d 434, 441–42 (5th Cir. 2012).
A comment from Watson is the basis for Sabatelli’s ADA claim.
Sabatelli contends that Watson perceived him as mentally impaired—and
discriminated against him on that basis—because Watson told him during the
termination meeting that “I don’t know what you’re discussing with your
psychiatrist.” That is too thin a statement to support a claim of direct
discrimination, which is how Sabatelli tries to prove his ADA claim. The
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statement does not refer to the decision to let Sabatelli go, so the factfinder
must make an inferential leap that Watson fired Sabatelli because he viewed
him as mentally impaired. Without more, that statement is not direct
evidence of disability discrimination. See Reed, 701 F.3d at 441 (citing Brown
v. CSC Logic, Inc., 82 F.3d 651, 655–56 (5th Cir. 1996)).
Sabatelli’s discrimination claims fail.
III.
That brings us to the trickier part of this case. Having filed this lawsuit
to pursue the discrimination claims, could Sabatelli later arbitrate his
contract claim?
We first note that when some claims are arbitrable and others are not,
it is not unusual to have separate litigation before an arbitrator and a judge.
See, e.g., Hebbronville Lone Star Rentals, L.L.C. v. Sunbelt Rentals Indus.
Servs., L.L.C., 898 F.3d 629, 631, 636 (5th Cir. 2018); Jones v. Halliburton
Co., 583 F.3d 228, 230, 242 (5th Cir. 2009). That makes sense because
“arbitration is a matter of contract.” Rent-A-Center, W., Inc. v. Jackson, 561
U.S. 63, 67 (2010). It is a way to resolve “disputes—but only those
disputes—that the parties have agreed to submit to arbitration.” First
Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943 (1995). Indeed, the Supreme
Court has recognized that “piecemeal litigation” may result when there are
“multiple claims, some arbitrable and some not.” KPMG LLP v. Cocchi, 565
U.S. 18, 19 (2011) (per curiam) (citing Dean Witter Reynolds Inc. v. Byrd, 470
U. S. 213, 217 (1985)). So nothing we say should be read to govern a situation
when only some claims are arbitrable.
But that is not the situation here. All of Sabatelli’s claims are subject
to arbitration. He agreed to arbitrate “any . . . claims arising out of or relating
to this Agreement, or breach thereof.” That broad language easily covers
both his discrimination and contract claims. See Gilmer v. Interstate/Johnson
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Lane Corp., 500 U.S. 20, 23, 35 (1991); Begole v. N. Miss. Med. Ctr., Inc., 761
F. App’x 248, 250 (5th Cir. 2019) (per curiam). Sabatelli does not contend
otherwise.
Despite the arbitration agreement, Sabatelli filed this suit in federal
court. The suit was allowed to proceed once SWC decided to fight the case
on the merits rather than compel arbitration. See In re Mirant Corp., 613 F.3d
584, 587–89, 592 (5th Cir. 2010). Arbitration can be waived. Nicholas v.
KBR, Inc., 565 F.3d 904, 907 (5th Cir. 2009). That is what SWC did in not
seeking to arbitrate this case after it was filed in federal court. It now
contends that Sabatelli’s bringing of this lawsuit likewise amounted to a
waiver of the arbitration clause. 3
Waiver of arbitration by litigation conduct—as opposed to an express
waiver—is not something we take lightly. Because the Federal Arbitration
Act advances a “liberal federal policy” in favor of arbitration, there is a
presumption against implied waiver. Moses H. Cone Mem’l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24 (1983); Miller Brewing Co. v. Ft. Worth Distrib.
Co., 781 F.2d 494, 496–97 (5th Cir. 1986). The presumption, though, is not
insurmountable. A party waives the right to arbitrate by “substantially
invoke[ing] the judicial process” to the “detriment or prejudice” of the other
side. Miller Brewing, 781 F.2d at 497.
3
Defendants argued waiver in the district court, though the court ruled on the
alternative argument of claim splitting. We can affirm on “any legal ground in the record.”
See Sanders v. United States, 736 F.3d 430, 435 (5th Cir. 2013) (citations omitted). And
waiver of arbitration based on litigation conduct is an issue for the court, rather than the
arbitrator, to decide. Vine. v. PLS Fin. Srvs., Inc., 689 F. App’x 800, 802–03 (5th Cir. 2017).
That is because “litigation-conduct waiver ‘implicates courts’ authority to control judicial
procedures or to resolve issues . . . arising from judicial conduct.’” Id. at 803 (quoting
Ehleiter v. Grapetree Shores, Inc., 482 F.3d 207, 219 (3d Cir. 2007)).
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Arbitration waiver is usually asserted against defendants who try out
federal court before seeking to arbitrate. See, e.g., Forby v. One Techs., 909
F.3d 780 (5th Cir. 2018); Mirant Corp., 613 F.3d at 584; Petroleum Pipe
Americas Corp. v. Jindal Saw, Ltd., 575 F.3d 476 (5th Cir. 2009). That makes
sense. It is unusual for the plaintiff who filed the court action to later want to
pursue arbitration. Indeed, we appear to have only one case involving a
waiver claim against a plaintiff who tried to arbitrate while the lawsuit she
filed was still pending. Nicholas, 565 F.3d at 907. The impetus for the
plaintiff’s change of heart in Nicholas was removal to federal court, so she was
no longer in her desired forum. Id. at 906–07.
In this circumstance, when the plaintiff is the reason there is a lawsuit
in the first place, the first requirement for implied waiver will generally be
satisfied. “[S]hort of directly saying so in open court, it is difficult to see how
a party could more clearly ‘evince a desire to resolve a dispute through
litigation” than filing a lawsuit. Id. at 908 (citing Gulf Guar. Life Ins. Co. v.
Connecticut General Life Ins. Co., 304 F.3d 476 484 (5th Cir. 2002)). As a
general matter, then, Sabatelli substantially invoked the judicial process by
filing this lawsuit (and then litigating it for 16 months before trying to
arbitrate).
The twist is that Sabatelli did not pursue the breach-of-contract theory
when he filed the suit. Waiver applies only if the litigated claim is the
“specific” claim the party seeks to arbitrate. Republic Ins. Co. v. PAICO
Receivables LLC, 383 F.3d 341, 344 (5th Cir. 2004) (citing Subway Equip.
Leasing Corp. v. Forte, 169 F.3d 324, 328 (5th Cir. 1999). So what is a claim
in this context?
As we have said in another context, a “claim” is any allegation
stemming from the “same nucleus of operative facts,” whatever the theory
of recovery. See ASARCO, L.L.C. v. Mont. Res. Inc., 858 F.3d 949, 956 (5th
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Cir. 2017). Sabatelli’s claims all related to the same event—his allegedly
wrongful termination—between the same parties. Our earlier evaluation of
age discrimination shows the factual overlap. Sabatelli has argued that
SWC’s failure to follow the employment agreement’s notice procedures
demonstrates that SWC’s nondiscriminatory explanation is pretextual.
Because the theory he seeks to arbitrate involves the same nucleus of
operative facts as the ones he pursued in federal court, and his own
arguments create an overlap between the two theories of recovery, Sabatelli
invoked the judicial process for the claim he now seeks to arbitrate.
Turning to the second waiver requirement, Sabatelli’s filing of this
lawsuit prejudiced SWC. “Delay, expense, and damage to a party’s legal
position” can constitute prejudice. Nicholas, 565 F.3d at 910. Sabatelli
delayed resolution of the case by litigating only his discrimination theories
while keeping his breach-of-contract theory on the back burner. The delay of
sixteen months was significant. See PAICO Receivables, 383 F.3d at 347; Price
v. Drexel Burnham Lambert, Inc., 791 F.2d 1156, 1159–60 (5th Cir. 1986). And
it would be much more costly for SWC to defend an arbitration after already
defending a case in court. If SWC had known that Sabatelli planned to
arbitration the contract claim, it could have sought to resolve the entire case
in one arbitration.
Just as we have held for defendants who test the waters of federal court
litigation before trying to arbitrate, Sabatelli should not get a “second bite at
the apple through arbitration” after he chose to litigate his termination in
federal court. See Mirant, 613 F.3d at 590 (citations omitted).
***
We AFFIRM the judgment of the district court.
9