San Antonio Water System v. Debra Nicholas

IN THE SUPREME COURT OF TEXAS
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NO . 13-0966
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SAN ANTONIO WATER SYSTEM , PETITIONER,
v.
DEBRA NICHOLAS, RESPONDENT
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ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE FOURTH DISTRICT OF TEXAS
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Argued January 13, 2015
JUSTICE BROWN delivered the opinion of the Court.
The Texas Commission on Human Rights Act (TCHRA) protects from retaliation employees
who oppose discriminatory employment practices. In this case Debra Nicholas, a former San Antonio
Water System (SAWS) employee, contends she was terminated because she confronted a male vice
president about his repeated lunch invitations to two female employees outside his department. We
hold no reasonable person could have believed the invitations gave rise to an actionable sexual-
harassment claim. Accordingly, Nicholas did not engage in a protected activity under the TCHRA
when she confronted the vice president about his behavior. We reverse the court of appeals’
judgment and dismiss Nicholas’s claim.
I
A Bexar County jury heard Nicholas’s action against SAWS. The jury found for Nicholas
and the trial court entered judgment on the jury’s verdict. The following facts were developed at trial.
In 2006, Nicholas was employed as chief of staff to David Chardavoyne, SAWS’s CEO.
Early that year, Chardavoyne called Nicholas into an in-progress meeting with Frank Stenger-Castro,
SAWS’s general counsel. Stenger-Castro told them that Lisa Spielhagen, a paralegal, informed him
she had been repeatedly invited to lunch by Greg Flores, a recently hired vice president, and was
uncomfortable with the invitations. According to Chardavoyne’s and Nicholas’s testimony, Stenger-
Castro told them Spielhagen said she felt harassed and that she would file a formal complaint if the
invitations persisted. Nicholas added that Stenger-Castro mentioned that Flores had also invited to
lunch a second employee, training consultant Sharon Snoga, though Stenger-Castro said he had not
personally spoken with Snoga.
Stenger-Castro, however, testified that Speilhagen did not complain about sexual harassment
or suggest she would file a complaint; rather, she simply found the invitations awkward and
inappropriate, and wanted them stopped. He testified he went to Chardavoyne out of an abundance
of caution because Flores’s behavior was “risky,” though he did not believe it violated SAWS’s
sexual-harassment policy.
Chardavoyne and Nicholas testified they met with Flores shortly after their meeting with
Stenger-Castro. Nicholas testified Flores admitted to inviting the women to lunch and once
complimented Snoga on her appearance but denied he intended to sexually harass either woman and
said he would change his behavior. Chardavoyne testified Nicholas did not say much at the meeting
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beyond reenforcing his admonishments to stop asking the women to lunch. Nicholas testified
Chardavoyne said he would not allow a member of the executive team to sexually harass anyone,
and that she told Flores it was “not a good idea for him to be going out with women in the
organization . . . by himself,” which “can be construed as inappropriate.” Nicholas testified she
further told Flores he risked losing his job if his conduct persisted. When asked if Nicholas intended
to counsel or reprimand Flores to prevent potential sexual harassment, Nicholas responded,
“Absolutely . . . because Frank Stenger-Castro . . . told us that if it didn’t stop, Lisa Spielhagen
would file a complaint.” Flores, on the other hand, denied a conversation with Chardavoyne and
Nicholas about his lunch invitations ever took place. He did, however, testify to sending Snoga two
emails in February 2006 in which he asked if she wore colored contacts and if she was making “an
indecent proposal.”
Chardavoyne resigned in 2008. His replacement chose to hire his own chief of staff, and
Nicholas was reassigned to an assistant vice president position that reported directly to Flores. In
2009, that position was eliminated as part of what SAWS contends were organization-wide cost-
cutting measures, and Nicholas was not interviewed for any other position. Nicholas maintains her
termination was retaliation for her confronting Flores, and that the retaliation was delayed because
Flores had no authority over her until her reassignment in 2009. Nicholas also complains she was
not interviewed for subsequent positions despite being qualified. She sued SAWS under the
TCHRA, alleging SAWS retaliated against her for opposing a discriminatory employment practice.
The jury found Nicholas opposed sexual harassment by counseling or reprimanding Flores,
was fired because of it, and awarded her nearly $1 million in damages. SAWS appealed, arguing no
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reasonable person could have believed sexual harassment under the TCHRA had occurred, and
therefore Nicholas did not engage in a “protected activity” under the TCHRA when she confronted
Flores. SAWS further argued Nicholas could not show a causal link between her confronting Flores
and her eventual termination nearly three years later, and that the trial court failed to apply a statutory
damages cap to Nicholas’s front-pay damages award. The court of appeals affirmed the trial court’s
judgment on all three issues, and SAWS sought our review. Because we hold Nicholas did not
engage in a protected activity under the TCHRA and consequently dismiss her claim, we do not
reach SAWS’s second and third issues.
II
SAWS is a governmental entity owned by the City of San Antonio that provides water and
wastewater services in Bexar and neighboring counties. As a governmental entity, it is generally
immune from suit. See Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 224 (Tex. 2004).
However, the Legislature has waived immunity for claims properly brought under the TCHRA.
Mission Consol. Indep. Sch. Dist. v. Garcia, 253 S.W.3d 653, 660 (Tex. 2008). But that waiver
extends only “to those suits where the plaintiff actually alleges a violation of the TCHRA by
pleading facts that state a claim thereunder.” Mission Consol. Indep. Sch. Dist. v. Garcia, 372
S.W.3d 629, 636 (Tex. 2012) (citing State v. Lueck, 290 S.W.3d 876, 881–82 (Tex. 2009)) (other
citations omitted). Accordingly, a plaintiff must state a claim for conduct that would violate the
TCHRA. See id. at 636–37. Otherwise, “any superficial reference to the [TCHRA] in a pleading
would be sufficient to establish the State’s consent to be sued—and additionally, the trial court’s
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jurisdiction over the claim—a result the Legislature did not intend.” Id. at 637 (citing Lueck, 290
S.W.3d at 882).
To establish a trial court’s jurisdiction over her TCHRA claim, a plaintiff must “plead the
elements of her statutory cause of action—here the basic facts that make up the prima facie case—so
that the court can determine whether she has sufficiently alleged a TCHRA violation.” Id. Nicholas
argues the trial court’s jurisdiction vested when she met what she describes as the “very minimal”
burden of establishing her prima facie case. But once a case has been fully tried on the merits, the
prima facie case is no longer relevant. See Wal-Mart Stores, Inc. v. Canchola, 121 S.W.3d 735, 739
(Tex. 2003) (“In discrimination cases that have not been fully tried on the merits, we apply the
burden-shifting analysis established by the United States Supreme Court. But when a discrimination
case has been fully tried on its merits, . . . a reviewing court does not engage in a burden-shifting
analysis.” (internal citations omitted)). Instead, we simply “inquire whether the evidence is legally
sufficient to support the jury’s ultimate finding.” Id.
Like a failure of proof at the prima facie stage, a failure to prove the elements of a TCHRA
claim after a trial on the merits deprives the trial court of jurisdiction. See Univ. of Hous. v. Barth,
403 S.W.3d 851, 853 (Tex. 2013) (per curiam) (holding that plaintiff’s failure to satisfy objective
component of good-faith test for reporting a violation deprived trial court of jurisdiction); In re
United Servs. Auto. Ass’n, 307 S.W.3d 299, 307 (Tex. 2010) (recognizing “when elements of a
statutory claim involve ‘the jurisdictional inquiry of sovereign immunity from suit,’ those elements
can be relevant to both jurisdiction and liability” (quoting Lueck, 290 S.W.3d at 883)). SAWS argues
there is no evidence Nicholas had a good-faith, reasonable belief that she engaged in a protected
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activity under the TCHRA. If SAWS is correct, the trial court had no jurisdiction over Nicholas’s
claim.
Nicholas argues SAWS failed to preserve this argument because it was not presented as a
legal-sufficiency challenge below. SAWS concedes it presented its argument below as a factual-
sufficiency challenge, but contends the point is nonetheless appropriately before this Court because
it implicates SAWS’s immunity from suit. We agree. The elements of a retaliation claim under the
TCHRA are jurisdictional in nature because “the Legislature has waived immunity only for those
suits where the plaintiff actually alleges a violation of the TCHRA by pleading facts that state a
claim thereunder.” Garcia, 372 S.W.3d at 636. We have consistently held that jurisdictional
arguments concerning immunity waiver cannot be waived. See Lueck, 290 S.W.3d at 881 (holding
elements of a Whistleblower Act claim are jurisdictional and may not be waived); Tex. Ass’n of Bus.
v. Tex. Air Control Bd., 852 S.W.2d 440, 445 (Tex. 1993) (holding jurisdiction “may be raised for
the first time on appeal” and may not be waived by the parties). It follows that “an appellate court
must consider all of a defendant’s immunity arguments, whether the governmental entity raised other
jurisdictional arguments in the trial court or none at all.” Dall. Metrocare Servs. v. Juarez, 420
S.W.3d 39, 41 (Tex. 2013) (per curiam); see also Rusk State Hosp. v. Black, 392 S.W.3d 88, 95
(Tex. 2012) (Even “if immunity is first asserted on interlocutory appeal, [the interlocutory-appeal
statute] does not preclude the appellate court from having to consider the issue at the outset in order
to determine whether it has jurisdiction to address the merits.”); Univ. of Hous. v. Barth, 313 S.W.3d
817, 818 (Tex. 2010) (per curiam) (holding court of appeals erred in concluding governmental entity
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waived jurisdictional challenge). We are accordingly obliged to consider SAWS’s jurisdictional
argument.
III
Because the TCHRA was enacted in part to “provide for the execution of the policies of Title
VII of the Civil Rights Act of 1964 and its subsequent amendments,” we look to relevant federal law
for guidance when the relevant provisions of Title VII are analogous. See TEX . LAB. CODE
§ 21.001(1); AutoZone, Inc. v. Reyes, 272 S.W.3d 588, 592 (Tex. 2008) (per curiam). The TCHRA
prohibits employers from engaging in retaliatory action against an employee for opposing a
discriminatory practice. TEX . LAB. CODE §§ 21.051, 055(1). To establish a violation, the employee
must show that: (1) she engaged in an activity protected by the TCHRA, (2) an adverse employment
action occurred, and (3) there exists a causal link between the protected activity and the adverse
action. See Evans v. City of Hous., 246 F.3d 344, 352 (5th Cir. 2001); Gonzalez v. Champion Techs.,
Inc., 384 S.W.3d 462, 472 (Tex. App.—Houston [14th Dist.] 2012, no pet.). An employee engages
in a protected activity when she “opposes a discriminatory practice,” “makes or files a charge,” “files
a complaint,” or “testifies, assists, or participates in any manner in an investigation, proceeding, or
hearing.” TEX . LAB. CODE § 21.055. Here, Nicholas contends she opposed a discriminatory practice
in the form of sexual harassment. Sexual harassment is a recognized cause of action under Title VII
and the TCHRA. Waffle House, Inc. v. Williams, 313 S.W.3d 796, 804 (Tex. 2010).
Opposition to a discriminatory practice is a protected activity irrespective of the merits of the
underlying discrimination claim. City of Waco v. Lopez, 259 S.W.3d 147, 151 (Tex. 2008). However,
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to establish an employee opposed a discriminatory practice, the employee must demonstrate a good-
faith, reasonable belief that the underlying discriminatory practice violated the TCHRA. See Turner
v. Baylor Richardson Med. Ctr., 476 F.3d 337, 348 (5th Cir. 2007) (“To satisfy this opposition
requirement, [the claimant] need only show that she had a ‘reasonable belief that the employer was
engaged in unlawful employment practices.’” (quoting Byers v. Dallas Morning News, Inc., 209 F.3d
419, 428 (5th Cir. 2000))); Cox & Smith Inc. v. Cook, 974 S.W.2d 217, 224 (Tex. App.—San
Antonio 1998, pet. denied) (“The employee is not required to show that there was actual existence
of an unlawful practice, only that she held a good[-]faith reasonable belief that the employer engaged
in activity made unlawful by Title VII or the TCHRA.”). The court of appeals acknowledged this
requirement but concluded that “Nicholas established she held a good[-]faith belief that Flores may
have engaged in sexual harassment and that her belief was objectively reasonable in light of the
record presented.” San Antonio Water Sys. v. Nicholas, 441 S.W.3d 382, 391 (Tex. App.—San
Antonio 2013). We disagree.
We first clarify the scope of the conduct that may be considered. On appeal, Nicholas points
to allegedly inappropriate emails Flores sent to Snoga concerning whether she wore colored contact
lenses and asking whether she was making “an indecent proposal.” But Nicholas testified she did
not see these emails until the day before her deposition, and that her counseling of Flores “wasn’t
based upon these emails.” Therefore, we do not consider them. When a plaintiff argues she opposed
a discriminatory practice, “the relevant conduct does not include conduct that actually occurred . . .
but was unknown to the person claiming [retaliation].” Clover v. Total Sys. Servs., Inc., 176 F.3d
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1346, 1352 (11th Cir. 1999). “Instead, what counts is only the conduct that person opposed, which
cannot be more than what she was aware of.” Id. Nicholas argues only that she confronted Flores
about his lunch invitations.
Nicholas testified she acted on information that Flores had “invited [Spielhagen] out to lunch
before or repeatedly, several times anyway” and that Snoga “had a similar complaint.” Regardless
of what Nicholas subjectively believed about Flores’s conduct, no reasonable person would believe
that a handful of lunch invitations amounted to sexual harassment actionable under the TCHRA. We
have previously recognized that “[t]o make out a statutory sexual-harassment claim, the employee
must prove more than that she found the harassment offensive.” Waffle House, 313 S.W.3d at 805.
Rather, “[t]he TCHRA contemplates discrimination affecting the ‘terms, conditions, or privileges
of employment.’” Id. (citing TEX . LAB. CODE § 21.051(1)). Accordingly, sexual harassment is
actionable “only if it is so severe or pervasive as to alter the conditions of [the victim’s] employment
and create an abusive working environment.” Clark Cty. Sch. Dist. v. Breeden, 532 U.S. 268, 270
(2001) (alteration in original) (quoting Faragher v. City of Boca Raton, 524 U.S. 775, 786 (1998))
(internal quotation marks omitted). We determine whether such an environment exists by “‘looking
at all the circumstances,’ including the ‘frequency of the discriminatory conduct; its severity;
whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it
unreasonably interferes with an employee’s work performance.’” Faragher, 524 U.S. at 787–88
(quoting Harris v. Forklift Sys., Inc., 510 U.S. 17, 23 (1993)). Offhand comments and isolated
incidents, unless extremely serious, typically will not amount to discriminatory changes in the
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“terms, conditions, or privileges of employment.” See id. at 788. Flores’s lunch invitations may have
been unwelcome, but no reasonable person could believe they constituted sexual harassment
actionable under the law. We do not mean to say that lunch invitations can never be a component
of a viable sexual-harassment claim, but under the facts of this case the lunch invitations were not
so severe or pervasive as to alter the conditions of employment or create an abusive work
environment.
In holding otherwise, the court of appeals focused only on the subjective belief of the actors
involved, pointing to Chardavoyne’s testimony that Stenger-Castro told him Spielhagen said she was
being harassed and that she would file a formal complaint if the invitations did not stop. And
although Stenger-Castro testified Spielhagen did not feel she was harassed nor threatened to formally
complain, he nonetheless admitted Flores’s behavior was “risky.” Therefore, he went to
Chardavoyne out of an abundance of caution, though he did not believe SAWS’s sexual-harassment
policy had been violated. But none of these precautionary measures establishes a good-faith,
reasonable belief that sexual harassment under the TCHRA had occurred. Even Nicholas testified
that the decision to confront Flores was made to “prevent sexual harassment potentially.” At most,
steps were taken to prevent unactionable conduct from becoming actionable. But the standard in
retaliation cases is that “an objectively reasonable belief that a violation is actually occurring based
on circumstances that the employee observes and reasonably believes.” Jordan v. Alt. Res. Corp.,
458 F.3d 332, 341 (4th Cir. 2006) (explaining that retaliation claim must involve statutory violation
that “has happened or is in progress”).
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Moreover, the conduct in this case pales in comparison to offensive but isolated conduct
other courts have held could not be the basis of a good-faith reasonable belief the law had been
violated. See Breeden, 532 U.S. at 271 (holding single incident of male employee reading aloud
sexual innuendo contained in a psychological evaluation, at which he and another male employee
chuckled, could not reasonably been seen as violating the law); Amos v. Tyson Foods, Inc., 153 F.
App’x 637, 640, 646 (11th Cir. 2005) (holding single instance of male employee entering women’s
restroom and “gawking” at undressed women could not create objectively reasonable belief that
claimants suffered illegal sexual harassment); Fogleman v. Greater Hazleton Health Alliance, 122
F. App’x 581, 584 (3d Cir. 2004) (holding female employee could not reasonably believe she had
been sexually harassed when male supervisor commented on her underwear being visible under her
uniform). Indeed, the court of appeals in this case has itself previously held unactionable conduct
arguably more egregious than the lunch invitations at issue here. In Cox & Smith Inc. v. Cook, a male
supervisor told the plaintiff a former supervisor “always talks about your breasts” and that “[w]e
thought you and he were hiding the salami.” 974 S.W.2d at 221. The supervisor also told the plaintiff
an offensive joke and made comparisons between the plaintiff and Hillary Clinton that the plaintiff
believed were sexual in nature. Id. at 226. Nonetheless, the court of appeals held the plaintiff could
not have reasonably believed that these incidents constituted actionable sexual harassment under the
TCHRA. Id. at 227. Without approving or disapproving Cook, we find the conduct at issue here
insufficient to give rise to any reasonable good-faith allegation of sexual harassment.
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Nicholas separately argues that because SAWS did not request definitions of key terms, such
as “sexual harassment,” in an instruction accompanying the liability question that was submitted to
the jury, the jury was entitled to ascertain its ordinary usage. Accordingly, Nicholas argues it is too
late for SAWS to argue this claim should be measured against the standard of sexual harassment
under TCHRA and Title VII case law and that this Court is bound to review the evidence in light of
the ordinary meaning of “sexual harassment.”
The trial court instructed the jury that “[t]o oppose sexual harassment, [Nicholas’s] action
in counseling and reprimanding [Flores] for sexual harassment must have been based on a
reasonable, good faith belief that his conduct actually violated the Texas Labor Code, even if she was
ultimately mistaken.” SAWS responds that the charge is consistent with the TCHRA and case law
and that courts reviewing legal sufficiency are not bound by how terms were defined in the jury
charge. We do not pass judgment on the correctness of the instruction because we agree with SAWS
that it ultimately has no bearing on whether the trial court had jurisdiction over Nicholas’s claims.
Sovereign immunity can be waived only by statute. City of Hous. v. Williams, 353 S.W.3d 128, 134
(Tex. 2011) (“[I]mmunity can be waived, but we defer to the Legislature to do so by statute.”).
Charge error cannot confer jurisdiction where none exists.
***
Because Nicholas could not have reasonably believed Flores’s lunch invitations constituted
an unlawful employment practice, her response in counseling or reprimanding Flores was not a
protected activity under the TCHRA. Nicholas therefore not only failed to prove her retaliation
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claim, she never pleaded one under the TCHRA. SAWS’s immunity from suit was therefore not
waived, and the trial court lacked jurisdiction over Nicholas’s claim. We reverse the contrary
judgment of the court of appeals and render judgment dismissing Nicholas’s claim.
_______________________________
Jeffrey V. Brown
Justice
OPINION DELIVERED: April 24, 2015
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