5th Circuit Finds No Constructive Discharge, Nixes Age Bias Verdict for Insurance Workers

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By Jay-Anne Casuga

Oct. 21 — Two former sales managers for Nationwide Mutual Insurance Co. in Texas weren't entitled to a jury verdict that they were constructively discharged because of their ages, 52 and 62, in violation of state law, the U.S. Court of Appeals for the Fifth Circuit ruled Oct. 20.

Reversing the denial of Nationwide's post-trial motion for judgment as a matter of law, the Fifth Circuit found insufficient evidence for a jury to conclude that Parker Perret and Melvin Pierre were subjected to intolerable working conditions that would have compelled a reasonable employee to resign.

Perret and Pierre, the oldest managers in the region, alleged they were placed on performance improvement plans. But without additional evidence that their responsibilities were reduced or they were demoted, reassigned, harassed or advised to resign, the court said the PIPs alone couldn't sustain a constructive discharge verdict under the Texas Commission on Human Rights Act.

Judge James E. Graves wrote the opinion, joined by Judges Carolyn Dineen King and Stephen A. Higginson.

Constructive Discharge Alleged Based on PIPs

According to the court, Nationwide placed Perret and Pierre on coaching plans in November 2009 because of purported performance deficiencies.

The employees contended that they “were at or near the top of their region in sales” and suspected the coaching plans were designed to lead to their terminations.

Around April 2010, both workers were placed on PIPs because of their failure to improve under the initial coaching plans. Perret resigned in May. Pierre, who had gone on medical leave, resigned in July.

They filed separate TCHRA lawsuits against Nationwide in Texas state court, but their cases were removed to the U.S. District Court for the Eastern District of Texas and consolidated.

Both alleged they were constructively discharged because of their ages. Pierre, who was black, also brought a race discrimination claim. He died while the case was on appeal.

A jury ultimately returned a mixed-motive verdict in favor of the employees. Although the jury found that Perret and Pierre were constructively discharged because of their ages or race, it also concluded that Nationwide would have placed them on the coaching plans and PIPs regardless of any impermissible age or race considerations.

The district court thus held that Perret and Pierre were not entitled to monetary damages under the TCHRA. It also denied Nationwide's motion for judgment as a matter of law, and both parties appealed.

Fifth Circuit Reverses Verdict

The Fifth Circuit reversed the verdict, ruling that no reasonable jury could have found that Nationwide constructively discharged Perret or Pierre because of their ages.

The employees needed to show working conditions so intolerable that a reasonable person would have been compelled to resign, but Perret and Pierre argued only that they were unfairly placed on coaching plans and PIPs, the Fifth Circuit said.

To prevail on their claim, the court explained, the employees needed to show working conditions so intolerable that a reasonable person in their positions would have been compelled to resign.

For example, they could have presented evidence that they were subjected to demotions, reductions in pay or job responsibilities, menial or degrading work, harassment, humiliation or offers of early retirement.

However, Perret and Pierre argued only that they were unfairly placed on coaching plans and PIPs.

“Absent something more, we cannot conclude that Nationwide's use of employee improvement plans created a situation in which a reasonable employee would have felt compelled to resign,” the court said.

McBride Law Firm and Gravely & Pearson represented the workers. Estes Okon Thorne & Carr represented Nationwide.

To contact the reporter on this story: Jay-Anne B. Casuga in Washington at jcasuga@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the opinion is available at http://www.bloomberglaw.com/public/document/PARKER_PERRET_PATRICIA_PENN_PIERRE_AS_EXECUTRIX_OF_THE_ESTATE_OF_.