Marina Castro v. TX Direct, LLC

IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

January 23, 2013 Session

MARINA CASTRO v. TX DIRECT, LLC

Direct Appeal from the Chancery Court for Shelby County

No. CH-11-0023-2 Arnold B. Goldin, Chancellor

No. W2012-01494-COA-R3-CV - Filed February 25, 2013

Employer terminated employee shortly after discovering she was pregnant. Thereafter,

employee filed a complaint against her former employer asserting claims of sex and

pregnancy discrimination, retaliation, and misrepresentation. Following a period of

discovery, the trial court granted summary judgment in favor of the employer on each of the

employee’s claims. After thoroughly reviewing the record, we affirm in part, reverse in part,

and remand for further proceedings.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed in

part, Reversed in part & Remanded

D AVID R. F ARMER, J., delivered the opinion of the Court, in which H OLLY M. K IRBY, J., and

J. S TEVEN S TAFFORD, J., joined.

Edgar Davison, Memphis, Tennessee, for the appellant, Marina Castro.

John J. Cook and Megan L. Black, Memphis, Tennessee, for the appellee, TX Direct, LLC.

OPINION

I. Background and Procedural History

TX Direct, LLC (“TX Direct”) is a credit card processing company located in Shelby

County, Tennessee. TX Direct employs approximately thirty-six (36) employees. In October

2009, Chris Reckert (“Mr. Reckert”), the Chief Executive Officer of TX Direct, interviewed

Marina Castro (“Ms. Castro”), a Hispanic woman, for a position at TX Direct. At the

conclusion of the interview, Mr. Reckert hired Ms. Castro to work as a sales representative

at a salary of $35,000 per year. Ms. Castro was an at-will employee.

Shortly after Ms. Castro began working at TX Direct, she discovered that she was

pregnant. On or around December 18, 2009, Ms. Castro informed her supervisor, Daniel

Carlton (“Mr. Carlton”), that she was pregnant. Three days later, on December 21, 2009,

Carlos Hopkins (“Mr. Hopkins”), the sales manager at TX Direct, called Ms. Castro into his

office for a meeting. During the meeting, Mr. Hopkins informed Ms. Castro that her salary

would be reduced from $35,000 to $17,000 per year because she was not meeting her

required monthly sales quota. Following the meeting, Ms. Castro sent a message to Mr.

Reckert on her cell phone asking to meet with him regarding the decision to reduce her pay.

On December 23, 2009, Mr. Hopkins called Ms. Castro into his office for a meeting and told

her that it was unprofessional to contact Mr. Reckert about the pay reduction. Ms. Castro

disagreed and insisted that she contacted Mr. Reckert because he interviewed her and he

knew the terms of her employment with TX Direct. As they were discussing this matter, Mr.

Reckert entered the office and sat down to discuss Ms. Castro’s concerns. Mr. Reckert

informed Ms. Castro that the reason for her pay reduction was her failure to meet the required

monthly sales quota. After further discussion at the meeting, Mr. Reckert offered to keep

Ms. Castro’s salary at $35,000 through January 2010, on the condition that she make ten

sales in the month of January. Ms. Castro agreed to this proposal. Subsequently, on January

7, 2010, TX Direct terminated Ms. Castro based on her inability to generate sales. TX Direct

did not replace Ms. Castro with another employee.

On April 2, 2010, Ms. Castro filed a claim for discrimination with the Tennessee

Human Rights Commission (“THRC”). On March 15, 2011, the THRC issued a notice of

determination in which it concluded that TX Direct did not engage in any discriminatory

practice and dismissed the complaint. Thereafter, on January 6, 2011, Ms. Castro filed a

complaint against TX Direct in the Chancery Court of Shelby County. In her complaint, Ms.

Castro alleged claims of sex and pregnancy discrimination, retaliation, hostile work

environment, and misrepresentation. Following a period of discovery, TX Direct filed a

motion for summary judgment as to all of Ms. Castro’s claims. On May 25, 2012, after Ms.

Castro filed her response to the motion, the trial court granted summary judgment in favor

of TX Direct. In its order granting TX Direct’s motion for summary judgment, the trial court

stated as follows:

[T]he Court finds that the following material facts are undisputed, and makes

the following findings, [sic] conclusions of law, in conjunction therewith:

1. Plaintiff was hired as a sales representative for Defendant in October

2009 with a base salary of $35,000.

2. There was no employment contract between Plaintiff and Defendant.

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3. Plaintiff made only three sales in three months for Defendant.

4. Plaintiff cannot establish a similarly situated non-protected employee

that was treated more favorably than her to establish a prima facie case

of sex or pregnancy discrimination.

5. Plaintiff was paid more than the other sales representative [sic] for

Defendant.

6. Plaintiff cannot establish that she was subjected to a hostile work

environment and that any alleged statements made to her were based on

a protected characteristic or created a severe or abusive working

environment.

7. Plaintiff did not engage in a protected activity to establish a claim of

retaliation under the Tennessee Human Rights Act. She did not make

a charge, file a complaint, testify, assist or participate in any matter in

any investigation, proceeding or hearing.

8. Plaintiff cannot establish a claim of misrepresentation as plaintiff was

an employee-at-will and was paid a salary of $35,000 for the duration

of her employment with Defendant.

In light of the undisputed material facts and the conclusions of law set

forth, this Court finds that Defendant’s Motion for Summary Judgment is well

taken and should be granted. IT IS THEREFORE ORDERED, ADJUDGED

AND DECREED that Plaintiff’s claims of sex and pregnancy discrimination,

retaliation, hostile work environment and misrepresentation fail as a matter of

law and that Defendant’s Motion for Summary Judgment is hereby granted in

all respects, with the costs of this action assessed against the Plaintiff.

Thereafter, Ms. Castro timely filed a notice of appeal to this Court.

II. Issues Presented and Standard of Review

On appeal, Ms. Castro argues that the trial court erred in granting summary judgment

in favor of TX Direct on her claims of sex and pregnancy discrimination, retaliation, and

misrepresentation.

A trial court’s decision to grant or deny a motion for summary judgment presents a

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question of law. Our review is, therefore, de novo with no presumption of correctness.

Kinsler v. Berkline, LLC, 320 S.W.3d 796, 799 (Tenn. 2010) (citing Blair v. W. Town Mall,

130 S.W.3d 761, 763 (Tenn. 2004). As such, “we must freshly determine whether the

requirements of Tenn. R. Civ. P. 56 have been met.” Hunter v. Brown, 955 S.W.2d 49,

50–51 (Tenn. 1997) (citing Gonzales v. Alman Constr. Co., 857 S.W.2d 42, 44–45 (Tenn.

Ct. App. 1993)).

Summary judgment is appropriate only where the “pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits . . . show that there is no

genuine issue as to any material fact and that the moving party is entitled to a judgment as

a matter of law.” Tenn. R. Civ. P. 56.04. The burden is on the moving party to demonstrate

this by either: (1) affirmatively negating an essential element of the non-moving party's

claim; or (2) showing that the non-moving party will not be able to prove an essential

element at trial. Hannan v. Alltel Publ'g Co., 270 S.W.3d 1, 8–9 (Tenn. 2008). “It is not

enough for the moving party to challenge the nonmoving party to ‘put up or shutup’ or even

to cast doubt on a party's ability to prove an element at trial.” Id. at 8. If the motion is

properly supported, “[t]he burden of production then shifts to the nonmoving party to show

that a genuine issue of material fact exists.” Id. at 5 (citing Byrd v. Hall, 847 S.W.2d 208,

215 (Tenn. 1993)). The non-moving party may accomplish this by: “(1) pointing to evidence

establishing material factual disputes that were overlooked or ignored by the moving party;

(2) rehabilitating the evidence attacked by the moving party; (3) producing additional

evidence establishing the existence of a genuine issue for trial; or (4) submitting an affidavit

explaining the necessity for further discovery pursuant to Tenn. R. Civ. P. 56.06.” Martin

v. Norfolk S. Ry. Co., 271 S.W.3d 76, 84 (Tenn. 2008) (citations omitted).

When reviewing the record, we must determine whether factual disputes exist. “In

doing so, we must consider the pleadings and the evidentiary materials in the light most

favorable to the movant's opponent, and we must draw all reasonable inferences in the

opponent's favor.” Hunter, 955 S.W.2d at 51 (citing Byrd, 847 S.W.2d at 210–11). If we

discover a disputed fact, we must “determine whether the fact is material to the claim or

defense upon which the summary judgment is predicated and whether the disputed fact

creates a genuine issue for trial.” Mathews Partners, L.L.C. v. Lemme, No.

M2008–01036–COA–R3–CV, 2009 WL 3172134, at *4 (Tenn. Ct. App. Oct. 2, 2009) (citing

Byrd, 847 S.W.2d at 214). “A disputed fact is material if it must be decided in order to

resolve the substantive claim or defense at which the motion is directed.” Byrd, 847 S.W.2d

at 215. A genuine issue exists if “a reasonable jury could legitimately resolve that fact in

favor of one side or the other.” Id. The grant of summary judgment is only appropriate if

“the evidence and the inferences reasonably drawn from the evidence permit reasonable

persons to reach only one conclusion—that the moving party is entitled to a judgment as a

matter of law.” CAO Holdings, Inc. v. Trost, 333 S.W.3d 73, 82 (Tenn. 2010) (citing

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Kinsler, 320 S.W.3d at 801; Giggers v. Memphis Hous. Auth., 277 S.W.3d 359, 364 (Tenn.

2009)). When a dispute exists or there is any uncertainty regarding a material fact, however,

the trial court must “overrule any motion for summary judgment in such cases, because

summary judgment proceedings are not in any sense to be viewed as a substitute for a trial

of disputed factual issues.” Evco Corp. v. Ross, 528 S.W.2d 20, 25 (Tenn. 1975).

IV. Analysis

A. Retaliation

We begin by addressing Ms. Castro’s argument that the trial court erred in granting

TX Direct’s motion for summary judgment regarding her claim for retaliation under the

Tennessee Human Rights Act (“THRA”). The THRA prohibits retaliation against an

employee who “has opposed a practice declared discriminatory by this chapter or because

such person has made a charge, filed a complaint, testified, assisted or participated in any

manner in any investigation, proceeding or hearing under this chapter.” Tenn. Code Ann.

§ 4-21-301(1).

[A] claimant must prove the following four elements to prevail on a retaliation

claim under the THRA:

(1) that [the plaintiff] engaged in activity protected by the

THRA;

(2) that the exercise of [the plaintiff's] protected rights was

known to the defendant;

(3) that the defendant thereafter took a materially adverse action

against [the plaintiff]; and

(4) there was a causal connection between the protected activity

and the materially adverse action.

Sykes v. Chattanooga Hous. Auth., 343 S.W.3d 18, 29 (Tenn. 2011) (quoting Allen v.

McPhee, 240 S.W.3d 803, 820 (Tenn.2007)).

After reviewing the record, it is abundantly clear that Ms. Castro did not make a

charge, file a written complaint, testify, assist, or participate in any manner in any

investigation or proceeding under the THRA while she was employed at TX Direct.

Although Ms. Castro did file a claim with the THRC on April 2, 2010, this occurred months

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after her termination. As a result, Ms. Castro cannot satisfy the first element of her

retaliation claim under the THRA. Accordingly, we affirm the trial court’s grant of summary

judgment in favor of TX Direct as to Ms. Castro’s claim for retaliation under the THRA.1

B. Misrepresentation

Next, we must address whether the trial court erred in granting summary judgment in

favor of TX Direct regarding Ms. Castro’s misrepresentation claim. As our Supreme Court

explained in Walker v. Sunrise Pontiac-GMC Truck, Inc., 249 S.W.3d 301 (Tenn. 2008):

In order to prove a claim based on fraudulent or intentional misrepresentation,

a plaintiff must show that:

1) the defendant made a representation of an existing or past fact; 2) the

representation was false when made; 3) the representation was in regard

to a material fact; 4) the false representation was made either

knowingly or without belief in its truth or recklessly; 5) plaintiff

reasonably relied on the misrepresented material fact; and 6) plaintiff

suffered damage as a result of the misrepresentation.

Metro. Gov't of Nashville & Davidson County v. McKinney, 852 S.W.2d 233,

237 (Tenn. Ct. App. 1992); see First Nat'l Bank v. Brooks Farms, 821 S.W.2d

925, 927 (Tenn. 1991); Lopez v. Taylor, 195 S.W.3d 627, 634 (Tenn. Ct. App.

2005). Similarly, to succeed on a claim for negligent misrepresentation, a

plaintiff must establish “that the defendant supplied information to the

plaintiff; the information was false; the defendant did not exercise reasonable

care in obtaining or communicating the information and the plaintiffs

justifiably relied on the information.” Williams v. Berube & Assocs., 26

S.W.3d 640, 645 (Tenn. Ct. App. 2000); see Robinson v. Omer, 952 S.W.2d

423, 427 (Tenn. 1997).

Id. at 311.

1

We note that, for the first time on appeal, Ms. Castro asserts a claim in her brief for retaliatory

discharge. Because this issue was not raised in the trial court, we decline to address this issue for the first

time on appeal. Simpson v. Frontier Cmty. Credit Union, 810 S.W.2d 147, 153 (Tenn. 1991) (“[I]ssues not

raised in the trial court cannot be raised for the first time on appeal.”) (citing Lovell v. Metropolitan

Government, 696 S.W.2d 2 (Tenn. 1985); Lawrence v. Stanford, 655 S.W.2d 927 (Tenn.1983)).

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According to Ms. Castro, during her interview, Mr. Reckert made several misleading

statements that convinced her to accept the sales representative position at TX Direct.

Despite Ms. Castro’s recitation in her brief of a number of statements made by Mr. Reckert,

the only alleged misrepresentation she brought to the attention of the trial court in her

complaint was that Mr. Reckert promised her a base yearly salary of $35,000 for the duration

of her employment at TX Direct. Assuming arguendo, that this statement could be

considered a misrepresentation, which we do not find,2 the record clearly shows that Ms.

Castro maintained a base yearly salary of $35,000 up until her termination on January 7,

2010. In fact, Ms. Castro conceded in her deposition that, despite discussions about a

possible reduction in her pay, her salary never actually decreased while working at TX

Direct. Thus, Mr. Reckert’s alleged misrepresentation was not false and Ms. Castro in no

way relied upon this information to her detriment. On the contrary, Mr. Reckert upheld his

promise to Ms. Castro that she would receive a base yearly salary of $35,000 while working

at TX Direct. Therefore, we affirm the trial court’s grant of summary judgment in favor of

TX Direct as to Ms. Castro’s misrepresentation claim.

C. Discrimination

Finally, we must determine whether the trial court erred in granting summary

judgment in favor of TX Direct as to Ms. Castro’s sex and pregnancy discrimination claims

under the THRA. See Tenn. Code Ann. § 4-21-401.3 In the absence of direct proof of

2

As this Court emphasized in D'Alessandro v. Lake Developers, II, LLC, No. E2011-01487-COA-R3-

CV, 2012 WL 1900543 (Tenn. Ct. App. May 25, 2012):

“The misrepresentation must consist of a statement of a material past or present

fact.”[McElroy v. Boise Cascade Corp., 632 S.W.2d 127, 130 (Tenn. Ct. App. 1982)] (citing

Haynes [v. Cumberland Builders, Inc., 546 S.W.2d 228, 232 (Tenn. Ct. App. 1976)];

Cumberland Portland Cement Co. v. Reconstruction Finance Corp., 140 F. Supp. 739, 751

(E.D. Tenn. 1953) aff'd 232 F.2d 930 (6th Cir. 1956)). “Thus, statements of opinion or

intention are not actionable.” Id. (citing Fowler v. Happy Goodman Family, 575 S.W.2d

496 (Tenn. 1978); Hamilton v. Galbraith, 15 Tenn. App. 158, 166 (1932); Cumberland, 140

F. Supp. at 751). Similarly, “puffing or other sales talk is not actionable [,]” id. (citing

Sunderhaus v. Perel & Lowenstein, 215 Tenn. 619, 388 S.W.2d 140 (1965)), and

“conjecture or representations concerning future events are not actionable even though they

may later prove to be false.” Id. (citing Young v. Cooper, 30 Tenn. App. 55, 203 S .W.2d

376 (1947)).

Id. at *6.

3

Tennessee Code Annotated section 4-21-401 provides, in part, that:

(continued...)

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discrimination on the part of the employer, a plaintiff can establish a prima facie case of sex

discrimination, by showing that she: 1) is a member of a protected class; 2) suffered an

adverse employment action; 3) was qualified for the position at issue; and 4) was replaced

by a person outside of the protected class or was treated less favorably than similarly situated

employees who are not members of the protected class and who engaged in similar conduct.

Hartman v. Tennessee Bd. of Regents, No. M2010-02084-COA-R3-CV, 2011 WL 3849848,

at *7 (Tenn. Ct. App. Aug. 31, 2011) (citing Clayton v. Meijer, Inc., 281 F.3d 605, 610 (6th

Cir. 2002)). Similarly, without direct proof of discrimination, a plaintiff can establish a

prima facie case of pregnancy discrimination by showing that: (1) she was pregnant; (2) she

was qualified for the position, (3) she was subjected to an adverse employment action; and

(4) “that there is a nexus between her pregnancy and the adverse employment action.” Spann

v. Abraham, 36 S.W.3d 452, 465 (Tenn. Ct. App. 1999) (citing Atchley v. Nordam Group,

Inc., 180 F.3d 1143, 1148 (10th Cir. 1999); Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d Cir.

1998); Boyd v. Harding Academy of Memphis, Inc., 88 F.3d [410,] 413 [(6th Cir. 1996)];

Smith v. F.W. Morse & Co., 76 F.3d 413, 421 (1st Cir. 1996)). A plaintiff may establish the

nexus between her pregnancy and the adverse employment action by demonstrating that

comparable non-pregnant employees received more favorable treatment. Id. (citing

McDonnell Douglas Corp. v. Green, 411 U.S. [792,] 802, 93 S.Ct. [1817,] 1824 [(1973)];

Ensley–Gaines v. Runyon, 100 F.3d 1220, 1224 (6th Cir. 1996); Garner v. Wal–Mart Stores,

Inc., 807 F.2d 1536, 1538 (11th Cir. 1987)).

Because this case was disposed of on a motion for summary judgment, we must

determine whether TX Direct successfully shifted the burden of production to Ms. Castro by

either affirmatively negating an essential element of her claims, or by showing that she

cannot prove an essential element of her claims at trial. Hannan v. Alltel Publ'g Co., 270

S.W.3d 1, 8–9 (Tenn. 2008). In the proceedings below, and in the parties’ briefs on appeal,

the focus of the inquiry was on the fourth element of Ms. Castro’s discrimination claims.

Specifically, whether Ms. Castro was treated less favorably than a similarly situated

employee outside of her protected class, i.e. a male or non-pregnant female employee.

As this Court explained in Bundy v. First Tennessee Bank National Ass'n, 266 S.W.3d

410 (Tenn. Ct. App. 2007):

In determining whether another employee is similarly situated to the plaintiff,

3

(...continued)

(a) It is a discriminatory practice for an employer to:

(1) Fail or refuse to hire or discharge any person or otherwise to discriminate against

an individual with respect to compensation, terms, conditions or privileges of employment

because of such individual's race, creed, color, religion, sex, age or national origin; . . . .

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the comparable employee “must be similar in all of the relevant aspects” to the

plaintiff. [Hagedorn v. Veritas Software Corp., 129 Fed. Appx. 1000, 1003

(6th Cir. 2005)] (quoting Johnson v. Kroger Co., 319 F.3d 858, 867 (6th

Cir.2003)). The Sixth Circuit Court of Appeals has explained:

. . . [T]o be deemed “similarly situated”, the individuals with whom the

plaintiff seeks to compare his/her treatment must have dealt with the

same supervisor, have been subject to the same standards and have

engaged in the same conduct without such differentiating or mitigating

circumstances that would distinguish their conduct or the employer’s

treatment of them for it.

Mitchell [v. Toledo Hosp., 964 F.2d 577, 583 (6th Cir. 1992)].

Id. at 419. On appeal, TX Direct argues that Ms. Castro was actually treated more favorably

than the other sales representatives. Specifically, TX Direct points to the affidavit of Mr.

Carlton who stated that Ms. Castro, despite only making three sales in three months, received

a higher salary than the other sales representatives who produced higher sales. Therefore,

according to TX Direct, Ms. Castro cannot identify any comparators that were treated more

favorably. As a result, TX Direct contends that it successfully negated the fourth element of

Ms. Castro’s discrimination claims.

We disagree. TX Direct did not establish that no comparators existed that were

treated more favorably. Instead, TX Direct has shown only that, based on the record before

us, Ms. Castro has yet to find evidence of a similarly situated male or non-pregnant female

employee. While Mr. Carlton’s affidavit may be evidence to support TX Direct’s position

that Ms. Castro was treated as favorably or more favorably than the other sales

representatives, it does not affirmatively negate an essential element of her claims. As we

emphasized in White v. Target Corp., No. W2010-02372-COA-R3-CV, 2012 WL 6599814,

(Tenn. Ct. App. Dec. 18, 2012):

“Under Hannan, as we perceive the ruling in that case, it is not enough to rely

on the nonmoving party's lack of proof even where, as here, the trial court

entered a scheduling order and ruled on the summary judgment motion after

the deadline for discovery had passed. Under Hannan, we are required to

assume that the nonmoving party may still, by the time of trial, somehow come

up with evidence to support her claim.”

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Id. at *7 n.3. TX Direct cannot satisfy its burden at the summary judgment stage by pointing

to Ms. Castro’s lack of proof. Accordingly, we conclude that the trial court erred in granting

summary judgment in favor of TX Direct as to Ms. Castro’s sex and pregnancy

discrimination claims.

V. Conclusion

For the foregoing reasons, we affirm in part, reverse in part, and remand this matter

for proceedings consistent with this Opinion. Costs of this appeal are taxed equally to the

Appellant, Marina Castro, and her surety, and the Appellee, TX Direct, LLC, for all of which

execution may issue if necessary.

_________________________________

DAVID R. FARMER, JUDGE

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