Exxon Mobil Corporation v. Dwight Hines and Shannon Everett

Affirmed as Modified and Opinion filed February 26, 2008

Affirmed as Modified and Opinion filed February 26, 2008.

In The

Fourteenth Court of

Appeals

____________

NO. 14-06-00745-CV

____________

EXXON MOBIL CORPORATION , Appellant

V.

DWIGHT HINES AND SHANNON EVERETT , Appellees

On Appeal from the 125th

District Court

Harris County, Texas

Trial Court Cause No. 2004-35573

O P I N I O N

This is a double appeal in a lawsuit filed by

appellees/cross-appellants, Dwight Hines and Shannon Everett (collectively A appellees @ ), alleging

defamation and age discrimination against their former employer,

appellant/cross-appellee, Exxon Mobil Corporation (hereinafter A Exxon @ ). In regards to

the discrimination claims, the trial court granted summary judgment favoring

Exxon. After trial on the defamation claims, a jury found that Exxon defamed

appellees and awarded damages totaling $467,500. In its appeal, Exxon contends

that (1) the allegedly defamatory statements were privileged as a matter of

law; (2) the Texas employment at-will doctrine bars appellees = claims; (3) the

employment at-will doctrine, at a minimum, prevents appellees from recovering

economic damages under the facts of this case; (4) the evidence is legally

insufficient to support the award of noneconomic damages; and in the

alternative, (5) the trial court erred in its submission of the excessive

publication issue to the jury. In their cross-appeal, Hines and Everett

contend that the trial court erred in granting summary judgment against their

age discrimination claims. We modify the trial court = s judgment to render judgment that appellees

take nothing on their defamation claims. We affirm the judgment as modified.

I. Background

On November 20, 2003, Exxon Mobil Corporation terminated

the employment of Dwight Hines and Shannon Everett. At the time of their

terminations, Hines was 52 years old and had worked for Exxon Mobil Chemical

Company (a division of Exxon) for 23 years. Also at that time, Everett was 50

years old and had worked for the same division for 19 years. The reason Exxon

gave Hines and Everett for their terminations was violation of the guidelines

governing Exxon = s Educational Matching Gift Program.

Through this program, Exxon employees and retirees who contribute to colleges

and universities may request that Exxon A match @ their

contributions (not to exceed $5,000) at a ratio of 3 to 1.

In 2002, Exxon undertook a periodic audit of the Matching

Gift Program. In the course of their investigation, two internal auditors,

David Hintz and Thomas Barnes, became interested in contributions Hines and

Everett made to their alma mater Graceland University in Lamoni, Iowa. At the

close of their investigation, the auditors concluded that Hines and Everett had

contributed to a scholarship fund at Graceland and had applied for Exxon to

match those contributions during the same period of time in which their

children were receiving scholarships from the fund. The auditors further

surmised that Hines and Everett knowingly participated in a scheme designed to

obtain a benefit for their children in violation of Matching Gift Program

guidelines, which preclude members of the employees = families from

benefitting from the charitable contributions and matching funds.

In July 2003, the auditors presented their findings to the

supervisors of Hines and Everett and those of other employees who had been

identified through the audit as having made suspect contributions.

Subsequently, Charlie Jones, a human resources manager, was assigned to review

the findings and recommend discipline. In August 2003, Jones gave his

recommendations to the employees = managers. Then,

on September 23, 2003, he presented the recommendations by way of a conference

call to the division vice presidents responsible for certain of the employees

in question. Participating in this meeting were Jones, Bruce Macklin (vice

president for chemicals), Don Daigle (vice president for refining and supply),

Nate Jenkins (a controller in chemicals, who, according to Jones, helped the

auditors with the investigation), and Jack Clark (Jones = s supervisor in

the human resources department). [1]

During this meeting, Jones specifically accused Hines and Everett of

participating in an A elaborate funding scheme @ with A intent to defraud @ the Matching Gift

Program.

Subsequently, on October 23, Jenkins gave a substantially

similar presentation to Daniel Sanders, President of Exxon Mobil Chemical

Company, who then approved Jones = s recommendation

that Hines = and Everett = s employment be

terminated. On November 20, 2003, Hines = and Everett = s employment was

terminated. On December 1, 2003, Exxon sent a letter addressed to all current

employees and retirees who had previously applied for matching funds for

contributions to Graceland, informing them that Graceland was no longer

eligible to receive matching funds as a result of an audit of such

contributions. The letter further stated that A [a]buses of the

program by a few individuals and institutions jeopardize its continuation. . .

. [D]ecisions to rescind an institution = s eligibility . .

. are made to preserve the integrity of the program. @

Hines and Everett sued Exxon alleging defamation and age

discrimination. As will be discussed in greater detail below, Hines and

Everett asserted that various statements made by Exxon representatives were

defamatory and compensable. They further alleged that Exxon = s stated reason

for the dismissals, i.e. , violation of the Gift Matching Program

guidelines, was a mere pretext for age discrimination.

Prior to trial, Exxon filed a partial motion for summary

judgment asserting principally that appellees/cross-appellants could not

provide legally sufficient evidence that the stated reason for the terminations

was pretextual. The trial court granted the motion against

appellees/cross-appellants = age discrimination claims.

The defamation claims proceeded to trial. After both sides

closed, the trial court submitted a jury charge asking whether eleven

particular statements or sets of statements were defamatory towards Hines and

whether twelve particular statements or sets of statements were defamatory

towards Everett. The jury found that four sets of statements were defamatory

against both, including statements contained in: (1) an A Issues and

Findings @ document prepared

by the auditors; (2) Jones = September 23 presentation to the division

vice presidents, (3) the October 23 presentation to the president of Exxon

Chemical, and (4) the December 1 letter to employees and retirees who had

contributed to Graceland. In regards to Everett, statements in an additional

document, identified in the charge only as A [t]he November 19,

2003 document, @ were also found to be defamatory. The jury further found

that Exxon communicated the September 23 and October 23 presentation statements

to people A other than those persons having an interest or duty in

the matter to which the statement related. @ However, the

jury concluded that Exxon did not communicate the Issues and Findings document,

the December 1 letter, or the November 19 document to anyone A other than those

having an interest or duty in the matter. @

In answer to the damages submissions, the jury found that

Hines suffered $100,000 in past mental anguish, $100,000 in injury to character

and reputation, and $100,000 in past and future lost income and lost

unemployment benefits. It further found that Everett suffered $75,000 in past

mental anguish, $75,000 in injury to character and reputation, and $100,000 in

past and future lost income and lost unemployment benefits. Lastly, the jury

found that Exxon was responsible for 85% of the damages awarded, and Hines and

Everett were each responsible for 15% of their own damages. Based on the

verdict, the trial court awarded Hines $255,000 and Everett $212,500 plus pre-

and post-judgment interest. As stated, both sides appeal. Exxon attacks the

defamation judgment; Hines and Everett challenge the summary judgment against

their discrimination claims.

II. The Defamation Claims

In its appeal, Exxon contends that (1) as a matter of law,

the allegedly defamatory statements were protected under the qualified

privilege for investigations of employee wrongdoing and were not excessively

published; (2) the Texas employment at-will doctrine bars appellees = claims; (3) the

employment at-will doctrine, at a minimum, prevents appellees from recovering

economic damages under the facts of this case; (4) the evidence is legally

insufficient to support the award of noneconomic damages; and in the

alternative, (5) the trial court erred in its submission of the excessive

publication issue to the jury. Appellees dispute Exxon = s contentions and

further assert that even if the September 23 and October 23 presentations were

privileged as a matter of law, the defamation judgment is still supported by

Exxon = s publication of

the December 1 letter to employees and retirees.

A. Damages Issues

We turn

first to Exxon = s challenges to the jury = s damages award. Defamatory statements can be categorized as

either per quod or per se . Tex. Disposal Sys. Landfill, Inc.

v. Waste Mgmt. Holdings, Inc. , 219 S.W.3d 563, 580 (Tex. App. C Austin 2007, pet. denied).

Statements that are defamatory per quod are actionable only upon

allegation and proof of damages; thus, before a plaintiff can recover for

defamation per quod , he or she must carry the burden of proof on both

the existence and amount of damages. Id . (citing Time, Inc. v.

Firestone , 424 U.S. 448, 459 (1976), and Leyendecker & Assoc., Inc.

v. Wechter , 683 S.W.2d 369, 374 (Tex.1984)); see also Black = s Law Dictionary 525 (2d Pocket ed.

2001). In cases involving defamation per se , however, damages are

presumed to flow from the nature of the defamation itself; thus, such an action

can be sustained even without specific proof of the existence and amount of

harm. See Tex. Disposal , 219 S.W.3d at 580 -81 (citing Bentley v.

Bunton , 94 S.W.3d 561, 605 (Tex. 2002), and Knox v. Taylor , 992

S.W.2d 40, 50 (Tex. App. C Houston [14th Dist.] 1999, no pet.)); see also Black = s Law Dictionary 525.

Here,

the trial court clearly charged the jury on defamation per quod . The

damages instructions and questions in the charge make no mention of damages

being presumed , but instead asked the jury to determine the amount of

damages A if any. @ Appellees did not argue in the

trial court and do not argue on appeal that their claims were defamation per

se as opposed to per quod . Consequently, appellees had the burden

of proving both the existence and amount of damages in order to maintain their

defamation causes of action.

Actual damages in defamation actions fall into two

categories: (1) those damages termed A economic, @ A special, @ or A out-of-pocket, @ such as, in this

case, lost income and lost employment benefits; and (2) those termed A noneconomic @ or A general, @ such as, in this

case, mental anguish and injury to character or reputation. See Tex.

Civ. Prac. & Rem. Code ' 41.001(4) (defining A economic damages @ ), ' 41.001(12)

(defining A noneconomic damages @ ); Gertz v.

Robert Welch, Inc. , 418 U.S. 323, 349 (1974) (explaining that defamation

damages are not confined to A out-of-pocket loss @ ); Morrill v.

Cisek , 226 S.W.3d 545 , 550-51 & n. 3-4 (Tex. App. C Houston [1st

Dist.] 2006, pet. denied) (discussing A special @ and A general @ defamation

damages). In its third and fourth issues, Exxon contends that (1) the economic

damages awarded by the jury are barred by application of the employment at-will

doctrine, and (2) the award of noneconomic damages is not supported by legally

sufficient evidence in the record. Both contentions are essentially legal

sufficiency or as-a-matter-of-law issues.

We must sustain a legal sufficiency challenge if the record

demonstrates that: (1) there is a complete absence of evidence on a vital

fact; (2) rules of law or evidence prevent the court from giving weight to the

only evidence offered to prove a vital fact; (3) the evidence offered to prove

a vital fact is no more than a scintilla; or (4) the evidence establishes

conclusively the opposite of the vital fact. City of Keller v. Wilson ,

168 S.W.3d 802, 810 (Tex. 2005). We consider the evidence in the light most

favorable to the verdict and indulge every reasonable inference that supports

it. Id . at 822. The evidence is legally sufficient if it would enable

reasonable and fair‑minded people to reach the verdict under review. Id .

at 827. We credit favorable evidence if reasonable jurors could, and disregard

contrary evidence unless reasonable jurors could not. See id .

As discussed above, the jury awarded both economic and

noneconomic damages to each of the appellees based on publication of the

September 23 and October 23 presentations. Consequently, we consider in turn

whether the evidence was legally sufficient to support the finding of economic

and non-economic damages as related to publication of these two presentations. [2]

1. Economic Damages and the At-Will Employment Doctrine

In its third issue, Exxon contends that the economic

damages awarded for lost income and lost employment benefits are barred by

application of the employment-at-will doctrine. In response, appellees argue

that: (1) the doctrine does not in fact bar defamation damages just because

the defamatory statements resulted in termination, and (2) the jury must have

considered how much of the economic damages were due to the termination versus

how much were due to the defamation because the jury awarded less in economic

damages than appellees = experts testified to at trial. The

arguments under this issue therefore break down into two groups: (1) those

involving the legal question of whether the at-will doctrine bars the defamation

recovery, and (2) those involving the factual question of whether there is any

evidence of defamation damages separate and apart from the damages for

termination.

a. Application of the At-Will Employment Doctrine

Under the at-will employment doctrine, an employer may

generally terminate an at-will employee without fear of legal repercussions for

a good reason, a bad reason, or no reason at all. County of Dallas v.

Wiland , 216 S.W.3d 344, 347 (Tex. 2007); Montgomery County Hosp. Dist.

v. Brown , 965 S.W.2d 501, 502 (Tex. 1998). [3]

Additionally, as a corollary to the doctrine, Texas does not recognize a cause

of action for A negligent investigation @ in the employment

context. See Tex. Farm Bureau Mut. Ins. Co. v. Sears , 84 S.W.3d 604,

606 (Tex. 2002). Based on these two principles, Exxon argues that appellee = s economic damages

are barred because they resulted from the employment terminations and not

directly from the defamation. Appellees argue that, like design defect and

breach of warranty in the products liability context, wrongful termination and

defamation in this case are simply alternative causes of action that would

result in the same or similar awards of damages. [4]

Thus, according to appellees, they may recover fully on the viable claims for

defamation, irrespective of any overlap in damages with nonactionable claims

for wrongful termination.

We begin by noting that appellees do not allege, and there

is no evidence to suggest, that Exxon ever communicated the substance of the

September 23 and October 23 presentations to anyone outside the company. [5]

Consequently, under appellees = theory, the internal communication of the

reason for the terminations ( i.e. , the alleged defamation) enables them

to recover the damages caused by the terminations . This would clearly violate the at-will

employment doctrine C and its general prohibition against

wrongful termination claims by at-will employees C by creating

liability where at law none may exist ( i.e. , by allowing monetary

recovery when the employer terminates the employee for a A bad reason @ ). [6]

See, e.g., Wiland , 216 S.W.3d at 347 ; Brown , 965 S.W.2d at 502 .

We reject appellees = argument and hold that a terminated

employee may not recover damages resulting from employment termination simply

because the reason for the termination (even if defamatory) may have been

internally communicated within the employing company.

Our holding should not be construed as suggesting that an

employer can never defame an employee in Texas or that an employee can never

recover defamation damages from his or her employer (whether the defamation was

communicated only internally or also externally); it merely means that an

employee cannot recover as defamation damages those damages caused by

employment termination . Accordingly, to the extent damages resulting

from termination were awarded in the judgment, such award is prohibited

under Texas law. However, if appellees proved defamation damages other than

those caused by their terminations, they may be entitled to recover those sums.

b. Sufficiency of the Evidence Regarding Distinct Defamation Damages

Appellees additionally insist that the record contains

evidence of economic damages caused by the defamatory statements separate and

apart from the damages resulting from the terminations. Rather than citing to

any such evidence, however, appellees point to the fact that the jury awarded a

lesser amount for economic damages than appellees = experts described

at trial. Appellees = theory is that because the jury awarded

less than was described, it must have considered how much of the economic

damages were due to the terminations versus how much were due to other factors

and awarded only the latter amount.

To begin with, a jury might decide for a variety of

legitimate reasons to discount the damages actually awarded relative to the

damages testified to by an expert. See generally McGalliard v. Kuhlmann ,

722 S.W.2d 694, 697 (Tex. 1986); Prati v. New Prime, Inc. , 949 S.W.2d

552, 555 (Tex. App. C Amarillo 1997, pet denied). That the jury

did so in this case (and speculation about why it might have done so) does not

constitute evidence that there were additional economic damages separate and

apart from the termination damages. More importantly, appellees cite to no

evidence introduced at trial C and our review has revealed no evidence in

the record C of economic damages caused by other than appellees = terminations.

In support of their economic damages claims, appellees

offered the reports and testimony of two experts: Haran Levy, a certified

public accountant who testified and reported regarding the value of lost

earnings and benefits, and Robert Cirkiel, an actuary who testified and

reported regarding the value of the Exxon pension and medicare supplement

plans. Levy specifically testified that his report covered A lost earnings and

certain benefits . . . due to the November 23 termination. @ He did not

identify any damages as being caused by anything other than termination. [7]

Cirkiel, as stated, testified and reported regarding the pension and medicare

supplement plans appellees lost when they were terminated. He did not identify

any damages that were not caused by the terminations in either his report or

his testimony. Appellees point to no other evidence of economic damages in the

record, and we are not aware of any additional evidence. Consequently, the

evidence is legally insufficient to sustain the award of economic damages for

excessive publication of the September 23 and October 23 presentations.

2. Legal Sufficiency of the Evidence to Support Noneconomic Damages

In its fourth issue, Exxon contends that the evidence is

legally insufficient to sustain the jury = s award of

noneconomic damages, namely those for mental anguish and injury to character or

reputation. Exxon specifically argues that there is only minimal evidence that

the noneconomic damages resulted from anything other than the terminations, and

no evidence that these damages resulted from statements in the September 23 or

October 23 presentations (which appellees apparently were not even aware of

until the lawsuit was filed). Appellees maintain that their non-economic

damages resulted more from the reasons given for the terminations and the

refusal to retract those allegations than from the actual terminations.

Even if appellees = assertion is

correct regarding the source of their damages, under the charge as given and as

answered by the jury, to be sustainable, the damages must have been caused by

statements in the September 23 and October 23 presentations and not simply by

the general reasons given for the terminations. [8]

As discussed above, in cases involving defamation per quod , damages are

not presumed to have flowed from the very fact of communication but must be

proven to have resulted from the defamatory communication. See, e.g., Tex. Disposal , 219 S.W.3d at 580 . Also as

discussed above, appellees cannot recover for damages to the extent such

damages were caused by their terminations.

Specifically, in order to sustain a jury award of mental

anguish damages in the defamation context, there must be not only evidence of

compensable mental anguish but also some evidence justifying the amount

awarded. Bentley v. Bunton , 94 S.W.3d 561, 606 (Tex. 2002) (citing Saenz

v. Fidelity & Guar. Ins. Underwriters , 925 S.W.2d 607, 614 (Tex.

1996)). Such evidence must show a high degree of mental pain and distress that

is more than mere worry, anxiety, vexation, embarrassment, or anger; it further

must directly demonstrate the nature, duration, and severity of the mental

anguish, which caused a substantial disruption in the claimant = s daily routine. EMC

Mortgage Corp. v. Jones , No. 05-06-00419-CV, 2007 WL 2447122 , at *10 (Tex.

App. C Dallas 2007, no

pet.) (citing Saenz , 925 S.W.2d at 614 , and Latham v. Castillo ,

972 S.W.2d 66, 70 (Tex.1998)). Similarly, to sustain an award of injury to

reputation or character, there must be competent evidence of A actual injury @ to the interests

involved (assuming malice is not an issue in the case). See Gertz , 418

U.S. at 349-50 ; Restatement (Second) of Torts ' 621, cmt. b; see

also Bentley , 94 S.W.3d at 619-20 (Baker, J., dissenting) (discussing Gertz );

Finklea v. Jacksonville Daily Progress , 742 S.W.2d 512, 516 (Tex. App. C Tyler 1987, writ

dism = d w.o.j.) (same).

Here, the evidence regarding appellees = general, or

noneconomic, damages was presented in two basic forms: (1) specific testimony

that certain actions or statements caused certain damage (negative emotions,

harm to reputation, etc.), and (2) general testimony that each of the appellees

felt negative emotions after his termination or felt as if his reputation and

character had been sullied by the reasons for the termination. Regarding the

first category, appellees cite to no specific testimony wherein a witness

stated that either of the appellees was damaged (noneconomically) specifically

by statements contained in the two presentations. To the contrary, the

specific testimony related to such things as the fact of being terminated,

having to move, receipt of the December 1 letter, the reasons given to each of

the appellees for being terminated, and telling family, friends, and others why

they were terminated. [9]

None of this evidence (however negative and justified the resulting emotions

and beliefs may have been) reveals a causal connection to the presentations in

question. The fact that the evidence identifies other, distinct causes of the

harm, prevents this evidence from supporting the conclusion that appellees were

noneconomically harmed by publication of the two presentations.

Regarding the second category, the general testimony of

negative emotions and character disparagement was also insufficient for several

interconnected reasons. [10]

First, most importantly and obviously, none of the general testimony was tied

specifically to statements in the two presentations; thus, it does not prove

that any damage was caused by publication of those statements. Second,

although it might be reasonable to assume when specific evidence of damages is

intermixed with more general evidence of damages that all of the evidence

relates to damage caused by the same source, it is not reasonable to infer that

the general testimony in such a situation (as appellees suggest here) relates

to a different, unmentioned specific cause. In other words, the mere fact that

the general testimony was generalized does not imply that it related to a

separate cause from the cause-specific testimony. Third, there is no evidence

that appellees even knew about the two presentations during the time frame in

which the alleged damages occurred; thus, there can be no inferential causal

link. [11]

Lastly, when viewed in isolation from the specific testimony, the general

testimony does not constitute the type of detailed evidence required to support

awards of mental anguish or reputation damages in the defamation context. See

Gertz , 418 U.S. at 349-50 ; EMC Mortgage Corp. , 2007 WL 2447122 , at

*10. Based on the foregoing, we find that the evidence is legally insufficient

to sustain the award of noneconomic damages for publication of statements in

the September 23 and October 23 presentations.

C. The December 1 Letter

Appellees additionally assert that the trial court = s final judgment

may rest on Exxon = s publication of the December 1 letter to

employees and retirees, even if the court finds that the judgment cannot be

supported by reliance on the September 23 and October 23 presentations. As

mentioned above, the jury found that the December 1 letter was defamatory

against both men but that it was not excessively published. Appellees assert

that the letter was excessively published as a matter of law; thus, the jury = s finding to the

contrary should be disregarded.

The primary difficulty with appellees = position is that

even if the letter in question was excessively published as a matter of law, no

damages were awarded on this basis. The damages questions in the charge were

predicated on positive answers to both the defamation question and the

excessive publication question for each particular statement. Since the jury

found that the December 1 letter was not excessively published, it clearly did

not consider that letter in assessing damages. Appellees moved for judgment on

the verdict. The trial court = s judgment tracks the jury = s damages

findings. Consequently, even if appellees are correct that the letter was

excessively published as a matter of law, the judgment did not award any

damages based thereon. Because appellees do not raise a cross-point on appeal

complaining about the lack of a damages finding, we cannot reverse a judgment

on what would be unassigned error. See Pat Baker Co. v. Wilson , 971

S.W.2d 447, 450 (Tex. 1998); Chapman v. Olbrich , 217 S.W.3d 482, 501

(Tex. App. C Houston [14th Dist.] 2006, no pet.).

In summary, all of the amounts awarded as defamation

damages by the jury are either barred by application of law or unsupported by

more than a scintilla of evidence in the record. Accordingly, we sustain Exxon = s third and fourth

issues. [12]

III. The Discrimination Claims

In their pleadings, appellees additionally alleged that

Exxon unlawfully terminated their employment on the basis of age. Prior to

trial, Exxon filed a motion for summary judgment against these causes of

action; the trial court granted the motion and entered a partial summary

judgment. In their cross-appeal, appellees challenge the trial court = s ruling. The key

dispute between the parties is whether appellees presented legally sufficient

evidence of pretext in response to the motion for summary judgment.

A. Shifting Evidentiary Burdens in the Employment Discrimination

Context

The Texas Commission on Human Rights Act (TCHRA) prohibits

discrimination against an employee on the basis of age, among other personal

characteristics. Tex. Lab. Code Ann .

'' 21.051-.556. The

TCHRA is modeled on the Federal Civil Rights Act of 1991 (Title VII); thus,

Texas courts follow federal statutes and cases in applying the statute. Quantum

Chem. Corp. v. Toennies , 47 S.W.3d 473, 476 (Tex. 2001); Winters v.

Chubb & Son, Inc. , 132 S.W.3d 568, 574 (Tex. App. C Houston [14th

Dist.] 2004, no pet.).

Consequently, in analyzing discrimination cases under

TCHRA, Texas courts apply the burden-shifting scheme first enunciated in McDonnell

Douglas Corp. v. Green , 411 U.S. 792, 802 (1973). Winters , 132

S.W.3d at 574 ; see also Reeves v. Sanderson Plumbing Prods., Inc. , 530

U.S. 133, 142-43 (2000) (discussing development of burden-shifting scheme).

Pursuant to this scheme, the plaintiff is first required to present a prima

facie case of discrimination. Reeves , 530 U.S. at 142 ; Winters ,

132 S.W.3d at 574 . Once the plaintiff has successfully demonstrated a prima

facie case, the burden shifts to the defendant to produce evidence showing a

legitimate, nondiscriminatory reason for the adverse employment action. Reeves ,

530 U.S. at 142 ; Winters , 132 S.W.3d at 574 . If the defendant carries

this burden, the plaintiff must then prove, by a preponderance of the evidence,

that the defendant = s stated reason is merely a pretext for

discrimination. Winters , 132 S.W.3d at 574 . In other words, although A intermediate

evidentiary burdens shift back and forth under this framework, > [t]he ultimate

burden of persuading the trier of fact that the defendant intentionally

discriminated against the plaintiff remains at all times with the plaintiff. = @ Reeves ,

530 U.S. at 142 (quoting Tex. Dept. Of Cmty. Affairs v. Burdine , 450

U.S. 248, 253 (1981)).

B. The Summary Judgment Proceedings and Proof

The parties do not dispute that appellees presented a prima

facie case of age discrimination by demonstrating that: both of them were over

40 when they suffered an adverse employment action, and they were either

replaced by a younger worker or a younger employee received different

treatment. See Winters , 132 S.W.3d at 574 . The parties also agree that

Exxon presented a legitimate nondiscriminatory reason for the terminations,

namely that Hines and Everett had knowingly violated the guidelines of the

Matching Gift Program. In its summary judgment, Exxon attacked appellees = evidence on the

third rung of the burden-shifting scheme, asserting that Hines and Everett

could provide no evidence that Exxon = s proffered

legitimate, nondiscriminatory reason for the terminations was a mere pretext

for age discrimination.

Under the Supreme Court = s opinion in Reeves ,

a plaintiff demonstrates pretext by producing evidence that (1) the reason

given by the employer was not its true reason for the employment action but

rather a pretext for discrimination or (2) the reason given was unworthy of

credence. 530 U.S. at 143 ; Russo v. Smith Int = l, Inc. , 93 S.W.3d 428,

438 (Tex. App. C Houston [14th Dist.] 2002, pet. denied). In the

summary judgment context, a plaintiff does not have to prove pretext but must

merely establish that a genuine issue of material fact exists to avoid

judgment. Russo , 93 S.W.3d at 438 (citing Amburgey v. Corhart

Refractories Corp. , 936 F.2d 805, 813 (5th Cir. 1991)). Summary judgment

will be improper if the plaintiff makes a prima facie case and produces

sufficient evidence for a jury to disbelieve the employer = s stated reason

for discharge. See Reeves , 530 U.S. at 146‑48. On the other

hand, an employer is entitled to summary judgment if the plaintiff = s proof creates

only a weak issue of fact as to whether the employer = s reason was

untrue, and there was abundant and uncontroverted independent evidence that no

discrimination had occurred. See id. at 148; Winters , 132 S.W.3d

at 576 ; Russo , 93 S.W.3d at 439 .

In their brief, appellees point to certain summary judgment

proof as constituting evidence that Exxon = s proffered

legitimate, nondiscriminatory reason for the terminations was a mere pretext

for age discrimination. [13]

Although appellees list the proof separately, it is classifiable into four

distinct groups:

(1) evidence that appellees were not told that they

were under investigation for having violated Matching Gift Program guidelines

prior to their being terminated, including statements by appellees to this

effect;

(2) evidence that appellees were not accused of

doing anything improper other than the violations of the Matching Gift Program

guidelines, including the testimony of one of the auditors and of appellees = supervisors;

(3) evidence that what appellees were accused of

doing was common practice at Exxon, i.e. , for employees to apply for

matching funds when they contributed to a university in the same year that a

child of the employee received a scholarship to attend the university,

including the testimony of both auditors; and

(4) evidence that

personnel higher in the Exxon hierarchy did little if anything to further

investigate the allegations against appellees before deciding to terminate

them, including the testimony of Jones (the human resources manager assigned to

recommend discipline) and of Sanders (the chemical division president), as well

as testimony concerning the corporate audit group and division vice presidents.

Regarding the first category of proof C evidence that

appellees were not told they were under investigation C appellees offer no

explanation as to how this demonstrates that the investigation was somehow a

pretext for discrimination. [14]

Furthermore, there was summary judgment proof that the auditors interviewed

both appellees regarding the audit of the Matching Gift Program; thus, they had

some knowledge of the on-going audit. Indeed, in his deposition, excerpts of

which appear in the summary judgment record, Sanders testified that appellees

received A pretty solid warning @ that they were

being accused of wrongdoing because they had (1) signed certain audit-related

forms, (2) been interviewed by the auditors, and (3) had attended briefings on

codes and standards of business conduct and had previously participated in

business practice reviews. Accordingly, under the facts of this case, the

failure to inform appellees of specific accusations and give them a chance to

rebut the specific accusations is only very weak evidence of pretext.

Concerning the second category C the absence of

other wrongdoing C appellees again do not explain how this

evidence demonstrates pretext. Exxon has not asserted that appellees were

terminated for general wrongdoing; Exxon asserted and asserts that they were

terminated for particular violations of the Matching Gift Program guidelines.

Therefore, the presence or absence of evidence regarding other wrongdoing is

irrelevant.

As to the third category C that appellees

were engaged in a common practice within Exxon C the proof that

appellees cite does not lend as much support to their argument as they

contend. While one of the auditors, Barnes, acknowledged that it was A a very common

practice @ for employees to

apply for matching funds for contributions to a university in the same year

that a child of that employee received a scholarship to attend the university,

appellees were accused of doing substantially more. Specifically, appellees

were accused of knowingly participating in a scheme that resulted in their

family members = directly benefitting from the Exxon matching

funds. Appellees point to no evidence that participation in such a funding

scheme was a common practice for Exxon employees or other charitable

institutions.

Lastly, regarding the fourth category C evidence that

higher-ups did little to further investigate the allegations C appellees again

fail to explain how this alleged failure demonstrates pretext. There was

significant evidence in the record showing that the auditors = findings were

considered by various levels of supervisors. Presentations were given,

received, and reviewed. Interaction between the auditors and the supervisors

occurred at various stages. Appellees offer no specific argument or evidence

regarding why the supervisors should have felt compelled to conduct their own

independent investigations. That the supervisors were apparently comfortable

with the work done by the auditors is, at best, very weak evidence of pretext.

In summary, appellees = summary judgment

arguments and evidence provided, at best, very weak evidence that Exxon = s proffered

legitimate, nondiscriminatory reason for the terminations was merely a pretext

for age discrimination. See Reeves , 530 U.S. at 148 ; Winters ,

132 S.W.3d at 576 ; Russo , 93 S.W.3d at 439 . Accordingly, we overrule

appellees = sole issue on cross appeal.

III. Conclusion

In conclusion, we hold that the trial court erred in

awarding judgment for appellees on their defamation causes of action but

properly granted summary judgment against appellees on their age discrimination

claims. Accordingly, we modify the trial court = s judgment to render judgment that appellees

take nothing on their defamation claims. We affirm the judgment as modified.

/s/ Adele Hedges

Chief Justice

Judgment rendered and Opinion filed

February 26, 2008.

Panel consists of Chief Justice Hedges,

Justice Seymore, and Former Justice Price. *

[1] Appellees assert that neither Daigle, Jenkins, nor

Clark had any responsibility regarding the investigation of appellees or their

eventual discipline. While appellees make a valid point regarding Daigle,

their assertions regarding Jenkins and Clark are supported by misleading

quotations from Jones = s trial testimony. This includes quotation of a

question asked by appellees = trial counsel

as opposed to Jones = s actual testimony, which was to some degree at odds

with the question. As noted above, Jones testified that Jenkins aided the

audit department with their investigation; Jones further testified that Jenkins

made a subsequent presentation on the matter to Daniel Sanders, President of

Exxon Mobil Chemical Company. Regarding Clark, Jones testified that as his

boss, Clark A had to agree to my recommendation @ and A would take

responsibility for that. @ Jones further defended Daigle = s participation in the meeting on the grounds of

promoting consistency and fairness in discipline across the corporation.

Appellees additionally assert that the

PowerPoint presentation prepared for the September 23 teleconference was

subsequently sent by email to at least five additional people within the

company. Plaintiff = s Exhibit 93 contains two emails, one by Jones and one

by Clark, transmitting an attached document entitled A Educational Matching Gift Case @ to participants in the September 23 meeting as well as

five other recipients within Exxon. Again, Jones defended the participation of

others within Exxon on the grounds of promoting consistency and fairness in

discipline across the corporation.

[2] We note at the outset that in the charge, the court

authorized the jury to award damages A if

any, that resulted from such statements. @

Thus, the court did not limit damages to those caused by excessive

publication of the statements. While Texas law has surprisingly little to

offer on this topic, the court = s charge

clearly runs counter to the Restatement in this regard. See Restatement (Second) of Torts ' 599, cmt. b ( A The effect of abuse of a

conditional privilege is to make the publisher of the defamation subject to

liability for the abuse. If the harm done by the abuse is severable, and can

be distinguished from the harm done by a part of the publisher = s conduct that would properly be

privileged, he is subject to liability only for the excess of harm resulting

from his abuse. @ ). Nevertheless, neither party raises any issues related to this aspect

of the charge.

[3] Exceptions to the general rule include terminations

based on unlawful discrimination and retaliatory terminations violative of the

Texas Whistleblower Act. Tex,.Gov = t

Code '' 554.001‑.010 (Texas Whistblower Act); Tex. Lab. Code ' ' 21.051-.556 (Texas Commission on

Human Rights Act) .

[4] Based on their defamation finding, the jury awarded

economic damages to appellees for lost income and lost employment benefits

suffered in the past and likely to be sustained in the future. As will be

discussed in the next section of the opinion, there is no evidence in the

record to suggest that these damages were caused by any Exxon conduct other

than the termination of appellees.

[5] Furthermore, there is no evidence that any Exxon

employee who heard or saw the September 23 or October 23 presentations

published the substance of the presentations outside the company.

[6] Thus, the situation before us is distinctly

different from cases wherein a plaintiff alleges two alternative but not

legally prohibited causes of action such as design defect and breach of warranty in the

products liability context . In that

situation, a plaintiff can recover under one cause of action (assuming he or

she can muster the requisite proof) without violating a prohibition against the

other claim. Here, recovery of lost wages and employment benefits due to

termination violates the at-will employment doctrine.

[7] Levy testified that he calculated lost earnings and

benefits only for Hines because he determined that Everett suffered A no economic damages @ of

the types he was asked to calculate.

[8] Interestingly, the jury found that the termination

letters given to appellees were not defamatory. It should also be noted that

any reasons for the terminations told directly to appellees (although they

certainly may have caused mental anguish) were not necessarily defamatory, as

defamation requires publication to a third party. See Granada Biosciences,

Inc. v. Forbes, Inc. , 49 S.W.3d 610, 618 (Tex. App. C Houston [14th Dist.] 2001), rev = d on other grounds , 124 S.W.3d 167 (Tex. 2003).

[9] For example, Hines testified that being fired was A devastating @

and life changing, and that looking for work and starting over was A horrible. @

He further said that telling his children that he had been terminated was A just awful . . . just horrible, @ that he found it hard to leave Houston, and that when

he saw the December 1 letter (sent by Exxon to current and former employees who

contributed to Graceland), it was like A being

called a liar and cheat all over again. @

Debra Hines testified that she could tell from her husband = s voice that he was devastated at being terminated and

he was stunned that Exxon would not have talked to him and investigated the

facts. She also said it was hard for him to tell the children.

Everett testified that he was in a state

of disbelief and shock when he learned of his termination and that he could not

sleep that night. He said that receiving the December 1 letter was A extremely upsetting. @ Rosemary Everett testified that her husband was devastated when he

lost his job for what he felt was unfair reasons and that it was a hardship to

move. Additionally, Peter Knorr, Everett = s

immediate supervisor at Exxon, testified that when he told Everett about the

termination, A [t]here was some emotional outburst . . . . He seemed

more angry than shaken. @ There was also testimony from several witnesses that

recipients of the December 1 letter would have known that it referenced

appellees.

[10] Examples of the more general evidence in the record

includes: Hines = testimony that he felt his good name was still

tainted and the fact that Exxon had not retracted anything meant he was still

being called a cheater; Debra Hines testimony regarding the importance to her

husband of having a A good name, @

that the allegations almost led to depression, and that he was affected by the

knowledge that he could not clear his name; Everett = s testimony that he had been proud to work for Exxon;

and Rosemary Everett = s testimony that her husband = s A good name was

smeared @ and that the time after he was terminated was

emotionally and financially stressful.

[11] As discussed in the background section above, the

presentations in question were given to small groups comprised mostly of upper

management personnel. Although the evidence suggests the possibility that the

Powerpoint file used during the September 23 presentation was subsequently

transmitted to five other Exxon employees via email, there is no evidence that

either appellee learned of the occurrence or the substance of either

presentation.

Appellees additionally speculate that the

presentations may have been even more widely distributed based on the fact that

in his testimony, Charlie Jones refused to completely rule out the possibility

that some of the people to whom he distributed the presentations may have then

distributed the presentations to others. However, the absence of evidence that

such redistribution did not occur does not constitute evidence that it did

occur. Furthermore, Jones and others testified that the documents were handled

pursuant to Exxon protocol intended to limit distribution of sensitive

materials.

[12] Because our holdings on issues three and four are

dispositive of Exxon = s appeal in its favor, we need not address Exxon = s remaining three issues.

[13] In their brief, appellees make no specific arguments

regarding the level of proof offered by Exxon that no discrimination had

occurred. See

Reeves , 530 U.S.

at 148 ; Winters , 132 S.W.3d at 576 ; Russo , 93 S.W.3d at 439 .

[14] In support of their assertion, appellees cite Laxton

v. Gap Inc. , 333 F.3d 572 (5th Circ. 2003), in which, the appellees assert,

the Fifth Circuit held: A the fact that the employer never gave the plaintiff a

chance to explain her conduct or improve was sufficient to demonstrate pretext. @ We do not read the opinion so narrowly. In

reversing a summary judgment favoring the employer in a sex discrimination

case, the Fifth Circuit pointed out that the reasons provided for the

termination included demonstrably false allegations in addition to allegations

of conduct that was A arguably authorized @ by

the company. The court further noted that the strength of the employee = s prima facie case of sex discrimination (which

included evidence of her capabilities for the job as well as evidence of her

supervisor = s displeasure at her pregnancy) supported the case for

pretext, concluding that all of these factors together were sufficient to raise

a fact issue. Additionally, Laxton is distinguishable from the present

case because in Laxton , the reasons for termination were primarily that

she had made poor management decisions (something that could be improved upon);

whereas here, Exxon alleged that appellees knowingly violated company policies

and thereby received a personal benefit. The very nature of the allegations

are completely different (alleged performance failures versus allegedly

scheming against the company = s interests).

* Former Justice Frank C. Price sitting by assignment.