City of Austin v. Raymond E. Chandler, Daniel J. Amador, David Becker, John Beese, Nathan Blane Brown, Michael Carter, Anastacio Cruz, Eddie De La Garza, Jose L. Delgado, Carlos S. Dominguez, Kenneth J. Ferro, David Gannon, Abel Garza, Vincent Giles, Jr.

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

ON REHEARING

NO. 03-12-00057-CV

City of Austin, Appellant

v.

Raymond E. Chandler, Daniel J. Amador, David Becker, John Beese, Nathan Blane Brown, Michael Carter, Anastacio Cruz, Eddie de la Garza, Jose L. Delgado, Leland Scott DePue, Carlos S. Dominguez, Kenneth J. Ferro, David Gannon, Abel Garza, Vincent Giles, Jr., Gregory T. Graboskie, M. Michael Hart, Bonnie Harvey, Cecil Jones, Anthony Kubesch, Christopher Megliorino, Randy Mulroy, Lori Peterson, Steven K. Reid, Roberto Rodriguez, Jorge Rojas, Richard Sanders, Harry Singletary, Steven J. Slavik, Ralynn Taylor, Lasandra B. Williams, Ricardo Zapata, and John Zavala, Appellees1

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT NO. D-1-GN-09-004161, HONORABLE STEPHEN YELENOSKY, JUDGE PRESIDING

OPINION

To address the issues raised in appellant’s motion for en banc reconsideration, we

withdraw our opinion and judgment dated February 7, 2014, and substitute the following in their place.

The Appellees—a group of public safety officers over the age of 40 who worked for

appellant the City of Austin’s now defunct Public Safety Emergency Management Department

(PSEM)—sued the City for age-based employment discrimination. The Appellees asserted that the

1 For convenience, we refer to the Appellees collectively. City’s method of consolidating the PSEM into the Austin Police Department (APD) disparately

impacted older PSEM employees by stripping them of their years of service. The jury returned a

verdict in favor of the Appellees. Damages were determined by the trial court in a separate hearing.

The trial court rendered judgment consistent with the verdict. On appeal, the City challenges the

trial court’s judgment in five respects. We affirm the judgment of the trial court.

BACKGROUND

APD is Austin’s primary law-enforcement agency. It is a civil-service police agency,

and as such, its employment practices are governed by chapter 143 of the Texas Local Government

Code and the City’s “meet and confer” labor agreements with the APD employees’ union. See

generally Tex. Loc. Gov’t Code §§ 143.021–.047 (describing classification and compensation of civil

service firefighters and police officers); see also id. § 143.303 (allowing municipalities to alter certain

civil-service employment terms by agreement with employees’ union). APD has strict objective

standards for determining an officer’s pay and rank, including “exam score, seniority points, education

points and other requirements.”

Prior to 2009, the PSEM was a separate non-civil-service agency encompassing the

City’s airport, park, and municipal-court law-enforcement operations. According to the City, the

minimum base salary for PSEM employees was significantly lower than that of APD. Furthermore,

there was a wider range of compensation packages for PSEM officers with the same rank and seniority,

owing in part to the fact that PSEM officers were eligible for a wider range of pay stipends for various

certifications, education levels, and types of assignments.

2 In 2006, the City began preparing for PSEM’s consolidation into APD, which,

according to the Chief of Police, would create a uniform chain of command and improve the City’s

ability to meet its law enforcement needs. As a result of its negotiations with the APD employees’

union, the City approved the consolidation in September of 2008 (the Consolidation Agreement), with

the consolidation to become effective January 4, 2009. According to the City, PSEM officers did not

participate in these negotiations because they were not part of the APD employees’ union.

Under the terms of the Consolidation Agreement, no PSEM employee could transfer

to APD at a rank higher than “officer” and no PSEM employee could start with a base salary higher

than that of an APD officer with sixteen years’ experience. Furthermore, PSEM employees could

include only up to three years of PSEM service as years of APD service. Given that APD officers need

five years of APD service before they are eligible to sit for a promotion exam, this meant that no PSEM

employee—regardless of previous rank or years of service—could be promoted to a higher rank for at

least two years after the consolidation. However, to compensate for the loss of most of their pay

stipends, the City gave all transferring PSEM employees a lump sum payment to ensure that they at

least maintained their final PSEM salary for their first two years at APD.

Following the consolidation of PSEM into APD, each of the Appellees timely filed their

individual “letter complaints” with the City of Austin Equal Employment and Fair Housing Office and

the Federal Equal Employment Opportunity Commission (EEOC). See Tex. Lab. Code § 21.01

(specifying procedural and substantive requirements for making employment-discrimination

complaints). The EEOC issued “right to sue notices” to the Appellees. Appellees subsequently

filed this underlying lawsuit, alleging that the Consolidation Agreement disparately impacted PSEM

employees over 40 years of age by stripping them of their years of service.

3 The City filed a plea to the jurisdiction, asserting that the Appellees’ disparate-impact

discrimination claim—which is the sole discrimination claim in their live petition—was not included in

the Appellees’ letter complaints to the EEOC. See Pacheco v. Mineta, 448 F.3d 783, 788 (5th Cir.

2006) (discussing distinction between disparate-impact and disparate-treatment employment

discrimination claims). Therefore, according to the City, the Appellees failed to exhaust their

administrative remedies with respect to their disparate-impact claim, and the trial court lacked

jurisdiction to hear this case. After a pretrial hearing, the trial court denied the City’s plea to the

jurisdiction and the case proceeded to a jury trial.

At trial, Harvey Corn, the Appellees’ expert statistician, testified that as a result of the

consolidation, the average PSEM employee under 40 years of age lost 3.7 years of service when placed

on APD’s pay scale, but the average PSEM employee over 40 lost 6.5 years. Because seniority factored

heavily into an APD officer’s base pay, this disparity, according to Corn, resulted in the average PSEM

employee under 40 receiving a 15.61% pay increase after consolidation, but the average employee over

40 receiving only a 5.68% increase. During cross-examination, the City questioned Corn about the

validity of his analysis, and Corn admitted that he did not attempt to valuate the differences in

retirement benefits, sick-leave pay, and other factors.2

The City called James Pearce, an economic and statistical analyst, who testified about

his analysis of the pay disparities after PSEM was consolidated into APD. Pearce testified that one

2 Several of the Appellees also testified about the effects of the consolidation, with one stating that unlike younger PSEM officers, older officers’ income did not increase at APD because any potential increase in seniority pay would be offset by reducing the lump-sum payment they received to compensate for their loss of pay stipends. Thus, older PSEM employees were kept at the same pay level for their first two years with APD.

4 reason for the larger pay increases for PSEM officers under 40 years of age was that more than half of

the younger employees made less than the APD minimum salary prior to consolidation, and thus their

salaries would substantially increase when they became APD officers. Pearce asserted that these

“outliers” skewed Corn’s analysis. However, Pearce never argued that the consolidation did not result

in disparate pay raises between younger and older officers or that this disparity was insignificant.

Furthermore, during his damage analysis, Pearce appeared to concede that the consolidation did result

in a “disparate impact” and “loss” for older PSEM officers.3

Following deliberations, the jury returned its verdict in favor of the Appellees.

Specifically, the jury found that (1) the City’s decision not to include years of service in setting the pay

for PSEM employees transferring to APD had a significantly adverse effect on employees over 40 and

(2) the City’s decision not to include years of service was not based on a reasonable factor other than

age. The trial court conducted a hearing on damages and entered a final judgment consistent with the

verdict, awarding the Appellees damages equal to back pay for the salary they would have

received—including overtime—had their years of service been transferred to the APD pay scale. The

trial court also ordered the City to place the Appellees on the APD pay scale in a manner consistent

with their years of service at PSEM. This appeal followed.

DISCUSSION

On appeal, the City challenges the trial court’s judgment in five respects. First, the City

asserts that the court erred in denying the City’s plea to the jurisdiction. In its second, third, and fifth

3 The Appellees contend that they did not cross-examine Pearce because his testimony was favorable to their case.

5 appellate issues, the City argues that the evidence is legally and factually insufficient to support the trial

court’s judgment. Finally, in its fourth appellate issue, the City contends that the trial court failed to

accurately instruct the jury on causation. We will begin our analysis with the City’s first appellate issue

because it concerns the trial court’s jurisdiction to hear this case.

Exhaustion of administrative remedies

In its first issue, the City asserts that the trial court erred in denying its plea to the

jurisdiction. Specifically, the City argues that the Appellees’ disparate-impact claim—which was the

theory they relied on at trial—was not included in the Appellees’ letter complaints to the EEOC.

Therefore, according to the City, the Appellees failed to exhaust their administrative remedies with

respect to their disparate-impact claim, and the trial court lacked jurisdiction to hear this case.

“To bring a suit for unlawful employment practices, a plaintiff must first have

filed an administrative complaint with the EEOC or the [Texas Commission on Human Rights].”

University of Tex. v. Poindexter, 306 S.W.3d 798, 807 (Tex. App.—Austin 2009, no pet.). The

plaintiff’s subsequent lawsuit “may raise only the specific issue[s] made in the employee’s

administrative complaint and ‘any kind of discrimination like or related to the charge’s allegations.’”

Elgaghil v. Tarrant Cnty. Junior Coll., 45 S.W.3d 133, 141 (Tex. App.—Fort Worth 2000, pet. denied)

(quoting Fine v. CAF Chem. Corp., 995 F.2d 576, 578 (5th Cir. 1993)). Courts view administrative

complaints—which are often filed by laymen acting pro se—“somewhat broadly, not solely by the

scope of the administrative charge itself, but by the scope of the EEOC investigation which can

reasonably be expected to grow out of the charge of discrimination.” Pacheco, 448 F.3d at 788–89

(internal quotations omitted).

6 Whether the allegations in a plaintiff’s lawsuit sufficiently relate to the allegations in

the plaintiff’s administrative complaint is a jurisdictional fact that does not implicate the underlying

merits of the plaintiff’s lawsuit. See Poindexter, 306 S.W.3d at 807–08, 811–12. Therefore, the trial

court, not the jury, makes this factual determination. Id. However, because the underlying

jurisdictional facts in this case are not in dispute, the trial court should make the jurisdictional

determination as a matter of law based solely on the undisputed facts. Id. at 806. We review that legal

determination de novo. See id.

Federal and Texas law both recognize “two largely separate theories of discrimination,

disparate treatment and disparate impact.” Pacheco, 448 F.3d at 787; Poindexter, 306 S.W.3d at

811–12. Disparate-treatment claims involve employment actions that treat employees differently based

on the employee’s race, gender, or other protected status. See Pacheco, 448 F.3d at 787.

Thus, disparate-treatment claims require proof of a discriminatory motive. Id. “Disparate-impact

discrimination, on the other hand, addresses employment practices or policies that are facially neutral in

their treatment of these protected groups, but, in fact, have a disproportionately adverse effect on such

a protected group.” Id. Therefore, a plaintiff bringing a disparate-impact claim must prove only that

her employer (1) used a facially neutral policy that (2) in fact had a disproportionately adverse effect

on the protected class. See id. at 791; Poindexter, 306 S.W.3d at 811.

In this case, the Appellees’ live pleadings allege only a disparate-impact claim, asserting

that the City’s Consolidation Agreement, which stripped PSEM employees of their years of service,

had a disproportionately adverse effect on PSEM employees over 40. See Mission Consol. Indep. Sch.

Dist. v. Garcia, 372 S.W.3d at 629, 641 (Tex. 2012) (noting that persons 40 years of age and older are

7 protected class for purposes of Texas and federal age-based discrimination claims). By comparison,

the Appellees’ letter complaints allege the following:

On or about January 4, 2009, the Airport and Park[] Police and the Marshall’s service were consolidated into the Austin Police Department. When this occurred, I lost my seniority, years of service, rank, stipend pay and overtime.

Younger officers with very few years of service received pay increases.

The only reason ever given was the financial impact on the City.

I believe that I was discriminated based on my age . . . in violation of the Age Discrimination in Employment Act of 1967 [ADEA] and the Texas Commission on Human Rights act, as amended.

As the City correctly notes, the letter complaints do not use the phrases “disparate

impact” or “facially neutral policy,” nor any variant thereof. However, the complaints do identify a

facially neutral policy—the consolidation of the Airport and Park Police and the Marshall’s service into

APD. See Gomes v. Avco Corp., 964 F.2d 1330, 1334–35 (2d Cir. 1992) (concluding that reference

to “eight year rule” for employment promotion sufficient to alert EEOC to potential disparate-impact

claim). The complaints also identify adverse effects—the Appellees’ loss of seniority, years of service,

rank, stipend pay, and overtime. Finally, the complaints at least allude to a resulting age-based

disparity—asserting that younger officers with fewer years of service received pay increases, with the

implication that older officers with more years of service did not.

Given that all thirty-three of the Appellees’ letter complaints identify the same facially-

neutral employment policy that allegedly disproportionally injured older employees, the EEOC would

reasonably be expected to investigate this case as both a disparate-treatment and disparate-impact

8 claim. See Gomes, 964 F.2d at 1335 (noting that although EEOC complaints “most naturally support

a claim of intentional discrimination,” facts alleged also support disparate-impact claim). We conclude

that the Appellees’ letter complaints sufficiently allege a disparate-impact claim such that they have

exhausted their administrative remedies for those claims. See Pacheco, 448 F.3d at 788–89. Thus, the

trial court had jurisdiction to hear this case and did not err in denying the City’s plea to the jurisdiction

on that basis. We overrule the City’s first appellate issue.

Sufficiency of the evidence

In its second, third, and fifth issues on appeal, the City challenges the legal and factual

sufficiency of the evidence to support the trial court’s judgment. Specifically, the City’s second

appellate issue asserts that the Appellees failed to make a prima facie case of age-based disparate-

impact discrimination. In its third appellate issue, the City argues that it established as a matter of law

that its employment decisions were based on reasonable factors other than age. Finally, in its fifth

appellate issue, the City claims that there is no evidence to support the trial court’s award of additional

overtime pay to Appellees. We address each of these issues in turn.

Standard of review

It is well established that jurors are the sole judge of the credibility of the witnesses and

the weight to be given to their testimony. See City of Keller v. Wilson, 168 S.W.3d 802, 819 (Tex.

2005). Jurors are free to credit one witness’s testimony and disbelieve another’s, and appellate courts

cannot overturn a jury’s verdict merely because we might reach a different result. Id. Therefore, to give

proper deference to the jury’s role as factfinder, we assume that the jury resolved all conflicts of

9 credibility in favor of its verdict, crediting favorable evidence if a reasonable juror could, and

disregarding contrary evidence if a reasonable juror could have disbelieved it. Id.

“In reviewing the legal sufficiency of the evidence, we view the evidence in the light

most favorable to the judgment . . . .” AutoZone, Inc. v. Reyes, 272 S.W.3d 588, 592 (Tex. 2008).

Evidence is legally insufficient if it would not enable a reasonable and fair-minded person to reach the

verdict under review. See City of Keller, 168 at 827. When an appellant challenges the legal

sufficiency of the evidence supporting an adverse finding of fact for which the opposing party had the

burden of proof, the appellant must demonstrate that there is no evidence, or merely a scintilla of

evidence, to support the adverse finding. See id. By contrast, when an appellant attacks the legal

sufficiency of an adverse finding on an issue for which he has the burden of proof, he must demonstrate

that the evidence establishes that issue as a matter of law. Dow Chem. Co. v. Francis, 46 S.W.3d 237,

242 (Tex. 2001) (per curiam).

In a factual-sufficiency review, appellate courts must examine the evidence that

both supports and contradicts the jury’s verdict in a neutral light. See id. We still defer to the

jury’s implicit determinations of credibility and weight to be given to the evidence. See Golden

Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003). Therefore, when a party brings a

factual-sufficiency challenge to a jury finding for which the party did not have the burden of proof, we

consider and weigh all of the evidence and set aside the verdict only if the evidence that supports the

finding is so weak as to make the verdict clearly wrong and manifestly unjust. Cain v. Bain,

709 S.W.2d 175, 176 (Tex. 1986); Pitts & Collard, L.L.P. v. Schechter, 369 S.W.3d 301, 312 (Tex.

App.—Houston [14th Dist.] 2011, no pet.). Similarly, when a party attacks the factual sufficiency of

10 an adverse finding of fact for which he has the burden of proof, he must demonstrate on appeal that the

adverse finding is against the great weight and preponderance of the evidence. Dow Chem., 46 S.W.3d

at 242. With these standards in mind, we turn to the City’s sufficiency challenges in this case.

Prima facie case of disparate impact

In its second issue on appeal, the City asserts that the evidence is both legally and

factually insufficient to support a prima facie case of age-based disparate-impact discrimination.

Specifically, the City argues that (1) the Appellees failed to identify a specific employment practice;

(2) the Appellees’ claims impermissibly equate years of service to age discrimination; and (3) the

Appellees failed to prove causation because the evidence does not demonstrate a “significant statistical

disparity” in employee pay after consolidation. Before addressing each of these claims, we will briefly

discuss the elements of a disparate-impact discrimination claim.

The plaintiff has the burden of making a prima facie case of age-based disparate-impact

discrimination. See Texas Parks & Wildlife Dep’t v. Dearing, 240 S.W.3d 330, 342 (Tex.

App.—Austin 2007, pet. denied). To make a prima facie case, the plaintiff must “(1) isolate and

identify the specific employment practice challenged; (2) demonstrate any observed statistical disparity

that the practice has on the protected class; and (3) demonstrate a causal link between the identified

practice and the demonstrated disparity.” Id. (citing Wards Cove Packing Co. v. Antonio, 490 U.S. 642,

655 (1989)). Plaintiffs must identify a specific employment practice rather than a generalized policy

in order “to avoid the result of employers being potentially liable for the myriad of innocent causes that

may lead to statistical imbalances.” Meacham v. Knolls Atomic Power Lab., 554 U.S. 84, 100 (2008)

11 Appellees identified and challenged the Consolidation Agreement’s failure to transfer

PSEM employees’ years of service as the specific employment practice. Appellees introduced

ample evidence and testimony demonstrating that under the terms of the Consolidation Agreement,

PSEM employees’ salaries were capped at the level of an APD officer with sixteen years of service and

they could include only three years of PSEM service as years of APD service. According to Appellees,

these elements of the Consolidation Agreement resulted in the disparate impact alleged. Thus, the

Consolidation Agreement’s stripping PSEM employees of their years of service is the specific

employment practice that the Appellees allege caused the disparate impact. See Gomes, 964 F.2d

at1334–35 (concluding that reference to “eight year rule” for employment promotion sufficient to alert

EEOC to potential disparate-impact claim).

On appeal, the City asserts that stripping PSEM employees of their years of service is

too generalized a policy to satisfy the specific-employment-practice requirement. In particular, the City

claims that Corn’s analysis of the Consolidation Agreement failed to take into account the benefits all

PSEM employees received as a result of their transfer to APD. Furthermore, the City claims that the

Appellees’ proposed remedy of completely transferring PSEM years of service to APD would have

resulted in higher pay disparities between younger and older officers. However, these issues relate to

whether the Appellees have sufficiently proven that stripping them of their years of service caused

a disparate impact, not whether stripping PSEM employees is a sufficiently specific employment

practice. See Meacham, 554 U.S. at 100 (explaining that purpose of specificity requirement is to ensure

employers are not liable for myriad of innocent causes that may lead to statistical disparity). Thus,

the City’s complaint that the Appellees failed to allege a specific employment practice is without

12 merit. See Loffredo v. Daimler AG, 500 Fed. App’x 491, 498 (6th Cir. 2012) (concluding that

securitization of retirement benefits for active employees was specific practice that had disparate impact

on older retirees).

The City also asserts that employment practices based on years of service can never

form the basis of an age-based disparate-impact claim, and thus the Appellees’ criticism of the

Consolidation Agreement fails as a matter of law. We find this argument unpersuasive. The City relies

on Hazen Paper Co. v. Biggins, in which the United States Supreme Court held that “there is no

disparate treatment under the ADEA when the factor motivating the employer is some feature other

than the employee’s age.” 507 U.S. 604, 609 (1993) (emphasis added). In Hazen Paper, the court held

that discriminating against an employee on the basis of his years of service—although correlated to

age—did not constitute age-based disparate treatment because the decision was not motivated by age.

Id. However, as the opinion makes clear, its analysis was strictly limited to disparate-treatment claims,

as the court had not yet “decided whether a disparate impact theory of liability is available under the

ADEA.” Id.

The United States Supreme Court and this Court have since recognized that a

disparate-impact theory of liability is available under the ADEA and Texas law. See Smith v. City of

Jackson, 554 U.S. 228, 232 (2005); Dearing, 240 S.W.3d at 351. Given that disparate-impact claims

necessarily assert that a facially neutral employment practice adversely affected older employees, it

would be wholly illogical to say that employees can never bring a disparate-impact claim when the

facially neutral policy relies on factors—like pension status or seniority—that are “empirically

correlated with age.” See Hazen Paper, 507 U.S. at 608. An employer like the City is, of course, free

13 to assert the affirmative defense that its use of seniority was a reasonable factor other than age. See

Meacham, 554 U.S. at 102 (“[E]mployment criteria that are routinely used may be reasonable despite

their adverse impact on older workers as a group.”) (internal quotations omitted). However, there is

nothing in the case law to suggest that seniority is always a reasonable factor other than age for all age-

based disparate-impact claims, and we decline to adopt such a per se rule.4

Finally, the City asserts that Corn’s testimony failed to establish a “significant statistical

disparity” between younger and older PSEM employees after their consolidation into APD. Again, the

City claims that Corn’s analysis does not take into account various benefits PSEM employees received

and improperly includes certain statistical outliers. Furthermore, the City raises statistical

arguments—many of which were not made in the trial court—that it claims demonstrates that the

disparity in pay after consolidation was either less than Corn claimed or preferable when compared to

alternative methods of consolidation.

In disparate-impact cases, after identifying a specific employment practice, “causation

must be proved; that is, the plaintiff must offer statistical evidence of a kind and degree sufficient to

show that the practice in question has caused the” complained of disparity. Watson v. Fort Worth Bank

& Trust, 487 U.S. 977, 994–95 (1988). There is no rigid formula for what constitutes a sufficient

4 The City also asserts that failing to transfer PSEM employees’ years of service to the APD pay scale is a “non-practice,” and thus cannot be a specific employment policy for purposes of a disparate-impact claim. The City’s brief does not explain what a non-practice is, nor does it cite to any cases that might shed light on the distinction between a non-practice and an affirmative employment policy. However, to the extent the City argues that employment decisions that can be characterized as non-actions cannot form the basis of a disparate-impact claim, we find no support for such a rule in the case law. See Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 990 (1988) (concluding that employer’s failure to set objective criteria for promotions could support disparate- impact claim because subjective decisions of supervisors led to racial disparities in promotions).

14 statistical disparity, but the “statistical disparities must be sufficiently substantial that they raise such

an inference of causation.” Id. A plaintiff need not prove causation with scientific certainty; “rather,

his or her burden is to prove [causation] by a preponderance of the evidence.” Bazermore v. Friday,

478 U.S. 385, 400 (1986).

In this case, Corn testified that because the Consolidation Agreement stripped PSEM

employees of their years of service, the average PSEM employee under 40 received a 15.61% pay

increase after consolidation, but the average employee over 40 received only a 5.68% increase. This

testimony was corroborated, at least in part, by Pearce, the City’s expert. Although Pearce testified that

Corn’s analysis improperly included statistical outliers like PSEM officers who made less than the APD

minimum, Pearce agreed with Corn that younger PSEM employees received raises that were “9.9

percentage points higher” than their older counterparts. Pearce explained that this 9.9% was the “most

relevant number,” and he continually referred to it as the number that most accurately exemplified the

resulting pay disparity between younger and older PSEM employees. Pearce never testified that this

figure was a statistically insignificant disparity or that the statistics failed to show that stripping PSEM

employees of their years of service caused this disparity. In fact, his analysis appears to have assumed

that the consolidation was the cause of the disparity in pay rates.

Even assuming for the sake of argument that the jury accepted Pearce’s analysis over

Corn’s, the jury could reasonably have concluded that the 9.9 percentage-point difference in raises after

the consolidation is sufficiently substantial to raise an inference of causation. See Watson, 487 U.S.

at 994–95 (explaining that there is no rigid formula for demonstrating causation). Furthermore, given

that the jury returned a verdict in favor of the Appellees, we assume that the jury credited Corn’s

15 testimony over Pearce’s and thus agreed with Corn that stripping PSEM employees of their years of

service effectively resulted in younger PSEM employees receiving raises that were three times higher

than those of older PSEM employees. Similar statistical disparities have been sufficient to demonstrate

a prima facia case of causation. See, e.g., Scales v. J.C. Bradford & Co., 925 F.2d 908 (6th Cir. 1991)

(concluding that evidence that males were promoted to broker representative in 2.38 years on average

while women were not promoted for 4.75 years was sufficient evidence of causation). Although the

City’s complaints about the alleged shortcomings in Corn’s analysis may go to the probative value of

his testimony, based on the record as a whole we conclude that there is sufficient statistical evidence

from which a jury could reasonably conclude that the Consolidation Agreement caused the disparate

impact alleged. See Bazermore, 478 U.S. at 400 (noting that “omission of variables from a regression

analysis” may affect opinion’s probative value but not its admissibility); see also McClain v. Lufkin

Indus., Inc., 519 F.3d 264, 279–80 (5th Cir. 2008) (same proposition).

Reviewing the evidence in the light most favorable to the jury’s verdict, we find that

there is more than a scintilla of evidence from which the jury could reasonably conclude that the

Appellees made a prima facie case of age-based disparate-impact discrimination. Thus, the evidence

is legally sufficient to support the jury’s finding in favor of the Appellees. See City of Keller,

168 S.W.3d at 827. Similarly, reviewing the evidence in a neutral light, we conclude that the evidence

supporting the jury’s finding that the Appellees made a prima facie case of discrimination is not so

weak as to clearly make the verdict wrong and manifestly unjust. Therefore, the evidence is also

factually sufficient to support the jury’s finding. See Cain, 709 S.W.2d at 176. We overrule the City’s

second appellate issue.

16 Reasonable factor other than age

In its third issue on appeal, the City asserts that the record establishes that the manner

in which it placed PSEM employees on the APD pay scale was based on a reasonable factor other than

age. Specifically, the City claims that its “goal of ensuring no loss in pay for PSEM officers in

transition to [APD] undoubtedly established a reasonable factor other than age . . . .” Thus, according

to the City, the evidence is both legally and factually insufficient to support the jury’s finding that the

City failed to prove its decision was based on a reasonable factor other than age.

“[I]t is not surprising that certain employment criteria that are routinely used may

be reasonable despite their adverse impact on older workers as a group.” Smith, 554 U.S. at 241.

Therefore, both federal and Texas law provide that an employment policy that disparately impacts older

workers may not be actionable if the challenged policy is based on a reasonable factor other than age.

See id. at 239–40; Dearing, 240 S.W.3d at 355. This Court, relying on federal cases decided before

the United States Supreme Court’s decision in Meacham, 554 U.S. at 94, held that a plaintiff has “the

ultimate burden of proof to demonstrate that any proffered [reasonable factor other than age] was

unreasonable.” Dearing, 240 S.W.3d at 355–56 (citing cases from several federal circuit courts for

same proposition). However, we recognize that Meacham, 554 U.S. at 94, expressly overruled those

federal cases that formed the basis of our conclusion in Dearing and established that a reasonable factor

other than age is an affirmative defense for which the employer has the burden of proof. See Tex. Lab.

Code § 21.122(b) (requiring courts to apply judicial interpretation of ADEA to Texas’s standard for

burden of proof in age-based discrimination claims). To establish this affirmative defense, the employer

has the burden to prove that (1) its decision was based on a factor other than age and (2) that factor is

reasonable. Meacham, 554 U.S. at 94. Thus, in order to prevail on appeal, the City must demonstrate

17 that the evidence is legally or factually insufficient to support the jury’s adverse finding on an issue for

which the City had the burden of proof. See Dow Chem. Co., 46 S.W.3d at 242 (describing applicable

standard of review).

In this case, the City asserts that its policy of ensuring that no PSEM employee’s

base salary decreased after consolidation demonstrates that its employment decisions within the

Consolidation Agreement were based on reasonable factors other than age. It is undisputed that the

City provided all PSEM employees with lump-sum payments to ensure that their salaries were not

reduced from their pre-consolidation levels for at least two years. Furthermore, it does not appear that

any of the Appellees’ salaries were reduced as a result of the consolidation.

However, the City fails to explain a logical connection between reducing the Appellees’

years of service—thereby adversely affecting their opportunities for promotion and raises—and

ensuring that all PSEM employees maintained their current salaries.5 There is no evidence or testimony

in the record to suggest that the reason the Consolidation Agreement stripped PSEM employees of their

seniority was to ensure that all PSEM employees did not receive a reduction in pay. At most, the lump-

sum payments to PSEM employees were designed to ameliorate some, but not all, of the adverse effects

of consolidation. Thus, the jury could have reasonably concluded that the City failed to prove by a

preponderance of the evidence that its decision to strip PSEM employees of their years of service was

based on reasonable factors other than age.

5 At trial, the City also argued that its employment decisions within the Consolidation Agreement were based on demands from APD’s union, a concern that PSEM employees’ rank and experience did not necessarily equate to APD rank and experience, and a concern that it would have been too costly to transfer PSEM employees’ years of service to APD. Although these explanations might arguably be reasonable factors other than age that could justify the City’s adoption the Consolidation Agreement, the City does not raise them on appeal.

18 Considering all of the evidence in the light most favorable to the jury’s verdict, the City

has not established as a matter of law that its employment decision was based on a reasonable factor

other than age. Thus, the evidence is legally sufficient to support the jury’s adverse finding on that

affirmative defense. See id.; see also Meacham, 554 U.S. at 94. Similarly, considering the evidence

in a neutral light, the City has failed to demonstrate that the jury’s finding is against the great weight

and preponderance of the evidence. Therefore, the evidence is factually sufficient to support the jury’s

adverse finding. See Dow Chem. Co., 46 S.W.3d at 242. We overrule the City’s third appellate issue.

Overtime pay

In its fifth issue on appeal, the City asserts that the evidence is insufficient to support

the trial court’s award of damages for overtime pay. Specifically, the City argues that the Appellees

did not introduce any evidence relevant to the amount of overtime pay during the liability portion of

trial. Thus, according to the City, the evidence is insufficient to support the trial court’s award of

overtime damages.

At trial, the issue of damages was submitted to the trial court. There is nothing in

the record to suggest that the City objected to this procedure.6 As the court explained, the evidence

concerning how many hours the Appellees worked, how much they were paid for that work, and how

much they would have been paid had they transferred their years of service to APD was not in dispute.

Thus, as the trial court noted, the amount of damages would be “a matter of math.” During the

damages hearing, the Appellees introduced an exhibit titled “Damage Estimates,” which was a

6 It is not entirely clear from the record, but it appears that the decision to have the jury determine liability and the trial court determine damages was made during an off-the-record discussion between the parties and the trial court.

19 document prepared by Pearce—the City’s own expert. Following the hearing, the trial court entered

a final judgment in which it awarded damages for back-pay consistent with the Appellees’ exhibit.

On appeal, the City does not assert that the trial court erred in admitting the Appellees’

exhibit on damages. Nor does the City assert that the evidence is incompetent or unreliable—indeed,

given that the damage estimate was prepared by the City’s expert, the City would be hard-pressed to

debate its validity. Instead, the City appears to assert that because the Appellees offered no evidence

concerning overtime pay during the liability portion of trial, the trial court should not have considered

the issue during the damages hearing.

The City does not cite to, and we have not found, any precedent that supports the

proposition that a plaintiff must introduce evidence of damages to the jury during the liability portion of

trial when, as here, damages will be decided by the trial court in a separate hearing. See Paradigm Oil,

Inc. v. Retamco Operating, Inc., 372 S.W.3d 177, 183–84 (Tex. 2012) (noting that in default judgment,

defaulting party is deemed to admit liability and then plaintiff must introduce evidence of non-

liquidated damages). Thus, the fact that the Appellees failed to introduce evidence of the amount of

overtime pay during the liability portion of trial is irrelevant. At the damages hearing, the Appellees

introduced competent evidence on the amount of back pay that they were owed, including overtime.

This uncontested evidence is both legally and factually sufficient to support the trial court’s award of

damages. The City’s fifth appellate issue is overruled.

Jury instruction on causation

In its fourth issue on appeal, the City asserts that the trial court erred in refusing to give

a separate jury instruction on causation. We review a trial court’s decision to submit or refuse to

20 submit a particular jury instruction for an abuse of discretion. In re V.L.K., 24 S.W.3d 338, 341 (Tex.

2000). The trial court has broad discretion to determine necessary and proper jury instructions. Id. A

trial court abuses its discretion by acting arbitrarily, unreasonably, or without consideration of guiding

principles. Mercedes-Benz Credit Corp. v. Rhyne, 925 S.W.2d 664, 666 (Tex. 1996); Ganesan v.

Vallabhaneni, 96 S.W.3d 345, 350 (Tex. App.—Austin 2002, pet. denied).

In this case, the first question submitted to the jury was “did the City’s decision

not to include years of service in setting the pay for PSEM officers have a significantly adverse

effect on persons age forty (40) and over?” At trial, the City submitted a proposed jury instruction:

“Definition: ‘Significantly adverse is measured by statistical significance.’” The trial court refused to

give the City’s requested instruction.

The actual jury instruction given by the trial court tracks the language of the Texas

Pattern Jury Charge for age-based disparate-impact discrimination.7 See State Bar of Texas, Texas

7 The pattern jury charge for age-based disparate-impact discrimination asks:

Did [employer’s] requirement that [describe specific employment practice] have a disparate impact on [name of protected group, e.g., persons age forty and over]?

“Disparate impact” is established if the identified and challenged practice has a significantly adverse effect and is not based on reasonable factors other than age discrimination.

Answer “Yes” or “No.”

State Bar of Texas, Texas Pattern Jury Charges-Employment PJC 107.6 (2012). Although this charge correctly states the elements of disparate-impact discrimination, it has not yet been updated to reflect that it is the employer’s burden to prove that its challenged practice was based on reasonable factors other than age. See Meacham v. Knolls Atomic Power Lab., 554 U.S. 84, 94 (2008).

21 Pattern Jury Charges-Employment PJC 107.6 (2012). Neither the pattern jury charge nor any federal or

state precedent provides a separate instruction on causation for disparate-impact claims. Therefore,

whether the trial court was required to instruct the jury on causation appears to be a question of first

impression.

To preserve this complaint for appeal, the City was required to (1) submit a written

request for an instruction on causation to the trial court that (2) was a substantially correct statement

of the law. See Tex. R. App. P. 278; Texas Dep’t of Human Servs. v. Hinds, 904 S.W.2d 629, 637–38

(Tex. 1995). The City’s proposed instruction relates to whether there was a statistically significant

disparate impact, not whether stripping PSEM employees of their years of service caused the significant

disparate impact. See Dearing, 240 S.W.3d at 342 (listing specific employment practice, significant

disparate impact, and causation as separate elements of disparate-impact claim). Because the City’s

proffered instruction relates to a different element of a disparate-impact claim, it did not inform the trial

court that the City was requesting an additional instruction on causation. Cf. Hinds, 904 S.W.2d at 638

(noting that although proffered instruction misstated law, it directed trial court’s attention to need for

proper instruction).

Furthermore, the City’s proffered instruction does not provide a substantially correct

statement of the law of causation. As previously noted, there is no rigid formula for what constitutes

a sufficient statistical disparity, but the “statistical disparities must be sufficiently substantial that they

raise such an inference of causation.” Watson, 487 U.S. at 994–95. The City’s proffered definition

eliminates the majority of this language, and merely asks the jury whether the evidence of a significant

disparate impact is “statistically significant.” The City does not cite to, and we have not found, any

22 case that uses the phrase “statistical significance” as a shorthand for the proper test of causation. Thus,

the City’s proposed instruction so substantially misstates the law that it has failed to adequately

preserve this complaint for appeal. See Tex. R. Civ. P. 278 Transcontinental Ins. Co. v. Crump, 330

S.W.3d 211, 226 (Tex. 2010) (noting that party must bring alleged error in jury charge to trial court’s

attention to preserve complaint for appeal); City of Brenham v. Honerkamp, 950 S.W.2d 760, 768 (Tex.

App.—Austin 1997, pet. denied) (concluding that proffered instruction was so illogically worded that

it failed to preserve complaint for appeal).

Having concluded that the City’s proffered instruction failed to bring the issue of

causation to the trial court’s attention and was not a substantially correct statement of the law,

we conclude that the City has not preserved this issue for appeal. We overrule the city’s fourth

appellate issue.

CONCLUSION

Having overruled the City’s five issues on appeal, we affirm the judgment of the

trial court.

__________________________________________

Scott K. Field, Justice

Before Chief Justice Jones, Justices Goodwin and Field

Affirmed on Rehearing

Filed: April 18, 2014