Denham v. Sunoco, Inc.

• Court: Court of Appeals for the Tenth Circuit
• Decided: February 21, 2007
• Docket: 06-5040
• Status: Unpublished

Opinion

F I L E D United States Court of Appeals Tenth Circuit UNITED STATES CO URT O F APPEALS February 21, 2007 FO R TH E TENTH CIRCUIT Elisabeth A. Shumaker Clerk of Court

JOHN M . DENHAM ,

Plaintiff-Appellant,

v. No. 06-5040 (D.C. No. 01-CV -219-E) SUNOCO, INC. (R& M ), (N.D. Okla.)

Defendant-Appellee.

OR D ER AND JUDGM ENT *

Before O ’B RIE N and BROR BY, Circuit Judges, and BRO W N, ** District Judge.

Plaintiff-appellant John Denham appeals from the judgment of the

district court rejecting his claim that he was terminated from his job with

defendant-appellee Sunoco, Inc., in violation of common law and § 510 of

ERISA, 29 U.S.C. § 1140. In arriving at its judgment, the district court

* After examining the briefs and appellate record, this panel has determined unanimously to grant the parties’ request for a decision on the briefs without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. ** The H onorable W esley E. Brown, Senior District Judge, District of K ansas, sitting by designation. concluded that Sunoco’s reason for terminating M r. Denham was both reasonable

and believable. Aplt. App., Vol. I at 63. Our jurisdiction arises under 28 U.S.C.

§ 1291, and we affirm.

Sunoco at all relevant times owned and operated a lubricants refinery in

Tulsa, Oklahoma. M r. Denham had been employed by Sunoco since December

1976. On M ay 25, 2000, M r. Denham began a medical leave of absence due to

neck, left shoulder, and back ailments and began receiving short-term disability

payments under Sunoco’s disability income plan. As required by company policy,

M r. Denham periodically reported his medical condition to his supervisor and to

Sunoco’s company doctor at the Tulsa refinery, Dr. Campbell. M r. Denham also

gave consent for his medical records to be shared with Sunoco, which Sunoco

later received.

During the time M r. Denham was on disability leave, his supervisor,

M r. M anard, heard comments from other Sunoco employees indicating that

M r. Denham may have been engaging in physical activities apparently

incompatible with his disabilities. In order to verify these rumors, Sunoco hired

a private investigative agency to look into the matter. That agency hired

Rex M erritt, a local investigator experienced in surveillance work, to follow

M r. Denham and videotape his activities.

Upon the completion of his surveillance, M r. M erritt submitted a videotape

to Sunoco’s human resources (HR) department along with an affidavit identifying

-2- the subject of the tape as M r. Denham. On November 15, 2000, M r. Denham met

with Dr. Campbell who examined M r. Denham and gave him a release to return to

work. Shortly after the completion of his visit with Dr. Campbell, and while still

on refinery property, M r. D enham was summoned to Sunoco’s HR department.

There he met with several of Sunoco’s management personnel, some of whom had

already review ed the videotape and M r. M erritt’s affidavit. The tape was shown

again, this time to M r. Denham, Dr. Campbell, and other HR personnel. After

telling Dr. Campbell that the person in the videotape was M r. Denham, Krista

Turney, Sunoco’s HR manager, asked Dr. Campbell whether “[w]ith the

limitations and restrictions that we understood that [M r. Denham] had, could he

be doing those types of activities that we had reviewed.” A plt. App., Vol. II

at 427. The doctor’s opinion was that M r. Denham could not be doing the

activities caught on the video. Id. W hen Dr. Campbell was asked at trial whether

M s. Turney “elicited an opinion from you that if this was M r. Denham on the

tape, he could not be doing the kinds of things or should not be doing the kinds of

things depicted there if he had limitations imposed as you understood them to be,”

id., the doctor replied, “[m]y opinion was that he could not be doing those things

as I saw on the video,” id.

During the November 15, 2000, meeting, M r. Denham admitted being the

person in the early part of the video shown working on a black truck and making

a trip to a local auto-supply store. He denied, however, being the person shown

-3- later in the video unloading fifty-pound sacks. M s. Turney told M r. Denham that

he would not be returning to work until the investigation into his disability claim

was finalized. Aplt. App., Vol. I at 75. M r. Denham w as eventually discharged

on January 10, 2001, after the Tulsa refinery personnel review ed the matter w ith

corporate officials in the company’s Philadelphia headquarters.

In response to his discharge, M r. Denham filed suit in O klahoma state court

alleging wrongful termination. Sunoco removed the action to federal district

court, alleging, inter alia, that M r. D enham’s claims were preempted by ERISA.

M r. Denham then amended his complaint to include a claim under ERISA § 510,

29 U.S.C. § 1140, alleging that he was unlawfully terminated because he sought

and obtained disability benefits from Sunoco’s disability income plan.

Both parties filed motions for summary judgment which were denied, and

trial proceeded to the court on August 2-5, 2004. In ruling for Sunoco, the

district court made extensive findings of fact and concluded, for purposes of this

appeal, that Sunoco’s termination of M r. Denham’s employment was reasonable

and that the reason given was believable. M r. Denham’s § 510 claim therefore

failed because M r. Denham had not established that Sunoco’s proffered reason for

terminating him was a pretext for illegal discrimination.

Although M r. Denham identifies seven different propositions on appeal, his

case essentially presents three grounds upon which he urges us to find error in the

decision of the district court: (1) that he was denied ERISA ’s procedural and

-4- substantive safeguards; (2) that, for a variety of reasons, Sunoco’s proffered

explanation for his termination was not reasonable and believable and thus was a

pretext for discrimination; and (3) that his breach-of-contract claim was

preem pted by ER ISA .

M r. Denham argues that Sunoco’s disability plan administrator, and not the

Tulsa refinery HR personnel, should have conducted the inquiry into his disability

status. He views this as evidence that he was denied ERISA ’s substantive and

procedural safeguards. After de novo review of this legal question, we disagree.

First, M r. Denham points to no provision in the disability plan precluding the type

of investigative effort engaged in by the Tulsa HR department, or to any provision

in the plan or in the law reserving this type of discrete employment investigation

and decision to the plan administrator. Second, M r. Denham at all times received

all the short-term and medium-term disability payments to which he was entitled

during his employment with Sunoco. This action to enforce ERISA’s § 510 anti-

discrimination provision is the proper remedy for an allegedly discriminatory

termination; M r. Denham was not denied any procedural or substantive rights

under ERISA . M r. Denham’s citation of general ERISA provisions declaring

basic ERISA policy and providing rights and remedies for plan participants is

irrelevant.

M r. Denham’s second issue is the crux of this appeal. Section 510 makes

it “unlawful for any person to discharge . . . a participant or beneficiary for

-5- exercising any right to which he is entitled under the provisions of an employee

benefit plan . . . or for the purpose of interfering with the attainment of any right

to which such participant may become entitled under the plan.” 29 U.S.C.

§ 1140. “[A]dverse employer action taken because an employee engages in

protected activity [here the claiming of disability benefits], including exercising,

or attempting to attain, any right under a plan or ERISA ” constitutes illegal

discrimination. Garratt v. Walker, 164 F.3d 1249, 1255 (10th Cir. 1998). In

proving illegal discrimination, the employee may resort to direct or indirect

evidence, but he must prove that the “adverse employment action was motivated

by an intent to interfere with employee benefits protected by ERISA . The

employee is not required to show that the employer’s sole motivation was to

interfere with employee benefits, [he] need only show that it was a motivating

factor.” Id. at 1256 (quotation and citations omitted).

In reviewing the evidence, the district court found that the investigator,

M r. M erritt, was able to identify M r. Denham and capture him on the videotape,

although it was not clear from the videotape whether it was actually M r. Denham

seen unloading the fifty-pound sacks. M r. M erritt, however, provided Sunoco

with an affidavit to accompany the videotape stating that, with the use of

binoculars, he could identify M r. D enham as the person moving the sacks.

Sunoco personnel showed the videotape to Dr. Campbell and told him that the

person in the tape was M r. Denham. W hen he was asked whether a person with

-6- M r. Denham’s disability could perform the activities depicted in the videotape,

Dr. Campbell opined that such activity would be unlikely. Aplt. App., Vol. II at

427. Based on these facts, the district court concluded that M r. Denham’s

termination was reasonable, and the reasons given to justify it w ere believable.

M r. Denham, therefore, failed to “demonstrate that the proffered reason for

termination was pretextual.” Id., Vol. I at 63-64.

“W hen there is conflicting evidence from which different inferences may be

drawn regarding the reasonableness of [a defendant’s] conduct, then what is

reasonable is always a question to be determined by the trier of fact.” Sims v.

Great Am. Life Ins. Co., 469 F.3d 870, 891 (10th Cir. 2006) (quotation omitted).

W e review factual determinations for clear error, giving due deference to the trial

judge’s opportunity to evaluate w itnesses’ credibility. Fed. R. Civ. P. 52(a); see

also U nited States v. M cIntyre, 997 F.2d 687, 709 (10th Cir. 1993) (refusing to

reexamine credibility of witnesses’ testimony or decide between competing

interpretations of testimony); Zimmerman v. Sloss Equip., Inc., 72 F.3d 822, 825

(10th Cir. 1995) (noting that “[w]hen findings are based on determinations

regarding the credibility of witnesses, Rule 52(a) demands even greater deference

to the trial court’s findings”).

In challenging the district court’s decision, M r. Denham argues that it was

contradicted by the overwhelming weight of the evidence. Specifically, he points

to objective evidence in the record of his disability; argues that the videotape

-7- relied on by Sunoco was unreliable, untrustworthy, and inadmissible; contends

that Dr. Campbell’s oral opinion rendered at the November 15, 2000, meeting

about M r. Denham’s ability to perform the tasks documented in the videotape was

ambiguous; and chastises Sunoco for failing to review the medical record in its

possession, to get Dr. Campbell’s opinion in writing, or to question Dr. Campbell

about possible fraud. W hile M r. Denham may make some valid arguments, they

are basically beside the point.

In Kariotis v. Navistar International Transportation Corp., 131 F.3d 672,

674 (7th Cir. 1997), an employee sued her former employer for terminating her

employment, allegedly in violation of ERISA, among other federal statutes. As in

this case, the employee was suspected of fraudulently accepting disability

benefits, and the employer hired a company to videotape her movements while on

leave. Describing the investigation as leaving “something to be desired,” id.

at 675, and “hardly look[ing] world class,” id. at 677, the Seventh Circuit

nonetheless affirmed part of the district court’s summary judgment in favor of the

employer because, while the plaintiff offered several pertinent criticisms of the

employer’s evaluation process, she had failed to advance “facts tending to show

that the employer’s reasons for some negative job action are false, thereby

implying (if not actually showing) that the real reason was illegal discrimination.”

Id. The court noted that, “arguing about the accuracy of the employer’s

assessment is a distraction, because the question is not whether the employer’s

-8- reasons for a decision are right but whether the employer’s description of its

reasons is honest.” Id. (citation and quotation omitted). After noting that there

were probably better w ays of investigating an employee’s suspected dishonesty

than those resorted to by the employer, the court went on to note that, “[y]et this

investigation was the reason given for the discharge, and a reason honestly

described but poorly founded is not a pretext as that term is used in the law of

discrimination.” Id. (quotation omitted). The court concluded that “whatever

curious process a company employs to reach its decisions is irrelevant so long as

nothing in the record suggests that the process is discriminatory.” Id. at 679.

This court cited Kariotis in Bullington v. United Air Lines, Inc., 186 F.3d

1301 (10th Cir. 1999), implicitly overruled on other grounds as recognized by

Boyler v. Cordant Techs., Inc., 316 F.3d 1137, 1140 (10th Cir. 2003), a case

involving a charge of age discrimination in hiring. There we noted that “[t]he

relevant inquiry is not whether [defendant’s] proffered reasons were wise, fair or

correct, but whether [defendant] honestly believed those reasons and acted in

good faith upon those beliefs.” Bullington, 186 F.3d at 1318. Similarly, in

Kendrick v. Penske Transportation Services, Inc., 220 F.3d 1220 (10th Cir. 2000),

a § 1981 case challenging a job termination on the basis of race discrimination,

this court explained that “a challenge of pretext requires us to look at the facts as

they appear to the person making the decision to terminate plaintiff.” Id. at 1231.

See also M cKnight v. Kimberly Clark Corp., 149 F.3d 1125, 1129 (10th Cir.

-9- 1998) (finding that plaintiff failed to establish pretext where the defendant

discharged plaintiff after conducting an investigation into a subordinate

employee’s allegations of sexual misconduct on the part of the plaintiff and

believed the allegations to be true, even though plaintiff presented evidence to the

district court that the allegations may have been false).

Here, Sunoco had before it (1) reports from other employees regarding

M r. Denham’s activities while collecting short-term disability; (2) a videotape

indisputably showing M r. Denham working on his truck and doing errands w ith

no apparent impairment in movement; (3) a signed affidavit from a private

investigator identifying M r. Denham as the person in the videotape lifting

fifty-pound sacks; and (4) the opinion of the company doctor that a person with

M r. Denham’s impairments could not be engaging in the activity depicted in

the videotape.

Given these circumstances, we find no error in the district court’s

conclusion that M r. Denham failed to prove pretext because Sunoco’s reason for

terminating him was both reasonable and believable. “W e have repeatedly held

that the relevant inquiry in such cases concerns the belief of the employer that the

employee engaged in misconduct, not whether the actual facts, as shown by

evidence extrinsic to the employer’s assessment, may have been otherwise.”

Sorbo v. United Parcel Serv., 432 F.3d 1169, 1178 (10th Cir. 2005). “[D]istrict

courts, when analyzing the pretext issue, do not sit as super-personnel

-10- departments free to second-guess the business judgment of an employer.”

Bullington, 186 F.3d at 1318 n.14.

Finally, M r. Denham does not take issue with the district court’s conclusion

that his failure to follow the proper grievance procedure was grounds to dismiss

his common-law contract claim for failure to exhaust administrative remedies.

See Aplt. App., Vol. I at 61. Instead, M r. Denham argues that his state-law claim

for breach of employment contract is preempted by ERISA , which does not have

an exhaustion requirement. Because we affirm the district court’s conclusion that

M r. Denham has failed to sustain his ERISA -based claim of improper job

termination, it will avail M r. Denham nothing for us to determine that his

common-law claim was preempted by ERISA. W e therefore need not reach this

issue.

The judgment of the district court is AFFIRMED.

Entered for the Court

Terrence L. O’Brien Circuit Judge

-11-