Revised February 28, 2003

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________ Summary Calendar No. 01-41393 _____________________

JUAN HERNANDEZ

Plaintiff - Appellee

v.

CRAWFORD BUILDING MATERIAL COMPANY, doing business as Crawford’s Discount Carpet and Home and Floor Center

Defendant - Appellant

_________________________________________________________________

Appeal from the United States District Court for the Eastern District of Texas _________________________________________________________________

February 21, 2003

Before KING, Chief Judge, and SMITH and DENNIS, Circuit Judges.

PER CURIAM:

Defendant-Appellant Crawford Building Material Company

(“Crawford”) appeals the final judgment entered by the District

Court for the Eastern District of Texas ordering Crawford to pay

Plaintiff-Appellee Juan Hernandez $20,000 in compensatory damages

and $55,000 in punitive damages as a result of Hernandez’s claim

that Crawford initiated a retaliatory employment action in violation of Title VII. Crawford attacks both the sufficiency of

the evidence presented to the jury and the ability of an employee

to base a Title VII retaliation claim on the employer’s filing of

a counterclaim against that employee after the employee has been

discharged. We conclude that the district court erred in denying

Crawford’s motion for judgment as a matter of law on the question

of whether the filing of a counterclaim could support an action

for employment retaliation. We therefore reverse the district

court and remand with instructions to dismiss the retaliation

claim.

I. FACTS AND PROCEDURAL BACKGROUND

Hernandez, a Mexican immigrant, began working as a manual

laborer at Crawford’s lumber yard around 1975. At some point,

management at Crawford became dissatisfied with Hernandez’s

performance; he was transferred to Crawford’s carpet warehouse,

where he received a pay raise concomitant with increased duties.

Crawford continued to be unhappy with Hernandez, though, and on

June 17, 1999, Crawford fired Hernandez after he miscut a roll of

carpet and failed to report the mistake. At that time, Hernandez

was sixty-one years old.

Hernandez filed a complaint with the Equal Employment

Opportunity Commission (“EEOC”) and with the Texas Commission on

Human Rights. When neither commission would provide him with the

relief requested, he sought and secured a “right-to-sue” letter

from the EEOC. On October 13, 2000, Hernandez filed suit against

2 Crawford, alleging that his termination violated the Age

Discrimination in Employment Act (“ADEA”),

, and

Title VII.

At some point while Hernandez was pursuing this suit,

someone told one of Crawford’s owners that Hernandez had been

stealing company property while he was employed at Crawford. The

witness, Manual Guerra, was a painter who had done business with

Crawford. He reported seeing building materials belonging to

Crawford stacked behind Hernandez’s house; he also reported that

Hernandez was selling that property. Hernandez allegedly told

Guerra that Crawford paid him with building materials.

Crawford answered Hernandez’s complaint on November 3, 2000.

In that answer, Crawford both denied the allegations of

discriminatory discharge and raised a counterclaim for theft

against Hernandez. In his answer to Crawford’s counterclaim,

Hernandez denied having ever stolen building materials from

Crawford. Then, on May 21, 2001, Hernandez supplemented his

original complaint to allege that Crawford’s counterclaim

amounted to a retaliatory employment action in violation of Title

VII, the ADEA, and § 1981.

Hernandez moved for summary judgment on the counterclaim.

The district court granted that motion, finding that Crawford

could not prove specifically, or even generally, what was stolen

or that Hernandez stole it. Most of the allegations of theft

concerned items that had gone missing six or seven years earlier;

3 at that time, Crawford had not investigated the problem. As a

result, Crawford now simply lacked sufficient evidence to

demonstrate to a jury that Hernandez had stolen Crawford’s

property.

At trial, the jury instruction covering Hernandez’s

retaliation claim included the following statements:

The Plaintiff also brings causes of action for retaliation, in violation of Title VII, the ADEA, and § 1981. These laws prohibit an employer from retaliating against a former employee for filing a discrimination lawsuit. Here, Plaintiff Hernandez contends that Defendant Crawfords made allegations and the claim for theft to retaliate against Plaintiff for having brought this lawsuit and pursuing his claims of discrimination against this Defendant.

To prevail on his retaliation claim, Plaintiff Hernandez must show by a preponderance of evidence his good faith opposition to discrimination and bringing this lawsuit was a substantial or motivating factor for a decision by Defendant Crawfords to make a theft allegation and counterclaim.

The jury found, in two special interrogatories, that Crawford had

not discharged Hernandez because of his age or because of his

Mexican heritage. However, the jury did find that Crawford’s

filing of the counterclaim constituted a retaliatory employment

action. The jury awarded $20,000 in compensatory damages (for

Hernandez’s claimed mental anguish and shame as a result of being

branded a thief) and $55,000 in punitive damages.

Crawford filed motions for a new trial and for judgment as a

matter of law. In his motion for a new trial, he argued that

there was insufficient evidence to support the jury’s findings:

4 (1) that Crawford had no permissible basis for filing the theft

counterclaim; (2) that Hernandez had suffered actual damages as a

result of the counterclaim; and (3) that Crawford had acted in a

manner sufficient to warrant an award of punitive damages. In

his motion for judgment as a matter of law, Crawford argued that

the filing of a counterclaim was not the kind of “ultimate

employment decision” upon which a claim of retaliation may be

based and, alternatively, that Hernandez had not proven that

Crawford had a retaliatory motive in filing the counterclaim.

The district court denied both motions. The court found

that Hernandez had presented sufficient evidence to support the

jury’s findings on the retaliation, causation, and damages

questions. As for the question of whether the filing of a

counterclaim could support a retaliation claim, the district

court found that, by failing to object to the jury charge on the

law of retaliation, Crawford had not preserved the issue for

later challenge. As a result, the district court reviewed the

question only for plain error; finding the issue debatable within

the federal district courts in Texas, the district court

concluded that no plain error had occurred.

Crawford timely appealed, raising two general classes of

appealable issues. First, Crawford reargues that the filing of a

counterclaim is not an “ultimate employment decision” sufficient

to support a claim of employer retaliation. Second, Crawford

asserts that there was insufficient evidence to support the

5 jury’s findings that: (1) Crawford had a retaliatory motive in

filing the counterclaim; (2) the filing of the counterclaim

caused any injury to Hernandez; (3) Hernandez was entitled to

damages based on his mental anguish; (4) in the absence of actual

damages, punitive damages were proper; and (5) Crawford’s conduct

was sufficiently egregious to support an award of punitive

damages.

II. FILING A COUNTERCLAIM AS AN “ULTIMATE EMPLOYMENT DECISION” FOR PURPOSES OF TITLE VII RETALIATION CLAIMS

Crawford contends that the jury impermissibly based its

verdict on a finding that the filing of a counterclaim

constituted a retaliatory action. Crawford argues that an

employer’s filing of a counterclaim cannot constitute the

“ultimate employment decision” necessary to support a finding of

retaliatory employment action under Title VII and the ADEA in the

Fifth Circuit.1

The district court denied this ground, in part because

Crawford had failed to object to the jury charge on this issue.

Because Crawford failed to preserve the issue, it is reviewed

only for plain error. Hartsell v. Dr. Pepper Bottling Co.,

(5th Cir. 2000). To overturn a verdict for plain

error in the jury instructions, we must find that the

1 This court has held that analysis of retaliation claims is the same for ADEA claims as it is for Title VII claims. Sherrod v. Amer. Airlines, Inc.,

(5th Cir. 1998). Therefore, for purposes of this discussion, we will discuss only Hernandez’s Title VII claim.

6 instructions made an obviously incorrect statement of law that

was “probably responsible for an incorrect verdict, leading to

substantial injustice.” Tompkins v. Cyr,

(5th

Cir. 2000).

Our precedents create a three-part test that a plaintiff

must satisfy in order to prove a retaliation claim: “(1) the

employee has engaged in activity protected by Title VII; (2) the

employer took adverse employment action against the employee; and

(3) a causal connection exists between that protected activity

and the adverse employment action.” Burger v. Cent. Apartment

Mgmt., Inc.,

, 878 (5th Cir. 1999) (citing Mattern v.

Eastman Kodak Co.,

(5th Cir. 1997)). “Our

court has analyzed the ‘adverse employment action’ element in a

stricter sense than some other circuits.” Id. at 878. In the

Fifth Circuit, only an “ultimate employment decision” by an

employer can form the basis for liability for retaliation under

Title VII. Mattern,

.

We have said that typical examples of ultimate employment

decisions that can support a claim of retaliation include

“hiring, granting leave, discharging, promoting, and

compensating.” Dollis v. Rubin,

(5th Cir.

1997). This understanding is grounded in the statutory language

of Title VII. While retaliation cases are specifically covered

by Section 2000e-3(a), we have looked to Section 2000e-2(a)(1),

which makes it unlawful “to fail or refuse to hire or to

7 discharge any individual, or otherwise to discriminate against

any individual with respect to his compensation, terms,

conditions, or privileges of employment,” to determine which

employment decisions can support a retaliation cause of action.

In Mattern, we concluded that the kinds of “ultimate employment

decisions” that will support a finding of retaliatory conduct

must be similar to the kinds of conduct described in Section

2000e-2(a)(1). Mattern,

;

(“Title VII

was designed to address ultimate employment decisions, not to

address every decision made by employers that arguably might have

some tangential effect upon those ultimate decisions.”) (quoting

Dollis,

). A review of our prior Title VII

jurisprudence confirms that we have consistently refused to

recognize retaliation claims that are dissimilar to the

prohibited activities of § 2000e-2(a)(1).2

2 Activities meeting the standard of “ultimate employment decisions” include: Green v. Adm’rs of the Tulane Educ. Fund,

(5th Cir. 2002) (demotion); Fierros v. Tex. Dep’t of Health,

(5th Cir. 2001) (denial of pay increase); Mota v. Univ. of Tex. Houston Health Sci. Ctr.,

(5th Cir. 2000) (discontinuation of employee’s stipend, denial of request for paid leave, denial of request to extend unpaid leave, and termination); Evans v. City of Houston,

(5th Cir. 2001) (demotion); Thomas v. Tex. Dep’t of Criminal Justice,

(5th Cir. 2000) (failure to promote employee); Rubinstein v. Adm’rs of the Tulane Educ. Fund,

(5th Cir. 2000) (denial of pay raise); Vadie v. Miss. State Univ.,

(5th Cir. 2000) (refusal to consider employee for another position after closing employee’s department); Shackelford v. Deloitte & Touche,

(5th Cir. 1999) (termination); Sharp v. City of Houston,

, 933 n.21 (5th Cir. 1999) (constructive demotion).

8 District courts in other circuits have held that the filing

of a suit or counterclaim can support a lawsuit premised on a

theory of retaliatory employment action. See Beckham v. Grand

Affair of N.C., Inc.,

(W.D.N.C. 1987)

(finding retaliation where employer instituted criminal

prosecution of former employee who filed claim with EEOC); EEOC

v. Va. Carolina Veneer Corp.,

(W.D. Va. 1980)

(finding retaliation where employer filed defamation suit against

employee based upon statements made by employee to EEOC).

However, this circuit has taken a more skeptical view, remarking

that “[i]t is not obvious that counterclaims or lawsuits filed

against a Title VII plaintiff ought to be cognizable as

retaliatory conduct under Title VII. After all, companies and

Activities which are not “ultimate employment decisions” include: Green,

(changing locks, restructuring office procedures, clarifying job duties, and reprimands); Mota, 261 F.2d at 521 (removal of employee’s name from letterhead, ostracism by coworkers, and loss of some job duties); Thomas,

n.2 (assignment to less desirable shift and formal discipline); Walker v. Thompson,

(5th Cir. 2000) (removal from duties on particular account, timing of short breaks during the day, and failure to receive $2.89 allegedly owed for unplanned overtime); Watts v. Kroger Co.,

(5th Cir. 1999) (change of work schedule and request that employee perform new job tasks); Burger, 168 F.3d at 879 (denial of transfer request to an identical position at a different job site); Webb v. Cardiothoracic Surgery Assocs. of N. Tex.,

(5th Cir. 1998) (rude treatment by employer); Messer v. Meno,

(5th Cir. 1997) (monitoring of employee’s conversations, criticism of work and conduct, and refusal to consider employee’s input in business decisions); Mattern,

(threats of potential dismissal, verbal reprimands, and low evaluations that could lead to missed pay increases).

9 citizens have a constitutional right to file lawsuits, tempered

by the requirement that the suits have an arguable basis.”

Scrivener v. Socorro Indep. Sch. Dist.,

, 972 (5th

Cir. 1999).

While there are no reported decisions from this circuit

dealing directly with this question,3 we think it is clear that,

given our strict interpretation of retaliation claims, an

employer’s filing of a counterclaim cannot support a retaliation

claim in the Fifth Circuit. A counterclaim filed after the

employee has already been discharged in no way resembles the

ultimate employment decisions described in Section 2000e-2(a)(1).

We find that the district court committed plain error in

instructing the jury that Crawford’s counterclaim could support a

finding of retaliatory employment action. This instruction was

an obvious misstatement of the law that led to substantial

injustice for Crawford. This claim should not have gotten to the

jury in the first place.4

3 There are two unreported Texas district court cases that have considered this question as well; the courts reached different conclusions. See Gustafson, Inc. v. Bunch,

(N.D. Tex. 1999) (filing of suit by employer after employee was discharged did not constitute an “ultimate employment decision”); Shafer v. Dallas County Hosp. Dist.,

(N.D. Tex. 1997) (filing of counterclaim supports Title VII retaliation action). 4 Because we find Hernandez’s retaliation claim uncognizable under Fifth Circuit law, we do not need to discuss his claims that the evidence presented at trial was insufficient to support the jury’s verdict.

10 IV. CONCLUSION

We REVERSE the district court’s decision denying Crawford’s

motion for judgment as a matter of law and REMAND with

instructions to dismiss Hernandez’s retaliation claim. Costs

shall be borne by Hernandez.

11 DENNIS, J., Circuit Judge, concurring:

I join fully in the per curiam opinion as a correct

disposition in accord with our precedents. I write separately only

to urge that the en banc court should reconsider our rule that

“only an ‘ultimate employment decision’ by an employer can form the

basis for liability for retaliation under Title VII.” Opinion at

7 (citing Mattern v. Eastman Kodak Co.,

(5th Cir.

1997)). This rule is inimical to both the text and the purpose of

the anti-retaliation provision of Title VII, 42 U.S.C. § 2000e-

3(a). See Mattern,

(Dennis, J., dissenting). A

majority of the federal circuits that have considered the question

have held that the protection afforded by the anti-retaliation

provision extends to adverse employment actions that, while

substantial, fall short of ultimate employment decisions. See Von

Gunten v. Maryland,

(4th Cir. 2001); Wideman v.

Wal-Mart Stores, Inc.,

(11th Cir. 1998); Knox

v. State of Indiana,

(7th Cir. 1996); Berry v.

Stevinson Chevrolet,

(10th Cir. 1996); Wyatt v.

City of Boston,

(1st Cir. 1994); Yartzoff v.

Thomas,

(9th Cir. 1987). Indeed, the only

other circuit that purports to follow the “ultimate employment

decision” rule, the Eighth Circuit, in practice applies something

broader. See e.g., Manning v. Metro. Life Ins. Co.,

(8th Cir. 1997) (defining ultimate employment decision to

12 include a “tangible change in duties or working conditions that

constituted a material employment disadvantage”).

13