Hunton Employment & Labor Perspectives

The Texas Supreme Court just accepted certified questions from the Fifth Circuit on two Texas employment law issues of first impression for the high court.  Sawyer v. E.I. DuPont De Nemours & Co., No. 12-0626.  The Texas Supreme Court will decide:  (1) whether at-will employees may bring fraud claims against their employers relating to the loss of their employment; and (2) if not, whether employees subject to a 60-day cancellation-upon-notice collective bargaining agreement that limits their employer’s ability to discharge its employees only for just cause constitute at-will employees under Texas law.

These issues arise from a 2006 case filed by 63 former employees (59 subject to a collective bargaining agreement; 4 not subject to the agreement) against E I DuPont De Nemours & Co. (“DuPont”) in the United States District Court for the Southern District of Texas.  The employees alleged DuPont fraudulently induced them to terminate their employment to work for a DuPont subsidiary by fraudulently representing it was “highly unlikely” DuPont would divest itself of the subsidiary and cause the employees to lose their current salaries and benefits.  After the employees agreed to transfer to the subsidiary, DuPont sold the subsidiary, which allegedly caused negative changes to the employees’ pension, pay, and benefits.  The employees sued for fraud, but the federal district court granted summary judgment for DuPont.  The court reasoned that the employees’ at-will employment status barred any fraud claims relating to their terminations.

The employees appealed to the Fifth Circuit.  Initially, the Fifth Circuit affirmed the district court’s grant of summary judgment.  But, on July 27, 2012, the Fifth Circuit withdrew its April 20, 2012 opinion and certified the state-law issues to the Texas Supreme Court.

The opening brief is due to the Texas Supreme Court on September 16, 2012.  All briefing is expected to be completed by October 16, 2012.  Oral argument has not yet been set. 

The Texas Supreme Court has a history of zealously protecting the at-will employment doctrine.  So, it will be interesting to see if the court continues this trend by barring fraud claims  related to the termination of employment.