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Lawrence v. Chattanooga-Hamilton County Hospital Authority

Court of Appeals of Tennessee, Knoxville

October 6, 2017


          Session May 23, 2017

         Appeal from the Circuit Court for Hamilton County No. 12-C-465 Ward Jeffrey Hollin gsworth, Judge

         This appeal involves an employment discrimination and retaliation lawsuit initiated by former employees of a hospital's Security Services Department. The trial court granted summary judgment to the hospital defendants on all claims, holding that plaintiff employees had failed to establish a prima facie case of discrimination or retaliation. The employees appeal. We affirm.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed; Case Remanded

          John C. Harrison and Everett L. Hixson, III, Chattanooga, Tennessee, for the appellees, Chattanooga-Hamilton County Hospital Authority, d/b/a Erlanger Health Systems, Charlesetta Woodard Thompson and Gregg Gentry.

          Stuart F. James, Chattanooga, Tennessee, for the appellants, Jerry L. Lawrence, Gary Talley, Harold Holliday, Kenneth R. Cookston, Ronald J. Capetz, Gary C. Avans, and Rodney J. Patton.

          John W. McClarty, J., delivered the opinion of the court, in which Charles D. Susano, Jr. and Kenny W. Armstrong, JJ., joined.



         I. BACKGROUND

         On April 30, 2011, the Chattanooga-Hamilton County Hospital Authority, d/b/a Erlanger Health Systems and its executive management team ("Erlanger") laid off the over 20-member police force, the Erlanger Security Services Department ("the SSD" hereinafter, but also referred to as the "Erlanger Police Department" by the appellants Jerry L. Lawrence, Gary Talley, Harold Holliday, Kenneth R. Cookston, Ronald J. Capetz, Gary C. Avans, and Rodney J. Patton ("Officers")). The SSD was a fully commissioned and POST-certified police department with law enforcement and arrest authority. Earlier in 2011, Erlanger decided to outsource its security services to Walden Security ("Walden") beginning May 1, 2011. Appellant Rodney Patton was the supervisor and/or chief of the SSD at the time of the layoff. All other appellants were employees of the SSD.

         Erlanger has an extensive history of outsourcing departments not considered within its "core competencies." Between 1997 and 2011, Erlanger outsourced its Rehab Services Department, LifeForce helicopter service, and Information Technology Department. In 2009, Erlanger laid off most of the employees in its Construction Services Department, offering severance packages. After this lawsuit was initiated, Erlanger outsourced its Dietary Department and the Environmental Services Department in 2014. The decision-makers involved, leading up to and overseeing the outsourcing decision for the SSD, included CEO Jim Brexler, COO Charlesetta Woodard-Thompson, CLO Dale Hetzler, Corporate Preparedness Officer ("CPO") Debbie Shepherd, Senior Vice President ("SVP") of Human Resources Gregg Gentry, Vice President ("VP") of Governmental and Community Affairs Doug Fisher, and CFO Britt Tabor.

         The record reveals that Erlanger's top management began discussing concerns about the adequacy of the SSD in the mid to late 2000s. Sworn testimony by upper level management, including SVP Gentry and COO Woodard-Thompson, revealed difficulties with hiring and understaffing despite the department being adequately budgeted. Erlanger augmented the SSD with off-duty Chattanooga Police Department officers to make up for the shortfall. Outsourcing discussions began as early as 2008. According to his Declaration, SVP Gentry spoke with Appellant Patton in 2008 about outsourcing. However, whether or not this conversation occurred is disputed by Patton's Affidavit.

         In fall 2009, VP Fisher and CLO Hetzler informed upper Erlanger management that Dan Johnson, the Chattanooga Mayor's Chief of Staff, had informed them that the city of Chattanooga would no longer commission the SSD officers (required in order for them to carry firearms). VP Fisher had a similar conversation with Allen Branum, Chief Deputy of the Hamilton County Sheriff's Department, although it is not clear whether that conversation dealt with Hamilton County commissioning the SSD officers or the city doing so. VP Fisher communicated this information to management, further increasing concern over Erlanger's ability to maintain an internal police force.

         In late 2009 and into early 2010, Erlanger outsourced its annual facilities security review to Security Assessments International ("SAI"). SAI's review recommended against outsourcing security and for keeping an internal police force. The report noted, inter alia:

         The Erlanger Police Department's personnel have done an excellent job in providing protection for Erlanger's patients, visitors, and employees at all EHS locations. This is noteworthy, taking into consideration the limited number of staff and resources currently available. This is due, in part to the fact that the hospital is the beneficiary of knowledgeable, experienced, and dedicated police and security personnel who have been able to establish, implement and manage an acceptable security program despite these budgetary and manpower constraints . . . .

         The Department is staffed below industry standards for the size, location, and criminal demographics of the Erlanger Health System . . . .

         All Security Guard positions should be replaced with armed police officers as the Security Guard position becomes vacant. Only armed police officers should be utilized in the protection of Erlanger Health System people and property.

         SAI recommended increasing the number of officers beyond the current number presently in the budget.

         Despite SAI's recommendations, on April 12, 2010, after discussions about outsourcing the SSD, Erlanger contracted with Walden to both manage the SSD and to augment its ranks with Walden's own unarmed, non-commissioned officers. The decision-makers for this agreement included CEO Brexler, COO Woodard-Thompson, CLO Hetzler, CPO Shepherd, SVP Gentry, and Pat Charles, Director of Human Resources. The practical effect of the management agreement between Walden and Erlanger meant that Walden would manage and augment the SSD from April 2010 until the end of April 2011.

         By the summer of 2010, a committee consisting of COO Woodard-Thompson, CLO Hetzler, CPO Shepherd, SVP Gentry, and VP Fisher continued outsourcing discussions followed by a decision to fully outsource the SSD and seek bidders. This decision was also communicated to and approved by CEO Brexler, and it involved CFO Tabor. The Declaration of SVP Gentry and the deposition of COO Woodard-Thompson provide that the reasons for outsourcing included Erlanger's inability to properly manage a security force; Erlanger's inability to properly staff the SSD in its current form and the necessity for increasing the SSD's size as recommended by SAI; and the possibility that the SSD's officers would lose their commissions, making managing a security force even more difficult in the future.

         In December 2010, Erlanger selected Walden, from among several other bidders, for full outsourcing of the hospital's security. The selection committee consisted of COO Woodard-Thompson, CPO Shepherd, and six other individuals not involved with the initial outsourcing decision. While Walden's bid required budget increases for the SSD, this was because Walden's proposal required a greater number of employees than presently employed. The selection committee sent the proposal to CEO Brexler who subsequently submitted it to Erlanger's Board of Trustees. On March 21, 2011, Erlanger's Budget and Finance Committee of the Board of Trustees approved the agreement with Walden. The full Board of Trustees approved the agreement unanimously three days later. All the SSD employees were laid off on April 30, 2011.

         The SSD employees were offered 12-week severance packages that released Erlanger of all liability and removed from the employee all rights to sue Erlanger. Seven former members of the SSD accepted the packages, including two officers in this case, Kenneth Cookston and Gary Talley. Four officers, Capetz, Avans, Lawrence, and Holliday, filed unpaid wage claims with the Department of Labor after their termination.[1]Mr. Capetz filed his claim on May 25, 2011, and the other three appellants filed their claims in August 2011.

         All the SSD employees were offered the chance to apply for positions with Walden. No officers in this case applied. Eight other former employees did apply, and Walden made seven offers, six of which were accepted. Five ended up working for Walden after one former employee failed to complete training. The SSD employees were not guaranteed that they would receive similar or the same pay or benefits while working for Walden as they had received as employees of Erlanger.

         On April 5, 2012, Officers filed this lawsuit. Appellants Talley, Holliday, Lawrence, Cookston, Capetz, and Avans alleged employment discrimination on the basis of age under the Tennessee Human Rights Act ("THRA"). Appellant Patton alleged employment discrimination on the basis of race under THRA. Appellants Lawrence, Holliday, Capetz and Avans alleged retaliatory discharge for filing unpaid wage claims with the Tennessee Department of Labor. Officers also asserted violations of the Tennessee Wage Regulation Act, but that claim was dismissed by the trial court and is not raised on appeal. Erlanger filed for summary judgment on all other claims on May 20, 2016. After several delays, the trial court held oral arguments on the motion for summary judgment on September 12, 2016.

         Erlanger argued in its motion for summary judgment that Appellants Lawrence, Holliday, Capetz, and Avans could not prove a prima facie case of retaliation because they were fired before they submitted unpaid wage complaints to the Tennessee Department of Labor. Erlanger also asserted that the claims of Appellants Cookston and Talley were barred by the releases they signed when they accepted a severance agreement with Erlanger. Erlanger further claimed that Appellant Patton could not prove a prima facie case of race discrimination because he was not replaced or treated differently than a non-minority; all Officers were terminated. Erlanger argued similarly that the other employees cannot prove a prima facie case of age discrimination because they were all terminated together and, as a result, none was replaced by a younger person or treated differently than a younger person.

         Officers argued primarily that Appellant Patton's Affidavit and the interrogatory answers of Appellants Cookston and Holliday raise material factual disputes that call the entire Gentry Declaration into question. Officers make no effort to show that they are trying to prove a prima facie case of discrimination. Their primary evidence at the summary judgment stage consisted of Patton's many assertions in an affidavit that Officers allege undermines Erlanger's arguments and rationale for outsourcing and the layoffs. The Patton Affidavit included the following pertinent assertions and statements of Patton himself:

At no time during my discussions with anyone in management was an issue raised as to the sufficiency of the police force at Erlanger or the ability to maintain an adequate police force to maintain security at the hospital. I did participate in discussions that involved hiring Walden to help the police department in a support role with the police department providing the armed security that [it] had been providing at Erlanger. . . .
. . . There was no issue surrounding the commissions that I am aware of. Moreover, each of the police officers or plaintiffs in this case continue to hold their commissions and each is post certified and was able to carry a firearm to provide armed security. . . . At no time did anyone raise any issues about the lack of commissions being provided to the police force in Erlanger. . . .
* * *
To my knowledge none of the Erlanger security guards providing security are properly armed, post-certified, or commissioned by the city of Chattanooga to provide police protection. Instead, off-duty Hamilton County Sheriff's Department inadequately provide that protection and both the cost of having the Sheriff's Department and Walden at the hospital are much more expensive and cost the hospital more money than it would have cost the hospital to adequately provide security through the Erlanger Police Department . . . .
. . . I never felt that the police force could not provide the law enforcement that is needed at the hospital. . . .
I raised concerns . . . that hiring a security company would eliminate the ability to make arrests on the Erlanger campus. . . . [The security company] would not be able to stop a suspect for questioning, would not be able to perform the same duties as a police force . . . .
I am aware that Erlanger has outsourced other departments and other services at the hospital. When making such outsourcing Erlanger has always provided for the employees to either be employed by the outsourced service agency at the same pay and with the same benefits as they enjoyed as employees or, alternatively, Erlanger would accommodate those employees by providing them with benefits and retirement as an employee of Erlanger.
Erlanger did not make the same offer to me or any of my police officers . . . . The officers and I were treated differently than other employees who were the victims of outsourcing by Erlanger for other services.
. . . I have reviewed the Erlanger security survey and I have come to the conclusion that Erlanger acted in contravention to that survey and its recommendations. . . . I am aware that the budgetary concerns arising from Walden providing security have increased the cost of maintaining security and ha[ve] not been as cost-effective nor effective as a Police Department.
. . . It is my opinion that those officers were fired because of their age and that those officers and I were treated differently because of our race and/or age. Erlanger had no substantial justification for spending more money to outsource security for an unarmed security agency to provide security at the hospital which is contrary to the security survey . . . .
* * *
Based upon what I know, my experience, and my knowledge of the facts and circumstances of this claim Erlanger made a decision to force out police officers who were about to vest in their retirement plans, who were over the age of 40, or black, and who are otherwise older . . . .

         Patton asserts that Erlanger's management never told him about their various concerns regarding the adequacy of the SSD. The SSD officers' commissions were not scheduled to expire until 2050, despite SVP Gentry's concerns to the contrary. Patton states that he had no knowledge or belief that commissions were being threatened. Erlanger's management never broached the issue with him. Patton notes that he was never involved in outsourcing discussions, including the 2008 discussion between Patton and SVP Gentry alleged in the Gentry Declaration. He was never made aware of the possibility of outsourcing except for the supplemental work Walden did for Erlanger from April 2010 to April 2011. According to Patton, Erlanger's management, including CPO ...

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