WARREN R. SCHEDE
ANTHONY & GORDON CONSTRUCTION CO., INC., ET AL.
9, 2017 Session
from the Circuit Court for Anderson County No. B5LA0236
Donald Ray Elledge, Judge
bookkeeper for two companies was terminated after his
employers learned that he had a conviction for money
laundering and mail fraud arising out of his previous
employment. The employee filed suit, alleging that he was
terminated because of his age, in violation of the Tennessee
Human Rights Act, and his disability, in violation of the
Tennessee Disability Act. The employers moved for summary
judgment, asserting that the employee was terminated for poor
performance and for not disclosing the prior conviction, that
these grounds constituted legitimate, nondiscriminatory
grounds for termination, and that the employee could not
demonstrate that these grounds were a pretext for unlawful
discrimination. The trial court granted summary judgment to
the employers, and the employee appeals. Finding that there
are genuine issues of material fact as to whether the
asserted reasons for Plaintiff's termination are
pretextual, we reverse the judgment and remand the case for
R. App. P. 3 Appeal as of Right; Judgment of the Circuit
Court Reversed; Case Remanded
M. Lawhorn and Richard E. Graves, Knoxville, Tennessee, for
the appellant, Warren R. Schede.
Strevel Hayes and Chris W. McCarty, Knoxville, Tennessee, for
the appellees, Anthony & Gordon Construction Co., Inc.
and Chameleon Enterprises, Inc.
Richard H. Dinkins, J., delivered the opinion of the court,
in which D. Michael Swiney, C.J., joined. John Wesley
McClarty, J., dissenting.
RICHARD H. DINKINS, JUDGE.
Factual and Procedural History
& Gordon Construction, Co., Inc., and Chameleon
Enterprise, Inc., (collectively "Defendants") were
joint employers of Warren Schede ("Plaintiff"), who
worked as a bookkeeper/accountant for one or both Defendants
for over seven years.
5, 2015, Plaintiff underwent a surgical procedure to replace
his pacemaker. On July 27, Plaintiff began to experience
chest pain and difficulty breathing at work and was
transported to a hospital. Defendants asserted that, in the
course of attempting to locate Plaintiff's wife, they
performed a search of Plaintiff's name and learned that
he had been convicted for mail fraud and money laundering
committed against one of his former employers, which he had
not disclosed at the time of his application for employment
with Defendants. Plaintiff returned to work in August, and on
September 11, 2015, his employment was terminated.
November 9, 2015, Plaintiff filed suit, alleging that he had
been terminated because of his age and disability. In
response, Defendants denied the allegations and raised
several affirmative defenses, including "that
Plaintiff's termination was not as a result of
discrimination and/or retaliation. . . . [that Plaintiff was
terminated] for legitimate, business reasons. . . [and] after
discovering prior bad acts he never revealed related to a
previous employer." After conducting discovery,
Defendants moved for summary judgment, contending that the
undisputed material facts showed that Plaintiff was
terminated for legitimate, non-discriminatory reasons, i.e.,
"poor performance and the discovery of [Plaintiff's]
prior criminal convictions for mail fraud and money
laundering." Plaintiff responded, contending that
sufficient evidence existed to support his discrimination
hearing on the motion was held on October 17, 2016, at the
conclusion of which the court granted the motion; a
transcript of the ruling was incorporated into an order
entered on October 27, which held that "Defendants set
forth legitimate, non-discriminatory, and non-pretextual
reasons for terminating the employment of Plaintiff, "
and dismissed the case. Plaintiff appeals, articulating the
Whether the Trial Court misapplied the summary judgment
standard by failing to take the strongest legitimate view of
the evidence in favor of the Plaintiff, failing to allow all
reasonable inferences in favor of the Plaintiff, and failing
to discard all countervailing evidence with respect to
Plaintiff's discrimination claims?
Standard of Review
dispositive issue in this appeal is whether the Trial Court
erred in granting summary judgment. As our Supreme Court has
Summary judgment is appropriate when "the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of
law." Tenn. R. Civ. P. 56.04. We review a trial
court's ruling on a motion for summary judgment de novo,
without a presumption of correctness. Bain v. Wells,
936 S.W.2d 618, 622 (Tenn. 1997); see also Abshure v.
Methodist Healthcare-Memphis Hosp., 325 S.W.3d 98, 103
(Tenn. 2010). In doing so, we make a fresh determination of
whether the requirements of Rule 56 of the Tennessee Rules of
Civil Procedure have been satisfied. Estate of
Brown, 402 S.W.3d 193, 198 (Tenn. 2013) (citing
Hughes v. New Life Dev. Corp., 387 S.W.3d 453, 471
* * *
[I]n Tennessee, as in the federal system, when the moving
party does not bear the burden of proof at trial, the moving
party may satisfy its burden of production either (1) by
affirmatively negating an essential element of the nonmoving
party's claim or (2) by demonstrating that the nonmoving
party's evidence at the summary judgment stage
is insufficient to establish the nonmoving party's claim
or defense. . . Tennessee Rule 56.03 requires the moving
party to support its motion with "a separate concise
statement of material facts as to which the moving party
contends there is no genuine issue for trial." Tenn. R.
Civ. P. 56.03. . . When such a motion is made, any party
opposing summary judgment must file a response to each fact
set forth by the movant in the manner provided in Tennessee
Rule 56.03. "[W]hen a motion for summary judgment is
made [and] . . . supported as provided in [Tennessee Rule
56], " to survive summary judgment, the nonmoving party
"may not rest upon the mere allegations or denials of
[its] pleading, " but must respond, and by affidavits or
one of the other means provided in Tennessee Rule 56,
"set forth specific facts" at the summary
judgment stage "showing that there is a genuine
issue for trial." Tenn. R. Civ. P. 56.06. The nonmoving
party "must do more than simply show that there is some
metaphysical doubt as to the material facts."
Matsushita Elec. Indus. Co., 475 U.S. at 586, 106
S.Ct. 1348. The nonmoving party must demonstrate the
existence of specific facts in the record which could lead a
rational trier of fact to find in favor of the nonmoving
party. . . However, after adequate time for discovery has
been provided, summary judgment should be granted if the
nonmoving party's evidence at the summary judgment
stage is insufficient to establish the existence of a
genuine issue of material fact for trial. Tenn. R. Civ. P.
56.04, 56.06. The focus is on the evidence the nonmoving
party comes forward with at the summary judgment stage, not
on hypothetical evidence that theoretically could be adduced,
despite the passage of discovery deadlines, at a future
Rye v. Women's Care Cntr. of Memphis, MPLLC, 477
S.W.3d 235, 250, 264-65 (Tenn. 2015).
review the trial court's ruling on a motion for summary
judgment de novo with no presumption of correctness,
as the resolution of the motion is a matter of law.
Martin v. Norfolk S. Ry., 271 S.W.3d 76, 84 (Tenn.
2008); Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn.
2002). We view the evidence in favor of the non-moving party
by resolving all reasonable inferences in its favor and
discarding all countervailing evidence. Stovall v.
Clarke, 113 S.W.3d 715, 721 (Tenn. 2003);
Godfrey, 90 S.W.3d at 695.
alleges that he was discriminated against on the basis of his
age, in violation of the Tennessee Human Rights Act
("THRA"), and his disability, in violation of the
Tennessee Disability Act ("TDA").
THRA, codified at Tennessee Code Annotated sections 4-21-101,
et seq., "prohibits employers from
discriminating against their employees who are forty years
old or older because of their age"; specifically, it
"prohibits age discrimination in hiring, firing, fixing
compensation, or defining the terms and conditions of
employment." Williams v. Greater Chattanooga Pub.
Television Corp., 349 S.W.3d 501, 509 (Tenn. Ct. App.
2011) (citing Tenn. Code Ann. § 4-21-401(a)(1)-(3),
(b)); Wilson v. Rubin, 104 S.W.3d 39, 48 (Tenn. Ct.
App. 2002)). To recover for unlawful age discrimination, an
employee must prove that "considerations of age not only
played a role in but determinatively influenced the
employer's decision." Williams, 349 S.W.3d
at 509 (citing Wilson, 104 S.W.3d at 51-52).
prohibits employers from discriminating against employees on
the basis of an employee's disability. Tenn. Code Ann.
§ 8-50-103(b); Bennett v. Nissan N. Am., Inc.,
315 S.W.3d 832, 841 (Tenn. Ct. App. 2009). The TDA
"embodies the rights and definitions provided by the
[THRA]." Barnes v. Goodyear Tire & Rubber
Co., 48 S.W.3d 698, 705 (Tenn. 2000), abrogated on
other grounds by Gossett v. Tractor Supply Co., Inc.,
320 S.W.3d 777 (Tenn. 2010). When an employee brings a claim
under the TDA, the employee must prove three elements to
prevail: "'(1) that the individual was qualified for
the position; (2) that the individual was disabled; and (3)
that the individual suffered an adverse employment action
because of that disability.'" Bennett, 315
S.W.3d at 841 (quoting Barnes, 48 S.W.3d at 705).
pursuing an employment discrimination claim under the THRA or
TDA may carry their burden of proof by introducing either
direct or indirect evidence. Bennett, 315 S.W.3d at
841 (citing Barnes, 48 S.W.3d at 705 (recognizing that
"[t]he third element, or causation element, [of a TDA
claim] may be established by either direct or indirect
evidence of discrimination")); Wilson, 104
S.W.3d at 49 (citing Moore v. Nashville Elec. Power
Bd., 72 S.W.3d 643, 651 (Tenn. Ct. App. 2001);
Perlberg v. Brencor Asset Mgt., Inc., 63 S.W.3d 390,
394-95 (Tenn. Ct. App. 2001)). Where the employee attempts to
show discrimination by indirect evidence, the employee must
first establish a prima facie case of
discrimination. Wilson, 104 S.W.3d at 50. This
"creates a rebuttable presumption that the employer
unlawfully discriminated against the employee."
Id. "The effect of the presumption is to place
on the employer the burden of producing evidence that the
challenged employment action was taken for legitimate,
non-discriminatory reasons." Id. If the
employer succeeds in producing evidence showing a legitimate,
non-discriminatory reason for the adverse employment action,
the employee then must "demonstrate that the
employer's proffered reasons are pretextual and that
unlawful discrimination was the true reason for the
challenged employment action." Id.
their motion, Defendants asserted that they "have
submitted affirmative evidence that the Plaintiff was
terminated from their employment, not because of his age or
alleged disability, but because of his poor performance and
the discovery of his prior criminal convictions for mail
fraud and money laundering." In the Memorandum supporting
the motion, Defendants assumed for the purposes of summary
judgment that Plaintiff could show a prima facie
case of discrimination on the basis of age and disability;
they argued that Plaintiff's evidence was insufficient to
establish his claim because "[t]he Plaintiff cannot
demonstrate through significant probative evidence that these
legitimate, nondiscriminatory reasons are pretextual in
nature." The effect of Defendants' concession was to
place the burden on them to produce evidence in support of
their contention that Plaintiff was terminated for
legitimate, nondiscriminatory reasons, i.e., poor performance
and an undisclosed criminal conviction. See Wilson,
104 S.W.3d at 51.
compliance with Tennessee Rule of Civil Procedure 56.04,
Defendants filed a Statement of Material Facts, to which
Plaintiff responded; the facts which Plaintiff did not
dispute are as follows:
1. This matter arises out of Plaintiff Warren Schede's
joint employment with the Defendants.
2. The Plaintiff was employed by the Defendants as a
bookkeeper from July 21, 2008 until his termination on
September 11, 2015.
3. The Plaintiff's primary job tasks included handling
accounts receivable, accounts payable, certified payroll,
contracts, and general accounting.
4. The Plaintiff's job tasks would include submitting
biannual and annual accounting reports to Defendants'
accountant, Jack Sherrod.
6. Defendants are contractors who service federal contracts
that require bonds.
7. In order to obtain the requisite bonds, the
Defendants' must submit accurate biannual and annual
reports to bonding agents.
8. If the Defendants are not bonded, they are unable to bid
for government contracts.
14. The Plaintiff was notified of many of his errors by email
from his supervisor, Ms. Brandy Justice.
RESPONSE: Plaintiff agrees it is undisputed that he from time
to time received e-mails from Brandy Justice and that several
of those e-mails are in the summary judgment record. It is
disputed that "many" of the errors or concerns
addressed in those e-mails were problems of his making since
the problems most often were attributable to Ms. Justice
15. Due to the Plaintiff's noticeable decline in
performance, the Defendants began looking for additional
staff to supplement the Plaintiff's work.
RESPONSE: The first statement of fact is that prior to
Plaintiffs termination, Defendants began looking for another
employee to perform some of Plaintiffs job duties. This fact
is undisputed. The second statement of fact is that this
search was undertaken "due to Plaintiff's noticeable
decline in performance." This fact is disputed.
16. In the spring of 2015, the Defendants hired Cindy Bias to
handle the Plaintiff's certified payroll tasks.
19. On June 4, 2015, the Plaintiff underwent surgery to
replace a defibrillator and pacemaker.
20. On July 27, 2015, the Plaintiff experienced a medical
emergency at work and was transported to the hospital by
22. In 1994, the Plaintiff pled guilty to mail fraud and
money laundering in the U.S. District Court for the Eastern
District of Tennessee.
23. Plaintiffs convictions arose out of the Plaintiff's
position as Division Vice President and Controller of the
Retail Division of Clayton Homes, Inc.
24. During Plaintiffs employment with Clayton Homes, Inc. the
Plaintiff transferred $2, 979, 709.00 in corporate funds into
his personal banking account for his personal benefit.
25. The Plaintiff served three years in federal prison for
29. On September 11, 2015, the Defendants discovered that the
Plaintiff had written a paycheck to an employee in the wrong
amount at the incorrect pay rate.
33. The Plaintiff agreed he was never harassed at work
because of his age.
34. The Plaintiff admitted he has never known the Defendants
to discriminate against anyone because of their ages.
35. The Defendants employ or have employed multiple persons
over the age of fifty including owner Richard Justice (age
58) and Jerry Crowe (age 61), the Plaintiff's immediate
coworker at the time of his termination.
36. As of November 25, 2015, twenty-six (26) of
Defendants' fifty-four (54) employees are over the age of
fifty (50) years old.
38. The Plaintiff and owner Richard Justice had conversations
about their physical ailments, often commiserating about