Efrain Areizaga v. ADW Corporation ( 2020 )

Case: 18-10304 Document: 00515257876 Page: 1 Date Filed: 01/03/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 18-10304 FILED
January 3, 2020
Lyle W. Cayce
EFRAIN AREIZAGA, Clerk
Plaintiff - Appellant
v.
ADW CORPORATION,
Defendant - Appellee
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:14-CV-2899
Before SOUTHWICK, WILLETT, and OLDHAM, Circuit Judges.
PER CURIAM:*
The plaintiff is a former employee of the defendant. Among his various
claims was that his employer violated the Fair Labor Standards Act. The
district court ordered mediation, which seemingly was successful. The parties
executed a settlement agreement, and the plaintiff dismissed his suit. On
appeal now is the district court’s denial of the plaintiff’s year-later motion for
relief from that judgment. We AFFIRM.
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 18-10304
FACTUAL AND PROCEDURAL BACKGROUND
From 2010 to 2013, Efrain Areizaga worked for ADW Corporation, which
provides heating and cooling equipment and architectural products in north
Texas. Areizaga was involved with preparing price estimates for sales of the
products. It is ADW’s position that Areizaga voluntarily ended his employment
in June 2013. Areizaga disagrees. He brought suit in Texas state court in July
2014, claiming ADW through contract breaches, tortious conduct, and
violations of the Fair Labor Standards Act, caused his resignation. ADW
timely removed the case to the United States District Court for the Northern
District of Texas.
The parties settled after participating in court-ordered mediation in
2016. On Areizaga’s motion, the district court dismissed the case with
prejudice in August 2016. Less than a year later, Areizaga moved for relief
from the final judgment under Rule 60 of the Federal Rules of Civil Procedure,
claiming fraud and intimidation during the mediation. The district court
denied the motion on February 12, 2018, and Areizaga noticed his appeal on
March 8.
Areizaga seeks review of three interlocutory orders of the district court
that predate the order of dismissal. He also seeks reversal of the district court’s
denial of his Rule 60(b)(3) motion.
DISCUSSION
We do not have jurisdiction over the three orders predating the final
judgment that followed Areizaga’s motion to dismiss. That is because there
was no timely appeal of the final judgment. A party dissatisfied with a final
judgment has 30 days to file a notice of appeal. 28 U.S.C. § 2107(a); FED. R.
APP. P. 4. Failure to appeal within the statutory period is a jurisdictional
failure. Bowles v. Russell, 551 U.S. 205, 210–11 (2007). Here, more than a
year passed between the final judgment and the current appeal.
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Jurisdiction does exist, though, over the appeal of the denial of the Rule
60(b)(3) motion. We review the district court’s denial of that motion for an
abuse of discretion. Bailey v. Cain, 609 F.3d 763, 767 (5th Cir. 2010).
Areizaga claims entitlement to relief from the final judgment on the
basis of “fraud . . . , misrepresentation, or misconduct by an opposing party.”
FED. R. CIV. P. 60(b)(3). To succeed on such a motion, the movant must show
by clear and convincing evidence “(1) that the adverse party engaged in fraud
or other misconduct, and (2) that this misconduct prevented the moving party
from fully and fairly presenting his case.” Hesling v. CSX Transp., Inc., 396
F.3d 632, 641 (5th Cir. 2005).
Areizaga claims that ADW engaged in fraud and misconduct by failing
to answer fully a discovery request and by allegedly threatening him during
mediation. The threat allegedly is what led to his agreement to settle the case.
Areizaga feared losing his job because ADW allegedly threatened legal action
against his new employer, Bartos, due to Areizaga’s use of ADW’s proprietary
information. ADW also allegedly communicated with Bartos about the use of
proprietary information. Areizaga asserts that he would not have worried
about his job, and thus would not have been as susceptible to threats, had he
known that ADW directly communicated with his employer.
The district court concluded that Areizaga failed to prove ADW engaged
in fraud by its response to a discovery request. A party engages in misconduct
under Rule 60(b)(3) when it knowingly fails to disclose evidence called for by a
discovery order. Government Fin. Servs. One Ltd. P’ship v. Peyton Place, Inc.,
62 F.3d 767, 772–73 (5th Cir. 1995). Although discovery orders are different
from discovery requests, we do not endorse the district court’s view that failing
to give a complete and accurate answer to an interrogatory is not fraud or
misconduct. We agree with the district court, though, that the allegedly
incomplete response here could not have had any effect. The interrogatory
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asked ADW to “identify” those with whom ADW had communicated about the
lawsuit, but the interrogatory did not ask for the contents of the
communications. Areizaga alleges that ADW communicated with the
president of Bartos about the lawsuit, but ADW did not list Bartos in its
response to the interrogatory. Still, ADW had already disclosed that it planned
to call the president of Bartos as a witness. Areizaga therefore did not prove
that any nondisclosure prevented him from “fully and fairly presenting his
case.” Gov’t Fin. Servs., 62 F.3d at 773. Accordingly, relief was not warranted
under Rule 60(b)(3).
The district court also rejected the argument that the alleged threats
warranted relief from judgment. The court held that there was no admissible
evidence of threats because confidentiality protections for mediation applied to
any threatening statements. Texas law protects statements made during
mediation, with limited, enumerated, and inapplicable exceptions. TEX. CIV.
PRAC. & REM. CODE ANN. § 154.073. Areizaga does not identify any statutory
exception. Instead, he argues that confidentiality for mediation should not
apply because of the crime-fraud exception, and because ADW waived
confidentiality by communicating with Areizaga’s employer about the
mediation. He also suggests that the district court erred by implying that
threats made during mediation are “substantive” to the mediation process and,
thus, confidential. Areizaga’s only evidence was his own account of the
statements.
Section 154.073 contains no clear exception for either crime-fraud or
waiver. See PRAC. & REM. § 154.073. The crime-fraud exception applies to
attorney-client privilege and work-product privilege. In re Grand Jury
Subpoena, 419 F.3d 329, 335 (5th Cir. 2005). It is inapplicable here. In
addition, even if there were a waiver exception under Section 154.073, it would
not apply because nothing in the record indicates that ADW ever waived
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confidentiality by telling Bartos about the alleged threats or the content of
discussions in mediation.
The remaining question, then, is whether the alleged threats were
covered by the confidentiality protections of Texas mediation law. Section
154.073 is confined to “matters occurring during the ‘settlement process’” — in
Areizaga’s words, what is “substantive.” In re Daley, 29 S.W.3d 915, 918 (Tex.
App.—Beaumont 2000, orig. proceeding). One Texas court of appeals held that
“[c]ommunications made during an alternative dispute resolution procedure
are confidential, and may not be used as evidence.” Rabe v. Dillard’s, Inc., 214
S.W.3d 767, 769 (Tex. App.—Dallas 2007, no pet.). Another court held that
whether a party had physically left the mediation discussion “prior to its
conclusion [and] without the permission of the mediator” was “not a matter
related to the settlement process itself,” and thus that fact was not
confidential. Daley, 29 S.W.3d at 918. Although there is no binding authority
on the exact question before us, we are persuaded that the alleged threats here
are more like the protected communications in Rabe than the non-protected
physical act in Daley. The alleged threats are protected as confidential because
they occurred within the confines of the structured mediation discussion.
PRAC. & REM. § 154.073; Rabe, 214 S.W.3d at 769.
Because Areizaga provided no competent evidence of threats to carry his
burden, the district court did not err in finding the alleged threats to be
confidential and inadmissible.
AFFIRMED.
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