D'Onofrio v. Vacation Publications

In a recent decision, the Fifth Circuit overruled Judge Lynn Hughes, again. The Fifth Circuit reversed Judge Hughes’ grant of summary judgment on several claims. The claims started when Karen D’Onofrio left Vacations to Go, the largest seller of ocean-going cruises in the world. Karen was a sales representative for Vacations. After a couple of years with Vacations. Karen’s husband sustained an injury to his back. About that same time, Michael, her husband, decided he would purchase a franchise with OneCruise, a competitor of Vacations. Karen took some time off to care for Michael. While she was out, she attended a training for OneCruise. She had planned to service her customers while out on FMLA leave. But, she failed to respond to emails. Customers complained. So, Vacations moved her customers to in-house sales reps.

Vacations then erroneously sent an email to customers, including Michael, that Karen no longer worked for Vacations. She had in fact been locked out of her online customer accounts. Karen, believing she had been fired applied for unemployment benefits. After several months, Vacations emailed Karen asking when she would return to work. Karen replied that she would not return, because she thought she had been fired.

Karen sued Vacations in state court for FMLA violations and hostile work envfironment. Vacations counter-sued for breach of a non-compete agreement and added Michael as a defendant. Vacations also sued for fraud, conversion of confidential information, and tortious interference with existing and prospective business relations. The company also removed the suit to federal court and Judge Hughes. Karen moved to voluntarily dismiss her FMLA claims, which Vacations opposed. The district court denied her motion to dismiss. Michael moved to be dismissed form the case, which motion the judge never addressed. Judge Hughes stayed discovery, as he often does. Vacations then moved for summary judgment, which the district court granted.

On appeal, the Fifth Circuit first addressed the evidence for the motion for summary judgment. The employer’s affidavits, noted the appellate court, were conclusory. Various Vacations employees submitted affidavits that concluded Karen had a valid non-compete agreement in place and she had violated it. That was a legal conclusion, said the court. Employees also speculated as to the damages, and did not explain how they arrived at their assessment of the damages. The employees did not even claim to have firsthand knowledge of the damages. The plaintiff’s objections to the affidavits should have been sustained, said the court. They were not competent evidence for summary judgment.

The Fifth Circuit found the district court had granted summary judgment on Karen’s hostile work environment claim without giving her notice that such a claim was before the court. The distrioct court granted summary judgment as to her hostile work environment claim sue sponte from the bench.

The district court quashed discovery, but would allow discovery by specific order. There was no order in which Judge Hughes allowed Karen to conduct discovery as to her hostile work environment claim. With no discovery on the claim, she was not prepared when the court ruled from the bench that it would grant summary judgment as to her hostile work environment claim. The court reversed the granting of summary judgment as to Karen’s hostile work environment claim.

The appellate court did affirm summary judgment as to Karen’s FMLA claim. Vacations had given her a choice. She could work from home and service existing customers or she could take a straight FMLA leave with no work. She chose to work from home. That choice prevents any claim that Vacations interfered with her FMLA rights.

Regarding the breach of a non-compete agreement, the Fifth Circuit found the agreement to be overbroad. The agreement had no limits, which means it was, in effect an industry wide agreement. Texas law forbids industry wide non-compete agreements. It had no geographic limit and it applied to any job for any competitor. The agreement would apply not just to any other cruise line, but to any travel company. The non-compete agreement applied too broadly, said the Fifth Circuit. The Fifth Circuit remanded this claim back to the district court for proceedings to determine the geographic limits Karen worked and the customers she serviced. The court could not determine what the limitations of the non-compete agreement were without more information about to whom she sold the product.

Regarding Vacations’ other claims, the Fifth Circuit found there was substantial issue of fact, such that summary judgment was not appropriate. The district court also incredibly awarded attorney’s fees against the D’Onofrios in the amount of $174,000. The higher court reversed that award. Judge Hughes has been reversed yet again.

See the decision in D’Onofrio v. Vacation Publications, No. 16-20628 (4/23/2018) here.