Friday, August 24, 2007

5th Circuit Holds Defendant Did Not Waive Statutory Cap as Affirmative Defense in Sex Discrimination Suit

Per Arismendez v. Nightingale Home Health Care, Inc., --- F.3d ----, 2007 WL 2083710 (5th Cir.(Tex.) Jul 23, 2007) (NO. 06-40593):

Arismendez contends that the employer waived the statutory cap by failing to properly invoke it as an affirmative defense in district court. In a diversity action such as this, substantive state law determines what constitutes an affirmative defense. Lucas v. United States, 807 F.2d 414, 417 (5th Cir.1986). However, "the Federal Rules of Civil Procedure provide the manner and time in which defenses are raised and when waiver occurs." Morgan Guar. Trust Co. of New York v. Blum, 649 F.2d 342, 344 (5th Cir. Unit B 1981). Rule 8(c) of the Federal Rules of Civil Procedure "requires that an affirmative defense be set forth in a defendant's responsive pleading. Failure to comply with this rule, usually results in a waiver." Lucas, 807 F.2d at 417. " 'Where the matter is raised in the trial court in a manner that does not result in unfair surprise, however, technical failure to comply precisely with Rule 8(c) is not fatal.' " Id.(quoting Allied Chem. Corp. v. Mackay, 695 F.2d 854, 855-56 (5th Cir.1983)). More specifically, a defendant does not waive an affirmative defense if it is raised at a " 'pragmatically sufficient time, and [the plaintiff] was not prejudiced in its ability to respond.' " Lucas, 807 F.2d at 418 (quoting Mackay, 695 F.2d at 856) (brackets in opinion).

In Seminole Pipeline v. Broad Leaf Partners, Inc., a Texas Court of Appeals held that the statutory cap in Chapter 41 was not an affirmative defense. 979 S.W.2d 730, 759 (Tex.App.-Houston [14th Dist.] 1998). The court explained that the cap automatically applied and "[b]ecause the defendants had nothing to prove, they had nothing to plead." Id. Here, if the statutory cap is not an affirmative defense and automatically applies, Arismendez's claim of waiver is without merit. However, another Texas Court of Appeals has opined that "[w]here maximum damages are provided in statutes in Texas, and a defendant wants to rely on the cap, it is considered a defense that must be plead and proved." Shoreline, Inc., v. Hisel, 115 S.W.3d 21, 25 (Tex.App.-Corpus Christi 2003) (citing inter alia ยง 41.008 ).

We need not determine whether the relevant statutory caps constitute affirmative defenses under Texas law. Assuming arguendo that the statutory caps are affirmative defenses, Arismendez has not shown that Nightingale waived the defense. In a Joint Pretrial Order, Arismendez referred to a statutory cap on damages. Although the employer did not plead a statutory cap in its answer, the employer did raise it prior to entry of judgment. Additionally, there were no factual issues to determine. While Arismendez asserts that Nightingale failed to prove the number of employees it had during the relevant time frame, that fact is irrelevant under the cap in Chapter 41.

Further, Arismendez has not shown how she was prejudiced by the delay in raising the statutory cap. We conclude that the employer raised the cap at a pragmatically sufficient time, and Arismendez was not prejudiced. The district court properly ruled that the employer had not waived the statutory cap.


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