Herring v. American Paper & Janitorial Products et al

Filing 61

OPINION on Summary Judgment. (Signed by Judge Lynn N Hughes) Parties notified. (ghassan, 4)

UNITED STATES DISTRICT COURT

Charles Otis Herring,
Plaintiff,

versus
American Paper & Janitorial
Products, Inc., et a!.,
Defendants.

SOUTHERN DISTRICT OF TEXAS

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Civil Action H-q-3474

Opinion on Summary Judgment
1.

Introduction.
Charles Otis Herring owned a janitorial business. American Paper & Janitorial

Products, Inc., had a broad maintenance contract with NewFirst State Bank. Paper
subcontracted the janitorial work to Herring.
Herring and two of his employees were seen stealing food from the Bank's
refrigerator the night after the Bank's Christmas party. The Bank told Paper that it did
not want Herring working in its building. Paper then canceled its contract with
Herring.
Representing himself, and discounting any standing issues, Herring has sued
for violations of employment discrimination, due process, conspiracy, breach of
fiduciary duties, and tortuous interference. Herring will take nothing.

2.

Background.
In November 20I 5, Herring through his assumed name, Envirotech Solutions,

contracted with Paper to supply janitors to Paper's customers. Paper offers a range of
building maintenance some of which it supplied through subcontractors such as
Herring. Paper has the contact to maintain the Bank. It allocated the janitorial work to
Herring,just as it might have allocated electrical maintenance by a subcontract with an
electrician.

After nine months, Paper expanded its contract with Envirotech to the cleaning
of all of the Bank's branches. As volume increased, quality decreased. Bank employees
began complaining that the cleaning crew's work was unsatisfactory. Herring insists
that these complaints were fabricated to mask a tellers's jealousy over how much he was
paid to clean. He says that these complaints did not start until the lower level employees
learned how much the Bank was paying him.
In December

2016,

Herring, who is black, along with two of his white

employees, were filmed stealing food from the Bank's refrigerator. Herring met with
Bank officials, watched the surveillance footage, and offered to pay for the missing food.
Later that day, Paper ended the contract with Herring to clean the Bank.
Two weeks later, Herring learned that one of the employees in the theft was
hired by another cleaning service. Paper hired that other company for the Bank job after
Envirotech's was terminated. Herring sued, claiming that it is not fair that the Bank
would permit that employee to be back yet Envirotech's contract was terminated.

3.

Constitutional Claims.

Herring has sued:
Paper, the Bank, Jimmie Salyer, Guy Stovall, III, Kimberly Krueger, Philip
Leopold, Cheryl Roach, and Tina Frick.
Paper and Salyer have already been dismissed. The defendants have moved to
dismiss under Rule

12 (b)

(6) of the Federal Rules of Civil Procedure. Because Herring

and the defendants have presented matters outside the pleadings, the motions to dismiss
and the reply motions will be converted into motions for summary judgment.

A.

I

Title VII.

To bring a discrimination claim under Title VII, the plaintiff must be an
employee of the defendant. In determining whether employment exists, a hybrid
economic realities and common-law control test is used.' The right to control an
employee's conduct in the execution of his responsibilities is the most significant aspect.
When examining control, what matters are whether the putative employer has the right

1

See Fed. R. Civ. P u(d).

2

Mares 'V. Marsh, 777 F.2d

1066

(5th Cir. Ig8 5).

to (a) hire and fire the worker,

(b) supervise him directly, (c) specify the employee's

work, and (d) set the employee's schedule. 3 Economic realities include whether the
putative employer disbursed the employee's salary, withheld taxes, covered him in
benefit plans, and set the terms and conditions of employment. 4 No single factor is
controlling.
Here, none of the remaining defendants employed Herring. Paper and
Envirotech were the parties to one contract. Kimberly Krueger signed the contract for
Paper - as its agent. She is not liable as an employer or a contracting party. Between
Krueger and Herring, no relationship exists - none.
The Bank had a contract with Paper, which had one with Envirotech. The Bank
paid Paper what it had agreed, and Paper paid Envirotech what it had agreed. Herring
paid his employees and himself. They are his employees and he is self-employed, setting
the jobs he accepts, the rates he sets, the staff he hires, and operating control of his
people and equipment.
The Bank manifestly did not employ Herring. The law for equality of
employment opportunity cover employees, not entrepreneur,contractors.

B.

Section 1981.

To support a claim under Section 1981 of the Civil Rights Act of 1866, Herring
must have pleaded facts showing that the defendants (a) did not perform a contractual
obligation to him

(b) as a result of an intention to discriminate on the basis of Herring' s

race. 5 These claims must initially identify an impaired contractual relationship.6
Further, to be successful, Herring must "identify injuries flowing from a racially
motivated breach of his own contract with the person who breached their mutual
contract, not of someone else's."7

3

[d. at 1068.

5

Sec General BIg. Contractors Ass'n, Inc.

6

Domino's Pizza, Inc.

7

Id. at 480.

11.

11.

Penn~lllania, 458 U.S. 375, 391 (1982).

McDonald, 546 U.S. 470, 478 (2006).

Herring says that Bank employees were trying to get Envirotech removed, but
he cannot show a contractual obligation that the Bank owed him. His contract was with
Paper, not the Bank or its employees.
Herring also says that the Bank employees were jealous that a black man could
be making as much as he was. He insists that the complaints of poor performance did
not start until after "the employees" learned how much he was making. This, to
Herring, proves discrimination. Herring does not consider alternatives: the workers
thought that his service was not worth the money he was being paid and their
complaints were about their own wages with their ire directed at the Bank, their
employer.
Herring identifies one Bank employee, the head teller. He has no facts to
suggest that this woman or another teller procured the Bank's rejection of his service
through Paper. For the institution itself, he ignores that this bank accepted him as a
subcontractor and later agreed to expanding his scope of work. He ignores that the
Bank had a video of him and his employees taking something that was not theirs.
The contract between Paper and Herring gave Paper sufficient grounds to cancel
the contract. Paragraph three of the contract required Herring to abide by all of the
Bank's "policies, practices, procedures, and expectations." Herring was required to read
the Paper handbook and guidelines for sub-contractors, and he signed a statement
acknowledging that" any infraction may result in termination." When Herring stole the
pastries, he violated the contract. Paper did not violate the law by cancelling the
contract.
Purloining pastries may seem frivolous, unless of course they belong to you.
Banks are especially wary of dishonesty in their houses. The Bank is not required to
prosecute Herring. It is not the government. Fairness, but not the law, suggests one
should be careful in reacting to evidence of dishonesty. At law, the affected party need
only have a reasonable basis for having lost confidence in the others' integrity, and that
only applies when it is in connection with an employment of contract. Neither is here.
Not only did Herring not have an employment contract with the Bank, but he did not
have a contract with the Bank at all. Equally important is that the Bank was required to
have plausible grounds to cancel the cleaning service - here they had better, they had
a video.

4.

State Law Claims.
Herring has sued the same people for conspiring to terminate Envirotech's

contract and for the Bank breaching its fiduciary duty owed to Herring as a depositor.
These claims are misguided.
Herring claims that, because multiple Bank employees were involved in
terminating the contract with Paper, it was a conspiracy. This, however, is not a
conspiracy.8 No matter how much conversation and coordination may occur among
people within one side of a deal or between several sides, it is not a basis for a legal
claim. One cannot conspire about one's own business interests and relationships.
Collusion is only illegal ifits acknowledged purpose is itself illegal and two people agree.
A company cannot conspire with itself. The Bank employees are all members of the
Bank, so there could be no conspiracy even if supporting facts existed.
The Bank could not have breached a fiduciary duty to Herring because it owed
him none. Herring claims that the Bank owed him a fiduciary duty because Envirotech
had a company account at the Bank.
This argument too is misguided. In Texas, a depositor-bank relationship is a
debtor-creditor relationship, not a fiduciary. 9 While Envirotech had a company account
at the Bank, the Bank owed no fiduciary duties on the account. Further, the Bank did
not act on the depository account; it took action on its contract with Paper, which
happened to involve Envirotech.

5.

Conclusion.
The facts of this case revolve around a series of interlocking business

relationships. Relationships are maintained largely on trust. When that trust appears
breached, it often is intolerable. Simply no facts support Herring's legal theories. No
matter how much the Bank employees wanted Herring gone, no employee put
Herring's hands on the refrigerator. This is not about diversity or cultural issues, it is

The intra-corporate conspiracy rule construes employees of the same company to be the same
person, and acts of the agent are acts of the company. See Hilliard 1.1. Ferguson, 30 F·3d 649,653
(5 th Cir. 1994).
8

See Texas Commerce Bank-Hurst, NA. 1.1. United States, 703 F. Supp. 592, 594 (N.D. Tex. 1988);
see also In re Letterman Bros. Energy Sec. Litig., 799 F.2d 967,975 (5th Cir. 1986).

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about a contract between two private companies. Herring was never an employee, nor
did he file a charge with the

EEOC.

As a result, Herring must lose.

Charles Otis Herring will take nothing from NewFirst State Bank, Guy Stovall,
III, Kimberly

Krueger, Philip Leopold, Cheryl Roach, and Tina Frick.

Signed on December 4,2018, at Houston, Texas.

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