Karen D'Onofrio v. Vacation Publications, I
888 F.3d 197
5th Cir.2018Background
- Karen D’Onofrio was a VTG (Vacations to Go) sales rep (from 2012) bound by an employment agreement containing an 18‑month post‑employment noncompete and confidentiality provisions and a 3‑year customer non‑solicit provision.
- Michael D’Onofrio (Karen’s husband) purchased a CruiseOne franchise in May 2014; a screenshot of Karen’s VTG sales totals (no customer names) was used in the franchise application.
- Karen requested FMLA leave in July 2014 to care for Michael; VTG offered unpaid leave or the option to service existing accounts remotely (Karen chose remote servicing). VTG later locked her out of accounts and informed staff they would cover her clients; a manager mistakenly emailed some clients that Karen no longer worked for VTG.
- Karen sued VTG for FMLA interference and hostile work environment (also alleged sexual harassment). VTG counterclaimed against Karen and Michael for breach of the covenant not to compete, conversion of confidential information, fraud, tortious interference, breach of fiduciary duty, and conspiracy.
- The district court granted VTG summary judgment in full (also terminating pending motions and disposing of claims not addressed in its order); the D’Onofrios appealed. The Fifth Circuit affirmed in part, reversed in part, vacated damages/fees/injunction awards, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument (D’Onofrios) | Defendant's Argument (VTG) | Held |
|---|---|---|---|
| Subject‑matter jurisdiction over VTG’s state‑law claims against Michael (supplemental jurisdiction) | Michael argued the state claims against him do not arise from the same nucleus of operative fact as Karen’s federal FMLA claim. | VTG asserted the state claims (conspiracy, conversion, tortious interference) arise from the same nucleus because they concern misuse of FMLA leave to start a competing franchise. | Affirmed: district court properly exercised supplemental jurisdiction under 28 U.S.C. §1367; common nucleus of operative fact exists. |
| FMLA interference (Karen) | Karen argued VTG interfered with her FMLA rights by requiring/expecting work while on leave and later treating her as terminated. | VTG argued it offered a voluntary option to work while on leave (to preserve commissions) and did not coerce work. | Affirmed: no FMLA interference—Karen voluntarily chose to service accounts while on leave. |
| Hostile work environment (Karen) | Karen contended she suffered a hostile work environment and was not given a chance to develop evidence before the court granted summary judgment sua sponte. | VTG argued Karen failed to present sufficient evidence supporting harassment claims. | Reversed: district court erred by granting sua sponte summary judgment without Rule 56(f) notice; error not harmless because Karen lacked opportunity to pursue discovery. |
| Enforceability of noncompete covenant (VTG v. Karen) | Karen argued the covenant was overbroad and unenforceable under Texas law. | VTG argued the covenant protected legitimate business interests (client goodwill, confidential info). | Reversed in part: covenants are overbroad (industry‑wide, no geographic or customer limits) and thus unreasonable; remand required to permit court to determine geographic/customer scope and (if possible) reform covenant under Texas law. |
| Conversion of confidential information (VTG v. D’Onofrios) | D’Onofrios argued they did not unlawfully access or use VTG confidential data; access was terminated and only a sales totals screenshot (no customer info) was shared. | VTG argued Karen had access to confidential lists and the laptop and that those were used to benefit the CruiseOne franchise. | Reversed: material fact disputes exist about unlawful access/use and about damages; summary judgment improper. |
| Tortious interference (VTG v. D’Onofrios) | D’Onofrios maintained VTG cannot show a reasonable probability of prospective contracts or actual harm from interference; evidence of only one post‑VTG customer who did business with them and that customer had no plans to purchase again. | VTG asserted client relationships (past buyers or inquiries) supported claims of interference with existing/prospective relationships. | Reversed: factual disputes (probability of future business, actual harm) preclude summary judgment. |
| Breach of fiduciary duty / knowing participation (VTG v. D’Onofrios) | D’Onofrios argued that preparatory steps and ownership of a franchise while employed are permissible; no evidence they used VTG trade secrets or solicited VTG customers while employed. | VTG argued Karen used her position and information (screenshot, training, servicing) to benefit the competing franchise and Michael knowingly participated. | Reversed: factual disputes about whether Karen appropriated confidential info or solicited clients while employed; summary judgment improper. |
| Fraud and fraud by nondisclosure (VTG v. Karen) | D’Onofrios argued Karen legitimately sought FMLA leave and did care for Michael; she had no general duty to disclose planning to compete. | VTG argued Karen misrepresented need for FMLA leave and failed to disclose ownership/attendance at competitor training to induce continued employment. | Reversed: material fact disputes exist as to Karen’s intent and VTG’s damages; summary judgment inappropriate. |
| Damages, injunction, and attorneys’ fees awarded to VTG | D’Onofrios argued awards were unsupported by competent evidence and fees were improperly awarded unconditionally. | VTG relied on its damages calculations and sought fees for appeals and further proceedings. | Vacated: damages and injunctive relief vacated due to infirm evidentiary support; attorneys’ fees award vacated (unconditional appellate fees improper and no statutory basis shown). |
Key Cases Cited
- Arena v. Graybar Elec. Co., 669 F.3d 214 (5th Cir. 2012) (standard for reviewing subject‑matter jurisdiction and supplemental‑jurisdiction analysis)
- Bryant v. Texas Department of Aging & Disability Services, 781 F.3d 764 (5th Cir. 2015) (elements of FMLA interference claim)
- Cuellar v. Keppel Amfels, L.L.C., 731 F.3d 342 (5th Cir. 2013) (FMLA interference precedent)
- United Mine Workers of America v. Gibbs, 383 U.S. 715 (U.S. 1966) (common‑nucleus test for supplemental jurisdiction)
- Steel Co. v. Citizens for a Better Environment, 523 U.S. 83 (U.S. 1998) (jurisdiction must be established before deciding merits)
- Peat Marwick Main & Co. v. Haass, 818 S.W.2d 381 (Tex. 1991) (Texas law on enforceability of covenants not to compete)
- Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193 (Tex. 2002) (limits on fiduciary duties of employees and permissible preparation to compete)
- Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768 (Tex. 2009) (elements of common‑law fraud)