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Garcia-Garcia v. Costco Wholesale Corp.

United States Court of Appeals, First Circuit

December 22, 2017



          Jose G. Fagot Diaz and Manuel E. Lopez-Fernandez on brief for appellants.

          Vincente J. Antonetti, Javier G. Vázquez-Segarra, and Goldman Antonetti & Córdova, LLC, on brief for appellee.

          Before Lynch, Thompson, and Kayatta, Circuit Judges.

          THOMPSON, Circuit Judge.

         After approximately eleven years of working his way up the Costco[1] employment ladder, appellant Leonal Anthony Garcia-Garcia[2] (Garcia) was fired following an investigation which revealed an inventory discrepancy in the Meat Department that he managed. Garcia sued Costco in federal court invoking diversity jurisdiction and alleging an array of Puerto-Rico-based claims stemming from his discharge.[3]The district court granted summary judgment in favor of Costco on all counts and Garcia appealed to this Court. We briefly summarize Garcia's employment history before we delve into the inventory snafu which ultimately led to his dismissal. In doing so, we view the evidence in the light most favorable to Garcia and draw all reasonable inferences in his favor. See Del Valle-Santana v. Servicios Legales De Puerto Rico, Inc., 804 F.3d 127');">804 F.3d 127, 128 (1st Cir. 2015).


         In 2002, Garcia began working at Costco store #365 located in Caguas, Puerto Rico, as a meat wrapper in the store's Meat Department. Throughout his tenure at Costco, Garcia continuously received positive performance evaluations and promotions. In 2006, he was elevated to meat cutter, and then in 2011, to meat manager. As part of his responsibilities as manager, Garcia was tasked with conducting inventory of all goods within the Meat Department. Although meat inventory was not Garcia's sole responsibility, it was nevertheless his "primary" one.

         Fast forward to October 28, 2013. Steve Stoddard, a Regional Meat Manager at Costco, noticed, while reviewing the Costco meat inventory, that "the ending inventory of $297, 000 represented a meat inventory much higher than the actual inventory [Costco] store #365 [could] physically accommodate in the store at any given time."[4] Thereafter, David Soto, then Costco-store-#365's manager, along with his assistant manager, Rocío Mendez, and Garcia were tasked with conducting a full accounting of the Meat Department's stock. What they found was an ending inventory of $315, 000. Given this high ending tally, a manual count of the meat cases was performed, which resulted in a discrepancy of $114, 000 in missing product.

         Following up, on November 4, 2013, Nayreth Ríos, Internal Auditor at Costco store #365, along with Rocío Mendez and Garcia, performed a second manual inventory count, which resulted in an ending value of $178, 000. When handed the result, Stoddard compared the audited manual inventory count with the ending inventory of the previous period and concluded that "the inventory discrepancy was due to a hidden shrink[5] of approximately $146, 000." A broader review of the inventory entries revealed that, on the 27th, 28th and 29th of October 2013, manual entries of approximately $114, 000 in product were made into the system (known as AS400). At that time, "it was determined that . . . Costco's inventory of the Meat Department for store #365 had been erratic for over nine . . . monthly periods."

         Thomas Farano, a Loss Prevention/Regional Manager at Costco, conducted interviews to get to the bottom of the product discrepancy. While speaking with Garcia, Farano, along with Jose Mendez, Costco's Loss Prevention Manager, and Frank Chiriboga, Costco's Regional Meat Manager, accused Garcia of stealing and altering the inventory numbers "to cover up the theft."[6] According to Farano,

[Garcia] denied any knowledge or involvement in entering the additional inventory into the AS400. [Garcia] indicated that other people had his pass word [sic] and he did not make any fraudulent entries to increase his inventory levels. He also could not offer any explanations to what could have happened which would have impacted the inventory numbers.

         Jeremy Dempsey, Vice President of Operations at Costco, also interviewed Garcia and accused him of "manipulating inventory and stealing products." When grilled, Garcia once again was "unable to explain why his inventories were high and erratic over the past nine . . . periods." Garcia reiterated that he had not stolen any merchandise and that, in fact, he believed all the merchandise had been accounted for. On three occasions, Garcia also grieved to Dempsey, Soto, and Farano about the accusations being made against him and complained about (what he characterized as) Costco's "gender-based disparate treatment, " which he said was causing him emotional distress and anxiety. According to Garcia, Costco had treated similarly situated female employees, including Beatriz Gomez, Rocío Mendez, and Johanne Oquendo, differently than him; when they engaged in similar alleged conduct (i.e., stealing or allowing theft under their watch), they were not disciplined and were actually later promoted.

         Seven days later, on November 29, 2013, Costco gave Garcia the boot. According to Garcia, Soto delivered the discharge news, and while doing so, apologized to Garcia and admitted Costco had no evidence that "pointed to Garcia as having committed any wrongdoing." Approximately two months later, Garcia sent a letter to Joe Portera, Costco's Executive Vice President, asking Costco to reconsider its decision to terminate his employment. In the letter, Garcia pointed out that other younger employees, "both male and female, " who had been involved in "similar situations" had been allowed to continue working at Costco. He professed, once again, that he did not steal from Costco and urged Portera to reconsider his termination. Garcia's request was denied and his employment was never reinstated.

         The following year, Garcia, represented by counsel, sued Costco in federal court pursuant to 28 U.S.C. § 1332 alleging multiple violations of Puerto Rico law: (1) gender-based disparate treatment and retaliation, Law 100, P.R. Laws Ann. tit. 29 § 146; (2) sex discrimination and retaliation, Law 69, P.R. Laws Ann. tit. 29 § 1321; (3) libel and defamation, P.R. Laws Ann. tit. 32 §§ 3141-3149; (4) violation of Sections 1, 8, and 16 of Article II of the Puerto Rico Constitution; (5) wrongful discharge, Law 80, P.R. Laws Ann. tit. 29 § 185b; and (6) violation of Puerto Rico's Civil Code, Art. 1802. His complaint sought compensatory damages and reinstatement. Costco filed an answer to the suit denying all wrongdoings alleged in the complaint and retorting that Garcia was dismissed "with just cause . . . after the investigation regarding the inventory discrepancy showed that he was responsible for the grossly negligent mishandling of company records and serious misconduct and incompetence in the performance of his job."

         Following discovery, Costco filed a motion for summary judgment maintaining that the "present case poses no genuine issues of material fact and as a matter of law the instant [c]omplaint should be dismissed." In support of its motion, Costco filed three affidavits from Costco agents Stoddard, Farano, and Dempsey. Garcia objected to the motion on several grounds, including that Costco had failed to meet its burden of establishing that his termination was based on good cause.[7] Garcia also objected to the admission of the three affidavits asserting they were not notarized and, according to Garcia, "all fail to represent[, ] . . . assert[, ] and/or mention in the specific document that each declarant has personal knowledge of the facts they pretend to assert." Additionally, Garcia claimed, without any discussion, that "the documents attached as exhibits to the [affidavits] are not authentic" and should not be admitted. The judge disagreed and admitted the affidavits[8] after concluding that Stoddard "declared events based on his personal knowledge." She also declined to entertain Garcia's "boiler-plate objection" that the exhibits had not been properly authenticated. As to the merits of Garcia's wrongful discharge claim, the district court found the following facts to be undisputed and thus dispositive: (1) Garcia was in charge of keeping inventory of the Meat Department; (2) Costco conducted an extensive investigation into the inventory discrepancy; and (3) Garcia was unable to account for such a discrepancy. The district court also found no merit to Garcia's remaining claims and granted summary judgment on all counts.[9]Garcia appealed to this Court.


         "We review the entry of summary judgment de novo." Echevarría v. AstraZeneca Pharm. LP, 856 F.3d 119, 126 (1st Cir. 2017). A grant of summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Ameen v. Amphenol Printed Circuits, Inc., 777 F.3d 63, 68 (1st Cir. 2015). "A genuine issue of fact exists where 'the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Taylor v. Am. Chemistry Council, 576 F.3d 16, 24 (1st Cir. 2009) (quoting Chadwick v. WellPoint, Inc., 561 F.3d 38, 43 (1st Cir. 2009)). The court must examine "the record in the light most favorable to the nonmovant" and must make "all reasonable inferences in that party's favor." Ameen, 777 F.3d at 68 (quoting Barclays Bank PLC v. Poynter, 710 F.3d 16, 19 (1st Cir. 2013)). "While we resolve all reasonable inferences in favor of the non-moving party, we 'must ignore conclusory allegations, improbable inferences, and unsupported speculation.'" Taylor, 576 F.3d at 24 (quoting Am. Steel Erectors, Inc. v. Local Union No. 7, Int'l Ass'n of Bridge, Structural, Ornamental & Reinforcing Iron Workers, 536 F.3d 68, 75 (1st Cir. 2008)).

         Moreover, when the district court's ruling is dependent in part on preliminary evidentiary rulings, we "review the district court's evidentiary rulings made as part of its decision on summary judgment for abuse of discretion." Hoffman v. Applicators Sales and Serv., Inc., 439 F.3d 9, 13 (1st Cir. 2006) (citing Alternative Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 31 (1st Cir. 2004)).


         On appeal, Garcia raises with us the same arguments he made below regarding the admission of the affidavits and the exhibits attached thereto--that neither should have been considered because they were not in compliance with Rule 56(c)(4) of the Federal Rules of Civil Procedure. Additionally, Garcia continues to challenge the judge's summary-judgment ruling on the merits of each of his six claims against Costco. We begin with a discussion of the affidavits before examining whether each count of Garcia's complaint warranted summary disposition.[10]

         A. Admission of Affidavits

         Rule 56(c)(4) provides that "[a]n affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated." "[T]he requisite personal knowledge must concern facts as opposed to conclusions, assumptions, or surmise." Perez v. Volvo Car Corp., 247 F.3d 303, 316 (1st Cir. 2001).

         Before this Court, Garcia once again maintains that Costco's supporting affidavits were not in compliance with Rule 56 for two reasons: (1) because the affiants did not declare that they have personal knowledge regarding the matters stated therein; and (2) because the inventory exhibits attached to the affidavits were not authenticated by the affiants. We are not persuaded the judge abused her discretion.

         1. Affidavits

         Garcia maintains the judge erred by not striking the affidavits of Stoddard, Farano, and Dempsey from the record. According to Garcia: the three affidavits "reveal[] that the affiants did not declare that they have personal knowledge of the purported facts set forth in each of their declarations" and, "[f]or such reason and because the affiants did not declare how they would be competent to testify on those matters raised in the [affidavits] at trial, the [district court] erred in not striking these from the record as they are inadmissible in evidence."[11](Emphasis in the original). Notably, although Garcia summarily and generally asserts that the affiants lacked personal knowledge about the matters being sworn to, the argument he actually develops on appeal is much more narrow and technical--he argues that the affiants' mere failure to specifically declare within the affidavits themselves that they did have personal knowledge suffices to make the affidavits inadmissible.

         First we note that Rule 56 contains no requirement that the affiant specifically articulate that he or she has personal knowledge. See Fed.R.Civ.P. 56(c). Therefore, Garcia's focus on this narrow argument, which is unsupported by the plain language of the applicable rule, is quite odd. Further, a reading of the affidavits demonstrates that all three affiants did have personal knowledge about the facts they were swearing to, despite not explicitly stating so. See Barthelemy v. Air Lines Pilots Ass'n, 897 F.2d 999, 1018 (9th Cir. 1990) (internal citation omitted) ("That Rule 56[]'s requirements of personal knowledge and competence to testify have been met may be inferred from the affidavits themselves."). For instance, Stoddard specifically states in his affidavit that he was the Costco agent who noticed the high inventory number of approximately $297, 000 for store #365 and later "determined that the inventory discrepancy was due to a hidden shrink of approximately $146, 000[.]" Similarly, Farano attested that he had been instructed to investigate the inventory discrepancy, and as part of doing so, interviewed Garcia, along with Mendez and Chiriboga. Farano also attached two emails as exhibits to his affidavit whereby he provides a synopsis of the interviews he conducted as part of the investigation. Finally, Dempsey notes that Stoddard informed him of the high-ending inventory, and that on November 13, 2013, he too "interviewed Garcia regarding the inventory discrepancy." It is readily apparent, and easily inferred, that these statements were made with personal knowledge.

         But, to the extent the affiants make broader statements about the inventory investigation without making their knowledge readily clear, those statements are either undisputed or are not specifically challenged by Garcia. Again, we note he does not contest the accuracy or veracity of any specific statement within the affidavits.

         Accordingly, we find no abuse of discretion in the lower court's decision to admit the affidavits. See Vélez v. Thermo King de Puerto Rico, Inc., 585 F.3d 441, 445 n.1 (1st Cir. 2009) (no abuse of discretion in admitting employer affidavit to show what motivated employee's firing because "the relevant question in th[at] case [was] not whether [the employer] was correct that [the employee] had violated rules, but whether that perceived violation was the reason it fired him").

         2. Exhibits

         As to the exhibits attached to the affidavits, Garcia maintains that they were not authenticated by the affiants or certified under oath and therefore, should have been excluded. We disagree. As noted, the district court never reached the merits of this contention because Garcia's argument was merely boilerplate--it characterized the exhibits as lacking authentication without noting any specifics. While Garcia attempts to resurrect this argument on appeal by adding in a bit more bite (he gets more specific and argues the exhibits are "illegible and unsigned"), his attempt is futile. See McCoyv.Massachusetts Inst. of Tech., 950 F.2d 13, 22 (1st Cir. 1991) ("It is hornbook law that theories not raised squarely in the district court cannot be surfaced for the first time on appeal.") Importantly, Garcia does not challenge the district court's finding ...

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