J-S94013-16


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

DR. LAXMI CHALLA                             IN THE SUPERIOR COURT OF
                                                   PENNSYLVANIA
                        Appellant

                   v.

PINNACLE HEALTH HOSPITALS INC.,
PINNACLE HEALTH AT HARRISBURG
HOSPITAL, PINNACLE HEALTH SYSTEM

                        Appellees                No. 370 MDA 2016


         Appeal from the Judgment Entered February 25, 2016
           In the Court of Common Pleas of Dauphin County
                    Civil Division at No(s): 06-2765

                                     *****


DR. LAXMI CHALLA                             IN THE SUPERIOR COURT OF
                                                   PENNSYLVANIA
                        Appellee

                   v.

PINNACLE HEALTH HOSPITALS D/B/A
PINNACLE HEALTH AT HARRISBURG
HOSPITAL AND PINNACLE HEALTH
SYSTEM

                        Appellants               No. 458 MDA 2016


         Appeal from the Judgment Entered February 25, 2016
           In the Court of Common Pleas of Dauphin County
                 Civil Division at No(s): 2006 CV 2765
J-S94013-16


BEFORE: LAZARUS, J., RANSOM, J., and FITZGERALD, J.*

MEMORANDUM BY LAZARUS, J.:                         FILED JANUARY 13, 2017

        Doctor Laxmi Challa (Challa) appeals and Pinnacle Health Hospitals,

d/b/a Pinnacle Health at Harrisburg Hospital and Pinnacle Health System

(collectively, Pinnacle Health), cross-appeals from the judgment entered on

the trial court’s order granting a non-suit in favor of Pinnacle Health and

denying Pinnacle Health’s post-verdict motion for fees and costs of suit.

After careful review, we affirm.

        Challa, a licensed physician, graduated from medical school in India

and immigrated to the United States in 2000.          In October 2002, Challa

applied for a first-year position in Pinnacle Health’s Internal Medicine

Residency Program and was “matched” with that program in March 2003.

On June 16, 2003, Challa relocated from San Jose, California, to Harrisburg,

Pennsylvania, in anticipation of beginning her residency. On June 29, 2003,

during her residency orientation week, Challa informed Pinnacle Health’s

Internal Medicine Department’s program coordinator, Janene Beck, that she

was thirty weeks pregnant and due to give birth in September 2003.

        Challa began her residency with Pinnacle Health on July 1, 2003. In

mid-to late July 2003, Challa reported to her program coordinators that she

was having “on and off” dizziness which affected her ability to finish patient


____________________________________________


*
    Former Justice specially assigned to the Superior Court.




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notes before rounds. On August 26, 2003, Challa met with Pinnacle Health’s

Internal Medicine Program Director, Dr. Nirmal Joshi, who expressed his

concerns regarding her performance in the program. Specifically, Dr. Joshi

told Challa that he was getting consistent negative feedback from her

residency supervisors regarding her bedside performance with patients. On

August 27, 2003, Challa suffered a premature membrane rupture and was

admitted to Harrisburg Hospital; she gave birth, via C-section, on August 28,

2003. Challa took four weeks’ leave after giving birth.

      In October 2003, upon her return to the program following maternity

leave, Challa received a positive performance review for her work in an

emergency room rotation. On November 17, 2003, Challa met again with

Dr. Joshi who told her that he was still receiving reports of her poor

performance from supervisors. On December 1, 2003, Challa was placed on

one-month probation after Dr. Joshi determined that she was not meeting

the educational requirements for the residency program. On December 16,

2003, Dr. Joshi met with Challa to give her a two-week evaluation of her

probation; during the meeting, Challa indicated that she would work during

the   Christmas   break   to   demonstrate   that   she   could   improve   her

performance. On January 6, 2004, Dr. Joshi met with Challa and informed

her that because her program performance continued to be unsatisfactory

she would have to leave the residency program.        Challa agreed to resign

from the program. The resignation letter, penned by Challa, states:




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        Due to unforeseen personal reasons I would like to resign by the
        end of February 2004 from PGY Internal Medicine Residency
        Program at Pinnacle Health Hospitals.       Thank you for your
        cooperation in this matter. Yours sincerely, Lazmi D. Challa

Resignation Letter, 1/8/04.

        On June 23, 2006, Challa filed a discrimination complaint against

Pinnacle Health under the Pennsylvania Human Relations Act (PHRA). 1           In

her complaint, Challa alleged that she was unlawfully discriminated against

on the basis of her pregnancy,2 gender, and disability.          On January 12,

2012, Pinnacle Health filed a motion for summary judgment, which the court

denied.

        A non-jury trial was held on October 7, 2015, before the Honorable

Bruce F. Bratton. At trial, Pinnacle Health conceded that Challa suffered an

adverse employment action; however, it argued Challa was terminated for a

legitimate, non-discriminatory reason. At the close of Challa’s case, Pinnacle

Health moved for a non-suit.3          N.T. Non-Jury Trial, 10/7/15, at 192.   On
____________________________________________


1
    43 P.S. §§ 951-963.
2
 The PHRA itself prohibits pregnancy discrimination and the PHRA is read in
pari materia with Title VII’s Pregnancy Discrimination Act, 42 U.S.C. §
2000e, et seq.
3
  Although Pinnacle Health and the court refer to the motion as a motion for
a directed verdict, it is properly termed a motion for non-suit. Compare
Rachlin v. Edmison, 813 A.2d 862 (Pa. Super. 2002) (en banc) (entry of
compulsory nonsuit is proper if trial on the case has begun and the plaintiff
has presented evidence) with Pa.R.C.P. 226 (trial court may grant motion
for directed verdict at close of all evidence). Therefore, the appeal is taken
from the court’s entry of a non-suit, not a directed verdict.




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October 8, 2015, in open court, the court granted Pinnacle Health’s motion

for non-suit. N.T. Proceedings, 10/8/15, at 203-205. On October 16, 2015,

Challa filed post-trial motions.          Ten days later, on October 26, 2016,

Pinnacle Health filed post-trial motions.        After more than 120 days had

elapsed from the filing of her post-trial motions, Challa filed a praecipe to

enter judgment, pursuant to Pa.R.C.P. 227.4(1)(b), on February 25, 2016.

On that same day, the court entered final judgment.

        On March 2, 2016, Challa filed a timely notice of appeal from the final

judgment.4      On March 8, 2015, the trial court ordered Challa to file a

statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b).

On March 17, 2016, Pinnacle Health filed a timely notice of appeal. 5       On

March 25, 2016, Challa filed her Rule 1925(b) statement.         On March 31,

2016, the trial court ordered Pinnacle Health to file a Rule 1925(b)

statement; Pinnacle Health complied and filed its statement on April 20,

2016.

____________________________________________


4
  See Conte v. Hahnemann Univ. Hosp., 707 A.2d 230 (Pa. Super. 1997)
(once requisite 120-day period runs after filing post-trial motions and party
opts to praecipe for entry of judgment, judgment becomes final, and
immediately appealable, when it is entered on docket); see also Pa.R.C.P.
227.4(1)(b).
5
  On May 23, 2016, by order of Court, we sua sponte consolidated the two
appeals at 307 MDA 2016 (Challa appeal) and 458 MDA 2016 (Pinnacle
Health appeal). See Pa.R.A.P. 513 (when more than one appeal is from
same order, appellate court may order them to be consolidated).




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       On appeal, Dr. Challa raises the following issues for our review:

       (1)    Whether the court below erred in granting a directed
              verdict against [Challa].6

       (2)    Whether the court below erred in granting a nonsuit
              against Plaintiff-Appellant.

       (3)    Whether the court below erred in finding that [Challa] had
              not established a prima facie case for discrimination under
              the PHRA.

       (4)    Whether the court below erred in finding that [Pinnacle
              Health] established a legitimate non-discriminatory reason
              for any adverse employment actions in this case.

       (5)    Whether the court below erred in finding that [Challa] had
              not put forward evidence of pretext for any adverse
              employment actions in this case.

       (6)    Whether, to the extent it did not [do] so, the court below
              erred in failing to give proper weight to the admissible
              hearsay admissions by [Pinnacle Health’s] agents.

       (7)    Whether the court below erred in allowing [Pinnacle
              Health] to argue that it would have terminated [Challa]
              regardless of whether she resigned when it took a
              contradictory position throughout the litigation with prior
              counsel.

       On cross-appeal, Pinnacle Health raises the following issue for our

consideration: Did the trial court err in failing to award attorneys’ fees and

costs to Pinnacle Health where Challa failed to produce any evidence at trial

to support her claim?


____________________________________________


6
  As previously noted, see supra n.3, the trial court entered a non-suit at
the close of Challa’s case, not a directed verdict, in favor of Pinnacle Health.
Therefore, the appeal is taken from the court’s entry of a non-suit, not a
directed verdict, making the first issue moot.



                                           -6-
J-S94013-16



Challa’s Appeal

       Challa contends that the trial court improperly granted a non-suit in

Pinnacle Health’s favor where, in pleadings, it denied that it forced Challa to

resign and then, at trial, admitted that it terminated her. Challa contends

that by permitting Pinnacle Health to take these different positions she was

prejudiced and, in the end, Pinnacle Health failed to advance a non-

discriminatory reason for the adverse employment action.

       A compulsory non-suit can only be granted in cases where it is clear

that a cause of action has not been established. The plaintiff must be given

the benefit of all favorable evidence along with all reasonable inferences of

fact arising from that evidence.         Smith v. King’s Grant Condominium,

614 A.2d 261, 263 (Pa. Super. 1992) (citation omitted). Any conflict in the

evidence must be resolved in favor of the plaintiff. Id.7

       Under the PHRA, the plaintiff has the burden of establishing a prima

facie case of discrimination.         General Electric Corp. v. Pennsylvania

Human Relations Commission, 365 A.2d 649, 655-56 (Pa. 1976),

adopting the holding of McDonnell Douglas Corp. v. Green, 411 U.S. 792
____________________________________________


7
  We note that prior case law only permitted an appeal from a final order
denying an appellant’s motion to remove a non-suit. See Billig v. Skvarla,
853 A.2d 1042, 1048 (Pa. Super. 2004) (“in a case where non-suit was
entered, the appeal properly lies from the judgment entered after denial of a
motion to remove nonsuit.”). Here, Challa filed a post-trial motion alleging
that the trial court erred in granting a non-suit against her. Because a
motion for post-trial relief replaces a motion to remove a non-suit, she has
preserved this allegation on appeal. See Pa.R.C.P. 227.1(a) (Note).



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J-S94013-16



(1973). A prima facie case is established by showing that the plaintiff is a

member of a protected class, has suffered an adverse employment action,

and, others not in the protected class have been treated differently.

Kryeski v. Schott Glass Technologies, Inc., 626 A.2d 595, 597-98 (Pa.

Super. 1993).

      Once the plaintiff has established a prima facie case, the burden shifts

to the employer to establish a legitimate, non-discriminatory reason for the

discharge. Winn v. Trans World Airlines, Inc., 484 A.2d 392, 402 (Pa.

1984); Jenks v. Avco Corp., 490 A.2d 912, 915 (Pa. Super. 1985). The

employer’s burden is one of production, not persuasion, and thus involves no

credibility assessment.   Kroptavich v. Pa. Power & Light Co., 795 A.2d

1048, 1055 (Pa. Super. 2002) (citation omitted). If the employer articulates

a legitimate business explanation, then the presumption of discriminatory

intent created by the employee’s prima facie case is rebutted and the

presumption simply drops out of the picture. Id. If a defendant meets this

burden, then a plaintiff has the opportunity to prove, by a preponderance of

the evidence, that the legitimate reasons offered by the employer were not

its true reasons, but, rather, a pretext for discrimination.           Bailey v.

Storlazzi, 729 A.2d 1206, 1212 (Pa. Super. 1999).            Thus, the ultimate

burden of proving intentional discrimination returns to the plaintiff after the

employer   offers   its   legitimate,   non-discriminatory   reasons    for   the

employment action. Id.




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      Pinnacle Health does not contest that Challa meets the first two prongs

of a prima facie case. In fact, it conceded at trial that Challa suffered an

adverse employment action when she was terminated from Pinnacle Health.

Pinnacle Health, however, disagrees with Challa’s claim that it treated her

differently than other non-pregnant residents in its program. Other than her

self-serving testimony that a chief resident asked for volunteers to take her

on-call shift and rotations prior to her termination, Challa has produced no

evidence to suggest that she was treated less favorably than her non-

pregnant resident counterparts due to her pregnancy.          Kryeski, supra.

Therefore, she failed to establish a prima facie case of discrimination.

      However, even if the court found that Challa established a prima facie

case of discrimination, Pinnacle Health clearly articulated a legitimate non-

discriminatory motive for its actions.

      Based on the evidence presented at trial, the court concluded that

Challa was terminated because she was unable to communicate effectively

with patients.   Specifically, Dr. Joshi testified that he had a one-on-one

meeting with Challa in August 2003 to address consistent concerns raised by

several supervisors regarding her negative bedside performance. N.T. Non-

Jury Trial, 10/7/15, at 124.   Doctor Joshi made a notation in Challa’s file to

reflect his concerns with her having difficulty progressing in her residency

training. Id. at 126-28. Prior to placing Challa on probation, Dr. Joshi again

noted that “when . . . evaluated against her peers at that time in training

and with other peers, she was clearly not making it, so . . . to that extent

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J-S94013-16



she was not competent.” Id. at 134. Specifically, he testified that Challa

was not meeting the educational requirements for the residency program.

Id.   This evidence proves that Pinnacle Health had a legitimate, non-

discriminatory reason for terminating Challa.      Therefore, the burden then

shifted to Challa to prove, by a preponderance of the evidence, that Pinnacle

Health’s alleged legitimate reasons were pretexual. Bailey, supra.

      We first note that whether Challa voluntarily resigned or was forced to

resign (terminated) is of no moment in the court’s ultimate judgment in

favor of Pinnacle Health where Challa failed to produce any evidence of

pretext to rebut Pinnacle Health’s legitimate, non-discriminatory reason to

terminate her.   There was ample documentary evidence supporting Dr.

Joshi’s testimony that Challa consistently failed to meet the standards

required of Pinnacle Health’s residency program.

      Challa’s testimony that a program coordinator questioned how she was

going to manage her pregnancy and residency and told her “it was not time

to be pregnant,” simply does not establish, by a preponderance of the

evidence, that her pregnancy was a motivating or determinative factor in

Pinnacle Health’s employment decision. Kroptavich v. Pa. Power & Light

Co., 795 A.2d 1048, 1061 (Pa. Super. 2002) (quoting Simpson v. Kay

Jewelers, 142 F.3d 639, 644-45 (3d Cir. 1998)). The record supports the

finding that Challa was warned several times prior to her probationary period

that supervisors had a “regular pattern of concerns related to her

performance at the bedside,” N.T. Non-Jury Trial, 10/7/15, at 124, and that

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J-S94013-16



she simply failed to meet the educational requirement of the residency

program. Moreover, the fact that Dr. Joshi gave Challa a favorable letter of

recommendation following her resignation also does not establish pretext

where Dr. Joshi testified that it is common practice to write such letters so

that residents are given an opportunity to “start somewhere else in a

different discipline. . . [and] allow them to have a second chance.” Id. at

142, 146.

        In sum, the evidence bears out the fact that the trial court, as fact

finder, could determine that Pinnacle Health’s alleged legitimate reason,

Challa’s poor job performance, was not motivated by animus. Kroptavich,

supra (quoting Fuentes v. Perskie, 32 F.3d 759, 764-65 (3d Cir. 1994))

(to prove pretext, plaintiff must point to “weaknesses, implausibilities,

inconsistencies, incoherencies, or contradictions in the employer's proffered

legitimate reasons [such] that a reasonable factfinder could rationally find

them ‘unworthy of credence’” and       infer that proffered non-discriminatory

reason “did not actually motivate” employer’s action).        Therefore, we find

no merit to Challa’s claim that the court improperly entered non-suit in

Pinnacle Health’s favor where it is clear that she failed to establish a cause of

action for discrimination under the PHRA.

        Challa also contends that the court failed to give proper weight to

admissible hearsay statements. Specifically, she claims that her testimony

about statements made by the hospital’s supervising staff were admissible

under    Pa.R.E.   803(25)(C)   or   (D),   as   opposing   parties’   statements.

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Moreover, she contends that the comments made by the staff established

pretext and support her discrimination case.

      Pursuant to Rule 803:

      (25) An Opposing Party's Statement. The statement is offered
      against an opposing party and:

         (A) was made by the          party    in   an   individual   or
         representative capacity;

         (B) is one the party manifested that it adopted or believed
         to be true;

         (C)   was made by a person whom the party
         authorized to make a statement on the subject;

         (D) was made by the party's agent or employee on a
         matter within the scope of that relationship and
         while it existed; or

         (E) was made by the party's coconspirator during and in
         furtherance of the conspiracy.

Pa.R.E. 803(25)(C), (D) (emphasis added).

      Challa cites to no case law to support her empty claim that the court

erred “to the extent [that it] failed to give the proper weight to the

admissible hearsay admissions.” Appellant’s Brief, at 28. Instantly, the trial

court concluded that any reference to Dr. Dida, Challa’s attending physician,

was only to be considered “to the extent it is offered only that these

statements occurred, not that the content was in any way . . . being offered

for the truth of the matter within these conversations.” N.T. Non-Jury Trial,

10/7/15, at 29.   The fact remains that while Dr. Dida supervised Challa’s

residency, she did not have the power to make ultimate decisions regarding

the retention or termination of residents from the program. Thus, we see no

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error in the court’s limited consideration of Challa’s testimony regarding Dr.

Didia.

Pinnacle Health’s Cross-Appeal

         On cross-appeal, Pinnacle Health asserts that the trial court improperly

denied its post-trial motion seeking attorneys’ fees and costs under the

PHRA.

         The trial court concluded that while Challa did not produce evidence to

support a prima facie claim of discrimination, her conduct did not rise to the

level of bad faith to support an award of attorneys’ fees and costs under

section 962(c.3) of the PHRA. See 43 Pa.C.S. § 962(c.3) (“court may award

attorney fees and costs to the prevailing defendant if the defendant proves

that the complaint was brought in bad faith.”).        We agree.    See Hoy v.

Angelone, 691 A.2d 485 (Pa. Super. 1997) (where nothing suggested that

defense was not undertaken and conducted in good faith, trial court’s denial

of counsel fees and costs under section 962 of PHRA was not manifestly

unreasonable or clearly erroneous).

         Moreover, Pinnacle Health was not entitled to the counsel fees under

42 Pa.C.S. § 2503, which states:

         § 2503. Right of participants to receive counsel fees.

         The following participants shall be entitled to a reasonable
         counsel fee as part of the taxable costs of the matter:

                                    *     *      *




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          (9) Any participant who is awarded counsel fees because
          the conduct of another party in commencing the matter or
          otherwise was arbitrary, vexatious or in bad faith.

          (10) Any other participant in such circumstances as may
          be specified by statute heretofore or hereafter enacted.

42 Pa.C.S. § 2503(9), (10). As we previously concluded, Challa’s actions in

bringing her discrimination lawsuit against Pinnacle Health did not rise to the

level of bad faith, nor were they arbitrary or vexatious. See Thunberg v.

Strause, 692 A.2d 295 (Pa. 1996) (where there is no basis in law or fact for

commencement of action, action is arbitrary). Therefore, the trial court did

not abuse its discretion in denying Pinnacle Health’s post-verdict motion.8

       Judgment affirmed.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 1/13/2017


____________________________________________


8
   Although Pinnacle Health did not file its post-verdict motion until October
26, 2015, more than 10 days after the trial court entered its directed
verdict/non-suit, pursuant to Pa.R.C.P. 227.1(c) “[i]f a party has filed a
timely post-trial motion, any other party may file a post-trial motion within
ten days after the filing of the first post-trial motion.” Because Pinnacle
Health’s post-verdict motion was filed within 10 days of the date that Challa
filed her post-trial motion, it was timely filed.




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