     Case: 11-10788     Document: 00511940157           Page: 1   Date Filed: 07/31/2012




            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                                            FILED
                                                                           July 31, 2012

                                       No. 11-10788                        Lyle W. Cayce
                                                                                Clerk

MATTHEW J. SCHIRLE,

                                                  Plaintiff–Appellant
v.

SOKUDO USA, L.L.C.; DNS ELECTRONICS L.L.C.; DAINIPPON SCREEN
DEUTSCHLAND GMBH; DAINIPPON SCREEN MANUFACTURING
COMPANY LIMITED,

                                                  Defendants–Appellees



                   Appeals from the United States District Court
                        for the Northern District of Texas
                              USDC No. 4:08-CV-555


Before KING, PRADO, and HAYNES, Circuit Judges.
EDWARD C. PRADO, Circuit Judge:*
        Plaintiff–Appellant Matthew Schirle brought various claims related to his
employment          ag a i n s t   a   family      of     Japanese       semiconductor
companies—Defendants–Appellees Dainippon Screen Manufacturing Company,
Ltd. (“DSM”), DNS Electronics, LLC (“DNSE”), Dainippon Screen Deutschland
gMBh (“DSD”), and Sokudo USA, LLC (“Sokudo USA”), collectively the


        *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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                                     No. 11-10788

Appellees. Specifically, he claimed that he was defamed, discriminated against
based on his non-Japanese origin, and retaliated against when he complained
of the discrimination. The district court granted summary judgment to the
Appellees. Because fact issues exist as to Schirle’s employment claims, we
REVERSE that grant in part but AFFIRM as to Schirle’s defamation claims.
             I. FACTUAL AND PROCEDURAL BACKGROUND
      In 1996, Schirle began working for DNSE.1 After working his way up
through the ranks of DNSE, Schirle was seconded by DNSE to Sokudo USA in
July 2006. While seconded to Sokudo USA, Schirle served as Sokudo USA’s
president and in that capacity reported to Takashige Suetake, chief executive
officer of Sokudo KK and vice chairman of DSM.                Schirle alleges that in
December 2006 he began to experience harassment motivated by a cultural bias
against “gaijins,” or foreigners not of Japanese descent. In late March 2007,
Suetake removed Schirle’s sales responsibilities for the European market and
transferred them to Akihiko Okamoto. In mid-August 2007, following a late July
2007 diagnosis of generalized anxiety disorder by Dr. Robert DeMartini, Schirle
took a two-month medical leave from Sokudo USA. Though the parties disagree
as to whether Schirle left of his own accord or was fired, in September 2007,
Schirle ended his employment with the DSM family of companies.
          Throughout his time at Sokudo USA, Schirle made several complaints
about “gaijin” harassment to various individuals within Sokudo USA and DNSE.
Schirle first complained of the discrimination in mid-February 2007; he informed
Suetake that he was being harassed by Steve Yada and Marty Yano, who like
Schirle were DNSE employees seconded to Sokudo USA. Yada and Yano’s job
responsibilities were to oversee Schirle and other American managers. Schirle


      1
           In terms of the relationship between the defendant entities, DNSE and DSD are
subsidiaries of DSM. Sokudo USA is a wholly-owed subsidiary of non-party Sokudo KK, which
itself is a joint venture between DSM and another non-party, Applied Materials.

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                                 No. 11-10788

again complained of harassment in May 2007. This time he did so to DNSE
Human Resources Director Alan Bickett. On July 12, 2007, Schirle reported the
continuing harassment to Nancie Dunn, another DNSE HR employee. Finally,
on August 13, 2007, Schirle filed a formal complaint with Bickett alleging
“gaijin” discrimination by Suetake, Yada, Yano, and Keisuke Takimoto, a DSM
employee who Suetake appointed in late June 2007 to directly supervise Schirle.
      Schirle also alleged that various individuals defamed him during his
secondment to Sokudo USA. He detailed five instances.
      A.    On July 18, 2007, during an executive review meeting with
            representatives of Micron Technology, Takimoto (1) displayed an
            organization chart that misspelled Schirle’s name and cast
            ambiguity on his position, (2) indicated that Schirle was a secretary
            and not a manager, and (3) indicated that Schirle could be
            eliminated if Micron desired.
      B.    On October 19, 2007, in response to an inquiry by Will Henrich (an
            employee of a DSD third-party agent in Germany) about whether
            Schirle had left voluntarily, DSD President Junji Otsuka wrote: “I
            heard he’s suffering from small mental disease, and not appearing
            to Sokudo USA office at all in this one month time.”
      C.    In late 2007, DNSE Vice President of Business Operations Scott
            Galler discussed Schirle’s “mental issues” with Reggie Hernandez,
            a Sokudo USA account manager. Galler (1) shared the information
            in Otsuka’s email with Hernandez, (2) informed Hernandez that
            Schirle suffered from “mental issues,” (3) indicated that these
            mental issues were related to Schirle’s departure from Sokudo USA,
            and (4) told Hernandez that Schirle had inherited his mental issues
            from his mother, who herself had mental issues.
      D.    Also in late 2007, Laszlo Mikulas, another DNSE Vice President,
            repeated to Hernandez the same statements that Galler had made
            to Hernandez about Schirle’s mental issues.
      E.    Finally, in late 2007, Hernandez relayed the statements made by
            Galler and Mikulas about Schirle’s mental issues to former DNSE
            employee Ron Hogan.




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                                  No. 11-10788

      Schirle brought suit on August 14, 2008 in the 342nd District Court of
Tarrant County, Texas. In that petition, Schirle claimed violations of Texas
law—statutory libel, libel per se, slander per se, business disparagement, and
civil conspiracy. Prior to bringing suit, however, on July 11, 2008, Schirle,
DNSE, and Sokudo USA entered into a tolling agreement under which they
agreed to toll any limitations period applicable to Schirle’s suit from July 12
through August 12, pending an ultimately unsuccessful mediation attempt.
Appellees removed the case to the United States District Court for the Northern
District of Texas on September 16, 2008. Upon removal, Schirle added claims
for Title VII discrimination, Title VII retaliation, and discrimination under 42
U.S.C. § 1981. On October 22, 2010, Schirle filed an amended complaint, which
for the first time alleged defamatory instances C, D, and E. Appellees moved for
summary judgment, which the district court granted. Schirle timely appealed.
         II. STANDARD OF REVIEW AND APPLICABLE LAW
      We review a district court’s grant of summary judgment de novo, applying
the same standards as the district court. Prison Legal News v. Livingston, 683
F.3d 201, 211 (5th Cir. 2012). Summary judgment is appropriate where the
movant shows that there is no genuine issue of material fact and that the
movant is entitled to judgment as a matter of law. Id. (citing Fed. R. Civ. P.
56(a)). In making this determination, all inferences are drawn in favor of the
non-movant. Id. at 211.
      Where federal jurisdiction is based on diversity, we apply the substantive
law of the forum state, Texas, to those claims that arise under state law. Aubris
Res. LP v. St. Paul Fire & Marine Ins. Co., 566 F.3d 483, 486 (5th Cir. 2009)
(citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78–79 (1938)) (additional citation
omitted). In resolving issues of state substantive law, we look to the final
decisions of the state supreme court, which are binding, but if there is no
decision directly on point, then we must determine how that court, if presented

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                                       No. 11-10788

with the issue, would resolve it. Packard v. OCA, Inc., 624 F.3d 726, 729 (5th
Cir. 2010). “The decisions of . . . intermediate appellate courts may provide
guidance, but are not controlling.” Id.
                                   III. DISCUSSION
A.      Title VII and Section 1981 Claims
        Title VII makes it unlawful for an “employer” to “fail or refuse to hire or
to discharge any individual, or otherwise to discriminate against any individual
with respect to his compensation, terms, conditions, or privileges of employment,
because of such individual’s race . . . or national origin.” 42 U.S.C. § 2000e-
2(a)(1). Additionally, the Title VII retaliation section prohibits an “employer”
from “discriminat[ing] against [its] employee[] . . . because [the employee] has
opposed any practice made an unlawful employment practice by this
subchapter,” such as racial/national origin discrimination. § 2000e-3(a). Under
the familiar McDonnell Douglas framework, to survive a motion for summary
judgment, the plaintiff must first make out his prima facie case of
discrimination. McCoy v. City of Shreveport, 492 F.3d 551, 556 (5th Cir. 2007)
(citing McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973)). “If the
plaintiff makes a prima facie showing, the burden [of production] then shifts to
the employer to articulate a legitimate, nondiscriminatory or nonretaliatory
reason for its employment action.” Id. at 557. This same framework applies to
racial discrimination claims under § 1981.2                    Wesley v. Gen. Drivers,
Warehousemen & Helpers Local 745, 660 F.3d 211, 213 (5th Cir. 2011) (citing
Patterson v. McLean Credit Union, 491 U.S. 164, 186 (1989)) (additional citations
omitted).




       2
          Section 1981, in relevant part, affords all persons within the United States the “same
right . . . to make and enforce contracts” without respect to race. 42 U.S.C. § 1981.

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      1.    Schirle’s Employer
      A threshold inquiry under both Title VII discrimination and retaliation
claims is whom Schirle had an employment relationship with for the purposes
of Title VII. In determining whether a given defendant is an employer, we use
the standards laid out in Deal v. State Farm County Mutual Insurance Co. of
Texas, 5 F.3d 117 (5th Cir. 1993), and summarized in Muhammed v. Dallas
County Community Supervision and Corrections Department:

      Determining whether a defendant is an “employer” under Title VII
      involves a two-step process. First, the court must determine
      whether the defendant falls within Title VII’s statutory definition
      of an “employer.” Title VII defines an “employer” as “a person
      engaged in an industry affecting commerce who has fifteen or more
      employees . . . , and any agent of such a person . . . .” If the
      defendant meets this definition, the court must then analyze
      whether an employment relationship exists between the plaintiff
      and the defendant.

      To determine whether an employment relationship exists within the
      meaning of Title VII, we apply a hybrid economic realities/common
      law control test. The most important component of this test is the
      right to control the employee’s conduct. When examining the
      control component, we have focused on whether the alleged
      employer has the right to hire, fire, supervise, and set the work
      schedule of the employee. . . . The economic realities component of
      the test focuses on whether the alleged employer paid the
      employee’s salary, withheld taxes, provided benefits, and set the
      terms and conditions of employment.

479 F.3d 377, 380 (5th Cir. 2007) (footnotes and internal quotation marks
omitted). However, we have long held that “superficially distinct entities may
be exposed to liability upon a finding that they represent a single, integrated




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                                         No. 11-10788

enterprise” (i.e., a single employer).3 Trevino v. Celanese Corp., 701 F.2d 397,
404 (5th Cir. 1983).
       By the terms of the secondment agreement between DNSE and Sokudo
USA, Schirle remained a DNSE employee and DNSE retained responsibility for
wages, benefits, and workers’ compensation. These factors, however, only relate
to the economic realities portion of the hybrid test from Muhammed. The more
important right-to-control factors are ambiguously delineated. Sokudo USA had
the right “to have [Schirle] return to DNSE,” but DNSE also “reserve[d] the right
to . . . discipline (including hire, fire and terminate)” Schirle. Therefore, it
appears from the terms of the secondment agreement that both DNSE and
Sokudo USA had the (more important) right to control Schirle’s conduct.
               2.      Race/National Origin Discrimination
       An employee establishes a prima facie case of discrimination if he can
demonstrate that he

       (1) is a member of a protected group; (2) was qualified for the
       position at issue; (3) was discharged or suffered some adverse
       employment action by the employer; and (4) was replaced by
       someone outside his protected group or was treated less favorably
       than other similarly situated employees outside the protected group.

McCoy, 492 F.3d at 556–57.            This case turns on the third and fourth elements
of the McDonnell Douglas test.4 Schirle alleges that he suffered an adverse

       3
          In Trevino, we laid out four factors for “determining whether distinct entities
constitute an integrated enterprise[:] . . . (1) interrelation of operations, (2) centralized control
of labor relations, (3) common management, and (4) common ownership or financial control.”
We need not engage in this inquiry, however, because as we detail below Schirle has not
adduced sufficient evidence on the substantive elements of his prima facie case for either his
racial discrimination claim or his retaliation claim.
       4
         It is clear from the record that Schirle (1) is a member of a protected group, see
McDonald v. Sante Fe Trail Transp. Co., 427 U.S. 273, 279 (1976) (holding that white
plaintiffs can bring racial discrimination claims under Title VII and § 1981), and (2) was
qualified for the position at issue, based on his bachelor’s and master’s degrees in engineering
as well as his twenty-five years in the semiconductor industry, including management

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employment action when Suetake stripped him of his European sales
responsibilities in late March 2007 and gave those responsibilities to Okamoto.
Adverse employment actions under the McDonnell Douglas framework are
limited to “ultimate employment decisions such as hiring, granting leave,
discharging, promoting, and compensating.” Pegram v. Honeywell, Inc., 361 F.3d
272, 282 (5th Cir. 2004) (emphasis omitted). Still, it is recognized that a
significant diminishment of “material responsibilities,” see Burlington Indus.,
Inc. v. Ellerth, 524 U.S. 742, 761 (1998), or a demotion, Pegram, 361 F.3d at 282,
also constitutes an adverse employment action under Title VII. Schirle’s loss of
his European sales responsibilities, leaving him only responsible for sales in the
United States, is a diminishment of material responsibilities significant enough
to satisfy the third element of his prima facie case of discrimination. This
conclusion flows from our standard of review, which requires us to draw all
inferences in Schirle’s favor. Turning to the fourth element, the record reveals
that in their “Responses to Plaintiff’s Requests for Admissions,” Appellees
admitted that Okamoto, who replaced Schirle in being responsible for European
sales, was “Japanese” and of the “Asian race.” Therefore, Schirle has met his
burden of making his prima facie case.
      The question then becomes whether the adverse employment action taken
by Suetake is attributable to DNSE and/or Sokudo USA. Title VII incorporates
respondeat superior liability such that if Suetake were an agent/employee of
either DNSE and/or Sokudo USA, that company would be liable for Suetake’s
actions. Smith v. Amedisys, Inc., 298 F.3d 434, 448 (5th Cir. 2002). While there
is no record evidence to suggest that Suetake was an agent of DNSE, the
secondment agreement between DNSE and Sokudo USA shows that Suetake
signed on behalf of Sokudo USA, as Sokudo USA’s CEO. The secondment



experience in Japan.

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agreement is governed by California law, and California adheres to the standard
rule that “a corporation may act only through its officers, agents, and
employees.” See Burdetee v. Carrier Corp., 71 Cal. Rptr. 3d 185, 202 (Cal. Ct.
App. 2008) (alterations omitted). This is sufficient evidence to create a fact issue
as to whether Suetake was Sokudo USA’s agent, see Borders Online LLC v. State
Bd. of Equalization, 29 Cal. Rptr. 3d 176, 182 (Cal. Ct. App. 2005) (“[I]ssues of
agency typically are questions of fact.”), which would allow Schirle to make a
claim against Sokudo USA under Title VII. See Amedisys, 298 F.3d at 448.
Nowhere in its briefing to this court or to the district court did Sokudo USA put
forth a legitimate, non-discriminatory reason for the adverse employment action;
summary judgment was therefore inappropriately granted to Sokudo USA. See
Alvarado v. Tex. Rangers, 492 F.3d 605, 618 (5th Cir. 2007).
      3.    Retaliation
      To make out a prima facie case of retaliation, the plaintiff must establish
that “(1) he participated in an activity protected by Title VII; (2) his employer
took an adverse employment action against him; and (3) a causal connection
exists between the protected activity and the adverse employment action.”
McCoy, 492 F.3d at 556–57. As we have previously stated, Schirle has put forth
no evidence that DNSE was his employer for Title VII purposes; thus, if his
retaliation claim is to survive, it can only do so against Sokudo USA. Schirle
cites four instances where he complained specifically of racial/national origin
discrimination. While specific complaints about discrimination are clearly
protected activity under Title VII, see Ikossi-Anastasiou v. Bd. of Supervisors of
La. State Univ., 579 F.3d 546, 551 (5th Cir. 2009), only one of Schirle’s
complaints was to Sokudo USA employees—his mid-February 2007 complaint
to Suetake about Yado and Yana’s harassment of him for being a foreigner.
Following this complaint in late March 2007, Suetake stripped Schirle of his
European sales responsibilities, which we have held constituted an adverse

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                                       No. 11-10788

employment action. Finally, the causal connection is met based on the near-one-
month temporal proximity between Schirle’s complaint to Suetake and Suetake’s
adverse employment action against Schirle. See Evans v. City of Hous., 246 F.3d
344, 354 (5th Cir. 2001) (“Close timing between an employee’s protected activity
and an adverse action against [him] may provide the ‘causal connection’ required
to make out a prima facie case of retaliation. We note that a time lapse of up to
four months has been found sufficient to satisfy the causal connection for
summary judgment purposes.” (internal quotation marks and citation omitted)).
As was the case with the discrimination claim, Sokudo USA has put forth no
legitimate, non-retaliatory reason for the adverse employment action, and
therefore, summary judgment was inappropriately granted. See Alvarado, 492
F.3d at 617.
B.      Defamation
        Under Texas law, to maintain a cause of action for defamation, the
plaintiff must prove that the defendant: (1) published a statement; (2) that was
defamatory concerning the plaintiff; (3) while acting with negligence regarding
the truth of the statement (if the plaintiff is a private individual). WFAA-TV,
Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998).5 Words are defamatory if
they tend to harm a person’s reputation. Id.; Tex. Civ. Prac. & Rem. Code
§ 73.001 (providing that a statement is defamatory if it “tends to injure a living
person’s reputation and thereby expose the person to public hatred, contempt or
ridicule, or financial injury or to impeach any person’s honesty, integrity, virtue,
or reputation.”). The plaintiff must bring a defamation suit not later than one


        5
         Texas law recognizes both libel and slander. An action for libel requires publication
to a third party of written defamatory words about the plaintiff, while slander requires
defamatory words about the plaintiff to be spoken, without legal excuse, to a third party.
Alaniz v. Hoyt, 105 S.W.3d 330, 345 (Tex. App.—Corpus Christi 2003, no pet.), abrogated on
other grounds by Fort Brown Villas III Condominium Ass’n, Inc. v. Gillenwater, 285 S.W.3d
879 (Tex. 2009).

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year after the day the cause of action accrues. Tex. Civ. Prac. & Rem. Code
§ 16.002(a). Ordinarily, the cause of action accrues when the defamatory
statement is published; under the discovery rule, however, “the statute of
limitations does not begin to run until the injured party learns of, or, in the
exercise of reasonable diligence, should have learned of the injury or wrong
giving rise to the action.” Johnson v. Baylor Univ., 188 S.W.3d 296, 301 (Tex.
App.—Waco 2006, no pet.).
      1.    Instance A
      Instance A comprises oral and written statements by Takimoto during an
executive review meeting with representatives of Micron Technology on July 18,
2007. The district court determined that Schirle’s defamation claim regarding
Instance A is time-barred because Schirle did not bring suit until August 14,
2008—more than one year after the statement was made. Schirle argues that
although Takimoto was a DSM employee, the statements were made within the
scope of his employment to Sokudo USA; therefore, the statements should be
covered by the tolling agreement between Schirle, DNSE, and Sokudo USA.
Review of the record shows that Takimoto was seconded not to Sokudo USA, but
to Sokudo Co., Ltd. (a separate legal entity). Therefore, the tolling agreement
does not apply to Instance A. Moreover, the discovery rule cannot save this
claim because Schirle admits to learning of it on July 19, 2007. The district
court was correct in finding this claim untimely.
      2.    Instance B
      Instance B involves alleged libel by Otsuka, a President of DSD, made on
October 19, 2007 in response to an inquiry by Henrich, who worked for a DSD
third-party agent in Germany, about whether Schirle had left voluntarily.
Otsuka responded: “I heard he’s suffering from small mental disease, and not
appearing to Sokudo USA office at all in this one month time.” DSD does not
assert a statute-of-limitations defense but contends that the statement is not

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defamatory because of Texas’s defense of substantial truth.             “Under the
‘substantial truth’ doctrine, minor inaccuracies are not actionable as long as the
publication’s ‘gist’ or ‘sting’ is true, and a ‘true’ statement for these purposes is
one that is not more damaging to the plaintiff’s reputation than a literally true
statement would have been.” Neely v. Wilson, 331 S.W.3d 900, 915 (Tex.
App.—Austin 2011, pet. granted). “If the underlying facts regarding the ‘gist’ of
the statement are undisputed, then substantial truth can be determined as a
matter of law.” Cram Roofing Co. v. Parker, 131 S.W.3d 84, 90 (Tex. App.—San
Antonio 2003, no pet.).
      As the district court noted, Schirle’s family doctor had referred to Schirle’s
condition as a “psychiatric condition.” Furthermore, Schirle’s psychiatrist had
stated that Schirle had a “mood disorder,” which he diagnosed as a “generalized
anxiety disorder.” DSD contends that “psychiatric condition” or “mood disorder”
is substantially the same as Otsuka’s statement that Schirle was “suffering from
a small mental disease.” In considering the gist of the two statements, we agree
with the district court that Otsuka’s statement was substantially true. Reading
that Schirle had a “small mental disease” and reading that Schirle had a
“psychiatric condition” or “mood disorder” does not evoke a markedly different
conclusion in the mind of the reasonable reader. A literally true statement
would have been just as damaging to Schirle’s reputation. Neely, 331 S.W.3d at
915. We therefore find that the district court was correct in granting summary
judgment against Schirle on Instance B.
      3.     Instances C, D, and E
      These instances relate to late 2007 oral statements made by Galler,
Mikulas, and Hernandez that Schirle and his mother suffered from “mental
issues.” Unlike Instances A and B, however, these claims were not pleaded until
October 22, 2010. As Texas only allows one year to bring a defamation claim,
these claims can only be saved if they “relate back” to an earlier, non-time-

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barred complaint.     Under the relevant portions of Federal Rule of Civil
Procedure 15(c)(1), “[a]n amendment to a pleading relates back to the date of the
original pleading when: (A) the law that provides the applicable statute of
limitations allows relation back; [or] (B) the amendment asserts a claim or
defense that arose out of the conduct, transaction, or occurrence that set out—or
attempted to be set out—in the original pleading.” The consequence of Rule
15(c)(1)(A) is that a claim will be deemed to “relate back” if relation back is
permitted under state law, even if it is not permitted under federal law. See
Coons v. Indus. Knife Co., Inc., 620 F.3d 38, 42 (1st Cir. 2010).
      Under federal law, a newly asserted claim relates back to a claim asserted
in the original petition if they arose out of the same “conduct, transaction, or
occurrence”; that is, a “common core of operative facts” must unite the original
claim and the newly asserted claim. Mayle v. Felix, 545 U.S. 644, 659 (2005).
Under Texas law, a newly asserted claim relates back unless it “is wholly based
on a new, distinct, or different transaction or occurrence.” Tex. Civ. Prac. &
Rem. Code §     16.068 (2008).    “Texas law treats each alleged defamatory
publication as a single transaction with an independent inquiry.” Tex. Disposal
Sys. Landfill, Inc. v. Waste Mgmt. Holdings, Inc., 219 S.W.3d 563, 587 (Tex.
App.—Austin 2007, pet. denied).
      Under neither federal nor Texas law do Instances C, D, and E relate back
because they are factually distinct. The statements, though similar, have factual
differences (e.g., discussing Schirle’s mother’s alleged mental issues in addition
to Schirle’s) and the speakers are different as well. Moreover, we agree with the
district court that the discovery rule cannot save Schirle’s claims because the
claims were not “inherently undiscoverable.”       See Velsicol Chem. Corp. v.
Winograd, 956 S.W.2d 529, 531 (Tex. 1997) (“The discovery rule applies if: (1) the
injury is inherently undiscoverable; and (2) the evidence of the injury is



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                                 No. 11-10788

objectively verifiable.”). The district court correctly found Instances C, D, and
E untimely.
                             IV. CONCLUSION
      For the foregoing reasons, we REVERSE the district court’s grant of
summary judgment to Sokudo USA as to Schirle’s discrimination and retaliation
claims but AFFIRM it in all other aspects.
      REVERSED IN PART, AFFIRMED IN PART; REMANDED.




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