What Does "Full Authority to Settle" Really Mean?

While it is "true that a trial court may order the parties to appear for a settlement conference, MCR 2.401(A), and may order that the parties, including insurance companies, send a representative to the conference who possesses full authority to settle, MCL 2.401(F)(2); Henry v Prusak, 229 Mich App 162, 168; 582 NW2d 193 (1998), that does not mean that a court can willy nilly hold a representative in contempt of court. In Bencheck v Estate of Paille, the Michigan Court of Appeals overturned two contempt of court rulings against the same insurance company because the Court of Appeals found that the carrier was fully entitled to rely on contractual language in the insurance policy and to instruct its representatives not to settle until after the underlying policy limits had been offered or paid. The Court of Appeals added, in what must be of considerable comfort to insurance companies everywhere, that a court cannot “force” settlements upon parties and may not assess penalties against a party or its representative for failing to make a settlement offer. Bencheck v Estate of Paille, (Michigan Court of Appeals) (Lawyers Weekly No. 08-76568) (unpublished per curium).

Q. “Federal Question, Diversity, CAFA, and Supplemental.” A. “What are four ways to get subject matter jurisdiction in an overtime case?”

By Dale R. Burmeister

There are at least four ways that federal courts have subject matter jurisdiction over overtime cases. First, federal court have federal question subject-matter jurisdiction over FLSA collective actions and the Rule 23 class actions to the extent that the latter arise under a separate federal law, such as RICO. Pursuant to 28 U.S.C. § 1331, federal district courts have original subject-matter jurisdiction over all civil actions arising under the laws of the United States. The FLSA is a law of the United States, and the FLSA collective action seeking to recover overtime arises under that law.

Second, federal district courts have original subject-matter jurisdiction over claims brought by parties from different states – diversity jurisdiction. In some overtime cases, all of the named plaintiffs are from states other than the state where suit is filed. Under those circumstances, a federal districti court has original subject matter jurisdiction.

It is important to point out that removal jurisdiction is narrower than original jurisidition. As a result, if all the plaintiffs in an overtime time case are from states other than where the defendant, often a corporation, resides and has it principal place of business, the plaintiffs can file the case in state court and it can not be removed by a defendant that resides or has its principal place of business in that state, unless, of course, there is another basis for jurisdiction, such as federal question jurisdiction.

Third, a federal court may also have jurisdiction over all the claims pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d) (“CAFA”). CAFA provides: "The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000 exclusive of interest and costs, and is a class action in which . . . any member of a class of plaintiffs is a citizen of a State different from any defendant.” 28 U.S.C. § 1332(d)(2). CAFA applies to actions commenced on or after the Act's effective date of February 18, 2005. Prime Care of Ne. Kan., LLC v. Humana Ins. Co., 447 F.3d 1284, 1285 (10th Cir. 2006). Thus, if even one of the named members of the class are citizens of a state other than where the employer is incorporated and has its principal place of business, there is jurisdiction.

Finally, if a district court has jurisdiction over some of the claims, it can also exercise supplemental jurisdiction over others, such as state law claims. In 1990, Congress enacted the supplemental jurisdiction statute, 28 U.S.C. § 1367, which essentially codified common law doctrines of pendent, ancillary, and pendent-party jurisdiction. The statute provides that “the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.”

When A Deal Is Not A Deal -- You Can't Waive Overtime

It is not uncommon to claim that a "deal is a deal" in employment cases like overtime and independent contractor lawsuits as a defense. It is often argued that the plaintiff agreed to be classified as an independent contractor or agreed to accept a salary in lieu of overtime even though expecting to work more than 40 hours a week. In Brooklyn Bank v. O’Neal, 324 U.S. 697, 707 (1945), however, the Supreme Court held:

"No one can doubt that to allow waiver of statutory wages by agreement would nullify the purposes of the [FLSA]. [P]olicy considerations ... forbid waiver of basic minimum and overtime wages under the Act ...."

Almost 40 years later, the Court reaffirmed in Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 745 (1981), that FLSA rights are not waivable. Lower courts have obviously followed suit. See, e.g., Abbott v. Beatty Lumber Co. 90 Mich. App. 500, 504, 282 N.W.2d 369, 371, 282 N.W.2d 369 (1979)(statutory entitlement to overtime compensation may not be waived by the employee even by a collective bargaining agreement, since to do so would nullify the purposes of the FLSA); Marshall v. R&M Erectors, 429 F. Supp. 771, 780 (D. Del. 1977); Kendrick v. Alternative Care, Inc., 2006 WL 4756451 (M.D. Fla. Oct. 25, 2006); Underwood v. NMC Mort. Corp., 445 F.R.D. 720, 723 (D. Kan. 2007)(employees cannot waive their right to overtime wages); Harrington v. Despatch Indus. L.P., 2005 U.S. Dist. LEXIS 12781 (D. Mass. 2005) (even though Plaintiff’s hiring letters stated that he was an exempt employee, plaintiff did not thereby relinquish his entitlement to overtime pay).

Amusing Judicial Opinions II -- Very Funny!

This Judge shows some real enthusiasm for a settlement that was reached right before trial, which made him "happier than a tick on a fat dog . . . ." Click here to read it.

Amusing Judicial Opinions -- "Tough as a Three-Dollar Steak"

For a humorous article from the Wall Street Journal on how judges spice up their opinions, click here.

Do You Recall Update

On July 11, 2009, I wrote that using "do you recall" in a question has its advantages. In "Elements of Trial Practice: More than 500 Techniques and Tips for Trial Lawyers," by Peter D. Polchinski, however, he makes a valid point, particularly when examining your own witnesses: "Avoid do you recall, do you remember, do you know or did you notice. Those headers suggest that the witness may not know the answer and they weaken the testimony."

U.S. Supreme Court Employee Trifecta -- High Court Sides with Employees in Two Retaliation Cases and a Discrimination Case in 2011 So Far

On January 24, 2011, the United States Supreme Court ruled in Thompson v. North American Stainless that Title VII of the Civil Rights Act prohibits employers from retaliating against employees who complain of discrimination by terminating the employment of closely related third-parties, such as spouses or family members. Title VII’s anti-retaliation provision covers a broad range of employer conduct and therefore is not limited to discriminatory actions affecting the terms and conditions of employment. It also prohibits employers from taking action that might dissuade a reasonable worker from making or supporting a charge of discrimination. The Court held a reasonable employee would likely be dissuaded from engaging in protected activity if she knew that her fiancé would be fired.

On March 1, 2011, the U.S. Supreme Court ruled in Staub v. Proctor Hospital that if an employee or former employee can show that any of the supervisors involved in the line that lead to the ultimate employment action at issue, had a discriminatory intent or animus in their actions, then the action of that supervisor can form the basis for the employer's liability. It no longer matters that the non-decision-maker did not have power or control over the decision-maker. It also does not matter that the decision-maker made an independent review and analysis of the grounds for the adverse employment action if the supervisor holding the discriminatory animus was anywhere in the line that led up to the ultimate employment action. Employing the so-called “cat’s paw” theory of employment discrimination -- that an employer can be liable for the discriminatory animus of an employee who influences, but does not make, an ultimate employment decision – the Court held that “if a supervisor performs an act motivated by . . . animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable . . . .”

On March 22, 2011, the Court decided Kasten v. Saint-Gobain Performance Plastics Corp. In Kasten, the Court found that oral employee complaints alleging violations of the Federal Labor Standards Act need not be in writing to receive anti-retaliation protection. In a 6-2 decision, the Court interpreted the statutory phrase "filed any complaint" to include oral complaints. Reasoning that a narrower interpretation limited to written complaints would not further the remedial purpose of the Act, the Court ruled that oral complaints could be "filed" for purpose of anti-retaliation protection if properly made. Thus, the Court held that if an oral complaint is “sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of [employees'] rights protected by the statute and a call for their protection,” such an oral complaint may be protected by the FLSA.

Putting Medicare on the Settlement Check

Jules Olsman, a well known plaintiffs' attorney in Michigan, recently spoke at the monthly dinner meeting of the Association of Defense Trial Counsel (ADTC), which I am the Treasurer of this year. He handed out the attached memorandum discussing the need -- or rather the lack thereof -- to include Medicare on settlement drafts in personal injury cases. Mr. Olsman relies on three cases in support of his position that Medicare should never be included on a settlement draft: Tomlinson v. Landers, 2009 WL 1117399 (M.D. Fla); Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010); and Azleppa v. Seiwell, 9 A.3d 632 (Pa. 2010).

New Caps on Non-Economic Damages for 2011

The Michigan Department of Treasury has announced that the new caps on noneconomic damages in products liability cases where the product did not cause either death or permanent loss of a vital bodily function for 2011 is $411,300. The indexed cap in cases involving death or permanent loss of a vital bodily function is now $734,500. The cap on noneconomic damages in medical malpractice cases is now $432,000.