Four Big Changes to Removal Under the Federal Courts Jurisdiction and Venue Clarification Act

The Federal Courts Jurisdiction and Venue Clarification Act went into effect on January 6, 2012 and alters removal of cases from state to federal court in four fundamental ways.

First, it now allows each defendant in a multiple defendant case a full thirty days following service on that defendant to file a removal notice.  Previously, there was a split of authority on whether the 30 days ran from the date the first defendant was served.

Second, the Act adopts new procedures for establishing the amount in controversy necessary to sustain diversity jurisdiction, with the default being “the sum demanded in good faith in the initial pleading" or Complaint.  There are several important exceptions, however, including discovery conducted in the state court proceeding after the case is no longer removable being a basis for later removal.

Third, while the one year absolute bar to removal remains, the Act provides that even after one year a case can become removable if “plaintiff has acted in bad faith in order to prevent a defendant from removing the action.”

Finally, the Act eliminates a federal court’s discretion to hear state-law claims asserted in a case removed to federal court on the basis of federal question jurisdiction and requires the district court to "sever from the action all [state-law] claims . . . and . . . remand the severed claims to the State court from which the action was removed.”

Google Search Tips for Litigators

• To restrict searches to a particular domain, like university websites, type in your search terms and then add site:.edu.  It looks like this:  masters degree architecture site:.edu.
• To exclude something, use the minus sign.  It looks like this: Newt-Gingrich.  That search would exclude references to Newt Gingrich.
• To restrict searches to the exact words you are looking for, as opposed to Google’s default mode which includes pleurals, synonyms, etc., put the words in quotation marks.  It looks like this: “motion to dismiss” would not return motions to dismiss.
• Use OR.  Google assumes that a space between search terms means “and.”  If you want to search for more than one term at the same time but not necessarily on the same page separate the words with OR.  It looks like this: class action OR lawsuit.
• If you want to restrict your searches to particular dates, click on the “Search Tools” tab that appears above your results and restrict the results to one of the time frames suggested under “Any Time” or put in a date range in the “Custom Range” option at the bottom of that pull down menu.   Your results are then restricted to that time period.

These and other search tips for litigators are discussed in more detail in the ABA Section on Litigation article entitled "Eight Google Skills All Litigators Should Master."

Cross Exam LInks and Quotes

Professor James Elkins from the West Virginia College of Law has assembled a great set of links and quotes on cross-examination here.

6th Circuit Overturns 17 Years of Precedent in ADA Case

In Lewis v. Humboldt Acquisition Corporation, Inc., __ F.3d ___, 2012 WL 1889389 (6th Cir. May 25, 2012), a 17 year old rule that plaintiffs alleging violation of the Americans with Disabilities Act (ADA) may prevail only if they show that their disability was the “sole” reason for any adverse employment action.  The Court of Appeals reversed, held, en banc, that an employee is not required to show that her disability was the “sole” reason for her termination in order to prevail on her ADA claim. However, the Sixth Circuit refused to adopt the “motivating factor” analysis from Title VII cases and ruled than an employee is required to show that her disability was a “but for” cause of the employer’s adverse employment action.  The Court relied on Gross v. FBL Financial Services, 557 U.S. 167 (2009), where the Supreme Court construed similar language found in the Age Discrimination in Employment Act (ADEA).   

Procedures Attorneys Must Follow in Other States to Take Depositions of Michigan Residents

MCR 2.305(E) permits depositions to be taken of Michigan residents when actions are pending in another state. It provides:

"Action Pending in Another State, Territory, or Country. An officer or a person authorized by the laws of another state, territory, or country to take a deposition in Michigan, with or without a commission, in an action pending in a court of that state, territory, or country may petition a court of record in the county in which the deponent resides, is employed, transacts business in person, or is found, for a subpoena to compel the deponent to give testimony. The court may hear and act on the petition with or without notice, as the court directs."

In addition, Michigan has a statute that establishes a clear procedure for deposing residents of Michigan in actions pending in other states. MCL 600.1852(2) states:

"Any court of record of this state may order a person who is domiciled or is found within this state to give his testimony or statement or to produce documents or other things for use in a proceeding in a tribunal outside this state. The order may be made upon the application of any interested person or in response to a letter rogatory and may prescribe the practice and procedure, which may be wholly or in part the practice and procedure of the tribunal outside this state, for taking the testimony or statement or producing the documents or other things. The order shall be issued upon petition to a court of record in the county in which the deponent resides or is employed or transacts his business in person or is found for a subpoena to compel the giving of testimony by him. The court may hear and actupon the petition with or without notice as the court directs. To the extent that the order does not prescribe otherwise, the practice and procedure shall be in accordance with that of the court of this state issuing the order. The order may direct that the testimony or statement be given, or document or other thing produced, before a person appointed by the court. The person appointed shall have power to administer any necessary oath. A person within this state may voluntarily give his testimony or statement or produce documents or other things for use in a proceeding before a tribunal outside this state."

See also Ewin v. Burnham, 272 Mich. App. 253 (2006).

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.

Second Circuit Rules that Pharmaceutical Sales Reps -- Some Making $100,000 a Year with Commissions -- Entitled to Overtime

On July 6, 2010, the United States Court of Appeals for the Second Circuit found that current and former sales representatives of a pharmaceutical company were neither exempt outside sales people nor exempt administrative employees.

The Court found that the salespeople were promoting sales of other, not making sales themselves. Thus, these employees primary duty was not making sales away from the employer’s place of business.

The Court also found that the sales representatives only performed low level marketing functions. Even though they had some authority to enter into agreements which bound company and had some discretion, the Court found the employees’ duties were not sufficient to make them exempt administrative employees under the FLSA.

Read the opinion here.

Supplemental Jurisdiction Saves the Day for Amount in Controversy Deficiencies in Multiple Plaintiff Cases

In Exxon Mobil Corp. v. Allapattah Services, Inc., 545 U.S. 546 (2005), the Court held that “where the other elements of jurisdiction are present and at least one named plaintiff in the action satisfies the amount-in-controversy requirement, §1367 does authorize supplemental jurisdiction over the claims of other plaintiffs in the same Article III case or controversy, even if those claims are for less than the jurisdictional amount specified in the statute setting forth the requirements for diversity jurisdiction.” The Supreme Court concluded that §1367(a) unambiguously overruled its previous holding in Zahn v. International Paper Co., 414 U.S. 291, 294-95 (1973), and held that because several of the plaintiffs satisfied the amount-in-controversy requirement of § 1332(a), and because the claims of the other plaintiffs undeniably arose out of the same case or controversy over which the district court had original jurisdiction, supplemental jurisdiction over the claims of all the named plaintiffs was proper. See also Engstrom v. Mayfield, 195 Fed.Appx. 444, 448, 2006 WL 2456948 (6^th Cir. 2006)(if any plaintiff satisfies the amount-in-controversy requirement of § 1332(a), the claims of other plaintiffs that arise out of the same case or controversy are properly the subject of supplemental jurisdiction).

U.S. Supreme Court Adopts "Nerve Center" Diversity Jurisdiction Test

In Hertz Corp. v. Friend, 2010 U.S. LEXIS 1897 (Feb. 23, 2010), the United States Supreme Court finally resolved a split among the circuits on how to analyze where a corporation’s “principal place of business” is for purposes of diversity jurisdiction. The Court reversed a Ninth Circuit holding that Hertz Corporation was a citizen of California because of the amount of business it did in California compared to other states, including New Jersey, where Hertz claimed was its principal place of business. For example, Hertz operated 273 of its 1,606 car rental locations in California, 3.8 million of its 21 million annual rental transactions took place in California, and approximately 2,300 of its 11,230 full-time employees were located in California. Still, the Supreme Court rejected the Ninth Circuit’s “business activities” test and instead adopted the corporate “nerve center” standard used by numerous other Circuits. The Sixth Circuit, however, applied a "total activities" test, whereby a court had to consider a variety of factors, such as the location of the corporation's nerve center, its administrative offices, its production facilities, and its employees. Gafford v. General Elec. Co., 997 F.2d 150, 163 (6th Cir. 1993). The U.S. Supreme Court concluded that since the headquarters, most of the executives, and the vast majority of the decision-making took place in New Jersey, that was Hertz’s principal place of business. In a unanimous decision the Supreme Court added much needed clarity on how to define a corporation’s so-called “nerve center”—which is now defined as the “the place where the corporation’s high-level officers direct, control, and coordinate the corporation’s activities.”

Statute of Limitations Analysis in Trentadue Extended to Latent Disease Cases

The statute of limitations in negligence and product liability actions is three years. MCL 600.5805(10); MCL 600.5805(13). A claim accrues and the statute of limitations begins to run at the time the wrong was done: “Except as otherwise expressly provided, the period of limitations runs from the time the claim accrues. The claim accrues . . . at the time the wrong upon which the claim is based was done regardless of the time when damage results.” MCL 600.5827.

In Trentadue v Buckler Automatic Lawn Sprinkler Co., 479 Mich 378, 388; 738 NW2d 664 (2007), Michigan Supreme Court rejected the application of the so-called “discovery rule” to toll the statute of limitations in personal injury cases except in very specific circumstances specifically set forth by the Legislature (e.g., claims for medical malpractice and fraudulent concealment) and held:
“We hold that the plain language of MCL 600.5827 precludes the use of a broad common-law discovery rule to toll the accrual date of claims to which this statue applies. Here, the wrong was done when Eby was raped and murdered in 1986. MCL 600.5827 was in effect at that time. Accordingly, plaintiff’s claims accrued at the time of Eby’s death. The Legislature has evinced its intent that, despite this tragedy, the defendant-appellants may not face the threat of litigation 16 years later, merely because plaintiff alleges she could not reasonably discover the facts underlying their potential negligence until 2002.” Trentadue at 407 (emphasis added). The Court also ruled that the word “wrong” in the statute means “when the plaintiff is harmed rather than when the defendant acted.” Id at 388 (citing Boyle v General Motors Corp, 468 Mich 226, 231-32, n5; 661 NW2d 557 (2003)(“The wrong is done when the plaintiff is harmed rather than when the defendant acted.”).

In Bearup v General Motors, 2009 WL 249456 at 7 (Mich App), the Michigan Court of Appeals extended the Trentadue analysis to cases involving latent injuries caused by exposure to toxic substances years earlier. Plaintiffs argued that symptoms alone were not sufficient to put them on notice of their injuries or the cause of their injuries. According to plaintiffs, their cause of action did not accrue until they received medical diagnoses. The Michigan Court of Appeals, however, held: "The period of limitation in a product liability action is three years. MCL 600.5805(13). This three-year period “runs from the time the [claim] accrues,” which is defined as “the time the wrong upon which the claim is based was done regardless of the time when damage results.” MCL 600.5827. To determine whether the statute of limitations has expired, the circuit court must first identify both “the wrong upon which the claim is based,” and the date the “wrong” was done. Our Supreme Court has explained that this calculation is intended to yield “the date on which the plaintiff was harmed by the defendant's negligent act, not the date on which the defendant acted negligently.” Stephens v Dixon, 449 Mich. 531, 534-535, 536 N.W.2d 755 (1995); see also Trentadue, supra at 388, 738 N.W.2d 664 (“The wrong is done when the plaintiff is harmed rather than when the defendant acted.”) (internal quotation omitted). After determining the date on which the plaintiff sustained the injury underlying a claim, the circuit court must determine whether the plaintiff filed a lawsuit within three years of that date."

"I Don't Recall"

It's easy to get sloppy when asking questions, but there's a big difference between asking a witness whether "they recall" something and asking whether it happened. Likewise, if a witness starts answering questions by saying that she "does not recall." follow up by asking, "So you can not say whether the light was red or green, is that correct?" If someone does not recall or you ask them if they remember something rather than whether it did or did not happen, you expose yourself to having that witness' recollection refreshed later on. It's a difference that matters.

Junk Science Checklist: Seven Factors Courts Must Consider in Michigan

In Michigan, trial courts are required to consider seven factors in assessing the admissibility of expert testimony:

1. Whether the opinion and its basis have been subjected to scientific
testing and replication.
2. Whether the opinion and its basis have been subjected to peer review
publication.
3. The existence and maintenance of generally accepted standards
governing the application and interpretation of a methodology or technique and
whether the opinion and its basis are consistent with those standards.
4. The known or potential error rate of the opinion and its basis.
5. The degree to which the opinion and its basis are generally accepted
within the relevant expert community.
6. Whether the basis for the opinion is reliable and whether experts in that
field would rely on the same basis to reach the type of opinion being proffered.
7. Whether the opinion or methodology is relied upon by experts outside
of the context of litigation.

MCL 600.2955(1). See also MRE 702.