11th Circuit Update: Class Action Fairness Act, Paycheck Deductions

Dudley v. Eli Lilly and Co.  (December 29, 2014)

Brief Summary: A party’s challenge to coverage under the Class Action Fairness Act must involve evidence stronger than a presumption

The case Dudley v. Eli Lilly and Co. involved an interlocutory appeal from a district court order granting former Eli Lilly employee Dudley’s motion to remand a class action back to Circuit court. After Dudley filed her claim in Circuit Court, claiming Lilly did not make certain incentive payments due to her and similarly situated employees, Lilly removed the case to District Court pursuant to the Class Action Fairness Act (CAFA). The district court granted the motion to remand, concluding Lilly failed to meet its burden to show the amount in controversy exceeded $5,000,000, as evidence to support this position was speculative. The 11^th Circuit affirmed, concluding that the district court’s decision did not amount to clear error determining that Lilly did not meet its burden. Relying on binding precedent from the Supreme Court in Dar Cherokee Basin Operating Co. v. Owens, 574 US __, 2014 WL 7010692 (Dec 15. 2014), the 11^th circuit held that, as it relates to a CAFA case, it could not rely on any presumption in favor of remand.

Watkins v. The City of Montgomery, Alabama.  (December 24, 2014)

Brief Summary: Employee Paycheck Deductions for Violation of Workplace Conduct Rules Does Not Disturb the Salary Basis Test for Exempt Employees

The case Watkins v. The City of Montgomery, Alabama involved fifty-four fire suppression lieutenants overtime claims under the Fair Labor Standards Act. Because the case went to a jury and was rejected, the 11^th circuit concluded the jury issues were determined properly, and affirmed the district court decision denying the claims. On appeal, the employees challenged the ruling by alleging that the jury verdict was wrong, and therefore, the motion for judgment should have been granted, as well as errors with the jury instructions.  Examining the FLSA, the 11^th Circuit recognized that the employees were subject to the executive exemption. Turning to the issue as to whether they passed the salary basis test due to paycheck deductions, the 11^th circuit recognized permissible deductions may include those for violations of safety rules and workplace conduct rules. Though the definition of workplace conduct is to be construed narrowly , the 11^th circuit noted that it does not prevent an employer from disciplining an employee for actions occurring off-property if the employer had a bona fide rule prohibiting the conduct. Applying this reasoning to the facts of the case, the 11^th circuit concluded that the employer established they had rules prohibiting each of the disciplinary violations committed by the lieutenants, and therefore, the deductions were proper and the salary basis test for the exemption was left intact.