Leslie Pinciaro Dudley v. Eli Lilly and Comany , 778 F.3d 909 ( 2014 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-13048
________________________
D.C. Docket No. 3:13-cv-01287-HES-JBT
LESLIE PINCIARO DUDLEY,
on behalf of herself and all others similarly situated,
Plaintiff - Appellee,
versus
ELI LILLY AND COMPANY,
a Foreign For-Profit Corporation,
LILLY USA, LLC,
a foreign for-profit limited liability company,
Defendants - Appellants.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(December 29, 2014)
Before TJOFLAT, MARCUS and WILSON, Circuit Judges.
MARCUS, Circuit Judge:
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In this interlocutory appeal, Appellants Eli Lilly and Company and Lilly
USA, LLC (collectively, “Lilly”) appeal from a district court order granting the
Appellee Leslie Dudley’s motion to remand this class action back to the Circuit
Court of Duval County, Florida. Dudley’s complaint alleged that Lilly did not
make certain incentive payments due to Dudley and other similarly situated
individuals who had been employed at the company. Lilly removed the case to the
United States District Court for the Middle District of Florida pursuant to the Class
Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). After considering the
complaint, the removal petition, and the evidence that had been presented, the
district court granted Dudley’s motion to remand the case to state court, finding
that Lilly had not met its burden of establishing by a preponderance of the
evidence that the amount in controversy exceeded $5,000,000, as required for
federal subject matter jurisdiction under CAFA. See 28 U.S.C. § 1332(d)(2). The
court determined that Lilly’s proffers about the amount in controversy were purely
speculative because Lilly had failed to identify a specific number of class
participants made up of only those employees who did not receive their promised
compensation; and had failed to identify the amount each member was entitled to
receive as compensation. We granted Lilly permission to appeal under 28 U.S.C. §
1453(c)(1), and after having considered the matter and taken oral argument, we
conclude that on the limited record presented, the district court did not clearly err
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in determining that Lilly has failed to meet by a preponderance of the evidence
CAFA’s amount-in-controversy requirement. Accordingly, we affirm.
I.
We review a district court’s decision to remand a CAFA case for lack of
subject matter jurisdiction de novo. Pretka v. Kolter City Plaza II, Inc., 608 F.3d
744, 751 (11th Cir. 2010). As with all diversity cases, we review for clear error
any factual determinations necessary to establish jurisdiction. See, e.g., Texas
Acorn v. Texas Area 5 Health Sys. Agency, Inc., 559 F.2d 1019, 1024 (5th Cir.
1977)1 (reviewing for clear error the district court’s finding that the amount in
controversy had been met); Rexford Rand Corp. v. Ancel, 58 F.3d 1215, 1218 (7th
Cir. 1995) (“The determination of the amount in controversy is a fact-specific
inquiry. Thus, we review the district court’s finding that the amount in controversy
exceeds $50,000 for clear error.”); McCormick v. Aderholt, 293 F.3d 1254, 1257
(11th Cir. 2002) (reviewing for clear error the district court’s findings regarding
domicile for diversity jurisdiction purposes); Vareka Invs., N.V. v. Am. Inv.
Props., Inc., 724 F.2d 907, 910 (11th Cir. 1984) (reviewing for clear error factual
question of a corporation’s principal place of business for diversity jurisdiction
purposes). Thus, we review de novo the district court’s ultimate legal conclusion
that the underlying factual allegations are insufficient to establish CAFA
1
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), we adopted as
binding precedent all Fifth Circuit decisions issued before October 1, 1981.
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jurisdiction, and we review for clear error the district court’s determination that
Lilly failed to establish that the amount in controversy exceeded $5 million by a
preponderance of the evidence. See Amoche v. Guarantee Trust Life Ins. Co., 556
F.3d 41, 48 (1st Cir. 2009) (holding in a CAFA case that it would review for clear
error “that portion of the district court’s assessment of subject matter jurisdiction
composed of factual findings,” and would review de novo its “ultimate assessment
of jurisdiction”); accord Watkins v. Vital Pharm., Inc., 720 F.3d 1179, 1181 (9th
Cir. 2013); Blockbuster, Inc. v. Galeno, 472 F.3d 53, 56 (2d Cir. 2006).
“Federal courts are courts of limited jurisdiction. They possess only that
power authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins.
Co. of Am., 511 U.S. 375, 377 (1994). The statute at issue today has expanded
considerably the subject matter jurisdiction of the federal courts over class actions
that meet certain minimal requirements. Miedema v. Maytag Corp., 450 F.3d
1322, 1327 (11th Cir. 2006). Specifically, CAFA grants federal district courts
jurisdiction over class actions where (1) any member of the plaintiff class is a
citizen of a state different from the state of citizenship of any defendant, (2) the
aggregate amount in controversy exceeds $5 million, and (3) the proposed plaintiff
class contains at least 100 members. See 28 U.S.C. § 1332(d)(2), (5)-(6)
(emphasis added); S. Fla. Wellness, Inc. v. Allstate Ins. Co., 745 F.3d 1312, 1315
(11th Cir. 2014).
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Recently, the Supreme Court decided Dart Cherokee Basin Operating Co. v.
Owens, 574 U.S. __, 2014 WL 7010692 (Dec. 15, 2014), which shed additional
light on the jurisdictional requirements found in CAFA. Prior to Dart, this Court
had presumed that in enacting CAFA, Congress had not intended to deviate from
“established principles of state and federal common law,” Miedema, 450 F.3d at
1328-29 (quoting United States v. Baxter Int’l, Inc., 345 F.3d 866, 900 (11th Cir.
2003)), which included “construing removal statutes strictly and resolving doubts
in favor of remand,” id. at 1328. In Dart, however, the Supreme Court made clear
that “no antiremoval presumption attends cases invoking CAFA, which Congress
enacted to facilitate adjudication of certain class actions in federal court.” 2014
WL 7010692, at *6, slip op. at 7. This conclusion was driven, in part, by the
legislative history, including language found in Senate Report No. 109-14 (2005),
which observed that CAFA’s “provisions should be read broadly, with a strong
preference that interstate class actions should be heard in a federal court if properly
removed by any defendant.” Id. at 43, as reprinted in 2005 U.S.C.C.A.N. 3, 41.
Applying this binding precedent from the Supreme Court, we may no longer rely
on any presumption in favor of remand in deciding CAFA jurisdictional questions.
See United States v. Archer, 531 F.3d 1347, 1352 (11th Cir. 2008) (holding that an
intervening decision of the Supreme Court will overrule our prior precedent if the
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Supreme Court decision is clearly on point and undermines our prior precedent to
the point of abrogation).
Dart also shed light on the necessary contents of a CAFA defendant’s notice
of removal. There, Dart’s notice of removal had alleged that all three CAFA
requirements had been met, among other things, charging an amount in
controversy of $8.2 million. 2014 WL 7010692, at *3, slip op. at 2. In moving to
remand, the plaintiff argued that Dart’s notice of removal had included “no
evidence” proving that the amount in controversy actually exceeded the $5 million
threshold requirement. Id. at *3, slip op. at 3. Dart responded with a declaration
from one of its executive officers, including a detailed damages calculation
indicating that the amount in controversy exceeded $11 million. Id. at *3, slip op.
at 3. Without challenging Dart’s new calculation, the plaintiff claimed that the
amount-in-controversy submission came too late because it had not been included
in the notice of removal, and the district court agreed. Id. at *3-4, slip op. at 3.
The Supreme Court did not. It held that “when a defendant seeks federal-court
adjudication, the defendant’s amount-in-controversy allegation should be accepted
when not contested by the plaintiff or questioned by the court.” Id. at *5, slip op.
at 5. In other words, all that is required is a “short and plain statement of the
grounds for removal,” including “a plausible allegation that the amount in
controversy exceeds the jurisdictional threshold.” Id. at *3, *6, slip op. at 1, 7
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(quoting 28 U.S.C. § 1446(a)). That is the end of the matter, unless “the plaintiff
contests, or the court questions, the defendant’s allegation.” Id. at *6, slip op. at 7.
In cases like this, however -- where the plaintiff contests the defendant’s
amount in controversy -- Dart recognized that the district court must go further.
Citing to the CAFA statute, the Supreme Court observed that when a notice of
removal’s allegations are disputed, the district court must find “‘by the
preponderance of the evidence, that the amount in controversy exceeds’ the
jurisdictional threshold.” Id. at *5, slip op. at 6 (quoting 28 U.S.C. §
1446(c)(2)(B)). We have repeatedly held that the removing party bears the burden
of proof to establish by a preponderance of the evidence that the amount in
controversy exceeds the jurisdictional minimum. S. Fla. Wellness, 745 F.3d at
1315; Pretka, 608 F.3d at 752; Miedema, 450 F.3d at 1330. We’ve also observed
that, in making this calculation, “[a] court may rely on evidence put forward by the
removing defendant, as well as reasonable inferences and deductions drawn from
that evidence.” S. Fla. Wellness, 745 F.3d at 1315. “[A] removing defendant is
not required to prove the amount in controversy beyond all doubt or to banish all
uncertainty about it.” Pretka, 608 F.3d at 754. Moreover, at the jurisdictional
stage, “the pertinent question is what is in controversy in the case, not how much
the plaintiffs are ultimately likely to recover.” Id. at 751 (quotation and emphasis
omitted). “The amount in controversy is not proof of the amount the plaintiff will
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recover. Rather, it is an estimate of the amount that will be put at issue in the
course of the litigation.” Id. (quotation omitted). Dart -- which did not involve a
plaintiff’s contest to the defendant’s jurisdictional allegations -- did not disrupt any
of this pre-existing CAFA case law.
We also underscore that jurisdictional facts are evaluated as they stand at the
time of removal. Miedema, 450 F.3d at 1331. As a result, under CAFA, class
actions may be removed at any point during the pendency of litigation in state
court, so long as removal is initiated within thirty days after the defendant is put on
notice that a case which was not removable based on the face of the complaint has
become removable. See 28 U.S.C. § 1453(b) (traditional one-year window for
removal does not apply to class actions). In other words, a CAFA defendant who
fails to meet his burden for removal at the early stages of litigation may still have
recourse to the federal courts later, after a fuller record has been developed in
discovery in the state court. See, e.g., Amoche, 556 F.3d at 53 (“Successive
attempts at removal [under CAFA] are permissible where the grounds for removal
become apparent only later in the litigation.”); Abrego Abrego v. The Dow Chem.
Co., 443 F.3d 676, 691 (9th Cir. 2006) (“[L]later-discovered facts may prompt a
second attempt at removal” under CAFA.). 2
2
This only makes sense. The former Fifth Circuit has long held in the general, non-CAFA
removal context that when a plaintiff makes new claims in state court, a defendant’s right to
remove is “revived.” See Cliett v. Scott, 233 F.2d 269, 271 (5th Cir. 1956). In Cliett, the
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II.
In the complaint before us, Dudley raises four separate causes of action
against Lilly, including a breach of employment contract, quantum merit, unjust
enrichment and promissory estoppel. She defines the class as:
All LILLY Fixed Duration Employees (“FDE”) who, during the class
period, did not receive[:] (1) a sales incentive (“VOB”), and/or (2) a
Customer Value Metric (“CVM”), and/or (3) a Service Value Chain
(“SVC”), and/or (4) the value of a Reward Recognition Trip (“RRT”),
payments as a result of their scheduled termination date occurring
before the completion of the time period used for calculating said
amounts.
Thus, in addition to seeking as damages the value of the reward trip, or RRT,
Dudley seeks payments for three different categories of sales-incentive payments.
Importantly, the complaint specifies that each former employee in the class was
entitled to one or more of the various incentive payments, using the disjunctive
“and/or.” Moreover, the complaint alleges that each of these categories of
plaintiffs had originally filed “suit for an accounting for moneys” to collect a judgment against
non-resident defendants related to the accounts on 700 acres of land. Id. at 269-70. After several
years of litigation in state court, the plaintiffs filed an amended petition asserting for the first
time title to the entire 700-acre tract. Id. at 270. The defendants promptly removed the case to
federal court; the plaintiffs then moved to remand, claiming “the defendants had voluntarily
submitted to the jurisdiction of the state court and had lost their right to remove.” Id. In
affirming the district court’s final judgment and denial of the motion to remand, the Fifth Circuit
held that the filing of the amended petition by the plaintiffs created “an entirely new and
different suit,” over which “defendants’ right to remove revived.” Id. at 271. See also S.W.S.
Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 493 (5th Cir. 1996) (“A defendant who fails in an
attempt to remove on the initial pleadings can file a second removal petition when subsequent
pleadings or events reveal a new and different ground for removal.” (quotation and alteration
omitted)); O’Bryan v. Chandler, 496 F.2d 403, 409-10 (10th Cir. 1974) (developments
subsequent to and not concluded by prior remand order provide grounds for a second removal
petition).
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payments is calculated using different time frames. Dudley says, for example, that
during her employment at Lilly, the payout periods for the VOB and the CVM
changed from quarterly to bi-annual. The SVC, however, is calculated annually.
As for the RRTs, Dudley alleges that each is valued at $5,000, and that they are
awarded for individual performance.
The crux of the complaint is that because Dudley’s employment term came
to an end before the calculation periods for these incentives ended, Lilly allegedly
failed to pay Dudley the incentives she had earned, in violation of her employment
contract. She says, moreover, that none of the former Fixed Duration Employees
in the class were paid these incentives for work performed before their
employment terms ended. Notably, the complaint does not allege, and we cannot
tell from this record, how many of the former Fixed Duration Employees were
withheld sales incentives and/or Customer Value Metrics and/or Service Value
Chains and/or the value of any Reward Recognition Trips. Dudley does claim,
however, that she and the other FDEs had been routinely paid incentives in
previous payout periods.
After Lilly removed the complaint to federal court, Dudley moved to remand
the matter back to the state court, on the ground that because Lilly’s amount-in-
controversy allegations were based on “speculation and conjecture,” Lilly had
failed to establish the threshold amount by a preponderance. She claimed that
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Lilly’s notice of removal “ignored the putative class definition” and that the
aggregate claims set forth in the complaint did not exceed $5 million.
In an effort to meet its burden, Lilly offered two affidavits from James R.
Harenberg, a Senior Director for Lilly’s U.S. Sales Services -- it first attached an
affidavit with its notice of removal, and then included an updated affidavit in its
opposition to Dudley’s motion to remand. Harenberg’s updated affidavit provides
that Lilly has used a variety of incentive programs for sales representative FDEs
that typically involve periodic payments based on the achievement of certain goals.
Harenberg explained that a February 2011 program, for example, made sales
representatives “eligible for incentive payments based on achievement of quarterly
and biannual goals.” According to Harenberg, the calculation periods for quarterly
incentives are January 1 through March 31; April 1 through June 30; July 1
through September 30; and October 1 through December 31. The calculation
periods for biannual incentives, however, are October 1 through March 31 and
April 1 through September 30.
Harenberg also avers that “[s]ince January 1, 2008, Lilly has employed
1,181 FDEs as sales representatives who were eligible to receive incentive
compensation, provided other requirements for such compensation were met.” He
then says that 210 of the 1,181 were still employed by Lilly as of October 28,
2013, leaving 971 former FDEs. Of the 971, “122 eligible FDEs ended
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employment on March 31 or September 30, the end of a quarterly period and a
biannual period.” Moreover, “339 eligible FDEs ended employment on June 30 or
December 31, the end of a quarterly period but not a biannual period,” and “510
eligible FDEs ended employment on a date other than a quarterly or biannual
period end date.”
As for the amount of damages contemplated per class member, Lilly said in
its notice of removal and its accompanying affidavit that “in 2011, for example,
quarterly incentive compensation targets for sales representatives ranged from
$1,450 to $4,725 and biannual incentive compensation targets ranged from $2,700
to $5,500.” It used the middle of these ranges -- $3,087.50 and $4,100,
respectively -- as well as Dudley’s allegation that a Reward Recognition Trip is
valued at $5,000 to estimate that: (1) the 122 former FDEs who ended their
employment at the end of a biannual period “could have [] forfeited” an aggregate
amount of $610,000 in Reward Recognition Trips; (2) the 339 former FDEs who
ended their employment at the end of a quarterly period (but not the end of a
biannual period) “could have [] forfeited” an aggregate amount of $3,084,900 in
biannual incentives and RRTs; and (3) the 510 former FDEs who ended their
employment on a day other than the last day of either incentive period “could have
[] forfeited” an aggregate amount of $6,215,625 in quarterly incentives, biannual
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incentives, and RRTs. Thus, says Lilly, Dudley’s complaint placed $9,910,525
into controversy.
Dudley challenged Lilly’s evidential foundation in district court, arguing,
among other things, that Lilly’s calculations erroneously assumed that all former
FDEs were eligible for all benefits and damages, without offering any proof as to
this point. Dudley further observed that nothing in her complaint even remotely
suggested which of these benefits the FDEs were entitled to. The district court
agreed with Dudley, and concluded that Lilly’s proffer was insufficient to satisfy
its burden. The court observed that Lilly had not only failed to identify a specific
number of class participants, but, more significantly for our purposes, also left the
court to guess at “what each member was entitled to receive as compensation and
did not.” The district court also held that “[a]lthough there may be a possibility
that some members may have the same amount of damages, it is not likely that
each member of the Class has the exact amount of incentive compensation owed to
them as does Plaintiff.” The district court concluded that the defendant had failed
in two attempts to establish by a preponderance of the evidence that the amount in
controversy for removal under CAFA had been met.
III.
After thorough review of this limited record, we conclude that the district
court did not clearly err in finding that Lilly failed to show, by a preponderance of
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the evidence, that CAFA’s amount-in-controversy requirement had been met.
Once Dudley contested Lilly’s notice of removal about its amount-in-controversy
allegations, Lilly responded with proffers in affidavit form. It then fell to the
district court to discern whether the amount in controversy had been established.
The main problem for Lilly, as the district court found, is that it failed to
establish by a preponderance of the evidence the amount of incentive
compensation that was allegedly denied to the class members. Accepting the
plaintiff’s good-faith allegation that all 971 former Fixed Duration Employees
were members of the class, Lilly has failed to establish even generally the dollar
amounts that each of the FDEs may have been denied in payment incentives as a
result of their termination dates. As we’ve noted, the complaint does not say that
all of these FDEs were denied all of the possible categories of incentive payments;
rather, it avers only that these FDEs were denied some combination of the sales
incentive or VOB (calculated quarterly and later biannually), and/or the Customer
Value Metric (calculated quarterly and later biannually), and/or the Service Value
Chain (calculated annually), and/or the Reward Recognition Trip (calculated
annually).
Notably, Lilly’s affidavits and briefing in no way suggest which employees
specifically relate to which form of incentive payment. Instead, Lilly breaks up the
former FDEs into three groups -- those who were terminated at the end of a
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biannual period, those terminated at the end of a quarterly period, and those
terminated at some other time -- and only gives estimates of quarterly incentive
payments, biannual incentive payments, and RRT values. It does not provide any
information about the VOB, CVM or SVC estimates. This means that it does not
specify how the quarterly incentive payment estimates may have been split
between the VOB and the CVM, nor how the biannual incentive payment estimates
may have been split between the VOB and the CVM, nor, indeed, where the SVC
estimates may have fit into the calculations. Again, Dudley’s complaint only
alleges that the members of the FDE class were denied at least one of these
payments, not necessarily all. Thus, it was impossible for the district court to
ascertain with any degree of confidence how many class members were denied
which payments, or even how the estimates for the different categories of
payments were allocated within the quarterly and biannual groupings.
Moreover, in dividing the incentive payments in terms of those calculated
quarterly, those calculated biannually, and RRTs, Lilly has provided a range of
possible incentive payments, and then used in its calculations the “midpoint” of
these ranges multiplied by the number of FDEs terminated within these categories.
However, Lilly has provided the district court with no way of judging whether
these “midpoint” numbers are realistic, compared to, for example, how much each
of the FDEs in the class were paid in past payout periods. Nor, more importantly,
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has Lilly even compared these midpoint numbers to average employee payments
made in past payout periods.
In short, as we see it, Lilly has failed to provide estimates of incentive
payments that corresponded to the categories of incentive payments identified in
the complaint; it also failed to recognize and build into the calculus that not all of
the FDEs were alleged to have been denied all of the incentive payments; and it
failed to provide any meaningful guidepost for the payment estimates it had
provided. As a result, the evidential foundation was bare -- revealing only how
many FDEs were terminated on certain dates, and the range of compensation an
FDE theoretically could have received -- and the district court was unable to make
any “reasonable inferences and deductions drawn from that evidence[] to
determine whether the defendant has carried its burden” of sustaining the
jurisdictional threshold. S. Fla. Wellness, 745 F.3d at 1315. Simply put, the
district court did not clearly err in finding that Lilly had failed to meet its burden.
Lilly argues that at this stage of the litigation, it should not have to concede
liability or be unduly burdened by providing “detailed, sales-record-by-sales-
record proof of incentive payments allegedly forfeited at termination” for each
former employee. We agree with these observations, but we cannot see how the
district court could generally infer the amount in controversy from this record.
Lilly, after all, had access to its own employment records and its evidence shows
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that it was able to parse out FDEs and their termination dates, and to provide a
payment range for each category of compensation. It seems to us that using these
same employment records or others, Lilly could have provided the district court
with more information about the amount of compensation that was allegedly
denied the class members, without conceding liability or being unduly burdened.
It is surely possible that while in state court more evidence about potential
damages may come to light, and, as we’ve already discussed, Lilly may seek to
return to federal court. At this stage of the litigation, however, we are compelled
to conclude that the district court did not clearly err in determining that Lilly has
not established, by a preponderance of the evidence, that the amount in controversy
exceeded $5,000,000. We, therefore, affirm.
AFFIRMED.
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