This morning, a unanimous Supreme Court issued two procedural opinions of interest to employees and employers. In the first, the unanimous court held that the default “preponderance of the evidence” standard (rather than “clear and convincing evidence") applied to FLSA actions (as they do in Title VII and other federal employment statutes) and the employer’s burden of proving whether an employee is exempt. E.M.D. Sales, Inc. v. Carrera, No. 23-217 (1/15/25). In the second, the unanimous Court held that a plaintiff could amend their complaints to remove any possible federal question jurisdiction and the case must then be remanded back to state court. Royal Canin USA, Inc. v. Wullschleger, No. 23-677 (1/15/25).
In Carrera, the plaintiff sales representatives for a food distributor argued that they were non-exempt and entitled to overtime compensation when they visited grocery stores and took orders, etc. The district court held that employer failed to provide clear and convincing evidence that they were exempt outside sales reps and ruled in favor of the plaintiff employees. “The court found that the employees primarily executed the terms of sales already made rather than making new sales themselves.”
Preponderance simply means more likely than not. The Court held that preponderance of the evidence is the default standard in civil cases, was the default standards at the time the FLSA was enacted, and would apply to the employer’s burden of proof. The preponderance standard is also the same standard used in other employment statutes, like Title VII. Only one appellate circuit court applied the clear and convincing standard. The clear and convincing standard is only used when specified in the statute, when the Constitution is at stake (like in a First Amendment case or severing of parental rights), and when the government is taking unusually coercive action (like taking away citizenship). Nothing in the FLSA indicates that a different burden of proof would apply. The Court took no position on the merits of the claim or defense.
We hold that the
preponderance-of-the-evidence standard applies when an employer seeks to show
that an employee is exempt from the minimum-wage and overtime pay provisions of
the Fair Labor Standards Act.
In Wullschleger, the plaintiff had filed a complaint
in state court alleging deceptive sales practices. The defendant removed the case to federal
court based on the asserted federal law claim (i.e., federal question court
jurisdiction). The plaintiff then moved
to amend her complaint to eliminate the federal law claim and for the court
to remand the case back to state court since it no longer had federal question
jurisdiction. The court declined to remand and
continued to exercise supplemental jurisdiction over her remaining state law claims. The Court of Appeals reversed and the Supreme
Court affirmed.
This case presents a further
question: What happens if, after removal, the plaintiff amends her complaint to
delete all the federal-law claims, leaving nothing but state-law claims behind?
May the federal court still adjudicate the now purely state-law suit? We hold
that it may not. When an amendment excises the federal-law claims that enabled
removal, the federal court loses its supplemental jurisdiction over the related
state-law claims. The case must therefore return to state court.
NOTICE: This summary is designed merely to inform and alert
you of recent legal developments. It does not constitute legal advice and does
not apply to any particular situation because different facts could lead to
different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
