Court Opinion

ID: 2765014
Source: CourtListenerOpinion
Date Created: 2014-12-29 20:00:54.695507+00
Date Added: 2024-06-11T11:13:20.358033
License: Public Domain

Case: 14-13048     Date Filed: 12/29/2014   Page: 1 of 17

                                                                            [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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