Court Opinion

ID: 768391
Source: CourtListenerOpinion
Date Created: 2012-04-18 09:03:25+00
Date Added: 2024-06-11T15:16:15.730788
License: Public Domain

209 F.3d 1008 (7th Cir. 2000)
Sandra L. RICE,    Plaintiff-Appellee,v.SUNRISE EXPRESS, INCORPORATED,   GAINEY CORPORATION and SUNRISE U.S.A.,  INCORPORATED,    Defendants-Appellants.
Nos. 97-3982 & 98-2195
In the  United States Court of Appeals  For the Seventh Circuit
Argued May 17, 1999Decided April 7, 2000

Appeals from the United States District Court  for the Northern District of Indiana.  No. 96 C 447--William C. Lee, Chief Judge.  Roger B. Cosbey, Magistrate Judge. [Copyrighted Material Omitted]
Before EASTERBROOK, RIPPLE and EVANS, Circuit Judges.
RIPPLE, Circuit Judge.

1
Sandra Rice brought an  action against Sunrise Express, Inc. ("Sunrise  Express") for violating the Family Medical Leave  Act ("FMLA" or "the Act") after Sunrise Express  terminated her upon her return from a medical  leave. Sunrise Express argued that Ms. Rice would  have been terminated even if she had not taken  leave, and, thus, the company had not violated  the Act. The jury returned a verdict for Ms.  Rice.

2
On appeal, Sunrise Express first asserts that  the district court erroneously placed the burden  of proof on Sunrise Express to prove that it had  a legitimate business reason for her termination.  Sunrise Express' second argument is that  insufficient evidence exists to find a violation  of the FMLA. For the reasons set forth in more  detail in the following opinion, we hold that the  district court improperly placed the burden of  proof on Sunrise Express. Therefore, we reverse  the judgment of the district court and remand the  case to the district court for proceedings  consistent with this opinion.

3
* BACKGROUND

A.  Facts

4
In 1994, Sunrise Express, a trucking company,  hired Sandra Rice as a payroll billing clerk.  When Sunrise Express hired Ms. Rice, it already  employed two other payroll billing clerks. Both  of these other employees left the company by  early 1995. Thereafter, Sunrise Express hired  Christy Huntington to replace the departing  employees.

5
In 1995, the owners of Sunrise Express sold the  company to Gainey Corporation ("Gainey"), and  later, in 1997, Sunrise Express was merged into  Sunrise U.S.A., Inc. ("Sunrise USA"). Due to the  sale of Sunrise Express, the company reorganized  its office, computerized its payables and  receivables, and upgraded its computer system.  Sunrise Express asserts that this upgrade,  completed by November 1995, drastically increased  the speed of data entry, the main responsibility  of payroll billing clerks. Consequently, the  workload of these individuals also was reduced  drastically. The company further claims that it  restructured the duties of several employees so  that the manager of the payroll billing clerks  assumed some of their tangential duties.  Meanwhile, the company began to experience a  decrease in its freight business. Sunrise Express  argues that all of these factors led to its  decision to terminate one of its payroll billing  clerks.

6
Ms. Rice began working for Sunrise Express in  January 1994; she had 6 to 12 months experience  in the trucking industry and 8 to 10 years  experience as a payroll/billing clerk. She never  had received a written evaluation of her work,  and she never had been disciplined, reprimanded,  or verbally warned. Employees of Sunrise Express,  including one of its owners, testified that she  performed satisfactorily and that they had no  problems with her work.

7
In mid-January 1996, Ms. Rice injured a toe on  her right foot and experienced both swelling and  infection. Her physician admitted her to the  hospital and placed her on antibiotics. She  remained in the hospital for one week and then  returned home for a second week. Her physician  then authorized her to work half-days, which she  did for one more week. At the end of the week,  however, the physician informed her that her toe  had to be amputated. Ms. Rice underwent surgery  on February 14 and remained on leave from work  for 4 more weeks before her doctor released her  to return to work beginning on March 11.

8
On March 5, Ms. Rice informed Sunrise Express  that she would be returning to work on March 11;  however, on March 7 she was informed that she was  being laid-off beginning March 11. According to  Sunrise Express, her lay-off stemmed from the  decrease in freight and the ability of other  employees to complete the work without her.  Sunrise Express claimed that Ms. Rice was chosen  for the lay-off over Ms. Huntington because the  latter had a better work ethic and because Ms.  Rice wasted time taking smoke breaks, playing  computer games, and talking on the telephone.

9
Ms. Rice claims, however, that Betty Keiser, the  owner of Sunrise Express, told her that the  reason for her lay-off was because she was  "already off." Tr.V at 60. The plaintiff also  states that others in Sunrise Express management  told her that the decision to terminate her was  made months before her medical leave. Sunrise  Express offered the personal circumstances of Ms.  Rice as its reason for not terminating her before  her FMLA leave. Sunrise Express states that it  chose January 1 as the target date for Ms. Rice's  lay-off because the company did not wish to  dismiss an employee during the holiday season.  Around the target date, Ms. Rice's family  experienced the death of a member and also  suffered other health and financial problems.  Therefore, Sunrise Express claims, it decided to  delay her lay-off a "short time" and within that  "short time" she went on FMLA leave.

10
Ms. Rice sued Sunrise Express for violating 29  U.S.C. sec. 2614(a)(1) for failing to reinstate  her to her previous position at the end of a  qualified medical leave.1 She thereafter  amended her complaint to add Sunrise USA and  Gainey as defendants. The district court denied  the defendants' joint motion for summary judgment  and Ms. Rice's cross-motion for partial summary  judgment.

B.  Procedural History

11
On September 17, 1997, the district court  conducted a final pre-trial conference. At that  meeting, the court raised the issue of whether  Gainey was liable as a successor corporation or  as a joint employee of Sunrise Express. Defense  counsel told the court that, as a practical  matter, the issue of Gainey's liability was not  material to the outcome of the case or to the  viability of any judgment that Ms. Rice might  obtain. The parties explained that they had  stipulated that Sunrise USA was the successor  corporation of Sunrise Express following their  merger and, therefore, would be liable for any  judgment rendered against Sunrise Express.  Satisfied that Sunrise USA had ample resources to  pay any judgment that might be rendered in favor  of Ms. Rice, the district court suggested that  the parties enter into a stipulation to that  effect and "simply hold in abeyance any  determination of successor liability by Gainey  Corporation until such time as it may become  material." Tr.I at 5. Both counsel agreed that  this course of action was acceptable, and the  court stated that they could "get the issue out  of the case for the time being, and perhaps not  have to deal with it at all." Tr.I at 6.2 No  formal order was entered severing the successor  liability claim against Gainey or dismissing  Gainey without prejudice. The case proceeded to  trial only against Sunrise Express and its  successor, Sunrise USA. Indeed, the Agreed  Statement of the Case identified the defendants  at trial as Sunrise Express, Inc. and Sunrise  USA, Inc. There was no mention of Gainey.

12
Several weeks later, the district court raised  the possibility of referring this case to a  magistrate judge for trial because the district  judge's own calendar was running somewhat behind.  Counsel for the defense later filed a written  consent on behalf of Sunrise Express, Inc.3 No  consent was sought from Gainey, even though the  same counsel represented both Sunrise USA and  Gainey.

13
The magistrate judge proceeded to conduct a two-  day trial on October 22 & 23, 1997. Counsel  appeared at trial on behalf of Sunrise Express  and Sunrise USA. Throughout the course of trial,  no indication was given that Gainey was missing  from the trial.

14
At the conclusion of the two-day trial, the jury  rendered a verdict in favor of Ms. Rice. The  magistrate judge then entered an order and  judgment in her favor and against Sunrise USA.  The judgment order specifically indicated that  the judgment was against Sunrise USA alone  because the parties had stipulated that Sunrise  USA was the "proper named defendant in this  case." R.86 at 9.4 At no time did counsel for  Sunrise USA object that the record lacked  Gainey's consent to trial before the magistrate  judge.

15
Sunrise USA appealed the judgment of the  district court to this court. On December 16,  1997, we entered an order sua sponte requiring  Sunrise USA, Sunrise Express, and Gainey to file  a jurisdictional memorandum. In reply to that  order, these corporations raised for the first  time the argument that Gainey had not consented  to trial by a magistrate judge and that such  consent was necessary for jurisdiction.

16
On January 30, 1998, Ms. Rice filed, in the  district court, a motion for correction of record  and entry of an order nunc pro tunc. The district  court granted Ms. Rice's motion and directed the  clerk of the district court to enter a notation  in the record to show that the court had, on  September 17, 1997, accepted the stipulation of  the parties that Gainey was to be severed from  the case.5 In issuing the order, the district  court pointedly noted that it was taking the  action in order to show what had been done  previously, not to alter substantive rights:

17
As the transcript of the September 17, 1997  final pre-trial conference shows, this court  determined that Sunrise USA was financially able  to satisfy any judgment against it, and then  obtained both counsel's agreement that  determination of Gainey's liability would not be  an issue at trial. Therefore Gainey was severed  from the trial. Under Rule 21 of the Federal  Rules of Civil Procedure, severance creates two  separate actions where previously there was but  one.

18
R.122 at 6.

II
DISCUSSION
A.  Jurisdiction

19
The first issue that we must confront is the  jurisdiction of this court and, by implication,  the jurisdiction of the district court. Because  federal courts are courts of limited  jurisdiction, we must approach any question  concerning the limits of our authority with great  care and circumspection. At the same time, we  must avoid hypertechnical characterizations of  procedural matters that serve none of the  policies that animate the jurisdictional statutes  but instead produce judicial diseconomy and  increase litigant expenses.6

20
The situation before us arises from the failure  of the district court to account explicitly for  the defendant Gainey. As the case originally came  to this court, it appeared that Gainey had not  consented to trial before a magistrate judge.  Therefore, it appeared that the allegation with  respect to it was still pending in the district  court. If this situation were the case, there  would be no final judgment in the action to  provide this court with jurisdiction under 28  U.S.C. sec. 1291. Nor would the magistrate judge  have been authorized to act as the district  court.7 The district court attempted to clarify  this ambiguity by the entry of a nunc pro tunc  order that recites that, at the final pretrial  conference, the district court, acting pursuant  to Rule 21 of the Federal Rules of Civil  Procedure,8 had severed Gainey and that the  case proceeded only with respect to the other  defendants.9

21
A district court may enter a nunc pro tunc order  that clarifies a jurisdictional issue. In Local  1545, United Mine Workers of America v. Inland  Steel Coal Co., 876 F.2d 1288 (7th Cir. 1989),  this court encountered a situation analogous to  the one at hand. On May 10, the district court,  when entering judgment against the defendants,  only listed the name of one of the two  defendants. On June 23, this court issued sua  sponte an order requiring the parties to submit  memorandums on the jurisdictional issue of  whether judgment had been entered as to all the  parties because the second defendant's name was  not on the final judgment. On June 28, the  district court issued a nunc pro tunc order  clarifying its earlier order and stating that the  court had intended to include the second  defendant in the May 10 judgment. In our later  opinion, we discussed whether the original appeal  was premature because it had been filed prior to  the nunc pro tunc and thus prior to final  judgment as to both of the defendants. We  concluded that the appeal was timely because  final judgment as to both the defendants had been  entered on May 10.

22
When a district court has taken all the steps  necessary for an action that affects  jurisdiction, but imprecisely memorializes that  action, the district court may issue a nunc pro  tunc order to explain more precisely what took  place. Given the Supreme Court's express  direction in Banker's Trust Co. v. Mallis, 435 U.S. 381, 386-87 (1978), a decision regarding  jurisdiction cannot turn on a rigid paper trail;  rather, we must evaluate what actually occurred  and determine whether the failure to memorialize  adequately what in fact occurred misled or  prejudiced any party.

23
When a United States District Judge states what  occurred in his or her courtroom on a particular  occasion, that statement is certainly worthy of  our acceptance, unless the record demonstrates  that the judge misapprehended the situation. A  district court's credibility certainly is not  dependent on the existence of a contemporaneous  writing. As Judge Flaum, writing for a panel that  also included Judges Posner and Kanne, has noted:

24
[a] written order is the best evidence of a  judicial act. But in the absence of a statutory  provision requiring the entry of a written order,  the judicial determination alone stands as the  operative act of the court. Courts accomplish  much of their business without formal  memorialization.

25
United States v. Taylor, 841 F.2d 1300, 1308 (7th  Cir.), cert. denied, 487 U.S. 1236 (1988).

26
The record demonstrates that the order entered  by the district court is "nunc pro tunc" not only  in form but in substance. The district court was  well aware that it could not "rewrite history,"  but could only clarify what had taken place in  its earlier proceedings. The district court  acknowledged that it was simply memorializing the  past, not changing the status of the parties.  Moreover, the course of the proceedings at the  pre-trial conference demonstrates that the  district court intended a severance and that the  parties understood the action as a severance.  First, the district court stated that the parties  should "simply hold in abeyance any determination  of successor liability by Gainey Corporation  until such time as it may become material." Both  counsel agreed that this course of action was  acceptable, and the court concluded that they  could "get the issue out of the case for the time  being, and perhaps not have to deal with it at  all." Tr.I at 6. The court presumably knew that,  if the trial was bifurcated pursuant to Rule 42,  then the issue of Gainey's liability would still  need to be determined at some point in order to  obtain a final judgment. On the other hand, if  the court severed the trial under Rule 21, then  final judgment could be rendered as to Sunrise  USA and Sunrise Express independent of Gainey's  liability. Given the court's comment that they  might not need to deal with Gainey's liability at  all, the pre-trial conference demonstrates that  the district court intended to sever Gainey as a  party under Rule 21. The court's nunc pro tunc  order clarified this former action.

27
The parties also understood the court's action  as a severance. The record demonstrates that the  parties did understand that the suit was  proceeding only against Sunrise USA and Sunrise  Express. In addition to the dialogue at the pre-  trial conference, the parties, in their Agreed  Statement of the Case, explained that the case  was brought by Ms. Rice against the defendants  Sunrise Express and Sunrise USA. No mention was  made of Gainey. Also, in the Agreed Proposed Jury  Instructions, the parties again stated that suit  was brought against Sunrise Express and Sunrise  USA and further clarified that Sunrise USA would  be responsible for any verdict in favor of the  plaintiff. No mention was made of Gainey.  Finally, the jury instructions given by the  district court, without objection by the  defendants, explained that Ms. Rice was seeking  compensation from Sunrise Express and Sunrise  USA. No mention was made of Gainey. Taken as a  whole, the record demonstrates that the parties  understood that Gainey had been severed from the  suit.

28
The district court properly severed Gainey under  Rule 21. It is within the district court's broad  discretion whether to sever a claim under Rule  21. See Hebel v. Ebersole, 543 F.2d 14, 17 (7th  Cir. 1976); see also United States v. O'Neil, 709 F.2d 361, 367 (5th Cir. 1983). Before making the  severance, the district court does not need to  determine the merit of the second claim. As long  as there is a discrete and separate claim, the  district court may exercise its discretion and  sever it. Here, the district court effectively  took Gainey, and the separately pled claim for  successor liability against Gainey, out of the  suit. The other parties already had stipulated  that Sunrise USA would be liable in full for any  judgment against Sunrise Express. Because Gainey  did not face primary liability, and, in all  likelihood, no liability at all, its presence was  not necessary, and, in the view of the district  court, its removal significantly simplified the  case. Once that party and claim were taken out of  the case, the district court validly entered  final judgment as to the remaining parties and  claims under Rule 58. We certainly cannot say  that the district court's determination was "so  transparently a confusion of Rule 21 with Rule  42(b), or an attempt to separate an essentially  unitary problem," see Spencer, White & Prentis  Inc v. Pfizer Inc., 498 F.2d 358, 362 (2d Cir.  1974), that the district court abused its  discretion. See also Hebel, 543 F.2d at 17  (stating that a court's discretion in severing  claims under Rule 21 may not be abused to  separate an essentially unitary problem).

29
Because Gainey had been severed from the case,  its consent to the magistrate judge's trying the  remaining counts of the suit was not needed; the  magistrate judge therefore was entitled to enter  final judgment with respect to these counts.  Accordingly, the district court had jurisdiction,  and we have appellate jurisdiction.

B.  Burden of Proof and Jury Instructions

30
The district court instructed the jury that the  defendants had the burden to establish that Ms.  Rice would not have been retained even if she had  not been on FMLA leave.10 For the reasons that  follow, we have concluded that this instruction  is not an accurate reflection of the statutory  mandate. In analyzing this issue, we must focus  on the structure and the language of the statute.  We begin with the structure.

31
In King v. Preferred Technical Group, 166 F.3d 887 (7th Cir. 1999), Judge Kanne explained, in  some detail, the structure of the FMLA. He noted  that the Act "establishes two categories of broad  protections for employees." 166 F.3d at 891.  First, in sec.sec. 2612-2615, the Act contains  prescriptive protections for employees that are  expressed as substantive statutory rights. As the  Judge wrote in King:

32
The Act provides eligible employees of a covered  employer the right to take unpaid leave for a  period of up to twelve work weeks in any twelve-  month period for a serious health condition as  defined by the Act. 29 U.S.C. sec. 2612(a)(1).  After the period of qualified leave expires, the  employee is entitled to be reinstated to the  former position or an equivalent one with the  same benefits and terms of the employment that  existed prior to the exercise of the leave. 29  U.S.C. sec. 2614(a). To insure the availability  of these guarantees, the FMLA declares it  "unlawful for any employer to interfere with,  restrain, or deny the exercise of or the attempt  to exercise, any right provided. 29 U.S.C. sec.  2615(a)(1).

33
King, 166 F.3d at 891. When an employee alleges a  deprivation of these substantive guarantees, the  employee must demonstrate by a preponderance of  the evidence only entitlement to the disputed  leave. The issue of the employer's intent is  immaterial. See King, 166 F.3d at 891.

34
In addition to these substantive prescriptive  rights, the FMLA also "affords employees  protection in the event they are discriminated  against for exercising their rights under the  Act." Id. Thus, the Act proscribes action by the  employer to discriminate or to retaliate against  an employee for the exercise of rights created by  the Act. See id.; see also 29 U.S.C. sec.  2615(a)(2) & (b). These proscriptive provisions  thus create a cause of action analogous to the  actions for discrimination and for retaliation  that are found in Title VII and the other  discrimination statutes. As Judge Kanne explained  in King:

35
In contrast to what an employee must show to  establish a deprivation of a substantive  guarantee under the Act, when an employee raises  the issue of whether the employer discriminated  against an employee by taking adverse action  against the employee for having exercised an FMLA  right, the question of intent is relevant. The  issue becomes whether the employer's actions were  motivated by an impermissible retaliatory or  discriminatory animus.

36
King, 166 F.3d at 891.

37
Ms. Rice claims that her employer, Sunrise  Express, interfered with her rights under the  FMLA. In order to make such a claim, however, she  must, as an initial matter, demonstrate that she  possessed a right under the Act. We therefore  must turn to the prescriptive section that  creates the right to reinstatement and focus on  the wording of that section. Section 2614(a)(1)  states:

38
Except as provided in subsection (b) of this  section, any eligible employee who takes leave  under section 2612 of this title for the intended  purpose of the leave shall be entitled, on return  from such leave--

39
(A)  to be restored by the employer to the  position of employment held by the employee when  the leave commenced; or

40
(B)  to be restored by the employer to an  equivalent position with equivalent employment  benefits, pay, and other terms and conditions of  employment.

41
29 U.S.C. sec. 2614(a)(1). The same section later  sets more precise contours on that right by  placing limitations on that right. Section  2614(a)(3) explains:

42
Nothing in this section shall be construed to  entitle any restored employee to--

43
(A)  the accrual of any seniority or employment  benefits during any period of leave; or

44
(B)  any right, benefit, or position of  employment other than any right, benefit, or  position to which the employee would have been  entitled had the employee not taken the leave.

45
29 U.S.C. sec. 2614(a)(3). In short, the employee  is entitled to be reinstated to the same position  held before the leave or to an equivalent  position.

46
In King, and again in Diaz v. Fort Wayne Foundry  Corp., 131 F.3d 711 (7th Cir.1997), this court  stated succinctly the burden of the plaintiff in  establishing a cause of action under the  prescriptive sections of the Act, including sec.  2614(a)(1) of the FMLA. The plaintiff must  establish, by a preponderance of the evidence,  that he is entitled to the benefit that he  claims. See Diaz, 131 F.3d at 713. As we have  just pointed out, sec. 2614(a)(3) makes clear  that the substantive right created by sec.  2614(a)(1) does not include an entitlement to any  right, benefit, or condition to which the  employee would not have been entitled if the  leave had not been taken. We think that this  latter provision, given its structural and  semantical relationship to sec. 2614(a)(1), is  best read as a rule of construction that affects  the meaning of sec. 2614(a)(1) by excluding from  the substantive right "any right, benefit, or  position of employment other than any right,  benefit, or position to which the employee would  have been entitled had the employee not taken  leave." 29 U.S.C. sec. 2614(a)(3). When sec.  2614(a)(3) is read in this manner, the employee  always bears the ultimate burden of establishing  the right to the benefit. If the employer wishes  to claim that the benefit would not have been  available even if the employee had not taken  leave, the employer must submit evidence to  support that assertion. When that burden of going  forward has been met, however, the employee must  ultimately convince the trier of fact, by a  preponderance of the evidence, that, despite the  alternate characterization offered by the  employer, the benefit is one that falls within  the ambit of sec. 2614(a)(1); the benefit is one  that the employee would have received if leave  had not been taken. For instance, if the employer  claims that the employee would have been  discharged or that the employee's position would  have been eliminated even if the employee had not  taken the leave, the employee, in order to  establish the entitlement protected by sec.  2614(a)(1), must, in the course of establishing  the right, convince the trier of fact that the  contrary evidence submitted by the employer is  insufficient and that the employee would not have  been discharged or his position would not have  been eliminated if he had not taken FMLA leave.

47
In its regulations implementing the Act, see 29  U.S.C. sec. 2654, the Department of Labor ("DOL")  has stated:

48
An employer must be able to show that an employee  would not otherwise have been employed at the  time reinstatement is requested in order to deny  restoration to employment. . . . An employer  would have the burden of proving that an employee  would have been laid off during the FMLA leave  period and, therefore, would not be entitled to  restoration.

49
29 C.F.R. sec. 825.216(a)(1). Read as a whole and  in the context of the entire regulatory scheme,  we think that this regulation is best understood  not as the agency's understanding as to Congress'  allocation of the ultimate burden of proof in the  litigation context, but as an explanation of the  nature of the substantive right created by the  statute. Similarly, the decision of our  colleagues in the Eleventh Circuit in O'Connor v.  PCA Family Health Plan, Inc., 200 F.3d 1349 (11th  Cir. 2000), does not state in any definitive  fashion that the statutory text was intended to  alter the normal allocation of burdens of proof  at trial, but simply states that "when an  'eligible employee' who was on FMLA leave alleges  her employer denied her FMLA right to  reinstatement, the employer has an opportunity to  demonstrate it would have discharged the employee  even if she had not been on FMLA leave."  O'Connor, 200 F.3d at 1354.

50
In this case, in which the evidence was fairly  close, we cannot say that the district court's  instruction misallocating the burden of proof did  not make a difference in the final outcome of the  case. Accordingly, we must remand the case to the  district court for a new trial.

Conclusion

51
For the foregoing reasons, the jury verdict is  reversed, and the case is remanded for further  proceedings consistent with this opinion.

REVERSED and REMANDED

Notes:

1
 29 U.S.C. sec. 2614(a)(1) states:
Except as provided in subsection (b) of this  section, any eligible employee who takes leave  under section 2612 of this title for the intended  purpose of the leave shall be entitled, on return  from such leave--
(A)  to be restored by the employer to the  position of employment held by the employee when  the leave commenced . . . .

2
 The dialogue states in full:
THE COURT:  Well, one thing we might do, then,  why don't we have a stipulation to that effect  [Sunrise USA has ample resources to pay] and  simply hold in abeyance any determination of a  successor liability by Gainey Corporation until  such time as it may become material.
MS. BROGAN: [Ms. Rice's attorney]: Post  judgment.
MR. KEEN:  So a stipulation that Sunrise U.S.A.  would--
THE COURT:  Is the successor to Sunrise Express  Inc. and would be liable for any judgment entered  against Sunrise Express, Inc. and as far as you  know, until you see the verdict, has the  resources to pay it.
MR. KEEN:  Okay.
THE COURT:  That way we can simply--
MS. BROGAN:  That's acceptable to us.
THE COURT:  --get the issue out of the case for  the time being, and perhaps not have to deal with  it at all.
Tr.I at 5-6.

3
 The district court construed this document as a  consent by Sunrise USA because Sunrise Express no  longer existed as a separate entity at the time  of the consent.

4
 See also R.87 and R.88 which enter judgment and  amended judgment "in favor of the Plaintiff  Sandra L. Rice and against the Defendant Sunrise  U.S.A., Inc."

5
 In the course of explaining what had occurred  during the district court proceedings, the  district court employed infelicitously the term  "severed from the case for the purposes of  trial." Read alone, this phrase might suggest  that the court intended to retain the successor  liability count against Gainey in the case but to  hold it for trial at another time. Such a reading  would be counter to the clear meaning of the  document read as a whole. The court squarely said  that it was severing the count against Gainey  under Rule 21 and that such a severance "creates  two separate actions where previously there was  but one." R.122 at 6.

6
 In Bankers Trust Co. v. Mallis, 435 U.S. 381  (1978), the Court declared that a common sense  interpretation of Rule 58, Fed. R. Civ. P., could  be used because nonadherence to the  technicalities did not mislead or prejudice the  parties. Also, the Court stated that it would not  avoid the merits of the action because of mere  technicalities. See id. at 386-87; see also Eisen  v. Carlisle & Jacquelin, 417 U.S. 156, 170-71  (1974) (stating that 28 U.S.C. sec. 1291 requires  a practical rather than technical construction of  finality); cf. Foman v. Davis, 371 U.S. 178, 181  (1962) (applying common sense interpretation to  prior Rule 73 which dealt with notice of appeal  when defect occurred in second notice of appeal  and the defect did not mislead or prejudice the  parties).

7
 This circuit has taken a strict view of the  prerequisites for trial before a magistrate judge  because the parties are giving up their  constitutional right to trial before an Article  III judge with life tenure and salary protection.  See Williams v. General Elec. Capital Auto Lease,  Inc., 159 F.3d 266, 268 (7th Cir. 1998), cert.  denied, 119 S. Ct. 2392 (1999). 28 U.S.C. sec.  636, which authorizes suit before a magistrate  judge, requires (1) consent of the parties and  (2) special designation by the district court.  The statute states in pertinent part:
(1)  Upon the consent of the parties, a  full-time United States magistrate or a part-time  United States magistrate who serves as a  full-time judicial officer may conduct any or all  proceedings in a jury or nonjury civil matter and  order the entry of judgment in the case, when  specially designated to exercise such  jurisdiction by the district court or courts he  serves.
28 U.S.C. sec. 636(c). Although the required  consent does not need to be in writing, it must  be explicit and on the record. See Mark I, Inc.  v. Gruber, 38 F.3d 369, 370 (7th Cir. 1994).  Also, the consent must be unanimous. See  Williams, 159 F.3d at 268; Brook, Weiner, Sered,  Kreger & Weinberg v. Coreq, Inc., 53 F.3d 851,  851-52 (7th Cir. 1995); Mark I, Inc., 38 F.3d at  370.
In applying the above authority, if Gainey was  still a party to the action and did not consent  to trial before the magistrate judge, then the  magistrate judge would not have had jurisdiction  to enter a final judgment. If the magistrate  judge did not have jurisdiction then this court  would not have jurisdiction under sec. 1291  because no final judgment would have been  entered. Because the record does not contain  evidence of Gainey's consent, the question would  remain whether Gainey was still a party in the  litigation.

8
 Rule 21 reads as follows:
Misjoinder of parties is not ground for  dismissal of an action. Parties may be dropped or  added by order of the court on motion of any  party or of its own initiative at any stage of  the action and on such terms as are just. Any  claim against a party may be severed and  proceeded with separately.
Fed. R. Civ. P. 21. If the district court severed  Gainey under Rule 21, then it created two  separate actions, each capable of reaching final  judgment and being appealed. If, however, Gainey  was not severed or the district court merely  bifurcated the parties under Rule 42, Fed. R.  Civ. P., then no final judgment could be entered  until final judgment was reached on all issues  and parties. Rule 42 states:
(b)  Separate Trials. The court, in furtherance  of convenience or to avoid prejudice, or when  separate trials will be conducive to expedition  and economy, may order a separate trial of any  claim, cross-claim, counterclaim, or third-party  claim, or of any separate issue or of any number  of claims, cross-claims, counterclaims,  third-party claims, or issues, always preserving  inviolate the right of trial by jury as declared  by the Seventh Amendment to the Constitution or  as given by a statute of the United States.
Fed. R. Civ. P. 42. The district court did not  explicitly state "I sever Gainey under Rule 21;"  however, this court does not require a formal  order of severance if the evidence shows that the  district court intended to sever the parties and  the parties understood that severance had  occurred. See Hebel v. Ebersole, 543 F.2d 14, 17  (7th Cir. 1976); accord United States v. O'Neil,  709 F.2d 361, 368 (5th Cir. 1983). As explained  below, the district court did intend to sever  Gainey from the actions and the parties were  aware this had occurred.

9
 We believe that the district court was entitled  to take the corrective action that it did take.  If characterized as a correction of the record  under Rule 10(e) of the Federal Rules of  Appellate Procedure, the action could be taken  without leave of this court. Rule 10(e) states:
(1)  If any difference arises about whether the  record truly discloses what occurred in the  district court, the difference must be submitted  to and settled by that court and the record  conformed accordingly.
(2)  If anything material to either party is  omitted from or misstated in the record by error  or accident, the omission or misstatement may be  corrected and a supplemental record may be  certified and forwarded:
(A)  on stipulation of the parties;
(B)  by the district court before or after the  record has been forwarded; or
(C)  by the court of appeals.
(3)  All other questions as to the form and  content of the record must be presented to the  court of appeals.
Fed. R. App. P. 10. If, on the other hand, the  district court's action was taken under Rule  60(a) of the Federal Rules of Civil Procedure,  the permission of this court is a necessary  prerequisite because the case is in the court of  appeals. Rule 60 reads:
(a)  Clerical Mistakes.  Clerical mistakes in  judgments, orders or other parts of the record  and errors therein arising from oversight or  omission may be corrected by the court at any  time of its own initiative or on the motion of  any party and after such notice, if any, as the  court orders. During the pendency of an appeal,  such mistakes may be so corrected before the  appeal is docketed in the appellate court, and  thereafter while the appeal is pending may be so  corrected with leave of the appellate court.
Fed. R. Civ. P. 60. As Local 1545, United Mine  Workers of America v. Inland Steel Coal Co., 876 F.2d 1288 (7th Cir. 1989), makes clear, however,  the sua sponte order of this court inquiring  about jurisdiction is sufficient authority for  the district court to enter an order explaining  the circumstances that cause the jurisdictional  ambiguity. See id. at 1291 n.4.

10
 The relevant jury instruction states, in part,  that "a defendant is entitled to seek to prove,  by a preponderance of the evidence, that the  employee would have been laid off during the  period of her FMLA leave, even if she had not  taken such leave." R.74 at 21.

52
TERRENCE T. EVANS, Circuit Judge, dissenting.

53
I respectfully  disagree with the majority's conclusion that Rice  should have the burden of establishing that she  would have been retained if she had not been on  FMLA leave. While I am not saying this issue can  only be sensibly resolved in one way, it seems to  me that it's better resolved by requiring the  employer to shoulder the burden.

54
When a statute is not clear, we owe deference to  the interpretation by an agency charged with  enforcing it if that interpretation is "based on  a permissible construction of the statute."  Chevron U.S.A. v. Natural Resources Defense  Council, 467 U.S. 837, 843 (1984). Quite  naturally, this principle applies to regulations  of the Department of Labor. See Thorson v. Gemini  Inc., 205 F.3d 370, (8th Cir. 2000) (explicitly  giving Chevron deference to the Department of  Labor in its interpretation of "serious health  condition" under the FMLA); and Price v. City of  Fort Wayne, 117 F.3d 1022 (7th Cir. 1997)  (relying on FMLA regulations to interpret the  phrase "serious health condition" with no  explicit discussion of Chevron principles).  Section 2614(a)(3)(B) gives employers an  exemption but it is silent, and therefore  unclear, as to who bears the burden of proof on  the issue. Thus, the Department of Labor has  promulgated regulations which state that an  "employer would have the burden of proving that  an employee would have been laid off during the  FMLA leave period and, therefore, would not be  entitled to restoration." 29 C.F.R. sec.  825.216(a)(1)(1997). Under this view, sec.  2614(a)(3)(B) creates an affirmative defense.

55
This agency interpretation of sec. 2614(a)(3)(B)  is entirely reasonable. The FMLA provides a  substantive right (a "statutory entitlement"),  Diaz v. Fort Wayne Foundry Corp., 131 F.3d 711  (7th Cir. 1997), and an antidiscrimination  component. Id.; King v. Preferred Technical  Group, 166 F.3d 887 (7th Cir. 1999). The  "statutory entitlement" provisions of the FMLA  should be treated, we said in Diaz, similarly to  those in the National Labor Relations Act, the  Fair Labor Standards Act, and the Employee  Retirement and Income Security Act. Under those  Acts, a burden can be placed on employers to  prove that a provision does not apply to them.  See NLRB v. Transportation Management Corp., 462 U.S. 393 (1983); Corning Glass v. Brennan, 417 U.S. 188 (1974) (the Equal Pay Act); Sutton v.  Engineered Systems, Inc., 598 F.2d 1134 (8th Cir.  1979) (the Fair Labor Standards Act).

56
On a practical level, it makes sense to require  the employer to bear the burden of proof on this  issue. The employer is in control of the  evidence. Of course, one might say that the same  is true in discrimination cases, and there, to  use the McDonnell Douglas model for summary  judgment, the employer only has to produce  evidence that there was a legitimate reason for  the employment action and the employee must show  that the reason given is pretextual. McDonnell  Douglas v. Green, 411 U.S. 792 (1973). But there  are problems with the approach. Even in  discrimination cases, the McDonnell Douglas  framework does not apply at trial. Postal Service  v. Aikens, 460 U.S. 711 (1983). And we have said,  in a way that can hardly be misunderstood, that  we disapprove of a McDonnell Douglas burden-  shifting approach in FMLA cases not involving  discrimination. Diaz. Nevertheless, I think the  majority here has allowed a McDonnell Douglas-  style analysis to cast too dark a shadow over its  view of this case.

57
What must be remembered is that this is a labor  case, not a discrimination case. Congress has  given the employee the substantive right to be  treated as she would have been had she had not  taken leave. She should not have to prove that  the company would have provided her a certain  benefit except for her taking leave. It makes  sense that the company, which must produce  evidence on the issue even under the majority's  analysis, should have to prove she would not have  received the benefit. In short, in rejecting the  Labor Department's reasonable interpretation of  the substantive provisions of the FMLA, the  majority requires an analysis appropriate to  discrimination cases, not to a statute that  confers substantive rights. I would affirm.