Thursday, June 04, 2015

Did the Eleventh Circuit Just Make It Harder to Attain Summary Judgment in Diversity Cases?

Last week, the Eleventh Circuit handed a major victory to Florida FedEx drivers who brought claims for back pay against FedEx. The claims of these and of other FedEx drivers around the country were consolidated as an MDL, and the MDL court certified a Florida-driver class. But the court then granted FedEx’s motion for summary judgment, concluding that the drivers were independent contractors and not -- as the Florida drivers alleged -- employees. After a few of the Florida drivers lost their individual claims, the Florida drivers appealed from the grant of summary judgment, and the Eleventh Circuit reversed, concluding that the question whether the drivers were employees or independent contractors under Florida law was for the jury to decide.

Judge Jordan’s comprehensive opinion for the court in Carlson will surely serve as the go-to source for employee–independent contractor questions under Florida law. But -- even outside the employment context -- it may also serve as a principal source for how close summary-judgment questions are resolved in cases by district courts sitting in diversity. Not only did the court apply Florida substantive law on determining when somebody’s an employee, but the court also appeared to defer quite heavily to how Florida courts would make that determination on summary judgment -- an apparently procedural inquiry.

Here’s the first full paragraph on page 7 of the opinion:
The claims of the Florida drivers stand or fall on the common question of whether FedEx properly classified them as independent contractors. In Florida, “[i]t is well-established that the question of an employer/employee relationship is generally a question of fact, and therefore a question for the trier of fact.” Pate v. Gilmore, 647 So. 2d 235, 236 (Fla. 1st DCA 1994). Accord Villazon v. Prudential Health Care Plan, Inc., 843 So. 2d 842, 853 (Fla. 2003) (“The existence of an agency relationship is normally one for the trier of fact to decide.”). Nevertheless, the general default rule does not always apply, and Florida courts have not hesitated to grant summary judgment on the employee/independent contractor question when the circumstances warrant. See, e.g., Miami Herald Pub. Co. v. Kendall, 88 So. 2d 276, 279 (Fla. 1956).
The court then reviewed Florida case law, the facts before it, and concluded that although the material facts were “largely undisputed,” the “inferences that can be drawn from those facts are not.” Summary judgment, the court held, was inappropriate.

The court -- relying squarely on established circuit precedent that all inferences are drawn in the non-movant’s favor -- could’ve stopped the opinion there and reversed. But it went on:
After all, employee/independent contractor cases are necessarily fact-intensive, and the general rule in Florida is that whether a worker is an employee is usually a question of fact. Factually speaking, Del Pilar [where an appellate court reversed a grant of summary judgment] is the closest Florida opinion we have, and we cannot say that the Florida Supreme Court would have decided that case different…. Although we recognize that Del Pilar is not binding in the Rule 56/summary judgment sense -- because federal law determines whether the evidence suffices to entitle a party to summary judgment -- it is nevertheless highly informative given that it involves the same package delivery industry and that Florida’s summary judgment standard is very similar to that of Rule 56.
Erie and its progeny have opted for vertical uniformity in diversity cases, so that with respect to substantive law a case filed in federal court will be handled in the same way as it would be in the courts of the state where the federal court sits. By ruling consistently with Del Pilar, we ensure that this case is decided in a Florida federal court as it would be in a Florida state court, and thereby discourage forum shopping as between federal and state courts in Florida and prevent the inequitable administration of the law.
Federal courts exercising diversity jurisdiction must “apply state substantive law and federal procedural law.” Hanna v. Plumer, 380 U.S. 460, 465 (1965). And in Carlson the court certainly did that -- it applied Florida substantive law to whether the drivers were employees and it applied federal procedural law to whether summary judgment was properly granted. But the court appeared to apply that federal procedural law with a healthy dose of Florida procedural law, too.

For example, the court accepted -- if not outright adopted -- Florida courts’ characterizations that the employee–independent contractor issue is “generally a question of fact” “for the trier of fact,” and referred to this as a “general default rule” and a “general rule.” Whether it should have done so is unclear. On the one hand, a recent decision of the Ninth Circuit seems to support this approach. See EncompassIns. Co. v. Coast Nat’l Ins. Co., 764 F.3d 981, 984 (9th Cir. 2014) (“Whether an issue is a question of law or a question of fact is a substantive question, to which state law applies. Once we determine whether an issue is a question of law or a question of fact, however, the proper standard of review is a question of federal procedure and is governed by federal law.” (citation omitted) (internal quotation marks omitted)). But a treatise leans in the other direction: “[c]haracterization as fact or law is governed by federal law, because it implicates the relationship between judge and jury.” 19 Charles Alan Wright et al., Federal Practice and Procedure § 4511 (2d ed. Apr. 2015). The Seventh Circuit, too, has stated that “the fixing of the boundary between questions of law and questions of fact[] is a matter of federal procedural law and therefore governed by federal rather than state law in diversity as in other federal suits.” Dilworth v. Dudley, 75 F.3d 307, 309 (7th Cir. 1996). In the light of the Carlson court’s statements, a judge who might otherwise conclude that no genuine dispute exists about whether a plaintiff is an employee might instead leave that question to the jury.

Further, although the panel in Carlson stated it wasn’t bound by a Florida court’s decision in the “Rule 56/summary judgment sense,” it nonetheless found desirable ruling consistently with it (that is, against summary judgment) to discourage forum shopping. But other authorities suggest -- at least in broad language -- that similar cases might indeed be decided differently on summary judgment depending on the forum in which the case was brought. See McEwen v. Delta Air Lines, Inc., 919 F.2d 58, 60 (7th Cir. 1990) (“Erie does not require a federal court to employ the state’s rules on the allocation of issues between judge and jury.... Federal courts may grant summary judgment under Rule 56 on concluding that no reasonable jury could return a verdict for the party opposing the motion, even if the state would require the judge to submit an identical case to the jury.”).

Carlson is an important employment-law decision. But it might be an even more important summary-judgment decision, and it could influence -- it arguably requires -- lower courts sitting in diversity in the Eleventh Circuit to consider how state courts would handle motions for summary judgment. Most of the time, to be sure, the result will unquestionably be the same. But given how many issues Florida courts regard as questions of fact for the jury to decide (according to a quick Westlaw search in the Florida state database, courts have characterized as fact issues intent, causation, whether touching is “offensive” so as to make it a tort, the value of property, and the existence of a partnership, to name a few), summary judgment in some diversity cases may now be harder to attain.


Anonymous said...

"closet" or closes Florida............ He needs a proof reader.

Rumpole said...

Pretty much my view of the law.

Anonymous said...

"Did the Eleventh Circuit Just Make It Harder to Attain Summary Judgment in Diversity Cases?"

Nope. Federal courts routinely rely on state-court precedents in assessing whether evidence suffices to avoid summary judgment. This opinion is neither an anomaly, nor a shift in the legal landscape.