Frederick Skoda v. Lilly USA LLC

488 F. App'x 161
CourtCourt of Appeals for the Eighth Circuit
DecidedAugust 8, 2012
Docket11-3167
StatusUnpublished
Cited by2 cases

This text of 488 F. App'x 161 (Frederick Skoda v. Lilly USA LLC) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Frederick Skoda v. Lilly USA LLC, 488 F. App'x 161 (8th Cir. 2012).

Opinions

PER CURIAM.

Frederick Skoda appeals following the district court’s dismissal of his civil action [162]*162against his former employer, Lilly USA LLC (Lilly). Because we conclude that the district court erred in its determination of the amount in controversy, we vacate the judgment and remand this case to the district court.

Skoda originally filed his complaint in Minnesota state court, alleging that after he and Lilly ended their employment relationship, Lilly failed to pay him commissions that were due. See Minn.Stat. §§ 181.08, subdiv. 2 (certain unlawful acts relating to payment of wages), 181.13(a) (penalty for failure to pay wages promptly), 181.171, subdiv. 3 (court shall order employer to pay attorney’s fees and costs if employer is found to have violated, inter alia, §§ 181.03, 181.13). Skoda claimed Lilly owed him $8,190, based on three unpaid commissions — respectively, $4,500, $950, and $2,740 — along with $43,740 in statutory penalties, for a total of $51,930. He also claimed reasonable attorney’s fees.

Lilly removed the case to federal court based on diversity jurisdiction under 28 U.S.C. § 1332, alleging that it was a resident of Indiana and Skoda was a resident of Minnesota and that, considering the statutory attorney’s fees Skoda had demanded, the amount in controversy exceeded $75,000. Lilly also moved to dismiss the complaint based on res judicata.

Skoda moved to remand, arguing that the amount in controversy did not exceed $75,000. At a March 2011 hearing before a magistrate judge, Skoda’s counsel verified that, thus far, his legal fees had totaled only $500. The magistrate judge noted that the Federal Rules of Civil Procedure required preparation for pretrial conferences, discovery, and preparation for and attendance at trial. The magistrate judge further observed that, based on Sko-da’s calculation of the statutory penalties, and assuming a billing rate of $150 per hour, Skoda would incur $24,000 in attorney’s fees after only 160 hours of work by his attorney. The magistrate judge found that Lilly had thus demonstrated that the amount-in-controversy requirement was met, and recommended denying Skoda’s motion to remand and dismissing the case based on res judicata. The district court adopted the magistrate judge’s report, denied Skoda’s motion to remand, and granted Lilly’s motion to dismiss. On appeal, Skoda challenges the district court’s denial of his motion to remand, as well as its grant of Lilly’s motion to dismiss.

We review de novo a district court’s denial of a motion to remand, see In re Prempro Prods. Liab. Litig., 591 F.3d 613, 619 (8th Cir.2010), and for clear error its findings of jurisdictional facts, see Trimble v. Asarco, Inc., 232 F.3d 946, 964-65 (8th Cir.2000), abrogated on other grounds by Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 549-52, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005). A defendant may remove an action to federal court if the action could have been filed there originally. See 28 U.S.C. § 1441(a) (removal of civil actions). Federal district courts have original jurisdiction over all civil actions where the parties have complete diversity of citizenship and the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332(a). The removing defendant bears the burden of establishing federal jurisdiction by a preponderance of the evidence, and a case should be remanded to state court upon a plaintiffs motion if it appears that the district court lacks subject matter jurisdiction. See In re Prempro Prods., 591 F.3d at 620. The jurisdictional inquiry focuses on the claims at the time of removal, see James Neff Kramper Family Farm P’ship v. IBP, Inc., 393 F.3d 828, 834 (8th Cir.2005), and the question is not whether damages are greater than the requisite amount, but whether a fact finder might legally conclude they are, see Kopp v. [163]*163Kopp, 280 F.3d 883, 885 (8th Cir.2002). All doubts about federal jurisdiction are resolved in favor of remand. See Dahl v. R.J. Reynolds Tobacco Co., 478 F.3d 965, 968 (8th Cir.2007).

Upon initial review of the record, we ordered the parties to submit supplemental briefing addressing whether, for purposes of determining the jurisdictional amount-in-controversy requirement, Skoda could obtain the $43,740 in statutory penalties he sought in his original complaint. For the reasons discussed below, we now conclude that, under the plain meaning of the statutes, a fact finder could not legally award Skoda $43,740 in statutory penalties. See Kopp, 280 F.3d at 884-85 (amount that plaintiff claims is not “in controversy” if no fact finder could legally award it).

Under section 181.13(a), when an employer discharges an employee, “the wages or commissions actually earned and unpaid at the time of the discharge are immediately due and payable upon demand of the employee.” If the employer fails to pay the employee’s earned commissions within 24 hours of the employee’s demand, the employee may collect a penalty for each additional day the commissions remain unpaid, for up to 15 days. Id. The penalty is set at the average of the employee’s daily earnings, which Skoda alleged was $395. Id. Under section 181.03, after the termination of employment an employer may not alter the method, timing, or procedures for payment of commissions earned through the last day of employment “if the result is to delay or reduce the amount of payment.” Minn.Stat. § 181.03, subdiv. 2. An employer who “violates this section is liable in a civil action brought by the employee for twice the amount in dispute.” Minn.Stat. § 181.03, subdiv. 3.

Skoda calculated his damages by first calculating a section 181.13(a) penalty of $5,925 ($395 x 15 days). He then added this penalty to each of the three commissions he was owed, for a total of $25,965, and then doubled this amount, pursuant to section 181.03, subdiv. 3, for a total award of $51,930.

We conclude, however, that Skoda overstates the amount that he could recover. Taking section 181.13(a) first, the better reading of the statute is that Skoda may recover the statutory penalty only once, not three times. The penalty is awarded for each day that the employer is “in default, until full payment or other settlement ... is made.” The employer is “in default” if “the employee’s earned wages and commissions are not paid within 24 hours after demand.” When explaining what amount is due and payable, and in defining when an employer is in default, the statute refers to the employer’s failure to pay “commissions,” in the plural.

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Bluebook (online)
488 F. App'x 161, Counsel Stack Legal Research, https://law.counselstack.com/opinion/frederick-skoda-v-lilly-usa-llc-ca8-2012.