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Round Up: 3rd, 5th, 6th and Federal Circuits

3rd Circuit: Court Denies Overtime Claim

By a 2-1 decision, the 3rd Circuit ruled Sept. 7 in Parker v. NutriSystem Inc. that the "retail commission exception" in the Fair Labor Standards Act (FSLA) applies to the company's pay system and, therefore, the sales workers are not entitled to overtime pay.

NutriSystem call center workers are paid a "flat rate" for every order they take and argued that their pay should be considered "piecework," comparing it to factory work. The court disagreed, and ruled that their pay resembles that of commission-based employees because it is both proportional to the cost of the product and dependent on the whims of customers. Furthermore, the 3rd Circuit declined to require that commission be interpreted strictly as a percentage of the amount paid by the customer.

5th Circuit: Heightened FMLA Reporting Rules Rejected

An impaired employee may not have to comply directly with an employer's heightened Family and Medical Leave Act (FMLA) reporting requirements, the 5th Circuit ruled Aug. 2 in Saenz v. Harlingen Medical Center, LP.

In 2006, Shauna Saenz, an employee of Harlingen Medical Center (HMC), applied for and received FMLA leave nine times due to a seizure condition, each time complying with HMC's heightened requirement that employees applying for FMLA leave report the reason for absences within two days. However, when Saenz was absent due to another condition on Dec. 29-31, 2006, and Jan. 3-4, 2007, her mother called HMC on her behalf. Saenz was hospitalized and an HMC supervisor visited her.

Saenz was diagnosed with bipolar disorder and depression and, on Jan. 9, 2007, called Hartford, HMC's insurer, to request intermittent leave. HMC terminated her for non-FMLA approved absences.

On Aug.2, the 5th Circuit reversed summary judgment in favor of HMC, explaining that between the calls from Saenz' mother and the supervisor's visit, HMC was aware that Saenz suffered from a condition to which FMLA might apply.

6th Circuit: Well-Meaning Acts Can Violate PDA

Actions taken out of concern for a pregnant employee can violate the Pregnancy Discrimination Act (PDA) and Americans with Disabilities Act (ADA), the 6th Circuit ruled in August.

Heather Spees became pregnant in 2007, soon after beginning work as a welder for James Marine Inc. (JMI). She informed her brother, Christopher Gunder, who worked as a foreman at JMI, and her direct supervisor, Tony Milam, of the pregnancy. Spees had miscarried in 2005 and Gunder and Milam decided to move her to light duty in the tool room. Milam had Spees obtain a doctor's note limiting her to light duty, despite earlier medical advice that she work without restriction. A month after transferring to light duty at the same pay and benefits, Spees was put on total bed-rest and, having earned no medical leave or FMLA, was fired.

In Spees v. James Marine, Inc., the district court granted summary judgment for JMI on all claims, but the 6th Circuit reversed the decision regarding Spees' transfer. It remanded her case for further proceedings on claims related to her transfer, finding that the pregnancy was a "motivating factor" for the job reassignment.

Federal Circuit Company Liable For Predecessors' $8 Million Suit

In a Sept. 1 ruling in Funai Electric Co. Ltd. v. Daewoo Electronics Corp., the Federal Circuit ruled that the defendant was liable for an $8 million default judgment in a patent infringement case against its two predecessor companies.

The predecessor companies are Daewoo Electronics Co. Ltd. and Daewoo Electronics Corp. which, in 2002, entered into an "Agreement for Sale and Purchase of Assets" governed by South Korean law. As part of the same deal, California-based Daewoo Electronics Co. of America transferred its entire business to Daewoo Electronics America Inc. In 2004, Japan-based Funai sued all four Daewoo entities in Federal District Court for the Northern District of California. When the district court entered a default judgment in 2005, Funai sought to collect from the successors.

Though the district court applied South Korean law concerning successor liability to the case and found the successors not liable, the Federal Circuit rejected this decision, citing the 2010 Supreme Court case Hertz Corp v. Friend, which calls for application of the laws of a company's "principal place of business" in transactions. The court applied the successor liability law of New Jersey, where Daewoo Electronics America is headquartered.

Correction: The 4th Circuit remanded Georgia Pacific Consumer Products v Von Drehle Corp. for further proceedings, reversing summary judgment for the defendant. InsideCounsel reported incorrectly in the October issue that Von Drehle had been ordered to stop making the paper towel product at issue in the litigation.

Contributing Author

Kayleigh Roberts

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