John Orton v. Johnny's Lunch Franchise, LLC
668 F.3d 843
| 6th Cir. | 2012Background
- Orton began work Sept 2007 for Johnny’s Lunch Franchise as Vice President of Real Estate and Site Selection, with a $125,000 salary.
- From Sept 2007 to Aug 2008, Orton was paid per plan, but JLF allegedly had payroll problems in 2008.
- In Aug 2008, Orton was not paid despite continuing work; on Dec 1, 2008, he and senior staff were laid off.
- Orton sued in Apr 2010 for unpaid wages from Aug–Dec 2008 against JLF and Calamunei under FLSA and state laws.
- District court dismissed the FLSA claim as Orton was deemed an exempt salaried employee and dismissed state-law claims for lack of jurisdiction; on appeal, the court reversed on the FLSA claim and remanded for proceedings.
- Concurrence noted uncertainty about facts and did not decide exemption-based outcomes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Orton plausibly states a back-wages claim under FLSA. | Orton asserts the salary was not properly paid under the salary-basis rule. | Defendants argued Orton was exempt salaried and thus not entitled to overtime/back wages. | Complaint plausibly states an FLSA claim; district court erred in dismissal. |
| How the 2004 salary-basis regulation affects exemption analysis. | In light of §541.602(a), Orton may not be exempt if deductions were not properly made. | Employers may rely on exemption if the salary-basis tests are satisfied and deductions fall within exceptions. | Burden on employers to show Orton received predetermined salary not subject to improper deductions; remand for factual development. |
| Who bears the burden and whether the exemption is an affirmative defense. | District court erred by not recognizing exemption as an affirmative defense and shifting burden. | Exemption is an affirmative defense to be proven by employer. | District court erred; exemption burden applies and should be determined on remand. |
| Whether the district court properly retained jurisdiction over state-law claims after dismissing FLSA claim. | Supplemental jurisdiction under 28 U.S.C. § 1367 should allow state-law claims to proceed. | Discretionary dismissal of state-law claims following FLSA dismissal. | Court reversed; district court retains discretion to exercise supplemental jurisdiction. |
Key Cases Cited
- Baden-Winterwood v. Life Time Fitness, Inc., 566 F.3d 618 (6th Cir. 2009) (regulations focus on pay received under salary-basis test; clarifies deductions impact on exemption)
- Hensley Mfg., Inc. v. ProPride, Inc., 579 F.3d 603 (6th Cir. 2009) (de novo review of Rule 12(b)(6) dismissal; plausible claim standard)
- Nicholson v. World Bus. Network, Inc., 105 F.3d 1361 (11th Cir. 1997) (older view on salary exemptions; informs shifts in regulatory approach)
- Donovan v. Agnew, 712 F.2d 1509 (1st Cir. 1983) (salaried status and contract-based pay discussions relevant to exemptions)
- Auer v. Robbins, 519 U.S. 452 (Supreme Court 1997) (regulatory interpretation guidance on exemptions)
- Takacs v. Hahn Auto. Corp., 246 F.3d 776 (6th Cir. 2001) (suspensions without pay can affect exempt status)
- Avery v. City of Talladega, 24 F.3d 1337 (11th Cir. 1994) (three-day suspension without pay for improper reasons discussed)
- Carlsbad Tech, Inc. v. HIF Bio., Inc., 556 U.S. 635 (Supreme Court 2009) (reaffirms discretionary nature of supplemental jurisdiction)