Justin Novick v. Shipcom Wireless, Incorpor, 946 F.3d 735

Shipcom Wireless grew rapidly after winning a VA contract and hired Trainers (Novick, Kehn, Bethas) and a Technical Support Engineer (Abraham) as salaried, exempt employees.
In 2015 Shipcom conducted an internal FLSA classification audit, decided going forward to reclassify Trainers as nonexempt, and provided reclassified employees (some still employed) with calculated backpay; Abraham remained classified exempt by the auditors.
Plaintiffs sued for unpaid overtime and liquidated damages under the FLSA; by trial the only disputed issues were (1) whether Plaintiffs fell within the FLSA administrative exemption and (2) whether Shipcom acted in good faith.
Shipcom sought permission to open and close jury arguments and moved to exclude audit materials under Fed. R. Evid. 407, 401–403; the district court denied both motions.
The jury found all four Plaintiffs were nonexempt; an advisory finding (adopted by the court) concluded Shipcom lacked good faith, and the court awarded actual and liquidated damages.
Shipcom appealed only the denial of its motion to open and close and the admission of audit-related evidence; the Fifth Circuit affirmed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Shipcom should have been allowed to open and close argument	Traditional plaintiff-first presentation is appropriate; story coherence favors plaintiff opening and closing	Shipcom bears burden on exemption and thus should open and close	Denial of Shipcom’s motion was not an abuse of discretion; court may order traditional plaintiff-first presentation
Whether internal audit materials were inadmissible as subsequent remedial measures under Rule 407	Audit and reclassification are probative of proper classification and good faith; admissible	Audit is a subsequent remedial measure barred by Rule 407	Rule 407 did not bar audit evidence: the audit was investigatory and did not itself make earlier harm less likely; reclassification required by law also undercuts Rule 407 policy bar
Whether audit materials were irrelevant or unfairly prejudicial under Rules 401–403	Audit exhibits and related testimony are relevant to job duties and auditors’ view of classifications; probative	Audit materials are irrelevant to exemption or unduly prejudicial/confusing	Audit materials satisfied relevance; probative value outweighed any prejudice under Rule 403; admission was not an abuse of discretion; any error was not prejudicial to Shipcom’s substantial rights

Martin v. Chesebrough-Pond's, Inc., 614 F.2d 498 (5th Cir. 1980) (abuse-of-discretion review for trial management decisions)
Samson v. Apollo Res., Inc., 242 F.3d 629 (5th Cir. 2001) (employer bears burden to prove an FLSA exemption)
John Hancock Mut. Life Ins. Co. v. Dutton, 585 F.2d 1289 (5th Cir. 1978) (permitting defendant to open and close where defendant bears burden)
Brazos River Authority v. GE Ionics, Inc., 469 F.3d 416 (5th Cir. 2006) (interpreting Rule 407’s "earlier injury or harm" language and excluding only true subsequent remedial measures)
Rozier v. Ford Motor Co., 573 F.2d 1332 (5th Cir. 1978) (Rule 407 inapplicable where remedial steps were legally compelled)
Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867 (5th Cir. 2013) (deference to district court on Rule 403 balancing)
Int'l Ins. Co. v. RSR Corp., 426 F.3d 281 (5th Cir. 2005) (affirming broad discretion of trial court under Rule 403)
Kelly v. Boeing Petroleum Servs., Inc., 61 F.3d 350 (5th Cir. 1995) (standard for reversible error on evidentiary rulings and substantial-rights analysis)
FDIC v. Mijalis, 15 F.3d 1314 (5th Cir. 1994) (burden on appellant to prove substantial prejudice)