In the
United States Court of Appeals
For the Seventh Circuit

Nos. 97-3982 & 98-2195

SANDRA L. RICE,

Plaintiff-Appellee,

v.

SUNRISE EXPRESS, INCORPORATED,
GAINEY CORPORATION and SUNRISE U.S.A.,
INCORPORATED,

Defendants-Appellants.



Appeals from the United States District Court
for the Northern District of Indiana.
No. 96 C 447--William C. Lee, Chief Judge.
Roger B. Cosbey, Magistrate Judge.


Argued May 17, 1999--Decided April 7, 2000




    Before EASTERBROOK, RIPPLE and EVANS, Circuit Judges.

  RIPPLE, Circuit Judge. Sandra Rice brought an
action against Sunrise Express, Inc. ("Sunrise
Express") for violating the Family Medical Leave
Act ("FMLA" or "the Act") after Sunrise Express
terminated her upon her return from a medical
leave. Sunrise Express argued that Ms. Rice would
have been terminated even if she had not taken
leave, and, thus, the company had not violated
the Act. The jury returned a verdict for Ms.
Rice.

  On appeal, Sunrise Express first asserts that
the district court erroneously placed the burden
of proof on Sunrise Express to prove that it had
a legitimate business reason for her termination.
Sunrise Express’ second argument is that
insufficient evidence exists to find a violation
of the FMLA. For the reasons set forth in more
detail in the following opinion, we hold that the
district court improperly placed the burden of
proof on Sunrise Express. Therefore, we reverse
the judgment of the district court and remand the
case to the district court for proceedings
consistent with this opinion.

I
BACKGROUND

A.   Facts

  In 1994, Sunrise Express, a trucking company,
hired Sandra Rice as a payroll billing clerk.
When Sunrise Express hired Ms. Rice, it already
employed two other payroll billing clerks. Both
of these other employees left the company by
early 1995. Thereafter, Sunrise Express hired
Christy Huntington to replace the departing
employees.

  In 1995, the owners of Sunrise Express sold the
company to Gainey Corporation ("Gainey"), and
later, in 1997, Sunrise Express was merged into
Sunrise U.S.A., Inc. ("Sunrise USA"). Due to the
sale of Sunrise Express, the company reorganized
its office, computerized its payables and
receivables, and upgraded its computer system.
Sunrise Express asserts that this upgrade,
completed by November 1995, drastically increased
the speed of data entry, the main responsibility
of payroll billing clerks. Consequently, the
workload of these individuals also was reduced
drastically. The company further claims that it
restructured the duties of several employees so
that the manager of the payroll billing clerks
assumed some of their tangential duties.
Meanwhile, the company began to experience a
decrease in its freight business. Sunrise Express
argues that all of these factors led to its
decision to terminate one of its payroll billing
clerks.

  Ms. Rice began working for Sunrise Express in
January 1994; she had 6 to 12 months experience
in the trucking industry and 8 to 10 years
experience as a payroll/billing clerk. She never
had received a written evaluation of her work,
and she never had been disciplined, reprimanded,
or verbally warned. Employees of Sunrise Express,
including one of its owners, testified that she
performed satisfactorily and that they had no
problems with her work.

  In mid-January 1996, Ms. Rice injured a toe on
her right foot and experienced both swelling and
infection. Her physician admitted her to the
hospital and placed her on antibiotics. She
remained in the hospital for one week and then
returned home for a second week. Her physician
then authorized her to work half-days, which she
did for one more week. At the end of the week,
however, the physician informed her that her toe
had to be amputated. Ms. Rice underwent surgery
on February 14 and remained on leave from work
for 4 more weeks before her doctor released her
to return to work beginning on March 11.
  On March 5, Ms. Rice informed Sunrise Express
that she would be returning to work on March 11;
however, on March 7 she was informed that she was
being laid-off beginning March 11. According to
Sunrise Express, her lay-off stemmed from the
decrease in freight and the ability of other
employees to complete the work without her.
Sunrise Express claimed that Ms. Rice was chosen
for the lay-off over Ms. Huntington because the
latter had a better work ethic and because Ms.
Rice wasted time taking smoke breaks, playing
computer games, and talking on the telephone.

  Ms. Rice claims, however, that Betty Keiser, the
owner of Sunrise Express, told her that the
reason for her lay-off was because she was
"already off." Tr.V at 60. The plaintiff also
states that others in Sunrise Express management
told her that the decision to terminate her was
made months before her medical leave. Sunrise
Express offered the personal circumstances of Ms.
Rice as its reason for not terminating her before
her FMLA leave. Sunrise Express states that it
chose January 1 as the target date for Ms. Rice’s
lay-off because the company did not wish to
dismiss an employee during the holiday season.
Around the target date, Ms. Rice’s family
experienced the death of a member and also
suffered other health and financial problems.
Therefore, Sunrise Express claims, it decided to
delay her lay-off a "short time" and within that
"short time" she went on FMLA leave.

  Ms. Rice sued Sunrise Express for violating 29
U.S.C. sec. 2614(a)(1) for failing to reinstate
her to her previous position at the end of a
qualified medical leave./1 She thereafter
amended her complaint to add Sunrise USA and
Gainey as defendants. The district court denied
the defendants’ joint motion for summary judgment
and Ms. Rice’s cross-motion for partial summary
judgment.


B.   Procedural History

  On September 17, 1997, the district court
conducted a final pre-trial conference. At that
meeting, the court raised the issue of whether
Gainey was liable as a successor corporation or
as a joint employee of Sunrise Express. Defense
counsel told the court that, as a practical
matter, the issue of Gainey’s liability was not
material to the outcome of the case or to the
viability of any judgment that Ms. Rice might
obtain. The parties explained that they had
stipulated that Sunrise USA was the successor
corporation of Sunrise Express following their
merger and, therefore, would be liable for any
judgment rendered against Sunrise Express.
Satisfied that Sunrise USA had ample resources to
pay any judgment that might be rendered in favor
of Ms. Rice, the district court suggested that
the parties enter into a stipulation to that
effect and "simply hold in abeyance any
determination of successor liability by Gainey
Corporation until such time as it may become
material." Tr.I at 5. Both counsel agreed that
this course of action was acceptable, and the
court stated that they could "get the issue out
of the case for the time being, and perhaps not
have to deal with it at all." Tr.I at 6./2 No
formal order was entered severing the successor
liability claim against Gainey or dismissing
Gainey without prejudice. The case proceeded to
trial only against Sunrise Express and its
successor, Sunrise USA. Indeed, the Agreed
Statement of the Case identified the defendants
at trial as Sunrise Express, Inc. and Sunrise
USA, Inc. There was no mention of Gainey.

  Several weeks later, the district court raised
the possibility of referring this case to a
magistrate judge for trial because the district
judge’s own calendar was running somewhat behind.
Counsel for the defense later filed a written
consent on behalf of Sunrise Express, Inc./3 No
consent was sought from Gainey, even though the
same counsel represented both Sunrise USA and
Gainey.

  The magistrate judge proceeded to conduct a two-
day trial on October 22 & 23, 1997. Counsel
appeared at trial on behalf of Sunrise Express
and Sunrise USA. Throughout the course of trial,
no indication was given that Gainey was missing
from the trial.

  At the conclusion of the two-day trial, the jury
rendered a verdict in favor of Ms. Rice. The
magistrate judge then entered an order and
judgment in her favor and against Sunrise USA.
The judgment order specifically indicated that
the judgment was against Sunrise USA alone
because the parties had stipulated that Sunrise
USA was the "proper named defendant in this
case." R.86 at 9./4 At no time did counsel for
Sunrise USA object that the record lacked
Gainey’s consent to trial before the magistrate
judge.

  Sunrise USA appealed the judgment of the
district court to this court. On December 16,
1997, we entered an order sua sponte requiring
Sunrise USA, Sunrise Express, and Gainey to file
a jurisdictional memorandum. In reply to that
order, these corporations raised for the first
time the argument that Gainey had not consented
to trial by a magistrate judge and that such
consent was necessary for jurisdiction.

  On January 30, 1998, Ms. Rice filed, in the
district court, a motion for correction of record
and entry of an order nunc pro tunc. The district
court granted Ms. Rice’s motion and directed the
clerk of the district court to enter a notation
in the record to show that the court had, on
September 17, 1997, accepted the stipulation of
the parties that Gainey was to be severed from
the case./5 In issuing the order, the district
court pointedly noted that it was taking the
action in order to show what had been done
previously, not to alter substantive rights:

  As the transcript of the September 17, 1997
final pre-trial conference shows, this court
determined that Sunrise USA was financially able
to satisfy any judgment against it, and then
obtained both counsel’s agreement that
determination of Gainey’s liability would not be
an issue at trial. Therefore Gainey was severed
from the trial. Under Rule 21 of the Federal
Rules of Civil Procedure, severance creates two
separate actions where previously there was but
one.

R.122 at 6.

II
DISCUSSION

A.   Jurisdiction

  The first issue that we must confront is the
jurisdiction of this court and, by implication,
the jurisdiction of the district court. Because
federal courts are courts of limited
jurisdiction, we must approach any question
concerning the limits of our authority with great
care and circumspection. At the same time, we
must avoid hypertechnical characterizations of
procedural matters that serve none of the
policies that animate the jurisdictional statutes
but instead produce judicial diseconomy and
increase litigant expenses./6

  The situation before us arises from the failure
of the district court to account explicitly for
the defendant Gainey. As the case originally came
to this court, it appeared that Gainey had not
consented to trial before a magistrate judge.
Therefore, it appeared that the allegation with
respect to it was still pending in the district
court. If this situation were the case, there
would be no final judgment in the action to
provide this court with jurisdiction under 28
U.S.C. sec. 1291. Nor would the magistrate judge
have been authorized to act as the district
court./7 The district court attempted to clarify
this ambiguity by the entry of a nunc pro tunc
order that recites that, at the final pretrial
conference, the district court, acting pursuant
to Rule 21 of the Federal Rules of Civil
Procedure,/8 had severed Gainey and that the
case proceeded only with respect to the other
defendants./9

  A district court may enter a nunc pro tunc order
that clarifies a jurisdictional issue. In Local
1545, United Mine Workers of America v. Inland
Steel Coal Co., 

(7th Cir. 1989),
this court encountered a situation analogous to
the one at hand. On May 10, the district court,
when entering judgment against the defendants,
only listed the name of one of the two
defendants. On June 23, this court issued sua
sponte an order requiring the parties to submit
memorandums on the jurisdictional issue of
whether judgment had been entered as to all the
parties because the second defendant’s name was
not on the final judgment. On June 28, the
district court issued a nunc pro tunc order
clarifying its earlier order and stating that the
court had intended to include the second
defendant in the May 10 judgment. In our later
opinion, we discussed whether the original appeal
was premature because it had been filed prior to
the nunc pro tunc and thus prior to final
judgment as to both of the defendants. We
concluded that the appeal was timely because
final judgment as to both the defendants had been
entered on May 10.

   When a district court has taken all the steps
necessary for an action that affects
jurisdiction, but imprecisely memorializes that
action, the district court may issue a nunc pro
tunc order to explain more precisely what took
place. Given the Supreme Court’s express
direction in Banker’s Trust Co. v. Mallis, 

, 386-87 (1978), a decision regarding
jurisdiction cannot turn on a rigid paper trail;
rather, we must evaluate what actually occurred
and determine whether the failure to memorialize
adequately what in fact occurred misled or
prejudiced any party.

  When a United States District Judge states what
occurred in his or her courtroom on a particular
occasion, that statement is certainly worthy of
our acceptance, unless the record demonstrates
that the judge misapprehended the situation. A
district court’s credibility certainly is not
dependent on the existence of a contemporaneous
writing. As Judge Flaum, writing for a panel that
also included Judges Posner and Kanne, has noted:

[a] written order is the best evidence of a
judicial act. But in the absence of a statutory
provision requiring the entry of a written order,
the judicial determination alone stands as the
operative act of the court. Courts accomplish
much of their business without formal
memorialization.

United States v. Taylor, 

, 1308 (7th
Cir.), cert. denied, 

(1988).

  The record demonstrates that the order entered
by the district court is "nunc pro tunc" not only
in form but in substance. The district court was
well aware that it could not "rewrite history,"
but could only clarify what had taken place in
its earlier proceedings. The district court
acknowledged that it was simply memorializing the
past, not changing the status of the parties.
Moreover, the course of the proceedings at the
pre-trial conference demonstrates that the
district court intended a severance and that the
parties understood the action as a severance.
First, the district court stated that the parties
should "simply hold in abeyance any determination
of successor liability by Gainey Corporation
until such time as it may become material." Both
counsel agreed that this course of action was
acceptable, and the court concluded that they
could "get the issue out of the case for the time
being, and perhaps not have to deal with it at
all." Tr.I at 6. The court presumably knew that,
if the trial was bifurcated pursuant to Rule 42,
then the issue of Gainey’s liability would still
need to be determined at some point in order to
obtain a final judgment. On the other hand, if
the court severed the trial under Rule 21, then
final judgment could be rendered as to Sunrise
USA and Sunrise Express independent of Gainey’s
liability. Given the court’s comment that they
might not need to deal with Gainey’s liability at
all, the pre-trial conference demonstrates that
the district court intended to sever Gainey as a
party under Rule 21. The court’s nunc pro tunc
order clarified this former action.

  The parties also understood the court’s action
as a severance. The record demonstrates that the
parties did understand that the suit was
proceeding only against Sunrise USA and Sunrise
Express. In addition to the dialogue at the pre-
trial conference, the parties, in their Agreed
Statement of the Case, explained that the case
was brought by Ms. Rice against the defendants
Sunrise Express and Sunrise USA. No mention was
made of Gainey. Also, in the Agreed Proposed Jury
Instructions, the parties again stated that suit
was brought against Sunrise Express and Sunrise
USA and further clarified that Sunrise USA would
be responsible for any verdict in favor of the
plaintiff. No mention was made of Gainey.
Finally, the jury instructions given by the
district court, without objection by the
defendants, explained that Ms. Rice was seeking
compensation from Sunrise Express and Sunrise
USA. No mention was made of Gainey. Taken as a
whole, the record demonstrates that the parties
understood that Gainey had been severed from the
suit.

  The district court properly severed Gainey under
Rule 21. It is within the district court’s broad
discretion whether to sever a claim under Rule
21. See Hebel v. Ebersole, 

, 17 (7th
Cir. 1976); see also United States v. O’Neil, 

, 367 (5th Cir. 1983). Before making the
severance, the district court does not need to
determine the merit of the second claim. As long
as there is a discrete and separate claim, the
district court may exercise its discretion and
sever it. Here, the district court effectively
took Gainey, and the separately pled claim for
successor liability against Gainey, out of the
suit. The other parties already had stipulated
that Sunrise USA would be liable in full for any
judgment against Sunrise Express. Because Gainey
did not face primary liability, and, in all
likelihood, no liability at all, its presence was
not necessary, and, in the view of the district
court, its removal significantly simplified the
case. Once that party and claim were taken out of
the case, the district court validly entered
final judgment as to the remaining parties and
claims under Rule 58. We certainly cannot say
that the district court’s determination was "so
transparently a confusion of Rule 21 with Rule
42(b), or an attempt to separate an essentially
unitary problem," see Spencer, White & Prentis
Inc v. Pfizer Inc., 

, 362 (2d Cir.
1974), that the district court abused its
discretion. See also 

(stating that a court’s discretion in severing
claims under Rule 21 may not be abused to
separate an essentially unitary problem).

  Because Gainey had been severed from the case,
its consent to the magistrate judge’s trying the
remaining counts of the suit was not needed; the
magistrate judge therefore was entitled to enter
final judgment with respect to these counts.
Accordingly, the district court had jurisdiction,
and we have appellate jurisdiction.

B.   Burden of Proof and Jury Instructions

  The district court instructed the jury that the
defendants had the burden to establish that Ms.
Rice would not have been retained even if she had
not been on FMLA leave./10 For the reasons that
follow, we have concluded that this instruction
is not an accurate reflection of the statutory
mandate. In analyzing this issue, we must focus
on the structure and the language of the statute.
We begin with the structure.

  In King v. Preferred Technical Group, 

(7th Cir. 1999), Judge Kanne explained, in
some detail, the structure of the FMLA. He noted
that the Act "establishes two categories of broad
protections for 

.
First, in sec.sec. 2612-2615, the Act contains
prescriptive protections for employees that are
expressed as substantive statutory rights. As the
Judge wrote in King:

The Act provides eligible employees of a covered
employer the right to take unpaid leave for a
period of up to twelve work weeks in any twelve-
month period for a serious health condition as
defined by the Act. 29 U.S.C. sec. 2612(a)(1).
After the period of qualified leave expires, the
employee is entitled to be reinstated to the
former position or an equivalent one with the
same benefits and terms of the employment that
existed prior to the exercise of the leave. 29
U.S.C. sec. 2614(a). To insure the availability
of these guarantees, the FMLA declares it
"unlawful for any employer to interfere with,
restrain, or deny the exercise of or the attempt
to exercise, any right provided. 29 U.S.C. sec.
2615(a)(1).

. When an employee alleges a
deprivation of these substantive guarantees, the
employee must demonstrate by a preponderance of
the evidence only entitlement to the disputed
leave. The issue of the employer’s intent is
immaterial. See 

.

  In addition to these substantive prescriptive
rights, the FMLA also "affords employees
protection in the event they are discriminated
against for exercising their rights under the
Act." 

Act proscribes action by the
employer to discriminate or to retaliate against
an employee for the exercise of rights created by
the Act. See id.; see also 29 U.S.C. sec.
2615(a)(2) & (b). These proscriptive provisions
thus create a cause of action analogous to the
actions for discrimination and for retaliation
that are found in Title VII and the other
discrimination statutes. As Judge Kanne explained
in King:

  In contrast to what an employee must show to
establish a deprivation of a substantive
guarantee under the Act, when an employee raises
the issue of whether the employer discriminated
against an employee by taking adverse action
against the employee for having exercised an FMLA
right, the question of intent is relevant. The
issue becomes whether the employer’s actions were
motivated by an impermissible retaliatory or
discriminatory animus.

.

  Ms. Rice claims that her employer, Sunrise
Express, interfered with her rights under the
FMLA. In order to make such a claim, however, she
must, as an initial matter, demonstrate that she
possessed a right under the Act. We therefore
must turn to the prescriptive section that
creates the right to reinstatement and focus on
the wording of that section. Section 2614(a)(1)
states:

  Except as provided in subsection (b) of this
section, any eligible employee who takes leave
under section 2612 of this title for the intended
purpose of the leave shall be entitled, on return
from such leave--

  (A) to be restored by the employer to the
position of employment held by the employee when
the leave commenced; or

  (B) to be restored by the employer to an
equivalent position with equivalent employment
benefits, pay, and other terms and conditions of
employment.

29 U.S.C. sec. 2614(a)(1). The same section later
sets more precise contours on that right by
placing limitations on that right. Section
2614(a)(3) explains:

  Nothing in this section shall be construed to
entitle any restored employee to--

  (A) the accrual of any seniority or employment
benefits during any period of leave; or

  (B) any right, benefit, or position of
employment other than any right, benefit, or
position to which the employee would have been
entitled had the employee not taken the leave.

29 U.S.C. sec. 2614(a)(3). In short, the employee
is entitled to be reinstated to the same position
held before the leave or to an equivalent
position.

  In King, and again in Diaz v. Fort Wayne Foundry
Corp., 

(7th Cir. 1997), this court
stated succinctly the burden of the plaintiff in
establishing a cause of action under the
prescriptive sections of the Act, including sec.
2614(a)(1) of the FMLA. The plaintiff must
establish, by a preponderance of the evidence,
that he is entitled to the benefit that he
claims. See 

. As we have
just pointed out, sec. 2614(a)(3) makes clear
that the substantive right created by sec.
2614(a)(1) does not include an entitlement to any
right, benefit, or condition to which the
employee would not have been entitled if the
leave had not been taken. We think that this
latter provision, given its structural and
semantical relationship to sec. 2614(a)(1), is
best read as a rule of construction that affects
the meaning of sec. 2614(a)(1) by excluding from
the substantive right "any right, benefit, or
position of employment other than any right,
benefit, or position to which the employee would
have been entitled had the employee not taken
leave." 29 U.S.C. sec. 2614(a)(3). When sec.
2614(a)(3) is read in this manner, the employee
always bears the ultimate burden of establishing
the right to the benefit. If the employer wishes
to claim that the benefit would not have been
available even if the employee had not taken
leave, the employer must submit evidence to
support that assertion. When that burden of going
forward has been met, however, the employee must
ultimately convince the trier of fact, by a
preponderance of the evidence, that, despite the
alternate characterization offered by the
employer, the benefit is one that falls within
the ambit of sec. 2614(a)(1); the benefit is one
that the employee would have received if leave
had not been taken. For instance, if the employer
claims that the employee would have been
discharged or that the employee’s position would
have been eliminated even if the employee had not
taken the leave, the employee, in order to
establish the entitlement protected by sec.
2614(a)(1), must, in the course of establishing
the right, convince the trier of fact that the
contrary evidence submitted by the employer is
insufficient and that the employee would not have
been discharged or his position would not have
been eliminated if he had not taken FMLA leave.

  In its regulations implementing the Act, see 29
U.S.C. sec. 2654, the Department of Labor ("DOL")
has stated:

An employer must be able to show that an employee
would not otherwise have been employed at the
time reinstatement is requested in order to deny
restoration to employment. . . . An employer
would have the burden of proving that an employee
would have been laid off during the FMLA leave
period and, therefore, would not be entitled to
restoration.

29 C.F.R. sec. 825.216(a)(1). Read as a whole and
in the context of the entire regulatory scheme,
we think that this regulation is best understood
not as the agency’s understanding as to Congress’
allocation of the ultimate burden of proof in the
litigation context, but as an explanation of the
nature of the substantive right created by the
statute. Similarly, the decision of our
colleagues in the Eleventh Circuit in O’Connor v.
PCA Family Health Plan, Inc., 

(11th
Cir. 2000), does not state in any definitive
fashion that the statutory text was intended to
alter the normal allocation of burdens of proof
at trial, but simply states that "when an
’eligible employee’ who was on FMLA leave alleges
her employer denied her FMLA right to
reinstatement, the employer has an opportunity to
demonstrate it would have discharged the employee
even if she had not been on FMLA leave."

.

  In this case, in which the evidence was fairly
close, we cannot say that the district court’s
instruction misallocating the burden of proof did
not make a difference in the final outcome of the
case. Accordingly, we must remand the case to the
district court for a new trial.

Conclusion

  For the foregoing reasons, the jury verdict is
reversed, and the case is remanded for further
proceedings consistent with this opinion.

REVERSED and REMANDED


/1 29 U.S.C. sec. 2614(a)(1) states:

  Except as provided in subsection (b) of this
section, any eligible employee who takes leave
under section 2612 of this title for the intended
purpose of the leave shall be entitled, on return
from such leave--

  (A) to be restored by the employer to the
position of employment held by the employee when
the leave commenced . . . .

/2 The dialogue states in full:

THE COURT: Well, one thing we might do, then,
why don’t we have a stipulation to that effect
[Sunrise USA has ample resources to pay] and
simply hold in abeyance any determination of a
successor liability by Gainey Corporation until
such time as it may become material.
MS. BROGAN: [Ms. Rice’s attorney]: Post
judgment.
MR. KEEN: So a stipulation that Sunrise U.S.A.
would--
THE COURT: Is the successor to Sunrise Express
Inc. and would be liable for any judgment entered
against Sunrise Express, Inc. and as far as you
know, until you see the verdict, has the
resources to pay it.
MR. KEEN: Okay.
THE COURT: That way we can simply--
MS. BROGAN: That’s acceptable to us.
THE COURT: --get the issue out of the case for
the time being, and perhaps not have to deal with
it at all.

Tr.I at 5-6.

/3 The district court construed this document as a
consent by Sunrise USA because Sunrise Express no
longer existed as a separate entity at the time
of the consent.

/4 See also R.87 and R.88 which enter judgment and
amended judgment "in favor of the Plaintiff
Sandra L. Rice and against the Defendant Sunrise
U.S.A., Inc."

/5 In the course of explaining what had occurred
during the district court proceedings, the
district court employed infelicitously the term
"severed from the case for the purposes of
trial." Read alone, this phrase might suggest
that the court intended to retain the successor
liability count against Gainey in the case but to
hold it for trial at another time. Such a reading
would be counter to the clear meaning of the
document read as a whole. The court squarely said
that it was severing the count against Gainey
under Rule 21 and that such a severance "creates
two separate actions where previously there was
but one." R.122 at 6.

/6 In Bankers Trust Co. v. Mallis, 

(1978), the Court declared that a common sense
interpretation of Rule 58, Fed. R. Civ. P., could
be used because nonadherence to the
technicalities did not mislead or prejudice the
parties. Also, the Court stated that it would not
avoid the merits of the action because of mere
technicalities. See 

see also Eisen
v. Carlisle & Jacquelin, 

, 170-71
(1974) (stating that 28 U.S.C. sec. 1291 requires
a practical rather than technical construction of
finality); cf. Foman v. Davis, 

, 181
(1962) (applying common sense interpretation to
prior Rule 73 which dealt with notice of appeal
when defect occurred in second notice of appeal
and the defect did not mislead or prejudice the
parties).

/7 This circuit has taken a strict view of the
prerequisites for trial before a magistrate judge
because the parties are giving up their
constitutional right to trial before an Article
III judge with life tenure and salary protection.
See Williams v. General Elec. Capital Auto Lease,
Inc., 

, 268 (7th Cir. 1998), cert.
denied, 

(1999). 28 U.S.C. sec.
636, which authorizes suit before a magistrate
judge, requires (1) consent of the parties and
(2) special designation by the district court.
The statute states in pertinent part:

  (1) Upon the consent of the parties, a
full-time United States magistrate or a part-time
United States magistrate who serves as a
full-time judicial officer may conduct any or all
proceedings in a jury or nonjury civil matter and
order the entry of judgment in the case, when
specially designated to exercise such
jurisdiction by the district court or courts he
serves.

28 U.S.C. sec. 636(c). Although the required
consent does not need to be in writing, it must
be explicit and on the record. See Mark I, Inc.
v. Gruber, 

, 370 (7th Cir. 1994).
Also, the consent must be unanimous. See

; Brook, Weiner, Sered,
Kreger & Weinberg v. Coreq, Inc., 

,
851-52 (7th Cir. 1995); Mark I, 

.

  In applying the above authority, if Gainey was
still a party to the action and did not consent
to trial before the magistrate judge, then the
magistrate judge would not have had jurisdiction
to enter a final judgment. If the magistrate
judge did not have jurisdiction then this court
would not have jurisdiction under sec. 1291
because no final judgment would have been
entered. Because the record does not contain
evidence of Gainey’s consent, the question would
remain whether Gainey was still a party in the
litigation.

/8 Rule 21 reads as follows:

  Misjoinder of parties is not ground for
dismissal of an action. Parties may be dropped or
added by order of the court on motion of any
party or of its own initiative at any stage of
the action and on such terms as are just. Any
claim against a party may be severed and
proceeded with separately.

Fed. R. Civ. P. 21. If the district court severed
Gainey under Rule 21, then it created two
separate actions, each capable of reaching final
judgment and being appealed. If, however, Gainey
was not severed or the district court merely
bifurcated the parties under Rule 42, Fed. R.
Civ. P., then no final judgment could be entered
until final judgment was reached on all issues
and parties. Rule 42 states:

  (b)   Separate Trials. The court, in furtherance
of convenience or to avoid prejudice, or when
separate trials will be conducive to expedition
and economy, may order a separate trial of any
claim, cross-claim, counterclaim, or third-party
claim, or of any separate issue or of any number
of claims, cross-claims, counterclaims,
third-party claims, or issues, always preserving
inviolate the right of trial by jury as declared
by the Seventh Amendment to the Constitution or
as given by a statute of the United States.

Fed. R. Civ. P. 42. The district court did not
explicitly state "I sever Gainey under Rule 21;"
however, this court does not require a formal
order of severance if the evidence shows that the
district court intended to sever the parties and
the parties understood that severance had
occurred. See Hebel v. Ebersole, 

, 17
(7th Cir. 1976); accord United States v. O’Neil,

, 368 (5th Cir. 1983). As explained
below, the district court did intend to sever
Gainey from the actions and the parties were
aware this had occurred.

/9 We believe that the district court was entitled
to take the corrective action that it did take.
If characterized as a correction of the record
under Rule 10(e) of the Federal Rules of
Appellate Procedure, the action could be taken
without leave of this court. Rule 10(e) states:

  (1) If any difference arises about whether the
record truly discloses what occurred in the
district court, the difference must be submitted
to and settled by that court and the record
conformed accordingly.

  (2) If anything material to either party is
omitted from or misstated in the record by error
or accident, the omission or misstatement may be
corrected and a supplemental record may be
certified and forwarded:

  (A)   on stipulation of the parties;

  (B) by the district court before or after the
record has been forwarded; or

  (C)   by the court of appeals.

  (3) All other questions as to the form and
content of the record must be presented to the
court of appeals.

Fed. R. App. P. 10. If, on the other hand, the
district court’s action was taken under Rule
60(a) of the Federal Rules of Civil Procedure,
the permission of this court is a necessary
prerequisite because the case is in the court of
appeals. Rule 60 reads:
  (a) Clerical Mistakes. Clerical mistakes in
judgments, orders or other parts of the record
and errors therein arising from oversight or
omission may be corrected by the court at any
time of its own initiative or on the motion of
any party and after such notice, if any, as the
court orders. During the pendency of an appeal,
such mistakes may be so corrected before the
appeal is docketed in the appellate court, and
thereafter while the appeal is pending may be so
corrected with leave of the appellate court.

Fed. R. Civ. P. 60. As Local 1545, United Mine
Workers of America v. Inland Steel Coal Co., 

(7th Cir. 1989), makes clear, however,
the sua sponte order of this court inquiring
about jurisdiction is sufficient authority for
the district court to enter an order explaining
the circumstances that cause the jurisdictional
ambiguity. See 

n.4.

/10 The relevant jury instruction states, in part,
that "a defendant is entitled to seek to prove,
by a preponderance of the evidence, that the
employee would have been laid off during the
period of her FMLA leave, even if she had not
taken such leave." R.74 at 21.




  EVANS, Circuit Judge, dissenting. I respectfully
disagree with the majority’s conclusion that Rice
should have the burden of establishing that she
would have been retained if she had not been on
FMLA leave. While I am not saying this issue can
only be sensibly resolved in one way, it seems to
me that it’s better resolved by requiring the
employer to shoulder the burden.

  When a statute is not clear, we owe deference to
the interpretation by an agency charged with
enforcing it if that interpretation is "based on
a permissible construction of the statute."
Chevron U.S.A. v. Natural Resources Defense
Council, 

, 843 (1984). Quite
naturally, this principle applies to regulations
of the Department of Labor. See Thorson v. Gemini
Inc., 

(8th Cir. 2000) (explicitly
giving Chevron deference to the Department of
Labor in its interpretation of "serious health
condition" under the FMLA); and Price v. City of
Fort Wayne, 

(7th Cir. 1997)
(relying on FMLA regulations to interpret the
phrase "serious health condition" with no
explicit discussion of Chevron principles).
Section 2614(a)(3)(B) gives employers an
exemption but it is silent, and therefore
unclear, as to who bears the burden of proof on
the issue. Thus, the Department of Labor has
promulgated regulations which state that an
"employer would have the burden of proving that
an employee would have been laid off during the
FMLA leave period and, therefore, would not be
entitled to restoration." 29 C.F.R. sec.
825.216(a)(1)(1997). Under this view, sec.
2614(a)(3)(B) creates an affirmative defense.

  This agency interpretation of sec. 2614(a)(3)(B)
is entirely reasonable. The FMLA provides a
substantive right (a "statutory entitlement"),
Diaz v. Fort Wayne Foundry Corp., 

(7th Cir. 1997), and an antidiscrimination
component. Id.; King v. Preferred Technical
Group, 

(7th Cir. 1999). The
"statutory entitlement" provisions of the FMLA
should be treated, we said in Diaz, similarly to
those in the National Labor Relations Act, the
Fair Labor Standards Act, and the Employee
Retirement and Income Security Act. Under those
Acts, a burden can be placed on employers to
prove that a provision does not apply to them.
See NLRB v. Transportation Management Corp., 

(1983); Corning Glass v. Brennan, 

(1974) (the Equal Pay Act); Sutton v.
Engineered Systems, Inc., 

(8th Cir.
1979) (the Fair Labor Standards Act).

  On a practical level, it makes sense to require
the employer to bear the burden of proof on this
issue. The employer is in control of the
evidence. Of course, one might say that the same
is true in discrimination cases, and there, to
use the McDonnell Douglas model for summary
judgment, the employer only has to produce
evidence that there was a legitimate reason for
the employment action and the employee must show
that the reason given is pretextual. McDonnell
Douglas v. Green, 

(1973). But there
are problems with the approach. Even in
discrimination cases, the McDonnell Douglas
framework does not apply at trial. Postal Service
v. Aikens, 

(1983). And we have said,
in a way that can hardly be misunderstood, that
we disapprove of a McDonnell Douglas burden-
shifting approach in FMLA cases not involving
discrimination. Diaz. Nevertheless, I think the
majority here has allowed a McDonnell Douglas-
style analysis to cast too dark a shadow over its
view of this case.

  What must be remembered is that this is a labor
case, not a discrimination case. Congress has
given the employee the substantive right to be
treated as she would have been had she had not
taken leave. She should not have to prove that
the company would have provided her a certain
benefit except for her taking leave. It makes
sense that the company, which must produce
evidence on the issue even under the majority’s
analysis, should have to prove she would not have
received the benefit. In short, in rejecting the
Labor Department’s reasonable interpretation of
the substantive provisions of the FMLA, the
majority requires an analysis appropriate to
discrimination cases, not to a statute that
confers substantive rights. I would affirm.