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Hensley v. Haynes Trucking, LLC

Supreme Court of Kentucky

June 14, 2018


          ON REVIEW FROM COURT OF APPEALS CASE NOS. 2013-CA-000190, 2013-CA-000978, 2013-CA-000329, AND 2013-CA-000956 FAYETTE CIRCUIT COURT NO. 10-CI-03986

          COUNSEL FOR APPELLANTS: William R. Garmer Jerome Park Prather Garmer and Prather, Brent Caldwell, Caldwell Law Firm, PLLC Bryce Caldwell

          COUNSEL FOR APPELLEES: HAYNES TRUCKING, LLC; AND ·L-M ASPHALT PARTNERS, LTD, D/B/A ATS CONSTRUCTION Robert E. Maclin III Jon Allen Woodall Brendan Reynolds Yates Masten Childers III McBrayer, McGinnis, Leslie & Kirkland, PLLC

          COUNSEL FOR APPELLEE: HARTFORD INSURANCE CO. La Toi D. Mayo J. Andrew Inman Littler Mendelson'; P.S.C. Susan C. Sears


         A group of plaintiffs, claiming for themselves and for others similarly situated, brought the underlying action in the trial court for backpay and statutory damages under Kentucky's prevailing-wage law, Kentucky Revised Statute (KRS) 337.505-550; and the trial court granted their motion to certify it as a class action under Kentucky Rule of Civil Procedure (CR) 23. The Court of Appeals vacated the trial court's class-action certification order. On discretionary review, we reverse the Court of Appeals' decision. We hold that class action is available to plaintiffs seeking recovery under the state's prevailing-wage law and that the trial court did not abuse its discretion in certifying this lawsuit as a class action.

         I. BACKGROUND.

         James Melvin Hensley and several other named plaintiffs[1] brought this action under CR 23 to recover back pay and statutory damages as authorized by KRS 337.505-550, [2] asserting that they were not paid prevailing wages, benefits, or overtime in connection with their employment as truck drivers for Haynes Trucking and L-M Asphalt Partners, Ltd., d/b/a ATS Construction, on various public-works projects. Hartford Fire Insurance Company is a party because it was the surety for the public-works performance bonds on these projects.

         Slightly less than a year after filing suit, Hensley moved for class certification, and the trial court granted ATS and Haynes's joint motion for discovery associated with the class-certification question and issued an order compelling discovery depositions of the putative class representatives and set a briefing schedule on the class-certification question. ATS, Haynes, and Hartford eventually filed a joint response opposing Hensley's motion for class certification. The trial court then conducted a hearing on the class-certification motion, allowing all sides to present extensive oral arguments.

         After the hearing, the trial court sustained Hensley's motion for class certification, [3] and we reproduce below the relevant portions of the trial court's order.

         The trial court's "Findings of Fact" included:

1. Plaintiffs filed a Class Action Complaint alleging violations of Kentucky prevailing wage law and breach of contract against Defendants.
2. The class is definite, and members are ascertainable, With at least 139 members, and perhaps many more, the class is so numerous that joinder of all members is impracticable.
3. There are questions of law and fact common to the class. Specifically, all liability issues are common to the class, including whether the defendants were required to pay prevailing wages to truck drivers for the time spent on the site of public works projects.
4. The claims of the representative parties are typical of the claims of the class.
5. The representative parties will fairly and adequately protect the interests of the class. In their depositions they have shown an appreciation of the issues in this case. Furthermore, they have come forward to speak on behalf of current employees who may fear repercussions, including loss of their employment, should they come forward individually. This additional fact enhances their ability to represent the class.
6. The questions of law and fact common to the members of the class predominate over any questions affecting only individual members. All legal issues are common and predominate.
7. Counsel for the Plaintiffs...are sufficiently experienced and qualified to serve as class counsel, and have demonstrated their knowledge of the law, procedure, and the requisite ability to fairly and adequately represent the interests of the class.

         And its "Conclusions of Law" stated:

The requirements of CR 23.01 have been met. The Plaintiffs have demonstrated that they also satisfy each of the elements of CR 23.02(c). The prosecution of separate actions by members of the class would create a risk of inconsistent adjudications with respect ' to individual members of the class which would establish incompatible standards of conduct for the party opposing the class. This is especially so since there is an absence of applicable Kentucky Appellate Court rulings on Kentucky's pervading (sic) wage law.
A class action is the superior method to resolve the common issues in this case. What is not common is the extent of damages, if any, each of the plaintiffs may be entitled to. However, the Court can craft a method to resolve the individual damages determination if that is necessary. The Court hereby certifies a class of plaintiffs as follows:
All persons who were employed by Haynes Trucking, at any time since 1995, who have not been paid prevailing wages or proper overtime but who transported asphalt, gravel, sand and/or other road building materials to various locations on the site of public works projects in the Commonwealth, distributed road building materials from the truck bed in a controlled manner on the site of the project, unloaded asphalt directly into paving machinery at a specific regulated rate so that such machinery could lay asphalt concurrently on the site of the project, and/or loaded recyclable and non-recyclable materials in conjunction with other heavy machinery for removal of the same from the site of the project.

         Haynes and ATS filed a timely joint notice of appeal from the class-certification order, and Hartford filed a separate notice of appeal of the same order. At the Court of Appeals, Haynes, ATS, and Hartford argued that the. trial court lacked subject-matter jurisdiction to rule on class certification and that Hensley had not satisfied the legal requirements for certification under CR 23. A panel of the Court of Appeals concluded that Hensley had fallen short in establishing the prerequisites of CR 23 to support a class action, commonality, and, therefore, vacated the trial court's order arid remanded the case to the trial court for decertification of the class. In a separate concurring opinion, the judge posited that KRS 337.550(2) does not permit class action suits at all.

         Hensley then sought discretionary review in this Court of the decision to decertify the class, and we granted discretionary review.

         II. ANALYSIS.

         As a preliminary matter, both sides agree that federal law should guide this Court's analysis of the trial court's class-certification decision because CR 23 mirrors its federal counterpart, Federal Rules of Civil Procedure Rule (FRCP) 23.[4]

         A. Issues Reviewable in an Interlocutory Appeal are Limited.

         This case comes to us by way of an interlocutory appeal. As we explained in Breathitt County Bd. of Educ. v. Prater, the general rule in appellate procedure is that only a trial court's final orders are appealable.[5] An exception to this general rule, an interlocutory appeal is a mechanism used to address less-than-final orders of a trial court of select issues.[6] One such issue that can be reviewed by interlocutory appeal is a trial court's order granting or denying class-action certification. Specifically, CR 23.06 states, "An order granting or, denying class action certification is appealable within 10 days after the order is entered."

         Because of the strict parameters of interlocutory appeals, the only question this Court may address today is whether the trial court properly certified the class to proceed as a class action lawsuit. We must focus our analysis on this limited issue and in so doing scrupulously respect the limitations of the crossover between (1) reviewing issues implicating the merits of the case that happen to affect the class-certification analysis and (2) limiting our review to the class-certification issue itself. Most importantly, "As the certification of class procedural, such process cannot abridge, enlarge, or modify any substantive right of the parties "[7] "The right of a litigant to employ the class-action a procedural right only, ancillary to the litigation of substantive claims."[8]

         "Rule 23 grants courts no license to engage in free-ranging merits inquiries at the certification stage. Merits questions may be considered[9] to the extent-but only to the extent-that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied."[10] Stated differently, Rule 23 "requires a showing that questions common to the class predominate, not that those questions will be answered, on the merits, in favor of the class."[11] Federal circuit courts have addressed the issue even more bluntly: "The determination [of] whether there is a proper class does not depend on the existence of a cause of action. A suit may be a proper class action, conforming to Rule 23, and still be dismissed for failure to state a cause of action."[12]

         Several issues obscure the focus on whether the trial court correctly certified the class in this case. First, Haynes and ATS assert that the trial court did not have the subject-matter jurisdiction to certify the class for those claims that allegedly do not meet the circuit court's jurisdictional minimum dollar - amount-in-controversy, [13] arguing that, consequently, all those claims must be dismissed. Second, as the concurring opinion from the Court of Appeals suggests, we must determine if a class-action lawsuit is even available for Hensley to assert prevailing-wage claims as a class action. Third, Haynes and ATS argue that prevailing-wage law has a so-called de minimis limitation that essentially forecloses litigation to those whose claims are triflingly small.

         1. The trial court has subject-matter jurisdiction.

         Haynes and ATS argue that the trial court lacked subject-matter jurisdiction over the claims of some of the purported class members that fail to meet the jurisdictional minimum in controversy and, as a result, those purported class members' claims should be dismissed. As the basis for their argument, Haynes and ATS rely on the statement of the Court of Appeals in Lamar v. Office of Sheriff of Daviess County that, "We are of the same opinion with respect to our CR 23" as the United States Supreme Court's opinion in Zahn v. International Paper Company [14] of FRCP 23.[15]

         The Court of Appeals in Lamar appears to have agreed with the U.S. Supreme Court about its following statements in Zahn:

This distinction and rule that multiple plaintiffs with separate and distinct claims must each satisfy the jurisdictional-amount requirement for suit in the federal courts were firmly rooted in prior cases dating from 1832, and have continued to be accepted construction of the controlling statutes....The rule has been applied to forbid aggregation of claims where none of the claimants satisfies the jurisdictional-amount....J£ also requires dismissal of those litigants whose claims do not satisfy the jurisdictional-amount, even though other litigants assert claims sufficient to invoke the jurisdiction of the federal court. [16]

         What undercuts Haynes and ATS's argument here is the fact that the U.S. Supreme Court later held in Exxon Mobil Corp. v. Allapattah Services, Inc. that Zahn is no longer good law, having been overruled by 28 U.S.C. § 1367, the federal statute granting federal district courts supplemental jurisdiction over certain claims.[17]

         In fact, because of the enactment of 28 U.S.C. § 1367, which completely undermines the holding in Zahn, the U.S. Supreme Court in Exxon Mobil held that in a class-action lawsuit, once one member of the class satisfies the jurisdictional amount-in-controversy requirement, a court may exercise supplemental jurisdiction over claims by class members that, by themselves, do not meet the jurisdictional amount-in-controversy requirement.[18] Simply stated, Haynes and ATS hang their entire subject-matter jurisdiction argument on a rule of law taken from a case that has been overruled. So their argument on this point fails to persuade us.

         We are not at liberty on interlocutory appeal to dismiss some of the purported plaintiffs' claims. Haynes and ATS are asserting to us a different subject-matter jurisdiction question than the one we may answer on interlocutory appeal. The question that is appropriate for us to answer on interlocutory appeal is: Did the trial court have the requisite subject-matter jurisdiction to certify the class? Haynes and ATS would ask: Does the trial court have the requisite subject-matter jurisdiction over the claims of some of the purported class members? As an appellate court adjudicating this interlocutory appeal, we can answer the first question, but we cannot answer the second one.

         The first question essentially asks if the trial court has the power to do what it did-in this case, to certify a class action. Challenging a class-action certification determination is a proper issue for interlocutory appeal, so challenging the trial court's initial subject-matter jurisdiction over a claim to make such a determination is also a proper issue for interlocutory appeal.[19]But in this case, Haynes and ATS seemingly admit that one plaintiff in this case satisfies the jurisdictional amount-in-controversy for the trial court to exercise subject-matter jurisdiction over that plaintiffs claim. Once a trial court has the requisite subject-matter jurisdiction over a claim-and all it takes is one claim-the circuit court may proceed to decide upon certification of a class.

         The second question stated above, however, is not an appropriate determination for an interlocutory appeal challenging certification of a class. The second question essentially asks whether the trial court improperly asserted subject-matter jurisdiction over some of the claims of some of the plaintiffs in this case. Answering this question would be an inappropriate extension of the issues Kentucky appellate courts can reach on interlocutory appeal. A defendant cannot challenge a trial court's subject-matter jurisdiction . over a claim, in and of itself, on interlocutory appeal. Opening the door to such a challenge on interlocutory appeal today would encroach upon the very narrow field of issues we have recognized as acceptable to present via interlocutory appeal.

         A trial court erroneously assuming subject-matter jurisdiction over a claim in and of itself is not an immediately appealable issue. In the class-action ' certification context, a trial court needs subject-matter jurisdiction over only one claim to exercise its power and determine whether class certification is appropriate. In this case, the trial court does have subject-matter jurisdiction over at least one of the claims by one of the plaintiffs, as was seemingly conceded by Haynes and ATS, because that plaintiffs asserted amount-in-controversy satisfied the jurisdictional minimum for circuit court jurisdiction.

         If Haynes and ATS believe that the trial court erroneously asserted subject-matter jurisdiction over some of the claims in this case, they are free to raise that issue before the trial court and, if unsuccessful at the trial court level, ultimately in the normal appellate process. But, once, as Haynes and ATS essentially concede, the trial court exercises proper subject-matter jurisdiction over one of the claims in this case, the trial court has the power to proceed with its class-action certification determination. This jurisdictional question is the only jurisdictional question appropriate to decide on interlocutory appeal, and because we have answered it in the affirmative, we proceed with our analysis.

         2. KRS 337.550(2) does afford class action suits.

         Before we determine whether Hensley may certify as a class, we must first determine whether the procedural vehicle of a class-action lawsuit is even available. Haynes and ATS attempt to argue that this issue is not before us today, and that it would be inappropriate for us to reach this issue.

         But simple logic dictates that we must answer this question because determining whether the trial court correctly certified a class necessarily assumes that the case can proceed as a class-action. In other words, determining whether the procedural device of a class action suit is available is a prerequisite to determining whether the case can proceed as a class-action lawsuit. And determining whether the prevailing-wage statute allows the procedural mechanism of a class-action lawsuit is not a determination of the merits of this case in any way. Stated differently, this Court is only determining if the case can proceed as a class action, not whether anyone is entitled to the relief sought under the prevailing-wage statute.

         We begin our analysis with KRS 337.550(2):

A laborer, workman, or mechanic may by civil action recover any sum due him or her as the result of the failure of his or her employer to comply with the terms of KRS 337.505 to 337.550. The commissioner may also bring any legal action necessary to collect claims on behalf of any or all laborers, workmen, or mechanics....

         Most recently in McCann v. Sullivan University System, Inc., we addressed the availability of class-action lawsuits in which plaintiffs assert claims arising from statutes.[20] As applied to the circumstances of this case, McCann stands for the proposition that if "[t]he General Assembly did not create a special statutory proceeding for [an] action[] brought under [KRS 337.550]...CR 23 remains an available procedural mechanism...."[21]

         We recognized in McCann that "Section 116 of the Kentucky Constitution empowers this Court to prescribe...rules of practice and procedure for the Court of Justice.""[22] One such rule of practice and procedure is Kentucky Rule of Civil Procedure ("CR") 1(2), which states, "[The Kentucky Rules of Civil Procedure] govern procedure and practice in all actions of a civil nature in the Court of Justice except for special statutory proceedings...." We explained that "[a] 'special statutory proceeding' is one that is 'complete within itself having each procedural detail prescribed.'"[23] "In sum, this Court determines the existence of a special statutory proceeding by evaluating whether the statute in question provides for a comprehensive, wholly self-contained process that prescribes each procedural detail of the cause of action."[24]

         Such a "comprehensive, wholly self-contained process" is completely missing from KRS 337.550(2). While it is true that KRS 337.550(2) identifies the "commissioner" as a party allowed to "bring any legal action necessary to collect claims on behalf of any or all laborers, workmen, or mechanics, " this is the extent of the process outlined in KRS 337.550(2) for the commissioner's lawsuit. Such a broad and general description of the commissioner's lawsuit falls short of the type of process that would constitute a special statutory proceeding to preclude access to remedies available by class-action lawsuits.

         Simply because KRS 337.550(2) allows the commissioner to bring a lawsuit on behalf of claimants does not preclude lawsuits-even class-action suits-by others aggrieved by alleged violations of the prevailing-wage statutes- the two types of actions are not mutually exclusive. KRS 337.550(2) simply gives the commissioner the ability to bring a lawsuit on behalf of claimants. Such a grant by itself cannot be read to suggest an intent by the legislature to foreclose class-action lawsuits in prevailing-wage claims. To the contrary, such grant more likely supports the importance of providing those denied the benefits of the prevailing-wage statutes with alternative forms of redress.

         So we hold that KRS 337.550(2) does not preclude the availability of class-action lawsuits because KRS 337.550(2) does not constitute a special statutory proceeding. Therefore, "CR 23 remains an available procedural mechanism applicable to [Hensley's] cause of action brought under KRS 337.[550(2)]."[25]

         3. We do not decide today whether Kentucky law imposes a so-called de minimis requirement.

         Before its repeal, Kentucky's prevailing-wage laws provided a robust set of instructions for the payment of prevailing wages similar to federal law's Davis-Bacon Act.[26] These laws were similar, but they were not identical. Haynes and ATS argue that the prohibition in federal law on the payment of prevailing wages to certain workers who spend what these parties term as a "de minimis amount of time on the work site" automatically excludes some of the truck drivers who seek to be a part of the class action in this case.

         Determining whether Kentucky law excludes as too trifling for litigation the claims of a group of plaintiffs is not an appropriate consideration for this Court on interlocutory appeal. But Haynes and ATS attempt to conjoin this issue with reviewing the trial court's class-action certification, arguing that determining whether Kentucky prevailing-wage law has a so-called de minimis requirement directly affects the numerosity requirement.

         No doubt numerosity would be affected if this Court were to determine whether the de minimis limitation applies in Kentucky law. For example, if this Court were to hold that Kentucky law allows a de minimis limit on litigable claims, some of the purported class members would be prevented from bringing i suit, requiring a reevaluation of how many purported class members exist and whether joinder of their claims is impracticable.

         But we do not reach this issue for the same reason we generally limit the scope of interlocutory appellate review-the interlocutory appeal is a device limited in its scope. And in this case, the interlocutory appeal mechanism cannot be used to address whether Kentucky prevailing-wage law has a de minimis limitation that prevents a certain group of plaintiffs from asserting a ...

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