Hensley v. Haynes Trucking, LLC

549 S.W.3d 430

Melvin HENSLEY, Danny Lainhart, James D. Fetters, William Abney, and Charles Bussell on Behalf of Themselves and Others Similarly Situated, Appellants

v.HAYNES TRUCKING, LLC; and L-M Asphalt Partners, Ltd., d/b/a ATS Construction and Hartford Fire Insurance Co., Appellees

2016-SC-000180-DG

Supreme Court of Kentucky.

JUNE 14, 2018

COUNSEL FOR APPELLANTS: William R. Garmer, Jerome Park Prather, Lexington, Garmer and Prather, PLLC, Brent Caldwell, Lexington, Caldwell Law Firm, PLLC, Bryce Caldwell, 401 Frederica St, Bldg B. Ste 204, Owensboro KY 42301.

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, Lexington, 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.

OPINION OF THE COURT BY CHIEF JUSTICE MINTON

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 plaintiffs¹ 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 machineryfor 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 and 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 actions.... is 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 mechanism ... is 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 considered⁹ 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,...