Indus. Welding Supplies of Hattiesburg, LLC v. Pinson

530 S.W.3d 854

INDUSTRIAL WELDING SUPPLIES OF HATTIESBURG, LLC; Airgas, Inc.; and Airgas USA, LLC, Appellants

v.John PINSON and Larry Murphy on behalf of themselves and all others similarly situated, Appellees

No. CV–17–86

Supreme Court of Arkansas.

Opinion Delivered: November 16, 2017

Dover Dixon Horne PLLC, Little Rock, by: Thomas S. Stone, Todd Wooten, and Carl F. "Trey" Cooper, III, Little Rock, for appellant.

McMath Woods P.A., by: Charles D. Harrison and Neil Chamberlain, for appellees.

KAREN R. BAKER, Associate Justice

Appellants Industrial Welding Supplies of Hattiesburg, LLC ("Industrial Welding"); Airgas, Inc., and Airgas USA, LLC (collectively "Airgas"), bring an interlocutory appeal of the Union County Circuit Court's order certifying a class action filed by appellees John Pinson, Larry Murphy, and others similarly situated (collectively "employees"). The employees were employed by Industrial Welding in one of their fifteen locations in Arkansas, Mississippi, or Alabama from December 31, 2011, through March 31, 2012. On appeal, appellants argue that the circuit court abused its discretion in granting the motion for class certification because (1) the employees failed to meet the commonality requirement by presenting proof that common issues of law or fact exist; (2) common issues of law and fact do not predominate over individual issues; and (3) a class action is not the superior method of resolving this controversy. Because this is an interlocutory appeal pursuant to Rule 2(a)(9) of the Arkansas Rules of Appellate Procedure–Civil, our jurisdiction is proper pursuant to Arkansas Supreme Court Rule 1–2(a)(8).

I. Facts and Procedural History

On December 29, 2014, the employees filed their first amended complaint against Industrial Welding and Airgas. The complaint alleged that on or about March 23, 2012, Industrial Welding announced that it had signed an agreement with Airgas under the terms of which Industrial Welding would be acquired by Airgas. The scheduled closing date for the Industrial Welding and Airgas transaction was March 31, 2012.¹ The employees alleged claims of breach of contract and unjust enrichment based on Industrial Welding's failure to compensate the employees for earned but unused vacation time. Specifically, the employees argued that each member of the class worked for Industrial Welding during the 2011 calendar year and earned vacation that was due to be paid in 2012. However, because each employee was terminated in 2012, each employee was entitled to payment for the unused vacation time he or she had earned in 2011. Further, the complaint named Airgas as a party to the extent it is a survivor of Industrial Welding and because it purchased Industrial Welding, including its current liabilities and noncurrent liabilities. To support their breach-of-contract claim, the employees first quoted the following portion of Industrial Welding's "Employee Policies and Guidelines Manual":²

Vacation Schedules

An employee becomes eligible for vacation upon completion of twelve (12) months of continuous service with the company.

Each employee earns vacation time as follows:

1 week after one year of service

2 weeks after two years of service

3 weeks after ten years of service

....

In addition, if an employee resigns, is laid-off, or is terminated, that employee will be paid for unused earned vacation time for the calendar year of the occurring event.

Second, the employees relied on employment contracts entered into between Industrial Welding and one or more of the employees, which stated, "The Employee shall be entitled to an annual vacation, as is determined by existing policy."³ Third, the employees alleged that Industrial Welding informed the employees by memo, "Vacation: 25% of your unused vacation (representing vacation acured [sic] from January 1 through March 21) will be paid to you on your final Nordan Smith payroll check." Finally, the employees relied on a letter from Airgas to the employees, which stated, "Your earned but unused vacation through March 30, 2012 will be paid out to you by Nordan Smith." As to the employees' unjust-enrichment claim, the employees alleged that Industrial Welding possessed and promised to pay money or its equivalent owed to the employees for earned but unpaid vacation time.

On January 14, 2015, Industrial Welding filed its answer to the employees' first amended complaint. On February 23, 2015, Airgas filed its answer to the employees' first amended complaint. Both Industrial Welding and Airgas sought to have the employees' complaint dismissed.

On May 24, 2016, the employees filed their amended motion for class certification to certify a class of "All persons who were employed by Industrial Welding Supplies of Hattiesburg, LLC on December 31, 2011, were so employed for at least one year prior thereto, and continued to be so employed until Industrial Welding Supplies of Hattiesburg, LLC on March 31, 2012." The employees restated the allegations contained in their amended complaint—this case involves vacation benefits that were owed to the employees but were not paid by Industrial Welding or its successor, Airgas.

On June 30, 2016, Industrial Welding filed its response to the employees' amended motion for class certification. Industrial Welding argued that class certification was inappropriate and asked the circuit court to deny the employees' motion for class certification.

On September 28, 2016, a hearing on the motion for class certification was held. During the hearing, the circuit court granted the employees' motion for class certification. On October 31, 2016, the circuit court entered its written order certifying the class. The appellants timely filed their notices of appeal. On appeal, the appellants argue that the circuit court abused its discretion in granting the employees' motion for class certification.⁴ Specifically, as to the breach-of-contract claim, the appellants contend that the employees failed to demonstrate commonality, predominance, and superiority.⁵

II. Standard of Review

An interlocutory appeal may be taken from an order certifying a case as a class action in accordance with Rule 23 of the Arkansas Rules of Civil Procedure. Circuit courts are given broad discretion in matters regarding class certification, and we will not reverse a circuit court's decision to grant or deny class certification absent an abuse of discretion. ChartOne, Inc. v. Raglon, 373 Ark. 275, 283 S.W.3d 576 (2008). When reviewing a circuit court's class-certification order, this court reviews the evidence contained in the record to determine whether it supports the circuit court's decision. Teris, LLC v. Golliher, 371 Ark. 369, 266 S.W.3d 730 (2007). Our focus is "whether the requirements of Rule 23 are met," and "it is totally immaterial whether the petition will succeed on the merits or even if it states a cause of action." Philip Morris Cos. v. Miner, 2015 Ark. 73, at 3, 462 S.W.3d 313, 316 (quoting Am. Abstract & Title Co. v. Rice, 358 Ark. 1, 9, 186 S.W.3d 705, 710 (2004) ).

III. Class Certification

Rule 23 of the Arkansas Rules of Civil Procedure governs class actions and class certification. The rule provides, in pertinent part:

(a) Prerequisites to Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties and their counsel will fairly and adequately protect the interests of the class.

(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.... An order certifying a class action must define the class and the class claims, issues, or defenses.

(Emphasis added.) Having considered the requirements of Rule 23, we now turn to the circuit court's order granting class certification:

On this 28th day of September, 2016, came on to be heard the Plaintiffs' Amended Motion for Class Certification, with Plaintiffs appearing through counsel of record Neil Chamberlin, Charles Harrison, Floyd M. Thomas, Jr. and Joe Hickey, Defendant Industrial Welding Supplies of Hattiesburg, LLC appearing through Thomas Stone, and Defendants Airgas, Inc. and Airgas USA, LLC appearing through Jerry Shivers and Molly Shepherd. Upon presentation and consideration of Plaintiffs' amended motion, and upon review and consideration of all papers, pleadings, and other submissions on file, the Court finds as follows:

That the Plaintiffs have satisfied all elements of Rule 23 of the Arkansas Rules of Civil Procedure and class certification is appropriate in this case.

The Court further finds that the named Plaintiffs, John Pinson and Larry Murphy, have demonstrated sufficient interest in and knowledge of this case such that they are each appropriate to serve as class representative in this matter.

The Court has also considered the pleadings and other filings, as well as the presentations in hearings before this Court, and finds that the attorneys for the Plaintiffs have sufficient expertise and experience to serve as class counsel in this matter.

The Court has also considered the pleadings and arguments of counsel and has determined that the class shall be defined as all persons who were employed by Industrial Welding Supplies of Hattiesburg, LLC on December 31, 2011, were so employed for at least one year prior thereto, and continued to be so employed until Industrial Welding Supplies of Hattiesburg, LLC was acquired by Airgas USA, LLC on

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