McCann v. Sullivan Univ. Sys., Inc.

528 S.W.3d 331

Mary E. MCCANN (Individually and on Behalf of All Others Similarly Situated), Appellant

v.The SULLIVAN UNIVERSITY SYSTEM, INC., d/b/a Sullivan University College of Pharmacy, et al., Appellee

2015-SC-000144-DG.

Supreme Court of Kentucky.

AUGUST 24, 2017

COUNSEL FOR APPELLANT: Theodore W. Walton, Garry Richard Adams, Jr.

COUNSEL FOR APPELLEES, THE SULLIVAN UNIVERSITY SYSTEM, INC., D/B/A/ SULLIVAN UNIVERSITY COLLEGE OF PHARMACY, SULLIVAN COLLEGE OF TECHNOLOGY AND DESIGN, SULLIVAN UNIVERSITY GLOBAL E-LEARNING, DALE CARNEGIA KENTUCKIANA, INTERNATIONAL CENTER FOR DISPUTE RESOLUTION LEADERSHIP, SULLIVAN UNIVERSITY, LOUISVILLE TECHNICAL INSTITUTE, THE NATIONAL CENTER FOR HOSPITALITY STUDIES, INSTITUTE FOR PARALEGAL STUDIES, SPENCERIAN COLLEGE AND INTERIOR DESIGN INSTITUTE: Grover C. Potts, Jr., Michelle Deann Wyrick, Rania Marie Basha, Louisville, Emily Christine Lamb.

COUNSEL FOR APPELLEES, THE KENTUCKY CHAMBER OF COMMERCE ("CHAMBER"), AND THE KENTUCKY SOCIETY FOR HUMAN RESOURCES MANAGEMENT ("KYSHRM"): Jeffrey Alan Savarise, Louisville, John Choate Roach, Lexington, Timothy James Weatherholt, Louisville.

COUNSEL FOR APPELLEE, JEFFERSON COUNTY TEACHERS ASSOCIATION (JCTA): Thomas J. Schulz, Louisville.

COUNSEL FOR APPELLEE, KENTUCKY EQUAL JUSTICE CENTER ("KEJC") AND JOBS WITH JUSTICE: John Christopher Sanders, McKenzie Cantrell.

COUNSEL FOR APPELLEES, KENTUCKY JUSTICE ASSOCIATION, KENTUCKY CHAPTER OF AMERICAN FEDERATION OF LABOR AND CONGRESS ODF INDUSTRIAL ORGANIZATIONS, KENTUCKY STATE BUILDING AND CONSTRUCTION TRADE COUNCIL, RIVER CITY FRATERNAL ORDER OF POLICE LODGE 614, INC., TEAMSTERS LOCAL 783, INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND. AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, AND UNITED STEEL, PAPER AND FORESTRY, RUBBER, MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND ALLIED INDUSTRIAL AND SERVICE WORKERS INTERNATIONAL UNION: Kevin Crosby Burke, Louisville, Irwin H. Cutler, Jr., David Lindsay Leightty, Louisville, Jamie Kristin Neal.

COUNSEL FOR APPELLEE, UPS CERTIFIED CLASS, Andrew J. Home, Michael Douglas Grabhorn, Louisville.

OPINION OF THE COURT BY JUSTICE WRIGHT

Mary McCann filed a CR 23 motion to certify a class action in Jefferson Circuit Court. The trial court denied that motion as a matter of law and McCann appealed. The Court of Appeals affirmed the trial court's judgment and held KRS 337.385 does not authorize class actions. McCann then moved this Court for discretionary review, and we granted her motion. On appeal, McCann argues that the Court of Appeals erred by reading KRS 337.385 to prohibit class actions. We agree. Therefore, we reverse the judgment of the Court of Appeals and remand this case to Jefferson Circuit Court for proceedings consistent with this opinion.

I. BACKGROUND

The Sullivan University System, Inc., hired Mary McCann as an admissions officer in March 2006 at its Fort Knox Campus. In May 2007, Sullivan transferred McCann to its Spencerian College campus in Louisville. In April 2008, Sullivan terminated McCann's employment.

Following her termination, McCann filed an action in Jefferson Circuit Court. Sullivan removed McCann's action to federal court after the United States Department of Labor filed a complaint against Sullivan under the federal Fair Labor Standards Act. Sullivan disputed the Department of Labor's allegations, but as part of that settlement, agreed to treat its admissions officers as non-exempt employees, to pay overtime wages, and to pay back wages to certain admissions officers. By agreed order, the federal district court dismissed McCann's federal Fair Labor Standards Act claims against Sullivan and remanded the. remaining state law claims to Jefferson Circuit Court.

When McCann moved to certify a class, the Jefferson Circuit Court. denied the motion on purely legal grounds. In its order denying class certification, the trial court relied upon dicta in an unpublished Court of Appeals' opinion, Toyota Motor Mfg., Kentucky , Inc. v. Kelley , 2012-CA-001508-ME, 2013 WL 6046079, at *9 (Ky. App. Nov. 15, 2013). The Court of Appeals in Kelley did not reach the merits of whether a class action is available for claims brought under KRS 337.385. Yet, the panel opined that if it were to reach that question, it would conclude that a class action is not available for claims brought under KRS 337.385. McCann appealed the trial court's judgment to the Court of Appeals.

In the instant case—unlike in Kelley —the Court of Appeals did reach the question whether a class action is available for claims brought under KRS 337.385. The Court of Appeals ultimately held that KRS 337.385 does not authorize class actions. The court reasoned this provision constitutes a special statutory proceeding that displaces our Rules of Civil Procedure. The court also noted that the statutory provision does not explicitly authorize class actions. We must determine whether the Court of Appeals erred in its reading of this provision. Determining the correct reading of a statute is a question of law that we review de novo without affording deference to lower courts. Board of Educ. of Fayette County v. Hurley-Richards , 396 S.W.3d 879, 885 (Ky. 2013).

II. ANALYSIS

A. The Rules of Civil Procedure and Special Statutory Proceedings

Section 116 of the Constitution of this Commonwealth empowers this Court "to prescribe ... rules of practice and procedure for the Court of Justice." Pursuant to that constitutional grant of authority, CR 1 defines the scope of the rules' application, stating: "[t]hese Rules govern procedure and practice in all actions of a civil nature in the Court of Justice except for special statutory proceedings...." (Emphasis added.) Therefore, based upon this constitutional grant of authority to prescribe the rules of practice and procedure, this Court retains the ultimate authority to determine the procedures used within the courts of this Commonwealth. However, in CR 1, we specifically state that the Rules of Civil Procedure govern all actions of a civil nature except special statutory proceedings.¹ Absent this caveat for special statutory proceedings, the Rules of Civil Procedure govern all civil actions within the Court of Justice. Now we must determine what constitutes a special statutory proceeding that displaces the Rules of Civil Procedure.

"A ‘special statutory proceeding’ is one that is ‘complete within itself having each procedural detail prescribed.’ " C.C. v. Cabinet for Health and Family Services , 330 S.W.3d 83, 87 (Ky. 2011) (quoting Swift & Co. v. Campbell , 360 S.W.2d 213, 214 (Ky. 1962) ). In C.C., we determined that dependency, neglect, and abuse (DNA) actions and the implementing procedures within the Uniform Juvenile Code constitute a special statutory proceeding that displaces any conflicting Rule of Civil Procedure. We reasoned that the Uniform Juvenile Code found in KRS Chapters 600 to 645 is complete within itself and describes in detail the comprehensive procedures accompanying those causes of action. For instance, the entirety of KRS Chapter 610 is entitled "Procedural Matters." That chapter includes fifty-one separate sections detailing matters including preliminary intake procedures ( KRS 610.030 ), hearing procedures ( KRS 610.070 ), procedures for appeals of disposition orders ( KRS 610.130 ), evidentiary procedures ( KRS 610.300 ), fees ( KRS 610.350 ), and procedures relating to fees and court costs ( KRS 610.360 ). The Uniform Juvenile Code is but one example of a special statutory proceeding that we have recognized.

Our predecessor Court recognized "that an election contest is a special statutory proceeding...."² Brock v. Saylor, 300 Ky. 471, 189 S.W.2d 688, 689 (1945). Likewise, we recently acknowledged that KRS 383.200 -285 constitutes a special statutory proceeding relating to forcible entry and detainer in landlord-tenant law. Shinkle v. Turner , 496 S.W.3d 418, 420–21 (Ky. 2016). Furthermore, the most easily recognizable special statutory proceeding is one in which the adjudication begins within an agency or a commission, but provides for an appeal to the Court of Justice. For instance, we acknowledged that, "[a]n appeal from an adverse decision of the [Unemployment Insurance] Commission is a special statutory proceeding." Western Kentucky Coca-Cola Bottling Co., Inc. v. Runyon , 410 S.W.3d 113, 116 (Ky. 2013).

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. Shinkle , 496 S.W.3d at 421 (statute had "an exclusive procedure, complete unto itself"); Runyon , 410 S.W.3d at 116 (the statute provided for a wholly self-contained administrative process); C.C. , 330 S.W.3d at 87 (the statute "laid out in detail" the comprehensive procedures and constituted a special statutory proceeding because the process was "complete within itself"); Swift , 360 S.W.2d at 214 (statutory cause of action was "complete within itself" and prescribed "each procedural detail"); Brock, 189 S.W.2d at 689 (the multi-step, detailed procedural requirements created a "special statutory proceeding").

Now, we must determine whether KRS 337.385 meets this standard.

B. Whether KRS 337.385 Constitutes a Special Statutory Proceeding

The statute at issue, KRS 337.385(2), states:

If, in any action commenced to recover such unpaid wages or liquidated damages, the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he or she had reasonable grounds for believing that his or her act or omission was not a violation of KRS 337.020 to 337.285, the court may, in its sound discretion, award no liquidated damages, or award any amount thereof not to exceed the amount specified in this section. Any agreement between such employee and the employer to work for less than the applicable wage rate shall be no defense to such action.

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