Ups Supply Chain Solutions, Inc. v. Hughes

UPS SUPPLY CHAIN SOLUTIONS, INC.; UNITED PARCEL SERVICE, INC.;and JOHN DOE 1-10 APPELLANTS v. MARION E. HUGHES; RAYMOND S. BATTS; JAMES A. CRUME;TERRI A. ROGERS; and PHILLIP L. WESTERN, individually,and on behalf of all persons similarly situated APPELLEES

NO. 2014-CA-001496-ME

Commonwealth of Kentucky Court of Appeals

APRIL 27, 2018

NOT TO BE PUBLISHED

APPEAL FROM JEFFERSON CIRCUIT COURT

HONORABLE MITCHELL PERRY, JUDGE

ACTION NO. 07-CI-009996

OPINION

VACATING AND REMANDING

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BEFORE: KRAMER, CHIEF JUDGE; COMBS AND THOMPSON, JUDGES.

COMBS, JUDGE:

UPS Supply Chain Solutions, Inc.; United Parcel Service, Inc.; and John Doe 1-10 (referred to collectively as "UPS") appeal from the order and opinion of the Jefferson Circuit Court entered on August 26, 2014. The court's order denied the motion of UPS for judgment on the pleadings and granted the motion for class certification filed by Marion E. Hughes, Raymond S. Batts, James A. Crume, Terri A. Rogers, and Phillip L. Western, individually, and on behalf of all other persons similarly situated. Based upon our review of the record and the applicable law, we vacate the order and remand for further proceedings consistent with this opinion.

Kentucky's Wages and Hours Act, Kentucky Revised Statutes (KRS) Chapter 337, allows a plaintiff who is not compensated by his or her employer for performing tasks which are compensable to recover payment for the time spent performing such tasks -- along with liquidated damages and attorney's fees. KRS 337.385. In 2007, the appellees filed a putative class action against UPS. In their complaint, they alleged that they and other employees of UPS were required to enter workplace facilities through mandatory security checkpoints before clocking in and to exit through the security checkpoints after clocking out each day. The appellees alleged that they were not paid wages for time spent at the security checkpoints and that UPS violated Kentucky's Wages and Hours Act by failing to compensate employees for work time. The appellees filed a motion for class certification. The proposed class was defined as consisting of all nonexempt UPSemployees employed in the Commonwealth during the applicable limitations period.

Kentucky Rules of Civil Procedure (CR) 23.01 and CR 23.02 govern class action certification. CR 23.01 provides as follows:

Subject to the provisions of Rule 23.02, one or more members of a class may sue or be sued as representative parties on behalf of all only if (a) the class is so numerous that joinder of all members is impracticable, (b) there are questions of law or fact common to the class, (c) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (d) the representative parties will fairly and adequately protect the interests of the class.

CR 23.02 reads as follows:

An action may be maintained as a class action if the prerequisites of Rule 23.01 are satisfied, and in addition:

(a) The prosecution of separate actions by or against individual members of the class would create a risk of (i) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or, (ii) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or

(b) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or(c) 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. The matters pertinent to the findings include: (i) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (ii) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (iii) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (iv) the difficulties likely to be encountered in the management of a class action.

A class may be certified only if the legal requirements outlined in both CR 23.01 and CR 23.02 are satisfied. Under the provisions of CR 23.01, four separate prerequisites must be satisfied; under CR 23.02, one of three conditions must be satisfied.

By order entered July 27, 2012, the circuit court denied the purported class representatives' motion for class certification. They filed a notice of appeal.

Thereafter, the purported class representatives filed a motion to amend, seeking to certify a more limited class. The new putative class was defined as all nonexempt UPS employees who worked at the following locations: Elizabethtown, Louisville, Technical & Logistics Center, and Worldport during the applicable limitations period.

By opinion and order entered October 9, 2012, the circuit court concluded that the more limited class also failed to meet the prerequisites and conditions of the rules of procedure governing class actions. Consequently, the court declined to certify the limited class. A second notice of appeal was filed. The appeals were consolidated by an order of this Court entered on November 27, 2012.

In an unpublished opinion rendered on September 6, 2013, this Court held that the circuit court had not erred by denying class certification in its order concerning the more broadly defined class. An affidavit of a UPS Security Director indicated that employees at two UPS facilities in Kentucky were not required to pass through mandatory security checkpoints yet were included in the proposed class. Since employees at these UPS facilities had not suffered an injury common to other putative class members, we concluded that class certification was improper. We affirmed the circuit court's opinion and order with respect to that appeal.

With respect to the more limited putative class, we concluded that the circuit court had erred by concluding that two prerequisites of CR 23.01 (commonality and typicality) of class certification had not been met. From our review of the record, we concluded that the security procedures and measures implemented by UPS were common to each of the identified UPS facilities. Wealso concluded that the putative class members had alleged a common wrong and had allegedly suffered the same injury -- unpaid work time. Consequently, we rejected the circuit court's conclusion that the putative class failed to meet the commonality prerequisite of class certification.

Furthermore, we concluded that the claims of the putative class representatives and the proposed class members were based upon a substantially similar course of conduct by UPS (mandatory security procedures at the facilities) and upon the same legal theory (violation of the Kentucky Wages and Hours Act). Consequently, we rejected the circuit court's conclusion that the more limited putative class failed to meet the typicality prerequisite for class action certification.

We vacated the circuit court's order denying class certification of the more narrowly defined class and remanded the matter for further proceedings. Upon remand, we instructed the circuit court to determine whether the limited class satisfied the remaining prerequisites for class certification pursuant to the provisions of CR 23.01 -- numerosity and adequacy of representation. We instructed the circuit court to deny class certification if it concluded that the limited class failed to satisfy either the numerosity or adequacy of representation prerequisite. However, if the circuit court determined that the limited class satisfied each additional prerequisite, we instructed it to determine whether the proposed limited class fulfilled any one of three conditions set forth in CR 23.02.If the circuit court determined that the proposed limited class satisfied any one of the three conditions provided by the civil rule, we directed it to certify the proposed class.

Upon remand, UPS filed a motion for judgment on the pleadings. UPS contended that the unpaid wages claims of the proposed class members could not be pursued through a class action because the provisions of Kentucky's Wages and Hours law did not permit such actions. In support of its position, UPS relied upon dicta included in our unpublished opinion, Toyota Motor Mfg., Kentucky, Inc., v. Kelley, 2012-CA-001508-ME, 2013 WL 6046079 (Ky. App. Nov. 15, 2013). In Kelley, we observed that if we were required by the facts of the case to decide whether a class action were available for claims brought under the provisions of KRS 337.385, we would conclude that it was not. We read the text of KRS 337.385(1) as a clear expression of the intent of the General Assembly not to permit class actions by employees against employers for unpaid wages.

Following a hearing conducted on August 15, 2014, the Jefferson Circuit Court denied the motion of UPS for judgment on the pleadings. The circuit court dismissed our dicta in Kelley as nonbinding. It was not persuaded that the provisions of Kentucky's Wages and Hours Act prohibit employees from pursuing relief by way of a class action. Pursuant to our instructions, the circuit courtproceeded to consider whether the proposed limited class satisfied the numerosity and adequacy of representation prerequisites for class certification.

With respect to the numerosity requirement, the circuit court observed that the proposed class numbered more than 11,000 employees working at the identified facilities. The court determined that given this large...