Employment Law Report
Kentucky Supreme Court Reasserts Constitutional Power, Opens Door to Class Actions
With the Kentucky Supreme Court’s recent ruling in McCann v. The Sullivan University System, Inc., employers should take heed to potential class action exposure in cases related to alleged violations of Kentucky’s wage and hour statute. However, the Court, in its text-centric opinion, appears to have issued a broader warning shot as to how to interpret Kentucky statutory causes of action in light of the Kentucky Rules of Civil Procedure.
The underlying dispute arose when Sullivan University hired McCann as an admissions officer in 2006 at its campus in Fort Knox, later transferring her to its Spencerian College campus in Louisville in 2007. After a prolonged tilt in federal court, McCann filed a state court motion under Kentucky Rule of Civil Procedure 23 to certify a class action on behalf of admissions officers for back overtime pay. KRS 337.385—Kentucky’s wage and hour statute—neither prohibited nor authorized class actions for plaintiffs suing under the statute. The central issue before the court was how this silence regarding class certification impacts the applicability of the Civil Rules to a particular action.
The Kentucky Supreme Court determined the wage and hour statute does not necessarily preclude class actions because it does not establish a self-executing comprehensive process to qualify as a “special statutory proceeding.” Constitutionally, the Court is vested with the power “to prescribe…the rules of practice and procedure for the Court of Justice.” The Commonwealth maintains very formalistic separation of powers; under Sections 27 and 28 of the Kentucky Constitution, not only are government powers divided among the three branches of state government, but each respective branch is prohibited from exercising an enumerated power of another. So as a matter of state constitutional law, the Supreme Court is the only body entitled to issue rules of court procedure. This extends by implication, of course, to Rule 23 and the availability of class certification.
The Court has routinely accommodated intrusions into its constitutional rule making prerogative but has historically done so out of comity to the legislature and the General Assembly’s wish to develop practices and procedures unique to the private rights of action created with legislation. This comity principle is reflected in Rule 1, which simultaneously declares the scope of the Rules to “govern all actions of a civil nature,” while it also recognizes an exception only for “special statutory proceedings.” McCann holds that a special statutory proceeding is one where “the statute in question provides for a comprehensive, wholly self-contained process that prescribes each procedural detail of the cause of action.” The wage and hour statute failed this test, and was thus denied an exception under the civil rules.
McCann teaches that though the General Assembly may create a right of action, the courts ultimately determine how cases must be prosecuted. At minimum, a statute cannot abrogate applicability of the civil rules solely by silence or omission. As a matter of state constitutional law, McCann demonstrates that procedural rules are more than backstops or statutory gap-fillers. The McCann Court firmly, if methodically, reasserts that its rules are the method of practice. Unless your cause of action specifies a procedural blueprint cradle-to-grave, expect the Kentucky Rules of Civil Procedure to govern your case, including the sometimes uncomfortable rules like Rule 23.
The McCann decision reaffirms the Kentucky Supreme Court’s constitutional role in state government and makes it resoundingly clear that the Court intends to exercise that role with only limited room for the General Assembly to occupy. In the short-term, employers should, of course, note that McCann opens the door to class certification in wage-and-hour claims. In the long-term, McCann needs to be viewed as a warning shot as to how statutory causes of action must be prosecuted in the courts. Unless statutory created processes are set out comprehensively, the Kentucky Civil Rules are going to control how the case proceeds.