Bayh v. Sonnenburg

• Decision Date: 12 June 1991
• Docket Number: No. 37S03-9106-CV-437,37S03-9106-CV-437
• Citation: 573 N.E.2d 398
• Court: Indiana Supreme Court
• Parties: 121 Lab.Cas. P 56,880, 1 NDLR P 367 Evan BAYH, as Governor of the State of Indiana, Jerry Thaden, as Commissioner of the Indiana Department of Mental Health, and the Indiana Patient Remuneration Board, Appellants (Defendants Below), v. Leo SONNENBURG, Gerald Hartnett, and Dennis Sheffield, on behalf of themselves and all other similarly situated persons, Appellees (Plaintiffs Below).

Page 398

573 N.E.2d 398

121 Lab.Cas. P 56,880, 1 NDLR P 367

Evan BAYH, as Governor of the State of Indiana, Jerry Thaden, as Commissioner of the Indiana Department of Mental Health, and the Indiana Patient Remuneration Board Appellants (Defendants Below), v. Leo SONNENBURG, Gerald Hartnett, and Dennis Sheffield, on behalf of themselves and all other similarly situated persons, Appellees (Plaintiffs Below).

No. 37S03-9106-CV-437.

Supreme Court of Indiana.

June 12, 1991.

Rehearing Denied Sept. 17, 1991.

Linley E. Pearson, Atty. Gen., Robert S. Spear, Chief Counsel, David Michael Wallman, Deputy Atty. Gen., Indianapolis, for appellants.

Terrance L. Smith, Anthony DeBonis, Jr., Smith & DeBonis, East Chicago, for appellees.

ON PETITION TO TRANSFER

SHEPARD, Chief Justice.

The Jasper Circuit Court entered a judgment for nearly $28 million against the State of Indiana in this class action brought on behalf of 7400 patients of Indiana's mental hospitals for work they performed while confined in those hospitals in the early 1970's. We hold that the patients are not entitled to compensation and reverse the judgment of the trial court.

I. Background and Procedural History

On May 23, 1974, Leo Sonnenburg and Gerald Hartnett filed this class action in the LaPorte Circuit Court against then-Governor Otis Bowen and then-Commissioner of the Department of Mental Health William Murray. Plaintiffs sought compensation for labor performed while they were patients in state mental hospitals. The original complaint contended the plaintiffs were entitled to payment under the minimum wage and overtime provisions of the Fair Labor Standards Act, 29 U.S.C. Secs. 206, 207 (1988) [hereinafter FLSA], ¹ and the involuntary servitude clause of the thirteenth amendment to the United States Constitution.

In March 1976, plaintiffs amended their complaint to add a count based on Indiana's patient remuneration law, Ind.Code Secs. 16-13-12.8-1 to -10 (Burns 1973). Indiana's patient remuneration board, which had been created by that law, was added as a defendant. After the United States Supreme Court ruled in National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976), that the Constitution prohibited application of FLSA to many state employees, plaintiffs again amended their complaint to drop the FLSA count and add a count based on quasi-contract.

In 1978, the trial court entered an order delineating the plaintiff class and granting partial summary judgment for the class based on the patient remuneration law. Defendants perfected an interlocutory appeal from this order. The Court of Appeals reversed both the class determination and the partial summary judgment, and remanded. Bowen v. Sonnenburg (1980), Ind.App., 411 N.E.2d 390. Following remand, the case was venued to the Jasper Circuit Court. Judge Kanne certified Gerald Hartnett and Dennis Sheffield as class representatives; Leo Sonnenburg was not allowed to serve due to mental incapacity. Judge Kanne also certified the class as "[a]ll patient workers who have labored in the State of Indiana Institutions for the Mentally Handicapped or Mentally Retarded from May 23, 1970 to December 31, 1974." So certified, the class totalled 7419. After the U.S. Supreme Court overruled National League of Cities in Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985), plaintiffs moved to amend their complaint to resurrect their FLSA claim. Defendants opposed the motion on grounds of prejudice, but the trial court granted leave to amend. It also permitted defendants to file a counterclaim for over $200 million against the plaintiff class seeking payment for the cost of providing hospitalization to class members. The counterclaim was withdrawn by the defendants on October 24, 1986.

A special judge, William Andersen, Jr., was appointed in October 1985, and the case was tried to the bench in 1987. During trial, the plaintiffs introduced a new count based on Sec. 21 of the Indiana Bill of Rights (just compensation for particular services), ² and raised a claim under 42 U.S.C. Sec. 1983 (1988). The Sec. 1983 claim alleged violations of the thirteenth and fourteenth amendments, the FLSA, and a federal anti-peonage statute, 42 U.S.C. Sec. 1994 (1988).

Judge Andersen rendered a general judgment for plaintiffs without findings of fact and conclusions of law on November 17, 1987. The court awarded nearly $14 million to the plaintiff class, an amount derived by multiplying the number of hours worked by $1.60. On top of this, the court ordered defendants to pay an equal amount in prejudgment interest, bringing the total judgment to nearly $28 million. From this total, the court awarded $5.5 million in attorney fees to plaintiffs' counsel and nearly $84,000 in costs. The court also reserved $2.5 million for potential payments to counsel for post-judgment services. Defendants moved for a stay of judgment pending appeal, pursuant to Indiana Trial Rule 62, which the court granted without a bond.

On appeal, defendants principally contended that the verdict was contrary to law, unsupported by any of the legal theories advanced by the plaintiffs. They also claimed the trial court erred in allowing the total judgment to increase with the discovery of new class members, in awarding prejudgment interest, in awarding costs, and in awarding attorney fees far above the lodestar amount. ³

The Court of Appeals affirmed in part and reversed in part. It held that plaintiffs were entitled to just compensation for particular services rendered under article I, Sec. 21 of the Indiana Constitution. Orr v. Sonnenburg (1989), Ind.App., 542 N.E.2d 201, 205. It refused, however, to allow the judgment to increase as new members of the class were discovered. Over Judge Staton's dissent, the Court of Appeals also reversed the award of prejudgment interest. Having thereby reduced the total award by half, the Court of Appeals vacated the award of attorney fees and remanded to the trial court with instructions to recalculate it. The Court of Appeals did not, however, disagree with the trial court's method for calculating attorney fees. On the contrary, it held that a trial court need not limit a fee award to the lodestar amount and that a trial court may exercise discretion in setting the fee. Id. at 207.

Both sides have petitioned this Court for transfer. Plaintiffs claim the Court of Appeals erred in refusing to allow prejudgment interest and in refusing to allow the judgment to increase with the discovery of new class members. Defendants claim the Court of Appeals erred: in interpreting article I, Sec. 21; in deciding that attorney fees need not be based on the lodestar amount; and in failing to specify whether the award constituted damages (presumably untaxed) or wages (presumably taxed). Because the Court of Appeals failed to give a statement in writing on plaintiffs' non-constitutional claims, Ind.Appellate Rule 11(B)(2)(e), and because the constitutional issue is one of first impression, App.R. 11(B)(2)(b), we grant transfer and vacate the opinion of the Court of Appeals.

II. Nonconstitutional Issues Come First

The Court of Appeals recognized that there were six theories on which the trial court could have based its verdict, four of which were nonconstitutional theories. ⁴ Orr v. Sonnenburg, 542 N.E.2d at 203-04. The court also correctly noted that the trial court's general judgment must be affirmed if it is sustainable on any theory supported by the record. ⁵ Id. at 204. Without first addressing the viability of the four nonconstitutional claims, the Court of Appeals embraced article I, Sec. 21 of the Indiana Constitution as being "[o]ne of the theories ... upon which the trial court's judgment may be sustained." Id. at 204. While a reviewing court can freely choose any apparent statutory or common law basis upon which a judgment can be sustained, constitutional issues are to be avoided as long as there are potentially dispositive statutory or common law issues still alive. It is "the duty of the court not to enter upon the consideration of a constitutional question where the court can perceive another ground on which it may properly rest its decision." Bureau of Motor Vehicles v. Scott (1986), Ind., 497 N.E.2d 557, 559 (quoting Applegate v. State ex rel. Bowling (1901), 158 Ind. 119, 124, 63 N.E. 16, 18).

Therefore, before we reach the constitutional questions raised by the parties, we first explore whether the trial court's judgment can be affirmed on one of the four nonconstitutional theories. If it can be, then this Court will not reach the constitutional claims. If it cannot, then plaintiffs' constitutional claims must stand on their own merits.

A. Section 1983

Section 1983 of Title 42 provides a civil remedy against any "person" who, under color of state law, subjects a "citizen of the United States" to the "deprivation of any rights, privileges, or immunities" secured by the federal Constitution or federal laws. ⁶ Plaintiffs have sued the Governor and the Commissioner of the Department of Mental Health in their official capacities, and the Indiana Patient Remuneration Board. To maintain this Sec. 1983 action, plaintiffs must show that the named defendants are "persons" as that word is used in Sec. 1983. Plaintiffs cite Stanton v. Godfrey (1981), Ind.App., 415 N.E.2d 103, for the proposition that state agencies and state government officials, when sued in their official capacities, are "persons" under Sec. 1983. In Stanton, the Court of Appeals held that the Indiana Department of Public Welfare and its administrator, when sued in his official capacity, were "persons" under Sec. 1983. Id. at 107. That holding, however, was implicitly overruled by Will v. Michigan Department of State Police, 491 U.S. 58, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989), in which the U.S. Supreme Court held the contrary. The Will Court stated:

Obviously, state...