Reel v. Clarian Health Partners, Inc.

• Decision Date: 08 December 2009
• Docket Number: No. 49A02-0901-CV-112.,49A02-0901-CV-112.
• Citation: 917 N.E.2d 714
• Parties: Maureen REEL, Thomas Dullen and Ned Milby on Behalf of Themselves and All Others Similarly Situated, Appellants-Plaintiffs, v. CLARIAN HEALTH PARTNERS, INC., Appellee-Defendant.
• Court: Indiana Appellate Court

917 N.E.2d 714

Maureen REEL, Thomas Dullen and Ned Milby on Behalf of Themselves and All Others Similarly Situated, Appellants-Plaintiffs, v. CLARIAN HEALTH PARTNERS, INC., Appellee-Defendant.

No. 49A02-0901-CV-112.

Court of Appeals of Indiana.

December 8, 2009.

Ronald E. Weldy, Weldy & Associates, Indianapolis, IN, Attorney for Appellants.

Kim F. Ebert, Steven F. Pockrass, Bonnie L. Martin, Ogletree Deakins Nash Smoak & Stewart, P.C., Indianapolis, IN, Attorneys for Appellee.

OPINION

VAIDIK, Judge.

Case Summary

We agree with Lemon v. Wishard Health Servs., 902 N.E.2d 297 (Ind.Ct.App. 2009), reh'g denied, trans. denied, that a claimant seeking redress pursuant to the Wage Claims Statute, Indiana Code chapter 22-2-9, must first submit a claim to the Indiana Department of Labor ("DOL") before he or she is entitled to file a lawsuit in court and that the act of filing a putative class action does not enable the putative class members to subvert the statutory requirements. In addition, Indiana Code section 22-2-9-5, which allows the DOL to prosecute certain wage claims (less than $800 before July 1, 2007, and less than $6000 thereafter) on its own by taking assignment of them from the claimants, does not absolve the proposed class members from first submitting their wage claims to the DOL. We therefore affirm the trial court's dismissal of the proposed class of plaintiffs who have not sought review and referral from the DOL.

Facts and Procedural History

This is the third time this case has come before this Court. The essential facts are that in July 2005 Maureen Reel, Thomas Dullen, and Ned Milby¹ ("Named Plaintiffs"), represented by Attorney Ronald Weldy, filed a complaint under the Wage Claims Statute, Indiana Code chapter 22-2-9, against Clarian Health Partners, Inc., as a proposed class action on behalf of "all former employees of [Clarian] who involuntarily separated from employment with [Clarian] and were paid their PTO [Paid Time Off] wages on or after July 11, 2003." Reel v. Clarian Health Partners, Inc. (Reel II), 873 N.E.2d 75, 77 (Ind.Ct.App. 2007) (citation omitted), trans. denied.² Named Plaintiffs alleged that Clarian was liable to them for liquidated damages and attorney fees pursuant to Indiana Code section 22-2-5-2 for paying their PTO fourteen days after the pay date for the pay period in which they were involuntarily separated. The complaint alleged that the wage claims of Named Plaintiffs (but not the other proposed class members) had been referred to Attorney Weldy by the Indiana Attorney General's Office and the DOL pursuant to Indiana Code section 22-2-9-4(b). Id.; see also Appellants' App. p. 98. Named Plaintiffs also served interrogatories and requests for production on Clarian, the majority of which sought class-wide discovery.

In September 2005 Clarian filed a motion for summary judgment, and the trial court stayed discovery regarding the identity and contact information of the proposed class until it ruled on Clarian's motion. The trial court ultimately granted summary judgment in favor of Clarian. Named Plaintiffs appealed, arguing that the Wage Claims Statute, not Clarian's human resources manual, governs when Clarian must pay PTO wages. We held that, having granted employees the right to their PTO upon termination, such PTO is a wage under the Wage Claims Statute despite language in Clarian's manual setting forth when PTO would be paid upon termination. "Thus, despite Clarian's policy to the contrary, Clarian must pay the PTO in a timely manner as required in the Wage Claims Statute." Reel II, 873 N.E.2d at 82-83. We thus reversed and remanded the case to the trial court.

On February 25, 2008, shortly after the Indiana Supreme Court denied transfer in Reel II, Clarian filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction as to Class Claims or, in the Alternative, for Summary Judgment as to Class Claims. Clarian argued that pursuant to Indiana Code section 22-2-9-4 of the Wage Claims Statute, members of the proposed class who had not first filed their wage claims with the DOL were precluded from filing their claims in the trial court. A hearing was held, and on May 8, 2008, the trial court issued a three-page order granting Clarian's Trial Rule 12(B)(1) motion to dismiss. The court's order provides in relevant part:

The Defendant correctly argues that Indiana Code § 22-2-9-4 requires all civil actions brought through application of Indiana Code § 22-2-5-2 to be brought by the Attorney General or his designee. Indiana Code § 22-2-9 et. seq. is part of the Wage Claims statute and is the statute applicable to employees whose employment has been terminated by the employer. The Named Plaintiffs (and the proposed class members) are employees whose employment was terminated by Clarian and, therefore, the Wage Claims statute is applicable to this lawsuit.

* * * * * *

It is undisputed that the Named Plaintiffs have properly proceeded through the Department of Labor review and referral to the Attorney General's designee. Therefore, the Named Plaintiffs were found by the Court of Appeals of Indiana to be entitled to the penal remedies available through application of Indiana Code § 22-2-5-2. However, the members of the class, as proposed, have not proceeded through the Department of Labor and the referral process. Therefore, as proposed, the members of the class would not be entitled to the penal remedies of Indiana Code § 22-2-5-2 and, since they were all paid their PTO by Clarian (albeit in an untimely manner), there is no remedy available to them (unless and until they comply with the Wage Claims statute).

* * * * * *

Procedurally, this lawsuit goes forward on the claims of the three named Plaintiffs who have all followed the procedure of Indiana Code § 22-2-9-4 and, therefore, are entitled to the penal remedies of Indiana Code § 22-2-5-2. However, the purported claims of the proposed class of terminated employees who have not availed themselves of the review and referral procedures of the statute can not go forward. There is no purpose to proceeding through extensive and costly class discovery on a claim with no possible merit. Therefore, the Court grants the Defendant's Trial Rule 12 motion to dismiss the claim for recovery under Indiana Code 22-2-5-2 of the proposed class of plaintiffs who have not sought review and referral pursuant to Indiana Code § 22-2-9-4. However, this order of dismissal does not affect the rights of the named Plaintiffs who have properly proceeded under the Wage Claims statute.

Appellants' App. p. 26-28. Named Plaintiffs filed a motion to reconsider, which the trial court denied. On December 30, 2008, the trial court ordered Clarian to pay Reel $1453.64, Dullen $1510.86, and Milby $3609.80, plus pre-judgment interest and costs incurred to date, reasonable attorney fees in the amount of $17,351.00, and costs in the amount of $276.30. Appellee's App. p. 12. On January 23, 2009, Clarian tendered a check in amount of $26,093.66 to Attorney Weldy and filed its Notice of Satisfaction of Judgment on January 27, 2009. Named Plaintiffs now appeal.

Discussion and Decision

Named Plaintiffs appeal the trial court's Trial Rule 12(B)(1) dismissal of the purported wage claims of the proposed class members who have not sought review and referral to pursuant Indiana Code section 22-2-9-4. Specifically, they argue that despite this Court's recent ruling in Lemon (in which transfer was pending at the time Named Plaintiffs filed their Appellants' Brief but in which transfer was denied by the time Clarian filed its Appellee's Brief), the members of the proposed class action were not required to file their wage claims with the DOL in order to be a part of the proposed class action against Clarian. In addition, Named Plaintiffs argue that the trial court erred in failing to compel Clarian to provide discovery to them.

The standard of review for Trial Rule 12(B)(1) motions to dismiss is a function of what occurred in the trial court. GKN Co. v. Magness, 744 N.E.2d 397, 401 (Ind.2001). If the facts before the trial court are not in dispute, then the question of subject matter jurisdiction is purely one of law. Id. "Under those circumstances no deference is afforded the trial court's conclusion because appellate courts independently, and without the slightest deference to trial court determinations, evaluate those issues they deem to be questions of law." Id. (quotation omitted). Thus, we review de novo a trial court's ruling on a motion to dismiss under Trial Rule 12(B)(1) where the facts before the trial court are undisputed. Id.³

I. Wage Claims Statute

Named Plaintiffs contend that the members of the proposed class action were not required to file their wage claims with the DOL in order to be a part of the proposed class action. We recently addressed this issue in Lemon, in which the Indiana Supreme Court denied transfer in September 2009—shortly after Named Plaintiffs filed their Appellants' Brief in this case.⁴ In Lemon, Sherri Lemon was employed by Wishard until she was involuntarily separated. 902 N.E.2d at 298. Wishard did not pay Lemon her accumulated sick pay and PTO on her next regular payday, as required by the Wage Claims Statute. Id. Lemon's attorney sought a referral letter from the DOL granting permission to file a lawsuit under the Wage Claims Statute, and the DOL issued the referral letter shortly thereafter. Id. Lemon then filed a putative class action lawsuit, claiming that Wishard had failed to pay her and at least 100 other involuntarily separated former Wishard employees in a timely fashion as required by the Wage Claims Statute. Id. at 299. Lemon moved for class certification and claimed that there were approximately 250 individuals who fit her proposed class definition, none of whom had requested a referral letter from the DOL. Id. The trial court denied Lemon's request for class certification, and an interlocutory appeal ensued. Id.

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