Richmond State Hosp. v. Brattain

• Citation: 961 N.E.2d 1010,162 Lab.Cas. P 61229
• Decision Date: 16 February 2012
• Docket Number: No. 49S02–1106–CV–327.,49S02–1106–CV–327.
• Parties: RICHMOND STATE HOSPITAL and All Other Similarly Situated State Institutions and Agencies, Appellants (Defendants below), v. Paula BRATTAIN, et al., Appellees (Plaintiffs below).
• Court: Indiana Supreme Court

162 Lab.Cas. P 61,229

961 N.E.2d 1010

RICHMOND STATE HOSPITAL and All Other Similarly Situated State Institutions and Agencies, Appellants (Defendants below),

v.Paula BRATTAIN, et al., Appellees (Plaintiffs below).

No. 49S02–1106–CV–327.

Supreme Court of Indiana.

Feb. 16, 2012.

Gregory F. Zoeller, Attorney General of Indiana, Thomas M. Fisher, Solicitor General of Indiana, Steve R. Creason, Patricia O. Erdmann, David L. Steiner, Frances H. Barrow, Ashley E. Harwel, Heather H. McVeigh, Donald G. Banta, Laura L. Bowker, Deputy Attorneys General, Indianapolis, IN, Attorneys for Appellants.

William A. Hasbrook, John F. Kautzman, Indianapolis, IN, Stephen D. Susman, Jonathan Bridges, Stephen Shackelford, Jr., Dallas, TX, Attorneys for Appellees.

PER CURIAM.

In short summary, for over twenty-five years, the State of Indiana required certain employees to work 40–hour weeks while requiring certain other employees to work only 37.5–hour weeks. Though the employees received the same biweekly paycheck, the effect of the State's policy was a disparity in actual hourly wage. The State ended the policy in 1993, but this class action was brought on behalf of those 40–hour employees.

Facts and Procedural History

The Court of Appeals did an exceptional job of detailing the extensive history of this litigation, as well as the history of the State's work-hour policies, Richmond State Hosp. v. Brattain, 935 N.E.2d 212, 217–24 (Ind.Ct.App.2010), modified on reh'g, 939 N.E.2d 1125 (Ind.Ct.App.2010), and we expressly adopt and incorporate by reference this portion of their opinion. Ind. Appellate Rule 58(A)(1).

The State raised nine issues in its appeal from the trial court's judgment, which the Court of Appeals described as:

(1) whether the trial court erred in finding that the merit Employees were not required to exhaust any available administrative remedies because to do so would have been futile; (2) whether the trial court abused its discretion in certifying a plaintiff class; (3) whether the trial court clearly erred in finding that the merit Employees were entitled to damages for the State's alleged breach of the “equal pay for comparable work” provision of the State Personnel Act; (4) whether the trial court clearly erred in finding that the nonmerit Employees were entitled to damages for the State's alleged breach of contract; (5) whether the trial court clearly erred in finding that the merit employees were entitled to receive twenty years of back pay; (6) whether the trial court clearly erred in determining which job classifications were split; (7) whether the trial court abused its discretion in admitting Plaintiffs' Exhibit C; (8) whether the trial court erred in relying on the damages estimates prepared by the Employees' damages expert; and (9) whether the Employees' claims are barred under the equitable doctrine of laches.

Richmond State Hosp., 935 N.E.2d at 217. The Court of Appeals found no error with respect to issues (1), (2), (3), (4), (6), (7), and (8). Id. With respect to issue (5), it reversed and remanded, finding that the back pay for merit employees should be calculated beginning on a date ten days prior to the filing date of the employee complaint, and concluding on the date the State ended its split-job classification system. The court further found that the State had not proven the elements of laches in issue (9).

Thus, as the case left the Court of Appeals, the employees' claims resolve as follows:

• The merit employees, both overtime-exempt and overtime-eligible, are owed back pay on their statute-based claim for the period beginning either ten days before the complaint or ten days before the filing of their grievances, whichever came first, until the day the State eliminated its split-pay system.

• The non-merit employees, both overtime-exempt and overtime-eligible, are owed back pay on their constitutional claims for a period of time ending the day the State eliminated its split-pay system and extending back some twenty years.

We granted transfer, 950 N.E.2d 1211 (Ind.2011) (table), and of necessity this case is being heard by only four members of this Court. The four participating Justices have cast diverging votes as to the various claims and subclaims delineated above, but cognizant of the need to conclude a case that has now lasted nineteen years, we have attempted to forge a result that will prevent perpetuation of the contest.¹ With those votes largely characterized by a 2–2 division, we summarily affirm the Court of Appeals with respect to its determination of the merit employees' claims. Ind. Appellate Rule 58. The sole exception relates to the State's contention that laches should bar outright the employees' claims, which we discuss below.

Laches Limits Damages Flowing from the Constitutional Claims

The State contends that the equitable doctrine of laches operates to bar all of the employees' claims. (Appellant's Br. at 53–54.) The employees do not dispute that laches could apply, arguing instead that the evidence was insufficient to support a ruling in the State's favor. (Appellee's Br. at 41–43.) We think the State's position goes too far, and we largely reject it, except as to part of the recovery for the non-merit employees.

We have previously said of the laches doctrine that “ ‘[i]ndependently of any statute of limitation, courts of equity uniformly decline to assist a person who has slept upon his rights and shows no excuse for his laches in asserting them.’ ” SMDfund, Inc. v. Fort Wayne–Allen Cty. Airport Auth., 831 N.E.2d 725, 729 (Ind.2005) (quoting Penn Mut. Life Ins. Co. v. Austin, 168 U.S. 685, 698, 18 S.Ct. 223, 42 L.Ed. 626 (1898)). It “has been aptly referred to as the doctrine of stale demand,” and reflects the courts' unwillingness “to come to the aid of a party who has knowingly slept on his rights under circumstances where he might have earlier asserted such rights in the exercise of due diligence.” Lake Caryonah Improvement Ass'n v. Pulte Home Corp., 903 F.2d 505, 509 (7th Cir.1990) (citing Schroeder v. Schlueter, 85 Ill.App.3d 574, 41 Ill.Dec. 12, 407 N.E.2d 204, 207 (1980)). And though it arose as an equitable defense, “[b]ased on the twin goals of limiting monetary consequences to the government and compelling the speedy resolutions of disputes ... it has been applied to claims for back pay by government personnel brought even before the limitations period has run, notwithstanding that these are actions at law, not equity.” Cornetta v. United States, 851 F.2d 1372, 1376 (Fed.Cir.1988); see also Teamsters & Employers Welfare Trust of Ill. v. Gorman Bros. Ready Mix, 283 F.3d 877, 880–81 (7th Cir.2002) (doctrine applies “regardless of whether the suit is at law or in equity, because, as with many equitable defenses, the defense of laches is equally available in suits at law”). In applying the doctrine, courts may restrict (or even deny outright) an award of damages—including back pay. See Occidental Life Ins. Co. v. EEOC, 432 U.S. 355, 373, 97 S.Ct. 2447, 53 L.Ed.2d 402 (1977).

To prevail in a defense of laches, the defendant must show “ ‘(1) inexcusable delay in asserting a known right; (2) an implied waiver arising from knowing acquiescence in existing conditions; and (3) a change in circumstances causing prejudice to the adverse party.’ ” SMDfund, Inc., 831 N.E.2d at 729 (quoting Shafer v. Lambie, 667 N.E.2d 226, 231 (Ind.Ct.App.1996)). Despite this structured test, “[t]here is no fixed or definite rule for the application of the doctrine of laches.” Grantham Realty Corp. v. Bowers, 215 Ind. 672, 686, 22 N.E.2d 832, 839 (1939).

With these principles in mind, we examine the circumstances of this litigation. The State instituted its split-pay system in 1967 and the non-merit sub-class representatives, Francis Ernst and Terry Sutcliffe, began their employment with the State in 1969. A generation later, the Court of Appeals decided Arden v. State Employees' Appeals Commission, 578 N.E.2d 769 (Ind.Ct.App.1991), laying the legal foundation upon which this current litigation rested when it was initiated by merit employees in July 1993.

By September 1993, the State had abolished its split-pay system. The landmark case of Collins v. Day that established the appropriate test for claims alleging violations of the Equal Privileges Clause of Indiana's constitution (and upon which basis the non-merit employees' claim rests), was decided in 1994. Collins v. Day, 644 N.E.2d 72 (Ind.1994).² Also in 1994, the General Assembly amended Section 34–1–2–1.5 of the Indiana Code, providing for only a two-year statute of limitations in bringing employment suits against the State.³

It was not until February 2002, however, that the plaintiffs sought leave to amend their complaint to add claims of non-merit employees. We think this delay reflects an instance in which the doctrine of laches should apply.

First, the delay in bringing non-merit employee claims was unreasonably long. The claims were brought about forty-five years after the State initiated its split-pay system, and forty-three years after the named plaintiffs in the non-merit sub-classes began their employment. While there may have been no case law recognizing a clearly defined, actionable claim during these decades, nothing barred the non-merit plaintiffs from seeking redress under the Just Compensation or Equal Privileges Clauses of the Indiana Constitution.

The Arden decision changed this landscape in 1991, making it clear that the split-pay system was unlawful. And though Arden did not address non-merit claimants, Sonnenburg clearly laid out a potential constitutional claim that same year—a claim that the non-merit plaintiffs waited eleven years to pursue. Collins then, three years later, articulated yet another possible constitutional claim for the non-merit plaintiffs—and yet they slumbered on this claim for eight years. And even when the merit employees launched this litigation in 1993 and the State...