Werlinger v. Champion Healthcare Corp.

• Decision Date: 25 August 1999
• Docket Number: 990032,Nos. 990027,s. 990027
• Parties: Sister Colette WERLINGER, Kimberly Albright, Barbara Johnson, Linda Fugleberg, Mark Zimmerman, Sara Disher, Karen Gilbraith, Cheryl Rasmussen, Carla Myrum, Sheryl Roesler, Bette J. Nelson, Lynne Honrud, Ellen Lodin, Dale Harold Myrum, Carol J. Buth, Vicky Palluck, Marianne P. Kalin, Joan L. Shepel, Tamara Jo Cook, Yvette R. Johnson, Belinda Schmidt, Lisa Puklich, Murray Moen, Deborah J. Anderson, Julie Kay Buth, Lynette Jensen, Judy Rehder, Connie Bruse, Deedra A. Whalen, John Freeman, Sharon R. Bjornson, Elizabeth M. Hermes, JoNelle A. Kuder, Michelle D. Nordick, Jeanette Buerkle, Rebecca J. St. Marie, Mary Heiden, Leann Marie Herrmann, Barbara Ann Odegaard, Laure K. Larson, Terri L. Neyens, Gail E. Palmer, Karen Huseth, Inez Lere, Mary Liebonow, Keatha McLeod, Lynelle M. Dick, Lori L. Habel, Roxanne Myhra, M. Colette Kroeten, Patricia A. Althoff, Jeanine M. Rau, Joyce Ramsey, Joan J. Anderson, Wanda Meyer, John Hoscheid, Amy Jahnke, Kristine R. Berseth, Julie Boe, Evelin Heck, Pam Kanenwisher, Jana Stenson, Theresa R. Hedman, Joan M. Niles, Claudia Houston, Mary Ann Stibbe, Romona Kuehl, Diane E. Reese, Diane K. Gorman, Lora Wallgren, Lynette Brosowske, Beulah C. Misheski, Gayle Jean Mosseau, Karen M. Haaland-Kelly, Lisa Jorgenson, Marlene E. Freeman, Wanda McGray-Moore, Polly Bakko, Kathleen M. Rue, Peggy J. Abrahamson-Syverson, Shirley Hedlund, Donna Stubstad, Colleen P. Frost, Tamara Hoaglund, Susan M. McCullough, Tamara Handegard, Peggy Lindstrom, Lynette Anderson, Julie Lambertz, Kristi J. Bale, Susan Bishoff, Christie R. Evanger, Bonnie Bredell, Lael Jean Richards, Darla M. Schmitz, Sharon Baumler, Andrea K. Jones, Bonnie Halvorson, Denise M. Gaard, Jean M. Madsen, Patti J. Killoran, Judy Anderson, Nancy Cigelski, Patricia Hendricksen, Therese Stenger, Janel Deane, Wanda L. Davis, Cathy Bitterman, Doris Jean Gundberg, Dawn M. Brenament, and Brenda Kapitan, Plaintiffs and Appellees v. CHAMPION HEALTHCARE CORPORATION, a Delaware Corporation, d/b/a "DHHS" and D
• Court: North Dakota Supreme Court

Page 820

598 N.W.2d 820

1999 ND 173

Sister Colette WERLINGER, Kimberly Albright, Barbara Johnson, Linda Fugleberg, Mark Zimmerman, Sara Disher, Karen Gilbraith, Cheryl Rasmussen, Carla Myrum, Sheryl Roesler Bette J. Nelson, Lynne Honrud, Ellen Lodin, Dale Harold Myrum, Carol J. Buth, Vicky Palluck, Marianne P. Kalin, Joan L. Shepel, Tamara Jo Cook, Yvette R. Johnson, Belinda Schmidt, Lisa Puklich, Murray Moen, Deborah J. Anderson Julie Kay Buth, Lynette Jensen, Judy Rehder, Connie Bruse Deedra A. Whalen, John Freeman, Sharon R. Bjornson Elizabeth M. Hermes, JoNelle A. Kuder, Michelle D. Nordick, Jeanette Buerkle, Rebecca J. St. Marie, Mary Heiden, Leann Marie Herrmann, Barbara Ann Odegaard, Laure K. Larson, Terri L. Neyens, Gail E. Palmer, Karen Huseth, Inez Lere, Mary Liebonow, Keatha McLeod, Lynelle M. Dick, Lori L. Habel, Roxanne Myhra, M. Colette Kroeten, Patricia A. Althoff, Jeanine M. Rau, Joyce Ramsey, Joan J. Anderson, Wanda Meyer, John Hoscheid, Amy Jahnke, Kristine R. Berseth, Julie Boe, Evelin Heck, Pam Kanenwisher, Jana Stenson, Theresa R. Hedman, Joan M. Niles, Claudia Houston, Mary Ann Stibbe, Romona Kuehl, Diane E. Reese, Diane K. Gorman, Lora Wallgren, Lynette Brosowske, Beulah C. Misheski, Gayle Jean Mosseau, Karen M. Haaland-Kelly, Lisa Jorgenson, Marlene E. Freeman, Wanda McGray-Moore, Polly Bakko, Kathleen M. Rue, Peggy J. Abrahamson-Syverson, Shirley Hedlund, Donna Stubstad, Colleen P. Frost, Tamara Hoaglund, Susan M. McCullough, Tamara Handegard, Peggy Lindstrom, Lynette Anderson, Julie Lambertz, Kristi J. Bale, Susan Bishoff, Christie R. Evanger, Bonnie Bredell, Lael Jean Richards, Darla M. Schmitz, Sharon Baumler, Andrea K. Jones, Bonnie Halvorson, Denise M. Gaard, Jean M. Madsen, Patti J. Killoran, Judy Anderson, Nancy Cigelski, Patricia Hendricksen, Therese Stenger, Janel Deane, Wanda L. Davis, Cathy Bitterman, Doris Jean Gundberg, Dawn M. Brenament, and Brenda Kapitan, Plaintiffs and Appellees v. CHAMPION HEALTHCARE CORPORATION, a Delaware Corporation, d/b/a "DHHS" and Dakota Heartland Health System; Paracelsus Healthcare Corporation of North Dakota, Inc., a North Dakota Corporation; f/k/a Champion Healthcare Corporation of North Dakota, Inc., a North Dakota Corporation, individually and as a partner in Dakota/Champion Partnership, a North Dakota general partnership, Dakota Medical Foundation, Defendants and Appellants

Nos. 990027, 990032.

Supreme Court of North Dakota.

Aug. 25, 1999.

As Amended on Denial of

Rehearing Sept. 8, 1999.

James M. Dawson and Catharine F. Haukedahl (argued) of Felhaber, Larson, Fenlon & Vogt, P.A., Minneapolis, and Robert H. Swenson and Sara Gullickson McGrane of Gunhus, Grinnell, Klinger, Swenson & Guy, Fargo, for defendants and appellants Champion Healthcare Corporation, Parcelsus Healthcare Corporation of North Dakota, Inc., and Dakota/Champion Partnership.

Sarah Andrews Herman, Adele Hedley Page (argued), and Kristy L. Albrecht of Dorsey & Whitney, Fargo, for defendant and appellant Dakota Medical Foundation.

Jeff A. Bredahl of Bredahl & Associates, Fargo, and Michael D. Nelson (argued) and Steven E. McCullough of Ohnstad Twichell, P.C., West Fargo, for plaintiffs and appellees.

NEUMANN, Justice.

¶1 Champion Healthcare Corporation, Paracelsus Healthcare Corporation (collectively "Champion Healthcare"), and Dakota Medical Foundation ("Dakota Medical") appeal from the district court's order granting class certification under Rule 23, N.D.R.Civ.P. We remand with instructions.

I

¶2 On November 1, 1996, Sister Colette Werlinger, and others similarly situated (plaintiffs), filed a complaint in district court seeking class action status under Rule 23, N.D.R.Civ.P., to recover unpaid wages, unpaid overtime, liquidated damages, attorneys' fees, and other costs under state law. The plaintiffs identified three subclasses in the complaint:

Class A: Current employees of Defendant Champion Healthcare's North Dakota business operations;

Class B: Involuntarily terminated former employees of Defendant Champion Healthcare's North Dakota business operations; and

Class C: Voluntarily terminated former employees of Defendant Champion Healthcare's North Dakota business operations.

¶3 On September 3, 1997, the plaintiffs filed an amended complaint, again seeking class action status. In the amended complaint, the plaintiffs alleged four separate claims against Champion Healthcare and Dakota Medical. Claim one, asserted on behalf of members and potential members of all three subclasses, involved meal breaks and Champion Healthcare and Dakota Medical's failure to comply with state law. Specifically, the plaintiffs alleged Champion Healthcare and Dakota Medical imposed a business policy that did not allow for an uninterrupted thirty-minute break for work shifts exceeding five hours when two or more employees were on duty. Claim two, asserted on behalf of members and potential members of Class B, alleged Champion Healthcare and Dakota Medical had failed to pay the full amounts of acquired "Earned Time" to members of Class B. Claim three, asserted on behalf of members and potential members of Class C, alleged Champion Healthcare and Dakota Medical had failed to pay the full amounts of acquired "Earned Time," to members of Class C. Under claims two and three, the plaintiffs sought interest on unpaid "Earned Time" as allowed by law. Claim four, asserted on behalf of members and potential members of all three classes, alleged Champion Healthcare has committed retaliatory acts against the named plaintiffs. This claim seeks injunctive relief to protect the rights of the named plaintiffs.

¶4 On November 27, 1998, the district court issued a memorandum opinion and order granting class action certification for all plaintiffs seeking wage claims for earned time and meal breaks, but did not grant class action certification for the plaintiffs seeking retaliation claims. The district court divided the class action plaintiffs into three subclasses:

(1) Former and current employees with meal break claims, a group which subsequently may be further defined if demonstrated to the Court that meal break claims properly apply to certain types of hospital employees, but not to others;

(2) Voluntarily terminated employees with earned time claims; and

(3) Involuntarily terminated employees with earned time and liquidated damage claims.

¶5 The sole issue presented on appeal is whether the district court abused its discretion in certifying this case as a class action.

II

¶6 An order certifying a class action is an appealable order. N.D.R.Civ.P. 23(d)(3); Peterson v. Dougherty Dawkins, Inc., 1998 ND 159, p 9, 583 N.W.2d 626; Holloway v. Blue Cross of North Dakota, 294 N.W.2d 902, 906 (N.D.1980). The district court has broad discretion in deciding whether to certify a class action under Rule 23(b), N.D.R.Civ.P. Peterson, at p 9. The district court's decision will not be overturned on appeal unless the court abuses its discretion. Id. at p 9. A district court abuses its discretion only if it acts in an unreasonable, arbitrary, or unconscionable manner. Id. at p 9.

¶7 This Court has construed Rule 23, N.D.R.Civ.P., as being very open and receptive toward class actions. Old Broadway Corp. v. Hjelle, 411 N.W.2d 81, 82 (N.D.1987). In reviewing an order granting certification, we are mindful of the policy regarding class actions in this state. Peterson, at p 10.

¶8 In order to certify a class action under Rule 23, N.D.R.Civ.P., four requirements must be satisfied:

1. The class is so numerous or so constituted that joinder of all members, whether or not otherwise required or permitted, is impracticable;

2. There is a question of law or fact common to the class;

3. A class action should be permitted for the fair and efficient adjudication of the controversy; and

4. The representative parties fairly and adequately will protect the interests of the class.

Peterson, at p 11; Old Broadway, at 83; N.D.R.Civ.P. 23.

¶9 The district court found all four requirements satisfied regarding earned time and meal break claims. Champion Healthcare and Dakota Medical appeal, attacking the district court's rulings as to all four requirements. We will review all four requirements for abuse of discretion by the district court.

A. Numerosity

¶10 Champion Healthcare and Dakota Medical argue the district court incorrectly found the plaintiffs satisfied the numerosity requirement for class action certification. Specifically, Dakota Medical and Champion Healthcare argue the plaintiffs did not show joinder was impracticable, and did not meet their burden of showing numerosity, or number of prospective class members.

¶11 Regarding its numerosity determination, the district court reasoned:

Plaintiffs believe there are "thousands" of potential class members with similar claims based upon similar facts. Plaintiffs base their estimate upon a confidential list in the companion federal lawsuit wherein Defendants provide names of more than two-thousand, five hundred (2500) former and current hospital employees. Plaintiffs' exhibits in this action include local newspaper articles from 1996, which reflect the number of hospital employees was, at that time, between approximately one-thousand (1000) and one-thousand, three hundred, fifty (1350).

The district court specifically found the "112 named Plaintiffs, with the likelihood that more Plaintiffs exist within and outside of the region, satisfy the numerosity requirement for class certification."

¶12 A determination of numerosity must be made "in light of the particular circumstances of the case and generally, unless abuse is shown, the trial court's decision on this issue is final." Horst v. Guy, 211 N.W.2d 723, 727 (N.D.1973) (quoting 3 Moore, Federal Practice 23.05, at 3422 (2d ed.1964)). Horst involved forty-eight identifiable members with scattered addresses and the distinct possibility other members existed. Id. at 726. In Horst, we held the district court did...