CRONE, Judge.
From 1967 until 1993, the State of Indiana required some of its employees to work 40 hours per week while other employees in the same job classification were required to work only 37.5 hours per week for the same salary. The job classifications in which this occurred were referred to as "split classifications." Thus, the 40-hour-per-week employees in split classifications effectively received a lower hourly wage than their counterparts working 37.5 hours per week.
Employees who had been required to work 40 hours per week filed a class action lawsuit against Richmond State Hospital and all other similarly situated State Institutions and Agencies (collectively referred to as "the State") alleging that their salaries were required to be, but were not, equal to that paid to their counterparts working 37.5 hours per week. The trial court certified the class action and created four sub-classes: (1) merit/overtime-eligible;
The State appeals the trial court's judgment. In considering the State's appeal, we address the following issues: (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 non-merit 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.
We reach the following resolutions of the issues: (1) the trial court did not err in finding that the merit Employees were excused from exhausting administrative remedies because to do so would have been futile; (2) all the statutory requirements for class action certification were satisfied, and thus the trial court did not abuse its discretion in certifying a plaintiff class; (3) the merit Employees are entitled to damages for the State's breach of the "equal pay for comparable work" provision of the State Personnel Act; (4) the non-merit Employees are entitled to back pay for the State's breach of the Equal Privileges and Immunities Clause of the Indiana Constitution; (5) the trial court erred in finding that the merit Employees were entitled to receive twenty years of back pay; (6) the trial court committed no error in determining which Employees were in split classifications; (7) the trial court did not abuse its discretion in admitting Plaintiffs' Exhibit C; (8) the trial court did not err in relying on damages estimates prepared by plaintiffs' damages expert; and (9) the State failed to establish all the elements of laches, and therefore it does not bar Employees' claims. We affirm in part, reverse in part, and remand with instructions to recalculate the amount of back pay to which the merit Employees are entitled.
The Employees were or are employed by the State. There are different categories of state employees, which are governed by different statutes and regulations. There are merit employees, who work at the merit agencies listed in Indiana Code Section 4-15-2-3.8,
In 1953, the Indiana General Assembly passed Indiana Code Section 4-1-2-1 requiring state employees working in "state offices" to work 37.5 hours per week. Indiana Code Section 4-1-2-1 provides in relevant part:
In 1967, the State Personnel Board
On September 19, 1993, in response to an important Indiana Court of Appeals opinion, Arden & Coulter v. State Employees' Appeals Commission, 578 N.E.2d 769 (Ind.Ct.App.1991), the SPD abolished the split class system and issued a policy standardizing the computation of hourly rates for all state employees on the basis of a 37.5-hour work week. To understand the facts and procedural history of this case, familiarity with the Arden decision is essential. Arden involved only two categories of state employees, merit/overtime-eligible and merit/overtime-exempt, rather than the four categories present in this litigation. However, Arden was not a class action lawsuit. In Arden, employees who had been working 37.5 hours per week at state institutions objected to the 40-hour work week requirement that was implemented pursuant to the 1987 Memorandum and "timely pursued all administrative remedies," but the State Employees' Appeals Commission ("SEAC") denied relief.
On appeal, the Arden court addressed two separate issues. With regard to the merit/overtime-eligible employees, the issue on appeal was whether it was proper for the State to require merit/overtime-eligible employees in a given classification to work 40 hours per week for the same salary as that received by other employees in the same classification who worked only 37.5 hours per week. To answer the question, the Arden court relied on 31 Indiana Administrative Code 2-4-2, which provided that "[a]ll regulations ... shall be designed... to guarantee ... equal pay for comparable work in the several agencies of the state service." (Emphasis added.) We concluded that the merit/overtime-eligible employees in a given classification working in state institutions and those of
The issue for the merit/overtime-exempt employees was different. In their case, there were no state office employees performing comparable work for 37.5 hours per week. Thus, we did not need to reach the question of equal pay. The question then was "whether the State could increase the hours of employment from 37.5 to 40." Id. We noted that the merit/overtime-exempt employees had "not directed us to any regulatory, statutory, or constitutional principle or authority in support of their argument that the State, under present law, could not increase their hours[,]" and we had found none. Id. Therefore, we concluded that the trial court properly determined that the merit/overtime-exempt employees were not entitled to relief. Id. at 774.
After Arden was decided in September 1991, but before the State eliminated the pay disparity between employees in state offices and institutions in September 1993, this lawsuit was initiated on July 29, 1993, on behalf of merit Employees, both overtime-eligible and overtime-exempt. The brief complaint simply alleged that the plaintiffs were state employees working 40 hours per week for the same salary as their counterparts in state offices who worked 37.5 hours per week and that "[u]nder Indiana law, like-classified institutional workers are entitled to receive the same pay for comparable work as State office employees." Appellants' App. Vol. 1 at 67. The complaint further stated that the plaintiffs had not filed grievances with the SEAC.
On September 27, 1993, the State filed a motion to dismiss, arguing that the plaintiffs, who were all merit Employees, had failed to exhaust their administrative remedies pursuant to the Administrative Orders and Procedures Act ("AOPA"). Id. at 74-79. The trial court denied the motion because it found that a factual determination was needed as to whether any exceptions to the doctrine of exhaustion of administrative remedies existed. Id. at 117-19.
On December 9, 1997, the State filed a motion for summary judgment, arguing that the merit Employees had failed to exhaust their administrative remedies and that Strong and other overtime-exempt employees were not entitled to relief under Arden. Id. at 129-33. The merit Employees opposed the State's motion, and the trial court granted them leave to seek summary judgment pursuant to Indiana Trial Rule 56(B).
Appellants' Br. at 59-60.
On July 27, 2001, the Employees filed a praecipe for hearing on damages and class certification.
On February 6, 2002, the State filed a motion to reconsider the August 1998 summary judgment ruling, which was denied.
On February, 8, 2002, the Employees filed an amended complaint adding non-merit employees and naming the class representatives to represent the four sub-classes of plaintiffs. On February 28, 2003, the trial court issued an order granting class certification. The salient facts regarding the class representatives follow. Veregge worked at Richmond State Hospital from 1987 to at least September 19, 1993, as a "Clerk Typist V." Id. at 68. Richmond State Hospital was classified as a merit agency, and the "Clerk Typist V" position was classified as an overtime-eligible position for purposes of federal labor laws. Id. at 69. Thus, Veregge was a merit/overtime-eligible employee and represents that sub-class of plaintiffs in this litigation. When Veregge was hired, she was required to work 37.5 hours per week. However, Richmond State Hospital was one of the state institutions not in compliance with the 40-hour work week requirement. Following the issuance of the 1987 Memorandum, Veregge's hours were increased to 40 hours per week in February 1988.
Ernst worked for the Indiana Department of Transportation (then the State Highway Commission) from 1969 until at least September 19, 1993. Id. The Indiana Department of Transportation was not classified as a merit agency. From 1989 through 1993, Ernst was classified as an "Engineering Assistant Supervisor III," which was an overtime-eligible position for purposes of federal labor laws. Id. at 70. Ernst was a nonmerit/overtime-eligible employee and represents that sub-class of plaintiffs in this litigation. From 1989 through 1993, Ernst was required by the State to work 40 hours per week.
Sutcliffe worked for the Indiana Department of Transportation from 1969 until at least September 19, 1993, as a "Highway Engineer," which was an overtime-exempt position for purposes of federal labor laws.
On April 20, 2008, the State filed a second motion for summary judgment, asserting in pertinent part that (1) there was no private right of action for damages under either the State Personnel Act or the Indiana Constitution; (2) the "equal pay for comparable work" provision in 31 Indiana Administrative Code 2-4-2 did not apply to nonmerit employees; and (3) pursuant to Arden, no overtime-exempt employees were entitled to additional pay. Appellants' App. Vol. 3 at 556-71. On July 14, 2008, the trial court issued an order summarily denying the State's motion. Id. at 627.
Following a bench trial, on July 28, 2009, the trial court entered findings of fact, conclusions thereon, and judgment ("the Final Judgment"), which provides in relevant part as follows:
Appellants' Br. at 78-81 (citations omitted). The trial court entered judgment in favor of the Employees and ordered the State to pay the Employees $42,422,788, which is composed of $20,979,490 for merit/overtime-eligible employees; $2,696,812 for merit/overtime-exempt employees; $16,762,773 for non-merit/overtime-eligible employees; and $1,983,713 for non-merit/overtime-exempt employees. Id. at 81-82. The State appeals. Additional facts will be provided when necessary.
Generally, the following standard of review applies to the issues raised. Any departure will be indicated. When reviewing claims tried without a jury, we will not set aside the findings and judgment unless they are clearly erroneous. Ind. Trial Rule 52(A). "Findings of fact are clearly erroneous when the record lacks any evidence or reasonable inferences from the evidence to support them." St. John Town Bd. v. Lambert, 725 N.E.2d 507, 518 (Ind.Ct.App.2000). "A judgment is clearly erroneous when it is unsupported by the findings of fact." Id. We will reverse the judgment only when the record leaves us firmly convinced that a mistake has been made. S.C. Nestel, Inc. v. Future Constr., Inc., 836 N.E.2d 445, 449 (Ind.Ct.App. 2005). "We neither reweigh the evidence nor assess the credibility of witnesses, but consider only the evidence most favorable to the judgment." Id.
Although the State first raised the exhaustion of administrative remedies in its motion to dismiss, the trial court ultimately issued a summary judgment ruling against the State and in favor of the merit Employees, which the State appeals. Our standard of review is well settled.
Id. (citations omitted).
The State argues that the merit Employees, both overtime-eligible and overtime-exempt, failed to exhaust the administrative remedies provided by the State Personnel Act ("SPA") (Indiana Code Chapter 4-15-2) and the AOPA (Indiana Code Title 4, Article 21.5) and that the trial court erred in finding that pursuit of those remedies would have been futile.
The AOPA "establishes the exclusive means for judicial review of an agency action." Ind.Code § 4-21.5-5-1. An aggrieved person may seek judicial review "only after exhausting all administrative remedies available within the agency whose action is being challenged and within any other agency authorized to exercise administrative review." Ind.Code § 4-21.5-5-4. Generally, if an administrative remedy is available, the claimant must pursue it before access to the courts is granted. Johnson v. Patriotic Fireworks, Inc., 871 N.E.2d 989, 992 (Ind.Ct.App. 2007). However, a party is not required to exhaust available administrative remedies "when the remedy is inadequate or would be futile, or when some equitable consideration precludes application of the rule." Ind. Mich. Power Co. v. Runge, 717 N.E.2d 216, 226 (Ind.Ct.App.1999).
As an initial matter, the parties dispute who bore the burden of proof. The State's position is that exhaustion of administrative remedies is an issue of subject matter jurisdiction, for which the merit Employees had the burden of proof. See Ind. Dep't of Envtl. Mgmt. v. NJK Farms, Inc., 921 N.E.2d 834, 842 (Ind.Ct.App.2010) ("The failure to exhaust administrative remedies deprives the trial court of subject matter jurisdiction."), trans. denied. The merit Employees argue that failure to exhaust administrative remedies is an affirmative defense, for which the State had the burden to prove that (1) the merit Employees failed to exhaust their administrative remedies and (2) the administrative remedies would not have been futile.
Indiana Trial Rule 8(C) provides, "A responsive pleading shall set forth affirmatively and carry the burden of proving:... lack of jurisdiction over the subject-matter[.] A party required to affirmatively plead any matters, including matters formerly required to be pleaded affirmatively by reply, shall have the burden of proving such matters." Lack of subject matter jurisdiction is an affirmative defense which may be raised either in the answer to the complaint or in a motion to dismiss under Trial Rule 12(B)(1).
As to the burden of establishing futility of administrative remedies, we observe that to prevail on a claim of futility, the petitioner "`must show that the administrative agency was powerless to effect a remedy or that it would have been impossible or fruitless and of no value under the circumstances.'" Johnson v. Celebration Fireworks, Inc., 829 N.E.2d 979, 984 (Ind. 2005) (quoting M-Plan, Inc. v. Ind. Comprehensive Health Ins. Ass'n, 809 N.E.2d 834, 840 (Ind.2004)). Accordingly, the merit Employees had the burden to prove that exhaustion of administrative remedies would have been futile.
We turn to the merits of the State's claim that the trial court erred in finding that the merit Employees' pursuit of administrative remedies would have been futile. To prevail upon a claim of futility, "one must show that the administrative agency was powerless to effect a remedy or that it would have been impossible or fruitless and of no value under the circumstances." M-Plan, 809 N.E.2d at 840 (citation and quotation marks omitted).
The State asserts that following Arden, the SPD and the SEAC changed their legal position regarding the split classification pay disparity and in support thereof argues that some grievances were settled in favor of the employee after Arden. The record reveals that the aforementioned grievances were filed before Arden and had been held in abeyance pending this Court's decision in that case. Any alteration in the State's legal position following Arden cannot diminish the uncontroverted evidence that all grievances filed before Arden would have been denied because of the State's legal position.
Nevertheless, the State contends that "the mere fact that the agency might rule against [a] party does not mean that [the] exhaustion requirement may be disregarded[,]" citing Johnson, 829 N.E.2d 979 and Patriotic Fireworks, 871 N.E.2d 989. Appellants' Br. at 22-23. In Johnson, a fireworks wholesaler brought an action against the state fire marshal arguing that the fire marshal misinterpreted the annual fee statute
Both cases are distinguishable from the case at bar for exactly the same reasons. First, the evidence here does not demonstrate that the SPD and SEAC might have denied relief on any grievances regarding the pay disparity; it shows that there was "no relief to be had[.]"
Still, the State claims that the administrative process was necessary to create a factual record for each employee to determine whether and when the employee was in a split class. We reject this claim because prior to Arden the State denied all grievances on non-fact specific, purely legal grounds. See Appellees' App. Vol. 2 at 274 (Beesley's testimony that the SPD's denials were based on its interpretation of the law).
We conclude that the State has failed to demonstrate the existence of a genuine issue of material fact regarding the futility of the administrative process. Therefore, the trial court did not err in finding that the exhaustion of administrative remedies was futile, and we affirm its summary judgment ruling against the State and in favor of the merit Employees.
The State challenges the trial court's certification of a plaintiffs' class. Whether the prerequisites to class certification have been met is a question of fact for the trial court. Hefty v. All Other Members of the Certified Settlement Class, 680 N.E.2d 843, 851 (Ind.1997). "Appellate courts reviewing a class certification employ an abuse of discretion standard."
The State argues that the class fails to meet requirements (2) through (4) of Indiana Trial Rule 23(A),
Turning first to whether questions of law or fact are common to the class, we observe that "[c]ommonality is satisfied by a finding that the plaintiffs' claims derived from a common nucleus of operative fact. A common nucleus of operative fact exists where there is a common course of conduct." Hollowell, 818 N.E.2d at 950 (citations and quotation marks omitted). Here, the common nucleus of operative fact consists of the following: (1) each plaintiff was a state employee during the class period; (2) each was required to work 40 hours per week while other state employees in the same job classification were required to work only 37.5 hours; (3) each had an employment contract with the State (discussed in Sections III and IV, infra); and (4) the State breached its employment contracts by requiring the class members to work 40 hours per week for the same salary as their counterparts working only 37.5 hours per week.
The State contends that the commonality requirement is not satisfied because the "equal pay for comparable work" provision does not apply to the nonmerit Employees and their lawsuit relies on a different legal theory. The State also claims that there are factual differences among the Employees that preclude certification, such as (1) some always worked 40 hours per week, while others initially worked 37.5 hours per week and were required to increase their hours to 40 per week; (2) some Employees, such as correctional officers, had paid lunches; (3) some Employees had state vehicles as part of their compensation; (4) some state institutions were not in compliance with the 40-hour work week rule during the class period; (5) overtime eligibility changed multiple times during the class period; (6) some employees listed as working in the class of correctional officer were not actually doing the work of correctional officers during the relevant time; and (7) class representative Sutcliffe was in the classification of "Highway Engineer III" for a period, which was a classification that a plaintiffs' expert testified should not recover damages.
As to whether the claims of the representative parties are typical of the claims of the class, we note that typicality focuses on the desired characteristics of the class representatives. Matter of Tina T., 579 N.E.2d 48, 54 (Ind.1991). Class certification is improper where one or more class representatives fails to possess the same interest and suffer the same injury as the class as a whole. Y.A. by Fleener v. Bayh, 657 N.E.2d 410, 418 (Ind. Ct.App.1995), trans. denied (1996). We think that the four sub-classes insure that this requirement is met: each sub-class representative possesses the same interest and suffered the same injury as the sub-class as a whole.
Finally, the State claims that the divergent interests of the persons included in the class also prevent the named plaintiffs from adequately representing the class as a whole. The adequacy requirement of Trial Rule 23(A)(4) consists of three components:
N. Ind. Pub. Serv. Co. v. Bolka, 693 N.E.2d 613, 618 (Ind.Ct.App.1998), trans. denied. The State argues that Arden determined only that merit/overtime-eligible employees were entitled to equal pay for comparable work, and that the class members falling within or without that category have conflicts, as some may have standing to pursue their claims through the administrative process and some do not. Because we have concluded that the merit Employees were excused from exhausting their administrative remedies and the trial court created four sub-classes, this argument is of no moment. We conclude that the trial court did not abuse its discretion in finding that the requirements of Trial Rule 23(A) were met.
The State also asserts that the predominance requirement of Trial Rule 23(B)(3) was unsatisfied. Trial Rule 23(B)(3) reads,
(Emphasis added.)
As to whether common questions of law or fact predominate over individual questions, this Court has explained that
7-Eleven, Inc. v. Bowens, 857 N.E.2d 382, 393-94 (Ind.Ct.App.2006) (citations omitted).
The State contends that there are too many factual differences among plaintiffs, that plaintiffs could not amalgamate multiple contract actions into one, and that their claims for damages are inherently individualized. To bolster its argument, the State cites Broussard v. Meineke Discount Muffler Shops, Inc., 155 F.3d 331 (4th Cir.1998). There, franchisees sued franchisor for breach of contract. The Fourth Circuit held that class certification was improper because, inter alia, the franchisees' collective breach of contract action was based on multiple different contracts. Id. at 340. Broussard is distinguishable. There, each franchisee had a separate contract with the franchisor. Here, the Employees within each sub-class had the identical contractual relationship with the State. We cannot say that the trial court abused its discretion in finding that common issues predominate over individualized issues.
The State further argues that certification was improper under Trial Rule 23(C)(1), which provides, "As soon as practicable after the commencement of an action brought as a class action, the court, upon hearing or waiver of hearing, shall determine by order whether it is to be so maintained." Specifically, the State asserts that the trial court could not certify a class subsequent to its August 1998 summary judgment ruling. In support, the State cites Peritz v. Liberty Loan Corp., 523 F.2d 349 (7th Cir.1975). In Peritz, the district court delayed consideration of the class action status until after a jury trial was held. The Seventh Circuit held that the language of the substantially similar Federal Rule 23(c)(1) "makes it plain" that "the order determining class status is to be made and finalized before the decision on the merits." Id. at 354. The Seventh Circuit concluded that "certification of the class was delayed beyond the permissible period allowed by the rule." Id.
Id. at 1382 (citing Haas v. Pittsburgh Nat'l Bank, 381 F.Supp. 801 (W.D.Pa.1974), rev'd on other grounds, 526 F.2d 1083 (3d Cir.1975)). Because the State chose to move for summary judgment, the State has waived any argument under Trial Rule 23(C)(1). A contrary decision would allow defendants to avoid class certification by immediately moving for summary judgment, which would not serve the policy purposes set out by the Postow Court.
The State contends that the trial court committed clear error in concluding that because the State violated 31 Indiana Administrative Code 2-4-2, the "equal pay for comparable work" provision, the merit Employees were entitled to damages for breach of employment contract.
The State's contentions are unavailing. In Whinery v. Roberson, 819 N.E.2d 465 (Ind.Ct.App.2004), trans. dismissed (2006), we stated,
Id. at 473 (citations and quotation marks omitted) (emphasis added). The State argues that Whinery is inapplicable because it did not involve merit employees or the SPA. However, the State fails to articulate any rationale, nor do we discern any, that Whinery should not apply to merit employees and the SPA. The merit employees have a contractual relationship with the State, which the State concedes, and the SPA and applicable AOPA rules are necessarily part of their employment contract.
Further, the State erroneously frames the merit Employees' claim in terms of a statutory private cause of action. The merit Employees need not rely on the existence of a private right of action under the SPA because this suit is a breach of contract action.
As to whether the State breached the "equal pay for comparable work" provision, Arden is dispositive. The State argues that Arden is distinguishable because the plaintiffs there exhausted their administrative remedies. That distinction is meaningless because the merit Employees are excused from exhausting their administrative remedies.
In a separate argument, the State claims that as a matter of law an overtime-exempt employee is precluded from recovering damages for having to work forty hours per week. The State asserts that the trial court erred in finding otherwise. In support, the State relies on Arden, in which the overtime-exempt employees were held to be ineligible for relief under the "equal pay for comparable work" provision
The parties agree that the nonmerit Employees cannot proceed with a claim that the State violated the "equal pay for comparable work" provision because it applies only to merit Employees. Although not the basis for the trial court's finding in favor of the nonmerit Employees, they assert that the State breached Article 1, Section 23 of the Indiana Constitution, also known as the Privileges and Immunities Clause, which, they contend, is incorporated into their employment contracts.
The non-merit Employees contend that this Court has characterized state employees' claims of constitutional violations by the State in connection with their employment as contractual claims, citing City of Terre Haute v. Brighton, 450 N.E.2d 1039 (Ind.Ct.App.1983), and Bernhardt v. State, 479 N.E.2d 1367 (Ind.Ct.App.1985), trans. denied (1986), two similar cases.
In Brighton, the employees were fire fighters claiming that the city breached their employment contracts, violated certain statutes, and violated their constitutional rights to due process. 450 N.E.2d at 1040. The city argued that because the fire fighters raised constitutional issues, the action was governed by the Indiana Tort Claims Act. The Brighton court disagreed. The court observed that the fire fighters' tenure statute, Indiana Code Section 36-8-3-4, required notice and an opportunity for a hearing before an employee could be removed from office or grade, which was a property interest that was protected by the Due Process Clause of
In Bernhardt, the employee claimed that the State breached her employment contract by terminating her for, among other reasons, exercising her constitutionally-protected rights to free speech and freedom of association.
Id. (some citations omitted) (emphasis added).
The State argues that the non-merit Employees fail to state a claim for violation of the Equal Privileges and Immunities Clause of the Indiana Constitution. Article 1, Section 23 of the Indiana Constitution states that "[t]he General Assembly shall not grant to any citizen, or class of citizens, privileges or immunities, which, upon the same terms, shall not equally belong to all citizens."
When determining whether a State law or regulation complies with Article 1, Section 23, we use the following twoprong analysis: (1) "the disparate treatment accorded by the legislation must be reasonably related to inherent characteristics which distinguish the unequally treated classes;" and (2) "the preferential treatment must be uniformly applicable and equally available to all persons similarly situated." Collins v. Day, 644 N.E.2d 72, 78-79 (Ind.1994). In addition, on review we must "exercise substantial deference to legislative discretion." Id. at 80. When alleging a violation of Article 1, Section 23, the challenging party has the burden to "negative every conceivable basis which might have supported the classification." Id.
The State argues that the inherent distinctions between any alleged disparate treatment are reasonably related to the inherent characteristics of state office work versus state institutional work. According to the State, the 37.5-hour work week of the state office employees insures that personnel are always available to conduct business when the state office is open to the public, and the 40-hour work week of the state institution employees insures that state institutions receive 24-hour coverage. Although the differences in required work hours is reasonably related to the inherent characteristics of state office work versus state institutional work, that is irrelevant in assessing the reasonableness of paying a lower hourly wage to an
Having determined that Collins's first prong is unsatisfied, we need not address the second prong to conclude that the State breached its contractual obligation pursuant to the Equal Privileges and Immunities Clause.
The trial court found that the class period extended from at least September 19, 1973 (an early benchmark for the existence of split classes), until September 19, 1993, when the State abolished the split class system by moving all employees to a 37.5-hour work week. Thus, the State's monetary liability was based on the back pay owed to the Employees over this twenty-year period. However, the State argues that the merit Employees' back pay is limited to the period beginning ten days before the filing of the complaint, filed July 19, 1993, and ending September 12, 1993. According to the State, this ten-day limitation is based on the fact that merit Employees were required to file any grievance regarding working conditions within ten days after the condition arose pursuant to Indiana Code Section 4-15-2-35 and former 31 Indiana Administrative Code 2-13-1. Former 31 Indiana Administrative Code 2-13-1 provided,
The State relies on our supreme court's decision in State Employees' Appeal Commission v. Bishop, 741 N.E.2d 1229 (Ind. 2001) ("Bishop II"), a consolidation of Indiana State Employees' Appeals Commission v. Greene, 716 N.E.2d 54, 57-58 (Ind.Ct.App.1999), and Indiana State Employees' Appeal Commission v. Bishop, 721 N.E.2d 881, 884-85 (Ind.Ct.App.1999) ("Bishop I"). In Greene and Bishop I, state clerical employees of the Rockville Training Center filed grievances with the SEAC complaining of unlawful pay disparity because they were working 40 hours per week while clerical workers at state offices were working 37.5 hours per week. The SEAC denied their claims, save one, as untimely. The trial court reversed the SEAC's decision, finding that the employees' claims were timely filed and that they were entitled to back pay beginning from the date of hire. The SEAC appealed, and the Court of Appeals held that the employees were entitled to back pay but only for a time period beginning ten days before they filed their respective complaints. See
Greene, 716 N.E.2d at 57; see also Bishop I, 721 N.E.2d at 885 ("The purpose of the limitations period would be undermined if the employee were allowed to recover back pay for a period greater than ten days prior to filing the complaint.").
The employees petitioned for transfer, arguing that the Court of Appeals' opinions conflicted with State v. Martin, 460 N.E.2d 986 (Ind.Ct.App.1984), which permitted a group of Indiana State Prison teachers to receive back pay from the beginning of the time period that they experienced the effect of the pay disparity. Id. at 991. Our supreme court rejected the employees' argument, summarily affirmed the opinions of the Court of Appeals, and disapproved the decision in Martin. Bishop II, 741 N.E.2d at 1230.
The merit Employees contend that Greene, Bishop I, and Bishop II are irrelevant because they did not address which statute of limitations applies when claimants are excused from having to exhaust administrative remedies. However, the ten-day limit on back pay is unrelated to the statute of limitation on bringing suit. The statute of limitations controls access to the courts. The amount of back pay to which a successful litigant is entitled constitutes another question entirely. Furthermore, although the Greene and Bishop I petitioners followed the administrative grievance process, while here the Employees were excused from that process, that difference is simply not sufficiently compelling to justify an award of damages to merit Employees greater than that received by the Greene and Bishop I petitioners.
The Employees assert that because they are properly excused from having to comply with the administrative grievance process, they are not bound by any of the procedural requirements of that process. We disagree. "[A]ll relevant statutory provisions" are part of the merit Employees' contractual relationship with the State. Whinery, 819 N.E.2d at 473. Excusal from the administrative grievance process, which permits immediate access to the courts, does not nullify the contractual nature of all the relevant statutory provisions.
We note that Indiana Code Section 4-15-2-35 and former 31 Indiana Administrative Code 2-13-1 apply only to merit Employees. As to how these rules are applied, we think that Greene, Bishop I, and Bishop II are dispositive. However, we recognize that the effect creates an apparent anomaly. Indiana Code Section 4-15-2-35 and former 31 Indiana Administrative Code 2-13-1 do not apply to nonmerit Employees and cannot be considered part of their contractual relationship with the State, so their back pay is not limited by the ten-day rule. Nevertheless, we are constrained to follow our supreme court's pronouncement in Bishop II. The enterprise of creating law is outside our sphere of authority. Although our supreme court has the ability to revisit the issue and redefine the law, until that time, we are obliged to apply it as it currently exists.
Accordingly, we reverse the trial court's damage award as to the merit Employees and remand with instructions to recalculate their damages based on the time period beginning ten days before the filing of the complaint and ending when the State abolished the split class system. As a final matter, we note that although the trial court found that the State abolished the "split class" system on September 19, 1993, the State asserts that it was September 12, 1993, citing Greene, 716 N.E.2d at 57-58, and Bishop I, 721 N.E.2d at 885. The State contends that therefore the merit Employees' back pay is limited to a period of about eight weeks. A review of the record before us does not reveal the exact date that the State ended the split class system. Therefore, on remand we instruct the trial court to determine whether the State abolished the split class system on September 12 or September 19, 1993, and to calculate the merit Employees' back pay accordingly.
The State asserts that the trial court clearly erred in determining which plaintiffs were in split job classifications and when such classifications were split. The trial court found that the split classifications consisted of the job classifications listed on Plaintiffs' Exhibit C, with the exception of Psychiatric Attendant 4, Cook 1, Cook 3, and Teacher's Assistant 4. Appellants' Br. at 68, 73 (Findings 62, 103, 104). Plaintiffs' Exhibit C is a computer-generated document that was prepared by the SPD from its own data following the Arden decision to determine which job
The State contends that Plaintiffs' Exhibit C is unreliable because (1) it contains numerous errors; (2) the job classification systems changed over time; and (3) the number of employees in each job classification changed on a daily basis.
We note that Keith Beesley, a SPD staff attorney, testified that Plaintiffs' Exhibit C was "one of the most critical documents from our perspective[,]" that "it's a pretty fair representation" of the different classifications that might be affected by this lawsuit, and that "[i]t's what we use to make decisions." Appellants' App. Vol. 4 at 859, 867. The State's argument is merely an invitation to reweigh the evidence, which we must decline.
The State contends that not only is Exhibit C unreliable, it is inadmissible.
The State argues that Exhibit C is unreliable and therefore irrelevant and inadmissible under Indiana Evidence Rule 402, which provides that irrelevant evidence is inadmissible. "`Relevant evidence' means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Ind. Evidence Rule 401. As to Exhibit C's reliability, the previously cited testimony of Keith Beesley indicates that Exhibit C was reasonably trustworthy as to which job classifications were split, and we therefore conclude that it was relevant.
The State next claims that Exhibit C was never authenticated or identified pursuant to Indiana Evidence Rule 901,
The State also asserts that Exhibit C is inadmissible hearsay and does not fall within any hearsay exceptions. Hearsay is an out-of-court statement offered in evidence to prove the truth of the matter asserted. Ind. Evidence Rule 801(c). Hearsay is not admissible except as provided by law or by the rules of evidence. Ind. Evidence Rule 802.
The Employees argue that Exhibit C is not hearsay because it constitutes a statement by a party-opponent, citing Indiana Evidence Rule 801(d)(2). The State fails to respond to this argument. Evidence Rule 801(d)(2) provides that a statement is not hearsay if
A statement is defined as an oral or written assertion. Ind. Evid. Rule 801(a)(2). Exhibit C consists of a list of written assertions. Exhibit C was offered by the Employees as evidence against the State. The State concedes that Exhibit C is a document it prepared. Thus, it is the State's own statement. This Court has found that the Indiana rule on party-opponent statements applies against the government in civil and criminal cases. See City of Indianapolis v. Taylor, 707 N.E.2d 1047, 1057 (Ind.Ct.App.1999) (holding that statement of arresting officer or another police officer was not hearsay when used in wrongful death action against two police officers and the City of Indianapolis because it was a statement by a party-opponent), trans. denied; Allen v. State, 787 N.E.2d 473, 479 (Ind.Ct.App.2003) (concluding that statement of police officer of matter within the scope of officer's employment when introduced against State was not hearsay), trans. denied. Thus, we conclude that Exhibit C is a statement of a party-opponent pursuant to Indiana Evidence Rule 801(d)(2) and is not inadmissible hearsay.
The trial court made the following relevant findings:
Appellants' Br. at 72-75.
The State contends that Fuller relied extensively on Exhibit C and that his conclusions are unreliable, as is clear from his issuance of four different opinions on damages. See Appellants' App. Vol. 5 at 993 (Fuller report dated June 18, 2008, estimating damages at $45 million); id. at 995 (Fuller report dated July 16, 2008, estimating damages at $42,422,788); id. at 996 (Fuller report dated February 2, 2009, estimating damages at $65 million); and id. at 997 (Fuller report dated March 3, 2009, estimating damages at $81.9 million). We are unpersuaded that the issuance of four different opinions suggests unreliability. The reports were based on different assumptions, such as which job classifications
In addition, we observe that the trial court found damages in the amount of $42,422,788. Thus, the trial court relied on Fuller's second report, dated July 16, 2008. Much of the State's argument regarding Fuller's reports focuses on the third and fourth reports, which were generated with the use of settlement data. Because the trial court did not base its damages calculations on those reports, the State's arguments are immaterial. We conclude that the trial court did not err in relying on Fuller's report to calculate damages.
Finally, the State argues that the Employees' claims are barred under the equitable doctrine of laches, which is "`neglect for an unreasonable length of time, under circumstances permitting diligence, to do what in law should have been done.'" In re Paternity of P.W.J., 846 N.E.2d 752, 759 (Ind.Ct.App.2006) (quoting Knaus v. York, 586 N.E.2d 909, 914 (Ind. Ct.App.1992)). Since the State is the party raising laches, it has the burden of proof by a preponderance of the evidence. Huff v. Huff, 895 N.E.2d 407, 410 (Ind.Ct.App. 2008). "A trial court has considerable latitude in deciding whether to invoke laches, and its decision will not be reversed on appeal absent an abuse of that discretion." In re Bender, 844 N.E.2d 170, 184 (Ind.Ct. App.2006), trans. denied. Laches has three elements that must be proven: "`(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. v. Fort Wayne-Allen County Airport Auth., 831 N.E.2d 725, 729 (Ind.2005) (quoting Shafer v. Lambie, 667 N.E.2d 226, 231 (Ind.Ct.App.1996)), cert. denied (2006).
Here, we may dispose of this issue by focusing on the third element, that is, prejudice. The State contends that "the delay has prejudiced defendants because it resulted in a $42 million judgment against defendants." Appellants' Br. at 54. The Employees counter that back pay does not constitute prejudice for purposes of a laches defense, citing Cornetta v. United States, 851 F.2d 1372 (Fed.Cir.1988). In Cornetta, a retired marine brought a wrongful discharge claim against the government. In discussing the prejudice prong of the government's laches defense, the court stated,
Id. at 1378 (citations omitted). The court rejected "the government's contention that Cornetta's potential receipt of back pay if he is successful on the merits is sufficient to support a laches bar." Id. at 1380. The court explained that if "back pay constitutes prejudice then virtually every suit could be said to be presumptively `prejudicial.... If the potential receipt of back pay is deemed to satisfy the prejudice prong of the laches test, we will have judicially created an unpredictable, free floating, de facto statute of limitations[.]'" Id. at 1381.
Nevertheless, in its reply brief, the State for the first time baldly asserts that "[n]ot only has the State suffered economic prejudice by plaintiffs' delay in the instant action, it has incurred defense prejudice as evidenced by sketchy records, records without adequate foundation and confused witnesses testifying about things that happened as much as 37 years ago." Appellants' Reply Br. at 22. We observe that we have determined that Exhibit C was sufficiently trustworthy to be admitted as evidence and that it was properly identified and authenticated. In any event, the State fails to expand on this assertion and fails to provide citations to the record. Therefore, it has waived this argument. See Loomis v. Ameritech Corp., 764 N.E.2d 658, 668 (Ind.Ct.App.2002) (holding that appellants waived issue by not presenting a cognizable argument in support thereof), trans. denied; see also Ind. Appellate Rule 46(A)(8)(a) ("The argument must contain the contentions of the appellant on the issues presented, supported by cogent reasoning. Each contention must be supported by citations to the authorities, statutes, and the Appendix or parts of the Record on Appeal relied on....").
Because all three elements must exist to prove laches and the State failed to carry its burden as to the third element, we need not address the remaining two elements. We conclude that laches does not bar the Employees' claims.
We reverse the trial court's finding that the merit Employees, represented by Veregge and Strong, are entitled to twenty years of back pay and remand with instructions to recalculate the merit Employees' back pay based on the time period beginning ten days before the July 29, 1993, complaint was filed and ending when the State abolished the split class system. On remand, we instruct the trial court to determine whether the State abolished the split class system on September 12 or September 19, 1993. We affirm the trial court's judgment in all other respects.
Affirmed in part, reversed in part, and remanded with instructions.
BAKER, C.J., and BARNES, J., concur.
Ind.Code § 4-15-2-3.8.
In Doody, the plaintiff's complaint contained two counts, with Count II merely restating Count I in the language of a class action. The plaintiff moved for summary judgment on Count I, which the trial court granted. On appeal, the Doody court noted that the trial court disposed of the merits on Count II when it rendered judgment on Count I, and therefore held that the trial court erred in deciding to hold a hearing on class certification after it had rendered judgment on the merits. 556 N.E.2d at 1361-62.
In Dalesandro, plaintiffs moved the court to certify a class of plaintiffs consisting of salaried employees who were terminated from International Paper and then hired by another paper company and who did not receive severance benefits. Some plaintiffs had submitted claims for severance pay in accordance with ERISA's requirements and some had not. International Paper argued that because the non-filers had not filed claims, they did not have colorable claims and therefore were not participants in the ERISA plan. The Dalesandro court stated,
214 F.R.D. at 482 (citations omitted) (emphasis in original). Thus, the Dalesandro court did not hold that the "statutorily imposed limitations period" was the only relevant rule governing the non-filers' claims, as merit Employees argue; instead, it stated that International Paper was not arguing that the non-filers' claims were barred by the statutorily imposed limitations period.
