Indus. Welding Supplies of Hattiesburg LLC v. Pinson , 530 S.W.3d 854 ( 2017 )

Cite as 2017 Ark. 315
SUPREME COURT OF ARKANSAS
No. CV-17-86
INDUSTRIAL WELDING SUPPLIES
Opinion Delivered: November 16, 2017
OF HATTIESBURG, LLC; AIRGAS,
INC.; AND AIRGAS USA, LLC
APPEAL FROM THE UNION
APPELLANTS COUNTY CIRCUIT COURT
[70CV-12-221]
V.
HONORABLE DAVID F. GUTHRIE,
JOHN PINSON AND LARRY JUDGE
MURPHY ON BEHALF OF
THEMSELVES AND ALL OTHERS REMANDED WITH
SIMILARLY SITUATED INSTRUCTIONS.
APPELLEES
KAREN R. BAKER, Associate Justice
Appellants Industrial Welding Supplies of Hattiesburg, LLC (“Industrial Welding”);
Airgas, Inc., and Airgas USA, LLC (collectively “Airgas”), bring an interlocutory appeal of
the Union County Circuit Court’s order certifying a class action filed by appellees John
Pinson, Larry Murphy, and others similarly situated (collectively “employees”). The
employees were employed by Industrial Welding in one of their fifteen locations in
Arkansas, Mississippi, or Alabama from December 31, 2011, through March 31, 2012. On
appeal, appellants argue that the circuit court abused its discretion in granting the motion
for class certification because (1) the employees failed to meet the commonality requirement
by presenting proof that common issues of law or fact exist; (2) common issues of law and
fact do not predominate over individual issues; and (3) a class action is not the superior
method of resolving this controversy. Because this is an interlocutory appeal pursuant to
Rule 2(a)(9) of the Arkansas Rules of Appellate Procedure–Civil, our jurisdiction is proper
pursuant to Arkansas Supreme Court Rule 1-2(a)(8).
I. Facts and Procedural History
On December 29, 2014, the employees filed their first amended complaint against
Industrial Welding and Airgas. The complaint alleged that on or about March 23, 2012,
Industrial Welding announced that it had signed an agreement with Airgas under the terms
of which Industrial Welding would be acquired by Airgas. The scheduled closing date for
the Industrial Welding and Airgas transaction was March 31, 2012.1 The employees alleged
claims of breach of contract and unjust enrichment based on Industrial Welding’s failure to
compensate the employees for earned but unused vacation time. Specifically, the employees
argued that each member of the class worked for Industrial Welding during the 2011
calendar year and earned vacation that was due to be paid in 2012. However, because each
employee was terminated in 2012, each employee was entitled to payment for the unused
vacation time he or she had earned in 2011. Further, the complaint named Airgas as a party
to the extent it is a survivor of Industrial Welding and because it purchased Industrial
Welding, including its current liabilities and noncurrent liabilities. To support their breach-
of-contract claim, the employees first quoted the following portion of Industrial Welding’s
“Employee Policies and Guidelines Manual”:2
1
The effective date of the “Asset Purchase Agreement” between Industrial Welding
and Airgas was April 1, 2012. As of this date, most of the Industrial Welding’s employees
became employees of Airgas.
2
This manual was distributed by Nordan Smith. It is undisputed that Industrial
Welding conducted business under the fictitious name of Nordan Smith, but it did not
formally register this name in Arkansas.
2
Vacation Schedules
An employee becomes eligible for vacation upon completion of twelve (12) months
of continuous service with the company.
Each employee earns vacation time as follows:
1 week after one year of service
2 weeks after two years of service
3 weeks after ten years of service
....
In addition, if an employee resigns, is laid-off, or is terminated, that employee will
be paid for unused earned vacation time for the calendar year of the occurring event.
Second, the employees relied on employment contracts entered into between
Industrial Welding and one or more of the employees, which stated, “The Employee shall
be entitled to an annual vacation, as is determined by existing policy.” 3 Third, the
employees alleged that Industrial Welding informed the employees by memo, “Vacation:
25% of your unused vacation (representing vacation acured [sic] from January 1 through
March 21) will be paid to you on your final Nordan Smith payroll check.” Finally, the
employees relied on a letter from Airgas to the employees, which stated, “Your earned but
unused vacation through March 30, 2012 will be paid out to you by Nordan Smith.” As
to the employees’ unjust-enrichment claim, the employees alleged that Industrial Welding
possessed and promised to pay money or its equivalent owed to the employees for earned
but unpaid vacation time.
3
The employees attached John Pinson’s “Employment Agreement and Non-
Compete Agreement” as an exhibit to the amended complaint. The amended complaint
states that Larry Murphy’s employment contract was not attached as an exhibit because it
could not be located.
3
On January 14, 2015, Industrial Welding filed its answer to the employees’ first
amended complaint. On February 23, 2015, Airgas filed its answer to the employees’ first
amended complaint. Both Industrial Welding and Airgas sought to have the employees’
complaint dismissed.
On May 24, 2016, the employees filed their amended motion for class certification
to certify a class of “All persons who were employed by Industrial Welding Supplies of
Hattiesburg, LLC on December 31, 2011, were so employed for at least one year prior
thereto, and continued to be so employed until Industrial Welding Supplies of Hattiesburg,
LLC on March 31, 2012.” The employees restated the allegations contained in their
amended complaint—this case involves vacation benefits that were owed to the employees
but were not paid by Industrial Welding or its successor, Airgas.
On June 30, 2016, Industrial Welding filed its response to the employees’ amended
motion for class certification. Industrial Welding argued that class certification was
inappropriate and asked the circuit court to deny the employees’ motion for class
certification.
On September 28, 2016, a hearing on the motion for class certification was held.
During the hearing, the circuit court granted the employees’ motion for class certification.
On October 31, 2016, the circuit court entered its written order certifying the class. The
appellants timely filed their notices of appeal. On appeal, the appellants argue that the circuit
court abused its discretion in granting the employees’ motion for class certification. 4
4
On March 29, 2017, Airgas sent a letter to the clerk of our court stating that it
adopts Industrial Welding’s brief in full.
4
Specifically, as to the breach-of-contract claim, the appellants contend that the employees
failed to demonstrate commonality, predominance, and superiority.5
II. Standard of Review
An interlocutory appeal may be taken from an order certifying a case as a class action
in accordance with Rule 23 of the Arkansas Rules of Civil Procedure. Circuit courts are
given broad discretion in matters regarding class certification, and we will not reverse a
circuit court’s decision to grant or deny class certification absent an abuse of discretion.
ChartOne, Inc. v. Raglon, 373 Ark. 275, 283 S.W.3d 576 (2008). When reviewing a circuit
court’s class-certification order, this court reviews the evidence contained in the record to
determine whether it supports the circuit court’s decision. Teris, LLC v. Golliher, 371 Ark.
369, 266 S.W.3d 730 (2007). Our focus is “whether the requirements of Rule 23 are met,”
and “it is totally immaterial whether the petition will succeed on the merits or even if it
states a cause of action.” Philip Morris Cos. v. Miner, 2015 Ark. 73, at 3, 462 S.W.3d 313,
316 (quoting Am. Abstract & Title Co. v. Rice, 358 Ark. 1, 9, 186 S.W.3d 705, 710 (2004)).
III. Class Certification
Rule 23 of the Arkansas Rules of Civil Procedure governs class actions and class
certification. The rule provides, in pertinent part:
(a) Prerequisites to Class Action. One or more members of a class may sue or be
sued as representative parties on behalf of all only if (1) the class is so numerous that
joinder of all members is impracticable, (2) there are questions of law or fact common
to the class, (3) the claims or defenses of the representative parties are typical of the
5
The appellants do not challenge the employees’ unjust-enrichment claim until their
reply brief. This court will not address arguments raised for the first time in the appellants’
reply brief, because the appellee is not given a chance to rebut the argument. Coleman v.
Regions Bank, 364 Ark. 59, 216 S.W.3d 569 (2005).
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claims or defenses of the class, and (4) the representative parties and their counsel will
fairly and adequately protect the interests of the class.
(b) Class Actions Maintainable. An action may be maintained as a class action if the
prerequisites of subdivision (a) are satisfied, and the court finds that the questions of
law or fact common to the members of the class predominate over any questions
affecting only individual members, and that a class action is superior to other available
methods for the fair and efficient adjudication of the controversy. . . . An order
certifying a class action must define the class and the class claims, issues, or defenses.
(Emphasis added.) Having considered the requirements of Rule 23, we now turn to the
circuit court’s order granting class certification:
On this 28th day of September, 2016, came on to be heard the Plaintiffs’
Amended Motion for Class Certification, with Plaintiffs appearing through counsel
of record Neil Chamberlin, Charles Harrison, Floyd M. Thomas, Jr. and Joe Hickey,
Defendant Industrial Welding Supplies of Hattiesburg, LLC appearing through
Thomas Stone, and Defendants Airgas, Inc. and Airgas USA, LLC appearing through
Jerry Shivers and Molly Shepherd. Upon presentation and consideration of Plaintiffs’
amended motion, and upon review and consideration of all papers, pleadings, and
other submissions on file, the Court finds as follows:
That the Plaintiffs have satisfied all elements of Rule 23 of the Arkansas Rules
of Civil Procedure and class certification is appropriate in this case.
The Court further finds that the named Plaintiffs, John Pinson and Larry
Murphy, have demonstrated sufficient interest in and knowledge of this case such
that they are each appropriate to serve as class representative in this matter.
The Court has also considered the pleadings and other filings, as well as the
presentations in hearings before this Court, and finds that the attorneys for the
Plaintiffs have sufficient expertise and experience to serve as class counsel in this
matter.
The Court has also considered the pleadings and arguments of counsel and
has determined that the class shall be defined as all persons who were employed by
Industrial Welding Supplies of Hattiesburg, LLC on December 31, 2011, were so
employed for at least one year prior thereto, and continued to be so employed until
Industrial Welding Supplies of Hattiesburg, LLC was acquired by Airgas USA, LLC
on March 31, 2012.
WHEREFORE, it is hereby CONSIDERED, ORDERED and
ADJUDGED that:
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1. A class shall be certified consisting of all persons who were employed by
Industrial Welding Supplies of Hattiesburg, LLC on December 31, 2011,
were so employed for at least one year prior thereto, and continued to be
so employed until Industrial Welding Supplies of Hattiesburg, LLC was
acquired by Airgas, LLC on March 31, 2012;
2. John Pinson and Larry Murphy shall be named representatives of said class;
and
3. Class counsel shall be Neil Chamberlain and Charles Harrison of McMath
Woods P.A., Floyd M. Thomas, Jr., and Joseph Hickey.
Upon our review of the circuit court’s order, we hold that it fails to comply with the
mandatory requirements contained in Rule 23(b) of the Arkansas Rules of Civil Procedure.
As noted above, the last sentence of subsection (b) clearly states that “[a]n order certifying a
class action must define the class and the class claims, issues, or defenses.” (Emphasis added.) Here,
as required by the rule, the circuit court defined the class as “all persons who were employed
by Industrial Welding Supplies of Hattiesburg, LLC on December 31, 2011, were so
employed for at least one year prior thereto, and continued to be so employed until
Industrial Welding Supplies of Hattiesburg, LLC was acquired by Airgas, LLC on March
31, 2012.” However, the circuit court failed to comply with the remainder of Rule 23(b)’s
requirements to define the “class claims, issues, or defenses.” In fact, the circuit court’s only
finding was the conclusory statement “[t]hat the Plaintiffs have satisfied all elements of Rule
23 of the Arkansas Rules of Civil Procedure and class certification is appropriate in this
case.”
While we recognize that neither party filed a Rule 52 motion for specific findings
below, nor do they challenge the sufficiency of the order on appeal, the circuit court’s failure
to define the class claims, issues, or defenses, as required by Rule 23(b), prevents this court
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from conducting a meaningful review of the order. In Baptist Health v. Haynes, 367 Ark.
382, 240 S.W.3d 576 (2006), we recognized that we first discussed the interplay between
Rules 23 and 52 in Mega Life & Health Insurance Co. v. Jacola, 330 Ark. 261, 954 S.W.2d
898 (1997). In Mega Life, the appellant argued that this court should reverse the circuit
court’s certification order because the lower court failed to make specific findings regarding
the existence of the Rule 23 requirements. In rejecting this argument, we explained:
This issue is governed by Ark. R. Civ. P. 52(a) which states that “findings of fact and
conclusions of law are unnecessary on decisions of motions under these Rules,” but
that the court shall enter such specific findings and conclusions upon the request of
a party. It does not appear from the abstract that Mega ever requested that the court
make such specific findings in regard to the predominance and superiority
requirements of Rule 23(b).
Moreover, Rule 52(b) states that upon a motion of a party made no later than
ten days after the entry of judgment, the court may amend its findings of fact or make
additional findings. Thus, Mega had ten days after the order of certification was
entered to ask the trial court to make additional findings regarding the Rule 23(b)
elements. Mega, however, failed to make such a request. Because Mega failed to
request specific findings in regard to the Rule 23(b) elements either prior to or after
the entry of the order of certification, we hold that it has waived this issue on appeal.
Mega Life, 330 Ark. at 267–68, 954 S.W.2d at 900.
Next, in Haynes, we discussed our decision in BPS Inc. v. Richardson, 341 Ark. 834,
20 S.W.3d 403 (2000). In BPS, the appellant argued that the case should be reversed and
remanded because the circuit court failed to make specific findings of fact and conclusions
of law pursuant to Rule 52. We explained that Rule 52 had been interpreted to mean that
if findings under Rule 52(a) are timely requested, the circuit court is required to make
specific findings of fact and conclusions of law. Thus, because the circuit court’s order did
not provide this court with an analysis of the requirements of Rule 23 or specific findings
8
of fact or conclusions of law pursuant to Rule 52, we reversed and remanded the case for
analysis and findings as required by Rule 23 and Rule 52.
We explained that the distinction between Mega Life and BPS was that, in BPS, the
appellant had made a request for specific findings under Rule 52. Whereas the appellant in
Mega Life did not.
However, subsequent to Mega Life and BPS, Rule 23(b) was amended in 2006 to
incorporate the following sentence at the end of that subsection: “An order certifying a class
action must define the class and the class claims, issues, or defenses.” (Emphasis added.) We noted
this amendment in a footnote in Haynes and quoted with approval the Addition to
Reporter’s Note, 2006 Amendment, as follows:
On May 25, 2006, this court issued a per curiam in which it adopted certain
amendments to Rule 23. Of specific import for the case at hand, Rule 23(b) was
revised to incorporate the following sentence at the end of that subsection: “An order
certifying a class action must define the class and the class claims, issues, or defenses.”
(Emphasis added.) The Addition to Reporter’s Note, 2006 Amendment, comments
on this addition as follows:
A new sentence has been added to the end of subdivision (b). As the
cases make plain, the certification order must define the class in sufficiently
definite terms so that the court and the parties may identify the class members.
[Citation omitted.] Identifying the claims, issues, and defenses will likewise
help in identifying class members and expedite the resolution of the litigation.
The amendment tracks existing Arkansas law and the federal Rule. This
amendment does not alter the precedent holding that the circuit court is not
required to perform a rigorous analysis of the case at the certification stage.
E.g., THE/FRE, Inc. v. Martin, 349 Ark. 507, 514, 78 S.W.3d 723, 727
(2002). But the circuit court must “undertake enough of an analysis to enable [the
appellate court] to conduct a meaningful review.” See Lenders Title Co. v. Chandler,
353 Ark. 339, 349, 107 S.W.3d 157, 162 (2003).
Addition to Reporter’s Notes, 2006 Amendment (emphasis added). Thus, this
court’s case law, as reflected in Lenders Title and BPS, has now been incorporated
into the rule itself, and this will hopefully help litigants and courts avoid precisely this
sort of issue in the future.
9
367 Ark. at 391 n.3, 240 S.W.3d at 583 n.3. While we recognize that the Lenders appellant
filed a motion for specific findings pursuant to Rule 52, our explanation of the circuit court’s
standard for class certification is helpful to our analysis,
We have consistently maintained that the trial court is not required to conduct
a rigorous analysis before it may certify a case as a class action. The fact that we have
refused to adopt such a strict standard, however, does not mean that there is no
standard at all. The trial court must undertake enough of an analysis to enable us to conduct
a meaningful review of the certification issue on appeal. At a minimum, this requires more than
a cursory mention of the six criteria or bare conclusions that those criteria have been satisfied.
The trial court cannot simply rubber stamp the complaint.
Lenders, 353 Ark. at 349, 107 S.W.3d at 162 (emphasis added).
We note that, in reference to Mega Life, the dissent states that “the majority proceeds
to eviscerate that precedent based on a misunderstanding of our role in deciding this appeal.”
On the contrary, the dissent apparently misunderstands that our decision in this case turns
on the 2006 amendment to Rule 23(b), which occurred over eight years after Mega Life was
decided. Again, in the present case, we recognize that neither party made a Rule 52 motion
for specific findings nor does either party address the sufficiency of the circuit court’s order
on appeal. However, whether or not the parties make a Rule 52 motion, the onus remains
on this court to ensure compliance with Rule 23. Stated differently, even in the absence of
a Rule 52 motion, the circuit court must still comply with the mandatory language
contained in Rule 23 in order for this court to conduct a meaningful review.
The requirements in Rule 23(b) and in Lenders, compel more than a cursory mention
of the six criteria or bare conclusions that those criteria have been satisfied. Here, we simply
have the bare conclusion that the “Plaintiffs have satisfied all elements of Rule 23 of the
Arkansas Rules of Civil Procedure and class certification is appropriate in this case.” This
10
finding is clearly insufficient. After the 2006 amendment to Rule 23, Rule 23 and Rule 52
will continue to intersect. However, both rules also impose separate and distinct
requirements. Rule 23 requires, at a minimum, that the circuit court define the class claims,
issues, or defenses. In contrast, Rule 23 is not as exacting as Rule 52, which imposes a
heightened standard because it requires the circuit court to make specific findings of fact
and conclusions of law. Here, even in the absence of a Rule 52 motion, the circuit court
is not relieved from its duty to comply with the minimum requirements of Rule 23.
Accordingly, because the order granting class certification fails to comply with Rule 23(b),
we remand with instructions to enter an order that complies with Rule 23. Because we
remand, we are unable to address the remaining points on appeal.
Remanded with instructions.
WOOD, WYNNE, and WOMACK, JJ., dissent.
ROBIN F. WYNNE, Justice dissenting. Because I believe that it is unnecessary to
remand in order to decide the issues on appeal, I respectfully dissent.
It is undisputed that no party made a motion for additional findings by the trial court
pursuant to Arkansas Rule of Civil Procedure 52 (2016), a fact the majority recognizes. The
majority also recites our holding in Mega Life & Health Ins. Co. v. Jacola, 330 Ark. 261, 954
S.W.2d 898 (1997), that we will not remand a certification order for findings regarding the
requirements of Arkansas Rule of Civil Procedure 23 if no party made a motion for
11
additional findings under Rule 52.6 Nonetheless, the majority proceeds to eviscerate that
precedent based on a misunderstanding of our role in deciding this appeal.
In the order on appeal, the certified class is clearly defined. The circuit court made
a finding that all of the Rule 23 requirements were satisfied. The additional findings the
majority is requiring the circuit court to make do not touch on our jurisdiction to decide
the case. The majority is simply incorrect in its assertion that remand is required for this
court to conduct a meaningful review of the order, when the parties themselves do not
consider the findings ordered on remand necessary to decide the appeal. Our review in this
matter is not de novo; instead, we are to review the order for an abuse of discretion. A
recitation of the class claims, issues, or defenses in the order is not necessary for us to conduct
a meaningful review of the issues on appeal because the issues on appeal have been fully
briefed by the parties and we are to review the order for an abuse of discretion based on the
arguments presented.7 The majority has not identified a single issue actually raised in this
appeal that cannot be decided based on the record before us.
While I agree that the order ideally would have been more detailed, a break with
our longstanding precedent regarding the parties’ duty to raise non-jurisdictional issues is
simply unnecessary here. Further, such a break is unwise in that it may produce troublesome
consequences in future cases. Any future litigant who fails to raise an issue with either the
6
Indeed, in every case cited by the majority in which this court remanded for
additional findings, one of the parties had filed a motion with the trial court containing a
request for additional findings.
7
Notably, the majority cites no authority for its assertion that this court has an
independent duty to ensure compliance with Rule 23 regardless of the arguments raised (or
not raised) either below or on appeal.
12
trial court or this court may now have legitimate grounds to complain if this court does not
independently discover potential defects in an order on appeal and deal with them sua
sponte, as has been done here. Under these circumstances, I would reach the merits of the
appeal.
For these reasons, I respectfully dissent.
WOOD and WOMACK, JJ., join.
Dover Dixon Horne PLLC, by: Thomas S. Stone, Todd Wooten, and Carl F. “Trey”
Cooper, III, for appellant.
McMath Woods P.A., by: Charles D. Harrison and Neil Chamberlain, for appellees.
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