Why Sullivan University could face a class-action lawsuit over wages

The Kentucky Supreme Court recently handed down a far-reaching decision that allows employees in Kentucky the option to certify class-action lawsuits against employers over unpaid wages and overtime disputes.

As a result, Louisville-based Sullivan University System Inc. could face such a class action.

At issue is whether the state statute that addresses an employer’s liability for unpaid wages, KRS 337.385, allowed for class-action lawsuits, even though they are not explicitly authorized by the statute, or if the statute allowed for a special exemption to class actions.

Late last week, the Kentucky Supreme Court reversed two lower court decisions and ruled that class-action lawsuits do apply to the statute.

The case involved a wage dispute between former Sullivan University admissions officer Mary McCann and the university. McCann is represented by Theodore Walton and Garry Adams Jr., partners of Louisville-based firm Clay Daniel Walton Adams PLC.

Sullivan University was represented by Grover Potts Jr., Michelle WyrickRania Basha and Emily Lamb.

In this case, McCann sued Sullivan in Jefferson Circuit Court for back pay in February 2010. But her case was moved to federal court after the U.S. Department of Labor filed a lawsuit against the school over alleged violations of the Fair Labor Standards Act in March 2010.

McCann’s federal complaint was eventually dismissed as part of Sullivan’s settlement with the Labor Department. The federal court sent McCann’s case back to the circuit court.

McCann attempted to file a class-action suit against Sullivan University in October 2013, but that was denied by the circuit court and appeals courts, according to the Kentucky Supreme Court ruling.

Potts, a partner with Wyatt Tarrant & Combs LLP, said in an interview that Sullivan University maintains that McCann was an exempted employee under the Fair Labor Standards Act, meaning that she did not qualify for time-and-a-half pay for overtime, among other things. Potts said a potential class-action suit would have to prove to the court that the participants were nonexempt employees on top of the other court requirement for class actions.

Employees involved in recruitment, like McCann was, are paid a salary above the federal minimum wage, he said. Potts said none of the courts addressed the qualification status of McCann, and instead focused on if class actions applied to wage and hours disputes, he added.

Mitchel Denham, partner in Louisville-based Thompson Miller & Simpson PLC, said in an interview that the Kentucky Supreme Court ruled that KRS 337.385 did not constitute a special exemption to class-action suits even though it did not explicitly state they were allowed.

But Denham also said plaintiffs still must meet the court rules to qualify a lawsuit as a class-action suit. After reading the court decision, he added that the case applies to all employers and is not isolated to educational institutions. Denham is not representing any of the parties to this case.

Potts said he argued to the courts that KRS 337.385 shows that wage and hours disputes don’t qualify for class-action status because the statute contains elements similar to other statues where class actions are not allowed. Ultimately, the Supreme Court disagreed.

A class-action lawsuit allows for several people who have been similarly affected to have their collective interests represented by a common counsel.

In part, the Kentucky Supreme Court ruled that the statute governing employer liability was not comprehensive enough to constitute a special exception to class actions and that Kentucky court rules apply to all civil court matters, even if they are not explicitly authorized in the statute.

In an email, Walton said that McCann and counsel will continue to pursue a class-action lawsuit against the private, for-profit university.