Kentucky State Police v. Terry Scott ( 2017 )


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  •                                                    RENDERED: AUGUST 24, 2017
    TO BE PUBLISHED
    ~upr:etu:e 2010 WL 881907
     (E.D. Ky., Mar. 5, 2010). Following remand,
    Scott and Fleming amended their complaint two times to add an allegation of
    violation of the Kentucky Civil Rights Act, KRS Chapter 344 and to name
    individual defendants.
    Ultimately, the trial court dismissed most of Scott's and Fleming's
    claims. In a 2012 Order, the trial court held that KSP and four individuals
    named in official capacities were all entitled to governmental immunity. Yanero
    v. Davis, 
    65 S.W.3d 510
    , 519 (Ky. 2001). Subsequently, and as to the KRS
    Chapter 18A claims, the trial court recognized that its jurisdiction with respect
    to administrative proceedings was limited to matters appealed under KRS
    i8A.100 and Chapter l3B. The court, similarly, dismissed the KRS Chapter
    344 claims, holding that "[p)olitical affiliation is not a protected class.under the
    Civil Rights Act." As to the claims for violation of the Kentucky Constitution,
    the trial court recognized that no tort cause of action exists in Kentucky to
    provide money damages for constitutional violations. See St. Luke's Hosp., Inc.
    v. Straub, 
    354 S.W.3d 529
    , 537 (Ky. 2011) (declining to create judicially a new_
    constitutional tort for a private right of action for state constitutional
    violations). Despite the foregoing, the trial court, nevertheless, permitted the
    case to go forward, stating
    The Court interprets [Straub) to mean that Plaintiff[s1 claims
    based directly on the Kentucky Constitution for monetary damages
    are foreclosed, but not that Plaintiff[s are) barred from bringing any
    and all claims directly under the Kentucky Constitution. If the
    plaintiffs demonstrate a constitutional violation in the form of
    5
    political discrimination that violates the right to freedom of
    association and the right of equal protection, they should have a
    remedy. The remedies available to the Plaintiffs may be limited to
    equitable relief, such as injunctive relief, but it would be premature
    to dismiss their claims. If Plaintiffs prove a violation of their right
    to equal protection under the state constitution, they may be
    entitled to injunctive relief in the form of reinstatement, backpay,
    restoration of retirement benefits, or some other actions necessary
    to make them whole[.] See e.g., 200 KAR 12:030. Courts are
    afforded "broad equitable discretion to fashion back pay awards."
    Dauid u. Caterpillar, Inc., 
    324 F.3d 851
    , 865 (7th Cir. 2003).
    The trial court held a bench trial in October 2013, following which it
    entered an Opinion & Order adjudicating the sole issue of "whether Plaintiffs'
    constitutional right to equal protection was violated when [KSP] hired Mark
    Boaz as an Arson Investigator II, at a substantially higher rate of pay." In its
    Findings of Fact, the court made extensive findings with respect to Boaz's,
    Scott's and Fleming's employee class, pay and history, and what it
    characterized as a number of irregularities in the hiring process for Boaz.
    The trial court concluded that KSP committed "flagrant violations of the
    hiring procedures required in KRS Chapter 18A[,]" but noted the administrative
    violations are not before the court by Scott's and Fleming's failure to exhaust
    admirative remedies. The court, however, held that Scott and Fleming had met
    their burden of showing a prima facie case of an equal protection violation,
    specifically grossly unequal treatment between themselves and Boaz, for which
    KSP had failed to prove any rational or reasonable justification, entitling them
    to equitable relief. In its judgment, the court stated:
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    Plaintiffs right to equal protection under the Kentucky
    Constitution Section [2]151 was violated by Defendant. KSP failed
    to prove any rational or reasonable justification for the grossly
    unequal treatment of Mr. Boaz as compared to the Plaintiffs. By
    reason of this violation of their right to equal protection under the
    state constitution, Plaintiffs are entitled to injunctive relief in the
    form of reinstatement to a position with the same grade and pay as
    Mr. Boaz, back pay, restoration of retirement benefits, and any
    other actions necessary to make them whole. See e.g., 200 KAR
    12:030. Courts are afforded "broad equitable discretion to fashion
    back pay awards." David v. Caterpillar. Inc., 
    324 F.3d 851
    , 865
    (7th Cir. 2003). Accordingly, IT IS ORDERED AND ADJUDGED:
    1.   That the Plaintiffs shall be paid back pay and benefits
    at the same rate KSP paid Mark Boaz for all wages and benefits for
    the entire period of employment in which each plaintiff was
    employed by KSP starting with the date of the original employment
    of Mr. Boaz, with said wages and benefits to be calculated and
    credited to the Plaintiffs consistent with 200 KAR 12:030;
    2.   The Plaintiffs are entitled to the following injunctive and
    equitable relief against Defendant in order to be made whole:
    a.   Kentucky State Police shall reimburse Plaintiff Terry
    Scott an amount of back pay as if he were employed at the same
    rate as Mark Boaz from the date of the hire of Terry Scott, April 1,
    2002 until present, similar to Mark C. Boaz who was employed at
    the following monthly rates of pay for the time period: (1)
    $3,173.58 per month from November 16, 2004 until December 07,
    2004; (2) $3,205.32 per month from January 12, 2005 until
    December 1, 2005; (3) $3,365.60 per month until July 17, 2006;
    (4) $3,469.78 per month until December 11, 2006; (5) $3,569.78
    per month until July 11, 2007; (6) $3,882.28 per month until
    December 10, 2007; (7) $3,982.29 per month until December 12,
    2008; and, (8) $4,062.36 per month until April 23, 2010. Further,
    Kentucky State Police shall restore his retirement benefits in an
    amount commensurate with his rate of pay being equal to that of
    Mark C. Boaz as detailed above;
    b.   Kentucky State Police shall reimburse Plaintiff Damon
    Fleming an amount of back pay as if he were employed at the same
    rate as Mark Boaz from the date of the hire of Terry Scott,
    5In this final section of its Opinion & Order, the trial court referred to Section 3
    of the Kentucky Constitution. Earlier portions of the Opinion, however, make clear
    that the court intended to refer to Section 2.
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    November 1, 2002 until July 10, 2009, similar to Mark C. Boaz
    who was employed at the following monthly rates of pay for the
    time period: (1) $3,173.58 per month from November 16, 2004
    until December 07, 2004; (2) $3,205.32 per month from January
    12, 2005 until December 1, 2005; (3) $3,365.60 per month until
    July 17, 2006; (4) $3,469.78 per month until December 11, 2006;
    (5) $3,569.78 per month until July 11, 2007; (6) $3,882.28 per
    month until December 10 , 2007; (7) $3,982.29 per month until
    December 12, 2008; and, (8) $4,062.36 per month until April 23,
    2010. Further, Kentucky State Police shall restore his retirement
    benefits in an amount commensurate with his rate of pay being
    equal to that of Mark C. Boaz as detailed above;
    The trial court's order was made final and appealable. CR6 54.02(1).
    KSP appealed to the Court of Appeals. In a split opinion, that court
    affirmed the trial court judgment. KSP argued that Scott and Fleming had
    failed to exhaust their administrative remedies. The Court of Appeals majority
    opinion rejected this argument on the basis that such exhaustion is not
    required when attacking the validity of a statute or regulation as void on its
    face because an administrative agency cannot decide constitutional issues,
    citing Commonwealth v. DLX, Inc., 42 S,W.3d 624, 626 (Ky. 2001). In contrast,
    the Court _of Appeals dissent noted the exception to exhaustion set out in DLX
    was inapplicable because Scott and Fleming did not attack the constitutional
    validity of a statute or regulation either on its face or as applied. In other
    words, Scott and Fleming's direct action was precluded by their failure to
    exhaust their administrative remedies. The dissent further urged that Scott
    and Fleming's direct action for b~ck pay was counter to this Court's decision in.
    Straub, 354 S.W.3d at 537-38.
    6   Kentucky Rules of Civil Procedure.
    8
    KSP filed a motion for discretionary review, which we granted.
    II.      Standard of Review.
    In this case, the trial court held a bench trial. Thus, to the extent that
    any factual issues are germane to our review, we, of course, defer to the fact
    finder, in this instance the trial court, and "[f]indings of fact, shall not be set
    aside unless clearly erroneous, and due regard shall be given to the
    opportunity of the trial court to judge the credibility of the witnesses." CR
    52.01. That said, the issues in this case seems to involve pure questions oflaw,
    and are therefore subject to de novo review by this Court. Louisville &
    Jefferson Cnty. Metro. Sewer Dist. v. Bischoff, 
    248 S.W.3d 533
    , 535 (Ky. 2007)
    (citing Bob Hook Chevrolet Isuzu, Inc. v. Commonwealth Transp. Cabinet, 
    983 S.W.2d 488
    ,490 (Ky.1998)).
    III.    . Issue on Appeal.
    As in both lower courts, KSP argues that Scott's and Fleming's failure to
    exhaust administrative remedies bars their direct action in the Franklin Circuit
    Court. We agree.
    As noted, exhaustion of administrative remedies is required prior to
    resort to the courts. DU(, 42 S.W.3d at 625 (citing Goodwin v. City of
    Louisville, 
    309 Ky. 11
    ,
    215 S.W.2d 557
    ,559 (1948)). Three exceptions exist to
    this rule oflaw: (1) a party demonstrates the futility of continuing the
    administrative process, (2) a statute authorizes direct judicial relief, and (3) a
    party challenges the constitutionality of a particular regulation or statute on its
    face. Popplewell's Alligator Dock No. 1, Inc. v. Revenue Cabinet, 
    133 S.W.3d
                                 9
    456, 471 (Ky. 2004). If none of these exceptions apply, then the court is
    deprived of subject matter jurisdiction.
    In DLX, a mining company aggrieved by the Natural Resources and
    Environmental Protection Cabinet ("Cabinet") alleged taking of its property
    without compensation in violation of Section 242 of the Kentucky Constitution
    filed a direct action in Franklin Circuit Court. In holding that exhaustion of
    administrative remedies was required, we held
    Exhaustion of administrative remedies is not necessary
    when attacking the constitutionality of a statute or a regulation as
    void on its face. Goodwin[, 
    309 Ky. 11
    , 
    215 S.W.2d at 559
    ]. This
    is because an administrative agency cannot decide constitutional
    issues. 
    Id.
     Thus, to raise the facial constitutional validity of a
    statute or regulation at the administrative level would be an
    exercise in futility. This exception does not apply in the case at
    bar, however, because DLX has not challenged the facial validity of
    the surface mining statutes and regulations. Rather, as its
    complaint shows, DLX's argument is that the Cabinet's application
    of the statutes and regulations resulted in an unconstitutional
    taking of its property.
    When an administrative agency applies a statute
    unconstitutionally, it acts beyond the bounds of the constitution,
    rather than passing on a constitutional question. In other words,
    until a statute has been applied, there can be no unconstitutional
    application. This is the basis for the rule that one must first show
    injury as the result of a statutory application, before that
    application may be attacked as unconstitutional. See, e.g., Stein v.
    Kentucky State Tax Commission, 
    266 Ky. 469
    , 
    99 S.W.2d 443
    , 445
    (1936). Thus, exhaustion of administrative remedies is not futile to
    an as-applied challenge to a statute. Quite the contrary, it is the
    administrative action which determines the extent, if any, of the
    constitutional injury.
    DLX, 42 S.W.3d at 626; see also Kentucky Exec. Branch Ethics Comm'n v.
    Atkinson, 
    339 S.W.3d 472
    , 476 (Ky. App. 2010) (holding that property valuation
    administrators were required, notwithstanding claim of agency's arbitrary
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    exercise of power, to exhaust administrative remedies before seeking judicial
    relief).
    Similar to DLX, Scott and Fleming have not challenged the facial validity
    of any statutes or regulations. Instead, they have challenged KSP's application
    of hiring statutes and regulations in its hiring of Boaz which, they claim, has
    injured them. Under KRS 18A.095, administrative jurisdiction over
    penalization is vested in the Personnel Board. Irrespective of whether the
    Personnel Board's 2007 decision regarding Scott's and Fleming's claim was
    correct, their obligation was to appeal timely that decision to the Franklin
    Circuit Court. KRS 13B.140, 18A.100. That determination is long since final,
    and operates as res judicata of any matters arising from the facts as alleged by
    Scott and Fleming. See Godbey v. Univ. Hosp. of Albert B. Chandler Med. Ctr.,
    Inc., 
    975 S.W.2d 104
    , 105 (Ky. App. 1998) ("Kentucky has for many years
    followed the rule that the decisions of administrative agencies acting in a
    judicial capacity are entitled to the same res judicata effect as judgments of a
    court.").
    Becaus~ we decide this case on the basis of Scott's and Fleming's failure
    to exhaust their administrative remedies, we do not reach the other primary
    issue raised: whether the trial court effectively awarded Scott and Fleming
    monetary damages contrary to our decisions in Yan~ro v. Davis, 
    65 S.W.3d 510
    ; and St. Luke's lfosp., Inc. v. Straub, 
    354 S.W.3d 529
    .
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    IV.   Conclusion.
    Based on the foregoing, we reverse the Opinion of the Court of Appeals.
    All sitting. All concur.
    COUNSEL FOR APPELLANT:
    Shawna Virgin Kincer
    Kentucky State Police
    COUNSEL FOR APPELLEE:
    David F. Broderick
    Brandon T. Murley
    Broderick & Davenport, PLLC
    COUNSEL FOR AMICUS CURIAE
    KENTUCKY PERSONNEL CABINET:
    Rosemary Holbrook
    Office of Legal Services
    Kentucky Personnel Cabinet.
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