Arthur Waller v. State of La., Department of Health & Hospitals

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

11-643

ARTHUR WALLER, ET AL.

VERSUS

STATE OF LOUISIANA, DEPARTMENT OF HEALTH & HOSPITALS

**********

APPEAL FROM THE
NINTH JUDICIAL DISTRICT COURT
PARISH OF RAPIDES, NO. 228,496
HONORABLE HARRY FRED RANDOW, DISTRICT JUDGE

**********

SHANNON J. GREMILLION
JUDGE

**********

Court composed of Oswald A. Decuir, Elizabeth A. Pickett, and Shannon J.
Gremillion, Judges.

Pickett, J., concurs and assigns written reasons.

AFFIRMED.

William Frank Coco
La. Dept. of Health & Hospital
P. O. Box 3836
Baton Rouge, LA 70802-3836
(225) 342-1128
Counsel for Defendant/Appellant:
State of Louisiana, Department of Health& Hospitals

W. Jay Luneau
Luneau Law Office
1239 Jackson St.
Alexandria, LA 71301
(318) 767-1161
Counsel for Plaintiffs/Appellees:
Arthur Waller, et al.

Neal Risley Elliott, Jr.
Attorney at Law
P. O. Box 3836
Baton Rouge, LA 70802
(225) 342-1128
Counsel for Defendant/Appellant:
State of Louisiana, Department of Health& Hospitals

GREMILLION, Judge.

The State of Louisiana through the Department of Health and Hospitals

appeals a judgment in favor of 121 classified employees of Central Louisiana State

Hospital awarding past-due “premium” wages. Additionally, 44 of those

employees who are no longer employed at the facility were awarded attorney fees

and penalties equal to 90 days’ wages. For the reasons that follow, we affirm.

FACTS

At all relevant times, the plaintiffs/appellees were employed at Central

Louisiana State Hospital (Central), a facility operated by the Department of Health

and Hospitals (the Department) through its Office of Mental Health (OMH). These

employees were considered classified for Civil Service purposes.

In the aftermath of Hurricane Katrina, Charity Hospital in New Orleans lost

essential services such as power and water. Hundreds of patients had to be

evacuated, including almost 100 psychiatric patients. The Department decided

these patients would be sent to Central. The upheaval in the healthcare system

caused by Katrina placed extraordinary pressures on the Department’s workers.

On September 14, 2005, the State Civil Service Commission met and

decided to authorize flexible Special Pay pursuant to Civil Service Rule 6.16(a).1

This decision gave departments the discretion to pay up to $15.00 per hour for

work related to the disaster. The Premium Pay was authorized for the period of

August 26, 2005 through February 28, 2006.

On September 26, 2005, Priscilla Shear, Human Resources Director for

OMH issued a memorandum to Dr. Cheryll Bowers-Stephens, Assistant Secretary

of OMH, outlining pay procedures regarding overtime pay and Premium Pay for

classified employees at “Open Facilities,” meaning facilities that remained open

1
Rule 6.16(a) allows the Commission to authorize Premium Pay under prescribed conditions,
including allowing the State to remain competitive in the employment market and for employees
who “perform extraordinary duty that is not an integral part of their regularly assigned duties.

after Katrina. The memorandum provided that classified employees at Open

Facilities would receive $15.00 per hour Premium Pay for overtime hours they

worked. This memorandum was approved by Dr. Bowers-Stephens and forwarded

to Central’s Chief Executive Officer.

The Chief Executive Officer of Central was Thomas L. Davis. When Davis

was first informed of the arrival of patients from Charity, he had no idea how many

patients Central would receive or the conditions of the patients. He was given

notice either one or two days before those patients started arriving. Central’s staff

began cleaning and preparing vacant buildings to accommodate these patients.

The nursing staff began preparing for as many medical contingencies as they could

foresee. The dietary staff had to prepare for more than double the number of

mouths they normally fed. All of these conditions had to be dealt with in the same

manner as if Central had received patients under normal conditions because the

Joint Commission on Hospital Accreditation makes no accommodation for storms.

The patients and staff of Charity arrived at Central beginning around 11:00

p.m. on Friday, September 2, less than 24 hours after Davis was advised to expect

them. Davis testified that the extraordinary duty extended to every department at

Central.

When he received the September 26, 2005, memorandum, Davis met with

his human resources personnel to ascertain the proper procedures for implementing

the Premium Pay authorized by OMH. The memorandum was forwarded to the

human resources department. Davis and his human resources staff had a difficult

time separating Katrina-related overtime from non-Katrina-related overtime. They

decided that all overtime would be included. This information was disseminated to

Central’s employees as well as the displaced Charity employees. When Davis

communicated his decision to Dr. Bowers-Stephens’ assistant, he was told that

although the memorandum could have been interpreted in that manner, such use of

2

the Premium Pay was not in accord with Dr. Bowers-Stephens’ intent. The

Premium Pay was only intended for those “direct care” employees who worked on

“evacuated units.”

Subsequently, Davis received an October 25 memorandum from Ms. Shear.

This memorandum reproduced the substance of the September 26 memorandum

except that it omitted from the Premium Pay regime classified employees at Open

Facilities, effectively denying the Central employees the Premium Pay.

The litigation was commenced before the Ninth Judicial District Court.

Plaintiffs/appellees demanded Premium Pay for all overtime hours worked plus

reasonable attorney fees. The Department responded with Declinatory Exceptions

of Improper Venue (arguing that venue was proper only in the Nineteenth Judicial

District Court in East Baton Rouge Parish, the domicile of the Department) and

lack of Subject Matter Jurisdiction (arguing that exclusive jurisdiction over pay

disputes is constitutionally vested with the State Civil Service Commission) and a

Dilatory Exception of Vagueness. These exceptions were denied by the trial court.

The Department sought writs from this court, which were denied. We found no

error in the trial court’s ruling. Waller v. State, Dep’t of Health & Hosp., 08-1257

(La.App. 3 Cir. 12/8/08) (Unpublished).

The trial court bifurcated the liability and damage phases of the trial.

Because no single demand exceeded $50,000.00, the trial was held before the

bench alone. The trial court rendered judgment in favor of all claimants in

awarding the Premium Pay, and in favor of 44 claimants who have left the

Department’s employ in awarding penalties equal to 90 days’ wages and

reasonable attorney fees of 35% of the total award. It is from this judgment the

Department appeals.

ASSIGNMENTS OF ERROR

The Department asserts that the trial court erred in:

3

1. Failing to recognize the State Civil Service Commission’s exclusive
jurisdiction over pay disputes;
2. Finding that the September 26, 2005 memorandum constituted an offer or
promise of Premium Pay to all classified employees;

3. Finding that the employees detrimentally relied on the September 26
memorandum; and,

4. Applying La.R.S. 23:631 to award penalties and attorney fees.

ANALYSIS

The issue of whether the Civil Service Commission enjoys exclusive subject

matter jurisdiction was addressed by this court when the Department sought writs.

In denying writs, we found no error. “Unless we refer an issue for appeal, this

court does not reconsider matters when, in denying writs, we find no error.

Uniform Rules Courts of Appeal 2–18.7; D'Amico, Curet & Dampf v. Jumonville,

458 So.2d 903 (La.1984).” In re Appeal of ANR Pipeline Co., 11-379, p. 5, (La.

App. 3 Cir. 8/10/11), ___ So.3d ___. A very marked distinction can be drawn

between cases in which writs are simply denied and those in which writs are

denied on a finding that the trial court did not err. This rationale applies to

determinations of whether a tribunal is vested with subject matter jurisdiction. See

Louisiana Land and Exploration Co. v. Verdin, 95-2579 (La.App. 1 Cir. 9/27/96),

681 So.2d 63, writ denied, 96-2629 (La. 12/13/96), 692 So2d 1067, cert. denied,

520 U.S. 1212, 117 S.Ct. 1696. A considered writ denial constitutes law of the

case. Id.

The doctrine of law of the case does not apply in situations in which we find

palpable error or in which its application would result in manifest injustice. Id.

We find neither of these circumstances exist. In Hawkins v. State through Dep’t of

Health & Hosp., 613 So.2d 229 (La.App. 1 Cir.1992), subject matter jurisdiction

with the district court was found properly exercised over a dispute regarding a

classified employee’s unpaid wages. The Department’s argument is principally

supported by Akins v. Housing Auth. Of New Orleans, 03-1086 (La.App. 4 Cir.

4

9/10/03), 856 So.2d 1220, writ denied, 03-2781 (La. 12/19/03), 861 So.2d 574. In

Akins, the dispute revolved around the claims of police officers for past-due

overtime wages plus an accounting for such past-due overtime and a declaration as

to future wages. Because of the claims for accounting and declaratory relief, the

fourth circuit distinguished Hawkins, and held that the suit was for more than a

money judgment. We find Hawkins applies to the present matter. Thus, the

Department’s first assignment of error will not be reconsidered on appeal.

By its second assignment of error, the Department contends that the trial

court erred in finding that the September 26 memorandum represented an offer or

promise of Premium Pay that the employees either tacitly accepted by working

overtime or on which they detrimentally relied by working overtime. The trial

court’s written reasons indicate that its principal finding in this regard was that the

memorandum constituted an offer. The employees demonstrated their consent by

working overtime. The trial court made a determination that detrimental reliance

formed an element of the cause of the contract. These findings are subject to

review under the manifest error standard. See Hibernia Nat. Bank v. Antonini,

37,836 (La.App. 2 Cir. 12/10/03), 862 So.2d 331.

The manifest error-clearly wrong standard requires that a reviewing court

defer to the factual determinations of the trial court, which is better positioned to

evaluate the witnesses and evidence and to make determinations of such factors as

credibility. Stobart v. State through Dept. of Transp. and Development, 617 So.2d

880 (La.1993). The standard also recognizes the constitutional allocation of

judicial functions among trial and appellate courts. Id. Under the standard, courts

of appeal apply a two-part test: 1) does the record reveal a reasonable basis for the

trial court’s finding? and, 2) does the record indicate that the finding was clearly

wrong? Id. “[T]he issue to be resolved by a reviewing court is not whether the

5

trier of fact was right or wrong, but whether the factfinder’s conclusion was a

reasonable one.” Id. at 882.

A contract is an agreement between two or more people whereby obligations

are created, modified, or extinguished. La.Civ. Code art. 1906. “A contract is

formed by the consent of the parties established through offer and acceptance.”

La.Civ. Code art. 1927. Unless a particular form is required by law, acceptance

need not be made in any particular form, and may be made orally, in writing, or by

action or inaction that clearly signals consent. Id.

No obligation can exist without a lawful cause. La.Civ. Code art. 1966.

“Cause is the reason why a party obligates himself.” La.Civ. Code art. 1967.

Article 1967 goes on to provide that a promise a party knew or should have known

would induce the other party to rely on it to his detriment can obligate the one who

made the promise when relying on the promise was reasonable.

The trial court found that detrimental reliance formed an element of the

cause in this case. We disagree. Detrimental reliance requires a demonstration

that a representation was made, that the one to whom the representation was made

justifiably relied, and that the reliance changed his position to his detriment. Suire

v. Lafayette City-Parish Consol. Gov., 04-1459, 1460, 1466 (La. 4/12/05), 907

So.2d 37. Central’s employees demonstrated no such reliance, because they

presented no evidence that they would not have worked overtime had they not been

offered the Premium Pay.

A finding that the trial court manifestly erred in its determination that the

employees detrimentally relied on the offer of Premium Pay does not foreclose the

employees’ recovery of the Premium Pay. If there was a valid offer and

acceptance, the Department is obligated.

The Louisiana Supreme Court has previously held that the payment of fringe

benefits is not a gratuitous act. “It is a reward by the company to promote loyal

6

and efficient service on the part of the employee. The plans are, moreover, an

inducement to employees to remain in the service of the company to enjoy the

benefits the plan promised. . .The employer expects and receives something in

return for his contribution, while the employee, in complying, earns the reward.”

T.L. James & Co. v. Montgomery, 332 So.2d 834, 841 (La.1975). The same

rationale applies to the Premium Pay offered to Central’s employees. These

employees were required to work extended hours under extraordinary

circumstances. Central’s staff had to take in 90 or more new patients overnight,

while maintaining the same standards had there been no storm. They had to house

and feed and care for not only 90 new patients but also the staff and families from

Charity. The inducement of Premium Pay would serve to promote the loyalty and

efficiency of Central’s staff, to the benefit of the Department.

In Knecht v. Board Of Trustees for State Colleges and Universities and

Northwestern State Univ., 591 So.2d 690 (La.1991), 32 then-current and former

employees of Northwestern State University sued the Board of Trustees to recover

47,584 hours of accumulated leave. The board had authorized the accrual of this

leave time under an Executive Order that empowered executive appointing officers

to permit employees who worked more than their regular hours to earn and accrue

hours of compensatory leave time equal to hours of overtime worked. The

executive order was not circulated to all employees, but had been communicated to

several university administrators. The board subsequently became aware through a

newspaper article or audit reports that Northwestern employees were amassing a

large number of hours of compensatory leave time and decided to rescind the

policy. The supreme court found that once an employee worked overtime a

bilateral contract was complete and the board was obligated to grant compensatory

leave, subject to the approval of the employee’s supervisor as to the time it could

be taken. Detrimental reliance played no part in this determination.

7

We are mindful that the Knecht decision was based upon the provisions of

the Louisiana Civil Code prior to the 1984 revisions, but the revisions did not

change the law applicable to this case. Accordingly, the Department’s second and

third assignments of error are without merit.

By its fourth assignment of error, the Department contends that the trial

court erred in applying La.R.S. 23:631 to award penalties and attorney fees. Forty-

four of the plaintiffs were no longer employed by the Department at the time this

case went to trial. The trial court awarded those employees penalties representing

90 days wages plus attorney fees of 35% of the total recovery of all plaintiffs.2

Louisiana Revised Statute 23:631 governs the payment of wages due an

employee after he resigns or is terminated. An employee who is terminated or

resigns must be paid by the next regular payday or within 15 days of his

termination or resignation, whichever occurs first. La.R.S. 23:631(A)(1)(a). If

there is a dispute as to the amount of wages owed, the employer must pay the

undisputed portion within the prescribed time. La.R.S. 23:631(B). Even when

penalty wages may not be due, a well-founded suit for past-due wages can result in

an award of attorney fees. La.R.S.23:632; Carragher v. Pittman Broadcasting

Serv., LLC, 06-857 (La.App. 3 Cir. 12/6/06), 944 So.2d 815. A well-founded suit

is one in which the employee is successful in recovering past-due wages. Cleary v.

LEC Unwired, LLC, 00-2532 (La.App. 1 Cir. 12/28/01), 804 So.2d 916. The

statutory language mandates an award of attorney fees “in the event a well-founded

suit for any wages whatsoever be filed by the laborer or employee after three days

shall have elapsed from the time of making the first demand following discharge or

2
The trial court found that considering the nature of the case and the work performed, recovery
of attorney fees in accordance with the contingency fee contract plaintiffs entered into with their
counsel was reasonable.
8

resignation.” La.R.S. 23:632. This is, of course, predicated on whether La.R.S.

23:632 applies at all.3

We find that sections 631 and 632 do apply. Bonuses that form a part of an

employer’s incentive plan have been held to constitute wages for purposes of

La.R.S. 23:361. Williams v. Dolgencorp, Inc., 04-139 (La.App. 3 Cir. 9/29/04),

888 So.2d 260, writ denied, 05-174 (La. 3/24/05), 896 So.2d 1042. The Premium

Pay was very much an incentive program intended to benefit both the Department

and the employees. The Department received additional work and loyalty and the

employees received, or were to receive, additional pay. We find the Premium Pay

was a component of the employees’ wages. The trial court correctly applied the

statutes to this dispute.

Courts of appeal review awards of attorney fees to determine whether the

trial court abused its discretion in the amount awarded. Slay v. Old Southern Ins.

Co. 498 So.2d 1129 (La.App. 3 Cir. 1986), writ denied, 501 So.2d 235 (1987).

In its written reasons fixing the amount of attorney fees, the trial court stated:

As to the amount of attorney's fees, plaintiffs seek to be
compensated for the full amount of their contingency fee contract with
their attorney. Because plaintiffs' counsel was working on a
contingency fee basis, he did not present detailed evidence of the time
and cost of his services. However, the jurisprudence states that where
the record does not detail the time and cost of an attorney's services, a
court may nonetheless fix the fee from the record. Mitchell v. Turner, 588 So. 2d 1305, 1308 (La. App. 2 Cir. 1991). The following factors
are considered to determine an attorney's fee on the basis of quantum
merit: the responsibility incurred, the extent and character of the labor
performed, the importance of the questions presented, the amount
involved, and the legal knowledge and ability of counsel. Id. Other
factors may be taken into consideration when determining an
appropriate attorney fee, such as result obtained, the responsibility
incurred, the importance of the litigation, the amount of money
involved, the extent and character of the work performed, the legal
knowledge, attainment and skill, of the attorneys, the number of
appearances involved, the intricacies of the facts involved, the

3
The statute reads in pertinent part, “Any employer who fails or refuses to comply with the
provisions of R.S. 23:631 shall be liable. . .” See Watkins v. St. Martin Parish School Bd., 05-
1535 (La.App. 3 Cir. 5/3/06), 929 So.2d 846, writ denied, 06-1244 (La. 9/15/06), 936 So.2d
1274.

9

diligence and skill of counsel, and the court's own knowledge of the
work involved. State, Dept. of Transp. & Dev. v. Williamson, .597 So.
2d 439 (La.1992). Plaintiffs' counsel also cited Taylor v. Production
Services, Inc., 600 So. 2d 63, 65 (La. 1992), wherein the Court noted
that a one-third contingency fee contract was entered into between the
plaintiff and his attorney and found that fee to be reasonable under the
circumstances. In Taylor, the Louisiana Supreme Court said the
following:

"In determining and fixing the attorney's fees as a
part of the reasonable and necessary costs of recovery,
the court must adhere to the Code of Professional
Responsibility, and may consider but is not bound by the
attorney-client contract. To qualify as a reasonable and
necessary cost of recovery, the fee must relate to
necessary services which actually benefited or
augmented recovery from the third person, rather than
duplicative services or those designed to benefit a single
party such as the mere monitoring of proceedings."

Id. at 66. In Taylor, the Louisiana Supreme Court acknowledged that
attorney's fees may be set on a contingency fee basis if the fee is
reasonable.

Applying the jurisprudential factors, the court finds that
plaintiffs' counsel's contingency fee is reasonable. The court
recognizes the difficulty of representing a large number of plaintiffs,
specifically one- hundred-twenty-one (121) plaintiffs with separate
wage claims.

Further, the court recognizes the work involved in the discovery
in this case. The evidence shows that many hours were spent by
plaintiffs' counsel taking depositions and examining documents.
Plaintiffs were successful in both portions of the bifurcated trial.
Though individually plaintiffs' claims were not worth excessive
amounts of money, the total amount due to the plaintiffs by the
defendant will be a significant sum of money. Finally, the court
acknowledges that these plaintiffs performed work during a time of
disaster and devastation in Louisiana. The importance of this litigation
is bolstered by their efforts and commitment during the aftermath of
Hurricane Katrina.

The trial court correctly applied the appropriate factors to be considered in

awarding attorney fees. We adopt as our own the trial court’s reasons in awarding

attorney fees.

10

CONCLUSION

Whether the trial court properly exercised subject matter jurisdiction over

this matter was considered when the Department sought writs. A finding by that

panel that the trial court committed no error constitutes law of the case.

The employees of Central were advised that all Katrina-related overtime

would be supplemented with Premium Pay. The memorandum issued by the

Department unequivocally indicated that Premium Pay was forthcoming. Once the

Department offered Premium Pay, and the employees accepted the offer by

working overtime, a bilateral contract was perfected between the Department and

the employees, which the Department is obligated to fulfill.

The trial court properly applied the statutes governing the payment of wages

to employees who are no longer employed at Central. There was no error in the

awards of penalty wages or attorney fees.

Costs of this appeal in the amount of $1,714.00 are taxed to appellant, State

of Louisiana through the Department of Health & Hospitals.

AFFIRMED.

11

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

11-643

ARTHUR WALLER, ET AL.

VERSUS

STATE OF LOUISIANA, DEPARTMENT OF HEALTH & HOSPITALS

PICKETT, J., concurring.

I agree with the result reached by the majority in this case. I write separately

to disagree with the conclusion reached in In re Appeal of ANR Pipeline Co., 11-

379 (La.App. 3 Cir. 8/10/11), ___ So.2d ___, regarding the law of the case

doctrine. The law of the case doctrine is always discretionary when this court

reviews its own previous decision. I find Rule 2-18.7, which applies to rehearings,

inapplicable to cases where we have previously denied supervisory writs,

regardless of the reasoning of the writ panel.

In this case, I find no palpable error in the result reached by this court in

denying the application for supervisory writs, and find that the state’s first

assignment of error lacks merit.