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MARCH 2016Indiana State Bar Association Young Lawyers Section

Message from the chair: “You’re Not Just Along For the Ride...The Future of the Practice is Now”BY BENJAMIN D. FRYMAN, SCHWERD, FRYMAN & TORRENGA

As 2016 begins, I find myself already well into the second

quarter of my term. I follow several young (or now perhaps “experienced”) lawyers who have helped us earn a great reputation with the rest of the Bar and throughout the country. We have an ambitious agenda again this year, and the YLS Council is already hard at work on several initiatives. Before I talk about any of that, I would like to give you my version of why your involvement in the ISBA, and particularly the YLS, matters for the future of your career (and mine).

Thanks to a change made to our bylaws last year, a “young lawyer” is defined as one in her/his first ten years of practice. We often hear that

the YLS is the future of the bar. While it is a cliché, it’s also literally true.

However, we may not take the time to think about our future careers because this is a complicated time to be a young lawyer. For those of us in that group (or even stretching the 10 years a bit), decent job opportunities are difficult to find. Many lawyers are finding themselves taking almost any case that walks through the door if it helps pay the bills. Others have hopefully found a good fit in a firm where they can practice with liberty and choose their own cases, at least to some extent.

In either spot, we all have bills, especially student loans. At the same time, we are continually learning things

about how to practice law that were not covered in law school classes. With few of us having very much extra time on our hands, what is so important about getting involved in the YLS? To answer that, we should start by looking at the practice of law, how it has changed over the past 50 years, and how it will change in the next 50 years.

I recently attended the Lake County Bar Association’s installation of President Shelice Tolbert and listened to the presentation of longevity awards. Some of us in this profession practice for 40 or 50 years, and some even longer. The Trial Rules, the Comparative Fault Act, the Rules of Evidence, the Medical Malpractice Act, and the Constitutional Amendment that permanently established

the Indiana Court of Appeals are just a few of the changes that those 50-year careers have seen. What will happen to the profession in our careers? Will we leave the practice in a state that is better or worse? Are we doing the things that will guarantee full access to the judicial branch of our government at all levels while being efficient enough to reduce the caseload on our courts?

Of course, we cannot answer those questions in much detail, yet. But we will have to answer them eventually, and failing to make a choice only leaves the decision to the choice of others. Sometimes that’s ok, but the matters we face in the practice today should not be left to fate.

Benjamin D. Fryman is a founding partner and the current CEO of Schwerd, Fryman & Torrenga in Valparaiso, Indiana. He also serves as the 2015-2016 chair of the Indiana State Bar Association’s Young Lawyers Section. Ben can be reached at bdf@sftlawyers.com.

Changes to Contempt: Stanke v. Swickard BY JENNIFER BAYS BEINART, BAYS FAMILY LAW

On August 31, 2015, the Court of Appeals in Stanke v. Swickard 1,

29A02-1412-DR-862, laid out clear rules that need to be followed before a party is found in civil contempt. This case is a “must read” for all lawyers filing petitions for contempt or defending against them.

In Stanke, Mother filed multiple motions asking the Court to hold Father in contempt for nonpayment of support. The trial court issued an Order to Appear and Show Cause that stated:

It is therefore ordered, adjudged, and decreed by this Court that Jason Stanke show cause why he should not

The Court explained that a contempt proceeding requires an array of due process protections, which includes notice in compliance with Indiana Code §§ 34-47-3-5 and 31-16-12-6. Those statutes read:

§ 34-47-3-5

(a) In all cases of indirect contempts, the person charged with indirect contempt is entitled:

(1) before answering the charge; or

(2) being punished for the contempt;

(3) to be served with a rule of the court against which

be found in contempt of this Court’s order regarding nonpayment of his child support obligation under this cause.

After a hearing, Father was found in contempt for 1) failing to return the children after midweek parenting time, 2) taking the children out of state without proper notification, and 3) failure to pay child support.

Father appealed, claiming that he was not afforded due process because the show cause order did not meet the statutory requirements and did not properly notify him of the allegations against him. The Court of Appeals agreed.

the contempt was alleged to have been committed.

(b) The rule to show cause must:

(1) clearly and distinctly set forth the facts that are alleged to constitute the contempt;

(2) specify the time and place of the facts with reasonable certainty, as to inform the defendant of the nature and circumstances of the charge against the defendant; and

(3) specify a time and place at which the defendant is required to show cause, in the court, why the

defendant should not be attached and punished for such contempt.

(c) The court shall, on proper showing, extend the time provided under subsection (b)(3) to give the defendant a reasonable and just opportunity to be purged of the contempt.

(d) A rule provided for under subsection (b) may not issue until the facts alleged to constitute the contempt have been:

(1) brought to the knowledge of the court by an information; and

(2) duly verified by the

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of all, I am impressed by the driving motivation you all have to help other people. That is what connects me to each of you. Our first project this year is to plan a state-wide Law Day celebration. This year’s topic is “Miranda”, which is always a fun subject. We have an opportunity to talk to school students about what it means to be a lawyer, and we should be able to reach schools in all 92 Indiana counties. We need leaders in each county. If you are willing to work with us, please email our Committee Chair, Sara McClammer at sara@bennettmcclammer.com, or email me directly. We are excited for a great year and fifty more to follow.

One major concern we face is the practice of law by individuals or corporations not currently allowed to do so. The legal profession provides a service which has historically been a very personal one. We recognize this so strongly that we begin every case with the establishment of a “relationship”; we run through procedures to be sure that the relationship is not conflicted; and most of the rules that we operate within focus on our client and our relationship with them.

The nationally trending idea is that our services can be provided or replaced with hotlines and downloaded fill-in-the-blank forms. The clients (now just customers), who are supposed to be getting help, end up with incomplete, unusable or defective

products and no licensed attorney to hold accountable. I cannot imagine any of us doing that to our clients. Yet, at the ABA Midyear Meeting in San Diego, a resolution was approved that aims to help the States define and regulate such legal services. Nowhere in the resolution do the words “client” or “attorney” appear even once. The future of our profession is being defined, and by this standard, we’re not part of it.

I realize these are heavy issues, especially if you’re still looking for a job. I am sure for most young lawyers, this is not a matter that has been given a lot of thought to this point. But now is the time to start thinking and joining the conversation. The corporations that are marketing these services are making enough money to buy Super Bowl ads, and they do not think about their customers as a person with whom they have a personal

relationship controlled by strict ethical rules. In many situations, the people looking for help end up without the answers they need, except now with even less means to afford a competent attorney.

We are not going to solve this issue immediately. However, we do need to wake up to it. Here is what I ask: while you’re making your short-term decisions, intentionally make some long term decisions too. First, decide to be a good lawyer. Always watch out for your client’s interest before anything else; that’s the easy part. Second, work your butt off. If you have been in this practice even a few months, you know that it’s hard work and a lot of hours if you want to make a living. We need hard-working lawyers to help improve the reputation of our profession and beat back the corporate takeover of the judicial system. Finally, think about the next decade.

Your first decade is your YLS decade. Don’t let that one slip away. The Bar Association is where the important issues of our profession are discussed and where those decisions are made. Be part of that.

One easy step is to contact your local Bar President and ask to become a representative in the House of Delegates at the ISBA Annual Meeting. You can find contact information for your local Bar President at www.inbar.org/local_bars. Come discuss the matters before the profession and vote on how we address them.

The practice of law is changing, but I am very optimistic about this generation of young lawyers. Every time I sit down with one of you, I am impressed by what you have done and what you are doing. Many of you make me feel lazy, and I work more hours than I will ever admit. But most

MESSAGE FROM THE CHAIR(continued from page 1)

Call the ISBA at 317.639.5465 or 800.266.2581 for more information about sponsoring this event.

Pricing Information – Tickets for judges are complimentary!$25 - ISBA Members and any spouse/guest of attendee | $50 - Non-ISBA Members

Register & pay by credit card at www.inbar.org

The Young Lawyers SectionInvites You To Attend The Annual

Indiana StateBar Association

Judicial ReceptionDon’t miss this unique opportunity to network with your local judges and colleagues. Firms may sponsor this special event, or you may purchase individual tickets.

Sponsoring organizations receive one complimentary ticket per $250 donation and will be recognized in State Bar publications.

WED., APRIL 275:00 - 7:00 PMConrad Indianapolis

50 W. Washington St.Indianapolis, IN 46204

have disclaimed having any specific plan to arrive in their positions. Instead, they describe working hard, being optimistic, staying engaged, being open to new opportunities when they are presented, and being willing to take a chance and shake things up. Justice Rucker addressed the 2015 LDA class. He encouraged class members to be willing to shake things up when new opportunities arise. I cannot explain how Justice Rucker knew I would have the opportunity to shake things up late in 2015, but I am glad his words resonated with me. Not every move is a good one, but I encourage our readers to try to recognize opportunities when they come, work hard, stay optimistic, and be willing to shake things up when appropriate.

In late spring 2003, I met with the CEO of a construction company

based in southern Indiana. I had completed my first year of undergraduate studies at Purdue and desperately needed a summer income source. My dad set up the meeting in hopes that I could find gainful summer employment. The CEO was honest. He could use my help for 1 project lasting approximately 6 weeks. That would be the extent of my engagement. The wages were substantially better than I could otherwise command, but the short time frame would leave me with several incomeless summer weeks. I decided to roll the dice and leap into the construction world. Only now can I fully appreciate the long-term impact of my decision.

I worked as hard as possible during those 6 weeks. When the job was finished, my hard work was rewarded. The company sent me to another job to work with a different superintendent for the remainder of my first summer. As my vacation came to a close, the superintendent asked me to return to his team the next summer. And so it went. Each summer while I was at Purdue I worked construction, gaining first-hand experience in the complex industry. Between Purdue and law school, I took a year to work construction full time and help pay for my education.

I started law school in fall 2008. My experiences in the construction industry naturally led to a desire to pursue construction law. Unfortunately, my desires met harsh reality, as 2008 was a bad year for construction and the derivative construction-law practice. I faced another difficult decision. Should I move forward with law school despite the poor career prospects, or should

I reconsider my options? I decided to take my chances. I continued my legal education, worked hard through law school, and, because paid summer internships were few and far between, I continued working for the same construction company in the summers. When I finished law school, I had yet to find a law firm to call home. Instead, once again, I returned to construction while also searching for my start in the legal community.

Shortly after I passed the bar exam, a law firm based in Shelbyville, McNeely Stephenson, asked if I would be interested in a “limited engagement opportunity.” They needed limited assistance with a substantial patent case. I had no experience in intellectual property and had not even taken a class in law school. I faced another difficult decision, but, once again, decided to roll the dice and move forward with the limited opportunity. I worked hard. Before I knew it, what began as a short-term engagement had morphed into a diverse practice ranging from insurance subrogation cases to real estate to business transactional work to commercial litigation and beyond. The firm’s founder and namesake, J. Lee McNeely, proved to be a terrific mentor, as did several other attorneys at the firm. From fall 2011 to fall 2015, I gained invaluable experience practicing law in a variety of areas.

When Easter & Cavosie, a boutique construction and real estate firm on the north side of Indianapolis, approached me several months ago with an opportunity to join their team and specialize in construction law, I faced another of life’s difficult decisions. I had always wanted to focus on construction law, but I had found a wonderful home at

McNeely Stephenson, with an interesting diverse practice and great relationships with clients and skilled attorneys. After significant deliberation, I decided to take the leap. My practice is now devoted to construction and real estate. The transition took work, but it has been worth the challenge. Like J. Lee McNeely and the McNeely Stephenson attorneys, J. Greg Easter and the Easter & Cavosie attorneys have afforded a second group of fine mentors. I have embraced my new role and am looking forward to a rewarding specialized practice.

What have I learned from these experiences? There are some recurring themes weaved into my story. Most significant of the themes are: (1) hard work; (2) optimism; and (3) a willingness to shake things up. No matter what adventure I faced, I worked hard. Few good things

happen without hard work. If I had not worked hard on the jobsite, my experience would have been limited to 6 weeks. If I had not worked hard in law school, I would not have had an opportunity at McNeely Stephenson. If I had not worked hard at McNeely Stephenson, the limited opportunity would likely have been just that—limited. Hard work pays off. In all instances, I was also optimistic. The construction job, law school, and McNeely Stephenson offered potential opportunities. None were certain. Had I taken a pessimistic view, I would have been blind to the potential benefits I could enjoy. Because I was optimistic, however, I decided to roll the dice and shake things up.

My experiences with the ISBA have yielded several opportunities to speak with judges and justices. Almost without exception, judges

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Editor’s Perspective: Shaking Things Up BY CHARLES DAUGHERTY, EASTER & CAVOSIE

Keep up with what’s going on withthe Indiana State Bar Association.

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Stanke. If your client is served a vague and generalized order to appear, file a motion to dismiss. Some judges are allowing the other party to cure the defects, but others are dismissing the motions outright. _______________1. This case is not yet listed in the Northeast Reporter.

oath of affirmation of some officers of the court or other responsible person.

§ 31-16-12-6(c)

(c) The court may order a party who is alleged to be in contempt of court under this section to show cause as to why the party should not be held in contempt for violating an order for support. The order to show cause must set forth:

(1) the contempt allegations;

(2) the failure to pay child support allegations;

(3) when the court issued the order for support;

(4) the party’s history of child support payments;

(5) the specific:

(A) date and time when; and

(B) place where the party is required to show cause in the court; and

(6) the party’s arrearage.

The Court in Stanke stated courts may lack the ability to find a party in

contempt unless a show cause ruling in compliance with these statutes has been issued, though there are some exceptions:

Strict compliance with the rule to show cause statute may be excused if it is clear the alleged contemnor had clear notice of the accusations against him, for example because he received a copy of an original contempt information that contained detailed factual allegations, or if he appears at the contempt hearing and admits to the factual basis for a contempt finding.

In the real world, this case instructs us to rethink the contents of our contempt

motions and show cause orders. Best practice requires that both the order and the motion contain detailed factual information about the particular conduct that is alleged to constitute contempt:

- Precise description of conduct (or lack of conduct).

- Specific dates.

- Exact amounts not paid

Additionally, we may be able to protect a client from being found in contempt if the opposing party fails to follow the statutes and

CHANGES (continued from page 1)

Union-Based Bidding Restrictions: Unresolved Issues BY CHARLES DAUGHERTY, EASTER & CAVOSIEThis article was originally posted on the Indiana Law Review Blog and is re-published with its permission. For more helpful articles, please visit indianalawreview.com.

For centuries, public entities have employed competitive bidding

to form construction contracts for public projects. Public entities often prefer competitive sealed bidding because it promotes both the lowest and best price, and fair and open competition among all citizens. Indeed, the Indiana General Assembly enacted Indiana’s competitive bidding statute “to safeguard the public against fraud, favoritism, graft, extravagance, improvidence and corruption, and to insure honest competition for the best work or supplies at the lowest reasonable cost.”1 That said, the competitive bidding system has faults. Owners sometimes use pre-bid arrangements and procedures to address perceived flaws in the competitive bidding process. Labor issues have been the subject of such pre-bid arrangements and procedures.

For instance, consider Pleasantville, a hypothetical Indiana city. Pleasantville plans to construct a new

non-union employers of equal protections, due process, and freedom of association.4 As for anti-competitiveness, challengers argue that public bidding statutes are not designed to maximize competition because restricting qualified bidders to those who employ union labor undercuts competition decreases the pool of available bidders.5

I. Project Labor Agreements v. Prequalification Bid Restrictions at Issue

Project labor agreements (“PLAs”) address the problems Pleasantville seeks to avoid, but from a slightly different angle than Pleasantville’s proposal. PLAs are agreements reached in advance of bidding with local labor unions to establish certain hiring preferences for union employees and payment of union wages in exchange for labor peace.6 Owners enter into PLAs with unions prior to bidding on projects and then require bidders, as a condition to bidding on the project, to abide by the PLAs.7 The U.S. Supreme Court addressed PLAs in the “Boston Harbor” case.8 The Court upheld PLAs under federal law, but left states to determine their

public building. Under Indiana Code sections 36-1-12-1 through 36-1-12-24, Pleasantville must open its project to competitive bidding and award the project to the “lowest responsible and responsive bidder.”2 City officials express concerns that the presence of non-union workers on the jobsite will lead to disputes with union workers and work stoppages. In response to this concern, Pleasantville would like to institute a bid prequalification restricting non-union contractors from bidding on the project. Is this permissible under Indiana and federal law? Unfortunately for Pleasantville, there is no clear answer at this time.

Neither Indiana courts nor the Seventh Circuit have directly addressed whether public entities may restrict bidding based on union status. Other jurisdictions have addressed this issue with mixed results. Opponents of union-only prequalification restrictions have challenged these restrictions’ validity in other jurisdictions on both constitutional and anti-competitiveness grounds.3 These challengers, using both federal and state constitutional grounds, argue such restrictions deprive

enforceability on state law grounds.9 Since the Boston Harbor decision, challengers have attacked PLAs as prohibited under state constitutions and competitive bidding statutes with mixed results.

PLAs are distinct from the proposed union-based prequalification in the Pleasantville hypothetical. First, PLAs, by definition, require an agreement with a union and, therefore, will always necessitate a union preference. Pleasantville’s bid restriction could require exclusively union or non-union employers; either accomplishes the goal of maintaining separation between union and non-union employees. Second, and more importantly, both union and non-union employers may bid jobs under PLA arrangements. Only union employers may bid jobs under Pleasantville’s proposed prequalification. Accordingly, the analysis of PLA enforceability may provide some insight into the Pleasantville problem, but it is not dispositive.

II. Opposition to Union-Based Restrictions

According to some commentators, “it is

recognized that a bid proposal for public work may not limit bidders to those who agree to furnish union labor.”10 Similarly, some have asserted that the prevailing judicial view is that “a proposal or advertisement limiting bidders to those who agree to employ union labor, or to furnish goods bearing the union label is invalid.”11 Along these lines, several states prohibit the use of PLAs. For instance, in George Harms Construction Co. v. New Jersey Turnpike Authority,12 the Supreme Court of New Jersey held that New Jersey’s competitive bidding law prohibited the New Jersey Turnpike Authority’s use of a PLA. The Court reasoned that under the competitive bidding law the Authority was prohibited from designating a “sole source of construction services,” which was the practical result of the PLA, and, therefore, the PLA was anticompetitive.13 Several other jurisdictions prohibit PLAs finding they either violate constitutional safeguards or are anticompetitive.14

III. Permitting Union-Based Prequalification

Some courts have upheld bid restrictions based on

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Indiana Employers Earn New Wage Claim Defense KRIS KAZMIERCZAK, KATZ & KORIN, PC

to ensure timely payments to employees was well served by the prior version of the wage statute.17 Furthermore, the judicial system did not appear taxed with an abundance of disputes over claims for liquidated damages.

In the past, the Indiana Supreme Court has also observed the positive effects that the mandatory liquidated damages provision and the absence of a good faith defense had on public policy serving the interests of both employers and employees.18 In its review of the wage statute existing prior to the recent addition of the good faith defense, the Indiana Supreme Court explained that:

[P]ermitting a good faith exception to the Wage Payment Statute would contravene the public policy of the statute to ensure that employers pay their employees’ wages in a timely fashion and in the correct amount. Many employees find it essential that they be paid on time to meet current obligations of daily life. Employees often do not have the will or economic staying power to engage in a court battle over relatively small amounts. Without the incentive of liquidated damages and attorney fees, employees may be hesitant to assert claims for violations of the law. If so, a good faith defense would lessen the deterrent effect of the penalty provision of the Wage Payment Statute.19

With the removal of the deterrent effect described by the Indiana Supreme Court, it should be expected that there will be an increase in wage claim disputes and litigation over good faith defenses.

The remedy section of Indiana’s wage statute sets out that “[e]very such person, firm, corporation,

This article was originally posted on the Indiana Law Review Blog and is re-published with its permission. For more helpful articles, please visit indianalawreview.com.

As of July 1, 2015, Indiana employers are no longer

automatically liable for paying liquidated damages as a penalty for overdue wages under Indiana law.1 Indiana law previously mandated that an employer must pay a maximum of double the amount of unpaid wages as a penalty for unlawfully withheld wages, without exception.2 Before the revision, courts had no discretion to deny an award of liquidated damages in connection with meritorious wage claims.3

A monumental shift in Indiana’s wage statute took effect on July 1, 2015 when, for the first time in over a century, the Indiana General Assembly authorized courts to use their discretion when considering an award of liquidated damages for overdue wages.4 Following the change in the law, an award of liquidated damages can only be imposed after the court is convinced that the employer was not acting in “good faith” when it failed to timely pay wages.5 Although this significant change was presumably intended to avoid unfair results for honest mistakes by employers, it will likely cause more uncertainty and indecision for employers, employees, and the courts when assessing potential liability for liquidated

damages. Additionally, the change will likely lead to more uncertainty over responsibility for liquidated damages and litigation over past due wages.

Under Indiana Code section 22-2-5-1:

Every person, firm, corporation, limited liability company, or association, their trustees, lessees, or receivers appointed by any court, doing business in Indiana, shall pay each employee at least semimonthly or biweekly, if requested, the amount due the employee.6

Indiana’s wage statute provides that “payment shall be made for all wages earned to a date not more than ten (10) business days prior to the date of payment.”7

Oftentimes, wage claims arise from a failure to pay wages timely when an employee is involuntarily terminated or resigns.8 Indiana Code section 22-2-9-2 provides that “[w]henever any employer separates any employee from the pay-roll, the unpaid wages or compensation of such employee shall become due and payable at regular pay day for pay period in which separation occurred . . . .”9 It must also be kept in mind that while the term “wages” has not been defined by statute, courts have determined wages to cover more than salary or hourly pay.10 Wages may also include other forms of employment compensation, such as vested unused vacation time, bonuses, and commissions, depending on the specific circumstances and terms of compensation at issue.11 As such, employers should consider all forms of compensation and benefits when undertaking a wage claim analysis.

Until the recent change in Indiana law, employers knew with certainty that if wages were not timely paid, then they would be responsible for paying liquidated damages.12 No affirmative defense existed and courts lacked judicial discretion to alter the penalty.13 As such, employers could easily predict their potential liability, assuming they did not correctly pay their employees.14 This degree of certainty and predictability led to greater self-governance by employers to pay their employees timely.15 Employers were also incentivized to pay overdue wages voluntarily, including penalties before a lawsuit is threatened or shortly after the filing of a lawsuit.16 Additionally, the mandatory penalty enhanced legal counsel’s ability to provide clear guidance as to an employer’s full potential for liability with confidence. In these ways, the public policy

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complete a project, it may lawfully use a PLA so long as the justification is economic, the provisions sought to be included in the PLA are reasonably calculated to solve specific problems associated with the project, and the bid specifications do not discriminate between union and non-union contractors.41

Opinions from the Attorney General’s office are not binding law, but they also should be ignored. Such authority raises the possibility that the Attorney General would oppose union-based prequalification.

Indiana’s Equal Privileges and Immunities Clause42 provides another difference from other jurisdictions considering this issue. In Collins v. Day,43 the Indiana Supreme Court departed from the familiar federal rational-basis standard in equal protection cases. Instead, the court held public actions should be reviewed

union status. For example, the Eighth Circuit, the United States District Court for the Western District of New York, and New York state courts have each held such bid restrictions are permissible.15

In Hanten v. School District of Riverview Gardens,16 a Missouri school district sought bids to expand four grade schools and build a new facility. School officials preferred bidders who employed union labor because the officials were concerned the presence of non-union employees could result in picketing and work stoppages.17 School officials expressed their preference in the bid specifications.18 The school also required bidders to list all subcontractors so that it could determine the bidders’ union status.19 A union contractor submitted the lowest bid, but its bid included two non-union subcontractors.20 The school district’s architect contacted the contractor questioning the contractor’s proposed use of two non-union subcontractors.21 In response, the contractor substituted two union subcontractors for a slightly elevated total bid price (though remaining the low bidder).22 The school board awarded the contract to the union contractor.23 Local taxpayers and one of the non-union subcontractors brought an action against the school district in federal court alleging, among other things, violations of non-union employees’ constitutional right to associate freely, due process, and Missouri’s “Open-Bidding” Statute.24 The school district moved to dismiss these counts for failure to state a claim, which the district court granted.25 The local taxpayers and the non-union subcontractor appealed.26

The Eighth Circuit affirmed the district court’s dismissal of all three counts.27 Regarding freedom

of association, the court applied both a direct and substantial interference test and a rational-basis test.28 For the first test, the court reasoned it was “exceedingly unlikely” the school board’s preference would directly and substantially interfere with a non-union worker’s right to refrain from joining a union.29 Rather, any interference would likely be indirect and incidental.30 For the second test, the court reasoned that “[t]he preference for union labor at a construction project is based upon the desire to avoid expensive and time consuming workplace disruptions, and that purpose is clearly legitimate as well as rational.”31

Regarding due process, the court explained that establishing a procedural due process violation based on the loss of a property interest requires a plaintiff to demonstrate a property interest at stake.32 The court recited Missouri’s state law rule that “an unsuccessful bidder on a construction project has no property right in the contract.”33 The court reasoned the non-union subcontractor had, at most, an expectancy of being awarded the job, which does not constitute a property interest under the Due Process Clause.34

Regarding Missouri’s “Open-Bidding” Statute, the court noted the statute requires contracts be let to the “lowest responsible bidder.”35 The court could find no allegation in the taxpayers’ complaint contending the lowest responsible bidder had not received the job.36 Instead, the court reasoned the complaint alleged the lowest bidder did receive the job. That the total contract price would have been less with the non-union bids did not persuade the court any violation of the “Open-Bidding” Statute had occurred.37

IV. Indiana’s Approach

As indicated above, Indiana courts have not decided this issue. Without a definitive answer, public entities and construction participants face the risk of a legal challenge. Evaluating that risk requires an analysis of the likely outcome in a dispute with Hanten-like facts. Litigants challenging union-based prequalification restrictions would likely raise similar arguments as in the cases cited above. Indiana courts could follow a very similar analysis as the Hanten court and permit union-based prequalification.

However, some Indiana case law should be noted. The Indiana cases citing to or cited by the cases and commentary above address competitiveness generally, but do not specifically address union restrictions in prequalification.38 However, these cases do indicate Indiana courts generally disfavors limitations on competition.39

Indiana’s competitive bidding statute contains language that is absent in Missouri. Indiana Code section 36-1-12-4 provides that “[t]he board shall prepare general plans and specifications describing the kind of public work required, but shall avoid specifications which might unduly limit competition.”40 Unfortunately, Indiana courts have not interpreted this language in light of this issue.

Moreover, additional authority indicates the legal risk of adopting union-based prequalification techniques. The Office of the Indiana Attorney General addressed PLAs in 1997 and opined:

[S]tate laws regarding public contracting and bidding procedures neither require nor forbid the use of PLAs. Rather, where a state agency or commission is charged with discretion to formulate bid specifications and choose contractors to

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WAGE CLAIM (continued from page 5)

standards for testing a good faith defense. For instance, courts may adopt an approach of determining whether there is “truly a good faith dispute as to exactly what was due the Plaintiff at the termination of her employ[ment],” as one Indiana trial court ruled over twenty years ago and before Indiana’s recent recognition of the good faith defense.23 In other contexts of Indiana law, such as insurance law, courts have required a showing that the defendant had “knowledge that there was no legitimate basis for denying liability.”24 In cases of libel or slander, Indiana courts have defined good faith to mean “a state of mind indicating honesty and lawfulness of purpose; belief in one’s legal right; and belief that one’s conduct is not unconscionable.”25 In the meantime, employers should remain alert and prepared to examine and consider whether legitimate grounds exist to dispute payment of wages when the question

limited liability company, or association who shall fail to make payment of wages . . . shall be liable to the employee for the amount of unpaid wages,” together with reasonable attorney’s fees and court costs.20 With respect to liquidated damages, the statute has been revised as follows:

[I]f the court . . . determines that the person, firm, corporation, limited liability company, or association that failed to pay the employee . . . was not acting in good faith, the court shall order, as liquidated damages for the failure to pay wages, that the employee be paid an amount equal to two (2) times the amount of wages due the employee.21

It is clear from the newly-revised statute that liquidated damages shall be awarded upon a showing that the

employer was “not acting in good faith;” however, the phrase “good faith” was not defined by statute. What specifically will be considered by the judiciary to meet the good faith burden is not presently known with certainty. Nonetheless, one thing is certain: the revised statute gives each judge the discretion to weigh and determine the question of good faith.22 Until case law is well developed, what constitutes “good faith” will be within the sole discretion of the court and every dispute on good faith will be determined on a case-by-case and judge-by-judge basis. Short of a flat-out intentional and blatant decision not to pay wages when known to be due, the potential factual circumstances and various contractual terms of compensation that might lead to a good faith defense are presently endless.

It may be that courts will apply previously established

7

13. Id.

14. See St. Vincent Hosp. & Health Care Ctr., Inc. v. Steele, 766 N.E.2d 699, 706 (Ind. 2002) (Boehm, J., concurring) (“A statute providing one party with treble damages and attorney’s fees is a very substantial deterrent to an employer’s playing fast and loose with wage obligations. As applied to claims of most works this is very understandable legislative policy.”).

15. Id.

16. Id.

17. See E & L Rental Equip., Inc. v. Bresland, 782 N.E.2d 1068, 1071 (Ind. Ct. App. 2003) (stating that public policy favors the “prompt payment of wages owed to employees.”).

18. See generally Naugle v. Beech Grove City Sch., 864 N.E.2d 1058 (Ind. 2007).

19. Id. at 1065.

20. Ind. Code § 22-2-5-2 (2015).

21. Id. (emphasis added).

22. Id.

23. See Todd v. Stewart, 566 N.E.2d 1077, 1078 (Ind. Ct. App. 1991).

24. Monroe Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968, 976 (Ind. 2005).

25. Owens v. Schoenberger, 681 N.E.2d 760, 764 (Ind. Ct. App. 1997).

26. See, e.g., Naugle v. Beech Grove City Sch., 864 N.E.2d 1058, 1067-69 (Ind. 2007).

under the following test: “First, the disparate treatment accorded by the legislation must be reasonably related to inherent characteristics which distinguish the unequally treated classes. Second, the preferential treatment must be uniformly applicable and equally available to all persons similarly situated.”44 Under this rubric, it is possible an Indiana court could arrive at a different result than jurisdictions applying the rational-basis approach to equal protection challenges.

The Indiana General Assembly’s recent passage of the Right-to-Work statute45 and repeal of the Common Construction Wage statute46 provide additional indications of the current stance on union issues in Indiana. Taken together, these actions evidence an unmistakable aura of antipathy toward labor unions. The debate surrounding the latter in particular focused on the perception that union wages

increase public construction costs.47 Whether this hurts or favors union-based prequalification depends on whether public entities are prohibiting union bidders or non-union bidders from bidding. This factor could potentially cut both ways.

Conclusion

This Article is not intended to promote or discourage union-based prequalification techniques. Instead, it highlights the present risk facing public entities like Pleasantville. For the moment, public entities will have to make important decisions without clear guidance. Other jurisdictions are split. Public entities should consider this split of authority and lack of certainty before including bid restrictions in their specifications based on union-status._______________1. Schindler Elevator Corp. v. Metro. Dev. Comm’n, 641 N.E.2d 653, 657 (Ind. Ct. App. 1994) (quoting Sch. City

of Gary v. Cont’l Elec. Co., 273 N.E.2d 293, 296 (Ind. Ct. App. 1971)).

2. Ind. Code § 36-1-12-4(b)(8) (2012).

3. See, e.g., Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799 (8th Cir. 1999) (challenging under the Fourteenth Amendment Due Process Clause).

4. See id. (due process); Associated Builders & Contractors, Inc. v. Contra Costa Water Dist., 37 Cal. Rptr. 2d 600 (Cal. Ct. App. 1995) (equal protection); Master Builders of Iowa, Inc. v. Polk Cty., 653 N.W.2d 382 (Iowa 2002) (freedom of association).

5. See, e.g., Laborers Local No. 942 v. Lampkin, 956 P.2d 422, 432-36 (Alaska 1998).

6. David J. Langworthy, Project-Labor Agreements After Boston Harbor: Do They Violate Competitive Bidding Laws?, 21 Wm. Mitchell L. Rev. 1103, 1107-08 (1996).

7. Id. at 1108.

8. Bldg. & Constr. Trades Council v. Associated Builders & Contractors of Mass./R.I., Inc., 507 U.S. 218 (1993).

9. Id. at 232-33.

10. Langworthy, supra note 6, at 1113 (citing Eugene McQuillin, The Law of Municipal Corporations § 29.48 (Gail A. O’Grady & Charity R. Miller eds., 3d ed. 1990)).

11. Id.

12. 644 A.2d 76, 79 (N.J. 1994).

13. Id. at 94-95.

14. 1 Bruner & O’Connor Construction Law § 2:58

15. See, e.g., Glenwood Bridge v. City of Minneapolis, 940 F.2d 367 (8th Cir. 1991); E. Amherst Plumbing, Inc. v. Thompson, No. 12–CV–0195A, 2013 WL 5442263 (W.D.N.Y. Sept. 27, 2013); Albany Specialties, Inc. v. Cty. of Orange, 662 N.Y.S.2d 773 (N.Y. App. Div. 1997).

16. 183 F.3d 799, 803 (8th Cir. 1999).

17. Id.

18. Id. at 804.

19. Id.

20. Id.

21. Id.

22. Id.

23. Id.

24. Id. at 805, 808-09.

25. Id. at 801.

26. Id.

27. Id.

28. Id. at 806.

29. Id.

30. Id.

31. Id.

32. Id. at 808.

33. Id.

34. Id. at 809.

35. Id.

36. Id.

37. Id. at 810.

38. See generally Engineered Steel Concepts, Inc. v. Gen. Drivers, 963 N.E.2d 62 (Ind. Ct. App. 2012).

39. Id. Indiana courts have also expressed concerns with the anti-competitive effects of union-based preferences under Indiana’s Antitrust Act, Skyline Roofing & Sheet Metal Company, Inc. v. Ziolkowski Construction, Inc., 26 N.E.3d 1024 (Ind. Ct. App. 2015).

40. Ind. Code § 36-1-12-4 (2012) (emphasis added).

41. 1997 Ind. Att’y Gen. Op. No. 7 (Dec. 18, 1997) (emphasis added).

42. Ind. Const. art. 1, § 23.

43. 644 N.E.2d 72, 80 (Ind. 1994).

44. Id.

45. Ind. Code §§ 22-6-6-1 to -13 (2012).

46. H.B. 1019, 119th Gen. Assemb., 1st Reg. Sess. (Ind. 2015).

47. Tony Cook, Indiana Senate Narrowly Passes Repeal of Common Wage, Indianapolis Star (Apr. 15, 2015, 9:37 PM), http://www.indystar.com/story/news/politics/2015/04/15/indiana-senate-narrowly-passes-repeal-common-wage/25836535/ [perma.cc/RL27-XBV3].

initially arises and thereafter in the event a claim is pursued.

Many wage claims arise out of disputes over compensation based on ambiguous contract terms or nebulous or complicated commission formulas.26 Although the use of the phrase “good faith” was undoubtedly intended to allow for flexibility to avoid perceived harsh results, it is foreseeable that the new revision will naturally lead to more litigation centered on “good faith” arguments, particularly disputes based on differing views of contract interpretation. One way to prepare against the potential risk of wage claims and the imposition of liquidated damages might include carefully drafting contract terms concerning compensation. As part of this exercise, it is important to outline and document all compensation and benefit terms offered by the employer

and to ensure the document is signed by the employee. It is likewise helpful to explain compensation formulas, conditions, and contingencies in simple and unambiguous terms.

Even with safeguards in place, such as well-written contracts, skillful and careful assessment must be used when employers decide whether to assert a good faith defense. Obviously, the good faith defense may heighten the temptation to raise plausible, but less than strongly convincing, contract interpretations to contest liquidated damages. The risk will be higher costs, including prolonged litigation and an attorney’s fee award to the employee, if such borderline arguments are rejected by the court and it finds the employer’s interpretation and arguments were not made in good faith. Given the impact and potential outcomes of the recent change in Indiana’s wage statute, employer

assessments and legal guidance on when to pursue a good faith defense will be a challenging and critical step in the defense of each wage claim and will likely depend on the factual circumstances and the specific judge making the ruling at least until case law develops.

Kris Kazmierczak is a shareholder of Katz & Korin, PC where his practice covers the areas of business and employment counseling and litigation and general litigation for a wide variety of clients._______________

1. See Ind. Code § 22-2-5-2 (2015) (requiring a showing of bad faith to impose liquidated damages).

2. Ind. Code § 22-2-5-2 (2014) (amended 2015).

3. Id.

4. Ind. Code § 22-2-5-2 (2015).

5. Id.

6. Id. § 22-2-5-1.

7. Id.

8. See, e.g., Naugle v. Beech Grove City Sch., 864 N.E.2d 1058 (Ind. 2007) (employee voluntarily resigned);

Highhouse v. Midwest Orthopedic Inst., P.C., 807 N.E.2d 737 (Ind. 2004) (employee resigned); Lemon v. Wishard Health Servs., 902 N.E.2d 297 (Ind. Ct. App. 2009) (employee was involuntarily terminated); Reel v. Clarian Health Partners, Inc., 873 N.E.2d 75 (Ind. Ct. App. 2007) (employees were involuntarily terminated).

9. Ind. Code § 22-2-9-2 (2015).

10. See Berry v. Crawford, 990 N.E.2d 410, 428 (Ind. 2013) (quoting Highhouse, 807 N.E.2d at 740 (quoting Pyle v. Nat’l Wine & Spirits Corp., 637 N.E.2d 1298, 1300 (Ind. Ct. App. 1994))) (“We have held that payment denominated ‘bonus’ is a wage ‘if it is compensation for time worked and is not linked to a contingency such as the financial success of the company.’”); Naugle, 864 N.E.2d at 1067 (Ind. 2007) (“[I]f vacation pay is to be compensated, it is deferred compensation in lieu of wages and is subject to the provisions of the Wage Payment Statute.”); Mortg. Consultants v. Mahaney, 655 N.E.2d 493 (Ind. 1995) (wage damages included the amount of commission owed to the employee under his employment contract).

11. See Berry, 990 N.E.2d at 428; Naugle, 864 N.E.2d at 1067; Mortg. Consultants, 655 N.E.2d 493.

12. Ind. Code § 22-2-5-2 (2014) (amended 2015).

8

What Happens on Appeal When Trial Court Dismisses Case Without Deciding All Issues:Competing Fields of Thought?COLIN E. FLORA

functional level, the Lockett approach prevents the case from being dragged out in the trial court only to be re-argued on the exact same issues on a subsequent appeal.

Regardless of which approach might be preferred in a vacuum, in Indiana appeals, Lockett provides guidance; in the Seventh Circuit, Bell controls.

Colin E. Flora is an associate civil litigation attorney who focuses his practice on appeals, class actions, business disputes, and personal injury cases with Indianapolis-based Pavlack Law, LLC. He obtained his bachelor’s degree with high distinction in political science from Indiana University South Bend in 2008. In 2011, he graduated with honors from I.U. McKinney School of Law. Colin is the author of more than 100 posts for the Hoosier Litigation Blog._______________1. Lockett v. Planned Parenthood of Ind., Inc., 29 N.E.3d 781, superseded, ---N.E.3d---, No. 45A05-1407-CT-340, 2015 WL 4885038 (Ind. Ct. App. Aug. 17) (Bailey, J.), reh’g denied (Oct. 2, 2015).

2. Codified at Ind. Code art. 34-18.

3. Bell v. Taylor, 791 F.3d 745 (7th Cir. 2015) (Flaum, J.).

4. Bell v. Taylor, No. 1:13-CV-00798-TWP-DK, 2014 WL 4250110 (S.D. Ind. Aug. 26, 2014), rev’d, 791 F.3d 745 (7th Cir. 2015).

5. Davis v. The Gap, Inc., 246 F.3d 152 (2d Cir.), as amended (May 15, 2001).

6. Oral Argument, Bell v. Taylor, No. 14-3099 (7th Cir. Apr. 1, 2015).

7. Bell, 791 F.3d at 749 (quoting Dubicz v. Commonwealth Edison Co., 377 F.3d 787, 791–92 (7th Cir. 2004)).

Recently, the Court of Appeals of Indiana handed down a

decision that touched upon an interesting, but technical procedural issue that I’ve seen addressed in two different ways this year: What happens on appeal when the trial court dismisses a case in its entirety but fails to address all claims or all parties? Indiana and the Seventh Circuit appear to have different views on what to do.

In Lockett v. Planned Parenthood of Indiana, Inc.,1 the trial court dismissed the case against Planned Parenthood, reasoning that the case was covered by Indiana’s Medical Malpractice Act.2 Thus, because the plaintiff did not first file her proposed complaint with the Indiana Department of Insurance–a prerequisite to filing suit–the trial court was obliged to dismiss the action for lack of subject matter jurisdiction. Where things get squirrelly, is that the case was also filed against an individual defendant who was not an employee or otherwise associated with Planned Parenthood. Nevertheless, “[t]he [trial] court also purportedly dismissed the[ ] complaint in its entirety and entered ‘Judgment for Defendants[.]’” Finding that the trial court had been “premature” in dismissing the complaint against the individual defendant, the court of appeals remanded the case for further proceedings.

The Seventh Circuit recently took a very different approach in Bell v. Taylor.3

At issue in Bell, a case originating from the Southern District of Indiana, was a determination by the district court that Bell had proven all elements of his copyright infringement action but had failed to prove his entitlement to damages.4 As a result, the district court entered summary judgment in favor of defendants and entered final judgment. The problem arises because Bell had also pleaded a claim for declaratory judgment, which does not require proof of damages. On appeal, Bell relied on the Second Circuit’s decision in Davis v. The Gap, Inc.5 There, the Second Circuit addressed the issue thusly:

Davis contends that it was improper for the district court to grant summary judgment on his copyright claims without first determining whether the defendant infringed his copyright. The complaint expressly sought “a declaratory judgment in favor of Mr. Davis against GAP, declaring” that the Gap had infringed Davis’s copyright by its reproduction of his eyewear in its advertisement. The district court granted the defendant’s motion for summary judgment on the basis of a variety of theories that had no bearing on the demand for declaratory relief. No doubt because of the confusing and prolix nature of the complaint, this aspect of the relief sought was overlooked. The existence of damages suffered is not an essential element of a claim for copyright infringement. The owner of a copyright is thus entitled to prevail

in a claim for declaratory judgment of infringement without showing entitlement to monetary relief. Insofar as the judgment dismissed the claim for declaratory relief without discussion, we are obliged to vacate the judgment and remand for consideration of that claim.

During the oral argument in Bell,6 Chief Judge Wood indicated her view that one of two scenarios can be deemed to have occurred: (1) the district court actually decided that issue–a highly unlikely scenario in light of the district court explicitly finding all of the necessary elements for a declaratory judgment in favor of Bell–or (2) that the district court’s final judgment order was issued in error and there was, in fact, no final judgment in the case. If the latter scenario is the case, Chief Judge Wood indicated that the appellate court would then lack jurisdiction to hear the appeal because the case had not yet reached a final judgment. Consequently, if the latter scenario is correct, the Seventh Circuit would have no choice but to remand the case to the district court to enter a final judgment.

In the decision by Judge Flaum, the Seventh Circuit confined its analysis to whether it had jurisdiction over the appeal. Finding that the district court had erred in entering final judgment without deciding the declaratory judgment issue, the Seventh Circuit concluded that it did not have subject matter jurisdiction over the appeal and remanded the case to reach a final judgment

before an appeal could be taken again. The court added, “[T]he order entered by the district court purporting to be a ‘final judgment’ is of no consequence. As we have said, ‘a district court’s label cannot convert an otherwise non-final judgment into a final judgment.’ ‘A district court’s decision is a final judgment only when the decision meets the requirements for being a final judgment.’”7 The court also clarified that the favored procedure is a timely motion to correct mistake under Rule 60.

Clearly, these two approaches provide diametrically opposed views on what to do when a court enters a final judgment that doesn’t address all issues in the case. There is Lockett and Davis which acknowledge the oversight by the trial court and remand the case for further proceedings to address the oversight, while at the same time providing a determination on the other issues of the appeal. On the other hand, there is Bell where the appellate court can do no more than declare that it lacks subject matter jurisdiction and send the case back to the trial court to address the overlooked issue. It is unclear which, if either, approach is preferable. On a technical level, the Bell approach makes sense–certainly the appellate court cannot exercise jurisdiction where jurisdiction is otherwise lacking. It also provides a strong preference for utilizing Rule 60 to resolve the issue before the delay of appeal. That said, on a

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OFFICERSChairBenjamin D. Fryman, Valparaisobdf@sftlawyers.com

Chair-ElectAllyson E. Claybourn, Evansvilleallysonclaybourn@berryplastics.com

Secretary/TreasurerCharles B. Daugherty, Indianapoliscdaugherty@easterandcavosie.com

DISTRICT REPRESENTATIVESDistrict 1Adam J. Sedia, Scherervilleasedia@rubinoruman.com

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AT LARGE REPRESENTATIVESCristal C. Brisco, South Bendcbrisco@southbendin.gov

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