UNION UNDERWEAR COMPANY, INC., d/b/a FRUIT OF THE LOOM v. JOEL O. BARNHART; ZACK N. WOMACK; DEEP & WOMACK; ANDREW P. CAMPBELL; DAVE LOPER; and LEITMAN, SIEGAL, PAYNE & CAMPBELL, P.C.
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RENDERED: APRIL 26,200l
TO BE PUBLISHED
1999-SC-0091
-DG
UNION UNDERWEAR COMPANY, INC.,
d/b/a FRUIT OF THE LOOM
v
.
APPELLANT
ON REVIEW FROM THE COURT OF APPEALS
1996-CA-0780-MR
WARREN CIRCUIT COURT NO. 95Cl-420
JOEL 0. BARNHART; ZACK N. WOMACK;
DEEP & WOMACK; ANDREW P. CAMPBELL;
DAVE LOPER; and LEITMAN, SIEGAL,
PAYNE & CAMPBELL, P.C.
APPELLEES
OPINION OF THE COURT BY JUSTICE JOHNSTONE
REVERSING AND REMANDING
After being dismissed from his employment, Barnhart brought suit against Union
Underwear Co., Inc. (d/b/a Fruit of the Loom), in April 1995, alleging that he had been
illegally discharged because of his age in violation of KRS 344.040(l). The jury found
in favor of Barnhart and recommended compensatory damages in the amount of
$250,000 and punitive damages in the amount of $750,000. The trial court entered
judgment against Fruit of the Loom accordingly. Fruit of the Loom appealed to the
Court of Appeals, which affirmed the judgment of the trial court. We granted
discretionary review and reverse.
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Fruit of the Loom is incorporated in New York and maintains its headquarters in
Bowling Green, Kentucky. At all times relevant to this appeal, Barnhart resided and
was employed outside of the Commonwealth of Kentucky. In addition to a number of
other arguments, Fruit of the Loom maintains that the Warren Circuit Court lacked
subject-matter jurisdiction over Barnhart’s claims because Barnhart is not covered by
the protections of the Kentucky Civil Rights Act (KCRA).
Subject-matter jurisdiction usually refers to a court’s power to hear this kind of
case rather than the court’s power to hear a particular case. Duncan v. O’Nan, Ky., 451
S.W.2d 626, 631 (1970). Clearly, the Warren Circuit Court is empowered to hear this
type of case, that is, an employment discrimination case brought under the KCRA.
KRS 344.450.
There is an exception to the general rule which addresses a court’s jurisdiction
over a particular case. See Milbv v. Wriaht, Ky., 952 S.W.2d 202, 205 (1997). This is a
limited exception and does not appear to apply to the case at bar.
While we disagree
with Fruit of the Loom that the trial court lacked subject-matter jurisdiction over this
case, we do agree that the KCRA does not apply to Barnhart because it would be an
extraterritorial application of the Act. Further, this was the basis that was presented in
support of Fruit of the Loom’s motion to dismiss for failure to state a claim upon which
relief can be granted. The trial court erred when it failed to grant this motion.
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WHETHER THE KCRA HAS EXTRATERRITORIAL APPLICATION
Barnhart’s only connection to Kentucky is that Fruit of the Loom is his employer
which has its headquarters in Kentucky. During all relevant periods, Barnhart was living
and working in either Alabama or South Carolina. He was employed in South Carolina
when he was dismissed from his job. Any discrimination against Barnhart occurred in
South Carolina, or alternately, in Alabama. Thus, the question we must answer is
whether the KCRA has extraterritorial application. Accord Equal Employment
Obbortunity Commission v. Arabian American Oil Co., 499 U.S. 244, 247, 111 S. Ct.
1227, 113 L. Ed. 2d 274, 281 (1991) (sole issue at bar was whether Title VII of the 1964
Civil Rights Act had an extraterritorial application to a naturalized citizen working in a
foreign country who worked for an American corporation).
We begin our analysis with the well-established presumption against
extraterritorial operation of statutes. That is, unless a contrary intent appears within the
language of the statute, we presume that the statute is meant to apply only within the
territorial boundaries of the Commonwealth. 73 Am. Jur. 2d, Statutes, § 359 (1974).
This rule of construction helps to protect against unintended clashes of the laws of the
Commonwealth with the laws of our sister states. See McCulloch v. Sociedad National
de Marineros de Honduras, 372 U.S. 10, 20-22, 83 S. Ct. 671, L. Ed. 2d 547, 554-55
(1963).
The General Assembly is obviously aware of the presumption against
extraterritorial application and how to overcome it. For example, the legislature
expressly provided for the extraterritorial application of the Workers’ Compensation Act
in KRS 342.670, which provides in pertinent part:
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Extraterritorial coverage.--(l) If an employee, while working outside
the territorial limits of this state, suffers an injury on account of which he
. . . would have been entitled to the benefits provided by this chapter had
such injury occurred within this state, such employee . . . shall be entitled
to the benefits provided by this chapter, provided that at the time of such
injury:
(a) His employment is principally localized in this state, or
(b) He is working under a contract of hire made in this state in
employment not principally localized in any state, or
(c) He is working under a contract of hire made in this state in
employment principally localized in another state whose workers’
compensation law is not applicable to his employer, or
(d) He is working under a contract of hire made in this state for
employment outside the United States and Canada.
There is no comparable provision for extraterritorial application in the KCRA.
Moreover, nothing in the Act implies that it was intended to operate beyond Kentucky’s
borders. In fact, the language of the Act indicates otherwise. KRS 344.020(1)(b)
provides in pertinent part that the purpose of the Act is to “safeguard all individuals
within the state from discrimination . . . .” (Emphasis added). Thus, we will not infer the
extraterritorial reach of the KCRA absent a positive showing by Barnhart that the
General Assembly intended that the Act be applied extraterritorially.
First, Barnhart’s argument that if the General Assembly intended that the KCRA
should not apply extraterritorially, it could have said so, must fail. It is not Fruit of the
Loom which has to show lack of extraterritorial application. Rather, it is Barnhatt who
must positively show the legislative intent that the KCRA is to be applied
extraterritorially.
Next, KRS 344.030(2) makes Fruit of the Loom an “employer” for the purposes
of KRS 344.030 to 344.100 and a “person” within the meaning of KRS 344.010.
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KRS
344.040(5) defines “employee” as an “individual employed by an employer. . . .”
Finally, KRS 344.040 makes it unlawful practice for an employer to:
Fail or refuse to hire, or discharge, any individual with respect to
compensation, terms, conditions or privileges of employment, because of
the individual’s race, color, religion, national origin, sex, age forty (40) and
over . . . .
(Emphasis added).
Barnhart argues that the use of the term “any individual” in KRS 344.040 evinces
a legislative intent that the KCRA has extraterritorial application. We disagree. Under
the presumption against extraterritorial application, the use of the terms “any” or “all” to
persons covered by the legislation does not imply that the enacting legislature intended
that the legislation be applied extraterritorially. 73 Am. Jur. 2d, Statutes, 3 359 (1974).
Barnhart further argues that Fruit of the Loom is an employer covered by the Act
and he is an employee within the meaning of the Act; thus, Fruit of the Loom is liable for
any discriminatory acts against him that are prohibited by the Act. While appealing, the
argument does not overcome Barnhart’s burden of making a positive showing that the
General Assembly,intended that the Act apply extraterritorially.
The United States Supreme Court rejected similar arguments in Equal
Emplovment Opportunitv Commission v. Arabian American Oil Co., 499 U.S. 244, 111
S. Ct. 1227, 113 L. Ed. 2d 274 (1991). The Equal Employment Opportunity
Commission (EEOC) argued that the language of the Act evinced a clear intent that it
be applied extraterritorially. Id. at 248-49, 113 L. Ed. 2d at 282-83. The EEOC relied in
part on the applicable definition of “employer” contained in Title VII. Specifically, the
EEOC argued that: (1) an employer was defined in part as being “engaged in an
industry affecting commerce;” (2) “commerce” in part was defined as “trade, traffic,
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commerce, transportation, transmission, or communication among the several States;
or between a State and any place outside thereof. . . .;‘I and (3) through use of the
language “any place outside thereof,” Congress purposefully intended Title VII to apply
to foreign jurisdictions. Id. at 249-50, 113 L. Ed. 2d at 283. The argument was
rejected.
While finding the EEOC’s argument plausible, the Arabian American Oil Court
concluded that the EEOC had not met its burden of making an affirmative showing that
Congress intended that the Civil Rights Act of 1964 apply extraterritorially. Id. at 253,
113 L. Ed. 2d at 285. The Court noted that the language was ambiguous -- referring to
it as boilerplate -- and did not speak directly to the issue presented. “If we were to
permit possible, or even plausible, interpretations of language such as that involved
here to override the presumption against extraterritorial application, there would be little
left of the presumption.” Id. Likewise, we hold that the language of the Act relied on by
Barnhart does not show that the General Assembly intended that the KCRA be applied
extraterritorially. Moreover, unlike acts of Congress, there can be no assumption that
the Commonwealth has the power to enforce its laws beyond its borders. See id. at
248, 111 S. Ct. at 1230, 113 L. Ed. 2d at - (both parties conceded that Congress has
the power to enforce its laws beyond the territorial boundaries of the United States).
This gives us even greater reason to be cautious when determining whether a law of
the Commonwealth should be applied extraterritorially.
Barnhart also argues that public policy favors extraterritorial application of the
KCRA. In particular, he argues that extraterritorial application furthers the goal of
national cooperation in eliminating discrimination. To deny extraterritorial application,
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according to Barnhart, is to allow Kentucky employers to escape punishment for acts of
invidious discrimination. Again, we disagree.
The relevant portion of the KCRA was enacted to “provide for execution within
the state of the policies embodied in . . . the Federal Age Discrimination in Employment
Act [ADEA] of 1967 . . . .” KRS 344.020(l)(a). In so doing, the legislature created both
administrative and civil remedies for persons discriminated against because of their
age. The right to these remedies are in addition to those established in the ADEA. The
“ADEA permits concurrent rather than sequential state and federal administrative
jurisdiction in order to expedite the processing of age-discrimination claims.” Oscar
Mayer & Co. v. Evans, 441 U.S. 750,755,99 S. Ct. 2066,60 L. Ed. 2d 609,615 (1979).
Barnhart has, or had, forums for relief other than Kentucky courts. Thus, our holding
does not let Fruit of the Loom “off the hook” and give it free reign to discriminate against
its out of state workers.’
Moreover, extraterritorial application of the KCRA would likely hinder rather than
promote the elimination of discrimination on a national basis. Congress enacted the
ADEA in order to eliminate age-based discrimination on a national level. The individual
states can and are encouraged to enact their own versions of the ADEA. See 29
U.S.C.A. § 633. Many states, such as Kentucky, have enacted such legislation. Such
‘We note that when the ADEA was initially enacted by Congress, it was
construed by a majority of federal courts as expressly having no extraterritorial
application. See. e.g., Pfeiffer v. Wm. Wrialey Jr. Co., 755 F.2d 554, 559 (7th Cir.
1985). However, an exception to this rule was created to prevent “a transparent
evasion of the Act, as where an employer transfers an employee abroad for a short
period of time for the purpose of avoiding the Act’s coverage.” Wolf v. J. J. Case Co.,
617 F. Supp. 858, 861 (E. D. WISC. 1985). Further, we also note that there is liberal
policy for protecting workers who suffer injury within the territorial boundaries of the
Commonwealth. a, a, Bryant v. Jericol Minina, Inc., Ky. App., 758 S.W.2d 45
(1988).
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legislation can only be viewed as providing additional protection from age-based
discrimination. Accord Nickel v. Shatterproof Glass Corp., 424 F. Supp. 884, 886 (D.
Mich. 1976).
There certainly is no guarantee that any additional protection provided by
the various states will be uniform. In fact, it is highly unlikely that it would be.
The extraterritorial application of one state’s legislation to prevent age-based
discrimination upon the employment practices of another state could result in
competing jurisdictions and difficult choice of law questions, all of which would delay
rather than expedite the disposition of age-based discrimination cases.
Such a result
would be contrary to one of the ADEA’s primary purposes, which is the expeditious
disposition of cases. Expediency is particularly important in these type of cases
because those aggrieved by acts of age-based discrimination by definition have
relatively fewer productive years left. Oscar Maver & Co. v. Evans, 441 U.S. at 757, 60
L. Ed. 2d at 616, quoting 113 Cong. Rec. 7076 (1976) (remarks of Sen. Javits).
We conclude by noting that the decision by a state to provide additional
protection against age-based discrimination in employment is a policy decision of that
state. Imposing the policy choice by the Commonwealth on the employment practices
of our sister states should be done with great prudence and caution out of respect for
the sovereignty of other states, and to avoid running afoul of the Commerce Clause of
the United States Constitution. “The Commerce Clause . . . precludes the application
of a state statute to commerce that takes place wholly outside of the State’s borders,
whether or not the commerce has effects within the State.” Edaar v. MITE Corn, 457
U.S. 624, 642-43, 102 S. Ct. 2629, 73 L. Ed. 2d 269, 283 (1982) (plur. opn.); see also
Campbell v. Arco Marine. Inc. 50 Cal. Rptr. 2d 626, 631-32 (Cal. Ct. App. 1996), which
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held that extraterritorial application of California’s Fair Employment Housing Act would
raise serious constitutional concerns under the Commerce Clause.
For the reasons set forth above, we hold that the Kentucky Civil Rights Act does
not have extraterritorial application. Further, we hold that, upon the facts of this case,
allowing Barnhart to obtain relief under the KCRA is an extraterritorial application of the
Act. Therefore, we reverse the Court of Appeals and remand this case with directions
to enter an order dismissing this complaint.
Cooper, Graves, and Wrntersheimer, JJ., concur. Lambert, C.J., dissents by
separate opinion, with Keller and Stumbo, JJ., joining that dissent.
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COUNSEL FOR APPELLANT:
Richard S. Cleary
Brent R. Baughman
Greenebaum, Doll & McDonald
3300 National City Tower
101 S. Fifth Street
Louisville, KY 40202
COUNSEL FOR APPELLEES,
JOEL 0. BARNHART; ZACK N.
WOMACK; DEEP & WOMACK;
ANDREW P. CAMPBELL, DAVE
LOPER; and LEITMAN, SIEGAL,
PAYNE & CAMPBELL, P.C.:
Zack N. Womack
Womack Law Offices
230 Second Street, Suite 500
P. 0. Box 637
Henderson, KY 42419-0637
John C. Roach
Ransdell, Roach & Wier, P.L.L.C.
2365 Harrodsburg Road, Suite A 200
Lexington, KY 40504
Andrew P. Campbell
Dave Loper
Leitman, Siegal, Payne & Campbell, P.C.
600 North 20th Street, Suite 400
Birmingham, AL 35203-2601
COUNSEL FOR AMICUS CURIAE,
ASSOCIATED INDUSTRIES OF KENTUCKY:
Douglas W. Becker
David A. Calhoun
Wyatt, Tarrant & Combs
2600 Citizens Plaza
Louisville, KY 40202
-lO-
RENDERED: APRIL 26,200l
TO BE PUBLISHED
1999-SC-0091
-DG
UNION UNDERWEAR COMPANY, INC.,
d/b/a FRUIT OF THE LOOM
v
.
APPELLANT
ON REVIEW FROM THE COURT OF APPEALS
1996-CA-0780-MR
WARREN CIRCUIT COURT NO. 95Cl-420
JOEL 0. BARNHART; ZACK N. WOMACK;
DEEP & WOMACK; ANDREW P. CAMPBELL;
DAVE LOPER; and LEITMAN, SIEGAL,
PAYNE & CAMPBELL, P.C.
APPELLEES
DISSENTING OPINION BY CHIEF JUSTICE LAMBERT
The opinion of the majority improperly circumscribes the jurisdiction of
Kentucky courts and undermines important state and federal policy. It is truly
extraordinary for a Kentucky court to hold that it lacks subject matter jurisdiction of a
claim for Kentucky Civil Rights Act violations committed against its employees by a
Kentucky corporation.’
‘While Fruit of the Loom is incorporated in New York, its principal place of
business is in Bowling Green. Barnhart reported directly to the company headquarters
in Bowling Green and the decision to demote Barnhart because of his age was made
and approved at corporate headquarters in Bowling Green. In sum, every decision that
gives rise to Barnhart’s claim occurred at corporate headquarters in Bowling Green.
Circuit courts “have original jurisdiction of all justiciable causes not vested
in some other co~t-t.“~
“The circuit court is a court of general jurisdiction; it has original
jurisdiction of all justiciable causes not exclusivelv vested in some other co~rt.“~ Under
these provisions, Kentucky circuit courts, unlike their federal counterparts that require
an express grant of jurisdiction, are granted subject matter jurisdiction in all cases
except where it is expressly denied. As such, the focus of the majority opinion on
whether the trial court was granted jurisdiction is misplaced; the inquiry should be
whether jurisdiction has been denied. Nothing in the Act remotely constitutes an
express denial of subject matter jurisdiction.4
The fundamental basis for the majority opinion is found in language from
the general purposes provision of the Act which refers to protection of “individuals within
this state.“5
To reach its conclusion, however, there has been a tortured reading of the
entire general purposes section and disregard of the first sentence, “to provide for
execution within the state of the Policies embodied in the Federal Civil Rights Act of
1964...” (emphasis added). Other provisions of the Act remove any doubt as to
legislative intent that all persons employed by an employer subject to the Act are
covered. KRS 344.030(5) defines “employee” as “an individual employed by an
employer,” and KRS 344.450 states, “any person injured by any act in violation of this
chapter shall have a civil cause of action in circuit court . . . .” Moreover, application of
2K~. CONST . §I 12(5).
3KRS 23A.010 (emphasis added).
4C0177pare KRS 24A.110 and KRS 24A.120, whereby the criminal and civil
jurisdiction of district courts is articulated, thereby depriving circuit courts of jurisdiction
in such circumstances.
5KRS 344.020(l).
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.
.
the Act by the majority leads straightaway to inconsistent treatment of corporate
employees working in Kentucky and those who work in another state. The majority
should have been guided by KRS 446.080 which requires that statutes “be liberally
construed with a view to promote their objects and carry out the intention of the
legislature, and the rule that statues in derogation of the common law are to be strictly
construed shall not apply to the statutes of this state.”
The most pernicious effect of the majority opinion is that it undermines
compelling state and federal policy. The Act (KRS 344, et. seq.) Is intended to
encompass and guarantee under state law the provisions of the Federal Civil Rights Act
of 1964, Title VIII of the Federal Civil Rights Act of 1968, the Fair Housing Act as
amended (42 USC 360), the Federal Age Discrimination in Employment Act of 1967,
the Americans with Disabilities Act of 1990, and the Civil Rights Act of 1991 as
amended.6 With the majority opinion here, these paramount rights have been thwarted.
Rights available to an employee within Kentucky are wholly denied to an employee of
the same corporation who is directed by the employer to work outside this state, despite
the fact that all relevant decisions were made in Kentucky.
As the majority opinion is predicated entirely upon lack of subject matter
jurisdiction, it found no need to address numerous other significant issues presented in
this case. This record should reflect, however, that the case was tried before a jury that
found Fruit of the Loom had discharged Barnhart “because of his age” and returned a
verdict in excess of one million dollars. Judgment for that sum plus attorneys’ fees was
entered by the trial court. It should also be said that the Court of Appeals panel hearing
‘Meyers v. Chapman Printina Co., Ky., 840 S.W.2d 814 (1992).
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the case was unanimous and rendered a scholarly opinion of forty-seven pages
affirming the final judgment.
Keller and Stumbo, JJ., join this dissenting opinion.
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