Case: Cole v. Warren County

The plaintiffs originally filed this lawsuit in the United States District Court for the Western District of Kentucky on December 12, 2011. The court dismissed the case on May 30, 2012, holding that the Jail’s seizure policy did not violate due process. Cole v. Warren County, 2012 WL 1950419 (W.D.Ky. 2012). The court declined to rule on whether the policy violated Kentucky law, so in 2012, the plaintiffs filed the lawsuit in the state court to address state law claims.

The plaintiffs were three former inmates of the Warren County Jail. They filed a lawsuit against the Warren County, Kentucky, and the South Central Bank of Bowling Green under state law and the Uniform Commercial Code, alleging that checks made payable to them were improperly confiscated and the funds were illegally deposited at the Bank and kept by the Jail for costs associated with their confinement. In sum, the plaintiffs argued that when they were arrested, checks they had in their possession were confiscated by the Jail. After deducting the amount related to fees for booking, processing, and housing, the Jail deposited the balance with the Bank.

The plaintiffs sought to recover all actual, consequential, and special damages arising from the Jail’s and Bank’s conduct, including the sums of all checks that were wrongfully accepted by the Bank and deposited into the Jail’s inmates accounts. The plaintiffs also sought punitive damages and a declaratory judgment permanently ordering the Jail and the Bank to cease the allegedly illegal practice. The plaintiffs also filed a motion requesting the Warren Circuit Court to certify a class consisting of "all persons admitted to the Jail since December 12, 2006."

Both the plaintiffs and the defendants filed motions for summary judgment. On May 2, 2014, the Warren Circuit Court held that the Jail’s policy of confiscating cash and checks without first obtaining authorization by a sentencing court was lawful. Still, the court held that both the Jail and the Bank violated the UCC by negotiating unendorsed checks, and that the Bank was liable to the inmates for paying checks without the inmates' authorization. Consequently, the court enjoined the Jail and the Bank from illegally endorsing and depositing such checks. However, the court denied the claim for damages, holding that the plaintiffs either benefited from the deposited funds or were refunded in the proper amount. Finally, the court denied the plaintiffs’ motion to certify a class action, because (i) the plaintiffs lacked standing for monetary damages against the Bank, (ii) the plaintiffs’ claims were not typical of the claims of the proposed class, (iii) the proposed class composition was too broad, and (iv) certifying the class would require an individualized inquiry into which individuals had unendorsed checks deposited, defeating the purpose of a class action.

The Warren Circuit Court denied the plaintiffs’ motions to alter, amend or vacate or to amend the initial complaint to raise constitutional issues not previously raised. The plaintiffs then filed an appeal against these denials, arguing that the court had improperly interpreted the state law, and the Jail should not be permitted to seize cash and checks in the possession of prisoners without an order from a sentencing court. In the alternative, the plaintiffs argued that the statute was unconstitutional, that they were entitled to damages due to the Jail and Bank’s violation of the UCC, and that class certification was erroneously denied.

Meanwhile, the Bank cross-appealed the Warren Circuit Court’s holding that the policy of honoring checks made payable to inmates and depositing those funds into the Jail’s account violated the UCC. The Bank argued that its policy of depositing inmate checks into the Jail’s account did not violate the UCC because the Bank had no legal obligation or basis for questioning the Jail’s authority to deposit such checks. In the alternative, the Bank claimed that injunctive relief was improper because a cause of action for monetary damages was the only relief provided for in the UCC, specifically KRS 355.3-420(2).

On November 13, 2015, the Kentucky Court of Appeals issued an opinion affirming the trial court’s interpretation of the state law and the legality of the Jail’s procedure of confiscating checks and automatically deducting required fees. However, the opinion reversed the trial court’s order enjoining the Jail and the Bank from continuing to endorse and deposit confiscated inmate checks, and reversed the trial court’s finding that the Bank was liable for conversion. Finally, the opinion affirmed the trial court’s order denying the appellants class certification.

On December 29, 2015, the plaintiffs filed a motion for discretionary review in the state Supreme Court, but the motion was denied on August 17, 2016. The case is now closed.