City of Phoenix v. Fields

• Decision Date: 19 February 2009
• Docket Number: No. CV-08-0159-PR.,CV-08-0159-PR.
• Citation: 219 Ariz. 568,201 P.3d 529
• Parties: CITY OF PHOENIX, a municipal corporation; City of Phoenix Employees' Retirement System Board, Petitioners, v. The Honorable Kenneth L. FIELDS, Judge of the Superior Court of the State of Arizona, in and for the County of Maricopa, Respondent Judge, Mary Ann Perez, Lou Krafts, Sherry Gill, Nan Nelson, Dorothy Hansen, Eva Hernandez, Norma Veach, Lillie Dye, Nefretari Salahdeen, Teresa Anderson, Elaine Stockton, Geraldine Martinez, Maria Montoya, Pauline Hodges, Violet Todd, Martha Martinez, Real Parties in Interest.
• Court: Arizona Supreme Court

201 P.3d 529

219 Ariz. 568

CITY OF PHOENIX, a municipal corporation; City of Phoenix Employees' Retirement System Board, Petitioners, v. The Honorable Kenneth L. FIELDS, Judge of the Superior Court of the State of Arizona, in and for the County of Maricopa, Respondent Judge Mary Ann Perez, Lou Krafts, Sherry Gill, Nan Nelson, Dorothy Hansen, Eva Hernandez, Norma Veach, Lillie Dye, Nefretari Salahdeen, Teresa Anderson, Elaine Stockton, Geraldine Martinez, Maria Montoya, Pauline Hodges, Violet Todd, Martha Martinez, Real Parties in Interest.

No. CV-08-0159-PR.

Supreme Court of Arizona, En Banc.

February 19, 2009.

Littler Mendelson, P.C. by J. Mark Ogden, R. Shawn Oller, J. Greg Coulter, Phoenix, Attorneys for City of Phoenix.

Kutak Rock LLP by Marc R. Lieberman, Paige A. Martin, Jennifer L. Kraham, Scottsdale, Attorneys for City of Phoenix Employees' Retirement System Board.

Jennings, Strouss & Salmon, P.L.C. by Peter W. Sorensen, Paul G. Johnson, Phoenix, Attorneys for Mary Ann Perez, Lou Krafts, Sherry Gill, Nan Nelson, Dorothy Hansen, Eva Hernandez, Norma Veach, Lillie Dye, Nefretari Salahdeen, Teresa Anderson, Elaine Stockton, Geraldine Martinez, Maria Montoya, Pauline Hodges, Violet Todd, and Martha Martinez.

Charles M. Brewer, Ltd. by David L. Abney, Phoenix, and Haralson, Miller, Pitt, Feldman & McAnally, P.L.C. by Stanley G. Feldman, Tucson, Attorneys for Amicus Curiae Arizona Trial Lawyers Association.

Arizona Center for Law In the Public Interest, Phoenix, by Timothy M. Hogan, Joy E. Herr-Cardillo, Tucson, Attorneys for Amici Curiae Arizona Center for Law in the Public Interest and the Goldwater Institute.

OPINION

HURWITZ, Justice.

¶ 1 Before suing a public entity, a plaintiff must file a notice of claim that includes "a specific amount for which the claim can be settled." A.R.S. § 12-821.01(A) (2003). This case applies that statutory requirement to a class claim.

I.

¶ 2 On April 11, 2002, eight former and current Head Start workers filed a notice of claim with the City of Phoenix (the "City") and the City of Phoenix Employees' Retirement System Board (the "Board") on behalf of themselves and others similarly situated (the "Class"). The notice alleged that Head Start workers were improperly denied the Class various benefits generally available to City employees. An amended notice of claim was filed on May 16, 2002, naming eight additional representatives. Neither the City nor the Board responded to the claim within sixty days; the claim was thus denied. See A.R.S. § 12-821.01(E).

¶ 3 On October 21, 2002, the putative class representatives filed a complaint against the City and Board in Maricopa County Superior Court, alleging constructive fraud, breach of contract, and failure to pay wages. The complaint sought certification of a plaintiff class. On March 5, 2007, after certification of the class, the defendants moved for summary judgment on the ground that the 2002 notices did not set forth an amount for which the claims of the Class could be settled.

¶ 4 The Class argued that the defendants had waived this defense through undue delay in asserting it. The superior court found no waiver, but nonetheless denied the motion for summary judgment, holding that the settlement demand requirement of § 12-821.01(A) does not apply to class actions. The City and Board sought special action relief in the court of appeals.

¶ 5 The court of appeals accepted jurisdiction and vacated the superior court's order. City of Phoenix v. Fields (Perez), 219 Ariz. 88, 193 P.3d 782 (App.2008). The court held that § 12-821.01(A) applies to class actions, id. at 94 ¶ 16, 193 P.3d at 788, and that the notices filed by the Class were deficient for failure to specify an amount for which the class claim could be settled, id. at 95-96 ¶ 22, 193 P.3d at 789-90.

¶ 6 The Class petitioned for review. We granted review because the issue presented is of first impression and statewide importance. See ARCAP 23(c). We have jurisdiction under Article 6, Section 5(3) of the Arizona Constitution and A.R.S. § 12-120.24.

II.

A.

¶ 7 The common law doctrine of sovereign immunity generally bars damages suits against public entities. See State v. Sharp, 21 Ariz. 424, 426, 189 P. 631, 631 (1920) (adopting common law rule). We abandoned that broad common law doctrine in Stone v. Arizona Highway Commission, 93 Ariz. 384, 387, 381 P.2d 107, 109 (1963). But although Stone and subsequent cases have developed a new common law of government liability, the legislature retains the power to modify the common law and develop this area of the law. See Ariz. Const. art. 4, pt. 2, § 18 ("The Legislature shall direct by law in what manner and in what courts suits may be brought against the State."); Ryan v. State, 134 Ariz. 308, 310, 656 P.2d 597, 599 (1982) ("We do not recoil from the thought that the legislature may in its wisdom wish to intervene in some aspects of this development.").

¶ 8 In 1984, the legislature enacted a comprehensive statutory scheme governing actions against public entities and employees. 1984 Ariz. Sess. Laws, ch. 285 (the "1984 Act") (now codified at A.R.S. §§ 12-820 to -823). The 1984 Act "declared ... the public policy of this state that public entities are liable for acts and omissions of employees in accordance with the statutes and common law of this state," id. § 1(A), and set forth limited circumstances in which public entities would enjoy complete or qualified immunity from liability, id. § 3 (now codified at A.R.S. §§ 12-820 to -820.05). The 1984 Act also required that, before suing a public entity, a plaintiff file a notice of claim with the entity. Id. § 5 (previously codified at § 12-821 (1984)).

¶ 9 The notice of claim requirement underwent significant legislative revision in 1994. 1994 Ariz. Sess. Laws, ch. 192 (the "1994 Act"). Most relevant to today's inquiry, the 1994 Act added § 12-821.01(A), which provides:

Persons who have claims against a public entity or a public employee shall file claims with the person or persons authorized to accept service for the public entity or public employee as set forth in the Arizona rules of civil procedure within one hundred eighty days after the cause of action accrues. The claim shall contain facts sufficient to permit the public entity or public employee to understand the basis upon which liability is claimed. The claim shall also contain a specific amount for which the claim can be settled and the facts supporting that amount. Any claim which is not filed within one hundred eighty days after the cause of action accrues is barred and no action may be maintained thereon.[¹]

B.

¶ 10 The 1984 Act did not expressly address class claims. In Andrew S. Arena, Inc. v. Superior Court (Pima County), we held that "A.R.S. § 12-821 does not bar class actions against public entities," and that "a claim against a public entity may be presented as a class claim." 163 Ariz. 423, 426, 788 P.2d 1174, 1177 (1990). "If the claim is denied, the court may thereafter entertain a class action on the claim provided that the case is appropriate as a class action under the applicable principles of law." Id.

¶ 11 Arena did not address the required form of a class claim. Nor, because it was decided under the 1984 Act, did Arena involve the requirement in § 12-821.01(A), added in the 1994 Act, that a notice include a "specific amount" for which the claim can be settled.

¶ 12 In Deer Valley Unified School District No. 97 v. Houser (McDonald), we held that in light of the "clear and unequivocal" language of § 12-821.01(A), a notice of claim must "include a particular and certain amount of money that, if agreed to by the government entity, will settle the claim." 214 Ariz. 293, 296 ¶ 9, 152 P.3d 490, 493 (2007). Deer Valley, however, did not involve a class claim. Nor has any reported Arizona decision other than the one below applied the 1994 Act to class claims.

1.

¶ 13 Applying § 12-821.01(A) to class claims is complicated by the nature of class actions. Persons filing a claim with a public entity do not yet represent a class; subsequent court certification of the class is required before the claimants attain representative capacity. See Ariz. R. Civ. P. 23(c)(1) (requiring the superior court to "determine by order" whether an action may be maintained as a class action); Arena, 163 Ariz. at 426, 788 P.2d at 1177. Before certification, the putative representatives have authority to settle only their individual claims. See 5 Jerold S. Solovy et al., Moore's Federal Practice § 23.161(2)(a) (3d ed. 2007) ("Moore's"). Even after certification, non-representative class members generally must be given an opportunity to exclude themselves from the class. Ariz. R. Civ. P. 23(c)(2). No settlement binds remaining class members until approved by the trial court after appropriate notice and hearing. Moore's, supra, § 23.60(8).

¶ 14 Thus, it is simply not possible for those filing a purported class claim under the notice of claim statute to set forth a "specific amount" for which the claim of the entire class "can be settled," as required by § 12-821.01(A). Not only do those filing the claim lack any such authority, they also have no assurance that a class will ever be certified, how many members of the class will opt out, or whether the superior court will eventually approve a proposed settlement.

¶ 15 The City and Board nonetheless argue that we should interpret § 12-821.01(A) as requiring that putative class representatives make a sum-certain settlement demand on behalf of a yet-uncertified class and then file suit, seeking simultaneous class certification and settlement approval. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 618, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997) ("[T]he `settlement only' class has become a stock device."). The initial difficulty with this argument is that such a demand would not comply with the language of the statute, which requires that the notice include "a specific...