Garza v. Gama

Decision Date12 July 2016
Docket NumberNo. 1 CA–SA 15–0315,1 CA–SA 15–0315
Citation240 Ariz. 373,379 P.3d 1004
Parties Leonel Garza, and all persons similarly situated, Petitioners, v. The Honorable J. Richard Gama, Judge of the Superior Court of the State of Arizona, in and for the County of Maricopa, Respondent Judge, Swift Transportation Co., Inc., Real Party in Interest.
CourtArizona Court of Appeals

Hagens, Berman, Sobol, Shapiro, LLP, Phoenix, By Robert B. Carey, Leonard W. Aragon, Michella A. Kras, Counsel for Petitioners.

Polsinelli, PC, Phoenix, By Rebecca Lumley, Counsel for Real Party in Interest.

Polsinelli, PC, Kansas City, MO, By James C. Sullivan, Travis Salmon, Counsel for Real Party in Interest.

Presiding Judge Diane M. Johnsen delivered the opinion of the Court, in which Judge Patricia A. Orozco and Judge Kenton D. Jones joined.

JOHNSEN, Judge:

¶ 1 Petitioners challenge the superior court's order decertifying an 80,000–member class of drivers suing Swift Transportation Co., Inc. For the reasons stated below, we accept jurisdiction of the petition for special action and grant relief. On this record, Swift has failed to show that its various affirmative defenses render the class unmanageable; we also hold that Arizona law applies to the drivers' claim for breach of the duty of good faith and fair dealing.

FACTS AND PROCEDURAL BACKGROUND

¶ 2 Petitioner Leonel Garza was a Swift truck driver who sued the company in 2005, alleging it systematically underpaid all of its drivers. The superior court denied Garza's subsequent motion for class certification. This court reversed and remanded, but on review, our supreme court vacated our decision, holding we lacked jurisdiction over the interlocutory denial of a motion to certify a class. Garza v. Swift Transp. Co., Inc. , 222 Ariz. 281, 213 P.3d 1008 (2009). On remand, the superior court certified a class of Swift drivers pursuant to Arizona Rule of Civil Procedure 23(b)(3). As trial approached, however, the superior court granted Swift's motion to decertify the class in July 2015.

DISCUSSION
A. Jurisdiction.

¶ 3 Petitioner Garza and the drivers who were members of the now-decertified class lack an adequate remedy on appeal. See Garza , 222 Ariz. at 287, ¶ 27, 213 P.3d at 1014 (special action was suitable means to seek review of order denying class certification). Cf. Ariz. Rev. Stat. § 12–1873(A) (2016) (creating appellate jurisdiction over orders certifying or refusing to certify class actions in cases filed after September 13, 2013). In addition, Garza's petition raises questions of statewide importance. See Perry v. Ronan , 225 Ariz. 49, 52, ¶ 6, 234 P.3d 617, 620 (App. 2010). For these reasons, we accept jurisdiction of the petition for special action.

B. De–Certification of the Class.
1. Reconsideration of certification.

¶ 4 Whether to certify a class is a matter within the discretion of the superior court. Godbey v. Roosevelt Sch. Dist. No. 66 of Maricopa County , 131 Ariz. 13, 16, 638 P.2d 235, 238 (App. 1981). In granting Swift's motion to decertify, the superior court concluded that the drivers' good-faith claim "is unmanageable as a class action." It held that, even assuming the claim presents common questions, Swift's affirmative defenses "raise individual issues" that would predominate over the common questions. Moreover, the court held, petitioners had not shown that Swift's choice-of-law arguments did not present "insuperable obstacles" to class-action treatment.

¶ 5 Petitioners argue that, having certified the class, the superior court lacked discretion to revisit the issue as trial neared. They argue that absent changed circumstances, a change in the law, the need to correct a clear error of law, or evidence that was unavailable earlier, the court should not reconsider a grant of class certification.

¶ 6 Arizona Rule of Civil Procedure 23(c)(1) provides that a class certification or der may be "altered or amended before the decision on the merits." The class in this case was certified under Rule 23(b)(3) (common questions of law or fact predominate over individual questions such that class treatment "is superior to other available methods for the fair and efficient adjudication of the controversy"). As Rule 23(c) anticipates, when the nature of the claims has evolved, the superior court has discretion to revisit whether, considering the elements of the claims and the proof required to prove those claims and any relevant affirmative defenses, common questions of law or fact continue to predominate over individual questions. See Gen. Tel. Co. of the Southwest v. Falcon , 457 U.S. 147, 160, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982) ; Marlo v. United Parcel Serv. , 251 F.R.D. 476, 479–80 (C.D. Cal. 2008) ("[A] district court reevaluating the basis for certification may consider its previous substantive rulings in the context of the history of the case, and may ‘consider the nature and range of proof necessary to establish the [class-wide] allegations.’ ") (citation omitted); see also ESI Ergonomic Solutions, LLC v. United Artists Theatre Circuit, Inc. , 203 Ariz. 94, 98 n. 2, ¶ 11, 50 P.3d 844, 848 n. 2 (App. 2002) (cases construing federal rule of civil procedure may be authoritative in interpreting similar state rule).

¶ 7 When the superior court certified the class in this case, the complaint contained claims for breach of a standard form contract and breach of the implied covenant of good faith and fair dealing. The premise of the claims was that Swift systematically paid its drivers for fewer miles than they actually drove. Garza , 222 Ariz. at 282, ¶ 3, 213 P.3d at 1009. A claim for breach of a standard form contract or company policy often may be suitable for class-wide treatment. See , e.g. , Lennon v. First Nat'l Bank of Ariz. , 21 Ariz.App. 306, 518 P.2d 1230 (1974) (class treatment of claim arising out of standard bank charges). In a ruling not now before us, however, the superior court dismissed petitioners' claim for breach of contract. With trial approaching on petitioners' remaining claim for breach of the covenant of good faith and fair dealing, the superior court did not abuse its discretion when it decided to reconsider whether common questions continued to predominate and whether the case, now with some 80,000 class members, continued to be manageable.

2. The remaining claim.

¶ 8 When Swift offers a trip to a driver, it sends a digital message informing the driver of the route and a mileage total for which the driver will be paid; the driver accepts the offer by pressing "y" in response to the inquiry. Garza , 222 Ariz. at 282, ¶ 2, 213 P.3d at 1009. Swift pays a fixed rate per mile, and to calculate the miles for which it will pay, it uses third-party software called the Household Goods Mileage Guide ("HHG"). In dismissing petitioners' claim for breach of contract, the superior court held that Swift's contracts only required Swift to pay a driver for the number of miles stated in the digital message, and that a driver could not claim breach based on Swift's failure to pay for any additional miles a trip actually may require.

¶ 9 Consistent with the superior court's earlier ruling dismissing petitioners' claim for breach of contract, the evidence now in the record is that Swift's drivers knew and agreed that they would be paid based on mileage derived from HHG, that the mileage they would actually drive would be greater than the HHG-derived mileage, and that, as a consequence, they would be paid for fewer miles than they drove. Swift cites evidence that drivers were informed and understood that a trip might require them to drive five to ten percent more miles than the HHG-derived mileage for which they are paid.

¶ 10 Petitioners' remaining claim alleges breach of the duty of good faith and fair dealing implied as a matter of law in Swift's contractual relationships with its employee-drivers and owner/operator-drivers. As explained in their petition for special action, petitioners allege HHG allows Swift more than one method of estimating the distance to a particular destination. They allege that in determining how much to pay a driver for a trip, Swift uses an HHG method that is not the most accurate means of estimating the distance the driver actually will drive.1 Petitioners allege Swift breached its duty of good faith and fair dealing (1) by failing to select the HHG alternative that most accurately estimates actual trip distance and (2) by failing to inform drivers of that fact. They argue, "[T]elling a driver that the HHG does not equate to actual mileage does not show that Swift adequately and accurately explained to drivers how the HHG worked." That HHG-calculated mileage is less than actual miles driven is one thing, petitioners contend; it is another that Swift "selected the least favorable HHG payment option—city/state pairs—but did not tell the drivers" it had done so.

¶ 11 Implied in every contract is a duty of good faith and fair dealing that "prohibits a party from doing anything to prevent other parties to the contract from receiving the benefits and entitlements of the agreement." Wells Fargo Bank v. Ariz. Laborers, Teamsters & Cement Masons Local No. 395 Pens. Tr. Fund , 201 Ariz. 474, 490, ¶ 59, 38 P.3d 12, 28 (2002). A party may breach the covenant of good faith and fair dealing without breaching an express term of the contract. Id. at 491, ¶ 64, 38 P.3d at 29 (breach of good faith when one party injures the other by "manipulat[ing] bargaining power to its own advantage[.]"). As alleged here, that principle means that although Swift's contracts may not have required it to pay drivers for any more miles than HHG specified, Swift may have breached its duty of good faith and fair dealing if it deliberately manipulated HHG to have it short the mileage the software calculated for purposes of payment.

¶ 12 It is apparent, therefore, that petitioners' claim for breach of the duty of good faith and fair dealing raises an issue common to all the members of the class:...

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