Garza v. Swift Transp. Co., Inc.

• Decision Date: 24 August 2009
• Docket Number: No. CV-08-0382-PR.,CV-08-0382-PR.
• Citation: 213 P.3d 1008,222 Ariz. 281
• Parties: Leonel GARZA, Plaintiff/Appellant, v. SWIFT TRANSPORTATION CO., INC., Defendant/Appellee.
• Court: Arizona Supreme Court

213 P.3d 1008

222 Ariz. 281

Leonel GARZA, Plaintiff/Appellant, v. SWIFT TRANSPORTATION CO., INC., Defendant/Appellee.

No. CV-08-0382-PR.

Supreme Court of Arizona, En Banc.

August 24, 2009.

Hagens Berman Sobol Shapiro, L.L.P. by Robert B. Carey, Amy M. Wilkins, Phoenix, Attorneys for Leonel Garza.

Polsinelli Shughart, P.C. by Marty Harper, Kelly J. Flood, Natalia A. Garrett, Phoenix,

Attorneys for Swift Transportation Company, Inc.

OPINION

RYAN, Justice.

¶ 1 In this case, we address whether the court of appeals properly exercised jurisdiction over an appeal from a superior court order denying a motion for class certification. We hold that the court of appeals lacked appellate jurisdiction.

I

¶ 2 Swift Transportation Company is a trucking company headquartered in Phoenix. Leonel Garza drove for Swift briefly in 2002. Garza signed a standard form contract providing he would be paid $0.82 per "dispatched mile." This form contract was signed by some 500 to 1,000 other Swift drivers. Swift offered trips through a two-way satellite communication device to drivers who had signed the contract. The device informed the driver of the starting point, the destination, and the estimated mileage for each offered trip. A driver then accepted the offer by notifying Swift through the device.

¶ 3 After his contract terminated, Garza claimed that Swift had miscalculated the "dispatched" miles he drove by ten to fifteen percent. Garza alleged about $1,500 in damages. Garza also asserted that Swift systematically underestimated mileage and, by doing so, routinely underpaid its drivers.

¶ 4 Garza filed a class action complaint under Arizona Rule of Civil Procedure 23 ("Rule 23") on behalf of himself and other drivers who had signed the form contract. Garza defined the class, in part, as "[a]ll persons who contracted with Swift Transportation [through the form contract]."

¶ 5 The superior court denied class certification, finding that (1) Garza did not have a claim under his proposed definition of the class, (2) the class was not adequately defined, and (3) the dispute over the meaning of the contract term "dispatched miles" would require inquiry into extrinsic evidence for each class member. The superior court then determined that Garza's individual claim was subject to compulsory arbitration. See Ariz. R. Civ. P. 72.

¶ 6 Garza appealed the denial of class certification.¹ Without discussion, the court of appeals found appellate jurisdiction under Arizona Revised Statutes ("A.R.S.") section 12-2101(D) (2003). Garza v. Swift Transp. Co. Inc., 1 CA-CV 07-0472, 2008 WL 3009961, at *2, ¶ 10 (Ariz.App. July 31, 2008) (mem. decision). The court then vacated the superior court's denial of class certification, id. at *1, ¶ 1, determining that Garza has a claim typical of other potential class members' claims, id. at *4, ¶ 21, and holding that the term "dispatched mile" should be interpreted uniformly for all class members, id. at *7, ¶ 30.

¶ 7 Swift petitioned for review, but its petition did not address appellate jurisdiction. We granted review and ordered the parties to submit supplemental briefs on the jurisdictional issue. See Musa v. Adrian, 130 Ariz. 311, 312, 636 P.2d 89, 90 (1981) (noting duty to determine existence of appellate jurisdiction). We have jurisdiction under Article 6, Section 5(3), of the Arizona Constitution and under A.R.S. § 12-120.24 (2003).

II

¶ 8 Rule 23(a) states:

One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

In appropriate cases, class actions provide an efficient method of litigating claims involving large numbers of people. See Andrew S. Arena, Inc. v. Superior Court, 163 Ariz. 423, 425, 788 P.2d 1174, 1176 (1990).

¶ 9 The federal courts of appeal long struggled with whether a district court's order denying class certification was an appealable order under 28 U.S.C. § 1291 (2006) (providing for appeals from "final decisions of the district courts of the United States"). Compare King v. Kan. City S. Indus., Inc., 479 F.2d 1259, 1260 (7th Cir.1973) (holding order denying class certification not immediately appealable), with Eisen v. Carlisle & Jacquelin, 370 F.2d 119, 120-21 (2d Cir.1966) (finding such an order immediately appealable). Even those federal courts finding orders denying class certification appealable acknowledged that such decisions were not technically final judgments under § 1291 because they did not finally dispose of the underlying action. See, e.g., Eisen, 370 F.2d at 120. Those courts, however, applied the so-called "death knell" doctrine to find finality when, because of the small size of the claim, "a plaintiff simply [could not] continue his law suit alone." Korn v. Franchard Corp., 443 F.2d 1301, 1306 (2d Cir.1971). Under that doctrine, if an appellate court determined that the litigation would be summarily concluded because individual claims were so small that "no lawyer of competence [would] undertake [such a] complex and costly case," it treated the denial of class certification as a "final order." Eisen, 370 F.2d at 120; see also Green v. Wolf Corp., 406 F.2d 291, 295 n. 6 (2d Cir.1968) (finding appellate jurisdiction under § 1291 when absent class certification, "the litigation will very likely terminate without reaching the merits").

¶ 10 The death knell doctrine did not automatically allow an appeal of right when the individual claim of the putative class representative was nominal. For example, some courts declined to apply the doctrine when prospective claimants other than the putative class representative had resources to proceed or if an award of attorneys' fees was available. See, e.g., Windham v. Am. Brands, Inc., 565 F.2d 59, 69 (4th Cir.1977) (refusing to apply death knell doctrine when several class members were financially capable of carrying suit individually); Johnson v. Nekoosa-Edwards Paper Co., 558 F.2d 841, 844 (8th Cir.1977) (noting that the possibility of attorneys' fees "significantly undercuts the economic rationale for the death knell doctrine"); West v. Capitol Fed. Sav. & Loan Ass'n, 558 F.2d 977, 981-82 (10th Cir.1977) (finding ability to recover attorneys' fees among factors in rejecting death knell); Hackett v. Gen. Host Corp., 455 F.2d 618, 622-23 (3d Cir.1972) (observing that a lawyer might take a case when attorneys' fees are available which would undermine the rationale of the death knell doctrine); City of N.Y. v. Int'l Pipe & Ceramics Corp., 410 F.2d 295, 299 (2d Cir.1969) (finding no death knell when the "City and [various intervenors] with adequate resources to continue the action and with substantial amounts at stake [would] undoubtedly carry on"). Under these decisions, appellate jurisdiction turned on consideration of various case-specific factors unrelated to the merits of the underlying order denying class certification.

¶ 11 The United States Supreme Court ultimately rejected the federal death knell doctrine in Coopers & Lybrand v. Livesay, 437 U.S. 463, 465, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978). The Court held that federal courts of appeal could not find class certification denials appealable as a matter of right under 28 U.S.C. § 1291 by "identify[ing] on a case-by-case basis those few interlocutory orders which, when viewed from the standpoint of economic prudence, may induce a plaintiff to abandon the litigation." Id. at 471, 98 S.Ct. 2454. Citing Rule 23(c)(1) of the Federal Rules of Civil Procedure, the Court reasoned that because orders denying class certification may be amended at any time, such orders do not fall within the "small class" of decisions excepted from the finality requirements of § 1291. Id. at 469-70 & n. 11, 98 S.Ct. 2454. The Court thus concluded that "orders relating to class certification are not independently appealable." Id. at 470, 98 S.Ct. 2454.²

III

¶ 12 Our court of appeals "derives ... appellate jurisdiction wholly from statutory provisions." Eaton v. Unified Sch. Dist. No 1, 122 Ariz. 391, 392, 595 P.2d 183, 184 (App. 1979) (citing Ariz. Const. art. 6, § 9), approved and adopted, 122 Ariz. 377, 595 P.2d 169 (1979). In general, "the types of judgments and orders from which appeals may be taken are set forth in A.R.S. § 12-2101." Id. "With certain exceptions ..., the power of [an appellate court] to review judgments of the superior courts is limited by A.R.S. § 12-2101(B) to appeals `from a final judgment.'" Rueda v. Galvez, 94 Ariz. 131, 132, 382 P.2d 239, 239 (1963).

¶ 13 Garza first argues that the order denying class certification was a final judgment under Arizona Rule of Civil Procedure 54(b), which permits entry of final judgment as to fewer than all of the claims in a case when there is "no just reason for delay and upon an express direction for the entry of judgment." Garza is mistaken; the superior court specifically removed the Rule 54(b) language as well as the words "final judgment" from Garza's proposed order before signing it.

¶ 14 Garza next argues that the court of appeals had jurisdiction under A.R.S. § 12-2101(D), which allows an appeal "[f]rom any order affecting a substantial right made in any action when the order in effect determines the action and prevents judgment from which an appeal might be taken." Garza argues that appellate jurisdiction was proper under this section because denial of class certification effectively ended the litigation of his claim. He maintains that his claim is too small to justify the cost of proceeding individually, thus preventing "judgment from which an appeal [may] be taken."

A

¶ 15 The exception to the final judgment rule codified at A.R.S....