Garza v. Swift Transportation Co.

SUPREME COURT OF ARIZONA
En Banc

LEONEL GARZA, ) Arizona Supreme Court
) No. CV-08-0382-PR
Plaintiff/Appellant, )
) Court of Appeals
v. ) Division One
) No. 1 CA-CV 07-0472
SWIFT TRANSPORTATION CO., INC., )
) Maricopa County
Defendant/Appellee. ) Superior Court
) Nos. CV2004-001777
) CV2004-005924
) (Consolidated)
)
)
) O P I N I O N
_________________________________ )

Appeal from the Superior Court in Maricopa County
The Honorable F. Pendleton Gaines, Judge

REMANDED
________________________________________________________________

Memorandum Decision of the Court of Appeals, Division One
Filed Jul. 31, 2008

VACATED
________________________________________________________________

HAGENS BERMAN SOBOL SHAPIRO, L.L.P. Phoenix
By Robert B. Carey
Amy M. Wilkins
Attorneys for Leonel Garza

POLSINELLI SHUGHART, P.C. Phoenix
By Marty Harper
Kelly J. Flood
Natalia A. Garrett
Attorneys for Swift Transportation Company, Inc.
________________________________________________________________

R Y A N, 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
2
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

1
The court of appeals subsequently stayed the arbitration
proceedings.
3
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

4
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
5
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.
6
Livesay, 437 U.S. 463, 465 (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. 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. The

Court thus concluded that “orders relating to class

certification are not independently appealable.” Id. at 470.2

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

2
In 1998, the Federal Rules of Civil Procedure were amended
to permit limited discretionary interlocutory appellate review of
grants and denials of class certification. See Fed. R. Civ. P.
23(f).
7
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
8
A.R.S. § 12-2101(D) has existed in Arizona without material

change since statehood, see 1913 Civ. Code § 1227(5), and was

the subject of early interpretation by this Court, see State ex

rel. Hess v. Boehringer, 16 Ariz. 48, 51, 141 P. 126, 127 (1914)

(holding that a dismissal without prejudice was appealable under

this subsection when the order of dismissal “in effect

determines the action and prevents final judgment . . . .”).

The classic example of an order falling under § 12-2101(D) is a

dismissal without prejudice entered after the statute of

limitations has run. Absent a savings statute, unless that non-

final order can be appealed, it “in effect determines the

action,” as any refiled action would be barred. See McMurray v.

Dream Catcher USA, Inc., 220 Ariz. 71, ___, ¶ 4, 202 P.3d 536,

539 (App. 2009) (explaining absence of appellate jurisdiction

when plaintiff’s complaint was dismissed without prejudice

unless statute of limitations had run) (citing Boehringer, 16

Ariz. at 51, 141 P. at 127); Edgar v. Garrett, 10 Ariz. App. 98,

101 & n.5, 456 P.2d 944, 947 & n.5 (1969) (dismissal for lack of

prosecution appealable when statute of limitations has run).

¶16 Other decisions correspondingly hold that § 12-2101(D)

bestows jurisdiction on the court of appeals only when a non-

final order precludes a party from obtaining an ultimate

judgment as a matter of law. See, e.g., Rollin v. William V.

Frankel & Co., Inc., 196 Ariz. 350, 351-52, ¶ 4, 996 P.2d 1254,
9
1255-56 (App. 2000) (accepting § 12-2101(D) jurisdiction when

case dismissed for lack of personal jurisdiction); Dusold v.

Porta-John Corp., 167 Ariz. 358, 361, 807 P.2d 526, 529 (App.

1990) (asserting as alternative basis for jurisdiction that when

dismissal was for lack of subject matter jurisdiction, § 12-

2101(D) appeal would lie because party could never have “final”

judgment).

¶17 Thus, the general rule remains that “jurisdiction of

appeals is limited to final judgments which dispose of all

claims and all parties.” Musa, 130 Ariz. at 312, 636 P.2d at

90. Most procedural orders therefore do not fall within the

narrow exception carved by § 12-2101(D). See Rueda, 94 Ariz. at

133, 382 P.2d at 240 (holding denial of a motion to set aside

default “does [not] determine the action so as to prevent entry

of judgment upon the default”); Ruesga v. Kindred Nursing Ctrs.

W., L.L.C., 215 Ariz. 589, 594, ¶¶ 14-15, 161 P.3d 1253, 1258

(App. 2007) (rejecting argument that contract clause requiring

alternative dispute resolution but preventing appeal of such

procedure to a “court of law” “in effect determines the

action”); Yaeger v. Vance, 20 Ariz. App. 399, 400, 513 P.2d 688,

689 (1973) (holding that an order granting mistrial “neither

‘determines the action’ nor ‘prevents judgment from which an

appeal might be taken.’”).

10
 B

¶18 In 1972, however, this Court held that § 12-2101(D)

applied to a denial of a class certification. Reader v. Magma-

Superior Copper Co., 108 Ariz. 186, 187, 494 P.2d 708, 709

(1972). The Court reasoned that absent class action

certification, the plaintiff’s claim “[would] . . . never be

adjudicated.” Id. at 188, 494 P.2d at 710 (quoting Eisen, 370

F.2d at 120). Second, it reasoned that if an appeal did not

lie, “no appellate court will be given the chance to decide if

this class action was proper.” Id.

¶19 Referring approvingly to federal death knell cases,

the opinion explained that when a plaintiff asserted nominal

damages, the cost of going forward absent class certification

would itself prevent judgment and satisfy § 12-2101(D). Id. at

187-88, 494 P.2d at 709-10 (“[N]o lawyer of competence is going

to undertake [a] complex and costly case to recover [nominal

damages]”) (quoting Eisen, 370 F.2d at 120). Thus, Reader

interpreted § 12-2101(D) in a manner consistent with the federal

death knell doctrine, concluding that whether an order denying

class certification would be subject to appeal would turn on

whether the named plaintiff could financially proceed with the

11
suit. 108 Ariz. at 187-88, 494 P.2d at 709-10.3

¶20 The court of appeals later recognized that an appeal

of a class certification denial was not appropriate under § 12-

2101(D) when “appellants proceeded in their individual

capacities to a final resolution of [the] litigation.”

Markiewicz v. Salt River Valley Water Users’ Ass’n, 118 Ariz.

329, 341, 576 P.2d 517, 529 (App. 1978). In such cases, the

court held, the order denying class certification “becomes

merged into the final judgment,” and can be reviewed on appeal

of that judgment. Id. Markiewicz distinguished Reader by

concluding that in cases like the one before it, denial of class

certification “did not ‘in effect’ determine the action, nor did

it prevent ‘judgment from which an appeal might be

taken’ . . . .” Id. (quoting A.R.S. § 12-2101(D)). “To hold

otherwise[,]” the court explained, “would force cautious

litigants to appeal every class action order, even if they were

prepared to remain in the litigation, for fear that the time for

appeal may have started to run from the entry of the class

action order.” Id. The court further noted that orders denying

certification are “merely interlocutory” as “[a]n order under

3
The Court subsequently concluded that the trial court
correctly denied class certification because the class at issue
was unmanageably large and plaintiffs had failed to quantify
their damages. Reader v. Magma-Superior Copper Co., 110 Ariz.
115, 116-17, 515 P.2d 860, 861-62 (1973).

12
[Rule 23(c)(1)] may be conditional, and may be altered or

amended before the decision on the merits.” Id. at 340 & n.10,

576 P.2d at 528 & n.10 (quoting Rule 23(c)(1)).

¶21 In Eaton, the court of appeals also refused to find §

12-2101(D) appellate jurisdiction over an order allowing an

action to be maintained as a class action, reasoning that such

determinations were conditional, and, in any event, did not

determine the case as a whole. Eaton, 122 Ariz. at 392 & n.2,

393, 595 P.2d at 184 & n.2, 185 (citing Rule 23(c)(1)).4 The

court did, however, observe that such orders could be subject to

the court of appeals’ review “on a discretionary basis pursuant

to [the court’s] special action jurisdiction.” Id. at 394, 595

P.2d at 186.

C

¶22 In light of Markiewicz, the other cases interpreting

A.R.S. § 12-2101(D), see ¶¶ 15-17, supra, and the Supreme

Court’s interment of the death knell doctrine, we conclude that

Reader should be overruled.

¶23 First, Reader is subject to the same criticisms that

led the Court in Coopers to reject the death knell rule. The

4
The court noted that Coopers did not “necessarily conflict”
with Reader because the decision “treated the order [denying
class certification] as an interlocutory order made appealable
under . . . A.R.S. § 12-2101(D),” while federal law lacked a
“similar provision.” Id. at 393 n.3, 595 P.2d at 185 n.3.

13
opinion requires appellate courts to engage in a case-specific

factual analysis before determining whether appellate

jurisdiction exists for class certification denials, creating

numerous complications, including the need to establish a court

record on the issue. See Coopers, 437 U.S. at 473-74 (noting

that requiring trial court record and appellate review to

determine whether jurisdiction should be taken constitutes a

“potential waste of judicial resources [that is] plain”).

Second, under existing Arizona law, class action defendants are

denied the right to appeal orders granting certification under §

12-2101(D). Id. at 476 (“Whatever similarities or differences

there are between plaintiffs and defendants in this context

involve questions of policy for Congress.”). Third, there is no

principled reason why the death knell doctrine should be limited

to class actions, and expansion of the doctrine to other orders

that make further individual litigation economically

unattractive to a plaintiff would fundamentally undermine the

final judgment rule. Id. at 469, 476 (explaining that “allowing

appeals of right from nonfinal orders that turn on the facts of

a particular case thrusts appellate courts indiscriminately into

the trial process and thus defeats one vital purpose of the

final-judgment rule - that of maintaining the appropriate

relationship between the respective courts”) (internal quotation

marks omitted). The final judgment rule, “in the absence of
14
most compelling reasons to the contrary, is very much worth

preserving.” Id. at 476.

¶24 Coopers’ emphasis on the compelling nature of the

finality rule corresponds with our determination that finality

is the rule, subject only to certain narrow exceptions. See

Rueda, 94 Ariz. at 132-33, 382 P.2d at 239-40; Boehringer, 16

Ariz. at 51, 141 P. at 127. This approach is consistent with

the language of § 12-2101(D), while Reader is not. Unlike an

order dismissing a complaint without prejudice after the statute

of limitations has run, an order denying class certification

does not, as a legal matter, “in effect determine[] the action

and prevent[] judgment from which an appeal [may] be taken.”

See A.R.S. § 12-2101(D); see also Markiewicz, 118 Ariz. at 340 &

n.10, 576 P.2d at 528 & n.10 (noting that class certification

orders are “merely interlocutory” under the terms of Rule 23).

To be sure, such an order may discourage a plaintiff from

pursuing his individual claim, but the same can be said for a

number of interlocutory orders, including rulings on motions for

summary judgment or to compel discovery.

¶25 Further, although there is no support for an automatic

appeal of right from the denial of class certification, recent

court of appeals decisions apparently assume that such a right

exists by failing to undertake a Reader analysis. See Garza, 1

CA-CV 07-0472, slip op. at *2, ¶ 10; see also ESI Ergonomic
15
Solutions, L.L.C. v. United Artists Theatre Circuit, Inc., 203

Ariz. 94, 97, ¶ 10, 50 P.3d 844, 847 (App. 2002). Such

decisions underscore that the appellate courts are poorly

positioned to carry out the kind of inquiry Reader requires.

¶26 “[E]ven those who regard ‘stare decisis’ with

something less than enthusiasm recognize that the principle has

even greater weight where the precedent relates to

interpretation of a statute.” See Galloway v. Vanderpool, 205

Ariz. 252, 256, ¶ 16, 69 P.3d 23, 27 (2003) (quoting Walker v.

Walker, 178 S.E.2d 46, 46 (Ga. Ct. App. 1970)). We are not,

however, “‘prisoners of the past,’ particularly when the

language of the statute at issue ‘does not compel the

interpretation reached in previous cases.’” Town of Gilbert

Prosecutor’s Office v. Downie (Matykiewicz), 218 Ariz. 466,

473, ¶ 34, 189 P.3d 393, 400 (2008) (Hurwitz, J., concurring)

(quoting Lowing v. Allstate Ins. Co., 176 Ariz. 101, 107, 859

P.2d 724, 730 (1993)). Our decision in Reader was inconsistent

with the language of § 12-2101(D) and rested in part on federal

decisions applying the now-discredited death knell doctrine.

Stare decisis does not compel a different result.5

5
In this case, Garza apparently participated in arbitration
until the court of appeals’ stay. Thus, the denial of
certification did not end the action. The contract also provides
for a mandatory award of the prevailing party’s attorneys’ fees,
a factor some courts cited in finding the absence of a death
knell. See, e.g., West, 558 F.2d at 981.
16
 D

¶27 The absence of appellate jurisdiction under § 12-

2101(D) does not mean, however, that orders granting or denying

class certification are entirely immune from interlocutory

scrutiny. Arizona’s special action rules provide a suitable

means, in an extraordinary case, of permitting the court of

appeals to address the issues raised by a trial court’s class

certification order. See Ariz. R.P. Spec. Act. 1(a) (noting

that special action is appropriate when there is no “equally

plain, speedy, and adequate remedy by appeal”); Ariz. R.P. Spec.

Act. 3, State Bar Committee Note (explaining that in

“extraordinary situations” when “the remedy by appeal . . . is

not ‘equally’ plain, speedy, or adequate” the court “has the

power to review . . . whether ‘essential justice has been

done’”). Furthermore, the special action procedure will avoid

the anomaly created by Reader and subsequent cases, under which

orders denying class certification may be reviewed on appeal,

but orders granting certification may not.

¶28 Moreover, in cases in which the court of appeals

decides to exercise discretionary special action jurisdiction,

the standard of review of a trial court’s determination of class

certification is not materially different from that of a direct

appeal. Compare Godbey v. Roosevelt Sch. Dist. No. 66 of

Maricopa County, 131 Ariz. 13, 16, 638 P.2d 235, 238 (App. 1981)
17
(stating that trial court’s class action order is reviewed for

abuse of discretion), with Ariz. R.P. Spec. Act. 3(c) (providing

for review of whether judge abused his or her discretion). We

therefore conclude that the special action procedure is the

appropriate vehicle to challenge a trial court’s grant or denial

of class certification.

IV

¶29 For the foregoing reasons, we vacate the court of

appeals’ memorandum decision, and remand to the superior court

for further proceedings.6

_______________________________________
Michael D. Ryan, Justice

CONCURRING:

_______________________________________
Rebecca White Berch, Chief Justice

_______________________________________
Andrew D. Hurwitz, Vice Chief Justice

6
Garza is not precluded from re-urging class certification
and the appropriate party may seek special action relief from the
ruling on such a request; we do not express any view on whether
such extraordinary relief would be appropriate.
18
_______________________________________
W. Scott Bales, Justice

_______________________________________
Ruth V. McGregor, Justice (Retired)

19