Phx. Law Enf't Ass'n v. City of Phx.

PHOENIX LAW ENFORCEMENT ASSOCIATION, et al., Plaintiffs/Appellees, v. CITY OF PHOENIX, Defendant/Appellant.

No. 1 CA-CV 19-0813

ARIZONA COURT OF APPEALS DIVISION ONE

April 22, 2021

NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

Appeal from the Superior Court in Maricopa County

No. CV2014-008711, CV2014-009114, CV2015-007714 (Consolidated)

The Honorable Sherry K. Stephens, Judge

AFFIRMED IN PART; VACATED IN PART

COUNSEL

Napier, Coury & Baillie, P.C., Phoenix

By Michael Napier, Eric Wilson, Cassidy Bacon

Counsel for Plaintiffs/Appellees PLEA, Barry Jacobs, Earle Akre, Robert Ramsey,

Rick Flum

Yen Pilch & Landeen, P.C., Phoenix

By Caroline A. Pilch, Robert E. Yen, Michael Pang

Counsel for Plaintiffs/Appellees Theresa Clark, et al.

Sherman & Howard L.L.C., Phoenix

By John Alan Doran, Matthew A. Hesketh, Lindsay H.S. Hesketh

Counsel for Defendant/Appellant

MEMORANDUM DECISION

Presiding Judge Samuel A. Thumma delivered the decision of the Court, in which Judge D. Steven Williams and Judge David D. Weinzweig joined.

THUMMA, Judge:

¶1 The City of Phoenix challenges orders certifying as class actions claims asserted by plaintiffs Phoenix Law Enforcement Association (PLEA), et al., and plaintiffs Theresa Clark, et al. For the reasons below, the orders are affirmed as to certification of both the PLEA class and the Clark class under Arizona Rule of Civil Procedure 23(b)(2) (2021),¹ and of the PLEA class under Rule 23(b)(3), but the certifications of both classes under Rule 23(b)(1)(B) are vacated.

FACTS AND PROCEDURAL HISTORY

¶2 City police officers are members of Arizona's Public Safety Personnel Retirement System (PSPRS). Under PSPRS, benefits are based on the employee's "average monthly benefit compensation." The "average monthly benefit compensation" is calculated using the monthly "base salary" paid over the consecutive three-year period that yields the highest average salary. Ariz. Rev. Stat. (A.R.S.) § 38-842(7)(a), (12).

¶3 City police officers who have not yet been promoted to the rank of sergeant are members of PLEA. Sergeants and lieutenants are members of the Phoenix Police Sergeants and Lieutenants Association (PPSLA). The City collectively bargains with PLEA and PPSLA about the terms of employment under Arizona's meet and confer ordinances. Phoenix City Code §§ 2-209 to -222; §§ 2-223 to -235. Under those ordinances, the City must meet every two years with PLEA and PPSLA to negotiate new terms of employment. If agreements are reached, they arememorialized in collective bargaining agreements: a Memorandum of Understanding (MOU) for PLEA and a Memorandum of Agreement (MOA) for PPSLA (collectively, MOUs and MOAs are referred to here as Collective Bargaining Agreements, or CBAs). If, however, the parties cannot agree, the City Council or City Manager imposes terms of employment based on "the interest of the public employees, public employer, and the public." Phoenix City Code §§ 2-219(K)(3); -233(B).

¶4 Starting in 1988, the MOUs contained provisions that allowed employees to increase (sometimes called "spike") their pension benefits by converting vacation time, sick time and uniform allowances into additional base salary. An employee could elect to participate in any or all of these wage enhancement provisions by submitting an election form. If an employee made such an election, the increased base salary would be used to calculate retirement benefits under PSPRS, typically leading to a larger pension benefit. These provisions were renewed in each subsequent MOU starting in 1988. The MOAs had similar provisions starting in 1990.

¶5 In 2014, the City informed PLEA and PPSLA that, given fiscal issues, it would not agree to renew the wage enhancement provisions in the new CBAs. The parties did not reach new agreements and no MOU or MOA was signed. As a result, the City imposed terms of employment that did not include wage enhancement provisions for 2014-2016.

¶6 PLEA, representative members and several individuals (the PLEA plaintiffs) sued the City in June 2014 challenging the removal of the wage enhancement provisions and seeking declaratory and injunctive relief. In July 2014, PPSLA members, individually and as class representatives (the Clark plaintiffs), sued the City making similar claims and seeking similar relief. In 2015, the Clark plaintiffs filed a separate complaint adding claims for promissory estoppel and failure to pay wages. By mid-2016, all three cases were consolidated into this case.

¶7 In October 2018, the Clark plaintiffs moved for class certification. See Ariz. R. Civ. P. 23. As discussed below, the motion by the Clark plaintiffs sought class certification under Rule 23(b)(1)(B) and (2). In January 2019, the PLEA plaintiffs moved for class certification under Rule 23(b)(1)(B) and (3). The PLEA plaintiffs and the Clark plaintiffs each sought certification of three sub-classes: employees who elected to participate in the wage enhancement provisions before July 1, 2014 and who stopped receiving the additional salary, and two classes of employees who had not yet begun receiving the benefits.

¶8 The City opposed both motions. During the pendency of the motions, the City also moved for judgment on the pleadings. The court denied in part and granted in part the motion for judgment on the pleadings, barring any claim for relief "unless a plaintiff was approved and participating in the wage enhancement program on or before July 1, 2014."

¶9 After significant briefing and argument, the superior court granted the motions for class certification. The court found there are about 700 class members — nearly 500 in the PLEA Class and more than 200 in the Clark Class. The questions of law and fact common to the class members identified by the court "relate to whether there is a contract between [the City] and those participating in the wage enhancement program . . . and if [the City] must fulfill its obligations to the plaintiffs." The court found the claims by the class representatives are typical of claims by the class and the representatives are adequate. See Ariz. R. Civ. P. 23(a). The court found the PLEA Class met the requirements of Rule 23(b)(1)(B), (b)(2), and (b)(3), and the Clark Class met the requirements of Rule 23(b)(1)(B) and (b)(2).

¶10 Based on these findings, the court certified two classes: (1) a class of PLEA members, consisting of Phoenix Police Department Unit IV officers who, as of June 30, 2014, satisfied the requirements of, and elected to participate in, at least one wage enhancement provision (the PLEA Class); and (2) a class of PPLSA members, consisting of Phoenix Police Department sergeants and lieutenants who, as of June 30, 2014, satisfied the requirements of, and elected to participate in, at least one wage enhancement provision (the Clark Class). This court has jurisdiction over the City's timely appeal challenging the class certifications pursuant to A.R.S. § 12-1873(A). Ariz. R. Civ. P. 23(f); Brumett v. MGA Home Healthcare, LLC, 240 Ariz. 420, 432 ¶ 22 (App. 2016).

DISCUSSION

¶11 Class actions are governed by Arizona Rule of Civil Procedure 23, which is nearly identical to its federal counterpart. The prerequisites for a class action are listed in Rule 23(a) while the types of permissible class actions are listed in Rule 23(b). "Plaintiffs seeking class certification must meet all the requirements of Rule 23(a) and at least one of the requirements of Rule 23(b)." Ferrara v. 21st Century N. Am. Ins. Co., 245 Ariz. 377, 380 ¶ 6 (App. 2018). Given the similarity of the rules, cases construing Federal Rule of Civil Procedure 23 are instructive in construing Arizona's Rule 23. Id. at ¶ 6 n.2 (citation omitted).

¶12 "'The issue of whether a suit should be allowed to proceed as a class action is left to the trial court's discretion and, absent an abuse of discretion, we will not interfere with the decision of the trial court.'" Id. at ¶ 6 (quoting Godbey v. Roosevelt Sch. Dist. No. 66, 131 Ariz. 13, 16 (App. 1981)). As stated by the Ninth Circuit, "noticeably more deference" is given to the grant of class certification than to a denial. Abdullah v. U.S. Sec. Assocs., Inc., 731 F.3d 952, 956 (9th Cir. 2013). "Matters of statutory construction and interpretation are questions of law, which we review de novo. In general, the factual considerations inherent in the decision to grant or deny class certification are left to the trial judge's discretion and will not be set aside absent an abuse of that discretion." Ariz. Dep't of Rev. v. Dougherty, 200 Ariz. 515, 517 ¶ 7 (2001) (citation omitted).

I. The Record Provides a Proper Basis Supporting the Findings that the Rule 23(a) Prerequisites Were Met.

¶13 Rule 23(a) prerequisites are: (1) numerosity; (2) commonality; (3) typicality and (4) representativeness. Ariz. R. Civ. P. 23(a). Although the City does not challenge numerosity, it challenges, in various ways, whether the court properly found the other prerequisites were met, including whether there is a genuine dispute about wage enhancement presenting a common question of law or fact. The court addresses those issues in turn.

A. The Court Properly Determined the Proposed Classes Met the Commonality Requirement.

¶14 The "commonality" prerequisite "requires simply that there exist questions of law or fact common to the class." Ferrara, 245 Ariz. at 380 ¶ 10 (quoting Lennon v. First Nat'l Bank of Ariz., 21 Ariz. App. 306, 309 (1974)). "What matters to class certification . . . [is] the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation." Ferrara, 245 Ariz. at 381 ¶ 10 (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011)).

1. The Dispute Regarding Wage Enhancement Beyond the Expiration of the CBAs.

¶15 Plaintiffs must affirmatively "prove that there are in fact . . . common questions of law or fact." Dukes, 564 U.S. at 350. In...