Garza v. Swift ( 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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
LEONEL GARZA, Plaintiff/Appellant,
v.
SWIFT TRANSPORTATION COMPANY INC, Defendant/Appellee.
No. 1 CA-CV 20-0389
FILED 10-7-2021
Appeal from the Superior Court in Maricopa County
No. CV 2004-001777
No. CV 2004-005924
(Consolidated)
The Honorable Timothy J. Thomason, Judge
AFFIRMED
COUNSEL
Hagens Berman Sobol Shapiro LLP, Phoenix, AZ
By Robert B. Carey (argued), Leonard W. Aragon, Michella A. Kras
Counsel for Plaintiff/Appellant
Fisher & Phillips LLP, Kansas City, MO
By James C. Sullivan (argued)
Co-Counsel for Defendant/Appellee
Fisher & Phillips LLP, Phoenix, AZ
By Shayna H. Balch, Alanna R. Brook
Co-Counsel for Defendant/Appellee
GARZA v. SWIFT
Decision of the Court
Dentons US LLP, Phoenix, AZ
By Karl M. Tilleman, Erin N. Bass, Doug Janicik
Co-Counsel for Defendant/Appellee
MEMORANDUM DECISION
Judge Paul J. McMurdie delivered the Court’s decision, in which Presiding
Judge Peter B. Swann and Judge David D. Weinzweig joined.
M c M U R D I E, Judge:
¶1 In this class action, Leonel Garza appeals from the superior
court’s rulings (1) granting summary judgment on the class’s sole
remaining claim for breach of the covenant of good faith and fair dealing;
(2) decertifying the class; and (3) finding the limitations period for certain
class members was not tolled during a prior appeal in this case. We affirm
the summary judgment and therefore do not reach the other two issues.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 In 2004, Scott Piron, a truck driver employed by Swift
Transportation Company Inc., filed a class action complaint against Swift,
alleging it uniformly paid drivers materially less than the actual miles
driven. Piron’s complaint was consolidated with another class action
complaint filed by Garza, Daniel Yingling, Dennis Jensen, and Dennis
Aitken. Garza and Yingling were owner-operators who had contracted
with Swift, and Jensen and Aitken were Swift employees.
¶3 In 2006, Garza moved to certify a nationwide class of
owner-operators, alleging Swift had consistently underpaid drivers by not
paying “dispatch miles” for each trip. Garza alleged the underpayments
stemmed from Swift’s use of the Rand McNally Household Mover’s Guide,
sometimes referred to by the parties as the Household Goods Mileage
Guide (“HHG”), to calculate miles and reimbursement. The Household
Goods Carriers’ Bureau Committee developed the HHG rules to “establish
a uniform method of computing mileages,” representing “the shortest
distance between two points suitable for truck travel.” Under the HHG,
mileages generally “are computed over those authorized highways which
result in the shortest distance between any two points and in accordance
with any other rules of [the HHG] that may apply,” and “[m]ileages
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between cities or towns are computed from or to a centrally located point
within such city or town.”
¶4 The superior court denied Garza’s class certification motion.
Garza appealed that ruling, and we reversed. Garza v. Swift Transp. Co., Inc.,
1 CA-CV 07-0472, 2008 WL 3009961 (Ariz. App. July 31, 2008) (mem.
decision) (“Garza I”). We held that the superior court could determine on a
class-wide basis “(1) whether [Swift’s] payment method, as applied to this
class, was undertaken in good faith, and (2) whether Swift exhibited good
faith in failing to explain to the class exactly how the payment method
worked.” Id. at *5, ¶ 24.
¶5 Our supreme court vacated Garza I on jurisdictional grounds
without addressing the merits of Garza’s motion. Garza v. Swift Transp. Co.,
Inc., 222 Ariz. 281 (2009) (“Garza II”). On remand, the superior court
certified a class of drivers employed by or contracted with Swift on or after
January 30, 1998, and compensated by mileage. It later granted summary
judgment on the owner-operators’ breach of contract claim. It also
separately ruled that the applicable limitation period for the remaining
claims was not tolled while Garza I and Garza II were pending.
¶6 Several years later, the court decertified the class, finding that
the remaining good faith and fair dealing claim was unsuitable for class
action treatment. But the court stayed the proceedings to allow Garza to
seek special action relief. In that special action, we reversed the
decertification order. Garza v. Gama, 240 Ariz. 373 (App. 2016) (“Garza III”).
Citing Garza’s allegation that the HHG offers a more precise means of
calculating distances than the city and state pairings used by Swift,
“including by zip code, nearest intersection, and latitude/longitude,” we
concluded as follows:
[A]lthough 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.
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: Given that the class members
agreed to be paid based not on actual miles but on HHG-
derived miles, did Swift have a duty implied by law to select
a program within HHG that would derive mileages that most
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closely approximated actual miles? Put differently, assuming
petitioners agreed that they would be paid based on whatever
HHG calculated, if Swift could choose between two (or three)
options within HHG, did Swift have a duty to the drivers to
select the option that was most advantageous to them?
Id. at 377, ¶¶ 10–12 & n.1. On this basis, we reversed the superior court’s
order denying class certification. Id. at 380, ¶ 26.
¶7 On remand, Garza offered two liability theories: (1) an
“Endpoint Theory,” under which Garza contended Swift “could have
selected origin and destination endpoints that more accurately reflected the
location where a driver was starting or ending his or her trip”; and (2) a
“Route Theory,” under which Garza contended Swift could have used
other location points to more closely approximate actual miles driven rather
than use the “short route” to determine HHG miles for pay.
¶8 Swift objected to the Route Theory on disclosure grounds. As
a result, the court set an evidentiary hearing to address that issue and
“whether routing is or is not an option available” within the HHG. After
hearing expert testimony from both sides, the court ruled “there is an
option under the HHG that could support the Route Theory,” citing Garza’s
expert, Dr. Lance Kaufman. Thus, the court allowed Garza to proceed on
the Endpoint and Route Theories but expressly left open “whether or not
Swift should have utilized the mechanism used by Kaufman,” whether
Kaufman’s methodology “is used in the industry,” and whether “it was
feasible or practical to utilize that methodology.”
¶9 Eventually, Swift moved for summary judgment. It presented
evidence that its transportation management system operated through
“Innovative Enterprise Software” and MileMaker software, the latter of
which could implement the HHG rules. Swift also presented evidence that
Innovative was “programmed to use only city/state pairs as location
points, including for the purpose of determining HHG mileage through its
interface with MileMaker.” Swift thus argued that Kaufman’s analysis, in
which he calculated mileages under Garza’s Endpoint and Route Theories,
was not compatible with Innovative and MileMaker. Swift also contended
Kaufman did not consider whether his analysis would be compatible with
Innovative.
¶10 Swift, then, asserted four grounds for granting summary
judgment: (1) the Endpoint and Route Theories “are not options within
HHG”; (2) Swift acted reasonably by using third-party software according
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to the publisher’s specifications to determine HHG mileage; (3) Garza had
no reasonable expectation that Swift could implement the options proffered
by Kaufman; and (4) Garza could not prove damages.
¶11 Swift also separately moved to decertify the class, contending
(1) individualized issues predominated over common issues; (2) damages
were not capable of class-wide calculation; (3) Garza no longer was a typical
plaintiff; and (4) Garza could not show that Swift could have used a
different option within the HHG.
¶12 The superior court granted summary judgment to Swift. It
rejected Garza’s contention that Swift had manipulated the data to generate
shorter mileages. Instead, the court found that Garza failed to present
evidence showing Swift did anything beyond “simply input information
into MileMaker and utilize[] the mileage data generated by the computer
program.” The court also found nothing in the record supported the
“notion that there was . . . an available ‘option’ that Swift failed to ‘select,’”
and that Kaufman’s methodologies “were not . . . existing options within
the HHG that Swift could have and should have used.”
¶13 The court decertified the class, ruling “the fundamental
inquiry [on the good faith and fair dealing claim] will be whether Swift
failed to meet the drivers’ reasonable expectations,” which “would
necessarily entail individualized inquiries into each class member’s
experience, background and reasonable expectations.” It held that Garza
could not apply the Route Theory on a class-wide basis because “some
drivers fully understood they would not be paid based on the routes
driven” and reasonable expectations only could be decided by determining
“what each class member was specifically told and how they interpreted
what they were told about how they would be paid.”
¶14 Moreover, because the court found Kaufman’s calculations
were not “available option[s]” within the HHG, the court reasoned that
the operative question now is whether Swift had an obligation
to create a complicated system for paying drivers that
mimicked Swift’s fuel routes that its computer system at the
time was not even capable of handling . . . . This is hardly a
simple question that necessarily results in a uniform answer.
If there was in fact an accessible, available system that Swift
decided not to use that would have resulted in higher
mileages, then it is easy to imagine that the answer to whether
Swift’s failure to choose such a system uniformly violated the
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expectations of the drivers. It is dramatically different,
however, to consider whether or not the failure to adopt a
complicated and expensive new system violated
expectations.
The court concluded that damages were not uniform across the class
because the Route Theory posited that “drivers should have been paid
based on ‘routes given to drivers’” but “owner-operator drivers were not
required to drive the routes given to them by Swift.” The court determined
that Garza, the only remaining class representative at that time, did not
have a claim typical to the class because he only drove for Swift for about
three months and “admitted that, as an owner-operator, he . . . was able to
drive any route he desired.”
¶15 Garza moved for reconsideration of the summary judgment
and decertification rulings, raising three liability theories: the Endpoint
Theory, the Route Theory, and a “Disclosure Theory” under which he
argued Swift “violated the covenant [of good faith and fair dealing] by not
accurately explaining to drivers how pay is calculated.” The court denied
these motions, again concluding Garza had presented “no evidence . . . that
there were other HHG sanctioned ‘options’ that Swift could have simply
selected that would have led to higher driver pay.”
¶16 Garza appealed. We have jurisdiction under A.R.S.
§§ 12-2101(A)(1) and -1873(A).
DISCUSSION
A. The Superior Court Did Not Err by Granting Summary Judgment
on the Good Faith and Fair Dealing Claim.
¶17 In reviewing a grant of summary judgment, we review de novo
whether any genuine issues of material fact exist and whether the superior
court correctly applied the law. Sign Here Petitions LLC v. Chavez, 243 Ariz.
99, 104, ¶ 13 (App. 2017). “[W]e view the facts in the light most favorable to
the party against whom judgment was granted.” Id. Summary judgment
should be granted only “if the facts produced in support of [a] claim . . .
have so little probative value, given the quantum of evidence required, that
reasonable people could not agree with the conclusion advanced by the
proponent of the claim.” Orme School v. Reeves, 166 Ariz. 301, 309 (1990).
¶18 All contracts in Arizona include an implied covenant 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
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the agreement.” Wells Fargo Bank v. Ariz. Laborers, Teamsters & Cement
Masons Local No. 395 Pension Tr. Fund, 201 Ariz. 474, 490, ¶ 59 (2002). A party
may breach the covenant if it injures the other party to a contract by
“manipulat[ing] bargaining power to its own advantage.” Id. at 491, ¶ 64.
1. Garza Did Not Show Swift Could Have Calculated
HHG-Compliant Miles in a Manner More Favorable to
Drivers.
¶19 Garza contends genuine issues of material fact remain over
whether the implied covenant of good faith and fair dealing required Swift
“to derive HHG miles for the Swift Provided Route that ‘most closely
approximated actual miles.’”
¶20 The relevant driver contracts “require[] Swift to pay ‘dispatch
miles’” and Garza argues there is record evidence to show “dispatch miles
means mileage for the route the driver is going to take.”1 But the superior
court interpreted the phrase “dispatched miles” in its 2012 summary
judgment ruling on the breach of contract claim, concluding “the
reasonable interpretation of ‘dispatched miles’ means the mileage stated in
the preplan message given to the owner-operator driver offered the trip.”
The court also determined “[a] dispatched mile is a mile as defined by the
dispatcher,” and “[i]t is common knowledge in the trucking industry that
[the HHG] is used to calculate ‘dispatched miles.’” Garza did not appeal
that ruling. For that reason, it is the law of this case that dispatched miles
are calculated using the HHG, and Garza cannot now argue otherwise. See
Dancing Sunshines Lounge, 149 Ariz. 480, 482 (1986) (“[T]he decision of a
court in a case is the law of that case on the issues decided throughout all
subsequent proceedings in both the trial and appellate courts, provided the
facts, issues and evidence are substantially the same as those upon which
1 Swift contends this argument is beyond our Garza III
mandate, contending we “specifically defined the issues on remand to be
whether (i) Swift deliberately manipulated HHG to have it short mileage
for purposes of driver pay, and (ii) Swift could have chosen other options
within HHG that would have been more advantageous to its drivers.” See
Garza III, 240 Ariz. at 377, ¶¶ 11–12; see also In re Marriage of Molloy, 181 Ariz.
146, 149 (App. 1994) (“On remand, a superior court must strictly follow the
mandate of an appellate decision.”) (internal quotation marks omitted). But
Garza’s argument could fall within the second issue in Garza III if it could
be shown that more closely approximating actual miles was a selectable
option within the HHG.
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the first decision rested.”). Thus, Garza’s good faith and fair dealing claim
turns on whether Swift, by promising to pay HHG dispatched miles,
manipulated its superior bargaining power by selecting HHG options that
did not accurately reflect the location where drivers started or ended their
trips and did not track the fuel routes sent to drivers.
¶21 For Garza to succeed on this argument, he must show the
HHG rules allowed Swift to choose more than one method of calculating
HHG miles. He has not done so. There is no record evidence showing the
Endpoint Theory or the Route Theory complied with the HHG.
¶22 Garza’s experts did not testify that either theory is
HHG-compliant. Dr. Lance Kaufman expressed no opinion on whether the
mileages he calculated using either theory complied with the HHG. He also
did not know whether his calculation methods followed industry custom
or practice in determining HHG miles. Garza even contended at one point
in the litigation that Kaufman’s role was to show how MileMaker functions,
and his work “ha[d] nothing to do with what Swift should or must do to
meet its contract obligations.” At oral argument before the superior court,
Garza conceded Kaufman is “not an expert on HHG. He is an expert on
MileMaker.”
¶23 Likewise, Garza retained Steven Keil “to review Swift’s
computing systems and software” and “assess[] whether alternate payment
methods based on the Swift-Provided Route could have been implemented
by Swift to pay drivers.” He, too, did not know whether Kaufman’s
methodologies produced HHG-compliant miles. And Michael Barr, who
Garza retained to analyze the MileMaker software, could only opine the
software “allow[ed] more precision and more accuracy” via practical
routes. Again, he did not opine whether MileMaker’s practical routes
would be HHG-compliant.
¶24 Garza contends the superior court improperly weighed the
experts’ testimonies in granting summary judgment. See State v. Pandeli, 242
Ariz. 175, 192–93, ¶¶ 74–76 (2017) (A disagreement among expert witnesses
“goes to the weight and credibility” of the expert opinions, “matters
reserved for the fact-finder’s consideration and determination.”). But a
party can present expert conclusions to defeat a motion for summary
judgment. Mohave Elec. Coop., Inc. v. Byers, 189 Ariz. 292, 304 (App. 1997).
And, this case does not involve a “good faith disagreement[] among
credible experts,” as neither Kaufman nor Keil expressed any opinions
about whether the Endpoint Theory or the Route Theory complied with the
HHG. Instead, they opined on various software and their capabilities. And
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although they testified MileMaker is capable of outputting HHG mileages,
a particular mileage is only an HHG-compliant mileage if its calculation
complies with the “well-defined rules and methodology” outlined in the
HHG. By expressing no opinion whether either theory complied with the
HHG rules, Garza’s experts failed to create a genuine issue of material fact
as to whether Swift could have chosen another method to calculate HHG
miles.
¶25 For the same reason, we also reject Garza’s contention that
fact questions remain as to whether Kaufman’s methodologies represented
available “HHG options to use more accurate endpoints that will calculate
more accurate HHG miles.” See Aranki v. RKP Invs., Inc., 194 Ariz. 206, 209,
¶ 12 (App. 1999) (“To succeed on a motion for summary judgment, the
[movant] need only demonstrate an absence of evidence for an essential
element of the complaint.”).
2. We Do Not Consider Evidence Presented for the First Time
on Reconsideration.
¶26 Garza challenges the superior court’s conclusions that
(1) Kaufman improperly used latitude and longitude and intersections in
creating routes; (2) the Route Theory is not an option within the HHG; and
(3) Garza did not present evidence other trucking companies paid drivers
similarly. He largely relies on the evidence presented with his motion for
reconsideration, including an affidavit from Kaufman, to contend
“MileMaker . . . allows users to enter latitude/longitude coordinates and
intersections when calculating HHG miles.”
¶27 Our review, however, is limited to the evidence when the
superior court considered Swift’s summary judgment motion. Grande v.
Jennings, 229 Ariz. 584, 587, ¶ 9 (App. 2012). Additionally, an order denying
reconsideration is not appealable. State v. Limon, 229 Ariz. 22, 23, ¶ 5 (App.
2011). We, therefore, decline to address the evidence Garza offered for the
first time on reconsideration. In any event, the MileMaker User Guide
proffered by Garza states that while junctions or latitude and longitude
points can be used to generate “practical routes,” they are not valid to
calculate HHG miles.
¶28 Garza contends the superior court “erroneously
predetermined a battle of conflicting expert opinions,” arguing the expert
testimony, and specifically Kaufman’s testimony, “focused on whether
HHG allowed Swift other methods for calculating driver pay.” But as
discussed, neither Kaufman nor Keil opined whether Kaufman’s
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calculations complied with the HHG, and Keil offered no opinion whether
Swift could have reasonably implemented Kaufman’s methodologies.
3. Whether Garza Raised the Route Theory Before Garza III Is
Irrelevant to the Summary Judgment Ruling.
¶29 Garza also challenges the superior court’s finding that he did
not present the Route Theory to this court in Garza III. Yet the court correctly
noted Garza conceded this point at oral argument on the summary
judgment motion. Still, the court allowed Garza to proceed on both the
Endpoint and Route Theories, rendering the issue irrelevant.
4. The Superior Court Did Not Grant Summary Judgment
Based on an Impracticability Defense.
¶30 Garza contends that Swift did not timely disclose its
impracticability defense, which he says hinged on its use of Innovative to
calculate HHG miles, arguing it was not disclosed until June 2019. The
record shows, however, that Garza was or should have been aware of this
issue as early as November 2017 when he requested an extension based in
part on Swift’s argument that
the MileMaker software is limited by how that program
interfaces with Swift’s operating system, Innovative
Software. Plaintiff has never heard of Innovative Software,
nor has Swift ever disclosed or otherwise claimed that it could
not or was not using the MileMaker features of its software
because of an interface limitation.
The superior court also identified these issues as outstanding as of April
2018: (1) “whether changing or modifying Swift’s computer system or
environment to accommodate [the Route Theory] would have been
impractical or infeasible (the ‘impracticability defense’)”; (2) “[w]hether the
‘impracticability defense’ would be a question for the jury”; and
(3) “[w]hether Swift timely disclosed the ‘impracticability defense.’” The
superior court did not rule on these issues until September 2018,
determining that Swift could “pursue the theory that there is no practical
‘routing function’ in either” version of the MileMaker software. Even so,
those rulings came more than a year before Swift moved for summary
judgment.
¶31 Additionally, Kaufman’s 2019 expert reports disclosed new,
relevant information about Swift’s impracticability defense. In his July 15,
2019 expert report, Kaufman contended Swift could have used latitude and
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longitude points to calculate mileages and disclosed he had developed “a
third-party software that integrates with MileMaker and streamlines this
process” along with another of Garza’s experts. Kaufman produced a
second report on August 27, 2019, in which he modified his earlier
methodology to instead “calculate[] Unpaid Miles using the closest
non-coordinate MileMaker location,” contending “[c]ity-state locations,
truck stop locations, and intersection locations . . . can be used as
alternatives to coordinates when calculating Unpaid Miles.” Given the
timing of these reports, Garza cannot now complain Swift did not timely
disclose its impracticability defense.
5. Garza Bore the Burden to Present Evidence Swift Breached
the Covenant of Good Faith and Fair Dealing.
¶32 Garza also contends Swift bore the burden to prove it would
have been impracticable to use the Endpoint Theory or the Route Theory in
its HHG mileage calculation process. The superior court ruled, and we
agree, Garza bore “the burden of proving that Swift had a duty and
breached that duty by failing to select an option more advantageous to the
drivers” and thus the burden “to show, at a minimum, that Swift could have
reasonably implemented Kaufman’s methods.” Indeed, it was Garza’s
burden to present evidence Swift had deprived the class of the benefit of
their contracts via, for example, “evasion of the spirit of the bargain, lack of
diligence and slacking off, willful rendering of imperfect performance,
abuse of a power to specify terms, [or] interference with or failure to
cooperate in the other party’s performance.” Restatement (Second) of
Contracts § 205 cmt. d (1981). Because Garza offered no evidence to show
the Endpoint Theory or Route Theory is HHG-compliant or existed before
this litigation, he failed to show Swift acted in bad faith by not
implementing these theories. Cf. Carter v. Safeway Stores, Inc., 154 Ariz. 546,
549 (App. 1987) (affirming judgment for defendant where plaintiffs could
not show any “reasonable probability” that the covenant was breached).
¶33 For these reasons, we conclude the superior court did not err
by granting summary judgment to Swift. As no class claims remain for trial,
we need not reach Garza’s challenge to the class decertification order or his
contention that the applicable limitations period should have been tolled
while Garza I and Garza II were pending.
B. Attorney’s Fees and Costs on Appeal
¶34 Swift requests its attorney’s fees incurred in this appeal under
A.R.S. § 12-341.01(A). Swift is the successful party on appeal, and the good
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faith and fair dealing claim arises out of contract. See Nelson v. Phoenix Resort
Corp., 181 Ariz. 188, 201 (App. 1994) (“Arizona courts have consistently
found the successful party eligible for an award of attorneys’ fees” in
appeals based on a breach of the implied covenant of good faith and fair
dealing.). We, therefore, award Swift reasonable attorney’s fees and taxable
costs upon compliance with Arizona Rule of Civil Appellate Procedure 21.
CONCLUSION
¶35 We affirm the grant of summary judgment.
AMY M. WOOD • Clerk of the Court
FILED: AA
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