Austin v. Chandler

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

DAVID D. AUSTIN; SHAWN P. BAGGS; JASON B. BARNES; KEITH R.
BENJAMIN; JESUS G. BOGGS; JAMES A. BRUGGEMAN; MICHAEL E.
COLVIN; CHRISTOPHER R. COOPER; CHARLES C. COTE; JOHN L.
DURHAM; CHRISTOPHER A. FARRAR; TRAVIS J. FEYEN; MARK J.
FRANZEN; MARK T. GLUZINSKI; KYLE F. GOERNDT; DANIEL C.
GREENE; ALLEN S. HANCOCK; SCOTT A. HEDGES; MICHAEL R.
HEIKES; KURT P. HOUSER; GREGORY L. HOWARTH; RAYMOND J.
KIEFFER; SCOTT S. KIRKPATRICK; CHRISTOPHER E. KUSH; DEAN A.
LAVERGNE; THOMAS B. LOVEJOY; BRIAN L. LUTT; RANDLE L.
MEEKER; GARY J. MINOR; WILLIAM E. MULLIKEN; JEFFREY A.
NICHOLS; WILLIAM L. NOCELLA; JEFFREY R. OKONOWSKI; JEFFREY
L. PEHLKE; SCOTT A. PICQUET; BRIAN D. POTTER; WALTER D.
RAMER; PETER A. ROWTON; ARTURO J. SALAZAR; SUSAN C.
SCHILLING; DOUGLAS L. SCHOLZ; DANIEL W. STOUT; SUNDRA A.
WILKINS; and PATRICK ORMEROD, Plaintiffs/Appellants/Cross-Appellees,

v.

CITY OF CHANDLER, Defendant/Appellee/Cross-Appellant.

No. 1 CA-CV 14-0476
FILED 9-8-2015

Appeal from the Superior Court in Maricopa County
No. CV2013-002134
The Honorable Katherine M. Cooper, Judge

AFFIRMED IN PART; VACATED IN PART; REMANDED
 COUNSEL

Robaina & Kresin, PLLC, Phoenix
By David C. Kresin
Counsel for Plaintiffs/Appellants/Cross-Appellees

Ryley Carlock & Applewhite, PA, Phoenix
By Michael D. Moberly, John M. Fry
Counsel for Defendant/Appellee/Cross-Appellant

MEMORANDUM DECISION

Presiding Judge Kent E. Cattani delivered the decision of the Court, in
which Judge Maurice Portley and Judge Lawrence F. Winthrop joined.

C A T T A N I, Judge:

¶1 A group of City of Chandler Police Department sergeants (the
“Sergeants”) appeal from the superior court’s decision granting the City of
Chandler judgment on the pleadings on the Sergeants’ claim for additional
compensation under a collective-bargaining agreement. The City cross-
appeals from the denial of its request for an award of attorney’s fees. For
reasons that follow, we affirm the judgment against the Sergeants, but
vacate the denial of attorney’s fees and remand for further proceedings
consistent with this decision.

FACTS AND PROCEDURAL BACKGROUND

¶2 The Sergeants are a group of current and former police
sergeants of the City’s police department. The relationship between the
City and the Sergeants is governed, as relevant here, by a collective-
bargaining agreement: the Memorandum of Understanding (“MOU”) for
July 1, 2011 to June 30, 2013.

¶3 The MOU provided for an administrative dispute resolution
procedure that applies to sergeants’ grievances arising from the terms and
conditions of the MOU. See Mullenaux v. Graham County, 207 Ariz. 1, 5, ¶
14, 82 P.3d 362, 366 (App. 2004). Under the MOU, a “grievance” was
defined as an allegation of “violation(s) of the specific express terms of this
Memorandum for which there is no Merit Board appeal or other specific
method of review provided by State or City law.” The procedure involved

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submitting a written grievance to three levels of supervisors in turn, then,
if not resolved, to arbitration; after arbitration, the City Manager would
make a final determination based on the findings and advisory
recommendations of the arbitrator.

¶4 The MOU also provided, in addition to other terms regarding
compensation, that all sergeants would receive a one-time reverse fiscal
crisis payment calculated as a prorated share of the City’s excess General
Fund operating revenues in fiscal year 2011–12. The Sergeants allege that
the City paid each of them $1,301 less than the amount to which they were
entitled as a reverse fiscal crisis payment.

¶5 The Sergeants did not invoke the MOU’s grievance
procedure, but rather filed a complaint in superior court alleging that the
reverse fiscal crisis payment constituted “wages” and that the City had
“wrongfully withheld” $1,301 from each of them, and seeking treble
damages for this alleged violation of Arizona’s Wage Act. See Ariz. Rev.
Stat. (“A.R.S.”) § 23-355(A).1 After answering the complaint, the City
moved for judgment on the pleadings, asserting that the MOU’s grievance
procedure provided the exclusive forum to address the Sergeants’ claim,
precluding the Sergeants’ civil lawsuit.

¶6 After briefing and argument, the superior court granted the
City’s motion and dismissed the Sergeants’ claim, concluding that the claim
was subject to the MOU’s grievance procedure and that the Sergeants’
failure to exhaust the grievance procedure barred the lawsuit. The court
denied the City’s request for attorney’s fees, however, reasoning that the
City had been adequately compensated by an award of attorney’s fees in a
different case; in the other, concurrent lawsuit, a different group of police
officers presented a comparable claim for a reverse fiscal crisis payment
based on a comparable MOU provision, and the City was represented by
the same law firm and offered the same argument and authority in defense.

¶7 The Sergeants timely appealed, and the City timely cross-
appealed from the denial of fees. We have jurisdiction under A.R.S. § 12-
2101(A)(1).

1 Absent material revisions after the relevant date, we cite a statute’s
current version.

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DISCUSSION

Judgment on the Pleadings.

¶8 A motion for judgment on the pleadings is appropriately
granted if the complaint fails to set forth a claim for which relief can be
granted. Save Our Valley Ass’n v. Ariz. Corp. Comm’n, 216 Ariz. 216, 218, ¶6,
165 P.3d 194, 196 (App. 2007). We assume the truth of the complaint’s
factual allegations, and consider de novo the legal conclusions reached by
the superior court. Shaw v. CTVT Motors, Inc., 232 Ariz. 30, 31, ¶ 8, 300 P.3d
907, 908 (App. 2013) (as amended). We similarly review de novo matters of
contract interpretation, including the interpretation of alternative dispute
resolution provisions. Weatherguard Roofing Co. v. D.R. Ward Constr. Co., 214
Ariz. 344, 346 n.4, ¶ 7, 152 P.3d 1227, 1229 n.4 (App. 2007).

¶9 First, the Sergeants argue the superior court erred because
their reverse fiscal crisis payment claim was not a “grievance” as defined
by the MOU. They note that a grievance under the MOU is an alleged
violation of the MOU’s express terms “for which there is no . . . other
specific method of review provided by State [] law,” and contend that the
Wage Act provides another specific method of review by authorizing the
state labor department to investigate an employee’s claim for unpaid
wages. See A.R.S. § 23-356 to -360.

¶10 Even assuming that investigation by the labor department is
a type of “specific method of review” that would remove a wage claim from
the MOU’s definition of grievance, this at most establishes that the
Sergeants could have pursued administrative investigation by the labor
department. The MOU’s definition contemplates only two tracks: a
grievance (to be resolved through the contractual grievance procedure) or
an allegation subject to another “specific method of review” (to be resolved
through the specified method). The Sergeants did not invoke that arguably
permissible method of review, however, and instead filed a civil complaint
in superior court.2 Accordingly, even accepting the Sergeants’ position,
judgment on the pleadings was appropriate.

2 We note that administrative review is no longer available;
administrative investigation of a wage claim is only authorized if the
employee files the claim with the labor department within one year after
the claim accrues. See A.R.S. § 23-356(A); see also A.R.S. § 23-357(A)
(mandating that the labor department investigate timely filed wage claims).

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¶11 The Sergeants alternatively argue that even if the wage claim
is a grievance within the MOU’s definition, the superior court erred because
the complaint presents a statutory Wage Act claim, and the Sergeants did
not clearly and unmistakably waive their right to present that claim in a
judicial forum. The Sergeants rely on Wright v. Universal Maritime Service
Corp., which held that waiver of a judicial forum for a statutorily created
cause of action (there, an employment discrimination claim under the
Americans with Disabilities Act) in a union-negotiated contract must be
“clear and unmistakable” to be enforceable. 525 U.S. 70, 80 (1998); see also
14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 259 (2009) (citing Wright, 525 U.S.
at 80, for the proposition that an agreement to arbitrate statutory
antidiscrimination claims must be explicitly stated in the collective-
bargaining agreement).

¶12 The Sergeants’ reliance on Wright is misplaced, however,
because they are not asserting a statutory cause of action, but rather one
premised on a breach of contract. The Wage Act offers an enhanced remedy
of treble damages if an employer wrongfully withholds an employee’s
wages. A.R.S. § 23-355(A); see also A.R.S. § 23-352 (describing justifications
for withholding wages). It does not, however, create an independent right
to receive wages in the first instance; rather, the employee must have some
other, generally contractual, right to compensation for labor or services. See
Swanson v. Image Bank, Inc., 206 Ariz. 264, 268, ¶¶ 13, 15, 77 P.3d 439, 443
(2003) (characterizing § 23-355’s treble damages provision as “the damages
available upon breach of an employment contract”); Schade v. Diethrich, 158
Ariz. 1, 11, 15, 760 P.2d 1050, 1060, 1064 (1988) (assessing entitlement to
treble damages under § 23-355 on basis of employer’s breach of enforceable
contract, and awarding attorney’s fees under § 12-341.01 as an action arising
out of contract); see also A.R.S. 23-350(6) (defining “wages”).

¶13 Nor does the Wage Act itself expressly or impliedly preclude
waiver of a judicial forum. See Swanson, 206 Ariz. at 268, ¶ 13, 77 P.3d at
443 (stating that plain language of § 23-355 does not prohibit waiver of the
statutory remedy); see also Pyett, 556 U.S. at 259 (stating that an agreement
to arbitrate even a statutory claim should generally be enforced absent
legislative intent to preclude waiver of a judicial forum). Because the
Sergeants’ claim is based on a contractual rather than a statutorily-created
right, Wright’s “clear and unmistakable” requirement is inapposite. Cf.
Wright, 525 U.S. at 77–78 (describing the “principal rationale” justifying a

The Sergeants’ claim thus fails either as a grievance (for failure to pursue
the grievance procedures) or as a wage claim subject to investigation by the
labor department (for failure to timely file a claim under A.R.S. § 23-356(A)).

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presumption of arbitrability under the Labor Management Relations Act as
“that arbitrators are in a better position than courts to interpret the terms of a
[collective-bargaining agreement]”) (emphasis in original); Cipolla v. R.I. Coll.,
742 A.2d 277, 281–82 (R.I. 1999) (distinguishing between waiver of judicial
forum for federal statutory antidiscrimination cause of action at issue in
Wright as compared to agreement to arbitrate a term or condition of
employment created by the collective-bargaining agreement itself).

¶14 Moreover, the MOU did not waive the Wage Act’s
substantive authorization of a discretionary treble damages remedy—the
MOU in fact specified that “[t]he arbitrator shall be bound by applicable
State and City law”—but rather specified a non-judicial forum in which to
assert entitlement to compensation for wrongfully withheld wages.
Although the Sergeants now maintain that the grievance procedure is
fundamentally unfair because the City Manager renders the final decision,
they negotiated the MOU through their collective-bargaining
representative and freely entered the agreement, and they have not offered
any substantive basis that would call into question the validity of their
agreement to an alternative forum for dispute resolution. See, e.g., A.R.S. §
12-3006(A).

¶15 Accordingly, the superior court did not err by granting the
City’s motion for judgment on the pleadings and dismissing the Sergeants’
claim with prejudice.

Attorney’s Fees in Superior Court.

¶16 We review an attorney’s fees award for an abuse of discretion.
City of Tempe v. State, 237 Ariz. 360, 367, ¶ 28, 351 P.3d 367, 374 (App. 2015).

¶17 The superior court denied the City’s request for attorney’s
fees on the basis that an attorney’s fees award in a different (although
substantially similar) case adequately compensated the City for reasonable
fees expended in this case as well. The other case—filed against the City by
a different group of police officers a few months after this case and resolved
a few months before this case—presented a comparable claim for a greater
reverse fiscal crisis payment under a comparable term of a collective-
bargaining agreement, and the City defended (and was granted judgment
on the pleadings) on the same basis through the same attorneys. See
generally Justus v. City of Chandler, CV2031-009483 (Maricopa Cnty. Super.
Ct.). In Justus, the court granted the City a reduced attorney’s fees award
of $25,000.

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¶18 The City contends that the superior court erred by denying its
request for attorney’s fees in its entirety. The City does not argue that it
was improper for the court to consider the award in Justus, but rather that
the court erred by concluding that the fee award in Justus adequately
compensated the City for all legal work performed in this case.

¶19 In denying the fee request in its entirety, the superior court
noted that “[the City’s] time entries for this case fail to identify legal services
specific to this case, for example, a review of documents relating to the
plaintiff sergeants in this case. While there may have been time spent in
this case but not in [Justus], the billing records do not identify such time.”
The City’s itemized statement of fees, however, reflects over 50 separate
billing entries predating the July 8, 2013 filing of Justus (although certain
entries predating Justus may nevertheless have been duplicated in the later-
filed case). And certain other billing entries reflect work—for instance,
answering the complaint, initial disclosure, correspondence with the
Sergeants’ counsel, and oral argument on the motion—that would have
been necessary regardless of time spent in handling the Justus case.

¶20 Accordingly, we vacate the denial of the City’s request for
attorney’s fees and remand for the limited purpose of reconsidering fees
expended that do not overlap work performed in Justus. On remand, the
superior court may consider the reasonableness of these non-overlapping
fees as it would any other fee request and adjust the resulting award
accordingly.

Attorney’s Fees on Appeal.

¶21 The Sergeants and the City both request an award of
attorney’s fees on appeal under A.R.S. § 12-341.01. We deny the Sergeants’
request for fees both because they have not prevailed on appeal and
because they failed to request fees in the pleadings in superior court. Cf.
Robert E. Mann Constr. Co. v. Liebert Corp., 204 Ariz. 129, 60 P.3d 708 (App.
2003) (failure to request trial or appellate fees on appeal precluded award
on remand). In an exercise of our discretion, we award the City its
reasonable attorney’s fees upon compliance with ARCAP 21. As the
prevailing party, the City is entitled to its costs on appeal upon compliance
with ARCAP 21.

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CONCLUSION

¶22 For the foregoing reasons, we affirm the dismissal of the
Sergeants’ claims, but vacate the superior court’s denial of the City’s
attorney’s fees request and remand for calculation of any such award.

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