New Arizona Supreme Court Case Explains How Class Representatives Comply with Notice of Claim Statute

Civil Procedure--Notice of Claim--Class Action

City of Phoenix v. Fields, 548 Ariz. Adv. Rep. 33 (January 22, 2009) (Justice Hurwitz)
CLASS ACTION PLAINTIFF MUST FILE NOTICE OF CLAIM AGAINST GOVERNMENT SPECIFIYING AMOUNT FOR WHICH CLASS REPRESENTATIVE WOULD SETTLE HIS INDIVIDUAL CLAIM/DEFENDANT MAY WAIVE RIGHT TO COMPLIANCE WITH NOTICE OF CLAIM STATUTE BY SUBSTANTIAL PARTICIPATION IN LITIGATION BEFORE PURSUING DEFENSE.

Plaintiffs, eight former Head Start workers brought a class action against the City of Phoenix claiming they had been denied certain benefits afforded other city employees. The class representative served a timely notice of claim but did not specify an amount for which the case could be settled. The city did not respond to the notice. Suit was filed, the city answered, four years of litigation followed and then Deer Valley v. Houser was decided holding a notice of claim must set forth a specific amount for which the claim could be settled. The city then moved for summary judgment based on the class representative's failure to specify an amount for which the case could be settled.

The Supreme Court first noted that class actions were unique and unaddressed by the notice of claim statute (ARS 12-831.01). The court observed that "it is simply not possible for those filing a purported class action under the notice of claim statute to set forth a 'specific amount' for which the entire class 'can be settled.'" The purported class representative has no legal authority to settle the case for the class until the class is certified and potential class members given an opportunity to opt in or out of the class.

On the other hand, the court noted it was for the legislature and not the court to exempt class actions from the notice of claim statute and this had not been done to date. Accordingly the court held that the notice of claim statute "requires a putative class representative to include in his notice of claim a 'specific amount' for which his individual claim can be settled. The notice should also include a statement that, if litigation ensues, the representative intends to seek certification of a plaintiff class. If a class is later certified, the notice of claim will sere as a representative notice for other class members."

Finally, the court ruled that noncompliance with the notice of claim statute is an affirmative defense which must be pled in the Answer or a Rule 12 (b) (6) motion to dismiss. Further, even when properly pled a defendant can be found to have waived the defense by substantially participating in litigation without pursuing the defense. This is particularly true regarding a claimed deficiency in a notice of claim because such a deficiency will always be apparent on the face of the notice and a matter courts can quickly and easily adjudicate.

Here where the city answered the complaint, engaged in extensive briefing on the propriety of class certification, filed various motions and Rule 26.1 disclosures including a number of unrelated motions for partial summary judgment and otherwise litigated the case for four years before raising the notice of claim defense in a motion for summary judgment, the defense was waived as a matter of law.