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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Neese v. Lithia Chrysler Jeep of Anchorage, Inc. (07/10/2009) sp-6389
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| JACKIE LEE NEESE, THOMAS | ) |
| DAVID DICUS, MICHELLE RENEE | ) |
| ENOS, CHERYL FRANCIS | ) |
| GRUNDMAN, KEITH ALLEN | ) |
| GRUNDMAN, SHAN KEOKE GULL, | ) |
| on behalf of GENEVIEVE | ) |
| MARGUERITE GULL, DAVID | ) |
| MARTIN REES, and ELIZABETH | ) Supreme Court No. S- 12725 |
| ALDEN REES, individually and on | ) |
| behalf of all others similarly situated, | ) Superior Court No. |
| ) 3AN-06-4815 CI | |
| Appellants, | ) |
| v. | ) |
| ) | |
| LITHIA CHRYSLER JEEP OF | ) |
| ANCHORAGE, INC., LITHIA OF | ) |
| ANCHORAGE, INC. d/b/a LITHIA | ) |
| DODGE OF SOUTH ANCHORAGE, | ) |
| LITHIA OF SOUTHCENTRAL | ) |
| ALASKA, INC. d/b/a CHEVROLET | ) |
| OF SOUTH ANCHORAGE, | ) |
| CHEVROLET OF WASILLA and | ) |
| SAAB OF SOUTH ANCHORAGE, | ) |
| and LITHIA IMPORTS OF | ) |
| ANCHORAGE, INC. d/b/a LITHIA | ) |
| HYUNDAI OF ANCHORAGE, | ) O P I N I O N |
| ) | |
| Appellees. | ) No. 6389 - July 10, 2009 |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Peter A. Michalski, Judge.
Appearances: Michael W. Flanigan, Walther &
Flanigan, Anchorage, for Appellants. Howard
S. Trickey and Matthew Singer, Jermain,
Dunnagan & Owens, P.C., Anchorage, for
Appellees.
Before: Matthews, Eastaugh, Carpeneti, and
Winfree, Justices. [Fabe, Chief Justice, not
participating]
CARPENETI, Justice.
I. INTRODUCTION
Consumers seeking to bring a class action alleged that
four auto dealerships failed to make statutorily mandated
disclosures when selling used vehicles. Two of the dealerships
moved to dismiss the complaint against them because the consumers
had not specifically alleged that class representatives purchased
vehicles at those dealerships. The superior court dismissed the
consumers claims against those two dealerships and entered final
judgment in favor of the two dealerships. Although the superior
court did not err in concluding that the consumers lacked
standing and failed to state a claim against the two dealerships,
the superior court subsequently entered final judgment without a
showing of hardship or good cause and without permitting the
consumers to amend their complaint by adding new class
representatives with standing against the dismissed dealerships.
Because this was error, we reverse and remand for further
proceedings consistent with this opinion.
II. FACTS AND PROCEEDINGS
A. Facts
This matter is on appeal from a motion to dismiss.
Thus, we accept as true all allegations in the consumers
complaint.1 Between June 2003 and July 2005, Cheryl and Keith
Grundman, David and Elizabeth Rees, Stanley Welles, Thomas Dicus,
Michelle Enos, and Shan Gull all purchased used vehicles from
Lithia Chrysler Jeep of Anchorage (Lithia Chrysler). In February
2005 Jackie Neese purchased a used vehicle from Lithia Dodge of
South Anchorage (Lithia Dodge). These consumers allege that the
Lithia dealerships failed to disclose important information about
the vehicles as required by AS 45.25.465(a). Specifically, the
consumers allege that although the dealerships were aware that
some of the vehicles they had purchased from individual owners
had been in accidents or had mechanical problems, the dealerships
did not provide the consumers an accurate disclosure of the
accident and repair history. Further, the consumers allege that
the dealerships purchased vehicles from individual owners without
making a reasonable inquiry into the condition of the vehicle[s],
including the accident and repair history of the vehicle[s] as
required by AS 45.25.465(a)(1). The consumers also allege that
the dealerships failed to disclose when they had purchased
vehicles from another dealer or from an auction even though AS
45.25.465(a)(2) requires such a disclosure. The dealerships also
allegedly failed to disclose that vehicles were originally
manufactured for sale in Canada, as required by AS 45.25.470.
B. Proceedings
In January 2006 the consumers filed a class action
complaint in the superior court against various Lithia
dealerships. Neese, Dicus, Enos, the Grundmans, Gull, and the
Reeses were all listed as plaintiffs, but Welles was not. Lithia
Motors, Inc., the umbrella corporation encompassing the various
Lithia dealerships, was not listed as a defendant. Listed as
defendants were Lithia Chrysler and Lithia Dodge as well as
Lithia of Southcentral Alaska (Lithia Chevrolet)2 and Lithia
Hyundai of Anchorage (Lithia Hyundai).
In the complaint the consumers stated that the lawsuit
was a class action on behalf of all persons, other than
defendants, their officers, directors, employees, and family
members, who, since July 1, 2002, have purchased from defendants
a used motor vehicle. The complaint alleged that defendants have
routinely breached the disclosure requirements set forth in AS
45.25.465 [disclosure of accident, repair, and purchase history]
and AS 45.25.470 [disclosure that vehicle was manufactured for
sale in foreign country] which in turn violate [AS
45.50.471(b)(43) and AS 45.50.471(b)(11) and (12)] [unfair
methods of competition and unfair and deceptive acts or
practices]. In addition to their statutory claims, the consumers
alleged that the dealerships failures to disclose the history of
the vehicles being purchased were intentional, wanton,
reckless[,] fraudulent and in disregard for the rights or safety
of the plaintiffs and other similarly situated purchasers and
thus represented a breach of the dealerships common law duties.
The consumers also requested equitable relief requiring
defendants to disgorge all monies obtained due to violations of
AS 45.25.465, .470 and 45.50.471 (11, 12 and 43) and requiring
defendants to cease and desist from further violations of AS
45.25.465, .470 and 45.50.471 (11, 12 and 43) and to post notices
of their duty of disclosure pursuant to those statutes in a place
and manner selected to best advise the consumer of their rights
under those statutes.
In July 2006 Lithia Chevrolet and Lithia Hyundai filed
a motion to dismiss for lack of jurisdiction (Alaska Civil Rule
12(b)(1)) and failure to state a claim (Rule 12(b)(6)). They
argued that the plaintiffs lack standing to sue [them] and the
complaint fails to state a claim against them because none of the
plaintiffs purchased a used vehicle at [Lithia Chevrolet or
Lithia Hyundai] and [n]either do any of the plaintiffs allege any
wrongdoing by Lithia Chevrolet or Lithia Hyundai.
The consumers filed an opposition to the motion to
dismiss, arguing that their complaint was sufficient to state a
class action claim and to provide a sufficient basis for standing
of the class. Specifically, the consumers contended that as a
class action, the class has sufficient standing to bring this
suit against all the named defendants because the common
ownership of the defendants . . . provides the juridical link[]
between all of the defendants sufficient to provide standing to
the class. They urged the court to address class certification
before considering whether the named class representatives had
adequate standing. The consumers also requested oral argument on
the motion to dismiss.
Without holding oral argument, the superior court
granted the motion to dismiss pursuant to Civil Rule 12(b)(1) and
(b)(6). The consumers then moved for reconsideration, arguing
that the court overlooked their request for oral argument. The
superior court granted the consumers motion and set oral
argument. After argument, however, the court again granted the
dealerships motion to dismiss. The consumers then filed a
petition for review, which we denied.
Lithia Chevrolet and Lithia Hyundai then moved for
entry of final judgment in the superior court. The consumers
opposed the motion, arguing that the entry of a final judgment as
against two of the Lithia defendants would result in the possible
filing of piecemeal appeals, as the claims against the remaining
Lithia defendants have not been resolved. The consumers also
requested that any judgment entered be without prejudice so that
customers who purchased used vehicles from the dismissed Lithia
dealerships and who were not furnished the disclosures required
by law [could] be allowed to bring claims against the dismissed
dealerships. After the dealerships filed their reply brief, the
superior court granted the motion for entry of final judgment and
entered final judgment in favor of Lithia Chevrolet and Lithia
Hyundai.3
A few days after final judgment was entered, the
consumers filed a motion to amend accompanied by their proposed
amended complaint, which named additional class representatives
who allegedly purchased vehicles without receiving statutorily
required disclosures from Lithia Hyundai and Lithia Chevrolet.
The consumers then filed a motion for reconsideration of the
courts entry of final judgment because they had included the
individuals who had purchased vehicles from the dismissed
dealerships. The superior court denied the motion for
reconsideration and affirmed its entry of final judgment.4
The consumers now appeal the superior courts order
granting the dealerships motion to dismiss and the entry of final
judgment.
III. STANDARD OF REVIEW
We review de novo an order dismissing a complaint for
failure to state a claim under Civil Rule 12(b)(6).5 Motions to
dismiss under Rule 12(b)(6) are viewed with disfavor and should
rarely be granted.6 To survive a motion to dismiss for failure
to state a claim, the consumers complaint need only set forth
allegations of fact consistent with and appropriate to some
enforceable cause of action.7 When considering the appeal of a
motion to dismiss we presume all factual allegations of the
complaint to be true and make all reasonable inferences in favor
of the non-moving party.8
We review de novo a superior courts decision to dismiss
a complaint for lack of subject matter jurisdiction.9 Issues of
standing are also reviewed de novo.10
We review entry of final judgment under Civil Rule
54(b) for abuse of discretion.11
IV. DISCUSSION
A. The Superior Court Did Not Err in Concluding that the
Consumers Lacked Standing and Failed To State a Claim
Against Lithia Chevrolet and Lithia Hyundai.
The superior court granted Lithia Chevrolet and Lithia
Hyundais motion to dismiss pursuant to Alaska Civil Rule 12(b)(1)
and (b)(6) because the consumers lack[ed] standing to sue these
two defendants and the complaint fail[ed] to state a claim
against them.
The crux of the consumers argument is that the
allegations in their complaint were sufficient to state a claim
under Alaska statutes. The dealerships respond that the
consumers failed to allege facts upon which relief could be
granted because they named Lithia Hyundai and Lithia Chevrolet as
defendants but failed to allege how either corporation harmed any
party to the lawsuit. The dealerships further assert that
[n]owhere in the complaint did [the consumers] allege the
purchase of a used vehicle from Lithia Hyundai or Lithia
[Chevrolet].
1. The consumers statutory claims
The consumers complaint alleges that the dealerships
have routinely breached the disclosure requirements set forth in
AS 45.25.465 and AS 45.25.470 which in turn violate [AS
45.50.471(b)(43) and AS 45.50.471(b)(11) and (12)].
Alaska Statute 45.25.465(a)(1) requires a dealer, when
obtaining a used motor vehicle from an individual consumer, to
make a reasonable inquiry of the seller into the condition of the
vehicle, including the accident and repair history of the
vehicle. The dealer is required to provide this information to a
prospective purchaser of the vehicle.12 When a dealer obtains a
used motor vehicle from another motor vehicle dealer, a
wholesaler, or an auction, the dealer must disclose to a
prospective purchaser of the vehicle that the vehicle was
purchased from another dealer, a wholesaler, or an auction.13
Alaska Statute 45.25.470 provides that [b]efore sale, a
motor vehicle dealer shall disclose in writing whether a motor
vehicle was originally manufactured for sale in Canada or another
foreign country.
Alaska Statute 45.50.471 makes unlawful unfair methods
of competition and unfair or deceptive acts or practices. These
include engaging in . . . conduct creating a likelihood of
confusion or of misunderstanding and which misleads, deceives or
damages a buyer or a competitor in connection with the sale or
advertisement of goods or services,14 and using or employing
deception, fraud, false pretense, false promise,
misrepresentation, or knowingly concealing, suppressing, or
omitting a material fact with intent that others rely upon the
concealment, suppression, or omission in connection with the sale
or advertisement of goods or services whether or not a person has
in fact been misled, deceived or damaged.15 The unfair methods of
competition and unfair or deceptive acts or practices also
include violating AS 45.25.400 45.25.590.16 Alaska Statute
45.50.531(a) provides that [a] person who suffers an
ascertainable loss of money or property as a result of another
persons act or practice declared unlawful by AS 45.50.471 may
bring a civil action to recover for each unlawful act or practice
. . . .
In Angnabooguk v. State,17 we held that a complaint
should not be dismissed under Rule 12(b)(6) unless it appears
beyond doubt that the plaintiff can prove no set of facts in
support of the claims that would entitle the plaintiff to relief.18
Thus, we must determine whether the consumers could prove any set
of facts in support of their AS 45.50.531(a) claims against
Lithia Hyundai and Lithia Chevrolet. Did the consumers have
standing to sue Lithia Hyundai and Lithia Chevrolet when their
complaint did not allege that any of the individual plaintiffs
were actually injured by those dealerships actions? If they did
not have standing, then they could prove no set of facts in
support of their claims against the two dealerships, and the
dismissal of those dealerships was proper.
2. Before the amendment of their complaint individual
consumers lacked interest-injury standing to sue
Lithia Hyundai and Lithia Chevrolet.
In Trustees for Alaska v. State,19 we explained that
[t]he basic requirement for standing in Alaska is adversity.20
Our cases have discussed two different kinds of standing. One is
interest-injury standing; the other is citizen-taxpayer standing.21
Under the interest-injury approach, a plaintiff must have an
interest adversely affected by the conduct complained of.22
Citizen-taxpayer standing, on the other hand, arises when
taxpayers or citizens wish to challenge governmental action based
on their status as taxpayers or citizens.23 Here, because the
consumers are not challenging governmental action but are rather
alleging private harm caused by private actors, citizen-taxpayer
standing is not at issue. Thus, the consumers must have interest-
injury standing in order to sue Lithia Hyundai and Lithia
Chevrolet.
The consumers cite Carpenter v. Hammond24 and Adams v.
Pipeliners Union 79825 to support their argument that they have
sufficient standing to sue Lithia Hyundai and Lithia Chevrolet.
The dealerships correctly point out that Carpenter involved
citizen-taxpayer standing,26 not interest-injury standing, and is
therefore not controlling. However, in Adams we addressed a
claim involving interest-injury standing and noted that to give
standing all that is necessary is a sufficient personal stake in
the controversy to guarantee the adversity which is fundamental
to judicial proceedings. 27
Under the interest-injury standing test, therefore,
the consumers must have an interest adversely affected by the
actions of Lithia Hyundai and Lithia Chevrolet,28 and they must
have a sufficient personal stake in the controversy to guarantee
. . . adversity . . . .29 According to their original complaint,
the consumers had interests that were adversely affected by the
actions of Lithia Chrysler and Lithia Dodge, but none of those
interests were adversely affected by Lithia Hyundai or Lithia
Chevrolet. The named class representative plaintiffs
specifically alleged wrongdoing only by Lithia Chrysler and
Lithia Dodge. Although Lithia Chevrolet is briefly mentioned in
the complaint, the named class representatives failed to allege
any actual injury caused by Lithia Chevrolet. Lithia Hyundai is
not even mentioned in the original complaint outside the caption
naming the defendants. Thus, the consumers had a sufficient
personal stake to guarantee adversity against Lithia Chrysler and
Lithia Dodge by means of specific allegations against those two
dealerships in the complaint, but no personal stake against
Lithia Hyundai and Lithia Chevrolet, because they lacked
adversity concerning those two dealerships. Hence, they lacked
standing against these two dealerships under the basic interest-
injury standard.
3. The juridical link doctrine did not provide the
consumers with standing to sue Lithia Hyundai and
Lithia Chevrolet.
The consumers argue that [a]s a class action, the
Plaintiffs had sufficient standing to bring this suit against all
the named defendants because [of] the common ownership of the
defendants. The common ownership of all of the defendants
provided a juridical link[] between all of the defendants
sufficient to provide standing to the class. According to the
consumers,
[T]he proper question in this matter is not
whether individual[] consumers can sue
individual dealers they have no dealings
with, but rather whether class
representatives in a class action can sue all
the Alaska subsidiaries of a single national
corporation, that was engaged in fraudulent
and illegal actions in Alaska, by and through
their Alaska subsidiaries, who were all
linked by a common plan of operation,
orchestrated by the parent corporation, even
if those class representatives only dealt
with some of those Alaska subsidiaries.
The dealerships respond that common ownership is not sufficient
to confer standing or state a claim, and the juridical link
doctrine does not apply.
The dealerships are correct. The juridical link
doctrine was first created in the dicta of a 1973 case from the
United States Court of Appeals for the Ninth Circuit, La Mar v.
H&B Novelty & Loan Co.30 In La Mar, the court indicated the
juridical link doctrine was an exception to the general principle
that a plaintiff who has no cause of action against the defendant
can not fairly and adequately protect the interests of those who
do have such causes of action.31 The court explained that this
general principle does not apply when all defendants are
juridically related in a manner that suggests a single resolution
of the dispute would be expeditious.32 Standing was assumed in La
Mar, and the juridical link doctrine was used to determine the
typicality and adequate representation requirements of Federal
Civil Rule 23, which governs class action lawsuits in federal
courts.33
Accordingly, the juridical link[] doctrine has no
bearing on the issue of standing.34 As the United States Supreme
Court has noted, [t]hat a suit may be a class action . . . adds
nothing to the question of standing, for even named plaintiffs
who represent a class must allege and show that they personally
have been injured, not that injury has been suffered by other,
unidentified members of the class to which they belong and which
they purport to represent. 35 Thus, even though a few courts have
applied the juridical link doctrine to the issue of standing,36
that approach is incorrect because it was intended to be applied
only in the context of class certification.37
Furthermore, the cases cited by the consumers do not
support their position. In Angel Music, Inc. v. ABC Sports,
Inc.,38 the United States District Court for the Southern District
of New York applied the juridical link doctrine to class
certification, not to standing, and the court concluded that the
doctrine provided an exception for defendant classes whose
conduct is standardized by a common link to an agreement,
contract or enforced system which acts to standardize the factual
underpinnings of the claims and to insure the assertion of
defenses common to the class.39 Here, the consumers have never
identified the defendants as a defendant class under Alaska Civil
Rule 23. Rather, the only purported class is the class of
potential plaintiff car purchasers. Thus, the juridical link
principle in Angel Music does not apply. Furthermore, in Angel
Music, the court reaffirmed the bedrock principle of standing in
class action cases: representative plaintiffs must have
individual standing to assert claims against all the members of a
defendant class.40
The consumers also cite Akerman v. Oryx Communications,
Inc.41 to support their assertion that the common ownership of all
of the defendants provided a juridical link[] between all of the
defendants sufficient to provide standing to the class. But
Akerman is inapplicable to this case for the same reasons as
Angel Music: The juridical link in Akerman concerned class
certification, not standing, and the juridical link discussion
focused on a defendant class; here, the issue is standing, and
there is no defendant class. Indeed, Akerman noted that
[m]embership in a plaintiff class is . . . insufficient to
mitigate a lack of individual standing.42
If the consumers wished to sue the dealerships for
collective wrongdoing, they could have also named the umbrella
corporation, Lithia Motors, as a defendant. But they did not do
so. Because Lithia Motors was not named as a defendant, the
common ownership of the various dealerships is not relevant to
the standing inquiry.43 The consumers failed to specifically
allege that either Lithia Hyundai or Lithia Chevrolet caused
injury to the representative plaintiffs. Without such an
allegation, they lacked standing against those two dealerships.
Such a lack of standing cannot be cured by the fact that the two
dealerships may be under the common ownership of an entity that
was not named as a defendant.
Because the juridical link doctrine applies only to
class certification and not to standing, it does not excuse the
consumers from the requirement that they have individual standing
in order to sue Lithia Hyundai and Lithia Chevrolet.
4. The superior court did not err in deciding the
standing issue before class certification.
The consumers argue that the superior court should have
decided whether to grant class status before deciding the
standing issue. In support of their argument the consumers cite
a federal case, Payton v. County of Kane.44 In Payton, the United
States Court of Appeals for the Seventh Circuit held that class
status must be addressed before standing.45 In so holding, the
Seventh Circuit broadly interpreted the United States Supreme
Courts opinion in Ortiz v. Fibreboard,46 in which the Court
examined class certification prior to standing in an asbestos-
related class action lawsuit.47
We have not specifically addressed whether the standing
inquiry should always precede class certification, but we
previously addressed standing as the first issue in Adams v.
Pipeliners Union 798.48 Further, the general approach of the
federal courts appears to favor the consideration of standing as
a preliminary matter. According to a leading treatise on class
actions,
Because individual standing requirements
constitute a threshold inquiry, the proper
procedure when the class plaintiff lacks
individual standing is to dismiss the
complaint, not to deny the class for
inadequate representation. The class issues
are not reached in this instance. On the
other hand, when a class plaintiff shows
individual standing, the court should pass to
Rule 23 criteria to determine whether, and to
what extent, the plaintiff may serve in a
representative capacity on behalf of the
class.[49]
Moreover, some federal courts have specifically rejected the
Payton rationale,50 and others have simply held that standing must
be examined before class certification because it is an inherent
prerequisite to the class certification inquiry.51
Under the approach we adopted in Adams, an approach
consistent with the view of many federal courts that standing is
an inherent prerequisite to the class certification inquiry,52 the
superior court did not err in addressing standing before class
certification in this case.
B. It Was an Abuse of Discretion To Enter Partial Final
Judgment in Favor of Lithia Hyundai and Lithia
Chevrolet Before All Claims Were Adjudicated.
The superior court entered final judgment in favor of
Lithia Hyundai and Lithia Chevrolet on April 12, 2007, concluding
that no just reasons exist to delay entry of final judgment for
those dealerships. Within a week, the consumers filed a motion
to amend their complaint accompanied by an amended complaint that
added class representatives who had purchased vehicles from the
dismissed dealerships. They also filed a motion for
reconsideration on the basis of their amended complaint. The
superior court denied the consumers motion for reconsideration
and affirmed its entry of final judgment without explicitly
ruling on the motion to amend.
The consumers argue that the superior court erred in
entering final judgment when all claims had not been adjudicated.
They assert that the superior courts entry of final judgment was
an abuse of discretion because it did not give them an
opportunity to amend their complaint by adding new class
representatives. They explain that new class representatives
have appeared that have the standing that the dismissed
defendants claimed the previous plaintiffs did not have. Thus,
the consumers assert that standing questions are now moot due to
the amendment of their complaint, which added new class
representatives who had direct dealings with the dismissed
dealerships.
The dealerships respond that the superior court
properly exercised its discretion by entry of final judgment
against the consumers because there was no just reason for delay.
They argue that a long delay in a partys ability to collect on a
judgment is a sufficient basis for a finding that there is no
just reason for delay. They also assert that this case does not
present the problem of piecemeal appeals that would warrant
delaying the entry of final judgment.
Civil Rule 54(b) provides that when multiple parties
are involved [in an action], the court may direct the entry of a
final judgment as to one or more but fewer than all of the . . .
parties only upon an express determination that there is no just
reason for delay and upon an express direction for the entry of
judgment.
In Johnson v. State,53 we explained that there must be a
good reason for using Rule 54(b).54 We held that granting Rule
54(b) final judgment was inappropriate where neither party would
suffer any appreciable hardship if review awaited final
determination of the case.55 In discussing the general approach
the superior court should take in addressing a Rule 54(b) motion,
we stated that [t]he finding should not be made simply because
counsel request it. There should be some danger of actual
hardship caused by delay in entry of final judgment. The court
should weigh the general policy against piecemeal appeals against
the reasons advanced in favor of the proposed finding.56 Later,
in S&B Mining Co. v. Northern Commercial Co.,57 we quoted Johnson
approvingly and held that [e]ntry of [R]ule 54(b) judgment is
discretionary; however, the policy against piecemeal litigation
is very strong . . . .58 We further discussed the standard in
Dinsmore-Poff v. Alvord:59
Typically, use of Rule 54(b) is appropriate
only if the party seeking judgment is likely
to suffer actual hardship otherwise. But the
word typically shows that we have not made
hardship a categorical requirement. This
accords with the federal view that since it
is impossible to catalog all reasons to grant
a Rule 54(b) motion, courts have discretion
to consider any relevant factor.[60]
More recently, in Cole v. State Farm Insurance Co.,61 we
emphasized that partial final judgments deserve careful appellate
review because of the laws fundamental aversion to piecemeal
appeals.62 We noted that [t]he device should be used only
infrequently and only when there is some danger of actual
hardship caused by delay in entry of final judgment. 63
Nonetheless, we have upheld Rule 54(b) final judgments under the
abuse of discretion standard in some instances.64
The consumers assert that they had a just reason to
delay entry of final judgment: They wanted to amend their
complaint and add new class representative plaintiffs who
purchased vehicles from Lithia Hyundai and Lithia Chevrolet. In
their opposition to the motion for partial final judgment, the
consumers specifically requested that the superior court enter
final judgment without prejudice if the court was inclined to
grant the dealerships motion. Instead, the superior court found
there was no just reason for delay and entered partial final
judgment without indicating whether it was with or without
prejudice. The superior court provided no reason for denying the
consumers the opportunity to amend their complaint.
In support of their argument that they should have been
allowed to amend their complaint before final judgment, the
consumers cite Alyeska Pipeline Service Co. v. Shook.65 Shook
involved an Alaska Wage and Hour Act class action claim in which
the class representative plaintiff had already received a large
severance payment from his former employer.66 Based on the
sufficiency of the payment, we reversed the order denying summary
judgment to the employer and remanded for entry of judgment in
favor of the employer on the class representatives individual
claim.67 However, we explained that [t]his result does not
require dismissal of the class action. The class should have
[an] opportunity to substitute a new class representative.68
Here, the consumers sought the opportunity to bring in new class
representatives to remedy the lack of standing against Lithia
Hyundai and Lithia Chevrolet. No reason appears why they should
not have been allowed this opportunity.
The consumers also argued to the superior court that
final judgment should be delayed in order to avoid piecemeal
appeals. Johnson requires a balancing of the general policy
against piecemeal appeals against the reasons advanced in favor
of the proposed finding.69 There is no indication that the
superior court balanced the general policy against piecemeal
appeals against the dealerships asserted reason for entry of
final judgment their desire to seek attorneys fees and costs.
Rather, the court simply signed the proposed order filed by the
dealerships. Without evidence that the superior court fulfilled
this important duty under Rule 54(b), we cannot affirm the entry
of partial final judgment.
As we have stated, there must be a good reason for
using Rule 54(b).70 The superior court here simply stated that it
was granting final judgment for the reasons set forth in the
dealerships motion for entry of final judgment. However, the
reasons set out in the dealerships motion fail to reveal hardship
or any other valid reason to enter partial final judgment. The
dealerships provided the following explanation of the hardship
they would face if final judgment was not entered:
Lithia Hyundai and Lithia Chevrolet have been
forced to incur attorneys fees defending
against the bogus claims of consumers who
never even stepped foot on these dealerships
lots. A final judgment may enable defendants
Lithia Hyundai and Lithia Chevrolet to seek
attorneys fees and costs as the prevailing
party. There is no justification for
delaying consideration of such an award until
after the resolution of the plaintiffs
unrelated claims against Lithia Dodge and
Lithia [Chrysler]. To the contrary,
unnecessarily delaying an award of fees and
costs would unfairly prejudice Lithia Hyundai
and Lithia Chevrolet, who are entitled as
prevailing parties to timely seek the
recovery of their fees.
The dealerships arguments regarding the hardship of having to
wait for attorneys fees and costs, however, are unconvincing.
Lithia Hyundai and Lithia Chevrolet are represented by the same
counsel as Lithia Dodge and Lithia Chrysler, and counsel has not
indicated any reason why it would constitute hardship for them to
wait until the entire case has been decided before requesting
attorneys fees as to two of the four dealerships. The consumers
are correct that [t]he purported reason for entry of final
judgment, advanced by the defendants, to allow the dismissed
Lithia defendants to seek attorneys fees and costs . . . does not
constitute the type of hardship envisioned by the rule or the
court in allowing the entry of a final judgment as to some, but
not all, of the parties named in the action. Moreover, Lithia
Hyundai and Lithia Chevrolet have not sought attorneys fees since
entry of final judgment, so their purported hardship appears
illusory.
The dealerships also argue that a long delay in a
partys ability to collect on a judgment is a sufficient basis for
a finding that there is no just reason for delay. But the
dealerships are not waiting to collect a debt or other type of
money judgment, as was the case in Bradford v. First National
Bank of Anchorage, where we held that Rule 54(b) final judgment
was justified by the long delay in collecting a debt.71 Thus,
their argument fails to reveal hardship or any other reason
sufficient to warrant Rule 54(b) final judgment.
Because the consumers indicated their intent to amend
their complaint and add class representatives with standing
against Lithia Hyundai and Lithia Chevrolet, and because the
dealerships did not show hardship or any other valid reason for
final judgment, it was an abuse of discretion for the court to
find that there was no just reason for delay and to enter final
judgment under Rule 54(b).
V. CONCLUSION
Although the superior court did not err in granting the
dealerships motion to dismiss based on the consumers lack of
standing, it was an abuse of discretion to enter Rule 54(b) final
judgment without requiring a good reason and without permitting
the consumers to amend their complaint by adding new class
representatives capable of establishing standing against the
dismissed dealerships. Thus, we REVERSE and REMAND to the
superior court to permit amendment of the complaint with new
class representatives who purchased used vehicles from Lithia
Chevrolet and Lithia Hyundai but did not receive statutorily
required disclosures.
_______________________________
1 See J&L Diversified Enters., Inc. v. Municipality of
Anchorage, 736 P.2d 349, 351 (Alaska 1987) (We will accept as
true all well-pleaded material allegations of a non-moving party
in our review of a dismissal on the pleadings.).
2 The dealerships also refer to Lithia Chevrolet as
Lithia Wasilla.
3 The superior court did not designate whether final
judgment was with or without prejudice.
4 The superior court later consolidated this case with a
related case involving the alleged illegal charging of a
document preparation fee by Lithia dealerships, Neese v. Lithia
Chrysler Jeep of Anchorage, Inc., No. 3AN-06-13341 Ci. (Alaska
Super., December 6, 2006).
5 Rathke v. Corr. Corp. of America, Inc. 153 P.3d 303,
308 (Alaska 2007).
6 Angnabooguk v. State, 26 P.3d 447, 451 (Alaska 2001)
(quoting Guerrero v. Alaska Hous. Fin. Corp., 6 P.3d 250, 253
(Alaska 2000)).
7 Rathke, 153 P.3d at 308 (quoting Kollodge v. State,
757 P.2d 1024, 1025-26 (Alaska 1988)).
8 Id.
9 Ruckle v. Anchorage Sch. Dist., 85 P.3d 1030, 1033
(Alaska 2004).
10 St. Paul Church, Inc. v. Bd. of Tr. of Alaska
Missionary Conference of United Methodist Church, Inc., 145 P.3d
541, 549-50 (Alaska 2006).
11 Kinn v. Alaska Sales & Serv., Inc., 144 P.3d 474, 483
(Alaska 2006).
12 AS 45.25.465(a)(1).
13 AS 45.25.465(a)(2).
14 AS 45.50.471(b)(11).
15 AS 45.50.471(b)(12).
16 AS 45.50.471(b)(43).
17 26 P.3d 447 (Alaska 2001).
18 Id. at 451 (citing Guerrero v. Alaska Hous. Fin. Corp.,
6 P.3d 250, 254 (Alaska 2000)).
19 736 P.2d 324 (Alaska 1987).
20 Id. at 327.
21 Id.
22 Id.
23 Id.
24 667 P.2d 1204 (Alaska 1983).
25 699 P.2d 343 (Alaska 1985).
26 See Carpenter, 667 P.2d at 1210.
27 Adams, 699 P.2d at 346 (quoting Carpenter, 667 P.2d at
1210).
28 See Trustees for Alaska, 736 P.2d at 327.
29 See Adams, 699 P.2d at 346.
30 489 F.2d 461, 465-66 (9th Cir. 1973); see also In re
Eaton Vance Corp. Sec. Litig., 220 F.R.D. 162, 169-70 (D. Mass.
2004).
31 489 F.2d at 466.
32 Id.
33 Id. at 464 (adding plaintiffs here are not entitled to
bring a class action against defendants with whom they had no
dealing). Alaska Civil Rule 23 is the corresponding state rule
that governs class action lawsuits in Alaska courts. See Alaska
R. Civ. P. 23.
34 Matte v. Sunshine Mobile Homes, Inc., 270 F. Supp. 2d
805, 822 (W.D. La. 2003) (stating that the juridical link
doctrine is relevant not to standing but to class certification
in the sense that it provides an exception to the Rule 23(a)
requirement of typicality and/or adequacy of representation in
class actions against multiple defendants).
35 Simon v. E. Kentucky Welfare Rights Org., 426 U.S. 26,
40 n.20 (1976) (quoting Warth v. Seldin, 422 U.S. 490, 502
(1975)).
36 See, e.g., Alves v. Harvard Pilgrim Health Care Inc.,
204 F. Supp. 2d 198, 205 (D. Mass 2002).
37 See In re Eaton Vance Corp. Sec. Litig., 220 F.R.D.
162, 170-71 (D. Mass. 2004) (explaining that juridical link
doctrine is better used to address Rule 23 issues, rather than in
the Courts analysis of Article III standing).
38 112 F.R.D. 70 (S.D.N.Y. 1986).
39 Id. at 77 (emphasis added).
40 Id. at 74 ([A] predicate to [a class representative]s
right to represent a class is his eligibility to sue in his own
right. What he may not achieve himself, he may not accomplish as
a representative of a class.).
41 609 F. Supp. 363, 375-77 (S.D.N.Y. 1984).
42 Id. at 376.
43 See Henry v. Circus Circus Casinos, Inc., 223 F.R.D.
541, 544 (D. Nev. 2004) (holding that security guards who brought
Fair Labor Standards Act claims had no standing to sue
subsidiaries of employers parent corporation other than their own
employer and thus they could not maintain class action against
other subsidiaries).
44 308 F.3d 673 (7th Cir. 2002).
45 Id. at 680.
46 527 U.S. 815 (1999).
47 See Payton, 308 F.3d at 680.
48 699 P.2d 343, 346 (Alaska 1985) ([T]he threshold issue
to Adamss appeal is whether he has standing to bring it.).
49 1 Alba Conte & Herbert Newberg, Newberg on Class
Actions, 2:9, at 110-11 (4th ed. 2002).
50 See, e.g., In Re Eaton Vance Corp. Sec. Litig., 220
F.R.D. 162, 165-67 (D. Mass 2004).
51 See, e.g., Rivera v. Wyeth-Ayerst Labs., 283 F.3d 315,
319 (5th Cir. 2002) (quoting Bertulli v. Indep. Assn of Contl
Pilots, 242 F.3d 290, 294 (5th Cir. 2001)) (holding that district
court erred by not demanding showing of standing before
certifying class because [standing] determines the courts
fundamental power even to hear the suit).
52 Rivera, 283 F.3d at 319 (quoting Bertulli, 242 F.3d at
294).
53 577 P.2d 706 (Alaska 1978).
54 Id. at 710.
55 Id. at 711.
56 Id. at 710.
57 813 P.2d 264 (1991).
58 Id. at 269 (nonetheless holding that superior court did
not abuse its discretion by entering final judgment against some
but not all defendants because there was no just reason for
delay).
59 972 P.2d 978 (Alaska 1999).
60 Id. at 988 (quoting Williams v. Mammoth of Alaska,
Inc., 890 P.2d 581, 586 (Alaska 1995)).
61 128 P.3d 171 (Alaska 2006).
62 Id. at 173 n.2.
63 Id. (quoting Johnson v. State, 577 P.2d 706, 710
(Alaska 1998)) (recognizing that the interests of justice often
will militate against the entry of a partial judgment).
64 See, e.g., Bradford v. First Natl Bank of Anchorage,
932 P.2d 256, 263 (Alaska 1997) (holding that long delay in
collecting debt is sufficient hardship to justify Rule 54(b)
final judgment); Adkins v. Nabors Alaska Drilling, Inc., 609 P.2d
15, 19 (Alaska 1980) (The rule seeks to accommodate the competing
interests of not forcing a party to wait until a court reaches a
final judgment as to all claims or parties with the equally
desirable policy of avoiding duplicitous and piecemeal appeals.).
65 978 P.2d 86 (Alaska 1999).
66 Id. at 87.
67 Id.
68 Id. at 91.
69 577 P.2d at 710.
70 Id.
71 932 P.2d 256, 263 (Alaska 1997).
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