Defense. Common. Barry Fish Memorial Golf Tournament. A Magazine for Arizona Defense Attorneys. The Arizona Association of Defense Counsel.

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1 Fall 2013 The Arizona Association of Defense Counsel Common Defense A Magazine for Arizona Defense Attorneys Barry Fish Memorial Golf Tournament The AADC s 18th Annual Barry Fish Memorial Golf Tournament was again a huge success, raising over $16,500 for the ALS Association, Arizona Chapter. Thanks again to everyone who celebrated Quatro de Mayo on the golf course and helped raised funds for this great cause! Mark your calendars for May 3, 2014 for next year s tournament at McCormick Ranch Golf Course.

2 President s Message The Arizona Association of Defense Counsel is now entering its 48th Barry Markson year of service to the defense bar, the legal community and the state of Arizona. Through it all, the AADC has worked diligently to support lawyers and enhance the perception and reputation of our profession. The AADC continues to promote values that benefit all of us, as well as our community. As I begin my term as President I can t help but think back to the beginning of my practice and my time with the AADC. I joined the AADC almost 19 years ago, and was proud to serve on the inaugural board for the Young Lawyer s Division and eventually as YLD President. Our calendar was filled with CLE, charity events and happy hours attended by well over 100 young lawyers every month. Today, our board is filled with many former YLD members and board members, and I m proud to note that for the first time in AADC history, two of the original YLD board members currently serve on the executive committee at the same time. We didn t think about it much at the time, but many of the friendships and relationships that began almost 20 years ago endure to this day, both within the AADC and beyond. In today s busy world it is almost impossible to meet other litigators outside the adversarial process let alone maintain a relationship. I m proud to say that the AADC continues to provide the opportunity for camaraderie and friendship through our receptions, CLE programs, charity events and Annual Meeting. I ve made a point of speaking with AADC members over the last several years, and I m often surprised how many are not aware of the programs and services the organization provides each year. The AADC is much more than the group that holds annual Judicial Receptions (although it s a great reception attended by hundreds of members and scores of judges in both Phoenix and Tucson). We do more than host the Barry Fish Memorial Golf Tournament to benefit ALS (although we ve raised over $250,000 for ALS since its inception). Did you know: We have a lobbyist! Last year the board retained a lobbyist to advise and represent the AADC regarding projected and pending legislation at the state capitol regarding the judiciary, tort reform and other issues effecting the legal community. Our board members have participated in meetings to draft and modify proposed legislation, and our stature at the legislature continues to grow. Our Judicial Committee meets with prospective judges and offers our recommendation where appropriate. AADC members and other defense lawyers applying for judicial positions seek our endorsement because an extremely large percentage of our recommended candidates are appointed by the governor. We have a new website! You can now visit azadc.org to see all of our upcoming events, reserve your place at any event and interact with other local defense attorneys. The new website if more interactive, contains more information and just looks better. The AADC is leading nationally with our Ladder Down program designed specifically for women. Founded and lead by our own Beth Fitch and Allison Christian, Ladder Down gives these attorneys access and exposure to nationally renowned speakers in areas of rainmaking and client development. In its first year, Ladder Down had a waiting list for the 24 coveted spots and a full slate of sponsors. We offer enough free or extremely discounted CLE programs to complete your annual requirement at almost no cost. Have you attended our monthly CLE lunch lately? It s free to members and includes a hot lunch from Honey Bear BBQ! There are also regular CLE programs from our substantive law sections as well as our June CLE Roundup. Our Annual Past Presidents Fall Kick Off Reception brings back our past presidents, as well as a who s who of the Valley attorneys. This year we are pleased to be honoring Dick Segal and the Honorable Lawrence Winthrop. I hope you will join us at the Phoenix Country Club on September 26th to honor these incredible men who continue to make such a lasting impact on the Arizona legal community. For almost fifty years, thousands of lawyers have helped build the Arizona Association of Defense Counsel into one of the preeminent legal defense organizations in the nation. Special thanks to our immediate Past President, Mike Ludwig, whose leadership propelled us into new areas and

3 prepared us for growth and success in the future. I am also excited to announce that Mike was recently appointed as the Arizona representative for DRI. We look forward to seeing Mike at our statewide AADC events and at DRI meetings around the country. The AADC is proud to have several alumni strongly involved in DRI leadership including Pete Kelly, our outgoing DRI state representative and past president, Patrick Paul who is currently on the DRI board and Lori Berke who is chairing the DRI Annual Meeting in Chicago this October. I hope many of you will join me in Chicago this year for what looks to be an amazing event. The Arizona Association of Defense Counsel continues to grow and expand our services each year. Thanks to you, our members, the AADC is a leader in the legal community statewide and nationally. Please feel free to contact me directly if there is anything we can do to enhance your experience with AADC, or if you have ideas to improve the organization as a whole. I hope to see you at our Kick Off Reception and throughout the year. Best Wishes, Barry Markson President AADC to Receive Diversity Award from DRI The Arizona Association of Defense Counsel was selected to receive this year s SLDO Diversity Award. The award honors the SLDO that displays a significant commitment to diversity. DRI was very impressed with the AADC s Ladder Down Program created by AADC s members Beth Fitch and Alison Christian. President Barry Markson will accept the award on behalf of AADC at the DRI meeting in Chicago in October. Contents President s Message Background Checks - Helping Employers Navigate the Battle Between Negligent Hiring and Discriminatory Hiring Practices Untangling Your Client s Breach Notification Under HITECH Annual Membership Meeting Meet The 2013 AADC Honorees....8 The Honorable Lawrence F. Winthrop Richard A. Segal Amicus News - Andrew Petersen, Esq Let s Hear It For The Defense Arizona Courts Continue To Refine Economic Loss Rule Board of Directors Join AADC All views, opinions, and conclusions expressed in articles of this magazine are those of the authors and are not necessarily that of the Arizona Association of Defense Counsel, and/ or the Board of Directors. Correspondence and articles are welcome and should be sent to the Editor. articles for submission to Holly Davies at hdavies@lorberlaw.com. The right is reserved to select materials to be published. Material accepted for publication becomes property of the Arizona Association of Defense Counsel. AADC 950 E. Baseline Rd. # Tempe, Arizona Phone: Fax: admin@azadc.org A A D C

4 Background Checks - Helping Employers Navigate the Battle Between Negligent Hiring and Discriminatory Hiring Practices By Michele Molinaro and John DiCaro - Jones Skelton & Hochuli PLC 3 With quick and easy electronic access to personal information at an employer s fingertips, employers must learn how to properly utilize such information in the hiring process. The failure to perform adequate background checks can open an employer up to liability for claims based on negligent hiring. These claims can have a negative impact in the marketplace, adversely affect employee morale and be costly to defend. On the other hand, improper use of background checks during employee screening can expose employers to civil rights violations. These opposing pitfalls require employers to perform a precarious balancing act and to understand the liability to which they are exposed. Employers need to develop a hiring process that effectively insulates them from both negligent hiring and civil rights claims. Employers understand that they bear a certain amount of liability for the actions of their employees during working hours. What some fail to realize is that hiring someone who is incompetent or unfit for the job can expose the employer to a negligent hiring claim Common Defense Fall 2013 based on harm that employee causes even if the employee s conduct is outside the employer s control. For instance, one court found the owner of an apartment complex liable for a handyman s assault on a tenant outside of working hours. 2 Liability existed because the owner failed to investigate the handyman s background, which included a laundry list of violent crimes. The first step in avoiding liability for negligent hiring is to understand the elements of the claim. To prevail on a negligent hiring claim, a plaintiff must show that (1) an employment relationship existed, (2) the employee was unfit for the position, (3) the employer knew or should have known the employee was unfit, (4) the employee negligently or intentionally caused the injury, and (5) the employee s conduct proximately caused the injury. 3 Regarding the first element -- employment relationship employers cannot assume they can escape liability through artful contract language or independent contractor relationships. 4 Courts will look at the totality of the facts when determining employment status rather than simply reviewing the language of an employment contract. Second, when determining if an employee is unfit, courts will examine both the nature of the position and the risk the employee posed to those with whom he came in contact, 5 A job applicant cannot be deemed unfit solely because of a criminal conviction. 6 The third element -- requiring an employer to have knowledge that the employee was unfit can be satisfied by showing that the employer should have discovered information showing the employee was unfit. 7 For instance, in the example of the apartment owner above, the owner should have discovered the handyman s history of violent crimes by simply checking his references and performing a public information search. Under the fourth element the employee s tortious conduct -- an employer is liable only for an employee s torts. Therefore, if the employee s actions were not negligent or intentional, a claim for negligent hiring would fail. 8 Finally, on the issue of proximate cause, a plaintiff must show that the injuries were caused by a characteristic of the employee which the employer knew might cause harm. 9 While applicants with criminal records are legally barred from holding certain positions, there are many others for which they still may be hired. To comply with federal law, a policy cannot blindly reject candidates based on their criminal record. For instance, as arrest and incarceration rates for African Americans and Hispanics exceed those of the general population, a hiring policy that rejects any applicant with a criminal history might have a disparate impact on those two protected classes and might violate Title VII of the Civil Rights Act of Liability can be minimized by fully researching an employee s criminal background

5 Background Checks (continued) and applying that information to the standards set forth under a properly developed hiring policy. An employer should develop a hiring policy that relies on factors that is job related. In order to show that an exclusion based on criminal history is a business necessity, the employer must take into account (1) the nature and gravity of the offense, (2) the time that has passed since the conviction or completion of the sentence and (3) the nature of the job sought. 10 Even if a hiring policy does have a disparate impact on a protected group, it might still be legally valid if the requirement is job related and consistent with business necessity. 11 For instance, employees of Company A process credit card information. Therefore, during its hiring process, Company A screens applicants for convictions involving for credit card fraud. However, employees of Company B do not have access to customer credit card information. In fact, Company B provides landscaping services and its landscapers do not collect customer payments. As such, Company B would have a difficult time arguing that credit card fraud convictions are related to a business necessity. Thus, while both of the processes for screening applicants can result in a disparate impact on a protected group, only Company A s policy meets the business necessity requirement. In the above example, Company A considered conviction records rather than arrest records. An arrest does not necessarily establish that a criminal act has been committed. In fact, many arrests do not result in criminal charges, or the charges are dismissed for a variety of reasons. Even if an individual is charged and prosecuted, he or she is presumed innocent unless proven guilty in a court of law. Therefore, an adverse employment action based on an arrest, in itself, is generally not job related or consistent with business necessity. But, in some circumstances, even without a conviction, the conduct underlying an arrest may make the individual unfit for the position in question. In those circumstances, the conduct, not the arrest, is relevant for employment purposes. Employers should consider seeking legal advice before taking any adverse employment action based on the conduct underlying arrest to ensure compliance with federal law. An employer s potential liability under the doctrine of negligent hiring requires employers to weigh the potential disparate impact of their hiring policies. This should not discourage employers from investigating the backgrounds of their employees and implementing an appropriate application process. To the contrary, by implementing a strong background investigation policy and using that policy in conjunction with a carefully tailored applicant screening process, employers can protect themselves from negligent hiring claims while still meeting the standards set forth under Title VII. Best Practices Tips: * Conduct a thorough background check by accessing public record sites that would reveal an applicant s criminal background. * Develop narrowly tailored written policies and procedures for screening applicants and employees for criminal conduct. * Identify essential job requirements. * Identify the specific criminal offenses that may demonstrate unfitness for performing such jobs. * Record the justification for the policy and policies * Document consultations and research considered in drafting the policies and procedures. * Eliminate policies or practices with blanket exclusions of applicants based on any criminal record. * When asking questions about criminal records, limit inquires to those records related to the job in question, consistent with business necessity. * Keep information about applicants and employees criminal records confidential. Only use it for the purpose for which it was intended. * Train managers, hiring officials and decision makers about Title VII and its prohibitions on employment discrimination. * More training! 1 EEOC Enforcement Guidance, No , at FN 10, dated 4/25/ Ponticas v. K.M.S. Invs., 331 N.W.2d 907 (Minn. 1983). 3 Rodolfo A. Camacho, ÒHow To Avoid Negligent Hiring Litigation, 14 Whittier L. Rev. 787, 794 (1993). 4 Santiago v. Phoenix Newspapers, 164 Ariz. 505, 508, 794 P.2d 138, 141 ( 1990). 5 Ponticas v. K.M.S. Invs., 331 N.W.2d 907, 912 (Minn. 1983). 6 See Green v. Missouri P. R. Co., 549 F.2d 1158 (8th Cir. 1977). 7 Stricklin v. Parsons Stockyard Co., 192 Kan. 360, 388 P.2d 824 (1964). 8 Di Cosala v. Kay, 91 N.J. 159, 173, 450 A.2d 508, 516 (N.J. 1982). 9 Ponticas at Green v. Missouri P. R. Co., 549 F.2d 1158, 1160 (8th Cir. 1977). 11 EEOC Enforcement Guidance, (April 25, 2012) Common Defense Fall

6 Untangling Your Client s Breach Notification Under HITECH By Michele G. Thompson, Esq. - Udall Law Firm Despite the passage of the Health Information Technology for Economic and Clinical Health (HITECH) Act more than four years ago as part of the American Recovery and Reinvestment Act of 2009, physicians routinely fail to recognize their mandatory obligation to comply with HITECH s sometimes daunting, and usually costly, breach notification provisions. The HITECH Act quietly arose as part of the Stimulus Bill, in a time when the country was facing an inevitable recession. Although most are all too familiar with HIPAA (The Health Insurance Portability and Accountability Act of 1996, P.L. No , 110 Stat (1996)), physicians largely remain unaware of HITECH. In brief, HITECH requires covered entities, such as physicians and hospitals, to notify individuals, the media and the Secretary of the United States Department of Health and Human Services (HHS) in cases of breach of protected health information PHI. The specific requirements are found at 45 C.F.R , et seq. Although breach notifications sound simple at first blush, the regulations can be onerous. Many covered entities are beginning to recognize the value of retaining an attorney to assist them in complying with HITECH. Indeed, since the enactment of HITECH, some insurance companies have started offering coverage for breach notifications under cyber-liability policies. Such policies generally cover breach notifications, credit monitoring services, attorneys fees and the like. As discussed below, navigating your client through the HITECH Act should be done expeditiously, yet cautiously. Covered entities are under a short deadline to investigate the breach, mitigate their patients damages, and notify their patients, the media and HHS. The law allows for only a sixty (60) period in which to provide such notifications so health care providers and attorneys must act quickly. What is a covered entity? When a potential breach occurs, one must first analyze whether HITECH, or HIPAA, for that matter, even applies. Although a vast majority of all physician s offices are deemed covered entities under HIPAA and, therefore, must comply with its provisions, this is not true of all providers. Indeed, in recent years, cash-based physician s offices (i.e., those who do not accept insurance) have been able to skirt around HIPAA s requirements. This is not common, but is seen more frequently with concierge medicine as well as in medical practices focusing on elective cosmetic surgery. Did a Breach Occur? After you know you are dealing with a covered entity that must comply with HIPAA/HITECH, one needs to analyze whether a breach occurred and then assist the provider in investigating the breach in order to mitigate additional harm from occurring. A risk analysis must be conducted and documented. Under HITECH, a breach is defined as the acquisition, access, use, or disclosure of protected health information in a manner not permitted under subpart E of this part which compromises the security or privacy of the protected health information. 45 C.F.R However, there are several exceptions that would not trigger breach notifications such as in the case of an inadvertent disclosure of otherwise protected health information between persons within the same covered entity. 45 C.F.R (1)(i). Further, to the extent the breached data is encrypted, no breach notifications are required under HITECH. See generally, 45 C.F.R Breach Notifications Once it is clear that a breach did, in fact, occur, it is important that the attorney assist their clients to investigate the breach and mitigate any damages that have occurred. Some of the questions to be asked include: How many patients have been affected? What was the nature of the breach? What type of information was disclosed? Who gained access to the information? How did this happen and how can we prevent it from happening again? Compliance with such breach notifications is not only cumbersome, but costly. In cases of breaches involving more than 500 residents of a particular State, 5 Common Defense Fall 2013

7 Untangling Your Client s Breach Notification (continued) the provider must individually notify each patient of the breach via first class mail and also issue press releases to prominent news outlets. 45 C.F.R Furthermore, the regulations require that the breach notifications be detailed and include, among other things, a brief description of the breach, a description of the types of unsecured protected health information that were involved in the breach, any steps individuals should take to protect themselves from potential harm resulting from the breach, and a brief description of what the covered entity involved is doing to investigate the breach, to mitigate harm to individuals, and to protect against any further breaches. 45 C.F.R (c). Notifying the HHS Secretary has its own challenges. Although the HHS has a designated website for breach notifications, found at gov/, such notifications can, and often do, result in a follow-up investigation by the HHS Office for Civil Rights (OCR) to ensure that the breach notification regulations were complied with in toto. Indeed, under HITECH, it is the covered entity s burden to demonstrate that all notifications were made. 45 C.F.R In such investigations, the OCR typically requests copies of sample notification letters, press releases, a list of media outlets who received such press releases, and a detailed list of the number of residents affected by the breach per State. Furthermore, a patient s failure to provide a covered entity with updated contact information (which is a common occurrence in medical practices spanning several years of patient care), triggers additional obligations. In such cases, HITECH requires substitute notice wherein alternative methods of notification are required. If there are more than ten patients whose contact information is out-ofdate, the physician is obligated to conspicuously post the breach notification on their website or in major print or broadcast media for a 90-day period. 45 C.F.R (d)(2). State Law Breach Notifications Even if HITECH is fully complied with, Arizona has its own breach notification requirement. Generally, compliance with HITECH satisfies your client s obligation under Arizona s notification requirement. However, even if your client is not deemed a covered entity under HITECH, they may still have state law obligations to notify individuals affected with a breach. See e.g., A.R.S (requiring businesses to notify its customers of breaches of unencrypted electronic personal information). Other Considerations As part of the breach notification process, attorneys should counsel their clients on HIPAA s policy requirements to ensure that both their privacy and security rule policies are in place and that they are continuing to meet their HIPAA training requirements. Although not required per se, ensuring that your client is complying with HIPAA in all aspects not just with regard to breach notifications is important if and when an OCR investigation ensues. Clients should be advised that encrypting their data would likely absolve any obligations for breach notifications under HIPAA. Although expensive, encryption can avoid the time, cost and embarrassment of breach notifications. Physicians who experience a large breach, particularly those who do not have the staff to manage a voluminous call increase, may opt to institute a call center to assist in providing information to patients who experience a breach. Although not required by HITECH, utilizing a call center can significantly lower the impact on a physician s G R E ATER P H OEN IX ED ITION M A G A Z I N E Ken Minniti Executive Publisher Attorney at Law Magazine President Target Market Media LLC N. Tatum Blvd., Suite , Phoenix, Az office direct (480) mobile (602) fax (480) KenMinniti@targetmarketmediallc.com ATLAS SETTLEMENT GROUP, INC. Structured Settlements James P. Garrison Ryan J. Garrison Ph: Fax: E. Via de Ventura, Suite 312 Scottsdale, Arizona jgarrison@atlassettlements.com rgarrison@atlassettlements.com Common Defense Fall

8 Untangling Your Client s Breach Notification (continued) day-to-day operations. In such circumstances, attorneys can assist providers in preparing a call center script and also establishing parameters for escalating phone calls from patients who may demand more attention. From a liability standpoint, attorneys should recommend that their clients offer patients free credit monitoring (particularly where credit card or social security numbers are breached). Again, although not required, credit monitoring serves not only serve as an act of good faith but may mitigate the loss that has occurred. In summary Notifying thousands of patients is no easy task. Attorneys may face resistance from physicians in exposing the breach. The notification process is costly and cumbersome. It can also be embarrassing and unnerving for the physician. However, your client s compliance with the HITECH Act is essential. Indeed, failing to comply with the onerous and technical requirements of HITECH can subject your clients to civil and criminal penalties, including monetary sanctions of up to $50,000 per violation. Assuring your client that their obligations under HITECH are mandatory and assisting them in the notification process so that they can focus on the practice of medicine, instead of the onerous regulations, is imperative. With some careful guidance and analysis, attorneys can greatly assist their clients untangle their obligations under HITECH. Annual Membership Meeting AADC had its Annual Membership Meeting on May 31 st - June 2 nd at the Westin Kierland. A morning of CLE was followed by free time and a group dinner. If you have any ideas for next year s Membership Meeting please contact Chris Begeman at chris@righilaw. com. 7 Common Defense Fall 2013

9 Meet The 2013 AADC Honorees Each year the AADC presents the Distinguished Service Award to a deserving attorney or judge. This year the AADC will honor Judge Lawrence F. Winthrop and Richard A. Segal. The awards will be presented on September 26, 2013 at the Past President s Fall Kickoff. The Honorable Lawrence F. Winthrop by Johnny Sorenson, Esq. Judge Lawrence F. Winthrop has earned and received his share of honors over the course of his distinguished career, and the AADC is proud to add to his list of achievements by recognizing him with its Annual Lifetime Achievement Award. Judge Winthrop was born and raised in Los Angeles and graduated from San Fernando High School in 1970 (other notable alumni from his high school over the years include Cheech Marin, George Lopez, and Ritchie Valens). He received his B.A. degree in History with honors from Whittier College in 1974, and his J.D., magna cum laude, from California Western School of Law in He was able to take the Arizona and California bar exams in successive weeks as Arizona did not include the multistate as part of its exam that year. Having passed both exams and obtaining licenses in both Arizona and California, he moved to Phoenix and joined Snell & Wilmer at a time when the firm had approximately 45 attorneys. He spent the next 16 years working in the trenches as an insurance defense and civil trial lawyer, helping manage the firm s health care litigation, state and local tax litigation and supervising the firm s pro bono program. Larry became an equity partner, and served as a pro tem judge in both the superior and appellate court, and became a member of the American Board of Trial Advocates. In 1989, Larry married Patricia Byrne, who reminds us that, during her insurance and hospital claims management career, she has hired so many defense lawyers that she probably should be getting this award! In 1993, Larry left Snell & Wilmer and, with Bill Doyle and Angila Gallenstein, formed the law firm of Doyle & Winthrop. Over the next nine years, that firm grew in size to about 25 lawyers, with an emphasis on construction litigation, health care defense and other types of tort litigation. In 2002, Larry was appointed by Governor Hull to the Arizona Court of Appeals Division One. Judge Winthrop joined the Phoenix Association of Defense Counsel (now the AADC) in 1977 and was a member until his appointment to the bench in He served on the AADC Board of Directors from 1984 to 1990, and again from 1995 to He was a member of the executive committee and served as Board President from 1988 to Larry recently finished a two year term as his court s Chief Judge, has served on a number of statewide committees and task forces, and in 2012 was honored by the Arizona Supreme Court as the Judge of the Year. He currently serves as the Chair of the Supreme Court s Attorney Disciplinary Probable Cause Committee, and also as the Vice-Chair of the Commission on Judicial Conduct. He is a long-time Board member and past president of the Arizona Foundation for Legal Services & Education, has a strong commitment to promoting civic education and working for access to justice for all Arizonans, and believes lawyers have a special obligation to become leaders in their local communities. Larry has seemingly found balance between a successful legal/judicial career and a fulfilling life outside the legal world. He and Pat are part of feeney/winthrop, a music group that through a series of local concerts raises money for community organizations like St. Joseph the Worker, a non-profit that provides job training and other services for the homeless in our community. Always eager to learn, I had a chance to ask Judge Winthrop questions about his career. Q: What did you enjoy the most about the practice of law? A: Initially, I enjoyed the diversity of general civil litigation, having the opportunity to Common Defense Fall

10 The Honorable Lawrence F. Winthrop (continued) work on many different types of cases, and learning how to try cases. In the 1970 s and 1980 s there seemed to be more opportunities for young lawyers to get trial experience; the cost of preparing and trying a case was certainly less, and the potential damages exposure was either more predictable or within insurance policy coverages. Q: What changes did you experience in your legal career and were the changes good or bad? A: Later in my career, I focused primarily on medical liability cases, and the best thing about that work was that I got to learn something new in each case, and had to figure out how to best educate a jury about a medical condition or surgical procedure. The lawyers handling those cases both plaintiff and defense were generally well prepared and knowledgeable, and the litigation and trial process was usually hard fought but very professional. Some of my most enduring friendships today are with lawyers I litigated with and against. Over those years, however, I have to say that the discovery process became much more contentious, with the attendant cost skyrocketing, and scheduling in multi-party cases a nightmare. I can t say that I miss anything about the disclosure/discovery process. Q: What is the most important lesson that you have learned about practicing law? A: The most important lesson I learned about practicing law is the importance of being honest and forthright with your client, with opposing counsel and with the court. The rules of professional responsibility require it, but not all lawyers adhere to those principles. It is very hard if not impossible to regain your integrity and credibility once it has been lost. Q: What advice can you give to lawyers about practicing law? A: My advice is a corollary of the last question. One of the hard tasks of any lawyer let alone a young lawyer is to help a client or witness understand how important it is to tell the truth. The pressure on litigants to shade the facts is enormous, and once that has happened, it is pretty hard to unring that bell. A lawyer can help a client explain the facts, but it is pretty difficult to extricate the client from a demonstrable falsehood. The other advice would be to never delay delivering bad news, whether it is an adverse expert opinion, unfavorable statutory or case law, or an adverse court ruling. Delay only reduces the client s options. Q: What advice do you have for lawyers about life outside the law? A: My advice about life outside the practice of law is to recognize that there is one. Too many of us tend to focus almost entirely on the law practice, to the detriment of our families and friends. Trying to find a balance between the professional career and a well-rounded personal life is a challenge common to many professionals. Frank Snell told me once (actually, more than once) that we are privileged to be lawyers, and are in a unique position to provide leadership in our greater community, whether it is within a civic or non-profit organization, a religious congregation or the arts. Accepting that responsibility and getting involved not only provides perspective and helps keep us grounded as to what is important, but allows us to make a meaningful and lasting contribution to our community. Q: If you were not a lawyer (or a judge), what would you want to be and why? A: If I was not a lawyer, I think I would be a teacher, although it is much harder to be a good teacher than it is to be a good lawyer. Over the last 10+ years, I have been pretty involved in civic-related education, and there is a tremendous need today for lawyers to step up and get involved in the schools in terms of teaching how our system of government is designed to work and our rights and responsibilities as citizens in a democracy. Anyone looking to get involved can easily participate in a Connecting with Classrooms program through the Arizona Foundation for Legal Services & Education. Either give me a call, or contact Joannie Collins at the Foundation: (602) Anyone that has had the pleasure of meeting or working with Judge Winthrop is a better person for it. He is an outstanding lawyer, judge, husband, community leader, and human being. We are proud to recognize him with the AADC Lifetime Achievement Award.

11 Richard A. Segal by Craig McCarthy, Esq. Richard A. Segal did not make the cut for Richard Bellah s recent Arizona Attorney article on the four oldest living Arizona lawyers. Though he dodged that distinction, he is undoubtedly one of the most senior and most revered of all active practitioners in the state. In fact, there are few other lawyer lists Dick Segal would not make. Legendary for his brevity with the written and spoken word, Dick s voluminous resume seems somehow at odds with his penchant for economy in all aspects of the law. Nevertheless, his storied career is worth a brief review. Although born in Chicago, Dick grew up in Phoenix and graduated from North Phoenix High. He attended the University of Arizona from 1951 to 1956, a condensed academic season, which yielded a bachelor s degree in 1954 and a law degree (then an LLB) two years later. He was issued Bar. No. 877 by the State Bar of Arizona after receiving the highest score on the 1956 Bar exam. Following three years of service in the U.S. Army, where he began to hone his trial skills as a JAG officer in Ft. Carson and Berlin, Dick came home to Phoenix. When he joined Gust Rosenfeld Divelbess & Robinette (now simply Gust Rosenfeld), there were eight lawyers in the firm which was located in the Security Building on Central and Van Buren, along with Snell & Wilmer. Dick liked it and he stuck around. He is not big on change. A few years back, he celebrated fifty years at Gust Rosenfeld. He recently celebrated 34 years with his wife, Susan Plimpton Segal, who is also his law partner. He has three grown children and one granddaughter. He has served as Maricopa County Bar President ( ), State Bar President ( ) and for 30 years as an officer and legal counsel to the Phoenix Community Alliance (PCA), a downtown business development group dedicated to revitalizing downtown Phoenix. When the fledgling Phoenix Association of Defense Counsel (now the AADC) was established in 1965, Dick was among its first active members. For years, Dick has been a judge pro tem and has served on innumerable bar committees and panels. Dick has tried more than 120 cases to verdict and has been counsel of record in dozens of reported appellate court cases. He is widely regarded among judges and lawyers as a lawyer s lawyer and the owner of one of the driest and quickest wits around. As anyone who knows him can attest, gleaning a lot of honorarium fodder directly from the source is a bit like pulling teeth. At the request of the AADC, however, I recently sat down in my mentor s corner office overlooking US Airways Center and Chase Field venues derived in part from his downtown development efforts and asked him about his reflections on the practice of law. Fortunately, he elaborated... a little. Below are some highlights from that conversation which are both classically Segal-esque and worthy of publication for the good of the legal order. Q. What have you enjoyed most about the practice of law? A. I ve often joked that I am a lawyer chauvinist pig. I enjoy associating with other lawyers. I always have. I enjoy the mental stimulation and the camaraderie. That has never changed. Q. What are the biggest changes you have seen in the practice of law and are they good or bad changes? A. The size of the legal community which is tied to the growth of Phoenix. I do not view it as a positive change but it was unavoidable. I used to know everyone in the profession. I knew who my adversaries were. I usually liked them and there was a foundation of trust, of mutual respect. And when you couldn t trust them, at least you knew that too. There is also so little chance to work in the courtroom for lawyers these days. We used to just go try cases. There was no discovery. I am not convinced that discovery has brought the benefits that were predicted. The final results are no better. Now lawyers specialize in discovery and attending mediations. I wish I knew the solution but I don t. The other big change is what I describe, for lack of a better term, as the instantaneousness of communication. No one can wait for anything. It breeds poor choices and half baked decisions. We are suffocated by trivia. The Common Defense Fall

12 Richard A. Segal (continued) real challenge now is to control the pace of things. Q. What is the most important lesson you have learned about practicing law? A. You don t have to file on the last day. Q. What is your best advice to young lawyers about how to practice law the right way? A. Ours is a learned profession. Take the time to do it right. Ultimately, we are here to serve our clients. That s what our profession is all about. Q. What role has luck played in your legal success? A. Everyone catche a few breaks but you have to make your own luck. Q. If you were not a lawyer, what would you be and why? A. A civil engineer. I like to build things. Probably more of the infrastructure stuff. Roads and bridges. If Dick Segal enjoys building things, he must be pleased with his reputation and the body of work he has created over the past half century. Few lawyers have practiced law at Dick Segal s level. He is the best lawyer many of us will ever know. For those who have practiced under Dick (no one I know can lay claim to actually practicing with him), it has been an honor and a privilege. To those who have practiced against him, Dick has been both a worthy opponent and a consummate professional. For those who have hired him, Dick was no doubt a refreshing combination of intelligence, efficiency and effectiveness. To the rest of us, Dick Segal is simply a role model. At some (unspoken) level, I suspect he is okay with that notion. AADC Website AADC has a new website! You will need to login to register for CLE s/events and to renew your membership. Your user name is your address. When you login the first time using your username/ address, select Forgot your Password. Your password will be ed to you. Once you have your password you can register for upcoming CLE s/events, update your member profile and access the members only directory. Be sure to update your primary practice area in your profile for the members directory. You can also select committees and substantive interest groups you would like to join. Amicus News - Andrew Petersen, Esq. In an important choice of law case, in Pounders v. Enserch E&C, Inc., 2013 WL (decided August 21, 2013), the Arizona Supreme Court held that New Mexico s statute of repose bars a wrongful death claim filed by the family of a worker at the Four Corners Plant who later developed mesothelioma while living in Arizona. Choice-of-law principles focus on a number of factors that are weighed and balanced against each other and the test has been called famously indeterminate. The AADC filed an amicus brief urging the Court to focus on New Mexico s interests in how businesses operate within its border. The brief argued, as did the defendants, that New Mexico was the center of the relationship. Regardless of where the worker later decided to live, New Mexico has the predominant interest in determining the parameters of liability for conduct within its borders. The Court referenced an important California Supreme Court decision McCann v. Foster Wheeler, 225 P.3d 516, 530 (2010). There, the California Supreme Court acknowledged that a state has a legitimate interest in attracting out-of-state companies to do business within the state and advance the opportunity of state residents to obtain employment and the products and services offered by out-of-state companies. The Court agreed with the Court of Appeals that New Mexico s interests in enforcement of its statute of repose should not be readily bypassed by a victim s relocation to another state before manifestation of a disease... Several members of the AADC represented the defendants in the litigation, and the AADC was glad to add its voice and emphasize the importance of these issues for future litigants. 11 Common Defense Fall 2013

13 Let s Hear It For The Defense Charles Onofry and Luane Rosen, Schneider & Onofry PC, Obtain Defense Verdict Charles D. Onofry and Luane Rosen of Schneider & Onofry, P.C., after a five day trial, obtained a defense verdict in the Robert Kubicek Architects & Associates, Inc. v. Bruce C. Bosley, Joanne M. Bosley, and The Bosley Group, Inc. matter. Mr. Onofry and Ms. Rosen represented defendants Bruce C. Bosley, Joanne M. Bosley, and The Bosley Group, Inc. In 1982, plaintiff Robert Kubicek Architects & Associates, Inc. (RKAA) hired defendant Bruce Bosley as an architect. Bosley later became a minority shareholder, president, and a member of RKAA s board of directors. Bosley resigned from RKAA in March For the ten years prior to his resignation, Bosley was principally responsible for managing RKAA s work for Bashas Inc., a major, long-term client of the firm. After leaving RKAA, Bosley formed his own architectural firm, The Bosley Group. Other RKAA employees who had worked on Bashas projects joined The Bosley Group, and Bashas began sending work to The Bosley Group. RKAA alleged that about the time Bosley left, he acquired copies of RKAA s allegedly copyrighted architectural drawings related to Bashas projects and later unlawfully copied and used the drawings in providing services to Bashas. RKAA sued Bosley, his wife, and The Bosley Group for direct copyright infringement, contributory copyright infringement, vicarious liability for copyright violations, violation of the federal Racketeering Influenced Corrupt Organizations (RICO) Act, violations of Arizona s Organized Crime, Fraud and Terrorism (Racketeering) Statute, and alter ego. Prior to trial, the district court dismissed RKAA s federal and state racketeering claims, and the alter ego claim. RKAA s copyright claims against the Bosley Defendants proceeded to trial. RKAA argued that its architectural drawings and plans remained the exclusive property of RKAA, and that Bosley knowingly and willfully infringed RKAA s copyrights. Bosley maintained that RKAA had no valid copyright in the architectural drawings, or, at the very least, that it had granted Bashas permission to use the drawings for Bashas projects. The jury ultimately agreed with Mr. Onofry and Ms. Rosen s position and found in favor of defendants. John Balitis and Carrie Pixler Ryerson, Fennemore Craig PC, Obtain Dismissal of Claims and Award of Attorneys Fees and Non-Taxable Costs John Balitis and Carrie Pixler Ryerson of Fennemore Craig obtained dismissal of plaintiff s alleged sex and disability discrimination claims via summary judgment in the Michele Crenshaw v. ExhibitOne Corporation matter. Mr. Balitis and Ms. Ryerson represented ExhibitOne Corporation. Plaintiff alleged that ExhibitOne discriminated against her based on disability, age and sex after she was separated through a reduction in force. Mr. Balitis and Ms. Ryerson successfully convinced plaintiff s counsel to voluntarily dismiss plaintiff s age discrimination claim based on the plaintiff s failure to exhaust her administrative remedies as to that claim. Thereafter, the parties proceeded with discovery on plaintiff s remaining disability and sex discrimination allegations. Mr. Balitis and Ms. Ryerson filed a successful motion for summary judgment following the close of discovery, resulting in a judgment in favor of ExhibitOne. The Court subsequently granted Mr. Balitis and Ms. Ryerson s motion for attorneys fees and non-taxable costs against plaintiff, a rare victory in the context of employment discrimination litigation. Common Defense Fall

14 Arizona Courts Continue To Refine Economic Loss Rule By Justin M. Scorza - Gust Rosenfeld PLC 13 Most defense lawyers in Arizona, particularly those working in the fields of construction defect and products liability, have become quite cozy with the economic loss rule since it was re-affirmed in the 2010 seminal case Flagstaff Affordable Hous. Ltd. P ship v. Design Alliance, Inc., 223 Ariz. 320, 223 P.3d 664 (2010). For those who have not, Arizona s economic loss rule precludes contracting parties from suing each other for economic losses, unless those losses result from physical injuries to a person or to property that was not subject to the parties contract. The practical result of this rule is that contracting parties are generally limited to contractual claims and barred from asserting tort claims seeking the same remedies. Many defense lawyers hoped application of the rule would be expanded after Flagstaff, but the courts have not obliged. In March, 2013, the court of appeals (Div. 1) declined to expand the judiciallycreated economic loss rule to claims under the legislativelycreated Consumer Fraud Act, holding that the rule was not a substantive restraint on the power of the Legislature to create new remedies. Shaw v. CTVT Motors, Inc., 232 Ariz. 30, 300 P.3d 907, 910 (App. 2013). Then, on July 31, 2013, the Arizona Supreme Court declined to expend the economic loss rule to non-contracting parties. Sullivan v. Pulte Home Corp., 667 Ariz. Adv. Rep. 36, P.3d (July 31, 2013). The Sullivan case, was intriguing because it presented a new and unusual factual scenario: a noncontracting party with a contract claim. In 2003, the Sullivans purchased a home that had been constructed and sold to its prior owner by Pulte Homes Common Defense Fall 2013 three years earlier. In 2009, the Sullivans discovered defects with the home s hillside retaining wall. When the Sullivans asked Pulte to repair the wall, Pulte refused. In response, the Sullivans filed suit against Pulte alleging six tort claims (consumer fraud, fraudulent concealment, negligence, negligent non-disclosure, negligence per se, and negligent misrepresentation) and one contract claim (breach of implied warranty). Because the Sullivans did not purchase the home from Pulte directly, they had no contract with the company. Nevertheless, they had an actionable contract claim (breach of warranty) against Pulte because Arizona law gives every homeowner an implied warranty from the builder whether a contract exists or not. In a strange twist, however, the Sullivans warranty claim was barred by Arizona s statute of repose for implied warranty claims filed more than eight years after substantial completion of the home (the Sullivans claim was filed nine years after completion). Addressing the case on appeal, the Arizona Supreme Court held that the economic loss rule only applied to contracting parties, explaining that the purpose behind the rule would not be advanced by applying it to non-contracting parties. Sullivan at 10 ( Arizona s economic loss doctrine serves to encourage the private ordering of economic relationships, protect the expectations of contracting parties, ensure the adequacy of contractual remedies, and promote accident-deterrence and lossspreading. ). In other words, application of the economic loss rule turns on the existence of an actual contract between plaintiff and defendant, rather than merely a contract claim. Because the Sullivans had no contract with Pulte, the economic loss rule did not bar their tort claims. While Sullivan s result is not surprising, it presents yet another blow to defense lawyers who hoped Arizona s courts would expand application of the economic loss rule. Despite its refinement in Shaw and Sullivan, however, the economic loss rule continues to be an invaluable tool for limiting duplicative tort claims in contractbased actions. Defendants facing tort claims in contract-based actions should seek to have those claims dismissed under the economic loss rule whenever possible.

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16 Board of Directors 15 Chris H. Begeman Righi Law Group 2111 E. Highland Ave. Ste. B440 Phoenix, AZ Fax: Brian Bergin Bergin, Frakes, Smalley & Oberholtzer 4455 E, Camelback Rd. Suite A-205 Phoenix AZ Lee Blake Lee, Hernandez, Landrum, Garofalo & Blake, P.C E. Northern Ave. Ste. 205 Phoenix, AZ Fax: Charles Callahan Christian Dichter & Sluga 2700 N. Central Ave. Ste Phoenix, AZ Fax: Matthew L. Cates Jennings Strouss & Salmon One E. Washington St. Suite 1900 Phoenix, AZ Fax: Alison Christian Christian Dichter & Sluga 2700 N. Central Ave. Ste Phoenix, AZ Fax: Common Defense Fall 2013 Holly P. Davies, President Elect Lorber, Greenfield & Polito 950 W. Elliot Rd. Ste Tempe, AZ Fax: Scott Day Freeman, Treasurer Fennemore Craig 2394 E. Camelback Rd. Suite 600 Phoenix, AZ Fax: Sharon Haynes City of Phoenix 200 E. Washington St. Ste Phoenix, AZ Fax: Kristina Holmstrom Lewis and Roca 40 N. Central Phoenix, AZ Fax: John Kastner Audilett Kastner P.C. 335 N. Wilmot Rd. Suite 500 Tucson, AZ Fax: Bill King Bonnett, Fairbourn, Friedman & Balint, P.C E. Camelback Rd. Ste. 300 Phoenix, AZ Phone: Fax: Kara Klima Farley Seletos & Choate 2400 W. Dunlap Ave., Ste. 305 Phoenix, AZ com Adam E. Lang Snell & Wilmer Once Arizona Center, 400 E. Van Buren Phoenix, AZ Fax: Paul Lee Bowman and Brooke 2901 N. Central Ave. Suite 1600 Phoenix, AZ Fax: com Michael A. Ludwig, Immed. Past Pres. & DRI State Rep. Jones, Skelton & Hochuli, P.L.C N. Central Avenue, Suite 800 Phoenix, AZ Fax: Barry M. Markson, President Thomas, Thomas & Markson 2700 N. Central Avenue, Suite 800 Phoenix, AZ Fax: Craig McCarthy, Secretary Gust Rosenfeld One E. Washington, Ste Phoenix, AZ Fax:

17 Brian Purcell Broening, Oberg, Woods & Wilson 1122 E. Jefferson St. Phoenix, AZ Fax: Jasmina Richter Sanders & Parks, P.C N. 3rd Street, Suite 1300 Phoenix, AZ Fax: James Robles Perry, Childers, Hanlon & Hudson PLC 722 E. Osborn #100 Phoenix, AZ Fax: Josh Snell Jones, Skelton & Hochuli, P.L.C N. Central Avenue, Suite 800 Phoenix, AZ Fax: Johnny J. Sorenson The Sorenson Law Firm, LLC 950 W. Elliott Rd. Ste 226 Tempe, AZ Phone: Fax: Business Card Order Form Jim Gackle Senior Account Manager Management Authorization Street Address 77 East Thomas Road, Suite 250 City,State,Zip Phoenix, AZ Phone# & ext. (602) , Ext. 203 Fax # (602) Cell Phone # (602) Website Record Retrieval * Deposition Reporting * Multi-Plaintiff Litigation * Medical Records Summarization *** Please fill in all necessary blanks *** Michele Thompson Udall Law Firm 4801 E. Broadway Blvd, Suite 400 Tucson, AZ Fax: mthompson@udalllaw.com Common Defense Fall

18 Renee Harris Regional Account Executive 6991 E. Camelback Road Suite A-110 Scottsdale, AZ (o) (d) (f) Engineering and Scientific Consulting North 19 th Ave Phoenix, AZ Toll-free CONSTRUCTION CONSULTING SOLUTIONS When you need responsive, reliable construction consultants. SPECIALTY SERVICES INCLUDE: Construction Forensic Testing & Analysis Litigation or Non-Litigation Expert Witness Damages Quantification Analysis for Construction Claims P. Gregg Curry, CPA/ABV/CFF Managing Director direct Navigant Consulting, Inc. Collier Center, Ste E. Washington St. Phoenix, AZ TUCSON PHOENIX Navigant Consulting, Inc. All rights reserved. Navigant Consulting is not a certified public accounting firm and does not provide audit, attest, or public accounting services. NAVIGANT is a service mark of Navigant International, Inc. Navigant Consulting, Inc. (NCI) is not affiliated, associated, or in any way connected with Navigant International, Inc., and NCI s use of NAVIGANT is made under license from Navigant International, Inc. See for a complete listing of private investigator licenses. Daniel G. Perez dperez@subrosapi.com North 7th St, Suite 100 Phoenix, Arizona O: F: As Arizona s finest bilingual investigative agency serving attorneys, insurance companies and businesses, we investigate personal injury & wrongful death events; property, casualty, liquor liability & Worker s Compensation claims; pre-employment & vendor backgrounds; corporate fraud/employee theft; drug trafficking; corporate due diligence; hidden assets; missing heirs; trademark & intellectual property infringement; computer-generated crime and industrial espionage in both English and Spanish. 17 Common Defense Fall 2013

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20 Arizona Association of Defense Counsel 950 E. Baseline Rd. # Tempe, Arizona Sponsor Spotlight: Augspurger Komm Engineering Our Goal The Right Engineering Support at the Right Time You have a job to do. Schedules, constraints and deliverables come with the territory. For over 35 years we have been working with the legal community, providing forensic engineering and expert witness services. And we ve done it from right here in Arizona. Your venue is important as well, and we work hard to keep up on the latest requirements established by the courts, including recent changes to Rule 26 and Daubert requirements. With this knowledge, we can be more efficient and communicate with you regarding what you need and when you need it. Our engineers have both extensive industrial and expert witness experience, in defense and in plaintiff cases. Our services include: Product Defects Personal Injury Safety Engineering Fire / Explosion Investigations Slip/Trip and Fall Injuries Vehicle Accident Reconstruction and Component Analysis Construction Defects Mechanical Engineering and Design Property Damage Our facility in Phoenix is equipped with the tools, instrumentation and space required to perform inspections, demonstrations and testing, from simple to complex. Evidence is stored securely on site in climate controlled conditions 3315 East Wilder Avenue. Phoenix, AZ