Monday, August 25, 2014

Richard H. Silverman Named an Officer of University of Arizona Foundation Board of Trustees

PHOENIX, Ariz. (August 25, 2014) – Jennings, Strouss & Salmon, PLC, a leading Phoenix-based law firm, is pleased to announce that Richard H. Silverman has been named Vice Chair of the University of Arizona (UA) Foundation’s Board of Trustees.
Silverman’s one-year term began on July 1, 2014. The other members of the Board include Chair Thomas W. Keating, Secretary Ted H. Hinderaker, Treasurer Robert F. Charles, Jr., and Past Chair Sarah B. Smallhouse.
“I am honored to serve,” said Silverman. “Especially because of the university’s growing and expanding impact on Maricopa County and the state with projects like the UA Cancer Center and Tech Launch Arizona.”  
Silverman served on the UA Foundation Board of Trustees for more than 10 years, and supports the university’s Steele Children’s Research Center and the UA Cancer Center. He earned his undergraduate degree in 1962 and his juris doctorate in 1965 from the UA. Silverman serves on the UA College of Medicine-Phoenix Leadership Board, and the UA TRIF-Water, Environmental and Energy Solutions initiative External Advisory Board. In 1966, he began work at the Salt River Project and later became the company’s chief operating executive and general manager before joining Jennings Strouss in 2011.
About Jennings, Strouss & Salmon, PLC
Jennings, Strouss & Salmon, PLC,  has been providing legal counsel for over 70 years through its offices in PhoenixPeoria, and Yuma, Arizona; and Washington, D.C. The firm's primary areas of practice include agribusiness; bankruptcy, reorganization and creditors’ rights; construction; corporate and securities; employee benefits and pensions; energy; family law and domestic relations; health care; intellectual property; labor and employment; litigation; real estate; surety and fidelity; tax; and trust and estates. For additional information please visit and follow us on LinkedInFacebook and Twitter.
The firm’s affiliate, B3 Strategies, assists clients with lobbying and public policy strategy at the local, state, and federal levels. For more information please visit
Contact:  Dawn O. Anderson  ||  602.495.2806

Tuesday, August 19, 2014

Arizona Registrar of Contractors Transition in Complaint Handling Process

By John G. Sestak, Jr.

The Arizona Registrar of Contractors (ROC) has historically followed a unique enforcement process, which has been described as “complainant driven.” Under that process, the complaining party made the sole decision “in whether to file a complaint, whether to have the ROC issue a citation, whether a hearing would occur, and whether repairs or settlement agreements complied with the terms of the contract.” As the ROC described, in a Director’s Message dated September 5, 2013, “in this ‘complainant driven’ process, the complainant made the critical decisions as the parties attempted to resolve their dispute.”

Since the fall of 2013, the ROC has transitioned from a “complainant driven” process to a regulatory process. Now, the ROC will effectively have complete control over the entire process once a complaint is filed. A citation will not be issued simply because the complainant requests it. Rather, the ROC will decide whether the evidence produced by the complainant and gathered by the ROC investigator supports the issuance of a citation. The Director’s Message states that, based upon a comparison with other states, this change will result in fewer citations being issued against contractors.

If the ROC decides to issue a citation, an arbitration process can be implemented. The arbitration process will typically be used for small-dollar disputes involving poor construction on residential properties where a contractor is not the subject of numerous prior complaints. For these cases, the contractor will be able to avoid the citation and formal disciplinary process by resolving the complaint through arbitration.

If a complaint is not resolved, the ROC may decide to prosecute the claim, regardless of whether the complaining party has made a settlement with the contractor or otherwise decides to abandon the complaint. Even if the complainant settles with the contractor, the ROC may elect to prosecute the claim and proceed to a hearing. The ROC may also subpoena the complainant’s testimony, even though the complainant has settled with the contractor. This is why the complainant ceases to become a “party” to the action or process once the complaint is filed.

The ROC will impose progressive discipline on contractors’ licenses based upon the severity and recurrence of violations. The ROC states that, in the future, discipline will consist of letters of concern, suspension limited to a finite number of days, suspension until compliance with an order of the ROC, and possible revocation of a license. The ROC suggests that this change will result in fairer and speedier resolution of investigations and that a contractor will not permanently lose its license for a first-time minor violation.

While the ROC states that these changes will enhance consumer protection, reduce “gaming of the system by bad contractors…,” be fairer to good contractors, and streamline the process, it remains to be seen what will evolve. The Director, in a Director’s Message of May 30, 2014, reported that the new process has resulted in a decrease of the issuance of citations against contractors from 36% of all complaints to approximately 13% of all complaints.

Thursday, August 14, 2014

Chapter 11 Bankruptcy (Infographic)

To learn more about bankruptcy law, contact Jennings Strouss. Jennings Strouss was ranked #1 in Phoenix, Arizona in the field of Bankruptcy and Creditor-Debtor Rights Law by The Best Lawyers in America®, 2010 & 2011.

Friday, August 8, 2014

Unsolicited Text Messages Can Be Costly

We last visited the Telephone Consumer Protection Act, 47 U.S.C.A. § 227 et seq. in 2003, when we wrote about the plethora of unsolicited faxes that were inundating everyone daily, and the legal issues that were associated. Large companies are still being taken to task for unsolicited faxes, and they now encounter new ways of costly intrusions into our time, and wallets.

One of the newest types of “marketing” is advertising through Short Message Services (or “SMS”), a messaging system that allows cellular telephone subscribers to use their cellular telephones to send and receive short text messages. An “SMS message” is a text message directed to a wireless device by using the telephone number assigned to the device. When the SMS or “text” message call is successfully made to a recipient’s phone, the cell phone rings or otherwise “beeps” the receipt of the text message. This type of messaging is popular because mobile phones are rarely out of arms reach of their owners, and SMS messages can be received by a recipient anywhere in the world.

Many advertisers have engaged in SMS texting to promote products to thousands of recipients. In addition to encroaching on a recipient’s time, unsolicited text advertisements cost mobile users money because many wireless service providers charge fees for incoming text messages, or apply a usage allocation deduction to the recipient’s plan.

Congress passed the Telephone Consumer Protection Act (TCPA) to regulate the use of automatic dialing machines and pre-recorded voice messages. With the advent of mass “text marketing,” litigation against such mass marketers is being initiated because the TCPA prohibits “unsolicited advertisements,” which includes “any material advertising the commercial availability of any property, goods, or services, which is transmitted to any person without that person’s prior express invitation or permission.”

The penalties for violating the TCPA are substantial, and the Federal Communications Commission (FCC) can enforce the Act, fining the text senders who are in violation. In addition, private claimants can maintain claims for knowing or willful violations of the TCPA for actual damages, statutory damages, and treble damages up to $1,500 for each violation. This has led to a host of class action lawsuits being filed.

Fax, and now text, advertising is a relatively inexpensive way to distribute mass information about products or services; however, it can become very expensive when the advertisements are sent without prior authorization. Significant damages can be recovered for violations, and those who wish to advertise through these forms of media should carefully review the statutes. Ideally, the company sending the advertisement should attempt to get express permission if it does not have an otherwise standing relationship with the recipient. If the recipient requests that the sender discontinue sending such advertising messages, the sender must stop or risk liability.

Approved First Pilot Project to Test the Fast-Track Licensing Process Provided in the Hydropower Regulatory Efficiency Act of 2013

Sarmentero Blog Author Card

The Federal Energy Regulatory Commission (“FERC” or “Commission”) approved this week the first pilot project to test a fast-track licensing process for hydropower development pursuant to the Hydropower Regulatory Efficiency Act of 2013 (the “Act”).

The Act directed FERC to investigate the feasibility of a two-year licensing process for low impact hydropower developments at non-powered dams and closed-loop pumped storage projects. FERC held an initial workshop on October 22, 2013 and sought comments and recommendations. On January 6, 2014, FERC issued a Notice opening a three-month window to file petitions for an expedited hydropower license under a pilot program starting February 5, 2014 and ending on May 5, 2014. These fast-track pilot projects were required to comply with following minimum criteria:
  • Have minimal change to existing surface and groundwater flows and uses;
  • Have no adverse effect on federally listed threatened and endangered species;
  • Include a letter from the implicated federal dam owner saying the plan is feasible (if applicable);
  • Include a letter from the managing entity of any public park, recreation area, or wildlife refuge giving its approval to use the site (if applicable); and
  • For closed-loop pumped storage projects, the project must not be continuously connected to a naturally flowing water feature.
The first approved fast-track pilot project is Free Flow Power Project 92, LLC's (“Free Flow”) 5-megawatt hydropower project located at the Kentucky River in Estill and Madison Counties, Kentucky (Docket No. P-14276).  In March of 2012, the Commission granted a preliminary permit to study the feasibility of Free Flow’s hydropower project. After filing its petition for the expedited licensing process, Free Flow filed, in June of 2014, a notice of intent to file a license application and a pre-application document (“PAD”). The PAD contained: (1) a detailed project description; (2) a list of potential environmental effects; (3) a proposed study plan to fill information gaps; (4) a process plan and schedule; and (5) documentation of consultation with affected federal and state resource agencies, Indian tribes, non-government organizations, and the public.

In this first pilot, FERC did not require additional studies and approved Free Flow’s proposed studies for hydraulics, fish entrainment, and aquatic habitat without modifications. However, FERC required amendments to Free Flow’s proposed water quality study, endangered species survey, and cultural resource assessments. Remarkably, the letter approving the pilot also includes a process plan and a schedule with milestones that not only Free Flow, but also FERC Staff and the Kentucky DEP must meet.

Friday, July 18, 2014

EEOC Sues CVS Pharmacy Claiming Its Separation Agreements Are Unenforceable

U.S. Equal Employment Opportunity Commission (EEOC) commenced litigation against CVS Pharmacy, Inc. alleging that its separation agreements unlawfully prevented employees from communicating with the agency (the EEOC) or filing discrimination claims.  Legal commentators have indicated that the form of separation agreement used by CVS is fairly standard for employers throughout the country.  However, the EEOC contends that the separation agreements interfere with the employee’s right to file charges with the EEOC and other agencies in violation of Title VII of the Civil Rights Act.

The separation agreements are settlement agreements with employees who are terminated.  In exchange for the employee signing a settlement agreement in which he or she waives claims, agrees not to sue, and releases the employer, the employer agrees to pay severance pay (and in many cases other benefits or compensation) which it is not legally obligated to pay.

The CVS separation agreement required the employees to notify the company if the employee became part of an administrative investigation and required that the employee promise not to disparage the company or its officers, directors or employees.  It also contained other restrictions, including a non-disclosure provision, release of claims, and a covenant not to sue.  Obviously payment of settlement compensation normally includes such releases and is designed to prevent lawsuits in exchange for the compensation and settlement payment.

The EEOC says that the separation agreement contained only one provision saying that nothing in the agreement was meant to interfere with the employee’s right to participate in any legal proceeding or cooperate with an agency’s investigation.  The EEOC said this provision is far too restrictive and constitutes a resistance to the full enjoyment of rights secured by Title VII because it interfered with the employee’s right to file a charge with the EEOC or any other employment agency and participate and cooperate with an investigation in to the employer’s practices.  The EEOC is seeking an injunction against CVS and CVS is vigorously defending the case.

The question is whether the EEOC is overstepping with the intent of virtually nullifying the essential purpose of the settlement agreement, which is to make a settlement payment in exchange for the employee agreeing to not take action against the employer.  It has long been held that such settlement agreements cannot prevent the employee from participating in EEOC or other agency investigations.  The case is expected to be litigated through all appeals.

Thursday, July 10, 2014

What Are Our Company's Obligations in the Event of a Data Breach?

Companies that conduct business in Arizona need to be aware of their legal obligations in the event of a data breach. These obligations are set forth by statute. Jennings, Strouss & Salmon attorney Andy J. Chambers discusses things a company should consider in the event of a data breach. 

Wednesday, June 25, 2014

AMC Plenary Highlights Investment in Mexican Sea Port Expansion Signaling Opportunity for U.S. Based Sureties

Recently, Patrick F. Welch, an attorney at Jennings Strouss & Salmon, PLC, attended the 2014 Arizona-Mexico Commission (“AMC”) Plenary Session hosted by Arizona Governor Jan Brewer and Sonora Governor Guillermo Padrés in Phoenix, Arizona on June 19-20, 2014. The theme of the Plenary Session was "Arizona & Sonora: Evolution of a Region." The semi-annual event serves as a platform for meaningful international collaboration between the two states, with the ultimate goal of strengthening their bilateral partnership and enhancing the economic growth and quality of life in the Arizona-Sonora region.

The Plenary Session included a number of topics ripe for discussion that demonstrate how the region is evolving and how collaboration between Arizona and Sonora is increasing, including investment in Mexico’s sea ports, reforms to Mexican labor laws, structural reforms to key economic sectors (energy, fiscal, financial, telecom, education, and labor) crucial to driving economic growth in Mexico, and important international finance tools available to U.S. investors through the Ex-Im Bank and the Small Business Administration to promote U.S. exports to Mexico.

One of the highlights of the Plenary Session was the presentation made by the Mexican Office of the Secretaria de Comunicaciones y Transportes (Secretary of Communications and Transport). This presentation focused on the huge amount of public and private investment being made in Mexico’s Pacific and Gulf sea ports, and how such investment will be a catalyst for economic development and expansion not only for the county as a whole, but also for the State of Sonora. Earlier this year, Mexican President Enrique Peña Nieto pledged $58.6 billion pesos (USD $4.55 billion) to expand and modernize Mexico’s ports, and some of those funds will be invested in the Sonoran sea ports located in Guaymas and Puerto Peñasco.

The investment being made in the port of Guaymas – the key industrial port for Sonora, will focus on the construction of a new port to meet demand for mineral exports (copper, gold, silver, and other minerals from Sonora’s vast mining operations). The total investment being made in the port of Guaymas is $8,300 MPD, and will occur in three stages between 2014-2018. The construction of the new port of Guaymas is potentially very attractive to Arizona based businesses. With railway and highway infrastructure connecting Arizona with the port of Guaymas, Arizona based businesses will now have an attractive port alternative to its south that opens up many possibilities for greater collaboration between the public and private sectors in Sonora and Arizona.

The $600 million pesos (USD$45 million) planned investment just to the north of Guaymas in Puerto Peñasco, a key tourist destination for residents of Sonora, Arizona and California because of its beautiful beaches, fishing, and water sports, will be used to construct a new port terminal for cruise ships aimed at increasing tourism to the area. The new port terminal will have capacity for two cruise ships and a state-of-the-art terminal building for passengers to access Puerto Peñasco and surrounding tourist sites. Mr. Welch spoke with a number of AMC members from both Sonora and Arizona who commented that the opening of the Puerto Peñasco port to cruise ship traffic is likely to drive growth in the local real estate market as well – a prime destination for U.S. and Mexican beach goers.

The modernization of these two Mexican ports is likely to drive additional investment in the Arizona-Sonora region, particularly in the areas of construction and tourism. According to Mr. Welch, “For U.S. based sureties issuing surety bonds in Mexico, these major sea port projects and Mexico’s overall commitment to expanding and improving its infrastructure provide a strong indication that Mexico will continue to be a key market for surety companies in the years to come. Moreover, for U.S. based manufacturers looking to expand production operations into Mexico, these new ports will provide closer and more efficient access to global shipping lanes. The bottom line is that the pace and amount of investment being made into Mexican ports is an extremely positive sign for economic development in the State of Sonora, and the Arizona-Sonora region overall.”

Following the Plenary Session, Jennings, Strouss & Salmon hosted a barbeque at Mr. Welch’s home for AMC members and friends. The gathering at Mr. Welch’s home, which featured some Mexican twists on traditional barbeque favorites like: purple and green coleslaw with jalapeño, green onion, and avocado tossed in a lemon cilantro vinaigrette; and mesquite smoked baby-back pork ribs with a ancho chile rub prepared by Mr. Welch and his wife, Maribel, afforded guests an informal opportunity to further discuss opportunities for collaboration between Arizona and Sonora.

Mr. Welch is licensed to practice in the States of Arizona and Nevada, and the Commonwealth of Massachusetts. He focuses his practice in the areas of general and complex commercial litigation, construction litigation, fidelity and surety litigation, and U.S./Mexico cross-border business transactions and litigation, including surety claim investigations. Mr. Welch is fluent in Spanish, and is a member of the Arizona-Mexico Commission.

Governor Padres, Dianira Froeschle, Patrick Welch 

From left to right are: Patrick Welch (standing), Maribel Welch (seated), Rene Moreno (standing), Karli Moreno (standing), Dianira Froeschle (seated), Duane Froeschle (seated).

Monday, June 23, 2014

Jennings, Strouss & Salmon Adds Two New Attorneys

PHOENIX, Ariz. (June 23, 2014) – Jennings, Strouss & Salmon, PLC, a leading Phoenix-based law firm, is pleased to announce that Alan P. Christenson and R. Steven Reed have joined the firm.
“We are excited to be experiencing growth in our corporate and real estate departments,” stated J. Scott Rhodes, the firm’s managing attorney. “In addition to the experience and knowledge Alan and Steven have in their respective areas, they fit nicely with the firm’s culture.”
Christenson focuses his practice on all aspects of real estate law, including restaurant, retail and commercial leasing; acquisition, sale and development; and financing. His experience includes representation of regional restaurant chains, a national insurance company, a national REIT, and a regional hospital with real estate transactions in over 20 states.
“I was attracted to Jennings Strouss because of the firm’s growing and sophisticated real estate practice,” said Christenson. “I’m proud to join a great group of attorneys with extensive experience in real estate law.
Reed concentrates his practice in the areas of general corporate law, mergers and acquisitions, securities, corporate finance, and real estate. His experience includes advising investors, businesses, business owners, start-ups, and emerging companies on a full-spectrum of corporate matters, including formation, acquisitions, capital raising transactions, shareholder relations, development and protection of intellectual property, and tax.
“I am fortunate to have the opportunity to work with the talented attorneys at Jennings Strouss,” stated Reed. “I look forward to expanding my practice and assisting the firm’s clients.”
About Jennings, Strouss & Salmon, PLC
Jennings, Strouss & Salmon, PLC, has been providing legal counsel for over 70 years through its offices in PhoenixPeoria, and Yuma, Arizona; and Washington, D.C. The firm's primary areas of practice include agribusiness; bankruptcy, reorganization and creditors’ rights; construction; corporate and securities; employee benefits and pensions; energy; family law and domestic relations; health care; intellectual property; labor and employment; litigation; real estate; surety and fidelity; tax; and trust and estates. For additional information please visit and follow us on LinkedInFacebook and Twitter.
The firm’s affiliate, B3 Strategies, assists clients with lobbying and public policy strategy at the local, state, and federal levels. For more information please visit
Contact:  Dawn O. Anderson  ||  602.495.2806