Wednesday, March 27, 2013

ASU College of Law Will Launch Teaching Law Firm in Summer 2013

In a recent press release, Arizona State University announced the launch of the ASU Alumni Law Group, a nonprofit teaching law firm that will hire and mentor recent graduates of the Sandra Day O’Connor College of Law. The ASU Alumni Law Group will provide low-cost legal services for underserved populations and other ASU entities.

J.Scott Rhodes, Jennings Strouss Managing Attorney and Sandra Day O’Connor College of Law alumnus, was quoted in the release stating, "The ASU Law Group will provide valuable training and mentoring for new lawyers, while also fulfilling a need for affordable legal services in the community. I anticipate that many successful legal careers will start with a stint at the ASU Alumni Law Group."

Click here to view the full article.

Tuesday, March 19, 2013


By Joel L. Greene

Over the last few years, various natural gas ratepayer groups have without success mounted a legislative effort to stop natural gas pipeline companies from over-recovering their costs. As discussed below, Capitol Hill may finally be listening.

In 2012, the Natural Gas Supply Association released its annual study analyzing the cost recovery over a five-year period of 32 major pipelines representing 80 percent of the transportation market. Based on pipeline data filed with the Federal Energy Regulatory Commission (FERC), the study concluded that for the period 2006-2010 pipelines over-recovered their costs by approximately $14.2 billion.  According to the American Public Gas Association, which has been among those championing the need for rate reform, the margin of over-recovery has increased from $3.7 billion (2009 report), to $4.1 billion (2010 and 2011 reports), to $4.2 billion (2012 report). [1]

The reason for this untenable situation is according to APGA, very straightforward:

…under NGA Section 5, the FERC does not have the refund authority to effectively restrain pipeline over-recovery. This was also the situation under the complaint section of the Federal Power Act (Section 206) until 1988, when Congress took stock of the situation and amended FPA Section 206 to give FERC the authority to order refunds from and after the date a complaint was filed.  Thus, under FPA Section 206 if FERC finds that an electric transmission provider overcharged customers beyond a “just and reasonable” rate, the FERC may refund the overcharges incurred from and after the date of the complaint to its customers. Natural gas customers, however, do not have the same protection under the NGA for FERC to provide any reimbursement to overcharged gas transportation customers.[2]

Of course, until 1992 pipelines were required to restate and undergo FERC scrutiny of their rates every three years, so gas consumers could be assured of a forum in which FERC would determine if the rates were still just and reasonable. However, with the issuance of Order 636 and the introduction of unbundled open access, FERC terminated the three-year rate review process. As a result, absent a mandatory come-back provision in a rate settlement, pipeline companies whose costs may have decreased to a level that no longer renders their rates just and reasonable, are under no obligation to have their rates evaluated.

Numerous organizations have taken up the “need for parity” gauntlet alongside APGA, including the American Forest & Paper Association, American Public Power Association, Industrial Energy Consumers of America, Northern Municipal Distributors Group, and Process Gas Consumers Group, among others.[3] Their call for reform has also been included in pleadings filed in the Section 5 investigation dockets before FERC. They have not fallen on deaf ears, but as recognized by Chairman Wellinghoff, require a legislative fix:

As a general matter, the lack of refund authority under section 5 of the NGA allows the regulated community to defeat the purpose of section 5 at least in some circumstances.  This is not the case under the Federal Power Act (FPA).  The Commission must establish a refund effective date for a section 206 proceeding and has the authority to order refunds for the period ending 15 months after the refund effective date.  Thus, the incentive for game-playing is removed and the Commission can determine on the merits that a public utility’s rates are just and reasonable.  For this reason, I support legislative changes providing for NGA refund authority paralleling that provided to the Commission in the FPA.[4]

Now it appears that consumers’ voices are being heard.  On March 6, 2013, the Chairman and ranking Republican of the Senate Committee on Energy and Natural Resources formally requested that FERC provide background information on the 10 Section 5 NGA rate investigations initiated by FERC (including one initiated by third party complaint) since 2009.[5] The letter requests that for each proceeding the FERC specify the original FERC-approved rate of return and whether the pipeline companies offered any discounts for its services.  A brief description of and timeline for each section 5 proceeding was also requested, including the manner of resolution, and any changes in rates for the various customer classes resulting from the proceeding, if any. Finally, FERC was asked to provide the Committee with information on the rules and procedures describing who may challenge pipeline rates, including FERC, and whether FERC has the authority under the NGA or any other applicable law, to require pipelines to periodically show cause that their rates are just and reasonable.

[1] Letter from Bert Kalisch, President & CEO, American Public Gas Association, to Honorable Jeff Bingaman, Chairman, Committee on Energy and Natural Resources (April 18, 2012) at pg. 1.
[2] Id. at pg. 2. See also, Testimony of the American Public Gas Association before the Senate Committee on Energy and Natural Resources Hearing “Opportunities and Challenges for Natural Gas (Feb. 12, 2013) (demonstrating why reform of Section 5 is an issue critical for U.S. consumers of natural gas) (hereinafter “Feb. 12 Testimony”)
[4] Chairman Wellinghoff’s dissenting statement (p.4) in Northern Natural Gas Co., RP10-148, issued Nov. 2, 2010. In its Feb. 12 Testimony, APGA reported that all of the sitting commissioners “being fully familiar with the outcomes in these Section 5 proceedings, have stated their support for amendment of NGA Section 5 to provide refund authority comparable to that available under FPA Section 206.”

Wednesday, March 13, 2013

Revised Form 1-9 Issued


The U.S. Citizenship and Immigration Services (USCIS) published a revised Form I-9 on March 8, 2013. Employers must complete a Form I-9 for each employee hired in the United States.  Employer should immediately begin using the revised form.  Earlier versions (dated 02/02/09 and 08/07/09) may also be used, but only until May 7, 2013. After that date, employers must use only the newly-revised form. The revised form may be found on the government’s website at:

Monday, March 11, 2013

Jennings, Strouss & Salmon Expands Energy Practice: Energy Attorney Andrea I. Sarmentero Garzón joins the firm's Washington, D.C. office

Andrea I. Sarmentero Garzón

Phoenix (March 12, 2013) – Jennings, Strouss & Salmon, P.L.C., a leading Phoenix-based law firm, is pleased to announce that Andrea I. Sarmentero Garzón has joined the firm’s energy practice as an associate in its Washington, D.C. office.

“We are pleased to welcome Andrea to the firm’s energy practice. She brings with her a wealth of energy law experience ranging from traditional regulatory matters to complex market issues, both domestically and internationally,” said Debra Roby, Chair of the firm’s energy practice. “In addition to her legal knowledge, Andrea’s experience with a state utility regulator complements our team well.” 

Sarmentero spent the past four years as a staff attorney in the counsel’s office at the New Jersey Board of Public Utilities.  Prior to practicing in the United States, she worked in the office of the General Secretariat with the Council of European Energy Regulators in Brussels, Belgium, and in the private sector as an attorney in the Project Finance Division of DLA Piper in Madrid, Spain.  Sarmentero also worked at the World Bank in Washington, D.C., focusing on electricity restructuring in various European countries.

“I am excited about the prospect of re-entering private practice and delighted to join Jennings, Strouss & Salmon’s growing energy team,” states Sarmentero. “This is a very challenging time for energy businesses everywhere, and I look forward to joining a team of distinguished attorneys who possess extensive experience representing clients in the ever changing energy industry.”

Sarmentero is admitted to the New York Bar.  She earned a J.D. from the University of Málaga in Spain, an LLM in Energy Law & Policy from the University of Dundee in the UK, and completed the NY Law School Foreign Lawyer Training Program.  Sarmentero also earned a Diploma in International Nuclear Energy Law from the University of Montpellier in France and a Master of Business and International Trade from the University Complutense of Madrid.  She is a member of the New York City Bar Association, American Bar Association, and the Energy Bar Association.

About Jennings, Strouss & Salmon
Jennings Strouss & Salmon is one of the Southwest's leading law firms, providing legal counsel for nearly 70 years through its offices in Phoenix and Peoria, Arizona; and Washington, D.C. The firm's primary areas of practice include 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; sports and entertainment; surety and fidelity; tax; and trust and estates. For additional information please visit and follow us on LinkedIn, Facebook and Twitter.
Contact:  Dawn O. Anderson  ||  602.495.2806

Wednesday, March 6, 2013

Are Those Non-Compete And Non-Solicitation Agreements Your Company Is Asking Employees To Sign Enforceable In Arizona?

By Garrett Olexa

It is not uncommon for an employer to decide to have existing employees agree to a covenant not to compete to preclude departing employees from working in the same business for a period of time after they leave the company. Likewise, companies frequently seek to get employees to sign non-solicitation agreements to preclude them, for a period of time after they leave the company, from soliciting the company’s customers or from soliciting its current employees to come with them. In Arizona such agreements are legal and, if properly and narrowly drafted, enforceable. 

For a non-compete or anti-solicitation agreement to be enforceable it generally must protect some legitimate interest of an employer beyond the desire to protect itself from competition. A restriction is considered unreasonable and will not be enforced if the restraint is greater than necessary to protect a legitimate interest of the employer or if that interest is outweighed by the hardship to the employee and likely injury to the public. Thus, what the Arizona courts consider to be a reasonable restrictive covenant is a fact intensive inquiry that requires an analysis of all of the circumstances. 

A short checklist of some important factors to consider include the following:

(1) Is there consideration?

That is, have there been either mutual promises, including the promise of future employment, or alternatively, has there been a bonus or increase in pay if the covenant comes after the start of employment? 

(2) Is the scope of the restrictive reasonable in terms of the type of work?

The type of work is often a critical factor to assessing enforceability. For instance, a non-competition provision may be invalid if it fails to limit itself to the scope of the type of work performed by the employer. If a medical practice specializes in cardiology, a restrictive covenant that fails to limit itself to that area of specialty would likely be invalid. A proper restriction should also limit itself to the type of work performed by the employee. 

Further, public policy concerns will sometimes outweigh the otherwise protectable interest remaining members may have and thus dictate special protections for certain professions. For example, Arizona courts have recognized that the doctor-patient relationship is special and entitled to unique protection, in part because it is believed that patients should have free choice of which doctor they see and free competition helps promote optimal care. The foregoing, in turn, impact the validity of restrictive covenants placed on medical professionals. Similarly, the ethical rules governing attorneys prohibits a lawyer from making or entering a partnership or employment agreement that restricts the lawyer’s right to practice after termination of the relationship. 

(3) Is the duration of the restrictive covenant reasonable?

An additional critical factor is whether the time period for a restrictive covenant is reasonable. This factor too will often depend on the specific job and trade. One question often posed to determine whether the time aspect of the restriction is reasonable in length is how long will it take your replacement to get up to speed and work effectively for the employer? 

(4) Does the restrictive covenant contain a reasonable geographic limitation? 

A non-compete provision is also often required to give a clear indication as to its geographic scope. Depending on the nature of the business that geographic restriction may be as narrow as a few miles or as broad as the vast parts of the country. If a company does not do business outside of Arizona, a non-compete outside of the State may be found to be overly broad and therefore unenforceable. 

With respect to non-solicitations provisions that limit an employee’s ability to solicit the company’s customers, a reasonable provision will generally be limited to those customers with whom the employee did business or had developed a relationship with and to current customers of the company, not former customers.

Because the enforceability of restrictive covenants are often driven by facts specific to a particular employee’s position and state-specific laws, national companies should be cautious about using a single form agreement for all employees in all States. To ensure that restrictive covenants are enforceable, employers should check the laws of the State where the employee is doing business and tailor the proposed restriction narrowly in accordance with the factors discussed above.

Tuesday, March 5, 2013

West Valley Growth

By David Brnilovich
(623) 878-2222

Building permits issued by cities in the western part of the Phoenix Metropolitan area (the “West Valley”) continue to accelerate in the New Year. In January of 2013, single family permits issued in the West Valley, including Peoria, Buckeye and Goodyear, were up 40% over the same period in 2012.

Three of the top 50 master-planned communities in the United States are located in the West Valley. Vistancia in Peoria saw a 69% in sales from 2011 through 2012. Buckeye’s Verrado community saw a 38% increase in sales during that same period, and Estrella in Goodyear was up 43% year over year.

In addition to these increases, the number of MLS listings of single family properties for sale in January 2013 compared to the number listed a year ago. The decrease occurred despite the fact that the median price of single family homes in the Valley increased at a record rate over the past 12 years.

If these trends continue, the West Valley economy can expect a strong performance for 2013.

Statute of Frauds Language Clarified By Arizona Court of Appeals

By Garrett Olexa

Arizona has codified the common law doctrine of the Statute of Frauds (A.R.S. §44-101). Essentially, the Statute of Frauds bars a party from suing to enforce certain types of agreements that are not in writing. One such type of agreement is an oral agreement that is not to be performed within one year from the date it is made (A.R.S. §44-101(5)).

Recently in Rudinsky v. Harris, 231 Ariz. 95, 290 P.3d 1218, (App. 2012), the Arizona Court of Appeals clarified the language -- “which is not to be performed within one year from the making thereof” -- which is set forth in A.R.S. § 44-101(5). The Rudinsky case arose out of a purported deal between Helen Rudinsky, real estate agent, and a full service brokerage company, Green Light Real Estate, LLC, concerning commissions on new business and future real estate transactions. Rudinsky alleged that the deal for future commissions with buyers introduced to the brokers would continue indefinitely into the future.

While the language in A.R.S. § 44-101(5) has been interpreted to not be applicable to oral contracts when there is a possibility of performance within one year, the Court in Rudinsky rejected the argument that the possibility that Rudinsky’s buyers may not have generated any more deals after the initial transaction made the contract one that was capable of being completed within one year. Rather, the Court held that the Rudinsky arrangement was distinguishable from other indefinite contracts that are capable of being performed within one year because Rudinsky had alleged the existence of a permanent contractual relationship that failed to contain any term that would terminate the contractual relationship within one year. The Court noted that even Rudinsky’s potential death would not terminate the contractual obligation of the full service brokerage company because the obligation would pass to the benefit of her estate, heirs, or beneficiaries. The Court held that such a relationship was not capable of being performed within one year and thus such a contract fell within the Statute of Frauds and was unenforceable.

The Rudinsky case provides a simple reminder that the best way to secure an enforceable contract is to get it in writing. If you have a verbal agreement and wonder whether it falls within the Statute of Frauds, check the nine categories of documents that A.R.S. §44-101 requires be in writing to be enforceable. If you need further assistance interpreting and understanding the Statute of Frauds, contact Garrett Olexa at or 623.878.2222.