Thursday, November 21, 2013

Jennings Strouss Named on 2014 U.S. News - Best Lawyers “Best Law Firms” List

PHOENIX, Ariz. (November 21, 2013) – Jennings, Strouss & Salmon, PLC announced that it has been selected for inclusion in Best Law Firms in America® 2014, published by U.S. News & World Report and Woodward/White, Inc. of Aiken, South Carolina.

The listings are presented in tiers and ranked nationally and by metropolitan area. The rankings showcase 11,765 different law firms ranked in one or more of 74 national and 120 metropolitan legal practice areas. Achieving a high ranking is a special distinction that signals a unique combination of excellence and breadth of expertise.

The methodology for the U.S. News - Best Lawyers "Best Law Firms" rankings involves surveying thousands of law firm clients, leading lawyers and law firm managers, partners and associates, and marketing and recruiting officers. Criteria include expertise, responsiveness, understanding of a business and its needs, cost-effectiveness, civility, integrity, and whether they would refer another client or a matter to a firm.

This year, Jennings, Strouss & Salmon was newly ranked in Construction Law; Litigation – Land Use & Zoning; Professional Malpractice Law – Defendants; Securities/Capital Markets Law; Banking and Finance Law; and Land Use & Zoning Law. Jennings Strouss received a national ranking for Energy Law (Tier 3), and was included in the metropolitan rankings for the following practice areas:

Phoenix - Tier 1:
Administrative/Regulatory Law
Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law
Commercial Litigation
Corporate Law
Energy Law
International Trade and Finance Law
Litigation – Bankruptcy
Litigation – Construction
Litigation – Real Estate
Medical Malpractice Law – Defendants
Personal Injury Litigation – Defendants
Real Estate Law
Tax Law
Trusts & Estates Law

Washington DC - Tier 1:
Energy Law

Phoenix - Tier 2:
Construction Law
Corporate Governance Law
Employment Law – Management
Health Care Law
International Arbitration – Commercial
Labor Law – Management
Legal Malpractice Law – Defendants
Litigation – Banking & Finance
Litigation – Land Use & Zoning
Mergers & Acquisitions Law
Professional Malpractice Law – Defendants
Securities/Capital Markets Law

Phoenix - Tier 3:
Banking and Finance Law
Eminent Domain and Condemnation Law
Ethics and Professional Responsibility Law
Land Use & Zoning Law
Litigation – Labor & Employment
Public Finance Law

About U.S. News & World Report
U.S. News & World Report is a multi-platform publisher of news and analysis, which includes the digital-only “U.S. News Weekly” magazine, and Focusing on Health, Personal Finance, Education, Travel, Cars and Public Service/Opinion, U.S. News has earned a reputation as the leading provider of service news and information that improves the quality of life of its readers. U.S. News & World Report’s signature franchise includes its News You Can Use® brand of journalism and its annual “Best” series of consumer Web guides and publications that include rankings of colleges, graduate schools, hospitals, mutual funds, health plans and more.

About Best Lawyers
Since it was first published in 1983, Best Lawyers® has become universally regarded as the definitive guide to legal excellence. Because Best Lawyers is based on an exhaustive peer-review survey in which almost 50,000 leading attorneys cast nearly five million votes on the legal abilities of other lawyers in their practice areas, and because lawyers are not required or allowed to pay a fee to be listed, inclusion in Best Lawyers is considered a singular honor.

About Jennings, Strouss & Salmon
Jennings Strouss & Salmon is one of the Southwest's leading law firms, providing legal counsel for over 70 years through its offices in Phoenix, Peoria, 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, land use and zoning; 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

Scheindlin Rejects Proposed Federal Rule Regarding Electronically Stored Information (ESI) Discovery Sanctions

On August 15, 2013, U.S. District Court Judge Shira Scheindlin (Southern District of New York), of Zubulake fame and described as, “[p]erhaps the most influential jurist in the e-discovery arena,” published another notable opinion on electronic discovery issues Sekisui America Corp. v. Hart, 2013 WL 4116322 (S.D.N.Y. Aug. 15, 2013). Coincidentally, or perhaps not, the opinion was issued the same day that proposed changes to the Federal Rules of Civil Procedure relating to sanctions for electronic discovery abuse were released for public comment.

The Sekisui opinion is notable because 1) it came out of the U.S. District Court for the Southern District of New York, a court with significant influence in e-discovery law, 2) it involved spoliation (failure to preserve ESI) by the plaintiff, and 3) the Court rejects the prejudice standard proposed in the revised rules. Sekisui America Corporation sued Richard Hart and his wife, Marie Louise

Trudel-Hart, for breach of contract arising out of the purchase of America Diagnostica, Inc., a company owned by the Harts and of which Mr. Hart was President. Hart remained in an executive position with America Diagnostica up until a year and a half later, at which time he was fired and issued a notice of intent to bring a legal claim by Sekisui. Fifteen months after the notice of intent to sue was issued, Sekisui filed its complaint, choosing to wait to institute its litigation hold.  Even then, Sekisui waited another six months to notify its outside technology vendor of the need to preserve its electronic information.

As a result, Sekisui permanently deleted Hart’s email and the email of another person, who was in a position to have material information relating to the breach of contract claim. Not surprisingly, Hart sought to have the Court impose spoliation sanctions, specifically an adverse inference instruction. The Magistrate Judge, Frank Maas, (another respected member of the e-discovery bar) rejected Hart’s request, finding that, although Sekisui’s destruction of ESI “may well rise to the level of gross negligence,” Hart had not met the burden of proving prejudice by the destruction of the lost emails. Judge Scheindlin reversed the Magistrate Judge’s order, disagreeing with imposing the burden of proof regarding prejudice on the party seeking sanctions, and determining that an adverse inference instruction was warranted.

Utilizing the analytical model developed by the Second Circuit Court of Appeals in Residential Funding Corp. v. DeGeorge Financial Corp, 306 F. 3d 99, 107 (2d Cir. 2002) for determining the propriety of adverse inference instructions when a party has destroyed evidence, Judge Scheindlin had little trouble finding that Sekisui’s conduct was sanctionable. The model states that the party seeking adverse inference instruction based on opposing party's failure to produce evidence in time for trial must show that 1) the party having control over evidence had the obligation to timely produce it, 2) the party that failed to timely produce evidence had culpable state of mind, and 3) missing evidence is relevant to seeking party's claim or defense such that reasonable trier of fact could find that it would support that claim or defense. The Judge noted that a party is “culpable” for purposes of the adverse inference test if the party destroyed evidence, knowingly or negligently. (2013 WL 4116322, head note 4). The Judge stated, “The law does not require a showing of malice to establish intentionality with respect to the spoliation of evidence…In the context of an adverse inference analysis, there is no analytical distinction between destroying evidence in bad faith, i.e. with a malevolent purpose, and destroying it willfully.” (Id. at * 6)

Regarding the relevance prong of the Residential Funding test, despite noting that a finding that the evidence in question was destroyed intentionally or through gross negligence is usually sufficient to establish relevance by itself, Judge Scheindlin found that the ESI at issue was relevant because it involved the email of “key players” in the litigation. (Id. at * 7) In other words, Judge Scheindlin held that a finding of relevance can be made by simply looking to whose data was destroyed.

With respect to Residential Funding’s prejudice requirement, Judge Scheindlin rejected the concept that the innocent party should bear the burden of proving prejudice. Rather, she explained that prejudice to the innocent party may be presumed whenever relevant evidence is destroyed, whether intentionally or through gross negligence, stating “Prejudice is presumed for the purposes of determining whether to give an adverse inference instruction when, as here, evidence is willfully destroyed by the spoliating party.”  (Id.* 7) Any other rule, she asserted, would “incentivize bad behavior on the part of would-be spoliators” and “would allow parties who have destroyed evidence to profit from that destruction.” (Id.)

In contrast to Judge Scheindlin’s Sekisui position, the proposed new F.R.C.P. 37 (e) rejects imposing sanctions for any degree of negligence. Under the proposed rule, a court can issue sanctions only if it finds that the failure to preserve ESI “(i) caused substantial prejudice in the litigation and w[as] willful or in bad faith; or (ii) irreparably deprived a part of any meaningful opportunity to present or defend against the claims in the litigation.” (David G. Campbell, Report of the Advisory Committee on Civil Rules 35 (2013)). Judge Scheindlin was critical of the proposed new rule’s limitation on the ability of a court to impose sanctions to situations where the spoliator’s conduct was “willful or in bad faith.” (Sekisui at * 4, n.51). Judge Scheindlin also criticized the proposed new rule’s “placing the burden of proving prejudice on the innocent party.” She stated, “I do not agree that the burden to prove prejudice from missing evidence lost as a result of willful or intentional misconduct should fall on the innocent party. Furthermore, imposing sanctions only where evidence is destroyed, willfully or in bad faith, creates perverse incentives and encourages sloppy behavior. Under the proposed rule, parties who destroy evidence cannot be sanctioned (although they can be subject to ‘remedial curative measures’) even if they were negligent, grossly negligent or reckless in doing so.” (Id.)

Judge Scheindlin’s opinion contained the adverse inference instruction that was to be read to the jury. It is significant to note that, per the terms of the Court’s instruction, prejudice is only presumed in the threshold determination of whether an adverse inference instruction should be given. According to the Court’s instruction, it is up to the jury to decide whether to adopt a presumption that the destroyed evidence would have been favorable to the Harts. Specifically, the Court’s instruction states that “relevant evidence was destroyed after the duty to preserve arose…[therefore] you may presume, if you so choose, that such lost evidence would have been favorable to the Harts. In deciding whether to adopt this presumption, you may take into account the egregiousness of the plaintiffs’ conduct in failing to preserve the evidence.” (Id. at *8)

The Sekisui case opinion provides several valuable ESI lessons for businesses:
  • Logically, because plaintiffs know if and when the decision to sue was made, courts will be inclined to hold plaintiffs to a stricter litigation hold obligation than a defendant;
  • A malevolent state of mind (i.e. intent or bad faith) may not be necessary for the imposition of spoliation sanctions. In Judge Scheindlin’s court, some form of negligence is sufficient; and,
  • At least according to Judge Scheindlin, but maybe not according to the revised federal rules, the innocent party does not have to prove prejudice resulting from the destruction of ESI. Rather, prejudice is presumed when evidence is willfully destroyed.
About the Author: Michael Palumbo is a Member with the law firm of Jennings, Strouss & Salmon, PLC. Mr. Palumbo's practice focuses on commercial and real estate litigation. Particular areas of experience include title insurance, escrow agent and Deed of Trust litigation; and quiet title, adverse possession, homeowners' associations and real estate agent disputes. For questions, contact Mr. Palumbo at or 602.262.5931.

Wednesday, November 20, 2013

Friday, November 8, 2013

Top Ten Things Every Governmental Utility Needs To Know About Compliance With CFTC Recordkeeping And Reporting Requirements, As Well As Trading With Swap Dealers


Jennings, Strouss & Salmon attorney Debbie A. Swanstrom recently presented the topic, “Now What? CFTC Obligations and Compliance in the Age of Swaps,” at the APPA Legal Seminar in Seattle, WA. Here are highlights from her presentation:

  1. You Can Lose Your Forward Contract Exclusion
  2. CFTC Does Regulate Physical Transactions In Cash Market
  3. If You Trade Any Products On A Facility, You Need To Be Aware Of What You Are Signing Up For
  4. You Need To Be Prepared To Report In Advance
  5. Your Trading Friends In Canada And Mexico Are Not CFTC-Friendly
  6. Changes Will Be Needed To Trade Capture Systems For PET Data
  7. To Avoid Reporting Burdens, You May Execute A Swap On DCM/SEF And Clear It
  8. Annual Reporting Of Election OF End-User Exception In Advance Is Easiest, But May Be Risky
  9. You Do Not Have To Say Yes To Everything Swap Dealers Request
  10. A Qualified Independent Representative Must Be Independent of Swap Dealer Not Governmental Utility
More details on these points, including the specific reporting and recordkeeping requirements imposed by the CFTC, are included in the attached slides.

Attention Realtors: Are You Engaging in the Unauthorized Practice of Law?

Attention Realtors: Are You Engaging in the Unauthorized Practice of Law?

Garrett's practice includes commercial and personal injury litigation; real estate litigation and transactions; business formation and corporate transactions; and estate planning.While there is no longer a statute in effect in Arizona making it a crime to engage in the unauthorized practice of law, the code of ethics governing realtors, much like the rules governing the practice of law for attorneys, make it impermissible to engage in the practice of law without a license.  The Code of Ethics of the National Association of Realtors® provides, in part, that realtors “shall not engage in activities that constitute the unauthorized practice of law and shall recommend that legal counsel be obtained when the interest of any party to the transaction requires it.”[1]  The foregoing begs two questions: “What constitutes the ‘practice of law’?” and “When should the recommendation be made that a client consult with an attorney?”

The Arizona Supreme Court, in 1961, defined the practice of law as “acts . . . which lawyers have customarily carried on from day to day through the centuries.” While the foregoing definition is not particularly helpful to those trying to figure out what does and does not fall within the “practice of law,” further clarification is found in the Arizona Supreme Court Rules. Those Rules define the “practice of law” to mean the providing of legal advice or services to another by doing such things as:
(i) preparing any document in any medium intended to affect or secure legal rights for a specific person or entity; (ii) preparing or expressing legal opinions; (iii) representing another in a judicial, quasi-judicial, or administrative proceeding, or other formal dispute resolution process such as arbitration and mediation (iv) preparing any document through any medium for filing in any court, administrative agency or tribunal for a specific person or entity; or (v) negotiating legal rights or responsibilities for a specific person or entity.
The Supreme Court Rules do create exceptions to the above definition. For example, it is not considered the practice of law if the preparation of legal documents is incidental to the regular course of business, when said documents are for the exclusive use of the business and not made available to third parties; however, with regard to the foregoing exception, keep in mind that both parts need to be satisfied for the exception to apply.  Thus, if the preparation of legal documents is incidental to your business, but the preparation of those documents by non-attorneys relates to transactions that did not directly involve your business’s rights, it is still considered to be the unauthorized practice of law.

While there have been very few Arizona cases addressing the issue of the unauthorized practice of law as it applies to realtors, hearing panels of the Professional Standards Committee of the Board of the National Association of Realtors® provide some additional guidance. For instance, one hearing panel concluded that a real estate agent did not engage in the unauthorized practice of law by simply filling in the blanks on a standard purchase contract; however, another panel found that a real estate attorney did engage in the unauthorized practice of law by preparing a simple Power of Attorney document for a client.  With regard to the issue of when a realtor should recommend that legal counsel be obtained, one hearing panel found that a seller’s real estate agent violated Article 13 when he failed to recommend to a buyer, whom he was not representing, that the buyer should consult an attorney to address whether a binding contract had been entered, and to help clarify the buyer’s rights in relation to that issue.

In short, while every situation is likely to contain its own unique facts, some general rules of thumb to help steer clear of an ethics complaint alleging the unauthorized practice of law include: (i) other than filling out form contracts, avoid preparing legal documents for parties to a transaction; (ii) avoid offering any type of legal advice, and (iii) when in doubt as to whether the interest of any party to the transaction requires legal advice, recommend that party consult an attorney.

[1] Article 13, Code of Ethics for the National Association of Realtors.

About the Author: Garrett Olexa is a Member with the law firm of Jennings, Strouss & Salmon, PLC. He focuses his practice in the areas of real estate and commercial litigation.  For questions, contact Mr. Olexa at or 623.878.2222.

Wednesday, November 6, 2013

Law Talk Wednesday: What Happens When a Board Receives the Physician's Narrative Response?

Fred Cummings continues our weekly series "Law Talk" discussing what happens when a board receives the physician's narrative response.