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INDEX The Arizona Association of Defense Counsel Newsletter SPRING 2021 PAGE 3 - MICHAEL K. KENNEDY - IN MEMORIAM PAGE 4 - HIGHLIGHT: 2021 AADC/ASU OPLINGER-BLAKE CLOSING ARGUMENT COMPETITION PAGE 5 - OPINION: THE PRACTICE PAGE 6 - ARTICLE: APOLLO EDUCATION V. NATIONAL UNION FIRE INSURANCE PAGE 8 - UPCOMING EVENTS PAGE 9 - NEW AADC MEMBERS PAGE 10 - YLD MENTOR PROGRAM PAGE 11 - YLD MEMBER SPOTLIGHTS PAGE 12 - ARTICLE: ONE PARTY TOO MANY PAGE 13 - FOR THE DEFENSE

As a member benefit, the AADC has retained a lobbyist to protect the interests of the defense bar and provide frequent updates on Arizona legislative activity. These updates are emailed to AADC members on a regular basis.

Many bills have been introduced this year. Two bills of particular interest include liability related to the public health pandemic (SB1377) and the reducing civil jury size from eight jurors to six (HB2185). Our legislative committee encourages AADC members to weigh in on these important bills and any other bill included in our updates.

If there is a particular bill that you or your firm is interested in tracking, the AADC can provide input directly to the legislators. Please feel free to reach out to Benjamin Branson at bbranson@cavanaghlaw.com or Shanks Leonhardt at shanks.leonhardt@sandersparks.com if you would like more information.

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COMMON DEFENSE | Spring 2021 | azadc.org

IN MEMORIAM

Michael K. Kennedy 1951-2021

AADC President 1985-1986 Colleague, Friend, Leader and Philanthropist

2021 AADC/ASU Oplinger-Blake Closing Argument Competition Congratulations to the 2021 Oplinger-Black Closing Argument Moot Court Competition Winners: 1st Place - Travis Grogan 2nd Place - Rachel Moss 3rd place - Elyssa Creary-Scher The AADC sponsors this ASU Moot Court competition each year. The students are provided with case materials including a complaint, photographs, deposition transcripts, case materials, and jury instructions. They incorporate these elements in their arguments. This year the competition was held via Zoom which provided the students with an additional challenge. All handled it wonderfully.

AADC members volunteered as judges. They scored the students in several areas including how they developed their argument using the available facts/law and their presentation style. The judges also provided verbal coaching and feedback at the conclusion of each team’s argument.

The students did a terrific job and expressed how much they appreciate the dialog with the judges.

Travis Grogan

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Rachel Moss

COMMON DEFENSE | Spring 2021 | azadc.org

Elyssa Creary-Scher

The Practice ARTICLE BY AUTHORS: DAN BERNARDONE, KARA KAPLAN AND NATHAN GALLINAT

Dan Bernardone: Lawyers often cite the billable hour as one of the worst aspects of the legal profession, and there’s a lot of truth to that. Annual billing requirements can hang over our heads 24/7/365, it doesn’t reward efficiency, and it’s generally a poor tool to measure the value of our work (even if it’s still better than alternative ways to charge a client). Recently though, to my surprise, a friend explained he occasionally misses the billable after going in-house at a company: “Sometimes I miss the billable hour. Now I need to be at the office during regular working hours unless I use up limited vacation time. I can’t just leave early or come in late like I could at a firm.” Maybe he’s onto something. The fact of the matter is that some firms, depending upon size and culture, don’t mind if you leave early or arrive late so long as you hit your hours. In a way, that reality allows flexibility in our schedules. If we work late, then we can arrive late, and if we arrive early, then we can leave early. In-house lawyers can’t really do this. To be sure, a week with low billables means the next week is worse, in which case we’re arriving early and working late (or working weekends), which is rotten. Ultimately, there is more bad than good with the billable hour, but sometimes it can create flexibility for some, which is nice.

Kara Kaplan: Networking! As a law student, I did not appreciate the value of networking and, quite honestly, found it overwhelming. I would spend hours overthinking the conversations I was about to have with real lawyers because I did not want to sound like I knew nothing. These people could by my future employer, don’t mess this up... But networking is so much more than a future job-hunting platform.

Have an opposing counsel you like? Great! That makes intense litigation that much more enjoyable.

New favorite expert witness? Let’s chat about it over happy hour.

Wanting to switch firms? Perfect, I know someone at a firm you’re looking into.

Don’t practice in family law? No problem, someone you trust may have a reference for your client.

In a community that may appear to be based on competition, expanding and maintaining your network is surprisingly easy.

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COMMON DEFENSE | Spring 2021 | azadc.org

Apollo Education v. National Union Fire Insurance: A New Standard for Insurers Evaluating Settlements in Arizona?

BY: ALISON R. CHRISTIAN, SHAREHOLDER AT CHRISTIAN DICHTER & SLUGA

In answering a certified question from the Ninth Circuit, on February 17, 2021 the Arizona Supreme Court determined that when evaluating an insured’s voluntary settlement with its shareholders “reasonableness [of that settlement] is assessed from the perspective of the insurer, not the insured.”

The case involves an insured’s attempt to recover a $13,125,000 settlement under its D&O policy. The policy did not include a contractual duty to defend and prevented the insured from entering into any settlement agreement “without the prior written consent of the Insurer,” which “shall not be unreasonably withheld.”

The insurer may not refuse to pay the settlement simply because the settlement amount is at or near the policy limits. The insurer may, however, “discount considerations that matter only or mainly to the insured—for example, the insured’s financial status, public image, and policy limits— in entering into settlement negotiations.” The insurer “may also choose not to consent to the settlement if it exceeds the insurer’s reasonable determination of the value of the claim, including the merits of plaintiff’s theory of liability, defenses to the claim, and any comparative fault.”

The court’s decision was grounded in the insurer’s lack of control over the defense, the lack of a contractual duty requiring the insured to cooperate with the insurer, and that the policy was negotiated by two sophisticated parties. The court noted that under such circumstances, “the insured has a strong and often adverse interest in settling within policy limits, regardless of the merits of a claim.” The majority pointed out, “the risk is that the insured will use the insurer’s coverage to assure it will escape liability that exceeds policy limits.” The ruling cautions, however, “Of course, the converse would be true where the insurer has control over the defense.”

The dissenting justices—Justice Gould and Justice Lopez—fear the decision “will undoubtedly create confusion and generate litigation for years to come.” They remark, “for the first time in our jurisprudence, the majority applies a first-party standard for settlement offers involving a third-party claim.”

The court outlined factors that an insurer must consider when presented with a proposed settlement, relying primarily on first-party cases. The insurer must (1) evaluate the claim, (2) determine whether it falls within the coverage provided, (3) fairly assess its monetary value, (4) decide on its validity, and (5) determine whether to pay it. See Zilisch v. State Farm Mut. Auto. Ins. Co., 196 Ariz.

234, 238 ¶ 21 (2000); Deese v. State Farm Mut. Auto.

Ins. Co.,172 Ariz. 504, 507 (1992); Rawlings v.

Apodaca, 151 Ariz. 149, 154 (1986).

The full decision can be found here.

SIDEBAR

The Practice continued Nathan Gallinat: The legal profession is a learned profession. The law school curriculum is great for erudition and teaching minds to “think like a lawyer,” but there are gaps when it comes to preparing law students for the actual practice of law.

This is not a ground-breaking revelation and has been the long-standing norm.

However, lawyers are fortunate to share in this common experience as generations of attorneys understand the gap between law school and the practice of law. Perhaps partly because of that, the vast majority of attorneys I have encountered are happy to share their time, insight, and wisdom to less experienced attorneys – without seeking anything in return. We are fortunate to be a part of a profession in which we have attorneys and mentors that facilitate the growth of our less experienced colleagues.

By Don Bivens Snell & Wilmer, LLP Chair of the Arizona Supreme Court’s Committee on Non-Lawyer Legal Providers As of January 1, 2021, the Arizona Supreme Court introduced significant innovations to the Arizona Rules for Professional Responsibility designed to address the justice gap in Arizona.

The new rules make a number of changes, but here are the big three: (1) a new class of legal services providers – Legal Paraprofessionals – can practice law within limited areas of proven competence without the supervision of a lawyer; (2) lawyers can now share fees with non-lawyers; (3) non-lawyers can own/manage/invest in a new type of law firm called Alternative Business Structures (“ABS”).

Legal Paraprofessionals who pass educational and exam requirements can practice in four limited areas: (1) family law (with certain exceptions); (2) municipal and justice court civil matters, and (3) criminal matters (that do not involve incarceration); and (4) administrative proceedings.

Lawyers can now share fees with nonlawyers. Among other things, this means that lawyers can pay referral fees to non-lawyers.

But, the referral source cannot do something you could not do directly yourself under E.R. 8.4.

Lawyers can now partner with non-lawyers to own/manage/invest in new entities called ABSs, to be approved by a Supreme Court Committee. Any ABS entity must identify a compliance lawyer who is an Arizona attorney who can demonstrate experience in managing a firm sufficient to assure compliance with the Rules of Professional Conduct by all participants in the ABS. The ABS entity itself is also subject to the Rules of Professional Responsibility.

There are a number of changes to the advertising rules. The bottom line remains that lawyers (and ABSs) cannot engage in false or misleading advertising. Lawyers or ABSs still cannot solicit clients in person or by phone, unless they are friends, family, former clients, or {NEW] business people who hire lawyers on a regular basis.

Do not clip this SIDEBAR piece from the newsletter as substitute for reading all the Supreme Court’s new rules, and the new regulations published by Supreme Court

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COMMON DEFENSE | Spring 2021 | azadc.org

AADC CLE Webinars Schedule: April 7, 2021 April 21, 2021 May 5, 2021 May 19, 2021 AADC Annual Meeting Coming early June 2021 Stay Tuned for Details!

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COMMON DEFENSE | Spring 2021 | azadc.org

Welcome New AADC Members DANI E L D O UGLAS

TIMO T H Y MCKERCH ER

Bremer, Whyte, Brown & O'Meara

AVP Nationwide Insurance

MARK S A RIC

MAXW E L L SHANAHA N

MEGA N S PAULDING

Bremer Whyte Brown & O'Meara

Koeller, Nebeker, Carlson & Haluck

Thomas, Rubin & Kelley

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YLD Mentorship Program Having a mentor in your corner to give advice (or an extra push) is invaluable to your legal career. It can lead to a more rewarding professional life, expanded network, a new job, and even a better work/life balance. If you're ready to grow your career, this is the program for you!

Being a mentor keeps your finger on the pulse of the profession, re-inspires your own career, grows your network, helps develop leadership and communication skills and is infinitely rewarding.

When people think of a mentor they often assume it's someone who is a veteran in the legal profession, but that's not usually the case. The most effective mentors are people with the most relevant experience (applicable to their mentee), not necessarily the most experienced. Rather than bring 10+ years ahead of their mentee, they may be one or two years ahead in professional and/or personal development areas.

The AADC YLD Mentorship Program is designed to pair mentors and mentees in a "no size fits all" approach by creating mentor/mentee relationships that work for them. For example, a first year associate may be looking for someone who has just a few years under their belt to provide advice from a new associate perspective that applies to our current climate. A 3-5 year attorney may be interested in a mentor who can help them climb the partnership track or determine whether they are pursuing the right career path.

The goal is to connect mentees with mentors to enhance personal and professional career goals. Please click to download a Mentee Application or Mentor Application. We look forward to receiving your application and helping you connect!

If you would like to discuss the program or have any questions, please email Vice President of AADC-YLD, Kimberly Page at kpage@jshfirm.com

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COMMON DEFENSE | Spring 2021 | azadc.org

CIVIL JURY TRIALS RESUME IN SOME STATE AND FEDERAL COURTS

YLD Member Spotlights

After a year of virtual proceedings, the courts are preparing to resume in-person jury trials while enforcing safety protocols in compliance with CDC guidelines. All courthouses will continue requiring masks as well as social distancing. Below is a summary of the latest orders regarding court proceedings:

Ian Beck: Outside of the office, I take my dogs for walks along the canal – especially during the work-from-home era.

Getting outside is always a great break. Plus, any time spent with my dogs is time well spent!

Kara Kaplan: Pre-pandemic, I found most of my free time was spent in a gym or yoga studio. This new workfrom-home norm gave me the opportunity to convert my garage into a gym and now I find myself enjoying a workout with the best workout buddies (my dogs) and some fresh air!

Serphim Sparrow: My favorite class in law school was Law, Science, and Litigation. We talked about how to know if experts are telling the truth, how to critique those experts, and what makes good evidence in general. We learned a lot of evidence the legal community just assumes to be solid is actually based on bad science. I ended up earning a CALI award in this class because I was so interested in the material that studying became fun.

Anne-Grace Reule: Outside of work, Anne-Grace enjoys cooking, experimenting with homemade cocktails, watching old films, and trying out the latest themed-peloton spin class.

Federal District Court (General Order 21-05) Phoenix and Tucson – Criminal and civil jury trails may resume as of March 2, 2021 Flagstaff Courthouse – jury trials suspended until further notice Yuma Courthouse – court proceedings involving fewer than 10 participants may resume Grand Jury proceedings in Phoenix and Tucson will resume March 22, 2021 in compliance with CDC guidelines Customer service counters in Phoenix, Tucson and Yuma to reopen May 3, 2021 Only one attorney and one client/representative shall sit a counsel table, socially distanced per CDC guidelines Jury members shall be seated in socially distanced manner per CDC guidelines Public seating in courtroom shall be socially distanced per CDC guidelines Maricopa County Superior Court (Administrative Order No. 2021-031) Effective March 15, 2021 criminal trials may resume utilizing 15 safely spaced courtrooms Effective April 1, 2021 civil jury trials may resume under a modified master calendar schedule as determined by the Civil Presiding Judge. The following procedures will be implemented: Jury selection will proceed in South Court Tower jury assembly area Only one jury trial to be held concurrently on each floor in the East Court Building Only one jury trial to be held concurrently in the Old Courthouse, Southeast Courthouse and Northeast Courthouse All prior health and safety protocols will remain in effect.

Pima County Superior Court (Administrative Order 2021-08) All jury trials remain suspended until March 31, 2021

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One Party Too Many: Liability of a Trailer Owner/Lessor BY: NIC MARTINO, ASSOCIATE, JONES, SKELTON & HOCHULI In personal injury cases involving tractor-trailers, there is an increasing trend for plaintiffs to name an owner/lessor of a vehicle or equipment, typically a trailer, as a named defendant. In Arizona, it is well established that in the absence of statutory liability or the owner’s independent negligence, an owner of a motor vehicle is not liable for the negligence of a borrower to whom he has relinquished control over the vehicle and who is using it exclusively for his own purposes. Schneider v. McAleer, 39 Ariz. 190, 4 P.2d 903 (1931); Peterson v.

Feldman, 7 Ariz.App. 75, 436 P.2d 169 (1968); Siverson v. Martori, 119 Ariz. 440, 443, 581 P.2d 285, 288 (App. 1978).

Likewise, as a general rule, the lessor of motor vehicle or trailer is not an appropriate party under the Graves Amendment (49 U.S.C.A. § 30106 (West)).

Under this statute:

“An owner of a motor vehicle that rents or leases the vehicle to a person (or an affiliate of the owner) shall not be liable under the law of any State or political subdivision thereof, by reason of being the owner of the vehicle (or an affiliate of the owner), for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of the rental or lease, if: (1) the owner (or an affiliate of the owner) is engaged in the trade or business of renting or leasing motor vehicles; and, (2) there is no negligence or criminal wrongdoing on the part of the owner (or an affiliate of the owner).”

Several courts and jurisdictions have specifically held the Graves Amendment preempts liability of the owner/lessor of a trailer. Zawatsky v. Barker Materials, Ltd., 22 Misc. 3d 1132(A), 881 N.Y.S.2d 367 (Sup. Ct. 2009); Klaybor v. Flowers Baking Co. of Batesville, LLC, 14-CV-095-SMY-DGW, 2014 WL 5029423, at *2 (S.D. Ill. Oct. 8, 2014).

If you see this issue arise in one of your cases, consider whether a responsive pleading or dispositive motion is appropriate to remove this potentially unnecessary party.

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COMMON DEFENSE | Spring 2021 | azadc.org

For the Defense Kevin Rindlisbacher, et al. v. Steinway, Inc., CV 18-1131-PHX-MTL (D. Ariz.)

Former Steinway-authorized dealer, Piano Showroom of Arizona, Inc., et.al., claimed Steinway was liable for constructive fraud and nondisclosure related to a dealer agreement entered into in 2010. The dealer agreement included mutually agreed upon sales goals. Plaintiffs claimed Steinway had an affirmative duty to disclose information they never requested: sales performance of the prior dealer that closed its Scottsdale store during the Great Recession. Plaintiffs claimed they were entitled to lost profits for more than 1,000 pianos they never sold, totaling over $8 million, as if they had met their sales goals. The Court granted summary judgment to Steinway on several issues, including that the claims were time-barred, no confidential relationship existed between Steinway and Plaintiffs, and lack of causation for damages.

Steinway was represented by Bruce Samuels and Heather Stanton of Lewis Roca Rothgerber Christie.

Christian Dichter & Sluga Obtains Full Dismissal For Insurer in Arizona CDS partners Alison Christian and Lindsey Grey successfully obtained a dismissal of all claims against an insurance company arising out of injuries sustained during a New Mexico car accident. The six plaintiffs, residents of California, were injured when their RV was hit by a commercial vehicle insured by the CDS’ client and driven by an Arizona resident. Plaintiffs brought direct claims against the insurance company in Arizona for negligence and negligent hiring, alleging such direct action was permitted by New Mexico law. Plaintiffs alleged duties imposed on insurers under the Motor Carrier Act of 1980 and direct-action rights under New Mexico’s Raskob authority. CDS argued Raskob is a procedural joinder rule and the insurance company had no role in hiring the allegedly negligent driver. In dismissing all claims against the insurer, MCSC Judge Stephens agreed with CDS’ arguments, holding “There is no legal authority for Plaintiffs’ position that Defendant, as a commercial liability insurer, had a duty to screen, review or participate in the hiring decisions of its insureds.”

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COMMON DEFENSE | Spring 2021 | azadc.org

Augspurger Komm Engineering, Inc. Avalon Health Economics Comprehensive Pain Management Cresa Forensic Experts of America Integrated Medical Evaluations J.S. Held LLC Kenrich Group

Klingler Group National Academy of Distinguished Neutrals, AZ Chapter Resolute Commercial Services Rimkus Consulting Group S-E-A Limited Subrosa Investigations Ward Group