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1 18 83 34 4E EA AS ST TB BA AS SE ELLIIN NE ER RO OA AD D T ZO ON NA A8 85 52 28 83 3 TE EM MP PE E,, A AR RIIZ FACSIMILE 480.820.1340 TFacciola@arizlaw.biz KIMBERLY ECKERT (602)-697-8469

TAMRA FACCIOLA (602) 740 - 4372

August 31, 2010 Mr. Barry Uhrman Jones Skelton & Hochuli, P.C. 2901 N. Central Ave. Suite 800 Phoenix, AZ 85012 RE:

McDonald adv. CCA

CV 09-781 PHX JAT

Dear Barry: As promised, I am providing to you what we feel is a thorough summary of the current state of litigation facing (or potentially facing) your client, CCA. This letter is offered as an attempt at effectuating a settlement and is to be used for only that purpose. I hope that, after a review of our letter, your client will clearly see the benefits of coming to a resolution rather than continuing to engage in protracted litigation. Continuing with litigation, frankly, does not appear to benefit any one. I am hard-pressed to conceive of any positive outcomes should CCA continue to litigate Mr. McDonald’s case and the others that are certain to follow should a resolution not be achieved. As we all are keenly aware, Mr. McDonald’s lawsuit against CCA is pending in Arizona federal district court. Coincidentally, over the past couple of months, I have had the opportunity to: 1) consult individually with other CCA former employees who allege termination in violation of the American’s With Disabilities Act and 2) have also become aware of two employment discrimination lawsuits recently filed in Arizona district court, at least one of them being filed under the ADA. Given the allegations of the recently terminated employees, combined with this most recently filed ADA lawsuit, I firmly believe that there is a very strong possibility that CCA could face a class action lawsuit in Arizona, similar to recent filings in other parts of the country.


Because of the anticipated changes in the application of the ADA due to the recent amendments, and the number of other plaintiffs or potential plaintiffs alleging violation of the ADA by CCA, we have determined that, if CCA makes it clear that resolution is not a goal, it is our obligation to make the court aware of these similarly situated cases. Undoubtedly, my client, Mr. McDonald, his case, and its fair resolution, are my primary concern. However, if a fair resolution cannot be achieved, and Mr. McDonald’s case must proceed, we feel it would be only proper to give the court notice of these other similar cases and to allow the court the opportunity to review my client’s case in light of the others. If the court finds it proper, the court could then certify a class action to help effectuate judicial economy. By doing so, the court would be able to consolidate what could end up being a large number of ADA claims against CCA in Arizona district court. The foregoing not withstanding, however, I also realize that in any given litigation situation, there are real parties with real interests. With that in mind, I believe it is appropriate to provide the parties the opportunity to present these litigation issues before a federal magistrate or settlement judge (or private mediator if your client prefers) to help them achieve some resolution before litigation escalates to a point of no return. The possibility of resolving not only McDonald now, but the other cases we are aware of can only benefit CCA. In the long run, should resolution not be achieved, the consequences and potential fall-out are much greater than merely CCA winning or losing McDonald, (or the other cases, for that matter), on their merits. I am certain you have advised your client of the hard “costs” of continued litigation with a number of plaintiffs – the costs and attorney fees involved. However, I am not sure that you or your client fully grasp the entire potential negative effects that will result from a failure to achieve a resolution. The fact is, whether or not a class action is certified by the court, if the parties can’t come to resolution, the negative potential result for CCA is overwhelming. Of course, if CCA is willing to take the risk of a potential class action being certified, with or without McDonald included in the class, the negative effects will be enormous. We do not at this moment, fully know how many other plaintiffs are out there. As I am sure your client is aware, if a class is certified, it will provide CCA’s competitors the opportunity to capitalize on the negative publicity that will accompany a multi-party employment discrimination lawsuit against CCA. The competitors will certainly make a request to the proper governmental awarding entity, seeking that CCA’s contracts with the state, at a minimum, undergo an audit. Such actions leave your client open to the very real likelihood that CCA’s contracts could be in jeopardy of being lost here in Arizona.

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To-date, one California law firm has expressed interest, via email, to Mr. McDonald concerning the possible class action lawsuit. Should that occur, whether or not Mr. McDonald’s case is made a part of the class, such a firm making an association with a class action here in Arizona would likely not bode well for CCA’s interests both here and across the rest of the country. In the event the court would determine not to certify a class, the negative fall-out for CCA is still great. Following is what we believe to be a realistic summarization of the consequences of failure to achieve resolution, with or without a class certification: McDonald 

If CCA’s second MSJ is granted – Mr. McDonald believes strongly that the ADA was violated and is resolved to file an appeal to the 9th circuit

If MSJ not granted a jury trial will ensue

Either scenario has tremendous negative costs associated: 

Enormous expense spent on costs and attorney fees, continued negative publicity and media exposure, scrutiny of CCA’s federal contracts, McDonald has expressed his willingness to associate with CCA competitors as a consultant (including GEO group)

Morgan 

Complaint has requested a jury trial

CCA receives no assurances it will prevail on summary judgment or win a jury trial

Costs (Similar to McDonald - that litigation has been ongoing for almost 3 years). A conservative estimate of attorney fees: 

Working on this case for just 20 hours per week at $350/hour for half a year (27 weeks) = $189,000 per year over the next three years if this case proceeds along the same path as McDonald, CCA stands to spend close to $570,000.00 (a conservative estimate of just attorney fees) The above cost does not include a jury trial

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Additional costs for a jury trial likely exceed $150,000.00

The facts of Morgan are, in some respects, even more egregious than in McDonald. The negative publicity and negative media coverage, scrutiny of federal contracts, and association with competitors as consultant (including GEO group), all remain the same as they do in McDonald

Martinez 

Same negative effects will ensue as described in Morgan 

over the next three years if this case proceeds along the same path as McDonald, CCA stands to spend close to $570,000.00 on just this case (again, a conservative estimate of just attorney fees)

CCA receives no assurances it will prevail on summary judgment or win a jury trial

Additional costs for a jury trial likely exceed $150,000.00

Erkkinen Another former employee, Ruby Erkkinen, also recently filed a lawsuit against CCA. Erkinnen v. CCA, No. 2:2010-CV-00182 (D. Ariz. filed Jan. 27, 2010). The lawsuit asserts a violation of and a cause of action under the ADA. While this firm does not represent this party, the costs associated with this case (should a class not be certified) will be the same as the others above: 

Complaint has requested a jury trial

CCA receives no assurances it will prevail on summary judgment or win a jury trial

Costs (Similar to McDonald - that litigation has been ongoing for almost 3 years). A conservative estimate of attorney fees: 

Working just 20 hours per week at $350/hour for half a year (27 weeks) = $189,000 per year over the next three years if this case proceeds along the same path as McDonald, CCA stands to spend close to $570,000.00 (conservative estimate of attorney fees)

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The above cost does not include a jury trial

Additional costs for a jury trial likely exceed $150,000.00

These three cases – Morgan, Martinez and Erkkinen (if a class is not certified) in individual litigation, will cost CCA more than $1.7 million dollars ($1,700,000.00) in attorney fees alone to litigate to the same point McDonald is currently.

Atiba-Davies Another former employee, Yvonne Atiba-Davies, also recently filed a lawsuit against CCA. Atiba-Davies v. CCA, No. 2:2010-CV-01683 (D. Ariz. Filed Aug. 10, 2010). The lawsuit asserts a violation of and a cause of action under Title VII of the United States Civil Rights act of 1964. While this firm does not represent this party, should a class not be certified, our interest in AtibaDavies and other individuals’ whom assert employment discrimination claims against CCA will be paramount. Costs associated with this case will be very similar to those outlined in the cases above. Other potential plaintiffs Counsel has recently become aware of three other potential plaintiffs who either have a charge pending with the EEOC or are in the process of preparing to file a charge alleging CCA’s violations of the ADA. Lawsuits filed on those individuals’ behalf would also assert causes of action under the ADA. Associated costs would be the same as listed above. All told, even without a class action and other plaintiffs coming forward, CCA stands to spend in excess of $3 million dollars, and perhaps as much as $7 million or more, on litigation filed or to be filed soon, over the course of several years. CCA could end up fighting these lawsuits and still lose its contracts with the State of Arizona. For all the foregoing reasons, entering into settlement negotiations appears to be a win-win proposition for all involved, but seems even more sensible for CCA. Agreeing to resolve these matters can help CCA in many ways, not the least of which is SAVING a few million dollars. My client is prepared to enter into good faith settlement negotiations and if a resolution can be achieved, Mr. McDonald will dismiss his pending lawsuit with prejudice and agree to confidentiality. Additionally, and presumably important to CCA, my partner and I will NOT offer any further consultation to nor represent, officially or unofficially, any other former or current CCA employees in litigation or other legal proceedings against CCA. Upon offer and acceptance of a formal settlement, I would agree

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to execute a document to that effect and make such document a part of the final settlement agreement. I look forward to working with you to fully and finally resolve this matter. Very truly yours,

Tamra Facciola TF/hs

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Offer of Settlement  

Letter of Settlement dated August 10, 2010 to Jones Skelton and Hochuli

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