Center for Auto Safety v. Goodyear Tire (CA1 11/26/19)

We’re not here to criticize lawyers and judges. Really, no. But these might have saved themselves a remand had any of them read the Arizona Rules of Civil Procedure.

Omitting the tiresome details, which are most of them, the parties settled this personal-injury case involving a tire (see what we did there?). CAS then intervened in order to open sealed records. The trial court had ordered them sealed after finding that they contained Goodyear trade secrets. The intervenor argued the public interest, that the tire was dangerous, that Goodyear and its lawyers were bad guys, etc. (The Court of Appeals does suggest that the lawyers’ actions were less than optimal. There has apparently been a fair amount of controversy involving these tires and, reading between the lines, there was some serious maneuvering going on here. Things happened that should raise eyebrows but the defense lawyers were not the only ones involved.) The trial court, relying on federal law cited by both parties, agreed. It found that “Goodyear’s interests did not outweigh the public’s need for access,” especially because Goodyear did not “particularize” how it would be harmed and because the information was “old.” The court authorized release of the records. Goodyear appealed.

It seems that of the six law firms involved at the trial-court level none managed to point the court to the applicable Arizona rule. (In fairness to the Arizona firms involved, its a fair bet that none of the lawyers doing the heavy lifting practice here. That’s an old problem with cases that involve national counsel; always double-check your out-of-state colleagues’ homework.)

The Court of Appeals reverses. By this time someone had mentioned Rule 5.4(c)(2). Documents can be sealed only if the court finds, in effect, that a need for a seal “overcomes the right of public access.” Under Rule 5.4(h), unsealing is governed by the same standards. But the trial court did not make a 5.4 analysis in ordering the unsealing. Instead, it used some sort of balancing test. It did, however, find that there were trade secrets involved — which the uniform act, adopted in Arizona, requires be kept secret. Age doesn’t vitiate them (which is a main reason why manufacturers keep stuff secret rather than patent everything). Their disclosure “necessarily implies that particularized harm exists because trade secrets derive their value from their secrecy.” “[A] court may expose trade secrets only in extraordinary circumstances, such as when the information has lost the independent economic value created by its secrecy, or when secrecy represents a significant threat to the public welfare.” An intervenor has a “heavy burden to show why the public needs access to confidential trade secrets.”

The court remands for a 5.4 analysis. But it puts its thumb on the scale by saying that since a summary of the secrets was already leaked “it is difficult to see what marginal benefit to the public would be achieved by unsealing the remaining trade secrets.”

Yes, it should probably have occurred to the trial court that you can’t just “balance” away a right to property, intellectual or otherwise. But in a strange land you depend on your guides — and the reality is that nowadays almost all civil law, not just its specialized branches, is off the edge of most trial judges’ maps. The rules, though, shouldn’t be.

(Opinion: CAS v. Goodyear)

Tucson Estates v. Estate of Jenkins (CA2 11/12/19)

The defendant didn’t care about this case; it made no appearance at any stage of it. The plaintiff cared mostly about attorney’s fees — but not those in this case, as only a couple of thousand dollars were at issue. The point, as the court suggests between the lines, was to set an easy-fee precedent for its future cases.

Plaintiff, a homeowners’ association, sued Defendant alleging violations of the CC&Rs. Plaintiff took default judgment and submitted a China Doll affidavit for its fees. The trial court awarded fees but reduced them, finding some of the requested fees excessive. Plaintiff appealed. A non-appearance on appeal is normally a confession of error but Plaintiff wanted a precedent set instead, so that’s what the court did: it reviewed the issue and published but set a precedent opposite to what Plaintiff wanted.

Plaintiff argued that the trial court’s ability to reduce the amount evidenced by a China Doll affidavit is limited when there is no opposition to it. Although that sounds dangerous considering the routine effronteries of China Doll affidavits there is decent support for it in some of the language of the precedent, including China Doll itself. The court has to step around that; not all of its steps are equally deft.

China Doll “authorizes a trial court to adjust a fee award ‘upon the presentation of an opposing affidavit.'” But it didn’t involve a situation where no one was available to file one.

McDowell (App. 2007) said that a China Doll affidavit establishes a “prima facie entitlement to fees in the amount requested.” McDowell was an HOA case involving contractual fees. This opinion distinguishes McDowell on the grounds that the CC&Rs in that case gave the HOA a claim to “all” fees whereas Tucson Estates’ give it a claim to “reasonable” fees.

Which leads the court to a conclusion: in order to ensure that the fee awarded is reasonable the trial court has broad discretion to review the fee request despite lack of an opposition. Otherwise, the intent of the parties to the contract could be frustrated.

This is good policy, the court tells us, because limiting the trial court “would incentivize some prevailing parties to overreach in their fee applications.” No, really?

(The irony is that this plaintiff didn’t, at least not much. Some of the items criticized by the trial court seem a bit overstated but others certainly don’t.)

But wait a minute. Is the court really suggesting that its rule doesn’t apply if the fee agreement says “all”? Can a default judgment include an unreasonable fee if the contract is worded correctly? What about the rule that that’s unethical? Isn’t it also against public policy? And if it is indeed against public policy, what is the legal difference between a contract that says “all” and a contract that says “reasonable”?

(Opinion: Tucson Estates Property Owners Association vs. Estate of Jenkins)

Kellin v. Lynch/AmericanWest (CA1 9/10/19)

It used to be that supersedeas bonds were obscure, mentioned only by a brief and vague rule, governed by common law and common sense. Few lawyers knew much about them and there weren’t many cases. Then various interests weaponized them and the legislature had to step in. Now we have a statute (12-2108), and a lengthy rule (ARCAP 7), and various changes in both from time to time. The result is that few lawyers know much about them but this is the tenth supersedeas-bond case we’ve blogged.

This special action is about supersedeas bonds on appeal of garnishment judgments.

Its a small piece of long, convoluted litigation spanning several appeals in which debtors appear to be using every conceivable legal maneuver to avoid paying an out-of-state judgment. The court recounts its history at length. This seems unnecessary — and, though not long by CA1 standards, the opinion would indeed have been better at half the length — but in the end there turns out to be a reason for it.

Creditor garnished two of Debtor’s bank accounts; one held about $70,000 and the other about $400,000. Over Debtor’s objection Creditor took garnishment judgments. Debtor appealed them. She asked the trial court to waive supersedeas bonds under Rule 7(a)(6), the funds in the accounts being their own security.  Creditor argued that bonds were required and appropriate under Rules 7(a)(4) and 7(a)(9). After argument the trial court, citing only Rule “7”, ordered a $50,000 bond for each garnishment judgment. Debtor took this special action.

The Court of Appeals accepted jurisdiction, for reasons mentioned in context below. The record doesn’t know the reasons for the trial court’s order, Debtor having not included in it a transcript of the relevant hearing. So the order will be affirmed if it could have been correct for any reason.

The court now discusses rules 7(a)(4) and 7(a)(9) at some length before revealing that the discussion is unnecessary because those rules don’t apply any more. The new rule, 7(a)(6), has applied since last January. (This rule’s novelty is the court’s reason for accepting special action. That really could have gone the other way; nothing here cries out for immediate interpretation.)

So, Debtor is right about which rule applies. It allows a court to protect the status quo and to protect the adverse party against loss potentially caused by the stay.  The court agrees with Debtor that having the funds protected in the bank accounts protects the status quo. So, since 7(a)(6) — unlike other parts of the rule — is permissive, it would have allowed the trial court to waive the bonds. But the court didn’t and the question is whether the rule allows that.

Creditor argued that bonds were appropriate to protect it from the costs and fees of the garnishment appeals. For some reason the court seems to decide that whether costs and fees can be awarded on a garnishment appeal is an issue that it must analyze. 12-1580E specifically answers the question but the court takes most of a page to get around to saying so. The statute allows costs and fees against the debtor if the court finds that the debtor objected to the writ in order to delay or harass the creditor.

The trial court’s order made no such finding. In most contexts that step isn’t skippable. But the opinion, having suggested that there was a basis for a finding — now you know why it explained the history of the litigation — seems to feel that that’s good enough in this situation. It doesn’t address the issue specifically.

So, jurisdiction accepted but relief denied.

(Opinion: Kellin v. Lynch/AmericanWest)