The moral being that its better to follow the rules in the first place than to make up arguments about them later.

Though it has been made more complicated over the years, procedure after compulsory arbitration isn’t rocket science. The arbitrator makes a decision; the winner then prepares a form of award and, if there’s no appeal, can get it reduced to judgment. But Phillips tried to skip a step: after winning an arbitration he had the arbitrator sign something he called a “judgment.” Ten months later, when he tried to enforce his “judgment,” Garcia moved to dismiss; under Rule 76d the court “shall” do that if the award isn’t reduced to judgment in 120 days. The trial court denied the motion.

Which creates an interesting procedural situation. Garcia of course argued that the “judgment” was invalid. But if there’s no judgment, how can there be an appeal? As the Court of Appeals points out, the mere denial of a motion to dismiss is interlocutory. It solves the problem by using its discretion to treat the “appeal” as a special action.

Addressing the merits, it then explains the conclusion it has already signaled, viz., that Phillip’s “judgment” was not, in its words, a “true judgment.” (There was, of course, either a judgment or there wasn’t; “true judgment” is redundant and potentially confusing.) It wasn’t a judgment because under Rule 58 only judges and commissioners can issue those.

Phillips argued that since Rule 76 actually says that what’s needed is an “award or other final decision” he had an adequate “final decision” in the form of a “mislabeled award.” He had a case (Bittner 1995) holding in effect that a mislabeled award can still be an award. But the issue here is whether a mislabeled award can be a judgment.

Phillips also argued 12-133E: “The award has the effect of a judgment on the parties unless reversed on appeal.” The court “harmonizes” the relationship between Rule 76 and 12-133E by deciding that the rule requires an affirmative judicial act – the entry of a “true judgment” – and that this “advances the intent” of the statute and is consistent with the statute because it doesn’t render any part of it meaningless. The court does not explain the remaining meaning, if any, of “the award has the effect of a judgment.” The court’s analysis here is conclusory, the sort of thing one reads expecting eventually to reach the meat of and never does. The conclusion is arguably correct but requires wading farther into the deep water of court rule-procedural statute relationships that the court seems willing to go.

The court then adds that in 2007 the present version of the rule replaced older language that was (though the court doesn’t put it this way) much more consistent with the statute. That indicates, the court concludes, that the Supreme Court intended an “affirmative act.” While correct, that begs the question of why the Supreme Court’s intent is more important than the Legislature’s (for purposes of this analysis it may indeed be but that isn’t something that should just go without saying).

The court remands for dismissal without prejudice, that being the flavor of dismissal both parties indicated at oral argument would be warranted if Garcia prevailed.

(link to opinion)

This case answers the question Lund v. Myers left undecided – whether moving to disqualify a firm that used inadvertently-produced privileged documents waives the privilege to them – and discusses the basis for disqualification.

This is actually the same case, up for yet another appeal after the Supreme Court remanded to the trial court. For some reason this opinion doesn’t say that (though you can catch it if you know the first case and read very carefully between a few lines), preferring to recite the facts at length despite being the third opinion to do so. 

Briefly, then: The context is a brother-v.-sister conservatorship controversy that has thrashed around our courts for several years, involving a varying cast of lawyers and fueled by the millions of grandpa Disney’s dollars that they’re really fighting about. Law Firm A had represented brother. Down the line a few years, Firm B subpoenaed its file. Firm A, for some reason thinking that B was taking over as counsel for its client, responded by sending B its whole file. Turns out that brother did indeed have another lawyer but it wasn’t Firm B, which instead represented sister. When brother’s lawyer found out about this he notified Firm B that parts of the file were privileged. But when that discussion lapsed Firm B disclosed the file to all parties and made some use of it. Brother moved to disqualify Firm B. That resulted in Lund, which is mostly about the procedure for getting a ruling on the documents. On remand the trail court disqualified Firm B, from which the case comes up again.

The Court of Appeals’ opinion in Lund had said that brother did not waive the privilege by moving to disqualify but the Supreme Court declined to comment, deeming that an issue for the trial court. The Court of Appeals now holds that no, brother did not waive the privilege. “[A] motion to disqualify neither establishes a cause of action nor defeats a claim of liability; it is not a claim or affirmative defense and does not have any apparent direct impact upon the merits of the underlying litigation. Reliance upon privileged information in support of a motion to disqualify does not place that information ‘at issue relevant to the case,’ as the phrase is contemplated under Arizona law, and does not impliedly waive privilege as to the opposing party.”  Since these are legal, not factual, conclusions it isn’t clear why the Supreme Court preferred not to address them.

As for the motion to disqualify Firm B, “when faced with a motion to disqualify premised upon the abuse of privileged information disclosed inadvertently, the trial court must: (1) determine whether the documents at issue are in fact privileged; (2) determine whether the receiving party exercised an unfair advantage over the documents, such as reviewing, copying, or distributing them in violation of Rule 26.1(f)(2) and ER 4.4(b); and (3) review the privileged information objectively, in light of the context of the case, to determine whether the receiving party possibly gained an unfair tactical advantage [proof of actual advantage is not required] . . .” The court can consider in mitigation whether the information was significant or already known and should consider alternatives to disqualification, which is disfavored. 

On this basis the trial court was within its discretion to disqualify Firm B.

[link to opinion]

Explaining a procedural requirement for a bad-faith claim in workers’ compensation.

Merkens received workers compensation benefits after inhaling a toxic substance at work. An IME eventually said she wasn’t harmed so Federal terminated the benefits. She sued it for breach of contract and bad faith. Federal moved for summary judgment, arguing that she first had to challenge its decision before the Industrial Commission. The Superior Court granted the motion; she appealed. The Court of Appeals affirms.

The court first reviews the history of workers’-compensation bad faith. “To date, the Arizona cases addressing a bad faith claim in the workers’ compensation context have involved injured workers who had or were pursuing a compensability determination before the Industrial Commission.” “Here, however, Merkens did not seek a determination from the Industrial Commission that she was entitled to continuing benefits. Instead, she claims she is entitled, in her superior court action, to recover the unpaid compensation and medical benefits related to her injury caused by Federal’s termination of her benefits, as well as related tort damages.”

And that’s why her claim fails. “Even if we assume [bad faith], the finder of fact would have to make a compensability determination to find that Federal unreasonably terminated Merken’s benefits.” But “the Industrial Commission has the exclusive jurisdiction to determine whether the injured worker is entitled to benefits and the amount of those benefits.” Franks (1985), allowing workers’-compensation bad faith, did not – and could not because its constitutional law – change that.

The court also affirms the trial court’s denial of fees, and itself denies costs, on hardship grounds. That would be unremarkable except that the court sees fit to throw in that “the hardship [was] caused by Federal’s decision.” So Federal “caused” Merken to be poor by not paying her money she has shown no right to? And if she did have workers’-comp benefits, that would be enough to defeat a claim of hardship? We wonder what the court thinks the quoted phrase adds to the opinion.

(link to opinion)