In one of the first jury trials in Arizona involving the legal cannabis industry, Jeff Matura, Kevin Barrett, and Melissa England represented investors and the owners and operators of a licensed cultivation facility. They alleged breach of contract and improper interference with contract claims against outsiders who engaged in a hostile takeover of a licensed cannabis entity.
The trial spanned three weeks. The jury then deliberated less than two hours and returned a unanimous verdict for the firm's clients, which totaled more than $1.7 million. The result is considered one of the first successful verdicts in the cannabis industry.
For more information on this trial or the firm's cannabis work, please contact Jeff Matura.
Jeff matura and melanie weigand prevail in appeal to the arizona court of appeals regarding cannabis dispute
Jeff Matura and Melanie Weigand successfully represented a licensed cannabis company in an appeal before the Arizona Court of Appeals.
A third-party cultivation operator filed a lawsuit against a licensed cannabis company for breach of contract, breach of implied covenant of good faith and fair dealing, conversion, and unjust enrichment. The trial court dismissed the lawsuit on a technicality, which was subject to reversal. The third-party cultivation operator therefore filed an appeal to the Arizona Court of Appeals. Mr. Matura and Ms. Weigand were brought in to handle the appeal due to their specialized knowledge and experience in the cannabis industry.
Mr. Matura and Ms. Weigand handled all aspects of the appeal, including the briefing and arguments submitted to the Arizona Court of Appeals. After considering the issues, the Arizona Court of Appeals issued a decision to uphold the trial court's dismissal. The Arizona Court of Appeals also granted Mr. Matura's and Ms. Weigand's request that it order the third-party cultivation operator to reimburse the licensed cannabis company for all attorneys' fees and legal costs it incurred. The Arizona Court of Appeals' decision was therefore a complete victory for the licensed cannabis company.
If you have any questions about this dispute or the firm's work in the cannabis industry, please contact Jeff Matura or Melanie Weigand.
Jeff Matura and Amanda Taylor prevail on appeal to the ninth circuit court of appeals regarding disability insurance dispute
Jeff Matura and Amanda Taylor represented an international disability insurance company in a dispute with a policyholder. The policyholder filed a lawsuit alleging the insurance company wrongfully denied her claim for disability benefits. The United States District Court agreed with Mr. Matura's and Ms. Taylor's arguments that the insurance company's denial was correct and granted summary judgment in favor of Mr. Matura's and Ms. Taylor's client.
The policyholder appealed the District Court's decision to the Ninth Circuit Court Appeals. After full briefing and oral argument, the Ninth Circuit Court of Appeals issued a decision that affirmed the District Court's decision in every respect. The Ninth Circuit Court of Appeals' decision was therefore a complete victory for Mr. Matura's and Ms. Taylor's client.
If you would like to learn more about this dispute or the firm's representation of insurance companies, please contact Jeff Matura.
We are proud to announce that Melissa England and Amanda Taylor have been elected partners at Barrett | Matura. Melissa represents local and national companies involved in the legal cannabis industry, along with municipal governments and insurance companies in a variety of disputes. Amanda has extensive experience handling complex insurance coverage and bad faith disputes, employment and discrimination claims, and general civil litigation. Both Melissa and Amanda have received the Rising Stars designation from Super Lawyers. Congratulations to Melissa and Amanda - we are excited to have them join the partnership at Barrett | Matura!
Attorneys Jeff Matura and Amanda Taylor assisted with an argument presented to the United States Supreme Court regarding whether the Age Discrimination in Employment Act ("ADEA") applies to public employers that have less than 20 employees. The argument was presented to the United States Supreme Court on the first day of its Fall 2018 session.
The case involves a lawsuit that two former employees filed against the Mount Lemmon Fire District. The trial court dismissed the lawsuit after agreeing with Mr. Matura and Ms. Taylor's arguments that the ADEA does not apply because the Fire District had less than 20 employees. The Ninth Circuit reversed the trial court's decision and concluded that the 20-employee threshhold only applies to private employers, but not to public employers such as the Fire District. The Ninth Circuit's decision was contrary to the decision of every other Circuit Court that had analyzed the same issue.
Mr. Matura and Ms. Taylor then filed a petition to the United States Supreme Court, which agreed to hear the issue and resolve the Circuit Court split that existed following the Ninth Circuit's decision. Mr. Matura and Ms. Taylor assisted with the arguments to the United States Supreme Court and requested that the Court conclude that the 20-employee threshhold within the ADEA applies to both public and private employers. The United States Supreme Court took the matter under advisement and is expected to issue a ruling within the next several months.
For more information on this issue, please contact Mr. Matura.
The Arizona Court of Appeals, in their recent ruling in State v. Jones, No. 1 CA-CR 16-0703 has held that “hashish” is not covered as “marijuana” under the Arizona Medical Marijuana Act (“AMMA”). Hashish is a resin extracted from marijuana plant. The case arose from the criminal conviction of Rodney Jones in March 2013, when Jones was found in possession of a jar containing .05 ounces of hashish. Jones was a registered qualifying patient under the AMMA. Jones was indicted on one count each of possession of the drug cannabis and possession of drug paraphernalia- the jar containing the cannabis. Jones moved to dismiss the charges, arguing that his valid AMMA card provided an absolute defense. The Superior Court denied his motion, convicting Jones in September 2016 to 3.5 years’ imprisonment.
The AMMA defines marijuana as the “dried flowers of the marijuana plant, and any mixture or preparation thereof…”  (Emphasis added). Lawyers for Jones argued that hashish is a preparation of the marijuana plant, and thus allowed under the AMMA. The Court of Appeals disagreed and sided with the State, finding that hashish is not a “preparation” of the marijuana plant, but an extracted resin, and thus distinct from marijuana allowed under the AMMA. The Court cited to a 1978 case, State v. Floyd, which notes the “great potency” of hashish, rendering it “susceptible to serious and extensive abuse.”
Judge Kenton Jones wrote a dissenting opinion, arguing that the AMMA’s definition of marijuana “clearly encompasses all forms of the marijuana plant, including its resin” and advocated for an interpretation that is consistent with the “spirit and purpose of the AMMA.”
This case will no doubt have wide implications on the medical marijuana industry. It’s estimated that 40 percent of dispensary sales are made up of “concentrates” such as hashish and resins.
If you have questions regarding this recent ruling, contact Jeff Matura, Tabitha Myers, or Melissa England at 602-792-5705.
Learn more about the Barrett | Matura Cannabis Law Practice Group.
You can read the Court's Full Decision here.
 A.R.S. Sec. 36-2801(15).
 120 Ariz. 358, 360 (App. 1978)
Jeffrey Matura and Melissa England joined the Arizona Cannabis Bar Association, whose mission is to educate lawyers and the public on cannabis law and to serve the needs of responsible cannabis legislation and regulation. Ms. England was also elected to serve as the secretary of the Association and will help to coordinate its future events and community outreach programs.
MORE ABOUT JEFF MATURA:
Jeff Matura is a founding shareholder of Barrett | Matura. His practice emphasizes commercial litigation, municipal and governmental law, and cannabis law. He is AV-Rated by Martindale-Hubbell, which is the highest peer-review rating an individual lawyer can receive. He has also received the Rising Stars designation by Super Lawyers. Contact Jeff at 602-792-5721 or email him at email@example.com
MORE ABOUT MELISSA ENGLAND:
Melissa England is a senior associate with Barrett | Matura and her practice encompasses a variety of areas including insurance law, construction law, commercial litigation, municipal and governmental law, and cannabis law. She has received the Rising Star designation by Super Lawyers and has been named as one of Arizona’s Finest Lawyers. Contact Melissa 602-792-5707 or email her at firstname.lastname@example.org.
Melissa England presented to other lawyers and industry experts regarding the enforceability of contracts involving cannabis at the Arizona State University Sandra Day O’Connor College of Law in connection with its presentation on Arizona’s War on Drugs: Cannabis Law in Arizona. Ms. England provided an in-depth examination of the legal and practical problems that individuals and companies encounter when they attempt to enforce contracts that involve cannabis and cannabis-related issues.
Included in the presentation was a discussion of insurance coverage for patients and cannabis businesses in states that have approved medical or recreational cannabis use. Ms. England also discussed how individuals and companies can avoid common pitfalls when trying to enforce contracts in the cannabis industry.
Learn more about Melissa England, or contact Melissa at email@example.com
Hunton v. American Zurich Ins. Co. – Expert’s Testimony May Lead to Implied Waiver of Attorney-Client Privilege
The Arizona District Court recently found an implied waiver of the attorney-client privilege based on the testimony of the insurer’s own bad faith expert.
In Hunton v. American Zurich Ins. Co., 2017 WL 3712445 (D. Ariz. 2017), the insured brought a bad faith suit against the carrier for the handling of her worker’s compensation claim. At issue was the failure of the carrier to accept the claim for several months even after it had obtained an IME report confirming the injury was the direct result of work activity. The carrier’s expert ultimately opined there was no bad faith on the part of the carrier. However, during his deposition, the expert testified that he did not know why the adjuster delayed and then ultimately accepted the claim and speculated that it was probably the result of “a series of emails” between her and her counsel. He further stated that he assumed she “still had doubts” after the IME report and suspected it was due to “a discussion she had with counsel the day she accepted it.” Those emails, of course, had been redacted, which led to a motion to compel their production.
Although the carrier argued that it was not raising a defense of “subjective” reasonableness and, therefore, the adjuster’s state of mind was not relevant, the Court found that through the testimony of the carrier’s own expert, it had expressly put “the subjective beliefs of the claims adjuster directly at issue.” As a result, the carrier impliedly waived the attorney-client privilege with respect to any communications regarding the ultimate coverage determination and decision to accept the claim. The Court relied on the principle that if the adjuster incorporated the advice or judgment of its own coverage counsel in making its decision, it could not “shield” those communications.
Carriers should be cautioned that if they do attempt to rely on any advice of counsel, a court may find an implied waiver of the privilege, even though that carrier does not expressly raise an “advice of counsel” defense. Therefore, the testimony of an adjuster is usually critical in this regard. If that testimony raises any issue with regard to the subjective beliefs of the adjuster or his or her reliance on communications from counsel, a court will likely find such a waiver. This case further confirms that a court may find such a waiver even if the testimony comes from the carrier’s expert instead of the adjuster. As a result, carriers and their counsel should ensure that their experts do not offer such testimony or speculate that certain actions or decisions may have been based on communications or advice from their counsel. Otherwise, they may inadvertently waive the attorney-client privilege with regard to any such communications.
Learn more about the Barrett | Matura Insurance Litigation and Coverage Practice Group.
Contact Jennifer Bahling or Kevin Barrett for more information.
Chukly v. American Family – Insured Can Prevent Removal to Federal Court by Adding Individual Adjuster as a Defendant
Insurers routinely remove breach of contract and bad faith lawsuits to Federal Court, a forum typically thought of as more favorable. The Arizona District Court recently confirmed that an insured, by adding a separate claim against an individual adjuster (or other employee of the insurer) could defeat the diversity requirement, allowing the case to be sent back to state court.
In Chukly v. American Family Ins. Co., 2017 WL 3262541 (D. Ariz. 2017), the insureds sued their homeowner’s insurer for bad faith arising out of a claim for storm damage to their home. They also added a claim against the individual adjuster and the claims manager for “aiding and abetting” the alleged bad faith handling of the claim. Because the individual employees were Arizona residents (as were the insureds), they moved to remand the case based on a lack of complete diversity. The Court noted that it did not have jurisdiction unless there was complete diversity among all parties, unless one of those parties was “fraudulently joined” simply to defeat the diversity requirement. Fraudulent joinder occurs if the claim “fails to state a cause of action” against a particular defendant and the failure is “obvious.”
The Court pointed out that Arizona courts, both state and federal, have reached “diverging outcomes” in terms of the validity of an “aiding and abetting” claim against an individual claims adjuster or other such employee. Some have allowed such a claim. Some courts have found that there is no basis for such a claim unless that adjuster actually engaged in a “separate tortious act” of his own. As a result, the Court resolved this ambiguity in the law in favor of the insureds and remanded the case back to state court.
This may not create a blanket rule, as each case will depend on the claims raised in that particular lawsuit and the merits of those claims. However, this ruling does potentially allow more insureds to defeat removal to Federal Court simply by adding this type of claim against individual adjusters and other employees if they are non-diverse. Of course, if those claims are ultimately dismissed, insurers may have the opportunity to remove the case back to Federal Court at that time.
Learn more about the Barrett | Matura Insurance Litigation and Coverage Practice Group.
Contact Jennifer Bahling or Kevin Barrett for more information.