With 2019 now well underway, it is worth taking a few minutes to discuss current Arizona litigation trends, as well as those that are expected to continue for the remainder of the year and into next.
Parties are more willing than in past years to take steps early in disputes to resolve their differences. Those early settlement efforts include mediations with third-party neutrals, direct negotiations between the parties’ decision makers, and settlement offers sent by counsel. We anticipate that this trend will continue. Many clients have learned from past experiences that protracted litigation is expensive and results are uncertain. Consequently, clients have analyzed their risk-reward positions in a case, and the corresponding benefits of early settlement, by taking a holistic view of litigation including by present-valuing the expense that is otherwise spread out over a period of years.
Additionally, the volatility of the markets and uncertainty associated with the economy suggest that there will be an increase in payment defaults and creditor-debtor litigation. Economic downturns invariably spawn this type of litigation. In Arizona, this trend may lead to increased foreclosures (including through the expedited process that occurs in real property foreclosures involving deeds of trust), commercial and residential evictions, and bankruptcy cases. Whether a downturn occurs, and if so to what degree, remains to be seen. Relatedly, lenders and their counsel are increasingly asking courts to appoint receivers to take possession of loan collateral (i.e., away from debtors) after the filing of a lawsuit and as an interim step before the completion of a foreclosure.
Also, we expect that courts will continue the trend of innovative programs designed to shorten the length of lawsuits and to make the work and expense associated with a case proportional to the needs of the case. Arizona’s trial courts now have rules which scale formal discovery to the amount claimed in the case, and which take into account the amount at issue and the parties’ relative resources. Federal courts have taken a similar approach. In that regard, the United States District Court for the District of Arizona continues to implement and refine a Mandatory Initial Discovery Pilot Project. This pilot project is noteworthy for, among other things, its attempt to speed up the progress of cases and to limit litigation expenses by requiring the parties to disclose relevant information for each sides’ claims and defenses at the beginning of a case. The effectiveness of this approach, and whether the pilot program will become permanent, remains to be seen.
Last, we are seeing an increase in consumer-based class actions being filed in Arizona, as well intensive multi-district litigation whereby multiple cases from various other states are consolidated in front of a federal judge in Arizona. The increase in laws and rules over the past several years which regulate how businesses must treat consumers and their data — including privacy laws, financial disclosure requirements, and restrictions on the means and methods of communicating with consumers — have contributed to this trend.
John M. O’Neal is chair of the Commercial Litigation Group at Quarles & Brady in Phoenix. Benjamin C. Nielsen is an associate in the group.