FACTUAL AND LEGAL CONTEXT OF LAWSUIT SETTLEMENTS (Wilcox, Mundell, Schuerman)

I.

Federal Causes of Action That Survived Motions to Dismiss Judge Wakes Order dated April 9, 2012 granted the defense Motions to Dismiss on numerous counts of the plaintiffs Complaints, but denied the Motions on a multitude of federal counts asserting claims under 42 U.S.C. 1983. These surviving federal counts (in addition to numerous surviving state law counts) include malicious prosecution, abuse of process, defamation, and unconstitutional retaliatory conduct claims against former County Attorney Andrew Thomas, former MCSO Chief Deputy David Hendershott and Sheriff Arpaio, and vicarious municipal liability counts against Maricopa County. The survival of these federal claims under 1983 is significant because these claims exposed the County to potentially very substantial adverse awards for the plaintiffs attorneys fees, even if the jury were to award the plaintiffs nominal damages.

II.

Exposure to Adverse Attorneys Fees Awards Under 1983 law, a defendant remains exposed to potentially very substantial adverse awards of the plaintiffs attorneys fees, even if the jury agrees with the defendant about the nominal damages allegedly suffered by the plaintiff. Given the fact that there were numerous plaintiff attorneys involved in this litigation, many with a billing rate far in excess of the maximum $250/hour contract rate charged by defense counsel, with some charging in excess of $500/hour, the County faced the threat of multi-million dollar adverse attorneys fees awards, even if the jury awarded these three plaintiffs a few thousand dollars each.

III.

Expense of Continued Litigation Over the past fifteen months of defending these lawsuits, the County has averaged approximately $88,000/month in defense expenses, due in large part to the necessary involvement of six different defense counsel for all the named defendants. This number is significant because these cases were dormant for a substantial part of this period of time while the parties awaited the Courts ruling on the pending Motions to Dismiss, and because this average expense was incurred for what arguably may considered to be minor litigation activity, as opposed to the more weighty and time consuming litigation activity required for depositions and trial work. Given this financial reality, the settlement of the Mundell and Schuerman

claims for $500,000 represented a mere 5.7 months of defense expenses, and the settlement of the Wilcox claim for $975,000 represented a mere 11.1 months of defense expenses, the least of which the County would have incurred anyway in continued litigation of these claims, with nothing to show for it but more expense, rather than a final resolution and termination of those defense expenses for these three lawsuits. IV. The Mediators Analysis of These Three Claims Retired Superior Court Judge Christopher Skelly, one of the premier and most sought after mediators in the State, devoted many months of effort toward analyzing these three claims for the County. In recent written communications with the County, Judge Skelly, for many of the same reasons set forth above, recommended the settlement of these three lawsuits for the same amounts at which the County ultimately settled them:
From: Chris Skelly [mailto:cskelly@scottandskelly.com] Sent: Monday, April 09, 2012 7:56 AM To: David Smith - CAOX; Debra Couch Subject: RE: Recommendations; Mediation Privilege Dave: Ive talked again with plaintiffs counsel. I recommend $500K for Mundell, $500K for Schuerman and $975K for Wilcox. Those three cases wont settle for less than those numbers at this point, no matter what I or anyone else may say. The numbers have come a long way from where they started. I think theyre good numbers. They expire tomorrow at 10:00 when the disciplinary rulings are made. In that regard Ill forward an e-mail I received this morning from Colin Campbell, who represents Mary Rose. Im starting an all-day mediation at 9:00 but have asked Deb to interrupt me if you call. -------------------------------------------------------------------------From: Debra Couch [mailto:dcouch@scottandskelly.com] Sent: Thursday, April 05, 2012 6:54 PM To: David Smith - CAOX Cc: Chris Skelly Subject: Recommendations FROM: CHRIS SKELLY Dave I dont pretend to have all the answers but I think I know enough about the cases to make some informed recommendations. I am writing to recommend to you

settlements of the Mundell claims in the amount of $500,000, the Schuerman claims in the amount of $650,000, and the Wilcox claims in the amount of $1 million. The joint mediation brief that I forwarded to you on March 27 contains much of the rationale for my recommendations. These plaintiffs will most probably prevail and be awarded reasonable damages and, when they do, they will recover their attorneys fees under 1983. It will cost a small fortune to work up and try these cases just to go get adverse verdicts in some amounts, added to which will be the plaintiffs attorneys fees. I know one of the plaintiffs has already incurred close to $500,000 in costs and fees and the judge has yet to rule on motions to dismiss! Its this reality that makes these numbers good settlement numbers in my opinion. Please let me know if I can be of any further help to you on this. If were going to do something, I think it needs to happen before the 10th for reasons weve already discussed.

V.

Financial Synopsis of These Three Claims A. Wilcox: Potential Adverse Attorneys Fees Award: $1 Million-$2 Million Potential Defense Expenses Through Trial: $2 Million-$4 Million Potential Jury Verdict: Uncertain B. Mundell: Potential Adverse Attorneys Fees Award: $1 Million-$2 Million Potential Defense Expenses Through Trial: $2 Million-$4 Million Potential Jury Verdict: Uncertain C. Schuerman: Potential Adverse Attorneys Fees Award: $1 Million-$2 Million Potential Defense Expenses Through Trial: $2 Million-$4 Million Potential Jury Verdict: Uncertain D. Totals: $3 Million-$6 Million of adverse attorneys fees awards if the jury awarded even nominal damages to each of these three plaintiffs; $2 Million-$4 Million of defense expenses through trial even if the jury returned defense verdicts in all three cases. The complete and financially certain resolution of these three multi-million dollar exposures for a combined $1.975 Million therefore was prudent and consistent with being a fiscally conservative steward of the taxpayers money.