your honour's there is no viable reason as a matter of law to impose any liability against c c s i on this record because c c s side does not exercise any control or even have a voice or right to participate in the claims handling business of country life insurance this precludes a finding that c c s i as vicariously liable on a theory of joint venture and also prefer precludes the imposition unusual in its facts so i want you to help me with the facts ok so as i read the record c s i or c o i the insurance company doesn't have any employees i correct that's not legally correct honor is it correct in fact it is correct that the pay checks are signed by c c s i and all of the people who did the work in this case and are employed by and if all people do the do the work for see a lie or technically employed correct the record does not reflect that clearly what they said matt anderson who's the claims attorney chad carpenter the claims manager and melanie spell meyer who's the claims analyst all said i work for country life  employees it was in gage in the business of life insurance where it's like this of insurance and that the way it's venture the way its business worked was that it and its sister companies in effect borrowed their employees from this staffing company owned by the same management so it was an independent staffing company under those circumstances could a reasonable jury find that c alliance c c s i were engaged in a joint venture two in honestly i understand so understand your legal argument i'm trying to trying to find out what the facts are so as a matter of fact all the people in this case who made the arguments that gave rise made to decisions they gave rise to liability were technically employed by c c s eyes that work for you i will agree with you that if that's the case then why isn't this really in a classic sense a joint venture between the company with the employees and the company with the insurance business the good news for this court is that the arizona supreme court has told us why sparks vs republic national insurance is the key case cited by all parties and the district court in its order on the joint venture issue sparks  involved three defendants and mr mcclure relied on sparks multiple times but for the wrong course and of the opinion there were three defendants an insurance company that was republic and then two trust companies one called and one called p s t alpha undeniably had active involvement in the business of insurance it was marketing it was billing and collecting premiums it was acting as an insurer and it could with are quite different in the sense that the nd company wasn't a company that provided all of the employees to the insure that made the decision with the court did it look at the facts in that case and said this nd company really wasn't involved in a joint venture it was just involved in a trust company business here these facts are just strange enough to make me wonder whether sparks has any application to it your honor i do believe that c c s site is akin to p s t in the sense that it is nothing more than a passive subsidiary being a staffing agency even if that's what you consider c c s i on the record doesn't actually reflect that but even if you go so far as to call it a staffing agency then rule us answers the question re well us involved a staffing agency that supplied nurses to a hospital and when both the hospital and the staffing agency were sued but an independent what  understand we have lots of cases with staffing agencies and lots of cases with independent companies but we don't have a hospital that has no employees and all and all of whom staff comes from a staffing agency or under common ownership when so i'm trying to figure out if there's some case someplace that addresses this kind of unique situation because in a in a common sense fashion the way your clients sold insurance was through a joint venture between their staffing company and their and their insurance company all of whom are under common ownership i think that's what i'm asking for you to try to address our answer that in two parts st i have searched nation wide not just in arizona or out of the th circuit i have not found a single case with these exact facts so if this court were to hold that merely signing a paycheck and being an h r company were sufficient to establish a joint benaud it would be the st to get there is no there is no case we're not about to hold it merely being staffing company and signing paychecks what we're trying to figure out is whether it is the unique facts of this case i think you admit they're unique they are here on this this is a joint venture we will be the st court to hold either way with respect to this kind of issue in the nd part of my answer to your question is that you have importantly identified in the venture what is the venture the venture is handling of the claims as a matter of anderson the attorney chad carpenter the manager and melanie spell my or their names and who who is their employer each of them testified i work for country life and again your honor their testimony is if you consider my employer to be the person that signs my paycheck technically that would be c c s i but my responsibilities and who directs the details of my work that is country life they explained that they sit in a group in a building with the country life claims department see c s i and it is in a separate building they do not know much about c c s i was their testimony they know that they are an h r company but other than that they kn nothing about c c s i and their understanding is that they take direction from country life and so in a borrowed servant paradigm which is really for responding out superior but in that sense you look at who controls their work and the only testimony that was presented to the jury is that country life controls the work of the claims handlers c c s i definitely controls the benefits and and issues the pay checks we do not have evidence in this record that c s i is actually a staffing agency i mean it any companies other than the ones under this common ownership there's a sentence or two in the record that indicates that they do supply employees for other sister companies sister companies under the umbrella of the right that are not an independent s agency in the sense that rent a maid might be a rent a nurse my peers that is correct your honor but i do i do want to draw your attention to matt anderson's testimony at  and seventy five to seventy six of the record where he says he and other employees described who they work for as country life melanie style meyer at three hundred and ninety six of the e r and had carpenter at three o eight they all say they work for country life and the jury wasn't presented any testimony at all about c c s i having any control i would like to ask you a question yes it kind of slightly different topic and i want to raise this so the your friends can address it to i'm having trouble figuring out why there are two separate punitive damages awards here even even under a derivative liability or joint venture theory it strikes me that the award ought to be joint and several that are i don't know what the amount ought to be but i can't figure out why there are two several only awards can you address that there should not be two separate a word do you trust that your briefs that we do the journal was instructed that they had were in your briefs only read your briefs is attacking instructed that they could only find punitive damages against the c s i if they had evidence of independent conduct of an evil mind i see c s i on clearance and convincing evidence mind you so the way the jury is i think part of the charge that was read to the jury that they had to determine independent conduct by c c s side they could not base their punitive award on don't you know i like question is wasn't the jury wasn't the jury also instructed that it could impose liability vicariously on the defendants only for the compound yes and i'm sorry your honor that i don't almost all for the record cite but reading the jury instruction with the verdict form together it is very clear that the decision tree is that if you found that country life  was liable for bad faith conduct and if you found joint venture then you could find compensatory damages on a joint and several theory but in order to get to punitive damages the jury was instructed that they had to find direct individual conduct  i and that is what is completely void in this record your honor i do want to touch in about one minute on emotional damages if i may emotional distress damages because they are excessive as this court noted in watson vs city of san jose excessive beyond the realm of reasonableness you have a plaintiff here who testified about a host of preexisting conditions and the only conditions that existed after the date of terminations were the same as those that existed before terminations of benefits that creates a problem for but for causation because the jury was properly instructed they could not award any amount not even a dollar for any condition that existed prior to the date of terminations and that's every condition in this case with that your honour's already served two minutes for a battle you may do that thank you morning hours may please the court my name is eric frazier i represent benjamin macor this is not the employment issue is not just about the paychecks there's testimony in the record that the jury could find that c c s i was the employer chad carpenter testified i'm employed with c c services that's on its volume four of our supplemental excerpts of page forty one but more importantly our honors c c assigned country life agreed not to contest the individuals who worked on the adjustment and processing of the claim were employed by c c s i that's in the joint pretrial order and in an ordinary case where you have let's say kelly services or something and they would say they had sent employees to country life to deal with a an influx of claims or something and they have employees that came there would even though they were employed by kelly services in my example would kelly services be jointly liable for an insurance decision made under the direction of country life well i think we did under arizona law i think we need more other requirements for a joint venture the answer is the answer is yes well that's my problem because the requirements seem to be that some active participation of kelly services gets a call saying gee what do we do about this clam that's one thing but if all they've done is say you know we've done the criminal background check this person seems to know what they're doing we'll see you in three months when you need another job and that's their only involvement they would not be a joint venture correct i think that's right and so what is it beyond own an ownership by an umbrella that distinguishes this situation i don't see any active involvement by sia c c s i as distinct from this sort of generic employment agency the only oddity is that their own eyebrow organization but i don't see any greater involvement them mike kelly example so i think there's much greater involvement because in your intelligence sample presumably your insurer has people who are working on claims they have they have managers who are training people on how to process claims country life here has no employees so the people who are well and i'm sure that's the i'm not sure that's correct as a matter of law but if it were then maybe only c c assayas liable and country life isn't it just seems to me if if the if they are not employed at all by country life then country life presumably has no liability it seems to me you just can't have it both ways a country life always has liability because under arizona law the  good faith obligation is non delicate so the liability always flows to country life but c c s i is liable here because the people who are doing the training for the claims claims managers the whole management structure of the claims department those are all c c s i employ so  but it's just the same as my example that they they are all employed by says we're going to give you a bunch of people go have a good time we'll see you in three months there's no it's that it's it seems to be trying to double up on something that is a singular set of individuals performing a single task for a single insurance company and i just don't see their rationale for for that the doubling of so in heart and sparks both arizona cases the court held rd party claims handlers liable for under a joint venture theory for for the bad faith conduct and so here the question really is whether there was any evidence that a lot of a reasonable jury to reach the conclusion that c s i and country life worth cage in a joint venture that's a classic fact question and i think the issue that you're struggling with judge graver is it's getting at an entirely separate doctrine called the lent employee doctrine which is it's an exception to the general responded that superiority doctrine so as we all learned in law school and to respond it's a period where the employer is viable for the actions of its employees there is a separate doctrine which is an exclusion an exception to th liability in your kind of kelly services example where they're just lending out employees but that's that i'll try and i think i understand the distinction you're trying to draw but it's particularly troubling in the context of punitive damages because again you have one act right one set of people and if they are truly a joint venture then presumably it is the joint venture as and as a whole that is responsible for whatever the amount of punitive damages is because even if your other theory is right i don't see an evil mind on the part of the same people doing the same want to act being twice finding separate evil minded evil hand in the two defendants because under your joint venture theory you've got a shell of an insurance company gets all of the people who make the decisions from c c s i shouldn't that be join several liability rather than several only liability so if we were very care if we were partnerships and were imposing vicarious liability it would be joint several so how did what what separate bad acts did each of these defendants do well it is the same conduct with the same conduct that gives rise to the punitive damages against but it's not only the same conduct it's the same conduct by the same people by the same people at the same shit i don't understand if there were a separate claims manager and  ally who said hey guys let's conspire together to screw over this poor claimant then you might impose punitive damages on both of them because of their evil mind and evil hand but here i think your joint venture theory may be correct but if it is correct i don't know how we have to separate punitive damages awards well judge i think the important thing is the posture of this case that's that's really an attack on the jury instructions an attack on the verdict well i'm put aside put aside waiver and whether the issue is raised or everything else i'm trying to just get the legal construct in my mind under this circumstance what's the justification for two separate punitive damages awards you want to make sure that somebody stands up and says we need to do the right thing whether it's the board of directors of country life and even though country life has no employees that does have a choice of doctors you've got i mean they're all one entity in your view and so you've got a joint venture you've just hit do that but i'm still trying to figure out what justifies two separate punitive damages awards it's not i think what your opponent says which is that the c c s i people did nothing wrong i think they i think my problem is they appear to have done everything wrong and so i can't figure out why there ought to be two separate awards well it to be i mean it's hard for me to get past the waiver arguments because countrywide hasn't challenge the punitive damages awards and we know that all that the employees who did the wrongdoing you had the evil mind matter which way you switch it i don't know how you get them to be separate well because under i mean it's especially under joint venture both joint ventures are responsible for each other's conduct and so even though it's the same and i'm going your joint venture with joint ventures you're responsible for each other's conduct but in the absence sparks of some proof that the joint venture did something independently wrong that liability would be joint several would it not it may be a could be if that's how the jury was instructed and that's why the not how the jury was instructed the question of whether there's any evidence here to support a joint and several award the jury may have followed its instructions faithfully the question is whether or not there's the evidence is sufficient to support several only awards i'm sorry well i think the question here is whether there's evidence to support punitive damages or against c s i that's the only that's the only thing that's being challenged on appeal here and there is right that judge reyes went through that all the conduct of c eyes own employees justifies that award i don't want i have one more question for you and an earlier answer relied on the trial document yes the jury never had that in front him correct that's correct so when we are reviewing the sufficiency of the evidence that the jury heard does that have any relevance so it's definite did not relieve us of our obligation to put forward sufficient evidence i think that's what you're getting at so don't we look at the record of what the jury heard you do look ok you do look at the record but we don't look that they did not have that piece of information so it passes out of the picture  i don't think it is out of the picture so certainly for evaluating the sufficiency of the record we're not relying on the joint pretrial statement we're relying on the testimony of todd carpenter where he says i'm employed with c c services i work for them it's that's everybody's employer who works for me it's my drug unit you're making or something of a forfeiture waiver argument i take it that they can no they can't could if there is sufficient evidence they can't contest they can't contest it because they agreed before trial that the they wouldn't contest that these think two out of the four issues turn on this issue of whether these people were employees of c s i but c c s i cannot now just cute that they were employees the evidence permitted the jury to find that st of all that these people were just but who had country life when they were talking about country life making the claims and decisions that necessarily would have been or the only evidence the jury had was that those would be people employed by c s i so the jury's going to any evidence in this record whether country life employed anyone directly there's evidence that country life employed nobody directly well is there evidence of country life employed no one directly or is it only evidence is there only evidence that all the people you identified were employed by now there is testimony saying that country life has has no employees that's a carpenter again this is volume two of our supplemental excerpt at page one hundred and two question does country life have any employees answer i don't believe country life technically has any employees as far as i know and there and there's another example that question is country life have any employees answer not that i'm aware of so there's absolutely testimony that country life has no employees so the jury could find that this wasn't just the paychecks but turning back to the  punitive you know this is this is similar i think to something like felony murder where you have the same the same conduct gives rise to liability for two people and you have to you can separately sentence those two people for the same underlying conduct that's what the jury was asked to do here and if the c s i or country life wanted something different if they thought there was no basis to award separate peanut of damages they needed to say something at trial after trial at the end the motion for a new trial in their opening brief i mean on appeal it's waged six ways from sunday if they thought that this that these verdict forms were not valid if they thought there was no way that responding at superior or joint venture could support equal culpability it's not surprising that we put the two awards would be assessed at the two awards would have the same amount because it's the same underlying bad conduct country life as a board country has board should ensure that the claims handlers of the company that  chooses to handle the claims are doing so appropriately you need to provide some incentives for people to stand up and do the right thing tha the verdict form which says any determination here and of joint liability is independent of any assessment of punitive or exemplary damages the waiver discussion that you just heard is flipped on its head mr mcclure had the burden to and their friend their bad conduct is vicariously imputed employers the c s i you might have a good argument about why there shouldn't be punitive damages against c l why but you don't make it  appeal so that's my question not his argument shirts or that question i can answer that question you're correct under that factual scenario country life should not be liable for peanut of damages because it's one or the other as judge graber was pointing out it's one with you but you don't raise that appeal our position has always been that country life controls these employees and we have not challenge that on a responding out sapir your theory country life is responsible for the claims handlers as its employees you have you have not challenge punitive damages against a country like we have in the sense that through the compensatory damages right now if you had the tax for the amount but not even though the liability correct those arguments if if the court agreed with them would require every versal of both the compensatory in the punitive damages awards on behalf of country life but in terms of which of the two entities is responsible for the work of these claims handlers both  agreed that country life controlled the employees and so we did not take that to be contested both sides said country life is in control the problem for mr mcclure is that a lack of control i see c s i means they cannot be liable in a joint venture and they cannot be liable for punitive damages based on independent evil mind thank you counsel a case just argued is submitted and i thank both counsel for a very helpful