Valley Law Firm Adds Respected Surname to Title
Greg Barr at firstname.lastname@example.org
The orders are in for new business cards at one of the Valley’s best-known firms, now that Beus Gilbert LLC has added a third surname to its nameplate and is now known as Beus Gilbert McGroder PLLC.
Beus Gilbert law firm adds high-profile attorneys Patrick McGroder and Jay Heiler
Russ Wiles, Arizona Republic Oct. 15, 2018
Phoenix law firm Beus Gilbert PLLC has added two prominent Valley attorneys, including a plaintiffs representative with a reported $500 million in legal victories and a government-affairs specialist with deep political roots.
Patrick McGroder, who has represented the Granite Mountain Hotshots firefighters, wounded Phoenix police officer Jason Schechterle and others, joined the firm on Oct. 12.
Political affairs attorney Jay Heiler joined in mid-July.
Heiler sits on the Arizona Board of Regents, recently serving as treasurer. He earlier was former Governor Fife Symington’s chief of staff, and he currently serves as president of the Arizona Charter School Association, among various affiliations.
He also co-founded Great Hearts Academies, a charter-schools network operating in Arizona and Texas, of which he is chairman. GreatHearts counts about 13,000 metro-Phoenix students and 4,000 in Texas and employs more than 1,300 teachers, he said.
McGroder and Heiler join a 30-attorney firm founded in 1982 by Leo Beus and Paul Gilbert, a zoning and land-use expert. Their affiliation dates to the 1960s, when Beus and Gilbert served as missionaries for The Church of Jesus Christ of Latter-day Saints.
Beus, after whom a new building is named at Arizona State University’s Sandra Day O’Connor College of Law, has focused on high-profile negligence and fraud cases. He said he didn’t know McGroder well previously but managed to talk him into joining the firm.
“We really like each other, which for lawyers is something,” Beus quipped. “The problem with Pat is there’s not enough wall space for all his accomplishments.”
Beus said he’s equally thrilled to have Heiler join the company.
McGroder, who had been a shareholder at Phoenix law firm Gallagher & Kennedy, said he had no plans to leave before meeting with Beus and Gilbert.
Beus Gilbert pursues many complex business litigation cases, mostly representing individuals, corporations, and other perceived victims against institutional defendants. Beus has been the lead litigator in cases where, according to his firm, verdicts and settlements have resulted in more than $4 billion for clients.
McGroder called the new affiliation “an opportunity to expand my career skills as a trial lawyer representing victims” and to pursue more cases with national significance.
McGroder, who in an interview said he has tried to make the world a better place through his legal work, pointed to several cases that he feels have made a difference.
These include exposing fuel-tank risks in collisions involving Ford Crown Victoria police cars, which he said resulted in the automaker repairing 350,000 police vehicles. Another suit following an accidental death at a Phoenix trampoline park led to Arizona implementing the nation’s first safety law for those recreation facilities, he said.
His other successful cases resulted in enhanced motor-coach safety following a fatal crash, improved road fencing in the Sedona area after fatal rock slides, changes in the operation of news helicopters after a deadly crash in central Phoenix, and probation of a fraternity at Arizona State University following a binge-drinking death.
Several of his cases have involved deaths stemming from vehicle or aircraft crashes.
Beus called McGroder “one of the best trial attorneys in Arizona history” and a “social architect” for turning high-profile cases into causes for reform.
McGroder, who claims to have recovered more than $500 million in settlements and verdicts for clients, will continue to focus on high-profile cases involving catastrophic injuries and deaths.
Heiler said he brought his public affairs and government-relations clients to Beus Gilbert and plans to build a broader, deeper practice there. He also plans to work with Beus on major commercial-litigation cases and with Gilbert on cases involving land use and real estate, which involves local-government relations.
Attorney Mark S. O’Connor Led the Way in One of the Top Ten Verdicts of 2018
Arizona Attorney June 2019 – United States District Court for the District of Arizona, CV16-004747
In a verdict announced on March 30, 2018, Sheri Booker, the first plaintiff in the Bard Inferior Vena Cava (IVC) filter multi-district litigation (MDL) to try her product liability claims, was awarded $3.6 million dollars. The trial began on March 14, 2018, and lasted three weeks in Arizona federal court. The nine-member jury deliberated for six-and-a-half hours before they decided that Bard negligently failed to warn consumers of the risk, and then awarded punitive damages to Ms. Booker. The jury found in favor of Bard on three of four claims — negligent design, strict liability design, and strict liability failure to warn. On the fourth claim-negligent failure to warn-the jury awarded $2 million in compensatory damages and awarded $2 million in punitive damages. The jury found Bard 80 percent at fault and the non-party radiologist 20 percent at fault. This was Arizona’s 5th largest jury verdict and largest punitive award of 2018.
Beus Gilbert McGroder Attorney Mark O’Connor and Ramon Rossi Lopez of Lopez McHugh LLP serve as co-lead/liaison counsel in the MDL. Both Mark O’Connor and Ramon Rossi Lopez were also lead trial counsel for Ms. Booker. The Bard G2 filter which subsequently broke, leaving pieces in Ms. Booker’s IVC, aorta, and in her heart, was implanted when Ms. Booker was 37. The fracture and migration of the filter resulted in significant injuries and medical procedures, including open-heart surgery.
In his argument to the jury during the punitive damages phase, Mark O’Connor stated “The simple fix was there – don’t put it on the market.” O’Connor emphasized that Bard never went to the medical community to say “We gave you something dangerous and we need to fix it before it causes irreversible damage.” After the trial, Mark O’Connor shared, “Sheri Booker showed tremendous courage in telling her story to the jury.” U.S. District Court Judge David Campbell presided over the MDL, which included more than 3,600 plaintiffs from across the country.
Lawdragon Hall of Fame Limelight: Patrick McGroder
Katrina Dewey June 12, 2019 Lawyer Limelights, News & Features, Plaintiff Consumer Limelights
Patrick McGroder’s grades in law school weren’t the sort that attracted offers from high-end firms. Struggling to find a job after earning his law degree, he eventually struck out on his own, a self-professed “dirty-shirt lawyer” who learned on the job.
“I was sworn in on Saturday and had my first jury trial on Monday morning,” McGroder of Beus Gilbert in Phoenix recalls. It was a criminal case, and one he lost.
“I didn’t know anything, and I don’t think the jurors left the box,” he says. “They probably wanted to find me guilty of impersonating a lawyer. I left there completely humiliated and mortified. I vowed that was never going to happen again.”
McGroder turned that promise into a career winning more than $600M for hundreds of injured people in high-profile cases, including 19 members of the Granite Mountain Hot Shots, a team of firefighters who perished during a 2013 wildfire, winning compensation for their families and prompting new safety procedures for battling such blazes. He settled a landmark case against Ford Motor Co. over police interceptor vehicles that burst into flames upon rear impact during car crashes, prompted by Phoenix police officer Jason Schechterle’s near-death in a March 2001 accident. There were 18 such cases across the country that he and David Perry litigated. The case ultimately led to the carmaker’s modification of 350,000 vehicles.
McGroder made his mark in complicated high-profile cases, all involving catastrophic injuries and product liability – most with a social justice component. His accomplishments and dedication to having an impact in helping attain justice for victims – as well as his philosophy burnished in his Buffalo, N.Y., roots – have made him one of Arizona’s most acclaimed trial lawyers and a member of the Lawdragon Hall of Fame.
“I gravitated to those types of cases, and I was very fortunate to have a staff and lawyers to work with me that subscribed to my commitment to humanity, to social change,” he says. “Virtually all of my cases involved some type of remedial change to not only make the world a better place, but to make it a safer place and to ensure that tragedies like I’ve seen, preventable tragedies, don’t happen again.”
Lawdragon: Your. career and accomplishments are incredibly impressive. Where did your drive to effect social change come from?
Patrick McGroder: I was raised in Buffalo, N.Y., an incredibly ethnic, blue-collar rust bucket – as they now refer to it – a town where I learned what’s important in life is loyalty, commitment, to not only your God, and family, but also to your fellow man, and the dignity that your fellow man represents. So that’s how I was raised. Philanthropy and social service were not an option in my family. My sisters and I were raised by incredible parents. They were not well educated but came from a generation where basic human rights were respected and those who were victimized in life must be afforded dignity, compassion, and empathy.
And then there’s my Catholic faith. So that’s why I believe so strongly that great human beings make great lawyers – people who are respectful, and civil and understand that our profession is not a business, but a calling. It’s a calling that ensures that we use the power of our licensure to effectuate solutions to problems, and I don’t care if it’s as simple as a will or a divorce or someone buying a home, or in my case, someone who’s catastrophically injured. It doesn’t matter. Our profession should be about understanding what our clients’ needs are and doing everything we can to ensure that those needs are met in a legal, ethical way. We’re not here to make problems. In my experience, there are a lot of lawyers out there, perhaps unwittingly so, who cause more problems than they solve.
LD: How did you decide to become a lawyer yourself? What inspired you – did you know lawyers?
PM: My father was a first-generation American and was a great believer in education. I had gone to Catholic boys’ schools all my life – grammar school and high school. Then, eventually, I went to Notre Dame, which was my father’s dream, because he was Irish. I’m not sure I was all that crazy about it. My dad was executive vice president of the Buffalo Bills football team. I spent four years at Notre Dame. I really had no desire or burning passion to be a lawyer. I always wanted to be a doctor, but my failures in life were generally directed toward the study of science and math, so…
LD: I feel your pain.
PM: I wasn’t particularly equipped for the medical profession but ironically, I wound up in the personal injury/medical malpractice field, where 50 percent of my practice is medicine, so I guess in a roundabout way, fate took me where I wanted to be. After Notre Dame, it was the height of the Vietnam War. I was getting called for physicals all the time. My father, who – as I said was a great believer in education – wanted me to go to law school. And I really had no desire at that point to be a lawyer. So I said, “Look, you always wanted me to go Notre Dame, but if I’m thinking about going to law school, I’d like to pick the law school myself.” So he said, “That’s fine.”
So coming from Buffalo, where there are essentially two seasons, July 4th and winter, and then spending four years in South Bend, Ind., where it snowed from the time I got there to the time I left, I applied mostly to warmer-weather schools and co-ed schools. Notre Dame, when I went there, was all boys.
LD: Clever man.
PM: I was fortunate enough to get into the University of Arizona and arrived in Tucson in the late ’60s, and quickly thought that I’d died and gone to heaven. There was sun, and a variety of other things that a co-ed school had to offer. I arrived there, driving a ’67 Corvette and pulling a Triumph TT motorcycle, and I was about 215 pounds then, and I thought of myself as an athlete. I wasn’t exactly mentally prepared for law school. But I was quickly befriended by my mentor, Professor Junius Hoffman, who was a brilliant man. He had an undergraduate degree in Greek mythology, I believe, from Harvard and a Yale degree in law. We were kind of the odd couple, because I was about three times his size, not mentally of course, but physically. Within the first year, I realized that being in law school was not only a privilege but that it might be the start of a very promising career. So I finished law school, and still wanted to go back to Buffalo and work for the Bills. I came up to Phoenix and took the bar exam in Phoenix and just fell in love. It was only about 600,000 people then, and it was just a fabulous town.
Because my grades were not prestigious in law school, I struggled to find a job. So I essentially became a sole practitioner; I learned to practice on the street, and I hit my first personal injury case for a million dollars within a few years and took off from there. I started my own firm and ran that firm for about 25 years. A lot of my partners retired, and I went with a semi-large firm here in Phoenix. I established a large personal injury practice. I realized that I could be much more effective if I took fewer cases and concentrated on those in which there was catastrophic injury or wrongful death associated with some social architecture. So I became known for taking those kinds of cases, whether they involved road design, aviation disaster, corrections, accounting, legal, and certainly medical negligence. Eventually, most of the high-profile cases in Arizona that involved catastrophic injury or wrongful death would find their way to my door, from the Granite Mountain Hotshots, the firefighters who were burned alive, to the news helicopters that crashed over downtown Phoenix.
LD: We have the honor of knowing numerous great lawyers who are great people, and then we’ve also seen the folks who want to be the same as those great lawyers, but maybe don’t have the moral underpinning, right? It seems to me a lot of what drives you to take the kinds of cases that you take and fight the way that you do comes from your personal code, from who you are.
PM: You know, I can’t heal the sick, I can’t raise the dead, but I can restore a modicum of dignity to my clients who have faced the most overwhelming adversity. And I hope that I do it in a way that’s empathetic, compassionate, and at the same time represents a full measure of justice. I don’t have any desire to be on the cover of any magazines, nor argue in front of the Supreme Court 10 times a year, although that would be a great honor. But what I do changes lives, and to me, that is my calling.
LD: Can you describe what it’s been like to be an advocate for your clients in court as well as to be an advocate for the openness of courts to people who lack financial resources?
PM: A lot of defendants talk about jury reform. I think juries are the ultimate reformation. They truly try to do the right thing. Do they come off the rails sometimes? Sure. Do they decide things based on irrelevancy? Sure, I mean that happens sometimes. But juries are the great equalizer, as is having a plaintiffs’ bar that’s available and affordable. To bring people justice that heretofore would not have a voice nor the financial wherewithal to litigate against institutions, people of means and wealth, governmental agencies, or any other potential defendant in a superior financial or leverage situation. We provide access to justice in a way that doesn’t penalize the poor, the voiceless, and the underserved. And I strongly believe in that.
LD: How do the victories that you’ve won for your clients motivate you when you wake up in the morning or when you’re finishing a long day at the office on a difficult case?
PM: It is beyond fulfilling to be able to use the power of your personality, intellect, creativity, and ingenuity, to bring justice for those who otherwise would simply never have an opportunity to bring their cases into the system. The scorecard of life, it’s not measured by wins and losses; it’s measured by the justice that we’re able to obtain for our clients. And especially in the plaintiffs’ bar, those clients who have been devastated, destroyed by injury, by travesty, by death. And to be able to say to them, “Look, what we’re able to do from a justice standpoint or a compensation standpoint, at the end of the day, perhaps is meaningless in your world. But maybe we can make your life a little bit better. And maybe the defendant will remember your name. And maybe the defendant will ensure, through changes and remedial measures, that something like what happened to you, is never, ever going to happen again.”
LD: You’re a nationally acclaimed plaintiff lawyer, but I know your heart is in Arizona, and many of the hallmark cases that you’ve done are Arizona-based. Obviously, Phoenix has grown into a major city while you’ve lived there – do you feel satisfied when you think about the ways that you’ve contributed to what it is today?
PM: Yes, absolutely. I’m silently proud – because I’m not somebody who wears my achievements on my sleeve – when I go by a road that has been redesigned because of what we’ve done, like Route 89A up in Sedona, for example, where our cases resulted in rock-fall remediation on a very scenic highway where rocks were falling and catastrophically injuring and killing people. Or considering the transformation of a waterway here where two doctors were killed or, whenever a police car drives by, thinking that we made police vehicles safer in this country, I feel quietly satisfied.
LD: What advice do you give your son, who’s following in your footsteps, or other attorneys who are starting out?
PM: I learned the hard way. I learned to practice law as a dirty-shirt lawyer. I didn’t have any clerk jobs. I was not recruited by silk-stocking firms. I did not have the types of mentors that one would find in a large law firm. I learned to practice law in the courtroom by trial and error, by doing everything I could, and through working 24/7 for probably the better part of 45 years.
Now a lot of that may have been fear: fear of making mistakes, fear of not doing what is in the best interest of my client, maybe because I didn’t know what was in the best interest of my client. So fear, for me, was a great motivator. But what I tell young people is, “Look, you need to learn every day. There are no stupid questions.” Because let me tell you something, I ask every stupid question there is. I have seen so many lawyers, so many young lawyers, who are afraid to ask that stupid question. They’re afraid because someone might think that they’re something less than as smart as they think they are. Or they’re afraid to put in the time and the commitment and the effort it requires to be a trial lawyer. If you want to be a trial lawyer, you’ve got to learn about the human condition. And you’ve got to learn to listen and learn to communicate. And without those tools, you’re not going to be much of a force in the courtroom. You’ve also got to work. You’ve got to sit down, analyze, be creative, be innovative, you’ve got to apply facts and theories of the law, and then work backward and understand the law and apply those theories and facts to the law. You need to know the other side’s case as well as they do. You need to understand how you can lose, because if you understand how you can lose, then you understand how to win.
Leo Beus and Paul Gilbert Might be two of the Most Influential, but Least Known Heavy Hitters in Arizona
The 25-attorney firm has not had a website since it opened in 1982. How successful? Beus Gilbert has reaped $4 billion in jury verdicts and settlements since its founding. Beus is a prominent, aggressive, not-always-liked litigator taking on the likes of Pfizer and big accounting firms.
Alumni President Devoted To BYU, Service
By Charlene Winters, Brigham Young University Alumni Magazine Published: Fall 1998
If BYU’s Alumni Association president were to open a vein, his blood would probably run blue. That’s because Paul E. Gilbert has been associated with BYU throughout his life and says he still feels inspired and thrilled every time he comes to campus.
The Phoenix-based attorney’s affiliation began in childhood when he attended BY Elementary, BY Junior High, and BY High School. He then attended BYU as a history major and served as student body president. His father, who died while Gilbert was a child, was a BYU assistant football coach, and his second father was a BYU dean. The roots go even deeper. His mother taught English at BY High, all seven of his brothers and sisters have attended BYU, and the tradition is continuing with his own children.
“My wife Susan and I have consistently brought our children to Provo for Homecoming to create a feeling of excitement about coming to this fine school,” he says. “Two of my children have already graduated from BYU, another is attending the university, and my last child, a senior in high school, plans to attend BYU.
“That will make us four for four,” he adds. “We do believe in free agency in our home. I have told my children they could attend whatever college they wanted, but I have always added that BYU was paid for.”
Although Gilbert attended the University of California, Berkeley, for his law degree, he says that, despite receiving a very good education there and forming some close and lasting friendships, his feelings toward UC Berkeley don’t approach the depth of his commitment to BYU.
“I think my alliance to BYU is closely akin to my feelings and support for the LDS Church,” he explains. I also think BYU is such a unique institution that it engenders uncommon loyalty. We feel a real bond with our fellow graduates because of our common goal–and that again comes back to the Church. We are more united as a student body in our goals and aspirations than any other student body in the world.”
“Paul Gilbert is a natural choice for alumni board president,” says George Bowie, executive director of the Alumni Association and an assistant advancement vice president. “He has consistently demonstrated his commitment to BYU and his willingness to help the university in any way.”
When he graduated from BYU in 1968, Gilbert says he left with a feeling of profound joy for the BYU experience and says that whenever he steps on campus, it floods him with pleasant and treasured memories.
“Frankly, I’m always a bit proud to know that I am affiliated with a university that is doing great things and that just gets better and better with time,” he says.
He acknowledges that BYU has undergone major changes in the 30 years since he was a student, but he believes the things that make him love and appreciate BYU have stayed constant.
“BYU continues to be run by an inspired board of trustees with rigorous adherence to Church standards. It remains full of clean-cut young people who believe as I do and who are part of the big picture that is changing the world. It also remains a university where real and meaningful truths are being taught across the disciplines. I just have a feeling BYU is playing and will continue to play an even more important role in the future in helping spread the influence and message of the gospel.”
Even after leaving BYU, Gilbert continued to serve the university. His deceptively simple philosophy about volunteer service–“I do what I am asked”–belies his deep commitment not only to BYU but also to causes in Arizona, where he serves on the board of the John C. Lincoln Foundation (one of the larger hospitals in Phoenix) and the National Conference of Christians and Jews.
“I believe in service,” he says. “I have been an admissions advisor since I was BYU student body president. I helped recruit students when I was a senior there. I helped with fundraising, and I served with the alumni. I have also been a leader of BYU’s alumni chapter in Phoenix.”
Gilbert encourages participation in regional chapters as a way of remaining involved with BYU. “I think many alumni are fiercely loyal to BYU and want to do something that links them to the university,” he says. “Yet they may not know how to do it or where to go. My answer to that question is to join and participate in local chapters.”
Gilbert’s goals as BYU Alumni Association president–a position he will hold through 1999–are many. He looks to the chapters to help coordinate with the BYU Management Society, BYU Law Society, Collegium Aesculapium, and other BYU groups. He wants to encourage regional scholarships to help worthy students who otherwise could not afford to attend BYU. He would like to see chapters participate in community activities that raise awareness about BYU. And he supports chapters as a major force in BYU’s capital campaign fund-raising efforts.
Additionally, he wants to see alumni assist each other in finding jobs. “We have a placement office–you can find it under the Alumni Association’s Web site on the Internet. Alumni should help each other.”
Particularly important to him during his tenure, he says, is to find ways to help alumni understand that the Alumni Association is their advocate and representative to BYU.
A strong believer in community involvement, Gilbert counts his work with the Desert Mission Food Bank for the Lincoln Foundation board as one of his most fulfilling assignments outside of his work with BYU.
“This is a place where people come for food,” he explains. “It is designed to help them overcome a short-term problem.” The food bank began in a small building it quickly outgrew, and Gilbert headed a $2.5 million capital campaign to help the organization meet the demand.
“I still remember the day when a divorced mother with three children came in with tears streaming down her face, saying her husband had left and she did not know how she could take care of her family. I immediately could see the need for the food bank. We now have a large warehouse and a large distribution faculty. All of us are volunteers, including dentists who donate one day a month to work on children’s teeth. We began the dentistry component after some schools approached us and said some children could not concentrate because their teeth hurt so much.”
Another volunteer position has kept Gilbert busy for 15 years as a member of the board of directors for the National Conference of Christians and Jews. He now serves as chair of the Arizona chapter.
“That group was formed when Al Smith, a Catholic, ran for U.S. president,” Gilbert explains. “A lot of religious prejudice emerged from that election, and the conference began to fight prejudice on a religious basis. Since then the goals have expanded to where we fight prejudice of any type–be it religion, race, sex, or prejudice against the economically disadvantaged. Among our many projects is going into schools to promote religious and racial tolerance. Last year we talked to more than 10,000 students in Arizona.
“We also sponsor a summer camp for high school students called ‘Any Town.’ When they arrive at the camp, we assign them a color–red, brown, or yellow–for a week and help them feel firsthand the effects of discrimination based on skin color. We also work on religious tolerance. Toward the end of the week’s camp, we show them ways to overcome prejudice and help them understand how prejudice starts and what they can do to right it.”
The conference has even defended the LDS faith, Gilbert says. “We did a considerable amount of good work with minimizing the effects of the anti-Mormon filmThe Godmakers. We distributed a lot of information against it, and the people who produced the movie were so mad, they sued us. We won the law suit.”
When not serving BYU and his community, Gilbert works as a law partner in the firm of Beus, Gilbert, and Devitt, which he helped found. Previously, he practiced law with former BYU President Rex E. Lee.
A $128.1 Million Settlement Reached In Miniscribe Case
By The New York Times Published: June 4, 1992
Former executives, accountants, and investment bankers involved with the Miniscribe Corporation, the defunct disk drive maker, have agreed to pay $128.1 million to settle fraud charges.
Greg Ruegsegger, the lawyer representing Miniscribe’s trustees, said Tuesday that he had reached an agreement in principle with more than 60 plaintiffs involved in the suits.
The settlement must be approved by a Federal judge in Denver and the United States bankruptcy judge overseeing Miniscribe’s liquidation.
In addition to Miniscribe management, defendants include the accounting firm Coopers & Lybrand, and the investment banking concern Hambrecht & Quist, among others.
They were accused of falsifying Miniscribe’s financial records and concealing the Longmont-based company’s sagging revenues throughout the late 1980s.
Miniscribe filed for protection from its creditors under Chapter 11 of the Federal Bankruptcy Code in January 1990. But the fraud allegations made it impossible to reorganize the company and the case was converted to a liquidation. Miniscribe’s assets were auctioned off to the Maxtor Corporation of San Jose, Calif.
“We’re hopeful we’ll get the settlement finalized and don’t expect any problems,” Mr. Ruegsegger said. “We think it’s a good settlement and a good deal for the estate.”
Plaintiffs including shareholders and creditors were seeking damages up to $1 billion. The company’s estate will pay off creditors in the bankruptcy proceedings as well as make cash settlements to shareholders.
The suit charged that former executives counted more than 6,000 contaminated disk drives as inventory and also packaged bricks as computer products and shipped them to distributors, recording sales of $4.3 million.
The settlement comes four months after a jury in Galveston, Tex. awarded $568 million to a group of investors and pension funds that put money into Miniscribe before the allegations arose. Coopers & Lybrand has agreed to pay up to $50 million to settle the Texas case; it is believed that Hambrecht & Quist will pay up to $24 million to settle the Denver case, according to a report in The Wall Street Journal. The investment firm already agreed to pay $30 million to settle the Texas case.
The paper said that to settle the Denver case, the defendants will pay a third of the settlement this year and the remainder over four years.
Accountant Hit With Judgment of $338 Million
By The Associated Press, Los Angeles Times Published: May 20, 1992
An Arizona Jury Says a Price Waterhouse Audit Led to a British Firm Making a Losing Investment in a Bank
PHOENIX — A state jury on Tuesday told Price Waterhouse to pay $338 million to a British banking firm because the accounting firm’s audit led to a losing investment in an Arizona bank.
The jury agreed with London-based Standard Chartered that Price Waterhouse bungled its audit of United Bank in 1985 and 1986. The British company had alleged in a Maricopa County Superior Court lawsuit that Price Waterhouse failed to alert the firm to bad loans on the bank’s books and grossly overstated its financial condition.
New York-based Price Waterhouse is one of the nation’s largest accounting firms.
Standard Chartered bought United Bank in January 1987, for about $335 million and sold it 16 months later to Citicorp for about $208 million–a $127 million loss.
The eight-person jury found that Price Waterhouse engaged in negligent misrepresentation and breach of fiduciary duty in working for Standard Chartered.
The jury decided to award the banking company roughly the amount it paid for United Bank.
Erica B. Baird, a spokeswoman for Price Waterhouse in New York, said the firm was outraged at the verdict and will appeal directly to the judge to dismiss the award.
She said the firm has a contingency plan to limit the effect of the award.
“We have insurance, and service to clients won’t be interrupted,” she said. “We are confident we can get the judgment stayed pending the appeal.”
She said the firm was relieved that the jury didn’t find that it had violated the Arizona Civil Racketeering Act, which would have allowed the damages to be tripled to more than $1 billion.
Leo Beus, attorney for Standard Chartered, said he was pleased with the verdict despite failing to get triple damages.
“This sends a signal not to trust auditors,” Beus said. “The jury wanted very badly to decide for Price Waterhouse, but they just couldn’t. The jury was very patient.”
The trial, which began in June of last year, was the longest civil trial in the state’s history, court officials said.
Beus said it was Arizona’s biggest civil award ever. Mary Budinger, a spokeswoman for Maricopa County Superior Court, said the court doesn’t keep such records.
Baird, Price Waterhouse’s spokeswoman, said that the auditing firm was being made a scapegoat for a bad business decision by Standard Chartered and that the trial was bent in favor of the plaintiffs.
“This is an 11-month trial,” she said. “In the 11 months, Price Waterhouse was given 25 days to present its case.”