When Does My Business Need a Corporate Records Discovery Master?

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When Does My Business Need a Corporate Records Discovery Master?

Pursuant to Rule 53 of the Arizona Rules of the Civil Procedure, a court has the authority to appoint a master to perform duties consented to by the parties, as well as address other pretrial and posttrial matters in ongoing litigation that cannot be effectively and timely addressed by the sitting judge. This can arise when the case is highly contentious, involves a huge number of documents, or implicates thorny privilege or confidentiality issues that the trial judge simply does not have the time to adequately referee and resolve.

For example, this provision may be of particular value to parties to an intra-company lawsuit when, say, the majority owners or managers of a business are having difficulty complying, or refusing to comply, with the discovery rights of minority owners to inspect and copy the company’s financial records. The majority owners may contend that the minority owners are trying to steal company secrets, while the minority owners insist that they are merely exercising their ownership and discovery rights.

There can be restrictions on the rights of minority owners to inspect and view certain documents, especially where there is evidence of breaches of confidentiality, breaches of fiduciary duty, or defamation. A discovery master can impose restrictions, ensure that the disclosure of records complies with any restrictions, and ensure that the company is fully disclosing all records in a prompt and efficient manner. The master can utilize any number of mechanisms, including by limiting disclosure to those who truly need to know, redactions, or finding that some records are so sensitive yet marginally relevant that they need not be disclosed at all. To do that, the master must be assured of complete access to electronic and paper copies of all relevant records, including financial records, and complete access to management. Under Rule 53, the master could enforce access to records by ordering non-contempt sanctions on parties and recommending that the judge issue contempt sanctions if needed.

Any master whom the court appoints should have no relationship to the parties, attorneys, court, or subject of the litigation that would require the disqualification of a judge under Arizona law. The only exception to this rule would be if the master fully disclosed all details related to the grounds for disqualification and the parties nonetheless agreed to the appointment.

When you are facing any type of dispute as you work through a business divorce or other intra-company dispute, you need an experienced Arizona business attorney who can advocate for your interests from the outset of the dispute. We are here to examine the facts concerning your case, consider your options, and build the strongest case possible. Contact Williams Mestaz, L.L.P., at (602) 256-9400 today, and set up an appointment to speak with us about your case.

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