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Kutak Rock Secures Class Action Victory in Arizona

News | August 20, 2019


Kutak Rock LLP, on behalf of AmeRisk Consulting LLC, along with multiple law firms and corporate defendants, jointly secured a victory in a class action lawsuit at the U.S. District Court for the District of Arizona-Phoenix Division.

A group of defendants, including AmeRisk, Artex Risk Solutions, Arthur J. Gallagher & Co, TSA Holdings, and Tribeca Strategic Advisors, were accused of engaging in a widespread captive insurance “conspiracy.”  Plaintiffs Dimitri Shivkov, et al. alleged that the actuarial and captive insurance providers had devised a plan to promote and sell tax-advantaged captive strategies that offered tax benefits which the Internal Revenue Service (IRS) subsequently disallowed.  

Shivkov and others who entered into captive agreements with the named defendants brought several claims, including breach of fiduciary duty, negligent misrepresentation, disgorgement, and civil conspiracy.  However, all agreements signed by the plaintiffs included an “Arbitration Clause” stipulating that any dispute between the relevant parties that could not be resolved through Arizona mediation would be arbitrated by the American Arbitration Association.  The agreements also include a “Limitation of Liability,” which details that defendants “shall have no liability to [the plaintiffs] for any losses, claims, demands, damages, liabilities, costs or expenses arising from […] this agreement.”  Defendants argued that the claims should be arbitrated individually under this clause; because all claims in this lawsuit are barred by the Arbitration Clause, individual arbitration would inevitably lead to a dismissal of the action.  Shivkov argued against individual arbitration on the basis that the clause is unenforceable, asserting, in part, that the Arbitration Clause is both “substantively and procedurally unconscionable,” the terms of the clause are beyond reasonable expectations, and the clause was terminated along with the agreements.

Senior U.S. District Judge Stephen McNamee delivered the court order to grant defendants’ renewed joint motion to compel individual arbitrations, thus dismissing the action in its entirety as all claims in the suit are barred by the Arbitration Clause.

Kutak Rock’s defense team was headed by partners Michael J. Low, Paul S. Gerding, Jr. and Marc R. Lieberman.  Firm associate Echo Reynolds also worked on this matter.