Melendres et al v Sheridan et al

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Manuel de Jesus Ortega Melendres, et al.,
Plaintiffs,
v.
County of Maricopa, et al.,
Defendants.
No. CV-07-02513-PHX-GMS
ORDER
On October 21, 2025, the Court met with the parties and outlined a procedure by
which the Defendants, if they should wish to do so, may substantiate the costs they claim
to have incurred from their compliance with the Court’s orders in this case. As part of that
hearing the Court both vacated the previous deadlines and procedures set forth in its
October 8 order (Doc. 3263) and indicated that it would further provide a written order
summarizing the proceedings and setting forth further procedures. This is that summary
and order.
BACKGROUND
In September 2023 (Doc. 2932) and September 2024 (Doc. 3078) the MCSO began
including in its Annual Report to this Court, assertions about the costs incurred by
Defendants in complying with this Court’s orders in this case. (Doc. 2932-1 at 44; Doc.
3078-1 at 51). In Appendix C to both Annual Reports, the Defendants broke down
purported costs in the years in which they were supposedly incurred. (Doc. 2932-1 at 56;
Doc. 3078-1 at 63). According to the reports, operational expenses began accruing in FY
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2014. (Doc. 2932-1 at 56; Doc. 3078-1 at 63). The Report for 2023 attributed operations
costs for 2023 “based on information available as of August 9, 2023.” (Doc. 2932-1 at 44).
After publication of the 2023 Annual Report, representatives of the Defendants made
public estimates about how much it would cost the County to continue to comply with the
Court’s orders through 2025 and made public arguments that expenses in these amounts
were excessive and should end. However, based on a pie chart provided by the MCSO to
the Community Advisory Board which purported to breakdown the costs that the MCSO
had incurred in the most recent year, the Court expressed some skepticism about the
expenses attributed to Melendres and invited the Sheriff to review those costs for accuracy.
Nevertheless, MCSO again re-asserted similar cost figures in its September 2024 Report,
and again asserted that cost figures for the last fiscal year were “based on information
available as of August 31, 2024.” (Doc. 3078-1 at 51).
The day after the MCSO filed its 2024 Annual Report, the Court entered an order
requiring the Defendants to provide the backup and basis for their annual attributions and
total costs of compliance with the Melendres orders to the Monitor’s public finance analyst
so he could audit those asserted costs. The Court required the Defendant to provide:
(1) Each separate expenditure, for each fiscal year, beginning in 2014,
that make up the Department/Operating Costs that they attributed to
the Melendres Orders;
(2) The financial documentation verifying the amount of each
expenditure;
(3) The cost of services, supplies, hardware, and software attributed to the
Melendres orders and the amount and percentage of such costs that
are attributable to the Melendres orders, as opposed to their use for
other MCSO functions and operations;
(4) The personnel cost attributable to the Melendres orders, including the
identification of positions and the function of the positions that are
wholly dedicated to Melendres compliance the identification of
positions which are only partly attributable to Melendres compliance,
the other functions performed by those employees, the costs of such
positions, and the percentage of all employee time attributable to
Melendres compliance for each position;
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(5) The specific paragraph or paragraphs of the Melendres orders to
which each expense is attributed;
(6) All budget requests made to the County by the MCSO and the
narratives that support these budget requests; and
(7) Any additional document or clarification sought by the Monitor or his
Budget Analyst consistent with this order.
(Doc. 3083 at 2-3). The Court further noted that “[b]ecause the Defendants have already
made the analysis and attributions in the process of preparing their annual financial reports,
the identification of such costs, their attribution to Melendres in the various amounts, and
the financial documentation supporting such costs should not be a time-consuming or
otherwise intensive enterprise.” (Id. at 3).
Yet, the Defendants could not, and did not, comply with much of this order despite
checking with the Chief of MCSO’s Court Implementation Division to determine from
where the purported figures came, and the reports’ own assertions for at least two of the
years that the figures were based on information that had been available within a few weeks
of the filing of the report. Nevertheless, over the course of the next year, the County did
provide a large number of documents from its financial ledger indicating the expenses it
began to code to Melendres back in 2014. MCSO budget personnel, County financial
officers, Defendants’ representatives and defense attorneys thereafter met with the
Monitor’s analyst thirteen times in an attempt to accurately reconstruct the figures that the
MCSO attributed to the costs of Melendres compliance beginning in 2014. The Defendants
have represented to this Court that they have provided all of the documents and information
they have on the issue. And yet, they have to date made no attempt to explain why they
have attributed the various expenses that they did to Melendres compliance. Further, based
on Defendants’ submission in response to the Monitor’s Budget Analyst, if an employee
spent only a portion of time on Melendres compliance, then the employee’s entire salary
and expenses were attributed to Melendres compliance, regardless of the actual percentage
of the employee’s time spent on Melendres imposed tasks.
After spending more than a year garnering information and reconstructing it, the
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Monitor’s public financial analyst filed a report stating that up to 72% of the costs attributed
to Melendres by the Defendants was misattributed. (See Doc. 3263).
ANALYSIS
The County proposes a very expensive and timely procedure whereby the multiple
parties, and a special master, will all engage public finance experts to examine the
Monitor’s public finance reconstruction and criticism of the costs attributed by the MCSO
to Melendres. The County has already engaged an expert team, may engage more experts
and asks for six months in which they and their experts can conduct discovery of the
Monitor’s finance experts. The Plaintiffs could presumably themselves name public
finance experts to examine the asserted costs during this period. Thereafter, the parties
could begin court proceedings before a special master, who could also appoint a court-
appointed public finance expert, in which the accuracy of the Monitor’s reconstruction
would be at issue. This is an unwarranted approach for several reasons.
First, it was the Defendants who made unsupported claims in their last two Annual
Reports about how much Melendres compliance costs. The Court never required the
Defendants to track the costs they attributed to Melendres (Doc. 606 ¶ 12), and until 2023,
the Defendants never made an assertion of such costs in their Annual Report. Second,
despite the Court’s orders that they do so (issued the day after they filed the 2024 report
which contained these asserted costs), and despite the Defendants’ own assurances to the
Court that they have supplied all information on the question in their possession, there
remains insufficient evidence or documents to support the Defendants’ allocation of
compliance costs to Melendres. Third, as the proponent of the costs, it is the burden of the
Defendants to prove them, and yet they have not done so. They have not even identified
why they attributed coded costs to Melendres. Fourth, the proposal in which the parties
focus their attention on the accuracy of the Monitor’s reconstruction of such costs is
inappropriate until the County, which has the burden to justify the costs itself, does so.
Fifth, in addition to having the wrong focus, the procedure would be very expensive.
Because the Plaintiff class is the prevailing party in this matter, the County must not only
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pay all of the fees of the attorneys that it engages to attempt to engineer the costs of
compliance that it claims, it must also pay the reasonable costs of the Plaintiffs in
employing its own team of experts and examining the County’s attempted engineering of
attributable expenses. Thus, as the County multiplies the costs by seeking to engineer what
it already purported to have engineered, it must pay Plaintiffs’ costs to respond to that
effort, including a Plaintiffs’ expert team, as well as the potential costs of a special master
and a court-appointed expert. In short, such a process would be lengthy and expensive.
Sixth, because the Court never required the County to provide expense attributions in its
Annual Report, the litigation of the costs of compliance will only add to that compliance
cost without advancing the goal of compliance.
In light of some County officials recently attributing all costs incurred as a result of
Melendres to the Monitor and the Court, the Court declines to compel the Defendants to
engage in such a process. Nevertheless, if the Defendants wish to attempt to engineer or-
re-engineer justifications for the costs that they have asserted, the Court will allow them to
do so in the following manner.
First, the subject of court hearings will be the accuracy of the County’s own report
justifying and demonstrating the operational expenses that the County Defendants attribute
to Melendres compliance in Doc. 2932-1 and Doc. 3078-1, Appendix C.1 The Report shall
be transparent and detailed and based on the facts required by the Court in Doc. 3083 and
the generally accepted accounting and audit principles which will be identified as described
below.
Second, the County Defendants shall have three weeks from the date of this order
to inform the Court if they wish to pursue the construction or reconstruction of their own
claimed expenses in complying with the Melendres orders set forth in Doc. 2932-1 and
Doc. 3078-1, Appendix C. If the County Defendants inform the Court they wish to do so,
the Court will shortly thereafter again convene the parties to set a timeline by which the
parties must submit their respective experts’ reports, responses and rebuttals. The Court
1 The operational expenses are exclusive of the “legal costs” and “non-attorney related
costs” contained in the Annual Report.
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will also discuss with the parties the appointment of a special master and the authorization
of a court-appointed expert.
Third, regardless of whether the County Defendants choose to pursue a
reconstruction of their claimed expenses, all parties will submit to the Court within three
weeks of today’s date, their experts’ identification of the recognized standards and
procedures, if any, that provide the generally accepted accounting principles, procedures
and audit standards for cost attribution, proration of an employee’s expenses among
separate tasks, necessary procedures to audit attributions and prorations and other issues
presented by the allocation and proration of costs in this case. The parties may agree on
the recognized standards. If they do not, the Court will, if necessary, have a hearing on the
issue and identify the accounting and audit standards by which all future cost allocations
to Melendres compliance be measured whether those costs be past, present or future
attributions.
Fourth, despite the Court order requiring it to do so, the County has not supplied
support for its attribution of operational costs to Melendres compliance. The Monitor’s
reconstruction finds that up to 72% of the Defendant’s unsupported attribution of
operational costs to Melendres compliance are wrongly attributed. The Court thus finds
that the operational costs that the County Defendants’ attribute to Melendres compliance
are unsupported, unjustified and are not based on discernible fact. The Court may revisit
this finding if the County chooses to proceed to meet its burden of proving the costs it
asserts while providing the Plaintiffs a fair opportunity to challenge such costs in this
action. If it chooses not to so proceed, this finding will remain in place.
Fifth, the Court will have the Monitor’s public finance experts provide a
supplemental report describing in additional detail to their 97-page report how they
engineered the actual expenses that the County Defendants attributed to Melendres, and
the lack of justification for many such expenses. The report shall be provided to the public
and the parties.
//
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IT IS THEREFORE ORDERED that the procedure and deadlines set forth in the
last two paragraphs of Doc. 3263 (on pages 2 and 3) are VACATED.
IT IS FURTHER ORDERED that within three weeks of the date of today’s order,
the Defendants shall inform the Court whether they seek to justify the past operational costs
that it has attributed to Melendres compliance set forth in the 2023 and 2024 annual reports
from the MCSO. The Court shall thereafter proceed on that notice as identified in this
order.
IT IS FURTHER ORDERED that within three weeks of the date of today’s order,
all parties shall submit to the Court their experts’ identification of the recognized standards
and procedures, if any, that provide the generally accepted accounting principles,
procedures and audit standards for cost attribution, proration of an employee’s expenses
among separate tasks, necessary procedures to audit attributions and prorations and other
issues presented by the allocation and proration of costs in this case.
Dated this 31st day of October, 2025.
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