April 27, 2017

Tenth Circuit: Random Drug Test for County Employee Acceptable When Employee Holds Safety-Sensitive Position

The Tenth Circuit Court of Appeals issued its opinion in Washington v. Unified Government of Wyandotte County, Kansas on February 6, 2017.

Roberick Washington was a lieutenant at the Wyandotte Country Juvenile Detention Center in Kansas City, Kansas. The position entailed Washington interacting with residents, conducting disciplinary hearings for residents, driving the County van to take juveniles to the intake assessment center, and being present if a fight broke out. Wyandotte County has a random drug testing policy that applies to employees in “safety sensitive positions.” The county’s Policy on Substance Abuse and Drug and Alcohol Testing lists Washington’s position, “juvenile lieutenant,” as a safety sensitive position. The policy states that a failed drug or alcohol test is grounds for discipline, including discharge.

Sheriff Donald Ash terminated Washington after he tested positive for cocaine following a random drug test. Pursuant to the Human Resource Guide, Washington Appealed Ash’s decision to the administrator of the Juvenile Detention Center. This grievance was denied, and Washington appealed to the County Administrator’s Office. After a hearing, an assistant county administrator upheld the termination. Washington claims that he sought an evidentiary hearing and a name-clearing hearing, but was denied both.

Washington alleged three violations of 42 U.S.C. § 1983, namely that the drug test was an illegal search in violation of his Fourth and Fourteenth Amendment rights, he was deprived of his property interest in continued employment without due process, and defendants failed to provide him with a name-clearing hearing. Additionally, Washington claimed the county breached an implied contract created by its written disciplinary policies in violation of state contract law. The district court granted summary judgment for the defendants on all counts.

The Tenth Circuit first addressed Washington’s § 1983 claims. Municipalities are not protected by qualified immunity, so to grant summary judgment in favor or a municipality, the pleadings and supporting materials must establish there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. A plaintiff must identify an unconstitutional policy that caused the claimed injury in order for a municipality to be liable under § 1983. A plaintiff must establish that the municipal employee causing the harm violated the plaintiff’s constitutional rights.

The Tenth Circuit first addressed Washington’s claim that the county’s random drug test violated the Fourth Amendment’s probable cause and warrant requirements. Ordinarily, a search must be based on individualized suspicion of wrongdoing. However, when the government asserts a special need beyond ordinary crime detection, the Tenth Circuit has found suspicionless drug testing reasonable if the government’s interests outweigh the individual’s privacy interests. Courts have held that when drug use among the individuals tested would threaten the workplace or public safety, the government’s concerns are real. Additionally, courts have held that random drug tests are effective at detecting and deterring drug use.

The Tenth Circuit held that the county had a legitimate special need because the random drug tests to juvenile lieutenants ensured the safety and welfare of the children housed in the juvenile detention center. The juvenile lieutenant position involved interactions with residents, and drug use would impair his ability to interact with the youth. Additionally, the random testing minimized the possibility that employees would evade detection and maximized deterrence. Therefore, the Tenth Circuit found a legitimate special need for the random drug testing.

The Tenth Circuit then weighed the special need against Washington’s privacy interests to determine if the tests were reasonable. The Tenth Circuit held that as a correctional employee, Washington’s expectation of privacy was diminished. Additionally, the drug testing was minimally invasive, as Washington provided a sample behind a closed door with no supervision.

Next, the Tenth Circuit held that the county presented two interests that were important enough to justify testing Washington. The first was that Washington was working with juveniles in an educational setting, and an employee’s illegal drug use presented a risk of harm to minors. Second, if an employee has law enforcement duties and access to direct contact with inmates, that employee’s illegal use of drugs presents a significant threat to inmates and the security of the facility. The Supreme Court has held that suspicionless drug testing of employees in certain safety sensitive positions was reasonable. In this case, the county’s policy lists “juvenile lieutenant” as a safety sensitive position. The Tenth Circuit held that this classification was reasonable to Washington’s position based on the duties that he performed. Therefore, the Tenth Circuit held that in this specific instance, the county’s interests were more important and outweighed Washington’s diminished privacy rights, and thus the random drug test was reasonable. Consequently, neither Sheriff Ash nor the county could be subject to § 1983 liability.

Next, the Tenth Circuit addressed Washington’s claim that the county’s personnel policies established he had a protected property interest in his continued employment at the Juvenile Detention Center. The Tenth Circuit stated a two-part inquiry to determine whether a plaintiff was denied procedural due process. First, the plaintiff must have a protected interest to which due process is applicable. The second inquiry is whether the plaintiff was afforded an appropriate level of due process.

Here, the Tenth Circuit looked to Kansas state law to determine if Washington had a protected property interest. The Tenth Circuit determined that Kansas law established that public employment is presumptively at-will, and that Washington did not provide evidence to rebut this presumption. The Tenth Circuit held that personnel policies alone were insufficient to create an implied employment contract. Therefore, the Tenth Circuit affirmed the district court’s grant of summary judgment on this claim.

The Tenth Circuit affirmed the district court’s grant of summary judgment for Washington’s claim that he was entitled to a name-clearing hearing because Washington’s pretrial order did not reference any damaged liberty interest.

Finally, the Tenth Circuit holds that because Washington failed to establish that there was an implied employment contract, the county was entitled to summary judgment on his breach of contract claim.

Tenth Circuit: Reasonable Person Would Not Have Felt Free to Leave When Stopped by Officers

The Tenth Circuit Court of Appeals issued its opinion in United States v. Hernandez on Thursday, February 9, 2017.

Phillip Hernandez was charged with one count of being a felon in possession of a firearm in violation of 18 U.S.C § 922(g)(1). The district court granted his motion to suppress the evidence, as it was obtained in violation of the Fourth Amendment’s prohibition against unlawful seizure during his encounter with two police officers. The government appealed, claiming that the court should apply the subsequent decision in Utah v. Streiff, and arguing that the district court failed to properly apply the Spence factors to the seizure.

On October 20, 2014, two police officers observed Phillip Hernandez walking near a construction site in a known high crime area. The uniformed officers asked Hernandez if they could speak to him, and began asking him questions while driving along side him in their marked police car as Hernandez continued walking. The officers eventually asked Hernandez to stop so they could ask him additional questions. While questioning Hernandez, the officers discovered an active warrant against him and that Hernandez was in possession of a firearm. Hernandez filed a motion to suppress the firearm evidence, which the district court granted.

On appeal, the government asserted that the Supreme Court’s decision in Utah v. Streiff should apply to this case. In Streiff, the Supreme Court ruled that courts may admit illegally obtained evidence as long as the link between the evidence and the illegal method is sufficiently remote, in a case where the evidence in question was obtained by police officers who illegally stop someone and later discover an existing warrant against that person. The Tenth Circuit, however, rejected the application of the decision in Streiff, agreeing with Hernandez that the government had waived the right to present this argument as they had failed to assert it at the district court level.

The court next turned to the government’s argument that the lower court improperly applied the Spence factors to Hernandez’s encounter with the two officers because officers are free to approach individuals and question them. The court stated that the crucial test to determine if an unlawful seizure has occurred is if the officer’s conduct would lead a reasonable person under similar circumstances to believe they were not free to ignore the police presence and leave the situation. The court agreed with the district court’s application of the factors enumerated in United States v. Spence, stating that once the police officers asked Hernandez to stop, because there were two uniformed police officers in a police car at night without other witnesses present, a reasonable person would not have felt he could walk away.

Finally, the court addressed if the officers had reasonable suspicion to justify an investigative detention. In considering the reasonableness of the detention, the court looked at if there were “specific and articulable facts and rational inferences drawn from those facts” that gave the officers reasonable suspicion that Hernandez was involved in criminal activity. The court looked at the officer’s stated reasons for suspicion, including that Hernandez was walking near a construction site where there had been prior thefts, Hernandez was in a high crime area, Hernandez chose not to walk on the side of the street with a sidewalk, and Hernandez was dressed in all black clothing and carrying two backpacks. The court ultimately determined that, although the level of suspicion required for a Terry stop is less than that required for an arrest, the circumstances in this case did not rise to the requisite level for the officers to stop Hernandez.

Justice Briscoe dissented, stating that he believed the encounter between Hernandez and the officers was more along the lines of a consensual encounter and did not constitute an unlawful seizure considering the circumstances.

The Tenth Circuit affirmed the district court’s grant of a motion to suppress the evidence.

Tenth Circuit: District Court has Wide Discretion to Impose Special Conditions of Supervised Release

The Tenth Circuit Court of Appeals issued its opinion in United States v. Bowers on Friday, February 10, 2017.

Donald Bowers was charged and convicted on two counts of civil contempt in violation of 18 U.S.C § 401(3) for willfully and repeatedly violating a permanent injunction against him stemming from a civil trade secret misappropriation suit. Bowers was sentenced to fifteen months’ incarceration and, following his release, a thirty-six month period of supervised release, during which he would make monthly payments of the remaining amount he owed to the plaintiff in the underlying civil suit. Bowers appealed, claiming that the court erred by imposing payments to the plaintiff in the civil case as part of his supervised release, denying his motion for disclosure of the criminal referral, and sentencing him for a period that exceeded six months.

The underlying civil case did not actually include Bowers himself, but his son Lonny Bowers (Lonny) and the officers of WideBand, who were sued by ClearOne Communications, Inc. for misappropriation of trade secrets. Bowers became involved when he entered into an agreement with the defendants in the case to purchase WideBand’s assets in exchange for money to pay their legal fees. The court issued a temporary restraining order and preliminary injunction to stop the transfer of assets to Bowers.

In the civil case against WideBand, the jury returned a verdict against the defendants that included compensatory damages against all the defendants, and punitive damages against two of the WideBand officers (not including Lonny). The day after the verdict in the WideBand case, Bowers filed a statement to perfect a security interest in all of WideBand’s assets. When the court ordered Bowers to appear to show why he was not in contempt for violating the existing temporary restraining order, he failed to appear, and the court determined that he was also subject to the existing restraining order as he acted in concert with the defendants in the WideBand case.

After Bowers failed to appear in multiple contempt hearings and again violated the permanent injunction by setting up and operating DialHD, Inc., a company that used the assets of WideBand, the court issued a memorandum decision and civil contempt order against Bowers for violating the permanent injunction, and directed Bowers to self-surrender for incarceration and pay ClearOne’s reasonable attorney fees and costs. Bowers failed to purge himself of the contempt charge, and the court issued a bench warrant for his arrest. The court rejected both of Bowers’ appeals from the civil cases.

The district court entered a civil judgment against Bowers in an amount of $57,188.61 in attorney fees for violating the permanent injunction, an amount of $22,743.88 to pay ClearOne’s costs and fees from the original ClearOne civil case, and $8,648 in appellate attorney fees in connection with his first appeal in the civil case. In relation to the contempt cases against Bowers, the district court judge who presided over the civil case sent a memo regarding the referral of criminal contempt charges for Bowers to the United States Attorney for the District of Utah, outlining the details of the civil case. A federal grand jury returned an indictment against Bowers for willfully disobeying the permanent injunction and civil contempt order, both in violation of 18 U.S.C. § 401(3). A jury found Bowers guilty on both counts.

Bowers was sentenced to fifteen months’ imprisonment, followed by a term of three years supervised release, during which he would make monthly payments to ClearOne. On appeal, Bowers argued that the district court abused its discretion by ordering him to make monthly payments to ClearOne, denying his motion to compel the government to disclose the criminal referral, and argued that his sentence is illegal because 18 U.S.C. § 402 limits sentences like those Bowers committed to no more than six months.

As to his first contention regarding the imposition of payments as a condition of his supervised release, the court stated that district court has broad discretion to impose special conditions of supervised release, stating that the conditions must only (1) be reasonably related to the nature and history of the defendant’s offense, the deterrence of criminal conduct, the protection of the public from the defendant’s crimes, or the defendant’s educational and other correctional needs; (2) involve no deprivation of liberty than is reasonably necessary; and (3) be consistent with pertinent policy statements issued by the Sentencing Commission. The court rejected Bowers’ argument, stating that the special condition in this case satisfies all of the requisite elements.

Bowers’ second argument on appeal, that the district court erred in denying his motion to discover the criminal referral, was also rejected by the court, as the information in the referral did not contain oral or written statements or other evidence that would render it discoverable under Fed. R. Civ. P. 16. Finally, the court also rejected Bowers’ argument that a sentence of fifteen months for his crimes was illegal under § 402, as he did not raise it at the district court level and therefore waived his right to assert the argument at the appellate level. The court added, however, that even if Bowers had not waived the argument, he still would not be entitled to relief because he was not charged under §402, but under § 401, which does not impose a maximum punishment.

The Tenth Circuit affirmed the judgment of the district court.

Tenth Circuit: Supreme Court Must Explicitly Hold Case to be Retroactive for Retroactivity to Apply

The Tenth Circuit Court of Appeals issued its opinion in In re Jones on Friday, February 10, 2017.

The Tenth Circuit had to determine if a secondary habeas petition was permissible where the first petition failed. Julius Darius Jones petitioned the court, seeking authorization to file a second capital habeas petition under 28 U.S.C. § 2254 to assert a claim for relief under the Supreme Court ruling in the case of Hurst v. Florida. The court evaluated Jones’ petition under the gatekeeping requirements of 28 U.S.C. § 2244(b) and rejected his petition.

Jones was convicted in 2002 of felony murder and sentenced to death. After Jones’ subsequent appeals were rejected, he filed his first habeas petition in 2007 on the grounds of ineffective assistance of trial and appellate counsel, which was denied by the court in 2013, and which denial was affirmed in 2015. In the present matter, Jones wishes to assert that his sentence violates his Fifth, Sixth, Eighth, and Fourteenth Amendment rights because the jury was not instructed that for the death sentence to be appropriate, the jury must find beyond a reasonable doubt that the aggravating circumstances of his crime outweighed any mitigating factors.

The court evaluated if Jones was entitled to a secondary habeas petition under § 2244(b)(2)(A), which states that the court may only authorize successive claims when the claim relies on a new constitutional rule of law that was made retroactive to cases on collateral review by the Supreme Court, which was not previously available to the claimant.

In rejecting Jones’ petition, the court determined that the case upon which Jones was relying, Hurst v. Florida, (where the court ruled the decision underlying the sentence of death must be found beyond a reasonable doubt) did not warrant retroactivity. The court stated that for a procedural rule of law to be retroactive, the Supreme Court must have explicitly held it to be. Because the Supreme Court has not held the Hurst ruling to be retroactive, the court determined Jones had not met the gatekeeping requirements under § 2244(b).

The Tenth Circuit denied the Motion for Authorization.

Tenth Circuit: District Court Did Not Err in Finding Assault Occurred Despite Poor Quality Evidence

The Tenth Circuit Court of Appeals issued its opinion in United States v. Henry on Friday, February 3, 2017. Panel rehearing was granted for the sole purpose of adding a footnote; that opinion is available here.

Tremale Henry finished a prison sentence for violating federal drug laws and was under supervised release for five years thereafter. During his five year supervised release, Mr. Henry was found by the district court to be responsible for two separate assaults with a dangerous weapon. The district court sentenced Mr. Henry to a 24-month prison term followed by six further years of supervised release. Mr. Henry argues that the district court impermissibly relied on hearsay when reaching its judgment.

The Tenth Circuit first addressed Mr. Henry’s first assault charge. In finding that Mr. Henry committed this assault, the district court relied on statements from a witness, Candace Ramsey. Ms. Ramsey testified that she saw Mr. Henry lunge at his victim with a small object, but that she could not see exactly what that object was. A probation officer then testified that Ms. Ramsey told him before the hearing that she saw Mr. Henry use a knife. The district court apparently credited this hearsay. Additionally, the district court relied on a surveillance video that showed Mr. Henry make rapid movements towards the victim. Although the video quality was poor and a knife could not clearly visible, the district court found that the reaction of the victim was consistent with a violent assault with a dangerous weapon. The district court found that all of these facts taken together established that Mr. Henry committed the first assault with a dangerous weapon.

The Tenth Circuit held that the district court did not err in its finding regarding the first assault. The Tenth Circuit stated that the usual rules of evidence do not apply in revocation hearings, and that the Supreme Court has allowed hearsay into supervised release proceedings. The Tenth Circuit went on to state that Fed. R. Crim. P. 32.1(b)(2)(C) grants a defendant in a revocation hearing the opportunity to question any adverse witness. Additionally, in United States v. Jones, the Tenth Circuit held that the application of Rule 32.1(b)(2)(C) requires a district court to conduct a balancing test to weigh “the defendant’s interests in confronting a witness against the government’s interest in foregoing the witness’s appearance.”

The Tenth Circuit held that neither Rule 32.1(b)(2)(C) nor Jones was applicable with regard to the first instance of the assault charge because the witness was available for cross-examination. Ms. Ramsey did appear at the hearing and Mr. Henry had the chance to question her about her hearsay statement. Additionally, Mr. Henry did not provide evidence to establish that his minimal due process rights were violated.

The Tenth Circuit next addressed the second assault charge, which consisted of the stabbing of the victim. The district court relied on out-of-court statements that the victim and the victim’s girlfriend made to a police detective. That detective then relayed the statements to Mr. Henry’s probation officer. Mr. Henry’s probation officer presented these statements at the revocation hearing, but neither the victim, his girlfriend, nor the detective was subject to cross-examination. Therefore, the Tenth Circuit held that Rule 32.1(b)(2)(C) and Jones did apply to this assault charge, and that the district court failed to conduct the balancing test Jones required.

The Tenth Circuit held that the district courts failure to apply the relevant tests was not a harmless error. The Tenth Circuit came to this conclusion because it determined that the district court considered both assault charges when it fashioned its sentence. Therefore, the error was not harmless and the Tenth Circuit remanded the case back to the district court for resentencing.

Tenth Circuit: Officers Reasonably Believed Use of Deadly Force was Necessary

The Tenth Circuit Court of Appeals issued its opinion in Carabajal v. City of Cheyenne, Wyoming on February 6, 2017.

This case arose out of an instance involving the Plaintiffs, Mathew Carabajal and his son, V.M.C., being pulled over by several officers, including Officer Thornton and Officer Sutton. On September 19, 2011, Mr. Carabajal was driving a vehicle containing his infant son, V.M.C., and two others. A police vehicle with its lights and sirens activated followed him, but he continued to drive for approximately six blocks, obeying the speed limit. After Mr. Carabajal pulled over, Officer Thornton, one of two officers who later arrived at the scene, stood in front of the vehicle, while a police vehicle was positioned behind Mr. Carabajal’s vehicle and two other vehicles were parked in front of Mr. Carabajal’s. Officer Thornton shouted at Mr. Carabajal, “Don’t start the car or I’ll shoot.” Mr. Carabajal’s vehicle began to move forward and, after three seconds, Officer Thornton fired two rounds from his shotgun at Mr. Carabajal, injuring him. The car then stopped and Officers Thornton and Sutton removed Mr. Carabajal from the vehicle. Mr. Carabajal fell to the ground and Officers Sutton and Thornton slowly dragged Mr. Carabajal out of the vehicle.

Plaintiffs sued the City of Cheyenne, Wyoming, its police department, and four officers, including Officers Thornton and Sutton, in their individual capacities. The district court dismissed V.M.C.’s claim that he was unlawfully seized when Officer Thornton shot into the vehicle he was an occupant in. The district court granted summary judgment on Mr. Carabajal’s excessive force claims, finding that the officers were entitled to qualified immunity. The district court also held that the complaint did not plead a negligence claim against the City based on the alleged hiring of Officer Thornton, due to a lack of evidentiary support.

The Tenth Circuit first addressed Mr. Carabajal’s challenge of the district court’s grant of qualified immunity on his excessive force claims. In this case, the events were captured on video, and the Tenth Circuit states that it relied on that evidence. The Tenth Circuit articulated the two-part analysis required when a defendant asserts qualified immunity. First, the plaintiff must allege facts to demonstrate that a violation of a constitutional right occurred. Second, if that demonstration is made, the court must determine whether the right at issue was “clearly established” at the time of the incident. The plaintiff must show both of these factors.

Mr. Carabajal alleged that Officers Thornton and Sutton violated his Fourth Amendment rights through the use of excessive force.  The Fourth Amendment protects individuals against “unreasonable searches and seizures.” A “seizure” must have occurred and the plaintiff must prove that is was “unreasonable.” Mr. Carabajal made two claims of excessive force.

Mr. Carabajal’s first excessive force claim regarded Officer Thornton’s shooting of Mr. Carabajal. The district court held that the use of force in this case was reasonable. The Tenth Circuit agreed. The Tenth Circuit cited the facts that Mr. Carabajal had eluded police for several blocks, was ordered not to start the vehicle, and that Mr. Carabajal appeared to deliberately drive his vehicle in Officer Thornton’s direction. Additionally, because of the positions of the three police vehicles, in those close quarters, the Tenth Circuit held that a reasonable officer could conclude that his life was in danger and employ deadly force to stop the vehicle. It was reasonable for Officer Thornton to have perceived that Mr. Carabajal’s driving was deliberate. Therefore, Officer Thornton’s conduct was reasonable.

Next, the Tenth Circuit held that, even if Officer Thornton’s conduct was excessive under the Forth Amendment, it was not clearly established that his conduct was unlawful at the time of the shooting. The Tenth Circuit addresses a circuit split regarding the issue and a lack of Supreme Court precedent to hold that the unlawfulness of Officer Thornton’s conduct was not clearly established.

Therefore, the Tenth Circuit held that qualified immunity was warranted regarding Mr. Carabajal’s first excessive force claim.

Mr. Carabajal’s second excessive force claim regarded Officers Thornton and Sutton’s removal of Mr. Carabajal from the vehicle after he was shot. The Tenth Circuit held that the video evidence revealed that the officers did not use an unreasonable amount of force, nor was it unreasonable to remove Mr. Carabajal from the vehicle under those circumstances. When Mr. Carabajal was removed, the officers were aware that he had been non-compliant with police instructions at least twice. Accordingly, the Tenth Circuit held that Mr. Carabajal did not demonstrate a violation of a constitutional right and that Officers Thornton and Sutton were entitled to qualified immunity regarding Mr. Carabajal’s second excessive force claim.

The Tenth Circuit next addressed V.M.C.’s claim that he was unlawfully seized by Officer Thornton when he shot into the vehicle that V.M.C. occupied. The Tenth Circuit held that even if V.M.C. did plead a plausible unreasonable seizure claim, Officer Thornton would have been entitled to qualified immunity because the law does not clearly establish whether firing a weapon into a car constitutes a Fourth Amendment seizure.

Finally, the Tenth Circuit addressed the district court’s dismissal of the Plaintiffs’ negligent hiring claim against the City. A plaintiff must show that the City was reckless or negligent in its employment of improper persons in work that posed a risk of harm to others, for the City to be liable. Here, the City engaged in an extensive investigation into Officer Thornton that demonstrated he qualified under Wyoming standards for employment as a police officer. The Plaintiffs presented no evidence that the City was on notice that Officer Thornton was likely to use unnecessary or excessive force against a member of the public. Thus, the Tenth Circuit held that the City owed no legal duty to protect Plaintiffs as they alleged.

Tenth Circuit: Summary Judgment Affirmed Where No Evidence Presented of Conspiracy to Monopolize

The Tenth Circuit Court of Appeals issued its opinion in Buccaneer Energy (USA) Inc., v. Gunnison Energy Corporation; SG Interests I, LTD.; SG Interests VII, LTD. on February 3, 2017.

Buccaneer Energy (USA) Inc. (Buccaneer) sued SG Interests I, Ltd.., SG Interests VII, Ltd. (together, SG), and Gunnison Energy Corporation (GEC) (collectively, Defendants) alleging that Defendants had conspired in restraint of trade in violation of § 1 of the Sherman Act and that Defendants had conspired to monopolize in violation of § 2 of the Sherman Act. The district court granted summary judgment for the Defendants and the Tenth Circuit affirmed due to Buccaneer’s failure to present sufficient evidence to create a genuine issue of fact on one or more elements of each of its claims.

Defendants each granted each other the option to participate equally in the construction and ownership of any pipeline initiated by the other party. GEC exercised this option to participate in the Bull Mountain Pipeline, which traveled from the Ragged Mountain Area (RM Area) located in Delta and Gunnison Counties, Colorado, to the Questar Interstate pipeline. GEC and SG also equally had ultimate control over the Ragged Mountain Gathering System (RM System), which transported natural gas from the RM Area to the Rocky Mountain natural Gas Pipeline (Rocky Mountain Pipeline).

Buccaneer acquired the Riviera Drilling and Exploration Company’s (Riviera) leases in the RM Area. Buccaneer pursued a means for transporting its expected gas production from GEC on the RM System. GEC offered a rate of $1.52 per MMBtu for interruptible service. Buccaneer countered, revising the interruptible service language but keeping the rate the same. GEC responded raising the rate to $3.92 per MMBtu, and reinserting the interruptible service provisions. Buccaneer did not counteroffer again. Buccaneer failed to secure a transportation agreement and Riviera terminated the Lease Agreement.

Buccaneer filed this case on June 21, 2012 and alleged that the “RM System was essential to effective competition for production rights and the sale of natural gas from the Ragged Mountain Area.” It further claimed that because Defendants refused to provide Buccaneer with access to the RM System, Defendants violated §§ 1 and 2 of the Sherman Act by engaging in a conspiracy in restraint of trade and a conspiracy to monopolize.

The district court granted summary judgment for Defendants on both of Buccaneer’s antitrust claims because Buccaneer did not present evidence to show that Defendants caused, or could cause, injury to competition in a defined market. Buccaneer also did not demonstrate its own preparedness to enter the market. The Tenth Court affirmed, concluding that Buccaneer failed to present sufficient evidence to survive summary judgment on either of its claims.

Section 1 of the Sherman Act prohibits “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States.” 15 U.S.C. § 1. This provision has been construed to forbid only restraints of trade that are unreasonable. The Tenth Circuit analyzed the Defendants’ conduct under the rule of reason because Buccaneer did not allege a per se rule violation.

First, the Tenth Circuit dismissed Buccaneer’s allegation that the Defendants unreasonably denied it access to the RM System, which was Buccaneer claimed was “essential” to Buccaneer’s ability to compete. Buccaneer failed to prove the second element of the “essential facilities doctrine,” a competitor’s inability to duplicate the facility. Here, the relevant facility is the RM System, and while it may be difficult to duplicate, Buccaneer did not present any evidence on the matter. Buccaneer focused on the Bull Mountain Pipeline, which was not at issue in this case.

Next, the Tenth Circuit held that Buccaneer did not adequately establish its claim under the rule of reason. Under the rule of reason, the plaintiff has the initial burden of showing an agreement had a substantially adverse effect on competition. The burden then shifts to the defendant to show pro-competitive virtues of such conduct. Then the plaintiff must show that such conduct was not reasonably necessary to achieve the legitimate objectives.  A court must then weigh the harms and benefits of such conduct to determine if it is reasonable.

A plaintiff must show an adverse effect on competition in general, not just that the conduct adversely affected the plaintiff’s business. Buccaneer failed to meets its burden of showing that the challenged conduct had anticompetitive effects. Buccaneer did not present any evidence of actual anticompetitive effect; such as fewer production rights being acquired in the RM Area or that Defendants’ position allowed them to pay less than competitive prices.

The Tenth Circuit next addressed whether Buccaneer had shown harm to competition by Defendants’ possession of market power in the relevant market. The “relevant market” consists of both the product area and the geographic area. The product market consists of products that are sufficiently substitutable with each other based on the purpose for which they are produced, as well as their price, use, and quantities. The geographic market encompasses the area in which competition occurs. Once the relevant market has been identified, a plaintiff must show market power by demonstrating that the defendants had either the power to control price or the power to exclude competition.

Buccaneer asserted that the first relevant product was “production rights” and the relevant geographic market was the RM Area. The Tenth Circuit held that Buccaneer did not adequately define either market. Buccaneer did not offer its own definition of the product market for “production rights,” for which it bore the burden of defining. Buccaneer also failed to establish the relevant geographic market with any precision; it simply stated the area and did not define its boarders. Therefore, the Tenth Circuit held that Buccaneer failed to meet its burden of establishing either the product or the geographic market. The district court therefore did not err when it dismissed the claim for failure to allege a legally sufficient market.

Further, even if Buccaneer did define a relevant market, it did not establish that Defendants possessed market power. Market share, or size, is not enough to establish market power, and the absence of market share creates a presumption that market power does not exist. Buccaneer did not present evidence to demonstrate Defendants’ market share. It did not allege what percentage of the “production rights” market that Defendants possessed. Additionally, Buccaneer did not present evidence that that Defendants created any barriers of entry into the relevant market for competitors. Therefore, Buccaneer failed to satisfy its burden of showing market power and also failed to establish any anticompetitive effect in the alleged market for production rights.

Buccaneer next alleged that the second relevant product was natural gas, which was undisputed. The Tenth Circuit held that Buccaneer’s defined relevant market, which was “the market for downstream sales of gas,” was insufficient to address that market for considerations relevant under the rule of reason analysis. Buccaneer also failed to show that the Defendants possessed market power in any relevant market. The Tenth Circuit held that Buccaneer did not set forth facts from which a jury could find that the Defendants possessed market power in that market.

Finally, the Tenth Circuit quickly dismissed Buccaneer’s § 2 conspiracy claim because such a claim requires proof of a relevant antitrust market. As with Buccaneer’s § 1 claim, it did not establish a relevant market, so its § 2 claim fails for the same reasons as its § 1 claim.

In conclusion, the Tenth Circuit held that, because Buccaneer failed to present evidence from which a jury could conclude that Defendants’ conduct actually or potentially harmed competition in a relevant antitrust market, both its § 1 and § 2 Sherman Act claims fail. The Tenth Circuit affirmed the district court’s order granting summary judgment in favor of Defendants on that basis.

Tenth Circuit: Honest Belief Doctrine Allows Employee to Challenge Honesty of Employer’s Stated Reason for Termination

The Tenth Circuit Court of Appeals issued its opinion in Dewitt v. Southwestern Bell Telephone Company on Wednesday, January 18, 2017.

After her employment was terminated by Southwestern Bell Telephone Company (SWBTC) in 2010, Janna Dewitt filed a lawsuit against her former employer claiming unlawful discrimination and failure to accommodate her disability in violation of the American Disability Act, as well as a retaliation claim in violation of the Family Medical Leave Act (FMLA). The district court granted summary judgment in favor of SWBTC on all three claims, and Dewitt appealed.

Dewitt worked as a customer service representative in the call center of SWBTC. When Dewitt was hired she disclosed her diagnosis of Type I diabetes to her employer, who allowed her to take breaks as needed to eat and check her insulin levels. During Dewitt’s employment she took FMLA leave occasionally for health reasons, but generally avoided taking FMLA leave as it was looked upon unfavorably by SWBTC. After Dewitt violated SWBTC’s company policy for a second time by hanging up on two customers, SWBTC initiated a review and ultimately terminated Dewitt. Dewitt contends that she does not recall hanging up on the customers, as she was experiencing dangerously low blood sugar levels.

The court applied the burden-shifting framework first laid out in McDonnell-Douglas Corp. v. Green, which articulates a three-prong test for evaluating employment claims: (1) the claimant must show a prima facie case of retaliation or discrimination; (2) if the claimant presents a prima facie case, then if the employer can show a legitimate non-discriminatory reason for the action against the employee, the burden shifts back to the claimant to show that (3) there is a genuine issue of material fact as to if the employer’s reason for the action was merely pretext.

As to Dewitt’s first claim that SWBTC terminated her because of her disability, the court affirms the district court’s grant of summary judgment. The court looked to SWBTC’s process in evaluating the hang-ups, and stated that SWBTC’s termination was made based on their honest belief and in good faith due to Dewitt’s conduct, not because of her disability. Dewitt requests that the court decline to apply the honest belief doctrine, claiming that it “eviscerates the third prong of the McDonnell-Douglas test.” The court declines to do so, stating that the honest belief doctrine works to allow the employee to challenge the honesty of the employer’s stated reasoning for the action against the employee.

Next, Dewitt claims that SWBTC failed to accommodate her disability by not excusing the dropped phone calls. The court affirms the grant of summary judgment as to this claim as well, stating that an employer is not required to retroactively accommodate a disability where the employee has not previously requested an accommodation, and Dewitt never raised the concern prior to the incident with SWBTC that her diabetes could cause her to drop calls. The court added that the Equal Employment Opportunity Commission’s own guidance refutes Dewitt’s claim that her past conduct should be overlooked, as the guidance states “an employer is not required to excuse past misconduct even if it is the result of the individual’s disability.”

Finally, regarding Dewitt’s third claim of retaliation by SWBTC against her for taking FMLA leave, the court also affirms the district court’s grant of summary judgment in favor of SWBTC. The court held that because SWBTC offered a legitimate reason for terminating Dewitt, her hanging up on customers, Dewitt was required to show that this reason was mere pretext for firing her due to her disability. While Dewitt offered testimony that FMLA leave was discouraged and another supervisor disliked her, neither witness was involved in her actual termination. Therefore, the court determined that Dewitt’s evidence did not sufficiently establish a question as to if SWBTC’s stated reason for terminating her was merely pretext to terminate her employment due to her disability.

The court affirmed the district court’s grant of summary judgment on all three of Dewitt’s employment claims.

Tenth Circuit: Commerce Clause Does Not Protect Creator of Child Pornography

The Tenth Circuit Court of Appeals issued its opinion in United States v. Humphrey on Wednesday, January 18, 2017.

Reginald Humphrey was convicted of the rape and forcible sexual abuse of his live-in girlfriend’s stepdaughter and sentenced to five years’ imprisonment. During the state’s investigation into the abuse claims, police found photographs and videos depicting the abuse on Humphrey’s computer. Subsequent to his conviction on the abuse claims, a grand jury indicted Humphrey on one count of producing child pornography in violation of 18 U.S.C. § 2251(a).

Section 2251(a) prohibits a minor from engaging in sexually explicit conduct to create a visual depiction of such conduct if it was made with materials that have been mailed, shipped, or transported via intrastate commerce. The court stated that there is no doubt § 2251(a) applies to Humphrey’s conduct in this case. Humphrey conditionally pleaded guilty to the charge, and reserved his right to appeal the district court’s ruling, arguing that the application of § 2251(a) to his solely intrastate activities violated the commerce clause as he did not distribute or share the child pornography across state lines.

The Tenth Circuit had to determine if the previous decisions of the court upholding the application of § 2251(a) to the production of child pornography were invalidated by the Supreme Court decision in National Federation of Independent Business v. Sebelius. While Humphrey acknowledges the court’s holding in United States v. Jeronimo-Bautista that the application of § 2251(a) to the intrastate production of child pornography did not violate the commerce clause, he argues the holding should be overturned in light of the ruling in NFIB, which rejected congress’s regulation of an individual’s inactivity in the market.

The court rejected Humphrey’s argument that NFIB should apply, as the NFIB case involved an individual’s failure to engage in a commercial activity where Congress had mandated action, while Humphrey’s case involved no requirement to act by Congress. The court states that this distinguishes Humphrey’s case from NFIB, because, “here, Humphrey didn’t fail to produce child pornography; he actively engaged in producing it.” The court states that because the NFIB case has no affect on Congress’s ability to regulate interstate commerce, they are bound by their previous holding in Jeronimo-Bautista.

The court affirmed the district court’s denial of Humphrey’s motion to dismiss.

Tenth Circuit: Concurrent Insurer Responsible for Proportional Shares of Loss for School Fire

The Tenth Circuit Court of Appeals issued its opinion in Philadelphia Indemnity Ins. Co. v. Lexington Ins. Co. on January 19, 2017.

In 2012, Philadelphia Indemnity Insurance Company issued an insurance policy to Tulsa School of Arts and Sciences (TSAS), an Oklahoma charter school. TSAS leased the Barnard Elementary School building from the Independent School District No. 1 of Tulsa County, Oklahoma. TSAS obtained the insurance policy, as required by the lease, naming the District as the payee. The District held a separate insurance policy on the building leased by TSAS and on over 100 other facilities the District owned. The building was damaged by fire on September 5, 2012. The total adjusted loss was $6,014,359.06. The insureds were paid; however, the insurers pursued litigation over which policy covered the damage. Both policies protected against fire damage and included identically worded “other insurance” provisions. Philadelphia sought a declaratory judgment in the U.S. District Court for the Northern District of Oklahoma in March 2013. The district court granted Philadelphia’s motion in December 2015 and denied Lexington’s request for summary judgment.

Rejecting Lexington’s arguments, the Tenth Circuit found that Philadelphia had standing. The court held that Philadelphia met the Constitutional requirement for a case or controversy in the context of a declaratory judgment. Philadelphia’s alleged injury was financial, definite, and concrete. The parties’ interests were adverse: either insurer would bear the loss or share it. Due to the causal connection of how the insurers’ policies interact with one another, a judicial determination of the insurers’ responsibilities under the policies would provide redress. The court stated that this action is between insurers for a declaration of the insurers’ responsibilities, and not an action to enforce a contract. Therefore, Philadelphia had standing.

The Tenth Circuit agreed with the district court’s conclusion. The court held that the district court properly applied Oklahoma insurance law in its decision on summary judgment. The panel applied the framework established by the Oklahoma Supreme Court in Equity Mutual Insurance v. Spring Valley Wholesale Nursery to affirm that both policies were primary polices, the identical policy provisions canceled each other out, and the total loss must be shared proportionally. This reasoning was further supported by the Fifth Circuit’s decision in Southern Insurance Co. v. Affiliated FM Insurance Co. In Southern Insurance, the court applied Mississippi law to hold that concurrent policies containing “other insurance” clauses canceled each other out and required pro rata calculation.

Philadelphia argued that the district court should have required Lexington to pay more because Lexington’s policy limit was $100 million, while its policy limit was $7 million. The court disagreed. Because Lexington’s policy included a “limit of liability” endorsement, Lexington’s policy limit was the amount of loss here and not the full $100 million.

Judge McHugh concurred in part and dissented in part. He agreed with Philadelphia. The district court should have used Lexington’s policy limit of $100 million and not the liability limit to determine the proportional share. The dissenting part also relies on a different interpretation of the default rule from Equity Mutual. Without expressly provided for in the insurance policy, the pro rata calculation should be based on the total policy limit of each policy. This conclusion would result in Philadelphia liable for 6.54% and Lexington 93.46%. The majority of the panel affirmed the lower court’s calculation apportioning 53.79% of the loss to Philadelphia, and 46.21% to Lexington.