May 26, 2016

Tenth Circuit: Declaratory Judgment Action Moot where Business Interests Sold During Litigation

The Tenth Circuit Court of Appeals issued its opinion in Schell v. OXY USA, Inc. on Monday, December 14, 2015, and modified the opinion on February 9, 2016.

The plaintiff class (appellees and cross-appellants in the Tenth Circuit) consists of approximately 2200 surface owners of Kansas land burdened by oil and gas leases held or operated by OXY, the appellant and cross-appellee. The leases contained a “free gas” clause that, in substance, purported to grant the lessor access to free gas for domestic use. In August 2007, OXY sent letters warning free gas users that their gas may become unsafe to use, either because of high hydrogen sulfide content or low pressure at the wellhead, as a result of the well reaching the end of their productive life.

On August 31, 2007, leaseholders David Schell, Donna Schell, Howard Pickens, and Ron Oliver filed this action on behalf of themselves and others similarly situated, seeking a permanent injunction and a declaratory judgment based on alleged breaches of mineral leases entered into with OXY for failure to supply free usable gas. The district court certified a class of all surface owners of Kansas land burdened by oil and gas leases held or operated by OXY which contain a free gas clause. Plaintiffs and OXY then filed cross-motions for summary judgment. The district court denied OXY’s motion for summary judgment and granted the plaintiffs’ motion for summary judgment. The district court granted the plaintiffs declaratory relief requiring OXY to provide free useable gas under the contract; however, the district court denied the plaintiffs’ motion for a permanent injunction.

Because the district court found that the free gas clauses were ambiguous and interpreted them according to principles of Kansas law, OXY moved to vacate the judgment to permit it to discover extrinsic evidence of the clauses’ meaning. The district court agreed and vacated its judgment. The district court subsequently granted plaintiffs’ resubmitted motion for summary judgment. It also denied plaintiffs’ motion for attorneys’ fees, expenses, and incentive awards. OXY then filed this appeal, and the plaintiffs cross-appealed. After the appeal and cross-appeal were filed, OXY sold all of its interests in the Kansas leases to Merit Hugoton, L.P. (“Merit”). The plaintiff class filed a motion to dismiss the appeal as moot based on this sale. The Tenth Circuit Court of Appeals permitted the appeal to proceed to briefing and oral argument. One week after oral argument, Merit filed a motion to intervene as an appellant and cross-appellee, which was denied by the Tenth Circuit.

The Tenth Circuit concluded the appeal is moot, thereby granting the motion of the plaintiff class to dismiss the appeal, reasoning OXY’s sale of the leases to Merit leads to the conclusion that its conduct cannot be affected by a declaratory judgment concerning the same leases. The Tenth Circuit dismissed OXY’s argument that the leaseholders could sue OXY over its prior conduct during the time when it was operating the wells, considering the fact that allowing OXY to continue the present litigation in order to protect itself from hypothetical unfiled future litigation would render the instant declaratory judgment action a prohibited advisory opinion. Further, the court stated Merit’s request to intervene does not change the conclusion that the declaratory judgment action is moot, in that the record is devoid of any evidence suggesting that a judgment against OXY would bind Merit with respect to the plaintiff class.

Next, the Tenth Circuit determined it was appropriate to dismiss the appeal without vacating the district court’s granting of the plaintiff class’s declaratory judgment action. Although the general rule is to vacate the judgment below when the case becomes moot on appeal, the court found OXY’s intentional conduct (i.e., selling of the leases to Merit) caused the issue over the free gas clauses of the leases to be moot, and that no other entity was more responsible for mooting the controversy, thereby justifying the equitable resolution of leaving in place the district court’s judgment granting the plaintiffs declaratory relief. To act otherwise, the court noted, would permit OXY to benefit from its voluntary act by wiping away a loss.

Lastly, with respect to plaintiffs’ cross-appeal challenging the district court’s denial of their motion for attorneys’ fees, expenses, and an incentive award, the Tenth Circuit determined it had jurisdiction over the matter, as the issue of attorneys’ fees (and related issues) was not moot, despite the mootness of the merits of the appeal. The Tenth Circuit then affirmed the district court’s holding that the plaintiff class has not shown a legally sound basis for an award of attorneys’ fees and other related relief. In so holding, the court found that neither the common-benefit exception to the American Rule nor 28 U.S.C. § 2202 was applicable. Because OXY sold all of the leases to Merit, the common benefit exception does not apply, as an award of attorneys’ fees under the exception would be an impermissible penalty on OXY. The Tenth Circuit affirmed the district court’s statement that there is no independent statutory or contractual basis for attorneys’ fees under § 2202.

Max Montag is a 2016 J.D. Candidate at the University of Denver Sturm College of Law.

Tenth Circuit: Unpublished Opinions, 5/6/2016

On Friday, May 6, 2016, the Tenth Circuit Court of Appeals issued no published opinion and one unpublished opinion.

Laurson v. Lind

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

Tenth Circuit: Unpublished Opinions, 5/5/2016

On Thursday, May 5, 2016, the Tenth Circuit Court of Appeals issued no published opinion and two unpublished opinions.

United States v. Winberg

Broughton v. Merit Systems Protection Board

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

Tenth Circuit: Court Reluctant to Infer Illegal Activity from Disturbing Legal Activities

The Tenth Circuit Court of Appeals issued its opinion in United States v. Edwards on Tuesday, December 29, 2015.

During a sting operation, Officer Chris Cornwell discovered that Paul Edwards was using a file sharing network to exchange sexually suggestive photos of a young girl. In addition to exchanging hundreds of photos of the girl, Edwards replied to some user comments in a way that suggested he was sexually attracted to the child. None of the photos posted by Edwards were illegal child pornography; rather, they were legal child erotica. Nevertheless, Officer Cornwell prepared an affidavit for a search warrant based on his descriptions of several of the images and noting that people who collect child pornography also often collect child erotica. On the basis of the information in the affidavit, the magistrate issued a search warrant, resulting in the discovery of thousands of images of child pornography at Edwards’ residence.

A grand jury indicted Edwards on one count of possession of child pornography and five counts of receipt of child pornography. Edwards moved to suppress the evidence found in his home, claiming the search warrant was not supported by probable cause. The district court acknowledged that the warrant presented a close question, but denied Edwards’ motion, concluding that because law enforcement explained that those who collect child erotica often also collect child pornography, there was no error in the magistrate’s issuance of the warrant. The district court further found that even if the warrant were issued erroneously, the good faith exception to the exclusionary rule applied.

Edwards entered a conditional guilty plea to the first count and the district court dismissed the remaining counts on the government’s motion. Edwards was sentenced to 63 months’ imprisonment followed by 7 years’ supervised release. He appealed his conviction and sentence, arguing his motion to suppress should have been granted.

The Tenth Circuit first evaluated whether the magistrate erred in issuing the warrant, and found that based on the totality of the circumstances, the affidavit failed to establish sufficient probable cause. The Tenth Circuit noted that the investigating officers never alleged that any of the material shared by Edwards was illegal child pornography and in fact the officers agreed that the material was legal child erotica. The Tenth Circuit next evaluated the investigating officer’s assertion that people who collect child pornography also frequently collect child erotica, and found that the officer’s assertion did not necessarily indicate the reverse—that people who collect child erotica also collect child pornography. The Tenth Circuit remarked that courts are reluctant to infer illegal activity from legal activity, regardless of whether the legal activity is disturbing. Officer Cornwell’s affidavit failed to show a causal connection between people who legally collect child erotica and those who illegally collect child pornography, and the district court erred in assuming that because the inverse was true, Officer Cornwell’s affidavit was sufficient. The Tenth Circuit ruled that, in absence of any evidence that Edwards collected child pornography, the affidavit failed to establish probable cause by averring that people who possess child pornography also collect child erotica and participate in online forums. The Tenth Circuit found that the pedophiliac tendencies of a person are insufficient to establish probable cause for possession of child pornography.

However, the Tenth Circuit agreed with the district court that the exclusionary rule’s good faith exception applied. Although the magistrate should have been on notice that the affidavit did not support probable cause, the officers who executed the warrant were reasonable in their reliance on the magistrate’s determinations. Edwards argued that the officers’ reliance on the warrant was unreasonable because (1) the affidavit contained false information that the officer knew to be false, (2) the issuing magistrate wholly abandoned the judicial role, (3) the affidavit in support of the warrant was so lacking indicia of probable cause as to render belief in its existence entirely unreasonable, and (4) the warrant was so facially deficient the executing officer could not believe it was valid. The Tenth Circuit quickly disposed of Edwards’ first, second, and fourth arguments, finding no judicial misconduct nor facial deficiencies to the warrant. As to the third argument, the Tenth Circuit found reliance on the warrant was not unreasonable in this case. Although the link between Edwards’ postings and possession of child pornography was “logically fallacious,” the Tenth Circuit held it was not so unsound as to render the officers’ reliance on the warrant objectively unreasonable. The Tenth Circuit noted that both the magistrate and district overlooked the logical inconsistency of Officer Cornwell’s argument, and it was not unreasonable for him to have also overlooked that inconsistency.

The Tenth Circuit affirmed the district court’s denial of Edwards’ motion to suppress based on the good-faith exception to the exclusionary rule.

Tenth Circuit: Jurisdiction Lacking Where Denial of Summary Judgment Based on Genuine Issues of Material Facts

The Tenth Circuit Court of Appeals issued its opinion in Henderson v. Glanz on Monday, December 28, 2015.

Aleshia Henderson was an inmate at the David L. Moss Criminal Justice Center in Tulsa, Oklahoma. She was in a holding cell of the medical unit in handcuffs and leg restraints awaiting medical treatment when Detention Officer (DO) Johnson unlocked the door in view of Inmate Jessie Earl Johnson, a violent offender who was considered extremely high risk for escape and required “extreme caution.” DO Thomas, unaware that the holding cell door was unlocked, left the medical unit to respond to a medical emergency. When a nurse returned with another emergency patient, DO Johnson left the medical unit to assist the nurses.

During this time, Inmate Johnson reported to Inmate Williams that he was going to make sexual contact with Henderson. He left his unlocked holding cell and entered Inmate Henderson’s unlocked holding cell, exiting about 10 minutes later. Both DO Johnson and DO Thomas observed Inmate Johnson leaving Henderson’s cell. DO Johnson immediately confronted Inmate Johnson, who denied being in Henderson’s cell. DO Johnson then interviewed Inmate Henderson, who would not speak but nodded when asked if Inmate Johnson had sexually assaulted her. She was taken to a hospital, where an examination showed bruising, swelling, and a midline vaginal tear consistent with forcible sexual conduct. Inmate Johnson was subsequently charged with rape, though the charge was dismissed when Henderson briefly recanted out of fear for her mother’s safety.

DO Johnson and Thomas told their immediate supervisor, Sergeant Pirtle, about the incident, and the Tulsa County Sheriff’s Office (TCSO) conducted an investigation. TCSO determined that department policy was violated when the DOs left their posts, failing to maintain the required two officers in the medical unit, and when they failed to maintain the log book. When asked later how she could have been unaware of the risk to Henderson, DO Johnson stated, “I don’t know how to answer that.”

Henderson brought suit under 42 U.S.C. § 1983 against DO Johnson, DO Thomas, and Tulsa County Sheriff Glanz, asserting violations of her Eighth Amendment rights. Defendants moved for summary judgment based on qualified immunity because Henderson could not show a constitutional violation. The district court denied summary judgment as to DO Johnson and DO Thomas, concluding there were genuine issues of material fact regarding whether DO Johnson and DO Thomas were aware of the risk of assault. The district court denied summary judgment to Sheriff Glanz because there were genuine issues of material fact regarding whether he was aware of the risk of assault to Henderson. Defendants appealed.

On appeal, the Tenth Circuit first determined it lacked jurisdiction to consider DO Johnson’s and Sheriff Glanz’s appeals. The Tenth Circuit noted that the district court’s denial of summary judgment was not ripe for interlocutory appeal because it was not a final order and did not fall into any of the exceptions allowing interlocutory appeal. The Tenth Circuit also noted that the district court found facts sufficient to support its denial of summary judgment, concluding that by viewing the facts in the light most favorable to Henderson, a reasonable jury could find a constitutional violation.

As to DO Thomas, the Tenth Circuit found it had jurisdiction to assess the district court’s denial of summary judgment. Because DO Thomas did not know DO Johnson had unlocked Henderson’s cell door and was not there when DO Johnson left the unit, he was not subjectively aware of a substantial risk of bodily harm to Henderson. The Tenth Circuit reversed the district court’s denial of qualified immunity to DO Thomas.

The Tenth Circuit dismissed the appeals of DO Johnson and Sheriff Glanz for lack of jurisdiction, and reversed the district court’s denial of summary judgment to DO Thomas.

Tenth Circuit: Unpublished Opinions, 5/3/2016

On Tuesday, May 3, 2016, the Tenth Circuit Court of Appeals issued four published opinions and two unpublished opinions.

United States v. Foster

United States v. Williams

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

Tenth Circuit: Unpublished Opinions, 5/2/2016

On Monday, May 2, 2016, the Tenth Circuit Court of Appeals issued one published opinion and six unpublished opinions.

Brennan v. United States

United States v. Banyai

Gallegos v. Colvin

McDaniels v. Goff

United States v. Alvarez

United States v. Saenz

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

Tenth Circuit: Unpublished Opinions, 4/29/2016

On Friday, April 29, 2016, the Tenth Circuit Court of Appeals issued one published opinion and six unpublished opinions.

United States v. Prince

Galloway v. Roberts

Guerrero v. Meadows

Haff v. Firman

Arrington v. Chavez

Stewart v. People of the State of Colorado

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

Tenth Circuit: Unpublished Opinions, 4/28/2016

On Thursday, April 28, 2016, the Tenth Circuit Court of Appeals issued no published opinion and four unpublished opinions.

Martinez Garcia v. Lynch

United States v. Lancaster

Morehead v. Douglas County Court

Hutson v. State of Colorado

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

Tenth Circuit: Government Lacks Authority to Garnish Retirement Accounts When Restitution Paid According to Schedule

The Tenth Circuit Court of Appeals issued its opinion in United States v. Martinez on Wednesday, December 16, 2015.

Toby Martinez was convicted of mail fraud and conspiracy and was ordered to pay roughly $2.7 million in restitution. The district court ordered that he was to pay the restitution through monthly payments of a percentage of his net disposable income. Upon leaving prison, Martinez was unable to obtain steady employment, and as a result owed relatively little through his court-ordered payment schedule. The government served writs of garnishment for two of Martinez’s retirement accounts, which were worth roughly $470,000 together. Martinez moved to quash the writs of garnishment in district court, but the court denied his motion. Martinez appealed, asking the court to consider whether the government can garnish assets beyond the amount currently due under the court-ordered payment plan. The Tenth Circuit determined it could not.

The Tenth Circuit began by analyzing 18 U.S.C. §§ 3613 and 3664, which allow the government to enforce orders of restitution as if they were liens or judgments in favor of the United States. The Tenth Circuit rejected the government’s argument that it could garnish the entire restitution amount, noting the argument incorrectly assumed the entire restitution amount was currently owed. The Tenth Circuit found that by statute, the district court—not the government—had the ability to determine how a defendant is to pay restitution. It is the government’s job to enforce the district court’s order. The Tenth Circuit analyzed whether Martinez owed the full restitution amount immediately or whether he owed only the installment payments until the full amount was paid. Analyzing the district court’s restitution order, the Circuit found that the district court ordered that Martinez owed only the installment payments. The Tenth Circuit noted that the full amount of restitution is owed only immediately only if the restitution order does not provide for installment payments. The Tenth Circuit also cautioned that the government’s position conflicts with the statutory directive to the district court to impose a payment schedule that reflects the defendant’s financial condition.

The Tenth Circuit reversed and remanded with instructions for the district court to grant Martinez’s motion to quash.

Tenth Circuit: Unpublished Opinions, 4/27/2016

Tenth Circuit: Conviction for Robbery under California Penal Code Qualifies as Crime of Violence

The Tenth Circuit Court of Appeals issued its opinion in United States v. Castillo on Tuesday, December 15, 2015.

Wilber Castillo was convicted in California in 2004 of second-degree robbery, and was removed from the United States in 2007. In 2009, he reentered the United States without inspection. In 2011, he was convicted of shoplifting and in 2014 he was convicted of disorderly conduct. He was interviewed by ICE after his 2014 arrest, and based on his admission, Castillo was charged with illegal reentry under 18 U.S.C. § 1326. The base offense level for illegal reentry is 8 but because of his 2004 conviction for robbery, which is classified as a crime of violence, his total offense level was 24, resulting in a Guidelines range of 46-57 months’ imprisonment. Castillo objected to the application of the crime of violence enhancer. The district court ruled Castillo’s prior conviction was a crime of violence and the offense level was correct, but nevertheless varied downward and sentenced Castillo to 24 months’ imprisonment. Castillo appealed.

The Tenth Circuit examined California Penal Code § 211 to determine whether a conviction under that section qualifies as a crime of violence for purposes of Guidelines § 2L1.2. Castillo argued that because § 211 considers threats to property as crimes of violence, it does not substantially correspond with the generic definition of robbery. The government conceded that including threats to property is a minority position, but argued that the crimes covered by § 211 outside the generic definition of robbery fell within the generic definition of extortion, which is also considered a crime of violence. The Tenth Circuit agreed.  Following the Ninth Circuit’s reasoning in another case that evaluated whether a conviction under § 211 qualified as a crime of violence, the Tenth Circuit found that because the elements of § 211 that do not correspond to the generic definition of robbery are encompassed in the generic definition of extortion, and both crimes are considered crimes of violence, the sentencing enhancer applied.

The Tenth Circuit affirmed the district court.