April 30, 2016

Tenth Circuit: Unpublished Opinions, 4/1/2016

On Friday, April 1, 2016, the Tenth Circuit Court of Appeals issued one published opinion and eight unpublished opinions.

Yarbury v. Martin, Pringle, Oliver, Wallace & Bauer, L.L.P.

United States v. Briggs

United States v. Peterman

Cross v. Bear

United States v. Scott

Marshall v. Oliver

Nebeker v. National Auto Plaza

United States v. Green

Case summaries are not provided for unpublished opinions.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

Tenth Circuit: Unpublished Opinions, 3/31/2016

On Thursday, March 31, 2016, the Tenth Circuit Court of Appeals issued two published opinions and two unpublished opinions.

Salado v. Aldridge

United States v. Montoya

Case summaries are not provided for unpublished opinions.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

Tenth Circuit: Unpublished Opinions, 3/30/2016

On Wednesday, March 30, 2016, the Tenth Circuit Court of Appeals issued no published opinions and eight unpublished opinions.

Miller v. Johnson

United States v. Gandara-Delgado

Dune Citizens Against Ruining the Environment v. United States Office of Surface Mining Reclamation & Enforcement

United States v. Mewhinny

United States v. Mendoza

Sweesy v. Sun Life Assurance Co. of Canada

Sullivan v. Rios

Galindo v. Gentry

Case summaries are not provided for unpublished opinions.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

Tenth Circuit: Unpublished Opinions, 3/29/2016

On Tuesday, March 29, 2016, the Tenth Circuit Court of Appeals issued three published opinions and seven unpublished opinions.

United States v. Tobanche

Ortega v. New Mexico Legal Aid, Inc.

McGrath v. Fogarty

United States v. Jimenez

Lane v. Colvin

United States v. Porter

Webb v. Smith

Case summaries are not provided for unpublished opinions.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

Tenth Circuit: Unpublished Opinions, 3/28/2016

On Monday, March 28, 2016, the Tenth Circuit Court of Appeals issued no published opinion and four unpublished opinions.

United States v. Burks

Hodson v. Weld County Sheriff

Estate of Bleck v. City of Alamosa

People of the State of Colorado v. Carrillo

Case summaries are not provided for unpublished opinions.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

Tenth Circuit: Unpublished Opinions, 3/25/2016

On Friday, March 25, 2016, the Tenth Circuit Court of Appeals issued two published opinions and four unpublished opinions.

Lundahl v. Global E. LLC

Padilla v. Clerk

Klecan v. Santillanes

United States v. Bell

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

Tenth Circuit: Unpublished Opinions, 3/24/2016

On Thursday, March 24, 2016, the Tenth Circuit Court of Appeals issued no published opinion and two unpublished opinions.

Barajas v. Falk

United States v. Morales-Cruz

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

Tenth Circuit: Unpublished Opinions, 3/23/2016

On Wednesday, March 23, 2016, the Tenth Circuit Court of Appeals issued no published opinion and four unpublished opinions.

United States v. Harris

United States v. Vaughan

Lujan-Jimenez v. Lynch

Webb v. Warren

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

Tenth Circuit: Sentence Upheld Because of District Court’s Detailed Findings About its Reasonableness

The Tenth Circuit Court of Appeals issued its opinion in United States v. Snowden on Friday, November 27, 2015.

Blake Snowden was a sales rep for Onyx, M.D., Inc. until his termination in August 2010. Onyx is a physician staffing agency that specializes in placing physicians in hospitals and clinics for short terms. Onyx uses a database program called Bullhorn, which it considers a competitive advantage. When Snowden was fired from Onyx, he decided to compete with Onyx in physician placement, and he obtained an Onyx executive’s password in March 2011 and used it to create his own Bullhorn account. Over the next few months, Snowden logged into Bullhorn dozens of times and copied gigabytes of data. He also intercepted emails of four Onyx executives. However, his efforts were unsuccessful; they neither benefited nor harmed Onyx’s business. When Onyx discovered the hack, the FBI traced it to a computer at Snowden’s address. Onyx’s only loss from the hack was about $25,ooo in legal fees and lost employee time related to the hack.

Snowden eventually pleaded guilty to unlawfully obtaining information from a protected computer and intercepting emails. The district court applied a 16-level enhancement based on its estimated loss of the cost of developing the database, $1.5 million, and calculated his Guidelines range as 41-51 months. However, the district court varied downward and sentenced him to 30 months. The court specifically found that it would apply a 30-month sentence no matter what, even if its Guidelines calculation was held to be incorrect on appeal.

The Tenth Circuit was skeptical about the district court’s assumption of $1.5 million in losses, although it understood the court’s reasoning. The Tenth Circuit found that had the district court limited its loss calculation to Onyx’s actual loss of approximately $25,000, the resulting Guidelines range would have been 8-14 months. However, it found any error harmless because of the district court’s detailed and unusual findings about what it considered to be a proper sentence for Snowden’s crime. The court specifically noted that it would vary upward to 30 months if the Guidelines range was too high and would vary downward to 30 months if the Guidelines range was too low. Because of these specific findings, the Tenth Circuit affirmed the district court’s sentence.

The Tenth Circuit affirmed the sentence but reversed and remanded for the correction of the restitution award to the parties’ undisputed proposed restitution amount.

Tenth Circuit: Unpublished Opinions, 3/22/2016

On Tuesday, March 22, 2016, the Tenth Circuit Court of Appeals issued one published opinion and eight unpublished opinions.

Sherard v. State of Utah

Jackson v. McCollum

White v. Patton

United States v. Locke

Webb v. Thompson

Vreeland v. Zupan

Webb v. Scott

Du Merac v. Colorado School of Mines

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

Tenth Circuit: Unpublished Opinions, 3/21/2016

On Monday, March 21, 2016, the Tenth Circuit Court of Appeals issued no published opinion and one unpublished opinion.

Francoeur v. U.S. Bank National Association

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

Tenth Circuit: Managers Acted in Bad Faith by Painting Grim Financial Picture to Valuation Firms

The Tenth Circuit Court of Appeals issued its opinion in Leone v. Owsley on Wednesday, November 25, 2015.

Charles Leone was a principal of Madison Street Partners, LLP (MSP). In 2012, he resigned his position, and fellow principals Stephen Owsley and Drew Hayworth (Managers) elected to buy Leone’s interest in MSP. The Operating Agreement required the purchase price to be set at fair market value, and the Managers received two independent valuations from St. Charles Capital, LLC, and INTRINSIC. Although it was not used in calculating the offer to Leone, in 2009 Duff & Phelps had valued MSP at between $50 and 65 million. The Managers reluctantly gave the Duff & Phelps report to St. Charles and INTRINSIC, but urged them to ignore it, arguing it was not relevant. The Managers characterized MSP as having poor performance and did not give the valuation firms MSP’s newsletters or other relevant information.

St. Charles valued MSP with a total 2011 revenue of $5.892 million and total net income of $2.21 million. MSPs internal profit and loss statement listed total 2011 revenue as $7.289 million and net income of $3.398 income. INTRINSIC prepared a less detailed report without an opinion as to MSP’s value. Based on the two reports, the Managers offered Leone a purchase price of $135,850. Leone rejected the offer and retained his own expert to value his interest. Leone’s expert calculated his interest as of August 2012 at $1.5 million. Around the same time, Owsley sent his father an email expressing an interest in buying out Leone, remarking that MSP was stable.

In November 2012, Leone brought suit against the managers in the U.S. District Court for the District of Colorado, alleging that they had breached Article 10, Section 10.2(d) of the Operating Agreement by failing to act in good faith in valuing his interest in MSP. Leone also argued the Managers breached the implied covenant of good faith by unreasonably attempting to force him to sell his interest for a price far below fair market value. Managers claimed Leone’s claims were barred because of their “good faith reliance on the advice of one or more third parties.” They moved for summary judgment, and the district court granted their motion. The district court ruled that the valuation firms were qualified to provide expert reports and there was no evidence Managers relied blindly on the reports. As to Leone’s claim that the Managers improperly influenced the valuation firms in order to receive more favorable numbers, the district court found that he had failed to raise a dispute of material fact about the procedural integrity of the valuation.

On appeal, Leone argued that the district court erred in its interpretation of Delaware law by (1) conflating express and implied contractual obligations of good faith, (2) holding that bad faith requires a tortious state of mind, and (3) refusing to consider the substantive unreasonableness of the offered purchase price. He also argued that the district court erred in granting summary judgment because he raised genuine issues of material fact. The Tenth Circuit first evaluated Leone’s argument that the district court erred in conflating express and implied bad faith. The Tenth Circuit noted that under either standard, a good faith evaluation of the ownership interests would require the Managers to refrain from taking action that would result in a lower valuation.

The Tenth Circuit next addressed Leone’s contention that the district court erred in finding that a tortious state of mind is required for bad faith. Analyzing the district court’s opinion as a whole, the Tenth Circuit found it properly stated the Delaware requirements for bad faith. The Tenth Circuit next addressed Leone’s argument that Delaware’s safe harbor provision does not immunize the Managers because they acted in bad faith by wrongfully influencing the valuation firms and relying on valuation figures that were clearly erroneous. The district court concluded it should refrain from considering the substantive accuracy of the valuation reports absence a finding of wrongdoing, then held that no reasonable juror could find that the Managers did anything that affected the procedural integrity of the valuation. The Tenth Circuit disagreed with the district court’s conclusion, noting that when taken in the light most favorable to Leone, a reasonable jury could conclude that the Managers did not rely in good faith on the valuation firms.

Addressing Leone’s claim that the district court erred in granting summary judgment, the Tenth Circuit agreed. Considering the evidence in the light most favorable to Leone, the Tenth Circuit found the district court erred in rejecting that an inference of bad faith could be drawn by the Managers’ actions. The Tenth Circuit noted that a reasonable jury could find that the Managers engaged in conscious wrongdoing based on inaccurate statements to the valuation firms. The Tenth Circuit noted that a reasonable jury could disagree with the district court’s conclusion that the Managers’ false statements did not materially influence the valuation firms’ reports.

The Tenth Circuit reversed the district court’s grant of summary judgment and remanded for further proceedings.