May 21, 2018

Bills Signed Allowing Out-of-State Workers in Colorado Access to Workers’ Compensation Benefits, Allowing Dispensary Employees to Sample Marijuana, and More

On Monday, April 30, 2018, Governor Hickenlooper signed 21 bills into law and sent one bill to the Secretary of State without a signature. To date, he has signed 204 bills and sent two to the Secretary of State without signature. Some of the bills signed Monday include the Long Appropriations Bill, a bill providing access to workers’ compensation benefits for out-of-state workers temporarily in Colorado, a bill requiring fingerprint-based background checks for employees with access to federal tax information, and more. The bills signed on Monday are summarized here.

  • HB 18-1069 – “Concerning the Allowable Uses of Reclaimed Domestic Wastewater, and, in Connection Therewith, Allowing Reclaimed Domestic Wastewater to Be Used for Toilet Flushing and Making an Appropriation,” by Reps. Jeni James Arndt & Dan Thurlow and Sen. Don Coram. The bill codifies rules promulgated by the water quality control commission of the Colorado Department of Public Health and Environment concerning allowable uses of reclaimed domestic wastewater, which is wastewater that has been treated for subsequent reuses other than drinking water.
  • HB 18-1186 – “Concerning the Continuation of the Colorado Youth Advisory Council, and, in Connection Therewith, Implementing the Sunset Review Recommendations of the Department of Regulatory Agencies and Making an Appropriation,” by Reps. James Wilson & Judy Reyhar and Sen. Vicki Marble. The bill implements the recommendation of the department of regulatory agencies to concerning the Colorado youth advisory council and extends the sunset date to September 1, 2023.
  • HB 18-1259 – “Concerning Providing Marijuana Samples to Employees for Business Purposes,” by Rep. Matt Gray and Sen. Vicki Marble. The bill permits a medical marijuana optional premises cultivation licensee, a medical marijuana-infused products manufacturing licensee, a retail marijuana cultivation facility licensee, and a retail marijuana products manufacturing licensee to provide samples to managers for quality control and product development purposes. The bill specifies limits on the amount that can be provided as a sample per batch.
  • HB 18-1284 – “Concerning the Cost of Prescription Drugs Purchased at a Pharmacy,” by Reps. Janet Buckner & James Wilson and Sens. Beth Martinez Humenik & John Kefalas. The bill enacts the ‘Patient Drug Costs Savings Act.’ The act prohibits a carrier that has a contract with a pharmacy or pharmacist, or a pharmacy benefit management firm acting on behalf of a carrier, from preventing a pharmacist from disclosing the cost of prescription drugs or requiring a pharmacy to collect a copay that exceeds the pharmacy’s costs.
  • HB 18-1308 – “Concerning an Exemption from the “Workers’ Compensation Act of Colorado” for Nonresident Employers whose Employees are Temporarily Working in Colorado,” by Reps. Tracy Kraft Tharp & Jon Becker and Sens. Owen Hill & Daniel Kagan. The bill establishes an exemption from the ‘Workers’ Compensation Act of Colorado’ for an out-of-state employer whose employees are working in Colorado on a temporary basis as long as the employer furnishes workers’ compensation coverage in the state in which the employee is regularly employed and the home state is contiguous to Colorado.
  • HB 18-1322 – “Concerning the Provision for Payment of the Expenses of the Executive, Legislative, and Judicial Departments of the State of Colorado, and of its Agencies and Institutions, For and During the Fiscal Year Beginning July 1, 2018, Except as Otherwise Noted,” by Rep. Millie Hamner and Sen. Kent Lambert. This is the Long Appropriations Bill, which budgets for various monies to be applied to different state agencies.
  • HB 18-1323 – “Concerning Transfers of Money to a Newly Created Office of State Planning and Budgeting Youth Pay for Success Initiatives Account within the Pay for Success Contracts Fund, and, in Connection Therewith, Making an Appropriation,” by Rep. Bob Rankin and Sen. Dominick Moreno. The bill requires the state treasurer to transfer specified amounts from the general fund and the marijuana tax cash fund to a newly created Office of State Planning and Budgeting Youth Pay for Success Initiatives account within the pay for success contracts fund for state fiscal years 2018-19 through 2021-22.
  • HB 18-1324 – “Concerning the Continuation of the Governor’s Commission on Community Service, and, in Connection Therewith, Making an Appropriation,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill codifies the existing governor’s commission on community service, which was created through executive order.
  • HB 18-1325 – “Concerning Measures to Address Coverage Gaps in the Statewide Digital Trunked Radio System, and, in Connection Therewith, Making an Appropriation,” by Reps. Millie Hamner & Bob Rankin and Sen. Kent Lambert. The statewide digital trunked radio system (DTRS) provides interoperable radio communications that allow personnel from multiple agencies in different levels of government to rapidly share information and coordinate efforts in emergency situations. The General Assembly established the public safety communications trust fund for the acquisition and maintenance of public safety communications systems, including the DTRS.
  • HB 18-1326 – “Concerning Support for Persons Interested in Transitioning from an Institutional Setting, and, in Connection Therewith, Making and Reducing Appropriations,” by Rep. Dave Young and Sen. Kent Lambert. The bill directs the Department of Health Care Policy and Financing to provide community transition services and supports to persons who are in an institutional setting, who are eligible for Medicaid, and who desire to transition to a home- or community-based setting.
  • HB 18-1328 – “Concerning the Children’s Habilitation Residential Waiver Program, and, in Connection Therewith, Making and Reducing an Appropriation,” by Rep. Dave Young and Sens. Kent Lambert & Dominick Moreno. The bill directs the Department of Health Care Policy and Financing to initiate a stakeholder process for purposes of preparing and submitting a redesigned children’s habilitation residential program waiver for federal approval that allows for home- and community-based services for children with intellectual and developmental disabilities who have complex behavioral support needs.
  • HB 18-1331 – “Concerning Expanding the Use of Open Educational Resources at Public Institutions of Higher Education, and, in Connection Therewith, Creating the Colorado Open Educational Resources Council, Creating a Grant Program to Support the Creation and Use of Open Educational Resources, and Making an Appropriation,” by Reps. Dave Young & Bob Rankin and Sen. Kevin Lundberg. The bill creates the Colorado open educational resources council in the Department of Higher Education and assigns tasks to the new council.
  • HB 18-1332 – “Concerning Creation of a Grant Program to Support Collaborative Educator Preparation Initiatives to Address the Teacher Shortage in Colorado, and, in Connection Therewith, Making an Appropriation,” by Reps. Millie Hamner & Bob Rankin and Sen. Dominick Moreno. The bill creates in the Department of Higher Education the collaborative educator preparation grant program to support joint initiatives among educator preparation programs, alternative teacher programs, school districts, boards of cooperative services, and public schools for preparing and placing educators.
  • HB 18-1333 – “Concerning Part C Child Find Responsibilities of State Departments, and, in Connection Therewith, Making an Appropriation,” by Rep. Dave Young and Sen. Kent Lambert. The bill defines ‘early intervention evaluations’ as evaluations performed pursuant to part C child find. The bill requires the state Department of Human Services and the Department of Education to enter into an interagency agreement to study the administration of early intervention evaluations. The departments are required to enter into the agreement by October 1, 2018, and to report the results of the study performed pursuant to the agreement to the joint budget committee by June 30, 2019.
  • HB 18-1334 – “Concerning an Extension of the Transitional Jobs Program, and, in Connection Therewith, Making an Appropriation,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill extends the transitional jobs program for five more years.
  • HB 18-1336 – “Concerning the Repeal of the Local Government Retail Marijuana Impact Grant Program,” by Rep. Dave Young and Sen. Kent Lambert. On July 1, 2019, the bill repeals the local government retail marijuana impact grant program, under which the Department of Local Affairs awards grants to eligible local governments for documented marijuana impacts.
  • HB 18-1337 – “Concerning a Veterans One-stop Center in Grand Junction, and, in Connection Therewith, Making an Appropriation,” by Reps. Millie Hamner & Bob Rankin and Sen. Kent Lambert. The bill provides that on and after November 1, 2018, the Division of Veterans Affairs in the Department of Military and Veterans Affairs may operate a veterans one-stop center in Grand Junction for the purpose of providing a central and accessible location where veterans, service members, and their family members in the western portion of the state may have access to assistance and resources.
  • HB 18-1339 – “Concerning a Requirement for Fingerprint-Based Criminal History Record Checks for Individuals with Access to Federal Tax Information, and, in Connection Therewith, Making an Appropriation,” by Rep. Bob Rankin and Sen. Kent Lambert. The bill requires fingerprint-based criminal history record checks for every applicant, contractor, employee, or other individual who has or may have access to federal tax information received from the federal government by a state agency in accordance with federal Internal Revenue Service Publication 1075.
  • SB 18-066 – “Concerning an Extension of the Operation of the State Lottery Division Beyond July 1, 2024,” by Sens. Jerry Sonnenberg & Leroy Garcia and Reps. Jeni James Arndt & Cole Wist. The bill extends the scheduled termination on July 1, 2024, of the state lottery division in the Department of Revenue to July 1, 2049.
  • SB 18-195 – “Concerning a Requirement that the Money in the Healthcare Affordability and Sustainability Fee Cash Fund be Appropriated Annually rather than Continuously Appropriated,” by Sen. Dominick Moreno and Rep. Bob Rankin. Current law specifies that money in the healthcare affordability and sustainability fee cash fund is continuously appropriated to the Colorado healthcare affordability and sustainability enterprise for specified healthcare related purposes. Beginning with state fiscal year 2018-19, the bill makes the expenditure of money from the fund by the enterprise subject to annual appropriation by the General Assembly.
  • SB 18-202 – “Concerning the Exemption of the Colorado Firefighting Air Corps Fund from the Maximum Reserve,” by Sen. Kent Lambert and Rep. Millie Hamner. The bill exempts the Colorado firefighting air corps fund from the maximum reserve, which currently limits the year-end uncommitted reserves in the cash fund to 16.5% of the amount expended from the cash fund during the fiscal year.

Additionally, on Monday, the Governor sent one bill to the Secretary of State without a signature. That bill was HB 18-1093, “Concerning the Allowable Uses of Reclaimed Domestic Wastewater, and, in Connection Therewith, Allowing Reclaimed Domestic Wastewater to Be Used for Food Crops and Making an Appropriation,” by Rep. Jeni James Arndt and Sen. Don Coram. The bill codifies rules promulgated by the water quality control commissio of the Colorado Department of Public Health and Environment concerning allowable uses of reclaimed domestic wastewater, which is wastewater that has been treated for subsequent reuses other than drinking water.

For a complete list of Governor Hickenlooper’s 2018 legislative actions, click here.

Colorado Court of Appeals: Colorado Wage Claim Act Does Not Categorically Bar Plaintiff from Piercing Corporate Veil

The Colorado Court of Appeals issued its opinion in Paradine v. Goei on Thursday, April 19, 2018.

Wage Claim Act—Corporations—Piercing the Corporate Veil.

Plaintiff served as the chief financial officer and vice president of administration for Aspect Technologies, Inc. (Aspect), a corporation. Defendant Goei was the chief executive officer. Plaintiff sued Goei and Aspect, raising a claim under the Colorado Wage Claim Act (the Act), for fraud, and for breach of contract. He alleged that defendants owed him unpaid wages. The trial court granted Goei’s motion for judgment on the pleadings and dismissed the three claims against him individually with prejudice.

On appeal, plaintiff asserted that he was not barred from piercing the corporate veil and holding Goei personally liable under the Act. The Act does not categorically bar a plaintiff from piercing the corporate veil to hold an individual liable for unpaid wages. Plaintiff’s fraud claim made allegations in support of his request that the trial court pierce the corporate veil to impose liability on Goei, and plaintiff’s breach of contract claim incorporated the allegations in the fraud claim. Because plaintiff pleaded sufficient facts to establish a plausible claim that plaintiff could pierce the corporate veil, the trial court erred when it granted Goei’s motion to dismiss on the pleadings.

The judgment was reversed and the case was remanded with directions.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Noncompetition Clause Unenforceable Against Dissenting Shareholder Doctor

The Colorado Court of Appeals issued its opinion in Crocker v. Greater Colorado Anesthesia, P.C. on Thursday, March 8, 2018.

Shareholder Employment Agreement—Merger—Dissenters’ Rights—Covenant Not to Compete—Judicial AppraisalLiquidated Damages.

Crocker, an anesthesiologist, was a shareholder in Metro Denver Anesthesia from 2001 until 2013, when that entity merged with Greater Colorado Anesthesia, P.C. (old GCA), now known as Greater Colorado Anesthesia, Inc. (new GCA). In conjunction with the merger, Crocker purchased one share of old GCA stock for $100. In April 2013 he signed a shareholder employment agreement (the Agreement), which contained a provision for liquidated damages to be paid to old GCA in the event that the former employee violated the “Damages Upon Competition” section within two years immediately following termination of the Agreement.

In 2014, old GCA began entertaining a merger with U.S. Anesthesia Partners (USAP) under which USAP would buy out GCA shares for a lump sum of cash plus USAP common stock. To receive that payment, shareholders of old GCA would be required to execute a new employment agreement reflecting a 21.3% reduction in pay and a five-year employment commitment. Old GCA would form an interim company (GCA Merger Sub, Inc.), file amended and restated articles of incorporation, and convert the company into a C-corporation, new GCA.

Crocker voted against the action and provided notice under C.R.S. § 7-113-202 that he would demand payment for his share of old GCA if the merger were approved, in exercise of his dissenter’s rights.

The merger was approved in 2015. Each approving shareholder would receive $626,000 in cash; $224,000 in USAP common stock, to fully vest in five years; and a signing/retention bonus. Old GCA sent Crocker $100 for his share. He refused it and later demanded $1,030,996.

Crocker communicated that he did not understand how the merger would affect his employment status and offered to work under a temporary contract, but GCA did not offer one. He did not return to work, but took a temporary position and then signed an employment agreement with Guardian Anesthesia Services and began providing services at a hospital within the noncompete area of the Agreement.

As relevant to this appeal, the district court held a trial to address (1) new CGA’s claim for damages resulting from Crocker’s alleged breach of the Agreement’s noncompete terms, and (2) new CGA’s request for a judicial appraisal of the fair value of Crocker’s 1.1% share of old GCA. The district court found that Crocker was no longer bound by the Agreement and the covenant not to compete could not be enforced against him. It also found that the fair value of Crocker’s share of old GCA was $56,044 plus interest.

On appeal, GCA argued that the district court erred in finding the noncompete provision unenforceable. The court of appeals stated, as a threshold matter, that generally a noncompete provision will survive a merger and the right to enforce the provision will vest in the surviving entity. But the court held that new GCA could not enforce the noncompete provision against Crocker because it is unreasonable to enforce the provision against a dissenting shareholder forced out of employment by the action of a merger. Here, it was undisputed that an anesthesiologist must reside within 30 minutes of where he works, and as a practical matter, enforcing the noncompete provision would have required Crocker to move or to pay GCA damages to continue to practice. Enforcement would thus further penalize Crocker’s exercise of his right to dissent rather than protect him from the conduct of the majority. Under these circumstances, the noncompete is unreasonable and imposes a hardship on Crocker. It is thus not enforceable against him as of the date the merger was finalized.

Further, C.R.S. § 8-2-113(3) directs that a damages term in a noncompete provision such as the one here is enforceable only if the amount is reasonably related to the injury suffered. Under the Agreement’s liquidated damages provision, Crocker would have to pay $207,755 in damages for the alleged violation of the noncompete provision. The district court determined, with record support, that the injury suffered by old GCA because of Crocker’s departure was zero. Here, there was no reasonable relationship between the actual injury suffered and the damages calculated per the formula, and the noncompete was not enforceable against Crocker.

Crocker cross-appealed the district court’s valuation of his share of old GCA, contending that the court erred in valuing his share by excluding evidence of the price USAP paid for old GCA. The district court did not refuse to consider the deal price, but properly rejected it because it found the price to be an unreliable starting point from which to determine fair value.

The judgment was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Supreme Court: Wage Claim Act Claims Limited to Two or Three Years Prior to Termination

The Colorado Supreme Court issued its opinion in Hernandez v. Ray Domenico Farms, Inc. on Monday, March 5, 2018.

C.A.R. 21.1— Certified Questions of State Law—Colorado Wage Claim Act—Statute of Limitations—Statutory Construction.

The Colorado Supreme Court accepted jurisdiction under C.A.R. 21.1 to answer a certified question of law from the U.S. District Court for the District of Colorado regarding how far back in time a terminated employee’s unpaid wage claims can reach under the Colorado Wage Claim Act, C.R.S. §§ 8-4-101 to -123. The court held that, under the plain language of C.R.S. § 8-4-109, a terminated employee may seek any wages or compensation that were unpaid at the time of termination; however, the right to seek such wages or compensation is subject to the statute of limitations found in C.R.S. § 8-4-122. That statute of limitations begins to run when the wages or compensation first become due and payable and thus limits a terminated employee to claims for the two years (three for willful violations) immediately preceding termination.

Summary provided courtesy of Colorado Lawyer.

Bills Signed Allowing Alcohol to be Auctioned at Special Events, Amending Employer Ability to Access FPPA Plans, and More

On Thursday, March 1, 2018, Governor Hickenlooper signed 26 bills into law. To date, he has signed 29 bills this legislative session. Many of the bills signed Thursday were supplemental appropriations bills or bills moving statutes from Title 12, C.R.S., but among the rest were bills allowing the auctioning of alcohol in sealed containers at special events, amending an employer’s ability to access Fire and Police Pension Association plans, and adopting the Enhanced Nurse Licensure Compact. Summaries of the bills signed Thursday are available here.

  • HB 18-1022 – “Concerning a Requirement that the Department of Revenue Issue a Request for Information for an Electronic Sales and Use Tax Simplification System,” by Reps. Lang Sias & Tracy Kraft-Tharp and Sens. Cheri Jahn & Tim Neville. The bill requires the department of revenue to issue a request for information for an electronic sales and use tax simplification system that the state or any local government that levies a sales or use tax, including a home rule municipality and county, could choose to use that would provide administrative simplification to the state and local sales and use tax system.
  • HB 18-1031 – “Concerning Employer Entry into the Fire and Police Pension Association Defined Benefit System,” by Reps. Jovan Melton & Kim Ransom and Sens. John Cooke & Matt Jones. The bill allows an employer that provides a money purchase plan to apply to the board, with a single application, to cover some or all of the existing members of its money purchase plan in the defined benefit system. Current law requires the employer to apply to the board separately for each plan.
  • HB 18-1075 – “Concerning the Enactment of Colorado Revised Statutes 2017 as the Positive and Statutory Law of the State of Colorado,” by Reps. Pete Lee & Leslie Herod and Sens. Daniel Kagan & John Cooke. This bill enacts the softbound volumes of Colorado Revised Statutes 2017, including the corrected replacement volume consisting of titles 42 and 43, as the positive and statutory law of the state of Colorado and establishes the effective date of said publication.
  • HB 18-1079 – “Concerning a Requirement that the Works Allocation Committee Prepare Annual Recommendations for the Use of the Colorado Long-term Works Reserve,” by Rep. Susan Beckman and Sen. Larry Crowder. The bill requires the works allocation committee to annually submit to the executive director of the Department of Human Services, the governor, and the joint budget committee recommendations for the use of the money in the Colorado long-term works reserve for the upcoming state fiscal year.
  • HB 18-1144 – “Concerning Certain Publishing Requirements for the Department of Revenue’s ‘Disclosure of Average Taxes Paid’ Table,” by Rep. Dan Thurlow and Sen. Jack Tate. The bill updates language regarding mailing of tax tables, and refers in general to the department’s website and also requires the department to provide the table on the software platform that the department makes available to taxpayers to file individual income taxes rather than refer to the “NetFile” link.
  • HB 18-1159 – “Concerning a Supplemental Appropriation to the Department of Education,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill makes a supplemental appropriation to the Department of Education.
  • HB 18-1160 – “Concerning a Supplemental Appropriation to the Offices of the Governor, Lieutenant Governor, and State Planning and Budgeting,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill makes a supplemental appropriation to the offices of the governor, lieutenant governor, and state planning and budgeting.
  • HB 18-1161 – “Concerning a Supplemental Appropriation to the Department of Health Care Policy and Financing,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill makes a supplemental appropriation to the Department of Health Care Policy and Financing.
  • HB 18-1162 – “Concerning a Supplemental Appropriation to the Department of Human Services,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill makes a supplemental appropriation to the Department of Human Services.
  • HB 18-1163 – “Concerning a Supplemental Appropriation to the Judicial Department,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill makes a supplemental appropriation to the Judicial Department.
  • HB 18-1164 – “Concerning a Supplemental Appropriation to the Department of Personnel,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill makes a supplemental appropriation to the Department of Personnel.
  • HB 18-1165 – “Concerning a Supplemental Appropriation to the Department of Public Safety,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill makes a supplemental appropriation to the Department of Public Safety.
  • HB 18-1166 – “Concerning a Supplemental Appropriation to the Department of Regulatory Agencies,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill makes a supplemental appropriation to the Department of Regulatory Agencies.
  • HB 18-1167 – “Concerning a Supplemental Appropriation to the Department of Revenue,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill makes a supplemental appropriation to the Department of Revenue.
  • HB 18-1168 – “Concerning a Supplemental Appropriation to the Department of State,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill makes a supplemental appropriation to the Department of State.
  • HB 18-1169 – “Concerning a Supplemental Appropriation to the Department of the Treasury,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill makes a supplemental appropriation to the Department of the Treasury.
  • HB 18-1170 – “Concerning Funding for Capital Construction, and Making Supplemental Appropriations in Connection Therewith,” by Rep. Millie Hamner and Sen. Kent Lambert. The bill makes supplemental appropriations for capital construction projects.
  • HB 18-1173 – “Concerning a Supplemental Transfer of Money from the General Fund to the Information Technology Capital Account of the Capital Construction Fund for the 2017-18 State Fiscal Year,” by Rep. Bob Rankin and Sen. Kent Lambert. For the 2017-18 fiscal year, the bill transfers $2,888,529 from the general fund to the information technology capital account of the capital construction fund.
  • SB 18-019 – “Concerning an Expansion of the Duration for which the Colorado Water Resources and Power Development Authority may Make a Loan Under the Authority’s Revolving Loan Programs,” by Sens. Kerry Donovan & Don Coram and Reps. Chris Hansen & Jeni James Arndt. Current law limits the duration of any water pollution control loan to 20 years; this bill removes the 20-year limitation.
  • SB 18-027 – “Concerning the Enactment of the ‘Enhanced Nurse Licensure Compact’, and, in Connection Therewith, Making an Appropriation,” by Sens. Jim Smallwood & Nancy Todd and Reps. Tracy Kraft-Tharp & Hugh McKean. The bill repeals the current ‘Nurse Licensure Compact’ and adopts the ‘Enhanced Nurse Licensure Compact’.
  • SB 18-030 – “Concerning the Nonsubstantive Relocation of Laws Related to Self-Propelled Vehicles from Title 12, Colorado Revised Statutes, as Part of the Organizational Recodification of Title 12,” by Sens. Chris Holbert & Daniel Kagan and Reps. Mike Foote & Yeulin Willett. The bill creates Title 44 in the Colorado Revised Statutes and relocates certain statutory sections to Title 44.
  • SB 18-032 – “Concerning the Nonsubstantive Relocation of Laws from Title 12, Colorado Revised Statutes, as Part of the Organizational Recodification of Title 12,” by Sens. Bob Gardner & John Cooke and Reps. Mike Foote & Leslie Herod. The bill relocates articles 26 and 26.1 from Title 12 to a new part in Title 18, and relocates the Uniform Unsworn Declarations Act to a new article in Title 13.
  • SB 18-034 – “Concerning the Nonsubstantive Relocation of Laws Related to the Regulation of Gaming from Title 12, Colorado Revised Statutes, to a New Title 44 as Part of the Organizational Recodification of Title 12,” by Sens. John Cooke & Lucia Guzman and Reps. Cole Wist & Pete Lee. The bill creates a new Title 44 and relocates certain statutory sections to Title 44.
  • SB 18-035 – “Concerning the Nonsubstantive Relocation of Laws Related to Gambling Payment Intercept from Title 24, Colorado Revised Statutes, to a New Title 44 as Part of the Organizational Recodification of Title 12,” by Sens. Bob Gardner & John Cooke and Rep. Cole Wist. The bill creates Title 44 of the Colorado Revised Statutes and relocates certain statutory sections to Title 44.
  • SB 18-041 – “Concerning the Ability of Operators of Sand and Gravel Mines to Use Water Incidental to Sand and Gravel Mining Operations to Mitigate the Impacts of Mining,” by Sens. Don Coram & Randy Baumgartner and Reps. Lori Saine & Jeni James Arndt. The bill specifies that the groundwater replacement plan or the plan of substitute supply and the permit may authorize uses of water incidental to open mining for sand and gravel, including specifically the mitigation of impacts from mining and dewatering.
  • SB 18-054 – “Concerning a Limitation on the Amount of an Increase in Fees Assessed Against Assisted Living Residences by the Department of Public Health and Environment,” by Sen. Larry Crowder and Rep. Larry Liston. Current law requires the State Board of Health to establish a schedule of fees for health facilities, including assisted living facilities. The bill applies an inflation rate limitation to the fees for assisted living facilities.
  • SB 18-067 – “Concerning the Ability of Certain Organizations Conducting a Special Event to Auction Alcohol Beverages in Sealed Containers for Fundraising Purposes under Specified Circumstances,” by Sens. Rachel Zenzinger & Kevin Priola and Reps. Tracy Kraft-Tharp & Kevin Van Winkle. The bill specifically allows certain organizations to bring onto and remove from the premises where an event will be held, whether licensed or unlicensed, alcohol beverages in sealed containers that were donated to or otherwise lawfully obtained by the organization and will be used for an auction for fundraising purposes as long as the alcohol beverages remain in sealed containers at all times and the licensee does not realize any financial gain related to the alcohol beverage auction.

For a list of the governor’s 2018 legislative decisions, click here.

Colorado Court of Appeals: Airport Shuttle Drivers Are Not “Interstate Drivers” for Overtime Purposes

The Colorado Court of Appeals issued its opinion in Brunson v. Colorado Cab Co., LLC on Thursday, February 2, 2018.

Colorado Minimum Wage Act—Colorado Wage Claim Act—Colorado Wage Order 31—Summary Judgment—Interstate Drivers.

Brunson is a shuttle van driver who transports passengers to and from Denver International Airport but does not drive out of state. He claimed that Shamrock Charters, Inc. and Colorado Cab Company, LLC (collectively, Shamrock) failed to pay him overtime compensation in violation of the Colorado Minimum Wage Act and the Colorado Wage Claim Act. The Acts are implemented by Colorado Wage Order 31, which requires covered employers to pay overtime. As pertinent here, the Wage Order exempts “interstate drivers” from its provisions. Neither the Acts nor the Wage Order defines the term “interstate drivers.”

The district court granted summary judgment in favor of Shamrock. It found that the Wage Order’s language closely follows the federal Motor Carrier Act (MCA) exemption of the Fair Labor Standards Act (FLSA) and construed “interstate drivers” in accordance with federal interpretation. Thus, the district court concluded that “interstate drivers” includes drivers involved in interstate commerce even if their work is entirely within the state. The court further concluded that Brunson was an interstate driver and was, as a matter of law, exempt from the Wage Order’s overtime pay requirements.

On appeal, Brunson contended that the federal interpretation of the MCA exemption does not apply to his state claims. The court of appeals determined that federal and state overtime pay exemptions are not identical or substantially identical. Further, the Colorado Department of Labor has published clear persuasive evidence of its intent to provide greater protections than those under FLSA. Therefore, the court concluded that federal case law’s interpretation of “interstate drivers” does not apply to Brunson’s state claims. Having determined that federal case law is not persuasive authority as to the meaning of “interstate driver,” the court relied on the Department’s interpretation of its own regulation in its Advisory Bulletin and construed the term “interstate drivers” to apply only to drivers whose work takes them across state lines. Thus, Shamrock did not “plainly and unmistakably” demonstrate that Brunson fell within the Wage Order’s exemption.

The summary judgment was reversed and the case was remanded.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: When Liability Based on Respondeat Superior, Settlement with Agent is Setoff Against Jury Verdict for Principal

The Colorado Court of Appeals issued its opinion in Marso v. Homeowners Realty on Thursday, February 8, 2018.

Respondeat Superior—Agent—Amendment of Answer—Affirmative Defense—Setoff—Settlement—Statutory Prejudgment Interest.

Dilbeck was employed by or associated with Homeowners Realty, Inc., d/b/a/ Coldwell Banker Home Owners Realty, Inc. (Coldwell) and acted as the Marsos’ agent in their purchase of a house. Two years after the purchase, the Marsos discovered that uranium tailings had been used as fill material, creating a potential health hazard. The Marsos filed a complaint against Dilbeck and Coldwell alleging negligence against Dilbeck and respondeat superior liability against Coldwell. Before the scheduled trial date, the Marsos settled with Dilbeck for $150,000, inclusive of interest. The jury was instructed to determine the total amount of damages sustained by the Marsos and was not informed of the amount of the settlement with Dilbeck. The jury returned a verdict of $120,000 against Coldwell. In post-trial proceedings, the trial court set off the settlement payment of $150,000 against the $120,000 jury verdict, resulting in a zero recovery for the Marsos. Because the settlement payment exceeded the jury verdict, the court entered judgment in favor of Coldwell and later entered a cost award against the Marsos of approximately $30,000.

On appeal, the Marsos contended that the court abused its discretion in allowing Coldwell to amend its answer to assert the affirmative defense of setoff over the Marsos’ timeliness objection. Because Coldwell did not obtain the settlement agreement until shortly before trial and the Marsos had no right to rely on the absence of a setoff, the amendment did not result in legal prejudice to the Marsos. Under these circumstances, the court did not abuse its discretion in allowing Coldwell to pursue its setoff defense.

The Marsos next argued that the trial court erred when it set off the settlement payment against the jury verdict. When a party’s liability is based entirely on respondeat superior, a settlement with the agent is setoff against the jury verdict entered against the principal. Therefore, the trial court did not err in this regard.

The Marsos also contended that the trial court erred when it set off the settlement payment before statutory prejudgment interest accrued on the jury verdict. Statutory prejudgment interest accrues on the jury verdict before the setoff. Here, the court must calculate the interest that accrued on the jury’s verdict from the date of the Marsos’ injury to the date of Dilbeck’s settlement payment and add it to the jury verdict

The judgment and cost award in Coldwell’s favor was reversed, and the case was remanded for further proceedings.

Summary provided courtesy of Colorado Lawyer.

Tenth Circuit: Workers’ Compensation Case Reversed Because Interpretation of Policy was Arbitrary and Capricious

The Tenth Circuit Court of Appeals issued its opinion in Owings v. United of Omaha Life Insurance Co. on Tuesday, October 17, 2017.

The plaintiff in this case, Owings, suffered a disabling injury while on the job and was afforded long-term disability benefits by the defendant, United of Omaha Life Insurance Company (United). Owings disagreed with the amount and beginning date of his disability benefits and filed suit. The district court granted summary judgment in favor of United, and Owings appealed.

Owings injured his back at work on July 1, 2013 while moving a surgical chair and cabinet, which left Owings unable to lift, bend, stoop, carry, push, and pull, resulting in Owings experiencing long-term back pain and spasms. The same day of his injury, Owings met with Bratton, the Director of Human Resources at United, who informed Owings that his title would be changed and his salary reduced, effective immediately. Owings went home and did not work for the company thereafter. Owings then applied for short-term disability benefits with United. As part of his application, Owings described the incident and the date it occurred, as well as statements from his employer and treating physician, Dr. McClintick. Dr. McClintick listed the “Date symptoms first appeared” as July 1, 2013, also noting that Owings had been continuously disabled and unable to work from the same date. Bratton, however, completed and signed an “Employer’s Statement” form for United, where she stated that Owings disability resulted from a previous injury and his last day of work was July 2, 2013.

Owings applied for long-term disability and was approved, although the letter stated that Owings became disabled on July 3, 2013. Owings, through his attorney, sent a letter to United asking for the date of disability to be changed to July 1, 2013. In response, United asked for copies of all of Owings’ time sheets. Bratton emailed Union twice with conflicting dates on Owings’ last day, but ultimately concluded that Owings left work at some time on July 2, 2013. Relying on this information, United denied the request to adjust Owings’ disability date, explaining that July 3 was the first day Owings was unable to work, since his employer verified he had worked July 2. United would only pay Owings the discounted salary set forth by Britton on July 1st. Owings subsequently filed suit.

Owings’ complaint is governed by the Employee Retirement Income Security Act (ERISA). A benefits decision under an ERISA-governed plan is generally left to the discretion of the administrator in determining the terms of the plan and of determining eligibility. In this case, the policy afforded United the discretion and final authority to construe and interpret the policy. The Tenth Circuit then examined whether the benefits decision at issue was arbitrary and capricious, limiting the review to determining whether the interpretation of the plan was reasonable and made in good faith.

Owings asserted that United abused its discretion in interpreting the term “disability” when calculating the amount of his monthly long-term disability benefit under the policy. Owings argued that the policy defined disability by reference to the inability to perform at least one of the material duties of his regular occupation, whereas United omitted the phrase “at least one of” to modify the policy to include each and every job duty.

The Tenth Circuit found United’s definition of disability to be inconsistent with the plain language of the policy, which requires only that the injury prevent the employee from being able to perform one material duty of occupation. The Tenth Circuit therefore found United’s definition of disability arbitrary and capricious.

The next issue was that United prohibited an employee from being declared disabled on the last day that he or she worked. United argues that Owings performed his job with no impairment for at least part of the day on July 1, so the earliest possible date disability could begin was on July 2. The Tenth Circuit found that United’s explanation could not be inferred from the policy’s definitional section. Nothing in the policy supported United’s conclusion that an employee cannot become immediately disabled after working for part of the day.

A third issue was whether United erred in relying exclusively on the statements from Bratton. The Tenth Circuit found that the record established, without question, that United rejected Owings’ initial request to adjust his disability date, as well as his subsequent administrative appeal, due to Bratton’s statements. The Tenth Circuit held that United erred in blindly relying on Bratton’s statements, as the determination should not have been based on whether Owings worked on a particular day, but rather on which day he sustained his injury.

The Tenth Circuit found that it was undisputed that Owings became injured on July 1. Owings’ treating physician identified July 1 as the date Owings was first unable to work. The only work Owings did on July 2 consisted of using the company cell phone; he did not physically go to the workplace. For these reasons, the Tenth Circuit concluded that United acted arbitrarily and capriciously in interpreting and applying the policy language. Under plain and ordinary meaning of the policy language, Owings became disabled on July 1, 2013. The proper remedy was to reverse the district court’s grant of summary judgment in favor of United.

The Tenth Circuit Court of Appeals REVERSED and REMANDED with directions to enter summary judgment in favor of Owings.

Tenth Circuit: Complaint Not Moot when Injury Can Be Redressed By Favorable Judicial Decision

The Tenth Circuit Court of Appeals issued its opinion in EEOC v. CollegeAmerica Denver, Inc. on Tuesday, September 5, 2017.

This case arises out of a dispute between CollegeAmerica Denver., Inc. (Company) and a former employee, Ms. Potts. The Company and Potts resolved a dispute by entering into a settlement agreement, but the Company came to believe that Potts breached the settlement agreement, leading the Company to sue Potts in state court. The suit sparked the interest of the Equal Employment Opportunity Commission (EEOC), which believed that the Company’s interpretation and enforcement of the settlement agreement was unlawful and interfered with the statutory rights of Potts. Based on this belief, the EEOC sued the Company in federal court.

The district court dismissed the EEOC’s unlawful-interference claim as moot, however, the EEOC is appealing the dismissal in light of the Company’s new theory against Potts: that she breached the settlement agreement by reporting adverse information to the EEOC without notifying the Company. The EEOC believes that by presenting this new theory, the Company was continuing to interfere with Potts’s and the EEOC’s statutory rights. The Tenth Circuit Court of Appeals reviewed this appeal and holds that the claim is not moot.

In deciding if a case is moot, the Tenth Circuit assesses whether a favorable judicial decision would have some effect in the real world. In other words, if a plaintiff no longer suffers an actual injury that can be redressed by a favorable judicial decision, the claim is moot.

A special rule applies when the defendant voluntarily stops the challenged conduct. When the conduct stops, the claim will be deemed moot only if two conditions exist: (1) it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur; and (2) interim relief or events have completely and irrevocably eradicated the effects of the alleged violation. The court held that the first condition was not met, as the Company continued to stand by its new theory of how Potts had breached the settlement agreement. Therefore, mootness due to voluntary cessation is not applicable here.

The Tenth Circuit further disagreed with the Company’s argument that the case was moot because the outcome would not affect anything in the real world. The court found that if the EEOC prevailed on the merits and obtained an injunction, the Company could not present its new theory in the state-court suit against Potts. The inability to present this theory would constitute an effect in the real world, preventing dismissal based on mootness.

The Tenth Circuit further rejected the Company’s newly raised argument that the EEOC sought overly-broad, unauthorized injunctive and declaratory relief, finding that a federal court should not dismiss a meritorious constitutional claim because the complaint seeks one remedy rather than another plainly appropriate one.

The Tenth Circuit Court of Appeals REVERSED and REMANDED for further proceedings.

Public Comment Period Open for 2018 10th Circuit Local Rules

On Tuesday, September 5, 2017, the Tenth Circuit Court of Appeals released its 2018 local rules for public comment. Comments will be accepted through October 31, 2017. A final version of the new rules will be posted on the Tenth Circuit’s website on December 1, 2017, and the rules will be effective January 1, 2018. A memo describing the changes to the local rules is available here, and a redline of the rule change is available here.

Effective December 31, 2017, two changes will be made to the Federal Rules of Appellate Procedure. Rule 4(a)(4)(B)(iii) will be changed to re-insert a sentence confirming that no fees are due when an amended notice of appeal is filed. Additionally, Rule 28.1(e)(3) will be deleted to correct a scrivener’s error; the rule should have been deleted last year.

Comments regarding the rule change may be submitted to the court clerk via email.

Colorado Court of Appeals: Internet has Made Some Aspects of Independent Contractor Test Obsolete

The Colorado Court of Appeals issued its opinion in Varsity Tutors LLC v. Industrial Claim Appeals Office on Thursday, July 27, 2017.

Employee—Independent Contractor–Unemployment Taxes.

Varsity Tutors LLC (Varsity) provided an online platform that connected tutors with students. Varsity had individual contracts with tutors, who advertised their services on Varsity’s website. Students who were interested in working with particular tutors contacted Varsity. Varsity then put the tutors and students together by providing contact information. Students and tutors then contacted one another to arrange tutoring sessions. Varsity and tutors agreed to an hourly rate that Varsity would pay them for tutoring, and Varsity generally charged students about twice that rate.

In 2014 the Division of Unemployment Insurance Employer Services—Integrity/Employer Audits for the Colorado Department of Labor and Employment (Division) audited Varsity’s 2013 books and decided that at least 22 tutors were Varsity’s employees for purposes of the Colorado Employment Security Act (CESA). The Division determined that Varsity owed $133.73 in unemployment taxes on the amounts it had paid the tutors. Varsity claimed that the tutors were independent contractors and it was thus not obligated to pay unemployment insurance taxes on wages it paid to them. A hearing officer and a panel of the Industrial Claim Appeals Office (Panel) decided the tutors were in “covered employment” and ordered Varsity to pay delinquent unemployment insurance taxes.

On appeal, Varsity asserted that the tutors were independent contractors and the Panel erred in concluding that Varsity was required to pay unemployment taxes. Varsity argued that the Panel erred by not applying the totality of the circumstances test.  CESA provides that a business can show that a worker is an independent contractor by proving by a preponderance of the evidence that the worker was (1) “free from control and direction in the performance of the service” under any “contract for the performance of the service” and “in fact”; and (2) “customarily engaged in an independent trade, occupation, profession, or business related to the service performed.” Both the panel and the hearing officer found the first part of this test was met. The second part of the test is guided by a totality of the circumstances analysis under Industrial Claim Appeals Office v. Softrock Geological Services, Inc. Alternatively, a business can establish that its workers are independent contractors by a written document signed by the business and the worker, documenting that the business did not do nine things listed in CRS § 8-70-115(1)(c). Such a document creates a rebuttable presumption of an independent contractor relationship as long as it also contains a disclosure in specific font that the worker as an independent contractor “is not entitled to unemployment insurance benefits” unless the worker or “some other entity” provides them and the worker must “pay federal and state income tax on any moneys paid pursuant to the contract relationship.”

Varsity’s contracts did not create a rebuttable presumption that the tutors were independent contractors. As to the second part of the CESA test, the contracts with the tutors stated in bold, “Independent Contractor Agreement for Services.” The disclosures in the contract are indicative that the tutors were independent contractors. The term “independent contractor” appears at least 16 times in the contract. The contract does not provide the tutors with training and provides minimal oversight of the tutors’ work, and does not establish a curriculum or require tutors to use specific materials. Applying the Softrock totality-of-the-circumstances test, the Court of Appeals found that the undisputed evidence in the record established that Varsity satisfied its burden of proving that the tutors were independent contractors because they were customarily engaged in independent businesses in 2013 that were related to the tutoring services they were performing.

The order was reversed.

Summary provided courtesy of The Colorado Lawyer.

Discovering Discovery: Building Your Case, Deposition Tips, Expert Witnesses, and More

“Reduced to its essence, discovery is the process of identifying, collecting, producing and/or receiving relevant, nonprivileged materials in connection with pending or reasonably foreseeable litigation. With the advent of notice pleading, civil discovery provides access to the relevant information that litigants and their counsel require to make informed decisions about the merits of their case and the potential for settlement.” -Magistrate Judge Craig B. Shaffer

Discovery is a crucial component of every litigation case. In the last 10 years, civil litigation has changed significantly. The proliferation of electronic data and new rules on both the state and federal level create increasingly difficult challenges for preserving, managing, and producing electronically stored information. Conducting discovery outside Colorado has become mainstream as civil litigation has become more national—even global.

This Friday, CBA-CLE will debut the newest title in our litigation library, Discovery in Colorado, at a full-day program, “Discovering Discovery.” Discovery in Colorado is a practical guide to discovery that brings to life the application of the Colorado and Federal Rules of Civil Procedure governing the discovery process. Discovery in Colorado was written by a variety of different practitioners, overseen by Magistrate Judge Nina Y. Wang and Natalie Hanlon Leh, Esq. Attorneys and judges with backgrounds in private, in-house, and government practice authored individual chapters.

Learn different approaches to discovery and hear distinct perspectives from some of the most experienced trial attorneys and judges in Colorado. Each class attendee receives Discovery in Colorado, 1st Edition, as course materials. Explore the ever-changing state of discovery through this valuable course and companion book. Register using the links below, or call (303) 860-0608.

 

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CLE Program: Discovering Discovery

This CLE presentation will occur on Friday, July 28, 2017, at the CLE Large Classroom (1900 Grant St., 3rd Floor) from 8:30 a.m. to 4:45 p.m. Register for the live program here and the webcast here. You may also call (303) 860-0608 to register.

Can’t make the live program? Order the homestudy here — Video OnDemandMP3 Audio