July 5, 2015

Colorado’s Lawful Activities Statute Does Not Protect Employees’ Medical Marijuana Use

Lipinsky-PrattBy Lino Lipinsky and Joel Pratt

On June 15, the Colorado Supreme Court ruled in Coats v. Dish Network, LLC, No. 13SC394, 2015 CO 44 (2015), that employers with a drug-free workplace policy have the right to take adverse action against employees who test positive for marijuana, even if the employees fully comply with the state’s medical marijuana laws, do not use marijuana at the workplace, and are not impaired on the job. This landmark decision affirms the right of employers to require that their employees comply with all federal drug laws, regardless of their states’ marijuana laws.

The plaintiff, Brandon Coats, a quadriplegic as a result of an automobile accident, failed a random drug test required by his employer, Dish Network. Mr. Coats argued that his use of medical marijuana was the only means by which he could control his leg spasms. Dish Network did not contest that Mr. Coats had no work-related problems other than the failed drug test. There was no dispute that Mr. Coats used marijuana only at home and had a valid Colorado medical marijuana card.

The court rejected the plaintiff’s argument that the Colorado lawful off-duty activities statute, Colo. Rev. Stat. § 24-34-402.5, protected his use of medical marijuana at home. That statute bars employers from taking adverse employment action against employers for “lawful” activities conducted away from work.

The Colorado Supreme Court narrowly focused on the definition of “lawful” in the statute and declined to reach any other issue. Mr. Coats’s attorney argued that the definition encompasses activities legal under state law, regardless of their status under federal law. Dish Network disagreed, arguing that the word “lawful” referred to activities legal under both state and federal law.

A unanimous court, with Justice Márquez not participating, agreed with Dish Network. The court held that the word “lawful” should be interpreted according to its generally accepted meaning, and that the Colorado legislature included no language indicating that the word should refer to state law alone. Colorado’s lawful activities statute thus only protects employees engaged in activities that are legal under both state and federal law.

Because the federal Controlled Substances Act lists marijuana as a Schedule I controlled substance and prohibits its possession, manufacture, sale, or use, medical marijuana remains illegal under federal law. Accordingly, Colorado’s lawful activities statute does not protect an employee using medical marijuana because such use is prohibited by federal law.

The trial court dismissed Mr. Coats’s claim against Dish Network. A split panel of the Colorado Court of Appeals affirmed the trial court’s decision, holding that Colorado’s lawful activities statute incorporated both state and federal law, and therefore, does not protect activity illegal under federal law. Judge Webb dissented, arguing that the reach of “lawful activities” should be determined exclusively by state law, under which marijuana use is considered lawful. The supreme court affirmed the court of appeals’ ruling.

The Coats decision reaffirms the right of employers to manage and to enforce drug-free workplaces. Employers will not have to make individualized decisions about whether a particular employee’s marijuana use is “lawful” under state law for bona fide medicinal purposes; instead, employers can institute and enforce broad drug-free workplace policies.

Further, the Coats decision avoids potential problems with the conflict between state and federal law. Colorado employers who contract with the federal government generally must comply with the federal Drug-Free Workplaces Act, which requires drug-free workplaces. Similarly, employers engaged in the transportation industry may be required to comply with the Omnibus Transportation Employee Testing Act of 1991, which mandates drug testing of certain transportation workers.

Had the court ruled in favor of Mr. Coats, employers subject to federal drug-free workplace regulations would have faced conflicting obligations. Colorado law would have demanded that employers tolerate certain employee drug use, while federal law would have demanded that employers take action against those same employees. The court avoided that problem by clarifying that Colorado law only protects employees engaged in activities that are lawful under state and federal law.

Employers also need to recognize the limits of this decision. Importantly, the court did not hold that employers have unfettered rights to fire or to discipline employees for the use of marijuana. Employers must still follow the law. Dish Network likely prevailed because it had adopted a clear and broad drug-free workplace policy, engaged in random drug testing, and applied its policies neutrally. An employer that selectively applies a policy could be vulnerable to discrimination claims.

Additionally, the Coats decision does not resolve the preemption issues surrounding Colorado’s medical and recreational marijuana amendments. A number of other pending cases, including Nebraska’s and Oklahoma’s challenge to Colorado’s marijuana laws filed in the U.S. Supreme Court, raise the preemption issue head-

Lino Lipinsky de Orlov is a litigation partner in the Denver office of McKenna Long & Aldridge, LLP.  He represents clients in all aspects of commercial litigation, mediation, arbitration, and appeals.  He has developed particular experience in complex business cases, particularly those involving creditor’s rights, real estate, trade secrets, and employment disputes.  Mr. Lipinsky also frequently speaks and writes on legal issues relating to technology, employment law, and ethics.   He is a member of the Colorado Bar Association’s Board of Governors and serves on the Board of the Colorado Judicial Institute.  He is a former President of the Faculty of Federal Advocates.  Among his honors, Chambers USA has recognized Mr. Lipinsky as one of Colorado’s leading general commercial litigators, and he has been included in The Best Lawyers in America.  He received his A.B. degree, magna cum laude, from Brown University and his J.D. degree from New York University School of Law, where he was a member of the New York University Law Review.

Joel M. Pratt is a member of McKenna Long & Aldridge’s Government Contracts Department in the Denver office. Mr. Pratt graduated, magna cum laude, from the University of Michigan Law School in 2014 where he served on the Michigan Law Review as the Executive Notes Editor and an Associate Editor. While earning his J.D., Mr. Pratt served as a judicial intern for the Honorable Alan M. Loeb, was a student attorney for the Michigan Unemployment Insurance Project and the Child Advocacy Law Clinic, and published several articles in legal academic journals across the country. Prior to joining the firm, Mr. Pratt worked as a law clerk for the Office of the Vice President and General Counsel of the University of Michigan. Mr. Pratt graduated with distinction in 2009 from the University of Colorado with a Bachelor of Arts in English Literature.  Mr. Pratt was also the winner of the University of Colorado Alumni Association Scholarship.

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

Tenth Circuit: Inadequate Briefing Warrants Affirmance of Lower Court Opinion

The Tenth Circuit Court of Appeals issued its opinion in Nixon v. City & County of Denver on Thursday, April 30, 2015.

Ricky Nixon was a Denver police officer who was involved in two highly publicized incidents of excessive force. He was cleared of wrongdoing after the first incident, but the Denver manager of safety ordered a 30-day suspension after the second incident and ordered his termination when he was not truthful about the incident. A panel of the Denver Civil Service Commission reversed the termination but ultimately the Colorado Court of Appeals remanded. While the Commission decision was being challenged by the City, Nixon filed a § 1983 suit against the manager of safety, the City, and others in federal district court. The district court dismissed all his claims, but on appeal Nixon challenged the dismissal of only two: (1) the City and manager violated his First Amendment rights by retaliating against him for protected speech, and (2) a Due Process claim based on his protected status as a police officer.

The Tenth Circuit noted that First Amendment claims should be evaluated under the Garcetti/Pickering test, and that to show a due process violation the employee must prove governmental defamation and alteration in legal status. The district court dismissed Nixon’s claims for failure to state a claim for relief.

The Tenth Circuit analyzed Nixon’s opening brief on appeal and found that no pertinent issue was adequately developed. The Tenth Circuit first affirmed the district court’s dismissal of Nixon’s stigma-plus-due process claim because Nixon’s opening brief “contain[ed] nary a word to challenge the basis of the dismissal.” As for Nixon’s claims that his speech was on a matter of public concern, the Tenth Circuit found only general statements about the protected speech and not specific references as required. Addressing the district court’s ruling that Nixon’s 2013 statement before the Civil Service Commission could not have been a motivating factor in his 2011 termination, the Tenth Circuit found that if it sought to make arguments for Nixon it could read one sentence in his brief to state that the retaliation was the City’s decision to seek state court review of the Commission’s ruling in Nixon’s favor. The Tenth Circuit, however, had “no obligation to address the point because the sentence fails to satisfy minimal standards for intelligibility that we must require from lawyers, it is misleadingly placed under a heading for a different issue, and the brief does not even say that the sentence is intended as a response to a ruling by the district court or an argument by the City.”

The Tenth Circuit affirmed the district court judgment.

Colorado Supreme Court: Lawful Off-Duty Activities Not Limited to State Law

The Colorado Supreme Court issued its opinion in Coats v. Dish Network, LLC on Monday, June 15, 2015.

Labor and Employment—Protected Activities.

The Supreme Court held that under the plain language of CRS § 24-34-402.5, Colorado’s lawful activities statute, the term “lawful” refers only to those activities that are lawful under both state and federal law. Therefore, employees who engage in an activity that is permitted by state law but unlawful under federal law, such as use of medical marijuana, are not protected by the statute. The Court therefore affirmed the court of appeals’ opinion.

Summary and full case available here, courtesy of The Colorado Lawyer.

Bills Regarding Military Employment Services, Voting Rights, Disabled Veteran License Plates, and More Signed

On Wednesday, May 27, 2015, Governor Hickenlooper signed six bills into law. To date, the governor has signed 258 bills into law. The bills signed Wednesday are summarized here.

  • HB 15-1030 – Concerning the Establishment of an Employment Services for Veterans Pilot Program, and, in Connection Therewith, Making an Appropriation, by Rep. Lois Landgraf and Sen. Larry Crowder. The bill creates the Employment Services for Veterans Pilot Program, including veterans services related to job retention, employment mediation, mentoring, and career counseling.
  • HB 15-1181 – Concerning the Exemption from the State Income Tax of Active Duty Military Income Earned by a Resident Individual in the Armed Forces of the United States, by Rep. Jon Keyser and Sen. Larry Crowder. The bill allows an armed forces member on active duty whose residence is in Colorado to receive a tax deduction from state taxable income.
  • HB 15-1026 – Concerning the Issuance of Military License Plates with an Identifying Figure Notifying the Public that the Holder May Use Reserved Parking for People with Disabilities, and, in Connection Therewith, Making an Appropriation, by Rep. Kit Roupe and Sen. Nancy Todd. The bill allows the Department of Revenue to create disabled veteran license plates.
  • HB 15-1327 – Concerning Limitations on Proxy Marriages, by Reps. Joann Ginal & Kit Roupe and Sens. Leroy Garcia & John Cooke. The bill limits proxy marriage in Colorado to military personnel and military contractors.
  • HB 15-1045 – Concerning the Amount a Veteran Must Pay to Enter State Parks, and, in Connection Therewith, Making an Appropriation, by Rep. Su Ryden and Sen. Larry Crowder. The bill requires state parks to grant free admission to active duty military personnel and military veterans during the month of August.
  • HB 15-1130 – Concerning Voting by Active Military and Overseas Voters in Municipal Elections, and, in Connection Therewith, Extending Certain Deadlines that Govern the Conduct of Municipal Elections to Ensure that Such Voters have the Same Ability to Vote in Such Elections as they do in Federal, State, and County Elections, by Reps. Dan Nordberg & Su Ryden and Sens. Leroy Garcia & Owen Hill. The bill aligns municipal election code with federal military voting acts to ensure U.S. citizens living abroad can vote.

For a complete list of Governor Hickenlooper’s 2015 legislative decisions, click here.

Bills Regarding Endangered Species Preservation, Career Training, and More Signed

On Friday, May 22, 2015, Governor Hickenlooper signed seven bills into law, and on Tuesday, May 26, 2015, Governor Hickenlooper signed four bills into law. To date, he has signed 252 bills into law this legislative session. The bills signed Friday and Tuesday are summarized here.

Friday, May 22, 2015

  • HB 15-1321 – Concerning Measures to Support Rural School Districts, and, in Connection Therewith, Making an Appropriation, by Reps. Brittany Pettersen & Jim Wilson and Sens. Kevin Grantham & Kerry Donovan. The bill provides administrative flexibility for funding for small rural school districts.
  • HB 15-1277 – Concerning Measures to Effectuate the Conservation of Native Species in Colorado, and, in Connection Therewith, Making Appropriations from the Species Conservation Trust Fund for Purposes Recommended by the Department of Natural Resources, by Rep. Ed Vigil and Sen. Jerry Sonnenberg. The bill transfers funds for the purpose of conserving native species that are threatened or endangered.
  • SB 15-199 – Concerning the Continuation of the Funding for the Habitat Partnership Program in the Division of Parks and Wildlife, by Sen. Jerry Sonnenberg and Rep. Ed Vigil. The bill continues a program that transfers moneys from big game licenses to the Habitat Partnership Cash Fund.
  • SB 15-226 – Concerning the Education Requirements Necessary to Qualify for a License to Take Wildlife, by Sen. Jerry Sonnenberg and Rep. Ed Vigil. The bill allows the Parks and Wildlife Commission to establish alternatives to a mandatory hunter education course.
  • HB 15-1315 – Concerning Support for County Veterans Service Officers, by Rep. Su Ryden and Sen. Larry Crowder. The bill eliminates a requirement that counties match DMVA funding for county veterans service officers.
  • HB 15-1307 – Concerning a Modification in the Definition of the Term “Qualified Commercial Structure” as the Term is Used in the “Colorado Job Creation and Main Street Revitalization Act”, by Rep. Daneya Esgar and Sen. Pat Steadman. The bill changes the definition of a qualified commercial structure for purposes of the historic preservation tax credit.
  • HB 15-1275 – Concerning Measures to Support Enrollment in Career and Technical Education Programs, and, in Connection Therewith, Making an Appropriation, by Rep. Faith Winter and Sens. Rollie Heath & Vicki Marble. The bill clarifies that career and technical course work related to apprenticeship and internship programs may be used for concurrent enrollment.

Tuesday, May 26, 2015

  • HB 15-1170 – Concerning Measures to Raise the Level of Postsecondary and Workforce Readiness that Colorado Students Demonstrate upon Graduation from High School, and, in Connection Therewith, Making an Appropriation, by Reps. Tracy Kraft-Tharp & Jim Wilson and Sens. Owen Hill & Rollie Heath. The bill adds a requirement of consideration of college enrollment to statistical performance indicator data.
  • HB 15-1180 – Concerning the Creation of a State Sales and Use Tax Refund for Tangible Personal Property that is Used in Colorado for Research and Development by a Qualified Medical Technology or Clean Technology Taxpayer, by Reps. Tracy Kraft-Tharp & Jim Wilson and Sens. Rollie Heath & Chris Holbert. The bill creates a sales and use tax refund for equipment used in clean technology and medical device firms with 35 or fewer employees.
  • HB 15-1230 – Concerning the Creation of the Innovative Industries Workforce Development Program, and, in Connection Therewith, Making an Appropriation, by Reps. Pete Lee & Mike Foote and Sens. Rollie Heath & John Cooke. The bill creates the Innovative Industries Workforce Development Program to reimburse employers with high-level internships and apprenticeships in innovative industries.
  • HB 15-1276 – Concerning the Creation of a Matching Grant Program to Facilitate Recruitment for Skilled Worker Training Programs, and, in Connection Therewith, Making an Appropriation, by Reps. Dan Pabon & Angela Williams and Sens. John Cooke & Rollie Heath. The bill creates the Skilled Worker Outreach, Recruitment, and Key Training Grant Program to offer grants for training skills that are needed in the workplace and to provide a certificate upon completion.

For a complete list of Governor Hickenlooper’s 2015 legislative decisions, click here.

Bills Regarding Businesses Permitted to Provide PACE Services, Release of Information Regarding Juvenile Facility Incidents, and More Signed

On Friday, May 8, 2015, Governor Hickenlooper signed 13 bills into law. To date, the governor has signed 197 bills this legislative session. Although the 2015 session has ended, the governor will continue to sign bills for the next few weeks.

The bills signed by Governor Hickenlooper on Friday are summarized here.

  • SB 15-239 – Concerning the Transfer of Vocational Rehabilitation Programs from the Department of Human Services to the Department of Labor and Employment, and, in Connection Therewith, Making an Appropriation, by Sen. Kent Lambert and Rep. Dave Young.
  • HB 15-1299 – Concerning Use of the Petroleum Storage Tank Fund for Incentives for Significant Operational Compliance with Regard to Petroleum Storage Tanks, by Reps. Millie Hamner & Dan Nordberg and Sen.  Ray Scott. The bill allows petroleum storage tank funds to be used for upgrades to both underground and above-ground tanks.
  • HB 15-1187 – Concerning Mental Health Evaluations of Licensed Veterinarians Conducted by a Veterinarian Peer Health Assistance Program as Ordered by the State Board of Veterinary Medicine, by Rep. Steve Lebsock and Sen. Leroy Garcia. The bill allows the State Board of Veterinary Medicine to require a veterinarian to undergo a mental health exam if it has reason to suspect the veterinarian has a mental health problem.
  • SB 15-137 – Concerning Business Entities Permitted to Provide the Program of All-Inclusive Care for the Elderly, by Sen. David Balmer and Reps. Brian DelGrosso & Joann Ginal. The bill allows public, private, and for-profit entities to provide care to the elderly in the PACE program.
  • SB 15-247 – Concerning the Augmentation of the Scope of Services of the State Drug Assistance Program Administered by the Department of Public Health and Environment to Authorize Funding for Prevention, Intervention, and Other Services, and, in Connection Therewith, Making an Appropriation, by Sen. Pat Steadman and Rep. Dave Young. The bill increases the scope of services provided by the AIDS drug assistance program and makes several changes to the program.
  • HB 15-1131 – Concerning a Ban on Powdered Alcohol, by Rep. JoAnn Windholz and Sen. Nancy Todd. The bill prohibits the use, sale, possession, transfer, purchase, or manufacture of powdered alcohol, with an exemption for certain institutions conducting bona fide research.
  • HB 15-1242Concerning the Right of a Medical Patient to Designate a Caregiver to Assist the Patient with Basic Tasks Following Release from a Medical Facility, by Rep. Jessie Danielson and Sen. Irene Aguilar. The bill requires that general hospitals in Colorado give a patient the option to designate at least one caregiver.
  • HB 15-1243 – Concerning Increased Spending Authority for the Division of Parks and Wildlife, and, in Connection Therewith, Establishing the Parks for Future Generations Trust Fund, Amending the Wildlife for Future Generations Trust Fund, and Giving the Division of Parks and Wildlife Explicit Spending Authority Over Moneys Received to Mitigate or Offset Adverse Impacts to the State’s Parks and Wildlife Resources, by Rep. Ed Vigil and Sen. Jerry Sonnenberg. The bill establishes the Parks for Future Generations Trust Fund, amends the Wildlife for Future Generations Trust Fund, and provides funding for both trust funds.
  • HB 15-1267 – Concerning Conditions of Probation Relating to Medical Marijuana, by Rep. Joseph Salazar and Sen. Lucia Guzman. The bill allows probationers to use and possess medical marijuana unless the offense for which they are on probation is a medical marijuana-related offense.
  • HB 15-1304 – Concerning a Plan to Study the Available Bear Management Tools Year Round to Address Bear-Human Conflicts, by Reps. Yeulin Willett  & Steve Lebsock and Sens. David Balmer & Ray Scott. The bill requires the Division of Parks and Wildlife to study available tools for better management of the black bear population.
  • HB 15-1284 – Concerning Measures to Enhance Program Efficiency for Shared Photovoltaic Energy Generation Facilities, by Reps. Faith Winter & Kit Roupe and Sens. Kevin Grantham and Mary Hodge. The bill eliminates population requirements for community solar garden use across counties.
  • HB 15-1015 – Concerning the Creation of an Interstate Compact Allowing States that Enter the Compact to Share Emergency Medical Service Providers Under Certain Circumstances, by Rep. Faith Winter and Sen. John Cooke. The bill allows the governor to enter into a compact with other states to enable emergency medical service providers to provide services in Colorado.
  • HB 15-1134 – Concerning the New Vehicle Exemption for Emissions Testing of Heavier Diesel Vehicles with a Model Year That is No Older than 2014, by Rep. Don Coram and Sen. John Cooke. The bill extends the new vehicle exemption for heavy diesels to six years as long as the vehicle has a model year of 2014 or later.

For a complete list of Governor Hickenlooper’s 2015 legislative decisions, click here.

Water Right Quantification, Earned Time for Certain Offenders, and More Bills Signed

On Monday, May 4, 2015, Governor Hickenlooper signed seven bills into law. He signed one more bill on Tuesday, May 5, 2015. To date, the governor has signed 184 bills into law. The bills signed on May 4 and 5 are summarized here.

May 4, 2015

  • HB 15-1239 – Concerning an Exception to the Prohibition Against Paying Postemployment Compensation for the Denver Health and Hospital Authority, by Reps. Beth McCann & Susan Lontine and Sen. Pat Steadman. The bill removes the Denver Health and Hospital Authority from the list of government agencies prohibited from offering post-employment compensation to employees who have been terminated.
  • HB 15-1203 – Concerning Earned Time for Certain Offenders Serving Life Sentences as Habitual Offenders, by Rep. Paul Rosenthal and Sen. Pat Steadman. The bill allows offenders sentenced before July 1, 1993 for crimes committed after July 1, 1985 to accrue earned time.
  • HB 15-1215 – Concerning In-State Tuition Classification for Dependents of Active Duty Military Members who have Attended School in Colorado, by Rep. Kevin Priola and Sen. Michael Johnston. The bill allows an institute of higher education to provide in-state tuition to active duty military members.
  • HB 15-1218 – Concerning Requiring Certain Disclosures by Defense-Initiated Victim Outreach Specialists, by Rep. Rhonda Fields and Sen. Michael Johnston. The bill specifies parameters for defense-initiated victim outreach in cases involving a Class 1 felony.
  • HB 15-1220 – Concerning Response to Sexual Assault on Campuses of Colorado’s Institutions of Higher Education, by Reps. Jessie Danielson & Su Ryden and Sens. John Cooke & Beth Martinez Humenik. The bill requires institutions of higher education to create Memoranda of Understanding with local hospitals to provide sexual assault examinations.
  • HB 15-1136 – Concerning the Number of Disabled Veteran License Plates with the Identifying Figure Authorizing the Use of Parking Privileges that May Be Issued to a Qualified Individual, and, in Connection Therewith, Making an Appropriation, by Rep. Clarice Navarro and Sen. Laura Woods. The bill increases the number of disabled veteran license plates available to two sets of place per veteran.
  • SB 15-183 – Concerning the Quantification of the Historical Consumptive Use of a Water Right, by Sens. Mary Hodge & Jerry Sonnenberg and Reps. Jeni James Arndt & Jon Becker. The bill specifies use periods for a judicial decree of historical consumptive use of a water right.

May 5, 2015

  • SB 15-225 – Concerning the Governance Structure of the State Historical Society, and, in Connection Therewith, Changing the Method of Appointment of a Board of Directors and Creating a Directors Council, by Sens. Chris Holbert & Nancy Todd and Reps. Su Ryden & Lori Saine. The bill changes the procedures for electing members to the board of directors for the Colorado State Historical Society.

For a complete list of Governor Hickenlooper’s 2015 legislative decisions, click here.

Tenth Circuit: Jury Improperly Instructed on Direct Threat in Employment Discrimination Case

The Tenth Circuit Court of Appeals issued its opinion in Equal Employment Opportunity Commission v. Beverage Distributors Company, LLC on Monday, March 16, 2015.

Michael Sungaila, who is legally blind, worked for Beverage Distributors until his position was eliminated, at which time he obtained a higher paying job in the company’s warehouse that required him to pass a physical. He passed the physical, but the doctor said Mr. Sungaila would require accommodations for his impaired vision. Beverage Distributors declined to make the accommodations, concluding instead that Mr. Sungaila’s condition created a significant risk of harm to himself or others, and rescinded its job offer. Mr. Sungaila subsequently received a lower-paying position with a different company. The EEOC brought suit on his behalf under the ADA.

At trial, Beverage Distributors asserted two defenses: (1) Mr. Sungaila’s limited vision created a direct threat of harm to himself or others and no reasonable accommodations could mitigate the risk, and (2) should he prevail, Mr. Sungaila’s award should be reduced because of his failure to mitigate damages. The jury found that Beverage Distributors was liable for discrimination and Mr. Sungaila was not a direct threat, but also found he had failed to mitigate his damages. The jury reduced his back-pay award for failure to mitigate. The EEOC filed two post-trial motions, first invoking F.R.C.P. 50(a) and arguing Beverage Distributors had not proved failure to mitigate as a matter of law, and also seeking a tax-penalty offset for the lump sum award. The district court granted both motions. Beverage Distributors appealed.

The Tenth Circuit first addressed Beverage Distributors’ claim that the jury was erroneously instructed on direct threat and this constituted reversible error. The Tenth Circuit evaluated the instruction and found it inaccurately conveyed the direct threat standard. The instruction stated that Beverage Distributors must prove that Mr. Sungaila’s employment posed a direct risk of harm, while the actual standard is simply that Beverage Distributors reasonably believed there was a direct risk. Because the jury instruction conveyed the wrong standard for the direct threat defense, and because the jury likely relied on this instruction in determining liability, the Tenth Circuit reversed.

Next, Beverage Distributors argued the district court improperly granted the EEOC’s Rule 50(a) motion, but the Tenth Circuit declined to reach the issue, finding that the evidence for the fact-intensive issue might be different on remand.

Finally, the Tenth Circuit found that the tax penalty offset was properly awarded. If the issue arises again on remand, it is properly before the court to decide whether to award a tax penalty offset, and there is no impropriety in such an award.

The Tenth Circuit reversed and remanded on the direct threat instruction and found the tax penalty offset was proper.

Tenth Circuit: One-Time Deduction from Salaried Employee’s Check Not Impermissible

The Tenth Circuit Court of Appeals issued its opinion in Ellis v. J.R.’s Country Stores, Inc. on Monday, March 9, 2015.

Sandra Ellis was a salaried manager for J.R.’s Country Stores, and as such she was required to work 50 hours per week. When she worked 40.91 hours one week, J.R.’s deducted $31.20 from her paycheck for the missed time. Ellis resigned, then sent a letter to J.R.’s claiming she was owed $42,187.50 in overtime wages and that she had lost her exempt status for FLSA purposes when J.R.’s made the one-time deduction. J.R.’s responded by paying Ellis $332.88, which it explained as reimbursement for the deduction plus all the overtime compensation she would have received for that pay period had she been an hourly employee.

Ellis filed a lawsuit in the U.S. District Court for the District of Colorado, alleging she was not a true exempt employee under the FLSA because of the one-time deduction and signaling an intent to certify a class of similarly situated managers. J.R.’s moved for summary judgment, attaching as exhibits all of Ellis’ time sheets and payroll records. Instead of responding to the summary judgment motion, Ellis filed a motion to certify a class. J.R.’s then sought a temporary stay of class certification pending determination of its summary judgment motion, and Ellis filed a response to the summary judgment motion. The district court granted J.R.’s summary judgment motion, finding the one-time deduction did not change the company’s intent to pay Ellis a salary, but even if Ellis were correct, the company was entitled to the window-of-correction defense detailed in the FLSA. The court denied Ellis’ class certification motion as moot. Ellis appealed.

The Tenth Circuit first addressed Ellis’ contention that the district court misapplied the salary-basis test associated with her FLSA exemption. Ellis contended the district court’s order only addressed the frequency factor of the salary-basis test, but the Tenth Circuit found that the district court properly applied all five factors in finding against Ellis. Ellis next disputed the district court’s conclusion that she failed to make findings of material fact concerning the existence of a company practice of making deductions. The Tenth Circuit disagreed, finding the district court properly applied Auer in determining that a one-time deduction could not be considered a practice. Addressing her argument that the company had a policy of enforcing improper deductions against salaried employees, the Tenth Circuit again disagreed, finding instead that J.R.’s policy as stated in its employee handbook essentially disallows improper deductions. Ellis also complained of J.R.’s policy of requiring managers to maintain 50 hour work weeks, but, after examining DOL policy and caselaw, the Tenth Circuit found no error.

The Tenth Circuit next addressed Ellis’ contention that the district court’s reliance on the window-of-correction defense was misplaced, and disagreed. After examining the record, the district court concluded that because J.R.’s reimbursed Ellis for the one-time deduction in a timely manner, it was entitled to the window-of-correction defense. The Tenth Circuit agreed. The Tenth Circuit found that although sister circuits had found the window-of-correction defense only applied to “inadvertent” deductions, it was not bound by those decisions and instead ruled the defense was applicable to “isolated” incidents.

Finally, the Tenth Circuit addressed Ellis’ contention that the district court erroneously denied her motion to defer summary judgment so she could conduct additional discovery. The Tenth Circuit found no error because the affidavit in issue failed to demonstrate a need for any further discovery, and Ellis’ contentions were speculative at best.

The Tenth Circuit affirmed the district court.

Colorado Court of Appeals: All Separations from Base Period Employers Must Be Evaluated to Determine Unemployment Eligibility

The Colorado Court of Appeals issued its opinion in Nagl v. Industrial Claim Appeals Office on Thursday, April 23, 2015.

Unemployment Compensation—CRS § 8-73-108(5)(e)(IV)—Constitutional Right to Travel.

Claimant worked as a front desk agent for Destination Vail Hotel, Inc. He quit this job to be located closer to his girlfriend in Telluride. Claimant found a new position in Telluride, but was subsequently laid off.

Claimant then sought unemployment insurance benefits. A deputy for the division of unemployment insurance denied claimant’s request for benefits based on his employment with Destination Vail Hotel. However, claimant did receive benefits based on his work for his Telluride employer. Claimant appealed, and the hearing officer affirmed the deputy’s decision. The Industrial Claim Appeals Office (Panel) affirmed.

On appeal, claimant contended that the Panel’s decision was inconsistent with the express purpose of the Colorado Employment Security Act (CESA), which is to provide unemployment benefits to persons who are unemployed through no fault of their own. Whether a claimant is entitled to unemployment benefits attributable to wages paid by a particular employer depends on the reason for the separation from that employment. Because it was undisputed that claimant voluntarily quit his employment with Destination Vail Hotel, and thus was at fault for that separation, the hearing officer and the Panel did not err in determining that he was disqualified from receiving benefits from that employer.

Claimant also argued that the move to Telluride was not a disqualifying event under CRS § 8-73-108(4)(n). However, the hearing officer properly limited the proceeding to the circumstances surrounding his Vail job, not his subsequent employer. The fact that he accepted work after leaving the Vail job does not bear on whether he refused to accept work following the termination of his Telluride job. Thus, CRS § 8-73-108(4)(n) does not provide a basis for awarding benefits to claimant based on his employment with Destination Vail Hotel.

Claimant further argued that the hearing officer’s application of CESA violated his right to travel, as protected by the Colorado Constitution, because it effectively penalized his right to move within the state. To succeed on an “as applied” challenge, a party must show that the statute is unconstitutional under the circumstances in which the party acted. Here, the loss of benefits resulting from claimant’s decision to quit his job to move closer to his girlfriend is not a constitutionally significant restriction. The order was affirmed.

Summary and full case available here, courtesy of The Colorado Lawyer.

Tenth Circuit: Panel Rehearing Granted to Limited Extent but Rehearing En Banc Denied

The Tenth Circuit Court of Appeals issued its revised opinion in Fulghum v. Embarq Corporation on Monday, April 27, 2015. The Tenth Circuit granted panel rehearing to a limited extent and issued a revised opinion. The opinion was circulated to all judges and none requested a poll, so en banc rehearing was denied. The Legal Connection summary of the original opinion is available here.

Tenth Circuit: Garcetti/Pickering Test Applies to Pretextual Termination of Police Officer

The Tenth Circuit Court of Appeals issued its opinion in Seifert v. Unified Government of Wyandotte County/Kansas City, Kansas on Friday, February 27, 2015.

Max Seifert was a reserve deputy for the Wyandotte County Sheriff’s Department in Kansas. In July 2003, Barron Bowling was involved in a minor car accident with a DEA agent, after which the DEA agent and another agent pulled Bowling from the car and pummeled, kicked, and insulted him while he was forced to lay shirtless on hot pavement. Seifert, then a detective with the Kansas City, Kansas Police Department (KCKPD), investigated the incident and documented the agents’ misconduct, despite pressure from others in the KCKPD to cover up the facts. He testified at Bowling’s criminal trial in 2005, and was forced into retirement from the KCKPD later that year.

Seifert then received a commission as a reserve deputy with the Wyandotte County Sheriff’s Department (WCSD). From January 2006 to June 2009, he assisted the WCSD with criminal investigations to satisfy his requisite 16 hours per month of volunteer time. In June 2009, KCKPD and the Unified Governments settled their claims with Bowling, and five days later, Seifert was removed from investigations by the WCSD. Seifert’s supervisor, undersheriff Roland, informed Seifert that the Wyandotte County District Attorney and an AUSA refused to accept cases involving Seifert because of concerns about his credibility. Roland also informed Seifert that by department rule he could not continue his work as a reserve deputy while simultaneously maintaining a civilian position in the jail. Seifert met with the police captain shortly thereafter, who told him there was no such rule precluding dual roles. Seifert also encountered the DA, who relayed it was not his office that had problems with Seifert but people in other jurisdictions.

In early 2010, the reserves supervisor asked Roland if he could have Seifert conduct training of other officers, since there was no other reserve work, but Roland would not allow it, citing the credibility issue. The trial of Bowling’s claims with the remaining defendants began on March 1, 2010, and Seifert testified on March 4 and 9. On April 8, 2010, the trial concluded. Five days later, Seifert received a memorandum signed by Roland and the reserves supervisor with Sheriff Ash copied, stating Seifert’s service as a deputy was no longer needed.

Seifert brought claims in federal district court under §§ 1983 and 1985 and under Kansas state law, all of which alleged that the actions against him were taken to deter him from testifying for Bowling or punish him for doing so. His § 1983 claims alleged defendants’ actions violated his First Amendment rights, and the § 1985 claims violated that statute’s prohibition against conspiracies to deter witnesses from testifying. The district court granted defendants’ motion to dismiss based on the two-year time bar in §§ 1983 and 1985 and granted summary judgment to defendants on all remaining claims. Seifert appealed.

The Tenth Circuit first evaluated the 2014 Supreme Court decision in Lane v. Franks, 134 S. Ct. 2369 (2014), which evaluated free speech concerns in the context of a government employee testifying as a citizen based on events discovered while in the employee’s official capacity. Turning to the instant case, the Tenth Circuit applied the five-pronged Garcetti/Pickering test. Defendants disputed the first, fourth, and fifth prongs, and the Tenth Circuit analyzed them in turn. Lane directly impacted the first prong, whether the speech was made pursuant to the employee’s official duties. Plaintiff’s testimony in this case was protected speech, because he was testifying as a citizen about matters that concerned his work but were not part of it. Although police officers routinely testify as part of their work, plaintiff’s testimony in the Bowling case was different from routine testimony given by police officers at standard trials. The Tenth Circuit found that plaintiff satisfied the first prong.

Since the second and third prongs were not in dispute, the Tenth Circuit turned to the fourth prong—whether the protected speech was a motivating factor in the adverse employment action. The Tenth Circuit found the timing suspicious for both of plaintiff’s adverse employment actions. Likewise, it found defendants’ proffered excuse, i.e., plaintiff’s “Giglio problem,” not credible because the adverse order involving Seifert was remote in time, Seifert had testified in several matters since then, Roland had a similar adverse order that did not affect his employment, the impeachment evidence against Seifert would not be significantly helpful to defense counsel, and it likely would not matter at all in state court.

The Tenth Circuit next evaluated the fifth prong, whether defendant would have reached the same employment decision regardless of the testimony. The Tenth Circuit found that plaintiff satisfied this prong as well, as defendant’s proffered explanations for termination of Seifert were pretextual as explained in the analysis of the fourth prong. The Tenth Circuit therefore reversed summary judgment on plaintiff’s § 1983 claim against the Unified Government. However, the Tenth Circuit  affirmed qualified immunity against Roland and Ash individually, as they could not reasonably have been expected to know the impact of Lane on their actions as employers since the actions predated Lane by several years.

Turning next to the § 1985 claim, the Tenth Circuit found sufficient evidence that Seifert was punished for testifying in the Bowling matters, and reversed on this claim. Because Roland and Ash did not raise individual qualified immunity arguments, the Tenth Circuit did not evaluate them. Finally, the Tenth Circuit affirmed the district court’s dismissal of Seifert’s state law claims, finding a sufficient remedy existed in federal court.

The judgment was affirmed in part, reversed in part, and remanded. Plaintiff’s motion to seal was granted.