July 22, 2017

Tenth Circuit: Discretionary Function Exemption Applies to All Activities of Prosecutors

The Tenth Circuit Court of Appeals issued its opinion in Estate of James D. Redd, M.D. v. United States on Tuesday, February 14, 2017.

The facts of the case stemmed from the case of Estate of James D. Redd, M.D. v. Love, in which the estate of Dr. Redd alleged that Mr. Love, a special agent with the Bureau of Land Management, violated Dr. Redd’s Fourth, Fifth, Sixth, Eighth, and Fourteenth Amendment rights when officers searched the Redds’ home as a part of an investigation that targeted persons in possession and trafficking in Native American artifacts that had been taken illegally from the Four Corners region of the United States. The day after agents searched the Redds’ property and arrested him, Dr. Redd committed suicide.

At the beginning of the trial of the lawsuit against Agent Love, the court dismissed all claims against Agent Love except one alleging excessive force. The court later dismissed the excessive force claim as well. In this appeal, the Tenth Circuit was evaluating one of the early claims under the Federal Tort Claims Act (FTCA) that had been dismissed by the district court in the first case: that the value of a “bird effigy pendant” was, as alleged by the estate, overstated in order to support a felony charge against Dr. Redd.

At the request of the parties to the case, the court decided the case on the briefs without oral argument. The court reviewed the claim de novo that the value of the pendant was inflated, and that prosecutors were aware of the inflation. The court stated, “determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” The court agreed with the district court’s finding that the allegation that a cooperating witness intentionally over-valued the pendant is implausible and not well pleaded. The court then noted that the district court was correct in stating that, “absent the implausible allegation of fraudulent valuation of the pendant, the discretionary function exception applies to all identified activities of the prosecutors barring the Estate’s FTCA claim.”

The Tenth Circuit affirmed the district court’s dismissal of all the Estate’s FTCA claims based on the discretionary-function exemption.

Tenth Circuit: FTCA Claims Subject to Jurisdictional Time Limitations

The Tenth Circuit Court of Appeals issued its opinion in Barnes v. United States on Wednesday, January 21, 2015.

Larry Barnes was indicted in Oklahoma federal court for two crimes related to possession and distribution of methamphetamine. He was convicted and sentenced to two concurrent 66-month sentences. Barnes appealed. While his appeal was pending, the government acquired evidence that testimony of an ATF agent, a Tulsa police officer, and a confidential informant had been fabricated, and asked the court to vacate Barnes’ conviction and immediately release him from prison. The court granted that motion on July 2, 2009.

Seeking redress, Barnes filed administrative tort claims with the BATF on May 20, 2010. Receiving no response from the BATF, Barnes filed a civil lawsuit in Oklahoma state court on May 13, 2011, which the government removed to federal court. On September 23, 2011, the BATF filed a motion to dismiss for lack of subject matter jurisdiction, arguing that since the FTCA vests exclusive jurisdiction over federal tort claims in the federal district court, and removal jurisdiction requires a colorable state court claim, and plaintiffs had no jurisdiction in state court, the federal court therefore lacked jurisdiction as well. On October 25, 2011, while its motion to dismiss was pending, the BATF notified Barnes via certified mail of its formal denial of the administrative claims. The letter specifically advised that any appeal must be filed within six months of the date of  mailing of the letter, or by April 25, 2011.

On March 23, 2012, the federal district court granted the BATF’s motion to dismiss, and dismissed the case without prejudice. On August 22, 2012, Barnes filed a second lawsuit in federal district court. The BATF again moved to dismiss, this time for lack of jurisdiction under F.R.C.P. 12(b)(1) due to the lawsuit being time-barred. The district court granted the motion to dismiss and Barnes appealed.

The Tenth Circuit analyzed the provisions of 28 U.S.C. § 2675(a) and 28 U.S.C. § 2401(b), and found the two sections acted like “book-ends” for the time limit to file an FTCA claim. Barnes argued that his second lawsuit was timely because he was filing under § 2675(a)’s “deemed denial” provision, but the Tenth Circuit found that the BATF’s October 25, 2011 letter explicitly triggered § 2401(b)’s six-month limitations period. The Tenth Circuit found that the court lacked jurisdiction due to the time-bar.

The Tenth Circuit also analyzed Supreme Court precedent in Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89 (1990), regarding jurisdictional bars and equitable estoppel. After a lengthy analysis, the Tenth Circuit concluded it was bound by previous circuit precedent to apply a jurisdictional bar to FTCA claims. Even analyzing Barnes’ claims under equitable estoppel principles, though, the Tenth Circuit still found no relief for Barnes, because he could not show “affirmative misconduct” by the BATF.

The Tenth Circuit found that the district court correctly dismissed the claims, but incorrectly did so with prejudice. Claims subject to a jurisdictional bar are properly dismissed without prejudice. The Tenth Circuit affirmed the judgment of the district court but remanded for correction of the dismissal as without prejudice.

Tenth Circuit: No Evidence that Physician’s Performance Fell Below Accepted Standard of Care

The Tenth Circuit Court of Appeals issued its opinion in Gallardo v. United States on Monday, May 19, 2014.

Ms. Gallardo brought suit against the United States under the Federal Tort Claims Act, alleging that the performance of her obstetrician, Dr. McCutcheon, fell below the standard of care during the delivery of her daughter, D.R.G., who was born with cerebral palsy.

In February 2007, Ms. Gallardo went to Memorial Hospital in Colorado Springs after complaining of reduced fetal movement and was evaluated with an electronic fetal monitor (EFM). Dr. McCutcheon, clinical director of the federally-operated Women’s Care Center at Peak Vista Community Health Center, admitted her and induced labor. The EFM readouts were used by Dr. McCutcheon to evaluate the health of the baby and determine continued course of treatment. These EFM readouts were “non-reassuring,” indicating potential fetal distress, but Ms. Gallardo ultimately delivered the baby vaginally. Ms. Gallardo asserted that Dr. McCutcheon’s actions during the labor and delivery fell below the applicable standard of care. She exhausted all administrative remedies against the Department of Health and Human Services and filed suit against the United States. The case was tried in the district court and ultimately decided in favor of the United States. Ms. Gallardo timely appealed to the Tenth Circuit on several points of error.

Ms. Gallardo asserted that the district court applied the wrong standard of care when determining that Dr. McCutcheon’s decisions were reasonable, and that the court disregarded the opinions of her two medical expert witnesses in finding for Dr. McCutcheon. However, the testimony of the four physicians described a widely variable standard of care for situations like Ms. Gallardo’s, and the district court not only relied on physician testimony but also relied heavily on guidelines issued by the American College of Obstetrics and Gynecology. Ms. Gallardo also asserted that the district court did not give enough significance to the EFM readouts, but for this claim too the district court relied on both expert testimony and the guidelines in forming its opinion.

Ms. Gallardo also argued that the district court failed to address the most significant criticisms of Dr. McCutcheon, but the record refutes her claims. Finally, Ms. Gallardo argued that the district court erred in allowing testimony regarding nomenclature adopted subsequent to D.R.G.’s birth. However, this testimony was not used in determining Dr. McCutcheon’s effectiveness, but rather to clarify language used by obstetricians regarding EFM strips.

The district court’s judgment was affirmed on all counts.

Tenth Circuit: Statute of Limitations Began to Run when Formal Diagnosis Received

The Tenth Circuit Court of Appeals issued its opinion in Bayless v. United States on Monday, April 28, 2014.

In 1997, Carolyn Bayless took a seasonal position with the Utah Division of Wildlife, where she traveled to remote locations around Utah to conduct various wildlife studies. Unbeknownst to her at the time, the U.S. Army was conducting chemical and biological weapons testing near two of the sites Bayless visited for the wildlife studies. In October 1997, approximately one month after completing her seasonal position, Bayless started experiencing episodic blurred vision and lip numbness. She sought medical treatment from several providers but did not find a reason for the symptoms. Her symptoms continued to worsen and she continued to seek medical treatment, but no doctor could find a reason for her neurological symptoms. After years of worsening symptoms and treatment trials, Bayless began to tell doctors that she believed her symptoms could have been caused by exposure to toxins she had experienced during her work with the Utah Department of Wildlife. In 2005, Bayless became convinced that her symptoms were caused by exposure to sarin nerve gas and other biological weapons that had been tested at the Army facilities near the location of Bayless’ work in 1997. In 2007, Dr. William Rea of the Environmental Health Center in Dallas, Texas, diagnosed Bayless with several conditions related to exposure to toxic chemicals. He reported that he “firmly believe[d] that in all medical probability this patient’s incapacitation is a result of her exposure to pesticides, heavy metals, molds, and mycotoxins in the workplace.”

Bayless filed an administrative claim on January 31, 2008, alleging that the activities of United States Army on its Dugway facility caused her to sustain permanent neurological and other injuries. On May 29, 2009, Bayless filed a complaint under the Federal Tort Claims Act (FTCA) in the United States District Court for the District of Utah. On December 2, 2011, the government moved for summary judgment to dismiss Bayless’ complaint for lack of subject-matter jurisdiction. The government argued that Bayless failed to present her administrative claim within two years of the accrual of that claim pursuant to 28 U.S.C. § 2401(b). After hearing argument on April 19, 2012, the district court granted the motion on May 17, 2012. The district court concluded that Bayless acquired enough knowledge by May 2005 for her claim to begin to accrue and also that her claim was not protected by the doctrine of equitable tolling.

The Tenth Circuit addressed the question of when the two-year statute of limitations under the FTCA began to run. Although Bayless’ symptoms began in 1997, she did not know of the existence of the Army testing sites until 2005, and was not formally diagnosed by a physician until 2007, despite numerous medical exams and tests. The Tenth Circuit held that the formal diagnosis began the statute of limitations and therefore her claim was timely. The opinion of the district court was reversed and remanded.

Tenth Circuit: District Court Lacked Jurisdiction Under FTCA and Tucker Act in FDIC Receivership Case

The Tenth Circuit Court of Appeals published its opinion in ECCO Plains, LLC. v. United States on Wednesday, September 4, 2013.

Ken Ulrich is the majority owner of High Plains Cattle Company, LLC. High Plains and Doug English formed ECCO Plains, LLC, to raise cattle for sale. Each made a $7,000,000 capital contribution to ECCO Plains. High Plains financed its capital contribution with a loan from the New Frontier Bank; Ulrich personally guaranteed the debt. English also financed his capital contribution from the Bank. No ECCO Plains assets were pledged as security for either loan. As part of the ECCO Plains operating agreement, the parties agreed that High Plains would, upon request, receive a return of its capital contribution before English received any of his capital contribution. The Bank, as well as FDIC, had a copy of the agreement. After the Bank became insolvent, FDIC was appointed receiver.

ECCO Plains sold approximately $5,500,000 worth of cattle to a packing house in Northern Colorado. FDIC caused the packing house to make the sale proceeds payable to both ECCO Plains and FDIC. High Plains made a written demand to FDIC to apply 100% of the sale proceeds to High Plains’ loan. The demand was based on its 50 percent membership interest in ECCO Plains and the terms of the ECCO Plains/English operating agreement. English, on the other hand, instructed FDIC to apply 50% of the proceeds to the High Plains loan and the other 50% to the English Cattle Company loan. FDIC, however, did neither. Instead, it applied all of the proceeds to the English Cattle Company loan. It then sold that loan, along with the High Plains loan, to third parties.

ECCO Plains, High Plains and Ulrich filed suit against the United States. All three alleged conversion and negligence under the Federal Tort Claims Act FTCA. ECCO Plains also alleged a Fifth Amendment Takings Claim. The government moved to dismiss based on lack of subject matter jurisdiction or, in the alternative, for failure to state a claim. The district judge granted the motion. He concluded ECCO Plains’ FTCA claims should be dismissed for lack of subject matter jurisdiction because it failed to file a notice of claim. The remaining claims were dismissed for failure to state a claim.

The Tenth Circuit first considered High Plains and Ulrich’s conversion and negligence claims. While those claims would be covered by the FTCA, the FTCA excludes claims arising out of interference with contract rights. The court agreed with the government that High Plains and Ulrich’s claims were actually that the FDIC interfered with their contractual right to the proceeds of the sale. Their complaint satisfied the elements of interference with contract under Colorado law and treatises in effect at the time of the FTCA’s enactment. The court held that the district court lacked subject matter jurisdiction over the conversion and negligence claims.

The court also held that ECCO Plain’s Fifth Amendment Takings claim should have been construed as an illegal exaction claim and dismissed for lack of jurisdiction. An illegal exaction claim exists when “the plaintiff has paid money over to the Government, directly or in effect, and seeks return of all or part of that sum that was improperly paid, exacted, or taken from the claimant in contravention of the Constitution, a statute, or a regulation.” Under the Tucker Act, the United States Court of Federal Claims has jurisdiction over illegal exaction claims when the exaction is based on an asserted statutory power. Here, the FDIC acted under its receivership powers to take control of the cattle sale money.

The court reversed the district court’s dismissal of High Plains and Ulrich’s negligence and conversion claims and ECCO Plains’ Fifth Amendment Takings claim for failure to state a claim and remanded to the district court to dismiss the claims for lack of jurisdiction.