December 18, 2014

Point/Counterpoint: YouTube Law—When Depositions Go Viral: (Point) An Open Democracy is a Healthy Democracy

This article originally appeared in the February 2014 issue of The Colorado Lawyer. It is part of a two-part “Point/Counterpoint” series. Click here for the “Counterpoint” article.
Pineau_JohnCNazi Hermann Goering is on YouTube at his 1946 trial in Nuremburg testifying about the necessity of concentration camps.[1] Charles Manson is on the Internet discussing his 1970 murder trial.[2] F. Lee Bailey’s powerful 1995 cross-examination in the O. J. Simpson trial is on the Web.[3]The thoughtful testimony of Bill Gates is posted from a 1998 video deposition.[4] Bill Clinton’s 1998 attempts to weave through a deposition are uploaded.[5] Andrew Fastow’s admission to Enron fraud in 2006 is posted throughout the Internet.[6] The 2011 video deposition of Tony Hayward, nervous CEO of British Petroleum, also is preserved for us online. And there are thousands of other public court records and depositions available at the click of a few keystrokes.[7]

Court records are public records, particularly after the trial is over. They are reviewed by us, and shared in books, studies, newspapers, television, and the movies. For centuries, these records have been open to the public, and for decades, they have included video exhibits and depositions. Public access is an accepted part of our constitutional plan for an open democracy. That venerable principle is being advanced by citizens who are securing their court files in cases that expose community hazards and then sharing the facts with the public on the Internet.

This practice is a growing pain for those who endanger our safety. Wayward corporations, and the insurance companies who represent them, expect that after trial, the court records of their misconduct will be forgotten, buried in a courthouse cellar, and covered with a sleepy layer of dust. Instead, these records are being uploaded so that the evidence is available to the public. The move is to openness and accountability—two necessary components of a healthy democracy.

The Public’s Right to Access Case Records

U.S. Circuit Court Judge Frank Easterbrook wrote in Union Oil Company of California v. Leavell:

People who want secrecy should opt for arbitration. When they call on the courts, they must accept the openness that goes with subsidized dispute resolution by public (and publicly accountable) officials. Judicial proceedings are public rather than private property and the third-party effects that justify the subsidy of the judicial system also justify making records and decisions as open as possible. What happens in the halls of government is presumptively public business. Judges deliberate in private but issue public decisions after public arguments based on public records. . . . Much of what passes between the parties remains out of public sight because discovery materials are not filed with the court. But most portions of discovery that are filed and form the basis of judicial action must eventually be released.[8]

Our courts proclaim that the public has a constitutional right to access court records.[9]

The presumption of public access recognized and promoted by the local rule finds its root in the common law rights of access to judicial proceedings and to inspect judicial records—rights which are “beyond dispute.” . . . The court in Publicker, and other circuit courts of appeal, have gone beyond the undoubted common law right, however, and have found a constitutionally protected right, rooted in the First Amendment, to public access to civil trials.[10]

The general public has had online access to the contents of federal court files since 2005.[11] In Colorado courts, “C.R.C.P. 121, adopted in 1988, creates a presumption that court files will be open to the public unless a court order provides otherwise.”[12]

Hence, the rule creates a presumption that all court records are to be open; it allows a court to limit access in only one instance and for only one purpose (when the parties’ right of privacy outweighs the public’s right to know); and it grants to every member of the public the right to contest the legitimacy of any limited access order.[13]

In Exum v. United States Olympic Committee, the U.S. District Court for the District of Colorado held that “[i]n the absence of a showing of good cause for confidentiality, parties are free to disseminate discovery materials to the public.”[14] Courts have found that “[a]ccess to discovery materials is particularly appropriate when the subject matter of the litigation is of general public interest.”[15]

Openness Generally Trumps Privacy Interests

Public access to court records is founded on the principles of an open democracy.

A presumption of openness inheres in civil trials as in criminal trials. . . . [T]he civil trial, like the criminal trial, plays a particularly significant role in the functioning of the judicial process and the government as a whole. . . . [P]ublic access to civil trials enhances the quality and safeguards the integrity of the fact finding process. It fosters an appearance of fairness, and heightens public respect for the judicial process. It permits the public to participate in and serve as a check upon the judicial process—an essential component in our structure of self-government. Public access to civil trials, no less than criminal trials, plays an important role in the participation and the free discussion of governmental affairs.[16]

In fact, it is “unreasonable, as a matter of law, for the parties to litigation to expect or to assume that all of the court files will remain private.”[17]

A claim that a court file contains extremely personal, private, and confidential matters is generally insufficient to constitute a privacy interest warranting the sealing of the file. Likewise, prospective injury to reputation, an inherent risk in almost every civil lawsuit, is generally insufficient to overcome the strong presumption in favor of public access to court records.[18]

Naturally, when a party’s privacy concerns outweigh the public’s right to know, the court will enter a protective order sealing such matters.[19] As trial lawyers know, protective orders are freely granted in cases that do not impact public safety or raise public concerns.

To protect community safety, parties have posted public records and videos of child abuse,[20] abuse of the handicapped,[21] nursing home abuse of the elderly,[22] school violence,[23] workplace violence,[24] bank foreclosure fraud,[25] drinking water contamination,[26] air and water pollution,[27] insurance bad faith,[28] and hundreds of other cases of public concern. In response, errant corporations have counter-punched with personal attacks and much more. For example, in the food industry, where video evidence has lead to successful civil and criminal charges, corporate lobbyists in twelve states are pushing legislation that criminalizes such videos and the videographers.[29] Fortunately, the fact that these laws would indict innocent witnesses has been noted by the press and prosecutors, and the bills have struggled for approval.[30] It is in this environment that I was contacted by my new friend Fred Burtzos, counsel for State Farm Insurance Company, and asked to debate the issue here.

So, how do citizens share these types of records? They collect the public portion of their court file, minus any sealed material. Using the records, images, and video depositions, they create a short video and upload it to the Internet. If their video exposes dangers to the community, it is likely to be watched and shared, and it may go viral. If it is not newsworthy, it is likely to have limited circulation.

Conclusion

The sharing of public records is not just growing, it is exploding. Over the last few years, my company, JusticeTV, has joined the trend to assist lawyers and their clients with the technical aspects of creating, editing, and uploading the videos. The process is simple. The law is well-established. And, like sunshine, it is healthy for our community.

John K. Pineau is a trial lawyer in civil and criminal courts. He has handled a number of high-profile cases and lectures on trial tactics and strategy. He also is the president of JusticeTV, LLC, a company that assists lawyers and their clients in creating and sharing public record videos—(303) 440-4444, johnpineau@yahoo.com, www.johnpineau.com.

This article originally appeared in the February 2014 issue of The Colorado Lawyer. Articles are available online to CBA members.

 


[1] See www.youtube.com/watch?v=mfwujaV7Ia8.

[2] See www.youtube.com/watch?v=7MZaEt6lOq8.

[3] See www.youtube.com/watch?v=gVoIz2zNX9U.

[4] See www.youtube.com/watch?v=m_2m1qdqieE.

[5] See www.youtube.com/watch?v=xHlt1W83JFU.

[6] See www.youtube.com/watch?v=9zxAJO7owy8.

[7] See www.youtube.com/watch?v=VUINT2ibjSE.

[8] Union Oil Company of California v. Leavell, 220 F.3d 562, 568 (7th Cir. 2000) (citing U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 27-29 (1994), and In re Memorial Hospital of Iowa County, Inc., 862 F.2d 1299, 1302-03 (7th Cir. 1988)).

[9] Mann v. Boatright, 477 F.3d 1140, 1149 (10th Cir. 2007) (citing Nixon v. Warner Communications, Inc., 435 U.S. 589, 597 (1978)).

[10] Huddleson v. City of Pueblo, Colorado, 270 F.R.D. 635, 638 (D.Colo. 2010) (citing Publicker Industries, Inc. v. Cohen, 733 F.2d 1059 (3d Cir. 1984)). See Mann v. Boatright, 477 F.3d 1140. 1149 (10th Cir. 2007) (“Courts have long recognized a common-law right of access to judicial records.”).

[11] See www.cod.uscourt.gov/courtoperations/faq.aspx.

[12] Office of the State Ct. Administrator v. Background Info. Serv., 994 P.2d 420, 429 (Colo. 1999).

[13] In Anderson v. Home Ins. Co., 924 P.2d 1123, 1126 (Colo.App. 1996), the court stated:

In the Open Records Act, § 24-72-201, C.R.S. (1988 Repl.Vol. 10B), the General Assembly has declared that, with certain specified exceptions, it is “the public policy of this state that all public records shall be open for inspection by any person at reasonable times. . . .” This public policy means that, unless there exists a legitimate reason for non-disclosure, any member of the public is entitled to review all public records. There is no requirement that the party seeking access must demonstrate a special interest in the records requested.

[14] Exum v. United States Olympic Committee, 209 F.R.D. 201, 206 (D.
Colo. 2002).

[15] In re Texaco, Inc. 84 B.R. 14, 17 (Bankr.S.D.N.Y. 1988) (citing In Re “Agent Orange” Product Liability Litigation, 821 F.2d 139, 146 (2d Cir. 1987)).

[16] Huddleson, 270 F.R.D. at 635, 638 (citing Nixon, 435 U.S. 589).

[17] Anderson v. Home Ins. Co., 924 P.2d 1123 (Colo.App. 1996) (citing Cox Broadcasting Corp. v. Cohn, 420 U.S. 469 (1975)).

[18] Doe v. Heitler, 26 P.3d 539, 544 (Colo.App. 2001).

[19] FRCP 26(c) and CRCP 26(c).

[20] See www.youtube.com/watch?v=N8RzT0NiruQ.

[21] See www.youtube.com/watch?v=IAYXJ26j2Po.

[22] See www.wkyc.com/video/1027702353001/0/Investigator-Hidden-camera-catches-nursing-home-abuse.

[23] See www.youtube.com/watch?v=xDifkMzSLuw.

[24] See www.youtube.com/watch?v=qkxbG5HADso.

[25] See 4closurefraud.org/depositions.

[26] See www.slideshare.net/MarcellusDN/lawsuit-deposition-of-pa-dep-official-tara-upadhyay-on-water-testing-procedures.

[27] See www.youtube.com/watch?v=HgR3lDg9KhY.

[28] See www.youtube.com/watch?v=5hIzsc7muxo.

[29] Oppel, Jr., “Taping of Farm Cruelty Is Becoming the Crime,” The New York Times (April 6, 2013), www.nytimes.com/2013/04/07/us/taping-of-farm-cruelty-is-becoming-the-crime.html?_r=0.

[30] Id.

Deposition Strategy and Technique – Five Tips For Your Next Deposition

DaveMarkowitzEvery litigator will conduct a deposition at some point in his or her career. Depositions are a chance for the litigator to obtain favorable (or unfavorable) evidence to use as part of the overall trial strategy. To quote Paul Gordon, however, “Depositions are one of the several points of friction between the science of practicing law and the art of practicing law. Understanding depositions is an essential tool for every litigator.”

Nationally renowned speaker David “Dave” Markowitz will be at the CLE offices on Wednesday, December 11, 2013, to teach about deposition strategies and techniques. He will share ten important goals for the litigator to accomplish in the deposition, including how to avoid undesirable results. Some of those goals are outlined here:

  1. Each deposition question should be aimed at accomplishing the desired result – the deposed witness should be questioned on relevant facts in order to create admissions to use at trial.
  2. Never attempt to accomplish improper deposition goals, such as deliberately trying to incur expense for the opponent.
  3. Determine what the big questions are and ask them. If they are answered, they will directly accomplish a major goal.
  4. Identify lying witnesses. Video record the deposition to visually demonstrate untruthfulness.
  5. Be thorough – decide which goals are the most important and spend the most time on these, while not neglecting points that are less important but will still help accomplish your goals.

If you are a litigator, or any attorney who conducts depositions, do not miss Dave Markowitz’s program on Wednesday, December 11. Click here to register or click the links below.

Dave Markowitz is considered by his peers to be among the best trial lawyers in the Northwest. His commanding presence and keen instincts have made him a courtroom icon. Over the last three decades, Dave has shepherded the firm from its beginning as an ambitious two-attorney litigation shop to its present status as one of the premier business litigation firms in the region.

 

CLE Program: Deposition Technique and Strategy with David Markowitz

This CLE presentation will take place on December 11, 2013, in the CLE Large Classroom. Click here to register for the live program and click here to register for the live webcast.

Can’t make the live program? Click here to order the homestudy.

People v. Stell: Breach of POA Agent’s Fiduciary Duty is Properly Included in Criminal Indictment

CashmanBy Barbara Cashman

In an 11/7/13 published opinion, the Colorado Court of Appeals ruled on substantial questions relating to the Uniform Power of Attorney Act (UPOA) as it relates to an agent’s duties, and the types of activities authorized under a power of attorney (POA). In People v. Stell, 2013CA0492, the court of appeals reversed and remanded with directions a case involving a criminal indictment of an agent who under a POA who liquidated the principal’s assets. This decision has wide and beneficial implications for principals who have executed POAs and whose agent are acting in their own self-interests, are converting their principal’s assets for the agent’s use, or who are otherwise stealing from them. Here’s a sketch of the factual background of the case.

The principal (referred to as “victim” in the opinion) executed a POA in 2009 in Virginia. Both Virginia and Colorado have adopted the UPOA so, even though the statutory citations vary, the law is substantially the same. In the POA, the principal named as agent his son, the defendant, Stell. While acting as agent under the POA, Stell wasted no time liquidating all of principal’s bank accounts, CDs, a 401K account, a piece of real property and the timber sold from that land – to the tune of $453,928.81. The following year, Stell proposed that the principal place other assets into a trust so they would be protected from creditors. The trust document that the principal signed at his agent Stell’s direction did not name the principal as beneficiary of such trust, and so the principal was permanently deprived of the use and benefit of those assets. In October 2010, principal terminated the POA and asked the Denver District Attorney’s office to investigate. As a result of the investigation, a nine-count indictment was drawn, eight counts for theft and one count for conspiracy. The appeal of the trial court’s ruling is based on the dismissal of counts 1, 2, 4 and part of 3 – relating to the authority of the agent, Stell, to transfer the principal’s property as agent under the POA. In its dismissal of those counts, the trial court ruled that because Stell had authority under the POA to do anything with the principal’s property that principal could do with it, Stell could not commit theft against his principal. The court of appeals soundly rejected this line of thinking.

The POA is a document that confers broad powers, but it is no license to steal. In this criminal case, the court of appeals examined carefully the fiduciary duty owed by an agent to his principal under the UPOA. Citing a Virginia Supreme Court decision, the court of appeals stated that “powers of attorney are strictly construed.” (Opin. at ¶17) Going further, the court ruled that the expansive language in a POA should be interpreted narrowly and should be construed in light of the surrounding circumstances. It soundly rejected the argument that, because a POA typically gives a broad grant of authority, it could somehow give an agent the authority to misbehave, commit theft, and otherwise breach fiduciary duties owed as a consequence of the nature of the principal-agent relationship.

The fact that a POA contains a broad grant of authority to the agent does not mean that an agent can abuse that authority. The agent is duty-bound (as in an agent’s fiduciary duty, as described in the UPOA) to exercise authority while acting as agent with the utmost good faith and loyalty. The court of appeals rejected the trial court’s reasoning that a broad grant of authority to the agent implied that an agent’s actions were somehow still “authorized” because agent was acting under a POA, even though the agent’s actions were in violation of his fiduciary duties. In ¶21 of the decision, the court of appeals identified the factual questions appropriate for a jury’s determination of whether an agent under a POA was acting within or outside of his or her scope of authority as determined by agent’s fiduciary duties. They included the following questions of whether agent acted: (1) in accordance with principal’s reasonable expectations and consistently with the principal’s interests and intent; (2) in good faith; (3) loyally for the principal’s benefit; and (4) with the care, competence, and diligence ordinarily exercised by agents in similar circumstances.

In reversing and remanding the counts of the indictment dismissed by the trial court, the court of appeals gives an indication that the days of the POA as a “license to steal” for non-criminal law purposes are over. This is an important development for Colorado – for both the new mandatory reporting of financial exploitation law (read my post about that law here) as well as the ability of exploited elders and other at-risk persons to recover funds improperly taken from them by an agent under a POA. It gives more protection for principals who have been taken advantage of by their agents to establish that the agent’s conduct was improper and to strengthen the ability to recover such funds that were improperly used or converted for the agent’s exclusive benefit.

Barbara Cashman is a solo practitioner in Denver, focusing on elder law, estate law, and mediation. She is active in the Trust & Estate and Elder Law sections of the CBA and is the incoming chair of the Solo/Small Firm section. She contributes to the SOLOinCOLO blog and blogs weekly on her law firm blog, where this post originally appeared.  She can be contacted at barb@DenverElderLaw.org.

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.

Burying the Body—Dismantling the Corpus Delicti Rule and Adopting the Trustworthiness Standard (Part 2)

Evig_SamuelBy Samuel A. Evig

Editor’s Note: This is Part 2 of a two-part series. Part 1 is available hereThe article originally appeared in the November 2013 issue of The Colorado Lawyer.

Evidence Corroborating a Confession

The LaRosa Court articulated three distinct ways in which evidence can corroborate a confession, and these three ways seem only to confound the philosophical question of whether trustworthiness is an interpretation of corpus delicti or replacement for it. Further, although the Court articulated three ways to corroborate confessions, it provided no examples or guidance to illustrate those methods. Trial courts, at least initially, must rely on case law from other jurisdictions to guide their rulings. Although the opinion provides little distinct guidance, analyzing the three methods helps to sketch the outlines of the standard.

The first method the Court articulated is when facts provided at trial “corroborate facts contained in the confession.”[1] Under this scenario, the visitor logs provided by the prosecution in LaRosa would help to corroborate the confession.[2] Those logs corroborate facts contained in the confession—LaRosa’s statement about where and when the offense happened. Cases interpreting the trustworthiness doctrine do not require independent corroboration for each fact articulated in a confession.[3] All that is required is that some facts corroborate some parts of the confession.

U.S. v. Kirk[4] illustrates this method of corroborating a confession. There, Kirk confessed to trading drugs for a handgun, and was found in possession of a handgun.[5] Authorities charged him with distributing a controlled substance in relation to the incident where he obtained a handgun.[6] No witness testified about any of the facts of that sale, except the witnesses presenting Kirk’s confessions. The non-confession evidence offered by the prosecution (possession of a gun, possession of drugs, Kirk’s prior history of drug distribution) would not, by themselves, have been sufficient to convict him of drug distribution.

Yet the appellate court upheld Kirk’s conviction, relying on the “detailed nature” of Kirk’s confessions, evidence showing Kirk had significant prior involvement in drug trafficking, the physical evidence near him (a gun, drugs, and drug paraphernalia), and a second confession to a cellmate.[7] The court noted, in terms of the necessary evidentiary standard, that the “evidence need not be sufficient, on its own, to establish the body of the offense beyond a reasonable doubt, or even by a preponderance of the evidence.”[8] In the Kirk case, the finding of the gun (alleged proceeds from an earlier drug transaction), along with the other factors, provided sufficient corroboration.[9]

The second way to corroborate the confession, according to LaRosa, is for the prosecution to “provide facts that establish the crime which corroborate facts contained in the confession.”[10] Although this method sounds like the first, it applies in situations where the prosecution proves the existence of a crime, but has to rely on the confession to prove a key element of it—such as the identity of the perpetrator. One way to distinguish these two methods is that the first uses corroboration to prove a crime occurred, while the second uses corroboration to show who committed a crime.

An example of this method of corroboration comes from Fontenot v. State.[11]There, authorities accused Fontenot of a robbery that turned into a kidnapping and first-degree murder.[12] Fontenot made incriminating statements to a friend and fellow inmate that fell short of outright confessions but that implicated him, and he made a detailed confession to police admitting involvement in the kidnapping and robbery.[13] His confession to police implicated a third party as the actual killer, but that third party was later exonerated.[14] At trial, independent, non-confession evidence proved a crime happened. The victim, clearly, had been murdered; yet none of the non-confession evidence proved Fontenot’s involvement.

The court, applying a trustworthiness standard, analyzed evidence at trial and affirmed the conviction. The court first found the statements he made to a cellmate and to a friend to be of a different character than his outright confession to police—and these statements buttressed the confession to police.[15] In addition, the court considered the similarities between the non-confession evidence and the confession evidence. Among other similarities, the court noted that witnesses’ descriptions of the abductor’s truck matched what Fontenot described, that the amount taken during the robbery roughly matched the amount Fontenot admitted he stole, and that descriptions of the clothing the victim wore during the abduction matched the description Fontenot gave of the robbery victim’s clothing.[16] Although the case contained conflicting evidence, the court found all that was necessary was that the confession be corroborated in some manner.[17] Because facts presented at trial corroborated specific facts in the confession; the confession was trustworthy and served to prove Fontenot’s involvement in the crime.

The third way to corroborate a confession is when “facts under which the confession was made show that the confession is trustworthy or reliable.”[18] It is the LaRosa Court’s inclusion of this third method that makes the case unique, and that kindles the debate about whether the Court was jettisoning the corpus delecti rule or merely interpreting it. Deciding whether a confession is itself sufficiently reliable to be trustworthy involves a host of factors, many of which apply to the more common but related problem of deciding when to suppress a confession as involuntary under the Fifth Amendment.[19]

First, a court may consider the person to whom the defendant confessed, because a confession to a friend or family member may not carry the same concerns of coercion or overreaching as a confession to police.[20] Second, the circumstances prompting the confession may be relevant—because some circumstances provide a very clear motive to falsely confess.[21] When the confession occurred in relation to when the suspect became aware of an investigation also can be important, because the lack of an investigation eliminates the possibility of police coercion.[22] Some courts even consider whether the suspect confessed more than one time,[23] although other courts disagree with this reasoning.[24] Still other courts look for information within the confession that is not available to the public or that shows an independent source of knowledge.[25]

As the LaRosa Court noted, “[t]he corroborating facts may be of any sort whatever, provided only that they tend to produce a confidence in the truth of the confession.”[26] If Colorado follows case law from other jurisdictions, almost anything corroborating the confession can be used to support it. The question then becomes exactly what standard of proof is necessary for the corroboration and how does a court determine what is sufficient corroboration.

The Evidentiary Standards

The question of what level the corroboration must meet to support a confession-based conviction is at the heart of the argument between the LaRosa dissenters and the majority. Neither the dissent nor the majority argues that the trustworthiness standard affects the admission of confessions. Instead, the standard presents a question of sufficiency to support conviction.[27] Both the dissent and the majority understand that the trial court—as opposed to a jury—makes a decision regarding the legal sufficiency of the evidence. Where the parties disagree is whether the standard is incorporated into Colorado’s existing sufficiency of the evidence law or is something new. Understanding the dissent’s position on this issue is a useful way to understand the application of the new rule.

First, the dissent argues the majority misinterpreted the Opper series of cases because those cases did not create a new standard but only imposed a way of interpreting the common-law rule of corpus delicti for federal courts.[28] The dissent argues the trustworthiness standard is the kind of “open-ended balancing test exhaustively disparaged and ultimately rejected as constitutionally inadequate by the Supreme Court.”[29] Besides being too open-ended, the dissent asserts the “substantial evidence standard” overruled corpus delicti and that LaRosa should have been decided on this basis alone.[30]

The “substantial evidence standard” mentioned by the dissent is set forth in Crim.P. 29. It permits the defense to move for judgment of acquittal once the prosecution rests.[31] The test for such motions is articulated in People v. Bennett.[32] Under Bennett, the trial court must consider whether

the relevant evidence, both direct and circumstantial, when viewed as a whole and in the light most favorable to the prosecution, is substantial and sufficient to support a conclusion by a reasonable mind that the defendant is guilty of the charge beyond a reasonable doubt.[33]

The test requires the prosecution to have provided evidence, sufficient to convict, for each element of the crime.

The LaRosa dissent argues that the substantial evidence standard, adopted by our rules of criminal procedure, implicitly overturned the common law of corpus delicti.[34] The argument is that Crim.P. 29 now requires all the evidence, including stand-alone confessions, to be viewed in the light most favorable to the prosecution, that the rule has long eliminated any distinction between direct and circumstantial evidence, and thus a confession standing alone often will be sufficient to defeat a motion for judgment of acquittal. That is, the jury should decide whether a confession in any particular case is sufficient to prove guilt beyond a reasonable doubt.

The majority does not go so far. Instead, it states that the trustworthiness standard is to be treated “like a rule affecting the sufficiency of the evidence to be analyzed by the court following a motion for judgment of acquittal.”[35] The key difference, according to the majority, is that the trustworthiness standard focuses not on the elements of the crime, but only on the evidence corroborating the confession itself.[36] Thus, it serves a different purpose than the sufficiency of the evidence test.[37]

The majority did not articulate what should happen if a trustworthy confession is the sole piece of incriminating evidence. Based on the limited guidance in the opinion, if that confession is trustworthy, it should suffice to support a conviction (assuming it provides evidence for each material element of the crime). That seems to be the whole reason behind jettisoning the corpus delicti rule. Of course, the corollary to that reasoning is that if the confession is not trustworthy, and it is the sole piece of incriminating evidence, the majority would bless the trial court granting the motion for judgment of acquittal.

The dissent would not engage in a trustworthiness analysis at all, and instead simply would apply the substantial evidence standard to reach a decision. Under the dissent’s position, an uncorroborated confession must be viewed in the light most favorable to the prosecution—that is, it must be viewed as trustworthy—and in that light would never justify a judgment of acquittal.

Guidance for Practitioners

Practitioners first need to be aware of when the trustworthiness doctrine applies. It does not apply to all cases with confessions; only cases where the primary piece of incriminatory evidence is a confession should be affected. Another way of recognizing affected cases is for attorneys to ask themselves whether the case has proof, other than the confession, which if true would be sufficient to sustain a conviction. In terms of typical fact patterns, attorneys should beware of inchoate crimes and crimes with silent victims (pre-verbal children, disabled persons, or deceased victims where the cause of death is at issue).

Practitioners need to recognize a second issue regarding whether the standard applies. That issue involves whether Colorado courts will find a difference between “admissions” and “confessions.”[38] Some courts, based on their reading of Opper, do not distinguish between admissions and confessions.[39] But other courts do.[40] Still other courts do not make the admission/confession distinction, but find some kinds of statements (pre-investigation statements for instance) so reliable as to require no corroborating evidence.[41] There are strong policy reasons to treat admissions and confessions made before a criminal investigation differently—namely, there should be no real concern about police overreaching when police are not yet involved. Where Colorado falls on the spectrum of admissions versus confessions or pre-investigation statements versus post-investigation statements is not at all clear.

If the confession is the primary piece of incriminating evidence, the practitioner needs to examine whether other facts corroborate facts within the confession, whether facts establish the crime the confession describes, and the specific facts surrounding the confession itself.[42] As noted above, case law from other jurisdictions is likely to be persuasive given the lack of Colorado law on this topic. The flexibility of the standard means almost anything is in play at this point to help corroborate the confession.

Conclusion

The fine lines defining this new doctrine have yet to be sketched by Colorado’s appellate courts. Some case law is necessary to fill in the cracks of this new construction. Until then, the one clear point from LaRosa is that it gives prosecutors a fighting chance in cases where victims cannot speak for themselves. For the defense bar, LaRosa signals a shift as well, because under corpus delicti, the defense could have a hearing before trial on the issue and, if successful, avoid trial altogether.[43] The current guidance in LaRosa indicates the proper time to apply the test is “like a rule affecting the sufficiency of the evidence to be analyzed by the court following a motion for judgment of acquittal.”[44] Further, proving that a confession is trustworthy is often much easier than proving the crime happened—which is something both the defense bar and prosecutors may need to consider in plea bargaining cases. Ultimately, the decision creates new issues for both prosecutors and defense attorneys in some of the most difficult cases for both sides.

Samuel A. Evig is a deputy district attorney in the 18th Judicial District—sevig@da18.state.co.us. The views expressed in this article are not necessarily those of the 18th Judicial District Attorney’s Office.

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.

 

© 2013 The Colorado Lawyer and Colorado Bar Association. All Rights Reserved. Material from The Colorado Lawyer provided via this World Wide Web server is protected by the copyright laws of the United States and may not be reproduced in any way or medium without permission. This material also is subject to the disclaimers at http://www.cobar.org/tcl/disclaimer.cfm?year=2013.

 


[1] LaRosa, 293 P.3d at 578.

[2] The majority opinion in LaRosa does not explicitly decide whether the evidence presented would be enough to support his conviction under the trustworthiness standard. The majority does not address this issue because they decided application of the new standard would violate his due process rights. LaRosa, 293 P.3d at 578-79. Given that the Court found corpus delicti could operate to frustrate justice in crimes against very young children, and that the Court found this reasoning (along with other factors) sufficient to overturn the rule, it seems likely the Court would have upheld a trial court finding of sufficient corroboration. In fact, the Court cited both Robson and Meredith as support for cases in which convictions were barred by the rule in its discussion. Id. at 575. Those cases, for the most part, are factually indistinguishable from LaRosa. The implicit guidance of the opinion is that if the case were decided under the trustworthiness standard, LaRosa’s conviction would stand.

[3] Moran, supra note 3 at 852. Moran argues independent evidence can bolster “any aspect of the confession, including obvious and uncontroverted facts,” and thus the rule does not protect defendants as well as corpus delicti. See also U.S. v. Sterling, 555 F.3d 452 (5th Cir. 2009) (prosecution need not corroborate each part of a confession for it to support a conviction; rather, the corroboration of portions of the statement suffice to corroborate the statement as a whole); Heiges, 779 N.W.2d at 912-13 (analyzing a confession of a mother to drowning her newborn child under a Minnesota statute requiring corroboration of confessions and holding corroboration is not necessary for every part of the confession).

[4] U.S. v. Kirk, 528 F.3d 1002, 1106-07 (8th Cir. 2008).

[5] Id.

[6] Id. at 1110.

[7] Id. at 1112-13.

[8] Id. at 1111, citing U.S. v. Eagle, 515 F.3d 794, 807 (8th Cir. 2008) and Whiteside v. U.S., 346 F.2d 500, 505 (8th Cir. 1965).

[9] A similar case is Sterling, 555 F.3d at 456-57. There, a defendant confessed to acquiring a gun in a drug deal sometime before his arrest. The appellate court upheld the trial court’s decision to find the confession corroborated (even though defendant took the stand and recanted the confession) based on officers finding the gun, prior act evidence showing Sterling had dealt drugs, and the facts of the confession being specific enough to enhance its reliability.

[10] LaRosa, 293 P.3d at 578.

[11] See generally Fontenot II, 881 P.2d 69.

[12] Id. at 73-74, citing Fontenot v. State, 742 P.2d 31 (Okla.Cr. 1987) (Fontenot I).

[13] Id. at 76-78. The specific statements that were not to made police involved him telling a friend he knew the identity of the criminals and telling a cellmate that he “knew we’d get caught.”

[14] The confession he made to police was similar to a confession provided by a co-defendant named Ward. Both men attempted to cast blame for the actual homicide on a third person, Tidwell. Evidence conclusively proved that Tidwell had no involvement. See Fontenot I, 742 P.2d at 31; Fontenot II, 881 P.2d at 79. Here, the trustworthy confession was trustworthy in the general sense to prove Fontenot’s involvement in the crime, but obviously not trustworthy in all its details.

[15] Fontenot II, 881 P.2d at 78.

[16] Id. at 78-79.

[17] The inconsistencies were not minor. Fontenot stated the victim was stabbed, but forensics showed she was shot; the body was not found where he said it would be; and there was no evidence the body had been set on fire, as he claimed it had. Id. at 79. In addition, the person Fontenot implicated as a conspirator was exonerated. As noted by the Fontenot II Court, the standard does not require that there be “no inconsistencies whatsoever between the facts proven and the facts related in the confession.” Only when the inconsistencies “so overwhelm the similarities” is a confession rendered untrustworthy. Otherwise, the jury decides what weight to assign to the confession.

[18] LaRosa, 293 P.3d at 578.

[19] There is an expansive body of case law regarding the voluntariness of confessions. See generally Colorado v. Connelly, 479 U.S. 157 (1986); People v. Gennings, 808 P.2d 839 (Colo. 1991). Although the factors articulated in these cases and their progeny play into the trustworthiness analysis, practitioners must remember that trustworthiness is a sufficiency finding, as opposed to an admissibility finding. Further, although a confession may or may not be voluntary, that does not, by itself, render it trustworthy. See In re K.A., 60 A.3d 442.

[20] Heiges, 779 N.W.2d at 911; Fontenot II, 881 P.2d at 78.

[21] In re K.A., 60 A.3d 442 at 450.

[22] Heiges, 779 N.W.2d at 911.

[23] Tilley v. State, 963 P.2d 607, 612 (Ok.Crim.App. 1998) (upholding a murder conviction against a claim of lack of trustworthiness of confessions based, in part, on the finding that there were multiple confessions) superseded by statute on other grounds in Coddington v. State, 142 P.3d 437 (Ok.Crim.App. 2006).

[24] Weisser, 150 P.3d at 1051. Weisser specifically held that multiple confessions do not establish the trustworthiness of such statements. The factual context of the case involved a man confessing to molesting a child on several occasions, then claiming Huntington’s disease caused the confessions.

[25] Mauchley, 67 P.3d at 489.

[26] LaRosa, 293 P.3d at 577-78, citing Wigmore on Evidence § 2071 at 511.

[27] Id. at 578. The majority states, in a paragraph about whether the trustworthiness standard is a rule affecting admissibility or sufficiency, that “the better approach is to treat the trustworthiness standard, at least for procedural purposes, like a rule affecting the sufficiency of evidence to be analyzed by the court following a motion for judgment of acquittal.” The dissent agrees the test is one of sufficiency. See id. at 580-81. Other jurisdictions find the test to be one of admissibility. See Mauchley, 67 P.3d at 490.

[28] LaRosa, 293 P.3d at 580.

[29] Id., citing Crawford v. Washington, 541 U.S. 36, 68 (2004). In this argument, the dissent is not alone. See Moran, supra note 3 at 851-53. The majority even notes some state courts reject the very arguments the majority adopted. LaRosa, 293 P.3d at 579, citing People v. McMahan, 548 N.W.2d 199, 204 (Mich. 1996) and State v. Ray, 926 P.2d 904, 906 (Wash. 1996) (court applying the corpus delicti rule overturned the conviction of a defendant who molested his 3-year-old child).

[30] LaRosa, 293 P.3d at 581.

[31] This is, of course, a useful simplification, because Rule 29 lists several times at which the defense may raise the motion.

[32] People v. Bennett, 515 P.2d 466, 469 (Colo. 1973).

[33] Id.

[34] LaRosa, 293 P.3d at 581.

[35] Id. at 578.

[36] Id. at 576.

[37] Id.

[38] The term “confession” means, here, an “admission of guilt.” LaRosa, 293 P.3d at 576. The term “admission” means, here, a statement falling short of admitting guilt, but tending to prove guilt. A good example is Opper’s admission to providing loans (discussed in the text above). His statement did not admit guilt, but tended to prove guilt when viewed with the other evidence in the case.

[39] See State v. Trexler, 342 S.E.2d 878, 880 (N.C. 1986) (describing the difference between admissions and confessions and holding the trustworthiness standard applies to both).

[40] See Fontenot II, 881 P.2d at n.11. The court there found two admissions Fontenot made to be exempt from the rule, and recognized a conflict with Opper. See also Heiges, 779 N.W.2d at 908-13 (incriminatory admissions to non-police witnesses helped to sufficiently corroborate a confession to police).

[41] See U.S. v. Irving, 452 F.3d 110, 118 (2d Cir. 2006) (identifying statements made before the commission of a crime and co-conspirator statements as requiring no corroboration), citing Warszower v. U.S., 312 U.S. 342, 347 (1941) and U.S. v. Simmons, 923 F.2d 934, 954 (2d Cir. 1991).

[42] LaRosa, 293 P.3d at 578.

[43] See Robson, 80 P.3d at 913 (case dismissed after a hearing before trial).

[44] LaRosa, 293 P.3d at 578.

Burying the Body—Dismantling the Corpus Delicti Rule and Adopting the Trustworthiness Standard (Part 1)

Evig_SamuelBy Samuel A. Evig

Editor’s Note: This is Part 1 of a two-part series.

This article originally appeared in the November 2013 issue of The Colorado Lawyer.

In People v. LaRosa, announced in January 2013, the Colorado Supreme Court overturned Colorado’s corpus delicti rule.[1] That rule, generally speaking, requires evidence of guilt beyond a defendant’s confession. In jettisoning the corpus delicti rule, the Colorado Supreme Court negated more than 100 years of its own precedent.[2] The decision, in a sort of circle-of-life for legal rules, signals both the death of one doctrine and the beginning of a new one by setting forth a new standard of evidentiary sufficiency for cases where a confession is the major (if not only) piece of truly incriminating evidence. The new test, labeled by the Court as the “trustworthiness standard,”[3] comes from federal cases, and the opinion provides some limited guidance in its application for practitioners.[4] This article examines the opinion with an eye toward helping attorneys recognize situations in which the trustworthiness standard applies, and looks at how other courts have handled issues soon to confront Colorado practitioners.

The Facts of LaRosa

LaRosa confessed to his wife, mother, pastor, a police dispatcher, and a detective that days before he had molested his daughter in a private area of a recreation center by performing oral sex on her while he masturbated.[5] At the time of the offense, his daughter was only 2-and-a-half years old and therefore unable to recall the incident. Besides multiple confessions, the prosecution presented evidence that LaRosa appeared lucid and not mentally ill during his confessions; introduced visitor logs proving he had, indeed, visited the recreation center on the date in question; and provided photographs of the shower area where he said the offense occurred.[6] Both before and during the trial, the defense argued the corpus delicti rule operated to preclude his conviction.[7] The trial court rejected those arguments.

Although LaRosa took the stand in his own defense and explained why he confessed to something that did not happen, the jury nevertheless convicted him of all charges.[8] In an unpublished opinion, the Colorado Court of Appeals reversed the convictions based on the corpus delicti rule.[9] The prosecution petitioned for certiorari, requesting that the Colorado Supreme Court join a growing number of jurisdictions abandoning the corpus delicti rule, and the Court agreed to hear the case.

In a 5–2 decision written by Chief Justice Bender, in which Justices Eid and Coats dissented, the Court discarded the corpus delicti rule, and announced a new standard applicable to situations like LaRosa’s—where a confession is the principal piece of incriminating evidence. It also concluded that due process prevented applying the new standard to LaRosa’s case, and thus affirmed the reversal of his convictions.[10]

The Corpus Delicti Rule

The corpus delicti rule is the sort of classic legal rule lawyers love. It is Latin, and thus sounds impressive. It means literally (if still mysteriously) the “body of the crime.”[11] The rule requires the prosecution to prove the crime described in a confession actually happened—using evidence other than the confession itself.[12] The LaRosa majority found “little consensus” concerning the reasoning behind the rule,[13] but other sources indicate the original purpose of the rule was to prevent the conviction of people who confessed to nonexistent crimes.[14] Scholars cite cases involving the disappearance of a victim, the identification of a suspect, the suspect confessing, the subsequent conviction and execution (or near execution) of the suspect, and then the victim being found alive.[15] The driving force behind the rule is the recognition that false confessions sometimes happen, and it contains an implicit policy decision that the danger of a wrongful conviction outweighs the danger of a wrongful acquittal.

As surprising as it may seem, situations triggering the rule—a confession in the absence of any other incriminating evidence, either before or after it—do not appear to be all that unusual. In Colorado alone there are at least eight reported cases where the rule operated to overturn or preclude a confession-dependent conviction.[16] That number is misleadingly low because prosecutors who are aware of the rule likely decline a number of cases that would have triggered the rule. Indeed, the ubiquity of the stand-alone-confession is what apparently gave rise to the corpus delicti rule.

As noted by the LaRosa majority, the goal of the rule is to “reduce the possibility that a person is convicted based on a confession to a crime that never happened.”[17] Criticism of the rule focuses on three issues. The first criticism is that it prevents the conviction of a suspect confessing to an imaginary crime but does not preclude the conviction of a suspect falsely confessing to an actual crime.[18] If a crime demonstrably happened, a mentally ill person falsely confessing to it could still be convicted. The court referred to this as an “incongruity,” and stated it came from the rule’s “inherently flawed design.”[19]

The second criticism the LaRosa Court noted is that changes in the law, such as the U.S. Supreme Court’s decision in Miranda v. Arizona[20] and the proliferation of statutory crimes, have helped curtail the problem of coerced confessions and made the application of the rule in certain situations very difficult.[21] The Court noted Miranda lessened the danger of “overzealous” police interrogations and that showing a tangible injury for inchoate crimes is sometimes impossible.[22] Further, courts have noted that statutory crimes have become so numerous and well-defined that determining what constitutes the corpus delicti of some offenses is nearly impossible.[23]

Finally, critics have noted the rule carries the very real risk of obstructing justice by preventing the conviction of offenders who commit crimes with no evidence of tangible injury.[24] An easier way to consider this criticism is to think of the rule as being over-inclusive because it may result in wrongful acquittals—that is, it sometimes operates to free those who commit and then confess to an actual as opposed to imaginary crime, but one with no tangible remains of provable harm. These types of crimes tend to be those in which victims are either absent or are unable to articulate what happened to them. For example, the Court identified cases in which the rule resulted in dismissals against defendants who admitted to molesting very young children.[25]

The LaRosa Court found each of these criticisms valid, and concluded that more good than harm would come from departing from precedent.[26] It abrogated the corpus delicti rule and, like many other state and federal courts, replaced it with a more forgiving inquiry grounded in analyzing the trustworthiness of the confession.

Formation of the Trustworthiness Standard

The LaRosa Court adopted the reasoning of a trio of U.S. Supreme Court cases announced in 1954. The cases, Opper v. U.S., U.S. v. Calderon, and Smith v. U.S., all dealt with financial crimes where the most damning evidence came from confessions.[27] Of the three, Opper provides the clearest formulation of the standard.

The government accused Opper of conspiring with and bribing a government employee named Hollifield.[28] At trial, the government presented evidence Opper and Hollifield had met and that, soon after the meeting, Hollifield made a decision favorable to Opper. The rest of the proof presented at trial consisted of statements Opper made to federal authorities about a number of “loans” to Hollifield soon after the favorable decision.[29]

After his conviction, Opper appealed and eventually the Supreme Court reviewed the case. One of Opper’s arguments concerned the sufficiency of the evidence—whether the statements he made were sufficient to support a conviction.[30] Opper’s “confession,” after all, was an admission to providing loans—not that the loans were bribes. The Court formulated a rule requiring the prosecution to “introduce substantial independent evidence which would tend to establish the trustworthiness of the statement.”[31] This, then, was the first formulation of the trustworthiness standard.

The Opper Court went on to conclude that the additional information presented by the government (the timing of Hollifield’s decision and evidence showing the two had met) provided enough corroboration to make the defendant’s statements trustworthy.[32] The statements, when added to the other evidence, were enough to permit a fact finder to find beyond a reasonable doubt that Hollifield committed the charged offense. The Court specifically noted the need for a flexible rule by saying “[e]ach case has its own facts admitted and its own corroborative evidence, which leads to patent individualization of the opinions.”[33]

Versions of this new trustworthiness standard have been adopted by a host of federal and state courts.[34] But a note of caution is appropriate in surveying these cases—a note whose roots are grounded in a philosophical debate about the scope of the original corpus delicti rule, the scope of the trustworthiness rule, and whether the latter really is a substitute for or rather a reinterpretation of the former. Some judges (including the LaRosa dissenters) consider the trustworthiness standard to be the U.S. Supreme Court’s interpretation of the federal common law of corpus delicti.[35] Others assert corpus delicti no longer exists in the federal system and the trustworthiness standard is a wholly new construct.[36] Still others use the two terms somewhat interchangeably.[37]

In any event, the flexibility of the trustworthiness standard, at once its greatest asset and its greatest limitation, caused the Colorado Supreme Court to provide some additional guidance to help trial judges and lawyers apply the standard.[38] In doing so, the Court seemed to shift the focus of the inquiry from whether other evidence proved the crime occurred to whether other evidence proved the confession was reliable.[39] Of course, these two inquiries are related. If there is corroborating evidence of the crime, it automatically corroborates the trustworthiness of the confession, but the discussion in LaRosa seems focused on the circumstances surrounding the confession in a way that the analysis in Opper did not. The Opper court emphasized facts directly supporting the prosecution’s case quite apart from the confession, most critically the timing of the loans compared to the governmental decision. It said virtually nothing about the circumstances of Opper’s confession. The LaRosa Court, in contrast, articulated a test in which facts outside the confession (such as the timing of the loans in Opper) are but one way to establish its trustworthiness. This expanded test is both more and less inclusive than the corpus delicti rule.

The change is less inclusive because the trustworthiness standard can, in some cases at least, prevent the “incongruous” result presented by corpus delicti—where a false confession to a crime that actually happened, but one the confessor did not commit, still would result in a conviction.[40] After all, a strict application of corpus delicti would result in a conviction if the prosecution could show the crime demonstrably happened without the confession. In theory, the trustworthiness standard could prevent the conviction of a mentally ill person falsely claiming credit for an actual crime because the inquiry focuses on the trustworthiness of the confession itself.

The new standard is more inclusive because corroborating the confession is often much easier than showing a crime occurred with independent evidence. This change lessens the possibility of the wrongful acquittal. The LaRosa case itself just might be such an example of a wrongful acquittal under the corpus delicti rule that would, but for the due process issues, have been a rightful conviction under the trustworthiness standard. Of course, by tipping the scales in adopting this standard, the Court also increased the possibility of a wrongful conviction.

This is Part 1 of a two-part series. Stay tuned.

Samuel A. Evig is a deputy district attorney in the 18th Judicial District—sevig@da18.state.co.us. The views expressed in this article are not necessarily those of the 18th Judicial District Attorney’s Office.

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.

 

© 2013 The Colorado Lawyer and Colorado Bar Association. All Rights Reserved. Material from The Colorado Lawyer provided via this World Wide Web server is protected by the copyright laws of the United States and may not be reproduced in any way or medium without permission. This material also is subject to the disclaimers at http://www.cobar.org/tcl/disclaimer.cfm?year=2013.

[1] People v. LaRosa, 293 P.3d 567, 575 (Colo. 2013).

[2] In Dougherty v. People, 1 Colo. 514, 528 (Colo. Terr. 1872), announced in 1872 (before Colorado became a state), the Supreme Court of the Colorado Territory examined the doctrine and upheld a conviction based on the accused administering “boneset” to cause an abortion.

[3] Also sometimes called the “corroboration rule” or the “Opper corroboration rule.” See Moran, “In Defense of the Corpus Delicti Rule,” 64 Ohio State L.J. 817, 851-52.

[4] LaRosa, 293 P.3d at 577-78.

[5] Id. at 570-71.

[6] Id.

[7] Id. at 571.

[8] Id.

[9] Id. The Colorado Supreme Court’s opinion quotes portions of the unpublished decision. Based on those quotes, it appears the court of appeals decided the case based on the fact that prosecution’s non-confession evidence could not establish the crime actually occurred. Instead, the evidence showed only that LaRosa had a chance to commit the offense, something the court of appeals said “every custodial parent has on a virtually continuing basis.”

[10] Id. at 578-79. One of the difficult parts of interpreting this decision is whether, had the trustworthiness standard been applied to this case, the outcome might have been different. Although it is possible to read too much into this opinion, given the Court’s dissatisfaction with the corpus delicti rule and the specific criticism of the rule as sometimes frustrating justice, it is likely that the result would have been very different. Had the dissenters won the day, the result would have been different.

[11] Black’s Law Dictionary 346 (7th ed., West Group, 1999).

[12] LaRosa, 293 P.3d at 572, citing Downey v. People, 215 P.2d 892, 899 (Colo. 1950).

[13] Id.

[14] Moran, supra note 3 at 817, citing 2 Hale, Pleas of the Crown 290 (1678); Moran, supra note 3 at n.60, citing Perkins, “The Corpus Delicti of Murder,” 48 Virginia L.Rev. 173 (1962) and Margolis, “Corpus Delicti, State of the Disunion,” 2 Suffolk University L.Rev. 44 (1968).

[15] Moran, supra note 3 at 826-29. According to Moran, the doctrine came from English commentators and became a part of American jurisprudence. Moran traces the foundations of the rule to 17th century England.

[16] See Meredith v. People, 380 P.2d 227 (Colo. 1963) (rule operated to overturn conviction of man for engaging in “unnatural” sex acts with a 5-year-old boy); People v. Rankin, 554 P.2d 1107 (Colo. 1976) (rule overturned conviction for distributing drugs); People v. Robson, 80 P.3d 912 (Colo.App. 2003) (rule precluded trial of man accused of sexually assaulting his infant daughter); Owen v. People, 392 P.2d 163 (Colo. 1964) (rule overturned conviction for sexual assault and incest of a deceased 16-year-old victim); Cobianchi v. People, 141 P.2d 688 (Colo. 1943) (rule operated to overturn second-degree murder conviction); People v. Maestas, 508 P.2d 782 (Colo. 1973) (theft conviction reversed because of the rule); People v. Applegate, 509 P.2d 1238 (Colo. 1973) (forgery conviction reversed based on the rule); People v. T.A.O., 36 P.3d 180 (Colo.App. 2001) (rule operated to overturn adjudication of a juvenile who confessed to sexually touching his sister).

[17] LaRosa, 293 P.3d at 572, citing McCormick on Evidence § 145 at 595.

[18] Id. at 574. The Court used this argument to conclude the rule was “originally erroneous.” This reasoning is somewhat puzzling because the rule did stop the conviction of someone falsely confessing to a crime that did not happen, a laudable if narrow goal. See Moran, supra note 3 at 836-37. If the original purpose of the rule was to stop the conviction and subsequent execution of someone for a crime that did not happen, how is the rule originally erroneous when it protects against the very harm it was designed to prevent?

[19] Id.

[20] Miranda v. Arizona, 384 U.S. 436 (1966).

[21] Id. at 574-75. But see generally Moran, supra note 3. Moran defends the corpus delicti rule using a murder case he defended to show that no constitutional doctrines involving confession would have operated to prevent the conviction of his client, and further asserts the trustworthiness standard is too malleable to protect suspects.

[22] Id.

[23] See State v. Mauchley, 67 P.3d 477, 487-488 (Utah 2003) (noting that different states have taken different approaches to whether corpus delicti applies to aggravators for capital murder, that some states specifically exclude the rule from applying to some crimes because of the difficulty, and ultimately abolishing the rule rather than attempting to work around the rule’s limitations). The problem of deciding what elements exactly establish the body of the crime is an even greater difficulty in states such as Utah, which require proving corpus delicti before the confession is admitted.

[24] LaRosa, 293 P.3d at 575, citing State v. Parker, 337 S.E.2d 487, 494 (N.C. 1985) (noting the difficulty of applying corpus delicti in crimes without a tangible injury and providing a broad discussion of the rule), and Mauchley, 67 P.3d at 488 (noting that other jurisdictions had to “selectively apply” the rule and ultimately deciding to abandon the rule). As noted by the Court in LaRosa, “the rule may operate to bar conviction for crimes committed against the most vulnerable victims, such as infants, young children and the mentally infirm.” Such concerns are valid; a number of cases involving the corpus delicti rule are horror shows. See supra note 16. See also Gibbard, “Corpus Delicti: Three Unusual Colorado Cases,” 38 The Colorado Lawyer 83 (March 2009) (a historical examination of the rule reversing three convictions, one involving a victim possibly being beaten to death, the second involving a victim dying after a possible illegal abortion and a “rabbit test,” and the third involving a man’s body being interred in his yard by his wife after either a murder or suicide). See also Williams v. People, 158 P.2d 447 (Colo. 1945) (mother put on trial after the discovery of the bodies of three of her babies—two of them mummified—found in her belongings). The Court is correct in articulating that the rule operates to prevent convictions in some cases where proving an actual injury is difficult; however, some might argue this is one purpose of the rule.

[25] LaRosa, 293 P.3d at 575, citing Robson, 80 P.3d at 913-14, and Meredith, 380 P.2d at 228.

[26] Id.

[27] Opper v. U.S., 348 U.S. 84 (1954) (prosecuting defendant for bribing a federal employee); Smith v. U.S., 348 U.S. 147 (1954) (prosecution for tax evasion); U.S. v. Calderon, 348 U.S. 160 (1954) (prosecution for tax evasion).

[28] Opper, 348 U.S. at 84-87.

[29] Id. at 88.

[30] Id. at 91-95.

[31] Id. at 93.

[32] Id. at 93-94.

[33] Id. at 93.

[34] See generally Schopler, Annotation, “Corroboration of Extrajudicial Confession or Admission,” 45 A.L.R.2d 1316 (originally published in 1956); Weisman, Annotation, “Sufficiency of Evidence to Support Homicide Conviction Where No Body Was Produced,” 65 A.L.R.6th 359 (originally published in 2011).

[35] See LaRosa, 293 P.3d at 580 (stating the trustworthiness standard “was therefore not a new restriction on the effect of confessions at all, but rather the Court’s definitive interpretation of the common-law rule, for the federal courts”).

[36] See Fontenot v. State, 881 P.2d 69, 78 (Okla.Crim.App. 1992) (Fontenot II),citing U.S. v. Kerley, 838 F.2d 932, 940 (7th Cir. 1988).

[37] See State v. Heiges, 779 N.W.2d 904, 909-12 (Minn.App. 2010) (Minnesota also has a statute requiring corroboration to sustain a conviction based on a confession—indicating it is a codification of the common-law rule—and using trustworthiness standard cases to support its position). See also State v. Weisser, 150 P.3d 1043, 1048 (N.M.C.A. 2006) (conflating the trustworthiness doctrine with corpus delicti) distinguished by State v. Wilson, 248 P.3d 315 (N.M. 2010).

[38] LaRosa, 293 P.3d at 577-78. In footnote 9 of the opinion, the Court notes several attempts by other courts to outline a proper application of the rule.

[39] Id.

[40] See In re K.A., 60 A.3d 442 (D.C.App. 2013). There, police searched a home and found guns under the mattress of a grandfather living at the home. About an hour after learning of the arrest, and while police were still on scene, K.A. confessed that the guns belonged to him and told officers to release his grandfather. K.A. provided a more detailed statement in which he identified the guns, but the court found his confession to be insufficiently corroborated. A strict application of the corpus delicti rule in this case would have created a different result because K.A. did, indeed, confess to a crime that actually occurred (possession of unregistered firearms).

Crowdfunding Securities Under the CROWDFUND Act

Andrew SchwartzBy Andrew A. Schwartz, Associate Professor of Law, University of Colorado

The “crowdfunding” of securities is poised to democratize the financing of startups, small businesses, farmers and others. Securities crowdfunding, defined as the sale of unregistered securities over the Internet to large numbers of retail investors, each of whom contributes a small amount, had previously been banned by federal law, but this prohibition was overturned by Congress in 2012. This new marketplace will go live once the SEC issues regulations to govern it. Although those rules were officially due in late 2012, they were just proposed on Oct. 23, 2013, and are likely to go into effect in 2014.

Securities crowdfunding has its origins in “reward” crowdfunding, practiced on websites like Kickstarter and IndieGoGo. In reward crowdfunding, artists, entrepreneurs and others ask “the crowd” to contribute capital to their ventures, generally in exchange for the fruits of the project, such as a book or CD. The investors never receive stock, bonds or other securities, however, because federal securities law effectively banned the crowdfunding of securities.

This all changed in 2012, when Congress amended the federal securities laws to overturn this prohibition. In Title III of the Jumpstart Our Business Startups (JOBS) Act—the “CROWDFUND Act”—Congress established a new exemption from the registration requirement for crowdfunded securities. President Obama signed the JOBS Act into law in April 2012, and it will go into effect once the SEC completes its rulemaking process.

The purpose of the CROWDFUND Act is twofold. First, it is designed to liberate startup companies, small businesses and others to use peer networks and the Internet to obtain modest amounts of business capital at very low cost. Second, Congress sought to democratize the market for financing speculative startup companies by allowing investors of modest means to make investments that had previously been offered solely to wealthy, “accredited” investors.

The new CROWDFUND Act has important limitations and places significant obligations on participants in this new marketplace. Under the statute, issuers may only raise up to $1,000,000 annually via securities crowdfunding. Issuers also must state a minimum amount and can only collect the proceeds of the offering if they reach or exceed that target.

Issuers must provide some very basic disclosures to the SEC, designated intermediaries, and potential investors. The financial disclosures depend on the size of the offering: For offerings of $100,000 or less, income tax returns for the last fiscal year and unaudited financial statements certified as accurate by the principal executive officer are required. For offerings of between $100,000 and $500,000, financial statements reviewed by an independent public accountant must be provided. And for offerings of between $500,000 and the maximum of $1 million, audited financial statements are mandated. Finally, following a crowdfunding round, an issuer must annually file with the SEC, and make available to investors, a report on the results of operations.

As for investors, the maximum annual aggregate amount of crowdfunded securities that any one investor may purchase depends on her wealth and income: If an investor’s net worth or annual income is under $100,000, she can invest the greater of $2,000, or five percent of her annual income, in crowdfunded securities each year. If her net worth or annual income is over $100,000, she can invest 10% of her annual income each year.

The Act provides that crowdfunding transactions may not be consummated directly between issuer and investor. Rather, they must be executed via a financial intermediary registered with the SEC as either a broker-dealer or a “funding portal,” a creation of the Act. The Act imposes a number of serious obligations on these financial intermediaries, such as a requirement that they take measures to reduce the risk of fraud, including obtaining a background check on officers, directors and substantial investors in crowdfunding issuers.

As for a secondary market, the Act provides that crowdfunded securities may not be transferred or sold by investors for one year after the date of purchase, unless being transferred to the issuer, an accredited investor, a family member of the purchaser, or as part of an offering registered with the SEC.

The CROWDFUND Act expressly pre-empts state law regarding registration or qualification of securities. That said, states must be provided with notice of crowdfunded offerings, and they retain the right to bring enforcement actions for fraud or other violations of state securities law not relating to registration.

To police fraudulent behavior, the Act expressly authorizes civil actions against an issuer, its directors and officers, if they make an untrue statement of a material fact. In addition, the SEC is granted examination, enforcement and other rulemaking authority over funding portals, and presumably retains authority to enforce the various statutory and regulatory mandates for both issuers and intermediaries.

How securities crowdfunding will play out in practice remains to be seen, and depends greatly on the rules that the SEC just proposed on October 23, 2013. Those proposed rules, called “Regulation Crowdfunding,” are available online, and the SEC invites comments from the public before they become final.

In short, the CROWDFUND Act represents an opportunity for enterprising and creative practitioners to shape a brand new market for securities.

Editor’s Note: This article originally appeared in the October 2013 CBA Business Law Section newsletter.

Andrew A. Schwartz is an associate professor of law at the University of Colorado, where he teaches and publishes on Contracts, Corporations and other aspects of business law.  He is a graduate of Brown University and Columbia Law School, where he served on the Columbia Law Review.  Prior to entering academia, he clerked for two federal judges and practiced with Wachtell, Lipton, Rosen & Katz in New York.  His most recent law review article is Crowdfunding Securities, published in the Notre Dame Law Review earlier this year.

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.

Enforcing Drug-Free Workplace Policies In Light of Colorado’s Legalization of Marijuana Use

Johnson_JeffBy Jeffrey T. Johnson

Does an employer’s drug-free workplace policy trump an employee’s use of medical marijuana to treat disabling medical conditions? Yes, according to a recent decision by a Colorado federal judge. In Curry v. MillerCoors, Inc., Judge John Kane rejected a terminated employee’s claim that his employer discriminated against him on the basis of his disability when it discharged him for testing positive for marijuana. Curry v. MillerCoors, Inc., No. 12-cv-02471 (D. Colo. Aug. 21, 2013).

Discharging Employee for Positive Drug Test Not Disability Discrimination

Paul Curry asserted that he suffered from hepatitis C, osteoarthritis and pain. He obtained a medical marijuana license from the State of Colorado to manage the symptoms of his disabling medical conditions. He claimed that he never used marijuana on his employer’s premises and was never under the influence of marijuana at work. He sued after his employer fired him for testing positive for marijuana in violation of the company’s written drug policy. He alleged, among other things, that his termination constituted disability discrimination under C.R.S. § 24-34-402(1)(a).

Despite Curry’s claim that he used marijuana legally to treat his medical conditions, the court found that it was lawful for the company to terminate him under its drug-free workplace policy. Judge Kane wrote “. . . a positive test for marijuana, whether from medical or any other use, is a legitimate basis for discharge under Colorado law.” Moreover, he stated that “anti-discrimination law does not extend so far as to shield a disabled employee from the implementation of his employer’s standard policies against employee misconduct.” The court concluded that MillerCoors’s enforcement of its drug-free workplace policy was a lawful basis for its decision to fire Curry.

No Violation of Colorado’s Lawful Activities Statute

Curry also asserted that his termination violated Colorado’s lawful activities statute, C.R.S. § 24-34-402.5(1). The statute prohibits employers from terminating an employee due to the employee engaging in a lawful activity off-duty and off the employer’s premises. The court found no violation, relying on the recent Colorado Court of Appeals decision in Coats v. Dish Network LLC, which held that because marijuana use remains illegal under federal law, an employee’s use of medical marijuana is not a “lawful activity” under the state lawful activities statute. In the Curry case, the court concluded that under established Colorado law, discharging an employee who tests positive for marijuana in violation of an employer’s drug-free workplace policy is lawful, “regardless of whether the employee consumed marijuana on a medical recommendation, at home or off work.”

Medical vs. Recreational Marijuana Use – Does it Matter?

The Curry and Coats decisions both addressed the termination of an employee who used marijuana for medical purposes within the limits of a state-issued medical marijuana license. With the passage of Amendment 64 last November legalizing the adult use and possession of small amounts of marijuana, the next question is whether an employee’s use of marijuana for recreational purposes will be treated similarly by the courts. Based on the broad, sweeping language used by the Colorado Court of Appeals in Coats and the U.S. District Court for the District of Colorado in Curry, the answer is yes. Both courts expansively upheld employer terminations of employees who tested positive for marijuana in violation of company drug policies, suggesting that their reasoning is not limited to the use of medical marijuana. It may take some time for a recreational marijuana termination case to reach the courts so we may not know definitively for a few years. In addition, either or both of these cases may be reversed on appeal. Absent that, however, all indications point to the same result for an employee discharge due to any positive drug test, regardless of whether the employee used marijuana for medical or recreational purposes.

Employers Should Strengthen, Communicate and Enforce Their Drug-Free Workplace Policies

Employers should review their drug testing and/or drug-free workplace policies to ensure that the policies apply to all controlled substances, whether illegal under state or federal law. Policies should clearly indicate that a positive drug test may result in termination of employment, regardless of whether the employee appears to be “under the influence” at work.  Employers then should communicate their drug-free workplace policies to their employees and enforce the policies in a consistent and uniform manner. Under these recent court decisions, terminating an employee who violates a written company drug-free policy will be lawful, even when the employee used marijuana legally under Colorado law.

Learn more about how new laws and rulings in Colorado and elsewhere will affect businesses large and small. From marijuana and social media to credit reports and arbitration agreements, employers need to adapt their policies to stay compliant and minimize liability. Experienced labor and employment lawyers Jeffrey T. Johnson, Esq., of Holland & Hart LLP and Todd J. McNamara, Esq., of McNamara Roseman & Kazmierski LLC will present “Advising Your Business Client on Employment Law – Recent Developments,” at CBA-CLE’s Business Law Institute on October 16, 2013. To register for the Business Law Institute, click here or call (303) 860-0608.

With more than three decades of experience, Jeffrey T. Johnson counsels employers on virtually every area of labor and employment law, including employment discrimination, wrongful discharge, wage and hour, WARN, employee policies, discipline, National Labor Relations Act matters, non-compete and non-disclosure agreements and employee safety and health.  When litigation arises, he serves as a battle-tested, effective advocate for his clients in federal and state courts and agencies as well as in arbitration.  Mr. Johnson is a Fellow of the College of Labor and Employment Lawyers and is recognized as a top labor and employment lawyer by Chambers USA, Best Lawyers in America, Colorado Super Lawyers, and Who’s Who Legal USA. He is also an arbitrator for the American Arbitration Association, Employment Law Panel (Denver).

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.

Resolve to Be More Civil

becky_byeBy Becky Bye

October is a bit of a new year for attorneys. The month marks a time when the Colorado bar admits hundreds of new attorneys, wide-eyed and anxious to begin practicing law. It is also a time where many law firms and other entities hire new attorneys to allow more senior attorneys to eventually transition out to retirement or other opportunities beyond their current practice.

I suggest, given that this is a time for new beginnings for all attorneys, that all attorneys also assess their practice and make some professional resolutions. One resolution I propose is for attorneys to practice with more civility and add camaraderie to their everyday practice.

The inherent adversarial nature surrounding the practice of law can easily polarize opposing counsel, opposing parties, and other people involved in any legal matter, whether it be a transactional matter or in the course of litigation. Many unfortunately interpret the language that “… a lawyer must act … with zeal in advocacy upon a client’s behalf…” to include unwarranted viciousness toward the opposing counsel, opposing parties, and even attorneys’ own office colleagues and peers. Subsequently, any negativity that results in the course of practicing law can create a negative perception of attorneys by the public and help trigger a general lack of civility within the practice of law.

Over the course of my legal career (which is relatively short in comparison to many others out there), I have often heard people complaining about how mean attorneys can be to each other. I also have heard more senior attorneys lamenting about their observations of newer attorneys being rude and unprofessional. In sum, many attorneys do not take the privilege of practicing law seriously.

Many of these attorneys believe that they cannot reconcile advocacy and respect with getting along with the opposing counsel, or even common decency. However, I beg to differ based on my own observations. All of the most respected legal minds of the Denver community and lawyers known nationally have several things in common. Of course, they were excellent, smart, and diligent legal scholars, but they also were known for their professionalism in all of their interactions.

Additionally, when I recently received the honor of an American Inns of Court Pegasus Scholarship, I was able to witness barristers (masters of the art of “advocacy” on behalf of clients in the United Kingdom) for six weeks in England. One of my foremost observations from this experience, which still resonates with me today, is that in spite of being known for their advocacy and legal eloquence, the barristers, even on opposing sides of a legal matter, worked together to the point where they coordinated a case before a tribunal. I was shocked when I attended breakfasts, lunches, and other meetings, between barristers of opposing parties, to discuss the next chain of events in their trial or hearing and what types of questions they would be asking their witnesses. In the courtrooms themselves, the barristers were pleasant and displayed a substantial amount of fellowship toward each other. It was soon very clear that this was the most effective way to represent clients, as courts and parties in legal proceedings were not bogged down in an unproductive exchange of communications with the intention of bullying the other party. The parties and courts could cut through that superfluous, tangential aspect of legal representation to get to the real issues at hand.

Although I understand the British legal system differs from ours in many respects, and not all aspects of it translate over to our legal system, all attorneys can still learn from trying to resolve small issues among attorneys in a courteous, respectable way. When things get too heated between opposing attorneys, ego and anger can unfortunately drive a case to go in the wrong direction, which is ultimately detrimental for clients and the legal system as a whole.

One of Merriam-Webster’s online dictionary definitions for “professional” is “exhibiting a courteous, conscientious, and generally businesslike manner in the workplace.” I urge you to take this definition to heart as a legal professional, and to conscientiously resolve to be sincerely courteous to everyone you encounter.

This article originally appeared in the October 2013 issue of The Docket.

Becky Bye is a public attorney. She received her J.D. from the University of Denver Sturm College of Law in 2005. Bye is actively involved in the legal community, including serving on the University of Denver Law’s Alumni Council and the DBA Docket Committee. She is a past chair of the CBA Young Lawyers Division. Bye may be reached at beckybye@gmail.com. 

DOJ: Amendment 64 Implementation can Proceed Without Federal Interference (For Now)

Bill_KyriagisBy Bill Kyriagis

On August 29, 2013, the federal government issued a long-anticipated policy statement regarding Amendment 64, which made clear that the federal government does not currently intend to interfere with Colorado’s efforts to implement a system to regulate the cultivation, distribution and sale of marijuana to adults for recreational purposes. Federal authorities also clarified their approach toward state-regulated medical marijuana industries.

Specifically, United States Deputy Attorney General James M. Cole issued a memorandum directed to all United States Attorneys, setting forth the Department of Justice’s (DOJ) policy toward marijuana businesses in states that have legalized marijuana for medical and/or recreational use. The memorandum is cast as guidance for prioritizing the “limited investigative and prosecutorial resources” available to the federal government.

Like the two previous federal memoranda addressing state-level efforts to liberalize marijuana laws, which were issued in 2009 and 2011, the new memorandum makes clear that marijuana remains illegal for all purposes under federal law, and that federal authorities will enforce federal drug laws where appropriate. Particularly, the memorandum highlights eight enforcement priorities that will guide federal authorities:

  • Preventing distribution of marijuana to minors;
  • Preventing revenue from marijuana businesses from going to criminal organizations;
  • Preventing diversion of marijuana from states where it is lawful to other states;
  • Preventing state-authorized marijuana activities from being used as a pretext for other illegal activity;
  • Preventing violence and use of firearms in the marijuana industry;
  • Preventing driving under the influence of marijuana and other adverse public health consequences associated with marijuana use;
  • Preventing cultivation of marijuana on public lands; and
  • Preventing marijuana possession or use on federal property.

While the memorandum stresses that it does not change federal law, and does not bind federal authorities, it makes clear that federal authorities are at least willing to allow Colorado and Washington state an opportunity to implement “strong and effective regulatory and enforcement systems that will address the threat those state laws could pose to public safety, public health, and other law enforcement interests.” Federal authorities will watch the implementation of these regulatory regimes closely, and, if they fail to live up to expectations, federal authorities may act. If anything, this reinforces the importance of the process playing out at the state and local level in Colorado, as final regulations and procedures are developed and implemented to regulate the coming recreational marijuana industry.

The memorandum also provides clarifying guidance concerning medical marijuana businesses, noting that they should not be an enforcement priority, regardless of their size or commercial nature, provided that the operation in question “is demonstrably in compliance with a strong and effective state regulatory system.” This represents a reversal of policy guidance provided in the 2011 memorandum, which had drawn a distinction between medical marijuana patients and their caregivers, on the one hand, and large-scale, for profit commercial enterprises, on the other hand. In some states, U.S. Attorneys had seized on this distinction to justify targeting large-scale medical marijuana businesses. In Colorado, however, federal authorities have generally taken a hands-off approach toward state-regulated medical marijuana businesses, which seems even more likely to continue in light of the recent memorandum.

It is important to emphasize that the August 29 memorandum is nothing more than a statement of current policy. It is not law, and it binds no one. U.S. Attorneys in various states may have differing interpretations of the policy guidance, which could lead to variations in enforcement from state to state. If state-level regulatory regimes fail to live up to federal scrutiny, federal authorities could quickly change their approach. Indeed, nothing prevents federal authorities from issuing new policy guidance down the road, which could reverse course. For example, when a new presidential administration comes into office in 2017, it could choose to completely ignore the Obama administration’s approach, and instead aggressively enforce federal marijuana laws.

That said, the significance of the August 29 memorandum cannot be understated. The previous two DOJ memoranda on state-sanctioned marijuana activities have had an enormous impact on the development of medical marijuana industries in a number of states. In removing the most significant potential barrier to the full implementation of Amendment 64 (and Washington state’s similar measure), the recent memorandum will likely have a similarly profound impact.

The legal situation relating to marijuana in Colorado is thus complex and confusing, but recreational marijuana businesses are going to become a part of the landscape in Colorado soon.  This will present business lawyers with new challenges and opportunities. Learn more about advising marijuana businesses at the Colorado Business Law Institute on October 16 and 17 at the Grand Hyatt in Denver. Click here to register for the live program, or click here to order the homestudy.

Bill Kyriagis represents business and real estate clients in litigation, bankruptcy and land use matters. In the land use context, Bill counsels clients on a variety of local government issues, including posturing land use matters for potential litigation and pursuing claims when necessary. Bill has also developed expertise regarding the issues faced by landlords and  property owners related to Colorado’s medical marijuana industry. Bill has worked on a number of pro bono cases, including a successful First Amendment challenge to local government land use regulations, and assisting tenants in landlord/tenant disputes. Bill contributes to his firm’s blog, where this post originally appeared.

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.

Consumer Financial Protection Bureau Regulations and their Impact on Real Estate Transactions

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 created the Consumer Financial Protection Bureau (CFPB), a federal agency charged with regulating consumer protection for United States financial products and services. According to the CFPB website, the group is focused on one goal: “watching out for American consumers in the market for consumer financial products and services.”

In order to achieve its goal of consumer protection, the CFPB has promulgated many rules and regulations since its inception in 2011. Prior to the creation of the CFPB, there were many agencies regulating financial transactions, but some non-bank lending institutions were federally unregulated, such as pay day loan companies, private mortgage lenders, debt collectors, credit reporting agencies, and private student loan companies. These types of lenders are now covered by the new CFPB regulations.

The CFPB regulations have had a significant impact on real estate transactions. The scope of the regulations is surprisingly broad. Attorneys, real estate brokers, and mortgage loan originators especially are affected by the changing regulatory climate propounded by the CFPB.

A half-day CLE program is going be held on September 27 to clarify the CFPB’s new rules and how they will affect residential mortgage lending. Members of the faculty include Debra Still, President and CEO of Pulte Mortgage, Terry Jones of Cherry Creek Mortgage Company, Joey Lubinski of Ballard Spahr, Craig Wildrick of Zions Bancorporation and Tom DeVine of Holland & Hart. If you are involved in any aspect of mortgage lending, or have clients who are, this is an important program to attend.

CLE Program:  The New Consumer Financial Protection Bureau Regulations: What Do They Mean for Your Clients

This CLE presentation will take place on September 27, 2013, in the CLE Large Classroom. Click here to register for the live program and click here to register for the live webcast.

Can’t make the live program? Click here to order the homestudy.

More Changes to the SEC’s “Neither Admit Nor Deny” Consent Decrees

HerrickLidstoneBy Herrick K. Lidstone, Jr., Esq.

The Securities and Exchange Commission (the “SEC”) has the power and authority under the Securities and Exchange Act of 1934 to bring enforcement actions against persons who violate the securities laws. Most of these actions are settled well before trial by the defendant agreeing to a court-ordered “obey the law” injunction, where the defendant neither admits nor denies the factual statements alleged by the SEC to support the injunction. The SEC has received significant criticism from commentators and legislators for entering into settlements without requiring the respondent to admit allegations against it. These have included significant criticisms by Hon. Jed. S. Rakoff (S.D.N.Y.) in his November 28, 2011 memorandum order denying a joint motion by the SEC and Citigroup for approval of a $285 million settlement of certain allegations by the SEC. (SEC v. Citigroup Global Markets, Inc.) This was discussed in more detail in the January 2012 Business Law Section Newsletter.

Obtaining settlements where the defendant “neither admits nor denies” the allegations is a practice that commenced long before 1972, but was formalized in 1972 (17 CFR § 205.5) with the additional SEC requirement that consent judgments be accompanied by a formal written agreement by the defendant “not to take any action or to make or permit to be made any public statement denying, directly or indirectly, any allegation in the complaint or creating the impression that the complaint is without factual basis.” This changed the prior practice by defendants who would deny the underlying facts immediately after entering into a consent decree with the SEC.

Perhaps as a result of the outcry from Judge Rakoff and others, in January 2012, the Director of the SEC’s Division of Enforcement announced that the Division would no longer permit those convicted or who otherwise admitted the facts in a parallel criminal action to settle with the SEC based on ““not admitting or denying” the facts.

On June 18, 2013, SEC Chair Mary Jo White further refined the SEC’s “neither admit nor deny” policy when she advised the investment community that even in non-criminal settings, the SEC may require admissions in cases “where heightened accountability or acceptance of responsibility through the defendant’s admission of misconduct may be appropriate” (as reported in the New York Times at page B-1, June 22, 2013). In those cases, the SEC enforcement staff has been advised to seek admissions or litigate the case. This may, of course, make litigation more frequent since many defendants may have believed in their innocence, but chose the “neither admit nor deny” settlement to avoid the time, expense, and uncertainty of litigation. Chair White anticipates that the admissions will be required in cases involving “particularly widespread harm to investors” and “egregious intentional misconduct.”

The SEC defense bar has raised a number of concerns about Chair White’s announcement and the anticipated effect of the new SEC practice. Among these concerns is whether this new policy might be subject to arbitrary application by staff. Equally significant, where a defendant is given the option of making admissions (which can then be used in subsequent shareholder litigation or even a criminal proceeding) or contesting the claims, defendants are more likely to contest the claims and seek vindication. Where settlements used to be simpler, the resulting litigation will likely involve a significantly greater amount of SEC resources to prosecute and corporate (that is, shareholder) resources to defend. Defense lawyers have also pointed out that the SEC’s recent track record on significant litigation has not been stellar.

Predictably, the plaintiffs’ attorneys applauded this change since they will now be able to use any admissions in their civil litigation. This fact, itself, will be a significant disincentive to targets of investigation to settle cases with admissions of wrongdoing.

It will be interesting to see how this new policy plays out.

Herrick K. Lidstone, Jr., Esq., is a shareholder of Burns Figa & Will, P.C. in Greenwood Village, Colorado. He practices in the areas of business transactions, including partnership, limited liability company, and corporate law, corporate governance, federal and state securities compliance, mergers & acquisitions, contract law, tax law, real estate law, and natural resources law. Mr. Lidstone’s work includes the preparation of securities disclosure documents for financing transactions, as well as agreements for business transactions, limited liability companies, partnerships, lending transactions, real estate and mineral property acquisitions, mergers, and the exploration and development of mineral and oil and gas properties. He has practiced law in Denver since 1978. He writes for many publications, including the Colorado Bar Association Business Law Newsletter, where this article originally appeared.

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.

Floodgates: Riding the Wave of New Immigration Practitioners

KatharineSpeerBy Katharine Speer

Comprehensive immigration reform looks more promising now than at any time in the last 15 years. Approximately 11 million unauthorized immigrants—your neighbors, co-workers, and classmates—could benefit from the proposed changes. More immediately, the Supreme Court just eliminated DOMA’s barrier to same-sex spousal visa petitions, and about a third of the U.S. population now lives in a marriage-equality state.

What does this mean for young lawyers? A lot of prospective clients in a frequently overlooked area of the law and the chance to put your law degree to work making dreams come true!

Corny, perhaps, but true.

At the same time, immigration law is notoriously complex; equal parts rewarding and frustrating.

Remember your administrative law class? Your favorite subject? Yeah, me neither.

Where does a young lawyer begin when faced with such a challenge? First, why not talk to some immigration lawyers to see if the practice area interests you? We don’t bite, and you can find a bunch of us at AILAlawyer.com. If this piques your legal interest, consider taking a pro bono case through the Rocky Mountain Immigrant Advocacy Network. You will be matched with a client in desperate need of your services and an experienced mentor.

Okay, so you’ve finished your pro bono case, and now you’re hooked. How do you become a competent immigration lawyer? One way is to land a job as an associate at an immigration firm, but these scarce positions can be highly competitive and may require years of experience. Another way is to start your own firm or an immigration practice within an existing firm. If you choose one of these options, the following could be your life raft.

  1. Reach out ~ Join the American Immigration Lawyers Association (AILA) and the Immigration Section of the Colorado Bar Association. Meet all the immigration lawyers you can. They will be your best resource.
  2. Don’t reinvent the wheel ~ Ask about the best treatises and research tools for your immigration niche. Check out free resources from the National Immigration Project, American Immigration Counsel, AILA (which you joined, right?), and other non-profits.
  3. Address language and cultural differences ~ No one can be proficient in every language and culture. Learn to work with translators and interpreters. Understand that your clients may see the judicial system differently and take time to talk through their fears, expectations, rights, and responsibilities.
  4. Expect the unexpected ~ Each immigration case is unique. The stakes for your client may range from career advancement, to family unity, to protection from torture. Take time to assess (and re-asses) every case to be sure you are safeguarding your client’s immediate and long-term interests.

Don’t stop here. Your curiosity, sense of adventure, and willingness to admit what you don’t know will serve you well as an immigration practitioner. When the wave of new immigration lawyers hits, your preparation will help you ride the tide to an intellectually and personally rewarding career.

Katharine Speer is a solo immigration practitioner in Denver. She currently serves on the Executive Committee of the Colorado Chapter of AILA, chairs the Spanish Speaking Lawyers Committee of the Colorado Bar Association, and participates in Denver Legal NightGreeley Legal Night, and Ya Es Hora De Ciudadanía. She hopes to see you there! In the meantime, she can be reached on her homepage, by email, on Twitter, orLinkedIn. She also writes for the DBA Young Lawyers Division blog, where this post originally appeared.

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.