August 29, 2014

Civil Access Pilot Project Extended to June 30, 2015

Chief Justice Directive 11-02 was amended in July to extend the period for the Civil Access Pilot Project until June 30, 2015. In June 2013, the project was extended to December 31, 2014. The court extended the pilot project for an additional six months in order to eliminate confusion, give the court time to determine whether the project achieved its stated goals, and consider what changes should be made to the Colorado Rules of Civil Procedure, if any.

The Civil Access Pilot Project was developed in order to streamline the litigation process by identifying and narrowing issues at the earliest stage of litigation, require active ongoing case management by a single judge, and attempt to keep litigation costs proportionate to the issues being litigated. It applies to certain business actions, including claims for breach of contract, business tort actions, actions regarding the application of the Uniform Commercial Code, actions involving commercial real property, private actions for securities fraud, actions involving intellectual property, and more.

For CJD 11-02 regarding the Civil Access Pilot Project, click here. For all the Colorado Supreme Court’s Chief Justice Directives, click here.

Colorado Court of Appeals: Substantial Compliance with Notice Provisions Sufficient for Hospital to Enforce Lien

The Colorado Court of Appeals issued its opinion in Wainscott v. Centura Health Corporation on Thursday, August 14, 2014.

Auto Accident—Hospital Lien Statute—Notice—Substantial Compliance—Colorado Consumer Protection Act—Fraudulent Concealment.

Donald Wainscott was injured in an auto accident caused by third parties (tortfeasors). He received treatment at St. Anthony Central Hospital, which is managed and operated by Centura Health Corporation. To secure payment of these medical expenses, Centura asserted a statutory hospital lien against any settlement or judgment that Donald Wainscott might receive as a result of the accident. The trial court declared that Centura’s failure to strictly comply with the hospital lien statute rendered its lien unenforceable.

On appeal, Centura argued that it substantially complied with the hospital lien statute and that the trial court erred in finding the lien was unenforceable. Because minor filing and notice deficiencies should not invalidate an otherwise valid hospital lien, substantial compliance may be sufficient to satisfy the filing and notice provisions of Colorado’s hospital lien statute. A lienholder substantially complies when it satisfies the statute’s purposes through timely actual notice of the lien to those against whom the lienholder attempts to enforce the lien. Because Centura did identify and serve the tortfeasors’ insurer and Donald Wainscott, Centura substantially complied with the hospital lien statute and the trial court erred in finding the lien was not enforceable.

On cross-appeal, the Wainscotts contended that the district court erroneously dismissed their Colorado Consumer Protection Act (CCPA) and fraudulent concealment claims under CRCP 12(b)(5) for failure to state a claim on which relief can be granted. The basis of the Wainscotts’ CCPA claim was an injury resulting from Centura’s failure to bill Medicare. However, during the period of time in question, Centura was required to refrain from billing Medicare and to seek payment from the tortfeasors’ liability insurer. Thereafter, it had the option of billing Medicare. Centura’s failure to advise the Wainscotts that it was obeying the law did not constitute a deceptive or unfair trade practice. Further, Centura did not have a duty to disclose that it planned to pursue payment from the tortfeasors or their insurer.Accordingly, the district court properly dismissed the CCPA and fraudulent concealment claims.

The district court’s dismissal of the Wainscotts’ CCPA and fraudulent concealment claims was affirmed. The summary judgment as to the Wainscotts’ declaratory action to determine the validity of Centura’s hospital lien was reversed. The case was remanded for further proceedings to determine whether the amount of Centura’s asserted lien represents “reasonable and necessary charges” under CRS § 38-27-101.

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

Tenth Circuit: Nurse’s Refusal to Assess Inmate’s Severe Abdominal Pain Violated Prisoner’s Eighth Amendment Rights

The Tenth Circuit Court of Appeals issued its opinion in Al-Turki v. Robinson on Tuesday, August 12, 2014.

Homaidan Al-Turki was a prisoner with Type II diabetes and other health conditions. On the night of October 5, 2008, he suddenly experienced severe abdominal pain. The pain was so severe he collapsed, vomited, and believed he was dying. He used his cell’s intercom to contact a correctional officer and request to go to the prison’s medical center. The officer called the medical center, where nurse Mary Robinson was the only medical staff person on duty. Robinson refused to see Al-Turki, despite knowing that severe abdominal pain can be a symptom of several life-threatening conditions and knowing that Al-Turki’s Type II diabetes made him susceptible to certain serious illnesses of which severe abdominal pain is an early symptom. Robinson also refused to allow him to be transported to a medical facility, claiming he was a flight risk.

Al-Turki reported his severe pain to a second correctional officer two more times that night, and the officer called Robinson both times. Robinson refused to see Al-Turki and advised the officer that he should file a written request for medical care the following morning. At some point in the night, Al-Turki either fell asleep or lost consciousness. When he awoke at 4 a.m., the pain was slightly better, and at 6 a.m. he was no longer experiencing pain. At a previously scheduled medical appointment at 10 a.m., he passed two kidney stones.

Al-Turki filed suit under 42 U.S.C. § 1983 against several prison officials, including Robinson, based on the officials’ failure to provide him medical assistance or treatment during the several hours he was in extreme pain while passing a kidney stone. The district court granted qualified immunity to all prison officials except Robinson, who filed an interlocutory appeal with the Tenth Circuit. The district court concluded Al-Turki could prove a claim of deliberate indifference to his medical needs in violation of the Eighth Amendment. The district court also concluded the law is clearly established that a medical professional who knows of and appreciates an inmate’s risk of serious medical harm must make a good faith effort to assess the individual.

The Tenth Circuit addressed Robinson’s two issues: (1) whether the evidence was sufficient to satisfy the objective prong of the Eighth Amendment extreme indifference test, and (2) whether her actions violated clearly established state law. As to the first claim, Robinson claimed that Al-Turki’s pain could not satisfy the objective prong because kidney stones are a relatively benign, albeit painful, condition and he was only in pain for a few hours. The Tenth Circuit stoutly rejected her argument, noting that Al-Turki was in so much pain he vomited and believed he was dying. He demonstrated significant suffering and was provided neither medical treatment to ease his suffering nor medical diagnosis to ease his fear of death. The Tenth Circuit similarly rejected her qualified immunity arguments based on Al-Turki’s relatively short period of suffering and benign diagnosis, since the facts concerning duration and diagnosis were not known at the time and he could have been suffering from any of a number of life-threatening conditions.

As to Robinson’s second claim, the Tenth Circuit ruled that Robinson violated clearly established law by choosing to ignore Al-Turki’s complaints. The denial of qualified immunity was affirmed.

Tenth Circuit: ERISA Preemption Necessitated Removal to Federal Court

The Tenth Circuit Court of Appeals issued its opinion in Salzer v. SSM Health Care of Oklahoma, Inc. on Wednesday, August 6, 2014.

Richard Salzer received medical care at an SSM facility following an accident. At the time, he was covered by a health insurance plan, and he entered into a contract with SSM in which he authorized his health insurance company to pay for his care. SSM had a provider agreement with Salzer’s health insurance company in which it agreed to accept payment from the insurance company at a discounted rate. Although the provider agreement prohibited SSM from seeking payment for covered charges from the insured, SSM billed Salzer for the non-discounted amount.

Salzer filed suit against SSM in Oklahoma state court, alleging breach of contract, violation of the Oklahoma Consumer Protection Act, deceit, and tortious interference with contract. He purported to represent a putative class of Oklahoma residents who received treatment at SSM facilities and were similarly billed in violation of provider agreements with insurance companies. Salzer sought damages and specific performance of the provider agreement. SSM removed the case to federal district court. In its notice of removal, SSM alleged that Salzer was a beneficiary of his wife’s employer-provided health plan operated by Aetna and governed by ERISA. SSM further alleged Salzer’s claims were preempted because they can be characterized as seeking to enforce rights under ERISA. Salzer moved to remove the case back to state court, but the district court denied his motion, ruling that his claims were completely preempted by ERISA.

Salzer then filed an amended complaint that reasserted his original claims and added other state law claims. SSM moved to dismiss for failure to state any ERISA claims. The district court dismissed Salzer’s complaint with prejudice, concluding that Salzer disregarded the court’s prior orders by failing to allege any ERISA claims and by continuing to argue that ERISA did not preempt the lawsuit. Salzer appealed to the Tenth Circuit.

The Tenth Circuit examined first the district court’s denial of Salzer’s motion to remand based on ERISA preemption. The Tenth Circuit looked at each of Salzer’s six claims and decided that the first five claims did not implicate ERISA and could have been remanded to state court. However, the sixth claim was indeed an ERISA claim, and the district court correctly refused to remand to the state court for determination of the ERISA claim. The Tenth Circuit found federal jurisdiction over one claim is sufficient to support removal. Because Salzer did not argue on appeal that the district court incorrectly dismissed his claims with prejudice, the Tenth Circuit affirmed the district court.

Tenth Circuit: Statements in Articles, When Read in Context, Revealed Nasty Employment Dispute but Did Not Constitute Defamation

The Tenth Circuit Court of Appeals issued its opinion in Hogan v. Winder on Tuesday, August 5, 2014.

Beginning in 2008, Chris Hogan worked for the Utah Telecommunications Open Infrastructure Agency (UTOPIA), a state agency charged with upgrading high-speed internet access, as a consultant under a professional services agreement. In 2011, Hogan suspected that UTOPIA’s executive director unfairly favored a bid for services from a company where the director’s brother worked. Hogan discussed his suspicions with the plant manager overseeing the contractor selection process, the plant manager discussed that conversation with the executive director, and the executive director terminated Hogan’s employment.

The day after the termination, the mayor of West Valley City, Utah, Michael Winder, requested an interview with Hogan. At that meeting, Hogan began to suspect that Winder was associated with UTOPIA. Hogan then hired an attorney who sent UTOPIA a draft complaint, alleging wrongful discharge and several contract claims. The attorney also sent UTOPIA a letter that Hogan would be amenable to settling the dispute. The attorney sent UTOPIA another letter a few days later, raising four demands for settlement and suggesting that the public scrutiny from Hogan’s lawsuit could destroy the company. UTOPIA’s attorney responded with a letter saying that the common terms for Hogan’s attorney’s demands were “extortion” and “blackmail.” Shortly after these exchanges, both parties filed suit. UTOPIA requested the state court to seal the record. Hogan filed suit in federal court and, after the Salt Lake Tribune wrote a story about the lawsuit, UTOPIA moved to seal the record in the federal suit as well. The state court denied the motion to seal, and UTOPIA voluntarily dismissed its case and its motions to seal. Five days later, an online media outlet published a story titled “Former UTOPIA contractor accused of extortion.” It was later revealed that Winder pseudonymously wrote the article. Other news outlets published condensed versions of Winder’s article. Hogan sued UTOPIA, Winder, the city, and a number of other persons he believed to be involved in the publication of the articles, alleging defamation, false invasion of privacy, intentional infliction of emotional distress, and § 1983 violations.  The district court dismissed all his claims and Hogan appealed to the Tenth Circuit.

The Tenth Circuit affirmed the district court’s dismissal, examining each claim in turn. The Tenth Circuit noted that the potentially defamatory statements were explained by the articles’ context. Examined in context, the Tenth Circuit found that any reasonable reader would realize the parties were embroiled in a nasty employment dispute and would not take the statements at face value. Likewise, Hogan’s arguments that the statements portrayed him in a false light fail, because taken in context, any reasonable reader would recognize that the statements were made during a nasty employment dispute. As to Hogan’s claims regarding intentional infliction of emotional distress, the statements do not meet Utah’s high standard requiring outrageousness, and these claims fail as well. Finally, the Tenth Circuit addressed Hogan’s § 1983 civil rights claims. The district court concluded that Hogan failed to show the officials were acting under the color of state law while publishing the articles, and the Tenth Circuit agreed.

The judgment of the district court was affirmed.

Tenth Circuit: Significant Evidence of Monopolization Precluded Summary Judgment Against Plaintiff

The Tenth Circuit Court of Appeals issued its opinion in Lenox Maclaren Surgical Corp. v. Medtronic, Inc. on Tuesday, August 5, 2014.

Lenox Maclaren Surgical Corp. manufactures bone mills, a type of instrument used in spinal fusion surgery. In 2000, Lenox began to sell bone mills to a Medtronic entity, but that Medtronic entity initiated a recall of Lenox’s products and began selling bone mills produced by a different Medtronic entity. Lenox sued the Medtronic entities for monopolization and attempted monopolization from 2007 through 2010. The district court granted summary judgment to Medtronic, and Lenox appealed on five issues: (1) foreclosure of issues due to res judicata; (2) definition of the product market; (3) Medtronic’s monopoly power; (4) Medtronic’s acquisition of monopoly power through exclusionary practices; and (5) harm to competition from Medtronic’s monopoly powers.

The Tenth Circuit first addressed Medtronic’s claim that Lenox’s suit was barred by the doctrine of res judicata, since Lenox could have raised these issues when the parties engaged in arbitration prior to the district court’s grant of summary judgment. In that binding arbitration, a panel found that Medtronic had insufficient proof to justify its recall of the Lenox bone mills and the company had taken action to clear Lenox from the market. In the action before the district court, Medtronic moved for dismissal based on res judicata, but the district court denied the motion. Medtronic did not raise the res judicata claim in its motion for summary judgment. The Tenth Circuit ruled that Lenox had no need to confront an argument not raised in the motion and declined to address the issue.

Turning to the monopolization issue, the Tenth Circuit disagreed with the district court’s grant of summary judgment, ruling that there were genuine issues of disputed fact which precluded summary judgment. In order to prevail on the monopolization claim, Lenox had to prove (1) monopoly power in the relevant market, (2) willful acquisition of this power through exclusionary conduct, and (3) harm to competition. The district court ruled that Lenox had not created a triable issue of fact on the relevant product market, monopoly power, willful acquisition, or harm, but the Tenth Circuit disagreed.

The Tenth Circuit first identified the relevant product market as the market for other bone mills, despite the fact that hand tools can be used to mill bone, because Lenox presented expert testimony regarding surgeons’ preference for bone mills, a substantial price difference exists between bone mills and hand tools, and Medtronic’s market literature identifies its competition as other bone mills. Because of potential factual disputes on this issue, summary judgment is precluded.

Next, the Tenth Circuit addressed Medtronic’s monopoly power in the bone mill market and determined that Lenox showed sufficient evidence of market share and barriers to entrance to infer that Medtronic had monopoly power in the market. Medtronic’s own literature showed that it had a majority share of the bone mill market during the years in question, with its lowest market share at 65% and its highest at 97-98%. Lenox’s expert testified as to barriers to market entrance. The evidence on market share and barriers created reasonable disputes of material fact and precluded summary judgment.

The Tenth Circuit then turned to the issue of Medtronic’s anticompetitive conduct and found that Lenox presented significant evidence from which a fact-finder could infer anticompetitive conduct. Applying the more stringent 6-factor disparagement test, the Tenth Circuit found that Lenox had alleged facts sufficient to infer anticompetitive conduct, including Medtronic’s reasonless recall of Lenox’s products and Medtronic’s statements to hospitals about the recalls, thus inducing consumers to avoid the Lenox product and causing harm to Lenox.

The Tenth Circuit ruled that Lenox presented significant evidence to support a finding on each element of its claim for actual monopolization, and this evidence precluded summary judgment to Medtronic. The district court’s judgment was reversed and the case was remanded for additional proceedings.

Colorado Court of Appeals: Juror Who Impermissibly Shifted Burden Should Have Been Discharged; Error Not Harmless

The Colorado Court of Appeals issued its opinion in People v. Marciano on Thursday, July 31, 2014.

Theft—Challenge for Cause—Burden of Proof—CRE 803(6)—Bank Records—Confrontation Clause of the Colorado Constitution—Evidence.

In her position as secretary for CDL Trucking, defendant’s duties included managing payroll, billing, making deposits, and loading money onto Comdata Mastercard cash cards for truck drivers’ use while on the road. Defendant stole money from the company by writing checks to herself and cash and by loading money onto a Comdata cash card for her own personal use. A jury found defendant guilty of multiple counts of theft.

On appeal, defendant contended that the trial court erred when it denied her challenges for cause as to Juror M and a second juror, both of whom ultimately sat on the jury. During voir dire, Juror M said that she expected defendant to present evidence in her defense. Neither the prosecutor nor the trial court engaged in any rehabilitative questioning of Juror M to clarify her expectations. The trial court gave no explanation on the record regarding why Juror M’s statements should be disregarded. Thus, defendant’s convictions must be reversed.

Defendant also contended that the trial court improperly admitted her bank records and records that CDL received from Comdata. A foundation for admission of bank statements under CRE 803(6) may be based on judicial notice of the nature of the business and of the records. Therefore, the trial court did not err in admitting these records. However, the trial court abused its discretion when it admitted the records from Comdata without the testimony of a foundational witness establishing their admission.

Defendant argued that admission of the Netbank statements violated her right to confrontation under the U.S. and Colorado Constitutions. Defendant’s personal bank account statements from Netbank were not created for testimonial purposes. Despite the indicia of reliability under CRE 803(6) specific to bank records, the prosecution did not establish or even allege that a witness or declarant from Netbank was unavailable. Therefore, the admission of the Netbank statements violated defendant’s state Confrontation Clause rights. On remand, to admit these documents, the prosecution must either present the testimony of an appropriate witness or establish that such a witness is unavailable for trial.

Defendant further contended that the evidence was insufficient to sustain her convictions on only the theft counts based on the transfers made to the Comdata cash card. Where the evidence admitted at trial, whether or not in error, would have been sufficient to sustain a guilty verdict, the prosecution is entitled to a retrial on remand. Therefore, although the Comdata records should not have been admitted at trial, the counts are nonetheless subject to retrial on remand. The judgment was reversed and the case was remanded to the trial court for a new trial on all counts.

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

Tenth Circuit: No Abuse of ATF Authority to Issue Demand Letter Designed at Combatting Gun Trafficking

The Tenth Circuit Court of Appeals issued its opinion in Ron Peterson Firearms, LLC v. Jones on Monday, July 28, 2014.

The Federal Bureau of Alcohol, Tobacco, Firearms, & Explosives issued demand letters to certain federal firearms licensees (FFLs) in California, Arizona, New Mexico, and Texas in an effort to reduce gun trafficking to Mexico. The demand letters required the FFLs to report to ATF when making sales to the same customer within five business days of two or more semiautomatic rifles “capable of accepting a detachable magazine and with a caliber greater than .22.” Three FFLs—Ron Peterson Firearms, LLC (Peterson), Dale Rutherford d/b/a The Cop Shop (Rutherford), and Tracy Rifle and Pistol, Inc. (Tracy)—appealed the demand letter, arguing that the ATF lacked authority to issue the demand letter and the decision to target FFLs along the four border states was arbitrary and capricious.

The Tenth Circuit, in accord with the Fifth and DC Circuits and the district court in this case, decided that the ATF neither exceeded its statutory authority or acted arbitrarily and capriciously in issuing the demand letter.

The ATF issued the letter in response to “Project Gunrunner,” a national initiative to combat firearms trafficking across the Mexican border. Project Gunrunner uncovered that although Mexican cartels traditionally preferred smaller model weapons, recently rifles and other long guns were being uncovered in raids. These weapons had not previously been tracked by the ATF with multiple-purchase tracing. In December 2010, the ATF announced a proposed reporting requirement regarding multiple purchases of long guns. It received over 12,000 comments during the comment period.

In July 2011, the ATF issued a demand letter to dealer and pawnbroker FFLs in the four border states. Letter recipients are required to report to the ATF whenever they sell two or more semi-automatic rifles within five business days to an unlicensed person. The reports must be submitted on an ATF form that includes information about the purchaser, the dates and locations of purchase, and certain characteristics of the firearms. Peterson, Rutherford, and Tracy are recipients of the July 2011 demand letter. They filed separate suits against the ATF’s acting director in his official capacity, challenging his authority under the Administrative Procedure Act, which suits were consolidated by the district court. The parties filed cross-motions for summary judgment. The district court granted the ATF’s motion for summary judgment and denied the plaintiffs’ motions. The plaintiffs appealed to the Tenth Circuit.

The plaintiff FFLs contended that the ATF lacked statutory authority to issue the July 2o11 demand letter, arguing that the demand letter runs afoul of several provisions of the Gun Control Act, as well as the Consolidated and Further Continuing Appropriations Act. The FFLs asserted that because the demand letter required them to submit information it was not already required to collect, the ATF exceeded its statutory authority. The Tenth Circuit disagreed, stating that the statute “unambiguously authorizes the demand letter.” The Tenth Circuit noted that the demand letter requested FFLs to submit information they are legally obliged to maintain. The FFLs also contend that the letter is invalid because FFLs cannot determine which transactions they are required to report. The Tenth Circuit rejected this argument, quoting from a sister case that “Appellants’ assertion belies reality.” Moreover, the ATF provided a website and phone number to help clarify which transactions were required to be reported.

FFLs also argue that the demand letter requires them to keep records “in a manner inconsistent with the regulations,” but the Tenth Circuit disagreed. Before the ATF issued the July 2011 demand letter, FFLs were already required to keep records of similar sales of different types of firearms. The July 2011 letter simply expanded that obligation to include long guns of the types recently preferred by Mexican cartels.

The FFLs also argue that the ATF exceeded its authority under § 923 by exceeding the authority granted to them by Congress. The Tenth Circuit, agreeing with the Fifth and DC Circuits, rejected these arguments. The arguments erroneously conflate two unrelated statutory sections, and nothing in the statute expressly forbids the ATF’s demand letter.

FFLs argue as well that the CGA limits the ATF’s authority because it limits the promulgation of any rule or regulation after the date of the Firearm Owners’ Protection Act. However, the demand letter is not a rule or regulation. Further, § 923 was enacted as part of the Firearm Owners’ Protection Act.

Rutherford and Tracy argue that even if the ATF’s demand letter was supported by statute, its action was arbitrary and capricious, and that there is no rational connection between the 2011 demand letter and gun trafficking across the Mexican border. The Tenth Circuit remarked that this argument fails to recognize ample evidence in the record of a “rational connection” between the information the ATF seeks and the gun trafficking. Further, the Tenth Circuit noted that agencies are not required to consider every alternative proposed but rather must consider only the most significant and viable alternatives. The Tenth Circuit found no arbitrariness or caprice in the ATF’s demand letter.

Finally, Peterson argued that the court should have excluded portions of the administrative record containing data from traces of firearms seized by Mexican law enforcement. The Tenth Circuit reminded Peterson that review of an agency decision is generally based on the full administrative record, and rejected Peterson’s argument.

The judgment of the district court was affirmed.

Chief Justice Directives 04-04 and 04-05 Amended by Colorado Supreme Court

On Friday, July 25, 2014, the Colorado Supreme Court announced revisions to Chief Justice Directive 04-04, “Advisory Counsel Appointments,” and 04-05, “Appointment and Payment Procedures for CAC, GALs, CFIs, and CVs.” For both of these Chief Justice Directives, the changes were effective July 1, 2014.

The changes reflect rate changes to the payment of court-appointed attorneys and investigators and related services. They affect both civil and criminal cases. The changes to CJD 04-04 are reflected in Attachment D, and the changes to CJD 04-05 appear on pages 7 to 8.

For all of the Colorado Supreme Court’s Chief Justice Directives, click here.

Tenth Circuit: Oklahoma’s Same-Sex Marriage Ban Ruled Unconstitutional

The Tenth Circuit Court of Appeals issued its opinion in Bishop v. Smith on Friday, July 18, 2014.

Sally Smith, the County Clerk for Tulsa County, Oklahoma, appealed the district court’s decision that Oklahoma’s same-sex marriage ban is unconstitutional. Smith also challenged the standing of the plaintiffs to bring the action, and whether the Oklahoma court clerk is a proper defendant as to Oklahoma’s non-recognition provision concerning same-sex marriages performed in another state. The Tenth Circuit determined that the plaintiffs had standing, affirmed the district court’s decision, and determined that the Oklahoma court clerk was an improper party regarding the non-recognition provision. In affirming, the Tenth Circuit applied its ruling in Kitchen v. Herbert, the Utah same-sex marriage case, in which it held that plaintiffs who wish to marry a partner of the same sex seek to exercise a fundamental right and state justifications for banning such marriages that hinge on the procreative potential of opposite sex marriage do not satisfy a narrow tailoring test applicable to laws that impinge upon fundamental liberties.

Mary Bishop and Sharon Baldwin are Oklahomans who are in a long-term relationship and wish to marry. They sought a marriage license from the Tulsa County Court Clerk in 2009 but were denied because they are both women. They have suffered harms from the denial, including incurring legal fees to prepare estate planning documents to confer upon each other the same rights they would have in marriage. Susan Barton and Gay Phillips were married in Canada in 2005 and again in California in 2008. They have suffered adverse tax consequences as a result of Oklahoma’s refusal to recognize their marriage, and say that Oklahoma treats them as inferior to their opposite-sex counterparts.

In November 2004, Bishop, Baldwin, Barton, and Phillips filed suit against the Oklahoma governor and  attorney general, challenging Oklahoma’s state constitutional ban on same-sex marriage. The governor and attorney general filed a motion to dismiss in 2006, which was denied, and appealed that denial to the Tenth Circuit. A panel of the Tenth Circuit determined in 2009 that plaintiffs failed to name a defendant having a causal connection to their injury, such as a court clerk. On remand, the district court allowed plaintiffs to amend their complaint to add Smith in her official capacity as Tulsa County Court Clerk, and to add challenges to §§ 2 and 3 of DOMA against the United States ex rel. Eric Holder. In 2011, the United States notified the district court that it would no longer defend § 3 of DOMA on the merits, and the Bipartisan Legal Advisory Group was allowed to intervene to defend the law. The case proceeded to summary judgment, and Smith submitted an affidavit that she had no authority to recognize out-of-state marriages, be they of same-sex or opposite-sex couples.

After the U.S. Supreme Court’s decision in United States v. Windsor, the district court entered an opinion and order disposing of the defendants’ motion to dismiss and the cross-motions for summary judgment. The district court ordered that Phillips and Barton lacked standing to challenge DOMA because state law resulted in the non-recognition of their marriage; any challenge to DOMA was moot in light of the Windsor decision; Phillips and Barton lacked standing to challenge Oklahoma’s non-recognition provision because Smith is not involved in recognition; and Oklahoma’s ban on same-sex marriage (Part A of SQ 711) violates the Equal Protection Clause. Smith appealed the decision regarding Part A and Barton and Phillips cross-appealed the conclusion that they lacked standing. The DOMA issues were not challenged.

Smith first contends that plaintiffs lack standing to challenge Part A of SQ 711 because they do not simultaneously contest a state statute to the same effect. However, the Tenth Circuit determined that a constitutional amendment would have the effect of superseding all previous statutes. The statute is not enforceable independent of SQ 711.

In addressing the merits of Smith’s appeal regarding Part A, the Tenth Circuit applied its reasoning from the Kitchen case. The Tenth Circuit opined that the Supreme Court’s dismissal in Baker v. Nelson is not controlling, plaintiffs seek to exercise a fundamental right to marry, and state justifications against same-sex marriage based on procreation fail to satisfy a strict scrutiny test. The Tenth Circuit first rejected Smith’s Baker arguments that lower courts are not free to reject summary dismissals, stating that her argument is undermined by the explicit language of the case creating the rule. Next, the Tenth Circuit evaluated her contention that children have an interest in being raised by their biological parents. The Tenth Circuit ruled that this contention is contradicted by statutes allowing adoption, egg and sperm donation, and other non-biological means for child-rearing. The Tenth Circuit noted that the state failed to raise arguments why same-sex marriage proposes a greater threat than other non-biological child-raising scenarios. Further, the Tenth Circuit stated that Oklahoma’s ban sweeps too broadly, because not all opposite-sex couples are able to procreate or are interested in procreation, and they are not denied the ability to marry.

As to the challenge to the non-recognition provision, the Tenth Circuit determined that Phillips and Barton lacked standing in this area because Smith is not a proper party. Smith submitted an affidavit to the effect that she is not able to recognize any marriages in her official capacity, and the affidavit is sufficient to establish that Smith is not a proper party regarding non-recognition. The Tenth Circuit sympathized with the plaintiffs, who have been litigating the issue for ten years, but suggested instead that if they attempted to file a joint tax return and were denied, they would be able to sue the Tax Commission regarding the denial.

The judgment of the district court was affirmed.

Colorado Court of Appeals: Attorney Fee Award Erroneous when Underlying Claim Was to Recover Judgment

The Colorado Court of Appeals issued its opinion in Castro v. Lintz on Thursday, July 17, 2014.

Workers’ Compensation—Tort—Piercing the Corporate Veil—Enforcement of Judgment—Breach of Duty to Creditor—Dismissal—Attorney Fees—CRS § 13-17-201.

In 2010, Castro was employed by Lintz Construction, Inc. He was injured during the course of his employment when he fell from the roof of a building while shoveling snow. Castro filed a workers’ compensation claim against both Lintz Construction and Jonathan Lintz personally. The administrative law judge (ALJ) ordered Lintz Construction to pay Castro benefits in the amount of $4,536.76. The district court later granted Lintz’s motion to dismiss Castro’s claims to enforce the judgment against Lintz on the ground that the claims were barred by the doctrine of claim preclusion, awarding attorney fees to Lintz. The Colorado Court of Appeals reversed the district court’s order.

On appeal, Castro contended that the district court erred as a matter of law in awarding Lintz attorney fees under CRS § 13-17-201. An award of attorney fees under § 13-17-201 is mandatory when a trial court dismisses a tort action under CRCP 12(b). Castro’s claims for disregarding the corporate form (piercing the corporate veil) to recover the money he had already been awarded in the workers’ compensation claim and enforcement of his judgment against Lintz Construction do not sound in tort. Although Castro’s breach of duty to creditor was a tort, the essence of this claim did not sound in tort because Castro sought to recover only the benefits he was awarded. Therefore, the district court erred in awarding Lintz his attorney fees under CRS § 13-17-201.

Summary and full case available here.

Tenth Circuit: Special Master Must Employ Abstraction-Filtration-Comparison Test for Copyright Infringement

The Tenth Circuit Court of Appeals issued its opinion in Paycom Payroll, LLC v. Richison on Friday, July 11, 2014.

David Richison, with his niece and nephew, Shannon and Chad Richison,  formed a payroll processing company, Ernest Group, d/b/a Paycom Payroll, in Oklahoma in the 1990s. During his time with Ernest Group, David wrote two payroll processing software programs, BOSS and Independence. He transferred his authorship interest in BOSS to Ernest Group in the 1990s. When the relationship between David and Chad deteriorated in 2001, David moved to Maryland and formed his own company called Period Financial Corporation. At Period, he wrote a new software program based in part on Independence, which he called Period Indy. In May 2009, Ernest Group filed a copyright infringement lawsuit against David, asserting that Period Indy infringed on Ernest Group’s copyright in BOSS. Ernest Group subsequently filed for copyright on Independence, stating that it was a work for hire. By 2011, David had written another program, Cromwell.

In August 2011, the parties settled and agreed to the entry of a consent decree. All of Ernest Group’s claims were released except its claim for injunctive relief based on copyright infringement, and all rights to Independence were assigned to Ernest Group. The partied agreed that the district court should appoint a special master to write a report regarding whether the Cromwell program infringed on either BOSS or Independence, and the district court should decide the issue based on the special master’s report. The parties disagreed as to which version of Cromwell should be used for the analysis, but not which versions of BOSS and Independence. The special master opined in his report, marked “Attorney’s Eyes Only,” that Cromwell infringed upon both BOSS and Independence. The district court adopted the special master’s findings and ordered that all copies of Cromwell should be destroyed.

After the report was filed, David objected to the “Attorney’s Eyes Only” restriction, noting that as the author of all the software in question, he could assist his attorneys in reviewing the substance of the report. Ernest Group opposed the motion, and the district court denied it, stating that David advanced no grounds to support lifting the restriction. David’s attorneys filed objections to the special master’s report, arguing that the special master failed to conduct the abstraction-filtration-comparison test, or at least that he did not document his application of the test. Ernest Group’s attorneys agreed with the objections to some extent and requested that the report be resubmitted to the master for further findings. Before the district court could rule, Ernest Group’s attorneys mailed David’s “highly critical” objections directly to the special master. David’s attorneys called for a new special master, claiming that Ernest Group had irrevocably tainted the master’s neutrality. The district court, instead of resubmitting the report to the special master, called on Ernest Group’s attorneys to offer a more substantive response to David’s critique of the report, which they did. The district court adopted the special master’s report in its entirety, ruled that Cromwell infringed upon Ernest Group’s copyrights in both BOSS and Independence, and ordered all copies of Cromwell destroyed. This appeal followed.

David raised four issues on appeal: (1) the “Attorney’s Eyes Only” restriction should be lifted, (2) the special master erred by evaluating versions of BOSS and Independence that were never registered with the copyright office, (3) the special master’s report was inadequate and the versions were not substantially similar, and (4) a new special master should be appointed if remand is necessary. The Tenth Circuit evaluated these claims in turn. The Tenth Circuit declined to agree with David on the first claim, noting that he agreed to the restriction in a consent decree and allowing David to view the report was not so fundamental of a right as to be unwaivable, and commenting that such restrictions are common in trade secret litigation. For the second claim, the Tenth Circuit similarly rejected David’s arguments, since he impliedly consented to the versions in two documents submitted to the court and his argument was therefore waived.

As to the third claim, the Tenth Circuit reversed the district court’s adoption of the special master’s report. The Tenth Circuit agreed that the special master should have documented his application of each step of the abstraction-filtration-comparison test, which he did not do. The report contained little evidence that the master performed the abstraction test, and in fact the report seemed to deem abstraction superfluous. Because the abstraction test was not performed, the special master’s findings regarding filtration were limited, and his entire analysis was flawed. The case was remanded for more complete reporting by the special master. In his fourth claim, David requested that a new special master be appointed, due to potential bias from the master receiving David’s critique. The Tenth Circuit disagreed, because the parties had agreed to this particular special master, and also noting that it only addressed David’s contentions in this appeal so if need arose for a different special master in the future that claim would not be barred.

The district court’s judgment was reversed and remanded for further reporting by the special master using the abstraction-filtration-comparison test.