August 21, 2019

Archives for July 2011

Tenth Circuit: The Federal Appeal of a Remand Order Becomes Moot Following the Plaintiff’s Voluntary Dismissal of the Case in State Court

The Tenth Circuit Court of Appeals issued its opinion in Dudley-Barton v. Service Corp. Int’l on Thursday, July 28, 2011.

The Tenth Circuit affirmed the district court’s decision. Respondents filed a class action lawsuit against Petitioners, a large, multi-state funeral home operating company, based on its allegedly unlawful employment practices and policies. Respondents sought to recover unpaid wages based on Petitioner’s “purported failure to compensate its employees for (1) time spent engaging in community work outside of regular employment hours; (2) time spent handling phone calls and other work-related issues after normal business hours; (3) time spent working through meal breaks; and (4) overtime hours worked. . . . In making these assertions, Plaintiffs brought four claims for violation of Colorado wage and labor laws, . . . as well as state law claims for breach of contract, fraud, unjust enrichment, breach of the implied covenant of good faith and fair dealing, conversion, and misrepresentation.”

Petitioners removed the case to federal court pursuant to the Class Action Fairness Act (CAFA), and Respondents then filed a motion to remand. The district court granted Respondents’ motion to remand, concluding that Petitioners had not established that the amount in controversy exceeded the $5 million jurisdictional threshold required. Respondents then filed a timely petition in the Tenth Circuit requesting leave to appeal the district court’s remand order. Before the Court granted the petition, Respondents filed in Colorado state court a notice voluntarily dismissing their claims against Petitioners without prejudice. The state court dismissed the case that same day. After, the Court granted Petitioners’ petition for leave to appeal. Two weeks later, Respondents filed a motion to dismiss Petitioners’ appeal, claiming that the appeal is now moot.

Respondents rely on their voluntary dismissal filed pursuant to Rule 41(a) of the Colorado Rules of Civil Procedure to argue that Petitioners’ appeal is moot and subject to dismissal. “Rule 41(a) states that plaintiffs may dismiss an action ‘without order of [the] court upon payment of costs . . . [by] filing a notice of dismissal at any time before filing or service by the adverse party of an answer or of a motion for summary judgment.'” Respondents argue that because Petitioners have not filed an answer or a motion for summary judgment, their notice of dismissal automatically terminated this case. Petitioners oppose Respondents’ motion to dismiss and argues that Plaintiffs may not moot its appeal by dismissing their lawsuit in state court.

The Court has not previously addressed whether the federal appeal of a remand order becomes moot following the plaintiff’s voluntary dismissal of the case in state court. “In the context of the present case, [the Court concluded] that when a plaintiff voluntarily dismisses its claims in state court, the pending federal appeal of the district court’s order of remand filed pursuant to 28 U.S.C. § 1453(c) becomes moot. Because [Respondents] have voluntarily dismissed their claims against [Petitioners], there is no meaningful dispute remaining between the parties: [Petitioners] have no material interest in contesting the district court’s remand order because [Respondents]’ lawsuit has now been dismissed. Further, since [Respondents] no longer have outstanding claims against [Petitioners], [the Court] cannot grant meaningful relief to [Petitioners] by reviewing the district court’s remand order.”

Tenth Circuit: Duress Defense Fails when No Evidence Proffered Showing Contacting Law Enforcement Would Be Futile

The Tenth Circuit Court of Appeals issued its opinion in United States v. Beckstrom on Thursday, July 28, 2011.

The Tenth Circuit affirmed the district court’s conviction and sentence. Petitioner was convicted of possession of fifty grams or more of methamphetamine with intent to distribute. Because he had two prior felony drug convictions, Petitioner was sentenced to life in prison under the mandatory sentencing provisions. On appeal, Petitioner challenges both his conviction and sentence, arguing that the district court improperly denied him the opportunity to present a duress defense, erred in treating his two prior felony convictions as separate criminal episodes sufficient to qualify for the sentencing provisions used, and unconstitutionally increased his maximum sentence based on facts never found by a jury.

The Court disagreed with all of Petitioner’s contentions. Petitioner was properly denied the opportunity to pursue a duress defense because he failed to proffer evidence showing he lacked a reasonable opportunity to escape the threatened harm. “As a general matter, the opportunity to seek the assistance of law enforcement will suffice as a reasonable alternative. A defendant who contends that police would have been unwilling or unable to help, but does not provide specific factual bases to conclude contacting law enforcement would be futile, falls short of meeting his evidentiary burden.”

The Court also concluded that the district court was correct to treat Petitioner’s two prior drug felonies as arising from separate criminal episodes. “[Petitioner] had prior convictions for continuing criminal enterprise (“CCE”) and possession of dangerous drugs for sale. The conduct forming the basis of the possession charge was one of three predicate offenses required to establish the CCE conviction. [The Court held] that two prior convictions will subject a defendant to a mandatory life term under [the sentencing provisions] if the second conviction requires proof of: (1) a criminal act separate from the acts supporting the first conviction, (2) which occurs at a distinct time from the acts supporting the first conviction, and (3) which occurs after the defendant had a meaningful opportunity to discontinue his unlawful drug-related activity.”

Petitioner’s constitutional challenge to the mandatory sentencing provisions was rejected because, as he concedes, it is foreclosed by Supreme Court precedent, under Almendarez-Torres v. United States, 523 U.S. 224 (1998).

Tenth Circuit: Unpublished Opinions, 7/28/11

On Thursday, July 28, 2011, the Tenth Circuit Court of Appeals issued two published opinions and five unpublished opinions.


Nikols v. Chesnoff

Department of Labor v. Copart, Inc.

White v. Schafer

Lancaster v. Bigelow

Howard v. Bureau of Prisons

No case summaries are available for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

Christy Burke: Keeping Time on the Go

Having spent seven years in the state attorney’s office specializing in domestic violence cases, Linda Watson was recently inspired by her three-year-old son to switch to a solo practice. She simply wanted a more virtual, entrepreneurial career that allowed her to see him more often. Now she runs Watson Law, a solo family and criminal law practice in Peoria, Illinois. Like most working parents, Linda logs a lot of time in the car and on public transportation, as she shuttles from court appearances to her home office to her son’s school and activities. In the middle of all this, she says, a cloud-based billing system has saved her neck by capturing all the found minutes spent emailing and phoning from her Android.

It’s True, the Cloud Can Now Set You Free

It’s not an unusual story. More and more lawyers are discovering that cloud-based time and billing systems cut them loose from the vestiges of an in-place practice. I checked in with a handful of lawyers who recently moved from traditional timekeeping systems to cloud-based applications.

Record time anywhere. Linda uses Clio, a practice management system that includes time and billing and trust accounting among its features. “I can bill right from my Android phone,” she says. “It’s not uncommon for me to run from one court appearance to another, but my billing entries don’t have to suffer. While I’m waiting those few minutes for the judge or a client, I can enter all of my time for the day, away from my office, right on my phone.” She says another plus is the ability to customize clients’ bills so they know their trust account status, which helps them be prepared for upcoming expenses.

Easily track and measure how you spend your time. Florida solo Pamela Wynn uses a system called A self-defined “cloudie,” she says using a cloud-based system has definitely increased her billings. “I used to lose some smaller time and expense items when I was away from the desktop program. It depended on me remembering to input the items when I got back to the office. With, the system is always available. I can track the smaller items that used to get lost as I’m doing them.” Also, Pamela sets up groups to track her nonbillable hours, so she can see where she’s leaking time during her workday. This helps her keep better records—which means more earnings for her practice.

Shorten the time spent preparing bills. Daniel Galligan of Milwaukee’s Mayer Galligan Law says he’s seen improved efficiency in his billing process with Bill4Time loaded on his phone. “We used to spend many hours each month formatting bills and getting them finalized,” he says. “Last month, I finalized, printed and sent an entire month’s bills in 20 minutes!”

All evidence points to the fact that the cloud is here to stay. More options are becoming available for lawyers as traditional software companies develop online-based interfaces to stay in the game. So maybe you should check out a few cloud applications and see if they help you capture more billable time, too.

Christy Burke is the Founder and President of Burke & Company, a New York-based communications agency specializing in public relations, marketing, and organizational management. She represents a variety of legal technology clients. Christy is also a columnist for Legal IT Professionals and has written articles for several legal technology and practice management publications. She contributes to the Attorney at Work blog, where this post originally appeared on July 26, 2011.

J. Robert Brown, Jr.: Shareholder Protection Act of 2011 – Preemption, Prevention and Protection (Altering the Standards for Fiduciary Duties of the Board) – Part 4

The Shareholder Protection Act of 2011 goes beyond director and shareholder approval.  By requiring shareholder approval in the proxy statement and by requiring disclosure of expenditures for the prior year in the annual report, the Act effectively triggers the application of the antifraud provisions.  To the extent companies do not accurately reveal the purpose of the payments on a going forward basis and the actual use of the payments (the latter will provide a check on the former), they may be liable.

The Act, however, went well beyond triggering the antifraud provisions.  For the first time in the federal securities laws, it would create a treble damage provision.  Moreover, the provision would likely apply on a strict liability basis.

The Act provides that expenditures made in violation of the shareholder approval requirement will be “considered a breach of a fiduciary duty of the officers and directors who authorized the expenditures for political activities.”  Liability will joint and several and equal three times the amount of the expenditure. In other words, authorization is the only element of the claim.  The provision imposes personal liability.  Moreover, it apparently does so on a strict liability basis.  Authorizing officers and directors will be liable even if they do not know about the provision or were otherwise unaware of the shareholder approval requirement.

Moreover, violations are more likely to occur than one might think.  Certainly, the authorization of political expenditures in the absence of shareholder approval will result in exposure.  But the provision is broader than that.  It applies the treble damages provision to any person who authorizes payments that are not “of the nature of those proposed by the issuer”.  So those authorizing contributions will need to make sure that they are consistent with what shareholders actually approved.  This will not always be clear.

Moreover, by defining the claim as a breach of fiduciary duty, boards will potentially be at risk for a derivative suit to the extent they fail to enforce the provision.  Once unauthorized campaign contributions are exposed, boards may find themselves in the unsavory position of having to bring actions against (or collecting treble damages from) authorizing officers or being sued for the failure to do so.  Similarly, boards may find themselves liable to the extent they delegated authority to officers.  Depending upon the terms of the delegation, it may fit the definition of “authorization.”

While Congress has been very willing to preempt state law in recent years, most of the changes have been with respect to process (other than, perhaps, assigning substantive authority to committees).  Congress for the most part has not tampered with fiduciary duty standards.  They have remained within the purview of state law.  Yet this proposal would alter that balance.  It would result in Congress defining fiduciary duty standards and the extent of liability as a result of violations.

For more than two decades, J. Robert Brown, Jr. has taught corporate and securities law, with a particular emphasis on corporate governance. He has authored numerous publications in the area and several of his articles have been cited by the U.S. Supreme Court. He is a professor at the University of Denver Sturm College of Law and blogs for The Race to the Bottom, where this post originally appeared on July 27, 2011.

Colorado Court of Appeals: Week of July 24, 2011 (No Published Opinions)

The Colorado Court of Appeals issued no published opinions and fifty unpublished opinions for the week of July 24, 2011.

Neither State Judicial nor the Colorado Bar Association provides case summaries for unpublished appellate opinions. Case announcements are available here.

Tenth Circuit: Money from Ponzi Scheme Must Be Returned to Victims before Discovery by Victim or Government in order to Earn Sentencing Credits

The Tenth Circuit Court of Appeals issued its opinion in United States v. Merriman on Wednesday, July 27, 2011.

The Tenth Circuit affirmed the district court’s sentence. Petitioner, in early 2009, “approached an otherwise unsuspecting U.S. Attorney’s Office and disclosed he had engaged in a longrunning Ponzi scheme that defrauded investors of over twenty-million dollars. At the time of his disclosure, [Petitioner] offered several million dollars of assets to the government so that it could liquidate the assets and eventually remit the proceeds to [his] victims. He cooperated with authorities throughout the proceedings and ultimately pled guilty to one count each of mail fraud and forfeiture.” Petitioner appeals two of the district court’s sentencing decisions: first, he argues the court should have counted the assets he initially turned over to the government as a credit against his victims’ measured aggregate loss, resulting in a two-point decrease, and second, he argues the court erred by finding he occupied a “position of trust” for a two-point enhancement.

The Application Notes of the Sentencing Guidelines “unambiguously require two conditions to be met before any credits are earned: the money must be returned to the victim, and this return must occur before the offense was detected or discovered by a victim or the government. . . . Here, the money was not returned by [Petitioner]; rather, it was returned by the government after a later liquidation of [Petitioner]’s forfeited assets. Even if [the Court] assume[d] the government ‘acted jointly’ with[Petitioner] to return his victims’ money, no money could have been returned until after [he] turned himself in and disclosed his crimes to the U.S. Attorney.” The Guidelines do not provide an exception “for crimes that are detected because the defendant confesses his crime to the government. Although the Guidelines permit a reduction for restoring victims’ losses prior to the onset of any government involvement, they do not contemplate similar treatment when payments are not returned to the victims until after the crime has been discovered by the government and the defendant has, for example, additional motivation to use his ill-gotten gains as leverage in a plea negotiation or other self-serving purpose.”

As to whether Petitioner occupied a position of trust, the Court found that “the parties do not dispute that [Petitioner] retained and exercised authority to make investments on behalf of his investors with complete discretion to invest however he desired. Investors did not scrutinize his financial accounting or investing decisions, nor was he obligated to disclose such matters. [The Court saw] no clear error in the district court’s conclusion that [Petitioner]’s authorized and exercised discretion and the resultant lack of transparency between [him] and his investors significantly contributed to his ability to avoid detection.” As such, even if his fraud was perpetuated in part by circumstances other than his position of trust, Petitioner’s complete control over his investors’ money significantly contributed to his fraud by “making the detection of the offense . . . more difficult.”

Tenth Circuit: Conviction for Sexual Contact-No Consent is a Forcible Sex Offense under the Sentencing Guidelines and Triggers Sentence Enhancement

The Tenth Circuit Court of Appeals issued its opinion in United States v. Reyes-Alfonso on Wednesday, July 27, 2011.

The Tenth Circuit affirmed the district court’s decision. Petitioner plead guilty to one count of illegal reentry after deportation. “Using the 2009 United States Sentencing Guidelines, the district court calculated an advisory guideline imprisonment range of forty-six to fifty-seven months. Then, the district court imposed a sentence at the bottom of that range: forty-six months’ imprisonment.” Petitioner now appeals and argues that “his prior conviction in Colorado for Sexual Contact–No Consent is not a forcible sex offense, which triggers the sixteen-level crime of violence enhancement . . . . [Petitioner] also argues that the sentence imposed by the district court is both procedurally and substantively unreasonable.”

The Court concluded that Petitioner’s conviction for Sexual Contact–No Consent is a forcible sex offense under the Guidelines and therefore triggers the sentence enhancement. Further, the Court concluded that the district court did not abuse its discretion by imposing a sentence of forty-six months’ imprisonment; the sentence was both procedurally and substantially reasonable.

Tenth Circuit: Foster Care Case Worker Did Not Abdicate Professional Responsibilities when Placing Abusive Child in Home

The Tenth Circuit Court of Appeals issued its opinion in J.W. v. State of Utah on Wednesday, July 27, 2011.

The Tenth Circuit affirmed the district court’s decision. The case arises from a situation of child-on-child abuse within the foster care system. Petitioners are “a foster couple and their now-adopted foster children who allege they incurred injuries after an abusive foster child was placed in their home in August of 2002. In this § 1983 action, Plaintiffs raised several state and federal claims against the State of Utah and the various State employees and entities involved in placing this child in their home. The district court dismissed several of [Petitioners]’ claims under Rule 12(b)(6) and granted summary judgment to [Respondents] on [Petitioners]’ remaining federal claims. [Petitioners]’ remaining state claims were then remanded to the state court for disposition. On appeal, [Petitioners] challenge the Rule 12(b)(6) dismissal of their negligence claims and the grant of summary judgment to the children’s caseworker and her direct supervisor on [Petitioners]’ Fourteenth Amendment due process claim.”

“Under Utah law, a battery is committed if (1) the actor deliberately makes a physical contact and (2) this contact is deemed harmful or offensive at law, regardless of whether the actor was aware of the harmful or offensive nature of the contact. See Wagner v. State, 122 P.3d 599, 603-04 (Utah 2005).” Although the abusive child may not have been aware of the harmful or offensive nature of his contact with A.W., the types of contacts alleged in Petitioners’ “complaint—repeated physical and sexual abuses—were of a deliberate nature, and they certainly fall within the definition of harmful or offensive contacts.” The Court was therefore persuaded that the Utah Supreme Court would apply the Wagner test to cases involving children as well as adults, and concluded that the abusive child’s “alleged conduct fell squarely within the definition of battery.” The Court then affirmed the district court’s dismissal of Petitioners’ negligence claims on governmental immunity grounds.

Petitioners also contend that the children’s caseworker abdicated her professional responsibilities when she placed the abusive child in the Petitioners’ home because she neither considered the child’s history nor deliberated on whether this placement would be in A.W. and M.W.’s best interests. “However, the undisputed evidence in the record refutes these contentions. The record reflects that the caseworker knew of the children’s histories and had observed their interactions, considered their safety, and received reports from [Petitioners] regarding W.C.C.’s pre-placement visits when she decided that this placement would be safe and appropriate for all involved.” The Court therefore affirmed the district court’s grant of summary judgment to the caseworker on Plaintiffs’ due process claim against her.

Tenth Circuit: Sufficient Expert Testimony Presented to Prove Causation and Coverage under Food Contamination Insurance Policy

The Tenth Circuit Court of Appeals issued its opinion in Leprino Foods Co. v. Factory Mutual Ins. Co. on Wednesday, July 27, 2011.

The Tenth Circuit affirmed the district court’s decision. Petitioner is a “Denver-based mozzarella manufacturer that customarily stores its products in third-party warehouses. In one of these warehouses, flavoring compounds derived from nearby-stored fruit products contaminated a large quantity of cheese.” Petitioner’s “all-risk” insurance policy with Respondent excluded contamination unless it was caused by “other physical damage.” When coverage was disputed, a jury determined the contamination was caused by other physical damage and therefore covered by the insurance policy. On appeal, Respondent claims the district court erred in several ways.

Respondent contends that the verdict is supported by insufficient evidence because Colorado law requires expert testimony, as opposed to lay testimony, to prove causation. The Court, however, concluded that Petitioner did in fact present sufficient expert testimony on this element. Respondent also challenges the district court’s jury instructions and its evidentiary ruling on Petitioner’s revised cold-storage guidelines. But, the Court did not find the instructions or ruling to be erroneous. The Court did agree with Respondent that Petitioner’s damages should be reduced by its settlement with the warehouse, so long as the setoff does not include the attorneys’ fees that Petitioner incurred in pursuing that litigation.

Tenth Circuit: Challenge to Length of Prison Sentence is Moot when No Longer in Prison and Seeking Shortened Supervised Release Term

The Tenth Circuit Court of Appeals issued its opinion in Rhodes v. Judiscak on Wednesday, July 27, 2011.

The Tenth Circuit affirmed the district court’s decision. Petitioner challenges only the length of his prison sentence, but he concedes he is no longer in prison. Although he remains subject to a long term of supervised release, the Court cannot issue a judgment on his § 2241 petition that will shorten his supervised release term. Petitioner has not asked a district court to reduce his term of supervised release under § 3583(e)(1), but merely asserts that, if he were to pursue such a remedy, it might be helpful for him to have something from the Court saying his sentence was too long. But Petitioner’s petition “overlooks the principle that to defeat mootness ‘it must be the effect of the court’s judgment on the defendant that redresses the plaintiff’s injury, whether directly or indirectly.'” There is nothing the Court can do to aid Petitioner, and any opinion would be advisory; there is no judgment the Court could render that would assist him in a future challenge to his supervised release. This petition is moot, but Petitioner will get a chance to ask for a judgment for a shorter term of supervised release.

Tenth Circuit: Petition for Rehearing to Amend Order and Judgment Granted; Revised Opinion Published

The Tenth Circuit Court of Appeals issued its opinion in United States v. Castellanos-Barba on Wednesday, July 27, 2011.

The Tenth Circuit granted Appellant’s petition for rehearing for the purpose of amending the order and judgment filed March 21, 2011. The revised opinion was also published.

The petition for rehearing en banc was transmitted to all of the judges of the court who are in regular active service. As none requested that the court be polled, that petition was denied.