July 21, 2018

Archives for March 19, 2014

Winds of Change (Part 5): The New Lawyer Entrepreneurs

rhodesA recent American Express Survey (results announced August 2013) compared how the Great Recession affected Generation Y (age 24-35) vs. Baby Boomer (age 48-70) entrepreneurs. Guess what? It made both groups more risk averse: “just 56% say they like taking risks, down from 72% in 2007.” We might have guessed.

Gen Y respondents also cited student debt load as another reason they’re less inclined to risk starting a business – especially straight out of school (16% did so in 2013 vs. 28% in 2007). About the same time, a Wall Street Journal article reported that “The rising mountain of student debt, recently closing in on $1.2 trillion, is forcing some entrepreneurs to abandon startup dreams.”

Average debt for undergrads is $40,000, the WSJ said, and post-grads weigh in at 55,000 – up from $40,800 10 years ago. The numbers are higher for law grads: an ABA Journal story reported that “The average 2012 law grad debt was $108,000, according to data collected by U.S. News & World Report.”

Closer to home, 39% of respondents to last year’s Colorado Lawyer Satisfaction & Salary Survey said law school debt has a significant effect (32%) or controls (7%) their career choices.

Is all that debt deterring Gen Y law firm startups? Not necessarily.

A June 2011 NBC News story profiled law grads who went solo. They did so partly in the face of a weak law job market: “since May 2008, the legal services sector has lost about 54,000 jobs, according to seasonally adjusted data from the Bureau of Labor Statistics.” As a result, “the number of recent law graduates going solo increased from 3.5 percent in 2008 to 5.5 percent in 2009, the biggest one year jump since 1982” (citing data from the National Association for Law Placement).

It’s not just the bad job market that’s fueling the startups. The AmEx story reports that Gen Y entrepreneurs take the leap primarily to pursue something they feel passionate about. Armed with that passion, they launch themselves with a characteristic can-do attitude, pushing growth though social media, rewards for repeat customers, and effective use of technology.

The new lawyer entrepreneurs are cut from the same cloth. As one of the lawyers in the NBC News story said:

“I don’t need a big copier, I don’t need a huge support staff to manage all my paperwork and I don’t need an expensive phone system. Basically I just need a laptop and cell phone and I’m off and running.”

Another caters to entrepreneurs like herself, using a virtual office and a secure client log-in system. She says this:

“There have been times when I’ve woken up in the morning and I have new clients. They’ve found me online somehow and I’ve never had any interaction with them, but now they’re my clients. It’s pretty sweet.”

And speaking of can-do attitude, one law school graduate paid off his $108,000 in law school debt in four years. His strategy? “All I had to do was put my life on the line,” he said. Not exactly what you’d normally think of as entrepreneurial, but equally innovative and focused.

Did they learn any of that in law school? We’ll talk about that next time.

To be continued.

Kevin Rhodes is a lawyer in private practice and a registered mentor with the Colorado Supreme Court’s CAMP program. He offers career coaching for lawyers and leads workshops for a variety of audiences, including the CBA’s Solo and Small Firm Section and the Job Search and Career Transitions Support Group. You can email Kevin at kevin@rhodeslaw.com.

Hon. David O. Colver to Retire from Phillips County Court

On Monday, March 17, 2014, the Colorado State Judicial Branch announced the retirement of Hon. David O. Colver of the Phillips County Court bench, effective May 30, 2014. Judge Colver was appointed to the bench in 1980. He also serves as a municipal judge in Holyoke and maintains a private law practice.

Applications are being accepted for the upcoming vacancy on the Phillips County Court bench. Eligible applicants must be qualified electors of Phillips County and must have graduated from high school or achieved the equivalent. Application forms are available from Justice Monica Marquez, the ex officio chair of the Thirteenth Judicial District Nominating Commission, and are also available on the State Judicial website. Applications must be received no later than 4 p.m. on April 9, 2014. Any person wishing to nominate another for the vacancy must submit their nominations no later than 4 p.m. on April 2, 2014.

Click here for more information about the vacancy.

Tenth Circuit: Ongoing Registration Obligations Under Colorado’s Sex Offender Registration Act Do Not Satisfy Jurisdictional Custody Requirement of Habeas Corpus Petitions

The Tenth Circuit Court of Appeals published its opinion in Calhoun v. Colorado Attorney General on Tuesday, March 18, 2014.

Ronald C. Calhoun, a convicted sex offender, appealed the district court’s dismissal of his habeas corpus petition filed under 28 U.S.C. § 2254. The district court held that Calhoun was not “in custody,” as required to invoke the jurisdiction of the federal courts. His probation was terminated on February 2, 2007 and he filed the current habeas petition five years later. Calhoun asserted that he was in custody for the purpose of § 2254 because he must register as a sex offender.

The Tenth Circuit held that “the future threat of incarceration for registrants who fail to comply with the [sex-offender registration] statute[s] is insufficient to satisfy the custody requirement.” The Colorado sex-offender registration requirements Calhoun is subject to are collateral consequences of conviction that do not impose a severe restriction on his freedom. The court agreed with circuits that have uniformly held that the requirement to register under state sex-offender registration statutes does not satisfy § 2254’s condition that the petitioner be “in custody” at the time he files a habeas petition.

Because the district court was without jurisdiction to consider the merits of the petition, the court affirmed its dismissal.

Tenth Circuit: Unpublished Opinions, 3/18/2014

On Tuesday, March 18, 2014, the Tenth Circuit Court of Appeals issued one published opinion and five unpublished opinions.

United States v. Arrowgarp

Smith v. Central Mine Equipment Co.

Tennyson v. Carpenter

Samland v. Doe

Large v. Beckham County District Court

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

HB 14-1229: Allowing Fingerprint-Based Background Checks for Applicants for Marijuana Establishment Licenses

On January 30, 2014, Rep. Elena Kagan and Sen. Michael Johnston introduced HB 14-1229 – Concerning Authorizing Sharing Information Between State and Local Government Agencies Related to Legal MarijuanaThis summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

For retail marijuana licensing purposes, the bill allows a local jurisdiction to submit fingerprints for purposes of conducting a criminal history background check or to acquire a name-based criminal history check if the licensee’s fingerprints are unclassifiable.

The bill passed out of both houses and was sent to Gov. John Hickenlooper on March 12.

The governor signed this bill into law on March 17, 2014.

HB 14-1222: Making Private Activity Bonds More Available for Geothermal Energy Projects on Applicant’s Property

On January 30, 2014, Rep. Mike McLachlin and Sen. Gail Schwartz introduced HB 14-1222 – Concerning Modification of the Terms Under Which a County may Issue Tax-Exempt Private Activity Bonds on Behalf of an Eligible Applicant for the Purpose of Financing a Geothermal Energy Project on the Applicant’s PropertyThis summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

Current law allows a county to issue private activity bonds on behalf of a property owner or group of property owners who do not own an entire cooperative electric association (eligible applicant) for the purpose of constructing, expanding, or upgrading an eligible clean energy project on the eligible applicant’s property. For an eligible clean energy project that is a geothermal energy project only, the bill reduces the minimum amount of private activity bonds that a county may issue for an eligible applicant from $1 million to $500,000, extends the maximum repayment term for bonds from 10 years to 15 years, and allows the bonds to be correlated to the revenue stream of the project up to 75% so long as bond payments do not exceed 75% of project revenue.

The bill passed out of the House on February 24. On March 13, the Senate Agriculture, Natural Resources, & Energy Committee approved the bill and sent it to the Senate floor for consideration on 2nd Reading.

HB 14-1217: Clarifying Legal Rights of a County Regarding Mineral Rights to Real Property

On January 30, 2014, Rep. Bob Rankin introduced HB 14-1217 – Concerning a Clarification of the Legal Rights of a County Government in Connection with Property Owned by a County. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

As introduced, the bill clarifies the legal rights of county governments in connection with real property owned by the county in the following respects:

  • The bill modifies existing statutory provisions pertaining to county powers in connection with the purchase and possession of real and personal property to clarify that the county may own, besides purchasing and holding, such property and expressly specifies that such property includes oil, gas, mineral, and other property interests for county revenue generation and other county government operations, projects, or purposes.
  • The bill clarifies requirements relating to the publication of notice of a sale by the county of mineral rights. The bill clarifies that oil and gas reserved rights are included within the mineral rights that the board of county commissioners (board) may lease for exploration, development, and production purposes. The bill deletes language placing a time limit on a lease of mineral rights by the county and clarifies that leases entered by the board prior to January 1, 2014, are legal and within the board’s authority.
  • The bill clarifies that revenue generation is among the purposes for which the county may lease real estate or other interests and that the board has authority to approve the terms and conditions of such leases. The bill also deletes existing statutory requirements imposing time limits on the length of a lease of oil and gas rights and imposing other conditions on the lease.
  • The bill adds oil, gas, and minerals to modify the word “lands” in the definition of “public projects.” The bill also provides that a public project may be acquired, owned, held, or developed by a county to generate county revenue.
  • Existing statutory provisions hold that certain places designated as public use on a map or plat are the public property of a city or town and that fee title is vested in the city or town. The bill adds counties and city and counties to the list of local governments whose interests are protected under these provisions.
  • The bill eliminates outmoded legal language from an existing statutory provision specifying when a fee simple estate of land is a fee simple estate of inheritance.
  • The bill clarifies that, whenever land is acquired for road, transit, or mass transit purposes, the right to subsurface support of the land surface is deemed to be acquired as well regardless of whether a fee, limited fee, or right-of-way is acquired. This section of the bill also deletes existing statutory language denying a governmental entity the right to acquire certain mineral resources beneath the real property through condemnation under certain circumstances.
  • The bill modifies existing statutory provisions allowing the acquisition by counties of land for highways including by means of condemnation to specify that nothing in these provisions modifies or restricts the powers or authority conferred on counties or the board with respect to county roads or revenue generation. The bill addresses existing statutory provisions governing the declaration of certain land as public highways. The bill specifies that public highways include all lands dedicated to public use by deed conveying a fee simple, limited fee, easement, or right-of-way, filed with the county clerk and recorder of the county in which the land is located, when the dedication has been accepted by the board and board has approved the surface of the land for use as a public road. The bill goes on to clarify that the fee or other estate conveyed from the grantor to the grantee is conclusively established by the language in the deed of conveyance that is pre-printed or inserted by the grantor or the grantee. The bill also clarifies that roads include certain strips of land, and that the acquiring government also owns in fee simple mineral rights under such strips of land.

On March 6, the Local Government Committee amended the bill and laid it over for a final vote.

HB 14-1215: Prohibits Receivers from Avoiding Obligations Regarding Collateral Under a Security Agreement

On January 30, 2014, Rep. Joann Ginal and Sen. Lois Tochtrop introduced HB 14-1215 – Concerning the Ability of a Federal Home Loan Bank to Enforce its Rights with Regard to Collateral Subject to a Security Agreement. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

In statutes governing the disposition of the assets of insolvent insurers, the bill generally prohibits a receiver or liquidator from avoiding the obligations of the insolvent insurer to a federal home loan bank with respect to collateral under a security agreement or related agreement to which the bank is a party. The bill passed out of both houses and was sent to Gov. John Hickenlooper on March 14.

HB 14-1214: Increasing Penalties for Crimes Against Emergency Medical Service Personnel

On January 30, 2014, Rep. Cheri Gerou and Sen. David Balmer introduced HB 14-1214 – Concerning an Increase in the Penalties for Certain Offenses Committed Against an Emergency Medical Service ProviderThis summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill increase the penalties for assault in the first degree, assault in the second degree, and murder in the first degree against an emergency medical service provider if the victim was engaged in the performance of his or her official duties and the offender knew or reasonably should have known that the victim was an emergency medical service provider.

The bill requires a court to sentence a person to the department of corrections if the person is convicted of assault in the first degree or assault in the second degree against an emergency medical service provider.

The bill lists the intentional killing of an emergency medical service provider engaged in the performance of his or her official duties as an aggravating factor for class 1 felonies.

The bill defines emergency medical service provider. The bill makes conforming amendments.

On February 11, the Judiciary Committee approved the bill and sent it the Appropriations Committee.

U.S. Supreme Court Rules Private Contractors and Subcontractors Are Covered By SOX Whistleblower Protections

CoburnSuttleRiordanBy Bob Riordan, Brett E. Coburn, and Brooks A. Suttle

On March 4, 2014, the U.S. Supreme Court issued its decision in Lawson v. FMR LLC,[1] addressing for the first time the whistleblower provision of Section 806 of the Sarbanes-Oxley Act (SOX), which provided in relevant part:

No [public] company . . . or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of [whistleblowing or other protected activity].[2]

While it is clear from the statutory language that a private contractor or subcontractor of a public company cannot engage in retaliatory actions against an employee, courts have divided on whether “an employee” refers only to the public, SOX-reporting company’s employees, or also protects employees of the private contractor or subcontractor from retaliation.

In Lawson, the U.S. Court of Appeals for the First Circuit took the former view, holding that the meaning of “employee” in Section 806 is unambiguous, and that employees of privately-held companies are not covered by SOX’s whistleblower protections regardless of who their employer contracts with.[3] In a 6-3 split decision, however, the high court reversed and remanded the First Circuit’s decision, finding instead that SOX’s anti-retaliation provision also covers employees of private contractors and subcontractors that are hired by public companies covered by the law. In so doing, the Court significantly expanded SOX’s whistleblower protections to give the law what appears to be, in the words of Justice Sotomayor’s dissent, a “stunning reach.”

The plaintiffs in Lawson were two former employees of private companies that contracted to advise and manage mutual funds, which had no employees and are covered by SOX as companies required to make certain regulatory filings. After they were allegedly retaliated against for attempting to report a purported fraud related to mutual funds, the plaintiffs brought a whistleblower claim against their former employers under Section 806. The defendants’ motion to dismiss was initially denied by the District Court, but the First Circuit reversed the decision and found that dismissal was appropriate because Section 806 did not protect the plaintiffs as employees of private companies.

On appeal, the Supreme Court examined the text of the statute, the context in which it was enacted, and its legislative history. Writing for the majority, Justice Ruth Bader Ginsburg wrote with regard to statutory text that the language of Section 806 is unambiguous, and contains “numerous indicators that the statute’s prohibitions govern the relationship between a contractor and its own employees.”[4] With regard to legislative intent, Justice Ginsburg likewise found that Section 806 was enacted “to encourage whistleblowing by contractor employees who suspect fraud involving the public companies with whom they work.”[5] Justice Ginsberg was joined in the majority by Chief Justice Roberts, and Justices Breyer and Kagan. Justices Scalia penned a separate opinion, joined by Justice Thomas, concurring in the ruling but criticizing the majority’s focus on legislative intent and comparisons to other whistleblower laws.

In a strongly worded dissent in which she was joined by Justices Kennedy and Alito, Justice Sotomayor wrote that the majority’s opinion gave the SOX whistleblower laws a “stunning reach” that could lead to “absurd results,” and that “nothing in the text, context, or purpose of the Sarbanes-Oxley Act suggests that Congress actually wanted to do so.”[6] Finding that the statutory text is ambiguous, and that Congress intended a narrow reading of Section 806 that excluded employees of private companies, Justice Sotomayor dissented that whatever “laudatory purpose” the majority’s interpretation of the whistleblower law might serve, “that is not the statute Congress wrote.”[7]

The dissent notwithstanding, the Court’s decision is now the law of the land, and will likely remain so unless and until Congress acts to overturn the majority’s interpretation of Section 806. While the majority was dismissive of any “floodgate-opening concerns” about a potential deluge of new whistleblower litigation,[8] there is no question that the number of employees covered by SOX’s whistleblower provisions has been enormously expanded by the Court’s ruling. As such, many private employers who have become accustomed to thinking of themselves as outside the scope of SOX’s whistleblower provisions will need to reevaluate their practices and procedures in light of Lawson, and take steps to minimize the potential for whistleblower claims. Such steps can include, among other things, changes to the company’s training programs, employee documentation and record-keeping procedures, and internal policies governing the discipline process and the permissible grounds for taking adverse action against an employee.

At a minimum, private companies who contract to do business with public companies should seek the assistance of counsel to conduct a thorough review of their internal control and compliance procedures, in addition to modifying their anti-retaliation policies as needed. Companies should also conduct training on what is and is not permissible given SOX’s whistleblower provisions, and make it clear that knee-jerk firings and other adverse actions must be avoided when an employee reports fraud or other misconduct covered by SOX, whether allegedly occurring at the public company or at the contractor-employer. Likewise, public companies need to recognize that they may now be found liable not only for retaliation against their own employees who report SOX violations, but also for retaliatory acts conducted by agents of the public company against the employees of its private contractors and subcontractors. Public company employers thus may also need to reconsider their SOX reporting and anti-retaliation policies in light of the fact that Lawson greatly expanded the pool of potential whistleblower claimants.

As a final note on Lawson, it is worth noting that the Supreme Court chose not to weigh in on another important issue recognized in the case – the extent to which a prior decision by the Department of Labor’s (“DOL”) Administrative Review Board’s (“ARB”) was entitled to deference by the Court. Several months after the First Circuit’s decision in Lawson, the ARB came to the opposite conclusion in Spinner v. David Landau & Associates, LLC.[9] In that case, the ARB held that the meaning of “employee” in Section 806 was ambiguous, and therefore the ARB did not have to follow the First Circuit’s ruling. Instead, the ARB sought to expand SOX’s reach in holding that Section 806 applied to employees of privately-held companies if they had contracts with publicly-traded companies.[10]

Thus, when the Supreme Court agreed to hear Lawson, many observers hoped that the Court would use it as an opportunity to decide the proper level of deference that courts should give to the ARB’s construction of SOX. The Court, however, essentially passed on the issue, simply noting in a footnote that “[b]ecause we agree with the ARB’s conclusion that [Section 806] affords protection to a contractor’s employees, we need not decide what weight that conclusion should carry.”[11] But while the deference issue was left unanswered, the Court’s Lawson decision will almost certainly have a large impact in the arena of SOX whistleblower litigation. At the very least, it has given both public company and private company employers plenty to consider in ensuring that they are in compliance with SOX’s anti-retaliation laws.

Brett Coburn is a partner who concentrates his practice on employment litigation and counseling. His litigation experience includes gender, race, age and disability discrimination suits under Title VII, the ADEA and the ADA, as well as FLSA wage and hour claims and FMLA interference and retaliation claims. His experience also includes the defense of collective actions under the FLSA and ADEA. He has litigated cases involving misappropriation of trade secrets, breach of employment contracts, violation of non-competition and other restrictive covenants, defamation, breach of employee duties, tortious interference and related customer and employee raiding claims.

Brooks Suttle is an associate in the firm’s Labor & Employment Group. Brooks received his J.D., with honors, from Emory University School of Law, where he was elected to the Order of the Coif. While at Emory, he served as the executive symposium editor for the Emory Law Journal, where he was responsible for planning and organizing the 2012 Randolph W. Thrower Symposium, “Innovation for the Modern Era: Law, Policy, and Legal Practice in a Changing World.” He also received the 2011 Myron Penn Laughlin Award for Excellence in Legal Research and Writing for his journal comment: “Reframing Professionalism: An Integral Approach to Lawyering’s Lofty Ideals.”

Bob Riordan is a litigator who focuses on disputes relating to employment, business torts, unfair competition and commercial transactions. He regularly represents clients in both federal and state courts, as well as various agencies and arbitral forums. He has appeared in trial and appellate courts throughout the country, and has been recognized for his achievements in Best Lawyers in AmericaChambers USA: America’s Leading Lawyers for Business, Georgia Trend’s Legal Elite, PLC Which Lawyer? and Super Lawyers magazine. Mr. Riordan has extensive experience in defending wage disputes brought on a mass and class basis as well as whistleblower claims. He also regularly defends companies against claims of all varieties of discrimination and retaliation, as well as claims relating to the law of public accommodation, tortious interference, breach of fiduciary and other duties, theft of trade secrets and similar matters. In addition, Mr. Riordan often litigates contract disputes, including earn-out and other claims tied to business combinations.

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.

 


[1] 571 U.S. ___ (March 4, 2014).

[2] 18 U.S.C. § 1514A(a) (2006 ed.) (emphasis added).

[3] See Lawson v. FMR, LLC, 670 F.3d 61 (1st Cir. 2012).

[4] Slip op. at 16.

[5] Id. at 19. Despite Justice Ginsburg’s observation, the rule of Lawson extends to reports of alleged misconduct committed by both the public company and the employer-contractor. Indeed, as pointed out in the dissent, under the majority’s holding, the employer-contractor’s alleged misconduct may have nothing to do with the contract between the employer-contractor and the public company.

[6] Id. at 2 (Sotomayor, dissenting).

[7] Id. at 20.

[8] Slip op. at 22.

[9] ARB Nos. 10-111, 10-115 (May 31, 2012).

[10] For its part, the First Circuit noted in its decision that, because the statute was unambiguous, the court owed no so-called Chevron deference to any contrary agency determinations. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) (holding that agency interpretations of ambiguous statutes will be upheld so long as they are reasonable, but where a statute is unambiguous, the courts as well as the administrative agencies must give effect to its clear meaning).

[11] Slip op. at 9 n.6. The dissent in Lawson argues that the majority in fact declined deference by not endorsing all of the ARB’s holding in Spinner. Slip op. at 17 n.11.

Honorable Carolyn B. McHugh Appointed to Tenth Circuit Court of Appeals

The Honorable Carolyn B. McHugh has been appointed to the United States Court of Appeals for the Tenth Circuit. President Obama nominated Judge McHugh on May 16, 2013, and renominated her on January 16, 2014. Judge McHugh’s nomination was confirmed by the Senate on March 12, 2014. Tenth Circuit Court of Appeals Judge Scott M. Matheson, Jr. administered the oath of office March 17th in Salt Lake City, Utah.

Judge McHugh practiced law in civil litigation at Kimball Parr Waddoups Brown & Gee (currently Parr Brown Gee & Loveless), where she eventually became a shareholder. She was appointed to the Utah Court of Appeals in August 2005, where she most recently served as the presiding judge. Judge McHugh will have her primary chambers in Salt Lake City.

Click here for the announcement from the Tenth Circuit Court of Appeals.

Colorado Supreme Court: Outcome-Determinative Test Mandatory in Determining if Criminal Conviction Should Be Overturned Based on Peremptory Challenges

The Colorado Supreme Court issued its opinion in People v. Alfaro on Monday, March 17, 2014.

Criminal Law—Jury.

The People petitioned for review of the court of appeals’ judgment in People v. Alfaro, No. 06CA314 (Colo.App. May 12, 2011) (not published pursuant to CAR 35(f)), which reversed defendant’s various convictions for murder, burglary, and attempted kidnapping. On direct appeal, the court of appeals found that the trial court erred by allowing defendant fewer peremptory challenges than authorized by statute and rule. Although defendant failed to object to the trial court’s interpretation of the applicable statute, the court of appeals found that the trial court’s error rose to the level of plain error, and ordered defendant’s convictions reversed and his sentences vacated.

The Supreme Court reversed the court of appeals’ judgment. The Court found that the court of appeals did not apply the outcome-determinative standard, which the Court’s holding in People v. Novotny, 2014 CO 18, makes mandatory for good-faith errors impairing a defendant’s capacity to shape the jury through peremptory challenges.

Summary and full case available here.