August 20, 2019

Archives for February 11, 2015

The Future of Law (Part Five): The Democratization of the Law (Cont’d.)

rhodesWe’ve looked at the ethos of the legal profession before. Here’s that definition again:

Ethos: the characteristic spirit of a culture, era, or community
as manifested in its beliefs and aspirations.

Democratization has its own ethos. Its characteristic spirit is a popularized impatience, a marketplace riot in which “power to the people” pushes aside the traditional gatekeepers (lawyers) of specialized knowledge (the law). We looked last time at some of the beliefs and aspirations undergirding the democratization of knowledge, and the kinds of philosophical debate they generate.

It’s one thing when lawyers take the law in directions we didn’t anticipate (like what happened when RICO and HIPAA drifted from their originally intended moorings); it’s quite another when consumers and non-lawyers do that. (HIPAA’s original intent: “to make it easier for people to keep health insurance, protect the confidentiality and security of healthcare information and help the healthcare industry control administrative costs.” RICO’s intent: to provide for criminal and civil redress “for acts performed as part of an ongoing criminal organization.”)

The law might have seen it coming. Democratization often creates high leverage events that seem sudden — e.g., the Arab Spring — but there’s usually a backstory of chronic popular discontent stonewalled by those in power, until one day enough is enough and the trend busts through.

In the case of law, a significant component of the backstory was chronic consumer dissatisfaction. For example, clients have been unhappy with hourly billing (and other fee practices) for a long time. (Billable hours are no picnic for lawyers, either.) Or consider the well-documented client dissatisfaction with the litigation process: e.g., this 2002 article about “just how pernicious litigation is for the average non-repeat player,” or this 2008 article about the problems judges face when litigants represent themselves. The latter notes that “These trends present real and significant challenges to a legal system designed for representation by trained advocates.” That pretty well sums up democratization’s impact on the law.

This week’s prediction: the legal democratization megatrend will spawn several powerful derivative trends that will erode the ethos of the law and the legal profession, in favor of a push to outcomes unencumbered by traditional legal process. For example, we can expect:

  • A break from reliance on the sacrosanct cornerstone of precedential appellate authority in legal decision-making.
  • Non-traditional practitioners executing transactions without what we would consider adequate contractual consideration, and resolving disputes without regard to historical evidentiary strictures (who cares about — or for that matter understands — hearsay anyway?).
  • Along the way, we’ll witness the continued diminution of the economic value of the knowledge base and skillset traditionally learned in law school and developed in the early years of law practice.

There will be other derivative trends as well; each will have gentler and more extreme versions. We’ll look at some of those in coming posts. Meanwhile, the debate about who can practice law better — the experts, or the empowered people — will rage on, mostly in vain. Democratization is a juggernaut that already can’t be stopped, and — in the law anyway — it doesn’t even have a full head of steam yet.

Kevin Rhodes has been a lawyer for nearly 30 years, in firms large and small, and in solo practice. Years ago he left his law practice to start a creative venture, and his reflections on exiting the law practice appeared in an article in the August 2014 issue of The Colorado Lawyer. His free ebook, Life Beyond Reason: A Memoir of Mania, chronicles his misadventures in leaving the law, and the lessons he learned about personal growth and transformation, which are the foundation of much of what he writes about here.

A collection of Kevin’s blog posts, Enlightenment, Apocalypse, and Other States of Mind, is now available as an ebook. Click the book title to sample and download it from the distributor’s webpage. It’s also available on from Barnes & Noble, iTunes, Amazon, and Scribd. The collection includes Forewords from Debra Austin, author of the Killing Them Softly law journal article which has been featured here, and from Ron Sandgrund, author of The Colorado Lawyer article mentioned above.

You can email Kevin at

Tenth Circuit: Under Particular Circumstances, Officers Justified in Taking Protective Custody of Seemingly Intoxicated Individual

The Tenth Circuit Court of Appeals issued its opinion in United States v. Gilmore on Friday, January 16, 2015.

In January 2013, National Western Stock Show workers alerted police to the presence of a disoriented and seemingly intoxicated man, Andre Gilmore, wandering near cattle tie-ins in an exhibitor parking lot at the Stock Show. The responding officers parked near Mr. Gilmore, exited their vehicle, and began walking toward him. Mr. Gilmore did not appear to notice the police officers until they spoke to him. When the officers asked if he was alright and what he was doing in the area, Mr. Gilmore did not respond. One of the uniformed officers identified himself a police officer and asked again, and Mr. Gilmore mumbled an incoherent answer. The officers determined that Mr. Gilmore was highly intoxicated and was a candidate for protective custody. They conducted a pat-down search of Mr. Gilmore and found a handgun tucked into his waistband. The officers arrested him for possessing a firearm while intoxicated in violation of C.R.S. 18-12-106(d) and drove him to the Stock Show security office. Mr. Gilmore was in and out of consciousness during this time, but he managed to provide his name and birthdate to one of the officers, who used the information to access his criminal history. They discovered he had a prior felony conviction that prohibited him from possessing a firearm, and a federal grand jury eventually charged Mr. Gilmore with one count of being a felon in possession.

Before trial, Mr. Gilmore filed a motion to suppress the gun seized during the pat-down search, arguing the officers lacked reasonable suspicion to believe he was armed and dangerous. The district court held an evidentiary hearing and determined that although the evidence did not support a reasonable suspicion that Mr. Gilmore was armed and dangerous, the police had probable cause to take Mr. Gilmore into protective custody for detoxification, and as such were justified in conducting a pat-down search before taking him into custody. After the evidentiary hearing, Mr. Gilmore signed a conditional plea agreement, reserving the right to appeal the denial of his motion to suppress. He was sentenced to 28 months in prison and timely appealed.

On appeal, Mr. Gilmore argued the district court erred in concluding the officers had probable cause to believe he was a danger to himself based on (1) his intoxication, (2) the dangerousness of the surrounding area, and (3) the danger posed by the cold weather. He conceded that if the officers had probable cause to believe he was a danger to himself, they were justified in conducting the pat-down search.

Mr. Gilmore contended that there was no evidence of his intoxication other than witness testimony that he appeared intoxicated, since there was no blood or breath analysis for alcohol intoxication. However, examining the totality of the circumstances, the Tenth Circuit found the officers were justified in finding Mr. Gilmore was a threat to himself or others due to his intoxication. His behavior suggested that he was disoriented and under the influence of alcohol or drugs, he did not initially react to the presence of the uniformed officers, and his reaction times were impaired.

Mr. Gilmore next argued that the government offered no evidence that the Stock Show was dangerous. However, officers testified that there was significant gang activity in the surrounding areas, and a disoriented person carrying a briefcase would be at risk for harm. Additionally, there were busy streets nearby, and Mr. Gilmore was at risk for wandering into traffic in his disoriented state.

As to Mr. Gilmore’s claims that he was dressed appropriately for the weather, the Tenth Circuit found evidence to support an inference that he would not have been appropriately dressed if he had passed out and been subjected to the day’s low temperature of -10 degrees Fahrenheit.

The Tenth Circuit affirmed the district court, concluding the officers had reasonable suspicion to believe Mr. Gilmore was a danger to himself because of his apparent intoxication in an environment that posed significant risks. The Tenth Circuit stressed that its finding was fact-specific and narrow, and that officers must have probable cause to take a person into protective custody.

Tenth Circuit: Unpublished Opinions, 2/11/2015

On Wednesday, February 11, 2015, the Tenth Circuit Court of Appeals issued no published opinion and five unpublished opinions.

United States v. Reed

VanLandingham v. Grand Junction Regional Airport Authority

Avington v. Metropolitan Tulsa Urban League

Diaz v. Lampela

United States v. Zaler

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

Colorado Supreme Court: Entity that was Non-Existent when Contractual Duty Created Still May Be Subject to Interrelated Contracts Doctrine

The Colorado Supreme Court issued its opinion in S K Peightal Engineers, Ltd. v. Mid Valley Real Estate Solutions V, LLC on Monday, February 9, 2015.

Economic Loss Rule—Interrelated Contracts Doctrine.

In this civil case, the Supreme Court considered: (1) whether entities that did not exist at the time the relevant contracts were completed can still be subject to the economic loss rule through the interrelated contracts doctrine; and (2) whether commercial entities situated similarly to respondent, which was a third-party beneficiary to a contract that interrelated to the contract by which the home at issue was built, are among the class of plaintiffs entitled to the protections of the independent tort duty to act without negligence owed by construction professionals to subsequent homeowners when constructing residential homes. The Court held that (1) the fact that an entity was nonexistent at the time the relevant contracts were completed does not alter the analysis under the interrelated contracts doctrine; and (2) the independent duty at issue does not apply here because, as a third-party beneficiary of a commercially negotiated contract that interrelates to the contract under which the home was built, respondent cannot properly be considered a subsequent homeowner. The judgment was reversed and the case was remanded to the court of appeals to return to the trial court for further proceedings consistent with this opinion.

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

Colorado Supreme Court: Issue Preclusion Does Not Bar Inquiry Into Post-Decree Historical Consumptive Use of Water Right

The Colorado Supreme Court issued its opinion in Concerning the Application for Water Rights of Sedalia Water and Sanitation District in Douglas County: Wolfe v. Sedalia Water and Sanitation District on Monday, February 9, 2015.

Historical Beneficial Consumptive Use Calculation—Change of Water Right and Augmentation Plan Decree—Claim and Issue Preclusion—Prolonged Unjustified Period of Nonuse.

The Supreme Court examined whether, in a successive change of the Stephan Sump No.1/Ball Ditch water right, its historical use based on average annual historical use in Case No. 83CW364 should be re-quantified to take into account twenty-four years of nonuse. The Court affirmed the water court’s determination that issue preclusion applies here to bar the State and Division Engineers from contesting the amount of historical beneficial consumptive use allocated to the Stephan Sump No.1/Ball Ditch water right for the 1872 to 1986 period. It reversed the water court’s ruling applying issue preclusion to the post-decree period following entry of the 1986 decree. The Court directed that, on remand from this decision in finalizing its decree, the water court should take any evidence and legal argument offered by the parties on the issue of the alleged period of post-1986 nonuse. If the water court finds there has been prolonged unjustified nonuse of the water right between entry of the prior change decree and the pending decree application, it may conclude that this constitutes a changed circumstance calling for the selection of a revised representative period of time for calculating the annual average annual consumptive use amount available for Sedalia Water and Sanitation District’s change of water right and augmentation decree.

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

Colorado Supreme Court: Totality of Circumstances Instructive in Determining Voluntariness of Consent to Search

The Colorado Supreme Court issued its opinion in People v. Munoz-Gutierrez on Monday, February 9, 2015.

Suppression of Evidence—Voluntariness and Coercion.

In this interlocutory appeal, the People sought review of the trial court’s order suppressing marijuana that the police discovered in a car registered to and driven by defendant. The trial court found that the People did not establish that defendant voluntarily consented to the search of his car. The Supreme Court determined that the trial court applied the wrong standard and held that defendant voluntarily consented to the search when he gave oral consent. Under the totality of the circumstances, the police’s conduct did not overbear defendant’s exercise of free will. Specifically, it was not sufficiently coercive or deceptive to a person with defendant’s characteristics in his circumstances. Accordingly, the Court reversed the trial court’s suppression order and remanded the matter to the trial court.

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

Tenth Circuit: PSLRA Requires Showing of Intent to Deceive, Defraud, or Manipulate In Order to Prove Scienter

The Tenth Circuit Court of Appeals issued its opinion in In re Gold Resource Corp. Securities Litigation: Banker v. Gold Resource Corp. on Friday, January 16, 2015.

Gold Resource Corporation (GRC) is a publicly traded Colorado corporation engaged in mining for gold, silver, and other minerals in Mexico. At one of its mines, the El Aguila property, GRC began stockpiling ore and developed an aggressive business plan calling for increased mining activities. GRC had a single buyer for its mining products from the El Aguila property. GRC issued a press release in January 2012, announcing “record” production at the El Aguila facility and predicting continued growth and success. GRC issued several other press releases and filings with the SEC documenting “record” production and growth.

GRC first announced production problems at the El Aguila facility on July 19, 2012, admitting its second quarter production was lower than expected due to several factors. It lowered its production outlook by 15 percent, causing stock values to plummet. GRC announced its third quarter results in an October 2012 press release, notifying investors that production was lower still than expected. In November 2012, GRC issued a press release announcing that settlement of its billing dispute with its single buyer required restatement of the already-reported financial results. It submitted a Form 8-K to the SEC explaining that executive management became aware of significant variances between GRC’s assays and those of the buyer in the third quarter of 2012, but that GRC believed those discrepancies were remedied as of September 30, 2012.

Nitesh Banker and others, investors, brought suit against GRC, alleging violation of § 10(b) of the Securities Exchange Act. Investors asserted that by September 30 at the latest, GRC was aware of serious problems with its accounting control, and therefore misled investors with its first and second quarter financial reportings. Investors also alleged that two statements in the January 30, 2012, press release were materially misleading, because GRC was aware of significant production problems but failed to report them, and because the statement about continuing on the trajectory of projected growth did not prove to be accurate. The district court dismissed the complaint with prejudice, finding plaintiff investors failed to meet the heightened scienter requirement required by the Private Securities Litigation Reform Act (PSLRA). Plaintiffs appealed.

The Tenth Circuit first examined the requirements for properly stating a claim for securities fraud, and the heightened pleading requirements for the untrue statement and scienter requirements under the PSLRA. The PSLRA requires that plaintiffs must show with particularity a mental state involving intent to deceive, manipulate, or defraud, in order to prove the scienter requirement.

First addressing plaintiffs’ allegations of scienter because of the misstatement of first and second quarter profits, the Tenth Circuit found no wrongdoing by GRC. The Tenth Circuit found other plausible inferences in GRC’s accounting misstatements and SOX miscertifications, including that employees in Oaxaca did not immediately tell executive management in Denver about the variances because they thought buyer’s figures were wrong, and it was prudent of the management to investigate the variances before confirming the discrepancy publicly. Addressing the accounting practices, the Tenth Circuit found no recklessness where GRC recognized as income the amount buyer agreed to pay, rather than the amount buyer eventually did pay, since that was the contractual agreement between GRC and the buyer. The Tenth Circuit similarly dismissed plaintiffs’ remaining assertions of scienter, finding instead that at most the conduct constituted negligence, and defendants’ explanation offered a plausible alternative. The defendants had every right not to disclose the variances before the matter was investigated and resolved.

As for the production problems, the Tenth Circuit accepted defendants’ explanations for encountering difficulties as a plausible reason to produce less ore than originally expected. The risks of the mining business were set forth in the cautionary statements issued to investors, and encountering the risks did not rise to the level of scienter.

The Tenth Circuit affirmed the district court’s dismissal of plaintiffs’ claims with prejudice. The Tenth Circuit also concluded the district court did not abuse its discretion by failing to allow plaintiff to amend its complaint and in denying its motion to strike.

Tenth Circuit: Unpublished Opinions, 2/10/2015

On Tuesday, February 10, 2015, the Tenth Circuit Court of Appeals issued three published opinions and two unpublished opinions.

Yeager v. Fort Knox Security Products

Morgan v. Tomlinson

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