May 21, 2019

Archives for July 31, 2015

New Crowdfunding Rules Released by Division of Securities

The Colorado Crowdfunding Act, HB 15-1246, was signed into law by Governor Hickenlooper on April 13, 2015, with an effective date of August 5, 2015. The goal of the Act was to increase equity opportunities for Colorado start-ups by creating a crowdfunding option with limitations to protect investors. The Act required the Securities Commissioner to promulgate rules and regulations in order to protect small businesses and investors.

The Colorado Department of Regulatory Agencies’ Division of Securities released comprehensive new crowdfunding rules on Thursday, July 30, 2015. The regulations are available here. The Division of Securities also issued guidelines about the new rules, noting that before a business can take advantage of the new crowdfunding rules it must file various forms with the Division of Securities; there are limits to how much money can be raised and how much individual investors can contribute; and all aspects of the transaction must take place between Colorado residents. The Division’s guidelines are available here.

Tenth Circuit: District Court Abused Discretion by Rejecting Plea Bargain Based on Appeal Waiver

The Tenth Circuit Court of Appeals issued its opinion in United States v. Vanderwerff on Wednesday, June 10, 2015.

Timothy Vanderwerff was indicted in the District of Colorado on three child pornography-related counts: Count 1 charged him with receipt of child pornography and Counts 2 and 3 charged him with possession. Vanderwerff entered into a plea agreement with the government wherein he would plead guilty to Count 2, which carried a statutory sentencing range of zero to ten years, in exchange for dismissal of Counts 1 and 3. The plea agreement contained an appeal waiver. The district court rejected the plea agreement, citing a “tectonic shift” in jurisprudence following the Supreme Court’s decision in Lafler v. Cooper which suggested the court should be a participant in the plea bargaining process. The district court also relied on United States v. Booker to support its finding that sentencing requires a court to consider context and apply criteria instead of performing mechanical judgment. The district court suggested that some of the judges on the Tenth Circuit were not “paying attention to their obligations” in reviewing lower court decisions. The district court rejected the proposed plea agreement.

Vanderwerff sought review of the district court’s rejection of the first plea agreement, but the Tenth Circuit determined it lacked jurisdiction because the issues were premature. The parties then negotiated a new plea agreement, wherein Vanderwerff would plead guilty to Count 1 in exchange for dismissal of Counts 2 and 3. Notably, the new plea agreement did not contain an appeal waiver. The statutory sentencing range for Count 1 was five to twenty years’ imprisonment. The district court sentenced Vanderwerff to 108 months’ imprisonment, and Vanderwerff timely appealed.

On appeal, the government agreed that the district court abused its discretion in rejecting the first plea agreement. The Tenth Circuit appointed pro bono amicus counsel to independently assess the legal propriety of the district court’s sentence decision. The amicus also agreed that the district court abused its discretion. The Tenth Circuit similarly concluded the district court abused its discretion in rejecting the plea agreement based on the appeal waiver, since its decision was premised on legally erroneous and irrelevant considerations. The Tenth Circuit opined that the district court’s reading of Lafler as a basis for rejecting the plea agreement evinced a serious misunderstanding of the case. The Tenth Circuit did not read Lafler to introduce a new role for the judiciary in the plea bargaining process.

The Tenth Circuit also disagreed with the district court’s interpretation of Booker, finding nothing in the case to suggest that district courts were obligated to exercise a wider scope of discretion in evaluating plea agreements. The Tenth Circuit noted the core holding of Booker was that the Guidelines are advisory, and found the district court seriously misconstrued Booker‘s mandate, constituting an abuse of discretion. In fact, the Tenth Circuit found nothing in Booker that spoke to appellate waivers at all, much less anything that allowed the district court to restrict a defendant’s ability to knowingly and voluntarily waive his or her appellate rights.

Finally, the Tenth Circuit disapproved of the district court’s use of the § 3553(a) factors as a basis for its rejection of the appeal waiver. The Tenth Circuit found the court committed serious error by applying the sentencing factors to the entry of guilt phase. The Tenth Circuit also did not appreciate the suggestion that it was not paying attention to its obligations to review the decisions of district court judges, and noted that it had its responsibilities firmly in hand. The Tenth Circuit found that plea bargaining was strongly favored and the appellate waiver was an important bargaining tool for a defendant.

The district court’s judgment was reversed and remanded. Judge Hartz separately concurred.

Tenth Circuit: No Fundamental Right Exists to Limitless Taxation in Order to Fund Education

The Tenth Circuit Court of Appeals issued its opinion in Petrella v. Brownback on Monday, June 1, 2015.

Plaintiffs, parents of students in the relatively wealthy Shawnee Mission School District (SMSD) in Kansas, sued various Kansas officials in U.S. District Court in 2010, seeking to enjoin enforcement of Kansas’ cap on local property taxes for education. The district court dismissed their suit for lack of standing, but the Tenth Circuit reversed in an opinion limited to the sole issue of standing. The district court dismissed Plaintiffs’ claims that the tax cap is subject to heightened scrutiny but allowed the rational basis claims to proceed. Plaintiffs filed a motion to reconsider and a notice of appeal. When the district court denied the motion for reconsideration, plaintiffs again appealed. The Tenth Circuit consolidated the appeals.

Plaintiffs sought relief as to four district court rulings: (1) the denial of Plaintiffs’ motion for a preliminary injunction; (2) denial of Plaintiffs’ motion for summary judgment; (3) partial grant of Defendants’ motion to dismiss; and (4) denial of Plaintiffs’ motion for reconsideration. First addressing jurisdiction, the Tenth Circuit found it lacked jurisdiction to consider the denial of Plaintiffs’ motion for summary judgment. Next, the Tenth Circuit considered whether Plaintiffs’ claims were moot because of subsequent amendments to Kansas’ school financing system, and found they were not, since the slight increases to the budget cap did not ameliorate their claims that the cap burdened their constitutional rights. The Tenth Circuit proceeded to address the merits of Plaintiffs’ claims.

The district court concluded Plaintiffs were unlikely to prevail on their claims that the budget cap violated their First Amendment rights, burdens their fundamental rights, imposes an unconstitutional condition, and denies them equal protection. The Tenth Circuit agreed. Plaintiffs argued the budget cap violated their First Amendment rights because education is speech and the budget cap burdens education, therefore the budget cap burdens speech. The Tenth Circuit found each premise seriously flawed, and noted that no court has recognized that a limit on public funding for education constitutes a limit on speech. Plaintiffs argued the budget cap limits their free association rights because it prevents them from coming together as a community to vote to raise property taxes for education at the district level. However, the Tenth Circuit found that there is no First Amendment right to a voter initiative, and Plaintiffs were free to raise funds for the school district privately, which they did.

As to Plaintiffs’ argument that the cap violates their civil liberties, the Tenth Circuit found there is no fundamental right to tax one’s neighbors without limitation in order to fund education. Plaintiffs also argued the cap undermines their right to direct the education of their children, but the Tenth Circuit reiterated that there is no fundamental liberty interest in setting public policy for public education funding, and the cap only prevents Plaintiffs from compelling their neighbors to vote on a tax increase. As to Plaintiffs’ argument that the cap burdens their fundamental voting rights, the Tenth Circuit again disagreed, finding that precedential case law only scrutinized who may be subject to voting restrictions, not which topics may be restricted.

The Tenth Circuit similarly dismissed Plaintiffs’ argument that the cap should be reviewed under heightened scrutiny because it denies them equal protection of the law in a base desire to harm them, holding that wealth, or residence in a wealthy school district, is not a suspect class subject to heightened scrutiny. The district court dismissed Plaintiffs’ various claims that the budget cap should be reviewed under heightened scrutiny, and the Tenth Circuit affirmed this dismissal.

The Tenth Circuit dismissed Plaintiffs’ challenge to the district court’s denial of summary judgment, and otherwise affirmed and remanded for further proceedings.

Tenth Circuit: Unpublished Opinions, 7/30/2015

On Thursday, July 30, 2015, the Tenth Circuit Court of Appeals issued one published opinion and nine unpublished opinions.

Janczak v. Tulsa Winch, Inc.

Landmark American Insurance Co. v. VO Remarketing Corp.

Carlson v. Pryor

United States v. Chisholm

Peterson v. Timme

In re Harth: Tal v. Harth

Villanueva v. Frawner

United States v. Charre

United States v. Cervantes

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