Vol. 32, No. 7
From the Courts
U.S. Court of Appeals for the Tenth Circuit
Tenth Circuit Summaries
Summaries of selected opinions appear on a space-available basis. The summaries are prepared for the Colorado Bar Association by Jenine Jensen and Catherine Campbell, licensed Colorado attorneys. The summaries of the U.S. Court of Appeals for the Tenth Circuit are provided as a service by the Colorado Bar Association and are not the official language of the Court. The Colorado Bar Association cannot guarantee the accuracy or completeness of the summaries.
Full copies of the Tenth Circuit decisions are available on the CBA website at http: //www.cobar.org/hotlinks.cfm (United States Courts link to the Tenth Circuit). Call The Colorado Lawyer Editorial Offices with questions: (303) 860-1118.
Truth in Lending Act—Mortgage Broker Not "Creditor"—Litigant Must Preserve and Support Appellate Arguments
Robey-Harcourt v. Bencorp Fin. Co., No. 02-6259, 4/15/03, W.D. Okla., Judge O’Brien.
Plaintiff entered into a contract with defendant whereby defendant would use its best efforts to obtain a mortgage loan for her. The contract specifically stated that defendant could not make loans or guarantee the acceptance of a loan. After failing to receive the loan she wanted, plaintiff sued defendant, alleging violation of the federal Truth in Lending Act ("TILA"). The district court granted summary judgment to defendant because it was not a creditor and could not be held accountable under the Act.
The Tenth Circuit Court holds that TILA did not apply to defendant because it was licensed as a mortgage broker, and TILA applies only to "creditors." The Court also rejects plaintiff’s argument invoking Oklahoma’s exception under Regulation Z, the implementation tool for TILA. She had not raised this argument in the district court, she failed to support the argument with legal authority, and she did not explain how the state exemption differed from federal law. The district court’s judgment is affirmed.
Bribery in Connection with Olympic Winter Games—Predicates for Travel Act Violations—Mail and Wire Fraud—Conspiracy—Underlying State Commercial Bribery Statute—Predicate for Travel Act Violation—Vagueness of Statute as Applied
U.S. v. Welch, Nos. 01-4170 & 01-4241, 4/22/03, D.Utah, Judge Baldock.
The government appeals the district court’s dismissal of the indictment in its entirety. The indictment charged the defendants, members of the Salt Lake City Bid Committee ("SLBC") for the 2002 Olympic Winter Games ("Games"), with fifteen bribery-related counts of criminal misconduct, in connection with SLBC’s activities in procuring the 2002 Games. The district court dismissed the Travel Act counts by holding that the underlying state commercial bribery statute was an invalid predicate for charging a Travel Act violation, and that the Utah state statute was unconstitutionally vague as applied to defendants. The court dismissed the conspiracy, mail, and wire fraud counts by holding that the prior dismissal of the Travel Act counts required their dismissal. The government appeals, and the Tenth Circuit Court of Appeals reverses.
First, the Travel Act counts do not require that the government allege that defendants are members of a criminal enterprise or organized crime. The court erroneously relied on the lack of reported cases involving the state statute and the lack of Utah state prosecutions under the statute. Utah’s commercial bribery statute is not unconstitutionally vague. The mail and wire fraud counts are sufficient because they set forth the elements of the offense charged, and provide defendants with fair notice of the charges against them. The required intent is only an intent to defraud, which the government may establish by various means. These counts do not have to allege an intent to achieve personal gain. Because the substantive counts of the indictment are upheld, the conspiracy count is sufficient as well. The orders are reversed and the case is remanded for further proceedings.
QDRO—ERISA—Nunc Pro Tunc Order—Survivor Benefits
Patton v. Denver Post Corp., No. 02-1040, 4/23/3, D.Colo., Judge Seymour.
Eleven months after her former husband’s death, plaintiff sought a declaration that his pension plan owed her survivor’s benefits under a qualified domestic relations order ("QDRO"). The QDRO was entered nunc pro tunc to the date of the divorce, eleven years prior to the husband’s death, because it concerned a pension plan unknown to the parties at the time of the divorce, due to an oversight. Defendant denied payment, claiming it was not "qualified" under ERISA, because it increased the liability of the plan and did not exist at the time of the participant’s death. The district court entered summary judgment in favor of plaintiff.
The Tenth Circuit Court finds no requirement that a QDRO be in a plan file prior to the participant’s death. The Court determines that the domestic relations order was "qualified" because it met the requirements of ERISA: (1) it did not divest any other beneficiary; (2) it did not increase benefits payable; and (3) it did not require benefits not otherwise provided by the plan. There was no dispute that another beneficiary’s interests were involved. Accordingly, the Tenth Circuit Court addresses the remaining two criteria. It holds that the nunc pro tunc order must be considered to have been entered before the participant’s death; therefore, it does not increase the benefits to be paid or change the benefits payable by the plan. Nunc pro tunc orders are akin to correction of a clerical order and their fictional quality does not diminish their binding effect. The district court’s judgment is affirmed.
Willful Discovery Violations—Default Judgment—Federal Jurisdiction—Jury Trial—Pre-judgment Interest
Olcott v. Delaware Flood Co., Nos. 01-5119 & 02-5021, 4/24/03, N.D.Okla., Judge Baldock.
In 1982, plaintiff sued defendants for federal securities law violations and various state law claims based in his investment in oil tax shelters. Despite three orders to do so, defendants refused to provide a complete accounting. As a result of the willful discovery violations, the district court entered default against defendants and ordered them to prove what part of plaintiff’s investment actually was used for legitimate business purposes. The district court ultimately dismissed plaintiff’s federal claims, but retained jurisdiction over the pendent state-law claims. After a hearing, the district court determined that none of plaintiff’s investment was used legitimately, and entered judgment in his favor for $1,077,014.70, plus interest, including prejudgment interest and attorney fees.
The Tenth Circuit Court rejects defendants’ challenge to federal jurisdiction on the ground that all federal claims had been dismissed. The federal court had jurisdiction because the suit invoked federal securities laws. Even though those claims were dismissed, that did not retroactively deprive the federal court of subject matter jurisdiction. Moreover, the court retained jurisdiction to enforce the sanction. The Tenth Circuit Court also rejects the claim that defendants were entitled to a jury trial at the set-off hearing because they did not have a constitutional right to a jury trial following entry of default.
Addressing defendants’ attempt to argue the merits of the underlying investment agreement, the Tenth Circuit Court holds that the entry of default precluded them from raising merits-based arguments. Finally, although the award of prejudgment interest was appropriate, the calculation is remanded for the district court to apply the law of the state governing the pendent state-law claims (New Jersey), because the default judgment was based on the state-law claims. The district court’s judgment is affirmed and the case is remanded.
Resentencing—Right to be Present at Resentencing
U.S. v. Bly, No. 02-6034, 5/2/03, W.D.Okla., Judge Kelly.
Defendant appeals the order modifying his sentence after the government’s motion for reconsideration in this 28 U.S.C. § 2255 proceeding. After being convicted of numerous drug trafficking offenses, defendant was sentenced to mandatory life terms based on the quantity of drugs involved, as well as his prior drug offenses. On appeal, the Tenth Circuit Court of Appeals held that the government had failed to prove that defendant was in fact the man convicted of the prior offenses and, therefore, vacated defendant’s sentence and remanded for resentencing de novo on that issue. On remand, the district court heard additional evidence and reimposed the life sentences. That sentence was affirmed. In the meantime, the Supreme Court decided Apprendi v. New Jersey, 530 U.S. 466 (2000).
Defendant brought this § 2255 proceeding challenging his sentences because they rested on court-found facts that, under Apprendi, must be decided by a jury. The district court applied Apprendi and reduced defendant’s nine life sentences to the twenty-year statutory maximum on each count, all to run concurrently. The government moved for reconsideration. The district court then held that the sentences must be modified so that in aggregate they would match as far as possible the total punishment prescribed for the relevant conduct determined at sentencing (a life sentence). However, defendant was not present for this increase in his sentence. The court ordered the twenty-year sentences to run consecutively, and defendant appealed.
The Tenth Circuit Court of Appeals vacates the resentencing order. The district court had jurisdiction to consider the government’s motion for reconsideration, but in granting relief involving an increase to defendant’s modified sentence, the district court should have afforded defendant the procedural guarantees criminal sentencing traditionally entails. The case is remanded to the district court to vacate its resentencing and conduct further proceedings.
Detention Pending Trial—Bail Reform Act—28 U.S.C. § 3145(a) —Reconsideration of Detention Order
U.S. v. Cisneros, No. 03-2009, 5/6/03, D.N.M., Judge Ebel.
Defendant appeals the order of the U.S. District Court for the District of New Mexico upholding the magistrate judge’s determination that she be detained, pending trial. By ordering her detained, the New Mexico District Court revoked a prior order of a federal magistrate judge in Arizona that had permitted Cisneros’s conditional release until trial. Defendant argues on appeal that the New Mexico District Court lacked authority to reconsider the original release order and, even if it had authority, it should have concluded as a result of its review under the Bail Reform Act that she was entitled to conditional release pending trial. The state and federal governments were investigating a criminal enterprise known as the "Cisneros Organization" in New Mexico and Arizona. One of its leaders is defendant’s husband. The indictment was filed in New Mexico federal court. Defendant was arrested on a New Mexico warrant in Arizona, where she is a resident. In Arizona, Cisneros was brought before a magistrate judge, who denied the government’s request that defendant be detained until trial. Defendant appeared for arraignment before a New Mexico magistrate and again remained free, pending trial. The government moved the New Mexico District Court for an order revoking defendant’s release and ordering her detained, pending trial. The magistrate held a hearing and was presented with new evidence by the government. He found that defendant was both a flight risk and a danger to the community, and ordered that she be detained, pending trial. Defendant appealed to the New Mexico district judge, who affirmed. Defendant appealed to the Tenth Circuit Court of Appeals.
The Tenth Circuit Court of Appeals affirms. The Court rules that 28 U.S.C. § 3145(a) is the appropriate basis for the government’s motion for reconsideration of a detention order, not § 3142(f). The district court had authority under § 3145(a) to review the Arizona release order and to revoke that order upon proper findings. Some of the charges defendant faces, including RICO conspiracy involving predicate acts of murder and conspiracy to murder, are very serious. The support underlying the charges against defendant is significant. The evidence tends to support a conclusion that defendant is a flight risk, and her release would pose a serious danger to other persons or the community. The order is affirmed.
"ERISA—Claim "Deemed Denied"—Time Limits—De Novo Review—Meaningful Dialogue
Gilbertson v. Allied Signal, Inc., No. 01-2324, 5/6/03, D.N.M., Judge McConnell.
After she was diagnosed with fibromyalgia, plaintiff applied for long-term disability benefits from her employer’s pension plan ("Plan"), which was covered by ERISA. Her claim was denied initially, but her employer invited plaintiff to provide additional information. The statutory sixty-day deadline for making a final decision was extended to 120 days, as permitted by law. Although plaintiff submitted additional information, the employer did not respond, except to notify her months later that it had scheduled her for an independent medical examination. The parties do not dispute that plaintiff’s claim was "deemed denied," because no decision about the Plan was made within the 120-day deadline, or ever. In ruling on plaintiff’s suit against the Plan, the district court applied a deferential standard of review to the denial of Plan benefits, and entered summary judgment in its favor.
Deciding an issue of first impression in this circuit, the Tenth Circuit Court of Appeals holds that when substantial violations of ERISA deadlines result in the claim’s being automatically deemed denied on review, the district court must review the denial de novo, even if the administrator of the pension plan has discretionary authority to decide claims. If, however, the parties are engaging in a meaningful exchange of information, inconsequential violations of the deadlines or other procedural irregularities would not entitle the claimant to de novo review. Here, the de novo standard applied, so the case is remanded to the district court for a de novo review.
Title VII Discrimination—Governmental Agency—Right-to-Sue from Attorney General—Equitable Considerations
Hiller v. State of Oklahoma, ex. rel. Used Motor Vehicle and Parts Comm’n, No. 01-6402, 5/6/03, Judge Seymour.
Plaintiff sued her former employer, a state agency, claiming that her discharge violated Title VII. Before filing suit, she filed a charge of discrimination with the EEOC. The EEOC issued a right-to-sue letter, advising her that it was dismissing her charge and that she had ninety days to file a court action, which she did. The state of Oklahoma ("State") moved for summary judgment on the ground that Title VII required plaintiff to obtain a right-to-sue letter from the U.S. Attorney General before filing suit. Plaintiff then tried, but failed, to get the Attorney General to issue the necessary notice. Therefore, the district court granted the State’s summary judgment motion.
The Tenth Circuit Court holds that the obscure statute pertaining to the EEOC’s authority, with regard to an investigation of a discrimination charge against a governmental agency, required plaintiff to have a letter from the Attorney General [42 U.S.C. § 2000e-5(f)(1)]. Because she did not have a letter, she did not comply with the statute.
The Tenth Circuit Court considered the equitable considerations and rules that it would work an injustice to deprive plaintiff of a remedy for failure to meet a nonjurisdictional requirement that was beyond her control. Where the EEOC did not find cause to pursue the case further, the State did not need the protections offered by the Attorney General’s participation in the administrative process. It would be unfair to require plaintiff to obtain a letter when those requests are routinely denied. The district court’s denial of equitable relief was an abuse of discretion. The judgment is reversed and and the case is remanded.
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