Vol. 38, No. 12
From the Courts
U.S. Court of Appeals for the Tenth Circuit
Summaries of Selected Opinions
Summaries of selected Tenth Circuit Court of Appeals Opinions appear on a space-available basis. The summaries are prepared for the Colorado Bar Association (CBA) by Katherine Campbell and Frank Gibbard, licensed Colorado attorneys. They are provided as a service by the CBA and are not the official language of this Court. The CBA cannot guarantee the accuracy or completeness of the summaries. Full copies of the Tenth Circuit decisions are accessible from the CBA website: www.cobar.org (click on "Opinions/Rules/Statutes").
No. 08-3029. United States v. Roach. 09/21/2009. D.Kan. Judge Lucero. Fourth Amendment—Suppression of Evidence—Staleness of Warrant—Good-Faith Exception—Sufficiency of Evidence—Daubert Test.
A jury convicted defendant of five counts arising from possession of a firearm, ammunition, and drugs. He was arrested after police executed a search warrant at his girlfriend’s residence and found the firearm and ammunition, as well as crack cocaine. The search was based on a warrant supported by a 120-page affidavit prepared by a narcotics officer assigned to work with the federal Drug Enforcement Agency and Gang Task Force. The affidavit described an alleged drug trafficking conspiracy by members of the "Crips" street gang in Wichita, Kansas.
After summarizing the general activities of the Crips, the affidavit provided a list of gang members, including defendant, and information from cooperating witnesses about the criminal activities and associations among these individuals. However, defendant’s name was not mentioned by any of the cooperating witnesses. Instead, his name appeared in connection with twenty-five of more than 500 incidents involving gang members mentioned in the affidavit as having been investigated by the Wichita Police Department over the previous seventeen years. Most of the incidents mentioned involving defendant occurred between 1993 and 2002. Four other incidents involving defendant’s activities in 2005 and 2006 were mentioned in the affidavit, none of them directly involving drugs or guns, and one being a verbal admission by defendant to ongoing gang activity. The warrant was not executed until 2007. Only generalized, blanket information was provided for the warrant’s conclusion that defendant resided at his girlfriend’s apartment.
Defendant moved to suppress the evidence found during the search of his girlfriend’s apartment on the ground that the warrant was not supported by probable cause. The district court denied the motion and defendant renewed his argument on appeal. The Tenth Circuit agreed with defendant that the warrant failed to establish probable cause, because (1) it relied on outdated evidence of defendant’s connection to the Crips; and (2) it failed to provide a nexus between defendant and the premises searched. However, the Circuit upheld the district court’s refusal to suppress the evidence, holding that the police executing the warrant had acted in good faith in concluding that the probable cause requirement was met. A reasonable officer could conclude that defendant was involved in ongoing criminal conduct and that a minimal nexus had been established between defendant and the residence searched.
Defendant also argued that there was insufficient evidence linking him to possession of the gun, ammunition, and crack cocaine. The Circuit disagreed, based on the following evidence: (1) there was clothing on the floor of the bedroom closet where some of the contraband was found, which the jury could have inferred belonged to defendant; (2) the girlfriend testified that she was unaware of the contraband, it was unknown to her, and no other adults had access to the apartment; (3) defendant possessed a key to the premises; (4) a time slip belonging to defendant was found on the closet shelf with the contraband; and (5) there was testimony that the ammunition in the kitchen was in plain view. The jury also could infer intent to distribute from the presence of such items as rubber gloves, digital scales, and plastic bags.
Finally, defendant challenged testimony by a police "gang expert" under F.R.E. 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). The district court failed to make specific findings to support its conclusion that the police officer’s testimony satisfied the Daubert test. However, the error was harmless, because the government met its burden of showing that the officer’s testimony did not substantially affect the verdict. The jury could have drawn the inference that defendant was a gang member without the expert’s testimony. Accordingly, the Circuit affirmed defendant’s conviction.
No. 08-1231. Four Corners Nephrology Assoc., P.C. v. Mercy Medical Center of Durango. 09/29/09. D.Colo. Judge Gorsuch. Monopoly—Antitrust—Harm to Competition Required—No Duty to Share Medical Facilities.
A hospital in Durango, Colorado hired a nephrologist and agreed to underwrite the expected monetary losses until the new practice became profitable. In addition, the hospital made the new practice the exclusive provider of nephrology services at the hospital. Another nephrologist who had previously treated the hospital’s dialysis patients was denied hospital privileges, so he sued the hospital, claiming antitrust violations. The district court granted summary judgment in the hospital’s favor.
The Tenth Circuit affirmed, holding that the hospital had no antitrust duty to share its facilities with plaintiff at the expense of its own nephrology practice. In general, a business may deal with whomever it wants and vice versa. The hospital was not required to provide hospital access to a competitor.
In addition, in demanding access to the hospital facilities, plaintiff sought to share—not to undo—the hospital’s putative monopoly. That is not the purpose of the antitrust laws. Those laws seek to advance competition, not to advantage competitors. Plaintiff had to show that he was harmed by the hospital’s conduct and that the injury he suffered involved harm to competition. Instead, he sought an order requiring the hospital to grant him hospital privileges. Plaintiff’s injury was not one the antitrust laws protect, because the laws are intended to protect customers from suppliers, rather than to protect suppliers from one another. The district court’s judgment was affirmed.
No. 08-3309. In re Corey, Debtor: Melnor, Inc. v. Corey. 09/30/2009. Judge Hartz. Bankruptcy Appellate Panel—Fraud—Debt Not Dischargeable—Issue Preclusion—Abusive Litigation Tactics.
Melnor, Inc. sued Christopher Corey in a Virginia court. Corey’s litigation misconduct led the court to strike his defenses. Corey then failed to appear for the trial on damages, and the court assessed damages based on Melnor’s evidence. Later, Corey filed for bankruptcy protection. Melnor argued that its debt was not dischargeable because it was incurred through fraud. The bankruptcy court agreed, holding that under the doctrine of issue preclusion, the Virginia judgment barred Corey from contesting that the debt was incurred through fraud. The Bankruptcy Appellate Panel (BAP) affirmed. Corey appealed, arguing that issue preclusion did not apply, because the fraud claim was resolved through a default and therefore was not actually litigated.
The Tenth Circuit determined that Corey had litigated Melnor’s fraud claim. The Virginia court entered default not because of Corey’s failure to contest the issue, but because his efforts in contesting it were abusive. Accordingly, Corey properly was precluded from litigating in the bankruptcy court whether he committed fraud against Melnor. The BAP’s judgment was affirmed.
No. 08-1046. Pacheco v. Shelter Mutual Insurance Co. 10/02/2009. D.Colo. Judge Seymour. Colorado Public Policy—Automobile Insurance—Uninsured Motorist—Exclusion of Resident Relatives.
Plaintiff purchased an automobile insurance policy from Shelter Mutual Insurance Co. (Shelter). The policy contained an exclusion from Uninsured Motorist/Underinsured Motorist (UM/UIM) coverage for resident relatives who owned a vehicle. Plaintiff resided with her parents, who also had auto policies with Shelter. In 2000, plaintiff was injured in a car accident caused by an underinsured motorist. She submitted a claim for UM/UIM benefits under her policy and those of her parents. Shelter denied the claims. The district court ruled that plaintiff was not an insured under her parents’ policies, and granted summary judgment in Shelter’s favor.
The Tenth Circuit noted that a prior version of Colorado’s UM/UIM statute applied. The Circuit held that the policy’s exclusion for resident relatives who owned vehicles violated public policy. Therefore, the exclusion in the plaintiff’s policy was void and unenforceable.
Plaintiff also sought to reform her parents’ policies to provide for UM/UIM coverage in the amount equal to liability coverage. The Circuit determined that a genuine issue of fact existed as to whether Shelter had offered the parents UM/UIM coverage in an amount equal to the bodily injury limits for their policies. Under the applicable statute, an insurer was required to notify the insureds of the right to increase UM/UIM coverage when they increased their bodily injury coverage. The factual dispute over whether this offer was made required a remand to determine whether the policy should be reformed. Therefore, the district court’s judgment was reversed and the case was remanded.
No. 08-1363. United States v. Fontenot. 10/13/2009. D.Colo. Judge Tacha. Sentence Reduction—Amendment 706—Applicability to Supervised Release.
Defendant was convicted of one count of distributing cocaine and one count of distributing cocaine base. In conjunction with his criminal history category of VI, he received a sentence of 130 months’ incarceration, followed by eight years of supervised release. After he completed his term of imprisonment and was serving his term of supervised release, he was convicted of fraud and money laundering. The district court sentenced him to seventy-two months on the fraud and money laundering convictions and to a six-month consecutive sentence on revocation of his supervised release. After he was sentenced, the U.S. Sentencing Commission (Commission) promulgated Amendment 706, which provides for a two-level reduction to the base offense level for offenses involving cocaine base. Based on this amendment, which was made retroactive, defendant filed a motion for sentence reduction.
On appeal, defendant argued that he was entitled to a sentence reduction under 18 U.S.C. § 3582(c)(2); his six-month incarceration on the supervised release violation constituted a "term of imprisonment that has subsequently been lowered by" Amendment 706. The Tenth Circuit disagreed. Defendant’s six-month sentence was based on his failure to comply with the terms of supervised release, not on the length of his underlying sentence as determined by the drug quantity table in the Sentencing Guidelines. Moreover, the Commission has issued a policy statement clarifying that § 3582(c)(2) does not authorize a reduction of a term of imprisonment imposed on revocation of supervised release. Accordingly, the Circuit affirmed the district court’s judgment denying defendant’s motion for sentence reduction.
No. 08-4164. United States v. Evanson. 10/19/2009. D.Utah. Judge Hartz. Sixth Amendment—Disqualification of Counsel—Conflict of Interest—"Unsworn Witness Rule."
Defendant was convicted of conspiracy to commit tax fraud, tax evasion, and aiding and assisting in the preparation of false income tax returns. His scheme involved the manufacture of false transactions to conceal income and create apparent deductions for participants in the scheme. He created these fictitious transactions by using business entities controlled by defendant and his co-conspirators.
Prior to trial, the government moved to disqualify defendant’s retained counsel based on conflict of interest. It contended that counsel was involved in, or had intimate knowledge of, defendant’s creation of false documents in an attempt to substantiate fictitious transactions and to induce participants in the scheme into signing misleading documents or giving other exculpating evidence. The government contended that counsel therefore would be required to testify at trial and should be disqualified from representing defendant.
The government’s motion was based on three documents: (1) a letter written by defendant refusing to quitclaim property held by one of his companies to a participant in the tax fraud, noting that defendant had consulted with his counsel before responding to the letter; (2) evidence that counsel had reviewed another letter from a co-defendant in furtherance of the scheme before it was sent to the participant; and (3) an e-mail from defendant to a participant, copied to defendant’s counsel, that the government considered was designed to mislead the participant into believing the fraud scheme was endorsed by the United States, and to get the participant to alter his interactions with the Internal Revenue Service in a way that was beneficial to defendant’s defense. The district court, citing the likely admissibility of these documents at trial, disqualified counsel from representing defendant.
On appeal, defendant argued that this disqualification violated his Sixth Amendment right to counsel. The Tenth Circuit determined that the reasons for disqualification of an attorney for conflict of interest sweep more broadly than Utah Rule of Professional Conduct 3.7, which requires attorneys to disqualify themselves from acting as an advocate at trial if they are likely to be a necessary witness. An attorney who has first-hand knowledge of the events at trial also may, as an "unsworn witness," convey first-hand knowledge of the events without being sworn or subject to cross-examination. This is unfair to the government. In addition, Rule 3.7 does not establish the constitutional standard to be applied under the Sixth Amendment. The Circuit also noted the broad discretion given to the district court in ruling on alleged conflicts of interest involving attorneys.
Here, the district court could reasonably anticipate that the letters on which the government relied to show the conflict of interest would be admitted into evidence at trial. They were relevant to prove that defendant willfully aided participants in evading their tax obligations. Counsel may have been inclined to discourage defendant from asserting that the letters were the product of his advice, even if such an assertion might have helped the defense. On the other hand, if counsel relied on an advice-of-counsel defense, counsel’s personal knowledge of the merits of the defense could have engendered problems at trial. There also was a problem with unsworn-witness and conflict-of-interest concerns if the co-defendant were to assert that he relied on counsel’s advice. The Circuit therefore affirmed the district court’s disqualification of counsel.
No. 08-3272. United States v. Phillips. 10/20/2009. D.Kan. Judge Tacha. Obstruction of Official Proceeding—Sufficiency of Evidence—"Nexus" Requirement—Showing of Intent.
A jury convicted defendant of obstructing an official proceeding, in violation of 18 U.S.C. § 1512(c)(2). Defendant was convicted of this offense after he disclosed the true identity of an undercover officer to the subject of investigations by the Drug Enforcement Agency, local law enforcement, and a federal grand jury. The officer had made a controlled buy of narcotics from the subject of the investigations and hoped to make increasingly large controlled buys from her in an attempt to uncover her source. However, this plan was thwarted when defendant revealed to the subject that her purchaser was an undercover officer. Defendant subsequently admitted that he had revealed the officer’s true identity, and allegedly boasted and laughed about "burning" the officer.
On appeal, defendant argued there was insufficient evidence that he acted with the intention of influencing the grand jury proceeding. The Tenth Circuit first determined whether a conviction under § 1512(c)(2) requires that there be a nexus between the obstructive conduct and the proceeding allegedly obstructed by a defendant’s conduct. The purpose for the nexus is to satisfy the mens rea requirement in the statute that the defendant "corruptly" obstructed the proceeding. The Circuit determined that there is such a nexus requirement.
The Circuit next turned to the sufficiency of the evidence to establish the required nexus. Defendant argued that the evidence demonstrated that he knew only that the officer was a policeman, not that the officer was involved in an ongoing or future grand jury investigation. However, the Circuit noted that § 1512(c)(2) does not require that a defendant know of the existence of an official proceeding. The defendant need know only that it is forseeable that his or her conduct will interfere with an official proceeding. Moreover, the defendant need not know that the proceeding in question is a federal proceeding. The evidence at trial permitted the jury to draw the conclusion that defendant disclosed the officer’s identity to thwart the investigation, of which the federal grand jury proceedings were a necessary part. This evidentiary showing was sufficient to meet the nexus requirement. The Circuit affirmed defendant’s conviction.
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