Vol. 39, No. 11
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. 09-1415. State Farm Mutual Automobile Insurance Co. v. Fisher. 08/24/2010. D.Colo. Chief Judge Briscoe. Colorado Insurance Law—Uninsured Motorist—Use of Vehicle—Causal Nexus.
Plaintiff-appellee insurance company (State Farm) filed this declaratory judgment action as a result of defendant-appellant Barbara Fisher’s claim for uninsured motorist benefits. Defendant’s son, Michael Fisher, was driving a vehicle insured by State Farm when it was rammed by a Suburban driven by Andrew Brown, the former boyfriend of one of Fisher’s passengers. Next, Brown fired a shotgun into the car, hitting one of the passengers. Fisher stopped and got out to obtain assistance for the injured passenger. Within moments, Brown fired another shot and killed Fisher. When law enforcement arrived, Brown shot and killed himself.
Brown’s insurer denied coverage, so defendant sought uninsured motorist (UM) coverage from State Farm. The district court granted summary judgment in favor of State Farm.
The Tenth Circuit applied Colorado law. Under Colorado law, to determine whether UM benefits are available, a claimant must demonstrate that an uninsured motor vehicle was being "used" at the time of the injury and that the use was causally related to the injury. The Circuit assumed, without deciding, that the first criterion was satisfied, but held that Brown’s use of the Suburban was not causally related to Fisher’s death. Brown did not use the Suburban to control Fisher’s movements. Brown’s use of the shotgun caused Fisher to pull over the car he was driving, and Brown did not position the Suburban so as to restrict the movement of Fisher, his vehicle, or anyone else. The Suburban also was not used to strike or assault Fisher. Thus, Brown’s use of the Suburban was a means to transport himself to the scene of his assault of Fisher. Such use is insufficient to establish the required causal nexus. The judgment in favor of State Farm was affirmed.
No. 09-6108. Jones v. Oklahoma City Public Schools. 08/24/2010. W.D.Okla. Judge Lucero. Age Discrimination in Employment Act—Pretext Plus Not Required—But For Causation Required.
Plaintiff sued her employer, claiming its decision to demote her violated the Age Discrimination in Employment Act (ADEA). The district court held that plaintiff had made out a prima facie case of age discrimination and that employer had offered a non-discriminatory reason for the decision. The court ruled that even though plaintiff had produced evidence showing that employer’s reasons were a pretext for age discrimination, no reasonable juror could find that she was demoted based on her age; therefore, it granted summary judgment to employer.
The Tenth Circuit concluded that the district court’s ruling impermissibly required plaintiff to demonstrate "pretext plus." The Supreme Court’s decision in Gross v. FLB Financial Services, Inc., 129 S.Ct. 2343 (2009), clarified that the ADEA requires but for causation. Consequently, a plaintiff must prove by a preponderance of the evidence that his or her employer would not have taken the challenged action but for the plaintiff’s age. The Circuit rejected employer’s argument that age must have been the only factor in the decision and reaffirmed Circuit precedent holding that an employer may be held liable for age discrimination if other factors contributed to the adverse action, as long as age was the factor that made the difference.
The Circuit held that Gross did not do away with the traditional McDonnell Douglas Corp. v. Green [411 U.S. 792 (1973)] burden-shifting paradigm, despite Gross’s statement that the burden of persuasion never shifts to the defendant in an ADEA mixed-motives claim. The burden-shifting paradigm does not shift the burden of persuasion; it only shifts the burden of production. The Circuit then held that plaintiff’s evidence was sufficient to show that the decision to demote her was a pretext for age discrimination, which rendered summary judgment unavailable. The district court’s judgment was reversed and the case was remanded.
No. 09-2028. Murphy v. Deloitte & Touche Group Insurance Plan. 09/08/2010. D.N.M. Judge Ebel. ERISA—Dual Role Conflict of Interest—Discovery—Administrative Record.
Plaintiff was denied disability benefits under her employer’s ERISA insurance plan (Plan). The Plan granted the administrator the dual role of administrator and payer of the Plan. Plaintiff sued and sought discovery on the issue of the Plan administrator’s dual role conflict of interest. The district court denied the discovery request, ruling that the conflict of interest was apparent from the administrative record, and then granted the Plan’s motion for summary judgment.
The Tenth Circuit noted that where the Plan gives the administrator discretionary authority to determine eligibility for benefits or to construe the terms of the Plan, the court reviews the administrator’s decision for an abuse of discretion. The presence of a dual role conflict is weighed as a factor in determining whether there is an abuse of discretion. The Circuit then reiterated the general rule against extra-record supplementation of substantive evidence of a claimant’s eligibility for benefits. The district court reviews the administrator’s decision, which necessarily is based on the record evidence.
The Circuit held that district courts may consider extra-record materials related to an administrator’s dual role conflict of interest. Rather than formulate a new procedure for evaluating discovery requests in this context, the Circuit determined that district courts should exercise discretion in handling such requests pursuant to Fed.R.Civ.P. 26. Here, the district court erred in denying plaintiff’s discovery request, which may have produced evidence regarding the seriousness of the inherent conflict and the likelihood that it jeopardized the Plan administrator’s decision-making process in her case. The Circuit accordingly vacated the district court’s order denying plaintiff’s discovery request. Because resolution of the discovery issue may affect analysis of the merits, the judgment also was vacated.
No. 08-6184. United States v. Bowling. 09/14/2010. W.D.Okla. Judge Tymkovich. Bank Fraud—Waiver of Security Interest as Affecting Scheme to Defraud—Defendant’s Entitlement to Good Faith Instruction.
A jury found defendant guilty of bank fraud. He was sentenced to a term of imprisonment, to forfeiture, and to pay restitution.
Defendant was a cattle rancher and farmer who financed his ranching business with bank loans. His loan agreements with the bank required him to provide the bank invoices evidencing cattle purchases; to obtain prior written approval for cattle sales; and to remit any proceeds to the order of the bank and himself as co-payees. There was evidence, however, that he disregarded these requirements with the bank’s tacit approval. By 2005, due to defendant’s deteriorating financial condition, the bank compelled him to consolidate his existing indebtedness and audited his cattle operation. He executed a new note and security agreement, giving the bank a perfected security agreement in the audited total of 759 steers, as well as a security agreement in his accounts, inventory, and equipment. Eventually, based on his failure to make payments on several of his obligations to the bank, the bank declared him in default and began foreclosure proceedings in state court. When the bank tried to locate the cattle, they had disappeared; defendant reported that they were either missing or stolen. The bank subsequently discovered that defendant had sold much of his cattle at sale barns in Oklahoma and Kansas, making many of the sales in the names of his mother and son. The proceeds of these sales were not remitted to the bank. This led to defendant’s indictment and conviction for bank fraud.
On appeal, defendant first argued that the district court erred by denying his motion for a judgment of acquittal based on his argument that the bank waived its security interest in the cattle. The Tenth Circuit rejected this theory. The bank fraud statute under which defendant was convicted, 18 U.S.C. § 1344(a), requires only that the government establish a scheme to defraud a financial institution that put the institution at financial risk, not that the bank suffered a monetary loss. Whether the bank waived its security interest under commercial law had no bearing on defendant’s liability under the statute. In light of this, the district court did not err by preventing defendant from presenting evidence that the bank waived its security interest or by refusing to instruct the jury on the waiver theory.
Defendant next argued that the district court erred in refusing to instruct the jury on his theory that he had acted in good faith. The Circuit previously had determined, in an en banc decision in this case, that a separate good faith instruction is not necessary in a fraud case where the district court properly instructs the jury on the element of intent to defraud. Intent to defraud, if found by the jury, shows a lack of good faith on the defendant’s part. Here, the district court’s instructions required the jury to find an intent to defraud and to find that defendant acted knowingly. No further good faith instruction was required.
The Circuit further determined that defendant (1) was not entitled to suppression of the evidence obtained through a search warrant obtained by an agent charged only with investigating the theft of livestock, and allegedly authorized by a biased state court judge; (2) was not entitled to a new trial based on any of his issues; (3) was not entitled to immediate reduction of the restitution order based on alleged offsets for pledged collateral; and (4) was not entitled to reversal of his conviction based on cumulative error. Accordingly, the Circuit affirmed defendant’s conviction and sentence.
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