Vol. 42, No. 2
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. 11-3293. Brown v. ScriptPro, LLC. 11/27/2012. D.Kan. Judge Kelly. Employment—Family Medical Leave Act—Fair Labor Standards Act—Interference—Retaliation.
Plaintiff sued his former employer, claiming his termination violated the Family Medical Leave Act (FMLA). He also sought damages under the Fair Labor Standards Act (FLSA). His latest job performance review indicated some difficulties, and the employer stated the reason for his termination as unresolved, previously discussed performance issues. Plaintiff asserted that he was terminated, in violation of the FMLA, because he took time off when his child was born. In addition, he claimed he was entitled to overtime pay under the FLSA for hours he worked at home. He did not, however, document those hours, despite the employer’s requirement that he do so. The district court granted summary judgment in favor of the employer.
The Tenth Circuit noted that the FMLA entitles a qualified employee to up to twelve weeks of leave for the birth of a child and to care for the child or to care for a family member. Plaintiff first claimed that his employer interfered with his exercise of FMLA rights. The McDonnell Douglas burden-shifting analysis does not apply, but an employer can defend against an interference claim by showing that the employee would have been terminated regardless of the request for FMLA leave. [McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802–04 (1973)] Intent is not necessary for an FMLA interference claim, so no pretext analysis was necessary. Accordingly, plaintiff’s evidence of pretext was considered in the context of the employer’s affirmative defense demonstration. The Circuit determined that the employer made the required showing that the evidence of grounds for termination was so one-sided that submission to a jury was not required. Plaintiff also claimed retaliation in violation of the FMLA. The Circuit employed a McDonnell Douglas analysis and concluded that plaintiff’s evidence did not create a triable issue of fact as to whether the reason for termination was pretextual. Finally, the Circuit rejected plaintiff’s FLSA claim because he had not met his burden of proving that he was not compensated for time he allegedly worked from home. His failure to keep the required time records was fatal to this claim. The summary judgment was affirmed.
No. 11-6233. Hancock v. American Telephone and Telegraph Co., Inc. 12/11/2012. W.D.Okla. Judge Matheson. Electronics Services—"Clickwrap" Agreements—Enforceability—Standard of Review for Challenge to Arbitration Agreement.
Dissatisfied with their digital telecommunications service, plaintiffs sued their service providers. The district court dismissed their claims based on forum-selection and arbitration clauses in the terms of service, which required arbitration in Texas. Plaintiffs argued that the terms of service were not enforceable because they did not knowingly accept the terms. They asserted that the providers’ standard practice of having the customer click on a computer screen did not adequately disclose to customers the terms of service. In addition, they claimed that the providers failed to establish that each plaintiff agreed to the terms, thus entitling them to an evidentiary hearing.
The Tenth Circuit addressed the providers’ "clickwrap" agreements, which are agreements requiring a computer user to consent to the terms by clicking on a dialog box on the screen to proceed with a transaction. Courts generally uphold clickwrap agreements, applying state law contract principles. Rejecting plaintiffs’ claim that the clickwrap agreements failed to give customers notice of and a meaningful opportunity to assent to the terms of service, the Circuit held that the agreements were enforceable. Turning to plaintiffs’ alleged factual disputes, the Circuit first established that a challenge to an arbitration clause is reviewed under a standard similar to that for summary judgment. After considering the evidence, the Circuit concluded that the evidence was undisputed that plaintiffs had agreed to the terms of service. The district court’s order of dismissal was affirmed.
No. 11-1534. United States v. Santistevan. 12/17/2012. D.Colo. Judge Kelly. Invocation of Right to Counsel During Custodial Interrogation—Unambiguous Nature of Invocation in Statements Contained in Letter Drafted by Counsel.
The government appealed from a district court order granting defendant’s motion to suppress incriminating statements he made after invoking his right to counsel. After defendant initially declined to speak with an agent from the Federal Bureau of Investigation (FBI) about certain robberies he was suspected of committing, the agent received a call from defendant’s girlfriend saying that defendant wanted to speak with him at the jail. The following morning, while traveling to the jail, the agent received a call from a public defender. The attorney told the agent that she represented defendant, and that defendant had told her earlier that morning that he did not want to talk to the agent. The agent told the attorney about the call he had received from defendant’s girlfriend and indicated that he intended to ask defendant whether he wanted to make a statement or answer questions. The attorney responded that she had given defendant a letter to give to the agent if defendant went to the jail.
At the jail, defendant handed the agent the letter from his counsel, which stated that defendant did not want to speak to the agent without counsel being present, but was "not foreclosing that option in the future." The agent read the letter, acknowledged to defendant that his attorney had advised him not to talk to the agent, and then told defendant it was totally up to him whether to talk to the agent or not. The agent then asked defendant whether he wanted to answer questions about the robberies without his attorney present, and defendant responded that he did. The agent transported defendant to FBI offices, where he was Mirandized and gave incriminating statements about the robberies.
On appeal, the government raised two arguments: (1) that defendant did not unequivocally invoke the right to counsel when he handed the agent the letter drafted by his attorney; and (2) that he was not in custody when he handed the letter to the agent. The Tenth Circuit upheld the district court’s findings that the language of the letter clearly invoked defendant’s right to counsel, and that by handing the letter to the agent, he ratified its contents and made them his own personal communication. It was irrelevant that defendant only presented the letter after being asked for it. Defendant was not required to specifically clarify that he intended to invoke the right to counsel after unambiguously invoking that right by giving the letter to the agent. Although defendant previously had indicated he wanted to speak with the agent, he was free in the interim to change his mind. Finally, defendant was subject to a custodial interrogation for purposes of his right to counsel at the time he gave the letter to the agent.
No. 11-6294. United States v. Farr. 12/17/2012. W.D.Okla. Judge Briscoe. Failure to Pay Tax Penalty—Evidence Presented at Trial of Unrelated Financial Transactions and Failures to Pay.
A jury convicted defendant of willfully failing to pay a trust fund recovery penalty that the Internal Revenue Service (IRS) had assessed against her. She managed an alternative medical clinic, and failed to pay quarterly employment taxes owed by the clinic, even though the clinic filed quarterly federal tax returns reporting that such taxes were due. The clinic avoided payment by frequently changing its name and tax identification number.
The IRS pierced the corporate veil and obtained a "trust fund recovery penalty" against defendant, personally. The Tenth Circuit set aside defendant’s first conviction for willful failure to pay the employment tax or the penalty. On remand, the district court dismissed the case. The government then filed a new indictment. Defendant moved to dismiss the indictment on double jeopardy grounds, but the district court denied her motion, and the Tenth Circuit affirmed the denial. Defendant was convicted after a jury trial.
On appeal, defendant primarily argued that the government improperly presented irrelevant and unduly prejudicial evidence at her trial. First, the government presented evidence concerning occasions in the 1980s when the IRS had assessed trust fund penalties against defendant and her husband, who ran the clinic before he died. It also presented evidence of defendant’s prosecution and acquittal in 1995 on a charge of failing to pay a trust fund penalty. The Circuit held that this evidence was relevant to establish defendant’s intent to violate the law and to refute her assertions that she was unaware of the trust fund recovery penalty at issue in this case.
Defendant also challenged the government’s presentation of evidence concerning "pyramiding" in the years between 1978 and 1999, which involved the clinic’s repeated name changes and operation by a series of different entities. Defendant argued that the pyramiding occurred only when her husband owned and operated the clinic. The Circuit rejected this contention, noting that defendant had assumed responsibility for payment of the taxes and had assisted in forming new entities to assume ownership and operation of the clinic.
The Circuit also upheld the introduction of evidence that defendant and her husband had filed a bankruptcy petition on which they listed the unpaid and unsecured trust fund recovery penalties, reasoning that this evidence was relevant to establishing defendant’s general awareness of trust fund recovery penalties and their operation. It upheld the admission of evidence concerning cash-skimming from the clinic, receipt of funds in an unrelated real estate transaction, improper use of grant moneys, and defendant’s personal use of a bank account and personal loan proceeds, all of which showed the availability of assets to pay the quarterly employment taxes and/or the trust fund recovery penalty, and defendant’s evasion of her responsibility.
The Circuit also rejected defendant’s arguments that the evidence was insufficient to prove that she willfully evaded payment of the tax and took affirmative steps to do so; that the government should have charged her under the statute dealing with willful failure to collect and pay a tax rather than the more generic tax evasion provision; and that the new indictment violated the Fifth Amendment’s Double Jeopardy Clause. Accordingly, the Circuit affirmed her conviction and sentence.
No. 11-3104. United States v. Jones II. 12/18/2012. D.Kan. Judge Holmes. Fourth Amendment—Officers Operating Outside Their Jurisdiction—Implicit Consent to Search.
Defendant entered a conditional guilty plea to drug and firearms offenses, reserving the right to appeal from the district court’s denial of his motion to suppress evidence found during searches of his residence and his vehicle in Kansas City, Kansas. The events began with surveillance of the "Grow Your Own Hydroponics Store" in Kansas City, Missouri, by officers of the Missouri State Highway Patrol. The officers observed defendant enter the store, and determined that he resided in Kansas City, Missouri, where his driving privileges had been suspended and where he was on parole for a drug offense. The officers observed defendant leaving the store carrying a white plastic sack, and followed his truck to his residence, which turned out to be in Kansas City, Kansas. When they arrived at the residence, the officers did not realize they had entered the state of Kansas. After defendant parked the truck, the officers approached him. One officer told him he was with the Missouri State Highway Patrol and was conducting a drug investigation and was there for defendant’s marijuana plants.
The officer obtained defendant’s identification and indicated he wanted to search defendant’s residence. Defendant gave no indication that he was refusing consent to a search. He unlocked the door, walked into the house, and made a hand gesture as though to say he had no marijuana plants there. However, the officer smelled the odor of marijuana before he even entered the house. After defendant entered the house, he grabbed a long gun and aimed it at the officer. The officer fired several rounds at defendant, wounding him. The officers then retreated to their vehicles and contacted dispatch, which informed them they were in Kansas City, Kansas. Kansas City, Kansas police arrived and took command, obtained search warrants for defendant’s residence and car, and found marijuana and firearms evidence.
On appeal, defendant argued that the district court should have granted his motion to suppress for several reasons. First, the Missouri officers were operating outside their jurisdiction under state law when they questioned him and entered his home in Kansas. The Tenth Circuit noted that the violation of a state statute is not per se a violation of federal law. Here, there was no need to examine state-law interests, because the Fourth Amendment inquiry turned on reasonableness of the seizure, not whether state law had been violated.
The officers did not seize defendant during the initial conversation because, under the circumstances, a reasonable person would have felt free to terminate the encounter with the officers. Even the assertion that the officers were there for defendant’s marijuana plants would not have made a reasonable person feel unable to discontinue the encounter and go about his business. Also, the fact that the officers never told defendant that he was free to leave, and that the initial encounter took place in an alley behind his house rather than on a busy street, did not convert the initial encounter into a seizure.
The encounter became a seizure when the officers took defendant’s license and conducted a records check with it. The question then became whether the officers had an objectively reasonable suspicion that defendant was engaged in criminal activity, warranting his further detention. Under all the circumstances, the Circuit held that such objectively reasonable suspicion was present.
The entry into defendant’s residence also was lawful, because the government met its burden to show that defendant consented to the entry. The consent was voluntarily given, even though the officer made statements suggesting he believed marijuana plants could be found in defendant’s residence and that the officer would not be deterred from looking for them by defendant’s advice to investigate a neighboring house. The fact that defendant never gave explicit oral or written consent to the entry into his residence also was not determinative, because an implied consent to search would be no less valid than express consent. The Circuit therefore affirmed the district court’s order denying defendant’s motion to suppress and the court’s resulting judgment.
No. 12-2021. Fireman’s Fund Insurance Co. v. Thyssen Mining Construction of Canada, Ltd. 12/19/2012. D.N.M. Judge Matheson. Personal Jurisdiction—Specific Jurisdiction—General Jurisdiction—Agency Theory—Forum Non Conveniens—Adequate Alternative Forum.
Plaintiff insured an excavator who sustained losses in a mine collapse in Canada. Plaintiff filed suit in New Mexico against Thyssen Mining Construction of Canada, Ltd. (Thyssen) and Mudjatik Thyssen Mining Joint Venture (MTM), a joint venture, for negligence in the mine collapse. Plaintiff filed a parallel suit in a Canadian court, where Thyssen and MTM raised a statute of limitations defense. The New Mexico district court dismissed MTM for lack of personal jurisdiction and dismissed the entire case under the forum non conveniens doctrine. Plaintiff appealed.
The Tenth Circuit first addressed personal jurisdiction, noting the requirement of sufficient contacts with the forum state. Minimum contacts may support specific or general jurisdiction. For specific jurisdiction, the defendant must have purposefully availed itself of the privilege of conducting activities within the forum state, and the litigation must result from those activities. In contrast, for general jurisdiction, the defendant must have continuous and systematic contacts with the forum to render it essentially at home there, and the litigation need not arise from the defendant’s activities in the forum.
Plaintiff argued that personal jurisdiction over MTM was based on an agency theory, relying on Thyssen’s registering to do business in New Mexico. However, the Tenth Circuit found the agency theory inapplicable because Thyssen’s contacts were unrelated to the MTM joint venture. Thus, plaintiff’s arguments for personal jurisdiction over MTM failed.
Addressing forum non conveniens, the Circuit cautioned that dismissal in favor of a foreign forum creates a danger that plaintiffs will be deprived of any remedy. Before dismissing, a court must ascertain that there is an adequate alternative forum in which the defendant is amenable to process and that foreign law is applicable. Here, even though New Mexico was concededly an inconvenient forum, defendants failed to show that an adequate alternative forum existed, because they claimed they could not be sued in Canada based on the statute of limitations. Because the Canadian court had not yet ruled on the statute of limitations defense, the availability of the Canadian court was unclear and dismissal of the New Mexico case was premature. The district court’s rulings were affirmed in part and reversed in part, and the case was remanded to the district court for further proceedings.
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