Cases of Note Archive 2014

Chapman v. Harner, Colorado Supreme Court No. 13SC072 (December 8, 2014)

Holding: The Colorado Supreme Court holds that, if a plaintiff makes a prima facie showing of negligence under the doctrine of res ipsa loquitur ("the thing speaks for itself"), the burden of proof does not shift to the defendant.

Case Summary: The plaintiff sued the defendant for medical malpractice after the plaintiff's husband died hours after the defendant performed an angiogram on him. The plaintiff made a prima facie showing under the res ipsa loquitur doctrine that it was more likely than not that negligence by the defendant caused the plaintiff's husband's death. The trial court rejected the plaintiff's request to then instruct the jury that the burden of proof shifted to the defendant to establish affirmatively that he was not negligent. The Court acknowledged a conflict in the law between the holding of Weiss v. Axler, 328 P.2d 88 (1958), in which the Court held that the burden does shift to the defendant upon a plaintiff's prima facie showing of negligence under res ipsa loquitur, and Colorado Rule of Evidence 301, which provides that a rebuttable presumption merely shifts the burden of going forward with evidence - the burden of production - and not the burden of proof. Considering prior case law and the policy behind CRE 301, the Court overruled Weiss and held that, as with all other rebuttable presumptions, only the burden of production shifts under res ipsa loquitur, not the burden of proof.

Hickenlooper v. Freedom from Religion, Colorado Supreme Court No. 12SC442 (November 24, 2014)

Holding: The use of public funds to cover the incidental overhead costs associated with issuing honorary proclamations recognizing a Colorado Day of Prayer does not, by itself, constitute an injury sufficient to establish taxpayer standing. Furthermore, any psychic harm endured by respondents due to media coverage revealing the existence of the honorary proclamations does not, by itself, constitute an injury sufficient to establish individual standing. Accordingly, the judgment of the court of appeals is reversed and the case is remanded with instructions to return it to the trial court for dismissal.

Case Summary: From 2004 through 2009, the governor issued annual honorary proclamations recognizing a Colorado Day of Prayer. The Freedom from Religion Foundation, Inc., and four of its members (respondents) sued the governor in his official capacity, asserting that the proclamations, which contained explicit biblical references, constituted an unconstitutional endorsement of religion in violation of the preference clause of article II, section 4 of the state constitution. The respondents sought declaratory and injunctive relief.

The trial court concluded that the respondents had individual standing to sue, but found that the honorary proclamations did not violate the preference clause and granted summary judgment in favor of the governor. The respondents appealed and the governor cross-appealed. The court of appeals affirmed the trial court's standing determination on other grounds, holding that the respondents had standing to sue as taxpayers. On the merits of the respondents' substantive legal claim, however, the court of appeals deemed the honorary proclamations unconstitutional and reversed the trial court's preference clause determination. The governor appealed.

Reviewing de novo the court of appeals' conclusion that the respondents had standing to sue, the supreme court noted the two-part test for making such a determination: A plaintiff must establish that: (1) He or she suffered an injury in fact; and (2) The injury was to a legally protected interest. The supreme court also acknowledged that Colorado courts provide for both broad taxpayer standing and broad individual standing.

Analyzing first the respondents' argument that they suffered injury sufficient to establish taxpayer standing because the governor used public funds in the course of issuing the proclamations, the supreme court held that, even assuming that the governor used public funds to pay for the paper, hard-drive space, postage, and personnel necessary to issue one Colorado Day of Prayer proclamation each year, such incidental overhead costs are not sufficiently related to the respondents' financial contributions as taxpayers to establish the requisite nexus for standing. If such costs were sufficient to confer taxpayer standing, the court reasoned, all members of the public would have standing to challenge literally any government action that required the use of a computer, basic office supplies, or state employee time-- an expansive result unsupported by the constitution or precedent.

Turning to individual standing, the supreme court held that any psychic harm endured by the respondents as a result of media coverage revealing the existence of the honorary proclamations did not, by itself, constitute an injury sufficient to establish individual standing. Rather, the respondents' circuitous exposure to the honorary proclamations (and concomitant belief that the proclamations expressed the governor's preference for religion) was too indirect and incidental an injury to confer individual standing.

Although the respondents' preference clause claim clearly satisfied the second prong of the standing test, the court held that the respondents did not establish injuries -- as either taxpayers or individuals -- sufficient to satisfy the first prong. Because the respondents failed to establish standing, the supreme court did not reach the merits of their substantive legal claim. The supreme court remanded the case to the court of appeals with instructions to return the case to the trial court for dismissal.

Justus v. People, Colorado Supreme Court No. 12SC906 (October 20, 2014)

Holding: The Public Employees' Retirement Association (PERA) legislation, Senate Bill 10-001, did not establish any contract between PERA and its members that entitles a PERA member to the specific cost of living adjustment (COLA) formula in place on either the date on which he or she becomes eligible for retirement or the date on which he or she actually retires. The General Assembly's latest modification of the COLA formula is consistent with the PERA legislation's historical base pension benefit and changeable COLA structure.  The bill's COLA reformulation did not violate the Contract Clauses of either the Colorado or United States Constitution. 

Case Summary: In 2010, the General Assembly enacted Senate Bill 10-001 to protect the present and future retirees of the Public Employees' Retirement Association (PERA) by providing for an adequately funded pension plan. One of the provisions of Senate Bill 10-001 changed the formula for the annual cost of living adjustment (COLA) from an annual increase of 3.5% of the retiree's base benefit to a  formula that capped the annual increase at 2% of the retiree's base benefit. Gary Justus and the other plaintiffs in the case are retired public employees who contended that they have a contract with the state of Colorado entitling each of them, upon retirement, to have their base pension benefit annually adjusted by the specific COLA formula in existence at the time they were eligible to retire for the rest of their lives without change. 

The Denver District Court granted summary judgment to the state, ruling that the Plaintiffs had no reasonable expectation of receiving the benefit of a particular COLA for life given the number of times that the General Assembly has amended the COLA formulas for PERA retirees. In doing so, the District Court observed that none of the  General Assembly's COLA formulas have ever contained durational language. The District Court concluded that the existence of a claimed contractual right for purposes of a contract clause claim requires a clear indication that the General Assembly intended to create such a contractual right and that the General Assembly never bound itself to calculating retirement benefits based on an unchangeable COLA. 

The Colorado Court of Appeals reversed the District Court, ruling that PERA retirees have a contractual right to have their COLA benefits calculated based on the COLA formula in place at the time of either their eligibility for retirement or their actual retirement. It held that the Colorado Supreme Court's decisions in two earlier pension cases, Police Pension & Relief Bd. v. McPhail, 139 Colo. 330, 338 P.2d 694 (1959), and Police & Pension Relief Bd. v. Bills, 148 Colo. 383, 366 P.2d 581 (1961), are dispositive of the argument that retirees have a contractual right to a particular COLA. Based on those cases, the Court of Appeals concluded that "the plaintiffs have a contractual right, but that the court must still determine whether any impairment of the right is substantial and, if so, whether the reduction was reasonable and necessary to serve a significant and legitimate public purpose. " The Court of Appeals remanded the case to allow the District Court to apply the second and third parts of the three-part contract clause analysis specified in In re Estate of DeWitt, 54 P.3d 849 (Colo. 2002), which requires a court to determine: (1) Whether a contractual relationship exists; (2) If so, whether the challenged change in the law impairs the contractual relationship; and (3) If so, whether the impairment is substantial, and to thereby determine whether Senate Bill 10-001 violated the contract clauses of the United States and Colorado constitutions.

The Colorado Supreme Court reversed the Court of Appeals and upheld the District Court's summary judgment order dismissing the case, holding that the PERA statutes providing for a COLA do not establish any contract between PERA and its members entitling a PERA member to perpetual receipt of the specific COLA formula in place on either the date the member became eligible for retirement or the date on which the member actually retires. 

The Supreme Court determined that the McPhail and Bills cases are not dispositive in favor of the Plaintiffs and that contrary to the Plaintiffs' argument, the contract clause balancing test established in DeWitt applies to the claim. The Supreme Court stated that in the McPhail and Bills cases, it did not address the criteria for analyzing and determining whether the legislature intended to create a contractual relationship or vested right but instead simply assumed the existence of a vested right and determined that the right had been impaired. However, the Supreme Court noted that in deciding the earlier cases, it had observed that the Denver Charter provision creating the vested right in both McPhail and Bills contained the following explicit words of entitlement: "In the event that the salaries in the Denver Police Department shall be raised after the effective date of this amendment and those members of said department who shall have previously been retired from active service and who are receiving a pension shall be entitled to an increase in the amount of their pension equal to one-half of the raise in pay granted in the rank said member held at the time he was retired. The Supreme Court stated that in comparison, the PERA statutes at issue do not use the word "entitled" or any similar words that would create an unmistakable vested contractual right. The Supreme Court also noted that neither McPhail nor Bills addressed a COLA formula that had been subject to various changes before and during retirees' careers, while the COLA formula paid to retirees changed repeatedly during the employment of each named retiree.

The Supreme Court noted that the McPhail and Bills cases were decided 40 years before the articulation of the modern contract clause test first applied in Colorado in DeWitt. The two earlier cases only addressed what is now the first part of the applicable three-part contract clause analysis. The Supreme Court stated that neither of the earlier cases examined the question of whether the legislature intended to contract, so the extent to which they are applicable to modern contract clause inquires is limited. Therefore, the Supreme Court applied the modern three-part contract clause test rather than following the earlier cases. Proceeding with the first prong of the analysis, whether there is a contractual relationship, the Supreme Court concluded that there is no contractual right to the COLA because the Court did not observe any contractual or durational language stating or suggesting a clear legislative intent to bind itself in perpetuity to paying PERA members a COLA based on a specific formula. The Supreme Court held that the General Assembly's latest modification of the COLA formula is consistent with PERA's historical pension benefit and changeable COLA structure and that the COLA reformulation in Senate Bill 10-001therefore did not violate the contract clauses of either the Colorado or the United States Constitution.

In re Arenas, United States Bankruptcy Court for the District of Colorado No. 14-11406 HRT (August 28, 2014)

Holding: Federal bankruptcy relief is not available to debtors engaged in the business of producing and distributing marijuana on the wholesale level in the state.

Case Summary: The debtors possess all of the required licenses and permits to legally engage in the business of producing and distributing marijuana on the wholesale level under Colorado law.  Debtors' activities, however, make them liable for criminal penalties under the federal Controlled Substances Act, 21 U.S.C. § 801 et seq. (CSA). Because Congress acted within its constitutional powers under the Commerce Clause when it enacted the CSA, the CSA does not violate the Tenth Amendment of the United States Constitution.

Debtors' ownership and control over premises that are used in the production and distribution of a federal Schedule I controlled substance as well as debtors' direct involvement in the production and sale of a Schedule I controlled substance violate the CSA, precluding the orderly operation of a case under either chapter 7 or chapter 13 of the federal Bankruptcy Code. Administration of debtors' case is impossible without inextricably involving the bankruptcy court and debtors' trustee in debtors' ongoing criminal violation of the CSA. The trustee cannot take control of debtors' property without himself violating § 856(a)(2) of the CSA. Nor can he liquidate the inventory of marijuana plants debtors possess because that would involve the trustee in the distribution of a Schedule I controlled substance in violation of § 841(a) of the CSA.

Although the debtors' need relief that would otherwise be available to them under the federal Bankruptcy Code, it is relief that, under the circumstances, the bankruptcy court cannot provide. As a federal court, the court cannot force the debtors' trustee to administer assets under circumstances where the mere act of estate administration would require him to commit federal crimes under the CSA. Nor can the court confirm a reorganization plan that is funded from the fruits of federal crimes.

TABOR Found. v. Colo. Bridge Enter., Colorado Court of Appeals No. 13CA1621 (August 14, 2014)

Holding: The Colorado bridge enterprise qualifies as an enterprise under the Taxpayer's Bill of Rights, article X, section 20 of the Colorado constitution, (TABOR) and therefore did not violate TABOR when it levied a bridge safety surcharge as authorized by statute and issued revenue bonds payable from surcharge proceeds without prior statewide voter approval.

Case Summary: The Taxpayer's Bill of Rights, article X, section 20 of the Colorado constitution, (TABOR) requires a "district", which includes "the state or any local government, excluding enterprises," to obtain "voter approval in advance" before levying a tax or issuing revenue bonds. TABOR defines a TABOR-exempt "enterprise" as "a government-owned business authorized to issue its own revenue bonds and receiving under 10% of all annual revenue in grants from all Colorado state and local governments combined." The "Funding Advancements for Surface Transportation and Economic Recovery Act of 2009" (FASTER), §§ 43-4-801 to 43-4--814, C.R.S.: (1) Created the Colorado bridge enterprise (CBE) as a government-owned business within the Department of Transportation (CDOT); (2) Declared the CBE to be a TABOR-exempt enterprise so long as it retains authority to issue revenue bonds and receives less than 10% of its total revenues from state and local government grants; (3) Authorized the CBE to impose a bridge safety surcharge (surcharge) on motor vehicle registrations; and (4) Authorized the CBE to issue revenue bonds payable from surcharge proceeds (bonds) for the purpose of funding the repair and replacement of state highway system bridges designated as structurally deficient or functionally obsolete (designated bridges). The CBE, without first obtaining statewide voter approval, exercised the authority granted to it by FASTER by imposing the surcharge, issuing revenue bonds, and repairing and replacing designated bridges.

The TABOR Foundation (Foundation), a nonprofit advocacy organization that endeavors to defend TABOR, filed a lawsuit in Denver District Court against the CBE, the Colorado Transportation Commission (Commission), and the individual members of the Commission in their official capacities. The Foundation alleged that the CBE does not satisfy the requirements for TABOR-exempt enterprise status because: (1) The surcharge is a tax, and enterprises may not levy taxes; (2) The CBE is not a government-owned business; and (3) The CBE receives more than 10% of its annual revenues from state and local government grants. The Foundation further alleged that because the CBE is not a TABOR-exempt enterprise, it violated TABOR when it imposed the surcharge and issued bonds without first obtaining statewide voter approval. Accordingly, the Foundation requested that the Denver District Court issue: (1) A declaratory judgment that the CBE violated TABOR by imposing the surcharge and issuing bonds without voter approval; (2) Orders setting aside the surcharge and directing the CBE and other defendants to refund all surcharge and bond revenue kept in violation of TABOR plus 10% simple interest as required by TABOR; (3) A permanent injunction prohibiting the CBE and other defendants from issuing additional revenue bonds without voter approval; and (4) An award of costs and attorney fees.

In May 2013, the Denver District Court conducted a bench trial. At the trial, the Foundation tried to make the case that the CBE is not a TABOR-exempt enterprise and thus violated TABOR by failing to obtain statewide voter approval before levying the surcharge and issuing bonds because: (1) The CBE levies the surcharge on most motor vehicles registered in Colorado without regard to whether any given vehicle is actually driven over a designated bridge, and the surcharge is therefore a tax subject to TABOR voter approval requirements rather than a fee paid in exchange for a specific service; (2) The Colorado Supreme Court had previously held in Nicholl v. E-470 Pub. Hwy. Auth., 896 P.2d 859 (Colo. 1995), that the power of taxation is inconsistent with TABOR-exempt enterprise status; and (3) The CBE received more than 10% of its annual revenue in state government grants in the form of $14.4 million in federal grant money provided to it by the Commission and 56 designated bridges transferred to it by CDOT. The trial court made extensive findings of fact and ruled in favor of the CBE and the other defendants on all claims, concluding that: (1) The surcharge is a fee, not a tax; (2) Neither the $14.4 million in federal grant money nor the designated bridges were state government grants for purposes of TABOR; and (3) The CBE is a TABOR-exempt enterprise and therefore was not required to obtain voter approval before levying the surcharge or issuing bonds. The Foundation appealed the trial court's decision.

The Colorado Court of Appeals affirmed the trial court's judgment in favor of the CBE and the other defendants. The Court of Appeals first held that the surcharge is not a tax because: (1) Its primary purpose is to fund a specific service, the repair and replacement of designated bridges, rather than to fund general government purposes; (2) Surcharge revenues are deposited to and expended from special designated accounts where they are segregated from other state money and spent only to fund the repair and replacement of designated bridges and therefore cannot be spent for general government purposes like taxes can; (3) The amount of the surcharge is reasonably related to the cost of repairing and replacing designated bridges; (4) The surcharge is levied on a class, persons who register motor vehicles in Colorado, who are reasonably likely to benefit from the service even though not every motor vehicle crosses a designated bridge; and (5) Colorado law does not require the surcharge to be voluntary to be considered a fee. The Court of Appeals then held that the CBE is a TABOR-exempt enterprise because: (1) The surcharge is a fee, not a tax; (2) The CBE is a business "because it pursues a benefit and generates revenue by collecting fees from service users"; and (3) The applicable statutory definition of "grant" set forth in §43-4-803 (13), C.R.S., which defines "grant" as "any direct cash subsidy or other direct contribution of money from the state or any local government in Colorado which is not required to be repaid" and specifically excludes "[a]ny federal funds received by the [CBE] regardless of whether the federal funds pass through the state or any local local government prior to receipt by the [CBE]" is valid and precludes both the designated bridges and federal funds received by the CBE from being "grants".

People v. Heywood, Colorado Court of Appeals No. 11CA2165 (August 14, 2014)

Holding: The Court of Appeals held that the terms "importune, invite, and entice", as used in the statute prohibiting internet sexual exploitation of a child, require a defendant to do more than just allow a person to continue viewing the defendant's intimate parts for a conviction for internet sexual exploitation of a child to stand. 

Case Summary: The defendant, Heywood, was charged with internet sexual exploitation of a child. Relevant to this case, the criminal statute reads:
 
"An actor commits internet sexual exploitation of a child if the actor knowingly importunes, invites, or entices through communication via a computer network . . . or instant message, a person whom the actor knows or believes to be under fifteen years of age and at least four years younger than the actor, to . . . observe the actor's intimate parts via a computer network . . . or instant message." §18-3-405.4 (1) (b), C.R.S.

Heywood, while in an adult-only chat room and without any information about the viewer's age, invited a person to view a web cam stream of himself masturbating. The viewer, a Jefferson County District Attorney's investigator posing as a 14-year-old girl, accepted the web cam stream. Heywood then asked about the viewer's age. The viewer told Heywood that she was 14 years of age. Upon learning the viewer's age, Heywood did not immediately stop the webcam stream, but told the viewer that she should not be watching. The conversation continued for about 5 minutes before Heywood turned off the web cam stream and the conversation ended shortly thereafter.  A jury convicted Heywood of internet sexual exploitation of a child. Heywood appealed his conviction arguing that there was insufficient evidence to show that he "importuned, invited, or enticed" the viewer to view his intimate parts. 

The Court of Appeals had to determine what "importune, invite, and entice" meant in this statutory context. The court found that the terms were unambiguous and that the terms require an actor to do more than merely allow a person to continue viewing the actor's intimate parts after the actor learns the person's age. The Court stated that "had the General assembly intended more broadly to prohibit allowing a person under the age of fifteen to view the actor's intimate parts through a computer network, it could have said so." The Court determined there was no evidence presented that Heywood believed the viewer was under age 15 when he invited her to view the stream. Nor was there any evidence that Heywood importuned, invited, or enticed the viewer to continue viewing the stream after the viewer revealed her age as 14. The Court reversed the conviction.

Idowu v. Nesbitt, Colorado Court of Appeals No. 13CA0801 (July 31, 2014)

Holding: A state agency may not retroactively cancel previously approved and taken leave time to avoid having to pay essential state employees overtime compensation.

Case Summary: The Plaintiffs (employees) are designated as “essential” employees at a facility operated by the Colorado Department of Human Services (DHS) that provides medical care to veterans and operates 24 hours a day, 7 days a week. The employees each requested and received approval from their supervisors to take paid leave time which, when combined with their work time, totaled more than 40 hours in a workweek. At the end of the pay period, DHS adjusted each of the employee’s timesheets to reflect only 40 hours of work for the week pursuant to State Personnel Rule 3-34, which allows state agencies to cancel an essential employee’s authorized leave to reduce overtime liability.

Section 24-50-104.5 (1), C.R.S., provides that authorized paid leave time counts as work time for the purposes of providing overtime compensation to essential state employees.  Accordingly, the employees grieved the alteration of their timesheets and requested to be paid at the overtime rate for work time that exceeded 40 hours. The facility administrator denied the grievances on the merits and the employees petitioned the state personnel board for review.  Ultimately, the State Personnel Director (Director) upheld the denial of the employees’ grievances. She determined that pursuant to section 24-50-104.5 (1), C.R.S., she was authorized to promulgate rules, including Rule 3-34, to administer the statute and applicable federal laws. The employees sought judicial review, and the District Court upheld the Director’s decision ruling that a supervisor’s discretion to authorize leave time pursuant to section 24-50-104.5 (1), C.R.S., includes the discretion to cancel the authorization after the end of the workweek. The employees appealed.

The case presented an issue of first impression in Colorado:  Can a state agency, pursuant to section 24-50-104.5, C.R.S., retroactively cancel previously approved and taken leave time to avoid having to pay essential employees overtime compensation?  The Court of Appeals concluded that a state agency may not retroactively cancel previously approved leave time and reversed the District Court’s judgment.

The Court of Appeals determined that the purpose of section 24-50-104.5 (1), C.R.S., is to provide overtime compensation for state employees who, because of the nature of their jobs and designation as essential employees, may have to work beyond forty hours at unexpected or unusual times, even if they did not actually work some of their normally scheduled hours that week. The Court confirmed that this was the General Assembly’s intent by reviewing the legislative history of section 24-50-104.5, C.R.S. (Section 24-50-104.5, C.R.S., was originally enacted as a different statutory section.) The House and Senate sponsors of the bill that enacted the original statute testified that in 1993 the Director promulgated a rule that eliminated the prior practice of counting authorized leave and holidays as work time when computing overtime compensation. The bill sponsors explained that the purpose of the bill was to restore the prior practice of counting such authorized leave for the purpose of computing overtime compensation for essential employees.

The Court of Appeals further concluded that the General Assembly’s intent is best given effect by interpreting section 24-50-104.5 (1), C.R.S., to require an agency to cancel previously authorized leave before the employee actually takes the leave. Allowing agencies to “de-authorize” leave that employees take in reliance on the leave authorization would allow an agency to avoid having to pay overtime compensation based, in part, on authorized leave time. This would be in direct contravention of the statute and would remove any incentive for essential employees to work unexpected shifts. For these reasons, the Court of Appeals concluded that DHS was not empowered under section 24-50-104.5, C.R.S., to cancel the previously authorized leave time of its essential employees.
Regarding Rule 3-34, the Director perceived that section 24-50-104.5 (1), C.R.S., authorized her to promulgate rules necessary to administer the statute and applicable federal laws.  However, the statute only authorizes the Director to establish rules necessary for the state personnel system to fully comply with all applicable federal employment laws, and the Court of Appeals found that no rules were needed to bring section 24-50-104.5 (1), C.R.S., into compliance with those federal laws.  The Director and DHS further argued that the Director’s authority to promulgate rules regarding overtime compensation for essential state employees exists by virtue of her authority to oversee the state’s total compensation philosophy pursuant to section 24-50- 104, C.R.S. However, the Court of Appeals found that the section 24-50-104.5, C.R.S., does not empower the Director to enact regulations that would permit state agencies to avoid statutory requirements. Therefore, any appropriate procedure to determine and maintain overtime pay must provide that authorized paid leave be counted toward the total work time of essential employees.  

Because the Court of Appeal did not discern any legislative intent to allow the Director to cancel statutory benefits conferred by section 24-50-104.5, C.R.S., it concluded that Rule 3-34 could not be used to such effect.  The Court of Appeals held that DHS did not have the authority to withdraw or cancel the employees’ previously authorized leave time after the employees had actually taken the approved leave time and that the leave time must be counted toward calculating the employees’ right to overtime compensation.

Benefield v. Colo. Republican Party, Colorado Supreme Court No. 11SC935 (June 30, 2014)

Holding: Section 24-72-204(5), C.R.S., mandates an award of costs and reasonable attorney fees in favor of any "prevailing applicant" who applies for and receives an order from the District Court requiring a custodian to permit inspection of a public record even if the order represents only a partial victory because the right to inspect other records is denied.

Case Summary: This case arises out of a 2006 request by the Colorado Republican Party ("Party") under the Colorado Open Records Act ("CORA") to inspect survey responses prepared by Benefield and other current or former members of the Colorado House of Representatives (the "Representatives"). After several years of litigation, the Party succeeded in obtaining an order allowing it to inspect 925 of the 1,584 surveys that it had originally requested. The District Court ultimately determined that the remaining 659 survey responses were not subject to inspection under CORA. The Party then moved for costs and attorney fees expressly provided for a prevailing applicant under section 24-72-204 (5), C.R.S. The District Court denied the motion on the grounds that the statutory mandate for an award of costs and attorney fees in favor of a "prevailing applicant" contemplated only an applicant who prevailed in the litigation as a whole. The District Court concluded that there was no "prevailing party" in the litigation and that the Party therefore was not a "prevailing applicant" within the meaning of CORA.

On appeal by the Party, the Colorado Court of Appeals reversed. The Court of Appeals construed the word "prevailing" to describe any applicant who succeeds in acquiring, as the result of filing an application with the district court, access to any record as to which inspection had previously been denied by the custodian. Because the Party succeeded, after filing its action, in obtaining the right to inspect public records, access to which had previously been denied by the Representatives, the Court of Appeals concluded that the Party was entitled as a matter of right to an award of costs and attorney fees. The Colorado Supreme Court agreed with the Court of Appeals that section 24-72-204 (5), C.R.S., mandates an award of costs and attorney fees in favor of any person who applies for and receives an order from the District Court requiring a custodian to permit inspection of any public record. Accordingly, the Supreme Court affirmed the judgment of the Court of Appeals. On remand, the Supreme Court ordered the District Court to exercise its discretion in determining the amount of costs and reasonable attorney fees to which the Party, as a prevailing applicant, is entitled in light of its partial success in the litigation.

Francen v. Dept. of Rev., Colorado Supreme Court No. 12SC610 (June 30, 2014)

Holding: Under the statute requiring automatic revocation of a driver's license for driving with a blood alcohol content (BAC) of 0.08% or more, the Department of Revenue ("Department") can use evidence taken by a police officer despite not having probable cause for the initial contact, and need not follow the exclusionary rule in the revocation hearing.

Case Summary: The Department revoked Tom Francen’s driver’s license pursuant to § 42-2-126(3)(a)(I), C.R.S. (2011), following a hearing officer’s determination that Francen had driven a motor vehicle with a BAC in excess of the statutory maximum.  The district court reversed, holding that the initial stop of Francen’s vehicle was not supported by reasonable suspicion.  The court of appeals reversed the district court and held that the legality of the initial contact between the police and Francen was not relevant in the civil administrative proceeding to revoke his driver’s license. The court also held that the exclusionary rule did not apply to suppress evidence of his BAC. 

Francen petitioned for certiorari review by the Colorado Supreme Court, which held that:

(a) Under section 42-2-126, C.R.S., as it existed at the time of the administrative hearing, "probable cause" referred to the quantum and quality of evidence necessary for a law enforcement officer to issue a notice of driver’s license revocation, not whether the officer’s initial contact with the driver was lawful; and 

(b) The exclusionary rule did not apply to suppress evidence of Francen’s BAC in the driver’s license revocation proceeding.

Justice Hood wrote a dissenting opinion in which he cited a series of Court of Appeals decisions uniformly inferring the requirement of a legal initial stop from the earlier version of the statute (which was ambiguous on this point) and noted that, in response to the Court of Appeals' departure from that precedent in this case, the General Assembly had promptly amended the statute to clarify that the legality of the initial stop is relevant.  Justice Hood condemned the "judicial quagmire" created by the majority's interpretation of the prior law, which establishes a window of time during which a driver cannot defend against a revocation on this basis.  However, a driver whose revocation hearing is held after the amendment of the statute, or under the prior version of the statute but before the date of the majority's opinion in this case, could raise the issue of the legality of the initial stop.

The majority and dissenting opinions in this case present competing views on the application of certain principles of statutory construction, including the principle that the General Assembly is presumed to be aware of, and to endorse, existing judicial interpretations of a statute whenever it amends the statute in ways that do not directly address those interpretations.

Hanson v. Dept. of Rev., Colorado Supreme Court No. 12SC788 (June 30, 2014)

Holding: [Companion case to Francen v. Dept. of Revenue, 2014 CO 54] Under the statute requiring automatic revocation of a driver's license for driving with a blood alcohol content (BAC) of 0.08% or more, the Department of Revenue ("Department") can use evidence taken by a police officer despite not having probable cause for the initial contact, and need not follow the exclusionary rule in the revocation hearing.

Case Summary: The Department revoked Andrew Hanson’s driver’s license pursuant to § 42-2-126, C.R.S. (2011), following a hearing officer’s determination that Hanson had improperly refused a blood alcohol test. Hanson maintained that evidence of his refusal should have been suppressed because the officer who first determined that he should submit to the test had entered his home without a warrant and without probable cause to arrest him for DUI. The district court and court of appeals upheld the revocation.

Hanson petitioned for certiorari review by the Colorado Supreme Court, which held that:

(a) Under section 42-2-126, C.R.S., as it existed at the time of the administrative hearing, "probable cause" referred to the quantum and quality of evidence necessary for a law enforcement officer to issue a notice of driver’s license revocation, not whether the officer’s initial contact with the driver was lawful.  In this case, the officer who made the initial, warrantless entry into Hanson's home was not the officer who arrested him for DUI and demanded that he submit to the alcohol test; the arrest and refusal occurred at a local hospital after Hanson was taken there at the officers' request.

(b) The exclusionary rule did not apply to suppress evidence of Hanson’s refusal in the driver’s license revocation proceeding.  Instead, evidence need be excluded only if the misconduct of law enforcement officials was done in bad faith or shocks the conscience of the court.

Justice Hood wrote a dissenting opinion in which he noted that the majority had extended the reach of the companion opinion (Francen) "beyond an illegal traffic stop to a warrantless home entry--'the "chief evil" against which the Fourth Amendment is directed.'."  In addition, the facts of this case led to a situation in which Hanson was also deprived of the right to cross-examine the officer who made the initial, warrantless entry into his home.  That officer failed to appear at the administrative hearing although he had been issued a subpoena.

Hanlen v. Gessler, Colorado Supreme Court No. 13SA306 (April 7, 2014)

Holding: The Secretary of State exceeded his rulemaking authority in promulgating Rule 10.7.5. The rule contravenes section 1-4-1002(2.5), C.R.S., as well as election code provisions that require issues regarding a certified candidate's eligibility to be resolved by the courts. The rule is therefore void.

Case Summary: The Adams 12 Five Star School District ("Adams 12") held a regular biennial nonpartisan school district director election on November 5, 2013. Approximately one week before the election, after ballots had been printed and distributed and mail ballot voting was underway, the designated election official concluded that candidate Amy Speers, who had been certified to and appeared on the ballot, was ineligible for office and sent her a letter requesting that she withdraw her candidacy. Speers neither conceded ineligibility nor filed an affidavit of withdrawal.

On election day, the Colorado Secretary of State ("Secretary") adopted Rule 10.7.5, which provided that "[if] the designated election official determines, after ballots are printed, that an individual whose name appears on the ballot is not qualified for office, the votes cast for that individual are invalid and must not be counted". Because Rule 10.7.5 was promulgated as a temporary or emergency rule, it took effect immediately. To comply with the rule, the Adams and Broomfield County clerks and recorders did not report the votes cast for Speers in the election.

On November 14, 2013, plaintiffs, registered electors of Adams 12, sued the Secretary in Denver District Court under section 24-4-106, C.R.S., of the Administrative Procedures Act, seeking judicial review of Rule 10.7.5. After conducting a hearing, the district court concluded that the Secretary acted in excess of his rulemaking authority in promulgating Rule 10.7.5. The Secretary appealed that holding to the Colorado Supreme Court. (The plaintiffs also brought a separate claim against the election officials to compel the completion of the vote count and certification of the election results. The district court ordered the election officials to complete the vote count and certify the vote tally, but that decision was not appealed.)

The Colorado Supreme Court affirmed the judgment of the district court for different reasons. The Court concluded that Rule 10.7.5, as a rule of general applicability, conflicted with section 1-4-1002(2.5)(a), C.R.S., which provides that where a vacancy occurs less than eighteen days before an election due to a partisan candidate's disqualification, votes cast in the election for that disqualified candidate "are to be counted and recorded." The Court also held that Rule 10.7.5 conflicted with the "Uniform Election Code of 1992" by impermissibly allowing designated election officials to usurp the courts' express authority to determine issues of eligibility concerning a candidate who has been certified to the ballot. Because the Secretary acted in excess of his rulemaking authority in promulgating a rule that contravened both section 1-4-1002(2.5), C.R.S., and election code provisions that require issues regarding a certified candidate's eligibility to be resolved by the courts, the Court declared the rule void.

Independence Inst. v. Gessler, United States District Court, D. Colorado, Civil Action No. 10-cv-00609-PAB-MEH (March 29, 2014)

Holding: The limitation in section 1-40-112 (4), C.R.S., on per signature compensation for initiative or referendum petition circulators violates the first amendment to the United States constitution. The limitation severely restricts the political speech rights of petition proponents by making it substantially more difficult for them to get their petitions on the ballot because the limitation is likely to deter most itinerant professional petition circulators from working in the state, prevent the hiring of low-volume professional circulators, and significantly increase the costs of signature gathering campaigns. Also, there is no evidence that the limitation protects the integrity of the initiative and referendum process by reducing incentives for fraud or ensuring that a higher percentage of signatures collected are valid.

Case Summary: Petition circulators, non-profit organizations, and petition entities (plaintiffs) involved in the initiative and referendum process in Colorado filed an action under 42 U.S.C. § 1983 in the United States District Court for the District of Colorado (district court) that challenged the constitutionality of Colorado's limitation, set forth in section 1-40-112 (4), C.R.S., on per-signature compensation for petition circulators on free speech grounds under the First Amendment to the United States Constitution (first amendment).

Section 1-40-112 (4), C.R.S., makes it "unlawful for any person to pay a circulator more than twenty percent of his or her compensation for circulating petitions on a per signature or petition section basis." As a practical matter, the statute requires that circulators receive most of their compensation in the form of hourly payments.

Plaintiffs claimed that the limitation on per signature compensation for petition circulators severely infringed their first amendment rights to free speech by decreasing the pool of professional circulators who are necessary for successful signature gathering campaigns and increasing the cost of signature gathering efforts, thus making it more difficult to qualify measures for the statewide ballot. Plaintiffs also claimed that there was no evidence that the limitation would protect the integrity of the initiative and referendum process by reducing the rate or incidence of fraud in the initiative and referendum signature gathering process.

After considering the evidence presented at trial, the district court found that the limitation on per signature compensation for petition circulators was likely to deter most itinerant professional petition circulators, the most efficient and effective circulators, from working in the state, prevent the hiring of low-volume professional circulators, and significantly increase the cost of signature gathering campaigns. The court also found that the cost increase resulting from the limitation would reduce the chances of underfunded proponents succeeding in the initiative and referendum process and that there was no evidence that the limitation would reduce the rate or incidence of fraud in the signature gathering process.

In light of its factual findings, the district court concluded that because the limitation on per signature compensation for petition circulators prevented initiative and referendum proponents from using individuals who would most effectively convey their message to the public to collect signatures, section 1-40-112 (4), C.R.S., imposed a severe burden on such proponents' first amendment rights, which required the court to use the strict scrutiny standard of review to determine the constitutionality of the statute. Based on this standard of review, and given the availability of other effective and less burdensome statutory tools to safeguard the state's interest in reducing fraud and the number of invalid petition signatures, the district court concluded that section 1-40-112 (4), C.R.S., violated the first amendment. Accordingly, the district court permanently enjoined the secretary of state from enforcing section 1-40-112 (4), C.R.S., and any ancillary statute that enforced it, namely, sections 1-40-135 and 1-40-121, C.R.S., to the extent that those sections apply to the limitation on per signature compensation.

People v. Novotny, Colorado Supreme Court No. 10SC377 (March 17, 2014)

Holding: Allowing a defendant fewer peremptory challenges than authorized or than exercised by the prosecution is not a structural error that automatically requires reversal.

Case Summary: The trial court improperly denied defense counsel's motion to challenge a juror for cause because the person was employed as an assistant attorney general. Defense cousel was required to use a peremptory challenge to remove the potential juror. The court of appeals applied a rule that requires automatic reversal under these facts. Overruling prior holdings to the contrary, the Colorado supreme court held that the trial court's denial of defense counsel's motion was not a structural error that requires automatic reversal. Rather, in this situation the court must determine whether the error was harmless under the proper outcome-determination test, in which case reversal is not required.

Trujillo v. Colo. Div. of Ins., Colorado Supreme Court No. 12SC672 (March 17, 2014)

Holding: The court of appeals erred in interpreting section 10-2-704 (1) (a) to create a fiduciary relationship between a bail bonding agent and the person whose money the bail bonding agent accepted to post bail for the defendant because neither the defendant nor the person who provided bail money was an insured to whom the bail bonding agent owed a fiduciary duty under the statute.

Case Summary: The Division of Insurance investigated Trujillo, a bail bonding agent, based on a complaint received from Connie Espinoza (Espinoza) who gave Trujillo $3,500 to bail her son out of jail. Trujillo never posted bail for Espinoza's son because the $3,500 was insufficient to post bail. Trujillo failed to return the money to Espinoza. Trujillo was sanctioned for nine violations of the insurance code, including a violation of his fiduciary duty as an insurance producer under section 10-2-704 (1) (a), C.R.S. The Colorado Court of Appeals determined that Trujillo had a fiduciary relationship with Espinoza because, as the defendant's mother who gave Trujillo money to post bail, Espinoza was a proper agent of the insured to whom Trujillo owed a fiduciary duty.

The Colorado Supreme Court reversed the court of appeals' decision on grounds that Trujillo and Espinoza did not have a fiduciary relationship under the statute. The Court analyzed section 10-2-704, C.R.S., which provides that an insurance producer owes the insured or a proper agent of the insured a fiduciary duty with respect to unearned premiums held by the insurance producer. Noting that "insured" is not a defined term in the statute, the Court analyzed common law surety principles to determine which party is analogous to the "insured" in a bail bonding context. The Court reasoned that the trial court, and not the defendant, is the party most analogous to an insured in the bail bonding context because a bail bonding agent posts bond to protect the court against the risk of the defendant's failure to appear. Therefore, Espinoza was not a proper agent of the insured, and Trujillo did not owe her a fiduciary duty.

Daimler Chrysler Fin. Serv. Ams. v. Colo. Dept. of Rev., Colorado Court of Appeals No. 12CA2559 (March 13, 2014)

Holding: A lending arm of a motor vehicle manufacturer that finances the full price, including all sales tax due, of motor vehicle sales made by dealers to vehicle purchasers using retail installment contracts cannot claim a credit for a portion of sales taxes forwarded in full to dealers for payment to the Colorado department of revenue when purchasers ultimately default on the installment contracts. The specific provisions of section 39-26-113 (6), C.R.S., which allow only a seller-financer to claim such a credit, control and apply in lieu of the conflicting but more general provisions of section 39-26-102 (5), C.R.S. Because Daimler  is not a seller-financer, it is not entitled to a sales tax  credit under section 39-26-113 (6), C.R.S.

Case Summary: Consumers purchased motor vehicles from several motor vehicle dealers using retail installment contracts secured by liens on the vehicles. At the time of the sales, the dealers assigned all of their rights under the installment contracts to Daimler Chrysler Financial Services Americas, LLC, (Daimler), which paid the dealers the entire amounts due on the contracts, including the sales tax due. The dealers then remitted the sales tax to the Colorado Department of Revenue (DOR). Some purchasers defaulted on their installment contracts, and Daimler repossessed and sold the vehicles. Even after the sales, there remained unpaid balances for some of the contracts. Daimler charged off those debts for federal income tax purposes and sought a bad debt tax credit from the DOR pursuant to section 39-26-102(5), C.R.S., which generally allows a taxpayer who is a retail seller responsible for collecting sales tax, including a taxpayer that is a group or combination acting as a unit, to claim such a tax credit. The DOR denied the claim. Daimler then filed a complaint in Denver District Court, which also denied the claim. Daimler then appealed to the Colorado Court of Appeals. The Court of Appeals affirmed.

The Court of Appeals found that sections 39-26-102 (5) and 39-26-113 (6), C.R.S., conflict. Both sections provide a tax credit  against sales taxes paid for taxes paid on accounts that are subsequently charged off as bad debts, but section 39-26-113 (6), C.R.S., controls under the rule of statutory construction that requires specific statutes to override more general conflicting statutes because that section more specifically addresses such situations for motor vehicle sales and allows only seller-financers to claim tax credits.

The Court of Appeals noted that if Daimler and the dealers were indeed a "unit" or "group" in the sale and financing of the vehicles then they would be acting as seller-financers and could claim a credit under section 39-26-113 (6), C.R.S, Section 39-26-116 (6), C.R.S., however, only considers a seller-financer to be a seller licensed in the state of Colorado which itself or through "a wholly-owned affiliate or subsidiary" collects all or part of the total consideration paid for a vehicle. Because Daimler is neither a licensed seller in Colorado nor a wholly-owned affiliate or subsidiary of the dealers with which it contracted, it does not meet the requirements of section 39-26-113 (6),C.R.S. and cannot claim the credit. The Court of Appeals concluded that the General Assembly would not have taken pains in section 39-26-113 (6), C.R.S., to award tax only to seller-financers of motor vehicles if all other motor vehicle retailers might avail themselves of the tax credit provided for in the more general provisions of section 39-26-102 (5), C.R.S.

Shigo, LLC v. Hocker, Colorado Court of Appeals No. 13CA0094 (February 27, 2014)

Holding: Currently, a debtor cannot take your home to satisify a debt if the owner has less than $60,000 of equity. Section  38-41-205, C.R.S., states: "The homestead mentioned in this part 2 may consist of a house and lot or lots or of a farm consisting of any number of acres." The question was whether the term "farm" covers water rights appurtenant to the land. The court held that water rights necessary to use land for agricultural purposes are included in the term "farm." Therefore, unless they exceed the $60,000 limit, water rights necessary to use land for agricultural purposes cannot be taken to satisfy a debt.

Case Summary: Due to a default judgement, the defendant owed plaintiff $4,400,000, but the plaintiff had been unable to collect. To satisfy the debt, the plaintiff tried to force a judicial sale of the defendant's water rights. The trial court ruled that the term "farm" did not include water rights, so the defendant could sell them to satisfy the debt. 

The defendant appealed. The question before the appeals court was whether "farm" included water rights. The court reasoned (1) that the term "lot" was already used, so the term "farm" could not mean merely the dirt; it had to mean something more. And (2) to have a farm, you must have agriculture, but to have agriculture, you typically need water. Therefore, water rights, if necessary for agriculture, are appurtenant to the land and are covered by the term "farm".

Riddle v. Hickenlooper, United States Court of Appeals Tenth Circuit No. 13-1108 (January 23, 2014)

Holding: Section 1-45-103.7 violates the equal protection rights of contributors to write-in, unaffiliated, and minor party candidates for public office.

Case Summary: In November 2002, Colorado voters passed Amendment 27, Colo. Const. Art. XXVII, § 2, which imposed restrictions on campaign financing. The General Assembly enacted HB 04-1121 to implement sections of Amendment 27. Section 1-45-103.7 regulates contributions using a per-election framework. Individuals and political committees may contribute a total of $400 to a candidate who participates in both a primary election and a general election (that is, $200 per election). Candidates who participate in a primary and a general election may accept $400 contributions at any time and may commingle primary election funds and general election funds without limitation. Individuals and political committees may contribute only $200 to primary-exempt candidates, that is, candidates who participate only in a general election.

A candidate from either of the two major political parties — the Democratic Party of Colorado and the Colorado Republican Party — is always subject to a primary election, regardless of whether his or her bid for the party nomination is contested by another candidate. Therefore, for all statewide elections, all major party candidates may receive contributions of up to $400. By contrast, a candidate for any of the three minor political parties — the Libertarian Party of Colorado, the American Constitution Party, and the Green Party of Colorado — is subject to a primary election only if his or her bid for the party nomination is contested by another candidate.

In 2010, contributors to Kathleen Curry, a write-in candidate for House District 61; Ms. Curry; her campaign committee; and the Libertarian Party (plaintiffs) sued Governor John Hickenlooper and then Secretary of State Scott Gessler (defendants) under 42 U.S.C. § 1983, challenging the constitutionality of former § 1-45-103.7 (3) and (4) (now section 1-45-103.7 (3), (4), and (4.5)) under the First Amendment and the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution in the United States District Court for the District of Colorado (district court).

Plaintiffs contended that Amendment 27 is ambiguous and susceptible to multiple interpretations and that defendants' interpretation of Amendment 27, as reflected by § 1-45-103.7, violated their First Amendment rights. Specifically, plaintiffs claimed that § 1-45-103.7 violated their freedom of expression and freedom of association rights as well as their Fourteenth Amendment rights to equal protection under the law. Plaintiffs raised both a facial and an "as applied" challenge to the constitutionality of § 1-45-103.7 and charged that the statute was: (1) facially unconstitutional as it abridges the associational and expressive First Amendment rights of all contributors to campaigns of primary-exempt candidates; (2) unconstitutional as applied to contributors to Ms. Curry as it abridges their associational and expressive rights by limiting their ability to contribute to Ms. Curry's candidacy; (3) facially unconstitutional as it abridges the Fourteenth Amendment rights of all contributors to campaigns of primary-exempt candidates; and (4) unconstitutional as applied to contributors to Ms. Curry as it restricts their ability to contribute to Ms. Curry's campaign in the same manner as other similarly situated contributors.

The district court found that Amendment 27 was constitutional as applied to plaintiffs. That finding refuted the contention that Amendment 27 is unconstitutional in all conceivable circumstances. The district court also found that defendants were entitled to summary judgment on plaintiffs' facial and as applied First Amendment challenge to Amendment 27 and its implementing statutes. In addition, the district court found that defendants were entitled to summary judgment on plaintiffs' facial and as applied Fourteenth Amendment Equal Protection challenge to Amendment 27 and its implementing statutes.

Plaintiffs appealed to the United States Court of Appeals for the Tenth Circuit (court of appeals), which reversed the district court. The court of appeals held that the statute, as applied, violated the contributors' rights to equal protection.

The court of appeals held that the statute improperly discriminates among contributors when major- and minor-party candidates are unopposed for their nominations.  The statute does not set contribution limits based on who has a primary and who doesn't. Instead, the statute blurs the distinction by allowing Republican and Democratic candidates who are not opposed in their primary elections to collect and spend the entire $400 after the primary. Thus, a Republican or Democratic candidate can obtain $400 from a single contributor and spend all of the money in the general election. For the same general election, a write-in candidate can obtain only $200 from a single contributor.

The court of appeals concluded that section 1-45-103.7 treats individuals contributing to Ms. Curry differently than the individuals contributing to the Republican and Democratic candidates. After the primary, a supporter of Ms. Curry could give her only $200. At the same time, others could contribute $400 each to the Republican and Democratic candidates, and the candidates could spend that money in the general election. In this way, the statute treats contributors differently based on the political affiliation of the candidate being supported. And by treating the contributors differently, the statute impinges on the right to political expression for those who support Ms. Curry or other nominees who are unable to obtain funds prior to nomination.

The defendants relied solely on the state's asserted interest in fighting corruption. But the court of appeals found that that interest is not advanced by a law that allows Republicans or Democrats to collect larger donations than write-ins, unaffiliated candidates, or minor-party nominees. The state created different contribution limits for candidates running against each other, and those differences have little to do with fighting corruption. The statutory classification violates the right to equal protection for individuals wishing to contribute to write-ins, unaffiliated candidates, and minor-party candidates when each candidate runs unopposed for the nomination.