Colorado Business Litigation Lawyer Blog

In June, we told you about the lawsuit filed against Colorado's Dalbey Education Institute whose infomercial "Winning in the Cash Flow Business", hosted by Gary Collins, was under fire for being deceptive and misleading.

Last week, the Attorney General and Federal Trade Commission were successful in obtaining a stipulated order barring the company from airing misleading statements during their infomercial.

The order specifically prohibits Dalbey from implying that consumers are likely to quickly earn substantial sums of money through brokering promissory notes, and additionally addresses the handling of sales calls and record keeping, compliance monitoring and the prohibition of disclosing consumer lists.

Further, an advertising disclosure stating that "Most of our customers will earn little or no money" is to be prominently displayed several times throughout the infomercial, the frequency of which depending on the length of the particular infomercial.

Will these new regulations really deter consumers from buying into a powerful infomercial in hopes of a quick rich scheme? All one has to do is look at lottery sales for that answer. The odds may be small, but it's the hope of being "the one" to hit it big that keeps the cash flowing. So, who really is the one "Winning in the Cash Flow Business"?

Any consumer who believes that they may have been scammed may file a complaint with the Colorado Attorney General through their website.

If you would like to read the full order, you may access it here.

In the 1990s, the "patent troll" carried a negative connotation, a person or company that aggressively enforced its patents through assertive lawsuits. However the troll of the 2000s translates into an entirely different hobgoblin.

Frenzy in the research, software and technology fields has ensued as forward thinking businesspersons are buying up struggling companies no longer solely for the product or idea itself, but for multiple strategic reasons.

In a defensive chess move to protect itself from its competitors, companies are being purchased for their collection of patents, in an effort to shelter themselves from competing companies' lawsuits. Most recently, Google wrangled a deal with Motorola Mobility for its 17,000 patents in an attempt to protect itself from competitors' potential lawsuits against companies who have purchased Google's Android software.

Conversely, Eastman Kodak is looking to sell its patents during a two-stage auction. Its lucrative patent settlements dried up recently prompting Kodak's sale. It is rumored that an undisclosed buyer may be interested in purchasing these patents for defensive protection. The speculation over this potential transaction resulted in a positive spike in Kodak's share price this week, closing at $2.69, a 26% increase.

There is also significant money to be made in the patent business. If it is diligent, a company that has acquired a patent portfolio can go about filing infringement lawsuits to defend its patents. Many times defendants will settle patent lawsuits due to the high cost of litigation or fear of jury verdicts. Consequently, due to the high prices of licensing fees and defending lawsuits, smaller independent companies or individuals have decided to simply throw in the towel rather than play the high stakes game.

So is the troll term misapplied? Are companies using lawsuits as a profit center? It appears there is still a great argument to be made between the terms "exploitation" and "opportunity" as it relates to the patent world.

Artist Christo Vladimirov Javacheff, "Christo", famous for suspending huge curtains of orange fabric over bridges, buildings and other public spaces throughout the world, has embarked on yet another art project. Christo and his wife Jeanne-Claude have targeted Colorado for a second time (the first time being in 1972) with plans to hang silvery, translucent fabric over the Arkansas River for two weeks in August 2014 for their "Over the River" project. Their original plan entailed a 42-mile stretch of river, however the Bureau of Land Management (BLM) agreed to an approximately 6 mile area.

Unfortunately for Christo, his vision has been met with opposition as the citizens group "Rags Over the Arkansas River" (ROAR) and two fly-fishing businesses, The Arkansas River Fly Shop and ArkAnglers, filed a lawsuit July 22, 2011 in Denver District Court. They are opposing the artist's project pointing out the possible adverse impact on park values and requirement of a state permit.

The feared environmental harms would potentially impact wildlife including the bighorn sheep population, birds and elk, not to mention an unfavorable impact to fishing, rafting and other popular activities along this scenic river.

ROAR claims that in order to support the cables and fabric, Over the River would have to use heavy industrial equipment to drive thousands of industrial rock bolts into the canyon walls all the while damaging public lands and resources, not to mention creating noise, dust and causing hundreds of highway closures.

In June, an agreement with park officials was approved pending the Bureau of Land Management granting a federal permit. In exchange, Christo's team would pay $550,000 in fees and expenses. The Colorado Wildlife Commission initially opposed the project before legislation married the two agencies.

While the BLM was analyzing the project over the last several years, it received thousands of public comments prompting an $11million dollar study paid for by Christo out of his approximately $50 million dollar budget. The BLM's final Environmental Impact Statement addresses the various wildlife and traffic concerns over the narrow 2-lane canyon highway during the five year project's construction and demolition.

Opponents state that they will continue to fight the project because of the devastation they foresee occurring to this area.

To read the BLM's Environmental Impact Statement go to: http://www.blm.gov/co/st/en/fo/rgfo/planning/otr/otr_final_eis/otr_final_eis_documents.html

A $100 million dollar class action settlement has just recently been reached against popular OppenheimerFunds, whose trademark touts "The Right Way to Invest".

Investors who thought their money was being safety held in conservative, low-risk mutual funds were unpleasantly surprised when in 2008 two of Oppenheimer's conservative investments, The Champion Income Fund and the Core Bond Fund lost 78.5% and 35.8% of their values, respectively.

Shareholders outraged by the gross loss sued the funds in 2009. Plaintiffs' lawyers alleged that Oppenheimer misrepresented the funds by marketing and selling them as a "diversified portfolio" that "[did] not involve undue risk". In actuality, the funds took gambles on mortgage backed securities involving a much higher risk than what was represented, and which "caused the Fund to crash".

In order "to eliminate the burden, expense, uncertainty and risk of further litigation," Oppenheimer officials settled the cases while continuing to deny any wrongdoing.

A hearing to approve the settlement is currently scheduled for September 30 before U.S. District Judge John L. Kane in Denver.

In order to participate in the class action, affected shareholders are required to file a Proof of Claim form.

The period in question for the Champion Income Fund is for funds purchased between January 1, 2006 and December 31, 2008. For information on filing and downloading a claim form, see https://www.oppenheimerchampionsettlement.com//.

The period in question for the Core Bond Fund is for funds purchased between April 30, 2007 and December 31, 2008. For information on filing and downloading a claim form, see https://www.oppenheimercoresettlement.com//.

The deadline to submit claims for either fund is October 30, 2011.

Should a Washington resident who has a concealed weapons permit from Florida be allowed to openly carry a hand gun in Denver? That is the question currently presented to the United States Court of Appeals for the Tenth Circuit now that Plaintiff Gray Peterson was recently denied his motion for summary judgment in Denver District Court against Alvin LaCabe.

LaCabe is a former ex officio sheriff and Manager of Safety for the City and County of Denver who was in charge of issuing the licenses, denied Peterson's request and has since retired.

With a few exceptions, in Colorado it is unlawful to carry a concealed firearm without a license. Peterson challenged the residency requirement on three constitutional grounds. He alleged that Colorado's state statutes are unconstitutional regarding permits to carry concealed handguns since it requires the applicant be a resident of the state and disputed Denver's lack of carry license reciprocity. If Peterson was a resident of Florida where he currently holds a carry license, he would be able to carry a gun in Denver.

The Attorney General for the State of Colorado intervened and presented its own cross-motion for summary judgment asking the court to "uphold the constitutionality of Colorado's residency requirement for the issuance of concealed handgun permits".

After reviewing the motions before the court, Judge Miller found that the statute at issue did not violate the plaintiff's constitutional rights, dismissed his claims and ordered defendants to be reimbursed for their costs.

Peterson has appealed his case, which is now entitled Peterson v. Garcia, et al.

Colorado Citizens Against ToxicWaste, Inc. (a grass-roots group based in Canon City) filed a lawsuit against several defendants including the Colorado Department of Public Health and Environment and Cotter Corporation outraged over the state official's approval for Cotter to dump radioactive sludge from its uranium mill into one of their two impoundment ponds.

During the Cold War, the 1958 mill was built with federal support to process yellowcake uranium for the nation's nuclear arsenal and power plants. In the twenty years after the mill was built, radioactive liquid waste was sent to 11 unlined ponds. In 1984 the site was designated by the Environmental Protection Agency for a Superfund cleanup when well tests turned up contaminated groundwater. With their operating license being renewed, Cotter turned to processing ore until about five years ago. Cotter stopped processing yellowcake uranium in 2005.

In June, Denver District Court Judge Robert Hyatt denied a motion filed by the state health department and Cotter to dismiss the residents' lawsuit. The lawsuit claims that Cotter is dismantling the mill without an approved plan required by Colorado radiation regulations.

In addition, claims are that state regulators made an informal deal with Cotter to reduce the $43.7 million bond Cotter must submit to guarantee cleanup to $20.8 million, a far cry from the $53 million proposed by the public. Cotter's initial cleanup bond was a mere $14.7 million, which they then agreed to increase to the $20.8 million. A Western Mining Action Project attorney representing the residents states that the bond currently in place is not enough.

According to John Hamrick, vice president for milling operations at Cotter, the sludge is about 95 percent kerosene. Kerosene was used to process the uranium. The plan is for the sludge to be mixed with a material, which Hamrick analogized as being sort of like kitty litter because it becomes solid. The new sludge neutralizes and is dumped into the impoundment pond. The health department claims the impoundment pond leaks, but Cotter disputes this allegation.

Recently, underground toxic plumes containing cancer-causing trichloroethylene have been detected moving toward the Arkansas River and Canon City. Cotter has been responsible for taking the water samples and doing the analysis and is continuing to monitor the situation. Meanwhile the old mill buildings are being decommissioned as Cotter is pondering building a new mill at the site.

To use the above stated kitty litter analogy, while Cotter may be able to make the waste neutralize and clump, the situation still stinks.

Fighting for their First Amendment right of free speech, Denver-based Royal Crest Dairy filed suit in federal court this year claiming that the Fort Collins ban against door-to-door commercial solicitation violated its constitutional rights. The ban which spanned over 70 years had been in place since 1938 through its "Green River Ordinance", which was adopted to protect the safety and privacy of residents.

Effective May 27, 2011 as a result of this lawsuit, City Council passed an ordinance creating a permit-based system for commercial solicitation. Solicitation in Fort Collins will now be permitted only between 9:00 am and sunset. The new rules include required background checks for solicitors and mandatory city-issued identification badges.

Residents however may still be able to opt out of solicitation by signing up on the city's no solicitation list (which bans commercial solicitation only), or with posting a "No Trespassing" or "No Soliciting" sign on their property (which bans all commercial and non-commercial solicitation) and can be downloaded through the city's website.

As a result, Royal Crest is no longer pursuing its federal case since the city's new rules were put into place. It instead plans on going through the permit process and to educate its employees about the new rules.

Of course there are exceptions to any rule, and nonprofit, religious organizations and political campaigns are among those exceptions. Therefore Fort Collins will continue to enjoy along with the rest of us, the barrage of political calls, news ads, and door-to-door solicitation afforded to us each election period. But on the bright side, you'll still be able to obtain your Thin Mints from your local Girl Scout troop each year!

For more information about the new rules and to download and print the "no soliciting" sign that cites the solicitation ordinance number, go to: www.fcgov.com/solicitation.

As technology continues to emerge in new ways, so does crafty thinking. Some lawyers and judges in countries such as Canada and New Zealand are now permitting and even encouraging service of legal documents through the popular networking site, Facebook.

Subsequent to several unsuccessful attempts at service, an Australian court recently allowed legal counsel for a mortgage lender to use Facebook for service of foreclosure documents after the homeowners defaulted on their loan. Once the bank demonstrated to the court that the defendants were indeed the ones represented on their Facebook page, the bank served notice. When the recipient promptly changed their privacy settings "within a day" of the bank sending the notice, the court deemed the service as being successful. The bank won their case.

Although courts have rules about more traditional methods of service being used via mail and hand delivery, Facebook service in the United States isn't far off on the horizon as some courts are getting more astute in adopting "alternate service" methods.

A judge in a 2006 case in New York federal court allowed plaintiff attorneys to email a summons to a defendant after finding out that the email address had been previously published in a classified ad. Alaska, on the other hand, already permits service through newspaper publication if service by other means has not been successful.

So perhaps in Colorado we too will soon start to see a combination of the old versus the new as courts and attorneys band together to effectuate good service on sneaky defendants.

Last year Chris Chappell, Craig Hospital Graduate Relations Coordinator, came up with an idea. The idea was relatively straightforward, but will have a huge impact on the lives of Craig Hospital patients suffering through their recovery from Spinal Cord Injuries (SCI) and Traumatic Brain Injuries (TBI) as they focus on rebuilding their lives.

Chris’ idea was to create a Craig Hospital license plate through the Colorado Department of Motor Vehicles to benefit SCI/TBI patients. So he formed a petition and went to work at gathering up enough signatures to present to state senators for sponsorship. His compassion towards the cause and devotion to the task at hand paid off big. Senate Bill 11-003 was created and sponsored by Senator Nancy Spence. Then this past Thursday, June 1, Governor Hickenlooper signed House Bill 1298 into law.

Through the sales of each of these specialty license plates, $20 will be contributed to the Patient Assistance Fund at Craig Hospital. These funds will assist patients who have depleted the monetary resources available to them to cover the costs associated with their recovery. Some of the ways the fund will contribute are by helping with wheelchairs and needed equipment, as well as enabling patients’ homes (kitchens and bathrooms) and vehicles to become accessible.

The Gilbert Law Group (formerly known as Gilbert & Ollanik) www.auto-law.com is very excited to be reporting on this development as we have witnessed firsthand how Craig Hospital has positively impacted the lives of many of our very dear clients. Craig Hospital is a world renowned facility for patients with spinal cord injuries and traumatic brain injuries located in Englewood, Colorado. More information about the facility can be gained through their website: www.craighospital.org.

Look for future information about obtaining the Craig Hospital license plate from the Colorado Department of Motor Vehicles by visiting: http://www.colorado.gov/cs/Satellite/Revenue-MV/RMV/1177024843150

Who hasn't caught an infomercial or two late at night when sleep is elusive? A friendly vibrant host touting a get rich quick scenario while you're fretting over a mounting pile of bills soon starts to sound appealing.

However the Federal Trade Commission and the Colorado Attorney General seem to take infomercials claims quite seriously. They recently joined in filing a suit in Denver U.S. District Court against the Dalbey Education Institute (formerly America's Note Network), which is based in Westminster, Colorado. Their concern was with the company's 2002 to 2010 infomercial entitled "Winning in the Cash Flow Business" that aired across the United States and Canada. The spot featured an "Emmy award Winning Host", Gary Collins.

The company's pitch is that by buying various CDs, DVDs and booklets ranging from $39.95 to $159, one can learn how to locate and broker promissory notes, which will quickly earn you significant amounts of money without much effort. The complaint however, alleges that the company's infomercials are deceptive and misleading.

The FTC brought their complaint under the Federal Trade Commission Act and the Telemarketing and Consumer Fraud and Abuse Prevention Act to secure relief, restitution, and the "disgorgement of ill-gotten monies" for deceptive practices. The State of Colorado brought their action under the Colorado Consumer Protection Act for similar reasons.

The lawsuit contends that DEI and its principals engaged in deceptive trade practices through an organized network of companies and knowingly made false representations, as very few consumers ever earned money after purchasing the advertised materials or broke into the promissory note business.

The Telemarketing Sales Rule prohibits telemarketers and sellers from misrepresenting "[a]ny material aspects of the performance, efficacy, nature, or central characteristics of goods or services that are the subject of a sales offer" and from "[m]aking a false or misleading statement to induce any person to pay for goods or services."

The complaint asks the Court for relief by entering permanent injunctions against Defendants to prevent future violations, award relief to consumers as is deemed appropriate, and for reimbursement of court costs.

Denying the allegations, DEI views this as an attack on a respected local company and intends on fighting the lawsuit.

Denver based Chipotle Mexican Grill lost portions of its appeal recently, affirming in part and denying in part the verdict in a lawsuit by a disabled man.

The Plaintiff, Mauizio Antoninetti, is a paraplegic who uses a wheelchair. Anoninetti visited two different California Chipotle restaurants on several occasions as both a customer and for purposes of his lawsuit. Anoninetti sued Chipotle for having counters too high preventing him from seeing the food preparers as they assembled the food, which is prepared assembly line style based on a customer's choices.

Prior to this litigation Chipotle had an unwritten policy which accommodated wheelchaired customers by showing them and allowing them to sample the available foods. However, in 2007 as a result of this litigation a formal written policy was established by Chipotle.

Initially, a federal judge ruled against Antoninetti due to his numerous lawsuits against dozens of other businesses for access violations, resulting in cash settlements. However the United States Court of Appeals overturned a portion of the judgment finding that prior to its written policy, Chipotle violated the Americans with Disabilities Act for failure to accommodate a customer's disability. The court further ruled that Antoninetti's prior litigation history cannot be used against him.

Although significantly less than Antoninettti sought, he had been awarded attorney's fees in the amount of $136,537.83 and damages of $5,000. These amounts were vacated by the Court of Appeals and remanded back to the district court for reconsideration.

The conclusion? The court affirmed in part, reversed in part, vacated in part and remanded -- sort of like when you order a little of this and a little of that when assembling your own Chipotle burrito.

Unfortunate news blows in for one of Colorado's top employers as Vestas Wind Systems faces a class action lawsuit filed in Colorado's U.S. District Court. The lawsuit alleges that the wind turbine company that employs roughly 1600 Coloradoans violated the U.S. Securities Exchange Act of 1934.

The suit alleges that misleading information was posted about the company's 2010 earnings, which resulted in losses to investors of Vestas stock and their pension fund. Four of Vestas' officers are singled out for knowingly releasing the false statements in financial reports and press releases.

Apparently an accounting procedure, which failed to be implemented by its January 2010 due date would have prevented the false statements from being disseminated. Vestas did not make this accounting change until November of 2010.

During the time period in question, it is alleged that ordinary shares traded at unnaturally inflated prices. Then when sobering second quarter news was posted, stating that several million dollars in revenue would have to be deferred, the market reacted accordingly with a 22.5 share drop in one day.

The lawsuit goes on to accuse Vestas officers of benefiting by receiving millions of Euros in salary and incentive-based compensation.

Vertas and its individual defendants are planning on vigorously defending this lawsuit claiming that the suit was filed without merit. So you make the call, meritorious claim or a lot of hot air?

Don't be downwind of the University of Colorado in Boulder. Since the spring semester of 2009, janitorial workers have been dealing with a sticky, ahem, stinky situation.

The university filed a lawsuit last week against Waxie Enterprises Inc. and Royal Paper Converting Inc. for defective toilet paper, which has caused the university more than $40,000 in major plumbing and sewer repairs. A total of 27 buildings on the Boulder campus were affected by the faulty toilet paper causing toilets to clog and overflow. As a result, the university was left with no other option but to saw-cut concrete and excavate sewer pipes that were so blocked up with offending toilet paper.

The complaint filed in Boulder District Court alleges breach of contract and negligence, and asks for an award of more than $40,000 plus costs.

One could presume that as with the story of Goldilocks and the Three Bears, the university might now be on the search for toilet paper that isn't too thin, isn't too tough, but is just right.

Last week's tornado outbreak read like a horror novel as dozens of tornadoes hit several southern states including Alabama, Georgia, Kentucky, Mississippi, Tennessee and Virginia, resulting in the deadliest single day for tornados since 1925. Across the country we hugged our loved-ones tighter watching the evening news, as our hearts heaved for families of the deceased and missing.

Yet just as soon as the dust had settled, the Mile High Chapter of the American Red Cross was planning their course of action. They started last Friday by sending 6 volunteers and 3 staff persons to Alabama. By Friday afternoon, an additional 5 people joined the group. At last count, a total of 14 volunteers and staff persons from Denver are in Alabama aiding the victims. The group includes disaster response, health services, public affairs, IT and mental health persons.

As more knowledge is gained about the situation, more volunteers from Denver may be sent to join the more than 3,700 Red Cross workers from around the country who are assisting the 16 affected states.

Additional information can be obtained by visiting: www.coloradoredcross.org or www.redcross.org to find out ways you can help.

With the exception of the Mercedes-Benz S550, the Nissan Titan, and the Smart Fortwo, American companies made all the vehicles on the Forbes "Worst-Made Cars On The Road" list. The only bright note is that no Ford vehicles made their way onto the list.

Forbes' list starts with the lowest-rated vehicles in at least three of Consumer Reports' 2011 reliability, safety and performance studies. These are based on Consumer Reports' overall scores for 2011 vehicles, and reports such as: The Most Reliable Cars; Best and Worst Values; Highest Cost of Ownership; Best and Worst Safety Performance Survey; and Best and Worst Fuel-Economy.

The worst-rated vehicles are: Cadillac Escalade (base model), Chevrolet Tahoe Hybrid, Dodge Nitro SLT, Dodge Dakota, Jeep Wrangler Unlimited, Mercedes-Benz S550, Chrysler Town & Country, Chevrolet Colorado, Chevrolet Aveo/Aveo5, Jeep Liberty/Jeep Liberty Sport, Nissan Titan, and Smart ForTwo.

Forbes notes that the Mercedes S550 only made the list because of its high cost of ownership, low fuel efficiency, and a low rating for overall value (as opposed to problems with reliability, safety or performance, which affected the other vehicles on the list). Forbes also points out that nearly every car or truck made today is safer, more efficient, and more reliable than anything on the road that was manufactured as recently as 15 years ago.