Colorado Business Litigation Lawyer Blog

As a Colorado native, I’m always on the lookout for articles that tout the advantages of Colorado living.

Boulder’s dailycamera.com reports that a bed bug problem at the University of Colorado dorms and family housing apartments merely mirrors a similar problem across the country. According to CU officials, the bed bugs were centered mostly in the family housing apartments than elsewhere, at least in part because residents of those apartments are more likely to engage in international travel.

As I sit here contemplating this information, I can’t for the life of me figure out the moral behind this news. Does it imply, as it clearly appears to, that people in foreign countries are more likely to have a bed bug problem than people in the U.S? Is it possible that bed bugs in foreign countries merely have a yearning to move to the U.S? Or do the U.S. family travelers to foreign lands live a not so hygienic lifestyle when they are in foreign countries?

As you can see, I had too much time on my hands today.

Check out more insightful blogs:

"Man’s Prosthetic Leg Set on Fire," Colorado Business Litigation Lawyer Blog, posted 07/13/10

"Don't Tase Me Bro," Colorado Business Litigation Lawyer Blog, posted 05/11/10

"Colorado’s Vicious Wiener Dog," Colorado Business Litigation Lawyer Blog, posted 02/25/10

Yet another digression from my assigned duty of composing a Colorado Business blog dedicated to legal analysis.

A group of friends in New Mexico, Colorado’s good neighbor to the south, decided they would spice up an otherwise mundane drinking contest. They agreed --no doubt drunkenly-- that the person who drank the least would be set on fire.

The unfortunate loser drank only six beers, after which the non-losers (for obvious reasons, I hesitate to call them winners) promptly set the loser’s prosthetic leg on fire. Quite predictably, the fire soon spread to the man’s body. The winners, in a semi-lucid interval, decided to take the still burning man to the hospital. Instead, they left him at the side of the highway.

Dona Ana County deputy sheriffs found the man, naked and still burning. He told deputies that he removed his clothes because of the pain. The man was taken to a burn center for treatment. His condition is unknown.

The thing about wagers like this is that nobody thinks they will lose. And yet, a loser there surely will be.

Moral: if you’re drunk and with friends who are also drunk, don’t make wagers that will result in the contestants only getting drunker, especially if you are drunk enough to allow yourself to be set on fire. And to the person who drove the man to the location where he was found, DON’T DRINK AND DRIVE, even with a burning man in your car. The non-losers will no doubt face serious criminal charges.

A Colorado Springs woman undergoing chemotherapy treatments for leukemia four times a week almost lost her health insurance coverage over an alleged one cent shortage in her premium payment. Yes, you read that right: one cent.

La Rosa Carrington, the single mother of two teenage daughters lost her job in May. Under COBRA, she was allowed to keep her insurance coverage, but was required to pay a part of the premium. When she calculated the premium, using the discount she was entitled to under the 2009 American Recovery and Reinvestment Act, she sent in a check for $165.15. She soon received a notice from Discovery Benefits, a North Dakota benefits administrator, telling her that her premium was one cent short and that she would lose her insurance coverage.

Dumfounded, Carrington called Discovery and spoke with two customer service reps. Both told her that it was company policy not to waive even one cent of the premium due. She then spoke with a supervisor, who told her the same thing. Carrington threatened to take the issue to the media. Shortly thereafter, she received a call from the supervisor, saying that the supervisor had done the calculation and got the same figure as Carrington.

An executive vice-president for Discovery gave yet another excuse. She said the COBRA software rounded the calculation of $161.1545 up to the nearest penny. Carrington had rounded down, using commonly accepted rounding principles such as those used by the Internal Revenue Service. Needless to say, Carrington’s insurance was reinstated.

This incident not only exposes the grossly impersonal nature of huge corporations, but also makes one wonder if common sense plays even a miniscule part in business transactions.

Continue reading "Something to Make Your Day Just a Little Drearier" »

Denver, Colorado District Judge Edward D. Bronfin entered an Order on June 24, 2010, dismissing all charges against a man accused of a bias motivated crime, robbery and second degree assault, all felonies.

Judge Bronfin’s order noted that Denver Officer Paul Baca stated in the sworn affidavit for arrest warrant that Aaron Puller, 22, was identified by two witnesses as having participated in the crimes. These identifications were the only evidence linking Puller to the crimes. Questioning of these two witnesses was videotaped.

The judge viewed relevant portions of each videotape and found that neither witness had in fact claimed that Puller was a participant. One witness denied even knowing Puller.

In explaining his reasons for dismissing the charges, Judge Bronfin concluded that the statements in the affidavit were false or at least made with a “reckless disregard for the truth.”

It is unknown whether the Denver District Attorney will appeal the dismissal of the charges. A more basic issue is whether or not officer Baca will be disciplined and/or charged with perjury. We shall wait and see.

In May 2009, the American Civil Liberties Union (ACLU) and the Public Patent Foundation filed a lawsuit against Myriad Genetics and the University of Utah Research Foundation. The lawsuit challenged patents granted to Myriad on two genes related to breast and ovarian cancer. U.S. District Court Judge Robert Sweet in New York invalidated the seven patents in his March 29, 2010 ruling.

Myriad and its founder, Mark Skolnick, were granted patents on the BRCA1 and BRCA2 genes. Mutations of these genes have been linked to breast and ovarian cancer. With the patents, Myriad had exclusive rights to perform diagnostic testing on the genes, the power to prohibit outside research, and the discretion to decide the cost for the preventative tests.

ACLU, joined by individual patients and medical organizations, charged in the lawsuit that the patents restrict scientific research and patients’ access to medical care. The union of plaintiffs also asserts that genes are products of nature and, therefore, are not subject to patents. Judge Sweet agreed, ruling the patents were “improperly granted.”

As reported by John Schwartz of the New York Times, Myriad and companies like it that hold patents on approximately 20% of human genes argue that the patent system rewards the considerable investment required for research by providing a temporary monopoly. In response to being a product of nature, Myriad contests that isolating the DNA makes it patentable.

The ACLU believes that a patent should not be granted until a company or individual develops a test or drug based on a gene, not when the gene has been isolated.

The decision is likely to be appealed. Watch for updates in the future.

Comment: The dictionary definition of a patent is “a grant made by a government that confers upon the creator of an invention the sole right to make, use, and sell that invention for a set period of time.” In other words, patents are intended to protect ideas or knowledge, not things created by nature. Last time I checked, genes were not inventions.

Continue reading "Gene Patents – Rewarding Innovation or Inhibiting Research?" »

As I previously reported 12/14/09 and 12/16/09, the Ninth Circuit Court of Appeals, in reversing a Federal District Court decision, held that employees of the police department of the City of Ontario, California, had a right of privacy in text messages sent on their city-owned alphanumeric pagers, even though their messages did not comply with city directives and even though the numerous non-business messages sent during work hours included private messages, many of which were to another city employee and were sexual in nature.

The U.S. Supreme Court, in an opinion announced June 17, 2010 reversed the court of appeals and says that while there may be an expectation of privacy in the text messages, the city’s motive in auditing (and reading) the messages had a legitimate business purpose, and thus did not constitute an illegal search under the 4th Amendment to the U.S. Constitution. The business purpose claimed by the city for the audit was to determine whether or not the monthly number of text messages set by the city was too low, resulting in employee/users being required to pay for work-related messages.

Moral: If you are a city employee and are told that there is a specific limit on the number of text messages you can send on city-owned pagers, and are told that messages may be audited and read by the city; and if you exceed the limit and most of your messages during working hours are private messages, some of which are sex-related, maybe you should have at least a hint that your private messages may not be secure as you had hoped.

In surfing the net, I ran across an old article that intrigued me.

Back in May, 2005 the American Hiking Society announced in Aspen, Colorado that on June 4,2005, it planned a 13th annual National Trails Day celebration. Ivan Levin, Trail Programs Manager of the Society said, “American Hiking Society warmly invites members of the American Indian Nations to join in the fun and healing of Mother Earth on National Trails Day at our magnificent National and Urban Parks.”

American Olympic skier Suzy Chaffee, co-chair of Native Voices Foundation noted that "This will make Mother Earth and Father Sky smile." She also commented that "US ski areas are graciously welcoming the tribes back to their beloved ancestral mountains to ski and snowboard, which is snowballing through the snow states.”

Some may say this invitation should have been the other way around.

Gary Noble, 31, of Denver, Colorado, was indicted by a federal grand jury in a 63-count wire fraud scheme, whereby Noble, through various companies he controlled, had his relatives purchase homes with loans obtained from commercial lenders through the use of false and fraudulent documents.

Noble had his relatives buy the homes through Noble Mortgage Company. Another of his companies, Noble Title Agency, issued title insurance commitments purporting to show that the purchasers were purchasing the properties free and clear of any prior loan encumbrances. Any such prior loans were to be paid off from the loan proceeds obtained from the mortgage lenders. Noble Title agency acted as settlement agent for the lenders. Instead of paying-off the prior mortgages from the loan proceeds, portions of the loan proceeds were appropriated by Noble to his own use and benefit. In many cases, the properties were resold shortly after their purchase to Noble’s and his family’s associates.

Noble was arrested in California on June 3, 2010, and is free on bond, pending a court date in Denver Federal Court on June 18. A conviction on each count of the indictment could result in as much as a 20-year prison term and/or a fine of $250,000. The court can also order that restitution (repaying the allegedly ill-gotten money) be made by Noble.

Dbtecno.com reports on June 14, 2010 that a 41-year old Michigan woman shot herself in the shoulder in an attempt to obtain health care for that same shoulder for injuries incurred a month earlier when she tried to prevent her dogs from fighting.

Being without health care, the woman said she couldn’t afford to see a specialist for her previous shoulder injury. After the shooting, the woman’s neighbors banded together to raise funds for the treatment of her pre-existing, painful condition.

Let me see if I understand this story. She can’t afford to see a specialist for her shoulder, but apparently she can afford hospital and medical care for the gunshot wound to her shoulder.

Is this an argument for or against health care reform?

Just when I thought I had the Helen Thomas resignation (firing) all worked-out in my overburdened brain, along comes the Denver Post’s David Harsanyi and his opinion that Ms. Thomas, 89 (and not 87 as I reported), was fired too hastily.

Harsanyi feels that although Ms. Thomas’ comment that Jews should “get the hell out of Israel” and go back to Germany or Poland or the U.S. or wherever they came from was an “ugly opinion” and “provocative,” that doesn’t mean that “one voice that is probably more honest than others of similar ideological disposition—can be expelled from the conversation simply for offending.” Touché.

In my previous article, I suggested that Ms. Thomas perhaps was a worthy candidate for a mild presidential ass kicking as a proxy for the as yet unnamed BP official responsible for the massive Gulf of Mexico oil leak. I hereby withdraw this tongue-in-cheek opinion. I see the error of my ways.

It seems that the real issue is, does an opinion reporter have a First Amendment right to have an opinion published, no matter how offensive it may be to no matter how many people? Yes. Can there be business consequences to the person offering that opinion? Yes.

Respects to Mr. Harsanyi.

This has nothing to do with Colorado. According to a June 8, 2010 piece by Ed Stoddard and Paschal Fletcher on Reuters.com, President Obama is very anxious to get to the bottom of who is responsible for the BP Gulf of Mexico off-shore oil leak. His reason? He needs that information to know “whose ass to kick.”

We all know by now that BP and other unknown persons in charge have failed to plug the leak, although BP has recently slowed the leak to some unacceptable level.

Because I am not in the business of writing political pieces, however, I have figured out a way to keep BP/Obama politics out of this article.

Instead, I have zeroed in on another likely ass kickin’ candidate: Helen Thomas, 87, who formerly covered the White House for Hearst News before her recent abrupt resignation. Ms. Thomas was caught on microphone talking to a rabbi at a White House function last week, saying that “Jews should get the hell out of Palestine” and go back to Germany and Poland and the U.S. and wherever they came from. Many of the presidential ass kickin’ backers probably agree that for these comments, Ms. Thomas surely is deserving of the traditional, albeit gentle, presidential ass kicking. Maybe she should volunteer to be a proxy for the as yet unknown, but more deserving, person at BP.

I know that some 87-year olds out there will suggest that I’m discriminating against seniors. This is not true at all. In fact, seniors are my favorite people. I’m sure you will agree that many 87-year olds say profound things, but not when the microphone is on. Still, that doesn’t make them immune from being selected for a healthy ass kickin’ from their kindly president.

A Westchester County, New York Supreme Court Justice ruled on May 21, 2010 that a psychiatrist, Dr. W, who had sex with his patient, a married woman (Mrs. L) owed a common law duty to tell Mrs. L’s husband, Mr. L, that he, Dr. W, had herpes simplex, before having sex with Mrs. L. Does this make sense so far?

In a case of first impression in New York, and cutting through the red tape, the judge found that it was not unreasonable to expect that if Dr. W. knew he had herpes and probably transmitted it to Mrs. L., that Mrs. L. would probably pass it on to Mr. L, with whom she was having regular sexual relations. Thus the duty on the part of Dr. W to disclose to Mr. L that Dr. W had the herpes virus, which to date has no cure. Does this clarify things?

The bottom line is that Dr. W., before having unprotected sex with Mrs. L, should have told Mr. L what he was about to do to Mrs. L. If that had happened, isn’t it pretty unlikely that the case would wind up in court? Or maybe would find its way to court as an assault and battery case or even worse.

For some unknown reason, Mrs. L was not made a party to the litigation.

I suspect that none of my readers will be affected nor are planning to be affected by this decision. Without a thorough review of case law, it is impossible to state with accuracy whether or not Colorado courts have yet weighed in on this issue. Still, a word to the wise should be sufficient.

Is this another good enough reason to be monogamous?

I previously reported about a case in the Lafayette, Colorado Municipal Court in which the owners of a wiener dog named “Spork” were charged with keeping a vicious dog which had bitten a veterinary technician on the face during a dental procedure. I promised I would follow-up on the story when additional facts became available.

In March 2010, a plea agreement was reached under which the charge against Spork’s owners will be dismissed if Spork keeps his nose clean-- so to speak-- for a 6-month period. Needless to say, the tiny dog’s owners are greatly relieved that, at least for six months, Spork does not face the possible penalty of euthanasia.

The injured veterinary tech, who has had one surgery and faces at least one more, says it was never her desire that Spork be put down. Her motivating factor in seeing that charges were filed initially was her hope that the dog would not bite anyone in the future.

As a small digression from thought-provoking and sometimes informative legal topics, I noticed with interest a Denver, Colorado KWGN Channel 2 piece about a serious police matter in Ohio.

It seems that an Alliance police officer began following a motorist he believed to be intoxicated. The officer had previously been told by a clerk at a convenience store that an intoxicated person had just left the store. The officer observed that the motorist failed to signal for a turn and attempted to stop the vehicle. The driver then led police on a 100- mph chase. The chase was discontinued after the officer visually identified the driver and felt that the chase was becoming too dangerous.

The same car was later spotted by a Brimfield Township officer, who followed the vehicle into a motel. At that point recollections diverged. The police say that the driver began resisting arrest; thus, when Alliance officers came upon the scene, they hauled out their trusty taser and fired, hitting the motorist with one probe. Unfortunately, the other probe hit one of the officers in the hand, administering a five second burst of electricity to the officer. A police cruiser dash camera shows both the motorist and the officer writhing on the ground. For the video, click here.

The motorist says he was not resisting arrest and that the officer who shot the taser--and not the motorist-- was responsible for hitting the fellow officer.

As an aside, the motorist’s dog bit two of the officers, further adding insult to injury.

Moral: Do not drive drunk; do not tase your bro.

Judge Stephen Victor Wilson, U.S. District Judge in the Central District of California, on April 20, 2010, dismissed a complaint filed by persons who claim they were defrauded by Bernard Madoff’s pyramid scheme.

The investors’ complaint alleges that the Securities and Exchange Commission (SEC) woefully failed to discover Madoff’s scheme long before Madoff confessed that he was running a pyramid scheme and had defrauded investors of amounts totaling billions of dollars.

Readers will recall that I previously wrote about the SECs inaction, incompetence and inexperience in its failure to discover Madoff’s illegal investment scheme. To refresh your recollection on the details of those articles click here and here.

Judge Wilson, in effect, says that the SECs manner of investigation, even assuming “sheer incompetence,” was permissible and protected, given that its actions and failure to act were protected by the “discretionary exception” to the Federal Tort Claims Act. In other words, if the statutes creating and controlling the SEC require discretionary (may act) as opposed to mandatory (must act) powers, those acts or failure to act do not expose the SEC to any liability.

It is expected that the decision will be appealed by the plaintiffs to the U.S. Court of Appeals for the Ninth District.

I will follow this case in the event of an appeal.

Continue reading "California Federal Court Dismisses Investors’ Lawsuit Against SEC for Madoff Losses" »

In an April 28, 2010 Senate subcommittee hearing, Senator Carl Levin (D-Mich.) grilled Daniel Sparks, former head of Goldman Sachs mortgage department, about an email that Sparks received from Thomas Montag, Goldman’s former head of sales and trading. In the June 22, 2007 email, Montag made reference to a series of mortgage-backed investments Goldman was selling to its customers as one “shi**y deal.” Sen. Levin noted that even after the date of the email Goldman continued to sell the same investments to customers. Quite naturally, Goldman officials didn’t tell those customers that it was a shi**y deal.

Sparks continued to deny that the email said precisely what it meant. Instead, he claimed that the email had to be put into context. Sen. Levin observed that the context was “mighty clear,” and asked Sparks if he was at all bothered by the fact that Goldman continued to sell the investments after June 22 with knowledge that it was a bad (fooled you!) deal for the customer.

If corporate greed makes you wince, in the immediate future you should refrain from watching TV and reading newspapers.

Continue reading "Sen. Levin Knows a Shi**y Deal When He Sees One" »

We all know by now what a Ponzi scheme is. Some sharp hedge fund manager or other investment guru sells fund shares, usually to close friends and relatives, and friends and acquaintances of each, promising a higher rate of return than could reasonably be earned in a legitimate investment. Typically, the fund doesn’t generate earnings with which to pay the promised interest to the investors. Instead, money paid in by later investors is used to pay interest to early investors. It doesn’t take much imagination to deduce that this house of cards, so to speak, eventually will collapse. When it does, typically nobody gets paid back.

The Security and Exchange Commission (SEC) is the body with authority to investigate these monetary funds. The SEC can impose huge fines on these bogus companies and freeze and seize their assets. Unfortunately, recent history has shown that the performance of the SEC leaves much to be desired. Click here to read about the breathtakingly inept and careless oversight that the SEC exercised in the Bernard Madoff debacle. To make matters even worse, it recently has been discovered that high level SEC staffers were busy watching porn on their government computers instead of doing the job for which they were hired. One lawyer watched as many as 8 hours of porn during the day.

Now comes an April 28, 2010 Denver Post article that reports that yet another $122 million Ponzi scheme has been discovered operating in Colorado. Sean Miller, a Greenwood Village-based hedge fund manager, said he was the only person involved in the wrongdoing. Although phony financial statements claimed $120 million in assets, there was actually only $15 million in a Morgan Stanley account.

As in all con games, experts say the so-called victims are oftentimes not victims at all. Lured by the promises of unusually high rates of return, these “victims” rarely ask questions about why the investment is consistently making investors so much money.

Will this never end?

Here we go again. Another Wall Street giant has been accused of defrauding its investors. Goldman Sachs & Co., a global investment banking and management firm, allegedly failed to disclose conflicts of interest in mortgage investments it sold during the failing housing market. Fabrice Tourre, a Goldman Sachs vice president, has also been charged by the SEC for his involvement. The Securities and Exchange Commission announced the charges last Friday.

According to Marcy Gordon with the Associated Press, Paulson & Co. is the Goldman Sachs client being investigated. The AP identifies Paulson as “one of the world’s largest hedge funds” and reports them as having paid Goldman approximately $15 million in 2007 for structuring the deals. Losses by investors reportedly exceed $1 billion.

The SEC allegations suggest Goldman failed to disclose to investors that Paulson & Co.
played a part in selecting mortgages and were in a position to profit from the waning mortgage values. Investors were told an independent, objective third party selected the securities.

The Goldman Sachs website reported the following statement today: “The SEC’s charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation.”

We will follow the saga and continue to report on it.

Continue reading "Goldman Sachs Faces Civil Fraud Charges" »

A reader of the Aspen, Colorado Local Spur recently wrote in, “How Many Days Would You Need for a Vacation to Aspen, Colorado?” One reader thoughtfully answered that it would depend on the time of year, since there are some interesting things to do and see in the summer. Another answered that a couple of days should suffice, since in the winter one who doesn’t ski would get bored after that length of time.

As a native who has lived in the Denver Metro area all of my life, I have some different ideas about vacations to Aspen.

In the winter, for most people at least, your money will probably be exhausted in one day and one night. You see, Aspen has never been touted as an inexpensive vacation area, what with its neatly parked corporate and private jets and limos. And one soon gets tired of trying to spy movie stars and other equally famous and/or important people.

In the summer, your money should allow you to eat at one prohibitively expensive Aspen restaurant and soak in the large hot springs pool in Glenwood Springs, about 40 miles to the north.

In either event, it is likely that the Aspen locals will tire of you before or at the same time as your money runs out. Local Aspenites, whether rich or poor, have a low tolerance level for flatlanders, which they commonly and affectionately call “turkeys.”

I say all this with tongue- in- cheek, of course. We Denverites love the scenic drive from Denver to Aspen at least once every five or ten years. And we don’t mind emptying our pockets when we get there, either. After all, where but in Aspen can a Coloradan (Coloradoan?) enjoy at least one day of hoping to ski with the rich and famous?

As promised, I am following-up on my previous article, "Corruption on Colorado’s North Metro Drug Task Force?"

The Denver Post reported on April 1, 2010 that Dan Tang, prominent owner of a Thornton Chinese restaurant, was sentenced in U.S. District Court to an 18-month prison sentence for his part in financing a marijuana growing operation.

Tang’s attorneys had recommended probation. The U.S. Attorney’s Office had recommended a sentence ranging from 11 to 30 months, which is well below the guideline of 70 to 87 months in prison for this type of offense. According to an Assistant U.S. Attorney, this sentencing concession was made because she believes Tang had a “diminished role’ in the marijuana-growing organization.

Responding to the defense request for probation, the judge said, "I just don't understand why he shouldn't go to jail. . . . If it means discomfort for him, so be it. If it means the [restaurant] business has to perform in different ways, that is a consequence of his criminal conduct."

It should be noted that the growing operation probably could not have operated without Tang’s financial contribution. If this is the “diminished role” the Assistant U.S. Attorney was referring to, it is difficult to imagine what a major role would be.

The father of a U.S. Marine killed in action in Iraq has been ordered by the Fourth Circuit U.S. Court of Appeals to pay court costs of $16,510 to the leader of a Topeka, Kansas church group. The anti-gay group picketed outside the Marine’s 2006 funeral, holding signs that read among other things, “God hates you” and “You’re going to hell” and “Thank God for dead soldiers.”

Unsurprisingly, the Marine’s family sued the church group for invasion of privacy, intentional infliction of emotional distress and civil conspiracy. A jury awarded the family $2.9 million in compensatory damages and $8 million in punitive damages, later reduced to $5 million.

The church group appealed to the Court of Appeals, saying that their First Amendment rights had been violated. The court agreed and reversed the jury’s verdict.

Now, the U.S. Supreme Court has agreed to hear the case on the legal issues of laws designed to protect the "sanctity and dignity of memorial and funeral services" and the privacy of family and friends of the deceased. The court will determine how far states and private entities such as churches and cemeteries may go to justify picket-free zones and “floating buffers” at funerals to silence or restrict speech and movements of demonstrators exercising First Amendment rights.

Sometimes the law gets in the way of common sense.

In 2008, the North Metro Drug Task Force raided a number of “high-end” homes in the Denver suburbs, seizing millions of dollars in drugs and cash. The houses were used as “grow houses,” where marijuana plants were grown. As a result of the raids, Dan Tang, a politically connected Thornton restaurant owner was arrested, allegedly as the ringleader of and the person who funded the drug operation.

The investigation--known as “operation fortune cookie”--may have been compromised, however, because allegedly someone on the Task Force wrote a letter to Tang, informing him that he was under investigation. The letter was discovered when Tang’s house was raided.

Tang was charged with money laundering, but has not been charged with any drug transactions. On November 20, 2010, he entered a guilty plea to a single charge of money laundering. He will be sentenced on March 31. It is rumored that he will receive probation.

In a significant development, two of the former members of the Task Force have filed suit a “whistleblowers” suit in federal court, claiming that there was “corruption” within the Task Force, and that when they tried to go up the chain of command in their respective departments to report the corruption, they were rebuffed and told not to cooperate in a Drug Enforcement investigation into the source of the leak to Tang. The officers were subsequently removed from the Task Force.

Further complicating the situation, after the raid, Tang allegedly gave $400,000 in cash to the former mayor of the City of Thornton and the same amount to an attorney. Both were to hold the cash for Tang, allegedly because authorities were in the process of tying-up Tang’s bank accounts. A short time later, the money was returned to Tang. Neither of these persons was criminally charged.

I will report further developments in this fiasco. Tang said he knew that growing marijuana was illegal, but that he was dragged into the operation by some of his relatives. Some of these other persons have already been convicted. Tang’s attorney said that Tang had never seen a marijuana plant or smoked marijuana. It is difficult to imagine how these facts somehow mitigate the seriousness of what Tang did. Westword newspaper says that the investigation revealed that Tang’s involvement in the drug operation involved more than just supplying its financing.

Stay tuned.

Lead lawyers in the class actions filed against Toyota in Colorado and across the country are adding claims that the vehicle manufacturer is guilty of racketeering under the Racketeer Influenced and Corrupt Organization Act (RICO).

Plaintiffs in the initial class actions claim that the resale value of their Toyotas has decreased because of problems of unintended acceleration that prompted the recall of millions of Toyota vehicles. If successful, this theory of damages could cost Toyota as much as $2 billion.

The lawsuits allege that Toyota knew of the unintended acceleration problems-- possibly as far back as 2002-- but Toyota nevertheless continued to advertise its vehicles as safe and reliable and concealed the problems from the public. If the RICO claims are proved, damages could approach $10 billion.

Support for the RICO claims is allegedly based upon Toyota documents and the congressional testimony of Toyota officials. Toyota has declined to comment on the litigation to date.

Continue reading "Toyota Guilty of Racketeering?" »

Heidi Hemmet, an investigative reporter for Fox31 KDVR.com reported March 17, 2010, retired workers at Denver Water in Colorado say they buried hazardous waste near several homes and schools 20 years ago. One former worker says he and a number of his co-workers were ordered by the Denver Water manager to bury "cement asbestos, radiation asphalt" and other toxic chemicals at the Foothills Water Treatment Facility near Titan Road and Santa Fe in Douglas County.

The workers claim they "crushed the asbestos piping, spread it out on the land and covered it with dirt. It was never properly capped." The workers also say they suffer from a wide range of illnesses believed to have been caused by exposure to asbestos. They are concerned that digging at the site could be releasing asbestos particles into the air and contaminating the soil and groundwater.

Some homeowners in the area said they thought they were buying homes near open space, and that if they knew about the contamination they never would have purchased property in that area. Workers say a drain flushes ground water from the site past dozens of houses and empties out just below Roxborough Intermediate School.

A statement by Denver Water to Fox31 says in part that "burying of CA (cement-asbestos) pipe may have occurred, but if it did, it was per standard practice at the time." In 2008, when workers first raised the issue with Denver Water, a company spokesperson advised they would conduct a thorough investigation if and when the workers brought forth specific details about alleged activities. The Denver Water Board says it will investigate the allegations. The state health department advises it may be prompted to investigate if it receives enough complaints from the community.

Those wishing to file a claim should call 303-692-3322.

As readers know, I don’t inject politics into my blogs. Nevertheless, I found the following subject a glaring example of a politician’s inexplicable turnabout.

The Huffington Post reports on March 8, 2010, Sarah Palin, in her first speech in Canada since resigning as Alaska’s Governor, admits that her family “used to hustle over the border for health care we received in Canada.” She goes on to comment, “And I think now, isn’t that ironic?”

Readers may recall Sam Stein of The Huffington Post citing, “The irony, one guesses, is that Palin now views Canada’s health care program as revolting: with its government-run administration and ‘death-panel’-like rationing.” Stein notes that the Canadian system was apparently more appealing to the Palins, at some point, than the health care coverage available in their home state of Alaska.

I do not believe that Ms. Palin is the first, nor surely will she be the last politician with the “do as I say, not as I do” philosophy. Numerous examples are available on the internet and in the archives of many newspapers of politicians, both Republican and Democrat, who have exhibited such a philosophy. The point is that such conduct and public statements do not tend to instill public confidence in our politicians.

We are entitled to better.

I wrote on December 7, 2009 that a Florida jury had awarded $300 million to an ex-smoker with emphysema. Cindy Naugle’s case was one of many formerly involved in a class action against Philip Morris.

On February 25, 2010, law360.com reported that the trial judge reduced the judgment to $30.9 million, finding that the original award was “excessive” and “shocking,” and the result of passion on the part of the jury.

In the initial award, the jury found the ex-smoker 10% at fault and a subsidiary of Philip Morris 90% at fault for the emphysema, resulting in a compensatory damages award of more than $56 million and $244 million in punitive damages.

An appeal is expected.

Continue reading "Judge Reduces $300 Million Award in Philip Morris Case" »

Be on the lookout for a wiener dog named “Spork,” especially if you work for a veterinarian.

Deborah Takahara of KDVR.com reports on February 23 that the 10-year old dog’s owners have been charged by the City of Lafayette, Colorado, with keeping a vicious dog because Spork bit a veterinary technician on the chin during oral surgery (on the dog).

The dog’s owners say that Spork is so cool he cries and won’t sleep without a blanket over him. They also say that the veterinarian tech got too close to Spork’s face with some scissors, which scared the dog. Who knows? Maybe Spork just wanted to keep his teeth intact.

State law does not allow people who work with animals to file vicious dog charges. There is no such exemption under Lafayette’s municipal code.

If the owners are convicted, Spork may suffer the ultimate penalty of euthanasia, a fate which the owners say they will spend their life’s savings to prevent.

All attempts at humor aside, I hope the person bitten has a speedy recovery.

Read more on Spork: "Lafayette Defends Prosecution of Spork the 'Vicious' Wiener Dog"

Google, the most popular computer search engine in Colorado and in the U.S., has expanded into China to augment Google’s user base by over 35% of the market share in China. The only problem is that Chinese law allows its government to require the removal of links on the website that China feels are “subversive or offensive.”

Google, of course, isn’t into censorship. It threatened to shut-down its search engine and possibly leave the country completely. Some observers believe the real reason for the censorship is to prevent China’s citizens from gaining access to politically sensitive information and images.

In order to explore the possibility of an acceptable compromise, Google has temporarily agreed to the censored search engine while Google and the Chinese government try to pursue a negotiated solution to the problem. Apparently, China’s public stance differs from its private one. Observers believe China doesn’t want to lose face by appearing to be anti-technology. And at the same time, Google wants to keep China’s very lucrative market. It is widely believed these tensions so far have prevented a compromise.

Google notes that its China web site has been subject to hack attacks from within China that have resulted in some of Google’s intellectual property being stolen. Google has not directly blamed the Chinese government for these attacks, since Google’s site was not the only site hacked. It is believed that a number of other large companies from various business sectors in the U.S. were also attacked. Google and the U.S. government are investigating in an effort to determine the identity of the hackers.

Google suspects the attack on its web site was for the purpose of accessing the Gmail accounts of Chinese dissidents. Google says, however, that the attack was unsuccessful because only two accounts were accessed. The only information accessed in these two accounts was information such as the date the accounts were opened and the subject line of emails, but not the content of the emails themselves.

I will closely be monitoring this controversy to see who blinks first. Stay tuned.

Today’s blog has absolutely nothing to do with legal commentary, court decisions, or business law. 9news.com reported a story on 02/15/10 that warms my heart.

A Cheyenne, Wyoming couple saw a dining room set advertised on Craigslist™ that they were interested in buying. They drove to Aurora, Colorado, where the dining room set was located, with cash for the purchase.

After making the purchase and loading-up the furniture, they decided to stop to eat at a Wendy’s restaurant just off I-25 in Denver. The man apparently dropped his wallet with credit cards, IDs and $1,200 in it as he got out of the car. When they made a temporary stop on I-25, they discovered that the wallet was missing. They called Wendy’s, believing that the billfold--or at least the $1,200--would be missing.

Luckily, Maricella Juarez, a Wendy’s employee, had recently arrived for work. She saw the billfold on the ground and promptly reported the find to her boss, who put the billfold in the store’s safe.

The couple returned to Wendy’s, where the billfold--with all contents intact-- was returned to them. Ms. Juarez was commended by her boss and no doubt by the happy and relieved couple.

Isn’t America a great place?

Continue reading "A Colorado Woman with Honor and Integrity" »

The Denver Post reported on February 9, 2010, that a 19-year old University of Northern Colorado student was arrested and charged with attempted arson, reckless endangerment, criminal mischief and illegal possession of alcohol allegedly for attempting to set fire to a bag of dog poop on his neighbor’s front porch. (Most of us remember this old Halloween trick of “make the neighbor stamp out the flaming bag of dog poop and howl with laughter”).

Apparently the neighbor had called the police earlier because the student and his friends were making too much noise. As the student approached the neighbor’s porch, matches and dog poop in hand, the neighbor-- whose newspaper earlier had been set afire on his porch-- was waiting and subdued the miscreant. The neighbor’s wife, armed with a camera, snapped-away as the events unfolded.

The police duly took photographs of the bag of dog poop and confiscated the matches.

A police spokesperson said the student was intoxicated.

Without attempting to minimize the seriousness of the incident, we should remember the old adage, “Boys will be boys.”

A December study by the legal consultancy firm of Altman Weil showed that the recession notwithstanding, some large law firms are raising their fees to corporations by an average of four per cent in 2010. It is unknown whether or not Colorado law firms were included in the study.

The hourly rate charged by senior partners in these large firms has gone as high as $700-$900 per hour. A local survey by Boston-based BTI Consulting in October disclosed that 15% of Boston’s law firms are raising their rates for 2010, while the remainder is keeping their fees the same as last year.

As I have written before, a corporation that is cost- conscious and result- oriented should look at the advantages of hiring a plaintiff’s firm that charges on a contingent fee basis, whereby legal fees are based upon a percentage of the amount recovered in a lawsuit. If the lawsuit is lost, the lawyer receives no fee. Of course, this type of fee arrangement is normally confined to instances where the corporation is suing another person or legal entity for monetary damages. If the corporation is the defendant in the case (the one being sued), contingent fees are usually not appropriate, although some plaintiff’s firms will fashion a fee agreement whereby the lawyer is paid based upon results in the case.

A corporation or other entity that is considering filing a suit for money damages should feel free to contact this firm for additional information on the various types of legal fee agreements available.

Related postings:

Why You Need a Contingent Fee Lawyer for Your Colorado Business Litigation

Why You Need a Contingent Fee Lawyer for your Colorado Business Litigation, Part II

On January 29, 2010, a Boulder County, Colorado jury awarded $37 million to Jennifer Latham of Lafayette, Colorado, whose health insurance was canceled after the woman sustained severe injuries in an auto accident, including multiple fractures and a brain injury.

Latham had purchased a health insurance policy from Assurant Health just five months before the 2005 accident. After she spent a month in the hospital and another month in rehabilitation at a cost of about $185,000, Assurant Health canceled her policy and refused to pay her medical bills, claiming that Latham had failed to disclose in her application an emergency room visit for shortness of breath and treatment for a uterine prolapse. Latham claimed her insurance company acted in bad faith. The jury agreed with Latham.

Assurant Health was one of the companies investigated by the House Subcommittee on Oversight and Investigations for its policy cancellation practices.

It is not known if Assurant Health will appeal the verdict.

In July 2009, a Colorado jury found a man guilty of 52 criminal counts, including violations of the Colorado Organized Crime Control Act, for stealing $11 million from the Colorado Department of Revenue.

The man’s girlfriend, a supervisor at the department, took the money through various schemes, including creating false businesses and fake tax returns. The woman said she took the funds at her boyfriend’s urging because she loved him and wanted him to leave his wife.

The man said that he believed the woman was withdrawing the funds from her trust account, a claim that the jury found incredible. The man lost all of the money in 18 months on business ventures, land deals, jewelry, cars and trips. His girlfriend spent none of the money on herself.

The man’s sentence of 58 years in jail was imposed on September 24. His girlfriend pleaded guilty and was sentenced to 24 years in prison. She must also pay $10.8 million in restitution to the state.

The moral of this story is that one should never take that which the tax man has first taken away.

U.S. District Judge Edward J. Lodge, recently issued a preliminary injunction barring Penny Lea Jones of Idaho Falls, Idaho, from preparing federal income tax returns for others, while the lawsuit is pending. The court found that Jones promotes a tax defier scheme that claims large fraudulent tax refunds for customers.

The court found that Jones repeatedly prepared federal income tax returns claiming bogus refunds based on a tax fraud scheme known as the "redemption" scheme. The court held that Jones prepared and filed 333 income tax returns for customers in 2008 and 2009 claiming more than $93 million in fraudulent refunds. The court said that the redemption scheme is based on a frivolous theory that the federal government maintains secret accounts for its citizens, and that taxpayers can gain access to funds in those accounts by issuing IRS 1099-OID forms to their creditors.

The case against Jones is one of seven lawsuits the Justice Department filed across the nation in October 2009 that seek to shut down tax preparers who allegedly promote the redemption scheme. The defendants in those cases allegedly prepared tax returns fraudulently requesting a total of $562.4 million in refunds. Under the scheme, participants file a series of false IRS forms, including tax returns, amended returns, and Forms 1099 (including Form 1099-OID) or Forms W-2, to request fraudulent tax refunds based on phony claims of large income tax withholding.

The Internal Revenue Service (IRS) catches the vast majority of fraudulent redemption-scheme tax refund claims without issuing any refund. Taxpayers who submit the claims face substantial civil monetary penalties, and possible criminal prosecution.

In the past decade, the Justice Department’s Tax Division has obtained more than 435 injunctions against dishonest tax-return preparers and tax-fraud promoters.

The recent 7.0 magnitude earthquake that struck the impoverished nation of Haiti has killed well in excess of 50,000 and injured an unknown number.

Numerous nations, led by the U.S., have begun delivering badly needed food, water, medical supplies and treatment, rescue workers, cleanup and demolition crews and security personnel. One major problem is that the Port Au Prince airport is so crowded that many planes with urgently needed supplies are unable to land and often are delayed for at least one day.

As I’ve written before, when donating to a charitable organization, you should select one or more whose contributions are reasonably sure to get to those in need and are not severely diluted by high administrative expenses, graft and pay-offs.

The internet website charitywatch.org (The American Institute of Philanthropy) has compiled a top-rated list of charities involved in the Haiti earthquake relief efforts. Each charity is given an “A” to “F” rating, based on the portion of their budget going to program services and their fundraising efficiency. You should carefully read the information on the charitywatch.org website in order to diminish the chance of having your credit card number stolen.

In these troubled economic times here in the U.S., many people are financially unable to donate at this time. But if you are able to donate, give an amount you are comfortable with, given your own financial situation. Remember, however, that the need is critical and will be for quit some time to come. I’m sure that all donations will be appreciated sincerely.

Denver station KUSA-TV reported January 11, 2010 that Krahl Construction has
halted work on a $1.5 million project at the main branch of the Denver Public Library as
the apparent result of a January 5 FBI search of Krahl's Chicago headquarters. Krahl also
has an office in Centennial, Colorado.

Krahl notified employees on January 8 that the company would be shutting down
the project. Neither the FBI nor Krahl disclosed why the raid took place, but an FBI
official said the search was part of an ongoing investigation and that the FBI was
"looking for evidence of a crime." No arrests were reported.

Krahl has been paid $430,000 for work already completed, but has been paid
nothing for unfinished work. New bids can be solicited after 10 days according to city
rules.

The company has an "A+" rating from the Chicago Better Business Bureau, and
reportedly does around $100 million a year in commercial construction work. It was
recently working as general contractor on an $81 million project at Riverside Medical
Center in Kankakee, IL, but hospital officials immediately hired another company to
finish the project.

One of the advantages of operating a business as a corporation in Denver is that, with some exceptions, shareholders (owners), officers and directors normally do not have personal liability for corporate debts. Under certain circumstances, however, there may be personal liability, such as for certain unpaid taxes and when equitable principles cause the court to “pierce the corporate veil,” where the court looks behind a corporate entity and takes action as though no entity separate from the members itself existed.

In the recent (October 29, 2009) Colorado Court of Appeals opinion in McCallum Family L.L.C. v. Winger, the court succinctly sets out the requirements for piercing the corporate veil. These requirements are:

1. The corporation is the “alter ego” of the person or entity in issue. Factors determining status as an alter ego may include whether:
a. The corporation is operated as a distinct business entity;
b. funds and assets are commingled;
c. adequate corporate records are maintained;
d. the nature and form of the entity’s ownership and control facilitate
misuse by an insider;
e. the business is thinly capitalized;
f. the corporation is used as a "mere shell";
g. legal formalities are disregarded; and
h. corporate funds or assets are used for noncorporate purposes.

Not all of the requirements need be present in every case. Each case must be decided on its unique factors.

2. The court must determine whether justice requires recognizing the substance of the relationship between the person or entity sought to be held liable and the corporation over the form because the corporate fiction was "used to perpetrate a fraud or defeat a rightful claim."

3. The court must consider whether an equitable result will be achieved by disregarding the corporate form and holding a shareholder or other insider personally liable for the acts of the business entity.

A major lesson to be learned from the foregoing principles is that a corporation must be operated in all respects as a business entity separate and apart from its shareholders, officers, directors and insiders. The requirements of paragraph No. 1 should be strictly observed; otherwise the benefits of immunizing individuals from corporate debt may be placed in jeopardy.

As a follow-up to my article “United Airlines Ramp Supervisor Awarded $3M Damages for Airline’s Retaliation to Her Discrimination Complaint,” I see that an interesting alleged discrimination case has arisen in the Puerto Rico office of the U.S. Attorney.

Juan E. Milanes, a male Assistant U.S. Attorney, claims that the office of Rosa Emilia Rodriguez-Velez, Acting U.S. Attorney for the District of Puerto Rico, was a “girl’s club” where male attorneys were discriminated against and were faced with a hostile work environment.

In his complaint for damages and other relief, now filed in the U.S. District Court in Puerto Rico, Milanes claims that when he was in the narcotics unit, supervised by a female Assistant U.S. Attorney, he was subjected to numerous acts of discrimination, and that his superior created a hostile work environment. Milanes further claims, among other things, that when he complained to the Acting U.S. Attorney, she retaliated against him by denying certain benefits to Milanes’ children, when the same benefits were given to her friends in the “girl’s club.” Milanes also claimed that his superior assigned him the oldest and weakest narcotics cases, threatened him with disciplinary action, and attempted to sabotage his trial work. He says his attempt to transfer to Kosovo was blocked by Ms. Rodriguez-Velez by the filing of a written reprimand on the day he was to leave.

Milanes was placed on administrative leave and forced to resign, an action he says constituted a constructive discharge. It should be noted that only the allegations of Milanes’ complaint are outlined here. Ms. Rodriguez-Velez’s version of the events has not yet been reported.

What is the moral here? Doesn’t the highest government attorney in a U.S. possession have to follow federal law when it comes to her employees? Is it not only businesses who sometimes fail to observe the law? Stay tuned. I will be following this case with interest.

Kudos to Michael Doyle at Suits and Sentences.

Jennifer McInerney, a former United Air Lines ramp supervisor, was awarded $3 million by a federal court jury in Colorado after finding that McInerney was retaliated against by United for making a discrimination complaint.

McInerney became pregnant in 2005. Anticipating that her pregnancy may have complications, she requested assignment to alternate positions, which requests were denied. Her son was born 11 weeks premature in November and she took all available family and medical leave, vacation leave and sick time. When her time off expired in March 2006, United refused to give her additional unpaid leave, although McInerney claimed that male ramp attendants were given unpaid time off. United ordered her to return to work in March 2006. When she didn’t return, United terminated her, claiming there was a shortage of ramp supervisors, and that when McInerney requested unpaid leave, the company couldn’t hold her job open any longer.

The jury found that although United did not discriminate against McInerney
because she was a woman when it refused her request for additional unpaid leave, but it did find that she was retaliated against for having made the discrimination complaint to the company in the first place.

Senior Federal District Judge Richard P. Matsch denied United’s post-trial motions, including a motion for reduction in the $3 million judgment amount. As to the latter motion, the judge said, “The defendant consistently refers to this case as a “garden-variety” emotional distress damages case. That characterization is a reflection of the same callous indifference to Ms. McInerney's plight as was shown by Kevin Mortimer in refusing to consider the plaintiff's repeated requests for accommodation.”

Colorado and other employers should look very carefully at their personnel decisions following an employee’s request for accommodation and discrimination complaints. Employer rules should prohibit any retaliatory action against the employee. Training of supervisors and making employees aware of recognizing possible retaliatory actions is a good starting place for preventing lawsuits similar to the McInerney case.

I recently wrote of the S.E.C.’s abysmal failures in not detecting Bernard L. Madoff’s billion dollar Ponzi scheme. (See “Bernard Madoff: An Epilogue, Parts I and II”). H. David Kotz, the S.E.C.’s inspector general has now issued two reports in which he recommends dozens of changes in the way the agency evaluates tips, trains investigators and documents examinations of securities firms.

The first report, pertaining to the S.E.C’s inspections and examinations office, recommends 37 improvements that would effectively overhaul nearly every aspect of the division’s operations. The recommendations include the manner in which investigators follow up on tips and the creation of step-by-step procedures in identifying potential securities laws violations.

The inspector general also issued 21 recommendations to the S.E.C.’s division of enforcement, including a formal process for handling complaints and improving the working relationships within the division. One recommendation would mandate that tips and complaints be reviewed by at least two persons with experience in the subject area before taking further action.

The S.E.C. has been directed to establish formal procedures regarding the scope and planning of examinations and the selection of staff members for specific investigations. Mr. Kotz ordered the two S.E.C. divisions to submit a written plan within 45 days detailing how they would apply the recommendations.

A re-reading of my previous blogs on this subject is recommended in order to give context to the ills addressed by the inspector general.

On September 30, 2009, I wrote about the government requirement that imposed upon contractors on certain federal projects a mandate to use the “E-Verify System” to verify a worker’s eligibility to work in the U.S. Employers were required to fire employees whose E-Verify information failed to match government SSA database information. (See “Compliance by Federal Contractors with the E-Verify System Became Mandatory Effective September 8, 2009”).

On October 9, 2009, the Department of Homeland Security (DHS) rescinded the rule. In 2007, several organizations, including the American Civil Liberties Union, National Immigration Law Center, and American Federation of Labor and Congress of Industrial Organizations had filed suit against DHS, claiming that clerical errors and inaccurate records could threaten legal U.S. workers.

At least two courts had issued injunctions to prevent the law from taking effect, while an Arizona federal court had refused to issue such an injunction. The governor of Rhode Island had issued an executive order requiring state agencies and contractors doing business with the state to use the E-Verify System. Both the Bush and Obama administrations supported the law.

[Source: Andrew Morgan, “DHS rescinds controversial 'no-match' employment rule,” Jurist, 10/9/09]

George Gombossy, a former consumer affairs columnist for the Hartford Courant, sued the newspaper and its owner, the Chicago-based Tribune Co., claiming the companies violated his free speech rights by forcing him out of his job.

Gombossy wrote columns and blogs that were critical of Courant advertisers, to which the newspaper’s owners took issue, saying the newspaper couldn’t afford to lose the business. In April, Gombossy told his editors he plann3ed to write a column about a state investigation into Sleepy’s, a mattress company that advertises with the Courant. As a result, Gombossy’s position was eliminated.

Gombossy’s attorney said this was the first time a journalist has used a state law that protects free speech in the workplace to protest a firing on grounds he was trying to protect consumers and keep his newspaper ”trustworthy.”

A spokesperson for the Courant says Gombossy had no contract for continued employment and the companies had the right to make a business decision to eliminate his position, a decision it stands by and will defend.

Gombossy has since started his own consumer affairs website www.ctwatchdog.com. He worked for the Courant for more than 40 years and was chosen to write the consumer affairs column 2007. He says he received excellent performance reviews and his column was widely promoted by the newspaper.

His suit seeks past and future economic losses, including fringe and retirement benefits, punitive damages and attorneys fees.

[Source: The Associated Press, September 29, 2009]

Denver based company, Vail Resorts, Inc. announced September 28, 2009 that it, together with the U.S. Forest Service and the National Forest Foundation, will contribute to a $4 million, three-year project to restore habitat devastated by Colorado’s worst fire in history. The 2002 Hayman fire destroyed 600 buildings, including 133 homes, and burned trees and vegetation on about 215 square miles. Erosion from burned areas caused sediment to build up around Cheesman Reservoir, creating a threat to a main source of water for Denver homes.

Most of the project’s work will focus on about 70 square miles of the most severely affected areas in four watersheds feeding the Upper South Platte River. More than 200,000 trees will be planted, plus willows, dogwood, grasses and sage to restore river areas.

According to Tom Sullivan, state director for the Nature Conservancy, without man’s help it may take 500 years before the forest restores itself.

About 65 percent of the water people use, including for farms and drinking water, comes from watersheds under the management of the Forest Service., About 75 percent of the water supply in Colorado comes through national forests. "The mountains are
the water towers of the West," according to Rick Cables, director of the Forest Service in Denver/

Denver Water, the owner of Cheesman Reservoir, has already spent $8 million planting seedlings, building sediment traps, repairing roads, installing bigger drainage pipes and doing other work to protect the watershed.

Continue reading "$4 Million Project to Help Restore Habitat Harmed by Colorado’s Hayman Fire" »

As most Denver businesses with federal contracts know, effective September 8, 2009, compliance with the free E-Verify internet-based system, formerly voluntary, became mandatory. The rule applies if the prime contract for services or construction is more than $100,000 with a period of performance longer than 120 days. For subcontractors, the value of services or construction must exceed $3,000.

Contractors and subcontractors are required to register with E-Verify within 30 days of the contract award date. The system, which facilitates compliance with federal immigration laws, requires that employers run new hires, whether or not employed on a federal contract, and existing employees directly working on these contracts, through the E-Verify system to determine the person’s eligibility to work in the U.S.

E-Verify compares the information on the individual’s Employment Eligibility Verification Form (I-9) against federal government databases to verify work eligibility. The E-Verify system is operated by the Department of Homeland Security in cooperation with the Social Security Administration. Applicable government contracts must have an E-Verify provision in the contract document. Penalties for non-compliance with the system’s mandatory requirements range from fines to criminal penalties and loss of eligibility to complete or bid on applicable federal government contracts.

The U.S. Chamber of Commerce and various industry associations filed a suit in a Maryland federal court, mounting serious legal challenges to the validity of the system, but the court upheld the system.

It would be prudent for prime contractors to have a provision in their subcontracts for mandatory compliance by subcontractors with the E-Verify system. Affected Colorado contractors should feel free to contact this office or their existing counsel for advice concerning the E-Verify system.

A September 10, 2009 decision by the 2nd Circuit U.S. Court of Appeals holds that an employer may be held liable for age discrimination allegedly committed by third parties, including an independent contractor.

Manhattan Apartments, Inc. (MAI) was the owner of an apartment building. Robert Brooks (Brooks) was hired by MAI as an independent contractor to interview and hire “Showers,” or persons who would show the apartments to prospective renters. In interviewing plaintiff Michael Halpert (Halpert) for a Shower’s job, Brooks allegedly told Halpert that he was “too old” for the position. Halpert sued MAI under the federal Age Discrimination in Employment Act.

The U.S. District Court for the Southern District of New York granted summary judgment in favor of MAI on the basis that Brooks was an independent contractor and that MAI could not be held liable for the act of an independent contractor. The court of appeals reversed the decision and remanded the case to the trial court for trial, including a determination of whether or not MAI’s degree of control over the interview and hiring process for the Shower position rendered Brooks MAI’s agent with respect to that position. The court noted that there was evidence on both sides of that issue, as disclosed by the summary judgment affidavits.

Business entities should take note that, contrary to general principles of non-liability of the principal, a person or business that hires an independent contractor may indeed be responsible for the acts of an independent contractor. This case amply demonstrates the importance of obtaining competent legal advice from an experienced business attorney concerning the sometimes complex issues of legal responsibility of one business or person for the acts of another.

[Source: Halpert v. Manhattan Apartments, Inc., ---F.3d---, 2009 WL 2881388, (CA.2, 2009)]

When your business has a complex lawsuit that you want filed or defended, how do you find a trial attorney who is the best for the kind of case you have and who is experienced and affordable? There are many areas of the law where not all of the lawyers with subject matter expertise (e.g., contract, torts, etc.) also have the ability to actually prepare and take a difficult case to trial in a competent and professional manner.

Preparing and trying a case to verdict demands an attorney with the strategic and persuasive ability to convince a jury of the righteousness of your case. These abilities are independent of the branch or area of law that is involved. They come from many years of experience in successfully trying or favorably settling various types of cases. Before you select your attorney, here are some things you can do that will help ensure that you choose the right one:

1. Ask the attorney how many cases he or she has tried. Attorneys who successfully try many cases usually have the respect of other lawyers and can negotiate a more favorable case settlement.

2. Find out what types of fee arrangements can be made. Attorneys who typically defend cases normally charge on an hourly basis. One unfavorable aspect of this type of fee arrangement is that the attorney gets paid whether you win or lose. A distinct advantage to you, therefore, is a fee arrangement, such as a contingent (percentage) fee, where the lawyer only gets paid if you win. Yet another fee arrangement is the lump sum fee. Again, the lawyer gets paid, win or lose. There are also combinations of a lump sum fee with a contingency for success.

3. Ask the attorney for a professional resume that sets forth the attorney’s legal education, memberships in professional (just pay the dues) and honorary (by invitation only) organizations, awards, experience, publications, etc.

4. Ask around. Business associates who have hired lawyers are sometimes good sources. Other lawyers in the community usually know who the best trial lawyers are. Check out the lawyer in a legal directory, such as the Martindale-Hubbell Law Directory©. This publication can usually be found at your local library. It contains a lawyer’s legal ability and ethics ratings, using input from lawyers in the local community who know the lawyer.

5. A face-to-face meeting with the lawyer is a good idea. You can learn a lot about the lawyer’s personality, demeanor and, if you ask a few questions, about his ethics and standards. You should feel comfortable and at ease with your lawyer.

6. Make sure to ask the lawyer if he or she will personally be involved in all major aspects of preparing and trying the case.

The Federal District Court for the Northern District of Texas has decided that an arbitration clause in a Blockbuster Inc. contract with its customers was illusory and could not be enforced by Blockbuster.

The lawsuit was brought by customers after the names of movies the customers rented from Blockbuster were published on Facebook under a contract between Blockbuster and Facebook. Customers claimed that such publication violated the Video Privacy Protection Act which prohibits a videotape service provider from disclosing personally identifiable information about a customer without the customer’s written consent. Blockbuster attempted to invoke the binding arbitration clause, taking the position that the court had no authority to decide the underlying issue and that it must be decided by arbitration.

The Blockbuster/customer contract contained a provision providing basically that the contract could be amended by Blockbuster “at its sole discretion” and “at any time.” The amendment became effective merely by posting it to the Blockbuster internet website. This right to amend did not exclude the arbitration provision The customers countered that the arbitration provision was “illusory” and that Blockbuster could not unilaterally change the rules of the game.

The court concluded that the arbitration provision was “illusory and unenforceable” and thus determined that the customers were not compelled to have their claims arbitrated.

The moral of this incident is that corporations should be very careful about including this type of unilateral right to amend in their contracts without first seeking legal advice from their attorney. It should be noted that this case applies only to Texas contracts. No attempt has been made by yours truly to determine the status of the law on this issue in other state or federal jurisdictions.

A new law, effective June 2, 2009 is of vital importance to employers in Colorado. The law imposes substantial fines and other punishment to any employer who misclassifies an employee as a subcontractor. The fine for a first willful violation is up to $5,000 for each misclassified employee. For a second willful violation, the fine is up to $25,000 for each misclassified employee and a two year disqualification pf the employer from contracting with any agency of the state.

The purpose of the bill is to protect rights to unemployment and workers compensation to those who should be classified as employees, to ensure that employers pay appropriate taxes to the state, and to prevent an unfair competitive advantage to those employers who misclassify persons as independent contractors over those who properly classify persons as employees.

An employer may request a written opinion from the Director of the Division of Employment and Training in the Department of Labor and Employment, concerning whether the employer should classify a person as an employee or independent contractor. The Director’s opinion is merely advisory and not binding. Thus, in the event any person files a complaint against the employer, and a hearing is conducted pursuant to the rules set up by the Director, an individual may be deemed by the Director to be an employee, notwithstanding an earlier informal opinion that the individual is an independent contractor.

It is interesting to note that nowhere in the law are there any definitions or guidelines concerning how to classify an individual. Thus, it would seem that the employer makes the classification at his, her or its peril.

Colorado court opinions give some guidance in this area. For example, in the 1993 case of Brighton School Dist. v. Lyons, the Court of Appeals notes that there are two tests for determining whether a relationship is one of employer-employee or independent contractor, the “control” test, and the “relative nature of the work” test.

Under the “control” test, the most important factor in determining employment status is whether the alleged employer exercises control over the means and methods of accomplishing the contracted service. This test also considers factors such as whether compensation is measured by time or lump sum and which party furnishes the necessary tools and equipment to perform the work.

Continue reading "New Colorado Law Punishes Employer for Misclassifying “Employee” as “Independent Contractor" »

In a previous post about high risk and Colorado business litigation, I reminded companies who hire lawyers by the hour of the substantial expense of that arrangement as well as the potential conflict of interest between the business and its lawyers. Now, let’s look at a couple of other risks.

Risk #3: Lack of courtroom experience. The law firm who bills you hourly often has a bunch of junior associates who do most of the case preparation. The lawyer who will try the case, though, is rarely involved in the early stages. Why would you want lawyers preparing your important case when the lawyers may never have tried a lawsuit? Some of them have never been inside a courtroom. Hiring an injury lawyer who agrees not to be paid unless you recover money means that your lawyer will be involved from the very beginning. No more junior associates churning out huge monthly attorneys’ fees.

Risk #4: Case becomes too technical. You don’t need a lawyer who knows the nooks and crannies of arcane accounting practices and has memorized the footnotes to the rules of the SEC. When you sue a brain surgeon who has made a mistake, don’t look for a lawyer who has been to medical school. Look for a good injury lawyer. When your family has been injured because of a design defect in an automobile, don’t hire a lawyer who has been trained as a mechanical engineer. Hire an injury lawyer. Injury lawyers understand how to simplify the case and keep the jury focused on the trial story and not on accounting practices.

I would enjoy the opportunity to discuss with you or one of your customers how we can work with you on select high risk / high reward business litigation. We work on a contingent fee basis. Contingent fees are not just for injured people. They also work well for commercial/financial institutions who do not want to front large legal fees in a case where success is not assured. In those cases, we become your partner. We do not take a fee unless we recover money for you. Contact me.

~Jim Gilbert~