Source: https://cbaclelegalconnection.com/2014/03/19/
Timestamp: 2019-04-19 08:40:57+00:00

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On January 30, 2014, Rep. Elena Kagan and Sen. Michael Johnston introduced HB 14-1229 – Concerning Authorizing Sharing Information Between State and Local Government Agencies Related to Legal Marijuana. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.
For retail marijuana licensing purposes, the bill allows a local jurisdiction to submit fingerprints for purposes of conducting a criminal history background check or to acquire a name-based criminal history check if the licensee’s fingerprints are unclassifiable.
The bill passed out of both houses and was sent to Gov. John Hickenlooper on March 12.
The governor signed this bill into law on March 17, 2014.
On January 30, 2014, Rep. Mike McLachlin and Sen. Gail Schwartz introduced HB 14-1222 – Concerning Modification of the Terms Under Which a County may Issue Tax-Exempt Private Activity Bonds on Behalf of an Eligible Applicant for the Purpose of Financing a Geothermal Energy Project on the Applicant’s Property. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.
Current law allows a county to issue private activity bonds on behalf of a property owner or group of property owners who do not own an entire cooperative electric association (eligible applicant) for the purpose of constructing, expanding, or upgrading an eligible clean energy project on the eligible applicant’s property. For an eligible clean energy project that is a geothermal energy project only, the bill reduces the minimum amount of private activity bonds that a county may issue for an eligible applicant from $1 million to $500,000, extends the maximum repayment term for bonds from 10 years to 15 years, and allows the bonds to be correlated to the revenue stream of the project up to 75% so long as bond payments do not exceed 75% of project revenue.
The bill passed out of the House on February 24. On March 13, the Senate Agriculture, Natural Resources, & Energy Committee approved the bill and sent it to the Senate floor for consideration on 2nd Reading.
On January 30, 2014, Rep. Joann Ginal and Sen. Lois Tochtrop introduced HB 14-1215 – Concerning the Ability of a Federal Home Loan Bank to Enforce its Rights with Regard to Collateral Subject to a Security Agreement. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.
In statutes governing the disposition of the assets of insolvent insurers, the bill generally prohibits a receiver or liquidator from avoiding the obligations of the insolvent insurer to a federal home loan bank with respect to collateral under a security agreement or related agreement to which the bank is a party. The bill passed out of both houses and was sent to Gov. John Hickenlooper on March 14.
On January 30, 2014, Rep. Cheri Gerou and Sen. David Balmer introduced HB 14-1214 – Concerning an Increase in the Penalties for Certain Offenses Committed Against an Emergency Medical Service Provider. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.
The bill increase the penalties for assault in the first degree, assault in the second degree, and murder in the first degree against an emergency medical service provider if the victim was engaged in the performance of his or her official duties and the offender knew or reasonably should have known that the victim was an emergency medical service provider.
The bill requires a court to sentence a person to the department of corrections if the person is convicted of assault in the first degree or assault in the second degree against an emergency medical service provider.
The bill lists the intentional killing of an emergency medical service provider engaged in the performance of his or her official duties as an aggravating factor for class 1 felonies.
The bill defines emergency medical service provider. The bill makes conforming amendments.
On February 11, the Judiciary Committee approved the bill and sent it the Appropriations Committee.
No [public] company . . . or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of [whistleblowing or other protected activity].
While it is clear from the statutory language that a private contractor or subcontractor of a public company cannot engage in retaliatory actions against an employee, courts have divided on whether “an employee” refers only to the public, SOX-reporting company’s employees, or also protects employees of the private contractor or subcontractor from retaliation.
The plaintiffs in Lawson were two former employees of private companies that contracted to advise and manage mutual funds, which had no employees and are covered by SOX as companies required to make certain regulatory filings. After they were allegedly retaliated against for attempting to report a purported fraud related to mutual funds, the plaintiffs brought a whistleblower claim against their former employers under Section 806. The defendants’ motion to dismiss was initially denied by the District Court, but the First Circuit reversed the decision and found that dismissal was appropriate because Section 806 did not protect the plaintiffs as employees of private companies.
On appeal, the Supreme Court examined the text of the statute, the context in which it was enacted, and its legislative history. Writing for the majority, Justice Ruth Bader Ginsburg wrote with regard to statutory text that the language of Section 806 is unambiguous, and contains “numerous indicators that the statute’s prohibitions govern the relationship between a contractor and its own employees.” With regard to legislative intent, Justice Ginsburg likewise found that Section 806 was enacted “to encourage whistleblowing by contractor employees who suspect fraud involving the public companies with whom they work.” Justice Ginsberg was joined in the majority by Chief Justice Roberts, and Justices Breyer and Kagan. Justices Scalia penned a separate opinion, joined by Justice Thomas, concurring in the ruling but criticizing the majority’s focus on legislative intent and comparisons to other whistleblower laws.
The dissent notwithstanding, the Court’s decision is now the law of the land, and will likely remain so unless and until Congress acts to overturn the majority’s interpretation of Section 806. While the majority was dismissive of any “floodgate-opening concerns” about a potential deluge of new whistleblower litigation, there is no question that the number of employees covered by SOX’s whistleblower provisions has been enormously expanded by the Court’s ruling. As such, many private employers who have become accustomed to thinking of themselves as outside the scope of SOX’s whistleblower provisions will need to reevaluate their practices and procedures in light of Lawson, and take steps to minimize the potential for whistleblower claims. Such steps can include, among other things, changes to the company’s training programs, employee documentation and record-keeping procedures, and internal policies governing the discipline process and the permissible grounds for taking adverse action against an employee.
At a minimum, private companies who contract to do business with public companies should seek the assistance of counsel to conduct a thorough review of their internal control and compliance procedures, in addition to modifying their anti-retaliation policies as needed. Companies should also conduct training on what is and is not permissible given SOX’s whistleblower provisions, and make it clear that knee-jerk firings and other adverse actions must be avoided when an employee reports fraud or other misconduct covered by SOX, whether allegedly occurring at the public company or at the contractor-employer. Likewise, public companies need to recognize that they may now be found liable not only for retaliation against their own employees who report SOX violations, but also for retaliatory acts conducted by agents of the public company against the employees of its private contractors and subcontractors. Public company employers thus may also need to reconsider their SOX reporting and anti-retaliation policies in light of the fact that Lawson greatly expanded the pool of potential whistleblower claimants.
As a final note on Lawson, it is worth noting that the Supreme Court chose not to weigh in on another important issue recognized in the case – the extent to which a prior decision by the Department of Labor’s (“DOL”) Administrative Review Board’s (“ARB”) was entitled to deference by the Court. Several months after the First Circuit’s decision in Lawson, the ARB came to the opposite conclusion in Spinner v. David Landau & Associates, LLC. In that case, the ARB held that the meaning of “employee” in Section 806 was ambiguous, and therefore the ARB did not have to follow the First Circuit’s ruling. Instead, the ARB sought to expand SOX’s reach in holding that Section 806 applied to employees of privately-held companies if they had contracts with publicly-traded companies.
Thus, when the Supreme Court agreed to hear Lawson, many observers hoped that the Court would use it as an opportunity to decide the proper level of deference that courts should give to the ARB’s construction of SOX. The Court, however, essentially passed on the issue, simply noting in a footnote that “[b]ecause we agree with the ARB’s conclusion that [Section 806] affords protection to a contractor’s employees, we need not decide what weight that conclusion should carry.” But while the deference issue was left unanswered, the Court’s Lawson decision will almost certainly have a large impact in the arena of SOX whistleblower litigation. At the very least, it has given both public company and private company employers plenty to consider in ensuring that they are in compliance with SOX’s anti-retaliation laws.
Brett Coburn is a partner who concentrates his practice on employment litigation and counseling. His litigation experience includes gender, race, age and disability discrimination suits under Title VII, the ADEA and the ADA, as well as FLSA wage and hour claims and FMLA interference and retaliation claims. His experience also includes the defense of collective actions under the FLSA and ADEA. He has litigated cases involving misappropriation of trade secrets, breach of employment contracts, violation of non-competition and other restrictive covenants, defamation, breach of employee duties, tortious interference and related customer and employee raiding claims.
Bob Riordan is a litigator who focuses on disputes relating to employment, business torts, unfair competition and commercial transactions. He regularly represents clients in both federal and state courts, as well as various agencies and arbitral forums. He has appeared in trial and appellate courts throughout the country, and has been recognized for his achievements in Best Lawyers in America, Chambers USA: America’s Leading Lawyers for Business, Georgia Trend’s Legal Elite, PLC Which Lawyer? and Super Lawyers magazine. Mr. Riordan has extensive experience in defending wage disputes brought on a mass and class basis as well as whistleblower claims. He also regularly defends companies against claims of all varieties of discrimination and retaliation, as well as claims relating to the law of public accommodation, tortious interference, breach of fiduciary and other duties, theft of trade secrets and similar matters. In addition, Mr. Riordan often litigates contract disputes, including earn-out and other claims tied to business combinations.
 571 U.S. ___ (March 4, 2014).
 18 U.S.C. § 1514A(a) (2006 ed.) (emphasis added).
 See Lawson v. FMR, LLC, 670 F.3d 61 (1st Cir. 2012).
 Id. at 19. Despite Justice Ginsburg’s observation, the rule of Lawson extends to reports of alleged misconduct committed by both the public company and the employer-contractor. Indeed, as pointed out in the dissent, under the majority’s holding, the employer-contractor’s alleged misconduct may have nothing to do with the contract between the employer-contractor and the public company.
 Id. at 2 (Sotomayor, dissenting).
 ARB Nos. 10-111, 10-115 (May 31, 2012).
 For its part, the First Circuit noted in its decision that, because the statute was unambiguous, the court owed no so-called Chevron deference to any contrary agency determinations. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) (holding that agency interpretations of ambiguous statutes will be upheld so long as they are reasonable, but where a statute is unambiguous, the courts as well as the administrative agencies must give effect to its clear meaning).
 Slip op. at 9 n.6. The dissent in Lawson argues that the majority in fact declined deference by not endorsing all of the ARB’s holding in Spinner. Slip op. at 17 n.11.
The Colorado Supreme Court issued its opinion in People v. Alfaro on Monday, March 17, 2014.
The People petitioned for review of the court of appeals’ judgment in People v. Alfaro, No. 06CA314 (Colo.App. May 12, 2011) (not published pursuant to CAR 35(f)), which reversed defendant’s various convictions for murder, burglary, and attempted kidnapping. On direct appeal, the court of appeals found that the trial court erred by allowing defendant fewer peremptory challenges than authorized by statute and rule. Although defendant failed to object to the trial court’s interpretation of the applicable statute, the court of appeals found that the trial court’s error rose to the level of plain error, and ordered defendant’s convictions reversed and his sentences vacated.
The Supreme Court reversed the court of appeals’ judgment. The Court found that the court of appeals did not apply the outcome-determinative standard, which the Court’s holding in People v. Novotny, 2014 CO 18, makes mandatory for good-faith errors impairing a defendant’s capacity to shape the jury through peremptory challenges.

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