Source: https://cbaclelegalconnection.com/tag/business-law/page/3/
Timestamp: 2019-04-20 18:20:58+00:00

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The Colorado Supreme Court issued its opinion in People v. Rediger on Monday, April 30, 2018.
Public Employee—Invited Error—Waiver—Constructive Amendment—Plain Error Review.
This case required the supreme court to decide two questions: (1) whether the owner–director of a nonprofit school regulated by various governmental entities is a “public employee” within the meaning of C.R.S. § 18-9-110(1), and (2) whether respondent waived or invited error with respect to a constructive amendment claim when his defense counsel stated that he was “satisfied” with the proposed jury instructions, notwithstanding the fact that the elemental instruction on the charge of interference with the staff, faculty, or students of an educational institution tracked C.R.S. § 18-9-109(1)(b) rather than C.R.S. § 18-9-109(2), which was the subsection charged in the information.
As to the first question, the court concluded that “public employee” means an employee of a governmental entity, and therefore an employee of a nonprofit school is not a public employee. Accordingly, the court agreed with the court of appeals division’s decision that respondent’s conviction for interference with a public employee in a public building cannot stand.
As to the second question, the court concluded that respondent neither waived nor invited error with respect to his constructive amendment claim because the record does not indicate that he or his counsel either intentionally relinquished a known right or deliberately injected the erroneous jury instruction as a matter of trial strategy. The court instead construed respondent’s general acquiescence to the instructions as a forfeiture and, reviewing for plain error, concluded that the constructive amendment of respondent’s charging document constituted plain error necessitating a new trial.
The court affirmed in part and reversed in part the court of appeals division’s judgment.
The Colorado Court of Appeals issued its opinion in Paradine v. Goei on Thursday, April 19, 2018.
Wage Claim Act—Corporations—Piercing the Corporate Veil.
Plaintiff served as the chief financial officer and vice president of administration for Aspect Technologies, Inc. (Aspect), a corporation. Defendant Goei was the chief executive officer. Plaintiff sued Goei and Aspect, raising a claim under the Colorado Wage Claim Act (the Act), for fraud, and for breach of contract. He alleged that defendants owed him unpaid wages. The trial court granted Goei’s motion for judgment on the pleadings and dismissed the three claims against him individually with prejudice.
On appeal, plaintiff asserted that he was not barred from piercing the corporate veil and holding Goei personally liable under the Act. The Act does not categorically bar a plaintiff from piercing the corporate veil to hold an individual liable for unpaid wages. Plaintiff’s fraud claim made allegations in support of his request that the trial court pierce the corporate veil to impose liability on Goei, and plaintiff’s breach of contract claim incorporated the allegations in the fraud claim. Because plaintiff pleaded sufficient facts to establish a plausible claim that plaintiff could pierce the corporate veil, the trial court erred when it granted Goei’s motion to dismiss on the pleadings.
The judgment was reversed and the case was remanded with directions.
The Colorado Supreme Court issued its opinion in Gadeco, LLC v. Grynberg on Monday, April 9, 2018.
In this original proceeding, the supreme court considered whether the trial court abused its discretion when it found that defendant impliedly waived the physician-patient privilege as to his mental health records by asserting counterclaims for breach of contract, requesting specific performance, and denying the opposing parties’ allegations. The court affirmed its rule that only privilege holders—patients—can impliedly waive the physician-patient privilege, and they do so by injecting their physical or mental condition into the case as the basis of a claim or an affirmative defense. Correspondingly, an adverse party cannot place a patient’s mental condition at issue through its defenses, nor can a privilege holder do so by denying an adverse party’s allegations. Applying those rules, the court held that defendant did not waive the physician-patient privilege through his counterclaims or answer. The court concluded that the trial court abused its discretion by ordering defendant to produce his medical records for in camera review and made the rule to show cause absolute.
The Colorado Court of Appeals issued its opinion in Minshall v. Johnston on Thursday, March 22, 2018.
The Minshalls filed a complaint against Johnston. Johnston was not personally served with process; instead, the court permitted substitute service under C.R.C.P. 4(f) on the registered agent of Aries Staffing LLC (Aries), a corporation of which Johnston was a co-owner and shareholder. The district court entered a default judgment against Johnston when he failed to respond to the complaint. Six months after he claimed he learned of the default judgment, Johnston moved pro se to set it aside, arguing that he was not properly served with process. The district court denied the motion.
On appeal, Johnston argued that the judgment against him is void for lack of jurisdiction. He contended that the Minshalls did not exercise due diligence in attempting to serve Johnston personally, which was a necessary condition precedent to serving him by substituted service. It was undisputed that the Minshalls complied with the procedural requirements of Rule 4(f) by filing an affidavit from the process server detailing his numerous unsuccessful attempts to serve Johnston. They also documented numerous other ways they tried to locate and serve Johnston. The record supports the district court’s finding that the Minshalls met the due diligence requirement of the rule.
Johnston also argued that substituted service on Aries’ registered agent, Incorp Services, Inc., was not reasonably calculated to give him actual notice of the suit. The court of appeals found no authority supporting the proposition that service on a registered agent of a corporation is sufficient, by itself, to effectuate valid service on a “co-owner” of a corporation. Here, there was no indication in the record of a separate relationship between Incorp and Johnston or other facts that would support the required finding under Rule 4(f).
The order was vacated. The case was remanded for a determination as to whether service on Incorp under Rule 4(f) was reasonably calculated to give actual notice to Johnston.
The Tenth Circuit Court of Appeals issued its opinion in HCG Platinum, LLC v. Prederred Product Placement Co. on Tuesday, October 17, 2017.
HCG Platinum, LLC (HCG) and Preferred Product Placement Corporation (PPPC) entered into a marketing and non-circumvention agreement, where PPPC agreed to place HCG products into specified retailers in exchange for a percentage of the proceeds, PPPC would disclose details of negotiations and projects with other business associates, and HCG would be prevented from interfering with PPPC’s agreements with any third-parties. The following year, HCG filed a breach of contract action against PPPC, alleging that PPPC breached the agreement by failing to execute a sales agreement with certain retailers. PPPC filed a counterclaim alleging that HCG breached the agreement by failing to pay outstanding commissions and by interfering with PPPC’s third-party relationships. The damages PPPC put forth were void of evidential support or significant written explanation.
HCG then moved to preclude PPPC from presenting any evidence of damages under the agreement. HCG argued that PPPC’s initial disclosures described projections that would be inadmissible without expert testimony and PPPC should not be able to put on any evidence of damages.
The district court stated that PPPC’s failure to supplement the damages aspect of its initial disclosures meant that PPPC could not introduce evidence of damages unless its discovery deficiency proved harmless or substantially justified. The district court then described an established “four factor test” regarding: (1) the prejudice or surprise to the party against whom the damages evidence would be offered, which is HCG; (2) HCG’s ability to cure that prejudice; (3) the extent to which the introduction of new damages evidence would disrupt the trial; and (4) whether bad faith or willfulness motivated PPPC’s discovery failures.
The district court addressed the fourth factor and found no support for a finding of bad faith. The district court then focused on prejudice and harmlessness and allowed arguments from both parties for the right way to think about the issue. HCG argued that the law compelled exclusion due to PPPC’s failure to disclose precise quantifications of damages, as well as claiming that the prejudice proved incurable and disruptive because reopening discovery and reviewing new documents would be burdensome and expensive. PPPC emphasized that its conduct caused only slight prejudice, which could be easily remedied through limited additional discovery.
The district court concluded that PPPC could not proceed to trial and entered a judgement in favor of HCG. PPPC appealed. The Tenth Circuit Court of Appeals reviewed the district court’s decision.
The Tenth Circuit concluded that the district court abused its discretion by imposing a discovery sanction that barred PPPC from pursing its counterclaims. The court based this conclusion on the fact that the district court misapplied the four-factor test described above, and found that the record reflected that the district court reached an arbitrary outcome that overlooked all but the last factor of the test.
The Tenth Circuit reversed the district court’s judgment in favor of HCG on PPPC’s counterclaims and remanded to allow the district court to reevaluate the exclusion of PPPC’s damages evidence under the four factor test.
The Tenth Circuit also mentioned that district courts should consider the effectiveness of lesser sanctions, where the exclusion of evidence has the necessary force and effect of a dismissal. There are three reasons for this. First is that dismissal constitutes an extreme sanction that typically is appropriate only in cases of bad faith or willful misconduct. Second, the Federal Rules of Civil Procedure expressly empower the district courts to impose sanctions short of exclusion. And third is the notion that district courts should consider the appropriateness of lesser sanctions, where their discovery rulings have the effect of dismissal, which is in accord with the decisions of other circuits.
The Tenth Circuit held that where the exclusion of evidence has the necessary effect of a dismissal, as in this case, the district courts should, in conjunction with the traditional four factor test, consider the efficacy of less drastic alternatives, reserving the sanction of dismissal for cases involving bad faith or willfulness or instances where less severe sanctions would prove futile.
The Tenth Circuit Court of Appeals REVERSED the district court’s judgment in favor of HCG and REMANDED with instructions that the district court reevaluate the exclusion of PPPC’s damage evidence.

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