Justia U.S. 10th Circuit Court of Appeals Opinion Summaries

Okmulgee Inn Venture, LLC (Okmulgee) leased space to a nightclub-bar and was a named insured on a liquor liability insurance policy. Okmulgee’s insurer, Mount Vernon Fire Insurance Company (Mt. Vernon), assumed a duty to defend Okmulgee against suits seeking damages for injuries covered by the policy. In 2006, three bar patrons sustained gunshot wounds during a fight at the nightclub and sued Okmulgee, alleging, among other things, that Okmulgee failed to ensure the safety of the bar’s patrons, properly train the bar's staff, or investigate the bar’s operator. The only specific allegations pertaining to alcohol were that two of the three victims were under-age but were admitted to the bar and served alcohol. Mt. Vernon refused to defend Okmulgee in these suits. Mt. Vernon asserted there was no coverage under the policy, and thus no duty to defend or indemnify, because the allegations did not indicate the injuries were caused by the selling, serving, or furnishing of alcoholic beverages. Mt. Vernon then initiated this declaratory judgment action to determine its obligations. On cross motions for summary judgment, the district court ruled in favor of Mt. Vernon. Okmulgee insisted Mt. Vernon owed it a duty to defend because the facts showed that coverage was provided by the policy. Because the victims had yet to establish Okmulgee’s liability for any claims, the Tenth Circuit concluded after its review that the question of Mt. Vernon’s duty of indemnification was not ripe for adjudication. Mt. Vernon is obligated to defend its insured, and Okmulgee was entitled to summary judgment on the duty-of-defense issue.

In 2005, Appellant CCCOK, Inc. filed a complaint at the Oklahoma Corporation Commission (OCC) against Southwestern Bell Telephone, L.P.(SWBT). CCCOK sought an order directing SWBT to pay it over two-million dollars in compensation for SWBT's alleged breach of a contract between them. The OCC rejected CCCOK’s claim, concluding that CCCOK was not entitled to compensation under the "clear and unambiguous" language of the Parties' contract. The federal district court affirmed the OCC's ruling. CCCOK appealed. On appeal, CCCOK contended that the OCC's ruling was arbitrary and capricious because it: (1) disregarded the terms of the parties' contract; (2) contradicted record evidence; and (3) violated CCCOK's rights under state and federal law. Upon review, the Tenth Circuit concluded that the OCC's ruling was not arbitrary and capricious and it affirmed the district court's decision.

Plaintiff John Ensey was employed by both Defendant Ozzie’s Pipeline Padder, Inc. (Ozzie’s) and Rockford Corporation when he was severely injured. He sued Ozzie’s but was denied relief on the ground that Ozzie’s was protected by the exclusive-remedy provision of the New Mexico Workers’ Compensation Act. Plaintiff appealed, contending that Ozzie’s could not invoke the exclusivity provision because it failed to show that it contributed to paying for the workers’ compensation policy obtained by co-employer Rockford. Upon review, the Tenth Circuit concluded that under New Mexico law Ozzie’s was protected by the exclusivity provision because its contract with Rockford required Rockford to obtain workers’ compensation insurance for Plaintiff, and Plaintiff failed to produce evidence to overcome the inference that Ozzie’s therefore contributed to paying the insurance premium. Accordingly, the Court affirmed the district court's judgment that denied him relief.

In 2003, the Securities and Exchange Commission (SEC) sought a preliminary injunction against ClearOne Communications, Inc. based on suspicions of irregular accounting practices and securities law violations. During a hearing on the preliminary injunction, Defendant and former CEO Susie Strohm was asked if she was involved in a particular sale by ClearOne that was the focus of the SEC’s case. She said she was not and approximated that she learned of the sale either before or after the end of ClearOne’s fiscal year. Based on this testimony, Defendant was later convicted of one count of perjury. She argued on appeal to the Tenth Circuit that her conviction should be reversed because (1) the questioning at issue was ambiguous, (2) her testimony was literally true, and (3) even if false, her testimony was not material to the court’s decision to grant the preliminary injunction. The Tenth Circuit disagreed on all three points. The Court found the questions were not ambiguous and there was sufficient evidence to demonstrate Defendant knowingly made false statements. Also, Defendant's testimony was material to the preliminary injunction hearing because it related to a transaction the SEC believed demonstrated ClearOne’s accounting irregularities. The Court therefore affirmed Defendant's conviction.

Marcus Food Company, a Kansas corporation based in Wichita, entered into an oral agreement in 1999 with Robert DiPanfilo, a citizen of Canada, under which DiPanfilo served as an independent sales and purchasing agent for the company. The agreement included a provision that rendered DiPanfilo liable to Marcus Food for 45% of any net losses on his accounts. After the parties’ relationship ended 10 years later, Marcus Foods attempted to collect on debts allegedly owed it under the agreement by suing DiPanfilo in the federal district court. A default judgment was entered against DiPanfilo following his failure to appear or respond to the complaint. DiPanfilo then moved to set aside the default judgment six-and-a-half months later on the grounds that it was void for lack of jurisdiction and/or because his delay was due to excusable neglect. After a hearing, the court denied DiPanfilo’s motion, finding personal jurisdiction over DiPanfilo, subject matter jurisdiction over the case, and insufficient support for his excusable-neglect argument. DiPanfilo appealed. Upon review of the district court's record and the applicable legal authority, the Tenth Circuit found no error in the district court's judgement and affirmed its judgement in favor of Marcus Foods.

Sorenson Communications, Inc. challenged the 2010-2011 rates set by the Federal Communication Commission (FCC or Commission) to compensate Video Relay Service providers, including Sorenson. Video Relay Service (VRS) is a type of telecommunication relay service (TRS), "which enables a person with a hearing disability to remotely communicate with a hearing person by means of a video link and a communications assistant." FCC regulations provide certain minimum standards that VRS providers must meet. Among these requirements, VRS providers must operate every day, twenty-four hours a day, and must answer 80 percent of all calls within 120 seconds. TRS customers do not pay to access the service. Instead, TRS providers are compensated by the TRS Fund at a rate determined by the FCC. The TRS Fund is financed by interstate telecommunications providers on the basis of interstate enduser telecommunications revenues. Until 2007, the Commission set VRS rates annually, which resulted in significant variation in compensation each year. In 2007, the FCC adopted a three-tiered rate structure for compensating VRS providers, with rates that declined as the number of minutes per month increased. Sorenson asked the FCC to stay its 2010 Order which retained the tiered structure of the 2007 order, but reduced rates on all tiers. Upon review, the Tenth Circuit denied Sorenson's petition for review because the Commission’s order was consistent with its statutory mandate and was not arbitrary or capricious.

The issue before the Tenth Circuit in this case pertained to a "class-of-one" equal protection lawsuit against a county government based on its demand that a property owner correct a nuisance. Kansas Penn Gaming, LLC alleged that after it and Cherokee County became involved in litigation concerning a casino development agreement, the County health department targeted Kansas Penn for a regulatory enforcement action. In particular, the County sent Kansas Penn a notice stating that the unkempt condition of its property violated state and local nuisance laws and regulations and warning that failure to clean up the property would lead to an enforcement action. Although the County never brought an enforcement action against Kansas Penn, Kansas Penn sued the County and some of its officials under 42 U.S.C. 1983. In its complaint, Kansas Penn alleged the notice of nuisance violated its right to equal protection by arbitrarily and maliciously singling it out for selective enforcement. Because the Tenth Circuit agreed with the district court that Kansas Penn failed to state a claim for relief under the standard set forth by "Bell Atl. Corp. v. Twombly," the Court affirmed dismissal of the complaint.

Appellants F. Jeffrey Miller and Hallie Irvin were charged in an eleven-count indictment with a variety of crimes stemming from an alleged conspiracy to defraud mortgage lenders in connection with the subprime housing market. After a month-long jury trial, Miller and Irvin were each convicted on several of the charges and sentenced. They appealed their convictions, citing numerous evidentiary and legal errors. Miller also challenged his sentence. Miller was a builder and developer involved in residential construction in Kansas, Missouri, and other states. With many competing developers marketing their homes to well-qualified buyers, Miller chose to focus his business on buyers with low income and poor credit. The marketing of Miller’s homes was handled by Stephen Vanatta, who would refer potential buyers to a mortgage broker named James Sparks for financing. Because a prior felony conviction for passing a bad check prohibited Vanatta from maintaining a checking account, his portion of commissions were paid by checks issued to his wife, appellant Irvin. Upon review, the Tenth Circuit found the district court erred on three of the eleven charges against Defendant Miller, but affirmed the district court in all other aspects. The Court remanded the case for further proceedings.

Plaintiff Qwest Corporation (Qwest) and Defendants Colorado Public Utilities Commission (CPUC), individual commissioners, and Cbeyond Communications, LLC (Cbeyond) (together, defendants), cross-appealed the district court’s decision construing 47 C.F.R. 51.5, a Federal Communications Commission (FCC) regulation relating to local telephone service providers. In order to facilitate competition in the local telephone service market, federal law requires incumbent local exchange carriers (ILECs), such as Qwest, to lease certain parts of their telecommunications networks to competitive local exchange carriers (CLECs), such as Cbeyond. ILECs are relieved of this obligation if, among other circumstances, the number of “business lines” in a local exchange reaches a certain threshold because, in the FCC’s view, a sufficient number of business lines shows that it would be economic for CLECs to invest in their own infrastructure. The term “business line” and the method of counting business lines are defined in the regulation. The parties disagree as to which types of a particular network element—UNE loops—are included in the business line count. The district court held that UNE loops serving non-business customers are included in the business line count and that non-switched UNE loops are not included in the business line count. Upon review, the Tenth Circuit affirmed the portion of the district court ruling that the business line count includes nonbusiness UNE loops; the Court reversed the district court's decision that the business line count does not include non-switched UNE loops.

Jack Katz and Infinity Clark Street Operating were minority shareholders in a real estate investment trust (REIT) owned by Archstone Smith Trust, a public company. Archstone entered into a merger agreement in which two investors acquired all of Archstone’s outstanding public shares. As part of the merger, Katz and Infinity were squeezed out of the REIT and had the option of receiving either cash or stock in the newly formed entity in exchange for their shares. Katz opted for cash; Infinity chose stock. Claiming the offering documents associated with the merger contained false and misleading statements or omissions, Katz and Infinity separately sued. In Colorado, Infinity filed a federal class action lawsuit alleging breaches of contract and fiduciary duty relating to the merger and would later be sent to arbitration. Meanwhile, Katz filed a class action lawsuit in Illinois state court asserting securities law claims arising from the merger. The Illinois case was removed to federal court and eventually transferred to Colorado. Katz then filed an amended complaint joining Infinity as a party plaintiff, even though Infinity’s case was still waiting the outcome of arbitration. The district court dismissed Katz’s complaint, ruling that by joining the case, Infinity was improperly splitting claims that should have been alleged in its earlier action. The court also found Katz lacked standing to bring his securities law claims since he was not a purchaser when he opted to sell his shares. Katz and Infinity challenged the district court’s decision on appeal. The issue before the Tenth Circuit was whether a plaintiff can split potential legal claims against a defendant by bringing them in two different lawsuits. The Court concluded that related claims must be brought in a single cause of action, and the district court properly dismissed the claim-splitting plaintiffs.