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

Appellant/cross-appellee OXY USA Inc. appealed the grant of summary judgment to appellees/cross-appellants, a class of plaintiffs represented by David and Donna Schell, and Ron Oliver, on the question of whether their oil and gas leases required OXY to make "free gas" useable for domestic purposes. OXY also appealed: the district court’s certification of plaintiffs' class; the denial of a motion to decertify; and an order to quash the deposition of an absent class member. Plaintiffs cross-appealed the district court's: denial of their motion for attorneys' fees; denial of their motion for litigation expenses; and denial of an incentive award. Notably, plaintiffs also moved to dismiss the appeal as moot. OXY opposed dismissal for mootness, but argued that if the Tenth Circuit found mootness, the Court should vacate the district court’s decision. Appellees/cross-appellants were approximately 2,200 surface owners of Kansas land burdened by oil and gas leases held or operated by OXY, executed separately from approximately 1906 to 2007. The leases contained a "free gas" clause. The clauses weren't identical, but all, in substance, purported to grant the lessor access to free gas for domestic use. All of the plaintiffs who have used free gas obtain their gas from a tap connected directly to a wellhead line. In addition, some members of the plaintiff class (including about half of the current users of free gas) received royalty payments from OXY based on the production of gas on their land. In August 2007, OXY sent letters warning free gas users that their gas may become unsafe to use, either because of high hydrogen sulfide content or low pressure at the wellhead. These letters urged the lessors to convert their houses to an alternative energy source. On August 31, 2007, leaseholders David Schell, Donna Schell, Howard Pickens, and Ron Oliver filed this action on behalf of themselves and others similarly situated, seeking a permanent injunction, a declaratory judgment, and actual damages based on alleged breaches of mineral leases entered into with OXY for failure to supply free usable gas. After review of the matter, the Tenth Circuit held that that OXY’s sale of the oil and gas leases at issue here mooted its appeal; therefore, the Court granted plaintiffs’ motion to dismiss. Nevertheless, the Court concluded that the cross-appeal had not been mooted by this sale, and affirmed the district court’s judgment as to the denial of attorneys’ fees, litigation expenses, and an incentive award. View "Schell v. OXY USA" on Justia Law

Western Union Company and its subsidiary, Western Union Financial Services, Inc. (collectively, Western Union), appealed the district court’s award of $40 million in attorney fees to class counsel after the settlement of a putative class action against Western Union. Plaintiffs filed this putative class action to challenge Western Union’s practice of failing to timely notify customers of failed money transfers and of holding customer money for years while accruing interest and charging administrative fees. While litigation over procedural hurdles to class certification was ongoing, the parties agreed to a settlement of the class claims against Western Union. “Generally, a settling defendant in a class action has no interest in the amount of attorney fees awarded when those fees are to be paid from the class recovery rather than the defendant’s coffers.” Western Union argued on appeal to the Tenth Circuit that it had standing to challenge the attorney-fee award in this case because it claimed it would be injured by a diminution of the Class Settlement Fund (CSF) if Class Counsel was awarded an excessive attorney-fee award. Western Union argued its interest in the CSF (and the potential effect of the attorney-fee award on the size of that fund) established its standing to challenge the fee award. The Tenth Circuit concluded any potential injury to Western Union was too attenuated from the award of attorney fees to Class Counsel to support Western Union’s standing. Because Western Union lacked standing to challenge the attorney-fee award, the Tenth Circuit lacked subject-matter jurisdiction and dismissed the appeal. View "Tennille v. Western Union" on Justia Law

CE Design, Ltd. sued Custom Mechanical Equipment in 2008 after it received a junk fax. CE Design brought a class action suit of people and businesses that had also received unsolicited faxes from Custom. After Custom's insurer, Emcasco Insurance Company, declined to defend, Custom settled with CE Design for a considerable sum. In settling, CE Design agreed not to enforce the judgment against Custom but to proceed directly against Emcasco. After Emcasco refused to pay the judgment, CE Design and Emcasco filed rival declaratory judgment suits in separate federal courts (CE Design in Oklahoma, and Emcasco in Illinois). Ultimately, the federal district court in Illinois transferred its case to the federal district court in Oklahoma. Based on the insurance policy's terms, the district court held that Emcasco had no duty to defend Custom or to pay the judgment. CE Design appealed. Finding no reversible error, the Tenth Circuit affirmed. View "Emcasco Insurance Co. v. CE Design" on Justia Law

Four Western Union customers whose wire transfers failed sued Western Union, alleging state-law claims for, among other things, conversion, unjust enrichment, and breach of fiduciary duty. The Named Plaintiffs initiated this litigation as a class action on behalf of all Western Union customers whose wire transfers failed. This class included three groups: 1) those customers who, like the named Plaintiffs, had already reclaimed their funds from Western Union; 2) those customers whose funds had already escheated to a state; and 3) those customers whose funds Western Union was currently holding. Two unnamed class members challenged the district court’s decision to certify the class and approve the settlement. They argued, among other things, that the class representatives could not adequately represent all of the class members; the settlement was unfair because it used primarily the money belonging to the class to fund the settlement; and the district court did not adequately notify absent class members of the class action and the settlement. After review, the Tenth Circuit concluded their objections lacked merit. View "Tennille v. Western Union" on Justia Law

In 1998, a driver hit pedestrian-plaintiff Roberta Folks with the side mirror of his vehicle and injured her. State Farm, the driver’s insurer, informed Folks she could receive basic personal injury protection (“PIP”) benefits under the driver’s policy. She received $104,000 in medical expenses and essential services. In 2002, State Farm told her she had exhausted the benefits available to her under the policy. Folks subsequently joined a lawsuit seeking additional PIP benefits in 2004. Over the course of the litigation, Folks unsuccessfully sought to certify a class on three attempts. In response to her last attempt in 2011, the district court determined she failed to satisfy the requirements of Rule 23(a) and Rule 23(b)(2) and denied class certification. A jury heard Folks’s individual claims and found in her favor in 2012. The district court amended the judgment in 2013 to correct errors in the calculation of damages. On appeal, Folks alleged the district court erred in denying class certification. She also argued the district court miscalculated the treble damages and statutory prejudgment interest to which she is entitled. Finding no error, the Tenth Circuit affirmed. View "Folks v. State Farm Mutual" on Justia Law

Patipan Nakkhumpun, lead plaintiff in a securities class action, represented investors who purchased securities in Delta Petroleum Corporation. Defendants were former officers and a board member of Delta who allegedly violated section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and Exchange Commission by misleading investors through statements about (1) a proposed transaction with Opon International, LLC and (2) Delta’s financial condition. The district court granted the defendants’ motion to dismiss, holding that Nakkhumpun had failed to allege: (1) loss causation regarding the statement about the Opon deal; and (2) falsity regarding the statements about Delta’s financial condition. Nakkhumpun moved for leave to amend, and the district court denied the motion on the ground of futility. On appeal, the parties disputed whether Nakkhumpun adequately pleaded falsity, scienter and loss causation with regard to the Opon transaction, and falsity and scienter with regard to Delta's financial condition. Upon further review, the Tenth Circuit affirmed in part and reversed in part. The Court concluded Nakkhumpun adequately alleged falsity, scienter and loss causation on the Opon transaction, but failed to adequately plead regarding Delta's financial condition. The case was remanded for further proceedings. View "Nakkhumpun v. Taylor" on Justia Law

This appeal stemmed from a putative securities fraud class action brought by lead plaintiff Nitesh Banker on behalf of all persons who purchased common stock in Gold Resource Corporation (GRC) during the class period between January 30, 2012, and November 8, 2012. GRC, a Colorado corporation, was a publicly traded mining company engaged in Mexico in the exploration and production of precious metals, including gold and silver. GRC’s aggressive business plan called for a dramatic increase in mining production during its initial years. Plaintiff alleged the "El Aguila" project experienced severe production problems during the class period, and that defendants knew about these problems but concealed them from investors. Plaintiff alleged GRC and four of its officers and directors committed securities fraud in violation of federal securities laws. He also asserted claims against individual defendants as "control persons." The district court dismissed the complaint with prejudice pursuant to Fed. R. Civ. P. 12(b)(6), holding that plaintiff failed to meet the heightened pleading standard for scienter required by the Private Securities Litigation Reform Act of 1995. Plaintiff appealed. But finding no reversible error, the Tenth Circuit affirmed. View "In re: Gold Resource Corp." on Justia Law

Appellants Sikora Nelson and Paul Dorsey challenged the district court’s order requiring them to post an appeal bond of $1,007,294 in order to pursue their appeals objecting to a class action settlement. Plaintiffs initiated the underlying class action suit against Defendants Western Union Company and Western Union Financial Services, Inc. (collectively, “Western Union”), based on the fact that, at any given time, Western Union maintains between $130 and $180 million in wire transfers sent by Western Union customers that fail for some reason. These funds belong to Western Union’s customers, but Western Union returns this money (minus administrative fees) only when a customer requests a refund. Frequently, however, the customer is unaware that the wire transfer failed and thus does not know to ask Western Union to return his money. And Western Union, although possessing the customer’s contact information, does not notify the customer that his wire transfer failed, but instead holds the unclaimed money and earns interest on it. Eventually, after several years, the law of the state where the customer initiated the wire transfer requires Western Union to notify the customer that his unclaimed funds will soon escheat to the state. At that time, Western Union uses the contact information it had on record to give the customer this required notice. If the customer still fails to claim his money, those funds (minus the administrative fees) escheat to the relevant state, which then holds the funds until the customer claims them. Finding no reversible error in the district court's decision to impose the appeal bond, the Tenth Circuit affirmed, but reduced the amount of that bond. View "Tennille v. Western Union Co." on Justia Law

Colorado Golf Club Holding Company LLC (CGC Holding), Harlem Algonquin LLC and James Medick proposed certification of a class action suit. They alleged a group of lenders conspired to create a fraudulent scheme to obtain non-refundable up-front fees in return for loan commitments , and misrepresented their ability and their objective to make good on the promises to meet certain financing obligations as part of a scheme to entice borrowers to pay the up-front fees. The class intended to offer generalized proof that the lenders concealed the financial history of Sandy Hutchens, the principal defendant, and his use of pseudonyms, to preserve the superficial integrity of the operation. The borrowers argued that had they known about this pretense, no putative class member would have taken part in the financial transactions that caused each to lose its up-front fees, amounting to millions of dollars of cumulative losses. The ultimate issue this case presented for the Tenth Circuit's review centered on whether the class could pursue claims under the Racketeer Influenced and Corrupt Organizations Act (RICO). In opposing the claims, the lenders argued that each class member would have to demonstrate that it relied on the lenders’ misrepresentations or omissions to satisfy RICO’s causation element, making a single trial unwieldy and unworkable. The Tenth Circuit held that the lenders were wrong in this respect: RICO class-action plaintiffs are not entitled to an evidentiary presumption of a factual element of a claim. The Court agreed with the district court that a class could be certified in this context. Plaintiffs' theory sufficiently allayed any concerns about Rule 23(b)(3)’s requirement that common issues predominate over those idiosyncratic to individual class members. The Tenth Circuit affirmed certification of the class, but reversed the district court with regard to certification decision as to the lenders’ law firm and lawyers, Broad and Cassel, Ronald Gache and Carl Romano. Because several claims were not properly before the Court in this interlocutory appeal, the Court declined to address: (1) whether plaintiffs’ claims constituted an impermissible extraterritorial application of RICO; (2) whether the plaintiffs could prove proximate cause; or (3) whether the district court properly exercised personal jurisdiction over certain defendants. View "CGC Holding v. Gache" on Justia Law

Plaintiffs Brett Woods and Kathleen Valdes were state employees and representatives of a class of New Mexico state and local government employees who alleged they paid for insurance coverage through payroll deductions and premiums pursuant to a policy issued by Standard Insurance Company (Standard), but did not receive the coverage for which they paid and, in some cases, were denied coverage entirely. Plaintiffs filed suit in New Mexico state court against three defendants: Standard, an Oregon company that agreed to provide the subject insurance coverage; the Risk Management Division of the New Mexico General Services Department (the Division), the state agency that contracted with Standard and was responsible for administering benefits under the policy; and Standard employee Martha Quintana, who Plaintiffs allege was responsible for managing the Division’s account with Standard and for providing account management and customer service to the Division and state employees. Plaintiffs' ninety-one-paragraph complaint, stated causes of action against Standard and the Division for breach of contract and unjust enrichment; against Standard for breach of fiduciary duty, breach of the implied duty of good faith and fair dealing, and Unfair Practices Act violations; and against Standard and Ms. Quintana for breach of the New Mexico Trade Practices and Fraud Act. The issue this appeal presented for the Tenth Circuit's review centered on whether remand to the state court pursuant to the Class Action Fairness Act (CAFA) was required under either of two CAFA provisions: the state action provision, which excludes from federal jurisdiction cases in which the primary defendants are states; or the local controversy exception, which requires federal courts to decline jurisdiction where, among other things, there is a local defendant whose alleged conduct forms a significant basis for the claims asserted by plaintiffs and from whom plaintiffs seek significant relief. The Court concluded that neither provision provided a basis for remand, and therefore reversed the decision of the magistrate judge remanding the case to state court. But because the Tenth Circuit could not determine whether Defendants have established the amount in controversy required to confer federal jurisdiction, the case was remanded to the district court for the resolution of that issue. View "Woods v. Standard Insurance Co." on Justia Law