2016 Legislative Review: Balance, no backsliding, but bulls-eye on business again

Tuesday, May 17, 2016

While the 2016 session of the Colorado General Assembly produced little news on the civil justice front, the partisan balance of a Democratic-controlled House and a Republican-controlled Senate provided two obvious benefits:

For legislation to survive both chambers, its sponsors were able to navigate and negotiate. Sponsors from both chambers sought the input of Colorado’s business community both to develop good public policy and to build political support.

Legislation that ignored business concerns – or, worse yet, put a bulls-eye on business as a target for speculative or unmerited litigation – usually met stiff resistance . . . and not only in the Republican-controlled Senate.

Colorado Civil Justice League, the state’s only associated devoted primarily to tort reform and curbing lawsuit abuse, opposed eight bills introduced in this year’s session. Of those, six died in the Senate, one died in the House, and one passed after sponsors agreed to eleventh-hour amendments that alleviated concerns about expanding liability.

CCJL appreciates legislators who opposed such extreme legislation as:

  • Enshrining a right for homeless people to sue for privacy (House Bill 1191),
  • Arbitrarily assigning liability for earthquakes to oil and gas operations (HB 1310),
  • Creating a corporate shaming regime funded by “fees” on business (HB 1435), and
  • Bills that ignore the legitimate business practices of conducting criminal background checks on prospective hires (HB 1388) and discussing a potential employee’s salary history and expectations (HB 1166).

Importantly, the bipartisan balanced stopped further erosion of Colorado’s business liability climate. Colorado currently ranks 16th on the U.S. Chamber of Commerce State Lawsuit Climate survey, up from 23rd in the previous study but well below the Top 10 status that made Colorado a magnet for growth in the 1990s and early 2000s.

The past four legislative sessions have yielded an onslaught of 38 bills that arbitrarily attack Colorado employers by making employment law a harvest field for plaintiffs lawyers. Such persistent threats raise enormous red flags to businesses that might consider expanding or relocating in Colorado.

CCJL backed two pro-active measures this year, as well. Senate President Bill Cadman (R-Colorado Springs) and Majority Leader Mark Scheffel (R-Parker) teamed up with Rep. Yeulin Willet (R-Grand Junction) to sponsor Senate Bill 184 which would update a 40-year-old statute that set the interest rate for litigation claims at 9 percent. SB 184 would have calibrated the rate to float at 2 percent above the Kansas City Federal Reserve discount rate. That bill passed the Senate 20-15, but died in a House committee.

Rep. Cole Wist (R-Centennial) and Sen. Cheri Jahn (D-Wheat Ridge) sponsored HB 1299, an overdue correction to the attorney fee recovery provision of the Colorado anti-discrimination act. Under this bill, successful employers could recover attorney fees from meritless claims “when no reasonable person” would believe the claim was likely to succeed. The House Judiciary Committee defeated this bill on a party-line vote.

Two bills demonstrated the ability of legislators of both parties to develop practical solutions to emerging issues. HB 1432, sponsored by Rep. Faith Winter (D-Westminster) and Sen. Andy Kerr (D-Lakewood), provided employees with the opportunity to view the employer’s personnel file without creating a litigation trap for employers. HB 1438, sponsored by Rep. Winter and Sen. Beth Martinez Humenik (R-Adams County) largely applies federal law regarding employers’ responsibility to accommodate pregnant employees.

 

Senate passes litigation interest rate reform

Thursday, May 05, 2016

Colorado State Senate took a long overdue step to update a 40-year-old statute to reflect today's economic reality when it passed Senate Bill 184 today.

Sponsored by Senate President Bill Cadman and Majority Leader Mark Scheffel, the bill would set interest rates on litigation judgments at 2% above the rate set by the Kansas City Federal Reserve Bank.


State law requires interest be paid on judgments to compensate the plaintiff for the time value of money that was lost. Colorado Supreme Court has repeatedly ruled that judgment interest is not intended to further punish the person who was at fault but to fairly compensate the person who was wronged.

The law goes back to the 1970s when inflation jumped from 3.6% in 1973 to 12.2% in 1974, fell below 9% for about three years and then leaped back into double digits from 1979 to 1981, peaking at 14.8%.

However, for the last 20 years, the Consumer Price Index (which measures inflation) has remained at less than 6%. In fact, CPI has been 3% or less for 181 of those 240 months. Yet Colorado's statutory interest rate remains the same.

This is fair to both plaintiffs and defendants in civil lawsuits.

 Under the existing 9% rate, plaintiffs and their attorneys (who typically get one-third to 40% of the judgment) have an incentive to drag out proceedings when they have a legitimate claim and when real-world interest rates are low. When real-world rates are above 9%, as was the case regularly in the 1970s and early-1980s, defendants can make more interest by keeping their in the bank than they will be required to pay when judgment day finally arrives.

As the bill moves to the House, it is sponsored by Rep. Yeulin Willett and is scheduled for a hearing on Monday at 1:30 p.m. in the State, Veterans and Military Affairs Committee.

Time to Update Lawsuit Interest Rates

Friday, April 15, 2016

You’ve heard the dubious advisors that claim to help you invest your money without risking any downturn in the market. Well in Colorado, there’s a legally-sanctioned way to make 9% interest year-after-year, regardless of what happens in the market: File a lawsuit.

Of course, the lawsuit must make a legitimate claim, but under Colorado law, judgments on lawsuits are guaranteed 9% annual interest from the day the lawsuit is filed until the judgment is rendered.

State law requires interest be paid on judgments to compensate the plaintiff for the time value of money that was lost. Colorado Supreme Court has repeatedly ruled that judgment interest is not intended to further punish the person who was at fault but to fairly compensate the person who was wronged.

The law goes back to the 1970s when inflation jumped from 3.6% in 1973 to 12.2% in 1974, fell below 9% for about three years and then leaped back into double digits from 1979 to 1981, peaking at 14.8%.


 

However, for the last 20 years, the Consumer Price Index (which measures inflation) has remained at less than 6%. In fact, CPI has been 3% or less for 181 of those 240 months. Yet Colorado’s statutory interest rate remains the same.

Just this week, Colorado Senate President Bill Cadman and Majority Leader Mark Scheffel introduced Senate Bill 184, which would make interest rates on lawsuits reflect the real world. According to the bill, interest would follow the market, “floating” at 2% above the rate charged by the Kansas City Federal Reserve.

This is fair to both plaintiffs and defendants in civil lawsuits.

Under the existing 9% rate, plaintiffs and their attorneys (who typically get one-third to 40% of the judgment) have an incentive to drag out proceedings when they have a legitimate claim and when real-world interest rates are low. When real-world rates are above 9%, as was the case regularly in the 1970s and early-1980s, defendants can make more interest by keeping their in the bank than they will be required to pay when judgment day finally arrives.

It’s time for lawmakers to remove gamesmanship from the courtroom and to restore common sense by passing SB 184.

 

Employer has a right to know criminal history

Sunday, March 27, 2016

Perhaps it’s laudable when a business makes a concerted effort to make a job available to someone with a criminal record. But in typically short-sighted fashion, a new bill at the State Capitol that that gesture in precisely the wrong direction by making it a matter of law that Colorado businesses cannot ask job applicants in their initial application if they have a criminal record. The bill also makes a one-size-fits-all decision for the vast majority of businesses that they cannot decide for themselves which jobs will not be offered to those with a criminal history. 

House Bill 1388, sponsored by the usually thoughtful and practical Rep. Beth McCann (D-Denver), is particularly ill-advised in light of recent events.

Just last month, Cedric L. Ford killed three people and wounded 14 others in a violent rampage at Excel Industries, the Hesston, Kansas, factory where he was employed.

According to KMBC-TV, Ford had felony convictions in two states. His rap sheet included burglary, grand theft, illegally carrying a concealed weapon, domestic violence, felony battery, disorderly conduct, drunken driving, and obstruction of justice.


In 2008, Ford completed an anger-management class after his conviction for disorderly conduct. About 90 minutes before his attack on his co-workers, he had been served with a restraining order because an ex-girlfriend stated Ford had choked her and she believed he would attack her again.

It’s not clear whether Ford’s employer knew about his criminal history, but what should be painfully obvious is that the employer had a right to know.

HB 1388 would, with limited exceptions, make it illegal for employers to ask potential employees about their criminal record on employment applications or from stating that someone with a criminal history cannot apply for a certain position.

While well-intentioned, the bill is fatally flawed in at least two respects:

  • First, when an employer has a job to offer, it is the employer’s sole prerogative. That job does not belong to a prospective employee and certainly not to Colorado state government. An employee can walk away from the job without notice, and if the business fails, the employee is not financially responsible. Responsibility for the business lies with the employer, whether it succeeds or fails. Thus, the job, by right and by logic, belongs to the employer. 
  • Second, employees reasonably expect that their employer will take reasonable precautions to ensure their safety, whether that means keeping the facility and equipment in good repair or making prudent decisions about people whether potentially dangerous people will be added to the workforce. 

Because it focuses solely on placing people with a criminal record in a job, HB 1388 ignores the rights and responsibilities of employers to their other employees and for their business.

 

Salazar bill treats oil & gas like hazardous waste

Monday, March 14, 2016

Rep. Joe Salazar (D-Thornton) is at it again – marrying his disdain for jobs created by Colorado’s energy industry with his penchant for enriching trial lawyers, one of which he just happens to be.

Salazar’s House Bill 1310 would hang a “SUE ME” sign on the back of Colorado oil and gas companies, decreeing by legislative fiat that energy exploration is responsible for earthquakes that occur in the Centennial State.

HB 1310 would make oil and gas operators subject to strict liability – also known as “liability without fault” – for earthquakes, inviting plaintiffs lawyers to troll for clients who claim their property was damaged by seismic activity. The only proof required is a determination that “oil and gas operations occurred within an area that has . . . experienced” frequent earthquakes.

As a result, oil and gas companies would be required to prove their innocence – to prove that they did not cause seismic activity. (Next, perhaps Salazar will suggest that energy companies be blamed for “climate change” and be held strictly liable for hailstorms, tornadoes, blizzards and drought.)

“Colorado courts have rejected applying this extreme strict liability standard even to activities such as selling gasoline in a paper cup or dumping highly caustic chemicals at a landfill,” explained Colorado Civil Justice League president Lee Mickus, who testified to the House Health, Insurance and Environment Committee.

“Existing law already allows plaintiffs to bring claims for personal injury and property damage arising from oil and gas operations,” he continued. But under current law, plaintiffs must prove that oil and gas operations caused the damage; Salazar’s bill would reverse that burden of proof, stacking the deck for plaintiffs and their lawyers.

HB 1310 passed out of the committee on a 7-6 party-line vote with Democratic Reps. Janet Buckner (Aurora), Daneya Esgar (Pueblo), Susan Lontine (Denver) , Dianne Primavera (Broomfield), Sue Ryden (Aurora), Joann Ginal (Fort Collins) and chair Beth McCann (Denver) voting with Salazar, Republican Reps. J. Paul Brown (Durango), Steve Humphrey (Severance), Janik Joshi (Colorado Springs), Gordon Klingenschmitt (Colorado Springs), Lois Landgraf (Fountain) and Kim Ransom (Littleton) voted against the bill.

 

Committee strips liability protection from 'unrepresented patients' bill

Monday, March 07, 2016

A bill to change the way doctors and hospitals determine treatment for "unrepresented patients" could actually delay treatment and subject health care providers to the threat of greater liability.

As introduced, House Bill 1101 (by Rep. Dave Young, D-Greeley) created a cumbersome process for determining treatment for patients for whom to responsible family member or close friend could be found to make health care decisions. The bill originally extended liability protections to physicians who, acting in good faith, make treatment decisions for such a patient.

However, the House Health, Insurance and Environment Committee stripped those protections out of the bill before passing it to the full House on a party-line vote.

As a result, CCJL members voted to OPPOSE HB 1101.

House committee kills 'homeless right to sue' (again)

Saturday, February 27, 2016

For the second straight year, a bill giving the homeless broad rights to sue municipalities, shopping malls and employers for discrimination has been defeated on a bipartisan vote in the Colorado House of Representatives.

Rep. Joe Salazar (D-Thornton) has introduced both bills and this year was joined by co-sponsor Rep. Jovan Melton (D-Denver). After last year’s bill failed on a 3-8 vote in the State, Veterans and Military Affairs Committee, Salazar re-tooled the bill ostensibly to eliminate the private enforcement provision that explicitly allowed for litigation.

This year’s bill, House Bill 1191, nonetheless created numerous “rights” and prohibited local ordinances that disproportionately impact homeless people, leading many legal experts to conclude that homeless people would still be able to bring lawsuits against anyone alleged to have violated the language of the bill, if it became law.

After a hearing on Feb. 24, the House Local Government Committee defeated the motion to pass the bill by a 5-6 vote.

Voting against the bill were Jeni Arndt (D-Fort Collins), Clarice Navarro (R-Pueblo), Kim Ransom (R-Littleton), Paul Rosenthal (D-Denver), Lori Saine (R-Firestone) and Dan Thurlow (R-Grand Junction).

Voting to pass the bill were Jessie Danielson (D-Wheat Ridge), Gordon Klingenschmitt (R-Colorado Springs), Jonathan Singer (D-Longmont), Steve Lebsock (D-Thornton) and committee chair Rhonda Fields (D-Aurora).

Click HERE for additional coverage in the Denver Post.

Legislative Update: The Perils of Private Enforcement

Saturday, February 13, 2016

In recent years, we've witnessed a rapidly-growing tendency for legislators to utilize private action litigation to enforce the provisions of a bill. For example, in employment discrimination law, someone who believes she's been a victim of illegal discrimination can file a lawsuit against the business alleged to have violated the law.

On occasion, private action enforcement might be appropriate - e.g., when a person's constitutional rights have been infringed by government and the only recourse is litigation against the offending government.

More often, private action enforcement is simply a legislative maneuver to avoid a fiscal note and a trip to the Appropriations Committee. The Judicial Department is often reluctant to estimate a significant increase in court costs from new litigation, but other state agencies asked to enforce a new law through administrative procedures may attach a giant price tag to its fiscal impact estimate, thereby dooming the bill due to budget constraints.

Private action enforcement may also present an invitation for litigation by plaintiffs attorneys who specialize in unique claims. Sometimes these claims are justified, but not always. When private actions are taken against a business, that business must incur significant legal costs defending itself whether the claim is valid or frivolous. Some unscrupulous plaintiffs attorneys recognize that even a dubious case may have "value" if a business would prefer to pay, say $20,000, to settle a claim rather than pay $25,000 to defend itself and still risk losing.

In most instances, CCJL encourages legislators to avoid private enforcement actions and to avoid one-way fee-shifting in which a winning plaintiff can recover attorney fees and court costs but a winning defendant has no such opportunity.


Among this year's bills that include a private enforcement action are HB 1166 (salary history as discriminatory practice), SB 70 (prohibit labor union discrimination), SB 82 (HOA whistleblower), and SB 84 (substitute health care decision making).

 

Governor elevates Gabriel to Supreme Court

Tuesday, June 23, 2015

Governor John Hickenlooper elevated Judge Richard L. Gabriel from the Colorado Court of Appeals to the Colorado Supreme Court, replacing Justice Gregory Hobbs who will retire in August.

Gabriel was one of three nominees submitted to the Governor by the Judicial Nominating Commission. The others were Judge David Prince, who presides in district court in El Paso County, and Professor Melissa Hart of the University of Colorado Law School.

Gabriel served on the Court of Appeals for seven years, appointed in 2008 by Governor Bill Ritter. A registered Democrat, he previously practiced commercial law, developing an expertise in complex commercial litigation, including business torts, intellectual property and products liability.

Colorado Civil Justice League noted that both Gabriel and Prince “have the type of broad expertise that brings balance to the court.”

This was Hickenlooper’s third appointment.

The Supreme Court now includes:

  • Chief Justice Nancy Rice (appointed in 1998 by Gov. Roy Romer)
  • Justice Nathan Coats (2000, Gov. Bill Owens)
  • Justice Allison Eid (2006, Gov. Owens)
  • Justice Monica Marquez (2009, Gov. Ritter)
  • Justice Brian Boatright (2011, Gov. Hickenlooper)
  • Justice William Hood (2014, Gov. Hickenlooper)
  • Justice Richard Gabriel (2015, Gov. Hickenlooper)

Court rules for employers in drug-free workplace case

Monday, June 15, 2015

A unanimous Colorado Supreme Court ruled that employers may enforce zero-tolerance drug use policies, even when the use in question is off-duty medical marijuana.

Brandon Coats, a quadriplegic and a medical marijuana patient, was terminated by Dish Networks when he failed a random drug test, violating the company’s drug policy. Coats argued that his medical marijuana use was protected by Colorado’s Lawful Activities Statute, which prohibits employers from discriminating against employees for their lawful off-duty activities.

Dish countered that medical marijuana use is not protected because it remains illegal under federal law. Both a district court and a three-member panel of the Court of Appeals ruled in favor of Dish Network.

Writing for a 6-0 majority, Justice Allison Eid affirmed the Court of Appeals ruling “that the commonly accepted meaning of the term ‘lawful’ is ‘that which is permitted by law’ or conversely ‘not contrary to, or forbidden by law.”

“[A] lawful activity is that which complies with applicable law, including state and federal law,” the majority opinion stated.

“We find nothing to indicate that the General Assembly intended to extend (the Lawful Activities Statute’s) protection for ‘lawful’ activities to activities that areunlawful under federal law,” the justices concluded.

Colorado Civil Justice League (CCJL) submitted a friend-of-the-court brief in this case, written by legal advisory board attorney Chris Ottele of Husch Blackwell. The CCJL brief supported the lower courts’ rulings that an activity which is prohibited under federal law is not protected by state law; therefore, Dish Networks should be permitted to enforce its zero-tolerance drug policy.