Court Opinions- Jun 3, 2019

Town of Breckenridge v. Egencia


Justice Melissa Hart did not participate in the case, which resulted in a 3-3 split among the Supreme Court justices. Justices Brian Boatright, William Hood and Richard Gabriel were of the opinion that the judgment of the Court of Appeals should be affirmed; Chief Justice Coats and justices Monica Márquez and Carlos Samour were of the opinion that it should be reversed. 

Because the court was equally divided, the judgment of the Court of Appeals was affirmed. More on this case can be found on page 8.

In re Reeves-Toney v. School District No. 1 in the City and County of Denver 

In this original proceeding under Colorado Appellate Rule 21, School District No. 1 in the City and County of Denver sought review of the trial court’s denial of its motion to dismiss Rebecca Reeves-Toney’s constitutional challenge to the “mutual consent” provisions of section 22-63-202(2)(c.5) of the Teacher Employment, Compensation, and Dismissal Act of 1990. 

Reeves-Toney alleged that these provisions violated the local control clause of article IX, section 15 of the Colorado Constitution by delegating local school boards’ hiring decisions to principals and other administrators.

Denver Public Schools moved to dismiss Reeves-Toney’s complaint, arguing that she lacked standing to bring her claim. The trial court agreed that Reeves-Toney lacked individual standing but nevertheless concluded that she sufficiently alleged taxpayer standing to challenge section 22-63-202(2)(c.5) and plausibly alleged that the statute is facially unconstitutional. The court thus denied the motion to dismiss.

DPS sought C.A.R. 21 relief. The Colorado Supreme Court issued a rule to show cause and made the rule absolute. The court held that because Reeves-Toney had not alleged an injury based on an unlawful expenditure of taxpayer money, she failed to demonstrate a clear nexus between her status as a taxpayer and the challenged government action. Reeves-Toney therefore lacked taxpayer standing to bring her constitutional challenge to section 22-63-202(2)(c.5). The court made the rule to show cause absolute and remanded the case to the trial court with directions to dismiss Reeves-Toney’s complaint.

Department of Revenue v. Agilent Technologies

This case required the Supreme Court to determine whether the Colorado Department of Revenue and Michael Hartman, in his official capacity as the executive director of the department, can require Agilent Technologies to include its holding company, Agilent Technologies World Trade, Inc. in its Colorado combined income tax returns for the tax years 2000–2007. The court was also asked if the answer to that question is no, whether the department may nevertheless allocate World Trade’s gross income to Agilent in order to avoid abuse and to clearly reflect income.

The court concluded that sections 39-22-303(11)–(12), of the Colorado Revised Statutes  (2018), do not authorize the department to require Agilent to include World Trade in its combined tax returns for the tax years at issue because World Trade is not an includable C corporation within the meaning of those provisions. The court concluded that the department may not allocate World Trade’s income to Agilent under section 39-22-303(6) because (1) that section has been superseded by section 39-22-303(11) as a vehicle for requiring combined reporting for affiliated C corporations and, even if section 39-22-303(6) could apply, on the undisputed facts presented, no allocation would be necessary to avoid abuse or clearly reflect income.

Accordingly, the court concluded that the district court properly granted summary judgment in Agilent’s favor, and affirmed the judgment of the division below.

Department of Revenue v. Oracle

This case, like Department of Revenue v. Agilent Technologies, required the Supreme Court to determine whether the Colorado Department of Revenue and Michael Hartman, in his official capacity as the executive director of the department can require Oracle Corporation to include its holding company, Oracle Japan Holding, Inc. in its Colorado combined income tax return for the tax year ending May 31, 2000. And if the answer to that question is no, whether the department may nevertheless allocate OJH’s gain from the sale of shares that it held in Oracle Corporation Japan to Oracle in order to avoid abuse and to clearly reflect income.

For the reasons in Agilent Technologies, the court concluded that the pertinent statutory provisions and regulations do not permit the department either to require Oracle to include OJH in its combined tax return for the tax year at issue or to allocate OJH’s capital gains income to Oracle. Accordingly, the court affirmed the judgment of the division below.

Colorado Custom Maid v. ICAO

Colorado Custom Maid places house cleaners with clients who need their homes cleaned. In doing so, it has tried to avoid becoming the house cleaners’ employer, hoping instead to maintain the relationship as one between a referral service and a group of independent contractors so that it could avoid paying unemployment taxes on the money it paid to those cleaners. In 2014, the Colorado Department of Labor and Employment Division of Employment and Training concluded that, despite CCM’s efforts to characterize them as independent contractors, CCM’s cleaners were in fact employees for whom the company should be paying unemployment taxes. After evaluating the dynamics of the relationship between CCM and its cleaners, the Supreme Court agreed. The court affirmed the Court of Appeals’ decision, which affirmed the conclusion of an Industrial Claim Appeals Office Panel that the realities of CCM’s relationship with its cleaners establish an employment relationship. This opinion is discussed in detail on page 4.

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