Court Opinions – Aug 24, 2020

Compania De Inversiones v. Grupo Cementos de Chihuahua

This case involves a Bolivian company known as Compañia de Inversiones Mercantiles S.A. and Mexican companies known as Grupo Cementos de Chihuahua, S.A.B. de C.V. and GCC Latinoamerica, S.A. de C.V. CIMSA brought a district court action in 2015 pursuant to the Federal Arbitration Act, 9 U.S.C. § 207, to confirm a foreign arbitral award issued in Bolivia against GCC. 

The action has been prolonged by ongoing litigation abroad and obstacles to effectuating service. The underlying dispute arises out of an agreement under which CIMSA and GCC arranged to give each other a right of first refusal if either party decided to sell its shares in a Bolivian cement company known as Sociedad Boliviana de Cemento, S.A. GCC sold its SOBOCE shares to a third party after taking the position that CIMSA failed to properly exercise its right of first refusal. In 2011, CIMSA initiated an arbitration proceeding in Bolivia. 

The arbitration tribunal determined that GCC violated the contract and the parties’ expectations. The arbitration tribunal later awarded CIMSA tens of millions of dollars for GCC’s breach. GCC initiated Bolivian and Mexican court actions challenging the arbitration tribunal’s decisions. A Bolivian judge, holding a position similar to that of an American trial judge, rejected GCC’s challenge to the arbitration tribunal’s decision on the merits. A Bolivian court, acting in a capacity similar to that of an American intermediate appellate court, reversed and remanded. 

On remand, the matter was temporarily assigned to a different trial judge, who granted GCC’s request for relief before the original trial judge could return from a planned vacation. While these three remand proceedings were occurring, however, Bolivia’s highest court reversed the Bolivian appellate court and affirmed the original trial judge. But as a result of the simultaneous remand proceedings, Bolivia’s highest court also issued arguably contradictory orders suggesting the second trial judge’s ruling on the merits remained in effect. GCC filed a separate Bolivian court action challenging the arbitration tribunal’s damages award. That case made its way to Bolivia’s highest court as well, which reversed an intermediate appellate court’s nullification of the award and remanded for further proceedings. The parties continued to litigate the damages award in Bolivia. 

Invoking the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, CIMSA filed a confirmation action in the United States District Court for the District of Colorado. After encountering difficulties with conventional service of process in Mexico under the Hague Convention on Service Abroad of Judicial and Extrajudicial Documents, Nov. 15, 1965, 20 U.S.T. 361, CIMSA sought and received permission from the district court to serve GCC through its American counsel pursuant to Federal Rule of Civil Procedure (“Rule”) 4(f)(3). The district court then rejected GCC’s challenges to personal jurisdiction, holding, among other things, it was appropriate to aggregate GCC’s contacts with the United States; CIMSA’s injury arose out of GCC’s contacts; exercising jurisdiction was consistent with fair play and substantial justice; and alternative service was proper. The district court further rejected GCC’s defenses to CIMSA’s claim under the New York Convention, concluding the arbitration tribunal’s ruling on the merits had not been set aside by a competent Bolivian authority, and the arbitration tribunal’s ruling on damages was sufficiently “binding” to allow confirmation. 

Although the jurisdictional questions are difficult, the 10th Circuit Court of Appeals considered this appeal pursuant to 28 U.S.C. § 1291 and affirmed the district court. The district court appropriately aggregated GCC’s contacts with the United States as a whole under Rule 4(k)(2). GCC forfeited arguments based on Rule 4(k)(2) and, regardless, the court concluded those arguments fall short on merit. The district court properly determined that CIMSA’s injury arose out of or related to GCC’s nationwide contacts. Contacts concerning GCC’s underlying breach of contract are pertinent, and those contacts satisfy the applicable version of the test for “proximate cause.” The district court correctly decided that exercising personal jurisdiction over GCC comported with fair play and substantial justice because CIMSA established minimum contacts and GCC did not make a compelling case to the contrary. Last, the district court accurately concluded that substitute service on GCC’s United States counsel did not run afoul of the Hague Service Convention or Rule 4(f)(3). 

The court also affirmed the district court’s confirmation of the arbitration tribunal’s decisions, agreeing with the district court that the best reading of the Bolivian proceedings is that the arbitration panel’s merits award has not been set aside, because the Bolivian court orders supporting the second trial judge’s decision favoring GCC lost any legal effect after Bolivia’s highest court affirmed the initial trial judge’s decision favoring CIMSA. In addition, the arbitration tribunal’s damages award may be confirmed in the United States under the New York Convention even if GCC’s Bolivian judicial challenge remains pending. 

U.S. v. Rising

Gerald Rising sought modification of a restitution order after he pled guilty to mail fraud, theft or embezzlement in connection with a health care program and money laundering. At his sentencing in 2012, the district court sentenced him to 66 months’ imprisonment and ordered him to pay $3.5 million in restitution. Nearly seven years after the entry of the sentence, Rising filed a motion seeking modification of the restitution order. The district court denied the motion, concluding that Rising’s appeal was untimely and that modification was not permitted under the Mandatory Victims Restitution Act. Exercising jurisdiction under 28 U.S.C. § 1291, the 10th Circuit Court of Appeals affirmed.

Doe v. School District No. 1

Jane Doe appealed the dismissal of her Title IX claim against School District No. 1, Denver, Colorado for failure to state a claim. According to the complaint, a group of students began sexually harassing Doe after she was sexually assaulted by another student in March of her freshman year at East High School. She alleges that despite her numerous reports of the harassment to school personnel, as well as reports from teachers and a counselor, the school administration never investigated her complaints and little if anything was done to prevent the harassment from continuing. She stopped attending regularly scheduled classes about 14 months after the assault, and she transferred to a different school after completing her sophomore year. Exercising jurisdiction under 28 U.S.C. § 1291, the 10th Circuit Court of Appeals reversed. 

Theiss v. City of Wheat Ridge

After being contracted to remodel a home and construct an addition, Derek Thiess ran into frequent and unusual red tape within the City of Wheat Ridge’s building department, which Kenneth Johnstone supervised. For example, the building department sometimes delayed or rejected permits for spurious reasons, such as for submitting plans on the wrong color of paper even though the department had no paper color requirement. When the department granted permits, it granted them for a shorter duration than was otherwise typical. Sometimes the department would issue violation notices against the property before having inspected it for the violation in question. At the direction of Johnstone or others within city management, the Wheat Ridge Police Department closely monitored the property for signs of unpermitted activity and encouraged a neighbor to make complaints in that regard. On at least one occasion, the building department ordered remedial measures on the property and then, when a subcontractor went out to perform that remediation, the police cited the subcontractor for unpermitted work. 

At Johnstone’s and a city councilmember’s instigation, the city brought a municipal criminal action against Thiess in February 2015, alleging building code violations—the only time on record the city had criminally prosecuted such violations. In June 2015, while the original prosecution was still pending, the city instituted a second prosecution, alleging that Thiess had been working without a permit on a particular day, which was allegedly “a day Thiess was not even present in Wheat Ridge.” In September 2015, the city dropped both prosecutions at Johnstone’s direction. By this time, however, Thiess had decided he could no longer endure the “targeted harassment,” and he listed the property for sale. 

While the property was on the market, the building department continued to issue violation notices, apparently including a violation based on attempting to sell the property without a city permit. Eventually, Thiess obtained the necessary permit. He sold the property at a loss in April 2016. The city treated the new owner and developer “very differently,” and did not “subject[] [them] to the same building code requirements.” The new owner resold the property in February 2017 for more than double the price at which it bought the property. 

Thiess claims that the City of Wheat Ridge and the head of the city’s building department, Johnstone, subjected him to frequent, arbitrary harassment. Thiess sued, asserting various claims under both federal and state law. The city moved to dismiss, and Thiess never responded to that motion. The district court eventually granted the motion with prejudice as to Thiess’ Federal claims and declined jurisdiction over his state-law claims. 

Thiess appealed, asserting the traditional de novo standard still applies. Because Theiss didn’t bring forward an abuse of discretion claim and his other claims are without merit, the 10th Circuit Court of Appeals affirmed the district court judgement. 

United States v. Zarate-Suarez

After being convicted of possession of methamphetamine with intent to distribute, Joanna Zarate-Suarez appealed her sentence, arguing that the district court erred by applying a two-level enhancement under the United States Sentencing Guideline § 2D1.1(b)(2) for directing the use of violence and a four-level enhancement under U.S.S.G. § 3B1.1(a) for her role as an organizer or leader of the conspiracy. 

Because Zarate-Suarez failed to preserve her objection to the violence enhancement, the 10th Circuit Court of Appeals reviewed this argument for plain error and held that the district court did not plainly err by applying that enhancement. And because she preserved her objection to the leader enhancement, the court reviewed this argument for clear error and likewise held that the district court did not clearly err when applying that enhancement. Accordingly, it affirmed Zarate-Suarez’s sentence. 

Medina v. Williams

Delano Medina seeks a certificate of appealability to appeal the dismissal by the United States District Court for the District of Colorado of his application for relief under 28 U.S.C. § 2241. 

Medina is a state prisoner incarcerated at the Colorado Territorial Correctional Facility. On May 8, 2020, he filed an application for relief under § 2241 contending that his rights under the First and Fourteenth Amendments are being violated because he is being denied access to the prison law library as a result of a lockdown related to the COVID-19 pandemic, and that his confinement during the pandemic violates his rights under the Eighth Amendment. The district court construed the application as challenging only conditions of Medina’s confinement, rather than its fact or duration. It therefore ruled that a § 2241 application was not the proper vehicle for Medina’s claims, dismissed the application without prejudice to the refiling of a civil-rights action under 42 U.S.C. § 1983, and denied a COA. 

The 10th Circuit Court of Appeals denied a COA and dismissed the appeal because Medina failed to establish exhaustion during the district court proceedings.

Millard v. Rankin

David Millard, Eugene Knight and Arturo Vega challenge the constitutionality of Colorado’s Sex Offender Registration Act (CSOR. The district court held CSORA was unconstitutional as applied to the Appellees1 because the statute inflicted cruel and unusual punishment and violated substantive due process guarantees. Additionally, the district court held that the state courts’ application of CSORA’s deregistration procedures to Vega violated his procedural due process rights. Defendant-Appellant, the State,2 appeals from the entirety of the district court’s decision. Because the district court’s ruling contravenes binding Supreme Court and Tenth Circuit precedent, we reverse. 

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