Editor’s Note: Law Week Colorado edits court opinion summaries for style and, when necessary, length.
The Colorado Court of Appeals unanimously dismissed an appeal in a case involving an arbitration award.
Itachi Capital, Inc. appealed a district court order vacating an arbitration award entered against Erin Turoff and ordering a new hearing. Itachi and Turoff jointly owned a limited liability company. Under the company’s operating agreement, Itachi, as a majority owner, had the right to take along the minority owner Turoff and compel her to sell her interest if certain conditions were met, according to court records. After finding a buyer, Itachi sought to enforce the provision compelling Turoff to sell her share of the business but she refused.
Itachi filed an arbitration demand with the Judicial Arbiter Group and during a status conference before the scheduled arbitration, Turoff, who was self-represented at the time, expressed concerns she was missing important documents. Itachi said it should get certain documents to Turoff soon. Turoff asked generally about Itachi’s theory of the case and the arbitrator suggested Turoff consult with counsel.
Turoff sent a written request to JAG asking the arbitrator to postpone the hearing so she could retain counsel. The arbitrator held another status conference before the scheduled arbitration to consider the requested continuance. During the conference, Turoff’s newly retained counsel requested a postponement explaining the need to get caught up on the dispute and for some limited discovery related to the proposed sale and the drag-along provision.
The arbitrator denied the request and after the arbitration was concluded, the arbitrator entered an award in Itachi’s favor, along with attorney fees and costs. Turoff filed a motion to vacate the award, arguing the refusal to postpone the hearing and permit discovery was unfair and prejudiced her rights. Itachi opposed the motion, arguing there wasn’t a legal basis to vacate the award and the arbitrator’s decision was entitled to deference.
Itachi asked the court to confirm the arbitration award, but Itachi didn’t identify its response as a cross-motion, nor did it file a separate motion requesting confirmation of the award, according to court records.
A district court entered a written order finding the requested discovery was relevant, Turoff articulated sufficient cause for continuance and the discovery denial caused Turoff substantial prejudice. The court concluded under the circumstances, the arbitration award cannot stand. The district court vacated the award and ordered the parties to resubmit their dispute to JAG for a new hearing. The order didn’t say anything about Itachi’s request to confirm the award embedded within its response, let alone expressly deny the confirmation of the award.
Itachi brought an interlocutory appeal contending the district court erred in vacating the arbitration award and ordering a new hearing. A motions division of the appeals court ordered the parties to show cause why the appeal shouldn’t be dismissed without prejudice for a lack of a final appealable judgment. After those parties responded, the division deferred the jurisdictional issue to the merits division.
The appeals court found it has no jurisdiction to review the district court’s order vacating the arbitration award and ordering a new hearing. The appeals court dismissed the appeal.
Rebekah Panzlau appealed a district court’s judgment that dismissed the negligence, breach of contract and constructive eviction counterclaims she asserted against Adams County Housing Authority, doing business as Maiker Housing Partners. The appeals court affirmed.
Maiker provides affordable housing and services to low-income residents in Adams County. Panzlau rented an apartment from Maiker and after Panzlau notified Maiker of a water leak in her apartment, Maiker paid for Panzlau to stay in a hotel while the leak was being repaired. Shortly after, Panzlau complained to Maiker about mold and water damage in the apartment. Maiker worked with a contractor who submitted a report that detailed an elevated level of mold spores in the apartment.
Due to the terms of the lease, Maiker asked Panzlau to vacate the apartment so repairs could be made while addressing the mold. Panzlau continued to stay in the hotel, but she refused to remove belongings from the apartment, according to court records.
Maiker filed a forcible entry and detainer action against Panzlau to get legal authorization to remove her belongings from the apartment to make the repairs. Acting pro se, Panzlau filed what the appeals court construed as an answer and counterclaims. In the first counterclaims, Panzlau alleged the mold contamination in the apartment injured and sickened her. Over the course of litigation, Panzlau filed three motions based on the same allegations for recusal of the trial judge.
After the court entered an order for possession in favor of Maiker, Panzlau amended her counterclaims. Panzlau appealed the court’s final judgment in October 2021, which dismissed all her counterclaims that remained pending at the time.
Panzlau raised multiple items on appeal including issues pertaining to the district judge’s denial of Panzlau’s recusal motions and issues pertaining to the dismissal of Panzlau’s counterclaims.
At the hearing for Maiker’s request for an order of possession, Panzlau orally moved for recusal of the district judge on the grounds the judge’s former law firm had represented Adams County Housing Authority in an unrelated case. The judge denied the motion, explaining while at the firm, he wasn’t involved in any case involving which the ACHA was a party.
A few days later, Panzlau filed a written motion to recuse the judge based on the judge’s prior relationship with the firm. Panzlau argued the judge was required to recuse due to an actual or perceived conflict of interest according to Colorado Rules of Civil Procedure 97. The judge denied the second recusal motion in April 2021, noting he had addressed the merits of the second recusal motion when denying the first recusal motion.
Panzlau filed another motion to recuse the judge in April 2021. The district court didn’t stay the proceedings upon the filing of the third recusal motion and during the pendency of the motion, the parties continued to submit filings to the court. The district court didn’t rule on Panzlau’s third recusal motion until May 2021, when it was denied. Panzlau asserted on appeal the district judge erred by failing to recuse himself and failing to stay the proceedings while the third recusal motion was pending.
The appeals court joined other jurisdictions holding that under these circumstances, the former employer’s representation of the party with regard to a matter unrelated to the litigation before the judge doesn’t automatically require recusal.
As for the stay of proceedings, the appeals court held Rule 97 doesn’t require judges to stay proceedings when a party files a successive recusal motion that rests under the same underpinnings as the party’s prior unsuccessful motion to recuse.
The appeals court affirmed the district court’s denial of Panzlau’s recusal motions, its decision not to stay the proceedings during the pendency of the third recusal motion and its dismissal of Panzlau’s counterclaims.
The Colorado Court of Appeal unanimously affirmed an order in part, reversed in part and remanded a case involving meal and rest breaks.
Colorado Hamburger Company, Inc. and JOBEC, Inc., who are jointly referred to as Colorado Hamburger in the court opinion, own and operate three McDonald’s restaurant franchises in Durango, Cortez and Pagosa Springs, Colorado. Jacob Hicks was employed at the Durango location from about February 2020 to June 2020.
In September 2020, Hicks filed a class action complaint against Colorado Hamburger alleging a violation of the Colorado Department of Labor and Employment regulation protecting hourly wage earners — the Colorado Overtime & Minimum Pay Standards. Specifically, Hicks claimed Colorado Hamburger failed to provide 10-minute compensated rest breaks for every four hours worked and 30-minute uncompensated meal breaks for every five consecutive hours worked.
For discovery, both sides submitted copies of Colorado Hamburger’s employee handbook which employees need to acknowledge their understanding of as a condition for employment. According to the appeals court, two aspects of the handbook are relevant here: employees must clock in and out at the beginning and end of their shift and for rest and meal breaks. According to the handbook, employees must also abide by the break policy which says if schedules and workloads permit, the company provides rest and meal breaks consistent with the COMPS order.
Colorado Hamburger provided 70 affidavits of current and former employees which uniformly state in part: “For each day that I work, I clock in and clock out at the start and end of my shift, and I also clock in and out for lunch or for rest breaks. This creates a record of my hours and my total time worked.”
At Hicks’ request, the court ordered Colorado Hamburger to supply unredacted timesheets for the 70 employees. According to Hicks’ meta-analysis, the timesheets allegedly showed a dramatic decrease in missed breaks after Hicks filed the lawsuit, according to court records.
Hicks argued the absence of a recorded break showed the employer failed to authorize and permit a break. Colorado Hamburger countered that the timesheets couldn’t support that inference, but rather the employees could have waived a break, didn’t record it or didn’t receive one but were compensated on the back end by a manager’s adjustment.
The court determined Hicks’ proposed class satisfied Rule 23(a), but the court further found Hicks failed to meet Rule 23(b)(3)’s requirement that common questions predominate over individual ones. For that reason, the court denied the class certification without having an evidentiary hearing.
Under Rule 23(a), a party can maintain a class action if the class is so numerous that joinder of all members is impracticable; there are questions of law or fact common to the class; the defenses or claims of the representative parties are typical of the claims or defenses of the class; and the representative parties will fairly protect the interests of the class.
In addition to satisfying those requirements, the party that moves for the class certification needs to prove that questions of law or fact common to the members of the class predominate over any questions impacting only individual members and a class action is superior to other methods available for fair and efficient adjudication of the issue, according to Rule 23(b)(3).
The appeals court agreed with the lower court that Hicks’ claim based on deprivation of meal breaks cannot proceed because individual issues will predominate over common ones. The appeals court, however, concluded that because Hicks plans to use a viable class-wide means of proving liability and damages for the alleged deprivation of rest breaks, common issues would predominate over the individual ones, thus it renders the class certification appropriate.
The appeals court reversed the order in part and remanded the case with directions to enter an order certifying a class based on the denial of rest breaks.