Articles Posted in US Court of Appeals for the Tenth Circuit

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In 2010, the Internal Revenue Service issued a refund to the Wichita Center of Graduate Medical Education (a federally qualified charitable organization) on overpaid taxes along with incorrectly calculated interest on the refund. The IRS then sought repayment of part of the interest. Under the Internal Revenue Code, corporate taxpayers received a lower refund interest rate than other taxpayers such as individuals or partnerships. The Center claimed it was not a corporation for purposes of this section and was be entitled to the higher interest rate applicable to non-corporations. The Tenth Circuit affirmed the district court’s finding that the Center was a corporation and subject to the lower interest rate: the statutory text compelled the conclusion that the Center, even though it did not issue stock or generate profit, had to be treated as an ordinary corporation for purposes of the refund statute. View "Wichita Ctr for Grad Med. Ed. v. United States" on Justia Law

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This case arose out of the efforts the IRS made to investigate the tax liability of High Desert Relief, Inc. (“HDR”), a medical marijuana dispensary in New Mexico. The IRS began an investigation into whether HDR had improperly paid its taxes, and specifically whether it had improperly taken deductions for business expenses that arose from a “trade or business” that “consists of trafficking in controlled substances.” Because HDR refused to furnish the IRS with requested audit information, the IRS issued four summonses to third parties in an attempt to obtain the relevant materials by other means. HDR filed separate petitions to quash these third-party summonses in federal district court in the District of New Mexico, and the government filed corresponding counterclaims seeking enforcement of the summonses. HDR argued that the summonses were issued for an improper purpose—specifically, that the IRS, in seeking to determine the applicability of 26 U.S.C. 280E, was mounting a de facto criminal investigation pursuant to the Controlled Substances Act. HDR also asserted that enforcement of section 280E was improper because an "official [federal] policy of non-enforcement” of the CSA against medical marijuana dispensaries had rendered that statute’s proscription on marijuana trafficking a “dead letter” incapable of engendering adverse tax consequences for HDR. The petitions were resolved in proceedings before two different district court judges; both judges ruled in favor of the United States on the petitions to quash, and separately granted the United States’ motions to enforce the summonses. HDR challenged these rulings on appeal. The Tenth Circuit determined HDR was unable to overcome the government’s demonstration of good faith under United States v. Powell, 379 U.S. 48 (1964), and its alternative “dead letter” argument was without merit. View "High Desert Relief v. United States" on Justia Law

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Tony Kourianos worked as a coal miner for more than 27 years before filing a claim for benefits under the Black Lung Benefits Act (“BLBA”). His claim was reviewed through a three-tiered administrative process. Ultimately, the Benefits Review Board (“BRB”) found that he was entitled to benefits. The BRB also found that Kourianos’s last employer, Hidden Splendor Resources, Inc., was the “responsible operator” liable for paying those benefits. Hidden Splendor’s insurer, Rockwood Casualty Insurance Company, petitioned the Tent Circuit Court of Appeal for review of the BRB’s decision: (1) challenging the administrative law judge’s (“ALJ”) decision prohibiting Hidden Splendor from withdrawing its responsible operator stipulation; and (2) contending the BRB incorrectly found that Kourianos was totally disabled and entitled to benefits. Finding no abuse of discretion in the BRB decision, the Tenth Circuit denied Rockwood's petition. View "Rockwood Casualty Insurance v. Director, OWCP" on Justia Law

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Taxpayers Neil Feinberg, Andrea Feinberg, and Kellie McDonald were shareholders in Total Health Concepts, LLC (THC), a Colorado company allegedly engaged in selling medical marijuana. After the Taxpayers claimed THC’s income and losses on their tax returns, the IRS conducted an audit and disallowed certain deductions under 26 U.S.C. 280E, which prohibited deductions for businesses engaged in unlawful trafficking of controlled substances. The IRS then recalculated the Taxpayers’ tax liability and issued a notice of deficiency for the unpaid balance. The Taxpayers challenged that determination in tax court, which affirmed on the basis that the Taxpayers had failed to substantiate the business expenses. Both parties agreed the tax court erred by injecting a substantiation issue into this case not raised in the notice of deficiency, and then placed the burden for refuting that claim on the Taxpayers. But the Commissioner argued the Tenth Circuit should affirm on the alternative ground that the Taxpayers did not meet their burden of proving the IRS’s determination that THC was unlawfully trafficking in a controlled substance was erroneous. The Taxpayers disagreed and contended placing the burden on them would violate their Fifth Amendment privilege. Because the Tenth Circuit concluded allocation of the burden of proof did not constitute “compulsion” under the Fifth Amendment, and because the Taxpayers made no attempt to meet their evidentiary burden, the Court affirmed the tax court on the alternative ground that section 280E prohibited the deductions. View "Feinberg v. CIR" on Justia Law

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The city of Fort Collins, Colorado, enacted a public-nudity ordinance that imposed no restrictions on male toplessness but prohibited women from baring their breasts below the areola. In response, Free the Nipple, an unincorporated association, and two individuals, Brittiany Hoagland and Samantha Six (collectively, Plaintiffs ), sued the City in federal district court, alleging (among other things) the ordinance violated the Equal Protection Clause, U.S. Const. amend. XIV, sec. 1, and they asked for a preliminary injunction to halt enforcement of the ordinance. The district court agreed and enjoined the City, pending the resolution of the case s merits, from implementing the ordinance to the extent that it prohibits women, but not men, from knowingly exposing their breasts in public. The City then brought this interlocutory appeal to challenge the injunction. The narrow issue presented for the Tenth Circuit's review asked whether the district court reversibly erred in issuing the preliminary injunction. The Court found the trial court did not, affirmed the district court's judgment and remanded the case for further proceedings. View "Free the Nipple v. City of Fort Collins" on Justia Law

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Plaintiff Anupama Bekkem filed suit against her employer, the Department of Veterans Affairs, based on numerous instances of discrimination and retaliation she allegedly experienced while working as a primary care physician for the VA in the Oklahoma City area. The district court dismissed some of her claims under Rule 12(b)(6) and granted summary judgment in favor of Defendant on the remaining claims. Plaintiff appealed. Finding no reversible error in the trial court's grant of summary judgment on Plaintiff’s claims of discrimination based on unequal pay and retaliation based on her non-selection for the position as North May clinic medical director, and dismissal of her claim of discrimination based on a reprimand she received, the Tenth Circuit affirmed. However, the Court reversed summary judgment as to Plaintiff's claim of retaliation relating to the reprimand, and remanded that claim for further proceedings at the district court. View "Bekkem v. Wilkie" on Justia Law

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Plaintiff Millard Lance Lemmings (“Lance”) was born at a government-operated hospital in Ada, Oklahoma. During his birth, Lance suffered a brain injury. Lance and his parents, suing as “parents and next friends,” sued Defendants Comphealth, Inc. and Comphealth Medical Staffing, Inc. for medical malpractice under the Federal Tor Claims Act. The parties settled the case on September 28, 2001. Lance’s parents were simultaneously engaged in a state court proceeding regarding guardianship of Lance. On the morning of October 25, 2001, Lance’s parents filed an application for an order approving the agreed settlement, attorneys’ fees, and litigation costs in the state court action. The state district court appointed Lance’s parents as the guardians of Lance’s estate. Following that court order, Lance’s parents withdrew their state court application for an order approving the settlement. Later that day, Lance’s parents appeared before the federal district court for a fairness hearing regarding the settlement and represented him at the fairness hearing. The district court did not appoint a guardian ad litem. Appellants Barbara Lemmings and Oran Hurley, Jr. filed a motion fifteen years later seeking to intervene, in which they contended: (1) the parties presented materially inaccurate information to the district court in 2001 in order to obtain the district court’s approval; (2) the district court did not have jurisdiction to approve the settlement because it did not appoint a guardian ad litem to represent Lance; and (3) a conflict of interest existed between Lance and his parents which required the appointment of a guardian ad litem. Belatedly, Appellants further sought access to the 2001 sealed fairness hearing transcript. In the motion to intervene, Appellants asserted that Lance’s parents spent a large portion of the proceeds and abandoned him in 2011, leaving him in the care of his paternal grandmother, Appellant Barbara Lemmings. The state district court appointed her Lance’s guardian in January 2017. After Ms. Lemmings suffered a health issue, the state court appointed Appellant Oran Hurley, Jr. as co-guardian. Appellants sought to reopen the district court action, vacate the dismissal, intervene, and rewrite the terms of the Irrevocable Governmental Trust in order to access the proceeds contained in that trust. The United States objected. The Tenth Circuit rejected Appellants' contention that Federal Rule of Civil Procedure 17 required the formal appointment of a guardian ad litem, and rejected the contention that an inherent conflict of interest always existed where a minor was represented by a parent who was a party to the same lawsuit as the minor. View "Kile v. United States" on Justia Law

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This case involved an alleged worldwide Ponzi scheme and the antifraud provisions of the federal Securities Act of 1933 and the Securities Exchange Act of 1934. Defendant Charles Scoville operated an internet traffic exchange business through his Utah company, Defendant Traffic Monsoon, LLC. The Securities and Exchange Commission (“SEC”) initiated this civil enforcement action, alleging Defendants were instead operating an unlawful online Ponzi scheme involving the fraudulent sale of securities. In this interlocutory appeal, Scoville challenged several preliminary orders the district court issued at the outset, including orders freezing Defendants’ assets, appointing a receiver, and preliminarily enjoining Defendants from continuing to operate their business. The Tenth Circuit upheld those preliminary rulings, finding the SEC asserted sufficient evidence to make it likely that the SEC would be able to prove that Defendants were operating a Ponzi scheme. View "SEC v. Traffic Monsoon" on Justia Law

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Jason Dean, director of the Labor Relations Division of the New Mexico Department of Workforce Solutions (“DWS”), appealed a district court's denial of qualified immunity against the claim that he violated Plaintiffs’ constitutional rights to substantive due process by failing to issue prevailing rates for wages and fringe benefits as required by New Mexico law. Plaintiffs were individuals who worked on public works projects in New Mexico, who filed claims under 42 U.S.C. 1983 on behalf of themselves and others similarly situated. As a result of this failure, from 2009 to 2015 plaintiffs alleged they did not receive the rates to which they were entitled under the Act. Defendants moved to dismiss, claiming qualified immunity. The district court granted it in part and denied it in part. Specifically, the district court granted the motion in its entirety as to Secretary Bussey, and as to Plaintiffs’ procedural due-process claim against Director Dean. However, the court denied the motion with respect to Director Dean on Plaintiffs’ substantive due-process claim. The Tenth Circuit dismissed plaintiffs' cross-appeal for lack of jurisdiction, and reversed and remanded the denial of qualified immunity as to Director Dean. View "Cummings v. Dean" on Justia Law

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Lina Thoung emigrated from Cambodia to the United States in 2002 using a fraudulently obtained visa in the name and birthdate of another person. In 2007, she obtained U.S. citizenship and affirmed she had never provided false information to any government official while applying for any immigration benefit. Her fraud was discovered in 2012. She subsequently pleaded guilty to misusing a visa, permit, and other documents to obtain citizenship. As part of her plea agreement, she jointly stipulated to denaturalization under 8 U.S.C. 1451(e) and removal from the United States. Relying on 8 U.S.C. 1228(c)(5), the district court entered an order of removal. Immigration authorities, unable to deport Thoung back to Cambodia, eventually released her subject to an Order of Supervision. Under this order, Thoung could be arrested and deported at any time. Thoung filed a writ of habeas corpus with the district court alleging the court had lacked subject-matter jurisdiction to enter its order of removal. The district court reaffirmed its jurisdiction to order removal and rejected Thoung’s habeas petition. The Tenth Circuit held that, because of the REAL ID Act’s limitations on judicial review, the district court lacked jurisdiction to entertain Thoung’s habeas petition challenging the prior removal order. Because the district court lacked subject-matter jurisdiction and thus lacked power to enter its October 2017 Memorandum and Order, that judgment was vacated. View "Thoung v. United States" on Justia Law