2012 COA 196M
Colo. Ct. App.2012Background
- Health Grades, Inc. is a web-based healthcare information provider; defendants are former Health Grades employees who resigned over a competing websites dispute.
- Health Grades sued defendants for breach of loyalty, misappropriation of trade secrets, interference with prospective business, conversion, and breach of contract.
- Defendants counterclaimed abuse of process, contending Health Grades' claims were sham litigation; Singson also asserted tortious interference, which Health Grades withdrew.
- Before trial, both sides moved for summary judgment; the court denied both and found genuine issues of material fact on abuse of process.
- At trial, defendants moved for a directed verdict on Health Grades' tort claims under the economic loss rule; the court denied, and the jury returned verdicts for defendants on Health Grades' claims and for defendants on abuse of process, awarding $200,000 each.
- Health Grades moved for judgment notwithstanding the verdict; the court declined; on appeal, the issue is whether the abuse of process claim should have been decided under a heightened standard before trial and whether remand is necessary.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the abuse of process claim based on sham litigation was properly submitted to the jury. | Health Grades argues the First Amendment heightened standard should have decided the claim before trial. | Boyer/Singson contend disputed evidence supported submission to the jury. | Court held the constitutional issue should be decided by the court, not the jury, under the heightened standard. |
| Whether denial of summary judgment/directed verdict forecloses a finding that Health Grades' claims were devoid of reasonable factual support. | Health Grades contends the court’s denials implied substantial justification for claims. | Defendants argue the ruling does not conclusively show reasonable factual support. | Court rejects absolute bright-line rule; denial does not by itself establish reasonable factual support. |
| What is the proper remedy and procedure on remand for the abuse of process claim under the POME heightened standard? | Health Grades seeks JNOV and/or remand to re-evaluate under heightened standard. | Defendants argue for upholding verdict and applying heightened standard on remand as needed. | Remand directed to apply the POME heightened standard to all Health Grades claims and decide anew on JNOV depending on results. |
| Should the court have withdrawn reliance on the jury verdicts in evaluating the abuse of process claim on remand? | Health Grades contends verdicts should not preclude reevaluation under POME. | Defendants rely on verdicts as evidence of lack of devoid of factual support. | Court indicates verdicts do not, by themselves, establish absence of reasonable factual support; remand is appropriate. |
| Does General Steel affect whether POME's heightened standard applies to this purely private dispute? | Health Grades urges adoption of broader application of POME to private disputes. | Defendants rely on General Steel to limit the application of the heightened standard. | Court notes General Steel does not require withdrawing the outcome and retains need to apply POME on remand. |
Key Cases Cited
- Hewitt v. Rice, 154 P.3d 408 (Colo. 2007) (abuse of process elements and damages requirement)
- Sterenbuch v. Goss, 266 P.3d 428 (Colo. App. 2011) (heightened standard in abuse of process cases)
- Concerned Membérs of Intermountain Rural Electric Association v. District Court, 713 P.2d 923 (Colo.1986) (need for heightened standard on dismissal motions under POME)
- In re Foster, 258 P.3d 1244 (Colo.2011) (POME principles adopted in abuse of process context)
- Ware v. McCutchen, 784 P.2d 846 (Colo. App. 1989) (burden shift under POME for abuse of process)
- Erystkowiak v. W.O. Brisben Cos., 90 P.3d 859 (Colo. 2004) (application of POME framework in private disputes)
- Yadon v. Lowry, 126 P.3d 332 (Colo. App. 2005) (POME factors applied in private litigation context)
- Porous Media Corp., 186 F.3d 1077 (8th Cir. 1999) (first prong of sham litigation objective baselessness standard in federal context)
- Davis v. Butler, 522 S.E.2d 548 (Ga. App. 1999) (denial of summary judgment as indication of substantial justification)
- General Steel Domestic Sales, LLC v. Bacheller, 291 P.3d 1 (Colo. 2012) (no automatic shield from POME heightened standard for purely private disputes)