2014 COA 88
Colo. Ct. App.2014Background
- Lester worked as TCBA's chief operating officer under an oral agreement promising $150,000/year (half paid by TCBA, half by Johnson's company JHP); TCBA paid him only twice and he filed a CWCA wage demand and suit.
- A jury found an implied contract and awarded Lester $12,307.69 in unpaid compensation against TCBA; the trial court dismissed Lester's claims against JHP.
- Lester moved for CWCA statutory penalties and attorney fees; the trial court held CWCA applied to implied contracts but denied Lester fees after applying factors from Carruthers (a case about fees to prevailing employers).
- Lester appealed the denial of attorney fees and the dismissal of JHP; he also sought appellate fees.
- The appeals court reversed the denial of trial (and potentially appellate) attorney fees under CWCA and remanded for application of the Newman standard; it affirmed dismissal of claims against JHP on the ground that alter-ego relief could not be applied to a separate nonmember entity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trial court may apply the Carruthers employer-fee factors to a prevailing employee under § 8-4-110(1) CWCA | Lester: prevailing employees are presumptively entitled to fees under the CWCA (per legislative declaration and Carruthers/Graham guidance) and the Newman standard should apply | TCBA: statute uses symmetrical "may" language for employers and employees so the same discretionary factors should apply | Reversed: employee-fee awards are governed by the Newman presumptive-plaintiff standard (award allowed absent "special circumstances"); trial court must reconsider fees under that standard |
| Whether trial court properly relied on employer hardship, employer good faith, and plaintiff’s officer status to deny fees | Lester: those are not "special circumstances" that can overcome the Newman presumption | TCBA: nonprofit hardship, good faith, and officer role justify denying fees | Reversed as to these factors: inability to pay, employer good faith, and plaintiff’s officer status do not constitute special circumstances to deny fees |
| Whether JHP could be held liable as TCBA’s alter ego | Lester: JHP was TCBA’s alter ego (common control, intermingling, undercapitalization) so JHP should be liable | TCBA/JHP: (trial court found) nonprofit cannot have alter ego because no shareholders; JHP is separate | Affirmed (on different grounds): although alter-ego doctrine can apply to nonprofits, Lester sued JHP (a separate corporate entity) rather than TCBA members/Johnson, and JHP is not a member/individual — so alter-ego relief against JHP was improper |
Key Cases Cited
- Carruthers v. Carrier Access Corp., 251 P.3d 1199 (Colo. App. 2010) (adopts factors for awarding CWCA fees to prevailing employers and notes employees are presumptively entitled to fees)
- Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400 (U.S. 1968) (prevailing plaintiff presumptively entitled to attorney fees under civil-rights fee statutes)
- Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (U.S. 1978) (explains narrow "special circumstances" exception for denying fees to prevailing plaintiffs)
- Hensley v. Eckerhart, 461 U.S. 424 (U.S. 1983) (standards for awarding reasonable attorney fees to prevailing parties)
- Krystkowiak v. W.O. Brisben Cos., Inc., 90 P.3d 859 (Colo. 2004) (alter-ego doctrine can apply to nonprofits; members may be liable)
- Graham v. Zurich American Insurance Co., 296 P.3d 347 (Colo. App. 2012) (prevailing employee may recover appellate attorney fees under CWCA and court guidance on factors for appellate fees)