Colorado high court upholds firing of quadriplegic for off-the-clock medicinal marijuana use

The Colorado Supreme Court ruled today that a private employer was justified in firing a quadriplegic worker because he had used medical marijuana at home to control muscle spasms. The court concluded that, despite a state constitutional amendment legalizing marijuana in Colorado, and despite a federal policy prohibiting the prosecution of medical marijuana patients in the state, it was technically not “lawful” under the federal Controlled Substances Act (CSA) for the worker to use marijuana off the clock.

The case concerned Brandon Coats. According to a 2014 article in the Huffington Post, Coats was injured at the age of sixteen when he was a passenger in a car that crashed into a tree. The accident paralyzed more than 80 percent of his body, and he has suffered from severe involuntary muscle spasms and seizures ever since. At first, he used prescription drugs to control the spasms, but these soon became ineffective. He later found, however, that smoking small amounts of medical marijuana would halt the spasms and allow him to go to work without pain. He joined Colorado’s medical marijuana registry in 2009.

At the time, Coats worked as a customer service representative for satellite television provider Dish Network, L.L.C. The record did not suggest that Coats ever came to worked stoned, and the company acknowledged that it had no complaints about his performance. The company does perform random drug tests, however, and one of its tests indicated that Coats had been exposed to tetrahydrocannabinol (THC), the psychoactive ingredient in marijuana, within the previous forty days. Dish immediately fired him.

Coats then brought suit under Colorado’s Lawful Activities Statute, Colo. Rev. Stat. section 24-34-402.5. This statute prohibits employers from terminating employees for “engaging in any lawful activity off the premises of the employer during nonworking hours.” Coats argued that, because Colorado voters had amended the state’s constitution in 2000 to permit the use of medical marijuana, it was lawful for him to take medical marijuana in his home during nonworking hours. The amendment provides an affirmative defense to criminal prosecution for violation of state marijuana-possession laws for certain individuals suffering from a “debilitating medical condition” for which a physician has prescribed marijuana. See Colo. Const. art. XVIII § 14. It also requires the return of any medical marijuana plants seized by law enforcement.

The Arapahoe County District Court disagreed and dismissed the case. Judge Elizabeth Volz ruled that the constitutional amendment did not actually make medical marijuana legal under state law, found that Dish was justified in terminating Coats, and ordered Coats to pay Dish’s attorney fees as though it had prevailed on a motion for failure to state a claim for relief in a tort action. In 2013, a divided panel of the Colorado Court of Appeals affirmed in part and reversed in part. The appellate court suggested in dicta that the use of medical marijuana was “lawful” under state law, but it held that it was not “lawful” under federal law. Coats v. Dish Network, L.L.C., 2013 COA 62, 303 P.3d 147 (2013). Possession of marijuana for any purpose—medical or otherwise—has been effectively illegal under federal law since 1937. Because Colorado’s Lawful Activities Statute was not limited to state laws, the majority held that an employer could fire an employee for violating federal laws away from work. The court did reverse the award of attorney fees, however, ruling that an action under the Lawful Activities Statute was not a tort claim. Judge John Webb dissented from the majority and concluded that the reference to “lawful activities” should be measured solely by Colorado law. Because he further concluded that possession of medical marijuana was indeed legal in Colorado, he would have reversed the lower court.

The Colorado Supreme Court granted certiorari review and affirmed in a short opinion. The court noted that marijuana remains illegal in all forms under federal law, citing the United States Supreme Court’s holding in Gonzales v. Raich, 545 U.S. 1 (2005), which had concluded that supremacy clause requires federal statutes to preempt conflicting state laws pertaining to marijuana regulation. Because of this, Coats could not show that the off-duty use of medical marijuana in his home was “lawful,” regardless of its legality under state law or its medical necessity. The court decided the issue only based on federal law and declined to address whether medical marijuana use is “lawful” under state law. Justice Allison Eid authored the unanimous decision. Justice Monica Márquez did not participate. The full text is available online at the court’s website and reported at: Coats v. Dish Network, L.L.C., 2015 CO 44, ___ P.3d ___ (2015).

In a footnote, the court acknowledged that the federal government itself would be precluded from prosecuting Coats. In its December 2014 appropriations bill, the United States Congress prohibited the Department of Justice from using any federal money to prevent Colorado and states with similar medical marijuana laws from “implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” Id. n. 2, quoting Consolidated and Further Continuing Appropriations Act, 2015, Pub. Law No. 113-235, § 538, 128 Stat. 2130, 2217 (2015). This followed an earlier announcement by the Department of Justice stating that it would not prosecute cancer patients or those with debilitating conditions who use medical marijuana in accordance with state law. Id. This did not convince the court to allow Coats’s claims to proceed, however; the court simply stated that “marijuana is still a Schedule I substance, and no medical marijuana exception yet exists in the CSA.” As such, medical marijuana use remains unlawful.

In short, the court recognized that Coats broke a law that no one enforces while he was off-the-clock and in his own home. His marijuana use did not hinder his ability to work; on the contrary, it gave him enough of a respite from pain that he could rejoin the workforce and hold down a steady job. And yet, the court ruled that Coats has no remedy against Dish Network for what would otherwise be a blatant violation of state employment discrimination laws. This serves no purpose and could open the door to pretextual termination of disabled Americans and other minority groups. Indeed, some commentators say that it was racism against blacks and Hispanics that first prompted the federal government to outlaw marijuana use in the 1930s.

This ruling is also a disappointment for those who depend on medical marijuana to live a productive life. The medicinal effects of THC have been known for centuries, and recent studies have suggested that cannabidiol (CBD) from marijuana plants may help to stop cancer and reduce epileptic seizures, among other benefits. Nevertheless, the federal government has been slow to reassess its marijuana laws, though Senator Rand Paul recently introduced a bill that would, among other things, remove medical marijuana from the CSA, reclassify the plant as a Schedule II substance with potential medicinal value, remove CBD and other cannabinoids from the federal definition of marijuana altogether, and relax restrictions on financial institutions dealing with marijuana businesses. The bill has passed the Senate and is currently being reviewed by a House subcommittee.

Although Senator Paul’s bill may be a step in the right direction for the medical marijuana community, some advocates warn that this legislation may be misguided. There is mounting evidence that minute amounts of activated THC may be required in order to achieve successful synergistic results with CBD; there are also many other non-psychoactive components to the marijuana plant, such as Cannabigerol (CBG), Cannabidiolic Acid (CBDA), and Tetrahyrocannabinolic Acid (THCa or unactivated THC) that may have unquantified medical benefits. Though such changes in federal law would offer no relief to Coats in his suit against Dish Network, they would likely protect other individuals in similar situations that may arise in the future.

In addition to the Coats ruling, the supreme court also announced today that it would review te ruling in People v. Crouse, 2013 COA 174, ___ P.3d ___ (2013). In Crouse, the El Paso County District Court had ordered the return of medical marijuana plants to a patient under the same constitutional amendment at issue in the Coats case. In a split decision, the court of appeals affirmed this ruling and held that the CSA was not so broad as to preempt this provision of the Colorado Constitution. Judge Webb, who had dissented in support of Coats, wrote the majority opinion, in which Judge Stephanie Dunn joined. Judge Steve Bernard dissented and argued that the government’s return of the plants was an illegal distribution of a controlled substance under federal law, i.e. that local police could be prosecuted as drug dealers merely for carrying out a state law requiring the return of improperly seized property. The Colorado Supreme Court’s decision to review Crouse on the same day that it announced Coats suggests that the justices may apply a similar rationale and conclude that the CSA prohibits state law enforcement from returning medical marijuana, regardless of whether it was properly taken.

Once it grants a petition for certiorari, the Colorado Supreme Court takes an average of two years to issue an opinion. Thus, it may be some time before the court provides further guidance on this subject. In the meantime, the conflict between state and federal law will continue to cause uncertainty for businesses and employees in the state.

Homebuilder immunity act dies in committee. What's next?

For the third straight year, the Colorado legislature has rejected efforts by the homebuilders’ lobby to provide virtual immunity for construction defects and property damage.

Late Monday night, the House committee on State, Military, and Veterans Affairs voted down Senate Bill 15-177 on straight party lines. All six Democrats on the committee voted against the bill, while all five Republicans voted for it. Similar bills had died in the Senate in 2013 and 2014.

In theory, SB177 would have boosted multifamily construction by shielding builders from liability for negligent work. Unlike the 2013 bill, this version never expressly stated that it was providing homebuilders with immunity, but it would have made it nearly impossible for community associations to take action against a builder who refused to honor a warranty. And even if the homeowners managed to overcome the procedural obstacles, the bill would have forced their claims into costly, private arbitration. Proponents hoped that, by eliminating responsibility for negligent work and property damage, they could entice homebuilders to construct more cheap condominiums.

Meanwhile, economist Pat Pacey testified that sluggish multifamily construction in Colorado is the result of low demand, not litigation. She noted that Colorado’s construction defect laws are about average compared to other states, and that multifamily construction is down across the nation. Nevertheless, many new multifamily projects, including a new 66-unit transportation-oriented development near I-25 and Yale and a 180-unit community in Littleton, have recently broken ground in Colorado. This left bill proponents struggling to find data to support their claim of a homebuilding crisis.

Sponsors also touted SB177 as an “affordable housing” measure, but none of the witnesses on Monday night could explain how eliminating consumer protections would help affordable housing communities. The closest anyone came was a representative of Habitat for Humanity, who suggested that her group might build higher density homes on land it was holding if the legislature could prevent claims for substandard work. In the end, however, the fact that a charity might construct a few more condominiums was not enough to persuade Democrats to strip away consumer protections for the entire state; seeing no guarantee that SB177 would provide any significant increase in affordable housing, they voted to postpone the bill indefinitely, effectively killing the measure for 2015.

The latest defeat for the homebuilders’ lobby poses the question of whether they will run yet another immunity bill in 2016. Initial comments from lobbyists suggest that they may abandon hope of statewide legislation and instead try to enact local ordinances to shield builders, notwithstanding the fact that most legal experts believe that these ordinances are unconstitutional. Lakewood and Lone Tree have passed such measures, but they conflict with state law and most likely exceed the cities’ home rule authority.

For whatever reason, the homebuilders remain unwilling to meet with homeowner advocates to talk about a compromise measure. After Monday’s vote, one prominent lobbyist said that his feelings were hurt by a comment on Twitter about shoddy construction, and that this made the homebuilders less likely to talk. In the meantime, Democrats in both chambers have expressed interest in changing the law to require meaningful mediation of construction defect disputes, create incentives for quality construction, and lower insurance costs, so long as consumer rights are protected. To date, however, the homebuilders’ so-called “coalition” includes only builders, lenders, and business groups who insist that immunity is the only option; those who suggest a compromise have been unwelcome at their table. When homeowner advocates have tried to meet with the coalition, they have been ignored or—in at least one instance—have literally been asked to leave.  As Monday’s vote shows, this unilateral approach is unlikely to succeed, and the homebuilders will need to consider the views of other stakeholders if they wish to change Colorado’s construction defect laws.

UPDATE: Efforts to run a bill in 2016 fell apart late in the session, and no new legislation was introduced.

CBS4 covers Colorado construction defect debate

CBS4 in Denver interviewed me and two of my clients earlier this year for a story about the difficulty in getting construction defects repaired. The story aired this week along with coverage of the General Assembly’s ongoing debate over construction defect laws. Click here to see the video and read the related story.

Colorado senate committee approves construction defect bill

Late last night, the Colorado Senate Business, Labor, and Technology Committee voted to refer SB 15-177 to the committee of the whole. The vote followed nearly seven hours of testimony from those in favor of construction defect legislation and those opposed.

As I have previously discussed in this blog, the bill sponsors have argued that their measure will encourage the construction of more affordable housing by giving builders de facto immunity for claims of defective workmanship and property damage in common interest communities. The bill achieves this by establishing difficult voting and disclosure requirements for homeowner associations and requiring costly, private arbitration of any disputes that can overcome the procedural hurdles. During the recent hearing, proponents echoed these statements and testified that insulating homebuilders from claims would lower home prices and rents by increasing the supply of cheaply-built condominiums.

Opponents questioned whether the bill contained any provisions that would actually help the affordable housing market. They also argued that it was improper for the legislature to shift the cost of fixing construction defects onto those homeowners who can least afford to pay for necessary repairs.

In response to the opponents, bill sponsor Jessie Ulibarri, a Commerce City Democrat, argued that those who buy homes in affordable home communities should not expect to have legal recourse against a homebuilder after they close on a house. Ulibarri acknowledged his own childhood experiences growing up in poverty but was adamant that unsophisticated buyers do not deserve any special protections when they buy a home. Ulibarri told the committee that he reads every contract in full before he signs it, and he insisted that homebuyers should not be allowed to avoid waivers in the fine print of their closing documents.

Although witnesses testified that virtually all new residential construction projects present buyers with contracts of adhesion, such that homebuyers have no choice but to accept onerous waivers and arbitration clauses, Ulibarri was not persuaded. He instead told the committee that low income residents do “have a choice,” and that choice is to not buy a home. In other words, homebuyers can either choose to buy an affordable home with construction defects, or they can choose to keep renting.

How this “choice” will help solve problems of affordable housing and high rents remains to be seen, but proponents of the bill were confident that it would work out somehow.

I testified along with one of my clients concerning the high cost of private arbitration and how paying arbitrators to decide these claims is not realistic for many who live in affordable housing communities. Affluent communities with huge repair claims can always find a contingent-fee lawyer to front the costs of a construction arbitration, but that is seldom an option for communities of less-wealthy residents.

Democrats on the committee proposed three amendments, which would have preserved homeowners’ right to a jury trial, protected individual unit owners’ ability to seek repairs if their neighbors did not approve community action, and delayed implementation of any law until state agencies could present data showing that the bill would actually help create more affordable housing. Ulibarri opposed all of these amendments and convinced the committee members to vote down these proposals while approving several others that altered the mechanics of the bill.

Republicans on the committee appeared to be particularly persuaded by one witness who testified that rent on her apartment in Denver was too high. Although the witness gave few details about her apartment or rents on comparable properties, Committee Chair David Balmer at one point referred to this testimony as being the most compelling of the evening. Democrats questioned whether the bill would have any appreciable effect on rents in the Metro Area or lead to the construction of any homes within City limits that a resident in her income bracket could afford. Ulibarri countered with the suggestion that Habitat for Humanity, a supporter of his bill, might give the witness a house at a discounted price if the bill passes.

In the end, despite hours of testimony, the vote came down as expected, largely along party lines. Democrat Cheri Jahn joined the five Republican senators on the committee to vote in favor of the bill. Democrats Irene Aguilar and Rollie Heath voted no, and Democrat Linda Newell was excused.

The bill now heads to the State House of Representatives, where Democrats are expected to reject the measure absent major amendments to protect homeowners.

Further comments and links to related topics may be found on my twitter page. Additional coverage also appeared in today’s Denver Business Journal.