United States District Court, D. Colorado
ORDER ENTERING CONSENT DECREE
CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE
This
matter is before the Court upon the parties' Joint Motion
for Entry of Consent Decree (Doc. # 41), which all parties
executed on July 31, 2019 (Doc. # 41-1). For the following
reasons, the Court grants the parties' Joint Motion for
Entry of Consent Decree and enters the parties' Consent
Decree.
I.
BACKGROUND
Plaintiff
Wolf Resources, LLC is a privately-held Colorado limited
liability company “engaged in the acquisition, holding,
exchange, and selling of oil and has mineral
interests.” (Doc. # 1 at 2-3.) According to Plaintiff,
Defendant Cody Denton's entity, Defendant Colorado Real
Property Solutions, LLC, became a member of Plaintiff in
2017. (Id. at 4.) While working for Plaintiff,
Defendant Denton held the title of Vice President of
Acquisitions. (Id.) Defendant Corey Linton's
entity, Core West Energy, LLC, became a member of Plaintiff
in 2017. (Id.) While working for Plaintiff,
Defendant Linton held the title of Vice President of Asset
Management. (Id.) On March 1, 2018, all Defendants
signed Plaintiff's Operating Agreement. (Id. at
5); see (Doc. # 1-1.) As of October 31, 2018,
Defendants had membership interests in Plaintiff. (Doc. # 1
at 7.) On November 1, 2018, Defendants resigned from
Plaintiff. (Id. at 9.) Plaintiff contends that prior
to their resignations, Defendants “exfiltrated
thousands, if not tens of thousands, of [Plaintiff's]
files, including substantial amounts of . . . confidential
and trade secret documents, ” failed to return those
files, and “threatened to solicit [Plaintiff's]
business relationships and compete against [Plaintiff],
” all in violation of the Operating Agreement.
(Id. at 9-11.)
Plaintiff
brought suit against Defendants on February 21, 2019,
alleging five claims for relief: (1) breach of contract; (2)
misappropriation of trade secrets under the federal Defend
Trade Secrets Act, 18 U.S.C. § 1836(b); (3)
misappropriation of trade secrets under Colorado Uniform
Trade Secrets Act, Colo. Rev. Stat. § 7-74-102(4); (4)
unjust enrichment; and (5) tortious interference with
contract. (Id. at 13-16.) Defendants deny
Plaintiff's allegations and assert five counterclaims:
(1) breach of contract; (2) violations of the Colorado Wage
Claim Act, Colo. Rev. Stat. § 8-4-101, et seq.;
(3) unjust enrichment; (4) fraud in the factum and in the
inducement; and (5) a request for a declaratory judgment.
(Doc. # 23 at 43-48.)
The
parties participated in a settlement conference with United
States Magistrate Judge Michael B. Hegarty on June 25, 2019.
(Doc. # 39.) After 12 hours of discussions, the parties
resolved all claims and entered into a written Material Terms
of Settlement agreement. See (Doc. # 37.) They
report that Magistrate Judge Hegarty approved of the terms of
the settlement. (Doc. # 41 at 1.) The parties finalized a
formal settlement agreement in the weeks that followed.
See (Doc. # 37.)
The
parties filed the Joint Motion for Entry of Consent Decree
presently before the Court on July 31, 2019. (Doc. # 41.)
They attach a proposed consent decree (the “Consent
Decree”) “embodying the terms of the
settlement” that all parties executed on July 31, 2019.
(Doc. # 41-1.) The parties request that the Court enter the
Consent Decree as the Court's final order and judgment in
this matter because “[o]ne of the terms of the
settlement is that the ‘Court will make the foregoing
terms [of settlement] an order of the Court.'”
(Doc. # 41 at 1.)
II.
LEGAL STANDARD
“A
consent decree is primarily a means by which parties settle
their disputes without having to bear the financial and other
costs of litigating.” Local No. 93, Int'l
Ass'n of Firefighters, AFL-CIO C.L.C. v. City of
Cleveland, 478 U.S. 501, 528-29 (1986). A consent decree
that is entered in federal court “must be directed to
protecting federal interests.” Frew ex rel. Frew v.
Haskins, 540 U.S. 431, 437 (2004). In
Firefighters, the Supreme Court held that a federal
consent decree must: (1) “spring from and serve to
resolve a dispute within the court's subject-matter
jurisdiction;” (2) “come within the general scope
of the case made by the pleadings;” and (3)
“further the objectives of the law upon which the
complaint was based.” 478 U.S. at 525.
The
Court may either “approve or deny the issuance of a
consent decree.” United States v. State of
Colo., 937 F.2d 505, 509 (10th Cir. 1991) (citing
Berger v. Heckler, 771 F.2d 1556, 1568 (2d Cir.
1985)). The Court of Appeals for the Tenth Circuit has
explained:
Because the issuance of a consent decree places the power of
the court behind the compromise struck by the parties, the
district court must ensure that the agreement is not illegal,
a product of collusion, or against the public interest. The
court also has the duty to decide whether the decree is fair,
adequate, and reasonable before it is approved.
Id. (citing United States v. City of Miami,
Fla., 664 F.2d 435, 441 (5th Cir. 1981)); E.E.O.C.
v. RCH Colorado, LLC, No. 15-cv-02170-RM-NYW, 2016 WL
9735737, *2 (D. Colo. July 5, 2016).
If the
Court is not satisfied that a consent decree fulfills these
criteria, the Court generally “is not entitled to
change the terms of the agreement stipulated to by the
parties.” Id. (citing Berger, 771
F.2d at 1568). “If deficiencies are found, it is proper
for the district court to advise the parties of its concerns
and allow them to submit a revised decree.” United
States v. Weiss, No. 11-cv-02244-RM-MJW, 2013 WL
5937912, *2 (D. Colo. Nov. 6, 2013) (citing State of
Colo., 937 F.2d at 509).
III.
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