UPDATE: On January 31, 2013, the court of appeals modified its original opinion to include an entire section addressing a motion for rehearing by the Defendants. Defendant employees asserted the court should rehear the case. They argued that on remand they should not be subject to meeting a heightened standard of proof for sham litigation claims (arising from First Amendment protections for litigation activity) for their claims. They based the petition in part on the Supreme Court’s subsequent decision in General Steel Domestic Sales v. Bacheller, 2012CO68 (Nov. 27, 2012). The court denied rehearing and declined to withdraw the original opinion, holding that General Steel did not decide the issue of whether the heightened standard applied to private party disputes brought through a judicial proceeding.
“Sham litigation.” A cynic would call that phrase redundant. However, the First Amendment protects the rights of individuals to have their claims decided in civil courts, unless they are devoid of a reasonable factual basis; such claims are an abuse of process. In this case, Employer sues former Employees who allegedly started a competing business. Employees counterclaim stating the Employer’s case is an abuse of process. A jury dismisses all claims and finds in favor of defendant Employees on the counterclaim. Employer argues that because their claims went to the jury, they could not have been devoid of a reasonable factual basis, so the counterclaim should have been dismissed. The court of appeals held that the trial court erred by allowing the jury to decide the counterclaim, and remanded for the trial court to determine if Employer’s claims had a reasonable factual basis.