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Plaintiffs,
v.
VAIL RESORTS, INC., THE VAIL CORPORATION, and VAIL SUMMIT RESORTS,
INC.,
Defendants.
Defendants should not be sanctioned for removing this case because it was
removed only after a thorough review of applicable law and was based on a genuine
and objectively reasonable belief that the case was properly removable. It was
removed because it seemed evident – at least to Defendants – that the Plaintiffs’ claim
relied on federal law. For reasons that will be explained below, the Plaintiffs’ reliance on
federal law was obscured until shortly before trial. Defendants believe that the case
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to allow a defendant to remove a state action when it was not originally removable as
stated by the Plaintiffs’ original complaint in the state court, but has become removable
due to the filing in state court of ‘an amended pleading, motion, order or other paper
from which it may first be ascertained that the case is one which is or has become
removable.’” W.H. Pat O’Bryan v. Chandler, 496 F.2d 403, 409 (10th Cir. 1994), quoting
28 U.S.C. § 1446(b); see also Huffman v. Saul Holdings Ltd., 194 F.3d 1072, 1078
The Court’s remand order says Defendants’ “stretch credulity” by claiming that
the case had become removable based on “Plaintiffs’ written response to a jury
instruction.” Order of Remand at 1. But federal courts have applied the second
Padilla-Morales v. The Shell Company, 2005 U.S. Dist LEXIS 43267 *15 (collecting
The Tenth Circuit has applied the “other paper” provision of the statute to find a
case removable under the second paragraph of § 1446(b) based on “information elicited
in a deposition.” See, Huffman v. Saul Holdings Ltd., 194 F.3d 1072, 1078 (10th Cir.
1999). Similarly, in Hubbard v. Union Oil Company of California, 601 F.Supp 790, 794
(S.D. Vir. 1985) the court applied the “other paper” provision of 28 U.S.C. § 1446(b) to a
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memorandum in support of a request for injunctive relief, which made the case
removable even though it clearly was not removable based on the original complaint.
In this case, Plaintiffs’ “other paper” asserted, for the first time, an irrevocable
interest in land. That newly claimed interest necessarily raised federal issues because
the land is federal land, owned by the federal government. Before then, this case had
been nothing more than a state law breach of contract claim, which necessarily
asserted nothing more than a mere license to enter upon land, not an actual ownership
Revealing that a claim relies on a question of federal law -- even if not done
through a formal amendment – makes the case removable if done in “other papers”
which for the first time raises a federal claim or make it known that the original complaint
actually relies on federal law. See Lovern v. General Motors, 121 F.3d 160, 162 (4th Cir.
1997) (where the federal issue is “obscured or omitted” from the complaint but becomes
apparent later “in an amended pleading, motion, order, or other paper,” the case
becomes removable).
Finally, Defendants sought removal not to delay the trial, but only because
Plaintiffs revealed the true nature of their claim seventeen days before trial. Indeed, as
will be shown below, there was no reason to delay the trial because the parties were
advised by the trial court – on the very day before the removal notice was filed - that the
Court considered it very unlikely that the trial would proceed as planned because the
Plaintiffs had improperly tainted the jury pool with prejudicial pretrial publicity and not
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BACKGROUND
removable, it is necessary to put the Plaintiffs’ claims into the context of the case as it
unfolded. When the case was filed and until just recently, the Plaintiffs’ case was
basically an ordinary breach of contract claim. Plaintiffs also asserted a claim for
alleged ordinary contract right to access Defendants’ premises without charge to use ski
lifts and ski trails. While these lifts and trails are mainly on federal land – the White
River National Forest – this was not an issue in the case except by way of defense.
A. The Contract
The contract at issue in the case was entered into almost 40 years ago between
a company that no longer exists and certain incorporators or founders of that company.
It is governed by Iowa law and grants the incorporators or founders certain privileges to
ski at the company’s resort. The assets of that company were then acquired by another
company, and the assets of that company were acquired several years ago, in 1998, by
the present Defendants. As the years passed, Plaintiffs actually set up businesses,
which used brokers to rent ski privileges or passes to anyone who wanted to buy them.
B. The Dispute
In 2005, Defendants learned that Plaintiffs were renting their passes on a daily
basis, which it concluded was an abuse of the free ski privileges granted to the
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transferring ski privileges for commercial purposes. This was set forth in a letter sent to
each of the Plaintiffs in this case. It was this act that lies at the very heart of the dispute
in the case.
C. The Parties Dispute the Nature of the Right Created by the Contract
Plaintiffs sued Defendants for breach of contract and tortious interference based
on the 2005 letter. Thus the suit presents a very key legal issue. That is, what exactly
is the nature of the contract right claimed by the Plaintiffs? The contract gives them the
“privilege” to use the ski lifts and trails of the original company. What is nature of this
“privilege”? Is it a license to enter Defendants’ premises and use the ski lifts and trials?
If it is, licenses are revocable under the governing state law and Plaintiffs have no case.
This key legal issue assumed increasing prominence as the case approached
trial. This legal issue was briefed in various contexts, including whether Defendants, as
a licensee of the federal government with a privilege to use federal land, could transfer
rights to Plaintiffs via contract that they actually did not have as a matter of federal law.
If Defendants have no more than a license from the federal government to use the land,
how can they transfer anything more a license? Moreover, as a matter of federal law,
the original corporation’s license to use federal law expired when that corporation
expired. It therefore appeared that the original “privilege” granted in the contract was
indeed a license to enter and use land. This is, of course, quite different from an actual
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The fact that the Plaintiffs’ contract claim is a license became increasingly clear
as the case approached trial. This presented Plaintiffs with an apparently intractable
legal problem. Specifically, if the contract right being asserted is a license to enter and
use the ski lifts and trails, such a license is revocable. This is a controlling – and
issue in the case is whether Defendants had the legal right to stop the rental practice in
2005.
ARGUMENT
An award of fees under 28 U.S.C. § 1447(c) must be denied where the removing
party had an “objectively reasonable basis” for removal. Martin v. Franklin Capital
Corp., 546 U.S. 132, 141 (2005). This is because in enacting the removal statute,
Congress intended to grant state court litigants the right to remove to a federal forum.
Id. at 140. The fee-shifting provisions of § 1447 were not intended to discourage
litigants from exercising their right to remove “in all but obvious cases.” Id. In this case,
Defendants had an objectively reasonable basis that Plaintiffs’ claim depended upon a
Federal courts have jurisdiction over a case if “the plaintiff’s right to relief
City of Hobart, 39 F.3d 1105, 1111 (10th Cir. 1994). Plaintiffs argued that the “well-
pleaded complaint” rule means that this Court should only look to the name of their
claims, and not to the nature of their claims. However, even where a Plaintiff asserts
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only claims under state law, “federal-question jurisdiction may be appropriate if the
state-law claims implicate significant federal issues.” Nicodemus v. Union Pac. Corp.,
440 F.3d 1227, 1232 (10th Cir. 2006). Moreover, “a plaintiff may not circumvent federal
jurisdiction by omitting federal issues that are essential to his or her claim.” Id. Thus
the relevant question for courts is not whether, on the face of the complaint, the
Plaintiffs have asserted a federal law claim, but whether the “state-law claim necessarily
raises a stated federal issue, actually disputed and substantial, which a federal forum
may entertain without disturbing any congressionally approved balance of federal and
state judicial responsibilities." Grable & Sons Metal Prods. v. Darue Eng'g & Mfg., 125
The central and most hotly disputed issue in this case is what kind of right was
created by the contract granting early investors the ski passes. The relevant contract
describes the right to use ski lifts and trails as a “privilege.” See Agreement to Organize
organizers will be entitled to the following free skiing and lift privileges[.]”) Under Iowa
law, a “license” is “a privilege to use land in the possession of another” for a “particular
act or series of acts.” Robert’s River Rides, Inc. v. Steamboat Dev. Corp., 520 N.W.2d
294, 300 - 301 (Iowa 1994). The Agreement at issue in this case therefore created a
A license or privilege to use or enter upon land is not an interest in land, and
does not run with the land. Jones v. Stover, 108 N.W. 112, 113 (Iowa 1906); Webb v.
Arterburn, 67 N.W.2d, 504, 515 (Iowa 1954) See also Marrone v. Washington Jockey
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Club, 227 U.S. 633, 637 (1913) (Holmes, J.) (“[W]hen the contract stands by itself it
as originally pled, therefore did not raise any federal law issues. Although Defendants’
ski lifts and trails are on federal land and subject to federal law and regulations, these
issues were raised by way of defense and did not make the case removable.
Significantly, however, under both Colorado and Iowa law, a license may be
Poole, 503 P.2d 626, 628 (Colo. App. 1972). Accordingly, if the interest being claimed
by Plaintiffs is this case is license to use or enter upon land, Defendants had the right to
revoke or modify the license as a matter of law and the case is over. This is how the
case apparently looked to both sides shortly before trial. Indeed, in the context of
arguing jury instructions on this issues, Plaintiffs suggested to the trial court that, if
Defendants are right that the interest being claimed by Plaintiffs is a license, it should
It was in this context that Plaintiffs attempted to create a new interest that was
more than just a license. The interest asserted by Plaintiffs was, or at least certainly
appeared to be, an actual interest in the land itself. This apparent transformation
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occurred in the context of the same page of the same jury instruction documents which
contained Plaintiffs’ suggestion that the court should send everyone home. Id.
This newly created interest was raised in response to Defendants’ proposed jury
instructions. Specifically, when the Defendants’ proposed instructions stated that the
jury should be instructed that the “privileges” were licenses to use the lifts and trails
which did not run with the land, the Plaintiffs responded – for the first time – that in
addition to an undefined contract right, the jury should be told “the interest created was
The Plaintiffs further argued that the “attributes [of the privileges] are ordinarily
revocation – which would have told the jury that a license is revoked when land is
conveyed – on the grounds that “[t]he owner of the land has been and remains the U.S.
The nature of the Plaintiffs’ alleged interests therefore evolved from just an
undefined contractual right to “use” the lifts and ski trails, to an alleged interest “akin to
As Defendants saw it, what started as a garden-variety contract claim had just
been transformed into some kind of undefined but irrevocable interest in federal land.
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Because Plaintiffs’ case is essentially over if they have a revocable license, they
lease.”
Justice Holmes, applying federal common law, observed that a contract creating
a right to use someone else's property "is either a conveyance or a license subject to be
revoked.” Marrone, 227 U.S. at 637. This was the fix the Plaintiffs were in. If they say
it's a license, then it can be revoked and they lose. But if they call it a conveyance, then
the case is removable to federal court because now they are claiming an interest in
federal land. As Justice Holmes noted, there are only two options. The Plaintiffs,
finding themselves boxed in, attempted to chose the conveyance option, but quickly
backed off with much outrage at Defendants when it landed them in federal court. See
Marrone v. Washington Jockey Club, 227 U.S. 633, 637 (1913) (Holmes, J.) (“[W]hen
revoked.”).
But the only way Plaintiffs could avoid having the court sending everyone home was to
change the nature of their claim from a contract right to an interest in land, which they
did for the first time on September 4, 2009. It certainly appeared to Defendants that
Plaintiffs had essentially changed the nature of the legal interest being asserted. This
seemed evident from the fact that Plaintiffs were asking the trial court to instruct the jury
that the legal interest being claimed amounted to an interest in land. That land,
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expanding and changing the nature of their claim, the Plaintiffs made this case
removable.
Specifically, the Plaintiffs in this case claim that a jury should give them money
because the Defendants have refused to honor, and have interfered with, their alleged
National Forest. This claim, however, does not appear in Plaintiffs’ complaints. The
first time Plaintiffs ever claimed this interest in federal land was, as explained in
The Plaintiffs, in their motion to remand, did not deny that a claimed interest in
federal land raise substantial federal issues that should be tried in federal court. Nor
could any such argument be successful. See, U.S. Const. Art. IV, § 3; 28 U.S.C. §
1331; Kleppe v. New Mexico, 426 U.S. 529, 539 (1976); Nicodemus v. Union Pacific
Corp., 440 F.3d 1227, 1234 - 1237 (10th Cir. 2006); N. Pac. Ry. Co. v. Townsend, 190
U.S. 267, 270 – 271 (1903) (whether federal government has parted with an interest in
land is a federal question). Federal law controls the creation of interests in federal land.
McFarland v. Kempthorne, 545 F.3d 1106, 1110 - 1111 (9th Cir. 2008) (“Federal law
governs a claim of easement over lands owned by the United States.”); Superior Oil Co.
v. United States, 353 F.2d 34, 37 n. 4 (9th Cir. 1965); United States v. Oklahoma Gas &
Electric Co., 127 F.3d 349, 352 (10th Cir. 1942); Southern Utah Wilderness Alliance v.
Bureau of Land Management, 425 F.3d 735, 762 - 763 (10th Cir. 2005). The federal
interest in its own lands, in interests allegedly held by others in those lands, and in the
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The Plaintiffs do not deny that a claim to “an irrevocable transferable interest akin
question. Plaintiffs instead quickly convinced this Court that the case is not removable
because their original complaint does not raise any claim amounting to an actual
The recently claimed interest in federal land is not, as Plaintiffs claim, a “defense
to a defense.” It is a restatement of their claim, designed to avoid the defense that they
hold a mere license revocable at will, not an irrevocable interest that runs with the land,
and a basis on which the Plaintiffs said they would ask the jury to hold the Defendants
liable.
It should be noted that, before September 4, the Plaintiffs had never precisely
defined the exact nature of the claimed “contract right.” It was only in the crucible of
litigation that it became evident – shortly before trial – that the Plaintiffs were on the
horns of a legal dilemma. If their claimed contract right is a license, Defendants could
revoke it and the court should “send everyone home.” But if the claimed right runs with
the land, it is not revocable but the case becomes removable under 28 U.S.C. § 1446.
Basically, Plaintiffs took a stab at creating an interest in federal land which the
Defendants could not revoke or modify, but emphatically denied to this Court that any
As is hopefully apparent from the foregoing facts and law, Defendants carefully
reviewed the relevant law in the context of the facts of this case. Defendants may be
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Defendants’ notice of removal was brought in good faith and within three
business days of learning of Plaintiffs’ claim to a irrevocable interest in land. The close
proximity to the trial date was a result of this late disclosure of the interest claimed in
federal land, and not Defendants’ desire to delay trial. Plaintiffs have not argued that
Defendants’ notice was untimely or that Defendants unreasonably delayed filing the
notice of removal.
First, Defendants are ready to try this case and have no reason to delay it. The
Notice of Removal asked for a prompt trial in this Court. Notice of Removal at 6 (“This
Second, Defendants filed their notice well within the 30-day period for seeking
removal set by 28 U.S.C. § 1446. The removal statute provides that a case not
other paper from which it may first be ascertained that the case is one which is or has
become removable.” 28 U.S.C. § 1446(b) (emphasis added). In this regard, the 30-day
period for removing a case from state to federal court does not begin to run until the
“amended pleading” or “other paper” shows that Plaintiffs’ claim actually presents a
question of federal law. See Huffman v. Saul Houldings Ltd. Partnership, 194 F.3d
1072, 1078 (10th Cir. 1999). As the Tenth circuit has explained, "[t]he plain purpose of
the [removal statute, 28 USC 1446(b)] is, then, to permit the removal period to start only
after the defendant is able to ascertain intelligently that the requisites of removability are
present." De Bry v. Transamerica Corp., 601 F.2d 480, 489 (10th Cir. 1979) (emphasis
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added). Thus a Defendant may remove a case at any time, so long as it is within the
30-day period set in Section 1446(b). See Decubas v. Norfolk S. Corp., 683 F. Supp.
259 (M.D. Ga. 1988) (case was removable in the middle of a bifurcated state court trial
because the resolution of the first stage made the case removable); Heniford v. Am.
Motors Sales Corp., 471 F. Supp. 328 (D.S.C. 1979) (where plaintiff revealed in closing
arguments to jury that it did not want the jury to return a verdict against the sole resident
In this case, Defendants were only able to ascertain intelligently that the
2009. Where Plaintiffs, and not Defendants, "controlled when the 30-day time limit of §
1446(b) would begin running," they cannot claim that removal on the eve of trial is
"unfair." Preaseau v. Prudential Ins. Co., 591 F.2d 74, 79 (9th Cir. Cal. 1979).
Third, if Defendants had genuinely desired a delay of the trial date, a much
simpler solution would have been to request a continuance based upon Plaintiffs’
prejudicial statements to the media that, as the state court recognized, substantially
limited – and probably foreclosed – the ability to draw an unbiased jury on the
scheduled trial date. The day before the case was removed, the state court held a
telephone hearing to inform the parties that it seemed unlikely that an unbiased jury
could be impaneled on the scheduled trial date because of recent pretrial publicity.
Here is what the state court trial judge told the parties the very day before the removal
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THE COURT:
I did read the article in the paper . . .the Summit Daily News that hit on
September 4th and I have serious, serious concerns with that article. I will remind
the parties of their duties and their ethical obligations under the professional rules
of conduct 3.6 and as a Court it is very difficult to balance the limitations on
freedom of expression and what’s good for, you know, the trial and potential
jurors. But I have some serious concerns that Mr. Neureiter – the comments in
the paper have put this trial in serious jeopardy. I feel the article was way more
than the claims, the nature of defenses. It was very slanted. And my primary
concern is that now everyone in this community is aware that there is a two week
trial starting on September 22nd (sic). I will be very surprised if we have even the
bare minimum needed to start the trial.
A (emphasis added).
Although this occurred the very day before the Notice of Removal was filed,
Plaintiffs did not see fit to inform this Court that a jury would probably not be empaneled
on the scheduled trial date. Instead, Plaintiffs dramatically declared that the case was
removed to delay the trial, a trial that at that point already seemed unlikely to proceed in
any event.
Finally, this Court’s order remanding the case forcefully expresses this Court’s
opinion that removal was both frivolous and improperly motivated, and while Defendants
have no appeal from this pronouncement, it is a serious matter and is taken seriously by
Defendants and their counsel. The Court’s perception of the purpose and intent of the
removal is deeply regretted. Defendants submit, however, that it was within the bounds
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s/ Michael J. Hofmann
Holme Roberts & Owen LLP
BOBBEE J. MUSGRAVE, #12440
MICHAEL J. HOFMANN, #30207
1700 Lincoln Street, Suite 4100
Denver, CO 80203
Phone: 303-861-7000
Fax: 303-866-0200
Email: michael.hofmann@hro.com
bobbee.musgrave@hro.com
Attorneys for Defendants
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CERTIFICATE OF SERVICE
The undersigned hereby certifies that on this 18th day of September, 2009, a
true and correct copy of the foregoing DEFENDANTS’ RESPONSE TO ORDER TO
SHOW CAUSE WHY SANCTIONS SHOULD NOT BE IMPOSED was filed with the
Clerk of the Court via LexisNexis File & Serve, which will send notification of such filing
to the following:
s/ Anita Langdon
Anita Langdon
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