The Benefits of Colorado State Court for Business Litigants

Many business clients instinctively prefer federal court based on negative state court experiences in jurisdictions outside Colorado.  Although counsel should certainly evaluate filing in federal court as a plaintiff, or removing to federal court as a defendant, federal court is not an obvious choice in Colorado.  In many cases, Colorado’s state court system can be a better choice, depending on the client, the client’s goals, and the needs of the particular case.  Recently released annual statistics from the U.S. District Court for the District of Colorado confirm one of the most important differences between Colorado state and federal courts—speed—but other factors are worth considering as well.

Speed:  Nowhere is the gulf wider between Colorado’s state and federal trial courts than speed, namely the time between filing a complaint and trial.  Released in August 2024, the federal district court’s 2023 statistics report showed an average time from filing to trial of 33.26 months, which is generally consistent with the longer-term average.  For breach of contract cases, that average jumps to 41.98 months.  Notably, for cases tried to magistrate judges, the average duration decreases to 27.63 months.

By contrast, Colorado state courts tend to move cases along much faster.  Chief Justice Directive 08-05 established as an “organizational goal” that no more than 10% of cases are open more than one year.  Many judges interpret this as a goal of one year from filing to trial, and attempt to live by it—or at least invoke it when setting a trial within 9-12 months of the case management conference.

Unfortunately, the Colorado Judicial Branch does not have a statistical report similar to that of the federal district court, so it is difficult to find an apples-to-apples comparison of the state trial courts’ adherence to the 10% goal.  Anecdotally, Crisham & Holman’s recent complex business lawsuits in Colorado state courts have averaged about 18 months from filing of the complaint to the ultimate trial date—even in cases where the defendant moved to dismiss, which, as detailed below, delays the start of discovery.  This is nearly twice as fast as the average lawsuit in federal district court.  

Some businesses would prefer delay for various reasons, but for the well-prepared business litigant seeking a speedy and efficient resolution, Colorado state courts offer a clear advantage.

Awardable costs:  To the extent a party confidently expects to prevail and therefore to recover its litigation costs, Colorado state courts may also offer a superior venue.  Under C.R.C.P. 54 and C.R.S. § 13-16-122, “costs may include”—but are not necessarily limited to—expert witness fees, any deposition costs, photocopying, witness fees, filing fees, transcript fees, and jury fees.  The breadth of the forms of “costs” captured by Colorado’s rule differs meaningfully from those available under the federal analog, Rule 68, and the accompanying definition at 28 U.S.C. § 1920, which includes only filing fees, transcript fees, witness fees, photocopies, and interpreter fees.

Motion to dismiss delays discovery:  Under the Colorado Rules of Civil Procedure, the filing of a motion to dismiss delays the answer deadline until after the Court decides the motion, which in turn delays the “at issue” date, the case management conference, and thus the beginning of discovery.  This timing can benefit litigants who want to narrow the issues before incurring expensive discovery, especially defendants with a decent shot at winning such a motion, or defendants asserting immunity to suit, such as under the workers’ compensation statute.  

While motion to dismiss decision times vary widely from judge to judge and even case to case, in Colorado state courts they tend to be decided within 3-6 months of full briefing.  The 2023 federal district court’s statistics report, by contrast, showed an average decision time of 7.9 months.  In some cases, federal judges have allowed a ripe motion to dismiss to remain undecided for 18 months, even after the filing of a motion for summary judgment.  

The steep challenge for LLC removal to federal court:  Colorado’s federal judges seem especially vigilant about proactively enforcing the Tenth Circuit’s holding in Siloam Springs Hotel, L.L.C. v. Century Surety Co. (2015).  In that case, the Tenth Circuit concluded that a limited liability company, “as an unincorporated association, takes the citizenship of all its members,” and therefore to establish diversity jurisdiction the proponent must determine the citizenship of all layers of LLC membership.  Many if not all federal district judges will issue show-cause orders, without a party raising the issue, if the complaint allegations or notice of removal appear deficient.  With many LLCs having investor-owners in many different states—especially where LLCs are private equity-backed—this effectively eliminates diversity jurisdiction for the bulk of larger, sophisticated private companies.  (Notably, LLCs account for about 70-80% of new business filings in Colorado.)  Of course, this isn’t necessarily an advantage of state court, but business defendants should not assume federal court is available simply because it is organized or headquartered in a different state (or states) than all plaintiffs.  

Quality of judges:  Although the federal bench tends to be much stronger in some jurisdictions, Colorado generally has a quality trial bench at both the federal and state levels.  Much of this is attributable to Colorado’s system of selecting and retaining judges.  

Instead of judicial elections with public campaigns, judicial nominating commissions made up of lawyers and community members recommend 2-3 names (appellate courts require 3 names) to the governor, and the governor appoints one person from that flight to an initial two-year term.  At the end of each term, a judge is up for a ”retention” election, meaning an up-or-down vote on that judge alone, not against a challenger.  Judges serve for a term of 6-10 years following each retention election, depending on the court.  

Predictable rules of civil procedure:  Colorado’s civil rules mostly track the Federal Rules of Civil Procedure, with some notable exceptions, like the delay of discovery while a motion to dismiss is pending, and the front-loaded Rule 26(a)(1) initial disclosures.  Where the Colorado rule is substantially the same as the federal rule, Colorado courts will look to federal cases applying that rule as persuasive authority.  The ability to argue from cases across the country leads to increased predictability and efficiency, especially in discovery disputes.  And because the Colorado Supreme Court adopted the federal Twombly/Iqbal pleading standard as a matter of state law in Warne v. Hall (2016), that body of law is also available as persuasive authority when briefing motions to dismiss for failure to state a claim.  

Depending on the specifics of each case, other factors may be worth weighing when choosing between Colorado state and federal court.  The bottom line, however, is that both are viable options for businesses pursuing or defending lawsuits in Colorado.  

Photo credit: Craig Talbert, CC BY 2.0, via Wikimedia Commons