Colorado Court Unseals Litigation Funding Agreement, Orders Mediation Between Parties

In List Interactive, Ltd. v. Knights of Columbus, Judge R. Brooke Jackson denied a motion to restrict public access to litigation funding agreements, finding that the content of the agreements are in the public interest. Judge Jackson confirmed that dollar amounts and specific terms may constitute trade secrets, but ruled that restricting access to the entire agreement is ‘grossly overbroad.’

As reported in Reason.com, consumer litigation funders Theano Ventures, LLC and Themistius Ventures, LLC, are claiming that they are entitled to a portion of funds deposited withe court. Yet the law firm in the case is claiming first lien position.

The funders have argued that the law firm subordinated its position in a letter that was issued to the plaintiff. That letter, along with the litigation funding agreement, have been entered into evidence as Exhibits B and C, as part of an effort to compel arbitration in New York. The court has now found that those exhibits must be unsealed for the public to view.

The underlying claim alleges that the funders breached Colorado state usury laws, which cap interest rates on loans at 45%. The effective interest rate of the funding is over 90%, according to the law firm, which cites Oasis Legal Fin. Group v. Coffman, 361 P.3d 400 (Colo. 2015). In that case, the Colorado Supreme Court asserted that loans from litigation funders are subject to the state’s lending statutes (the court characterized these transactions as loans, despite Oasis’ argument that their funding amounts to an investment).

The plaintiff, all three of the plaintiff’s counsel, and the litigation funders are claiming entitlement to the over $750,000 in funds on deposit at the court registry. The court is suggesting mediation, and currently awaiting response from the parties if that is an acceptable path forward.

In List Interactive, Ltd. v. Knights of Columbus, Judge R. Brooke Jackson denied a motion to restrict public access to litigation funding agreements, finding that the content of the agreements are in the public interest. Judge Jackson confirmed that dollar amounts and specific terms may constitute trade secrets, but ruled that restricting access to the entire agreement is ‘grossly overbroad.’

As reported in Reason.com, consumer litigation funders Theano Ventures, LLC and Themistius Ventures, LLC, are claiming that they are entitled to a portion of funds deposited withe court. Yet the law firm in the case is claiming first lien position.

The funders have argued that the law firm subordinated its position in a letter that was issued to the plaintiff. That letter, along with the litigation funding agreement, have been entered into evidence as Exhibits B and C, as part of an effort to compel arbitration in New York. The court has now found that those exhibits must be unsealed for the public to view.

The underlying claim alleges that the funders breached Colorado state usury laws, which cap interest rates on loans at 45%. The effective interest rate of the funding is over 90%, according to the law firm, which cites Oasis Legal Fin. Group v. Coffman, 361 P.3d 400 (Colo. 2015). In that case, the Colorado Supreme Court asserted that loans from litigation funders are subject to the state’s lending statutes (the court characterized these transactions as loans, despite Oasis’ argument that their funding amounts to an investment).

The plaintiff, all three of the plaintiff’s counsel, and the litigation funders are claiming entitlement to the over $750,000 in funds on deposit at the court registry. The court is suggesting mediation, and currently awaiting response from the parties if that is an acceptable path forward.