In Denver Homeless Out Loud v. Denver, _ F.4th _, 2022 U.S. App. LEXIS 12005 (10th Cir. May 3, 2022), the U.S. Court of Appeals for the Tenth Circuit, in a split decision, vacated a preliminary injunction requiring Denver officials to give advance notice of sweeps to clear out and clean up homeless encampments. In doing so, the appellate court raised sua sponte the preclusive effect of a prior settlement agreement, concluding that "special circumstances" warranted consideration of that issue and deeming the preliminary injunction granted in error because the plaintiffs were unlikely to prevail on a precluded claim. Newly appointed Judge Rossman dissented, describing the majority's approach as an "unprecedented" and "unwarranted exercise of appellate discretion."

Case Background

In response to the spread of homeless encampments throughout the city, Denver banned unauthorized camping on public or private property. Denver Homeless Out Loud, 2022 U.S. App. LEXIS 12005, at *2. Denver officials enforce the ban via "homeless sweeps," which involve clearing and cleaning up the encampments. Id. at *2-3. In 2016, some of those affected by the sweeps, including the advocacy group Denver Homeless Out Loud ("DHOL"), brought a class action lawsuit, Lyall v. City of Denver, 319 F.R.D. 558 (D. Colo. 2017), against Denver and various officials, alleging violations of their due process rights and other claims. Id. at *3-4. The Lyall parties eventually settled, agreeing to detailed protocols for Denver's future enforcement of the camping ban and releasing Denver and its officials from present and future liabilities. Id. at *5.

Post-Lyall, Denver officials continued to conduct homeless sweeps, and in October 2020, DHOL and other plaintiffs filed a second class action, purportedly seeking to enforce the Lyall settlement agreement and obtain relief under 42 U.S.C. § 1983 for alleged violations of their procedural due process rights. Id. at *5-11. Following limited, expedited discovery and a three-day hearing, the district court granted a preliminary injunction requiring Denver officials to satisfy certain advance-notice requirements prior to conducting future sweeps. Id. at *11-12. Denver did not raise the preclusive effect of the Lyall settlement agreement in opposition to the preliminary injunction, and so the district court did not address that issue, instead assessing only whether the procedural due process claim was likely to succeed on the merits. Id. Denver filed an interlocutory appeal of that ruling, then later moved to dismiss the class action, arguing, inter alia, that the Lyall settlement agreement precluded the DHOL Plaintiffs' due process claim. Id. at *12-13. That motion remained pending while the Tenth Circuit reviewed Denver's interlocutory appeal. Id.