Adams v. PERA

• Court: Colorado Court of Appeals
• Decided: August 28, 2025
• Docket: 24CA1957
• Status: Unpublished

Opinion

24CA1957 Adams v PERA 08-28-2025

COLORADO COURT OF APPEALS

Court of Appeals No. 24CA1957 City and County of Denver District Court No. 24CV31993 Honorable Martin F. Egelhoff, Judge

Adams-Arapahoe School District 28J, Adams County School District 14, Englewood School District No. 1, Harrison County School District 2, Arapahoe County School District No. 6, ESS West, LLC, and Kelly Services Inc.

Plaintiffs-Appellants,

v.

Colorado Public Employees’ Retirement Association,

Defendant-Appellee.

JUDGMENT AFFIRMED IN PART AND REVERSED IN PART, AND CASE REMANDED WITH DIRECTIONS

Division II Opinion by JUDGE FOX Schutz and Bernard*, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e) Announced August 28, 2025

Caplan and Earnest, LLC, Michael W. Schreiner, Elliot V. Hood, Caroline G. Gecker, Boulder, Colorado, for Plaintiffs-Appellants Adams-Arapahoe School District 28J, a/k/a Aurora Public Schools, Adams County School District 14, Englewood School District No. 1, Harrison County School District 2, and Arapahoe County School District No. 6

Faegre Drinker Biddle & Reath LLP, Teresa Akkara, Denver, Colorado; Faegre Drinker Biddle & Reath LLP, Aaron D. Van Oort, Minneapolis, Minnesota, for Plaintiff-Appellant ESS West, LLC Hall & Evans LLC, Jared Ellis, Denver, Colorado, for Plaintiff-Appellant Kelly Services Inc.

Fox Rothschild LLP, Caleb Durling, Spencer R. Allen, Denver, Colorado, for Defendant-Appellee

Kutz & Bethke LLC, William P. Bethke, Vesna Milojevic, Lakewood, Colorado, for Amicus Curiae The Colorado League of Charter Schools

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art. VI, § 5(3), and § 24-51-1105, C.R.S. 2025. ¶1 Plaintiffs, Adams-Arapahoe School District 28J, a/k/a Aurora

Public Schools (APS), Adams County School District 14, Englewood

School District No. 1, Harrison County School District 2, Arapahoe

County School District No. 6 (collectively, the School Districts) and

ESS West, LLC (ESS) and Kelly Services Inc. (Kelly) (collectively, the

Vendors), appeal the district court’s judgment dismissing their

complaint against defendant, the Colorado Public Employees

Retirement Association (PERA), for lack of jurisdiction because

(1) the School Districts failed to exhaust their administrative

remedies, and (2) the Vendors lacked standing.1 We reverse the

district court’s dismissal on exhaustion grounds but affirm its

dismissal of the Vendors for lack of standing and remand for

further proceedings.

I. Background

¶2 PERA is “an instrumentality of the state” of Colorado that

manages state employees’ retirement pensions, including the

pensions of public employees in “all school districts in Colorado.”

1 We also received an amicus brief from the Colorado League of

Charter Schools that generally aligned with the arguments raised by the School Districts and Vendors.

1 §§ 24-51-101(20), -201(1), -201(2)(a.5), C.R.S. 2025. It acts

through its board of trustees. See § 24-51-202, C.R.S. 2025. The

Vendors are “private education staffing agenc[ies] that specialize[] in

placing qualified staff in K-12 school district positions, including

substitute teachers, substitute paraprofessionals, and other

substitute school support staff.” In the summer of 2016, APS

contracted with Kelly to fill substitute teacher positions; the other

School Districts had similar arrangements with ESS.

¶3 In September 2016, PERA communicated with APS over its

“decision to privatize its staffing of substitute employees.” PERA

explained that it was “not attempting to interfere with decisions that

APS feels are in its best interests,” but it was “concerned about the

privatization of jobs that have traditionally been held by APS

employees” because “the removal of employees from the PERA

system negatively impacts the elimination of the unfunded liabilities

of the PERA trust fund and shifts the financial impacts within the

PERA School Division.” PERA concluded that it would “respect APS’

decision to classify the substitute employees as employees of [Kelly]

2 and not the school district” while “reserve[ing] the right to challenge

APS’ classification . . . in the future.”2

¶4 On June 30, 2023, PERA did just that by challenging the

PERA membership status of APS’ Kelly-outsourced substitutes.

PERA noted that, “[i]n using a third-party entity to staff substitutes,

[APS] has incorrectly taken the approach that these individuals are

not entitled to PERA membership because they are ‘employees of’

the third party; as a result, [APS] is relieved of the responsibility to

pay PERA contributions.” PERA detailed that APS’ approach

“negatively impacts the PERA trust fund” and “creates

inconsistencies between different school districts within the state.”

Further, PERA reasoned that allowing this arrangement would

(1) lead to some substitutes not receiving PERA benefits they are

entitled to; (2) unfairly burden school districts that are paying their

substitutes’ PERA contributions; and (3) undermine rules governing

retirees’ ability to work within school districts.

¶5 And it concluded,

2 PERA similarly communicated with Englewood School District No.

1 in 2018 and Harrison County School District 2 in 2023 about whether employing substitutes through Kelly would have PERA implications.

3 PERA does not agree that substitutes performing functions that have traditionally been held by employees of the District can be removed from PERA membership simply by inserting a private entity, here [Kelly], into the relationship. For PERA purposes, these individuals are considered employees of the District because pursuant to Colorado law, all employees of the District are required to be members of PERA as a condition of employment. It is PERA’s position that regardless of whether the District pays its substitute employees directly, or utilizes a third party to place and/or pay substitute employees, these substitute employees are required to be PERA members.

¶6 As a result, while PERA maintained that APS could continue

working with Kelly “to coordinate the scheduling of substitute

employees[,] . . . both employer and member contributions [would

be] owed to PERA on behalf of all of the District’s substitute

employees pursuant to Colorado law.” PERA gave APS until July 1,

2024, to comply with this mandate, recognizing that the rule

“represent[ed] a change from current practices and [could] require

logistical alterations by multiple parties.”

¶7 PERA then communicated its position to all school districts,

sending “an email to all School . . . employers . . . to clarify that[,

effective July 1, 2024,] all substitute teachers must be members of

4 PERA regardless of whether the school or district fills those roles

using a third party” (the Substitute Rule). PERA explained that “all

substitute teachers are considered employees of the PERA affiliated

employer pursuant to Colorado Law” and that “it [wa]s PERA’s

position that regardless of whether an affiliated employee pays its

substitute employees directly or utilizes a third party to place

and/or pay substitute employees, these substitute employees are

required to be PERA members.”

¶8 PERA explained its position in greater detail in a later

message:

For other outsourced positions, the test of whether an individual is an “employee” of the PERA affiliated employer — and thus whether PERA membership is required — remains the same as it currently exists. PERA employers must review applicable factors to determine whether an individual is an “employee” of the school or the district. Factors may also indicate that an individual is an independent contractor, an employee of a third-party staffing agency, or a concurrent employee of both the PERA employer and staffing agency. If the individual is an employee of the district or a concurrent employee of the district with some other entity, PERA membership is required.

Part of this analysis may depend on the individual’s role and the relationship to a

5 school. For example, teaching is a core function of a school with specific state requirements for performing those duties, but some services, like snow removal, are more incidental. Some services may more easily lend themselves to outsourcing without creating an employee relationship. Colorado law governing PERA grants PERA authority to determine membership status and exemption from membership. PERA will review an employer’s classifications of other outsourced positions upon request.

¶9 On June 27, 2024, before the Substitute Rule was to take

effect, the School Districts and the Vendors sued PERA. The School

Districts and the Vendors argued that PERA (1) acted beyond its

authority and could not dictate whether Kelly and ESS employees

were PERA employees; and (2) did not comply with Colorado’s State

Administrative Procedure Act (APA), see § 24-4-103, C.R.S. 2025,

when it issued the Substitute Rule. The School Districts and the

Vendors requested a declaratory judgment and later moved for a

temporary restraining order and preliminary injunction (TRO/PI).

¶ 10 PERA responded by moving to dismiss the complaint pursuant

to C.R.C.P. 12(b)(1). PERA argued that (1) the School Districts’

claims were unripe because they had failed to exhaust their

administrative remedies before filing suit; and (2) the Vendors

6 lacked standing because any impact to their business would be

indirect, and they had also failed to exhaust their administrative

remedies.

¶ 11 The district court ruled in PERA’s favor. The court noted that

it was undisputed that the School Districts and the Vendors had

failed to seek any administrative remedy before seeking judicial

review. The court found that section 24-51-205(1), C.R.S. 2025,

granted PERA “the authority to determine [PERA] membership

status” and that “[s]uch decisions by the board may be appealed

through the administrative review procedures set forth in the board

rules. Such final decision[s] by the board shall be subject only to

review by proper court action.”

¶ 12 The court reasoned, “As evident from the language and

structure of the statute, the legislature intended the statutory

remedy to be the primary remedy, such that judicial review must be

preceded by the Board’s administrative review procedure and final

decision.” As a result, the court found that it lacked jurisdiction to

address the School Districts’ claims because they had failed to

exhaust PERA’s administrative remedies. The court also found that

the Vendors lacked standing because the indirect harm they might

7 suffer did not constitute injuries in fact or injuries to legally

cognizable interests. The court therefore dismissed the complaint

and deemed the motion for a TRO/PI moot.

¶ 13 This appeal followed. The School Districts and the Vendors

raise three issues on appeal, all of which were preserved. See

Brown v. Am. Standard Ins. Co. of Wis., 2019 COA 11, ¶ 21.

II. Analysis

A. Whether the Substitute Rule is Quasi-Legislative or Interpretive

¶ 14 First, the School Districts and the Vendors argue that the

court erred by dismissing the complaint for failure to exhaust

administrative remedies because that requirement only applies to

quasi-adjudicative decisions. They argue that PERA engaged in

quasi-legislative rulemaking when it issued the Substitute Rule,

pointing to the rule’s prospective and general applicability. They

contend that under the APA, section 24-4-106, C.R.S. 2025, and

C.R.C.P. 57, they could seek judicial review of the Substitute Rule.

They add that, even if an appeal to the PERA Board was a

theoretical vehicle to obtain administrative review, that remedy

would have been futile.

8 ¶ 15 PERA responds that its statutory authority to determine

membership status under section 24-51-205(1) is broad and

challenges to its determinations must follow the administrative

process outlined in PERA Rule 2.20, 8 Code Colo. Regs. 1502-1:2;

only after this process is complete can an aggrieved party seek

judicial review. PERA contends that when it clarifies its positions

on various matters to answer questions raised by members and

employers, it is not engaging in formal rulemaking. Moreover,

PERA argues that if it engaged in rulemaking at all, the Substitute

Rule was a valid interpretative rule. PERA adds that C.R.C.P. 57

does not eliminate the exhaustion requirement, and that

administrative review would not be futile.

1. Standard of Review and Applicable Law

¶ 16 “We review de novo a district court’s determination that it

lacks subject matter jurisdiction. Similarly, we review de novo the

court’s determination of whether a plaintiff’s complaint sought

review of a governmental body’s quasi-judicial functions or its

quasi-legislative actions.” Freed v. Bonfire Ent. LLC, 2024 COA 65,

¶ 13 (citation omitted).

9 ¶ 17 “An action is quasi-judicial, and . . . subject to review under

[C.R.C.P.] 106(a)(4), when it ‘involves the determination of the

rights, duties, or obligations of specific individuals’ based on the

‘application of presently existing legal standards or policy

considerations to past or present facts . . . [to] resolv[e] the

particular interests in question.’” Id. at ¶ 12 (quoting Farmers

Water Dev. Co. v. Colo. Water Conservation Bd., 2015 CO 21, ¶ 18).

In contrast, “a governmental body’s quasi-legislative actions are

reviewed under [C.R.C.P.] 57” and “are usually prospective, reflect

public policy relating to matters of a permanent or general

character, and are not restricted to identifiable persons or groups.”

Id.

¶ 18 Under section 24-51-205(1), PERA’s trustees have “the

authority to determine membership status” of state employees.

Section 24-51-205(1) also details that, “[s]uch decisions by the

board may be appealed through the administrative review

procedures set forth in the [PERA] rules. Such final decision by the

board shall be subject only to review by proper court action.” While

PERA has the authority to “adopt and promulgate . . . rules for the

administration of the association,” the issuance of any legislative

10 rules must follow the APA’s notice-and-comment rulemaking

procedural requirements in section 24-4-103. § 24-51-204(5),

C.R.S. 2025. Rules that are not properly promulgated may not “be

relied upon or cited against any person.” § 24-4-103(10).

¶ 19 Interpretive rules, in contrast to legislative rules, are not

governed by section 24-4-103 because they “are not meant to be

binding as rules.” § 24-4-103(1). “Whether a rule is legislative or

interpretive depends on its effect: it is legislative if it establishes a

norm that commands a particular result in all applicable

proceedings; it is interpretive if it establishes guidelines that do not

bind the agency to a particular result.” Hammond v. Pub. Emps.’

Ret. Ass’n of Colo., 219 P.3d 426, 428 (Colo. App. 2009).

¶ 20 Next, in the context of administrative law, the exhaustion

doctrine provides that “courts will not intervene until a petitioner

has exhausted all available administrative remedies.” Crow v.

Penrose-St. Francis Healthcare Sys., 169 P.3d 158, 164 (Colo. 2007).

The exhaustion doctrine “applies with equal force when the party

seeks declaratory relief” through Rule 57. City & County of Denver

v. United Air Lines, Inc., 8 P.3d 1206, 1213 (Colo. 2000).

11 ¶ 21 The policy reasons supporting the exhaustion doctrine include

(1) allowing “an administrative agency to develop a sufficient factual

record so that the agency itself and later-reviewing courts can

adequately review the agency’s decision”; (2) promoting

“administrative efficiency by ensuring an uninterrupted

administrative process”; (3) ensuring “agency autonomy, giving the

agency a chance to correct its own errors through internal

processes without the court’s intervention”; and (4) conserving

“judicial resources by ensuring that courts only become involved

with disputes when the administrative process fails to produce an

adequate remedy.” Crow, 169 P.3d at 164-65.

¶ 22 While the exhaustion doctrine is primarily associated with

“quasi-judicial action[s], not . . . quasi-legislative (i.e., rulemaking)

action[s]” and there is a perception that the exhaustion doctrine

only applies to quasi-judicial actions, there is “no such absolute

rule.” Moss v. Members of Colo. Wildlife Comm’n, 250 P.3d 739,

743, 745 (Colo. App. 2010) (holding that plaintiffs’ challenge to a

quasi-legislative rule was not excused from the exhaustion doctrine

on the grounds that adequate administrative remedies were

unavailable because plaintiffs could have petitioned to amend or

12 repeal the rule through section 24-4-103(7) and providing that

“[a]ny interested person shall have the right to petition for the

issuance, amendment, or repeal of a rule”); see also Colo. Ground

Water Comm’n v. Eagle Peak Farms, Ltd., 919 P.2d 212, 218-19

(Colo. 1996) (determining that a rule promulgated by the

commission was subject to APA review and noting that parties in

rulemaking proceedings “are required to exhaust their

administrative remedies before seeking judicial review”).

¶ 23 The exhaustion doctrine, however, “is subject to limited

exceptions.” United Air Lines, Inc., 8 P.3d at 1213. Exhaustion is

unnecessary “when it is ‘clear beyond a reasonable doubt that

further administrative review by the agency would be futile because

the agency will not provide the relief requested.’”3 Id. (citation

omitted). Most relevant here, “[i]f the agency refuses to reconsider

its decisions or procedures, or has stated a categorical rule to apply

in a group [of] cases, rendering exhaustion futile, . . . courts will

3 Exhaustion is also unnecessary when “the matters in controversy

are matters of law that the agency lacks the authority or capacity to determine, such as constitutional issues” or challenging the constitutionality of an agency’s governing statutes. City & County of Denver v. United Air Lines, Inc., 8 P.3d 1206, 1213 (Colo. 2000).

13 excuse a party’s failure to exhaust available administrative

remedies.” Id.

2. Analysis

¶ 24 Initially, we conclude that the Substitute Rule is not a quasi-

judicial decision because it bears none of the characteristics of a

quasi-judicial action. It does not apply current or existing PERA

standards to determine the obligations of specific individuals nor

does it resolve a question of particular interests. See Freed, ¶ 12.

Instead, it applies prospectively to a broad class of people without

consideration of the particular facts of any individual case. The

Substitute Rule was adopted pursuant to PERA’s rulemaking

authority rather than its quasi-judicial authority. See id.

¶ 25 PERA reiterates, however, that it has statutory authority to

determine PERA membership status, see § 24-51-205(1), and

directs our attention to cases in which courts affirmed PERA’s

authority under this provision to argue that PERA was not required

to engage in formal rulemaking to issue the Substitute Rule. See

Taylor v. State Pers. Bd., 228 P.3d 273, 279 (Colo. App. 2010)

(“[T]he issue of whether Taylor was an employee for purposes of

receiving PERA service credits, which is the remedy that Taylor

14 ultimately seeks, is indeed within PERA’s jurisdiction.”); see also

Pub. Emps.’ Ret. Ass’n v. Stermole, 874 P.2d 444, 446 (Colo. App.

1993) (Section 24-51-205(1) “places the responsibility on the Board

to make the factual determinations as to whether income received

by a member is or is not salary received by the member from an

employer covered by PERA.”). Further, PERA points out that it is

an instrumentality of the state, see § 24-51-201(1), and not a state

agency; thus, its rulemaking authority is restricted only by section

24-4-103 of the APA because section 24-51-204(5) specifically

commands so. We agree that the plain language of section 24-51-

205(1) clearly grants PERA the power to make membership

decisions.

¶ 26 But the fact that PERA has the authority to determine

membership status — and indeed, whether PERA had the authority

under section 24-51-205(1) to issue the Substitute Rule at all (an

issue we need not reach) — misses the point. The determinative

issue is whether the Substitute Rule is quasi-legislative, as the

School Districts and the Vendors posit, or interpretive, as PERA

contends.

15 ¶ 27 The Substitute Rule bears none of the characteristics of an

interpretive rule. Interpretive rules “establish[] guidelines that do

not bind the agency to a particular result.” Hammond, 219 P.3d at

428. The Substitute Rule did not establish nonbinding

guidelines — it announced a categorical rule.

¶ 28 PERA also argues that the Substitute Rule is interpretative

because it “interprets the term ‘member’ as it relates to substitute

teachers, one of the hundreds — if not thousands — of different

jobs” PERA members hold. PERA also highlights that its later

clarification of the Substitute Rule left open the possibility of a

flexible factor-based decision-making process for other types of

third-party employees, like snowplow drivers. But whether PERA’s

decision-making process may be deemed interpretive as applied to

positions other than substitute teachers is not a question before us.

And we reject the argument that simply because PERA is

interpreting a statutory term, that necessarily means the Substitute

Rule is interpretative. See id.; 32 Charles Alan Wright, Arthur R.

Miller & Charles H. Koch, Federal Practice and Procedure § 8155 (2d

ed. 2001) (“One should not be deceived by a literal reading of the

term ‘interpretative’ and conclude that a rule is interpretative

16 because it interprets a statute or another rule.”)). Contrary to

PERA’s position, the Substitute Rule bears all the hallmarks of a

quasi-legislative rule.

¶ 29 The Substitute Rule was a categorical decision that applied to

all substitute teachers working in Colorado schools — including

those employed by third parties and presumably substitutes who

were never prior PERA members — and their school districts;

deemed all such employees to be PERA members; and required

PERA dues from these new members and corresponding

contributions from school district employers. It applied

prospectively, allowing schools a year to prepare for the upcoming

change, applied generally and statewide, and was a permanent and

mandatory change. See Freed, ¶ 12.

¶ 30 Therefore, pursuant to section 24-51-204(5), the Substitute

Rule is a quasi-legislative rule that had to comply with the APA’s

procedural requirements in section 24-4-103 to bind the

substitutes and the school districts. See § 24-4-103(10) (“No rule

shall be relied upon or cited against any person unless . . . it has

been published and, whether adopted before or after said date, it

has been made available to the public in accordance with this

17 section.”); see also Home Builders Ass’n of Metro. Denv. v. Pub. Util.

Comm’n, 720 P.2d 552, 562 (Colo. 1986) (The APA’s “statutory

requirements are mandatory, and noncompliance is fatal to the

agency’s rule-making actions” and when an agency does “not follow

the rule-making procedure set forth in section 24-4-103,” the rule is

“void.”).

¶ 31 This leads us to the crux of the issue on appeal — whether the

School Districts and the Vendors were required to exhaust their

administrative remedies before seeking judicial review of the

Substitute Rule. Without PERA having invoked the notice-and-

comment process, there were no administrative remedies the School

Districts and Vendors could have availed themselves of before going

to district court to challenge the Substitute Rule.

¶ 32 PERA argues that the School Districts and the Vendors should

have pursued the administrative remedies in PERA Rule 2.20, 8

Code Colo. Regs. 1502-1:2. These rules outline that parties can

seek administrative relief by appealing an initial decision to PERA’s

Executive Director, id. at Rule 2.20(A), and then participating in an

administrative hearing before three PERA Board members, id. at

Rule 2.20(B)-(E), before a final administrative decision can be

18 reviewed under C.R.C.P. 106(a)(4). But this decision-making

process is quasi-adjudicative, especially because it can be appealed

through C.R.C.P. 106(a)(4). See Freed, ¶ 12. So, a party would not

be expected to challenge a quasi-legislative action such as the

Substitute Rule in this manner.

¶ 33 To administratively challenge a rule issued via PERA’s

rulemaking authority would instead involve petitioning for

amendment or repeal of the rule through section 24-4-103(7) (“Any

interested person shall have the right to petition for the issuance,

amendment, or repeal of a rule.”). See Moss, 250 P.3d at 745. And

while normally a party challenging a properly promulgated

administrative rule would need to avail themselves of this remedy,

the record does not show that the Substitute Rule was published in

accordance with section 24-4-103. As a result, section 24-4-

103(7)’s process was unavailable. Ultimately, PERA issued a quasi-

legislative rule without adhering to the APA’s notice-and-comment

procedures outlined in section 24-4-103. Therefore, the Substitute

Rule is void and may not “be relied upon or cited against any

person.” § 24-4-103(10); see also Home Builders Ass’n of Metro.

Denv., 720 P.2d at 562.

19 ¶ 34 We conclude that (1) the Substitute Rule is quasi-legislative

and cannot bind PERA members and employers until it adheres to

the APA’s procedural requirements under section 24-4-103, and

(2) the district court erred by relying on exhaustion principles to

dismiss the complaint. We reverse and remand for the district

court to address the merits of the School Districts’ claims.

B. The Vendors’ Standing

¶ 35 Next, the School Districts and the Vendors contend that the

court erred by dismissing the Vendors for lack of standing. They

first argue that we need not address whether the Vendors have

standing because they raise identical claims as the School Districts.

But if we reach this issue, they contend the Vendors have standing

because the Substitute Rule would force them to renegotiate their

contracts with the School Districts. Further, the Vendors will have

been deprived of the right to participate in notice-and-comment

rulemaking and will incur costs in “facilitat[ing] the School’s

compliance” with the Substitute Rule and “ensur[ing] that their own

employees are treated fairly” because of the new administrative

obligations imposed on them.

20 ¶ 36 PERA responds that the Vendors were properly dismissed for

lack of standing because any economic harm the Vendors could

suffer as a result of the Substitute Rule is indirect and speculative.

Moreover, PERA argues that the APA does not create substantive

rights giving rise to standing, and therefore, the Vendors cannot

demonstrate that they have “suffered injury in fact” or that they

have suffered an injury to “a legally protected interest as

contemplated by statutory or constitutional provisions.” Wimberly

v. Ettenberg, 570 P.2d 535, 539 (Colo. 1977). Further, PERA argues

that simply because the School Districts have standing does not

mean that the Vendors do as well.

¶ 37 “[S]tanding is a question of law” that we review de novo.

Adams v. Land Servs., Inc., 194 P.3d 429, 430 (Colo. App. 2008).

“In Colorado, parties to lawsuits benefit from a relatively broad

definition of standing.” Ainscough v. Owens, 90 P.3d 851, 855

(Colo. 2004). Indeed, the Colorado Supreme Court has noted that

“the test in Colorado has traditionally been relatively easy to

satisfy.” Id. at 856. But “[i]f a court determines that standing does

21 not exist, then it must dismiss” the party’s claims. Hickenlooper v.

Freedom from Religion Found., Inc., 2014 CO 77, ¶ 7.

¶ 38 “A plaintiff must satisfy two criteria to establish standing:

First, the plaintiff must have suffered an injury-in-fact, and second,

this harm must have been to a legally protected interest.” Boulder

Valley Sch. Dist. RE-2 v. Colo. State Bd. of Educ., 217 P.3d 918, 923

(Colo. App. 2009). “[T]he injury-in-fact requirement ensures that an

actual controversy exists so that the matter is a proper one for

judicial resolution,” and while “both tangible injuries (e.g., physical

damage) and intangible injuries (e.g., aesthetic deterioration of the

environment) can satisfy the injury-in-fact requirement, ‘an injury

that is overly “indirect and incidental” to the defendant’s action’ will

not convey standing, nor will the remote possibility of a future

injury.” Hickenlooper, ¶ 9 (citations omitted). “The second prong of

Colorado’s standing test requires that the plaintiff have a legal

interest protecting against the alleged injury. This is a question of

whether the plaintiff has a claim for relief under the constitution,

the common law, a statute, or a rule or regulation.” Ainscough, 90

P.3d at 856 (citation omitted).

22 ¶ 39 As the School Districts and the Vendors highlight on appeal,

in Lobato v. State, 218 P.3d 358, 367-68 (Colo. 2009), the Colorado

Supreme Court declined to address standing in a constitutional

challenge for one group of plaintiffs who may not have otherwise

had standing. The supreme court explained that the “plaintiff

school districts raise the same claims as the individual plaintiff

parents. The continued participation of the school districts in this

case is similar to the role of permissive intervenors and does not

require standing independent of plaintiffs with standing.” Id. at

368; see also C.R.C.P. 24(b) (governing permissive intervenors). The

supreme court therefore determined that it did not need to

“evaluate the plaintiff school districts’ standing provided that they

raise[d] claims identical to those of the plaintiff parents” and

allowed them to continue as plaintiffs in the case. Id. But the court

cautioned in a footnote that “if the plaintiff school districts were to

inject novel issues into the case or otherwise invoke the court’s

subject matter jurisdiction, then the school districts would have to

possess independent standing, and the trial court would evaluate

the school district’s standing.” Id. at 368 n.9.

23 ¶ 40 So when one party has standing, it may not be necessary to

determine whether other parties have standing if they have identical

claims that do not inject “novel issues” into the case or “otherwise

invoke the court’s subject matter jurisdiction.” Id. at 368, 368 n.9;

see also Aurora Pub. Sch. v. A.S., 2023 CO 39, ¶ 34 (When two

parties “raise[d] the same [constitutional] argument” and there was

no dispute that one had standing, the court had subject matter

jurisdiction, and “it [was] not necessary to address the standing of

[the other party] to bring the identical claim.” (citing Lobato, 218

P.3d at 368)); Chostner v. Colo. Water Quality Control Comm’n, 2013

COA 111, ¶ 22 (“Given that the Coalition and the District Attorney

assert identical arguments on appeal, we need not reach the issue

of whether the District Attorney has standing independent of the

Coalition.”).

¶ 41 Importantly, courts still must dismiss parties that lack

standing if their claims are not identical or if they invoke distinct

subject matter jurisdiction issues. See, e.g., Jones v. Samora, 2016

COA 191, ¶¶ 30-41 (analyzing parties’ standing separately to

conclude that an individual lacked standing because they alleged

they lost an elected position, which was unconnected to harms

24 associated with a mail-in ballot contention, while the other party

had organizational standing because of a member’s alleged loss of

the right to cast secret ballots).

¶ 42 We conclude that the Vendors’ claims are not identical to the

School Districts’, and that the Vendors lack independent standing

to challenge the Substitute Rule.

¶ 43 During oral arguments the division inquired about standing

and, more specifically, about what the Vendors added to the case.

Counsel for the School Districts and Vendors argued that the

Substitute Rule implicates the Vendors’ interests. Counsel also

asserted, however, that while the Vendors have their own claims for

which they have independent standing, their claims “rise and fall

together” with the School Districts’ claims, allowing them to remain

in the case per Lobato. But when the division inquired about how

the Vendors’ claims might affect a hypothetical settlement

agreement, counsel responded that the Vendors have interests

“beyond” the School Districts’ interests. Further, counsel argued

that the Vendors would likely need to be “involved” in some fashion

with any settlement agreement that affected their employees.

25 ¶ 44 The Vendors cannot rely on Lobato to simultaneously assert

that their standing is irrelevant because their claims are identical to

the School Districts’ while also contending that they have their own

claims that generate independent standing — ones that would

entitle them to be involved in the other parties’ settlement

agreement no less. See Lobato, 218 P.3d at 368 (comparing parties

with Lobato standing to permissive intervenors); cf. Local No. 93,

Int’l Ass’n of Firefighters v. City of Cleveland, 478 U.S. 501, 529

(1986) (“[W]hile an intervenor is entitled to present evidence and

have its objections heard at the hearings on whether to approve a

consent decree, it does not have power to block the decree merely

by withholding its consent.”).

¶ 45 Put another way, because the Vendors’ claims allegedly entitle

them to be involved in settlement decisions and implicate interests

other than the School Districts’ — for example, harms related to the

Vendor’s administrative costs) — Lobato cannot apply. Lobato does

not grant standing to parties who otherwise would lack it simply

because their interests closely align with a party that has standing.

See 218 P.3d at 368, 368 n.9. And because we conclude that

26 Lobato cannot allow the Vendors to remain in the case, we must

determine whether they have independent standing.

¶ 46 The Vendors assert that they have standing for three reasons:

(1) they will have to renegotiate their contracts with the School

Districts; (2) they will lose their right to participate in notice-and-

comment rulemaking; and (3) they will suffer administrative costs

through training and educating their employees, complying with

PERA reporting obligations, facilitating the School Districts’

compliance, and ensuring “their employees are treated fairly.”

¶ 47 As to the Vendors’ first and third claims for standing, the

alleged harms are both speculative and indirect; thus, they do not

constitute injuries in fact. Alleged injuries that are “indirect and

incidental” results of a plaintiff’s actions are “insufficient to confer

standing.” Wimberly, 570 P.2d at 539 (holding that bail businesses

lacked standing to challenge new bail program that could “affect the

business of the bail bondsmen as a practical matter” but which did

so only “indirectly by permitting criminal defendants to choose

amongst an increased number of bail alternatives”); see also 1405

Hotel, LLC v. Colo. Econ. Dev. Comm’n, 2015 COA 127, ¶ 49 (Even

assuming a project would “cause the Hotels economic harm by

27 drawing away some of their existing customers, such harm is not

directly caused by” the plaintiffs’ conduct and cannot not confer

standing. (footnote omitted)). In effect, the Vendors contend that

Substitute Rule would cause them harm because it would increase

the costs of doing business with the School Districts. But this is

not a direct harm caused by PERA’s actions because the Substitute

Rule does not directly impose costs on the Vendors. And any

specific administrative costs the Vendors will suffer, and whether

they will need to amend their contracts with the School Districts, is

speculative. See Hickenlooper, ¶ 9 (“[T]he remote possibility of a

future injury” is “insufficient to confer standing.”).

¶ 48 As for whether the Vendors have standing because they lost

the right to participate in the rulemaking process, “the APA does

not confer standing in and of itself, because it ‘does not create

substantive legal rights on which a claim for relief can be

based.’ . . . [S]ome other law must give rise to a cause of action

under the APA.” Weld Cnty. Colo. Bd. of Cnty. Comm’rs v. Ryan,

2023 CO 54, ¶ 15 (quoting Romer v. Bd. of Cnty. Comm’rs, 956 P.2d

566, 576 (Colo. 1998)).

28 ¶ 49 The Vendors contend that because the APA is incorporated

into PERA’s governing statutes through section 24-51-204(5) they

have standing to challenge PERA’s rulemaking actions. But PERA’s

rulemaking authority under section 24-51-204(5) expressly

incorporates only the notice-and-comments requirements of section

24-4-103. And while section 24-51-205(1) authorizes judicial

review of PERA’s final decisions on membership status, this does

not automatically give rise to the legally cognizable rights the

Vendors claim confers standing on them here. See Colo. State Bd.

of Educ. v. Adams Cnty. Sch. Dist. 14, 2023 CO 52, ¶¶ 51-53. As a

result, the Vendors cannot demonstrate harm to legally protected

interest by invoking the APA. See Ryan, ¶ 15; Romer, 956 P.2d at

576.

¶ 50 So, the Vendors cannot remain parties to the case because

their claims are not identical to the School Districts’ claims. See

Lobato, 218 P.3d at 368, 368 n.9. And the Vendors lack

independent standing because their alleged economic harms are

indirect and speculative, see Wimberly, 570 P.2d at 539; 1405

Hotel, ¶ 49, and they cannot demonstrate a harm to a legally

protected interest via the APA, see Colo. State Bd. of Educ., ¶ 52;

29 Ryan, ¶ 15; Romer, 956 P.2d at 576. The district court did not err

by finding the Vendors lacked standing.

C. Preliminary Injunctive Relief

¶ 51 The School Districts finally argue that we should enjoin the

Substitute Rule, arguing that they will suffer “immediate and

irreparable harm” if we do not and that they are “overwhelmingly

likely” to succeed on the merits of their case on remand.

Specifically, the School Districts contend that the factors outlined

in Rathke v. MacFarlane, 648 P.2d 648, 653-54 (Colo. 1982), have

been met and warrant an injunction under C.R.C.P. 65. PERA

responds that, because the district court never conducted a hearing

on the matter, we lack a sufficient factual record to decide this

issue. PERA also contests whether the Rathke factors have been

met.

¶ 52 As detailed in Rathke, the decision to grant a preliminary

injunction “lies within the sound discretion of the trial court,” but

“injunctive relief should not be indiscriminately granted . . . it

should be exercised sparingly and cautiously and with a full

conviction on the part of the trial court of its urgent necessity.”

Rathke, 648 P.2d at 653. Given this high standard,

30 [i]n exercising its discretion, the trial court must find that the moving party has demonstrated:

(1) a reasonable probability of success on the merits; (2) a danger of real, immediate, and irreparable injury which may be prevented by injunctive relief; (3) that there is no plain, speedy, and adequate remedy at law; (4) that the granting of a preliminary injunction will not disserve the public interest; (5) that the balance of equities favors the injunction; and (6) that the injunction will preserve the status quo pending a trial on the merits.

Id. at 653-54 (citations omitted).

¶ 53 We agree with PERA that we lack a fully developed record to

determine whether an injunction is warranted consistent with the

Rathke factors. The record on appeal is limited given the court’s

decision to dismiss for lack of subject matter jurisdiction, and there

was no hearing concerning injunctive relief that we may review. On

remand, the district court will be best positioned to consider

whether a hearing is necessary and if so, make the factual

determinations necessary to decide whether an injunction is

warranted.

31 III. Disposition

¶ 54 We reverse the district court’s dismissal of the case for lack of

exhaustion but affirm the court’s dismissal of the Vendors for lack

of standing. We therefore remand the case for the district court to

address the merits of the School Districts’ claims, including

whether, after a hearing, injunctive relief is warranted.

JUDGE SCHUTZ and JUDGE BERNARD concur.