Panagoulakos was pulled over for having a temp tag that was too faded to read. He admitted to the cop (lieutenant, actually. This will explain some delegation that comes a little later) who pulled him over that there was a gun in the car. In checking NCIC, the lieutenant found a hit for a protection order. According to the hit, Panagoulakos was prohibited from possessing a firearm.
Panagoulakos admitted to knowing about the protection order, but said that the judge had given him permission to carry a firearm and that this was noted in the order. The lieutenant called a sergeant to make the decision on whether or not to arrest, and was told that an arrest was appropriate. Given the facts known at the time, I would agree with that. After all, who believes what suspects say about their own protection orders? The lieutenant then called for an officer (Yazzie) to actually make the arrest that he had already called someone else to make the decision on. Yazzie was also directed to check the order to see if it contained the exception that Panagoulakos thought it did.
Yazzie (who incorrectly believed that all protection orders prohibited the carrying of firearms) took Panagoulakos to the station and reviewed the order. Federal law prohibits the restrained party of a protection order from carrying a firearm if the order involves intimate partners. In this case, the order did not have the "intimate partner" box checked, although there was some language on the order which said If you're a spouse or former spouse, cohabitate or cohabitated, or if you have a child together, then you can't have a gun. Panagoulakos' relationship with the protected party was listed as "ex-boyfriend."
Yazzie went ahead and filed the charges. Panagoulakos sued everybody who was involved in this case for wrongful arrest, illegal seizure of his property, violation of due process, and negligent hiring/training/retention. The district court held that Yazzie was entitled to qualified immunity as it related to the initial arrest, because the initial arrest was supported by probable cause. The district court also held that once Yazzie had reviewed the protection order she no longer had probable cause, and therefore was not entitled to qualified immunity. Yazzie appealed.
The Tenth circuit made a point of saying that it didn't necessarily agree that probable cause had dissipated, but that it was willing to humor that for the sake of argument. Even so, the Tenth Circuit has never imposed a duty to release a lawfully arrested prisoner when new evidence comes to light. That's not to say that it should never be done, but only that there's no case law which clearly establishes an obligation to do so (the decision doesn't mention this, but Colorado even has a statute which expressly authorizes the police to un-arrest someone when there are no grounds to charge them with a crime. As I recall, the procedure in NM was a bit more complicated).
The district court's decision was reversed, Yazzie was granted qualified immunity.