The BLT: The Blog of Legal Times

NLRB Warns of Three-Month Furloughs if House Cuts Pass

Facing the prospect of draconian budget cuts, the National Labor Relations Board warned today that it would be forced to furlough all 1,665 employees for nearly three months between now and the end of September if a House of Representatives funding proposal passes.

The House is expected to vote today or tomorrow on a continuing resolution to fund the government for the remainder of the year. The funding proposal would eliminate $50 million, or 18%, of the NLRB’s budget — a reduction that would be squeezed into the final seven months of the fiscal year.

“Nearly all of the agency's budget is spent on salaries and rents; there are no programs to eliminate or postpone,” said NLRB Chairman Wilma Liebman and Acting General Counsel Lafe Solomon in a written statement. “The only way to meet this extreme and immediate reduction would be to furlough all of the NLRB's 1,665 employees for 55 workdays.”

The majority of employees do not work in Washington D.C., but rather in 51 local offices in 33 states.

“If enacted, the House proposal could force the NLRB to curtail all agency operations, including investigating alleged illegal practices by private-sector employers and unions, conducting workplace elections, and helping to settle election-related disputes,” according to Liebman and Solomon.

A House proposal that would have eliminated all NLRB funding for the remainder of the year was defeated during debate on amendments on Thursday, although it garnered 176 votes.

D.C. Circuit Revives Challenge to Online Tobacco Sale Restrictions

A federal appeals court in Washington today revived a businessman's suit challenging regulations that restrict the online sale of tobacco products.

The plaintiff, Robert Gordon, a member of the Seneca tribe in upstate New York who sold tobacco across the country via an Internet site, filed suit last year in Washington’s federal trial court against the enforcement of the “Preventing All Cigarette Trafficking Act.” More background on the case here.

Gordon’s suit, seeking an injunction, was filed a day before the new law was set to take effect. U.S. District Judge Henry Kennedy Jr. in Washington dismissed the suit, noting, among other things, the “lateness of the hour” in which Gordon was seeking relief from the courts. Kennedy said in his ruling that it wasn’t in the public’s interest to stop the legislation in its tracks.

A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit today vacated the dismissal of the suit and sent it back to the trial court for further proceedings.

Judge Janice Rogers Brown, writing for the appeals court panel, said Kennedy should not have relied on the timing of Gordon’s suit in dismissing it. “A motion seeking to enjoin a statute’s enforcement before the statute may legally be enforced is timely—or at least not late—by definition,” said Brown, who heard the case with Judges Judith Rogers and Thomas Griffith.

The appeals court said that even if the suit were untimely, a delay in filing it is not a proper basis on which to reject a preliminary injunction request. The D.C. Circuit also said Kennedy addressed the public interest in a “conclusory fashion,” leaving the appeals court to wonder whether the analysis was complete.

“By summarily citing to the public’s interest without elaboration, the district court abdicated its responsibility to fully analyze the one factor on which it did rely,” Brown wrote.

A lawyer for Gordon, Aaron Streett, an associate with Baker Botts in Houston, was not immediately reached for comment this afternoon. Streett argued for Gordon in the D.C. Circuit. Baker senior counsel R. Stan Mortenson in Washington also was not immediately reached for comment on the ruling.

House Votes to Stop 'Equal Access to Justice' Fees

The House of Representatives gave initial approval Thursday to a proposal that would temporarily end the payment of attorney fees to some people who successfully sue the federal government.

Republican supporters of the proposal said they want to stop payments because of insufficient accounting of the program. Under the Equal Access to Justice Act of 1980, individuals, small businesses, non-profits and others can collect attorney fees from the federal government if they prevail in a case and meet certain other requirements, such as a falling below a net worth ceiling.

The temporary halt was added as an amendment to legislation designed to pay the federal government’s operations through Sept. 30. The legislation, known as a continuing resolution, itself still needs approval from the full House and Senate, and it could change.

Rep. Cynthia Lummis (R-Wyo.), the sponsor of the amendment, called the 1980 law a “very fair law.” But she said the payments should stop because there’s no centralized information about which lawyers and plaintiffs are getting the fee awards.

“We need to have a six-month moratorium on expenditures and payouts under EAJA, so we can get information about who’s receiving this money,” she said on the House floor.

Lummis and Rep. Mike Simpson (R-Idaho) said they suspect some non-profits, especially environmental groups, are abusing the law and using it as a regular source of funding. “It has become, frankly, a cottage industry — suing the federal government, which is suing the people, and then asking the people to pay your legal fees for doing so,” Simpson said.

Democrats, making an appeal to Tea Party supporters, said an end to the payments would harm people who are fighting the government with few resources. They described plaintiffs suing because they were denied Social Security benefits or used as “guinea pigs” in nuclear experiments decades ago.

“Who do you want to empower, the people who were the guinea pigs or the federal government?” asked Rep. Ed Markey (D-Mass.).

Amendment opponents pointed to the law’s several requirements before fees can be awarded. For example, fees are not available if the federal government’s position was “substantially justified.”

The amendment passed 232-197, largely along party lines.

Updated at 12:26 p.m. with additional reporting.

Suit Charges D.C. Police Executed Search Warrant at Wrong Apartment

Updated 12:40 p.m.

A man and his wife are suing the Metropolitan Police Department for $1 million in damages for allegedly barging into and searching the wrong apartment during a drug investigation last year in Southeast Washington.

The suit, filed in Washington's federal trial court this week, alleges civil and constitutional violations. The police did not take anything from the home of Danny Costello and his wife, Gai Nguyen, according to court records.

“The police officers had a duty, before attempting to execute their search warrant, to make sure that they were executing the warrant only for the apartment the warrant authorized entry,” the couples’ attorney, Wendell Robinson, said in the complaint [.pdf]. “But the police officers negligently, intentionally, willfully, wantonly, and maliciously, forcibly entered the plaintiffs’ apartment without sufficient evidence that it was apartment #305."

A Metro police spokeswoman, Gwendolyn Crump, declined to comment on the suit. Acting D.C. Attorney General Irvin Nathan did not immediately respond to a message seeking comment this afternoon.

The authorities were searching for, among other things, drug money, scales, bank records, tally sheets, packaging and boxes. The search warrant identified the target apartment as having a green door with a black iron gate. “There are no numbers on the door but it is directly across from apartment #304,” according to the warrant.

Robinson, a solo practitioner in Washington, acknowledged in the suit that his client’s apartment did not have a number on the door. Robinson was not immediately reached for comment this morning.

The suit said about 10 police officers burst into the apartment on April 9, forcibly entering with firearms drawn, to execute a search warrant. Costello was handcuffed.

“Let’s save time,” an officer told Costello, according to the suit. “Where is the stuff?”

“What is the stuff?” Costello allegedly responded.

“Drugs,” the office said, according to Costello’s lawyer.

Costello said the drugs were in a drawer.

“Not the prescription drugs,” the officer replied after looking in the drawer.

The police, Costello’s lawyer said, continued searching the apartment for more than an hour and did not find anything listed on the search warrant. Nothing was seized, court records show.

“Maybe we got the wrong door,” an officer said, according to the complaint.

The Morning Wrap

Estrada v. Posner: Miguel Estrada is asking the U.S. Supreme Court to intervene again in the case of his client Conrad Black, after a federal appeals court, including Judge Richard Posner, upheld two counts against Black. Click here for the story from Black's National Post.

Commandments Fight: The Washington Post reports on a Ten Commandments legal battle that's brewing in southwest Virginia in a school district that also has a "Bible Bus."

'Trial Gods': The New York Times reports on some of the superstitions that local lawyers have while in trial, such as never getting a hair cut.

Come Again?: The Justice Department wants to know whether Senior Judge Roger Vinson's ruling last month on the new health-care law was intended as an injunction, The Wall Street Journal reports.

Beck's Not a Fan: Google is coming in for criticism from an array of sources lately, including from competitors and the Texas attorney general. The latest critic, according to the Los Angeles Times, is Glenn Beck.

Hogan Lovells posts slight revenue decline, up tick in profits

By Jeff Jeffrey

Hogan Lovells – the product of last year’s combination of Washington’s Hogan & Hartson and the U.K.’s Lovells – reported Thursday that post-merger revenue declined slightly, but profits rose as the new firm cut costs.

The separate firms grossed $1.68 billion in 2009. This year, Hogan Lovells is reporting a gross of $1.66 billion. Meanwhile, profits per partner were $1.14 million in 2010 – up from the $1.11 million at Hogan and $1.01 million at Lovells in 2009.

Hogan Lovells said revenue per lawyer came in at $704,000. That figure is down 8.5% from the $770,000 Hogan & Hartson reported last year, but it’s 21% higher than the $580,000 that Lovells reported for the 2010 Global 100, The American Lawyer’s ranking of global firms by gross revenue.

J. Warren Gorrell Jr., co-CEO of Hogan Lovells, said he and his counterpart David Harris were pleased with the figures for Hogan Lovells first year, considering “the work it took to bring these two firms together.” Gorrell said, “It’s not surprising that our revenues were down slightly, given what is happening in the global economy. Being flat in light of that fact wasn’t a surprise and was consistent with what we expected.”

A trimmer team may have helped. In all, the firm reported that it has 2,363 lawyers worldwide, down 8% from the 2,569 the two legacy firms had in 2009. The combined partnership includes 512 members, which is also down 16 partners from the number the two legacy firms reported for 2009.

Harris said that Hogan Lovells saw strong performances in its finance practices, particularly in the banking and lending practices. Harris also highlighted the firm’s litigation, antitrust and U.S.-based regulatory practices. Gorrell added that on the U.S. regulatory side, the firm’s life sciences, government contracts and antitrust practices performed well.

On the other end of the spectrum, Harris said that the firm’s European corporate practice slipped last year, especially on the transactional side, and that real estate is still slower than it has been in past years. Harris said, “Real estate is doing better, but we can’t read too much into that because the work tends to be client specific. Generally, the market for real estate work is still slightly challenged.”

Geographically, Gorrell said the firm did well in its London, Washington, Colorado and Miami offices, and had strong showings in Germany, Russia and China.

Gorrell and Harris pointed to several significant matters that helped the bottom line. The firm advised Russia-based X5 Retail Group N.V. on its $1.65 billion acquisition of the Kopeyka retail chain for US$1.65 billion. The firm represented Ford Motor Co. on its $1.8 billion divestiture of Sweden-based auto manufacturer Volvo Cars to China-based Zhejiang Geely Holding Group Company Limited. It also represented the Republic of Ecuador in securing a $1.7 billion loan from the Export-Import Bank of China.

Hogan and Lovells merged on May 1, 2010. To account for the first four months of 2010, the firm used the data from the separate firms. Those amounts were added to the figures for the combined firm from that point forward.

NRA Appoints New Director of Federal Affairs

The National Rifle Association’s Institute for Legislative Action today announced that James Jay Baker has been appointed as director of federal affairs.

Baker rejoins the NRA after previously serving as executive director of NRA-ILA, director of federal affairs and legislative counsel. Prior to rejoining the NRA, he worked in senior management positions at Crossroads Strategies, Ogilvy Government Relations and Federalist Group.

Baker said he was asked to rejoin the NRA because of his previous experience. “I was delighted that they asked and I said sure. It’s no more complicated than that but I’m happy to be back,” he said.

The NRA also promoted Jason Ouimet to deputy director of federal affairs. A federal liaison for the NRA since 2005, Ouimet previously served as legislative assistant for Sen. Saxby Chambliss (R-Ga.) as well as senior analyst for the National Republican Senatorial Committee’s research operation.

"I would like to offer my congratulations to...Jim and Jason. They are seasoned and skilled legislative and political professionals who will well serve the interests of the NRA and its four million members, in addition to the tens of millions of hunters and gun owners across the country," said Chris Cox, executive director of NRA-ILA in a written statement. "We look forward to continuing the fight for the Second Amendment with these gun rights advocates.”

4th Circuit Finds Maryland Strip Club Law Overbroad

Maryland’s strip club law is unconstitutionally overbroad, ruled a panel of the U.S. Court of Appeals for the 4th Circuit on Thursday.

In Legend Night Club v. Miller, the panel majority affirmed a permanent injunction against enforcement of the law that was imposed in 2009 by a federal district court.

The law limits the range of permissible conduct, attire and entertainment at establishments licensed to serve alcoholic beverages. It originally was to take effect in 2005 but was challenged by the Legend Night Club and International Nite Life Enterprises, which operate adult establishments in Prince George’s County, Md. Jimmy Bell of the Law Office of Jimmy A. Bell in Bowie, Md., filed the lawsuit and argued the case in the 4th Circuit.

Writing for the panel majority, Judge James Wynn said, “The statute imposes restrictions that extend well beyond strip clubs and other establishments primarily offering adult entertainment.” It prohibits a “broad swath of expression” protected by the First Amendment, he said, and could not be saved by a limiting construction.

The state had argued that the law was amended to address the secondary effects of presenting nude dancing in establishments that serve alcohol. Bell countered that the law was unconstitutionally overbroad because it “limits activity which can include a ballet, a Shakespearian play, and other mainstream productions" of artistic merit.

But Wynn, in his opinion, said the state essentially was asking the court “to ignore the plain language of the statute and rely instead on the government’s assurances that the statute would not be unconstitutionally enforced. In support of this plea, Defendants submitted affidavits from enforcement authorities in nine counties where the statute currently applies, each stating that in the relevant jurisdiction, § 10-405 has never been enforced against an establishment offering productions of clear artistic merit. Nevertheless, no limitation on the scope of the sweeping prohibitions exists in the statute.”

U.S. District Judge Mark Davis of the Eastern District of Virginia, sitting by designation, joined Wynn’s decision. Senior Circuit Judge Clyde Hamilton concurred in part and dissented in part, writing that he believed the law was susceptible to partial invalidation.

Defendants Charged in Medicare Scams Worth $225 Million

The federal Medicare Fraud Strike Force today charged 111 defendants with allegedly participating in fraud schemes that falsely billed Medicare for more than $225 million.

Attorney General Eric Holder and Health and Human Service Secretary Kathleen Sebelius announced the operation is the largest-ever takedown of health care fraud against the federal government.

The defendants charged today allegedly submitted claims to Medicare for treatments that were medically unnecessary or never provided, and are accused of violations of anti-kickback statutes, money laundering and aggravated identity theft.

“With this takedown, we have identified and shut down large-scale fraud schemes operating throughout the country. We have safeguarded precious taxpayer dollars. And we have helped to protect our nation’s most essential health care programs, Medicare and Medicaid,” said Attorney General Holder in a written statement. “As today’s arrests prove, we are waging an aggressive fight against health care fraud.”

More than 700 law enforcement agents participated in today’s operation and also executed search warrants in connection with other strike force investigations. The strike force is a joint effort between the Department of Justice and HHS, consisting of a multi-agency team of federal, state and local investigators. Since it was created in 2007, the strike force has conducted operations in nine districts and charged more than 990 individuals for collectively falsely billing Medicare for more than $2.3 billion.

“Last year alone, our partnership recovered a record $4 billion on behalf of taxpayers. From 2008-2010, every dollar the Federal Government spent under its Health Care Fraud and Abuse Control programs averaged a return on investment of $6.80,” Sebelius said in a written statement.

The DOJ and HHS also announced the strike force will expand operations to Dallas and Chicago. It currently operates in Baton Rogue, La., Brooklyn, N.Y., Detroit, Houston, Los Angeles, Miami, and Tampa, Fla.

Shearman Partner Lands SEC Corporation Finance Post

Shearman & Sterling capital markets partner Lona Nallengara has been hired as deputy director for legal and regulatory policy in the Securities and Exchange Commission's Division of Corporation Finance.

Nallengara will work on the division’s extensive Dodd-Frank Act rulemakings, as well as focusing on “potential proposals to enhance the U.S. proxy system and initiatives to ease compliance burdens and facilitate capital formation for small business,” according to the SEC.

The Division of Corporation Finance’s mission is to see that investors are provided with material information in order to make informed investment decisions.

“I am delighted that Lona has agreed to join the division at this critical – and very busy – time for the agency,” said director Meredith Cross in a written statement. “His extensive capital markets background coupled with his experience in advising corporate issuers on governance matters and compliance with the federal securities laws will be invaluable to both the division and the commission in fulfilling our mission.”

According to his law firm bio, Nallengara’s experience includes representing Goldman Sachs and Morgan Stanley in connection with the high yield offerings to finance the acquisition of TXU Corp. by Kohlberg Kravis Roberts & Co. and The Texas Pacific Group.

He earned his law degree from Osgoode Hall Law School in Toronto.