The BLT: The Blog of Legal Times

LivingSocial Multi-District Litigation Assigned to D.C. Court

A group of consumer class actions filed in federal courts across the country against LivingSocial were consolidated this week into a single multi-district litigation to take place in Washington, according to court records.

In an order (PDF) filed Aug. 22 in U.S. District Court for the District of Columbia, the U.S. Judicial Panel on Multidistrict Litigation granted LivingSocial's motion to consolidate the five cases—filed in federal courts in California (northern and southern districts), D.C., Florida and Washington state earlier this year—into a single action. The request was supported by the plaintiffs in all of the cases.

The multi-district litigation was assigned to U.S. District Judge Ellen Segal Huvelle. The panel noted that Washington was considered the most appropriate forum because LivingSocial is headquartered here.

The plaintiffs have accused LivingSocial of placing unlawful expiration dates on the “daily deals” at local businesses that are sold through the company’s Web site. The lawsuits allege violations of local consumer protection laws and the Credit Card Accountability Responsibility and Disclosure Act, which bars expiration dates of less than five years on gift certificates.

“LivingSocial and its retail partners offer these gift certificates with illegal expiration dates well aware that many consumers will not use the gift certificates before the expiration date,” the complaint (PDF) originally filed in D.C. states. “LivingSocial’ s deliberate and systematic use of abbreviated expiration dates harms and deceives consumers in the District of Columbia and throughout the United States.”

A LivingSocial representative could not immediately be reached for comment.

The plaintiffs are being represented by Charles LaDuca and William Anderson of Washington’s Cuneo Gilbert & LaDuca and Christopher Ellis of Bolen, Robinson & Ellis of Decatur, Ill. LivingSocial is being represented by a team from Cooley’s Washington, San Francisco and San Diego offices, according to court records. None of the attorneys could immediately be reached for comment.

Similar class actions were also filed earlier this year against Living Social competitor Groupon Inc., another daily deal site. Those cases were converted in June to a multi-district litigation, which was transferred to the U.S. District Court for the Southern District of California.

Obama Vacation Includes Visit With Harvard Law's Ogletree

President Barack Obama spent about an hour over the weekend at a Martha's Vineyard reception organized by Harvard Law School Professor Charles Ogletree Jr., a longtime friend of Obama and his wife, Michelle.

The visit came on Saturday night, according to reports from the media pool that’s following the president’s vacation. Reporters weren’t allowed in, but White House spokesman Josh Earnest described it as an “informal reception” organized by Ogletree and attended by about 100 people.

Ogletree’s relationship with the Obamas dates back two decades. He’s been described as Barack Obama’s mentor, and The National Law Journal reported in 2008 that he also knew Michelle Obama when she was a student at Harvard Law. D.C. lawyers have occasionally mentioned Ogletree as a possible Obama nominee, either for an appellate judgeship or a position in the Department of Justice.

According to the media pool, the reception took place in an otherwise quiet neighborhood of shingled cottages in Oak Bluffs, on the north side of Martha’s Vineyard. Apparently anticipating the president’s arrival, crowds had gathered to try to take photographs. One group had set up a sign that said, “Welcome Mr. President to Alpine Street,” and as the president left, several people waved large American flags.

Obama was there for just over an hour before returning to the house where he and his family are staying. It’s not clear whether Michelle Obama also attended the reception. White House senior adviser Valerie Jarrett was there.

On Aug. 17, Ogletree hosted a panel discussion about race at the Martha’s Vineyard Performing Arts Center, according to the Vineyard Gazette. Anita Hill, whom Ogletree represented during the 1991 confirmation process of Justice Clarence Thomas, and who recently became of counsel at Cohen Milstein Sellers & Toll, was among those on the panel.

Ogletree is a former deputy director of the D.C. Public Defender Service. Last month, he was in U.S. District Court in Washington representing New York publisher and philanthropist Karl Rodney, who had pleaded guilty to a charge of misleading congressional staff.

Longtime McDermott Lawyer Joins Trade Group

The American Beverage Association has hired as its new deputy general counsel a lawyer who spent 26 years with McDermott Will & Emery.

Amy Hancock will advise the association and its members on antitrust and regulatory issues, as well as on litigation, according to a news release. She started on Monday, a spokesman said. The association represents the non-alcoholic side of the beverage industry, including soft-drink makers and distributors.

Hancock worked at McDermott from 1985 to 2011 in the firm’s Chicago and Washington offices, focusing on antitrust and regulatory matters. She was a counsel when she left. This year, she represented an Ohio hospital company, ProMedica Health System Inc., in an antitrust action brought by the Federal Trade Commission and the state of Ohio, according to court records.

The association’s president, Susan Neely, said in statement that Hancock “will be a tremendous asset to both the association and its member companies.”

Updated at 5:03 p.m.

Steptoe's Beef with Burger Joint Cools Down

It’s been a month since a burger joint shut down by a D.C. Superior Court judge at the request of Steptoe & Johnson re-opened. The beef between the two appears to have cooled down.

Black & Orange, a Burger Grilling Company—formerly called Rogue States—has re-opened at its Connecticut Ave. location near Dupont Circle after resolving problems with its kitchen ventilation system.

Shortly after the restaurant opened in February 2010, Steptoe employees began to complain about smoke and fumes from the restaurant entering the firm’s air intake system. Black & Orange owner Raynold Mendizabal said he tried to reason with firm after learning of the problem but instead was slapped with a complaint.

The March 2010 complaint said “Steptoe employees have reported health-related effects in connection with the smoke and food odors, including but not limited to headaches, nausea, dizziness, watery and itchy eyes, drowsiness and distraction.”

Judge John McAdams Mott found Steptoe's complaints credible and last October ordered the restaurant to shutter its doors until the ventilation problem could be fixed. The restaurant re-opened in June after installing a $90,000 ventilation system that runs to the top of the 10-story building.

"Our sole concern has been the health and welfare of our employees. As long as that issue is addressed, we're pleased to have them back in the neighborhood," a firm spokesperson said in a statement. The spokesperson declined to say whether the new ventilation system had solved the odorous problem.

“We are keeping an eye daily on it and working with the building engineers and so far it’s working perfectly,” Mendizabal said.

Looking back, the owner said he wished he could have avoided the whole suit that cost both parties about a million dollars.

“The end result was we went to war and nobody won,” Mendizabal said.

Mendizabal said he changed the name of his restaurant after he received calls from Rogue Brewery complaining that he was infringing on the name rights. He said all else remains the same, including the restaurant's specialty burgers and late-night hours.

“My position is if you’re good, the name doesn’t even matter.”

National Law Journal photo by Diego M. Radzinschi.

Previous Coverage:

Steptoe & Johnson Fumes at Nearby Burger Joint

Steptoe Wins Preliminary Injunction in Beef With Burger Restaurant

Steptoe Wins ‘Burger Case,’ Rogue States to Shut Down

Clemens' Lawyers Argue Prosecution Misconduct Bars Retrial

Lawyers for Roger Clemens today urged a Washington federal judge to prohibit prosecutors from putting the former baseball star on trial again, saying the government engaged in intentional misconduct and should be punished.

Clemens' attorneys, including lead counsel Russell Hardin Jr. of Houston, said the legal principle of double jeopardy prohibits a retrial. The defense lawyers also asked for dismissal of the indictment.

Judge Reggie Walton of U.S. District Court for the District of Columbia abruptly declared a mistrial July 14 after prosecutors presented evidence the judge had earlier ruled inadmissible.

The presentation of the disputed evidence occurred on the second day of testimony, and it was the second time in as many days the government drew criticism from the trial judge. Walton asked the attorneys to address whether double jeopardy precludes a retrial.

Clemens’ attorneys today set out to convince Walton that the prosecution’s conduct was intentional. The government, Hardin said, ignored court orders and shirked duties to make sure exhibits confirmed with pretrial rulings.

“The law is many things in this nation but most of all it is about fairness,” Hardin said. “The government had its day in court and squandered it with misconduct that irretrievably wasted time, money, and the opportunity for a one-time, fair resolution of these charges for all involved.”

The evidence in question was a videotape from the congressional hearing that is central to the government’s case against Clemens, who is charged with lying to Congress when he denied ever using steroids or performance-enhancing drugs.

On the video, jurors got to hear about an affidavit from the wife of former Yankees pitcher Andy Pettitte. Laura Pettitte identified two conversations she had with her husband about Clemens.

The affidavit bolsters Andy Pettitte’s claim he and Clemens discussed the use of performance-enhancing drugs. Walton had earlier ruled that prosecutors could introduce the evidence as rebuttal.

Prosecutors noted in court that Clemens’ attorneys failed to object to the evidence. The judge first picked up on the inadmissibility of the affidavit evidence. But it was the defense that had earlier asked Walton to restrict the ability of the government to use the Laura Pettitte affidavit.

"There was no intention to run afoul of any court ruling, your honor," Durham told Walton in court, court records show.

Hardin said in court papers that prosecutors “planned to put Ms. Pettitte’s statements before the jury in this backdoor fashion.”

Clemens’ attorneys argue that the two prosecutors in the case, assistant U.S. attorneys Steve Durham and Daniel Butler, knew the contents of the government’s video exhibit and that the government was “willing to go as far as possible until its conduct raised an objection.”

“At no time did the Government state that the publication of Mrs. Pettitte’s statements to the jury was accidental—because it wasn’t,” Clemens’ lawyers said. “If the publication of Mrs. Pettitte’s statements to the jury was an accident, the more natural response would have been for the prosecutors to apologize immediately or to otherwise express remorse or contrition for the oversight.”

On the first day of trial, the prosecution ran afoul of court orders and drew an admonition from Walton.

Walton interrupted Durham’s opening remarks after the prosecutor told the jury it would hear testimony from three former baseball players about their use of human growth hormone. Walton had earlier ruled out testimony of other players’ use of performance enhancing drugs.

Durham, asked to explain the violation, said in a bench conference that the testimony of the former teammates substantiates why Clemens would use drugs, according to Hardin's court filing.

“They play at the same time on the same team,” Durham said, according to court papers. “It explains why in the world this man would choose to use these drugs.”

After the discussion at the bench, Walton told jurors to disregard the prosecutor’s statement.

Prosecutors are expected to file their opposition to the defense demand by Aug. 19. A spokesman for the U.S. Attorney’s Office, William Miller, declined to comment. Walton early on imposed a gag order in the case.

Court Disbars Former DOJ Official Charged In Abramoff Scandal

The D.C. Court of Appeals today disbarred a former U.S. Justice Department lawyer who pleaded guilty in Washington federal district court to a conflict of interest violation stemming from the Jack Abramoff lobbying scandal.

Robert Coughlin II, who served as deputy chief of staff in the Criminal Division, consented to disbarment from the District of Columbia bar, the appeals court said in an order (PDF) published today.

Coughlin had been under interim suspension since June 2008. He pleaded guilty in April 2008 in U.S. District Court for the District of Columbia to one count of conflict of interest. Coughlin was not immediately reached for comment this morning.

Prosecutors said Coughlin acknowledged receiving gifts from former Greenberg Traurig lobbyist Kevin Ring, who was also charged in the Abramoff investigation. Ring and Coughlin were close friends, socializing regularly.

Coughlin helped Ring get a $16.3 million grant for the Chocktaw Tribe to build a jail. Coughlin received thousands of dollars in concert and sporting event tickets and restaurant trips.

“There is no question that Mr. Coughlin benefited from Ring’s generosity and made use of the perks,” lawyers for Coughlin said in court papers. “Mr. Coughlin believed that Ring, through Greenberg Traurig, had access to extra sports and concert tickets when they were available and not being used by others at the firm.”

Coughlin’s attorneys, including Joshua Berman, now a partner at Katten Muchin Rosenman, said in court papers that “over time Kevin Ring took advantage of their friendship. In a sad twist of fate, Mr. Coughlin’s greatest attribute—his trust in and dedication to friends—became his undoing.”

Pharmaceutical Company Pleads Guilty to Drug Misbranding

The pharmaceutical company UCB, Inc. has agreed to a $34 million settlement in Washington federal district court to resolve civil and criminal allegations over the misbranding of a prescription drug used in the treatment of seizures.

UCB, represented by Covington & Burling, agreed to plead guilty to a misdemeanor count for misbranding of the drug Keppra, court records show. The company is the U.S. subsidiary of the Belgian pharmaceutical UCB SA.

UCB also agreed to settle False Claims Act liability for nearly $26 million, making up the bulk of the global agreement. The payment resolves claims for reimbursement for Keppra by federal and state health care programs.

“UCB put its pursuit of profits ahead of its obligations to patients,” U.S. Attorney Ronald Machen Jr. said in a prepared statement. “Today’s guilty plea and UCB’s $34 million payout should remind drug companies that try to cleverly design off-label marketing schemes that we will not allow them to compromise patient safety.”

Prosecutors in Washington said UCB unlawfully marketed the drug for treatment for migraines even though the Food and Drug Administration never approved the drug for that purpose. The off-label market use for migraine treatment offered a higher sales potential than the market for epilepsy, prosecutors said.

The settlement includes a five-year corporate integrity agreement between UCB and the Department of Health and Human Services inspector general’s office. The agreement requires UCB to “maintain, monitor and enforce and detailed compliance program and code of conduct governing future promotional activities.”

The U.S. Attorney’s Office said the settlement resolves two whistleblower suits—one from 2007 and the other from 2008—in Washington and Oregon federal district courts. The whistleblowers will receive a total payment of more than $2.8 million for their role in the litigation, the government said.

A lawyer for UCB, Covington partner Ethan Posner, co-chair of the firm’s white-collar defense and pharmaceutical litigation groups, was not immediately reached for comment this afternoon about the settlement.

UCB’s lawyers said, contrary to the government’s assertions otherwise, that there was no evidence the promotion or use of Keppra for migraines caused actual harm to any patient.

“The UCB of 2011 is a different company than it was in the late 1990s and early 2000s,” the company’s lawyers said in court papers. Before the government investigation of the company, UCB directed its sales force to stop promoting Keppra for migraines, court records show.

Matthew Solomon, the chief of the U.S. Attorney Office’s fraud unit, prosecuted the UCB case with Assistant U.S. Attorney Sondra Mills.

DOJ's Public Integrity Section Takes on John Edwards

Updated 4:28 p.m.

A team of three Justice Department public integrity prosecutors, working with federal prosecutors in North Carolina, make up the government's prosecution team against former U.S. Senator and president candidate John Edwards.

DOJ announced today that a grand jury indicted Edwards for his alleged role in a scheme to violate federal campaign finance laws. Edwards, 57, represented by Skadden, Arps, Slate, Meagher & Flom partner Gregory Craig and local counsel, was charged in U.S. District Court for the Middle District of North Carolina with conspiracy, false statements and accepting illegal campaign contributions. A copy of the indictment is here.

“Mr. Edwards is alleged to have accepted more than $900,000 in an effort to conceal from the public facts that he believed would harm his candidacy,” Assistant Attorney General Lanny Breuer said in a statement. “As this indictment shows, we will not permit candidates for high office to abuse their special ability to access the coffers of their political supporters to circumvent our election laws.”

Prosecutors allege Edwards, during his presidential candidacy, conspired to accept and receive campaign contributions to “protect and advance his candidacy from disclosure of an ongoing extra-marital affair and the resulting pregnancy.” The government contends Edwards used the funds to pay for the living and medical expenses of Rielle Hunter, with whom Edwards had an affair.

In a statement, Craig said today: “John Edwards will tell the court he is innocent of all charges, and will plead not guilty. He did not break the law and will mount a vigorous defense.”

Outside the Hiram H. Ward federal building in Winston-Salem this afternoon, Craig told reporters: “No one has ever been charged, either civilly or criminally, with the claims that have been brought against Sen Edwards today. This is an unprecedented prosecution. Craig said "no one would have known, or should have known, or could have been expected to know, that these payments would be treated or should be considered as campaign contributions. And there was no way Senator Edwards knew that fact either.”

One key figure in the indictment is the late Fred Baron, prominent Democrat and plaintiffs' personal injury lawyer in Dallas. Baron is "Person D" in the Edwards indictment, our sibling publication Tex Parte noted today. Baron was Edwards' finance chairman for his 2008 presidential run.

The Edwards prosecution puts DOJ’s Public Integrity Section back in the national spotlight. Lawyers in the unit came under fire in 2008 and 2009 for the botched prosecution of former Sen. Ted Stevens of Alaska. Three former members of the section, former chief William Welch II, Brenda Morris and Edward Sullivan, remain under criminal investigation for their roles in the failed prosecution.

Public Integrity trial attorneys David Harbach II and Jeffrey Tsai are assigned to the Edwards prosecution, in addition to the section’s deputy chief, Justin Shur. Assistant U.S. Attorneys Robert Higdon Jr. and Brian Meyers in North Carolina are working with the Main Justice team. Higdon is the criminal division chief for the U.S. Attorney's Office for the Eastern District of North Carolina, in Raleigh.

Judge Upholds Ruling in Tobacco RICO Case

A federal judge in Washington today refused to vacate a landmark ruling and injunction in 2006 that said a group of tobacco industry companies conspired to dupe consumers about the health risks of smoking.

Lawyers for companies that include Philip Morris USA, its parent company Altria Group, Inc. and R.J. Reynolds Tobacco Company, urged Judge Gladys Kessler of Washington federal district court to vacate or modify aspects of the injunction the judge issued nearly five years ago.

The attorneys, including Beth Wilkinson for Philip Morris and Altria, argued that Kessler no longer has control over the case because of a new federal law, the Family Smoking Prevention and Tobacco Control Act of 2009. The tobacco companies' lawyers said Kessler’s ruling in 2006 interferes with Food and Drug Administration regulations and has the potential to create conflicting regulatory requirements.

Kessler said today in a 26-page opinion the tobacco companies have offered “no facts which would warrant revisiting the findings of this court—findings that were affirmed by the Court of Appeals.” The judge also said she has “ample expertise” to craft court-ordered remedies that comply with anti-racketeering laws.

FDA regulation, the judge said, targets issues of concern to public health officials. Kessler said her focus is any violation of federal racketeering laws. “FDA rulemaking is not designed to prevent future racketeering activity covered” by the Racketeer Influenced Corrupt Organization Act, the judge said.

The defendants' fear of a clash between the judiciary and Congress, the judge said, is “premature and speculative.” In the event, she said, that the FDA issues regulations that conflict with a court order, the government can ask the court to amend the injunction.

Kessler noted the defendant companies are challenging in a separate suit and in administrative proceedings many of the provisions of the Tobacco Control Act. A case is pending in the U.S. Court of Appeals for the 6th Circuit.

“It is difficult to understand how defendants can argue that the Tobacco Control Act will produce their future compliance with RICO when they do not believe that a great portion of the Act should apply to them at all,” Kessler said.

Lawyers for the tobacco companies in March filed court papers (PDF) urging Kessler to vacate her final judgment following the Tobacco Control Act, which addressed the design, manufacturing, marketing and distribution of tobacco.

“This newly established federal regulatory framework extinguishes the court’s jurisdiction over this case in whole or, at least, in significant part,” Wilkinson said in court papers that defendant companies each signed onto. (Gibson, Dunn & Crutcher and Winston & Strawn also represent Philip Morris and Altria. Jones Day represents R.J. Reynolds.)

The new regulation, the tobacco lawyers said, “eliminates any reasonable likelihood that defendants will engage in future joint racketeering activity of the type this court found and on which it premised its forward-looking injunctive relief.”

“The FDA possesses unique regulatory expertise in matters of public health,” the attorneys said. “If the court were to exercise overlapping regulatory authority with respect to tobacco products, there would be an unacceptable risk of inconsistent regulatory determinations that would impair the FDA’s role as the ‘primary federal regulatory authority’ in this area."

DOJ Wants Reduced Sentences for More Drug Offenders

The Justice Department is pitching a proposal that would retroactively apply crack sentencing laws to thousands of offenders whose conduct occurred before new guidelines took effect reducing sentences for many inmates.

Last August, President Obama signed into law a measure that reduced the 100-to-1 sentencing disparity between crack and powder cocaine, a move Justice officials supported.

Today, Attorney General Eric Holder Jr. and Assistant Attorney General Lanny Breuer in separate remarks said the department favors going one step further—the retroactive application of that guideline to offenders whose conduct occurred before August. Such a move could benefit more than 12,000 prisoners.

Holder, addressing the U.S. Sentencing Commission in downtown Washington, said the Fair Sentencing Act “is being successfully implemented nationwide, achieving its central goals of promoting public safety and public trust and ensuring a fair and effective criminal justice system."

“[W]e believe the imprisonment terms of those sentenced pursuant to the old statutory disparity—and who are not considered dangerous drug offenders—should be alleviated to the extent possible to reflect the new law,” Holder said in prepared remarks.

The commission estimates that the average reduction in sentence for eligible offenders would be 37 months. Several groups, including the American Bar Association, National Association of Criminal Defense Lawyers and the American Civil Liberties Union, provided testimony to the commission in support of retroactive application of the crack sentencing guideline.

Holder called the sentencing issue "deeply personal to me,” saying that as a trial judge in Washington in the 1980s and 1990s he saw the “devastating effects of illegal drugs on families, communities and individuals.”

In downtown Baltimore, Breuer raised retroactivity in a speech at the national seminar for federal public defenders.

“We support retroactivity of the sentencing guidelines amendment to this extent because our goal is a sentencing policy that is tough, and enhances public safety, while at the same time it promotes public trust and confidence in our criminal justice system,” Breuer said.

Dangerous offenders, Holder said, including inmates who used weapons during the commission of a crime, should be prohibited from receiving retroactivity.

In his remarks, Holder dismissed concern that the sentencing commission doesn’t have jurisdiction to make the guideline retroactive without the a directive from Congress. Holder said today the commission is “well within its authority” to make the amendment retroactive.

The acting federal prisons director, Thomas Kane, who addressed the sentencing commission today, said the corrections system must be ready to quickly and accurately recalculate sentences if retroactivity is applied.