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DOJ Inspector General Plans to Resign

Glenn Fine, a top internal watchdog at the U.S. Justice Department for a decade, has submitted letters of resignation, saying he wants to "pursue new professional challenges."

Fine, 54 and pictured above, will step down as DOJ's inspector general effective Jan. 28, according to copies of letters addressed to President Barack Obama and Attorney General Eric Holder Jr. The letters are dated today.

His tenure has been marked recently by high-profile investigations into allegations of misconduct by former Attorney General Alberto Gonzales and his staff. Together with DOJ’s other internal watchdog, the Office of Professional Responsibility, Fine’s staff dug into the firings of U.S. attorneys, the shifts in the department’s Civil Rights Division and other topics.

Even aside from those scandals, the position of DOJ inspector general is highly sensitive. The office oversees audits and investigations of potential waste, fraud and abuse amid the billions of dollars the department spends each year.

“The Department, the Congress, and the public have received great value from the work of the OIG over the years, and it has been the high point of my professional career to work with so many dedicated public servants in the OIG,” Fine wrote to Holder (PDF). “I will always be grateful for the opportunity to have served as the Inspector General at the Department of Justice.”

Obama is expected to nominate a successor, who will need Senate confirmation. No acting inspector general has been named. Cynthia Schnedar is Fine’s deputy, and he praised her as a “strong” deputy in his letter to Holder.

DOJ Targets Online Sale of Counterfeit Goods

More than 80 Web sites allegedly selling counterfeit goods are temporarily out of business this morning following a national intellectual property enforcement action targeting the sale and distribution of fake merchandise, Justice Department officials said today.

Federal authorities obtained orders seizing the domain names of 82 Internet retail sites that were selling sports equipment, shoes, handbags, sunglasses, DVDs, music and software, according to the Justice Department. The Web sites include "burberryoutlet-us.com," "tieonsale.com," "handbagcom.com" and "coachoutletfactory.com." A full list of the domain names is here.

“With today’s seizures, we are disrupting the sale of thousands of counterfeit items,” Attorney General Eric Holder Jr. said in prepared remarks today. “We are cutting off funds to those looking to profit from the sale of illegal goods and exploit the ingenuity of others.”

The undercover sting targeted retailers the authorities suspected were selling and distributing counterfeit goods. If an item was confirmed as a fake, a U.S. magistrate judge issued a seizure order for the domain name. DOJ officials said the enforcement action follows an earlier effort, announced in June, in which seizure warrants were executed against nine Web sites.

In his remarks, Holder called enforcement of intellectual property rights a top priority at the Justice Department. “Make no mistake: Intellectual property crimes are not victimless, and they are not risk-free,” the attorney general said.

Nine U.S. Attorney Offices, including offices in Washington, Manhattan, New Jersey and Florida, participated in the investigation. Seventeen domain names were seized in the District of Columbia, U.S. Attorney Ronald Machen Jr. said.

In a statement, U.S. Senate Judiciary Chairman Patrick Leahy (D-Vt.) touted pending legislation that would give the Justice Department power to seek an injunction against a domain name of an Internet site "dedicated to infringing activities" even when the domain name is not registered in the United States.

"We can no longer sit on the sidelines while American intellectual property is stolen and sold online using our own infrastructure," Leahy said in a statement. "This costs American jobs, hurts our economy, and puts consumers at risk."

This Week in The National Law Journal

Legal Times 150: Our annual look at the largest law offices in D.C. shows that even with a seeming cornucopia of new work provided by financial and health care reform legislation, 93 of the 150 firms shed lawyer jobs.

Borrowed Time: Jenna Greene reports on the Equal Employment Opportunity Commission's race against the clock, with recess appointees in its leadership, and an ambitious agenda aided by a boost in its budget.

Restructuring Report: Our special report on bankruptcy and corporate restructuring highlights what struggling cities are doing, as well as bankruptcy alternatives such as state insolvency laws.

Foreign Policy: Law schools are thinking globally these days with new international programs, while foreign law schools are also looking for accreditation here, Karen Sloan reports in this story.

And in Inadmissible: Items on wrangling over enforcement of the Foreign Corrupt Practices Act, Republicans flexing their muscles in the House, new U.S. attorney hires in the fight against IP piracy, and more hurdles in the Indian trust litigation.

The Morning Wrap

Let's Make a Deal: The publication of a quarter-million State Department cables over the weekend revealed the pressure American diplomats put on other countries to accept relocated Guantánamo Bay prisoners, The New York Times reports. In one example, Slovenia was told to take a prisoner if it wanted to meet with President Obama. The cables also show the global distress over Iran and Obama's push for harsh sanctions. The Wall Street Journal reports the cables could prove embarrassing to the United States and its allies.

NY Uptick: The New York Law Journal reports law firms in New York have outperformed their peers nationwide so far this year. A Wells Fargo Wealth Management survey found firms in New York and Southern California have shown 5 to 6 percent revenue increases while firms nationally have seen flat growth.

Debt Buying Boom: The Wall Street Journal reports a surge in lawsuits against people who aren't paying their bills as souring loans and credit-card obligations have become cheaper to buy.

Prohibition: The Food and Drug Administration is cracking down on caffeine-infused alcoholic drinks, including "Moonshot '69," whose co-founder calls the regulatory push "prohibition in 2010," The New York Times reports.

Cyber Monday: As shoppers click their way around web sites for holiday bargains on this Cyber Monday, Attorney General Eric Holder Jr. is expected today to announce a major online intellectual property enforcement action. U.S. Attorney Ronald Machen Jr. of the District and Immigration and Customs Enforcement Director John Morton are expected to join Holder this morning at the U.S. Justice Department.

Top Texas Advocate Dies in Plane Crash

Gregory Coleman, the former Texas solicitor general who argued in two of the most important U.S. Supreme Court cases in recent years, died Tuesday in a plane crash. Coleman was a former law clerk to Justice Clarence Thomas. 

A partner in the Yetter Coleman firm of Austin and Houston, Coleman was piloting a small plane that crashed in fog in Destin, Florida. The flight related to family holiday plans, and his mother-in-law and and his wife's uncle who were passengers also died in the crash.

Our sibling publication Texas Lawyer has more on the story and reaction from shocked friends and colleagues including current Texas SG James Ho, who called it a "deeply sad day."

A soft-spoken lawyer with a calm manner that worked well with the justices, Coleman, 47, argued at the high court just last month in Skinner v. Switzer, representing a Texas prosecutor in a dispute over DNA testing for a death row inmate.

But Coleman was best known for arguments in two 2009 cases, Northwest Austin Municipal Utility District No. 1 v. Holder, an important test of the Voting Rights Act, and Ricci v. DeStefano, a Connecticut affirmative action case. He won both cases in decisions that were viewed as victories for the Court's dominant conservative majority, though they were not as expansive as some conservatives hoped.

Coleman participated in The National Law Journal's annual Supreme Court review panel discussion in D.C. in 2009, soon after his victories. In the voting rights case Coleman won for his client, a small utility district, the ability to escape from federal scrutiny under the law for its election practices. But the justices did not go so far as to declare the law unconstitutional.

"A lot of commentators have asked, well, were you disappointed that you didn't get Section 5 of the Voting Rights Act struck down?" Coleman said during the NLJ discussion. "The answer is clearly no. Yes, we asked for that. I do think the argument is right, but this is the first case that the Supreme Court has had in quite some time where any part of Section 5 or the apparatus surrounding it has been challenged. Three years ago, nobody was talking about Section 5 or whether its application to various parts of the country might be unfair. People are talking about that now. There are commentators on both sides of the philosophical aisle [who] have been suggesting that Congress really ought to rethink some of what it did in 2006. Maybe it should make some changes."

Happy Thanksgiving from The National Law Journal

The National Law Journal will be taking a few days off from posting to the BLT in honor of the Thanksgiving holiday. We hope you are able to enjoy a day or two away from the office, and we will resume publishing on Monday, Nov. 29.

Farm Groups Urge High Court to Boost Protection for Small Producers

With food at the top of people's minds on the eve of Thanksgiving, a coalition of 55 farming, ranching and consumer groups filed an amicus brief with the U.S. Supreme Court, protesting allegedly anticompetitive practices by major food producers.

The groups want the high court to review Terry v. Tysons Farms, a case brought by a Tennessee chicken farmer against the Springdale, Ark.-based poultry giant.

The farmer, Alton Terry, had a contract to raise chickens for Tysons, but when he assumed a leadership role in a newly-formed regional poultry association, he alleged that Tysons illegally retaliated against him, ultimately terminating his contract.

Terry sued, charging that Tysons violated the Agricultural Fair Practices Act of 1967 and the Packers and Stockyards Act.

In 2009, the U.S. Court of Appeals for the 6th Circuit upheld a lower court decision dismissing the case and awarding attorney fees to Tysons. The company was represented by Jay Jorgensen of Sidley Austin, while Terry was represented by Cynthia Noles Johnson of Johnson Law P.C. in Cohutta, Ga. Justice Department lawyers Jonathan Levy and Michael Raab filed an amicus brief on behalf of the U.S. Department of Agriculture supporting Terry.

In an issue of first impression before the 6th Circuit, the court found that Terry’s case failed because the plaintiff “must allege an adverse effect on competition in order to state a claim” under the Packers and Stockyards Act. The court also noted that this question has come before seven of its sister circuits, and all reached the same conclusion.

“The district court properly determined that although Terry asserts a number of wrongful acts by Tyson, his complaint does not allege that Tyson's actions had an anticompetitive effect,” the court found.

Now, 55 groups representing more than 400,000 farmers want the Supreme Court to reverse this decision and interpret the statute more broadly.

"The Terry case is critical to fulfilling Congress' intent that the Packers and Stockyards Act serves to protect farmers from abusive practices by dominant processors,” said David Balto, a Washington-based solo practitioner and former Federal Trade Commission official who is representing the farm groups. “Unfortunately, some courts have mistakenly concluded that in order to prevail under the PSA, a farmer must demonstrate an antitrust violation. That conclusion would make those Congresssmen turn over in their graves. The PSA was passed because the antitrust laws had failed to protect farmers and Congress recognized the need for a separate statute to protect farmers."

Zuckerman: Keep Fee Dispute in Federal Court

Zuckerman Spaeder argues in a reply brief submitted to the U.S. Court of Appeals for the D.C. Circuit that its dispute with a former client over allegedly unpaid fees should not be moved into arbitration because the client has been an active participant in litigation stemming from the dispute.

Zuckerman alleges that James Auffenberg Jr. has failed to pay for work the firm performed for him after he was indicted in 2007 for allegedly dodging millions in federal taxes. After winning an acquittal for Auffenberg last year, Zuckerman filed a suit against him, alleging in its April 27, 2009, complaint that he hadn’t paid more than $834,000 in legal fees.

Auffenberg has argued throughout the case that Zuckerman told him he would have to pay no more than $1.5 million for the firm to represent him but then sent him a bill for an additional $834,299 after the acquittal.

In January, almost a year into the litigation, Auffenberg, who is being represented by Thomas Duckenfield III and David Holzworth of Yoss LLP, moved to stay the case pending arbitration before the D.C. Attorney/Client Arbitration Board. D.C. Bar rules generally require lawyers to arbitrate fee disputes at the client's request.

Last month, Auffenberg argued in his brief before the D.C. Circuit that the trial court erred by denying his motion for arbitration because, despite the fact that he did not mention arbitration in his initial answer to Zuckerman’s lawsuit, he “communicated his intention to arbitrate early and often.” He also draws a distinction between the litigation that progressed over his counterclaim of malpractice and the effort to move the case into arbitration.

But Zuckerman contends that Auffenberg’s argument that he had informed the firm of his intent to move the case into arbitration was “simply untrue.”

Francis Carter, a Zuckerman partner handling the dispute, cites in the firm’s Nov. 22 brief several benchmarks in the fee dispute litigation at which point Auffenberg could have requested arbitration but failed to do so. Carter cites as examples Auffenberg’s three answers to the initial complaint and its subsequent amended complaints, the joint request for a 14-month case schedule, his participation in mediation and his decision to file and oppose motions to dismiss the case.

Carter also notes that Zuckerman has incurred “substantial” costs as a result of the litigation and carrying the allegedly outstanding fee and would be “prejudiced by restarting the litigation before the [Attorney/Client Arbitration Board].”

According to Carter’s brief, the first time Auffenberg said he was considering arbitration was in discussing a Dec. 11, 2009, offer by Magistrate Judge John Facciola of the U.S. District Court for the District of Columbia to personally arbitrate the dispute. Auffenberg didn’t state that he planned to file an ACAB petition until Jan. 27, the brief says. By then, the case had been litigated for almost a year.

“Auffenberg refers on many occasions to the federal policy favoring arbitration. To ‘favor’ arbitration, however, does not require turning a blind eye to conduct inconsistent with the arbitration right. Indeed, the preservation of arbitration as a robust alternative to litigation requires a firm rejection of the gamesmanship practiced here,” Carter writes in the brief.

Auffenberg has until Dec. 6 to file his reply. Final briefs in the case are due on Dec. 27. The D.C. Circuit has not set the case for oral argument.

Ex-Republican Congressional Committee Official 'Deeply Regrets' Stealing $844K

Lawyers for a former National Republican Congressional Committee treasurer who is charged with stealing hundreds of thousands of dollars to fund a lavish lifestyle are asking a federal judge to impose a 37-month prison sentence.

The defendant, Christopher Ward, pleaded guilty in September in the U.S. District Court for the District of Columbia to a charge that he stole more than $844,000 from March 2001 to December 2007. Ward was charged with interstate transportation of stolen money.

Prosecutors allege that Ward, who became the NRCC treasurer in 2003, wrote checks to himself and made unauthorized wire transfers, taking money from the NRCC and from political committee clients. Ward, a Maryland resident, ran a consulting firm on the side that specialized in Federal Election Commission regulations.

Ward admitted to his crimes in 2008 when questions arose about his failure to commission a required audit, Ward’s attorney said. Ward’s sentencing is scheduled for Dec. 2 in front of U.S. District Judge Colleen Kollar-Kotelly. The sentence—37 months behind bars and three years of supervised release—was arranged through a plea deal that is subject to a district judge’s approval.

A lawyer for Ward, Wilmer Cutler Pickering Hale and Dorr partner Howard Shapiro, said in court papers filed Tuesday that Ward has already paid a high price for his crimes. Ward, according to Shapiro, lost his job, wife, home and all of his assets. Shapiro said Ward owes $700,000 to the IRS. Ward’s divorce settlement calls for a $120,000 payment to his ex-wife and $3,650 a month in child support. The attorney said Ward "deeply regrets" stealing money.

“Mr. Ward takes full responsibility for the serious crime that he has committed and deeply regrets the violation of trust to his employer and clients,” said Shapiro, chair of Wilmer's litigation department. “Since his wrongful conduct came to light, Mr. Ward has fully cooperated with the government’s investigation and has sought to make amends for his mistakes.”

Ward faces a guideline range of between 37 months and 46 months, court records show. Shapiro said in court papers that the 37-month sentence is consistent with other fraud and white-collar cases “that resulted in a loss amount similar to or far more than in Mr. Ward’s case.”

Federal prosecutors support the 37-month prison term, calling it an appropriate sentence that reflects the seriousness of the crime and gives credit to Ward for his cooperation with the investigation of the offense.

Ward, according to the government, stole to fund a “lavish” lifestyle. In one 14-month period, Ward spent more than $65,000 for a country club membership in Maryland. He spent tens of thousands of dollars on vacation home rentals on Martha’s Vineyard. Ward, according to prosecutors, stole to “treat himself and others to unnecessary luxuries that he could not otherwise afford.”

One aggravating factor in the case is the nature of the victims, political committees and campaigns “engaged in political debate and the electoral process,” government lawyers said in court papers filed Tuesday.

“Stealing from these organizations did not merely undermine their political efforts,” assistant U.S. attorney Jonathan Haray said. “By stealing money obtained from political contributions, the defendant deprived individual donors of the opportunity to engage in political speech.”

In Health-Care Case, Lawyers Spar Over Implications for Medicaid

The state attorneys general who are suing over the Democrats' new health care law hope to make a big statement about Congress' power under the Constitution's commerce clause. But their case also involves a more bureaucratic question about the law's effect on Medicaid.

Lawyers battle over that question in a new round of briefs filed Tuesday. The mostly Republican group of attorneys general argues the new law transforms the Medicaid program, which is intended to provide health care to the needy, in a way that violates Congress’ spending power.

“The federal-state Medicaid partnership agreement did not afford plenary power to the federal government to make any Medicaid revision that it wished irrespective of the States’ expectations, or to bully the States with threats to remove them from the program for failing to accept transformative and harmful new conditions,” the group’s latest brief argues.

The U.S. Justice Department argues in its latest brief that Medicaid remains voluntary for states. The brief also says that, although Congress has wide latitude to remake the program, the new health care law “leaves [the] core Medicaid framework intact. Its key change — the expansion of eligibility to childless adults below 133 percent of the federal poverty level — is analytically indistinguishable from prior expansions.”

The dispute over Medicaid is important because it’s one of the issues the states are using to argue they have standing to bring their challenge. In fact, the Justice Department’s brief says nine of the 20 states have no standing to request summary judgment because they “submit no evidence of the allegedly coercive effect of the federal Medicaid grant at stake.”

Both sides in the case have asked Senior Judge Roger Vinson for summary judgment in their favor. Oral argument on their motions is set for Dec. 16.