The BLT: The Blog of Legal Times

Thompson Hine Slaps E-Cigarette Company with Breach of Contract Suit

Thompson Hine has filed a $480,000 lawsuit against a Florida-based electronic cigarette company and its president, alleging that they failed to pay for work the firm performed on a suit against the Food and Drug Administration. The firm’s complaint also alleges that Elicko Taieb, the majority owner and president of Smoking Everywhere Inc., misappropriated funds from his company for personal use without first paying the firm for its legal work.

Thompson Hine’s complaint, filed on Nov. 3 in the U.S. District Court for the District of Columbia, contends that Taieb hired the firm on March 19, 2009, to advise the company on the sale and distribution of its electronic cigarettes. According to a March 17 engagement letter, Taieb agreed to pay Walt Linscott, an Atlanta-based Thompson Hine partner, $605 per hour and to pay a retainer of $7,500. The engagement letter also says that rates for other Thompson Hine lawyers and legal assistants would range from $185 to $650 per hour.

On April 28, 2009, the complaint says, Thompson Hine filed suit in Washington against the FDA on behalf of Smoking Everywhere, seeking an injunction that would bar the agency from halting the importation of electronic cigarettes into the United State. The firm ultimately won a preliminary injunction against the FDA.

The next month, Smoking Everywhere stopped making payments to Thompson Hine, eventually racking up $375,250 in unpaid fees, the firm alleges in the complaint. The complaint was filed by Thomas Feher, a Cleveland-based Thompson Hine partner.

Meanwhile, Taieb entered into a second retainer agreement with the firm to have Thompson Hine represent him and his company in an action brought by the attorney general of Oregon alleging that Taieb and his company violated Oregon’s Unlawful Trade Practices Act.

Taieb and Ray Story, vice president of Smoking Everywhere, signed a second engagement letter for the Oregon matter, in which they agreed to pay Kip Schwartz, a Washington-based Thompson Hine partner, $545 per hour and Dennis Southard and Eric Heyer $420 and $300 per hour, respectively. Southard is of counsel to the firm and Heyer is an associate. Taieb and Story also agreed to pay a second retainer of $10,000.

The complaint says Thompson Hine was able to have Taieb dismissed from that lawsuit and to have portions of the complaint against Smoking Everywhere dismissed.

The complaint contends that Taieb failed to pay $105,494 in fees related to the Oregon matter.

In addition to alleging that Taieb has failed to pay for the fees the firm says it owes, the complaint says that he “misappropriate[ed] substantially all of the revenues and assets of SE to his personal use in violation of his duties to the company and for purposes of defrauding creditors.” The complaint alleges one count of breach of contract against Taieb and another for breach of contract against Smoking Everywhere. The complaint also alleges three counts of fraudulent transfer.

According to court records, Taieb has not yet responded to the firm’s complaint and no attorney has entered an appearance on his behalf to date. Taieb could not be reached for comment. Judge Rosemary Collyer is presiding over the case.

D.C. Firms Team to Put Senior Lawyers to Work on Pro Bono Projects

The D.C. Bar Pro Bono Program and the D.C. Access to Justice have teamed to launch a new project that is designed to put senior lawyers who are winding down their practices to work on pro bono efforts.

The project, dubbed the Senior Attorney Initiative for Legal Services or SAILS Project and chaired by Marc Fleischaker of Arent Fox (pictured right), asks participating law firms to implement programs in which older attorneys can ply their legal skills on pro bono projects across Washington. Participating firms are reviewing their billable hour policies to ensure that they support senior lawyer efforts.

The idea for SAILS grew out of a January meeting of firm chairs and managing partners that had been called by James Sandman, chair of the D.C. Bar Pro Bono Committee, and Peter Edelman, chair of the D.C. Access to Justice Commission. During the meeting, firm leaders discussed ways to help meet the growing need for legal services among Washington’s poor. That need was exacerbated by the recession, which reduced the amount of funding legal services providers were able to raise.

According to a report released last year by the D.C. Access to Justice Commission and the D.C. Consortium of Legal Services Providers, that the legal services community lost approximately 25% of its funding due to the recession, leading to the loss of 12% of attorneys and nearly 40% of critical non-attorney staff.

When the idea came up during the meeting for senior lawyers to play a larger role in pro bono efforts, Fleischaker, then-chair of Arent Fox, volunteered to organize the project and serve as its chair.

“There is a tsunami of lawyers entering their 60s and heading toward retirement. We thought this would be a great way for them to use their legal skills while helping to meet a growing need for legal services,” Fleischaker said.

Fleischaker said from there he began reaching out to some of the District’s largest firms to gauge the interest in the program. “We received a lot of enthusiastic support among firm leaders,” Fleischaker said.

So far, 11 firms have agreed to take part in the project: Arent Fox; Arnold & Porter; Covington & Burling; Crowell & Moring; Dickstein Shapiro; DLA Piper; Hogan Lovells; McDermott Will & Emery; Skadden, Arps, Slate, Meagher & Flom; Steptoe & Johnson; and Zuckerman Spaeder. Arent Fox has changed its billable hour requirements for senior lawyers to allow pro bono work done as part of SAILS to count towards their mandatory minimums.

Senior lawyers from two of those firms, Arent Fox and McDermott, are already working together with two legal services providers on a project to help homeless and low-income veterans in Washington.

Fleischaker said he is working with other legal service providers to match specific projects with firms participating in SAILS. He said he hopes to have all of the participating firms matched with a legal service provider by Jan. 1. Fleischaker added that he hopes other firms in Washington will want to take part in SAILS.

Both the D.C. Bar and the D.C. Access to Justice Commission have pledged to provide Fleischaker with a staff to help organize the project and to help answer questions.

If the program is successful in Washington, Edelman said that it has the potential to spread to other jurisdictions.

“Washington is the best place in the country to launch something like this, given our long history of pro bono service. But there are a lot of other places where this could really be effective,” Edelman said. “It’s a very exciting project to be a part of.”

National Law Journal photo by Diego M. Radzinschi.

D.C. Appeals Court Rejects Release of Guantanamo Prisoner

A federal appeals court in Washington today sided with the Justice Department in vacating a judge's order to release a Guantánamo Bay detainee who once swore allegiance to al-Qaida but never fought for the group.

The government sought to keep Mohammedou Ould Salahi detained on the ground that his oath of allegiance to al-Qaida made him a part of the organization at the time of his capture. DOJ lawyers abandoned claims that Salahi aided the September 11 terrorist attacks.

A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit unanimously agreed with DOJ, reversing a trial judge’s ruling and remanding the case for further proceedings in the U.S. District Court for the District of Columbia. The court refused to outright direct the trial judge to deny Salahi’s habeas petition.

The panel judges—Chief Judge David Sentelle heard the case with judges David Tatel and Janice Rogers Brown—said additional fact-finding is necessary to determine whether Salahi was a “part of” al-Qaida. Tatel, writing for the appeals court, said several recent opinions in detainee cases offer guidance that the trial judge didn’t have at the time of his ruling. The D.C. Circuit opinion is here.

Salahi was captured in Mauritania in November 2001 and has been held at Guantánamo since 2002. Government lawyers allege Salahi helped al-Qaida recruit, host leaders and execute money transfers.

In the trial court, DOJ lawyers relied heavily on statements Salahi made to interrogators. Salahi, who alleged that interrogators abused him, testified during an evidentiary hearing. Senior Judge John Robertson, who has since retired from the bench, cited “extensive and severe mistreatment” in giving little weight to statements that lacked independent corroboration, the appeals court said.

DOJ lawyers said Salahi has the burden to prove he cut ties with al-Qaida after swearing allegiance to the group in 1991. That presumption may be justified in some scenarios, the appeals court said, but not in Salahi’s case. At the time Salahi swore allegiance, the court noted, the United States and al-Qaida shared the same goal to overturn Afghanistan’s communist government.

The appeals court said it was concerned the trial judge may have evaluated Salahi’s oath to al-Qaida in isolation. Also, the court said one problem with the trial court ruling is that “it treats the absence of evidence that Salahi received and executed orders [from al-Qaida] as dispositive.”

In today’s ruling, the circuit judges pose a series of question that could become central to additional hearings in the case. Among them: Even if Salahi did not receive express orders from al-Qaida, was there a tacit understanding that he would refer prospective fighters to the organization? Can the trial judge infer, based on Salahi’s ties to al-Qaida, that he remained a trusted member of the group?

“With answers to questions like these, which may require additional testimony, the district court will be able to determine in the first instance whether Salahi was or was not ‘sufficiently involved with [al-Qaida] to be deemed part of it,’” Tatel wrote in the opinion.

Murkowski Hires Patton Boggs' Ginsberg

Patton Boggs partner Benjamin Ginsberg has found his way into one of the latest disputes over election results — this time advising U.S. Sen. Lisa Murkowski's write-in effort.

Murkowski (R-Alaska) is poised to win re-election, depending on the outcome of more than 83,000 write-in votes. Though she lost the Republican primary in August to Joe Miller, a former federal magistrate judge, Miller received about 70,000 votes on Election Day.

Ginsberg (pictured above) has lots of experience examining contested ballots. He advised Sen. Norm Coleman (R-Minn.) in Coleman’s failed recount bid two years ago, and he was part of George W. Bush’s legal team during the 2000 Florida recount.

That doesn’t mean, though, that Alaska’s process will be similarly drawn-out or uncertain. “To refight the last recount is a fatal error,” Ginsberg said in an interview Monday, speaking generally. He did not immediately respond to a request for comment today.

Miller isn’t giving up, and his campaign’s latest statement takes aim at Ginsberg. It criticizes Murkowski for hiring “high priced election lawyers” and says Ginsberg “played a key role in the ‘hanging chads’ Florida recount of the 2000 election.” The statement adds that thousands of absentee ballots still need to be counted and that Miller is assembling a legal team.

Click here for an Am Law Daily wrap-up of some other post-election disputes.

National Law Journal photo by Diego M. Radzinschi.

Justice Stevens and the Ground Zero Mosque

As a sitting Supreme Court justice, John Paul Stevens was attentive to the symbolic meaning of things. As recently as April, in the "cross in the desert" case Salazar v. Buono, Stevens wrote, "Making a plain, unadorned Latin cross a war memorial does not make the cross secular. It makes the war memorial sectarian."

On Thursday the now-retired justice delivered a speech reflecting on the symbolism of another war memorial and on the recent controversy over building an Islamic cultural center that includes a mosque near ground zero in New York City. In the process, the World War II veteran confessed that he too had once reacted emotionally when he saw Japanese tourists visiting the USS Arizona memorial at Pearl Harbor, where he served for more than two years during the war.

It was in 1994, more than 50 years after the attack on Pearl Harbor, but still Stevens said that after seeing the Japanese tourists there, "several thoughts flashed through my mind." He recalled thinking, "Those people don't really belong here. We won the war, they lost it. We shouldn't allow them to celebrate their attack on Pearl Harbor."

But on further reflection, Stevens said he realized that the tourists might have been there for a range of reasons, including to reflect  on "how horrible all wars are to all who participate in them." Stevens added, "Most significantly, I realized that I was drawing inferences about every member of the tourist group that did not necessarily apply to any single one of them. We should never pass judgment on barrels and barrels of apples just because one of them may be rotten."

Stevens drew a connection from his experience at the USS Arizona memorial to those who react emotionally and negatively to Muslims building a mosque near Ground Zero. "The Japanese tourists were not responsible for what some of their countrymen did decades ago; the Muslims planning to build the mosque are not responsible for what an entirely different group of Muslims did on 9/11."

Stevens was speaking before the National Japanese American Memorial Foundation on the 10th anniversary of the creation of a memorial -- which stands not far from the Supreme Court -- that recognizes the contribution of Japanese Americans to the U.S. war effort in World War II, while also calling attention to the internment of Japanese Americans during the war, a program the Supreme Court upheld.

Stevens called that feature of the memorial "a monument to stupidity" because thousands of American citizens were held in camps without any due process and without any evidence that it was needed.

"Guilt by association is unfair," Stevens concluded. "The monument teaches us that it is profoundly unwise to draw inferences based on a person's membership in any association or group without first learning something about the group. Its message is a powerful reminder of the fact that ignorance -- that is to say, fear of the unknown -- is the source of most invidious prejudice." 

The Morning Wrap

Diversity Dive: The National Association for Law Placement's latest diversity statistics showed the percentage of both minority attorneys and women attorneys declined slightly at firms during 2010, The National Law Journal reports. It was the first time in the 17 years the association has collected data that diversity declined.

Unsolved Mystery: Authorities in Mexico recovered 18 bodies from a mass grave in a coconut grove on the rural outskirts of Acapulco, perhaps solving the mystery of the disappearance of 20 men more than a month ago, The New York Times reports.

Over Exposure: A district attorney in Colorado is accused of exposing himself to three women in his office. The prosecutor, Myrl Serra, is charged with felony unlawful sexual contact, extortion and indecent exposure.

Facebook Status Change: A Maryland woman who was kicked off Facebook for reportedly "friending" people she didn't know lost her bid to sue the social networking site. Karen Beth Young alleged Facebook violated her First Amendment rights.

Tick Tock: Just a friendly reminder that daylight savings time ends Sunday, Nov. 7 at 2 a.m. Oh, snow has already fallen in the North Carolina mountains. Still time for pumpkin pie.

Oil Services, Freight Companies Settle FCPA Claims for $236 Million

The Justice Department and the Securities and Exchange Commission today announced sweeping settlements against seven oil services and freight forwarding companies for bribing foreign officials, with total penalties of $236 million.

The companies allegedly bribed customs officials in more than 10 countries to circumvent local rules and regulations, in violation of the Foreign Corrupt Practices Act. The bribes covered everything from avoiding customs duties to expediting imports to extending drilling contracts to lowering tax assessments.

Panalpina World Transport and its U.S. subsidiary admitted in documents filed in U.S. District Court for the Southern District of Texas to bribing officials in countries including Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia and Turkmenistan on behalf of customers in the oil and gas industry.

Panalpina admitted that between 2002 and 2007, it paid thousands of bribes totaling at least $27 million to foreign officials. The payments were falsely recorded as legitimate business expenses in the customers’ corporate books.

The customers including Shell Nigeria Exploration and Production, Transocean Inc., and Tidewater Marine International admitted they approved of or condoned the payments, according to the DOJ.

Panalpina agreed to pay a criminal fine of $71 million and disgorgement of $11 million. The company was represented by Richard Dean and Douglas Tween of Baker & McKenzie. Shell Nigeria will pay a criminal fine of $30 million and disgorgement of $18 million. The charges stem from about $2 million paid to subcontractors with knowledge that the money would go to bribing Nigerian officials.

Offshore driller Pride International Inc., represented by Martin Weinstein of Willkie Farr & Gallagher, also spent about $2 million on bribes between 2001 to 2006, according to the SEC. The company will pay a $33 million criminal fine and $24 million in disgorgement and interest.

Tidewater Inc. will pay a $7 million criminal penalty and $8 million in disgorgement.

Transocean’s criminal penalty is $13 million, with another $7 million in disgorgement.

Noble Corp. will pay a $3 million criminal fine and disgorgement of $6 million.

Global SantaFe Corp. did not pay a criminal fine, but did agree to an injunction, $4 million disgorgement and a civil penalty of $2 million.

The DOJ case was prosecuted by Senior Trial Attorney Stacey Luck of the Criminal Division’s Fraud Section, with assistance from Assistant Chief Adam Safwat.

At the SEC, the investigation was conducted by Jason Rose, Michael King, Tracy Price, Denise Hansberry, Laura Josephs, Linda Moran, Amy Friedman, Mathew Hefferan, Moira Roberts, Sharan Custer, Ernesto Palacios and Chedly Dumornay.

Obama Names the Just-in-Case DOJ Leadership

Neil MacBride, the U.S. attorney for the Eastern District of Virginia, is now first in line to serve as attorney general in the event that no one at the U.S. Justice Department is able to do so.

In an executive order signed today, President Obama switched up the line of succession at the Justice Department to add MacBride and two other U.S. attorneys. The line of succession would apply only in the most extreme of circumstances, when the attorney general, the deputy attorney general, the associate attorney general and others in the DOJ leadership are unable to serve because of death or other circumstances.

MacBride was an associate deputy attorney general before he became U.S. attorney, and he also worked for then-Sen. Joe Biden (D-Del.). After him in the line of succession are Todd Jones, the U.S. attorney for the District of Minnesota, and Dennis Burke, the U.S. attorney for the District of Arizona. Jones chairs a committee of U.S. attorneys who advise Attorney General Eric Holder Jr.

Under a previous order signed in 2008 by President George W. Bush, the U.S. attorney for the District of Maryland, Rod Rosenstein, was first in the line of succession outside the DOJ leadership.

Judge Orders Review of Polar Bear’s 'Threatened' Designation

A federal judge today ordered the government to review its decision in 2008 to list the polar bear as a threatened species, a designation that kicked off a flurry of suits by animal rights groups that want greater protection and organizations that are opposed to the listing.

The U.S. Fish and Wildlife Service found that projected habitat losses qualify the polar bear as a threatened species, a designation that affords protection under the Endangered Species Act. The government did not identify the polar bear as endangered, however, because the species is abundant. There are about 20,000 to 25,000 polar bears worldwide, according to court records.

The federal government has failed to acknowledge ambiguities in the definition of an endangered species, Judge Emmet Sullivan of the U.S. District Court for the District of Columbia said today in his ruling.

Sullivan remanded the polar bear dispute to the Interior Department for further proceedings. The judge did not rule on the merits of the listing.

In a 26-page ruling that follows a hearing last month, Sullivan grappled with language in the Endangered Species Act but concluded that the government has failed to adequately explain the legal basis for listing the polar bear as threatened.

The judge dismissed the government’s claim that to be “in danger of extinction” a species must be in imminent harm. Sullivan said the “overall structure” of the act “suggests the definition of an endangered species was intentionally left ambiguous.”

Global Warming FOIA Suit Against NASA Heats Up Again

In court documents filed last night, the Competitive Enterprise Institute argues that NASA has gone out of its way to avoid turning over records that show the agency reverse-engineered temperature data to better make the case that the planet is becoming warmer.

CEI, which is being represented by Gibson, Dunn & Crutcher’s Andrew Tulumello, argues in a pleading filed in Washington federal court that NASA’s request for summary judgment in the Freedom of Information Act suit against the agency should be denied because e-mails and other evidence turned over by NASA suggest that there are additional records that are being withheld.

“Rather than deal forthrightly with a FOIA request on these issues, NASA has engaged in obstruction and delay,” Tulumello writes in the court filing, which was filed late last night in the U.S. District Court for the District of Columbia.