The BLT: The Blog of Legal Times

DOJ Programs Office Faces Budget Pressure

House Republican legislators warned today of further possible cuts to the U.S. Justice Department division that's responsible for grants, training and other aid to states and localities.

The Office of Justice Programs was already facing a likely reduction in its $3.6 billion budget. Last month, in the face of pressure to reduce the overall federal budget deficit, the Obama administration proposed a cut of $588 million, or 16.6%, to take effect in the fiscal year beginning Oct. 1.

But Rep. Frank Wolf (R-Va.), the chairman of the House appropriations subcommittee that oversees DOJ funding, said that might not be enough. “The fiscal crisis facing the country is real, and it requires a level of fiscal austerity that goes beyond the president’s request,” Wolf said during a budget hearing today.

Wolf and Rep. Jo Bonner (R-Ala.) had praise for the work that the Office of Justice Programs does, including sending money to their home states. Nevertheless, Bonner said, “We’re looking at a deep, deep hole to dig out of.”

The Office of Justice Programs represents a significant part of DOJ’s funding, at about 12.9% of last year’s budget. As The National Law Journal reported last month, the Obama administration has proposed increasing other parts of the department’s budget.

Assistant Attorney General Laurie Robinson told the appropriations subcommittee that the department understands the need for austerity, and Democratic legislators sounded the same note. “We’re all at the point where we agree on the need for cuts, and the question is how to apply those cuts,” said Rep. José Serrano (D-N.Y.).

Wolf pushed the office to concentrate more of its resources on fighting the abuse of prescription drugs, especially oxycodone, and on reducing instances of prison rape. Rep. Chaka Fattah (D-Pa.) said he hopes to block the administration’s proposed cut of $11 million from programs for missing or exploited children.

D.C. Lottery Whistleblower Suit Partially Survives Motion to Dismiss

U.S. District Court Judge Paul Friedman is allowing several parts of a multimillion dollar lawsuit filed against the city by its former contract chief, Eric Payne, to move forward.

In an opinion (PDF) yesterday, Friedman wrote that while many of Payne’s claims for defamation and wrongful termination were valid, he dismissed several elements, writing that Payne failed to show that he could prove the city engaged in fraud.

Payne, also a practicing attorney, served as director of contracts in the city’s Office of the Chief Financial Officer from 2006 until he was fired in January 2009. He previously served as assistant general counsel in the office beginning in 2004. Despite the partial dismissal, Payne said he is satisfied with Friedman's decision.

"We are pleased with the judge’s ruling and we are looking forward to having our day in court," Payne said in a phone interview today.

His attorney, Washington solo practitioner Donald Temple, did not immediately return a request for comment.

In late 2005 and 2006, in response to a series of security breaches that led to the printing of fake D.C. Lottery tickets, the city moved to break off its relationship with the company overseeing production, Lottery Technology Enterprises.

Payne, according to his complaint (PDF) filed in Washington federal court, accused the city’s chief financial officer, Natwar Gandhi, of interfering with the bidding process for a new lottery contractor. Payne claimed Gandhi told him not to consider certain bidders, which Payne believed was in violation of the city’s contracting laws.

Payne took his concerns to the Office of Integrity and Oversight, according to his complaint. He was fired in January 2009 and sued the city and Gandhi – in both his official and personal capacities – for unlawful termination, claiming he was the victim of retaliation for blowing the whistle on how the bidding process was handled. He also sued for defamation and emotional distress.

The city has denied the allegations of wrongdoing. Ariel Waldman, senior counsel to the city's attorney general, declined to comment on the pending case. The city's motion to dismiss can be found here (PDF).

Friedman wrote that Payne had ground to sue under the city’s Whistleblower Act, but granted the city’s request to dismiss Payne’s claim that the city unlawfully fired him under the D.C. False Claims Act. The judge wrote that while Payne claims he reported government waste, he failed to show the city was engaged in fraud in how it dealt with the lottery contracts. Reporting on waste is not protected activity under the act, Friedman wrote, and calling an activity “fraud” isn’t enough to survive a motion to dismiss.

Payne, who had already filed an amended complaint, asked the court for a chance to put together a second amended complaint to address the fraud issue, but the court denied that request, saying Payne failed to show he could survive another motion to dismiss.

Friedman also found that Gandhi was immune from personal liability – although not in his official capacity – and granted the motion to dismiss claims filed against him as a private individual. City laws protect individuals acting within the scope of their official duties from tort liability, Friedman wrote. He also dismissed a claim for intentional infliction of emotional distress.

A joint statement on how both sides want to proceed is due April 5.

Video: Marcia Coyle on Tuesday's Wal-Mart arguments

The National Law Journal's Marcia Coyle analyzes Tuesday's Supreme Court arguments in Wal-Mart v. Dukes for The News Hour on PBS.

Watch the full episode. See more PBS NewsHour.

 

D.C. Judge Holds Steady, Keeps Ruling in Scott Bloch Case

A federal judge in Washington late Tuesday refused to reconsider a decision this month in which she rejected former Bush administration lawyer Scott Bloch's request to back out of his plea deal in a contempt case.

In a ruling (PDF) issued last night, Magistrate Judge Deborah Robinson said Bloch, who led the Office of Special Counsel under President George W. Bush, was aware the charge of contempt of Congress carries a mandatory-minimum sentence of one month in jail. Robinson is scheduled to sentence Bloch today at 4 p.m.

Bloch, the judge said, was also aware that he faced up to a year in prison, an acknowledgment Bloch made when he pleaded guilty in April 2009 in Washington's federal trial court. At the hearing, Bloch also said he was not promised a sentence.

Bloch, through his lawyers at Winston & Strawn, arranged a plea deal that called for probation, community service and a fine to resolve a misdemeanor charge. Bloch lied when he told congressional staffers he did not hire an information technology company to erase files from his government computer.

Judges have the final word on punishment, but they rarely reject negotiated settlements. After studying the contempt statute for months, Robinson in February announced that Bloch must spend at least a month in jail.

Ever since then, Bloch and his defense lawyer, Winston partner William Sullivan Jr., have tried to abandon the plea deal. Sullivan argued that Robinson had an obligation at the time of the plea hearing to inform Bloch that the charge came with a mandatory-minimum jail sentence.

Assistant U.S. Attorney Glenn Leon has supported Bloch's effort to start over, saying the government negotiated a deal in good faith and that principles of fairness are in play.

Sullivan and Leon have argued in court and in recent pleadings that Robinson has discretion to sentence Bloch to probation.

The lawyers point to the recent contempt case in Washington against baseball slugger Miguel Tejada, who received probation in 2009 for the same charge brought against Bloch. Sullivan urged Robinson to reconsider her March 9 decision that denied Bloch’s effort to withdraw from his guilty plea.

This morning, Sullivan said in a statement that Robinson “inexplicably, repeatedly, and wrongfully” is ignoring “the plain and compelling law and evidence presented” that Bloch genuinely believed the contempt charge was probation-eligible. “[T]hat is the crucial inquiry here, and its answer is blindingly obvious," Sullivan said.

Sullivan also said: “What is most distressing about the opinion is the Court’s erroneous assertion that we did not pursue the idea that the Court ‘patently misunderstood’ the parties.'"

In court papers, Sullivan said that Robinson's opinion earlier this month, where she denied Bloch's motion to withdraw his guilty plea, is "premised on a misunderstanding" of Bloch's position in the case.

The Morning Wrap

Skeptics: The massive class action against retail giant Wal-Mart Stores Inc. ran into stiff resistance at the U.S. Supreme Court on Tuesday, after surviving lower court challenges ever since it was launched 10 years ago, NLJ's Tony Mauro reports.

Drug Money: A chemist at the Food and Drug Administration has illegally traded on inside information in advance of at least 27 FDA announcements since 2006, reaping profits or avoiding losses of more than $3.6 million, the Washington Post reports.

International Call: The question for regulators in Washington is how AT&T’s $39 billion bid to buy T-Mobile could hurt consumers, in particular by eliminating T-Mobile’s low-cost phone plans. As they consider the deal, regulators may look abroad to see how competition affects wireless markets, according to The New York Times.

Microsoft Memoir: Bill Gates schemed to take shares in Microsoft from his co-founder during the early days of the software company following his partner's treatment for cancer, according to a new memoir by the billionaire co-founder, Paul Allen, The Wall Street Journal reports.

Under Attack: A Libyan woman who said she had been raped by pro-government militiamen is being sued for slander for naming her alleged attackers, Reuters reports.

Class Action: Sirius XM Radio Inc., the biggest U.S. satellite-radio broadcaster, must face class-action claims in a lawsuit alleging antitrust violations, a federal judge ruled, according to Bloomberg.

John Hinckley Asks For More Trips Away From Hospital

Updated 5:29 p.m.

Lawyers for President Ronald Reagan's attempted assassin today asked a federal judge in Washington to grant him additional visits to his mother's house, saying he has run out his limited number of trips and cannot continue "progressing with therapeutic and transitional goals."

John Hinckley Jr.'s attorneys at Dickstein Shapiro asked Judge Paul Friedman to give Hinckley additional trips as attorneys for St. Elizabeths Hospital, where Hinckley has lived for more than 20 years, prepare to file a request for the enlargement of the terms of Hinckley’s conditional release. That request is expected by June.

In July 2009, Friedman granted Hinckley a total of 12 visits to his mother’s home. In his 15-page order (PDF), Friedman said the purpose of the visits is to give Hinckley the opportunity to acclimate to his mother’s community. In recent years, Friedman has incrementally expanded (PDF) Hinckley’s freedom, imposing certain conditions that govern his trips away from the hospital.

Hinckley’s lawyers, including Dickstein partner Barry Wm. Levine, co-leader of the firm’s white-collar criminal defense and investigations practice, said in court papers (PDF) filed today that each of the 12 trips since July 2009 “were completed in full and faithful compliance” with Friedman’s order and “without any manifestation of mental disease or danger to himself or others.”

The court papers filed today, the eve of the 30th anniversary of the Reagan assassination attempt, do not specify a number of additional visits.

In an interview this evening, Levine said Hinckley is not a danger to himself or others and that there are no longer symptoms of mental illness. Hinckley, Levine said, has "unfailingly adhered to every component of every court order."

"I think the important message for people of good will is that the John Hinckley who fired that weapon was a man ravaged by mental disease," Levine said. "Today, there is no evidence of that disease. This is a victory for mental health. Through hard work and good care, people can actually get better."

Assistant U.S. Attorney Thomas Zeno, a lead prosecutor in the Hinckley case, was not immediately reached for comment this afternoon. A spokesman for the U.S. Attorney’s Office, Bill Miller, declined to comment.

Citing security concerns, prosecutors in the past have argued for a conservative approach to Hinckley’s conditional release.

17 Howrey Lawyers Find Homes at Baker & Hostetler

Fifteen ex-Howrey lawyers in Washington, including Robert Abrams, the former co-chair of Howrey's global litigation practice, are joining Baker & Hostetler. Two lawyers join in Los Angeles. Read more in NLJ affiliate AmLaw Daily.

Judge Approves $250K Settlement in 2005 Arrests of D.C. Protesters

A group of about 70 protesters who claim they were unlawfully arrested in 2005 while demonstrating in Washington's Adams Morgan neighborhood could each receive at least $2,000 in damages from the city, under a settlement agreement approved in Washington federal court.

U.S. District Court Judge Ellen Huvelle granted preliminary approval to the settlement on March 24, subject to final approval following a public fairness hearing scheduled for Aug. 1. The suit was supposed to go to trial on Feb. 1, but the settlement was hammered out in late January, according to court records. A copy of the settlement notice can be found here (PDF).

If approved, attorneys representing the class would receive $50,000 of the $250,000 settlement. The American Civil Liberties Union and two Washington firms, Gaffney & Schember and Kirkland & Ellis, represented the class, but since the ACLU and Kirkland & Ellis worked pro bono, they won’t be eligible for a share.

The class action stems from a demonstration that took place the night of Jan. 20, 2005. Following the inauguration of former president George W. Bush to a second term in office earlier in the day, a group of demonstrators opposed to the president’s re-election took to the streets in Adams Morgan; several class members claimed they were bystanders.

According to the complaint (PDF), the march was broken up when police arrived – the protesters did not have a permit, and some marchers were engaging in vandalism – and more than 70 participants and bystanders were arrested. Several class members claimed they were assaulted by police while they were being arrested, including one man who accused police of spraying pepper spray directly in his face. The class also questioned whether the police had the right to make arrests without first asking the crowd to disperse, and also whether parading without a permit was an offense that warranted arrest.

After Huvelle granted summary judgment for the class in 2008, the city appealed to the U.S. Court of Appeals for the D.C. Circuit. The judges sent the case back to federal court for further review, agreeing with the city that police are not always obligated to order a crowd to disperse before they start making arrests. In this case, the court noted that there were still disputed facts as to whether police had probable cause the night of the demonstrations to arrest any member of the crowd.

The five class representatives will split $5,000, and two class members who claimed they were assaulted in the course of the arrest will receive separate awards of $15,000 and $20,000. The entire class, which could be as many as 69 people, will split the remaining $160,000.

ACLU legal director Arthur Spitzer, one of the lead plaintiffs' counsel, said in a phone interview today that while the monetary settlement was important, the class members were especially pleased that the city agreed to expunge their arrest records. As part of the settlement, both sides also agreed to a statement acknowledging that police were "justified" in taking action to stop vandalism and protect bystanders, but that the city could not link any class member to those illegal acts.

"Most of them are young people, starting their careers, many of them foresee the possibility of needing security clearances or bar admittances in the future," Spitzer said. "We’re glad that the police department now recognizes that it can’t arrest a crowd for parading without a permit unless it first effectively informs the people that they have to disperse and gives them an opportunity to do so before making arrests."

Daniel Schember and Susan Dunham of Gaffney & Schember were named as lead counsel from that firm in the settlement agreement, along with Spitzer and attorneys from Kirkland & Ellis.

When reached by phone, Ariel Waldman, senior counsel to the city's attorney general, was glad that both sides could reach an agreement.

"The District of Columbia is pleased to avoid the burdens and expenses of further litigation on this matter," he said. He added that the city was also pleased with the inclusion of the statement regarding actions police took to stop vandalism and protect bystanders.

Updated 3/31 at 2:47 p.m. with additional reporting.

FTC Fines Toys "R" Us for Violating Settlement Agreement

Toys "R" Us has not been playing nicely with others. So says the Federal Trade Commission, which fined the company $1.3 million for violating a 1998 order governing its dealings with its suppliers.

In the underlying case, the FTC found that Toys "R" Us used its dominant position as a toy distributor to extract agreements from toy manufacturers to stop selling the same toys to warehouse clubs like Costco.

The 1998 agreement barred Toys “R” Us from asking its suppliers to limit the toys they sell to discounters or requesting that they refuse to sell to them altogether. It also barred Toys “R” Us from asking any supplier about its sales to any toy discounter.

According to the FTC, Toys “R” Us (through its Babies “R” Us subsidiary) violated the order by complaining to manufacturers including Peg Perego, Graco and Medela about discounting their baby products.

At various times between 1999 and 2010, according to the FTC, the company objected to the discounts other retailers were providing to consumers, requested information from several of the companies about how they were supplying products to discounters, and failed to keep records of communications with its suppliers.

“This case reaffirms the importance of complying with all aspects of a commission order,” said Richard Feinstein, director of the Bureau of Competition, in a news release. “Although we did not find evidence that Toys ‘R’ Us entered into agreements with the suppliers that violated the order, the penalty here underscores the importance of parties complying fully with all of their order obligations.”

Toys” R” Us was represented by D. Bruce Hoffman, who heads Hunton & Williams’ global competition practice. He declined comment.

Rum Maker Loses Appeal In ‘Havana Club’ Trademark Dispute

Updated 5:33 p.m.

A divided appeals court in Washington today ruled in favor of the U.S. Treasury Department's refusal to renew a Cuba company's trademark for "Havana Club" rum, marking the latest chapter in a long fight between Pernod Ricard and rival Bacardi Ltd. over use of the mark.

In a 2-1 decision, a panel of the U.S. Court of Appeals for the D.C. Circuit said a change in the law in 1998 prohibited both new registration of trademarks and renewal of previously registered marks connected to certain Cuban companies. The U.S. Patent and Trademark Office in 1976 first approved Cubaexport's application for the the Havana Club trademark.

Judge Brett Kavanaugh and Senior Judge Harry Edwards said today in the appeals court ruling that Cubaexport had no perpetual right to renew the mark. Any right to renew the Havana Club trademark, the judges said, was “expressly revocable at any time” because of federal regulations involving certain transactions with Cuba.

“In our judgment, the government’s express and longstanding revocation authority devastates Cubaexport’s argument that it somehow had a ‘vested right’ to perpetual renewal of the trademark,” Kavanaugh said in the opinion for the majority.

Writing in dissent, Senior Judge Laurence Silberman said “it seems clear that the Patent and Trademark Office must renew a trademark when requested, so long as the holder pays the usual fee and submits an affidavit describing the mark’s use or explaining its non-use.”

The majority opinion, Silberman said, is “unsound doctrinally, both with regard to principles of statutory interpretation and to basic tenets of administrative law.”