The BLT: The Blog of Legal Times

D.C. Circuit Rules For Zuckerman Spaeder In Fee Dispute

Zuckerman Spaeder has prevailed in a federal appeals court in Washington in the firm's legal fight to force a former client in a tax fraud case to pay $834,000 in fees.

A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit unanimously upheld a trial judge’s ruling in March 2010 to deny staying the proceedings in Washington federal district court.

The former client, James Auffenberg Jr., and his lawyers tried to convince the appeals court that the dispute belongs in arbitration, not in federal court.

U.S. District Judge Reggie Walton last year said Auffenberg failed to invoke arbitration “prior to actively participating in this litigation.”

Judge Douglas Ginsburg, sitting with Judge Merrick Garland and Senior Judge Stephen Williams, said in the appeals court ruling it’s undisputed Auffenberg failed to invoke arbitration in or before filing his answer to Zuckerman’s suit.

“In this appeal, we affirm the district court’s denial of the stay because Auffenberg failed to make a timely assertion of his right to arbitrate, and his litigation activity after he filed his initial answer and counterclaim imposed substantial costs upon Zuckerman and the district court,” Ginsburg wrote in the opinion.

Zuckerman represented Auffenberg in a tax fraud case in U.S. District Court for the District of the Virgin Islands. Auffenberg, who was indicted in 2007, was acquitted two years later. The firm sued him in Washington in April 2009.

Zuckerman litigation partner Francis Carter argued for the firm in the D.C. Circuit in February. Carter declined to comment today. Carter noted the case faces the potential of returning to the trial court for litigation.

Auffenberg sued the firm in a counterclaim for malpractice, saying the firm agreed to cap fees at $1.5 million. He alleged the $834,000 beyond that was unreasonable.

A year into the litigation, Auffenberg sought arbitration through the D.C. Attorney/Client Arbitration Board, a part of the D.C. Bar. After Walton refused to stay the case, Auffenberg appealed to the D.C. Circuit.

Auffenberg’s attorney, David Holzworth of Washington’s Holzworth & Kato, said today the D.C. Circuit’s decision continues a split among the circuits on the procedural question of when to invoke the right to arbitrate.

Holzworth said it’s too early to determine whether Auffenberg will ask the full D.C. Circuit to hear the dispute or whether he will petition the U.S. Supreme Court to review the decision.

The D.C. Circuit today sought to provide clarity on the timing of the invocation to arbitrate.

“By this opinion we alert the bar in this Circuit that failure to invoke arbitration at the first available opportunity will presumptively extinguish a client’s ability later to opt for arbitration,” the appeals court said.

Holzworth said the opinion “clarifies that issue very clearly, saying it must happen at the earliest possible opportunity. Unfortunately we didn’t have that standard in front of us in the case below.”

Booz Allen Hamilton Partner Sues for Gender Discrimination

A Booz Allen Hamilton Inc., partner filed a gender discrimination lawsuit against the company earlier this week in District of Columbia Superior Court, alleging that the company "flagrantly ignores its obligations under the law to treat women equally with men at the highest level of the firm."

Molly Finn, according to her complaint (PDF) filed July 27, was the highest-ranking female partner at the consulting firm until she was fired last September. Her termination takes effect on Oct. 31.

Finn accuses the firms’ Leadership Team – all of whom are men, she notes in the complaint – of consistently forcing out high-ranking women partners before they can reach the level of “Senior Partner.”

She also claims that male partners are paid more money and given faster tracks to advancement within the firm than women in a comparable position. As an example, she details golf trips with top firm partners that no women partners were invited to attend. “These outings presented a significant opportunity to network toward firm leadership positions – but only for men,” she writes.

Finn is being represented by Richard Salzman of Washington’s Heller, Huron, Chertkoff & Salzman. He could not immediately be reached this afternoon.

In a statement, Booz Allen spokesman James Fisher said that “Booz Allen does not comment publicly on details of personnel situations out of respect for an individual's privacy.”

“While we have not yet been served with the lawsuit, we are aware of Ms. Finn's allegations and strenuously deny them,” he said. “Because of our strong belief in the merits of our position, we intend to contest her claims through the litigation process.”

Finn joined Booz Allen in 1986 as a research associate, according to her complaint. She was made a partner in 1998.

After breaking up with her partner in 2006, Finn alleges that she was subjected to questions from firm leaders about her ability to work as a now-single parent. She said she was pushed to explain her ability to continue working at the same level to Ralph Shrader, president, CEO and chairman of the firm’s board of directors.

At one point, Finn claims she was told to “stop saying pro-woman, feminist things to Ralph.”

The case is before Judge Laura Cordero. An initial scheduling conference is scheduled for Oct. 28.

Former Colleagues Weigh In on Rudolph Contreras Nomination

During his 17 years with U.S. attorney offices in Washington and Delaware, new judicial nominee Rudolph Contreras earned a reputation as a skilled writer and analyst, handling complex fraud prosecutions as deftly as he defended routine administrative suits against the government, according to former colleagues and superiors.

Contreras, the civil division chief of the U.S. attorney’s office in Washington since 2006, was nominated yesterday afternoon by President Barack Obama for the U.S. District Court for the District of Columbia.

If confirmed, he would be the third of the last four heads of the office’s civil division to be tapped for a federal judgeship in Washington – the others were U.S. District Chief Judge Royce Lamberth and U.S. District Judge John Bates.

Contreras has spent the bulk of his career in Washington. Troutman Sanders partner Mark Nagle, who was with the U.S. attorney’s office almost exclusively from 1985 through 2004 and preceded Contreras as chief of the civil division from 1998 to 2004, said that from the beginning, Contreras “wrote with a clarity that was beyond a number of years of experience he’d had practicing law.”

“I don’t think that anyone could look at any case that he handled and say that he did anything other than represent his client to the best of his ability, and consistent with the law and ethics and his role as an attorney for the United States,” Nagle said.

Nagle recalled a major age discrimination class action against the U.S. Administration for International Development that Contreras helped move to a settlement in the late 1990s, Evans et al. v. Atwood et al.

“He had to draw upon legal principles, precedents that had been built up in other areas and develop a litigating position on issues that, frankly, the government attorneys were not called upon frequently to address,” Nagle said. “It was further confirmation of that analytical strength that I think is going to serve him really well.”

Contreras joined Jones Day’s Washington office after graduating from the University of Pennsylvania School of Law in 1991. Jones Day partner Gregory Shumaker, who helped recruit Contreras out of law school, said the two worked together on several large toxic tort cases during Contreras’ three years at the firm.

“He’s very analytical and he’s very thorough,” Shumaker said. “He’s a person who is really astute at judging people’s character and understanding what makes people tick.”

Mueller Appoints New Chief of Staff

Fresh off a congressional vote to extend his term as FBI director, Robert Mueller III has appointed a new chief of staff.

Aaron Zebley is getting the promotion from his current position as deputy chief of staff, according to a staff note that Mueller sent out. He started on Thursday. Zebley has served as a special counsel to Mueller, and he was an assistant U.S. attorney in the Eastern District of Virginia for five years. He also spent seven years in the FBI’s Counterterrorism Division.

Mueller’s most recent chief of staff, John Carlin, is moving on to be the principal deputy in the Justice Department’s National Security Division, under newly confirmed Assistant Attorney General Lisa Monaco. Carlin is a former assistant U.S. attorney in the District of Columbia. “John’s talents and judgment will be missed here at the bureau, but I look forward to continuing to work with him in his new position,” Mueller said in his note.

On Wednesday, the Senate voted to confirm Mueller to a new, two-year term as FBI director, allowing him to serve past the 10-year limit that’s written into federal law. His service is scheduled to run out on Sept. 4, 2013.

Two other moves involving DOJ’s National Security Division, according to a division spokesman: Anita Singh, who is on detail from DOJ’s Criminal Division to the White House’s national security staff, will be Monaco’s deputy chief of staff and counsel; and Donald Vieira, who has been the division’s chief of staff since March 2009, is leaving the department for Wilson Sonsini Goodrich & Rosati.

Settlement Grants Class of Vets with PTSD Lifetime Disability Coverage

More than two thousand veterans of the wars in Iraq and Afghanistan who were denied disability benefits for their post-traumatic stress disorder will receive lifetime coverage, the National Veterans Legal Services Program announced today, the result of a class action settlement with the federal government.

Represented pro bono by lawyers from the D.C. office of Morgan, Lewis & Bockius, as well as in-house counsel working for free from Hewlett-Packard Co. and Pfizer Inc., the veterans served between 2003 and 2008.

“For more than a thousand military families, today’s settlement brings some well-deserved peace of mind,” said James Kelley II, lead partner for the team at Morgan Lewis, which also included Brad Fagg and Charles Groppe. “We are gratified that the government will finally make good on its promise to meet the healthcare needs of these veterans and their loved ones.”

The veterans filed their complaint in the Court of Federal Claims in December 2008, and in 2009, the court certified it as a class, with 2,161 soldiers opting in. The members were were found by a physical evaluation board to be unfit for continued service due, at least in part, to post-traumatic stress disorder, but were assigned a disability rating of less than 50% — the rating that entitles a veteran to disability retirement benefits.

The settlement entitles the veterans to:

· Lifetime military disability retirement payments retroactive to the date of discharge.

· Eligibility to apply for Combat-Related Special Compensation (which may increase the veteran’s monthly disability payments further).

· Lifetime military healthcare (TriCare) for the veteran, his or her spouse, as well as their children until at least age 18.

· Lifetime commissary and military post exchange privileges.

· Eligibility to purchase life insurance coverage through the Survivor Benefit Plan.

· Reimbursement for expenses paid for the medical treatment of the veteran, the veteran’s spouse, and the veteran’s minor children, from the date of the veteran’s separation from military service.

The settlement must still be approved by the court.

Barton Stichman and Amy Fletcher represented the National Veterans Legal Services Program.

Bryant Snee and Douglas Mickle of the Justice Department represented the government, as did Jacob Wolf of the Military Personnel Branch Army Litigation Division, John Goehring of the Air Force General Litigation Division, and Kathleen Kadlac of the Office of the Judge Advocate General.

Former N.D. Attorney General Sues Law School for Age Discrimination in Hiring

Updated at 2:14 p.m.

Nicholas Spaeth, the former state attorney general for North Dakota, filed suit Thursday in Washington federal court against the Michigan State University College of Law, accusing school officials of refusing to consider him for a teaching job because of his age.

Spaeth, according to his complaint (PDF), applied to be considered for a teaching job at the school in October, responding to a posting on the Association of American Law Schools' bulletin. During the group's Faculty Recruitment Conference, he was not offered an interview slot.

He accuses the school of instead hiring three individuals who are younger and who he believes brought far less professional experience to the table. Spaeth is being represented by Lynne Bernabei and Alan Kabat of Washington’s Bernabei & Wachtel.

Spaeth’s complaint alleges one count of a violation of the Age Discrimination in Employment Act. He’s seeking an appointment to a teaching position at the school, compensation for future lost wages and other damages.

“If Defendant had considered Plaintiff’s application based on his qualifications alone and not based on his age, it would have hired him for any one of the teaching positions for which it hired,” Spaeth wrote in the complaint.

In a statement today, College of Law Dean Joan Howarth said the school had not received notice of the lawsuit.

"When or if one comes our way it will be a false accusation because we do not and have not discriminated on the basis of age," she said.

Bernabei said Spaeth had previously filed complaints with the U.S. Equal Employment Opportunity Commission against more than 100 law schools that also did not offer him an interview. Of those complaints, between 30 and 40 had been dismissed and the rest were still pending. This is the first lawsuit Spaeth has filed against one of the schools, but Bernabei said they expect to add more defendants to the suit or file related cases.

Spaeth was elected as North Dakota’s attorney general in 1984, a position he held through 1993. He spent the following seven years in private practice as a partner at Dorsey & Whitney and Cooley Godward, with a focus on corporate law. He spent the past decade in the legal offices of major corporations, including Inuit Inc., H&R Block Inc., and the Federal Home Loan Bank of Des Moines.

Spaeth earned his J.D. from Stanford Law School in 1977 and his clerking experience includes a stint with former U.S. Supreme Court Justice Byron White from 1978 to 1979. He previously taught law at University of Minnesota Law School and University of Missouri School of Law.

The case is before U.S. District Judge Ellen Huvelle.

Updated with additional reporting.

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.

Judge Orders Release Of Richard Nixon's Watergate Testimony

Updated 2:34 p.m.

A federal trial judge today ordered the public release of former President Richard Nixon's grand jury testimony rooted in the Watergate investigation.

Chief Judge Royce Lamberth of U.S. District Court for the District of Columbia ruled against the U.S. Justice Department, which fought to keep the material secret to maintain the privacy of witnesses.

Watergate’s importance in American history, Lamberth said in his decision (PDF), “cannot be overstated.” The judge has been reviewing the transcript dispute for months.

“Nearly forty years later, Watergate continues to capture both scholarly and public interest,” the judge said. “The disclosure of President Nixon’s grand jury testimony would likely enhance the existing historical record, foster further scholarly discussion, and improve the public’s understanding of a significant historical event.”

Lamberth said the privacy interest implicated in the release of the Nixon transcripts is minimal. Many Watergate principals who are likely identified in the papers, the judge said, are now dead. “[T]he Court rejects the government’s argument that thirty-six-year-old records are too ‘young’ for disclosure,” Lamberth wrote.

The judge said the “undisputed historical interest in the requested records” outweigh the need to maintain the secrecy of the documents.

Lamberth said he “is confident that disclosure will greatly benefit the public and its understanding of Watergate without compromising the tradition and objectives of grand jury secrecy.”

The transcript will not be released immediately because the government has the opportunity to ask the U.S. Court of Appeals for the D.C. Circuit to review the decision.

A Justice Department spokesman, Charles Miller, said the department is reviewing the ruling. Miller declined to comment further.

The petitioners, American history and legal scholars, filed suit in Washington federal district court last year to obtain the testimony Nixon gave in June 1975 following his resignation and pardon.

Allison Zieve, director of the Public Citizen Litigation Group, which represented the plaintiffs, heralded today's ruling. Zieve said the records will be "fascinating whether they say everything or nothing at all."

"This is quite a strong opinion," Zieve said. "I'm hoping that the government decides to let it stand. This really is an extraordinary case."

The Morning Wrap

Sunken Nomination: President Barack Obama's choice for a spot on the 10th Circuit, Stephen Six, is getting bottled up in committee, after one of the nominee's home-state senators apparently reversed his initial support, The National Law Journal reports.

More Nominations: The BLT reported last night on some new nominations from the Obama White House, for the Federal Circuit and for district courts in Washington and New York.

Suing Over Regs: The Wall Street Journal reports that some business groups, notably the U.S. Chamber of Commerce's legal arm, are gearing up for possible lawsuits over the Dodd-Frank financial overhaul law, especially after a recent D.C. Circuit ruling.

Ponzi News: Senior Judge Jed Rakoff of federal district court in Manhattan issued a ruling on Thursday that could mean billions less for the victims of Ponzi schemer Bernard Madoff, The New York Times reports.

Maryland Marriages: The Democratic leader of Maryland's state Senate, who opposes same-sex marriage, predicted that a marriage bill would pass the General Assembly next year, The Washington Post reports.

International Trade Court Judge Nominated To The Federal Circuit

President Barack Obama today nominated an International Trade Court judge for a slot on the U.S. Court of Appeals for the Federal Circuit.

The nominee, Evan Wallach, who has served on the New York based trade court since 1995, has presided over more than 230 cases to verdict or judgment, according to the White House.

Wallach has sat by designation on federal trial and appellate courts around the country, including hearing more than 80 cases on the U.S. Courts of Appeals for the 2nd, 3rd and 9th Circuits. He was nominated to fill the seat created by the retirement of Judge Arthur Gajarsa.

The National Endowment for the Arts described Wallach as “one of the nation’s most foremost experts on war crimes and the law of war.” Wallach, who has taught the law of war at Brooklyn Law School and New York Law School, wrote about waterboarding in a 2007 piece in The Washington Post.

Wallach was not immediately reached for comment this evening.

The Arizona native enlisted in the U.S. Army in 1969 and served in the Vietnam War in the early 1970s as a terrain reconnaissance sergeant in the 8th Engineer Battalion, the White House said. Wallach graduated in 1976 from the University of California, Berkeley School of Law.

Wallach was a litigation associate after law school with the firm Lionel Sawyer & Collins in Las Vegas. He became partner in 1982, according to his biography on the trade court’s web site. In private practice, Wallach was a general litigation partner who focused on media representation.

Samuel Lionel, a founder of the firm, called Wallach a “scholarly” lawyer who is “very level-headed” and fair. “Litigants who appear in front of him will be pleased,” Lionel said. “He’s a good choice.”

Later in the 1980s and 1990s, Wallach served a stint as general counsel and public policy advisor to Senate Majority Leader Harry Reid (D-Nevada) and as an attorney-advisor in the Nevada Army National Guard. Wallach served as an attorney-advisor during the Persian Gulf War.

“Judge Wallach has distinguished himself throughout his legal career in both the public and private sectors,” Obama said in a statement Thursday evening. “He possesses a keen intellect and a commitment to fairness and integrity that will serve him well as a judge on the Federal Circuit.”

In April, the U.S. Senate confirmed Williams Mullen partner Jimmie Reyna for a vacancy on the Federal Circuit, a court of national jurisdiction whose docket is loaded with intellectual property cases, trade disputes, suits against the government and federal personnel matters.

Reyna was the head of the firm’s international trade and customs practice.

David H. Ingram contributed reporting.