The BLT: The Blog of Legal Times

Judge Tosses Suit Over IRS Health Care Law Regulation

A federal judge in Washington today dismissed a legal challenge to the Internal Revenue Service's enforcement of a section of the federal health care law.

U.S. District Senior Judge Paul Friedman found the IRS did not run afoul of the Affordable Care Act by adopting a rule granting tax credits to low- and middle-income residents of the 34 states that declined to set up a health insurance exchange.

The plaintiffs argued the language of the health care law only allowed the IRS to grant tax credits to residents of states that set up separate exchanges. Friedman found the text of the law, as well as Congress' goals in passing the law—making health insurance more affordable for all Americans—did not support the plaintiffs' limited interpretation.

Bank Groups, CFTC Spar over Swaps Rules

Setting the stage for what's likely to be a knock-down fight, financial industry lawyers led by Gibson Dunn & Crutcher partner Eugene Scalia faced off in court Tuesday against counsel for the U.S. Commodity Futures Trading Commission over rules governing the $600 trillion market for cross-border swaps.

In a preliminary hearing before U.S. District Judge Ellen Huvelle in the District of Columbia, the lawyers laid out key points of contention in the suit filed by the Securities Industry and Financial Markets Association, the International Swaps and Derivatives Association and the Institute of International Bankers in December.

“As everyone agrees, this is a hugely important issue,” said CFTC deputy general counsel Robert Schwartz.

The Morning Wrap

A Big Enough Pot? A federal judge in Philadelphia is questioning whether a proposed $765 million settlement of NFL concussion claims will be enough money to cover 20,000 retired players. According to the Associated Press, Sol Weiss, a lead lawyer for the ex-players, “remained confident the class action settlement will ultimately be approved.” Mediator Layn R. Phillips, a former federal judge, has called the deal fair for both sides.

Broken Record: Rising legal costs ended JPMorgan Chase’s three-year streak of record annual earnings. The $2.6 billion settlement tied to Bernie Madoff’s Ponzi scheme reduced fourth-quarter profit by about $850 million, according to Bloomberg. It capped a year in which JPMorgan spent more than $23 billion on legal settlements.

Drone Watch: Federal, state and local law enforcement agencies are increasingly borrowing border-patrol drones for domestic surveillance operations, The Washington Post reports, calling it “a harbinger of what is expected to become the commonplace use of unmanned aircraft by police.”

LinkedIn Adds In-House Lobbyist to Its Network

Pablo Chavez, a top Google Inc. official in Washington, D.C., is clicking over to LinkedIn Corp. Jan. 28 to serve as the social networking website's first in-house lobbyist in the nation's capital.

Chavez, director of public policy and government affairs at Google, is joining LinkedIn as its vice president of public policy, according to a tweet from his new company's chief executive officer, Jeff Weiner. Chavez was one of Google's first in-house lobbyists in Washington when he started at the Internet giant in 2006, according to congressional records. He previously was chief counsel to Sen. John McCain (R-Ariz.).

"We are excited to welcome Pablo to LinkedIn and know that his deep experience will be invaluable to us as we build our public policy presence," LinkedIn spokesman Hani Durzy said in a written statement.

D.C. Court Funding Holds Steady in Budget Deal

The congressional budget deal announced late Monday would restore to the District of Columbia local court system money that was cut under last year's sequester, but the agreement provides less funding than court officials wanted.

The proposed budget for fiscal year 2014 included $232.8 million for operations and capital projects. The court system's pre-sequestration budget for operations and capital projects in fiscal year 2013 was $232.4 million.

The D.C. court system, along with other federally funded agencies, was forced to cut its budget by five percent last year under mandatory cuts known as sequestration. The court system absorbed the approximately $12 million in cuts by scaling back on planned construction and maintenance services, and training employees to do other work due to a hiring freeze.

Budget Plan for Judiciary Could 'Stop the Bleeding'

Congress is planning to give some relief to the federal judiciary after last year's budget cuts.

A bipartisan appropriations bill released Monday night would provide the federal courts an increase of $316 million in discretionary spending—or 5 percent above current funding—for the 2014 fiscal year, according to a summary of the 1,582-page bill from the Senate Appropriations Committee.

That would almost erase the $350 million in budget cuts to the judiciary in March as part of sequestration, which has caused almost a year of layoffs and furloughs in the federal courts and threatened the judiciary's ability to pay court-appointed private counsel in criminal cases.

TV Networks Ask D.C. Circuit to Freeze Online Streaming Case

As the U.S. Supreme Court takes up a dispute between television networks and online streaming service Aereo Inc., national broadcasters have asked the U.S. Court of Appeals for the D.C. Circuit to put a similar case on hold.

The networks sued online streaming company FilmOn X LLC in Washington federal court last year, accusing FilmOn of violating federal law by transmitting copyrighted material over the internet. The networks lodged similar claims against Aereo, and appealed to the Supreme Court after the U.S. Court of Appeals for the Second Circuit sided with Aereo.

FilmOn, according to court papers filed Jan. 13 by the networks in the D.C. Circuit, "will not consent to the requested relief" of putting the proceedings on hold pending the Supreme Court's review of the Aereo case. The high court granted review of the Aereo case on Jan 10.

The Morning Wrap

Skeptical Justices: The Obama administration appeared to face an uphill battle on Monday in persuading the U.S. Supreme Court to reverse a broad ruling by the U.S. Court of Appeals for the D.C. Circuit limiting the president's power to make recess appointments, The National Law Journal reports.

Just Right?: Has Steptoe found the Goldilocks sweet spot between 4,000-lawyer behemoths and specialized boutiques, or is the market for legal services making such a model increasingly untenable?, the National Law Journal reports.

If The Whistle Doesn't Fit: The Washington-are law firm of the late Johnnie Cochran is trying to break into the business of representing whistleblowers, The Wall Street Journal reports.

Senate Confirms Wilkins to D.C. Circuit

The Senate today confirmed Robert Wilkins to the U.S. Court of Appeals for the D.C. Circuit, marking the final step in an aggressive push from the White House and Senate Democrats to leave a mark on a key federal appeals court.

President Barack Obama in June simultaneously nominated Wilkins and two other lawyers—Patricia Millett and Cornelia Pillard—to the D.C. Circuit.

With Monday's confirmation vote, Wilkins became the fourth Obama pick since May to take a seat on the D.C. Circuit. That matches the number of judges George W. Bush appointed to the appeals court, whose decisions in the regulatory arena—including securities, communications and the environment—have national sweep.

The Senate voted 55-43 to confirm Wilkins under a new streamlined confirmation process that came into place amid the partisan fight in the Senate over the D.C. Circuit. Wilkins will join the appeals court from the U.S. District Court for the District of Columbia, where he's been a trial judge since 2010.

After Senate Republicans blocked Obama’s D.C. Circuit nominees from getting votes, Democrats changed longstanding Senate rules to strip the minority party of their rightto block nominee votes.

The Senate in December confirmed two other judges to the D.C. Circuit—Millett, a former Akin Gump Strauss Hauer & Feld partner and Pillard, who taught at Georgetown University Law Center.

Republicans argued that the D.C. Circuit workload did not justify the additional $1 million per year cost per judge. They accused Obama of filling the vacancies to "pack" the court in support of his legislative and regulatory proposals.

The confirmation of Obama's D.C. Circuit picks shifts the balance of active judges from an even split—four Republican appointees and four Democratic appointees—to a 7-4 advantage for Democrats. Republican-appointed judges hold a 9-8 advantage when senior judges are counted.

Obama's first successful appointment to the D.C. Circuit came in May, when the Senate confirmed former O'Melveny & Myers appellate partner Sri Srinivasan. He left the Justice Department Office of the Solicitor General to join the bench.

Wilkins’ confirmation came the same day that Miguel Estrada—unsuccessfully nominated to the D.C. Circuit under President George W. Bush—argued in the high court over the scope of the power of the president to use the recess appointment authority. (Democrats blocked Estrada’s nomination to the D.C. Circuit.)

Hours before the Wilkins vote, Estrada, co-chair of the appellate and constitutional law practice at Gibson, Dunn & Crutcher, argued a case on behalf of Senate Republicans that Obama overstepped his authority in making recess appointments to the National Labor Relations Board in 2012.

"It's certainly interesting. Miguel Estrada is an extraordinary lawyer, and his own experience with the Senate certainly added significance to the situation as I saw it," Sen. Mike Lee (R-Utah) said after watching the Supreme Court arguments. "This added a degree of poignancy that’s kind of intangible."

Republican Senators Confident Following Oral Arguments

Republican senators left the Supreme Court arguments today confident that they would prevail in the constitutional showdown over the president's power to make recess appointments.

Sen. Mike Lee (R-Utah), on the front steps of the court, said he believed the justices would deliver a lopsided win on at least one of the three key questions at issue in NLRB v. Noel Canning. That would let stand appeals court rulings that President Barack Obama overstepped his authority when he sidestepped the Senate's advise-and-consent power in January 2012.

Lee pointed to a particular exchange in the Supreme Court oral arguments today—about what language the Senate used when creating its so-called "pro forma" sessions to avoid going into a recess—as the Obama administration's weak point.