The BLT: The Blog of Legal Times

The Morning Wrap

Denied: A San Diego judge has denied class certification in the 2011 suit that generated a wave of alumni actions accusing law schools provided misleading post-graduate employment numbers, The National Law Journal reports. Four plaintiffs were pursuing a case against Thomas Jefferson School of Law, seeking to certify a class of graduates from 2006 to 2013.

Dropped: The U.S. Court of Appeals for the Fifth Circuit has abandoned an earlier ruling that curtailed the power of judges to sign off on a wiretap that's outside the district where the order was approved, The Wall Street Journal reports. A three-judge panel, in a rare move, withdrew its earlier decision. The court's new ruling is here.

Charged: A six-lawyer firm in Louisville, Kentucky was sued yesterday over allegations attorneys paid real-estate kickbacks. "We are a family-owned firm that has been in business for over 40 years, and we would not and did not violate" the law, the firm said in a written statement. Read the rest of the story in The National Law Journal here.

Threatened: Advocacy groups are backing encrypted email service provider Lavabit in a contempt dispute in the U.S. Court of Appeals for the Fourth Circuit. A trial judge in Virginia held Lavabit's founder in contempt for fighting the government's effort to force the provider to disclose electronic keys that would give prosecutors access to secure communication. The Electronic Frontier Foundation's brief is here, and click here for the brief from the American Civil Liberties Union.

Justices Asked to Review Businessman's Search Warrant Dispute

A prominent Washington businessman who is caught up in the ongoing federal investigation of corruption in the 2010 mayoral campaign has taken his fight against prosecutors to the U.S. Supreme Court.

The government last year seized more than 23 million pages of documents from Jeffrey Thompson, and ever since his lawyers have fought over whether prosecutors in the U.S. Attorney's Office for the District of Columbia should be forced to return some of the property.

Thompson's lawyers at Williams & Connolly argue that prosecutors shouldn't be allowed to keep attorney-client protected documents and information that's outside the scope of the warrants. The defense lawyers—the team includes Brendan Sullivan Jr.—lost in the trial court and in the U.S. Court of Appeals for the D.C. Circuit. In April, the appeals court declined to rehear the case.

The Supreme Court on Monday approved the filing of a public, redacted petition for review. The justices have not asked the Justice Department for a response to the petition.

Federal Judiciary Budget Increases in Last-Minute Budget Deal

The budget deal Congress approved late Wednesday to reopen the government and raise the debt ceiling provides $51 million in additional funding to the judiciary and to federal defenders.

Federal courts officials and members of the Senate Judiciary Committee greeted the increase as good news, although it is small when compared to $350 million in budget cuts earlier this year as part of sequestration.

In the bill, $1.012 billion would go to defender services, marking a $26 million annual increase over Fiscal Year 2013 for attorneys who represent indigent defendants, said Charles Hall, a spokesman for the Administrative Office of the U.S. Courts.

D.C. Courts, Lawyers Feel the Pain During Shutdown

At the start of the government shutdown October 1, the federally funded District of Columbia court system announced furloughs for about one-third of its employees. Over the past week, though, the courts have started calling certain furloughed employees back to work to handle a crunch in operations.

D.C. Superior Court officials, for instance, are bringing back several employees needed to manage criminal cases, said Anne Wicks, the courts' executive officer. The civil division of Superior Court had stopped issuing documents needed to carry out evictions in landlord and tenant cases, but Wicks said employees will be brought back to work to resume those operations.

For lawyers appointed by judges in criminal, child abuse and neglect, and other types of cases, there's no relief in sight. Without an appropriation from Congress, the court suspended payments to court-appointed lawyers, jurors, witnesses and experts.

Judge, Lawyers Say Shutdown to Harm Judiciary

The last government shutdown in 1996 had a "debilitating" effect on court operations, retired U.S. District Judge W. Royal Furgeson Jr. told lawmakers on Capitol Hill today. Testifying in Washington, Furgeson said the judiciary, already grappling with budget cuts from earlier this year, will find it “much more difficult” to cope if the shutdown continues.

Furgeson was part of a panel of lawyers speaking today before the House Judiciary Committee on the effects of the shutdown on the judiciary and access to justice. During the last shutdown, Furgeson, now the dean of UNT Dallas College of Law, said the courts felt the harm long after the impasse ended because of how much regular business was put on hold to plan for the shutdown.

The federal judiciary says it expects to be fully operational through October 15. As the shutdown continues with no end in sight, American Bar Association President James Silkenat told the House committee that "our concern for the judiciary grows every day."

No Hearings Postponed As D.C. Circuit Presses On

Citing the government shutdown, U.S. Justice Department lawyers urged the U.S. Court of Appeals for the D.C. Circuit to postpone certain cases set for hearings last week and through the end of this week.

The court, in at least seven instances and without comment, rejected the government's requests. The private lawyers in the cases were not entirely eager to have argument hearings pushed back to a date uncertain.

In one case, a dispute over Medicare payments, M. Miller Baker of McDermott Will & Emery's Washington office, said the challengers "have expended considerable resources preparing for argument and would be prejudiced by an unnecessary continuance."

In another case, a Louisiana-based lawyer, John Wells, told the court that he "regretfully" opposed the government's effort to postpone argument. Wells cited his travel schedule as among the reasons the court should not delay argument in the case, a Navy personnel dispute.

The Morning Wrap

Bracing: As the shutdown drags on, the nation's chief judges are bracing for the moment the judiciary runs out of reserve funds. "We're all working through it, trying to figure out where we're going to go right now," Chief Judge Morrison England Jr. of the U.S. District Court for the Eastern District of California told The National Law Journal. The NLJ's complete coverage of the shutdown is here. Meanwhile, on the debt ceiling front, The New York Times reports: "Constitution May Give Obama Options to Raise Debt Ceiling."

Chasing: A Connecticut woman who allegedly used her car as a battering ram was fatally shot yesterday following a police chase. The Washington Post has coverage here and here, and The New York Times reports here. In The Los Angeles Times today: "When to shoot? Capitol shooting raises questions about force."

Financing: The Washington Post reports: "The very wealthy could play a much greater role in funding federal candidates and political parties if the Supreme Court rules that a key campaign finance restriction adopted after Watergate is unconstitutional." More on the U.S. Supreme Court: Here's NLJ coverage of the veteran advocates--and newcomers--set to argue in the coming weeks.

Tweeting: "Silicon Valley teams from Wilson Sonsini and Davis Polk have landed banner slots on the closely watched Twitter IPO," The Recorder reports. The Wall Street Journal reports here on Twitter's IPO.

Intelligence Officials Warn of Consequences of Shutdown

By Alex Zank

The consequences of the government shutdown, now in its second day, are becoming increasingly more dire, James Clapper, the Director of National Intelligence, told the Senate Judiciary Committee at an oversight hearing today.

"On top of the sequestration cuts, this seriously damages our ability to protect the safety and security of citizens," Clapper said. He added: "This is not just a beltway issue." The shutdown, he said, will affect the intelligence community's effectiveness internationally.

Sen. Chuck Grassley (R-Iowa), the top Republican on the judiciary committee, expressed concern to Clapper and Keith Alexander, director of the National Security Agency, about the high number of government workers in the intelligence community (70 percent) who are not on the job now because of the shutdown. Grassley suggested that there are too many government employees working on tasks that are not essential to the protection of the national security.

Clapper said his intelligence office made tough decisions on which employees to keep on the job during the shutdown. The Office of the Director of National Intelligence, he said, kept staff “essential to protect against imminent threat,” as required by shutdown protocol.

Feds Prepare to Settle Mutilated Currency Forfeiture Case

The U.S. Justice Department is preparing to settle a civil forfeiture dispute over more than $4.2 million in mutilated currency that agents seized last year in an international money laundering investigation, a prosecutor told a judge this afternoon.

In court papers filed in Washington, agents said they believed the money was intentionally damaged—burned and chemically altered—and then submitted to the U.S. Treasury Department's Bureau of Engraving and Printing (BEP) with the goal of acquiring new, clean bills. A Secret Service agent described the scheme as a "money laundering machine."

Lawyers for Banco Piano S.A., represented by Steptoe & Johnson LLP, filed a claim in U.S. District Court to contest the forfeiture, saying the bank, in Argentina, lawfully submitted the currency and should receive fresh bills in redemption. The attorneys said the bank, as routine business, purchases damaged foreign currency at a discount and submits it to the issuing government for replacement.

"Banco Piano did not have any knowledge of, let alone participate in, any alleged money laundering or counterfeiting activity that could involve mutilated United States currency," Steptoe litigation partner Matthew Herrington wrote in court papers last year.

Leahy Calls for Overhaul of Intelligence Oversight

By Alex Zank

The first vote that U.S. Senator Patrick Leahy (D-Vt.) cast after entering the Senate in 1975 was to create the Church Committee to investigate abuses by the FBI, CIA and other intelligence agencies.

“More than 38 years after I cast my first vote on the floor of the Senate, we continue our fight to ensure that the privacy rights and civil liberties of Americans are not swept aside in the name of national security,” Leahy said on Tuesday to an audience at Georgetown University Law Center.

The keynote speaker during the first of three Georgetown-hosted discussions regarding intelligence gathering, Leahy, chairman of the Senate Judiciary Committee, connected the past with the present.

“I am convinced that the system set up in the 1970s to regulate the surveillance capabilities of our intelligence community is no longer working,” he said. “We must recalibrate.”