Posts Tagged ‘Department of Justice’

Justice Dept. case against FedEx collapses mid-trial

Big news from federal court in San Francisco: we’ve repeatedly questioned the U.S. Department of Justice’s adventurous decision to charge Federal Express with crimes for, in essence, refusing to snoop into its customers’ packages and business. From our post two years ago:

The federal government has prevailed on a grand jury to indict Federal Express for servicing what it should have known were illicit online pharmacy operations. FedEx says it repeatedly asked the government to supply a list of shippers it considered illicit so that it could cut off service, but that the government refused; the Department of Justice contends that circumstantial evidence should have been enough to alert the package shipment company. …

And last month, quoting Washington Legal Foundation’s Cory Andrews:

“Federal prosecutors have accused FedEx of knowingly shipping illegal drugs in interstate commerce and laundering money by merely doing its job: delivering packages (in this case, from online Internet pharmacies) to their intended recipients and getting paid for the service. …To avoid the very sort of ‘gotcha’ prosecution at issue here, Congress inserted exceptions for common carriers in each of the relevant statutes” authorizing shipment of prescription medications and controlled substances when done in the usual course of business….

Now, this [Associated Press/ABC News]:

A criminal trial nearly two years in the making alleging FedEx knowingly delivered illegal prescription drugs to dealers and addicts ended suddenly Friday when prosecutors moved to dismiss all charges against the shipping giant.

U.S. District Court Judge Charles Breyer, who had been highly critical of the government’s positions as the trial unfolded, granted the motion to dismiss: on Friday he called FedEx “factually innocent” and said the withdrawal of charges was “in the court’s view, entirely consistent with the government’s overarching obligation to seek justice even at the expense of some embarrassment.”

FedEx spokesman Patrick Fitzgerald said in a statement Friday that the company has always been innocent and the case should never have been brought.

“The government should take a very hard look at how they made the tremendously poor decision to file these charges,” he said. “Many companies would not have had the courage or the resources to defend themselves against false charges.”

Many in the field of white-collar legal defense have warned large corporations, particularly those with businesses built upon relationships of public trust, to cut a deal with the federal government rather than try to withstand the full force it can bring to bear in a prosecution. But FedEx, for one, has shown that it is still possible to defy the authorities and win. Mike Koehler at FCPA Professor says that might help lay to rest what has been called the “Arthur Andersen effect” in which indictment is itself seen as tantamount to corporate death.

P.S.: Our friend James Copland of the Manhattan Institute has this observation (via email):

What’s remarkable here is that UPS agreed to a $40 million non-prosecution agreement — and to hire a new corporate officer and an independent auditor looking over their shoulder and reporting to the U.S. Attorney — for the same alleged conduct.

[cross-posted at Cato at Liberty]

More from Jim Copland and Rafael Mangual at Real Clear Markets: “Judge Breyer observed that the government had failed to show any ill intent, and he pointedly noted that prosecutors have not gone after the U.S. Postal Service for the same conduct…. glad FedEx called the government’s bluff and won.” And: Eugene Volokh; George Leef, Forbes (and thanks for quote).

Banking and finance roundup

  • The Department of Justice cuts a settlement deal with Bank of America under which the bank agrees to give millions to liberal groups [Sean Higgins/Washington Examiner, Federalist Society blog rounding up criticisms]
  • Seizures under bank structuring law have hit small business owners who deposited cash in under-$10,000 amounts because their insurance policies wouldn’t cover cash-on-hand holdings above that amount [Ali Meyer/Free Beacon, earlier and generally]
  • “It is hereby enacted that Smith wins his lawsuit” statutes and the Bank Markazi (Iran funds) case [Michael Greve, Liberty and Law]
  • Second Circuit panel throws out $1.2 billion verdict against B of A over Countrywide mortgage lending, saying government didn’t prove fraud [Daniel Fisher, more]
  • “The crowdfunding catch: government regulations” [Thaya Brook Knight, Newsweek/Cato]
  • Too left-wing to get tenure at Harvard Law in era of the Crits. Now, to banks, “he’s judge and jury and everything else.” [Wall Street Journal profile of Fed governor Daniel Tarullo]

Judge Andrew Hanen vs. DoJ lawyers, cont’d

In the old days, when lawyers representing the U.S. Department of Justice were found to have lied, an Attorney General might have ended their service. We’re not in the old days any more [Michael Greve] As related in an earlier post, Judge Andrew Hanen of the Southern District of Texas federal court, after concluding that federal lawyers had chosen to hide relevant facts in litigation challenging President Obama’s DAPA immigration initiative, ordered them to take ethics classes in a scathing opinion; his order has variously been criticized for possibly exceeding his jurisdiction, and for being insufficiently stringent to deter future misconduct by the Department’s lawyers.

House Judiciary: freeze that slush

The House Judiciary Committee, by an 18-6 vote, has given its approval to the Stop Settlement Slush Funds Act of 2016, which would curtail the Department of Justice’s practice of using legal settlements to funnel money to favored groups [Rep. Bob Goodlatte press release, Nicholas Quinn Rosenkranz, Dan Lungren testimony, U.S. Chamber] Earlier here (Randal John Meyer), here, etc.

Federal judge: DoJ lawyers told untruths, need ethics classes

A federal judge has handed down one of the most spectacular rebukes in memory to the courtroom conduct of the U.S. Department of Justice [DOJ], for hiding the ball in a challenge to the administration’s DAPA immigration initiative. Writes Ilya Shapiro:

[Judge] Hanen’s remedy consists of five components:

(1) all the lawyers at DOJ headquarters who litigate in the 26 states that challenged DAPA (most of them) have to go back to school for an annual ethics course taught by an outside expert;

(2) DOJ has to certify annually for five years that these lawyers are indeed going to school;

(3) the attorney general must report within 60 days “a comprehensive plan to prevent this unethical conduct from ever occurring again,” and “what steps she is taking to ensure that . . . the Justice Department trial lawyers tell the truth — the entire truth.”; …

Declaring that the lawyers had acted in “bad faith” and that their “conduct is certainly not worthy of any department whose name includes the word ‘Justice,'” Hanen added: “The court does not have the power to disbar the counsel in this case, but it does have the power to revoke the pro hac vice status of out-of-state lawyers who act unethically in court.” [Joel Gehrke, Washington Examiner; Josh Blackman, NRO] But see: Orin Kerr asks whether the order exceeds the court’s jurisdiction.

Campus climate roundup

  • Department of Justice: we’re going to use that Dear Colleague Title IX letter as a basis for prosecution, and colleges are going to need to crack down on speech if they want to stay in compliance [Eugene Volokh, Scott Greenfield, and FIRE, on University of New Mexico case] A brief history of how we got here from the Dear Colleague letter [Justin Dillon and Matt Kaiser, L.A. Times; my Commentary piece three years ago anticipating the basics] Why won’t even a single university challenge this stuff in court? [Coyote, earlier]
  • Dangers of “safe spaces”: Mike Bloomberg’s Michigan commencement address is getting noticed [Bloomberg View, Deadline Detroit, Soave] “Slogans Have Replaced Arguments” [John McWhorter]
  • Compulsory chapel will make no provision for adherents of dissenting sects: Oregon State plans training incoming freshmen in “social justice learning,” “diversity,” and “inclusivity.” [Robby Soave]
  • Running various departments at George Mason U. along lines recommended by Freire’s “Pedagogy of the Oppressed”: no problem. Naming law school after Antonin Scalia: that might politicize things [Michael Greve via Bainbridge]
  • USC cancels visiting panel of gaming industry stars because it’s all-male [Heat Street]
  • Harvard aims sanctions at students who join off-campus, unofficial single-sex clubs [The Crimson, FIRE, background Althouse, Greenfield]
  • Margot Honecker, hated DDR education minister, filled schools with indoctrination, informants. Glad that era’s over [Washington Post, Telegraph, SkyNews obituaries]

Banking and finance roundup

  • To keep your sex business free from the coils of federal regulation, your best bet might in fact be Ted Cruz, implacable opponent of Operation Choke Point [Elizabeth Nolan Brown; more from Snopes on rather silly attacks on Cruz for doing job lawyers are expected to do for clients in Texas case]
  • Snoopy, you’re not systematically important: judge frees MetLife from SIFI designation under Dodd-Frank [Thaya Brook Knight/Cato, John Cochrane]
  • What with Sen. Elizabeth Warren trying to put a lid on some companies’ criticism of the Labor Department’s fiduciary rule, hope it’s still OK for the rest of us to talk about it [Thaya Brook Knight, Cato]
  • Sen. Warren isn’t only one using letters to SEC to browbeat businesses: New York City elected Public Advocate Letitia (“Tish”) James tries to hassle gunmaker Sturm Ruger to comply with various demands of gun control advocates [Manikandan Raman, Benzinga/Yahoo; more on Ms. James and her blames]
  • Next term Supreme Court will consider case on scope of insider trading law, Salman v. U.S. [Ira Stoll, more] “Returning to Common-Law Principles of Insider Trading After United States v. Newman” [Richard Epstein, Yale Law Journal on Second Circuit’s decision via Stoll]
  • DoJ cracks down on big-investor activism — at least when of a sort antitrust enforcers don’t like [Matt Levine]

March 23 roundup

  • Never know who’ll benefit: supersedeas appeal bond limits, sought by tort reformers, may now save Gawker from ruin [WLF, earlier] Plus a Florida appellate court ruling on newsworthiness, and other reasons the scurrilous media outlet is hoping for better luck on appeal if it can get past the bond hurdle [Politico New York]
  • Governance in Indian country: Native American lawyer Gabe Galanda disbarred by Nooksack tribe while fighting disenrollment of some of its members [Seattle Times, followup (tribal judge rules due process was lacking, but in so doing, as employee serving at tribe’s pleasure, “potentially left herself open to being fired”)]
  • Revenge of the broken-winged pterodactyl: Maryland Democrats accuse each other of complicity in gerrymander in fight for Van Hollen’s House seat [me at Free State Notes]
  • Oh, DoJ: “enforced donation to ‘public service’ organizations that just happen to support the ruling party’s goals” [Jeb Kinnison citing this post of ours on mortgage settlements]
  • “Trump’s long trail of litigation” [Brody Mullins and Jim Oberman, WSJ; our earlier here, here, here, etc.]
  • Lansing prosecutor, an “outspoken advocate for ending human trafficking and prostitution,” now facing charges of go ahead and guess [WILX; our Eliot Spitzer coverage]

Police roundup

  • Open-minded: liberal-leaning Marshall Project publishes Heather MacDonald, often found on other side of criminal justice debates, on why police shootings of “unarmed” persons are not as clear-cut a matter as one might think;
  • “Report: Dashcam Equipment in Chicago Police Vehicles ‘Intentionally’ Destroyed” [Bryant Jackson-Green, Illinois Policy]
  • Sure-footed SWAT response to San Bernardino terror attack proved value of police militarization, right? Not so fast [Anthony Fisher]
  • In December Cato held a conference on “Policing America,” catch up with the videos here [Jonathan Blanks]
  • “Head of multi-jurisdictional anti-drug task force says forfeiture reform may spell the end of these roving, self-funded teams of drug-fighting cops who aren’t answerable to any local authority. He makes a good argument, but not the argument he thinks he’s making.” [that’s Radley Balko summarizing Tim Helldorfer, Memphis Commercial Appeal]
  • U.S. Department of Justice “Wants to Punish Abusive Ferguson Police with Massive Raises” [Scott Shackford, more on civil rights suit]