Source: http://federalbarcouncilquarterly.org/?p=773
Timestamp: 2019-04-24 15:06:49+00:00

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The Federal Bar Council held its annual Winter Bench and Bar Conference at the Four Seasons Resort on the Big Island of Hawaii from January 30 through February 6, 2015. Sharon L. Nelles of Sullivan and Cromwell chaired the meeting, and Second Circuit Judge Richard C. Wesley headed the Planning Committee. George A. Davidson of Hughes Hubbard & Reed received the Whitney North Seymour Award for public service by a private practitioner. Below, we describe the programs presented.
Eastern District Judge William F. Kuntz, II, chaired a panel including Neil M. Barofsky, Jenner & Block, Professor Marshall L. Miller, New York University Law School, and Audrey Strauss, Alcoa Inc., that discussed the application of the Foreign Corrupt Practices Act and corporate accountability for employee wrongdoing. The program consisted of skits followed by panel discussions. The skits focused on a company that entered into a consulting contract with the sister of the Minister of Homeland Security of an unnamed country, who obtained contracts for the company.
Professor Miller explained the FCPA. In order to avoid liability for bribes by employees, a company must keep careful accounts and records of work done and have strong internal control provisions. It is legitimate to use a relative of a foreign official to get business, but the relative actually must perform work for the company.
Panel members discussed the difference to a company between a guilty plea and a DPA (“Deferred Prosecution Agreement”). With a guilty plea, a company can put the matter behind it. With a DPA, the court appoints a monitor and the company has a probation period with a monitor overseeing its operations along with the involvement by the court. Both guilty pleas and DPAs have the collateral effect of the admission of factual guilt. While providing facts to the Justice Department, the company has to be careful not to violate the laws of foreign countries relating to data collection and secrecy, yet the more information provided the better the relationship with Justice will be. The government will look to see if companies have put remedial measures into place as soon as possible.
Professor Miller talked about the Yates Memo on Individual Accountability for Corporate Wrongdoing, which is a message to the Justice Department, companies, and the press, but which does not represent a change in policy or practice. The Justice Department expects complete cooperation and that companies will provide all information. A company that does not provide all the facts will get no credit. Audrey Strauss said that it was incumbent on a good defense attorney to bring forward all facts. The company’s lawyers must hand up individuals who are guilty.
Neil Barofksy said that a monitor can be onerous or helpful with either an adversarial, slash and burn, or tough but fair attitude. The real responsibility of the monitor is to put in a “gold plated” compliance system, because a company’s wrongdoing often results from an inadequate compliance system. The responsibilities of the monitor are set forth in the contract between the company and the government entity involved. The agreement should describe the monitor’s duties clearly and the parties should agree on the scope. Professor Miller said that companies want the monitorship to succeed.
Audrey Strauss believes that it is better for the company to fix the compliance system itself as early as possible, rather than to have one imposed from outside. Corporate liability is based on respondeat superior, as long as the employee acted within the scope of duty. There is a real question whether respondeat superior should be applied in criminal cases.
The program began with a performance of a skit originally performed at the Federal Bar Council American Inn of Court. Marjorie Berman and Eric Franz starred in the skit, which demonstrated the complexity of the issues raised by sexual assault accusations on college campuses. Following the skit, Southern District Judge Katherine Polk Failla chaired a panel consisting of Harlan A. Levy, Boies, Schiller & Flexner, formerly the chief deputy attorney general of New York State, and Frederick P. Schaffer, general counsel and senior vice chancellor for legal affairs at the City University of New York.
Judge Failla discussed the background of the U.S. Department of Education requirements for universities to comply with Title IX. Harlan Levy explained that there were two overarching themes: greater justice for women and accountability for men. Frederick Schaffer explained that Title IX began as a vehicle for creating comparable sports programs for men and women. In 1999, the Office of Civil Rights of the Department of Education sent a “Dear Colleague” letter to colleges and universities stating that Title IX covered sexual discrimination, including both quid pro quo discrimination and sexual harassment. When students complain about other students, a university has an obligation to act. If a university ignores sexual discrimination, it can be held liable.
In 2011, the Office of Civil Rights issued another “Dear Colleague” letter with no notice or rule making. The 2011 letter imposed an affirmative obligation on universities to support victims, educate the student body, investigate, and adjudicate. The letter contained an extraordinary level of detail, including a standard of evidence and who gets to participate. Each university must comply or risk the loss of federal funding. Any party who is dissatisfied can appeal to the Department of Education, which can investigate and bring pressure on the university.
Harlan Levy spoke about specific examples and the status of litigation and legislation. He discussed the student dissatisfied with the outcome of an investigation carrying around a mattress at Columbia, Harvard Law School professors criticizing the guidelines and the denial of confrontation, and an erroneous Rolling Stone article based on a single source with no corroboration. Levy also spoke about the film “The Hunting Ground,” which presents sexual assault on campus as a civil rights issue. Governor Andrew Cuomo referenced the film in connection with sponsoring the “yes means yes” legislation covering the standard for sexual assault in New York State. Levy said that there must be training at schools that makes the “yes means yes” standard clear. There must be consent by words or actions, indicating clear permission to proceed.
Schaffer said that the City University of New York has put full blown due process procedures into place, including witnesses, cross-examination, lawyers, and students sitting on the panels, even though the “Dear Colleague” letter discourages that. The New York and California “yes means yes” statutes provide that a person who is intoxicated to the point of impairment cannot consent.
Schaffer and Levy indicated that these issues are more than theoretical for them. They both have boy/girl twins.
Eastern District Judge Nicholas G. Garaufis chaired a panel that examined various aspects of political corruption. The panel members were Professor Richard A. Briffault, Columbia University School of Law and an advisor to Mayor Bill DeBlasio; Margery Bronster, Bronster Fujichaku Robbins in Honolulu and former Attorney General of Hawaii; Lisa J. Demsky, Munger, Tolles & Olsen in Los Angeles; and Michael Jay Green, Law Offices of Michael Jay Green in Honolulu.
Professor Briffault provided an overview of the development of federal political corruption law. He explained that, in connection with prosecutions for theft of honest services, the current focus is on bribery and proof of a quid pro quo. The “quid” requires a benefit from the private person to the official, which can be anything – cash, vacations (McDonald), employment (Silver), a benefit to a third person (Skelos). Next, there must be a “quo” – an official act or use of influence to affect an outcome. The “pro” means that there must be a connection between the official act and the bribe. The official act does not have to be illegal. Lisa Demsky said that the facts of each particular case – i.e. the circumstances, timing, intent – are important to determining whether an official has crossed the line from friendship or a noncriminal employment relationship to criminal activity. Panel members discussed specific cases to try to define what constitutes theft of honest services, using a continuing hypothetical. The panel concluded that it comes down to arrogance and a sense of entitlement by public officials.
Michael Green, a personal injury lawyer, said that when people are elected they become arrogant. The way to curtail public corruption is to create transparency in campaign spending. Candidates raise millions of dollars to be elected to offices where they are paid $100,000. There must be a will among those in office to make a change.
Margery Bronster described her experience as Hawaii’s Attorney General from 1995 to 1999 investigating the Bishop Trust. The Bishop Trust was created as part of one of the biggest estates in the country and currently is the largest landowner in Hawaii. Bronster said that she confronted a cozy relationship among the Bishop trustees and the government, which enabled the trustees to pay themselves a huge amount of money by spending many hundreds of thousands of dollars on providing benefits to elected officials. Bronster said that she ran into roadblocks set up by the Hawaii Supreme Court, but eventually was able to interest the Internal Revenue Service in an investigation. Bronster was reappointed Attorney General by the governor, but not confirmed by the state legislature. Eventually, as a result of the IRS investigation, the Bishop Trustees were replaced and new rules were put into place, she said.
A panel led by Judge Jeffrey Meyer of the District of Connecticut discussed the conflicts between extraterritorial jurisdiction and sovereignty. Judge Meyer, who has written about and taught that subject, led off with a tutorial on the subject area. There then were three skits that illustrated some of the issues: (1) a skit loosely based on the FIFA prosecution; (2) a skit concerning inconsistencies between the United States and European Union in their approach to antitrust enforcement; and (3) international cartels.
Neil Barofsky led off with a discussion of the FIFA case and the bases for jurisdiction in that case. The key in that case is that the defendants actually engaged in conduct in the United States. If the conduct had occurred exclusively overseas, and the conduct was legal in the jurisdictions in which it occurred, it might be difficult for U.S. authorities to assert jurisdiction – but those are not the facts in FIFA, notwithstanding press articles to the contrary. A major concern is that if the United States tries to become the world’s police officer, other countries might attempt to exercise jurisdiction over conduct occurring here.
Steven Holley of Sullivan & Cromwell and Harry First, a professor of law at New York University Law School, discussed inconsistencies between U.S. law and EU law in the context of the Microsoft litigation. Holley was part of the team that represented Microsoft in that litigation, and First has written a book about it. Holley explained that in the EU, there is no discovery, no trial, and no ability to cross-examine witnesses, and the EU does not recognize the attorney-client privilege for in-house counsel. In addition, the EU has insisted on certain types of relief that have been rejected in the United States, and it is not unusual for a disgruntled U.S. litigant to seek relief from the EU. First was of the view that EU procedure is not that different from the procedure before the Federal Trade Commission or the Securities and Exchange Commission, which act as prosecutor and judge in conducting an investigation. He noted that substantive conflicts between U.S. enforcement policy and EU enforcement policy were more common in the past than today, and he does not think it will be a significant problem going forward.
Robert Kaplan of Kaplan, Fox & Kilsheimer then discussed international cartels from a plaintiff’s perspective and James Warnot of Linklaters addressed the issues from a defendant’s perspective. International cartel cases have become a cottage industry and have included massive litigations in such diverse areas as auto parts, computer memory, televisions, air cargo, freight forwarders, and ocean shipping. Often civil litigation and criminal investigations proceed simultaneously. Most countries have amnesty or leniency programs, although in the United States only the first one through the door qualifies, while in other countries various levels of leniency are available to companies that turn themselves in. In the United States, a successful amnesty applicant also can qualify for single damages, as opposed to treble damages, if it cooperates with the plaintiffs. As a result, in many international cartel cases the only issues are whether a class can be certified and damages. U.S. plaintiffs only can sue for damages suffered in the United States, so many plaintiffs also bring suits in other countries. In the past, many countries have been hostile to rules that favor the plaintiffs – such as broad discovery, class actions, and contingency fees – but there is a growing trend around the world to adopt the U.S. approach.
Judge Meyer concluded the discussion by noting that, as time goes on, international cooperation will be required in order to avoid intrusions on sovereignty and inconsistent results.
Chief Judge Katzmann described statutory interpretation as a collision between human beings and language. There are two major approaches to statutory interpretation: the textualist approach, which focuses only on the words of the statute and excludes legislative history, and purposivism, which considers legislative history. In Chief Judge Katzmann’s view, the goal of statutory interpretation is to determine Congress’ purpose in passing legislation, and there is a “toolbox” of interpretative aids available to courts to assist them in that task, including words, context, technical usage, structure, canons, and legislative history. Chief Judge Katzmann is quick to point out that not all legislative history is created equal, and courts must be careful to consider the reliability of particular legislative history before using it. He credits the textualists with helping to bring some discipline into this area. At the end of the day, however, he does not think that courts should exclude anything that is helpful in determining Congress’s purpose.
Justice Sotomayor observed that statutes are written for a reason. Congress uses words to tell us what they want us to do, but human behavior often provides a twist that Congress did not anticipate with its words. The Court nevertheless has to determine how the statute applies, and Justice Sotomayor estimated that 75 percent of the Court’s cases involve statutory interpretation. One way to understand the views of the Justices on this issue is to consider the starting point of each Justice. Justice Sotomayor observed that Justice Breyer thinks that the Court should start with the policy, while Justice Scalia thought that the Court should start with the words. The other Justices are somewhere in between those two ends of the continuum. Justice Sotomayor describes herself as looking for the reason the statute was adopted.
Judge Wesley emphasized that sometimes there are gaps in the legislation. Congress cannot anticipate every conceivable permutation. He noted that interpretation of state statutes can be different from interpretation of federal statutes because in New York, at least, there is no legislative history. Sometimes the best interpretative tool is the model code after which the statute is patterned. Sometimes the legislators cannot agree on an issue so they interject “purposeful ambiguity” into a statute so the courts can decide.
Judge Garaufis remarked that administrative agencies interpret statutes all the time, and those interpretations may never be reviewed by the courts. Often the agencies are engaged in a dialogue with Congress and have a much better idea of what Congress is trying to achieve. The Supreme Court has recognized this by deferring to agency interpretation of the relevant legislation.
The panel then discussed the statutory interpretation issues in Yates v. United States, 135 S. Ct. 1074 (2015). In Yates the question was whether throwing undersized fish back in the water to avoid prosecution could violate the provision of Sarbanes-Oxley that prohibits the destruction of tangible objects. Emphasizing that the purpose of Sarbanes-Oxley is to deal with financial issues, Justice Ginsburg held that destruction of fish did not violate the statute. In dissent, Justice Kagan cited Dr. Seuss’ book, One Fish Two Fish Red Fish Blue Fish (1960), in arguing that a fish is a tangible object. Judge Wesley observed that reliance on Dr. Seuss is a sure sign that an opinion does not have five votes. Justice Sotomayor noted that Yates was the subject of many bad fish jokes.
The panel also discussed King v. Burwell, 135 S. Ct. 2480 (2015), where the Court determined that tax credits under the Affordable Care Act are available to persons in states that rely on a federally created insurance exchange. The statute makes such credits available for state exchanges but is silent on that issue in the case of federal exchanges. In a carefully written opinion, Chief Justice Roberts held that the omission was essentially a typographical error. Even though he considers himself to be a textualist, the Chief Justice ruled that “the context and structure of the Act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.” Concluding the discussion, Justice Sotomayor observed that the differences among the Justices are largely a question of ordering principles, and each Justice must decide which principles are most important to that Justice in determining the meaning of a statute.
As has become a tradition at the Winter Meeting, Miguel Estrada of Gibson Dunn and Neal Katyal of Hogan Lovells discussed the cases currently on the docket in a panel moderated by Second Circuit Judge Richard Wesley. Katyal began the discussion with some interesting statistics: Justices Breyer and Sotomayor agreed the most; Justices Thomas and Sotomayor disagreed the most; Justice Breyer was most frequently in the majority; Justice Kagan wrote the fewest opinions; and Justice Thomas wrote the most. Justice Sotomayor asked the most questions – with an average of 22 questions per argument – and Justice Scalia got the most laughs. There were 84 cases this term, 16 of which came from the States. The government lost in six out of seven criminal cases; its only victory was in a case involving the protocol for administering death penalty drugs.
Fisher v. University of Texas, an affirmative action case, is up in the Court for the second time. The argument did not go well for the proponents of affirmative action. In Katyal’s view, the Court will either affirm, which is unlikely; eliminate affirmative action, which is possible; or issue a narrow decision on the facts, which is the most likely outcome. Given the success in attracting minorities to a program at the University of Texas that automatically admits the top 10 percent of the graduates of every high school class, the university, in Estrada’s view, failed to demonstrate that affirmative action is needed to achieve a critical mass. Estrada described affirmative action as on life support.
Both Estrada and Katyal thought it was likely that the Court would strike down the court of appeals decision in Friedrichs v. California Teachers Association, which upheld the right of unions to require non-members to pay union dues even though a portion of that money may be used to fund political activity with which the non-members disagree. With Justice Scalia’s death after the conference, however, the Ninth Circuit’s decision was left intact.
In Whole Woman’s Health v. Cole, the question is whether certain restrictions placed on abortion clinics placed an undue burden on the exercise of a constitutional right. The issue comes down to how many miles a woman must travel to get an abortion. Katyal noted that Justice Kagan had voted for a stay, which is an indication that she will probably vote for reversal. Judge Wesley observed that the concept of “undue burden” is so vague that it invites the Justices to rely on their personal experiences in deciding a case.
Undue burden is also the issue in Zubik v. Burwell, where the Department of Health and Human Services requires some religious organizations to file an application for an exemption from the Affordable Care Act’s requirement that employers provide contraceptive coverage, even though some religious organizations are automatically exempt. The question is whether requiring the form to be filed creates an undue burden. Estrada believes that at least some of the religious organizations involved in the case will win.
In United States v. Texas, a number of states brought a lawsuit challenging President Obama’s executive order on immigration. The states challenge the order on the ground that it is inconsistent with federal immigration law, and the executive branch failed to follow the Administrative Procedures Act in implementing the order. The states contend that they have standing because they offer certain benefits to immigrants who are the subject of “deferred action” for deportation. Estrada expressed the view that the Obama Administration is probably right on the statutory question, and it is probably wrong on the Administrative Procedure Act question, but it is questionable whether the states have standing.
Southern District Judge Analisa Torres led a panel on insider trading. The panelists included Kevin O’Connor, general counsel of Point72 Asset Management, and Scott Morvillo of Morvillo LLP.
O’Connor began the discussion by pointing out that under the case law it is not always illegal to trade on nonpublic inside information, and Congress has shown no appetite to change the law in this area. The key issue under Newman was whether the recipient of the inside information knew that the tipper breached a fiduciary duty in disclosing the information. Since a tippee down the line almost never knows anything about the circumstances under which the information was originally disclosed, it is very hard for the government to win those cases, as Newman demonstrates. Nevertheless, there is always the risk that the tippee will be accused of conscious avoidance. Therefore, some companies have protocols for asking about the source of the information when it is received.
The original tipper must also derive a personal benefit from disclosing the information. In that regard, the panel discussed the Dirks case, where the original tipper was a whistleblower who had no interest in trading on the information. The Supreme Court determined that a tippee who received the information and traded on it did not violate the law.
The panel illustrated these principles through a series of skits.
Judge Torres also moderated the meeting’s ethics panel. The vehicle for the discussion was consumer surveys. Diana Torres of Kirkland & Ellis gave a tutorial on surveys generally. Ken Plevan of Skadden Arps then explained the ethical issues in the context of pre-litigation consumer surveys.
There is always a question whether such surveys can be kept confidential if they do not turn out as expected. To qualify as work product, the survey must be in anticipation of litigation, but if it is in anticipation of litigation, it cannot be destroyed. There is no guarantee that a privilege claim will be upheld. At least one court has held that, where pre-litigation surveys are similar to studies commissioned in the regular course of business, they are not subject to work product protection.
The panel also discussed whether surveys can be taken of class members. Frederick Fox of Kaplan Fox & Kilsheimer expressed the view that pre-certification surveys are permissible, but once a class is certified, such surveys cannot be done without the consent of the other side or permission from the judge.
John Siffert of Lankler Siffert & Wohl discussed whether a Rule 30(b)(6) witness would be required to disclose the existence of surveys, even if the survey was done by a non-testifying expert. The rules require the disclosure of such surveys, without revealing the substance, even if they are considered to be privileged. The witness cannot say no such documents exists. If the witness fails to answer the question correctly, ABA Model Rule 3.3 requires the lawyer to correct the testimony. It is no longer sufficient to tell the client to get a new lawyer if the client has made a false statement in a judicial proceeding.
The Winter Meeting ended with a conversation between Supreme Court Justice Sonia Sotomayor and Judge Richard C. Wesley. Justice Sotomayor and Judge Wesley served on the Second Circuit together before her confirmation to the Supreme Court, and they are good friends. Justice Sotomayor spoke about her Court experience and her personal life. Set forth below are some of the topics Justice Sotomayor discussed.
Justice Sotomayor provided some clues to the way the Justices operate within the Court. First, she said that dissents on cert. petitions are meant to be read to educate the bar and raise issues for petitioners, the public, and colleagues. Justice Sotomayor is in the cert. petition pool along with eight of the (then) nine justices. A clerk from one chambers reviews each of the 8,500 cert. petitions and writes a bench memo, presenting both sides, and makes a recommendation. The bench memo particularly helps in pro se cases where the petition is hard to understand. The Chief Justice decides which petitions should be discussed, and each Justice has 24 hours to request that additional petitions be discussed. Following the usual protocol, the Chief Justice speaks first and then the rest of the justices speak in descending order of seniority. The current Chief Justice lets the Associate Justices speak out of turn.
Compared to her editing at the Second Circuit, described by Judge Wesley as “legendary,” Justice Sotomayor is very careful with her editing at the Court, because each Justice has an individual pride of authorship. Justice Sotomayor talked about the differences in opinion writing at the Second Circuit and the Supreme Court.
Justice Sotomayor said that fractured opinions, resulting from the inability of the Justices to come to one opinion, shows courts below what each Justice is thinking. Lines of analysis develop through these separate opinions. Justice Sotomayor says amici briefs are of varying value to her. Some just rehash points raised by the litigants, but others provide history or expertise that is not in the briefs. The latter can be very helpful and provide a different perspective on the case. For example, Justice Sotomayor drew a concurrence in a tax case from an amicus brief. The reality is that the Justices are asked to be experts in areas of the law in which they have no experience and this is very humbling.
In cases of social significance, Justice Sotomayor suggested that dissents provide clues to how strongly the Justices feel on the subject. In intellectual property cases, the Court rules very narrowly because technology is developing very fast. Justice Sotomayor’s specialty, to the extent she has one, is intellectual property, which she developed on the Second Circuit.
Judge Wesley asked Justice Sotomayor how the social atmosphere at the Second Circuit and the Supreme Court differ. He remembers her as a social leader in the Second Circuit, bringing people together. Justice Sotomayor said that socializing in Washington is harder work. Her Supreme Court colleagues tend to scatter over the weekend to see grandchildren or go to the opera. Justice Sotomayor does a lot of socializing around Court life, including dinners with other Justices, Congress, and the Supreme Court Historical Society. Justice Ginsburg hosts National Council of the Arts musical recitals two or three times a year at the Court.
Justice Sotomayor said that she had a close relationship with her clerks. Each one is knowledgeable about all cases and they talk together as a group. In contrast, at the district court and Second Circuit, she worked with one clerk on one opinion at a time. She receives about 300 applications for clerkships, compared to 1,000 applications when she was on the district court and 500 to 700 in the Second Circuit.
Justice Sotomayor believes the most important ingredient for people is education. She devotes a lot of her time to talking to kids to inspire them to be curious about the world and their place in it. Justice Sotomayor does not believe that we will reach an equal society until we have equal education.
Council President Vilia Hayes presented the Whitney North Seymour Award for public service by a private practitioner to her partner at Hughes Hubbard & Reed, George Davidson. In her introduction, Hayes talked about Davidson’s career of exceptional public service similar to that of Whitney North Seymour. Davidson had a leadership role with the Puerto Rican Legal Defense & Education Fund, where he served on the board with Justice Sotomayor. He served as president of the Legal Aid Society and chair of the William Nelson Cromwell Foundation, as Whitney North Seymour had done. Davidson also served on the board of the Community Law Offices, was founding chair of the Federal Defenders of New York, active in the International Bar Association and the American Bar Association, a Fellow of the American College of Trial Lawyers, a life member of the American Law Institute and chair of Greenwich House. Hayes said she remembers him encouraging associates to perform pro bono legal work at Hughes Hubbard and acting as a mentor to all involved in pro bono work.
Davidson talked about four reasons he was delighted to receive the award. First, he said that Whitney North Seymour was a personal role model. He first saw him at a program for college seniors who had been accepted by Columbia Law School, where Seymour spoke about the role and responsibility of the lawyer in the profession. Second, Davidson talked about Seymour as a person and his commitment to values, including freedom of thought and expression, advancement according to merit, a just and fair court system, and a commitment to procedural fairness. Third, Davidson said he was happy to join the company of the other recipients of the Award. Finally, he was thrilled that he was receiving the award at a time when his old friend Justice Sotomayor was the guest of honor, his long-time colleague Vilia Hayes was president of the Council, and former colleague Joan Salzman was executive director.

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