Source: http://www.techlawjournal.com/alert/2008/03/18.asp
Timestamp: 2019-04-20 14:17:47+00:00

Document:
TLJ Daily E-Mail Alert No. 1,732, March 18, 2008.
March 18, 2008, Alert No. 1,732.
3/17. The U.S. Court of Appeals (10thCir) issued its divided opinion [74 pages in PDF] in US v. Nacchio, reversing the conviction of Joseph Nacchio, a former CEO of Qwest Communications International, and remanding for a new trial, before a new judge.
The Department of Justice (DOJ) criminally prosecuted Nacchio on allegations that he traded shares of Qwest while knowing that the company was unlikely to continue to meet its announced earnings.
On April 19, 2007, a trial jury of the U.S. District Court (DColo) returned a verdict of guilty on 19 counts of violation of federal securities laws involving insider trading. It acquitted Nacchio on 23 other counts.
On July 27, 2007, the District Court imposed a sentence of 72 months in prison on Nacchio. See, DOJ release.
The Court of Appeals held that "the improper exclusion of his expert witness merits a new trial". However, the Court of Appeals rejected Nacchio's other appeal points -- insufficiency of the evidence, improper jury instructions, and exclusion of classified information.
The excluded expert witness was Daniel Fischel, a professor at the University of Chicago law school, whose testimony would have provided economic analysis of Nacchio’s trading patterns, and the economic importance of the allegedly material inside information.
The Court of Appeals rejected, with little explanation, Nacchio's argument that the District Court erred in preventing him from introducing "classified information relevant to Qwest’s business prospects and the defendant’s state of mind".
The Court of Appeals wrote that Nacchio "claims that the evidence would have shown that he personally had reason to believe that Qwest’s economic prospects were much better than others realized. Thus, he says, this evidence should have been permitted both to show that he did not have material information and to negate scienter. We affirm the district court’s decision, because even if the classified information were presented and established what he said it would, it could not exonerate Mr. Nacchio as he claims. Essentially, Mr. Nacchio argues that undisclosed positive information can be used as a defense to a charge of trading on undisclosed negative information. We disagree."
The Court added that "If an insider trades on the basis of his perception of the net effect of two bits of material undisclosed information, he has violated the law in two respects, not none."
The Court of Appeals did not address whether or not the DOJ brought criminal charges against against Nacchio in retaliation for refusal to comply with National Security Agency (NSA) requests for customer call record data in violation of 47 U.S.C. § 222.
Nor does the Court of Appeals does not address whether or not Nacchio's claims regarding Qwest's business prospects were anticipated contracts with the NSA, or whether those contracts were also withheld in retaliation.
See also, story titled "Bush Responds to USA Today Story Regarding NSA Database of Phone Calls" in TLJ Daily E-Mail Alert No. 1,369, Friday, May 12, 2006, and story titled "BellSouth and Verizon Attack USA Today Story" in TLJ Daily E-Mail Alert No. 1,372, Wednesday, May 17, 2006.
The Court of Appeals also ordered that the case be reassigned to another District Court Judge. Judge Edward Nottingham presided at the first trial.
This case is U.S.A. v. Nacchio, U.S. Court of Appeals for the 10th Circuit, App. Ct. No. 07-1311, an appeal from the U.S. District Court for the District of Colorado. Judge McConnell wrote the opinion of the Court of Appeals in which Judge Kelly joined. Judge Holmes dissented in part.
3/17. The U.S. Supreme Court granted certiorari in FCC v. Fox Television Stations, a broadcast profanity case involving the Federal Communications Commission's (FCC) regulation of "fleeting expletives". See, Orders List [18 pages in PDF] at page 3. See also, Supreme Court docket.
On November 6, 2006, the FCC issued an Order [36 pages in PDF] on remand regarding complaints that four broadcast television programs contained indecent and/or profane material. The Order concluded, among other things, that comments made by Nicole Richie during "The 2003 Billboard Music Awards" and by Cheryl LaPiere during the "The 2002 Billboard Music Awards" were indecent and profane. This order is FCC 06-166.
On June 4, 2007, the U.S. Court of Appeals (2ndCir) issued its divided opinion [53 pages in PDF] finding that "the FCC’s new policy sanctioning ``fleeting expletives´´ is arbitrary and capricious under the Administrative Procedure Act for failing to articulate a reasoned basis for its change in policy. Accordingly, the petition for review is GRANTED, the order of the FCC is VACATED, and the matter is REMANDED to the agency for further proceedings consistent with this opinion."
Kevin Martin, Chairman of the FCC, wrote in a statement that "I am pleased the Supreme Court will review the Second Circuit’s decision in Fox vs. FCC. The Commission, Congress and most importantly parents understand that protecting our children is our greatest responsibility. I continue to believe we have an obligation then to enforce laws restricting indecent language on television and radio when children are in the audience."
FCC Commissioner Deborah Tate issued a release in which she stated that she is "pleased". FCC Commissioner Michael Copps also issued a release in which he stated that he too is "pleased".
The ACLU's Caroline Fredrickson stated in a release that "The FCC’s new policy of policing television broadcasts with a vengeance doesn’t survive First Amendment scrutiny. Giving the Commission the ability to leverage arbitrary fines based on a vague set of standards will have a chilling effect on free speech, because broadcasters trying to avoid the penalties will err on the side of caution and begin censoring content that wouldn’t actually be considered indecent."
This case is FCC, et al. v. Fox Television Stations, Inc., et al., U.S. Supreme Court, Sup. Ct. No. 07-582, a petition for writ of certiorari to the U.S. Court of Appeals for the District of Columbia, App. Ct. Nos. 06-1760-ag, 06-2750-ag, and 06-5358-ag. The Court of Appeals heard petitions for review of a final order of the FCC.
3/17. The U.S. Supreme Court denied certiorari in Microsoft v. Novell, an antitrust case involving PC operating systems that dates back to the mid-1990s. See, Orders List [18 pages in PDF] at page 15.
This lets stand the October 15, 2007, opinion [31 pages in PDF] of the U.S. Court of Appeals (4thCir), which affirmed the judgment of the District Court.
The Court of Appeals affirmed the District Court's denial of Microsoft's motion to dismiss the Sherman Act Sections 1 and 2 claims. Microsoft argued that since Novell did not compete with Microsoft in the PC operating system market it did not suffer antitrust injury, and therefore lacked standing.
The Court of Appeals also affirmed the District Court's dismissal of, as untimely, other claims brought by Novell.
This case is Microsoft Corp. v. Novell, Inc., Sup. Ct. No. 07-924, a petition for writ of certiorari to the U.S. Court of Appeals for the 4th Circuit, App. Ct. Nos. 06-1134 and 06-1238. The Court of Appeals heard appeals from the U.S. District Court for the District of Maryland, D.C. Nos. 1:05-cv-01087-JFM and 1:00-md-01332-JFM), Judge Frederick Motz presiding. Chief Justice Roberts did not participate. See also, Supreme Court docket.
3/17. The U.S. Court of Appeals (8thCir) issued its opinion [8 pages in PDF] in Entertainment Software Association v. Swanson, affirming the District Court's permanent injunction against enforcement of a statute of the state of Minnesota that prohibits minors from purchasing or renting certain video games.
4:00 PM. Andrew Odlyzko (University of Minnesota) will give a lecture titled "Technology Mania: Comparing the 1999 Internet Bubble with the 1840s Railroad Mania". Location: Room 120, George Mason University School of Law, 3301 Fairfax Drive, Arlington, VA.

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