The BLT: The Blog of Legal Times

Steptoe Wins ‘Burger Case,’ Rogue States to Shut Down

As of 5:30 a.m. Wednesday, Rogue States, A Burger Company will have to cease operating to comply with a D.C. Superior Court judge’s verdict in the closely watched dispute between the restaurant and its neighbor, Steptoe & Johnson.

Judge John Mott’s ruling came after a three-day trial in which several Steptoe employees testified that fumes from the restaurant’s exhaust system were causing health problems, including watery eyes, headaches and nausea.

Steptoe, which was represented by Deborah Baum, a partner at Pillsbury Winthrop Shaw Pittman, has argued in court papers that because Rogue States’ exhaust vent is on the second floor it expels fumes directly into the firm’s air intake system. The firm has argued that the only way to properly fix the problem is to extend the exhaust system to the roof of Rogue States’ building, which has been estimated to cost roughly $150,000.

Rogue States owner Raynold Mendizabal, who was represented by Gary Adler of Roetzel & Andress, argued that the problem had been fixed when the restaurant installed a “scrubber” on its exhaust system and stepped up cleanings of that device after Steptoe won a preliminary injunction against the restaurant in August.

In handing down his ruling today, Mott said that despite Rogue States’ efforts, the odors and fumes have persisted and are continuing to cause “noticeable, discomforting and annoying” health problems for Steptoe’s approximately 700 employees.

“The plaintiffs have proven that there is a nuisance by a preponderance of the evidence, and based on the entirely credible testimony from employees who work in the building every day, I order the defendants to abate the nuisance. . . . As long as the current equipment is in place and does not include extending the exhaust system to the roof or some other means of fixing the problem, Rogue States must cease its grilling operations,” Mott said today.

Mott also noted in his verdict that this case “was not about anyone trying to run a small establishment out of business, nor is it about a small business that does not care about its neighbors. It’s about the nuisance that interferes with the use, comfort, and enjoyment of [Steptoe’s] place of business.”

Mott denied a verbal motion from Adler to stay the decision pending an appeal filed by Rogue States with the D.C. Court of Appeals, saying, “I see no basis to stay the decision.” Mott did allow Rogue States to have the rest of the business day, which for a restaurant that operates overnight means until 5:30 a.m. tomorrow, to inform its employees of the decision.

After Mott handed down his verdict, Adler and Mendizabel declined to comment.

In a statement, Steptoe general counsel Thomas Barba said, "Steptoe is gratified by the Court's order. From the time that the restaurant started operations in February of this year, we have sought a solution that would allow the restaurant to continue its operations without harming our employees. Unfortunately, the restaurant and its landlord were unable to agree on a solution that would safeguard the well-being of our employees. Accordingly the court had no option but to order the nuisance abated and the restaurant to turn off its grill. While we wish the defendants could find a way to survive in this location and not cause a nuisance to our employees, we are committed to the health and safety of our workforce and providing our employees with a good environment to work in."

Defense Lawyers in Wone Case Want Gag Order

Lawyers for three defendants in a wrongful death suit stemming from the murder of Washington attorney Robert Wone have asked a judge to ban the attorneys in the case from speaking publicly about the litigation.

The defendants, former Arent Fox partner Joseph Price and two roommates, Victor Zaborsky and Dylan Ward, are accused in D.C. Superior Court of covering up the Wone homicide in August 2006. Price, Zaborsky and Ward lived together in the Northwest Washington home where Wone was fatally stabbed.

Following a month-long bench trial on charges that included conspiracy and obstruction of justice, Price, Zaborsky and Ward were acquitted earlier this year. The authorities have not brought a murder charge in the case. None of the defendants testified in the criminal prosecution, and in the civil arena each of the men has refused to answer interrogatories from the attorneys representing Wone’s widow.

The defense lawyers for the three men said they want a gag order to minimize the risk of tainting the jury pool. The plaintiffs’ attorneys, who include Benjamin Razi, a Covington & Burling partner in Washington, are planning to challenge the defense request for a gag order.

The attorneys base their request in part on a comment that a plaintiffs’ attorney, Patrick Regan, made to reporters last month following a hearing in the civil suit. Regan of Washington’s Regan, Zambri & Long told reporters, at the end of the hearing and outside the courtroom: “Defendants do not assert their Fifth Amendment rights if they are not guilty of something,” Regan said.

The attorneys for Price, Zaborsky and Ward—including Craig Roswell, David Schertler and Frank Daily, respectively—said in a joint filing Oct. 8 that Regan’s comment was “patently incorrect” and that it will only serve to poison the jury pool.

“There was no legitimate purpose for making such a statement,” the defense lawyers said in the filing. The attorneys said the assertion of the defendants’ Fifth Amendment right “should not be used by the plaintiff’s counsel to influence jury selection through the press more than a year before the trial is scheduled to begin.”

In the request for a ban on public comment on the case, the defense lawyers did some homework on Covington & Burling. The defense attorneys said in a footnote that “one would expect” Covington, which maintains a large white-collar criminal defense practice, to take issue with Regan’s remark about the Fifth Amendment.

The lawyers for Price, Zaborsky and Ward include as exhibits the gag orders that Judge Reggie Walton of Washington federal district court issued in the Scooter Libby criminal prosecution and in civil litigation involving security contractor Blackwater. More recently, Walton issued a gag order in the perjury case against baseball star Roger Clemens.

Supreme Court Denies Review of Sonnenschein's Dispute With Former Partner

In an order handed down today, the Supreme Court denied without comment Sonnenschein Nath & Rosenthal’s petition for certiorari in a breach of contract dispute between the firm and a former partner. The denial means that former Sonnenschein partner Douglas Rosenthal’s fight with his former firm over compensation will go to trial for a second time.

Sonnenschein, which is now known as SNR Denton following a merger with UK-based Denton Wilde Sapte, had asked the high court to weigh in on a 2005 suit filed by Rosenthal, who alleged that he was not fairly compensated for representing the families of those killed in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland. That contingency work made $18 million for the firm. Rosenthal also claimed he was owed origination credit for Sonnenschein’s representation of Sun Microsystems against Microsoft Corp. That work generated $20 million for the firm.

Rosenthal said the firm kept him at the bottom of the partner pay scale, and encouraged him to forgo the Pan Am contingency work to focus on corporate clients who would guarantee a payout.

Rosenthal, who is not related to the Rosenthal in the firm’s name, claimed in his complaint that he was owed $8.5 million. He voluntarily retired from the firm in 2005 and went to work for Constantine Cannon.

In 2008, a Washington jury determined that Rosenthal should have been paid $500,000 each year for the years 2003 and 2004, instead of the more than $400,000 he received from the firm. For 2005 and 2006, the jury decided that Rosenthal should have received $1,365,000 instead of the more than $1 million offered by the firm for each of those years.

A D.C. Superior Court judge later slashed Rosenthal’s award to $65,639 after Sonnenschein argued that Rosenthal’s award was calculated incorrectly.

In January, the D.C. Court of Appeals granted Rosenthal a new trial for a portion of what he claims the firm owes him for the Pan Am Flight 103 work. The court also gave Rosenthal the option of accepting the jury's original decision for some of those fees without the trial judge's reductions and moving on. Rosenthal opted for the retrial.

In the petition for certiorari, filed on Aug. 17 by James Hamilton, a partner at Bingham McCutchen, Sonnenschein argued that that the appeals court made “egregious” errors in its January opinion that will have “significant and far reaching effects on our nation’s major law firms.” Hamilton declined to comment on the Supreme Court’s decision to deny certiorari.

SNR Denton’s general counsel, John Koski, said in a statement, “While we are disappointed that the Supreme Court did not accept the case at this stage, we are confident in the outcome.”

Gary Malone, a Constantine partner representing Rosenthal, said that he “wasn’t surprised” at the Supreme Court’s decision. He said that he and his client waived their right to reply to the petition “so we could get the denial of cert. done more quickly.”

Malone said, “We knew that Sonnenschein’s petition was wholly without merit, and we’re looking forward to the trial on the issue of damages. This is the final word on the question of whether Rosenthal was treated unfairly, and it appears the Supreme Court agreed that the firm failed to compensate Mr. Rosenthal properly for the millions he brought into the firm.”

Judge Lifts Contempt Finding Against DOJ Lawyer in Stevens Case

A federal judge today lifted the civil contempt finding against a senior Justice Department lawyer who participated in the post-conviction proceedings in the Ted Stevens prosecution in Washington.

Judge Emmet Sullivan of Washington federal district court lifted the contempt finding against Patty Stemler, a Criminal Division appellate section supervisor. Stemler was not a lead trial attorney in the Stevens case, and she is not one of the five prosecutors who are under criminal investigation for their role in the public corruption prosecution of Stevens.

Sullivan held Stemler and two other DOJ attorneys, William Welch II and Brenda Morris, in civil contempt at a hearing in February 2009 for the alleged failure to produce certain documents to the court and to the defense attorneys for Stevens. Lawyers for Stemler, represented by Wilmer Cutler Pickering Hale and Dorr, have twice filed motions to vacate Sullivan’s finding.

A hearing had been scheduled for Thursday in the U.S. District Court for the District of Columbia. Sullivan has abandoned the hearing. His order today also removed the civil contempt finding from Welch and Morris, who remain under criminal investigation.

Sullivan today denied Stemler's motion to vacate the contempt finding. Still, he lifted the finding because the government, he said, later “purged the contumacious conduct.” Sullivan said in a 26-page opinion today that he finds it unnecessary to impose sanctions against Stemler.

Stemler, who joined the Stevens case in late 2008, played a "significant and extensive" role in shaping the government's responses to the court, Sullivan said in his ruling. Sullivan said Stemler had an obligation to comply with the court's order to produce certain documents related to an FBI agent's whistleblower complaint that alleges government misconduct.

Lawyer for POM Wonderful Facing Sanctions

Barry Coburn, a name partner at Coburn & Coffman representing juice maker POM Wonderful in at least two cases, has been ordered to show cause as to why he shouldn't be sanctioned for allegedly making false representations to a D.C. Superior Court judge.

Judge Judith Bartnoff, who is presiding over a breach of contract suit filed against POM by Hogan Lovells, said in an order handed down on Oct. 6 that Coburn and POM misrepresented the confidential status of an ongoing Federal Trade Commission investigation into medical claims made by POM in advertising and marketing materials.

In the Hogan case, which stems from the firm’s claim that POM has failed to pay more than $666,000 in legal fees for the firm’s work on the FTC investigation, Coburn fought for months to keep any reference to the FTC investigation under seal.

According to court records, Coburn argued on behalf of POM that any reference to the FTC investigation was protected by attorney-client privileges. In a June 11 pleading in the Hogan case, Coburn calls the FTC investigation “highly confidential and privileged.”

In July, The National Law Journal obtained court records in the Hogan case that identified the name of the agency investigating POM but were later placed under seal. Coburn sought and obtained a temporary restraining order against the newspaper that barred it from disclosing the name of the agency. POM ultimately requested that the temporary restraining order be dropped after the NLJ — backed by an amicus brief joined by The Washington Post, The New York Times and other media outlets — had asked the D.C. Court of Appeals to overturn Bartnoff's ruling.

According to Bartnoff’s Oct. 6 order, POM itself disclosed the name of the agency in a separate suit the company filed in California. Bartnoff wrote, “It would appear that [POM Wonderful] itself knew or should have known of the content of the filings on the public record in its California lawsuit and that the representations made to this court that the existence of the FTC investigation had not been made public were not accurate.” The order does not name the specific lawsuit.

Bartnoff set a hearing for Oct. 22, at which time POM and Coburn will be required to show cause to why they shouldn’t be sanctioned for allegedly violating the federal rules regarding disclosures made to a judge. Bartnoff also ordered the parties in the case to be prepared to address whether the sealing order should be lifted.

In a statement, Coburn’s lawyer, Mark Rochon, a white collar defense partner at Miller & Chevalier, said, “Once this was brought to Barry's attention, he notified the Court and that is what prompted the hearing. I have known Barry for over 20 years and I am 100% sure that his representations to the Court were what he reasonably believed to be true."

Randell Ogg, a Washington-based solo practitioner representing Hogan in its suit against POM, declined to comment on Bartnoff’s order. Hogan’s general counsel George “Sandy” Mayo also declined to comment.

For POM, the sanctions hearing is the latest twist in a complex litigation history. The company is known for its tough litigation stance. In 2009 and 2010, the company filed at least seven lawsuits against such beverage giants as Welch Foods Inc., Tropicana Products Inc., Ocean Spray Cranberries Inc. and Coca-Cola Co., which distributes Minute Maid juices.

POM sued the FTC last month, in another case being handled by Coburn, alleging that the agency's rules on deceptive advertising violate the company’s free speech rights. But then two weeks later, the FTC fired back in an administrative complaint against POM, its parent company Roll International Corp., and Stewart Resnick, chairman of POM; Lynda Resnick, co-director of Roll; and Matthew Tupper, president and chief operating officer of POM. In the administrative complaint, the FTC alleges that the juice maker violated federal law by making deceptive disease prevention and treatment claims.

D.C. Circuit Pick Discloses Income, Political Contacts

Caitlin Halligan made $1.3 million a year as the head of the appellate practice at Weil, Gotshal & Manges before stepping down to join the Manhattan district attorney's office in January.

Halligan (pictured at right) reported her income as part of the U.S. Senate confirmation process for what she hopes will be her next job — a judgeship on the high-profile U.S. Court of Appeals for the D.C. Circuit. President Barack Obama nominated her to the court last month, and the Senate Judiciary Committee today released the materials Halligan was required to submit.

Her financial disclosure report and 41-page background questionnaire give a fuller picture of Halligan, 43, an appellate specialist and former New York state solicitor general.

Halligan disclosed income of $1.29 million in 2009 and of $1.35 million in 2008, the year after she joined the firm from state government. The figures are low compared with the average income at the New York-based firm; average compensation for all equity and non-equity partners at Weil was $1.8 million in 2009, according to the most recent Am Law 100 survey.

Her income so far this year as general counsel to the Manhattan district attorney’s office is $131,018. She reports a household net worth of $7.3 million.

In response to part of the Senate’s background questionnaire, Halligan writes that her first contact with the Obama administration regarding the D.C. Circuit came in April of this year. She writes that she “spoke with an attorney from the White House Counsel’s Office, who informed me that my name was being forwarded to the Justice Department” for vetting for the circuit. She met with White House and DOJ officials on June 8.

Halligan does note, however, that she helped out with Obama’s presidential campaign. She doesn’t say whether she did so during the primary campaign, the general campaign, or both, but she writes that she “coordinated research conducted by several other attorneys on the election laws of several states, which was provided to representatives of the Obama presidential campaign.” She writes that she also canvassed voters.

Uruguay Taps Foley Hoag in Groundbreaking Battle Against Philip Morris

In what is being described as a first-of-it's-kind conflict between a nation's tobacco control regulations and the treaty rights of a multinational corporation, Uruguay has hired a pair of D.C.-based partners from Foley Hoag in an international battle against Philip Morris.

The South American nation has tapped Paul Reichler and Ronald Goodman to defend its anti-smoking laws in an arbitration before the International Centre for Settlement of Investment Disputes.

The proceedings were initiated earlier this year by FTR Holdings SA, a Swiss conglomerate that owns fellow plaintiffs Philip Morris as well as Abal Hermanos SA, the second-largest Uruguayan tobacco company.

The plaintiffs object to 2008 Uruguay law which prohibits different packaging for cigarettes sold under a single brand – for example, only one kind of Marlboro may be sold, as opposed to variations such as Marlboro Red, Marlboro Gold, Marlboro Blue, and Marlboro Green (Fresh Mint).

Also, the law requires pictograms on tobacco packages to graphically illustrate the possible adverse health effects of sustained tobacco use and mandates that 80% of the surface area of cigarette packages be covered with health warnings to consumers.

The tobacco companies, represented by Swiss firm Lalive, say that the law is a “gross violation” of their rights and runs afoul of a bilateral investment treaty between Uruguay and Switzerland. They complain it has caused a decrease in sales, destroyed good will associated with their trademarks, and deprived them of their intellectual property rights.

“The claimants do not challenge the Uruguayan government’s sovereign right to promote and protect public health,” the request for arbitration reads. “However, the government cannot abuse that right and invoke it as a pretext for disregarding claimants’ legal rights.”

Uruguay enacted the measures as part of a broad effort to safeguard and enhance public health. In 2005 it became one of 170 countries to sign the World Health Organization's Framework Convention on Tobacco Control, a global initiative to reduce or eliminate tobacco use.

Reichler believes the plaintiffs have targeted Uruguay as a test case. "Our view is that Philip Morris is hoping to use this case to deter not only Uruguay but other signatories to the WHO's Framework Convention from taking effective measures to safeguard the public health against the known hazards of tobacco consumption," he said in a statement.

“Sovereign states are normally given wide discretion in enacting legislation or promulgating regulations to protect and promote public health. Indeed, that is one of the fundamental aspects of sovereignty," he said. "This is not a case of economic regulation, but of government action strictly in the name of public health."

The Campaign for Tobacco-Free Kids has agreed to help finance Uruguay’s defense.

The Morning Wrap

Mine Safety Backlog: The Washington Post reports that the list of unresolved appeals for mine safety citations has grown since the Upper Big Branch mine, despite efforts by the Obama administration to reduce the backlog.

2006 Mine Cases Settle: Massey Energy has settled lawsuits filed by nine miners who survived the January 2006 fire at the company's Aracoma Mine, the Charleston (W.Va.) Gazette reports. Terms were not disclosed.

Guiding the BP MDL: A federal judge in New Orleans has named 15 attorneys to serve on the plaintiffs' steering committee in the multidistrict litigation against BP PLC over the Deepwater Horizon oil spill, The National Law Journal reports.

Vaccines and Autism: The U.S. Supreme Court hears argument today in a case related to so-called "vaccine courts," and The New York Times reports that the biggest effect of the court's ruling will be on lawsuits contending a link between vaccines and autism.

Rough First Day: Hewlett-Packard Co.'s new CEO will start his job in a courtroom, The Associated Press reports. Leo Apotheker is expected to be called as a witness in Oracle's corporate espionage trial against rival SAP AG, Apotheker's employer of more than 20 years.

Foreclosure Mess: The Wall Street Journal reports that as many as 40 state attorneys general are expected to announce an investigation this week into the mortgage-servicing industry, answering a call for increased government scrutiny of such companies.

Former Counsel to Cheney to Argue for David Safavian

A former chief legal adviser to Vice President Dick Cheney is set to argue for former Bush administration procurement official David Safavian later this month in a federal appeals court in Washington.

Steptoe & Johnson partner Shannen Coffin in Washington filed a notice of appearance last month in the U.S. Court of Appeals for the D.C. Circuit. Coffin, who concentrates in appellate and Supreme Court litigation, announced Oct. 8 he will argue for Safavian, who was convicted on false statement and obstruction of justice charges in late 2008 as part of the Jack Abramoff lobbying scandal.

Prosecutors allege Safavian lied to Senate and General Service Administration officials about his relationship with Abramoff, who had expressed an interest to Safavian in acquiring two GSA-controlled properties.

The conviction in late 2008 came after Safavian, former chief of staff for the General Services Administration, won a new trial. The U.S. Court of Appeals for the D.C. Circuit ruled in his favor in June 2008 in a decision that questioned the scope of the government's prosecution. The court's opinion is here.

Safavian was sentenced last year to a year and a day in prison. He is free pending the outcome of his appeal.

Coffin, who declined to comment, did not participate in the briefs in the D.C. Circuit. Coffin left the White House in 2007 and rejoined Steptoe & Johnson. Between 1994 and 1995, Coffin clerked for Judge David Sentelle of the D.C. Circuit, who was named chief judge in 2008.

Safavian's main trial attorney, Lawrence Robbins of Washington's Robbins, Russell, Englert, Orseck, Untereiner & Sauber, was not immediately reached for comment today about the case. Robbins argued for Safavian during the earlier trip in January 2008 to the appeals court.

Safavian’s lawyers allege the Justice Department’s decision to tack on new charges after the appellate court loss amounts to vindictive prosecution. The new charges—including false statements to the FBI—exposed Safavian to a longer sentence, his lawyers said in court papers.

Attorneys for Safavian said the new charges arose “out of precisely the same nucleus” of facts in the older prosecution. Prosecutors told Safavian’s attorneys that the government would add new charges, after the successful appeal, unless Safavian accepted a plea offer, Safavian’s attorneys said.

Judges Douglas Ginsburg and Janice Rogers Brown are scheduled to hear the case Oct. 22 with Senior Judge Harry Edwards. The Justice Department has not identified the attorney who will argue for the government.

A Justice Department Criminal Division appellate lawyer, Sangita Rao, said in court papers in April that Safavian acted as a “champion” of Abramoff’s interests at the GSA but told ethics officials that Abramoff did his own work on Capitol Hill. Safavian and Abramoff were close friends.

Longtime Environmental Official Heads to K&L; Gates

Cliff Rothenstein worked for the federal government for three decades, mostly in jobs related to the environment. Now he's joined K&L Gates as a government affairs adviser.

Rothenstein most recently worked at the Federal Highway Administration, where he has been the head of legislative affairs since last year. But he previously held positions at the U.S. Environmental Protection Agency and on Capitol Hill, and he said he’ll continue to concentrate on environmental matters at K&L Gates’ Washington office.

The firm is a good fit, Rothenstein said in a phone interview, because of the range of environmental issues it handles. “They cover the gamut of issues,” he said.

With a master’s in public policy, Rothenstein started his career in the EPA’s budget office. In 1988, he went to work for U.S. Sen. Max Baucus (D-Mont.), handling legislation before the Senate’s environmental committee. He left in 1997 to take a political appointment at the EPA, and a few years later he became a career employee and the head of the EPA’s Office of Underground Storage Tanks, which helps to clean up U.S. gas stations.

Rothenstein said the timing was right for his first move into the private sector. He had been working on the congressional reauthorization of the federal surface transportation program, but Congress has stalled work on the issue. “I had thought about doing this at some point in my career,” he said.

Mayer Brown Adds White Collar Partner From Dickinson Wright

Michael Volkov has left Dickinson Wright to join Mayer Brown’s litigation practice in Washington. He started work at Mayer Brown as a partner on Wednesday.

Volkov, who is currently representing one of the defendants in the Justice Department’s massive arms trafficking Foreign Corrupt Practices Act case, handles a range of white collar defense cases. He said that his practice is currently composed of about half FCPA cases with the other half split between compliance and government relations work. He also handles congressional investigations, civil litigation, and regulatory enforcement matters.

Before joining Dickinson Wright in 2008, Volkov served as deputy assistant attorney general in the Justice Department's Office of Legislative Affairs. He spent five years on the Hill working as chief crime and terrorism counsel for the Senate Judiciary Committee, chief crime, terrorism and homeland security counsel for the House Judiciary Committee, and a trial attorney in the Antitrust Division of the U.S. Department of Justice. Volkov also served as a federal prosecutor in Washington for 17 years.

He said his move to Mayer Brown came because he “was looking for a global platform because my practice has begun to become a reflection of the global marketplace.” He said that as more and more of his practice focuses on FCPA work, it “made sense” to move to a firm with 14 offices outside the United States.

Volkov’s move to Mayer Brown comes after a series of departures from that firm’s litigation practice. Last year, five securities litigation lawyers, including Richard Morvillo, who previously chaired Mayer Brown’s securities enforcement group, jumped to Schulte Roth & Zabel. And in June, David Krakoff, the former co-chair of Mayer Brown’s white collar litigation practice, and Christopher Regan, also a former Mayer Brown partner, left for BuckleySandler.

McDermott Set to Move to Capitol Hill in 2012

McDermott Will & Emery will be moving to Capitol Hill in November 2012. The firm has signed a letter of intent with Clark Enterprises and Boston Properties to occupy 165,000 square feet of Class A, office space at 500 North Capitol St., with an option to take on more.

According to sources with knowledge of the deal, which is among the largest recent private sector agreements in Washington, McDermott’s lease is for 15 years and the firm will pay in the range of $65 per square foot—meaning about $10.7 million each year. McDermott’s current offices occupy about 189,000 square feet at 600 13th St. N.W.

“We consider this a home run deal,” said Bobby Burchfield, co-managing partner of McDermott’s Washington office. Burchfield said the deal, which gives the firm all but two floors in a building currently being rented by the IRS, allows for the space to be fully renovated before the firm moves in.

Burchfield said the firm was attracted to the idea of “being able to brand the building as ‘The McDermott Building.’” He said, “These days, it’s important for firms to differentiate themselves from their competitors. We really liked the idea of moving to a highly trafficked location where people who pass by our building will necessarily think of McDermott Will & Emery.”

Burchfield said that the firm looked at roughly 23 locations, including in Rosslyn, Va. And in the Navy Yard neighborhood near Nationals Park, before deciding on the Capitol Hill location. Moving to 500 North Capitol St. will make McDermott only the second large law firm with an office on Capitol Hill. Jones Day moved to 51 Louisiana Avenue N.W. in 1999.

“This is a location that will be custom configured for a 21st Century law firm, and it’s in a location that is among the safest spots in Washington. We really felt that this was exactly what we were looking for,” Burchfield said.

As The National Law Journal previously reported, it’s a good time to be a law firm nearing the end of its lease in Washington. Commercial vacancy rates have hit double digits for the first time in more than a decade, driving landlords to make valuable concessions.

Burchfield agreed that McDermott was “fortunate” to be looking for a new lease in the current real estate market. “We found a very attractive package at this point in time that we might not have seen if our lease were ending at a later date,” Burchfield said.

This Week in The National Law Journal

Don't Ask, Don't Tell: Two federal court rulings that dramatically shifted the legal landscape for the military's ban against openly gay service members may not ultimately matter. Instead, the issue may be settled where the Obama administration wants it to be — in Congress, Amanda Bronstad reports.

Two Versions of Reality: In a story co-published by the NLJ and ProPublica, Dafna Linzer explores two unusual opinions by U.S. District Judge Judge Henry Kennedy Jr. — opinions that were released within weeks of each other in the same Guantanamo Bay case, the second opinion eight pages shorter.

Post-Election Power Shift?: After toiling four years in the minority, Republican lawyers on Capitol Hill are poised to move into key jobs should the GOP win big in the November election.

And in Inadmissible: Akin and Orrick are still just friends, the DOJ Public Integrity Section gets public praise, Patton Boggs shows up in a satirical newspaper, and more. Click here.

The Morning Wrap

Trio Shares Prize: American Peter Diamond of the Massachusetts Institute of Technology and Dale Mortensen of Northwestern University werenamed today two of three winners of the 2010 Nobel Prize in Economics. Diamond, Mortensen and British-Cypriot Christopher Pissarides won the "for their analysis of markets with search frictions," The Wall Street Journal reports.

Inquest: The Royal Courts of Justice in London today began its inquiry into the deaths of 52 people killed by four suicide bombers in attacks in London in 2005, The New York Times reports. The inquiry will examine whether the British domestic security service could have done more to stop the attacks.

Court Delay: Some economists say the delay in the housing rebound in part stems from the long foreclosure process that unfolds in the 23 states in which foreclosures must be approved by a judge, The Wall Street Journal reports. The process in those states takes longer than in states where the courts are not involved.

The High Court Bar: The New York Times examines what it calls a "new breed of skilled and ambitious advocates" who search out cases to take to the U.S. Supreme Court. Some lawyers question whether these attorneys are bent on the prestige of arguing a Supreme Court case more than representing the interest of their clients.

Settling Up: The District of Columbia government paid more than $50 million in legal settlements from 2007 to 2009, according to a database The Washington Post obtained. Plaintiffs' attorneys say the District spends more on suits because the city drags out litigation, keeping government lawyers tied up for months.

Drug Company's Lawyers Want $77M Judgment Vacated

A defense lawyer for generic drug manufacturer Mylan Inc. urged a federal appeals court panel in Washington today to vacate a nearly $77 million judgment against the company in a closely watched antitrust case.

Several health insurance companies, including Blue Cross & Blue Shield of Massachusetts Inc. and Health Care Services Corp, filed suit in Washington federal district court to challenge agreements Mylan entered in 1997 with companies that sold the active pharmaceutical ingredient for the anti-anxiety drugs Lorazepam and Clorazepate.

The suit alleged the agreement cut off access to raw materials, allowing Mylan to raise drug prices. The trial in 2005 in the U.S. District Court for the District of Columbia marked one of the first pitting indirect purchasers — the health care providers—against drug companies. A jury sided with the plaintiffs, and Judge Thomas Hogan ultimately imposed treble damages totaling nearly $77 million.

Gyma Laboratories of America, Inc. and Cambrex Corporation, who are also named defendants, are represented by Hunton & Williams. Profarmaco, a Cambrex subsidiary, sells active pharmaceutical ingredients. Gyma is a registered agent for Profarmaco and other ingredient suppliers.

Mylan's raw material agreement did not harm competitors, a lawyer for Mylan, Jonathan Jacobson, argued today in the U.S. Court of Appeals for the D.C. Circuit. Jacobson, a Wilson Sonsini Goodrich & Rosati partner in New York, said supply of the ingredients rose a year after the agreement, and he said there were more competitors in 1998 than in 1997.

Jacobson said Mylan doesn’t control the price that pharmacies set for drugs. Lawyers for Mylan said in court papers that pharmacies mark up reimbursement rates to health insurers from the net sales price they pay to generic drug manufacturers.

Senior Judge Stephen Williams, who was on the panel with Chief Judge David Sentelle and Senior Judge A. Raymond Randolph, examined whether the increase in market supply of the drug ingredients stemmed from artificially high prices.

Martin Lueck, chairman of Robins, Kaplan, Miller & Ciresi of Minneapolis, argued for the plaintiffs. Mylan, Lueck said in court, “shocked” the system and reaped “enormous” profit from the raw material exclusivity agreement.

The appeals court took the case under advisement and did not immediately rule.

Reporters Committee Petitions Supreme Court To Intervene In Grand Jury-Related Case

The Reporters Committee for Freedom of the Press, in an unusual step, has asked the U.S. Supreme Court for permission to intervene in a pending grand jury-related case in order to oppose the sealing or redaction of any filings in the case.

The case—In Re Grand Jury Proceedings (Siobhan Reynolds and Pain Relief Network Alliance)—is on the justices’ Oct. 15 conference list in the form of a motion to file a petition for certiorari under seal with redacted copies for the public record.

The Reporters Committee, in its request to the Court, notes that news reports already have provided “significant, if incomplete, insight into the issues in this case.”

The case, which comes to the justices from the U.S. Court of Appeals for the 10th Circuit, involves Reynolds and her organization, the Pain Relief Network. Both received grand jury subpoenas last year, which Reynolds tried to have quashed. When she refused to comply, she was held in contempt and fined, but eventually released the documents sought.

The subpoenas were part of an ongoing grand jury investigation related to the federal prosecution of Dr. Stephen Schneider and his wife, Linda, who operated a medical practice specializing in pain relief and whose prosecution Reynolds had publicly condemned, according to the American Civil Liberties Union, which represented Reynolds in the district court. During the conflict, Reynolds spoke to the media about the subpoenas and the ensuing contempt proceedings.

The Reporters Committee, in its motion to intervene, argues that neither the Federal Rules of Criminal Procedure nor the rationale for grand jury secrecy supports sealing the certiorari petition or other related filings in an appeal involving a challenge to grand jury subpoenas and contempt proceedings, particularly when the facts are already public knowledge.

“The decision to seal or redact a portion of any filing should differentiate between secret material concerning the actual grand jury proceedings and ancillary courtroom matters,” wrote Lucy Dalglish, the Committee’s executive director and counsel of record.

The motion to file the petition under seal indicates that the petitioners do not want the filings sealed but feel they are bound by sealing orders from the district and appellate courts. Reynolds’ counsel, Robert Corn-Revere, a partner in the Washington office of Davis Wright Tremaine, writes in the motion: “While Petitioners believe this motion is necessary under the circumstances, they also disagree that the sealing orders in the courts below are appropriate or that they actually serve an interest in preserving grand jury confidentiality. The controversy at issue already has been the subject of extensive press coverage and the details of the grand jury investigation are widely reported.”

Corn-Revere, who was not available for comment, also told the Court that he intended to file a motion to unseal the petition and appendix “as soon as is practicable.”

Mandatory Reporting of Child Abuse Limited to Cases in Which Caretaker is Suspect

Two former private school officials have had their convictions for failing to report evidence of child abuse thrown out thanks to a D.C. Court of Appeals ruling handed down yesterday. The court determined that the District law that requires such reporting by school officials is limited to instances in which the child was abused by a parent or guardian.

In 2004, the parents of a preschool student at Nation House School, a private school in Washington, told Isaac Hargrove and Juanita Handon, the principle and vice principle of the school, that their daughter had been molested by four of her classmates. According to the appeals court’s opinion, Hargrove and Handon questioned the other preschool children but decided that the allegations of molestation were not credible.

The parents of the allegedly abused student took her to the hospital and notified the Child and Family Services Agency and the Metropolitan Police Department.

At MPD, a detective began investigating the allegations of child abuse and questioned Hargrove and Handon. The opinion, which was decided on Sept. 30 but made public yesterday, says that the detective asked why the school’s internal incident report had not been submitted to MPD or to the Child and Family Services Agency. Hargrove said he had “no idea” it had to be submitted.

Hargrove and Handon were subsequently charged with violating the District’s mandatory reporting statute. Following a bench trial, they were convicted of the misdemeanor offense.

The court’s opinion, written by Judge Stephen Glickman and joined by Judges Inez Reid and Anna Blackburne-Rigsby, focuses on the language of the mandatory reporting statute and whether it applies to instances in which the alleged molestation is believed to have been committed by someone who is not a parent, guardian or custodian.

On appeal, Hargrove, who was represented by Nigel Scott of Washington-based Scott & Yallery-Arthur, and Handon, who was represented by Jessica Brand of the D.C. Public Defender Service, argued that the statute does not require suspected molestations to be reported if the alleged perpetrator is not a parent or caretaker.

Rosalyn Groce, deputy attorney general of the District of Columbia, argued that a child may be “abused” according to the statutory definition of that word, even if no caretaker was implicated.

Citing definitions of what is legally considered to be an “abused or neglected child” and the legislative history as to how those definitions came to be, Glickman writes, “We conclude that the mandatory reporting statute means just what it says. Section 4-1321.02 (a) imposes no reporting requirement in the absence of reasonable cause to suspect caretaker malfeasance in connection with the abuse or neglect of a child. Because appellants had no reason to suspect such malfeasance on the part of [the child’s] parents or caretakers in the present case, we vacate their convictions."

Dutko Registers to Lobby on Mexican Aviation Safety

A small Mexico-based airline has hired lobbying firm Dutko Worldwide, hoping to prove to the United States government that Mexico's aviation safety deserves a better rating.

The U.S. Federal Aviation Administration downgraded Mexico’s safety rating in July from what’s known as Category 1 to Category 2, saying the country is not completely meeting international standards. Since then, Mexican airlines have been unable to expand their U.S. services, Dow Jones reported last month.

In an attempt to reverse that, Mexico-based Interjet has hired Dutko, according to U.S. Senate records. Pete Halpin, a senior vice president at Dutko and former head of congressional affairs for the U.S. Department of Transportation, is listed on the registration. Halpin did not immediately return a call requesting comment today. The registration is effective Thursday.

Dutko was ranked No. 10 by revenue among Washington lobby shops in the most recent Influence 50.

Sidley Austin Secures Innocence for Man Convicted of Quadruple Homicide

In 1997, David Housler was convicted of the murders of four employees in the notorious "Taco Bell" murders in Clarksville, Tenn., and was sentenced to four consecutive life sentences. But on Monday, after spending nearly 14 years in prison, Housler walked out of prison a free man thanks to four years of pro bono work by a team of Sidley Austin lawyers who were able to show that the government had convicted an innocent man.

Housler’s involvement in the Taco Bell case was partly a matter of unfortunate timing. Shortly after a gunman walked into the Taco Bell restaurant on Jan. 30, 1994, and shot four individuals, Housler was arrested for his suspected involvement in an unrelated robbery. Facing a bail of $50,000, Housler concocted a story designed to provide prosecutors information about the Taco Bell shooting in exchange for a reduced bail.

Housler’s story involved his supposed meeting with Courtney Mathews, the primary suspect in the Taco Bell shooting, at a party. Housler said that Mathews had told him that he was planning to rob the restaurant and that he wasn’t going to leave any witnesses alive. Courtney Mathews was convicted of the killings in 1996, based on overwhelming physical evidence.

While Housler had never met Mathews and certainly hadn’t spoken to him about the plans for the Taco Bell shooting, prosecutors took that statement and later used it as evidence that Housler was involved. After a series of what were later proven to be prosecutorial missteps, prosecutors were able to extract another false statement from Housler that tied him to the murders.

In 1997, a jury convicted Housler as an accomplice, based on prosecutors' claim that he had acted as a lookout for Mathews. Housler’s false confession to prosecutors was admitted during trial and wasn't contested by his attorney. That statement, which Housler later recanted, was enough to convince the jury of his involvement in the shootings and he was sentenced to four consecutive life sentences.

After years of failed attempts to appeal his case, Sidley agreed to represent Housler pro bono in 2007. The firm assembled a team of five lawyers led by Washington-based partner Paul Hemmersbaugh to represent Housler.

After 10,000 hours of work, Hemmersbaugh’s team showed that the prosecution’s missteps had fatally flawed their case. Hemmersbaugh also showed that Housler’s original attorney, Larry McMillan, who is now a state judge in Tennessee, had failed to provide adequate counsel.

Judge John Gasaway, the judge overseeing Housler’s post-conviction relief proceeding also found that new evidence—in particular, Mathew’s 1994 confession to his attorneys that he had acted alone and did not even know Housler—also entitled Housler to a new trial.

On Sept. 23, Gasaway vacated Housler’s convictions and granted him a new trial. Hemmersbaugh said Housler was allowed to post bail and is now living in Kentucky.

Although the state of Tennessee could still appeal that ruling, Hemmersbaugh said that was unlikely because there is no evidence that his client was in any way connected to the murders.

“We’re thrilled that our client is out of prison and is a free man. This was a great example of justice being done,” Hemmersbaugh said.

Keep Greenhouse Gas Data Private, FTC Warns EPA

The Federal Trade Commission has warned the Environmental Protection Agency not to make certain greenhouse gas emissions data public as the EPA moves to impose new industry reporting requirements.

Last October, the EPA issued rules mandating that certain industries report data related to their greenhouse gas emissions. The EPA now proposes to group that data into 22 categories and designate the confidentiality status of each category through rulemaking.

The FTC in its comments warned that three categories of data that the EPA proposes to make public contain potentially sensitive confidential business information – data which could be used to further anti-competitive activity.

“Public disclosure of such facility- and firm-specific sensitive business information may make it easier for reporting companies to either tacitly or explicitly coordinate their pricing decisions,” according to the FTC comments, which were approved by the agency’s commissioners in a 5 – 0 vote. “Making confidential business information public may lead to collusion that harms consumers through higher prices, decreased quality, and decreased innovation.”

The FTC has the resident expertise to flag the issue because the agency reviews mergers in industries such as petroleum refining, petrochemical production, natural gas processing, and other manufacturing industries, such as industrial gases and titanium dioxide production.

The Clean Air Act requires the EPA to make greenhouse gas data public unless it constitutes confidential business information. The act also requires the EPA to release “emission data” even if it is confidential.

The FTC suggested that EPA interpret the term so the data at issue would not be revealed, calling this “an effective way to balance the act’s policy goals of promoting transparency and protecting competition.”

The Morning Wrap

U.S. Contractors Employed Taliban: After a year-long investigation, a Senate panel has found that the mostly Afghan force of private security guards the U.S. military depends on to protect supply convoys and bases in Afghanistan is rife with criminals, drug users and insurgents. The Wall Street Journal reports that the report alleges that some local warlords who have emerged as key labor brokers for private security firms are also Taliban agents.

Thanks, Supreme Court! The New York Times reports that the overriding theme of this year's midterm election campaign is money, lots of money. The explanation for how interest groups have become such powerful players this year includes not just the Supreme Court’s ruling in the Citizens United case that struck down restrictions on corporate spending on elections, but also a constellation of other legal developments since 2007 that have gradually loosened strictures governing campaign financing and the regulation of third-party groups.

Meet the New Boss: Pete Rouse, the man picked to succeed Rahm Emanuel as White House chief of staff, has a much lighter touch than his predecessor, Politico reports. Where Emanuel was a whirlwind of on-the-spot decision-making, his replacement is more focused on organization and long-term planning. And the low-key Rouse is less prone to spouting opinion, signaling his intentions through pointed questions, the same Socratic technique favored by President Barack Obama, the paper reports.

Well Done, Mr. Ewing: Larry Hagman, the ex-'Dallas' star at the center of the "Who shot J.R.?" incident, won an arbitration decision that requires Citigroup to pay the 79-year-old actor $11.5 million in damages following a dispute involving several of his accounts. The New York Daily News reports that the award includes $10 million in punitive damages Citi must pay to charities selected by Hagman, as well as $1.1 million in compensatory damages. A Financial Industry Regulatory Authority arbitration panel also ruled that Citi must pay about $440,000 for Hagman's legal fees and other costs.

The Brief, Bizarre Courtship of Akin and Orrick

In all, it took just seven days for partners at Akin Gump Strauss Hauer & Feld and Orrick, Herrington & Sutcliffe to pressure their respective firm leaders to call off merger talks. Those seven days included a strange fake news story and frustration for partners on both sides of the discussion.

Partners at Akin and Orrick said that there was not one single issue that killed the talks; it was more a feeling among partners that an Akin-Orrick combination wouldn’t be worth the headache of trying to bring the two firms together. (The National Law Journal examined what the combined firm would look like here.)

One Akin partner, who said that the firm had instructed its partners not to comment publicly about the talks, said, “I just don’t see the need to try and cram two firms with around a thousand lawyers together. It made no sense.” An Orrick partner, who cited similar instructions from his firm, said, “Neither firm was willing to jettison chunks of their practice to make a merger happen. Neither one wanted to screw some of their partners just to get a deal done.”

SEC Halts Scam Defrauding Deaf Investors

The Securities and Exchange Commission has obtained a temporary restraining order and emergency asset freeze against an Internet company that allegedly defrauded deaf investors.

The company, Imperia Invest IBC, raised more than $7 million from 14,000 investors -including $4 million mainly from deaf people in the United States - and boasted of astronomical rates of return, where a $50 investment would grow to $134,000 in six months.

On its website, Imperia listed what the SEC says are fake business addresses in both the Bahamas and Vanuatu.

The website stated that investors could only access their profits by purchasing a Visa debit card from Imperia for a few hundred dollars. However, Imperia has no relationship with Visa and was using the Visa name without authorization.

According to the SEC, no evidence has been found that any of the investors received a single payment.

The SEC's complaint filed in U.S. District Court in Utah on Oct. 6 alleges that Imperia defrauded investors by soliciting funds to purchase Traded Endowment Policies, or viatical settlements, which involve the sale of an insurance policy by the policy owner before the policy matures. Policies are sold at a discount from face value in an amount greater than the current cash surrender value.

Investors transferred their funds into pooled accounts in Costa Rica, Panama, or the British Virgin Islands.

“Unless Imperia's actions are enjoined, additional investors will be duped into investing in Imperia with no hope whatsoever of receiving the promised returns,” wrote SEC lawyers Daniel Wadley and Thomas Melton in the complaint. “In addition, Imperia should be compelled to disgorge amounts it has improperly obtained from investors, and should be subject to a civil penalty based on its fraudulent activities.”

According to the complaint, Imperia did not appear to specifically target the deaf community, though the company's activities “appear to taken their greatest toll” on them.

The company is accused of violating the Securities Act and the Securities Exchange Act.

According to SEC Salt Lake Regional Office head Kenneth Israel, Imperia is not represented by counsel. The SEC was granted a motion for electronic service of the complaint and service by publication.

NBC Suspending Production of 'Outlaw' Show

Word from Hollywood today is that production of the star-crossed NBC show "Outlaw," starring Jimmy Smits as a former Supreme Court justice, has been suspended. The remaining episodes of the show, in which the former conservative justice goes into private practice to represent the underdog, will be aired, but no new ones will be made unless there's a surprise uptick in viewership.

The show, a product of Conan O'Brien's production company, did not attract enough viewers to keep it going, according to this Entertainment Weekly report. Press notices like ours were almost universally negative -- absurd plots, bad acting, the works -- but as usual, it was the low ratings that have made the show an early casualty of the new TV season.

Prison Term Vacated, Doctor in South Carolina to be Freed

Ronald McIver had spent more than five years in prison, serving a 30-year term for his alleged role in man's drug overdose.

McIver's lawyers at DLA Piper, including Peter Zeidenberg, serving pro bono, successfully convinced a federal district judge in South Carolina to vacate the prison term earlier this year.

In post-conviction litigation, McIver’s defense attorneys presented new information about the case, compelling the presiding judge set a new sentencing hearing. Click here for earlier coverage.

Yesterday, Judge Henry Floyd of the U.S. District Court for the District of South Carolina sentenced McIver, who is 66 and suffering from advanced prostrate cancer, to time-served. McIver, who has a life expectancy of less than a year, is expected to be released soon, Zeidenberg said.

McIver, who has relinquished his medical license, would have died in prison, Zeidenberg said. Zeidenberg called the ruling a “thrilling” victory. “To think this man was looking at 30 years for something he should not have been convicted of,” he said.

In the post-conviction litigation, lawyers for McIver argued the death of the man, Larry Shealy, was not a result of a drug McIver prescribed. Zeidenberg said Shealy likely died of heart disease. Floyd vacated two counts against McIver that made up the 30-year prison term.

Prosecutors, who had been seeking a 10-year prison term, could decide to challenge Floyd’s ruling on appeal in the U.S. Court of Appeals for the 4th Circuit. An assistant U.S. attorney, William Watkins Jr., was not immediately reached for comment.

The Morning Wrap

Foreclosure Fracas: The Washington Post reports that as many home loans have fallen into default and banks have sought to seize homes, judges around the country have increasingly ruled that lenders had no right to foreclose, because they lacked clear title. But the problems don't end there. As the Post puts it, "If millions of foreclosures were invalidated because of the way the hurried securitization process muddied the chain of ownership, banks could face lawsuits from homeowners and from investors who bought stakes in the mortgage securities - an expensive and potentially crippling proposition."

Privacy? On the Internet? The Fulton County Daily Report has an article examining a set of potential class actions against three Internet powerhouses raises interesting questions about how law enforcement agencies get information about Internet users without their knowledge. The suits claim that Comcast, Yahoo and Windstream have violated federal wiretap and computer privacy laws by providing information in response to warrants or subpoenas issued by Georgia judges or magistrates, which are then faxed or otherwise relayed to the Internet companies' headquarters outside of Georgia.

About that Flash 'Crash': The Wall Street Journal reports that the so-called May 6 "flash crash" was caused by a little known mutual fund based outside Kansas City. The $27 billion Asset Strategy Fund, run by Waddell & Reed Financial Inc., is bigger than most hedge funds and, by some measures, acts like one.

U.S. Talks to Insurgent Group: The Guardian is reporting that the Afghan and US governments have recently made contact with one of the most fearsome insurgent groups in Afghanistan, the Haqqani network. The Haqqani network has a reputation for ruthlessness and has the closest ties with al-Qaida. But Kabul and Washington have come to the conclusion that they cannot be excluded if an enduring peace settlement is to be reached, the paper reports.

Defense Lawyer Urges D.C. Circuit to Keep GPS Ruling

A lawyer for a man whose life sentence was vacated because the government improperly tracked his movement with a GPS device is urging a federal appeals court to deny the Justice Department's request to re-examine the court's earlier ruling.

In August, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit ruled for the defendant, Antoine Jones, who had been serving a life sentence for his alleged role in a drug trafficking conspiracy.

The appeals court said the government’s use of a global positioning system device without a warrant to track Jones’ movement violated his rights under the Fourth Amendment. The court vacated his conviction and voided his life sentence. Last month, DOJ attorneys asked that the full appeals court pick up the dispute to erase the panel decision.

DOJ lawyers said in their petition that the appeals court ruling could call into question common law enforcement techniques such as photographic surveillance of people in public. Prosecutors said the opinion doesn’t help the authorities distinguish between acceptable monitoring and monitoring that requires a warrant. DOJ said law enforcement officers use GPS tracking with “great regularity.”

A lawyer for Jones, Stephen Leckar of Washington’s Shainis & Peltzman, said the government’s claim the “sky is falling” offers no credible basis that the appeals court ruling will interfere with law enforcement needs.

"If agents want to use one of these devices to track and record the whole of one’s movements for prolonged periods of time, then surely it should be no undue burden to demand that they first satisfy a neutral and detached federal court that probable cause exists to do so," Leckar said in an e-mail.

Police regularly search homes and cars, Leckar noted in court papers. “Yet the courts have never used that as a reason to ignore the Fourth Amendment,” he wrote.

Three state Supreme Courts have concluded the government needs a warrant to initiate GPS tracking, but federal appellate courts are divided on the issue.