Tag Archives: crime

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Welcome to “Sorrellonia”!: WLF Seminar Assesses Off-Label Drug Speech Ruling

PodiumPic1Off-Label Speech After U.S. v. Caronia: Implications for Drug & Device Regulation and the First Amendment, a Washington Legal Foundation Web Seminar program, is now available for on-demand viewing.

Our program featured analysis and commentary from Coleen Klasmeier of the Sidley Austin law firm and WLF’s Chief Counsel, Richard Samp. Coleen and Rich make reference to a Powerpoint slide deck, which due to a technical problem wasn’t available to viewers during the program.  The slide deck can be downloaded here.

For her presentation, Coleen coined the term “Sorrellonia” because the U.S. Court of Appeals for the Second Circuit two-judge majority in Caronia became the first court to fully apply the holding and rationale of the U.S. Supreme Court’s 2011 Sorrell v. IMS Health opinion.

Coleen’s and Rich’s presentations drew upon their combined years of experience in dealing with FDA’s application of its off-label speech restrictions and the Justice Department’s prosecution of cases where criminal violations of those rules allegedly occurred.

While they both saw great promise in the opinion for greater freedom in the exchange of critical medical information, they also offered firm notes of caution that the ruling not be interpreted as a green light for businesses’ promotion of off-label uses. Great peril still exists in this area they warned, a fact that is all the more apparent today with the announcement of another nearly $1 billion Justice Department settlement with a pharmaceutical company.

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Time for Supreme Court Review of Corporate “Status Crime” Legal Doctrine

Cross-posted by Forbes.com at WLF contributor site

Two weeks ago in Friedman v. Sebelius, a divided U.S. Court of Appeals for the District of Columbia Circuit largely upheld what amounts to the lifetime exclusion of three senior pharmaceutical executives from any further involvement in the industry.  Their offense:  pleding guilty to misdemeanor charges that they were executives of Purdue Frederick Co., at a time when (unbeknownst to them) some company employees engaged in the improper promotion of Purdue Frederick drugs.

Criminal prosecution of corporate executives not shown to have a guilty state of mind (or even to have acted negligently) has long been controversial.  Such prosecutions—under what is known as the “Responsible Corporate Officer” (RCO) doctrine—have twice survived constitutional challenges in the Supreme Court by razor-thin 5-4 margins in 1943 and 1975.  The Supreme Court reasoned that the RCO doctrine allows society to make a strong statement regarding its disapproval of corporate misbehavior without unduly punishing largely blameless senior executives, because penalties in RCO cases “commonly are relatively small, and conviction does no grave danger to the person’s reputation.”  Morisette v. United States.  There is serious reason to question whether the lifetime exclusion largely upheld by the D.C. Circuit fits the Supreme Court’s definition of a “relatively small” penalty.  In light of federal officials’ determination to bring more such prosecutions, the Supreme Court ought to revisit the RCO doctrine and decide whether it is being applied in a manner that comports with due process of law. Continue reading →

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High Court Weighing WLF’s Cert Petition on Behalf of Overcriminalization Victim

Guest Commentary

Nick Hendrix, a 2012 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

In its conference today, the United States Supreme Court will consider Cory King’s petition for certiorari in King v. United States. Washington Legal Foundation is serving as King’s counsel of record in his appeal from the U.S. Court of Appeals for the Ninth Circuit.  SCOTUSBlog has named the petition to its “Petitions to Watch” section. As we point out in the petition, the Ninth Circuit’s ruling on a key issue of criminal law – the breadth of the federal “false statements” statute – conflicts directly with a Sixth Circuit decision. Such a circuit split is considered a major factor dictating in favor of Supreme Court review.

Mr. King, owner and operator of an Idaho farm since 1986, was charged and convicted of violating the Safe Drinking Water Act (SDWA). State agriculture investigators, who were at the time inspecting Mr. King’s cattle operation, discovered he was injecting melted snow into his wells for crop irrigation without a permit. State investigators ordered King to cease this practice, which he did, and the investigators imposed a substantial administrative fee. The state later relayed this information to federal officials, who felt that Idaho’s punishment was insufficient.  The federal officials charged King with violations of the Safe Drinking Water Act (even though no drinking water was affected) and 18 U.S.C. § 1001 (the false statements statute).  Continue reading →

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DOJ-Antitrust Out of Step on Awarding Credit for Compliance Programs

Guest Commentary

Katie Owens, a 2012 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

According to the Antitrust Division of the U.S. Department of Justice, no corporate compliance program is worthy of credit when considering punishment of corporations.  The U.S. Sentencing Commission should correct this outlier policy.

 

At the Department of Justice (“DOJ”), corporate compliance programs are not treated equally among the agencies various divisions. The U.S. Attorney’s Manual expressly “recognizes that no compliance program can ever prevent all criminal activity by a corporation’s employees.” All but one of DOJ’s divisions applies this principle. The Antitrust Division believes that an antitrust violation directly correlates to a “failed” compliance program, one not deserving of credit under the Federal Sentencing Guidelines (“Guidelines”).

DOJ-Antitrust reserved a carve-out from the Guidelines specifically for antitrust violations based on its stance that these violations go to “the heart” of a company’s activities. Note that this carve out applies to antitrust violations only, meaning that all other crimes, including fraud, bribery, and environmental harm, may receive credit for maintaining an effective compliance program. Furthermore, this antitrust rule is an absolute with no exceptions. No compliance program, no matter how diligent, will be considered, because the program is deemed a “failure” by the Division if there is any antitrust law violation.

Rather than rewarding compliance efforts as a means of overall prevention of antitrust violations, the Division focuses instead on amnesty as a means of enforcement. Under this idiosyncratic approach, the first member of a cartel to admit wrongdoing receives amnesty from prosecution, regardless of guilt. The reporting company is then required to do nothing, while in other contexts, violations reported to the Criminal Division of the DOJ require violators to implement compliance programs or to improve existing ones. As commentator Joe Murphy observed, this policy could potentially lead a company to not “worry about compliance, but instead to devote its attention to making sure that it was always the first one to confess to the government if a cartel was about to be discovered. It could then keep most of its excess cartel profits, since it would not be responsible for large fines, and its plea would limit its civil exposure to single damages.” Continue reading →

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Update: Further Scholarship on Antitrust as “Crime of Moral Turpitude”

Two years ago, The Legal Pulse featured a guest commentary by White & Case LLP partner Eric Grannon, who is also a member of Washington Legal Foundation’s Legal Policy Advisory Board, entitled Is an Antitrust Violation a “Crime Involving Moral Turpitude”? DOJ Thinks So. In the post, Mr. Grannon described a “Memorandum of Understanding” that subjects foreign business executives to exclusion or deportation from the U.S. if they are convicted of a criminal violation of U.S. antitrust laws.

Mr. Grannon and his White & Case colleague Nicolle Kownacki have authored a more extensive analysis of the Memorandum for the April 2012 issue of The Champion, published by the National Association of Criminal Defense Lawyers. Even though, as the article explains, the Memorandum has never been subjected to judicial scrutiny or gone through any public comment process, the Justice Department routinely uses it as a “carrot” to encourage foreign executives to plead guilty to antitrust violations. In each of the 50 cases where foreign executives entered plea agreements with the Antitrust Division, DOJ granted the defendants a waiver from the moral turpitude memo.

Grannon and Kownacki lay out a very convincing case in the article that criminal violations of the Sherman Act are not acts of moral turpitude, citing to compelling case law which supports their argument.

One would hope that at some point in the near future, a Justice Department which claims to respect civil liberties will take a second look at this Memoradum and either eliminate it or make substantial changes.  Grannon and Kownacki’s article certainly provides the intellectual basis for doing just that.

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Plight of WLF Supreme Court Client Noted In Wall St. Journal Article

A long anticipated story in this morning’s Wall Street Journal regarding the federal government’s use of a “false statements” criminal statute noted the plight of a Washington Legal Foundation client, Cory King (story here, subscription required). A petition is currently pending before the U.S. Supreme Court asking the Justices to review a U.S. Court of Appeals for the Ninth Circuit ruling that upheld guilty verdicts under the federal Safe Drinking Water Act and 18 U.S.C. § 1001, the so-called “false statements” law. As the Journal article states:

Critics across the political spectrum argue that 1001, a widely used statute in the federal criminal code, is open to abuse. It is charged hundreds of times a year, according to court records and interviews with lawyers and legal scholars.”

WLF’s petition urging a reversal of Mr. King’s conviction argues that the federal false statements statute does not apply because his statement about where a valve on his Idaho farm sent water was made to a state agricultural official with no connection to the U.S. government.  In late February, SCOTUSblog featured WLF’s petition on Mr. King’s behalf as a “Petition of the Day,” a feature the blog’s experts use to highlight cases with a better than average chance of being granted review.

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Appellate Experts Assess Supreme Court at Mid-term Point

Yesterday, Washington Legal Foundation held its annual “High Court Halftime” briefing program to look back on some decisions from the Supreme Court’s October 2011 term and to preview upcoming arguments.

The video of this program is available here for on-demand viewing.

Hosted by WLF advisory board chairman, The Honorable Dick Thornburgh, and headlined by veteran Supreme Court advocate Carter Phillips, the briefing delved into the Court’s views on civil litigation, government regulation, federalism, and separation of powers. The speakers devoted significant attention to the numerous issues before the Court in challenges to the Affordable Care Act federal health care reform law. The 5.5 hours devoted to these cases is the most permitted by the Court since a 1970 rule change which limited each litigant to 30 minutes of argument time.

Speaker Cory Andrews of WLF’s Litigation Division also detailed a petition for certiorari WLF filed with the Court last week on behalf of small farmer Cory King, a victim of overzealous federal criminal prosecution.  Information about the case is available here.

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WLF Web Seminar Program Delved Into Strict Vicarious Liability for Managers

In case you missed it, a video of WLF’s October 26 Web Seminar program, Liability & Exclusion Without Intent: Managing to Survive Under the Responsible Corporate Officer Doctrine, is now available for your on-demand viewing.

The speakers, Mark Calloway and Brian Stimson of Alston & Bird, prepared a PowerPoint presentation to go along with their talk.  That presentation is available here.

Additional resources:

Constitutional Protection Amidst Severe Civil Punishments, WLF Legal Opinion Letter

“Responsible Corporate Officer”: Business Executives Face Strict Liability Under Novel Criminal Law Doctrine, WLF Legal Backgrounder

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Newspaper’s “Sunday Reflections” Column Authored by WLF Chairman

Sunday Reflection: Judge orders EPA to pay up for malicious prosecution

 
Last Friday, after five years of litigation, a federal judge in Louisiana ordered the U.S. government to pay $1.7 million in damages for maliciously prosecuting Hubert Vidrine, a used-oil processing plant manager.

The facts of the case, in which the Washington Legal Foundation participated as one of Vidrine’s counsels, evoke daytime TV drama. But Vidrine is an actual victim of federal overcriminalization, and government agencies’ enduring lack of respect for business civil liberties, which this case illuminates, is a real and growing, national problem. . . . .   Read more at the Washington Examiner.