A new Illinois abortion notification law scheduled to go into effect today has been pushed back. Tomorrow, members of a state medical disciplinary board are slated to discuss the controversial measure. It requires doctors to notify parents if an underage girl tries to get an abortion.

Anti-abortion activists, including Eric Schiedler, have been trying to get the rule enforced for years.

SCHIEDLER:
Schiedler and the Pro-Life Action League say they'll continue to argue for the law regardless of the Medical Board's decision.

Opponents say the law is irrational. They say the state allows pregnant minors to make other medical decisions without parental notification.

Source:

City Room - News In Brief - New Illinois Abortion Law Postponed

Monday might have been the high-point for the prosecution in the trial of Thomas Petters, the Minnesota businessman charged with masterminding a $3.5 billion Ponzi scheme.

On the stand: Deanna Coleman, Petters’s secretary and office manager. She’s been heralded as the the “star-witness” for the prosecution, based partly on the fact that after she tipped off the FBI to what was allegedly going on with Petters, she went undercover and nabbed recordings of Petters making allegedly damning statements.

Prosecutors have alleged that Petters duped hedge funds into funding fictitious shipments of consumer electronics for more than a decade. On Monday, Coleman backed the allegations, according to accounts from Bloomberg and the Minneapolis Star-Tribune. Click here for previous LB coverage of the Petters situation.

“We didn’t have any real deals at Petters” that would generate revenue to repay investors, Coleman told jurors in federal court in St. Paul, Minnesota. Coleman said Petters’s staff made up fake purchase orders for shipments of electronic goods and fake wire-transfer receipts to trick investors into thinking that Petters’s deals were legitimate.

Petters has pleaded not guilty to a 20-count indictment accusing him of mail and wire fraud, money laundering and conspiracy. Coleman has pleaded guilty in the scheme.

On the stand today, Coleman told jurors today she had two recording devices on her when she walked into Petters’s office on Sept. 8, 2008, after meeting with prosecutors.

She recorded Petters telling her that he had a plan to get “out of the crime.” On the recording, Petters added that, if “worst came to worst, you wouldn’t go to jail. I would.”

According to the Star-Tribune story, a forensic accountant took the stand and read from a letter she’d found on Coleman’s computer. The letter to Petters, dated October 2004, said that Coleman was worried about the stability of Petters Co. Inc. At first, according to the letter, Coleman had worried about having to go to prison for a couple of months. “You always promised we’d find a way out. And yes, I believed you,” her letter says. “Now it’s nonstop that I worry about going to prison. I’ve lost trust in you. All I see is a black hole at the end of the tunnel.”

A home run piece of evidence? Maybe not entirely. On cross-examination, according to the Star-Trib, Decker acknowledged that she couldn’t say whether the letter was ever sent to Petters.

We’re not sure it’s exactly newsworthy anymore when a lawsuit challenging President Obama’s election on the grounds that he wasn’t born in the U.S. gets dismissed. (Though rest assured, we’ll be all over it if and when one gains significant traction.)

But an opinion issued on Thursday dismissing one of these suits (this one, like others, brought by our favorite Orange County lawyer/dentist Orly Taitz) caught our attention.

Here’s why: the court made some interesting observations on separation of powers. Many of the suits brought on these grounds have been dismissed for so-called standing problems. (Click here for a nice piece from last year from Supreme Court reporter Jess Bravin on the issue of standing.) In Bravin’s words, “the Supreme Court has interpreted this to mean that courts . . . only should decide disputes where the plaintiff alleges “concrete” and “particularized” harm, rather than what Justice Antonin Scalia has called “purely psychological displeasure.” Citizens who have sued Obama have largely been found to have lacked standing.

The opinion issued on Thursday, by Santa Ana, Calif., federal judge David O. Carter (a Clinton appointee), delved deeply into standing problems he felt many plaintiffs in the suit suffered.

But in the suit dismissed on Thursday, Carter ruled that a group of plaintiffs could have standing: namely Wiley S. Drake, Alan Keyes, Gail Lightfoot, and Markham Robinson because they appeared on the California ballot as candidates for president or vice president in the 2008 election. Therefore, they may have been, theoretically speaking, harmed by an alleged fraud perpetrated by Obama in regard to his birthplace.

In regard to this group, Carter move on to another issue: separation of powers, finding that it is not within the constitutional power of the federal courts to “overthrow a sitting president.” Click here for an LA Times article on the suit.

Writes Carter:

In order for Plaintiffs’ alleged injury to be fully addressed, Plaintiffs would have the Court
intervene, upheave the results of a national election, declare the President illegitimate, shut down
the functioning of the government of the United States, and leave this country defenseless.

. . .

Plaintiffs make it clear from their briefing that they believe that any order issued by a president who does not satisfy the natural-born citizen clause is unconstitutional. Therefore, in order to cure Plaintiffs’ perceived injury, the Court would need to wade deep into the waters of the President’s official duties–in fact, it would have to declare that the President could no longer perform any official duties. The separation of powers concerns implicated by this request are grave.

. . .

The founders of the Constitution created impeachment to allow an orderly process of transition and succession during which the country can continue to function. Plaintiffs’ request, asking this Court to sweep away the votes of over sixty-nine million Americans with the stroke of a pen and order a new election during which the country would be in a state of turmoil, ignores the Constitution’s processes and separation of powers that were developed by the founders

The analysis certainly seemed persuasive, but just as an added check, we called up Michael Small, a lawyer at Akin Gump in Los Angeles who last year taught a course at UCLA law on separation of powers.

Small explained that he “wasn’t surprised in the least” by the opinion. “Any judge would have ruled this way,” he said. “I could imagine a judge enjoining a specific ruling issued by a president viewed as illegitimate, but not one ousting the president.”

One of the larger law-n-business cases on the Supreme Court’s 2009-1010 docket moves into the spotlight on Monday. At issue: whether the money-management fees that drive the mutual-fund industry are too high.

According to the WSJ’s Jess Bravin and Jane Kim, a ruling for shareholders could push down fees that last year approached $100 billion by some estimates in the $10 trillion industry. Click here for coverage from the USA Today; here for the Bloomberg story; here for links to all the relevant documents, courtesy of Scotusblog.

The case, Jones v. Harris Associates, strikes at the heart of the workings of the mutual-fund industry. Typically, the investment-advisory company that manages a mutual fund takes a percentage of the assets, say 1%. That fee is negotiated with the mutual-fund board, which is set up to represent investors.

In 1970, Congress imposed on investment advisers “a fiduciary duty with respect to . . . compensation for services.” Advisers said that means they should disclose fees, costs and profits to the mutual-fund board, which can then strike a deal on behalf of investors. The existence of nearly 8,000 mutual funds gives investors plenty of alternatives if they believe fees are too high, the mutual-fund industry said.

The shareholder plaintiffs, backed by the SEC, argue, on the other hand, that fund boards often are too closely tied to the advisers to drive hard bargains. They have a different definition of fiduciary duty, saying in their brief that Congress meant the fees “must be fair” to investors and “comparable to an arms-length deal.”

“The law, as it stands now, just went down the wrong road and let management fees get totally out of hand,” said John Bogle, founder of mutual-fund company Vanguard Group, which sells mostly low-fee index funds. Bogle filed an amicus brief backing shareholders.

The case was filed in 2004 by three shareholders in the Oakmark Funds, which were developed and run by Harris Associates, a Chicago firm that said it oversees about $48 billion in assets. The plaintiffs said Harris charged Oakmark an effective rate of 0.88% on $6.3 billion in assets, nearly twice the 0.45% rate for an unrelated institutional client like a pension fund.

The fee for independent clients, plaintiffs argue, should be a benchmark for what an arm’s-length transaction would look like. Harris responds that servicing the Oakmark Funds is more demanding than work for independent clients.

The dispute divided Seventh Circuit judges Frank Easterbrook and Richard Posner, who are both known for their market-based views of the law. In this case, however, the pair differed on whether the market works well in this instance.

Judge Easterbrook wrote the opinion rejecting the shareholder suit.

“Holding costs down is vital” for mutual funds, he wrote, because “management fees are a substantial component” of the costs and even small differences in rates can have a big impact on returns. He said that gives fund boards a reason to keep fees low, or investment advisers an incentive to deliver net returns that justify extraordinary pay.

Photo: iStockPhoto

The Obama administration and key Democrats have reached a tentative agreement on a proposed law to provide greater protections to reporters against being fined or imprisoned if they refuse to identify confidential sources.

More...

Shield Law Compromise Would Protect Reporters and Bloggers - The Caucus Blog - NYTimes.com

Activists are pushing for a state law requiring even first-time DUI offenders to use an ignition interlock device, above, which measures a driver's blood-alcohol content.

To address the seemingly intractable problem of fatalities related to drunken or impaired driving in Maryland, the General Assembly convened a task force to review what some advocates had long complained were inadequate laws.

In general under Maryland law, first-time DUI offenders face up to one year in prison and fines up to $1,000. Those with three or more convictions face up to three years in prison and a fine of up to $3,000.

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Groups press for tougher drunk driving laws -- baltimoresun.com

After charges were dismissed against former Alaska senator Ted Stevens when the prosecution failed to turn over evidence to Stevens’s defense, it was easy to forget that lawyers still needed to clean up all details, as Don Henley might put it. One of those details was the sentencing of Bill Allen, (pictured left) the former VECO oil services executive who testified against Stevens in a cooperation agreement with the government.

This week, U.S. District Judge John Sedwick (not to be confused with Hedwig) sentenced Allen, age 72, to three years in prison and fined him $750,000, in a downward departure from sentencing guidelines, thanks to his cooperation. A trusted Allen lieutenant, Rick Smith, also was sentenced this week to 21 months in prison and a $10,000 fine for his role in bribing lawmakers. Here’s the AP story, via the Anchorage Daily News, which includes the following explanation:

Stevens was charged with lying on Senate forms about home renovations and gifts he received from wealthy friends. Allen testified he was the source, sending a VECO work crew to help change a modest A-frame cabin in Girdwood into a two-story home with wraparound decks, new electricity and plumbing.

Allen’s dealings with Stevens did not figure into his sentence. Instead, the terms were calculated on his role in bribing Alaska state lawmakers during petroleum tax deliberations in 2006.

For those trying to keep all the players straight in this corruption probe, the Anchorage paper helpfully gives us a roster. For previous LB coverage of the Stevens case, click here, here, and here. The Anchorage paper notes that the investigation is on-going with Allen and Smith still cooperating. [End of post]

Photo:AP

We were quietly hoping we’d be able to return either to the topics of the pharmaceutical industry or kickbacks. With this latest news about Amgen (LAT, AP), we can do both in one post.

The news is this: 14 states and the District of Columbia have sued Amgen and others over an alleged kickback scheme designed to boost sales of its anemia drug Aranesp.

New York AG Andrew Cuomo, in a statement, said the suit, filed in Boston federal court (complaint not yet available) alleges that Amgen, AmerisourceBergen Corp. and AmerisourceBergen’s drug wholesaler, ASD Healthcare, and specialty group purchasing unit International Nephrology Network encouraged doctors to bill third-party payers, such as Medicaid, for free samples of Aranesp.

Cuomo said the lawsuit also alleges that Amgen conspired with INN and ASD Healthcare to offer improper kickbacks to medical providers - such as sham consultancy agreements, weekend retreats or other services - to induce them to purchase and prescribe Aranesp.

“Drugs should be prescribed to patients on the basis of need, effectiveness, and safety, not on a corporate giant’s promise of an all-expense paid vacation,” Cuomo said. “In an egregious violation of the law, Amgen allegedly bribed medical providers and left taxpayers footing the bill for free drug samples.”

In a statement, David Polk, an Amgen spokesman, said, “We believe that the allegations are without merit, and we look forward to the opportunity to examine these matters with the states before the court.”

Also in a statement, Michael Kilpatric, an AmerisourceBergen spokesman, said, “We’ve had no contact in this case with anyone in the N.Y. AG’s office or any other state attorneys general offices and we expect to defend ourselves vigorously.”

Bill Lerach and Mel Weiss. Remember them?

The one-time class-action honchos were sent to prison in 2008 for their roles in an alleged scheme to pay kickbacks to clients who agreed to take the lead in securities fraud litigation. Lerach was sentenced to a two-year term, while Weiss got 30-months.

But you knew that. What you might not know is that both men are out of prison and serving time in halfway houses.

Here’s a story from the Recorder, which looks at how Weiss and Lerach were each able to get out of the clink a full six months before their release dates.

Weiss resides in Miami and Lerach in Southern California; it’s unclear when they will be fully released.

The two men can thank a new federal law that allows inmates to spend a larger share of their sentences in community facilities.

Called the Second Chance Act, the federal measure was signed into law last year by President Bush.

Halfway houses are designed to reintegrate people into the community, attorney Alan Ellis told the Recorder.

“If you need a place to live, they will help you find a place to live. If you need a job, they will help you find a job. If you need vocational training, they will help you with that,” Ellis said.

But Weiss did not lobby for placement in a halfway house, his lawyer said. Lerach’s lawyer did not return a call for comment from the Recorder.

It turns out that Weiss, despite his longer sentence, may be a free man before Lerach. That’s because Weiss finished a drug and alcohol treatment program, which allowed him to substantially cut down his sentence.

Lerach applied to that program but wasn’t accepted.

Last week, word broke that the Obama administration’s “Pay Czar,” Kenneth Feinberg (pictured), was slashing compensation for executives at seven large financial firms. Click here for the WSJ story.

Amid all the discussion over whether the move was good or bad, overdue or counterproductive, one question, according to former 10th Circuit judge and current Stanford Law prof Michael McConnell, got lost in the shuffle: Was Feinberg’s action constitutional?

McConnell, writing Friday for the WSJ’s opinion page, thinks the answer is a resounding no. Writes McConnell:

Mr. Feinberg’s ukase is the most prominent example (and not just by the Obama administration) of the exercise of power by an individual unilaterally appointed by the executive branch without Senate confirmation—and thus outside the ordinary channels of Congressional oversight.

That’s the argument, in a nutshell. But McConnell knows his way around the Constitution, and prefers to give Journal readers a bit more:

The Appointments clause of the Constitution, Article II, section 2, provides that all “Officers of the United States” must be appointed by the president “by and with the Advice and Consent of the Senate.” This means subject to confirmation, except that “the Congress may by Law vest the Appointment” of “inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.”

There is no doubt that Mr. Feinberg is an “officer” of the United States. The Supreme Court has defined this term (Buckley v. Valeo, 1976) as “any appointee exercising significant authority pursuant to the laws of the United States.”

. . .

While somewhat more disputable, Mr. Feinberg’s is probably an “inferior” officer, defined as one subject to supervision and removal by a member of the cabinet. . . . This means that Congress could, if it wished, vest the appointment of the pay czar in the secretary, without any need for Senate confirmation.

But Congress has not done so. On the contrary, it vested the authority to implement TARP’s compensation provision in the secretary of the Treasury. The secretary may sub-delegate that power to someone else—but that someone must be an “officer” properly appointed “by and with the advice and consent of the Senate.”

The Supreme Court observed in Buckley v. Valeo that the provisions governing appointments under the Constitution reflect more than “etiquette or protocol.” They embody the Founders’ conviction that all power under U.S. laws must be exercised by officers with constitutional authority.

It’s understandable, perhaps, if, after reading this far, your reaction is: “eh, what’s the harm? Why this adherence to constitutional formalism in a time of national crisis?” McConnell has an answer for you:

The Founders understood that the president and heads of the executive departments could not single-handedly carry out the law, so they required Senate confirmation as what the Federalist Papers call “an excellent check” on abuse or favoritism by the president.

The power to set compensation at large American businesses is especially subject to potential abuse, favoritism, arbitrariness, or political manipulation. It is no reflection on Kenneth Feinberg, who has a sterling reputation and who appears to have approached these sensitive duties with a spirit of commendable integrity, to say that the checks and balances of the Constitution should be scrupulously observed. They were not. Because he is not a properly appointed officer of the United States, Mr. Feinberg’s executive compensation decisions were unconstitutional.

Something we’d like you to pretend, LBers: You’re the parent of a dutiful and college-bound high schooler who, in an uncharacteristic flight of whimsy and, yes, moderate rebellion, creates a Web site making fun of her high-school principal. She gets found out and winds up in front of a judge who handcuffs her and holds her in a juvenile detention center for three months.

Later, you find out that your daughter wasn’t alone; that hundreds of others had been sentenced to lengthy stays at one of two privately run juvenile detention centers for equally minor infractions. You also learn of allegations that the judge had been taking cash kickbacks from the private detention centers. Over the years, the allegations go, the judge and another had pocketed some $2.6 million in kickbacks, at the expense of many many largely innocent teens.

We might be going out on a limb here, LBers, but you’d probably be inclined to sue the judges, and maybe even recover something fairly quickly.

Not so, it seems. That’s right. Not so. Your lawsuit against the judges is a likely loser, all due to the theory of judicial immunity, which protects judges from a wide swath of civil suits.

And that’s what’s happening, it seems, to plaintiffs in two federal lawsuits brought against Luzerne County Court judges Mark Ciavarella and Michael Conahan (pictured). As loyal LBers will recall, the judges were accused of participating in a kickback scheme similar to the one described above. They’ve been prosecuted criminally, but, according to this story in the Wilkes-Barre Times Leader, might well escape civil liability. (On the criminal front, they first entered guilty pleas, but later withdrew them.) Click here, here and here for earlier LB posts about the situation.

We checked in with Pitt law professor and expert on the judiciary Arthur Hellman to talk about this strange notion of judicial immunity.

Hellman indeed backed the notion that the plaintiffs might end up high and dry. He said that while the immunity isn’t absolute, it extends to actions taken while judges were engaged in a judicial function.

Hellman explained that the Supreme Court in 1971 upheld the notion of judicial immunity in a case in which an Indiana judge ordered the forced sterilization of a woman, a naked breach of state law. Because the judge was acting under his stautorily granted jurisdiction, he was covered by the immunity. The rule does not, Hellman continued, apply to judges working in official but non-judicial capacities. For example, a judge would not be immune from suit if he or she fired an employee for discriminatory reasons.

“These rogue judges, they were doing things the statute authorized them to do — to sentence juvenile offenders,” says Hellman. “That they did it for terrible reasons, indeed a corrupt motive, I doubt will overcome the presumption of immunity.”

Hellman says that, in occasional instances, the theory causes outcomes that “look terrible.” He says that “it very likely means there will be no recompense.”

Despite Hellman’s words, the plaintiffs lawyers in the Pennsylvania case are arguing the immunity doesn’t apply. They say the doctrine is meant to protect judges from liability for the honest discharge of their duties. The actions of Ciavarella and Conahan were hardly honest.

“Ciavarella made his own rules. He might as well have set up a courtroom in his garage and put on a black robe. He was acting outside the Constitution,” Levick

Hellman says, however, the plaintiffs might ultimately win out. “If there’s enough of a sense of public outrage, the legislature could pass a law to allow the plaintiffs to recover,” he says. “After all, these people were injured by state agents.”

The Iqbal decision, handed down by the Supreme Court last term, makes it harder for plaintiffs to defeat defendants’ motions to dismiss. For that reason, broadly speaking, defense lawyers love the Iqbal decision, and plaintiffs’ lawyers hate it.

That said, it might be unwise for lawyers of any stripe to get too used to it. Three Democratic lawmakers plan to introduce a bill next week that would override it. Click here for the story, from the Dow Jones Newswires’ Kristina Peterson. Reps John Conyers (D., Mich.), Jerrold Nadler (D., N.Y.) (pictured), and Henry Johnson (D., Ga.) are currently working on a bill that effectively undo the portion of the ruling that deals with pleading standards.

For now, some background, pulled from this post from last month: In the ruling, the court ruled 5-4 that a Pakistani Muslim who was arrested after the Sept. 11 attacks was barred from suing U.S. officials for abuses he says he suffered in a Brooklyn detention center.

But the reach of the decision went beyond a detainee’s right to sue. In the opinion, the court clarified a key component of civil procedure, ruling that plaintiffs must include in their initial pleadings substantial, not “threadbare,” factual assertions that give “facial plausibility” to their claims. The pronouncement represented a major shift from the earlier rule, which required only a simple statement of the case against the defendant.

And, according to a recent story from the NLJ’s Tony Mauro, it’s had a real impact. Writes Mauro:

A major lawsuit against the makers of Seroquel, an anti-psychotic drug, was dismissed on Iqbal grounds in the Middle District of Florida in July. Last month, a California federal judge, citing Iqbal, dismissed a case challenging the government’s no-fly list, brought by a Muslim woman who claimed she was a victim of profiling. In a case at the 11th U.S. Circuit Court of Appeals, also last month, an Alien Tort Claims Act suit against Coca-Cola bottlers in Colombia was dismissed on Iqbal grounds.

The legislation proposed in the House would return pleading standards to where they were after the Supreme Court’s 1957 Conley v. Gibson decision, which stated that defendants should have “fair notice” of any claim, but said only cases lacking strong evidence should be dismissed.

“The Iqbal decision will effectively slam shut the courthouse door on legitimate plaintiffs based on the judge’s take on the plausibility of a claim, rather than on the actual evidence,” Nadler said. The bill will be similar to one introduced earlier this year in the Senate by Sen. Arlen Specter (D., Penn.) but will spell out the new standards more specifically.

Last week, a settlement was reached in an interesting lawsuit, one that pitted six Muslim clerics (three of whom are pictured) against US Airways, the organization that runs the Minneapolis airport, and a handful of individuals. Click here for the USA Today story on the settlement.

The backstory is likely to inflame some passions on either side of the debate. As described by the USA Today:

The imams were removed from a US Airways flight [from Minneapolis to Phoenix] on Nov. 20, 2006, after a passenger told a flight attendant that the six men had been praying loudly and cursing U.S. policies in Iraq before boarding the aircraft. Once on board, the men took separate seats in the cabin’s front, middle and back. Before the pilot asked them to get off the flight, he was told that two of the men asked for seat belt extenders, which could be used as weapons.

Airport police, consulting with the FBI, removed the men and questioned them. Authorities eventually determined the clerics were not a threat, and they took a different flight home.

The imams sued, claiming that their Fourth Amendment rights to be free of unlawful search and seizure was violated.

Minnesota federal judge Ann Montgomery in July granted summary judgment for US Airways, but left in place causes of action against several other defendants. Wrote Judge Montgomery:

Unquestionably the events of 9/11 changed the calculus in the balance American society chooses to make, especially in airport settings, between liberty and security. Ultimately, the proper balance will be achieved, in large part, because we have the most capable and diligent law enforcement and intelligence communities in the world.

But when a law enforcement officer exercises the power of the Sovereign over its citizens, she or
he has a responsibility to operate within the bounds of the Constitution and cannot raise the
specter of 9/11 as an absolute exception to that responsibility. On the record before the Court,
no reasonable officer could have believed they could arrest Plaintiffs without probable cause.
The right that was violated is clearly established . . .

The suit recently settled on undisclosed terms. According to the USA Today, the imams called the settlement a victory. The airport said it has not changed any policies as a result of the settlement, which it said it agreed to in order to save the expense of a trial.

“It is not an admission of guilt,” said Patrick Hogan, a spokesman for the Metropolitan Airports Commission, which runs Minneapolis-St. Paul International Airport.

In an editorial on Monday, the USA Today railed against the settlement:

While the settlement spared them the uncertainly and expense of a trial, it could have a chilling effect on the ability of airline crews and officials to protect passengers from a perceived threat. Pilots have to make quick, tough judgment calls: Take off with frightening suspicions unresolved or err on the side of caution. The only way to determine whether a real threat existed was to remove the clerics from the plane and investigate.

In this case, some of the initial suspicions proved unfounded. It turned out that the imams, who had been attending a religious conference in Minneapolis, didn’t have one-way tickets and hadn’t changed their seat assignments, as first thought. They denied making remarks about Saddam Hussein or U.S. involvement in Iraq. Even so, that was the information available to the captain when he had to make a “go/no go” decision. Airlines and airport authorities need flexibility to act in the interest of safety without worrying about being sued.

LBers, we think it’s a tough case. Any thoughts?

Photo: Getty Images

It’s been a long and strange trip, but it finally might be time to put the lid on the Ben Kuehne saga. On Monday, a three-judge panel of the Eleventh Circuit sided with a lower court ruling from earlier this year which dismissed the main count of the indictment against the prominent Miami lawyer. Click here for the opinion ; here for the AP story. Click here and here for earlier LB posts on Kuehne.

Kuehne was indicted last year on money laundering charges arising out of his writing opinion letters that Colombian drug kingpin Fabio Ochoa had enough money free from the taint of drug trafficking to pay some $5.2 million in legal fees. Kuhene was paid about $200,000 by Miami attorney Roy Black’s law firm and others involved in Ochoa’s defense.

A portion of the funds were traced to a businessman named Hernando Saravia, who transferred some of the purportedly legitimate cash from Ochoa to Black. But Kuehne didn’t know that Saravia had been cooperating with federal prosecutors and that some of the money was from illegal drug proceeds being handled by undercover U.S. agents.

Late last year, Miami federal judge Marcia Cooke found that Kuehne could not be prosecuted because the funds were for legitimate legal services. On Monday, the Eleventh Circuit largely agreed with Cooke, finding she was “eminently correct” to dismiss the unprecedented indictment against Kuehne and two others on money laundering charges under the federal statute. The panel concluded that Kuehne was protected by an exemption in federal money-laundering statutes carved out by Congress for defense attorneys in 1988.

According to the AP, the Justice Department declined to comment, but it had said in a statement last year that it “approaches with great care” any possible prosecution of a defense lawyer. In this case, though, it said prosecutors were confident they had clear evidence of wrongdoing against Kuehne.

The ruling Monday was welcomed by defense lawyers, wrote the AP, who had feared that a successful prosecution of Kuehne would force them to stop taking cases involving defendants whose financial situations are murky.

“This is a huge win not just for Ben Kuehne but for criminal defense lawyers,” said David O. Markus, a Miami attorney who helped write a friend of the court brief on Kuehne’s behalf for the National Association of Criminal Defense Lawyers. “It sends the message to the government that criminal defendants are entitled to representation and criminal defense lawyers are entitled to represent clients without having this dark cloud hanging over their heads.”

Kuehne still faces a separate money laundering charge, but defense attorneys say it will be harder to prosecute because it carries a higher standard of proof.

We know that more than a few legal secretaries read the Law Blog. Let this post serve as a cautionary tale to all those hard-working men and women who type up time sheets, remind lawyers of appointments, prepare pleadings, and help keep track of important dates and deadlines.

The strange and sympathy-inducing story goes like this:

According to this story in the National Law Journal, two men, Charles Joyce and James Voigt, sued PepsiCo and two of its distributors in Wisconsin state court, claiming PepsiCo had stolen trade secrets from confidential discussions the plaintiffs had in 1981 about selling bottled water. PepsiCo later used the information to develop and market Aquafina.

Notice of the lawsuit was delivered to an agent for PepsiCo in North Carolina, where the company is incorporated. But — yipes! — PepsiCo says its law department at the company’s Purchase, N.Y.-based headquarters was not notified until September.

So, in other words, the lawsuit sat in North Carolina for months and months. Finally, in the face of PepsiCo’s silence, a default judgment was entered, and a damages award tallying $1.26 billion (yes, $1.26 billion) was entered on Sept. 30. PepsiCo filed motions to vacate the order and dismiss the claims on Oct. 13, saying it wasn’t even aware of the lawsuit until Oct. 6.

“The bottom line is there was a defect in the process for us, but also for” the plaintiffs, said PepsiCo spokesman Joe Jacuzzi, who called the case “highly dubious.”

In court papers, PepsiCo claims it first received paperwork from North Carolina agent on Sept. 15 when a copy of a co-defendant’s letter was forwarded to Deputy General Counsel Tom Tamoney in PepsiCo’s law department. Tamoney’s secretary put the letter aside and didn’t tell anyone about it because she was “so busy preparing for a board meeting,” PepsiCo said in its Oct. 13 motion to vacate.

Another breakdown, according to the AmLaw story: Lawyers for PepsiCo distributors Wis-Pak Inc. and Carolina Canners Inc. made court appearances in June and July. PepsiCo was at a loss to explain why it hadn’t heard about the case from them. “It’s just another unfortunate thing that didn’t come together,” Jacuzzi said.

In seeking to dismiss the case, PepsiCo argues that the statute of limitations should preclude the lawsuit. Furthermore, “the $1.26 billion judgment that has been entered is unprecedented in size and justice requires that PepsiCo have a chance to defend itself,” the company said.

The lead plaintiffs lawyer, David Van Dyke of Chicago-based Cassiday Schade, told the National Law Journal that Wisconsin courts have been “pretty clear that they don’t like” vacating default judgments. “There is a possibly that a judge may say we’re going to litigate the damages aspect of it,” Van Dyke said.

A funny little squib in Tuesday’s NYT might be of some interest to Scotus junkies or literary nonfiction fans or simply residents of New York’s Upper East Side (or maybe all three).

The story concerns an encounter noted writer Gay Talese had over the weekend with Supreme Court Chief Justice John Roberts.

Sunday night, Talese was dining at a restaurant on 70th and Lexington (Lumi, for those who must know), when in walked the chief with his wife.

Writes Talese:

[E]very table was occupied when the chief justice and Mrs. Roberts arrived to receive, as is standard in New York, barely a nod of recognition from the onlookers and not a trace of effusion from the waiters, most particularly those who lent service to the justice. . . .

We at our table, true to form, paid the Roberts couple no mind, although after two hours of pretending not to notice them, we were certainly respectful (and grateful) when, as they stood to leave, the chief justice himself said: “Excuse me, but we cannot possibly finish this wonderful bottle of wine, and I wonder if you’d like to try it.”

“Oh, thank you, Mr. Chief Justice,’’ I replied, and then added my own admonishment (how brazen of me!) “… but only if you’ll sign the label.’’

Unhesitatingly, Chief Justice Roberts removed from his jacket pocket a ballpoint pen, and scribbled on the label his name: “John Roberts.’’

The anecdote doesn’t need a bunch of commentary, it seems. It is what it is — a funny little tale. That said, we’ll share just a few cursory observations.

Roberts’s gesture was gracious. Quite gracious. We wonder — cynical scribes that we are — if Roberts knew the recipient was Talese prior to handing it over and, if so, he thought the gesture might render a little good ink?

Was Talese’s request of a signature out of line or just quick thinking?

Finally, for those curious: the wine, according to Talese, was a Chianti Classico 2005, from Villa Mangiacane.

The big Minnesota drama unfolding this fall — outside of whether Brett Favre can continue to rack up wins for the Vikes — involves Minnesota businessman Tom Petters, whose criminal fraud trial begins this week. Petters, as we’ve discussed before, has been accused of one of the biggest Ponzi schemes in U.S. history. Click here for a walkup today from WSJ’s Susan Carey; here for previous LB coverage.

The 52-year-old Petters was arrested last October and indicted Dec. 1 on 20 criminal counts for allegedly orchestrating a $3.5 billion fraud. He could face life in prison. Petters allegedly duped investors for 14 years with phantom purchases and resales of merchandise that he never bought or resold. Petters has steadfastly maintained his innocence.

At trial, all eyes could be on Las Vegas businessman Larry Reynolds, a former Petters colleague whose background is a bit murky, to say the least. According to heavily redacted court documents, Reynolds has another name, a decades-long criminal background, did time in prison twice, was a government informant and joined the federal witness-security program.

Mr. Reynolds, 67, allegedly profited by laundering $12 billion in investor funds through his bank accounts to Petters’s main company.

But in court filings, Petters’s lawyers accused the U.S. government of helping to “supervise the fraud they have now indicted,” referring to Reynolds’s status in the witness-security program at the same time he allegedly contributed to the Petters conspiracy. Jon Hopeman, the lead defense attorney for Petters, says the legal team has moved to have the case dismissed because of the government’s “failure to tell us who Reynolds was.”

Federal prosecutors declined to comment. But at a court hearing, assistant U.S. attorney Joseph Dixon denounced the claims by Petters’s lawyers as “preposterous.” The government has, however, sought to exclude Reynolds’s history from being introduced as evidence at the trial.

Helping foster the mystery: Frederic Bruno, a lawyer representing Reynolds. Bruno recently said of his client: “You’ll have to wait to see what he says in testimony at trial, if he testifies.”

The criminal securities-fraud case against former Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin has nearly reached its third week, and at least one observer said that the case hasn’t necessarily gone as prosecutors had hoped. (Click here for all recent LB coverage of the case.)

Today, Judge Frederic Block of Brooklyn, who was considered to be a great draw for the defendants, ruled that prosecutors could not introduce as evidence an email written by one of the defendants, in yet another apparent setback for the government’s case. In the email, Tannin wrote that hedge funds he helped run could “blow up.” Months later they did. (Click here for the ruling.)

Prosecutors are trying to prove to a mostly blue-collar jury that Cioffi and Tannin repeatedly lied to investors about the health of two subprime-related funds that faltered amid the subprime mortgage crisis, costing investors about $1.5 billion. Privately the defendants believed the funds were doomed but publicly they expressed the opposite to investors, prosecutors alleged. The defendants say they did no such thing and the government is simply taking a handful of emails they wrote out of context.

The disputed evidence is an email written by Tannin from his personal Google account in November 2006, about eight months before the funds collapsed. In it, he wrote things like, “We could not run the leverage as high as I had thought we could — or to see that in an extreme event — we could blow up.” He also wrote, “I was also very nervous about the state of the market and how we were going to perform,” and that “I was worried that this would all end badly and that I would have to look for work.”

In July, FBI Special Agent Mark Munster applied for a warrant to search the personal email account, based in part on the fact that a different Tannin Gmail had been turned over to Bear Stearns lawyers who were investigating the funds’ collapse. That Gmail, from April 2007, is a key piece of government evidence in the trial. The warrant was granted, and Google handed over Tannin’s email records.

But the warrant, Judge Block ruled on Monday, “did not, on its face, limit the items to be seized from Tannin’s personal email account to emails containing evidence of the crimes charged in the indictment, or, indeed, any crime at all. It was, therefore, unconstitutionally broad….”

Robert Nardoza, a spokesman for the U.S. attorney’s office in Brooklyn, which is handling the case, declined to comment.

For our money, no BigLaw practice quite excites like US Supreme Court advocacy. We know it’s a loss leader and horribly cutthroat to boot. Still, it’s high time for Hollywood to dish up a good series on SCOTUS advocates.

Which brings us to today’s National Law Journal profile of Paul Clement, the former Solicitor General under George W. Bush, who joined King & Spalding last November to build a Supreme Court practice.

In the Hollywood series of our dreams, some character will have to be based on the 43-year-old Clement. He’s a former editor of the Harvard Law Review, where he reported to Barack Obama; he is regarded as one of the superstar appellate advocates of his generation, with 50 Supreme Court arguments under his belt; and he is a habitué of the 9:30 Club, D.C.’s famous alt-rock establishment. What more do you want?

So, how’s he faring in private practice? The NLJ reports that Clement landed two Supreme Court arguments this term ─ not too shabby ─ and one hug from a client. His secret, so far, has been to embrace left-leaning causes, of all things.

In the first case, argued Oct. 14, he represented a Children’s Rights group that is pushing for enhanced legal fees following a victory in a 2005 civil rights case. (Here’s an LB post on the case.)

In a case to be argued Nov. 4 he will represent men wrongly convicted in the murder of a retired Iowa police officer. In June, NLJ reports, Clement traveled to Omaha, Nebraska to pitch his services pro bono to Curtis McGhee Jr. and Terry Harrington, who were found guilty of murder in 1977 but are now suing their Iowa prosecutors for falsifying evidence. The men were so impressed by his pitch that they ended the meeting with a hug, which Clement calls a “definite first.”

Interestingly, the prosecutor’s side in that case will be argued by Mayer Brown associate: Steve Sanders. According to his bio page, though, Sanders is no wide-eyed Gen Y-er, having served for 15 years at Indiana University, including as Assistant Dean of the College of Arts & Sciences. Still, Sanders v. Clement ─ the associate against the SCOTUS giant ─ screams Hollywood drama.

Clement, meanwhile, denies that he has become a devotee of the party of Obama, despite his recent caseload. “I haven’t had a conversion on the road to Damascus,” he told NLJ.

Abortion rights supporters have challenged two new Oklahoma laws that would give the state some of the strictest abortion laws in the country by forcing women to answer questions about race and their relationships, and to listen to a doctor talk them through an ultrasound.

Opponents of the laws say they were drafted to make a woman's already difficult decision to have an abortion even more difficult. But supporters say the surveys will prove valuable to understanding why women seek abortions, and that women need to be provided with as much knowledge as possible before making an irrevocable decision.

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The Associated Press: Strict Oklahoma abortion laws spark court battles



In this Feb. 4, 2004 file photo, Garlin Newton carries a cross in front of the Oklahoma Capitol in Oklahoma City, in observance of Rose Day, an anti-abortion event. Two new laws being challenged in the Oklahoma courts would give the state some of the strictest abortion laws in the country by forcing women to answer questions about race and their relationships, and to listen to a doctor talk them through an ultrasound. (AP Photo/Jeffrey Haderthauer, File)