“I can’t do my job.”

“The government knew the documents were lies.”

“Dismiss it!”

Those words, uttered by Brendan Sullivan Jr. of Williams & Connolly, show how the Beltway Bigwig has been anything other than a “potted plant” in his defense of Alaska Senator Ted Stevens, who is on trial for allegedly failing to disclose $250,000 worth of gifts and services he received. By all accounts, the DOJ prosecution has been shaky, and Sullivan has capitalized on several mistakes by prosecutors. (See LB coverage here.)

“Mr. Sullivan, combining a calibrated theatricality and exhaustive preparation, has set Justice Department prosecutors on their heels and shaped the scope of much of the evidence to his liking,” NYT reported over the weekend. One of Sullivan’s tactics: expressing outrage after finding prosecutors didn’t turn over potentially exculpatory evidence.

“Given that holding the government closely to its disclosure obligations is a well-known strategy of Mr. Sullivan’s, experienced Washington lawyers who have sat in on the trial say they are stunned that the Justice Department government left itself vulnerable by repeatedly making mistakes,” reports NYT.

Legal Times also weighed in, noting that three weeks into the trial, which is taking place in Washington, the actions of DOJ’s Public Integrity Section have threatened to “doom the case.”

The judge overseeing the case, Emmet Sullivan has already instructing the jury to ignore some testimony and evidence because prosecutors had not played by the rules.

Among the mistakes: Judge Sullivan ruled that prosecutors redacted exculpatory information from an FBI report and belatedly turned over a clean copy the night Brendan Sullivan and his team were to cross-examine the government’s star witness, Bill Allen, who allegedly provided most of the gifts and services to Stevens. The judge also found prosecutors did not turn over a material document through discovery and presented to jurors business records from Mr. Allen’s former company that the government knew were false. For an update of today’s trial happenings, here’s the AP story.

Pardon us for belatedly turning our attention to two newsworthy reports released by the SEC’s inspector general last week. The reports follow an IG report released last month that criticized the SEC’s role in the collapse of Bear Stearns, and a fascinating Portfolio magazine article on the decline of the agency’s enforcement division under Christopher Cox, a notion the SEC chairman vigorously disputes.



The Aguirre Report: The IG, H. David Kotz, found that the agency should consider disciplining its director of enforcement, Linda Thomsen (pictured), and two supervisors for their role in handling an insider trading investigation that led to the firing of an SEC lawyer for trying to interview John Mack, currently the CEO of Morgan Stanley.

The matter began when Gary Aguirre, an SEC line attorney, said he was fired in 2005 after trying to get testimony from Mack during his investigation of hedge fund Pequot Capital Management, whose founder is a friend of Mack’s. The SEC’s IG, H. David Kotz, said there was “a connection between the decision to terminate Aguirre and his seeking to take Mack’s testimony.”

Kotz criticized Thomsen for providing “relevant information” about the commission’s evidence against Mack to Morgan Stanley’s counsel, Mary Jo White, telling her there was “smoke” but “no fire” regarding Mack in e-mails the commission had reviewed, even though Thomsen hadn’t consulted first with Aguirre, the front-line investigator. At the time, Morgan Stanley was vetting Mack to be its new CEO.

An SEC spokesman said the IG report had concluded that the Pequot matter had been “aggressively pursued” and that “the investigation did not find that enforcement cases are generally affected by political decisions or the prominence of defendants.” Through a spokesman, Thomsen declined to comment to the LB.



The Bear Stearns Report: In another Kotz report released last week, he found the SEC, which was criticized for pursuing a hands-off approach at the start of the financial crisis, failed to enforce the securities laws against Bear Stearns after finding that a firm employee inflated the values of certain complex mortgage securities. The SEC’s Miami office drafted a proposal recommending civil penalties against Bear but dropped the case last year, several months before the firm collapsed amid the credit crisis. It was Bear’s disclosure of badly priced mortgage securities in two of its internal funds that helped spark the credit crisis.

The SEC enforcement staff said the report was “misleading, and all too often relies on speculation and innuendo to support its harsh conclusions.” Sen. Charles Grassley of Iowa (pictured above), who commissioned the report, said its findings are “another disturbing example of the lack of vigorous enforcement at the SEC.”

Law Blog - WSJ.com : Kotz in the Act: SEC Inspector Heaps More Criticism on SEC

Former Westchester County District Attorney Jeanine Pirro. Pirro. The CW Network announced that Pirro, who has been doing legal commentary on television since the O.J. Simpson murder trial, will be the presiding jurist on “Judge Jeanine Pirro,” weekday afternoons beginning Sept. 22. (AP/Warner Bros Ent. Inc., Mark Harmel)


Jeanine F. Pirro, the salty former Republican district attorney who unsuccessfully challenged both Hillary Clinton and Andrew Cuomo, has taken up a new career as a TV judge. But she’s finding that Judge Judy is a tough act to follow.

Two dozen protesters showed up outside the Manhattan offices of Warner Brothers, the show’s distributor, last month when her program premiered, according to a NYT story. They took umbrage with the depiction of Pirro as a judicial paragon. The problem, they said, is Pirro’s past.

The article goes on to explain a handful of instances where criminals have gone free after her office, or in one instance the police, were accused of ignoring exculpatory evidence.

”The show portrays her as a crusader of justice,” said Jeffrey Deskovic, a leader of the pickets told the Times. ”In fact, she made a regular habit of prosecutorial misconduct and breaking rules.”

According to the Times story, “critics like Deskovic say that while watching Judge Pirro on her television show it is worth thinking about the fact that she or at least her office has been slapped on the wrist by two different judges for less-than-fair prosecutions. The issues in those cases were not those of low-rent television squabbles, but ended up costing two men, who may have been innocent, precious years of their lives.”

Pirro should bear in mind that even Judge Judy, another TV judge known for her blunt style, has endured critics. One of her biggest kerfuffles came on a speaking tour in Australia years ago when she reacted negatively to a proposal to limit the spread of AIDS by giving addicts clean needles. Reportedly Judge Judy said that the way to solve the drug problem was to, quote, “give them dirty needles and hope they die.” As of Sept. 30, Judge Judy was the No. 1 show in syndication for the 17th consecutive week among gross average audience ratings.

We’re waiting for a call back from Pirro’s lawyer, William I. Aronwald.

So far this year Stanford’s Fair Use Project has taken on an author and the estate of a beloved musician. Now they’re going after a talk show host.

With the copyright battle between Premise Media, Yoko Ono and EMI just recently extinguished, the Fair Use Project is back at it. On Friday, with the help of Bingham McCutchen, the Fair Use Project’s Tony Falzone, representing Brave New Films, filed a suit in the U.S. District Court for the Northern District of California against talk radio host Michael Savage and Talk Radio Network.

At the center of the suit is a video called “Michael Savage Hates Muslims” (viewable at NoSavage.org), in which Savage expresses his disdain for Muslims and Islam.



Radio talk show host Michael Savage at his home Monday, Dec. 3, 2007, in Tiburon, Calif. (AP Photo/John Storey)

In January, Brave New Films uploaded the video, which reportedly takes one-minute of audio excerpts from Savage’s show, to its YouTube channel. Recently, Talk Radio Network allegedly sent a takedown notice to YouTube demanding the removal of the video. TRN?s notice resulted in YouTube removing the video and also temporarily disabling Brave New Films? entire YouTube channel. Here’s a report from the L.A. Times.

According to YouTube, copyright law requires the company to terminate accounts that repeatedly infringe, and Brave New Films had problems with Viacom last year when they used material from the “Colbert Report.” (The Viacom complaint was eventually dropped.) Suspensions can be lifted if one or more of the claims are retracted.

Phil Newmark, a producer at Talk Radio Network, told the LAT that “Michael never sent a complaint to YouTube about anything. This did not come from him in any way, shape or form.”

Readers know we’ve been following the Wachovia/Citi/Wells Fargo situation fairly closely. But yesterday, we learned a little something new about the lawyers on the case. While Boies, Schiller & Flexner’s David Boies, George Frampton, Amy Neuhardt and Philip Bowman led the charge for Wachovia, Team Wachovia also picked up contributions this week from a first-year associate named Elizabeth Wurtzel. Yup, that Elizabeth Wurtzel — the author of Prozac Nation, *****: In Praise of Difficult Women, and More, Now, Again: A Memoir of Addiction. Wurtzel graduated from Yale Law earlier this year and on Monday started life as a first-year associate at Boies Schiller.

Friday afternoon, we talked with Wurtzel, 41, who spent a good hour with us chatting about a range of things, from New York after 9/11 to the writing life to her first week in a pressure-filled law-firm office.

Hi Elizabeth, thanks for taking the time. Before we get to Boies Schiller, let’s take a step back. We’d read you had gone to law school, but hadn’t really gotten the lowdown on why you’d done that. So let’s ask. Why the heck did you go to law school?

You know, it’s something that others haven’t really gotten right. The truth is that I’d always wanted to go to law school. When I was in my 20s, I’d gotten the applications, but given everything that was going on, I’d never really had the time to go through with the effort. But I’d always thought it would be a great experience.

I had a really hard time after 9/11. I was basically living across the street from the World Trade Center, and a big chunk of debris fell on top of my building and the roof caved in. I thought I was going to die. Really. I’d never thought that before, but on that day I sat there and thought ‘I cannot believe it’s going to end this way.’ Afterward, I was very determined not to let this have an effect on me, but I couldn’t get there. I was really quite upset. I stayed in my apartment and read books about Islam and Osama bin Laden and American policy abroad and Israel and the Arabs and it became quite obsessive. I thought, ‘if this is what I’m doing with my time, I might as well go to school.’ So I applied.

What about your writing career at the time? I take it you were willing to set it aside for law school?

Well, ‘More, Now, Again’ came out right after 9/11 and it just sort of got lost in the miasma, which I really think is a shame because I think it’s by far the best thing I’ve done. I don’t think I really cared about my writing at that point. What was on my mind was that I wanted to learn more; nothing else felt that important.

And why law school?

I thought about other programs, but there’s something very substantial and effective about a law degree. If you want to go prosecute terrorists, you can do that with a law degree. But the bigger part of me was interested in teaching. I really thought that that’s what I would end up doing.

Did Yale live up to expectations?

Completely. I thought it was amazing. I really hadn’t taken advantage of my undergraduate years — I just partied through them — and I was immediately ready to work. I suppose the biggest adjustment was getting used to my peers. There was a big generation gap, and I learned pretty quickly that law students are fairly risk averse and cautious. They were so good! So well behaved! And so unlike a lot of the people I’d spent my 20s with. It was a bit of a shock, but I came to appreciate that mindset. Still, I tried to get them to lounge with me, but they wouldn’t. They don’t know how to lounge.

During one of your summers you worked at WilmerHale, right?

I did. I really liked it. I thought it was a great firm and would have been totally happy there. I actually liked writing memos about personal jurisdiction. I had loved civil procedure and evidence as a student and realized that it’d be a shame if I didn’t at least try to be a lawyer. In the end, I wanted to work part time at WilmerHale, and they weren’t too keen on that idea, so it didn’t work out. But I liked the summer there a lot.

So how did Boies Schiller come about?

Like everyone, I was a huge fan of David Boies, and from what I knew about him, I thought he might “get” me. So I sent him an email. I said I want to practice law but that I didn’t want to stop writing and I asked if there was any way I could practice law for him. I really didn’t think he’d be interested, but he called me up one day and asked if I was still interested. So we met and we talked and he offered me a job.

I take it you liked David when you met?

I can’t say enough about him. He’s a very engaging, mesmerizing person. He’s just so thoughtful about so many things. I’ve only been here a week, but the firm is just filled with brilliant people. It’s very impressive.

So did you work out a part-time arrangement?

The truth is that I’ll work full-time, probably. It’s just that I wanted to have a little of flexibility, like to be able to work from home from time to time. But I’m going to be working hard, I know, which is fine. The only thing for me at home is my dog, really. If I didn’t have a dog, I could live in the office.

Your first week sounded crazy. You walked right in on the Wachovia situation, right?

I did. Had I started a week earlier, my life might have been much different, but I got there too late to really get all that involved. But I did some research on it and I watched the team work. People were so devoted and serious and took great pains to look at every possible argument. It was very impressive to watch. People were there for a couple nights in a row, and I honestly found the dedication everyone showed really pretty moving.

So what happens to your writing career? Are you just putting it up on the shelf?

I don’t know what’ll happen. If law takes over, it’ll be because I’m enjoying it, because it’s interesting and worthwhile. I write a lot of op-eds, which don’t take a lot of time and I won’t stop doing that. I’ve also tried to turn my law-school thesis into a book.

Really? What’s that about?

It’s about how the Constitution created Hollywood, about creativity and the Constitution. To me, it’s just sort of mind-boggling that the framers put provisions in the Constitution that had to do with intellectual property. At the time, our country was a pretty rugged place, but it seems they had a hope of making the country a place in which creativity and invention could really flourish. So that’s what it’s about, and that’s what on my mind at the moment on the writing front.

It’s interesting. For a lot of lawyers, the life of a writer seems so ideal, or at least so opposite from what they know. A lawyer’s life is highly structured; a writer’s life, not so much. Are you ready for this much structure in your life?

I’m actually really looking forward to that. I used to feel that I spent too much of my time in my pajamas doing nothing, and I’d think ‘in the time that I don’t spend writing, I could raise a family of five.’ In a lot of ways, being a writer is lonely and alienating. You hear about the work ethic of people like Joyce Carol Oates and John Updike and you think ‘well, God bless them, but I don’t know how they do it.’ Most of the rest of us just wind up watching Oprah. I was roaming the neighborhood every day, lingering at the dog run with my dog. It was really bad. I just wasn’t doing enough, and I feel like law school sort of gave me my voice back. When you have a lot to do, you get a lot done. At least that’s how it’s been for me.

If I had gotten to [Boies Schiller] a week earlier, I might have been thrown into the Wachovia situation. Think how exciting and interesting that is! I’d be energized by something like that, which would give me more energy to do other things. Basically, I’m really excited to work hard.

Sounds good, Elizabeth. Thanks again for taking the time.

Happy to.

Earlier today, the Connecticut Supreme Court, in a 4-3 opinion, overturned the state’s ban on same-sex marriage. It makes Connecticut the third state — after Massachusetts and California — to legalize same-sex marriage. Because the ruling relied on the Connecticut state constitution, it can’t be appealed to the U.S. Supreme Court. Click here for the AP story; here for the NYT story; here for the Hartford Courant story, here for the opinion itself and here, here, and here for the dissents.

We blogged about the California ruling when it came down in May (click here); though we missed out on the Massachusetts ruling back in 2004, as we were but a twinkle in the blogosphere’s eye.



So what do we say about the Connecticut ruling? For that, we checked in with Susan Schmeiser at the University of Connecticut School of Law.

Schmeiser told us that although the court was asked to decide a narrow issue — whether civil unions offered the same benefits and rights benefits as marriage — it did so in sweeping fashion. “It’s really not just about marriage, but on what it means for a group to be recognized by the state.” She calls the decision “more than symbolic,” even though it won’t lead to a host of tangible benefits for gays and lesbians, as many of those were already provided by the state’s civil union law.

From the majority opinion:

Although marriage and civil unions do embody the same legal rights under our law, they are by no means ‘‘equal.’’ As we have explained, the former is an institution of transcendent historical, cultural and social significance, whereas the latter most surely is not. Even though the classifications created under our statutory scheme result in a type of differential treatment that generally may be characterized as symbolic or intangible, this court correctly has stated that such treatment nevertheless ‘‘is every bit as restrictive as naked exclusions’’ . . . because it is no less real than more tangible forms of discrimination, at least when, as in the present case, the statute singles out a group that historically has been the object of scorn, intolerance, ridicule or worse.

Gay persons have been subjected to and stigmatized by a long history of purposeful and invidious discrimination that continues to manifest itself in society. The characteristic that defines the members of this group—attraction to persons of the same sex—bears no logical relationship to their ability to perform in society, either in familial relations or otherwise as productive citizens. Because sexual orientation is such an essential component of personhood, even if there is some possibility that a person’s sexual preference can be altered, it would be wholly unacceptable for the state to require anyone to do so.

Insofar as gay persons play a role in the political process, it is apparent that their numbers reflect their status as a small and insular minority. It recently has been noted that, of the more than one-half million people who hold a political office at the local, state and national level, only about 300 are openly gay persons. . . No openly gay person ever has been appointed to a United States Cabinet position or to any federal appeals court, or served in the United States Senate, and only two currently serve in the United States House of Representatives. . . . Gay persons also lack representation in the highest levels of business, industry and academia. For example, no openly gay person heads a Fortune 500 company. . . . By any standard, therefore, gay persons ‘‘remain a political underclass in our [state and] nation.’’

From Justice David Borden and Justice Christine Vertefeuille’s dissent:

At this point in our state’s history, however, and without any appropriate fact-finding on the issue, I am unable to say that it is widely considered to be less than or inferior to marriage, or that it does not bring with it the same social recognition as marriage. It is simply too early to know this with any reasonable measure of certitude.

From Justice Peter Zarella’s dissent:

The ancient definition of marriage as the union of one man and one woman has its basis in biology, not bigotry. If the state no longer has an interest in the regulation of procreation, then that is a decision for the legislature or the people of the state and not this court. Therefore, I conclude that the equal protection provisions of the state constitution are not triggered. I further conclude that there is no fundamental right to same sex marriage.

LB readers, we’d love to hear your thoughts.

We suppose there’s no real way to sugarcoat this, but we found the first line of an email sent by Heller Ehrman and posted by the CalLaw blog to its employees downright chilling.

It is with a great deal of regret that we write to inform you that we will not be able to pay you for work performed after today, Friday October 10 and, as a result, that your employment with the firm will be terminated today.

As all loyal LB readers probably know, Heller Ehrman, the erstwhile Bay Area juggernaut, last month decided to close its doors, a victim of an overly ambitious expansion plan and an unexpected loss of litigation work.

Initially, the firm had said it would wind up its business by Nov. 28. But it seems to be expediting the process. The email also reads:

These actions have been forced upon us by the two banks — Citibank and Bank of America — that control our ability to make any payments. Generally, they have refused to pay employees who we cannot convince them are necessary (as they define it) for the wind down efforts.

According to a source close to the firm, the email was directed largely toward administrative staff and other non-lawyer personnel, but that some lawyers were affected. Many Heller lawyers have found work at other firms, some of which have gone into hiring mode, despite the down market.

Let’s keep ourselves busy with a pet project: Tracking the fees that Weil Gotshal receives from its work on the Lehman bankruptcy.
AmLaw Daily reports that, according to court documents made public Wednesday, the firm received a $5 million advance in September for work leading up to the bank’s bankruptcy filing. “The negotiations were unsuccessful and the chapter 11 cases resulted,” wrote Harvey Miller (pictured), Weil’s bankruptcy guru, in a filing. “[Weil] is applying the advance to the charges for the professional services performed and to reimbursement of out of pocket expenses.”

But that $5 mil could be peanuts. AmLaw Daily notes that UCLA law prof Lynn LoPucki, estimates advisory and legal fees could come to $906 million, according to Bloomberg reports.

In a separate filing, Lehman sought to employ Curtis, Mallet-Prevost, Colt & Mosle as its conflicts counsel. Curtis, Mallet bankruptcy partners Steven Reisman and Lynn Harrison will step in as Lehman’s lawyers when a potential or actual conflict of interest arises with Weil, Gotshal, the filings say.

Both applications reportedly lay out billing rates the two firms expect to charge Lehman. Weil says its partners charge $650 to $950 an hour. Curtis, Mallet says its partners charge $675 to $785 an hour. Rates for counsel, associates, and paralegals also are detailed.

Oh, what fun it could have been — a titanic and riveting courtroom drama between Citigroup and Wells Fargo over who would take home Wachovia. But, alas, it’s not to be. According to an announcement announced this afternoon, Citigroup has dropped out of the settlement talks with Wachovia and Wells Fargo, and will not challenge the Wachovia, Wells Fargo merger. Click here for the WSJ story; here for the Citigroup statement. Click here, here here and here for previous LB coverage.

Despite today’s developments, the story will not fall entirely off the Law Blog’s radar screen. Said Citigroup:

Citi believes that it has strong legal claims against Wachovia, Wells Fargo and their officers, directors, advisors and others for breach of contract and for tortious interference with contract. Citigroup plans to pursue these damage claims vigorously on behalf of its shareholders. However, Citigroup has decided not to ask that the Wells Fargo-Wachovia merger be enjoined.

So, it seems that the litigation will continue, albeit not with injunctive relief at stake, only money (sigh). What might the litigation look like going forward? Recall, for starters, that in the lawsuit Citi filed in New York state court, it asked for $60 billion. For further help on unpacking what we might see going forward, we checked in with Elizabeth Nowicki down at Tulane, who’s been following this situation closely.

In an initial email, Nowicki reminded us what Wachovia CEO Robert Steel said earlier this week in a sworn affidavit, that without Citigroup’s initial cash infusion, Wachovia would have landed either into bankruptcy or the FDIC’s hands.

“That now means that there is a little more weight behind the theory that Citigroup was used as a “stalking horse” for Wachovia,” says Nowicki. “If that is true — if Wachovia really did just use Citigroup to carry Wachovia until something better turned up — then we might have the basis for an actual tort claim as opposed to only the exclusivity agreement breach.”

In a statement, Wachovia spokeswoman Christy Phillips-Brown said: “Wachovia continues to believe its agreement with Wells Fargo, which involves no government assistance, is proper and valid. The agreement is in the best interests of shareholders, employees, creditors and retirees as well as the American taxpayers and it imposes no risk to the FDIC fund.”

On the breach-of-contract claim, Nowicki says that for Citigroup, it’s all about damages. How does Citi prove the harm that resulted from the breach? “I would make the argument that in addition to the money wasted by Citigroup in terms of lawyers fees, publicists, and expenses, Citi’s stock value was likely harmed by having been rebuffed,” she says. “In addition, there’s a bigger claim to be made, by having been a spurned bidder, Wachovia compromised Citi’s financial position and credibility for making short-term bids.”

While these are claims Wachovia is likely to have to answer to, Nowicki suspects that Wells Fargo might be able to walk away from all this without much of a scratch, largely because of a provision tucked in to the just-signed Bailout Bill. The provision is section 126(c), which says, in essence, that there shall be no liability against a third party for having acquired a target that otherwise was in an exclusivity agreement with someone else. “I believe it’s fairly clear,” she says. “I doubt Wells will have tortious-interference liability because of it.”

It led us to ask why such a section — called a “deal-jumper “provision” by Nowicki — was needed. “It has the fingerprints of an extremely smart banking lawyer,” she says. “In a distressed atmosphere, we want to encourage bidders to come forward.” Nowicki says Wells’s takeover removes potential liability from the FDIC, which had agreed to backstop the Citigroup/Wachovia deal.

Here’s another legislative process Q&A post. We tackle two questions in this post. Here’s the first:

Does one know who writes a bill? Is writing a bill considered different than being the Sponsor of the bill? There’s no such term “writing” as far as I’ve ever heard. The sponsor is the Member of Congress primarily responsible for [...]

More...

Emmett Louis Till, a 14-year-old from Chicago whose body was found in the Tallahatchie River near the Delta community of Money, Miss., on Aug. 31, 1955. (AP Photo)


Over the past four nights, the TV One channel, in a documentary series called “Murder in Black and White,” has examined four cases of racially motivated murders that took place in the South of the 1940’s and 50’s.

One of the most infamous examples of racially-motivated murder (which is not featured in the series) is the 1955 torture and murder of Emmett Till, a 14 year-old from Chicago who, while visiting family in Mississippi, supposedly made the fatal mistake of whistling at a white woman. Now, over half a century later, Till’s name has been exhumed for use in The Emmett Till Unsolved Rights Crime Act, recently signed into law by President Bush, which gives new authority to the DOJ and FBI to reopen, investigate and prosecute unsolved Civil Rights era crimes. Here’s a report from the NLJ.

The Act, writes the NLJ, directs the attorney general to designate a deputy chief in the Criminal Section of the Civil Rights Division to be responsible for investigating and prosecuting violations of criminal civil rights statutes in which the alleged violation occurred before January 1, 1970, and resulted in death, and to designate a supervisory special agent in the Civil Rights Unit of the FBI to investigate those alleged violations as well.

The AG also has authority under the act to award grants - $2 million annually - to state or local law enforcement agencies for the investigation and prosecution of such cases. Congress appropriated $10 million in general funding each year for the act, with all of its provisions to sunset in fiscal year 2017.

According to this story in the Jackson (Miss.) Free Press, Mississippi currently doesn’t have any active civil-rights cold cases, but Mississippi AG Jim Hood supported the bill nonetheless. “The public needs to know that the state and the federal government did everything we could,” Hood added. “In the future, 50 years from now, people will be able to look at that list of people who died and know that, at least, someone looked at it with the assets and abilities to thoroughly review it . . . Let’s get it answered for the victims. It’s what they deserve.”

It was an annual southern California childhood event: the whale-watching field trip. Most years, you didn’t see much of anything; the day was just an excuse to get out of the classroom, drink too much hot chocolate and test the efficacy of Dramamine. But once, a big old barnacle-ridden gray whale sided up to the boat, surfaced briefly and blew a big geyser of seawater out of its blowhole, misting all of us on the port side. The girls squealed in delight, the boys cheered and gave high-fives and the teacher, briefly, wept (she really did).

We were reminded of this today in reading about the Supreme Court arguments that took place today in a case pitting the U.S. Navy against, essentially, a bunch of whales off the California coast.

The dispute centers on a series of Naval training exercises involving the use of sonar that began in February 2007 and are scheduled to end in January. In March of last year, the Natural Resources Defense Council filed suit in federal court in California to stop or modify the use of sonar, which can hurt sea life. (According to ScotusWiki, Necropsies of dead whales showed hemorrhaging in and around the ears and internal organs.) A federal district judge granted a preliminary injunction halting the exercises; the Ninth Circuit made findings and kicked it back down to the lower court, which upheld its original ruling. On appeal, the Ninth Circuit upheld the preliminary injunction. The Navy appealed, and here we are. Click here for stories on today’s arguments from the AP and WaPo.

The administration argues that the judiciary must defer to its determination because the exercises constitute a national security emergency that overrides environmental laws. But the NRDC and other environmental groups say the Navy must adhere to environmental laws that regulate the actions of federal agencies.

According to the WaPo story, arguments Wednesday revealed that the Court might not split down iits normal ideological lines on this one. Justice Breyer, for one, reportedly wondered aloud why the parties hadn’t settled this. “You’re asking us to figure it out,” Breyer said before adding, to laughter in the courtroom: “The whole point of the armed forces is to hurt the environment . . . on a bombing mission, do they have to prepare an environmental impact statement?”

But Justice David Souter ridiculed the idea that the administration could declare an emergency to try to get around complying with environmental laws. “If there’s an emergency, it’s one the Navy created simply by failing to start EIS preparation in a timely way,” he said.

Photo: Getty Images

This just in: The AP is reporting that a litigation freeze among Citigroup, Wachovia and Wells Fargo has been extended for about two more days, until Friday morning at 8 a.m. The truce was first put into place on Monday, with a supposed expiration of Wednesday at noon, to give the parties a bit of time to reach a settlement over the bidding war for Wachovia.

Citigroup and Wells Fargo are locked in a hard-fought battle over Wachovia. Last week, Wachovia agreed to a tentative $2.2 billion deal with Citigroup for Wachovia’s banking operations. Later in the week, Wells Fargo jumped into the bidding, and reached agreement with Wachovia whereby Wachovia would be sold in its entirety (the banking operations, as well as its asset-management and brokerage arms) to Wells Fargo for $15.1 billion. A big crazy web of litigation was launched over the weekend.

So what’s been going on since Monday? The WSJ reported this morning that a “quick resolution appeared increasingly unlikely,” and that Citi had reached out to other parties to join its bid. The talks, which are apparently continuing, are largely turning on ways to split up Wachovia’s assets between the two parties.

Click here, here here and here for previous LB coverage.

Two weeks ago, we asked a Heller Ehrman associate about job prospects following the firm’s planned November 28 wind-down. He told the Law Blog that managing partner Matt Larrabee had indicated, at a firm meeting, that Baker & McKenzie was interested in “taking some lawyers from all of the domestic offices.”

The Recorder today reports that those hopes have been dashed.

On Tuesday, Peter Benvenutti, the chairman of the dissolution committee now controlling the firm, confirmed whispers that Baker & McKenzie and Winston & Strawn, both one-time merger candidates, had withdrawn proposals to pick up large groups of lawyers and their expensive real estate. While Benvenutti would not say whether deals on this scale are being discussed with any other firms, he did say there’s interest in taking over certain of the firm’s leases, and “we expect to have clarity in a day or two.”

But there still may be some interest. Baker reportedly remains interested in a smaller number of Heller partners — between five and 20 partners in various practice areas and locations, according to the Recorder. Winston, too, is reportedly still pursuing some number of Heller lawyers.

Meanwhile, also on the law-firm front, it seems that partners are working hard to assuage the fears of associates, many of whom are apparently shaken by the financial crisis. Click here for the NLJ story.

For instance, Ropes & Gray chairman Brad Malt said the firm is “well positioned to weather the turbulence in the marketplace” because its practice areas and clients are diversified. In fact, the e-mail said that the Wall Street crisis is an opportunity for the firm to pick up business as the financial sector attempts to get back on track.

David Aufhauser, then the Treasury Department GC, speaks with reporters at the Treasury Department, Oct. 14, 2003. (AP Photo/Evan Vucci)

David Aufhauser has a pretty sterling resume: general counsel of the Treasury Department official; former general counsel for UBS AG’s investment bank; partner at Williams & Connolly; graduate of elite schools (Wesleyan, Penn Law, Harvard MBA). Today, that resume picked up a bit of a smudge: a settlement with New York AG Andrew Cuomo over allegations of insider trading in the auction-rate securities market. Here’s the story from the WSJ.

Aufhauser, who stepped down from his post at UBS in August, was one of seven UBS executives Cuomo alleged in a complaint to have sold auction rate securities with inside and early knowledge of the problems in that market. He is the only top executive to settle with regulators over his actions. A representative from the attorney general’s office says it is still investigating the other executives.

Aufhauser has agreed to pay to the state of New York his entire 2008 incentive compensation package from UBS of $6 million plus a $500,000 penalty. He has also agreed to be barred from the securities industry for two years, barred from being an officer or director of a public company for two years, and barred from practicing law in New York for two years, according to the settlement agreement signed by Aufhauser, his attorney and an attorney in Mr. Cuomo’s office. He neither admits nor denies wrongdoing.

“We are pleased to have reached this amicable agreement and avoided a potentially lengthy litigation,” a spokesman said on behalf of Aufhauser in a statement.

Just in case you were wondering what he learned in law school, there’s this, from the Penn Law Web site: “Penn’s broadband view of a lawyer’s role in civil society gave a lot of us the courage - and commitment - to pursue careers that could lead a trial lawyer to be a counselor to a President, and then to help run enterprises of enormous dimension and impact. One of my great fortunes in life was to have attended the School.”

We try not to give undue coverage to the Ted Stevens trial. We really do. But the case, with its myriad oddities, has become a blogger’s dream.

The latest: U.S. District Judge Emmet Sullivan has accused a lawyer, Dorsey & Whitney’s Robert Bundy, of trying to send secret signals to his client, the government’s star witness, former Veco CEO Bill Allen, during Allen’s cross-examination. Here’s an AP story.

”He’s fortunate he went out that door and not the back door with the marshals,” an angry Judge Sullivan reportedly said about Bundy (pictured), who was sitting in the public gallery yesterday facing his client.

Allen, who pleaded guilty to bribing state lawmakers and agreed to testify against Stevens in exchange for immunity for his family and a possible break at sentencing, resumed testifying today. But before allowing Allen to start, Judge Sullivan and Stevens’s defense team — led by Williams & Connolly’s Brendan Sullivan (no relation) — both say they saw Bundy making signals to Allen while defense lawyer Sullivan was questioning the witness.

Apparently, the judge had questioned Bundy about this yesterday, notes the AP, and said he was thinking about questioning him again this morning, calling it ”borderline obstruction of justice.” But Bundy didn’t come to court today. According to his partner, Creighton Magid, Bundy didn’t think he’d be welcome. ”He is torn up about this,” said Magid, who also said Bundy ”vehemently denies” making any signals to Allen.

Magid said he would represent Allen if needed during the resumption of his testimony Tuesday.

Sen. Ted Stevens, R-Alaska, left, listens to witness Bill Allen, right, being questioned by his Attorney Brendan Sullivan, second from left top, Oct. 6, 2008. Others depicted are Prosecution Attorneys Joseph Bottini, and Brenda Morris, seated second and third from left, and Judge Emmet G. Sullivan, second from right. (AP Photo/Dana Verkouteren)

Big day in the Ted Stevens trial: Judge Emmet G. Sullivan is scheduled to hold a hearing today on whether evidence allegedly withheld by the prosecution merits a mistrial. Meanwhile, the show continued yesterday, with the prosecution playing three taped conversations between Stevens and former Veco CEO Bill Allen. Stevens reportedly didn’t know that Allen, who faced evidence that he’d tried to bribe lawmakers, had agreed to cooperate with the Feds. Here are reports from the LAT and NYT.

Stevens is facing charges that he accepted and failed to report more than $250,000 in gifts — including home renovations — from Veco, an oil-services company.

Here are some of the more notable (and non-chronological) moments from the tapes:

Stevens: “They’re not going to shoot us. It’s not Iraq.” At worst, he said, “we might have to pay a fine and serve a little time in jail.” He added, “I hope to Christ it never gets to that, but I don’t think it will.”

Allen: [Apologizing to Stevens for their problems] “I love you, you know.”

Stevens: “Get out in the community. You’re not going to let this thing whip you.”

Stevens: “[Federal agents are] probably listening to this conversation right now.”

Allen: “Well, they’re not supposed to be.”

It wasn’t the biggest news of the day, but it likely moved the needle up at Verizon’s Manhattan headquarters. The phone giant suffered a setback in its dogged pursuit of patent infringers today as a jury decided that cable TV company Cox Communications didn’t infringe on patents related to Internet phone service. Click here for a Reuters story, here for a walk-up in today’s WSJ by Amol Sharma.

Verizon has ramped up efforts to enforce its Internet phone technology even though it doesn’t push the service to its own customers. Last year, Verizon scored a victory in a patent case against Internet phone provider Vonage. A federal jury ruled that Vonage had infringed on some Verizon patents. The companies later reached a settlement in which Vonage agreed to pay Verizon $117.5 million.

But today’s verdict might make it tougher for Verizon, which is battling cable companies to provide customers with TV, phone and Internet hook-ups, to go after other cable TV companies for patent issues.

“Despite the decision, we believe our patents were infringed,” Verizon said in a statement. “We will continue to innovate and protect our intellectual property.” Verizon said it has not decided whether to appeal the decision.

This just in: The three parties involved in the Wachovia litigation — Wachovia, Citigroup and Wells Fargo — have agreed to halt all litigation activity until noon Wednesday. The news was announced a few minutes ago in press releases issued by each company. The release reads:

Wachovia, Citigroup, and Wells Fargo have agreed to:

1) a standstill of all formal litigation activity effective immediately;
2) cease any formal discovery activities, and
3) cooperate in good faith to agree among themselves to secure orders where necessary in all applicable cases in all jurisdictions tolling any schedules for the filing of litigation papers or court appearances or any other formal litigation deadlines, with the goal of preserving the status quo during the litigation standstill period.

This standstill agreement will terminate at noon on Wednesday, Oct. 8, 2008, unless otherwise extended.

The companies did not give a reason for the action but a statement from Citigroup said, “We are pleased to participate with the Federal Reserve Board in a fair-minded, good faith process to achieve a prompt and successful outcome.”

Lehman Brothers employees signed in green a portrait of Lehman Brothers CEO Richard Fuld, Jr.,outside the New York headquarters, Sept. 15, 2008 in New York. (AP Photo/Mary Altaffer)

It’s a common scenario: Company is in trouble. Behind the scenes, management scrambles to right the ship while reassuring the public that everything will be just fine. Company crumbles. Investors claim they wouldn’t have bought — or would’ve sold — but for the public statements of strength. Questions of civil and criminal liability follow. (Remember Bear?)

And so it goes for Lehman Brothers, whose CEO, Richard Fuld, testified today before the House Oversight and Government Reform Committee. In a front-page story entitled “The Two Faces of Lehman’s Fall,” the WSJ reports that the FBI has launched a preliminary inquiry into whether Lehman or its executives committed fraud by misrepresenting the firm’s condition to investors. Meanwhile, prosecutors from the U.S. Attorney’s office in New York’s Eastern District are examining, among other things, whether Lehman execs misled investors by making upbeat comments to investors and research analysts on Sept. 10 — five days before the firm filed for bankruptcy protection.

Were Lehman execs talking out of both sides of their mouths? Here, according to the WSJ, is a summary of the events under scrutiny:

• On September 9, Lehman’s stock plunged 45% on news that a potential deal with Korea Development Bank fell through.
• As Lehman’s “clearing bank,” J.P. Morgan acted as the financial middleman between Lehman and its clients. Steven Black, co-CEO of J.P. Morgan’s investment bank, told Fuld that in order to protect itself and its clients, JPM needed $5 billion in additional collateral — over and above the $5 billion J.P. Morgan had demanded five days earlier, which had yet to be paid. Fuld persuaded Black to settle for $3 billion right away.
• That evening, top Lehman execs discussed the need to raise between $3 billion and $5 billion to shore up capital by early 2009. That evening, discussions with outside bankers about possible capital raising ended without any formal plan. Lehman execs arranged a conference call for the next day to announce earnings ahead of schedule and to disclose plans for a restructuring. The bankers counseled Lehman against holding the call, warning there were too many open questions about the firm’s finances.
• On next day’s conference call, the firm announced that it expected its largest quarterly loss ever, $3.9 billion, driven largely by declines in real-estate valuations. CEO Fuld said the firm intended to sell a majority stake in its investment-management division and would cut its dividend. Lehman executives didn’t say anything about needing to raise capital.
• On the call, a Deutsche Bank analyst asked whether Lehman would need to raise $4 billion as part of the plan. Lehman’s CFO, Ian Lowitt, replied: “We don’t feel that we need to raise that extra amount.” At another point, Lowitt said: “Our capital position at the moment is strong.”
• By Sunday, Sept. 14, Lehman, its lawyers and officials from the New York Fed determined that Lehman must file for bankruptcy.

Fuld and Lowitt declined to comment. One Lehman executive says the firm determined sometime during the night prior to the conference call that additional capital wouldn’t be needed because Lehman hoped to raise more money by selling additional assets.

Loyal LB’ers: Surely, more info will emerge on what occurred prior to Lehman’s fall. But based on what we know so far, will the government — or shareholders — have a case?