DOJ to Appeal Disgorgement Ruling / Kessler To Lock Courtroom For Gulson
February 16, 2005 4:56 pm by Gene BorioDOJ attorney Sharon Eubanks apprised Judge Kessler at the end of court Tuesday that the DOJ plans to file a petition asking for a rehearing en banc of the disgorgement issue on which a DC Court of Appeals panel ruled Feb. 4. That panel disallowed disgorgement as a remedial option should the defendants be found guilty.
The deadline for filing is March 21.
The DC Court of Appeals Rule #35 states that:
An en banc hearing or rehearing is not favored and ordinarily will not be ordered unless:
(1) en banc consideration is necessary to secure or maintain uniformity of the court’s decisions; or
(2) the proceeding involves a question of exceptional importance.
The rule explicitly mentions the presumed basis for the DOJ’s petition, an Appeals Courts split:
for example, a petition may assert that a proceeding presents a question of exceptional importance if it involves an issue on which the panel decision conflicts with the authoritative decisions of other United States Courts of Appeals that have addressed the issue.
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Also, Judge Kessler issued an order Tuesday morning closing the courtroom for the testimony of Australian whistleblower Frederick Gulson Wednesday morning. She said the doors would be locked.
Judge Kessler expressed her concern about the court reporter’s live “feed” of real-time transcribed court proceedings. The feed will be strictly sequestered, and delivered only within the courtroom proper. It will not even be delivered to the DOJ’s support room down the hall.
February 16th, 2005 at 7:37 pm
The rule explicitly mentions the presumed basis for the DOJ’s petition, an Appeals Courts split:
for example, a petition may assert that a proceeding presents a question of exceptional importance if it involves an issue on which the panel decision conflicts with the authoritative decisions of other United States Courts of Appeals that have addressed the issue.
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The split you describe (ie a non-unanimous majority decision by a panel of judges) *IS NOT* ordinarily grounds for an en-banc hearing.
The split referred to in the Federal rules of procedure listed above refers to a split *BETWEEN CIRCUITS* on issues of importance. In other words, did the decision from the DC circuit contradict other decisions made by other Federal courts that have looked at the same or similar issues?
In this case, the answer is no. The recent decision by the DC circuit is consistent with past precedent on this remedy (eg the Carson case). The recent decision certainly was new, but thats largely because what the govt was asking for was totally unprecedented. But case law here is on the side of Tobacco, not the gov’t, which really had no right to ask for a criminal remedy in a civil case.
The gov’t can certainly ask for a hearing en banc, but frankly, its highly unlikely they will get it (let alone actually win it).
February 17th, 2005 at 7:09 pm
Actually, tobacco observer is incorrect. There is a circuit split: the 2d Circuit and 5th Circuit have both held that disgorgement is available in civil RICO actions; the DC Circuit just held that it is not.
February 20th, 2005 at 3:53 am
You are right. I was wrong. There is a split here.
Without getting into a protracted legal argument, the second circuit in Carson vs. USA generally disallowed disgorgement in civil RICO cases, except under a very narrow set of circumstances. In that case the disgorgement remedy was not permitted against the defendant Carson. The fifth circuit using Carson as precedent limiting the scope of disgorgement also denied it as a remedy against the defendant.
So indeed there is a circuit split on the specific issue of whether or not disgorgement is EVER an appropriate remedy under civil RICO section 1964, in terms of “prevent and restrain”.
But in my opinion this is still a relatively minor split. Carson severely limited civil RICO disgorgement, the fifth circuit agreed with that limitation, and now the DC circuit has limited it even more, completely eliminating it. They have a fairly convincing, and in my opinion solid explanation as to why they disagreed, saying in effect, if Congress wanted disgorgement to be allowed in civil RICO cases, they would have specifically authorized it.
So the question for the full panel will be, is the issue of the exceptional use of disgorgement under RICO 1964 a matter of “exceptional importance”? As far as I know this remedy has still never actually been successfully applied to any defendant in any civil RICO case. If my read of the majority opinion here is right, even re-permitting the Carson exception, disgorgement would still not be allowed in this case. Is it worth the attention of the full panel to possibly re-open the little loophole opened by Carson?
I kind of think not, actually, but I concede it could happen.