U. S. Judge Voices Doubt on Trump Bid to Block House Subpoena for Financial Records

Judge Amit P. Mehta

A federal judge expressed astonishment Tuesday at arguments raised by President Trump’s lawyers seeking to block his accounting firm from turning over years of financial records to the House Oversight and Reform Committee and seemed to signal a swift ruling in favor of lawmakers, reports The Washington Post.

“U.S. District Judge Amit P. Mehta fired pointed questions at the president’s lawyers, who argued in an April 22 lawsuit that the committee’s sweeping subpoena to Mazars USA for the financial records of Trump and various associated entities since 2011 was not ‘a valid exercise of legislative power,’” writes the Post‘s Spencer S. Hsu.

A lawyer representing Trump accused Democrats of “assuming the powers of the Department of Justice” on a partisan crusade.

Read the Post article.



Construction Defect Dispute Governed by Contract Disputes Act Not Yet Suited to Being a ‘Suit’

A recent ruling provides an unfortunate example of what can happen when a contractor does not consider commercial general liability when making strategic decisions throughout the process of investigating and repairing construction defects, writes William Bennett in a web post for Saxe Doernberger & Vita.

The post continues:

The Southern District of California recently held that a series of demands for a general contractor to investigate and repair several construction defects at a U.S. Army facility did not constitute a “suit” within the meaning of the general contractor’s commercial general liability (“CGL”) policy.

In Harper Construction Co., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., the U.S. Government hired Harper Construction Company (“Harper”) to construct a U.S. Army training facility for the Patriot Missile System in Fort Sill, Oklahoma. No. 18-cv-00471-BAS-NLS (S.D. Cal. Mar. 28, 2019). During the project, Harper hired Harper Mechanical Contractors (“Harper Mechanical”), an independent company, as a subcontractor “to perform demolition, grading, and other work at the Project.”

After Harper completed the project, the government informed Harper of property damage at the project, “including, but not limited to, gypsum wallboard cracks and binding doors.” Harper attempted to repair the issues, but the problems continued. The issues were apparently the result of Harper Mechanical’s grading work. Subsequently, the government sent two letters requesting an investigation and asking Harper to “propose a plan to correct the issues.” As Harper undertook an investigation spanning multiple years, the government became increasingly frustrated with the delays. The government threatened to initiate “formal administrative recourse” and to demolish the project, forcing Harper to re-build from the ground up. It also sent Harper another letter requesting Harper submit a formal proposal to correct the issues.

Harper’s general liability carrier was National Union Fire Insurance Company of Pittsburgh, PA (“National Union”). Harper Mechanical was listed as an additional insured on Harper’s policy. Four years after the government’s first notification to Harper of the issues with the project, Harper’s broker submitted a claim to National Union. The broker noted that Harper was seeking additional insured coverage for Harper Mechanical under Harper’s own policy for investigation and repair costs resulting from Harper Mechanical’s work.

National Union issued a reservation of rights letter and sought more information from Harper. The parties corresponded for the next year and half, until National Union issued a denial letter indicating that there was not a “suit” against Harper seeking damages because of “property damage,” based on the policy’s definition of “suit.”

The policy contained the standard ISO CGL definition of “suit,” which is defined, in pertinent part, as “a civil proceeding in which damages because of … ‘property damage’ to which this insurance applies are alleged. ‘Suit’ includes: … b. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent.”

Harper sued National Union. National Union moved for summary judgment. In opposition, Harper argued that the government’s demand constituted a “suit” because the demand falls within the Contract Disputes Act (“CDA”), which includes administrative and court proceedings and qualifies as “any other alternative dispute resolution proceeding” under the policy definition. The CDA applies to “contracts made by an executive agency for, among other things, the procurement of construction … of real property.”

The court acknowledged that the CDA applied to the contract, given the Army’s status as an executive agency. However, the CDA does not automatically consider all disputes to constitute a “claim.” A dispute does not become a “claim” unless one of the contracting parties issues a “[w]ritten demand or written assertion … seeking … the payment of money in a sum certain,” at which point “each claim by the Federal Government against a contractor relating to a contract shall be the subject of a written decision by the contracting officer.” Without the claim being “submitted for a written decision by the contracting officer, which is the first step in the dispute resolution process under the CDA,” the court determined that there was “no evidence that Harper was faced with a “civil proceeding in which damages … are alleged” or “any other alternative dispute resolution proceeding,” as required by the policy’s definition of “suit.” The court also noted that there was no evidence that National Union had consented to any of the processes involved in the dispute, which is a further requirement of the definition of “suit.”

The court granted summary judgment for National Union based on the conclusion that the CDA demands did not constitute a “suit.” This case is an unfortunate example of what can happen when a contractor does not consider coverage when making strategic decisions throughout the process of investigating and repairing construction defects. The result could potentially have been favorable for Harper had it notified National Union early (and often) of the issues, involved coverage counsel to work with its defense and/or general counsel to strategize about how to cast the proceedings as a “suit” under the CDA, and followed the proper channels under the CDA to solidify its position that the parties were involved in ADR proceedings under existing California law.



Outcry Over EPA Proposal to Weaken Standards for Cleanup of ‘Forever Chemicals’

EPA: Environmental Protection AgencyThe Environmental Protection Agency has proposed weaker standards for cleaning up dangerous groundwater contamination sites across the country where chemicals containing fluorine-based PFAS compounds threaten drinking supplies of millions of Americans, according to a post by Androvett Legal Media & Marketing. The proposal would lower existing requirements for addressing groundwater contamination at military bases where large amounts of contamination have been documented.

“We’ve seen companies like 3M and DuPont fail to take responsibility for the health risks caused by the chemicals they created. Federal regulators should be increasing – not decreasing – oversight at this time,” said water contamination attorney Bryan Fears of Dallas-based Fears Nachawati, who represents individuals and local governments in water contamination litigation against makers of the chemicals. “This problem is not going away and cleaning up these sites must be a priority.”

Called “forever chemicals” because they never fully degrade, PFAS compounds have been found in drinking water used by 110 million people across the nation and in the blood of 98 percent of Americans. The compounds, which are found in hundreds of consumer and industrial products, have been linked to immune system problems and cancer. The EPA proposal would extend the timetable for cleanup at more than 400 military bases where the use of fire-retardant foam containing the chemicals has been blamed for serious groundwater contamination problems.

The EPA proposal is under a 45-day review and comment period. “Now is the time for Americans to speak up about this problem and ensure that contamination is addressed sooner rather than later,” said Fears. “This is a fight for safe drinking water for our communities, families and future generations to come.”



Trial to Begin Over Claims Army Corps Knew of Flooding Risk in Wake of Hurricane

The trial involving Hurricane Harvey-related claims from Houston-area property owners who were flooded by the water release from two U.S. Army Corps of Engineers reservoirs will begin on May 6, according to a post on the website of Androvett Legal Media & Marketing.

“We’re pleased that we can finally present the evidence to claim fair compensation for the residents whose property was flooded because of the government’s failures,” said Daniel Charest of Burns Charest LLP, co-lead counsel for the residents. “The Corps of Engineers knew its reservoirs and management plans would result in the flooding of private property, which is exactly what happened in August 2017.”

An estimated 8,000 to 10,000 homes and businesses flooded near government-run dams to the west of Houston. The plaintiffs allege the actions of the Corps of Engineers and its design of the reservoirs led to the flooding of their private property, resulting in an unlawful “taking” of land under the Fifth Amendment of the U.S. Constitution.

The Addicks and Barker reservoirs were built in the 1940s and 1950s. Over the years, the government allowed developers to build thousands of homes and businesses on land that the Corps knew was at risk of flooding, according to plaintiffs. During Harvey’s rains, some of these properties flooded from reservoir overflow, and others flooded when the Corps chose to release water to protect the dams.

The two-week bench trial is before the Court of Federal Claims but will take place in the federal courthouse in downtown Houston.



Miller & Chevalier Adds Government Contracts Lawyer from the Department of the Navy

Miller & Chevalier Chartered has added Abigail (Abi) Stokes as counsel in the firm’s Government Contracts practice. Stokes joins the firm after almost 10 years as a first-chair government contracts attorney for the United States Department of the Navy.

While she was with the Navy, Stokes had responsibility for numerous, high-value programs and was awarded an Acquisition Excellence award, as well as the U.S. Navy’s Meritorious Civilian Service Award, the firm said in a news release. Her experience includes litigating numerous bid protests and counseling on statutory and regulatory compliance issues throughout the procurement lifecycle.

Stokes earned a J.D. from the University of California, Hastings College of the Law, and a B.S. from the University of California, Davis. She began her legal career as a law clerk to the Honorable Alex R. Munson of the U.S. District Court for the Northern Mariana Islands.



Big Law Pay Equity Gets Closer Scrutiny by Small Labor Agency

A small Labor Department agency with sizable oversight is looking closely at Big Law firms like Morgan Lewis & Bockius, Fox Rothschild, and Paul Hastings, as part of its mission to address compensation and promotion practices in the legal industry, reports Bloomberg Law.

“The DOL’s Office of Federal Contract Compliance Programs recently cautioned law firms that do work with the federal government that it will be closely analyzing how their employment practices affect diversity,” reports Bloomberg’s Paige Smith. “At least 10 firms will be audited by the OFCCP in 2019, and the agency’s director Craig Leen said investigators may target the legal industry in particular in future probes.”

Some big law firms are facing a wave of litigation over alleged discrimination against women and people of color.

Read the Bloomberg Law article.



Elon Musk and SEC Make Deal: He’ll Have ‘Experienced Securities Lawyer’ Preapprove His Tweets

Elon Musk and the Securities and Exchange Commission have come to a settlement agreement over the Tesla CEO’s errant behavior on social media: All of Musk’s communication via social media, the company’s website, press releases, and investor calls must be preapproved by an “experienced securities lawyer.”

Musk got into trouble with the SEC earlier this year when he tweeted a projection about Tesla vehicle production that the agency considered to be misleading.

Business Insider reports that Musk must “implement mandatory procedures and controls” providing oversight of all of his communications regarding the company “made in any format.”

Read the Business Insider article.



May 2 Webinar: Key Issues in Municipal Restructuring

Expert Webcast will present an interactive roundtable discussion municipal restructuring on May 2, 2019, 1-2 p.m. Pacific Time, with Andy J. Dillon, executive director at Conway MacKenzie, and Karol K. Denniston, partner at Squire Patton Boggs, and moderated by Alex Kasdan, senior managing director, DelMorgan & Co.

Dillon acted as treasurer for the state of Michigan, managing 1,450 employees, where he was responsible for collecting more than $50 billion in annual revenues, tax administration, collections, bond finance, school loan programs, local government oversight, and served as the sole fiduciary of $60 billion in pension, 401K, state trust and cash assets. While treasurer, Dillon also led two state reviews of the City of Detroit’s finances, negotiated a consent agreement between the city and state and transitioned the city into receivership. Dillon also provided hands on oversight of dozens of troubled cities, counties and school districts, Expert Webcast said in a release.

Denniston, a bankruptcy and restructuring lawyer for more than 30 years, has experience representing debtors, creditors, bondholders and other parties in a wide variety of litigated bankruptcy cases and out of court transactions. Denniston has been working in the distressed municipal sector since 2009 and routinely represents cities, special districts, indenture trustees, bondholders, taxpayers and monoline insurers in a variety of municipal restructuring engagements throughout the US. She has represented clients in municipal insolvency proceedings with a focus on negotiating resolutions, including in Puerto Rico PROMESA restructurings for the Government Development Bank and COFINA.

Register for the roundtable.



Ford Says Feds Have Opened Criminal Probe Into Its Emissions Certifications

CNBC is reporting that the Justice Department has launched a criminal investigation in a matter relating to Ford Motor’s emissions certification process.

“The matter stems from issues related to road load estimations, including analytical modeling and physical track testing,” writes CNBC’s Amelia Lucas. “Road load is a vehicle-specific resistance level that helps determine fuel economy ratings and emissions certifications. It does not involve the use of defeat devices to cheat on emissions tests.”

The company said it voluntarily disclosed disclosed the issue to the Environmental Protection Agency on Feb. 18 and has hired outside experts to investigate its vehicle fuel economy and testing procedures after employees raised concerns.

Read the CNBC article.



Pepper Hamilton Ordered to Turn Over Baylor Investigation Materials to Plaintiffs’ Attorneys

A U.S. district judge has ordered Pepper Hamilton LLP to turn over materials tied to the law firm’s 2015-16 investigation that led Baylor University regents to report the school had fundamentally failed in its Title IX implementation duties, reports the Waco Tribune-Herald.

“The significance is we are continuing to get to the bottom of who, what, where and when in regard to the failures at Baylor,” said Jim Dunnam, a Waco attorney who represent the 15 plaintiffs.

Plaintiffs’ lawyers had filed for a subpoena in March 2017 seeking materials from Pepper Hamilton and in June filed a motion to compel the firm to comply, but the firm did not respond to the request, according to the Tribune-Herald‘s Phillip Ericksen.

Read the Tribune-Herald article.



Whistleblowing General Counsel Gets $1.87 Million Payday

The Houston Chronicle reports that the former general counsel of the Houston Housing Authority won $1.87 million in a lawsuit against the agency after she accused it of retaliation.

“Karen Miniex, the former general counsel for the agency, alleged her boss at the housing agency retaliated against her after she investigated fraud in the agency’s voucher program targeted at veterans,” according to the report. “The trial was held before U.S. District Judge Nancy F. Atlas.”

A statement from the agency said an appeal is being considered, should the judge uphold the jury’s verdict.

Read the Houston Chronicle article.



Former Prosecutor: Mueller’s Hedging on Obstruction ‘Somewhat Surprising’

The Russian election interference report by Special Counsel Robert Mueller, still not fully disclosed, is raising a number of questions and also surprised some who practice criminal law, according to a report by Androvett Legal Media & Marketing.

“It is perhaps somewhat surprising that Mr. Mueller didn’t provide a conclusion on the issue of obstruction of justice. Certainly, many Americans were expecting a clear-cut decision,” said Philip Hilder, a former U.S. prosecutor in Houston who now is a white-collar criminal defense lawyer at Hilder & Associates, P.C.

“But proving either conspiracy or obstruction is a difficult challenge. Until the portion of the actual Mueller report is disclosed articulating his rationale, I could only speculate as to why there is no solid conclusion after a two-year investigation.

“Perhaps more surprising is that Attorney General William Barr concluded after only 48 hours of review that the investigation is not sufficient to establish that the president obstructed justice. Assuming the bulk of the report itself is released, a fuller picture will come into focus as to why Mueller demurred and whether Mr. Barr’s conclusion is justified,” said Hilder who has represented whistleblowers and other defendants in high-profile trials.

“As to how much of the report and grand jury testimony should be turned over to Congress, it is reasonable to assume that a large portion is based on grand jury material. A court order is needed to release that information. A blanket release requested by Congress may not be possible, since there may be evidence disclosed that is related to ongoing investigations by other federal prosecutors as well criminal prosecutions already indicted by the Mueller team. Nonetheless, it may take a while until all the grand jury material is scrutinized before its possible release. I would anticipate rolling production, with Congress receiving parts of the report over time.”



Energy Market Manipulation Remains a Hot Issue at FERC

The Federal Energy Regulatory Commission is continuing to aggressively investigate and bring enforcement action against companies that engage in energy market manipulation, reports WilmerHale in its 10-in-10 Hot Topics in Energy Series.

These investigations and proceedings mirror Commodity Futures Trading Commission (CFTC) action on financial market manipulation in the energy area.

“As the recent Powhatan and Silkman decisions indicate, the body of case law defining FERC’s enforcement authority continues to develop. Regulated companies should be aware that the statute of limitations in market manipulation cases will likely be read permissively. A strong internal compliance program, coupled with self-reporting in appropriate instances, can help reduce risk,” according to the article’s authors.

Read the article.



Hackers Shut Down Boston Legal System for Weeks, Seeking Payment in Bitcoin

A cyberattack on the agency overseeing Boston public defenders has caused a weekslong slowdown, disabling e-mail systems, delaying some hearings, and hanging up payments for the private attorneys who represent clients, reports The Boston Globe.

“The Committee for Public Counsel Services has been cleaning up for two weeks after a ransomware attack locked up its servers, with the culprits demanding that a ransom be paid in bitcoin,” writes the Globe‘s Andy Rosen. “The agency refused to pay, because it has backup files it can use to restore the system.”

A similar attack hit the Jackson County, Georgia, government internal network recently, forcing most of the systems offline, according to ZDNet. In that case, the county paid $400,000 to cyber-criminals week to get rid of the ransomware infection and regain access to its IT systems.

Read the Globe article.



Lawsuit: Trump Family-Planning Rule ‘Politicizes’ Medicine

A new Trump administration rule for family-planning grants could trigger a national public health crisis, the American Medical Association and Planned Parenthood said in a lawsuit Tuesday challenging the rule, reports the Associated Press.

In addition to the AMA/Planned Parenthood lawsuit, the rule is being challenged in a lawsuit filed Monday by California officials and another filed Tuesday by officials in 20 other mostly Democratic controlled states.

The Department of Health and Human Services rule would prohibit family planning clinics funded by the federal Title X program from making abortion referrals — a provision that critics denounce as a “gag rule.”

“Pregnancies that are unintended, and thus riskier, will increase. The number of abortions will also increase. And there will be fewer tests for sexually transmitted infections and cancer screens — putting patients and their partners at great health risk,” the lawsuit said.

Read the AP article.



Foley Adds Former US Congressman Michael Capuano in Boston

Foley & Lardner LLP announced former U.S. Congressman Michael Capuano has joined the firm’s Government Solutions Practice as a public affairs director, splitting his time between the firm’s Boston and Washington D.C. offices.

He joins Foley’s team of former congressmen, which includes public affairs directors Dennis Cardoza and Scott Klug, both previously members of the U.S. House of Representatives.

Capuano served as the U.S. Representative for Massachusetts’ 7th Congressional District from 1999 to 2019. He was a senior member of the Transportation and Infrastructure Committee and the Financial Services Committee, and chair of the Special Task Force on Ethics Enforcement.

Prior to his congressional career, Capuano was the mayor of Somerville, MA from 1990 to 1999.



Supreme Court Limits Police Powers to Seize Private Property

The Supreme Court has ruled that the Constitution places limits on the ability of states and localities to take and keep cash, cars, houses and other private property used to commit crimes, reports The New York Times.

Reporters Adam Liptak and Shaila Dewan explains that the practice, known as civil forfeiture, “is a popular way to raise revenue and is easily abused, and it has been the subject of widespread criticism across the political spectrum. The court’s decision will open the door to new legal arguments when the value of the property seized was out of proportion to the crimes involved.”

All nine justices found that the Excessive Fines Clause applies to the states under the 14th Amendment. Justice Ruth Bader Ginsburg wrote that the historical and logical case for the conclusion is overwhelming.

Read the NY Times article.




U.S. Supreme Court Asked to Review Zero Emissions Credit Schemes

High power - electric- gridIn two related cases, petitioners are asking the U.S. Supreme Court to strike down state generator subsidies that petitioners argue distort competitive wholesale power markets that are under the exclusive jurisdiction of the Federal Energy Regulatory Commission under the Federal Power Act, reports Verrill Dana in its Energy Law Update.

Associate Brian Marshall of Portland, Maine, explains:

Both cases concern “zero emission credits” (ZEC) schemes, one in Illinois and one in New York, that subsidize nuclear power plants. These ZEC subsidies allow otherwise uncompetitive nuclear plants to stay profitable and continue to operate, even if they fail to receive sufficient compensation in wholesale power auctions. Both the Second and Seventh Circuits have upheld the ZEC nuclear power subsidies.

Read the article.



Roberts Again Sides With Liberal Supreme Court Justices in Disagreeing With Lower Court Interpretations

For the second time in as many weeks, Chief Justice John G. Roberts Jr. has sided with liberal Supreme Court justices to disagree with how lower courts have interpreted Supreme Court precedent, reports The Washington Post.

“On Tuesday, Roberts was pointed in saying the Texas Court of Criminal Appeals has ‘misapplied’ a 2017 ruling that instructed that court to reconsider its analysis of whether death-row inmate Bobby James Moore was intellectually disabled, and thus ineligible for execution.” writes the Post‘s Robert Barnes.

And less than two weeks ago Roberts joined in blocking a Louisiana law that tightened restrictions on abortion providers.

Read the Post article.



Trump’s Emergency Declaration Echoes Harry Truman Failed Attempt

President Trump has declared a national emergency to finance the building of a border wall, adding fuel to the controversial issue that closed the federal government for more than three weeks.

In a post on the website of Androvett Legal Media & Marketing, Lynn Pinker Cox & Hurst constitutional law expert David Coale says Trump’s emergency declaration is similar to President Harry Truman’s takeover of the steel industry to avoid a strike during the Korean War by the United Steelworkers of America.

The U.S. Supreme Court rejected the takeover in 1952’s Youngstown Sheet and Tube Co. v. Sawyer decision, largely because the president acted without congressional approval. Today’s situation, where Congress has repeatedly refused to fund the president’s border wall, has strong echoes of the Youngstown case, Coale says.

“As for defense spending, both the House and Senate, have the power to overrule a claim of emergency,” says Coale. “If the president can clear that hurdle, there probably are billions of dollars in ‘undesignated’ defense and homeland security money that he could try to access. But ‘undesignated’ does not mean ‘free to take, no strings attached,’ and defense contractors who expect to get paid from that money will likely sue from all directions, as will private landowners in the way of the wall’s path.”