SACRAMENTO — The impact of the federal government shutdown became readily apparent Tuesday morning when attorneys for the U.S. Department of Justice, citing the budget drama, asked a judge to pause the antitrust trial targeting social commerce company Bazaarvoice.
“Absent an appropriation, Department of Justice attorneys and employees are generally prohibited from working, even on a voluntary basis, except in very limited circumstances,” DOJ attorney Peter Huston wrote. “This is creating difficulties for the Department to perform the functions necessary to support its litigation efforts, and, accordingly, the Department’s policy is to seek a stay in all pending civil litigation.”
U.S. District Judge William Orrick denied the motion, and proceedings in United States v. Bazaarvoice continued as scheduled in San Francisco.
Similar scenes played out in federal courtrooms around the state as the legal system greeted the government shutdown with a mix of resigned frustration and unease.
If Congress restores funding to courts, U.S. attorneys’ offices and regulatory agencies in a matter of days, 800,000 furloughed federal workers will still have suffered, but most people will experience the closures as little more than an irritating inconvenience, some lawyers said. If the shutdown lingers for weeks, however, the effects could be more troubling, they warned, and not just in the courtroom.
“Folks are going to be reluctant to start [an IPO] road show if the SEC isn’t going to be there in the end,” said Cooley partner Eric Jensen.
A six-page ” plan of operations” posted on the U.S. Securities and Exchange Commission’s website led to initial confusion over whether the agency would continue to review initial public offering plans. But Jensen said that, based on conversations with SEC staff, “ we’re seeing information that says they’ve got the ability to keep things moving.”
What that means in terms of timing for Twitter and other companies that have already filed plans to go public is unclear. The SEC should benefit from a traditional IPO lull that happens around this time of year because of the recent close of the financial quarter, Jensen said. But if the closures continue several weeks from now, “that’s going to be a problem for the SEC,” he added.
The U.S. Patent & Trademark Office will remain open, operating with reserves.
Federal courtrooms remain open. In the Eastern District of California’s Sacramento court, it was business as usual with a marijuana cultivation trial, a sentencing hearing and continuing proceedings in the state prison overcrowding case, said criminal defense attorney John Balazs.
“The judiciary will be capable of keeping things going for 10 business days,” said David Madden, a spokesman for the U.S. Ninth Circuit Court of Appeals. “After that, we can’t tell” what’s going to happen, he said.
Most civil and support staff in U.S. attorneys’ offices were furloughed Tuesday. Civil litigators, like those in United States v. Bazaarvoice, were told to ask for stays in their cases. In Oakland, Judge Yvonne Gonzalez Rogers granted the Justice Department’s unopposed motion to temporarily halt the Electronic Frontier Foundation’s efforts to unveil documents about the government’s secret data-collecting program.
Meanwhile, federal criminal proceedings continue, even though payments to panel attorneys have been suspended since Sept. 17. Funding ran out early in the fiscal year that ended Sept. 30. Court administrators had hoped the money would be replenished with the adoption of an Oct. 1 budget. That didn’t happen.
“Everybody is just kind of in a real uncertain situation,” said Fresno panel attorney Carl Feller. No one takes criminal assignments to get rich, he said, but “it can be difficult when all the investment in the case has been done and when it comes time to get compensated there’s nothing coming in the door.”
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