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ABA to vote on federal pre-emptions of torts The American Bar Association House of Delegates is expected vote at its annual meeting in Honolulu next month on a resolution opposing federal agencies drafting pre-emptions that bar state tort claims into the preambles of their rules and regulations. The resolution, drafted by defense and plaintiffs’ bar members of the ABA Tort Trial and Insurance Practice Section, was drafted in response to such pre-emptions of state tort laws as were written into the preambles of the Food and Drug Administration’s new drug-labeling rule and a pending National Highway Traffic Safety Administration regulation on motor vehicle roof-crush standards. The preambles are introductory opinions that do not have the force of law, but federal courts generally give deference to a rule-making agency’s view of its own regulations. Impeachment call for federal judge in Calif. Representative James Sensenbrenner, a Wisconsin Republican who last year suggested an inspector general for the federal judiciary, appeared to lay the foundation for such a move by issuing a resolution calling for impeachment of U.S. District Judge Manuel Real of Los Angeles. Sensenbrenner said the “resolution has become necessary due to the breakdown in the judicial branch’s enforcement of the judicial discipline statute Congress enacted in 1980.” Resolution 916 “merely allows the House Judiciary Committee to open an investigation to determine the facts,” he said in a prepared statement. Real’s attorney Don Smaltz called the resolution “an obvious rush to judgment.” It was filed “without advance notice to Judge Real and he wasn’t given an opportunity to respond to any allegations of criminal misconduct,” said Smaltz of Spiegel Liao & Kagay in Rancho Palos Verdes, Calif. Real, 82, has been accused of improperly seizing control of a bankruptcy case from another judge because it involved a probationer, Deborah M. Canter, he was overseeing. He then allowed Canter to live rent-free for three years in a house, costing owners $35,000 in lost rent, according to court records. Hiring of law grads is up Some 89.6% of law graduates from the class of 2005 gained employment by Feb. 15 of this year, the highest percentage since 2001, according to the National Association for Law Placement (NALP). In addition, the average starting salary for full-time jobs jumped to $60,000, a $5,000 increase compared with the class of 2004, NALP found. The employment rate, which has hovered around 89% since 1998, is in sharp contrast to the mid-1990s, when about 84% of law graduates obtained work by February following the year they graduated. Ex-Brocade executives charged over options In announcing criminal and civil complaints against two former executives of Brocade Communications Systems Inc. last week, the San Francisco U.S. attorney and the U.S. Securities and Exchange Commission painted the stock option backdating issue in black and white tones. “In many cases it makes a hash of a company’s financial statements,” said SEC Chairman Christopher Cox, in from Washington to trumpet the first charges in the widespread probe. “It’s poisonous.” Added U.S. Attorney Kevin Ryan, “We are looking strongly, intently and aggressively at similar issues.” But despite Cox’s harsh language, those ongoing regulatory and criminal investigations are moving into an area more gray than black. Indeed, even as Cox and Ryan excoriated Brocade’s former CEO, Gregory Reyes, and former vice president of human resources, Stephanie Jensen-along with former Chief Financial Officer Antonio Canova, who faces civil charges-lawyers and accountants for the government, companies and executives are attempting to figure out how to separate the truly criminal conduct from less nefarious errors in dating options grants. Richard Marmaro, the Skadden, Arps, Slate, Meagher & Flom partner representing Reyes, says the government has no proof of his client’s intent. Suppression hearing ends in KPMG tax case A two-day hearing over whether to suppress proffer statements of three defendants in the KPMG tax shelter case ended last week with defense lawyers insisting that government coercion on attorney fees violated their clients’ rights. U.S. District Judge Lewis Kaplan again criticized government pressure on KPMG to limit or cut off the payment of fees to three ex-employees. The three are among 16 defendants facing trial in New York City in the largest alleged illegal tax shelter scheme in history. Former Vice Chairman Richard Smith and two others say they never would have sat down with prosecutors had KPMG not changed its policy on paying legal fees. Kaplan reserved decision on the motion.

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