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It’s a case the U.S. Court of Appeals for the Federal Circuit cannot refuse. With its exclusive jurisdiction over patents, international trade, and government contracts cases, the Federal Circuit might be the last place you’d expect to hear about a Mafia conspiracy. Yet, on Sept. 7, a three-judge circuit panel will hear the appeal of an Italian janitorial service company that tries to spin a tale worthy of a Mario Puzo novel. Naturally, the story of Impresa Construzioni Geom. Dominico Garufi v. United States begins in Sicily, at the U.S. Navy’s Sigonella Air Base near Catania. In 1997, Italian authorities reportedly broke up a ring of Mafia-controlled companies that conspired to win construction contracts on the base. Among those indicted was Carmelo La Mastra. According to briefs filed with the Federal Circuit, Italian prosecutors have accused La Mastra of being “a member of the organization known as the ‘Cosa Nostra,’ ” and using intimidation, murder and other crimes to further the interests of organized crime. La Mastra is also the owner of Joint Venture Conserv., which, despite being in receivership as a result of the indictment, beat out the Garufi firm for a maintenance contract with the air base in 1999. Garufi offered to do the job for $18.9 million, while Joint Venture bid $28 million for the five-year contract. Contracting officers had found Garufi’s bid to be so low that they thought the company did not fully understand the job’s requirements. Garufi appealed the Navy’s decision, claiming Joint Venture is still controlled by La Mastra and that the government violated its rules requiring contractors to “have a satisfactory record of integrity and business ethics.” After unsuccessful protests to the General Accounting Office, Garufi’s appeal landed before Judge Emily Clark Hewitt of the U.S. Court of Federal Claims. The government, represented by Franklin White of the Justice Department, argued that because La Mastra’s company had been placed in the hands of an Italian administrator, the person “who owns these companies is really irrelevant.” Hewitt ruled last year in favor of the government, saying she found the Navy’s contracting decision “consistent with the information developed in the procurement process.” Apparently underwhelmed by the alleged link between the military and the mob, Hewitt never expressed discomfort with the contracting process. Several times in the opinion she referred to the Mafia allegations as “inflammatory.” Garufi’s lawyer, Sam Gdanski of Suffern, N.Y., responds that his arguments before Hewitt and briefs before the circuit are merely the truth as the Italian authorities saw it. “We don’t use words that weren’t used in the [Italian] court documents,” he says. Gdanski also rebuffs the government’s claim that Garufi’s low bids illustrate a lack of understanding of the business. “They’re comparing apples to oranges,” he says, arguing that higher bids have to factor in the costs of corruption. John Peters, a Navy spokesman, says, “The allegation of Mafia ties is not unusual” for losing bidders in Sicily. Peters adds that U.S. Navy construction contracts in Italy have to be approved by a joint U.S.-Italian anti-Mafia committee. But janitorial contracts such as the one won by Joint Venture do not go through the same scrutiny. La Mastra’s lawyers in Sicily could not be reached. LABOR’S LOVE LOST Decisions by the full, 12-judge Federal Circuit are rare. Rarer still are decisions in which the court overturns its own precedent. And then there are decisions like Raney v. Federal Bureau of Prisons, in which the typically agreeable Federal Circuit bench split into two sniping camps. In the Aug. 11 en banc decision, the court held 7-5 that a labor union’s in-house lawyers are entitled to market-rate attorney fees as a reward for successfully challenging a client’s job suspension. The decision rejected the court’s previous interpretations of the Back Pay Act, which reimburses federal workers for salary lost after they’ve been unfairly disciplined. Judge Arthur Gajarsa, writing for the majority, dismissed as “logically untenable” Federal Circuit decisions from 1984 and ’86 that held that in-house union legal offices should get only the actual cost of their services, not the value of their time billed at market rates. “If it is acceptable to pay some fees,” Gajarsa asked, “why is it unacceptable to pay market-rate fees?” Gajarsa was joined by Judges Paul Michel, Jay Plager, Raymond Clevenger, Alvin Schall, William Bryson, and Timothy Dyk. The dissent had a ready answer to Gajarsa’s question, one that took an unforgiving view of the market value of union lawyers. Judge Randall Rader, joined by Chief Judge Robert Mayer, Senior Judge Glenn Archer, and Judges Alan Lourie and Pauline Newman, wrote that the “Back Pay Act does not allow the Federal Circuit to award fees to non-profit legal organizations at the rates for profit-making law firms.” Insisting that the law required factoring market principles into the calculation of reasonable attorney fees, Rader wrote, “Union law practices do not have the same client expectations for office space and equipment, do not compete for the same pool of entering attorneys at the same pay rates, do not impose the same billing requirements on new attorneys, and do not bill their clients with the same profit making agenda” as private firms.” In a majority footnote, Gajarsa fired back: “The dissent denigrates the expectations of the union’s clients, the quality of its associate attorneys, and the demands the union’s practice places on those associates.” He added, “Both the basis for these views and their relevance to the issues at hand lie beyond the understanding of the court.” The decision appeared to be a victory for Gajarsa, a 1997 Clinton appointee who was on the original panel with Lourie and Archer. Since Lourie and Archer joined Rader’s dissent, it appears Gajarsa had been outvoted after the 1998 oral argument. However, the Federal Circuit allows judges to petition their colleagues to bring a case en banc even before a panel decision is released. In January 1999, the court did just that with Raney, and after an extended rebriefing schedule, the case was submitted without oral argument last October. The Raney case was only the second en banc decision issued this year, keeping with a recent trend of only two or three a year. Naturally, lawyers for federal employee unions cheered the decision. Joe Goldberg, acting general counsel for the American Federation of Government Employees, whose $45,000 fee request for its representation of fired prison bakery worker Larry Raney is at the heart of the case, says, “We’ve done a great service.” Citing the now-overturned case law, the arbitrator who reinstated Raney to his post at the federal penitentiary in Leavenworth, Kan., had granted the union what amounted to $15,000 in costs. “It puts us on a level playing field” with private attorneys, says Gregory O’Duden of the National Treasury Employees Union, who filed an amicus brief supporting the AFGE. Harold Lester of the Justice Department referred a call to a spokesman, who said the department had not decided whether to ask the Supreme Court to hear the case. The NTEU’s O’Duden says it’s unlikely the high court will take the matter. “There isn’t any conflict” between the circuits now that the Federal Circuit has struck down its 1984 and 1986 rulings. Gajarsa noted in his majority opinion that the court’s action brought it in line with precedents in the 3rd, 9th, and D.C. Circuits. A WAR ON DRUGS The future of Prozac is still in the hands of the Federal Circuit, even after a decision last month finding that manufacturer Eli Lilly and Co. violated rules against “double patenting.” Eli Lilly spokesman Edward West says the company will ask the full court to review the Aug. 9 decision. The unanimous ruling by Judge Arthur Gajarsa, Chief Judge Robert Mayer, and Senior Judge Daniel Friedman cut about two years off Lilly’s exclusivity rights on the anti-depressant. The ruling also led to a massive sell-off of Lilly stock, which dropped about 30 percent in value. If upheld, according to West, the panel decision would allow generic drug makers to market by August 2001 their own versions of fluoxetine hydrochloride, the active ingredient in Prozac. If Lilly wins a reprieve from the full Federal Circuit, or the Supreme Court, it would have exclusive rights to sell the drug until 2004. Lilly’s brief is due Sept. 22. NO-PUBLISH TO PERISH? The Federal Circuit’s new advisory committee has yet to have its first meeting, but it already has an issue on its agenda — courtesy of another U.S. Court of Appeals. An Aug. 22 ruling by a three-judge panel of the 8th Circuit held that rules prohibiting lawyers from citing unpublished, or nonprecedential, opinions were unconstitutional. Legal observers have called the opinion by Judge Richard Arnold, Anastasoff v. United States, a potential blockbuster for the seven appellate courts that forbid citations to unpublished decisions. Scott McCaleb, an associate at D.C.’s Wiley, Rein & Fielding and a new member of the Federal Circuit’s committee, says, “I think that our committee would study that” as soon as it convenes for its first meeting in October. The 8th Circuit’s ruling begs the question of whether other circuits should change their rules regarding nonprecedential decisions. The Federal Circuit’s Rule 47.6 (b) states that nonprecedential opinions “must not be employed or cited as precedent.” Wrote Arnold: “Courts may decide, for one reason or another, that some of their cases are not important enough to take up pages in a printed report. Such decisions may be eminently practical and defensible, but in our view they have nothing to do with the authoritative effect of any court decision.”

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