The start of the fall term in the U.S. Court of Appeals for the D.C. Circuit wasn’t a particularly pleasant one for the U.S. Justice Department, which found itself last week taking a barrage of questions over whether the government left the court in the dark about a controversial enforcement action against a national pharmaceutical chain.
The appeals court, which resumed hearing oral arguments on September 10 after a summer break, questioned DOJ’s stance in a closely watched dispute between CVS Caremark Corp. and the U.S. Drug Enforcement Administration over licenses to sell controlled substances at two retail stores in Florida.
CVS’ lawyers at King & Spalding were challenging an interim suspension order the DEA issued in February following an investigation of questionable sales of the painkiller oxycodone. On September 11, the day before oral argument, the DEA announced it had revoked the registrations of the two pharmacies.
The new development drew ire from one of the judges on the panel, David Tatel, who called the timing of the news “very disturbing.” Tatel questioned the interaction between DOJ and the DEA, and he demanded answers from a top official at Main Justice about the government’s responsibility to keep an appeals court apprised of developments in a case.
With a spate of high-profile disputes on the D.C. Circuit’s fall docket, there’s no easy road ahead for DOJ. Department lawyers are going to court to defend the Central Intelligence Agency’s refusal to disclose information about the international use of drones, and the government will try to convince the court to uphold the expansion of the power to freeze assets in the United States at the request of a foreign country. In November, the appeals court will examine the prosecution of Kevin Ring, a former Jack Abramoff associate, in a dispute over the scope of honest-services fraud.
What follows are highlights of key DOJ cases upcoming in the D.C. Circuit’s fall term.
Amid the crackdown in Florida against prescription drug abuse, the enforcement action against CVS is a highlight for the DEA. DOJ lawyers are defending the DEA’s interim suspension order in February that blocked two stores in Sanford, Fla., from selling controlled substances.
Samantha Chaifetz, a DOJ Civil Division lawyer, argued in the D.C. Circuit last week that “tremendous” sales of oxycodone justified the DEA’s decision. The DEA determined the CVS stores posed an “imminent danger” to the public safety. CVS, Chaifetz said, had a responsibility “to police the prescriptions.”
King & Spalding litigation partner Catherine O’Neil said in court that CVS doesn’t have a problem with the DEA’s efforts to curb drug abuse. But, O’Neil argued, the drug agency ignored critical information about remedial efforts in place at the two pharmacies to ensure that prescriptions are being filled for legitimate reasons.
Senior Judge Stephen Williams described the controlled-substance sales numbers as “junk” statistics and questioned their reliability. “It’s the crudest thing I’ve ever seen,” Williams said, describing the DEA’s order. Also on the panel was Judge Karen LeCraft Henderson.
On August 31, DEA Administrator Michele Leonhart issued the final order to revoke the registrations, marking the first such action against a large national chain. The day before the hearing, Chaifetz informed the appeals court about Leonhart’s determination. Tatel questioned Chaifetz about why DOJ didn’t tell the appeals court earlier about an underlying administrative law judge’s decision and about Leonhart’s final order.
“I actually find this very disturbing,” Tatel said in court. The D.C. Circuit, he said, could have decided to postpone argument. The appeals court, the judge also said, could have called for additional court papers to address the development in the case.
Tatel said the court wants to hear from the head of the Civil Division, Stuart Delery, about the department’s interaction with the DEA.
Delery and Tatel get a chance to meet face to face this week in a dispute over government secrecy. Delery is on tap to argue for the CIA on September 20 in a dispute over whether the spy agency should be forced to disclose information about the use of drones in the so-called “targeted killing” program. Delery’s participation marks a rare occasion that a top DOJ official will argue a case — typically a sign of the significance of the dispute.
The American Civil Liberties Union sued the CIA in 2010 after the agency refused to confirm or deny the existence of any records about drones. The ACLU’s Jameel Jaffer, who will argue in the D.C. Circuit, noted in an interview that senior government officials have discussed the drone program in public speeches and in the press. Jaffer argued in court papers that the case presents an issue of “immense public interest.” The appeals court agreed to expedite its review of the dispute.
Catherine Hancock, a DOJ Civil Division lawyer, said in court papers that “even if there is speculation about a fact, unless an agency officially confirms that fact, the public does not know whether it is so.” DOJ lawyers contend the D.C. Circuit should not “cobble together” any government acknowledgment about drones based on “unofficial statements by former CIA Director Leon Panetta and President Obama.”
Jaffer said last week that the government owes an explanation to the public about drones. “The situation we have now allows the government to claim that the program is closely supervised, claim that it is lawful, claim that there are minimal civilian casualties, while at the same time refusing to disclose any of the documents that would allow the public to assess for itself the accuracy of the government’s statements,” Jaffer said. “It’s a dangerous situation.”
Tatel will hear the case with judges Merrick Garland and Thomas Griffith.
Attorney General Eric Holder Jr. early on made asset forfeiture a key priority of his administration. The scope of the power of federal trial judges to freeze assets in the United States, at the request of a foreign country, is the centerpiece of a case set for a hearing on October 16.
DOJ lawyers, working on behalf of officials in Hong Kong, successfully convinced a judge in Washington last year to freeze more than $23.7 million that the government contends was funneled from HSBC accounts overseas to two banks in Houston.
The target in the asset dispute, Gang Luan, represented by a team from Miller & Chevalier in Washington, is the sole owner of Houston Offtech Investment LLC and the majority shareholder of AAA Japanese Imports Inc. His lawyers, including Barry Pollack, a white-collar criminal defense partner with the firm, argue U.S. District Judge Gladys Kessler didn’t have authority to restrain the accounts.
There’s no civil complaint pending against Luan in Hong Kong, the attorneys said, and there’s no criminal indictment against him overseas. Pollack said even if the restraining order was legal, it was only valid for 90 days. The restraint of the accounts has continued for more than a year.
DOJ Criminal Division appellate attorney Vijay Shanker in court papers in August said Luan’s property is subject to civil or criminal forfeiture under foreign law, and that Kessler had the power to issue the restraining order even though there is no forfeiture proceeding in Hong Kong.
The National Association of Criminal Defense Lawyers (NACDL) is backing former lobbyist Ring in his effort to overturn his conviction in a corruption case in Washington’s federal trial court. The D.C. Circuit will hear the case on November 15.
Ring was sentenced in October to 20 months in prison for his role in a scheme that involved providing meals, drinks, tickets and other items of value to federal officials. Prosecutors contend Ring and associates sought to “corruptly influence and reward official action” on behalf of clients. Ring’s lawyers, including Miller & Chevalier partner Timothy O’Toole, argue that there was never any agreement between Ring and the recipients of his gifts. The jury was allowed to find Ring guilty without a showing of any bribery agreement.
“The line between relationship-building and bribery is very murky unless you require proof that the two people had an agreement,” O’Toole said in an interview last week.
The NACDL and the Virginia-based Center for Competitive Politics, represented by a team of lawyers that includes Brown Rudnick partner Paul Enzinna, said in an amicus brief that to prove honest-services fraud, prosecutors should be required to show an “exchange” between an item of value and an act in response.
“This error threatens to chill, or worse, criminalize, an extraordinarily broad range of conduct that is engaged in on a daily basis by millions of Americans — including not only lobbyists like Mr. Ring, but men and women in any business who seek to ‘influence’ customers through hospitality — and which has never been thought to be criminal,” Enzinna said.
Mike Scarcella can be contacted at firstname.lastname@example.org.