It’s not often that the U.S. Department of Justice prosecutes a sitting U.S. Senator, obtains a conviction at trial, and then concludes it has no choice but to voluntarily dismiss the charges and let the former defendant walk free, totally vindicated. But that’s what happened in United States v. Ted Stevens, the government’s case against the longest-serving Republican in the Senate’s history. If this has ever happened before in the United States, I’m unaware of it.
To quote from today’s New York Times:
Judge Emmet G. Sullivan dismissed the charges against Mr. Stevens, which was expected given the way the case has disintegrated since the conviction in October. But the judge went well beyond that step, declaring that what the prosecutors did was the worst “mishandling or misconduct that I’ve seen in my 25 years.”
Judge Sullivan spoke disdainfully of the prosecutors’ repeated assertions that any mistakes during the trial were inadvertent and made in good faith. He said he had witnessed “shocking and serious” violations of the principle that prosecutors are obligated to turn over all relevant material to the defense.
The judge appointed the attorney Henry Schuelke as special prosecutor to investigate possible criminal contempt charges against the prosecution team.
How could this happen? The article suggests the lawyers may have been grossly overworked, rushed to trial by an aggressive defense (damn good move by the defense, if true), or simply outlawyered by Williams & Connolly, a notoriously tough white collar criminal defense firm and the D.C. “go to” firm for cases like this. Or, of course, the attorneys could have simply gotten carried away and decided to play outside the rules of criminal procedure and legal ethics. In the heat of a high-stakes criminal case, anything can happen.
But with a special prosecutor appointed by a federal judge to investigate the Stevens prosecutors, we may never know exactly how this all unfolded. There will be theories, of course, perhaps even a book or two – John Grisham may be turning this over in his mind right now, trying to figure out if there’s a novel there somewhere (sure there is John!).
The lawyers under investigation will “lawyer up” and perhaps take the Fifth (which is sure to cost them their jobs). Some may cut deals and testify against others, or some may be granted immunity; how could they afford the defense costs if they don’t? In other words, the special prosecutor will use the same tools against them that they were used to using against their targets.
In addition to the risk of criminal contempt, there are serious ethical issues that may have to be investigated by the D.C. and Alaska Bars (some of the lawyers were based in Alaska).
In a very real sense you have to feel sorry for these prosecutors – no one goes to law school and becomes a career prosecutor expecting to get caught up in something like this. And more than almost anyone else, they had to have known the risks they were taking, and the consequences if they were discovered. They took on a very big fish, and that fish was backed by an enormously powerful and resourceful law firm that spared nothing in the defense of its client. And so, the hunters become the hunted.
A new administration often means a new approach to federal agency enforcement of the antitrust laws. And, a shift from Republican to Democrat often means more aggressive enforcement by the DOJ and FTC. The business and legal communities want to know, what can we expect?
James W. Lowe and Thomas Mueller of Wilmer Hale attempt to answer some of these questions in their article Whither US Antitrust?, published in the March 2009 issue of the Global Competition Review.
The Federal government has two antitrust enforcement authorities – the Antitrust Division of the Department of Justice and the Federal Trade Commission. These two agencies have partially overlapping enforcement authority over civil cases, and they often collaborate in setting antitrust policy. Although the federal courts are the final arbiters of the federal antitrust laws (which are statutory, and therefore originate with Congress), the business community relies heavily on the Justice Department and the FTC to provide their views on the law. Accordingly, from time-to-time the Justice Department and FTC issue detailed joint guidelines. (Examples include: Collaborations Among Competitors, 2000; Antitrust and IP Rights, 2007; and Antitrust Licensing Guidelines, 1995).
The DOJ/FTC joint reports are a big deal – they often include lengthy hearings, prepared testimony and position papers from interested parties, proposed guidelines, revised guidelines, and so on, until (drum role ….) the big day when the final report is issued. And, as a result, these reports are given great weight by the antitrust community – and by that I mean the vast army of antitrust lawyers and economists who endeavor to understand this stuff, harmonize it with court decisions (where possible), and advise their clients on how to behave.
So, it’s no understatement to say that it is an unwelcome surprise when the federal antitrust enforcement agencies can’t agree on the law. Yet, this is what occurred when the Justice Department issued a report entitled “Competition and Monopoly: Single Firm Conduct Under Section 2 of the Sherman Act“. This mammoth, 200-plus page document followed public hearings that took 19 days stretched over a year, and included the the testimony of over 100 witnesses. The Report was finally issued in September 2008, 27 months after this process began. Broadly speaking, the Report addresses the topics of monopolization, predatory pricing, tying arrangements, refusals to deal and exclusive dealing. This is referred to as “single firm conduct” as distinguished from joint action (contracts, combinations or conspiracies) under Section 1 of the Sherman Act.
Needless to say, a Report of this magnitude and gravitas is of great interest; it provides a summary of the law to date on each topic area, discusses the hearing testimony, and then describes the federal enforcers’ views on the topic. Since the law isn’t static, these reports tell the public in which direction the enforcement authorities see the law moving and therefore where to expect enforcement activity However, although the DOJ and the FTC began this project together in June 2006, the DOJ finished alone. Why would this be?
As you may have guessed by now, the FTC disagreed with Justice, and therefore refused to join in the Report. In addition, the FTC Commissioners (those are the top folks at the FTC) issued dissenting “Statements” the same day that DOJ issued its report.
Of course, antitrust enforcement can be highly political. The Executive Branch appoints the Attorney General, who in turn implements the wishes of the President, at least most of the time. Some administrations are tough on antitrust enforcement, and others are better referred to a “anti-antitrust.” The President also appoints the five FTC commissioners, but the appointments are for seven year staggered terms, and no more than three of the commissioners may be from the same party. Traditionally, perhaps in part for these reasons, the FTC has tended to be more politically independent than DOJ. Very few Commissioners serve more than one term, and they typically fade back into academic or consulting practices when their term is up.
With Alberto Gonzalez as Attorney General, and knowing what we know now about how politicized DOJ was during the period that this report was being prepared, one can only wonder what went on behind the scenes during this process. However, law enforcement agencies don’t present their public disagreements in political terms, and here the public debate was conducted on the higher planes of economics and competition law. All four current FTC Commissioners (one seat is vacant) issued dissenting statements. Three of the Commissioners (but not the Chairman, who was more tactful than the others) argued that the DOJ had misstated the law on Section 2 conduct and had proposed legal standards that would, in their words “be a blueprint for radically weakened enforcement of Section 2 of the Sherman Act.” They disagreed on what the law is and what the law should be.
Quoting further from the Statement of the three dissenting Commissioners:
In short the Department’s Report erects a multi-layered protective screen for firms with monopoly or near-monopoly power. As an inevitable consequence, dominant firms would be able to engage in these practices with impunity, regardless of potential foreclosure effects and impact on consumers. Indeed, it appears that the Department intends for this screen to apply even when a firm uses two or more of these practices collectively, instead of just one practice individually.
Strong words from two agencies that the public expects to work out their differences behind closed doors and present a common front to the world.
This post is being published on the eve of the Presidential election. If we have a Democratic President in 2009, the law of Section 2 of the Sherman Act, as described in this Report, could soon become a footnote in American antitrust jurisprudence. However, the authors of the DOJ report, recognizing that acceptance of their views may be short-lived, might not look at the product of their labors so hopelessly. In their view, the Report may lie dormant during a Democratic administration, only to be revived at some unknown future date (perhaps as soon as four years), when its approach to antitrust enforcement returns to favor.