John Snyder's Errant Thoughts

Another Article on Securities Law

Here's another article that I helped write. This one deals with an odd case in Chicago. Download NYLJ_08082007.pdf

SEC Remedies

Here's an article on SEC enforcement remedies that I wrote -- er, assisted in the preparation of -- last fall. It's an absolute page-turner. John Grisham is shaking in his boots! Download sec_remedies.pdf

Musings About Privilege

Attorney-client privilege is the bedrock of what a litigation attorney does.

Currently sitting in the archives in the basement of my law firm are briefs, letters, memos, analysis, all of which I sweated over, agonized about, often at three in the morning. The clients I wrote for have paid handsomely for these writings. Some of them are pretty much run-of-the-mill. Others represent truly incisive and insightful work.

You will never see them. They are privileged and will never see the light of day. In truth, even if I were able to share them, they are mostly uninteresting to anyone but those who were in the midst of the case and appreciate the context. Indeed, some of this work represents effort dedicated to covering "just in case" contingencies that never came to pass, or exploring what turned out to be blind alleys. This work was probably never seen even by the client (though the client no doubt paid for it).

I mention this because of an experience I had recently, an experience that, due to privilege, I have to describe only very generally. I completed a litigation concerning a dispute among partners in a certain real estate development. The upshot was that my client bought out its partner and, now, is free to continue developing the project with full autonomy. I was touched by the enthusiasm of my client when he was talking about his plans for the development. No doubt it will make money, but more than that, my client's hard work will result in a tangible thing -- a finished property -- that represents his vision.

Part of the special satisfaction that I have about this case is the feeling that, in a small way, I contributed to this tangible project. Next time I am visiting the town where this project is located, I will make a special trip to see the project. I will look on the project as a physical manifestation of my work, not in the sense that my contribution was particularly significant in the larger scheme of things, but in the sense that I made a contribution nonetheless.

It is rare for a litigator practicing my kind of law to have something tangible to point to as a physical manifestation of his labors. It occurs to me that this is one of the hardest things about lawyering. Think about newspaper reporters; they have their portfolio of articles they can point to. Developers have buildings. Screenwriters have movies. Lawyers, on the other hand, have boxes of memos and forgotten letters, draft briefs, none of which is to see the light of day under penalty of disbarment.

I'm not whining. Lawyers know what they are signing up for, and we are paid well for what we do. No one should feel sorry for us. However, it bears mentioning that one of the most significant prices a lawyer pays is sacrificing tangible manifestations of one's life's work. It is something no one talks about, but it is a hidden cost of this line of work.

Dura v. Broudo

My article about Dura v. Broudo, the Supreme Court case on loss causation.

Download NLJ-Sellier-Snyder-4-16-07.pdf (257.0K)

Goodling, The Fifth, and Immunity

I wrote earlier about why I thought Monica Goodling's claimed right to assert the Fifth Amendment was based on a very strained reading of the Reiner case.

Now, in the wake of Rep. Conyers' letter and Goodling's response, some in the blogosphere seem to be buying the Innocent Fifth Amendment argument (see many of the comments here) without thinking it through.  For example, this comment:

John Dowd is absolutely right about Goodling's invocation of the Fifth Amendment. It is sad to see John Conyers (and perhaps Elliot Mincberg, who used to work for PFAW) attempting to penalize an individual for asserting their rights under the Fifth Amendment.

The McCarthyism claims are completely unwarranted, but Dowd is absolutely right about the law. Despite the protestations of Republicans, there is enough circumstantial (if not direct) credible evidence of wrongdoing here that Democrats do not need to engage in the same type of Constitution trampling that Republicans have engaged in over the past six years.

Wrong, wrong, wrong!!!

The Reiner case on which Goodling relies was a very narrow decision which involved circumstances vastly different from those presented here.  All that Reiner held was that if there was a clearly identifiable crime committed, if Person X and Person Y were the only people at the scene of the crime who could have committed it, and if Person X is proposing to offer evidence and sworn testimony that Person Y actually committed the crime, then when Person X is brought to trial, Person Y can take the Fifth despite her claim of innocence.

The reason is simple.  If Person Y testifies, she will be forced to admit to a series of inculpatory facts, which will be used against her if Person X is acquitted and Person Y is later tried for the same crime.

Based on the record we have now, I fail to see how this situation is analogous.  Moreover, if this argument is accepted and the Reiner doctrine is expanded to wholly exempt any person from complying with a subpoena whenever that person can show that somebody accused that person of conduct that is possibly unlawful, then you may as well never issue another subpoena.  If Conyers accepts Goodling's argument, you can pretty well assume that folks inside the Justice Department and White House will start accusing each other, then when the subpoenas are issued, they will say, "Sorry, I'd love to come testify, because I'm totally innocent, but because that guy over there said I did something wrong, I'm taking the Fifth."  The next person will say the same thing, and the next, and the next, and...investigation over.

It may be that Goodling has information that she has not yet shared that gives her a firm basis for claiming the Fifth.  For instance, if McNulty offers sworn testimony that Goodling withheld specific information from him in order to induce his false testimony, and if it becomes clear that either Goodling suborned perjury and obstructed justice or McNulty, in full knowledge of the facts, committed perjury himself, then perhaps Reiner could apply.  However, we need a better understanding of why Goodling is taking the Fifth.

The most recent Dowd letter suggests that calling Goodling to testify would only punish Goodling for exercising her constitutional rights.  Not so.  The Congress has every right to request non-privileged information from Goodling, and to the extent she is asked questions that do not infringe on her privilege (to the extent any privilege exists), she has to answer.  Moreover, if she does not answer, the Congress has an obligation to defend its subpoena power by holding Goodling in contempt if she fails to answer clearly proper questions.  Lastly, it appears from the case law that Goodling has to appear and claim privilege in order for Congress to consider a grant of immunity (as discussed below).  Therefore, issuing a subpoena is not "punishment" in this case.

In the end, Goodling is attempting to negotiate immunity, and her tactic will probably work.  Under 18 U.S.C. § 6005, Congress has authority to grant immunity to Goodling.  However, as noted above, in order for Congress to grant immunity, Goodling has to appear before Congress and actually refuse to testify.  In re McElrath, 248 F.2d 612 (D.C. Cir. 1957) teaches that until the witness has been called before Congress, has refused to testify, and has claimed his privilege against self-incrimination, it is contrary to manifest intent of Congress to set in motion the immunity process.

Look for an immunity agreement with Goodling to be reached very soon.  The Congress has bigger fish to fry than Goodling, and by signaling a willingness to grant immunity, Congress will put increased pressure on other mid-level people who fear being thrown under the bus to come forward and get immunity while it is being handed out.

Goodling's "Innocent Fifth Amendment" Claim

I have argued for several days that the White House has waived executive privilege, with respect to the eight fired US Attorneys, both by offering up Rove and Miers for “conversations” and by selectively disclosing purportedly privileged emails.

It appears that Monica Goodling’s attorney is putting forward the new line of defense – a reinforcement to executive privilege – designed to thwart Congress’s inquiry.  Goodling’s “fallback” position is what I call the “innocent Fifth Amendment” claim.  Others can discuss whether this will fly politically, given the public implications of invoking the Fifth Amendment.  (Echoes of Oliver North and Watergate.)  My focus here is the legal validity of simultaneously proclaiming one’s innocence and taking the Fifth.

In general, a witness who is subpoenaed to testify before a court or Congress may invoke the Fifth Amendment and refuse to testify if he or she has a good faith basis for doing so.  A good faith basis exists where the witness’ answers “could reasonably ‘furnish a link in the chain of evidence’” against him or her.  If the assertion of the Fifth Amendment privilege is challenged, a court must make the determination of whether the witness, in testifying, faces genuine risks of incrimination.  U.S. v. Vavages, 151 F.3d 1185 (9th Cir. 1998) (“The standard for determining whether a claim of privilege is justified is ‘whether the claimant is confronted by substantial and real, and not merely trifling or imaginary, hazards of incrimination.’ ”).

The lynchpin of the “innocent Fifth Amendment” claim is the Supreme Court’s decision in Ohio v. Reiner, 532 U.S. 17 (2001) (per curium), which everyone should read and understand. This case involves a factual scenario very different from the one that Monica Goodling faces, but the principle in Reiner is simple enough.

In Reiner, a baby had died from "shaken baby syndrome."  It was clear that one of two people had killed the baby – the father or the babysitter – as each had been alone with the baby during the period of time when the trauma could have occurred. The state prosecuted the father. 

The father's defense at trial was, predictably, that the babysitter did it.  When the state indicated that it would subpoena the babysitter to testify against the father, the babysitter (who claimed her innocence) refused to testify on the basis of the Fifth Amendment.  The state subsequently granted the babysitter immunity, the babysitter testified to her innocence, and the father was convicted.

On appeal, the father argued that the babysitter was not entitled to invoke the Fifth Amendment because she had maintained her innocence.  The Court rejected this argument and upheld the father's conviction, holding that the babysitter (named Batt):

had “reasonable cause” to apprehend danger from her answers if questioned at respondent's trial.  Batt spent extended periods of time alone with Alex and his brother in the weeks immediately preceding discovery of their injuries. She was with Alex within the potential timeframe of the fatal trauma. The defense's theory of the case was that Batt, not respondent, was responsible for Alex's death and his brother's uncharged injuries. In this setting, it was reasonable for Batt to fear that answers to possible questions might tend to incriminate her. Batt therefore had a valid Fifth Amendment privilege against self-incrimination.

Significantly, the Court emphasized: 

[W]e have never held . . . that the privilege is unavailable to those who claim innocence. To the contrary, we have emphasized that one of the Fifth Amendment's “basic functions ... is to protect innocent men ... ‘who otherwise might be ensnared by ambiguous circumstances.’”  In Grunewald, we recognized that truthful responses of an innocent witness, as well as those of a wrongdoer, may provide the government with incriminating evidence from the speaker's own mouth.

What does the Reiner case have to do with Goodling’s situation?  It establishes the general proposition that a Fifth Amendment claim is not necessarily incompatible with a person's maintenance of innocence.  Beyond that, however, the comparisons become more strained.  On the face of it, Goodling's situation is dramatically different from a manslaughter case where only two people could have committed a single distinct crime.

In the Reiner case, it was very clear why the babysitter would reasonably believe that her truthful testimony would place her in jeopardy.  Supposing the jury had acquitted the father, the state might have turned around and prosecuted the babysitter.  The babysitter’s truthful testimony would have assisted the state in establishing numerous facts critical to proving the babysitter’s guilt – most importantly, that the babysitter was alone with the baby during the critical time period, and therefore had opportunity to commit the crime.  Thus, the Court concluded that her assertion of the Fifth Amendment was valid under the circumstances, notwithstanding her claim of innocence. 

The Reiner decision has been applied and discussed in some depth in at least two subsequent cases.  See In re Proceedings Before a Grand Jury, 768 N.E.2d 1102 (Mass.App.Ct. 2002) (“As in Reiner, the witness in the case before us was one of but two individuals who, because of timing and opportunity, were in a position to have perpetrated the crimes, and she has been implicated by the only other person so situated.”); Hernandez v. State  2007 WL 671317 (Tex. App. San Antonio 2007) (“Here, Jose Gutierrez's testimony for the State placed Alex Medina at the scene during the assault, and Hernandez's written statement, although not admitted into evidence, implicated Medina in the assault, revealing a potential for self-incrimination if Medina testified.”).

What Reiner and the cases that have followed it have in common is the following:  (1) there was absolutely no question that clearly identified crime occurred; (2) the witness was present when and where the crime occurred or could have occurred, and had the opportunity to commit the crime; (3) the witness was among a very small number of people so situated; and (4) another person in that suspect group had accused the witness of committing the crime.

Based upon these cases, it seems clear that the Reiner case applies in a very narrow set of circumstances.  Whether those circumstances are present in the Goodling case remains to be seen.  However, if it is true that Goodling is in a situation where Reiner would clearly control, that means that a crime has been committed at a high level of the Justice Department, and that Goodling or someone within a very small circle surrounding her is complicit and either blames her or is expected to blame her.

On the other hand, it seems at least as likely that Goodling is simply trying to stretch the narrow Reiner rule far beyond what the legal precedent seems to support.

New Use of Blogs

I wrote previously about my belief that the White House is having trouble getting its arms around the documentary evidence concerning the eight US Attorneys, and as a result is making some basic mistakes like issuing easily contradicted statements.  My speculation regarding the reason for this was that it is a manpower issue; they simply don't have enough qualified and trusted people to do the job (which I repeat, is massive) properly and quickly.

The blogs are exploiting this "manpower gap" by establishing document review databases like this one that has numerous (no idea how many) people actively reviewing the documents produced by the White House and checking it against other publicly available information and statements.

From the look of it, the reviewers are generally doing a first rate job.

Don't underestimate the importance of this.  In a document-intensive, fact-intensive, time sensitive matter, the difference between winning and losing often comes down to your ability to grind through the documents effectively, make connections, put the story together.  Very often, the critical insight comes as a result of making an unexpected connection -- reading something in a document and having that jar a memory of something you read two weeks earlier.

However, in the rush of a document review, it is certain that many of those connections are routinely missed -- particularly if one or two people are trying to grind through tens of thousands of documents. 

That is why this sort of collaborative approach is such an advantage, and such a revolutionary and under-appreciated effect of the Blogosphere.  Imagine the connections that hundreds of reviewers, each looking at documents with fresh eyes, will make!

Missing the Point on US Attorneys

I am having a hard time understanding why the Democrats are not pounding home what I consider the most important point of this whole affair with the eight fired US Attorneys.  The point is one that is empirically substantiated by Shields and Cragan, showing that under Bush, Democrats have been about eight times as likely as Republicans to be investigated or indicted.

I think that's the whole ballgame here -- the criminal justice system being hijacked by the Bush Administration to act as an extension of the Karl Rove political machine.  If you ignore the broader context, as the Democrats have largely been doing for some reason, then you're down to attacking the Administration for firing executive branch officials who serve at the pleasure of the President.

I know that it is very unusual for a President to dump US Attorneys mid-term, and I'm aware that these eight US Attorneys appear to have been fired for no good reason.  I'm also aware that the Administration's justifications have been a moving target.  There's definitely some smoke here. 

But the scandal is not that the Bush Administration did something weird, or even that it fired eight people who didn't deserve it.  The scandal is that the Administration has managed to turn the Justice Department into a partisan organization that imprisons the Administration's political enemies (at least that's a fair inference from what we know).  The firing of the eight US Attorneys is part of that narrative in that it reveals one of the Administration's methods for imposing discipline and ensuring that its US Attorneys implement the Administration's nefarious policies.

At any rate, that is how I would tell the story if I were trying to whip up public outrage over these firings.  Focusing narrowly on the individual merits of the eight US Attorneys who were ousted is somewhat interesting, but the Democrats are going to lose this argument if they don't see the forest through the trees.

Judicial Pay

The federal judges are complaining again about how underpaid they all are.  Here's a quick overview of what various government officials make.  U.S. District Court judges make $162,100.  Court of Appeals judges make $171,800.  The Supremes make $199,200, and the Chief Justice makes $208,100.  [Note:  this link is a bit out of date; judges now make slightly more than this -- district judges about $165,000 and so on....]

It so happens that this latest push to increase judges' pay coincides with the decision made last week by Simpson Thatcher, a big NYC firm, to increase the pay for brand-new associates to $160,000 (a move already matched by some of Simpson's competitors, and very likely to be matched across the board at NYC megafirms over the next couple weeks), which means that associates right out of law school who know nothing about the practice of law are earning basically the same as federal judges.  [Actually, if you count bonus -- and why wouldn't you? -- first years are going to blow the district judges out of the water....]

On the one hand, something seems out of whack if new associates are out-earning federal judges.  On the other hand, federal judges are always welcome to resign their position, sign on with a big firm, work brutal hours, and take home a hell of a lot more than $160,000.  Yet I don't see too many of them streaming for the exits.

The reason is that being a federal judge is a pretty sweet job.  (What other job gives you the luxury of lifetime tenure (including senior judge status later on), massive deference, and the joy of suddenly having every word you speak be the gold standard by virtue of your having said it?)  It's a far better existence than reviewing documents all night in a dreary office at Simpson Thatcher.

Also -- many federal judges are former Assistant U.S. Attorneys who grew up in the federal courthouse and, when a position opened up, were essentially promoted from within.  They're career government employees, and once again, they understand what they signed up for.

It's interesting, we hear a lot of complaints about the underpaid judiciary.  We never seem to hear similar complaints from underpaid officials in the Treasury Department.  According to my slightly out-of-date listing, the Secretary of the Treasury makes about  $180,000.  How much do you think Henry Paulson, former head of Goldman, is giving up by not working in the private sector?

In any event, what is the point here with judicial pay?  We're not going to pay federal judges $1,000,000+ per year, so they're never going to come close to parity with senior partners at big law firms.  Politically, it will never happen.  When one puts on the black robe, there is a major tradeoff -- you sacrifice money, but in return you get massive perks (bulletproof job security, endless deference, an opportunity to be a "jurist" and make a lasting impact on the profession, no more clients scrutinizing your bills, etc.).

Oh, and where I grew up, in the real world, $165,000 is not a bad salary.

GWOL - Global War on Lawyers

Shame on Charles D. Stimson.

The commandant of America's gulags has now taken aim at top law firms that represent detainees.

Mr. Stimson made his remarks in an interview on Thursday with Federal News Radio, a local Washington-based station that is aimed at an audience of government employees.

The same point appeared Friday on the editorial page of The Wall Street Journal, where Robert L. Pollock, a member of the newspaper’s editorial board, cited the list of law firms and quoted an unnamed “senior U.S. official” as saying, “Corporate C.E.O.’s seeing this should ask firms to choose between lucrative retainers and representing terrorists.”

In his radio interview, Mr. Stimson said: “I think the news story that you’re really going to start seeing in the next couple of weeks is this: As a result of a FOIA request through a major news organization, somebody asked, ‘Who are the lawyers around this country representing detainees down there?’ and you know what, it’s shocking.” The F.O.I.A. reference was to a Freedom of Information Act request submitted by Monica Crowley, a conservative syndicated talk show host, asking for the names of all the lawyers and law firms representing Guantánamo detainees in federal court cases.

Mr. Stimson, who is himself a lawyer, then went on to name more than a dozen of the firms listed on the 14-page report provided to Ms. Crowley, describing them as “the major law firms in this country.” He said, “I think, quite honestly, when corporate C.E.O.’s see that those firms are representing the very terrorists who hit their bottom line back in 2001, those C.E.O.’s are going to make those law firms choose between representing terrorists or representing reputable firms, and I think that is going to have major play in the next few weeks. And we want to watch that play out.”

Assuming Mr. Stimson is not suggesting that America's great law firms are banging out pro bono hours on Muhammad Atta's probate work, I assume he is saying that anyone in Guantanimo is a terrorist responsible for 9/11.  If so, as a trained lawyer, Mr. Stimson must have some pretty good proof to make such a serious accusation.  And if he's really that confident in his proof, then why so nervous about having real lawyers looking at these cases?

In fact, I take this as strong evidence that a tipping point has been reached.  Real litigators are now putting the government to the proof (even though detainees have woefully few procedural rights), and this is causing great embarrassment and consternation among lazy bureaucrats who have assumed for the last five years that the word "terrorism" was a substitute for "evidence."

Here's hoping that America's CEOs and general counsel ignore Stimson's clarion call, and that America's leading law firms have the courage to stand firm in the face of this grotesque interference with due process.

P.S.:  Here's something to give you hope, from the NYT article:

Neither the White House nor the Pentagon had any official comment, but officials sought to distance themselves from Mr. Stimson’s view. His comments “do not represent the views of the Defense Department or the thinking of its leadership,” a senior Pentagon official said. He would not allow his name to be used, seemingly to lessen the force of his rebuke. Mr. Stimson did not return a call on Friday seeking comment.

Any "senior pentagon official" whose name would lend that much force to a rebuke must be a serious heavy hitter.  (Cough, cough, Gates, cough.)

Anyone wanting to hear the actual interview can find the link here.