Alison Frankel

Kiobel brief shows State/DOJ split over human rights litigation

Alison Frankel
Jun 15, 2012 04:00 UTC

When John Bellinger of Arnold & Porter was the legal adviser to the State Department in the administration of George W. Bush, the Justice Department filed about a dozen amicus briefs addressing the Alien Tort Statute, a 1789 law that has become a modern vehicle for international human rights litigation. Bellinger told me on Thursday that he signed every one. When foreign nationals use the ATS to bring cases in U.S. courts for conduct that took place overseas, foreign policy is implicated, and the State Department wants a voice. That’s why Bellinger believes it’s so significant that when the Justice Department filed its new amicus brief in the reformulated Kiobel v. Royal Dutch Petroleum case at the U.S. Supreme Court, State Department legal adviser Harold Koh did not sign it.

“That seemed to be a not-so-subtle message — more to the human rights community than the Supreme Court — that State did not agree with the Justice Department position,” said Bellinger, who blogged about the DOJ brief on Wednesday night at Lawfare. “The Obama administration was in a tight spot in this one.”

The DOJ brief, signed by Solicitor General Donald Verrilli, argues, tepidly, against the application of the Alien Tort Statute against Shell by Nigerian nationals who claim the oil company was complicit in state-sponsored torture and murder in their country. That’s a switch in sides for the government, which had supported the Nigerians in Kiobel‘s first trip to the Supreme Court, when the issue was whether corporations could be liable under the Alien Tort Statute. The Justice Department said they could, in an amicus brief that State Department adviser Koh signed.

But then the justices changed the question in Kiobel from corporate liability to whether the statute even extends to extraterritorial conduct in the first place. That wasn’t a novel issue for the Justice Department, which had argued in a 2004 amicus brief at the Supreme Court that ATS does not apply overseas (and, according to Bellinger, the Bush administration made the same argument in several other appellate courts as well). So the Obama DOJ was in a bind. To support the Nigerians, it would have to repudiate what Bellinger called “seven years of well-argued briefs” by previous Justice Department lawyers. But to support Shell, it would have to turn its back on the State Department and human rights advocates.

Verrilli and his team searched for some middle ground in a brief that truly deserves the overused description “tortured.” They argued that the ATS shouldn’t apply in Kiobel, which has no connection whatsoever to the United States. But the SG also said there’s no reason to establish an absolute bar on ATS litigation based on conduct on foreign soil. If a foreign official who allegedly engaged in torture now resides in the United States, for instance, that official can be sued under the ATS, according to the brief, because otherwise the United States might be perceived to be harboring the defendant. (Those were the facts in Filartigan v. Pena-Irala, the 1980 Supreme Court case that pioneered use of the ATS in human rights litigation.) “A close examination of the historical context and purposes of the ATS, the modern-day line of cases, and Congressional action suggests that there are circumstances in which it would be appropriate for a court to recognize a cause of action based on the ATS for violations of international law occurring outside the United States,” the brief said.

Previewing e-books defense: No price-fixing, no harm to readers

Alison Frankel
Apr 16, 2012 21:35 UTC

Has there ever been a price-fixing case in which the alleged conspirators agreed to take less money for their product and simultaneously up their production and boost competition? The answer to that question may determine the success of the Justice Department‘s e-books antitrust suit against Apple and the two publishers that have not agreed to settle DOJ’s civil charges.

On Friday, Apple and three publishers filed reply briefs in their effort to win dismissal of the private antitrust class action that parallels the Antitrust Division’s case. Those filings, coming two days after the government brought suit, offer good hints at how defense lawyers for Apple and the publishers will counter the Justice Department’s allegations. (Interestingly, Hachette and Harper Collins — the two publishers that have reached a tentative $52 million settlement with 16 state Attorneys General — did not sign the joint publishers’ motion, which suggests that they may argue their AG deal resolves the class action plaintiffs’ damages claims.)

The essence of the government’s case (as well as the private class action) is that the publishers regarded Apple’s entry into the e-books market as a chance to break Amazon’s 90-percent monopoly. As part of that effort, the publishers allegedly conspired with Apple to change the e-books model from the wholesale pricing Amazon insisted upon to so-called “agency pricing,” in which publishers set prices and Apple received a commission for every e-book it sold. Both the class action and the government suit assert that Apple and the publishers engaged in what’s known as “per se” price-fixing, which means that plaintiffs must only prove there was a conspiracy to restrain competition and raise prices. The Justice Department and private plaintiffs claim the proof of the conspiracy is the rise in e-book prices after the publishers all signed agency-pricing deals with Apple, from $9.99 to $12.99 or $14.99 for new titles.

Why isn’t DOJ seeking money damages in e-books price-fixing case?

Alison Frankel
Apr 12, 2012 13:38 UTC

The newly-filed Justice Department complaint against Apple and five major publishers is an incalculable boon to Hagens Berman Sobol Shapiro and Cohen Milstein Sellers & Toll, the firms that won the intense competition to lead the multidistrict e-books antitrust class action. There hasn’t yet been discovery in the class action, which the defendants have moved to dismiss or send to arbitration, so the specific details in the Antitrust Division’s complaint, including emails and meetings between Apple and publishing executives, are powerful evidence of the conspiracy the class action alleges. The Justice Deparment’s same-day settlement with Hachette Books, Simon & Shuster, and Harper Collins also increases the likelihood that those publishers will also move to resolve the class action and improves the class’s case against Apple and the remaining publishers, Macmillan and Penguin.

There’s another gift to the private lawyers in the DOJ case as well: The Justice Department is not asking for any money damages of its own. Its complaint seeks only a decree that the defendants engaged in an unlawful price-fixing conspiracy, an injunction against such collusive conduct, and costs. The Antitrust Division — which filed its case in Manhattan federal court as a related proceeding to the multidistrict litigation — seems to be leaving money damages entirely in the hands of Hagens Berman and Cohen Milstein.

Steve Berman of Hagens Berman told me in an email that it’s not unusual for the Justice Department “to leave damages to private lawyers.” He also said there had been no discussions between class counsel and the DOJ on what sort of damages the Justice Department would seek. But his firm’s official statement makes clear that the private lawyers also noticed the distinction between what they want and what the Antitrust Division is after:

U.S. walks dangerous line to support Argentina in bond cases

Alison Frankel
Apr 9, 2012 21:29 UTC

Distressed debt investors don’t have much credence as victims. These are, after all, hedge funds that buy up bonds in or near default, typically at a steep discount, in the hope they’ll be able to boost the value of the debt through the bankruptcy process or litigation in U.S. courts. Right now, for instance, distressed bond funds are preparing for battle over billions of dollars worth of Greek sovereign debt that they snatched up in anticipation of that country’s default in March. Distressed debt funds quite literally feed off the flesh of moribund companies and foreign economies, which is why they’re frequently called vulture funds. Vultures flanked by crafty lawyers aren’t entitled to a whole lot of sympathy.

But they earned some from me when I read the Justice Department’s new amicus brief, filed last week at the 2nd Circuit Court of Appeals in the long-running battle between The Republic of Argentina and NML Capital, Aurelius, and other holders of defaulted Argentine bonds. The brief suggests that the Justice Department believes the foreign policy objectives of the executive branch trump the obligations of a foreign sovereign to comply with U.S. court directives. That’s an argument the government clearly feels conflicted about, based on the brief. And its support of Argentina, at the expense of the power of the U.S. court system, could roil the vulture-dominated secondary market for distressed sovereign debt in the midst of the Eurozone crisis.

Usually, the United States wouldn’t get involved in a dispute over contract interpretation, which is at the heart of the cases at the 2nd Circuit. But the Justice Department believes Argentina’s appeal implicates a “cornerstone” foreign economic policy. Last December, U.S. District Judge Thomas Griesa of federal court in Manhattan issued a series of orders in various bondholder cases against Argentina concluding that under the standard contract provision known as pari passu (or “equal footing”), Argentina must pay the vulture funds in full before making payments to investors who agreed to participate in two rounds of restructurings that followed Argentina’s 2002 bond default. In February, Griesa issued injunctions based on those orders, which meant that Argentina could not make any payment to investors who were issued new debt in the 2005 and 2010 restructurings until it paid the holdouts everything it owes them.

Nortel IP sale will help Google win OK for Motorola bid

Alison Frankel
Aug 18, 2011 22:43 UTC

Remember the Cold War military doctrine of Mutually Assured Destruction? The idea was that if the United States and the Soviet Union both knew the enemy had enough weapons to wipe the entire country off the map, neither would actually use those weapons. Mutually Assured Destruction got the entire world through the age of fallout shelters and Barry Goldwater. So the doctrine should be powerful enough to get Google, Apple and Microsoft past Justice Department antitrust regulators.

It’s a given that Google’s $12.5 billion Motorola bid is going to be scrutinized for its antitrust implications. Google’s law firm on the deal, Cleary Gottlieb Steen & Hamilton, has conceded that point; the firm announced that David Gelfand – who previously escorted Google unscathed through antitrust reviews of its DoubleClick and AdMob acquisitions — will be antitrust counsel on the Motorola bid. The $4.5 billion acquisition of Nortel’s intellectual property by a consortium led by Microsoft and Apple is already under review by the DOJ’s antitrust division. I’m betting that each patent plays will have an easier time passing regulatory muster because of the other.

Before I get to why, there’s the issue of which agency will be investigating the Google deal. Both the Federal Trade Commission and the Justice Department have the power to conduct premerger antitrust reviews. They’ve both looked at Google acquisitions in the past: the FTC green-lighted the 2007 DoubleClick and 2010 AdMob deals; the DOJ rejected Google’s proposed advertising partnership with Yahoo in 2008 and approved, with some modifications, its deal with ITA Software in 2011. The FTC is also reportedly conducting a widespread antitrust investigation of Google’s search engine business. But I have it on good authority that the Justice Department will be handling the Motorola review, partly because DOJ has historically overseen competition in the telephone industry and is already reviewing the AT&T merger with T-Mobile and the Nortel IP sale.