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Spotlight on privatisation of the courts

As debate in the US continues over mandatory arbitration clauses that have led to private adjudications, a new film focuses attention on the use of private forums and sealed proceedings to resolve matters of potential public importance.

Spotlight, starring Michael Keaton, focuses on the team of investigative journalists from The Boston Globe who exposed sexual abuse by Roman Catholic priests. The movie takes its name from The Globe’s ‘Spotlight Team’ of investigative reporters.

As stories about investigative journalism go, Spotlight is not All the President’s Men. It is not so much about a team of reporters finding the facts on their own as it is a story about reporters struggling to pry the facts – and story – loose from attorneys who have settled their cases in private forums or who are litigating with key documents sealed by confidentiality orders.  In Spotlight, it is the lawyers who have put the facts and story together; but it is a story that they must keep to themselves.

In a line that explains the rationale for transparency of the judicial and legislative process, Justice Brandeis notes that sunshine is the best disinfectant. Court proceedings that seemingly involve only private interests may very well have public import. For example, cases alleging sexual harassment and employment discrimination, even when brought by a single plaintiff, may involve conduct that is pervasive and thus relevant to others who might muster the courage to step forward and vindicate their own rights. Matters litigated in the sunshine may cause private entities and government oversight bodies to take action to protect against prospective injury. But for the work of the Spotlight Team, the pervasive nature of egregious conduct would not have seen the light of day.

Public litigation in the United States has brought to the surface facts that make cars safer, workplaces more tolerable for protected classes and the air we breathe less dangerous to human health. It does not even take a court ruling or jury verdict to make the point – information that comes to light during the litigation process may fuel legislative oversight and/or regulation. This is not merely a collateral benefit; it is the way the system is supposed to work. And – as Spotlight reminds us – there is a real benefit to a transparent system of justice.

Reuben Guttman is a prominent trial lawyer and founding partner at Washington, DC-based firm Guttman, Buschner & Brooks.

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Losing Opportunities to Recover Money for Worker Health and Welfare Funds

In settling False Claims Cases involving pharmaceutical industry misbranding and kickbacks, are State Attorney Generals leaving money on the table? The answer is maybe.

Most FCA settlements compensate for lost Medicaid and Medicare dollars. Left out of the mix are losses incurred by state and municipal health and welfare funds. Undoubtedly the money left on the table is not insignificant.

Why does this occur? One reason is that most state AG’s assign investigation of pharma fraud to Medicaid Fraud Control units. And larger investigations are coordinated among state AG’s through the National Association of Medicaid Fraud Control Units (NAMFCU). The result seems to be that no one is watching out for the interests of  public employee health and welfare funds at the state and federal level.

With public employee health and welfare funds strapped for cash and looking to meet rising drug costs, the oversight is not immaterial. It is an oversight that should raise questions from health and welfare fund trustees. Public employee unions which bargain for dollars to fund healthcare costs should pay particular attention. Where a municipal fund needs cash to make ends meet, the shortfall generally means that workers will get the short end of the stick when it comes time to negotiating a new labor agreement.

The Importance of Whistleblowers

Whistleblowers are of vital importance to regulators, helping them put the pieces of the jigsaw together, says Reuben Guttman.

Back in 2013, HSBC whistleblower, Herve Falciani, told the German publication Der Spiegel: “Banks such as HSBC have created a system for making themselves rich at the expense of society, by assisting in tax evasion and money laundering.” Conclosury statements like this are levied all the time by public interest groups, legislators, opinion writers and pundits.  When they are made, they are often a matter of speculation or at most, an argument of inferences from loose facts. Of course, Herve Falciani is different. When he left HSBC in 2008, he reportedly took data from 130,000 customers. He took the facts to allow authorities to make solid claims of tax evasion; claims that can only be effectively levied with inside information.

In a global economy with complex transactions, communications occurring in multiple languages and transactions and communications made with the jargon of the industry, it is extraordinarily complicated for outside regulators to investigate and gather the facts to prove complex fraud cases.  To some degree, it is analogous to a large ship attempting to navigate a harbor without a local captain available to explain where the rocks are or where the water is shallow. Or, perhaps it is like a blind person walking into a room for the first time without having any sense of where the furniture is located.

Of course regulators have the ability to access documents through a subpoena or civil and investigative demands, and they might even have the ability to ask questions under oath.  But which documents do the regulators ask for?  And when the questions are asked, how should the questions be worded so that regulators target the facts with the precision of a laser guided missile?   Imagine an investigator questioning an HSBC official: Question:“Have you aided and abetted foreign citizens in ways that allow them to avoid paying taxes?”  Answer: “No, that is not our mission … we are a bank.”

The problem is that most sophisticated lawbreakers understand the concept of a smoking gun.  Never create a document that summarizes the wrongdoing for regulators.  Never create a document that lays out the facts leading regulators to pinpoint the wrongdoing. And of course, in a large corporation, never create documents, rules, policies or plans that will cause the average employee to question the propriety of a corporation’s efforts. We live in an age where complex wrongdoing is orchestrated through communications and programmes which, if analysed independently, would seem harmless.

Yet, it is the whistleblower – the person inside the box – who can explain how patterns of innocent conduct, when linked together, amount to wrongful schemes involving fraud, money laundering, racketeering and tax evasion.  Whistleblowers like Falciani are so critically important to regulators and without their help, regulators face a daunting task of fully understanding the schemes and pinpointing and gathering the evidence to convince a trier effect that wrongful conduct has occurred.  Hence, “the importance of the whistleblower.”

The Art of Advocacy

Judges are now insisting that plaintiffs make their case with facts instead of merely putting their clients on notice of a claim.

When the United States Supreme Court issued its decisions in Bell Atlantic Corp v Twombly, 550 U.S. 544 (2007) and Aschroft v Iqbal , 556 U.S. 662 (2009), there was sea change in the standard by which judges evaluated lawsuits to determine their sufficiency to withstand a motion to dismiss.  Rather than merely placing a defendant on notice of a claim, the Court established a new standard.  Plaintiffs must allege facts allowing a court to find that a claim is plausible.  In reviewing the allegations of the complaint, courts are challenged to weed out conclusory statements and base their analysis on only the factual pleadings of the Complaint.

Naturally, Iqbal and Twombly have raised serious access to justice issues for plaintiffs who must muster the facts without an opportunity to gather evidence through discovery.  The “plausibility” standard is of course entirely subjective; what is plausible to one judge based on his or her life’s journeys may not be plausible to another.  And with the challenge to plead facts, plaintiffs are undoubtedly encouraged to put the “kitchen sink” into their complaints and plead complaints that are exponentially larger than those of yesteryear.

With all of the problems caused by Iqbal and Twombly, there is a nugget of gold that can be snatched as a teaching lesson.  The notion that litigants are instructed to make their cases based on facts and not conclusions or hyperbole, is a solid concept.

The question of what is a fact and what is a conclusion is of course a lesson that lawyers must understand.  In one of my classes at Emory Law School, I asked the students to outline the good facts and bad facts for a case involving assault and robbery. A student raised his hand noting that a good fact for the Defendant is “he has an alibi.”  I turned to the student and said, “Are you telling me a fact or are you giving me a conclusion?”  The student looked at me.  I said, “unpack what you just told me in terms of the evidence, or facts, that support the alibi.” The student then began to tell me about a witness who saw the defendant at a theater performance at the time of the alleged incident; theater tickets found in the defendant’s wallet; and a receipt from a theater vendor which had the time and date stamp on it.  Of course these are three very powerful facts – often hard to dispute – which are more compelling than merely stating the conclusion that an alibi exists.

In two weeks, I will again be teaching second year students trial advocacy at Emory Law School.  It is hard to explain the difference between facts and conclusions but I give them this example which, in past years, they seem to remember.

Several years ago, a seven year old girl who is the daughter of a trial lawyer, said to her father: “I hate my little brother, no one likes him, he is extremely difficult and we need to trade him in for a new brother.”  The father said, “Sweetie, haven’t I told you to make your arguments with facts and not conclusions or hyperbole?”  The daughter said, “Yes, I remember Daddy; I will start over. Here is a photo of your BMW and the can of spray paint used to redecorate it.  Here is a photo of our dog Spot tied up in your Versace Neck Ties and I have here a photo of your 80 inch Samsung TV set and the baseball that went through the screen; I also have here an essay the little fellow wrote for school which discusses his contemporary art projects. Finally, Daddy, here is a study by a prominent Harvard Psychologist who says that parents do well to act early and trade in ill-behaved children.” The father responded: “I understand.  Say no more.  The little fellow is history.”

Advocacy is a two way street

Young lawyers learning about advocacy need to understand how judges think if they are to master the skill, says Reuben Guttman.

Young advocates or trial lawyers often labour under the conception that communication is a one size fits all effort.  Be smooth, don’t be nervous, be flamboyant, and engage in fanfare.  Really?  For my trial advocacy students at Emory Law School, this is sometimes their vision of a trial lawyer.  Yet advocacy is a two way street.  Before an advocate formulates the content and form of his or her message, the most important question to ask is “Who is receiving the message?” Advocates, or trial lawyers, are teachers.  Judges and juries are their students.  How does the trial lawyer, as a teacher, deliver a message that resonates with each particular student?

Insight

Last year at Emory Law School,  I convened a panel of four judges with the hope of giving students an insight into their lives.  It was enlightening for the students to learn that these judges had dockets ranging from a couple hundred to several thousand cases.  The students learned that these judges were tasked with deciding matters that they had never studied in law school.  Their support ranged from one to several law clerks and the law clerks themselves were all recent law school graduates.  This group of judges ranged from civil cases to criminal matters with divorces, large scale securities class actions, business disputes, discrimination cases, and maritime matters in the mix.

Breaking the monotony

There is a saying that justice is blind.  And of course there is a perception that judges are powerful – which they of course are – and that they know everything.  While sitting in federal court a couple of weeks ago, I was watching a judge hear a dozen motions before it was my turn to argue. He was jovial.  He was witty. He engaged the litigants with humour.  I liked him. I had seen this behavior before with jurists.  I realised of course that some judges usually do this to break the monotony of the job.  They are human beings.  As I sat and watched this particular judge, I thought about him sitting high on his bench in a courtroom with 35 foot ceilings and the walls adorned with paintings of judges who had preceded him. I thought about why the US government spends so much on these ornate courtrooms.  I realised that without these accoutrements, judges would seem like mere mortals.  And of course, the proceeding itself would not be cloaked in the same solemnity.

Lifetime experiences

For the advocate, it is important to understand that at the end of the day, their messages will be evaluated by humans; whether they are judges or jurists.  They will have lifetime experiences, families that they go home to, perhaps pets that they feed, and like other humans, they will have had their successes and failures.  They will have fears and concerns.

If there is a takeaway from all of this, it is that advocacy is a two way street.  What you may think is the right message, or form of message to deliver to the decision maker, may not necessarily be the one that resonates.  What you may think is the right style may not be appropriate for a particular audience.  This is just something to think about; communication is a two way street.

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