Category Archives: Legal – General

A solid endorsement

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Harris%20County%20DA%27s%20office%20121508.jpgI’ve been enjoying the new local blog Life at the Harris County Criminal Justice Center, which, along with Mark Bennett’s blog, provides an interesting daily glimpse of life around the Harris County criminal courthouse. Given the twists and turns of the recent Le Affaire Rosenthal, both blogs have had interesting observations about the players.
In this recent post, the HCCJC blog makes the following common sense endorsement that I hope all Harris County voters will embrace:

In the 176th [Criminal District Court] Judical Race, there is no issue in picking who I recommend.
The race is between Michele Saterelli Oncken and incumbent Brian Rains.
Judge Rains has been on the bench ever since I’ve been a lawyer. And ever since I’ve been a lawyer he has had the reputation of being one of the rudest and most unkind judges on the bench since . . . well, Pat Lykos.
He claims that Michele Oncken is running against him “because I made her husband mad.”
If only it was that simple, Judge Rains. The fact is that you’ve upset everybody.

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The aftermath of the Clemens hearing

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clemens%20at%20congress.jpgMany folks have been asking me about my thoughts on the Roger Clemens saga, but I am so disappointed with the abysmal level of discourse regarding the Mitchell Commission Report and the issues involved with the use of steroids and other PED’s in society that I find it hard to drum up much enthusiasm for addressing it. Compare the discussion of the issues from this earlier post with this live blog analysis of the questions and answers from Clemens hearing and you will see what I mean. Sort of makes you want to whipsaw the committee in the same manner as this Colman McCarthy/Washington Post op-ed, doesn’t it? Art DeVany expresses similar sentiments.
Although I expressed reservations early on about the unconventional way in which Clemens’ legal team has been defending the matter, I don’t think the hearing measurably increased Clemens’ risk of being charged criminally. In fact, in an odd way, the hearing may have actually mitigated that risk somewhat.
McNamee came across as such a manipulator that my sense is that it’s doubtful that prosecutors would base a criminal case against Clemens primarily on McNamee’s testimony. Thus, unless investigators come up with a conduit of the PED’s who is willing to testify that the PED’s were delivered to Clemens and McNamee, Clemens may avoid criminal charges. He is certainly not out of the woods yet, but the Congressional hearing probably hurt him more in the court of public opinion than it did with regard to a potential criminal case (Update: Peter Henning agrees with me).
Nevertheless, I’m not yet ready to bet on that prediction. At least without long odds in my favor.

On the DeGeurin-DeGuerin brothers and Houston’s G-man

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texas%20flag%20021208.jpgA couple of interesting stories have popped up over the past several days regarding Houston lawyers.
First, there was Mary Flood’s profile of the DeGuerin (or was that DeGeurin?) brothers, Mike and Dick, two of the best in Houston’s formidable criminal defense bar. The criminal defense bar in Houston has essentially branched out from two extraordinary criminal defense lawyers, the late Percy Foreman and Richard “Racehorse” Haynes. Mike and Dick are from the Foreman tree, while such excellent Houston criminal defense lawyers as Dan Cogdell and Jack Zimmermann stem from the Haynes tree. A good follow-up story for Flood would be to track the number of first-rate criminal defense lawyers in Houston who have been influenced by Foreman, Haynes and their many acolytes.
Meanwhile, not to be outdone, this ABA Journal article profiles Houston’s $1,100-per-hour lawyer, Stephen Susman. As noted earlier here, Susman has long contended that that he charges in excess of a grand per hour “to discourage anyone hiring me” on an hourly basis. As they say in legal circles, Susman prefers cases with a bit more meat on the bone.

The psychotherapist-patient privilege

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Gabe%20Bryne.jpgGosh, as if Paul the psychotherapist, Gabe Byrne’s character in the new HBO series, In Treatment, didn’t have enough to worry about.
The Fifth Circuit Court of Appeals has just issued this interesting opinion on the psychotherapist-patient privilege in the case of former Austin police officer, John Auster (H/T Robert Loblaw).
Auster suffers from paranoia, anger, and depression, so the stress of the impending termination of his workerís comp benefits was not exactly conducive to improvement of those conditions. Auster proceeded to tell two of his therapists that he was prepared to undertake a campaign of violence if his benefits were terminated. Inasmuch as the therapists had a duty under state law to report the threats, the U.S. Attorney’s office indicted Auster for extortion.
On a defense motion to suppress Auster’s threatening statements, the District Court threw out Austerís threats on the grounds that they were protected by the psychotherapist-patient privilege and not admissible at trial. The government appealed and the Fifth Circuit reversed, reasoning that Auster knew that his therapists had to report the threats and so he had no expectation that the threats would remain confidential. Accordingly, the Fifth Circuit concluded that such threats are not privileged. As Loblaw points out, there is now a split among the circuit courts over the the psychotherapist-patient privilege, with the Fifth joining the Tenth Circuit in not recognizing the privilege, while the Sixth and Ninth Circuits recognize the privilege.

Lerach’s sentence

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Lerach%20021208.jpgFormer plaintiff’s class action securities lawyer Bill Lerach was sentenced yesterday to two years in prison, fined $250,000 and ordered to complete 1,000 hours of community service (Peter Lattman’s W$J interview of Lerach is here and more W$J coverage of blawgosphere reaction is here). Lerach pled guilty last September to a felony count of conspiring to obstruct justice and to submit false testimony in federal judicial proceedings after being investigated by the Department of Justice for the better part of a decade.
My posts from over the years on Lerach and the investigation into his practice are here, and my latest posts summarizing my views on his plea deal are here and here. Along similar lines to the thoughts expressed in this post from yesterday, Larry Ribstein cautions those who take satisfaction in watching Lerach’s fall from the pinnacle of the plaintiff’s class action securities bar:

What many call their ìgreedî is what moves the marketís invisible hand and what has . . . generated so much public good for our financial markets. Both financial innovations and legal innovations may be taken too far, but this doesnít negate their positive aspects and the need to encourage them.
Thatís not an excuse for wrongdoing. If laws have been broken the violators should be sent away. But we should be aware that the excesses of prosecutors can cause at least as much, and possibly more, harm than the excesses of financial speculators.

The winds of prosecutorial power

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Ben%20kuehne.jpgWhen the Department of Justice decided to prosecute Arthur Andersen out of business despite a manifestly weak case, that confirmed that the creation of enormous wealth for thousands of employees and an impeccable reputation built over decades of fine work provide no insulation these days from the excesses of an rapacious prosecutor’s judgment.
Then, the DOJ decided to misapply a criminal law to prosecute several former executives of the social pariah Enron, which a vacuous mainstream media applauded without nary a mention of the dreadful implications that such a misuse of the state’s overwhelming prosecutorial power portends.
Given this backdrop, it was not particularly surprising that the government threatened to put large employers out of business unless they served up a few employees for the government to prosecute. Or that the government turned its prosecutorial power on the business news media as well as almost everything else. In the meantime, some of the leading purveyors of this prosecutorial campaign of abuse were being rewarded for their actions and competing for the highest offices in the land.
But now the government is turning its prosecutorial power toward pillars of the legal profession, first with regard to a Mayer Brown partner who performed work for Refco and more recently with regard to Ben Kuehne, who has long been one of the most-admired lawyers in the Miami legal community. Ellen Podgor analyzes the implications of the Kuehne indictment and Ashby Jones adds more context here.
So, after much of the legal profession has stood by for years while prosecutors trampled the rule of law in criminalizing unpopular business executives, where does the profession now “hide [with] the laws all being flat?.” Will the profession be able to stand upright in the winds of prosecutorial abuse that are blowing now? Stay tuned.

Piling on Rosenthal

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Rosenthal%20020208.jpgIt’s become fashionable around Houston to be critical of outgoing Harris County District Attorney Chuck Rosenthal. Frankly, much of the criticism is deserved. But given what Rosenthal has been going through in federal court over the past couple of days, one has to wonder whether the media firestorm regarding Rosenthal has reached the point that otherwise rational observers have taken leave of their senses.
Take this latest Chronicle article on the hearing over Rosenthal’s destruction of emails that he had been ordered to turn over in connection with a civil lawsuit in federal court. The Chron article, which is representative of the newspaper’s vitriolic coverage of Rosenthal’s political demise, calls the hearing a “contempt hearing” in which the judge could “hold Rosenthal in contempt, . . .[and] put the DA behind bars for six months.”
H’mm. I don’t think so.
Although the plaintiffs in the civil lawsuit are having a field day excoriating Rosenthal in court and in the media, I can’t see how the judge could hold Rosenthal in contempt of court, at least at this stage. The plaintiffs’ motion (see here) essentially requests that the judge hold Rosenthal in criminal contempt of court because of Rosenthal’s destruction of email evidence and failure to comply with the court-ordered procedure for reviewing the emails. The motion doesn’t call for Rosenthal to be held in civil contempt. There is no need for the court to take coercive action and Rosenthal would not be able to take any action to purge the contempt, anyway. The destroyed emails are gone for good and Rosenthal can’t do anything about that.
Thus, Rosenthal — who isn’t even a party to the civil lawsuit — is accused of criminal contempt, but he has been provided none of the protections that due process of law requires for a criminal defendant. Inasmuch as Rosenthal’s allegedly contemptuous conduct did not take place in the courtroom, the trial judge does not have the power to hold him in criminal contempt without a full-blown trial on the criminal contempt charges. Indeed, the trial judge cannot even be the judge in Rosenthal’s criminal contempt trial because the judge is a potential witness in that trial.
Likewise, the plaintiffs’ lawyer in the civil lawsuit cannot prosecute a criminal contempt case against Rosenthal. Rather, the contempt charge must be referred to the U.S. Attorneys’ Office, which then decides whether to prosecute Rosenthal based on an evaluation of the evidence and and the charges. If the U.S. Attorney decides to do so, then Rosenthal is entitled to the due process protections that any criminal defendant is entitled to receive, including notification of the specific charges, trial by jury, and confrontation of the adverse witnesses. The circus going on right now over in federal court doesn’t come close to fulfilling those Constitutional safeguards.
So, I don’t think Judge Hoyt is going to hold Rosenthal in criminal contempt and throw him in jail. Even if Judge Hoyt were to do so, the Fifth Circuit would likely stay the commitment order and eventually overturn it. The Chronicle and Rosenthal’s many other detractors can continue to revel in the lame duck DA being filleted in a public court hearing, but at least provide Rosenthal due process of law. We in Houston have already seen what happens to the unpopular public figures of the moment when those protections are ignored.

The never-ending City of Houston corruption probe

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City%2Bof%2BHouston%2BSeal.gif.pngIt’s been a couple of years since I last blogged on it, and it’s been over two and a half years since the new defendants were first mentioned as potential targets in the probe, but the feds finally got around last week to indicting Andrew Schatte and Michael Surface, the principals in the Keystone Group who have made a living over the past decade or so managing big construction projects financed by the City of Houston and other municipalities. The press release on the indictment is here and a copy of the indictment is here. For unknown reasons, the U.S. District Clerk’s office did not post the indictment publicly until yesterday, which is about as long as it took for the Chronicle’s editorial staff to comment on the indictment.
The indictment alleges that Schatte and Surface bribed former City of Houston building services director Monique McGilbra to gain favor on a couple of big City of Housotn building projects for which they were competing. The feds allege that the bribes were both direct (not so big) and indirect (much larger), the latter of which were allegedly funneled through Garland Hardeman, McGilbra’s former boyfriend who Schatte and Surface hired to work with them in obtaining the contracts. McGilbra, who copped a plea back in 2005, will be singing like a canary for the prosecution in this case.
Not enough is known about Schatte and Surface’s defense strategy at this point to know what will be the most important issues in the case. However, one has to wonder why the U.S. Attorneys’ office — which has been investigating corruption in the City of Houston administration of former Mayor Lee P. Brown now for six years — waited for over two and a half years after McGilbra had fingered Schatte and Surface to bring the charges against the two? Similarly, when did the feds notify Schatte and Surface that they were targets of a criminal probe? If it was some time ago (as it would appear), then why was Surface serving on the Harris County Sports & Convention Corp board for the past two years while being the target of a federal criminal probe?
The feds need to wrap this matter up.

Protesting the absolute priority rule while wintering in Houston

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totem%20pole%20013108.JPGThis Tom Fowler/Chronicle article reports on a retired commercial painter from Ohio is engaging in a rather novel protest of the absolute priority rule, the bankruptcy principle that prevents shareholders from receiving any value under a bankruptcy plan unless creditors either are paid in full or agree that the shareholders can receive something:

Calpine Corp.’s emergence from bankruptcy protection in the coming days will end a tough chapter in the history of Texas’ No. 3 power producer, but don’t expect applause from shareholder Robert Strouse.
The retired commercial painter from Ohio likely will continue his vigil in front of the company’s downtown Houston offices where he’s been protesting the bankruptcy plan for the past two weeks.
“They’d like me to go away, but I’m going to hang on as long as I can,” said Strouse, 62.
Strouse claims the company misled him about the price he could expect for his stock when Calpine emerges from bankruptcy ó a charge the company denies. [. . .]
Strouse said his quarrel with Calpine began last month after a phone conversation with an investor relations official. He said he was told his 5,000 shares probably would be valued at about $1.60 each under the company’s reorganization plan. That’s a far cry from the $5.12 each he paid for them in March 2004, but better than nothing, he figured, so he voted in favor of the plan.
The plan that came out of the bankruptcy court in December, however, wasn’t what he expected. It will cancel outstanding shares of common stock like his and replace them with warrants ó the right to purchase new Calpine stock ó but at a price likely higher than that at which the stock will begin trading.
“They lied to me, plain and simple,” Strouse said.

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The products of an entertaining form of corruption

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Okie%20STate%20stadium%20013008.jpgInasmuch as the corrupt sponsorship of big-time football and basketball by academic institutions is a common topic on this blog, the following articles caught my eye:

The Chronicle’s Richard Justice surveys several of the ugly recent incidents in big-time college football and calls for higher ethical standards. However, he ignores the perverse incentives built into the highly-regulated system that promote the unethical behavior.
Meanwhile, one of the coaches who has been accused of being ethically-challenged — former Texas Aggie coach Dennis Franchione — turns out to be an over-achiever with an interesting story.
And how exactly is it that Rick Neuheisel was able to persuade UCLA to hire him as its new coach in the face of this curriculum vitae?

Look, June Jones, Rich Rodriguez, Franchione, Neuheisel and the other supposedly unethical coaches of the moment are not, on balance, any more unethical than the rest of us. They are simply the products of a highly-regulated system that creates all sorts of perverse incentives to act badly. Change those incentives and the coaches’ behavior will change. A good start would be to quit paying the coaches the excess rents that should be paid to the players whose talents generate them.