Tag: Litigation

Department of Justice (DOJ) Intervenes in Qui Tam Action Against Lance Armstrong

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The Department of Justice announced in February that it would intervene in a False Claims Act suit filed against former Tour de France winner Lance Armstrong and others by former teammate Floyd Landis. Reports indicate that in 2010, Landis filed a lawsuit, captioned United States ex rel. Landis v. Tailwind Sports Corporation, et al., in the U.S. District Court for the District of Columbia. The lawsuit alleges that Armstrong and his teammates violated the terms of a $30 million sponsorship contract he and his cycling team had with the U.S. Postal Service (USPS) by taking drugs to enhance their performances.

USPS sponsored Armstrong’s Tailwind cycling team from 1996 through 2004. During that time, Armstrong and his team took more than $30 million in sponsorship fees. The USPS claims Armstrong violated a contractual promise by regularly employing banned substances and methods to enhance their performance, in violation of the USPS sponsorship agreements. Those sponsorship agreements gave USPS the right to place its logo prominently on the cycling team’s uniform, among other promotional opportunities. However, the agreement also required the cycling team to comply with all rules of cycling’s governing bodies. Those rules prohibited the use of performance enhancing substances and methods.

For years Armstrong and others denied that the team used performance enhancing drugs, but in October, 2012, the U.S. Anti-Doping Agency (USADA) issued a report concluding that Armstrong used banned performance enhancing substances, starting in at least 1998 and continuing throughout his career. The time Armstrong and teammates were alleged to have been “doping” overlaps significantly with the term of Armstrong’s USPS sponsorship.

After the USADA report, Armstrong admitted in an interview with Oprah Winfrey that he used banned substances and methods throughout his career, starting in the mid-1990s. He admitted having used banned substances during each of his seven Tour de France victories, including the six he won while sponsored by USPS.

The U.S. Government’s intervention complaint alleges that riders on the USPS-sponsored team “knowingly caused violations of the sponsorship agreements by regularly and systematically employing substances and methods to enhance their performance” and, as a result, “submitted to the United States false or fraudulent invoices for payment.” In addition, the complaint alleges that the Defendants “made false statements, both publicly and to the USPS, that were intended to hide the team’s misconduct so that those invoices would be paid.” All in all, according to the government, “[b]ecause the Defendants’ misconduct undermined the value of the sponsorship to the USPS, the United States suffered damage in that it did not receive the value of the services for which it bargained.” In support of its allegations, the government details the prohibited substances used by the Armstrong team, including erythropoietin, human growth hormone, anabolic steroids, and corticosteroids. It also details delivery methods used, including blood re-injections and “the oil,” a mixture of testosterone and olive oil. In addition, the government complaint contains a litany of Armstrong’s denials of banned substances use over a ten-year period.

While the Government notified the court that it was joining the lawsuit’s allegations as to Armstrong, the Tailwind cycling team, and the team’s manager, it advised the court that it was not intervening in the case as to several other defendants named in Landis’s complaint.

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Cloning Decision Could Lead to Copycat Litigation in the World of Racing

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Owners of elite American Quarter Horses may soon be ponying up to create clones of their champions.

On July 31, 2013 a North Texas District Court jury decided that the American Quarter Horse Association’s (“AQHA”) rule prohibiting the registration of cloned American Quarter Horses violates federal and Texas antitrust laws. The AQHA, located in Amarillo, Texas, is the world’s largest equine breed registry and membership organization, with more than 5 million American Quarter Horses registered to nearly 350,000 members.

The American Quarter Horse excels at sprinting short distances and racing of these animals is the third most popular form of horse racing, generating more than $300 million in bets at U.S. racetracks in 2012. American Quarter Horses are bred to run in races of under a quarter-mile and have been clocked at speeds up to 55 mph.

Plaintiffs Jason Abraham and Gregg Veneklasen sued the AQHA for $6 million in damages, arguing that Rule 227(a) of the AQHA, which prohibits the registration of clones, violated both the Sherman Antitrust Act and the Texas Free Enterprise Act, which reflects federal antitrust law.

Plaintiffs alleged that the association’s prohibition of clones violates Section 1 of the Sherman Antitrust Act because the AQHA acted as a conspiracy that unreasonably restrained interstate or foreign trade. In response, the AQHA argued that the association is a single body and that the Board of Directors acted with a single interest, and therefore cannot be a conspiracy. Plaintiffs further alleged that the rule violated Section 2 of the Sherman Antitrust Act because the AQHA acted to maintain its monopoly power in the industry by enacting the rule. In response, the AQHA argued that the rule did not maintain monopoly power, but instead narrowed the association’s reach by reducing the potential universe of its registered horses.

On July 31, the jury found that the AQHA’s Rule 227(a) violated Section 1 and Section 2 of the Sherman Antitrust Act, as well as the equivalent Texas laws. In their decision, the jury awarded no damages, but could lead to the reversal of Rule 227(a) following an order the District Court Judge.

Johne Dobbs, the President of the AQHA’s Executive Committee, is reported as saying that the AQHA will appeal the North Texas District Court decision to the 5th Circuit, though it may be a year before a decision is made on the appeal.

A decision in favor of the AQHA by the 5th Circuit could have a reversing effect on a number of changes to AQHA rules since 2000, while a decision against could further cement the trend toward the AQHA being more inclusive. In 2000, a breeder sued the AQHA regarding the association’s rule that limited one registeredhorse per breeding pair per year, which thereby prohibited the use of embryo transplants to create multiple foals per breeding pair. The court held in an interlocutory order that the rule was an anticompetitive restraint of trade, adopted for the purposes of limiting the supply of registered quarter horses. Before a final order was written, the two parties settled and the AQHA changed its rules to allow for the registration of all embryo transfer foals. Since then, the AQHA has changed its rules to also register horses considered perlinos and cremellos to register, as well as horses deemed to be excessively white. The AQHA may be interested in pursuing a reversal to these changes if the 5th Circuit rules in their favor.

A decision against the AQHA could also lead to other breeder associations, including the American Kennel Club and American Paint Horse Association, to change their rules prohibiting the registration of clones.

An industry able to support quarter horse clones is likely ready to go if the courts side with the plaintiffs. Texas company ViaGen owns the patent that created the infamous cloned sheep, Dolly. The company has already cloned a number of horses, including Royal Blue Boon, the all-time leading dam of cutting horses with personal lifetime earnings of $381,764 and produce earnings of over $2.6 million. Hundreds of American Quarter Horse owners have already gene banked their horses in anticipation of the AQHA changing Rule 227(a).

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Alleged STOLI Producers Found Guilty of Fraud and Other Criminal Charges

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Earlier today, a jury in the United States District Court for the Southern District of New York found independent insurance producers Michael Binday, James Kergil, and Mark Resnick guilty of mail and wire fraud, and conspiracy to commit those offenses.  The jury also convicted Kergil and Resnick of conspiracy to obstruct justice.  Sentencing has been scheduled for January 15, 2014.  The convicted defendants may face up to 80 years in prison.

During the 12 day trial, federal prosecutors argued that Binday, Kergil, and Resnick lied to insurers to perpetrate the scheme and then lied again to cover it up.  Based on the testimony of insiders and insureds, along with the defendants’ own emails and other documents, prosecutors specifically argued that the defendants:

  • recruited brokers to solicit elderly clients to serve as straw-buyers for the policies, with promises of large commissions to the brokers and payments to the clients upon the sale of the policies;
  • submitted applications to insurers for more than $100 million in life insurance, which grossly misrepresented the insureds’ income and net worth and lied about the intent to sell the policies, the fact that the premium would be financed by third-parties, and that multiple policies were being applied for or had been issued in the name of the insured;
  • recruited accountants and other professionals to submit bogus inspection reports and other documents purporting to verify the insureds’ financials;
  • conspired to thwart insurers’ attempts to investigate the representations made in the policy applications and to disguise the source of premiums paid for the policies by wiring funds into insureds’ accounts; and
  • earned millions of dollars through commissions and in some cases by arranging to cash in themselves on the death benefits upon an insured’s death.

Insurance industry leaders Jim Avery, the former Vice Chairman and President of Individual Life Insurance for Prudential, and Mike Burns, a Senior Vice President at Lincoln Financial Group, also testified during the government’s case in chief.  Both testified about their companies’ anti-STOLI policies, the harm to insurers that STOLI caused, and the measures the companies took to try to screen it out.

The evidence relating to the conspiracy to obstruct justice charges against Kergil and Resnick included alleged recorded calls that a scheme insider, who testified under a plea agreement, had with Kergil and Resnick, and testimony from an employee of the Apple computer store where Resnick allegedly had taken his computer to have the hard drive wiped clean.  The alleged calls, which were recorded in cooperation with the FBI, involved discussions about Kergil’s instruction to Resnick and the insider to destroy all records with Binday’s name on them and to wipe their computer hard drives clean.

Each of the defendants was separately represented by his own counsel, and none of the defendants took the stand in his defense.  Instead, the defendants presented excerpts from approximately a dozen files for policies that the defendants submitted to the insurers and that supposedly contained STOLI red flags.  Based on these documents, the defendants argued that the insurers were not deceived by the defendants’ lies and that the scheme was profitable for all involved and not criminal activity.  On rebuttal, the prosecutors introduced additional evidence from the insurer files showing that the insurers’ attempts to investigate the STOLI red flags were met with more lies on the part of the defendants and their associates.

This criminal prosecution has already spawned at least one civil action by an insurer seeking to have a STOLI policy allegedly involving Resnick and Binday declared null and void.

Recent Americans with Disabilities Act (ADA) Decision Might Signal Broadening of the ADA’s Accommodation Provisions

Poyner Spruill

The United States Court of Appeals for the Fifth Circuit recently held that accommodations under the Americans with Disabilities Act (ADA) are not limited to job modifications that enable an employee to perform essential job functions.  In Feist v. Louisiana, a former assistant attorney general for the Louisiana Department of Justice (LDOJ) sued the LDOJ claiming that it discriminated against her in violation of the ADA by declining to provide her with a free on-site parking space to accommodate her disability (osteoarthritis of the knee).  Siding with the employer, the trial court dismissed the case holding that the plaintiff failed to explain how the denial of on-site parking limited her ability to perform “the essential functions” of her job.

The Court of Appeals reversed the trial court’s decision, holding that the text of the ADA does not indicate that an accommodation must facilitate the essential functions of an employee’s position.  The court also relied on federal regulations (which the LDOJ argued were not entitled to deference) which provide that reasonable accommodations may include modifications or adjustments that enable a covered entity’s employee with a disability to enjoy equal benefits and privileges of employment as are enjoyed by its other employees without disabilities.  The court did not express an opinion on whether the employee’s request for a free on-site parking space was “reasonable” under the ADA, but left that determination to the trial court on remand.

This case may indicate a willingness of courts in future cases to broaden the scope of accommodations beyond what employers currently believe are required by the ADA.  Until more courts weigh in on the question, employers should tread carefully and seek legal counsel when responding to requests for accommodations that seem unrelated to an employee’s ability to perform his or her job functions.

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Google Must Face Most Claims in Keyword Wiretap Class Action

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If you were on Google’s home page yesterday at the office, you probably spent more time than you care to admit playing the “help the letter ‘g’ hit the piñata” game that Google created for its 15th birthday.

For Google, that might be a welcome distraction from very bad news it received from the Northern District of California.  U.S. District Court Judge Lucy Koh denied in part Google’s motion to dismiss a 2010 claim in which users accuse Google of violating various state and federal laws by scanning the content of user emails for purposes of creating user profiles and directing targeted advertising, thus allowing a putative class action suit against the search (and everything else online) giant to proceed.

Judge Koh’s order (full text can be found here), is significant in its handling of a number of Google’s arguments, but the rejection of a particular line of argument is understandably receiving much of the attention. In its Motion to Dismiss, Google argued that its practice of scanning emails is not a violation of the Federal Wiretap Act because, among other reasons, Gmail users and non-Gmail users have consented to the interception of emails.   Google’s consent argument was two-fold.  First, it argued that Gmail users had “expressly consented” to having their emails scanned by agreeing to its Terms of Service and Privacy Policies, which every Gmail users is required to do.  Second, it argued that non-Gmail users have “impliedly consented” to the practice by sending an email to a Gmail user, because at that time those non-users understood how Gmail services operate.

Judge Koh rejected both of Google’s consent arguments, holding that the Court “cannot conclude that any party – Gmail users or non-Gmail users – has consented to Google’s reading of email for the purposes of creating user profiles or providing targeted advertising.”  The Court dug into the multiple iterations of Google’s Terms of Service and Privacy Policies that have been in place since 2007, and found that the policies did not explicitly notify users that Google would intercept emails for the purposes or creating user profiles and targeting advertisements.  The Court discussed a number of sections of Google’s policies where users allegedly consented to the practice of scanning emails for advertising purposes, and in each case found that the policies either described a different purpose for scanning emails (such as filtering out objectionable content) or were unclear when describing what kind of information would be intercepted (using descriptions like “information stored on the Services” or “information you provide”).  The Court further held that Google’s current policies (which were put in place on March 1, 2012) are equally ineffective at establishing consent.  Finally, the Court rejected the argument that non-Gmail users had impliedly consented to the interception of emails, noting that accepting Google’s theory of implied consent would “eviscerate” laws prohibiting interception of communications.

Judge Koh’s denial of Google’s Motion to Dismiss is the latest reminder that when it comes to privacy policies and terms of use, how you write something can be as important as what you write.  We will have more on the various issues discussed in Judge Koh’s order over the next few days.

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Your Facebook “Like” May Be Constitutionally-Protected Speech

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According to a recent decision by the United States Court of Appeals for the Fourth Circuit, pressing the “like” button on your Facebook page constitutes substantive speech that may be protected by the First Amendment.

Six employees of the Hampton, Virginia Sheriff’s Office were dismissed because they showed support for Sheriff B.J. Roberts’ electoral opponent. They filed suit against Sheriff Roberts, claiming in part that their terminations violated the First Amendment. The United States District Court for the Eastern District of Virginia granted summary judgment to Sheriff Roberts, in part because the court found that the employees failed to allege that they had engaged in protected speech.

The plaintiff of significance in this matter, Roy Carter, Jr., claimed his protected speech in support for Sheriff Roberts’ opponent came in the form of a Facebook “like” for the opponent’s page. The Eastern District of Virginia held that the thumbs-up button by itself did not constitute sufficient speech to merit First Amendment protection. Not so, ruled the Fourth Circuit – when Carter pressed “like,” he caused to be published on his Facebook profile and on his friends’ news feeds that he liked Sheriff Roberts’ opponent’s campaign, which is a substantive statement.

“That a user may use a single mouse click to produce the message that he likes the page instead of typing the same message with several individual key strokes is of no constitutional significance,” held the court. Further, the Court stated that hitting the “like” button is the internet equivalent of displaying a political sign in one’s front yard, which the Supreme Court has held constitutes substantive speech.

The district court’s ruling was reversed for Carter and two other plaintiffs and the matter was remanded. Although the three remaining plaintiffs may not recover monetary damages because of the sheriff’s Eleventh Amendment immunity, they may have an opportunity to be reinstated.

The full text of Bland v. Roberts may be found here.

Diagnostic Laboratories Settles for $17.5 Million After Healthcare Whistleblowers’ Allegations of Medicare Fraud

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The Department of Justice announced yesterday that Diagnostic Laboratories and Radiology, the West Coast’s largest supplier of laboratory and X-ray services to nursing homes, will pay $17.5 million to settle whistleblower allegations that the California-based company violated the False Claims Act by giving kickbacks for referral of mobile lab and radiology services, which were subsequently billed to Medicare and Medi-Cal (California’s Medicaid program).  Diagnostic Labs allegedly took advantage of Medicare’s and Medi-Cal’s reimbursement systems by billing them at standard rates while secretly giving discounted fees to the participating nursing homes. According to the lawsuit, those fees were as much as 80 percent below the lab’s normal rates.

For inpatients, Medicare pays a fixed rate based on the patient’s diagnosis, regardless of specific services provided.  For outpatients, Medicare pays for each service separately.  Diagnostic Labs’ scheme supposedly enabled the nursing homes to maximize their profits for providing inpatient services by decreasing the cost of them.  It also allegedly allowed Diagnostic Labs to obtain a steady stream of lucrative, outpatient referrals that it could directly bill to Medicare and Medi-Cal.  This provision of inducements, including giving discounted rates to generate referrals, is prohibited by both federal and state law. By law, the discounts should have been passed along to the government programs.

The Medicare whistleblowers in this case were two former Diagnostic Lab employees, Jon Pasqua and Jeff Hauser, who said they were fired after reporting the secret discounts and kickbacks to the authorities. Hauser and Pasqua worked in the company’s sales office and said they tried to report the questionable discount practices to supervisors first, but were ignored. They then provided information to state and federal officials, and were subsequently fired from their jobs shortly before filing the healthcare fraud case in February 2010, according to their lawyers.

This settlement will resolve Hauser and Pasqua’s lawsuit, which was filed under the qui tam, or whistleblower, provisions of the federal and state False Claims Act. This act allows private citizens with knowledge of fraud to bring qui tam lawsuits on behalf of the US government. The individual filing the lawsuit is known as the relator, or whistleblower.  Healthcare whistleblowers, such as Hauser and Pasqua, serve an important role in exposing and eliminating healthcare fraud.

While it is true that whistleblowers take on a personal risk in these cases, it is still worthwhile for them to come forward with their information. Because qui tam whistleblowers help to eliminate government fraud, they receive a significant proportion of the lawsuit’s settlement for their efforts.

Together, Pasqua and Hauser will receive a total $3,755,500 as their share of the federal government’s recovery.

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Office of Federal Contract Compliance Programs (OFCCP) New Rules Target Veterans and Individuals with Disabilities

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Familiar with this?  It’s time to update your affirmative action plans.  For the women and minorities plan, you gather your applicant data, prepare spreadsheets and update your written materials to reflect new goals and changes in your recruiting sources.  For the veterans and individuals with disabilities plan, you update a bit and you’re done.  Starting early next year, however, the rules will change making updates more onerous for employers.  On August 27, 2013, the Office of Federal Contract Compliance Programs announced final rules for federal contractors regarding hiring and employment of disabled individuals and protected veterans and imposing new data retention and affirmative action obligations on contractors.  The rules are expected to be published in the Federal Register shortly and will become effective 180 days later.

The key changes include:

  • Benchmarks.  Contractors must establish benchmarks, using one of two methods approved by the OFCCP, to measure progress in hiring veterans.  Likewise, contractors must strive to hire individuals with disabilities to comprise at least seven percent of employees in each job group.  The OFCCP says these are meant to be aspirational, and are not designed to be quotas.
  • Data Analysis and Retention.  Contractors must document and update annually several quantitative comparisons for the number of veterans who apply for jobs and the number of veterans that they hire.  Likewise, for individuals with disabilities, contractors are required to conduct analyses of disabled applicants and those hired.  Such data must be retained for three years.
  • Invitation to Self-Identify.  Contractors must invite applicants to self-identify as protected veterans and as an individual with a disability at both the pre-offer and post-offer phases of the application process, using language to be provided by the OFCCP.  This particular requirement worries employers who know that the less demographic information they have about applicants, the better – especially when the application is denied.  Contractors must also invite their employees to self-identify as individuals with a disability every five years, using language to be provided by the OFCCP.

Additional information, including with respect new requirements such as incorporating the equal opportunity clause into contracts, job listings, and records access, can be found here (http://www.dol.gov/ofccp/regs/compliance/vevraa.htm) and here (http://www.dol.gov/ofccp/regs/compliance/section503.htm).

Contractors with an Affirmative Action Plan already in place on the effective date of the regulations will have additional time, until they create their next plans, to bring their plan into compliance.  However, whether they have a current Affirmative Action Plan or not, federal contractors should begin looking at these new rules now and take steps to ensure they are in compliance.

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The IRS/Treasury Department Announcement & Estate Planning Ruling Re: Same-Sex Marriage

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On August 29, 2013, the Treasury Department and the Internal Revenue Service (“IRS“) issued Revenue Ruling 2013-17. The ruling establishes that the IRS will recognize same-sex marriages for all federal tax purposes regardless of where the couple lives, as long as the couple was married in a jurisdiction that recognizes such marriages. So, for example, if a couple was married in Connecticut (a recognizing state), but now live in Kentucky (a non-recognizing state), they will receive the same federal tax treatment as heterosexual couples residing in Kentucky. The ruling clarifies that a “state of celebration” approach will be used versus a “state of residence” rule. Treasury Secretary Jacob J. Lew says the decision “[a]ssures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change.” It is important to note that, according to the ruling, “marriage” does not include a registered domestic partnership, civil union or other similar arrangement. The ruling applies to all federal tax provisions where marriage is a factor, including: filing status, estate tax exemptions, personal and dependency exemptions, the standard marriage deduction, IRA contributions, earned income tax credits and employee benefits.

The ruling came on the heels of the Supreme Court’s June 2013 decision in United States v. Windsor and is meant to address some of the confusion that Windsor left in its wake. As background, before Congress enacted the Defense of Marriage Act (“DOMA“), marital status for federal income tax purposes was defined by state law. Section 3 of DOMA banned same-sex couples from being recognized as “spouses” for all federal law purposes. Windsor ruled Section 3 of DOMA unconstitutional; however, the decision did not require states to recognize same-sex marriages. Thus, since June, state and federal agencies have been wondering how to deal with same-sex marriages in non-recognizing states. With the Revenue Ruling, much-needed guidance has arrived.

From the estate planning perspective, there are now several more options that same-sex couples can use to their advantage. First, same-sex spouses are now eligible for the marital deduction, which means that they may transfer as much as they want to their spouse (in life and in death) without incurring federal estate or gift tax, provided that the recipient spouse is a U.S. citizen.

Another benefit is the use of “gift-splitting.” Any individual can give up to $14,000 each year to as many people as they choose without incurring gift tax. Heterosexual spouses, and now same-sex spouses, can combine their $14,000 to jointly give $28,000 to individuals tax-free.

Same-sex spouses will also now get to take advantage of an estate planning tool known as “portability.” Portability allows a widow or widower to use any unused estate tax exclusions (capped at $5.25 million for 2013) of their spouse who died in addition to their own. The unused exclusion must be transferred to the surviving spouse and an estate tax return must be filed (by the executor) within nine months of the spouse’s death, even if no tax is due.

The ruling also has a myriad of other implications for taxes and employee benefits that should be carefully considered by same-sex couples. There are still lingering questions about how other agencies, such as the Social Security Administration, will address benefits post-Windsor.

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Indicted—Not Once, But Twice! Former GlaxoSmithKline In-House Counsel, Lauren Stevens, Tells Her Harrowing Story And Hard Lessons Learned From Being Indicted

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Imagine, one of the worst things that could happen to any person, especially an attorney—being indicted.  This not only happened to former GlaxoSmithKline (“GSK”) Vice President and Associate General Counsel, Lauren Stevens (“Stevens”) once—but twice!  On November 8, 2010, a federal grand jury in the District of Maryland returned an indictment charging Stevens with one count of obstructing an official proceeding  in violation of 18 U.S.C. §1512, one count of falsification and concealment of documents in violation of 18 U.S.C. §1519, and four counts of making false statements in violation of 15 U.S.C. §1001. On March 23, 2011, the District Court dismissed the indictment without prejudice due to erroneous and prejudicial legal advice that the prosecutors gave to the grand jury.  However, on April 13, 2011, Stevens was indicated again, based on the same charges in the earlier indictment.  For more than 18 months, Stevens lived this harrowing ordeal, and eventually was exonerated of any wrong doing.  Stevens will discuss the events leading up to the indictment, the grueling court proceedings, and the lessons she learned at the National Association of Women Lawyers’ Ninth Annual General Counsel Institute on November 8, 2013 at the Intercontinental Hotel in New York City.

The indictments against Stevens arose out of a letter from the Food and Drug Administration (“FDA”) to GSK stating that it had information that GSK possibly promoted the use of Wellbutrin (a drug approved by the FDA to treat depression) for an unapproved use (namely, weight loss).  The FDA requested that GSK voluntarily provide numerous materials and information related to the promotion of Wellbutrin.

GSK assembled a team, led by Stevens, which included in-houseattorneys, a former FDA reviewer, and employees from GSK’s marketing, compliance, regulatory affairs and medical divisions, to respond to the FDA’s request.  GSK also retained an outside law firm to conduct an internal review and advise GSK how to respond to the inquiry.  Ultimately, GSK submitted six substantive letters, all signed by Stevens, in which she denied that GSK promoted Wellbutrin for an unapproved use and/or paid doctors to give promotional talks that included information on the unapproved use.  On December 17, 2010, the government filed a motion to bar Stevens from relying on the defense of advice of counsel on the basis that it was not a defense to a charge of violating 18 U.S.C. §1519 because, the government argued, the statute is not a specific intent crime.  That same day, Stevens filed a motion to disclose the government’s presentation to the Grand Jury relating to the advice of counsel defense.  She also filed two motions to dismiss Count II of the indictment.  In the first motion, Stevens sought dismissal for unconstitutional multiplicity and for failure to state an offense, arguing that Counts I and II violated her due process rights because they sought to impose multiple punishments for the same offense.  She also argued that the government’s case was legally flawed because the government did not allege that she altered or falsified any pre-existing documents.  In her second motion, Stevens sought dismissal of Count II on the basis that the charges were unconstitutionally vague.

On February 25, 2011, Stevens filed her opposition to the motion to exclude, arguing that where a defendant relies in good faith on the advice of counsel, she lacks the intent necessary to be found guilty of making false statements and obstructing justice, which required proof that she “knowingly” submitted false information.  She also argued that she met the prerequisites for asserting the defense because outside counsel was aware of all material facts as evidenced by over 350 drafts of the six response letters to the FDA and 1,300 pages of notes regarding the matter.

On March 23, 2011, the Court denied the government’s motion to prohibit Stevens from asserting the advice of counsel defense.  The Court then dismissed the indictment without prejudice due to erroneous and prejudicial legal advice the prosecutors gave to the grand jury.

On April 13, 2011, a federal grand jury re-indicted Stevens.  The trial commenced thirteen days later, and proceeded through May 6, 2011, at which time the government rested its case.  Stevens filed a Rule 29 Motion for Acquittal on the basis that the government failed to present evidence sufficient to prove beyond a reasonable doubt any of the six counts.  On May 10, 2011, the Court granted Stevens’ Motion and dismissed the indictment.  The Court determined that the government was given access to attorney-client privileged communications, which formed the basis of the government’s case, as the result of an erroneous decision by a Massachusetts magistrate judge that the communications were evidence of a scheme to perpetrate a crime of fraud.  However, the documents revealed a “studied, thoughtful analysis of an extremely broad request from the [FDA] and an enormous effort to assemble information and respond on behalf of the client.”  Although GSK’s responses may not have satisfied the FDA, they were sent to the FDA in the course of Stevens’ bona fide representation of a client and in good faith reliance on both external and internal lawyers for GSK.  The Court concluded: “the defendant sought and obtained the advice of counsel of numerous lawyers.  She made full disclosure to them.  Every decision that she made and every letter she wrote was done by consensus.”  Further, although some statements were not literally true, they were made in good faith which would negate the requisite element of intent required for the charged crimes.

Stevens learned many lessons from this ordeal including: (1) when hiring outside legal counsel, make sure they know all of the facts; (2) make sure other parties know you have hired outside counsel; (3) take clear, accurate notes, knowing they could end up in Court; and (4) be careful in correspondence with adverse parties.

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