Shutdown, Holdup for the Courts

The federal courts may be open during the government shutdown, but it’s far from “business as usual.” According to a Department of Justice memo, U.S. Attorneys across the country have been directed to “curtail or postpone” civil litigation “to the extent that this can be done without compromising . . . the safety of human life or the protection of property.” Criminal litigation will continue without interruption.

As a consequence, case by case, U.S. Attorneys are filing motions for stays of litigation. “Absent an appropriation,” the typical motion reads, “Department of Justice attorneys and employees are generally prohibited from working, even on a voluntary basis. . . . This is creating difficulties for the Department to perform the functions necessary to support its litigation effort.”

In a letter to Chief Judge Loretta A. Preska (S.D. NY), the U.S. Attorney for the Southern District of New York described his staff under the shutdown: “only a small number of Assistants and staff have been excepted from the furlough”—and among these are the members of the trial team in the United States v. Countrywide Financial Corporation.” Nearly all civil division assistants and staff will be unable to work on cases or meet existing court deadlines until Congress restores funding.

Chief Judge Loretta A. Preska issued an order (pdf) staying all civil cases in the Southern District of New York, other than civil forfeiture cases, in which the U.S. Attorney’s Office for the district has appeared as counsel. The stay ends the first business day after the President signs into law a budget appropriation. Court deadlines will be tolled during the duration of the government shutdown.

Chief Judge Emily C. Hewitt also announced that the U.S. Court of Federal Claims “does not expect to issue continuances based on the lapse or anticipated lapse of appropriated funds.” The court will continue to hear and decide cases without interruption.

Across the country, there are varying responses by judges to DOJ requests for stays because of the shutdown.

In the District of Columbia District Court, Judge Colleen Kollar-Kotelly responded to a DOJ request for a stay in litigation involving an airline merger agreement, by writing (pdf)“. . because of the need for the prompt resolution of this matter, the Court has set an expedited discovery and trial schedule. A stay at this point would undermine this schedule and delay the necessary speedy disposition of this matter.” Motion denied.

In the same district, a U.S. Attorney requested a stay “until Congress has restored appropriations to the Department,” in a patent software case brought by Microsoft Corporation against the Department of Homeland Security and the U.S. Bureau of Customs. Stay granted.

In San Francisco, an Assistant U.S. Attorney submitted a motion to stay proceedings in an antitrust case in which the United States is challenging the acquisition of PowerReviews, Inc by Bazaarvoice, Inc. “Although we greatly regret any disruption caused to the Court and the other litigants,” the AUSA asked for a stay until funding is restored. Motion denied.

What happens in the cases where motions are denied? According to DOJ’s directive, “If a court denies a litigator’s request to postpone a case and orders it to continue, the litigation will become an excepted activity that can continue during the lapse.”

The difficulties aren’t exclusively DOJ’s. Employees throughout the federal government have been furloughed and are prohibited from working during a shutdown. If they are involved in Federal court civil litigation, they are seeking stays until they’re able to work again.

Invoking the shutdown, Federal Trade Commission attorneys moved for a stay in an antitrust case involving the acquisition of the second- and third- largest glass container manufacturers in the United States, resulting, according to the government, in an effective duopoly. They noted that, if their motion was denied, “the FTC will comply with the Court’s order, which would constitute express legal authorization for the activity to continue.” The case was stayed.

In another case alleging an anti-competitive policy change by the Commodity Futures Trading Commission, counsel for the CFTC notified the court in a motion that “all non-essential government employees, including undersigned counsel, have been furloughed,” and asked that any deadlines in the case be suspended until the counsel’s employment status is reinstated. The court granted the motion.

Not all federal cases involve big business. The shutdown also affects individuals and small businesses in federal court. In the Central District of California, a plaintiff is suing the driver of a U.S. Postal Service vehicle for injuries in an accident. The Assistant U.S. Attorney and attorneys for the U.S. Postal Service applied for a stay of action in the event of a lapse of appropriations. Noting in his order that “defendants are unable to effectively prepare their case in the absence of an appropriations act,” the presiding judge in the case has granted a stay.