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Potted Plant: DC Circuit Concludes That Trial Court Judges Have No Authority To Reject DOJ DPAs

Given the prominence of DPAs (and NPAs) in resolving corporate FCPA enforcement actions, for over a year FCPA Professor has been closely following U.S. v. Fokker Services (a case outside the Foreign Corrupt Practices Act context involving criminal charges against Fokker to unlawfully export U.S. origin goods and Services to Iran, Sudan, and Burma).

In resolving the case, the DOJ and Fokker agreed to an 18 month DPA in which the company agreed to forfeit $10.5 million and to pay an additional $10.5 million in a parallel civil settlement.

No so fast, Judge Leon (D.D.C.) said in rejecting the DPA in February 2015 (see here [1] for the prior post). In pertinent part, Judge Leon stated:

“Both of the parties argue, not surprisingly, that the Court’s role is extremely limited in these circumstances.  They essentially request the Court to serve as a rubber stamp […].  Unfortunately for the parties, the Court’s role is not quite so restricted. […] “One of the purposes of the Court’s supervisory powers, of course, is to protect the integrity of the judicial process.” When, as here, the mechanism chosen by the parties to resolve charged criminal activity requires Court approval, it is the Court’s duty to consider carefully whether that approval should be given. […] I do not undertake this review lightly.  I am well aware, and agree completely, that our supervisory powers are to exercised ‘sparingly, and I fully recognize that this is not a typical case for the use of such powers.  The defendant has signed onto the DPA and is not seeking redress for an impropriety it has identified.  But the Court must consider the public as well as the defendant.  After all, the integrity of judicial proceedings would be compromised by giving the Court’s stamp of approval to either overly-lenient prosecutorial action, or overly-zealous prosecutorial conduct.” […] The Court concludes that this agreement does not constitute an appropriate exercise of prosecutorial discretion and I cannot approve it in its current form.”

Both the DOJ and Fokker Services appealed Judge Leon’s denial of the DPA and the DOJ basically told the court “hands off our DPAs” (see here [2] for the prior post).

During the September 2015 oral argument before the DC Circuit [3], the court seemed to have some serious concerns regarding the substantive and procedural arguments of the parties.

However, earlier this week in this decision [4], the DC Circuit (in an opinion authored by Judge Sri Srinivasan) concluded that Judge Leon should have been a potted plant because trial court judges lack authority to reject DOJ DPAs.

Set forth below are the relevant excerpts from the opinion.

“The Constitution allocates primacy in criminal charging decisions to the Executive Branch. The Executive’s charging authority embraces decisions about whether to initiate charges, whom to prosecute, which charges to bring, and whether to dismiss charges once brought. It has long been settled that the Judiciary generally lacks authority to second-guess those Executive determinations, much less to impose its own charging preferences. The courts instead take the prosecution’s charging decisions largely as a given, and assume a more active role in administering adjudication of a defendant’s guilt and determining the appropriate sentence.

In certain situations, rather than choose between the opposing poles of pursuing a criminal conviction or forgoing any criminal charges altogether, the Executive may conclude that the public interest warrants the intermediate option of a deferred prosecution agreement (DPA). Under a DPA, the government formally initiates prosecution but agrees to dismiss all charges if the defendant abides by negotiated conditions over a prescribed period of time. Adherence to the conditions enables the defendant to demonstrate compliance with the law. If the defendant fails to satisfy the conditions, the government can then pursue the charges based on facts admitted in the agreement.

This case arises from the interplay between the operation of a DPA and the running of time limitations under the Speedy Trial Act. Because a DPA involves the formal initiation of criminal charges, the agreement triggers the Speedy Trial Act’s time limits for the commencement of a criminal trial. In order to enable the government to assess the defendant’s satisfaction of the DPA’s conditions over the time period of the agreement—with an eye towards potential dismissal of the charges—the Speedy Trial Act specifically allows for a court to suspend the running of the time within which to commence a trial for any period during which the government defers prosecution under a DPA.

In this case, appellant Fokker Services voluntarily disclosed its potential violation of federal sanctions and export control laws. After extensive negotiations, the company and the government entered into an 18-month DPA, during which Fokker would continue cooperation with federal authorities and implementation of a substantial compliance program. In accordance with the DPA, the government filed criminal charges against the company, together with a joint motion to suspend the running of time under the Speedy Trial Act pending assessment of the company’s adherence to the agreement’s conditions. The district court denied the motion because, in the court’s view, the prosecution had been too lenient in agreeing to, and structuring, the DPA. Among other objections, the court disagreed with prosecutors’ decision to forgo bringing any criminal charges against individual company officers.

We vacate the district court’s denial of the joint motion to exclude time under the Speedy Trial Act. We hold that the Act confers no authority in a court to withhold exclusion of time pursuant to a DPA based on concerns that the government should bring different charges or should charge different defendants. Congress, in providing for courts to approve the exclusion of time pursuant to a DPA, acted against the backdrop of long-settled understandings about the independence of the Executive with regard to charging decisions. Nothing in the statute’s terms or structure suggests any intention to subvert those constitutionally rooted principles so as to enable the Judiciary to second-guess the Executive’s exercise of discretion over the initiation and dismissal of criminal charges.

In vacating the district court order, we have no occasion to disagree (or agree) with that court’s concerns about the government’s charging decisions in this case. Rather, the fundamental point is that those determinations are for the Executive—not the courts—to make. We therefore grant the government’s petition for a writ of mandamus and remand for further proceedings consistent with this opinion.

[…]

By rejecting the DPA based primarily on concerns about the prosecution’s charging choices, the district court exceeded its authority under the Speedy Trial Act. The Act excludes any period of time “during which prosecution is deferred by the attorney for the Government pursuant to written agreement with the defendant, with the approval of the court, for the purpose of allowing the defendant to demonstrate his good conduct.” 18 U.S.C. § 3161(h)(2). While the exclusion of time is subject to “the approval of the court,” there is no ground for reading that provision to confer free-ranging authority in district courts to scrutinize the prosecution’s discretionary charging decisions. Rather, we read the statute against the background of settled constitutional understandings under which authority over criminal charging decisions resides fundamentally with the Executive, without the involvement of—and without oversight power in—the Judiciary. So understood, the statute’s “approval of the court” requirement did not empower the district court to disapprove the DPA based on the court’s view that the prosecution had been too lenient.

The Executive’s primacy in criminal charging decisions is long settled. That authority stems from the Constitution’s delegation of “take Care” duties, U.S. Const. art. II, § 3, and the pardon power, id. § 2, to the Executive Branch. See United States v. Armstrong, 517 U.S. 456, 464 (1996); In re Aiken Cnty., 725 F.3d 255, 262-63 (D.C. Cir. 2013). Decisions to initiate charges, or to dismiss charges once brought, “lie[] at the core of the Executive’s duty to see to the faithful execution of the laws.” Cmty. for Creative NonViolence v. Pierce, 786 F.2d 1199, 1201 (D.C. Cir. 1986). The Supreme Court thus has repeatedly emphasized that “[w]hether to prosecute and what charge to file or bring before a grand jury are decisions that generally rest in the prosecutor’s discretion.” United States v. Batchelder, 442 U.S. 114, 124 (1979); see Bordenkircher v. Hayes, 434 U.S. 357, 364 (1978).

Correspondingly, “judicial authority is . . . at its most limited” when reviewing the Executive’s exercise of discretion over charging determinations. Pierce, 786 F.2d at 1201; see ICC v. Bhd. of Locomotive Eng’rs, 482 U.S. 270, 283 (1987). The decision whether to prosecute turns on factors such as “the strength of the case, the prosecution’s general deterrence value, the [g]overnment’s enforcement priorities, and the case’s relationship to the [g]overnment’s overall enforcement plan.” Wayte v. United States, 470 U.S. 598, 607 (1985). The Executive routinely undertakes those assessments and is well equipped to do so. By contrast, the Judiciary, as the Supreme Court has explained, generally is not “competent to undertake” that sort of inquiry. Id. Indeed, “[f]ew subjects are less adapted to judicial review than the exercise by the Executive of his discretion in deciding when and whether to institute criminal proceedings, or what precise charge shall be made, or whether to dismiss a proceeding once brought.” Newman v. United States, 382 F.2d 479, 480 (D.C. Cir. 1967). “Judicial supervision in this area” would also “entail[] systemic costs.” Wayte, 470 U.S. at 608. It could “chill law enforcement,” cause delay, and “impair the performance of a core executive constitutional function.” Armstrong, 517 U.S. at 465 (quotation omitted). As a result, “the presumption of regularity” applies to “prosecutorial decisions and, in the absence of clear evidence to the contrary, courts presume that [prosecutors] have properly discharged their official duties.” Id. at 464 (internal quotation marks, quotation, and alterations omitted).

[…]

Even if the district court’s criticisms of the prosecution’s exercise of charging authority were entirely meritorious—an issue we have no occasion to address—the court should not have “assume[d] the role of Attorney General,” Microsoft, 56 F.3d at 1462. Rather, the court should have confined its inquiry to examining whether the DPA served the purpose of allowing Fokker to demonstrate its good conduct, as contemplated by § 3161(h)(2). There is no reason to question the DPA’s bona fides in that regard, see Deferred Prosecution Agreement, at 4-7; Gov’t Supp. Mem. in Support of DPA Reached with Fokker Services, B.V., at 15-16, and the district court made no suggestion otherwise. And insofar as a court has authority to reject a DPA if it contains illegal or unethical provisions, see United States v. Saena Tech Corp., 2015 WL 6406266, at *17-19 (D.D.C. Oct. 21, 2015); United States v. HSBC Bank USA, N.A., 2013 WL 3306161, at *7 (E.D.N.Y. July 1, 2013), the district court again made no such suggestion here. The court instead denied the exclusion of time under § 3161(h)(2) based on a belief that the prosecution had been unduly lenient in its charging decisions and in the conditions agreed to in the DPA. The court significantly overstepped its authority in doing so.

[…]

The order under review marks the first time a DPA negotiated by the government has been subjected to judicial scrutiny of the prosecution’s basic exercise of charging discretion. DPAs have become an increasingly important tool in the government’s efforts to hold defendants accountable. They afford prosecutors an intermediate alternative between, on one hand, allowing a defendant to evade responsibility altogether, and, on the other hand, seeking a conviction that the prosecution may believe would be difficult to obtain or would have undesirable collateral consequences for the defendant or innocent third parties. The agreements also give prosecutors the flexibility to structure arrangements that, in their view, best account for the defendant’s culpability and yield the most desirable long-term outcomes.

By rejecting a central component of the resolution reached between a number of federal enforcement agencies and the defendant company, the district court’s ruling “cannot but have enormous practical consequences for the government’s ability to negotiate future settlements,” Microsoft, 56 F.3d at 1456, and could have “potentially farreaching consequences” for prosecutors’ ability to pursue— and fashion the terms of—DPAs, Kellogg Brown & Root, 756 F.3d at 762. The order thus amounts to “an unwarranted impairment of another branch in the performance of its constitutional duties.” Cheney, 542 U.S. at 390. In short, the “novelty of the District Court’s . . . ruling, combined with its potentially broad and destabilizing effects in an important area of law,” justify granting the government’s petition for a 28 writ of mandamus. Kellogg Brown & Root, 756 F.3d at 763 (quoting Cheney, 542 U.S. at 381).”