Lindsey “Foreign Official” Motion Denied
Mike McCollum (Foley & Lardner – here), who was present for today’s hearing, and Jaime Guerrero (Foley & Lardner – here) provide this guest post.
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This afternoon, United States District Judge Howard Matz issued an oral ruling in the Lindsey case that is scheduled to begin trial on April 5 in the Central District of California. The Court denied defendants’ motion to dismiss the indictment on the “foreign official” issue. The issue presented was whether the officials of Mexico’s state-owned utility company, CFE, were “foreign officials” under the FCPA. Giving his ruling orally from the bench, and emphasizing that his precise reasoning will be spelled out in a written ruling to follow, District Judge Matz held that they were foreign officials, giving some insight into his thinking.
District Judge Matz noted several undisputed facts, including that CFE supplies electricity to all of Mexico except for Mexico City, that the Mexican Constitution provides that the supply of electricity in Mexico is solely a government function, that Mexican statutory law defines CFE as a “decentralized public entity with legal personality and its own patrimony,” that CFE’s Governing Board is composed of Mexican government officials and its Director General is appointed by the President of Mexico, and that CFE’s English language website describes it as an agency of the Federal Government. District Judge Matz further confirmed that it was the defendants’ position, as stated in their briefs, that the issue presented was one of “pristine” undisputed facts and issues of law, and thus no further facts that might be introduced at trial could bear on the issue.
District Judge Matz then presented to counsel for the moving defendants a two-page written hypothetical. Because he only distributed the hypothetical to the attorneys, we can only go from the summary described in open court, which was essentially this: Exxon and Occidental bid for a large oil contract from Pemex, Mexico’s state-owned oil company. It is a public bid, and Occidental offers to pay more than Exxon. At the publicly televised contract award ceremony, however, Exxon hands a $10 million check to Pemex, which thanks Exxon publicly, and then Pemex awards the contract to Exxon instead. Question put to the defense: Is it the case that Congress, in enacting the FCPA, would have said that the FCPA would not have applied to these circumstances? Counsel for the moving defendants argued that what was important was not what Congress would have wanted to say, but what they did say, and Congress did not say that the statute should apply to state-owned-enterprises. In an era (1970s) when states owned large sectors of industry around the world, Congress chose not to include state-owned-enterprises within the reach of the FCPA.
District Judge Matz responded, in essence, that what was most convincing to him, in combination with the undisputed facts regarding CFE noted above, was the definition of the word “instrumentality.” He noted the defendants’ Webster Dictionary definitions (“serving as a means or agency: implemental” and “of, relating to, or done with an instrument or tool”) and American Heritage Dictionary definition (“[a] subsidiary branch, as of a government, by means of which functions or policies are carried out”). Based on this definition of “instrumentality” and on the undisputed facts regarding CFE, District Judge Matz noted that it was unnecessary to delve into the legislative history because it could be determined as a matter of statutory construction that the officials of CFE were “foreign officials.”
Opening statements are set for Tuesday morning, and the trial is expected to go until the end of April.
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For additional coverage see here from the FCPA Blog.
For briefing on the “foreign official” issue, see prior posts here, here, and here.
Lindsey Defendants Move to Strike State Department “Foreign Official” Declaration *UPDATE* Judge Strikes State Department Declaration
Monday’s post (here) detailed the recent declaration by Clifton Johnson, Assistant Legal Adviser for Law Enforcement and Intelligence in the Legal Adviser’s Office of the United States Department of State in the Lindsey “foreign official” challenge pending in the Central District of California.
The Lindsey defendants have moved (here) to strike the State Department declaration. Among other arguments made, the Lindsey defendants state as follows.
“The opinion of one employee of the Department of State, or even of the Department of State as a whole, on the terms of the Convention and what the treaty required of the United States, as well as the meaning of the FCPA, a United States criminal statute, has no bearing on the matter before the Court. In any event, it is the job of the federal courts, not the executive branch, to be the final arbiter of what the FCPA actually provides. See generally Marbury v. Madison, 1 Cranch 137, 177 (1803) (“It is emphatically the province and duty of the judicial department to say what the law is.”).”
“On the other hand, the foreign policy implications of a particular interpretation, and how to deal with them, are the business of Congress and the President to address. Mr. Johnson’s suggestion to this Court to decide foreign policy is inappropriate. Courts concern themselves with the interpretation of the law as written. Congress is perfectly capable of amending the statute if it decides it is necessary to do so in light of a court’s decision. See generally McNally v. United States, 483 U.S. 350, 360 (1987) superseded by statute, Anti-Drug Abuse Act of 1988, Pub. L. No. 100-690, 102 Stat. 4181 (“If Congress desires to go further, it must speak more clearly.”).”
Alternatively, the Lindsey defendants argue that if the Court is inclinded to consider the State Department declaration, that it should order Mr. Johnson to appear at the March 24th motion hearing. As noted in an exhibit to the motion to strike, the DOJ has stated that it “will not voluntarily produce Mr. Johnson as a witness at that hearing.”
*UPDATED*
In an order yesterday, presiding judge Howard Matz ordered (here) the State Department declaration be stricken.
For additional coverage see here.
State Department Declaration in Lindsey “Foreign Official” Challenge
In its opposition brief (here) in the Lindsey “foreign official” challenge, the DOJ states at footnote 5:
“If this Court were to interpret the FCPA in such a way that officials of state-owned and state-controlled enterprises could not be foreign officials, the United States would be out of compliance with its treaty obligations under the OECD Convention. The government has requested a declaration from the State Department confirming this assessment and explaining its implications for U.S. foreign policy. Given the short response period, the declaration could not be finalized, but the government will endeavor to secure the declaration before argument on this motion and will file it if and when it is received.”
Last Friday, the DOJ filed a declaration by Clifton Johnson, Assistant Legal Adviser for Law Enforcement and Intelligence in the Legal Adviser’s Office of the United States Department of State – see here.
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Readers may also be interested in reviewing the OECD Convention (here) including commentary 15; a previous post (here) on the OECD Convention and U.S. positions; and a previous post (here) on how another OECD signatory country views the term “foreign public official.”
“Foreign Official” Issue Fully Briefed in Lindsey Matter
Yesterday, Lindsey Manufacturing Company, Keith Lindsey, and Steve Lee – defendants in an FCPA case pending in the Central District of California – filed a reply brief (here) to the DOJ’s opposition to defendants’ motion to dismiss challenging the DOJ’s interpretation that employees of alleged state-owned or state-controlled enterprises are “foreign officials” under the FCPA.
See here for the prior post on the defendants’ motion to dismiss.
See here for the prior post on the DOJ’s opposition brief.
Other “foreign official” challenges pending (although not as far along in terms of briefing) include the Carson matter (also in the C.D. of California – see here) and the O’Shea matter (in the S.D. of Texas – see here).
DOJ Files “Foreign Official” Opposition Brief In Lindsey Matter
Yesterday, the DOJ filed its opposition brief (here) in the Lindsey matter pending in the C.D. of California.
As noted in this prior post, the defendants filed a motion to dismiss challenging the DOJ’s interpretation that employees of alleged state-owned or state-controlled enterprises are “foreign officials” under the FCPA.
Other “foreign official” challenges pending include the Carson matter (also in the C.D. of California – see here) and the O’Shea matter (in the S.D. of Texas – see here).