Fed shutdown forces courts into ‘limbo land’

With many of its lawyers on furlough during the government shutdown, the Justice Department on Tuesday sought to delay a long-running False Claims Act case accusing a company of fraud to win millions of dollars in hurricane-reconstruction work.

The request by the U.S. Attorneys Office in Washington comes as government lawyers seek delays in other cases with mixed success, including the US Airways-American merger and a lawsuit challenging National Security Agency surveillance activities.

Though federal court criminal cases appear unaffected by the shutdown, the U.S. Tax Court remains closed while Justice Department civil litigators are seeking to put their cases on hold.

“Things are in limbo land,” said tax lawyer Dan Rosefelt, principal at Fried & Rosefelt LLC, citing the tax court closure. More troubling for tax professionals such as Rosefelt, much of the Internal Revenue Service is closed, too.

“I have clients right now who want to pay hundreds of thousands of dollars, millions of dollars, but they can’t,” Mr. Rosefelt said. “There are no revenue officers to talk to.”

With the tax court closed, civil litigation is slowing down. Court records reviewed by The Washington Times reveal numerous requests by the Justice Department to postpone civil cases in recent days. The requests mostly contain the same boilerplate language.

“Absent an appropriation, Justice Department attorneys will be prohibited from working, even on a voluntary basis, except in very limited circumstances,” assistant U.S. Attorney Mercedeh Momeni wrote in a request to delay a pending False Claims Act case against DRC Inc. The case was filed in 2004 over U.S. Agency for International Development relief efforts after Hurricane Mitch in Honduras in 1998. The company disputed the accusations, but recent court records reflect settlement talks underway.

A spokesman for the US Attorney’s Office in Washington referred to the Justice Department contingency plan in response to questions about the shutdown.

The plan, which is posted on the Justice Department website, states that criminal litigation will continue without interruption, but civil cases will be curtailed or postponed unless a judge rules otherwise.

“The Justice Department and the courts understandably are drawing a distinction between criminal cases and civil cases,” said Charles Tiefer, a law professor at the University of Baltimore law school and former deputy general counsel for the House.

“Criminal cases have speedy trial rules and involve the liberty of the accused,” he said. But civil cases involve the highest issues of governance, ranging from wartime contracting expenditures to gigantic mergers with antitrust questions to cases about electronic government surveillance.”

Under the Justice Department policy, if a judge denies a request to postpone a case and orders it to continue, the litigation “will become an excepted activity that can continue during the lapse.”

That’s what happened last week when U.S. District Judge Jeffrey White in California rejected the Justice Department’s request to postpone a lawsuit filed by the Electronic Frontier Foundation. The group sued the National Security Agency in July, calling the surveillance activities that were leaked by former contractor Edward Snowden unconstitutional.

A judge also overruled the Justice Department when government lawyers sought to postpone a pending antitrust case in the merger of US Airways and American Airlines in Washington.

But court records show prosecutors fared better in other cases.

In the Circuit Court of Federal Claims, a judge granted a Justice Department request to delay a lawsuit filed against the government by defense contractor KBR over contract work to restore oil production in Iraq.

In recent days, government lawyers also filed papers to delay a lawsuit between an office-supply contractor and the Federal Trade Commission, as well as litigation brought by a group of paramedics who sued the government claiming they were shortchanged on overtime pay.

The administrative office for the federal court system said in a notice last week that it had enough money to operate through Thursday, but it would be up to chief judges in each district to decide which employees to keep if the shutdown goes on any longer.

For now, the U.S. District Court in Washington says jury trials will continue, but if funds run out, jurors may find payments delayed.