Judge Upholds N.S.A.’s Bulk Collection of Data on Calls

In just 11 days, the two judges and the presidential panel reached the opposite of consensus on every significant question before them, including the intelligence value of the program, the privacy interests at stake and how the Constitution figures in the analysis.

The latest decision, from Judge William H. Pauley III in New York, could not have been more different from one issued on Dec. 16 by Judge Richard J. Leon in Washington, who ruled that the program was “almost Orwellian” and probably unconstitutional.

The decision on Friday “is the exact opposite of Judge Leon’s in every way, substantively and rhetorically,” said Orin S. Kerr, a law professor at George Washington University. “It’s matter and antimatter.”

The case in New York was brought by the American Civil Liberties Union, which said it would appeal.

“We are extremely disappointed with this decision, which misinterprets the relevant statutes, understates the privacy implications of the government’s surveillance and misapplies a narrow and outdated precedent to read away core constitutional protections,” said Jameel Jaffer, a lawyer with the group.

A spokesman for the Justice Department said, “We are pleased the court found the N.S.A.’s bulk telephony metadata collection program to be lawful.”

The next stops for the parallel cases are the appeals courts in New York and Washington. Should the split endure, the Supreme Court is likely to step in.

In the meantime, the decisions, along with recommendations issued on Dec. 18 by the presidential review group, illustrate the absence of agreement about the effectiveness and legality of the program, which, Judge Pauley said, “vacuums up information about virtually every telephone call to, from or within the United States.” That information is “metadata” — the phone numbers involved, when calls were made and how long they lasted.

The two judges had starkly differing understandings on how valuable that program is.

Judge Pauley, whose courtroom is just blocks from where the World Trade Center towers stood, endorsed arguments made in recent months by senior government officials — including the former F.B.I. director Robert S. Mueller III — that the program might have caught the Sept. 11, 2001, hijackers had it been in place before the attacks.

Judge Pauley began his opinion with an anecdote. In the months before Sept. 11, he said, the N.S.A. intercepted seven calls made to a Qaeda safe house in Yemen from the United States. They were from Khalid al-Mihdhar, who was living in San Diego and would become one of the hijackers.

But the security agency “could not capture al-Mihdhar’s telephone number,” the judge wrote, and “N.S.A. analysts concluded mistakenly that al-Mihdhar was overseas and not in the United States.”

“Telephony metadata would have furnished the missing information and might have permitted the N.S.A. to notify the Federal Bureau of Investigation of the fact that al-Mihdhar was calling the Yemeni safe house from inside the United States,” Judge Pauley wrote.

Judge Leon, in Washington, took the opposite view, saying the government had failed to make the case that the program is needed to protect the nation. “The government does not cite a single instance in which analysis of the N.S.A.’s bulk metadata collection actually stopped an imminent attack, or otherwise aided the government in achieving any objective that was time-sensitive in nature,” he wrote.

The presidential review group took a middle ground, though it seemed to lean toward Judge Leon’s position. It said the security agency “believes that on at least a few occasions” the program “has contributed to its efforts to prevent possible terrorist attacks, either in the United States or somewhere else in the world.” But it added that its own review suggested that the program “was not essential to preventing attacks,” and that less intrusive measures would work.

The group recommended that bulk storage of telephone records by the government be halted in favor of “a system in which such metadata is held instead either by private providers or by a private third party.” Access to the data, it said, should require a court order.

The two judges did not limit their disagreements to how well the program worked. They also drew different conclusions about its constitutionality.

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S.&P. Calls Federal Fraud Suit Payback for Credit Downgrade

Standard & Poor’s on Tuesday denounced a $5 billion fraud lawsuit by the United States government as retaliation for its 2011 decision to strip the country of its AAA credit rating.

The McGraw Hill Financial unit of S.& P. was the only major credit rating agency to remove the United States’ top rating, and the only one the Justice Department sued over claims of misleading banks and credit unions about the credibility of its ratings before the 2008 financial crisis.

In a filing on Tuesday in Federal District Court in Santa Ana, Calif., S.& P. said that the lawsuit was an effort to punish it for exercising its First Amendment rights and that the suit seeks “excessive fines” in violation of the Eighth Amendment.

It said the government’s “impermissibly selective, punitive and meritless” lawsuit was brought “in retaliation for defendants’ exercise of their free-speech rights with respect to the creditworthiness of the United States of America.”

A Justice Department spokesman declined to comment.

S.& P. seeks the dismissal of the lawsuit, which in July, Judge David Carter of Federal District Court allowed to go forward, with prejudice, meaning that it cannot be brought again. The August 2011 downgrade of the United States’ credit rating to AA-plus from AAA reflected concern about the federal government’s ability to address the nation’s swelling debt.

The government’s Feb. 4 lawsuit accused S.& P. of inflating ratings to win more fees from issuers, and failing to downgrade ratings for collateralized debt obligations despite knowing they were backed by deteriorating residential mortgage-backed securities.

In Tuesday’s filing, S.& P. estimated that more than $4.6 billion of the losses it claims might have resulted from collateralized debt obligations that were structured, marketed or sold by Bank of America or Citigroup. It also said more than $1 billion came from debt that had never been issued.

S.& P. also said the government lacked authority to sue under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, because no federally insured financial institutions had been affected by violations.

The government has in recent months made more use of that act, which was passed after the 1980s savings and loan crisis, in part because it has a lower burden of proof and a longer statute of limitations than other laws.

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DealBook: Activist Investor Calls for Breakup of Smithfield Foods

Keith Srakocic/Associated PressSmithfield’s brands include Smithfield, Eckrich, Farmland, Armour and others.

An activist hedge fund took aim at Smithfield Foods on Monday, arguing that the pork producer should consider splitting itself up despite its proposed $4.7 billion sale to a major Chinese meat processor.

The fund, Starboard Value, wrote in a letter to Smithfield’s board that it believed the company was worth much more separately. Starboard says it owns a 5.7 percent stake, making it one of the largest shareholders in the company.

Shares of Smithfield were up more than 2 percent in premarket trading on Monday, although they remained below the offer price from Shuanghui International.

The letter signals a potential fight over Smithfield, one of the country’s biggest producers of hogs. Last month, it agreed to sell itself to Shuanghui for $34 a share, in a bid to increase sales of American pork in China.

But Starboard has picked up an argument advanced against Smithfield over the years: that its vertically integrated operations, from raising hogs to slaughtering and processing them into bacon and ham and then selling the products, are worth more separate than combined.

“We believe there are numerous interested parties for each of the company’s operating divisions, and that a piece-by-piece sale of the company’s businesses could result in greater value to the company’s shareholders than the proposed merger,” the hedge fund wrote.

Starboard may be in for a tough fight. Smithfield’s management team, led by C. Larry Pope, has defended the logic of keeping the company whole, as have Shuanghui executives. Before announcing the deal with Shuanghui, Smithfield had been in talks with two other buyers as well.

One of Smithfield’s former biggest investors, the Continental Grain Company, had also called for a breakup of the company, but instead sold off virtually its entire stake this month, taking advantage of the higher share price since the Shuanghui deal was announced.

Starboard acknowledged that Smithfield’s deal with Shuanghui prevented it from seeking rival takeover bids. Instead, the hedge fund offered to look for and bring in potential bidders for Smithfield’s divisions.

In taking aim at Smithfield, Starboard is choosing one of its biggest targets yet. The activist hedge fund has made its name agitating against the likes of AOL.

Obama Calls Surveillance Programs Legal and Limited

Christopher Gregory/The New York TimesObama Defends Surveillance Programs: President Obama defends and explains a National Security Agency program that monitors domestic and international phone records.

Connecticut's Chief Justice Calls for 11 Percent Pay Hike for Judges

As a newly created committee begins meeting to discuss judicial salaries in Connecticut, the state judicial branch has offered up a detailed proposal that would boost annual pay for most judges by about $45,000 or more over the next four years.

In a 20-page report, Chief Justice Chase T. Rogers calls for the state's judges and judicial magistrates to receive a pay increase of about 11.3 percent next year and 5.5 percent for each of the three following years. That would boost salaries for the state's 162 Superior Court judges, for example, from $146,780 now to $163,416 next year and $191,890 by fiscal year 2017.

In calling for the increases, Rogers notes that state judges haven't had a pay increase in five years, that judicial salaries have risen less than 1.65 percent annually in the past decade and that Connecticut now ranks 45th overall in judicial pay, when the state's cost of living is factored in.

The initial 11.3 percent increase, Rogers stated in the report to the 12-member Connecticut Commission on Judicial Compensation, would bring salaries to where they would have been if judges had received cost-of-living increases, linked to inflation, over the past decade. The first year of raises would cost the state an estimated $3.8 million.

"As public officials, judges do not expect to become wealthy," Rogers wrote. "But fairness and the need to retain highly qualified jurists require that judicial salaries maintain their value. Protecting the compensation of Connecticut's public officials against inflation is essential to prevent genuine hardship over time, hardship that increasingly discourages recruitment and retention of talented individuals."

Rogers' proposal will no doubt launch a spirited debate. In recent months, some members of the legal profession have worried that below-market salaries had caused many experienced judges to step down and go into private practice. "I would guess (and this is just a guess) that more judges have left the bench in the last five years or so, than the number who left in the preceding 10 to 15 years," Superior Court Judge Barry Stevens wrote in a letter to Connecticut Law Tribune columnist Dan Krisch, who has written about the "trickling exodus" of judges.

Others have said that, given the still-struggling economy and the state's budget woes, this is an inopportune time for judges to request a large pay increase. They note that, even with the static pay in recent years, the state has no shortage of lawyers who want to be judges.

Representative Arthur O'Neill, R-Southbury, noted the outrage that erupted earlier this month when it was revealed that the state Department of Higher Education had awarded raises of up to $48,000 to 21 staff members. "This is the wrong time to be asking for substantial increases in compensation," said O'Neill, a member of the Legislature's Judiciary Committee. "Any increase is going to be difficult to sell, given the fact that we have an ongoing budget deficit [and] enormous debt from unfunded liabilities."

PRIVATE SECTOR RELUCTANCE

The judicial branch report, bolstered with graphs and narrative arguments, compares judges' salary increases with employees in other branches of government and with unionized employees.

U.S. Panel Calls Huawei and ZTE ‘National Security Threat’

The House Intelligence Committee said that after a yearlong investigation it had come to the conclusion that the Chinese businesses, Huawei Technologies and ZTE Inc., were a national security threat because of their attempts to extract sensitive information from American companies and their loyalties to the Chinese government.

The companies sell telecommunications equipment needed to create and operate wireless networks, like the ones used by Verizon Wireless and AT&T. Many of the major suppliers of the equipment are based outside the United States, creating concerns here about the security of communications.

Those concerns are most acute about Huawei and ZTE because of their close ties to the Chinese government, which the committee said has heavily subsidized the companies. Allowing the Chinese companies to do business in the United States, the report said, would give the Chinese government the ability to easily intercept communications and could allow it to start online attacks on critical infrastructure, like dams and power grids.

The release of the report comes as both presidential candidates have spoken of the importance of United States ties with China and have promised to act strongly on Chinese currency and trade practices that are damaging to American business interests.

Mitt Romney, the Republican presidential candidate, has called repeatedly during his campaign for a more confrontational approach to China on business issues, although he has focused his warnings more on Chinese currency market interventions than on the activities of the nation’s telecommunications companies.

President Obama has also taken a tougher stance on China recently. Late last month, Mr. Obama, through the Committee on Foreign Investment, ordered a Chinese company to divest itself of interests in four wind farm projects near a Navy base in Oregon where drone aircraft training takes place. It was the first time a president had blocked such a deal in 22 years.

The Obama administration has also filed a case at the World Trade Organization in Geneva accusing China of unfairly subsidizing its exports of autos and auto parts, the ninth trade action the administration has brought against China.

“We have a process that is not aimed at one specific company but using all the assets and parts of U.S. government aimed at protecting our telecommunications and critical infrastructure,” a senior White House official said.

The report was released on Monday morning at a news conference held by

Representative Mike Rogers, Republican of Michigan, the chairman of the House Intelligence Committee, and Representative C. A. Ruppersberger of Maryland, the top Democrat on the committee.

They said that the United States government should be barred from doing business with Huawei and ZTE and that American companies should avoid buying their equipment.

The report said the committee had obtained internal documents from former employees of Huawei that showed it supplied services to a “cyberwarfare” unit in the People’s Liberation Army.

The United States government, the report said, should go through the Committee on Foreign Investment in the United States, an interagency panel that reviews the national security implications of foreign investments, to carry out its recommendations. It also said that committee should block any mergers and acquisitions involving the Chinese companies and American businesses.

In the course of the investigation, the House committee said it had uncovered evidence of economic espionage — and officials said on Monday that they planned to hand over the evidence to the F.B.I.

Former and current employees for Huawei, the report said, told investigators for the committee that the company had committed “potential violations” in the United States related to immigration, bribery, corruption and copyright infringement.

Huawei has been the focus of criticism and security warnings for years, including by the Defense Department. Its expansion plans in the United States have faced resistance from Congress over questions about its ties to the military in China.

Huawei denies being financed to undertake research and development for the Chinese military, and its executives have repeatedly insisted that they have nothing to hide. The company issued an open letter to the United States government in February 2011, asking for an inquiry to clear up what it characterized as misperceptions about its history and business operations.

Michael S. Schmidt reported from Washington and Christine Hauser from New York. Keith Bradsher contributed reporting from Hong Kong, and Quentin Hardy from San Francisco.

New Jersey Governor Chris Christie Calls Law Student an ‘Idiot

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Back in May 2011, we informed our readers about a lawsuit brought forward by Jacoby & Meyers, a personal injury and litigation firm made famous by its ridiculous television commercials. In that suit, the PI magnates contested an ethics rule which barred non-lawyers from being able to stake a claim in the ownership of law firms. They want lawyers to be able to run their firms like real businesses, outside investors and all.

After all, that pesky ethics rule no longer exists down under in Australia, and in England, people can now add “legal services” to their grocery lists. But as we noted in Morning Docket, “America’s Most Familiar Law Firm” took a bit of a blow in New York yesterday when one of its lawsuits challenging the ban was dismissed.

Let’s take a look at what happened….

Continue reading “New York Says ‘No’ (For Now) to Non-Lawyer Firm Ownership”

You’ve probably heard the same advice as I have about participating in meetings — speak up at least once during every meeting. Otherwise, people will wonder why you’re even there — are you engaged in the discussion? Do you even understand what’s going on? Are you nursing a hangover again? What’s the deal?

Now, some of you have absolutely no problem speaking up at meetings. In fact, maybe you’re a little too “good” at it. This post isn’t for you. For those of you who don’t realize you babble on too much in meetings, there will be a different post dedicated to the likes of you, entitled: “When Everyone in the Room Has Ceased Making Eye Contact with You, It’s Time to Shut Up.”

Others of you are shy about speaking up in larger groups, especially in front of a lot of senior people. You feel pressured to come up with something brilliant, and often end up not saying anything at all because you don’t think your ideas are worthy of public utterance. Or sometimes, you really can’t seem to think of anything to contribute….

Continue reading “Moonlighting: How Watching Game Shows Can Help You in Meetings”

Justice Scalia speaking last night at Wesleyan University.

Last night, Justice Antonin Scalia delivered the prestigious Hugo Black Lecture at Wesleyan University, speaking in the university’s Memorial Chapel before a packed house. Wesleyan is an uber-liberal school — the basis for the movie PCU, about a very Politically Correct University — and Justice Scalia’s visit was preceded by campusprotests. But I was pleasantly surprised by how respectful and appreciative the audience was of Justice Scalia’s deeply thoughtful and persuasive remarks; the protests during his speech were minor and clustered near the end.

I trekked up to Middletown from New York City to attend the lecture. What did Justice Scalia have to say? And what did the protests entail?

Continue reading “Justice Scalia Goes to Wesleyan”

New Jersey Governor Chris Christie

Much to the dismay of students, faculty, and alumni, the Camden campus of Rutgers University School of Law will soon be merging with Rowan University, and doing away with the Rutgers name. Up until now, our coverage of the pending merger has been limited to Morning Docket entries. But last night, during a town hall meeting held by New Jersey Governor Chris Christie, the debate got interesting.

In what is being referred to as “the most-heated town hall clash of the year,” Christie reportedly got into a shouting match with a current Rutgers Law – Camden student. Harsh words were exchanged, and the scene ended with the law student being escorted from the meeting by police.

Who is this law student, and what was said? Let’s delve into the details….

Continue reading “New Jersey Governor Chris Christie Calls Law Student an ‘Idiot’”

Tags: Chris Christie, Christopher Christie, Law Schools, New Jersey, Rowan University, Rutgers Law, Rutgers Law - Camden, Rutgers School of Law, Rutgers School of Law - Camden, Rutgers University School of Law, Rutgers University School of Law - Camden, William Brown

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