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Legal Report October 2016


Corruption. A recent U.S. Supreme Court ruling will make it more difficult for federal prosecutors to prove charges of public corruption against elected officials. 

In McDonnell v. United States, the Court nullified a lower court’s guilty conviction and two-year prison sentence of former Virginia Governor Robert McDonnell, who—along with his wife, Maureen—was indicted on honest services fraud and Hobbs Act extortion charges for accepting $175,000 in loans, gifts, and benefits from Virginia businessman Jonnie Williams while McDonnell was in office.

Williams, the CEO of Star Scientific, had developed a nutritional supplement from a compound found in tobacco. Star Scientific hoped that Virginia’s public universities would research the compound, and Williams wanted McDonnell’s assistance to obtain the research studies.

During the lower court case that ultimately convicted McDonnell, prosecutors were required to show that he committed—or agreed to commit—an official act in exchange for the loans and gifts from Williams. 

An official act is defined as “any decision or action on any question, matter, cause, suit, proceeding, or controversy, which may at any time be pending, or which may by law be brought before any public official, in such person’s official capacity, or in such official’s place of trust or profit,” according to court documents.

Prosecutors claimed that McDonnell committed at least five official acts in exchange for the gifts, including “arranging meetings” for Williams with other Virginia officials to discuss Star Scientific’s product, “hosting” events for the company at the governor’s mansion, and “contacting other government officials” about the research studies.

Jurors were also instructed that an official act includes “acts that a public official customarily performs,” such as those to further longer-term goals or “in a series of steps to exercise influence or achieve an end,” court documents explain. Using these instructions, the jury convicted McDonnell and his wife. 

McDonnell appealed the jury’s ruling to the Supreme Court, arguing that the definition of “official act” that was given to the jury was incorrect. 

The Court ruled in his favor, finding that an official act is a decision or action on a “question, matter, cause, suit, pro­ceeding, or controversy” that must involve the formal exercise of governmental power. 

To qualify as an official act, a public official must “make a decision or take an action on that question or matter, or agree to do so,” the Court explained in an opinion by Chief Justice John Roberts. “Setting up a meeting, talking to another official, or organizing an event—without more—does not fit the definition of ‘official act.’”

The Court ruled this way because it was concerned that the charges against McDonnell were a threat to how representative government typically works.

“The basic compact underlying representative government assumes that public officials will hear from their constituents and act appropriately on their concerns,” Roberts explained. “The government’s position could cast a pall of potential prosecution over these relationships” if constituents made a campaign contribution. 

The Court ordered McDonnell’s case be returned to a lower court to consider if the evidence used to convict him was strong enough to try him again with the proper jury instructions. Prosecutors then decided to drop all charges against him. (McDonnell v. United States, U.S. Supreme Court, No. 15-474, 2016)

Discrimination. IFCO Systems will pay $202,200 and other relief to settle one of the U.S. Equal Employment Oppor­tun­ity Commission’s (EEOC) first lawsuits alleging sex discrimination based on sexual orientation. 

“This consent decree marks EEOC’s first resolution of a suit challenging discrimination based on sexual orientation under Title VII,” said EEOC General Counsel David Lopez in a statement. 

The EEOC charged that a lesbian employee at IFCO’s Baltimore facility was repeatedly harassed by her supervisor because of her sexual orientation. Her supervisor allegedly made numerous comments to her about her sexual orientation and appearance, such as saying “I want to turn you back into a woman” and “You would look good in a dress.” 

When the employee complained to management and called the employee hotline to report the harassment, IFCO retaliated by firing her, the EEOC alleged. These actions were a violation of Title VII of the Civil Rights Act of 1964; the EEOC has concluded that harassment and other discrimination due to sexual orientation is prohibited sex discrimination. 

Under the settlement, IFCO will pay $182,200 to the female employee, write her a letter of reference, and donate $20,000 to the Human Rights Campaign Foundation to support its Workplace Equality Program. It will also retain an expert to develop a training program for its managers, supervisors, and employees on LGBT workplace issues. 

Additionally, IFCO will distribute its equal employment opportunity policies and toll-free employee hotline number and Web address to all employees in its North Region. It’s also required to post a notice about the settlement and report to the EEOC on its compliance, including how it handles future complaints of sexual orientation discrimination. (EEOC v. Pallet Companies, d/b/a IFCO, U.S. Court for the District of Maryland, Baltimore Division, No. 1:16-cv-00595-CCB, 2016)​


Discrimination. The U.S. Department of Justice (DOJ) signed a memorandum of understanding (MOU) with the Republic of El Salvador to create a formal partnership to protect U.S. workers from El Salvador from discrimination based on citizenship, immigration status, and national origin.

Under the MOU, the DOJ will work with the Salvadoran government to educate workers about their employment rights and provide them with the resources to protect their rights. The MOU also seeks to promote training for employers on their obligations under the antidiscrimination provision of the Immigration and Nationality Act (INA), which prohibits employment discrimination based on citizenship, immigration status, and national origin, according to a press release.

Additionally, the DOJ will train Sal­va­­doran consular staff on the anti­dis­crimination provision of the INA and the Salvadoran embassy will create a system for referring discrimination claims from the embassy and consulates to the DOJ.​


Fraud. President Barack Obama has signed a bill into law that requires the federal government to reduce fraud through agency actions.

The law (P.L. 114-186) requires the U.S. Office of Management and Budget (OMB) to create guidelines for federal agencies to establish financial and administrative controls to identify and assess fraud risks. The guidelines must incorporate leading practices identified in the U.S. Government Accountability Office report Framework for Managing Fraud Risks in Federal Programs.

Agencies will be required to implement control activities to prevent, detect, and respond to fraud. These activities include conducting evaluations of fraud risks and using a risk-based approach to design to mitigate identified fraud risks, collecting and analyzing data from reporting mechanisms to detect fraud trends, and using the results to monitor, evaluate, audit, and investigate to improve fraud prevention, detection, and response.

The law requires agencies to sub­mit an account to Congress describing how they are implementing these controls as part of their annual financial reports.

Terrorism. The U.S. House of Representatives failed to pass a bill that encouraged banks to tip off federal investigators about terrorism financing.

The bill (H.R. 5606) would have enhanced Section 314 of the Patriot Act, which encourages financial institutions and the federal government to share information about transactions connected to terrorism. 

Under the bill, financial institutions could report to the federal government if they suspected funds were being used for “terrorist acts, money laundering activities, or a specified unlawful activity.” The bill also would have shielded financial institutions from civil litigation for filing these reports. 

Critics, however, claimed that the bill could give the government access to citizens’ financial information based on suspicious activity.

“The Patriot Act should not be casually expanded,” the House Liberty Caucus said in a statement. “In short...H.R. 5606 will permit the government to demand information on any American from any financial institution merely upon reasonable suspicion.”​


Use of force. Berrien County (Georgia) Sheriff Anthony Heath pleaded guilty to using excessive force against arrestees, vio­lating their civil rights. Heath and deputies from the Berrien County Sheriff’s Office chased an individual in 2012 who had been banned from traveling through the county. A deputy arrested the individual, without incident, and then held him on Heath’s orders in the woods. When Heath arrived on the scene, the individual was not resisting arrest. Heath then kicked, punched, and forcefully kneed the arrestee several times. Heath repeated this behavior in a separate incident in 2014. The FBI investigated, and the U.S. Department of Justice charged him with two felony counts of deprivation of rights under color of law. Heath pleaded guilty to both charges. (U.S. v. Heath, U.S. District Court for the Middle District of Georgia Valdosta Division, No. 7:16-cv-20-HL, 2016).

Gun rights. A reckless domestic assault is a “misdemeanor crime of domestic violence” that prohibits convicted felons from possessing firearms, the U.S. Supreme Court ruled. Almost 20 years ago, Congress passed the Lautenberg Amendment, which bars people convicted of misdemeanor domestic abuse from buying or owning a gun or ammunition. The Court found that the amendment applies to domestic abusers found to have committed their offenses recklessly as well as to those who acted intentionally. “A person who assaults another recklessly ‘uses’ force, no less than one who carries out that same action knowingly or intentionally,” wrote Justice Elena Kagan for the Court. (Voisine v. United States, U.S. Supreme Court, No. 14-10154, 2016).

Discrimination. FAPS, Inc., a large automotive service firm, will pay $350,000 to settle a race discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC). The EEOC charged that FAPS engaged in a pattern or practice of discrimination against African-Americans in recruitment and hiring by relying on word-of-mouth recruiting that deterred them from applying, refusing to hire qualified African-American applicants, and falsely telling them that no positions were available when FAPS was hiring. Under the settlement, FAPS will distribute the $350,000 among qualified but rejected African-American applicants, make good-faith efforts to meet designated hiring goals for African-Americans, and use recruiting methods that target black candidates, among other measures. (EEOC v. FAPS, Inc., U.S. District Court for the District of New Jersey, No. 2:10-cv-03095, 2016).