November 21, 2017 / 8:57 PM / a year ago

Judge laments ‘glaring inequity’ of lenient corporate plea deals

(Reuters) - Please read U.S. District Judge William Young’s opinion in U.S. v. Aegerion Pharmaceuticals. The Boston judge, a Ronald Reagan appointee who has been on the bench since 1985, has raised profound questions about American justice and restoring faith in a system whose legitimacy is under unprecedented attack.

On its face, the decision rejects a misdemeanor plea agreement between Boston federal prosecutors and Aegerion, which stands accused of marketing an extremely expensive high-cholesterol drug to patients who derived no benefit from it. The plea deal was part of a broader pact that required Aegerion to pay $40.1 million to resolve the government’s civil and criminal claims.

Judge Young took exception to the terms of the plea because it allowed him no discretion in sentencing the company. Prosecutors and Aegerion reached what is known as a “C plea,” in which they pre-negotiated the pharma company’s sentence, restricting the judge’s options to imposing the agreed-upon sentence or rejecting the plea altogether. (The phrase is a reference to the provision in the Federal Rules of Criminal Procedure that allows these agreements.) Judge Young, who previously rejected a C plea in 2013’s U.S. v. Orthofix (956 F.Supp.2d 316), said Aegerion’s plea didn’t adequately address, among other things, the size of the $7.2 million criminal penalty, the sophistication of the alleged fraud and the vulnerability of its victims.

“What is left unexplained is why the government does not simply let Aegerion collapse in disgrace,” he wrote. “Perhaps these questions do not make economic, real world sense. The point is, I do not know and the proffered ‘C’ plea does not begin to explain the financial picture in detail. Apparently the parties think their representations suffice. They do not.”

Like other federal judges in the past decade – most famously, U.S. District Judge Jed Rakoff of Manhattan, to whom Judge Young paid heed in the Aegerion opinion – the judge highlighted the court’s duty of independence. “The moral authority of the third branch of our government,” he said, rests on judges performing the “vital roles” of trying cases and sentencing offenders. Courts ought to be skeptical, he said, of plea agreements that call for judges to exercise neither of those roles. And they have been: Young cited other judges who have rejected C pleas, including U.S. District Judge Donovan Frank of St. Paul in 2010’s U.S. v. Guidant (708 F.Supp.2d 903) and U.S. District Judge James Donato of San Francisco in a trio of rulings last summer in the government’s price-fixing probe of the electrolytic capacitor industry.

It’s after that discussion that Judge Young pushes his thinking beyond what other judges have said about upholding the judiciary’s independence. After the judge first expressed doubts last month about the Aegerion plea agreement, the company and the government tweaked the deal to add a probation period. On Nov. 1, the company’s lawyers at Ropes & Gray submitted a memo justifying the agreement. Among its arguments: The “vast majority” of corporate plea deals are just like Aegerion’s. Pre-negotiated sentences give corporate shareholders and employers certainty about the future of the business, Aegerion said, and serve the government’s interest in encouraging corporations to cooperate in holding accountable the individuals who have actually done wrong.

As proof of the benefits of C pleas, Aegerion’s memo listed more than a dozen cases just against pharma companies in Boston federal court in which prosecutors agreed to pre-negotiate corporate sentences.

That argument backfired, in a big way, with Judge Young. He looked at the list of pharma defendants that negotiated C pleas with the government and saw something he’d previously overlooked: the “glaring inequity” of a “shocking disparity between the treatment of corporations and individuals in our criminal justice system.”

He continued: “Aegerion proves beyond peradventure that a forbidden two-tier system pervades our courts. Corporations routinely get C pleas after closed door negotiations with the executive branch while individual offenders but rarely are afforded the advantages of a C plea. Instead, they plead guilty and face a truly independent judge. This is neither fair nor just; indeed, it mocks our protestations of ‘equal justice under law.’”

By accepting C pleas from corporations, Judge Young said, prosecutors imply that the government considers the interests of shareholders and investment bankers more important than those of the “innocent wives, children, neighbors and colleagues” of individual offenders. Why should corporations be allowed effectively to skirt the courts?

The American jury system, in Judge Young’s view, is “the purest and most incorruptible justice humankind has ever conceived.” Yet Americans have been infected with what the judge called “a deep and pervasive sense of injustice,” stemming from gender, race and economic disparities. Judge Young said he has never experienced, in nearly 40 years on the bench, the sort of systemic challenge the judiciary seems to face today. In a barbed footnote, the judge cited both Russian attempts to spread fake news about the courts and President Donald Trump’s recent comment that our justice system “is a joke and … a laughingstock.”

In that context, the judge said, the judiciary’s legitimacy is undermined by every corporate plea agreement that allows businesses to evade sentencing by a federal judge. Judge Young said he doesn’t understand why prosecutors buckle to corporate demands for C pleas, but he urged the government to stop thinking it has no choice. Prosecutors always have the option of going to trial.

“The verdict of an American jury has a moral force incomparably greater than any plea,” he wrote. “That’s why corporations are so desperate to avoid them.”

I don’t know if Judge Young’s cri de coeur will hold up on appeal. (Both Aegerion and the Boston U.S. attorney’s office told my Reuters colleague Nate Raymond that they’re still weighing their options.) As you probably remember, the 2nd U.S. Circuit Court of Appeals did not look kindly in 2014 at Judge Rakoff’s concern for the public interest in the Securities and Exchange Commission’s settlement with Citigroup (752 F.3d 285). More recently, the D.C. Circuit rejected U.S. District Judge Richard Leon’s attempt to block a corporate deferred prosecution agreement in 2016’s U.S. v. Fokker Services (818 F.3d 733). When trial judges push the bounds of their authority, appellate courts sometimes push back.

But if you care about the courts, you should think about what Judge Young says. He’s a passionate believer in our justice system. He’s given the last 40 years of his life to it. And he’s gravely worried about its perceived legitimacy. Don’t ignore him.

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