Government Shutdown Could Trigger Delays in Civil Cases

October 2, 2013 by Andrew Zajac and Tom Schoenberg

U.S. Justice Department lawyers from New York to San Francisco are asking judges to delay civil cases as the government partially shuts down, and in Manhattan already won a halt to litigation except one trial.

The Justice Department made the requests yesterday in prominent cases including its bid to block the merger of US Airways Group Inc. and AMR Corp. in Washington and others including an antitrust suit in San Francisco pressing Bazaarevoice Inc. to sell assets. Federal attorneys are seeking delays in cases including the Depository Trust and Clearing Corp.’s suit against the Commodity Futures Trading Commission over rules for swaps data.

The scope of delays sought by the department is laid out on its website, which says criminal litigation will continue without interruption while civil litigation will be curtailed or postponed as much as possible without significantly compromising “the safety of human life or the protection of property.”

If a court denies a request to postpone a case, the government will consider the judge’s order “legal authorization to continue” with staffing at the minimum level, Justice Department planners said.

Two Weeks

While prosecutors say they have been immediately pinched by the government shutdown, the federal court system can run for about two weeks without furloughing personnel by tapping into fees from filings and other sources, according to a statement by U.S. District Judge John Bates, who is director of the Administrative Office of the U.S. Courts. Bates’s statement came before the shutdown began.

Once those funds have been spent, the court system would continue to handle most cases, Bates said.

Federal judges would remain on the job, though it’s unclear whether magistrate and bankruptcy judges would be paid until the crisis is resolved, and payments to jurors and court-appointed criminal defense lawyers might be deferred, he wrote in his statement.

Emily Hewitt, the chief judge of the Washington-based Court of Federal Claims, which hears only civil cases primarily involving financial disputes with the U.S., issued a statement on its website that the court will continue to hear and decide cases, sticking with schedules currently in effect.

Hewitt’s comment “does not preclude litigants from filing motions for stays,” Hazel Keahey, the court’s clerk, said.


“In the end, the outcome is going to be determined on a case-by-case basis by the judge who’s handling the case,” Keahey said.

The chief judge of the Southern District of New York, U.S. District Judge Loretta Preska, yesterday granted a Justice Department request for a stay in most civil cases because so many lawyers are being furloughed.

Except for the government’s trial team in the whistle- blower suit against Bank of America Corp.’s Countrywide Financial Corp. unit, “nearly all civil division assistants and staff will be unable to work on cases or meet existing court deadlines until Congress restores funding,” according to a letter to Preska from Sara Shudofsky, chief of the civil division for the Manhattan U.S. attorney’s office.

Airline Case

A government request yesterday for a delay in the airline antitrust case in Washington was denied by U.S. District Judge Colleen Kollar-Kotelly, who said a “speedy disposition” of the case, scheduled for trial on Nov. 25, is necessary.

The Justice Department sought to postpone the proceedings until Congress restores funding, saying in court papers that its attorneys are “generally prohibited” from working except in “very limited circumstances.”

“This is creating difficulties for the department to perform the functions necessary to support its litigation efforts,” the department said in the filing.

Federal lawyers also filed requests in district court in Washington for stays in at least four other cases, winning at least one in an antitrust suit challenging the merger of Ardagh Group SA and Compagnie de Saint-Gobain.

In San Francisco, the Justice Department lost its bid to defer an antitrust trial against Bazaarevoice, a provider of software for managing online product reviews, in light of the department’s lapse in funding. The company opposed the move.

Voter ID

A voting-rights lawsuit challenging the Texas law requiring voters to show photo identification should be halted until the shutdown is over, Justice Department lawyers told a court in Corpus Christi, Texas. Until federal funding is restored, “Department of Justice attorneys and employees are prohibited from working, even on a voluntary basis, except in very limited circumstances including emergencies involving the safety of human life or the protection of property,” government lawyers said in a filing today. Lawyers for Texas and minority-rights groups challenging the voter-ID rule didn’t oppose the delay, the U.S. said in its filing.

–With assistance from Patty Hurtado in federal court in Manhattan, Karen Gullo in federal court in San Francisco, Sophia Pearson in federal court in Philadelphia and Laurel Brubaker Calkins in Houston. Editors: Fred Strasser, Michael Hytha