Corporate Governance

The Tenth Circuit Affirms: Comments by John Holcomb, Daniels College of Business

By J. Robert Brown

As an initial matter, we offer the following comments from John Holcomb at the Daniels College of Business.  John has commented considerably on this case and attended the trial. 

• As several predicted, the en banc panel has reversed the 3-judge panel and reinstated the Federal District Court ruling and verdict. In that sense, it is a red-letter day for criminal justice and vindication for Qwest shareholders and retirees, as well as vindication for Judge Nottingham in his careful rulings on the exclusion of Fischel as an expert witness.

• Though it is a narrow 5-4 ruling, the majority decision is a thorough rebuke of the claims made by the defense and the analysis of the three-judge panel. It even adopts some of Judge Nottingham’s language that the defense report to qualify Fischel as an expert witness was “woefully inadequate” or “woefully insufficient.” It is clear from the majority opinion that any mistakes made were by defense counsel and not by Judge Nottingham.

• The en banc opinion deferred to Judge Nottingham’s discretion and the procedures used in excluding the expert testimony and ruled that he had not been arbitrary or capricious, but rather careful in his rulings. The defense had received plenty of notice that Nottingham would rule on the government’s crucial motion that the expert testimony be excluded as not meeting Daubert standards, and the defense had numerous opportunities to request an evidentiary hearing and failed to do so.

• The court has remanded to the 3-judge panel for a decision on sentence enhancement and forfeiture issues, where Nottingham was again careful and restrained in his rulings. Hence, any reversal or modification of the sentence is highly doubtful.

• In his dissent, Chief Judge Henry suggests the case is not over, and if the majority is correct about the mistakes made by defense counsel that Nacchio might file an appeal based on “ineffective assistance of counsel.” That likely will not fly, in spite of the numerous criticisms of counsel Stern’s advocacy. In the slight chance it would fly, it would be quite a blemish on Stern’s reputation.

• This is a great ruling and a very careful and convincing majority opinion by Judge Holmes, who dissented from the 3-judge panel decision. He carefully weaves through every precedent, showing how they dictate the result in this case and how any contrary rulings do not apply and can be readily distinguished. His footnotes are well crafted and provide tremendous support for his analysis. Given his earlier dissent from the three-judge panel and his majority opinion for the en banc court, he will be the hero to Qwest shareholders and to those who will be glad to see Nacchio in prison.

Full post as published by The Race to the Bottom on February 25, 2009 (boomark / email).