Corporate Governance

Nacchio and the Supreme Court: The Cert Petition (Strategy)

By J. Robert Brown

Joe Nacchio has filed a cert petition with the US Supreme Court.  In it, he raises three issues.  These include:

• 1. Whether the defendant is entitled to acquittal or a new trial because the Tenth Circuit, in conflict with the standards applied in other circuits, erred by upholding the jury instructions bearing on the materiality of the type of information at issue, and by holding that there was sufficient evidence that the defendant failed to disclose material information and knew it.

• 2. Whether the judgment must be reversed and remanded for a new trial because the Tenth Circuit approved the use of impermissible procedures for the exclusion of expert testimony under Rule 702 that conflict with decisions of other circuits.

• 3. Whether the Tenth Circuit's decision should be summarily reversed because it misapplied decisions of this Court, mischaracterized the district court's reasoning, failed to resolve all the issues presented, and held that Nacchio failed to address an issue that was a principal focus of his brief.

We will take a look at this petition, mostly by examining the first issue.  The other two have been examined in great detail in earlier posts in connection with the various 10th Circuit decisions.

We at this Blog are no experts on cert petitions and Maureen Mahoney is.  Nonetheless, we question some of the strategy.  The brief in a number of places makes dramatic predictions.  If the 10th Circuit decision is upheld, officers and directors will never be able to trade.  That Nacchio (or Qwest) would have been liable had they disclosed the internal data suggesting that the external forecasts were wrong. 

Both of these positions border on sophistry.  While there are technical arguments for the positions, it is hard to believe that many trained securities lawyers would agree with either.  They seem designed to promote a sense of Armageddon in an effort to attract attention to the brief and encourage the Court to take the case.  Fair enough.  But such positions also detract from credibility.  Having said that, Mahoney's strategy has caught us flat footed before (her one sentence in the appellate brief asking for a new judge, for example).  Perhaps it will happen again.  On with the posts.   

The cert petition, like all important documents in this case, is posted on the DU Corporate Governance web site.

Full post as published by The Race to the Bottom on March 26, 2009 (boomark / email).