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Corporate Governance

: The Race to the Bottom

US v. Nacchio: The Bail Petition and "A Hope of Attracting the Interest of the Supreme Court"

By J. Robert Brown

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We have not been following closely the back and forth on whether Joe Nacchio should be released on bail pending the outcome of his petition for ceriorari in the US Supreme Court. Nonetheless, we were aware of the 34 page opinion issued by Judge Krieger (federal district court in Denver and successor to Judge Nottingham) denying Nacchio bail and ordering him to appear at prison on Tuesday of this week.

In our review of the cert petition, we were highly critical of some of the legal arguments contained in the document, viewing them as either incorrect or overstated (that had Nacchio disclosed the internal projections at issue, other circuits would have "regard[ed] [the statements] as misleading and punish[ed] him for disclosing;" and that if the opinion was upheld, insiders "cannot buy or sell company shares ever."). The arguments were presumably stated in such a fashion to attract the attention of the Supreme Court to the case.

As a result, we read with interest the opinion by Judge Krieger and viewed her characterization of the cert petition with interest. She had this to say:

At this point, some of the newly-formed arguments raised in the Petition appear to be strategically crafted to create the appearance of circuit split on issues of law with a hope of attracting the interest of the Supreme Court. But in doing so, the Defendant has been forced to mischaracterize the holdings and reasoning of the Tenth Circuit panel and en banc decisions and to elevate dicta in cases from other circuit courts.

The case is on appeal to the Tenth Circuit where bail is unlikely to be granted then on to the Supreme Court. From the looks of things, Nacchio will be reporting to prison on Tuesday as commanded by Judge Krieger.

The primary materials in this case can be found at the DU Corporate Governance web site.

Full post as published by The Race to the Bottom on April 13, 2009 (boomark / email).