I. Background

Fokker Services is a Dutch aerospace services provider that was accused of violating export laws and sanctions from 2005 to 2010. See United States v. Fokker Servs. B.V., 79 F. Supp. 3d 160, 161 (D.D.C. 2015). Fokker Services allegedly exported shipments of aircraft parts, technology, and services to countries such as Iran, Burma, and Sudan. Id. at 161-62.

Fokker Services allegedly attempted to deliberately conceal its violations and evade detection from law enforcement. Id. at 162-63. In 2010, the company voluntarily self-reported these activities to the government and cooperated with an effort to remedy the situation. Id. at 163-64.

The government and Fokker Services entered into a Deferred Prosecution Agreement (“DPA”) in which Fokker Services agreed to pay $10.5 million, to cooperate with the government, to implement new compliance programs, and to comply with export laws. See id at 161. The government agreed not to prosecute upon successful completion of the eighteen-month agreement. Id. The parties submitted the DPA and a factual statement to the district court, as well as a motion to exclude time under the Speedy Trial Act, 18 U.S.C. § 3161 (2012). Id. at 163. The district court refused to grant the exclusion of time because it did not approve of the DPA. Id. at 167.

The government and Fokker Services have both appealed the district court's opinion refusing to approve the exclusion of time. The Court should affirm the district court's opinion.

II.Arguments of Appellants – United States and Fokker Services B.V. [1]

A. United States

The government argues that under the Department of Justice’s Principles of Federal Prosecution of Business Organizations in the United States Attorneys’ Manual (“USAM”) §§ 9-28.000 – 9-28.1300, Fokker Services deserves favorable treatment for voluntary disclosure and cooperation. Prior to Fokker Services’ disclosure, the government had limited information on Fokker Services, there was no government agency with an open investigation on them, and there was no evidence that Fokker Services was aware of any possible government interest in them. Under the USAM, Fokker’s disclosure thus warrants a benefit.

According to the government, the district court’s authority is limited to approving the exclusion of time motion. Under § 3161(h)(2), the court may only approve or deny the parties agreement to exclude time from the 70-day computation, not to approve or deny the DPA. Section 3161(h)(2) only allows the court to decide whether to exclude time in order for the defendant to demonstrate good behavior. While the government concedes some discretion, they argue that it is limited to determining whether a DPA is truly being used for diversion or if it is impermissibly being used to fend off a looming trial date.

In response to the district court’s argument of supervisory power, the government notes that this power is limited by separation of powers principles. For one, courts should not interfere with the government’s discretionary decision to award Fokker Services for their cooperation. The government argues that in the DPA, it has exercised its discretion and policy judgment to consider Fokker Services disclosure, cooperation, remedial conduct, and financial position in coming to an agreement. This prosecutorial discretion keeps courts neutral and recognizes the limitations of the judiciary’s ability to judge the strength of a case or enforcement priorities. According to the government, prosecutorial discretion and separation of powers principles thus demand that the court not interfere with these agreements unless they are used for purposes not allowed under the statute, such as postponing a trial rather than showing good behavior.

B. Fokker Services

Fokker Services supports many of the arguments made by the government but also adds some concerns unique to a criminal defendant. Fokker Services expressed concern with the effects that such judicial involvement would have on the right to compromise with the government. Thomas Zeno, DC Circ. May Sidestep Clarifying A Judge's Role In DPAs, Law360 (Sep. 14th, 2015, 12:53 PM). Moreover, they expressed concern about being prosecuted for admissions made on the understanding that there would be a DPA. Id.

III.Arguments of Appellee – Amicus Curiae In Support of Lower Court Opinion [2]

Amicus Curiae (“Appellee”), on behalf of the district court opinion, argues that the court correctly exercised the discretion conferred to it under the Speedy Trial Act, separation of powers principles, and the trial court’s inherent supervisory power over criminal cases.

Appellee argues that under § 3161, the court has the discretion to reject a DPA that is deemed to be too lenient. The Speedy Trial Act states that time may be excluded from the seventy-day period including “[a]ny period of delay during which prosecution is deferred by . . . the Government pursuant to written agreement with the defendant, with the approval of the court, for the purpose of allowing the defendant to demonstrate his good conduct. 18 U.S.C. § 3161(h)(2) (emphasis added). Traditional grammar rules suggest that “approval of the court” modifies the phrase related to the agreement rather than the government’s purpose. See, e.g., Barnhart v. Thomas, 540 U.S. 20, 26 (2003) (explaining grammatical rule that a phrase “should ordinarily be read as modifying only the noun or phrase that it immediately follows”). The government’s reading would make “approval of the court” superfluous. Furthermore, legislative history supports the court’s discretion beyond analysis of the government’s purpose. Overall, according to appellee, the text, structure, and purpose of § 3161 permits the court to reject a DPA that is deemed to be overly lenient.

Appellee argues that the district court’s order was consistent with separation of powers principles. The government was still free to prosecute, dismiss, or renegotiate another DPA with Fokker Services. Separation of powers does not mean that the government always gets its preferred outcome. This judicial power is regularly seen with plea agreements. Courts have independent power to consider the public interest. Moreover, courts have supervisory power over criminal cases. If the government wanted to avoid judicial intervention, it could have decided not to charge the defendant. However, the government decided to use the court as leverage thus opening itself up to judicial scrutiny. This is the “hallmark” of an independent judiciary under separation of powers principles. The government cannot require the court to be a rubber stamp, for that would be a violation of separation of powers principles.

IV. Lower Court Opinion Should Be Affirmed

The Court of Appeals for the District of Columbia should affirm the opinion of the district court. Under the Speedy Trial Act, separation of powers principles, and the court’s supervisory authority, the judiciary has a role in determining whether to grant an exclusion of time based on a DPA. This authority has limitations, but these limitations do not affect the outcome of this particular case.

As a statutory argument, the text of the statute states that the court must approve the agreement in order for it to warrant the exclusion of time. The legislative history, structure, and purpose of the statute support the meaning of the text. The government argues that the approval of the court only matters for determining whether the agreement is used to demonstrate good behavior or as pretext for postponing a trial. That reading, however, would render the phrase “approval of the court” superfluous. Moreover, if the government wanted to postpone a trial, it could drop the charges or not bring charges in the first place. Also, it would be nonsensical for the focus to be on the government’s motives because if the government was trying to postpone a trial and the defendant complied with the terms, the government would be bound to comply with the DPA. There is no benefit from using the DPA as a stalling tactic.

The government’s separation of powers arguments also suggest the court should have the discretion to approve or deny DPAs. The government argues that this infringes on prosecutorial discretion. However, the court did not force the government to try the case, to dismiss the charges, or to bring alternative charges. The court only indicated that it would not approve the agreement. That is unlike the error committed in SEC v. Citigroup Global Markets, Inc., 752 F.3d 285 (2d Cir. 2014). In Citigroup, the Second Circuit reversed a district court’s rejection of a consent decree. Id. The district court rejected the decree because, according to the court, the government did not bring the proper charges and the public interest was disserved. See id. at 289–91. However, as the Second Circuit noted, deciding what charges to bring and defining the “public interest,” are both discretionary policy choices that belong with the executive branch. See id. at 296–98. In addition, rather than asking the parties to bring a new agreement, the district court in Citigroup ordered them to trial. Id. at 291. Citigroup is thus distinguishable from this case. Here, the judge did not prohibit the government’s ability to renegotiate, drop the charges, or go forward to trial. Here, the district court rejected the DPA based on the facts and charges in the Information not based on charges not brought by the government.

Consideration of the public interest is a difficult factor. One the one hand, the government contends that the DPA terms are in the public interest. Given Fokker Services’ financial position, Fokker Services, F. Supp. 3d at 166, the government has decided that the public interest is appropriately served by the DPA. This policy decision deserves significant deference. See Citigroup, 752 F.3d at 296. Understandably, they want to avoid another Arthur Andersen. However, courts frequently exercise discretion in determining whether a particular agreement between a prosecutor and defendant is too lenient or not in the public’s interest. See, e.g., United States v. Harris, 679 F.3d 1179, 1182 (9th Cir. 2012) (plea agreements). Furthermore, the Speedy Trial Act “was designed with the public interest firmly in mind.” Zedner v. United States, 547 U.S. 489, 501 (2006). Thus, courts have an independent obligation to ensure that the public interest is not disserved, which is what happens with grossly disproportionate DPAs. It could also be argued that given the Department of Justice’s new focus on individual culpability, Sally Q. Yates, Individual Accountability for Corporate Wrongdoing, U.S. Dept. of Justice (Sep. 9, 2015), the public interest—as defined by the executive branch—is not being served here because no individuals are being prosecuted, Fokker Services, F. Supp. 3d at 166. While the government has a strong argument for making discretionary policy judgments about the “public interest,” it is not dispositive because the judicial branch frequently considers the public interest and, moreover, the district court here has strong statutory and supervisory power arguments. Overall, prosecutorial discretion has not been infringed because that discretion does not mean the court must be a rubber stamp for the executive, see id. at 291, and when the executive calls on the power of the courts, it opens itself up to judicial scrutiny, see id. 297.

Judges have inherent supervisory power over criminal cases. This power is typically used to remedy the violation of a defendant’s rights or to fashion civilized standards of procedure and evidence. United States v. HSBC Bank USA, N.A., 2013 U.S. Dist. LEXIS 92438, *11-12 (E.D.N.Y. July 1, 2013). One of the purposes is to protect the integrity of judicial proceedings. Id. at *12. Thus, when the government seeks to use the judicial branch as leverage and to add some judicial credibility to an agreement, the court must protect the integrity of the judicial process. Id. at *19. Separation of powers principles limit this supervisory power, but as explained above, the government is free to choose alternative paths or to renegotiate another agreement. The courts may not use the supervisory power to force the government to bring certain charges, but it can use it to protect the integrity of the proceedings. When the courts lend the judicial stamp of approval to a DPA, the perception is that the court views the DPA as fair and in the public interest. Thus, courts should exercise their supervisory power to ensure that DPAs are, indeed, fair and in the public interest. Separation of powers principles, therefore, support the court’s authority because an independent judiciary with supervisory authority need not always agree with the executive branch.

To be sure, there is a valid concern about the effects this will have on the resolution of white collar criminal cases. Defendants may be less likely to volunteer information to the government out of fear that an agreement may not be approved. This, in turn, may make the investigation and prosecution of crimes less frequent. Perhaps this would force the government to focus its resources and build stronger cases before entering into agreements. Perhaps it will force the government to articulate its charges and their factual basis more clearly in light of judicial oversight. This may have the effect of providing defendants with more leverage. Overall, it would likely result in a more fair, just, and transparent white collar criminal law.

For the reasons stated here, the Court should affirm the district court’s opinion. This disposition is consistent with Second Circuit's holding in Citigroup because that case is distinguishable in important ways. Furthermore, an increasing judicial role in the resolution cases may lead to more fair and just outcomes. For example, DPAs may make individual accountability less likely. See Jed S. Rakoff, The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?, N.Y. Rev. of Books (Jan. 9, 2014). But with more judicial oversight and the new Yates guidelines, this does not have to be the case. It may also have a greater deterrent effect if DPAs without culpable individuals are rejected. Id.

Without the neutral judicial role, many cases are resolved outside of the adversarial system in a more administrative system controlled by the prosecutors. See generally Gerard E. Lynch, The Role of Criminal Law in Policing Corporate Misconduct, 60 Law and Contemp. Probs. 23, 58–60 (1997). Broadly worded statutes are being expanded to cover more and more conduct, which results in a system where prosecutors are designing compliance programs and the public is frequently not aware of the terms of these agreements. See generally Criminalising the American Company: A Mammoth Guilt Trip, The Economist(Aug. 30, 2014). The precedents for DPAs are often past DPAs with other similar companies. But all of this is highly shaped by the government with its substantial leverage in the process. Rather than fight, companies settle to avoid other collateral consequences from going to trial, let alone the possibility of a guilty verdict. This may happen even when the employees who’s conduct was the basis for charges is found not guilty. In addition, the evolution of DPAs has resulted in cases where it is unclear whose conduct or culpability the companies are accepting liability for. A regime with greater judicial oversight may result in greater scrutiny on the front end that removes some of the imbalance between the government and corporations. Thus, greater judicial involvement may be preferable—if in accordance with separation of powers principles, as in this case.

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[1] Unless otherwise noted, the information in this section is derived from the Government’s Supplemental Memorandum In Support of Deferred Prosecution Agreement Reached With Fokker Services B.V. in United States v. Fokker Services, Criminal No. 14-CR-121 (RJL).

[2] Unless otherwise noted, the information in this section is derived from the brief of the Court-Appointed Amicus Curiae in Support of the Order Below in Unites States v. Fokker Services.