[00:01:09] Speaker 03:
I think we're ready to go.

[00:01:10] Speaker 03:
Mr. McCallion.

[00:01:16] Speaker 00:
Good morning.

[00:01:17] Speaker 00:
Ken McCallion on behalf of the appellant Mr. Marchena.

[00:01:23] Speaker 00:
This is an appeal really from the largest forfeiture case at the time.

[00:01:29] Speaker 00:
Approximately $1.4 billion was forfeited by the battle organization

[00:01:38] Speaker 00:
and la corporacion, Cuban-American group.

[00:01:42] Speaker 00:
And the success of that case, which not only led to a substantial forfeiture, but also the conviction of the leaders of that racketeering organization and many of its lower level members, in addition to the leadership, was largely due through the efforts.

[00:02:04] Speaker 01:
At JA 121 and the complaint,

[00:02:07] Speaker 01:
You cite to the Attorney General's confidential informant guidelines.

[00:02:12] Speaker 01:
What pages or page of those guidelines makes it clear that the Assistant United States Attorneys, U.S.

[00:02:19] Speaker 01:
Department of State agents, or local police officers have either expressed or implied authority to engage in a best efforts agreement?

[00:02:32] Speaker 01:
The appendix won't tell you.

[00:02:34] Speaker 01:
It just references that

[00:02:36] Speaker 01:
attorney general's confidential informant guidelines.

[00:02:39] Speaker 00:
Where are they?

[00:02:41] Speaker 00:
The confidential guidelines, a portion of it is attached to the appendix.

[00:02:49] Speaker 00:
But along with those confidential guidelines have to be read in the existing case law relating to those guidelines in the operations sale, Marquette, SCJ.

[00:03:00] Speaker 01:
Are you going to answer my question?

[00:03:02] Speaker 01:
What portion of the guidelines

[00:03:05] Speaker 01:
makes it clear that AUSAs, Department of State agents, and so on, have either the express or implied authority to engage in those agreements.

[00:03:19] Speaker 00:
It would be the portions of the guideline, not in HAC-Verba, but the guidelines basically say that... Well, why don't you take me to it?

[00:03:29] Speaker 00:
Okay.

[00:03:31] Speaker 01:
I have the appendix in front of me.

[00:04:25] Speaker 00:
Well, several provisions would have to be read together, but it does not say in hot verba that an AUSA... Where are the guidelines to which you're referring the provisions that have to be read together?

[00:04:39] Speaker 00:
The provisions of the definition of confidential informant, Appendix 191 Sub 6,

[00:04:58] Speaker 00:
Yeah.

[00:04:59] Speaker 00:
The Confidential Appendix 193, 13 Confidential Informant Review Committee.

[00:05:07] Speaker 00:
Say again.

[00:05:09] Speaker 00:
Confidential Informant Review Committee.

[00:05:12] Speaker 00:
Uh-huh.

[00:05:15] Speaker 00:
And I can't immediately find it.

[00:05:23] Speaker 00:
The provision that says an award will be commensurate with the contribution

[00:05:28] Speaker 00:
by the confidential informant.

[00:05:31] Speaker 00:
I don't have that immediately available.

[00:05:32] Speaker 01:
And from those three, you say the guidelines make clear that AUSAs have that authority?

[00:05:45] Speaker 00:
If we said that, I meant to say that case law is firmly established in the sale case SCG Marquette.

[00:05:58] Speaker 00:
that agents can do what they have inherent power and ability to do if it relates to their essential functions using the language of sale.

[00:06:13] Speaker 00:
One of the essential functions of an agent and an AUSA is to solicit the cooperation of confidential informants and cooperating

[00:06:27] Speaker 00:
witnesses, without that the justice system and law enforcement operations are severely hampered and would have a chilling effect.

[00:06:41] Speaker 05:
But I don't understand where, even if that is part of their job description, that that means that they have the authority to enter into contracts that will result in the payment of money.

[00:06:56] Speaker 05:
That's a separate issue.

[00:06:58] Speaker 05:
You can enter into an informant agreement with a witness without agreeing to make any efforts to pay money.

[00:07:06] Speaker 00:
That's true.

[00:07:07] Speaker 00:
And an agent in an AUSA can't promise to pay money.

[00:07:11] Speaker 00:
What they can do is promise to make best efforts to support an award if the investigation is successful.

[00:07:21] Speaker 00:
In this case, if monies are forfeited, then and only then all the USA

[00:07:28] Speaker 00:
has to do and the agent, in this case, two or three different agencies, the Department of Justice and the Department of State, all they have to do is make a good faith, best efforts, recommendation.

[00:07:43] Speaker 05:
But that agreement only provides a claim in the court of federal claims if it can be read to mandate the payment of money.

[00:07:51] Speaker 05:
And if they have no authority to

[00:07:55] Speaker 05:
agree to make any best efforts to pay money, and you have to show that they have authority to agree to pay money, which you haven't done.

[00:08:05] Speaker 00:
Respectfully, I think the answer to that is no.

[00:08:09] Speaker 00:
There's two types of agreements, and SCG pointed this out.

[00:08:14] Speaker 00:
In that particular case, the court found that the princess, the informant, argued that she had been guaranteed a payment

[00:08:24] Speaker 00:
by the government as opposed to a best efforts agreement, which the court indicated it seems it was more of a best efforts agreement.

[00:08:37] Speaker 00:
The court acknowledged, and the court's also in sale, this court in sale, and other cases as held that a best efforts agreement is different from an ironclad promise to pay its

[00:08:53] Speaker 00:
And that's the way the forfeiture system works.

[00:08:56] Speaker 00:
That's the way the guideline system works.

[00:08:58] Speaker 00:
That's the way the Department of Justice forfeiture system works.

[00:09:02] Speaker 00:
The first thing that the committee reviewing it considers is what is the recommendation of the line agents and the AUSA who worked on that particular case?

[00:09:15] Speaker 01:
Is the best effort an obligation to pay?

[00:09:19] Speaker 00:
Absolutely not.

[00:09:21] Speaker 00:
In New Valley,

[00:09:22] Speaker 05:
Well, if it's not an obligation to pay, then it can't form the basis for a claim for money in the court of federal claims.

[00:09:30] Speaker 00:
Well, it's a claim for a breach of the implied covenant of good faith and fair dealing in that contract.

[00:09:38] Speaker 00:
New Valley pointed out the distinction.

[00:09:40] Speaker 00:
It wasn't an agent.

[00:09:41] Speaker 05:
It doesn't matter.

[00:09:41] Speaker 05:
It still has to be a claim for money.

[00:09:44] Speaker 00:
Yes, it is.

[00:09:46] Speaker 05:
And the agents that entered into those have to have the authority

[00:09:51] Speaker 05:
to enter into binding agreements that will result in the payment of money, whether they can agree to a specific sum or they can agree to make best efforts to secure a specific sum.

[00:10:02] Speaker 00:
Yes.

[00:10:03] Speaker 05:
And the agents, um, and I think any provision that says a USA's or any of these other people have that kind of authority, because my understanding is that kind of authority is maintained at a very high level at the justice department and at other agencies.

[00:10:20] Speaker 00:
That is the power to pay.

[00:10:22] Speaker 00:
What an agent and an AUSA have the power to do is say, we're the line agents.

[00:10:28] Speaker 00:
We've worked with this informant.

[00:10:30] Speaker 00:
He has cooperated.

[00:10:32] Speaker 00:
He's cooperated fully.

[00:10:35] Speaker 00:
In this case, he cooperated with astronomically positive results.

[00:10:41] Speaker 00:
And we therefore recommend, consistent with what we should do as AUSAs or as agents,

[00:10:49] Speaker 00:
but certainly consistent with our promise to the informant at the time he came into us.

[00:10:56] Speaker 00:
We're not promising you any money, but we're promising that if this case is successful and there's a forfeiture, we will attempt to make you whole.

[00:11:08] Speaker 00:
In this case, it was the $106,000 that the corporation owed to him for his past services, a very modest amount

[00:11:19] Speaker 00:
uh... in view of the one point four billion dollar forfeiture there was no promise to pay that but however there was a good faith uh... and implied covenant of good faith and fair dealing that if the informant did what he was going to do when he did this for a year after year after year he testified doesn't the covenant of good faith and fair dealing depend upon an otherwise enforceable contract for money within the court of federal claims

[00:11:51] Speaker 05:
Yes, but you don't have an enforceable contract for the payment of money.

[00:11:56] Speaker 05:
I've already conceded that.

[00:11:58] Speaker 00:
In SCG sale and other cases, and even in New Valley case, dealing with the launching of a satellite, there's a difference between a promise to launch a satellite, or in this case, a promise to pay money, and a promise to make a good faith effort

[00:12:20] Speaker 00:
to launch that satellite, or in this case, support a recommendation and award.

[00:12:28] Speaker 00:
In this particular case, the AUSA later involved actually, after soliciting Mr. Marchena's cooperation and getting the benefit of that, and there being institutional ratification over a period of years whereby

[00:12:49] Speaker 05:
They continued to reassure him that yes, once the forfeiture money comes in- Are you saying, this sounds like a different theory, that somebody with authority has ratified this agreement?

[00:13:05] Speaker 00:
Oh, absolutely.

[00:13:06] Speaker 05:
Well, the AUSA- No, I mean, the AUSA does not have authority to pay money.

[00:13:12] Speaker 05:
I thought you just said that there was institutional ratification.

[00:13:18] Speaker 05:
which to me suggested that you were saying somebody with authority ratified this agreement.

[00:13:23] Speaker 05:
You're not saying that, that anybody with contracting authority either at the Justice Department or any other agency has ratified this agreement, have you?

[00:13:32] Speaker 00:
No, someone with recommending authority, the AUSA and his superiors.

[00:13:38] Speaker 00:
In fact, the second AUSA on the case, Alison Lair, actually went and drafted the recommendation

[00:13:47] Speaker 00:
and the application for Mr. Marchena after recommending that he fire his attorney, attorney Spitler.

[00:13:57] Speaker 00:
In essence, Allison Lair, the AUSA then became not only the representative of the government, but the attorney for Mr. Marchena.

[00:14:08] Speaker 00:
And when the application languished for a period of time, she then rehired

[00:14:16] Speaker 00:
attorney Spitler who filed his own recommendation and the government opposed it at that point.

[00:14:26] Speaker 00:
There's the fundamental agreement to in good faith enter, make recommendations without any promise of money.

[00:14:39] Speaker 00:
We would suggest, and particularly that cases such as Sale, Marquette, SCG,

[00:14:45] Speaker 00:
uh... the language of that makes it clear that there are uh... good faith agreements short of an absolute promise to pay money but an agreement to make a recommendation for the payment of money which are inherently enforceable and in this case mister marchena relied to his detriment on the representations of the government agents in this regard

[00:15:15] Speaker 02:
You're into your rebuttal.

[00:15:16] Speaker 02:
You're well into your rebuttal.

[00:15:17] Speaker 00:
Oh, I'm sorry.

[00:15:18] Speaker 02:
Do you have a final point or do we want to turn to that?

[00:15:21] Speaker 00:
I'll reserve.

[00:15:21] Speaker 00:
Thank you.

[00:15:36] Speaker 05:
may please the court the trial court correctly concluded that mister martina failed to lead the existence of a binding contract with officials authorized can you address these cases your friend is discussing is there any support for the notion that entry into a best efforts agreement by someone otherwise without authority to bind the government for money and support a claim in the court of federal claims no your honor the uh... s g s case the princess case that my friend has referenced

[00:16:05] Speaker 04:
uh... made in dicta which uh... uh... helen tess has called it as well a reference to the examination there was whether that was in fact a binding promise to pay money in the court found that it was not it said there were there may have been some sort of agreement of the type of a trust us agreement you know we'll do our best to help you out uh... but solely that references the only reference to the court never considered authority to make such a uh... binding contract war actually held that there was such a point account i'm confused now because

[00:16:36] Speaker 01:
Your opposing counsel tells me that the United States was representing Mr. Marchena for a while there.

[00:16:45] Speaker 04:
That's not in the pleadings and not to my knowledge was that ever the case.

[00:16:49] Speaker 04:
There are allegations that AUSAs or other agents of the government made recommendations to Mr. Marchena to fire his counsel.

[00:16:58] Speaker 04:
We never got to the stage of the proceedings to determine factual accuracy of any of those, but they're irrelevant to this appeal of course because as the

[00:17:06] Speaker 04:
Judge Hughes has noted that there has to be authority to bind the government.

[00:17:11] Speaker 04:
And that's what my friend wants to skip over.

[00:17:13] Speaker 04:
They talk about, well, of course they can promise.

[00:17:15] Speaker 01:
Well, that's already been conceded.

[00:17:18] Speaker 01:
Understood, Your Honor.

[00:17:20] Speaker 04:
And so because this theory sort of relies on this sort of bank shot that would say, because I promise that I'll do my best to get someone else who does have authority to do a particular thing, there can't be jurisdiction

[00:17:32] Speaker 04:
And there can't be the existence of a binding contract in the court of federal claims.

[00:17:35] Speaker 04:
Now, my friend also references two potential theories of authority which could apply in certain cases, those being express authority as delegated by the Constitution, a statute, or a regulation.

[00:17:48] Speaker 04:
And as the court has noted, none of the regulations or statutes referenced in the briefing by my friend

[00:17:55] Speaker 04:
delegate that authority to AUSAs or any of the individual officials at issue here.

[00:18:01] Speaker 04:
In terms of an implied authority theory, that would require, as my friend referenced, that it's inherent to the duties of these individuals that they must have this authority in order to do their jobs.

[00:18:14] Speaker 04:
In fact, the Court of Federal Claims has looked at exactly this scenario on a number of occasions and found exactly the opposite.

[00:18:20] Speaker 04:
They have found that

[00:18:22] Speaker 04:
uh... individual law enforcement officers do not have as an inherent portion of their duties the inherent authority to buy in the government in contracts to pay confident that these types of delegations authority written down are they are you are are they in confidential memoranda or they're just in in internal memoranda at the justice department at the agencies i imagine that they are internal i don't know the answer to whether they're confidential but there's certainly attached any of these delegations to

[00:18:52] Speaker 05:
your motion?

[00:18:53] Speaker 04:
No, Your Honor.

[00:18:54] Speaker 04:
And I'm not aware of any.

[00:18:55] Speaker 04:
And importantly, for the posture of this case, there's no allegation in any of the versions of the complaint that any of these individuals were delegated authority to bind the government.

[00:19:05] Speaker 04:
And to finish my point on the Court of Federal Claims case law on inherent authority, the key point there was there is authority with individuals in the Justice Department

[00:19:17] Speaker 04:
that can delegate this down in specific cases to make a deal with the confidential informant and that's the proper means by which to achieve this.

[00:19:24] Speaker 04:
What's that level?

[00:19:27] Speaker 04:
The statutes typically vest that authority in the attorney general or in the case... Or a delegate.

[00:19:33] Speaker 04:
Who is the person?

[00:19:35] Speaker 04:
I don't know the specific delegates.

[00:19:37] Speaker 04:
It's typically at the assistant attorney general or in some cases deputy assistant attorney general level.

[00:19:43] Speaker 04:
There are a number of different funds that I think have different delegations

[00:19:47] Speaker 04:
But I'm not aware of all of them at the moment, Your Honor.

[00:19:51] Speaker 04:
Subject to any further questions, Your Honors, the United States respectfully requests that this court affirm the decision of the trial court.

[00:20:02] Speaker 00:
Thank you.

[00:20:06] Speaker 00:
Now, in the lower court, the court did find that agents and AUSAs have authority to make recommendations, but drew a distinction

[00:20:16] Speaker 00:
We believe for the first time in any case law between recommendations to another agency, which the court found could be proper and authorized, as opposed to an agent or an AOSA's own agency.

[00:20:35] Speaker 00:
We believe that this distinction is not supported by the case law.

[00:20:42] Speaker 00:
and is contrary to the practice certainly of any agency looking to its own agents for recommendation as to the success or contribution of a confidential informant.

[00:20:56] Speaker 00:
I would also point out that in this particular case one of the agents who did make this best efforts promise to help this individual informant out if

[00:21:11] Speaker 00:
the case was successful was from the Department of State, not the Department of Justice.

[00:21:17] Speaker 00:
So there's a distinction there.

[00:21:19] Speaker 00:
But just on this inherent power issue, I would draw the court's attention to cases such as Henke, where the court found that there may not have been a binding agreement to pay Henke a guaranteed sum of 250,000.

[00:21:38] Speaker 00:
But there was authority to enter into an agreement that if the mission was successful, he, a fellow DEA agent, was committed to trying to get Henke paid.

[00:21:52] Speaker 00:
This is the kind of best efforts agreement, which case law supports both Henke, the sale case, which talks about an agent and an AUSA's inherent authority.

[00:22:08] Speaker 03:
I don't see that cited in your brief, that case.

[00:22:12] Speaker 03:
Was that cited in your brief?

[00:22:14] Speaker 00:
Well, the Henke case is cited in the government's brief for other issues.

[00:22:20] Speaker 00:
I was just rereading it.

[00:22:22] Speaker 00:
And at page 25, 43, Federal Court of Claims at 25 is a language I just quoted.

[00:22:34] Speaker 00:
If it's not in our brief, I apologize, but it is.

[00:22:37] Speaker 00:
of case law here, and it does echo SGS, which also says that SACs and ASACs, let's see, this is SCG at 701 to 704.

[00:23:02] Speaker 00:
can promise to do their best to assist and aid a confidential informant in every possible way, but they cannot make a promise to make a specific payment of a specific sum of money.

[00:23:17] Speaker 00:
That's why the SCG case draws that distinction and basically suggests that in that case,

[00:23:31] Speaker 00:
uh... the princess was overreaching she was saying there's a promise to pay when what she really should have been arguing and which the court found was appropriate would be recommendations uh... for payment without any absolute uh... that's a court of federal claims case, right?

[00:23:49] Speaker 05:
that and the Hincky case you're citing to us are both court of federal claims cases they are, yes but they're not binding on us uh... well uh...

[00:24:00] Speaker 00:
No, but I would hope persuasive to the court regarding this appeal from a denial of an essential confidential informants claim that the government not only didn't make the best efforts, but subverted and opposed a recommendation by him after he had performed and all the other elements of a contract

[00:24:31] Speaker 00:
including consideration had been performed as found by the lower court.

[00:24:36] Speaker 02:
We've exceeded our time.

[00:24:37] Speaker 00:
Thank you.

[00:24:37] Speaker 02:
Thank you very much.

[00:24:38] Speaker 02:
I thank both sides and the case is submitted.