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Monday, November 22, 2010
'You did what?' How anti-trust lawyer broke up Big 5
By Selected News Articles @ 1:31 PM :: 7135 Views :: Energy, Environment, National News, Ethics

The Humorous Side of the Law: ‘You did what?’

by Carl Steinhouse

When Hawaii became a state, the Department of Justice sent two attorneys to enforce the antitrust laws. I was one of them. I boned up on Hawaiian history. But many of the Hawaiian names I’d read only in my mind’s eye.

Hawaii considered the arrival of the department’s Antitrust Division an important event and the governor and the attorney general, as well as my new boss, senior attorney Bill F. (he’d arrived earlier) greeted me and my family with leis and escorted us in a stretch limousine to our hotel.

On the way, we passed a large statue of King Kamehameha. Wanting to show off my knowledge of Hawaiian history, I pointed to the statue and exclaimed, “Isn’t that King Kamehameha?”

Gales of laughter came from the governor and the attorney general. I had pronounced it Kamy-Hamy-Ha; the correct pronunciation being Ka-may-ha-may-ha. Bill shook his head, probably wondering what kind of dumb assistant he’d inherited. Red-faced, I stopped exhibiting my knowledge of Hawaiian culture.

I had another surprise in store for me. Bill, the “senior” attorney, was a fine gentleman and an academic expert in the international application of the antitrust laws, an esoteric field, if there ever was one with little application to what turned out to be a rough and tumble assignment in Hawaii. I found out he was no courtroom lawyer and had zilch trial experience. I, the junior attorney, with one civil case under my belt, had more trial experience than my boss! And neither of us had criminal trial or grand jury experience — and here we comprised the entire Antitrust Division’s Honolulu Office. Vernon, the head of the state of Hawaii Antitrust Division, even younger than me, had more experience than either of us.

Also, it turns out that neither of us was cognizant of the department’s protocols in opening investigations and filing cases, which required the approval of the Assistant Attorney General running the Antitrust Division. Going on our merry way, Bill and I began several criminal price fixing investigations, and a few civil merger investigations — all without obtaining the requisite authority. We’d leapfrogged the bureaucracy! That was the first mistake.

Starting with the easiest matter first, we conducted an investigation under a little-used antitrust statute barring the same person from sitting on the boards of competing companies. The theory of the law was simple: the potential for anti-competitive hanky panky was much greater if the same people sat on the boards of two or more direct competitors.

The investigation didn’t take long. The companies in Hawaii were clearly competitors and we found a whole slew of these directors who sat on the boards of two or more of these competing companies. We put together what I considered to be an airtight civil complaint and a brilliant pleading (if I may say so myself) and sued all the miscreants — our second mistake. We sent Washington a copy of the pleadings.

Since there was no e-mail back in 1962, it took almost a week to get a reaction — and a reaction we did get! The phone rang, and I happened to pick it up. Our direct superior in Washington, Gordon S., was on the line.

“You did what?” Gordon screamed. He knew perfectly well what we’d done so I considered the question rhetorical that didn’t require a response, so I sat there silently, glad to be 5,000 miles away. From his tone I knew I was in trouble, but not precisely why.

“Did you ever hear of obtaining authority to conduct investigations?”

I never had really thought about it but it didn’t take a genius to know the answer had better be affirmative. “I guess so.”

“Did you ever hear of obtaining approval to file a case?”

Again, I mumbled, “I guess so.”

“Withdraw the complaint,” he ordered, his tone bordering on rage.

“I don’t think so, Gordon.”

“What did you just say?” he growled menacingly.

“Look, the directors have already resigned and the Honolulu newspapers have been waxing eloquent about, and I quote, ‘The quick and effective action and great victory of the antitrust office. They are to be congratulated.’”

“What are you reading from?”

“An editorial in the Honolulu Star-Bulletin. We received banner headlines in all the newspapers about our great victory. The newspapers are already in the mail to you.”

There was silence on the other end of the line. I abhor a vacuum so I asked, “Do you still want me to withdraw the complaint?”

Gordon sighed. “No, you idiot, it would make us look like jackasses. Steinhouse, you’re one lucky bastard. If that case had blown up in your face, you’d be out of a job faster than you could ignore our procedures.”

“Uh, Gordon....”

“What else?” he asked. I could hear his trepidation.

“We’ve begun five other investigations and …”

“Without authority, I suppose?”

“Uh-huh.”

“Put the senior attorney on the line.”

I handed the phone to Bill. Immediately, his face turned red. “There’s really no need for profanity. I understand; you were provoked. Yes, yes, we will seek authority for each of those investigations we’ve already opened before we do another thing.”

Within the months, Bill was transferred back to Washington to a job in his specialty, international commerce. Shortly thereafter, a new senior attorney, Ray Carlson, arrived. A tough, by the book, no-nonsense seasoned trial attorney with several civil and criminal trials under his belt, Carlson changed things for the better and I certainly learned a lot — including the bureaucratic protocols.

Our cases were front-page news in Honolulu.

- - -

Carl Steinhouse had been a federal prosecutor for the United States Department of Justice for 15 years after which he went into private practice specializing in class actions, white-collar crime, and civil and criminal defense trials. Prior to his legal studies, he had served as an intelligence analyst in the Army Counterintelligence Corps. Since his retirement, he has authored six books in his Holocaust Heroes series: “Wallenberg is Here!” “Righteous and Courageous,” “Improbable Heroes,” “Barred”, “Wily Fox” and “We Shall Be Called Israel!” See www.carlsteinhouse.com for details. He can be reached at stein0216@comcast.net.

Reprinted with permission of author.  Original posting >>> Marco (FLA) News

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