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ORAL HISTORY OF WILLIAM B. SCHULTZ, ESQ.
This is the ninth in a series of interviews of William B. Schultz conducted by Stephen J. Pollak
on behalf of the Oral History Project of the District of Columbia Circuit. This interview was
conducted on Friday, February 25, 2022, in Washington, D.C.
Mr. Pollak: So, Bill Schultz, we are here in the Pollak kitchen; a bright sunny afternoon on
Friday, February 25, 2022.
You’ve done a good outline and the last interview concluded with you
discussing leaving your post at the Food and Drug Administration. Would you
identify the timing of all this? And tell as you wish what led you to leave the
agency?
Mr. Schultz: David Kessler left at the beginning of President Clinton’s second term and there
was a two-year period where there was an Acting Commissioner, Mike
Friedman. I was also a Deputy and had a tremendous amount of authority within
the agency. Mike mostly deferred to me on my priorities because I had a strong
relationship with HHS Secretary Donna Shalala.
Mr. Pollak: And this was what year?
Mr. Schultz: This would be the first two years of Clinton’s second term, so 1997-98.
We accomplished a lot. During that time, the Administration chose Jane
Henney as Commissioner, but she had to go through confirmation hearings
before becoming the Commissioner.
Mr. Pollak: And who was she?
Mr. Schultz: She had been a researcher at the National Cancer Institute and then she was
Deputy Commissioner under David Kessler during the Bush Administration, but
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she left before I started at FDA. I never worked with her there. She had a very
different philosophy. She really viewed herself as a career civil servant. The
FDA Commissioner and my position were political positions, but she wanted to
run the day-to-day operations of the agency and wasn’t particularly interested in
major initiatives, which was what made the Kessler years and the two years that
followed so exciting. It became clear to me that it was probably a good time to
leave.
Over the years, I have observed in government, it’s often very hard for a
deputy to stay when the principal is replaced. I helped with her confirmation
and I helped prepare her for all the meetings and the hearings, but I was
interested in staying in the Clinton Administration and I looked around.
Mr. Pollak: And why were you interested in staying?
Mr. Schultz: Because the jobs were fulfilling. It was fulfilling in the same way that Public
Citizen was fulfilling or working for Henry Waxman was, but you had a staff
and you had the ability in the executive branch to accomplish an enormous
amount – even without legislation—through regulation and policy decisions.
So, I wasn’t interested in leaving unless I couldn’t find a good fit.
I learned there were two potential jobs at the Department of Justice.
One was the Deputy Associate Attorney General. The Associate Attorney
General is the number-three position at the Department of Justice. There is the
Attorney General and the Deputy Attorney General and then the Associate
Attorney General. The Associate Attorney General oversees a lot of the
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Department’s civil work, including the Civil Division, the Civil Rights Division,
and the Environmental Division. Whereas the Deputy Attorney General is more
focused on the criminal aspects of the Department of Justice and oversees the
U.S. Attorneys’ Offices and the Criminal Division.
The Associate AG was Ray Fischer and I interviewed with him but
didn’t get the job. It went to Joe Onek, who is a very prominent Washington
lawyer, whom I knew. He started out at the Center for Law and Social Policy,
but he had clerked at the Supreme Court with Ray Fischer, the Associate AG.
So I couldn’t really feel too disappointed about that.
The other job that I became aware was available was Deputy Assistant
AG in the Civil Division in charge of appellate litigation. This was the Deputy
in charge of all civil appellate litigation across the country.
There are about 50-60 lawyers in the division, and it seemed like a very
exciting job to me. I hadn’t been in court since 1976, for more than ten years,
but I was still very comfortable with the idea of doing appellate litigation. I had
known Frank Hunger somewhat because of the tobacco litigation, but David
Kessler had gotten to know him quite well.
Frank Hunger was head of the Civil Division. He was the brother-inlaw of Vice President Al Gore. This was his decision and I applied for the job.
And to show you what a loyal friend and colleague David Kessler is, he flew
down to Washington from New Haven where he was the Dean of Yale Medical
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School to try to sell me to Frank Hunger as the person he should hire. There was
a lot of competition for the job and I eventually got it.
Before I started, when I was still at the FDA, Frank asked me to
participate in a number of meetings about a potential tobacco lawsuit that the
White House was pushing him to file. He was skeptical about it, as were his
other deputies. I was asked to participate because I had been so involved in
tobacco at FDA.
This lawsuit was a follow up to national litigation that had been brought
by state attorneys general against the tobacco industry to recover for health care
costs that the states had paid due to fraud and other misbehavior. I believe by
this time those lawsuits had settled. But the idea was for the federal government
to bring a lawsuit to recover both the money it had spent in the Medicaid
program and the Medicare program, and for violations of the RICO statute
which gives the federal government a cause of action where there has been a
conspiracy to defraud the public.
Mr. Pollak: And put this in time — like when Kessler came from New Haven to talk to
Hunger.
Mr. Schultz: This was probably late 1998.
Mr. Pollak: I see.
Mr. Schultz: I believe I started at the Justice Department at the beginning of 1999. Interesting,
a couple of days before I started the job, President Clinton at the State of the
Union announced that the federal government was going to bring this lawsuit
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that Frank Hunger and the other deputies in the Civil Division had been so
skeptical about.
When I started Frank asked me if I would be in charge of it, which was
obviously outside the jurisdiction of my main job in appellate litigation. But he
knew that I had a lot of background in tobacco and in litigation. And frankly, I
think his other deputies didn’t want to pursue the case. So I gladly accepted.
I think a number of people thought that I was hired at the Justice
Department to do this case. But that wasn’t true and that wasn’t the sequence of
events.
Shortly after I started, Frank Hunger left. He told me that he was going
to leave when he offered me the job. He left to work on his brother-in-law’s
presidential campaign, and David Ogden, who had been working for Attorney
General Janet Reno’s office, became the Acting Assistant Attorney General. He
then became my supervisor, and he was very supportive of the case.
Interestingly his father had worked for HHS and had been the principal author of
the famous 1964 Surgeon General’s report, which was the classic document on
the devastating diseases caused by tobacco.
Mr. Pollak: So, you stayed at the helm of the appellate section of the Civil Division at DOJ
for two years, is that right?
Mr. Schultz: Yes
Mr. Pollak: And Ogden was your immediate supervisor during that time?
Mr. Schultz: Yes
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Mr. Pollak: I see. So you worked closely with him?
Mr. Schultz: Very closely.
Mr. Pollak: I see. Well, but did you then handle the tobacco litigation?
Mr. Schultz: I was in charge of it. The initial effort was to put the case together and then file
the litigation. But yes, I was in charge of the tobacco case that the Department of
Justice brought.
Mr. Pollak: And I think that history would be interested in who put the case together. Who
led the litigation? Where it was? What judge and how it all played out?
Mr. Schultz: We put together a component of the Civil Division that we created and named
the “Tobacco Litigation Team.” Initially I got help from some of the best people
in the Civil Division. From the Appellate Division I enlisted Mark Stern, a
senior lawyer there, and Alisa Klein, who had been a neighbor and was one of
the few people I actually knew in Civil Appellate.
I was given authority to do a substantial amount of hiring because there
was a lot of interest within the Justice Department to do this work. But I also
was determined to hire people from outside the Justice Department as well as
inside.
Mr. Pollak: Why?
Mr. Schultz: The Civil Division is a defensive organization with the exception of civil fraud.
All its work is in defending the government. It takes a much different mentality
to be a plaintiff in a case and to initiate a case. I wanted to take advantage of the
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tremendous abilities of the Civil Division lawyers, but I also wanted to interject
some plaintiffs’ energy into the case.
So, we did hire a few people from the Fraud Section which initiates
cases, but we brought on others from the outside as well, including Colette
Matzzie, who had been at Public Citizen Litigation Group, and Andrew
Goldfarb, who had done some work with my friend from the Bork hearings,
Ralph Neas. We also brought in several others and put together a very talented
team. Patrick Glenn became the director, responsible for the day-to-day
management of a team of about 20 lawyers.
Mr. Pollak: Meaning what?
Mr. Schultz: The first thing we had to do was develop the theory of the case. We put together
a team to do that and I brought in a lawyer who had been very key in the state
cases. The best-litigated state tobacco case was litigated by Mike Ciresi and his
law firm in Minnesota. It was clear they really knew what they were doing.
They actually assigned partners to read all the documents. His right-hand person
was Roberta Walburn, and I persuaded her to move to Washington for three
months to help us develop this case. We drew on her expertise and on expertise
around the Justice Department. For example, I brought in David Barron from
the Office of Legal Counsel, who was an expert on the Secondary Payer Act, the
Medicare statute that allows Medicare to recover product liability claims. And
Susan Davies, who worked with Joel Klein in the Antitrust Division, because we
were looking at potentially an antitrust case too. David Barron is now Chief
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Judge of the First Circuit and Susan Davies went on to become counselor to
Senator Patrick Leahy. She worked at the White House under President Obama
and held several important positions in government. At one point, I arranged for
David Kessler to come down to D.C. and talk to this group because I wanted to
inspire them about what was at stake and David was able to talk about the
devastating public health consequences of tobacco.
We spent about six months putting together the case and we looked at
various theories – antitrust, battery, other theories – but in the end, we made two
arguments. One was under the Medicare Secondary Payer Act, which would
essentially allow Medicare to recover for health care costs; and the second was
under the RICO statute –a civil statute that allowed the government to sue where
there had been mail and wire fraud and to obtain injunctive relief looking
forward against those who violated the statute.
Mr. Pollak: And where did you bring the suit?
Mr. Schultz: We brought it in Washington, D.C. It turned out there were two other tobacco
cases pending before two different judges and so we had the option to file it as a
related case before either judge. I told the team that this was the most important
decision we were going to make. We chose Judge Gladys Kessler and filed it
before her, which in hindsight I think was an excellent choice.
Mr. Pollak: Who was the other judge? Do you remember.
Mr. Schultz: I do.
Mr. Pollak: Do you want to leave that out?
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Mr. Schultz: Yes, the judge is a friend.
Mr. Pollak: Right. Ok. So what would you like to say about the tobacco litigation? What
made it a ripe time to go against tobacco in 1999 or 2000?
Mr. Schultz: The Clinton Administration became interested in this litigation after state
attorneys general had brought cases against the tobacco industry. Those cases
were an attempt to recover state medical costs based on fraud. I think most of
the costs were under Medicaid and the state attorneys general ended up with a
very large and meaningful settlement that not only paid the states billions of
dollars but set up Truth Initiative, a public advocacy group to advocate for
tobacco control, that received $500 million dollars. Under the settlement, the
companies agreed to major changes in tobacco advertising and in their conduct.
And because of that settlement, there was tremendous interest in whether there
was a case the federal government could bring. Our theory was that the
Medicare Secondary Payer Act case was a basis for recovering health care costs
that the federal government had paid under Medicare because of the misbehavior
of the tobacco companies. By this time, because of the state work, because of
the Waxman Committee’s work, and because of Kessler’s work at FDA, there
was a very solid foundation for proving the tobacco companies knew the risks of
tobacco going back to the 1950s — long before the Surgeon General’s report.
They used their trade association to confuse the scientific discussion and to
create doubts about whether tobacco caused lung cancer, heart disease, and other
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ailments. The tobacco companies had been very successful in keeping people
who smoked from quitting.
The tobacco companies marketed their products to children because they
understood that new smokers were almost all children. Ninety percent of
smokers started before the age of 18. They had a very sophisticated marketing
campaign that included cartoon characters like Joe Camel to addict children to
tobacco. So, the whole issue of tobacco health and tobacco health care costs was
very much a priority for the Clinton Administration, and it had, as I mentioned
before, tried to pass major legislation, an effort which had barely failed. The
challenge to the FDA regulation was being litigated through the courts, but this
seemed like another opportunity.
The case was litigated for ten or more years after the Clinton
Administration, long after I left the Justice Department. But in the end, Judge
Kessler had a long trial, and she wrote an opinion that was more than 1000 pages
long that has finding after finding about the fraud of the tobacco industry and the
devastation that it created. She ended up imposing various kinds of injunctive
relief. The case went up to the DC Circuit several times. But it is regarded as a
great success.
I should add a couple of other things. Because this was such a priority,
David Ogden, the head of the Civil Division, was very involved and the
Attorney General was very involved. In the summer of 1999, we were ready to
file the case and Attorney General Janet Reno was ready to sign off on it, in the
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middle of the Elián González matter. A child had been found in the waters
between Cuba and United States. His mother attempted to escape with him but
had drowned, and there was a very public custody fight between his uncle who
lived in the U.S. and his father in Cuba.
Janet Reno, who was from Florida and had deep connections there, was
very pre-occupied with the Elián González matter, but in the middle of all this,
she had to make a final decision about whether we were going to bring our case.
She ultimately authorized it and the case announced at a big press conference on
the day we filed.
At some point during my tenure, Patrick Glynn stepped aside as the
director of the Tobacco Litigation Team and was replaced by Sharon Eubanks.
In 2001, after Al Gore had lost the presidency to George Bush, there was a
question as to whether this case would survive. There wasn’t a lot of support in
the senior leadership in the Justice Department. Those discussions were leaked,
which embarrassed the Department, and the case actually survived.
The Tobacco Litigation Team never got the support it would have gotten
in a Democratic administration, but they stuck with it and they litigated the case
year after year, and did, from what I know, a terrific job.
Mr. Pollak: Why don’t you describe your role as the case went along. Your own personal
role.
Mr. Schultz: I was ultimately involved in developing the theory of the case and putting
together the team; and then in reviewing and editing every pleading that was
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filed. I was very involved in the case during my time at the Justice Department.
I devoted a lot of time to it.
Mr. Pollak: How did you divide your time between tobacco and running a division of 60
lawyers?
Mr. Schultz: I probably spent a quarter of my time on tobacco and the rest on the appellate
job, which is a big job. As I mentioned, Bob Kopp was Director of Appellate
Staff in the Civil Division, and there was also a very strong senior leadership
team. Interestingly, my office was in main Justice and the entire Civil Appellate
Division was in a different building about three blocks away. because their
offices in the Justice Department were under construction. My secretary and I
were in a little group of offices around David Ogden who – as I said – was the
Assistant Attorney General. I got involved in what seemed like the major cases,
which were appropriate for me to be involved in.
Mr. Pollak: Did you have any personal assistants or lawyers? Or did it go directly from you
to Kopp?
Mr. Schultz: No, I did not. Everyone I worked with were career lawyers in the Appellate
Division. By the way, one very senior appellate staff lawyer who has become
prominent is Doug Letter.
Mr. Pollak: Yes!
Mr. Schultz: As you know, Doug is now counsel to House Speaker Nancy Pelosi, a position
that he has held since the Democrats won the House back in 2018. He has
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brought and argued major cases in the federal courts, including many in the
Supreme Court.
Doug and I were next-door neighbors when I was growing up, although
his family moved to California when he was probably six years old and he was
five years younger than I. So we didn’t play together but our parents were very
good friends. When I was at Public Citizen, I argued a number of appellate
cases against him. So, he is somebody that I knew well, and I remember he had
a nice dessert party for me to welcome me to DOJ.
There were a few other lawyers there that I knew, but it was –was and is
– a very talented group of lawyers. These are difficult jobs to get and the
lawyers just do litigation in the federal circuit courts of appeals.
Mr. Pollak: What was the ultimate decision in the tobacco case?
Mr. Schultz: In 2006, Judge Kessler rendered a decision that the tobacco companies had
violated the civil RICO statute and had engaged in a conspiracy over 30 or 40
years to deceive the public about the health risks of tobacco, and marketed
tobacco to children. After many years of further litigation, she ordered the
companies to publish statements to correct their deception about the risks of
smoking and the addictiveness of nicotine. Her 1000-page opinion meticulously
catalogues the companies’ unlawful behavior.
Mr. Pollak: So, you have a section in the outline about the basic job of the head of appeals
and you alluded to it, but is there more to say?
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Mr. Schultz: Yes, there is probably a little more to say. There are several components to it.
One component is authorizing appeals. When the government loses in the
district court, a decision has to be made as to whether to appeal it to a circuit
court. And the process is generally that the federal agency involved makes a
recommendation. The recommendation is submitted to Civil Division’s appellate
section, my office. It is first reviewed by one of the career lawyers who writes a
recommendation as to whether the government should appeal. So I was
involved in making that decision. The recommendation is then submitted to the
Solicitor General’s office and the Solicitor General makes the decision. But we
listened very conscientiously to the agency’s recommendations and the Solicitor
General generally deferred to what we wanted to do. So that’s one part of the
job.
The second part is reviewing briefs and editing briefs. There is so much
going on you obviously can’t read them all. I would have to identify the ones
that were major issues or one I was particularly interested in. For example,
those involving Food and Drug Administration. It was my job to clear those
briefs and to spot any issues that could be particular problems for the
administration; whether a policy matter that could have to do with issues that cut
across different departments such as standing or exhaustion or other threshold
issues.
I had a close working relationship with Solicitor General Seth Waxman
because many of the cases the Solicitor General was arguing were cases that our
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team had argued in the courts of appeals. We would review all the Supreme
Court papers and comment on them, participate in the moot courts for the
Supreme Court arguments, and generally work very closely with the Solicitor
General’s office. The Deputy Solicitor General for the Civil Division then and
today was Ed Kneedler who was a law school classmate of mine, so he is
somebody I had known for a long time.
Occasionally I testified before Congress, maybe once or twice, and I
argued cases in the courts of appeals. Over two years I argued six cases so there
was a fair amount of time preparing for that.
Mr. Pollak: It is interesting to me that there is sort of a one-on-one relationship between the
Deputy Assistant in charge of appeals and Bob Kopp, the Director in charge of
appeals. It seems kind of a strange organization.
Mr. Schultz: It worked well. Bob Kopp was a very talented but self-effacing person. There
was never any tension. He was very reliable, and he was always very respectful
of what I wanted to do.
Mr. Pollak: What did you bring to your oral arguments having litigated for Public Citizen
and working in government at the FDA?
Mr. Schultz: You know it’s interesting, because I initially wondered how somebody in my
position should handle these oral arguments. The Department had a career
lawyer who did most of the work and who may expect to argue. I didn’t want to
be seen as taking the argument away from the career attorney. When I asked Bob
Kopp about that he said the best thing to do if you want to do an argument in a
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case is to get involved early on. Then everybody knows it is something you care
about and it won’t be a surprise that you want to argue it. So I took that advice
and I don’t think I argued anything where I hadn’t done significant work on the
briefs. But again, just by the nature of the job, I wasn’t doing the original
research. There just wasn’t time and the lawyers were too good for that to make
sense.
The one exception I think of is CampbellError! Bookmark not defined.
v. Clinton. This was a challenge by a member of Congress to the War Powers
Act. I think the claim was that Clinton had sent troops to Kosovo without
authorization from Congress as required by the War Powers Act. Bob Kopp or
Mark Stern wanted me to argue it because they felt it was a political case and it
made sense to have the political deputy argue it.
Our main argument in this case was that Congressman Tom Campbell didn’t
have standing. In other words, this was a political issue between Congress and
the President, and a member of Congress did not have a right to sue the
President to challenge whether he was complying with the act. I was willing to
argue it but it put me in the position of arguing against standing, which was
exactly the opposite position I had taken at Public Citizen in many contexts. I
once estimated that I probably spent a quarter of my time at Public Citizen
arguing about standing, about whether we could get into court. I do remember
when I got up to argue, one of the members of the panel, Judge Larry Silberman,
looked at me with great surprise. He knew me well from Public Citizen and
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seemed to be surprised to see me arguing for the government. But I argued the
case and won. While I was at Civil Appellate, I had four cases in the D.C.
Circuit and I believe Judge Silberman was on three of the panels. And I always
felt I had a good rapport with him. He was a tough judge but I always felt I
connected well with him in oral arguments. Interestingly, Judge David Tatel,
who has become a good friend, was on four panels.
Mr. Pollak: What other circuits did you argue in and do you have anything to say about an
argument in some other circuit as compared to an argument in the D.C. Circuit?
Mr. Schultz: I was very interested in a case about publishing journal articles without FDA
approval. I worked a lot on this issue at FDA, and I decided to argue it. The
panel was Judge Silberman, Judge Tatel, and Judge Stephen Williams. Between
the time District Judge Royce Lamberth decided the case and the time the D.C.
Circuit held its argument, Congress had passed amendments to the Food, Drug,
and Cosmetic Act that had gone into effect and that in limited circumstances
allowed for the distribution of journal articles that hadn’t been approved at the
FDA. It was a compromise that I was very involved in negotiating when I was
at the agency. The idea of the compromise was the article could be distributed if
the company made a commitment to do the studies needed to determine
effectiveness. I thought we were in a lot of trouble particularly since the panel
didn’t seem like it would be favorable to our position.
Judge Lamberth had decided that the new statute restricted distribution
of journal articles, but in fact it did just the opposite. It created a safe harbor
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allowing manufacturers to distribute articles if they agreed to do the studies
required to determine whether the articles about a drug’s effectiveness were
valid. If the companies did not comply with the statute, then the pre-existing law
would apply.
I was looking for a way to save the case and thought that we should
advance an interpretation of the new statute that did not contain a prohibition on
the dissemination of journal articles, an interpretation that was contrary to Judge
Lamberth’s ruling but that I believed to be correct. The problem was the lawyers
at the Food and Drug Administration didn’t want to admit that the statute was
this limited, and I needed to concede in order to avoid a very bad First
Amendment decision. I spent the whole weekend talking to the senior lawyer at
FDA because I wasn’t going to make the argument unless she went along. I
think the Justice Department is entitled to do that, but I wasn’t willing to make
that argument without FDA agreeing. Ultimately, I convinced the lawyer, Ann
Wion, the key and most conservative FDA lawyer, and made the argument. The
lawyer on the other side was Bert Rein of the firm Wiley Rein & Fielding, a very
prominent lawyer, quite a bit more senior than I.
I laid out my theory to the court, which hadn’t been in any of the briefs,
and I remember Judge Silberman said he thought they were going to make a
major First Amendment decision but it looks like they couldn’t do that. We
ended up avoiding the issue, and the decision relied on my theory. It was sent
back to Judge Lamberth, who dismissed the case. The Washington Legal
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Foundation asked for attorneys’ fees on the ground that they had prevailed. I
was adamantly against that but the lawyer in the U.S. Attorney’s Office at that
point who was handling the case in the district court strongly felt that the
government should agree to attorneys’ fees. I just wasn’t willing to have this
battle with him. You can only override career people so many times and I just
wasn’t willing to do it here.
So the Justice Department took the position that the Washington Legal
Foundation could get something like half a million dollars in attorneys’ fees, but
when Judge Lamberth considered the issue, he said, “Nothing doing.” Judge
Lamberth ruled that the D.C. Circuit had overturned his decision and he was not
awarding attorneys’ fees, so I felt vindicated.
Mr. Pollak You noted that you wanted to say something about Seth Waxman’s oral
argument in Food and Drug Administration v. Brown & Williamson Tobacco
Corp..
20
What’s the case and why is it something you wanted to comment on?
Mr. Schultz This was a challenge to the tobacco regulation that we had written and issued
when I was at FDA in which FDA concluded it had jurisdiction to regulate
tobacco as a combination drug and medical device. It was a very controversial
decision, but we won most of the issues in the district court in North Carolina,
the forum selected by the tobacco industry. We lost a divided decision in the
Fourth Circuit and the government petitioned for certiorari, which the Supreme
Court granted.
20 529 U.S. 120 (2000).
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We knew it was going to be a tough case and I was very involved in the
briefs and the moot courts. And we felt that the outcome was probably going to
depend on Justice Sandra Day O’Connor – that she would be the swing vote.
When Seth got up to argue it, almost immediately she said: “You’re saying
tobacco is a drug? That doesn’t make any sense.” She just squinched her mouth
up and made it pretty clear that we didn’t have her vote. Seth struggled through
the argument. We felt after the argument we were going to lose.
I remember David Kessler and a bunch of us had lunch afterwards.
Everybody had seen the argument and we weren’t feeling very good about it. In
the end, the decision was five to four. It was probably closer than we thought,
with a very effective dissent by Justice Stephen Breyer.
Mr. Pollak But you lost.
Mr. Schultz We lost. We lost and the FDA lost all its jurisdiction over tobacco. The
program was closed down and it wasn’t revived until 2010 under the Obama
Administration when Congress finally enacted legislation establishing a tobacco
program at FDA. Between 2001 when I left government and 2010, I worked
closely with the Campaign for Tobacco Free-Kids to get the legislation enacted.
Mr. Pollak You wanted to comment on cases that were brought in the Southern District of
New York under the United States Attorney and their relationship with main
Justice.
Mr. Schultz As I said, Civil Division’s appellate staff was in charge of all civil appellate
litigation across the country. Any case that we thought was important enough,
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we briefed and argued. Our job was to identify the most important cases,
particularly those that were simultaneously being considered in several circuits.
It was important to have us arguing and managing them so the arguments would
be consistent. Often the same attorney argued in several circuits.
The exception to this was the Southern District of New York, often
called “the sovereign district of New York,” which historically had successfully
taken the position that they should handle any case within their jurisdiction. And
this seemed wrong to me. It seemed contrary to the interests of the Justice
Department. I decided to take a run at this and try to persuade the Attorney
General to restore the Civil Division’s responsibility for those cases. I had been
in government long enough to know that I needed help and so I got Seth
Waxman, the Solicitor General, on my side to agree to this.
I also met with Deputy Attorney General Eric Holder, but he wasn’t
willing to go to bat for us. He was in charge of overseeing all the U.S. attorneys,
so he had to work with them. He just wasn’t willing to take on Mary Jo White.
Seth and I jointly made a presentation to Attorney General Reno. The
U.S. Attorney for the Southern District was Mary Jo White, who felt she had to
be very protective of her office’s jurisdiction. She was a very effective,
aggressive advocate and she flew to Washington to meet with the Attorney
General on this issue. This happened in the middle of a crisis at the Justice
Department involving a Cuban child, Elián González, which I previously
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mentioned in connection with the Attorney General’s authorization of the
tobacco lawsuit.
In the middle of this crisis, Attorney General Janet Reno took an hour to
hear from Mary Jo White why the U.S. Attorney’s Office in the Southern
District was so special.
I had the head of the Civil Division and the Solicitor General on my
side, but in the end the Attorney General sided with Mary Jo White and things
remained as they were. Seth later told me it was the only internal cause he ever
lost while he was at the Justice Department. So, I guess it goes down as a
valiant effort.
Mr. Pollak Well, do you want to devote a little more time to this?
Mr. Schultz I just want to say a couple more words about the role of the Justice Department.
One interesting question that comes up is who is the client? When the Justice
Department brings a case on behalf of an agency or defends a case on behalf of
an agency, there is a raging issue about whom they represent. Many lawyers at
the Justice Department will say they are representing the United States.
Mr. Pollak So, just to make it a little more concrete, why don’t you pick a subject matter
field and make a hypothetical of representing an agency. It doesn’t need to be a
real case.
Mr. Schultz Well, let me take a real case that came up when I was at the General Counsel’s
office at HHS. As background, most administrative agencies don’t have
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independent litigating authority. Whether you’re the Food and Drug
Administration or the Department of Defense, you’re represented by the Justice
Department. At the Justice Department, generally the mantra there is that the
Justice Department represents the United States. And I think it’s fairly clear the
Justice Department can make the calls on what is litigated.
You’ll recall when I was at Public Citizen, I had a case against the Food
and Drug Administration involving banning color additives that were animal
carcinogens. As a reminder the Food and Drug Administration had developed
what it called a de minimis policy for these carcinogens. FDA took the position
that if the risk to humans was trivial or very small, de minimis, it didn’t have to
be banned. It went to the D.C. Circuit, and at some point in the briefing, Richard
Willard, head of the Civil Division, read the brief and it didn’t make sense to
him. He was right. The law said animal carcinogens must be banned and there
was no de minimis exception in the law.
Ultimately, I was told the Secretary of HHS had a conversation with the
Attorney General. I guess the head of the Civil Division lost the battle, but in
the end, he was right because the court didn’t buy FDA’s argument. The FDA
lost the case because, as Richard Willard said, the agency wasn’t following the
law. But that’s a very rare situation. Usually, the Justice Department decides,
and it doesn’t get to the level of the Attorney General and the Department head.
In theory, if they disagree, the Cabinet Secretary and the Attorney General can
go to the President and the President can decide. But that’s very unusual.
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Going back to my experience as General Counsel of HHS, I had a case
very early on in the Supreme Court. The issue in the case was whether Medicare
providers, doctors for example, can challenge the state Medicaid agencies over
whether their rates were adequate. Generally, the states set rates as to what
hospitals and doctors and other providers are paid for Medicaid, but there is
language that the rates have to be sufficient to attract doctors and other providers
to participate in the program. And so doctors were challenging the states’ rates
as inadequate. The question in the Supreme Court was whether there was a
private right of action. Could the doctors bring this kind of challenge in court, or
did they have to go thought the administrative process at HHS?
The U.S. government wasn’t in the case, but, as is often the case, the
Solicitor General’s office planned to file an amicus brief informing the Court of
the government’s position. And the question was, who’s side should the U.S. be
on? Should the United States side with the states or should it side with the
providers seeking adequate rates?
In this case, Kathleen Sebelius, the Secretary of the Department of
Health and Human Services, was very interested and wanted to support the idea
there was a private right of action, that the doctors could sue for adequate rates.
She wanted the Department of Justice and the Solicitor General’s Office to take
that position in the Supreme Court. There were others in the government who
agreed with this, including the Associate Attorney General, the number three
official in the Justice Department, and the White House Counsel, the President’s
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lawyer. But the career lawyers in the Solicitor General’s Office disagreed. They
thought this wasn’t consistent with positions they had taken before, and they felt
very strongly that the government ought to take the opposite position of what
Secretary Sebelius wanted.
Acting Solicitor General Neal Katyal ended up backing his staff.
Nobody was willing to take this to President Obama. And so, against the desires
of the client, the federal government took the position that there was no private
right of action.
I had several meetings with the Acting Solicitor General about this,
making all the legal arguments. He told me he was certain that our argument
only had one or two votes, and it just wasn’t a position he thought the
government should take. In the end, it was a five to four decision, with Justice
Breyer in the majority, finding there was no private right of action. It was a
particularly disappointing result since it might have made a difference had the
federal government supported the doctors and the Secretary of HHS.
The bottom line in my experience is that lawyers in the Justice
Department have had different views of this. In the Civil Division, at least in the
Appellate Division, I felt the lawyers were mostly respectful of the agencies and
took their position seriously. Obviously, the Acting Solicitor General at the time
of the Medicaid case didn’t really seem to care what his client wanted to do. He
did what he thought was in the best interest of the Solicitor General’s Office.
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I should note that after Don Verrilli became Solicitor General he asked
me to lunch, and it turned out he wanted to discuss this case. He had watched the
whole thing play out from the vantage point of the White House. He had been in
the White House Counsel’s Office before he became Solicitor General, and he
wanted to tell me that he had a different view. He did very much care what his
client, the Secretary of HHS, thought. It wasn’t a promise that he would always
go our way, but it was a promise that it was a new day. And, in the end, we had
many, many cases in the Supreme Court together and a very close working
relationship.
Mr. Pollak You’re at a point where there came to be another presidential election in 2000
and you left the government. Right?
Mr. Schultz Right. So, it’s probably a good stopping place.
