The Thompson memo and ancillary jurisdiction

WhiteCollarCrimeProfBlog points to Judge Lewis Kaplan's 83 page Order, in which he holds that 1) the Tompson memo is unconstitutional; 2) sovereign immunity bars an award of sanctions against the government (because there is no specific statute providing for attorneys fees); 3) but, the defendants, using the court’s ancillary jurisdiction, can recover from KPMG, and:

Accordingly, the Court holds that it has ancillary jurisdiction to determine the claims of the KPMG Defendants for advancement. As Judge Gleeson did in Garcia [No. 04 Civ. 0832 (JG), 2004 WL 1636982, *1 n.2 (E.D.N.Y. July 22,2004), aff’d, 443 F.3d 202 (2d Cir. 2006).], the Court will direct the Clerk, as a matter of administrative convenience, to open a civil docket number for the claims of the KPMG Defendants against KPMG.

SL&P comments here.  WSJ comments here.  Dave Hoffman comments here.  He notes that:

[There is apparently an arbitration agreement in the partnership agreement which could delay matters, but the court suggested what it thinks of that provision by saying “Assuming that the KPMG Defendants pursue relief against KPMG and that KPMG remains insistent upon its alleged arbitration remedy, the questions whether the arbitration clause properly is so construed and, if so, whether it is void as against public policy [as frustrating the court’s decision] will be addressed . . . .” (fn. 239).  Hee.]