As predicted, KPMG would become a major appellate morass. There is a long discussion of mandamus standards, which if you have not read by now, you are not a real appellate lawyer. According to the Tax Prof Blog: The latest twist in the KPMG tax shelter saga:
Federal District Judge Kaplan on Monday filed a 47-page brief in the Second Circuit defending his decision last summer to hold a separate civil proceeding to determine whether KPMG should pay the indicted 16 former KPMG partners' legal fees.
Our earlier converage of KPMG here. Among other things, Judge Kaplin determined that because the government had worked with KPMG and Skadden to hinder the defendants Sixth Amendment rights, he would open a civil docket, and let a civil case proceed in order to enforce an agreement between KPMG and its employees that would pay their attorneys fees. In this brief, Judge Kaplin explains the use of ancillary jurisdiction as follows:
As the Supreme Court wrote in Kokkonen v. Guardian Life Insurance Co., a district court may assert ancillary jurisdiction “to enable [it] to function successfully, that is, to manage its proceedings, vindicate its authority, and effectuate its decrees.” In consequence, the exercise of ancillary jurisdiction, even where it requires the addition of a party, is appropriate where (1) the ancillary dispute arises directly out of events that occurred in the criminal case, (2) its resolution is important to the fair and proper resolution of the criminal charges on the merits, and (3) determination of the ancillary dispute would not substantially predominate over or otherwise
interfere materially with the determination of the criminal charges.
It concludes that his action were correct because:
...the “non-party” is an unindicted co-conspirator in the indictment and, when the ancillary proceeding began, was a defendant on an identical conspiracy charge pending in the same district court.
WSJ law blog comments here.
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