DC Circuit curtails judicial exercise of supervisory powers over deferred prosecution agreements

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White Collar Alert


In a ruling with important implications for corporate criminal resolutions, the DC Circuit has upheld DOJ's wide prosecutorial discretion to enter into Deferred Prosecution Agreements (DPAs) with defendants − and severely limited the authority of federal judges to challenge government charging decisions involving DPAs.  On April 5, 2016, the Court of Appeals reversed District of Columbia District Judge Richard J. Leon's unprecedented order denying a joint consent motion for exclusion of time under the Speedy Trial Act, 18 U.S.C. §§ 3161-3174, filed in connection with a DPA with Fokker Services, B.V., effectively blocking the DPA by preventing a delay in the proceedings so that the defendant could demonstrate its good conduct as it faced a pending criminal charge.  In reversing, the court ruled that the trial judge had no role in weighing the merits of DOJ's decision-making in entering into the DPA.     

In United States v. Fokker Services, B.V., the government filed a single count of conspiracy to violate the International Emergency Economic Powers Act, 50 U.S.C. § 1705, against Fokker Services, an aerospace company that engaged in illegal export and re-export of aircraft parts and technology to US-sanctioned countries. In conjunction with that charge, the government filed the consent motion seeking the court’s approval, as required under § 3161(h)(2) of the Speedy Trial Act, to delay for 18 months the statutory requirement that a trial begin within 70 days of the filing of an Information or Indictment, in order to allow Fokker to demonstrate good conduct and to implement remedial measures under the terms of the DPA.  

In denying the consent motion, Judge Leon acknowledged limitations on judicial supervisory powers, but warned against rubber-stamp approvals of all prosecutorial actions. Juxtaposing Fokker’s admitted conduct against the backdrop of a post-9/11 world, Judge Leon found the DPA’s terms – including a monetary fine equal only to the revenue Fokker collected from illegal transactions, the lack of charges against any individuals, and the absence of an independent monitor – to be insufficient. In particular, Judge Leon took issue with the government’s decision to not charge any individuals in connection with the conspiracy.

Judge Sri Srinivasan, writing for the three-judge panel of the DC Circuit, highlighted the constitutional foundation for prosecutorial discretion in charging decisions, as well as the statutory framework and congressional intention behind the Speedy Trial Act, in finding that Judge Leon “significantly overstepped” his judicial authority in denying the consent motion. The court recognized that authority over whether and how to charge criminal cases arises from the Executive branch’s constitutional obligations to “take Care” and “see to the faithful execution of the laws.” With this backdrop, the court concluded that judicial approval of DPAs under § 3161(h)(2) is limited to ensuring that the purpose behind a DPA is to allow a defendant to demonstrate good conduct so as to avoid prosecution, and not merely a pretext to avoid the tick-tock of the Speedy Trial clock. This judicial approval authority does not imbue courts with a new-found power to “scrutinize and countermand” prosecutorial authority and discretion.

In support of its conclusion in Fokker, the court analogized judicial approval of DPAs to the limited judicial power under Rule 48(A) of the Federal Rules of Criminal Procedure, which requires a prosecutor to obtain “leave of court” before dismissing criminal charges, and to antitrust consent decrees under the Tunney Act, 15 U.S.C. § 16(e), which are to be approved by courts when “in the public interest.” These analogs confirmed the narrow confines of judicial authority in the charging context, reflecting that judicial oversight in these instances is intended to guard against possible prosecutorial harassment of the defendant (Rule 48(a)) and not as a predicate for judicial rejection of an agreement simply because the court disagrees with the Executive’s exercise of its prosecutorial discretion.  

The court rejected the court-appointed amicus curiae’s effort to draw an analogy between judicial review of DPAs and plea deals under Rule 11 of the Federal Rules of Criminal Procedure on the grounds that a court’s power to review plea deals is premised on judicial primacy in sentencing. The court distinguished DPAs, which are agreements entered into by the parties, intended to allow defendants to avoid criminal convictions altogether, and hence do not implicate the judiciary’s authority in sentencing.

The issues contemplated and decided by the DC Circuit in the Fokker case have been percolating. Three years ago, in United States v. HSBC Bank USA, N.A., Judge John Gleeson of the Eastern District of New York assessed the role of the court in reviewing the terms of a DPA. Like Judge Leon, Judge Gleeson noted the court’s deference to the executive branch with respect to charging decisions. Judge Gleeson anticipated the DC Circuit’s framing of the judicial role in approving DPAs, namely to prevent parties from “circumventing” the temporal confines of the Speedy Trial Act. Yet, in line with Judge Leon’s approach, Judge Gleeson remarked that the court was not “a potted plant” and proceeded to address the merits of the DPA before granting his approval subject to continued monitoring.

In 2011, in the civil context, Judge Jed S. Rakoff of the Southern District of New York rejected a consent judgment presented to the court in U.S. Securities and Exchange Commission v. Citigroup Global Markets Inc., concluding that the court could not “impose substantial injunctive relief” merely “on the basis of allegations unsupported by any proven or acknowledged facts.” To do so, according to Judge Rakoff, would be “neither reasonable, nor fair, nor adequate, nor in the public interest,” the combination of which, the court stated, must exist for a consent judgment to be acceptable. The Second Circuit reversed, finding that the district court’s requirement that “the S.E.C. establish the ‘truth’ of the allegations against a settling party as a condition for approving the consent decrees” constituted an abuse of discretion. Thus, there too, the appellate court curtailed what it perceived as judicial overzealousness in assessing the merits of the exercise of executive brand discretion.


The Fokker decision confirms the Justice Department’s discretion in employing DPAs in resolving criminal enforcement matters. The DC Circuit’s ruling reinforces that whether and how to charge a case rests squarely in the hands of the Executive branch. In its view, district court judges examining the parameters of DPAs should restrict examination of those agreements to whether the DPA served the intended purpose of the Speedy Trial Act’s provision for exclusion of time to allow the Defendant to demonstrate good conduct. Judges who engage in inquiries into the merits may overstep their authority and impinge on prosecutors’ constitutional obligation (and exclusive right) to faithfully execute the law. “Interpreting § 3161(h)(2) to empower courts to scrutinize the prosecution’s underlying charging decisions would tend to discourage – not encourage – the prosecution’s use of DPAs, contradicting the provision’s apparent overarching object.” Among other things, many practitioners believed (or hoped) that the recent close scrutiny and review of DPAs by several district court judges afforded putative defendants a rationale for arguing that DOJ should enter into a non-prosecution agreement (NPA) rather than a DPA, to avoid that kind of judicial scrutiny. To the extent Fokker is followed in other circuits, it relieves DOJ from having to satisfy judicially crafted standards for DPA approval.

Nonetheless, we believe defense counsel retains important leverage in negotiating DPAs, particularly with respect to the inclusion of detail on the reasons behind the government’s decision not to charge. Notwithstanding the ruling in Fokker, the inclusion of such language remains in the prosecution’s interest given the public scrutiny and controversy that often follows such resolutions. In our experience, the inclusion of such language relating to the reasons not to indict (such as prompt efforts at remediation, rigorous compliance upgrades, and cooperation with the government) can have a salutary collateral benefit in the seemingly inexorable follow-on derivative or class action matters that come in the wake of such resolutions.

To learn more about this ruling and its implications for you, please contact any of the authors.