[Congressional Record (Bound Edition), Volume 159 (2013), Part 5]
[Senate]
[Pages 6496-6501]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       NOMINATION OF THOMAS PEREZ

  Mr. HARKIN. Mr. President, I come to the floor today to express my 
deep disappointment that once again Republican obstructionism and 
procedural tricks are preventing this body from carrying out its 
constitutional duty and responsibility, its obligation to consider 
important Presidential nominations.
  This time the target is Mr. Tom Perez, the President's extremely 
qualified nominee to be Secretary of Labor.
  The HELP Committee, which I chair, was scheduled to vote on his 
nomination at 4 o'clock this afternoon. Obviously, we are not doing 
that. An anonymous Republican has invoked an obscure procedural rule to 
prevent our committee from meeting at that scheduled time. This 
pointless obstructionism is extremely disturbing.
  I would like to point out that we had previously been scheduled to 
vote on his nomination in my committee 2 weeks ago. In an effort to 
bend over backwards and to be accommodating to our colleagues who 
requested more time to consider documents related to the nomination, I 
deferred it for 2 weeks as sort of senatorial courtesy.
  This time there is no allegation that they have had insufficient time 
for

[[Page 6497]]

consideration, just delay for delay's sake on the nomination. Tom Perez 
has been before our committee since March. We have had our hearing, 
during which Mr. Perez fully answered all questions posed to him. I cut 
off no one. I allowed anyone to ask whatever questions they wanted.
  Mr. Perez has met with any interested Senator personally and answered 
over 200 written questions for the record. It is an understatement to 
say his nomination has been thoroughly vetted. This continuing delay is 
unconscionable and only hurts the American workers and businesses that 
rely on the Department of Labor each and every day.
  As our country continues to move down the road to economic recovery, 
the work of the Department of Labor is becoming even more vital to the 
lives of our working families. Whether it is making sure workers get 
paid the wages they deserve, helping returning veterans reenter the 
workforce, protecting our seniors' retirement nest eggs, ensuring that 
a new mother can care for her baby without losing her job, the 
Department of Labor helps families build the cornerstones of a middle-
class life.
  Now more than ever we need strong leadership at the Department to 
help strengthen our fragile recovery and build a stronger and 
revitalized American middle class. That is why this nomination is so 
important.
  There has been a lot of public discussion about Mr. Perez but 
remarkably little of it has focused on what should be the central 
question before our committee today: Will Tom Perez be a good Secretary 
of Labor. The answer is unequivocally yes. Without question, he has the 
knowledge and experience needed to guide this critically important 
agency.
  Through his professional experiences, and especially his work as 
Secretary of the Maryland Department of Labor, Licensing and 
Regulation, he has developed strong policy expertise about the many 
important issues for American workers and businesses that come before 
the Department of Labor every day. He spearheaded major initiatives on 
potentially controversial issues, such as unemployment insurance reform 
and worker misclassification, while finding common ground between 
workers and businesses to build sensible, commonsense solutions.
  He also clearly has the management skills to run a large Federal 
agency effectively. He was also an effective manager and a responsible 
steward of public resources, undertaking significant administrative and 
organizational reforms that made the Maryland DLLR more efficient and 
more effective.
  His outstanding work in Maryland has won him the support of the 
business community and worker advocates alike. To quote from the 
endorsement letter of the Maryland Chamber of Commerce:

       Mr. Perez proved himself to be a pragmatic public official 
     who was willing to bring differing voices together. The 
     Maryland Chamber had the opportunity to work with Mr. Perez 
     on an array of issues of importance to employers in Maryland, 
     from unemployment and workforce development to the housing 
     and foreclosure crisis. Despite differences of opinion, Mr. 
     Perez was always willing to allow all parties to be heard, 
     and we found him to be fair and collaborative. I believe that 
     our experiences with him here in Maryland bode well for the 
     nation.

  That is a pretty strong endorsement by a chamber of commerce for a 
nominee whom the minority leader today on the floor characterized as a 
``crusading ideologue . . . willing to do or say anything to achieve 
his ideological ends.'' That is how he was characterized by the 
Republican leader today, but the Maryland Chamber of Commerce didn't 
seem to think so. So that grossly unfair characterization by the 
Republican leader is manifestly inconsistent with the experiences of 
the Republican leaders and businesses that have actually worked with 
Tom Perez.
  Mr. President, I ask unanimous consent to have printed in the Record 
letters from businesses and Republican leaders demonstrating the strong 
bipartisan support for Mr. Perez's nomination. These people clearly 
disagree with the Republican leader's assessment of Mr. Perez's 
qualifications and character.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                                   March 19, 2013.

 Joint Statement From State Attorneys General in Support of Nomination 
         of Tom Perez as Secretary of U.S. Department of Labor

       ``Tom Perez is a brilliant lawyer and leader, who listens 
     thoughtfully to all sides and works collaboratively to solve 
     problems. He has dedicated his career to serving the public, 
     and his experience as Secretary of the Maryland Department of 
     Labor, Licensing and Regulation and in the U.S. Department of 
     Justice make him ideally suited to serve as the Secretary of 
     the U.S. Department of Labor.
       ``As state Attorneys General, we have found Perez to be 
     open, responsive and fundamentally fair. He is committed to 
     justice and the rule of law and able to work across party and 
     philosophical lines to achieve just results.
       ``The U.S. Department of Labor and the country will be well 
     served by a leader who understands the need to forge 
     partnerships with state and local officials and who values 
     cooperation to bring about successful results for both 
     employers and employees.''
       ``The following Attorneys General issued this joint 
     statement in support of Perez's nomination:
       ``California Attorney General Kamala Harris, Delaware 
     Attorney General Beau Biden, Illinois Attorney General Lisa 
     Madigan, Iowa Attorney General Tom Miller, Mississippi 
     Attorney General Jim Hood, North Carolina Roy Cooper, Oregon 
     Attorney General Ellen Rosenblum, Tennessee Attorney General 
     Robert Cooper, Jr., Former Utah Attorney General Mark 
     Shurtleff and Former Washington Attorney General Rob McKenna.
                                  ____

                                                   March 15, 2013.
     Hon. Barack Obama,
     President of the United States, The White House, Washington, 
         DC.
       Dear President Obama: The Maryland Chamber of Commerce 
     supports the nomination of Thomas E. Perez to serve as the 
     United States Secretary of Labor.
       During his tenure as Secretary of Maryland's Department of 
     Labor, Licensing and Regulation, Mr. Perez oversaw a wide 
     range of regulatory programs of critical importance to the 
     state's business community, including unemployment insurance, 
     the regulation of financial institutions, worker safety and 
     professional licensing.
       Mr. Perez proved himself to be a pragmatic public official 
     who was willing to bring differing voices together. The 
     Maryland Chamber had the opportunity to work with Mr. Perez 
     on an array of issues of importance to employers in Maryland, 
     from unemployment and workforce development to the housing 
     and foreclosure crisis.
       Despite differences of opinion, Mr. Perez was always 
     willing to allow all parties to be heard and we found him to 
     be fair and collaborative. I believe that our experiences 
     with him here in Maryland bode well for the nation.
       The Maryland Chamber of Commerce is Maryland's leading 
     statewide business advocacy organization. Our 800 member 
     companies employ more than 442,000 people in the state. The 
     Chamber works to support its members and advance the State of 
     Maryland as a national and global competitive leader in 
     economic growth and private sector job creation through its 
     effective advocacy, high level networking and timely 
     communications.
           Sincerely,

                                           Kathleen T. Snyder,

                                               CCE, President/CEO,
     Maryland Chamber of Commerce.
                                  ____

                                           Greater Prince George's


                                          Business Roundtable,

                                        Bowie, MD, March 18, 2013.
       To Whom It May Concern: Tom Perez is one of the most honest 
     and dedicated public officials that we in the Prince George's 
     County business community have ever worked with. His 
     understanding that government must work in partnership with 
     business to find solutions that succeed in today's 
     marketplace highlights his continual accessibility and his 
     empathic approach to working with job creators nationwide.
       We applaud the President's nomination of Tom Perez as 
     Secretary of Labor because we have experienced, first hand, 
     the fruits of Tom's open door policy and his steady approach 
     to finding solutions that work for the benefit of all.
           Sincerely,
                                                  M.H. Jim Estepp,
     President/CEO.
                                  ____

                                             The Maryland Minority


                                Contractors Association, Inc.,

                                    Baltimore, MD, March 21, 2013.
     President Barack Obama,
     The White House, Pennsylvania Avenue, Washington, DC.
       Dear President Obama, The Maryland Minority Contractors 
     Association applauds the nomination of Tom Perez as the 
     United States Secretary of Labor, and encourages a quick 
     confirmation. While serving as Maryland's labor secretary, 
     Tom proved to be fair-minded, and always had an open door.

[[Page 6498]]

       The Maryland Minority Contractors Association is composed 
     primarily of merit shops, so our member companies have 
     employees that are not under union collective bargaining 
     agreements. We found ourselves at the table with Tom on a 
     range of issues, from workplace safety to apprenticeships to 
     the proper classification of employees. Although our 
     perspectives often differed, we always had a seat at the 
     table, and I can confidently say that our perspective was 
     always taken into consideration. Tom pursues his role of 
     protecting workers with vigor, but he always took the 
     concerns of our members seriously, and, when presented with 
     sound arguments, was willing to compromise.
       We strongly support the nomination of Tom Perez, and we 
     believe that he will make an excellent Secretary of Labor. He 
     is a smart, honest person who will serve our county well.
                                                      Pless Jones,
     President, Maryland Minority Contractors.
                                  ____

                                                 Whiteman Osterman


                                                  & Hanna LLP,

                                       Albany, NY, April 15, 2013.
                  Re Thomas Perez, Nominee for Secretary of Labor.
     Sen. Thomas Harkin (D-IA),
     Hart Senate Office Building,
     Washington, DC.
     Sen. Lamar Alexander (R-TN),
     Dirksen Senate Office Building,
     Washington, DC.

       Dear Senators Harkin and Alexander: I write as an appointee 
     by former President George H.W. Bush to the United States 
     Department of Justice in support of Thomas Perez who has been 
     nominated by President Obama to serve as Secretary of Labor 
     and urge your favorable consideration of his candidacy.
       As the Assistant Attorney General for Civil Rights (1990-
     1993), I worked directly with Tom (in fact, I hired him in 
     1990) on a variety of sensitive matters, including criminal 
     and voting rights issues. During a number of face-to-face 
     meetings, I had the opportunity both to review his legal-
     based memoranda and to engage in a number of intense debates 
     as to what should be the Division's final course of action. 
     As a result of those experiences, I found Tom to be an 
     excellent lawyer, a dedicated public servant with a deep 
     commitment to the common good, and a person of legal and 
     moral integrity; qualities that enable him to recognize the 
     value of contending parties' positions in order to achieve 
     workable solutions.
       I believe that he will bring those skills and strong 
     personal qualities to the duties of the Secretary of Labor 
     and enable him to perform in a manner worthy of your trust.
       Thank you for listening to my support for this very special 
     and patriotic man.
           Respectfully yours,
                                                    John R. Dunne.

  Mr. HARKIN. Indeed, I think Mr. Perez's character--his character--is 
exactly what qualifies him for this job--his character.
  Tom Perez has dedicated his life to making sure every American has a 
fair opportunity to pursue the American dream. At the Maryland 
Department of Labor, he revamped the State's adult education system so 
more people could successfully train for better jobs and brighter 
futures. As the Assistant Attorney General for Civil Rights at the U.S. 
Department of Justice, where he is right now, he has been a voice for 
the most vulnerable, and he has reinvigorated the enforcement of some 
of our most critical civil rights laws. He has helped more Americans 
achieve the dream of home ownership through his unprecedented efforts 
to prevent residential lending discrimination. He has helped to ensure 
that people with disabilities have the choice to live in their own 
homes and communities rather than only in institutional settings and to 
make sure people with disabilities receive the support and services 
they need to make independent living possible. He has stepped up the 
Department's efforts to protect the employment rights of servicemembers 
so our men and women in uniform can return to their jobs and support 
their families after serving their country.
  I can tell you that Tom Perez is passionate about these issues. He is 
passionate about justice and about fairness, and I believe these are 
qualities that Tom Perez learned at the hand of his former employer 
here in the Senate, our former committee chairman of the HELP 
Committee, Senator Ted Kennedy. But, as he explained in his 
confirmation hearing, he also learned from Senator Kennedy ``that 
idealism and pragmatism are not mutually exclusive.'' Mr. Perez knows 
how to bring people together to make progress on even controversial 
issues without burning bridges or making enemies. He knows how to hit 
the ground running and quickly and effectively become an agent of real 
change. That is exactly the kind of leadership we need at the 
Department of Labor. We need his vision, we need his passion, and we 
need, yes, his character at the helm of this important agency.
  Allow me to state very clearly that while I know there has been 
generated controversy--not real controversy but generated controversy--
surrounding Mr. Perez's nomination, there is absolutely nothing that 
calls into question his ability to fairly enforce the law as it is 
written. There is absolutely nothing that calls into question his 
professional integrity or his moral character or his ability to lead 
the Department of Labor.
  As I mentioned, Mr. Perez has been as open and aboveboard as he could 
possibly be throughout this entire confirmation process. He has met 
with any Member personally who requested a meeting. As I said, he 
appeared before our committee in a public hearing. He has answered more 
than 200 written questions. He has bent over backward to respond to any 
and all concerns raised about his work at the Department of Justice.
  This administration--President Obama--has also been extraordinarily 
accommodating to any Republican colleague, especially to their concerns 
about Mr. Perez's involvement in the global resolution of two cases 
involving the city of St. Paul, MN--Magner v. St. Paul and Newell v. 
St. Paul. The administration has produced thousands of documents 
concerning these two cases. They have arranged for the interview of 
government employees. They have facilitated almost unprecedented levels 
of disclosure to alleviate any concern about his involvement in these 
cases.
  As chairman of the committee, I have also tried to be as 
accommodating as possible, joining in requests for documents that I, 
quite frankly, thought were unnecessary but willing to acquire and 
postponing the executive session for 2 weeks to provide Members 
additional time for consideration.
  All this extensive process has revealed is that Mr. Perez acted at 
all times ethically and appropriately to advance the interests of the 
U.S. Government. For example, with respect to the Magner and Newell 
matters, Mr. Perez consulted with both outside ethics and professional 
responsibility experts at the Department of Justice, and Mr. Perez 
acted within their guidelines at all times. It is no surprise that 
outside ethics experts have confirmed that Mr. Perez acted 
appropriately in these matters.
  I would like to submit again for the Record letters and statements 
from several legal ethics experts and experts in the False Claims Act 
confirming that Mr. Perez's handling of the Magner and Newell cases was 
both ethical and appropriate. And I ask unanimous consent to have 
printed in the Record these letters.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

  Statement of Stephen Gillers, Elihu Root Professor of Law, New York 
                 University School of Law, May 6, 2013

       The Joint Staff Report makes many assertions and contains 
     many factual allegations, which may or may not be contested. 
     However, only one issue is described as ethical. It is this 
     issue that the Democratic Staff memo mainly addresses. Stated 
     most favorably from the Joint Staff perspective, the issue 
     is:
       ``Assuming that Assistant Attorney General Tomas E. Perez 
     (Civil Rights Division) was mainly responsible for reaching 
     the agreement with the City of St. Paul described below--even 
     assuming that the agreement would not have happened without 
     his intervention--but assuming, too, that Assistant Attorney 
     General Tony West (Civil Division), who had ultimate 
     authority to decide whether or not to intervene in Newell and 
     Ellis, chose not to do so after considering their merits, the 
     United States interest in preserving the disparate impact 
     test under the Fair Housing Act, and the U.S. interest in 
     ensuring (so far as possible) that a Supreme Court ruling on 
     the proper test be based on favorable facts, did Perez 
     violate any rule of professional conduct (ethics rule) 
     governing him as a lawyer by encouraging others at DOJ or HUD 
     (or elsewhere) to refrain from intervention in Newell and 
     Ellis in exchange for St. Paul's agreement to withdraw the 
     Magner appeal?''
       The Joint Staff Report argues that linking the two cases--
     withdrawal of the Magner appeal and U.S. non-intervention in 
     the two

[[Page 6499]]

     Qui Tam actions, Newell and Ellis (hereafter Newell)--was 
     unethical. However, it cites no professional conduct rule, no 
     court decision, no bar ethics opinion, and no secondary 
     authority that supports this argument. In fact, no authority 
     supports it.
       The duty of lawyers for the United States is no different 
     from the duty of lawyers generally, namely to pursue the 
     goals of their client within the bounds of law and ethics. 
     Clients generally identify those goals, but when the client 
     is the government, its lawyers often do so, sometimes in 
     conjunction with agencies, elected officials, or other 
     representatives of the government who are authorized to speak 
     for the client.
       The United States had interests in Magner and also in 
     Newell. Qui Tam actions are brought to vindicate interests of 
     the sovereign, here the U.S. The U.S. interest was to recover 
     money assuming, of course, that Newell had merit. The U.S. 
     interest in Magner was to avoid Supreme Court review of a 
     legal issue in Magner, whose facts were seen as unfavorable 
     to a decision that would sustain a disparate impact test for 
     violations of the Fair Housing Act. Perez believed that 
     preserving the disparate impact test was important to his 
     client and more important than intervention in Newell.
       I assume that Perez persuaded others with decision-making 
     authority, and in particular West, that withdrawing the 
     Magner appeal was more important to U.S. interests than 
     intervention in Newell. I also assume, though it is 
     contested, that Newell was meritorious and that but for the 
     agreement with St. Paul, the United States would have 
     intervened in Newell and perhaps prevailed.
       Of course, it is legitimate to argue that Perez, West, and 
     others made the wrong choice and that pursuing Newell was 
     more important to U.S. interests than how the Supreme Court 
     would ultimately resolve the issue in Magner. I have no view 
     on that question. It is not an ethical question. The question 
     I can answer is whether Perez could ethically make the 
     decision he did and which he encouraged others to accept. 
     Could he ethically decide, when faced with a situation where 
     only one of two possible choices could be made, and where 
     each choice offered a benefit to his client, to choose option 
     A over option B?
       The answer is unequivocally yes. Perez was not choosing to 
     advantage one client over another client. There was no 
     conflict here between the interests of two clients because 
     there was only one client. That client, we are assuming, had 
     two interests--withdrawal of Magner or intervention in 
     Newell--but under the circumstances, it could pursue only 
     one. Perez made a choice between these options and encouraged 
     others to agree. His conduct violates no ethical rule that 
     governs lawyers. He was acting in what he believed to be the 
     best interests of his client, which is what lawyers are 
     required to do.
                                  ____



                                          The Vernia Law Firm,

                                       Washington DC, May 6, 2013.
     Re Declination by the United States Department of Justice in 
         United States ex rel. Newell v. City of St. Paul, Civil 
         No. 09-SC-001177 (D.Minn.).

     Hon. Representative Jim Jordan,
     Chairman, Subcommittee on Economic Growth, Job Creation & 
         Regulatory Affairs Committee on Oversight and Government 
         Reform, Rayburn House Office Building, Washington, DC.
     Hon. Representative Matt Cartwright
     Ranking Minority Member, Subcommittee on Economic Growth, Job 
         Creation & Regulatory Affairs, Committee on Oversight and 
         Government Reform, Rayburn House Office Building, 
         Washington, DC.
     Hon. Representative Trent Franks
     Chairman, Subcommittee on the Constitution and Civil Justice, 
         Committee on the Judiciary, Rayburn House Office 
         Building, Washington, DC.
     Hon. Representative Jerrold Nadler
     Ranking Minority Member, Subcommittee on the Constitution and 
         Civil Justice, Committee on the Judiciary, Rayburn House 
         Office Building, Washington, DC.
       Dear Messrs. Jordan, Cartwright, Franks, and Nadler:
       I am writing in advance of the Committee's May 7, 2013 
     hearing regarding the Department of Justice's declination of 
     the False Claims Act qui tam cases, United States ex rel. 
     Newell v. City of St. Paul, Minnesota, Civil No. 09-SC-001177 
     (D.Minn.), and United States ex rel. Ellis v. City of St. 
     Paul, Civil No. 11CV-0416 (D.Minn.), to provide my comments 
     on certain of the conclusions reached in the Joint Staff 
     Report, DOJ's Quid Pro Quo with St. Paul: How Assistant 
     Attorney General Thomas Perez Manipulated Justice and Ignored 
     the Rule of Law (April 15, 2013). I appreciate the 
     opportunity to address the Committee.
       For most of my twenty years practicing law, I have handled 
     investigations and cases brought under the False Claims Act, 
     31 Sec. U.S.C. Sec. Sec. 3729, et seq. Early in my career, I 
     served for eight years as a Trial Attorney in the Fraud 
     Section of the Commercial Litigation Branch of the Department 
     of Justice's Civil Division. In that capacity, I handled 
     dozens of False Claims Act cases involving numerous federal 
     agencies, including the Department of Housing and Urban 
     Development (HUD). I left the Fraud Section to be a 
     prosecutor in the Criminal Division where, in 2005 I received 
     a John Marshall Award from the Department of Justice, and the 
     National Exploited Children's Award from the National Center 
     for Missing and Exploited Children.
       That same year, I joined Covington & Burling LLP, initially 
     focusing on the defense of False Claims Act investigations 
     and suits. I started my own firm in 2009, in part to have the 
     flexibility of representing whistleblower clients as well as 
     defendants. I have filed numerous qui tam suits, and I am now 
     litigating some of those, including a major case against a 
     long-term care pharmacy for prescriptions reimbursed by 
     Medicare Part D. In addition to my work on these cases, I 
     have made presentations on the False Claims Act and related 
     statutes, and I write the best-read legal blog on the topic, 
     www.falseclaimscounsel.com.
       I have had no professional involvement in the Newell or 
     Ellis cases, and have not spoken about them with any of the 
     persons described in the Joint Staff Report. I have, however, 
     reviewed that Report, its attached documents, the Democratic 
     Staff's Report on the same topic (April 14, 2013), and 
     certain of the documents publicly available on the District 
     Court for the District of Minnesota's PACER website.
       As one of the few attorneys in private practice with 
     significant Department of Justice experience who represents 
     both defendants and whistleblowers, I read these documents 
     with great interest. With all due respect to the Joint Staff, 
     however, I feel compelled to write to take issue with certain 
     of their factual conclusions. I will limit my comments to 
     those that I feel are critical to assessing the conduct of 
     Department of Justice officials involved in these cases.


                       Merits of the Newell case

       Because the documents do not treat the Ellis case as a 
     significant factor in the Department's decision-making, I 
     have not undertaken to analyze the merits of that matter. Let 
     me also preface my remarks by stating that I do not intend 
     this letter to disparage Mr. Newell or his counsel. The 
     Department of Justice appears to have largely corroborated 
     his allegations and his qui tam complaint is well-drafted.
       I disagree, however, with the Joint Staff's conclusion that 
     ``The Department of Justice Sacrificed a Strong Case Alleging 
     a Particularly Egregious Example of Fraud.'' See Joint Staff 
     Report at 37. Instead, I believe that the documents evidence 
     significant bases for skepticism by Department of Justice 
     officials.
       The Joint Staff's conclusion rests in large part on its 
     rejection of statements by Department of Justice supervisors 
     that whether or not to intervene in Newell was a ``close 
     call,'' and its reliance instead on earlier positions in 
     support of intervention taken by the trial attorney and 
     others assigned to the case. But the draft memorandum urging 
     intervention acknowledges several significant potential 
     problems with the case--problems that clearly rebut the 
     conclusion that the case was a ``strong'' one, as the Joint 
     Staff asserts.
       Newell's most prominent weakness was the potential 
     difficulty in proving that St. Paul's noncompliance with 
     Section 3 was material to the decision of HUD to make grant 
     payments. The trial attorney handling the case candidly 
     admitted that there was litigation risk regarding 
     materiality:
       ``The City will argue that even if HUD did not say it 
     explicitly, HUD's silence over many years is tacit approval. 
     We will have to admit that the City was failing to comply 
     with Section 3 in ways that should have been apparent to HUD. 
     The City did not send its HUD 60002 forms each year. HUD 
     never objected to this failure. The City will argue that HUD 
     was so unconcerned with Section 3 compliance that the City's 
     failure to comply did not affect, or could not have affected 
     HUD's decision to pay.
       ``The City will argue that HUD's failure to monitor its 
     Section 3 compliance was consistent with HUD's general lack 
     of oversight of Section 3 during the relevant period. The 
     city has already noted that previous federal administrations 
     were not concerned with Section 3 (a position with support in 
     recent HUD comments), and that it is unfair to require a City 
     to make boilerplate certification each year, ignore the 
     City's non-compliance year-after-year, and then seek FCA 
     relief when a new administration comes in that is more 
     concerned with compliance with Section 3.
       Draft Intervention Memo at 7. Although the trial attorney 
     was optimistic that these arguments could be overcome, there 
     can be no doubt that significant concerns about proving 
     materiality of the City's noncompliance

[[Page 6500]]

     were evident long before the alleged quid pro quo.


 Reliability of the Draft Intervention Memorandum's Damages Calculation

       I also respectfully disagree with the Joint Staff's 
     assertion that the Department of Justice's decision to 
     intervene in the case cost taxpayers a significant 
     opportunity to recover over $200 million. See Joint Staff 
     Report at 61. This, too, significantly overstates the 
     strength of Newell.
       The draft intervention memo very briefly describes only one 
     damages theory, which the trial attorney characterizes as 
     ``aggressive'': that the damages under the False Claims Act 
     were the entire amount of the Section 3 construction project 
     grants (which was some unknown fraction of the overall $86 
     million in HUD grants). That ``aggressive'' theory is an 
     unsettled area of law, however, and the Joint Staff's 
     reliance on it in calculating the cost to taxpayers of 
     declining to intervene in the suit is dubious.
       For much of the False Claims Act's 150-year history, 
     computing damages was relatively straightforward: the fact-
     finder calculated the difference between what the Government 
     actually paid and the value of the goods or services it 
     received. See United States v. Bornstein, 423 U.S. 303, 316 
     n. 13 (1976). When a third-party, and not the Government is 
     the intended recipient of the tangible benefit from the 
     outlay of federal funds, this approach arguably breaks down. 
     The traditional ``benefit-of-the-bargain'' approach is 
     strained further when the false claim relates not to quality 
     of the goods or services received by the third-party, but to 
     the fund recipient's satisfaction of some other condition 
     intended to benefit society more generally. The Newell case 
     falls into this category: the city receives Section 3 funds 
     to improve housing, and allegedly false claims relate to its 
     compliance with a condition unrelated to the quality of that 
     work.
       The Courts have struggled with these issues, and four 
     Courts of Appeals--for the Second, Fifth, Seventh, and Ninth 
     Circuits--have chosen to follow the ``aggressive'' approach 
     the trial attorney described. The District of Columbia and 
     Third Circuits instead continue to employ the ``benefit-of-
     the-bargain'' approach, which might result in a very low 
     damages calculation in a case such as Newell. I am not aware 
     of any controlling precedent on this issue in the Eighth 
     Circuit, in whose jurisdiction Newell was filed.
       Given the unsettled nature of this area and the imprecision 
     in the Draft Intervention Memorandum's damages figure, $86 
     million represented only a theoretical upper limit on the 
     Government's damages for St. Paul's alleged violations. The 
     Department of Justice trial attorney acknowledged the 
     limitations of this approach, writing in the Draft 
     Intervention Memorandum: ``We acknowledge this is an 
     aggressive position, and that some less aggressive approach 
     may be needed for trial. To date, however, we have not yet 
     determined an alternative approach.'' Id. at 5.
       Even if the Department of Justice had intervened and 
     secured a judgment against the City on False Claims Act 
     liability, moreover, there is a significant risk that the 
     District Court or the Court of Appeals for the Eighth Circuit 
     would, under the facts of this case (including HUD's apparent 
     disregard of Section 3 enforcement, and the defendant's 
     status as a taxpayer-funded entity) reject the ``aggressive'' 
     approach of seeking to recoup all Section 3 grants. Such a 
     decision would hinder the Government and relators in future 
     False Claims Act cases in the Eighth Circuit's jurisdiction.


      The Risk of Newell's Dismissal on Public Disclosure Grounds

       The Joint Staff Report also criticizes the Department's 
     declination on the grounds that it exposed Mr. Newell to 
     dismissal of his qui tam suit on grounds that the Court 
     lacked jurisdiction under the False Claims Act's public 
     disclosure bar. See Joint Staff Report at 58; 31 U.S.C. 
     Sec. 3730(e)(4)(A) (2010). I respectfully disagree with the 
     premise of this criticism, which is that the Department of 
     Justice does, or should, evaluate the potential success of a 
     motion to dismiss on public disclosure grounds.
       In my experience, both at the Department and in private 
     practice, the Government does not typically investigate the 
     common grounds on which declined qui tam suits founder: 
     public disclosure and particularity under Fed. R. Civ. P. 
     9(b). Although I, as a whistleblower attorney, would prefer 
     that the Department investigate these possible grounds for 
     dismissal prior to deciding whether to decline or intervene a 
     case, there are sound reasons for not doing so: the 
     Department of Justice has inadequate resources to investigate 
     the merits of the fraud allegations; routinely investigating 
     the public disclosures that might lead to the dismissal of a 
     declined qui tam would ultimately detract from the 
     Department's ability to carry out the False Claims Act's core 
     mission of detecting and remedying fraud.
       Certainly no one has done more than Senator Grassley to 
     encourage whistleblowers to assist the Government in 
     uprooting fraud. The recent amendment to the public 
     disclosure bar demonstrates well his interest in improving 
     enforcement of the Act. I nevertheless believe that Congress 
     could best improve whistleblowers' involvement in fraud 
     enforcement by addressing more significant problems besetting 
     them (such as the application of Fed. R. Civ, P. 9(b) to 
     False Claims Act complaints, which is by far the most common 
     grounds for dismissal of declined qui tam cases).
       In conclusion, after reviewing the publicly available 
     materials on the Department of Justice's decision to decline 
     to intervene in United States ex rel. Newell v. City of St. 
     Paul, I believe that Department officials acted well within 
     the scope of their discretion in declining to intervene in 
     that case. I must respectfully disagree with the contrary 
     conclusions the Joint Staff reached in its Report. I 
     appreciate your consideration.
           Truly yours,
     Benjamin J. Vernia.
                                  ____

                                                    Cohen Milstein


                                          Sellers & Toll PLLC,

                                    Philadelphia, PA, May 6, 2013.
     The Hon. Jim Jordan,
     Chairman, Subcommittee on Economic Growth, Job Creation & 
         Regulatory Affairs, Committee on Oversight and Government 
         Reform, Rayburn House Office Building, Washington, DC.
     The Hon. Matt Cartwright,
     Ranking Minority Member, Subcommittee on Economic Growth, Job 
         Creation & Regulatory Affairs, Committee on Oversight and 
         Government Reform, Rayburn House Office Building, 
         Washington, DC.
     The Hon. Trent Franks,
     Chairman, Subcommittee on the Constitution and Civil Justice, 
         Committee on the Judiciary, Rayburn House Office 
         Building, Washington, DC.
     The Hon. Jerrold Nadler,
     Ranking Minority Member, Subcommittee on the Constitution and 
         Civil Justice, Committee on the Judiciary, Rayburn House 
         Office Building, Washington, DC.
       Dear Chairmen Jordan and Franks and Ranking Members 
     Cartwright and Nadler: The undersigned are partners and co-
     chairs of the Whistleblower/False Claims Act Practice Group 
     at Cohen Milstein Sellers & Toll, PLLC. For over ten years, 
     we have assiduously represented whistleblowers in legal 
     actions brought pursuant the federal False Claims Act, 31 
     U.S.C. Sec. Sec. 3729, et seq., and its state counterparts in 
     federal and state courts throughout the country. We regularly 
     engage in the evaluation of the viability of potential claims 
     under those statutes and work with relators to combat fraud 
     against the government. We have been asked by committee staff 
     to offer our opinion regarding the effect of the Department 
     of Justice's decision to decline to intervene in the qui tam 
     cases of United States ex rel. Newell v. City of St. Paul and 
     United States ex rel. Ellis v. City of Minneapolis, et al. 
     What follows is that opinion.
       On May 19, 2009, Relator Frederick Newell filed his qui tam 
     action under the federal False Claims Act against the City of 
     St. Paul in the United States District Court for the District 
     of Minnesota. On February 9, 2012, the Department of Justice 
     advised the court that it declined to intervene in the case. 
     On March 12, 2012, Mr. Newell filed an amended complaint in 
     response to which the City of St. Paul filed a motion to 
     dismiss based, in part, on the Public Disclosure Bar.
       At the time that Mr. Newell filed his initial complaint in 
     his action, the False Claims Act provided a jurisdictional 
     bar to a relator's qui tam action commonly referred to as the 
     Public Disclosure Bar. Subsequently amended and rendered a 
     non-jurisdictional basis for dismissal in the Patient 
     Protection and Affordable Care Act of 2010, this section, 31 
     U.S.C. Sec. 3730(e)(4), provided as follows:
       ``(A) No court shall have jurisdiction over an action under 
     this section based upon the public disclosure of allegations 
     or transactions in a criminal, civil, or administrative 
     hearing, in a congressional, administrative, or Government 
     Accounting Office report, hearing, audit, or investigation, 
     or from the news media, unless the Attorney General or the 
     person bringing the action is an original source of the 
     information.
       ``(B) For purposes of this paragraph, `original source' 
     means an individual who has direct and independent knowledge 
     of the information on which the allegations are based and has 
     voluntarily provided the information to the Government before 
     filing an action under this section which is based on the 
     information.''
       On July 20, 2012, the court granted St. Paul's motion to 
     dismiss, finding that it lacked subject matter jurisdiction 
     over Mr. Newell's action because of manifold public 
     disclosures of his allegations predating the filing of his 
     complaint and because he was not an original source of the 
     information on which the allegations were based. Mr. Newell 
     has appealed the dismissal of his case and his appeal is 
     currently pending before the United States Court of Appeals 
     for the 8th Circuit.
       On February 18, 2011, Relators Andrew Ellis, Harriet Ellis 
     and Michael Blodgett

[[Page 6501]]

     filed their qui tam action under the federal False Claims Act 
     against, among others, the Cities of Minneapolis and St. Paul 
     in the United States District Court for the District of 
     Minnesota. On June 18, 2012, the Department of Justice filed 
     a Notice of Election to Decline Intervention. The defendants 
     in that case subsequently filed motions to dismiss the 
     Relators' complaints, which the court denied without 
     prejudice. That case remains pending as of the date of this 
     letter.
       The effect of the government's decision not to intervene in 
     these two qui tam cases is central to the issues presently 
     being considered by your subcommittees. Indeed, it is 
     important to understand that, contrary to conclusory 
     statements set forth in the Congressional Committees' Joint 
     Staff Report of April 15, 2013, the decision by the 
     Department of Justice not to intervene in Mr. Newell's case 
     did not allow the City of St. Paul to move for dismissal of 
     the case ``on grounds that would have otherwise been 
     unavailable if the Department had intervened.'' (Joint Staff 
     Report, p. 58). In fact, the same motion would have been 
     available to the City whether or not the government had 
     intervened in the case. In Rockwell Intl. Corp. v. United 
     States ex rel. Stone, 549 U.S. 457 (2007), the United States 
     Supreme Court rejected the argument that government 
     intervention provides jurisdiction to a Relator who is not an 
     original source. Even had the government intervened, Mr. 
     Newell would have been vulnerable to the exact same public 
     disclosure jurisdictional bar.
       Likewise, in declining to intervene in Mr. Newell's qui tam 
     action, the Department of Justice did not ``give up the 
     opportunity to recover as much as $200 million.'' (Joint 
     Staff Report, p. 4). A declination of intervention has never 
     been recognized by any court as tantamount to the termination 
     of the government's right to pursue the claim asserted in the 
     action. In fact, the federal False Claims Act specifically 
     provides that if the government initially elects not to 
     proceed with the action, it may intervene at a later date 
     upon a showing of good cause. 31 U.S.C. Sec. 3730(c)(3). The 
     government can decline to intervene in one action and, after 
     that complaint is dismissed, decide to intervene in a 
     subsequently filed action. Or the government can institute 
     and pursue its own action under the False Claims Act. 
     Moreover, the dismissal of Mr. Newell's complaint does not 
     affect the government's ability to pursue the same claims 
     itself. Thus, in declining to intervene in the Newell and 
     Ellis actions, the government is not foreclosed from pursuing 
     the claims that Mr. Newell could no longer himself pursue or 
     to intervene at a later date in the Ellis action, nor is it 
     foreclosed from pursuing remedies that might be available 
     under any other statutory or regulatory provisions. In fact, 
     in declining to intervene in these actions, it ``gave up'' no 
     rights or opportunities whatsoever.
       We trust that the foregoing sheds light on the effect of 
     the government's decision not to intervene in the Newell and 
     Ellis qui tam actions and that this letter is helpful to the 
     work of your committees.
           Respectfully submitted,
     Gary L. Azorsky.
     Jeanne A. Markey.

  Mr. HARKIN. As Professor Stephen Gillers, who has taught legal ethics 
for more than 30 years at New York University School of Law, wrote in 
one of these letters, Mr. Perez's actions in these cases ``violate[d] 
no ethical rule that governs lawyers. He was acting in what he believed 
to be the best interests of his client, which is what lawyers are 
required to do.''
  In short, Mr. Perez did his job at DOJ, and he did it well. When it 
comes down to it, I think the fact that he did his job well is probably 
the source of much of the generated controversy surrounding his 
nomination. Maybe some people just don't like Tom Perez precisely 
because he is passionate about enforcing our civil rights laws and has 
vigorously pursued such enforcement in his current position.
  I take great issue with the minority leader's suggestion today that 
Mr. Perez doesn't follow the law or believe that it applies to him. I 
would respectfully suggest that the Republican leader needs to check 
his facts. To the contrary, Tom Perez has had a remarkable career as a 
result of a determination to make the promise of our civil rights 
statutes a reality for everyday Americans. Maybe these are some of the 
same laws that some colleagues sometimes would like to forget are on 
the books, but these laws matter. Voting rights matter. Fair housing 
rights matter. The rights of people with disabilities matter. These 
laws are part of what makes our country great. I am incredibly proud of 
the work Mr. Perez has done at the Department of Justice to make those 
rights a reality after years of neglect. He should be applauded, not 
vilified, for the service he has provided to this country.
  Mr. President, it almost seems that when Mr. Perez's name came up, 
there was a controversy generated about these cases in St. Paul 
involving whistleblower types and that somehow he acted inappropriately 
and denied the government the ability to get back a couple hundred 
million dollars or so. That seemed to be a belief some of my colleagues 
on the other side had. So we looked into it. We went through all the 
documents, all the e-mails, and thousands of pages, with ethics lawyers 
both in the government and out. What we came up with was that Mr. Perez 
acted ethically and appropriately at all times. There is no ``there'' 
there. So the facts belie the belief, but it seems that the belief 
carries on and that somehow the belief trumps the facts.
  Well, if some of my colleagues want to believe the worst about Tom 
Perez, they can believe that, but they have no facts to back it up. It 
is an unfounded belief. Is that what is going to guide this body in 
approving nominations for this President or any President--that if I 
believe something and I can get maybe some of my colleagues to join in 
and believe it, that is enough? That is sufficient to vilify a nominee, 
to try to tear him down?
  What about the facts? Don't facts matter? Doesn't the record matter? 
Of course it does. And the facts, as proven time and time again, are 
that Mr. Perez acted ethically and appropriately at the Department of 
Justice at all times and especially in the two cases--Magner v. St. 
Paul and Newell v. St. Paul. That has been clearly brought forth, that 
he acted appropriately and ethically.
  So I say to my colleagues on the other side, believe what you want, 
but that belief, mistaken as it is, should not be used to tear down a 
good person, to vilify a good person, to cast this person in a light 
which is totally false.
  So, yes, Mr. President, there was an objection to our meeting today 
under this obscure rule of the Senate, but we have rescheduled the 
meeting for 1 week hence. So in 1 week we will meet again, and we will 
vote to report out the nomination of Tom Perez, and then we will come 
to the floor. Again, I hope that it won't be filibustered by my 
Republican colleagues but that we will be able to vote up or down on 
Mr. Perez based not upon what someone believes but what the facts are, 
what his record is, what his record has been both in local government, 
State government, and at the Department of Justice.
  When you look at that record, it is an exemplary record of unstinting 
public service in the best interests of the civil rights and equal 
rights of our country. That is why, with his background, his 
experience, and his dedication to fairness and justice, the fact that 
he has actually worked in the Senate on the HELP Committee--the 
committee that has jurisdiction over the Department of Labor--gives 
tremendous weight to his background and insight into how to be a truly 
great Secretary of Labor.
  So we will vote next week. I hope there are not other kinds of 
roadblocks--unfounded roadblocks--thrown into the path of his 
confirmation. We will do everything we can to make sure this good 
person takes his rightful place as our next Secretary of Labor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. LEE. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________