Don’t Sell Us Out!!

January 15, 2011

I met with a client not long ago and heard a story I can’t let go of. My client’s business interfaces with the federal government. One of his employees failed to comply with a notice requirement associated with a regulation. A screw-up, absolutely, and a violation of a federal regulation, you bet! That all said, the violation was insignificant and, when it was discovered, my client’s people self-reported the violation. What followed was Kafka-esque, and only ended with the payment of a very, very large fine. The fine bore no relationship to the harm caused by the violation. (X times nothing, with nothing representing the harm, will always equal nothing.) I imagine my client could have fought the assessed penalty, but the business depends on a positive relationship with the government. Good sense said, Pay the man! Good sense prevailed.

Several years ago another client had a problem with a different federal agency. (The problem related to a  signature not being notarized on an administrative appeal. For want of the notarization, the appeal would have been granted, according to the agency.) Not so dependent on the good graces of the government, this client had me sue the federal government to avoid a six-figure penalty. A very nice fellow from Washington, DC defended the suit by filing a motion to dismiss. Lots of blather in the motion about the need for compliance with laws and all that, and about courts not interfering with administrative regulations. I gave as good as I got and, finally, we had a hearing on the motion. The judge (the late John Roll) asked the Washington lawyer–he flew out to Tucson for this hearing–to address anything not addressed in  his memorandum. He couldn’t and, after fumbling around for a while, Judge Roll asked me to speak. I started to explain why my client had a right to have the court test the propriety of the penalty, whereupon Judge Roll said:  “I agree.” He also suggested, from the bench, that we discuss a resolution.

The case settled for about $10,000 a few days later. When I spoke with the lawyer after we reached an agreement, I asked him about the regulation, as he was the lawyer for the government who was tasked with enforcement. He said the agency had promulgated the regulation and was giving it a “test drive.” I asked him about his success rate. “Not so good,” he said. “I’ll bet,” I thought.

Government has the power to solve problems for real people. In fact, many problems our society faces, slogans and buzz words aside, can only be solved by the federal government. So, when I hear about nonsense like the fine my client was (effectively) forced to pay, and when I have to file a lawsuit to avoid a ridiculously large penalty being assessed because someone forgot to carefully read some instructions, I ask myself, How can those of us who believe government is a force for good sell that position to others? How can I tell my clients they ought to believe government can be a positive force in our society when the federal government takes their money, and only takes it because it can?

There are millions of people like me who believe government makes people’s lives better, but we also know government works best when people believe it can solve more problems than it creates. So, government, be smart whenever you can be. Focus on long term impacts. Make friends, not enemies. You’ll be more effective, and we’ll all  be better off.


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