By David Ingram and Nate Raymond
WASHINGTON, Oct 1 (Reuters) - Faced with an indefinite
government shutdown, U.S. government lawyers sought delays on
Tuesday in court cases across the country on subjects ranging
from competition among Idaho hospitals to drone strikes abroad.
The requests to postpone trials and deadlines for written
briefs had been expected after the Justice Department cautioned
on Monday that non-critical civil matters would fall victim to a
lack of money. Only U.S. government matters that were deemed
essential were allowed to go on until Congress allocates money
for the fiscal year that began on Tuesday.
Courts granted some requests and denied others on Tuesday,
the first day of the partial shutdown.
Judges in Washington, D.C., and New York refused to halt big
cases challenging the merger of AMR Corp's American
Airlines and US Airways Group Inc, and seeking
to hold Bank of America Corp liable for mortgage fraud.
"We should, out of respect, observe a moment of silence for
the passing of a great institution - I mean the federal
government," U.S. District Judge Jed Rakoff in Manhattan, who
oversees the Bank of America trial, told jurors with a bit of
sarcasm on Tuesday.
There was no immediate sign of when the political standoff
that forced the shutdown would end.
Republicans in the House of Representatives had tried to tie
renewal of government funding to measures undermining President
Barack Obama's signature healthcare law, while the
Democratic-controlled Senate repeatedly rejected those efforts.
The fiscal year begins on Oct. 1.
The Federal Trade Commission, the Equal Employment
Opportunity Commission, the Federal Communications Commission
and the Export-Import Bank of the United States joined the
Justice Department in filing motions to stay proceedings.
In docket after docket nationwide, agency lawyers summoned
dire language as they told judges what they already likely knew
from news reports.
"We write to notify the Court that, as a result of Congress
not enacting a federal budget for this fiscal year or extending
the continuing resolution previously in place, Plaintiff has
ceased regular operations," wrote enforcement attorney R.
Stephen Painter of the U.S. Commodity Futures Trading Commission
in one letter.
Nearly all civil cases that involved the federal government
in the busy U.S. District Court in Manhattan were put on hold.
Judge Loretta Preska, chief of the district, said in an order
that all deadlines would be extended for a time equal to the
length of the shutdown.
OPEN FOR LIMITED BUSINESS
Despite the urgent appeals for delay, federal courts were
themselves open and available to accommodate criminal cases and
private lawsuits to which the U.S. government was not a party.
The judiciary said it had reserves from prior fiscal years to
last about two weeks, after which it would need to reevaluate.
The U.S. Supreme Court said it would not alter its normal
operations at least until Friday. Based on past practice, oral
arguments next week were expected to go ahead at the start of
the high court's nine-month annual term.
A federal law known as the Anti-Deficiency Act prohibits
government employees from volunteering their service when not
authorized by an appropriation "except in cases of emergency
involving the safety of human life or the protection of
Not all government suits ground to a halt.
The Manhattan U.S. Attorney's Office exempted members of the
trial team in its lawsuit against Bank of America over allegedly
defective mortgages sold to Fannie Mae and Freddie Mac
by the bank's Countrywide unit, according to a letter
that U.S. Attorney Preet Bharara's office sent to Judge Preska.
In Washington, U.S. District Judge Colleen Kollar-Kotelly
went ahead with a previously scheduled hearing on the
government's challenge to the proposed $11 billion merger of
American Airlines and US Airways, and in a written order
later declined a Justice Department request to stay the case.
MONEY AT STAKE
Kollar-Kotelly in the two-page order said the airline case
was significant because of ongoing bankruptcy proceedings for
American's parent AMR Corp, as well as "the amount of
money at stake" in the deal.
A stay would "delay the necessary speedy disposition of this
matter. It is essential that the Department of Justice attorneys
continue to litigate this case," she wrote.
The companies, which call any delay a threat to their deal
to create the world's biggest airline, opposed the request. A
trial is scheduled to begin on Nov. 25.
Some litigants were more accommodating. The American Civil
Liberties Union did not oppose a Justice Department request for
a temporary halt in the ACLU's suit to find out more about U.S.
drone strikes abroad. The suit was filed in 2010.
In Idaho, a closely watched bench trial in which the Federal
Trade Commission seeks to block a hospital chain from buying a
physicians group entered a seventh day. Early on Tuesday, FTC
lawyers asked for a stay but U.S. District Judge B. Lynn Winmill
had not ruled on the request by midday, a clerk said.
FTC lawyers won a delay in a separate contested merger case,
one in which the commission sued to block the combination of two
glass-bottle manufacturers: Ireland's Ardagh Glass and
a U.S. unit of France's Saint-Gobain.
U.S. District Judge Barbara Rothstein said that although a
trial is scheduled to begin in Washington, D.C., on Oct. 17, the
sides would need to submit a new proposed schedule if and when
the government reopens.
"The parties are encouraged to observe the original schedule
as closely as possible," she wrote.