Companies that turn to the US federal courts to resolve fights with rivals and customers may find themselves in limbo if the government shutdown continues beyond next week.

The system has enough money left over from fees and other sources to run until January 11, according to the Administrative Office of the US Courts, which supports the judiciary. After that, non-essential workers at the 94 federal district courts, and at higher courts across the US, may have to stay home even as skeleton crews show up — without pay — to handle matters deemed essential under US law, including many criminal cases.

Individual courts and judges will then decide how to fulfill those critical functions, said David Sellers, a spokesperson for US courts. He pointed to earlier shutdowns, the longest of which was the 21-day furlough that started in December 1995 and ended in January 1996. A shutdown beyond January 11 would break that record.

“In the past, some courts have suspended civil cases, some have conducted business as usual,” Sellers said. “It’s really a judge-by-judge, court-by-court determination.”

A loss of funding for civil cases would exacerbate a problem that’s already made it harder for companies to get their day in court, said Russell Wheeler, a visiting fellow at the Brookings Institution and a former deputy director at the Federal Judicial Centre in Washington. That problem: 119 judicial vacancies, or about 18% of the 677 federal judge-ships.

Qualcomm

One of the biggest pending cases is the Federal Trade Commission’s (FTC) anti-monopoly lawsuit against Qualcomm, set for a non-jury trial starting January 4. US district judge Lucy Koh, known for her tight schedules and firm deadlines, appears committed to completing the trial by January 28, and the FTC said it is expected to proceed.

“I think American companies can handle it for a while, but obviously if this is still going on six months from now it’ll be a very serious situation,” Wheeler said. If the shutdown is protracted, he emphasised, companies may try to resolve disputes in other ways, including arbitration, if possible, taking their cases to the much larger network of state courts, which isn’t affected by the closure.

The partial government shutdown started on December 22 after President Donald Trump declined to sign spending legislation without $5bn for the border wall he campaigned on. With the president under pressure from the right to fulfill that promise and Democrats now in control of the House of Representatives, it could drag on.

Whenever the cash runs out, the courts will begin operating under the Anti-deficiency Act, the federal law that requires work to continue if it’s necessary “to support the exercise of Article III judicial powers”, or the resolution of cases, under the constitution.

A December 10 congressional report on the effects of shutdowns said that neither judges nor their most important staff would be subject to furlough. Essential probation and pre-trial services officers also would be protected if needed to resolve cases, according to the report, which found that most courts continued to function during the 1995-1996 closure. Employees would either work without pay or be reimbursed with funds designated for other services, such as training or technology, Sellers said.

‘Triage system’

Ruben Castillo, chief judge of the US district court for the northern district of Illinois in Chicago, is ready to operate a “triage system” if the shutdown extends beyond January 11.

“I will have to have a meeting with our court personnel and tell them I won’t be able to pay them. Then we’ll have to shut down civil trials,’’ Castillo said. Criminal trials will get priority, he said, because defendants, who are presumed innocent, have been waiting for the resolution of their cases.

In the end, he predicted, he will lose some veteran employees eligible for retirement, adding, “This is not the way to run a court system.’’

The courts will need to co-ordinate independently with local offices of the US marshals service and the US attorney’s office, which are part of the executive branch’s justice department rather than the judiciary, Sellers said. For the cases deemed crucial, it’s up to the marshals and the US attorneys to ensure defendants are delivered to their hearings and government lawyers appear to prosecute them, he said.

For now, many courts are taking a wait-and-see approach. Daniel Spohr-Grimes, a spokesperson for the court in the eastern district of California, said the chief judge will issue an order detailing the scope of operations under lapsed appropriations if the shutdown continues past January 11.

The justice department has already won court orders putting some of the cases it’s involved in on pause. In the busy southern district of New York, in Manhattan, the chief judge, on December 27, put a hold on all civil cases in which the government is a party. In Washington, US district judge Emmet Sullivan halted a challenge to restrictions the Trump administration imposed on immigrants seeking asylum. Sullivan, who has declared the policy unlawful, ordered the US to alert him when funding is restored.

Some judges have declined to delay trials scheduled for January, including a California case challenging the administration’s addition of a citizenship question to the 2020 census. (BusinessDay SA)

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