Judge Won’t Dismiss Suit Against U.S. Officials

A federal bankruptcy judge on Monday rejected a request by the U.S. Justice Department to dismiss a $30-million lawsuit accusing top department officials of bias and misconduct in making decisions that allegedly “propelled” a computer company toward bankruptcy.

A Washington-based firm, INSLAW Inc., which has filed for bankruptcy, sued the Justice Department on June 9. Among the primary targets of the suit is D. Lowell Jensen, former No. 2 Justice Department official, who was appointed to the U.S. District Court in San Francisco in July by President Reagan.

In rejecting the request for dismissal, U.S. Bankruptcy Judge George Bason Jr. characterized the conduct of some Justice Department officials as amounting “to trickery, fraud and deceit” in their efforts to use INSLAW trade secrets without paying for them.

Bason said he had seen evidence “of a truly outrageous course of conduct over a fairly lengthy period of time by very high officials of the Department of Justice, the very department of our government charged with upholding the law.”

INSLAW had presented a case supporting its allegation that one of its former employees now working for the Justice Department was “conducting what amounts to a vendetta against the firm,” Bason said.

The former employee is C. Madison Brewer, supervisor of the department’s use of PROMIS, a sophisticated computer system developed by INSLAW to manage criminal and civil law cases. Brewer had been INSLAW’s general counsel before being dismissed there 10 years ago.

INSLAW filed for protection under the bankruptcy laws in 1985 after the Justice Department held up $1.2 million in payments to the company at the direction of Brewer.

The suit charges also that Jensen has been highly critical of PROMIS since trying to start a competing system called DALITE in California in 1974.

Government attorneys argued that the suit is groundless because the Justice Department is protected by “sovereign immunity” and because the case is essentially a contract dispute and, thus, out of the bankruptcy court’s jurisdiction. However, Bason rejected those contentions, saying that “government officials are bound by the court just as are private citizens.”

Mark Landler reported from Washington and Bill Farr from Los Angeles.