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Context of 'November 13, 1991: Judge Says Findings of Fact in PROMIS Case Have Left ‘Cloud’ over Justice Department'

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The US District Court for the District of Columbia upholds a bankruptcy court ruling in favor of Inslaw. The ruling concerned the dispute over the PROMIS software between Inslaw and the Justice Department, which was found to have violated bankruptcy protection provisions (see September 28, 1987 and February 2, 1988), but had appealed (see Between February 2, 1988 and November 22, 1989). Judge William Bryant finds that the department knew an enhanced version of PROMIS was Inslaw’s central asset, that ownership of the software was critical to the company’s reorganization in Chapter 11 bankruptcy, and that the department’s unilateral claim of ownership and its installation of the enhanced version in offices around the United States violated automatic stay bankruptcy provisions in multiple ways. In addition, Bryant agrees with the bankruptcy court’s conclusion that the department never had any rights to the enhanced version and that “the government acted willfully and fraudulently to obtain property that it was not entitled to under the contract.” In addition, when Inslaw suggested mechanisms to determine whether the private enhancements had been made, the government rejected them, and “when asked to provide an alternative methodology that would be acceptable, the government declined.” The department could have used established procedures to get relief from the automatic stay provisions, but simply chose not to do so. Bryant, who also finds that the department tried to convert Inslaw’s bankruptcy to Chapter 7 liquidation, adds, “What is strikingly apparent from the testimony and depositions of key witnesses and many documents is that Inslaw performed its contract in a hostile environment that extended from the higher echelons of the Justice Department to the officials who had the day-to-day responsibility for supervising its work.” Finally, Bryant finds that, as the case was grounded in bankruptcy law, the bankruptcy court was an appropriate forum to hear the dispute and it did not have to be submitted to the Department of Transportation Board of Contract Appeals, an arena for contract disputes. Although most of the damages awarded are upheld, as Bryant finds the bankruptcy court assessed damages based on the evidence it obtained, he reduces compensatory damages by $655,200.88. [US Congress, 9/10/1992]

Entity Tags: William Bryant, US Department of Justice, Inslaw, Inc., US District Court for the District of Columbia

Timeline Tags: Inslaw and PROMIS

The US Justice Department appeals an adverse decision of the US District Court for the District of Columbia in the dispute with Inslaw over the alleged theft of the enhanced PROMIS application (see November 22, 1989). The department raises some of the same issues previously raised in its appeal of a bankruptcy court ruling to the District Court and requests a reversal on the basis of the facts found in the bankruptcy court, which it says made “clear errors.” In addition, it argues:
bullet That its use of enhanced PROMIS did not violate automatic stay bankruptcy protection, so the argument should not have been in the bankruptcy court, but before the Department of Transportation Board of Contract Appeals under the Contract Disputes Act;
bullet That since no motion was filed to convert Inslaw from a chapter 11 bankruptcy to a chapter 7, there was no violation of the automatic stay protection in this respect;
bullet That the department has not filed a claim, so it is still entitled to sovereign immunity; and
bullet That damage awards for violation of the automatic stay can only be paid to individuals, not corporations.
The department will be successful and the District Court ruling will be overturned (see May 7, 1991). [US Congress, 9/10/1992]

Entity Tags: US Department of Justice, Inslaw, Inc., US Court of Appeals for the District of Columbia

Timeline Tags: Inslaw and PROMIS

The House Subcommittee on Economic and Commercial Law holds a hearing about the failure of Attorney General Richard Thornburgh to provide full access to all documents and records about the Inslaw case. At the hearing, Inslaw owner William Hamilton and its attorney Elliot Richardson air their complaints about an alleged criminal conspiracy in the Justice Department’s handling of a contract with Inslaw and its alleged theft of an enhanced version of the PROMIS application. Steven Ross, the general counsel to the clerk of the US House of Representatives, refutes the Justice Department’s rationale for withholding documents related to possible wrongdoing by its officials involved with the Inslaw contract. In addition, Government Accountability Office representatives describe deficiencies in the Justice Department’s Information Resources Management Office and its administration of data processing contracts.
Bason's Allegations - Judge George Bason, a bankruptcy judge who had found in favor of Inslaw in a dispute with the department (see September 28, 1987), testifies that he believes his failure to be reappointed as bankruptcy judge was the result of improper influence on the court selection process by the department because of his findings. Bason cites information provided to him by a reporter (see May 1988) and negative statements about him by departmental employees (see June 19, 1987 and June 1987 or Shortly After). After investigating these allegations, the committee will find: “The committee could not substantiate Judge Bason’s allegations. If the Department of Justice had influence over the process, it was subtle, to say the least.” Bason will point out that Norma Johnson, the judge who chaired the meeting at which he was not reappointed (see December 15, 1987), had previously worked with departmental official Stuart Schiffer, who was involved in the Inslaw case. However, the committee will comment that it has “no information that Judge Johnson talked to Mr. Schiffer about Inslaw, Judge Bason, or the bankruptcy judge selection process.”
Thornburgh's Reaction - Following this hearing, Thornburgh agrees to cooperate with the subcommittee, but then fails to provide it with several documents it wants. [US Congress, 9/10/1992]

Entity Tags: Steven Ross, William Hamilton, Richard Thornburgh, Government Accountability Office, Elliot Richardson, George Bason, House Subcommittee on Economic and Commercial Law

Timeline Tags: Inslaw and PROMIS

A judge hearing the PROMIS case for the Department of Transportation Board of Contract Appeals (DOTBCA) says that findings by the Bankruptcy Court for the District of Columbia and the US District Court for the District of Columbia have left a “cloud” over the Justice Department. The two courts originally found for Inslaw (see September 28, 1987 and November 22, 1989), which is in dispute with the department over an enhanced version of the PROMIS software, but these rulings were overturned on appeal, mostly on jurisdictional grounds (see May 7, 1991). At a hearing, counsel for the department says, “I think those trials speak for themselves, and every order has been vacated.” However, the judge responds: “There is one problem. The fact that a judge or a court doesn’t have jurisdiction doesn’t mean that the court is completely ignorant. True, Mr. Bason [the bankruptcy court judge] and Mr. Bryant [the judge that heard the initial appeal] did not have jurisdiction, but they did make some very serious findings on the basis of sworn testimony. They had been truly vacated, and it may be that all the statutes to run have run and they can’t go anywhere. Those cases may be dead forever. But it has left a cloud over the respondent [the department].” The House Judiciary Committee will comment: “As the DOTBCA judge concluded, there definitely remains a cloud over the department’s handling of Inslaw’s proprietary software. Department officials should not be allowed to avoid accountability through a technicality or a jurisdiction ruling by the Appeals Court.” [US Congress, 9/10/1992]

Entity Tags: idateasiapi, House Judiciary Committee, Inslaw, Inc., US Department of Justice

Timeline Tags: Inslaw and PROMIS

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