SAN FRANCISCO (CN) - A federal judge showed little patience on Wednesday for a federal prosecutor's argument that FedEx behaved in an "unprecedented" way during the drafting of a tolling agreement.
The government sought to reform the agreement as part of its case accusing the shipping company of conspiring to distribute and sell drugs from illegal online pharmacies. FedEx was indicted on the charges in June 2014.
FedEx has argued that it bears no legal responsibility for the 10 million packages it ships a day and cannot possibly monitor its deliveries for controlled substances, and at Tuesday's hearing, FedEx's attorneys continued to declare that their client is innocent.
But most of U.S. District Judge Charles Breyer's attention went to eviscerating prosecutor Kirstin Ault's theory that FedEx deceived the government during the talks preceding the drafting of a tolling agreement for the case. A tolling agreement does away with a case's statute of limitations.
Ault - who is with the U.S. Attorney's Office in San Francisco - claimed that her opponents did not make clear that FedEx Corporation, Federal Express Corporation and FedEx Corporate Services are not all different names for the same company, but distinct companies themselves.
As a result of this alleged concealment, Ault said, she did not name all of the companies in the agreement that she meant to.
FedEx moved to dismiss the counts against the unnamed entities because the statute of limitations for those companies has expired, but Ault argued that FedEx should have made sure the prosecution knew that the companies could not be taken together as one.
"It's unprecedented in a criminal case that the defendants are negotiating with the government in good faith, use the term 'good faith' over and over again, and then hide the ball and then seek to take advantage of the government's belief that they were acting in good faith to aid them in litigation," Ault said.
Breyer did not suffer the argument gladly.
"I'm trying to figure out what is unprecedented," he said. "If the government's mistaken, they're mistaken."
He added, "Are you familiar with the website SEC.org? Won't it disclose to you and everyone else what the corporate structure is at FedEx?"
Ault acknowledged that she did not consult the Securities and Exchange Commission filings for FedEx before drafting the agreement, but argued that the government treated all the companies as one entity "because that's what they told us."
Breyer said that FedEx does not have any responsibility to aid the government's criminal investigation against it.
"They're not privy to your entire investigation, they don't know what you're focusing on, and if they did they don't have a duty," he said. "I know this is a somewhat novel prosecution, but whether it's a novel prosecution or not doesn't mean the procedures ought to be novel."
Breyer then turned to Allen Ruby, the arguing attorney for FedEx.
"I thought you wouldn't have to speak at this hearing, but you're accused of deceit, of concealment," Breyer said. "I don't know how many other commandments we'll get to, but you'd better defend yourself."
Ault quickly pointed out that she was not accusing Ruby of anything personally, since he was not present at the meetings that led to the tolling agreement.
"Then who is it you're pointing your finger at?" Breyer asked.
"I only know that it was impossible for the person on the other side to believe that we were entering into a tolling agreement with only one part of the company," Ault said. "We believed that we were entering into a tolling agreement with the entire corporation."
Ruby - who is with Skadden Arps in Palo Alto - called the government's claims "preposterous."
"It's natural to harp on somebody else's mistakes, but one exception is to blame somebody else for your own mistake," he said.
And the "additional layer of preposterousness," Ruby said, was that "the government says not only did they not know these things that were publicly available, but somehow FedEx knew that the government didn't know what was available all over the Internet."
Ault contended that during the discussions prior to the agreement, the different corporate names were "constantly" used "interchangeably."
Breyer cut in. "All you're saying is that people use the term FedEx or some variation of that," he said. "Of course you're right. People don't say, 'I work for X aka Y not to be confused with Z.
"But when you prepare a document which you want to have a legal effect called tolling a statute of limitations, I have to believe that some level of competence would require a government agency to check sources - which in this case happen to be publicly filed."
Ault continued trying to cite precedence from civil cases in her defense, but Breyer would not have it.
"I guess I'd better go back to law school, because I thought in a criminal case the defendants don't have to do anything," he said. "They don't have an affirmative duty to straighten out the prosecution's misconceptions about the case."
Even after he said he would grant FedEx's motion to dismiss the counts against the companies not named in the tolling agreement, the caustic Breyer did not let up.
After he idly mentioned that he did not know how his order would affect the government's prosecution going forward, Ault - clearly just wanting it to be over - said, "It will have no effect, your honor."
Caustic to the end, Breyer said, "Well, I'm delighted to participate in a motion that has no effect. But I'm still going to write an opinion on this, because I think it's a concern when the government has an expectation that tolling agreements should be reformed in a criminal context.
"People will ignore it, because apparently it has no effect, but that's okay. I don't take it personally."
The case is set to go to trial in early June.
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