Denise O'Donnell (gov)

The resignation on Thursday of Denise E. O’Donnell as New York’s deputy secretary for public safety and commissioner of the Division of Criminal Justice Services could wind up propelling her toward a run for New York attorney general, The Buffalo News reports.

O’Donnell, who served as the U.S. Attorney for the Western District of New York from 1998 to 2001, resigned as one of New York Democratic Gov. David Paterson’s top aides, to protest the handling of the latest scandal in New York state government. O’Donnell complained that the state police, which was under her purview, was involved in the affair, saying that she had been assured that the state police was not involved.

O’Donnell in a statement said that communication by the governor and state police with a woman who requested a protective order against Paterson aide David Johnson, was “unacceptable regardless of their intent.â€� The Buffalo News reports O’Donnell claimed she was misled by the state police — one of the agencies she oversaw — about its role in the incident.

According to the newspaper, “The departure of Buffalo’s Denise E. O’Donnell from two top criminal justice posts in the Paterson administration serves as more than a statement of moral outrage — though that’s certainly part of it. It also allows O’Donnell to pursue her long-held dream of running for attorney general.”

The former federal prosecutor previously sought the Democratic nomination for attorney general in 2006 but did not get the necessary 25 percent at the party’s state convention in Buffalo to qualify for the primary ballot that year, the newspaper reports. She withdrew from the race at the convention.

But, following Friday’s announcement by Paterson that he is ending his bid for a full term, the Democratic field has all but been cleared for state Attorney General Andrew Cuomo to seek the Democratic nomination, The Buffalo News reported.

If that came to pass, O’Donnell would be a likely candidate for Cuomo’s job as state attorney general. In addition to her past efforts to seek the position, she also retained a huge war chest  — nearly $350,000 cash on hand — from her 2006 bid, according to the newspaper.

In filing suit against Intel Corporation today, the Federal Trade Commission will test the limits of its authority to enforce antitrust laws, observers say.

It’s a “very ambitious case,â€� that will “explore the contoursâ€� of antitrust laws, said Kenneth Glazer, who previously served as deputy director in the FTC’s competition bureau and is a partner at K&L Gates.

The agency today accused the chip giant of  waging “a systematic campaign to shut out rivals” by “cutting off their access to the marketplace.”

The suit comes on the heels of several important developments in the long-running Intel case. In the last year, the company agreed to a $1.25 billion settlement with rival chip maker Advanced Micro Devices, Inc., was hit with a $1.45 billion fine from the European Union, and was targeted in a separate lawsuit filed by New York State Attorney General Andrew Cuomo.

In the past, Intel has been accused of of illegally inducing its customers to spurn AMD’s products.

The FTC’s case goes further. It says that Intel engaged in anti-competitive behavior in a separate market for chips, known as graphics processing units, that are made for heavy multimedia use. It also alleges deceptive marketing practices that raise consumer protection concerns. Previous litigation has largely focused on antitrust violations.

After what two commissioners called an “unprecedented” four meetings, the commission voted yesterday to unanimously file suit.

Commissioner William E. Kovacic was recused from the matter because his wife’s firm, Jones Day, represents Intel competitor, Nvidia, which makes the multimedia chips and lobbied the FTC to bring the suit.

In a statement, Intel accused the commission of adding “last minute” allegations the FTC had not properly investigated, and demanding an “unprecedented” set of remedies.

“This case could have, and should have, been settled,” said the company’s general counsel, Douglas Melamed, who served as acting antitrust chief in the Clinton Justice Department. Melamed joined Intel last month after the AMD settlement.

The FTC’s wide-ranging complaint covers conduct stretching back a decade. The agency brought its case under multiple authorities, some of which have rarely been tested by courts.

The FTC usually brings monopolization cases indirectly through the Sherman Act, which governs the Justice Department’s antitrust cases. But the FTC can also bring antitrust cases through its own authority, under the Federal Trade Commission Act. Section 5 of that statute prohibits broader “unfair methods of competition.”

Recent cases the FTC has brought under its Section 5 authority, including a 2005 cases against Negotiated Data Solutions, have resulted in settlements and were not tested by judicial scrutiny.

In its case against Intel, the FTC tried both approaches.

“What they are doing is hedging their bets,” said Robert Litan, a former deputy in the Antitrust Division during the Clinton administration, where he supervised the first Microsoft investigation. “Section 5 is a safety net and catch-all. [The case] is designed to set precedent and see if it sticks.”

The 24-page complaint includes nearly five pages of proposed remedies to change Intel’s conduct.

Chairman Jon Leibowitz and Commissioner J. Thomas Rosch alleged in a statement that Intel “fell behind in the race for technological superiority,” and resorted to “deception and coercion” to catch up with AMD and other innovators.

“Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly,” said Richard A. Feinstein, who heads the FTC’s competition bureau. “It’s been running roughshod over the principles of fair play and the laws protecting competition on the merits.

The complaint is filed not in federal court but through an administrative process within the commission. The FTC recently announced new rules for the commission to expedite cases, after coming under fire for letting matters drag on for years. A trial, which will test the commissions new procedures, is slated for next September.

Ah, another battle over attorney-client privilege.

The issue faded somewhat following the Justice Department’s re-issuance, roughly a year ago, of corporate charging guidelines. The Filip memo, named for former Deputy Attorney General Mark Filip and etched in the U.S. Attorney’s Manual, bars federal prosecutors from evaluating a corporation’s cooperation based on a waiver of attorney-client privilege.

When the guidelines were issued last August, corporations cheered. Corks popped. Confetti fell. But the privilege issue has re-emerged in a big way — in the New York attorney general’s probe into Bank of America’s takover of Merrill Lynch.

Lewis Liman (Cleary Gottlieb)

On Tuesday, New York Attorney General Andrew Cuomo’s office fired off this letter to BofA’s lawyer, Cleary Gottlieb’s Lewis Liman, accusing the bank of hiding behind the privilege to avoid answering questions about $3.6 billion in bonuses to executives at Merrill Lynch and discussions officials had with in-house and outside lawyers about Merrill’s “cascading” losses.

Then the office got really prickly:

The law is clear that Bank of America and its officers cannot assert an advice of counsel defense for their decisions, and at the same time persist in refusing to disclose the substance of the conversations with counsel. Accordingly, we request that Bank of America reconsider its decision to prevent this Office from adequately probing these crucial issues. We provide you with this final opportunity to reconsider. Otherwise, we will proceed with our charging decisions without giving credit to the advice of counsel defenses that Bank of America has not permitted us to test.

Liman responded in kind. In a Sept. 8 letter obtained by Main Justice, the bank’s lawyer denied using an advice of counsel defense, calling the basic premise of Cuomo’s letter “simply wrong.”

Bank of America has not put at issue the subject matter of any advice of counsel. Nor has Bank of America offered reliance on legal advice as a justification for its disclosures. Bank of America’s position has been clear and consistent throughout: the Proxy Statement and related disclosures complied with all applicable laws, rules and regulations.

When asked, BofA and Merrill employees under subpoena said that they had relied on counsel’s advice, but that’s different from using the attorney-client privilege as a shield, Liman wrote.

Bank of America has not asserted reliance on counsel as a defense to an adjudicating authority. Witnesses under subpoena answered a question that they were required to answer by your Office. Neither Bank of America nor the witnesses chose that question to be asked. Your Office chose to ask it. Once the question was asked, the witnesses and Bank of America were required to answer it truthfully. The answer to that question was not privileged. No one has sought to take unfair advantage of the assertion of the privilege by hiding information from your Office or anyone else.

The lawyer also accused prosecutors of repeatedly declining to meet with BofA’s counsel to hear the bank’s side of the story — “including why there is no basis for seeking to invade the attorney-client privilege here.” And he noted that the bank’s lawyers have cooperated in the investigation consistent with the Filip memo, SEC policy, and New York State bar.

“These policies uniformly admonish against seeking waiver of the attorney-client privilege in an investigation in all but the most extreme circumstances,” he wrote.