Jury is Deadlocked in Andersen Trial

Five weeks of trial and seven days of jury deliberations have finally come down to a deadlocked jury in the Department of Justice v. Arthur Andersen LLP obstruction of justice trial in Houston. Late Wednesday afternoon the 9-man, 3-woman jury sent a note to U.S. District Judge Melinda Harmon that read: "We are not able to reach a unanimous decision."

Judge Harmon refused to accept the jury's statement as a final decision and instead instructed the jury to return to their hotel rooms where they have been sequestered for over a month and resume deliberations on Thursday, June 13. The judge told jurors to, "continue your deliberations in an effort to agree upon a verdict and dispose of this case." The jury instruction is referred to as an "Allen" charge, and when used, jurors are reminded of the importance of the case, the cost of a second trial, and that there is no reason to believe another jury in another trial would have any easier time making a decision. Jurors are also told to be leisurely in their deliberations and to take as much time as necessary to render a decision.

In spite of defense attorneys' opposition, Judge Harmon refused to instruct jurors that if they cannot agree on a verdict they must render a unanimous verdict of not guilty. The instruction is part of the pattern jury charges for the 5th U.S. Circuit Court of Appeals. The Andersen case is being tried in the 5th circuit.

Defense attorney Denis McInerney told the judge she "must" give the instruction to the jury. Judge Harmon's response to defense attorneys' objections was, "You're getting no help from me. If I am wrong, you can get me reversed." Industry experts who speculated that the case would be easy for the government to win see the jury's inability to reach a decision as a moral victory for Andersen.

"This tentative deadlock is evidence that the indictment should never have been handed down," said Michael Young, a lawyer at Willkie Farr & Gallagher who frequently represents accounting firms in cases of financial fraud. "In substance, the U.S. attorney handed a death sentence in a case that was far from open and shut. The mood within the profession is one which believes strongly that Andersen was prematurely sent to the gas chamber before it had its day in court."

Before sending jurors back to their hotel rooms on Wednesday evening, Judge Harmon told them they must, "Remember also that after full deliberation and consideration of the evidence in the case, it is your duty to agree upon a verdict if you can do so without surrendering your conscientious conviction."

Should Andersen be found guilty of obstructing of justice it its destruction of documents and e-mail messages relating to the firm's Enron audit, the firm will face a maximum fine of $500,000 and probation of five years. Should the jury remain deadlocked, the judge will be required to declare the trial a mistrial. At that point the Justice Department will either request a retrial or reattempt a negotiated settlement with Andersen. Prior to the trial, the two sides were unable to reach a settlement.

Andersen: The Story So Far

Andersen: Updated List of Client Defections

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