NORA BARRY FISCHER, District Judge.
This complex and contentious case involving charges of conspiracy, wire fraud, bank fraud and tax offenses once again returns to the Court with numerous disputes between the parties, most of which relate to the Court's Pretrial Order entered on September 18, 2014. (Docket Nos. 284-294; 298-303). In short, the Government seeks reconsideration of several aspects of the Court's Pretrial Order, which was entered after a status conference held on August 22, 2014 and provided to counsel, in draft form, thirty-one days before its motions were filed. (Docket Nos. 284, 285). Through these motions, the Government seeks to preclude the Defendants from presenting any exhibits at the trial scheduled to commence on March 2, 2015, and to have Defendants produce impeachment evidence in advance of trial, among other changes. (Id.). Aside from an uncontroversial point, Defendants contest these motions. (Docket Nos. 286-88). Further, despite the Court's Order instructing the parties to meet and confer on the contested authenticity of the Government's exhibits and file a Joint Status Report by November 21, 2014, the parties provided the Court with competing Status Reports, advising that they have made little progress toward reaching any meaningful agreements on the authenticity of the Government's voluminous exhibits, now described as nearly
After considering all of the parties' submissions, the Court holds that the Government's Motion to Preclude Admission of Defense Exhibits Because of Failure to Comply With Reciprocal Discovery Obligations (Docket No. 284) and Motion for Clarification of Pretrial Order (Docket No. 285) are essentially motions for reconsideration and the Government's Motion to Preclude [284] is denied, and its Motion for Clarification [285] is granted, in part, and denied, in part. The Court will order the parties to return to the table in an effort to conduct meaningful negotiations on the authenticity of the exhibits; otherwise, the Court may need to employ different case management techniques noted below. Finally, with respect to the email disclosure by the Government, the Court concurs with the Government that the materials are non-discoverable internal work product, were produced inadvertently and will order Defendant Smith and his counsel to destroy their notes from the viewing session and to file affidavits with the Court certifying that such destruction has occurred.
The Court first turns to the Government's Motions filed at Docket Nos. 284 and 285, which the Court believes are properly construed as motions for reconsideration of certain deadlines and directives set forth in the Court's Pretrial Order, including: (1) the deadline for Defendant's production of exhibits to the Government by February 2, 2015; (2) to define the scope of the term "exhibits" in the Order, identifying the type of exhibits needed to be produced by Defendants as of that deadline; and (3) the Government's deadline for submission of its hard copy exhibits to the Court and its request that it be permitted to maintain the exhibits throughout trial. (Docket Nos. 284, 285). By separate motion, the Government further seeks to preclude Defendants from presenting any exhibits that were not produced as reciprocal discovery or to set a deadline for reciprocal discovery. (Id.). In response, Defendants concede point (3) noted above but contest all other matters. (Docket Nos. 286, 288). As (3) is uncontested, the Government's Motion for Clarification is granted on that point. But, the Court will deny the remainder of the Government's requests because it does not believe that reconsideration of the other aspects of the Court's Pretrial Order is warranted.
The purpose of a motion for reconsideration "is to correct manifest errors of law or fact or to present newly discovered evidence." Kabacinski v. Bostrom Seating, Inc., 98 F.App'x 78, 81 (3d Cir. 2004) (quoting Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985)). Because "federal courts have a strong interest in the finality of judgments," United States v. Hoey, Cr. No. 09-200, 2011 WL 748152, at *2 (W.D.Pa. Feb. 15, 2011) (citation omitted), the standard that must be met to prevail on a motion for reconsideration is high, see Berry v. Jacobs IMC, LLC, 99 F. App'x 405, 410 (3d Cir. 2004).
The Court may grant a motion for reconsideration if the moving party shows: (1) an intervening change in the controlling law; (2) the availability of new evidence which was not available when the court issued its order; or (3) the need to correct a clear error of law or fact or to prevent a manifest injustice. United States v. Banks, Crim No. 03-245, 2008 WL 5429620, at *1 (W.D.Pa. Dec. 31, 2008) (citing Max's Seafood Café by Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999)). Motions for reconsideration are not a tool to re-litigate and reargue issues which have already been considered and disposed of by the Court, see Hoey, 2011 WL 748152, at *2 (citation omitted), or for addressing arguments that a party should have raised earlier, see United States v. Dupree, 617 F.3d 724, 732-33 (3d Cir. 2010) (quotations omitted). Rather, such a motion is appropriate only where the court misunderstood a party or where there has been a significant change in law or facts since the Court originally ruled on that issue. Hoey, 2011 WL 748152, at *2. Finally, the relevant legal standards must be read in conjunction with this Court's Practices and Procedures, which provides that "any motions for reconsideration shall be filed within seven (7) days." See Practices and Procedures of Judge Nora Barry Fischer, § II.M., available at:
At the outset, it is the Court's belief that all of the Government's remaining requests should have been raised at the Status Conference and/or at some point during the thirty-one days that all counsel had the draft Pretrial Order before it was formally issued. See Dupree, 617 F.3d at 33. Motions for reconsideration are not to be used as vehicles "for addressing arguments that a party should have raised earlier" and likewise do not "empower litigants . . . to raise their arguments, piece by piece." Dupree, 617 F.3d at 732 (quotations omitted). The procedures utilized by the Court to establish the Pretrial Order issued on September 18, 2014 included: soliciting input from counsel via email on August 18, 2014 prior to the Status Conference; convening a status conference on August 22, 2014 during which the Court reviewed the entire Pretrial Order with counsel; and circulating the draft Pretrial Order via email after the conclusion of the conference. (Docket Nos. 273, 274). Simply put, these procedures were designed to afford the parties and their attorneys with a full and fair opportunity to provide input to the Court regarding case management for what appears will be a long and contentious trial and also to give everyone an opportunity to understand the Court's expectations of counsel and the parties throughout these proceedings.
Further, it appears to the Court that the Government has styled its Motions as seeking "changes" or "clarification" of the Pretrial Order because its arguments are not sufficient to meet the high burden necessary to demonstrate that reconsideration is warranted. See Berry, 99 F. App'x at 410. To this end, the Government has not set forth: any changes in the controlling law since the Court entered its Order; any new evidence which was not previously available; or, any clear errors of fact or law in the Court's Order. (See Docket Nos. 284, 285). Instead, the Government relies on a series of non-binding, District Court decisions from outside this Circuit for legal support; repeatedly cites the need for changes based on unspecified "experiences" its counsel has had in prior cases;
The first issue is reciprocal discovery. To the extent that the Government argues that the Court should preclude four criminal defendants charged with serious felony offenses from presenting any exhibits at trial months before the scheduled trial date of March 2, 2015, such motion is clearly denied. No authority has been presented to the Court supporting such an Order. (See Docket Nos. 284, 285). The law is well established that the appropriate sanctions for proven violations of Rule 16, if any, are discretionary matters for the Court such that violations may be excused for "good cause." Indeed, the severe sanctions of striking or precluding evidence should only result upon a showing of prejudice to the opposing party. See e.g., United States v. Jones, 503 F. App'x 174, 178 (3d Cir. 2012) (quoting United States v. Lopez, 271 F.3d 472, 484 (3d Cir. 2001)) ("However, these sanctions are discretionary; `Rule[16] does not require a district court to do anything.'"); United States v. Lee, 573 F.3d 155, 161 (3d Cir. 2009) ("In determining an appropriate remedy [for a Rule 16 violation], a district court should consider the reasons for the party's delay in producing the materials, including whether it acted intentionally or in bad faith, and the degree of prejudice to the opposing party."); United States v. Rodgers, No. 2:12-CR-162, 2014 WL 3735585, at *4 (W.D. Pa. July 28, 2014) (McVerry, J.) ("Here, since the trial has been continued until September at Defendants' request, Porter's counsel will have more than enough time to incorporate the alleged post-arrest statements into his trial strategy—notwithstanding the government's delay."). Like the Court's previous holding that there was no prejudice to Defendant Smith by the Government's failure to make full pretrial Brady disclosures to him on the "gift of equity" issue, (Docket No. 263), there is simply no prejudice to the Government at this time which would support an Order precluding Defendants from presenting exhibits at trial.
The next issue is whether the Court should establish a deadline for Defendants to make reciprocal discovery available to the Government in advance of the Court's February 2, 2015 deadline for the exchange of exhibits. (Docket No. 284). The Court declines to do so for a host of reasons. Again, until filing the instant motions, the Government never asked for a deadline; hence, there is no deadline for reciprocal discovery in the Court's December, 2, 2013 Order. (See Docket No. 248). There is also no companion deadline set for the Government to produce its discovery to Defendants. (See Docket Report). Further, while the Government has made significant amounts of discovery available to Defendants, including producing exhibit lists and nearly 5,000 actual, marked exhibits, and its open file production of voluminous evidence at the U.S. Secret Service Office, it continues to state that more supplementation is forthcoming. (Docket Nos. 284, 285, 302). Additionally, the Court has now established a deadline for the parties to mark and exchange exhibits by February 2, 2015, one month before trial. (Docket No. 283). Thus, all exhibits are due to the respective opponent(s) by that deadline. Failure to abide by such deadline by the Government or the Defendants would necessarily result in the Court having to evaluate any independent objection to any specific evidence not timely disclosed under the legal principles articulated above. Beyond setting forth the applicable legal standard, it would be both impractical and imprudent for the Court to issue a pretrial Order providing essentially an "advisory opinion" of how it will evaluate whether any untimely disclosures or production of trial exhibits will be stricken, or not, as the facts underlying such determination are simply unknown at this juncture. See Burkey v. Murberry, 556 F.3d 142, 149 (3d Cir. 2009) (recognizing that a "District Court may not render an advisory opinion").
Moreover, Defendants, through their respective counsel, have all indicated that they intend to comply with their discovery obligations under Rule 16 but have been spending the balance of their time reviewing the Government's voluminous disclosures to them. (Docket Nos. 286, 288). This is not a hollow position as the Government's evidence includes nearly 5,000 marked exhibits, as selected from its much more voluminous production at the U.S. Secret Service Office, and its Jencks Materials, available for review at the U.S. Attorney's Office on the stand-alone computer. As is explained in more detail below, the Government has also demanded that Defendants now review the exhibits it has produced to them and to stipulate to the authenticity of the documents. (Docket Nos. 302, 303). On the reciprocal disclosures, some have made more progress than others as Defendant Svaranovic has provided the Government with a disk of potential trial exhibits she intends to present. (Docket No. 299). Defendant Smith likewise made some production of materials to the Government and has also outlined the additional exhibits he intends to present. (Docket No. 288). To date, Defendants Kubini and Ratchkauskas have advised that their respective presentations will likely include only exhibits found within the Government's own production. (Docket Nos. 273, 286). The Court agrees that a rolling production of materials by Defendants to the Government is appropriate and does not believe that establishing yet another deadline prior to the February 2, 2015 deadline for the exchange of exhibits in the Pretrial Order will accomplish anything but engender further disputes.
A third issue presented to the Court is the scope of the definition of the term "exhibits" as used by the Court in § 3 of the Pretrial Order. (Docket No. 283). The Government advocates that "exhibits" should be broadly interpreted to include any exhibits that Defendants intend to use during cross-examination of Government witnesses, relying on a theory set forth in District Court cases in United States v. Hsia, 2000 WL 195067 (D.D.C. Jan. 21, 2000), and United States v. Swenson, 298 F.R.D. 474 (D. Id. Feb. 10, 2014), that presenting such documents represents an extension of their own "cases-in-chief" such that discovery must be permitted. Defendants respond that the Government is not entitled to pre-trial discovery of their impeachment materials and that the decisions relied upon by the Government are non-binding, distinguishable and disfavored. (Docket Nos. 286, 288, 299). Again, the Government did not provide the Court with the precedent it relies on (i.e., Hsia and Swenson) before the Pretrial Order was entered, despite numerous opportunities for the Government to do so. Hence, the Pretrial Order was issued without the Court contemplating the parties' positions on what appears to be a most contested point of law between these parties. (Docket No. 283). Of course, as trial has not yet commenced, the dispute is framed without reference to the admission of any particular piece of evidence or in the context of how such exhibit is proffered to be used by the proponent at trial. (See Docket No. 282 ("The Court thus declines the parties' invitation to make broad rulings on these very general disputes at this stage of the case but will resolve any issues as they arise under the parameters set forth in the Pretrial Order.")). Further, Hsia and Swenson do not represent settled law and other courts have criticized the approach set forth therein, including the one case that has cited Swenson for any purpose. See e.g., United States v. Harry, 2014 WL 6065705, at *4-11 (D. N.M. Oct. 14, 2014) (distinguishing Hsia and Swenson and holding that "the term `case-in-chief,' as rule 16(b)(1)(A) phrase, refers to evidence that a party presents between the time that the party calls its first witness and the time the party rests.").
In any event, this Court retains the inherent authority to interpret its own Orders and the Court does not share the Government's broad interpretation of the term "exhibits" used in § 3 of the Pretrial Order entered in this case. See E.E.O.C. v. U.S. Steel Corp., 877 F.Supp.2d 278, n.5 (W.D. Pa. 2012) (citing United States v. Spallone, 399 F.3d 415, 421 (2nd Cir. 2005); SEC v. Hermil, Inc., 838 F.2d 1151, 1153 (11th Cir. 1988) ("Included in a district court's power to administer its decrees is the power to construe and interpret the language of the original order.")). Like a contract, a court order should be "construed consistently with fundamental precepts of contract construction" with reference to the "four corners" of the Order. Washington Hosp. v. White, 889 F.2d 1294, 1300 (3d Cir. 1989). In this Court's estimation, the Pretrial Order, interpreted as a whole, does not support the Government's position. (See Docket No. 283).
Here, the Court has not specifically ordered Defendants to produce their impeachment or rebuttal exhibits to the Government in advance of trial and the term "exhibits" should not be read to require such production. (See id.). Instead, the term "exhibits" utilized throughout § 3 must be interpreted with reference to the other related provisions in the Order, namely, §§ 3.a. and 3.b. referencing the parties' witness disclosures and §4 outlining the Government's required disclosures under the Jencks Act, Brady/Giglio impeachment materials and Rule 404(b) evidence. (Id.). These provisions, read together, can only be reasonably interpreted to require all of the parties to mark and exchange the exhibits that they intend to present during their own respective cases-in-chief by the established deadline. To this end, pursuant to §§ 3.a. and 3.b., the Court requires the parties to provide witness lists and offers of proof, under seal, listing the witnesses the parties may call if needed "
For these reasons, the Government's motion is denied to the extent that it seeks reconsideration and for the Court to interpret the term "exhibits" in the manner it proposes. Instead, the Court states that "exhibits" means "exhibits (other than purely for impeachment or rebuttal)."
As part of its Pretrial Order, the Court ordered the parties and counsel to meet and confer and to file a Joint Status Report with the Court by November 21, 2014. (Docket No. 283). A meeting was held at the U.S. Attorney's Office on November 20, 2014, or one day before the Court's deadline. (Docket Nos. 302, 303). Attendees at the meeting included Government counsel, his litigation assistant, and counsel for Defendants Ratchkauskas, Svaranovic and Smith.
The litigants in the CMU v. Marvell litigation, Civ. A. No. 09-290, presented the Court with literally thousands of pretrial objections on matters that did not appear to be truly relevant and/or important in that case. Given same, the Court admonished counsel for presenting pretrial objections to exhibits which could not have been practically presented in the normal course of the trial of that case. (See Civ. A. No. 09-290, Docket No. 586). Notably, the parties in that case agreed to time limits on their respective presentations prior to the trial, limiting both sides to 20 hours to present their respective cases-in-chief, less time spent in openings and closings. (Id.). The Court struck all of the pretrial objections noting that the parties had presented 2,700 exhibits but had only 2,280 minutes to present the exhibits at trial. (Id.). They had also raised separate objections to deposition designations and other potential evidence. (Id.). The Court held that "the overzealous submission of exhibit lists and deposition designations has caused the Court to be inundated with unnecessary objections. This Court is not in the business of resolving hypothetical disputes as to exhibits and deposition designations that the parties have no real intent to actually offer at trial and in fact could not actually be presented as a practical matter given the time restrictions." (Id.). The Court then ordered the parties to meet and confer and further narrow the scope of the exhibits they actually sought to present at trial and to raise only meaningful objections to such exhibits. Ultimately, the parties presented a more reasonable amount of disputes and the Court handled them in due course.
This case is admittedly different because the Court has not imposed time limits on the presentations by any of the parties involved, i.e., the Government; Kubini; Ratchkauskas; Svaranovic; and Smith. The Court has, however, elicited trial estimates with the Government advising that its case-in-chief would take around four weeks and Defendants stating that an additional week or week and a half was needed for their collective cases-in-chief. Needless to say, the Court expects the parties to adhere to such estimates. In past mortgage fraud cases, United States v. Slane, Crim. No. 11-81, and United States v. Moreno, Crim. No. 10-117, the Government was able to expeditiously present its case well within the time requested, beating its pretrial estimate of the length of its case-in-chief by around a week in both instances. But, these were both single defendant cases where the defendants' role was well defined within an admitted broader conspiracy, a closing agent, Slane and an appraiser, Moreno. The defense attorneys in those cases also worked well with government counsel and raised few objections such that the authenticity of thousands of exhibits was not the type of dispute that the Court was called upon to resolve. Hence, despite the fact that this case involves four defendants with very different roles in the alleged fraud, the Court did not initially believe that time limits would be needed in this case, which involves some of the same transactions that were presented during the Moreno trial.
Setting time limits in a criminal case is not without precedent. In United States v. Cousar, 2007 WL 4456798, (W.D. Pa. Dec. 16, 2007), Judge Lancaster established time limits in a complex construction fraud case involving a fifty-three page indictment and thirty-nine criminal charges alleging fraud during three separate construction projects: PNC Park; the Petersen Events Center; and the reconstruction of the Pentagon after the 9/11/01 terrorist attacks. It appears that the parties had estimated a five week presentation by the Government and two-week presentation by three defendants collectively but Judge Lancaster entered an order limiting the Government to forty (40) hours of trial time and Defendants to twelve (12) hours each. Id. The Government appealed this decision but the Order was vacated prior to the Court of Appeals deciding the issues when the Government agreed to sever certain counts and focus its case on a number of related alleged fraudulent acts concerning the reconstruction of the Pentagon. (Crim. No. 06-07, Docket No. 151). The Court also granted the parties additional time in the lead trial of the severed counts, i.e., an additional twenty (20) hours for the Government and five (5) additional hours for each Defendant. (Crim. No. 06-07, Docket No. 168). Each of the defendants then pled guilty to certain charges so it is unclear how those case management techniques would have fared.
Returning to the present matter, the authenticity of exhibits remains an area where the Court believes that the parties should be able to reach agreements, regardless of the Government's threat to withhold Jencks Act material until the time of trial if the Defendants fail to so stipulate. The standard for authenticity of exhibits is not onerous. To this end,
United States v. Turner, 718 F.3d 226, 232 (3d Cir. 2013). "Business records are admissible as an exception to the hearsay rules if the records were `made at or near the time by . . . a person with knowledge, if kept in the ordinary course of a regularly conducted business activity, and if it was the regular practice of that business activity to make' the records." United States v. Jimenez, 513 F.3d 62, 77 (3d Cir. 2008) (quoting FED. R. EVID. 803(6)). Business records may be authenticated through witness testimony or the use of written certifications that comply with Rule 902(11), including that pretrial notice of the certification and an opportunity to challenge same is provided to the opponent. See FED. R. EVID. 902(11). Courts that have addressed the issue have held that the admission of such written certifications to authenticate business records does not violate the Confrontation Clause to the extent that the statements contained therein are not testimonial. See e.g., United States v. Schwartz, 315 F. App'x 412 (3d Cir. 2009); United States v. Ellis, 460 F.3d 920, 927 (7th Cir. 2006); United States v. Adefehinti, 510 F.3d 319 (D.C. Cir. 2007).
The parties' positions on these issues are largely undeveloped but the Court still feels that they should be able to negotiate in good faith and reach more agreements on exhibit authenticity given this standard and what it understands about the scope of the Government's case. Here, the Government alleges that each of the Defendants was involved in a conspiracy to commit wire and/or bank fraud stemming from their alleged roles in a mortgage fraud conspiracy. The Government has stated that it plans to focus on around 108 transactions at trial. (Docket No. 154-7). According to information provided by the Government during this case, it appears that Defendants Kubini and Ratchkauskas were involved in all of the transactions at issue as buyers and/or sellers of the properties in question while Svaranovic acted as an appraiser on around 50 transactions and Smith acted as a closing attorney for about 43 of the transactions. (Id.). The Government contends that others acted in the appraiser and closing attorney roles for the transactions in which Svaranovic or Smith did not participate; for example, Platinum Appraisals and/or Absolute (Joel Reck and Jason Moreno) appraised many of the properties while James Steiner of Hergenroeder, Rega & Sommer closed a number of the transactions and James Sporrer, Denise O'Hare and Karen Atkison closed others operating under Western Pennsylvania Land Conveyance Company and Corestate Settlement Services. (Id.). Notably, neither Smith nor Svaranovic were involved in any of the 28 transactions which occurred from November 23, 2005 through July 9, 2007. (Id.).
It also seems that most of the objections have been raised to the authenticity of documents resulting from transactions for which Smith and Svaranovic had no apparent involvement, including the aforementioned transactions occurring before July 9, 2007. For example, neither Smith nor Svaranovic will agree to stipulate to authenticity of the records from Pittsburgh Home Loans but they were not involved in any deals where Robert Arakelian was the broker. (Docket Nos. 154-7; 302; 303). Similarly, they have not agreed to stipulate to the authenticity of the records of the financial institutions which only closed matters brokered by Arakelian, (i.e., First Franklin; First Magnus Financial; and One West Bank/Indymac). (Id.). Setting aside the merits of these objections by Smith and Svaranovic, their objections are only before the Court because of the fact that the Government joined the cases against Smith and Svaranovic to the earlier case filed against Kubini and Ratchkauskas.
Smith has raised other objections which are curious, to say the least. To this end, Smith intends to object to the authenticity of records from other settlement agents involved in closing real estate transactions he had no part in, including Corestate Settlement Services (Atkison); Western Pennsylvania Land Company (Sporrer/Atkison/O'Hare); and Hergenroeder, Rega & Sommer (Steiner). (Docket No. 303). Likewise, despite the fact that all other parties have agreed to stipulate that documents that the Government seized from Kubini and Ratchkauskas under federal search warrants are authentic business records, Smith refuses to do so. (Id.). Hence, it appears to the Court that objections have been raised for the sake of objecting.
The Government supports its demands for stipulations on the authenticity of the exhibits by arguing that it would waste time and increase its costs by procuring witnesses to provide foundation testimony supporting the authenticity and admissibility of its exhibits. (Docket Nos. 273, 282, 302). Yet, any complaints about costs to the Government are undermined by the fact that the Government charged the case against all four defendants jointly but now appears to be unwilling to self-limit the scope of its presentation and continues to supplement its nearly 5,000 exhibits, "reserving the right" to do so up until trial. The custodian issue is also interesting given that Government counsel has previously advised that it intends to call certain witnesses at trial, including Robert Arakelian (Pittsburgh Home Loans); Rochelle Roscoe (Riverside Mortgage); and James Steiner (Hergenroeder, Rega & Sommer), each of whom could provide foundation testimony for the allegedly objectionable records. Further, it appears that representatives of many of the other involved entities may be called by the Government.
It is this Court's duty to follow the dictates of the Federal Rules of Criminal Procedure "to provide for the just determination of every criminal proceeding, to secure simplicity in procedure and fairness in administration, and to eliminate unjustifiable expense and delay." FED. R. CRIM. P. 2. Like the CMU matter, expending scarce court resources
If the above fails, and to the extent that no meaningful progress has been made by the filing of the Joint Status Report, the Court will address whether any additional case management methods will be utilized and may consider whether it is appropriate to: refer the matter to a U.S. Magistrate Judge or a Special Master to help facilitate these negotiations; revisit the present trial schedule and consider establishing time limits on the trial presentations; and/or order briefing on potential severance of charges and/or defendants or bifurcation of the trial. To the extent that objections to exhibits are maintained, formal briefs will be required in addition to the charts set forth in the Pretrial Order.
The last issue for the Court pertains to yet another dispute between Smith and the Government over the disclosures made by the Government on the stand-alone computer and for which the Court conducted an in camera review of emails which the Government argues were inadvertently disclosed. (Docket Nos. 293-94, 297-98, 301). The Government has voluntarily made extensive disclosures to Defendants on the stand-alone computer containing materials which include Jencks Act statements; Giglio impeachment materials; and other materials which government counsel asserts may be helpful to the Defendants' trial preparation. (Docket Nos. 282, 298-1). Defendants have had access to most of this material since
Based on the parties' submissions, the disputed emails which are dated on October 7, 2013 were added to the stand-alone computer at some point before September 17, 2014 by staff from the U.S. Attorney's Office, apparently unbeknownst to the assigned Assistant United States Attorney. (Docket Nos. 294, 298). On that date, Smith and his counsel went to the U.S. Attorney's Office, were granted access to the stand-alone computer, reviewed the emails and took notes on same. (Docket No. 298). Smith's counsel admits that he believed that the emails were "highly significant" because they related to information he had previously requested about an alleged victim financial institution during these proceedings. (Id.). Based on information they had "now learned" through their review of the materials, Smith's counsel demanded additional information from the Government pertaining to this case in his correspondence dated October 7, 2014. (Docket No. 298-2). The next day, Smith directly referenced such information in his Response to the Government's Motion filed with the Court. (Docket No. 288 at 4).
The Government responded by having its ethics counsel write a letter to Smith's counsel on October 14, 2014, advising him that the information he referenced at page 2, paragraph 6 of his own letter indicated that he had accessed privileged material. (Docket No. 298-3). (This portion of the initial letter by Smith's counsel consists of a single, albeit compound, sentence. (Docket No. 298-2)). Ethics counsel directed him to return any copies of the material, to promptly advise the Government of the source of the information and to not publish the material in any way. (Docket No. 298-3). Minutes after receiving this letter, Smith's counsel replied via email:
(Docket No. 298-4). At some point around this time, the assigned United States Attorney located the email in question on the stand-alone computer and deleted same. (Docket No. 294). Smith's counsel then returned to review the stand-alone computer again at 11:00 a.m. on October 15, 2014 and observed that the email had been removed by the Government. (Docket No. 298). After leaving the U.S. Attorney's Office on Grant Street, downtown, Smith's counsel presumably returned to his office, which was then on the North Shore at Burns White, LLC. (Id.). At 1:59 p.m., Smith's counsel filed a motion for in camera review on the Court's CM/ECF System, suggesting impropriety on behalf of the Government based on the contents of the emails. (Docket No. 293). The Government objected to this procedure, with a lengthy opposition. (Docket No. 294). Smith replied by filing a lengthy affidavit by his counsel detailing his version of the facts at issue, portions of the affidavit were filed under seal. (Docket Nos. 297, 298). The Court granted the in camera review over the Government's objection due to its "inherent authority to supervise the professional conduct of attorneys appearing before it," United States v. Miller, 624 F.2d 1198, 1201 (3d Cir. 1980), and the Government's allegations that defense counsel acted unethically and in violation of the Rules of Professional Conduct. (Docket No. 300).
At the outset, the Court has reviewed the disputed emails in camera and agrees with the Government that its assertion of privilege is valid.
In the context of civil litigation, this Court has recognized that a disclosure of materials otherwise protected by the attorney-client or work product privilege "does not operate as a waiver . . . if: (1) the disclosure is inadvertent; (2) the holder of the privilege or protection took reasonable steps to prevent disclosure; and (3) the holder promptly took reasonable steps to rectify the error." Wise v. Washington Cnty., Civ. A. No. 10-1677, 2013 WL 4829227, at *2 (W.D. Pa. Sept. 10, 2013) (quoting FED. R. EVID. 502(b)). Other factors for consideration include:
J.N. v. S. W. Sch. Dist., No. 1:14-CV-0974, 2014 WL 4792260, at *7 (M.D. Pa. Sept. 24, 2014) (citations omitted). The disclosing party generally has the burden of proving that each of the three elements of Rule 502(b) has been met. See Wise, 2013 WL 4829227, at *2. (citations omitted). Applying these legal principles to the instant dispute in this criminal case demonstrates that the asserted privileges were not waived by the Government.
With respect to whether production was inadvertent, courts have held that internal government documents which are exempt from disclosure under Rule 16(a)(2), such as prosecution memos, are presumptively inadvertently produced. See United States v. Carr, 2013 WL 3242938, at *1 (N.D. Al. Jun. 24, 2013). The same principle applies here as Defendant Smith never had any right to access such internal documents under the applicable discovery Rule. See United States v. Rigas, 281 F.Supp.2d 733, 742 (S.D. N.Y. 2003) ("Defendants were not entitled to the work product contained within [the AUSA's email] account."); see also United States v. Hurst, 185 F. App'x 133, 136 (3d Cir. 2006) ("Hurst also tries to obtain relief from the fact that the government inadvertently disclosed some of its work product to defense counsel during discovery and then removed that material from the items that were made available to defense counsel. The government was properly allowed to withhold certain inadvertently disclosed documents from the defense during discovery because those documents were work product."). The Court of Appeals for the Third Circuit has "long held that Rule 16 is not to be used as a tool for general evidence-gathering prior to trial." United States v. Maury, 695 F.3d 227, 254 (3d Cir. 2012) cert. denied sub nom. Atl. States Cast Iron Pipe Co. v. United States, 133 S.Ct. 1600, 185 L. Ed. 2d 581 (2013) (citation omitted). "Rule 16 does not require the prosecution to disclose all the minutia of its evidence, to reveal its trial strategy, and to delineate with total specificity the case it intends to present." United States v. Randolph, 456 F.2d 132, 136 (3d Cir.1972) (internal quotation omitted). Similarly, Rule 16(a)(2) does not require the Government to divulge its pretrial discovery strategies (precisely the topic of the emails in question here) to a defendant. See FED. R. CRIM. P. 16(a)(2).
Even if the emails are not presumed to be inadvertently produced, there are no facts before this Court undermining Government counsel's assertion that he did not intend to disclose this otherwise undiscoverable document to Smith and his counsel. (Docket Nos. 293-94, 297-98). At most, Smith and his counsel argue that they had no "reason to suspect that the production was anything but intentional on the government's part" due to the nature and circumstances surrounding the Government's tight controls on access to the stand-alone computer. (Docket No. 297-1 at ¶ 14). In essence, they argue that the fact that the document was placed on the stand-alone computer by U.S. Attorney's Office staff demonstrates that it was intentionally disclosed. The same is plainly not sufficient to overcome the Government's otherwise well-taken assertion that the disclosure was inadvertent. As one court aptly held,
F.D.I.C. v. Fid. & Deposit Co. of Maryland, 196 F.R.D. 375, 380 (S.D. Cal. 2000) (quoting O'Mary v. Mitsubishi Elec. Am., 59 Cal.App.4th 563, 577, 69 Cal.Rptr.2d 389, 398-99 (1997)).
Smith's counsel further states in his affidavit that he "assumed" that the emails were intentionally disclosed to him because the nature of the communications were pertinent to discovery requests he had made during this case for the Government to produce disclosures concerning an alleged victim financial institution. (Docket No. 298). He claims that he was unsurprised to see the information contained in email form because there were other emails from government agents on the computer. (Id.). However, he makes no effort to explain how or why he believes that the emails do not contain privileged work product. (Id.). Indeed, his October 7, 2014 demand letter to the Government specifically recites legal advice and strategy provided from one AUSA to another which he "learned" from the document. (Docket No. 298-2). He also fails to note that the emails expressly described the procedure that the Government intended to use to make any necessary disclosures to him about the victim financial institution — a procedure which involved seeking an ex parte Order from the Court prior to any disclosure given the confidential nature of the information. (Docket No. 301). Of course, producing the email in question was not contemplated. In short, the Court gives little weight to these arguments and finds that the documents were inadvertently produced.
The Court next turns to its evaluation of the reasonableness of the precautions taken by the Government to prevent disclosures, a factor which includes the extent of the disclosure, the scope of the production, and the number of inadvertent disclosures. See FED. R. EVID. 502(b). "The mere fact of an accidental disclosure does not automatically render the precautionary measures unreasonable at the time they were performed." United States v. Rigas, 281 F.Supp.2d 733, 739 (S.D. N.Y. 2003). Here, the undisputed facts demonstrate that the extent of the disclosure was limited as Smith and his counsel were erroneously permitted to view a copy of the emails in question on a stand-alone computer terminal in the U.S. Attorney's Office on a single occasion. (Docket Nos. 293-94, 297-98). At most, they took notes of the material contained within the emails during their viewing session; however, Smith's counsel's notes appear to be essentially a verbatim copy of the material. (Id.). The Government has maintained strict control over the computer, limited access to appointment only sessions for the Defendants and their counsel and has forbid them from copying, printing and/or downloading of any of the materials. It also appears that the only materials saved on the terminal are uploaded by the U.S. Attorney's Office staff as directed by the involved prosecutors. (Docket Nos. 282, 298-1). It is undisputed that the scope of the production by the Government on the stand-alone computer is extensive, a point which cannot meaningfully be contested in light of Smith's repeated requests for hard or electronic copies of the materials which he believes are necessary to adequately prepare for trial, despite the very early "view only" disclosures. There have also been no other reported inadvertent disclosures by the Government on the stand-alone computer.
The undisputed record further shows that the Government took prompt remedial action upon being made aware of the inadvertent disclosure as the assigned Assistant United States Attorney forwarded the matter to ethics counsel, who then drafted and sent a clawback letter to Smith's counsel, advising him that he had obtained privileged information and requesting that he return same. (Docket No. 298-3). The emails were also deleted from the stand-alone computer, restricting any further access to the inadvertently disclosed materials. (Docket No. 294). In its correspondence, the Government requested that Smith and his counsel terminate use of the material for any purpose but they have refused, continuing to use the material to advance their discovery position in this case. (Docket No. 298-3). The Government now seeks a protective order from the Court directing Smith and his counsel to destroy their notes. (Docket No. 294). Hence, prompt and effective remedial action has been taken.
Finally, considerations of fairness strongly support the finding that the disclosure of the emails was inadvertent and for the Court to uphold the privilege in light of all of the facts and circumstances. Again, Smith and his counsel gained access to an internal prosecution document to which they otherwise would never have been privy and such document includes explicit references to litigation strategy employed by the U.S. Attorney's Office in the case to be made against Smith while the case is ongoing. (Docket No. 301). The disclosure of such information was inadvertent and was reasonably "clawed back" by the Government. Both Smith
Where an attorney is in receipt of confidential documents, that attorney "has ethical obligations that may surpass the limitations implicated by the [. . .] privilege and may apply regardless of whether the documents in question retain their privileged status." Burt Hill, Inc. v. Hassan, 2010 WL 419433, at *4 (W.D.Pa. Jan. 29, 2010) (Bissoon, J.) (citing Herman Goldner Co., Inc. v. Cimco Lewis Indus., 2002 WL 188733 (Pa.Comm.Pl. Jul. 19, 2002)). Under Rule 4.4(b) of the Pennsylvania Rules of Professional Conduct and the ABA's Model Rule 4.4(b) on which it is based, "[a] lawyer who receives a document relating to the representation of the lawyer's client and knows or reasonably should know that the document was inadvertently sent shall promptly notify the sender." Wise v. Washington Cnty., No. CIV.A. 10-1677, 2013 WL 4829227, at *3 (W.D. Pa. Sept. 10, 2013). Simply put, Smith's counsel "should have known" that the emails contained privileged internal government work product and were inadvertently disclosed, especially given his prior role as a Government prosecutor.
The Court also believes that Smith's counsel did not act reasonably in light of all of the circumstances. Despite the claim that he found the information in the emails he reviewed on September 17, 2014 to be "highly significant," it appears that he did not conduct any evaluation of the emails in question or any legal research to determine if they were privileged. (Docket No. 298). He also did not seek an opinion from an ethics expert to determine how to proceed consistent with the boundaries of the pertinent ethics Rules. See e.g., Burt Hill, 2010 WL 419433, at *6 ("Defense counsel operated under a cloak of ethical propriety, having retained an expert who opined that the retention and review of Plaintiff's privileged and confidential documents was permissible."); Nesselrotte v. Allegheny Energy, Inc., Civ. A. No. 06-1390, 2008 WL 2890832, at *6 (W.D. Pa. Jul. 23, 2008) ("the Court finds no evidence of bad faith on behalf of counsel for the Plaintiffs, especially in light of Plaintiff's counsel's representation that he conducted legal research as to the ethical rules regarding Plaintiff's removal of the Allegheny documents and his decision to retain the same."). Smith's counsel took no action to promptly advise government counsel of the disclosure before using the privileged information he obtained affirmatively in the case at hand. (Docket No. 298). Instead, without conducting any of his own research or obtaining an ethics opinion, Smith's counsel "assumed" that the Government intended to disclose the information he had "now learned" to him; used it to make discovery demands in a letter to government counsel on October 7, 2014; and, referenced it again in a filing with the Court on October 8, 2014 defending a motion brought by the Government. (Docket Nos. 288, 298-2). He also did not refrain from continuing to use and/or to attempt to use the information, cf., Rigas, 281 F. Supp. 2d at 742 (noting that "[a]ll defense counsel have refrained from reviewing [the AUSA's] work product pending resolution of this discovery dispute."), as he was instructed to do by Government counsel. Again, Smith's counsel returned to view the materials on the stand-alone computer a second time on October 15, 2014. (Docket No. 298). Only after he saw that the emails were deleted did Smith's counsel seek relief from the Court by filing his motion for in camera review. (Docket No. 293). But, through his motion and affidavit, Smith's counsel continues to assert that the content of the emails demonstrates impropriety on behalf of Government counsel — again citing to explicit legal strategy noted therein to support his position. (Docket Nos. 293, 298). None of these facts evidence reasonableness; frankly, they demonstrate the opposite — a complete lack of respect for the asserted privilege.
The Court's inquiry does not end here as attorneys also owe a duty of candor to the Court to not knowingly: make a false statement of material fact or law to the Court; fail to correct any false statements previously made; or offer evidence that the lawyer knows to be false. Pa. R. Prof. C. 3.3(a)(1), (3). Further, the explanatory notes state that "an assertion purporting to be on the lawyer's own knowledge, as in an affidavit by the lawyer or in a statement in open court, may properly be made only when the lawyer knows the assertion is true or believes it to be true on the basis of a reasonably diligent inquiry. There are circumstances where failure to make a disclosure is the equivalent of an affirmative misrepresentation." Id., at n.2. Here, Smith's counsel has inserted himself directly into these proceedings by presenting the Court with a sworn statement purportedly setting forth his version of the events in question and has made similar assertions in his legal briefs. (Docket Nos. 293, 297-298). However, in this Court's estimation, the candor of several of the assertions in counsel's affidavit and briefs is questionable, at best. Among them,
Collectively, the Court interprets these statements as misleading, at best. In many ways the nature of these statements makes them more troubling to the Court then the failure to promptly notify the Government of the access to the privileged communication, as required by Rule 4.4(b).
Most troubling to the Court, however, is that Smith's counsel has continued to use the privileged material — by quoting it verbatim in his correspondence and his affidavit — despite the Government's reasonable request that he terminate any further use of same in the October 14, 2014 letter. (Docket Nos. 297-98). It appears that the redacted versions that have been filed with the Court do not fully protect all of the information disclosed in the emails as they contain repeated references to information that the Government clearly intended to remain confidential. (Docket No. 297). The full versions filed under seal include the entirety of the privileged content. (Docket No. 298). By doing this, Smith's counsel has created further records of the privileged material and what started out as a limited, inadvertent disclosure contained to the information that Smith and his counsel retained from their single viewing session and any information in notes taken therefrom has now expanded to multiple electronic documents that Smith's counsel has created quoting the privileged matters.
The scope of these further disclosures by Smith's counsel is not established on this record but he has clearly generated additional documents containing the privileged information. To this end, Smith's counsel created the documents quoting the privileged information while he remained at Burns White LLC but he has since left that law firm and is now operating a solo law office. (See Docket No. 303). Presumably counsel shared a copy of his sealed filing with his client. It is also unclear who else within Burns White assisted in preparation and/or filing of same but others likely had access to such information. (Docket Nos. 298; 298-2). For example, immediately below counsel's signature on his correspondence and affidavit, the documents are marked "SZS/tmb," which appears to be a reference to the paralegal and/or secretary working on the file. (Id.). In any event, it is more than likely that electronic copies of this privileged material remain at Burns White in some form despite counsel's departure from the firm.
The Court also considered the apparent purpose of Smith and his counsel disclosing all of this information to the Court, i.e., to yet again point out purported wrongdoing by the Government and allege discovery misconduct.
For all of these reasons, the Court finds that the Government has demonstrated "good cause" for the requested protective order. See FED. R. CRIM. P. 16(d)(1) ("At any time the court may, for good cause, deny, restrict, or defer discovery or inspection, or grant other appropriate relief."). Accordingly, Smith and his counsel will be directed to destroy all notes containing the privileged information and any other documents, electronic or otherwise, which also contain the privileged information, including any such documents remaining in the possession of Burns White. (Docket Nos. 297-98). They will also be ordered to not use the information they have obtained from the privileged communication for any purpose in this litigation going forward. To the extent that any disclosures are made by the Government to Defendants in this case concerning the alleged victim financial institution, the Court should be supplied a copy of same so that it can adequately prepare for any trial-time disputes.
For these reasons, the Government's Motion to Preclude Exhibits [284] is DENIED; its Motion for Clarification of Pretrial Order [285] is GRANTED, IN PART, and DENIED, IN PART, to the extent that the Court will modify the Pretrial Order and permit the Government to maintain its hard copy exhibits during trial and to bring such exhibits to Court on the first day of jury selection, March 2, 2015 at 9:00 a.m. rather than 12:00 p.m. on February 27, 2015; and Defendant Smith and his counsel are directed to destroy their notes and any other documents (electronic or otherwise) that they have created containing the privileged information they viewed on the stand-alone computer and is the subject of this Memorandum Opinion. An appropriate Order follows.
