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U.S. v. Smith

August 19, 1997




On Appeal From the United States District Court

For the District of New Jersey (D.C. Crim.o. 94-cr-00524)

Before: BECKER and SCIRICA, Circuit Judges, and KELLY, District Judge. *fn**

BECKER, Circuit Judge.

Filed August 19, 1997

Argued: June 6, 1997


This appeal by the Newark Morning Ledger Co., Cox Texas Publications, Inc., and the Dallas Morning News, Inc. ("newspapers"), who unsuccessfully sought access to certain records and proceedings in the sentencing phase of a criminal case in the district court, requires us to resolve certain tensions between the media's First Amendment right of access to judicial proceedings and the rule of confidentiality of grand jury material, see Fed. R. Crim. P. 6(e). The focus of the newspapers' attention is the putative misconduct of the government in publicly disclosing its sentencing memorandum which contained allegations of criminal conduct against several individuals who have not been charged with any crimes ("uncharged individuals"). The memorandum was addressed to the sentencing of J. David Smith and Steven D'Andrea, who had been convicted of various charges in connection with a state lottery kickback scheme (which made the matter one of great public interest). At the same time that it submitted the memorandum to the court, the government posted it on its Internet website and made copies available to members of the press, the public, and state lottery regulators.

Smith and D'Andrea, Smith's employer GTECH Corporation (a company that provides computer and other services to state lottery authorities), and the uncharged individuals mentioned in the sentencing memorandum complained to the district court, contending that the memorandum contained grand jury material, and asserting that the government had violated Rule 6(e) by disclosing it to the public. The district court sealed the sentencing memorandum on the ground that 6(e) material was implicated, and, for the same reason, ordered the parties to file under seal briefs concerning the extent to which the sentencing memorandum was sourced in secret grand jury material.

The newspapers filed a motion to intervene (which was granted) and for access to the papers and proceedings. At a hearing on the motion, they contended that they had a First Amendment and a common law right of access thereto. The parties opposing access (Smith, D'Andrea, GTECH, and those whose names are mentioned in the sentencing memorandum) objected that access would result in the disclosure of putative grand jury material in violation of Rule 6(e). The district court agreed, and entered an order denying the newspapers' request for access to the sentencing memorandum, the briefs, and the hearing it had scheduled on the question whether the government had violated Rule 6(e). The district court also made clear that, after it made its determination, all aspects of the proceedings (including the briefs and the transcript of the hearing) would be opened up (except to the extent prohibited by Rule 6(e)). The newspapers filed a timely appeal, and we stayed the hearing before the district court pending our resolution of the matter.

We first conclude that the segment of the newspapers' appeal seeking access to the sentencing memorandum is moot, as the newspapers already have copies of it. With respect to the briefs and hearing, even though the proceedings at issue before the district court concern alleged government misconduct and hence public access to them would serve important functions, there is no presumptive First Amendment or common law right of access to them if secret grand jury material would be disclosed by that access. Indeed, as the government has represented, the district court will necessarily have before it previously undisclosed grand jury material. Moreover, Rules 6(e)(5) and 6(e)(6) require a court to seal any papers or hearings "affecting" or "relating to" grand jury proceedings, which includes any proceedings that would disclose secret grand jury material. We conclude that grand jury secrets might be disclosed by the briefs and hearing to which the newspapers seek access, and conclude that the district court acted properly in ensuring that such material remains confidential while it makes its determination whether that material is in fact secret grand jury material. Under such circumstances, in camera review of the disputed material is necessary.

Rejecting the newspapers' alternative request, we will not require the district court to redact the briefs or to open up the nonsecret aspects of the hearing, for that would be highly impractical and inefficient and would create a circus-like "revolving door" hearing. Moreover, although there is (and can be) no prior restraint on the use by the newspapers of material already in their possession, we conclude that the potential grand jury material contained in the sentencing memorandum is entitled to the protection afforded to it by the district court despite the fact that it has already been publicly disclosed. We will therefore affirm the order of the district court sealing the briefs and the hearing and remand so that the district court can hold its scheduled in camera hearing. If and when the district court determines that aspects of those briefs and hearings are nonsecret, it shall, as it has already promised, disclose those aspects to the public.

I. Facts and Procedural History

On October 4, 1996, Smith and D'Andrea were convicted in the District Court of twenty felony counts arising out of a state lottery kickback scheme following a jury trial. Smith had been National Sales Manager of GTECH Corporation. In that capacity, he had received illegal payments from Benchmark Enterprises, Inc., a consulting firm owned and operated by D'Andrea that was retained by GTECH. *fn1

On January 15, 1997, before the parties had filed their post-trial motions and before the Probation Office had prepared the presentence investigation reports for either Smith or D'Andrea, the government submitted its sentencing memorandum to the district court. *fn2 Simultaneously, the government placed the memo on its Internet website and made copies available to the public, the media, and to state lottery regulators. To support the government's position that Smith and D'Andrea should receive substantial sentences, the section of the memorandum concerning relevant conduct included descriptions of criminal conduct involving several uncharged individuals. The dissemination of the memorandum was immediately followed by a series of newspaper articles reporting the substance of the memorandum, and in particular, the allegations against the uncharged individuals.

On January 16, 1997, the day after the sentencing memorandum was publicly disclosed, counsel for GTECH and the uncharged individuals named in the sentencing memorandum made an oral request before the district court to be heard about the disclosure. The court held a hearing the next day. GTECH and the uncharged individuals contended that the sentencing memorandum contained grand jury material and that, as such, the government had violated Fed. R. Crim. P. 6(e) by disclosing it to members of the public. These third parties were joined by Smith and D'Andrea in also claiming that the filing of the sentencing memorandum violated various aspects of Fed. R. Crim. P. 32, which governs the preparation of presentence investigation reports. *fn3 The government contended in opposition that its disclosure of the sentencing memorandum was proper in all respects.

At the conclusion of the hearing, "to preserve the status quo" pending full briefing on the issues before it, the district court ordered the sentencing memorandum removed from the clerk's office and placed under seal. The court also directed the government to remove the memo from its website, to make all reasonable efforts to retrieve copies of the document that had been disseminated, and to refrain from further dissemination of the memo. The court ordered the parties to file any further papers under seal, but expressly reserved decision on whether it would close any future hearing. It informed the parties that it would determine, based on the parties' papers, "whether there is sufficient implication of Rule 6(e) . . . to warrant closure."

On January 31, 1997, GTECH and the uncharged individuals filed under seal briefs alleging that the government's disclosure of the sentencing memorandum violated Fed. R. Crim. P. 6(e) and 32. The government filed its opposition brief under seal on February 14, and the movants filed their sealed reply papers on February 24.

On February 14, 1997, the newspapers moved to intervene and for access to the sentencing memorandum, the briefs filed under seal, and any hearing, contending that they had First Amendment and common law rights of access to all of them. *fn4 GTECH and the other parties opposed the newspapers' request for access to the papers and proceedings. At a hearing on the newspapers' motion on March 24, the district court granted the newspapers' motion to intervene, but denied their request for access to the sentencing memorandum, the briefs, and to the hearing (which it scheduled for April 28). The court informed the newspapers that "the very reason [the briefs are] sealed is there may be materials in there which affect Rule 6(e)." Moreover, the court stated:

I'm in the process of considering the briefs at the present time. I think it would be fundamentally unfair and a disservice to the system of justice and to this Court for me to precipitously let them go without having heard the arguments of the parties in a free and unfettered context so that I can decide matters of sensitivity under Rule 6.

The court noted that "at the conclusion of [the Rule 6(e)] hearing or shortly thereafter" it would disclose all of the materials that it determined did not contain grand jury secrets. The court filed an order to this effect on April 1.

On April 3, 1997, the newspapers filed a notice of appeal from the district court's orders of January 17 and April 1 which had sealed the sentencing memorandum, the briefs, and the April 28 hearing. On April 24, 1997, we stayed the April 28 hearing. We have appellate jurisdiction under 28 U.S.C. Section(s) 1291 to review final decisions of the district court. *fn5 Orders either granting or, as in this case, denying access to court proceedings or records are appealable as final orders under Section(s) 1291. See, e.g., United States v. Antar, 38 F.3d 1348, 1355 (3d Cir. 1994); United States v. Raffoul, 826 F.2d 218, 222 (3d Cir. 1987). *fn6 We lack jurisdiction, however, over the part of the newspapers' appeal that concerns access to the sentencing memorandum because it is moot. The newspapers already possess the sentencing memorandum, and the district court's orders do not bar them from publishing it. Under these circumstances, no meaningful relief can be granted to the newspapers with respect to the sentencing memorandum, and there is no live controversy between the parties. *fn7

Thus, we consider (only) whether the district court has properly sealed the briefs and the hearing. To the extent that those briefs and the hearing concern the disclosure of the sentencing memorandum, our resolution of whether there is a public right of access to them will necessarily impact on the ...

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