U.S. v. Gatto

• Decision Date: 14 June 1985
• Docket Number: Nos. 84-1121,84-1133,s. 84-1121
• Citation: 763 F.2d 1040
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Jerome GATTO, Virgil Redmond, Joseph Bonanno, Jr., and Salvatore Bonanno, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1040

763 F.2d 1040

UNITED STATES of America, Plaintiff-Appellant, v. Jerome GATTO, Virgil Redmond, Joseph Bonanno, Jr., and Salvatore Bonanno, Defendants-Appellees.

Nos. 84-1121, 84-1133.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Dec. 11, 1984.

Decided June 14, 1985.

Donald B. Ayer, U.S. Atty., Sacramento, Cal., for plaintiff-appellant.

D. Gilbert Athay, Salt Lake City, Utah, Charles R. Garry, Dennis P. Riordan, San Francisco, Cal., for defendants-appellees.

Appeal from the United States District Court for the Eastern District of California.

Before WALLACE, HUG, and SCHROEDER, Circuit Judges.

WALLACE, Circuit Judge:

The federal government appeals the district court's order excluding evidence seized by Utah state officials in a trash search operation about which the federal government failed to notify the defense until a few weeks before trial was to begin, even though the state had obtained the evidence two years earlier. It also appeals the district court's subsequent dismissal of the action with prejudice for failing to proceed to trial before the appeal of the exclusion order was resolved. The district court had jurisdiction over this case pursuant to 18 U.S.C. Sec. 3231. We have jurisdiction pursuant to 18 U.S.C. Sec. 3731. We reverse and remand.

I

Early in 1982, the Sacramento field office of the Federal Bureau of Investigation (FBI) began investigating operations at the Los Gatos, California, office of Sunburst Industries, a company with offices there and in Salt Lake City, Utah. On July 7, 1982, as a result of the Sacramento investigation, a grand jury returned an indictment charging the defendants with 47 counts of mail fraud, wire fraud, interstate transportation of forged or altered securities, and conspiracy. The district court ordered the federal government to provide discovery "in accordance with FRCrimP 16." Over the next eighteen months, there were numerous pretrial motions dealing with discovery and admissibility of evidence. Finally, a jury trial was set for April 24, 1984.

On March 28, 1984, however, the federal prosecutors notified defense counsel that they had just discovered, and intended to introduce into evidence during their case-in-chief, numerous documents obtained by the State of Utah's Organized Crime and Criminal Identification Bureau (Utah Bureau) in a trash search operation conducted at the Salt Lake City office of Sunburst Industries between November 30, 1981 and May 19, 1982. They claimed that a conversation between Sacramento-based FBI agents and a Utah state official on March 21, 1984 had made them aware of the documents for the first time. The district court granted a defense motion for an evidentiary hearing on why the existence of this evidence had not been disclosed earlier in the discovery process.

After holding a six-day evidentiary hearing, the district judge issued an order excluding any evidence the federal government obtained from the Utah authorities which the Utah authorities had seized pursuant to the trash search operation, as well as such evidence obtained as a result of the trash search. He also ordered the government to identify any evidence it possessed and intended to introduce during trial that could be directly traced to the trash search operation. The trial date was continued to May 1, 1984.

The district judge based his ruling on the authority of rule 16(d)(2), Fed.R.Crim.P., and his inherent supervisory powers. He explicitly did not base it on the fourth amendment. He observed that rule 16(a)(1)(C) required the government to make available to the defense any documents within the government's possession, custody, or control that are material to the defense or intended for use in the government's case-in-chief. He further stated that rule 16(d)(2) gives federal courts the discretionary authority to grant a continuance, exclude evidence, or enter any other order deemed just in the circumstances if any party fails to comply with a discovery order. The district judge also reasoned that he had inherent supervisory power to punish discovery misconduct, citing United States v. Gonsalves, 691 F.2d 1310, 1315-22 (9th Cir.1982), vacated and remanded, --- U.S. ----, 104 S.Ct. 54, 78 L.Ed.2d 73 (1983), for the proposition that his supervisory power gives him the authority to preserve the integrity of the judicial system, governed solely by notions of fair play, which are more exacting than minimum requirements of due process.

The district judge concluded that the facts of this case allowed him to exercise both his rule 16(d)(2) and his supervisory powers against the government because the federal prosecutors and the Sacramento FBI agents helping them were either negligent or reckless in not discovering and disclosing the existence of the trash search evidence in a more timely manner. The record shows that neither the Sacramento-based officials nor the Salt Lake City FBI agent who served as a liaison between the Sacramento investigators and the federal investigation of Sunburst's Utah activities actually possessed, had custody of, or controlled the trash search evidence before March 27, 1984. Moreover, the district judge never made any finding to the contrary. He merely found that the federal officials were negligent or reckless in not learning about, asserting control over, and disclosing the existence of the documents earlier. He found that a number of federal officials unconnected with the Sacramento investigation had at least heard about the trash search operation as early as December 1981. He also found that the Salt Lake City FBI agent had heard about the operation and had passed on one document which could be traced to the trash search operation long before the Sacramento-based officials alleged that they learned about the operation. The district judge said he found it inconceivable that the experienced Salt Lake City FBI agent would not have reported the existence of the trash search material to his fellow investigators in Sacramento. He made no finding, however, that the federal prosecutors had any advance knowledge of the trash search or that the Salt Lake City FBI agent realized the extent or importance of the documents in the state's possession. Moreover, he stopped short of finding that the Sacramento-based FBI agents were lying about their asserted ignorance. The district judge concluded, however, that the behavior of the Sacramento-based FBI agents amounted either to negligence or recklessness because not even bureaucratic difficulties could excuse their failure to learn about the trash search.

The district judge reasoned that these facts neither required him to dismiss the case nor allowed him merely to order a continuance, which he admitted was the normal remedy. He stated that dismissal was unacceptable because there was no proof that the government had intentionally or willfully concealed the evidence, the problem occurred before trial began, the evidence was not exculpatory, and any tainted evidence left over could be dealt with at trial on a piece-by-piece basis. He maintained that a continuance was insufficient, however, because it failed to satisfy either the demands of due process or notions of fair play and substantial justice, because the time, effort, and money that would be lost would be prejudicial, unfair, and unjust to the defendants. He observed that the indictment had been filed nearly two years before, and thus the sword had hung over the defendants long enough, that they had spent sufficient money on their defense, and that the court had expended sufficient judicial resources in managing the case. Moreover, the trial was set to begin in four days, and postponing it would inconvenience both the court and the defense attorneys in reclearing their calendars. Finally, a related state trial would be delayed if a continuance were ordered.

The government appealed this exclusionary order pursuant to 18 U.S.C. Sec. 3731 before trial began. While its appeal was pending, the government unsuccessfully attempted either to stay the commencement of trial or to convince the district court that it had lost jurisdiction over the case while the appeal was pending. On the day trial was to begin, the government refused to proceed on the ground that it was entitled first to exercise its statutory right to appeal the exclusionary order under 18 U.S.C. Sec. 3731. It argued that to proceed would take the meaning out of its right to appeal the exclusionary order because the evidence excluded was substantial proof of material facts. The district judge advised the government of his planned action and then dismissed the case pursuant to rule 48(b), Fed.R.Crim.P., with prejudice. He reasoned that the government was willing to proceed before discovering the trash search evidence, apparently concluding that it had sufficient evidence to convict the defendants. He cited several cases to build the proposition that rule 48(b) gave him the discretionary authority to dismiss a case for unnecessary delay either with or without prejudice, whether or not there are constitutional rights at stake. He justified his dismissal of the case with prejudice on grounds that the government's refusal to proceed was a "flagrant refusal to abide by this Court's previous orders," an "unnecessary delay," and the "rankest abuse of prosecutorial discretion." The government also appealed this dismissal, and we granted its motion to consolidate its two appeals.

II

The government argues that the district court's supervisory power did not provide it with authority to exclude the evidence in this case because the government's late disclosure did not violate the Constitution or any federal statute. It contends that the district court's reliance on United States v. Gonsalves, 691 F.2d 1310 (9th Cir.1982), vacated and remanded, --- U.S. ----, 104 S.Ct. 54, 78 L.Ed.2d 73 (1983) (Gonsalves ), demonstrates error because the Supreme Court...