U.S. v. Wallach

• Decision Date: 23 March 1989
• Docket Number: D,No. 867,867
• Citation: 870 F.2d 902
• Parties: UNITED STATES of America, Appellee, v. Eugene Robert WALLACH, a/k/a "E. Robert (Bob) Wallach", Rusty Kent London, and Wayne Franklyn Mohamed Farid Chinn, Defendants-Appellants. ocket 88-1564.
• Court: U.S. Court of Appeals — Second Circuit

Page 902

870 F.2d 902

UNITED STATES of America, Appellee, v. Eugene Robert WALLACH, a/k/a "E. Robert (Bob) Wallach",

Rusty Kent London, and Wayne Franklyn Mohamed

Farid Chinn, Defendants-Appellants.

No. 867, Docket 88-1564.

United States Court of Appeals, Second Circuit.

Argued Feb. 28, 1989.

Decided March 23, 1989.

Ted W. Cassman, Emeryville, Cal. (Penelope M. Cooper, Cristina C. Arguedas, George C. Walker, Albert Krieger, Lawrence A. Gibbs, of counsel, and Cooper, Arguedas & Cassman, on the brief), for defendants-appellants Rusty Kent London and Wayne Franklyn Mohamed Farid Chinn.

Edward M. Chikofsky, New York City, submitted a brief on behalf of defendant-appellant Eugene Robert Wallach.

Baruch Weiss, Asst. U.S. Atty., New York City (Benito Romano, U.S. Atty., and Elliott B. Jacobson, Vincent L. Briccetti, Asst. U.S. Attys., on the brief) for appellee.

Before FEINBERG, TIMBERS, and ALTIMARI, Circuit Judges.

TIMBERS, Circuit Judge:

The essential question presented on this appeal is whether we have appellate jurisdiction to review an interlocutory order denying a pretrial motion to dismiss an indictment. Under the circumstances of this case, we hold that we do not.

Eugene Robert Wallach ("Wallach"), Rusty Kent London ("London"), and Wayne Franklyn Mohamed Farid Chinn ("Chinn") (collectively, "appellants"), appeal from an order entered December 6, 1988 in the Southern District of New York, Richard Owen, District Judge, denying a motion for reconsideration of the court's previous order denying without an evidentiary hearing appellants' motion to dismiss an indictment charging them with crimes arising from an investigation into their activities in connection with Welbilt Electronic Die Corporation ("Wedtech"). Appellants asserted that the indictment was tainted by a violation of Fed.R.Crim.P. 6(d) ("Rule 6(d)") because of the presence before a grand jury in the Southern District of New York of Assistant United States Attorneys ("SDNY prosecutors") who (a) had a conflict of interest, and (b) had conducted their investigation in violation of the exclusive jurisdiction provisions of the Ethics in Government Act of 1978, 28 U.S.C. Sec. 591 et seq. (1982 & Supp. IV 1986) ("Ethics Act").

On appeal, the government argues that we are without appellate jurisdiction since the appeal is from a non-final order and that in any event there was a violation of neither the Ethics Act nor Rule 6(d). Appellants argue that there is jurisdiction to hear and decide this appeal pursuant to the collateral order exception to the final judgment rule, and the indictment should be dismissed because of the unauthorized presence before the grand jury of the SDNY prosecutors.

We hold that this appeal is from an interlocutory order which does not fall within any exception to the final judgment rule. Accordingly, we dismiss the appeal.

I.

We summarize only those facts believed necessary to an understanding of the issues raised on appeal.

In 1986, the SDNY prosecutors began a grand jury investigation of asserted corrupt practices by Wedtech, a military contractor located in the Bronx, N.Y., in obtaining government contracts. During the course of that investigation, there came to light possible misconduct by Franklyn C. Nofziger ("Nofziger"), former Assistant to the President for Political Affairs at the White House, regarding his lobbying efforts on behalf of Wedtech. On February 2, 1987, following a preliminary investigation by the SDNY prosecutors pursuant to Sec. 592(a) of the Ethics Act, James C. McKay ("McKay") was appointed Independent Counsel pursuant to Sec. 593(b) of the Ethics Act to conduct a full investigation of Nofziger. Apparently recognizing possible overlap with the SDNY investigation, the referral order entered by the United States Court of Appeals for the District of Columbia, Division for the Purpose of Appointing Independent Counsels ("Independent Counsel Court") stated:

"[I]t may be necessary for Independent Counsel to coordinate his investigation with investigations being conducted by the United States Attorneys in New York and Maryland".

While McKay was investigating Nofziger, the SDNY grand jury investigation continued apace. On April 8, 1987, after the initiation of an investigation by the Public Integrity Section of the Department of Justice's Criminal Division into reports that he was involved with Wedtech, Attorney General Edwin Meese III ("Meese") recused himself from participation in any further Wedtech-related investigations. On May 11, 1987, the question whether Meese's relationship with Wedtech, Nofziger, Wallach, Chinn, and/or Financial Management International, Inc. (a corporation owned and operated by Chinn) violated any federal conflict of interest or criminal laws was referred to McKay for investigation pursuant to Secs. 592(e) & 594(e) of the Ethics Act. While the referral recognized that "various [other] investigations have developed substantial evidence of Wedtech-related criminal conduct on the part of individuals other than Mr. Meese", it did not refer these other matters to McKay. ¹ The referral was accepted by McKay the next day.

On August 18, 1987, in response to questions regarding the scope of McKay's jurisdiction, the Independent Counsel Court entered an order confirming the May 11 referral of the question whether Meese's dealings with Wedtech, Wallach or others violated any federal conflict of interest or criminal laws. The order reiterated that McKay was empowered to investigate and indict Meese as well as others, but only if the other individuals had engaged in criminal activity in concert with Meese.

On December 21, 1987, pursuant to Sec. 597(a) of the Ethics Act, McKay gave written authorization for the SDNY prosecutors to proceed with indictments of Wallach, Chinn and London. The next day, a SDNY grand jury returned the original 18-count indictment of Wallach, London and Chinn which variously charged commercial bribery, mail and securities fraud, and operation of an enterprise through a pattern of racketeering activity in violation of 18 U.S.C. Sec. 1961 et seq. (1982 & Supp. IV 1986) ("RICO"). A modified and expanded superseding indictment later was returned.

On September 9, 1988, Wallach, Chinn, and later London, moved to dismiss the indictment, asserting that the appearance of the SDNY prosecutors before the grand jury which returned the indictment was improper because (a) the SDNY prosecutors had a "pervasive conflict of interest" and conflicting loyalties in the subject matter of the investigation and indictment of appellants and (b) the referral of the Meese investigation to McKay divested the SDNY prosecutors of jurisdiction to investigate Wedtech-related matters absent written authorization from McKay pursuant to Sec. 597(a) of the Ethics Act. ² It was claimed, therefore, that the SDNY prosecutors who had appeared before the grand jury were not "[a]ttorneys for the government" authorized under Rule 6(d) to "be present while the grand jury [was] in session".

On November 18, 1988, after oral argument, Richard Owen, District Judge, declined to hold an evidentiary hearing and denied from the bench the motion to dismiss the indictment. The court held that there was no violation of Sec. 597(a) of the Ethics Act since Meese, the specific subject of the referral to McKay, was not a target of the SDNY investigation. On the instant expedited appeal, appellants seek review of the district court's denial of their later motion for reconsideration and of its denial of their request for an evidentiary hearing.

For the reasons set forth below, we dismiss the appeal since it is from a non-appealable interlocutory order. We therefore do not reach the substantive issues raised and we express no opinion as to their merits.

II.

It is basic of course that our jurisdiction as a United States Court of Appeals is limited to review of "final decisions of the district courts of the United States." 28 U.S.C. Sec. 1291 (1982). The Supreme Court has long held that the policy underlying this statute is to avoid piecemeal appellate review of district court decisions which do not terminate the litigation. Flanagan v. United States, 465 U.S. 259, 264 d (1984); United States v. Hollywood Motor Car Co., 458 U.S. 263, 265 (1982) (per curiam).

Under the collateral order exception to the final judgment rule, appeal of an interlocutory pretrial order may be allowed only if the order falls within that small class of cases "which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated". Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949). To come within the collateral order exception, an order must (a) conclusively determine the disputed issue; (b) resolve an important issue completely separate from the merits of the action; and (c) be effectively unreviewable on appeal from a final judgment in the action. Flanagan, supra, 465 U.S. at 265; Coopers & Lybrand v. Livesay, 437 U.S. 463, 468 (1978); United States v. Helmsley, 864 F.2d 266, 268 (2 Cir.1988) ("Helmsley I"); United States v. Midland Asphalt Corp., 840 F.2d 1040, 1042 (2 Cir.1988) aff'd., 109 S.Ct. 1494 (1989).

In criminal cases, the final judgment rule is " 'at its strongest' ". Flanagan, supra, 465 U.S. at 264 (quoting Hollywood Motor Car, supra, 458 U.S. at 265); see DiBella v. United States, 369 U.S. 121, 126 (1962); Cobbledick v. United States, 309 U.S. 323, 325 (1940). The reason for this is that the " 'encouragement of delay, is fatal to the vindication of the criminal law' ". United States v. MacDonald, 435 U.S. 850, 854 ] (1978) (quoting Cobbledick, supra, 309 U.S. at 325); see Flanagan, supra, 465 U.S. at 264-65; Abney v. United States, 431 U.S. 651, 657 (1977). In criminal cases, the Supreme Court has allowed...