Grand Jury 95-1, In re, 96-1543

• Decision Date: 08 July 1997
• Docket Number: No. 96-1543,96-1543
• Citation: 118 F.3d 1433
• Parties: 27 Envtl. L. Rep. 21,391 In re GRAND JURY 95-1.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1433

118 F.3d 1433

27 Envtl. L. Rep. 21,391

In re GRAND JURY 95-1.

No. 96-1543.

United States Court of Appeals Tenth Circuit.

July 8, 1997.

Kenneth R. Scott, Assistant United States Attorney (Henry L. Solano, United States Attorney, William Lucero, Chief Appellate

Division, and Linda Kato, Special Assistant United States Attorney, with him on the brief), Denver, CO, for appellant.

Lee D. Foreman, of Haddon, Morgan & Foreman, P.C., Denver, CO, for appellee.

Before BRISCOE, LOGAN, and LUCERO, Circuit Judges.

BRISCOE, Circuit Judge.

A grand jury was convened to investigate possible criminal violations in connection with mining operations conducted by Company X and its subsidiaries in southwestern Colorado. While the grand jury proceedings were ongoing, the government filed a civil action against John Doe, a former officer of Company X, under the Comprehensive Environmental Response, Compensation, and Liability Act. Doe filed a motion in the civil action seeking disqualification of the district judge because the same judge was presiding in the grand jury investigation and was allegedly privy to disparaging evidence concerning Doe. Doe simultaneously filed a motion in the grand jury proceedings for disclosure of materials. The district court granted the motion for disclosure and the United States appeals. We issued a stay of the district court's order of disclosure pending appeal on March 14, 1997, pursuant to a motion by the United States. We reverse the district court's order granting the motion for disclosure of grand jury materials.

I.

Company X and its subsidiaries operated a gold and silver mine in southwestern Colorado from 1984 to December 1992. In December 1992, Company X and its subsidiaries filed for bankruptcy and abandoned operations at the mine. According to the government, the abandoned mine is now a Superfund site managed by the United States Bureau of Reclamation and the Environmental Protection Agency.

In 1995, a federal grand jury in Colorado began investigating possible criminal violations of federal environmental laws arising out of Company X's operation of the mine. To date, the investigation has resulted in indictments against Company Y, a subsidiary of Company X, and two senior managers of Company Y. Company Y has pled guilty to forty felony crimes, including conspiracy, violations of the Clean Water Act, and false statements, and has been fined $20 million. The investigation remains ongoing and is focusing on former officers and employees of Company X and Company Y, including Doe. No criminal charges have been brought against Doe to date.

As part of the grand jury investigation, on September 27, 1995, the United States filed a sealed Ex Parte In Camera Motion for Judicial Approval to Issue Subpoena, seeking permission to issue a grand jury subpoena duces tecum to a Denver law firm that had served as outside counsel for Company Y during the time it was involved in the mining operations. In support of the motion, the United States argued the documents and information sought were not protected by any attorney-client privilege or work-product immunity because (1) many of the documents were business records, technical data, and communications with non-client third parties and were never subject to any privilege; (2) any privilege or immunity concerning otherwise confidential documents had been waived or otherwise extinguished by various conduct and statements; and (3) any other privilege or immunity had been overcome by the crime-fraud exception. To support its argument that the crime-fraud exception was applicable, the United States filed a sealed grand jury submission that included detailed statements of relevant portions of the grand jury investigation, including discussions of grand jury testimony and exhibits. Various grand jury materials, including transcripts, were attached to the submission.

On January 9, 1996, the United States filed a related motion asking the district court to hold in abeyance any determination concerning the alleged crime-fraud exception, and the court granted the motion on January 11. Although hearings were subsequently held on the remaining portions of the United States' motion for judicial approval to issue subpoena, no ruling has yet been issued on that portion of the motion concerning the crime-fraud exception.

The United States, acting through the Justice Department's Environment and Natural Resources Division, filed a civil action against Doe on May 23, 1996, seeking to recover environmental clean-up costs associated with the mine. The action was randomly assigned by the clerk's office to Judge Edward Nottingham, the same judge who had previously been assigned to oversee the grand jury investigation. Doe filed his motion to disqualify Judge Nottingham on October 11, 1996, claiming disqualification was necessary under 28 U.S.C. § 455(a) and (b)(1) because the judge had (1) presided over ex parte applications by the government for prejudgment garnishment of Doe's property in the civil action, (2) supervised the grand jury that was investigating matters related to the mining operations and received ex parte submissions pertaining to the government's attempt to obtain files from the law firm that represented Company Y, (3) failed to insure that government counsel complied with notice requirements in actions commenced under the Federal Debt Collection Procedure Act, and (4) ignored local rules in assuming control over the civil action.

Doe also filed a motion in the grand jury proceedings on October 11, 1996, seeking "full access to all grand jury materials that relate in any way to grand jury investigations concerning the ... [m]ine." Append. III at 1219. In support of his motion, Doe asserted the United States had submitted various grand jury materials to the district court (in particular, its ex parte motion for approval to issue subpoena) and that, "[b]ecause both the Court and the [United States] in [the civil action] have had access to grand jury materials, it is appropriate that [he] also have such access." Id. at 1221. Doe further argued he would "be required to engage in discovery and disclosure in [the civil action] which [would] require access to all materials in the possession of the United States, including all grand jury materials." Id. at 1222. Notably, Doe's motion said nothing about the motion to disqualify Judge Nottingham and did not urge that access to the grand jury materials was necessary to fully address the motion to disqualify.

A hearing was held on October 29, 1996, on Doe's motion for access to grand jury materials. At the outset of the hearing and prior to Doe's counsel speaking on the record, Judge Nottingham stated: "I take the motion to be a motion that I need these materials, because there has been disparaging information and I need the disparaging information to support a motion to disqualify in the civil case." Id. at 1273-74. When Doe's counsel finally spoke, he stated, "I think as you've stated the proposition, that a big part of our request for access to the Grand Jury materials does in fact bear upon the pending motion [to disqualify]." Id. at 1276. However, Doe's counsel later stated: "I can't tell you that if you revealed the [grand jury] material to us in connection with the civil case, whether or not at this point that would support or go against the motion to disqualify. Depending upon the quality and tone of the material that you received, it either might support it or might not support it. I can't honestly tell you that I know the answer to that question." Id. at 1281.

Prior to ruling on Doe's motion for access, Judge Nottingham made the following statements concerning his review of the grand jury materials submitted ex parte to him by the government:

And as I sit here today, I have, very frankly I have difficulty remembering disparaging things that I've heard about Mr. [Doe] except in the civil case. I think that's where I picked up whatever disparaging material I think I remember about Mr. [Doe]. And when I say disparaging, I'm using that in the sense that it tends to put him in a bad light. I think the material in the civil case tended to put him in a bad light, as I recall. That is hardly surprising because that's the nature of advocacy.

Id. at 1301. Ultimately, Judge Nottingham granted Doe's motion for access, stating:

The motion for access to Grand Jury materials and Grand Jury file is granted in part. And in making that determination, I'm guided by the Douglas Oil criteria. Douglas Oil says, first of all, that Grand Jury materials may be disclosed if it is necessary to avoid injustice in another judicial proceeding.

I do not see how any party in the civil proceeding involving the United States versus [John Doe] can litigate the motion to disqualify unless and until they know what the Grand Jury judge has seen and what has been furnished and what has gone on before the Grand Jury judge.

Douglas Oil also says that the Court should consider the need for disclosure versus the need for secrecy. What I have already said addresses the question of whether there is a need for disclosure. I don't see how either side of the civil proceeding can intelligently litigate the motion to disqualify when the only people who know whether there has been "disparaging" information are the attorneys for the government in the Grand Jury case and the Court.

And, you know, what is disparaging is in the eye of the beholder, and ultimately it will be a question in the civil case of whether the material furnished to the Court requires disqualification. But both sides in the civil case are entitled to have the material and to make their case that either the material is disparaging or it is not disparaging.

* * * * * *

But my point is nobody in the civil case can litigate the civil case with literally one hand tied behind their backs, and it's both sides, it's not just the defendant in the civil case that has...