Tri-Star Airlines, Inc. v. Willis Careen Corp., 98-033 D/A.

• Decision Date: 13 December 1999
• Docket Number: No. 98-033 D/A.,98-033 D/A.
• Citation: 75 F.Supp.2d 835
• Court: U.S. District Court — Western District of Tennessee
• Parties: TRI-STAR AIRLINES, INC., a Nevada corporation, Plaintiff, v. WILLIS CAREEN CORPORATION OF LOS ANGELES, a California corporation, d/b/a Willis Careen Aerospace, and AICCO, Inc., a California corporation, Defendants.

75 F.Supp.2d 835

TRI-STAR AIRLINES, INC., a Nevada corporation, Plaintiff, v. WILLIS CAREEN CORPORATION OF LOS ANGELES, a California corporation, d/b/a Willis Careen Aerospace, and AICCO, Inc., a California corporation, Defendants.

No. 98-033 D/A.

United States District Court, W.D. Tennessee, Western Division.

December 13, 1999.

Richard Glassman, Glassman Jeter Edwards & Wade, P.C., Memphis, TN, for AICCO, Inc., a California Corporation, defendant.

Sidney P. Alexander, U.S. Attorney's Office, Memphis, TN, for Federal Bureau of Investigation, for Federal Bureau of Investigation.

ORDER DENYING APPEAL OF MAGISTRATE JUDGE'S ORDER

DONALD, District Judge.

Before the court is the appeal of the United States Attorney, on behalf of the Federal Bureau of Investigation (hereinafter "FBI"), from the November 20, 1998, order of Magistrate Judge James H. Allen denying a motion to quash a subpoena duces tecum. The defendant, AICCO, Inc. (hereinafter "AICCO"), opposes the motion.

BACKGROUND

Plaintiff, Tri-Star Airlines, Inc. (hereinafter "Tri-Star"), sued various defendants in the United States District Court of the Central District of California, Case No. 97-7066, on a claim involving, inter alia, insurance coverage on a leased aircraft. On March 25, 1997, the FBI, pursuant to a search warrant, seized a large quantity of documents and other items (approximately 105 boxes) from 1080 West Rex Road, Memphis, Tennessee, which was apparently a business office of David Namur, who was allegedly the principal financier of Tri-Star, and other individuals. According to the FBI, these documents and items are located at the Memphis Field Office of the FBI undergoing review and evaluation by the FBI and the United States Attorney as part of a criminal investigation. Apparently, Namur's attorneys claim that a portion of the seized material is subject to attorney-client privilege.

In conjunction with the civil legal action in California, David Namur was deposed in California in 1998. Namir made certain statements that he claimed he could only support with the documents seized by the FBI. AICCO claimed that the documents seized by the FBI are essential for its defense against the civil action in California and that it has made every effort to obtain the documents elsewhere, without success, and, subsequently, arranged for a subpoena for the documents. Thus, AICCO's position is that it would be substantially prejudiced in its defense of the civil action in California if the documents are not made available for review.

In opposition to the subpoena, the United States Attorney claimed that the United States Attorney, FBI, the Securities & Exchange Commission (hereinafter "SEC"), and a Grand Jury are conducting a criminal investigation concerning bond issues involving several entities, including Tri-Star and David Namur, but not AICCO. The United States Attorney notes that there is an ongoing dispute as to which of the seized items are protected by attorney-client privilege. Apparently 27-29 boxes of material are in dispute. The United States Attorney also claimed that until it can examine the items which are alleged to be privileged, it cannot determine which documents may be forgeries or should be submitted for forensic evaluation.

On July 10, 1999, the United States Attorney filed a motion to quash the subpoena issued by this court on behalf of AICCO to obtain access to certain documents held by the FBI. On July 17, 1999, the motion was referred to Magistrate Judge James H. Allen.

The bases for the motion of the United States to quash were that the subpoena would: 1) require disclosure of protected matter, 2) interfere with a Grand Jury investigation, and 3) pose an undue burden for the FBI and the United States. In support, the United States Attorney referred to Fed.R.Civ.P. 45(c)(3)(A), which states that a court shall quash a subpoena if it requires disclosure of privileged or protected matter or subjects a person to undue burden.

The Magistrate Judge ruled that the United States was required to make available for inspection, within thirty (30) days, all the documents and items in its possession obtained as a result of the search of the premises at 1080 West Rex Road Memphis, Tennessee, on or about March 25, 1997, except for those documents which are claimed to be protected by attorney-client privilege. The Magistrate Judge's order permitted AICCO to copy the documents in question.

The Magistrate Judge noted that the qualified privilege of secrecy of law enforcement records must be balanced against the claimant's need for access to the allegedly privileged information. See Tuite v. Henry, 98 F.3d 1411, 1417 (D.C.Cir.1996); In re Sealed Case, 856 F.2d 268, 272 (D.C.Cir.1988). The Magistrate Judge evaluated the claim of the United States Attorney under the elements listed in In re Sealed Case and found that the qualified privilege of law enforcement should give way to the need of AICCO for the material. Indeed, the Magistrate Judge found that the United States Attorney failed to make a number of necessary allegations to support its opposition to the subpoena.

Regarding the claim of the United States Attorney that compliance with the subpoena would be overly burdensome, the Magistrate Judge noted that it would be AICCO that would be required to do the reviewing and that AICCO would be required to bear the cost of copying. Thus, the Magistrate Judge rejected the claim of burden raised by the United States.

Finally, the Magistrate Judge, in a very well reasoned analysis, noted that under any claim of secrecy of Grand Jury proceedings, the motion of the United States Attorney failed to establish a necessary justification for quashing the subpoena. The Magistrate Judge acknowledged that under Fed.R.CrimP. 6(e)(2), there is a general rule of secrecy as to matters before the Grand Jury but that not every document in the possession of the Grand Jury is necessarily prohibited from release. In the Matter of Special March 1981 Grand Jury, 753 F.2d 575, 578 (7th Cir.1985). However, he noted that documents created independently of the Grand Jury may, nonetheless, impinge upon the policy of secrecy of Grand Jury proceedings. See In re Grand Jury Proceedings Relative to Perl, 838 F.2d 304, 307 (8th Cir.1988).

To determine if a document should be released, the party seeking disclosure has the burden of showing a particularized need for it. Fed.R.Crim.P. 6(e)(C)(I); Douglas Oil Co. of California v. Petrol Stops Northwest, 441 U.S. 211, 222, 99 S.Ct. 1667, 60 L.Ed.2d 156 (1979); In re Grand Jury Proceedings Relative to Perl, 838 F.2d at 306. The Magistrate Judge applied the elements of the particularized need test presented in Douglas Oil and found that AICCO had demonstrated a sufficient need for some, but not all, of the requested documents, which outweighed the United States need for secrecy. Thus, the Magistrate Judge rejected the United States Attorney's motion to quash under any authority relating to the principle of secrecy of Grand Jury proceedings and ordered the FBI to allow access to those documents which were not claimed to be subject to attorney-client privilege.

It is should be acknowledged that the Magistrate Judge noted that the documents had already been in the possession of the FBI for almost a year and eight months, giving the United States sufficient time to make any appropriate examination or analysis. This court notes that the time available to the United States to examine the documents has extended by almost a year since the time of the Magistrate Judge's order.

The United States appealed the decision of the Magistrate Judge.

STANDARD OF LAW

Appeals from a Ruling of a Magistrate Judge

The district court has the authority to refer certain pre-trial matters to a magistrate judge for resolution. 28 U.S.C. § 636(b); Callier v. Gray, 167 F.3d 977, 980 (6th Cir.1999). These referrals may include non-dispositive pretrial matters, such as a motion to compel or a motion for a protective order concerning discovery. 28 U.S.C. § 636(b)(1)(A). They may also include dispositive matters, such as a motion for summary judgment or a motion for injunctive relief, and evidentiary hearings. 28 U.S.C. § 636(b)(1)(B). However, when a dispositive matter is referred, the magistrate judge's authority only extends to issuing proposed findings of fact and recommendations for disposition, which the district court may adopt or not. The district court also has the authority to refer other matters to the magistrate judge, to include certain post-trial matters, such as, in certain circumstances, a determination of damages or a petition for attorney's fees. 28 U.S.C. § 636(b)(3); Callier v. Gray, 167 F.3d 977, 982-83 (6th Cir.1999) (citing Gomez v. United States, 490 U.S. 858, 109 S.Ct. 2237, 104 L.Ed.2d 923 (1989); Mathews v. Weber, 423 U.S. 261, 96 S.Ct. 549, 46 L.Ed.2d 483 (1976)).

The district court has appellate jurisdiction over any decisions the magistrate judge issues pursuant to such a referral. 28 U.S.C. § 636(b); Fed.R.Civ.P. 72. The standard of review that is applied by the district court depends upon the nature of the matter considered by the magistrate judge.

If the magistrate judge issues a non-dispositive pretrial order, the district court should defer to that order unless it is "found to be clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1)(A); Fed. R.Civ.P. 72(a); Massey v. City of Ferndale, 7 F.3d 506, 509 (6th Cir.1993). However, if the magistrate judge's order was issued in response to a dispositive motion or prisoner petition, the district court should engage in de novo review of all portions of the order to which specific written objections have been made. 28 U.S.C. §...