U.S. Government v. Marks

• Decision Date: 09 July 1997
• Docket Number: No. 95-1257,95-1257
• Citation: 949 S.W.2d 320
• Parties: 40 Tex. Sup. Ct. J. 868 The UNITED STATES GOVERNMENT, Petitioner, v. William J. MARKS, Sr., Respondent.
• Court: Texas Supreme Court

Page 320

949 S.W.2d 320

40 Tex. Sup. Ct. J. 868

The UNITED STATES GOVERNMENT, Petitioner, v. William J. MARKS, Sr., Respondent.

No. 95-1257.

Supreme Court of Texas.

Argued Sept. 4, 1996.

Decided July 9, 1997.

Morris Harrell, Jerry K. Warren, Cynthia Keely Timms, Dallas, Kenneth W. Starr, Steven M. Colloton, Washington, DC, for Petitioner.

H. Campbell Zachry, Drew R. Heard, Van VanBebber, Robert E. Davis, Dallas, for Respondent.

HECHT, Justice, delivered the opinion of the Court, joined by PHILLIPS, Chief Justice, CORNYN, OWEN and ABBOTT, Justices.

This difficult case requires balancing the government's interest in law enforcement against the interests of private parties and the public in open court proceedings. The issue is whether a judge may ever allow a government prosecutor's disclosure of legally confidential, grand-jury-related information offered in support of the government's position in a judicial proceeding to be made in camera and ex parte and order the record sealed. We hold that such procedure can be used in extraordinary circumstances and that it was properly employed in this case. We reverse the court of appeals, which reached the contrary conclusion. 910 S.W.2d 73.

I

When the Office of Independent Counsel of the United States Government informed William J. Marks, Sr. about August 31, 1994, that he was a target of a federal grand jury investigation concerning his income tax returns, he attempted to obtain information and documents from his former accountant, Stephen Feldman. Feldman, a witness in the investigation, refused to cooperate with Marks. A few weeks later, on October 6, 1994, Marks filed a petition to depose Feldman pursuant to Rule 187, TEX.R. CIV. P., which authorizes a court to order the taking of a deposition to perpetuate testimony in anticipation of litigation.

In his petition Marks asserted that he had been threatened with action by the Internal Revenue Service and contemplated suing Feldman for malpractice. Although Rule 187(1) requires that a petition state "the names and residences, if known, or a description of the persons expected to be interested adversely to petitioner", Marks' petition neither mentioned the OIC or the federal grand jury nor alluded to the ongoing criminal investigation he knew he was a target of. Although Marks argues that his deposition of a witness for purposes of a prospective civil action had no bearing on the criminal investigation, the petition requested that Feldman be required to produce "any and all documentation evidencing, referring or relating to any oral and/or written communications by and between the deponent and third parties relating to the tax returns". While any connection between such documents and Marks' possible malpractice lawsuit against Feldman is not immediately apparent, the connection between the documents and the criminal investigation is obvious.

Rule 187(2) requires fifteen days' notice of a hearing on the petition to the witness and all adverse parties but provides "that in any case where justice or necessity so requires the judge or justice may permit the taking of such depositions upon shorter notice". Marks requested a hearing on shorter notice, alleging that he feared important documents might be destroyed, that the Internal Revenue Service had threatened action against him by November 15, 1994, and that Feldman's death was imminent. After an ex parte conference with Marks' counsel, the district judge set a hearing for October 10. Feldman was not served until October 8, a Saturday, and was not able to obtain legal counsel in time for the Monday hearing, so he did not attend. With only Marks' counsel present and without hearing evidence concerning any of the exigencies that Marks alleged, a visiting judge ordered Feldman to appear for his deposition on October 13.

Marks served Feldman with notice of the order on October 11. The next day, Feldman, having obtained counsel, moved to vacate the order for the deposition. At a hearing on October 13 before a second visiting judge, Feldman obtained a six-day delay of the deposition until October 19. On October 14 Feldman filed an amended motion to vacate the order for the deposition and asked for a hearing on October 18. The same day Feldman notified the OIC of Marks' petition. This was the government's first knowledge of the petition.

The day of the hearing on Feldman's amended motion to vacate, the government filed a motion to intervene in the proceeding and a motion for reconsideration of the order for Feldman's deposition. The OIC, Marks, and Feldman all appeared by counsel at the hearing, over which yet a third visiting judge presided. The court granted the government's motion to intervene over Marks' objection and heard extensive argument on the motion for reconsideration and the motion to vacate. Marks declined to offer evidence concerning Feldman's health, the destruction of documents, or the threatened action by the IRS. (The only action threatened against Marks was indictment by the federal grand jury.) The government urged that Feldman's deposition be delayed 90 days so as not to interfere with the federal grand jury investigation. OIC counsel offered to tell the court enough about the grand jury investigation to show how Feldman's deposition might hamper it, but she stated that she could not disclose the same information to Feldman, Marks, or anyone else because of Rule 6(e) of the Federal Rules of Criminal Procedure, which prescribes secrecy for grand jury proceedings. Over Marks' objection, the court agreed to hear OIC counsel in chambers, on the record, with a court reporter present, but outside the presence of Marks' and Feldman's attorneys.

Following the hearing the court ordered that Feldman submit to a physical examination within ten days and file a report signed by the examining physician. The order delayed Feldman's deposition 30 days if he was reported to be in bad health and 90 days if reported in good health, and provided that the government could request an additional delay to protect the integrity of its ongoing criminal investigation. The order also sealed the court reporter's record of the in camera hearing.

Marks sought relief by mandamus, first in the court of appeals and then in this Court. We denied leave to file on December 8, 1994. Marks v. Hartman, 38 TEX. SUP. COURT J. 117 (No. 94-1106, Dec. 8, 1994). Marks also appealed, but only from the sealing of the record of the in camera hearing. Meanwhile, Feldman's physician reported to the district court that Feldman was in good health, and consequently his deposition was delayed. On December 14, 1994, Marks sued Feldman in county court for breach of contract, malpractice, breach of fiduciary duty, and conversion. The district and county courts continued to delay Feldman's deposition pending completion of the federal investigation.

About six months later, on June 7, 1995, the grand jury indicted Marks, Arkansas Governor Jim Guy Tucker, and a third person. United States v. Tucker, No. LR-CR-95-117 (D. Ark. filed June 7, 1995). The indictment remains pending. See United States v. Tucker, 78 F.3d 1313 (8th Cir.), reh'g denied, 82 F.3d 1423 (8th Cir.1996) (en banc), cert. denied, --- U.S. ----, 117 S.Ct. 76, 136 L.Ed.2d 35 (1996). Once Marks was indicted, the government withdrew its opposition to Feldman's deposition. In August 1995, Marks took Feldman's deposition, during which Feldman asserted his privilege against self-incrimination under the Fifth Amendment.

Marks continues to assert that he is entitled to the record of the in camera hearing based on Rules 76 and 76a, TEX.R. CIV. P.; the state constitutional guarantee of due course of law, TEX. CONST. art. I, § 19; and the federal constitution guarantee of due process, U.S. CONST. amend. XIV, § 1. (In the court of appeals Marks also relied on the state constitutional guarantee to open courts, TEX. CONST. art. I, § 13, but he does not do so here.) The court of appeals agreed with all Marks' claims and ordered disclosure of the record because "the general law does not support the government's assertion that the secrecy of grand jury investigations required an ex parte-in camera hearing in this case", and "the ex parte-in camera hearing the trial court held in this proceeding violates both the United States and Texas Constitutions, Texas rules and case law." 910 S.W.2d 73, 78.

Because of the obvious importance of the issues presented, we granted the government's petition for writ of error, 39 TEX.SUP.CT.J. 451. At our request, the district court delivered to us the sealed record, which was not included in the appellate record, and we have reviewed it.

II

Marks appealed pursuant to Rule 76a(8), TEX.R. CIV. P., and he and the government agree that this appeal is governed by Rule 76a. That rule provides that "court records", as defined in the rule, can be sealed only by following specified procedures. Since those procedures were not followed in this case, the record of the in camera hearing should not have been sealed if it is a "court record" under the rule.

Rule 76a(2) states:

For purposes of this rule, court records means:

(a) all documents of any nature filed in connection with any matter before any civil court, except:

* * * * * *

(2) documents in court files to which access is otherwise restricted by law....

We assume, since the parties do not argue otherwise, that a transcription of oral statements in a proceeding is "filed" or "in [a] court file[ ]" for purposes of the rule. The question, then, is whether access to the record is restricted by law.

The government rests its argument for an affirmative answer on Rule 6(e) of the Federal Rules of Criminal Procedure, which provides in part:

(2) General Rule of Secrecy.... [A]n attorney for the government, or any person to whom disclosure is made under paragraph (3)(A)(ii) of this subdivision shall not disclose matters occurring before the grand jury, except as otherwise...