U.S. v. Mann

• Decision Date: 03 August 1995
• Docket Number: No. 94-50082,94-50082
• Citation: 61 F.3d 326
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. James Scott MANN, III, Peter K. Gallaher, William M. Moore, Julian C. Alsup, and Charles Christensen, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 326

61 F.3d 326

UNITED STATES of America, Plaintiff-Appellant, v. James Scott MANN, III, Peter K. Gallaher, William M. Moore Julian C. Alsup, and Charles Christensen Defendants-Appellees.

No. 94-50082.

United States Court of Appeals Fifth Circuit.

Aug. 3, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied Sept.

21, 1995.

James Blankinship, Asst. U.S. Atty., Austin, TX, James H. DeAtley, U.S. Atty., Richard

L. Durbin, Asst. U.S. Atty., San Antonio, TX, for appellant.

William Alfred White, Law Office of William A. White, Austin, TX, for Alsup.

William Peel Allison, White, Allison & Yeager, Austin, TX, for Christensen.

William Stephen Brittain, Williams & Forsythe, Austin, TX, for Mann.

David B. Fannin (Court-appointed), Law Office of David B. Fannin, Austin, TX, for Gallaher.

Gary F. DeShazo, Gary DeShazo & Assoc., Austin, TX, for Moore.

Appeal from the United States District Court for the Western District of Texas.

Before VAN GRAAFEILAND, ^* JOLLY and WIENER, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

The district court dismissed the indictment in this case because, after several delays in bringing the case to trial, the government failed to comply with the district court's order to disclose documents. The government had allowed the defendants access to the documents upon a non-copying condition, but withdrew access when it discovered that the defendants were copying the documents. We hold that the documents were privileged against disclosure under Fed.R.Crim.P. 16(a)(2), and although the government may have conditionally waived its privilege, the defendants breached the agreement. The government, therefore, had the right to reassert its privilege against disclosure. Thus, because the government properly exercised its privilege against disclosure under Rule 16(a)(2), the district court abused its discretion when it dismissed the indictment. Consequently, we reverse the district court's dismissal of the indictment, and remand the case.

I

This case has its genesis in the 1980s, during which time the defendants were involved in a series of allegedly fraudulent transactions regarding the sale of a Texas savings and loan institution and the exchange of certain parcels of real estate. The main focus of this appeal and our attention today, however, is on the pretrial investigation and the discovery that began shortly before most of the defendants were initially indicted in September 1991, and continued until shortly before the district court's dismissal of the third superseding indictment in January 1994. We now turn to examine the events shaping this controversy in greater detail.

This case has involved a series of indictments, dismissals, and reindictments, which evidence the complex nature of the case against the defendants, and which contributed to the frustration of the district court. In September 1991, the grand jury returned a twelve-count indictment charging Peter K. Gallaher, William M. Moore, Charles M. Christensen, and Julian C. Alsup ¹ with filing false corporate tax returns in violation of 26 U.S.C. Sec. 7206(1), (2) from 1984 through 1990. The district court set trial for April 20, 1992. The following January, the case was reassigned to the Honorable Sam Sparks. In response to motions for continuance by defendants Alsup and Christensen and in anticipation of a superseding indictment, the district court set trial for July 6, 1992. As anticipated, the grand jury returned a superseding indictment in April that added appellee J. Scott Mann to the case and included additional charges of fraud and conspiracy in connection with a failed savings and loan association, in violation of 18 U.S.C. Sec. 371. After three parties moved for a continuance, the district court rescheduled the trial for August 17, 1992. On August 5, however, the government dismissed the superseding indictment. At that time, the grand jury returned a new indictment, which contained only three counts and charged only Mann with tax-related offenses. ² Mann's trial on these charges was subsequently set for November 1992, with the Honorable James R. Nowlin presiding. On October 22, Mann's case was reassigned to Judge Sparks. At a hearing on November 5, Judge Sparks allowed Mann to substitute his counsel and was informed by the government that it was seeking another superseding indictment. Subsequently, the court granted Mann's motion for a continuance, rescheduling the trial for December 21. At a December 11 motions hearing, the government informed the court that it was still working on the superseding indictment. On December 18, Mann's counsel filed a motion for a continuance to allow him more time to examine the evidence. On December 22, the court granted Mann's motion for continuance, and set the case for trial on March 1, 1993. On February 24, 1993, the district court filed an amended order, rescheduling the trial for March 29, 1993. At docket call on March 1, the government told the court that it was still pursuing a superseding indictment, expected by July. On March 11, the district court entered an order rescheduling Mann's trial for July 5 because his counsel needed additional time to prepare his defense. On June 30, the grand jury issued the thirty-nine count superseding indictment that is the subject of this appeal. ³ After a discovery motion hearing on September 24, 1993 the court set the trial date as January 4, 1994.

In the meantime, plea negotiations were ongoing. Before the first indictment had issued in September 1991, the government had met with the defendants and their attorneys on several occasions to discuss the case. As a part of these discussions, the government had allowed the defendants to inspect portions of government agents' reports ⁴ that included assessments of the strength of the case, and that were otherwise not discoverable under Rule 16(a)(2). In addition to the exposure of these documents, Agent Mazur copied approximately 150 pages of his report, termed the "evidence" or "factual" section and placed it on file with the government's other evidence to which the defendants were given access in order to allow the defendants to better understand the cases against them. Apparently, a portion of Agent Brooks's report was also deposited with the government's evidence, composed of hundreds of volumes of materials.

Although the record does not contain a formal agreement governing access to these documents and the agents' reports, the record reflects that early in the discovery process certain "rules of engagement" were established. The district court was aware of these rules because on several occasions the government referenced these informal rules in its pleadings and correspondence. For instance, in its January 24, 1992 Response to Pretrial Motions Filed by Defendant William Moore, the government stated that it had

agreed to informally provide all discovery to which Defendant Moore is entitled pursuant to the Federal Rules of Criminal Procedure and the laws and Constitution of the United States. Further, the government has informally agreed to provide discovery of materials to which Defendant Moore is not entitled under the above cited authorities.

Supplemental Record on Appeal, Vol. I, at 103. In its January 24, 1992 Response to Pretrial Motions Filed by Defendant Peter

Gallaher, the government states that "[i]t is the policy of the prosecutor assigned to this case to facilitate discovery whenever possible. To that end, counsel for Mr. Gallaher ... has been allowed to examine the Special Agent's report prepared by Walter Mazur of the Internal Revenue Service." Id. at 105.

In other pleadings, the government was more specific as to the parameters of the rules, using the same language to describe access to the materials on two different occasions, stating the following:

[t]he government will voluntarily allow all defendants in this cause to examine and copy evidence which the government has accumulated during its investigation. The only exceptions are items submitted to the government with a reservation of the attorney-client privilege. Counsel for the defendants may examine the government's files at the Federal Building, 300 East 8th Street, Austin, Texas. The files are in the custody of Walter Mazur, Special Agent, Internal Revenue Service, Criminal Investigation Division.... A copier is available to the defendants' attorneys. A fee of 10 cents per page will be charged.

The government has previously allowed attorneys to examine Agent Mazur's report. The government will continue to allow counsel to review the factual portion of the report, but the report may not be copied and must remain on government premises at 300 East Eighth Street, Austin, Texas.

May 13, 1992 Response to Pre-Trial Motions Filed by Defendants Mann and Gallaher, Supplemental Record on Appeal, Vol. II, at 274-75 (emphasis added); June 9, 1992 Response to Pre-Trial Motions Filed by Defendant Christensen, Supplemental Record on Appeal, Vol. II, at 421-22 (emphasis added). Moreover, early in the discovery process, the government orally told the court that it was giving the defendants restricted access to portions of the special agents' reports. In a June 10, 1992 pretrial motion hearing, the government stated that

we have given the attorneys access to Mr. Mazur's investigative reports.... We intend to give the attorneys access throughout [the discovery process] to the factual portions of that report. Now there's some theory and that sort of thing in there that we are going to hold back, but the factual portions that will lead them into the evidence, that the government has accumulated, will remain open to them.

Record on Appeal, Vol. V at 12 (emphasis added).

As the record reflects, the defendants were allowed to examine the evidence portion of the investigative reports, but specifically were prohibited from copying these reports. Up to July 1992, the defendants had access to these investigative...