In re Grand Jury Proceeding
No. 95-3268
United States Court of Appeals, Eighth Circuit
March 15, 1996
Rehearing and Rehearing En Banc Denied May 6, 1996
Order Granting Stay May 17, 1996
75 F.3d 1313
III. CONCLUSION
Having found that appellants’ compliance with the subpoenas here at issue did not moot their appeal, we nonetheless find that the district court correctly refused to quash the subpoenas. Accordingly, we affirm.
UNITED STATES of America, Appellant, v. Jim Guy TUCKER; William J. Marks, Sr.; John H. Haley, Appellees.
No. 95-3268
United States Court of Appeals, Eighth Circuit.
Decided March 15, 1996.
Rehearing and Rehearing En Banc Denied May 6, 1996, 1996 WL 225986.
Submitted Dec. 12, 1995. Order Granting Stay May 17, 1996. United States Department of Justice; Sun Diamond Growers of California, Amicus Curiae.
75 F.3d 1314
George B. Collins, Chicago, IL, argued (William H. Sutton and James J. Lessmeister, Little Rock, AR, on the brief), for appellee Jim Guy Tucker.
Robert E. Davis, Dallas, TX, argued (D. Randall Johnson, on the brief), for appellee William Marks.
Ted Boswell, Bryant, AR, argued (Curtis L. Bowman, Little Rock, AR, on the brief), for appellee John Haley.
BOWMAN, Circuit Judge.
The United States, represented by Independent Counsel Kenneth W. Starr, appeals from an order of the District Court dismissing an indictment brought against Jim Guy Tucker, William J. Marks, Sr., and John H. Haley. The court ruled that the Office of Independent Counsel (OIC) has no jurisdiction to prosecute the case. We reverse.
On August 5, 1994, the Division for the Purpose of Appointing Independent Counsels (commonly known and herein referred to as the Special Division), pursuant to a request from United States Attorney General Janet Reno, appointed Starr as Independent Counsel
to investigate to the maximum extent authorized by the
Independent Counsel Reauthorization Act of 1994 whether any individuals or entities have committed a violation of any federal criminal law, other than a Class B or C misdemeanor or infraction, relating in any way to James B. McDougal‘s, President William Jefferson Clinton‘s, or Mrs. Hillary Rodham Clinton‘s relationships with Madison Guaranty Savings & Loan Association, Whitewater Development Corporation, or Capital Management Services, Inc.
In re Madison Guar. Sav. & Loan Ass‘n, Div. No. 94-1, Order at 1-2 (D.C.Cir.Sp.Div. Aug. 5, 1994) (emphasis added).1 Thе order further conferred upon Starr “jurisdiction and authority to investigate other allegations or evidence of violation of any federal criminal law ... by any person or entity developed during the Independent Counsel‘s investigation referred to above and connected with or arising out of that investigation.” Id. at 2 (emphasis added). The OIC also was empowered to investigate any obstruction of justice “in connection with any investigation of the matters described above.” Id. Finally, the Special Division vested in the Independent Counsel “jurisdiction and authority to seek indictments and to prosecute any persons or entities involved in any of the matters described above, who are reasonably believed to have committed a violation of any federal criminal law arising out of such matters.” Id. In sum, the court ordered that the Independent Counsel “shall have prosecutorial jurisdiction to fully investigate and prosecute the subject matter with respect to which the Attorney General requested the appointment of independent counsel, as hereinbefore set forth, and all matters and individuals whose acts may be related to that subject matter,” including crimes “that may arise out of the above described matter.” Id. at 3 (emphasis added).
Starr succeeded Robert B. Fiske, Jr., who had been appointed by the Attorney General in January 1994 pursuant to
By letter dated September 2, 1994, the Acting Assistant Attorney General, Criminal Division, responding to Starr‘s August 31 request, referred to the OIC “investigative and prosecutorial jurisdiction over ... [w]hether any person committed any federal crime relating to the bankruptcy action entitled In Re: Landowners Management System, Inc., Tax Identification No 75-2001911, Debtor, United States Bankruptcy Court, Northern District of Texas, Case No. 787-70392 (Chapter 11).” The letter noted that the Attorney General had agreed that this matter, and another that was redacted from the record that is before us in this
The OIC‘s criminal investigation of matters relating to the LMS bankruptcy culminated on June 7, 1995, when a grand jury for the Eastern District of Arkansas issued the indictment that is the subject of this appeal. Governor of Arkansas Jim Guy Tucker, his Little Rock lawyer John H. Haley, and his San Francisco business partner William J. Marks, Sr., were variously charged with tax fraud; bankruptcy fraud; making false material statements for the purpose of influencing CMS, a federally licensed management company in Arkansas; and conspiracy to commit various of these acts. The specifics of the indictment are discussed in further detail as necessary to the discussion in Part II of this opinion.
The case was assigned to Judge Henry Woods,2 who on September 5, 1995, held a hearing on the defendants’ motions to dismiss. Within a few hours, the court issued a twenty-one-page order and opinion dismissing the indictment on the ground that the OIC lacked prosecutorial jurisdiction over this case.
I.
The Independent Counsel‘s first issue on appeаl was addressed by the District Court somewhat summarily and with little legal analysis: whether the courts have the authority to review the Attorney General‘s decision under
An independent counsel, of course, is not an ordinary United States attorney. The counsel is appointed by the judiciary (the Special Division) at the behest of the Attorney General.
Although prosecutorial discretion is not the precise issue here, we do not see any reason to believe that the Attorney General‘s referral decision is any more subject to judicial review than the usual prosecutorial decisions. But we need not rest our decision on intuition guided by a consideration of prosecutorial discretion and its unreviewability in its ordinary contexts, for the definitive answer to the question of reviewability in this case is found in legislative history that cannot be ignored (although the appellees and the District Court elected to do just that).
In 1987, the second timе legislation establishing the independent counsel process was reauthorized, the conferees discussed the possibility of codifying the holdings of Dellums v. Smith, 797 F.2d 817 (9th Cir.1986), and Banzhaf v. Smith, 737 F.2d 1167 (D.C.Cir.1984) (en banc) (per curiam) (the legislative history incorrectly referred to the case as Banzhai v. Smith), wherein two circuit courts of appeals “properly reflect[ed] legislative intent” by concluding “that no judicial review is available of decisions by the Attorney General not to conduct preliminary investigations.” H.R.Conf.Rep. No. 452, 100th Cong., 1st Sess. 22 (1987), reprinted in 1987 U.S.C.C.A.N. 2185, 2188.5 The joint statement explained, however, that such a provision was not included in the jointly proposed legislation “because the conferees did not wish to suggest, by indicating a lack of judicial review of Attorney General decisions on preliminary investigations, that judicial review might be available of other Attorney General decisions under this chapter.” Id. Thus one might quite logically conclude that, where Congress did intend there tо be judicial review of Attorney General decisions, it specifically ordained judicial review, as it did when providing for judicial review of an Attorney General‘s decision to remove an independent counsel. To be certain that its point—that unreviewability of the Attorney General‘s decisions is the rule when the inde-
United States v. Juvenile Male, 923 F.2d 614 (8th Cir.1991), to which the appellees direct our attention for the proposition that the Attorney General‘s referral is reviewable, is inapposite. In Juvenile Male, the issue was the reviewability of the Attorney General‘s decision to certify, under the Juvenile Justice and Delinquency Prevention Act, that the crime with which a juvenile was charged was a “crime of violence.” The Court held that the certification in question was reviewable. Cf. United States v. C.G., 736 F.2d 1474 (11th Cir.1984) (holding certification under the Act that appropriate state court did not have jurisdiction was not reviewable); United States v. Vancier, 515 F.2d 1378 (2d Cir.) (same), cert. denied, 423 U.S. 857 (1975). We stated, “While this court may not have the power to guide a federal prosecutor‘s discretion, we must insure that the exercise of that discretion is within the confines” of the statute. Juvenile Male, 923 F.2d at 617-18. The argument that the Juvenile Male holding is apрlicable here ignores the definitive legislative history of the law reauthorizing the OIC that clearly evidences Congress‘s intent that (unless otherwise provided in the statute) the Attorney General‘s decisions under the independent counsel law are nonjusticiable. Further, the question whether a juvenile has been charged with a “crime of violence” is easily reviewed by a court and is well within the expertise of the judiciary. The “relatedness” determination at issue here, on the other hand, is an exercise of a discretion that only the prosecutor and the Attorney General command, because of their intimate knowledge of the course of the investigation, including witness statements, and of other proceedings that may be ongoing before the grand jury. That is, the “relatedness” question is largely without the standards that the judiciary typically requires for review, another reason for entrusting it, as Congress has, to the broad (and unreviewable) discretion of the Attorney General.
Reliance on Gutierrez de Martinez v. Lamagno, — U.S. —, 115 S.Ct. 2227, 132 L.Ed.2d 375 (1995), in support of the appellees’ position also is misplaced. Gutierrez was a case decided under the terms of the Westfall Act, which authorizes the Attorney General to certify that a federal employee sued for a wrongful or negligent act was acting within the scope of employment at the time of the alleged act, so that the United States is substituted for the defendant. In the ordinary case, such certification would allow a plaintiff to maintain an action under the Federal Tort Claims Act (FTCA), although because of an exception to the FTCA
Neither fаctor is present here. In this case, the Department of Justice, as amicus curiae, agrees with the Independent Counsel that the Attorney General‘s referral is not reviewable. Further, as is apparent from the District Court‘s unchallenged acknowledgement that these defendants properly may be prosecuted by the United States Attorney for the Eastern District of Arkansas (who has recused herself from matters concerning CMS) or by the Attorney General (who made the referral to the OIC), the Attorney General‘s referral does not “instruct[] a court automatically to enter a judgment pursuant to a decision the court has no authority to evaluate.” Id. at —, 115 S.Ct. at 2234. The absence of judicial review of the discretionary referral decision merely allows the prosecution to proceed without the delay that judicial review inevitably would entail; it does not direct the outcome of the prosecution. Furthеr, unlike the situation in Gutierrez, this is not a case where the Attorney General has a vested interest in the referral such that she “is hardly positioned to act impartially.” Id. at —, 115 S.Ct. at 2233.
At oral argument we were directed to the admonition of the Gutierrez Court that “judicial review of executive action ‘will not be cut off unless there is persuasive reason to believe that such was the purpose of Congress.‘” Id. at —, 115 S.Ct. at 2231 (quoting Abbott Lab. v. Gardner, 387 U.S. 136, 140, 87 S.Ct. 1507, 1511, 18 L.Ed.2d 681 (1967)). But considering our reading of the independent counsel law and the uncontroverted legislative history we have discussed above, the full, unabridged language of the Court does not support the appellees’ position, and actually supports our holding that the Attorney General‘s referral decisions are nonjusticiable: “Accordingly, we have stated time and again that judicial review of executive action ‘will not be cut off unless there is persuasive reason to believe that such was the purpose of Congress.‘” Id. (emphasis added). It is fair to say that the “reason to believe” here is more than just “persuasive,” it is beyond reasonable dispute.
Accordingly, we hold that the Attorney General‘s referral decision under
II.
Even if the courts had jurisdiction to review the Attorney General‘s “relatedness” determination under
The grand jury‘s indictment of June 7, 1995, was the culmination of an investigation that began on Independent Counsel Fiske‘s watch. The indictment alleged that Tucker and Marks made false material statements to CMS for the purpose of securing a $300,000 loan. Tucker and Marks represented to CMS that the loan was for investment in D & L Telecommunications, Inc., when in fact it was used as part of the cash collateral pledged for a personal loan of $8.5 million from Fleet National Bank. Allegedly, $6 million of that loan was used to purchase controlling interest in Planned Cable Systems Corporation (PCS), a cable television company in which Marks, who was president of the company, already was a minor shareholder. According to the indictment, Haley acquired a “shelf” corporation, that is, one with no assets or operations, in Texas, called LMS. The appellees merged PCS into LMS and Marks was named president. In November 1987, LMS filed a fraudulent bankruptcy in the Northern District of Texas. The proposed reorganization plan, approved by all creditors listed in the bankruptcy schedules before LMS even filed its bank-
Also relevant here is an indictment from the same grand jury handed down on August 17, 1995, after the arguments on the question of dismissal had been briefed to the District Court. The indictment charged Tucker, James McDougal, and Susan McDougal with fraudulent loan schemes involving Madison Guaranty and CMS.
As we mentioned in our discussion in Part I, “relatedness” in the context at issue here is an essentially standardless concept and, as the statute is written, one that is exceedingly broad. Section
Considering the open-ended phrasing of
This said, we do not think that Congress may give the Division unlimited discretion to determine the independent counsel‘s jurisdiction. In order for the Division‘s definition of the counsel‘s jurisdiction to be truly “incidental” to its power to appoint, the jurisdiction that the court decides upon must be demonstrably related to the factual circumstances that gave rise to the Attorney General‘s investigation and request for the appointment of the independent counsel in the particular case.
Id. It is clear that the limitation in question (assuming, as do appellees, that “demonstrably related” is a genuine limitation) was upon the authority of the Special Division to define jurisdiction in the first instance, and was the result of the constitutional concеrns (appointments clause and separation of powers) generated by Congress‘s decision to vest executive powers in the judiciary (the Special Division). “Demonstrably related” is not, as Marks asserts, “[t]he applicable legal standard for evaluating whether the Independent Counsel has authority to prosecute the instant case.” Brief of Appellee Marks at 13. We do not agree that the subject matter of the referral jurisdiction must be “demonstrably related” either “‘to the factual circumstances’ that give rise to the appointment,” Brief of Appellee Tucker at 10, or “to the subject matter of the Independent Counsel‘s jurisdiction,” Brief of Appellee Marks at 13.9 We thus reject the appellees’ contention that the subject matter of the referral jurisdiction is required to relate to James McDougal‘s or President Clinton‘s or Mrs. Clinton‘s relationship to CMS or Madison Guaranty or the Whitewatеr Development, which is the subject matter of the Independent Counsel‘s original investigatory jurisdiction. If that were the test for a proper referral, then referral never would be necessary and
The matters over which the OIC sought referral jurisdiction were developed during the investigation conducted by the OIC under the original grants of jurisdiction, first the jurisdiction of the regulatory Independent Counsel (Fiske) and then the statutory Independent Counsel (Starr). It is apparent from the record before us, even though grand jury proceedings to which we are not privy continue, that there is overlap in witnesses and in defendants between the original prosecutorial jurisdiction (see August 17, 1995, indictment) and the referral jurisdiction (see June 7, 1995, indictment). Further, as the August 17 indictment demonstrates, there is a clearly defined relationship between Tucker (referral) and McDougal (original), Tucker (referral) and CMS (original and referral), and Tucker (referral) and Madison Guaranty (original). (CMS was an entity named in the original grant of jurisdiction and allegedly defrauded by the activities charged in the August 17 indictment, and material false statements to CMS by Tucker and Marks constitute a part of the charges in the June 7 indictment.) We have no difficulty in concluding that the required relatedness between original and referral jurisdiction is present here.
The appellees further argue that they are not “persons” within the meaning of
The Attorney General shall conduct a preliminary investigation in accordance with section 592 whenever the Attorney General receives information sufficient to constitute grounds to investigate whether any person described in subsection (b) may have violated any Federal criminal law....
Thus it is the alleged culpability of a covered “person” that may require the Attorney General to conduct an initial preliminary investigation. But the ultimate scope of jurisdiction of the OIC—whom he may investigate and whom he may prosecute—as determined by the Special Division, is not necessarily limited to covered persons, and neither is referral jurisdiction. Moreover, referral jurisdiction requires only relatedness to the original prosecutorial jurisdiction; nowhere do the OIC provisions require that a
The appellees also argue that the Independent Counsel was, in reality, seeking expansion jurisdiction, not referral jurisdiction, and that he did not comply with the requirements of expansion jurisdiction, or, in the alternative, that he should have sought expansion jurisdiction instead of referral jurisdiction. Expansion jurisdiction may be granted to the OIC by the Special Division upon the request of the Attorney General, if possible violations of criminal law by
Assuming for the sake of argument that the discretion exercised by the Attorney General in referring “related” matters to the OIC is reviewable, and giving the Attorney General the deference that is due such discretionary decisions, we hold that she did not abuse her discretion in determining that the subject matter of the referral jurisdiction in this case is “related” to the Independent Counsel‘s original prosecutorial jurisdiction within the meaning of
III.
We come now to the Independent Counsel‘s request that this case be assigned to a judge other than Judge Woods upon remand to the District Court. We conclude that this request must be granted to preserve the appearance of impartiality.
The Independent Counsel relies primarily on newspaper articles to support his
For their part, President and Mrs. Clinton have been reported to have expressed continued support for Tucker since his indictment by the grand jury. It was reported in an article on the front page of the Arkansas Democrat-Gazette that, the day after Tucker pleaded not guilty to the charges in this case, the Clintons attended a fund-raising luncheon in Little Rock, Arkansas, where Tucker received a “sustained standing ovation.” Noel Oman & Peter Aronson, Clinton lunch also a feast for Tucker, Ark. Democrat-Gazette, June 24, 1995, at 1A. At the event, solidifying his connection with the recently indicted Tucker, the President said in a speech, “I am especially glad to see Governor and Mrs. Tucker here today and especially grateful for the reception you gave them.” Id. at 12A. Tucker also acknowledged the perceived connection when he was quoted in an interview as saying of the OIC, “I think that‘s been much of their goal, to try and tar the [P]resident with images of wrongdoing here in his home state.” Inside Politics (Cable News Network, Inc., television broadcast, June 21, 1995).
The appellees object to the Independent Counsel‘s request on several grounds, among them: that the issue was not raised in the District Court and is raised now only because the Independent Counsel did not like the result reached in the proceeding below; that “the motion is ... frivolous because it is obviously premature to raise such a motion in an appellate court,” Brief of Appellee Marks at 38; that Judge Woods‘s political affiliation, and the Independent Counsel‘s affiliation with another political party, comprise the basis for the argument; and that the argument is “an improper vehicle for the publiсation of a personal attack on Judge Woods for the purpose of distracting this Court from a proper review of the district court‘s dismissal ruling on its merits,” id. Most of the appellees’ claims are undeserving of comment, and we summarily reject the suggestion that appellant‘s brief is evidence that Judge Woods‘s political persuasion forms the basis for the Independent Counsel‘s request. Nowhere do the appellees give us reasons for concluding that the matters the Independent Counsel has brought to our attention do not create an appearance of bias.
We also reject the contention that the Independent Counsel‘s request is improperly made to this Court in the first instance rather than to Judge Woods. The appellees’ arguments stem from their confusion about the source of our power to grant the OIC‘s request. “Federal appellate courts’ ability to assign a casе to a different judge on remand rests not on the recusal statutes alone, but on
The Independent Counsel does not seek review of Judge Woods‘s failure to disqualify himself under
Further, the Eighth Circuit cases cited by the appellees are distinguishable. See United States v. Bauer, 19 F.3d 409, 414 (8th Cir.1994) (“This Court has held that claims under
We turn now to the merits of the OIC‘s request. Under
The Independent Counsel argues that, because of the “unmistakable appearance” of bias or partiality here, “[r]eassignment is necessary to preserve the appearance and reality of justice.” Brief of Appellant at 42. We agree. Based on the information before us in this case, we conclude that the risk of a perception of judicial bias or partiality is sufficiently great so that our proper course is to order reassignment on remand.11 As we
As a practical matter, there is no shortage of other judges in the Eastern District of Arkansas to whom this case may be assigned. Apart from whatever time Judge Woods spent in ruling on the motion to dismiss the indictment, judicial resources have not been expended on the case and neither judicial, prosecutorial, nor defense efforts will have to be duplicated when the case is reassigned. The OIC‘s request for reassignment is granted, not because we believe Judge Woods would not handle the case in a fair and impartial manner (we have every confidence that he would), but only because we believe this step is necessary in order to preserve the appearance as well as the reality of impartial justice.
IV.
We have taken with the case Marks‘s motion to strike portions of appellant‘s brief and appendix, which according to Marks contain “Offending Materials.”
We first reject, without lengthy comment, the contention that any part of the appellant‘s brief raised frivolous arguments or that the brief “reflects a considered decision by the Independent Counsel to attack Judge Woods personally rather than to address the correctness of the trial court‘s decision on its legal merits.” Motion to Strike and Brief in Support Thereof at 12-13. As we have concluded in this opinion, not only are the Independent Counsel‘s arguments not frivolous, they are meritorious, and the bulk of his brief is indeed devoted to “address[ing] the correctness of the trial court‘s decision on its legal merits.” In any case, Marks need not be concerned that we so easily could be distracted from our duty to review the merits of an appeal that is properly before us. Throughout his motion, Marks mischaracterizes Independent Counsel‘s advocаcy, and comes perilously close to having filed a frivolous motion.
As for the materials that Marks claims have no business being cited in appellant‘s brief or being included in appellant‘s appendix, we conclude that they are either documents properly in the record in this case; legal authority properly cited to the Court; or publicly filed or disseminated documents or articles of which we properly may take judicial notice. Here, too, Marks‘s argument is devoid of merit.
The motion is denied.
V.
The judgment of the District Court dismissing the indictment for lack of prosecutorial jurisdiction is reversed and the case is remanded for trial. The Independent Counsel‘s motion for reassignment of the case is granted, and the Chief Judge of the United States District Court for the Eastern District of Arkansas is instructed to see that the case is assigned to a judge other than Judge Woods. Marks‘s motion to strike portions of
Order
May 17, 1996.
Appellees’ motion to stay the mandаte of this court is granted pursuant to
The issuance of the mandate in this case shall be stayed to and including June 17, 1996. If within that time there is filed with the Clerk of this court a certificate of notification by the Clerk of the Supreme Court that a petition for writ of certiorari has been filed, this stay shall continue until final disposition of the case by that court.