United States v. Jerome Gatto, Virgil Redmond, Joseph Bonanno, Jr., and Salvatore Bonanno

Citations: 763 F.2d 1040; 1985 U.S. App. LEXIS 19884Docket: 84-1121, 84-1133

Court: Court of Appeals for the Ninth Circuit; June 14, 1985; Federal Appellate Court

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The federal government is appealing a district court's order that excluded evidence obtained by Utah state officials during a trash search at Sunburst Industries, which the government failed to disclose until shortly before trial, despite the evidence being collected two years earlier. The district court dismissed the case with prejudice due to the lack of progress toward trial while the appeal regarding the exclusion order was pending. The case originated from a grand jury indictment in July 1982 against defendants for various offenses, including mail and wire fraud. Following extensive pretrial motions and a scheduled jury trial, the federal prosecutors notified the defense on March 28, 1984, about the previously undisclosed evidence. The district court conducted a six-day evidentiary hearing, resulting in an order to exclude the evidence obtained from the trash search and to disclose any related evidence intended for trial. The trial was subsequently postponed to May 1, 1984.

The district judge's ruling relied on Rule 16(d)(2) of the Federal Rules of Criminal Procedure and his inherent supervisory powers, explicitly excluding the Fourth Amendment as a basis for his decision. He noted that Rule 16(a)(1)(C) mandates the government to provide the defense with any relevant documents in its possession that are material to the defense or intended for use in its case-in-chief. Rule 16(d)(2) grants federal courts the discretion to issue continuances, exclude evidence, or take other appropriate actions if a party fails to comply with discovery orders. The judge cited United States v. Gonsalves to support his argument that his supervisory powers enable him to maintain the integrity of the judicial process, which requires fairness beyond mere due process standards.

The judge determined that the circumstances warranted the exercise of his Rule 16(d)(2) and supervisory powers against the government due to the negligence or recklessness of federal prosecutors and FBI agents in failing to timely discover and disclose evidence from a trash search. Evidence indicated that neither the Sacramento officials nor the liaison FBI agent had control over the trash search evidence prior to March 27, 1984. The judge found no contrary evidence but noted that numerous federal officials were aware of the trash search as early as December 1981. He expressed skepticism about the Salt Lake City FBI agent's failure to inform Sacramento investigators about the trash search evidence, although he did not determine that federal prosecutors had prior knowledge of the operation. The judge refrained from concluding that the Sacramento agents were dishonest regarding their claimed ignorance but deemed their conduct negligent or reckless, asserting that bureaucratic challenges could not justify their lack of awareness about the trash search.

The district judge determined that neither dismissal of the case nor a continuance was appropriate. Dismissal was ruled out due to a lack of evidence showing that the government intentionally concealed evidence, the issue arose before the trial, the evidence in question was not exculpatory, and any problematic evidence could be addressed during the trial. A continuance was deemed inadequate as it would undermine due process and fairness, given the time and resources already invested, the length of time since the indictment was filed, the impending trial date, and the potential delay of a related state trial. 

The government appealed the exclusionary order under 18 U.S.C. Sec. 3731 before the trial commenced. During the appeal, the government sought to delay the trial or argue that the district court had lost jurisdiction, both of which were unsuccessful. On the trial's start date, the government opted not to proceed, asserting its right to appeal the exclusionary order, which it claimed would affect its ability to present substantial evidence. The district judge, citing rule 48(b) of the Federal Rules of Criminal Procedure, dismissed the case with prejudice, citing the government's refusal to proceed as a significant delay and an abuse of discretion. 

The government subsequently appealed the dismissal, arguing that the district court lacked the authority to exclude evidence as no constitutional or statutory violation occurred. It claimed the court's reliance on a vacated case was erroneous and asserted that the exercise of supervisory power should only address recognized rights or ensure proper jury considerations. These legal arguments are subject to de novo review.

The "supervisory power" was first termed by the Supreme Court in McNabb v. United States, establishing the Court's authority to create procedural rules within criminal justice. Prior to McNabb, federal courts had not claimed a general power to formulate such rules, instead relying on specific congressional mandates. Although the Supreme Court acknowledges that lower federal courts possess supervisory power, it restricts this authority to procedural rules not explicitly mandated by the Constitution or Congress and has not defined its source. This power is considered necessary for the judiciary's role in maintaining checks and balances within government.

In Gonsalves, it was argued that supervisory power arises from the judiciary's function in limiting governmental excesses, emphasizing fairness beyond basic due process requirements. However, the Supreme Court vacated Gonsalves, indicating that the discussion on supervisory power's limits was inadequate and questioning the idea that this power allows federal courts to "do justice" in unique cases. A competing theory suggests that supervisory power could be justified as a form of limited federal common law, acknowledging Congress's authority to create procedural rules. This theory posits that federal courts may establish procedural rules when injustices occur, reflecting congressional intent in situations where legislative action is impractical.

Congress holds the final authority over the federal judiciary's supervisory power, which it can limit or reverse, as evidenced by past legislation like the Jencks Act and the Omnibus Crime Control and Safe Streets Act. The Supreme Court has upheld the Jencks Act but has not addressed the Omnibus Act's validity directly. The exercise of supervisory power is constrained by the separation-of-powers principle, requiring a clear factual and legal basis for its use. Courts cannot exercise this power merely to maintain judicial integrity unless there is a clear violation of constitutional rights, statutes, or procedural rules. The Supreme Court has ruled that supervisory power cannot be used to impose remedies for nonconstitutional rights that the Court has previously limited. In the present case, the delay in evidence disclosure did not breach any constitutional provisions or federal statutes, apart from potentially violating Rule 16 of the Federal Rules of Criminal Procedure. Since Rule 16 provides specific remedies, the district court was barred from exercising supervisory power to exclude the evidence.

The government contends that the district court incorrectly excluded evidence under Rule 16(d)(2), asserting that this rule pertains solely to documents actually possessed by the federal government. The government argues that its failure to disclose the trash search documents was neither negligent nor reckless and that a continuance would have been a suitable remedy if there was a violation of Rule 16. The court agrees with the government's first argument and does not address the others. Rule 16(d)(2) grants district courts discretion to remedy failures related to the discovery of tangible evidence as outlined in Rule 16(a)(1)(C), which states that evidence must be in the government's possession, custody, or control and material to the defense or intended for use at trial.

It is established that neither Sacramento officials nor the FBI agent in Salt Lake City had possession, custody, or control of the trash search evidence before March 27, 1984, and the district judge did not find otherwise. The key legal question is whether Rule 16(a)(1)(C) obligates the federal government to disclose documents held by state officials, particularly when the federal government fails to recognize their relevance. The document also questions whether "the government" includes individuals beyond the prosecutors, a matter not previously addressed. The district court seemed to include FBI agents involved in the case within this definition.

Referencing *United States v. Trevino*, the text notes that the term "government" is interpreted to mean the prosecution, although its scope may extend to closely connected investigative agencies. However, the critical issue remains whether the documents must be in actual possession or if constructive possession suffices. Previous cases have suggested that actual possession by the prosecutor is not always necessary, indicating a duty to produce evidence that could be accessed through due diligence, even if not directly in their possession.

Prosecutors' obligations under rule 16(a)(1)(A) regarding due diligence differ from those under rule 16(a)(1)(C). While rule 16(a)(1)(A) mandates disclosure of any defendant's statements in the government's possession, custody, or control, rule 16(a)(1)(C) lacks similar language, indicating Congress intended to limit the government's disclosure responsibilities strictly to documents within its actual possession. This interpretation aligns with existing case law, such as United States v. Friedman, which established that the federal government has no obligation to produce documents held by foreign governments, regardless of knowledge of their existence. The same principle applies to documents in state custody, where no special justification exists to extend federal obligations. Consequently, rule 16(a)(1)(C) only triggers disclosure for documents actually possessed by the federal government, with no duty to produce materials from state authorities or third parties.

The Fifth Circuit has determined that Rule 16(a)(1)(C) pertains only to documents that the federal government has in its actual possession, custody, or control. In United States v. Adkins, the prosecutor initially indicated he would not introduce certain bank records but later changed his decision during the trial, providing the records to the defense. Adkins claimed this constituted a denial of a fair trial due to the government's prior misrepresentation and the incompleteness of the records. The court rejected these claims, stating that the government is only required to disclose documents it intends to introduce that are within its possession.

In another case, Thor v. United States, the court upheld the denial of a subpoena for documents that were solely in the control of state officials, again referencing Rule 16(a)(1)(C). Consequently, it is concluded that for Rule 16(a)(1)(C) to apply, the documents must be in the government's actual possession. In this instance, they were not, leading to the reversal of the district judge's suppression of evidence based on an erroneous interpretation of the rule.

Additionally, the government had announced weeks prior to trial its intention to introduce 382 tangible items as evidence, which may have complicated the defendants' preparation. However, since the defendants did not request a continuance, the court could not assess whether one would have been warranted. The district court's erroneous suppression of evidence does not necessitate a reversal unless it properly dismissed the indictment with prejudice due to a failure to prosecute. The government argues that appealing the exclusionary order affected the district court's jurisdiction, or alternatively, that the dismissal with prejudice was an abuse of discretion since it was the government's failure to prosecute that ensured its right to appeal.

The court rejects the government's claim that filing a notice of appeal under 18 U.S.C. § 3731 divested the district court of jurisdiction over the case. Typically, a notice of appeal transfers jurisdiction to the appellate court; however, appeals under § 3731 are exceptions, allowing the district court to retain the authority to dismiss an indictment while an appeal regarding a pretrial order is ongoing. This retention of jurisdiction is deemed a necessary policy to balance the government's conditional right to appeal suppression orders against a defendant's right to a timely trial. The government can request the district court to stay proceedings pending appeal, and if denied, it may seek review from the appellate court.

In the current case, the focus is on whether the district court abused its discretion in dismissing the indictment with prejudice, rather than on the possibility of a dismissal without prejudice for unnecessary delay. Rule 48(b) permits dismissal for unnecessary delay, but such dismissals, especially with prejudice, require cautious exercise and prior warning to the prosecution. Although the district court provided the necessary warning before the dismissal, it did not adequately demonstrate caution, as evidenced by a precedent case (United States v. Loud Hawk) where a similar dismissal was reversed due to the necessity of delay in protecting the government's appeal rights. In that case, the dismissal was deemed an abuse of discretion because the suppressed evidence was critical to the prosecution's case.

The district court dismissed the indictment with prejudice due to the government's noncompliance with court orders, delay, and misuse of prosecutorial discretion. However, the only alleged violation was of a discovery order under Rule 16, which was found not to have occurred. The court ruled that the delay was justified as it was necessary for appealing a suppression order. The district judge mistakenly believed the government could have proceeded with the evidence it had before learning about the trash search, which was irrelevant to the necessity of the suppressed evidence being material to the case. The record did not support the dismissal with prejudice, as the government had the right to appeal. Consequently, the appellate court determined that the district judge abused his discretion in dismissing the indictment.

In dissent, Judge Schroeder argued that the prosecution failed to produce relevant documents that were within its control as per Rule 16(a)(1)(C). These documents, derived from a joint investigation involving state and federal authorities, should have been disclosed earlier, and the prosecution's negligence bordered on recklessness. He contended that the majority's decision encouraged delay and gamesmanship, undermining the prosecution's duty to act in good faith. The documents were critical to the case, and the dismissal with prejudice was justified due to the government's inability to proceed without them. Ultimately, he would affirm the district court's decision. The majority rejected the dissent's stance that the federal government could claim control over documents merely by knowing of their existence.