Opinion
1:02M137
October 15, 2002
ORDER
On September 4, 2002, this Court issued a search warrant for premises owned by the L.S. Starrett Company ("Starrett") in Mt. Airy. North Carolina. The warrant was executed on September 5, 2002 by agents of the United States Department of Defense. One hundred thirty-nine items were seized. The agents made a return of the warrant with an inventory on October 3, 2002.
Prior to the filing of the return, and on October 1, 2002, the government submitted a motion to be considered by the Court at the time the warrant was returned. It proposed the entry of an order to partially seal the search warrant affidavit in this case. On that same date, Starrett filed an "Emergency Motion of the L.S. Starrett Company to Maintain Sealed Status of Search Warrant Materials and Request for Hearing." This motion requested that the search warrant, the application and affidavit, and the inventory return be maintained under seal until further order of the Court. The company asked that it be allowed to present this motion through an in camera hearing wherein the public would be excluded.
The Court entered an order on October 1, 2002 concerning both the government's and Starrett's submissions. That order outlines this Court's search warrant procedures instituted to comply with Baltimore Sun Company v. Goetz, 886 F.2d 60 (4th Cir. 1989). The procedures require the public filing of any motion to seal search warrants. However, it permits a supplemental filing wherein confidential information may be relayed to the Court under seal in support of, the request to seal search warrant materials. The government's submissions complied with this procedure, but Starrett's motion did not because it requested that its entire motion be filed under seal.
The October 1, 2002 order treated Starrett's motion as a request to intervene. However, it struck the motion and brief for being in non-compliance with this Court's procedure, but allowed Starrett to make a new request. In so doing, the Court necessarily denied Starrett's request that this entire matter be handled in camera. The Court further set dates for intervention by other parties and for briefing and hearing on the government's or any other party's motion.
The Parties' Contentions
The New York Times Company ("the Times") timely filed a motion to intervene. It indicates that, through affiliates, it publishes the Telegram Gazette, which is a daily newspaper of general circulation in Worcester, Massachusetts. The circulation area of that paper includes the community of Athol, where the L.S. Starrett Company is headquartered.
The Times contends that the search of Starrett is a significantly newsworthy item both nationally and locally to the communities of Athol, Massachusetts, and Mt. Airy, North Carolina. In its motion to intervene and in its brief, the Times shows that the Telegram Gazette has been covering a story also released by the Wall Street Journal concerning the L.S. Starrett Company and its alleged violation of the False Claims Act, 31 U.S.C. § 3729-3733. These news articles, which are attached to the motion to intervene, state that the government has been investigating Starrett concerning its coordinate measuring machines which are used to check tolerances of manufactured parts. According to the articles, Richard Parks, a former technician employed by Starrett, filed a civil lawsuit under seal in the Massachusetts federal court based on the False Claims Act. Such filing is otherwise known as a qui tam action. The news articles allege that an investigation is proceeding to determine whether Starrett sold substandard equipment to the government.
The Times argues that the public has a right to "timely, accurate, unbiased and thorough information about the company." (Br. at 3) This is important, it states, not only for employees and retirees of the company who need to know information concerning the financial condition of the company, but also for members of the Athol community of which Starrett is the major employer and community contributor. Furthermore, it is contended that the news is important to the national investment community.
The Times agrees that this Court is bound by the holding of theBaltimore Sun case. It states that to the extent the government's motion to partially seal the affidavit rests on protecting the identity of confidential sources of law enforcement and the need to protect an ongoing investigation, it does not object to the partial sealing of the search warrant affidavit. However, it objects to the sealing of any other part of the search warrant papers and, in particular, the more comprehensive sealing sought by Starrett, which will be discussed next.
In compliance with the Court's order, Starrett filed a motion to intervene and an amended motion to seal. It still wishes to seal the entire search warrant, the search warrant application and affidavit, and the return inventory. Sealing is allegedly necessary to protect the privacy and reputation interests of the company and any employee mentioned in the search warrant papers. It asserts standing both for itself and on behalf of its employees.
Starrett was founded in 1880 and manufactures over 5,000 industrial, professional, and consumer products. It is the only remaining full-line precision tool company which manufactures its tools in the United States, and has a reputation in the industry for quality instruments. It employs over 2,300 workers, of which 250 people are employed in Mt. Airy. The company's employees, former employees, directors, and retirees own over forty percent (40%) of the stock. It is listed on the New York Stock Exchange. One week after the search, The Wall Street Journal ran the article concerning the allegations. The stock price tumbled twenty-seven percent (27%), representing $31.8 million in lost shareholder value. Starrett worries that additional information about the investigation or release of confidential business information could further harm the share price and adversely affect its business and the jobs of its employees.
The Hearing
On October 9, 2002, a hearing was held on this matter. At that time, the Court conducted an in camera inspection of the government's request for sealing, took additional oral evidence under seal, and made a determination. The government was ordered to file the Court approved redacted version of the affidavit on or before October 11, 2002. All matters not redacted were to be unsealed, unless Starrett prevails on its motion, a matter to which the Court now turns.
Relying on Baltimore Sun, the Court approved the Times' right to appear and intervene in this case. The Court further determined that the L.S. Starrett Company, whose property was the subject of the search warrant, had standing to intervene to represent its interest. Starrett originally argued that it had a right to represent the interests of employees who might be named in the affidavit, whether they be potential targets or innocent third parties not connected with the investigation. However, the issue was mooted because all parties at the hearing agreed that this Court had the discretion under Baltimore Sun to consider the privacy and reputation rights of persons mentioned in a search warrant affidavit, even though those persons have not made an appearance or intervened in this action.
See Matter of Search of 1993 Jeep Grand Cherokee, 958 F. Supp. 205, 208 n. 7 (D. Del. 1996), relying on, Nixon v. Warner communications. Inc., 435 U.S. 589, 599 n. 11, 98 S.Ct. 1306, 55 L.Ed.2d 570 (1978).
At the hearing, Starrett again made a motion for an in camera hearing, which the court denied.
Neither Starrett nor the Times contest this Court's order granting the government's motion to redact matters from the search warrant affidavit to protect information sources and "the confidentiality of sensitive aspects" of the government's investigation. The dispute between Starrett and the Times appears to center on what standard the Court should employ in deciding whether to redact allegations and names from the search warrant papers in order to protect against invasion of privacy, damage to reputation, and economic harm.
Discussion
All parties agree that this Court's decision is governed by theBaltimore Sun case. In Baltimore Sun, the Fourth Circuit decided that due to the nature of search warrants, they were not governed by the First Amendment right of access to government documents, but rather by the common law qualified right of access, relying on, Nixon v. Warner Communications, Inc., 435 U.S. 589, 98 S.Ct. 1306, 55 L.Ed.2d 570 (1978). The decision to seal is a discretionary one to be made by the judicial officer issuing the warrant, but requires specific findings to be made with respect to the decision. The standard to be employed is that:
The circuits are split concerning whether search warrants are subject to a First Amendment right of public access or a common law qualified right of access. United States v. Cianci, 175 F. Supp.2d 194, 200 (D.R.I. 2001) (collecting cases); Matter of Flower Aviation of Kansas, Inc., 789 F. Supp. 366, 367-68 (D. Kan. 1992) (collecting cases).
The judicial officer may deny access when sealing is "essential to preserve higher values and is narrowly tailored to serve that interest." Press-Enterprise I, 464 U.S. at 510, 104 S.Ct. at 824; Washington Post, 807 F.2d at 390. In that event, the judicial officer must consider alternatives to sealing the documents. (citations omitted)886 F.2d at 65-66.
In Baltimore Sun, the court identified two reasons for sealing warrant papers to be the protection of (1) the identity of informers, and (2) the ability of the government to continue with confidential investigations. These two bases for sealing by the government have been widely accepted by other courts. Matter of Eye Care Physicians of America, 100 F.3d 514, 518 (7th Cir. 1996); Matter of Flower Aviation of Kansas, Inc., 789 F. Supp. 366 (D. Kan. 1992); In re Search Warrant for Secretarial Area Outside Office of Gunn, 855 F.2d 569 (8th Cir. 1988). No party here disputes that these two factors can justify sealing.
In addition, Starrett raises the possibility that there may be a pending qui tam action which has been filed under seal in the District of Massachusetts. It argues that if there is one, this Court should consider this factor as well in exercising its discretion. Starrett argues that if the government obtained information from the sealed qui tam action and used that to obtain a search warrant, the Court should preserve the confidentiality of that information, at least until such time as the qui tam action is unsealed. At the hearing, the government stated that it could not either confirm or deny whether a qui tam action was, in fact, pending in the District of Massachusetts. However, if one were, the government would join in Starrett's contention that information obtained from the qui tam action, if used in a search warrant affidavit, should remain under seal, at least until the qui tam action is unsealed.
The Court agrees with Starrett and the government that to the extent that specific information in the affidavit comes solely from the qui tam action, as opposed to independent sources, then this constitutes an additional ground for redacting the affidavit until such time as the qui tam action is unsealed. Because the Court, like the government, will neither confirm nor deny whether a qui tam action is pending, the Court must make its ruling based on the suggested hypothetical situation. Given that a party has raised the issue that there may be a qui tam action pending, the Court announces that if there, in fact, is a pending qui tam action, then the Court will order redaction of such material coming from the qui tam action until the time said qui tam action is unsealed.
Starrett also requests that the Court redact any mention of its employees from all search warrant papers. It says employees are named in the search warrant and the inventory. Because Starrett has not seen the affidavit, it can only surmise that individuals are mentioned there. Starrett urges that the Court remove the names of such individuals from any unredacted papers. In addition, it asks the Court to seal the entire search warrant, application, and return based on the assertion that any allegation of fraud against Starrett or its employees has not been proven nor have any charges been brought. Because of the unique nature of the search warrant process wherein allegations can be made in the absence of filing criminal charges, Starrett argues that neither it nor its employees can defend themselves against such allegations and, therefore, the entire proceeding should be kept under seal until such time, if ever, charges are actually filed. Starrett argues sealing is necessary to protect privacy interests and reputation, and to prevent economic harm to itself, its employees' jobs, and any named employee. Baltimore Sun does not speak to the issue of whether a search warrant affidavit may remain sealed to protect privacy interests of individuals or corporations. Other courts have balanced privacy interests against the common law right of access to government documents, although not all cases have concerned search warrants. Some courts have relied on the Supreme Court's decision in Warner Communications, 435 U.S. at 598, which recognized the inherent supervisory authority of a court to override the common law right of access to documents in order to protect against misuse of court records, such as to gratify spite, promote public scandal, for use as a vehicle of libel, or to disclose confidential business information. See United States v. Smith, 776 F.2d 1104 (3d Cir. 1985); United States v. Criden, 681 F.2d 919 (3d Cir. 1982) (Criden III); United States v. Criden, 648 F.2d 814 (3d Cir. 1981) (Criden I);Matter of Search of 1993 Jeep Grand Cherokee, 958 F. Supp. 205, 208, 210 (D. Del. 1996). Other courts have apparently concluded that there is a general right of privacy which operates in counter-position to the common law right of access to public documents. See In re Macon Telegraph Publishing Company, 900 F. Supp. 489, 492-93 (M.D. Ga. 1995); Matter of Flower Aviation, 789 F. Supp. at 368; In re Search Warrant for 2934 Anderson Morris Road, Niles. Ohio, 48 F. Supp.2d 1082 (N.D. Ohio 1999). These courts arguably would extend greater protection to reputation and privacy interests than those courts which limit the privacy or reputation interest to the exercise of the court's inherent supervisory power as expressed in Warner Communications.
There may be an issue of whether a corporation has the same privacy and reputation rights as those of an individual. No party has cited case law on this issue. It is worth noting that in the case of a publicly traded corporation like Starrett, there is arguably a greater need for some members of the public, such as current and potential future investors, to have open access to information which might color their investment decisions. Perhaps a publicly held corporation would have to make an even greater showing than a private individual in order to obtain an order sealing a warrant and affidavit. The Times argues it is in the best interest of Starrett to be as open as possible. As will be seen, the court need not make a final decision on the matter because, to the extent the court would consider Starrett's reputation interests, those interests would fail to support sealing for the same reasons that the individual interests present in this case fall short.
In support of a general privacy right, Starrett claims that the court should be guided by analogous privacy concerns such as (1) the prohibition of disclosure of materials occurring before a grand jury, Fed.R.Crim. 6(e)(f)(2), citing, Douglas Oil Co. of California v. Petrol Stops Northwest, 441 U.S. 211, 219, 99 S.Ct. 1667, 60 L.Ed.2d 156 (1979); (2) the privacy concerns with respect to Title III electronic surveillance investigations, citing, United States Attorney's Manual § 9-7.250, relying on 18 U.S.C. § 2518 (8)(b); and (3) the Freedom of Information Act's ("FOIA") exemption from disclosure of agency records on grounds of invasion of personal privacy, citing, 5 U.S.C. § 552(b)(7)(c); United States Dept. of Justice v. Reporters committee For Freedom of Press, 489 U.S. 749, 767, 109 S.Ct. 1468, 103 L.Ed.2d 774 (1989)
While it is true that privacy is recognized as an important concern in these situations, it is the presence of formal guidance in those areas and the absence of such guidance for search warrants that is most notable. To the extent that any privacy implications have been deemed sufficiently important in grand jury proceedings, wire tap situations, and FOIA settings, they apparently have been codified. This is not true in the case of search warrants and the affidavits supporting them. The lack of a statute or rule commanding consideration of privacy when issuing search warrants actually suggests that privacy should receive, if not lesser, then at least narrower, treatment in the search warrant arena. This narrower treatment will be discussed in more detail later in this opinion.
This Court finds that reputation and privacy interests of potential targets or innocent third parties named in search warrants must be tied to misuse or potential misuse of the court documents, as opposed to a general and independent privacy or reputation right. The power to protect privacy interests arises out of the Court's inherent supervisory authority to protect court proceedings. Warner Communications, 435 U.S. at 598. The focus is not on the individual, but on the process. In the case of a search warrant, the government initiates court action. The Court then has inherent power to supervise the government's filings for intentional or accidental overreaching. The Court does not examine a warrant to determine whether it invades a named individual's privacy. It examines it to determine whether there is probable cause to issue a warrant. Only as an adjunct to that action should the Court look to see whether the government's application strays too widely from what is necessary to establish probable cause.
Those courts, which would recognize a more general right of privacy, raise the concern that at times innocent individuals are named in search warrant papers, along with potential targets of criminal prosecution who have not been charged. Because search warrants are often issued prior to any charging document, these individuals may find it difficult to protect themselves from baseless allegations or hyperbole. See Macon Telegraph, 900 F. Supp. at 492-93. Therefore, they arguably deserve protection through the sealing of the search warrant affidavit or the redacting of names.
Recognizing an independent privacy right for individuals to seal search warrant papers would have major consequences. Such an approach would likely lead to the routine sealing of all search warrants and affidavits. See United States v. Smith, 776 F.2d at 1115 (Mansmann, J., concurring) (similar issue with respect to Bill of Particulars). On the other hand, if the Court were charged with evaluating the privacy interest of every individual mentioned in a search warrant, it would be overwhelmed, and be put in the impossible situation of trying to gauge unknown individuals' privacy and reputation interests. Such an impossible process would, it seems, lead to, or give the appearance of, arbitrary and capricious decision-making and reduce, rather than enhance, the confidence of the public in court decisions.
Recognition of an independent and generalized right to privacy would also appear to swallow the common law right of access to search warrant papers. Yet, the Fourth Circuit's decision in Matter of Application and Affidavit for a Search Warrant, 923 F.2d 324 (4th Cir.), cert. denied sub nom, Hughes v. Washington Post Company, 500 U.S. 944, 111 S.Ct. 2243, 114 L.Ed.2d 484 (1991), makes quite clear the major importance which the common law right plays in a free society. In that case, the intervenor was an individual who wished to keep federal search warrant materials sealed in order to protect his right to a fair trial in state court. The Sixth Amendment's guarantee of a fair trial would seem at least as important as a generalized right of privacy and reputation with respect to potential targets of a criminal investigation, or innocent third parties.
The Fourth Circuit cited Warner Communications, 435 U.S. at 597-98, as recognizing that the common law right of public access served the important functions of allowing citizens to keep a watchful eye on the workings of public agencies and to obtain information on the operation of the government. It also found t at public awareness concerning how the criminal justice system functions serves the important interest of informing the public that the law is being enforced, along with informing it of the methods and techniques for investigation used on the public. Such information is equally important with respect to search warrants as it is for trials. Searches pursuant to warrants are conducted without public notice wherein compelled or forced entry is made onto premises by armed agents and property or persons seized. Such strong-arm actions will appear chilling to some and could, not unreasonably, be expected to be the cause for public anxiety, at least in some instances. Such anxiety can be best abated by the release of information showing that the actions are authorized and justified.
The Fourth Circuit further emphasized that the common law presumption was in favor of access, Id. at 329, and that delay in unsealing threatens the value of openness which is a highly prized freedom, Id. at 331. Finally, the circuit held that a court's decision must weigh all the interests, but is not dependent on the agreement of the proceedings' participants, which means that a court has an independent duty to protect the common law right of access to judicial documents. These concerns represent institutional values for the benefit of all; values which necessarily may impinge on any one individual's reputation or desire for privacy.
In summation, this Court rejects those holdings which would suggest that in making a decision to seal search warrant documents, a court may rely on an independent, general right of privacy for potential targets or innocent third parties named in the documents. Rather, the Court determines that there is a presumption of public access to search warrant documents and, in conjunction with that right, the Court may only exercise its supervisory power to prevent misuse of court documents.
Parties, such as Starrett, who wish to prompt the court to exercise its supervisory authority in a certain manner must make a solid and particularized showing of misuse or potential misuse of court papers beyond the privacy and reputation concerns arising from being named and discussed in a search warrant.
Some guidance for use of the supervisory power can be gleaned from decisions where courts have exercised it, even if not in the search warrant situation. The Third Circuit, in a series of decisions involving release of evidence video and audio tapes used in a trial, confronted the issue of privacy and reputation rights in the face of the common law right of access to the court documents. Criden I and Criden II, supra. It decided that the common law right of access could only be overcome by what amounted to a showing of a level of intensified pain beyond mere unflattering or false comments. United States v. Criden, 681 F.2d at 922. Judge Weis, in a concurring and dissenting opinion, would have further excluded braggadocio comments about alleged acquaintanceships and ability to influence individuals, comments bordering on being libelous, and ridicule with respect to integrity and intelligence. He would have done so because these comments appeared to be gratuitous and irrelevant to the case and caused unnecessary embarrassment. Later in United States v. Smith, 776 F.2d 1104, the Third Circuit redacted the names of unindicted co-conspirators from a Bill of Particulars, even while employing the First Amendment right of access test. Judge Mansmann concurred, finding that the government itself may have been responsible for the potential harm because it intentionally filed an extremely broad Bill of Particulars without limiting it to those individuals for whom it had sufficient evidence to make the allegations.
In United States v. Cianci, 175 F. Supp.2d 194 (D.R.I. 2001), the court restricted access to a search warrant affidavit, after indictment, based on the Sixth Amendment right to a fair trial. Even though the court did not rely on its supervisory power, the ruling is instructive for the present case. There, the court found the affidavit to be unusually prejudicial for a number of reasons. First, many statements had little bearing on probable cause. Additionally, many more statements were attributed to third parties and anonymous sources than were found in the typical search warrant affidavit. Third, the affidavit was written in a uniquely inflammatory story book format. Finally, many statements contained unsubstantiated, derogatory remarks about uncharged individuals which even the government conceded should not be made public. These are the kinds of concerns to which a court should be attentive in determining whether the government has intentionally or accidentally created a document which is rife for misuse.
Misuse does not arise from merely being named in a search warrant, even as a target of the investigation. For example, the court in Matter of Search of 1993 Jeep Grand Cherokee, 958 F. Supp. at 211, unsealed a search warrant even though it contained information about a potential target's personal life. The court found the information was not of such an intimate nature so as to justify access restrictions because it was relevant to the search request and not gratuitously invasive.
From the above discussed cases, the Court determines that it has a right under its supervisory powers to recognize privacy and reputation concerns of individuals and to protect confidential business information. The test, however, is a stringent one which looks first to the legitimacy of the information in connection with the government's application and then the potential for the information to be misused. Consequently, and for purposes of exercising its supervisory powers, as opposed to other grounds for sealing, the mere mention of an individual's name or activities in a search warrant will not justify redaction of the name, identifying information, or allegations. Rather, there must be a showing that the information in the search warrant has marginal relevance and will be extremely and unnecessarily embarrassing or harmful because of, for example, gratuitous demeaning, inflammatory, and unsubstantiated comments not truly needed for a probable cause determination.
The Court has examined the search warrant papers and finds that they do not meet this standard to justify further redaction. First, with respect to the search warrant itself, the mere fact that it identifies certain crimes as the basis for the warrant cannot serve as grounds for redaction. All search warrants must contain such an item. While it is true that the search warrant does not serve as a charging document, the assertion of criminal activity by itself does not constitute unnecessary and unduly harmful or embarrassing information. Likewise, the mention of names or whose office was searched does not meet the above standard. The same is true for the names in the inventory. In all of these instances, any names which are mentioned do not tie that individual as being a potential target, participant, or innocent third party and, more importantly, are necessary for the search warrant process. Therefore, there can be little cognizable harm to reputation or privacy interests.
With respect to the search warrant application affidavit, this may well set out actions of and/or statements by named individuals. Some readers may believe that the named individuals merely have information relevant to the investigation. Others may conclude that the individuals may be a potential target of a criminal investigation. There may be embarrassment to named individuals and the possibility of more drastic consequences to careers. See, for example, Certain Interested Individuals v. Pulitzer Pub. Co., 895 F.2d 460, 476 (8th 1990), cert. denied, 498 U.S. 880, 111 S.Ct. 214, 112 L.Ed.2d 173 (1990). With respect to the Starrett Company, there may be adverse affects to its business, jobs, and stock.
The Court is not unmindful of the actual painful effects of these consequences and the fact that the allegations come at a time when Starrett and named individuals do not have a court venue to rebut any allegations. Nevertheless, the Court determines that the common law right of access does not permit the Court to exercise its supervisory authority in a fashion to freely redact identifying information and allegations about individuals or the company from the search warrant affidavit. There must be evidence of potential misuse.
It should be pointed out that the predicament in which Starrett and its employees find themselves is not entirely unique to the search warrant situation. In this court's experience, when a complaint is issued, the agents often will take a search warrant affidavit and add to it the information gleaned from the search. These and other complaint affidavits often contain the names of individuals who are not charged in the complaint and innocent third parties. These parties, likewise, do not have a court venue open to them for rebuttal purposes. Were Starrett's motion to be granted with respect to search warrants, this opens up the possibility that complaint affidavits would also have to be scrutinized.
The Court has reviewed the search warrant and finds that all statements are sufficiently relevant to the probable cause finding and are not based on grossly abusive, inflammatory, conclusory, or unsubstantiated evidence so that the Court should exercise its supervisory powers to redact the information. The important public interest in access to the search warrant process overrides the privacy and reputation rights of Starrett and its employees. Therefore, the motion of L.S. Starrett Company to seal the entire search warrant, application and affidavit, and inventory will be denied.
The court has examined the search warrant papers and has not found any confidential business information. The court determines that it has the discretion to permit Starrett to view the redacted affidavit to aid the court in making this determination, but finds such help unnecessary.
IT IS THEREFORE ORDERED that the motions of the L.S. Starrett Company and the New York Times Company (docket nos. 11 and 9) to intervene be, and the same hereby are, granted.
IT IS FURTHER ORDERED that the motion of the L.S. Starrett Company made in open court to hold an in camera hearing to decide its motion is denied.
IT IS FURTHER ORDERED that the motion of the United States (docket no. 1) to redact only certain portions of the search warrant affidavit is granted, and the search warrant, the search return inventory, and the redacted search warrant application filed by the United States on October 11, 2002 are all unsealed. The unredacted search warrant application and affidavit is sealed until further order of the Court. The government shall keep the Court apprised as to events which serve as cause for further unsealing.
IT IS FURTHER ORDERED that the motion of the L.S. Starrett Company to seal the entire search warrant, and search warrant application, affidavit, return and inventory (docket no. 11) is denied, and Starrett's further motion for additional sealing beyond that granted to the government is likewise denied.
IT IS FURTHER ORDERED that this order is stayed for five business days for the parties to file an appeal or objections. Any appeal or objection to a United States District Judge must be filed within three business days from the date of this order.