The claim of L. Dennis Kozlowski and Mark Swartz that they should have had access to a law firm’s internal investigation into fraud at Tyco International has been rejected by a federal appeals court.
The U.S. Court of Appeals for the Second Circuit turned aside the plea of Kozlowski and Swartz that they were entitled to materials prepared by Boies, Schiller & Flexner in advance of their second trial for stealing $100 million from Tyco.
The materials were interviews with members of Tyco’s board of directors that included questions about whether or not the board approved bonuses to Kozlowski and Swartz.
Onetime CEO Koslowski and Swartz, the company’s former CFO, claimed they could have used the interviews as impeachment material against board members who testified at their trial that ended in their convictions in 2005.
Following a mistrial in 2004, Manhattan Supreme Court Justice Michael Obus (See Profile) quashed their subpoena for the Boies interviews, holding that the documents constituted trial preparation materials.
The two men were then convicted at a second trial before Obus on 12 counts of first-degree grand larceny, eight counts of first-degree falsifying business records, fourth degree-conspiracy and violating the Martin Act.
Both Kozlowski and Swartz were sentenced to serve 8 1/2 to 25 years in prison. They are now serving part of their sentences on work release.
Kozlowski and Swartz claimed the Obus decision on the subpoena denied them of a fair trial, but their convictions were affirmed by the Appellate Division, First Department, and the New York Court of Appeals.
The New York high court, in People v. Kozlowski, 11 N.Y.3d 223 (2008), enforced the contemporaneous objection rule requiring a party to object to a perceived legal error in a decision or instruction at the time the error is made and that Kozlowski and Swartz did not invoke a constitutional argument in seeking the enforcement of the subpoena before the trial judge.
Still claiming they were denied a fair trial, the two men filed petitions for writs of habeas corpus.
Yesterday, the circuit affirmed Holwell by summary order in Kozlowski v. Hulihan, 12-0764-pr, and Swartz v. Annetts, 12-0776-pr, with Judges Jose Cabranes (See Profile), Richard Wesley (See Profile) and Jesse Furman (See Profile), sitting by designation from the Southern District, deciding the appeal.
The circuit examined the contemporaneous objection rule as an "independent and adequate state ground" that would bar federal habeas relief.
Kozlowski and Swartz had argued that federal habeas relief was allowed in their case because the New York Court of Appeals, in discussing third-party subpoena rules, "interwove" federal law with its analysis of their state law claims.
The circuit disagreed, saying "the state-law ground that forecloses their federal habeas claims is not the Court of Appeals’ decision on its third-party subpoena rules."
"Rather, it is the Court of Appeals’ application of the contemporaneous objection rule," the circuit said. "Hence, as the District Court pointed out, the real question here is whether the Court of Appeals’ finding of procedural default under the contemporaneous objection rule implicated federal law."
"On this issue," the circuit said, "there is no doubt—the Court of Appeals relied on no federal law in finding that Kozlowski and Swartz had failed to contemporaneously assert a constitutional claim. Indeed, the Court of Appeals stated plainly that it was not addressing any constitutional claim because Kozlowski and Swartz ‘did not raise a constitutional argument in support of their subpoena below.’"
The circuit went on to find that the appeal failed to show this was an exceptional case that would excuse the bar on habeas relief because the pair failed to present any evidence that the New York Court of Appeals had made an "exorbitant" application of a "generally sound rule."
"The very purpose of the contemporaneous objection rule is to permit the parties to submit relevant arguments and for the trial court to make an informed decision at the time," the court said. "Inasmuch as the trial court had no opportunity to consider the constitutional claim, we are not now in a position to opine on what that court might have done in the hypothetical circumstance that petitioners had advanced their constitutional argument."
Assistant District Attorney Amyjane Rettew argued for the state.
Nathanial Marmur of Stillman & Friedman argued for Swartz.
"We’re disappointed. We never got to look at key impeachable materials in the case," Marmur said. "These were interviews with directors and the New York Court of Appeals said it was reasonably likely that they [the directors] said something different to the lawyers regarding bonuses."
Alan Lewis of Carter Ledyard & Milburn argued for Kozlowski.
"We respectfully disagree with the decision and are considering the various avenues available for further review," Lewis said in a statement. "While any litigant is naturally disappointed when the result of a case is not what he seeks, we are most disappointed by the Court’s summary rejection of Mr. Kozlowski’s most important arguments without full explanation or trenchant analysis."
@|Mark Hamblett can be contacted at email@example.com.