Corporations defending criminal charges aren’t entitled to pretrial access to general, fact-based employee statements, a federal appeals court held on Monday.
Only binding statements — those related to the company’s allegedly criminal conduct — are available at the pretrial stage, since “any broader reading begins to afford organizational defendants greater rights than those afforded to individual defendants,” held the U.S. Court of Appeals for the Third Circuit.
The ruling, in U.S. v. Maury, 09-2305, affirms the conviction of Atlantic States Cast Iron Pipe Co. for environmental and worker-safety violations and declines its bid for a new trial.
According to the opinion, Atlantic, which produces ductile water and sewer pipes for municipalities at its Phillipsburg plant, allowed contaminated wastewater to overflow from retention tanks and pits onto the plant’s roadway, where it was carried by storm drains into the Delaware River, creating oil slicks.
Sometimes workers were directed to pump water into the roadway, rather than into hazardous-materials tanks as required, the opinion said. Officials allegedly concealed what they knew about the discharges.
Atlantic also burned waste paint in a furnace used to melt scrap metal to form the pipes, the opinion said. Incinerating waste paint was not permitted because it produces volatile organic compounds. The company tried to hide the drums holding the waste from officials investigating the wastewater discharges.
Around the same time, a series of work accidents occurred, including a fatal forklift accident. Another forklift accident resulted in a leg fracture, though the incident was not reported and the employee was forced to return to work immediately.
In addition, a worker lost three fingers in a plant cement mixer that had been modified to bypass an emergency shut-off switch. Another lost an eye when struck with the blade of a saw that did not contain a safety shield.
Officers allegedly forced employees, by threat of dismissal, to lie about equipment maintenance and working conditions, and to otherwise obstruct accident investigations.
A grand jury indictment in December 2003 charged Atlantic and its officers — plant manager John Prisque, maintenance superintendent Jeffrey Maury, human resources manager Scott Faubert and finishing superintendent Craig Davidson — with criminal offenses, including knowing violations of the federal Clean Water Act, Clean Air Act and Occupational Health and Safety Act.
Prosecutors sought a protective order allowing them to delay production of material normally discoverable under Federal Rule of Criminal Procedure 16(a)(1)(C).
That provision entitles corporate defendants to pretrial discovery of admissions by employees that are binding on the company either because of the employee’s authority position or because the employee was personally involved in the criminal conduct.
U.S. District Judge Mary Cooper agreed with the government’s concerns about protecting plant employees from workplace harassment and threats, and issued an order, finding there was good cause for withholding the evidence until 30 days before trial.
In August 2005, weeks before trial, prosecutors turned over the documents in accordance with Cooper’s order. Only statements connected to the alleged criminal conduct were included because other material is not covered by Rule 16(a)(1)(C).
Just before trial, the government provided the defendants with the full, unredacted witness statements, as required by the Jencks Act.
In April 2006, the jury found each defendant guilty of most of the offenses.
Cooper sentenced the officers to terms of incarceration ranging from six months to nearly six years, and the company to an $8 million fine and four years’ probation and monitoring.
The defendants demanded a new trial, claiming that Cooper misinterpreted the evidentiary rule and deprived them of important discovery.
The pretrial discovery should not have been limited because “[o]nce an employee participated in the misconduct, all statements given by that employee should have been disclosed, even if unrelated to the misconduct,” they claimed.
On Monday, Judge Julio Fuentes, joined by Circuit Judges Kent Jordan and D. Brooks Smith, affirmed, holding that only employee statements pertaining to the company’s alleged criminal conduct are discoverable before trial under Rule 16(a)(1)(C).
“In keeping with traditional notions of agency and vicarious liability, it is only in this context that the employee ‘speaks’ on the behalf of the Company as concerns the charged conduct against which the organizational defendant must defend itself,” Fuentes wrote.
An ordinary employee plays two parts, the panel said: a “situational agent of the Company” and “an average, run-of-the-mill fact witness.”
“The further a general employee’s statements diverge from admissions about having engaged in a form of conduct on behalf of the Company, the more they begin to resemble general, fact-based, witness statements,” which aren’t discoverable by individual defendants under Rule 16 until trial, the panel said.
Giving corporations access to non-Rule 16(a)(1)(C) material before trial “would grant organizational defendants a windfall,” Fuentes wrote, noting that such material is produced at trial for purposes of witness impeachment.
The court knew of no circuit court opinion that dealt with the precise scope of discovery available under the provision.
“This dearth in law alone makes it particularly challenging for the Defendants to prove that the discovery they received was plainly erroneous,” Fuentes said.
The court also rejected the individual defendants’ attempts to reverse the conviction based on insufficient evidence and other alleged faults.
Assistant U.S. Attorney Glenn Moramarco of the office’s Appellate Division argued for the government. He did not return a call. Neither did John O’Reilly of Day Pitney in Parsippany, who argued for Atlantic.
David Gialanella is a reporter for the New Jersey Law Journal, a Legal affiliate.