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In re Application of Dow Jones & Co.

decided: March 14, 1988.

IN RE APPLICATION OF DOW JONES & COMPANY, INC., THE NEW YORK TIMES COMPANY, CBS INC., NATIONAL BROADCASTING COMPANY, INC., NEW YORK NEWS INC., THE ASSOCIATED PRESS, AND NEWSDAY, INC., APPLICANTS, DOW JONES & COMPANY, INC., THE NEW YORK TIMES COMPANY, CBS INC., NATIONAL BROADCASTING COMPANY, INC., THE ASSOCIATED PRESS, AND NEWSDAY, INC., APPLICANTS-APPELLANTS; UNITED STATES OF AMERICA,
v.
STANLEY SIMON, MARIO BIAGGI, PETER NEGLIA, JOHN MARIOTTA, BERNARD EHRLICH, RICHARD BIAGGI AND RONALD BETSO, DEFENDANTS, STANLEY SIMON, PETER NEGLIA, JOHN MARIOTTA, BERNARD EHRLICH AND RICHARD BIAGGI, DEFENDANTS-APPELLEES



Appeal by Dow Jones & Company, Inc. et al. from an order restraining extrajudicial speech in the case of United States v. Simon, No. 87 Cr. 265 (S.D.N.Y. July 10, 1987) by prosecutors, defense counsel and defendants entered in the United States District Court for the Southern District of New York (Cannella, J.) on July 10, 1987 and a subsequent order entered on July 27, 1987 (Motley, J.) denying appellants' motion to vacate the July 10th order. Affirmed.

Cardamone, Winter and Miner Circuit Judges.

Author: Cardamone

CARDAMONE, Circuit Judge:

This is an appeal by news agencies from an order restraining trial participants in a criminal case from speaking with the press. Appellants urge that secrecy of the sort imposed by this "gag" order seriously compromises the right of the press to publish. In this case the district court was faced with what it described as a "shameful abuse of grand jury secrecy," which it concluded was reasonably likely to influence the outcome of defendants' trial. Because it is the obligation of the federal courts to ensure that a defendant receive a fair trial by an impartial jury, the district court entered the subject restraining order upon finding that this case is a "widely publicized or sensational" one within the meaning of Local Criminal Rule 7(c), which authorizes such an order when "extrajudicial statements by parties and witnesses" are likely to interfere with that right. We affirm.

BACKGROUND

Dow Jones & Company, The New York Times Company, CBS Inc., National Broadcasting Company, Inc., The Associated Press, and Newsday (collectively, "news agencies" or "appellants") appeal from the subject restraining order entered in the United States District Court for the Southern District of New York (Cannella, J.) on July 10, 1987, which denied their motion to vacate an earlier order entered in the district court on April 23, 1987, and from an order of the district court (Motley, J.) dated July 27, 1987 that denied a motion to vacate the July 10 order. The news agencies ask us to vacate the July 10 order that modified the April 23 order and reverse the decision under which the order was entered, United States v. Simon, No. 87 Cr. 265 (S.D.N.Y. July 10, 1987).

The Simon case stems from a wide-ranging investigation into the affairs of Wedtech, a South Bronx, New York military contractor that is charged with fraudulently qualifying for "no-bid" federal contracts set aside for minority-owned companies. The investigation led to the April 1, 1987 indictment of Stanley Simon, former Bronx Borough President, on six counts of extortion, obstruction of justice, perjury, and tax evasion. On June 3, 1987 a superseding indictment charged Simon and six additional defendants with violating the federal racketeering statute (RICO) based on their participation in bribery and other crimes committed in connection with Wedtech's activities. The six other defendants are Mario Biaggi, U.S. Congressman from the Bronx; his son, Richard Biaggi, a member of the Congressman's former law firm, Biaggi & Ehrlich; General Bernard Ehrlich, partner in that law firm; Peter Neglia, former New York Regional Director of the U.S. Small Business Administration; John Mariotta, co-founder of Wedtech, formerly its chief executive officer, chairman of its Board, and principal stockholder; and Ronald Betso, holder of an option to purchase 20,000 shares of Wedtech stock allegedly placed in Betso's name for defendant Neglia. Each defendant is accused of having benefitted financially from the criminal activities of Wedtech; Simon, Mario Biaggi, and Neglia are also charged with having misused their public offices on its behalf. All the defendants except Mario Biaggi and Betso are appellees on this appeal. In addition to state and federal investigations, two congressional committees are examining the affairs of individuals connected with Wedtech.

The record reflects a plethora of publicity concerning the Wedtech investigation since October 1986. From then until the April 1, 1987 indictment, articles appeared in all of the region's major newspapers detailing the joint federal-state investigation and the grand jury proceedings relating to Stanley Simon. Although the attribution to sources and the facts vary in their specificity, and perhaps accuracy, the net effect clearly translated secret grand jury proceedings into matters of public knowledge. In late May 1987, news articles again described in detail the targets, charges, negotiations, and timing of the superseding June 3 indictment. The news stories revealed what was being investigated, what the grand jury was hearing, what witnesses were being called or about to be called, and what they would say. This apparently accurate information was often ascribed to "law enforcement sources," "law enforcement officials," and "prosecutors."

In these and other flurries of publicity, the prosecutors, defendants, and defense counsel participated in the escalating publicity duels. As a result, on April 10, 1987--nine days after the original indictment was filed against Stanley Simon--his defense counsel orally proposed in open court before Judge Cannella that the parties agree to a "gag" order restraining extrajudicial speech by all trial participants. Simon's counsel asserted that media publicity resulting from state and federal prosecutors' violation of grand jury secrecy required a blanket order to insure that his client received a fair trial. At first the government concurred orally in the proposed stipulated order, but later in a letter addressed to the court stated that the prosecution opposed extension of Rule 7 of the Criminal Rules of the Southern District of New York (Local Rule 7), which limits out-of-court statements by prosecutors and defense attorneys.

On April 23, 1987 the district court nonetheless entered a broad restraining order directed to the prosecutors, defendants, and defense counsel. The news agencies were not named in the April 23 order, which remained in effect--apart from a court-approved press conference held on June 3, 1987 to announce the six additional indictments -- until entry of the July 10 order that is the subject of this appeal.

On June 12, 1987, at the news agencies' request, the district court heard oral arguments as to whether the broad April 23 order should be continued. Five defendants supported its continuance, two defendants (including Mario Biaggi) took no position, and the government and news agencies argued that it should be vacated. On July 10 the district court modified its April 23 order so that it provides

Ordered, that the United States Attorney and the District Attorney for Bronx County, their representatives and agents, defendants Stanley Simon, Mario Biaggi, John Mariotta, Peter Neglia, Bernard Ehrlich, Richard Biaggi and Ronald Betso, and their counsel and representatives SHALL NOT MAKE ANY extrajudicial statement concerning this case (1) to any person associated with a public communications media, or (2) that a reasonable person would expect to be communicated to a public communications media, except that nothing in this Order shall prohibit any individual from:

(A) Stating, without elaboration or characterization --

(1) the general nature of an allegation or defense;

(2) information contained in the public record;

(3) the scheduling or result of any step in the proceedings; or

(B) Explaining, without characterization, the contents or substance of any motion or step in the proceedings, to the extent such motion ...


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