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PENGUIN BOOKS USA INC. v. WALSH

January 31, 1991

PENGUIN BOOKS USA INC. AND JEFFREY R. TOOBIN, PLAINTIFFS,
v.
LAWRENCE E. WALSH, INDEPENDENT COUNSEL, AND OFFICE OF INDEPENDENT COUNSEL, DEFENDANTS.



The opinion of the court was delivered by: Keenan, District Judge:

FINDINGS OF FACT and CONCLUSIONS OF LAW

This action was instituted by plaintiff's Penguin Books USA Inc. ("Penguin") and Jeffrey R. Toobin ("Toobin"), seeking certain equitable relief concerning the proposed publication of a book entitled Opening Arguments: A Young Lawyers First Case — United States v. Oliver North ("Opening Arguments"). Opening Arguments, authored by Toobin, is scheduled to be published by Penguin. The book is based on Toobin's experiences as an Associate Counsel with defendant Office of Independent Counsel ("OIC") in connection with his work on the investigation into, and prosecutions relating to, the Iran-Contra affair. Defendant Lawrence E. Walsh ("Walsh" or "Judge Walsh") is named in his capacity as Independent Counsel.

In Count I of the Complaint plaintiffs seek a permanent injunction barring defendants "from taking any further action to prevent, delay, hinder or otherwise interfere with" plaintiffs' "exercise of their First Amendment rights to publish Opening Arguments." (Complaint ¶ 37). Count II of the Complaint seeks a declaratory judgment that publication of Opening Arguments would not subject either Penguin or Toobin to liability for violation of Rule 6(e) of the Federal Rules of Criminal Procedure. (Complaint ¶ 40). Count III of the Complaint seeks a declaratory judgment that publication of Opening Arguments will not violate any contractual or fiduciary duty owed by Toobin to defendants and will not give rise to a cause of action against Toobin for a constructive trust on his revenues from publication. (Complaint ¶ 46).

Defendants' Answer asserts four "affirmative defenses" to the Complaint. (Answer ¶¶ 47-50). The first defense is that the Complaint fails to state a claim upon which relief can be granted. (Answer ¶ 47). The second defense is improper venue. (Answer ¶ 48). The third defense is that the District of Columbia District Court has jurisdiction over Rule 6(e) issues presented by Count II of the Complaint. (Answer ¶ 49). This third defense was rejected by this Court's Order of December 26, 1990. Defendants' fourth defense is that

    "The relief demanded by plaintiffs is barred by
  plaintiffs' inequitable conduct, including laches,
  unclean hands, and prior dissemination of Toobin's
  manuscript without seeking any judicial declaration as
  to their legal right to do so, as well as Toobin's
  retention of materials containing confidential
  information relating to the work of the OIC when he
  left the OIC." (Answer ¶ 50).

Additionally, defendants assert two counterclaims: First, that "defendants are entitled to a declaration that certain portions of Toobin's manuscript are covered by Rule 6(e)" (Answer ¶ 52); and second, that they "are entitled to a declaration that under Disciplinary Rule 4-101 of the Code of Professional Responsibility, 5 C.F.R. § 735.206, 28 C.F.R. § 45.735-12 (b) and (c), and Toobin's contractual and fiduciary duties to the OIC, Toobin does not have a legal right to disseminate non-public information relating to the work of the OIC without the consent of the OIC." (Answer ¶ 54).

Jurisdiction is proper in this Court, the Court having subject matter jurisdiction of the action pursuant to 28 U.S.C. § 1331. Declaratory relief is authorized by 28 U.S.C. § 2201 and 2202.

Findings of Fact

A trial was held before the Court on January 3, 1991. Many of the facts were stipulated to by the parties. The only witness at trial was plaintiff Toobin, who was employed as an Associate Counsel at the OIC from January 31, 1987 to May 4, 1989. (Stip. ¶¶ 8, 9*fn*). Toobin presently is employed as an Assistant United States Attorney in the Eastern District of New York.

During his employment at the OIC, Toobin collected thousands of pages of materials relating to the work of the OIC which he retained when he left the employ of the OIC. (Stip. ¶ 19). Among other things, Toobin collected and took with him 22 spiral-bound notebooks comprising approximately 2,176 pages. These contained notes taken during internal OIC meetings, records of internal OIC discussions, and other matters relating to the work of the OIC. (Stip. ¶¶ 20, 21). In addition to these notebooks, Toobin took with him some 64 pages of handwritten notes relating to the work of the OIC (see Stip. ¶ 23). Included in the notebooks and notes were textual materials typed by Toobin on OIC word processors. (Stip. ¶ 25). Toobin also took with him thousands of pages of other documents, including notes written by Independent Counsel Walsh; documents dealing with possible criminal charges; and documents revealing investigation results and plans. (Stip. ¶¶ 26-29). He made use of these materials in writing Opening Arguments.

During his employment with the OIC, Toobin signed certain non-disclosure agreements. On March 10, 1987, he signed a "CIA Addendum to Nondisclosure Agreements," pursuant to which he agreed to "submit to CIA for security review all materials, including works of fiction, that contain any mention of CIA intelligence data, activities, or subjects to which [he is] given access, that [he] contemplate[s] disclosing publicly or that [he has] prepared for public disclosure . . . ." (Stip. Exh. 2). The purpose of the CIA review was to "give the CIA an opportunity to determine whether the information or materials [he] contemplate[s] disclosing publicly contain any classified or classifiable information." (Id.). On March 11, 1987, Toobin signed a "Classified Information Nondisclosure Agreement (Industrial/Commercial/Non-Government)" pursuant to which he "acknowledge[d] that [he had] received a security indoctrination concerning the nature and protection of classified information, including the procedures to be followed in ascertaining whether other persons to whom [he] contemplate[s] disclosing this information have been approved for access to it, and that [he] understand[s] these procedures." (Stip. Exh. 3 at ¶ 4). Also on March 11, 1987, Toobin signed a "Sensitive Compartmented Information Nondisclosure Agreement" pursuant to which he agreed "to submit for security review by the Department or Agency that last authorized [his] access to such information" any information related to or derived from Sensitive Compartmented Information which he intended to disclose. (Stip. Exh. 4 at ¶ 4). On May 4, 1989, the day Toobin left the employ of the OIC, he signed three additional agreements. The first is a "Non-Disclosure Agreement" which states as follows:

    The OIC requires each individual granted access to
    the following categories of material to enter into a
    nondisclosure agreement:
    Investigative material compiled by this office which
    relates directly/indirectly to this investigation
    and its sources, both U.S. and foreign.
    Grand Jury material. Rule 6(e) of the Federal Rules
    of Criminal Procedure — An obligation of
    Secrecy for material provided to the Grand Jury
    concerning this investigation, to include exhibits,
    whether on tape, paper, or original form.
    Central Intelligence classified material —
    Materials containing mention of CIA intelligence
    data, activities, or subjects. [Will be submitted
    for review prior to release. Written approval from
    the CIA is required for its release.]
  Individuals granted access to any information in the
  above defined categories are not authorized to
  discuss, provide, or in any manner divulge said
  information to anyone outside this office without the
  written approval of the Independent Counsel or his
  duly designated representative . . . .

(Stip. Exh. 5). He again signed the "Sensitive Compartmented Information Nondisclosure Agreement," in acknowledgement that he had undergone a security debriefing. (Stip. Exh. 6). Finally, Toobin signed a "Termination of Access to Certain Classified Information" pursuant to which he acknowledged that the termination of his access barred him "from further access to [certain classified information] and materials but does not release [him] from [his] continuing obligation to protect the security of said information and material." (Stip. Exh. 7).

Toobin testified that on May 2, 1989, he informed defendant Walsh and his associate Guy Miller Struve ("Struve") that he planned to write a book on his experiences at the OIC. (Tr. at 29[fn**]). As Toobin recollects, Walsh said that such an endeavor could be "tricky" and indicated that he himself was thinking of writing a book on the experience. (Tr. at 30-31). Toobin testified that he acknowledged his obligation to obtain prepublication review of the book, and that if Walsh had any problems with what Toobin wrote, they could "try to work them out." (Tr. at 31). The next day, May 3, 1989, Toobin went into Walsh's office to say good-bye, and again mentioned that he wanted Walsh to "be comfortable" with the book, and stated that he was going to submit it to Walsh for his review. Again, Toobin testified, Walsh mentioned that he, too, was planning to write a book. (Tr. at 31). Toobin further testified that he mentioned his book for a third time to Walsh at a victory party after the North verdict was delivered on May 4, 1989, and that they discussed the hope that their respective books would enjoy successful sales. (Tr. at 33-34).

It is undisputed that on May 16, 1989, Toobin submitted to Walsh a portion of the manuscript for his proposed book, which was submitted simultaneously for OIC clearance to Al Stansbury ("Stansbury"), Director of Security for OIC. Toobin stated in an accompanying letter addressed to Walsh that he had shown the manuscript to "no one except my wife." He indicated that Walsh had "concerns about the idea of [Toobin's] writing a book," but assured Walsh that he wanted to try to write the book and "to do it right." Toobin stated, "Let me be very clear about the single use I plan to make of the enclosed section at this time. Most importantly, I do not want to publish it or in any way publicly disseminate it. My sole purpose in submitting this section for review is to allow me to show it to a small group of publishers." (Stip. Exh. 8) (emphasis in original).

Toobin's initial submission of a portion of his manuscript was replied to by Struve, on behalf of the OIC, on May 25, 1989. In a letter to Toobin, Struve stated,

  "[W]e have reached certain general conclusions which
  Judge Walsh has asked that I transmit to you without
  delay. At numerous points, your draft manuscript
  refers to matters which were and are totally internal
  to the [OIC], including discussions at staff
  meetings, discussions outside of staff meetings, and
  internal memoranda. We believe that it is improper for
  you to disclose such matters outside the [OIC], and we
  object to any such disclosure. Your draft manuscript
  also refers to certain matters which transpired
  between our Office and others which relate to the
  business of the Office and which have not been the
  subject of public disclosure. We believe that

  it is improper for you to disclose such matters
  outside the Office, and we object to any such
  disclosure."

(Stip. Exh. 9). Toobin replied directly to Walsh in a letter dated May 31, 1989. Toobin expressed surprise at the position taken by the OIC and stated,

  "As I understand the obligations of former
  prosecutors, there is no law or privilege that bars
  discussion of all `internal' office business. Nor does
  the fact that certain matters `have not been the
  subject of public disclosure' create a ban on my
  writing about them. Indeed, there is a substantial
  body of writings by members of prosecution teams about
  their experiences. To cite just two examples from
  Watergate, there is `Stonewall,' by Richard
  Ben-Veniste and George Frampton, who were Assistant
  Special Prosecutors, and `Not Above the Law,' by James
  Doyle, who was press officer to the Special
  Prosecutor. My manuscript deals with the same kinds of
  matters as these books."

(Stip. Exh. 10). Toobin stated that he wanted to "accommodate" Walsh, and that he hoped to handle on his own the clearance for the manuscript. He indicated, however, that due to the tone of Struve's May 25, 1989 letter, he might need to obtain counsel.

On July 18, 1989, Toobin wrote to Michael R. Bromwich, Esq., of the OIC, to obtain from the OIC written authorization to submit the then 72-page manuscript to an agent. Toobin wrote,

  "Based on our meeting in Oklahoma City yesterday, my
  understanding is that the OIC is willing to provide
  such written authorization for the 72-page manuscript
  which I previously furnished — minus the
  reference to a certain White House official. Based on
  my conversation with you, Judge Walsh and Jim Wieghart
  yesterday, I am authorized to provide this material to
  Esther Newberg of ICM. The OIC will subsequently
  provide the written authorization."

(Stip. Exh. 11). Bromwich signed the July 18, 1989 letter on behalf of the OIC, thereby authorizing the manuscript's submission to Esther Newberg.

On September 8, 1989, October 12, 1989, October 23, 1989, November 2, 1989 and November 21, 1989, Toobin supplied Stansbury with additional portions of his manuscript for OIC clearance. (Stip. Exhs. 12, 14, 15, 18, 23).

In a letter to Struve dated October 27, 1989, Toobin acknowledged having received an October 11, 1989 letter from Struve. He also acknowledged having "excised from the manuscript all the classified information identified by Al Stansbury." (Stip. Exh. 16). Toobin stated, however, that he was "concerned by the comments about Rule 6(e)" of the Federal Rules of Criminal Procedure, and noted that Struve had found alleged Rule 6(e) violations in the manuscript. Toobin stated that he had reviewed the manuscript, and requested that Struve "identify specifically how and where [Struve] believe[s] that [Toobin] may have transgressed Rule 6(e), so that [he] may take appropriate action." Id.

In a letter to Struve dated November 13, 1989, Toobin acknowledged receipt of a letter from Struve dated November 1, 1989. Toobin stated that he had read the cases cited by Struve and "reconsidered [his] previous request that [Struve] identify specific instances in [the] manuscript" that Struve felt violated Rule 6(e). Toobin stated, "I take my Rule 6(e) obligation seriously, and I have now re-examined the manuscript in light of your letter and taken appropriate action. After that additional review, I turned over copies of the chapters to my editor." Id.

On that same day, November 13, 1989, Struve wrote to Toobin, enclosing pages from Chapters 8 and 9 of the manuscript, which Stansbury had identified as "presenting security problems, with the material that creates the problems redacted." (Stip. Exh. 20). Struve stated,

  "As you know, your manuscript has been reviewed
  exclusively for classified information by Mr.
  Stansbury, based on your representation that you will
  disclose the manuscript only to your editor. Prior to
  your publishing any portion of the manuscript,

  the entire manuscript will have to be submitted to the
  Central Intelligence Agency, as well as to any other
  affected agency for purposes of a classified
  information review."

Id. In addition, Struve stated that Chapters 8 and 9 contain Rule 6(e) material "as well as office confidences the disclosure of which is not consistent with the spirit of the Oklahoma City agreements. We trust that you will redact such materials before disclosing the drafts of chapters 8 and 9 to anyone, including your editor." Id. A virtually identical version of this letter again was submitted to Toobin on November 22, 1989 (Stip. Exh. 24) and again on December 1, 1989. (Stip. Exh. 26). The November 22, 1989 letter, however, stated that Chapter 10 was found to contain no classified information, and the December 1, 1989 letter indicated that Chapter 11 contained no classified information. (Stip. Exhs. 24 & 26).

On November 15, 1989, Toobin wrote to Struve in response to Struve's letter of November 13, 1989, concerning Chapters 8 and 9. Toobin stated, "After removing the words identified as classified and making sure that the manuscript conforms both with Rule 6(e) of the Federal Rules of Criminal Procedure and the spirit of the discussions in Oklahoma City, I have passed the chapters to my editor and agent." (Stip. Exh. 21). Struve responded on November 15, 1989, requesting that Toobin submit copies of the chapters that were turned over to his editor for OIC review. (Stip. Exh. 22). And on November 22, 1989, Struve wrote to Toobin, noting that the OIC had not been advised that Toobin proposed to submit Chapters 8 and 9 to his editor and that the OIC had not authorized this submission. Struve stated, "We ask that you notify us fully, in advance, of any disclosure you propose to make of any portions of your manuscript to anyone other than your editor." (Stip. Exh. 25).

From December 1, 1989 through January 10, 1990, Toobin and Struve exchanged numerous letters. Struve repeatedly asked that Toobin submit to the OIC a copy of the manuscript in the form in which it had been given to his editor, and Toobin repeatedly stated that he hoped to have a final manuscript to submit to the OIC in the near future. (Stip. Exhs. 27-34).

On March 3, 1990, Toobin wrote directly to Walsh and enclosed for OIC final review a copy of his completed manuscript. Toobin stated in this letter as follows:

    I am very pleased that, once we got the formal
  review process on track, we were able to reach a
  mutually satisfactory conclusion without unduly
  distracting you from your more important duties.
  Should you have the time to read the manuscript, I
  would be honored to hear your thoughts.
    I am also pleased to report that the CIA has
  finished its review of the manuscript and cleared it
  for publication in its entirety. In a few
  particulars, the CIA disagreed with the OIC's
  determination of what was classified. Notwithstanding
  the CIA's approval, in most of those instances, I
  chose to redact passages which the OIC had marked as
  classified. I hope that you will see this as the
  courtesy to you which I intended it to be. With
  respect to parts of Chapter 5, however, I have elected
  to adopt the CIA's determination of what was
  classified. I trust that you will agree that when the
  subject is the CIA itself, the CIA's views should
  control . . . .

(Stip. Exh. 35). Walsh replied on March 6, 1990, expressing his displeasure at Toobin's distribution of the manuscript to his editor, the CIA, "and perhaps others," without having resolved the "6(e) questions before Chief Judge Robinson" of the District of Columbia Federal District Court, who has supervised the OIC grand juries. Walsh stated, "As you know I have not consented to the release of any privileged material: attorney-client privilege or work product. Further, a hasty scanning of the book discloses large amounts of 6(e) material." Walsh advised Toobin that "[f]inal classification review requires further action and referral by this Office which cannot be undertaken until the 6(e) material and privileged communications have been removed." As a final warning, Walsh stated, "I urge you not to make matters worse by further disclosure." (Stip. Exh. 86).

By March 19, 1990, Toobin had obtained an attorney to represent his interests in attempting to obtain OIC clearance for his manuscript. In a letter dated March 20, 1990, Struve wrote to Toobin's lawyer, Aaron Marcu, acknowledging that Toobin had agreed

  "not to publish the book he has written concerning the
  work of [the OIC] before the fall of 1990, but is
  unwilling to make or reaffirm the additional
  commitments which Judge Walsh understood Mr. Toobin to
  have made at the July 1989 meeting in Oklahoma City
  (1) that the work will not be published before the
  determination of the North appeals, including any
  remand resulting therefore, and ...

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