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United States v. Western Titanium

August 6, 2010


The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge


On July 26 and 27, 2010, the Court held a hearing on pending pretrial motions. Having fully considered the parties' submissions and the argument presented at the hearing, the Court rules as follows:

1. Defendants Western Titanium, Inc. ("Western") and Schroeder's Motion to Suppress Evidence (Doc. No. 438)

The Court will hold an evidentiary hearing with respect any documents specifically identified by Defendants in their motion as falling outside the scope of the search warrant on August 30, 2010 at 9:00 a.m. The Government shall identify, by August 20, 2010, which of those documents it intends to use at trial. The remaining documents shall be returned to the Defendants. Defendants' request to supplement their motion to specifically identify electronic documents falling outside the scope of the warrant is denied.

The scope of the evidentiary hearing shall be limited to Defendants' claim that specified documents seized by the agents fell outside the scope of the search warrant. For the following reasons, the Court is not persuaded that agents engaged in an impermissible general search, or that the search warrant was unconstitutionally overbroad.

a. Impermissible General Search

Defendants contend that the Government engaged in a wholesale seizure of documents outside the scope of the warrant, thus constituting an impermissible general search requiring suppression of all documents seized. Based on the Declaration of Agent Dao, the Court does not believe that the agents executing the warrant acted in "flagrant disregard" of the terms of the search warrant.

Agent Dao indicates that prior to the execution of the search warrant, he briefed the agents participating in the search regarding the nature of the search and the specific categories of items that were subject to seizure. Each agent read a copy of the affidavit and the search warrant, and was provided with a copy of the Attachments "A" and "B." The search that day lasted approximately 12 hours, which suggests that agents were in fact reviewing documents for compliance with the search warrant prior to their seizure, and were not engaged in the wholesale seizure of documents alleged by Defendants.

Nor does the Court believe that the removal of the file cabinets from the premises by Agent Dao demonstrates a flagrant disregard for the terms of the search warrant. Agents had already determined that 65-75% of the documents within similar file cabinets fell within the scope of the search warrant before the cabinets were removed. The off-site search of the cabinets consumed approximately 160 hours while agents reviewed the documents to determine whether they fell within the scope of the warrant. Given that significant effort was expended in attempt to comply with the terms of the search warrant, the Court does not find that the agents flagrantly disregarded the search warrant by ignoring its terms or engaging in indiscriminate fishing expeditions. Accordingly, Defendants' request for suppression of all of the documents seized pursuant to the search warrant is denied.

b. Search Warrant Overbreadth

Defendants contend that the search warrant was constitutionally overbroad because it allowed for the seizure of broad categories of documents without any showing that the business was permeated with fraud. Having reviewed the search warrant and the affidavit, the Court finds that the warrant complies with the Fourth Amendment's specificity requirement. That is, the warrant identifies the items to be seized with sufficient particularity to allow the executing officers to determine what they are authorized to search for and what is authorized to be seized. The affidavit also sets forth probable cause to seize the particular things named in the warrant. Therefore, Defendants' overbreadth challenge to the search warrant is denied.

2. Defendant Mach 2 Metals Rule 41 Motion to Return Property Unlawfully Seized on April 15, 2008 and Motion to Join Western Titanium and Daniel Schroeder Motion to Suppress Evidence (Doc. No. 440)

Defendant Mach 2 Metals, Inc. ("Mach 2") moves for return of property pursuant to Rule 41 of the Federal Rules of Criminal Procedure and joins Defendants Western and Schroeder's Motion to Suppress Evidence on the basis that agents seized improperly seized Mach 2 documents during their search because the warrant was directed at Western Titanium. The Government responds that at the time of the search, Mach 2 Metals was simply a fictitious business name that Western Titanium operated under and therefore, any Mach 2 documents were in fact Western Titanium documents.

Based upon the Government's exhibits, the Court is persuaded that Mach 2 was effectively Western Titanium and that Mach 2 documents therefore fell within the scope of the search warrant. Accordingly, Mach 2's motion for return of seized property and for suppression of evidence is DENIED.

3. Defendants Western and Schroeder's Motion to Dismiss the Indictment for Selective Prosecution (Doc. No. 437)

The Court will deny this motion because Defendants have failed to establish that the prosecution has brought the charges in this case for reasons forbidden by the Constitution. The presumption of regularity supports prosecutorial decisions and, in the absence of clear evidence to the contrary, courts must presume that the Attorney General and United States Attorneys have properly discharged their official duties. United States v. Armstrong, 517 U.S. 456, 464 (1996).

To demonstrate the existence of a prima facie case for selective prosecution, a defendant must present evidence that: (1) others similarly situated were not prosecuted, and (2) the prosecution was based on an impermissible motive. United States v. Alexander, 287 F.3d 811, 817-18 (9th Cir. 2002).

In order to be entitled to discovery on the issue of selective prosecution, the defendant must produce some evidence that similarly situated defendants of other races or other protected classes could have been prosecuted but were not. Armstrong, 517 U.S. at 469.

Defendants have not made a showing sufficient to establish that they fall within a constitutionally protected class distinct from those companies that allegedly were not prosecuted for similar conduct or that this prosecution was based on an improper motive. The Court is not persuaded that the fact that Defendants voiced objection to Boeing's problem advisories places them in a constitutionally protected class. Moreover, Defendants' knowing participation in what the Government contends was fraudulent conduct presents a legitimate, non-discriminatory basis for prosecution. See e.g., United States v. Taylor, 693 F.2d 919, 923 (9th Cir. 1982) (noting that it is "quite rational for the government, in deciding whether or not to prosecute, to consider whether the potential defendants have, by their public statements or otherwise, made clear their actual or intended participation in the illegal activity.").

Accordingly, Defendants' motion to dismiss the indictment for selective prosecution is DENIED. Defendant's request for further discovery regarding this issue is also DENIED.

4. Defendants Western and Schroeder's Motion to Dismiss for Post-Indictment Delay (Doc. No. 443)

Defendants Western and Schroeder move this Court to dismiss the Second Superseding Indictment due to a Sixth Amendment speedy trial violation. The Court will deny this motion. In making this determination, the Court has considered the length of the delay, the reason for the delay, Defendants' assertion of their rights and any prejudice to Defendants. See Doggett v. United States, 505 U.S. 647, 651 (1992); Barker v. Wingo, 407 U.S. 514, 530 (1972). The length of the delay is presumptively prejudicial, as it will be nearly two years by the time the trial commences. See Barker, 407 U.S. at 530; see also United States v. Murillo, 288 F.3d 1126, 1132-33 (9th Cir. 2002).

The delay in this case is attributable to the resolution of Defendants' Rule 41 Motion. The Court was willing to proceed with trial last October, provided Defendant's Rule 41 motion and all other pretrial motions could be resolved before then. However, the Rule 41 motion has not been resolved and remains pending until this day. Although Defendants have credited the Court for this delay, they fail to account for their own conduct, such as appeals of the Court's initial ruling, their failure to comply with the Court's orders, and delays in the privilege hearing requested by defense counsel and incurred as a result of Defendants' unfounded attack on the integrity of the taint attorney. Whatever the shortcomings of the Court, it has attempted to resolve the privilege issue as expeditiously as possible. In any event, none of the delay in resolving the Rule 41 motion may properly be attributed to the Government.

The Court understands the defense position that it is delay caused by the return of the superseding indictments and its alleged failure to settle on a theory that have created the constitutional speedy trial violations and acknowledges that Defendants Western and Schroeder have consistently asserted their speedy trial rights. However, the Government is not prohibited from continuing to investigate a case while an indictment is pending and, from a practical standpoint, Defendants could not have proceeded to trial any sooner had there been no superseding indictment -- Defendants' Rule 41 motion still would not be resolved. Therefore, the Court can find no prejudice to the Defendants warranting relief on speedy trial grounds.

Finally, although Defendants' claim appears to be based solely on Sixth Amendment grounds, the Court finds that there has been no violation of the Speedy Trial Act. As detailed in the Government's response and opposition, only 25 non-excludable days have passed since the filing of the original indictment. Therefore, Defendants' Motion to Dismiss for Post-Indictment Delay is DENIED.

5. Defendants Western and Schroeder's Motion to Exclude Testimony and Evidence Regarding Tests Conducted by the Air Force Research Laboratory and Testimony Regarding the Requirements of Specification MIL-T-9046 (Doc. Nos. 445 and 466)

Having considered the parties' papers and the argument of counsel, the Court will deny the defendants' Daubert motion. The applicable legal standard is not in dispute. Both sides appear to agree that Dr. Calcaterra is offering scientific, technical or other specialized knowledge, bringing his testimony within Federal Rule of Evidence 402. As such, this Court must serve as a "gatekeeper" to exclude "junk science" by making a preliminary determination that Dr. Calcaterra's testimony is reliable. This is a two-part analysis. First, the Court must determine if Dr. Calcaterra's testimony rests on a reliable foundation, that is, does it amount to good science. Second, this testimony must also be relevant to the task at hand.

Defendants' arguments all go to the question of relevance. They do not argue that the Air Force Research Laboratory's testing methods are not generally accepted in the scientific community, that it has not been tested, or that it has a problematic rate of error. Defendants in fact concede that they have no basis for such a challenge. Thus, in light of the Government's briefing on this issue and Defendants' lack of substantive challenge, the Court finds that Dr. Calcaterra's testimony amounts to "good science."

The inquiry thus continues to whether that testimony is relevant to the case at hand. To begin with, relevance is not about Dr. Calcaterra's conclusions or their correctness. Rather, if his testimony logically advances a material aspect of the Government's case, Calcaterra may testify and the jury will decide how much weight to give that testimony.

Having reviewed Defendants' arguments, the Court finds that the proposed testimony is sufficiently relevant to permit the Government's expert testimony at trial. The Government's testing goes to the question of whether the material sold by Western Titanium met the requirements of MIL-T-9046 and whether Defendants acted with the specific intent to defraud when they represented that it did. Although the precise requirements of the specification are in dispute, Defendants' knowledge and intent are questions which must be resolved by the jury. ...

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