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United States v. Western Titanium

October 12, 2010

UNITED STATES OF AMERICA, PLAINTIFF,
v.
WESTERN TITANIUM, INC. (1), DANIEL SCHROEDER (2), BRIAN MISAK (3), JOHN COTNER (4), CHEEM ANG (5), MACH 2 METALS, INC. (6), INTEGRATED TITANIUM GROUP I (7), INTEGRATED TITANIUM GROUP II (8), DEFENDANTS.



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

ORDER FOLLOWING HEARING ON MOTIONS IN LIMINE

At a hearing held on October 6, 2010, the Court issued the following orders on pending motions in limine:

A. Motions filed by Defendants Western Titanium, Mach 2 Metals, and Schroeder

1. Motion in Limine Regarding Materials Subject to the Attorney-Client Privilege and/or Work Product Doctrine (Western MIL No. 1) (Doc. No. 581)

Defendants Western Titanium, Mach 2 Metals, and Schroeder (collectively, "Western") move for an order: 1) disqualifying any government attorneys, agents, or experts who have reviewed or been exposed to Western's privileged and work product documents from further participation in this case; 2) prohibiting the Government from introducing as evidence at trial or referencing in any way any document protected by the attorney-client privilege and/or work product doctrine; 3) prohibiting the Government from introducing at trial any evidence seized after April 15, 2008; and 4) prohibiting the Government from making or referencing any allegation that Mr. Schroeder supposedly failed to disclose documents or records "possessed in his desk" without first making a showing, outside the presence of the jury, that it has proof of each foundational aspect of any allegation.

Defendants' request that the Government be prohibited from introducing as evidence at trial or reference in any way any document by the attorney-client and/or work product doctrine is Granted. The Court has already ordered the suppression of this evidence and believes suppression to be the appropriate remedy in this case. For this reason, Defendants' requests for disqualification of government attorneys and agents and the mass suppression of all evidence seized after April 15, 2008 Denied. The Court agrees with the Government's assessment that none of the privileged materials reveal any type of detailed defense strategy or allow any significant or meaningful insight into the preparation of Defendants' case. It was only after days of ex parte testimony and evidence that the Court was able to determine that the documents were privileged. Therefore, the Court finds no government misconduct or intrusion into defense strategy to warrant a remedy beyond suppression of the privileged documents. Defendants' oral motion for a stay of proceedings pending review of this determination by the Ninth Circuit Court of Appeals is Denied.

Finally, Defendants' request that the Government be prohibited from referencing allegations in paragraphs 10 and 11(yy) of Second Superseding Indictment absent of a showing of proof is Granted. The Court has determined that the files containing the "Sketch" were compiled at the direction of counsel in anticipation of litigation and are protected by the work product doctrine. The Court believes that this protection extends to the location of the file. Based upon evidence previously received by the Court, the compilation was placed in the desk only as part of the work product compilation. Accordingly, the Government may not introduce evidence that the sketch, or any other document within the compilation, were found in the desk.

If there is additional evidence to support the allegations of alleged in Paragraphs 10 and 11(yy) of the second superseding indictment, the Government shall make an offer of proof. Otherwise, the Government shall show cause why those allegations in the indictment should not be stricken.

2. Prohibit Reference to Undisclosed and/or Legally Improper Theories of Fraud (Western MIL No. 2) (Doc. No. 582)

Western moves this Court to prohibit the Government from advancing any theory of fraud that is: 1) not identified in the Second Superseding Indictment or the March 10, 2010 Bill of Particulars; 2) is based upon non-compliance with a "requirement" of a material specification that is not identified as a requirement in that specification; and 3) is based upon Western's action in accordance with one of multiple reasonable interpretations of a concededly ambiguous specification.

This motion is Denied. This Court has previously upheld the sufficiency of the Second Superseding Indictment and found that Defendants have been provided with sufficient notice of the crimes charged, particularly in light of the bill of particulars and the full discovery provided. The Court does not believe it is in a position to manage the Government's selection of evidence with respect to any element of the charged offenses, or its manner of proof. Of course, the Court will re-visit this issue should the defense make a specific showing of variance between the Second Superseding Indictment and the Government's proof. Furthermore, with respect to the alleged ambiguity of the regulations, this Court has previously denied Defendants' attempts to force a summary judgment ruling in this criminal case. It is the Government's burden to prove Defendants' specific intent to violate the law and it is entitled to do so by presenting its evidence at trial.

3. Exclude Speculative and Improper Lay Opinion Testimony (Western MIL No. 3) (Doc. No. 583)

The Court does intend to follow the Federal Rules of Evidence. Therefore, Western's motion is granted to that extent. However, to the extent that Defendants seek rulings on the admissibility of specific evidence based upon generalized assertions, the Court will Reserve ruling until such time as the evidence is sought to be admitted. Although the parties may be exceedingly familiar with the specific evidence that will be presented at trial, the Court is not. The Court declines to make evidentiary rulings in the abstract.

4. Exclude Evidence from JPL, DCMA, Boeing, Western Titanium and Sierra Alloys (Western MIL No. 4) (Doc. No. 584)

Western contends that the Government has failed to disclose documents from the Defense Contract Management Agency ("DCMA"), JPL, Boeing and Sierra Alloys that are material to the defense or constitute Brady or Giglio material. Western also alleges that the Government has failed to produce in discovery the documents seized from Western, and that the Government has failed to identify any 404(b) evidence.

The Government responds that it has produced the relevant discovery in its possession and indicates that it has turned over thousands of documents from DCMA and JPL as well as the entire Defense Criminal Investigative Services ("DCIS") casefile from the investigation of Sierra Alloys. Further, the Government indicates that Defendants were given numerous opportunities to inspect, copy or photograph the search warrant documents at DCIS and at Judge Battaglia's chambers. Finally, the Government responds that it provided notice of potential 404(b) evidence on September 9, 2010. The Government asserts that 404(b) notice is not necessary because the acts are uncharged overt acts in the conspiracy already alleged or inextricably intertwined with the conduct charged in the indictment.

Defendants have failed to make any specific showing that the Government has improperly withheld documents subject to disclosure under Rule 16 and/or Brady or Giglio. Therefore, Defendants' motion to exclude evidence from JPL, DCMA, Boeing, Western Titanium, and Sierra Alloys is Denied.

As to the Government's 404(b) disclosure, it appears that the noticed acts may be subject to admission outside of 404(b) as uncharged overt acts of the conspiracy. See United States v. Soliman, 813 F.2d 277 (9th Cir. 1987) (Noting that the policies underlying Rule 404(b) are simply inapplicable when some offenses committed in a single criminal episode become "other acts" because the defendant is indicted for less than all of his actions.). However, because notice of these acts was not provided until September 9, 2010, the day after motions in limine were due, Defendants will be given an opportunity to respond. Thus, the Court Reserves ruling as to the admissibility of the other act evidence disclosed in the September 9 letter. Defendants may file a renewed motion in limine regarding this evidence on or before October 14, 2010; the Government shall file any response on or before October 20, 2010. The Court will rule at the time of trial.

5. Exclude Expert Testimony That Does Not Satisfy FRE 702 or FRE 403 (Western MIL No. 5) (Doc. No. 585)

Western seeks to preclude all or some of the testimony of 21 Government expert witnesses because: 1) the requirements of the specifications at issue are the ultimate legal issue in this case; 2) the specifications do not contain the "requirements" the Government seeks to adduce opinion testimony regarding; 3) some of the witnesses are not qualified to provide expert testimony on the various subjects identified by the Government; 4) the irrelevant testimony is a waste of time; 5) eliciting testimony from a fact witness is prejudicial; and 6) the testimony is unnecessarily cumulative. In addition, Western seeks to exclude two experts because they were identified after the Court's deadline.

While the Court will Reserve ruling on the admissibility of any particular expert's testimony or qualifications until the time of admission, the Court is able to make some findings at this time. First, the Court finds that opinion testimony regarding the proper meaning and interpretation of the specifications is admissible under Federal Rule of Evidence 702 because it will assist the jury to understand the evidence or to determine a fact in issue. The Court disagrees with Defendants' position that such testimony is barred by Rule 704 as an opinion on an ultimate issue to determined by the jury, or that it presents a question of law to be determined by the Court. Defendants are not charged with violating specifications, they are charged with fraud. Thus, opinion testimony regarding the meaning and interpretation of the specifications at issue may be probative of Defendants' knowledge and state of mind, but it does not opine on the ultimate issue in this case -- whether Defendants possessed the specific intent to defraud.

Second, the Court will give the Government's experts leeway to explain the requirements of given specifications, even if those requirements are not specifically set forth in the specifications. Defendants' knowledge of these requirements is an issue to determined by the jury. Thus, Defendants' objections to the lack of specificity regarding the requirements is a matter properly addressed on cross-examination.

Third, the Court notes that Ninth Circuit authority does permit the use of the same witness to provide lay and expert testimony provided the jurors are aware of the witness's dual roles. The Government indicates that it intends to elicit percipient testimony from certain witnesses before qualifying them as experts to opine on whether the material they received conformed to the specifications. In United States v. Anchrum, 590 F.3d 795 (9th Cir. 2009), the Court approved a procedure where the witness's testimony was separated into a first phase consisting of his percipient observations, and a second phase consisting of his credentials and expert testimony. The Court will approve the use of such a procedure in this case, however, the prosecution shall endeavor to keep the "fact" portion of witness's testimony wholly separate from the "expert" portion and shall make clear to the jury when the "expert" portion begins.

Fourth, the Court has reviewed the summaries of the proposed expert testimony and it appears that each expert will be testifying about different aspects of the specifications, or discreet events. However, the Court is not inclined to allow cumulative testimony. Defendants' objections in this regard are preserved.

Finally, because Defendants have failed to demonstrate any prejudice, the Court declines to exercise the extreme sanction of exclusion of the two ...


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