United States v. HSBC Bank USA, N.A.

863 F.3d 125 (2d Cir. 2017)

 

RULE:

Though the United States Court of Appeals for the Second Circuit reviews the ultimate decision to seal or unseal a court record for abuse of discretion, it reviews the determination that a particular document is a judicial document de novo. In the Second Circuit, to qualify as a judicial document subject to a presumptive right of public access, the item filed must be relevant to the performance of the judicial function and useful in the judicial process. 

FACTS:

Plaintiff-appellant the United States entered into a five-year deferred prosecution agreement (the "DPA") with defendants-appellants HSBC Holdings plc and HSBC Bank, USA, N.A. (collectively, "HSBC"), deferring prosecution of charges under the Bank Secrecy Act, the International Emergency Economic Powers Act, and the Trading with the Enemy Act. The still-pending agreement provided that if HSBC complies with its extensive obligations under the DPA, the government will seek the dismissal of those charges at the conclusion of the DPA's term. If, on the other hand, HSBC breaches the DPA, the government may seek to convict HSBC on the deferred charges. To inform that determination, the DPA provided for the appointment of an independent monitor charged with preparing periodic reports on HSBC's ongoing compliance with anti-money laundering laws and with the DPA itself. When the government and HSBC jointly moved for a speedy trial waiver, the district court invoked its supervisory power both to review and "approve" the DPA on its merits and to condition its approval on the court's monitoring of the DPA's implementation. In the exercise of that asserted authority, the district court subsequently ordered the government to file a confidential report prepared by the independent monitor regarding HSBC's compliance with the DPA (the "Monitor's Report"). In November 2015, appellee Hubert Dean Moore, Jr., a member of the public, moved to unseal the Monitor's Report. The district court granted the motion, subject to redactions, finding that the Monitor's Report was a "judicial document" to which the public enjoyed a qualified First Amendment right of access. The government and HSBC appeal the district court's unsealing and redaction orders, arguing that the district court ran afoul of separation of powers principles in involving itself in the implementation of the DPA.

ISSUE:

Did the district court encroach upon an executive function by involving itself in the implementation of the DPA?

ANSWER:

Yes.

CONCLUSION:

The district court impermissibly encroached on the Executive Branch's U.S. Const. art. II, § 3 mandate in concluding that a report from an independent monitor as to a bank's compliance with a deferred prosecution agreement (DPA) was a judicial document as the court had no freestanding supervisory power to monitor the implementation of a DPA, and nothing in 18 U.S.C.S. § 3161(h)(2) altered the presumption of regularity given to a prosecutor's charging decisions; 18 U.S.C.S. § 3161(h)(2) authorized courts to determine that a DPA was bona fide before granting a speedy trial waiver, and did not constitute a disguised effort to circumvent the speedy trial clock. Even if the monitor's report might have been relevant to the judicial function later, it was not a judicial document now as the district court had no authority over the DPA's implementation.

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