U.S. v. Nicholas, 594 F. Supp. 2d 1116 (C.D. Cal. 2008)
In this case, the United States District Court in the Central District of California denied defendant Henry Nicholas’s motion to block the production of an incriminating email and for an order preventing the use of the email for cross examination or impeachment should Nicholas testify. Rejecting Nicholas’s argument that the email was protected from disclosure by marital privilege, the district court held that a Ninth Circuit ruling that the email was subject to some protection by the marital privilege did not preclude all potential use of the email. Accordingly the district court held that because the email could constitute the admission of a co-conspirator and be admissible at trial under other limited circumstances, it must be disclosed to Nicholas’s co-defendant.
In April 2002, former Broadcom CEO, Henry Nicholas, used his company laptop and email account to send an email to his then-wife discussing his children, his marriage, his drug use, and various issues related to Broadcom. Quotations from the email included:
• “The worst part is the company falling apart because I am not fully functioning.”
• “However, I don’t care about Broadcom anymore…I just feel like a liar to the people I am recruiting to new positions…because I am potentially f—ing some things up this week that will be irreparably damaging.”
• “However, I am willing to lie and bulls— to get key people in place so I can extract myself from Broadcom as soon as possible”
Nicholas also referenced “suffering ecstasy come-down” and “panic attacks” and “electric shock like flashes” upon quitting “cold turkey,” among other things.
The email was not protected by password or other safeguard and was accessible to at least ten IT staff members through various means.
In 2002, the email was discovered by an IT staff member engaged in authorized maintenance and was subsequently provided to another member of the IT staff acting on instructions of the Board to gather information regarding concerns over Nicholas’s behavior. Between 2002 and 2007, when the email was disclosed to the government in the course of their investigation of Broadcom’s stock option practices, many people at Broadcom became aware of the email, including General Counsel, the Co-Chairman of the Board of Directors, and the Director of Human Resources. Nicholas was aware of the wide-spread knowledge of email amongst Broadcom employees but took no efforts to maintain its privacy until he first raised the claim of privilege in July 2007.
Extensive motions practice ensued regarding potential protection of the email by the marital privilege. On appeal from an order of the district court, the Ninth Circuit held the email was protected by the marital privilege and precluded its admission in “judicial or grand jury proceedings.” However, upon motion for clarification, the Ninth Circuit declined to hold that the email could “not be used for ‘impeachment, rebuttal, or other purposes” as requested by Nicholas. Instead, the court left it to the discretion of the district court to determine the scope of the protection at trial.
In October, 2008, upon receiving notice that the government intended to use the email in preparation for trial and disclose it to Nicholas’s co-defendant, Nicholas moved to suppress the email and preclude its use for cross examination or impeachment and to prevent its disclosure to his co-defendant.
On November 15, 2008, the Orange County Register ran a story that disclosed the existence and substance of the email.
In response to Nicholas’s motion, the district court held:
As the Ninth Circuit recognized, the Email may be admissible at trial notwithstanding the privilege. The Court will have to make the ultimate determination of the Email’s admissibility at trial after considering all of the facts and circumstances at that time. Because the Email may be admissible at trial, in fairness, the Email must now be disclosed to [the co-defendant]. Finally, in light of the disclosure of the contents of the Email by the Orange County Register, the Court finds no compelling interest in keeping this order under seal.
In reaching this determination, the district court first examined the scope of the Ninth Circuit’s ruling regarding the applicability of the marital privilege and relevant precedent regarding the same. Accordingly, the district court stated:
[P]recluding the use of the Email for any purpose would exceed the “appropriate scope of the protection” to which the Email is entitled. Evidentiary privileges are not absolute, and the jury’s obligation to consider relevant, probative, evidence may outweigh any interest in keeping privileged information from it.
Turning to the admissibility of the email against Nicholas’s co-defendant as a co-conspirator admission, the district court relied upon ER 801(d)(2)(E) which states that “a statement by a co-conspirator of a party during the course and in furtherance of the conspiracy” is admissible against the party. The email, the court reasoned, would arguably qualify as such an admission for various reasons, including that it was written during the time of the alleged conspiracy and that Nicholas “may have made the statements in the Email in furtherance of the alleged conspiracy.” Thus, the district court concluded that the email could be admitted against the co-defendant and that disclosure was therefore necessary to allow him to prepare a defense.
Finally, the district court determined that because of the extensive dissemination of the email by the Orange County Register as well as the widespread knowledge of the email amongst Broadcom employees, “no compelling justification exists for keeping the Court’s order under seal.” The district court acknowledged the ongoing protection of the marital privilege to which the email was entitled, but found that “insofar as the confidential information Dr. Nicholas seeks to keep under seal has been made public, the privilege does not justify shielding the Court’s order from meaningful review and comment by the public.”
A full copy of the opinion is available here.