In Re Grand Jury Subpoena American Broadcasting Companies, Inc.

947 F. Supp. 1314, 25 Media L. Rep. (BNA) 1235, 1996 U.S. Dist. LEXIS 17439, 1996 WL 675898
CourtDistrict Court, E.D. Arkansas
DecidedNovember 6, 1996
DocketGJ-96-3
StatusPublished
Cited by13 cases

This text of 947 F. Supp. 1314 (In Re Grand Jury Subpoena American Broadcasting Companies, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Grand Jury Subpoena American Broadcasting Companies, Inc., 947 F. Supp. 1314, 25 Media L. Rep. (BNA) 1235, 1996 U.S. Dist. LEXIS 17439, 1996 WL 675898 (E.D. Ark. 1996).

Opinion

MEMORANDUM OPINION AND ORDER

SUSAN WEBBER WRIGHT, District Judge.

Before the Court is the motion of American Broadcasting Companies, Inc. (“ABC”) to quash a grand jury subpoena seeking the full transcript and videotape of an interview with Susan H. MeDougal conducted by ABC News Anchor Diane Sawyer in New York City on August 30, 1996. 1 The United States, by Independent Counsel Kenneth W. Starr, has responded in opposition to the motion. For the reasons that follow, the Court finds that ABC’s motion to quash the grand jury subpoena should be and hereby is denied.

I.

On August 5, 1994, the Special Division of the United States Court of Appeals for the District of Columbia appointed Kenneth W. Starr as Independent Counsel to conduct an investigation into the matter known as ‘Whitewater.” The court appointed Mr. Starr pursuant to a request by Attorney General Janet Reno following Congress’ reenactment of the Independent Counsel provisions of the Ethics in Government Act of 1978, 28 U.S.C. §§ 591-99. The court conferred upon Mr. Starr

full power, independent authority, and jurisdiction to investigate to the maximum extent authorized by the [statute] whether any individuals or entities have committed a violation of any federal criminal law ... relating in any way to James B. MeDou-gal’s, President William Jefferson Clinton’s, or Mrs. Hillary Rodham Clinton’s relationships with Madison Guaranty Savings and Loan Association, Whitewater Development Corporation, or Capital Management Services, Inc.

In re: Madison Guaranty Savings & Loan Ass’n, Div. No. 94-1, slip op. at 1-2, 1994 WL *1316 461299 (D.C.Cir.Sp.Div. August 5, 1994). The court additionally conferred upon Mr. Starr “prosecutorial jurisdiction to fully investigate and prosecute the subject matter ... as hereinbefore set forth, and all matters and individuals whose acts may be related to that subject matter, inclusive of authority to investigate and prosecute federal crimes ... that may arise out of the above described matter, including perjury, obstruction of justice, destruction of evidence, and intimidation of witnesses. Id. at 3.

On August 17, 1995, a federal grand jury sitting in Little Rock, Arkansas, indicted Susan H. McDougal, her former husband James B. McDougal, and then-Governor Jim Guy Tucker on charges that included conspiracy, mail and wire fraud, bank fraud, false statements, and misapplication. These charges related to a series of alleged fraudulent transactions involving Madison Guaranty Savings & Loan (“Madison”) and Capital Management Services (“CMS”). The indictment alleged that Ms. McDougal knowingly submitted a false and fraudulent application for a $300,000 loan from CMS on behalf of “Master Marketing,” an alleged bogus firm purportedly owned by Ms. McDougal, and then used the money for personal expenses of the McDougals, including a down payment on land in the name of Whitewater Development Corporation.

On May 28,1996, a jury found Ms. McDou-gal guilty of four felony counts arising from the Master Marketing loan: (1) mail fraud in violation of 18 U.S.C. § 1341; (2) misapplication of the funds of a small business investment company (“SBIC”) in violation of 18 U.S.C. § 657; (3) false entries in the records of an SBIC in violation of 18 U.S.C. § 1006; and (4) false statements to an SBIC in violation of 18 U.S.C. § 1014. United States v. McDougal, et al., No. LR-CR-95-173 (E.D.Ark.). Ms. McDougal was subsequently sentenced to twenty-four months imprisonment, followed by three years probation, and ordered to pay a fine of $5,000, make restitution to the Small Business Administration in the amount of $300,000 plus interest, and perform 312 hours of community service dur-mg her probationary period. See id. Her appeal of that conviction and sentence is currently before the Eighth Circuit Court of Appeals.

On August 20, 1996, the date of her sentencing, the Independent Counsel served Ms. McDougal with a subpoena directing her to testify before the grand jury oh September 4 and 5, 1996. Ms. McDougal responded by filing a motion to quash the grand jury subpoena or in the alternative for a protective order. This Court held a hearing on Ms. McDougal’s motion on September 3, 1996. After considering the pleadings and arguments of the parties, the Court issued an immunity order pursuant to 18 U.S.C. § 6002 and denied Ms. McDougal’s motion to quash or for a protective order.

On the morning of September 4, 1996, the Court was advised by the Office of Independent Counsel that Ms. McDougal refused to testify before the grand jury. The Court held a hearing that same morning to determine whether Ms. McDougal should be held in contempt. After considering statements offered by the Office of Independent Counsel, counsel for Ms. McDougal, and Ms. McDougal herself, the Court determined that Ms. McDougal should be held in civil contempt pursuant to 28 U.S.C. § 1826(a) for her refusal to testify before the grand jury. The Court ordered Ms. McDougal to report to the United States Marshal on September 9, 1996, to be detained, for no more than eighteen months, until such time as she agrees to testify, her testimony is no longer necessary, or the term of the grand jury, including any extensions, has expired. 2

On the evening of September 4, 1996, the ABC News program “PrimeTime Live” aired portions of the interview of Ms. McDougal conducted by ABC News anchor Diane Sawyer in Néw York City on August 30, 1996. Following the broadcast, the Independent Counsel issued a grand jury subpoena to ABC seeking the full transcript and full videotape of the interview, including portions of the interview not broadcast. ABC thereupon *1317 filed the motion to quash now before the Court.

II.

ABC argues that the grand jury subpoena should be quashed on the following grounds: (1) the video footage and transcript of the MeDougal interview which was not broadcast is protected from disclosure by the journalist’s qualified privilege under the First Amendment to the Constitution of the' United States; (2) such information is protected from disclosure under the Constitution of the State of Arkansas, Article 2, § ’6, the shield law of the State of Arkansas, Ark.Code Ann. § 16-85-510, and the shield law of the State of New York, N.Y.Civ. Rights Law § 79 — h; and (3) the Independent Counsel failed to follow Department of Justice guidelines regarding the issuance of subpoenas to the media. The Court will address these claims in turn.

1.

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947 F. Supp. 1314, 25 Media L. Rep. (BNA) 1235, 1996 U.S. Dist. LEXIS 17439, 1996 WL 675898, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-grand-jury-subpoena-american-broadcasting-companies-inc-ared-1996.