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In re 38 Studios Grand Jury

Superior Court of Rhode Island

May 18, 2017

In Re: 38 Studios Grand Jury

         Superior Court Providence County

          For Plaintiff: Claire J. Richards, Esq. Jeremy M. Licht, Esq.

          For Attorney General's Office: Rebecca J. Partington, Esq. Susan E. Urso, Esq. Kate C. Brody, Esq.

          For ACLU: Jared Goldstein, Esq. Andrew Horwitz, Esq.

          DECISION

          GIBNEY, P.J.

         Governor Gina M. Raimondo (the Petitioner), in her capacity as Governor of the State of Rhode Island, brings this petition for the release of grand jury documents relating to the 38 Studios investigation. The Petitioner requests that the Court order public disclosure of all grand jury materials and/or documents regarding 38 Studios which were presented over the course of eighteen months beginning in 2013 and ending in 2015. Noting the immense public interest in the 38 Studios investigation, the Petitioner urges the release of documents and maintains that the reasons for disclosure outweigh the need for secrecy. In an amicus curiae brief, the American Civil Liberties Union of Rhode Island (ACLU) supports the Petitioner's request to disclose grand jury records. The Rhode Island Office of the Attorney General (Attorney General) objects to the Petitioner's request, contending that disclosure is not permitted under Rhode Island's Rules of Criminal Procedure and that the Petitioner has not demonstrated a particularized need for the materials. This Court exercises jurisdiction pursuant to Super. R. Crim. P. 6(e)(3)(C).

         I Facts and Travel

         In June of 2010, the Rhode Island General Assembly authorized the issuance of up to $125 million in bonds to provide for the financing of companies seeking to grow their employment in Rhode Island. In November of 2010, the Rhode Island Economic Development Corporation (the EDC) issued $75 million in bonds to 38 Studios to encourage the company's move to Rhode Island and to finance its expansion in the state. In 2012, 38 Studios filed for bankruptcy and did not repay the bonds. The bankruptcy of 38 Studios left Rhode Island taxpayers with an estimated $88 million loss in principal and interest.

         A statewide grand jury convened in December of 2013 in order to investigate the 38 Studios deal for any possible criminal wrongdoing. That grand jury sat for a total of eighteen months, concluding in July of 2015. There were approximately 146 individuals, including members of the 2010 General Assembly, interviewed in connection with the grand jury's investigation. At the conclusion of that investigation, the Attorney General and the Rhode Island State Police determined that there were "no provable criminal violations of the Rhode Island General laws in connection with the funding of 38 Studios, the disbursement of funds to 38 Studios, [or] by 38 Studios vendors." Results of the Criminal Investigation of 38 Studios, LLC (Investigation Results) at 8. On February 3, 2017, the Attorney General confirmed that the 38 Studios grand jury investigation was closed.

         Following the bankruptcy of 38 Studios and the failure to repay the bonds, the State brought a separate civil action against entities involved in the business deal. This civil action resulted in settlements in excess of $61 million and provided for the release of hundreds of thousands of pages of documents, e-mails, pleadings, and deposition transcripts that were produced in relation to the civil action. On February 10, 2017, this Court, Silverstein J., approved the final settlement of the last remaining defendant in the State's civil action, thus bringing the civil matter to a close. Following that final settlement, on February 13, 2017, the Petitioner brought her petition to release materials related to the grand jury's investigation.

         II Parties' Arguments

         In moving for the disclosure of grand jury materials, the Petitioner contends that there has been prolonged and profound public interest in the 38 Studios deal and the resulting investigation. The Petitioner notes that Super. R. Crim. P. 6(e)(2) (Rule 6(e)(2)) sets forth a general rule of grand jury secrecy that prohibits the disclosure of information that would tend to reveal some secret aspect of the grand jury's investigation. Notwithstanding Rule 6(e)(2), the Petitioner contends that the Superior Court has discretion to order the release of grand jury material in exceptional circumstances.

         Moreover, the Petitioner argues that the Superior Court-in evaluating the disclosure of grand jury materials-should consider the effect such disclosure would have on policies underlying grand jury secrecy and should evaluate the need for the material sought. The Petitioner avers that the burden of demonstrating such a particularized need is not a heavy one and that as the conditions justifying secrecy become less relevant, a party requesting disclosure will have a lesser burden in showing justification.

         Further, the Petitioner notes, the general secrecy of the grand jury can be pierced if a disclosure request complies with an enumerated exception under Super. R. Crim. P. 6(e)(3) (Rule 6(e)(3)), which provides for the release of documents in limited circumstances. However, the Petitioner contends that the exceptions providing for disclosure under Rule 6(e) are not an exclusive or exhaustive list. The Petitioner argues that some federal courts have granted disclosure of materials when a request did not fit the list of exceptions provided in the Federal Rules of Criminal Procedure. Those federal courts, the Petitioner explains, allow for disclosure in "exceptional circumstances" and will consider a release of material if there is significant public interest and if disclosure would further the goal of government transparency.

         Finally, the Petitioner contends that the immense historical significance and profound public interest constitute exceptional circumstances, as recognized by federal courts, warranting the disclosure of grand jury materials. Such exceptional circumstances, the Petitioner argues, justify disclosure in the instant matter and outweigh the need for grand jury secrecy. The Petitioner maintains that-although the grand jury investigation did not result in the indictment of any individual-revealing grand jury materials would not unjustly expose innocent individuals because many parties have already been under the public microscope for their involvement with 38 Studios, and the public is generally aware of their involvement.

         In its amicus curiae brief, the ACLU, in support of the Petitioner's request, cites similar arguments in favor of disclosure. The ACLU contends that grand jury records should be released in light of the extraordinary circumstances of the 38 Studios grand jury investigation. Namely, the ACLU contends that the public has a right to know the inner workings of the investigation since it dealt with the Rhode Island Legislature and the allocation of taxpayer funds. The ACLU maintains that the Court is not constrained by the Rhode Island Rules of Criminal Procedure and it may release records beyond those circumstances which allow for disclosure according to Rule 6(e)(3). Finally, the ACLU argues that the historical relevance of this investigation favors disclosure and that heightened public interest outweighs any need for secrecy.

         Alternatively, the Attorney General contends that the Petitioner's request should be denied because disclosure of the 38 Studios grand jury materials is not permitted under Rhode Island's Rules of Criminal Procedure. The Attorney General maintains that the request for disclosure does not meet any of the enumerated exceptions to Rule 6(e) as required to warrant disclosure. The Attorney General notes that the Petitioner's request is not brought preliminarily to, or in conjunction with, a judicial proceeding, since the State's civil suit for damages has already concluded.

         Further, the Attorney General maintains that the Petitioner has not demonstrated a particularized need for the materials, instead focusing her request on a need for governmental transparency and public interest. The Attorney General contends that such a basis is insufficient to permit disclosure under the Rules of Criminal Procedure and Rhode Island case law. Even if the Court were to consider disclosure outside the permitted exceptions to Rule 6(e), the Attorney General contends that the Petitioner's request does not merit disclosure according to policy considerations promulgated by the federal courts. The Attorney General notes that the identity of witnesses who testified before the grand jury have never been released, no witness has authorized disclosure, and the investigation closed relatively recently in 2015. It further argues that the statute of limitations for potential charges has not yet run and that the Petitioner's request is not properly limited in scope. Accordingly, the Attorney General maintains that disclosure is not appropriate under federal policy considerations.

         Finally, the Attorney General contends that the Petitioner's claim of public interest does not outweigh an interest in maintaining grand jury secrecy. The Attorney General argues that release of the materials without a demonstration of a particularized need could have a chilling effect on future grand juries and their role in the criminal justice system; such a disclosure could affect witnesses' willingness to testify or cooperate in fear that their testimony could be released without proper legal foundation. For all of the above reasons, the Attorney General contends that the Petitioner's request must be denied.

         III History of the Grand Jury

         The Rhode Island Supreme Court has stated that the purpose of the grand jury is to serve the '"dual function of determining if there is probable cause to believe that a crime has been committed and of protecting citizens against unfounded criminal prosecutions."' Ims v. Town of Portsmouth, 32 A.3d 914, 922-23 (R.I. 2011) (quoting U.S. v. Sells Eng'g, Inc., 463 U.S. 418, 423 (1983)). Our Supreme Court has also noted that a grand jury proceeding is not a trial; rather, the grand jury was developed primarily as an inquisitorial institution, as opposed to one of an adversarial nature. Id. at 923. A grand jury's role is to determine through inquiry whether or not a criminal prosecution is warranted based on the evidence presented. See id.; see also Sara Sun Beale, William C. Bryson, James E. Felman, and Michael J. Elston, Grand Jury Law and Practice, § 1:7 (2d ed. 2016). In carrying out its mission, the grand jury serves two primary roles, often referred to as the "sword" and "shield" functions. See U.S. v. Navarro-Vargas, 408 F.3d 1184, 1190-96 (9th Cir. 2005).

         Concern for the importance of the grand jury's dual function underlies the '"long-established policy that maintains the secrecy of the grand jury proceedings."' In re Doe, 717 A.2d 1129, 1134 (R.I. 1998) (quoting Sells Eng'g, 463 U.S. at 424). Due to the weighty nature of its responsibilities, the grand jury conducts its investigation behind closed doors where it is free from scrutiny by the public, the press, the court, and even the defendant and defense counsel. See 1 Charles A. Ian Wright, Arthur R. Miller, and Edward H. Cooper, Federal Practice & Procedure Criminal § 106 (4th ed. 2008).

         The Rhode Island Rules of Criminal Procedure address the critical role of the grand jury and its need for secrecy. Rule 6(e)(2)[1] states that

"[a] grand juror, an interpreter, a stenographer, an operator of a recording device, a typist who transcribes recorded testimony, an attorney for the State, or any person to whom disclosure is made . . . shall not disclose matters occurring before the grand jury, except as otherwise provided for in these rules. A knowing violation of Rule 6 may be punished as a contempt of court."

In contemplating the disclosure of grand jury materials, the Court must be mindful of the "fundamental policy of grand jury secrecy." See In re Doe, 717 A.2d at 1134 (internal quotation omitted). Accordingly, whenever a reviewing court is asked to determine whether a specific disclosure impermissibly pierces this veil of secrecy, the reviewing court must examine "not only the need for and the character of the material sought but also the effect such disclosure would have on policies underlying grand jury secrecy." Id.

         Accordingly, Rule 6(e)(3) contains a list of exceptions whereby disclosure of grand jury matters, otherwise prohibited by the Rules of Criminal Procedure, may be made. See Rules 6(e)(3)(A) and 6(e)(3)(C). Specifically, Rule 6(e)(3)(C) states that:

"(C) Disclosure otherwise prohibited by this rule of matters occurring before the grand jury may also be made-
"(i) when so directed by a court preliminarily to or in connection with a judicial proceeding;
"(ii) when permitted by a court at the request of the defendant, upon a showing that grounds may exist for a motion to dismiss the indictment because of matters ...

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