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The Second Circuit held last month that an independent monitor
report is not a "judicial document" and, among other
things, largely curtailed district courts' oversight of
deferred prosecution agreements. United States v. HSBC Bank USA, N.A., No.
16‐308(L) (2d Cir. July 12, 2017). The case arose from a
five-year deferred prosecution agreement (DPA) that the government
had entered into with HSBC Bank, USA, N.A. in 2012.
The DPA in question called for the appointment of an independent
monitor to prepare periodic reports on HSBC's compliance with
the DPA itself and with anti-money laundering laws. When the
parties filed the DPA with the court and sought to exclude time
under the Speedy Trial Act, the district court concluded that it
had "authority to approve or reject the DPA pursuant to its
supervisory power." The district court also conditioned its
approval of the DPA on its own monitoring of the DPA's
implementation. In November 2015, the district court received a
letter from a member of the public seeking to unseal the
independent monitor's report regarding HSBC's compliance.
Finding that the monitor's report was a "judicial
document" to which the public enjoyed a qualified First
Amendment right of access, the district court granted the motion,
which led to this appeal.
The Second Circuit held, inter alia, that because the report is
not relevant to the performance of the judicial function, it is not
a "judicial document," and the district court had erred
in ordering it unsealed. The Court highlighted that
"attempting to forecast the relevance of the [report] at the
conclusion of the DPA's term is inherently speculative"
and "cannot support treating [it] as a judicial document at
this point in time."
The Second Circuit also revisited judicial oversight of DPAs
generally. The Court held that "the district court
impermissibly encroached on the Executive's constitutional
mandate to 'take Care that the Laws be faithfully
executed'" when it sua sponte invoked its supervisory
power to oversee the implementation of the DPA at the outset of the
case. Notably, the court concluded that absent unusual
circumstances, "a district court's role
vis‐ŕ‐vis a DPA is limited to arraigning the
defendant, granting a speedy trial waiver if the DPA does not
represent an improper attempt to circumvent the speedy trial clock,
and adjudicating motions or disputes as they arise."
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