Federal Court in Ky. Declares Mistrial in Suit on Contractor's Violation of Export Controls
The U.S. District Court for the Western District of Kentucky declared a mistrial in a case against defense contractor Quadrant Magnetics for violating export controls after the government sent the company thousands of pages of documents relevant to the case immediately prior to and during the company's trial (United States v. Quadrant Magnetics, W.D. Ky. # 3:22-00088).
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Judge David Hale said the government failed to disclose certain material to Quadrant’s lawyers during discovery in a possible violation of the Brady rule, which requires prosecutors to hand over any information that may be favorable to the defense. A new trial has been set for May 27.
The trial centered around allegations Quadrant violated export control laws between 2012 and 2018 by shipping controlled technical data to a Chinese company without a license in violation of the International Traffic in Arms Regulations. The indictment also charged Quadrant, a sub-contractor, with defrauding the U.S. by defrauding its primary contractor GE Aviation. Before the trial, the judge rejected claims from Quadrant that Arms Export Control Act and ITAR licensing requirements for technical data violate the First and Fifth Amendments (see 2502210053).
The trial was initially delayed by a week due to the government's "latent production" of around 14,000 pages of relevant material, then, a week into the trial, the government disclosed another 13,600 pages of material relevant to the case, prompting discussion on a potential mistrial.
The withheld information fits into two general buckets. The first relates to another GE Aviation supplier, Adams Magnetics, and Adams' identical conduct in sending purportedly controlled data to China "with GE Aviation's knowledge and consent." In a motion concerning the evidence, Quadrant said the documents in this bucket "corroborate" the company's defenses that "GE Aviation knew and approved of Quadrant’s actions as part of an ongoing business relationship" and that Quadrant didn't intend to "mislead GE Aviation or the government."
The second bucket of documents is from Electron Energy Corporation, another magnet supplier that GE Aviation looked to buy from after Quadrant's alleged violations arose in 2017. Quadrant said these documents "show that GE Aviation continued to view the magnet as not-ITAR controlled" and "corroborate Quadrant’s defenses." Quadrant said it would have used these documents to cross-examine Electron Energy employee Steven Walmer at trial.
During a March 17 hearing on the documents, government attorney Joshua Judd said the U.S. disclosed the documents after learning that Quadrant subpoenaed Meg Langford, an employee of Adams, according to an unofficial transcript of the hearing. Judd said that after the subpoena, the government "looked in our production database to see what was produced" and found that there were documents related to Adams in "another database."
John Brownlee, counsel for Quadrant, said at the hearing that the failure to disclose the documents violates the Jencks Act, which requires the U.S. to produce any statement in the government's possession of a witness called by the U.S., and implicates the Brady rule. Providing the court with an example, Brownlee noted an email sent by Walmer to GE telling GE that Electron Energy's magnets were made in China and noting that GE said the data wasn't ITAR-controlled and didn't require an export license.
Brownlee said the documents strike at the "heart of the conspiracy" charge. "This is classic Brady," he said. "This is what this case in many ways is about, this whole thing is about whether or not these parts are in fact ITAR-controlled and here Mr. Walmer is saying no." Brownlee provided other examples.
In response, Hale said he's "concerned that Brady is implicated here." In declaring a mistrial, the judge said a Jencks Act violation had occurred, but that he didn't "see it as intentional" by the government. Hale added that it's "significant nonetheless because it impacts so many witnesses."
The litigants and the judge discussed whether to declare a mistrial or simply recall the witnesses so that the disclosed documents could be used for cross-examination. Asked whether he thought a mistrial was appropriate, Judd said the government has to "defer to the Court in this matter," though he stressed that he "can’t suggest to the Court that we agree with it.”
Although Hale declared a mistrial, he said he would have just recalled every affected witness if "this was a mere Jencks Act issue." The judge said "we are beyond the Jencks issue and we're into the Brady category."