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‐à‐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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