albert h. turkus (aht 7000) julia m. kazaks (jmk 7504...
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Albert H. Turkus (AHT 7000)
Julia M. Kazaks (JMK 7504)
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
(202) 371-7000
John B. Magee (JBM 0787)
Sanford W. Stark (SWS 8984)
MCKEE NELSON LLP
1919 M Street, N.W., Suite 200
Washington, D.C. 20036
(202) 775-1880
Dennis O’Grady (DO 7430)
Mark Hall (MH 9621)
RIKER, DANZIG, SCHERER
HYLAND & PERRETTI
One Speedwell Avenue
Morristown, New Jersey 07962
(973) 538-0800
Counsel for Debtors
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(AT NEWARK)
)
In re: ) Civ. No. 2:02cv03082 (SRC)
) Chap. 11 Nos. 01-30135 (RG) and
G-I HOLDINGS INC., et al., ) 01-38790 (RG) (Jointly Administered)
)
Debtors. ) Honorable Stanley R. Chesler
)
NOTICE OF DEBTORS’ MOTION TO SEAL FINANCE COMMITTEE STAFF
STATEMENTS
TO: THE HONORABLE STANLEY R. CHESLER,
UNITED STATES DISTRICT JUDGE
Case 2:02-cv-03082-SRC-MAS Document 312 Filed 04/17/2009 Page 1 of 3
2
THE UNITED STATES OF AMERICA
PLEASE TAKE NOTICE that on a date to be designated by the Court the undersigned
Skadden, Arps, Slate, Meagher & Flom LLP, McKee Nelson LLP and Riker Danzig Scherer
Hyland & Perretti LLP, co-counsel for G-I Holdings, Inc. and ACI, Inc. (collectively,
“Debtors”), shall move before the Honorable Stanley R. Chesler, at the United States District
Court, Frank R. Lautenberg U.S. Post Office & Courthouse, Courtroom 8, Newark, New Jersey
07101-0999, seeking the entry of an order to seal Finance Committee Staff Statements submitted
as exhibits in support of its Memorandum in Opposition to the Government’s Motion In Limine
and in Support of GAF’s Motion for Reconsideration of the Court’s June 2007 Partial Summary
Judgment (the “Motion”).
PLEASE TAKE FURTHER NOTICE that, in support of the Motion, Debtors shall rely
on the Memorandum of Law and Joint Declaration of John B. Magee and Michael J. Desmond
filed herewith. A proposed form of order is also submitted herewith.
Dated: April 17, 2009
Respectfully submitted,
____s/ Dennis O’Grady________________
Dennis O’Grady (DO 7430)
Mark Hall (MH 9621)
RIKER, DANZIG, SCHERER
HYLAND & PERRETTI
One Speedwell Avenue
Morristown, New Jersey 07962
(973) 538-0800
Case 2:02-cv-03082-SRC-MAS Document 312 Filed 04/17/2009 Page 2 of 3
3
Albert H. Turkus (AHT 7000)
Julia M. Kazaks (JMK 7504)
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
(202) 371-7000
John B. Magee (JBM 0787)
Sanford W. Stark (SWS 8984)
MCKEE NELSON LLP
1919 M Street, N.W., Suite 200
Washington, D.C. 20036
(202) 775-1880
Counsel for Debtors
Case 2:02-cv-03082-SRC-MAS Document 312 Filed 04/17/2009 Page 3 of 3
Albert H. Turkus (AHT 7000)
Julia M. Kazaks (JMK 7504)
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
(202) 371-7000
John B. Magee (JBM 0787)
Sanford W. Stark (SWS 8984)
MCKEE NELSON LLP
1919 M Street, N.W., Suite 200
Washington, D.C. 20036
(202) 775-1880
Dennis O’Grady (DO 7430)
Mark Hall (MH 9621)
RIKER, DANZIG, SCHERER
HYLAND & PERRETTI
One Speedwell Avenue
Morristown, New Jersey 07962
(973) 538-0800
Counsel for Debtors
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(AT NEWARK)
)
In re: ) Civ. No. 2:02cv03082 (SRC)
) Chap. 11 Nos. 01-30135 (RG) and
G-I HOLDINGS INC., et al., ) 01-38790 (RG) (Jointly Administered)
)
Debtors. ) Honorable Stanley R. Chesler
)
MEMORANDUM IN SUPPORT OF DEBTORS’ MOTION TO SEAL FINANCE
COMMITTEE STAFF STATEMENTS
Case 2:02-cv-03082-SRC-MAS Document 312-2 Filed 04/17/2009 Page 1 of 9
TABLE OF CONTENTS
i
FACTS
ARGUMENT
I. The Senate Request Contains Newly Discovered Evidence Not Previously Available to the
Parties or the Court Regarding the Application of the Transitional Rule..................................4
II. Debtors’ Interest in Submitting the Senate Request Under Seal Outweighs Need for Public
Disclosure ..................................................................................................................................4
III. No Less Restrictive Alternative to Sealing the Senate Requests Exists ....................................5
CONCLUSION
Case 2:02-cv-03082-SRC-MAS Document 312-2 Filed 04/17/2009 Page 2 of 9
ii
TABLE OF AUTHORITIES
CASES
Bank of Am. Nat’l Trust and Sav. Ass’n v. Hotel Rittenhouse Assoc., 800 F.2d 339 (3d Cir. 1986)..........3
In re Cendent Corp., 260 F.3d 183 (3d Cir. 2001) ......................................................................................3
Glenmede Trust v. Thompson, 56 F.3d 476 (3d Cir. 1995) .........................................................................3
Leucadia, Inc. v. Applied Extrusion Techn., Inc., 998 F.2d 157 (3d Cir. 1993)..........................................3
Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994) ...................................................................3
STATUTES AND REGULATIONS
I.R.C. § 731(c) .............................................................................................................................................1
U.S. District Court for the District Court of New Jersey, Local Civil Rule 5.3 ..................................1, 3, 5
Case 2:02-cv-03082-SRC-MAS Document 312-2 Filed 04/17/2009 Page 3 of 9
Debtors move pursuant to Local Civil Rule 5.3 to seal certain materials to restrict access
to this Court and counsel. Debtors can demonstrate good cause for this relief in the form of
legitimate public interests and can demonstrate that serious private and public injury would result
if the relief is not granted. Because no less restrictive means are available, the Court should
grant Debtors’ motion.
FACTS
On April 17, 2009, contemporaneously with this filing, Debtors filed their Memorandum
in Opposition to the Government’s Motion In Limine and in Support of GAF’s Motion for
Reconsideration Of The Court’s June 2007 Partial Summary Judgment. The Court’s partial
summary judgment in favor of the United States held that the 1994 binding contract exception to
I.R.C. § 731(c) (“Transition Rule”) did not apply to a liquidating distribution of a fixed payment
of cash and marketable securities to the Debtors in 1999. On April 17, 2009, Debtors filed a
motion for reconsideration of the Court’s partial summary judgment ruling. The government
now seeks penalties and in its motion in limine seeks to preclude Debtors from presenting certain
trial evidence on the Transition Rule for purposes of asserting penalty defenses.
Through newly discovered evidence and analysis, Debtors’ motion for reconsideration
demonstrates that (1) the Transition Rule was enacted solely based on Debtors’ legislative efforts
to obtain relief under Debtors’ contract, and (2) Debtors’ contract and liquidating distribution are
covered by the Transition Rule. Debtors’ new evidence includes deposition testimony and
affidavits of company executives, GAF’s professional lobbyists, and former Treasury
Department personnel, all of whom worked directly with members of Congress or Congressional
staff to secure enactment of the Transition Rule.
Case 2:02-cv-03082-SRC-MAS Document 312-2 Filed 04/17/2009 Page 4 of 9
In addition, Debtors developed affidavits reflecting the anticipated statements of two
Congressional staff members who worked on the Senate Finance Committee tax staff in 1994
(“Finance Committee Staff”), and who were instrumental in initiating and shepherding the
Transition Rule relief sought by GAF through the legislative process. The Office of Senate
Legal Counsel has advised Debtors’ counsel that before affidavits can be executed, Senate
procedures designed to implement institutional concerns and considerations, including the
Speech and Debate Clause of the United States Constitution, must be followed. These
procedures include, ultimately, obtaining the unanimous consent of the Senate.
Debtors’ counsel has invoked the formal procedure necessary to obtain these Senate
approvals, as reflected in the Joint Declaration of John B. Magee and Michael J. Desmond
(“Joint Declaration”) that accompanies this motion and in the sealed materials themselves. As
the Joint Declaration reflects, on April 17, 2009, Debtors initiated the formal Senate approval
process through a detailed submission to the Office of Senate Legal Counsel (“Senate Request”),
explaining the need for and disclosing the content of the affidavits.
The affidavits sought through the Senate Request are based on recent interviews Debtors’
counsel conducted with Finance Committee Staff and reflect the affidavit testimony Debtors
believe Finance Committee Staff would give. Their content is highly probative on the matters
addressed in Debtors’ opposition to the United States’ motion in limine and its simultaneous
motion for reconsideration. This request to seal the Senate Request is based on legitimate private
and public disclosure concerns of the United States Senate.
Debtors also request that the Court consider, in order to expedite and simplify the
introduction of these materials, ordering the government to stipulate to the content of the
affidavits unless the United States is able to produce specific information that the proposed
Case 2:02-cv-03082-SRC-MAS Document 312-2 Filed 04/17/2009 Page 5 of 9
affidavits of the Finance Committee Staff are not accurate.
ARGUMENT
Debtors’ acknowledge the long-standing principle in the Third Circuit that there is “a
common law public right of access to judicial proceedings and records” and that a party seeking
relief must show “good cause” to warrant abrogating this right. In re Cendant Corp., 260 F.3d
183, 192 (3d Cir. 2001). Though “‘the right of access is firmly entrenched, so also is the
correlative principle that the right . . . is not absolute’” but “‘must be balanced against the factors
militating against access.’” Leucadia, Inc. v. Applied Extrusion Tech., Inc., 998 F.2d 157, 166
(3d Cir. 1993) (quoting Bank of Am. Nat’l Trust & Sav. Ass’n v. Hotel Rittenhouse Assoc., 800
F.2d 339, 344 (3d Cir. 1986)). In moving to restrict public access to judicial proceedings and
records, a party must describe: “(a) the nature of the materials or proceedings at issue; (b) the
legitimate private or public interests which warrant the relief sought; (c) the clearly defined and
serious injury that would result if the relief sought is not granted; and (d) why a less restrictive
alternative to the relief is not available.” D.N.J. Civ. R. 5.3(c)(2).
The Third Circuit has identified a non-exhaustive list of factors to assist courts in
determining whether a party has demonstrated good cause sufficient to justify the sought-after
relief. These factors include whether disclosure will violate any privacy interests, whether the
information is being sought for an improper purpose, whether disclosure will cause
embarrassment, whether confidentiality over the information is important to public health and
safety, whether the sharing of information among litigants will promote efficiency, whether the
party benefiting from confidentiality is a public official or entity, and whether the case involves
issues important to the public. Pansy v. Borough of Stroudsburg, 23 F.3d 772, 787-91 (3d Cir.
1994). In total, “the analysis should always reflect a balancing of private versus public
interests….” Glenmede Trust Co. v. Thompson, 56 F.3d 476, 483 (3d Cir. 1995). Because the
Case 2:02-cv-03082-SRC-MAS Document 312-2 Filed 04/17/2009 Page 6 of 9
interest in protecting the formal Congressional approval process for obtaining sworn testimony
firmly outweighs any public interest in the substance of the Senate Request, and the information
is highly probative in a matter currently before the Court, Debtors’ motion to seal should be
granted.
I. The Senate Request Contains Newly Discovered Evidence Not Previously Available
to the Parties or the Court Regarding the Application of the Transitional Rule
The affidavits sought from the Finance Committee Staff reflect the recollections of active
participants to the 1994 enactment of the Transition Rule, who confirm the uncontradicted
evidence that GAF’s legislative efforts led to the enactment by Congress of that statutory
exception. The affidavits support Debtors’ position that the Transition Rule was drafted and
included in the statute at Debtors’ request, and tailored to Debtors’ specific situation. Through
the Senate Request, Debtors have invoked the formal process to make the information publicly
admissible evidence. Given the highly probative nature of this evidence, the pending motions
and their timing, and the likely delay in the Senate approval process, it is necessary to bring the
Senate Request to the Court’s attention immediately to avoid irreparable harm to Debtors’ case.
II. Debtors’ Interest in Submitting the Senate Request Under Seal Outweighs Need for
Public Disclosure
The public interest in upholding formal Senate approval procedures outweighs any
interest that may attach to public access to the material, and the sealing of these materials will
promote a substantial public purpose by allowing the Senate approval process to proceed before
publication. The affidavits sought by the Senate Request do not involve a specific matter of
public interest. Rather, they describe the process by which a piece of legislation was enacted at
Debtors’ specific request. Placing these materials under seal pending formal Senate approval
supports the public purpose reflected in the Senate rules that implement, among other
Case 2:02-cv-03082-SRC-MAS Document 312-2 Filed 04/17/2009 Page 7 of 9
considerations, a clause of the U.S. Constitution. Nor is disclosure of the Senate Request a
matter of public health or safety. In sum, there is no legitimate public need for the information
Debtors’ seek to seal.
On the other hand, Debtors’ have a significant interest in presenting to the Court the
views of Congressional staff members who played a key role in the enactment of transition relief
for GAF. The information is necessary to construct a fully developed record regarding the
application of the Transition Rule to the liquidating distribution in 1999.
III. No Less Restrictive Alternative to Sealing the Senate Requests Exists
The current motion schedule and the accompanying time constraints, together with
the anticipated delay necessary entailed by the processing of the Senate Request, necessitate
placing the Finance Committee Staff statements under seal.
CONCLUSION
For the reasons set forth above, Debtors request that the public’s access to the Senate
Request be restricted under D.N.J. Civ. R. 5.3.
Dated: April 17, 2009.
Respectfully submitted,
_______s/__Dennis O’Grady___________
Dennis O’Grady (DO 7430)
Mark Hall (MH 9621)
RIKER, DANZIG, SCHERER
HYLAND & PERRETTI
One Speedwell Avenue
Morristown, New Jersey 07962
(973) 538-0800
Case 2:02-cv-03082-SRC-MAS Document 312-2 Filed 04/17/2009 Page 8 of 9
Albert H. Turkus (AHT 7000)
Julia M. Kazaks (JMK 7504)
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
(202) 371-7000
John B. Magee (JBM 0787)
Sanford W. Stark (SWS 8984)
MCKEE NELSON LLP
1919 M Street, N.W., Suite 200
Washington, D.C. 20036
(202) 775-1880
Counsel for Debtors
3943821.1
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Albert H. Turkus (AHT 7000)
Julia M. Kazaks (JMK 7504)
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
(202) 371-7000
John B. Magee (JBM 0787)
Sanford W. Stark (SWS 8984)
MCKEE NELSON LLP
1919 M Street, N.W., Suite 200
Washington, D.C. 20036
(202) 775-1880
Dennis O’Grady (DO 7430)
Mark Hall (MH 9621)
RIKER, DANZIG, SCHERER
HYLAND & PERRETTI
One Speedwell Avenue
Morristown, New Jersey 07962
(973) 538-0800
Counsel for Debtors
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(AT NEWARK)
)
In re: ) Civ. No. 2:02cv03082 (SRC)
) Chap. 11 Nos. 01-30135 (RG) and
G-I HOLDINGS INC., et al., ) 01-38790 (RG) (Jointly Administered)
)
Debtors. ) Honorable Stanley R. Chesler
)
ORDER GRANTING DEBTORS’ MOTION TO SEAL FINANCE COMMITTEE STAFF
STATEMENTS
Debtors have filed a Notice of Motion to Seal Finance Committee Staff Statements
pursuant to Local Civil Rule 5.3 pending Senate authorization to execute the sworn statements of
Case 2:02-cv-03082-SRC-MAS Document 312-6 Filed 04/17/2009 Page 1 of 3
2
two Congressional staff members (the “Finance Committee Staff Statements”) involved in
developing the 1994 Transition Rule. Congressional rules implementing institutional
considerations, including the Speech and Debate Clause of the U.S. Constitution, require Debtors
to obtain formal approval from the Senate including, ultimately, the unanimous consent of the
Senate, in order to obtain executed versions of the Finance Committee Staff Statements. Thus,
Debtors’ Motion requests that the Court seal the draft statements and restrict access to this Court
and counsel. Sealing these materials will protect the interests of the affiants as well as the
institutional considerations of the Senate, while allowing the Court to consider crucial and highly
probative evidence supporting Debtors. Pursuant to Local Civil Rule 5.3, THE COURT
HEREBY FINDS that:
1) Debtors filed the declarations required to provide evidence of good cause for
this Court to permit filing under seal;
2) Debtors have sufficiently described the nature of the materials at issue;
3) Debtors have identified legitimate public and private interests that warrant the
relief sought;
4) Debtors have clearly defined a serious injury that would result if the order is
not granted; and
5) There is no less restrictive alternative available other than the relief sought.
Accordingly, for good cause shown, the Court ORDERS that the Finance Committee
Staff Statements shall be filed under seal, with access limited to the Court and counsel.
Case 2:02-cv-03082-SRC-MAS Document 312-6 Filed 04/17/2009 Page 2 of 3
3
IT IS SO ORDERED.
BY THE COURT:
Hon. Stanley R. Chesler
United States District Judge
Dated:_______________,2009
Case 2:02-cv-03082-SRC-MAS Document 312-6 Filed 04/17/2009 Page 3 of 3
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