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Mississippi Department of Audit v. Gulf Publishing Company, Inc.

Supreme Court of Mississippi, En Banc

November 16, 2017

MISSISSIPPI DEPARTMENT OF AUDIT, STACEY PICKERING, JIM HOOD, CHRIS LOTT, DAVID HUGGINS, MELISSA C. PATTERSON, JOSEPH A. RUNNELS, JR., SANDRA R. CHESTNUT AND HAROLD E. PIZZETTA, III
v.
GULF PUBLISHING COMPANY, INC. MELISSA C. PATTERSON, STACEY PICKERING, INDIVIDUALLY, DAVID HUGGINS, INDIVIDUALLY, CHRIS LOTT, INDIVIDUALLY, MISSISSIPPI DEPARTMENT OF AUDIT, STACEY PICKERING IN HIS OFFICIAL CAPACITY AS STATE AUDITOR FOR THE STATE OF MISSISSIPPI, HAROLD E. PIZZETTA, III, MISSISSIPPI DEPARTMENT OF MARINE RESOURCES, JOSEPH A. RUNNELS, JR., SANDRA R. CHESNUT AND JIM HOOD
v.
GULF PUBLISHING COMPANY, INC.

          DATE OF JUDGMENT: 11/04/2013

          DATE OF JUDGMENT: 05/27/2014

         HARRISON COUNTY CHANCERY COURT, HON. JENNIFER T. SCHLOEGEL

          ATTORNEYS FOR APPELLANT: OFFICE OF THE ATTORNEY GENERAL BY: MARGARET P. ELLIS JUDY T. MARTIN ARTHUR F. JERNIGAN, JR. JOHN G. CORLEW ROBERT V. GREENLEE ALAN M. PURDIE MELISSA C. PATTERSON RONALD G. PERESICH ROY MERRITT TIPTON WILLIAM V. WESTBROOK, III SAMUEL E. L. ANDERSON LYNN CHAIN WALL JOHN T. KITCHENS THOMAS EUGENE WHITFIELD, JR. DION JEFFERY SHANLEY

          ATTORNEY FOR APPELLEE: HENRY LAIRD

          ATTORNEYS FOR APPELLANT: ARTHUR F. JERNIGAN RONALD G. PERESICH JOHN T. KITCHENS ALAN M. PURDIE MARGARET P. ELLIS JOHN G. CORLEW WILLIAM V. WESTBROOK ROY MERRITT TIPTON DION JEFFERY SHANLEY MELISSA C. PATTERSON SAMUEL E. L. ANDERSON JUDY T. MARTIN LYNN CHAIN WALL ROBERT V. GREENLEE THOMAS EUGENE WHITFIELD

          BEAM, JUSTICE

         ¶1. The Court of Appeals reversed and rendered a final judgment entered by the Harrison County Chancery Court, in which the chancery court held that: (1) Gulf Publishing's (GP) records request under the Mississippi Public Records Act (MPRA) was not subject to any exemptions contained in the act; (2) the Department of Marine Research (DMR) acted in bad faith by asserting defenses for the purpose of delay in violation of the Mississippi Litigation Accountability Act (MLAA); (3) DMR willfully and wrongfully denied GP's records requests; (4) the State Auditor acted in bad faith and willfully and wrongfully denied GP's requests; (5) the State Auditor was in civil contempt from November 4, 2013, until it purged itself on December 5, 2013, when it filed a motion with the federal district court, seeking permission to release the records requested by GP, which were then in the custody of a federal grand jury; therefore, the State Auditor was liable for attorney's fees and expenses resulting from the contempt; (6) GP was entitled to attorney's fees under the MPRA, the MLAA, and relevant caselaw for contempt and monetary sanctions for bad faith; (7) DMR and the State Auditor were jointly and severally liable for attorney's fees and other expenses; and (8) the following individuals were fined $100 each pursuant to the MPRA, for their participation in the willful and wrongful denial of GP's public-records request: State Auditor Stacey Pickering, Attorney General Jim Hood; Director of Investigations David Huggins, Investigator Chris Lott, Special Assistant Attorneys General Melissa Patterson, Joseph Runnels, Sandra Chestnut, and Harold Pizzetta.

         ¶2. GP petitioned this Court for writ of certiorari, which was granted. Having reviewed the record and considered GP's claim(s), we find the Court of Appeals should not have reached the question of whether the investigative-report exemption under the MPRA applied in this instance. As will be explained, that claim was waived. Therefore, that portion of the Court of Appeals' judgment holding that the public records sought by GP were exempt under the MPRA's investigative-report exemption is overruled.

         ¶3. We find that the Department of Audit, as a public body defined by Mississippi Code Section 25-61-3(a), is liable to GP for the civil penalty prescribed Mississippi Code Section 25-61-15, along with reasonable expenses and attorney's fees as found by the chancery court, for denying GP access to public records not exempt from the provisions of the MPRA.[1]

         ¶4. Also, we find no error in the chancery court's decision to fine Huggins $100 under the penalty provision contained in MPRA. See Miss. Code Ann. § 25-61-15 (Rev. 2010).

         FACTS AND PROCEDURAL HISTORY[2]

         ¶5. In 2012, a joint federal and state task force began investigating DMR for misappropriation of funds. The investigation lead to the indictments and convictions of several individuals, including former DMR Director Dr. Bill Walker; DMR Chief of Staff Joe Ziegler; DMR official Tina Shumate; D'Iberville City Manager Michael Janus; and Dr. Walker's son, Scott Walker.

         ¶6. During the investigation, on November 14, 2012, GP's subsidiary newspaper, The Sun Herald, submitted a written records request[3] to DMR, in accordance with Mississippi Code Section 25-61-5 of the MPRA. Miss. Code Ann. § 25-61-5 (Rev. 2010). DMR communicated its willingness to comply with the newspaper's request, but DMR and the newspaper could not agree on costs.

         ¶7. The newspaper submitted a second request on December 27, 2012, for additional records.[4] Before DMR's compliance or response was due, the Harrison County grand jury subpoenaed the same records covered by the newspaper's November 14 and December 27 requests.

         ¶8. The subpoenas, issued at the behest of the Department of Audit on January 6 and 9, 2013, required DMR's records to "to be 'retained in-place, '" to "be accessible upon demand by agents of the Mississippi Office of State Auditor, " and to "be released to no entity other than [the Department of Audit]." The subpoenas also stated, "This subpoena . . . may be satisfied by mailing or delivering a certified copy of said records[.]" Alleging the subpoenas prohibited DMR from releasing its records to anyone other than the state auditor, DMR informed The Sun Herald in writing that it could no longer comply with the public-records requests.

         ¶9. On January 15, 2013, the Department of Audit took possession of the records pursuant to the subpoenas. Almost all of the records had electronic copies. But a few records existed as uncopied and unscanned originals.

         ¶10. The next day, on January 16, 2013, GP sued DMR in the Harrison County Chancery Court to compel production of the records, without service upon the Attorney General, but instead upon DMR's director.

         ¶11. A week later, on January 22, 2013, special assistant attorneys general assigned to both DMR (Joseph Runnels) and the Department of Audit (Melissa Patterson), worked together to submit a protective order to the Harrison County Circuit Court.[5] DMR filed the motion for protective order in the circuit court, and the Department of Audit, through Patterson, signed off on the motion. The circuit court found "the . . . subpoena . . . prohibit[ed DMR] from complying with the [MPRA]." Therefore, the circuit court modified the subpoena to permit DMR to release to GP public records in its possession, even if those records also were subject to the subpoena.

         ¶12. On January 23, 2013, Counsel for GP Henry Laird and Counsel for DMR Runnels appeared before the chancery court. Laird told the chancery court that the parties were still working on a resolution and announced that he did not see any reason to go forward with the expedited hearing set for that day. Laird said there were two categories of records, one computerized, the other comprised of hard copies, which were voluminous.[6] According to Laird, they were attempting to work out an arrangement for GP to have access to the boxes containing the hard copies so GP could identify what documents, if any, within those boxes they wanted, and then have DMR make copies for GP.

         ¶13. Days later, DMR downloaded 22, 215 records to a "DVD" and handed it over to GP. The only records that were not released to GP were the uncopied and unscanned originals no longer in DMR's possession, but in the Department of Audit's possession. ¶14. Another hearing was held on April 23, 2013, at which the chancery court heard GP's claim that it was still seeking the records for which no electronic copy was available. DMR moved to dismiss, claiming GP had failed to prove that DMR wrongfully had denied the requests. The chancery court said it could "not force DMR to turn over records that they no longer possess or have access to[.]" Thus, the chancery court deemed the Department of Audit a "necessary party since they are the ones in physical custody and possession of all the documents that [GP] now seeks." The court ended the hearing by giving GP permission to join the Department of Audit as a necessary party.

         ¶15. GP filed a motion to amend its first complaint four months later, on August 16, 2013. And on August 26, 2013, GP filed a new, separate lawsuit, naming DMR and the Department of Audit as defendants, which was properly served on the Attorney General. The motion to amend was granted on September 10, 2013. The two lawsuits were consolidated.

         ¶16. DMR answered the second complaint by asserting that it had not wrongfully denied GP's requests, and that GP's claim already had been litigated in the first lawsuit. As part of its answer, the Department of Audit asserted the records in its possession were exempt under the MPRA's "investigative report" exemption. See Miss. Code Ann. § 25-61-3(f) (Supp. 2016).

         ¶17. The chancery court heard GP's second claim on October 30 and 31, 2013. During the hearing, the chancellor instructed the Department of Audit to bring the records to the courthouse. Before the records arrived, the chancery court had ruled from the bench that the records did not fall under the investigative-reports exemption. The chancery court allowed the documents to be taken from the courthouse and instructed the Department of Audit to copy the records or put DMR in a position to comply with GP's requests.

         ¶18. Though the chancery court later would rescind this statement, the court stated at the end of the hearing that "there has been no evidence presented to the [c]ourt that . . . DMR has done anything other than attempt to comply with the records request, at least based upon the evidence the [c]ourt has been presented." The chancery court, however, reserved the right to add, alter, amend, and/or revise her bench ruling when reduced to writing.

         ¶19. That same day, on October 31, an Assistant United States Attorney (AUSA) attempted to contact the chancellor. The chancellor did not speak with the AUSA or return his phone calls.

         Federal Subpoena

         ¶20. Before the chancery court's bench ruling was reduced to writing, the Clerk of Court for the United States District Court for the Southern District of Mississippi, through the AUSA, issued a subpoena on November 4, 2013, commanding the Department of Audit's Director of Investigations, Huggins, to appear the next day, at 9 a.m., at the federal building in Jackson, Mississippi, and to bring all the DMR records in the Department of Audit's possession.

         ¶21. Around 2:40 p.m. on November 4, Huggins informed the Department of Audit attorney, Melissa Patterson, of the federal subpoena. At around 5 p.m. that evening, Patterson notified the chancellor. Subsequently, at approximately 7:00 p.m. that evening, Patterson and GP's attorney, Laird, had a telephonic hearing with the chancellor. Laird suggested that Patterson seek a motion to quash or a protective order. But Patterson represented that she thought Huggins could, instead, appear before the grand jury and explain why he was unable to bring the records.[7] The chancery court ended the hearing by ordering Patterson to produce the records to the chancery court by 9 a.m. on November 5.

         ¶22. Shortly before midnight on November 4, the chancellor electronically filed an emergency order immediately seizing the records and ordering they be delivered to the chancery court so they could be copied and Bates-stamped before the Department of Audit complied with the federal subpoena.

         ¶23. The next morning, on November 5, Patterson contacted Investigator Chris Lott with the Department of Audit to arrange transportation of the records to the chancery court, but learned the records already had been transported to Jackson. Patterson notified the chancellor, and another hearing was held that day in which the chancellor found the Department of Audit in contempt of her October 31 bench ruling and subsequent emergency order filed by the court on the Mississippi Electronic Courts (MEC) system the night before on November 4, directing the Department of Audit to deliver the DMR records to the Harrison County Courthouse at 9 a.m.

         ¶24. The chancery court issued a bench ruling on November 5, announcing:

I have no choice at this time but to find that the Auditor by acting in cooperation with the federal prosecutor is in direct contempt of my ruling and my order of last week on October 31, and certainly in direct contempt of my protective order which I issued last night. Now, even if the Auditor cooperated with the federal prosecutor pursuant to the subpoena prior to my protective order being issued last night, nevertheless, the Auditor was certainly aware and under this Court's order to turn the documents over to the DMR.

         ¶25. That same day, on November 5, the state grand jury and the federal grand jury indicted several individuals in relation to the DMR investigation.

         Interlocutory Appeal

         ¶26. On November 6, 2013, the Attorney General's Office submitted a motion in the chancery court to stay all further proceedings pending appeal. And on November 8, 2013, the Department of Audit submitted a combined motion to alter or amend the judgment, to vacate the November 4, 2013, order, and to stay all proceedings pending appeal. On November 21, 2013, the Department of Audit petitioned this Court for interlocutory appeal, along with a motion to stay the chancery court proceedings. On December 3, this Court denied both the petition for interlocutory appeal and the motion to stay.

         Contempt

         ¶27. On November 16, 2013, in an order for direction, the chancellor invited GP to file a motion for contempt because "the federal grand jury subpoena itself did not prevent or restrict the copying of the original records requested by the subpoena." GP subsequently filed its motion for civil contempt and attorney's fees against the Department of Audit. GP did not allege that DMR or any other individuals were in contempt.

         ¶28. The civil contempt hearing started on December 4, 2013. At the beginning of the hearing, the Department of Audit moved for the chancellor to recuse herself, as she already had found the Department of Audit to be in contempt and, thus, reasonably would be perceived as already having bias in this matter. The chancellor held that the Department of Audit had waived the issue and denied the motion.

         ¶29. To make its case for contempt, GP first called State Auditor Stacey Pickering to testify as to why his office chose to comply with the federal subpoena.

         ¶30. Huggins was then called to testify about the events leading up to the delivery of the records to the federal grand jury, instead of the chancery court. According to Huggins, the AUSA, who was running the federal side of the DMR investigation, contacted him on November 1, 2013. The AUSA asked Huggins to come by the federal building on November 4, causing Huggins to suspect that he might be issued a subpoena. Already concerned about a federal subpoena, Huggins had spoken with Attorney General Hood, who advised, hypothetically, should a federal subpoena come down, Huggins should comply with it.

         ¶31. Huggins voluntarily went to the federal courthouse on November 4 and was issued a federal subpoena. Huggins said he initially thought he could comply with both the chancery court's ruling and the federal subpoena. He had the records sealed and hoped that would be enough to appear before the grand jury the next day and explain why he did not bring the records.

         ¶32. Unbeknownst to Patterson, around 6 p.m. on November 4, Huggins decided he had to show up at the federal grand jury or face federal penalties. Huggins said his decision was based on his conversation with Attorney General Hood as well as a conversation with the AUSA. Huggins told the AUSA his plan to try to comply with both the chancery court's ruling and the federal subpoena, but the AUSA advised Huggins to comply with the subpoena. Huggins testified that he called Lott at approximately 6:00 p.m. on November 4. Huggins told Lott that he (Huggins) had been directed by the AUSA to have these records in Jackson by 9:00 a.m. on November 5. Huggins said Lott called him an hour later and said, "We've decided to move tonight."

         ¶33. The contempt hearing ended with the Department of Audit informing the chancery court that necessary steps were being taken to release the records from the federal court.

         Motion to Release

         ¶34. On December 5, 2013, the Department of Audit filed a motion with the federal district court seeking permission to release the records to GP. On December 20, the federal district court ruled the records were not subject to federal grand-jury secrecy and, therefore could be released. See United States v. Walker, No. 1:13-CR-89-KS-MTP, 2013 WL 6805121, at *7 (S.D.Miss. Dec. 20, 2013).

         ¶35. Pursuant to the federal district court order, on December 27, 2013, the AUSA released the records to the Department of Audit, which then delivered them to the chancery court. Over the next two to three weeks, GP inspected and copied in part the records under supervision of the chancery court.

         Final ...


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