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Timestamp: 2018-02-17 23:43:20
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SHELBY CIRCUIT JUDGE GRANTS WRIT LIMITING PRETRIAL CONFERENCES IN DISTRICT COURT
By LawReader Senior Editor Stan Billingsley July 4, 2009
Recently Shelby County Circuit Judge Chuck Hickman granted a Writ of Prohibition sought by Shelby County Attorney Hart Meggiben. The County Attorney sought the Writ of Prohibition against a ruling by Shelby District Judge Donna Dutton in which she ordered a pretrial conference in a criminal case styled Commonwealth v. Angela Peters.
This issue is of importance to the District Court in Kentucky, as it seriously restricts the inherent power of the District Court to be a “court of record”, negates several Rules of Procedure, and greatly enhances the ability of the Commonwealth to use the Circuit Court to interfere with the day to day operation of the District Court. This ruling also grants to the prosecutor the discretionary ability to punish defense lawyers who cross swords with him.
An appeal of Judge Hickman’s Writ of Prohibition was filed in the Court of Appeals in June.
Judge Hickman before becoming Shelby Circuit Judge was the Shelby County Attorney. Upon his elevation to the bench, he was replaced as County Attorney by his former Assistant County Attorney, Hart Meggiben.
Judge Hickman’s order says that Shelby District Judge Donna Dutton granted the defense request for a pretrial conference and ordered that the arresting police officer be present. The hearing was not conducted due to the filing of the County Attorney’s petition for a Writ of Prohibition.
The County Attorney took the position in his petition that a District Judge has no authority to require a pre-trial conference and to mandate that the arresting officer be present.
On August 29, 2008 the Circuit Judge issued a five page decision in which he granted the Writ of Prohibition. The Writ is written so broadly it appears to forbid the appearance of police officers at any future pretrial conferences in the District Courts of the 53rd. Judicial District.
The Writ of Prohibition issued by Judge Hickman said in part:
“The Shelby District Judge, Hon. Donna Dutton, entered Orders on July 15, 2008 and July 29, 2008 which ordered the appearance of a prosecution witness, the arresting police officer in the Shelby District Court action, Case No. 08-T-00855 Commonwealth v. Angela Peters, at a pretrial conference for unspecified discovery purposes.”
“The issue presented to the Court is as follows: Whether a District Court may order the Commonwealth to produce a prosecution witness, the arresting officer, at a pretrial conference for unspecified discovery purposes?”
“The Kentucky Rules of Criminal Procedure, statutory authority, or case law do not provide the District Court with any authority to order the production of a prosecution witness for unspecified discovery purposes prior to trial. “ (Note: Judge Hickman did not cite any statutory or case law authority for this claim in his five page decision. We can only speculate how the Writ Order will be applied to suppression hearings.)
“The District Judge’s Order impacts all prosecutions by the Commonwealth in the 53rd. Judicial Circuit, the integrity of the discovery process, and the structure of the discovery process as set out in the Kentucky Rules of Criminal Procedure. A Writ of Prohibition is the appropriate remedy herein.”
“The District Court ordered the attendance of the police officer at the pretrial conference on the basis of long standing practice and tradition because, “the production of the prosecuting witness, i.e. the officer, prior to trial has proven to be the most effective method in the 53rd. Judicial District used to expedite cases and aid in the disposition of cases.”
“There is nothing wrong with this informal practice, however, it is a distinct issue whether a Court may order a witness for the Commonwealth to appear before the Court to engage in what the Commonwealth terms “an unregulated, unspecified discovery exercise.” (emphasis added by court) “Neither the District Court or defense counsel identified the information sought from the police officer at the mandated pretrial conference.”
“Peters suggests that by not requiring police officers to attend pretrial conferences for unspecified discovery purposes will deny defendants in the 53rd. Judicial District “full disclosure of the nature of the charges against them.”
“It is the opinion of the Court that the District Court’s Order is unnecessary as the defense may secure discovery via RCr 7.24 and secure the testimony of prospective witnesses pursuant to RCr 7.10. “
“There is no basis found in the Kentucky Rules of Criminal Procedure or in applicable case law which would support the District Court’s Order. Based on the foregoing, the Writ of Prohibition is granted.” (emphasis added by court)
It would appear that Judge Hickman joins in the speculation of the County Attorney that the Defense might ask an improper discovery question at the hearing, and that they know in advance that any objection the Commonwealth made at such a hearing would be overruled by the District Court. Neither the County Attorney or the Circuit Judge cite legal authority to justify the extraordinary remedy of a Writ of Prohibition for an act that has not occurred and may never occur. The Writ does not explain how this ruling affects Motions in Limine and Suppression Motions.
We have heard reports that this Writ of Prohibition is selectively being applied by the Shelby County Attorney to deny pre-trial conferences with the arresting police officer to certain attorneys and not to others. If the County Attorney is selectively applying the Writ of Prohibition, it raises a question of prosecutorial vindictiveness. A selective application of this Writ by the County Attorney strikes a blow to his argument that the process itself is improper.
Com. v. Leap, 179 S.W.3d 809 (KY, 2005)
“…in certain cases in which action detrimental to the defendant has been taken after the exercise of a legal right, the court has found it necessary to `presume’ an improper vindictive motive.” United States v. Goodwin, 457 U.S. 368, 373 102 S.Ct. 2485, 2489 73 L.Ed.2d 74 (1982).
Analysis of Judge Hickman’s Writ of Prohibition
We perceive a serious flaw in the legal justification of the Writ of Prohibition Order. The Circuit Court has stated no finding of a specific violation of any rule of procedure that was mandated by the action of the District Court.
The Circuit Court merely speculates that it is possible that at the pre-trail conference some improper discovery question may be asked of the police officer.
Note the speculative nature of the language of the Circuit Court in its Writ of Prohibition:
…, it is a distinct issue whether a Court may order a witness for the Commonwealth to appear before the Court to engage in what the Commonwealth terms “an unregulated, unspecified discovery exercise.” (emphasis added by court) “Neither the District Court or defense counsel identified the information sought from the police officer at the mandated pretrial conference.”
The Circuit Court only assumes that something may arise to which the Commonwealth may properly object. It has cited no specific discovery request which violates any rule.
Further RCr 8.03 clearly permits the Court to order a pre-trial conference to “to consider such matters as will promote a fair and expeditious trial…” This broad language in the rule seems to authorize the pretrial procedure of the Shelby District Court.
See: RCr 8.03 Pretrial procedure
“At any time after the filing of the indictment or information the court on motion of any party or on its own motion may order counsel for all parties to appear before it for one or more conferences to consider such matters as will promote a fair and expeditious trial. At the conclusion of a conference the court shall prepare and file an order noting the matters agreed upon. This rule shall not be invoked in the case of a defendant who is not represented by counsel. HISTORY: Amended by Order 81-5, eff. 9-1-81; adopted eff. 1-1-65”
We find nothing in RCr 8.03 which requires the District Court to justify in advance its reasons for calling a pretrial conference.
Nothing prevents the Commonwealth at the pretrial conference from objecting to any specific question or discovery request when it is actually presented. If at the pretrial conference an issue arises, and if the court’s order is felt by the Commonwealth to violate the discovery rules, then one might justify a request for a Writ request.
We note that a Suppression Hearing process requires the charging witness (i.e. police officer) to appear and testify. We cannot determine from the Writ Order issued by Judge Hickman if he intends to also prohibit Motions in Limine and Suppression Hearings by his blanket order. We find little distinction from a hearing conducted before a trial in which the officer is required to testify when the hearing is called a suppression hearing, and another hearing ordered by the trial judge which is formerly called a “pretrial conference”.
The Writ of Prohibition order of the Shelby Circuit Court seems to be overly broad and as it prohibits acts by the District Court which are specifically authorized by RCr 8.03 in an attempt to limit in advance something that might not be authorized and may never occur.
We note that it is clearly within the jurisdiction of all trial courts to hold a pretrial conference. See RCr 8.03 authorizing pretrial conferences. The court through its inherent judicial power and its obligation to see that all parties enjoy due process of law provides the clear right of the court to conduct pretrial conferences.
The Shelby Circuit Court’s Writ Order would prohibit all pretrial conferences at the whim of the Commonwealth. Such an order would negate RCr 8.03 and therefore appears to be an abuse of discretion.
The second condition under which a Writ may be considered is if the “lower court is about to act incorrectly”. The Circuit Court has not stated in their Writ order how the District Court is “about to act incorrectly”. The Circuit Court only says the District Court is intending to conduct “an unregulated, unspecified discovery exercise.”
The reading of every ruling we have found regarding the justification for granting a Writ (which is always said to be an exceptional remedy) implies that some specific improper action of the lower court must be identified.
Further, we find in the Writ Order no specific justification for the claim that the pretrial conference ordered by the District Court will be “unregulated”. We suggest that the proper regulation is found in RCr 7.24 and RCr 7.26. It is unusual for one to assume that a judge is going to act improperly in the future.
We would suggest that the Rules of Criminal Procedure provide for a great deal of discovery. See RCr 6.22 and RCr 7.24. Therefore all discovery is not prohibited.
The blanket Writ issued by the Circuit Court concludes that all discovery is improper.
Therefore the Writ issued herein is overly broad. Any fair reading of the Writ Order will lead one to conclude that the order is vague about what conduct is prohibited unless one concludes that all discovery is prohibited.
The Writ issued by the Shelby Circuit Court is a blanket prohibition of discovery and this has been held to be an abuse of discretion.
See: Volvo Car Corp. v. Hopkins, 860 S.W.2d 777 (Ky., 1993)
“The Court of Appeals was “of the opinion that respondent’s blanket order denying discovery is erroneous and a clear abuse of discretion.” The basis of the Court of Appeals’ ruling was stated as follows:
“The appellate courts of this Commonwealth have long held that discovery rules are to be accorded liberal treatment and that limiting their application must be defined by relevancy and privilege. There is no prerequisite to discovery that the party be prepared to prove his case. [Citations omitted.] Respondent made no findings that the information sought to be discovered by petitioners is irrelevant or privileged. “
…“As stated Hickman v. Taylor, 329 U.S. 495, 67 S.Ct. 385, 91 L.Ed. 451 (1947), a protective order against discovery is appropriate only upon proof that it is “being conducted in bad faith or in such manner to annoy, embarrass, or oppress the person subject to the inquiry.”
The Criminal Rules provide authority for the court to order the Commonwealth to deliver a complete written disclosure of the details of the criminal charge against the defendant. The Writ Order admits as much as it states that the District Court is permitted to authorize alternative methods of discovery such as an order granting a request for a Bill of Particulars.
A Bill of Particulars is a list of written statements made by a party to a court proceeding, upon demand of another party, that sets forth details of a claim or defense. A bill of particulars may be used in either criminal defense or in civil litigation.
In criminal law, defense attorneys may file a motion requesting bills of particulars from prosecuting attorneys. However, prosecuting attorneys can not request the same of the defense. This request may be part of an omnibus motion, motion in limine, or similar motion.
The Commonwealth must respond in good faith to the Bill of Particulars order or risk dismissal of the charges against the defendant, and possible face sanctions for contempt of court if they fail to comply with the courts order.
A pre-trial conference provides the Commonwealth an opportunity to disclose all information required and authorized by a Bill of Particulars without all the paperwork.
So one option of the court and the defendant is to pepper the Commonwealth with formal Bill of Particular requests.
The written Bill of Particulars response can have the effect of a deposition in that if at trial there is a variance from the Bill of Particulars response, then the defense has an opportunity to seek dismissal and sanctions against the prosecutor. The convenience of the pretrial conference allows this information to be shared without all the formal pleading.
So if the Shelby Circuit Court’s Writ of Prohibition is upheld, the District Court Judge and the defendant can certainly respond with a barrage of motions and orders for the information they sought informally to be provided in writing. We scratch our head in wonderment at the Circuit Court’s reasoning that the discovery complained of by the Commonwealth in their petition for a Writ, can be obtained through a Bill of Particulars, but cannot be obtained at a pretrial conference.
Most prosecutors have concluded that it is far less work for them to attend a pretrial conference to work out these issues then to spend their days writing formal responses to Bill of Particular requests. Most prosecutors allow open book discovery, and have found that this makes their workload far less than a practice that fights the defense on every single discovery issue.
See: RCr 6.22 Bill of particulars
“The court for cause shall direct the filing of a bill of particulars. A motion for such bill may be made at any time prior to arraignment, or thereafter in the discretion of the court. A bill of particulars may be amended at any time subject to such conditions as justice requires. HISTORY: Adopted eff. 1-1-63”
3) DISCOVERY IS ALLOWED IN CRIMINAL CASES:
The Rules clearly permit a great deal of discovery in criminal cases. Further RCr 7.24 provides a method of regulation of the discovery process. The Claim by the Commonwealth that a pretrial conference is an “unregulated” procedure is far fetched in view of the limitations in the following cited Rules.
See: RCr 7.24 Discovery and inspection
(1) Upon written request by the defense, the attorney for the Commonwealth shall disclose the substance of any oral incriminating statement known by the attorney for the Commonwealth to have been made by a defendant to any witness, and to permit the defendant to inspect and copy or photograph any relevant (a) written or recorded statements or confessions made by the defendant, or copies thereof, that are known by the attorney for the Commonwealth to be in the possession, custody, or control of the Commonwealth, and (b) results or reports of physical or mental examinations, and of scientific tests or experiments made in connection with the particular case, or copies thereof, that are known by the attorney for the Commonwealth to be in the possession, custody or control of the Commonwealth.
(2) On motion of a defendant the court may order the attorney for the Commonwealth to permit the defendant to inspect and copy or photograph books, papers, documents or tangible objects, or copies or portions thereof, that are in the possession, custody or control of the Commonwealth, upon a showing that the items sought may be material to the preparation of the defense and that the request is reasonable. This provision authorizes pretrial discovery and inspection of official police reports, but not of memoranda, or other documents made by police officers and agents of the Commonwealth in connection with the investigation or prosecution of the case, or of statements made to them by witnesses or by prospective witnesses (other than the defendant).
(i) If the defendant requests disclosure under Rule 7.24(1), upon compliance to such request by the Commonwealth, and upon written request of the Commonwealth, the defendant, subject to objection for cause, shall permit the Commonwealth to inspect, copy, or photograph any results or reports of physical or mental examinations and of scientific tests or experiments made in connection with the particular case, or copies thereof, within the possession, custody, or control of the defendant, which the defendant intends to introduce as evidence or which were prepared by a witness whom the defendant intends to call at trial when the results or reports relate to the witness’s testimony.
(ii) If the defendant requests disclosure under Rule 7.24(2), upon compliance with such request by the Commonwealth, and upon motion of the Commonwealth, the court may order that the defendant permit the Commonwealth to inspect, copy, or photograph books, papers, documents or tangible objects which the defendant intends to introduce into evidence and which are in the defendant’s possession, custody, or control.
(i) If a defendant intends to introduce expert testimony relating to a mental disease or defect or any other mental condition of the defendant bearing upon the issue of his or her guilt or punishment, the defendant shall, at least 20 days prior to trial, or at such other time as the court may direct upon reasonable notice to the parties, notify the attorney for the Commonwealth in writing of such intention and file a copy of such notice with the clerk. The court may for cause shown allow late filing of the notice or grant additional time to the parties to prepare for trial or make such other order as may be appropriate.
(ii) When a defendant has filed the notice required by paragraph (B)(i) of this rule, the court may, upon motion of the attorney for the Commonwealth, order the defendant to submit to a mental examination. No statement made by the defendant in the course of any examination provided for by this rule, whether the examination be with or without the consent of the defendant, shall be admissible into evidence against the defendant in any criminal proceeding. No testimony by the expert based upon such statement, and no fruits of the statement shall be admissible into evidence against the defendant in any criminal proceeding except upon an issue regarding mental condition on which the defendant has introduced testimony. If the examination ordered under this rule pertains to the issue of punishment (excluding a pretrial hearing under KRS 532.135), the court shall enter an order prohibiting disclosure to the attorneys for either party of any self-incriminating information divulged by the defendant until the defendant is found guilty of a felony offense, unless the parties otherwise enter into an agreement regulating disclosure.
(C) If there is a failure to give notice when required by this rule or to submit to an examination ordered by the court under this rule, the court may exclude such evidence or the testimony of any expert witness offered by the defendant on the issue of his or her mental condition.
(D) Evidence of an intention as to which notice was given pursuant to this rule, but later withdrawn, shall not be admissible, in any civil or criminal proceeding, against the person who gave said notice.
(4) If the case has been set for trial, a request for relief under this rule shall be made a reasonable time in advance of the trial date, and the granting of a continuance by reason of such request shall lie within the sound discretion of the court.
(5) An order granting relief under this rule shall specify the time, place and manner of making the discovery and inspection permitted and may prescribe such terms and conditions as are just.
(6) On a sufficient showing the court may at any time order that the discovery or inspection be denied, restricted or deferred, or make such other order as is appropriate. On motion the court may permit the Commonwealth to make such showing, in whole or part, in the form of a written statement to be inspected by the court privately; and if the court thereupon grants relief following such private inspection the entire text of the Commonwealth’s statement shall be sealed and preserved in the records of the court to be made available to the appellate court in the event of an appeal by the defendant.
(7) One (1) motion shall exhaust the relief available to the movant under this rule, except that a subsequent motion may be sustained on a showing of just cause.
(8) If subsequent to compliance with an order issued pursuant to this rule, and prior to or during trial, a party discovers additional material previously requested which is subject to discovery or inspection under the rule, that party shall promptly notify the other party or the other party’s attorney, or the court, of the existence thereof.
(9) If at any time during the course of the proceedings it is brought to the attention of the court that a party has failed to comply with this rule or an order issued pursuant thereto, the court may direct such party to permit the discovery or inspection of materials not previously disclosed, grant a continuance, or prohibit the party from introducing in evidence the material not disclosed, or it may enter such other order as may be just under the circumstances.
HISTORY: Amended by Order 2004-5, eff. 1-1-05; prior amendments eff. 1-1-03 (Order 2002-1), 3-1-99 (Order 98-3), 1-1-99 (Order 98-2), 10-1-94 (Order 94-1), 9-1-93, 1-1-88, 1-1-87, 1-1-86; adopted eff. 1-1-65
Further regulation of criminal discovery procedures is found in RCr 7.26:
RCr 7.26 Demands for production of statement and reports
(1) Except for good cause shown, not later than forty-eight (48) hours prior to trial, the attorney for the Commonwealth shall produce all statements of any witness in the form of a document or recording in its possession which relates to the subject matter of the witness’s testimony and which (a) has been signed or initialed by the witness or (b) is or purports to be a substantially verbatim statement made by the witness. Such statement shall be made available for examination and use by the defendant.
(2) If the Commonwealth claims that a statement to be produced under this Rule 7.26 does not relate to the subject matter of the witness’s testimony, the court shall examine the statement privately and, before making it available for examination and use by the defendant, excise the portions that do not so relate. The entire text of the statement shall be sealed and preserved in the records of the court to be made available to the appellate court in the event of an appeal by the defendant.
HISTORY: Amended by Order 96-1, eff. 1-1-97; prior amendments eff. 1-1-86, 9- 1-81; adopted eff. 1-1-65
4) THE PETITION FOR THE WRIT LACKS A FUNDAMENTAL ELEMENT
One of the required elements of a Writ of Prohibition is that the party seeking the Writ has no other remedy at law but the Writ. We would suggest that the Commonwealth could seek a “protective order” under CR 26.03. Such an order could limit discovery objected to by the Commonwealth. That would provide an avenue of relief and therefore rule out one of the fundamental requirements of a Writ of Prohibition.
See: Hardy v. Goodwine, No. 2007-SC-000284-MR (Ky. 6/25/2009) (Ky., 2009)
“A writ of prohibition is an extraordinary remedy and should only be granted in exceptional circumstances.” James v. Shadoan, 58 S.W.3d 884, 885 (Ky. 2001) (citing Bender v. Eaton, 343 S.W.2d 799, 800 (Ky. 1961)). The standard for issuing a writ of prohibition is as follows:
A writ of prohibition may be granted upon a showing that (1) the lower court is proceeding or is about to proceed outside of its jurisdiction and there is no remedy through an application to an intermediate court; or (2) that the lower court is acting or is about to act erroneously, although within its jurisdiction, and there exists no adequate remedy by appeal or otherwise and great injustice and irreparable injury will result if the petition is not granted.”
Also see: Com. v. Tipton, 770 S.W.2d at 241 and Dunkel v. Boetler, No. 2008-SC-000223-MR (Ky. 5/21/2009) (Ky., 2009).
Reasons justifying a Pre-trial Conference:
There are many reasons why courts conduct pre-trial conferences. We have complied a list of the following reasons, and we suggest there are many more reasons that justify a pre-trial conference.
RCr 8.03 says that:
“the court on motion of any party or on its own motion may order counsel for all parties to appear before it for one or more conferences to consider such matters as will promote a fair and expeditious trial.”
Issues which may be raised in Pre-Trial Conference (this is not exhaustive)
1. stipulation of facts
2. setting of trial date
3. establishment of a pre-trial order
4. 404B notice
6. motion to amend indictment or complaint
7. “consider such matters as will promote a fair and expeditious trial.”
8. speedy trial motion
9. limitation of witnesses
10. qualification of expert witnesses
11. Brady Rule disclosure motion
12. motion to dismiss – jurisdiction
13. bail review
14. bill of particulars motion
15. discovery orders
16. consideration of preemptory challenges
17. consideration of jury instructions
18. separation and joinder issues
19. waiver or demand of jury trial
20. review of video or audio tapes
21. narrow the scientific issues in dispute
22. appointment of counsel, discharge of counsel
23. competence evaluation of defendant
24. in camera review of privileged medical records
25. probable cause review
Application of Civil Rules to Criminal Practice
The Rules of Criminal Procedure allow application of Civil Rules. We believe that CR 95 is useful in understanding the broad nature allowed for the conduct of pre-trial conferences.
See: RCr 13.04 Application of Civil Rules to criminal procedure
The Rules of Civil Procedure shall be applicable in criminal proceedings to the extent not superseded by or inconsistent with these Rules of Criminal Procedure.
HISTORY: Amended by Order 81-5, eff. 9-1-81; prior amendment eff. 7-1-75; adopted eff. 1-1-63
CIVIL RULE 95 PRETRIAL CONFERENCE
A pretrial conference shall be scheduled in all cases at the discovery and status conference. The pretrial conference shall be for the purpose of:
(a) Simplifying the issues and agreeing upon the issues of law and upon the issues of fact to be tried.
(b) Exploring the possibility of settlement.
(c) Disposing of all remaining motions.
(d) Considering amendments to pleadings.
(e) Exploring possible admissions of fact and documents that will avoid unnecessary proof.
(f) Limiting the number of expert witnesses.
(g) Any other matter that will aid in disposition of the case.
AUTHORITY OF COURT TO COMPEL ATTENDENCE OF WITNESS
All courts have great power to compel the attendance of witnesses at any criminal proceeding. If the court orders a police officer to appear for any proceeding before the court, the witness may be sanctioned for non-compliance.
RCr 7.06 Indispensable witness
(1) If it appears by affidavit in any criminal proceeding that the testimony of a person is indispensable and that there are reasonable grounds to believe that it will be impracticable to secure that person’s attendance by subpoena, the court may issue an order to any peace officer to bring the witness before the court. A hearing shall then be held without unnecessary delay at which the witness shall be present and represented by counsel unless waived, and the court may require the witness to give bail for his or her appearance as a witness. The applicable provisions governing bail shall apply to bail for indispensable witnesses. If the witness fails to give bail, the court may commit him or her to custody pending a final disposition of the proceeding in which the testimony is needed. The court may order the witness’s release if he or she has been detained for an unreasonable length of time and may modify at any time the requirement as to bail
(2) If such witness is committed for failure to give bail, the court on written motion of the witness and upon notice to the parties may direct that the witness’s deposition be taken. After the deposition has been taken the court shall discharge the witness.
HISTORY: Amended by Order 98-3, eff. 3-1-99; prior amendments eff. 1-1-85 (Order 84-2), 9-1- 81 (Order 81-5); adopted eff. 1-1-63
KRS 421.110 Punishment of witness for contempt.
Disobedience of a subpoena; intentional evasion of a service of it, by concealment, or otherwise; concealment or removal of a minor to prevent service of a subpoena upon him, or preventing his attendance as a witness, by a person having control of him; or a refusal to be sworn or to answer as a witness, or to subscribe an affidavit or deposition when lawfully ordered, may be punished as a contempt of the court or officer by whom the attendance or testimony of the witness is required.
KRS 421.120 Liability of disobedient witness for costs and damages.
When a witness is brought before a court for contempt by disobedience of a subpoena, and it is shown that the legal fees for travel and one (1) day’s attendance were paid or tendered to him when the subpoena was served, and that he failed to attend without reasonable cause, the court may summarily order him to pay the party, on whose behalf he was summoned, the costs occasioned to him by the disobedience of the subpoena, not exceeding twenty dollars ($20); and he shall also be liable for any damages occasioned by the failure to attend.
KRS 421.130 Warrant of arrest of disobedient witness — Bond.
If a witness fail to attend in obedience to a subpoena, the court or officer before whom his attendance was required may issue a warrant for arresting and bringing him before the court or officer, at a time and place to be fixed in the warrant, to give his testimony, and answer for the contempt. If the warrant be not for immediately bringing the witness before the court or officer, a sum shall be fixed in which the witness may give bond, with surety, for his appearance; and if no sum be fixed by the court or officer, it shall be one hundred dollars ($100).
Judge Martin J. Sheehen Vindicated by U.S. Supreme Court – It took twelve years, but his important ruling in the “Rosetta Stone Case” has now been upheld.
By LawReader Senior Editor Stan Billingsley July 2, 2009
Twelve years after the Kentucky Supreme Court shot down some DUI rulings made by then Kenton District Judge Martin J. Sheehan (now Kenton Circuit Judge) he was vindicated by the U.S. Supreme Court in a ruling handed down on June 25, 2009.
In 1996 the Kentucky Supreme Court in Commonwealth v. Wirth, 936 S.W.2d 78, considered a case which was called by us as ‘THE ROSETTA STONE CASE”.
We call Judge Sheehen’s ruling made in the Kenton District Court in 1994, the “Rosetta Stone Case” because it aggregated some half dozen legal issues that were of great importance to the practice of DUI law and we felt it would explain the law just as the real Rosetta Stone lead archeologists to an understanding of the written Egyptian language.
Sheehan told LawReader that he was presented with a case which raised numerous issues which were then being debated by the bar, and he attempted to discuss and resolve all of those issue in one case. He was aware that his ruling would likely be reviewed by the Court of Appeals and the Supreme Court.
He was correct. The Court of Appeals and later the Kentucky Supreme Court heard his ruling and were (we will use the word) “dismissive” of Sheehan’s ruling.
One key ruling Sheehan made was that the records of the BA technician could not be introduced without the technician being present and available for cross-examination.
On June 25th, we believe the U.S. Supreme Court answered that question, and upheld Sheehan’s reasoning, in Melendez-Diaz v. Massachusetts, No. 07-591.
The Supreme Court held that a state forensic analyst’s lab report that is prepared for use in a criminal prosecution is subject to the demands of the Sixth Amendment’s Confrontation Clause. With Justice Antonin G. Scalia writing for the majority and joined by Justices John Paul Stevens, David H. Souter, Clarence Thomas, and Ruth Bader Ginsburg, the Court reasoned that the lab reports constitute affidavits which fall within the “core class of testimonial statements” covered by the Confrontation Clause. Therefore, when Mr. Melendez-Diaz was not allowed to confront the persons who created the lab reports used in testimony at his trial, his Sixth Amendment right was violated.
The U.S. Supreme Court held that crime laboratory reports may not be used against criminal defendants at trial unless the analysts responsible for creating them give testimony and subject themselves to cross-examination. Justice Scalia wrote: “The confrontation clause may make the prosecution of criminals more burdensome, but that is equally true of the right to trial by jury and the privilege against self-incrimination.”
We believe, that this ruling applies to the ruling in Wirth by the Ky. Supreme Court that allowed BA technicians to submit a written report about the BA machines status, and held that the technician did not have to appear at trial on this issue.
Melendez-Diaz argued that the State’s introduction of the drug analysis certificates violated his Sixth Amendment right to confront witnesses against him under the Court’s ruling in Crawford v. Washington. Crawford had held that so-called “testimonial” evidence cannot be introduced at trial unless the defendant has a chance to cross-examine the witness providing the evidence. Melendez-Diaz characterized the lab analysis as testimonial and argued that Crawford required the lab technician to testify on the results.
The Melendez ruling now establishes that crime lab reports are “testimonial” in nature and thus subject to Crawford v. Washington.
CRAWFORD V. WASHINGTON, 124 S.Ct. 1354, 158 L.Ed.2d 177 (U.S. 03/08/2004) was issued almost ten years after Judge Sheehan made his ruling in the original Wirth case. In 2004 in Commonwealth v. Walther he again issued a ruling against the admission of BA lab technician reports without the technician having to be present, and cited Crawford v. Washington, which upheld and applied the confrontation clause of the 6th. Amendment to a similar case.
The Kentucky Supreme Court quickly granted discretionary review of Sheehan’s decision in Walther the same year. In 2004 the Kentucky Supreme Court in Commonwealth v. Walther ,189 S.W.3d 570 once again overruled Judge Sheehan on his ruling which held that a BA technician’s report about the working condition of a BA machine was “testimonial” and therefore subject to Crawford v. Washington limitations.
The Kentucky Supreme court said in their ruling in Walther :
“On December 9, 2004, the trial judge entered an opinion and order suppressing the evidence in question on grounds that (1) the evidence was “testimonial” in nature and, thus, inadmissible under the United States Supreme Court’s holding Crawford v. Washington, 541 U.S. 36, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004); and (2) the evidence was “untrustworthy” because computerized printouts of tests performed on the machine by the breath-alcohol technician prima facie indicated that the machine was tested for accuracy at 6:09 p.m. on June 3, 2004, in Cynthiana, Harrison County, Kentucky, and again at 6:11 p.m. on the same date in Erlanger, Kenton County, Kentucky—a physical impossibility. The trial judge then dismissed both charges.1 We granted the Commonwealth’s motion to certify the following question of law:
Can a certified copy of a breath-alcohol machine’s maintenance and test records be admitted into evidence to show compliance with 500 KAR 8:020 § 2(1) without in-court testimony by the breath-alcohol technician who performed the maintenance and tests?
We answered this question in the affirmative in both Commonwealth v. Wirth, 936 S.W.2d 78, 82-83 (Ky.1996), and Commonwealth v. Roberts, 122 S.W.3d 524, 528-29 (Ky.2003). The trial judge, however, held in this case that “Crawford does in fact supersede the prior decisions of the Kentucky Supreme Court in Wirth and its progeny” on this issue.2 We disagree.
A footnote in the Walther decision identified Judge Sheehan, in an unusual comment not generally found in Supreme Court decisions:
“Judge Sheehan, who suppressed the maintenance and test records in this case, is the same district judge who suppressed similar records in Wirth, holding then that this type of evidence is not admissible under the business or public records exceptions to the hearsay rule. KRE 803(6); KRE 803(8). As noted, we held otherwise.”
Our reading of Melendez leads us to conclude that the U.S. Supreme Court has applied the “confrontation clause” to the reports of all crime lab technicians and this includes BA technicians. This means that in future DUI cases where BA testimony is sought to be introduced by the Commonwealth, they must produce the BA technician, and he will be subject to cross-examination.
We concede that there is the possibility that a future Supreme Court will interpret Melendez differently and may try to say that a BA technician is not the same as a Crime Lab technician…but any fair reading of Melendez says such reports are “testimonial” and therefore subject to the confrontation clause.
We note the Kentucky Supreme Court has whittled down Daubert over the years to make exceptions allowing the introduction of “junk science’ such as drug dog testing, fingerprints, etc. and it is possible that they might try to find a way to sidestep Melendez.
On the other hand, this strong ruling in Melendez might just as well be viewed by the current Ky. Supreme Court as justification to re-examine recent rulings which have limited the Daubert test rule in Kentucky . We note that Melendez for the first time recognized the serious questions of reliability of many crime lab procedures, and a national study has recently criticized the way courts blindly use questionably science.
The Bottom Line is that Judge Sheehan was right twelve years ago, and we compliment him for his foresight.
See Walther and Wirth decisions:
189 S.W.3d 570
Liberty Astin WALTHER, Respondent.
No. 2005-SC-0001-CL.
Gregory D. Stumbo, Attorney General, Frankfort, Christopher S. Nordloh, Assistant Kenton County Attorney, Covington, Counsel for Petitioner.
Harry P. Hellings, Jr., Hellings & Pisacano, PSC, Covington, Counsel for Respondent.
At 2:24 a.m. on June 9, 2004, Respondent Liberty Astin Walther, a Kenton County, Kentucky, deputy jailer, was operating his motor vehicle within the city limits of Fort Mitchell, Kentucky, when he was stopped by an officer of the Ft. Mitchell Police Department. Respondent was arrested and charged with a first offense of operating a motor vehicle with a blood-alcohol concentration of or above 0.08, KRS 189A.010(1)(a), or while under the influence of alcohol, KRS 189A.010(1)(b), a Class B misdemeanor. KRS 189A.010(4)(a) (fine of $200 to $500 or imprisonment for 48 hours to 30 days or both). He was also charged with careless driving, KRS 189.290, a violation. KRS 189.990(1) (fine of $20 to $100).
The Uniform Citation charging Respondent with these offenses indicates that he was stopped after the arresting officer observed him traveling 48 miles per hour in a 35 miles per hour zone, rounding a curve at an unsafe rate of speed, and drifting into the opposite lane of traffic; that after making the stop, the officer detected the odor of alcohol on or about Respondent’s person; that the results of a field sobriety test were “unsatisfactory;” that Respondent admitted drinking “probably ten beers” between 8:00 p.m. and 1:30 a.m.; and that a breath-alcohol test performed by use of an Intoxilyzer 5000 breathalyzer machine measured Respondent’s blood-alcohol level at 0.124.
During a bench trial held in the Kenton District Court on November 9, 2004, the Commonwealth offered evidence in the form of certified records of maintenance and tests performed by a breath-alcohol technician to prove that the machine used to test Respondent’s breath, Intoxilyzer 5000 EN s/n [serial number] 68-012628, was in proper working order. Respondent objected to the admission of this evidence, and the trial judge took the issue under submission. On December 9, 2004, the trial judge entered an opinion and order suppressing the evidence in question on grounds that (1) the evidence was “testimonial”
in nature and, thus, inadmissible under the United States Supreme Court’s holding Crawford v. Washington, 541 U.S. 36, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004); and (2) the evidence was “untrustworthy” because computerized printouts of tests performed on the machine by the breath-alcohol technician prima facie indicated that the machine was tested for accuracy at 6:09 p.m. on June 3, 2004, in Cynthiana, Harrison County, Kentucky, and again at 6:11 p.m. on the same date in Erlanger, Kenton County, Kentucky—a physical impossibility. The trial judge then dismissed both charges.1 We granted the Commonwealth’s motion to certify the following question of law:
In Roberts, we set forth with specificity the five foundation requirements necessary for admission of the results of a breath-alcohol test. 122 S.W.3d at 528. The first requirement is proof “[t]hat the machine was properly checked and in proper working order at the time of conducting the test.” Id. In that respect, 500 KAR 8:020 § 2 provides:
(1) A breath alcohol analysis instrument shall be accurate within plus or minus 0.005 or plus or minus five (5) percent, whichever is greater, alcohol concentration units reading to be certified. To determine accuracy of instruments, a technician trained or employed by the Department of State Police shall perform analyses using a certified reference sample at regular intervals.
(2) All breath alcohol analysis instruments shall be examined by a technician trained or employed by the Department of State Police prior to being placed into operation and after repairs of any malfunctions.
The evidence suppressed by the trial judge was offered to establish the first foundational requirement for admission of the breath-test results. The evidence consisted of three sets of copies of maintenance and test records pertaining to Intoxilyzer 5000 EN s/n 68-012628. Each set contained a notarized certification by Greg Blankenship, the breath-alcohol technician who prepared and had custody of them, that they were true and exact copies of the original records maintained by him and that he prepared and maintained them in the regular course of his duties as an employee of the Kentucky State Police Breath Alcohol Maintenance Program.
Thus, they were otherwise admissible without extrinsic evidence of authenticity, i.e., additional testimony of Blankenship, under KRE 902(4) and KRE 1003.3 The records include computer printouts of test results that, as the trial judge noted, are largely incomprehensible to a layperson. Thus, it is Blankenship’s interpretation of those test results that the trial judge characterized as “testimonial.”
The first set of records (Commonwealth’s exhibit 2A) pertained to tests performed by Blankenship on June 3, 2004, when the machine was returned to operation after being temporarily removed to the manufacturer’s Owensboro, Kentucky, plant for service and repairs.4 In addition to the computer printouts, this set included a “Performance Work Sheet” with a printed column listing thirty-eight separate tests to be performed, an adjacent column of blank spaces with the heading “Verified,” and another column of blank spaces adjacent to the second with the heading “Notes.” Blankenship handwrote “OK” in the “Verified” column beside each described test. He also made three handwritten entries in the “Notes” column, writing “2339 RPM” on the line next to the test for “Motor speed;” “.083″ on the line next to the test for “Calibration Check 0.080″ (indicating that the calibration was within 0.005 as required by 800 KAR 8:020 § 2(1)); and “Time to time out = 3 min. & 1 sec.” on the line next to the test for “No Sample Given Time NSG.”
The second set of records (Commonwealth’s exhibit 2B) pertained to maintenance and tests performed by Blankenship on July 8, 2004. In addition to the computer printouts, this set contains a document entitled “Breath Alcohol Instrument Service Record,” on which Blankenship handwrote that the maintenance and tests were performed at Erlanger, Kenton County, and that the reasons for the tests were “routine” with a reported complaint of “cold breath tube.” Blankenship also handwrote on this document under the heading “subject test,” the words “OK .083 on subject test calibration check” and the following under the heading “Comments”:
Reset all tube connections. All tubes OK upon arrival. Monitored specs and settings. Changed solution. Cleaned and serviced unit as needed. Ran tests. All tests OK. Unit OK for use.
The document was signed by Blankenship and dated “7-8-04″ in handwriting.
The third set of records (Commonwealth’s exhibit 2C) pertained to maintenance and tests performed by Blankenship on July 15, 2004. In addition to the computer printouts, this set also contains a “Breath Alcohol Instrument Service Record,” on which Blankenship handwrote that the tests were conducted at Erlanger, Kenton County, that the reasons for the tests were “routine,” and that the reported complaints were “None.” Blankenship also handwrote on this document under the heading “subject test,” the words “OK.084 on subject test calibration check” and
the following under the heading “Comments”:
Monitored specs and settings. Changed solution. Cleaned and serviced unit as needed. No problem reported, None found. Ran standard tests. All tests OK. Unit OK for use.
The document was signed by Blankenship and dated “7-15-04″ in handwriting.
In Crawford v. Washington, the United States Supreme Court held that the Confrontation Clause of the Sixth Amendment to the United States Constitution does not permit the use of court-created hearsay exceptions or other tests of “reliability,” e.g., the “particularized guarantees of trustworthiness” articulated Ohio v. Roberts, 448 U.S. 56, 66, 100 S.Ct. 2531, 2539, 65 L.Ed.2d 597 (1980), to admit testimonial hearsay statements against a defendant at a criminal trial unless the witness is unavailable and the defendant had a prior opportunity for cross-examination. Crawford, 541 U.S. at 68, 124 S.Ct. at 1374. The Commonwealth does not assert either that Blankenship was unavailable for trial or that Respondent had a prior opportunity to cross-examine him. Thus, the only issue is whether the notations Blankenship made in the documents reflecting his maintenance and the results of his tests on the Intoxilyzer machine were “testimonial.” To provide guidance in making this determination, the U.S. Supreme Court explained:
The text of the Confrontation Clause… applies to “witnesses” against the accused — in other words, those who “bear testimony.” “Testimony,” in turn, is typically “[a] solemn declaration or affirmation made for the purpose of establishing or proving some fact.” An accuser who makes a formal statement to government officers bears testimony in a sense that a person who makes a casual remark to an acquaintance does not.
Id. at 51, 124 S.Ct. at 1364 (citations omitted).
The Court also stated that, at a minimum, the term “testimonial” applies to police interrogations and to prior testimony, whether at a preliminary hearing, before a grand jury, or at a formal trial. Id. at 68, 124 S.Ct. at 1374. Because the statement at issue in Crawford was a statement given to the police during a custodial interrogation, “testimonial under any definition,” Id. at 61, 124 S.Ct. at 1370, the Court “[left] for another day any effort to spell out a comprehensive definition of `testimonial.’” Id. at 68, 124 S.Ct. at 1374. However, it did endorse the view that statements were testimonial, if, e.g., they “were made under circumstances which would lead an objective witness reasonably to believe that the statement[s] would be available for use at a later trial.” Id. at 52, 124 S.Ct. at 1364. Applying his well-documented “originalist” view of constitutional interpretation,5 i.e., that the Constitution must be interpreted today as the Framer’s originally understood it,6 Justice Scalia, the author of Crawford, noted therein that several hearsay exceptions were well established by 1791, “most of [which] covered statements that by their nature were not testimonial—for example, business records or statements in furtherance of a conspiracy.” Id. at 56, 124 S.Ct. at 1367 (emphasis added).7
Every jurisdiction but one that has considered this issue since Crawford has concluded that maintenance and performance test records of breath-analysis instruments are not testimonial, thus their admissibility is not governed by Crawford. Bohsancurt v. Eisenberg, 212 Ariz. 182, 129 P.3d 471, 480 (Ct.App.2006); Rackoff v. State, 275 Ga.App. 737, 621 S.E.2d 841, 845 (2005); Napier v. State, 827 N.E.2d 565, 569 (Ind. Ct.App.2005); State v. Carter, 326 Mont. 427, 114 P.3d 1001, 1007 (2005); State v. Godshalk, 381 N.J.Super. 326, 885 A.2d 969, 973 (Law Div.2005); Green v. DeMarco, 11 Misc.3d 451, 462-63, 812 N.Y.S.2d 772, 780-81 (N.Y.Sup.Ct.2005); State v. Norman, 203 Or.App. 1, 125 P.3d 15, 18-19 (2005); Luginbyhl v. Commonwealth, 46 Va.App. 460, 618 S.E.2d 347, 354-55 (2005); Shiver v. State, 900 So.2d 615, 618 (Fla.Dist.Ct.App.2005).
We have no difficulty aligning our jurisdiction with this substantial majority. Blankenship did not make the notations in question for the purpose of proving Respondent’s guilt. Napier, 827 N.E.2d at 569. He did not accuse Respondent of any wrongdoing. Luginbyhl, 618 S.E.2d at 354. A properly operating breathalyzer instrument could just as well prove innocence as guilt. Thus, Blankenship was not “bear[ing] testimony” against Respondent. Crawford, 541 U.S. at 51, 124 S.Ct. at 1364. His notations pertained only to whether certain tests were performed, the results of those tests, and whether the machine should continue in use or be referred to the manufacturer for repairs. The notations were made for quality control purposes and were used at trial only to establish one of the foundational requirements for admission of Respondent’s breath-test result. Carter, 114 P.3d at 1005-06. Blankenship probably knows when he prepares his maintenance and test records that the information contained therein might be used at a trial (though probably not which trials). However, the fact that the records have an incidental use in court as evidence of the reliability of the machine during a particular time frame does not alter the fact that the records have a primary business purpose that would exist, i.e., to assure compliance with 500 KAR 8:020 § 2, even in the absence of this litigation. Green, 11 Misc.3d 451, 462-63, 812 N.Y.S.2d at 780-81. As observed by the Court of Appeals of Oregon:
[T]he certifications in this case do not resemble the classic kind of testimonial evidence at which the Confrontation Clause was aimed — ex parte examinations of witnesses intended to be used to convict a particular defendant of a crime. Rather, the certifications are evidence about the accuracy of a test result arrived at by a machine. They were created by state employees in the course of carrying out routine ministerial duties required by statute and administrative rule to certify the accuracy of test results of Intoxilyzer machines. . . .
…. [The technicians] were merely ensuring that the machines operated properly and provided accurate readings before and after defendant’s test result was obtained. Unlike police or prosecutorial interrogators, the technicians have no demonstrable interest in whether the certifications produce evidence that is favorable or adverse to a particular defendant.
Norman, 125 P.3d at 18-19.
We conclude that the notations contained in Blankenship’s reports were not testimonial, thus their admission into evidence was neither governed nor affected by the holding in Crawford.
1. The audiotapes of the proceedings held on November 9 and December 9, 2004, were not made a part of the record on appeal, and the order of dismissal does not explain why the trial judge dismissed the charges of operating a motor vehicle while under the influence of alcohol, KRS 189A.010(1)(b), and careless driving, neither of which would require proof of Respondent’s blood-alcohol level for conviction.
2. Judge Sheehan, who suppressed the maintenance and test records in this case, is the same district judge who suppressed similar records in Wirth, holding then that this type of evidence is not admissible under the business or public records exceptions to the hearsay rule. KRE 803(6); KRE 803(8). As noted, we held otherwise.
3. Respondent did not object on grounds that the records were inadmissible under KRE 803(8) because they contained factual findings offered by the government in a criminal case, KRE 803(8)(C), or under KRE 803(6) because Blankenship’s certification did not recite that the information contained in the records was entered “at or near the time” the information was obtained, KRE 803(6), though the contents of the records, themselves, as described infra, seem to indicate that they were created on site and contemporaneously with the conduct of the maintenance and/or testing.
4. Although the records also contain a “Certificate of Calibration” signed by an employee of the manufacturer, that fact is irrelevant to their admissibility.
5. E.g., Antonin Scalia, Originalism: The Lesser Evil, 57 U. Cin. L.Rev. 849, 862 (1989).
6. Id. at 851-52.
7. Justice Scalia also somewhat reluctantly acknowledged that the exception for dying declarations was established before 1791, but stated that “[i]f this exception must be accepted on historical grounds, it is sui generis.” Id. at 56 n. 6, 124 S.Ct. at 1367 n. 6.
936 S.W.2d 78
COMMONWEALTH of Kentucky, Appellant,
Michael Alan WIRTH, Appellee.
No. 95-SC-402-CL.
Rehearing Denied Jan. 30, 1997.
A.B. Chandler, III, Attorney General, Frankfort, Garry L. Edmonson, Kenton County Attorney, Covington, for appellant.
Robert A. Riley, Assistant Public Advocate, LaGrange, Edward C. Monahan, Assistant Public Advocate, Frankfort, for appellee.
Wilbur M. Zevely, Florence, for amicus curiae.
We granted the Commonwealth’s request for certification of the law (Ky. Const. § 115 and CR 76.37(10)) to determine the proper construction of KRS 189A.010 and other statutes which deal with driving under the influence of alcohol. In a broadly interpretive opinion, the Kenton District Court construed the statute to require, inter alia, a pre-trial election by the Commonwealth as to which of the four subparts of KRS 189A.010(1) it would undertake to prove, and to require additional warnings by which a defendant would be informed that he may not be compelled to submit to any chemical testing and to further correct perceived inaccuracies in the statutory warnings. The trial court also held that without expert testimony to prove the absorption rate of alcohol, chemical testing performed after the last ingestion of alcohol will not be admitted in evidence to prove blood alcohol content at the time the defendant was driving. Finally, the trial court held that expert testimony as to the proper operation of the machine would be required to establish a foundation for admission of the results of a breath test.
We have been informed that great uncertainty and inconsistency prevails within the divisions of the Kenton District Court and perhaps in district courts elsewhere in Kentucky. In this opinion we will answer the questions which have been raised while recognizing, nevertheless, that respondent, for reasons of double jeopardy, may not be further prosecuted due to the trial court’s finding that he was not guilty of a violation of the per se statute, KRS 189A.010(1)(a).
After having been observed driving in an erratic manner after midnight on December 3, 1994, respondent was stopped by a Villa Hills police officer on suspicion of violating
the alcohol driving laws. After failing various field sobriety tests, respondent was arrested and taken to the police station. At the station, an officer who was certified to operate the Intoxilyzer 5000 read respondent the warnings required by KRS 189A.105. After observing respondent for twenty-three minutes, the test was administered and the result obtained was .156 blood alcohol content. After various pre-trial motions and a suppression hearing, the case was set for trial by jury. Thereafter, however, respondent waived his right to a jury trial and the case was submitted to the trial court upon a joint stipulation of facts. The facts so stipulated were that the arresting officer had probable cause to arrest respondent; that the warning required by KRS 189A.105(1)(a) was read to respondent; that the operator was properly certified to operate the Intoxilyzer 5000 pursuant to the administrative regulations; that the administration of the breath test followed the proper sequential steps required by the regulations; that the ambient air sample fell within an acceptable range; and that respondent was observed for twenty-three minutes before the breath test was given.
Despite the stipulated facts, the trial court found defendant not guilty substantially on grounds that the Commonwealth had failed to introduce evidence which related the Intoxilyzer result back in time to the point at which respondent had last been observed operating a motor vehicle, a period found to be one hour and twelve minutes. On this basis, the charges against respondent were dismissed.
The first issue we will address is whether the Commonwealth must elect under which section of KRS 189A.010(1) it intends to proceed. In this case, as is typical, the required election was between (a) and (b). Subsection (a) provides that a violation occurs when a person operates or is in physical control of a motor vehicle while the alcohol concentration in his blood or breath is .10 or greater. This is usually referred to as the “per se ” statute and requires proof only of .10 or more alcohol concentration without regard to its effects on motor vehicle operation. King v. Commonwealth, Ky.App., 875 S.W.2d 902 (1994). Subsection (b) proscribes operation or physical control of a motor vehicle while under the influence of alcohol. This subsection broadly deals with the effect of alcohol on the motor vehicle operator and is usually proven by evidence of aberrant driving behavior.
The conduct proscribed in KRS 189A.010(1)(b) is not substantially different than under former law. What is different is subsection (a) which criminalizes the presence of chemicals in a defendant’s blood or breath. In our view, this provision does not create a new or separate offense, but merely provides an additional means by which a motor vehicle alcohol related offense may be committed. While an additional means of committing the offense has been created, the punishment remains one and the same. As we see it, therefore, the question is whether in circumstances where a defendant may be guilty of violating two or more sections of the same statute, but subjected only to a single punishment, is it proper for the prosecution to go forward with all available proof of statutory violations, and permit a conviction on whatever basis is supported by the evidence. The answer is in the affirmative. Robards v. Commonwealth, Ky., 419 S.W.2d 570 (1967).
The trial court has read KRS 189A.010(1) to prefer or even mandate only a per se prosecution if such evidence is present. It said:
The legislative scheme appears to have envisioned that all cases involving a BA reading or blood alcohol content of .10% or greater would be tried under KRS 189A.010(1)(a) as a per se offense….
The legislative intent to encourage that all DUI cases with a BAC of .10% or higher be tried as “per se” cases is strongly evidence in the provisions of KRS 189A.010(2). In this statute the legislature omitted the presumption of intoxication that was present in prior law. This means that under KRS 189A there is no positive statutory presumption of intoxication if the BAC is .10% or higher. The only statutory presumptions in this Chapter regarding intoxication are now negative or neutral
presumptions and only apply in cases where the BAC is less than .10%. The theory goes that since there is no longer any need to prove intoxication or impairment, only the reading in excess of the statutory minimum is relevant. Therefore, there is no longer a need for a presumption of intoxication or impairment.
Slip op. at 9. We find no support in the statute for this interpretation. We observe that the obvious reason for the omission of any presumption when the blood alcohol content reading is .10 or greater is that a completed offense is established thereby, rather than a rebuttable presumption of impairment of driving ability. King v. Commonwealth, supra.
We have recently reiterated the viability of alcohol driving prosecutions based on evidence other than that which is derived from scientific testing. Commonwealth v. Hicks, Ky., 869 S.W.2d 35 (1994), we quoted with approval from Allen v. Commonwealth, Ky.App., 817 S.W.2d 458 (1991), and stated that a DUI conviction could be sustained without evidence procured by use of a device for measuring intoxication. We held that the trial court erred in dismissing a case over prosecution objection where the scientific evidence had not been admitted. Indicating that the observations of the police officer would have been sufficient to make a prima facie case for the jury, we said:
In such a circumstance, the Commonwealth was entitled to go forward and the trial judge was without authority to dismiss the case. We reiterate, it is not the province of a trial court to determine that a case should be dismissed contrary to the wishes of a party who has announced ready for trial.
While we do not agree with an interpretation that the statute or laws requires an election as to which of the four statutory subsections will be prosecuted to the exclusion of all others, it would appear that fundamental fairness and appropriate trial preparation requires notice as to which statutory subsections will be proven by the Commonwealth. Such notice should be given in good faith within a reasonable time prior to trial to permit the defendant to assemble evidence in opposition to the charges against him. A blanket notice covering all possible violations without regard to the available evidence would defeat the purpose and be tantamount to no notice at all.
Accordingly, it is our determination that the trial court erred with respect to its prohibition against a prosecution pursuant to KRS 189A.010(1) upon multiple theories. Where there is evidence to prove one or more theories of the case, the Commonwealth may present all such evidence and have the jury render a verdict thereon.
The next question presented is whether the warning provided for in KRS 189A.105 is insufficient and should be supplemented with additional warnings. It was the trial court’s opinion that the warnings enumerated in KRS 189A.105(1)(a)(1), (2) and (3) are inaccurate and contain misinformation and should be supplemented so as to avoid any misleading and achieve greater accuracy. In particular, a primary focus is placed upon the provision which states that “no person shall be compelled to submit to any test or tests.” KRS 189A.105. Appellee insists that not only are the warnings set forth in the statute inaccurate, but that it would be impossible to craft a warning which would be truly adequate. The remedy he proposes is to inform a defendant of his right to counsel prior to deciding whether to take or refuse a breath or blood test.
Initially, we discern no basis upon which a court may sua sponte supplement a warning required by a statute. Quite plainly the statute states that at the time a breath, blood or urine test is requested, the person shall be informed of certain matters. If such a warning is inaccurate, only the Legislature possesses power to modify it to achieve greater accuracy except where the inaccuracy would be so grave as to amount to a constitutional violation. While one may envision a fact pattern in which the required statutory warning would be inaccurate or misleading as applied, in general, it is not, and the trial court was without authority to require supplementation of the warning. In the context of a defendant’s constitutional rights under Boykin v. Alabama, 395 U.S. 238, 89 S.Ct.
1709, 23 L.Ed.2d 274 (1969), this Court has held that one pleading guilty need not be informed of every possible consequence of the guilty plea. We observed that a multitude of events occur in a criminal proceeding which might influence a defendant to plead guilty or stand trial and that it would be impossible to inform a defendant of all facts and law which might affect his decision. Jewell v. Commonwealth, Ky., 725 S.W.2d 593 (1987). The same reasoning applies here.
In addition, we wish to correct what appears to be a widespread misinterpretation of the statute. By virtue of KRS 189A.103, one who operates a motor vehicle consents to a test of his blood, breath or urine for the purpose of determining alcohol concentration. The phrase “no person shall be compelled” in KRS 189A.105 could not rationally have been intended to contradict the consent provisions of KRS 189A.103. A more reasonable interpretation of the language used is that one who refuses will not be physically forced to submit to a chemical test. It does not mean that such person has a lawful right to refuse such testing.
The courts of this Commonwealth have not heretofore extended the constitutional right to counsel to the pre-chemical test stage of the proceeding and we decline to do so now. Newman v. Stinson, Ky., 489 S.W.2d 826 (1972); Commonwealth, Transportation Cabinet v. Cornell, Ky.App., 796 S.W.2d 591 (1990).
The next issue we will address concerns the foundation requirement for admission of a breath test. While admitting in evidence the result of the breath test in this case, as a condition of such admission the trial court required testimony from the technician who serviced the machine as a foundation for such evidentiary admission. The trial court recognized that “of all the District Courts in Kentucky, this is one of the very few that requires testimony from the B/A technician as a foundation element for introduction of B/A results.” Slip op. at 18. It rejected the widespread use of the business and public records exception to the hearsay rule (KRE 8.03(6) and (8)) as evidence of timely and proper calibration of the machine to assure its accuracy, and instead relied upon a 1975 opinion of the Ohio Court of Appeals, State v. Fellows, 47 Ohio App.2d 154, 352 N.E.2d 631 (1975), which required the testimony of the person who calibrated the machine.
More than twenty years ago this Court decided Marcum v. Commonwealth, Ky., 483 S.W.2d 122 (1972), and Owens v. Commonwealth, Ky., 487 S.W.2d 897 (1972). We held that the test result should be admitted on the testimony of the operator:
We believe the integrity was sufficiently established as the operator of the machine testified concerning the training and the operation of the machine, that all necessary preoperation checks were performed and that the machine was functioning satisfactorily.
It is generally held that the prosecution has the burden of proving tests such as the breathalyzer were correctly administered. At a minimum this proof must show that the operator was properly trained and certified to operate the machine and that the machine was in proper working order and that the test was administered according to standard operating procedures. We believe the proof in this case met these requirements.
Id. at 900-01. The standard set forth in Marcum and Owens remains the principal foundation requirement. The only additional requirements are found in KRS 189A.103(3)(a), KRS 189A.103(4), and 500 KAR 8:020(2), which may be satisfied by means of business or public records showing compliance with the additional requirements. Provided the documentary evidence may be properly admitted, it is unnecessary to produce the testimony of the technician who serviced and calibrated the machine.
While this Court would be loath to discourage scholarship and thoughtful application of the law, we remain mindful of SCR 1.040(5) which requires the trial courts of this Commonwealth to follow applicable precedents of the Supreme Court or where there are no such precedents, those established in the opinions of the Court of Appeals. Where this Court or the Court of Appeals has spoken
to a particular issue, trial courts are not at liberty to embrace the contrary decisions from other jurisdictions even though they may believe them to be preferable.
As to appellee’s contention with respect to a qualitative differences between prosecutions under the per se statute and under the law as it was when Owens v. Commonwealth was decided, we first observe that the conviction in Owens was for manslaughter in the second degree. In that case, the breath test evidence was admitted and amounted to persuasive evidence of the appellant’s intoxication at the time he struck another vehicle and killed the driver. Thus, the contention that greater certainty is required now than under former law is unpersuasive. In fact, breath testing for intoxication has been in existence for a long time and has been used in a variety of prosecutions. While breath testing may not be flawless, it has been determined to have sufficient reliability to be admissible in evidence and to sustain a conviction. Morgan v. Shirley, 958 F.2d 662 (6th Cir.1992). We discern no need or basis upon which to require a greater degree of certainty.
The final issue is whether the Commonwealth was required to present expert testimony by which the breath test result would be related back in time to the point of motor vehicle operation. The statute at issue here makes it an offense to be in physical control of a motor vehicle while the alcohol concentration in the driver’s blood or breath is .10 or more. In every case a significant period of time will elapse between the time of driving and the time of testing. In this case that period was one hour and twelve minutes. Even if there was no time taken for travel or administrative activities associated with the arrest and testing, manufacturers’ protocols require at least twenty minutes observation during which the subject to be tested may not ingest any substances. The contention which emerges is that the test does not reflect the true blood alcohol content at the time of operation or control of a motor vehicle. 1 The trial court agreed:
This Court rules that the B/A test result obtained within a reasonable time of operation, while admissible, does not make a prima facie case for violation of KRS 189A.010(1)(a). In order for the state to make a prima facie case there must be some evidence relating the BAC back to the time of operation.
Slip op. at 25. The court’s ruling was despite its recognition that
from a practical standpoint, most of the information necessary to accurately extrapolate B/A results is solely within the knowledge of the accused. For example, information regarding food consumption, duration of alcoholic beverage consumption, the quantity of alcohol consumed and the time alcohol consumption ceased is all information critical to extrapolation. Unfortunately, from the prosecutorial standpoint, in most cases such information is solely within the knowledge of the accused, not the Commonwealth.
We recognize that other jurisdictions are divided as to whether extrapolation evidence is necessary. While it is widely acknowledged that one’s alcohol concentration level may change between the time of driving and testing, in most cases the delay will favor the defendant by producing a lower reading. An exception would be where one drank an extraordinary quantity in a brief period as described in n. 1, hardly a factual circumstance we should use to establish a benchmark. A literal interpretation
of KRS 189A.010(1)(a) would require instantaneous testing to obtain a conviction under the per se statute. Such an interpretation would, of course, effectively abolish the statute. We are required to refrain from construing statutes in such a manner. Bailey v. Reeves, Ky., 662 S.W.2d 832 (1984). A more appropriate construction may be achieved by reference to KRS 189A.103, a statute which details testing procedures and addresses questions of validity, timeliness, etc. When the per se statute is read in conjunction with KRS 189A.103, it becomes manifest that instantaneous testing is not required. Beckham v. Board of Education of Jefferson County, Ky., 873 S.W.2d 575 (1994). What is required is compliance with the statutes and regulations. Extrapolation evidence is not required for the Commonwealth to make a prima facie case of a per se violation. KRS 189A.010(1)(a).
Our view with respect to extrapolation evidence is strengthened by the fact that without the defendant’s cooperation, no valid extrapolation can occur. As the trial court observed, a number of facts known only to the defendant are essential to the process. This Court has long recognized that in exceptional circumstances the burden of going forward may be upon the accused where exempting facts are peculiarly within his knowledge. This proposition was stated Smith v. Commonwealth, 313 Ky. 113, 230 S.W.2d 478 (1950), as follows:
It is a general rule running through the law of evidence that where the negative of an issue does not permit of direct proof, or where the facts are more immediately within the knowledge of the defendant, the burden of proving that such averment is not true rests upon him.
Smith, 230 S.W.2d at 479 (quoting Smith v. Commonwealth, 196 Ky. 188, 244 S.W. 407, 408 (1922)).
In our view, an extrapolation based only on the lapse of time between driving and testing is no more reliable than the result yielded by a breath test a reasonable time later. As a safeguard, KRS 189A.103(7) permits a person who has been tested to obtain, in addition, a test or tests administered by a person of his choosing. Certainly nothing would prevent a defendant from producing his own extrapolation expert based on the test administered by the police and the tests voluntarily taken.
We have been directed to Pence v. Commonwealth, Ky.App., 825 S.W.2d 282 (1992), in which the Court recognized the difficulty of proving blood alcohol levels at the time of motor vehicle operation rather than at the time of testing. Nevertheless, it was conceded that for purposes of the legal analysis, intoxication was established. Painstakingly the Court noted the absence of evidence which would have established when the defendant drove the vehicle. Inferentially, if such evidence had been present, the conviction would have been sustained. In the instant case we know when the defendant last drove the vehicle. We also know that without access to any additional alcoholic beverage he had a blood alcohol concentration of .156 one hour and twelve minutes later. The necessary facts which were missing in Pence are present here. We have also been directed to Timmons v. Commonwealth, Ky., 555 S.W.2d 234 (1977), and believe its analysis should be considered here.
We do not dispute the proposition that the proof of each essential element of a crime, including the corpus delicti, must be sufficient to justify reasonable minds in finding its existence beyond a reasonable doubt. When the evidence bearing on one particular element is circumstantial, as it was in this instance, not only is it necessary, but reasonable and customary, to resort to the evidence as a whole for an assessment of the probabilities.
Rhetorically, we have been asked when the lapse of time between driving and testing for alcohol intoxication becomes so great as to prevent a rational trier of fact from determining guilt based thereon. In this case we need not attempt to formulate a bright line rule nor anticipate every possible state of facts which might arise. For our purposes it is sufficient to say that the evidence presented here in support of a per se violation easily met the “beyond reasonable doubt” standard. While a trier of fact, whether it be a trial court or a jury, may
have the power to disregard compelling evidence or impose a standard of its own which is so great as to be incapable of satisfaction, such power does not logically validate the result. Measured against proper standards of evidentiary analysis, the decision of the trial court was in error.
STEPHENS, C.J., and BAKER, GRAVES, KING, LAMBERT and STUMBO, JJ., concur.
WINTERSHEIMER, J., not sitting.
Amicus curiae, The Kentucky Association of Criminal Defense Lawyers, has explained this theory as follows:
The simplest way to understand this theory is to assume an individual chugs or instantly consumes a pint of whiskey. This individual then immediately drives and is stopped for speeding or some other minor traffic violation. If he does not do well on the field sobriety tests, as few people do whether sober or not, he is arrested. Some period of time later, generally 20 minutes to 1 hour, he is given the Intoxilyzer and blows a number of somewhere around a .20. When this individual drove, obviously, his blood level was at or near 0.00. When he was tested, his blood alcohol was enormous because the whiskey that he instantly consumed had time to make it’s [sic] way into his system. It is well known that absorption of alcohol from the stomach into the blood takes between 40 minutes to several hours, depending upon the facts in any given case.
New KBA President, Buzz English Sworn In
Charles “buzz” english, jr. sworn in as new kba president
Sets fund-raising for KLEO Summer Institute as one of his first priorities
Charles E. “Buzz” English, Jr., of Bowling Green, officially begins his one-year term as president of the Kentucky Bar Association (KBA) today, Wednesday, July 1.
“This is a remarkable honor, and one I will work diligently to uphold to the very best of my ability,” English said. “I am looking forward to leading this association into new directions of service by reaching out to attorneys in all corners of the Commonwealth.”
English follows a family tradition of service to the bar association first established by his father, Charles E. English, Sr., who served as KBA President in 1985. The historic achievement marks only the second time a father-and-son duo has served terms as president of the association. The first father-son set to serve was B.M. Westberry of Paducah in 1978 followed by R. Kent Westberry of Louisville in 2004.
English grew up attending KBA functions with his dad and followed in his footsteps by attending the University of Kentucky Law School in 1983. After graduation, he began practice with his father at the firm English, Lucas, Priest & Owsley in Bowling Green. The firm had been established by the elder English, a Bowling Green native, and other attorneys in 1972.
One of English’s first goals as president is to raise sufficient funds among Kentucky’s legal community to continue operation of the Kentucky Legal Education Opportunity (KLEO) program’s Summer Institute.
“The KLEO Summer Institute needs our help,” English said. “Budget cutbacks have threatened to discontinue this pre-law preparatory program designed to prepare students from low-income, minority and disadvantaged backgrounds for the rigors of law school. The summer institute acts as an essential element of the KLEO Program’s dedicated efforts to increase the number of historically under-represented students in Kentucky’s public law schools.”
During the summer institute, law professors introduce KLEO scholars to the curriculum they will encounter during their first year of law school. The scholars are also exposed to the special study skills and strategies they will need to succeed in law school and are mentored by former participants in the program as well as a practicing attorney or judge.
Based on the national Council of Legal Education Opportunity (CLEO) program, KLEO was initiated in spring, 2002, by former Supreme Court of Kentucky Chief Justice Joseph E. Lambert as a way of increasing the number of historically under-represented students in Kentucky’s public law schools. State Rep. Jesse Crenshaw, D-Lexington, sponsored legislation in the Kentucky General Assembly to provide funding for the program.
Each year, the KLEO program accepts five entering first-year law students from each of Kentucky’s three public law schools: the University of Kentucky College of Law; the University of Louisville Brandeis School of Law; and Northern Kentucky University Chase College of Law. As KLEO scholars, these fifteen students are each awarded a $5,000 annual stipend toward the cost of their legal education. A total stipend of $15,000 may be awarded to the scholar during the three years of law school if the student remains eligible.
“The KLEO scholars we have spoken with have described the summer institute as every bit as important to their success as the KLEO scholarships themselves,” English said. “The summer institute prepares the scholars for the rigors of law school in a way that is crucial to their ability to perform once law school begins. That’s why we think it is essential to raise funding for this important component of the program.”
Two fundraisers for the KLEO Summer Institute have been planned for July. The first, sponsored by the Louisville Bar Association’s Diversity Committee, will begin 5 p.m, Thursday, July 16, at the Louisville Bar Center at 600 W. Main Street, Suite 110. For more information on this event, contact Scott Furkin, LBA Executive Director, by email at sfurkin@loubar.org or by phone, (502) 583-5314.
The second KLEO reception and fundraiser will be held 5-7 p.m., Tuesday, July 28, at the Lexington History Museum, also known as the old courthouse, at 215 W. Main Street. Members of the KBA Young Lawyers Section’s Diversity Committee have been assisting with the organization of this event. For more information on the Lexington event, contact Valorie D. Smith by e-mail at VASmith@stites.com or by phone (859) 226-2263.
English said he is encouraging attorneys throughout the state to consider donations to the Kentucky Bar Foundation for the specific benefit of the KLEO Summer Institute. The Kentucky Bar Foundation is an IRC Section 501 [C] [3] organization and contributions are tax deductible to the full extent of the law.
“These donations in the interest of diversity are sincerely appreciated.” English said. “We encourage your assistance in this effort to change the face of justice in Kentucky.”
Gov. Beshear Appoints Three African American Judges In Jefferson County
Gov. Beshear has improved the racial diversity of the Jefferson County Judicial System by appointing Olu Stevens as a Circuit Judge. Stevens is the immediate past presidence of the Louisville Bar Association. He also appointed Sadiqua Reynolds and Erica Lee Williams as District Judges.
These three appointment leave four additional judgeships available on the bench in Jefferson County. The Governor is expected to fill these seats sometime this year. All appointed judges will serve until the next general election in 2010.
Raoul Cunningham President of the Louisville Chapter of the NAACP praised the appointments saying: “Beshear had picked wisely and…all three candidates will make excellent judges.”
SUGGESTIONS ON HOW TO JUMP START YOUR LAW CAREER
Suggestions to jump start a legal career
Develop “expertise” in some area of the law through self-education. Publicize this skill by writing articles and sending them to bar journals, legal blogs. Volunteer to speak at CLE events. This will pump up your resume.
Begin legal work part-time while working at another job.
Contact law firms in area, and invite them to send you business they don’t have time to handle. Make it know that you are available for standing in for them at Court appearances, collections, small claims….whatever.
Have business cards printed up through VistaPrint, and pass these out liberally.
Develop the ability to do bankruptcies – divorces and advertise this skill at a competitive price.
Visit local courts and pass out your business card to busy lawyers. Just being seen in the courtroom will be beneficial. Attend all motion days of the courts. It is important to be seen in the courtroom. When other attorneys and judges see you there, they will think of you when something comes up.
Register for appointment in criminal cases with the federal courts. This work pays very well.
Volunteer to take pro bono cases ….visit local judges and offer to take assignments.
Find web sites that publish lists of local attorneys available for work and submit your name.
Volunteer to work in campaign of local and state officials, who may have ability to hire you in the future if they are elected.
Join local social clubs like Lions Club, Rotary, etc.
Apply with state employment agencies for legal positions. State government employees thousands of lawyers.
Contact the placement offices at your law school.
Develop knowledge of collection practices, and inform local businesses of your interest in doing their collection work. This often pays very well, and lots of businesses will be glad to find someone who will do this work…other law firms will often send you this type of work.
Consider setting up office in rural area and small towns, or neighborhood shopping areas…with storefront that is highly visible to public. In larger cities a single practitioner can sometimes be lost…in rural areas and small towns you tend to stick out more.
Contact the local public defender association and apply for job.
Develop a blog on a specific legal topic and regularly post related legal topics on the blog.
Contact http://www.lawfirmstaff.com/articles/50031/76/Should-you-choose-LFS …a lawyer placement agency
Register with www.lawyers.com
Visit local Legal Aid group and volunteer. They frequently turn away work they can’t handle and will be eager to hear from you.
Read Michael Jackson Will….
JULY 1–A will signed in 2002 by Michael Jackson stipulates that his assets be placed in a family trust and that his mother be appointed the guardian of his three offspring.
The will, a copy of which you’ll find below, lists three executors, including lawyer John Branca and music industry executive John McClain.
The will makes no provision for bequests to Jackson’s father or any of his eight siblings, and a court filing indicates that beneficiaries of the Michael Jackson Family Trust are limited to his children and mother Katherine. Six other relatives, including his brother Tito’s three sons, are named as “contingent remainder beneficiaries” who would share the estate in the event that Jackson’s principal beneficiaries died before he did.
Branca and McClain believe that the value of Jackson’s estate “exceeds $500 million” and consists of “non-cash, non-liquid assets,” including Jackson’s share of lucrative music royalty rights. In the case that Jackson’s mother were to predecease him (or was unable or unwilling to serve as guardian), Jackson stipulated that singer Diana Ross should be appointed guardian of his minor children. The “Last Will of Michael Joseph Jackson” was executed in Los Angeles on July 7, 2002. (8 pages)
To view the Michael Jackson will go to: http://www.thesmokinggun.com/archive/years/2009/0701091mjwill1.html
Expert Explains Justification for Derivatives
Testimony of Don Thompson
JPMorgan Chase & Co. (JPMC)
on behalf of the Securities Industry and Financial Markets Association (SIFMA)
Subcommittee on Capital Markets, Insurance and GSEs
Chairman Kanjorski, Ranking Member Garrett, and Members of the Subcommittee, my name is Don Thompson, and I am a Managing Director and Associate General Counsel at JPMorgan Chase & Co. I provide legal advice with respect to the full range of JPMC’s over-the-counter (OTC) derivatives businesses. Thank you for inviting me to testify at today’s hearing.
Benefits of OTC Derivatives to Our Economy
For the past 30 years, American companies have used OTC derivatives to manage interest rate, currency, and commodity risk. Beginning in the early 1970s, global economic forces began to affect American companies, regardless of business type or scope of operations, and two key events are especially noteworthy:
(1) the United States dropped the gold standard in 1971, which led to floating exchange rates;
(2) severe oil price shocks led to increased volatility in commodity prices and interest rates.
These events presented complex financial risk management challenges that, left unmanaged, would have negatively affected many companies’ financial performance and possibly even their viability. In response to marketplace demand, financial products, such as futures contracts and OTC derivatives, were developed to provide companies with tailored and flexible risk management tools.
Since their inception, OTC derivatives have been used by companies that are exposed to risks in the course of their day-to-day operations that they are unable to manage themselves. As a result, interest rate, currency and commodities derivatives became important and commonplace tools for these companies in 1980s and 1990s. Credit derivatives were developed over the past 10-12 years and – when used responsibly — have served a similar, useful role in managing credit risk. Since then, OTC derivatives have become a vital part of our economy. According to the most recent data, 92% of the largest American companies and over 50% of mid-sized companies use OTC products to hedge risk.
The role of entities like J.P. Morgan in the OTC derivatives market is to act as financial intermediaries. In much the same way that financial institutions act as a go-between with investors seeking returns and borrowers seeking capital in the capital markets, we work with companies and other end-users looking to mange their risk with entities looking to take on those risks.
In this role, we work with many American and global companies and help them manage their risks. Recently, many of our clients have expressed great concern on the affects of the proposed legislative and regulatory changes on their businesses. Clients such as Chesapeake, Constellation, Medtronic and Cargill are very worried about the unintended consequences of these policy proposals, particularly at a time when our economy remains fragile. In our view, the effect of forcing such companies to face an exchange or a clearinghouse would limit their ability to manage the risks they incur in operating their business and have negative financial consequences for them via increased collateral and margin posting. These unintended repercussions have the potential to harm an economic recovery. We welcome the opportunity to discuss these issues today.
Let me first discuss in detail some of the benefits of OTC derivatives.
(1) Tailored Risk Management
Companies today demand customized solutions for risk management, and the OTC market provides them.
As an example, a typical OTC derivative transaction might involve a company that is borrowing in the loan market at a floating interest rate. This product is similar to a variable rate home mortgage. To protect themselves against the risk that interests rate will rise, the company will enter into an interest rate swap. These swaps generally enable the company to pay an amount tied to a fixed interest rate, and the financial institution will pay an amount tied to the floating rate of the loan. Similar to the homeowner in a variable rate mortgage, if rates rise steeply, they have some protection. Every aspect of the swap can be tailored to the company’s needs to ensure that the company is able to match its risks exactly. It is that customization that makes OTC derivatives so useful to companies.
OTC transactions are used in a similar manner by a wide variety of companies seeking to manage volatile commodity prices and foreign exchange fluctuations.
For example, a company may be importing raw materials into the United States to manufacture a product that is sold all around the world – such as aircraft. That American company will want to protect themselves and their shareholders from bearing undue risk if the price of the dollar fluctuates against the currencies it uses to buy raw materials. With no change to its business model, it could find itself in a situation where the price to produce the planes is higher than the profit it makes from selling those planes, simply due to exchange fluctuations outside its control. It could also find itself exposed to changing prices in commodity raw materials, such as steel or fuel. Any responsible company would act to prevent putting itself in this kind of jeopardy and its employees, clients and shareholders at great risk.
In this example, the aircraft company will purchase a currency derivative in the OTC foreign exchange market that allows it to lock in the exchange rate for each of the currencies that it is exposed to. The company would also likely purchase a commodity derivative that will lock in the price of the raw materials. These transactions allow the aircraft company to focus on its core competency — building planes — rather than fearing foreign exchange or commodity price risk.
It is important to note that although interest rate and currency derivatives currently are offered on US exchanges, few corporations use these exchange-traded contracts for two main reasons:
Exchange-traded products are, by necessity, highly standardized and not customized. As a result, companies are unable to match their unique risks to the products that are offered on exchanges; and
Exchange/clearinghouse collateral requirements are onerous. Clearinghouses (including those that support exchanges) require that participants pledge only liquid collateral, such as cash or short-term government securities, to support their positions in the market without regard to the credit quality of the company. However, companies need their most liquid assets for their working capital and investment purposes. Requiring a company to post cash as collateral means taking that cash out of the company’s core business, which hurts the company and its employees.
In addition to customization, the other main benefit of OTC derivatives is flexibility with respect to its ability to provide collateral to support its derivative transaction. In the interest rate swap example, the financial institution may ask the company to provide credit support to mitigate the credit risk that it faces in entering into this transaction. Most often, that credit support comes in the same form as the collateral provided for the loan agreement. Thus, if the loan agreement is secured by property, fixtures and/or receivables, that same collateral would also be used to secure the interest rate swap. As a result, the company does not have to incur additional costs in obtaining and administering credit support for the interest rate swap.
The flexibility of the credit support arrangement provided by OTC products is best highlighted by contrasting it to the posting requirements the company would have faced had it executed its interest rate swap transaction on an exchange. The CME Group and its predecessor institutions pioneered risk management products and currently trade a wide variety of interest rate futures and options contracts, including interest rate swap futures, and all companies are free to enter into these contracts. (In fact, JPMC is one of the biggest users of these exchange-traded risk management contracts). However, the exchange requires a high degree of standardization in the contracts it trades, and requires that transacting entities post cash or cash-equivalent collateral to support their trades. In addition, collateral calls may be made up to twice daily, to account for market fluctuations. This requirement of readily marketable collateral is necessary to ensure the clearinghouse is protected from risk; the clearinghouse or clearing member must instantaneously apply that collateral in the event of a participant default.
A clearinghouse is a very highly collateralized central counterparty that becomes the buyer to every seller and the seller to every buyer. In order for the clearinghouse to perform its credit risk mitigating role in the financial system, it is essential for the clearinghouse to be able to calculate accurately how much collateral it needs from a participant to secure the transactions on which it faces that participant. This can only be done for derivatives that are sufficiently standardized and liquid to enable the clearinghouse to obtain prices quickly so that it can calculate how much collateral is needed. This cannot be done with illiquid or non-standard transactions.
Thus, in the example above, if the company had executed its hedge on the exchange, it would have had to post cash or readily marketable collateral upfront and up to twice daily thereafter. By entering into the transaction in the OTC market, the company is able to use the same collateral that it already posted to secure its loan, with no additional liquidity demands or administrative burdens. This collateral is high quality, being the basis for the extension of credit in the loan agreement, but posting it does not affect the company’s operations or liquidity. This flexibility to use various forms of credit support significantly benefits companies.
(3) Basis Risk
Another benefit to companies is that unlike exchange-traded derivatives, OTC derivatives match very closely the actual risks that companies need to manage. Without this fit, companies are exposed to so-called “basis risk” — that is, the difference between the risk that is incurred and the benefit of the hedge. To the extent that there is misalignment of the risk and the hedge, companies will bear the risk of the difference, which could be significant, depending upon the volatility of prices and the level of standardization of the hedge. In fact, the precision of the “fit” determines whether companies qualify for hedge accounting, delineated in FAS 133, which has been developed to address the accounting for hedging transactions. Because of the tailored solutions available through the OTC market, using OTC derivatives is the easiest and most effective way for companies to achieve hedge accounting. Without hedge accounting, companies will see significant volatility in their financial reporting, obscuring the true value of their business.
While we believe that exchanges play an invaluable role, not all entities can or want to trade on exchange. Currently, end-users have the choice of entering into their hedging transactions on an exchange or in the OTC market. For most end-users, OTC derivatives are critical to their risk management, and risk management is critical to their operations in volatile times. We believe that end-users should continue to be allowed to have the choice to use these products.
Problems with use of OTC Derivatives
The discussion of the benefits of OTC derivatives is not to deny that there have been problems with their use, and it is essential that policymakers examine the causes of the financial crisis to ensure it is never repeated. While JPMC does not believe that OTC derivatives were the cause of the financial crisis, it is clear that AIG’s near-failure and the consequent investment by US taxpayers involved a subset of credit default swaps as well as poor risk management by its counterparties. In addition, the regulatory framework did not subject AIG to a thorough, comprehensive review–the kind of regulatory oversight to which a national or state bank’s derivatives activities are currently subject.
Despite the failures at AIG, it is critical to point out that the markets in these products have continued to be available for end-users, and defaults have been processed as the market infrastructure envisioned.[1] Nonetheless, we believe there is an urgent need for reform to address systemic risks that have been revealed by the financial crisis and that reform should encompass OTC derivatives.
JPMC believes it is imperative that the root causes of the financial crisis be addressed and that regulatory reform address systemic risk while preserving the benefits of OTC derivatives for end-users. To that end, we propose the following:
· Financial regulation should be considered on the basis of function not form. That is, the appropriate regulatory framework should be determined on the basis of what an entity does rather than what legal entity form it takes.
· A systemic risk regulator should oversee all systemically significant financial institutions and activities. We believe it is necessary to establish a systemic risk regulator charged with the responsibility to oversee all systemically significant financial institutions and that this regulator should have the capability to impose capital requirements on these institutions, to oversee their transactions with each other and with their customers, and to impose conditions on those transactions, such as collateral requirements.
· All standardized OTC derivatives transactions between systemically significant financial institutions or professional intermediaries should be cleared through a regulated clearinghouse. The standardization requirement is necessary because, as discussed above, only transactions with a degree of standardization are capable of being risk-managed by the clearinghouse and thus be eligible for clearing.
· Enhanced reporting requirements should apply to all OTC derivatives transactions. For cleared transactions, the clearinghouse would have data on aggregate trading volumes and positions as well as specific counterparty information. Non-cleared transactions should be reported to a trade repository on a frequent basis, and the repository should publish aggregate market data. The systemic risk regulator as well as market regulators such as the CFTC or SEC should have access to the trade-specific data, and regulators should also have the ability to request more detailed information as required.
In addition to these proposals for federal legislative action, we believe that financial intermediaries can and should act in concert with regulators to begin to provide a more effective framework for the clearing of OTC derivatives products. Clearing of clearing-eligible transactions provides additional stability to the American financial system. By way of example, in the interest rate swap market, we clear 70% of new transactions. A significant portion of credit default swaps (CDS) have become standardized over time, and we have worked since 2005 with other financial institutions and the Federal Reserve to establish a central counterparty (CCP) to clear standardized CDS. The ICE Trust clearinghouse launched on March 9th and has begun clearing CDS. We anticipate that a significant majority of dealer-to dealer CDS trading volume will ultimately be cleared as products are migrated to the clearinghouse. In the commodity derivatives market, we clear a significant amount of our inter-dealer OTC derivatives as well.
As the ICE Trust clears more clearing eligible CDS contracts, we anticipate that in the near future the large majority of dealer to dealer clearing eligible CDS contracts will be cleared as a matter of routine. Clearing is a highly transparent process, and anyone with access to the internet can view data free of charge. The data relates to daily volume traded, as well as the price used by the clearinghouse for calculating how much collateral the clearinghouse will require from each dealer. The links to the websites showing that data:
https://www.theice.com/marketdata/reportcenter/reports.htm?reportId=98
http://www.markit.com/information/products/cds/cds-page.html
Interest Rates Clearing
Currently this market clears using the London-based LCH SwapClear service. For outstanding trades as at the close of 2008, SwapClear clears approximately $160 trillion in notional, which equates to roughly 50% of inter-dealer swap trades globally.
Commodities Clearing
During the three month period ending in February 2009, OTC commodity derivatives dealers cleared on average approximately 40% of their OTC energy derivatives transactions and 35% of other commodity derivatives (excluding metals and agricultural products). We anticipate these percentages will increase over time.
Clearing has not been an industry practice because FX/currency OTC contracts tend to have shorter maturities, which generally decreases counterparty risk, and counterparty risk is the primary driver for the development of clearinghouses. However, discussions on this have begun among dealers and regulators.
JPMC is committed to working with Congress, regulators and other industry participants to ensure that an appropriate regulatory framework for derivatives is implemented. I appreciate the opportunity to testify and look forward to your questions.
[1] For example, Lehman Brothers had a portfolio of OTC interest rate derivatives transactions that had an aggregate notional value of $9 trillion and that was cleared through LCH Clearnet, a clearinghouse that clears the majority of OTC interest rate swap transactions entered into between financial intermediaries. Upon Lehman’s bankruptcy, the clearinghouse auctioned the portfolio, pursuant to its rules, and eliminated the market risk without having to tap its guaranty fund. In addition, Lehman’s bankruptcy triggered settlement of credit default swaps that referenced Lehman. It is estimated that there was up to $400 billion of such transactions outstanding, in gross notional terms, but at settlement, after netting all positions, the total payments owed were between $6 and $8 billion dollars. The calculation and payment process occurred in an orderly manner with no reported problems.
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