albert h. turkus (aht 7000) julia m. kazaks (jmk 7504...

Albert H. Turkus (AHT 7000)

Julia M. Kazaks (JMK 7504)

SKADDEN, ARPS, SLATE,

MEAGHER & FLOM LLP

1440 New York Avenue, N.W.

Washington, D.C. 20005

(202) 371-7000

John B. Magee (JBM 0787)

Sanford W. Stark (SWS 8984)

MCKEE NELSON LLP

1919 M Street, N.W., Suite 200


(202) 775-1880

Dennis O’Grady (DO 7430)

Mark Hall (MH 9621)

RIKER, DANZIG, SCHERER

HYLAND & PERRETTI

One Speedwell Avenue

Morristown, New Jersey 07962

(973) 538-0800

Counsel for Debtors

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

(AT NEWARK)

)

In re: ) Civ. No. 2:02cv03082 (SRC)

) Chap. 11 Nos. 01-30135 (RG) and

G-I HOLDINGS INC., et al., ) 01-38790 (RG) (Jointly Administered)

)

Debtors. ) Honorable Stanley R. Chesler

)

NOTICE OF DEBTORS’ MOTION TO SEAL FINANCE COMMITTEE STAFF

STATEMENTS

TO: THE HONORABLE STANLEY R. CHESLER,

UNITED STATES DISTRICT JUDGE

Case 2:02-cv-03082-SRC-MAS Document 312 Filed 04/17/2009 of 3

2

THE UNITED STATES OF AMERICA

PLEASE TAKE NOTICE that on a date to be designated by the Court the undersigned

Skadden, Arps, Slate, Meagher & Flom LLP, McKee Nelson LLP and Riker Danzig Scherer

Hyland & Perretti LLP, co-counsel for G-I Holdings, Inc. and ACI, Inc. (collectively,

“Debtors”), shall move before the Honorable Stanley R. Chesler, at the United States District

Court, Frank R. Lautenberg U.S. Post Office & Courthouse, Courtroom 8, Newark, New Jersey

07101-0999, seeking the entry of an order to seal Finance Committee Staff Statements submitted

as exhibits in support of its Memorandum in Opposition to the Government’s Motion In Limine

and in Support of GAF’s Motion for Reconsideration of the Court’s June 2007 Partial Summary

Judgment (the “Motion”).

PLEASE TAKE FURTHER NOTICE that, in support of the Motion, Debtors shall rely

on the Memorandum of Law and Joint Declaration of John B. Magee and Michael J. Desmond

filed herewith. A proposed form of order is also submitted herewith.

Dated: April 17, 2009

Respectfully submitted,

____s/ Dennis O’Grady________________


Mark Hall (MH 9621)


HYLAND & PERRETTI



(973) 538-0800


3




MEAGHER & FLOM LLP



(202) 371-7000



MCKEE NELSON LLP



(202) 775-1880

Counsel for Debtors





MEAGHER & FLOM LLP



(202) 371-7000



MCKEE NELSON LLP



(202) 775-1880


Mark Hall (MH 9621)


HYLAND & PERRETTI



(973) 538-0800

Counsel for Debtors



(AT NEWARK)

)


) Chap. 11 Nos. 01-30135 (RG) and


)


)

MEMORANDUM IN SUPPORT OF DEBTORS’ MOTION TO SEAL FINANCE

COMMITTEE STAFF STATEMENTS

Case 2:02-cv-03082-SRC-MAS Document 312-2 Filed 04/17/2009 Page 1 of 9

TABLE OF CONTENTS

i

FACTS

ARGUMENT

I. The Senate Request Contains Newly Discovered Evidence Not Previously Available to the

Parties or the Court Regarding the Application of the Transitional Rule..................................4

II. Debtors’ Interest in Submitting the Senate Request Under Seal Outweighs Need for Public

Disclosure ..................................................................................................................................4

III. No Less Restrictive Alternative to Sealing the Senate Requests Exists ....................................5

CONCLUSION


ii

TABLE OF AUTHORITIES

CASES

Bank of Am. Nat’l Trust and Sav. Ass’n v. Hotel Rittenhouse Assoc., 800 F.2d 339 (3d Cir. 1986)..........3

In re Cendent Corp., 260 F.3d 183 (3d Cir. 2001) ......................................................................................3

Glenmede Trust v. Thompson, 56 F.3d 476 (3d Cir. 1995) .........................................................................3

Leucadia, Inc. v. Applied Extrusion Techn., Inc., 998 F.2d 157 (3d Cir. 1993)..........................................3

Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994) ...................................................................3

STATUTES AND REGULATIONS

I.R.C. § 731(c) .............................................................................................................................................1

U.S. District Court for the District Court of New Jersey, Local Civil Rule 5.3 ..................................1, 3, 5


Debtors move pursuant to Local Civil Rule 5.3 to seal certain materials to restrict access

to this Court and counsel. Debtors can demonstrate good cause for this relief in the form of

legitimate public interests and can demonstrate that serious private and public injury would result

if the relief is not granted. Because no less restrictive means are available, the Court should

grant Debtors’ motion.

FACTS

On April 17, 2009, contemporaneously with this filing, Debtors filed their Memorandum

in Opposition to the Government’s Motion In Limine and in Support of GAF’s Motion for

Reconsideration Of The Court’s June 2007 Partial Summary Judgment. The Court’s partial

summary judgment in favor of the United States held that the 1994 binding contract exception to

I.R.C. § 731(c) (“Transition Rule”) did not apply to a liquidating distribution of a fixed payment

of cash and marketable securities to the Debtors in 1999. On April 17, 2009, Debtors filed a

motion for reconsideration of the Court’s partial summary judgment ruling. The government

now seeks penalties and in its motion in limine seeks to preclude Debtors from presenting certain

trial evidence on the Transition Rule for purposes of asserting penalty defenses.

Through newly discovered evidence and analysis, Debtors’ motion for reconsideration

demonstrates that (1) the Transition Rule was enacted solely based on Debtors’ legislative efforts

to obtain relief under Debtors’ contract, and (2) Debtors’ contract and liquidating distribution are

covered by the Transition Rule. Debtors’ new evidence includes deposition testimony and

affidavits of company executives, GAF’s professional lobbyists, and former Treasury

Department personnel, all of whom worked directly with members of Congress or Congressional

staff to secure enactment of the Transition Rule.


In addition, Debtors developed affidavits reflecting the anticipated statements of two

Congressional staff members who worked on the Senate Finance Committee tax staff in 1994

(“Finance Committee Staff”), and who were instrumental in initiating and shepherding the

Transition Rule relief sought by GAF through the legislative process. The Office of Senate

Legal Counsel has advised Debtors’ counsel that before affidavits can be executed, Senate

procedures designed to implement institutional concerns and considerations, including the

Speech and Debate Clause of the United States Constitution, must be followed. These

procedures include, ultimately, obtaining the unanimous consent of the Senate.

Debtors’ counsel has invoked the formal procedure necessary to obtain these Senate

approvals, as reflected in the Joint Declaration of John B. Magee and Michael J. Desmond

(“Joint Declaration”) that accompanies this motion and in the sealed materials themselves. As

the Joint Declaration reflects, on April 17, 2009, Debtors initiated the formal Senate approval

process through a detailed submission to the Office of Senate Legal Counsel (“Senate Request”),

explaining the need for and disclosing the content of the affidavits.

The affidavits sought through the Senate Request are based on recent interviews Debtors’

counsel conducted with Finance Committee Staff and reflect the affidavit testimony Debtors

believe Finance Committee Staff would give. Their content is highly probative on the matters

addressed in Debtors’ opposition to the United States’ motion in limine and its simultaneous

motion for reconsideration. This request to seal the Senate Request is based on legitimate private

and public disclosure concerns of the United States Senate.

Debtors also request that the Court consider, in order to expedite and simplify the

introduction of these materials, ordering the government to stipulate to the content of the

affidavits unless the United States is able to produce specific information that the proposed


affidavits of the Finance Committee Staff are not accurate.

ARGUMENT

Debtors’ acknowledge the long-standing principle in the Third Circuit that there is “a

common law public right of access to judicial proceedings and records” and that a party seeking

relief must show “good cause” to warrant abrogating this right. In re Cendant Corp., 260 F.3d

183, 192 (3d Cir. 2001). Though “‘the right of access is firmly entrenched, so also is the

correlative principle that the right . . . is not absolute’” but “‘must be balanced against the factors

militating against access.’” Leucadia, Inc. v. Applied Extrusion Tech., Inc., 998 F.2d 157, 166

(3d Cir. 1993) (quoting Bank of Am. Nat’l Trust & Sav. Ass’n v. Hotel Rittenhouse Assoc., 800

F.2d 339, 344 (3d Cir. 1986)). In moving to restrict public access to judicial proceedings and

records, a party must describe: “(a) the nature of the materials or proceedings at issue; (b) the

legitimate private or public interests which warrant the relief sought; (c) the clearly defined and

serious injury that would result if the relief sought is not granted; and (d) why a less restrictive

alternative to the relief is not available.” D.N.J. Civ. R. 5.3(c)(2).

The Third Circuit has identified a non-exhaustive list of factors to assist courts in

determining whether a party has demonstrated good cause sufficient to justify the sought-after

relief. These factors include whether disclosure will violate any privacy interests, whether the

information is being sought for an improper purpose, whether disclosure will cause

embarrassment, whether confidentiality over the information is important to public health and

safety, whether the sharing of information among litigants will promote efficiency, whether the

party benefiting from confidentiality is a public official or entity, and whether the case involves

issues important to the public. Pansy v. Borough of Stroudsburg, 23 F.3d 772, 787-91 (3d Cir.

1994). In total, “the analysis should always reflect a balancing of private versus public

interests….” Glenmede Trust Co. v. Thompson, 56 F.3d 476, 483 (3d Cir. 1995). Because the


interest in protecting the formal Congressional approval process for obtaining sworn testimony

firmly outweighs any public interest in the substance of the Senate Request, and the information

is highly probative in a matter currently before the Court, Debtors’ motion to seal should be

granted.

I. The Senate Request Contains Newly Discovered Evidence Not Previously Available

to the Parties or the Court Regarding the Application of the Transitional Rule

The affidavits sought from the Finance Committee Staff reflect the recollections of active

participants to the 1994 enactment of the Transition Rule, who confirm the uncontradicted

evidence that GAF’s legislative efforts led to the enactment by Congress of that statutory

exception. The affidavits support Debtors’ position that the Transition Rule was drafted and

included in the statute at Debtors’ request, and tailored to Debtors’ specific situation. Through

the Senate Request, Debtors have invoked the formal process to make the information publicly

admissible evidence. Given the highly probative nature of this evidence, the pending motions

and their timing, and the likely delay in the Senate approval process, it is necessary to bring the

Senate Request to the Court’s attention immediately to avoid irreparable harm to Debtors’ case.

II. Debtors’ Interest in Submitting the Senate Request Under Seal Outweighs Need for

Public Disclosure

The public interest in upholding formal Senate approval procedures outweighs any

interest that may attach to public access to the material, and the sealing of these materials will

promote a substantial public purpose by allowing the Senate approval process to proceed before

publication. The affidavits sought by the Senate Request do not involve a specific matter of

public interest. Rather, they describe the process by which a piece of legislation was enacted at

Debtors’ specific request. Placing these materials under seal pending formal Senate approval

supports the public purpose reflected in the Senate rules that implement, among other


considerations, a clause of the U.S. Constitution. Nor is disclosure of the Senate Request a

matter of public health or safety. In sum, there is no legitimate public need for the information

Debtors’ seek to seal.

On the other hand, Debtors’ have a significant interest in presenting to the Court the

views of Congressional staff members who played a key role in the enactment of transition relief

for GAF. The information is necessary to construct a fully developed record regarding the

application of the Transition Rule to the liquidating distribution in 1999.

III. No Less Restrictive Alternative to Sealing the Senate Requests Exists

The current motion schedule and the accompanying time constraints, together with

the anticipated delay necessary entailed by the processing of the Senate Request, necessitate

placing the Finance Committee Staff statements under seal.

CONCLUSION

For the reasons set forth above, Debtors request that the public’s access to the Senate

Request be restricted under D.N.J. Civ. R. 5.3.

Dated: April 17, 2009.

Respectfully submitted,

_______s/__Dennis O’Grady___________


Mark Hall (MH 9621)


HYLAND & PERRETTI



(973) 538-0800





MEAGHER & FLOM LLP



(202) 371-7000



MCKEE NELSON LLP



(202) 775-1880

Counsel for Debtors

3943821.1





MEAGHER & FLOM LLP



(202) 371-7000



MCKEE NELSON LLP



(202) 775-1880


Mark Hall (MH 9621)


HYLAND & PERRETTI



(973) 538-0800

Counsel for Debtors



(AT NEWARK)

)


) Chap. 11 Nos. 01-30135 (RG) and


)


)

ORDER GRANTING DEBTORS’ MOTION TO SEAL FINANCE COMMITTEE STAFF

STATEMENTS

Debtors have filed a Notice of Motion to Seal Finance Committee Staff Statements

pursuant to Local Civil Rule 5.3 pending Senate authorization to execute the sworn statements of


2

two Congressional staff members (the “Finance Committee Staff Statements”) involved in

developing the 1994 Transition Rule. Congressional rules implementing institutional

considerations, including the Speech and Debate Clause of the U.S. Constitution, require Debtors

to obtain formal approval from the Senate including, ultimately, the unanimous consent of the

Senate, in order to obtain executed versions of the Finance Committee Staff Statements. Thus,

Debtors’ Motion requests that the Court seal the draft statements and restrict access to this Court

and counsel. Sealing these materials will protect the interests of the affiants as well as the

institutional considerations of the Senate, while allowing the Court to consider crucial and highly

probative evidence supporting Debtors. Pursuant to Local Civil Rule 5.3, THE COURT

HEREBY FINDS that:

1) Debtors filed the declarations required to provide evidence of good cause for

this Court to permit filing under seal;

2) Debtors have sufficiently described the nature of the materials at issue;

3) Debtors have identified legitimate public and private interests that warrant the

relief sought;

4) Debtors have clearly defined a serious injury that would result if the order is

not granted; and

5) There is no less restrictive alternative available other than the relief sought.

Accordingly, for good cause shown, the Court ORDERS that the Finance Committee

Staff Statements shall be filed under seal, with access limited to the Court and counsel.


3

IT IS SO ORDERED.

BY THE COURT:

Hon. Stanley R. Chesler

United States District Judge

Dated:_______________,2009


albert h. turkus (aht 7000) julia m. kazaks (jmk 7504...

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