USA v. XS Platinum, Inc et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
UNITED STATES OF AMERICA,
Plaintiff,
vs.
JAMES SLADE,
Defendant.
Case No. 3:14-cr-00103-05-SLG-DMS
ORDER RE MOTIONS IN LIMINE
Before the Court are three motions in limine. 	At Docket 93 is Defendant James
Slade’s Motion in Limine to Exclude Evidence of Mr. Slade’s Prior Uncharged Business
Activities. 	At Docket 94 is Mr. Slade’s Motion in Limine to Exclude Statements of
Unavailable 	Codefendants 	and 	Alleged 	Co-Conspirators. 	At 	Docket 	109 	is 	the
Government’s Motion in Limine to Exclude Evidence of an Absence of Environmental
Harm, Jury Nullification, and Ignorance of the Law. The motions have been fully briefed.
Oral argument was not requested and is not necessary to the Court’s decisions. 	Mr.
Slade is charged with four counts of permit violations under the Clean Water Act, a related
conspiracy count, and one count of submitting a false report under the Clean Water Act.1
A jury trial is scheduled to begin on September 21, 2015.
1 Docket 17 (Superseding Indictment).
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DISCUSSION
I. 	Mr. Slade’s Motion at Docket 93
Mr. Slade seeks to preclude the Government from introducing evidence pertaining
to Mr. Slade’s prior mining activity at the Liberty Creek Mine in Washington State from
approximately 2004 to 2008. Mr. Slade asserts that
[a]n individual with knowledge of the Liberty Creek Mine provided agents
with information in an audio recorded interview about a permit violation
citation that the individual (not Mr. Slade) received and blamed that violation
on Mr. Slade’s activities. 	The individual explained that he and Mr. Slade
were adverse parties in litigation, speculated about Mr. Slade’s business
dealings, and insinuated that Mr. Slade mishandled funds.2
Mr. Slade indicates that he is unaware of the specific facts the Government intends to
introduce, but asserts that “evidence pertaining to Liberty Creek Mine” is irrelevant. And
even if relevant, Mr. Slade maintains that (a) to the extent the Government contends the
evidence is admissible under an exception to Evidence Rule 404(b)(2), Mr. Slade should
be provided an opportunity to respond, and (b) even if the evidence the Government
intends to introduce falls within an exception to Rule 404(b)(2), it should be excluded
under Rule 403 because “its probative value would be substantially outweighed by a
danger of unfair prejudice, confusing the issues, misleading the jury, undue delay, and
wasting time” because Mr. Slade’s activities in Washington predate those at issue in this
case and because “at least some of the government’s information comes from a person
who was involved in a civil lawsuit against Mr. Slade.”3
2 Docket 93 (Mot.) at 2.
3 Docket 93 (Mot.) at 3 (citing Fed. R. Evid. 403).
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The Government responds that it “intends to introduce evidence of Mr. Slade’s
prior experience owning and operating alluvial mining companies, and of the specialized
mining system he developed, and which XSP [XS Platinum, Inc.] later hired him to
implement at the Platinum Creek Mine in Alaska.”4 The Government contends that this
evidence is “inextricably intertwined with the government’s case.”5 But the Government
also indicates that it “does not intend to introduce evidence of permit violations or
business disputes with past partners.”6 As such, the Government maintains that it “does
not seek to introduce prior criminal acts, or even bad acts, but rather only the evidence
necessary to tell a clear and coherent story of the defendant’s developing the AuVert
system, using it and discovering its shortcomings with Liberty, being recruited at XSP to
implement the system, and knowingly re-implementing it incompletely at Platinum Creek
Mine.”7
The Government also asserts that to the extent the Court finds the evidence is not
inextricably intertwined with the charges against Mr. Slade, it is “nonetheless admissible
to show [Mr. Slade’s] knowledge, absence of mistake and lack of accident regarding the
mining operations at the Platinum Creek Mine and the discharges of turbid wastewater
into the Squirrel/Platinum Creek and Salmon River.”8 The Government asserts that
4 Docket 106 (Opp’n) at 1-2.
5 Docket 106 (Opp’n) at 2.
6 Docket 106 (Opp’n) at 2. The Government adds, however, that it may seek to introduce such
evidence if “the defendant raises these issues or otherwise makes them relevant.” Id.
7 Docket 106 (Opp’n) at 5.
8 Docket 106 (Opp’n) at 2 (citing Evidence Rule 404(b)).
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The defendant’s intimate knowledge of alluvial mining, his development of
the mining system being implemented at XSP, and his understanding of the
business side of running an alluvial mining company are all direct evidence
of his knowledge of the problems at Platinum Creek Mine, and the absence
of any mistake or accident with respect to the discharges from Platinum
Creek 	Mine. 	Evidence 	of 	the 	prior 	mining 	operation 	is 	critical 	to
demonstrating the defendant’s familiarity with and knowledge of the mining
system at issue here, and his resulting knowledge that, as implemented at
Platinum Creek, that system would result in illegal discharges.9
With respect to Evidence Rule 403, the Government emphasizes that it does not
intend to introduce evidence of permit violation citations or allegations that Mr. Slade
mishandled funds in its case in chief. The Government contends that the evidence it does
intend to introduce, of Mr. Slade’s mining experience and mining system, is not unfairly
prejudicial and “is highly probative of his knowledge of both the fact that discharges were
occurring at Platinum Creek, and that the mine was governed by a regulatory regime that
would make those discharges illegal.”10 	And the Government asserts that evidence of
Mr. Slade’s prior mining experience “is also essential to explaining why he was hired at
XSP.”11
The Ninth Circuit has held intrinsic evidence “includes evidence that ‘is necessary
to permit the prosecutor to offer a coherent and comprehensible story regarding the
commission of the crime.’”12 Such evidence “includes circumstantial evidence explaining
the general nature of a defendant’s business activity and providing a context in which the
9 Docket 106 (Opp’n) at 6-7.
10 Docket 106 (Opp’n) at 10.
11 Docket 106 (Opp’n) at 10.
12 United States v. Anderson, 741 F.3d 938, 949 (9th Cir. 2013) (internal citations omitted).
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transactions at issue took place.”13 In United States v. Anderson, the defendant argued
that the Government’s copyright infringement case was complete without the evidence of
other similar copyright violations. 	But the Ninth Circuit held that the evidence “help[ed]
explain Anderson’s business operations, including his manufacturing process.”14 	The
Ninth Circuit reasoned that “the larger and more sophisticated [Anderson’s] operation
was, the more likely it was that he knew what he was doing was illegal.”15
Here, the Court finds that the evidence the Government seeks to present in
connection with Mr. Slade’s work at Liberty Creek Mine provides context for the activities
at issue in this case, including Mr. Slade’s mining company experience, his development
and use of the mining system used at XSP, and the significance of some of his alleged
actions at XSP. 	Accordingly, it is admissible intrinsic evidence.16 	Moreover, the Court
finds that the evidence is not unfairly prejudicial under Rule 403.17 However, the Court
will grant the Defendant’s motion to exclude evidence as to any prior permit violations
and as to Mr. Slade’s prior business disputes, unless and until the Court orders otherwise
on motion of the Government made outside of the presence of the jury.
13 741 F.3d at 949-50.
14 741 F.3d at 951.
15 741 F.3d at 951.
16 The Court also finds that the proffered evidence would be admissible under Evidence Rule
404(b) to demonstrate Mr. Slade’s knowledge of mining and absence of mistake.
17 See Docket 93 (Mot.) at 2.
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II. 	Mr. Slade’s Motion at Docket 94
Mr. Slade asks the Court to exclude any out of court statements made by his
codefendants or any alleged co-conspirators who do not testify at trial. “In particular, the
defense is aware of an audio recorded interview of Mr. [James] Staeheli by federal agents
and interviews of and a factual proffer made by Mr. [Robert] Pate in connection with his
guilty plea. 	The defense also understands that the government interviewed Richard
Webber . . . .”18 	Mr. Slade bases this motion on the Confrontation Clause of the U.S.
Constitution and U.S. Supreme Court precedent that he reads to prohibit the introduction
of statements by a non-testifying co-defendant that incriminates another defendant at a
joint trial and bars testimonial statements of unavailable witnesses whom the defendant
did not have an opportunity to cross-examine.19
The Government responds that it intends to introduce written and oral co-
conspirator statements.20 	The Government contends that (a) the statements are not
hearsay if they are statements offered against a party and made by co-conspirators during
the course and in furtherance of the conspiracy pursuant to Evidence Rule 801(d)(2)(E);21
(b) Mr. Slade’s reliance on Bruton v. United States is misplaced because Mr. Slade will
18 Docket 94 (Mot.) at 3.
19 Docket 94 (Mot.) at 2 (citing Bruton v. United States, 391 U.S. 123 (1968)).
20 Docket 105 (Opp’n) at 2.
21 Docket 105 (Opp’n) at 2. The Government “also anticipates offering statements into evidence
as non-hearsay statements of a party-opponent under Fed. R. Evid. 801(d)(2) and as business
records admissible for the truth of the matter asserted under Fed. R. Evid. 803(5).” Id. at 6.
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not be tried at a joint trial;22 and (c) none of the statements the Government will seek to
admit are “testimonial” under Crawford v. Washington and therefore their admission
would not violate the Confrontation Clause.23
Without being provided the specific statements the Government may attempt to
introduce or the evidence of a conspiracy (and, thus, the status of any alleged co-
conspirators) that the Government may present, the Court cannot rule on the admissibility
of such statements under the exceptions identified by the Government, nor broadly
preclude any category of statements as requested by Mr. Slade. Accordingly, Mr. Slade’s
motion at Docket 94 is denied without prejudice to renew.
III. 	The Government’s Motion at Docket 109
The Government asks the Court to exclude: “(1) evidence and argument that the
Defendant’s acts did not result in environmental harm; (2) evidence and argument for jury
nullification; and (3) evidence and argument that the Defendant was ignorant of the law
and/or did not know the legal requirements of the Clean Water Act.”24 Mr. Slade argues
generally that the Government’s motion is premature and improperly seeks to exclude
“broad categories of evidence that it fails to identify with any particularity.”25
22 Docket 105 (Opp’n) at 7 (citing 391 U.S. 123 (1968)). 	However, Mr. Slade’s co-defendant
James Staeheli is now scheduled to go to trial with Mr. Slade. See Docket 135 (Order).
23 Docket 105 (Opp’n) at 8-9.
24 Docket 109 (Mot.) at 1.
25 Docket 118 (Opp’n) at 2.
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On the first point, Mr. Slade agrees with the Government that environmental harm
is irrelevant to the offenses charged.26 	He seeks an order that precludes both parties
from “introducing evidence or making arguments about pollutants other than turbidity or
any effects that turbidity or any other pollutant might have on the environment.”27
According to Mr. Slade, the Government has represented that it intends “to elicit testimony
. . . about the detrimental effects of turbidity on fish and wildlife.”28
It appears that the parties are substantially in agreement to preclude evidence and
argument pertaining to environmental harm. Accordingly, the Government’s motion as to
this issue will be granted in that both parties will be precluded from introducing evidence
or making arguments about pollutants other than turbidity or any effects that turbidity or
any other pollutant might have on the environment.
Second, 	the 	Government 	asks 	the 	Court 	to 	preclude 	the 	Defendant 	from
presenting evidence or argument “designed to elicit jury nullification.”29 Here again, Mr.
Slade agrees with the Government that arguments that the jury should acquit Mr. Slade
even if it determines that he violated the law would be improper. 	Defendant states that
he does not intend to make any such argument.30 	The Government has not specified
what evidence the defense might introduce that it seeks to exclude by this motion. Absent
specification as to that evidence, the Court declines to grant the in limine motion in that
26 Docket 118 (Opp’n) at 5.
27 Docket 118 (Opp’n) at 5.
28 Docket 118 (Opp’n) at 4-5.
29 Docket 109 (Mot.) at 5.
30 Docket 118 (Opp’n) at 5-6.
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regard. 	Therefore, the Government’s motion is granted to the extent that Mr. Slade will
not be permitted to argue to the jury that he should be acquitted even if the jury determines
that he violated the law. 	The motion is otherwise denied without prejudice to renew at
trial.
Third, the Government asks the Court to preclude Mr. Slade from presenting
evidence that he was “ignorant of the law and the facility’s permit.”31 	The Government
asserts that the Clean Water Act is a general intent crime and “a lack of knowledge
concerning its legal requirements is irrelevant and should not be admitted in this case.”32
Mr. Slade does not dispute that “ignorance of the law is not a defense” but asserts
that his “knowledge of the permit’s conditions and limits is relevant to whether he
knowingly discharged in violation of the permit.”33 Four of the Counts against Mr. Slade
are charged under 33 U.S.C. § 1319(c)(2). 	In United States v. Weitzenhoff, the Ninth
Circuit 	held 	that 	criminal 	sanctions 	could 	be 	imposed 	under 	Section 	1319(c)(2)
“regardless of whether the polluter is cognizant of the requirements or even the existence
of the permit.”34 	Therefore, evidence going to Mr. Slade’s knowledge of the law or the
permit requirements is not relevant to those four counts
Mr. Slade asserts that his knowledge of the permit and its requirements is relevant
to “whether he failed to report discharges of water with turbidity levels that exceeded
31 Docket 109 (Mot.) at 8.
32 Docket 109 (Mot.) at 8 (citing United States v. Hopkins, 53 F.3d 533, 537 41 (2d Cir. 1995);
United States v. Weitzenhoff, 35 F.3d 1275, 1283 86 (9th Cir. 1993); United States v. Frezzo
Bros., Inc., 546 F. Supp. 713, 720 (E.D. Pa. 1982), aff'd, 703 F.2d 62 (3d Cir. 1983)).
33 Docket 118 (Opp’n) at 7.
34 United States v. Weitzenhoff, 35 F.3d 1275, 1284 (9th Cir. 1993).
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those set in the permit” and “whether he knowingly made a false statement that there
were no discharges in 2010 (Count Six) or conspired to violate the permit and make false
statements (Count One).”35 He adds that “he did not have the authority and control over
the mine or its discharges that the Government suggests . . . . He also was not the person
tasked with a variety of environmental compliance issues . . . .”36 But Mr. Slade does not
explain why pursuing these arguments requires him to present evidence as to whether
he was aware of whether XSP was violating the CWA or the permit. The cases that he
cites for the proposition that a non-permittee should be held to a different standard are
inapposite. United States v. Speach considered a different statutory provision that made
it unlawful to “knowingly transport[] or cause[] to be transported any hazardous waste
identified or listed under this subchapter to a facility which does not have a permit.”37
Because that section “requires transporters . . . to ensure that other parties have storage
permits,” the Ninth Circuit “decline[d] to impose liability on these defendants absent proof
that they knew the recipient’s permit status.”38 	Neither that statutory provision, nor the
situation it addresses, is at issue here.
In United States v. Cooper, cited by Mr. Slade, the Ninth Circuit held that “the
phrase ‘any person’ [in 33 U.S.C. § 1319(c)(2)] is broad enough to cover permittees and
35 Docket 118 (Opp’n) at 8.
36 Docket 118 (Opp’n) at 7.
37 968 F.2d 795, 796 (9th Cir. 1992) (emphasis added).
38 968 F.2d at 797 (emphasis added).
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non-permittees alike.”39 	Here, the Complaint alleges that Mr. Slade was, inter alia, the
Chief Operating Officer of XSP.40 The CWA provides that the term “person” as used in
the relevant section includes “any responsible corporate officer.”41 While Mr. Slade may
dispute whether he was a “responsible corporate officer,” he does not demonstrate why
his knowledge of the law or permit conditions is relevant to that question. For these
reasons, Mr. Slade’s knowledge is not relevant to the conspiracy count.42
Mr. Slade’s knowledge of the law or permit requirements is also not relevant to
Count Six, which alleges that Mr. Slade, among others, violated the Clean Water Act
when he “did state to the ADEC [Alaska Department of Environmental Conservation] in
the 2010 Annual Report for placer mining at the Platinum Creek Mine that there was ‘no
discharge’ during 2010, a statement the defendant[] knew to be false.”43 	Because the
alleged statement does not refer to the law or the permit requirements, Mr. Slade’s
knowledge of those topics is not relevant to whether he made the statement at issue or
knew it to be false. Accordingly, the Government’s motion in limine will be granted on this
topic.
39 173 F.3d 1192 (9th Cir. 1999). The Cooper court did not decide whether the Government was
required to prove that a non-permittee defendant knew of the permit and its requirements. Id. at
1201.
40 Docket 17 (Superseding Indictment) at ¶ 11.
41 33 U.S.C. § 1319(c)(6).
42 See Ingram v. United States, 360 U.S. 672, 678 (1959) (“There need not, of course, be proof
that the conspirators were aware of the criminality of their objective . . . .”); United States v.
Grasso, 724 F.3d 1077, 1086 (9th Cir. 2013) (same).
43 Docket 17 (Superseding Indictment) at ¶ 53.
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CONCLUSION
Based on the foregoing, IT IS ORDERED that:
1. 	Defendant James Slade’s Motion in Limine to Exclude Evidence of Mr.
Slade’s Prior Uncharged Business Activities at Docket 93 is GRANTED as to any prior
permit violations and as to Mr. Slade’s prior business disputes. The motion is otherwise
DENIED.
2. 	Defendant James Slade’s Motion in Limine to Exclude Statements of
Unavailable Codefendants and Alleged Co-Conspirators at Docket 94 is DENIED without
prejudice to renew at trial outside the presence of the jury.
3. 	The Government’s Motion in Limine to Exclude Evidence of an Absence of
Environmental Harm, Jury Nullification, and Ignorance of the Law at Docket 109 is
GRANTED to the extent that (a) both parties are precluded from introducing evidence or
making arguments about pollutants other than turbidity or any effects that turbidity or any
other pollutant might have on the environment; (b) Mr. Slade shall not argue that he
should be acquitted even if the jury determines that he violated the law; and (c) evidence
that Mr. Slade was ignorant of the law or did not know the requirements of the Clean
Water Act permit is precluded. 	The motion is otherwise DENIED without prejudice to
renew at trial outside the presence of the jury.
4. 	Either party may seek to revisit these rulings at trial, but shall do so by
motion made outside the presence of the jury.
DATED this 10 th day of July, 2015 at Anchorage, Alaska.
/s/ Sharon L. Gleason
United States District Judge
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