Petition for Writ of Certiorari — Rockwell International Corp. v. United States

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O07 117 8 JAN 1 3 1998

No. 97-___orcice OF THE CLERK

In The

Supreme Court of the United States

October Term, 1997

ROCKWELL INTERNATIONAL CORPORATION,

Petitioner,

UNITED STATES OF AMERICA,

Respondent.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Tenth Circuit

PETITION FOR A WRIT OF CERTIORARI

Mark J. MacDOouGALL Haro_tp A. HADDON

THomas P. McLisH (Counsel of Record)

AxkIN, Gump, STRAUSS, Ty GEE

Hauer & FeEtp, L.L.P. HADDON, MorGaAn &

1333 New Hampshire Ave., ForEMAN, P.C.

NW, Suite 400 150 East 10th Avenue

Washington, DC 20036 Denver, CO 80203

(202) 887-4510 (303) 831-7364

Counsel for Petitioner

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED FOR REVIEW

Whether appellate review of a trial court’s interpreta-

tion of the terms of a plea agreement should be for

“clear error,” as the Seventh, Ninth and Tenth circuits

hold, or should be “de novo,” as the Second, Fourth,

Sixth, Eighth and District of Columbia circuits hold.

Whether the plea-agreement “analogy” to contract

law suggested in Blackledge v. Allison, 431 U.S. 63

(1977), permits a strict application of the parol evi-

dence rule in interpreting a written plea agreement

such that no extrinsic evidence of a defendant’s rea-

sonable understanding is permitted.

LIST OF PARENT COMPANIES AND

NONWHOLLY OWNED SUBSIDIARIES

Rockwell International Corporation

Boeing North American, Inc., a wholly owned subsidiary

of The Boeing Corporation

Boeing Australia, Ltd.

Boeing Capital Corporation

iii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW ........... i

LIST OF PARENT COMPANIES AND NONWHOLLY

PUP ENED WASUMEPEAEED os occ seco ccctcrcescces ii

ROR OO oso oe becca cceceincecccces iii

BOP Ge PPE IDS 05 a ke. Vv

Ce MRO once che vcescccceckuliessee. 1

oo ag eS SS aera pas a rere 1

CONSTITUTIONAL AND STATUTORY PROVI-

I sis io ae ago kp cbse vc vee 1

SiAbEmenrer OF IHG CASE... 2... oc. e tee ees 1

JURISDICTION OF THE DISTRICT COURT........ 9

REASONS FOR GRANTING THE PETITION....... 9

I. The courts of appeals are divided on the impor-

tant question of what deference, if any, to give

the district court’s interpretation of a plea agree-

DUE UEa Ee stack bebe iucesbenedebicvaenvces 9

Il. Strict application of the parol evidence rule to

integrated plea agreements undercuts the due

process clause’s concern for reasonableness to

the defendant, but the courts of appeals disagree

on the rule’s application. ...................... 15

A. Due process forbids a strict application of

the parol evidence rule to integrated plea

case cage eg eg OE OO ESP VOLS ED 17

TABLE OF CONTENTS - Continued

Page

B. The parol evidence rule, when correctly

applied, is not a rule of evidence which pre-

cludes a party from demonstrating that the

words of a contract have context .......... 20

CIC Ae hi i ia onc ie ci ee ine cegvisusnsisgens 26

RPP Gino. se cKa hae 8 Ver baw ed eecaene basemen la

TABLE OF AUTHORITIES

Page

CASES

Allen v. Hadden, 57 F.3d 1529 (10th Cir.), cert.

Seed, 116 S. CY. SOG TARO) wiki do. obs cee csi 10

American Cyanamid Co. v. Fermenta Animal Health

Ce. Sh: Bae 197: (5G ty Acocks Kargirisivess 085 25

Bailey v. United States, 116 S. Ct. 501 (1995) ......... 26

Baldwin v. United States, 116 S. Ct. 1873 (1996) ...... 14

Blackledge v. Allison, 431 U.S. 63 (1977)........... 15, 17

Boston Sand Co. v. United States, 278 U.S. 41 (1928) .... 23

Crescent Oil & Shipping Servs., Ltd. v. Phibro Energy,

Juc.; 929 FA: {2d Cir ISG EE 25

Deal v. United States, 508 U.S. 129 (1993)............ 23

Eddy v. Prudence Bonds Corp., 165 F.2d 157 (2d Cir.

1947), cert. denied sub nom. Prudence Realization

Corp. 0, 2aGy, 293 U.S. G45. CISKB) 2. occas csccees 13

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101

CL OUIS ias Sak ou LARS s Bartle k bce be Bs Rbsis + ond wanes 13

Harrison v. Northern Trust Co., 317 U.S. 476 (1943) .... 22

In re Arnett, 804 F.2d 1200 (11th Cir. 1986).......... 17

Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844

CRUE a os ics as bale Mec ae RR RDA ens oo wc 12

ee tt ae teain cam ak oe , 5k 19

TABLE OF AUTHORITIES - Continued

Page

Lawyers Title Ins. Corp. v. Honolulu Fed. Sav. & Loan

Ass'n, 900 F.2d 159 (9th Cir. 1990) ................ 13

Mabry v. Johnson, 467 U.S. 504 (1984). ............ 16, 25

Markman v. Westview Instruments, Inc., 116 S. Ct.

LING (HII oi.cocinnis collate Few cWiee Ces eibe Raeeaes 13

Mellon Bank, N.A. v. Aetna Business Credit, Inc., 619

PA Tipe AO Se: SOP ds ee kc eddan kena hac cee swaes 24

Milis v. United States, 117 S. Ct. 478 (1996).......... 14

Mitzelfelt v. Department of Air Force, 903 F.2d 1293

(ZOE Ce. Bias ocnncc vase uadeene mein uuawer seh ees 3

Nash v. Towne, 5 Wall. (U.S.) 689 (1866) ...... 22, 23, 24

National Diamond Syndicate, Inc. v. United Parcel

Serv., Inc., 897 F.2d 253 (7th Cir. 1990)............ 13

New York Trust Co. v. Island Oil & Transp. Corp., 34

R2d G55 (2d Cie: BORG pics ccnenks cheat Gadladend. ss 22

Ornelas v. United States, 116 S. Ct. 1657 (1996)

av teeen Uta Sek ee ehh ba tr te Mae Lee 12, 13, 14, 15, 23

Pacific Gas & Elec. Co. v. G.W. Thomas Drayage &

Rigging Co., 442 P.2d 641 (Cal. 1968)........... 21, 22

People v. Romero, 745 P.2d 1003 (Colo. 1987), cert.

denied, 405 US. GRO (IFGG) ooo viia's oes ced deeds ieee: 20

People v. Payseno, 1997 WL 637817 (Colo. Ct. App.

Oct. 16, SORT}. b5:8s sdicinwns theaids Wee aig sewn een Gus 20

Pierce v. Underwood, 487 U.S. 552 (1988)............. 12

Reese Exploration, Inc. v. Williams Nat. Gas Co., 983

B.2g 1534 €100e Cle: W998). ese. ea ee 13

Ricketts v. Adamson, 483 U.S. 1 (1987) ............ 13, 26

vii

TABLE OF AUTHORITIES - Continued

Ridinger v. State, 341 N.W.2d 734 (Iowa 1983)........ 20

Salve Regina College v. Russell, 499 U.S. 225 (1991) .... 13

Santobello v. New York, 404 U.S. 257 (1971)....... passim

Sierra Club v. United States Dep't of Energy, 770 F.

PUPP. 570 DO: COM OVA y eis bs os Sees Ma vicce do cieie’s 3

St. James v. People, 1997 WL 757895 (Colo. Dec. 8,

EPOT PPR G rs SEES ON A CAE WU 0 VERS UR BA OF 11

State v. Abbott, 901 P.2d 1296 (Haw. Ct. App. 1995).... 11

Stern v. Shalala, 14 F.3d 148 (2d Cir. 1994)........... 16

Sumitomo Mach. Corp. of Am. v. Allied Signal, Inc.,

Si BSG G28 (3d Cie W906) ook i. eit eek es 24

Town of Newton v. Rumery, 480 U.S. 386 (1987)....14, 17

United States Dep’t of Energy v. Ohio, 503 U.S. 607

CESMAD SAEs this ota a ithe hk poh v seeds wa pS Oe Seeds aaa 3

United States ex rel. Hall v. Schwartzman, 887

i ar Ce Seer, ee NE nC 7

United States ex rel. Stone v. Rockwell Int'l Corp.,

No. 89-M-1154 (D. Colo.) ............ccccceece passim

United States v. Ajugwo, 82 F.3d 925 (9th Cir. 1996),

Cert. Gentea, Ti7 S."CC. 782 1997). oe. 10, 19

United States v. Anthony, 93 F.3d 614 (9th Cir. 1996) .... 10

United States v. Badaracco, 954 F.2d 928 (3d Cir.

viii

TABLE OF AUTHORITIES —- Continued

United States v. Ballis, 28 F.3d 1399 (5th Cir. 1994)....

United States v. Barraza, 87 F.3d 1323, 1996 WL

SONS COMMUNE, isin odin ced whe sevendaeues

United States v. Bines, 64 F.3d 667, 1995 WL 490152

(9th Cir. 1995), cert. denied sub nom. Martin v.

United States, 116 S. Ct. 538 (1995) and Johnson v.

United States, 116 S. Ct. 734 (1996)............

United States v. Bugusz, 43 F.3d 82 (3d Cir. 1994),

cert. denied sub nom. O'Rourke v. United States,

PA BEER. BE CMUEE > cid oud cika> opinid dikienewe eos ks

United States v. Clark, 55 F.3d 9 (1st Cir. 1995)...

United States v. Camacho-Bordes, 94 F.3d 1168 (8th

COE SUED... kos Kadena kedi tack See eat

United States v. Conkins, 9 F.3d 1377 (9th Cir. 1993) ....

United States v. Conway, 81 F.3d 15 (1st Cir. 1996)....

United States v. Cooper, 70 F.3d 563 (10th Cir. 1995) ....

United States v. Cornell, 121 F.3d 718, 1997 WL

GEOR AA GS UT ha vin.d bwkia ee iecadeb ccee«

United States v. Fernandez, 960 F.2d 771 (9th Cir.

ROO wo ca DEUS AGES ESCORTS REO Lesa

United States v. Fields, 766 F.2d 1161 (7th Cir. 1985)

United States v. Floyd, 1 F.3d 867 (9th Cir. 1993).

United States v. Garcia, 956 F.2d 41 (4th Cir. 1992) ....

United States v. Gonzalez, 112 F.3d 1325 (7th Cir.),

cert. denied, 118 S. Ct. 396 (1997)..............

United States v. Harvey, 791 F.2d 294 (4th Cir. 1986) ....

United States v. huwley, 93 F.3d 682 (10th Cir. 1996) ....

Page

TABLE OF AUTHORITIES - Continued

United States v. Hyde, 117 S. Ct. 1630 (1997). . 12,

United States v. Ingram, 979 F.2d 1179 (7th Cir.

1992), cert. denied, 507 U.S. 997 (1993)..........

United States v. Johnson, 979 F.2d 396 (6th Cir. 1992) ....

United States v. Keller, 902 F.2d 1391 (9th Cir. 1989) ....

United States v. Lane, 95 F.3d 1159, 1996 WL 481797

SI i

United States v. Legg, 7 F.3d 236, 1993 WL 393080

eC RESIS nec a) Sa eles ena

United States v. Lennox Metal Mfg. Co., 225 F.2d 302

| RUM RRS a ee te

United States v. Lovell, 81 F.3d 58 (7th Cir. 1996)...

United States v. Martin, 25 F.3d 211 (4th Cir. 1994)...

United States v. Mills, 122 F.3d 346 (7th Cir.), cert.

denied, 1997 WL 713549 (Dec. 15, 1997).........

United States v. Mohammed, 974 F.2d 1344, 1992 WL

rv 1 eG | 3 Pe 2 ae ce aint aa gee

United States v. Myers, 32 F.3d 411 (9th Cir. 1994) ....

United States v. Pancal, 999 F.2d 548, 1993 WL

SOaee CeCe Gee, Some ue eer oo ieee.

United States v. Pinkney, 37 F.3d 1507, 1994 WL

Pe AC ene ae BOOR Sb ek oe i sos Ga bates

United States v. Pollard, 959 F.2d 1011 (D.C. Cir.),

cert. denied, 506 U.S. 915 (1992) ................

Page

13, 25

TABLE OF AUTHORITIES - Continued

Page

United States v. Read, 778 F.2d 1437 (9th Cir. 1985),

cert. denied, 479 U.S. 835 (1986) ............--.-eeee 10

United States v. Ready, 82 F.3d 551 (2d Cir. 1996) .... 16

United States v. Rexach, 896 F.2d 710 (2d Cir.), cert.

denied, 496 US. OGD CSF) «osc. csc ckc cs ccs cote te 11

United States v. Rewis, 969 F.2d 985 (11th Cir. 1992) .... 16

United States v. Rockwell Int’l Corp., 124 F.3d 1194

to £e Bs eer oerrerrry.. frre 10, 12, 17, 18

United States v. Rourke, 74 F.3d 802 (7th Cir.), cert.

denied, 116 S. Ct. 1640 (1996) 2.56000 wcevas nee. csies 9

United States v. Salcedo, 865 F.2d 266, 1988 WL

Rib, 2. Bo a, || pero? PC Te Trey Eee 10

United States v. Shorteeth, 887 F.2d 253 (10th Cir.

QOD wn ns ua cette s 6s Rhos FA nl Gees cee nenee sé asehint 10

United States v. Silva-Zamudio, 73 F.3d 371, 1995

WE; FORGET CO Cis TORR) a a ees se ees is 10

United States v. Smith, 976 F.2d 861 (4th Cir. 1992) .... 17

United States v. Swinehart, 614 F.2d 853 (3d Cir.),

cert. denied, 449 US. G27 CiSGG) « . « . anc sasccsecsss 19

United States v. Veri, 108 F.3d 1311 (10th Cir. 1997) .... 16

United States v. West, 2 F.3d 66 (4th Cir. 1993)....... 11

TABLE OF AUTHORITIES - Continued

Page

United States v. Wittie, 25 F.3d 250 (5th Cir. 1994),

aff'd sub nom. Witte v. United States, 515 U.S. 389

SN Crank Cabbie scheme ad hoes ene hese SCERES EAS +s 16

Watt v. Alaska, 451 U.S. 259 (1981) .................. 23

CONSTITUTIONAL AND STATUTORY PROVISIONS

United States Constitution, amendment 5............. 1

Te SR ee AS 8 hs BO iow 0 i ve eke Kees canes )

ee re ee EE I 8 0 65s Gans tose ncencentapore 1

BE SI, a AIO oie ads he Kass hetscccene dee. 4,7

Senate Report No. 345, 99th Cong., 2d Sess. (1986),

reprinted in 1986 U.S.C.C.A.N. 5266 ............545. 7

OTHER AUTHORITIES

3 Arthur L. Corbin and Lawrence A. Cunningham

& Arthur J. Jacobson, Corbin on Contracts §§ 537,

542, 573 (1960 & Supp. 1997) .............. 21, 22, 23

David McCraw, How Do Readers Read? Social Sci-

ence and the Law of Libel, 41 Cath. U. L. Rev. 81

AEE SOONER SS SSeS PSS eee 23

Restatement (Second) of Contracts §§ 202, 212, 214

a I ee a eras siale Gir aed ke me nhs 18, 22

U.S. Dep’t of Justice, Sourcebook of Criminal Justice

Statistics 1996 (Kathleen Maguire & Timothy J.

py ge 8 Rt.) eee err re eee 14

4 Samuel Williston & Walter H.E. Jaeger, Williston

on Contracts §§ 609, 629 (3d ed. 1961)............. 22

OPINIONS BELOW

The court of appeals’ opinion is reported at 124 F.3d

1194 (10th Cir. 1997), reprinted in the appendix, at pages

la-15a. The district court’s unpublished, November 19,

1996, memorandum opinion is reprinted in the appendix,

at pages 16a-26a.

JURISDICTION

The court of appeals’ opinion affirming the district

court’s order was entered on August 26, 1997. A timely

petition for rehearing and suggestion for rehearing en

banc was denied on October 15, 1997. App. 27a-28a. This

Court has jurisdiction under 28 U.S.C. § 1254(1) (1994).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

United States Constitution, Amend. 5: “No person

shall . . . be deprived of life, liberty, or property, without

due process of law... . ”

STATEMENT OF THE CASE

This petition presents two important issues of federal

criminal law, as to each of which the courts of appeals

have rendered conflicting holdings. The federal circuits

disagree on the question whether district court inter-

pretations of plea agreements should be reviewed under

a de novo or a “clear error” standard. And federal courts

of appeals apply differing interpretations of the “parol

evidence” rule in allowing — or precluding - evidence of a

defendant’s reasonable understanding of the terms of a

written plea agreement.

The Tenth Circuit, in its ruling below, declined to

conduct de novo review of a district court’s facial inter-

pretation of a plea agreement. The court of appeals also

applied a strict “parol evidence rule” to preclude consid-

eration of evidence shedding light on the meaning of a

key provision in that plea agreement, while conceding

that a reasonable interpretation of the proffered evidence

supported the defendant’s understanding of that provi-

sion. The Tenth Circuit’s ruling effectively foreclosed

enforcement of a government promise that induced guilty

pleas to 10 criminal charges, despite the undisputed fact

that the corporate defendant paid substantial monetary

consideration for that very promise. The court’s standard

of review and its application of the parol evidence rule to

a written plea agreement in a criminal case differ from

the standards applied to the interpretation and review of

contractual documents in civil disputes. The result here

was fundamentally unfair and effectively imposed on

corporate criminal defendants a heavier burden of proof

than is applied to individuals who seek enforcement of

their rights under a plea agreement. On both of these

issues — the standard of review and the application of the

parol evidence rule - the Tenth Circuit is in conflict with

many other circuits.

This case arises out of a highly publicized investiga-

tion of environmental problems at the federal govern-

ment’s Rocky Flats nuclear weapons facility near Denver,

Colorado. Until 1990 Rockwell International Corporation

[“Rockwell”] managed the facility under contract with

the United States. In June 1989 the investigation com-

menced with the issuance of a search warrant premised

on sensational allegations that Rockwell and the Depart-

ment of Energy [“DOE”] had conducted surreptitious

burnings and discharges of radioactive material into the

air and water. Although the government later acknowl-

edged that these allegations were unfounded, it con-

ducted a three-year grand jury investigation into all

aspects of environmental management at the plant.

The investigation culminated in 1992 with a written

plea agreement. Under the agreement, Rockwell pled

guilty to 10 counts charging that it illegally stored and

disposed of hazardous wastes at the plant and violated

the Clean Water Act. Four of the charged violations

related to the failure of Rockwell and DOE to obtain

permits for the storage of mixed radioactive and hazard-

ous wastes. Because DOE is a federal agency, it enjoyed

sovereign immunity and could not be charged with a

crime or subjected to a civil penalty. See, e.g., United States

Dep't of Energy v. Ohio, 503 U.S. 607, 615-23 (1992); Mitz-

elfelt v. Department of Air Force, 903 F.2d 1293, 1294-95

(10th Cir. 1990); Sierra Club v. United States Dep’t of Energy,

770 F. Supp. 578, 584 (D. Colo. 1991). As to all the charges,

the government stipulated that no hazardous substances

had migrated outside the plant’s boundaries.

In exchange for Rockwell’s guilty pleas and a stipu-

lated $18.5 million fine, the government promised not to

bring additional charges against Rockwell or its

employees and to forbear from administrative action

against Rockwell under a number of environmental stat-

utes. Paragraph 5 of the plea agreement recited that the

government’s promise not to sue Roockwell did not

“encompass (or preclude) . . . the issuues raised in” a

pending qui tam action brought under 331 U.S.C. § 3230

(1994) and captioned United States ex rel. : Stone v. Rockwell

International Corp. [“Stone”], No. 89-M-+1154 (D. Colo.).

Immediately after this paragraph, the aggreement stated,

“After an independent review, the Departtment of Justice-

Civil Division has determined to file a: notice in Stone

declining to intervene” [hereinafter “deeclination provi-

sion” }.

The plea agreement also contained an “integration

clause,” which provided that there were : no other agree-

ments, terms or conditions, express or inmplied, and that

neither party was relying on any termns, promises or

conditions not expressed in the agreemeent.

The Stone case was a pending qui tam’ suit brought in

1989 by a former Rockwell employee. Tfhe suit’s claims

loosely tracked the allegations in the fedeeral search war-

rant affidavit that had initiated the criminaal investigation.

During the plea negotiations, the U.S... Department of

Justice [“DOJ”] was weighing whether to exercise its

statutory right to intervene and prosecutee the Stone suit.

Because government intervention allows 2a “false claims”

suit to be vastly expanded in scope,! Rocckwell sought a

1 When the government intervenes, as it vultimately did in

Stone, it typically adds breach of contract andd tort claims not

available to a private plaintiff and is not subjecct to the statutory

“original source” rule which limits the claimns of the private

plaintiff by requiring them to be based on infoprmation which is

not in the public domain unless the plaintiff wwas the “original

source.”

plea agreement that would foreclose government inter-

vention in Stone unless the government discovered sub-

stantial new evidence of misconduct subsequent to the

plea. A meeting was held in Washington, D.C., between

Rockwell lawyers and attorneys from DOJ’s Civil and

Criminal Divisions to discuss Rockwell’s concerns. At

that meeting, according to the Rockwell lawyers, the Civil

Division attorneys stated they did not intend to intervene

but would not foreclose intervention in the future if sub-

stantial new evidence of fraud were discovered after the

plea. Subsequent to that meeting, and with DOJ concur-

rence, Rockwell provided Civil Division lawyers with

numerous internal investigative memoranda and docu-

ments that were not otherwise available to the govern-

ment because they were privileged. These documents and

reports were inculpatory to Rockwell. DOJ-Civil accepted

them on the express understanding that they were being

tendered to foreclose a later government intervention in

the Stone suit based on the claim that DOJ had been

ignorant of the inculpatory facts.

Because the plea agreement engendered great public

controversy, the prosecutors who negotiated it testified

before a congressional committee. DOJ prosecutor Peter

Murtha defended the plea agreement's declination provi-

sion:

I think the Civil Division’s decision here [to

decline intervention], although expedited, was

not necessarily a terribly difficult one to make.

And if new information came to their attention,

they could have intervened based on that new

information.

Prosecutor Kenneth Fimberg also defended the declina-

tion concession, pointing out that he had extracted sub-

stantial additional fines (about $3 million) for this

“additional value.”

The district court accepted the plea agreement in

June 1992, and Rockwell paid the stipulated $18.5 million

in fines. Rockwell did so in the belief that the government

would not and could not thereafter intervene in Stone

absent a showing of substantial new evidence of fraud. In

November 1995 — some six and a half years after the qui

tam suit was filed — the government moved to intervene

in Stone. Rockwell opposed the motion and responded by

moving in the criminal action to enforce the declination

provision of the plea agreement. Rockwell argued that

the government should be barred from intervening in

Stone because the government had no significant new

evidence of fraud or misconduct. Rockwell proffered evi-

dence in support of its motion which demonstrated the

following:

e Rockwell’s executives and attorneys under-

stood that the declination provision barred

intervention unless the government discov-

ered substantial new evidence of fraud or

misconduct.

e There was no such “new evidence.”

e Rockwell’s understanding of the declination

provision was reasonable, in part because the

government attorneys had deliberately

induced it and, according to the testimony of

prosecutor Murtha, shared that understand-

ing. Rockwell’s understanding was also rea-

sonable because it was supported by

legislative history and case law interpreting

the qui tam statute’s “late intervention” pro-

vision, which requires “good cause,” 31

U.S.C. § 3730(c)(3), rooted in substantial new

evidence.

e The government’s motivation in seeking late

intervention in Stone was to obtain tactical

advantage in an action brought by Rockwell

in the Court of Federal Claims arising from

the Rocky Flats contract. In 1996, that case

was indefinitely stayed on the government's

motion, which cited the intervention in Stone

as cause for a stay because the Stone litiga-

tion might void Rockwell’s contract claims.

The district court denied Rockwell’s motion to

enforce the plea agreement. The court refused to consider

the evidence that Rockwell had tendered, holding that

under its interpretation of the plea agreement there was

no ambiguity, see App. 21a, and that the declination pro-

vision was “simply a statement of fact” which “did not,

by its own terms, pre®'vde later intervention” for any

2 See S. Rep. No. 345, 99th Cong., 2d Sess. 26-27

(“Conceivably, new evidence discovered after [the government

elects not to intervene] could escalate the magnitude or

complexity of the fraud, causing the Government to reevaluate

its initial assessment or making it difficult for the qui tam relator

to litigate alone. In those situations where new and significant

evidence is found and the Government can show ‘good cause’

for intervening, paragraph [(c)(3)] provides that the court may

allow the Government to take over the suit.”), reprinted in 1986

U.S.C.C.A.N. 5266, 5291-92; United States ex rel. Hall v.

Schwartzman, 887 F. Supp. 60, 62 (E.D.N.Y. 1995) (holding that

discovery of “new and significant evidence which has altered

[the government’s] view of the magnitude of the alleged fraud

[is] precisely the circumstance[] which Section 3730(c)(3) was

intended to address”).

reason the government deemed expedient. Id. The district

court further held that case law construing plea agree-

ments according to the reasonable understanding of the

defendant was not applicable “where the defendant is a

corporation.” App. 24a. In effect, the district court held

that the declination provision — for which Rockwell bar-

gained and paid an additional $3 million - gained it

nothing.

Reviewing the trial court’s “interpretation of the

agreement . . . for clear error,” the Tenth Circuit affirmed.

App. 8a. The Tenth Circuit’s opinion acknowledged that

the evidence tendered by Rockwell in support of its

motion “confirm(ed) Rockwell’s reasonable understand-

ing that the definition of ‘good cause’ seriously circum-

scribed the government's ability to later intervene.” App.

7a-8a. However, the court declined to review this evi-

dence, or the plea agreement, de novo. Rather, the court

held that neither it nor the trial court could consider any

evidence regarding the parties’ intentions or understand-

ings because “[t]he parol evidence rule bars the court

from considering evidence of terms outside of an inte-

grated written agreement.” App. 9a. The court further

held that the trial court’s characterization of the declina-

tion provision as only “a statement of fact” was “not

clearly erroneous” and thus declined to afford de novo

review to that interpretation either on its face or with the

gloss of Rockwell’s proffered evidence. App. 8a-13a.

JURISDICTION OF THE DISTRICT COURT

The District Court had jurisdiction over this case

under 18 U.S.C. § 3231 (1994); see Lane v. Williams, 455

U.S. 624, 630 (1982); Santobello v. New York, 404 U.S. 257,

262 (1971).

REASONS FOR GRANTING THE PETITION

I. The courts of appeals are divided on the important

question of what deference, if any, to give the dis-

trict court’s interpretation of a plea agreement.

The Tenth Circuit Court of Appeals applied a “clear

error” standard in declining to undertake independent

review of the district court’s conclusion — from a facial

review of the plea agreement - that the declination provi-

sion was merely a “statement of fact” having no prom-

issory significance.

The Tenth Circuit thus joined two other circuits, the

Seventh and the Ninth circuits, in holding that a trial

court’s interpretation of a plea agreement may be

reviewed only for clear error. The Seventh Circuit has

consistently held it will review a trial court’s interpreta-

tion of a plea agreement only for clear error.? The Ninth

and Tenth circuits years ago - mostly in unpublished

3 United States v. Gonzalez, 112 F.3d 1325, 1327 (7th Cir.),

cert. denied, 118 S. Ct. 396 (1997); United States v. Lovell, 81 F.3d

58, 61 (7th Cir. 1996); United States v. Rourke, 74 F.3d 802, 805 (7th

Cir.), cert. denied, 115 S. Ct. 1840 (1996); United States v. Fields,

766 F.2d 1161, 1168 (7th Cir. 1985). In the cases where certiorari

was denied, the standard of review issue was not raised.

decisions — had held that a trial court’s interpretation of

an integrated plea agreement must be reviewed de novo.

But more recently these two circuit courts have aban-

doned that standard and concluded that a trial court’s

interpretation of the plea agreement may only be

reviewed for clear error — the Tenth Circuit in two recent

published opinions,5 and the Ninth Circuit in more than

two dozen recent published and unpublished opinions.®

4 See United States v. Pancal, 999 F.2d 548, 1993 WL 265153,

at *2 (10th Cir. 1993); United States v. Mohammed, 974 F.2d 1344,

1992 WL 217813, at *1 (9th Cir. 1992); United States v. Shorteeth,

887 F.2d 253, 256 (10th Cir. 1989); United States v. Salcedo, 865

F.2d 266, 1988 WL 131745, at *1 (9th Cir. 1988). In the cases

where certiorari was denied, the standard of review issue was

not raised.

5 United States v. Rockwell Int'l Corp., 124 F.3d 1194, 1199

(10th Cir. 1997); Allen v. Hadden, 57 F.3d 1529, 1534 (10th Cir.),

cert. denied, 116 S, Ct. 544 (1995).

419049, at *2 (9th Cir. 1997); United States v. Anthony, 93 F.3d 614,

616 (9th Cir. 1996); United States v. Barraza, 87 F.3d 1323, 1996 WL

338357, at *3 (9th Cir. 1996); United States v. Lane, 95 F.3d 1159,

1996 WL 481797, at *1 (9th Cir. 1996); United States v. Ajugwo, 82

F.3d 925, 928 (9th Cir. 1996), cert. denied, 117 S. Ct. 742 (1997);

United States v. Silva-Zamudio, 73 F.3d 371, 1995 WL 761657, at *1

(9th Cir. 1995); United States v. Bines, 64 F.3d 667, 1995 WL

490152, at *8 (9th Cir. 1995), cert. denied sub nom. Martin v. United

States, 116 S, Ct. 538 (1995) and Johnson v. United States, 116 S. Ct.

734 (1996); United States v. Pinkney, 37 F.3d 1507, 1994 WL

534697, at *2 (9th Cir. 1994); United States v. Floyd, 1 F.3d 867, 869

(9th Cir. 1993); United States v. Conkins, 9 F.3d 1377, 1381 (9th Cir.

1993); United States v. Fernandez, 960 F.2d 771, 772 (9th Cir. 1992);

United States v. Keller, 902 F.2d 1391, 1393 (9th Cir. 1989); United

States v. Read, 778 F.2d 1437, 1441 (9th Cir. 1985), cert. denied, 479

U.S. 835 (1986).

The D.C., Second, Fourth, Sixth and Eighth circuits, how-

ever, have rejected the “clear error” standard: they uni-

formly hold that a trial court’s interpretation of an

integrated plea agreement must be reviewed de novo.”

The states also do not agree with one another. Com-

pare St. James v. People, 1997 WL 757895, at **3-4 (Colo.

Dec. 8, 1997) (noting that “courts are divided concerning

the standard of appellate review to be applied to a trial

court’s determination of whether a plea agreement has

been violated,” and holding that in Colorado de novo

review is proper to review meaning of plea agreement

while “clear error” is proper standard for reviewing find-

ings of breach of plea agreement) with State v. Abbott, 901

P.2d 1296, 1298 (Haw. Ct. App. 1995) (“Disputes over the

meaning of plea agreements involve questions of fact,

and our review of factual determinations made by a trial

court is governed by the ‘clearly erroneous’ standard. . . .

Whether the State has actually breached the terms of a

plea agreement, however, is a question of law, which we

review de novo. .. . ”) (citing State v. Adams, 879 P.2d 513,

516 (Haw. 1994)).

Thus, the question is presented: should the terms of a

plea agreement be reviewed de novo or only for clear

error?

7 See, e.g., United States v. Camacho-Bordes, 94 F.3d 1168, 1173

(8th Cir. 1996); United States v. Martin, 25 F.3d 211, 217 (4th Cir.

1994); United States v. Legg, 7 F.3d 236, 1993 WL 393080, at *2 (6th

Cir. 1993); United States v. West, 2 F.3d 66, 69 (4th Cir. 1993);

United States v. Pollard, 959 F.2d 1011, 1033 (D.C. Cir.), cert.

denied, 506 U.S. 915 (1992); United States v. Rexach, 896 F.2d 710,

713 (2d Cir.), cert. denied, 498 U.S. 969 (1990).

The difference between “de novo” review and “clear

error” review of a trial court’s interpretation of a plea

agreement is the difference between, on the one hand, an

appellate court’s “close scrutiny”® and “[i]ndependent

review,” Ornelas v. United States, 116 S. Ct. 1657, 1662

(1996), and, on the other hand, a “sweeping deference,”

id., to the trial court which constrains an appeals court to

“accept the trial court’s findings” unless it is “left with

the definite and firm conviction that a mistake has been

committed,” Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S.

844, 855 (1982) (internal quotations and footnote omitted).

The difference is, in the end, enough to change the out-

come of an appeal.

There was such a difference in Rockwell. The Tenth

Circuit acknowledged that Rockwell's proffered evidence

demonstrated it reasonably understood the government

was “seriously circumscribed” in its obligation to later

intervene. App. 7a-8a. However, by employing the “clear

error” standard, the Tenth Circuit left unchallenged the

trial court’s implicit conclusion that Rockwell “unreason-

ably” believed the declination provision had some sub-

stance, and its explicit conclusion that the declination

provision was not a promise but merely a meaningless

“statement of fact.” In effect, the courts below refused to

give effect to Rockwell’s belief that DOJ could not inter-

vene in Stone absent significant new evidence, even

though that belief had a reasonable basis. The trial court’s

“cramped understanding,” United States v. Hyde, 117 S. Ct.

1630, 1635 (1997) inexplicably “strip[ped the declination

8 Pierce v. Underwood, 487 U.S. 552, 586 (1988) (White, J.,

concurring in part and dissenting in part).

etree

provision] of any meaning,” id. at 1634; see Ricketts v.

Adamson, 483 U.S. 1, 10 (1987) (disapproving interpretation

of plea agreement that “would render the agreement

meaningless”), and merited the scrutiny of de novo review.

In the context of facial review of written plea agree-

ments, de novo review makes sense. The trial court has no

“superiority,” Salve Regina College v. Russell, 499 U.S. 225,

233 (1991), over the appellate court such that deference

by the appellate court is necessary or desirable. In the

civil context, all the circuits, including the Seventh, Ninth

and Tenth circuits, hold that contract interpretations are

subject to de novo review. See, e.g., Reese Exploration, Inc. v.

Williams Nat. Gas Co., 983 F.2d 1514, 1518-19 (10th Cir.

1993); National Diamond Syndicate, Inc. v. United Parcel

Serv., Inc., 897 F.2d 253, 256 (7th Cir. 1990); Lawyers Title

Ins. Corp. v. Honolulu Fed. Sav. & Loan Assn, 900 F.2d 159,

162 (9th Cir. 1990); see also Markman v. Westview Instru-

ments, Inc., 116 S. Ct. 1384, 1394-96 (1996) (holding that

patent terms must be construed by court as questions of

law); Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 112

(1989) (holding that trust agreements are construed de

novo “without deferring to either party’s interpretation”);

Eddy v. Prudence Bonds Corp., 165 F.2d 157, 163 (2d Cir.

1947) (Learned Hand, J.) (“[A]ppellate courts have

untrammeled power to interpret written documents.”),

cert. denied sub nom. Prudence Realization Corp. v. Eddy, 333

U.S. 845 (1948). There is no rational basis for greater

appellate deference in a criminal context.

In Ornelas v. United States, 116 S. Ct. 1657 (1996), the

Court held that “clear error” review of questions that

have constitutional dimensions is reserved for findings of

fact. 116 S. Ct. at 1661 n.3. Ornelas further held that in a

fourth amendment context, a trial court’s determinations

of “mixed questions of law and fact” — what constitutes

probable cause and reasonable suspicion - must be

reviewed under a de novo standard. Review for “clear

error,” the Court held, was inappropriately deferential

and inimical to uniformity in constitutional interpreta-

tion. 116 S. Ct. at 1662.

Ornelas rests upon a desire for consistency of results

on similar facts.? Such consistency promotes respect for

law. Given the importance of plea bargains in the admin-

istration of justice, the same rationale requires de novo

review of such bargains. The criminal law takes extraor-

dinary care to ensure that plea agreements — the instru-

ment by which some 90% of all criminal cases terminate?

— are voluntary and that each party gets what it bar-

gained for.

9 The Seventh Circuit has noted that “[a]lthough Ornelas

dealt with the determinations of reasonable suspicion and

probable cause in Fourth Amendment jurisprudence . . . the

rationale of Ornelas cannot be limited, in a principled manner, to

that single area of jurisprudence.” United States v. Mills, 122 F.3d

346, 348 (7th Cir.), cert. denied, 1997 WL 713549, No. 97-6692

(Dec. 15, 1997). Indeed, this Court has remanded “for further

consideration in light of Ornelas” two cases involving fifth

amendment voluntariness of a confession where the Seventh

Circuit had previously reviewed a circuit court’s conclusions

only for “clear error.” See Mills v. United States, 117 S. Ct. 478

(1996); Baldwin v. United States, 116 S. Ct. 1873 (1996).

10 See U.S. Dep’t of Justice, Sourcebook of Criminal Justice

Statistics 1996, at 420 tbl. 5.5 (Kathleen Maguire & Timothy J.

Flanagan eds.) (fiscal year 1996); see also Town of Newton v.

Rumery, 480 U.S. 386, 396 n.6 (1987) (pl» rality opinion) (noting

that in 1985 only 12.8% of all criminal cases resulted in trial).

While the Court has recognized that plea agreements

are an “essential” and “highly desirable” part of the

criminal-justice process, Santobello v. New York, 404 U.S.

257, 261 (1971), it has also said that the plea-bargaining

process must be “[p]roperly administered,” Blackledge v.

Allison, 431 U.S. 63, 71 (1977), “to insure the defendant

what is reasonably due in the circumstances,” Santobello,

404 U.S. at 262. The “[p]roper[] administ[ration]” of the

plea-bargaining process and our “unitary system of law,”

Ornelas, 116 S. Ct. at 1662, require that there be a single

standard among all the sister circuits for reviewing plea

agreements to determine whether the defendant has

received what it is constitutionally due. There is no good

reason to exclude from de novo review a trial court’s

“ultimate determinations” regarding plea agreements,

especially where the determinations rested only on a

facial review of the written document.

Whether “de novo” or “clear error” review most prop-

erly gives the criminal defendant what the due process

clause reasonably requires is a question of vital impor-

tance in the proper administration of the plea-bargaining

process. The courts of appeals do not agree on the resolu-

tion of this question. This Court’s intervention is war-

ranted.

II. Strict application of the parol evidence rule to inte-

grated plea agreements undercuts the due process

clause’s concern for reasonableness to the defen-

dant, but the courts of appeals disagree on the

rule’s application.

“[T]o insure the defendant what is reasonably due,”

Santobello v. New York, 404 U.S. 257, 262 (1971), the due

process clause requires that “when a plea rests in any

significant degree on a promise or agreement of the pros-

ecutor, so that it can be said to be part of the inducement

or consideration, such promise must be fulfilled,” id.;

accord Mabry v. Johnson, 467 U.S. 504, 509 (1984).

Consistent with Santobello’s mandate, federal courts

of appeals have uniformly held that the test for determin-

ing whether the government has violated the terms of a

plea agreement is “what the defendant reasonably under-

stood when the guilty plea was entered.”'! Because the

government is held to a high standard of good faith and

fair dealing in the plea bargaining process, see United

States v. Cooper, 70 F.3d 563 (10th Cir. 1995), some courts

of appeals have held that the interpretive rules for the

construction of plea agreements are unique. See United

States v. Ready, 82 F.3d 551, 558-559 (2d Cir. 1996) (holding

that if defendant’s understanding of promise is reason-

able, it controls, and ambiguities are construed strictly

against government); Uniied States v. Rewis, 969 F.2d 985,

988 (11th Cir. 1992) (same).

While many courts of appeals have held that the due

process clause does not permit the language of a plea

11 E.g., United States v. Veri, 108 F.3d 1311, 1313 (10th Cir.

1997); United States v. Conway, 81 F.3d 15, 17 (1st Cir. 1996);

United States v. Wittie, 25 F.3d 250, 262 (Sth Cir. 1994), aff'd sub

nom. Witte v. United States, 515 U.S. 389 (1995); United States v.

Bugusz, 43 F.3d 82, 94 (3d Cir. 1994), cert. denied sub nom.

O’Rourke v. United States, 514 U.S. 1090 (1995); United States v.

Myers, 32 F.3d 411, 413 (9th Cir. 1994) (per curiam); Stern v.

Shalala, 14 F.3d 148, 150 (2d Cir. 1994); United States v. Rewis, 969

F.2d 985, 988 (11th Cir. 1992); United States v. Badaracco, 954 F.2d

928, 939 (3d Cir. 1992).

agreement to be subject to a “rigidly literal construc-

tion,”!2 several — including the court below in Rockwell -

have employed a version of contract law’s “parol evi-

dence rule” to defeat a defendant's reasonable under-

standing of the government promise. By strictly applying

a “parol evidence” rule to plea agreements, the court

below committed compound error: it not only violated

Rockwell's right to due process, but it also misconstrued

the role of the parol evidence rule in the construction of

any “contract.”

A. Due process forbids a strict application of the

parol evidence rule to integrated plea agree-

ments.

The “analogy” between plea agreements and contract

law suggested in Blackledge v. Allison, 431 U.S. 63 (1977),

is an uneasy one. This Court has said that the analogy

between plea agreements and civil contracts is “not com-

plete,” Town of Newton v. Rumery, 480 U.S. 386, 393 n.3

(1987), and the circuit courts have consistently declared

that the application of contract law to plea agreements

must be tempered with the recognition that a defendant's

“contract rights” in a plea agreement ultimately are

grounded on the Constitution, see, e.g., United States v.

Smith, 976 F.2d 861, 863 (4th Cir. 1992) (in interpreting

12 E.g., United States v. Hawley, 93 F.3d 682, 692 (10th Cir.

1996); United States v. Clark, 55 F.3d 9, 12 (1st Cir. 1995); United

States v. Ingram, 979 F.2d 1179, 1185 (7th Cir. 1992), cert. denied,

507 U.S. 997 (1993); United States v. Johnson, 979 F.2d 396, 399-400

(6th Cir. 1992); In re Arnett, 804 F.2d 1200, 1203 (11th Cir. 1986);

United States v. Harvey, 791 F.2d 294, 300-01 (4th Cir. 1986).

immunity and plea agreements, “we must bee mindful of

the fact that the defendant’s underlying ‘conttract’ right is

constitutionally based and therefore reflects cconcerns that

differ fundamentally from and run wider tkhan those of

commercial contract law”) (internal quotatioons omitted).

This uneasy analogy finds no rest in (the contract

law’s so-called parol evidence rule:!3 the circuuit courts are

split over how and to what extent it should bbe applied to

plea agreements. The First, Third and Fovurth circuits

have held that the parol evidence rule must tbe “relaxed”

in the context of interpreting plea agreemeents. As the

Third Circuit stated:

Because of the unique nature of a pPlea bar-

gain, involving as it does the waiver of cconstitu-

tional righ», we believe the parol evidennce rule

should not be rigidly applied to bar eyVidence

which would aid the trial court in propertly con-

struing the plea agreement. Thus, evidennce of a

prior draft plea agreement, or of stat#ements

made by the prosecution during the pldea bar-

gaining which sheds light on the meaning of a

pertinent word or phrase in an “integratee4” plea

agreement would be admissible.

13 The traditional view is that the “parol evidence” rule

excludes extrinsic evidence introduced to vary,” add to or

contradict the terms of an integrated, unambiguo?¥US contract.

See, e.g., Rockwell, App. 9a-10a; but see Restatement t (Second) of

Contracts § 214 & comment a (1981) (stating moddern view of

parol evidence rule that extrinsic evidence is not pPermitted to

“contradict,” but may be used to interpret, a corntract when

parties disagree over meaning of its terms, even iff contract is

integrated and “unambiguous”); id. § 215 comment'ts a & b.

———

United States v. Swinehart, 614 F.2d 853, 858 (3d Cir.), cert.

denied, 449 U.S. 827 (1980); accord Kingsley v. United States,

968 F.2d 109, 114-115 (1st Cir. 1992); United States v. Gar-

cia, 956 F.2d 41, 42-44 (4th Cir. 1992).

The other circuit courts that have applied the parol

evidence rule to plea agreements have done so strictly:

they prohibit any extrinsic evidence to add to, vary or

contradict an “unambiguous,” “integrated” agreement.

See, e.g., United States v. Ajugwo, 82 F.3d 925, 928 (9th Cir.

1996) (refusing to apply “relaxed” parol evidence rule:

“(W]e refuse[] to consider parol evidence for the purpose

of adding terms to or changing the terms of an integrated

plea agreement.”) (internal quotations omitted), cert.

denied, 117 S. Ct. 742 (1997); United States v. Ballis, 28 F.3d

1399, 1410 (5th Cir. 1994) (“Although circumstances sur-

rounding the agreement’s negotiations might indicate

[the defendant’s] intent [in entering into plea agreement],

parol evidence is inadmissible to prove the meaning of an

unambiguous plea agreement.”); United States v. Ingram,

979 F.2d 1179, 1184 (7th Cir. 1992) (holding that extrinsic

evidence is inadmissible to prove meaning of plea agree-

ment that is “unambiguous on its face”), cert. denied, 507

U.S. 997 (1993). The Tenth Circuit below similarly rejected

the use of a “relaxed” parol evidence rule in the inter-

pretation of plea agreements. App. 9a-12a. The court

affirmed the trial court’s refusal to hear Rockwell's evi-

dence, which was offered to explain the intended mean-

ing of, and Rockwell’s reasonable understanding of, the

plea agreement's declination provision.

The states that have addressed the issue have no

uniform answer. For example, while Iowa has suggested

that extrinsic evidence may not be considered unless the

plea agreement is determined to be “ambiguous,” !* Colo-

rado holds the contrary view:

[I]t is appropriate for a trial court to consider

not only the form and content of any written

document purporting to incorporate the govern-

ment’s representations to the defendant but also

any oral statements made to the defendant as

well as extrinsic evidence relating to the circum-

stances of the government's dealings with the

defendant. Consideration of extrinsic evidence

is especially appropriate when the written docu-

ment itself is ambiguous. Under such circum-

stances, a court’s task is not to rewrite the

agreement but to construe it in a manner consis-

tent with the intent of the parties and the defen-

dant’s right to be treated fairly by the

government.

People v. Romero, 745 P.2d 1003, 1010 (Colo. 1987), cert.

denied, 485 U.S. 990 (1988); accord People v. Payseno, 1997

WL 637817, at *2 (Colo. Ct. App. Oct. 16, 1997).

B. The parol evidence rule, when correctly

applied, is not a rule of evidence which pre-

cludes a party from demonstrating that the

words of a contract have context.

There are two inescapable ironies about the decisions

of those circuit courts that insist on applying a “strict”

parol evidence rule. The first is that, while these courts

recognize the due process clause’s requirement that the

plea agreement must be interpreted so that a defendant's

4 See Ridinger v. State, 341 N.W.2d 734, 736-37 (lowa 1983).

“reasonable understanding” of the agreement is effectu-

ated, they provide no means for the defendant to establish

its “reasonable understanding.” Below, Rockwell’s con-

siderable, and undisputed, evidence would have estab-

lished why the Stone declination provision appeared in

the plea agreement when the agreement had just stated

that it did not “encompass (or preclude) . . . the issues”

raised in Stone. But this evidence was deemed barred by

the “parol evidence rule” and was never considered.

The second irony is that when the parol evidence rule

—- a substantive rule of contract law (but not a rule of

evidence)'5 — is thoughtfully applied, it must not be

applied so woodenly and formulaically that it distracts

courts from their judicial function of uncovering and

effectuating what the parties intended when they used

particular words and phrases. Its application need not be

“relaxed” or “strict.” The rule should, in fact, be used

uniformly to “insure the defendant what is reasonably

due in the circumstances,” Santobello, 404 U.S. at 262, by

helping to uncover the parties’ intentions.

As Chief Justice Traynor stated in his seminal deci-

sion on the parol evidence rule, the test of admissibility

of extrinsic evidence to explain the meaning of a written

! instrument is not whether it appears to the court to be

“plain and unambiguous on its face,” but whether the

offered evidence is “relevant to prove a meaning to which

the language of the instrument is reasonably susceptible.”

Pacific Gas & Elec. Co. v. G.W. Thomas Drayage & Rigging

5 E.g., 3 Arthur L. Corbin, Corbin on Contracts § 573, at

357-58 (1960).

: ,

Co., 442 P.2d 641, 644, 645 (Cal. 1968) (emphasis sup-

plied). This test, Justice Traynor held, flows from the

inherent fluidity of the meaning of words:

Although extrinsic evidence is not admissible to

add to, detract from, or vary the terms of a

written contract, these terms must first be deter-

mined before it can be decided whether or not

extrinsic evidence is being offered for a prohib-

ited purpose. The fact that the terms of an instru-

ment appear clear to a judge does not preclude the

possibility that the parties chose the language of the

instrument to express different terms. That possi-

bility . . . exists whenever the parties’ understanding

of the words used may have differed from the judge's

understanding.

Id. at 645 (emphasis supplied).'®

The “parol evidence” rule in short must be applied in

a way that recognizes the reality that words are “inexact

tools” of our language, Harrison v. Northern Trust Co., 317

U.S. 476, 479 (1943). As Professor Corbin noted, “words

do not define themselves,” and their relevant meaning in

a particular context depends on the “meaning” ascribed

to them by their users. See Corbin, supra, § 536, at 27; see

16 See, e.g., Nash v. Towne, 5 Wall. (U.S.) 689, 699 (1866);

United States v. Lennox Metal Mfg. Co., 225 F.2d 302, 310-15 (2d

Cir. 1955) (Frank, J., concurring); New York Trust Co. v. Island Oil

& Transp. Corp., 34 F.2d 655, 655-56 (2d Cir. 1929) (Learned

Hand, J.); Restatement, supra, § 202 cmt. c, § 212 cmt. b, § 214 &

cmt. a, § 215 cmt. b (1981); 3 Arthur L. Corbin and Lawrence A.

Cunningham & Arthur J. Jacobson, Corbin on Contracts § 542, at

94-95 (1960 & Supp. 1997); 4 Samuel Williston & Walter H.E.

Jaeger, Williston on Contracts §§ 609, 629 (3d ed. 1961).

s.—_--_~..

David McCraw, How Do Readers Read? Social Science and

the Law of Libel, 41 Cath. U. L. Rev. 81, 101-02 (1991)

(“Regardless of the particular theory invoked, the under-

lying point of modern psycholinguistic research is the

subjectivity of meaning. . . . Meaning is found not in the

symbol but in the stored memory of the reader.”).

In contractual interpretation and statutory construc-

tion, this Court has recognized that words have meaning

only in context and that the overarching goal is effectuat-

ing the contracting parties’ intent, of “doing justice to the

parties before it,” Corbin, supra, § 539, at 80. See, e.g., Nash

v. Towne, 5 Wall. (U.S.) 689, 699 (1866) (“[Courts] are

never shut out from the same light which the parties

enjoyed when the contract was executed, and, in that

view, they are entitled to place themselves in the same

situation as the parties who made the contract, so as to

view the circumstances as they viewed them, and so to

judge of the meaning of the words and of the correct

application of the language to the things described.”);

Deal v. United States, 508 U.S. 129, 131-32 (1993) (“[A]

fundamental principle of statutory construction (and,

indeed, of language itself) [is] that the meaning of a word

cannot be determined in isolation, but must be drawn

from the context in which it is used.”); Watt v. Alaska, 451

U.S. 259, 266 (1981) (“[A]scertainment of the meaning

-apparent on the face of a single statute need not end the

inquiry. This is because the plain-meaning rule is ‘rather

an axiom of experience than a rule of law, and does

not preclude consideration of persuasive evidence if it

exists.’ ”) (citations omitted; quoting Boston Sand Co. v.

United States, 278 U.S. 41, 48 (1928) (Holmes, J.)); cf.

Ornelas, 116 S. Ct. at 1661 (noting that probable cause and

reasonable suspicion are not “finely-tuned standards” but

“fluid concepts that take their substantive content from

the particular contexts in which the standards are being

assessed”),

When courts of appeals erect the parol evidence rule

as a shield which bars evidence that sheds light on the

meaning of a plea agreement's terms, there is special

irony. Notwithstanding Santobello’s guarantee of “rea-

sonableness” to criminal defendants, the courts in civil

cases have routinely used the parol evidence rule in the

way Nash suggested - to learn of and effectuate the

intentions of commercial contractors. For example, in a

breach-of-contract action between two lending institu-

tions, the Third Circuit stated:

It is the role of the judge to consider the

words of the contract, the alternative meaning

suggested by counsel, and the nature of the

objective evidence to be offered in support of

that meaning. The trial judge must then deter-

mine if a full evidentiary hearing is warranted.

If a reasonable alternative interpretation is sug-

gested, even though it may be alien to the

judge’s linguistic experience, objective evidence

in support of that interpretation should be con-

sidered by the fact finder.

Mellon Bank, N.A. v. Aetna Business Credit, Inc., 619 F.2d

1001, 1011 (3d Cir. 1980) (emphasis supplied; footnote

and citation omitted).!7

17 See, e.g., Sumitomo Mach. Corp. of Am. v. Allied Signal, Inc.,

81 F.3d 328, 332 (3d Cir. 1996) (“extrinsic evidence is permitted

because the law recognizes that the meaning of words can

depend on context, and what may seem unambiguous without

In interpreting plea agreements, the failure to recog-

nize the parol evidence rule as a tool to effectuate the

contracting parties’ intentions rather than as a prophylac-

tic rule of evidence is a grievance of constitutional dimen-

sion. It undercuts Santobello’s guarantee; it “call[s] into

question” “the consensual character of the plea,” Mabry,

467 U.S. at 508-09; and it frustrates the defendant’s right

to “get[] the benefit of his bargain,” Hyde, 117 S. Ct. at

1634.

This was demonstrated below. Rockwell's evidence

established that the declination provision was not a rou-

tine inclusion of an irrelevant fact. Rather it reflected the

parties’ agreement, and Rockweli’s reasonable under-

standing, that while the government was not required to

release all its rights in the qui tam suit, it would be required

to decline intervention, unless it could prove that it had

substantial new evidence of fraud. This was a valuable

context . . . may be ambiguous when understood from the

linguistic reference point of the parties”) (internal quotations

omitted); American Cyanamid Co. v. Fermenta Animal Health Co.,

54 F.3d 177, 181 (3d Cir. 1995) (“Evidence of the circumstances is

always admissible in aid of the interpretation of an integrated

agreement.”) (internal quotations omitted); Crescent Oil &

Shipping Servs., Ltd. v. Phibro Energy, Inc., 929 F.2d 49, 52 & n.11

(2d Cir. 1991) (“There are, indeed, a good many cases holding

that the words of a writing are too ‘plain and clear’ to justify the

admission of parol evidence as to their interpretation. In other

cases, it is said that such testimony is admissible only when the

words of the writing are themselves ‘ambiguous.’ Such

statements assume a uniformity and certainty in the meaning of

language that do not in fact exist; they should be subjected to

constant attack and disapproval.”) (internal quotations

omitted).

a ET

concession from the government, in part because Rock-

well had voluntarily, liberally and deliberately disclosed

inculpatory documents and facts pertaining to alleged

environmental violations so that the government would

never have a basis for later intervention.

The declination provision, in short, meant something

to the parties, or there would have been no need to

include it and to pay an additional $3 million for it.

Because it was placed in the paragraph in which the

government generally excluded Stone from its covenant

not to sue, the declination provision on its face at least

reasonably suggested that the provision itself was an excep-

tion to the general Stone exclusion. See, e.g., Bailey v.

United States, 116 S. Ct. 501, 506 (1995) (“We consider not

only the bare meaning of the word but also its placement

and purpose in the statutory scheme. The meaning of

statutory language, plain or not, depends on context.”)

(internal quotations omitted). The proof that the parties

in fact intended this result - and that Rockwell's guilty

plea “rest[ed] . . . on [this] promise . . . [such] that it

c[ould] be said to be part of the inducement or consider-

ation,” Santobello, 404 U.S. at 262 — resided in the evi-

dence which the Tenth Circuit and the district court

refused to consider. Other courts of appeals would have

allowed this evidence.

CONCLUSION

In his dissent in Ricketts v. Adamson, 483 U.S. 1, 16

(1987), Justice Brennan observed that “[t]his Court has

yet to address in any comprehensive way the rules of

construction appropriate for disputes involving plea

agreements.” In the absence of controlling authority, the

federal courts of appeals are in disarray over the stan-

dard properly to be applied in reviewing interpretations

of plea agreements, the currency used so often to dispose

of criminal cases. Further, they do not agree on, and

criminal defendants cannot be assured, whether the

defendant will be permitted to introduce any evidence

about the meaning of a plea agreement and the defen-

dant’s reasonable understanding of that agreement when

a court has decided the agreement is “integrated.” The

courts below used rigid applications of two rules of

avoidance - “clear error” review and the “parol evidence

rule” — to improperly defeat Rockwell’s reasonable

understanding of the plea agreement here. These two

issues each merit this Court’s plenary review.

Respectfully submitted,

Haroi_p A. HAapDDOoN

(Counsel of Record)

Ty GEE

150 East 10th Avenue

Denver, Colorado 80203

Telephone: (303) 831-7364

Facsimile: (303) 832-2628

Mark J. MacDouGALL

THomas P. McLisH

AKIN, Gump, STRAUSS,

Hauer & Fe tp, L.L.P.

1333 New Hampshire Ave., NW,

Suite 400

Washington, DC 20036

(202) 887-4510

Counsel For Petitioner

APPENDIX

TABLE OF CONTENTS

) Page

United States v. Rockwell Int'l Corp., 124 F.3d 1194

EES AO Oe Te Oe Pee eee eee la

Memorandum Opinion of the Trial Court, United

States v. Rockwell Int’l Corp., No. 92-CR-107 (D.

I ba Rak adh cea dececcccecccce 16a

Order of the United States Court of Appeals for

Tenth Circuit denying petitioner’s Petition for

Rehearing and Suggestion for Rehearing En

RR Oy ee a eee Pee ee eee eee ee 27a

UNITED STATES of America,

Plaintiff-Appellee,

Vv.

ROCKWELL INTERNATIONAL

CORPORATION, Defendant-Appeliant.

No. 96-1530.

United States Court of Appeals,

Tenth Circuit.

Aug. 26, 1997.

Rehearing Denied Oct. 15, 1997.

Harold A. Haddon (Rachel A. Bellis with him on the

brief), Haddon, Morgan & Foreman, P.C., Denver, CO, for

Defendant-Appellant.

Douglas N. Letter, Department of Justice, Washing-

ton, DC, for Plaintiff-Appellee.

Before BRISCOE, LOGAN and LUCERO, Circuit

Judges.

LUCERO, Circuit Judge.

In 1992, Rockwell International Corporation entered

into a plea agreement with the United States (the “gov-

ernment”), pleading guilty to various environmental

crimes and agreeing to pay a fine of $18.5 million. In

return, the government promised to refrain from further

criminal and, to a lesser extent, civil proceedings. Rock-

well appeals the district court’s refusal to entertain its

interpretation of that plea agreement, an interpretation

that would forbid the government from intervening in a

qui tam action against Rockwell. We conclude that the

district court was correct to reject Rockwell’s proposed

reading of the plea agreement, and affirm.

Rockwell operated the U.S. Department of Energy’s

Rocky Flats Nuclear Weapons Plant just outside Denver,

Colorado. In 1988, the criminal division of the Depart-

ment of Justice, as well as other federal agencies, began

investigating allegations that Rockwell had committed

environmental crimes at Rocky Flats. After obtaining a

federal warrant and conducting an extensive search of the

facility in 1989, the government seized a very large vol-

ume of documents and a special grand jury was

empaneled to investigate Rockwell’s operation of Rocky

Flats. Also in 1989, James Stone, as relator, filed a qui tam

complaint against Rockwell in district court in Colorado,

pursuant to 31 U.S.C. § 3730 (the “Stone Suit”). Stone’s

complaint alleged that Rockwell had violated the False

Claims Act, 31 U.S.C. § 3729, by submitting improper

reimbursement applications to the Department of Energy

and committing other wrongful acts in its operation of

Rocky Flats.

In compliance with 31 U.S.C. § 3730(b), the complaint

in the Stone Suit was filed under seal and served on the

United States but not on Rockwell. Because the govern-

ment sought and was granted extensions to keep the

complaint under seal, Rockwell was not given notice of

the Stone Suit until November 1990. Even after the com-

plaint was unsealed, the United States, acting through the

civil division of the Justice Department, continued to

delay the decision on whether to elect to prosecute the

qui tam action. In the meantime, Rockwell filed a suit

against the United States in the Court of Federal Claims

(the “Claims Court Suit”), alleging that the Department

of Energy had breached contractual obligations and had

improperly withheld fees owing to Rockwell for operat-

ing Rocky Flats. During this time, proceedings before the

grand jury continued.

In 1991, the government and Rockwell’s counsel

entered into substantial plea negotiations, discussing the

possibility of a global resolution of all suits and investiga-

tions involving Rockwell’s management of Rocky Flats.

The negotiations culminated in a written plea agreement

executed on March 26, 1992, an agreement that fell short

of the full resolution sought by Rockwell. The five-page

agreement specified that Rockwell would waive the

necessity of indictment, plead guilty to ten environmental

criminal charges and pay a fine of $18.5 million. In

return, the government promised not to bring any further

environmental criminal charges against the corporation

or its officers, directors or employees stemming from

Rockwell’s management of Rocky Flats as then known by

the government. The government also promised not to

sue or take other administrative action against Rockwell

based on violations of certain environmental statutes.

Specifically, provision 5 of the agreement states:

In connection with this disposition, the United

States agrees that, as to all environmental mat-

ters at Rocky Flats which are presently known to

the Department of Justice or the Environmental

Protection Agency (“EPA”) on the date of this

agreement, the United States covenants not to

sue or take administrative action against Rock-

well for civil damages, penalties or other mone-

tary relief based upon alleged violations of

RCRA, the CWA, § 103 of the Comprehensive

Environmental Response, Compensation and

Liability Act (“CERCLA”), 42 U.S.C. § 9603, the

Clean Air Act, 42 U.S.C. §§ 7401 et seq., or the

Toxic Substances Control Act, 15 U.S.C. §§ 2601

et seq.

Appellant’s App. at 500.

However, provision 5 expressly excludes from the

government's promise not to sue three areas of potential

civil liability. Directly following the above-quoted lan-

guage, the agreement states:

This covenant does not encompass (or preclude)

(a) claims for recovery of response costs, natural

resource damages or injunctive relief brought

pursuant to RCRA, CERCLA or other authority,

or for civil or administrative penalties arising in

connection with such relief or a consent decree

or administrative order mandating such relief;

(b) the ongoing civil or administrative investiga-

tion of possible violations of 40 C.F.R. Part 761

concerning polychlorinated biphenyls (“PCBs”)

at Rocky Flats, including, without limitation,

Building 707; or (c) the issues raised in United

States of America, ex rel., and James S. Stone v.

Rockwell International Corporation, Civil Action

No. 89-C-1154 (D.Colo.) (“Stone”). After an inde-

pendent review, the Department of Justice-Civil

Division has determined to file a notice in Stone

declining to intervene.

Id. at 500-01. The agreement contains an integration

clause stating there are no other agreements, terms, or

conditions, express or implied, and that entering the

agreement, neither parties relies on any terms, promises,

or conditions not expressed therein. Id. at 503. The plea

agreement was accepted by the court in June 1992.

The same day Rockwell executed the plea agreement,

the Department of Justice-Civil Division filed in the Stone

Suit a notice of its election not to intervene in the qui tam

action. The notice states: “The United States also reserves

its rights under 31 U.S.C. § 3730(c)(3) to intervene at a

later date upon a showing of good cause.” Id. at 505.

In November 1995, citing information revealed in

pending civil litigation with Rockwell, the government

moved to amend its answer to Rockwell’s complaint in

the Claims Court Suit to interpose a fraud defense/coun-

terclaim. In July 1996, the Court of Federal Claims

allowed the government to file the amended answer. Also

in November 1995, the government moved to intervene in

the Stone Suit. Rockwell responded with this action. The

company asserted that the attempt to intervene breached

the 1992 plea bargain and requested the district court to

enforce that agreement.

In separate orders, the district court denied Rock-

well’s motion to enforce the plea agreement and granted

the government’s motion to intervene in the Stone Suit.

The court found the terms of the plea agreement clear

with respect to the government's limitation on its prom-

ise not to pursue civil actions, and found no ambiguity in

what it characterized as the “statement of fact” that the

Department of Justice-Civil Division had previously

determined to file a statement in the Stone Suit declining

to intervene. Id. at 189. The court rejected Rockwell’s

attempt to introduce a large volume of material describ-

ing the history of the plea agreement negotiations.

According to Rockwell, this evidence demonstrates that it

understood the government’s obligation to include a

promise not to intervene at a later date unless new and

significant information on the complexity or magnitude

of the fraud was revealed. The court concluded that

Rockwell cannot credibly argue that it did not

understand the government's consideration for

its guilty pleas to encompass only a promise not

to pursue civil or administrative remedies for

violations of the RCRA, the CWA, § 103 of the

CERCLA, the Clean Air Act, and the Toxic Sub-

stances Control Act. The plea agreement did not

contain a covenant not to pursue civil remedies

for any violation of the False Claims Act, and it

expressly excluded any covenant with respect to

the Stone case.

Id. at 192. It is in this posture the case comes before us.

On appeal, Rockwell raises two issues, both related

to the district court’s interpretation of the plea agree-

ment. The first is that the district court improperly

refused to consider Rockwell's interpretation of the plea

agreement and enforce it according to those terms. The

second is that the district court impermissibly refused to

grant an evidentiary hearing to consider the evidence

supporting Rockwell’s interpretation of the agreement.

According to Rockwell, the language of the plea

agreement reflects negotiations with the government in

which it attempted to ensure no financial liability apart

from the $18.5 million fine it agreed to pay as part of its

guilty pleas. Rockwell tells us that in order to effectuate

this goal, it attempted to get the United States Attorney

for the District of Colorado and the Criminal Division of

the Justice Department to commit the Justice Department-

Civil Division to stay out of the Stone Suit. Rockwell

alleges that Justice Department attorneys consistently

indicated that the government did not intend to intervene

in the Stone Suit, but that the Civil Division attorneys

were unwilling to commit that assurance to writing. Rec-

ognizing its leverage, Rockwell alleges the government

extracted $3 million more in fines than Rockwell had

previously agreed to pay in return for declining to inter-

vene. Rockwell suggests an understanding that the gov-

ernment might only later intervene if it obtained

significant new information increasing the scope and

complexity of the fraud. Allegedly in order to forestall

future intervention based on the discovery of new infor-

mation, Rockwell turned over additional incriminating

documents before the plea agreement was executed.

Much of the evidence offered by Rockwell to support

its reading of the agreement explains why it believed that

the declination of intervention included a limit on future

intervention. If the government initially declines to take

over the qui tam suit, then, as noted in the government's

declination of intervention, § 3730 only allows the gov-

ernment later to intervene upon a showing of “good

cause.” 31 U.S.C. § 3730(c)(3). The proposed evidence

includes correspondence between the government and

Rockwell’s attorneys, transcripts of testimony by Depart-

ment of Justice prosecutors, and legislative history of the

qui tam provisions of the FCA, confirming Rockwell's

reasonable understanding that the definition of “good

cause” seriously circumscribed the government's ability

to later intervene. Rockwell admits that all this evidence

is extrinsic to the plea agreement itself, but insists it is

nevertheless admissible and necessary to explain Rock-

well’s understanding of the plea agreement.

Due process requires “that when a plea rests in any

significant degree on a promise or agreement of the pros-

ecutor, so that it can be said to be part of the inducement

or consideration, such promise must be fulfilled.” San-

tobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 498, 30

L.Ed.2d 427 (1971); see also Mabry v. Johnson, 467 U.S. 504,

508-11, 104 S.Ct. 2543, 2546-48, 81 L.Ed.2d 437 (1984)

(noting consensual elements of knowing and intelligent

plea require defendant to have a fair understanding of

plea bargain’s consequences). Rules of contract law

inform the interpretation and enforcement of promises in

a plea agreement. United States v. Cooper, 70 F.3d 563, 565

(10th Cir.1995); see also Blackledge v. Allison, 431 U.S. 63, 75

n. 6, 97 S.Ct. 1621, 1630 n. 6, 52 L.Ed.2d 136 (1977). If we

find that the government breached the plea agreement we

must remand the case either for specific performance or

to allow the defendant to withdraw its guilty plea. San-

tobello, 404 U.S. at 262-63, 92 S.Ct. at 498-99.

We review de novo whether the government’s con-

duct violates the plea agreement, but the district court’s

interpretation of the agreement is reviewed for clear

error. Allen v. Hadden, 57 F.3d 1529, 1534 (10th Cir.1995).

The district court’s decision to deny an evidentiary hear-

ing is reviewed for an abuse of discretion. United States v.

Packwood, 848 F.2d 1009, 1010 (9th Cir.1988). A court

applies a two-step process in interpreting the terms of a

plea bargain: first, the court examines the nature of the

governmentt’s promise; second, the court investigates this

promise based upon the defendant’s reasonable under-

standing at the time the guilty plea was entered. Cun-

ningham v. Diesslin, 92 F.3d 1054, 1059 (10th Cir.1996). We

“will not allow the government to resort to a rigidly

literal construction of the language of the plea agree-

ment” to frustrate a defendant’s reasonable expectations.

United States v. Shorteeth, 887 F.2d 253, 256 (10th Cir.1989).

However, the government's obligations to the defendant

do not issue from mere silence. United States v. Furman,

112 F.3d 435, 439 (10th Cir.1997) (“We shall not impose

duties on the government that are not an express or

implied part of its agreement with the defendant.”).

Here, the district court found that the plea agreement

expressly excluded any covenant not to sue with respect

to the Stone Suit. Appellant’s App. at 189. Under Cun-

ningham, we therefore examine the scope of the govern-

ment’s promise in light of Rockwell’s reasonable

understanding at the time it entered its guilty plea. In this

case, however, the second-step reasonableness inquiry is

severely limited by the integration clause contained in the

plea agreement. See Blackledge, 431 U.S. at 75 n. 6, 97 S.Ct.

at 1630 n. 6. The parol evidence rule bars the court from

considering evidence of terms outside of an integrated

written agreement.

The parol evidence rule is as much one of substantive

contract law as it is an evidentiary rule. See generally

Arthur L. Corbin, 3 Corbin on Contracts § 573 (1960).

Under it, extrinsic evidence may not be admitted to con-

tradict the terms of a binding integrated agreement or to

add to the terms of a binding and completely integrated

10a

agreement. Restatement (Second) of Contracts §§ 215,

216. An “integrated agreement” exists when the parties to

a contract have reduced to a final written expression one

or more terms of their agreement. Id. § 209(1). “A com-

pletely integrated agreement is an integrated agreement

adopted by the parties as a complete and exclusive state-

ment of the terms of the agreement.” Id. § 210(1). Merely

because a writing claims to be a final and exclusive

expression of the parties’ agreement does not in itself

prohibit the court from looking beyond the document to

see if other agreements exist between the parties. See id.

§ 209 comment b; Blackledge, 431 U.S. at 75 n. 6, 97 S.Ct. at

1630 n. 6.

The written plea agreement in this case appears on its

face to be completely integrated. Provision 12 provides:

“This document states the parties’ entire agreement.

There are no other agreements, terms, or conditions,

express or implied. In entering this agreement, neither

the Department of Justice nor Rockwell have relied, or

are relying, on any terms, promises, or conditions not

expressly stated herein.” Appellant’s App. at 503. Rock-

well does not contend that the written agreement is not

the parties’ final and complete expression; in fact, in the

district court Rockwell itself asserted the integration of

the plea agreement to bar consideration of the Depart-

ment of Justice-Civil Division’s notice of declination in

the Stone Suit. See Appellant’s App. 78-79; 130-31 (state-

ment of Mr. Koenigs); see also Restatement (Second) of

Contracts § 209(3) (in absence of contrary evidence, a

writing that appears integrated will be considered as

such); Blackledge, 431 U.S. at 75 n. 6, 97 S.Ct. at 1630 n. 6

(provision denying existence of other agreements or

lla

terms carries great weight). Thus, if Rockwell's extrinsic

evidence is offered to prove its reasonable understanding

that the plea agreement contained an additional term, the

parol evidence rule will bar our consideration of that

understanding. Rockwell offers its evidence for exactly

this purpose.

The plea agreement in this case contains no promise

by the government limiting its ability to intervene in the

Stone Suit to a showing of good cause. Not only is the

term “goed cause” absent from the written plea agree-

ment, the only covenant by the government not to sue

appears in provision 5, and that provision specifically

excludes the Stone Suit from the covenant not to sue. The

language relied upon by Rockwell to support its view of

the government's obligations is the statement: “After an

independent review, the Department of Justice-Civil Divi-

sion has determined to file a notice in Stone declining to

intervene.” Appellant’s App. 500-01. The district court

considered the quoted sentence and found it to be not a

promise, but a statement of fact. Id. at 189. Such an

interpretation of the agreement is not clearly erroneous.

What Rockwell really seeks is to add a term to the

agreement. According to Rockwell, the plea agreement

precludes the government from suing for damages based

on violations of environmental law other than (inter alia)

the issues in the Stone Suit, except that the government

can only sue in the Stone Suit upon satisfying Rockwell’s

understanding of the statutory phrase “good cause.”

This, however, is not how the plea agreement is written.

Regardless of whether Rockwell's extrinsic evidence vin-

dicates its assertion that the government agreed to be so

12a

limited in intervening in the Stone Suit, the parol evi-

dence rule forbids Rockwell from asserting this addi-

tional term. See Restatement (Second) of Contracts § 216;

see also United States v. Ajugwo, 82 F.3d 925, 928-29 (9th

Cir.1996) (excluding evidence of additional term where

plea agreement found to be completely integrated);

United States v. Fentress, 792 F.2d 461, 464 (4th Cir.1986)

(same). Cases cited by Rockwell to demonstrate a relaxed

application of the parol evidence rule in the plea bargain

context all involve admission of extrinsic evidence to

explain the terms of the agreement itself. See U.S. v.

Swinehart, 614 F.2d 853, 858 (3rd Cir.1980); Kingsley v.

United States, 968 F.2d 109, 114-15 (1st Cir.1992).

United States v. Garcia, 956 F.2d 41, 42-44 (4th

Cir.1992), also cited by Rockwell, involved admitting

parol evidence to prove that an additional term existed,

notwithstanding the apparently unambiguous nature of

the written plea agreement itself. In that case, however, it

was clear that there was no dispute as to the govern-

ment’s contemporaneous additional promise and no evi-

dence that the additional agreement was extinguished by

an integration clause. In fact, the additional promise,

contained in the plea agreement's cover letter, indicated

that the term was included in the plea agreement itself.

That case was closer to a demonstration that the govern-

ment may not in bad faith make a promise to a defendant

who speaks almost no English, then repudiate it merely

because of the existence of a written agreement mis-

takenly omitting the promise. See, e.g., Blackledge, 431 U.S.

at 75 n. 6, 97 S.Ct. at 1629 n. 6 (mistake or fraud can

vitiate even writing purporting to be completely inte-

grated). Rockwell does not argue that the integration

13a

clause incorrectly manifests its understanding of the

scope of the written agreement. The district court was

correct to conclude that the government's efforts to inter-

vene in the Stone Suit were not breaches of the plea

agreement. In light of the agreement’s complete integra-

tion into the writing, any understanding to the contrary is

simply unreasonable.

Even if Rockwell’s interpretation of “good cause” in

the qui tam statute is reasonable, it is not a reasonable

understanding of the government’s promise in the plea

agreement. The qui tam statute is not referenced in the

plea agreement, which expressly excludes the Stone Suit

from its covenants. At most, Rockwell’s evidence sug-

gests that it was under the impression that a declination

of intervention would severely preclude the government

from later intervening and that the government did noth-

ing to dissuade Rockwell from such an understanding.

This belief exists apart from the plea agreement, however,

is based on the statute, and is an issue to be resolved in

the Stone Suit.

For similar reasons, we do not believe the district

court abused its discretion in ruling on Rockwell’s motion

without granting an evidentiary hearing. We will not

disturb a district court’s discretionary decision unless we

have a firm and definite conviction that it made a clear

error of judgment or went beyond the boundaries of

permissible choice. Moothart v. Bell, 21 F.3d 1499, 1504

(10th Cir.1994). Rockwell claims that the district court

refusal to grant an evidentiary hearing is a manifestation

of the court’s conclusion that as a corporation, it is not

14a

entitled to the due process protections afforded individ-

ual defendants. To support its position, Rockwell seizes

on language from the district court’s order:

The defendant [Rockwell] cites cases that

require interpretation of criminal plea agree-

ments according to the reasonable understand-

ing of the defendant. In those cases, the courts

were concerned with due process protection of

the accused and it is not uncommon for the

individual offender to have an imperfect under-

standing of the legal issues or to have his under-

standing be something different from that of his

attorney. That is, of course, not possible where

the defendant is a corporation. Rockwell cannot

credibly argue that it did not understand the

government's consideration for its guilty pleas

to encompass only a promise not to pursue civil

or administrative remedies for violations of

[various environmental statutes]. The plea

agreement did not contain a covenant not to

pursue civil remedies for any violation of the

False Claims Act, and it expressly excluded any

covenant with respect to the Stone case.

Appellant’s App. at 192.

Rockwell is correct that a corporate defendant is

entitled to the protections of the Due Process Clause. See,

e.g., BMW of North America, Inc. v. Gore, __ U.S. __, 116

S.Ct. 1589, 134 L.Ed.2d 809 (1996). We do not read the

quoted language from the district court to mean it did not

consider Rockwell entitled to due process. Rather, we

understand the court to have found that Rockwell had

the same understanding of the plea agreement that its

counsel had. Rockwell does not claim that its attorneys

15a

misled it in explaining the plea agreement’s conse-

quences. Rockwell’s attorneys simply could not have

understood the plea agreement to include a term not

within the completely integrated written instrument, and

the district court merely held the corporation to that same

understanding. Because the evidence proffered by Rock-

well could not reasonably have led it to the understand-

ing of the agreement it now asserts, the court did not

abuse its discretion in denying Rockwell an evidentiary

hearing.

Ill

For the reasons stated herein, the district court’s

denial of Rockwell’s motion to enforce the plea agree-

ment is AFFIRMED.

16a

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Chief Judge Richard P. Matsch

Criminal Action No. 92-CR-107

UNITED STATES OF AMERICA,

Plaintiff,

ROCKWELL INTERNATIONAL CORPORATION,

Defendant.

MEMORANDUM OPINION AND ORDER

(Filed Nov. 19, 1996)

MATSCH, Chief Judge

On December 18, 1995, the defendant, Rockwell

International Corporation, filed a motion for an order

enforcing the written plea agreement accepted by Judge

Sherman G. Finesilver on June 1, 1992. The occasion for

the motion was the government’s filing on November 14,

1995, of a motion to intervene in a qui tam False Claims

Act case, pending in this jurisdiction, United States of

America ex rel. James S. Stone v. Rockwell International Cor-

poration, Civil Action No. 89-C-1154 (“Stone” case) (now

89-M-1154). That civil action was initiated by a complaint

filed by James S. Stone, as relator, on July 5, 1989. The

first claim for relief alleged that Rockwell, as contractor

operating the Department of Energy facility at Rocky

Flats, Colorado, committed wrongful acts and submitted

false records or statements to the United States to obtain

approval and payment of claims for reimbursement of

17a

costs and applications for fee awards under the contract.

The complaint contains conclusory allegations of conceal-

ment of numerous and continuous violations of environ-

mental and safety laws and regulations which, if known

to the government, would have prevented such payments

to Rockwell.

This criminal case was initiated by a waiver of indict-

ment and the filing of an Information on March 26, 1992.

The information was filed pursuant to a carefully negoti-

ated written plea agreement, and Rockwell immediately

pleaded guilty to four counts charging violations of the

Resource Conservation & Recovery Act, 42 U.S.C.

§ 6928(d)(2)(A) and (C), and six counts charging viola-

tions of the Clean Water Act, 33 U.S.C. § 1319(c)(1)(A)

and (2)(A). The plea agreement called for fines totalling

$18.5 million as the appropriate penalties for these envi-

ronmental crimes under Fed. R. Crim. P. 11 (e)(1)(C). On

the same date these guilty pleas were entered, March 26,

1992, the government filed a notice that it declined to

intervene in the Stone case, pursuant to 31 U.S.C. § 3730.

In paragraph 1 of the plea agreement the government

made the following promise in exchange for the guilty

pleas:

1. Pursuant to Federal Rule of Criminal

Procedure 11(e)(1)(C), Rockwell will plead

guilty to ten criminal charges involving viola-

tions of the Resource Conservation and Recov-

ery Act (“RCRA”), 42 U.S.C. §§ 6901 et seq., and

the Clean Water Act (“CWA”), 33 U.S.C. §§ 1251

et seqg., as set forth in the attached charging

document. In return, the United States will not

bring other environmental criminal charges (or

18a

environmentally-related conspiracy, fraud or

false statement criminal charges) against Rock-

well or its present or former officers, directors

or employees, as to all such environmental and

environmentally-related matters concerning

Rocky Flats which are presently known to the

Department of Justice on the date of this agree-

ment.

In addition, the United States included the following

covenant not to sue in in [sic] the plea agreement.

5. In connection with this disposition, the

United States agrees that, as to all environmen-

tal matters at Rocky Flats which are presently

known to the Department of Justice or the Envi-

ronmental Protection Agency (“EPA”) on the

date of this agreement, the United States cove-

nants not to sue or take administrative action

against Rockwell for civil damages, penalties or

other monetary relief based upon alleged viola-

tions of RCRA, the CWA, § 103 of the Compre-

hensive Environmental Response, Compensa-

tion and Liability Act (“CERCLA”), 42 U.S.C.

§ 9603, the Clean Air Act, 42 U.S.C. §§ 7401 et

seq., or the Toxic Substances Control Act, 15

U.S.C. §§ 2601 et seq.

This covenant does not encompass (or pre-

clude) (a) claims for recovery of response costs,

natural resource damages or injunctive relief

brought pursuant to RCRA, CERCLA or other

authority, or for civil or administrative penalties

arising in connection with such relief or a con-

sent decree or administrative order mandating

such relief: (b) the ongoing civil or administra-

tive investigation of possible violations of 40

C.F.R. Part 761 concerning polychlorinated

biphenyls (“PCBs” at rocky Flats, including,

19a

without limitation, Building 707; or (c) the

issues raised in United States of America, ex rel.,

and James S. Stone v. Rockwell International Corpo-

ration, Civil Action No. 89-C-1154 (D. Colo.)

(“Stone”). After an independent review, the

Department of Justice Civil Division has deter-

mined to file a notice in Stone declining to inter-

vene.

In August, 1991, Rockwell sued the government in

the United States Court of Federal Claims in Rockwell v.

United States, Case No. 91-1362C, claiming breach of con-

tract by the Department of Energy and seeking approxi-

mately 6.5 million dollars in award fees for the operation

of the Rocky Flats plant from October 1, 1988 through

September 30, 1989. In that action, Rockwell challenges a

reduction in award fees based on the evaluation of its

performance in the Environment, Safety, and Health

(“ES&H”) requirements of its contract.

The government now claims that discovery con-

ducted in that civil action by counsel in the Commercial

Litigation Branch of the Civil Division of the Department

of Justice, revealed evidence that Rockwell concealed and

misrepresented environmental law violations as alleged

in the Stone case. Additionally, in his declaration filed in

support of the motion to intervene in the Stone case, John

A. Kolar, DOJ Trial Attorney, informed that counsel for

Mr. Stone has provided more documents and information

supporting his allegations of fraudulent concealment. Mr.

Kolar has explained that this is new evidence to the Civil

Division which did not share in the information devel-

oped by the prosecutors in the investigation leading to

this criminal case because of the grand jury secrecy

20a

requirements of Rule 6(e) of the Federal Rules of Criminal

Procedure.

The False Claims Act, in 31 U.S.C. § 3730(c)(3), autho-

rizes the government to change its position and move to

intervene upon a showing of “good cause.” Fed. R. Civ. P.

24(b) permits intervention by a government agency in

any civil action when a party relies on any statute or

executive order administered by that agency. The applica-

tion to intervene must be timely and not be prejudicial to

the rights of the original parties. Rockwell filed its oppo-

sition to the motion to intervene and the relator, Stone,

filed his supporting briefs. Rockwell's principal argument

is the same contention made here - that intervention

violates the plea agreement.

On July 17, 1996, Judge Yock in the Court of Federal

Claims entered an order granting the motion of the

United States to file a first amended answer asserting

fraud counterclaims. That court reviewed the discovery

history in that case and concluded that Rockwell would

not suffer undue prejudice from permitting the govern-

ment to proceed with a Special Plea of Fraud under 28

U.S.C. § 2514 and to assert False Claims Act counter-

claims. The court noted that the government’s discovery

was not fully answered until January 1995, observing that

Rockwell had resisted document requests and made

repeated objections to discovery.

This court has entered a memorandum opinion and

order in the Stone case finding good cause under its

interpretation of the False Claims Act and finding that

neither Stone nor Rockwell will be prejudiced by permit-

ting the government to take over the prosecution of the

21a

claims in that case. Thus, the only impediment now is

whether the court should use its equitable power to pre-

vent the Department of Justice from proceeding in the

Stone case because intervention violates the plea agree-

ment.

In Santobello v. New York, 494 U.S. 257, 262 (1971), the

Supreme Court held that an offender can obtain specific

performance of his plea agreement because the failure to

perform the bargained promise would deny due process.

Contract principles are applicable to plea agreements.

United States v. $87,118.00 in United States Currency, 95

F.3d 511, 516 (7th Cir. 1996); United States v. Hawley, 93

F.3d 682, 692 (10th Cir. 1996). The initial question is

whether there is any ambiguity in the language of this

agreement. The government points out that the express

language of the covenant not to sue in paragraph five

specifically excludes the issues raised in the Stone case.

The sentence regarding the decision of the Department of

Justice — Civil Division to file a notice not to intervene in

Stone is simply a statement of fact as of the time of the

plea agreement and does not, by its own terms, preclude

later intervention.

Counsel for Rockwell make much of the negotiating

history of the plea agreement and claim that Rockwell’s

understanding of the agreement was that DOJ would

intervene in Stone only if it obtained “new and signifi-

cant” evidence that “escalated the magnitude or complex-

ity of the fraud” alleged in Stone, in addition to reliance

on the negotiations leading to the increase in the amount

of the agreed fines to $18.5 million in exchange for

greater protection, Rockwell relies on the legislative his-

tory of § 3730(c)(3) to “intervene at a later date upon a

22a

showing of good cause” by noting the following language

from Senate Rep. No. 99-345, 26-27, reprinted in 1986 U.S.

Code Cong. & Admin. News 5266, 5291-92 (emphasis

added):

Conceivably, new evidence discovered after [the

Government elects not to intervene] could escalate

the magnitude or complexity of the fraud, causing

the Government to reevaluate its initial assess-

ment or making it difficult for the qui tam relator

to litigate alone. In those situations where new

and significant evidence is found and the Govern-

ment can show “good cause” for intervening,

paragraph [3] provides that the court may allow

the Government to take over the suit.

The defendant claims that the Civil Division of DOJ

has long had access to the information necessary to make

a decision about intervention because non-grand jury

material was supplied to it, including many documents

submitted by Rockwell. The defendant contends that the

non-grand jury materials included all of the evidence that

the government now relies on in this motion to intervene.

There is no feasible way for the court now to evaluate

the merits of Rockwell’s contention that the Civil Divi-

sion of the Department of Justice cannot meet the new

evidence requirement according to Rockwell’s interpreta-

tion of the plea agreement. A measured response would

require the court to review the large volume of material

involved and that is not the mission of the court. As

noted in C. Wright and A. Miller, Federal Practice and

Procedures, § 1912 at p. 373-74 (1986), the common inter-

pretation of Rule 24(b) is to allow intervention liberally to

23a

government agencies and officers seeking the oppor-

tunity to assert the public interest in litigation initiated

by other parties. Here there are two significant areas of

public interest involved. One is protection against

improper expenditure of public funds as a result of fraud-

ulent inducement and the second is the intense interest in

the protection of the environment where hazardous waste

is generated in the operation of a facility with the public

purpose of providing for the national defense. Unless the

government limited its authority and discretion in the

plea agreement, the law does not require the court to

undertake a factual analysis to decide whether the gov-

ernment has made such a showing of new evidence. The

controlling questions are whether the Department of Jus-

tice has acted in bad faith and whether there is any actual

prejudice to Rockwell or to Stone. As to Stone, it is clear

that his interests are aligned with that of the government

because he has supported intervention and, indeed

requested it, it is difficult to see how Rockwell will suffer

any prejudice now that the Court of Federal Claims has

permitted the government to raise these same fraud

issues in its amendment counterclaim.

There is an additional element of public interest

involved here and that is the concern raised by the for-

mer members of the grand jury conducting the investiga-

tion of Rocky Flats that the negotiated plea agreement

did not result in a just disposition. They have filed a

separate civil action seeking to be released from the

grand jury oath of secrecy under Rule 6(e) of the Criminal

Rules. In Re Special Grand Jury 89-2, Miscellaneous No. 96-

Y-Z203. That is a matter yet to be heard. Its relationship to

this case is apparent. There is a broad and abiding public

24a

interest in knowing the true story at Rocky Flats Weapons

Plant that can best be addressed in litigation.

The defendant cites cases that require interpretation

of criminal plea agreements according to the reasonable

understanding of the defendant. In those cases, the courts

were concerned with due process protection of the

accused and it is not uncommon for the individual

offender to have an imperfect understanding of the legal

issues or to have his understanding be something differ-

ent from that of his attorney. That is, of course, not

possible where the defendant is a corporation. Rockwell

cannot credibly argue that it did not understand the

government's consideration for its guilty pleas to encom-

pass only a promise not to pursue civil or administrative

remedies for violations of the RCRA, the CWA, § 103 of

the CERCLA, the Clean Air Act, and the Toxic Substances

Control Act. The plea agreement did not contain a cove-

nant not to pursue civil remedies for any violation of the

False Claims Act, and it expressly excluded any covenant

with respect to the Stone cases. Upon the foregoing, it is

ORDERED that the defendant’s motion for order

enforcing plea agreement, filed December 18, 1995, is

denied.

DATED: November 19, 1996

BY THE COURT:

/s/ Richard P. Matsch

Richard P. Matsch,

~ Chief Judge

Case Number: 92-CR-107

25a

I certify that I mailed a copy of the attached Mem-

orandum Opinion and Order entered by Chief Judge

Richard P. Matsch on November 19, 1996, to the follow-

ing:

Henry Solano

United States Attorney

Linda Surbaugh

Assistant U.S. Attorney

Kenneth R. Scott

Assistant U.S. Attorney

Lee Foreman

Bryan Morgan

Haddon, Morgan & Foreman

150 E. Tenth Ave.

Denver, CO 80203

William R. Gray

Purvis, Gray, Schuetze & Gordon

1050 Walnut #501

Boulder, CO 80302

Gerald P. McDermott

McDermott & Hansen

1890 Gaylord St.

Denver, CO 80206-1211

Hartley D. Alley

4251 Kipling St. #130

Wheat Ridge, CO 80033

Leslie Gordon Fagen

Bruce Birenboim

Paul, Weiss, Rifkind, Wharton &

Garrison

1285 Avenue of the Americas

New York, NY 10019-6064

26a

John A. Koler

U.S. Department of Justice

P.O. Box 261 Ben Franklin Station

Washington, DC 20044

Paul S. Leevan

3345 Wilshire Blvd. #1107

Los Angeles, CA 90010

Michael T. Gilbert

Christopher J Koenigs

Williams, Youle & Koenigs

1200 17th St. #1420

Denver, CO 80202

Thomas P. McMahon

Powers, Phillips, P.C.

1200 17th St. #660

Denver, CO 80202

Dean S. Neuwirth

Jacobs, Chase, Frick, Kleinkoph &

Kelley

1050 17th St. #1500

Denver, CO 80265

Dated: 11/19/96 JAMES R. MANSPEAKER,

CLERK

By: /s/

Deputy Clerk

27a

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

ROCKWELL INTERNATIONAL No. 96-1530

CORPORATION,

)

v. )

)

Defendant-Appellant.

ORDER

Filed October 15, 1997

Before BRISCOE, LOGAN and LUCERO, Circuit Judges.

This matter comes on for consideration of appellant's

petition for rehearing and suggestion for rehearing en

banc.

Upon consideration whereof, the petition for rehear-

ing is denied by the panel that rendered the decision.

In accordance with Rule 35(b), Federal Rules of

Appellate Procedure, the suggestion for rehearing en

banc was transmitted to all of the judges of the court who

are in regular active service. No member of the panel and

no judge in regular active service on the court having

requested that the court be polled on rehearing in banc,

28a

Rule 35, Federal Rules of Appellate Procedure, the sug-

gestion for rehearing en banc is denied.

Entered for the Court

PATRICK FISHER, Clerk

By: /s/

Deputy Clerk

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.