United States v. General Electric Company

• Decision Date: 22 August 1962
• Docket Number: 29488-29490,29491-29493.,30297,Civ. A. No. 29379
• Citation: 209 F. Supp. 197
• Parties: UNITED STATES of America and Tennessee Valley Authority, Plaintiffs, v. GENERAL ELECTRIC COMPANY et al., Defendants. UNITED STATES of America, Plaintiff, v. GENERAL ELECTRIC COMPANY et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

209 F. Supp. 197

UNITED STATES of America and Tennessee Valley Authority, Plaintiffs, v. GENERAL ELECTRIC COMPANY et al., Defendants.

UNITED STATES of America, Plaintiff, v. GENERAL ELECTRIC COMPANY et al., Defendants.

Civ. A. Nos. 29379, 29488-29490, 30297, 29491-29493.

United States District Court E. D. Pennsylvania.

August 22, 1962.

Fred D. Turnage, H. Robert Halper, Donald G. Balthis, Baddia Rashid, John W. Martin, Jr., Morton M. Fine, Trial Attys., Antitrust Div., Dept. of Justice, for the United States.

Charles J. McCarthy, Beauchamp Brogan, Curtis Sauer, Knoxville, Tenn., for Tennessee Valley Authority.

Henry W. Sawyer, Philadelphia, Pa., for General Electric Co.

Philip H. Strubing, John G. Harkins, Jr., Philadelphia, Pa., Cravath, Swaine & Moore, by Victor M. Earle, III, New York City, for Westinghouse Electric Corp.

Philip H. Strubing, John G. Harkins, Jr., K. Robert Conrad, Philadelphia, Pa., for H. K. Porter, Inc.

Charles A. Wolfe, Ralph W. Brenner, Philadelphia, Pa., for McGraw-Edison Co. and Cutler-Hammer, Inc.

Raymond W. Midgett, Jr., Richard G. Schneider, Philadelphia, Pa., for I-T-E Circuit Breaker Co.

William H. Elliott, Jr., Thomas L. Cantrell, Alfred C. Aurich, Philadelphia, Pa., for Ohio Brass Co.

W. Wilson White, Philadelphia, Pa., for Wagner Electric Corp.

Louis J. Goffman, Philadelphia, Pa., for Federal Pacific Electric Co.

Louis J. Goffman, Philadelphia, Pa., for Cornell-Dubilier Electric Corp.

Miles W. Kirkpatrick, Don B. Blenko, Philadelphia, Pa., for Moloney Electric Co., Square D Co. and Lapp Insulator Co., Inc.

Charles I. Thompson, Jr., Philadelphia, Pa., for Kuhlman Electric Co.

W. Bradley Ward, Edward W. Mullinix, Philadelphia, Pa., for Allis-Chalmers Mfg. Co.

Robert W. Sayre, Philadelphia, Pa., for A. B. Chance Co.

KRAFT, District Judge.

Following a grand jury investigation of the electrical equipment industry, the Government instituted these civil actions for damages under the Clayton Act, 15 U.S.C.A. § 12 et seq. and the False Claims Act, 31 U.S.C.A. § 231 et seq.¹ Tennessee Valley Authority is co-plaintiff in five of the suits.

The cases are now before us on three motions by defendants, all of which will be considered and disposed of in one opinion.

Defendants' first motion is to impound grand jury minutes and documents and for allied relief. We are called upon to determine the validity of the Government's claim that testimony and documents developed and produced in a Federal grand jury investigation are available for its use in the preparation and trial of its civil damage suits. The basic consideration involved is, of course, the traditional secrecy of grand jury proceedings. The reasons for secrecy are many and varied, and we need not stop at this point to discuss them in detail. See, e. g., Pittsburgh Plate Glass Company v. United States, 360 U.S. 395, 79 S.Ct. 1237, 3 L.Ed.2d 1323 (1959); United States v. Procter & Gamble Company, 356 U.S. 677, 7 S.Ct. 983, 2 L.Ed.2d 1077 (1958); United States v. Rose, 215 F.2d 617 (3rd Cir. 1954); In re April 1956 Term Grand Jury, 239 F.2d 263 (7th Cir. 1956); 8 Wigmore, Evidence (3d ed. 1940), § 2360.

For present purposes, at least, the traditional policy of grand jury secrecy is embodied in F.R.Cr.P. 6(e), 18 U.S.C.:

"(e) Secrecy of Proceedings and Disclosure. Disclosure of matters occurring before the grand jury other than its deliberations and the vote of any juror may be made to the attorneys for the government for use in the performance of their duties. Otherwise a juror, attorney, interpreter or stenographer may disclose matters occurring before the grand jury only when so directed by the court preliminarily to or in connection with a judicial proceeding or when permitted by the court at the request of the defendant upon a showing that grounds may exist for a motion to dismiss the indictment because of matters occurring before the grand jury. No obligation of secrecy may be imposed upon any person except in accordance with this rule. * * *"

F.R.Cr.P. 54(c) defines "Attorney for the government" as "* * * the Attorney General, an authorized assistant of the Attorney General, a United States Attorney, an authorized assistant of a United States Attorney * * *."

Manifestly, the second sentence of Rule 6(e) is not directly involved here, since there has been no application to the Court in connection with the Government's use of grand jury materials.

The gist of defendants' contention, as we understand it, is that the first sentence, declaring the right of attorneys for the Government to have disclosure of the grand jury transcript "for use in the performance of their duties," refers only to their duties in an "enforcement proceeding," to wit, a criminal prosecution or a civil equity action under section 4 of the Sherman Act, 15 U.S.C.A. § 4. This seems to us an unduly narrow construction of the Rule.

Passing the question whether a civil damage suit by the Government is not itself a form of enforcement action, — as to which, see United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443 (1943) — the duties of Government attorneys are by no means limited to enforcement proceedings. The attorneys for the Government in these actions are authorized by statute to conduct "any kind of legal proceeding, civil or criminal," in which the United States is a party in interest. 5 U.S.C.A. § 310. On principle, it would seem that the United States is no less interested in recouping losses suffered from violations of its laws than in the enforcement of the same laws.

Moreover, we are not persuaded that defendants' construction of Rule 6(e) is required, as defendants assert, by the context "in which it appears, namely, as part of the criminal rule relating to a body convened for the sole purpose of investigating possible violations of criminal statutes." Courts, on more than one occasion, have construed the first part of the second sentence of the Rule as applying to civil damage suits. In Herman Schwabe, Inc. v. United Shoe Machinery Corp., 194 F.Supp. 763 (D. Mass.1958), a private treble damage action under the antitrust laws, defendant was granted access to plaintiff's testimony before a grand jury investigating the defendant. Similarly, in a recent case in this District, Judge Lord — "solely on the strength of the particular and peculiar situation here presented" — allowed the defendant in a private civil action to inspect the transcript of the grand jury testimony of one of the plaintiffs. In the Matter of Special 1952 Grand Jury, 22 F.R.D. 102 (E.D.Pa. 1958). To the same effect, see United States v. Ben Grunstein & Sons Company, 137 F.Supp. 197 (D.N.J.1955), infra.

We believe that it would be illogical to construe the second sentence of Rule 6(e) to permit disclosure of grand jury matters in civil damage actions, but to interpret the first sentence of the same Rule to mean that disclosure of grand jury matters to Government attorneys is limited to use only in criminal or quasi-criminal proceedings.

Counsel have not cited and our own extensive research has failed to disclose a single case in which the precise question before us has been expressly raised or adjudicated. However, in at least two cases it has been assumed, without discussion of the point, that the Government was within its rights in using grand jury materials in a civil damage suit based on the very matters which were before the grand jury. In United States v. General Motors Corp., 15 F.R.D. 486 (D.Del.1954), the Government sued for treble damages under the Elkins Act, 49 U.S.C.A. § 41, contending that the defendant received from the Baltimore & Ohio Railroad an unlawful rebate against regular transportation charges. The rebate transaction had been presented to two Federal grand juries under the criminal provisions of the Elkins Act. In preparing for trial of the civil action, defendant filed a motion under F.R.Civ.P. 34, 28 U.S.C.A. for an order directing the United States to produce the transcripts of the grand jury hearings. In denying the motion, the Court stated (p. 488):

"I do not find in the present action for civil penalties any justification for ordering production for inspection and copying the transcripts of the Grand Jury's meetings. It is argued the Department of Justice will have the transcripts of the Grand Jury available and may use them, and such, it is suggested, will be a tactical advantage the discovery rules were designed to eliminate. But defendant, here, has other discovery techniques at its disposal through which most of the information sought and clues to other possible sources may be obtained." (Emphasis supplied)

United States v. Ben Grunstein & Sons Company, 137 F.Supp. 197 (D.N.J.1955), was a civil proceeding by the United States for damages under the False Claims Act. A grand jury investigation had resulted in the indictment and conviction, under the criminal provisions of the Act, of two of the defendants in the civil action. In granting limited disclosure of grand jury minutes on defendants' motions, the Court noted (p. 199):

"Defendants allege, as the necessary `good cause' for such application, the fact that plaintiff has present access to these entire minutes, thus giving plaintiff a great tactical advantage over defendants, who lack same." (Emphasis supplied)

Defendants place special reliance on In re April 1956 Term Grand Jury, 239 F.2d 263 (7th Cir. 1956). While certain language of that opinion, viewed in isolation, seems to lend some support to defendants' position, the case must be read in the light of the particular situation there presented. Indeed, that part of the opinion quoted on page 18 of defendants' brief is preceded in the report by the caveat: "Therefore, in the situation presented to us in the case at bar. * * *" In that case the uncontradicted facts were that the Treasury Department had, by various administrative subpoenas, endeavored to gain access to certain documents and...