United States v. Enterprises, Inc
| Decision Date | 22 January 1991 |
| Docket Number | No. 89-1436,89-1436 |
| Citation | 112 L.Ed.2d 795,111 S.Ct. 722,498 U.S. 292 |
| Parties | UNITED STATES, Petitioner, v. R. ENTERPRISES, INC., et al |
| Court | U.S. Supreme Court |
Pursuant to an investigation into allegations of interstate transportation of obscene materials, a federal grand jury sitting in the Eastern District of Virginia issued subpoenas duces tecum to Model Magazine Distributors, Inc. (Model), and to respondents R. Enterprises, Inc., and MFR Court Street Books, Inc. (MFR), all of which were based in New York and wholly owned by the same person. The subpoenas sought a variety of corporate books and records and, in Model's case, copies of certain videotapes that it had shipped to retailers in the Eastern District. The District Court denied the companies' motions to quash the subpoenas and, when the companies refused to comply with the subpoenas, found each of them in contempt. The Court of Appeals, inter alia, quashed the subpoenas issued to respondents, ruling that the subpoenas did not satisfy the relevancy prong of the test set out in United States v. Nixon, 418 U.S. 683, 699-700, 94 S.Ct. 3090, 3103-3104, 41 L.Ed.2d 1039—which requires the Government to establish relevancy, admissibility, and specificity in order to enforce a subpoena in the trial context—and that the subpoenas therefore failed to meet the requirement that any document subpoenaed under Federal Rule of Criminal Procedure 17(c) be admissible as evidence at trial. The court did not consider respondents' contention that enforcement of the subpoenas would likely infringe their First Amendment rights.
Held:
1. The Court of Appeals did not apply the proper standard in evaluating the subpoenas issued to respondents. Pp. 297-303.
(a) The Nixon standard does not apply in the context of grand jury proceedings. The unique role of a grand jury makes its subpoenas much different from subpoenas issued in the context of a criminal trial. Thus, this Court has held that a grand jury may compel the production of evidence or the testimony of witnesses as it considers appropriate, and that its operation generally is unrestrained by the technical procedural and evidentiary rules governing the conduct of criminal trials. Nixon § multifactor test would invite impermissible procedural delays and detours while courts evaluate the relevancy and admissibility of documents sought by a particular subpoena. Additionally, requiring the Government to explain in too much detail the particular reasons underlying a subpoena threatens to compromise the indispensable secrecy of grand jury proceedings. Broad disclosure also affords the targets of investigation far more information about the grand jury's workings than the Rules of Criminal Procedure appear to contemplate. Pp. 297-299.
(b) The grand jury's investigatory powers are nevertheless subject to the limit imposed by Rule 17(c), which provides that "the court on motion made promptly may quash or modify the subpoena if compliance would be unreasonable or oppressive" (emphasis added). Since a grand jury subpoena issued through normal channels is presumed to be reasonable, the burden of showing unreasonableness, as the above language indicates, must be on the recipient who seeks to avoid compliance, and the Court of Appeals erred to the extent that it placed an initial burden on the Government. Moreover, where, as here, a subpoena is challenged on relevancy grounds, the motion to quash must be denied unless the district court determines that there is no reasonable possibility that the category of materials the Government seeks will produce information relevant to the general subject of the grand jury's investigation. Since respondents did not challenge the subpoenas as being too indefinite or claim that compliance would be overly burdensome, this Court does not consider these aspects of the subpoenas. Pp. 299-301.
(c) Because it seems unlikely that a challenging party who does not know the general subject matter of the grand jury's investigation will be able to make the necessary showing that compliance with a subpoena would be unreasonable, a court may be justified in requiring the Government to reveal the investigation's general subject before requiring the challenger to carry its burden of persuasion. However, this question need not be resolved here, since there is no doubt that respondents knew the subject of the particular investigation. Pp. 301-302.
(d) Application of the above principles demonstrates that the District Court correctly denied respondents' motions to quash. Based on the undisputed facts that all three companies are owned by the same person, that all do business in the same area, and that Model has shipped sexually explicit materials into the Eastern District of Virginia, the court could have concluded that there was a reasonable possibility that respondents' business records would produce information relevant to the grand jury's investigation, notwithstanding respondents' self-serving denial of any connection to Virginia. Pp. 302-303.
2. This Court expresses no view on, and leaves to the Court of Appeals to resolve, the issue whether, based on respondents' contention that the records subpoenaed related to First Amendment activities, the Government was required to demonstrate that they were particularly relevant to the investigation. P. 303.
884 F.2d 772 (CA4 1989), reversed in part and remanded.
O'CONNOR, J., delivered the opinion for a unanimous Court with respect to Parts I and II, the opinion of the Court with respect to Parts III-A and IV, in which REHNQUIST, C.J., and WHITE, SCALIA, KENNEDY, and SOUTER, JJ., joined, and the opinion of the Court with respect to Part III-B, in which REHNQUIST, C.J., and WHITE, KENNEDY, and SOUTER, JJ., joined. STEVENS, J., filed an opinion concurring in part and concurring in the judgment, in which MARSHALL and BLACKMUN, JJ., joined, post, p. ---.
William C. Bryson, Washington, D.C., for petitioner.
Herald P. Fahringer, New York City, for respondents.
*
This case requires the Court to decide what standards apply when a party seeks to avoid compliance with a subpoena duces tecum issued in connection with a grand jury investigation.
Since 1986, a federal grand jury sitting in the Eastern District of Virginia has been investigating allegations of interstate transportation of obscene materials. In early 1988, the grand jury issued a series of subpoenas to three companies Model Magazine Distributors, Inc. (Model), R. Enterprises, Inc., and MFR Court Street Books, Inc. (MFR). Model is a New York distributor of sexually oriented paperback books, magazines, and videotapes. R. Enterprises, which distributes adult materials, and MFR, which sells books, magazines, and videotapes, are also based in New York. All three companies are wholly owned by Martin Rothstein. The grand jury subpoenas sought a variety of corporate books and records and, in Model's case, copies of 193 videotapes that Model had shipped to retailers in the Eastern District of Virginia. All three companies moved to quash the subpoenas, arguing that the subpoenas called for production of materials irrelevant to the grand jury's investigation and that the enforcement of the subpoenas would likely infringe their First Amendment rights.
The District Court, after extensive hearings, denied the motions to quash. As to Model, the court found that the subpoenas for business records were sufficiently specific and that production of the videotapes would not constitute a prior restraint. App. to Pet. for Cert. 57a-58a. As to R. Enterprises, the court found a "sufficient connection with Virginia for further investigation by the grand jury." Id., at 60a. The court relied in large part on the statement attributed to Rothstein that the three companies were "all the same thing, I'm president of all three." Ibid. Additionally, the court explained in denying MFR's motion to quash that it was "inclined to agree" with "the majority of the jurisdictions," which do not require the Government to make a "threshold showing" before a grand jury subpoena will be enforced. Id., at 63a. Even assuming that a preliminary showing of relevance was required, the court determined that the Government had made such a showing. It found sufficient evidence that the companies were "related entities," at least one of which "certainly did ship sexually explicit material into the Commonwealth of Virginia." Ibid. The court concluded that the subpoenas in this case were "fairly standard business subpoenas" and "ought to be complied with." Id., at 65a. Notwithstanding these findings, the companies refused to comply with the subpoenas. The District Court found each in contempt and fined them $500 per day, but stayed imposition of the fine pending appeal. Id., at 64a.
The Court of Appeals for the Fourth Circuit upheld the business records subpoenas issued to Model, but remanded the motion to quash the subpoena for Model's videotapes. In re Grand Jury 87-3 Subpoena Duces Tecum, 884 F.2d 772 (1989). Of particular relevance here, the Court of Appeals quashed the business records subpoenas issued to R. Enterprises and MFR. In doing so, it applied the standards set out by this Court in United States v. Nixon, 418 U.S. 683, 699-700, 94 S.Ct. 3090, 3103-3104, 41 L.Ed.2d 1039 (1974). The court recognized that Nixon dealt with a trial subpoena, not a grand jury subpoena, but determined that the rule was "equally applicable" in the grand jury context. 884 F.2d, at 776, n. 2. Accordingly, it required the Government to clear the three hurdles that Nixon established in the trial context—relevancy, admissibility, and specificity—in order to enforce the grand jury subpoenas. Id., at 776. The court concluded that the challenged subpoenas did not satisfy the Nixon standards, finding no evidence in the record that either company had ever shipped materials into, or otherwise conducted business...
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