Grand Jury Proceedings, In re, s. 85-1762

• Decision Date: 03 July 1986
• Docket Number: Nos. 85-1762,86-1047 and 86-1170,s. 85-1762
• Citation: 795 F.2d 226
• Parties: In re GRAND JURY PROCEEDINGS. Appeal of CAMPAIGNER PUBLICATIONS, INC., et al., Appellants. In re GRAND JURY PROCEEDINGS. Appeal of CAUCUS DISTRIBUTORS, INC., Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 226

795 F.2d 226

In re GRAND JURY PROCEEDINGS Appeal of CAMPAIGNER PUBLICATIONS, INC., et al., Appellants In re GRAND JURY PROCEEDINGS Appeal of CAUCUS DISTRIBUTORS, INC., Appellant.

Nos. 85-1762, 86-1047 and 86-1170.

United States Court of Appeals, First Circuit.

Argued April 8, 1986.

Decided July 3, 1986.

Matthew H. Feinberg with whom Segal, Moran & Feinberg, Boston, Mass., Kenneth J. Aronson, Hochheiser & Aronson, Joseph M. Weitzman, New York City, Daniel S. Alcorn, Fensterwald, Alcorn & Bowman, Arlington, Va., Ronald D. Degen and O'Rourke & Degen, New York City, were on brief, for Campaigner Publications, Inc. and Caucus Distributors, Inc.

Kenneth J. Aronson with whom Hochheiser & Aronson, New York City, Matthew H. Feinberg, Segal, Moran & Feinberg, Boston, Mass., Joseph M. Weitzman, New York City, Daniel S. Alcorn, Fensterwald, Alcorn & Bowman, Arlington, Va., Ronald D. Degen and O'Rourke & Degen, New York City, were on briefs, for Caucus Distributors, Inc.

Daniel I. Small, Asst. U.S. Atty., with whom William F. Weld, U.S. Atty., and Martha Sosman, Asst. U.S. Atty., Boston, Mass., were on brief, for the U.S.

Before BOWNES, BREYER and TORRUELLA, Circuit Judges.

BOWNES, Circuit Judge.

These three consolidated appeals have been taken from judgments of civil contempt against appellants Campaigner Publications, Inc., Fusion Energy Foundation, National Democratic Policy Committee, and Caucus Distributors, Inc., all organizations associated with Lyndon LaRouche. The contempt judgments were imposed by the United States District Court for the District of Massachusetts due to the failure of the appellants to cooperate with a grand jury investigation into possible credit card fraud by these and other LaRouche related entities. These organizations are suspected of obtaining hundreds of thousands of dollars in interest-free loans from credit card banks. The loans were allegedly obtained by fraudulently altering small credit card purchases or donations from persons interested in Lyndon LaRouche to reflect a charge for a large sum. The sums thus obtained were ultimately returned to the credit card bank sans accrued interest after the owner of the credit card informed the bank that the charge was not authorized.

Contempt proceedings began in district court in March of 1985. By late January of 1986, three separate judgments of contempt had been entered, each relating to a different period during which certain of the organizations had refused to cooperate with the grand jury. Appeal No. 85-1762 was filed by all four appellants and pertains to the initial contempt judgment and the first partial judgment, both entered in the spring of 1985. Appeal No. 86-1047 involves the second order of partial judgment entered in November, 1985. Appeal No. 86-1170 concerns the further judgment and commitment entered in January, 1986. Appeals Nos. 86-1047 and 86-1170 were brought by Caucus Distributors only. We shall consider each of these judgments in turn.

Appeal No. 85-1762

The events leading to the initial contempt order and first partial judgment began on January 30, 1985, when the United States Marshals attempted to serve keeper of the records grand jury subpoenas at the New York headquarters of six LaRouche related organizations: Campaigner Publications, Inc.; Caucus Distributors, Inc.; Fusion Energy Foundation; National Democratic Policy Committee; The LaRouche Campaign; and Independent Democrats for LaRouche. The Treasurer of The LaRouche Campaign and Independent Democrats for LaRouche told the marshals that no one was authorized to accept service at that time. The next day a news article about the subpoenas appeared in a Campaigner publication, New Solidarity. On February 6, 1985, one day before the return date of the subpoenas, the United State Marshals again attempted to serve the subpoenas. The subpoenas were left with a receptionist who would not allow the marshals into the office area but told them that she was authorized to accept service. At the grand jury hearing the next day, no witnesses appeared. On February 8, 1985, the United States Attorney sent letters by overnight mail to the keepers of the records of the organizations rescheduling the grand jury appearances for February 14, 1985. Again, no witnesses for appellants appeared when the grand jury reconvened.

The government then moved for an order to show cause in the District Court of Massachusetts and served the motion on the four organizations. The district court granted the motion and set a hearing for March 29, 1985. On March 19, 1985, the order was served on a woman at appellants' office who stated that appellants would receive the order from her. Prior to the March 29 hearing, the district court received correspondence from attorneys for some of the subpoenaed organizations requesting a hearing and claiming that service of process for both the subpoenas and the show cause order had not been completed on those organizations. Appellants, however, did not appear at the March 29 show-cause hearing. At that hearing, the district court found that appellants had each been served with the grand jury subpoena and that their failure to comply was without just cause. The court then found each of the four organizations in contempt and ordered each "to pay the sum of $10,000 per day to the Clerk of the United States District Court for Massachusetts until such time as [each organization] ... shall fully comply with said subpoena." The orders were then stayed until April 2, 1985.

On April 3, appellants, still not in compliance with the subpoena, filed a motion to vacate the contempt order and to quash the subpoenas. A hearing was held that day and the court denied the motion, finding that adequate service had been made. On April 4, 1985, appellants filed a motion to purge contempt and sanctions, which stated that they "hereby accept service to appear before the grand jury." On April 9, 1985, the court ruled that "[i]n light of the acceptance of service by the respondents and their request for a reasonable time to respond to the subpoenas, I will defer action on this motion pending notice or a report from either party that a hearing before the Grand Jury has been scheduled." Compliance with the subpoena, however, did not follow and, on April 22, 1985, the district court granted the government's motion for a partial judgment (the first partial judgment) in the sum of $70,000 against each appellant for failure to comply with the subpoena for the seven days between April 2 and April 8, 1985. Appellants had not paid any of the $10,000 per day fine imposed by the court.

On May 2, 1985, appellants filed a motion for reconsideration regarding the orders of partial judgment which indicated that compliance had commenced on April 18, 1985. On the same day, May 2, the government obtained from the clerk of the district court a certification for registration in another district of the initial contempt judgment issued March 29. The certification stated that no notice of appeal had been timely filed as to the March 29 judgment. This judgment was then registered in the Southern District of New York and a restraining notice obtained freezing a number of appellants' bank accounts. The face of the restraining notice states that on March 29, 1985, a judgment in the amount of $70,000 had been obtained. On May 13, 1985, appellants filed a motion to annul the certification and for sanctions. On May 21, 1985, appellants filed a motion to quash the subpoena duces tecum. That same day a hearing was held on the pending motions. On July 19, 1985, the district court issued an order denying appellants' motion to purge contempt, filed April 4, their motion to reconsider the first partial judgment, filed May 2, their motion to annul certification, filed May 13, and their motion to quash the subpoena, filed May 21. On August 2, 1985, appellants appealed the March 29 initial contempt judgment, the April 22 partial judgment for $70,000, and the July 19 denials of the motions to reconsider, to annul, and to quash.

In an order dated December 5, 1985, this court dismissed the appeal of the March 29 initial contempt judgment as untimely and the denial of the motion to quash as nonappealable. The appeal of all the other orders and judgments was permitted to proceed.

We now focus on the April 22 partial judgment for $70,000. Appellants' sole argument against the April 22 judgment is based upon its attack on the underlying contempt order issued March 29. Appellants claim that they were never properly served with either the grand jury subpoena or the order to show cause and that since the $70,000 partial judgment rests upon an invalid order, it too is invalid. Appellants also attack this court's decision to dismiss the March 29 judgment as untimely, arguing that because the motion to purge contempt was still technically pending until it was officially denied on July 19, the time for appeal was tolled during this period under Federal Rule of Appellate Procedure 4(a)(4). ¹

Our December 5, 1985 decision to dismiss the appeal of the March 29 order is binding upon us under the doctrine of the law of the case. See generally J. Moore, J. Lucas, & T. Currier, 1B Moore's Federal Practice p 0.404 (1984). To elucidate our previous order, however, we point out that while a motion to alter or amend the judgment under Federal Rule of Civil Procedure 59(e) will serve to toll the time for appeal under Federal Rule of Appellate Procedure 4(a)(4), only motions which draw "into question the correctness of the judgment [are] ... functionally a motion under Civil Rule 59(e)." 9 Moore's Federal Practice p 204.12 at 4-67. Appellant's motion to purge contempt was not meant to alter the judgment, rather it was an attempt to obey the contempt order and stop the accumulation of the fine. As such, it could not toll the time for appeal.

The consequence of our dismissal of the appeal of the March 29 judgment for app...