Federal Deposit Ins. Corp. v. Ernst & Whinney, s. 89-5073

Citation921 F.2d 83
Decision Date17 December 1990
Docket NumberNos. 89-5073,89-6364,s. 89-5073
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)
PartiesFEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff, v. ERNST & WHINNEY, Defendant.

Deborah Ruth Kant, Douglas Letter, U.S. Dept. of Justice, Civ. Div. Appellate Staff, Washington, D.C., for F.B.I. and U.S.

Harry S. Mattice, Miller & Martin, Chattanooga, Tenn., John L. Douglas, F.D.I.C., Washington, D.C., Michael C. Spencer, Milberg, Weiss, Bershad, Specthrie & Lerach, Knoxville, Tenn., for F.D.I.C.

John W. Wheeler, Robert R. Campbell, Hodges, Doughty & Carson, Knoxville, Tenn., Howard A. Ellins, Julia Brickell, Davis, Polk & Wardell, New York City, Daniel F. Kolb, Washington, D.C., for Ernst & Whinney.

Before MARTIN and MILBURN, Circuit Judges, and HOLSCHUH, Chief District Judge. *

BOYCE F. MARTIN, Jr., Circuit Judge.

The Federal Bureau of Investigation petitions for a writ of mandamus requiring the district court to vacate its October 5, 1989, order which required the Bureau to turn over an index of documents, identifying matters occurring before a grand jury, to parties in a civil action.

The lawsuit which spawned the controversy before us is an action brought by the Federal Deposit Insurance Corporation against the accounting firm of Ernst & Whinney. The FDIC action maintains, inter alia, that Ernst & Whinney engaged in negligent accounting practices and professional malpractice in connection to its audits of several Tennessee banks either owned by or related to banks owned by C.H. Butcher, Sr., and his family.

The Butchers' banking empire was, and still is, the subject of a criminal investigation known as MAYBAN. The MAYBAN investigation involved grand jury investigations and trial proceedings.

On April 8, 1988, Ernst & Whinney served a subpoena duces tecum on the Bureau demanding the production of documents pertaining to the criminal investigation of the Butcher banking empire. Those documents requested included items relating to 134 individuals and organizations connected with the Butcher banking failure. The Bureau moved to quash the subpoena on the basis of several governmental privileges which bar the disclosure of those matters which have occurred before a grand jury. The principal basis relied upon to bar disclosure was Rule 6(e) of the Federal Rules of Criminal Procedure.

Rule 6(e) provides, in relevant part:

Rule 6. The Grand Jury

(e) Recording and Disclosure of Proceedings.

....

(2) General Rule of Secrecy.... [A]n attorney for the government, or any person to whom disclosure is made under paragraph (3)(A)(ii) of this subdivision shall not disclose matters occurring before the grand jury, except as otherwise provided for in these rules. No obligation of secrecy may be imposed on any person except in accordance with this rule. A knowing violation of Rule 6 may be punished as a contempt of court.

(3) Exceptions.

....

(C) Disclosure otherwise prohibited by this rule of matters occurring before the grand jury may also be made--

(i) when so directed by a court preliminarily to or in connection with a judicial proceeding;

If the court orders disclosure of matters occurring before the grand jury, the disclosure shall be made in such manner, at such time, and under such conditions as the court may direct.

The Bureau's challenge to the subpoena was referred to a United States magistrate who ruled that he could not assess the Bureau's assertion of privilege without an index describing the documents. The Bureau objected to the magistrate's order, and thereafter, the district court rejected those objections but remanded the dispute to the magistrate to determine if an easier method of producing the index could be fashioned.

On December 21, 1988, the magistrate held a status hearing to resolve the difficulties in producing the index. At the hearing, the Bureau offered a sample of the index to the magistrate in camera which the magistrate unsealed and showed to attorneys for Ernst & Whinney. On December 27, 1988, the magistrate ordered the Bureau to file an index of the subpoenaed documents with the magistrate and the parties--despite the Bureau's request to file the index in camera. The order required that the index identify which documents were obtained through grand jury subpoenas.

The Bureau objected to the order and moved to file the index in camera or to stay the compliance deadline pending district court or appellate review of the order. Concerned that the district court was not going to review the motion before the compliance deadline, the Bureau moved for an emergency stay pending mandamus review of the magistrate's order and filed a petition for a writ of mandamus in this Court. On January 24, 1989, the stay was granted by this Court. Eventually, we vacated the stay and denied the mandamus petition to give the district court the opportunity to review and rule upon the Bureau's motion.

On October 5, 1989, the district court adopted the magistrate's order compelling the Bureau to file the index without the in camera protection sought by the Bureau. The district court stayed its ruling, however, to allow the Bureau to again seek appellate review of its rulings.

The Bureau sought from this Court a writ of mandamus and also filed a notice of appeal from the district court's October 5th order. On August 28, 1990, this Court determined that the district court's order constituted an appealable, collateral order under Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). On September 7, 1990, this Court combined the mandamus action and appeal.

We now find that the order of August 28, 1990, which determined that the district court's order constituted an appealable, collateral order was in error. Although there is some authority in other circuits which would support the determination that the October 5th order was appealable under Cohen, see, e.g., In re Rafferty, 864 F.2d 151 (D.C.Cir.1988), the law in this circuit seems to foreclose this avenue of appeal. See United States v. James T. Barnes & Co., 758 F.2d 146 (6th Cir.1985); Butcher v. Bailey, 753 F.2d 465, 471 (6th Cir.1985); Dow Chemical Co. v. Taylor, 519 F.2d 352 (6th Cir.1975) (district court's discovery order is not appealable under the "collateral order doctrine").

However, there is clear authority in this circuit that jurisdiction rests under a petition for mandamus. In EEOC v. K-Mart Corp., 694 F.2d 1055 (6th Cir.1982) we held that mandamus was an available means to review a discovery order which raised, "questions of unusual importance necessary to the economical and efficient administration of justice." K-Mart Corp., 694 F.2d at 1061 (quoting In re April 1977 Grand Jury Subpoenas, 573 F.2d 936, 940 (6th Cir.1978), cert. denied sub nom. General Motors Corp. v. United States, 440 U.S. 934, 99 S.Ct. 1277, 59 L.Ed.2d 492 (1979)). The sanctity of the grand jury as a means of criminal investigation is so widely known that citation to any authority is unnecessary. As an investigative arm of the court its proceedings have always been conducted in secret. The district court's order of October 5th appears to threaten this longstanding policy and, therefore, requires this Court to exercise its mandamus power because it is a matter that affects the efficient administration of justice.

We are mindful that our review of the district court's order is constrained because this case is before us on a petition for writ of mandamus. The writ of mandamus has been traditionally used to confine an inferior court to its lawful exercise of jurisdiction. Schlagenhauf v. Holder, 379 U.S. 104, 109-10, 85 S.Ct. 234, 237-38, 13 L.Ed.2d 152 (1964); Will v. United States, 389 U.S. 90, 95, 88 S.Ct. 269, 273, 19 L.Ed.2d 305 (1967). The writ can be issued where there is an usurpation of judicial power or a clear abuse of discretion. Schlagenhauf, 379 U.S. at 110, 85 S.Ct. at 238; Union Light, Heat & Power Co. v. U.S. District Court, 588 F.2d 543, 544 (6th Cir.1978), cert. dismissed sub nom. Union Light, Heat & Power Co. v. Rubin, 443 U.S. 913, 99 S.Ct. 3103, 61 L.Ed.2d 877 (1979). Moreover, a party seeking mandamus has "the burden of showing that its right to the issuance of the writ is 'clear and undisputable.' " Bankers Life and Casualty Company v. Holland, 346 U.S. 379, 384, 74 S.Ct. 145, 148, 98 L.Ed. 106 (1953) (quoting United States v. Duell, 172 U.S. 576, 582, 19 S.Ct. 286, 287, 43 L.Ed. 559 (1899)); In re Bendectin Products, 749 F.2d 300, 303 (6th Cir.1984); In re Post-Newsweek Stations Mich. Inc., 722 F.2d 325, 329 (6th Cir.1983).

Finding that we have jurisdiction, we now grant the writ of...

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