Corrugated Container Anti-Trust Litigation, In re

• Decision Date: 19 June 1980
• Docket Number: 80-1307 and 80-1338,ANTI-TRUST,Nos. 80-1284,s. 80-1284
• Citation: 620 F.2d 1086
• Parties: 1980-2 Trade Cases 63,435 In re CORRUGATED CONTAINERLITIGATION. Appeal of Charles J. FRANEY. In re CORRUGATED CONTAINERLITIGATION. Appeal of Philip FLEISCHACKER. In re CORRUGATED CONTAINERLITIGATION. Appeal of Alex HOPKINS.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1086

620 F.2d 1086

1980-2 Trade Cases 63,435

In re CORRUGATED CONTAINER ANTI-TRUST LITIGATION Appeal of Charles J. FRANEY In re CORRUGATED CONTAINER ANTI-TRUST LITIGATION Appeal of Philip FLEISCHACKER In re CORRUGATED CONTAINER ANTI-TRUST LITIGATION. Appeal of Alex HOPKINS.

Nos. 80-1284, 80-1307 and 80-1338.

United States Court of Appeals, Fifth Circuit.

June 19, 1980.

Singleton & Singleton, Robert H. Singleton, Houston, Tex., for appellant in No. 80-1284.

Michael W. Coffield, Coffield, Ungaretti, Harris & Slavin, Chicago, Ill., amicus curiae for Joseph Kurpiel.

Harold C. Gaebe, Jr., Thompson, Walther, Gaebe & Frank, St. Louis, Mo., amicus curiae for Richard Hermann.

Harold F. Baker, Howrey & Simon, Washington, D. C., for The Mead Corp.

O'Brien, Carey, McNamara, Scheuneman & Campbell, Ltd., Barry T. McNamara, LaDonna Loitz Chuchro, Peter Petrakis, Chicago, Ill., for appellant in No. 80-1307.

Hill & Ghiselli, Jerry G. Hill, Houston, Tex., for appellant in No. 80-1338.

Wright & Patton, P. C., Houston, Tex., for plaintiffs Liaison Counsel.

Mandell & Wright, Stephen D. Susman, Houston, Tex., for Chairman of Steering Committee.

Baker & Botts, Houston, Tex., for defendants Liaison Counsel.

Hutcheson & Grundy, Houston, Tex., for Sect. defendants Coordinating Committee.

Butler, Binion, Rice, Cook & Knapp, Houston, Tex., for defendants Liaison Counsel for Non-Settling defendants Committee.

Appeals from the United States District Court for the Southern District of Texas.

Before TJOFLAT, FAY and FRANK M. JOHNSON, Jr., Circuit Judges.

TJOFLAT, Circuit Judge:

Philip Fleischacker, Charles J. Franey, and Alex Hopkins bring these consolidated appeals from orders of the District Court for the Southern District of Texas holding them in civil contempt for invoking the fifth amendment privilege against self-incrimination and refusing to answer questions posed to them at civil depositions. ¹ The court had instructed them to answer the questions, ruling that the fifth amendment right to remain silent was unavailable to them since their deposition testimony could not possibly be used against them in any future criminal proceeding. We vacate the orders holding Franey and Hopkins in contempt because we conclude that the court acted improperly in ruling that there existed no danger of self-incrimination. We must dismiss Fleischacker's appeal for lack of jurisdiction.

I

Fleischacker, Franey, and Hopkins are non-party witnesses in In re Corrugated Container Antitrust Litigation, M.D.L. No. 310, a private, multidistrict, antitrust action. That litigation was set on foot by a two-year federal grand jury investigation of allegations of price-fixing in the corrugated paper container industry. The grand jury investigation resulted in felony indictments against nine manufacturers of corrugated products and nine individuals and misdemeanor indictments against an additional five manufacturers and seventeen individuals. There followed a criminal trial in the district court for the Southern District of Texas. A jury acquitted those defendants who stood trial of all charges.

Fleischacker and Hopkins both testified before the grand jury after the district court, acting on the Government's petition, had entered an order granting them "use" immunity pursuant to 18 U.S.C. §§ 6001-6003 (1976) (immunity statute). Although Franey was not subpoenaed to appear before the grand jury, he submitted to an interview with Department of Justice attorneys in exchange for a letter from the Department of Justice promising that any information he revealed would not be used against him in any criminal proceeding. The Government transcribed the Franey interview and presented it to the grand jury. During the criminal trial, the Government called Franey and Hopkins as witnesses. They testified after the prosecutor obtained orders granting them statutory use immunity.

While the grand jury investigation and the subsequent criminal trial were in progress, purchasers of corrugated products filed forty-four class and eleven non-class treble damages actions against corrugated product manufacturers, some of which were indicted by the grand jury. The plaintiff purchasers alleged that the defendants had engaged in a nationwide conspiracy to fix the prices of corrugated containers in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 (1976). The Judicial Panel for Multidistrict Litigation consolidated those actions, pursuant to 28 U.S.C. § 1407 (1976), in the Southern District of Texas under the caption In re Corrugated Container Antitrust Litigation.

After the conclusion of the criminal trial, the plaintiff class in the consolidated civil action subpoenaed Fleischacker, Franey, Hopkins, and numerous other witnesses who had testified before the grand jury or during the criminal trial, requiring them to appear for depositions and to produce documents. Fleischacker, Franey, and Hopkins were all employees of defendant corporations during the period of the alleged price-fixing conspiracy. Fleischacker was deposed in New York, New York on January 22, 1980, and Hopkins, in Houston, Texas on January 30, 1980. Both refused to answer any questions concerning their alleged knowledge of or participation in the alleged price-fixing conspiracy, asserting their fifth amendment privilege against self-incrimination. Franey was deposed in Houston on March 4, 1980, and he, too, responded with silence to every substantive question. That same day, the plaintiff class went before the district court in Houston, seeking an order compelling Franey to testify. On the court's order, Franey appeared for deposition in open court on March 5, 1980. After listening to the questions, the court ordered Franey to answer. Again, he refused.

On March 6, the court entered Pretrial Order No. 40, adjudging Franey in civil contempt. The court concluded that the fifth amendment privilege was not available since, "(c)learly, Mr. Franey cannot be prosecuted in either state or federal courts using the testimony thus elicited. Kastigar v. United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972)." Record in No. 80-1284, vol. 1, at 12. The court explained:

This is because all the questions are either taken verbatim from the transcripts of his immunized testimony (in his interview with the Department of Justice attorney and at the criminal trial) or are so closely related in subject matter and so clearly derived from the immunized testimony as to be thoroughly tainted and inadmissible against him in any conceivable future prosecution.

Id. at 14.

Also on March 6, the court granted the class plaintiffs' motion to enter Pretrial Order No. 39. That order provides that the Honorable John V. Singleton, Jr., Judge of the United States District Court for the Southern District of Texas shall exercise the powers of a District Judge for the Southern District of New York for the purpose of overseeing the deposition of Philip Fleischacker.

Class plaintiffs obtained a subpoena from the United States District Court for the Southern District of New York requiring Fleischacker to appear for a continuation of his deposition in New York on March 10, 1980. Judge Singleton, in Houston, presided over that deposition by means of a speaker-phone connection. Deposing counsel asked Fleischacker a series of questions taken verbatim from the transcript of his immunized grand jury testimony ² and further questions that counsel said were "derived" from the immunized testimony. Although Judge Singleton ordered Fleischacker to answer, he persisted in his invocation of the fifth amendment. Judge Singleton held him in contempt of court, citing the reasons set forth in Pretrial Order 40. Record in No. 80-1307, vol. 2, at 71.

Hopkins' deposition resumed in Houston on March 19, 1980. When Hopkins asserted his fifth amendment privilege, the deposition was recessed and continued in open court before Judge Singleton. Counsel asked him questions taken verbatim from his grand jury and trial testimony and questions purportedly "derived" from the immunized testimony. The court held Hopkins in contempt for his continued refusal to answer. Again, the court's order is based on a ruling that the answers to the questions "would be so clearly and thoroughly derived from the immunized testimony that they could never be used to prosecute Mr. Hopkins and therefore that he has no legitimate fear of self-incrimination . . . ." Record in No. 80-1338, at 24.

II

Fleischacker first raises the issue whether the Fifth Circuit Court of Appeals has jurisdiction to decide his appeal. We agree with him that this court lacks jurisdiction and that the appeal should be heard by the Court of Appeals for the Second Circuit.

The District Court for the Southern District of New York issued the subpoena requiring Fleischacker to appear for the March 10 deposition under the authority of Fed.R.Civ.P. 45. Rule 45(d)(2) provides:

A resident of the district in which the deposition is to be taken may be required to attend an examination only in the county wherein he resides or is employed or transacts his business in person, or at such other convenient place as is fixed by an order of court. A nonresident of the district may be required to attend only in the county wherein he is served with a subpoena, or within 40 miles from the place of service, or at such other convenient place as is fixed by an order of court.

This rule makes it clear that Fleischacker, who was in the vicinity of New York, could have been required to appear for a deposition only in, or near, New York. He certainly could not have been compelled to travel to Houston, in the Southern District of Texas, to be deposed. As a non-party witness, he was not even subject to the jurisdiction of the District Court for the Southern District of Texas. ³ The policy behind the rule is to avoid unnecessary inconvenience and expense to deponents.

The same policy concern underlies Fed.R.Civ.P....