Grand Jury Impaneled January 21, 1975, Matter of

Decision Date21 January 1975
Citation541 F.2d 373
Parties1 Fed. R. Evid. Serv. 309 In the Matter of GRAND JURY IMPANELED
CourtU.S. Court of Appeals — Third Circuit

Jonathan L. Goldstein, U. S. Atty., John J. Barry, Asst. U. S. Atty., Newark, N. J., for appellee.

Howard Gittis, Alan J. Davis, Mark A. Aronchick, Philadelphia, Pa., Richard A. Levin, Amster & Levin, Millburn, N. J., Wolf, Block, Schorr & Solis-Cohen, for Abraham E. Freedman.

Jonathan Vipond, III, Michael L. Seabolt, Philadelphia, Pa., for Americo V. Cortese.

Before SEITZ, Chief Judge, ADAMS and HUNTER, Circuit Judges.

JAMES HUNTER, III, Circuit Judge:

The primary issue presented by these appeals is whether retainer agreements filed by a law firm with the Prothonotary of the Court of Common Pleas of Philadelphia County pursuant to Rule 202 of that court are privileged so as to defeat a subpoena for such agreements issued by a federal grand jury. The district court held that the agreements were not privileged and enforced the subpoena. We agree and accordingly affirm.


On December 10, 1975, a subpoena duces tecum was served on the Honorable Americo V. Cortese, Prothonotary of the Court of Common Pleas of Philadelphia County, directing him to produce "any and all retainer agreements filed by the law firm of Freedman, Borowsky and Lorry for the period January 1, 1968 to the present." App. at 2a. The subpoena was issued by a federal grand jury sitting in Newark, New Jersey in connection with its investigation of possible criminal violations by the National Maritime Union, its officers and employees. At the time the subpoena was served, attorneys in Philadelphia County were required by Rule 202 of the Court of Common Pleas of that county ("Local Rule 202") to file a copy of all contingent fee agreements with the Prothonotary. 1 Section (f) of Rule 202 provided that the filed agreements "shall be impounded subject to inspection only by Order of the Court, by the client or by the Disciplinary Board of the Supreme Court of Pennsylvania."

On January 19, 1976, the Prothonotary filed a motion to quash the subpoena in the district court. Also, Abraham E. Freedman, for the law firm of Freedman, Borowsky & Lorry, moved to intervene and to quash the subpoena. The Prothonotary argued that he was not the proper person on whom to serve the subpoena. Both Freedman and the Prothonotary contended that the retainer agreements were privileged by virtue of section (f) of Local Rule 202 and that the district court, as a matter of comity, should defer enforcement of the subpoena pending the filing and disposition of an appropriate petition to the Court of Common Pleas for release of the agreements in question.

A hearing was held on the motions on January 20, 1976. No testimony was taken, but certain exhibits and affidavits were introduced by the parties. 2 Just prior to the hearing, a representative of the Prothonotary's office had appeared before the grand jury and had refused to produce the subpoenaed records on the grounds asserted in the motion to quash.

On January 23, 1976, the district court, by oral opinion, ruled that Freedman had standing to intervene but rejected Freedman's and the Prothonotary's objections to the subpoena. A formal written order was entered on February 4, 1976, granting Freedman's motion to intervene, denying the motions to quash by the Prothonotary and Freedman, directing the Prothonotary to produce the records forthwith and staying enforcement pending appeal. App. at 89a-90a.

Freedman filed a notice of appeal in the district court on January 23, 1976. Id. at 91a. On February 9, 1976, the Prothonotary moved for certification of the February 4, order under 28 U.S.C. § 1292(b), which motion was granted by the district court. Id. at 92a-96a. We granted the Prothonotary's petition for appeal pursuant to Federal Rule of Appellate Procedure 5 on March 1, 1976, and stayed further proceedings in the district court pending disposition of the appeal. Id. at 109a.


At the outset, we are met with government objections to Freedman's appeal and standing to intervene below. Freedman's notice of appeal was filed on January 23, 1976, twelve days prior to entry of the court's written order on February 4, 1976. Although the appeal was technically premature, 3 we will not dismiss. The court's order is appealable, 4 and the government has not been prejudiced by the prematurity. Hodge v. Hodge, 507 F.2d 87, 89 (3d Cir. 1975); Hamilton v. Stillwell Van & Storage Co., 343 F.2d 453, 455 (3d Cir. 1965); see Foman v. Davis, 371 U.S. 178, 181, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). We are also of the opinion that Freedman had standing to intervene below and challenge the subpoena on the basis of his claim of privilege. Perlman v. United States, 247 U.S. 7, 12, 38 S.Ct. 417, 62 L.Ed. 950 (1918); see United States v. Nixon, 418 U.S. 683, 94 S.Ct. 3090, 41 L.Ed.2d 1039 (1974); Couch v. United States, 409 U.S. 322, 93 S.Ct. 611, 34 L.Ed.2d 548 (1973); Schwimmer v. United States, 232 F.2d 855, 860 (8th Cir.), cert. denied, 352 U.S. 833, 77 S.Ct. 48, 1 L.Ed.2d 52 (1956).

The Prothonotary contends initially that the subpoena was not appropriately directed to him because his function is ministerial and he lacks legal authority to produce the records sought, absent an order of the Court of Common Pleas. In our view, the subpoena was properly directed to the Prothonotary. He is the custodian of the retainer agreements and had actual possession of them at the time the subpoena was issued. See Schwimmer v. United States, supra, 232 F.2d at 860; In re New York State Sales Tax Records, 382 F.Supp. 1205, 1206 (W.D.N.Y.1974); cf. Fisher v. United States, --- U.S. ----, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976), aff'g 500 F.2d 683 (3d Cir. 1974) (en banc); Couch v. United States, supra, 409 U.S. at 330-35, 93 S.Ct. 611. The grand jury's subpoena supplies the legal authority for the Prothonotary's production of the records.

Both the Prothonotary and Freedman urged the district court, as a matter of comity, to defer enforcement of the subpoena pending an appropriate application to the Court of Common Pleas for release of the retainer agreements. While recognizing that the state's interest was "not without substance," the district court nevertheless held that deference would be inappropriate in this case. "To hold otherwise," the court stated, "would do violence to the integrity of the grand jury as an arm of the federal judiciary." App. at 84a. Appellants contend that in refusing to stay its hand, the district court "failed to accommodate and needlessly disrupted a state regulatory system of paramount public importance."

As did the district court, we recognize that the state interests involved in this case are not insubstantial. And perhaps as a matter of comity, if not prudence and orderly procedure, the United States might well have first sought an order of the Court of Common Pleas: the instant litigation, and resultant expenditure of time and energy by the parties and the judiciary, might then have proved unnecessary. 5 But the district court did not err in declining to defer enforcement in this case. The ultimate question of privilege presented in this action is, of course, one of federal, not state law, pp. 8-10 infra, and accordingly is appropriate for decision by a federal court. The district court had before it and considered the views of President Judge Bradley of the Court of Common Pleas and thus was not uninformed as to the state's interests in and interpretation of Local Rule 202. App. at 22a-24a. The court could well have concluded that interference with and delay of the grand jury's investigative functions outweighed any interests in comity. See Bellotti v. Baird, --- U.S. ----, ----, 96 S.Ct. 2857, 48 L.Ed.2d --- (1976); Lake Carriers Ass'n v. MacMullen, 406 U.S. 498, 509, 92 S.Ct. 1749, 32 L.Ed.2d 257 (1972); England v. Medical Examiners, 375 U.S. 411, 418, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964). The grand jury possesses broad investigative powers. 6 Here, its term and the statute of limitations may be running daily and there was no basis for the district court to assume that the Court of Common Pleas would release the subpoenaed records. 7 Finally, unlike many of the cases cited by appellants, 8 the significant interests in comity that are raised when a federal court's action interferes with a pending state court proceeding are not present here.


We come now to the primary issue presented by this appeal. The Prothonotary and Freedman argue that the contingent fee agreements under subpoena are privileged and thus cannot be obtained by grand jury subpoena. They assert that under "well-established principles of federal common law, which have been adopted in rule 501 of the Federal Rules of Evidence," a person filing records under a state "required records" law has a privilege against use of those records in any phase of a federal criminal proceeding. Local Rule 202 is such a required records rule, in their view. The government's rejoinder is two-pronged. First, it claims that even if Local Rule 202 creates a required reports privilege as a matter of state law, a federal court need not and should not recognize that privilege as a matter of federal common law in a federal grand jury investigation or criminal proceeding. Alternatively, it contends that Local Rule 202 does not, even as a matter of state law, cloak the subpoenaed retainer agreements with a privilege against their use in a grand jury investigation or criminal proceeding; it is merely a "limited access rule."

Preliminarily, we decline the government's invitation to divine how the Pennsylvania courts would interpret Local Rule 202. That determination is better left to the state courts as the scope of the privilege, if any, created by...

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