Grand Jury Investigation No. 78-184, In re

• Decision Date: 02 April 1981
• Docket Number: No. 78-3709,78-3709
• Citation: 642 F.2d 1184
• Parties: 81-1 USTC P 9373 In re GRAND JURY INVESTIGATION NO. 78-184. SELLS, INC., Peter A. Sells, Fred R. Witte, Appellants, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1184

642 F.2d 1184

81-1 USTC P 9373

In re GRAND JURY INVESTIGATION NO. 78-184.

SELLS, INC., Peter A. Sells, Fred R. Witte, Appellants, v. UNITED STATES of America, Appellee.

No. 78-3709.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 9, 1980.

Decided April 2, 1981.

Arlington Ray Robbins, San Diego, Cal. (argued), Daniel B. Hunter, Hunter & Ryan, E. Mac Amos, Jr., McWilliams, Amos & Curnow, San Diego, Cal., on brief, for appellants.

Stephen D. Altman, Dept. of Justice, Washington, D.C., for appellee; J. Roger Edgar, Washington, D.C., on brief.

Appeal from the United States District Court for the Southern District of California.

Before FARRIS and NELSON, Circuit Judges, and CURTIS, ^* District Judge.

FARRIS, Circuit Judge:

Peter A. Sells, Fred R. Witte, and Sells, Inc., appeal from the district court's order under Federal Rule of Criminal Procedure 6(e) granting the Civil Division of the Department of Justice access to documents, exhibits, and testimony acquired by a federal grand jury. The United States urges us to dismiss the appeal for want of jurisdiction. We uphold appellate jurisdiction and reverse.

In 1974, Special Agent Edwin Wordell of the Internal Revenue Service began a combined civil and criminal administrative investigation of Sells, Witte, and Sells, Inc. He issued administrative summonses for various corporate records of Sells, Inc. Sells, Inc., refused to comply with the administrative summonses. Wordell obtained a district court order enforcing the summonses on July 29, 1975, but his investigation was further delayed by a stay of enforcement pending appeal of the order to this court. ¹

In May 1977 a federal grand jury was convened to investigate whether Sells, Witte, and Sells, Inc., had criminally defrauded the United States or evaded the federal income tax. The grand jury issued summonses to Sells, Witte, and Sells, Inc., for many of the materials previously sought by administrative summonses. On April 13, 1978, the grand jury indicted the three on two counts of conspiracy to defraud the United States, 18 U.S.C. § 371 (1976), and nine counts of tax fraud, 26 U.S.C. § 7206(2) (1976). Pursuant to a plea bargain Sells and Witte pleaded guilty before another district judge to one count of conspiracy to defraud the government by obstructing an IRS investigation. All other counts against the three defendants were dismissed.

On December 18, 1978, the government moved for disclosure of the grand jury materials to Civil Division attorneys and their assistants for possible civil prosecution. Sells, Witte, and Sells, Inc., objected, alleging grand jury abuse. ² The district court ruled that it need not reach the issue of abuse because the Civil Division was entitled under Federal Rule of Criminal Procedure 6(e)(3)(A)(i) to the materials as a matter of right. Sells, Witte, and Sells, Inc., jointly appeal this decision. On September 17, 1979, the United States filed civil suit against Sells, Witte, and Sells, Inc., under the False Claims Act, 31 U.S.C. §§ 231-235 (1976), and at common law.

I. APPELLATE JURISDICTION

The United States attacks this court's jurisdiction to review the disclosure order, arguing that the order is not a "final decision" within the meaning of 28 U.S.C. § 1291 (1976), but rather an interlocutory order and therefore not immediately appealable. We recognize that appellate courts have shown great reluctance to entertain appeals from Rule 6(e) orders before conclusion of grand jury proceedings. E. g., In re Grand Jury Proceedings, 580 F.2d 13, 16-17 & n.4 (1st Cir. 1978). Interruptions caused by interlocutory appeals pose substantial threats to the grand jury process. Cobbledick v. United States, 309 U.S. 323, 327-28, 60 S.Ct. 540, 542, 84 L.Ed. 783 (1940). One court has dismissed an appeal from a disclosure order entered while civil proceedings were ongoing, noting that review could be accomplished by challenging admission of improperly obtained evidence after final judgment. Baker v. United States Steel Corp., 492 F.2d 1074, 1078 (2d Cir. 1974).

Here a different situation is presented. At the time of entry of the Rule 6(e) order, criminal proceedings had terminated. It was not until nearly nine months after entry of the order and fully eight months after filing of this appeal that the government filed civil suit. In these circumstances, the disclosure order was the result of an independent proceeding. The order here, which conclusively resolved the only issue in that proceeding, is a "final decision" and therefore immediately appealable. See In re Grand Jury Investigation, 630 F.2d 996, 999-1000 (3d Cir. 1980); United States v. Sobotka, 623 F.2d 764, 766 (2d Cir. 1980); see also Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S. 211, 233, 99 S.Ct. 1667, 1680, 60 L.Ed.2d 156 (1979) (Rehnquist, J., concurring).

II. MOOTNESS AND RIPENESS

The United States contends that this appeal is moot because many of the grand jury materials in question have already been disclosed to Civil Division attorneys and their assistants. It asserts that even if Sells, Witte, and Sells, Inc., prevail this court will be powerless to accord relief.

We disagree. The controversy here is still a live one. By its terms the disclosure order grants access to all attorneys for the Civil Division, their paralegal and secretarial staff, and all other necessary assistants. Each day this order remains effective the veil of secrecy is lifted higher by disclosure to additional personnel and by the continued access of those to whom the materials have already been disclosed. We cannot restore the secrecy that has already been lost but we can grant partial relief by preventing further disclosure.

The United States also contends that any challenge to use of the materials is premature. It cites several cases suggesting that evidence improperly obtained from a grand jury may be suppressed at a subsequent civil proceeding. See In re April 1977 Grand Jury Subpoenas (General Motors), 584 F.2d 1366, 1370 (6th Cir. 1978) (en banc), cert. denied, 440 U.S. 934, 99 S.Ct. 1277, 59 L.Ed.2d 492 (1979); In re Grand Jury, 583 F.2d 128, 131 (5th Cir. 1978) (per curiam); In re Grand Jury Subpoenas, 581 F.2d 1103, 1110 n.16 (4th Cir. 1978), cert. denied, 440 U.S. 971, 99 S.Ct. 1533, 59 L.Ed.2d 787 (1979); In re Fred R. Witte Center Glass No. 3, 544 F.2d 1026, 1029 (9th Cir. 1976); Coson v. United States, 533 F.2d 1119, 1120-21 (9th Cir. 1976) (per curiam); see also, United States v. Penrod, 609 F.2d 1092, 1097 (4th Cir. 1979), cert. denied, 446 U.S. 917, 100 S.Ct. 1850, 64 L.Ed.2d 271 (1980); S.Rep. No. 95-354, 95th Cong., 1st Sess. 7 n.12 (1977), reprinted in 1977 U.S. Code Cong. & Ad. News 527, 531 n.12. This fact does not make the present action unripe or premature. This action is a proper means to prevent future disclosure before it occurs; the availability of a motion to suppress in future civil proceedings provides a remedy for improper disclosures that have already occurred. Our decision here and any rulings on remand regarding the propriety of the disclosures will of course be binding in such proceedings, at least upon the parties to this appeal.

III. PROPRIETY OF DISCLOSURE

Federal Rule of Criminal Procedure 6(e), which governs grand jury secrecy, provides in part:

(2) General rule of secrecy. A grand juror, an interpreter, a stenographer, an operator of a recording device, a typist who transcribes recorded testimony, an 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....

(3) Exceptions.

(A) Disclosure otherwise prohibited by this rule of matters occurring before the grand jury, other than its deliberations and the vote of any grand juror, may be made to

(i) an attorney for the government for use in the performance of such attorney's duty; and

(ii) such government personnel as are deemed necessary by an attorney for the government to assist an attorney for the government in the performance of such attorney's duty to enforce federal criminal law.

....

(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; or

(ii) when permitted by a court at the request of the defendant, upon a showing that grounds may exist for a motion to dismiss the indictment because of matters occurring before the grand jury.

The United States contends that Rule 6(e)(3)(A)(i) allows disclosure to Civil Division attorneys without court order. It also contends that the district court's disclosure to secretaries, paralegals, and assistants was proper under Rule 6(e)(3)(C)(i). Sells, Witte, and Sells, Inc., dispute both contentions.

A. Disclosure to Civil Division Attorneys

Federal Rule of Criminal Procedure 6(e)(3)(A)(i) grants disclosure of grand jury materials to "an attorney for the government for use in the performance of such attorney's duty." Such disclosure is a matter of right; it may be accomplished without court order, e. g., In re Grand Jury, 583 F.2d 128, 130 (5th Cir. 1978) (per curiam); United States v. Garcia, 420 F.2d 309, 311 (2d Cir. 1970) (per curiam). Federal Rule of Criminal Procedure 54(c) provides:

"Attorney for the government" means the Attorney General, an authorized assistant of the Attorney General, a United States Attorney, (or) an authorized assistant of a United States Attorney ....

The United States accordingly contends that the portion of the district court's order that disclosed to Civil Division attorneys was proper, and in fact superfluous.

Sells, Witte, and Sells, Inc., contend that Rule 6(e)(3)(A)(i) applies only to disclosure in aid of criminal, rather than civil, law enforcement. They argue that "such attorney's duty" refers only to the ...