Grand Jury Subpoena, Matter of

Decision Date02 January 1992
Citation411 Mass. 489,583 N.E.2d 241
PartiesIn the Matter of a GRAND JURY SUBPOENA.
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

Janis M. Berry, Boston (Jonathan M. Zorn, with her) for howmet corp.

Ian Crawford, Boston, for Price Waterhouse.

Andrew M. Zaikis, Asst. Atty. Gen., for Com.


ABRAMS, Justice.

We allowed the application of Howmet Corporation (Howmet) for further appellate review to consider whether an interlocutory appeal is available to Howmet from the denial of its motion to quash a subpoena directed to and served on its accounting firm, Price Waterhouse, at Price Waterhouse's Boston office. The Appeals Court concluded that the appeal was premature. See Matter of a Grand Jury Subpoena, 30 Mass.App.Ct. 462, 569 N.E.2d 852 (1991). For the reasons stated in this opinion, we conclude that Howmet may not appeal from the order denying the motion to quash the subpoena. Price Waterhouse, if it wishes to appeal from the order, must first disobey the subpoena and risk contempt. Thus, Howmet's and Price Waterhouse's appeals are not properly before us and must be dismissed.

We also allowed further appellate review of the Commonwealth's cross appeal from an order requiring it to reimburse Price Waterhouse for the firm's reasonable expenses incurred in complying with the subpoena. Because that order is a final one, we reach the merits of the Commonwealth's appeal.

On April 6, 1990, the Attorney General, in connection with a grand jury investigation into possible criminal violations of Massachusetts tax laws by Howmet, served a subpoena duces tecum on Howmet's independent accounting firm, Price Waterhouse, at its Boston office. The subpoena requested that Price Waterhouse supply to the grand jury certain records in its possession or control regarding Howmet, including Federal and State tax returns. Howmet itself never was served with a grand jury subpoena. Pursuant to G.L. c. 211, § 3, Howmet and Price Waterhouse each filed motions to quash the subpoena before a single justice of this court. The single justice transferred both motions to the Superior Court.

There, Howmet filed three more motions: (1) a motion for relief in the nature of prohibition challenging the grand jury's jurisdiction; (2) a motion for an order concerning affidavits and related evidence submitted in connection with the grand jury's jurisdictional hearing; and (3) a motion for an order compelling production on subpoenas served on the Department of Revenue (department).

In the first motion, Howmet argued that its activities in Massachusetts fall within Pub.L. No. 86-272, 1 and that, therefore, it was not required to file corporate excise returns in Massachusetts and cannot be held criminally liable for not filing such returns. A Superior Court judge ordered Howmet to submit affidavits and briefs in support of this first motion, an order which formed the basis of the second motion.

In the second motion, relying on Simmons v. United States, 390 U.S. 377, 394, 88 S.Ct. 967, 976, 19 L.Ed.2d 1247 (1968) (Fifth Amendment to the United States Constitution bars State from using against defendant at trial potentially incriminating statements made in preliminary hearing on motion to suppress), Howmet asked the Superior Court to bar the prosecution from using these affidavits in other proceedings.

In its final motion, Howmet moved that the Superior Court compel the department to respond to four subpoenas that it, in turn, had served on the department. The subpoenas, intended to elicit information regarding the Commonwealth's jurisdiction to convene a grand jury, requested production of department records regarding the Commissioner of Revenue's (commissioner's) construction of, and standards applicable under, Pub.L. No. 86-272. 2

The Superior Court judge denied all five motions, but directed the Commonwealth to reimburse Price Waterhouse for expenses reasonably incurred in complying with the subpoena. Pursuant to G.L. c. 211, § 3, Howmet and Price Waterhouse again commenced a joint proceeding in the Supreme Judicial Court for the county of Suffolk seeking to stay and reverse the orders of the Superior Court. The single justice denied relief in view of the potential availability of relief from the Appeals Court. Howmet then filed a petition for interlocutory relief in the Appeals Court pursuant to G.L. c. 231, § 118 (1990 ed.), seeking once again to stay and reverse the orders of the Superior Court. This petition, too, was denied by a single justice of the Appeals Court; however, he did allow Howmet's motion for leave to file an interlocutory appeal to the Appeals Court under G.L. c. 231, § 118.

After Howmet filed its appeal, Price Waterhouse filed its own appeal from the Superior Court's denial of its motion to quash, and the Appeals Court consolidated Howmet's and Price Waterhouse's appeals. The Commonwealth filed a cross appeal from that portion of the Superior Court's order directing the Commonwealth to reimburse Price Waterhouse for its costs of complying with the subpoena. On appeal, Howmet and Price Waterhouse challenge the subpoena on the merits, arguing that the subpoena (1) lacked extraterritorial effect because it failed to comply with G.L. c. 233, §§ 13A-13D (1990 ed.) (Uniform Act to Secure the Attendance of Witnesses From Without the Commonwealth in Criminal Proceedings); (2) violated the accountant- taxpayer nondisclosure privilege of G.L. c. 62C, § 74 (1990 ed.); (3) violated 26 U.S.C. § 6103 (1988), and G.L. c. 62C, §§ 21, 22 (1990 ed.) (Federal and State nondisclosure provisions regarding the confidentiality of tax information); and (4) may have violated art. 12 of the Massachusetts Declaration of Rights (prohibiting involuntary production of incriminating evidence).

1. Howmet may not intervene to move to quash the subpoena issued to Price Waterhouse requesting Howmet documents. In general, interlocutory orders are not appealable. See Cronin v. Strayer, 392 Mass. 525, 528, 467 N.E.2d 143 (1984); Borman v. Borman, 378 Mass. 775, 781-782, 393 N.E.2d 847 (1979). Orders denying motions to quash subpoenas, such as the one at issue in this case, are not final decisions and not appealable. The usual way of challenging such orders is to disobey them and appeal from the subsequent contempt order. See, e.g., Cronin v. Strayer, supra; Matter of Roche, 381 Mass. 624, 625 n. 1, 411 N.E.2d 466 (1980). Consolidating review of all the issues raised in a case in a single, comprehensive appellate proceeding, it is hoped, eliminates some delay and also fosters better informed decisions. See Cronin v. Strayer, supra 392 Mass. at 529-530, 467 N.E.2d 143; Cappadona v. Riverside 400 Function Room, Inc., 372 Mass. 167, 169, 360 N.E.2d 1048 (1977); DiBella v. United States, 369 U.S. 121, 124, 82 S.Ct. 654, 656, 7 L.Ed.2d 614 (1962); Baltimore Contractors, Inc. v. Bodinger, 348 U.S. 176, 178, 75 S.Ct. 249, 250, 99 L.Ed. 233 (1955); Cobbledick v. United States, 309 U.S. 323, 325, 60 S.Ct. 540, 541, 84 L.Ed. 783 (1940); Heike v. United States, 217 U.S. 423, 428-429, 30 S.Ct. 539, 540-41, 54 L.Ed. 821 (1910); McLish v. Roff, 141 U.S. 661, 665-666, 12 S.Ct. 118, 119-20, 35 L.Ed. 893 (1891); Borden Co. v. Sylk, 410 F.2d 843, 846 (3d Cir.1969); United States v. Fried, 386 F.2d 691, 695 (2d Cir.1967). Generally, we follow a policy of the nonappealability of interlocutory orders.

Federal Courts of Appeal have created an exception to the nonappealability rule in cases in which the party to whom the order to produce documents is directed cannot be expected to care enough about the arguably privileged nature of the documents to risk contempt. This exception to the rule of nonappealability of interlocutory orders is known as the "Perlman exception." See Perlman v. United States, 247 U.S. 7, 38 S.Ct. 417, 62 L.Ed. 950 (1918).

The facts of Perlman may be summarized as follows. A company partly owned by Perlman had submitted papers and models as exhibits in a patent infringement suit. The papers and models were impounded in the trial court as a condition to the suit's being dismissed without prejudice. Later, the United States Attorney, investigating a charge that Perlman had perjured himself during the patent trial, moved that the court issue an order directing the clerk of court to produce the exhibits before the grand jury. The motion was granted, and Perlman, claiming privileges under the Fourth and Fifth Amendments to the United States Constitution in the exhibits, sought and was denied relief from the order. The Supreme Court rejected the government's assertion that the order was interlocutory and nonappealable.

Some Federal courts construe the Perlman exception very broadly, holding that if a person has custody of material as to which a third party allegedly holds a privilege of nondisclosure and production of the material arguably would defeat that privilege, then the third party may intervene and appeal the order pursuant to 28 U.S.C. § 1291 (1988). 3 See, e.g., In re Grand Jury Subpoena, 784 F.2d 857, 855-860 (8th Cir.1986); Matter of Klein, 776 F.2d 628, 630-632 (7th Cir.1985); In re Grand Jury Matter, 770 F.2d 36, 38 (3d Cir.1985); United States v. (Under Seal), 748 F.2d 871, 873 (4th Cir.1984); In re Int'l Syss. & Controls Corp. Sec. Litig., 693 F.2d 1235, 1238 n. 1 (5th Cir.1982). Howmet asks us to adopt the reasoning of these cases and to create a broad Perlman exception to our general rule that interlocutory rulings in criminal cases are not appealable. 4

The line of cases creating a broad Perlman exception to the general rule of nonappealability, at best, are only distantly related to the Perlman case. 5 Unlike the attorney and accountant custodians and their clients who claim to hold a privilege in the cases cited above, the party seeking to appeal, Perlman, and the custodian of the documents at issue, a...

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  • In re Grand Jury Subpoena
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    ...appeals from the order of contempt, we in effect review the judge's denial of the motion to quash. See Matter of a Grand Jury Subpoena, 411 Mass. 489, 492-493, 583 N.E.2d 241 (1992) (orders denying motions to quash subpoenas not final decisions and not appealable; usual way of such orders i......
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