In re: Grand Jury

• Decision Date: 05 April 2002
• Docket Number: No. 01-4042.,01-4042.
• Citation: 286 F.3d 153
• Parties: In re: GRAND JURY.
• Court: U.S. Court of Appeals — Third Circuit

286 F.3d 153

In re: GRAND JURY.

No. 01-4042.

United States Court of Appeals, Third Circuit.

Argued February 28, 2002.

Opinion Filed April 5, 2002.

COPYRIGHT MATERIAL OMITTED

Michael B. Himmel [ARGUED], Robert J. Kipnees, Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP, Woodbridge, NJ, Counsel for Appellant John Doe.

Alain Leibman [ARGUED], Christopher J. Christie, George S. Leone, United States Attorney's Office, Newark, NJ, Counsel for Appellee United States of America.

Before: ROTH and FUENTES, Circuit Judges, and KATZ,^* District Judge.

OPINION OF THE COURT

FUENTES, Circuit Judge.

This case requires us to resolve the conflict that arises when a grand jury subpoena seeks production of evidence ostensibly shielded by a civil protective order. Appellant is a target of a grand jury investigation in the District of New Jersey. The Government seeks to obtain, by way of a grand jury subpoena, testimony, documents, and other discovery material given pursuant to a protective order in a pending civil case. Appellant filed a motion to quash the subpoena on the ground that the protective order barred disclosure of the documents to the Government. The District Court denied Appellant's motion and granted the Government's cross-motion to compel production of the subpoenaed documents.

We hold that a grand jury subpoena supercedes a civil protective order unless the party seeking to avoid the subpoena demonstrates the existence of exceptional circumstances that clearly favor enforcement of the protective order. Appellant cannot meet his burden of establishing exceptional circumstances in this case, and therefore we affirm the order of the District Court denying appellant's motion to quash the subpoena and granting the Government's motion to compel production of the subpoenaed documents.

I.

In 1998, Appellant John Doe and his wife filed a complaint in the Superior Court of New Jersey ("civil case").¹ The defendants in this commercial litigation removed the case to the District Court for the District of New Jersey. The parties entered into a Stipulation and Consent Order which was approved by the District Court in March 1999. The order included confidentiality provisions which limited disclosure of deposition transcripts and other documents produced in discovery. The parties agreed that the protective order was designed to avoid public disclosure of sensitive personal and corporate financial information, and that the case did not involve trade secrets or other information which normally enjoys a high level of confidentiality. After Doe added defendants to his case with whom there was no diversity of citizenship, the case was remanded to the New Jersey Superior Court in August 1999.

After remand, a Superior Court judge held a case management conference and entered a Case Management Order in October 1999 which adopted the earlier protective order entered by the District Court. Subsequent to the issuance of the state protective order, depositions, interrogatory answers, and other discovery were taken of Doe and several of his associates. The civil case, which also includes counterclaims against Doe, is still ongoing in state court and currently awaits trial.

Around April 2000, as discovery was ongoing in the civil case, the United States Attorney's Office for the District of New Jersey commenced a grand jury investigation of Doe and his wife into alleged mail fraud, wire fraud, income tax evasion, and falsification of income tax returns. These matters relate to issues raised in the civil case. On May 29, 2001, the grand jury issued a subpoena to Doe's civil case counsel. The subpoena calls for all depositions, related exhibits, interrogatory answers, and responses to requests for admissions in the civil case with respect to Doe and several other deponents. The parties agree that all the deposition testimony and other discovery sought by the subpoena was taken after the case was remanded to state court and under the state protective order.

Doe filed a motion to intervene and moved to quash the subpoena issued to his civil counsel on June 27, 2001. The Government filed a cross-motion to compel compliance with the subpoena and production of the documents.²

The District Court judge presiding over the grand jury held a hearing on August 14, 2001. In an opinion and order filed under seal on October 25, 2001, the court denied Doe's motion to quash and granted the Government's motion to compel production. In its opinion, the court noted that a circuit split exists on the question of whether a protective order may trump a grand jury subpoena and that this Court has not decided the issue. Without the benefit of clear guidance from this Court, the District Court declined to adopt a specific rule, but held that even under the most "protective" circuit law, the protective order cannot take precedence if it was improvidently granted. The court found that the protective orders in this case were improvidently granted and therefore allowed the grand jury subpoena to override the protective order.³ The court also questioned the extent of the deponents' reliance on the protective order and found that the public interest did not justify enforcing the protective order in the face of the grand jury subpoena.

Doe timely appeals the denial of his motion to quash the subpoena. With the consent of the Government, the District Court stayed its order pending expedited appeal to this Court. We granted the parties' request for expedited appeal because the grand jury investigation is pending.

II.

The District Court had jurisdiction under 28 U.S.C. § 3231 and Fed.R.Crim.P. 17(c) over Doe's motion to quash the grand jury subpoena and the Government's motion to compel production. This Court has jurisdiction over the District Court's order denying Doe's motion and granting the Government's motion under 28 U.S.C. § 1291. See In re Grand Jury Proceedings, 604 F.2d 798, 800-01 (3d Cir.1979).

Doe challenges the grand jury subpoena as an intervenor under Federal Rule of Criminal Procedure 17(c), which states that "[t]he court on motion made promptly may quash or modify the subpoena if compliance would be unreasonable or oppressive." The same rule also allows the court to direct production of subpoenaed documents.

"We review the decision to quash a grand jury subpoena for abuse of discretion." Impounded, 241 F.3d 308, 312 (3d Cir.2001). We have plenary review over the District Court's interpretation and application of the relevant legal standards. See Pansy v. Borough of Stroudsburg, 23 F.3d 772, 783-84 (3d Cir.1994). The District Court's factual determinations are reviewed for clear error. Impounded, 241 F.3d at 312.

III.

We have not previously addressed whether, and under what circumstances, a civil protective order may shield information from a grand jury, but our sister circuits have developed three different approaches to this problem.⁴ The Second Circuit has held that, absent a showing of improvidence in the grant of the protective order, or extraordinary circumstance or compelling need for the information, a protective order takes priority over a grand jury subpoena. Martindell v. International Telephone & Telegraph Corp., 594 F.2d 291, 296 (2d Cir.1979). This presumption in favor of enforcing protective orders against grand jury subpoenas has been rejected by several courts. Three courts of appeals have announced a per se rule that a grand jury subpoena always trumps a protective order. In re Grand Jury Subpoena Served on Meserve, Mumper & Hughes, 62 F.3d 1222, 1226-27 (9th Cir. 1995); In re Grand Jury Proceedings (Williams), 995 F.2d 1013, 1020 (11th Cir. 1993); In re Grand Jury Subpoena, 836 F.2d 1468, 1477 (4th Cir.), cert. denied, 487 U.S. 1240, 108 S.Ct. 2914, 101 L.Ed.2d 945 (1988). Most recently, the First Circuit declined to adopt either the Second Circuit standard or the per se rule. It instead established a rebuttable presumption in favor of grand jury subpoenas. Under this rule, a grand jury subpoena overrides a protective order unless the party seeking to avoid the subpoena demonstrates the existence of "exceptional circumstances that clearly favor subordinating the subpoena to the protective order." In re Grand Jury Subpoena (Roach), 138 F.3d 442, 445 (1st Cir.), cert. denied, 524 U.S. 939, 118 S.Ct. 2345, 141 L.Ed.2d 716 (1998).⁵

We benefit from the reasoning of these courts in announcing our rule today. We join the First Circuit in concluding that a strong but rebuttable presumption in favor of a grand jury subpoena best accommodates the sweeping powers of the grand jury and the efficient resolution of civil litigation fostered by protective orders.

A.

In considering the tension between a grand jury subpoena and a civil protective order, we first recognize the "unique role" played by the grand jury in our system of justice. See Impounded, 241 F.3d at 312; see also In re Grand Jury Subpoena, 223 F.3d 213, 216 (3d Cir.2000) (noting that grand jury is "essential to the federal criminal justice system"). The grand jury is "a grand inquest, a body with powers of investigation and inquisition, the scope of whose inquiries is not to be limited narrowly by questions of propriety or forecasts of the probable result of the investigation...". Blair v. United States, 250 U.S. 273, 282, 39 S.Ct. 468, 63 L.Ed. 979 (1919). As the Supreme Court has noted, the grand jury is "[r]ooted in long centuries of Anglo-American history" and is "a constitutional fixture in its own right." United States v. Williams, 504 U.S. 36, 47, 112 S.Ct. 1735, 118 L.Ed.2d 352 (1992) (internal quotations and citations omitted).⁶ It may "inquire into all information that might possibly bear on its investigation until it has identified an offense or has satisfied itself that none has occurred." United States v. R. Enterprises, Inc., 498 U.S. 292, 297, 111 S.Ct. 722, 112 L.Ed.2d 795 (1991). Therefore, "[a]s a necessary consequence of its investigatory function,...