IN RE SEARCH WARRANT ISSUED JULY 14, 1987

• Decision Date: 09 May 1988
• Docket Number: Misc. No. 2433-D.
• Citation: 684 F. Supp. 1417
• Parties: In re SEARCH WARRANT ISSUED JULY 14, 1987.
• Court: U.S. District Court — Northern District of Texas

684 F. Supp. 1417

In re SEARCH WARRANT ISSUED JULY 14, 1987.

Misc. No. 2433-D.

United States District Court, N.D. Texas, Dallas Division.

February 11, 1988.

On Amended Motion for Return May 9, 1988.

Louise P. Hytken, U.S. Dept. of Justice, Tax Div., and William Sheetz, Asst. U.S. Atty., Dallas, Tex., for the government.

Robert Edwin Davis and William R. Cousins, III of Davis, Meadows, Owens, Collier & Zachry, Dallas, Tex., for Roy Douglas Rodgers, W.W. Rodgers & Sons Properties, Inc., W.W. Rodgers & Sons Fruits and Vegetables, Inc., Apple Trucking, Inc., Lettuce Invest, Inc., and W.W. Rodgers & Sons Produce, Inc.

G. Tomas Rhodus and Ronald A. Stein of Brice & Mankoff, P.C., Dallas, Tex., for Franklin W. Barton, J. Michael Barton, and Barton Bros. Produce.

MEMORANDUM OPINION AND ORDER

FITZWATER, District Judge.

A large scale search and seizure operation conducted by agents of the Internal Revenue Service has resulted in various Fed.R.Crim.P. 41(e) motions for return of property and a motion by the government to stay the proceedings indefinitely pending the outcome of a grand jury investigation. Because the court concludes that the Rule 41(e) movants have yet to make a colorable showing of irreparable injury, the court does not reach the government's motion to stay, and instead affords the movants the opportunity to amend their pleadings to conform to the applicable equitable standards.

I. BACKGROUND FACTS AND PROCEDURAL HISTORY

On July 21, 1987, acting pursuant to a warrant issued by a magistrate of this court, agents of the Internal Revenue Service ("IRS") conducted a large scale search of the premises of W.W. Rodgers & Sons Produce, Inc. and Barton Brothers Produce and seized a large volume of documents. IRS agents also searched the persons of Roy Douglas Rodgers and Frank Barton. The searches were conducted to obtain evidence of alleged criminal violations of the internal revenue laws, including tax evasion, fraud, and the making of false statements, resulting from currency skimming, money laundering, and illegal kickbacks.

Following the search and seizure in question, Roy Douglas Rodgers, W.W. Rodgers & Sons Properties, Inc., W.W. Rodgers & Sons Fruits and Vegetables, Inc., Apple Trucking, Inc., Lettuce Invest, Inc., and W.W. Rodgers & Sons Produce, Inc. ("Rodgers"), filed Rule 41(e) motions for the return of the seized property or, in the alternative, for the return of copies of the seized property. Thereafter, Franklin W. Barton ("Barton") filed a similar motion, and Roger Sutton, a Rodgers' employee who was present during the search and was questioned and detained by IRS agents, adopted the Rodgers' motion.

On October 2, 1987, the court convened a hearing in order to "receive evidence on any issue of fact necessary to the decision of the motion." See Fed.R.Crim.P. 41(e). After hearing the testimony of three witnesses and extensive arguments of counsel concerning admissible testimony, and after considering the terms of an agreement among the government and the movants that would permit the inventorying of seized documents (Tr. 185-193), the court adjourned the proceeding, indicating that it would consider certain substantive matters and make appropriate rulings before reconvening the hearing. Id. at 192, 198.

Before the hearing was reconvened, however, the government filed a November 17, 1987 motion for indefinite stay order. The government contends that a grand jury is now investigating the matters that are the subject of the search and seizure and that the instant proceedings should be stayed pending completion of the grand jury investigation.

II. DISCUSSION

As noted, the court has previously indicated its intention to rule on substantive questions raised at the October 2 hearing in order that the issues presented can be decided expeditiously. The government's subsequently filed motion for indefinite stay order has not affected the court's intentions, because the court concludes that movants have yet to plead a colorable claim of irreparable injury that would warrant the court's reconvening an evidentiary hearing. It is thus unnecessary, at this juncture, to decide the government's motion.

A.

This court's authority to grant Rule 41(e)¹ relief derives from its power over court officers. Hunsucker v. Phinney, 497 F.2d 29, 32-34 (5th Cir.1974), cert. denied, 420 U.S. 927, 95 S.Ct. 1124, 43 L.Ed.2d 397 (1975) (declaratory judgment action to prohibit use of seized documentary evidence and Rule 41(e) proceeding to obtain return of property). Such jurisdiction should be exercised, however, with caution and restraint and subject to equitable principles. Id. at 34. Indeed, Rule 41 "is a crystallization of a principle of equity jurisdiction." Id. (quoting Smith v. Katzenbach, 351 F.2d 810, 814 (D.C.Cir. 1965)). See also Richey v. Smith, 515 F.2d 1239, 1243 (5th Cir.1975); Watts v. Kroczynski, 636 F.Supp. 792, 796 (W.D.La. 1986). Courts in other circuits have also held that proceedings for the return of seized property are governed by equitable principles. See Pieper v. United States, 604 F.2d 1131, 1133 (8th Cir.1979) (action to quash search warrant and suppress evidence) ("The District Court's equitable jurisdiction to suppress illegally obtained evidence before an indictment has been issued has been firmly established. However, the jurisdiction is an extraordinary one and is to be exercised with caution and restraint."); Mr. Lucky Messenger Service, Inc. v. United States, 587 F.2d 15, 17 (7th Cir.1978) (civil action seeking return of seized currency); Klitzman, Klitzman & Gallagher v. Krut, 591 F.Supp. 258, 266 (D.N.J.), aff'd, 744 F.2d 955 (3d Cir.1984) (civil action seeking, in part, injunctive relief requiring return of seized documents); Hiller v. Murphy, 600 F.Supp. 14, 16 (N.D. Ga.1984) (suit for injunctive relief seeking return of property seized, suppression of evidence, and cessation of further investigations based on seized materials).

One such principle of equity is that relief should not be granted in the absence of a showing of irreparable injury. See, e.g., G.M. Leasing Corp. v. United States, 429 U.S. 338, 359-60, 97 S.Ct. 619, 632, 50 L.Ed.2d 530 (1977) (holding petitioner had not demonstrated "the irreparable injury required to support a motion to suppress, under Fed.Rule Crim.P. 41(e), on equitable grounds in advance of any proceedings....") (citing Hunsucker, 497 F.2d at 34). In Richey, the Fifth Circuit set forth various factors for a district court to consider when determining whether to exercise its jurisdiction, two of which are whether the plaintiff would be irreparably injured by denial of the return of the property and whether plaintiff has an adequate remedy at law for the redress of his grievance. 515 F.2d at 1243-44. See also Marshall v. Central Mine Equipment Co., 608 F.2d 719, 721 (8th Cir.1979) (OSHA search warrant case) (plaintiff must clearly demonstrate that his constitutional rights cannot be adequately adjudicated in the pending or anticipated enforcement proceeding against him) (citing Hunsucker, 497 F.2d at 34-35).

Thus far, however, movants have not adequately demonstrated even a colorable claim of irreparable injury.² They have focused primarily on another ineluctable element of a Rule 41(e) motion, the legality of the search and seizure, but this has been to the virtual exclusion of necessary equitable considerations that govern Rule 41(e).³ In its August 18, 1987 brief, Rodgers devoted just over one page to the need for return of its records (relying on recordkeeping requirements of the Perishable Agricultural Commodities Act of 1930, 7 U.S.C. § 499a et seq.), and the balance of the brief to the illegality of the search. Movant, Barton, adopted the motions of Rodgers et al. and set forth no express reasons for requiring the return of his property. At the portion of the hearing completed on October 2, the thrust of movants' initial presentation was upon the legality of the search. Thus far, the pleading of irreparable injury has been insufficient to warrant continuing the hearing.⁴

B.

Whether movants can plead irreparable injury with requisite specificity may hinge on whether the government makes available to movants copies of needed documents retained by the grand jury or returns documents that are not needed by the grand jury or by government prosecutors. Other courts have held that Rule 41(e) movants do not suffer irreparable harm where the government represents it will voluntarily return property, see Ex parte Decious, 622 F.Supp. 40, 40-41 (E.D.N.Y.), app. dism'd, 779 F.2d 35 (2d Cir.1985) (table), cert. denied sub nom. Law Firm of Daniel P. Foster v. United States, 474 U.S. 1061, 106 S.Ct. 808, 88 L.Ed.2d 783 (1986); Standard Drywall, Inc. v. United States, 668 F.2d 156, 157 n. 2 (2d Cir.), cert. denied, 456 U.S. 927, 102 S.Ct. 1973, 72 L.Ed. 2d 442 (1982) (dictum) (questioning whether, in absence of seizure of unique property or privileged documents, party can demonstrate irreparable harm when government provides copies of seized documents or returns originals), and that, generally, where a party is the target of an ongoing grand jury investigation, Fourth Amendment considerations should be deferred, "provided that the Government cooperates by giving copies of items seized or by returning the originals." Zadok v. Sergeant, Civil Action No. H-86-1719 (S.D.Tex. Feb. 27, 1987) (unpublished order) slip op. at 3, app. dism'd, No. 87-2378 (5th Cir. Jul. 22, 1987) (unpublished opinion) (per curiam) (citing Application of Sentinel Government Securities, 530 F.Supp. 793, 797 (S.D.N.Y.1982)).

In the present case the government and movants, pursuant to a court order that culminated from a discussion at the October 2 hearing (Tr. 185-193), apparently have inventoried the seized documents. It is not unreasonable for the court to anticipate that movants and the government can next agree upon which documents (or copies) can be returned to movants....