Jaskolski v. Daniels

• Decision Date: 21 October 2005
• Docket Number: No. 04-3622.,No. 04-3623.,04-3622.,04-3623.
• Parties: Joseph JASKOLSKI and National Insurance Crime Bureau, Plaintiffs-Appellees, v. Rick DANIELS, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

427 F.3d 456

Joseph JASKOLSKI and National Insurance Crime Bureau, Plaintiffs-Appellees, v. Rick DANIELS, et al., Defendants-Appellants.

No. 04-3622.

No. 04-3623.

United States Court of Appeals, Seventh Circuit.

Argued September 14, 2005.

Decided October 21, 2005.

COPYRIGHT MATERIAL OMITTED

James R. Branit (argued), Bullaro, Carton & Stone, Chicago, IL, Howard L. Huntington, Bullaro & Carton, Munster, IN, for Plaintiffs-Appellees.

Steven J. Sersic (argued), Rubino & Crosmer, Dyer, IN, David A. Capp (argued), Office of the United States Attorney, Hammond, IN, for Defendants-Appellants.

Before EASTERBROOK, ROVNER, and SYKES, Circuit Judges.

EASTERBROOK, Circuit Judge.

Joseph Jaskolski assisted federal prosecutors in an investigation that led to the indictment of Rick Daniels and three of his relatives for insurance fraud. After the defendants (collectively "Daniels") were acquitted, they sued Jaskolski and his employer, the National Insurance Crime Bureau, in state court, charging them with the tort of malicious prosecution. During discovery Daniels sought documents that Jaskolski deemed to be grand jury materials protected from disclosure by Fed.R.Crim.P. 6(e). When the state judge sided with Daniels and ordered Jaskolski to hand over everything plaintiffs wanted, Jaskolski and the Bureau filed this suit in federal court seeking an injunction. District Judge Lozano obliged and enjoined Daniels from pursuing discovery in state court; instead they must turn to District Judge Moody, who supervised the federal grand jury and under the injunction has exclusive authority to decide which materials in Jaskolski's (and the Bureau's) files will be released to the plaintiffs in the tort litigation.

In this court the parties have devoted their energies to debating whether Jaskolski played the role of "government personnel" in the criminal prosecution — for, if he did, then he "must not disclose a matter occurring before the grand jury". Fed.R.Crim.P. 6(e)(2)(B). Many persons who learn information about a criminal investigation are free to disclose what they know, and "[n]o obligation of secrecy may be imposed except in accordance with Rule 6(e)(2)(B)." That subsection covers, among others, any "person to whom disclosure is made under Rule 6(e)(3)(A)(ii) or (iii)." Rule 6(e)(2)(B)(vii). Rule 6(e)(3)(A)(ii) in turn refers to "any government personnel — including those of a state, state subdivision, Indian tribe, or foreign government — that an attorney for the government considers necessary to assist in performing that attorney's duty to enforce federal criminal law".

During the criminal investigation, an Assistant United States Attorney concluded that Jaskolski's assistance was "necessary" and informed Judge Moody that Jaskolski would be allowed access to some grand jury materials. If Jaskolski served the investigation as "government personnel" then he is forbidden to disclose what he learned, without the federal court's approval. One appellate decision holds, however, that investigators who work for the Insurance Crime Bureau are not "government personnel" even if a federal prosecutor supervises their activities. See United States v. Tager, 638 F.2d 167 (10th Cir.1980). Other decisions are more favorable to the idea that private employees detailed to assist federal prosecutors are "government personnel" for that prosecution. See United States v. Lartey, 716 F.2d 955 (2d Cir.1983); United States v. Benjamin, 852 F.2d 413 (9th Cir.1988). The parties (and the United States, appearing as amicus curiae) want us to determine the proper classification of private insurance investigators under Rule 6(e)(3)(A)(ii).

Single-minded attention to the meaning of "government personnel" has led the parties (and the district judge) to slight antecedent questions, such as what this dispute is doing in federal court. State judges manage discovery in state litigation, and if federal law bears on that subject then state judges apply the federal law. Jaskolski alleged that federal jurisdiction exists under 28 U.S.C. § 1331, which says that district courts have "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." What claim arises under the Constitution, laws, or treaties? Jaskolski does not say. An issue depends on federal law, but it is an issue in a pending state case.

Section 1331 does not permit a defendant in state litigation to obtain a federal court's resolution of each federal point that may crop up. Only when a well-pleaded complaint poses a substantial federal issue does § 1331 supply jurisdiction. See Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, ___ U.S. ___, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005) (citing many predecessors). Otherwise the existence of a federal defense (or indeed any federal issue, for Rule 6(e) does not supply a "defense" to the claim of malicious prosecution) would allow a new federal suit to be launched. That assuredly is not the law. See, e.g., Gully v. First National Bank, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70 (1936); Taylor v. Anderson, 234 U.S. 74, 75-76, 34 S.Ct. 724, 58 L.Ed. 1218 (1914). Issues that affect discovery but not the substantive claim flunk the well-pleaded-complaint doctrine and so do not come within § 1331. What's more, if the presence of a federal issue in a state case permitted a separate suit under § 1331, it also would allow removal under 28 U.S.C. § 1441(b), and that too assuredly is not the law. See, e.g., Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826, 830-32, 122 S.Ct. 1889, 153 L.Ed.2d 13 (2002); Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 9-12, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983); Chicago v. Comcast Cable Holdings, L.L.C., 384 F.3d 901 (7th Cir.2004).

Although § 1331 does not supply jurisdiction, 18 U.S.C. § 3231 does. That's the statute providing jurisdiction over federal criminal prosecutions. Questions about the propriety of releasing grand jury materials for use in other litigation (such as the suit Daniels had filed) come within the federal criminal tribunal's ancillary jurisdiction. See, e.g., United States v. Baggot, 463 U.S. 476, 103 S.Ct. 3164, 77 L.Ed.2d 785 (1983); McDonnell v. United States, 4 F.3d 1227, 1247-48 (3d Cir.1993); American Friends Service Committee v. Webster, 720 F.2d 29, 71-72 (D.C.Cir.1983); Doe v. Rosenberry, 255 F.2d 118 (2d Cir.1958) (L.Hand, J.). See also Charles Alan Wright, 1 Federal Practice & Procedure § 109 (3d ed.1999). So a dispute of this kind properly may come to federal court — but only because of the federal grand jury's role, not (as the parties supposed) because federal courts resolve all disagreements about the application of federal law.

Notice the conditional phraseology: disputes of this kind properly may be resolved in federal court. Other statutes limit the federal judiciary's role in particular controversies. One of these is the Anti-Injunction Act, 28 U.S.C. § 2283: "A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments." Jaskolski requested, and the district court issued, an injunction that stays proceedings in a state court. The district court did not find that any of the statutory exceptions is satisfied; indeed, the court did not mention the statute. On appeal Jaskolski gives it a nod, while Daniels and the United States ignore § 2283. This statute does not affect federal subject-matter jurisdiction, so Daniels has forfeited its benefit. (Because the dispute between Daniels and Jaskolski is private litigation, we need not consider the possibility of abstention under Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), and its successors, a doctrine that federal courts may need to enforce to protect state sovereignty even if the litigants are sleepwalking. See Ohio Civil Rights Commission v. Dayton Christian Schools, Inc., 477 U.S. 619, 625-26, 106 S.Ct. 2718, 91 L.Ed.2d 512 (1986); International College of Surgeons v. Chicago, 153 F.3d 356, 361 n. 4 (7th Cir.1998).)

Likewise Daniels has forfeited the benefit of issue preclusion (collateral estoppel). The state court already has decided the very issue that these parties presented to the federal judge. Under 28 U.S.C. § 1738 the state decision has the same preclusive effect in federal court that it would have in state court. We see no reason why only federal courts would be competent to determine whether Jaskolski acted as "government personnel"; certainly federal courts do not have sole authority to determine whether evidence already in Jaskolski's hands represents "matters occurring before the grand jury" (Daniels contends that it is not, and the state judge apparently agreed). At all events, § 1738 means that the state law of preclusion must be followed even when federal jurisdiction over a particular subject is exclusive. Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985). Once again, however, the parties have ignored this subject, and as preclusion is an affirmative defense it has been forfeited. We therefore need not explore what preclusive effect an order compelling the production of documents in discovery has under Indiana law.

A reader who expects us to turn at last to the question whether Jaskolski acted as "government personnel" in the investigation will be disappointed, for that issue turns out to be non-dispositive. An affirmative answer would resolve the dispute in Jaskolski's favor — but a negative answer does not lead to victory for Daniels, so we leave the question for another case in which the resolution matters. Recall the language of Rule 6(e)(2)(B): "[T]he following persons must not disclose a matter occurring before the grand jury: . . . (vii) a...