PETITION OF US FOR DISCLOSURE OF GRAND JURY, 80-Misc. 40.

• Decision Date: 02 March 1981
• Docket Number: No. 80-Misc. 40.,80-Misc. 40.
• Citation: 510 F. Supp. 585
• Parties: Petition of the UNITED STATES FOR the DISCLOSURE OF GRAND JURY MATTERS (MILLER BREWING COMPANY).
• Court: U.S. District Court — Eastern District of Wisconsin

510 F. Supp. 585

Petition of the UNITED STATES FOR the DISCLOSURE OF GRAND JURY MATTERS (MILLER BREWING COMPANY).

No. 80-Misc. 40.

United States District Court, E. D. Wisconsin.

March 2, 1981.

Thomas Martin and Joseph P. Stadtmueller, U. S. Attys., Milwaukee, Wis., for U. S.

Gimbel, Gimbel & Reilly, by Stanley Gimbel, Milwaukee, Wis., for intervenors.

Quarles & Brady by Thomas J. Donnelly, Milwaukee, Wis., for Miller Brewing Co.

DECISION and ORDER

MYRON L. GORDON, District Judge.

On October 1, 1980, the United States filed a petition seeking disclosure of certain grand jury matters, pursuant to Rule 6(e), Federal Rules of Criminal Procedure. Presently before the court are the motions to intervene of five parties affected by the petition and the motion of one intervenor to inspect certain of the grand jury materials which the government seeks to disclose.

This matter arises out of a prolonged government investigation of the tax affairs of the Miller Brewing Co. In late 1979, a grand jury was empaneled to investigate the situation; this grand jury investigation terminated in the summer of 1980 without the return of an indictment. The criminal investigation is now closed. The government now seeks to disclose eight categories of information developed by the grand jury to internal revenue service civil investigators, who have continued their separate investigations.

This petition is brought pursuant to Rule 6(e)(3)(C)(i), Federal Rules of Criminal Procedure, which provides an exception to the general policy against disclosure of matters occurring before the grand jury, see Rule 6(e)(2). Subparagraph (3)(C)(i) provides:

"(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."

I. INTERVENTION

Miller now seeks to intervene in this action, as do four current or former employees of Miller who testified before the grand jury and whose testimony, collectively, is one item the government wishes to disclose. The government has not specifically opposed the request for intervention; however, I am persuaded that this motion to intervene should be granted even if the government does oppose it.

Rule 6(e) was substantially modified by Congress in 1976. These modifications were intended to reaffirm the long-established policy of grand jury secrecy while at the same time providing a procedure to facilitate the appropriate release of grand jury material. Comments made by the Senate Committee on the Judiciary would tend to discourage intervention: "It is contemplated that the judicial hearing in connection with an application for a court order by the government under subparagraph (3)(C)(i) should be ex parte so as to preserve, to the maximum extent possible, grand jury secrecy." Senate Report No. 95-354, 95th Cong. 1st Sess. at 8, rpt. in 1977 U.S.Code Cong. & Adm.News, p. 527, 532. However, the court of appeals for this circuit, examining this issue under the previous version of Rule 6(e), held that parties such as those seeking to intervene here are entitled to do so. State of Illinois v. Sarbaugh, 552 F.2d 768, 772-73 (7th Cir. 1977).

The Supreme Court has recently held that parties such as these intervenors have standing to object to a disclosure order. Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S. 211, 218 n. 8, 99 S.Ct. 1667, 1672 n. 8, 60 L.Ed.2d 156 (1979). Accordingly, I will grant the motions to intervene of Miller and the four individual intervenors.

II. INSPECTION BY MILLER

Miller has also moved to allow it to inspect the material in five of the eight categories the government petitions to disclose. These five categories contain material subpoenaed by the grand jury from third parties and the testimony of the four individual intervenors. The government has consistently refused Miller access to this material. Miller argues that it needs to inspect these materials so that it may support its argument "that the grand jury proceeding was not conducted solely for the purpose of a good faith criminal tax investigation." In support of this motion, Thomas Donnelly, counsel for Miller, has filed an affidavit in which he avers: "Affiant believes that an examination of the grand jury material specified in the petition of the United States is necessary for the affiant ... to demonstrate the true purposes for the commencement of the grand jury investigation. ..." Donnelly affidavit of October 14, 1980, ¶ 7.

In light of the congressional statement that this type of proceeding is to be ex parte, there is some doubt about the propriety of granting such a motion. Miller's position is that in order to respond to the government's petition for disclosure under Rule 6(e)(3)(C)(i), the court must grant disclosure to Miller pursuant to the same rule. This would seem directly to violate the congressional intent when it created the rule, as well as the policy of grand jury secrecy. Even if I were to assume, arguendo, that such an inspection is permissible, I find that Miller has not met its burden of justifying this disclosure.

The standard of law applicable here is whether Miller has demonstrated a "particularized need" for the material in question.

"This `indispensable secrecy of grand jury proceedings,' must not be broken except where there is a compelling necessity. There are instances when that need will outweigh the countervailing policy. But they must be shown with particularity." United States v. Procter & Gamble, 356 U.S. 677, 682 78 S.Ct. 983, 986, 2 L.Ed.2d 1077 (1958), quoting United States v. Johnson, 319 U.S. 503, 513 63 S.Ct. 1233, 1238, 87 L.Ed. 1546 (1943).

Miller contends that it has demonstrated a particularized need. It argues that it has raised serious questions regarding the government's use of the grand jury; specifically, Miller urges that certain of the subpoenas do not relate to any charges the grand jury had the power to bring. The government has filed affidavits presenting its explanations for these subpoenas. Miller argues that if it is permitted to examine the other material, it may be able to discover further examples of misuse of this grand jury.

Miller correctly urges that it is an abuse of the grand jury process to use the grand jury's investigative powers to pursue a civil investigation. Procter & Gamble, supra, 356 U.S. at 683, 78 S.Ct. at 986; In re April 1956 Grand Jury, 239 F.2d 263, 271-73 (7th Cir. 1956). "If the powers of the grand jury, including the power to subpoena documents, are used, not for the purpose of criminal investigation but rather to gather evidence for civil enforcement, there exists an abuse of the grand jury process." In re Grand Jury Subpoenas, April 1978, 581 F.2d 1103, 1108 (4th Cir. 1978); citing Procter & Gamble, supra. Miller's need to show such an abuse must be balanced against the policy of grand jury secrecy.

Procter & Gamble enumerated five reasons for the policy of grand jury secrecy, but it is the fourth reason that is relevant to the instant case.

"(4) To encourage free and untrammeled disclosures by persons who have information with respect to the commission of crimes." Procter & Gamble, supra, 356 U.S. at 682 n. 6, 78 S.Ct. at 986 n. 6.

The material here consists of documentary evidence subpoenaed from third parties and the testimony of current and past employees of Miller. Miller, which was the target of the grand jury, has never seen this material.

To balance the competing interests here, I must consider the effect which disclosure to Miller might have on these parties and on the proper function of grand juries. This grand jury has completed its operations, but that does not eliminate the need for secrecy.

"In considering the effects of disclosure on grand jury proceedings, the courts must consider not only the immediate effects upon a particular grand jury, but also the possible effect upon the functioning of future grand juries. Persons called upon to testify will consider the likelihood that their testimony may one day be disclosed to outside parties. Fear of future retribution or social stigma may act as powerful deterrents to those who would come forward and aid the grand jury in the performance of its duties. Concern as to the future consequences of frank and full testimony is heightened where the witness is an employee of a company under investigation. Thus, the interests in grand jury secrecy, although reduced, are not eliminated merely because the grand jury has ended its activities." Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S. 211, 222 99 S.Ct. 1667, 1674, 60 L.Ed.2d 156 (1979).

The...