U.S. v. P.H.E., Inc., 91-4149

Decision Date26 May 1992
Docket NumberNo. 91-4149,91-4149
CourtU.S. Court of Appeals — Tenth Circuit
PartiesUNITED STATES of America, Plaintiff-Appellee, v. P.H.E., INC. a/k/a Adam & Eve, a North Carolina corporation, Philip D. Harvey, Alan C. Bushnell, Ann F. Buzenberg, Frederic W. Fuller, Jr., Richard W. Loy and Peggy A. Horton, Defendants-Appellants, American Civil Liberties Union Foundation, American Civil Liberties Union of Utah Foundation, People for the American Way, Playboy Enterprises, Inc., American Booksellers Foundation for Free Expression, Association of American Publishers, Inc., Council for Periodical Distributors Associations, the Freedom to Read Foundation, Independent Video Retailers Association, International Periodical Distributors Association, Inc., Magazine Publishers of America, National Association of College Stores, Inc., Recording Industry Association of America, Inc., Amici Curiae.

Richard N.W. Lambert, Asst. U.S. Atty., Salt Lake City, Utah (David J. Jordan, U.S. Atty., with him on the brief), for plaintiff/appellee.

Bruce J. Ennis, Jr. of Jenner & Block, Washington, D.C. (David W. Ogden, John B. Morris, Jr., Julie M. Carpenter, Steven R. Escobar of Jenner & Block, Washington, D.C., and Jerome H. Mooney, III of Mooney and Associates, Salt Lake City, Utah, with him on the brief), for defendants/appellants.

Burt Neuborne, New York City, Burton Joseph of Barsy, Joseph & Lichtenstein, Chicago, Ill., filed an amicus curiae brief for Playboy Enterprises, Inc.

Kathryn D. Kendell, ACLU of Utah Foundation, Salt Lake City, Utah, Steven R. Shapiro, Marjorie Heins, American Civil Liberties Union Foundation, New York City, Elliot M. Mincberg, People for the American Way, Washington, D.C., filed an amicus curiae brief for the American Civil Liberties Union, ACLU of Utah Foundation and People for the American Way.

Michael A. Bamberger, Kenneth J. Pfaehler of Sonnenschein Nath & Rosenthal, New York City, filed an amicus curiae brief for American Booksellers Foundation for Free Expression, Ass'n of American Publishers, Inc., Council for Periodical Distributors Associations, the Freedom to Read Foundation, Independent Video Retailers Ass'n, Intern. Periodical Distributors Ass'n, Inc., Magazine Publishers of America, Nat. Ass'n of College Stores, Inc., and Recording Industry Ass'n of America, Inc.

Before MOORE, ALDISERT, * and McWILLIAMS, Circuit Judges.

ALDISERT, Circuit Judge.

The First Amendment bars a criminal prosecution where the proceeding is motivated by the improper purpose of interfering with the defendant's constitutionally protected speech. Bantam Books v. Sullivan, 372 U.S. 58, 83 S.Ct. 631, 9 L.Ed.2d 584 (1963); Dombrowski v. Pfister, 380 U.S. 479, 85 S.Ct. 1116, 14 L.Ed.2d 22 (1975). This appeal by defendants who unsuccessfully moved to dismiss an indictment charging violations of federal obscenity law presents that issue for our consideration.

Jurisdiction was proper in the trial court based on 18 U.S.C. § 1461 (criminalizing the use of United States mail to send obscene materials). Jurisdiction in this court is contested; the appellants maintain that jurisdiction lies under 28 U.S.C. § 1291, as interpreted in Cohen v. Beneficial Indus Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), and related cases. The appeal was timely filed. Rule 4(a), Fed.R.App.P.

In the posture in which this case comes to us we must first meet the objection raised by the government that this court lacks jurisdiction to hear the appeal. Should we determine that we possess jurisdiction we must then examine for clear error the district court's finding of fact that this prosecution in Utah was not tainted by the "questionable motives and zealotry exhibited by prosecutors and government officials in ... points East", Dist.Ct.Op. at 7; we must review also the district court's legal determination that former United States Attorney Dee Benson's participation cleansed the indictment of any impropriety alleged to have been previously manifested by his assistant, Richard N.W. Lambert, and others presently or formerly in the office of the United States Attorney for the District of Utah.

I.

The court's findings regarding the participation of the prosecutors are findings of fact reviewable under the clearly erroneous standard. "A finding is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948)). The court's conclusions of law are examined de novo. In re Ruti-Sweetwater, Inc., 836 F.2d 1263, 1266 (10th Cir.1988). The extent of this court's jurisdiction is a question of law which we determine in the first instance. See McGeorge v. Continental Airlines, Inc., 871 F.2d 952, 953 (10th Cir.1989).

II.

In 1985, then Utah United States Attorney Brent Ward sent a letter to then Attorney General Edwin Meese. This letter proposed a coordinated, nationwide prosecution strategy against companies that sold obscene materials:

The heart of this strategy calls for multiple prosecutions (either simultaneous or successive) at all levels of government in many locations. If thirty-five prosecutors comprise the strike force, theoretically thirty-five different criminal prosecutions could be instigated simultaneously against one or more of the major pornographers.... I believe that such a strategy would deal a serious blow to the pornography industry.... This strategy would test the limits of pornographers' endurance. I believe the targeted companies would curtail their operations and withdraw from and refrain from entering geographical markets in which they could not find community acceptance.

App. 1427-28. In a later letter, Ward emphasized the financial burden that multiple prosecutions would put on the defendants:

As profitable as these enterprises may be, there is a limit to the prison terms, fines and forfeiture of assets to which obscenity distributors will subject themselves. Multiple, simultaneous prosecutions at both federal and local levels therefore carry the potential to undermine profitability to the point that the survival of obscenity enterprises will be threatened.

App. 1432.

Assistant United States Attorney Richard N.W. Lambert, one of the prosecutors in the present case, worked with Ward in developing the idea of multiple prosecutions. App. 1015. (Lambert represented the government by brief and in oral argument before us in these proceedings, even though he also serves as a critical witness.) He described the potential benefits of the strategy in his deposition testimony. App. 1017-18. The plan by its nature would require the cooperation of prosecutors in other jurisdictions. The United States Attorney's office in the Eastern District of North Carolina, which later investigated but did not prosecute PHE, became involved in this strategy at an early stage. Regarding the multiple prosecution strategy in general, Lambert stated: "I think we understood from the beginning that we--that is, our office and the U.S. Attorney's office in North Carolina--would coordinate our efforts together." App. 1067.

In response to the Ward letters and to other expressions of concern over pornography, Attorney General Meese created the National Obscenity Enforcement Unit in February 1987 to oversee the prosecution of obscenity violations nationwide. Justice Department policy then in effect discouraged multiple obscenity prosecutions unless the materials were unquestionably obscene. In September 1987, the Justice Department changed its policy discouraging multiple prosecutions, stating that such tactics were now encouraged when prosecuting large organizations. PHE, Inc. v. Department of Justice, 743 F.Supp. 15, 19 (D.D.C.1990).

The Department commenced "Project PostPorn" in July 1988, a series of multidistrict prosecutions of distributors of sexually oriented materials. Lambert handled some of these indictments, but PHE was not one of the companies targeted in Project PostPorn. Id. at 19-20.

Lambert's dealings with the defendants began in 1986. In May of that year, PHE's premises in North Carolina were searched by federal and state agents, including federal prosecutors from Utah and the Eastern District of North Carolina. Id. at 17-18. These officials posted guards at all the doors, ordered employees to submit to interviews, searched their personal handbags and briefcases and denied access to lawyers. Id. at 18. Federal agents also served PHE's employees with 118 subpoenas. Id.

Lawyers for the defendants met with Ward and Lambert in September 1986 to see if a plea agreement could be worked out. At these meetings, Ward and Lambert stated that the only way the defendants could avoid multiple prosecutions was by ceasing distribution in Utah of all sexually oriented materials, not simply those that were obscene (an exception was made for films that had received an "R" rating from the Motion Picture Association of America). Id. It bears emphasis that Ward and Lambert acknowledged that this would require the company to stop sending material that was protected by the First Amendment. Id. No plea agreement was reached.

In the course of these negotiations, Lambert stated that if no plea agreement was reached, prosecutions could be brought in Utah, North Carolina and elsewhere in the country. App. 382. Lambert specifically mentioned possible prosecutions in the Eastern District of North Carolina and in the state courts of Alamance County, North Carolina. App. 376, 382.

Lambert's prophecy proved correct, because the company and various individuals were indicted on obscenity charges in Alamance County in August 1986 that went to trial and ended in an acquittal in 1987. 743 F.Supp. at 19....

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