United States v. Deerfield Spec. Papers, Inc.

• Decision Date: 09 October 1980
• Docket Number: Crim. No. 80-094.
• Citation: 501 F. Supp. 796
• Parties: UNITED STATES of America v. DEERFIELD SPECIALTY PAPERS, INC., et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

501 F. Supp. 796

UNITED STATES of America v. DEERFIELD SPECIALTY PAPERS, INC., et al.

Crim. No. 80-094.

United States District Court, E. D. Pennsylvania.

October 9, 1980.

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Arthur H. Kahn, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., Philip G. Koenig, Dennis Kelly, Herrick & Smith, Boston, Mass., for Deerfield Specialty Papers, Inc.

John G. Harkins, Jr., Laurence Z. Shiekman, Deborah F. Cohen, Pepper, Hamilton & Scheetz, Philadelphia, Pa., Paul Noelke, W. Stuart Parsons, Michael H. Schaalman, Gerald G. Miller, Quarles & Brady, Milwaukee, Wis., for Philip Morris Industrial Inc. (Nicolet).

Oliver C. Biddle, Helen P. Pudlin, Ballard, Spahr, Andrews & Ingersoll, Philadelphia, Pa., R. Gordon Smith, R. Brian Ball, McGuire, Woods & Battle, Richmond, Va., for Riegel Products Corp.

Ralph W. Brenner, Steven R. Fischer, Montgomery, McCracken, Walker & Rhoads, Philadelphia, Pa., H. Richard Wachtel, Grant S. Lewis, Howard S. Ockman, LeBoeuf, Lamb, Leiby & MacRae, New York City, for St. Regis Paper Co. (Rhinelander).

Samuel E. Dennis, Aaron Beyer, Meltzer & Schiffrin, Philadelphia, Pa., for Westfield River Paper Co., Inc.

David L. Pennington, Harvey, Pennington, Herting & Renneisen, Ltd., Philadelphia, Pa., John R. Hally, Mary R. Long, Nutter, McClennen & Fish, Boston, Mass., for Richard C. Emery.

Carmen C. Nasuti, Nasuti, Miller & Fioravanti, Philadelphia, Pa., Thomas E. Brown, James M. Fergal, Gimbel, Gimbel & Reilly, Milwaukee, Wis., for Robert G. Etter.

Richard C. Rizzo, Barbara P. Ianacone, Dechert, Price & Rhoads, Philadelphia, Pa., for John E. Griffith.

Robert W. Sayre, James G. Rosenberg, David S. Antzis, Saul, Ewing, Remick & Saul, Philadelphia, Pa., for Orrin B. Clifford.

Seymour I. Toll, Diana Hare, Toll, Ebby & Gough, Philadelphia, Pa., for John R. Babeuf.

A. Grant Sprecher, Joseph R. Davison, Obermayer, Rebmann, Maxwell & Hippell, Philadelphia, Pa., Richard L. Manning, Timothy J. Kerr, Crowley, Fuller & Manning, Chicago, Ill., for Edward J. Bogest.

Howard Gittis, Gregory T. Magarity, Wolf, Block, Schorr & Solis-Cohen, Philadelphia, Pa., for Hollis P. Fowler.

Walter L. Devany, Norman B. Carter, Eduardo C. Robreno, Middle Atlantic Office, Antitrust Division, U. S. Dept. of Justice, Philadelphia, Pa., for the Government.

MEMORANDUM AND ORDER

HANNUM, District Judge.

On February 28, 1980, the Grand Jury handed down an indictment charging five (5) corporations and eight (8) individuals¹ with a combination and conspiracy to raise, fix, maintain and stabilize the prices and terms and conditions of sale of glassine and greaseproof paper. The indictment charges that the conspiracy and combination began at least as early as January, 1973 and continued until at least August, 1976. In the prosecution of this case, numerous pre-trial motions have been filed both by the Government and the defendants, jointly and individually. The following discussion and resolution will pertain to these aforementioned motions.

I. Motion To Dismiss Indictment.

The defendant Hollis P. Fowler, past president and chief executive officer of the defendant Westfield River Paper Company, filed a Motion To Dismiss Indictment alleging two (2) foundations in support. In the first instance, the defendant contends that he received oral and written promises from the government concerning a grant of informal immunity and that he provided pertinent information to the government while under the impression that he was under immunity which was subsequently used against him before the Grand Jury. The defendant also asserts that the government allegedly failed to present evidence to the Grand Jury which it knew to be exculpatory. On May 8, 1980 and August 27, 1980, respectively, the defendant Westfield River Paper Company and the remaining corporate and individual defendants joined in and adopted the defendant Hollis P. Fowler's motion as regards the allegation concerning the government's failure to present exculpatory material to the Grand Jury.

A. Immunity. The defendant Hollis P. Fowler contends that he is entitled to a dismissal of the indictment because it was obtained directly or derivatively from information he provided to the government while he was under an informal grant of immunity.² The defendant asserts that an indictment presented on the basis of evidence obtained through a grant of immunity is tainted and must be dismissed. Of course, if the defendant can establish the validity of his allegations, he will be entitled to the relief requested. See, e. g., United States v. Paiva, 294 F.Supp. 742 (D.D.C.1969).

The Court's initial inquiry necessarily undertaken to arrive at a resolution of the defendant's motion concerns whether a grant of immunity was effected or an agreement not to prosecute created. Although a distinction between the two (2) concepts exists,³ the Court will not endeavor to discern the nature of the apparent bargain struck but rather whether a bargain was indeed struck at all. The issue concerning the characterization of the agreement will be resolved subsequent to the submission of additional memoranda and at a more appropriate time.⁴

In support of his contention that an agreement had been reached, the defendant has proffered a letter written on February 22, 1979, by Norma B. Carter, Esquire, an Assistant United States Attorney associated with the Department of Justice, Antitrust Division, Middle Atlantic Office, and which was addressed to the defendant. The letter apparently was a memorialization of a previous phone call and reads as follows:

February 22, 1979

Dear Mr. Fowler:

This is to confirm our appointment for February 28 at 12 o'clock. As we discussed, based upon your representation of your medical history and your offer of cooperation with the Government, the Antitrust Division does not intend to prosecute you for any violation of the antitrust laws based on information or testimony you may give in connection with this matter.

If you have any questions, please call me collect at (215) 597-7413.

Sincerely yours NORMA B. CARTER Attorney Middle Atlantic Office Antitrust Division

(Emphasis added). The government contends that this letter in no way constituted an informal grant of immunity (or an agreement not to prosecute) but rather was merely an invitation for a proffer. According to the government, "Fowler was never told, either on the telephone, by letter, or during the interview, that he would never be subject to prosecution." Government's Memorandum In Opposition To Motion Of Hollis P. Fowler To Dismiss The Indictment, Docket Entry No. 6 at p. 7. For the reasons that follow, the Court finds the government's position unpersuasive and concludes that some type of bargain had been struck.

A review of the language contained in the letter reveals that some type of bargain had been reached by the government and the defendant. In essence, the government promised that it would not prosecute the defendant for violations of the antitrust laws so long as the defendant fulfilled its promise of cooperation. Preliminarily, however, the Court does note that the language of the letter suggests an agreement not to prosecute rather than a blind grant of informal immunity.

The language contained in the letter existing in the present case bears a marked similarity to the letter subject to controversy in the case of United States v. Quatermain, 467 F.Supp. 782 (E.D.Pa.1979), rev'd on other grounds, 613 F.2d 38 (3d Cir. 1980). The letter in Quatermain was set forth as follows:

This letter is to confirm our understanding with respect to your cooperation with the Drug Enforcement Administration and the United States Attorney's Office in its investigation of Zelman A. Fairorth and others who are allegedly involved in the manufacture of methamphetamine. It has been agreed that in return for your cooperation and truthful testimony in any court proceeding related to these matters that the Government will provide you with immunity from prosecution for your participation and involvement with Zelman A. Fairorth and others relating to the manufacture of methamphetamine. It is further agreed that at the completion of our investigation the Government will provide you with a letter setting forth the extent of your cooperation and the results of that cooperation in terms of seizure of contraband and prosecution of suspected violators. Finally, it is understood that application has been made on your behalf to include you and your family under the Department of Justice witness protection plan. In the event that you are not accepted into the witness protection plan the Drug Enforcement Administration has agreed to provide you with the same services and protections afforded by the Department of Justice witness plan.

The Government represents that it has contacted the appropriate officials of the Pennsylvania Department of Parole and has received approval for your assistance in this investigation.

United States v. Quatermain, supra at 38. (Emphasis added). Although the district court concluded that an informal grant of immunity was provided, without considering the possibility of it being merely an agreement not to prosecute,⁵ opinions differed in the United States Court of Appeals for the Third Circuit as evidenced, primarily, by Judge Aldisert's dissent. Regardless, for purposes of deciding what is immediately before the Court, Quatermain lends support in a near conclusory fashion that a bargain indeed had been struck. See also United States v. Pellon, 475 F.Supp. 467 (S.D.N.Y.1979).

Whether the pertinent letter memorialized an informal grant of immunity or an agreement not to prosecute, it is axiomatic that either are enforceable. See, e. g., United States v. DeSena, 490 F.2d 692, 694 (2d Cir. 1973); United States v. Levy, 153 F.2d 995, 997 (3d Cir. 1946); United States v. Paiva, supra. "Ordinarily immunity in the federal system may be granted only with the...