United States v. International Paper Co., Crim. No. 78-H-11

• Decision Date: 14 July 1978
• Docket Number: Crim. No. 78-H-11,78-H-12.
• Citation: 457 F. Supp. 571
• Parties: UNITED STATES of America v. INTERNATIONAL PAPER COMPANY et al. UNITED STATES of America v. BOISE CASCADE CORPORATION et al.
• Court: U.S. District Court — Southern District of Texas

457 F. Supp. 571

UNITED STATES of America v. INTERNATIONAL PAPER COMPANY et al.

UNITED STATES of America v. BOISE CASCADE CORPORATION et al.

Crim. Nos. 78-H-11, 78-H-12.

United States District Court, S. D. Texas, Houston Division.

July 14, 1978.

J. Albert Kroemer, U. S. Dept. of Justice, Dallas, Tex., for plaintiff.

Richard N. Carrell, Fulbright & Jaworski, Robert Malinak, Baker & Botts, Joseph Jaworski, Bracewell & Patterson, William Junell, Jr., Reynolds, Allen & Cook, Gerald Applewhite, Applewhite & Maguire.

MEMORANDUM OPINION

SINGLETON, District Judge.

On July 7, 1978, a pretrial hearing was held before this court on the motion of defendants in these two cases to dismiss both indictments for grand jury abuse. At the court's suggestion and with the defendants' concurrence, defendants have submitted a joint motion to dismiss, joint briefs and the joint affidavits they selected as showing the patterns of abuse of which they complain. After careful consideration of the arguments of counsel, as well as the briefs, motions, and affidavits filed with the court on this issue, the court finds that the motion to dismiss should be overruled.

An investigation into alleged price fixing activities in the corrugated container industry was begun in late 1975. In July, 1976, a grand jury in Houston began hearing testimony on this matter, and in January, 1978, it returned two indictments, one for price-fixing activities prior to the beginning of 1975 and the other for similar activities continuing after that time.¹ It is the defendants' contention that various practices of the attorneys and staff of the Department of Justice during the grand jury investigation constitute abuse of the process and require dismissal of both indictments. Specifically, they attack the interview procedure, the use of summaries, the proffer system, and certain statements of the prosecuting attorney concerning Fifth Amendment rights. Throughout their briefs and arguments the defendants raise the question of what evidence the prosecutor must place before the grand jury and the manner in which he must present it.

Before the hearing on July 7, the government and defendants submitted those affidavits they considered important to the issues raised by the motion to dismiss. The facts about the investigation given in this opinion are taken from these affidavits. Over the course of the grand jury investigation some 190 witnesses were examined. Approximately 90 appeared before the grand jury and the others were interviewed solely by Department of Justice employees — attorneys, a paralegal named Russell Abrego, and one or more F.B.I. agents. This interview testimony was then summarized to the grand jury by the sworn testimony of the paralegal, Mr. Abrego. Of the 190 witnesses, some were subpoenaed and some agreed to interviews without subpoenas. Some agreed to interviews but requested that a subpoena be issued for form's sake. Most of the witnesses who were subpoenaed, and apparently all who appeared without subpoena, were given the option of testifying before the grand jury or in an interview. No witness was subpoenaed to appear at an interview, but many were given the choice of doing so rather than appearing before the grand jury. A significant number refused to be interviewed. Several witnesses appeared before the grand jury and later appeared in an interview session. The interviews were conducted at the Dallas, Texas, office of the Antitrust Division or in Chicago or New York, allegedly for the convenience of the witnesses and their attorneys. Witnesses were allowed to bring their attorneys to the interviews, an option unavailable before the grand jury.

Those witnesses who appeared before the grand jury frequently invoked their Fifth Amendment privilege against self-incrimination, so that the government was forced to request court orders granting immunity if it wished to hear their testimony. Interview witnesses also demanded immunity before testifying, and this was accomplished through a letter from the Antitrust Division promising to treat information given by the witness as if pursuant to a court order granting immunity. The decision whether to seek court-ordered immunity for witnesses before the grand jury or to issue an informal "immunity letter" was based on proffers of testimony, typically made orally by the prospective witness's attorney, outlining the material to which the prospective witness planned to testify. If the testimony appeared valuable enough in terms of the ultimate outcome of the investigation, the appropriate form of immunity would be sought. As the investigation progressed, the government attorneys became more selective in their immunity grants, requiring information that would carry the investigation into new fields. They issued to those attorneys who requested them certain guidelines for determining whether immunity would be sought: (1) testimony which would implicate someone higher than the witness in his own or another company, (2) testimony which would show violations in the "felony period", i. e., after January 1, 1975, or (3) testimony which would expand the geographic scope of the alleged conspiracy.

The government attorneys assured interview witnesses that their testimony would be kept as secret as testimony before the grand jury. In fact, either the transcript or the tape of each interview was furnished to the grand jury, though not read or played to them in its entirety. The government contends that this brought the interviews under the veil of grand jury secrecy.

Grand jury witnesses were, of course, placed under oath. Interview witnesses were also sworn when a court reporter was present to transcribe their testimony. In the majority of cases the interview was tape recorded and the transcript sent to the witness for attestation. Interview witnesses not sworn by a court reporter were advised that making false or misleading statements could subject them to criminal penalties. The government explains this admonition and attestation as a means to make the statements admissible in subsequent judicial proceedings under 28 U.S.C. § 1746 and to subject the witness to criminal sanctions for lying under 18 U.S.C. § 1001. The statute which makes punishable perjury before a grand jury is 18 U.S.C. § 1621, which would not apply to non-grand jury testimony.

The defendants' first contention is that these interviews, although uniformly conducted out of the presence of any grand juror, constitute proceedings before the grand jury. If this is so, the presence of persons not authorized under Rule 6(d), Fed.R.Crim.P., is a per se abuse requiring dismissal of the indictments. U. S. v. Echols, 542 F.2d 948 (5th Cir.), cert. denied, 431 U.S. 904, 97 S.Ct. 1695, 52 L.Ed.2d 387 (1977). It is uncontroverted that Mr. Abrego, various F.B.I. agents, and the witnesses' attorneys were unauthorized persons and that they were present at the interviews. The only question is whether these interviews can be considered grand jury proceedings.

Defendants cite one case for this proposition, United States v. Phillips Petroleum Company, 435 F.Supp. 610 (N.D.Okl.1977). In Phillips a witness was subpoenaed and immunized by court order, testified before the grand jury and, at the close of the day, continued his testimony in a recorded interview at the prosecutor's office in the presence of his attorney and an I.R.S. agent. The witness's testimony was central to the case, and in the post-appearance interview he gave testimony which could be considered broadly exculpatory. This latter testimony was never presented to the grand jury. Judge Barrow held that the interview was part of the grand jury proceedings and the exculpatory testimony should have been placed before the grand jury. Both these irregularities were held to be abuses of the grand jury process, necessitating dismissal of the indictments. 435 F.Supp. at 618.

The defendants have cited no other case, and this court's independent research has discovered none, holding an interview at which no grand juror was present to be a grand jury proceeding. There are significant differences between Phillips and the cases before the court. In Phillips the prosecutor stated, ". . . for the record, this is a continuation of Mr. Akright's grand jury testimony . . .. This will be considered part of the grand jury records and will be under the same conditions of use immunity we have previously extended through order of the Court." 435 F.Supp. at 616. In contrast, in these cases the prosecutors made clear that the interviews were given in lieu of a grand jury appearance. See Exhibit A, attached hereto and incorporated herein, a copy of the form letter sent to interviewees by the government. Second, in Phillips the interview testimony was not made available to the grand jurors, whereas here it was supplied to them. Third, the witness's testimony in Phillips was unique, crucial, and exculpatory. Here the grand jury heard live testimony implicating each of the defendants. Defendants have given this court no reason to believe that any of the interviewees occupy such a pivotal position, or that their testimony was exculpatory. It appears that Phillips was essentially a one-witness case and that the witness told an incriminating story before the grand jury and an exculpatory one in the interview. We have no hint of a similar problem here.

Even if these three important factors were not so different, this court is not persuaded that Phillips should be followed. The reasons for excluding unauthorized persons from the grand jury — protection of witnesses and grand jurors from intimidation, coercion, or retribution; preventing the flight of the guilty; and preserving the reputation of the innocent — do not apply to interviews such as these. No grand juror was present to be intimidated or coerced; the witnesses enjoyed as much secrecy as they would had they been before the grand jury; and the unauthorized persons...