Assistant U.S. Atty., Atlanta, GA, for respondent-appellant.
Andrew J. Ekonomou and Howell A. Hall, Atlanta, GA, for petitioner-appellee.
Appeal from the United States District Court for the Northern District of Georgia.
Before TJOFLAT, Chief Judge, HATCHETT, Circuit Judge, and HENDERSON, Senior Circuit Judge.
TJOFLAT, Chief Judge:
The Government appeals the district court's order quashing a grand jury subpoena seeking a court reporter's notes of a deposition that the appellee gave as the plaintiff in an earlier civil suit. The district court had no valid reason for quashing the subpoena, and, accordingly, we reverse.
I.
Appellee Billy J. Williams brought a civil action in the United States District Court for the Northern District of Georgia against his former employer, North American Life Assurance Company (North American), to recover commissions that were allegedly due on policies he had sold. North American contended that it did not owe Williams any commissions because he had "rebated," a practice by which an agent gives part of his commission to an insured as an inducement to purchase the insurance. Both Georgia law and Williams' employment contract with North American prohibit rebating.
At the time Williams brought his civil suit, a Northern District of Georgia grand jury was investigating whether Williams had violated the mail and wire fraud statutes,
18 U.S.C. 1341 and 1343 (1988), by his actions. Williams, fearing that his responses to North American's discovery requests in the civil suit might incriminate him and lead to a grand jury indictment, moved the district court pursuant to Fed.R.Civ.P. 26(c) for a protective order. The court granted the order, limiting the use of the discovery Williams provided North American to the civil case.
Following initial discovery pursuant to this order, North American sought to take Williams' deposition. Williams, concerned whether the previous protective order would cover the deposition, refused to testify unless North American consented to the entry of another protective order. North American consented, and signed an order Williams had prepared. They presented the order to the judge, who later signed the order. The order stated in part:
It is hereby ordered that portions of the deposition of the plaintiff designated by the plaintiff, including all transcripts and copies thereof shall be privileged.... No transcript or copies thereof nor any statements or testimony given therein shall be used or disseminated except in strict compliance with the following restrictions:
....
(2) That the privileged deposition information shall be used solely and exclusively for the purpose of this civil action only and may not be used either directly or indirectly for any other purpose....
Williams gave his deposition, and soon after, Williams and North American settled the suit.
Some time later, the federal grand jury issued a subpoena duces tecum for the court reporter's notes of Williams' deposition testimony. Williams moved the district court in this case to quash the subpoena, claiming that if the court reporter honored the subpoena she would disobey the protective order that had been entered in the civil suit and would abridge his Fifth Amendment right against self-incrimination. The district judge who had presided over Williams' earlier civil suit and had entered the protective order granted the motion to quash.
In his dispositive order, the district judge noted that the Eleventh Circuit had never been called upon to weigh the competing interests at stake--the grand jury's need for the subpoenaed deposition notes, on the one hand, and the district court's need for the protective orders to facilitate the resolution of the civil suit, on the other. He looked for guidance to the Second and Fourth Circuits.
In Martindell v. International Telephone & Telegraph Corp.,
594 F.2d 291 (2d Cir.1979), the Second Circuit first addressed these competing interests. There, the government sought to obtain depositions that witnesses had given in a civil suit pursuant to a Rule 26(c) protective order. To do so, the government attempted to modify the protective order. The Court of Appeals concluded that
absent a showing of improvidence in the grant of a Rule 26(c) protective order or some extraordinary circumstance or compelling need ..., a witness should be entitled to rely upon the enforceability of a protective order against any third parties, including the Government, and that such an order should not be vacated or modified merely to accommodate the Government's desire to inspect protected testimony for possible use in a criminal investigation.
Id. at 296.
The Fourth Circuit rejected the Second Circuit's Martindell test and the rationale underpinning it. In In re Grand Jury Subpoena,
836 F.2d 1468, 1477 (4th Cir.), cert. denied,
487 U.S. 1240 , 108 S.Ct. 2914, 101 L.Ed.2d 945 (1988), the Fourth Circuit adopted a per se rule that a protective order will not shield information from a grand jury subpoena. That court stated that "a reasonable balancing of the respective interests of the civil courts and grand jury investigations favors enforcement of a grand jury subpoena despite the existence of an otherwise valid protective order." Id. at 1477.
The district judge in the instant case rejected the Fourth Circuit's per se rule and stated that he would follow the Second Circuit's Martindell test. Focusing upon Martindell 's basic assumption that "a witness should be entitled to rely upon the enforceability of a protective order against ... the Government," 594 F.2d at 296, the district court reasoned that because Williams relied on the Rule 26(c) protective order and waived his Fifth Amendment right to remain silent, he was entitled to have the order enforced. In effect, the court considered itself estopped to deny the enforcement of the protective order and, therefore, quashed the subpoena. The Government appeals.
II.
The sole issue before us is whether a protective order issued under Rule 26(c) of the Federal Rules of Civil Procedure may shield a deposition given in a civil suit from a subsequent federal grand jury subpoena. We reject the Second Circuit's Martindell approach of balancing the interests involved in favor of the Fourth Circuit's per se rule.
A.
We first examine Martindell 's primary assumption that a witness should be able to rely on the enforceability of a protective order against a grand jury subpoena. This inquiry necessarily weighs the grand jury's need for information against the district court's need for protective orders to facilitate litigation. We find that the essential and historic purpose served by the grand jury outweighs the utility served by Rule 26(c) protective orders.
In weighing these important interests, we begin by considering the historic role of the grand jury. To aid its constitutionally charged duties, a federal grand jury enjoys sweeping powers to investigate allegations of criminal behavior. See United States v. Calandra,
414 U.S. 338, 343, 94 S.Ct. 613, 617, 38 L.Ed.2d 561 (1974); Branzburg v. Hayes,
408 U.S. 665, 688, 92 S.Ct. 2646, 2660, 33 L.Ed.2d 626 (1972); Blair v. United States,
250 U.S. 273, 279-80, 39 S.Ct. 468, 470, 63 L.Ed. 979 (1919). Since the founding of the United States, grand juries have been accorded wide latitude to gather all relevant material because "the public ... has a right to every man's evidence." Branzburg, 408 U.S. at 686-87, 92 S.Ct. at 2660. At the federal level, as in the states, the grand jury exercises this right for the public.
The grand jury, in acting for the public, requires wide latitude to investigate allegations of criminal activity so that it can issue accurate indictments and dismiss baseless charges. See United States v. Mandujano,
425 U.S. 564, 573, 96 S.Ct. 1768, 1775, 48 L.Ed.2d 212 (1976); Calandra, 414 U.S. at 343, 94 S.Ct. at 617; Branzburg, 408 U.S. at 687, 92 S.Ct. at 2659. As the Supreme Court has observed, "[a] grand jury investigation 'is not fully carried out until every available clue has been run down and all witnesses examined in every proper way to find if a crime has been committed.' " Calandra, 414 U.S. at 344, 94 S.Ct. at 618 (internal quotations omitted).
As the public has a right to everyone's evidence, the citizen has a concomitant duty to appear and to testify before a grand jury when subpoenaed to do so; it is "a basic obligation that every citizen owes his Government." Calandra, 414 U.S. at 345, 94 S.Ct. at 618; see also United States v. Dionisio,
410 U.S. 1, 9-10, 93 S.Ct. 764, 769, 35 L.Ed.2d 67 (1973); New York v. O'Neill,
359 U.S. 1, 11, 79 S.Ct. 564, 571, 3 L.Ed.2d 585 (1959). The courts, in turn, have a duty to compel those who are subpoenaed to discharge this obligation; otherwise, the grand jury would be prevented from functioning effectively.
The court, however, has only this limited role in dealing with the grand jury. A district court simply does not intervene in the normal operations of a grand jury investigation. In re Grand Jury Subpoena, 836 F.2d at 1471. "[T]he grand jury is not subject to the direction of the [district] court with respect to [its investigative] functions." Id. Likewise, the Supreme Court in United States v. Williams, --- U.S. ----, 112 S.Ct. 1735, 118 L.Ed.2d 352 (1992), stated:
The whole theory of [the grand jury's] function is that it belongs to no branch of the institutional government, serving as a kind of buffer or referee between the Government and the people. Although the grand jury normally operates, of course, in the courthouse and under judicial auspices, its institutional relationship with the judicial branch has traditionally been ... at arm's length.
Id. at ----, 112 S.Ct. at 1742; see also Calandra, 414 U.S. at 343, 94 S.Ct. at 617 (noting that no judge monitors the grand jury proceedings).
Against the grand jury's important need for information, and its independence from the judiciary, we consider the district court's interest in using protective orders to help dispose of cases. The Second Circuit recognized a "vital function" to be served by a Rule 26(c) protective order, "which is to 'secure the just, speedy, and inexpensive determination' of civil disputes by encouraging full disclosure of all evidence that might conceivably be relevant." Martindell, 594 F.2d at 295 (quoting Fed.R.Civ.P. 1). According to the court,
[t]his objective represents the cornerstone of our administration of civil justice. Unless a valid Rule 26(c) protective order is to be fully and fairly enforceable, witnesses relying upon such orders will be inhibited from giving essential testimony in civil litigation, thus undermining a procedural system that has been successfully developed over the years for disposition of civil differences.
Id.
While we recognize that protective orders help district courts resolve civil matters, we cannot agree with the Second Circuit that they are the "cornerstone of our administration of civil justice." Protective orders are merely a facilitating device and should not be used to shield relevant information from a valid grand jury subpoena. We find absolutely nothing in Rule 26(c) or its advisory committee notes to support the notion that Congress, in passing on and enacting the Rule, intended to circumscribe the grand jury's authority and subpoena power as the Second Circuit has done. Like the Fourth Circuit, we believe that the Martindell rationale fails to pay proper deference to the federal grand jury's constitutional status, and to its independence from judicial management.
In our view, the desire to conclude a civil dispute quickly--whether to cut the parties' litigation expenses or to advance the court's civil docket--is not a compelling reason for interfering with the grand jury by refusing to enforce its subpoenas. The interest in fostering grand jury investigations outweighs the district court's interest in efficiently disposing of its civil cases. Permitting witnesses to rely on civil protective orders to keep information from a criminal investigation disrupts the essential grand jury process and threatens the grand jury's independence from the judiciary. We will not sacrifice the integrity of a grand jury investigation simply to speed the disposition of a civil docket.
B.
The Martindell rationale also fails to recognize that federal courts lack the power to provide witnesses with the broad protection that witnesses seek. In asking a court to shield potentially incriminating material from a grand jury investigation, a civil witness seeks to avoid indictment and, ultimately, punishment based on the information revealed. Such a witness seeks, in essence, a form of use immunity.
Federal courts, however, have no authority to grant witnesses--including those who testify under a Rule 26(c) protective order--such use immunity. Pillsbury v. Conboy,
459 U.S. 248, 261-62, 103 S.Ct. 608, 616, 74 L.Ed.2d 430 (1983); Grand Jury Subpoena, 836 F.2d at 1475; In re Corrugated Container Anti-Trust Litig.,
620 F.2d 1086, 1094 (5th Cir.1980); cf. Ullmann v. United States,
350 U.S. 422, 76 S.Ct. 497, 100 L.Ed. 511 (1956). Congress has placed the power to grant use immunity exclusively in the Executive Branch. United States v. D'Apice,
664 F.2d 75, 77 (5th Cir. Unit B 1981); see
18 U.S.C. 6003 (1988). Our predecessor court, the Former Fifth Circuit, recognized this in Corrugated Container, 620 F.2d at 1094-95. There, the court held that the district court's action, in effectively granting use immunity to two witnesses, undermined the policies Congress codified in section 6003. Id. at 1094. Quoting from the Seventh Circuit's decision in In re Daley,
549 F.2d 469, 478-79 (7th Cir.), cert. denied,
434 U.S. 829 , 98 S.Ct. 110, 54 L.Ed.2d 89 (1977), the court stated:
Although it is correct ... that federal courts possess inherent equitable powers over their own process in order to secure judicial proceedings from abuse, the immunity order which is issued pursuant to
18 U.S.C. 6003 is not a matter of judicial process or judicial discretion. The immunity power originates in the legislature; its exercise is delegated solely to the executive.
Corrugated Container, 620 F.2d at 1097 (citations omitted).
While a district court can issue Rule 26(c) protective orders to encourage the full disclosure of relevant evidence, it cannot impinge upon the authority of the Executive Branch to decide who is to be accorded use immunity. In the case at hand, the district court lacked the authority to immunize Williams' deposition testimony, and, thus, should have denied the motion to quash the grand jury subpoena.
C.
We also reject the Martindell test because it is administratively unworkable. The test itself defies construction. Moreover, in application, the Martindell approach places prosecutors in untenable positions and potentially places courts in conflict with each other.
1.
To begin, a court would be hard-pressed to interpret the Second Circuit's Martindell test. Martindell permits a witness to rely upon a court's protective order unless the government shows "improvidence in the grant" of the order, "some extraordinary circumstance," or a "compelling need." Martindell, 594 F.2d at 296. The Second Circuit, however, has yet to define these terms.
The Second Circuit nowhere outlines the definition of "improvidently granted," and it is difficult to imagine what that phrase could mean in this context. Nevertheless, to determine whether a protective order has "improvidently" issued, we assume that the reviewing judge looks only to the evidence before the court at the time the order was entered. Accordingly, the judge would not take into account the grand jury's need for the evidence, as that need would not have been apparent at the time the order issued. Rather, the evidence then before the court would have been that presented by the party, or witness, seeking the protective order. It is unlikely, indeed, that such proof would have shown the need for the evidence the grand jury subsequently subpoenaed, a need that, had the court been aware of it, would probably have counseled against the issuance of the order. In short, it is not likely that the government could ever demonstrate "improvidence in the original grant of the protective order."
What constitutes a "compelling need" or "extraordinary circumstances" may be easier to determine once the government informs the court about the grand jury's investigation. This may be of little comfort, however, to the party or witness seeking a Rule 26(c) order unless the grand jury's need for the testimony sought to be protected is known at that time.
2.
The Second Circuit, moreover, never indicates how the prosecutor is to show "a compelling need" or "extraordinary circumstances." Certainly the prosecutor must avoid disclosing grand jury proceedings. Yet, the prosecutor must show some such evidence in order to enforce the subpoena. It is not clear whether the prosecutor has a single opportunity to be heard, and must therefore guess how much evidence to produce, or if the prosecutor may merely reveal the investigation a piece at a time until it convinces the court that the grand jury's need is sufficient. The Martindell line of cases never indicates whether the prosecutor makes the presentation to the court in camera to minimize the disclosure of the grand jury proceedings, or if the protected witness may participate in the process to ensure that the prosecutor does not overreach.
3.
Not only does the Martindell test put prosecutors in a strategic quandary, but it creates difficulties for judges as well. First, for the district judge issuing the protective order, the Second Circuit approach creates a Hobson's choice when, after the judge has induced the witness to incriminate himself by promising to enforce a protective order, the government demonstrates compelling need for the witness' testimony. The judge must choose between (1) going back on his word (thus breeding disrespect for the law in the eyes of the witness, if not the public in general) by honoring the grand jury subpoena, and (2) denying the public its "right to every man's evidence." Either way, the public suffers.
Second, the Martindell balancing-type inquiry creates the potential for conflict between the judge who is presiding over the civil case and the judge who is called upon to enforce the grand jury subpoena. Posit a case in which a grand jury subpoenas a court reporter for notes of a deposition covered by a protective order. The reporter, aware of the protective order, notifies the judge who issued the order and seeks instructions. The judge, at the deponent's request, orders the reporter not to produce the notes, and the reporter so advises the prosecutor. The prosecutor, in turn, repairs to another judge and seeks enforcement of the subpoena. That judge, honoring the grand jury's subpoena, orders the court reporter to show cause why he should not be held in civil contempt for refusing to obey the subpoena. The reporter is then faced with the choice of suffering a contempt adjudication and possible incarceration either from the first judge (for disobeying the protective order), or from the second judge (for disobeying the subpoena). Thus, the two judges are placed squarely at odds with one another. If the two judges are colleagues on the same court, the conflict may be resolved informally without further litigation. If the two judges are from different courts, however, no simple solution might be available.
III.
In sum, we find that the Second Circuit's test in Martindell, which balances the grand jury's need for the protected evidence against the district court's need to facilitate discovery, misunderstands the importance of the role of the grand jury. A district court, moreover, does not have the institutional authority to craft protective orders with the effect of granting use immunity to civil witnesses. Finally, a balancing test proves to be administratively unworkable and may lead to unseemly inter-court conflict. We, therefore, hold that a Rule 26(c) protective order does not shield relevant information from a later grand jury investigation.
Accordingly, we vacate the order of the district court quashing the grand jury's subpoena. On receipt of our mandate, the district court shall enter an appropriate order enforcing the subpoena.
VACATED and REMANDED with instructions.
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