In re GRAND JURY SUBPOENA DUCES TECUM dated January 15, 1986. Appeal of UNITED STATES of America, Appellant.
No. 86-1297
United States Court of Appeals, Eighth Circuit.
Submitted May 14, 1986. Decided July 29, 1986.
Rehearing and Rehearing En Banc Denied Sept. 11, 1986.
797 F.2d 676
We affirm the district court‘s decision that jurisdiction over Weeks’ action against the United States and HUD properly lies with the Claims Court. From the record, however, it does not appear that the district court considered the option of exercising its discretion to transfer the case instead of dismissing it outright. See
For the reasons stated above, the decision of the district court is affirmed.
Robert J. Erickson, Dist. Judge, Washington, D.C., for appellant.
James M. Llewellyn, Fort Smith, Ark., for appellee.
Before McMILLIAN, Circuit Judge, BRIGHT, Senior Circuit Judge, and BOWMAN, Circuit Judge.
BRIGHT, Senior Circuit Judge.
The United States (Government) appeals the order of the district court vacating a previous order which prohibited a financial institution in the Western District of Arkansas from notifying its customers of a grand jury subpoena of the customers’ financial records. For the reasons set forth below, we affirm but remand the matter to
I. BACKGROUND.
On January 15, 1986, a federal grand jury sitting in the Western District of Arkansas issued a subpoena to a financial institution in that district requesting production of bank records of two of its customers, their business partnerships or firms, and the records of a related business entity. These customers of the financial institution are targets of an ongoing investigation of suspected murders, labor racketeering, and drug and explosives trafficking. The subpoena included a request that the financial institution “not disclose the existence of the request for 90 days [because] [a]ny such disclosure could impede the investigation being conducted and thereby interfere with the enforcement of the law.” The financial institution informed the Government that it would notify these customers of the subpoena. The Government then sought and received a district court order directing the financial institution to delay notification of these customers for ninety days.
The financial institution moved for reconsideration of the order, and the district court held a hearing on the matter. Thereafter, the district court vacated its previous order, asserting: (1) that it lacked authority to command the financial institution not to notify its customers of the subpoena pursuant to the provisions of
At the hearing, the Government asserted that the court possessed inherent power to issue the order, or that either the Right to Financial Privacy Act,
While recognizing that a number of district courts have indicated the power to issue such an order exists upon adequate factual showing by the Government, the district court stated that, even if it were inclined to follow this rationale, it would not issue the requested order in the present case because the Government failed to make an adequate showing to justify overturning the policy of Rule 6(e)(2) which bans orders of non-disclosure to grand jury witnesses. Id. The Government thereupon brought this appeal.
While we disagree with the court‘s first proposition, we do agree and the Government seems to concede that it did not make a sufficient showing to justify the issuance of the order. The Government, however, contends that it has new and additional information which it wishes to present to the district court as a basis for the imposition of a secrecy order on the financial institution.
II. DISCUSSION.
A. Jurisdiction
Before reaching the merits of the dispute, we address the question of whether this court has jurisdiction of the appeal. Although the order appealed from does not constitute a final judgment, it conclusively determines a disputed question (whether the financial institution may disclose the existence of the subpoena to the grand jury targets); resolves an important issue completely separate from the merits (as yet, no indictment has issued); and, is effectively unreviewable on appeal from a final judgment. Richardson-Merrell, Inc. v. Koller, — U.S. —, 105 S.Ct. 2757, 2761, 86 L.Ed.2d 340 (1985); In re 1985 Grand Jury Proceedings, 785 F.2d 593, 595 (8th Cir. 1985). As such, the order falls within the collateral order exception to the final judgment rule.
B. Authority to Issue a Secrecy Order to Witnesses
We first address the district court‘s ruling that it lacked authority to issue the requested order because
Congress designed Rule 6(e) to prevent disclosure of matters occurring before the grand jury, thereby implementing the “long-established policy that maintains the secrecy of the grand jury proceedings in the federal courts.” United States v. Procter & Gamble Co., 356 U.S. 677, 681, 78 S.Ct. 983, 986, 2 L.Ed.2d 1077 (1958) (citations omitted).3 Quoting United
(1) To prevent the escape of those whose indictment may be contemplated; (2) to insure the utmost freedom to the grand jury in its deliberations, and to prevent persons subject to indictment or their friends from importuning the grand jurors; (3) to prevent subornation of perjury or tampering with the witnesses who may testify before grand jury and later appear at the trial of those indicted by it; (4) to encourage free and untrammeled disclosures by persons who have information with respect to the commission of crimes; (5) to protect innocent accused who is exonerated from disclosure of the fact that he has been under investigation, and from the expense of standing trial where there was no probability of guilt.
United States v. Procter & Gamble Co., 356 U.S. at 681 n. 6.
To these ends, Rule 6(e)(2), in part, recites a general rule of secrecy: “No obligation of secrecy may be imposed on any person except in accordance with this rule. A knowing violation of Rule 6 may be punished as a contempt of court.” In addition, Rule 6(e)(4) permits indictment to be kept secret until a defendant is in custody or released pending trial; Rule 6(e)(5) requires grand jury hearings to be closed to the extent necessary to prevent disclosure; and Rule 6(e)(6) requires “[r]ecords, orders and subpoenas relating to grand jury proceedings [to] be kept under seal to the extent and for such time as is necessary to prevent disclosure of matters occurring before the grand jury.”
Congress also created narrow exceptions to the general rule of secrecy. See Rule 6(e)(2) and (3). In listing those persons on whom an order of secrecy may be imposed, Rule 6(e)(2) makes no mention of witnesses. The notes of the advisory committee observe that while subdivision (e)(1) of Rule 6 preserves the traditional practice of secrecy on grand jurors and others unless a court permits disclosure, subdivision (e)(2) “does not impose any obligation of secrecy on witnesses.” The comment further states that “[t]he existing practice on this point varies among the districts. The seal of secrecy on witnesses seems an unnecessary hardship and may lead to injustice if a witness is not permitted to make a disclosure to counsel or to an associate.” Thus, the Rule permits a grand jury witness to disclose the fact or the content of his testimony without first obtaining an order of the court. However, we emphasize that the comments specify that this “veil of secrecy” was lifted to permit grand jury witnesses to make disclosures to counsel or to associates; while in this case, the witness intends to notify the targets of the grand jury investigation.
As the district court noted, a number of courts have stated that, notwithstanding the prohibition of Rule 6(e)(2), “[c]ircumstances may exist * * * which would justify some restrictions on disclosure by [grand jury] witnesses.” In re Grand Jury Witness Subpoenas, 370 F.Supp. 1282, 1285 n. 5 (S.D.Fla.1974). See also In re Grand Jury Subpoena Duces Tecum, 575 F.Supp. 93, 94 (S.D.N.Y.1983); Beacon Journal Publishing Co. v. Unger, 532 F.Supp. 55, 59 (N.D.Ohio 1982). We are aware of only one court that has actually issued an order prohibiting certain financial institutions, served with grand jury subpoenas, from disclosing the fact of service of the subpoenas, the nature of the documents subpoenaed, and the extent of compliance with the subpoenas. In re Swearingen Aviation Corp., 486 F.Supp. 9, 11 (D.Md.1979), mandamus to vacate secrecy order denied for lack of standing, 605 F.2d 125 (4th Cir.1979) (hereinafter Swearingen). In denying the writ of mandamus to vacate the secrecy order, the Fourth Circuit noted that the prohibition against imposing an obligation of secrecy on witnesses was intended to benefit the witnesses and not the targets of the grand jury investigation. Swearingen, 605 F.2d at 127.
Again, in this case, the Government seeks only to prevent the witness from
We do not believe that, in approving the Federal Rules of Criminal Procedure, Congress intended to completely bar the district courts from imposing a reasonable obligation of secrecy on grand jury witnesses in an appropriate case. To construe the provisions of Rule 6(e) to give a grand jury witness unrestricted freedom to communicate the existence of the subpoena and the investigation or the content of testimony to targets could completely undercut the entire purpose of grand jury secrecy. For example, in this case, such disclosure to targets could enable the targets (1) to escape; (2) to exert pressure on grand jury members; or (3) to influence (or attempt to influence) witnesses appearing before the grand jury, thus discouraging free and untrammeled disclosures by witnesses. Thus, just as the general rule of grand jury secrecy may be set aside by a district court in an appropriate case pursuant to the provisions of Rule 6(e), so too should the prohibition against secrecy orders be subject to some control by the district judge.4 We therefore conclude that, upon a proper showing in an appropriate case, the district court may direct a grand jury witness to keep secret from targets of the investigation the existence of a subpoena, the nature of documents subpoenaed, or testimony before the grand jury, for an appropriate period of time.
C. Proper Showing to Impose a Secrecy Order
In this appeal, the Government does not question that part of the district court‘s order denying issuance of a secrecy order because the Government failed to make an adequate showing. The district court stated:
Even if it were conceded that a court might be empowered to order a bank to remain silent in some circumstances, a proposition not obviously right for the reasons outlined above, we are not inclined to believe that the government has in this case made a sufficiently specific showing. The agent who testified named no names, and he gave no detailed reasons for his beliefs. The showing was vague, and the risks claimed were not differentiated from those that would obtain if an indictment is eventually handed down against the customer.
The Government does not dispute the district court‘s finding in this regard, but contends that it has further information to present for the district court‘s consideration, should we rule that the district court possesses the power to issue such an order. We are therefore bound to affirm because the Government has not contested the district court‘s determination that it failed to make a sufficient showing to justify issuance of the order.
Although we are not presented with the issue of what kind of showing by the Government warrants issuance of such an order, we observe that the policy of non-secrecy as to grand jury witnesses embodied in Rule 6(e)(2) should not be set aside except in situations where the need for secrecy outweighs the countervailing policy, and that this need must be shown with particularity. In so observing, we draw upon the language of United States v. Procter & Gamble Co., supra, in which the Supreme Court outlined the circumstances in which the policy of secrecy embodied in Rule 6(e) may be set aside by a federal court. We
Accordingly, while affirming the district court, we remand the case for the district court to consider any Government motion for reconsideration based on additional evidence.
III. CONCLUSION
Affirmed and remanded.
McMILLIAN, Circuit Judge, concurring in the result only.
I agree the order of the district court should be affirmed but not for the reasons set forth in the panel opinion.1 I would not remand the case for reconsideration. Accordingly, I concur in the result only.
I agree that we have appellate jurisdiction to review the order of the district court under the collateral order exception to the final judgment rule. At 678.
As I read the district court‘s order, the district court held only that “in the face of the specific command” of
I believe the district court correctly held that under Rule 6(e)(2) it did not have the authority to impose an obligation of secrecy upon a grand jury witness.
I would also hold that the “compelling necessity ... shown with particularity” standard is inconsistent with the express language of
[a]ny reasons for a secrecy requirement, including the government‘s attempt to prevent subornation of perjury, suppression of evidence, or falsification of documents, would apply with equal force to the presentation of oral testimony as to the production of documentary evidence. See United States v. Procter & Gamble Co., 356 U.S. 677, 681 n. 6 [78 S.Ct. 983, 986 n. 6] (1958).... [T]here is no distinction for purposes of Rule 6(e) between a witness‘s freedom to disclose his [or her] oral testimony before a grand jury and his [or her] freedom to disclose what documentary evidence the witness has been compelled to provide to the grand jury.
In re Vescovo Special Grand Jury, 473 F.Supp. at 1336.
Because I would hold the district court correctly determined that under Rule 6(e)(2) it did not have the authority to impose an obligation of secrecy upon a grand jury witness, I agree the order of the district court should be affirmed. Accordingly, I concur in the result only.
Notes
1.
1. I also reject the government‘s argument based upon § 1109 of the Right to Financial Privacy Act of 1978 (RFPA),
The government‘s first argument that the district court has the authority to issue protective orders imposing secrecy upon bank officials pursuant to § 1109 of the RFPA,
The RFPA expressly states that it does not apply to “any subpoena or court order issued in connection with proceedings before a grand jury.”
The government also argues that the bank is not necessarily a grand jury “witness” for purposes of
2. The Fourth Circuit commented on the rule in In re Swearingen Aviation Corp., 605 F.2d 125, 127 (4th Cir.1979), but denied the targets of the investigation standing to contest an order imposing certain secrecy requirements on a bank called as a witness before the grand jury. However, in the exercise of its supervisory power, the court authorized the targets to contact the financial institutions to obtain records and other information which the district court had not directed the financial institutions to keep secret. We emphasize that the targets’ limited right to obtain this information did not include the right to obtain any information which the district court had ordered the witnesses to keep secret.
3. In United States v. Procter & Gamble Co., supra, the Supreme Court considered a problem converse to the one before us. There, the Court considered the circumstances in which a trial court under
4. It is axiomatic that the grand jury derives its power from the district court and therefore acts under the inherent supervision of the court. Levine v. United States, 362 U.S. 610, 617, 80 S.Ct. 1038, 1043, 4 L.Ed.2d 989 (1960); In re Long Visitor, 523 F.2d 443, 446-47 (8th Cir. 1975); In re Gopman, 531 F.2d 262, 266 (5th Cir.1976).
court the question of the source of funds for any damages recovered by Weeks. However, we believe that under the facts of this case it is clear that Weeks’ action is against the United States and the Tucker Act‘s jurisdictional conditions properly apply. Accordingly, remand for additional findings on this issue is unnecessary as unlikely to affect our resolution of this jurisdictional question. Cf. A.L. Rowan, 611 F.2d at 1001 (where only Claims Court could exercise jurisdiction over entire suit, transfer of all claims to Claims Court avoided bifurcating suit and was in the interests of justice).
10. Weeks’ attempt to alternatively base federal subject matter jurisdiction on diversity of citizenship is also misplaced. Though this court has apparently never directly addressed this issue, we agree with those courts which have found that instrumentalities of the United States like HUD are citizens of no state for diversity purposes. See, e.g., State of Texas v. Interstate Commerce Commission, 258 U.S. 158, 160, 42 S.Ct. 261, 262, 66 L.Ed. 531 (1922); Hancock Financial Corp. v. Federal Savings and Loan Insurance Corp., 492 F.2d 1325, 1329 (9th Cir. 1974); Federal Deposit Insurance Corp. v. National Surety Corp., 345 F.Supp. 885, 887-88 (S.D. Iowa 1972). Compare Trans-Bay Engineers and Builders, Inc. v. Hills, 551 F.2d 370, 376 (D.C.Cir.1976) (citations omitted) (residence of Secretary of HUD in Washington, D.C. for diversity purposes when Secretary sued in official capacity). But see, e.g., Molton, Allen & Williams, Inc. v. Harris, 436 F.Supp. 853, 855-56 (D.D.C.1977) (criticizing Trans Bay as improperly expanding the scope of diversity jurisdiction).