UNITED STATES OF AMERICA, PETITIONER V. R. ENTERPRISES, INC., AND MFR COURT STREET BOOKS, INC. Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Fourth Circuit No. 89-1436 In The Supreme Court Of The United States October Term, 1989 The Solicitor General, On Behalf Of The United States, Petitions For A Writ Of Certiorari To Review The Judgment Of The United States Court Of Appeals For The Fourth Circuit In This Case. PARTIES TO THE PROCEEDING In addition to the named parties, Model Magazine Distributors, Inc., was a party in the courts below. TABLE OF CONTENTS Question Presented Parties to the Proceeding Opinions below Jurisdiction Rule involved Statement Reasons for granting the petition Conclusion OPINIONS BELOW The opinion of the court of appeals (App., infra, 1a-15a) is reported at 884 F.2d 772. Earlier opinions of the court of appeals (App., infra, 16a-18a, and 19a-56a) are reported, respectively, at 844 F.2d 202 and 829 F.2d 1291. JURISDICTION The judgment of the court of appeals was entered on August 31, 1989. A petition for rehearing was denied on December 12, 1989 (App., infra, 68a-69a). The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). RULE INVOLVED Rule 17 of the Federal Rules of Criminal Procedure provides, in pertinent part, as follows: (c) For Production of Documentary Evidence and of Objects. A subpoena may also command the person to whom it is directed to produce the books, papers, documents or other objects designated therein. The court on motion made promptly may quash or modify the subpoena if compliance would be unreasonable or oppressive. The court may direct that books, papers, documents or objects designated in the subpoena be produced before the court at a time prior to the trial or prior to the time when they are to be offered in evidence and may upon their production permit the books, papers, documents or objects or portions thereof to be inspected by the parties and their attorneys. QUESTION PRESENTED Whether, before it may enforce compliance with a grand jury subpoena for corporate business records, the government must establish that the subpoenaed materials would be relevant and admissible at a trial on the merits. STATEMENT 1. Since 1986, a grand jury sitting in the Eastern District of Virginia has been investigating allegations of interstate transportation of obscene materials. In early 1988, the grand jury issued a series of subpoenas to Model Magazine Distributors, Inc. (Model), and two related companies, respondents R. Enterprises, Inc., and MFR Court Street Books, Inc. (MFR). /1/ The subpoenas sought a variety of corporate books and records. See App., infra, 70a-82a. The grand jury subsequently issued two further subpoenas to Model. The first called for additional business records; the second requested one copy of each of 193 identified videotapes that Model had shipped into the Eastern District of Virginia. Id. at 83a-84a; see id. at 4a. 2. Respondents moved to quash the subpoenas. Following extensive hearings in the United States District Court for the Eastern District of Virginia, the motions to quash were denied. First, on June 17, 1988, Judge Hilton denied Model's motions to quash. App., infra, 57a-58a. The court found that the two subpoenas for business records were sufficiently specific. Ibid. It also upheld the subpoena for the 193 videotapes, concluding that the tapes were relevant to the government's investigation and that production of the tapes would not constitute a prior restraint. Ibid. Second, on July 8, 1988, Judge Cacheris denied the motion by R. Enterprises to quash the subpoena for business records. App., infra, 59a-60a. The court found that the subpoena was "clearly delineated and not overly burdensome." Id. at 59a. The court also found a "sufficient connection" between R. Enterprises and the Eastern District of Virginia to warrant "further investigation by the grand jury." Id. at 60a. In particular, the court noted that Martin Rothstein, the owner of R. Enterprises, had admitted that R. Enterprises, MFR Books, and Model were "all the same thing." Ibid. Finally, on August 12, 1988, Judge Ellis denied MFR's motion to quash the subpoena for business records. App., infra, 61a-64a. The court stated that it was "inclined to agree" with "the majority of the jurisdictions," which do not require the government to make "a threshold showing" before a grand jury subpoena may be enforced. Id. at 63a. The court added, however, that "even assuming that the Fourth Circuit would require a threshold showing of relevance," the government had made such a showing in this case. Ibid. The court found sufficient evidence that respondents were "related entities," at least one of which "certainly did ship sexually explicit material into the Commonwealth of Virginia." Ibid. The court also found the subpoena to be appropriately "tailored." Ibid. Characterizing the subpoenas in this case as "fairly standard business subpoenas," which "ought to be complied with," id. at 65a, the district court denied the motion to quash. When the companies thereafter refused to comply, the court found them in contempt. Id. at 64a. 3. The court of appeals affirmed in part and reversed in part. App., infra, 1a-15a. Relying on United States v. Nixon, 418 U.S. 683 (1974), the court held that, pursuant to Rule 17(c) of the Federal Rules of Criminal Procedure, the government must "clear three hurdles" in order to secure the enforcement of a grand jury subpoena: "(1) relevancy; (2) admissibility; (3) specificity" (App., infra, 7a). /2/ The court emphasized that unless grand jury subpoenas are held to such a threshold standard, they might be used as "a means of discovery in addition to that provided by Fed. R. Crim. Pro. 16." App., infra, 9a. "The test for enforcement," the court explained, "is whether the subpoena constitutes 'a good faith effort to obtain identified evidence rather than a general "fishing expedition" that attempts to use the rule as a discovery device.'" Ibid. In order not to "undercut() the strict limitation of discovery in criminal cases" (ibid.), the court held that "any documents subpoenaed under Rule 17(c) must be admissible as evidence at trial." Id. at 10a. Applying those standards, the court first upheld the subpoenas to Model for business records. App., infra, 7a-8a. It found the requested records to be sufficiently relevant because they would "most likely reveal whether the company's business dealings in Virginia resulted in the sale and or distribution of allegedly obscene materials in the state." Id. at 8a. In addition, the court had no doubt of "the necessity of a subpoena to obtain those records, as logically they are available only from the company itself." Ibid. The court, however, quashed the subpoenas for the business records of MFR and R. Enterprises. App., infra, 8a-10a. The court explained that the government had adduced no evidence that those companies had done business in the Eastern District of Virginia; the court therefore "fail(ed) to see how the records of those companies are relevant to a grand jury investigation" in the district. Id. at 9a. In addition, the court stated, any evidence of activities by the target companies outside the State of Virginia "would most likely be inadmissible on relevancy grounds at any trial that might occur." Id. at 10a. Accordingly, the court held, the subpoenas "fail to meet the requirement() that any documents subpoenaed under Rule 17(c) must be admissible as evidence at trial." Ibid. Finally, the court remanded Model's motion to quash the subpoena for videotapes. App., infra, 10a-15a. The court held that the subpoenaed films were not shown to be obscene and that the government had failed to establish the relevance of the films to the grand jury's investigation. Id. at 12a-14a & n.4. It also noted that there were "additional means for obtaining these tapes other than the issuance of a subpoena duces tecum and an in camera review by the district court." Id. at 13a. On December 12, 1989, the panel denied the government's petition for rehearing. By a vote of 6 to 5, the full court of appeals denied rehearing en banc. App., infra, 68a-69a. REASONS FOR GRANTING THE PETITION Rule 17(c) of the Federal Rules of Criminal Procedure permits the recipient of a grand jury subpoena duces tecum to move to quash the subpoena on the ground that "compliance would be unreasonable or oppressive." Relying on Rule 17(c), the court of appeals agreed to quash two grand jury subpoenas for garden-variety business records because, in the court's view, the subpoenas did not "meet the requirement() that any documents subpoenaed under Rule 17(c) must be admissible as evidence at trial." App., infra, 10a. /3/ The court of appeals' decision is both unprecedented and unwise. The majority of circuits do not require the government to make any preliminary showing of relevance in order to secure compliance with a grand jury subpoena. And while two circuits have imposed a modest threshold requirement, no other circuit has gone as far as the Fourth Circuit, which has construed Rule 17(c) to require the government to make a threshold showing that evidence sought by the grand jury would be relevant and admissible at a trial on the merits. Because the court of appeals' novel standard for grand jury subpoenas is inconsistent with the decisions of this Court, conflicts with the approach taken by the majority of other circuits, and threatens to disrupt the ordinary operation of grand jury investigations, the petition for a writ of certiorari should be granted. 1.a. This Court has consistently recognized the broad scope of a grand jury's powers of investigation. "Because its task is to inquire into the existence of possible criminal conduct and to return only well-founded indictments," a grand jury's "investigative powers are necessarily broad." Branzburg v. Hayes, 408 U.S. 665, 688 (1972). While the powers of the grand jury are not unlimited, "the longstanding principle that 'the public . . . has a right to every man's evidence,' except for those persons protected by a constitutional, common-law, or statutory privilege, * * * is particularly applicable to grand jury proceedings." Ibid. Accord United States v. Dionisio, 410 U.S. 1, 9-10 (1973). Over the years, the Court has articulated three related principles designed to ensure that the grand jury can fulfill its broad investigative and accusatory mandate. First, the Court has held that the rules and restrictions that apply at trial on the merits do not apply in the same way to grand jury proceedings. Because it has "(t)raditionally * * * been accorded wide latitude to inquire into violations of criminal law," the grand jury "may compel the production of evidence or the testimony of witnesses as it considers appropriate, and its operation generally is unrestrained by the technical procedural and evidentiary rules governing the conduct of criminal trials." United States v. Calandra, 414 U.S. 338, 343 (1974). Unlike the trial on the merits, "(a) grand jury proceeding is not an adversary hearing in which the guilt or innocence of the accused is adjudicated." Ibid. For example, in Calandra the Court held the Fourth Amendment exclusionary rule inapplicable to grand jury proceedings. "Permitting witnesses to invoke the exclusionary rule before a grand jury would precipitate adjudication of issues hitherto reserved for the trial on the merits and would delay and disrupt grand jury proceedings." 414 U.S. at 349. Moreover, the Court emphasized, "(s)uppression hearings would halt the orderly progress of an investigation and might necessitate extended litigation of issues only tangentially related to the grand jury's primary objective." Ibid. Similarly, in Costello v. United States, 350 U.S. 359 (1956), the Court refused to apply the rule against hearsay to grand jury proceedings. The American grand jury system, observed the Court, derives from the English model, under which the work of the grand jury "was not hampered by rigid procedural or evidential rules." Id. at 362. Indeed, the Court noted, grand jurors "could act on their own knowledge and were free to make their presentments or indictments on such information as they deemed satisfactory." Ibid. To impose the rule against hearsay on the grand jury process, the Court explained, "would run counter to the whole history of the grand jury institution, in which laymen conduct their inquiries unfettered by technical rules." Id. at 364. The Court sharply distinguished the rules that apply in the grand jury from those that apply at trial: "In a trial on the merits, defendants are entitled to a strict observance of all the rules designed to bring about a fair verdict. Defendants are not entitled, however, to a rule which would result in interminable delay but add nothing to the assurance of a fair trial." Ibid. Second, the Court has emphasized that the rules applicable to grand jury proceedings must take into account the fact that "(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." Branzburg v. Hayes, 408 U.S. at 701. "(T)he precise nature of the offense, if there be one," the Court has stated, is "developed at the conclusion of the grand jury's labors, not at the beginning." Blair v. United States, 250 U.S. 273, 282 (1919). Applying that principle, the Court has consistently held that the scope of the grand jury's inquiries cannot be confined by rules that depend, in any respect, on the outcome of the grand jury's efforts. For example, in Hale v. Henkel, 201 U.S. 43 (1906), the Court rejected the contention that a witness may not be questioned prior to the return of an indictment. The Court explained that "(i)t is impossible to conceive that * * * the examination of witnesses must be stopped until a basis is laid by an indictment formally preferred, when the very object of the examination is to ascertain who shall be indicted." Id. at 65. Accord United States v. Dionisio, 410 U.S. at 16. More recently, in Branzburg v. Hayes, supra, the Court rejected the contention that before a grand jury may subpoena a reporter for his source of information, the government must show that a crime has occurred and that the information is not available elsewhere. The Court explained that "only the grand jury itself can make this determination," in that the grand jury's role "includes an investigatory function with respect to determining whether a crime has been committed and who committed it." 408 U.S. at 701. "It is only after the grand jury has examined the evidence that a determination of whether the proceeding will result in an indictment can be made." Id. at 701-702. As the Court summarized the point in Blair v. United States, 250 U.S. at 282, the scope of a grand jury investigation "is not to be limited narrowly by questions of propriety or forecasts of the probable result of the investigation, or by doubts whether any particular individual will be found properly subject to an accusation of crime." Third, the Court has emphasized that, in order to discharge its functions, the grand jury should not be interrupted by procedural detours. "Any holding that would saddle a grand jury with minitrials and preliminary showings would assuredly impede its investigation and frustrate the public's interest in the fair and expeditious administration of the criminal laws." United States v. Dionisio, 410 U.S. at 17. Accord United States v. Calandra, 414 U.S. at 350. As the Court explained in Costello, if a grand jury's work could be challenged on the grounds of adequacy or competence, "the resulting delay would be great indeed. The result of such a rule would be that before trial on the merits a defendant could always insist on a kind of preliminary trial to determine the competency and adequacy of the evidence before the grand jury." 350 U.S. at 363. b. The court of appeals' decision violates each of those three principles. First and foremost, the decision holds the grand jury to the same standards of relevance and admissibility that apply at trial. In the court's view, "any documents subpoenaed under Rule 17(c)" -- whether subpoenaed by a grand jury during its investigation, or subpoenaed by the government after indictment and in preparation for trial -- "must be admissible as evidence at trial" (App., infra, 10a). Applying that standard, the court quashed the subpoenas to R. Enterprises and MFR, concluding that evidence of activities outside of Virginia "would most likely be inadmissible on relevancy grounds at any trial that might occur." Ibid. This was wrong: that standard ignores this Court's consistent distinction between the grand jury and trial settings and imposes on the grand jury process a rule of relevance that simply has no place in the investigative context. /4/ Second, the relevance standard adopted by the court of appeals depends, in principal part, on the outcome of the grand jury's business -- who will be charged as defendants, and what the charges will be. Such a standard is entirely inconsistent with the principle that the grand jury's work cannot be confined by "forecasts of the probable result of the investigation, or by doubts whether any particular individual will be found properly subject to an accusation of crime." Blair v. United States, 250 U.S. at 282. As this Court has noted, the grand jury "does not depend on a case or controversy for power to get evidence but can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not." United States v. Morton Salt Co., 338 U.S. 632, 642-643 (1950). Under the court of appeals' approach, however, a grand jury may subpoena only evidence that can be shown to be relevant to the charges that the grand jury will ultimately announce. Finally, by affording targets a ready vehicle for challenging subpoenas -- one that requires the government to show relevance and admissibility -- the court of appeals has created a new means for delaying grand jury investigations. Targets of a grand jury investigation ordinarily have every incentive to defeat or at least delay the investigation, as well as to obtain information about the government's case. Indeed, trial practice guides for defense counsel specifically refer to numerous tactical advantages of such pretrial motions. /5/ This Court's cases, however, strongly counsel against measures that would permit such "undue interruption (of) the inquiry instituted by a grand jury." Cobbledick v. United States, 309 U.S. 323, 327 (1940). 2. There are two lines of authority within the circuit courts concerning motions to quash subpoenas duces tecum under Rule 17(c). In most circuits, the government need not make any preliminary showing of relevance -- let alone a showing that the materials would be relevant at trial. Rather, under the majority rule, the initial burden falls on the recipient of the subpoena, which can obtain relief only if it can establish that the requested documents have no conceivable relevance to the subject of the grand jury's investigation. Two circuits, however, have required the government to make a preliminary showing that the subpoenaed records are relevant to a legitimate grand jury investigation. Although the Fourth Circuit's decision in the present case has features in common with the minority rule, it goes well beyond even that rule by requiring the government to establish the likely relevance of the subpoenaed documents at trial. a. The majority rule is well settled. In In re Grand Jury Subpoena (Battle), 748 F.2d 327 (1984), for example, the Sixth Circuit refused to quash a grand jury subpoena seeking "all books, papers, records, memoranda and data" relating to certain discretionary bank accounts controlled by a former union official. The court rejected the official's contention that the government should be required to demonstrate the relevance of the requested records. Instead, the court explained, "(t)he burden is on the party seeking to quash the subpoena to show 'that the information sought bears "no conceivable relevance to any legitimate object of investigation by the federal grand jury," * * * or that there has been 'harassment or prosecutorial misuse of the system.'" Id. at 330. The Eleventh Circuit has likewise declined to require the government to make a preliminary showing of relevance in order to enforce a grand jury subpoena duces tecum. In In re Grand Jury Proceedings (Bank of Nova Scotia), 691 F.2d 1384 (1982), cert. denied, 462 U.S. 1119 (1983), the recipient of a documents subpoena resisted production, contending that the government should first be required to show "that the documents sought are relevant to an investigation properly within the grand jury's jurisdiction and not sought primarily for another purpose." Id. at 1387. The court of appeals rejected that claim and enforced the subpoena. Acknowledging that the trial court had made no finding "that the documents sought were relevant or necessary for the grand jury's investigation," ibid., the court flatly refused to devise any such requirement "absent some showing of harassment or prosecutorial misuse of the system." Ibid. To do so, the court reasoned, would "impose (an) undue restriction() upon the grand jury investigative process." Ibid. The Second Circuit likewise follows the majority rule. In In re Liberatore, 574 F.2d 78 (1978), the recipient of a grand jury subpoena duces tecum seeking handwriting exemplars and fingerprints contended that the government should be required to show the relevance and necessity of that information to the grand jury's investigation. After noting that the target had not preserved the issue for appeal, the court went on to reject the claim on the merits. The court explained that "the government does not in each and every case bear the constant burden of initially showing the relevance of the particular evidence sought to be produced by way of subpoena." Id. at 83. "Instead," the court continued, "the party seeking to quash a subpoena must carry the burden of showing that the information sought bears 'no conceivable relevance to any legitimate object of investigation by the federal grand jury.'" Ibid. The Ninth Circuit has also refused to impose on the government the requirement to make a threshold showing of relevance or necessity. For example, in In re Grand Jury Proceeding (Schofield), 721 F.2d 1221 (1983), a grand jury issued a subpoena to the former attorney of a target, seeking documents relating to the previous representation. The district court quashed the subpoena, stating that the government must first establish, by affidavit, the "legitimate need and relevance" of the requested information. Id. at 1222. The court of appeals reversed, holding that "(n)o affidavit of relevance and need must be introduced." Id. at 1223. The court explained that "(i)n view of the presumption that the government obeys the law . . . (there is) no reason to inject into routine grand jury investigations the delay and imposition upon district courts that will be opened up by a rule institutionalizing these disclaiming affidavits." Ibid. Accord In re Grand Jury Proceedings (Hergenroeder), 555 F.2d 686 (9th Cir. 1977). b. The Third Circuit, joined more recently by the Tenth Circuit, has long applied a somewhat different approach, requiring the government, in the first instance, to justify a subpoena duces tecum on relevance grounds. See In re Grand Jury Proceedings (Schofield II), 507 F.2d 963 (3d Cir.), cert. denied, 421 U.S. 1015 (1975); In re Grand Jury Proceedings (Schofield I), 486 F.2d 85, 92-93 (3d Cir. 1973); In re Grand Jury Subpoena Duces Tecum Issued on June 9, 1982, 697 F.2d 277, 281 (10th Cir. 1983). In Schofield I, the Third Circuit, exercising its "supervisory powers," required the government to make a preliminary showing, by affidavit, that each item requested by the grand jury is "at least relevant to an investigation being conducted by the grand jury and properly properly within its jurisdiction, and is not sought primarily for another purpose." /6/ 486 F.2d at 93. The Third Circuit does not, however, require more than a minimal showing of relevance. For example, in In re Appeal of Hughes, 663 F.2d 282 (1980), the court found that the government had demonstrated the relevance of documents subpoenaed by the grand jury when it represented, by affidavit, that "the grand jury was conducting an investigation into specific federal crimes," that the requested documents would be relevant to that investigation, and that the information was not sought for an unrelated purpose. Id. at 287. The court noted that even a "cryptic" affidavit may satisfy the government's obligation under Schofield I. Ibid. See also In re Grand Jury Proceedings (Schofield II), 507 F.2d at 967. c. Like the rule in the Third and Tenth Circuits, the Fourth Circuit's decision in the present case imposes a threshold obligation on the government to establish the relevance of the subpoenaed records. But the decision below goes well beyond the minority rule. To satisfy the court of appeals' standard, the government must prove that the requested documents are relevant not merely to the grand jury's investigation, but also to the likely charges at trial. No other court of appeals -- not even the Third and Tenth Circuits -- has taken so restrictive a view of the grand jury's subpoena power. By superimposing on the grand jury system a set of trial-related requirements, the court of appeals lost sight of the critical differences between those two distinct stages of the criminal justice system. And in the process, the court has devised a blueprint for grand jury delay and disruption -- a lesson that will not be lost on future recipients of grand jury subpoenas. CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. KENNETH W. STARR Solicitor General EDWARD S.G. DENNIS, JR. Assistant Attorney General WILLIAM C. BRYSON Deputy Solicitor General LAWRENCE S. ROBBINS Assistant to the Solicitor General MARCH 1990 /1/ The government had earlier sought to subpoena certain corporate records and videotapes in the possession of Model and another company, but the court of appeals had held those subpoenas to be too broad and too vague, and had refused to compel compliance with the subpoenas. See App., infra, 19a-56a. /2/ The court of appeals "recognize(d) that the Nixon court was not reviewing a subpoena duces tecum in connection with a grand jury investigation," but it found the "interpretation of Rule 17(c)" articulated in the Nixon case "equally applicable in this case." App., infra, 7a n.2. /3/ The court of appeals also vacated an order requiring compliance with the subpoena for videotapes. App., infra, 10a-15a. Although we disagree with that portion of the court's decision as well, we seek review only of that portion of the decision quashing the subpoenas for respondents' business records. /4/ The court of appeals also made some rather doubtful assessments of relevance even under a trial standard. For example, the court surmised that out-of-state transactions conducted by Martin Rothstein through two of the corporate entities would not be admissible against him in a trial conducted in the Eastern District of Virginia. See App., infra, 10a. Under Fed. R. Evid. 404(b), however, that narrow construction of relevance seems problematic at best. Still less does such a restrictive view of relevance apply at the grand jury stage. /5/ See, e.g., 1 A. Amsterdam, Trial Manual for the Defense of Criminal Cases Section 172 (1984); 1. S. Allen, I. Rosen, D. Winston & J. Kruskal, Criminal Defense Techniques Section 6A.02(5) (1988); B. Gershman, Prosecutorial Misconduct Sections 2.1-2.9 (1985); National Lawyers Guild, Representation of Witnesses Before Federal Grand Juries Section 13.4(b) (3d ed. 1985). /6/ Most circuits have explicitly rejected the Third Circuit's "Schofield" rule. See In re Grand Jury Proceedings (85 Misc. 140), 791 F.2d 663, 665 (8th Cir. 1986); In re Sinadinos, 760 F.2d 167, 169 (7th Cir. 1985); In re Grand Jury Subpoena (Battle), 748 F.2d at 330 (Sixth Circuit); In re Grand Jury Proceedings (Bank of Nova Scotia), 691 F.2d at 1387 (Eleventh Circuit); In re Pantojas, 628 F.2d 701, 704-705 (1st Cir. 1980); In re Liberatore, 574 F.2d at 83 (Second Circuit); In re Grand Jury Proceedings (Hergenroeder), 555 F.2d at 686 (Ninth Circuit). APPENDIX