JOHN DOES 1-4, PETITIONERS v. UNITED STATES OF AMERICA

   No. 87-1712

   In the Supreme Court of the United States

   October Term, 1987

   On Petition for a Writ of Certiorari to the United States Court of
Appeals for the Fourth Circuit

   Brief For the United States in Opposition

           TABLE OF CONTENTS
   Question Presented
   Opinions Below
   Jurisdiction
   Statement
   Argument
   Conclusion

                            OPINIONS BELOW

   The opinion of the United States Court of Appeals for the Fourth
Circuit (Pet. App. 1a-25a) is reported at 836 F.2d 1468.  The opinion
of the United States District Court for the District of Maryland (Pet.
App. 26a-38a) is reported at 659 F. Supp. 628.

                             JURISDICTION

   The judgment of the court of appeals was entered on January 12,
1988.  A petition for rehearing was denied on March 18, 1988 (Pet.
App. 39a).  The petition for a writ of certiorari was filed on April
18, 1988.  The jurisdiction of this Court is invoked under 28 U.S.C.
1254(1).

                          QUESTION PRESENTED

   Whether a federal grand jury subpoena may be quashed on the ground
that the depositions sought are protected by a Rule 26(c) civil
protective order.

                               STATEMENT

   On December 16, 1986, and again on January 21, 1987, a special
grand jury investigating the collapse of a Maryland savings and loan
institution issued subpoenas compelling production of depositions
given by petitioners in a civil action in the Eastern District of
Virginia.  Petitioners moved the United States District Court for the
District of Maryland to quash the grand jury subpoenas on the ground
that their depositions were sealed by a protective order entered in
the civil action in Virginia.  The motion to quash was denied;  the
Fourth Circuit affirmed.  Pet. App. 1a, 3a.  Petitioners now seek
review in this Court.

   1. Petitioners are former officers and directors of Community
Savings & Loan (Community) and its related financial entities, known
as the EPIC group.  In 1985, Community suffered a financial collapse.
Shortly thereafter, civil suits were instituted against EPIC and
consolidated in the Eastern District of Virginia.  In re:  EPIC
Mortgage Insurance Litigation, M.D.L. No. 680 (E.D. Va.).  Plaintiffs
in that litigation sought third-party depositions from petitioners
(Pet. App. 2a).  Petitioners, who knew that a federal grand jury in
Maryland was investigating Community and EPIC (ibid.), requested a
stay of discovery in the civil action, on the ground that their
testimony might tend to incriminate them.  The district court in
Virginia denied the stay, but proposed that a protective order "would
satisfy their concerns with the fifth amendment privilege" (id. at 9a
n.7).  In an order negotiated by the parties, the district court in
Virginia prohibited disclosure to "any state or federal investigating
agency or authority" (id. at 3a).  No notice of the protective order
was given to the government or the United States Attorney conducting
the grand jury Investigation (id. at 17a-18a).

   After the depositions were taken, the Maryland grand jury issued
subpoenas duces tecum commanding petitioners' attorney to appear and
produce transcripts of the depositions in his custody.  Petitioners
moved to quash, urging that government was not entitled to the
depositions in the absence of a modification of the protective order.
At the request of the Maryland district court, the government sought
clarification of the protective order;  the Virginia district court
confirmed its intention to preclude access to "the grand jury as well
as any other investigative person or body of the state or federal
government" (Pet. App. 3a-4a, 27a-38a n.3).  The government then
returned to the Maryland district court, requesting a ruling on
petitioners' motion to quash.

   2. The Maryland district court denied the motion, distinguishing
cases involving an informal government request for materials covered
by a protective order (Pet. App. 32a).  The court concluded that the
grand jury's broad powers to subpoena materials, and its rights to
"every man's evidence" cannot be overcome simply because protective
orders further "the need for witnesses and parties to be more
cooperative in civil litigation" (id. at 30a, 34a).

   3. A divided panel of the court of appeals affirmed.  After
emphasizing the "sweeping power of the grand jury to compel
(testimony)" (Pet. App. 5a, citing Blair v. United States, 250 U.S.
273, 280 (1919)), the court rejected petitioners' contention that
their reliance upon the protective order justified quashing the grand
jury subpoena.  The Fourth Circuit concluded that Rule 26(c), Fed. R.
Civ. P., was not intended as a surrogate for either the Fifth
Amendment or statutory immunity.  When faced with the deposition
notice, petitioners were entitled to invoke their Fifth Amendment
privilege against self-incrimination or seek immunity from the federal
prosecutor.  They could not attempt to obtain the benefits of these
protections by means of the Federal Rules of Civil Procedure (Pet.
App. 6a):

         (T)he deponents' fifth amendment right against
      self-incrimination did not require, nor may it depend on, the
      shield of civil protective orders.  Deponents were entitled to
      rely only on their own silence or a grant of immunity to protect
      their rights, otherwise they risked waiving those rights.

   The court of appeals recognized that this might impose a difficult
choice upon parties subject to deposition in civil litigation, but
noted that petitioners were not parties to the civil litigation and,
in any event, any adverse civil consequence attaching to their
testimony was not within the protection afforded by the Fifth
Amendment against compelled self-incrimination (id. at 7a-8a).

   In concluding that the protective order did not provide sufficent
grounds to quash the grand jury subpoena, the court also rejected
petitioners' argument that the Second Circuit's decisions suggested a
different result.  Observing that "no court of appeals has directly
addressed the issue in this case" (Pet. App. 10a), the court concluded
that two Second Circuit cases involving the government's compulsory
process supported its holding (id. at 10a-11a).  See United States v.
GAF Corp., 596 F.2d 10 (1979) (court enforces federal statutory
subpoena) /1/ and United States v. Davis, 702 F.2d 418, cert. denied,
463 U.S. 1215 (1983) (court enforces grand jury subpoena.) /2/

                               ARGUMENT

   The decision below is correct and does not conflict with any
decisions of this Court or any other court of appeals.  Accordingly,
no further review is warranted.

   1. Petitioners' argument is based on the claim that they are
entitled to rely upon Rule 26(c), Fed. R. Civ. P., to protect
themselves against self-incrimination.  The Fourth Circuit, however,
was clearly correct in rejecting this claim.  The privilege against
self-incrimination is grounded in the Fifth Amendment to the
Constitution, not in the Federal Rules of Civil Procedure.  If
petitioners believed that their testimony as third-party deponents
might incriminate them, they were free to invoke the Fifth Amendment.
Pillsbury Co. v. Conboy, 459 U.S. 248 (1983).  Because they failed to
assert the privilege with respect to that testimony, they have lost
it.  United States v. Kordel, 397 U.S. 1 (1970) (witness who failed to
assert privilege with respect to interrogatories could not then claim
that the government was barred from using them in a parallel criminal
proceeding);  see also Garner v. United States, 424 U.S. 648 (1976)
(incriminating disclosures made without claiming privilege on
compelled tax returns may be used in criminal prosecution over
defendant's Fifth Amendment objection).

   The Fourth Circuit recognized the potential hardship in requiring a
deponent in a civil action to choose between waiving his privilege or
refusing to testify in reliance on it, but correctly concluded that
the Fifth Amendment does not protect against the need to make such
hard choices.  Cf. McGautha v. California, 402 U.S. 183, 215-216
(1971).  Indeed, the Fifth Amendment was intended to prevent compelled
self-incrimination, not every potentially adverse consequence that
might arise in a civil action because a witness asserted the
privilege.  See Lefkowitz v. Cunningham, 431 U.S. 808, 808 n.5 (1977).
 As this Court has stated, "the prevailing rule" is that "the Fifth
Amendment does not forbid adverse inferences against parties to civil
actions when they refuse to testify * * *:  the Amendment 'does not
preclude the inference where the privilege is claimed by a party to a
civil cause.'" Baxter v. Palmigiano, 425 U.S. 308, 318 (1976) (quoting
8 J. Wigmore, Evidence 439 (McNaughton rev. 1961) (emphasis is
original)).  Thus, "at trial a civil defendant's silence may be used
against him, even if that silence is an exercise of his constitutional
privilege against self-incrimination." National Acceptance Co. v.
Bathalter, 705 F.2d 924, 929 (7th Cir. 1983).

   The Fourth Circuit also correctly recognized that petitioners'
claims of hardship were in fact exaggerated.  Petitions were
third-party deponents in the civil action, and hence were not faced
with the risks that litigating parties face when they choose not to
testify.  More importantly, petitioners must have been aware of the
risk that the government will obtain protected materials upon a
showing of "compelling need" or "extraordinary circumstances" (Pet.
12).  Under this standard, a potential witness concerned about
self-incrimination cannot rely upon the protective order as an
absolute protection against disclosure of the information.  A
compelling interest standard would in fact present sufficient
uncertainty that an accused "would be reluctant, and perhaps foolish,
to submit to discovery." Note, using Equitable Powers to Coordinate
Parallel Civil and Criminal Actions, 98 Harv. L. Rev. 1023, 1038
(1985).  /3/

   What petitioners really seek through the device of a protective
order is Fifth Amendment protection without the need actually to
invoke the Fifth Amendment.  They seek a right not to testify before
the grand jury but nevertheless to retain the ability to testify in
the civil action.  The Fourth Circuit correctly recognized that this
course of conduct is foreclosed by this Court's established Fifth
Amendment jurisprudence.  The Fifth Amendment may be invoked in civil
actions.  Lefkowitz v. Cunningham, 431 U.s. 801, 805 (1977).  but even
a mistaken failure to assert the privilege may still operate to waive
it.  See, e.g., Garner v. United States, 424 U.S. at 654 n.9
(observing that Schneckloth v. Bustamonte, 412 U.S. 218 (1973),
"(makes) clear that an individual may lose the benefit of the
privilege without making a knowing and intelligent waiver").
Accordingly, this Court has held that information obtained by the
government in a civil proceeding may be used in obtaining a criminal
conviction.  United States v. Kordel, 397 U.S. 1 (1970).

   There is nothing, then, in the Fourth Circuit's decision that
undermines petitioners' constitutionally protected interests.  On the
other hand, accepting petitioners' analysis would raise serious
separation of power issues.  In petitioners' view, a protective order
would amount to a grant of immunity for testimony given in the civil
action.  But as this Court stated in Pillsbury Co. v. Conboy, 459 U.S.
248, 261 (1983):  "No court has authority to immunize a witness.  That
responsibility * * * is peculiarly an executive one, and only the
Attorney General or a designated officer of the Department of Justice
has authority to grant use immunity." See 18 U.S.C. 6002 et seq.
Concerned about this problem, the Fourth Circuit wisely refused to
authoriz(e) district courts to give civil deponents de facto grants of
immunity in the guise of Rule 26 protective orders" (Pet. App. 14a).
/4/

   Contrary to petitioners' implication (Pet. 12), the Fourth
Circuit's holding does not threaten to impede civil litigation.  AS
the Fourth Circuit noted, there are a number of ways a trial court may
manage litigation so as not to deprive civil litigants of their day in
court because witnesses have chosen to rely upon the Fifth Amendment.
These judicial management tools include the use of stays to delay
discovery, pretrial hearings to assess the validity of the claimed
privilege, and traditional rules of burden-shifting and evidence (Pet.
App. 15a-16a).  The interests of civil litigants in seeing their cases
progress will not be significantly undermined by the Fourth Circuit's
decision here.

   Nor will the decision in this case interfere with the salutary
effects of Rule 26(c) protective orders.  Such orders will remain
available to facilitate litigation by affording parties protection
against disclosure to the public, or to competitors, or for any other
reason listed in Rule 26(c).  After this decision, as before, a court
may enter a protective order whenever "justice requires to protect a
party or person from annoyance, embarrassment, oppression, or undue
burden or expense." Fed. R. Civ. P. 26(c).

   On the other hand, if petitioners' position were accepted, the
power of the grand jury would be seriously undermined.  Denying
enforcement of a grand jury subpoena strikes at the heart of the grand
jury's right to all relevant evidence.  Branzburg v. Hayes, 408 U.S.
665, 688 (1972);  Blair v. United States, 250 U.S. 273, 282 (1919).
Such a ruling not only denies the grand jury access to information
that may be critical to the investigation of substantive offenses, but
also to testimony that may be the essence of a crime in itself --
perjury.  If a protective order shields deposition testimony from a
grand jury subpoena, witnesses may be able with impunity to provide
testimony in the civil action in direct conflict with the testimony
subsequently given to the grand jury.  Moreover, the grand jury must
have the right to obtain evidence that it believes may be relevant to
the government's charges.  It has that right because it stands as the
public's representative, as an intermediary "'between the accuser and
the accused.'" Branzburg v. Hayes, 408 U.S. at 687 n.23 (quoting Wood
v. Georgia, 370 U.S. 375, 390 (1962)).  Because the grand jury serves
that important function, the public suffers when the grand jury is
deprived of relevant evidence.

   2. Petitioners contend that review is warranted because the
decision below conflicts with Second Circuit decision.  Contrary to
petitioners' implication, the Fourth Circuit did not hold here that a
governmental entity, in all circumstances and by any means whatsoever,
is entitled to information protected by a Rule 26(c) order;  it
decided only that a particular kind of process -- a federal grand jury
subpoena -- is enforceable despite the existence of a civil protective
order.

   As the Fourth Circuit noted (Pet. App. 10a), the Second Circuit has
never addressed that precise issue.  The Second Circuit has been
presented in a series of cases with differing kinds of attempts by the
government to obtain materials governed by a civil protective order:
an informal request by telephone and letter (Martindell v. ITT, 594
F.2d 291 (1979));  a request by motion to vacate a protective order
(Palmieri v. New York, 779 F.2d 861 (1985);  Minpeco S.A. v.
Conticommodity Services, Inc., 832 F.2d 739 (1987));  and a statutory
civil investigative demand (United States v. GAF Corp., 596 F.2d 10
(1979)).  Petitioners' argument that the Second Circuit has
undeviatingly followed a "compelling need" standard (Pet. 9), in
asserted conflict with the ruling here (id. at 10), ignores the Second
Circuit's careful practice of deciding these cases on their particular
facts, and in particular the weight it has given to the nature of the
government's demand.

   In cases where the government seeks enforcement of a formal demand
for materials protected by a Rule 26(c) order, as in this case, the
Second Circuit's decision are in accord with the Fourth Circuit's
decision here:  the government's compulsory process is enforced
without a showing of "compelling need." In United States v. GAF Corp.,
supra, for example, the court enforced a federal civil investigative
demand (CID) /5/ issued by the Antitrust Division of the Department of
Justice.  Earlier, the government had sought to obtain the same
materials by moving to modify a protective order.  The motion was
denied because the government's interest in the "possible" use of the
information in a criminal investigation was "'not clearly specified or
specifiable in advance.'" Id. at 12 (quoting GAF Corp. v. Eastman
Kodak Co., 415 F. Supp. 129, 130, 133 (S.D.N.Y. 1976)).  The Antitrust
Division then decided to obtain the same materials by means of a CID,
and petitioned for enforcement in the district court.  United States
v. GAF Corp., 449 F. Supp. 351 (S.D.N.Y. 1978), rev'd, 596 f.2d 10 (2d
Cir. 1979).  On appeal, the Second Circuit rejected Kodak's argument
that the protective order prevented enforcement of the government's
formal process.  Nowhere did the court indicate that the government's
enforcement power was contingent upon the showing of a "compelling
need" for the materials.

   Petitioners thus err in contending that the Second Circuit has
adopted a monolithic "compelling need" standard.  GAF proves the
contrary;  indeed, the differing results achieved by the government in
the same case depending upon how it sought to obtain the protected
materials is dramatic evidence that petitioners have failed to take
into account a critical distinction essential to the Second Circuit's
analysis.  /6/ Where the government has sought to enforce a formally
authorized subpoena, as in GAF and here, the Second Circuit has not
inquired about the government's "need" for the materials.  Only where
an informal demand is made -- as, for example, by a motion to vacate a
protective order -- does the Second Circuit require that a compelling
need be demonstrated.  See Palmierei v. New York, 779 F.2d 861 (2d
Cir. 1985).  /7/

   Thus, in Martindell v. ITT, 594 F.2d 291 (2d Cir. 1979), the
government had attempted to obtain protected materials by requests
over the telephone and by letter to the judge who had granted the
protective order.  The district court declined to modify the
protective order, and the Second Circuit affirmed, emphasizing the
informal nature of the request:  "The Government may not * * * simply
by picking up the telephone or writing a letter to the court * * *
insinuate itself into a private lawsuit between others" (id. at 294).
/8/

   Subsequently, in United States v. Davis, 702 F.2d 418, cert.
denied, 463 U.S. 1215 (1983), the Second Circuit was faced with a case
involving formal grand jury process.  Grand jury subpoena had been
issued for deposition testimony given in a prior civil action in
Bankruptcy Court.  A claim was made that the deposition was protected
from disclosure by a confidentiality agreement.  Ultimately, the
Second Circuit rejected that argument because the deposition was
protected only by a tentative understanding, not by a Rule 26(c)
protective order.  In analyzing the issue, however, the Second Circuit
expressly declined to apply the Martindell standard, because the
informal demand in that case was an attempt by the government to
proceed "outside of its usual investigative powers to secure the
requested testimony, not by grand jury subpoena" (702 F.2d at 422).

   In sum, the Fourth Circuit's decision here comports with this
Court's decisions and is not in conflict with the decisions of the
Second Circuit or with the decisions of any other court of appeals.
In the absence of such a conflict, there is no need for further
review.

                              CONCLUSION

   The petition for a writ of certiorari should be denied.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   JOHN R. BOLTON

      Assistant Attorney General

   DOUGLAS N. LETTER

   VICTORIA F. NOURSE

      Attorneys

   JUNE 1988

   /1/ The court also noted (Pet. App. 12a) that Palmieri v. New York,
779 F.2d 861 (2d Cir. 1985), although distinguishable from the instant
case and "difficult to reconcile with" GAF Corporation, would appear
to "militate in favor of upholding the protective order here."

   /2/ Judge Sprouse dissented, observing that the majority's holding
would "retard () effective and informative discovery," by undermining
the vitality of the Rule 26 protective order (Pet. App.21a).  While
concurring in the majority's Fifth Amendment analysis, and stating
that the deponents had "waived fifth amendment rights" (id. at 21a),
Judge Sprouse concluded that the government should not be permitted
"evidence it would not have obtained but for overriding a protective
order" (id. at 22a).

   /3/ See also Note, Nonparty Access to Discovery Materials in the
Federal Courts, 94 Harv. L. Rev. 1085, 1104 (1981) (labelling as
"surely fallacious" petitioners' argument that a deponent will not
invoke his privilege if a deposition is covered by Rule 26(c));  8 C.
Wright & A. Miller, Federal Practice and Procedure Section 2018 at 153
(1970) ("It has been suggested that a protective order impounding the
results of the discovery and forbidding disclosure to anyone other
than the parties would remove the risk of incrimination, but whether
the court, in a civil action, can provide protection equivalent to an
immunity statute, as is needed if the claim of privilege is to be
overcome, seems doubtful.").

   /4/ Adoption of petitioners' preferred standard -- "compelling
need" -- would also raise serious questions about the propriety of the
civil trial court's intervention in a criminal grand jury
investigation.  A court inquiring as to the "need" of the grand jury
for evidence threatens to impinge on the grand jury's right to
determine what is relevant and necessary to its investigation.  See
Blair v. United States, 250 U.S. 273 (1919).  If the grand jury is
"even to approach the proper performance of its constitutional
mission, it must be free to pursue its investigations unhindered by
external influence or supervision." United States v. Dionisio, 410
U.S. 1, 17 (1973).

   /5/ A CID is a statutorily authorized subpoena (15 U.S.C. 1312).

   /6/ Petitioners do not refer to GAF, a case upon which the court of
appeals substantially relied (Pet. App. 10a-12a).

   /7/ The issue in Palmieri, upon which petitioners chiefly rely for
their conflict claim, arose when the State of New York conducted an
antitrust investigation and, in furtherance of its efforts, sought to
obtain the terms of a settlement agreement that was subject to a
protective order entered in a private federal civil action.  Although
a state grand jury had been impaneled for some time, the State
Attorney General did not attempt to obtain the settlement agreement by
using compulsory process;  instead, the State filed a motion to lift
the protective order.  The district court granted the State's motion,
and the Second Circuit reversed, concluding that the district court
had erred in failing to find either a "compelling need" to modify the
order or that the order was "improvidently granted" in the first
instance.  779 F.2d at 865-866.

   Essential to both the holding and analysis of Palmieri is the
method by which the State chose to obtain the protected materials.  In
concluding that a compelling need was necessary to modify a protective
order, the Second Circuit relied heavily on the existence of alternate
means available to satisfy the State's desire for information.  Noting
the broad reach of the State's investigative powers, the Second
Circuit stated (779 F.2d at 866 (citations omitted)):

         (T)he state has a special burden with respect to the
      materials that it seeks to unseal.  * * * "(T)he federal
      government * * * ha(s) at its disposal special investigatory
      powers, not available to private litigants * * *." We note that
      the State of New York enjoys a similar privileged position with
      respect to its investigatory powers.  For example, it has the
      power to subpoena persons and documents before the grand jury *
      * *.

   By emphasizing the alternate means available, the court implicitly
distinguished between cases in which the government moves to modify a
protective order and cases in which the government issues, and seeks
enforcement of, compulsory grand jury process.  To the Palmieri court,
it was not simply a matter of form whether the State proceeded
indirectly by means of a motion to modify or directly by a grand jury
subpoena:  the method was a measure of the degree of the government's
interest.  The Second Circuit was reluctant to permit interference in
civil litigation based solely upon the State's representation in its
moving papers that it needed the materials for its grand jury
investigation when the grand jury itself had failed to express its
interest directly through a subpoena.  Id. at 865-866.

   Since Palmieri, the Second Circuit has confirmed that should the
government express its interest in protected materials by means of a
motion to modify a protective order, it will be held to a compelling
need standard.  Minpeco S.A. v. Conticommodity Services, Inc., 832
F.2d 739 (1987);  H.L. Hayden Co. v. Siemens Medical Systems, 797 F.2d
85 (1986).  Petitioners claim that Minpeco and Palmieri involved
"formal" means, unlike the same court's decision in Martindell (Pet.
10 n.2).  But neither Minpeco nor Palmieri involved a grand jury
subpoena as is the case here.  See United States v. Davis, 702 F.2d
418, and use of grand jury process), cert. denied, 463 U.S. 1215
(1983).

   /8/ The Martindell court specifically noted that the government had
discharged the grand jury investigating the matter and "apparently
chose not to use grand jury investigative processes to obtain the()
testimony" (594 F.2d at 296 n.5).  The Second Circuit went on to
distinguish the issue presented here:  "(W)e are not called upon in
the present case to decide whether the Government might be entitled to
enforcement of a subpoena compelling production of the depositions"
(id. at 296 n.6).