Of the Tenth Circuit, sitting by designation. *

United States Court of Appeals

For the First Circuit

 

No. 07-2353

IN RE: GRAND JURY INVESTIGATION

(DISTRICT OF MASSACHUSETTS).

__________

ISLAMIC INVESTMENT COMPANY OF THE GULF (BAHAMAS) LIMITED,

Appellant,

v.

GEOFFREY HARPER, ESQUIRE, AND FISH & RICHARDSON P.C.,

Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. George A. O'Toole, Jr., U.S. District Judge]

Before

 Howard, Baldock, and Selya, *

Circuit Judges.

James J. McGuire, with whom Timothy J. McCarthy, Sheppard,

Mullin, Richter & Hampton LLP, Nicholas C. Theodorou, and Foley

Hoag LLP were on brief, for appellant.

Richard M. Zielinski, with whom Barbara Van Gorder and

Goulston & Storrs, P.C. were on brief, for appellees.

October 10, 2008
Inasmuch as the contempt sought against Fish & Richardson is 1

based exclusively on Harper's conduct, we refer herein only to

Harper. Our decision, of course, disposes of the appeal as to both

Harper and the law firm.

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SELYA, Circuit Judge. This appeal requires us to explore

the parameters of the district court's authority to hold in

contempt those whose actions arguably interfere with judicial

proceedings. The context is this: Islamic Investment Company of

the Gulf (Bahamas) Limited challenges the district court's denial

of its motion to hold in contempt an attorney (Geoffrey Harper) and

the law firm of which Harper is a member (Fish & Richardson P.C.).1

The appellant, whom we shall refer to by the acronym "IICG,"

chiefly asserts that the lower court failed to recognize that it

had inherent power to hold Harper in contempt. Concluding, as we

do, that this assertion lacks merit, we affirm the refusal to hold

Harper in contempt.

The present proceeding traces its roots to a Texas state

court. In that venue Harper, representing a client named Laird

Fairchild, brought a civil action against Fairchild's quondam

employer, Overland Capital Group, Inc., and its corporate parent,

IICG. That case culminated in a settlement agreement under which

Fairchild received money in exchange for, among other things, his

promise neither to disclose certain information nor to disparage

the defendants. The settlement agreement included an arbitration

clause.
Because an understanding of the nature and scope of the grand 2

jury probe is not essential to the resolution of this appeal, we

abjure any discussion of those topics. Similarly, we decline to

furnish any details about the reasons for the government's interest

in IICG and/or Overland.

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In April of 2006 — approximately six months after the

consummation of the settlement — IICG invoked the arbitration

clause. It alleged that Fairchild had violated the terms of the

settlement agreement by disclosing confidential information and

making disparaging statements. Fairchild answered the arbitral

complaint, counterclaimed against IICG, and filed third-party

claims against Overland (which, in turn, asserted counterclaims

against Fairchild).

In September of 2006, while the arbitration proceeding

was still pending, the United States Attorney for the District of

Massachusetts empaneled a grand jury. Wishing to learn more about

IICG and Overland, the prosecutors tapped Fairchild as a potential

witness. Fairchild began discussions with the prosecutors. When 2

IICG and Overland found out about these discussions, they concluded

that Fairchild's narrative concerned matters covered by the

settlement agreement's non-disclosure and non-disparagement

provisions. Spurred by this suspicion, Overland moved for a

discovery order in the pending arbitration; its goal was to compel

Fairchild to reveal in haec verba what he had related to the

government.
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Fairchild objected to the discovery request on the ground

that a grand jury witness may not be compelled to disclose his

grand jury testimony or to provide information about pre-testimony

interviews. The arbitrator overruled this objection and granted

the discovery request.

Harper, representing Fairchild, then contacted Corey

Smith, the Assistant United States Attorney in charge of the grand

jury investigation. He alerted Smith to the issuance of the

discovery order. Believing that compliance with the discovery

order might compromise the grand jury investigation, Smith asked

the district court to stay the order. The district court granted

the motion and pretermitted production of the information. 

Smith contemporaneously forwarded copies of his motion

and the district court's stay order to Harper. By operation of a

local rule of court, the documents were effectively under seal. See

D. Mass. R. 106.1(b) (stipulating that "[a]ll subpoenas, motions,

pleadings, and other documents filed with the clerk [of court]

concerning . . . grand jury proceedings shall be sealed and

impounded unless otherwise ordered by the court"). However, there

was no transmittal letter indicating that fact, nor was the

existence of a seal apparent from the face of the documents. 

Shortly after receiving the federal court documents from

Smith, Harper provided them to a reporter from the Wall Street

Journal. He subsequently furnished the same paperwork to at least
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two other journalists. These disclosures led to several news

stories about the investigation.

On February 23, 2007, Harper sought to introduce the

federal court documents at a hearing held in a Texas state court

(ancillary to the subject matter of the ongoing arbitration case).

IICG objected to their introduction on the ground that the motion

and order had been filed under seal. The Texas court sustained the

objection and refused to consider the documents.

Harper claims that this was the first he knew that the

motion and order had been filed under seal. Subsequent to the date

of that hearing, he eschewed any further disclosure of the federal

court documents.

Stung by the negative press that they had received, IICG

and Overland moved in the federal district court to adjudge Harper

in contempt for disclosing the sealed documents and to enjoin any

further dissemination of them. The district court granted

immediate injunctive relief and ordered Harper to show cause why he

should not be held in contempt. 

The court convened a show-cause hearing on March 27,

2007. Harper claimed not to have known of the sealing order at the

time the disclosures were made. Thus, to the extent that the

disclosures violated an automatic sealing order, those violations

were unwitting.
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IICG and Overland refused to accept this explanation.

They insisted that the court should hold Harper in contempt because

the disclosures transgressed a local rule that required sealing of

virtually all grand jury documents. See D. Mass. R. 106.1(b). In

their view, even if Harper was not explicitly notified that the

documents he received were filed under seal, he should have known

that grand jury documents were confidential. Relatedly, the

movants asseverated that Harper's conduct was not only in blatant

disregard of the court's seal but also offended the spirit of

Federal Rule of Criminal Procedure 6(e) and the letter of District

of Massachusetts Local Rule 83.2A (both of which are discussed

infra). 

The district court took the matter under advisement and,

roughly four months later, issued a thoughtful memorandum opinion

denying the motions for contempt. See In re Grand Jury Investig.,

No. 07-MC-10019, slip op. (D. Mass. July 20, 2007) ("D. Ct. Op.").

IICG filed a timely notice of appeal.

The denial of a motion to adjudge in contempt is reviewed

for abuse of discretion. See Langton v. Johnston, 928 F.2d 1206,

1220 (1st Cir. 1991). "[A] district court abuses its discretion

when a relevant factor deserving of significant weight is

overlooked, or when an improper factor is accorded significant

weight, or when the court considers the appropriate mix of factors,

but commits a palpable error of judgment in calibrating the
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decisional scales." United States v. Roberts, 978 F.2d 17, 21 (1st

Cir. 1992).

The abuse of discretion rubric is not seamless but,

rather, admits of various subtleties. For example, to the extent

that a discretionary decision turns on an abstract legal

proposition, review is de novo. See, e.g., McKenna v. First

Horizon Home Loan Corp., 475 F.3d 418, 422 (1st Cir. 2007). To the

extent that such a decision turns on findings of fact, review is

for clear error. See, e.g., Project B.A.S.I.C. v. Kemp, 947 F.2d

11, 15 (1st Cir. 1991). To find clear error, an inquiring court

must form a strong, unyielding belief, based on the whole of the

record, that a mistake has been made. See Langton, 928 F.2d at

1219. 

IICG's attack focuses largely on the district court's

supposed misuse (or, perhaps, non-use) of its inherent power.

Inherent power, sometimes known as supervisory power, is a blanket

term. It encompasses those powers which, although not specifically

conferred by the Constitution or by statute, "are nonetheless

necessary to the exercise of all others." United States v. Horn,

29 F.3d 754, 760 (1st Cir. 1994) (citations and internal quotations

omitted). Among this bundle of inherent powers is the power,

independent of any statute or rule, to sanction for contempt. See

Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991).
-8-

The contempt power is "one of the most potent weapons in

the judicial armamentarium." Project B.A.S.I.C., 947 F.2d at 16.

Due to the strength of the contempt power, courts have fashioned a

number of prudential principles to guide its deployment. We

briefly rehearse those principles. 

First, a complainant must prove civil contempt by clear

and convincing evidence. Langton, 928 F.2d at 1220. Second, the

putative contemnor "must have violated a clear and unambiguous

order that left no reasonable doubt as to what behavior was

expected and who was expected to behave in the indicated fashion."

Project B.A.S.I.C., 947 F.2d at 17. Third, "any ambiguities or

uncertainties in such a court order must be read in a light

favorable to the person charged with contempt." Id. at 16. And,

finally, even if all of these conditions are satisfied, the trial

court retains a certain negative discretion; that is, the court

retains the authority to eschew the imposition of a contempt

sanction if it deems such eschewal to be in the interests of

justice in the particular case. See Langton, 928 F.2d at 1221-23

(affirming denial of contempt when, despite noncompliance with

court's order, defendant had made good-faith efforts to comply).

It is against this background that we proceed to the merits.

The centerpiece of IICG's appeal is its complaint that

the district court ignored its request for an exercise of inherent
This local rule deals with the release of information by 3

lawyers in connection with pending litigation. With regard to

grand juries, the rule provides in pertinent part that "a lawyer

participating in or associated with the investigation shall refrain

from making any extrajudicial statement, which a reasonable person

would expect to be disseminated by means of public communication,

that goes beyond the public record or that is not necessary to

inform the public that the investigation is underway [and] to

describe the general scope of the investigation . . . ."

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power. This omission, IICG says, amounts to a per se abuse of

discretion, requiring a remand. 

The premise on which this complaint rests is sound: a

trial court can abuse its discretion by failing to exercise that

discretion. See, e.g., James v. Jacobson, 6 F.3d 233, 239 (4th

Cir. 1993). Here, however, the conclusion that IICG would have us

draw does not follow from the enunciated premise. We explain

briefly.

The district court began its analysis by considering

whether the contempt motions implicated Federal Rule of Criminal

Procedure 6(e), which governs the secrecy of grand jury

proceedings. The court determined that Harper was not within the

defined group of persons to whom Rule 6(e) applies (and, therefore,

that no obligation of secrecy attached to him). See D. Ct. Op. at

4 (citing Fed. R. Crim. P. 6(e)(2)(B)). Thus, Harper was not

subject to contempt on that basis.

Next, the court turned to Local Rule 83.2A. It found 3

that rule inapposite because Harper was not a participant in or

associated with the grand jury investigation. D. Ct. Op. at 5-6.
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In all events, Harper's disclosures did nothing more than alert the

public to the investigation and, thus, were permissible under the

rule. Id. at 6.

Although the district court devoted much of its analysis

to the question of whether Harper might be said to have violated

one or both of these rules, it did not stop there. Having

determined that neither rule applied, the court turned to its

inherent power. See id. at 7-8. That the court did so summarily

and without much explication does not mean that it failed to weigh

the possible use of its inherent power in its decisional calculus.

We have held before, and today reaffirm, that brevity alone does

not betoken an abuse of discretion. See Caterino v. Barry, 922

F.2d 37, 40 (1st Cir. 1990) ("Despite limited analysis by the

district court, we are unable to say that its decision . . . fell

outside the wide boundaries of its discretion."). There are no

magic words that a district court must pronounce in order to

convince a reviewing court that it has considered an issue. A

simple reference normally will do. That is the case here.

The question, then, reduces to whether the district

court's refusal to exercise its inherent power to adjudge Harper in

contempt can be said to constitute an abuse of discretion. We

think not.

To begin, IICG does not challenge on appeal either of the

district court's rule-based determinations. We assume, therefore
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— but do not decide — that Harper did not transgress either

Criminal Rule 6(e) or Local Rule 83.2A. See United States v.

Zannino, 895 F.2d 1, 17 (1st Cir. 1990) (holding that points not

contested on appeal may be deemed abandoned). That strips the

inherent power question to its bare essentials. 

Relative to those essentials, the district court properly

articulated the principle that the civil contempt sanction requires

the violation of a clear and specific order known to the putative

contemnor and directed at a class of persons that includes him.

See D. Ct. Op. at 7 (citing Project B.A.S.I.C., 947 F.2d at 17).

The court noted that the sealing of the transmitted documents did

not come about as the result of a specific order directed at Harper

or tailored to the particular case but, rather, resulted from the

operation of a local rule. See id. at 7 (citing D. Mass. R.

106.1(b)). Presumably relying on that fact and on the lack of any

evidence that Harper knew of either the local rule or of the seal,

the court declined to hold him in contempt. See id. at 8.

IICG posits that the district court's analysis failed to

recognize that a specific order is not always a prerequisite to a

finding of contempt. It adds that Harper's conduct was so

offensive to the abecedarian concept of grand jury secrecy that the

court could — and should — have exercised inherent power to hold

him in contempt. In our judgment, however, IICG's characterization
-12-

of Harper's conduct as so disrespectful to the court's lawful

authority as to demand a finding of contempt is overblown.

The principal flaw in this characterization is that it

rests on an assumption that Harper knew (or, at least, was

chargeable with culpable knowledge) of the seal when he disclosed

the motion and stay order to the press. But that assumption is

unfounded. The district court determined that Harper, although

aware that grand jury proceedings are highly confidential and that

grand jury materials usually are subject to some sort of

protection, did not have actual knowledge that the transmitted

documents were sealed. See D. Ct. Op. at 3. Here, moreover, the

facts militated strongly against a finding that Harper was

chargeable with culpable knowledge. After all, no willful

violation had occurred, Harper was not a member of either the

Massachusetts bar or the bar of the Massachusetts federal district

court, and nothing in the record indicates that he regularly

practiced criminal law. The documents had been sent to him by

Smith without any restriction, even though Smith knew that Harper

would file them in the arbitration case. Finally, the transmitted

documents — a motion to stay proceedings and a stay order —

reasonably could be thought not to intrude on the secrecy of the

grand jury's proceedings.

To be sure, IICG rails against these findings. But

nothing in the record prompts a belief — let alone a strong,
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unyielding belief — that they are incorrect. Because the findings

are not clearly erroneous, see Langton, 928 F.2d at 1219, we must

accept them.

To cinch matters, the district court determined that

neither the grand jury proceeding nor any other proceeding had been

prejudiced as a result of Harper's disclosures. D. Ct. Op. at 6.

Implicit in that determination is the notion that neither the

district court's authority nor the due administration of justice

was offended by Harper's actions. Where, as here, a trial court

deems its authority unsullied by a putative contemnor's actions and

refuses to hold him in contempt, there is simply no warrant for an

appellate court to second-guess that determination. 

To sum up, the district court thoroughly reviewed what

had transpired. It employed its inherent power to enjoin Harper

from further dissemination of the transmitted documents and warned

that any future violation of that injunction could be enforced

through the contempt sanction. D. Ct. Op. at 8 n.2. But the court

also found that Harper had not deliberately violated a known

sealing order and chose not to hold him in contempt for the

original disclosures. That circumspect choice of remedy was within

the court's discretion and in keeping with the prudential

principles that must guide the deployment of a court's inherent

power. See Horn, 29 F.3d at 760 (explaining that "it is

inappropriate for courts to attempt to use the supervisory power to
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justify an extreme remedy when, short of such heroic measures, the

means are at hand to construct a satisfactory anodyne more narrowly

tailored to the objective").

We need go no further. Because we discern neither error

nor abuse of discretion in the lower court's rejection of IICG's

contempt motion, we uphold its order.

 

Affirmed.