William H. Rehnquist: We will hear argument now in No. 85-1329, Young versus United States, consolidated with 85-6207, Klayminc against the United States, et cetera. Mr. Cohen, you may proceed whenever you're ready.
James A. Cohen: Thank you, Your Honor. Mr. Chief Justice, and may it please the Court: The issue in this case is whether a person charged with a serious criminal contempt has a right to be investigated and prosecuted by a disinterested prosecutor; more specifically, a prosecutor who is not concurrently representing the interests of the United States and the interests of a private party. In 1978 Vuitton sued the claimants, who are among the petitioners here, for trademark infringement. In July of 1970... excuse me, in July of 1982, that matter was settled with a promise on the part of the defendants in the action to pay $100,000, and the issuance of an injunction which was designed to protect Vuitton's trademark rights. That injunction prohibited, among other things, the manufacture or sale, offering to sell, and aiding and abetting such an offer. The issue... the injunction was issued in July of 1982. And in December of 1982, Sol Klayminc sued Mr. Bainton, Joseph Bainton, who was the lawyer for Vuitton in the underlying trademark infringement injunction, for defamation. The source of the alleged defamation was an article which was published in the Wall Street Journal in December of 1982, and at the same time that the suit began, or approximately the same time, payment on the $100,000 settlement was stopped.
Speaker: 0 xxx.
James A. Cohen: The defamation action was discontinued subsequent to the convictions in this case. In February of 1983, the sting in this matter began. The sting covered a wide number of topics, and by the end of March, Mr. Bainton felt, apparently, that he had sufficient information to apply to the court to be appointed as special prosecutor pursuant to Rule 42(b), as well as applied to the court for some extraordinary authority to conduct the sting.
Antonin Scalia: Now, he could have done that whether or not he was later appointed by the court, right? I mean--
James A. Cohen: Well, I think the answer--
Antonin Scalia: --You can have a freelance private stinger if he wants to go out and set it up.
James A. Cohen: --Well, except that it was apparently Mr. Bainton's intention to supervise that. And ethical prohibitions would prohibit him from taping meetings without the consent of all the parties.
Antonin Scalia: All right, except for the... well, but all of this was done before any appointment by the court; is that right?
James A. Cohen: All of which was done?
Antonin Scalia: What you've just referred to, the beginning of the sting operation.
James A. Cohen: Yes, the sting had begun, and there was no taping prior to the application--
Antonin Scalia: That's right.
James A. Cohen: --to be appointed as special prosecutor.
Antonin Scalia: So all of that could have been done whether... whether or not he was later appointed by the court, right?
James A. Cohen: Without taping, yes.
Antonin Scalia: Okay. And he could have taken all that information and brought it to the court--
James A. Cohen: Yes.
Antonin Scalia: --or brought it to the U.S. Attorney?
James A. Cohen: That's correct, he could have. Absolutely. However, no effort was made to take this matter to the United States Attorney when the information first came into the special prosecutor's, or Bainton's... Mr. Bainton's possession at that time. The only time that any contact was--
John Paul Stevens: Mr. Cohen, help me out on one other... Mr. Cohen, the thing on the sting. There was taping with a videotape, is that what it was?
James A. Cohen: --There were videotapes and audio tapes. None... as far as we know, I have no reason to believe that any taping occurred prior to the time that Mr. Bainton was appointed.
John Paul Stevens: Right. But could those tapes... forget for a moment ethical obligation... did that taping violate any State law or Federal law?
James A. Cohen: Not in New York, where most of them took place. They would have violated California law. And the only way that it was permitted in California was by virtue of Mr. Bainton's status as a special prosecutor. Indeed, he contacted a member of the Los Angeles County District Attorney's Office in effect to notify them and to receive, I suppose, advance... advance approval.
John Paul Stevens: Why does his status as a special prosecutor exempt him from California State law?
James A. Cohen: Because... I don't... I don't know that it... I think that the answer is that the California authorities treated Mr. Bainton as an Assistant United States Attorney. The State law of California prohibiting taping things would not apply to a Federal prosecutor.
John Paul Stevens: I see. Regardless of whether he had the court approval? Just flatly--
James A. Cohen: I think that's correct, yes.
John Paul Stevens: --I see.
James A. Cohen: United States Attorneys in California are permitted to do--
John Paul Stevens: But apart from the California incident, you don't claim there's any violation of law? Just a violation of ethical responsibilities for a lawyer to supervise this kind of an operation?
James A. Cohen: --That's correct.
Speaker: This isn't wire-tapping you're talking about? Just taping?
James A. Cohen: No, it's surveillance-type taping. In a hotel room, they were done. And audio taping on telephones.
John Paul Stevens: And the ethical concern is that lawyers aren't supposed to lie; is that it?
James A. Cohen: That's among the ethical concerns, yes.
John Paul Stevens: What other... because they often, I know in these trademark infringement situations, they often employ private investigators who take on a role of someone whom they really aren't, and tell a lot of falsehoods.
James A. Cohen: Well, that happened in this case too.
John Paul Stevens: And is that... you think all of those activities are ethically improper for a lawyer to permit people working on his side of the case to engage in?
James A. Cohen: For a lawyer who's representing the two clients, yes. For a lawyer who simultaneously represents, or purports to represent the... represent the interests of the United States and at the same time represents a private party; I think that's improper.
John Paul Stevens: Oh, that... I understand your conflict of interest argument. But apart from that, you think that it's wrong for a lawyer in a trademark infringement, or one of these cases, to employ private investigators who use a cover story and a lot of falsehoods?
James A. Cohen: No, I don't have a serious problem with that if--
John Paul Stevens: I see.
James A. Cohen: --if it's done under proper circumstances. We discuss stings--
John Paul Stevens: Right. Really, my bottom line is, I'm just not quite clear on why the sting has much to do with your basic argument?
James A. Cohen: --Well, I think that it has to do this with it. In a sting, the government, in effect, participates in the crime itself. And it's been--
John Paul Stevens: But it isn't a crime.
James A. Cohen: --Pardon me?
John Paul Stevens: My point is, it isn't even a crime. 0 xxx.
James A. Cohen: No, I understand that, Justice Rehnquist. And I'm not suggesting that this Court should... should in anyway eliminate it from the repertoire of tools that law enforcement personnel use. It is a much different thing, though, when it's used by a private attorney who's simply been given a label, who has no training and no accountability to anyone. So I think that's the difference. And I think that there are also intrinsic problems within it.
William H. Rehnquist: I can see that's a factual difference. Why does it make any legal difference?
James A. Cohen: Why does the fact that a private attorney did it--
William H. Rehnquist: Yes.
James A. Cohen: --who had the conflicting obligations? Because you can't tell how those conflicting interests influence the investigation and prosecution. There's no way that we can sort through this record and say, well, at this point in time, Mr. Bainton was acting properly in the interests of the United States. And at this point in time, it seemed that he was really acting for Vuitton.
Antonin Scalia: But it doesn't matter, as far as the sting is concerned. You've acknowledge he could have done it privately and then handed over the results of it to the prosecutor.
James A. Cohen: Well, the difference--
Antonin Scalia: It doesn't matter during the sting stage whether he's acting in his own interest or in the government's interest or in his client's interest. It doesn't matter, does it?
James A. Cohen: --Well, it does matter if you're permitting this person to do things that he wouldn't otherwise be able to do. And that's exactly what happened here.
John Paul Stevens: But the point is, he would otherwise be able to do it, as a purely private lawyer.
James A. Cohen: He wouldn't have been able to tape, for example.
John Paul Stevens: He could hire a detective firm... why couldn't he?
James A. Cohen: Because of the ethical prohibitions which exist in our profession.
John Paul Stevens: I think you just... well, I don't. I thought you just said to me it was common in enforcement of this kind of--
James A. Cohen: I'm sorry, Justice Stevens. I thought you were positing an example where someone goes out and pretends to be someone else. That's not the taping. There are ethical prohibitions against misrepresentation and deceit. That would arguably cover that kind of conduct. But commonly, these things are done not by the lawyers but by the investigative agencies.
John Paul Stevens: --Sure, but under the supervision of a lawyer. And that's what you've got here.
James A. Cohen: Well, you have a little more than that here, Your Honor. You have Mr. Bainton and his associate, Mr. Devlin, playing a very active role at every point in the proceedings here. This isn't simply, give us a monthly report and a monthly bill. This is an active role in every single step of these proceedings.
Antonin Scalia: Is there some reason why misrepresentation and deceit by a lawyer is okay so long as he's a United States Attorney? How does that--
James A. Cohen: Well, yes, there is, I think. The answer to that question is that when it's... I'm sorry?
Antonin Scalia: --Is that in the canons of ethics? I mean, is there a distinction in the canons on that? I mean--
James A. Cohen: Well, there's not a distinction in the canons. But when it's done by the government, we believe, at least, that the government is doing it for one reason and one reason only, in the interest of the public to ferret out crime. When it's done by someone who has two interests, we can't be sure why it's being done. We can't be sure, in effect, how it's being done. The decisions of this Court and other courts which permit stings and other investigative techniques, which have at times been said to create problems or concerns about defendants' rights, and the integrity of the system, have all been involved with a public prosecutor, who was trained, who was accountable, to higher ups in the U.S. Attorney's Office and in the Justice Department.
William H. Rehnquist: --I think, as a matter of original inquiry, that perhaps the standards would be higher for a public prosecutor than for a private attorney?
James A. Cohen: Well, you might. Except that we are not concerned, I think, rightfully, that as a general matter public prosecutors will misuse their office in defense of some other client; because there is no other client. In this case, when you have the attorney purporting to represent the interests of the United States, and at the same time, representing that second client who has a very serious interest in the United States' case, we just can't tell. We can't be confident.
Antonin Scalia: xxx had only one client during the sting here. He wasn't representing the United States yet.
James A. Cohen: No, that's not true, Your Honor. He was appointed as a special prosecutor on March 31st of 1983. At that point in time, the formal investigation began. Prior to that--
Antonin Scalia: Prior to that--
James A. Cohen: --there had just been conversations--
Antonin Scalia: --he had just one client? You say the sting began before he became a special prosecutor?
James A. Cohen: --Yes, the sting did begin. The evidence that was introduced at trial, though, didn't... was created under the special prosecutor's mandate. And that all... and that was at a point in time when he was representing the United States and representing Vuitton.
Thurgood Marshall: But when it gets here, it's the United States as the respondent.
James A. Cohen: Well, that's caused some confusion, Your Honor, because--
Thurgood Marshall: Some confusion? [Laughter]
James A. Cohen: --That has caused some confusion, Your Honor. As you obviously know, the government has submitted amicus briefs supporting the notion that the prosecutor should be disinterested. I don't think that the mere labelling someone as a special prosecutor, as a United States Attorney, ought to dispose of this case. It's just... and this case really illustrates, I think, why not.
Thurgood Marshall: 0 xxx.
James A. Cohen: I understand that, Your Honor.
Thurgood Marshall: Well, I have problems with that.
James A. Cohen: Well, I meant that I understand that's a fact. I have some problems with it as well. Speaking of the U.S. Attorney, Judge Brieant, who I think was initially sensitive to the possibility that some problems would exist, and also to the alleged magnitude of the case, as it was explained to him, directed Mr. Brieant... Mr. Brieant; Mr. Bainton, on April 6th to... which is about five days into the... into the taped portion of the sting, and about five days after he was appointed special prosecutor... to, quote, fully debrief the United States Attorney. Well, he... he... I think, Your Honor, and I have to go back to the transcript to be sure, he directed Mr. Bainton to fully debrief the U.S. Attorney, and said that he wasn't requiring the United States Attorney to come in; that it was simply a suggestion. In any event, I don't think it's important to quarrel over whether he was directed or whether it was suggested. The full debriefing never occurred. Mr. Bainton sent a short, two paragraph letter, which is in the appendix, to Mr. Pedowitz, who was at that point, was chief of the criminal division. And apparently never receiving a reply, contacted him sometime later, and the reply was apparently "good luck". The U.S. Attorney was never fully offered this case. The matter was never referred to the United States Attorney by the District Court. In short, the procedure suggested by the government, that is, the Solicitor General's Office, in their brief, were never complied with in this case. The tapes and the conversations that occurred during the investigation covered a wide variety of topics. They first discussed the defamation action. And there was an apparent attempt on the tapes by Mr. Weinberg to elicit an admission from Sol Klayminc that in fact the defamation action was frivolous. There was an attempt to discover the financial assets of Sol Klayminc. It also discussed, in fact... discussed mostly plans to manufacture counterfeit bags in Haiti. Also discussed in the tapes, or stated on the tapes, were suggestions by Weinberg in response to inquiries from one or more of the defendants in this case that in fact the proposed plan to manufacture bags in Haiti and distribute them elsewhere was not illegal. And I just would wish to emphasize that those kinds of lulling statements occur, not in the context of a heroin conspiracy or a cocaine conspiracy, something that it is beyond any doubt at all is wrong, and you don't need to be told that it is not, this occurs in the context of an injunction which had very specific, proper business purposes, to protect Vuitton's trademark rights. In that context, suggesting to someone, as Weinberg did time and time again, that the plan that they were discussing, and the scheme, if you will, that was afoot, would not violate the injunction is particularly offensive. The interests that the special prosecutor labored under here were not only the duty to Vuitton. In fact, there was another client, Fendi, who was also apparently a very expensive trademark, because Mr.... Mr. Bainton also represented Fendi. And in fact, in discharging Mr. Rochman, who was originally a defendant in this case, from his civil obligations for Vuitton as attorney for Fendi, Mr. Bainton discharged Mr. Rochman as well. And that's contained in a letter that is also in the appendix. There's the $100,000 judgment against Sol Klayminc and the family companies, including Barry Klayminc. That was... as I say, payment was stopped on that with about $81,000 left to pay. There's a $750,000 judgment against petitioner Young. Petitioner Young was involved in a case in California in 1981, in which he agreed to an injunction prohibiting him from manufacturing, selling, offering to sell, counterfeit Louis Vuitton bags. As a part of that agreement, there was a liquidated damages provision of $750,000 that would only become due and owing if Young violated that injunction. In addition to that, there's a personal interest the special prosecutor had, because he was a defendant in a defamation action which was begun before the sting.
William H. Rehnquist: Mr. Cohen, let me read you, if I may, a sentence from the Second Circuit opinion, and ask you if that describes... Judge Lombard's opinion says: The fact that Sol Klayminc had brought suit against Bainton and the New York Courts alleging harassment and other acts is entitled to no weight as the suit was clearly frivolous. It was never pressed, and was finally dismissed by consent. Is that the suit you're referring to?
James A. Cohen: That is the suit, Your Honor. And the fact that it was frivolous... and I'm not qualified to say whether it was frivolous, and with all due respect to Judge Lombard, I don't think that he is either... there is... there is nothing... there is nothing that prevents or has been explored, Mr. Bainton from being concerned about that. The suit was for two a quarter million dollars. Somebody hired a lawyer to represent him. The matter was discontinued after a claim of prosecutorial immunity. Now, whether or not it was frivolous is really not the point. What we're really talking about here is an appearance of a conflict of interest. And I think it clearly existed when the prosecutor is a defendant in a suit such as that brought before any prosecution. His law firm was also defendant in that action.
Byron R. White: So your major... you rely chiefly on the conflict on the prosecutor having another client?
James A. Cohen: Yes, Your Honor, that's correct.
Byron R. White: But you do... do you argue in brief that a private attorney should never be appointed, no matter who he is?
James A. Cohen: Well, we've taken a couple of different positions in the brief.
Byron R. White: Well, how about the answer to my question, yes or no.
James A. Cohen: The answer is that except in a serious contempt, the answer is yes.
Byron R. White: Yes. Well, do you abandon that?
James A. Cohen: No. For a serious criminal contempt, the private attorney for an underlying party should never be appointed.
Byron R. White: Well, no, but how about any private attorney?
James A. Cohen: Oh, no, no, no. We don't... Your Honor, I'm sorry, I misunderstood your question. We do agree with the Solicitor General's position that it would be permissible under Rule 42(b) to appoint a private, disinterested attorney.
Byron R. White: Whether he's ever had... been in a criminal court in his whole life?
James A. Cohen: Well, on the contrary, Your Honor, there's lot of former prosecutors out--
Byron R. White: Well, I know, I know. But so your answer is that the court may appoint a private attorney.
James A. Cohen: --A private, disinterested attorney, yes.
Byron R. White: And need not refer it to the U.S. Attorney at all?
James A. Cohen: No, we happen to agree that the proper procedure of considering separation of powers concept should be to at least refer it to the executive branch.
William H. Rehnquist: Well, if you appoint a private attorney who's not representing one of the plaintiffs, how does the attorney get paid?
James A. Cohen: Well, Your Honor, the administrative office of the United States court has a fund which has been used to pay disinterested private attorneys before on a few occasions.
William H. Rehnquist: As a matter of course?
James A. Cohen: Apparently, yes, Your Honor. There's the lodging that Mr. Bainton put in, a letter that he sent to the administrative office of the courts; and there are conversations that the Solicitor General office... Solicitor General's office has had with the general counsel of that unit. And apparently, there is a fund from which to pay. Now, the fund is not overwhelming in amount. And it hasn't been tapped that frequently. But it has been tapped in at least three occasions that we know of.
Antonin Scalia: And it's not sure to be there next year.
James A. Cohen: No, but nor are lots of other funds, Justice Scalia.
Antonin Scalia: But to the extent that the court has to rely on that fund to any attorney that it appoints, the court's in not much better shape than it is in having to rely on the United States Attorney?
James A. Cohen: Well--
Antonin Scalia: It's at the mercy of another branch, right?
James A. Cohen: --I think that's true, Justice Scalia. But to the extent that the courts will always have to depend on another branch's muscle, if you will, they're always at that mercy. The U.S. Attorney's manual, for example, and the Justice Department, by their very presence here, I think, demonstrates the proper respect due to courts. And I think that those kinds of concerns, whereas I don't say that they're completely frivolous, I just think they're not very real. The interesting part of this case is that if Mr. Bainton had been a real Assistant United States Attorney he would be subject to prosecution under 18 U.S.C. 208(a), which is the conflict of interest statute that Congress has passed in order to prevent just this sort of thing. If I may, I'd like to reserve the rest of my time for rebuttal.
William H. Rehnquist: Thank you, Mr. Cohen. We'll hear now from you, Mr. Bryson.
William C. Bryson: Mr. Chief Justice, and may it please the Court: I am representing one of the two parties which is calling itself the government in this case. For clarification, of course, Mr. Bainton is the special prosecutor. I'll refer to him as the special prosecutor, and I'll refer to the positions that the Department of Justice is arguing before the Court as the government's position. Now, the government's position in this case is a little different from the position taken by either of the other two parties. Basically, it can be summarized in four propositions. First, that ordinarily it is the United States Attorney who should prosecute serious contempts. Second, that in some special cases... and we think that for practical reasons, this is going to be a very limited class... but in some special cases, it is appropriate for the court to appoint a private attorney to prosecute a criminal contempt. Third, that that should be done, if at all, only after the United States Attorney has been given the case for consideration and has declined the prosecution. And fourth... excuse me... that the attorney for the opposing party in a civil case should never be the party who is appointed to prosecute a criminal... a serious criminal contempt.
Antonin Scalia: Mr. Bryson, could I ask about number two? Where does the court get authority to appoint a special prosecutor?
William C. Bryson: Well, I think there are two answers to that, Your Honor. First, Rule 42(b) does contain a reference... it's a very cryptic reference, to be sure. But it is a reference to the notion that either the U.S. Attorney or an attorney appointed by the court can handle criminal contempts. It does not specify what that attorney is to do, other than to take part in the notice-taking process.
Antonin Scalia: Well, let's--
William C. Bryson: But in any event, contemplates the participation of a private attorney in some respect.
Antonin Scalia: --But doesn't that--
William C. Bryson: Our second answer... I'm sorry.
Antonin Scalia: --Go ahead. Doesn't that contravene the Constitution, which requires that--
William C. Bryson: Well, I don't think so, because my second answer is that I think criminal contempt is a different animal in some important respects from the typical criminal offense. And we believe that it is inherent, even if there were no Rule 42(b), it is inherent in the power of the courts to enforce their judgments that they are not wholly dependent on the executive branch to enforce those judgments. They have--
Antonin Scalia: --Isn't this person an officer? An officer?
William C. Bryson: --We don't believe he is an officer. We believe he would fall in the Buckley v. Valeo sense, more in the category of an employee. But even... excuse me... if he were--
Antonin Scalia: Is a regular prosecutor not an officer?
William C. Bryson: --Well, we believe he is not an officer but an employee. That is to say, his task, his responsibilities here, are not so broad.
Antonin Scalia: A United States Attorney is--
William C. Bryson: I'm sorry. And United States Attorney, yes.
Antonin Scalia: --He is an officer?
William C. Bryson: That's right.
Antonin Scalia: But this individual who does the same thing is not?
William C. Bryson: Well, he does, Your Honor, I think do the same thing, because he is limited in several very important respects. First of all, he doesn't have the breadth of responsibility for deciding who is to be prosecuted. He has been given an assignment to pursue a particular case. In this sense, he's more like an Assistant United States Attorney. And second, he is only given one case. He is not given the task of deciding throughout the world of potential criminal offenses, which ones to pursue.
Antonin Scalia: Well, I'm glad you haven't made the argument that your brief made. I have real troubles if he is an officer, because you handled that... the government handled that quite readily in the brief by simply saying that the Constitution authorizes the appointment of officers by the courts.
William C. Bryson: Well, that, I think, Your Honor, would only be so if we accept that Rule 42(b) is a legislative delegation to the courts of the authority to--
Antonin Scalia: Well, Rule 43(b) I don't think helps you, because Rules 43(b) was never passed by the Congress.
William C. Bryson: --Well, that's right. And that's one of the--
Antonin Scalia: The Constitution requires that the Congress may by law vest appointment in the court.
William C. Bryson: --That's correct, and that's one of the problems.
Antonin Scalia: And Rules 43(b) has never been enacted by the Congress.
William C. Bryson: That's correct.
Antonin Scalia: So that argument's wrong?
William C. Bryson: Pardon?
Antonin Scalia: So that argument's wrong?
William C. Bryson: Well, I think, Your Honor, the... there is some force to the argument. And I think... I recognize your point. I think there is some force to the argument that the appointments clause does not get in the way of... show a constitutional disposition against... this kind of appointment. Because if Congress had, for example, more specifically designated the special prosecutor as being someone who could be appointed, then we would be beyond appointments clause problem. So... excuse me... it's not a constitutional problem. At most, it's a question of the degree of the specificity of the authorizing statute. But beyond that, I think it's important to point out some of the practical problems that this kind of conflict of interest creates. We point out in the brief that the statutes and regulations which Congress has imposed on regular Department of Justice employees establish a Federal policy against just this kind of conflict of interest. We think it's a general policy. We think it's a policy that this Court ought to apply to this kind of conflicting representation where the United States and a private party are both being represented by the same attorney. Section 208(a) was pointed out. Section 528 of Title XXVIII states that conflicts of interest will not be permitted in cases in which the United States... an Assistant United States Attorney is carrying forward a prosecution. And that statute directs the government to pass particular regulations dealing with conflicts of interest. And among those regulations is one that would apply directly in this case, Section 735-4, stating that if an organization has a substantial interest in the outcome of a case, and that organization is one with which the attorney is allied in the personal... in some personal sense, that the attorney is disqualified from proceeding with the prosecution or investigation. Now, the practical problems here are very real.
William H. Rehnquist: xxx addressed to this situation, Mr. Bryson?
William C. Bryson: Well, I think it would be addressed, Your Honor, to a situation where, for example--
William H. Rehnquist: He's in the ABA, or the ABA has an interest in the outcome; that's what that sounds like.
William C. Bryson: --Well, I think it would clearly apply, Your Honor, to a case where, for example, if I continued to represent a private party, and that private party had an interest in the outcome of a lawsuit in which I was the prosecutor, that would clearly be covered. Now, there might be closer questions dealing with organizations such as the ABA, but clearly, in a case like this, that regulation would cover a prosecutor, and the prosecutor would be disqualified from proceeding with the investigation or prosecution. Now, as a practical matter, there are special problems in this kind of case, one of which is, for example, mention was made of Mr. Young. Mr. Young is one of the defendants who apparently had some assets, and he had a $750,000 judgment which was subject to execution if he were convicted. Well, that is an enormous incentive to choose Mr. Young as one of the defendants to prosecute, as opposed to, for example, using Mr. Young as a witness against some of the other defendants. Similarly, in current times, when there is a specific Federal statute prohibiting trademark infringement, the Section 402 of the contempt statutes comes into play, and that statute provides that a fine can either go to the... the victim or to the United States. Obviously, the attorney for the victim is going to have an interest to see to it, to urge the court, to have the fine paid to the victim as opposed to the United States.
William H. Rehnquist: Well, Mr. Bryson, what you say I don't doubt makes a good deal of sense in the abstract. But if we adopt your position that people with a conflict of interest can't be appointed special prosecutors, that it first have to go to the United States Attorney, the court is left without any realistic way of enforcing an injunction or prosecuting a contemner, unless the U.S. Attorney approves.
William C. Bryson: Well, Your Honor, I have a couple of answers. First of all, I think almost invariably the United States Attorney will prosecute such cases. That's the policy of the Justice Department as set out in the section of the U.S. Attorney's manual that we have... we have quoted in the brief. Second, there is a fallback in the availability of administrative office funds. And third... and I think this is not an insignificant factor... there are law firms that are willing to offer services on a pro bono basis, which happens on a regular... regular... from time to time, in cases in which, for example, a mandamus action is brought against a judge, and none of the parties is prepared to defend the judge. The judge can be defended on a pro bono basis by a law firm that the judge selects. So--
Antonin Scalia: Mr. Bryson, what's the oldest case you have that gives the courts authorities to cite for criminal contempt without a statute and on... with their own appointment of a prosecutor for violation of one of their orders, as opposed to for, you know, contempt that occurs in front of them, an insult to their dignity, an obstruction of their processes, but just disobeying one of their judgments? What's the oldest case you have that allows the court some inherent power to punish for this?
William C. Bryson: --Well, the McCann case would fall into that category. Most of the cases... the problem is, most of these cases have involved very small contempts. And the degree to which somebody is participating as a special prosecutor is on a very limited basis. In McCann, it may not have gone much beyond simply the notice stage, which was authorized... was subsequently authorized by Rule 42(b). But certainly McCann and some of the other cases of about that age that are cited in Mr. Bainton's brief would fall generally into that category. And that's from the middle thirties. Thank you.
William H. Rehnquist: Thank you, Mr. Bryson. Mr. Bainton, we'll hear from you now.
J. Joseph Bainton: Mr. Chief Justice, and may it please the Court: The Chief Justice's last question indicates to me that the Court is focussing on the real issue presented by this case, and that is, how are the Federal courts going to enforce their orders? This Court, in its decision, among others, in Gompers and Debs has long recognized... we agree, petitioners agree, and the Solicitor General agrees... that if the judiciary is to maintain its status as a coequal branch of government, it has to have the ability to enforce its orders.
Antonin Scalia: How does Congress enforce its orders?
J. Joseph Bainton: Through the executive branch, Your Honor. But that... Your Honor, that is not... that is not what this Court held in Gompers. That's not what this Court held in McCann... excuse me, in In re Debs. I think that if a Federal court is going to be able to maintain its status as an equal branch of government, it simply has to be able to enforce its orders. This Court has consistently held that, and no one has contended to the contrary. So I suggest that the real issue is, how do you do that? And the only... and the historical answer to that question, and the oldest--
Antonin Scalia: How long have we consistently held that?
J. Joseph Bainton: --1911, Your Honor.
Antonin Scalia: Older than the thirties?
J. Joseph Bainton: 1911 is the oldest I have, which is Gompers, Your Honor. The first appointment is In re Debs, which was decided by this Court in 1895. The Rule 42(b) was enacted in 1946. Now, in Professor Orfields... who was the reporter to the advisory committee on the Federal Rules treatise... he indicated that the advisory committee and therefore presumptively this Court, in enacting Rule 42(b), meant to codify prior existing practice. And the prior existing practice was described in the Second Circuit's decision in McCann v. New York Stock Exchange. In that case, the Second Circuit held that it was not only allowable, but the preferred practice, in cases such as this one, for the Court to specially appoint the attorney for the civil litigant aggrieved by the disobedience of the Federal court order. Now Rule 57 of the Federal Rules of Criminal Procedure also comes into play to the extent that it says, in substance, any... that... excuse me, as it says in substance that all prior practice is not excluded. To the extent that the Court does not find adequate authority to do what it did within Rule 42(b), which is what the District Court found in both opinions and the Second Circuit, we suggest that the power question can be resolved ultimately by reference to the All Writs Act. So I don't think that there is a serious question as to whether the court has the power to do what it did in this and other cases. Of course, it can't exercise this power in a way that deprives a defendant of his due process rights. And that is the question that is really presented by this case. What has... what this Court I think has to do is balance the interests of an independent judiciary against the risk that this process might somehow compromise the rights of a defendant. In that balancing process, I think the most important factor for the Court to take into account is the very special role that the District Court judge plays in these cases. As Mr. Bryson pointed out, the decision to prosecute, to continue the prosecution, is not reposed with the District... excuse me, with the civil litigant's lawyer. The decision in this case, and Musidor and McCann and the others, confers no right on a civil litigant. As a result of the Second Circuit's opinion, no civil litigant can go to a District Court judge and say, I have a trademark, I have an injunction, and I have what I think is evidence of probable cause of a violation of that injunction. I want a criminal prosecution. That decision rests completely within the discretion of the District Court judge. And that's important. And I think that answers most, if not all, of the arguments raised both by the petitioners and the Solicitor General. There exists within our system of justice a series of systemic safeguards that we think adequately protect any possible compromise of the defendant's right to a fair trial; not a perfect trial, a fair trial. As this Court held in Marshall v. Jerrico, there is not a constitutional right to a completely unbiased prosecutor. In that case, the Court used the phrase, too remote and insubstantial. And that's what I most respectfully suggest the complaint's about this practice are, too remote and insubstantial. There has been no claim that anything that occurred in this case, or any other case to my knowledge, was improper, was different than the U.S. Attorney under different circumstances might have done.
Antonin Scalia: Mr. Bainton--
J. Joseph Bainton: Yes, sir.
Antonin Scalia: --let's take a very important and massive court decree, like the old AT&T decree, which was essentially the structure for our telecommunications industry for decades. Do you think the Court could have just been, in effect, legislature, judge and jury by enforcing that decree through appointing its own prosecutors to investigate whether AT&T was abiding by all the constraints? Doesn't that trouble you as far as separation of powers is concerned?
J. Joseph Bainton: Your Honor, if I'm not mistaken, I believe that case was brought by the Justice Department, wasn't it?
Antonin Scalia: Well, that's right.
J. Joseph Bainton: What you're saying is, by analogy, if a private party had sought the same sort of relief, and obtained it?
Antonin Scalia: That's right, that's right. It could have been brought by a private party, and you could have had a massive decree like that. Isn't there some problem about... I mean, it's fine to have judicial independence. But I thought that there were checks and balances, and that all of the branches sort of depend on one another to a degree.
J. Joseph Bainton: Your Honor, I don't know that--
Antonin Scalia: You're saying that we have the right to make the judgment and to enforce it.
J. Joseph Bainton: --That's correct, Your Honor. It is your job to decide what your judgment means. And if you... and having done that, you have to enforce that. Let me give you an example, if I may, going to the old law school example of Blackacre. The Federal District Court Judge says, Mr. Bainton, you can have possession of Blackacre. I go to Blackacre, and the person there is standing there with a shotgun and says, if you step across that border, I'm going to blow your brains out. I go back to the District Court judge. He sends me to the U.S. Attorney. The U.S. Attorney says, you know, that's terrible. The judge said you're entitled to have possession of Blackacre. But I'm very busy. We have a big cocaine trial in this district. I don't have anybody to help you. I go back to the District Court Judge and say, judge, I haven't got possession of Blackacre. What are you going to do about it? The judge says, well, can't help you. The U.S. Attorney can't... the U.S. Attorney has to act as a check and balance. And although my order is plain and clear and in no way ambiguous, it won't be enforced. Your Honor, I think that the courts have to enforce their orders. They have to have the ability to enforce their orders.
John Paul Stevens: Mr. Bainton, with your very good example of Blackacre, wasn't the remedy one of ejectment, which was enforceable by an executive officer? He didn't have to go back to court to enforce an ejectment order.
J. Joseph Bainton: Your Honor... Your Honor, when... when the executive branch declines to enforce a court order, rightfully or wrongfully, a court must be able to see that that order is given force and effect. What happens when... I'll give you another example... what happens when someone subpoenas some tapes from the White House, and the subpoena is not complied with. And the... and the Attorney General says, we're not going to seek to enforce that order.
Thurgood Marshall: Mr. Bainton--
J. Joseph Bainton: Surely the District Court must be able to compel the production of those tapes under those circumstances.
Thurgood Marshall: --Suppose either you or the judge asked the prosecutor to appoint somebody here. Could he have appointed you? Could the prosecutor have appointed you in this case?
J. Joseph Bainton: The Attorney General could have, Your Honor, yes. Not the U.S. Attorney. The Attorney General.
Thurgood Marshall: What are you... what is he going to do with that conflict of interest statute?
J. Joseph Bainton: Oh, I'm sorry, I see your question.
Thurgood Marshall: Yes. He couldn't have appointed you?
J. Joseph Bainton: I don't think, Your Honor--
Thurgood Marshall: He couldn't have. Do you agree?
J. Joseph Bainton: --No, I don't agree, Your Honor.
Thurgood Marshall: Well, how could he, and... and just... violate the statute?
J. Joseph Bainton: Your Honor... Your Honor, I don't think that the... that there is a conflict of interest. The interests of the civil litigant in this case were coterminous, no more and no less, than that of the District Court; and that is, that the court's order be enforced.
Thurgood Marshall: xxx against the court, not the individual.
J. Joseph Bainton: I'm sorry, I didn't hear you.
Thurgood Marshall: Contempt is against the court.
J. Joseph Bainton: Yes, but the--
Thurgood Marshall: Not the individual.
J. Joseph Bainton: --we're talking about interests, though, Justice Marshall. And the interests--
Thurgood Marshall: And you only had one interest?
J. Joseph Bainton: --I had one interest, and that is that the court order be obeyed.
Thurgood Marshall: Your client.
J. Joseph Bainton: Pardon me, sir?
Thurgood Marshall: Your client.
J. Joseph Bainton: No, that is not correct, sir. That is not correct. My client... the court's interests, and my interests, are simply that court orders be obeyed.
Thurgood Marshall: You still had the same client.
J. Joseph Bainton: That's correct, sir.
Thurgood Marshall: But you're arguing for the client now or the court?
J. Joseph Bainton: No, Your Honor, I--
Thurgood Marshall: Well, I just want to know which hat you have on.
J. Joseph Bainton: --Your Honor, there is no question--
Thurgood Marshall: You're wearing two hats.
J. Joseph Bainton: --as to which hat I'm wearing. And the record in this case is pristine in the sense that I have, rightly or wrongly, represented the United States of America from the time of my appointment. The--
Thurgood Marshall: xxx pristine.
J. Joseph Bainton: --Your Honor, as to who I appeared for, I'm sorry, I respectfully disagree; that is the word I chose to use. There has been no question at any stage in this proceeding that it was other than a criminal proceeding. Which is required, at least under the Second Circuit's decision in McCann.
John Paul Stevens: Mr. Bainton, would the case be different if your client had both a claim for damages, because of a lot of trademark infringement and the like, which would be enforceable by a civil contempt, as well as the criminal proceeding? Would then there be a conflict?
J. Joseph Bainton: No, sir. That's true in every case, and there's no practical conflict. And let me explain why if I may. The burden of proof in any criminal case is obviously proof beyond a reasonable doubt. In a civil case, it's--
John Paul Stevens: No, but in that case, if you represented both the court's interest in enforcement and your client's interest in obtaining money, would it be proper for you to agree to dismiss the criminal charges if there were full payment of all damage claims?
J. Joseph Bainton: --Your Honor, I couldn't agree to do that. That is not within the special prosecutor's power. And that's the point I made earlier.
John Paul Stevens: Well, agreed, maybe... enter into an agreement by which you, in exchange for the payment of whatever the amount the damages were or alleged to be, you agreed to recommend to the court that they would be... the criminal charges would be dismissed.
J. Joseph Bainton: You're saying, would that create... potentially create a conflict of interest?
John Paul Stevens: Yes.
J. Joseph Bainton: Yes. It would potentially create a conflict of interest. I suppose. I think I can't say that it doesn't. But I think that what you've got to do in deciding this case is, again, to determine whether there is a risk that the entitlement to the defendant of a fair trial will be compromised. And whether or not this case is going to be... whether my recommendation would be accepted or rejected by the District Court rests in its discretion. And I think it's fair to say that in these cases the District Courts generally look at recommendations of special prosecutors with respect to the disposition of a criminal matter, including its commencement. Some look differently--
John Paul Stevens: Well, let me change the example a little bit. Supposing the settlement was, in addition to not recommending, you also agree that you will not offer in evidence the results of the sting operation. You just wouldn't call that to the court's attention.
J. Joseph Bainton: --I couldn't do that.
John Paul Stevens: That would be a conflict of interest.
J. Joseph Bainton: That would be unethical. When--
John Paul Stevens: You think you have an obligation to the judge to disclose all evidence that you have in your possession?
J. Joseph Bainton: --I think I have an... had and continue to have an unqualified obligation to the United States of America to give it the best representation of which I am capable.
John Paul Stevens: What if your client said, I really think you're being too hard on this particular adversary. I really don't think it's in our best business interest in the long run to go forward with these kinds of contempts because of customer relations, one thing or another. What would you do then?
J. Joseph Bainton: Well, then, I'd have to make a decision. I'd have to ask whether or not to be relieved from the prosecution because there was no fund left to pay me. That's what I'd have to do. I could not abandon my ethical obligation to my client because I was no longer getting paid. I could asked to be relieved. If I was relieved, then I suppose one of these other solutions, if they were possible, would come into play. But I don't think I could throw the case, if you will. The... there is an analogy, I think, in civil practice, everyday of the week, because lawyers take oaths to obey the law, they produce documents in civil litigation that are terribly prejudicial to their client.
John Paul Stevens: Let me ask you one other question, if I may. What would you ethical obligation be if your private client went bankrupt and there just weren't funds to pay your privately? Then what would you do then?
J. Joseph Bainton: Your Honor, once accepting the engagement, I think I'm bound to see it through to its conclusion unless excused by the District Court judge. I don't think there's any question about that. And that's no different than appearing in any Federal action. Once you appear on behalf of a party, you're in the lawsuit unless, in the exercise of its discretion, the District Court judge lets you out. I don't think is any different from any other case in that respect.
Byron R. White: What in your view would be the objection to saying, the private attorney should not be appointed, especially for one of the parties, unless the United States Attorney refuses the case?
J. Joseph Bainton: I have no... utterly no problem with that, sir. In this case--
Byron R. White: That it should first be presented to the United States--
J. Joseph Bainton: --As a matter of good practice, not necessarily of constitutional law. I don't think the Constitution requires that. I think that good practice suggests it. It occurred in this case, I'd like to point out, not once but twice. Mr. Cohen, in his remarks, suggested that the debriefing never occurred. That, the record demonstrates, is utterly untrue. I produced to the United States Attorney every scintilla of information--
Byron R. White: --So you think--
J. Joseph Bainton: --I had at the time--
Byron R. White: --So the United States Attorney, you think, in effect if not expressly, in effect declined prosecution?
J. Joseph Bainton: --No, sir, I think he expressly declined the prosecution not once but twice. Judge Brieant, as the record shows, on the eve of trial, again called the United States Attorney's office, and again offered them... not ordered them, but offered them... the opportunity to try the case, and they declined. So the U.S. Attorney expressly declined to prosecute this case not once but twice. Now, in--
Byron R. White: Prior to your appointment?
J. Joseph Bainton: --No, sir. No, sir.
Byron R. White: Was it ever offered to him prior to your appointment?
J. Joseph Bainton: No, sir, it was offered to him on the day of my appointment; literally on the day.
Byron R. White: On the day. By whom?
J. Joseph Bainton: At Judge Brieant's request, I delivered to the U.S. Attorney the affidavit submitted in support of my... in support of the application for my appointment. And Your Honor, that affidavit contained every bit of information about this case that I then knew. And when the U.S. Attorney had that affidavit--
Byron R. White: Had you already been appointed?
J. Joseph Bainton: --Yes, sir, I had. By... by... for a duration of a number of hours. And as the... as Mr. Cohen correctly stated--
Byron R. White: But you would have no objection if the judge had said, well, I... we should give the U.S. Attorney first crack before you're even appointed?
J. Joseph Bainton: --Yes, sir. But contrary to what the Solicitor General said, I know of my own personal knowledge of four cases, three in the Central District of California and one in the Southern District of New York, within the last eight to ten months, when the U.S. Attorney has, on each occasion, been offered this opportunity, and has declined, and I have been appointed. So the statement by the Solicitor General that this Court can assume that the Justice Department will regularly prosecute this case is at least inconsistent with my personal experience.
Thurgood Marshall: Just to keep the record straight, did you give those records to the U.S. Attorney or to his assistant?
J. Joseph Bainton: I gave them to the head of the criminal division of the U.S. Attorney's office.
Thurgood Marshall: That's what I thought.
J. Joseph Bainton: Which I thought was the appropriate.
Thurgood Marshall: Well, you did say you gave them to the U.S. Attorney. I wanted to get the record straight.
J. Joseph Bainton: No, that's correct, Justice Marshall.
Thurgood Marshall: Not that it matters.
J. Joseph Bainton: That's correct. I gave it to the head of the criminal division; not to the U.S. Attorney himself. You're correct. I apologize for the misstatement. Assuming--
Antonin Scalia: Mr. Bainton.
J. Joseph Bainton: --Yes, sir.
Antonin Scalia: I like the notion that we have the power not just to render judgments but to enforce them as well. What happens when, after your appointment, you come in try the case, and we say, six years? All right?
J. Joseph Bainton: Who's we? This Court or the District Court?
Antonin Scalia: Judges.
J. Joseph Bainton: Okay.
Antonin Scalia: A Federal court. It gives the... on the contempt citation, it gives the defendant six years, or whatever. And nobody arrests him. The U.S. Attorney just says, you know, it's too much. Or I'm too busy. My people are out doing other things. Nothing happens. Now, do we have authority to appoint somebody to arrest and incarcerate him as well? I mean, wouldn't that follow from your notion that somehow we have to be self-contained; otherwise we're not real judges? Aren't we ultimately dependent on the executive anyway?
J. Joseph Bainton: In that example, I think as a practical matter, you're absolutely correct. But I think there is a qualitative, Justice Scalia, between setting up a court order... an entirely court-maintained prison system and enforcing a court's order. Federal courts, certainly in the desegregation cases, have run school districts.
Antonin Scalia: I understand that.
J. Joseph Bainton: So... so, you know, but it's--
Antonin Scalia: But the notion that somehow the effectiveness of the courts, the notion that somehow it's dependent upon the other branches is not inconceivable, is it?
J. Joseph Bainton: --But your example, sir, I most respectfully suggest, is largely speculative. The likelihood of the marshall service declining to incarcerate someone, I most respectfully submit, is slim or none. The likelihood of an already overburdened U.S. Attorney's office to say, I haven't got the personnel to prosecute this case is a real problem. That is a problem that has prompted this rule of law. And, while conceptually you're right, Justice Scalia,--
Antonin Scalia: Well, maybe that's because--
J. Joseph Bainton: --I think the real problem you've got to deal with is the one that was dealt with by the Second Circuit. And I'd most respectfully suggest, the one you pose is never going to occur.
Antonin Scalia: --Maybe that's because the United States Attorney thinks that of all the violations of law out there, the flouting of this particular court order is not the most serious that should engage the time of either his people or the courts. Now, why do our matters have to go to the top of the prosecutorial agenda necessarily? What isn't that violation of law one that ought to be put on the list for the United States Attorney like all the other ones? It's a violation of law.
J. Joseph Bainton: Because the interests of the judiciary, and the enforcement of its orders, are different, Justice Scalia, than the legitimate and proper interests of the justice... of the executive branch. This Court cannot compel the executive branch to prosecute any criminal regardless of how heinous his conduct. That's implicit in the notion of separation of powers. But if this is going to be a coequal branch, it has to support its orders. And to answer the question I posed, why is the agenda different, as the District Court found in this case, orders of this type are routinely ignored. As a result, the case load of the District Court, which it has to deal with... there is no way that the District Court can prevent trademark owners from filing lawsuits such as the civil lawsuit from which this case arises... they want to stop the flood of cases. They want their orders respected. Because when Federal court orders are obeyed, then unnecessary civil contempt proceedings won't occur. The interest of the District Court is in people obeying the order. And the order is no magic. The order says, defendant, thou shalt do what Congress has already told you to do under the Trademark Act.
John Paul Stevens: Mr. Bainton, may I--
J. Joseph Bainton: Yes, sir.
John Paul Stevens: --What if you had a different kind of crime, shortage of U.S. Attorneys to prosecute, and the prosecutor tells a victim, we just don't have enough lawyers to keep this case on the docket. And the victim says, well, I've got a lawyer and I'll pay him if he can handle the prosecution. Would there be any problem with that?
J. Joseph Bainton: Yes, if the judge is going to appoint him.
John Paul Stevens: No, the--
J. Joseph Bainton: I think that... I think that the... and there is provision, happens all the time in securities fraud cases when representatives of the SEC are specially appointed by the Attorney General to prosecute criminal securities cases or criminal anti-trust cases.
John Paul Stevens: --Well, stick with my hypothetical.
J. Joseph Bainton: So that provision is there.
John Paul Stevens: Stick with my hypothetical.
J. Joseph Bainton: It's never been used in the way you suggest, sir, but it could be.
John Paul Stevens: But stick with my hypothetical for a minute. What would be wrong, if anything, with just doing that? Would there be any ethical problems?
J. Joseph Bainton: Who is doing it?
John Paul Stevens: Well, either the judge or the U.S. Attorney says, we don't have enough lawyers to go around. We will designate you attorney for the government for the purpose of this case, even though we know you are the attorney for the victim, and your particular interest in it is remedying the wrong of the victim?
J. Joseph Bainton: Well, the answer to the question really depends... depends in large part on who does it. The court doesn't have the power to do it, under separation of powers.
John Paul Stevens: Well, assuming power, would there be any ethical objection to such an arrangement?
J. Joseph Bainton: If the Attorney General were to do it.
John Paul Stevens: Because it seems to me it's quite a close parallel. Because you have the same relationship with the victim of this wrongdoing as in my hypothesis the lawyer would have with the victim of the ordinary street crime?
J. Joseph Bainton: I think... I think under the statute cited by the Attorney General there might... it would be unlawful for the Attorney General to make such an appointment--
John Paul Stevens: Well, let me put it differently.
J. Joseph Bainton: --because it would be a violation of the statute.
John Paul Stevens: What if Congress passed a law and said, we think this is a good way to get a lot of backlog out. We would recommend a procedure. This would be done on a routine basis. I think you'd suggest that's a good idea.
J. Joseph Bainton: The... the... there are two parts to the answer to that question, sir. The first part is, the only person who could make such an appointment is the Attorney General of the United States. Secondly, the conflict of interest statute cited by the Solicitor General would make such an appointment as a proposition of statutory law by the Attorney General unlawful and therefore improper. Now, the next question, I suppose, is, suppose that statute didn't exist, that statute was not a bar to such action by the Attorney General, would there be an ethical problem? I don't think so.
William H. Rehnquist: xxx was the way crimes were prosecuted at the time of the Constitution.
J. Joseph Bainton: That's correct, sir.
William H. Rehnquist: There weren't a lot of U.S. Attorneys around. The typical prosecution was by the victim's attorney.
J. Joseph Bainton: That's correct. I'm running out of time. I would like to talk briefly about the request that this Court exercise its supervisory powers to change the practice under Rule 42(b). We think that that is very ill-advised, because this Court writes the criminal rules of procedure. This... an advisory committee exists, and neither the petitioner nor the Solicitor General has offered any reason to depart from the usual practice under 18 U.S.C. Section 3771. In other words, if you conclude that this practice doesn't violate the due process rights of defendants, generally, or more particularly, the defendants in this case, but you nonetheless say, maybe this... maybe there's a better way. And I'm an optimist. I'd always like to think there's a better way. I most respectfully suggest that neither petitioners nor the Solicitor General have offered you one, and I personally don't know of one. But perhaps it exists. Then there's a procedure so this Court can draw upon the collective wisdom of scholars, of practicing lawyers, of U.S. Attorneys and of lower Federal judges. And I think that practice should be followed by this Court, if it's so inclined, and it would be a mistake to exercise its supervisory powers in the context of this case. I believe two other points and I'm done. I believe Justice Blackmun asked Mr. Cohen about the State law of California with respect to the taping. In the District Court's opinion at 592-748, it discusses a line of Ninth Circuit cases which say that it would be unconstitutional for the State of California to proscribe the manner in which Federal law enforcement officers can conduct an investigation. And therefore, it would be improper for California to tell the FBI or any other Federal law enforcement officer that it cannot engage in one-way electronic eavesdropping. In its opinion the Ninth Circuit said that that construction of the statute was ridiculous, and therefore rejected it. And finally, I'd like to emphasize that Justice Scalia's point about the investigation, the remarks about... the remarks by petitioners about the... about the impropriety of the investigation, I think, are the largest red herring in this case. Justice Scalia, I believe you're absolutely right when you say that this is what happens in investigations of trademark counterfeiting everyday of the week. The only thing that Judge Lasker's order changed from what would occur on a garden variety case is, we have videotapes and audio tapes of what was said. We have, I most respectfully submit, the best evidence of what occurred on those occasions. And that can do nothing but to protect the legitimate interests of the defendants in this case. Thank you.
William H. Rehnquist: Thank you, Mr. Bainton. Mr. Cohen, you have one minute remaining.
James A. Cohen: Thank you. I'll speak quickly. First of all, with all due respect, Justice Rehnquist, the system in this country at the time of the Constitution was a system of public prosecution. Not only that, for the past 100, 150 years, the system in England has been a system of public prosecution at least as it would apply to this kind of case. In England, the police, not the victim, hire the private attorney to manage... to prosecute the case. Second of all, it is simply not true that Mr. Bainton went to the U.S. Attorney a few hours after the appointment. He was appointed on March 31st, and the tapes began to run. And they ran from March 31st until April 6th. That's when the letter went out to the United States Attorney. Thirdly, if you examine the appendix at pages 103 to 106, you'll see letters in which the hats, as you said, Justice Marshall, kept changing between the special prosecutor hat and Vuitton's hat, in terms of making deals with Rochman, and then the lodging, which we filed with the clerk of the court, at pages L36 and L39, the same hat sort of switched... I should say; well, it doesn't matter... with respect to Mr. Pariseault, who was also bargained with, depending on whose interests were at stake at that particular time. Finally--
William H. Rehnquist: Your time has expired, Mr. Cohen.
James A. Cohen: --Thank you.
William H. Rehnquist: The case is submitted.


Earl Warren: No. 914 United States, Appellant, versus First National Bank of Houston, et al. Mr. Turner.
Donald F. Turner: Mr. Chief Justice, may it please the Court. This and the succeeding case are both direct appeals under the Expediting Act, from judgments, dismissing anti-trust complaints against two bank mergers, one in Houston and one in Philadelphia. Well, the cases are not precisely parallel, the main issues are commendable. Both we and the Comptroller's officer and intervenor have read them together. And accordingly, if it is agreeable to the Court, I propose to present more or less a coalesced main argument but I shall of course endeavor to and deal in this first hour with specific issues raised by the defendant Banks in the Houston case. These cases raised, we believe some basic issues of interpreting the Bank Merger Act of 1966 and before giving you a brief background of the events that led up to the two cases now before you, I think it would be helpful if I quoted the principle provisions of this statute. Section 18 (c) (5) of the Act, provides and I quote, “A federal banking agency shall not approve, and I insert a proposed bank merger, whose effect in any section of the country may be through substantially lessen competition, or tend to create a monopoly, or which in any other manner would be in restraint of trade, unless it finds that the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served.” Subparagraph seven provides that in any antitrust action other than under Section 2 of the Sherman Act brought against a merger approved by a federal banking agency and again I quote, “The standards applied by the Court shall be identical with those with the banking agencies are directed to apply,” by the provision that I just quoted. And finally, and again I quote, “And that in any such action, the Court shall review de novo the issues presented.” Now, let me briefly describe to you a -- the background of two cases. First City National Bank of Houston and Southern National Bank, appellees here, applied as the statute requires to the Comptroller of the Currency for approval of their proposed merger transaction. The Comptroller notified the other two approving agencies in the Department of Justice who submitted as the statute requires their assessment of the competitive factors involved. The Federal Reserve Board and the Department of Justice both reported that competitive effects would be adverse, the Department of Justice using the adjective seriously. Nevertheless, the Comptroller approved the merger in September 1966, concluding that in his opinion the effects of the merger on competition will not be adverse in the Houston area and that in any event, any anticompetitive effects of the transaction are clearly outweighed in public interest by the probable effect of the transaction in meeting the convenience and needs of the Houston community. Thereupon within the 30-days limitation provided for by statute, the Department of Justice filed a complaint, challenging the proposed merger on the ground that it might substantially lessen violation -- lessen competition in violation of Section 7 of the Clayton Act. And the facts that was relied on among others and I will be very sketchy on this were that the acquiring bank was the largest bank in Houston, the Houston area, accounting together with its affiliates were approximately 29.6% of all commercial deposits in Harris County, that the acquired bank was the 6th largest commercial bank in Harris County and with affiliates accounting for about 2.8% of commercial deposits. But in addition, Southern was the fastest growing bank in -- in the city having only been recently chartered and it had a young aggressive management which indeed has been cited as one of the reasons for the merger, it being anticipated that that management will play an active, if it not, dominant role in the merge institution. Within a week after the complaint was filed, the Comptroller intervened and next day moved to dismiss the complaint for failure to state facts, sufficient to support a cause of action. Defendant banks thereupon filed a motion for dissolution of the statutory stay on the ground, and I quote, “The plaintiff has made no allegation challenging the findings and determinations of the Comptroller than any -- that any anticompetitive effects resulting from a proposed merger are clearly outweighed in the public interest as arbitrary, capricious, and not supported by substantial evidence.” Because plaintiff refuses to meet its statutory burdens, said the motion, there is no reasonable probability it will prevail on the merits. Subsequently at the hearing on December 2nd the District Court ruled as we understand it and as I have been informed by counsel for the Comptroller that they understand it, that the Bank Merger Act of 1966 requires the Government to plead and assume the burden of proving not only that the merger is anticompetitive but also that the competitive injury is not clearly outweighed by the convenience and needs of the community to be served.
William J. Brennan, Jr.: I gather -- I -- that provision being that they're not merely that the Comptroller was wrong in his determination, but affirmatively to establish by new proofs that proposition -- that negative --
Donald F. Turner: As we understand that it Mr. Justice Brennan, the view of the Court was that under the Bank Merger Act -- after the Bank Merger Act of 1966, the Government must plead and assumes the burden of proving not only anticompetitive consequences which would normally warrant a conclusion that Section 7 has been violated, but was also proved that those anticompetitive consequences are not clearly outweighed --
William J. Brennan, Jr.: Yes, that's what –-
Donald F. Turner: -- by the convenience and needs.
William J. Brennan, Jr.: That's what -- what you said but what I'm --
Donald F. Turner: Yes.
William J. Brennan, Jr.: But what I'm -- that question.
Donald F. Turner: Yes.
William J. Brennan, Jr.: I didn't ask you the right question.
Abe Fortas: Counsel for the Houston banks --
Donald F. Turner: They dispute this --
Abe Fortas: They -- they read the opinion --
Donald F. Turner: That's right, and I will get to that Mr. Justice Fortas. They --
William J. Brennan, Jr.: Now, what under that -- what under that view is the significance of the determination of the Comptroller?
Donald F. Turner: That would be an issue which the judge in the Houston case clearly did not reach. It was an issue which we believe was reached by Judge Clary in the Provident case and it is an issue again that we -- we shall have to deal with. There is as Mr. Justice Fortas suggested, dispute between us and the Houston banks as to the effects of the District Judge's ruling. The Houston banks take the position that the judge did not even reach the burden of proof issue. That he simply ruled that the Government had to allege facts from which it could be determined that the convenience and needs did not outweigh. And as I indicated I will -- I will take up that question. Now, on the basis of what we understood the ruling of the District Court to be, he -- he entered his order and gave us 10 days to amend our complaint to comply with what he had indicated on the basis of our understanding of what his ruling was. We declined to amend believing that the issue is so important and one so deserving of early determination, final determination that it should be taken up fast and accordingly the complaint was dismissed and we brought this appeal. Now, the Provident case, again at the proposed merging banks, Provident National and Central Penn made their application to the Comptroller of the Currency for approval of their merger. Again, both the Federal Reserve Board and the Department of Justice indicated their view in their reports on competitive factors that there would be significant adverse competitive effects. Again, the Comptroller approved the merger including that rather than having an overall adverse effect on competition and I'm quoting, “It will have a favorable effect further the increased ability of the resulting bank to serve the convenience and needs of the Philadelphia area by increased deficiency and the like makes this merger desirable.” Accordingly the -- again, within 30 days the Justice Department filed a complaint alleging that the violation violate -- that the merger violated Section 7 of the Clayton Act. And very briefly the facts are that Provident, the acquiring bank is the 5th largest bank in the four-county Philadelphia area accounting for 9% of the area's bank deposits. Central Penn, the proposed acquired bank is the 6th largest accounting for approximately 5% of the deposits, the five largest banks in the area already accounted for some 71% deposits. From here on the procedural course of this case was slightly different, the Comptroller who again intervened as a party moved to dismiss the complaint on August 11th. The defendants also moved to dismiss. They argued in effect that the Government was unwilling to shoulder the burden of proof that the merger was not justified by meeting the convenience and needs of the community. But here, the District Court initially denied these motions on the ground that the action was then only at the notice pleading stage and the complaint was adequate to apprise the other parties that the Government believed the merger unlawful under the Clayton Act as modified by the Bank Merger Act. However, shortly thereafter on November 4th, the District Court ruled that in order to prove that the merger was unlawful, the Government would be required to show both of the merger would have substantial anticompetitive effects and that these anticompetitive effects are not clearly outweighed by convenience and needs. The Court then went further and indicated that it would give great weight to the findings of the Comptrollers stating that if it appears that the decision of the Comptroller is dependent upon an exercise of discretion, the Court will vow to that discretion and I close -- quote, “Unless the Comptroller abused, exceeded, or arbitrarily applied it.” Now then, the Government subsequently indicated by various filings that it was unwilling to assume the burden of proof upon the convenience and needs issue. Accordingly, the banks and Comptroller again moved for final judgment dismissing the complaint and these motions were granted, and the Government duly appealed. Now, in both of the -- there's a -- in both of the cases, the respective District Courts then dissolved the statutory stay provided for in the Bank Merge Act of 1966, stays however were subsequently obtained in this Court. Now, before proceeding to define what I think the issues are, I think it would be helpful if I indicated to you what is not in dispute here. We do not and did not below dispute that the Bank Merger Act specifies the standards to be applied by the District Court in any antitrust proceeding brought against bank mergers or that the standards are presumably different to some extent from the Clayton Act which would normally apply. The Government in no way has intended to dispute this by drafting its complaints in terms of Section 7 only. If any Court had merely requested us to amend their complaints to make reference to the Bank Merger Act, we would have done so even we thought -- even though we thought it was unwarranted for reason I will shortly disclose rather than take so narrow an issue up on appeal.
Abe Fortas: That does create a technical problem, does it Mr. Turner? That is to say the Government brought these complaints under Section 7 --
Donald F. Turner: That's correct.
Abe Fortas: And -- then I suppose that the counsel for the banks felt a little awkward about what might happen, doesn't it? They came in and said that the standards of another statute were relevant and necessary for a decision of the case. Why didn't the Government plead the Bank Merger Act of 1966?
Donald F. Turner: Well, the reason --
Abe Fortas: You now say that those were the -- you concede that those were the governing standards.
Donald F. Turner: Well, again I -- and I hope that this is not a technical response. I -- the -- the Bank Merger Act itself creates no cause of action. It itself sets forth -- sets up no judicial proceeding. All the Bank Merger Act -- Act says is and it says repeatedly throughout the various subsections that in any antitrust proceeding that may be brought, the Court shall apply these standards, shall review de novo and so on.
Abe Fortas: No it doesn't say that. It says that any judicial proceeding. Did I read it correctly?
Donald F. Turner: Well, I quote -- the statute appears --
Abe Fortas: Now , look at seven -- page 70 of your brief.
Donald F. Turner: Yes. Page 70, “Any action brought under the antitrust laws arising out of the merger transaction.” In any such action that's the last sentence. The Court shall review it de novo.
Abe Fortas: Where is the merger?
Donald F. Turner: Then in the next subparagraph, “In any judicial proceeding, attacking a merger transaction on the ground that in and of itself had violated any of the antitrust laws.” So, that raise judicial proceeding, again, refers to the antitrust laws. The standards applied by the Court and so forth. And then over on pa ge 71, subparagraph (d), “In any action brought under the antitrust laws.”
Abe Fortas: Well, however that might be, what you're telling us now, at least, clears up the purposes in his argument whatever its effect maybe --
Donald F. Turner: Yes.
Abe Fortas: -- one point and that is to say the Department of Justice agrees that the standards applicable to your action. So, it would be the standard set forth in the Bank Merger Act of 1966.
Donald F. Turner: That is correct. There would be -- here, I assume, to the extent relevant and there will undoubtedly be in the future. Many arguments between the Government and any prospective defendants as to what the significance or substance of those changes are. But we can -- we have always agreed that the Bank Merger Act as it clearly says, “Sets out its standards which are applicable, the antitrust proceedings attacking vague grounds.” Now, I take it, (Inaudible) -- a couple of things I don't think we're in dispute, I take it that opposing counsel would agree that the complaints of the Government stated a cause of action insofar as the Clayton Act is concern, and insofar as the an -- as anticompetitive consequences alluded to in the Bank Merger Act standard are concern. I doubt that they would agree that they clearly establish a Clayton Act violation, but I'm sure they would agree in light of Von's Grocery, Pabst, and other decisions that the alleged facts have -- at least gave the Government a fighting chance. Now, given -- endeavoring to get these issues out of the way, it seems to us that the following four questions are presented here, all of which are great importance and are threshold questions insofar as the Bank Merger Act is concern. First, both cases we believe present the question whether once the Government in an antitrust suit challenging a bank merger establishes that the merger may substantially lessen competition defendants have the burden of proving that the merger's anticompetitive effects are clearly outweighed in public interest by the probable effect of the transaction in meeting convenience and needs. That's the first issue. Now, second, and a related issue --
Potter Stewart: The Court, you're talking about now in Court?
Donald F. Turner: In Court.
Potter Stewart: This is after this has been approved by the relevant agency.
Donald F. Turner: That is correct. This is in an antitrust proceeding which we have -- we have brought, pursuant to the antitrust laws and indeed the -- the continuing validity which is recognized under the Act.
Potter Stewart: Now, for this --
Donald F. Turner: The question is now, who has -- what is the disposition of burden of proof?
Potter Stewart: In this so-called --
Donald F. Turner: I can put it another way by saying --
Potter Stewart: Review de novo.
Donald F. Turner: Does the -- well, that's -- that's the second issue actually.
Potter Stewart: Well, that's what it's called though, and that's what the Court proceeding is called.
Donald F. Turner: Let me put it this way, that in deciding what the disposition of the burden of proof is, it must meet -- you must necessarily face what I would call I second question and the ones that -- squarely raised by Provident and argued almost exclusively by the banks there namely, whether the statute really incorporates a review standard. The kind of standard appropriate for the review of action of administrative agencies and does not continue in effect what used to be namely that the Court itself would make an independent determination of the issues presented?
Potter Stewart: As -- as the trial court have original jurisdiction --
Donald F. Turner: As – that's -- that is correct. That is correct. I quite agree that you can't really answer burden of proof issue satisfactorily without getting to the -- to the other question as well and that indeed is the second question.
William J. Brennan, Jr.: Because I suppose Mr. Turner that --
Donald F. Turner: Yes.
William J. Brennan, Jr.: -- that the statute is read as setting up a review standard nothing more.
Donald F. Turner: That is the --
William J. Brennan, Jr.: Then -- then (Inaudible) they answered on the basis whether it's to be a review of anything except the determination (Inaudible).
Donald F. Turner: That's correct. If -- if it were so that the -- that the purpose -- the words of statute and purpose of the statute is to turn the District Court in an antitrust proceeding into a review court, clearly our complaints are defective. We would have to plead much differently than the way we pled there. We would plead I supposed along the line that the determination of the Comptroller was arbitrary capricious without foundation in law and so on and so forth and not supported by substantial evidence on -- on the record. And we clearly did not plead that way.
Speaker: And you have to do that – you would have to do that even though you were free to introduce additional evidence.
Donald F. Turner: That is correct. And I -- to say parenthetically that the freedom to introduce additional evidence on part of all parties I think bears on the question as to whether the review standard is really contemplated. Now, the third issue is the one which the banks have raised in the Houston case which is peculiar to their case only. They claim that the District Court dismissed the Houston case on the pleadings without reaching any question of burden of proof and that consequently their case raises only the question whether the department must, “Alleged facts in its complaint establishing that the merger will have anticompetitive effects which are not clearly outweighed.” Now, I think the final issue which we have raised is whether in the event we prevail in the Court here, the statutory stay should be automatically restored on remand to the District Courts with the parties of course being free to petition again for dissolution if they care to do so.That is an issue which clearly comes at the end. Now I would have deemed it most appropriate and I think --
Speaker: (Inaudible)
Donald F. Turner: Yes.
Speaker: (Inaudible)
Donald F. Turner: Because -- the constitutional issue Mr. Justice Harlan which was raised by -- not only the comptroller but the Provident Bank is tied up in the question as to whether the statute provides for a review standard as compared with the standard whereby the Court independently makes its determination. As the banks argue for this result on the basis that -- very briefly they claim that the kind of job which the Bank Merger Act requires the Court to do is so foreign to the Court that it raises serious constitutional questions and accordingly this Court should -- should read the Act as -- as making a review court out of the -- out of the District Court. That is -- that is subsidiary to that -- that question. Now I would have normally contemplated taking up this issue first because it is clearly primary and clearly would dispose of all of the questions that are involved here and I think also a full exposition of this is very helpful in understanding the rest of the issue but in view of the time available and in order to make sure that I do get to this in fairness to defendant banks in the Houston case, I think I will go to that -- to that issue, the issue which is peculiar to that case first. Now, as I said the --
Potter Stewart: It was a pleading -- to be the pleading --
Donald F. Turner: That's the pleading question. As I understand --
Potter Stewart: Whether or not you stated a cause of action with the matter of pleadings.
Donald F. Turner: That's right. As the banks contend that all the District Court held was that we -- we should have alleged facts pertaining to convenience and need, and did not reach the question of who had the burden of proof. Now, as I've already indicated that was not our understanding and it is not the understanding of the Comptroller who made the motion to dismiss which was granted by the Court, and I would agree that the question is not entirely free from doubt. The citations to the record made by the Houston banks cast at least some doubt, but I would refer to a portion of the transcript which they do not refer to as -- as indicating the foundation for our own view that the judge was in fact disposing of the burden issue. This is on page 3A of the appellee banks brief, the appendix to their brief. The Court, I am of the view in the light of this few authorities which we have -- have at this time that the Act of 1966 made some rather substantial changes in the law. I understand the cases, and he was referring to some other District Court decisions, to hold the burden to be on the plaintiff to alleged and prove anticompetitive result of this merger and further that it is not outweighed by the convenience and needs aspect to the matter. I think the Department of Justice has continued for reasons of its own to adapt a contrary interpretation, but I consider these cases and I'm paraphrasing as authoritative, at least at this time further I think the petitions fails to state a cause of action in that it alleges only the first step and not the second step which is necessary for the plaintiff to support. Now, as I say, I -- we -- we read this and I believe the Comptroller does -- is indicating that the judge was in fact dismissing our complaint not only -- not merely for failure to allege facts but on the basis of a further view that he thought the burden proof on the balancing issue was on us. But let me -- if we assume that this is all that the Court decided, our contention would be that that ruling itself is wrong if the Government is right on the other major issues which are before the Court, that is to say if the Bank Merger Act contemplates an independent determination by the Court and if as we urge the statute clearly sets forth convenience and needs as an exception to a general antitrust standard and as an exception the burden falls on the defendants rather than on the Government, then it seems to us that the judge's holding that we should plead facts pertaining to -- to convenience and needs is just a wrong ruling. If the Government does not have the burden of proof on convenience and needs then it clearly state -- the complaint states a prima facie case by alleging only anticompetitive consequences and it is not a defective complaint. Moreover, purely as a matter of pleading, a plaintiff does not normally have to alleged facts (Inaudible) and affirmative defense. Indeed there have been some cases in the past holding that ill-advised lawyers who assert such facts thereby transfer the burden of proof to themselves. So the short of it is -- we believe that even if the ruling made is as narrow as the Houston Bank suggest, it is wrong if we are right on the issues. Moreover, and this is my final point on this question, if the Court's ruling was as limited as the Houston Bank suggest and if the narrow ruling was correct neither of which propositions we agree with, it seems to us that fairness would dictate that the case be remanded with the directions that the Government be given lead to amend and our reasons are two, that if the judge rule that way, it was at best terribly unclear and if he had been clear that the Government would -- would have elected to amend rather than taking intermediate appeal on so narrow a point to this Court.
Speaker: I thought Mr. Turner, you were given all kinds of opportunities to amend.
Donald F. Turner: We were -- we were given the opportunity. We did not amend because we believed that the judge had ruled to the reasons that I have suggested namely that he -- he was -- he -- he was dismissing the complaint unless we amended it on the basis of his position that the Government not only had to allege that anticompetitive –-
Potter Stewart: But also prove --
Donald F. Turner: -- consequences were not clearly outweighed but had the burden of proof.
Potter Stewart: You understood his --
Donald F. Turner: That is why we did not amend --
Potter Stewart: You understood his ruling to be much broader than --
Donald F. Turner: That's right.
Potter Stewart: -- nearly that you had not --
Donald F. Turner: That is correct.
Potter Stewart: -- technically stated a cause of action.
Donald F. Turner: And we did not amend because the broad ruling is one of such vital significance that we thought it appropriate to take an appeal.