Legal Document

463 U.S. 476 103 S.Ct. 3164 77 L.Ed.2d 785 UNITED STATES, Petitioner,v.James E. BAGGOT. No. 81-1938. Argued March 2, 1983. Decided June 30, Syllabus Federal Rule of Criminal Procedure 6(e)(3)(C)(i) permits disclosure otherwise prohibited by 6 matters occurring before a grand jury "when so directed court preliminarily to or in connection with judicial proceeding." Respondent was the target investigation certain commodity futures transactions. He never indicted but, after plea negotiations, pleaded guilty misdemeanor violations Commodity Exchange Act. Thereafter, Government filed motion under for transcripts and documents Internal Revenue Service (IRS) use an audit determine respondent's civil income tax liability. While holding that not authorized 6(e)(3)(C)(i), District Court nevertheless allowed its "general supervisory powers over jury." The Appeals reversed, agreeing no is available but erred granting powers." Held: IRS's "preliminar[y] proceeding" within meaning hence Rule. contemplates only uses related fairly directly some identifiable litigation, pending anticipated. It enough show litigation may emerge from matter which material be used. focus on actual made material. follows appropriate here audit, purpose prepare conduct assess amount liability through administrative channels. fact if discloses deficiency, respondent seek redress redetermination proceeding Tax refund action Claims district court, without more, does mean Government's . Pp. 478-483. 662 F.2d 1232 (7th Cir.1981), affirmed. Lawrence G. Wallace, Washington, D.C., petitioner. Samuel J. Betar, Jr., Chicago, Ill., respondent. Justice BRENNAN delivered opinion Court. 1 In United States v. Sells Engineering, Inc., --- ----, 3133, 75 we decide today circumstances obtain materials (hereinafter sometimes referred as "(C)(i)"). question this case whether taxpayer's We agree it not. 2 May 1976, special began investigating transactions Chicago Board Trade. James Baggot became investigation. indicted; instead, interviews IRS agents negotiat ons Government, he two counts violating Act.1 substance Baggot's crime scheme sham commodities create paper losses, deducted his returns. A fraction "losses" then recovered cash kickbacks were reported income. 3 About eight months plea, (C)(i) IRS, At first denied request. After renewed motions, however, granted disclosure. held sought are "matters jury," therefore subject 6(e)'s requirement secrecy. With respect remainder materials, concluded because proposed Nevertheless, App. Pet. Cert. 47-48. 4 reversed. re Special February, 1975 Grand Jury (Baggot), (CA7 1981). all sought, one possible exception, jury" 6(e). agreed (C)(i), remanded further consideration concerning might certiorari, limited (C)(i). certiorari. 457 102 2955, 73 1347 (1982). 5 charged responsibility taxpayers. To end, conducts examinations audits taxpayers' returns affairs. If, conclusion any internal appeals, concludes taxpayer owes issues formal notice deficiency prescribed 26 U.S.C. § 6212. Upon receiving has, broadly speaking, four options: (1) can accept ruling pay deficiency; (2) petition (3) and, exhausting claim, bring suit court; (4) do nothing await steps collect tax. See generally B. Bittker, Taxation Income, Estates Gifts &Par; 111.5, 112.1, 115.1, 115.2, 115.7 (1981). Certain propositions common ground between parties. Both sides, sensibly, understand term "in with," refer already pending, while "preliminarily to" refers yet initiated. concedes including informal appeal component, itself "judicial Conversely, agrees either would proceeding."2 issue, then, (C)(i).3 conclude 7 provision is, face, affirmative limitation availability court-ordered materials. our previous cases 6(e), have had occasion address detail, focusing instead moving party particularized need access Sells, ante, at ---- - S.Ct., 3147 3149, cited. requirements, though ways,4 independent prerequisites test criterion degree; language imposes additional governing kind must shown. reflects judgment every beneficial purpose, even valid governmental reason breaching Rather, Thus, used, factually likely emerge. If primary assist preparation proceeding, permitted. Young, 494 F.Supp. 57, 60-61 (ED Tex.1980). 8 liability, channels.5 Assuming arguendo will inevitably disclose part, see also n. 6, infra, there particular why lead least point view. decision largely self-executing, sense has legal force own, requiring prior validation enforcement court. go into owed; empowered non-judicial means (such levy property salary, §§ 6331, 6332), having prove validity underlying Of course, end up chooses take there, p ssibility negate proposes put seeks extrajudicial one—the assessment IRS. takes countless actions affected citizens permitted resist challenge often loosely said "preparing litigation," frequently wise agency anticipate chance called upon defend That, alone Where agency's require resort accomplish present goal, preliminary purposes 9 always arose courts—one which, example, agency, when found probable violation law, required criminal prosecution vindicate law compliance.6 hold (or, matter, private who anticipates against him) time initiative litigating lies elsewhere.7 Nor such commencement obtaining Proceedings (Miller Brewing Co.), 687 1079 1982), rehearing closed issued clearly expressed intention same correctly Miller case, plainly rather than inquiry preceded it. There other situations proper; canvass possibilities here. clear perform non-litigative function assessing taxes litigation. Hence, 10 Affirmed. 11 Chief BURGER, dissenting. 12 holds agencies inspect unless "primary disclosure" "to ." Ante, 480. This compelled history ignores vital public interest effective noncriminal cases. I dissent. 13 Fed.Rules Crim.Proc., provides discretion order "preliminary (Emphasis added.) evident rule filing complaint contemplated Congress. Disclosure encompasses those where about filed. words necessarily proceedings existence, where, claim study. Court's interpretation effectively reads out interprets apply "actual use" ere indeed Congress' intent, sufficed allow proceedings" added permitting proceedings. As now Rule, rarely 14 unclear legislative exactly what Congress intended phrase agencies. That been unchanged since original adopted 1946. 1946 Advisory Committee Notes explained rules codified traditional doctrine 18 U.S.C.App. 1411. cited examples practice involved motions disclosure—which denied—in existing hearing. Schmidt States, 115 394 (CA6 1940); American Medical Association, 429 (DDC 1939). short, appear these resolve tension agencies' information juries' secrecy." Note, Facilitating Administrative Agency Access Material, 91 Yale L.J. 1614, 1620-1625 15 1977 amendments 6(e) offers somewhat more guidance intent Those carried with" primarily concerned spelling whom conditions attorneys Department could personnel assisting Senate Report stated balance prosecutors assistance fear indirect "will misuse enforce non-criminal laws. S.Rep. 95-354, 95th Cong., 1st Sess. (1977), U.S.Code Cong. & Admin.News 1977, pp. 527, 531. However, specifically balancing interests 16 "[T]here preclude jury-developed evidence purposes. On contrary, improper, assuming utilized legitimate Ibid. (emphasis added). 17 states conflicting policies concerned: promote claims allowing purposes, prevent abuse tool discovery. "the believes intends basis court's refusal paragraph (C) enable government should restrictive prevailing decisions." (footnote omitted). reference 6(e)(3)(C) suggests understood balanced courts weighing provision. 19 One "prevailing decisions" Robert Hawthorne, Inc. Director Service, 406 1098, 1126 Pa.1976). assisted federal t x via jury. proper, termination investigation, "future follow access." F.Supp., 1129. "for second sentence Id., 62. Hawthorne assumed did suggest premature preparing conducting 20 House debates permit onset Rep. Charles Wiggins although agent prosecutor "not free share [grand jury] employs him," once laws uncovered, pursuant order: 21 "There come uncovers laws, State local becomes duty attorney cannot act information, turn job. successfully seeking court." 123 Cong.Rec. 25196 (1977) 22 say improper planning thrust remarks proper complaint. outweighed Illinois Abbott Associates, 15, 1356, 1361, 281 (1983), Douglas Oil Co. Petrol Stops Northwest, 441 211, 99 1667, 60 156 (1979); Procter Gamble Co., 356 677, 78 983, 1077 (1958). 23 reviewing history, apparent, precise issue presented "reflects concern rule—the prevention facilitation enforcement." Transcripts 80 Mich.L.Rev. 1665, 1674-1675 Given absence statutory statements guided concerned. 24 attempts crude rigid way reconcile issue. believe better struck threshold satisfied long possibility action, ultimately act, review. respect, makes difference review de novo, here, limited; nor adversely choose forego broad enlarges potential aiding enforcement. standard met—as be—the questions shown used civ l discovery outweighs approach focuses attention key again competing case-by-case basis. id., 1680-1689. result enhance reducing risk abuse. 25 assumption agencies, prosecutors, subvert whenever possible. Accordingly, erects barrier restricting theory remove incentive fundamental flaw analysis idea phenomenon, Few ever reported, fewer 683, 986, (1958), "criminal procedures elicit * flouting policy law." Moreover, tremendous pressure investigate crimes their jurisdictions—crimes both numerous complex before—reduces likelihood swayed tasks violate professional ethical standards behest personnel. Finally, think incapable policing occasional abuses occur. sensitivity risks abuse, readiness ensure integrity See, e.g., April 1956 Term Jury, 239 263 1956); Doe, 341 1350 (SDNY 1972); Sam Cohen, 42 T.C.M. (CCH) 312, 321 battle phantom, "strawman" threat, fails account substantial costs impose public. financial crimes, Securities Commission devote thousands lawyer hours case. Brief O.T.1982, 81-1032, p. 39, 37. duplicate investigations waste resources; meritorious brought. 3138, 7, (BURGER, C.J., dissenting). approve result. 27 Applying principles, reverse remand. release Indeed, facts almost respondent, contest remand determination sufficient conducted good faith. 6c(a)(A). knotty what, any, sorts garden-variety riminal prosecutions qualify generally, Bradley Fairfax, 634 1126, 1129 (CA8 1980); 20, Concurrent Investigation (J. Ray McDermott 622 166, 170-171 (CA5 February 1971 Conlisk, 490 894, 897 1973); Doe Rosenberry, 255 118, 120 (CA2 1958). Our Other considerations govern construction similar contexts (e.g., Fed.Rule Civ.Proc. 26(b)(3) ("in anticipation trial")). requires "needed avoid injustice another party's request "structured cover needed." 222, 1674, (1979) 221-224, 1674-1676; 3149. These inquiries particulars sought. new 6(e)(3)(E), effect August 1, relies remark Wayne LaFave (Reporter Rules) during congressional hearings leading amendment 3144 3147. response question, "tax hearing" considered Hearings Proposed Amendments Rules Subcommittee Judiciary, 94 (1977). LaFave's ambiguous hearing," reasonably taken audit. earlier: "[T]he turned purely proceedings, proceeding. But occasions proceedings." 86. meant mean, position inconsistent own position, one. particu ar, find unnecessary contentions parties level exist points deficiency. argues, occurrence contingent assessment, outcome itself. proceeding," posit prejudge very supposedly being decided Bates, 200 U.S.App.D.C. 296, 627 349 (1980); McDermott, F.2d, 171; (United States), 309 440, 443-444 (CA3 1962). counters scam, prospect exoneration theoretical real. Judge Elmo Hunter's Empaneled September 28, 1978, 667 724 1981); 119-120. general many begun reaches tentative question; point, commonly shifts ascertaining scope details building support necessary action. decline how firm litigate characterized regarded reject argument remote contingency because, assessed him, simply it, negotiate settlement Government. (including surrender) possibility. disqualify eligibility disclosure, left conceivably instances chances low realistic possibility, instance.

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