Court Opinion

ID: 9468551
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:17:39.638122+00
Date Added: 2024-06-11T17:40:55.019216
License: Public Domain

PELL,
concurring in part, dissenting in part.
The majority opinion correctly characterizes its view as being “restricting.” Because I regard the views expressed in the majority opinion as being unduly restricting of a legitimate use of the requested material, I respectfully dissent. I do agree with the majority opinion in its holding that the district court exceeded its discretion in permitting disclosure under its supervisory power. On the other hand, in my opinion the Internal Revenue System was entitled under Rule 6(e)(3)(C)(i), Fed.R.Crim.P., to most, if not all, of the disclosure it requested.
The majority opinion cites at two places United States v. Interstate Dress Carriers, Inc., 280 F.2d 52 (2d Cir. 1960). I do not gather that the majority thought that case was incorrectly decided. Chief Judge Lum-bard made it succinctly clear that the rule against disclosure was “intended only to protect against disclosure of what is said or what takes place in the grand jury room.” Id. at 54. The opinion in Interstate also pointed out that the purpose of the secrecy rule was not to foreclose from all further revelation to proper authorities the information or documents which were presented to the grand jury. Id. Elaborating fu? ther the court stated:
Thus, when testimony or data is sought for its own sake — for its intrinsic value in the furtherance of a lawful investigation — rather than to learn what took place before the grand jury, it is not a valid defense to disclosure that the same information was revealed to a grand jury or that the same documents had been, or were presently being, examined by a grand jury.

Id.

Unfortunately, it appears to me that the majority opinion has unduly limited the rule permitting disclosure, notwithstanding a disclaimer of such intent, so as to foreclose substantially further revelation of any documents or testimony to proper authorities in a situation such as that here involved in which there is no presently existing “judicial proceeding.” The majority opinion fails to give any real recognition to the word “preliminarily” in the rule of disclosure. Obviously, it appears to me, the drafters of the rule contemplated two situations in which there could be disclosure based upon a judicial proceeding situation. One of these was “in connection” with a judicial proceeding which would seem to mean that there was a judicial proceeding in existence. On the other hand, if we give the plain dictionary meaning to the word *1241“preliminarily” that of “preceding the main business” or “lying before,” or “leading to,” the disclosure would be pertaining to a judicial proceeding not yet in existence. The majority opinion appears to hold that there must be some real certainty that there will be a judicial proceeding, or, at the very least, such a proceeding must be in an en-ceinte status. I do not regard the rule as so requiring.
It is true, of course, as the majority states, that the option of litigation rests with the taxpayer who may wish to pay any deficiency assessed if one is even assessed. From the vigorous manner in which the present litigation is being pursued, I would find more certainty in the likelihood of ultimate judicial proceedings than does the majority. In any event, the actual beginning of litigation is always an uncertain matter which may be deferred or even never begun for any of several reasons. If we read into the rule that the disclosure preliminarily to a judicial proceeding must be preliminarily to a judicial proceeding bound to happen, we substantially are curtailing the plain language of the rule in a situation such as the present where there has been a guilty plea to an information charging an understatement of taxable income of approximately $60,000. It would not seem to characterize correctly the likelihood of ultimate vigorous pursuit of civil liability by the Internal Revenue Service as being “embryonic, speculative and uncertain.” In sum, on this point, it appears to me from the facts of this case that there is reasonable certainty that a judicial proceeding will follow but that even if this was not a practical certainty under the plain wording of the rule of disclosure the Internal Revenue Service was entitled to disclosure of the items it sought.
A secondary aspect, however, aside from that of being preliminarily to a judicial proceeding is that much of the material sought is in the nature of documents which are sought for their own sake or as Chief Judge Lumbard stated for their “intrinsic value in the furtherance of a lawful investigation.” Interstate, 280 F.2d at 54.
This court approved the above principle in United States v. Stanford, 589 F.2d 285, 291 (7th Cir. 1978), cert. denied, 440 U.S. 983, 99 S.Ct. 1794, 60 L.Ed.2d 244 (1979). Under the principle established in that case, it would appear that some of the documents in the present case, in any event, should have been disclosed. These were the “Memorandum to File” prepared by the Assistant U. S. Attorney, a letter to Baggot from Pacific Trading Company, and purchase and sale statements from Baggot’s account.
The Lassar memorandum was clearly a work product of the attorney and it appears to me that on its face it reveals nothing about what occurred before the grand jury. Even if Lassar had intended some of his memorandum to refer to matters which might be presented to the grand jury :t is speculative to say that any particular factual matters were actually so presented. Baggot argued in his reply brief that Stanford was factually distinguishable in that the disclosures made were documents which the complainants had either personally executed or with which they were thoroughly familiar. In the present case, I fail to see why a letter to Baggot and his purchase and sale statements would not be matters with which he was thoroughly familiar. There was probably good reason to think that other purchase and sale documents were items with which he was familiar. Baggot also attempts to distinguish Stanford on the basis that the documents there were not disclosed because they revealed nothing about the grand jury investigation. Because the correspondence and commodities statements have in the meaning of Interstate their own intrinsic value I fail to see where the documents themselves reveal anything about the grand jury investigation. They are sought for their own significance not because of their having been put before the grand jury. An appropriate inquiry would be whether documents, once they have been before a grand jury, are immobilized perpetually from use in a legitimate investigation by another branch of government. The majority opinion has not chosen to address Stanford at all.
*1242Baggot also attempts to distinguish Interstate Dress Carriers because of the “independent statutory authority” which the ICC commanded to inspect the documents. Baggot also argues that the IRS had “no comparable right ... to the grand jury documents.” However, this ignores the fact that in Interstate the documents had personally been subpoenaed by a grand jury and were in custody of the Justice Department pursuant to the subpoena. Further, as the majority opinion itself mentioned, the IRS did have comparable statutory authority to that of the ICC under 26 U.S.C. § 7602 to examine books and records. Certainly this would apply to Baggot’s own documents such as a letter to him and documents pertaining to his commodity transactions.
A later case which I regard as stating the law of this circuit as set forth in Stanford is that of S.E.C. v. Everest Management Corp., 87 F.R.D. 100, 105 (S.D.N.Y. 1980). In that case, the SEC requested permission to use documents presented directly to grand juries pursuant to grand jury subpoenas. The court summarized the law which I believe should be applicable to the documents here involved as follows:
A request for grand jury documents evokes different, and less exacting, considerations than a request for transcripts of grand jury testimony. Illinois v. Sarbaugh, 552 F.2d 768, 772 n.2 (7th Cir.), cert. denied, 434 U.S. 889, 98 S.Ct. 262, 54 L.Ed.2d 174 (1977); see United States v. Stanford, 589 F.2d 285, 291 (7th Cir. 1978), cert. denied, 440 U.S. 983, 99 S.Ct. 1794, 60 L.Ed.2d 244 (1979). Documents produced to the grand jury do not intrinsically reveal what transpired in the grand jury room. This reasoning has led some courts to comment that documents may not fall within the ambit of rule 6(e)’s secrecy requirement. United States v. Weinstein, 511 F.2d 622, 627 n.5 (2d Cir.), cert. denied, 422 U.S. 1042, 95 S.Ct. 2655, 45 L.Ed.2d 693 (1975); In re Grand Jury Investigation of Ven-Fuel, 441 F.Supp. 1299, 1303 (M.D.Fla.1977). The more prevalent view, and the one opted for by this court, is expressed in United States v. Interstate Dress Carriers, Inc., 280 F.2d 52, 54 (2d Cir. 1960): “Documents as well as oral testimony of course may come within rule 6(e)’s proscription against disclosure.” Emphasis is placed on the purpose for which grand jury documents are sought. Disclosure is appropriate where documents are sought to further legitimate purposes in connection with lawful investigations or judicial proceedings. See, e. g., Interstate Dress Carriers, Inc., supra, 280 F.2d at 54 (disclosure to further lawful agency investigation); United States v. Saks & Co., 426 F.Supp. 812, 815 (S.D.N.Y.1976) (same); Capitol Indemnity Corp. v. First Minnesota Construction Co., 405 F.Supp. 929, 931 (D.Mass.1975) (disclosure to further discovery in civil litigation).
In Everest, the SEC was granted disclosure even though its need for the documents was largely occasioned by its own carelessness. The district court judge observed that disclosure would save the parties from costly and perhaps futile discovery of documents produced earlier to the grand jury. Here the majority opinion requires the IRS to utilize discovery procedures other than utilizing the documents which should be readily available under the law just cited. Little purpose is served by such a requirement in this case where the grand jury proceedings have long since expired.
Finally, while the majority opinion accords some deference to the importance of collecting taxes and refers to such as “being worthy of civil pursuit,” the opinion nevertheless holds that it is not of such consequence as to justify the fashioning of a special judicial exception to grand jury secrecy. For the reasons I have indicated herein, I do not think any judicial exception need be fashioned. All that needs to be done is to apply existing law to an extremely important phase of governmental activity, namely that of collecting the revenue often from unwilling or evasive sources. Our taxation system is frequently under attack and we are aware that evasion' does occur. We should also be mindful that the *1243continued functioning of our government is dependent upon the successful collection of legitimately owed taxes.
ORDER
On consideration of the petition for rehearing and suggestion for rehearing en banc filed in the above-entitled cause by defendant-appellee, James E. Baggot, a vote of the active members of the court was requested. The panel considered the petition for rehearing and a majority of the judges on the original panel have voted to deny the petition for rehearing. A majority of the active members of the court have also voted to deny a rehearing en banc*
It Is Ordered that the aforesaid petition for rehearing be, and the same is hereby Denied.
It Is Further Ordered that the supplement to the majority opinion and also the partial concurrence and dissent attached to this order shall be, and the same are made a part of the opinion in this case.
SUPPLEMENT TO THE MAJORITY OPINION
HARLINGTON WOOD, Jr., Circuit Judge.
Judge Pell’s dissent and the government’s petition for rehearing correctly point out that the majority opinion did not discuss in depth its holding that certain commodity trading records subpoenaed by the grand jury from third parties were considered to be items subject to Rule 6(e). Some additional comments are therefore appropriate.
We see no conflict with our holding in United States v. Stanford, 589 F.2d 285 (7th Cir. 1978), cert. denied, 440 U.S. 983, 99 S.Ct. 1794, 60 L.Ed.2d 244 (1979). The factual circumstances of that case were peculiar and distinguishable, but apart from that the rule discussed there has not been satisfactorily met to permit release of the documents in the present case. In Stanford, it was the defendants who claimed a violation of Rule 6(e) because they, not some third parties, were shown certain documents from their own individual governmental employment or welfare files obtained by grand jury subpoena. This court determined that the document disclosure was proper. That holding, with which we agree, was: “The disclosures challenged here revealed nothing about the grand jury investigation, and the disclosures were made only to persons legitimately connected with the documents.” 589 F.2d at 291. It is stressed that “[ujnless information reveals something about grand jury proceedings, secrecy is unnecessary.” Id.
Judge Parsons in the present case considered Stanford and correctly concluded that the particular documents which he examined in camera should nevertheless be viewed as matters occurring before the grand jury and therefore subject to Rule 6(e). As he was thoroughly familiar with the grand jury proceedings, we see no justification for disputing his view of those documents. The information filed against Baggot sets out various commodity trades which were in question. The particular documents appear to be related to those trades and to be the basis of the grand jury’s investigation. The defendant aptly labels the documents the “essence” of the grand jury inquiry. We note that the government did not cross appeal Judge Parson’s Stanford ruling as Judge Parsons nevertheless proceeded to release the documents under his general supervisory powers.
It seems to be argued that if documents subpoenaed by a grand jury have some “intrinsic value,” that is, they were created for purposes other than the grand jury investigations, then they are automatically outside of Rule 6(e). See United States v. Interstate Dress Carriers, 280 F.2d 52, 54 (2d Cir. 1960), and its progeny. If that is all there is to the test, grand jury secrecy would be seriously eroded by being sacrificed to the alleged need for the documents by someone else and the power of a grand jury could be misused. The policies favoring grand jury secrecy in most instances must still be given *1244due weight. Douglas Oil Co. v. Petrol Shops Northwest, 441 U.S. 211, 219 n.10, 99 S.Ct. 1667, 1673 n.10, 60 L.Ed.2d 156 (1979); United States v. Procter & Gamble Co., 356 U.S. 677, 681-82 and n.6, 78 S.Ct. 983, 985-86 and n.6, 2 L.Ed.2d 1077 (1958).
 It is not the holding of this case that all third party documents subpoenaed by a grand jury thereby forever after acquire immunity from any other use.1 Only those subpoenaed documents should be subject to Rule 6(e) which when reasonably considered in the context of the particular grand jury investigation are determined by the trial court to reveal some secret aspect of the grand jury investigation. If a third party document has intrinsic value and a usefulness for other legitimate purposes and would not breach grand jury secrecy, it may be released for those purposes outside of Rule 6(e). The trial judge who is thoroughly familiar with the grand jury proceeding should be accorded wide discretion in that determination.
Some courts have gone a degree further than we find necessary in these particular circumstances and have held that “matters occurring before the grand jury” include documents that “[m]ay tend to reveal what transpired before the grand jury.” (Emphasis supplied.) United States v. Armco Steel Corp., 458 F.Supp. 784, 790 (S.D.Mo. 1978). Accord, In re Grand Jury Investigation (Lance), 610 F.2d 202, 216 (5th Cir. 1980); United States v. Gold, 470 F.Supp. 1336, 1350 (N.D.Ill.1979). See also United States v. Hughes, 429 F.2d 1293, 1294 (10th Cir. 1970); U.S. Industries, Inc. v. United States District Court, 345 F.2d 18, 20-21 (9th Cir.), cert. denied, 382 U.S. 814, 86 S.Ct. 32, 15 L.Ed.2d 62 (1965). Under that test, the documents here would unquestionably be protected from disclosure.
SUPPLEMENTAL CONCURRENCE AND DISSENT

 Judges Bauer and Pell have voted to grant the petition for rehearing en banc.

. Upon return to their original owners after serving their grand jury purposes, the documents in any event would be subject to later subpoena and use by others.