Court Opinion

ID: 2675364
Source: CourtListenerOpinion
Date Created: 2014-05-22 14:02:05.973939+00
Date Added: 2024-06-11T12:22:19.067712
License: Public Domain

SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized).

                             In re State Grand Jury Investigation (A-65-12) (072552)

Argued March 17, 2014 -- Decided May 22, 2014

PER CURIUM

         In this appeal, the Court addresses whether enforcement of grand jury subpoenas seeking defense attorneys’
records regarding the defendants’ post-indictment activities must await completion of the pending criminal
prosecution.

          On May 14, 2010, a State Grand Jury returned Indictment 10-05-00057-S (Indictment 10-05-00057-S)
charging thirty-four defendants with racketeering, money laundering, falsifying records, failing to file tax returns,
failing to pay income taxes, and other related offenses. On May 24, 2010, days after the issuance of that State Grand
Jury Indictment, a separate investigation was initiated.

          On June 13, 2011, all of the privately retained defense attorneys who represented defendants in connection
with Indictment 10-05-00057-S were served with grand jury subpoenas duces tecum, specifically seeking the
attorneys’ fee records for all payments received between May 15, 2010 – the day after Indictment 10-05-00057-S
was returned – and the return date of the subpoena. Six of the subpoenaed attorneys (attorneys) filed a motion to
quash the subpoenas, arguing that the subpoenas sought information that could be used improperly in the ongoing
trial proceedings, that the subpoenas infringed on their clients’ right to counsel by requiring the attorneys to provide
evidence against their clients, and that the subpoenas would have a chilling effect on their relationship with their
clients. The court denied the attorneys’ motion to quash, finding that the subpoenas were part of a separate
investigation into acts subsequent to Indictment 10-05-00057-S and that neither the Sixth Amendment nor attorney-
client privilege barred the State from subpoenaing client fee records.

          The Appellate Division granted the attorneys’ motion for leave to appeal, but ultimately affirmed the trial
court’s denial of the motion to quash. Nonetheless, the panel was concerned that the service of subpoenas on the
defendants’ attorneys would have a “deleterious inhibiting effect” on the attorney-client relationship, particularly
because the State had served subpoenas on all privately retained attorneys rather than using a more tailored
approach. To that end, and, in order to balance the parties’ interests, the Appellate Division issued, sua sponte, a
stay of enforcement of each subpoena until the charges pending against an individual defendant (i.e., an attorney’s
client) under State Grand Jury Indictment 10-05-00057-S are resolved.

         The Court granted the State’s motion for leave to appeal from the imposition of the stay. In re State Grand
Jury Investigation, 214 N.J. 112 (2013). The attorneys did not file a cross-motion for leave to appeal the Appellate
Division’s judgment upholding the subpoenas.

HELD: The stay of enforcement of each subpoena ordered by the Appellate Division shall continue in effect, provided
that the State offers and each defendant executes a statute of limitations tolling agreement. If a defendant fails to
execute a tolling agreement within forty-five days of the State’s offer, the stay shall be lifted in respect of that
defendant.

1. Because the attorneys did not file a cross-motion for leave to appeal the Appellate Division’s judgment upholding
the subpoenas, the Court does not have before it the merits of the attorneys’ original motion to quash. That said, the
Court takes note of the fact that the State did not provide any guidelines or factors under which the Attorney General
reviews and permits the issuance of State Grand Jury subpoenas to attorneys representing previously indicted
defendants. Although the Court is constrained by the current procedural posture from commenting further on the
role to be played by guidelines or factors in the review and approval of State Grand Jury subpoenas to attorneys

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representing previously indicted defendants, the Court acknowledges the importance of such guidelines in the
federal criminal justice system. (p. at 8).

2. With regard to the matter before the Court – the Appellate Division’s imposition of the stay – the Court accepts
the State’s representations that it seeks only attorney payment information, not information about the nature of the
services provided by the attorneys to their clients, and that the statute of limitations for the matters under
investigation is likely to expire before proceedings arising from Indictment 10-05-00057-S are concluded. The
Court also accepts the attorneys’ representation that, in light of the State’s statute of limitations concerns, it would
be reasonable to require the indicted defendants to enter into statute of limitations tolling agreements with the State
as a condition for sustaining the stay of the subpoenas. (p. at 9).

3. The interest of justice would not be served by a stay that substantially hinders the State’s prosecution of the
offenses currently under investigation. Therefore, the stay of enforcement of the subpoenas is appropriate only if the
State is not harmed by the operation of statute of limitations for offenses being investigated and presented to the
State Grand Jury. As such, the stay of enforcement of each subpoena ordered by the Appellate Division shall
continue in effect, provided that the State offers and each defendant executes a statute of limitations tolling
agreement. If a defendant fails to execute a tolling agreement within forty-five days of the State’s offer, the stay
shall be lifted in respect of that defendant. (p. at 9).

          The judgment of the Appellate Division is AFFIRMED AS MODIFIED and the matter is REMANDED
to the trial court for further proceedings consistent with the Court’s opinion.

        JUSTICES LaVECCHIA, ALBIN, PATTERSON, and FERNANDEZ-VINA, and JUDGES
RODRÍGUEZ and CUFF (both temporarily assigned) join in this opinion. CHIEF JUSTICE RABNER did
not participate.

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                                       SUPREME COURT OF NEW JERSEY
                                         A-65 September Term 2012
                                                  072552

IN RE STATE GRAND JURY
INVESTIGATION

         Argued March 17, 2014 – Decided May 22, 2014

         On appeal from the Superior Court, Appellate
         Division.

         Frank Muroski, Deputy Attorney General,
         argued the cause for appellant State of New
         Jersey (John J. Hoffman, Acting Attorney
         General, attorney; Mr. Muroski, Mark G.
         Eliades, and Christopher S. Romanyshyn, of
         counsel and on the briefs).

         Vikrant Pawar argued the cause for
         respondents John Weichsel, Esq., Robert
         Blossner, Esq., Tom Cataldo, Esq., Murray
         Richman, Esq., Stacey Richman, Esq., and
         Paul Chiaramonte, Esq.

         Henry E. Klingeman argued the cause for
         amicus curiae The Association of Criminal
         Defense Lawyers of New Jersey (Krovatin
         Klingeman, attorneys; Mr. Klingeman and
         Helen A Nau, on the brief).

    PER CURIAM

    This unusual matter comes before the Court on leave granted

to the State of New Jersey.   In re State Grand Jury

Investigation, 214 N.J. 112 (2013).   The appeal arises out of a

motion to quash a subpoena duces tecum that had been issued by

                                1
the State Grand Jury to private criminal defense attorneys for

fee records pertaining to “any defendant named within State

Grand Jury Indictment 10-05-00057-S,” an earlier issued

indictment.   The motion to quash was denied and that

determination was affirmed on appeal; however, the Appellate

Division issued, sua sponte, a stay of enforcement of each

subpoena until the charges pending against an individual

defendant under State Grand Jury Indictment 10-05-00057-S are

resolved.   The State sought review of the Appellate Division’s

sua sponte action, which impedes law enforcement efforts to

proceed with ongoing State Grand Jury work.    We now modify the

Appellate Division’s judgment.

                                 I.

    The history of this appeal reveals protracted proceedings

leading up to this Court’s review of the stay of the subpoenas.

We briefly summarize that history.

    On May 14, 2010, a State Grand Jury returned Indictment

10-05-00057-S charging thirty-four defendants, who had been

under investigation for involvement in several organized

criminal enterprises, with racketeering, money laundering,

falsifying records, failing to file tax returns, failing to pay

income taxes, and other related offenses.     According to an

affidavit filed by the then-Director of the Division of

Criminal, Department of Law and Public Safety, “a separate

                                 2
investigation” was initiated on May 24, 2010, days after the

issuance of that State Grand Jury Indictment.

    On June 13, 2011, all of the privately retained defense

attorneys who had represented the defendants in connection with

State Grand Jury Indictment 10-05-00057-S were served with grand

jury subpoenas duces tecum, seeking the attorneys’ fee records

for all payments received between May 15, 2010, and the return

date of the subpoena.     The affidavit of the former Director of

the Division of Criminal Justice states that he “authorized the

issuance of the State grand jury subpoenas.”     The subpoenas were

addressed to the custodians of records at the attorneys’ firms,

and all sought the same data:

         [A]ll fee records including but not limited
         to:    (1) Cash Receipt entries; (2) Bank
         Deposit tickets including the cancelled
         deposit items; (3) Receipts issued for
         payments, including cash, check or any other
         form; (4) Payment ledgers; (5) Retained
         copies   of   any   checks  received   and/or
         currency    tendered;   (6)   Any   documents
         identifying the person making the payment;
         (7) Currency Transaction Reports; (8) IRS
         Forms 8300; (9) Records identifying anything
         of value received in lieu of cash or check
         and the identity of the person tendering the
         things of value relative to legal services
         provided or agreed to be provided . . . .

    Six of the subpoenaed attorneys (attorneys) filed a motion

to quash the subpoenas.    They argued that the subpoenas sought

information that could be used improperly in the ongoing trial

proceedings, that the subpoenas infringed on their clients’

                                   3
right to counsel by requiring the attorneys to provide evidence

against their clients, and that the subpoenas would have a

chilling effect on their relationship with their clients.

    The motion court refused to quash the subpoenas, finding

that the subpoenas were part of a separate investigation of acts

subsequent to issuance of State Grand Jury Indictment

10-05-00057-S and that neither the Sixth Amendment nor attorney-

client privilege barred the State from subpoenaing client fee

records.

    On leave granted to the six attorneys, the Appellate

Division affirmed the trial court’s denial of the motion to

quash, concluding that:   (1) the State was using the subpoenas

properly to investigate separate, post-indictment conduct, and

(2) the fee records were not protected by attorney-client

privilege.   As to the first point, the Appellate Division

stated:

                We have little difficulty in agreeing
           with the Law Division that (1) the May 2010
           indictment and (2) the investigation into
           similar post-indictment conduct of some or
           all of the indicted defendants represent
           separate spheres of inquiry authorized to
           the State.    The dominant purpose of the
           latter line of inquiry -- including the
           payment of counsel fees as outlined in the
           challenged subpoenas -- can have no capacity
           “to buttress an indictment already returned
           by the grand jury.”   [State v. Francis, 191
           N.J. 571, 591-92 (2007).]      The requested
           materials, by definition, will have their
           genesis in events that occurred after the

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            May   2010     indictment    was    issued,    and
            necessarily involve circumstances temporally
            separate from the subjects of the alleged
            “predicate criminal activity [that] occurred
            between in or about January 2005, and in or
            about April 2010.”        Obviously, the State
            cannot be prevented from investigating and
            later indicting already-indicted individuals
            if   those    individuals    continue     criminal
            conduct after the indictment.         A defendant
            cannot be immunized from future scrutiny of
            a similar offense just because he or she has
            already    been    charged    with    the    prior
            misconduct.     Nor can the involvement of an
            attorney    --   unwitting    or   otherwise    --
            automatically shield possible wrongdoing.

            [(second alteration in original).]

As to attorney-client privilege, the appellate panel concluded

that,

            [b]ased upon the record presented to us, the
            data sought by the State’s subpoenas --
            narrowly tailored to non-communicative, non-
            confidential attributes of the      parties’
            business relationship -- neither invade the
            attorney client privilege nor erode the
            protections available to indigent and non-
            indigent defendants alike.

     However, the panel was concerned that the service of

subpoenas on the attorneys would have a “deleterious inhibiting

effect” on the attorney-client relationship, particularly in

this case, in which the State had served subpoenas on all

privately retained attorneys rather than using a more tailored

approach.    The panel found that “[s]uch a cover-the-waterfront

inquiry indubitably raises concerns of fairness and the

potential for both misunderstanding by, and intimidation of,

                                    5
defense counsel and their clients.”   Although the panel

recognized that “[e]ven when trials are pending, a grand jury’s

right to unprivileged evidence may outweigh the right of the

defense bar and its clients not to be disturbed,” the panel

found that here “the State’s broad-stroke-approach tips the

scale in favor of caution in order to ensure that the indicted

defendants are not deprived of counsel of their choice.”

Therefore, “[i]n order to accommodate the disparate interests of

the State, the indictees, and their attorneys,” the panel

imposed a stay on the enforcement of the subpoenas duces tecum

issued to the attorneys.   The panel ordered that the stay of

each subpoena remain in place until the conclusion of

proceedings arising from State Grand Jury Indictment 10-05-

00057-S against an attorney’s client.

    This Court granted the State’s motion for leave to appeal

from the imposition of that stay, which had not been included in

the attorneys’ request for relief.    The attorneys did not file a

cross-motion for leave to appeal the Appellate Division’s

judgment upholding the subpoenas.

                                II.

    Before this Court, the State argues that the Appellate

Division’s stay of the execution of the subpoenas “frustrate[s]

the public’s interest in the fair and expeditious administration

of the criminal law” and should not have been imposed based on a

                                 6
finding of potential, as opposed to actual, infringement on the

defendants’ right to counsel.   The State particularly emphasizes

its concern that, because the bulk of the pretrial and trial

proceedings relating to State Grand Jury Indictment

10-05-00057-S have yet to take place, the stay is likely to

allow the statute of limitations on the matters under

investigation to run before the subpoenas can be executed.      The

State also represents that it seeks only attorney payment

information and does not and will not seek any detail or

information related to the nature or provision of attorney

services.

    The attorneys argue that this Court should affirm the stay

imposed by the Appellate Division because it properly balances

the State’s need for the information and the indicted

defendants’ interest in their relationship with their attorneys.

The attorneys assert that the State’s concerns regarding the

operation of the statute of limitations do not require lifting

the stay.   Rather, the attorneys suggest that those concerns

could be addressed through individual statute-of-limitations

tolling agreements between the defendants and the State.     The

attorneys represent that requiring such tolling agreements as a

condition of the stay would be reasonable.

                                 7
                               III.

    Because this case comes before this Court only on the

State’s motion for leave to appeal the imposition of the stay,

the Court does not have before it the merits of the attorneys’

original motion to quash.   Therefore, the Court lacks the

ability to probe the circumstances under which the State has

proceeded with these subpoenas duces tecum against defense

counsel.   We note that we have not been provided with any

guidelines or factors under which the Attorney General reviews

and permits the issuance of State Grand Jury subpoenas to

attorneys representing previously indicted defendants.    That

said, we are constrained by the procedural posture of this

matter from commenting further, at this time, on the role to be

played by guidelines or factors in the review and approval of

State Grand Jury subpoenas to attorneys representing previously

indicted defendants.   We are aware nonetheless of the importance

of such guidelines in the federal criminal justice system.       See,

e.g., In re Klein, 776 F.2d 628, 634-35 (7th Cir. 1985)

(describing Department of Justice internal guidelines for

issuance of subpoenas to attorneys for information related to

client representation); In re Grand Jury Subpoena to Attorney

(Under Seal), 679 F. Supp. 1403, 1408 nn.15 & 17 (N.D.W. Va.

1988) (quoting full text of federal guidelines and recognizing

                                 8
“the validity of the serious concerns addressed by the . . .

guideline[s] and the appropriateness of the criteria”).

    As the matter is before us, the State has represented that

it seeks only attorney payment information, not information

about the nature of the services provided by the attorneys to

their clients.   The State has also represented that the statute

of limitations for the matters under investigation is likely to

expire before proceedings arising from State Grand Jury

Indictment 10-05-00057-S are concluded.    We accept those

representations.    We similarly note and accept the attorneys’

representation that, in light of the State’s statute of

limitations concerns, it would be reasonable to require the

indicted defendants to enter into statute of limitations tolling

agreements with the State as a condition for sustaining the stay

of the subpoenas.    We agree that the interest of justice would

not be served by a stay that substantially hindered the State’s

prosecution of the offenses currently under investigation.

Therefore, while the Appellate Division judgment properly sought

to balance the interests of the State and the attorneys, we hold

that its stay of execution of the subpoenas is appropriate only

if the State is not harmed by the operation of statute of

limitations for offenses being investigated and presented to the

State Grand Jury.

                                  9
    Accordingly, we conclude that the stay ordered by the

Appellate Division shall continue in effect, provided that the

State offers and each defendant executes a statute of

limitations tolling agreement.   However, if a defendant fails to

execute a tolling agreement within forty-five days of the

State’s offer, the stay shall be lifted in respect of that

defendant.

                                 IV.

    The judgment of the Appellate Division is affirmed as

modified by this decision.   This matter is remanded to the trial

court for further proceedings consistent with the implementation

of this opinion.

     JUSTICES LaVECCHIA, ALBIN, PATTERSON, and FERNANDEZ-VINA,
and JUDGES RODRÍGUEZ and CUFF (both temporarily assigned) join
in this opinion. CHIEF JUSTICE RABNER did not participate.

                                 10
                       SUPREME COURT OF NEW JERSEY

NO.       A-65                               SEPTEMBER TERM 2012
ON APPEAL FROM          Appellate Division, Superior Court

IN RE STATE GRAND JURY
INVESTIGATION

DECIDED              May 22, 2014
                 Justice LaVecchia                               PRESIDING
OPINION BY          Per Curiam
CONCURRING/DISSENTING OPINION BY
DISSENTING OPINION BY

                                 AFFIRM AS
CHECKLIST                        MODIFIED/
                                   REMAND
CHIEF JUSTICE RABNER          ----------------------       ----------------------

JUSTICE LaVECCHIA                      X

JUSTICE ALBIN                          X

JUSTICE PATTERSON                      X

JUSTICE FERNANDEZ-VINA                 X

JUDGE RODRÍGUEZ (t/a)                  X

JUDGE CUFF (t/a)                       X
                                        6

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