Court Opinion

ID: 9468745
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:22:37.937553+00
Date Added: 2024-06-11T17:38:47.497519
License: Public Domain

Judge Pell,
in dissenting, reflects our views as to the proper interpretation of “preliminarily to a judicial proceeding.”
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 “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 enceinte 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.
In re Special February, 1975 Grand Jury, supra, 652 F.2d at 1310-11.
*728Here two of the three taxpayers being investigated were convicted of filing false income tax returns in which they did not report all of their gross income. Taxpayer Number One has allegedly under-reported his income $43,660 in 1975 and $4,656 in 1977; Taxpayer Number Two, $20,946 in 1974 and $21,219 in 1975; and Taxpayer Number Three, $1,443 in 1975 and $92,404 in 1976. (Affidavit of supervisory Internal Revenue agent as to evidence developed during the course of the grand jury investigation filed in support of government’s application for disclosure.)
Therefore, here, as in the dissent in Bag-got, it is arguably unreasonable to say that judicial proceedings are “embryonic, speculative and uncertain.” The majority opinion in Baggot is arguably inconsistent with the Seventh Circuit’s opinion in Patrick v. United States, 524 F.2d 1109, 1117 (7th Cir. 1975), written by Justice Stevens. There the Seventh Circuit held, in an action to enjoin a jeopardy assessment7 and collection of wagering taxes, that the district court could reasonably anticipate that judicial proceedings would arise out of a contest over Patrick’s failure to file any gambling tax returns when he admittedly had received such income.
B. Other Agency Cases — Quasi-judicial Nature of Proceedings
The major exception to a restrictive application of Rule 6(e)(3)(C)(i) has occurred with respect to proceedings the courts have characterized as quasi-judicial. Disclosure has been granted in cases dealing with the disciplining of lawyers, the removal of judges, the investigation and disciplining of government employees, and the prosecution of violators of criminal laws on the theory that the scheme under which such an action is taken is designed to culminate in, or clearly contemplates, a judicial proceeding. In the Matter of Disclosure of Testimony Before the Grand Jury (Troia), 580 F.2d 281, 286 (8th Cir. 1978). But see Bradley v. Fairfax, 634 F.2d 1126, 1128-31 (8th Cir. 1980); In re Special February 1971 Grand Jury v. Conlisk, 490 F.2d 894, 897 (7th Cir. 1973); Doe v. Rosenberry, 255 F.2d 118, 120 (2d Cir. 1958); United States v. Sobotka, 623 F.2d 764, 766 (2d Cir. 1980). Cf. United States v. Bates, 627 F.2d 349, 351 (D.C.Cir.1980) (The court distinguished its case, dealing with a request of the Federal Maritime Commission for disclosure, from cases dealing with the disciplining of lawyers, on the basis that “disciplinary proceedings of lawyers * * * are a function which has been assigned to the judiciary from time immemorial. It is not only preliminary to a judicial proceeding, it is part of a judicial proceeding.”). Similarly, disclosure has been granted to a state attorney general for use in determining whether to bring a federal antitrust action. United States v. Colonial Chevrolet Corp., 629 F.2d 943 (4th Cir. 1980), cert. denied sub. nom. Certain Individuals and Corporations v. United States, 450 U.S. 913, 101 S.Ct. 1352, 67 L.Ed.2d 337 (1981); United States v. B. F. Goodrich Co., 619 F.2d 798 (9th Cir. 1980).
In none of these cases can it be said with any certainty that a judicial proceeding will occur. The investigating authority may conclude there has been no wrongdoing, or the subject of the investigation may not contest the adverse action. In this respect, the government here is persuasive in contending that there is no substantial difference from the IRS civil tax assessment situation.
In summary, the record discloses that Judge Hunter found that the government acted in good faith in its use of the grand jury for the purpose of conducting a criminal investigation. The material sought was relevant to and a particularized need was shown for its disclosure to the government in connection with civil tax enforcement proceedings. We hold that disclosure was sought preliminarily to a judicial proceeding under Rule 6(e)(3)(C)(i).
*729Reversed and remanded to the district court with instructions to authorize disclosure of the grand jury materials to the Internal Revenue Service for its use in the proposed civil tax examination. Disclosure shall be made in such manner, at such time, and under such conditions as the district court may direct.

. But see In re April 1977 Grand Jury Proceedings, supra, 506 F.Supp. 1174, 1178 (E.D.Mich.1981), where the court distinguished Patrick v. United States, 524 F.2d 1109 (7th Cir. 1975), from the typical tax deficiency situation on the basis that Patrick involved a jeopardy assessment, drastic in nature, from which a judicial proceeding could be reasonably anticipated.