ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Miscellaneous No. 78-158).
Seitz, Chief Judge, and Aldisert and Rosenn, Circuit Judges.
This is an appeal by Larry Smith from an order of the district court holding him in civil contempt of court.
Smith was served with a subpoena duces tecum directing him to produce before the grand jury on March 1, 1978, certain designated records of Rittenhouse Consulting Services, Inc.; Severance Administrators, Inc.; and Specialized Assurance, Inc. It is undisputed that Smith is the custodian of the subpoenaed records and a principal officer of the three corporations.
Smith moved to quash the subpoena on the grounds that it was overbroad, unfairly burdensome and that the government failed to show that the records were relevant to a proper inquiry of the grand jury. Smith further requested that the government establish that it had complied with Rule 6(e) Federal Rules of Criminal Procedure by providing the district court with the names of persons to whom disclosure of the subpoenaed information would be made and that the government affirm or deny under 18 U.S.C. § 3504(a)(1) whether Smith was subjected to illegal electronic surveillance.
The government submitted an affidavit in opposition to the motion to quash in which it stated that the subpoenaed records were relevant and necessary to the grand jury's investigation of Smith's and others' alleged illegal activities concerning "receipt of bribes by employee benefit plan officials and theft or embezzlement from employee benefit plan[s]." The affidavit recited that the government complied with its filing obligations under F.R. Cr. P. 6(e).
At an in camera hearing on the motion to quash or modify the subpoena duces tecum, Smith contended that the subpoena was overbroad. Smith also requested to see the 6(e) disclosure notice of the names of the persons to whom disclosure of the grand jury information would be made. At the hearing, the government stated that the grand jury was investigating allegations that Smith, as the majority owner and operator of the three corporations listed in the subpoena duces tecum, engaged in bribes, theft and/or embezzlement from employee benefit plans. The district court ruled that the government's affidavit as augmented at the hearing complied with this court's requirement that the government show the subpoenaed items to be relevant to a proper inquiry of the grand jury. In re Grand Jury Proceedings, 486 F.2d 85 (3rd Cir. 1973) (Schofield I). The court, however, reserved decision on appellant's request to inspect the F.R. Cr. P. 6(e)(2)(B) notice of disclosure which the government filed with the court and which was impounded under Local Rule 4(c).
The court denied Smith's motion to quash and ordered him to comply with the subpoena duces tecum ; which order was stayed pending submission by the government of an affidavit denying the use by the government of illegal electronic surveillance. The court reserved decision on the question of Smith's access to the 6(e) notice, deeming this issue to be separate and apart from compliance with the subpoena. On May 19, 1978, the court, noting that the government had filed an affidavit on the subject of electronic surveillance, declared the subpoena ripe for compliance and denied Smith's motion to inspect the 6(e) disclosure notice.
At this juncture, defense counsel informed the court that Smith would not comply with the court's order compelling compliance with the subpoena. The government then moved to hold Smith in contempt pursuant to 28 U.S.C. § 1826. At the contempt hearing Smith claimed that he was entitled to secure revelation of the notice of disclosure before complying with the subpoena. Hence, the witness asserted that the fact that he had not been shown the notice of disclosure provided him with a justifiable defense for not complying with the subpoena. The district court rejected Smith's defense. Smith still refused to produce the subpoenaed records. After the court advised Smith of the consequences of such refusal, he again refused to comply with the court's order to produce the subpoenaed records. The court then ruled Smith to be in contempt pursuant to 28 U.S.C. § 1826. Smith now appeals the order holding him in contempt of court on the grounds that: (1) the Schofield affidavit provided by the government was not sufficiently particular to allow the court to properly determine the relevancy and purpose of each subpoenaed document to the grand jury investigation; and (2) he was entitled to know under Rule 6(e)(2)(B), Federal Rules of Criminal Procedure, the identity of government personnel to whom disclosure will be made of the content of the subpoenaed records. We turn to those issues.
In order to obtain enforcement of a grand jury subpoena duces tecum, the government is required to make at least a minimal showing by affidavit of the existence of a proper purpose. Such enforcement may be obtained where it is shown that the items sought are (1) relevant to an investigation, (2) properly within the grand jury's jurisdiction, and (3) not sought primarily for another purpose. In Re Grand Jury Proceedings, 507 F.2d 963 (3rd Cir. 1975), cert. denied, 421 U.S. 1015, 95 S. Ct. 2424, 44 L. Ed. 2d 685 (Schofield II). Smith contends that the court abused its discretion by failing to determine the relevance and purpose of the records to the grand jury investigation.
The government's affidavit reveals that the grand jury was conducting an investigation into alleged "receipt of bribes by employee benefit plan officials and theft or embezzlement from employee benefit plans" and "alleged criminal activity on the part of individuals involved in the administration of the assets of employee benefit plans." The affidavit contains the representation that: "The items sought by the Grand Jury are relevant to the Grand Jury investigation and are not sought primarily for another purpose."
The sufficiency of the government's showing is committed to the sound discretion of the district court whose decision will not be disturbed unless this court finds that the district court's judgment amounted to an abuse of discretion. Our review of the corrected affidavit and the facts and circumstances of the grand jury proceedings shows no abuse of ...