ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (D.C. Crim. Nos. 79-00296-01/07)
Before Seitz, Chief Judge, and Gibbons and Rosenn, Circuit Judges.
CBS Inc. (CBS) appeals from an order of the district court adjudging it in civil contempt for failure to comply with a court order directing it to submit certain materials to the court prior to trial for in camera inspection.
On December 3, 1978, CBS broadcast an investigative report on its news program 60 MINUTES concerning the business of fast-food franchising. Entitled "From Burgers to Bankruptcy," the report focused on the activities of Wild Bill's Family Restaurants (Wild Bill's) and concluded with a statement by Mike Wallace that the FBI and the United States Attorney in Newark, New Jersey, had been investigating Wild Bill's and expected to present evidence to a grand jury in the near future.
On September 5, 1979, a grand jury in Newark returned an indictment against several principals of Wild Bill's (the defendants). The indictment charged the defendants with one count of conspiracy and nineteen counts of fraud arising out of the Wild Bill's franchising operation.
Approximately five months later, and less than one month before their trial was scheduled to begin, the defendants served CBS with a subpoena duces tecum asking CBS to produce before trial:
(Investigator's) notes regarding interviews with franchisees and employees of Wild Bill's, filmed interviews of such individuals which were not aired, which are called "out-takes" and notes pertaining to franchisees and employees who refused to be interviewed by your investigators, and, also all video tapes, audio tapes, notes, memoranda, reports and documents of any nature pertaining to the preparation of the program aired in December, 1978 entitled "From Burgers to Bankruptcy."
CBS moved to quash the subpoena, asserting a first amendment privilege for newsgathering that protected the requested materials.
The district court held a hearing on March 4, 1980, to consider the motion to quash. In an oral opinion issued at the end of this hearing, the district court ruled that the subpoena as written was overbroad and not enforceable under Fed.R.Crim.P. 17(c). However, because the defendants' trial was set to begin in one week, the court decided to confront CBS's privilege claim immediately instead of waiting for the trial. It based this decision on several factors, including a desire to avoid disrupting the trial and needlessly increasing its expense, and to afford an opportunity to obtain appellate review of the court's privilege decision before the start of the trial.
The district court relied on our recent decision in Riley v. City of Chester, 612 F.2d 708 (3d Cir. 1979), to find a qualified privilege protecting journalists in their newsgathering function. Because the privilege was not absolute, the court concluded that it must determine whether the privilege should yield to the defendants' need for the information sought. It also concluded that it could not make this determination without first seeing the information in CBS's possession. Therefore, the court directed the government to furnish CBS with a list of the witnesses it intended to call at trial. Instead of quashing the defendants' subpoena entirely on the basis of Fed.R.Crim.P. 17(c), the court modified it and ordered CBS to produce to the court for in camera inspection prior to trial all verbatim or substantially verbatim statements in CBS's possession made by persons named in the witness list.
The court's order did not provide for the release of any of these statements to the defendants before the trial. Rather, the court stated that it would entertain a motion by the defendants for disclosure of such statements after each witness in question testified on direct examination at trial. Only then would the court balance the defendants' need for the statements against the interests underlying the privilege. After so ruling, the court gave CBS until March 6 to decide whether to comply with the subpoena as modified.
After the March 4 hearing, the defendants served CBS with a second subpoena. This subpoena sought production directly to the defendants of all verbatim or substantially verbatim statements relating or referring to Wild Bill's made by roughly 100 named persons. The great majority of these persons were franchisees or potential franchisees of Wild Bill's and former employees of Wild Bill's. Although it appears that there is some overlap between the persons included in this subpoena and in the government's witness list, we cannot determine from the record the extent of the overlap.
At a hearing held on March 6, the district court also denied enforcement of this subpoena. Because it previously had held that a qualified journalist's privilege protected the type of material sought by this subpoena, the court concluded that direct production of these statements to the defendants was improper. It modified this subpoena to conform to its March 4 ruling and directed CBS to produce to the court for in camera review prior to trial all verbatim and substantially verbatim statements made by the franchisees and potential franchisees listed in the second subpoena. The court did not order production of the statements of Wild Bill's employees or the other persons named in the subpoena and did not specify a procedure for production of the franchisees' statements to the defendants at trial.
The court incorporated this ruling into its March 4 order. The result required CBS to give to the court for in camera inspection all film and audio tapes or written transcripts that reproduced any verbatim or substantially verbatim statements made by: 1) any individuals named in the witness list, and 2) the franchisees or potential franchisees named in the second subpoena.
CBS, however, informed the court that it would not comply with this production order. Therefore, the court held CBS in civil contempt and imposed a fine of $1 per day for every day that CBS remained in contempt. This court ...