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In re Grand Jury Matter. District Council 33 Health and Welfare Fund

August 9, 1985

IN RE: GRAND JURY MATTER. DISTRICT COUNCIL 33 HEALTH AND WELFARE FUND, DISTRICT COUNCIL 33 LEGAL FUND AND EARL STOUT, APPELLANTS


Appeal from the United States District Court for the Eastern District of Pennsylvania (District Court G.J. No. 84-34-2)

Author: Seitz

Before: SEITZ, WEIS, and ROSENN, Circuit Judges.

Opinion OF THE COURT

SEITZ, Circuit Judge.

The appellants, District Council 33 Health and Welfare Fund, District Council 33 Legal Fund, and Earl Stout, appeal from an order of the district court denying their motion to quash a grand jury subpoena directed to District Council 33 of the American Federation of State, County and Municipal Employees ("District Council 33"). Appellate jurisdiction is asserted under 28 U.S.C. § 1291 (1982).

I.

On August 21, 1984, District Council 33 was served with a subpoena duces tecum requiring it to produce the following documents:

Any and all ledger books, accounting records and other documents reflecting all cash receipts, cash disbursements, accounts receivable, and accounts payable for District Council 33, District Council Health and Welfare Fund, and District Council 33 Legal Fund, for the period 6/1/82 to the present.

District Council 33 is an unincorporated association representing over 12,000 employees of the City of Philadelphia. The Health and Welfare Fund and the Legal Fund are separate trusts that were established to provide certain benefits to the members of District Council 33. Earl Stout is the president of District Council 33 and the Chairman of the Board of Trustees for each Fund.

District Council 33, the two Funds, and Earl Stout moved to quash the subpoena duces tecum in the district court. The two Funds and Earl Stout were treated by the court as third party intervenors. Contending that the government was utilizing the grand jury process for the sole purpose of harassing Stout, the movants noted that a prior grand jury investigation, which resulted in the issuance of an indictment against Stout, had culminated in a directed judgment of acquittal after trial. Complying with a subpoena in connection with that earlier investigation had been costly and burdensome. Hence, the movants argued that they should not be required to comply with the subpoena because the government had not demonstrated a good faith basis for the grand jury investigation.

In response to the motion to quash, the government submitted a Schofield affidavit*fn1 in which it averred (1) that the grand jury was conducting an investigation into possible violations of various federal criminal statutes, including 18 U.S.C. § 1962 (1982) (RICO) and 18 U.S.C. § 1341 (1982) (mail fraud); (2) that the subpoenaed records were relevant and necessary for the grand jury investigation; (3) that the investigation was properly within the jurisdiction of the grand jury; (4) that there was no intent to harass; and (5) that the present investigation focused on allegations distinct from the earlier grand jury probe.

The district court denied the motion to quash, finding that the government had demonstrated the existence of a proper purpose for the subpoena through its Schofield affidavit. The movants thereafter petitioned the court to certify its order to permit an interlocutory appeal under 28 U.S.C. § 1292(b) (1982). When this petition was denied, the Health and Welfare Fund, the Legal Fund, and Earl Stout (collectively "the appellants") appealed to this court pursuant to 28 U.S.C. § 1291 (1982). District Council 33 is not among the parties bringing this appeal.

II.

We turn initially to the government's motion to dismiss on the ground that the appellants lack standing to appeal. It is well-settled that the denial of a motion to quash a grand jury subpoena is ordinarily not a final order for the purpose of an appeal. Rather, finality is achieved when the party to whom the subpoena is directed disobeys its commands and is subsequently cited for contempt. United States v. Ryan, 402 U.S. 530, 29 L. Ed. 2d 85, 91 S. Ct. 1580 (1971); Cobbledick v. United States, 309 U.S. 323, 60 S. Ct. 540, 84 L. Ed. 783 (1940); Alexander v. United States, 201 U.S. 117, 50 L. Ed. 686, 26 S. Ct. 356 (1906). Where, however, a person lacks the opportunity to contest the subpoena by disobedience because it is not directed to him or her, an order denying a motion to quash is final as to that individual. In re ...


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