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In re Grand Jury Matter

argued: September 16, 1986.

IN RE GRAND JURY MATTER; JOHN F. KENNEDY MEMORIAL HOSPITAL, DISTRICT COUNCIL 33, DISTRICT COUNCIL 33 HEALTH & WELFARE FUND, AND EARL STOUT, APPELLANTS
v.
UNITED STATES OF AMERICA



On Appeal from the United States District Court for the Eastern District of Pennsylvania, D.C. Civil No. 84-34-5

Author: Sloviter

Opinion OF THE COURT

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

SLOVITER, Circuit Judge.

I.

Facts

In September, 1985, a federal grand jury issued a subpoena duces tecum directing the John F. Kennedy Memorial Hospital (JFK Hospital) to produce records and documents in nine separate categories, mostly relating to the finances of the hospital (the 1985 subpoena). Appellants seek reversal of the district court's order dated March 11, 1986, directing JFK Hospital to comply with the grand jury subpoena.

Appellant JFK Hospital is apparently owned by appellant District Council 33 of the American Federation of State, County and Municipal Employees (District Council 33), which represents over 12,000 employees of the City of Philadelphia.*fn1 Appellant District Council 33 Health & Welfare Fund was established to provide health benefits to members of District Council 33 and their dependents. The fourth appellant, Earl Stout, is President of District Council 33, Chairman of the board of Trustees of the Health and Welfare Fund, and Chairman of the Board of Directors of JFK Hospital.

At the request of counsel for the hospital and District Council 33, the government provided a Schofield affidavit that stated that the grand jury was investigating possible violations of 18 U.S.C. § 1962, which is part of the Racketeer influenced and Corrupt Organizations Act (RICO), and 18 U.S.C. § 1341, which prohibits mail fraud, and that the records subpoenaed were essential to that investigation. See In re Grand Jury Proceedings (Schofield I), 486 F.2d 85 (3d Cir. 1973); In re Grand Jury Proceedings (Schofield II), 507 F.2d 963 (3d Cir.), cert. denied, 421 U.S. 1015, 95 S. Ct. 2424, 44 L. Ed. 2d 685 (1975).

JFK Hospital, District Council 33, its Health and Welfare Fund and Stout moved to quash the subpoena. Before the government could respond to this motion, the district court issued an order on October 10, 1985 quashing the subpoena. The government alleges that it did not receive a copy of this order within the ten days in which it was required to request reconsideration pursuant to Local Rule 20(g) of the Eastern District of Pennsylvania, adopted in criminal cases by Local Criminal Rule 2. Some time thereafter, the government filed a Motion for Leave to File Motion for Reconsideration Out of Time and a Motion for Reconsideration of the order quashing the subpoena. The district court granted both motions on February 3, 1986, vacated its order of October 10, 1985, and ordered JFK Hospital to comply with the subpoena by February 3, 1986.

Appellants moved for reconsideration of the February 3, 1986 order. After a hearing, appellants' motion was denied by the district court in an order filed on March 11, 1986 affirming the order of February 3, 1986. In effect, this order denied appellants' motion to quash the grand jury subpoena. All four then took this appeal from that order.

II.

Appealability and Standing

The government has filed a motion to dismiss the appeal, alleging that appellants lack standing. Our disposition of almost all of the issues raised by the motion and on the merits of the appeal is controlled by this court's decision last year in In re Grand Jury Matter (District Council 33), 770 F.2d 36 (3d Cir.), cert. denied, 474 U.S. 1022, 106 S. Ct. 574, 88 L. Ed. 2d 558 (1985), involving three of the four appellants before us here. In that case, which arose from a grand jury subpoena issued August 21, 1984 directed to District Council 33 (the 1984 subpoena), the district court denied a motion to quash the subpoena, the movants appealed, we dismissed the appeal of several appellants on the ground that they had no standing, and, on the merits, we affirmed the district court's refusal to quash.

We turn first to the status of appellant JFK Hospital, to whom the subpoena was directed. As we stated in our prior opinion, the denial of a motion to quash a grand jury subpoena is not a final order for the purposes of an appeal unless and until the party to whom the subpoena is directed disobeys its commands and in subsequently cited for contempt. Id. at 38 (citing United States v. Ryan, 402 U.S. 530, 29 L. Ed. 2d 85, 91 S. Ct. 1580 (1971); Cobbledick v. United States, 309 ...


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