In Re: Grand Jury ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
5-13-1999
In Re: Grand Jury
Precedential or Non-Precedential:
Docket 98-6498
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Filed May 13, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 98-6498
IN RE: IMPOUNDED
ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(Docket No. 97-MC-333)
District Court Judge: Honorable John W. Bissell
Argued March 3, 1999
Before: RENDELL, ALDISERT Circuit Judges,
WILLIAMS, District Judge*
(Filed May 13, 1999)
Jeremy D. Margolis
Edward E. McNally (ARGUED)
Robert M. Andalman (ARGUED)
Altheimer & Gray
10 South Wacker Drive, Suite 4000
Chicago, IL 60606
Attorneys for John Doe 1 and
John Doe 2
_________________________________________________________________
*Honorable Spencer M. Williams, United States Senior District Court
Judge for the Northern District of California, sitting by designation.
James R. Streicker
Terence H. Campbell
Cotsirilos, Stephenson, Tighe &
Streicker, Ltd.
33 North Dearborn St., Suite 600
Chicago, IL 60602
Attorneys for John Doe 3
Joel I. Klein,
Assistant Attorney General
A. Douglas Melamed,
Deputy Assistant Attorney General
John J. Powers, III
John P. Fonte (ARGUED)
Anthony V. Nanni
Reginald K. Tom
Matthew D. Segal
Antitrust Division
U.S. Department of Justice
1401 H. Street, NW
Washington, DC 20530
Attorneys for Appellee
OPINION OF THE COURT
RENDELL, Circuit Judge.
This case involves the question of when a fear of foreign
prosecution implicates the Fifth Amendment privilege after
the Supreme Court's decision in United States v. Balsys,
118 S. Ct. 2218 (1998). Appellants are immunized
witnesses who have refused to testify before a grand jury,
claiming that their case falls within a test articulated in
Balsys requiring Fifth Amendment protection.
On October 29, 1997, a special grand jury was impaneled
in the District of New Jersey for the purpose of investigating
possible price-fixing or other anticompetitive agreements
among manufacturers and distributors in the artificial
sausage casings industry that may violate Section 1 of the
Sherman Act, 15 U.S.C. S 1. The appellants in this case are
2
employees of a corporation targeted in this investigation;
each of the appellants appeared before the grand jury
pursuant to a subpoena and an immunity order of the
District Court compelling his testimony. Appellants
indicated their willingness to answer questions relating to
certain business dealings within the United States, but they
refused to answer questions about activities that occurred
in the United States and related to foreign markets or
occurred outside the United States, claiming that the
court's compulsion order and grant of immunity provided
insufficient protection against foreign prosecution. When
the government moved to hold appellants in contempt, the
appellants requested the court to order a hearing at which
they could question the government regarding contacts with
foreign governments relating to this investigation.
Appellants argued before the District Court, as they do
here, that language in the Supreme Court's opinion in
United States v. Balsys created a test for when a foreign
prosecution implicates a defendant's Fifth Amendment
rights, and that this prosecution falls within the"test" of
Balsys, because it is an instance of cooperative
international antitrust enforcement.1 They offered evidence
of a "standing policy" that included selections from
speeches by Antitrust Division officials that discussed
increasing "internationalization" of antitrust enforcement,
"positive comity" initiatives with other countries that result
in information and evidence sharing, and two prior criminal
antitrust investigations with the Canadian government.
They also pointed to substantive criminal penalties in other
countries for antitrust violations, namely, Argentina,
Canada, Chile, Ireland, France, Japan, Korea, Norway,
Spain, Taiwan, Thailand, and the Philippines, as further
evidence of increasing internationalization of antitrust law.
They also argue that the policy of internationalization also
included the use of Mutual Legal Assistance Treaties
("MLATs") in obtaining information, and also the use of the
grand jury in aiding foreign prosecutions, through the
International Antitrust Enforcement Assistance Act.
_________________________________________________________________
1. The language that all agree is the basis for the "test" is set forth
infra
at pages 7-8. It does not lend itself to paraphrasing.
3
In addition, appellants argued to the District Court that
a joint international prosecution had occurred in their
cases. They pointed to the following as evidence of that joint
prosecution: 1) questioning of grand jury witnesses about
Canadian and German contacts; 2) efforts by the Antitrust
Division in Canada, Spain, the United Kingdom, Germany,
Mexico, France, and other nations, to obtain documents for
the grand jury investigation; and 3) efforts by the Antitrust
Division to question Mexican and German nationals.
Appellants also argued that Canadian authorities had
contacted one of their counsel, and that this event also
constituted evidence of a joint prosecution. As a result,
appellants argued they were facing a "whipsaw" in which
they could be compelled to produce information in this
country, but be prosecuted in foreign nations, and that the
Antitrust Division desired to use the witnesses' testimony
about foreign effects of their behavior to instigate a foreign
prosecution based on the grand jury's investigation.
Appellants also asserted that they required a hearing to
question government witnesses, because they had no way
of further developing their proof regarding foreign contacts.
In response to appellants' arguments, the government
disclosed a set of Schofield affidavits and submitted
separate in camera Schofield affidavits. The disclosed
affidavits stated that the compelled testimony was sought
by the United States "to advance the grand jury's inquiry,
and not for another purpose" and that testimony was not
sought for the purpose of delivering that testimony to a
foreign nation.
The appellants claimed that this government proffer was
insufficient, because it could be inferred from their evidence
that the Antitrust Division had already been sharing
information with foreign authorities for the purpose of
foreign prosecutions. Based on all of these facts, they
argued, due process required that the nature and extent of
the relationships between the United States and the foreign
countries in this case be explained, and that the evidence
they had already produced mandated an evidentiary
hearing.
The District Court convened a number of hearings that
focused on the nature and extent of appellants' asserted
4
Fifth Amendment rights. At the first hearing, the District
Court addressed several of the substantive legal issues
raised by appellants and engaged in a waiver colloquy with
one of them, who would not be able to attend the later
hearing. In the interim, when another appellant refused to
testify, the court heard argument on the applicability of
United States v. Balsys and entered an initial contempt
order; appellants filed a motion for reconsideration, and the
court heard further argument, withheld signature on its
contempt order, and combined the claims and arguments of
the witnesses for briefing and argument. The court then
held a final hearing on the import of Balsys to determine
whether the appellants should be held in contempt, and
whether the appellants' motion to compel witnesses should
be granted. In addition to these hearings, the court
reviewed the disclosed and in camera Schofield affidavits
and questioned prosecutors and the grand jury foreman in
camera as to the nature of the dispute.
In its final rulings on the motions, the court credited the
efforts of appellants, but noted that it had to focus upon
the "well-defined nature of the proceedings that are before
the Court at this time. . . . what is the likelihood of
disclosure of the evidence to one or more foreign
governments at least to the point of requiring a factual
inquiry into that subject." In so stating, the court accepted
the government's pronouncements, including the
assurances made in its Schofield affidavits to the effect that
the information to be obtained was only to be used for a
prosecution within the United States, found that the
appellants had not raised a genuine issue of material fact
requiring an evidentiary hearing, and denied appellants'
motion to compel. Later in the argument, appellants made
a renewed application for an evidentiary hearing and for
disclosure of the in camera proceedings and affidavits,
claiming that disputed issues had presented themselves in
the course of the government's presentation, and that their
course of dealings with the government indicated that a
hearing was necessary. The court denied the hearing
motion once again, finding that the evidence presented by
appellants, even if accepted, was "immaterial and
inadequate." The court also found that the evidence and
argument of appellants did not undermine the
5
government's representations, even those contained in the
Schofield affidavits released to counsel, that grand jury
evidence was being collected in furtherance of a legitimate
inquiry, and that the material was not going to be released
to foreign prosecutors. The court also found that the
circumstances presented "virtually no likelihood of the
generation of a record which would overcome those
positions asserted by the government with regard to this
testimony from these witnesses." The District Court then
moved on to set forth its reading of the Balsys opinion, and
it found that Balsys did not provide a basis for appellants'
claims of Fifth Amendment privilege. The District Court
held the appellants in contempt, and they now appeal to
this court.
Appellants now assert: 1) the District Court erred in not
accepting their assertions of privilege, and 2) the District
Court erred by determining that an evidentiary hearing was
not required to determine the merit of their Fifth
Amendment claims, and in so doing, denied them their due
process rights. We have jurisdiction pursuant to 28 U.S.C.
S 1291. Our review of the District Court's legal analysis is
plenary. See In re Grand Jury, 103 F.3d 1140, 1143 (3d Cir.
1997). The District Court's decision to deny additional
review, beyond that of a Schofield affidavit, is subject to
abuse of discretion review. See In re Grand Jury, No. 98-
6145, 1999 WL 150880, at *8-*9 (3d Cir. Mar. 19, 1999).
I. Balsys
Appellants recognize that the basis for and scope of their
Fifth Amendment privilege was the subject of extensive
discussion in United States v. Balsys, 118 S. Ct. 2218
(1998), in which the Supreme Court held that the Fifth
Amendment did not apply to foreign prosecutions. In
Balsys, the appellant, in a resident alien application, had
claimed that he had served in the Lithuanian army between
1934 and 1940, and that he had lived in hiding in
Lithuania between 1940 and 1944. See id. at 2221. He was
subpoenaed by the Office of Special Investigations of the
Justice Department as to his wartime activities via an
administrative subpoena. See id. Balsys refused to testify,
claiming a Fifth Amendment privilege against compelled self
6
incrimination, because although his answers would not
subject him to criminal investigation in the United States,
he faced the prospect that his responses to the potential
deportation proceeding could subject him to criminal
prosecution by Lithuania, Israel, and Germany. See id. at
2221-22. As the government had conceded the
reasonableness of Balsys's "real and substantial fear" of
prosecution, the Court looked to "whether a criminal
prosecution by a foreign government not subject to our
constitutional guarantees presents a `criminal case' for
purposes of the privilege against self-incrimination." Id. at
2222. After surveying the different historic approaches to
the privilege in Supreme Court jurisprudence, the Balsys
court concluded that fear of foreign prosecution, without
more, was not a sufficient basis for the invocation of a Fifth
Amendment privilege against compelled self-incrimination.
See id. at 2234-35.
Appellants argue that certain language in the Balsys
opinion sets forth a "test" for an exception to the general
rule, whereby the Fifth Amendment privilege may be
recognized in connection with fear of foreign prosecution. It
is true that in Balsys, Justice Souter expounds on
circumstances under which a claim of privilege may
nonetheless be permissible in light of likely foreign
prosecution:
This is not to say that cooperative conduct between the
United States and foreign nations could not develop to
a point at which a claim could be made for recognizing
fear of foreign prosecution under the Self-Incrimination
Clause as traditionally understood. If it could be said
that the United States and its allies had enacted
substantially similar codes aimed at prosecuting
offenses of international character, and if it could be
shown that the United States was granting immunity
from domestic prosecution for the purpose of obtaining
evidence to be delivered to other nations as prosecutors
of a crime common to both countries, then an
argument could be made that the Fifth Amendment
should apply based on fear of foreign prosecution
simply because that prosecution was not fairly
characterized as distinctly "foreign." The point would
7
be that the prosecution was as much on behalf of the
United States as of the prosecuting nation, so that the
division of labor between evidence-gatherer and
prosecutor made one nation the agent of the other,
rendering fear of foreign prosecution tantamount to
fear of a criminal case brought by the Government
itself.
Whether such an argument should be sustained may
be left at the least for another day, since its premises
do not fit this case. It is true that Balsys has shown
that the United States has assumed an interest in
foreign prosecution, as demonstrated by OSI's mandate
and American treaty agreements requiring the
Government to give to Lithuania and Israel any
evidence provided by Balsys. But this interest does not
rise to the level of cooperative prosecution. There is no
system of complementary substantive offenses at issue
here, and the mere support of one nation for the
prosecutorial efforts of another does not transform the
prosecution of the one into the prosecution of the
other. . . . In this case there is no basis for concluding
that the privilege will lose its meaning without a rule
precluding compelled testimony when there is a real
and substantial risk that such testimony will be used
in a criminal prosecution abroad.
118 S. Ct. at 2235-26.
Appellants claim that this language in Balsys sets forth
a test for determining whether an individual may claim a
Fifth Amendment privilege against self-incrimination based
on fear of foreign prosecution, and they articulate the test
in their brief as follows: 1) the witness's fear of foreign
prosecution is reasonable; 2) the fear is based on a foreign
criminal statute substantively similar to United States law;
and 3) the testimony is being taken with a purpose that it
will be shared with a foreign government. Br. at 34.
Despite appellants' arguments, we remain unconvinced
that Balsys necessarily establishes a "test," let alone the
test they urge. Nor do we view the Supreme Court's
pronouncements as arguably justifying the privilege here
given the facts appellants have adduced. First of all, the
8
language in Balsys is conditional rather than prescriptive
(i.e., "could be said," "could be argued") and sets forth a
hypothetical situation reserved "for another day," rather
than a set of rules which a court can readily apply to
determine whether an investigation is such that the
protections of the Fifth Amendment should apply.
Moreover, despite appellants' arguments, we alsofind that
even were we to seize upon the generalized statements in
Balsys as a rule, we disagree not only with their
characterization of the showing it would require but also
with their contention that their allegations are sufficient to
bring Balsys into play. They assert the existence of a broad-
based policy of international prosecution and spirit of
cooperation that reflects an ongoing and established policy
of "joint internationalization" of antitrust enforcement by
the Justice Department that satisfies the Balsys "test."
However, even when we employ Justice Souter's explication
in Balsys as our guide, we conclude that instances of
contacts with overseas nationals, or requests for documents
in foreign countries, in this case, even when combined with
the selections of the speeches cited by appellants, are not
sufficient to demonstrate a "joint prosecution" in the
meaning contemplated by Balsys.
Balsys recognizes that a Fifth Amendment right may
possibly exist in a situation in which the prosecutorial
actions at issue essentially transform foreign efforts into a
domestic prosecution, so that the protections might apply.
See 118 S. Ct. at 2230-35. In Balsys, the United States had
undertaken an interest in the particular kinds of foreign
prosecution to which Balsys was subject through treaty
agreements and investigative efforts. See id. at 2235-36.
For example, an agreement between the United States and
Lithuania provided for cooperation in prosecution of war
crimes, mutual legal assistance concerning the prosecution
of persons suspected of having committed war crimes, and
assistance in locating witnesses and making available
witnesses. See id. at n.19. Moreover, in Balsys, the Office
of Special Investigation was mandated to act as a liaison
with foreign prosecution offices and to use resources for
investigations, guidance, information, and analysis, and to
direct and coordinate prosecutions. See id. at n.18. Yet, the
Court found that this was not sufficient to create a
9
"cooperative prosecution," as there was "no system of
complementary substantive offenses at issue here, and
mere support of one nation for the prosecutorial efforts of
another does not transform the prosecution of the one into
the prosecution of the other." 118 S. Ct. at 2235-36.
Appellants have pointed to questioning of witnesses about
foreign contacts, efforts to collect documents in other
nations, and attempts to question Mexican and German
nationals, and the existence of criminal antitrust penalties
in other countries as evidence of a "cooperative
prosecution." However, we see the matter differently. The
fact that a few instances of evidence gathering have
occurred in other countries does not create an inferential
leap that appellants' fear of foreign prosecution is
"tantamount to fear of a criminal case brought by the
Government itself." Id. at 2236. In addition, the fact that
other nations have enacted criminal antitrust laws does not
dictate a conclusion that nations are acting in concert
through a system of complementary substantive offenses,
particularly where a number of the nations in which
appellants claim they face prosecution in fact do not
criminalize price fixing, have never had a successful
criminal antitrust investigation or have never utilized the
criminal antitrust provisions, or enforce antitrust violations
through administrative proceedings. The authorities that
appellants cite, either in their own particular case or in
terms of trends in Antitrust Division policies, may indicate
that such a case might present itself to us at some point in
the future, but we view appellants' argument as urging a
"what if " scenario rather than a true case of an ongoing or
imminent international "cooperative prosecution" that
would warrant our viewing foreign activity as part of a
domestic prosecution.
II. Flanagan
Although appellants rely heavily on Balsys as supporting
their position, the government argues that we cannot let
the novel issue presented by Balsys overshadow the need
for appellants to satisfy the threshold question conceded by
the government in Balsys: whether a witness faces a real
and substantial fear of foreign prosecution. See 118 S. Ct.
10
at 2221; see also United States v. Balsys, 119 F.3d 122,
124-26 (2d Cir. 1997), reversed, 118 S. Ct. 2218 (1998). We
will address this issue because we agree that this is an
essential element that was ultimately neither conceded (as
in Balsys) nor met in this case, and because the District
Court's discussion of this issue reflected an ambivalence as
to its meaning. The District Court first found that it was
not necessary to rule on the question of the
"reasonableness" of the fear of foreign prosecution in the
course of its ruling denying an evidentiary hearing to
appellants, but then noted that it might revisit the issue as
it addressed the merits of the contempt motion. The District
Court then made the following statement when appellants'
counsel asked whether he should address the question of
the "reasonableness" of their fear of foreign prosecution:
Well, I think, frankly, the prospect of foreign
prosecution remains uncertain. On the other hand, I
realize that we're dealing with lay people who are
businessmen, and if it is a question of essentially
determining whether any of them objectively . . . has a
reasonable fear foreign prosecution might ensue, then
such an apprehension would be understandable.
Appellants claim that these statements constitute afinding
by the District Court that a "reasonable" fear of prosecution
exists under their version of the Balsys "test." However, we
note first that this language is somewhat vague and
conditional, and does not necessarily constitute afinding.
However, even if we construe this statement as afinding by
the District Court, we find that it does not properly address
and analyze the question of "real and substantial fear of
prosecution" within the meaning of Flanagan, let alone
Balsys.
The standard for real and substantial fear of foreign
prosecution is set forth in the Second Circuit's decision of
In re Flanagan, 691 F.2d 116 (2d Cir. 1982), and has been
adopted by this court.2 See Environmental Tectonics v. W.S.
_________________________________________________________________
2. Other Courts of Appeal have found that the protections of Fed. R.
Crim. P. 6(e) are sufficient in and of themselves to protect against
foreign
prosecution, and that no further inquiry is necessary. See In re Grand
Jury (Nigro), 705 F.2d 1224, 1227-28 (10th Cir. 1982); In re Baird, 668
F.2d 432, 434 (8th Cir. 1982).
11
Kirkpatrick, Inc., 847 F.2d 1052, 1064-66 (3d Cir. 1988).
The Flanagan test involves the following factors: 1) whether
there is an existing or potential foreign prosecution of a
witness; 2) what foreign charges could be filed against that
witness; 3) whether prosecution would be initiated or
furthered by testimony; 4) whether any such charges would
entitle the foreign jurisdiction to have an individual
extradited from the United States; and 5) whether there is
a likelihood that any testimony given here would be
disclosed to the foreign government. 691 F.2d at 121. The
Flanagan court also noted that the apprehension "must be
a real and reasonable one, based on objective facts as
distinguished from his subjective speculation." 691 F.2d at
121. This threshold showing must be made, because the
Fifth Amendment "privilege protects against real dangers,
not remote and speculative possibilities." Zicarelli v. New
Jersey State Commission of Investigation, 406 U.S. 472, 478
n.2 (1972). Courts have construed these factors narrowly
and have rarely found that real and substantial danger of
foreign prosecution exists. See United States v. Gecas, 120
F.3d 1419, 1425-26 (11th Cir. 1997), cert. denied, 118 S.
Ct. 2365 (1998).
Appellants have not satisfactorily argued, let alone
shown, that they face a real and substantial fear of
prosecution within the meaning of the Flanagan test. First,
although appellants claim that joint investigative efforts in
Canada, Germany, and England demonstrate the requisite
existing or prospective prosecution, the cases that found
that a witness faced a pending or prospective prosecution
within the meaning of Flanagan involved a more substantial
nexus and a heightened likelihood of actual prosecution
that is lacking in the instant case. See Gecas, 120 F.3d at
1425-26 (potential war crimes prosecution as a result of
imminent expulsion from United States created real and
substantial risk of foreign prosecution); United States v.
Sealed, 794 F.2d 920, 924-25 (4th Cir. 1986) (existing
prosecution and possibility of extradition created a real and
substantial fear of prosecution); Moses v. Allard, 779 F.
Supp. 857, 863-69 (E.D. Mich. 1991) (criminal investigation
pending in Switzerland, nexus existed between information
requested in proceeding and pending prosecution, and
witness faced possibility of extradition, so real and
12
substantial fear of prosecution); Mishima v. United States,
507 F. Supp. 131, 132-33 (D. Alaska 1981) (where conduct
was criminalized under Japanese law, and cases had been
referred to a Japanese prosecutor, witnesses had
demonstrated real and substantial fear of prosecution,
whereas witnesses whose cases had not been referred to a
prosecutor had not demonstrated such a fear); In re
Cardassi, 351 F. Supp. 1080, 1083-84 (D. Conn. 1972)
(questions witness refused to answer concerned events in
Mexico, potential acts were incriminating under Mexican
law, and Mexican authorities had expressed an interest in
the case).
Second, appellants rely upon the existence of criminal
antitrust laws in other nations. However, these legal codes
are not as sweeping as appellants claim they are; Germany,
Spain and the United Kingdom do not criminalize price-
fixing, and other countries they list, such as Argentina,
Chile, and the Philippines, do not generally engage in
criminal prosecutions, have never done so, or do so
through administrative channels. Third, appellants rely
heavily on the fact that Canada has a similar criminal
antitrust law, has engaged in criminal antitrust
prosecutions, has an MLAT in effect with the United States,
has helped in a course of evidence gathering, and has made
a contact with one of their counsel, to show that they face
a real and substantial fear of prosecution. However, an
assertion that a prosecution may be possible, or the fact
that foreign investigative authorities have engaged in
inquiries, does not mandate a finding under Flanagan that
appellants face an existing or prospective prosecution. See
In re Grand Jury (Chevrier), 748 F.2d 100, 103-106 (2d Cir.
1984) (no evidence of current, pending investigation, only
routine inquiry by Canadian government, and lack of
potential named violations, so no real and substantial fear
of prosecution); In re Grand Jury (Gilboe), 699 F.2d 71, 76-
77 (2d Cir. 1983) (no present or prospective foreign
prosecution, despite asserted claims of "shadowy
investigations" and newspaper accounts, and no likely
potential for extradition, so no real and substantial fear of
prosecution). Therefore, the first and second requirements
of Flanagan have not been met in this case.
13
As for the fourth Flanagan requirement, appellants claim
that they could be extradited to Argentina, Canada, Chile,
Germany, Ireland, Japan, Norway, Spain or Thailand, given
the existence of treaties with these countries. However,
Flanagan and related cases demonstrate that the existence
of an extradition treaty, absent the presence of other
factors, is not sufficient to create a real and substantial fear
of prosecution. See, e.g., In re Grand Jury (Gilboe), 699 F.2d
at 76-77. With respect to the use of their testimony by a
foreign nation, as touched upon by the third andfifth
Flanagan factors, we note that, as we discuss more fully
below, appellants' argument in this regard is speculative at
best.3 Accordingly, we conclude that appellants have not
shown a "real and substantial fear" of prosecution.
III. Right to An Evidentiary Hearing
Appellants also claim that their due process rights were
violated because the District Court refused their requests
for an evidentiary hearing to question governmental officials
regarding their contacts with foreign nations. They argue
that they could have met the "test" under Balsys if they
could have called governmental officials and questioned
them, and that the District Court improperly relied on the
representations of the government in the Schofield affidavits
in denying such a hearing. In denying their requests, the
District Court found that the government's statements that
the witnesses' testimony would not be released was not
overcome by the evidence adduced by appellants, and that
_________________________________________________________________
3. Appellants argue that Rule 6(e) of the Federal Rules of Criminal
Procedure regarding secrecy of grand jury proceedings gives them little
comfort in this regard. The Flanagan court recognized that Rule 6(e) does
not eliminate the risk of a witness's testimony being given to a foreign
power. As Flanagan noted, grand jury proceedings are not "leakproof,"
and depend in part on the largess of government officials who have
access to grand jury minutes. 691 F.2d at 123. Here, appellants argued
that the government had already shared information as a matter of
course with the Canadian government and its investigators; however, the
District Court determined that the unsworn allegations of appellants of
information sharing, in combination with the evidence appellants had
produced, did not undercut the government's averments of good faith, a
conclusion that we do not disturb, as we discuss infra.
14
even if their offers of proof were taken at face value, that
evidence did not point to a set of circumstances that would
fall within Balsys, and hence, no evidentiary hearing was
necessary.
Where a witness has challenged a subpoena requiring his
testimony before a grand jury, we require the government to
make some preliminary showing by affidavit that: 1) the
information sought is relevant to the grand jury's
investigation; 2) properly within the grand jury's
jurisdiction; and 3) not sought primarily for another
purpose. See In re Grand Jury Proceedings (Schofield I), 486
F.2d 85, 93 (3d Cir. 1973); In re Grand Jury (Schofield II),
507 F.2d 963, 966 (3d Cir. 1975). Where the District Court
is not satisfied with the government's affidavits, either
because "the matters set forth challenge the court's
credibility or because the witness has made some colorable
challenge to the affidavits, the court can require something
more." 507 F.2d at 964-65. The District Court has broad
discretion in determining whether further proceedings or
discovery are necessary or warranted after reviewing a
Schofield affidavit, including in camera hearings, additional
affidavits, or a hearing. See Schofield II, 507 F.2d at 965;
Schofield I, 486 F.2d at 93. We have also noted that certain
factors should inform a district court's decision as to
whether the government is abusing the subpoena process:
the limited scope of the inquiry into abuse of the subpoena
process, the potential for delay, and any need for additional
information that might cast doubt upon the accuracy of the
government's representations. See In re Grand Jury, No. 98-
6415, 1999 WL 150880, at *8-*9 (3d Cir. Mar. 19, 1999).
Our review of a decision to deny additional review is
deferential, and we will not disturb a District Court's
decision unless its "weighing" was an abuse of discretion.
See id. at *9.
Appellants argue that the denial of a full evidentiary
hearing by the District Court was a denial of due process,
and in so arguing rely on statements that where an alleged
contemnor faces incarceration, due process requires an
"uninhibited adversary hearing" where the witness can
probe "all nonfrivolous defenses to the contempt charge."
See In re Grand Jury, 13 F.3d 459, 461 (1st Cir. 1994),
15
citing In re Grand Jury (Campaigner Publications) , 795 F.2d
226, 234 (1st Cir. 1986). However, these same courts have
recognized, as have we, that due process does not require
a hearing in all instances where a witness faces being
found in contempt, and we have limited an alleged
contemnor's right to calling witnesses to those instances
where there is a genuine factual dispute or where testimony
is useful to bring to the court's attention relevant evidence
not already developed on the record. See In re Grand Jury
Matter (Backiel), 906 F.2d 78, 85 (3d Cir. 1990). Moreover,
courts have noted that a District Court's discretion in
determining what process is due to an alleged contemnor is
very broad. See 13 F.3d at 461; see also Sanchez v. United
States, 725 F.2d 29, 32 (2d Cir. 1984) (upholding order
with regard to witness's custody on the basis of witness's
affidavit and oral argument); Simkin v. United States, 715
F.2d 34, 38 & n.2 (2d Cir. 1983) (witness affidavit only).
As we have recently noted in In re Grand Jury:
There is a difference between requiring evidentiary
support and requiring a hearing. Neither Supreme
Court precedent nor our prior decisions require that a
hearing be held whenever a subpoena is challenged on
reasonableness grounds. Indeed, this court has
specifically rejected any such suggestion, leaving the
decision to hold a hearing to the district court's
discretion. . . . Nor does precedent or policy require a
different rule when the challenge is a constitutional
one.
1999 WL 150880, at *8 (citations omitted).
In particular, the appellants have argued that alleged
instances of information sharing between the Antitrust
Division and Canadian investigators and other instances of
joint investigative activity involving other countries, as
outlined above, created genuine issues of material fact as to
whether the government was sharing information in their
cases, and whether the instant prosecutions were, in fact,
joint international prosecutions, and that the District Court
was therefore in error in denying them an evidentiary
hearing. In making its ruling on the motions for an
evidentiary hearing, the court found that neither the
16
witnesses' allegations nor their proffered evidence cast
sufficient doubt on the government's pronouncements to
lead the court to conclude that an evidentiary hearing was
necessary.4
Appellants now assert that their position is unique in
that all of the evidence they require is in the hands of the
government, and that the District Court should have
permitted them to challenge the government's averments of
good faith by calling and examining witnesses. We find that
they do not face a situation all that different from any
individual challenging a grand jury subpoena; we must
preserve the proper balance between the grand jury's need
to know and the rights of the witnesses summoned before
the grand jury, and we have structured our analysis of a
District Court's decisions in these matters keeping both of
these interests in mind. See In re Grand Jury , 1999 WL
150880 at *8-*10; In re Grand Jury Matter (John F. Kennedy
Hospital), 802 F.2d 96, 102 (3d Cir. 1986).
The District Court was aware of the nature of the inquiry
before it, the interests at stake, and the manner in which
the government's Schofield affidavits had been challenged
by appellants. Appellants presented an array of evidence
and argumentation, which the court examined at length in
light of the Schofield affidavits; it determined that there was
no basis for a hearing whereby appellants could question
the bona fides of the government statements. Absent a
genuine factual issue, or some showing of harassment or
bad faith sufficient to warrant rejection of the Schofield
affidavits, the District Court exercised its discretion to rely
upon the affidavits and averments of the government, and
_________________________________________________________________
4. The court did query government counsel as to whether it would be
required to seek the Court's leave under Rule 6(e) to disclose testimony
or proofs compelled from the witnesses to a foreign sovereign. The
government opined it would be required by law to approach the court for
a 6(e) order to disclose such materials. The District Court later noted
that were the government to change its position in this matter regarding
disclosure of material to foreign authorities, it would apply to the Court
for a 6(e) order. The District Court allowed that in such a situation it
would be willing then to revisit the question of an evidentiary hearing
and the applicability of this case to Balsys, but emphasized that: "We
are not at that point. We may never be."
17
in so doing, did not violate appellants' due process rights.
See In re Grand Jury, 1999 WL 150880 at *8-*9; Backiel,
906 F.2d at 85; 802 F.2d at 102; In re Grand Jury
(Schmidt), 619 F.2d 1022, 1029-30 (3d Cir. 1980). We find
that the District Court's denial of appellants' request for a
hearing was not an abuse of discretion in this case.
We will affirm the decision of the District Court.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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