Texas Assn Business v. Earle ( 2004 )

United States Court of Appeals
Fifth Circuit
REVISED NOVEMBER 2, 2004
F I L E D
October 18, 2004
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
______________________ Clerk
No. 03-50254
______________________
TEXAS ASSOCIATION OF BUSINESS AND WILLIAM O. HAMMOND,
Plaintiffs-Appellants,
versus
RONALD EARLE, DISTRICT ATTORNEY, TRAVIS COUNTY, TEXAS,
Defendant-Appellee.
____________________________________________________
Appeal from the United States District Court
for the Western District of Texas, Austin Division
_____________________________________________________
Before DEMOSS, DENNIS, and PRADO, Circuit Judges.
DENNIS, Circuit Judge:
Plaintiffs-Appellants, Texas Association of Business (TAB) and
William O. Hammond, filed suit in the Western District of Texas
against Defendant-Appellee Ronald Earl, the District Attorney for
Travis County, seeking injunctive and declaratory relief. The
lawsuit arises out of a Travis County grand jury investigation of
TAB for Texas Election Code violations during the 2002 state
election cycle. TAB and Hammond seek an injunction against the
enforcement of subpoenas issued by the grand jury, an order
enjoining the entire grand jury investigation, and a judgment
declaring that TAB’s conduct during the 2002 campaign season
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constitutes expression protected by the First Amendment guarantees
of free speech and free association. The district court declined
to consider these requests, citing the abstention doctrine set forth
in Younger v. Harris, 401 U.S. 37 (1971) and its progeny. We
affirm. However, we decline to decide whether an injunction is
necessary to relieve TAB of its obligation to produce documents
under the subpoenas, as the issue has become moot.
I. BACKGROUND
TAB is a non-profit Texas corporation that describes its
purpose as the promotion of the free enterprise system. Hammond is
TAB’s President and Chief Executive Officer. During the 2002
election cycle, TAB promulgated a number of television and print
advertisements highlighting a particular candidate’s view on
specific issues, such as lawsuit reform, healthcare, and taxes. TAB
alleges that these ads were for informational purposes and did not
advocate for the election or defeat of any particular candidate;
although, the ads criticized and praised particular candidates by
name.1 TAB also maintains that the ads were created solely of their
own volition without consultation with, or cooperation from, any
candidate. District Attorney Earle questions TAB’s assertions that
no candidate cooperation or consultation occurred.
1
TAB contends that the ads did not engage in express
advocacy of the election or defeat of a clearly identified
candidate, or in other words met the so called “magic words”
test found in footnote 52 of the Supreme Court’s opinion in
Buckley v. Valeo, 424 U.S. 1(1976).
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After the election cycle, five different losing candidates
filed two separate lawsuits against TAB and Hammond in state court,
alleging that TAB violated Texas state election law by illegally
obtaining $2,000,000 and failing to disclose the expenditure of
those funds for campaign purposes. In addition, a complaint was
filed with the Texas Ethics Commission, which enforces the Texas
Election Code, alleging various violations of the Code. The Travis
County’s District Attorney’s office began an investigation into
TAB’s practices and on January 16, 2003, the 147th Travis County
Grand Jury issued three subpoenas to Hammond, Don Shelton, who was
TAB’s Information Systems Director, and Bob Thomas, owner of Thomas
Graphics, who was hired to create TAB’s ads.
TAB claims that all three of the subpoenas seek to compel
information that is protected by its rights to free speech and
freedom of association as guaranteed in the First Amendment to the
United States Constitution. Based on this assertion, TAB and Hammond
filed suit in federal district court seeking: (1) an injunction to
prevent the District Attorney’s office from enforcing the three
grand jury subpoenas, (2) an injunction to prevent the District
Attorney’s office from conducting a grand jury investigation into
TAB’s advertisements, and (3) a declaration that TAB’s conduct
during the 2002 election cycle was protected speech. On February 10,
2003, after conducting an evidentiary hearing, the district court
denied TAB and Hammond’s requests for relief and dismissed the suit,
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applying the abstention doctrine set out in Younger v. Harris, 401
U.S. 37 (1971). TAB and Hammond timely appealed.
While TAB and Hammond were seeking relief in federal court they
also sought relief within the state court system, filing a number
of motions with the state district court. First, they filed a
motion to quash the subpoenas, which was denied in a written order
on April 8, 2003. The state court judge held that the TAB ads at
issue “involve ‘speech’ covered by the First Amendment, thereby
requiring the state to regulate in the area with narrow
specificity,” but that the State had offered evidence that TAB
“engaged in express advocacy, improperly coordinated with candidates
and political action committees, improperly mixed T.A.B. and
political action committee business, and failed to properly report
expenditures and contributions.” Based on the above, the state
court judge allowed the grand jury to proceed, but prevented the
grand jury from receiving a list of TAB’s members and donors, and
from subpoenaing any sitting elected official without the court’s
approval. The protective order also forbids the release of any
information obtained under the subpoenas to any outside entity or
individual, including the civil litigants working with the District
Attorney’s office. TAB then filed writs of mandamus challenging the
state court’s order, which the Austin Court of Appeals and the Texas
Court of Criminal Appeals denied.
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In addition, after Hammond and Shelton refused to comply with
another subpoena, the state court held a show cause hearing. After
the hearing, both were held in contempt and the court fined them
$500 each. Hammond and Shelton then filed a petition for writs of
mandamus in the Texas Court of Criminal Appeals, which was denied
without opinion on June 25, 2003. When Hammond refused to abide by
the order and to pay the fine, the court ordered him placed into
custody. Hammond filed a writ of habeas corpus. The Texas Court
of Criminal Appeals granted him bail and ordered a response from the
state court on the habeas charge. On October 20, 2003, the
appellants TAB and Hammond partially complied with the contested
subpoenas and turned over to the grand jury the requested documents,
redacted in accordance with the protective order issued by the state
court.
II. MOOTNESS
District Attorney Earle contends that because the appellants
complied with the subpoena request, there is no live case or
controversy and that this case should be dismissed as moot. We
agree that the issue of compliance with the subpoenas’ order to hand
over documents is now moot. There remains, however, a case and
controversy over compliance with the parts of the subpoenas ordering
live testimony before the grand jury, issuance of an injunction
barring the entire grand jury investigation and the granting of
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declaratory relief. Thus, we must consider whether the Younger
abstention doctrine applies.
III. STANDARD OF REVIEW
This court applies a two-tiered standard of review in
abstention cases. Nationwide Mut. Ins. Co. v. Unauthorized Practice
of Law Comm., 283 F.3d 650, 652 (5th Cir. 2002). “Although we
review a district court’s abstention ruling for abuse of discretion,
we review de novo whether the requirements of a particular
abstention doctrine are satisfied.” Id. “The exercise of
discretion must fit within the narrow and specific limits prescribed
by the particular abstention doctrine involved.” Webb v. B.C.
Rogers Poultry, Inc., 174 F.3d 697, 701 (5th Cir. 1999). “A court
necessarily abuses its discretion when it abstains outside of the
doctrine’s strictures.” Id. Thus, we review a district court’s
decision to abstain for abuse of discretion, provided that the
elements for Younger abstention are present.
III. ANALYSIS
Under the rule set out by the United States Supreme Court in
Younger v. Harris, federal courts must refrain from considering
requests for injunctive relief based upon constitutional challenges
to state criminal proceedings pending at the time the federal action
is instituted. Younger v. Harris, 401 U.S. 37 (1971); Doe v. The
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Order Desk, Inc., 1997 WL 405141, at *2 (N.D.Tex. July 14, 1997).
On the same day that Younger was decided, the Court expanded the
rule to apply to suits for injunctive relief. Samuels v. Mackell,
401 U.S. 66 (1971).
In Younger, the Court identified one primary source of the
policy, saying, “[o]ne is the basic doctrine of equity jurisprudence
that courts of equity should not act, and particularly should not
act to restrain a criminal prosecution, when the moving party has
an adequate remedy at law and will not suffer irreparable injury if
denied equitable relief.” 401 U.S. at 43-44. The Court pointed out
that this rule of equity acts to “prevent erosion of the role of the
jury” and “avoid a duplication of legal proceedings and legal
sanctions where a single suit would be adequate to protect the
rights asserted.” Id. at 44. The Court then went on to name the
most important source for the abstention doctrine it was
enunciating, “Our Federalism.” The Younger Court used this
talismanic phrase to sum up “the notion of ‘comity,’ that is, a
proper respect for state functions, a recognition of the fact that
the entire country is made up of a Union of separate state
governments, and a continuance of the belief that the National
Government will fare best if the States and their institutions are
left free to perform their separate functions in their separate
ways.” Id.
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There is a three-prong test for determining whether the Younger
abstention doctrine is applicable: (1) the dispute must involve an
“ongoing state judicial proceeding,” (2) an important state interest
in the subject matter of the proceeding must be implicated, and (3)
the state proceedings must afford an adequate opportunity to raise
constitutional challenges. Wightman v. Tex. Supreme Ct., 84 F.3d
188, 189 (5th Cir. 1996)
If this test is met, then a federal court may only enjoin a
pending state criminal court proceeding if certain narrowly
delimited exceptions to the abstention doctrine apply.
Specifically, courts may disregard the Younger doctrine when: (1)
the state court proceeding was brought in bad faith or with the
purpose of harassing the federal plaintiff, (2) the state statute
is “flagrantly and patently violative of express constitutional
prohibitions in every clause, sentence, and paragraph, and in
whatever manner and against whomever an effort might be made to
apply it,” or (3) application of the doctrine was waived. Younger,
401 U.S. at 49; Trainor v. Hernandez, 431 U.S. 434, 446 (1977);
DeSpain v. Johnston, 731 F.2d 1171, 1180 (5th Cir. 1984).
Here, TAB and Hammond contend that the district court abused its
discretion in applying the Younger abstention doctrine because there
is no “ongoing state judicial proceeding” and because the state
proceedings do not afford them an adequate opportunity to raise
constitutional challenges. They essentially concede that the State
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of Texas has an important state interest in ensuring that
participants in the electoral process comply with its election laws.
In addition, TAB and Hammond do not argue that any of the narrow
exceptions to Younger apply.
A. Ongoing State Proceedings
The first issue to be decided is whether state grand jury
proceedings in which subpoenas have been issued constitute an
“ongoing state proceeding” such that abstention is warranted. The
circuits are split on this issue, with our colleagues on the Fourth
and Eighth Circuits finding that a grand jury proceeding is an
ongoing state proceeding and the those on the Third Circuit holding
that it is not.2 Kaylor v. Fields 661 F.2d 1177 (8th Cir. 1981);
2
In addition, district courts in Texas and New York have
weighed in on the issue with most courts finding that a grand
jury proceeding is an ongoing state proceeding. Doe v. The Order
Desk, Inc. 1997 WL 405141 (N.D.Tex. 1997)(holding that Texas
grand jury proceedings constitute ongoing state proceedings for
purposes of Younger abstention); Notey v. Hynes, 418 F. Supp.
1320, 1326 (E.D.N.Y. 1976)(“when a grand jury has been impaneled
and is sitting and investigating, there is a “criminal case” and
in New York a criminal proceeding”); Law Firm of Daniel P.
Foster, P.C., v. Dearie, 613 F.Supp 278, 280 (E.D.N.Y.
1985)(“Thus, were the court to grant the relief sought, the
immediate and direct effect would be to enjoin the state court
from enforcing its order to comply with the subpoena and the
state from pursing a grand jury investigation, which is a
criminal proceeding.”); Cf. Nick v. Abrams, 717 F. Supp. 1053,
1056 (S.D.N.Y. 1989)(This case requires and inquiry into whether
a “pending state proceeding” exists when a state attorney general
executes a search warrant authorized by a judge during a criminal
investigation prior to arrest or indictment. For the reasons set
forth below, these circumstances constitute a pending state
proceeding for Younger abstention purposes.”); but see Brennick
v. Hynes, 471 F.Supp 863,867 (N.D.N.Y. 1979)(indicating that the
Younger abstention doctrine “does not apply to state grand jury
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Craig v. Barney 678 F.2d 1200 (4th Cir. 1982); Monaghan v. Deakins
798 F.2d 632 (3rd Cir. 1986).3
The answer to the question of when there is exists an ongoing
state proceeding may turn on a determination of which kinds of state
proceedings are the relevant kind of proceeding for Younger
purposes. The Supreme Court jurisprudence first recognized the need
for abstention where criminal proceedings were ongoing.4 Younger’s
applicability has been expanded to include certain kinds of civil
and even administrative proceedings that are “judicial” in nature.
Ohio Civil Rights Comm’n v. Dayton Christian Schools, Inc., 477 U.S.
619 (1986)(finding that Younger abstention was appropriate when
matter was before a state commission charged with hearing gender
discrimination claims); Middlesex County Ethics Comm. v. Garden
State Bar Ass’n, 457 U.S. 243 (1982) (applying the Younger doctrine
to intervention in ongoing attorney disciplinary proceedings);
Juidice v. Vail, 430 U.S. 327 (1977) (holding that Younger should
apply in challenges to civil contempt proceedings against a default
judgment debtor who failed to comply with a subpoena).
proceedings where the target for investigation has no immediate
recourse to state courts.”).
3
Notably, the U.S. Supreme Court granted certiorari in the
case from the Third Circuit, but the issue was mooted before any
decision could be rendered. Deakins v. Monaghan, 484 U.S. 193
(1988).
4
Younger, 401 U.S. at 37; Samuels, 401 U.S. at 66. In these
cases there had been an indictment or other formal charge filed
against the parties seeking relief.
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A grand jury proceeding has both administrative functions, like
investigating wrongdoing and making an initial determination of
probable cause to file criminal charges, and judicial functions,
wherein it may summon witnesses and compel the production of
documents. However, both the administrative and judicial functions
pertain directly to the enforcement of the state’s criminal laws.
It is the criminal law arena where the federal courts’ deference to
state courts has been most pronounced. See Middlesex County Ethics
Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432 (1982); Juidice
v. Vail, 430 U.S. 327, 344 (1977). Other proceedings have been
found to be due the same deference because of analogy to, or nexus
with, criminal proceedings. Middlesex County Ethics Comm., 457 U.S.
at 432. (“The importance of the state interest may be demonstrated
by the fact that the noncriminal proceedings bear a close
relationship to proceedings criminal in nature.”)
In Texas, grand jury proceedings bear a very close relationship
with criminal trial proceedings.5 The grand jury is said to be “an
arm of the court by which it is appointed.” Dallas County Dist.
Attorney v. Doe, 969 S.W.2d 537, 542 (Tex. App. 1998). The district
court impanels the grand jury after testing the qualifications of
its members, administers the jurors’ oath, and instructs them as to
5
In Texas, a grand jury has the power to indict. Tex Code
Crim. P. art. 20.19-22. In Craig, the Fourth Circuit found that
an investigation by a Virginia grand jury, which does not have
the power to indict, constituted an ongoing state proceeding for
purposes of Younger abstention. 678 F.2d at 1201.
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their duties as grand jurors. Tex. Code Crim. P. art. 19.24, 19.26,
19.32, 19.34, 19.34, 19.35. The grand jury can seek advice from the
district court on any matter it is considering. Tex. Code Crim. P.
art. 10.06. Any subpoena sought to be issued by the grand jury is
issued by the district court and enforced by that court. Tex. Code
Crim. P. art. 24.01; 20.15; 24.05-08. Such subpoenas may also be
challenged in the district court by means of a motion to quash the
subpoena, thus providing a judicial forum in which to raise
constitutional issues.
B. Important State Interest
The plaintiffs concede that the State of Texas’s interest in
the enforcement of its election laws is an important interest. As
there is no dispute as to this issue we move on to the third prong
of the test.
C. Adequate Opportunity to Raise Constitutional Challenges
The third prong of the test for Younger applicability is
whether the state proceeding affords an adequate opportunity to
raise constitutional challenges. Wightman, 84 F.3d at 189. We find
that it does. In this case, the plaintiffs have had ample
opportunity to raise constitutional claims, and have in fact done
so in the district court, an intermediate appellate court, and
Texas’s highest appellate court with jurisdiction over this dispute.
In fact, the trial court judge limited the scope of the challenged
subpoenas on constitutional grounds.
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Texas law allows persons served with a grand jury subpoena to
move to quash the subpoena. See Dallas County Dist. Attorney, 969
S.W.2d at 542. If dissatisfied with the district court’s ruling on
the motion to quash, appellate review is available through mandamus.
Kidd v. Lance, 794 S.W.2d 586, 587 (Tex. App. 1990). In addition,
the constitutionality of any subpoena and the issue of whether TAB’s
conduct was protected under the First Amendment can be litigated at
any criminal trial arising from the grand jury investigation.6 The
availability of the above opportunities to litigate constitutional
claims in the state courts constitute “an adequate opportunity to
raise constitutional challenges” in the state proceedings such that
this prong of the Younger test is satisfied and abstention is
warranted.
IV. Conclusion
In accordance with the abstention doctrine established in
Younger v. Harris and its progeny we AFFIRM the order of the
district court dismissing this action.
6
The opportunity to raise constitutional claims at trial has
been held sufficient by the Eighth Circuit. Kaylor, 661 F.2d at
1181.
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