In Re: Grand Jury

Opinions of the United

2002 Decisions States Court of Appeals

for the Third Circuit

4-5-2002

In Re: Grand Jury

Precedential or Non-Precedential:

Docket No. 01-4042

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PRECEDENTIAL

Filed April 5, 2002

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 01-4042

IN RE: GRAND JURY

On Appeal from the United States District Court

for the District of New Jersey

District Court Judge: The Honorable Katharine S. Hayden

(D.C. Miscellaneous No. 00-188)

Argued on February 28, 2002

Before: ROTH and FUENTES, Circuit Judges, and

KATZ,* District Judge

(Opinion Filed: April 5, 2002)

Michael B. Himmel [ARGUED]

Robert J. Kipnees

Greenbaum, Rowe, Smith,

Ravin, Davis & Himmel LLP

P.O. Box 5600

Woodbridge, New Jersey 07095

Counsel for Appellant

John Doe

_________________________________________________________________

* Honorable Marvin Katz, United States District Judge for the Eastern

District of Pennsylvania, sitting by designation.

Alain Leibman [ARGUED]

Christopher J. Christie

George S. Leone

United States Attorney’s Office

970 Broad Street

Newark, New Jersey 07102-2535

Counsel for Appellee

United States of America

OPINION OF THE COURT

FUENTES, Circuit Judge:

This case requires us to resolve the conflict that arises

when a grand jury subpoena seeks production of evidence

ostensibly shielded by a civil protective order. Appellant is

a target of a grand jury investigation in the District of New

Jersey. The Government seeks to obtain, by way of a grand

jury subpoena, testimony, documents, and other discovery

material given pursuant to a protective order in a pending

civil case. Appellant filed a motion to quash the subpoena

on the ground that the protective order barred disclosure of

the documents to the Government. The District Court

denied Appellant’s motion and granted the Government’s

cross-motion to compel production of the subpoenaed

documents.

We hold that a grand jury subpoena supercedes a civil

protective order unless the party seeking to avoid the

subpoena demonstrates the existence of exceptional

circumstances that clearly favor enforcement of the

protective order. Appellant cannot meet his burden of

establishing exceptional circumstances in this case, and

therefore we affirm the order of the District Court denying

appellant’s motion to quash the subpoena and granting the

Government’s motion to compel production of the

subpoenaed documents.

I.

In 1998, Appellant John Doe and his wife filed a

2

complaint in the Superior Court of New Jersey ("civil case").1

The defendants in this commercial litigation removed the

case to the District Court for the District of New Jersey. The

parties entered into a Stipulation and Consent Order which

was approved by the District Court in March 1999. The

order included confidentiality provisions which limited

disclosure of deposition transcripts and other documents

produced in discovery. The parties agreed that the

protective order was designed to avoid public disclosure of

sensitive personal and corporate financial information, and

that the case did not involve trade secrets or other

information which normally enjoys a high level of

confidentiality. After Doe added defendants to his case with

whom there was no diversity of citizenship, the case was

remanded to the New Jersey Superior Court in August

1999.

After remand, a Superior Court judge held a case

management conference and entered a Case Management

Order in October 1999 which adopted the earlier protective

order entered by the District Court. Subsequent to the

issuance of the state protective order, depositions,

interrogatory answers, and other discovery were taken of

Doe and several of his associates. The civil case, which also

includes counterclaims against Doe, is still ongoing in state

court and currently awaits trial.

Around April 2000, as discovery was ongoing in the civil

case, the United States Attorney’s Office for the District of

New Jersey commenced a grand jury investigation of Doe

and his wife into alleged mail fraud, wire fraud, income tax

evasion, and falsification of income tax returns. These

matters relate to issues raised in the civil case. On May 29,

2001, the grand jury issued a subpoena to Doe’s civil case

counsel. The subpoena calls for all depositions, related

exhibits, interrogatory answers, and responses to requests

for admissions in the civil case with respect to Doe and

_________________________________________________________________

1. This case has been submitted under seal pursuant to the order of the

District Court under Federal Rule of Criminal Procedure 6(e)(6).

Therefore, our statement of facts is necessarily brief. "John Doe" is a

pseudonym used to prevent disclosure of any matters before the grand

jury.

3

several other deponents. The parties agree that all the

deposition testimony and other discovery sought by the

subpoena was taken after the case was remanded to state

court and under the state protective order.

Doe filed a motion to intervene and moved to quash the

subpoena issued to his civil counsel on June 27, 2001. The

Government filed a cross-motion to compel compliance with

the subpoena and production of the documents.2

The District Court judge presiding over the grand jury

held a hearing on August 14, 2001. In an opinion and order

filed under seal on October 25, 2001, the court denied

Doe’s motion to quash and granted the Government’s

motion to compel production. In its opinion, the court

noted that a circuit split exists on the question of whether

a protective order may trump a grand jury subpoena and

that this Court has not decided the issue. Without the

benefit of clear guidance from this Court, the District Court

declined to adopt a specific rule, but held that even under

the most "protective" circuit law, the protective order

cannot take precedence if it was improvidently granted. The

court found that the protective orders in this case were

improvidently granted and therefore allowed the grand jury

subpoena to override the protective order.3 The court also

questioned the extent of the deponents’ reliance on the

protective order and found that the public interest did not

justify enforcing the protective order in the face of the

grand jury subpoena.

Doe timely appeals the denial of his motion to quash the

subpoena. With the consent of the Government, the District

Court stayed its order pending expedited appeal to this

Court. We granted the parties’ request for expedited appeal

because the grand jury investigation is pending.

_________________________________________________________________

2. The Government did not oppose Doe’s motion to intervene.

3. The District Court held that under our decisions in Glenmede Trust

Co. v. Thompson, 56 F.3d 476 (3d Cir. 1995) and Pansy v. Borough of

Stroudsburg, 23 F.3d 772 (3d Cir. 1994), the protective order was

improperly granted because of the "fatal lack of judicial findings of good

cause" and due to this Court’s discouragement of"umbrella" protective

orders. Dist. Ct. Mem. Op. at 10-12.

4

II.

The District Court had jurisdiction under 28 U.S.C.

S 3231 and Fed. R. Crim. P. 17(c) over Doe’s motion to

quash the grand jury subpoena and the Government’s

motion to compel production. This Court has jurisdiction

over the District Court’s order denying Doe’s motion and

granting the Government’s motion under 28 U.S.C.S 1291.

See In re Grand Jury Proceedings, 604 F.2d 798, 800-01 (3d

Cir. 1979).

Doe challenges the grand jury subpoena as an intervenor

under Federal Rule of Criminal Procedure 17(c), which

states that "[t]he court on motion made promptly may

quash or modify the subpoena if compliance would be

unreasonable or oppressive." The same rule also allows the

court to direct production of subpoenaed documents.

"We review the decision to quash a grand jury subpoena

for abuse of discretion." Impounded, 241 F.3d 308, 312 (3d

Cir. 2001). We have plenary review over the District Court’s

interpretation and application of the relevant legal

standards. See Pansy v. Borough of Stroudsburg , 23 F.3d

772, 783-84 (3d Cir. 1994). The District Court’s factual

determinations are reviewed for clear error. Impounded, 241

F.3d at 312.

III.

We have not previously addressed whether, and under

what circumstances, a civil protective order may shield

information from a grand jury, but our sister circuits have

developed three different approaches to this problem.4 The

_________________________________________________________________

4. We note that all the circuit cases discussed here addressed the issue

in the context of protective orders issued by federal courts under Federal

Rule of Civil Procedure 26(c). Here, the initial stipulated protective order

was approved by the District Court, but all the materials sought by the

grand jury were produced under the state court protective order, which

incorporated and adopted the federal order. The interests implicated by

the clash between a protective order and a grand jury subpoena are

substantially the same whether the order was issued under federal or

state law. Therefore, the circuit cases we discuss below are relevant, and

the rule we announce applies to both federal and state protective orders.

5

Second Circuit has held that, absent a showing of

improvidence in the grant of the protective order, or

extraordinary circumstance or compelling need for the

information, a protective order takes priority over a grand

jury subpoena. Martindell v. International Telephone &

Telegraph Corp., 594 F.2d 291, 296 (2d Cir. 1979). This

presumption in favor of enforcing protective orders against

grand jury subpoenas has been rejected by several courts.

Three courts of appeals have announced a per se rule that

a grand jury subpoena always trumps a protective order. In

re Grand Jury Subpoena Served on Meserve, Mumper &

Hughes, 62 F.3d 1222, 1226-27 (9th Cir. 1995); In re Grand

Jury Proceedings (Williams), 995 F.2d 1013, 1020 (11th Cir.

1993); In re Grand Jury Subpoena, 836 F.2d 1468, 1477

(4th Cir.), cert. denied, 487 U.S. 1240 (1988). Most recently,

the First Circuit declined to adopt either the Second Circuit

standard or the per se rule. It instead established a

rebuttable presumption in favor of grand jury subpoenas.

Under this rule, a grand jury subpoena overrides a

protective order unless the party seeking to avoid the

subpoena demonstrates the existence of "exceptional

circumstances that clearly favor subordinating the

subpoena to the protective order." In re Grand Jury

Subpoena (Roach), 138 F.3d 442, 445 (1st Cir.), cert.

denied, 524 U.S. 939 (1998).5

We benefit from the reasoning of these courts in

announcing our rule today. We join the First Circuit in

concluding that a strong but rebuttable presumption in

favor of a grand jury subpoena best accommodates the

sweeping powers of the grand jury and the efficient

resolution of civil litigation fostered by protective orders.

A.

In considering the tension between a grand jury

subpoena and a civil protective order, we first recognize the

"unique role" played by the grand jury in our system of

justice. See Impounded, 241 F.3d at 312; see also In re

Grand Jury Subpoena, 223 F.3d 213, 216 (3d Cir. 2000)

_________________________________________________________________

5. At oral argument, the Government urged this Court to adopt the First

Circuit’s rule.

6

(noting that grand jury is "essential to the federal criminal

justice system"). The grand jury is "a grand inquest, a body

with powers of investigation and inquisition, the scope of

whose inquiries is not to be limited narrowly by questions

of propriety or forecasts of the probable result of the

investigation . . .". Blair v. United States , 250 U.S. 273, 282

(1919). As the Supreme Court has noted, the grand jury is

"[r]ooted in long centuries of Anglo-American history" and is

"a constitutional fixture in its own right." United States v.

Williams, 504 U.S. 36, 47 (1992) (internal quotations and

citations omitted).6 It may "inquire into all information that

might possibly bear on its investigation until it has

identified an offense or has satisfied itself that none has

occurred." United States v. R. Enterprises, Inc., 498 U.S.

292, 297 (1991). Therefore, "[a]s a necessary consequence

of its investigatory function, the grand jury paints with a

broad brush." Id. A subpoena is perhaps the most

important of the grand jury’s tools of investigation, and its

authority to subpoena witnesses "is not only historic, but

essential to its task . . . [because] ‘the public . . . has a

right to every man’s evidence,’ except for those persons

protected by a constitutional, common-law, or statutory

privilege." Branzburg v. Hayes, 408 U.S. 665, 688 (1972)

(citations omitted).

Courts exercise limited control over the functioning of the

grand jury and extend great deference to this historic

institution and its broad powers. See Impounded , 241 F.3d

at 312. The grand jury "belongs to no branch of the

institutional Government, serving as a kind of buffer or

referee between the Government and the people." Williams,

504 U.S. at 47. As we have acknowledged, the grand jury’s

"great powers of investigation and inquisition" allow it to

" ‘compel the production of evidence or testimony of

witnesses . . . unrestrained by the technical procedural and

evidentiary rules governing the conduct of criminal trials.’ "

In re Grand Jury Subpoena, 223 F.3d at 216 (quoting

_________________________________________________________________

6. "In this country the Founders thought the grand jury so essential to

basic liberties that they provided in the Fifth Amendment that federal

prosecution for serious crimes can only be instituted by ‘a presentment

or indictment of a Grand Jury.’ " United States v. Calandra, 414 U.S.

338, 343 (1974) (citation omitted).

7

United States v. Calandra, 414 U.S. 338, 343 (1974)). While

courts have some authority to limit the grand jury’s power,

see Impounded, 241 F.3d at 312-13, the Supreme Court

has stated that "[g]iven the grand jury’s operational

separateness from its constituting court, it should come as

no surprise that we have been reluctant to invoke the

judicial supervisory power as a basis for prescribing modes

of grand jury procedure." Williams, 504 U.S. at 49-50.

A civil protective order also serves important interests.

Protective orders, authorized under federal law by Federal

Rule of Civil Procedure 26(c) and by analogous provisions in

state rules, are intended " ‘to secure the just, speedy, and

inexpensive determination’ of civil disputes . . . by

encouraging full disclosure of all evidence that might

conceivably be relevant." Martindell, 594 F.2d at 295

(quoting Fed. R. Civ. P. 1). By shielding sensitive

information from third parties and the public at large,

protective orders "offer litigants a measure of privacy" and

"aid the progression of litigation and facilitate settlements."

Pansy, 23 F.3d at 786.

B.

We ultimately conclude, however, that absent exceptional

circumstances, protective orders should not serve to

interfere with the unique and essential mechanism of a

grand jury investigation. Other courts have rejected the

Second Circuit’s rule favoring protective orders because

that test "tilts the scales in exactly the wrong direction" by

"failing to pay proper respect" to the grand jury and its

powers. See In re Grand Jury Subpoena (Roach) , 138 F.3d

at 444; see also In re Grand Jury Subpoena Served on

Meserve, Mumper & Hughes, 62 F.3d at 1226 ("[A]llowing

protective orders to be enforced at the expense of grand

jury subpoenas would yield little benefit, at great cost."); In

re Grand Jury Proceedings (Williams), 995 F.2d at 1017

("Permitting witnesses to rely on civil protective orders to

keep information from a criminal investigation disrupts the

essential grand jury process and threatens the grand jury’s

independence from the judiciary."); In re Grand Jury

Subpoena, 836 F.2d at 1475 ("A civil protective order may

seriously impede a criminal investigation by a grand jury.").

8

While protective orders are in many cases very important

facilitating devices, they are not, as the Second Circuit

describes them, part of the "cornerstone of our

administration of civil justice," and should almost always

yield in the face of a grand jury subpoena. See Martindell,

594 F.2d at 295.

The grand jury itself is a "cornerstone" of our justice

system. The Fourth Circuit has cataloged the ways in which

a protective order may improperly intrude upon the grand

jury’s functioning:

Uncoerced testimony given in a civil action may provide

important and relevant information to a grand jury

investigation. In addition, the government has an

interest in obtaining this information for purposes of

impeachment should the deponents testify in a manner

materially inconsistent with their deposition testimony

in any future criminal trial. Finally, protective orders

may cause the absurd result of shielding deponents

from prosecutions for perjury because, while evidence

of perjury would certainly be cause for modifying a

protective order, the protective order itself impedes an

investigation that might lead to cause for believing that

perjury has occurred.

In re Grand Jury Subpoena, 836 F.2d at 1475.

It is true that under its broad powers, the grand jury may

obtain evidence by means other than subpoenaing civil

discovery materials. For example, it may subpoena

witnesses directly, and the Government could grant these

witnesses immunity if they refuse to testify. Yet in almost

all cases, the grand jury should not be forced to resort to

these imperfect alternatives when relevant evidence may be

found in civil discovery materials. Because we give great

deference to the grand jury’s investigatory methods, we

hesitate to dictate which methods may properly be

employed. In many cases, the relevant witnesses are

themselves targets of the grand jury probe and therefore a

subpoena would not yield the required information because

the witnesses would likely assert their Fifth Amendment

privilege against self-incrimination. Allowing a protective

order to prevail could all too often frustrate the grand jury’s

9

constitutionally and historically protected mission. We do

not wish to allow protective orders, designed to facilitate

private civil litigation, instead to delay criminal

investigations which advance the public interest.

However, allowing a grand jury subpoena to override a

protective order could encourage civil deponents to assert

their Fifth Amendment privilege. This "may disrupt or

thwart civil litigation and discovery in a wide variety of

cases." Id. at 1473. Yet we agree with the Fourth Circuit

that a protective order "cannot effectively deal in all

instances with the problems posed by civil litigants who

plead the fifth amendment during pretrial discovery," so it

is "not therefore a substitute for invocation of the privilege,

and it should not be afforded that status." Id. at 1475. We

have held that "reliance on the Fifth Amendment in civil

cases may give rise to an adverse inference against the

party claiming its benefits." S.E.C. v. Graystone Nash, Inc.,

25 F.3d 187, 190 (3d Cir. 1994) (citing Baxter v.

Palmigiano, 425 U.S. 308, 318 (1976)). Therefore, concern

for the Fifth Amendment right of a deponent "[does] not

require, nor may it depend on, the shield of civil protective

orders." In re Grand Jury Subpoena, 836 F.2d at 1471.

Furthermore, the Fourth Circuit has outlined several

ways by which a court may "ensure [the] successful

resolution of a civil action which is threatened by a

deponent’s privileged silence." See id. at 1476. These

methods to facilitate efficient discovery include: 1) delaying

discovery until any pending grand jury investigation has

been completed; 2) conducting a pretrial hearing to expose

any non-meritorious assertions of the Fifth Amendment

privilege; 3) shifting the burden of proof to the privilege-

asserting party who is in the best position to provide

relevant proof and whose invocation of the privilege

"contributed substantially to a party’s failure of proof "; and

4) excluding testimony given at trial if the same testimony

had been withheld during discovery under an assertion of

privilege. See id.; see also In re Grand Jury Proceedings

(Williams), 995 F.2d at 1018 n.11 (noting several

"precautions" that may be taken to protect civil plaintiffs

fearing criminal prosecution against self-incrimination).

10

A protective order is an important device, but it is also a

limited one, and is subject to modification. See , e.g., Pansy,

23 F.3d at 789-91 (establishing test for modification of

protective orders). As the Fourth Circuit has noted:

Even with a protective order in place, incriminating

statements still create the risk that parties to a civil

action will leak sealed information or materials to

relevant law enforcement authorities. In the event of a

leak, . . . a protective order, unlike a grant of

immunity, provides no assurance that incriminating

statements will not be used against a deponent in a

criminal proceeding or that the statements will not be

used to obtain other relevant evidence. Moreover, a

protective order . . . is normally subject to modification

under Rule 26 for sufficient cause.

In re Grand Jury Subpoena, 836 F.2d at 1476. A protective

order often "cannot serve as more than a stopgap measure

. . . [because] incriminating information will normally be

disclosed at trial even if the information is effectively

suppressed prior to that time." Id. Protective orders are

limited instruments that are quite useful in facilitating the

efficient disposition of litigation in the many civil cases that

involve potentially embarrassing facts or sensitive

commercial or other private information. Yet deponents who

have reason to fear not just embarrassment or economic

disadvantage, but possible criminal charges as well, should

be aware that a protective order alone cannot protect them

from a grand jury investigation.

Arguing for adoption of an approach akin to the Second

Circuit’s Martindell rule, Doe asserts that the Government

may overcome that rule’s presumption in favor of the

protective order by demonstrating "compelling need" for the

subpoenaed information, and therefore the harm to the

esteemed role and powers of the grand jury is slight. He

further contends that any impediment to the grand jury’s

investigation posed by quashing the subpoena can be

avoided by compelling the witnesses themselves to testify,

and if the witnesses elect to assert their Fifth Amendment

privilege, the Government could then grant them immunity.

This argument, however, does not account for the

consequences that would ensue if the Government declines

11

to grant immunity. Such consequences would likely occur

in cases such as Doe’s where the witness himself is the

target of the grand jury probe. In addition, such a high and

exacting standard as "compelling need" simply does not

comport with the wide-reaching powers of the grand jury

and the judicial deference shown those powers.7

IV.

In the vast majority of cases, a protective order should

yield to a grand jury subpoena. On the other hand, we also

understand that on very rare occasions, the public interest

in speedy resolution of private civil litigation could outweigh

the strong public interest in favor of prosecution of criminal

wrongdoing. The per se approach, adopted by three of our

sister circuits and under which a grand jury subpoena

always trumps a protective order, defers to the sweeping

powers of the grand jury, but does so at the expense of

flexibility. It also forecloses enforcement of a protective

order in the exceptional case in which the public interest

demands that the civil litigation take priority over any

criminal investigation. Such a rigid test ignores

"idiosyncratic circumstances" and fails to understand that

"the confluence of the relevant interests -- generally, those

of society at large and of the parties who are seeking to

keep a civil protective order inviolate -- occasionally may

militate in favor of blunting a grand jury’s subpoena." In re

Grand Jury Subpoena (Roach), 138 F.3d at 445.

_________________________________________________________________

7. Our view of Martindell is strengthened by our prior disapproval of the

Second Circuit’s standard in a related context. We considered the

standard for modification of a protective order by a non-Government

party in Pansy, and we particularly focused on the weight that should be

given to the parties’ reliance in determining whether to modify a

protective order. The Second Circuit test (which applies to all attempts

to modify a protective order) makes the parties’ reliance dispositive, as

such reliance forms the underlying policy rationale for its strong

presumption in favor of protective orders. We joined many other courts

of appeals in rejecting the Second Circuit approach as "too stringent."

See Pansy, 23 F.3d at 789-90 (citing cases from other circuits). Instead,

we considered the parties’ reliance as merely one non-dispositive factor

in a balancing test. See id. at 790. Here, where modification is sought by

way of a grand jury subpoena, the reasons for rejecting the Martindell

rule as far "too stringent" are even more compelling.

12

We therefore join the First Circuit in establishing a strong

presumption that a grand jury subpoena supercedes a

protective order. The party seeking to avoid the subpoena

may rebut that presumption only by showing the existence

of exceptional circumstances that clearly favor enforcing the

protective order against the grand jury subpoena.

A court’s assessment of whether a party has shown

exceptional circumstances requires a case-by-case analysis

of the relevant facts, and is not susceptible to easy

generalization. The First Circuit outlined several factors for

courts to consider in determining whether "exceptional

circumstances" exist. These factors include: 1) the

government’s need for the information (including the

availability of other sources); 2) the severity of the

contemplated criminal charges; 3) the harm to society

should the alleged criminal wrongdoing go unpunished; 4)

the interests served by continued maintenance of complete

confidentiality in the civil litigation; 5) the value of the

protective order to the timely resolution of that litigation; 6)

the harm to the party who sought the protective order if the

information is revealed to the grand jury; 7) the severity of

the harm alleged by the civil-suit plaintiff; and 8) the harm

to society and the parties should the encroachment upon

the protective order hamper the prosecution or defense of

the civil case. Id. at 445. We find these factors to be quite

helpful and we adopt them today. We stress, however, that

this list is not exhaustive; a district court need not weigh

every one of these factors, and it may consider additional

factors as the circumstances warrant.

We cannot overemphasize that the presumption we

announce today in favor of a grand jury subpoena may only

be rebutted in the rarest and most important of cases. As

the First Circuit stated, "[i]n the end, society’s interest in

the assiduous prosecution of criminal wrongdoing almost

always will outweigh its interest in the resolution of a civil

matter between private parties . . . and thus, a civil

protective order ordinarily cannot be permitted to sidetrack

a grand jury’s investigation." Id. (citations omitted)

(emphasis added).

In a University of Chicago Law Review article which

proposed a similar rule and upon which the First Circuit

13

relied, the author offered several illustrative examples of the

kinds of exceptional cases which might warrant enforcing a

protective order against a grand jury subpoena. See Ajit V.

Pai, Comment, Should a Grand Jury Subpoena Override a

District Court’s Protective Order?, 64 U. Chi. L.Rev. 317,

336-39 (1997). Pai proposed that a large bankruptcy case

of major national importance, one which requires swift

resolution to serve the broader interests of many creditors

and thousands of employees’ jobs, might justify enforcing a

civil protective order against a grand jury subpoena. Id. at

337. In such a case, confidentiality could be essential to

ensuring that the parties are forthcoming and the public

interest is served. Pai also suggested cases involving a

failed savings and loan or other financial institution, ones

in which the public interest in settling the institution’s

affairs and avoiding a costly government bailout might

outweigh the prosecutorial interest. Id. at 338. Mass tort

litigation, in which interfering with discovery could threaten

awards of compensation for thousands of plaintiff victims,

could also present a scenario in which the interests served

by the protective order could prevail. Id. These examples

make clear that only in cases in which the public interest

in resolving the civil litigation is overwhelming should

courts consider overriding a grand jury subpoena.

We recognize that the exceptional circumstances rule

sacrifices some of the certainty which forms one of the most

attractive features of the per se rule. However, we do not

wish to eliminate any possibility of a court exercising its

discretion in an extraordinary case. In the vast majority of

cases, a grand jury subpoena should prevail. Almost

always, the public interest in investigating criminal

misconduct will outweigh the public interest in facilitating

private civil litigation. As the Government conceded at oral

argument, however, the per se rule’s inherent inflexibility

fails to allow for the truly exceptional case in which

quashing the grand jury subpoena would be appropriate.

Finally, we share the concerns of the courts that have

approved the per se rule that allowing a protective order to

trump a grand jury subpoena, even in only the rarest of

cases, could amount to a virtual grant of immunity and

could thereby encroach upon the exclusive power of the

14

United States Attorney, under 18 U.S.C. S 6003, to issue

grants of immunity. See In re Grand Jury Proceedings

(Williams), 995 F.2d at 1018 (commenting that"[w]hile a

district court can issue Rule 26(c) protective orders to

encourage the full disclosure of relevant evidence, it cannot

impinge upon the authority of the Executive Branch to

decide who is to be accorded use immunity"); In re Grand

Jury Subpoena, 836 F.2d at 1475 (noting that enforcing a

protective order against a grand jury subpoena would

"usurp the proper authority of the executive branch to

balance the public interest in confidentiality against the

interest in effective criminal investigation").

Our worry is alleviated because again, in almost all

cases, the grand jury subpoena should prevail. We

acknowledge that enforcing a protective order grants a

certain degree of quasi-immunity to a deponent, because

application of the protective order denies the grand jury

access to statements made by the deponent, and the

deponent would likely assert his Fifth Amendment privilege

if subpoenaed directly. Yet a protective order is no

substitute for immunity because, as we have discussed

above, a protective order is inherently modifiable and does

not prevent the Government from prosecuting the deponent

through evidence obtained by other means. Just because

the grand jury might hypothetically obtain the evidence

from other available sources does not mean that it should

have to resort to such imperfect alternatives. But because

these potential alternatives exist, allowing a protective order

to quash a grand jury subpoena in a truly exceptional case

would not bar any prosecution such that enforcement of

the protective order would rise to the level of a de facto

grant of immunity. Concern with the scope of judicial power

ultimately does not dissuade us from allowing some slight

flexibility and entertaining the possibility that a protective

order might prevail in an exceptional case.

We therefore hold that a rebuttable presumption exists in

favor of grand jury subpoenas when they conflict with civil

protective orders. Unless the party seeking to avoid the

subpoena can demonstrate the existence of exceptional

circumstances that clearly favor the enforcement of the

protective order, the grand jury subpoena will supercede. A

15

district court should examine the facts of each case to

determine whether exceptional circumstances have been

shown to exist, while understanding that, in almost all

cases, the grand jury subpoena should trump a civil

protective order.

V.

In this case, we presume that the grand jury subpoena

issued to Doe’s civil counsel for deposition transcripts and

other discovery materials trumps the protective order under

which this evidence was produced. Doe has the burden of

showing the existence of exceptional circumstances that

clearly favor rebutting the presumption and enforcing the

protective order against the grand jury subpoena.

Although we review the District Court’s decision whether

to quash the subpoena for abuse of discretion, our review

over the District Court’s application of the legal standard is

plenary. See Pansy, 23 F.3d at 783-84. We need not

remand this case for further consideration by the District

Court and thereby further delay the pending grand jury

investigation. Because the record is sufficient, we may

ourselves assess whether Doe can show exceptional

circumstances. In any event, the District Court’s opinion

included analysis quite similar to that required by the

exceptional circumstances test. Although the District Court

decided this case without the guidance of a clear rule from

this Court, it expressly held that the public interest would

not be served by enforcing the protective order because

"[t]here is certainly no public interest in protecting the

personal financial dealings of the [Does] in the face of a

criminal investigation." Dist. Ct. Mem. Op. at 12.

We agree. Upon consideration of the facts of this case in

light of the non-exhaustive factors adopted above, we

conclude that Doe cannot overcome the presumption

against enforcing the protective order against the grand

jury subpoena. The Government’s need for the subpoenaed

information is significant. Therefore, allowing the protective

order to prevail could frustrate the grand jury’s power to

obtain evidence. The contemplated criminal charges being

investigated by the grand jury are severe; the potential

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harm to society in allowing extensive tax evasion and fraud,

and the illegal diversion of large amounts of money, without

punishment, is certainly substantial. The value of the

protective order to the timely resolution of the civil case is

limited at best. Discovery appears mostly complete, and the

civil case now awaits trial. Therefore, the protective order’s

value in facilitating discovery has significantly diminished,

and the protected information will likely be disclosed at

trial in any event. Doe may be harmed if his personal and

corporate financial information is revealed to the grand

jury, but because grand jury proceedings are secret, this

information will not become public and risk the burden and

embarrassment to Doe that protective orders are meant to

avoid. Rather, any harm would result instead from the

potentially self-incriminating statements contained in the

subpoenaed materials. Protective orders do not serve to

protect Fifth Amendment interests; any harm to such

interests is comparatively slight.

Counsel for Doe asserted at oral argument that

exceptional circumstances are present here because Doe is

a target of the grand jury investigation which led to the

subpoena. Yet, if this suffices to show exceptional

circumstances, then exceptional circumstances may be

found in every case. We refuse to allow "exceptional

circumstances" to swallow the presumption in favor of

grand jury subpoenas. Doe also contends that the

Government does not have a compelling need for the

subpoenaed information because it has other available

sources for the information. Government need, whether it

be "compelling" or otherwise, is not dispositive. It is simply

one potential factor in the analysis. We have rejected the

Second Circuit’s Martindell rule partly because it placed an

improper burden of showing compelling need on the

Government.

The public interest in enforcing the protective order and

facilitating the civil litigation simply does not outweigh the

public interest in prosecuting potential criminal behavior in

this case. As we stressed above, a grand jury subpoena

should almost always trump a protective order, and we find

no reason to rebut that strong presumption in this private

commercial dispute. Doe cannot show exceptional

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circumstances that clearly favor subordinating the

subpoena to the protective order.

VI.

In conclusion, we hold that a grand jury subpoena

supercedes a protective order unless the party seeking to

quash the subpoena can demonstrate exceptional

circumstances that clearly favor subordinating the

subpoena to the protective order. Doe cannot make such a

showing of exceptional circumstances. Therefore, we will

affirm the District Court’s denial of Doe’s motion to quash

the subpoena and its grant of the Government’s motion to

compel production.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

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