Petition — In re Aladdin Hotel Corp.

PP biprere Court, U. a

FILED |

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IN THE

Supreme Court of the United States

OCTOBER TERM 1979

MIsc. no.€ 9 8 z 8 z

IN RE

SUBPOENAS DUCES TECUM

ISSUED TO CUSTODIAN OF RECORDS

ALADDIN HOTEL CORPORATION,

A ppellant-Petitioner,

PETITION FOR A WRIT OF CERTIORARI

To the United States Court of Appeals for the

Eighth Circuit

LONDON, GREENBERG & FLEMING

NorRMAN S. LONDON

1600 Boatmen’s Tower

100 North Broadway

St. Louis, Missouri 63102

(314) 231-8700

Attorneys for Petitioner

St. Louis Law Printing Co., Inc., 812 Olive Street 63101 314-231-4477

eS

TABLE OF CONTENTS

Page

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Decisions of the Eighth Circuit Court of Appeals as Well

as Other Federal Courts Indicate That Much Con-

fusion Yet Exists as to the Circumstances Under

Which an Order Denying a Motion to Quash a Grand

Jury Subpoena Will Be Considered a Final Order,

Appealable Under 28 U.S.C. § 1291 and Under What

Circumstances a Witness Must Be Subjected to Con-

tempt Proceedings in Order to Assert Appellate Rights 7

ee a iia hse oka EAs 24 R 6 5 9 6 oe 11

TS RG A-1

ee hk iy een ee heed cases es A-2

Cases Cited

Alexander v. United States, 201 U.S. 117 (1906) ...... 7

Cobbledick v. United States, 201 U.S. 117 (1940) ...... 7

Continental Oil Company v. United States, 330 F. 2d 347

as tds eae s ss cs cease sec eaee 7

DiBella v. United States, 369 U.S. 121, 124 (1961) ...... 8

Groppi v. Leslie, 404 U.S. 496 (1972) .............. 9

In Re Grand Jury Subpoena for Appearance of Patrick

Felatico, 561 F. 2d 110 (8th Cir. 1977) ............ 7

In Re Virgil, 524 F. 2d 209 (10th Cir. 1975) ........ 9

Melikian v. United States, 547 F.2d 416 (8th Cir. 1977) .. 10

Perlman v. United States, 247 U.S. 7 (1917) .......... se

Schwimmer v. United States, 232 F. 2d 855 (8th Cir. 1956) 7

United States v. Alter, 482 F. 2d 1016 (9th Cir. 1973)... 9

United States v. Boe, 491 F. 2d 970 (8th Cir. 1974) .... 9

United States v. Dinsio, 468 F. 2d 1392 (9th Cir. 1973) .. 9

United States v. Handler, 476 F. 2d 709 (2nd Cir. 1973) 10

United States v. Roe, 455 F. 2d 753 (Ist Cir. 1972) .... 8

United States v. Ryan, 402 U.S. 530 (1971) ............ pe

Statutes and Rules Cited

SN IS SP ee deb ceba sides i ctiesses 9

28 United States Code § 1291 .................... ay 3,7

Be WM ia vcd ance cevecseccdsceccess 2

IN THE

Supreme Court of the United States

OCTOBER TERM 1979

i sy see

IN RE

SUBPOENAS DUCES TECUM

IsSUED TO CUSTODIAN OF RECORDS

ALADDIN HOTEL CORPORATION,

Appellant-Petitioner,

PETITION FOR A WRIT OF CERTIORARI

To the United States Court of Appeals for the

Eighth Circuit

Petitioner, Aladdin Hotel Corporation, a Nevada Corpora-

tion, prays that a Writ of Cetriorari be issued to review the

judgment of the United States Court of Appeals for the Eighth

Circuit entered in this case on August 1, 1979 whereby the

Court dismissed an appeal filed by the Aladdin Hotel Corpo-

ration from the order of the United States District Court for

the Eastern District of Missouri denying a motion to quash a

Grand Jury Subpoena issued to the Custodian of Records of

said Corporation.

DECISION BELOW

The decision of the Court of Appeals is unpublished but the

Order to Show Cause and the Order Dismissing the Appeal are

appended hereto as Exhibits A and B.

JURISDICTION

The judgment of the Court of Appeals was entered on Au-

gust 1, 1979. Jurisdiction of this Court is invoked under 28

U.S.C. § 1254(1).

QUESTION PRESENTED

Where a corporation, which is not the target of a Grand

Jury investigation, challenges a Grand Jury Subpoena Duces

Tecum on grounds that the subpoena is unduly burdensome

and oppressive and constitutes a general search warrant, must

the corporation subject itself to a contempt citation in order to

obtain appellate review of an adverse District Court decision?

STATUTE INVOLVED

Title 28, United States Code §1291 provides in pertinent

part:

The courts of appeals shall have jurisdiction of appeals

from all final decisions of the district courts of the United

States . . . except where a direct review may be had in

the Supreme Court.

STATEMENT

This is a petition for review of the decision of the Court of

Appeals dismissing the appeal of the Aladdin Hotel Corpora-

tion (hereinafter Aladdin) which had filed its timely Notice of

Appeal from the decision of the District Court denying its

motion to quash two grand jury subpoenas duces tecum. The

subpoenas were issued to the Custodian of Records of the Alad-

din and called for the production, inter alia, of records of

payments and loan transactions between or on behalf of the

Aladdin, its officers, directors and employees and/or subsidi-

aries and one Peter J. Webbe for the years 1973 through the

present, and additionally called for:

“3. Records reflecting the identities of individuals who re-

ceived various complimentary and/or courtesy serv-

ices extended by the Aladdin Hotel Corp., including,

but not limited to such items as free meals, air fare

and lodging, such records to reflect the identities of

Aladdin Hotel Corp. employees, officers or directors

responsible for authorizing such services for the years

1973 through the present.

“4. Records reflecting bad debt, or account write-offs,

relating to gambling ‘IOU’s’, otherwise known as

‘Markers’, including all supporting documentation, for

the years 1973 through the present.”

The subpoenas define the term “Records” as including but not

limited to:

“. . . Ledger books, papers, books, correspondence, memo-

randa, cancelled checks, check stubs, bank account state-

ments, W-2 forms, 1099 forms, notes, balance books, etc.”

The Aladdin supported its motion by the affidavits of its di-

rector of finance indicating that compliance with the subpoena

aay oon

relating to documents pertaining to Peter J. Webbe would in-

volve a week’s work for approximately four individuals for

each of the three specific categories of items requested, and

that compliance with the subpoena relating generally to compli-

mentary services and bad debts would involve over six million

items and would require two additional full time individuals

working in excess of one year to locate, photostat and collate

the items for presentation.

Additionally, it was shown at the hearing on the motion to

suppress that three FBI agents initially attempted to obtain

access to the subpoenaed records on the premises of the Aladdin,

in Las Vegas, through a previously issued subpoena which was

later withdrawn.

The Government took the position in both its response to the

Motion to Quash and at the hearing that the Aladdin was not

directly a target of Grand Jury investigation, but that the Grand

Jury was investigating the affairs of Peter J. Webbe to determine

if Mr. Webbe was using the facilities of the Aladdin to transmit

illegal payments to St. Louis governmental or political figures.

According to the Government, therefore, the investigation is

focusing on a number of persons or entities other than the

Aladdin.

The Aladdin asserted in its motion that the subpoenas were

unduly burdensom and oppressive and that they constituted gen-

eral search warrants and that to require the Aladdin to comply

therewith would violate its rights to due process and equal pro-

tection of the law.

After a hearing on the motion, at which both the Government

and the Aladdin presented evidence, the District Court issued

its order denying the motion to quash with regard to the docu-

ments pertaining specifically to Peter J. Webbe, and modifying

the subpoena pertaining to the other documents so as to require

the Aladdin to produce:

—

1. Corporate minute books for the years 1973 through

the present;

2. Corporate stock transfer register for the years 1973

through the present;

3. Check registers, subledger cards, and summary sheets

and lists reflecting the identities of individuals who received

various complimentary and/or courtesy services extended

by the Aladdin Hotel Corporation for the years 1973

through the present;

4. Monthly reports showing lists of markers and return

checks written off as uncollectible or as bad which reflect

bad debts and/or account write-offs relating to gambling

IOU’s for the years 1973 through the present.

The District Court then ordered the subpoenas enforced as

modified, whereupon the Aladdin filed its Notice of Appeal.

The Government filed a motion to dismiss the appeal con-

tending that under this Court’s opinion in United States v. Ryan,

402 U.S. 530 (1971) orders denying motions to quash subpoenas

are not final orders appealable under 28 U.S.C. § 1291 and that,

therefore, the Court of Appeals did not have jurisdiction to

entertain the appeal.

The Court of Appeals issued its order to show cause why the

appeal should not be dismissed (Exhibit A) to which the Aladdin

filed its timely response asserting that, since it was not a target

of the investigation, the Aladdin should not be required to

subject itself to the penalties of contempt in order to assert its

appellate rights and that denial of immediate review would

render impossible any review whatsoever.

a

The Court of Appeals, nevertheless, dismissed the appeal and

ordered its mandate forthwith from which dismissal this petition

_ =a

is taken requesting this Court to review the circumstances and

law under which an appeal was denied to the Aladdin.

Prior to filing this petition, however, the Aladdin has produced

for the Grand Jury, the records called for in the first of the

two subpoenas, to wit the record relating to documents pertain-

ing to Peter J. Webbe and has also complied with the first two

paragraphs of the District Court’s order modifying the second

subpoena. Consequently, the remaining issues, unresolved by

the Court of Appeals, pertain to the oppressive and burdensome

nature of paragraphs 3 and 4 of the modified subpoena. As-

sembly and production of those documents, would according to

the Aladdin’s director of finance, take considerable time and

effort because much of the information is on microfilm and

many of the check registers have been destroyed or misplaced

as a result of previous State and Federal Tax Audits. Accord-

ingly, it is the Aladdin’s position that the modification of the

subpoena with respect to the general demand for records of

complimentary services and bad debt write offs did not ade-

quately reduce its burdensomeness. The Aladdin has, therefore,

not complied with paragraphs 3 and 4 and the Government has

indicated that it will initiate contempt proceedings.

REASON FOR GRANTING THE WRIT

Decisions of the Eighth Circuit Court of Appeals as Well as

Other Federal Courts Indicate That Much Confusion Yet Exists

as to the Circumstances Under Which an Order Denying a

Motion to Quash a Grand Jury Subpoena Will Be Considered a

Final Order, Appealable Under 28 U.S.C. § 1291 and Under

What Circumstances a Witness Must Be Subjected to Contempt

Proceedings in Order to Assert Appellate Rights.

In United States v. Ryan, 402 U.S. 530 (1971), this Court

reiterated the general rule set forth in such prior cases as Cob-

bledick v. United States, 201 U.S. 117 (1940), and Alexander

v. United States, 201 U.S. 117 (1906), that an order denying

a motion to quash a grand jury subpoena is not appealable

under 28 U.S.C. §1291. However, the Court noted an im-

portant caveat to this general rule in the “limited class of cases

where denial of immediate review would render impossible any

review whatsoever of an individual’s claims.” (402 U.S. 533).

This exception merely reiterated the rule set forth long ago

in Perlman v. United States, 247 U.S. 7 (1917), that such

orders are appealable where the movant is “powerless to avert

the mischief of the order.” The Perlman exception was recog-

nized and applied in the Eighth Circuit as well as other circuits

prior to this Court’s decision in Ryan, supra. See, e.g.: Schwim-

mer v. United States, 232 F. 2d 855 (8th Cir. 1956), and

Continental Oil Company v. United States, 330 F. 2d 347 (9th

Circuit 1964).

Subsequent to Ryan, several courts, including the Eighth

Circuit in Jn Re Grand Jury Subpoena for Appearance of Pat-

rick Felatico, 561 F. 2d 110 (8th Cir. 1977), have continued

to recognize cases as falling under the exception where the sub-

poena has been directed to a third party (not a target) “who

—

could not be expected to expose himself to the penalty of con-

tempt in order to obtain appellate review.” (561 F. 2d 111).

In United States v. Roe, 455 F. 2d 753 (ist Cir. 1972), the

Court of Appeals for the First Circuit recognized a right of

appeal by Senator Gravel from an order denying a motion to

quash a grand jury subpoena issued to one of his legislative

assistants who was not a subject of the investigation. Citing

Perlman v. United States, supra, the Court of Appeals reasoned

that “the subpoena was not addressed to intervenor (Gravel)

but to third parties, who could not be counted on to risk con-

tempt in order to protect intervenor’s constitutional rights . . .

Hence he was ‘powerless to avert the mischief of the order’ un-

less permitted to appeal it.” (455 F. 2d 757).

Prior to the Ryan decision, this Court had expressed the ex-

ception in somewhat more broad terms. In DiBella v. United

States, 369 U.S. 121, 124 (1961), the exception was said to

apply “where the damage of error unreviewed before the judg-

ment is definite and complete and has been deemed greater

than the disruption caused by intermediate appeal” and also

“where the practical effect of the order will be irreparable by

any subsequent appeal.” Neither Perlman nor DiBella were

overruled in Ryan, but the extent to which the exception is to.

be applied remains unclear and would appear to require a

balancing of the harm caused by immediate enforcement against

the “disruption caused by intermediate appeal.”

In this connection it should be noted that in Continental Oil

case, supra, the Court of Appeals proceeded to hear the appeal

on an expedited basis and to render an immediate ruling and

preliminary order followed later by a more extensive opinion.

Consequently, there was little, if any, description of the Grand

Jury proceedings as a result of the appellate process, as op-

posed to contempt proceedings.

It is respectfully submitted that the assumption that an ap-

peal from the denial of a motion to quash will somehow be

—

more disruptive of the Grand Jury proceedings than an appeal

from a contempt citation is somewhat unfounded. The issues

raised in the motion to quash are immediately before the Court

of Appeals without the need for the witness to disobey the

Grand Jury’s order. In the instant case, the transcript of the

hearing had been prepared and was ready for filing. An ex-

pedited appeal procedure would have determined the issues

raised within such time as the Court of Appeals may have

directed.

On the other hand, contempt proceedings require not only

a direct confrontation with the legal process but also the fol-

lowing steps:

1) The appearance of the witness before the Grand Jury and

refusal to comply with the subpoena;

2) Initiation of contempt proceedings by the United States

Attorney;

3) Notice to the witness of the contempt proceedings. Note

that in United States v. Alter, 482 F. 2d 1016 (9th Cir. 1973),

the Ninth Circuit concluded that the five day notice require-

ments of Rule 6(d) F.R.C.P. should be followed in grand jury

proceedings unless good reasons are shown for shortening or

lengthening the time. Other cases have held that notice should

provide at least a “reasonable time” for preparation of the de-

fense. See, In Re Virgil, 524 F. 2d 209 (10th Cir. 1975);

United States v. Boe, 491 F. 2d 970 (8th Cir. 1974); Cf:

Groppi v. Leslie, 404 U.S. 496 (1972) (involving inadequate

notice of contempt proceedings by state legislature);

4) A full “Uninhibited Adversary Hearing” on the contempt

with the right to call witnesses. See: United States v. Dinsio,

468 F. 2d 1392 (9th Cir. 1973) and United States v. Alter,

482 F. 2d 1016 (9th Cir. 1973);

5) Proceedings relative to the bond or stay of execution if

incarceration is ordered. Note that 28 U.S.C. §1826(2)(b)

—_ a

provides for denial of bond if the appeal is “frivolous or taken

for delay”, but assumes the availability of bond in other cases.

United States v. Handler, 476 F. 2d 709 (2nd Cir. 1973);

Melikian v. United States, 547 F. 2d 416 (8th Cir. 1977);

6) The filing of a notice of appeal and determination through

the appellate process.

Five of the foregoing six steps could be avoided if the Court

of Appeals would assume jurisdiction of the denial of the mo-

tion to quash. Moreover, it would not be necessary for a third

party (which is not a target), such as the Aladdin, to subject

itself to the adverse consequences of a contempt citation in

order to assert its constituuonal rights. Although this is obvi-

ously critical in the case of an individual it is equally important

where a corporation, such as a casino, must avoid even the

appearance of impropriety in order to maintain licenses or

franchises. It is for this reason that the Aladdin has sought to |

comply to the extent reasonably possible with the subpoenas.

As indicated, the Aladdin has produced the documents called

for with the exception of those generally described in paragraphs

3 and 4 of the modified subpoena which the Aladdin asserts

are unduly burdensome. The Aladdin, therefore, has not and

does not seek appellate rights in order to delay or disrupt the

Grand Jury proceedings, but on the contrary, seeks to resolve

the issues raised with as little disruption as possible and with-

out the necessity of disobeying the District Court’s order and

subjecting itself to contempt proceedings.

It is submitted, therefore, that to require a corporation such

as the Aladdin under the circumstances of this case, to subject

itself to a contempt citation in order to assert appellate rights

effectively undermines those rights without any compelling ne-

cessity.

Guidance is needed, therefore, to clarify the rule and the

exceptions noted in Ryan and to determine under what circum-

aww jj

stances the contempt process can be avoided through an appeal

of a motion to quash.

CONCLUSION

For the foregoing reasons, a Writ of Certiorari should issue

to review the judgment of the Court of Appeals in dismissing

the Aladdin’s appeal.

Respectfully submitted,

LONDON, GREENBERG

& FLEMING

NORMAN S. LONDON

1600 Boatmen’s Tower

100 North Broadwday

St. Louis, Missouri 63102

(314) 231-8700

Attorneys for Petitioner

FATED LTT

sence S PANG SERA le cnn e

EXHIBIT A

United States Court of Appeals for the Eighth Circuit

No. 79-1574

In Re Subpoenas Duces Tecum) Appeal from the United

Issued to Custodian of Records | States District Court for

Aladdin Hotel Corporation, the Eastern District

Appellant. of Missouri.

Filed: July 25. 1979

Before HEANEY, ROSS and McMILLIAN,Circuit Judges.

ORDER

By order of the Honorable H. Kenneth Wangelin, District

Judge of the Eastern District of Missouri, movant’s motion to

quash two subpoenas duces tecum was denied and movant was

ordered to comply with the terms of the subpoenas, as modi-

fied by the order, by producing certain records to the special

grand jury at its next regular session on August 2, 1979. On

July 18, 1979, movant filed a notice of appeal and the district

court granted a stay pending appeal.

The government now moves to dismiss for lack of jurisdic-

tion and requests an expedited decision. Since it appears that

this court lacks jurisdiction to entertain this appeal [United

States v. Ryan, 402 U.S. 530 (1971)], and an expedited ap-

peal is authorized by Rule 2, Fed. R. App. P., movant-appellant

is directed to show cause within five days, by July 30, 1979,

why the appeal should not be dismissed. No extensions will be

granted.

It is so ordered.

A true copy.

Attest:

Clerk, U.S. Court of Appeals, Eighth Circuit.

[Not to be published. ]

aa

EXHIBIT B

United States Court of Appeals for the Eighth Circuit

No. 79-1574 September Term, 1978

In Re Subpoenas Duces Tecum) Appeal from the United

Issued to Custodian of Records States District Court for

Aladdin Hotel Corporation, ( the Eastern District

Appellant. | of Missouri.

Before HEANEY, ROSS and McMILLIAN, Circuit Judges.

Response of appellant, Aladdin Hotel Corporation, to this

Court’s show cause order as to why the above appeal should

not be dismissed for lack of jurisdiction having been filed and

considered by the Court, it is now here ordered that this ap-

peal be, and it is hereby, dismissed.

Mandate forthwith.

August 1, 1979