Petition — Adams Extract Co. v. Franey

77° 3e8 | 1 NQ¥ 19 1960

MICHAEL RODAK, JR. CLERK |

Supreme Court of the United States

OCTOBER TERM, 1980

In re Corrugated Container Antitrust Litigation

M.D.L. 310,

ADAMS EXTRACT COMPANY, ET AL.,

Petitioners,

vs.

CHARLES J. FRANEY AND ALEX HOPKINS,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

STEPHEN/D. SUSMAN LOWELL E. SACHNOFF

MANDEL & WRIGHT ANDREW M. SCHATZ

806 Main Street, 21st Floor Barry S. ROSEN

Houston, Texas 77002

SACHNOFF SCHRAGER JONES

WEAVER & RUBENSTEIN, LTD.

One IBM Plaza, Suite 4700

Chicago Illinois 60611

(312) 644-2400

(713) 228-1521

Pandick Press Midwest, Inc., Chicago © 454-7600

Questions Presented

1. Whether a court has authority to determine that

testimony will be “derived from” previously immunized testi-

mony pursuant to the federal immunity statute, 18 U.S.C.

§ 6002, in the context of a motion to compel testimony over a

claim of Fifth Amendment privilege?

2. Whether a witness may be ordered to testify over a

claim of privilege against self-incrimination where it is deter-

mined that his testimony will be “derived from” previously

immunized testimony and thus unavailable for use in future

criminal prosecutions?

3. Whether deposition testimony is “derived from” pre-

viously immunized testimony under the federal immunity stat-

ute, 18 U.S.C. § 6002, where a transcript of the immunized

testimony is used by duposing counsel to formulate the depo- -

sition questions?

il

Parties To The Proceeding Below

Plaintiffs:

Accurate Metal Weatherstrip Company, Inc.

Adams Extract Company

After Six, Inc.

Al Barker Publishing Co.

The Amberley Greeting Card Co.

Andre-Boudin Bakeries, Inc.

Arcadia Furniture Corp.

Atlas Container Co., Inc.

Austin Products Co.

Bateman Canning Co.

The Beaumont Co.

Bert Paley, Ltd.

Bodines, Inc.

Bookout & Mitchell Supply, Inc.

Bowman Dairy Company, Inc.

Burger King Corp.

Cantrell & Cochrane, Inc.

Carron Manufacturing Co., Inc.

Continental Nut Co.

Cook Distributing Co.

Cook Produce, Inc.

Co-Ordinated Industries, Inc.

Covington Fabrics Corp.

Dean Foods Co.

Dean Foods Products Company

Dean Milk Company Inc.

Denver Meat Co.

District Hotel Supply, Inc.

Doranne of California d/b/a Embassy Giftwares

Douglas Furniture Corp.

Draper Canning Co., Inc.

Draper-King Cole, Inc.

Dulaney Foods, Inc.

li

Erie Seating Co.

Falstaff Brewing Company

Fox Deluxe Pizza Co.

Furniture Plastics, Inc.

Gandy’s Dairies, Inc.

Gateway Farms, Inc.

General Brewing Co.

Golden Quality Ice Cream Co.

Grace Brewing Co.

Great Northern Packaging Corp.

Green Bay Foods

Griffin & Brand Sales Agency, Inc.

Grist Mill Co.

Haeger Potteries, Inc.

Huron Packaging Corp.

Shell-Tex Fisheries, Ltd.

Sky View Cooling Co.

Snyder-Craft Co., Inc.

Speas Co.

Steak and Ale Restaurants of America

Sunmark, Inc.

Tierra Royal Potteries, Inc.

Town House Furniture Ltd.

Trappe Frozen Foods Corp.

United Farmers Cooperative, Inc.

United Food Services, Inc.

United Foods, Inc.

Universal Cooperatives, Inc.

Valley Avocado Sales, Inc.

Valley Farms, Inc.

Valley Plastics Inc.

Walters Brewing Company

West Publishing Co.

Westside Paper Co.

Williams Manufacturing Co.

Winona Industries

Winter Garden, Inc.

Wittek Gold Supply Co., Inc.

iv

Non-Party Deponent-Appellants:

Charles: Jerome Franey

Philip Fleischacker

Alex Hopkins

Non-Settling Defendant In Jn re Corrugated Container Anti-

trust Civil Litigation, M.D.L. 310:

The Mead Corporation

Other Defendants In Jn re Corrugated Container Antitrust Civil

Litigation, M.D.L. 310:

Alton Box Board Company

Boise Cascade Corporation

Champion International, Inc.

The Chesapeake Corporation of Virginia

Consolidated Packaging Corporation

Container Corporation of America

The Continental Group, Inc.

Corco, Inc.

Crown Zellerbach Corporation

Diamond International Corporation

Dura-Containers, Inc.

Fibre Box Association

Fibreboard Corporation

Georgia-Pacific Corporation

Green Bay Packaging, Inc.

Hoerner Waldorf Corporation

Inland Container Corporation

International Paper Company

Interstate Container Corporation

Longview Fibre Company

MacMillan Bloedel, Inc.

MacMillan Bloedel Containers Inc.

Menasha Corporation

Olinkraft, Inc.

Owens-Illinois, Inc.

Packaging Corporation of America

Potlatch Corporation

St. Joe Paper Company

St. Regis Paper Company

Southwest Forest Industries, Inc.

Stone Container Corporation

Union Camp Corporation

U.S. Corrugated Fibre-Box Company

Western Kraft East, Inc.

Westvaco Corporation

Weyerhaeuser Company

Willamette Industries

vi

TABLE OF CONTENTS

Page

RNIB 5, 2.5.8 £s cchcnapins oimpebionibvedancaonsncabsvacorich i

Parties to the Proceeding Below.............ccccccccsscsssceccescseeees li

IO wishes itecihaotuntiiedasttasceecislimbovedins sane, eoivecskca l

HUE RTA NMDSN rE, NODE 2

Constitutional and Statutory Provisions Involved............ 2

cg LE Al SR Lae ALICE 2

Reasons for Granting the WFit.............ccccccccsccsscesceecceeceeees 6

I. The Writ Should Be Granted to Resolve A Direct

Conflict Between The Courts of Appeals................ 6

II. The Writ Should Be Granted To Correct The

Court of Appeals’ Erroneous Determination That

A Witness Cannot Be Compelled To Testify

Where His Testimony Would Be Derived From

His Previously Immunized Testimony..................-. 8

III. The Writ Should Be Granted To Resolve Impor-

tant Questions Concerning Administration Of The

Judicial System And To Prevent Unwarranted

STEN WOUNDED «s.iccsnecsscscetbiecscccassacesbobacsissiubicabs ll

GRE ER, SERRE TMNT Sa NTE ee 14

Vii

TABLE OF AUTHORITIES

Cases Page

Appeal of Starkey, 600 F.2d 1043 (8th Cir. 1979)... 4, 6,9

Ellis vy. United States, 416 F.2d 791 (D.C. Cir.

PURI TG, <chisisidccate sn thcnssntcdepilbasigoivedbooummvthgaev eiavvbersinnenss 10

Hanover Shoe v. United Shoe Machinery Corp.,

Ee OF a Ee IIIED opp decbingncininsen stone chnspssncseveepbine 12

Hawaii v. Standard Oil Co. of California, 405 U.S.

IE BT Pani ieiicinscnsactsiiothaie cihaduabstovnauisabiinaicss 12

Hoffman v. United States, 341 U.S. 479 (1951)...... 10

In re Folding Cartons Antitrust Litigation, 465

F.Supp. 618 (N.D. Ill.), rev’d on other grounds,

CO ee GOT (FCI, USD )nvcccecnscdianesnerbasestisnsone 9,10

Kastigar v. United States, 406 U.S. 441 (1972) ...... 8,9, 11

Little Rock School District v. Borden, Inc., 1980-2

Trade Cases J 63,522 ( 8th Cir. 1980).................. 7

Marchetti v. United States, 390 U.S. 39, 53 (1968) 10

Murphy v. Waterfront Commission, 378 U.S. 52

I Bivens 5 didieatial ainéshssdibchdddndsbiinaddanh hen senedietiiesatinieacoes 10

Patrick v. United States, 524 F.2d 1109 (7th Cir.

PES aiiisbedideobiussl cncssiccalsatbidalinbinesbnestaniesesiobendipenbiose 7

Perma Life Mufflers, Inc. v. International Parts

AIA, Be eek Baty Bae C BIOS ) oscesorerusentcienerasessne 12

United States v. Apfelbaum, 63 L.Ed2d 250, 262

IMac tis sinks dedi dindubaaeassiabvdnos. yedeeegnesorueabanbants 11

United States v. McDaniel, 482 F.2d 305 (8th Cir.

Sn, i A sss eens eeachanthadeakinseooauetabesnabuben 9

United States v. Nemes, 555 F.2d 51 (2d Cir.

OTF Pestsisseasins - shade uckaaisetaiadatetbistanabiiaaiiesunduabicsensirbaldbiins 9

Zenith Radio Corp. v. Hazeltine Research, Inc.,

Rs FA RW ETD Uistigiicnscccpbebbsveastsnsetess does 12

Constitutional and Statutory Provisions

Fifth Amendment to the United States Con-

TENGE gD AAR, Sa PPO RE Passim

Ra ead We CE AN, (NI ios Gidsin estenshabsaicdnegnsensacensecs Passim

Supreme Court of the United States

OCTOBER TERM, 1980

In re Corrugated Container Antitrust Litigation

M.D.L. 310,

ADAMS EXTRACT COMPANY, ET AL.,

Petitioners,

vs.

CHARLES J. FRANEY AND ALEX HOPKINS.

Respondents.

LL

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

OPINIONS BELOW

The majority and dissenting opinions in the Court of

Appeals, Jn re Corrugated Container Antitrust Litigation, Ap-

peal of Charles J. Franey, Appeal of Philip Fleishacker, Appeal

of Alex Hopkins (hereinafter, Corrugated), are reported at 620

F.2d 1086 (5th Cir. 1980) and are set forth in the Appendix at

pp. la-17a. The opinions and orders of the United States

District Court for the Southern District of Texas adjudging

2

Respondents Franey and Hopkins in civil contempt have not

been reported. They are set forth in the Appendix at pp. I b-5b,

and pp. 6b-8b, respectively. The order of the Court of Appeals

denying Petitioners’ timely petition for rehearing and rehearing

en banc is set forth in the Appendix at p. Ic.

—

JURISDICTION

The judgment of the Court of Appeals for the Fifth Circuit

vacating the orders of contempt for failure to testify, was

entered on June 19, 1980. A timely petition for rehearing and

for rehearing en banc was denied on August 14, 1980. The

jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The Fifth Amendment to the United States Constitution

provides in pertinent part:

No person... shall be compelled in any criminal case to

be a witness against himself... .

The federal immunity statute, 18 U.S.C. §§ 6001-6003

(1976) provides in pertinent part:

[ N Jo testimony or other information compelled under the

order (or any information directly or indirectly derived

from such testimony or other information) may be used

against the witness in any criminal case... .

18 U.S.C. § 6002.

STATEMENT OF THE CASE

Plaintiffs in this massive antitrust litigation seek review by

this Court of a decision of the Court of Appeals for the Fifth

Circuit, vacating, by a 2-1 vote, orders (the “Orders”) of the

District Court for the Southern District of Texas (the “District

Court”) adjudging Charles Franey (“‘Franey”) and Alex Hop-

kins (“Hopkins”) to be in contempt of court for refusing to

answer questions propounded at their civil depositions. The

3

Court of Appeals vacated the Orders, ruling that Franey and

Hopkins legitimately feared self-incrimination from answering

the deposition questions."

Franey and Hopkins are non-party witnesses in this private

treble damage action against defendant manufacturers of corru-

gated containers.? Both Franey and Hopkins were employees of

defendants during the period of the alleged price-fixing con-

spiracy and both testified under grants of “use” immunity

pursuant to 18 U.S.C. § 6001 er seg. prior to or during the

criminal trials which preceeded these civil actions. Hopkins

testified under separate grants of Statutory “use” immunity

before a federal grand jury and at trial. Franey testified at trial

under a grant of statutory “use” immunity and also testified in

an interview conducted by the Department of Justice pursuant

to a letter grant of “use” immunity.3

' Philip Fleischacker had also appealed the District Court’s order

of contempt entered against him for his refusal to testify. The

circumstances of his claim of Fifth Amendment privilege were

identical to those of Franey and Hopkins and the three appeals were

consolidated. Because Fleischacker appeared for deposition in New

York under subpoenas issued by the District Court for the Southern

District of New York, the Court of Appeals for the Fifth Circuit

dismissed Fleischacker’s appeal for lack of jurisdiction. (pp. 5a-8a. )

Fleischacker’s appeal is now awaiting decision before the Second

Circuit Court of Appeals, Jn re Corrugated Container Antitrust

Litigation, M.D.L. No. 310, Appeal of Philip Fleischacker, Docket No.

80-1090.

? Prior to trial, all but three defendants in this action entered into

settlements with the Plaintiff class totaling over $300 million. Two

additional defendants settled during trial. Mead Corporation did not

settle and following fourteen weeks of trial, a jury found Mead to be

guilty of the alleged price-fixing conspiracy and liable to Plaintiff class

in excess of $1 billion. Judgment has not yet been entered against

Mead. Appeals are expected.

* The Court of Appeals did not consider the validity of the letter

grant of immunity because “the district court could have based its

order compelling Franey to answer deposition questions solely on the

grant of statutory immunity.” (p. 11a, n.4)

4

Following the conclusion of the criminal trial, plaintiffs

sought and obtained complete transcripts of Franey and Hop-

kins’ immunized testimony in each of the above proceedings.

In preparation for the civil depositions of Franey and Hopkins,

deposing counsel reviewed and studied the questions and

answers which comprised the immunized testimony. At the

civil depositions, the questions asked Franey and Hopkins by

deposing counsel, as found by the District Court, were limited

to questions taken verbatim from their respective immunized

testimony or questions directly based on and derived from that

immunized testimony. (pp. 3b, 7b.) Despite this clear use of

each witness’ own immunized testimony in developing the

deposition questions asked of them, both Franey and Hopkins

refused to answer all substantive questions, claiming the Fifth

Amendment privilege against self-incrimination.4

The District Court ordered both Franey and Hopkins to

answer the propounded questions, ruling that use of the

immunized testimony in developing the deposition questions

asked of Franey and Hopkins would render their answers so

clearly and thoroughly derived from the immunized testimony

so as to be unusable in future criminal prosecutions against

them. (pp. 3b, 7b.) In reaching its determination, the District

Court relied on the decision of the Court of Appeals for the

Eighth Circuit in Appeal of Starkey, 600 F.2d 1043 (8th Cir.

1979), where the court, on identical facts, compelled testimony

over a claim of privilege.

In a 2-1 decision, the Fifth Circuit vacated the District

Court’s Orders of contempt, finding that the District Court

‘acted improperly in ruling that there existed no danger of self-

incrimination.” (p. 2a.) The majority did not dispute the

District Court’s factual finding that the deposition questions

were taken verbatim or derived from the transcripts of Franey

and Hopkins’ immunized testimony. The Court of Appeals

held, however, that a court lacked authority, in the context of a

4Franey and Hopkins were among over one hundred witnesses

in this litigation who asserted the Fifth Amendment privilege against

self-incrimination and refused to testify.

motion to compel testimony, to determine whether testimony

would be “derived from” immunized testimony pursuant to 18

U.S.C. § 6002, stating that:

[1]t was inappropriate for the [District] Court, ... [in

determining] whether the witnesses were entitled to invoke

the fifth amendment, to consider whether the testimony

was “tainted” such that it could not be used against them

in future prosecutions.

(p. 12a.)

While the majority recognized that section 6002 “contemplates

that district courts will have the responsibility to determine

what is derived use of immunized testimony,” the Fifth Circuit

held that “the authority to make that determination is limited to

the situation where the witness has been indicted and the

Government is seeking to introduce evidence to secure a

criminal conviction.” Jd.

Judge Frank M. Johnson, in dissent, recognized that “*(i)t

has always been for the courts to determine whether an

assertion of the privilege is proper”, and that “(c)ourts have

also always decided the taint question—whether evidence

should be excluded as derivative of immunized testimony”. (p.

16a, citations omitted.) He concluded that it was well within a

court’s authority to make a prospective determination of taint

and that “any prosecutorial use of the deposition testimony,

required by the district judge would, without any question, be

barred as derivative of the compelled evidence.” Jd.

6

REASONS FOR GRANTING THE WRIT

THE WRIT SHOULD BE GRANTED TO RESOLVE A

DIRECT CONFLICT BETWEEN THE COURTS OF AP-

PEALS

The Fifth and Eighth Circuits are in direct conflict over the

issues raised in this Petition. In a situation identical to the one

at bar, the Eighth Circuit, in Appeal of Starkey, 600 F.2d 1043

(8th Cir. 1979), compelled civil deposition testimony over a

claim of Fifth Amendment privilege where deposing counsel

used the deponent’s prior immunized testimony to develop

subsequent deposition questions asked of him.

Like Franey and Hopkins, Starkey was a key employee of

a company indicted by the federal government for criminal

price fixing. Starkey testified before a federal grand jury

investigating the alleged price fixing under a grant of “use”

immunity pursuant to 18 U.S.C. § 6001 ef seg. Following

conclusion of the criminal proceedings, in which all defendants

plead nolo contendere, the State of Arkansas commenced a civil

treble damage action against Starkey’s employer. During

discovery in the civil case, Starkey’s immunized grand jury

testimony was made available to plaintiff.

As in the case at bar, deposing counsel] used Starkey’s

immunized testimony to question him at his civil deposition. |

Many of the deposition questions were taken verbatim from the

immunized testimony while the balance were follow-up ques-

tions derived from the immunized testimony. Starkey refused

to answer these questions claiming the Fifth Amendment

privilege against self-incrimination. The Eighth Circuit found,

however, that the “obvious dependence on the [immunized]

grand jury testimony in the deposition questions” would leave

the deposition testimony “tainted and unavailable for criminal

prosecution”, Jd. at 1047, and ordered Starkey to answer

questions “within the same time, geographical and substantive

7

framework as the grand jury testimony.” Jd. at 1048. The court

specifically rejected the notion that it was exceeding its author-

ity in compelling the testimony, finding instead that it was

“merely fulfilling its proper duty to determine what is a derived

use of immunized testimony.” Jd.

Thus faced with identical factual Situations, the Eighth

Circuit compelled a witness to testify over a claim of privilege

while the Fifth Circuit, in this case, permitted a witness to

remain silent. In addition to this conflict in results reached by

the Circuits, the underlying rationale for the Fifth Circuit’s

ruling—that it lacked authority to determine whether testimony

is “derived from” immunized testimony in any context other

than “the situation where the witness has been indicted and the

Government is seeking to introduce evidence to secure a

criminal conviction”—is in conflict with a decision by Justice

(then Judge) Stevens for the United States Court of Appeals

for the Seventh Circuit and a decision by a separate panel of the

Fighth Circuit. In Patrick v. United States, 524 F.2d 1109,

1120 (7th Cir. 1975), Justice Stevens made a prospective

determination of taint in a suit to enjoin the assessment of a tax.

In Little Rock School District v. Borden, Inc., 1930-2 Trade

Cases §] 63,522 at p. 76,783 (8th Cir. 1980), the Eighth Circuit

specifically upheld the authority of a court to determine derived

use in the context of a motion to compel testimony over a claim

of privilege.5

Because there is a clear conflict between the Circuits as to

the circumstances in which testimony can be compelled over a

claim of privilege and as to the authority of a court to make

determinations necessary to analyze the propriety of a Fifth

Amendment claim, certiorari should be granted.

5 The Court in Borden held that deposition testimony could be

derivative of prior immunized testimony even absent deposing coun-

sel’s use of the immunized testimony. Petitioners do not assert this

broader position herein.

THE WRIT SHOULD BE GRANTED TO CORRECT

THE COURT OF APPEALS’ ERRONEOUS DETERMINA-

TION THAT A WITNESS CANNOT BE COMPELLED TO

TESTIFY WHERE HIS TESTIMONY WOULD BE DE-

RIVED FROM HIS PREVIOUSLY IMMUNIZED TESTI-

MONY

The Fifth Circuit was plainly in error in holding that a

witness could not be compelled to testify over his Fifth Amend-

ment objection where his testimony is “directly or indirectly

derived from” his previously immunized testimony. Because

the tainted testimony could not be used against the witness in a

subsequent criminal prosecution, the basis for any Fifth

Amendment objection disappears. Permitting invocation of the

Fifth Amendment under such circumstances, as the Court of

Appeals did here, is a needless restriction on the fundamental

right and duty of the federal courts to best ascertain the truth

from all available evidence.

The Fifth Amendment to the United States Constitution

protects a person from being forced to give testimony which can

be used against him in a criminal proceeding. However, under

the federal immunity statute, 18 U.S.C. § 6002,

[ N Jo testimony or other information compelled under

the order (or any information directly or indirectly derived

from such testimony or other information) may be used

against the witness in any criminal case.... (Emphasis

added. )

Thus, if deposition testimony is “directly or indirectly derived

from” immunized testimony, it cannot be used in a future

prosecution of the witness, and testimony, which may be

necessary to reach a truthful resolution of the litigation may,

and therefore, must be compelled. Kastigar v. United States,

406 U.S. 441 (1972). Common sense and substantial case

precedent support this conclusion.

\

tice aaa

9

Once a witness has testified under a grant of “use”

immunity, a “very heavy burden” attaches to evidence offered

in a subsequent criminal prosecution of the witness.

This burden of proof, which we reaffirm as appropri-

ate, is not limited to a negation of taint; rather, it imposes

on the prosecution the affirmative duty to prove that the

evidence it proposes to use is derived from a legitimate

source wholly independent of the compelled testimony.

Kastigar, supra, 406 U.S. at 460. Courts have strictly construed

the requirement that subsequent evidence be “wholly inde-

pendent” of the compelled testimony such that any showing of

use of compelled testimony in developing subsequent evidence

taints the subsequent evidence. See, e.g., United States v.

Nemes, 555 F.2d 51 (2d Cir. 1977); United States v. McDaniel,

482 F.2d 305 (8th Cir. 1973).

Applying this strict standard to the facts of this case, it

cannot be questioned that where deposing counsel use immu-

nized testimony to develop deposition questions, the subsequent

testimony will be “derived from” the immunized testimony.

The Eighth Circuit made this very ruling in Appeal of Starkey,

supra.® The Court of Appeals’ refusal to apply this rule in this

case on the ground that it lacked authority to determine tire

“taint” issue is erroneous.

Because the privilege against testifying frustrates the search

for truth, courts have always exercised their inherent power

—and indeed their obligation—to determine the circumstances

6In the only other decision written on this issue, a court

determined that testimony could not be compelled because the

questioner did not even have access to the immunized testimony and

thus could not have used the immunized testimony as a basis for the

subsequent deposition questions:

Here, plaintiffs have not had access to the witnesses’ grand

jury testimony: the questions plaintiffs have asked are not based

on the immunized testimony, but rather on the much broader

' discovery which has occurred in this civil case. .. .

In re Folding Carton Antitrust Litigation, 465 F.Supp. 618 (N.D. Ill.),

rev'd on other grounds, 609 F.2d 867 (7th Cir. 1979).

10

in which an assertion of the privilege would be proper. Mar-

chetti v. United States, 390 U.S. 39, 53 (1968); Hoffman v.

United States, 341 U.S. 479, 486 (1951). When the privilege is

improperly asserted, courts have always compelled the witness

to testify:

The witness is not exonerated from answering merely

because he declares that in so doing he would incriminate

himself—his say-so does not of itself establish the hazard

of incrimination. It is for the court to say whether his

silence is justified ... and to require him to answer if it

clearly appears to the court that he is mistaken.

Id.

In assessing the validity of a Fifth Amendment claim,

courts have routinely determined the applicability of statute of

limitations, double jeopardy, or immunity bars which would

either eliminate the possibility of future prosecutions of the

witness or prevent use of the witness’ testimony in a future

criminal action. Courts have not hesitated to reach these

complex issues in the context of a motion to compel testimony

over a claim of privilege despite the fact that statute of

limitations, immunity and double jeopardy bars are normally

only considered as affirmative defenses during criminal trials.

Certainly nothing in the immunity statute itself or in any case

cited by the majority below limits the circumstances in which a

court may determine derived use.

Moreover, compelling testimony “derived from” immu-

nized testimony over a claim of privilege does not amount to a

judicial creation of immunity.” A court is no more “creating”

7 The case of Ellis v. United States, 416 F.2d 791 (D.C. Cir.

1969), cited by the majority below (p. 14a, n.7) as an example of

judicial “creation” of immunity is easily distinguishable. In Ellis,

there was no prior grant of immunity. The district court compelled

testimony over a claim of privilege solely because of the after-the-fact

exclusionary rule which prevents evidence from being introduced

against a witness where it has been compelled over his claim of

privilege. See In re Folding Carton Antitrust Litigation, 609 F.2d 867,

872, n.11; Murphy v. Waterfront Commission, 378 U.S. 52 (1964).

Since nothing else prevented the testimony from being used in a

subsequent prosecution (i.e. statute of limitations, double jeopardy,

immunity, waiver) the district court was found to have “created”

immunity. Ellis, supra, 416 F.2d at 796.

1]

immunity when it determines derivative use than when it denies

the privilege be cause a statute of limitation or double jeopardy

would bar future prosecution. In each of these situations, the

court’s obligation is the same: to determine whether the witness

has a real and substantial fear of prosecution from testifying.

United States v. Apfelbaum, 63 L.Ed2d 250, 262 (1980). In

each of these situations, it is for the court to decide whether the

operative statute effectively bars use of the testimony in a future

prosecution and to overrule a claim of privilege if it does.

Thus the Fifth Circuit erred in deciding that it lacked

authority to determine derived use in the context of a motion to

compel and erred in refusing to compel the testimony of

Respondents herein. This Court should grant certiorari to

prevent future applications of the Court of Appeals’ erroneous

rulings.

THE WRIT SHOULD BE GRANTED TO RESOLVE

IMPORTANT QUESTIONS CONCERNING ADMINIS-

TRATION OF THE JUDICIAL SYSTEM AND TO PRE-

VENT UNWARRANTED REFUSALS TO TESTIFY

Whether deposition testimony derived from immunized

testimony can be compelled over a claim of Fifth Amendment

privilege is an important, continually recurring question of law.

While Petitioners suggest above that this Court’s decision in

Kastigar controls the analysis of the issue presented here, the

opinion of the Fifth Circuit emphatically denies Kastigar’s

applicability. The Fifth Circuit has either misunderstood its

role in applying this Court’s directive or “derived” testimony is

indeed conceptually different from any other evidence derived

from use of immunized testimony. In either case, the issues

presented are so fundamental to an ordered system of both

justice and personal liberties and so often recurring in cases

before the courts, that they should be addressed and resolved

by this Court.

#%

12

For centuries the Anglo-American legal systems have

granted to the courts the general authority to obtain every

person’s testimony. While there is, without question, a limita-

tion imposed on this power to preserve the fundamental

freedom from self-incrimination, important private litigation®

may be severely handicapped by wholesale invocation of the

Fifth Amendment. Indeed, those witnesses best able to aid the

court to reach a correct judgment by truthfully testifying to

wrongdoing are precisely those persons who invoke the Fifth

Amendment.

While witnesses may of course withhold testimony if it can

be used against them in future criminal proceedings, where, as

here, witnesses have given critical testimony under immunity,

their knowledge can be made available in the form of “de-

rived” testimony without jeopardizing their Fifth Amendment

rights. Yet, in the absence of a uniform rule enunciated by this

Court, the ability to compel testimony from such witnesses and

the witness’ ability to protect themselves from incrimination has

been dependent upon the jurisdiction in which they are found.

The case at bar presents a prime example of the anom-

olous results the existing conflict between the Circuits may

generate. Another witness in this action, Philip Fleischacker,

was compelled to testify over his claim of privilege for the same

reasons Franey and Hopkins were compelled to testify. How-

ever, because Fleischacker was found and served with a

subpoena to testify in New York, the Fifth Circuit dismissed his

appeal for lack of jurisdiction and the validity of his claim of

privilege is now being determined by the Second Circuit. Thus,

without direction from this Court, even witnesses in the same

8 This Court has often recognized that Congress sought to

encourage private litigants to assist federal and state governments’

enforcement of national economic policies, as expressed in the

antitrust laws, including Section 1 of the Sherman Act. See e.g.,

Hawaii v. Standard Oil Co. of California, 405 U.S. 251, 262 (1972);

Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 336

(1971); Hanover Shoe v. United Shoe Machinery Corp., 392 U.S. 481

(1968); Perma Life Mufflers, Inc. v. International Parts Corp., 392

U.S. 134, 139 (1968).

13

case may be subject to different Fifth Amendment standards

and litigants may be unable to obtain important testimony

solely because witnesses are found in certain jurisdictions.

Equally troubling is the Fifth Circuit’s refusal to exercise its

authority to determine the taint issue in considering the pro-

priety of a Fifth Amendment claim. The need for exercise of

this authority is clear: should courts abstain from deciding

questions relevant to determination of the privilege during a

motion to compel, there would be no mechanism to regulate its

exercise; witnesses could simply refuse to testify even though

they had no legitimate basis for doing so. Such a result would

cripple the fact finding process and expand the bounds of the

Fifth Amendment privilege beyond anything contemplated by

its framers or approved by this Court in Kastigar. Allowing the

Fifth Circuit’s abstention to stand will permit important wit-

nesses to improperly block the search for truth by refusing to

testify and will severely undercut judicial authority to determine

the factual basis behind Fifth Amendment claims.

14

CONCLUSION

For all of the foregoing reasons, Petitioners pray that a writ

of certiorari issue to review the judgment of the United States

Court of Appeals for the Fifth Circuit vacating the District

Court’s Orders of contempt for refusal to testify.

STEPHEN D. SUSMAN LOWELL E. SACHNOFF

MANDEL & WRIGHT ANDREW M. SCHATZ

806 Main Street, 21st Floor Barry S. ROSEN

Houston, Texas 77002 SACHNOFF SCHRAGER JONES

713) 228-1521

( WEAVER & RUBENSTEIN, LTD.

One IBM Plaza, Suite 4700

Chicago Illinois 60611

(312) 644-2400

November 12, 1980

APPENDIX A

la

In re CORRUGATED CONTAINER

ANTI-TRUST LITIGATION.

Appeal of Charles J. FRANEY.

In re CORRUGATED CONTAINER

ANTI-TRUST LITIGATION.

Appeal of Philip FLEISCHACKER.

In re CORRUGATED CONTAINER

ANTI-TRUST LITIGATION.

Appeal of Alex HOPKINS.

Nos. 80-1284, 80-1307 and 80-1338.

United States Court of Appeals,

Fifth Circuit.

June 19, 1980.

Rehearing and Rehearing En Banc

Denied Aug. 14, 1980.

Appeals from the United States District Court for the

Southern District of Texas.

Before TJOFLAT, FAY and FRANK M. JOHNSON, Jr.,

Circuit Judges.

TJOFLAT, Circuit Judge:

Phillip Fleischacker, Charles J. Franey, and Alex Hopkins

bring these consolidated appeals from orders of the District

Court for the Southern District of Texas holding them in civil

contempt for invoking the fifth amendment privilege against

seif-incrimination and refusing to answer questions posed to

2a

them at civil depositions.! The court had instructed them to

answer the questions, ruling that the fifth amendment right to

remain silent was unavailable to them since their deposition

testimony could not possibly be used against them in any future

criminal proceeding. We vacate the orders holding Franey and

Hopkins in contempt because we conclude that the court acted

improperly in ruling that there existed no danger of self-

incrimination. We must dismiss Fleischacker’s appeal for lack

of jurisdiction.

I.

Fleischacker, Franey, and Hopkins are non-party witnesses

in Jn re Corrugated Container Antitrust Litigation, M.D.L. No.

310, a private, multidistrict, antitrust action. That litigation was

set on foot by a two-year federal grand jury investigation of

allegations of price-fixing in the corrugated paper container

industry. The grand jury investigation resulted in felony

indictments against. nine manufacturers of corrugated products

and nine individuals and misdemeanor indictments against an

additional five manufacturers and seventeen individuals. There

followed a criminal trial in the district court for the Southern

District of Texas. A jury acquitted those defendants who stood

trial of all charges.

Fleischacker and Hopkins both testified before the grand

jury after the district court, acting on the Government’s petition,

had entered an order granting them “use” immunity pursuant

to 18 U.S.C. §§ 6001-6003 (1976) (immunity statute).

Although Franey was not subpoenaed to appear before the

grand jury, he submitted to an interview with Department of

‘Pursuant to the recalcitrant witness Statute, 28 U.S.C.

§ 1826 (1976), the district court sentenced each of the appel-

lants to sixty days imprisonment and a fine of five thousand

dollars. The court stayed execution of the sentences pending

the filing and determination of these appeals.

3a

Justice attorneys in exchange for a letter from the Department

of Justice promising that any information he revealed would

not be used against him in any criminal proceeding. The

Government transcribed the Franey interview and presented it

to the grand jury. During the criminal tria), the Government

called Franey and Hopkins as witnesses. They testified after

the prosecutor obtained orders granting them statutory use

immunity.

While the grand jury investigation and the subsequent

criminal trial were in progress, purchasers of corrugated prod-

ucts filed forty-four class and eleven non-class treble damages

actions against corrugated product manufacturers, some of

which were indicted by the grand jury. The plaintiff purchasers

alleged that the defendants had engaged in a nationwide

conspiracy to fix the prices of corrugated containers in violation

of Section | of the Sherman Aci, 15 U.S.C. § | (1976). The

Judicial Panel for Multidistrict Litigation consolidated those

actions, pursuant to 28 U.S.C. § 1407 (1976), in the Southern

District of Texas under the caption Jn re Corrugated Container

Antitrust Litigation.

After the conclusion of the criminal trial, the plaintiff class

in the consolidated civil action subpoenaed Fleischacker,

Franey, Hopkins, and numerous other witnesses who had

testified before the grand jury or during the criminal trial,

requiring them to appear for depositions and to produce

documents. Fleischacker, Franey, and Hopkins were all em-

ployees of defendant corporations during the period of the

alleged price-fixing conspiracy. Fleischacker was deposed in

New York, New York on January 22, 1980, and Hopkins, in

Houston, Texas on January 30, 1980. Both refused to answer

any questions concerning their alleged knowledge of or partici-

pation in the alleged price-fixing conspiracy, asserting their fifth

amendment privilege against self-incrimination. Franey was

deposed in Houston on March 4, 1980, and he, too, responded

with silence to every substantive question. That same day, the

4a

plaintiff class went before une district court in Houston, seeking

an order compelling Franey to testify. On the court’s order,

Franey appeared for deposition in open court on March 5,

1980. After listening to the questions, the court ordered Franey

to answer. Again, he refused.

On March 6, the court entered Pretrial Order No 40,

adjudging Franey in civil contempt. The court concluded that

the fifih amendment privilege was not available since,

“{c]learly, Mr. Franey cannot be prosecuted in either state or

federal courts using the testimony thus elicited. Kastigar v.

United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212

(1972).” Record in No. 80-1284, vol. 1, at 12. The court

explained:

This is because all the questions are either taken verbatim

from the transcripts of his immunized testimony [in his

interview with the Department of Justice attorney and at

the criminal trial] or are so closely related in subject matter

and so clearly derived from the immunized testimony as to

be thoroughly tainted and inadmissible against him in any

conceivable future prosecution.

Id. at 14.

Also on March 6, the court granted the class plaintiffs’

motion to enter Pretrial Order No. 39. That order provides that

the Honorable John V. Singleton, Jr., Judge of the United

States District Court for the Southern District of Texas shall

exercise the powers of a District Judge for the Southern District

of New York for the purpose of overseeing the deposition of

Philip Fleischacker.

Class plaintiffs obtained a subpoena from the United

States District Court for the Southern District of New York

requiring Fleischacker to appear for a continuation of his

deposition in New York on March 10, 1980. Judge Singleton,

in Houston, presided over that depcsition by means of a

speaker-phone connection. Deposing counsel asked Fleischac-

Sa

ker a series of questions taken verbatim from the transcript of

his immunized grand jury testimony? and further questions that

counsel said were “derived” from the immunized testimony.

Although Judge Singleton ordered Fleischacker to answer, he

persisted in his invocation of the fifth amendment. Judge

Singleton held him in contempt of court, citing the reasons set

forth in Pretrial Order 40. Record in No. 80-1307, vol. 2, at 71.

Hopkins’ deposition resumed in Houston on March 19,

1980. When Hopkins asserted his fifth amendment privilege,

the deposition was recessed and continued in open court before

Judge Singleton. Counsel asked him questions taken verbatim

from his grand jury and trial testimony and questions pur-

portedly “derived” from the immunized testimony. The court

held Hopkins in contempt for his continued refusal to answer.

Again, the court’s order is based on a ruling that the answers to

the questions “would be so clearly and thoroughly derived from

the immunized testimony that they could never be used to

prosecute Mr. Hopkins and therefore that he has no legitimate

fear of self-incrimination. ...” Record in No. 80-1338, at 24.

Il

Fleischacker first raises the issue whether the Fifth Circuit

Court of Appeals has jurisdiction to decide his appeal. We

agree with him that this court lacks jurisdiction and that the

appeal should be heard by the Court of Appeals for the Second

Circuit.

The District Court for the Southern District of New York

issued the subpoena requiring Fleischacker to appear for the

March 10 deposition under the authority of Fed.R.Civ.P. 45.

Rule 45(d)(2) provides:

2 In February 1980 the court had ordered the Government

to disclose to the plaintiff class the transcripts of the grand jury

testimony of numerous witnesses, including Fleischacker,

Franey and Hopkins. That order is now on appeal before the

Fifth Circuit in a separate proceeding.

6a

A resident of the district in which the deposition is to

be taken may be required to attend an examination only in

the county wherein he resides or is employed or transacts

his business in person, or at such other convenient place as

is fixed by an order of court. A nonresident of the district

may be required to attend only in the county wherein he is

served with a subpoena, or within 40 miles from the place

of service, or at such other convenient place as is fixed by

an order of court.

This rule makes it clear that Fleischacker, who was in the

vicinity of New York, could have been required to appear for a

deposition only in, or near, New York. He certainly could not

have been compelled to travel to Houston, in the Southern

District of Texas, to be deposed. As a non-party witness, he

was not even subject to the jurisdiction of the District Court for

the Southern District of Texas. The policy behind the rule is to

avoid unnecessary inconvenience and expense to deponents.

The same policy concern underlies Fed.R. Civ.P. 37, which

governs the imposition of sanctions upon persons unjustifiably

resisting discovery. Rule 37(a)(1) provides: “An application

for an order to a deponent who is not a party shall be made to

3 As the court observed in Lincoln Laboratories, Inc. v.

Savage Laboratories, Inc., 27 F.R.D. 476, 477, 478-79

(D.Del.1961 ):

It is obvious that the court in which the action is pending

stands in a different position as to parties, or officers or

agents of corporate parties, as to whom it has personal

jurisdiction that it does as to “disinterested” witnesses of

whom it has no personal jurisdiction, and especially where

the deposition is taken in a district other than that in which

the litigation is pending. ...

If the party or witness refuses to answer any question after

being directed to do so by the court in the district in which

the deposition is being taken, the refusal may be consid-

ered a contempt of that court. If this witness was a

“disinterested witness’’, the court in the district where the

litigation is pending would ordinarily have no jurisdiction

over that witness and could not hold him in contempt.

7a

the court in the district where the deposition is being taken.”

This provision indicates that the only court that had the power

to compel Fleischacker, a non-party deponent, to answer

questions at a deposition conducted in the Southern District of

New York was the district court sitting in that district. Rule

37(b)(1) provides that the power to enter sanctions against a

deponent who disobeys an order to answer deposition questions

also belongs to the court in the district in which the deposition is

being taken.

If In re Corrugated Container Antitrust Litigation were not

a section 1407 multidistrict case, then, there could be no

question that a subpoena requiring Fleischacker to appear for a

deposition would have to be issued by the District Court for the

Southern District of New York—or, perhaps, the District Court

for the District of New Jersey—as would an order compelling

him to answer questions or an order holding him in contempt of

court for refusing to answer. Of course, an appeal from that

contempt order would be proper only in the Second Circuit

Court of Appeals, “the court of appeals for the circuit embra-

cing the district” in which the reviewable decision was ren-

dered. 28 U.S.C. § 1294 (1976).

Under section 1407(b), the judge to whom a multidistrict

case is assigned, “may exercise the powers of a district judge in

any district for the purpose of conducting pretrial depositions in

such coordinated or consolidated pretrial proceedings.” It was

this provision that enabled Judge Singleton to preside over

Fleischacker’s deposition in New York. In ordering Fleischac-

ker to respond and in holding him in contempt, Judge Singleton

was exercising the powers of a district judge of the District

Court for the Southern District of New York. As the legislative

history of section 1407 indicates, his actions were limited by the

ordinary operation of the Rules of Civil Procedure:

By the term “pretrial proceedings” the committee has

reference to the practice and procedure which precede the

trial of an action. These generally involve deposition and

discovery, and, of course, are governed by the Federal

Rules of Civil Procedure.

8a

H.R.Rep. No. 1130, 90th Coug., 2d Sess. (1968), reprinted in

[1968] U.S. Code Cong. & Admin.News, pp. 1898, 1900.

Judge Singleton recognized in Pretrial Order No. 39 that

the purpose of the section 1407 mechanism is to maximize the

efficiency of discovery in multidistrict cases:

This court will preside rather than appoint a deposition

judge because the matters to be examined and the objec-

tions which will probably arise are so inextricably inter-

woven with the delicate and complex structure of this

litigation as to make it extremely difficult for a judge

unfamiliar with the whole case to preside.

Record in No. 80—1307, at 1. This purpose may be fully

served without considering Judge Singleton’s orders compelling

Fleischacker to testify and holding him in contempt to be orders

of the District Court of the Southern District of Texas. And to

consider them such would be contrary to the provisions of Rule

37 requiring that orders directed to recalcitrant deponents be

issued in the district in which the deposition is taken. More-

over, it would defeat the Rules’ strong policy of minimizing

inconvenience to non-party witnesses to require Fleischacker

and others in his position to travel thousands of miles to appeal

a Rule 37(b)(1) contempt order.

Therefore, we must conclude that this court lacks jurisdic-

tion to hear Fleischacker’s appeal.

We now turn to the question whether the trial court erred

when it entered the orders holding Franey and Hopkins in

contempt.

The fiith amendment provides that “[n]o person... shall

be compelled in any criminal case to be a witness against

himself....” This privilege against compulsory self-

9a

incrimination ‘“‘can be asserted in any proceeding, civil or

criminal, administrative or judicial, investigatory or adjudica-

tory... .” Kastigar v. United States, 406 U.S. 441, 444, 92 S.Ct.

1653, 1656, 32 L.Ed.2d 212 (1972). A witness may properly

invoke the privilege when he “reasonably apprehends a risk of

self-incrimination, ... though no criminal charges are pending

against him, ... and even if the risk of prosecution is remote.”

Wehling v. Columbia Broadcasting System, 608 F.2d 1084,

1087, n. 5 (Sth Cir. 1979) (citations omitted ).

The Wehling test indicates that a court must ordinarily

make two inquiries to determine whether a witness is entitled to

assert the privilege and refuse to respond to questioning. First,

the court must determine whether answers to the questions

might tend to reveal that the witness has engaged in criminal

activities. If the answers could not be incriminatory, the witness

must answer. Zicarelli v. New Jersey State Commission of

Investigation, 406 U.S. 472, 92 S.Ct. 1670, 32 L.Ed.2d 234

(1972). If answering the questions might incriminate the

witness, the court must next ask whether there is a risk, even a

remote risk, that the witness will be prosecuted for the criminal

activities that his testimony might touch on. As the Seventh

Circuit recently observed:

[This determination does not depend] upon a judge’s

prediction of the likelihood of prosecution. Rather, .. . it is

only when there is but a fanciful possibility of prosecution

that a claim of fifth amendment privilege is not well

taken.... When a witness can demonstrate any possibility

of prosecution which is more than fanciful he has demon-

strated a reasonable fear of prosecution sufficient to meet

constitutional muster.

In re Folding Carton Antitrust Litigation, 609 F.2d 867, 871

(7th Cir. 1979) (citations omitted ). :

We have no doubt that Franey and Hopkins have met both

requirements of this test. The plaintiff class seeks their testi-

mony concerning their knowledge of and participation in the

10a

alleged nationwide price-fixing conspiracy. Their answers to

the deposition questions may well reveal that they have violated

federal and state criminal antitrust laws. The risk that they will

be prosecuted for such crimes is certainly more than fanciful.

There has been no suggestion that the applicable statutes of

limitations have run, and, as Hopkins has testified, a federal

grand jury sitting in Ohio has begun its own investigation of the

corrugated container industry. Deposition of Alex Hopkins, at

39-40.

Even if a witness establishes that he has a reasonable fear

of self-incrimination and that there is some risk of prosecution,

he can be compelled to testify if he is first granted ‘“‘use”

immunity pursuant to 18 U.S.C. §§ 6001-6003. Section 6002

provides that when a witness is compelled by a disctrict court

order to testify over a claim of fifth amendment privilege:

[T]he witness may not refuse to comply with the order on

the basis of his privilege against self-incrimination; but no

testimony or other information compelled under the order

(or any information directly or indirectly derived from

such testimony or other information) may be used against

the witness in any criminal case, except a prosecution for

perjury, giving a false statement, or otherwise failing to

comply with the order.

In Kastigar v. United States, 406 U.S. at 453, 92 S.Ct. at 1661,

the Supreme Court held that section 6002 immunity “from use

and derivative use is coextensive with the scope of the privilege

against self-incrimination, and therefore is sufficient to compel

testimony over a claim of the privilege.”

lla

Franey and Hopkins both were granted such statutory

immunity upon the Government’s petitions for immunity orders

to compel testimony before the Houston grand jury or at the

criminal trial.4 Section 6003 provides that an immunity order

may be entered only at the request of a United States Attorney.

Since the Government is not a party to the private antitrust

action, a new grant of statutory immunity to compel the

desposition testimony of Franey and Hopkins was unavailable.

In re Daley, 549 F.2d 469, 479 (7th Cir. ), cert. denied 434 U.S.

829, 98 S.Ct. 110, 54 L.Ed.2d 89 (1977).

The district court found, however, that no new grant of

immunity was necessary since the deposition testimony of

Franey and Hopkins would be “clearly and throughly derived

from the immunized testimony previously given” and thus

inadmissible in “any conceivable future prosecution.” Record in

No. 80-1338 at 19, 20. Because the deposition testimony would

be thus “tainted,” the court reasoned, neither witness could

have a “legitimate fear of self-incrimination.” Jd. at 20, 25.5

‘Before Franey was granted statutory immunity during

the criminal trial, the Department of Justice gave him a letter

promising him immunity in exchange for his answers to inte \- ee

view questions posed by a Department of Justice attorney.

Since we suppose that the district court could have based its

order compelling Franey to answer deposition questions solely

on the grant of statutory immunity, we find it unnecessary to

consider the validity of the letter grant of immunity.

5 The district court relied on Appeal of Starkey, 600 F.2d

1043 (8th Cir. 1979), as authority for its ruling. In Starkey, the

court held that a witness at a civil deposition had no right to

invoke his fifth amendment privilege against self-incrimination

since the deposition testimony would be tainted by grand jury

testimony that the witness had given under a grant of immunity.

For the reasons we state in text, we disagree with the Eighth

Circuit’s apparent assumption that the district court had the

authority to determine whether the grand jury testimony would

be “tainted.” Nevertheless, the result in Starkey may well be

correct since the state attorney general, the only potential

prosecutor, was a party to the civil litigation and was the party

seeking the deposition testimony. By arguing that the testimony

would be tainted, the attorney general conceded that the

testimony would be inadmissible in a future prosecution. This

concession may itself have operated as a grant of immunity.

12a

The district court’s reasoning indicates that the court had

misconstrued its role in applying the immunity statute. Since

the witnesses had not been—in fact, could not have

been—granted immunity to compel their deposition testimony,

the only issues before the court were the two comprised within

the test restated by this court in Wehling: whether answers to

the deposition questions might tend to reveal that the witnesses

have engaged in criminal activities, and whether the witnesses

face possible criminal prosecution. The court apparently

_.4ttempted to fit its rulings within the framework of this test

when it suggested that the deposition testimony would not be

“incriminatory” since it would be “tainted.” The existence of

immunity or of derivative “taint” would have no bearing on the

question whether testimony would be “incriminatory,” how-

ever. Incriminatory testimony is simply testimony that suggests

that the witness may have committed a crime. When in-

criminatory testimony is offered under a grant of immunity, the

testimony remains incriminatory despite the immunity. Thus it

was inappropriate for the court, in applying the two-part test to

determine whether the witnesses were entitled to invoke the

fifth amendment, to consider whether the testimony was

“tainted” such that it could not be used against them in future

criminal prosecutions.

Nor did the immunity statute itself confer on the court the

power to rule that Franey and Hopkins must testify on the

ground that the compelled testimony would be “derived from

the immunized testimony previously given.” Although it is true

that section 6002 contemplates that district courts will have the

responsibility of determining what is a derived use of immu-

nized testimony, the authority to make that determination is

restricted to the situation where the witness has been indicted

and the Government is seeking to introduce evidence to secure

a criminal conviction. This notion that the issue of “taint” can

be raised only in such a context is implicit in the decisions

holding that the Government must bear the burden of dis-

l3a

proving “taint”. In Kastigar, for example, the Supreme Court

observed that once a defendant demonstrates that he has

testified under a grant of immunity, the prosecution has “the

affirmative duty to prove that the evidence it proposes to use is

derived from a legitimate source wholly independent of the

compelled testimony.” 406 U.S. at 460, 92 S.Ct. at 1665. Since

the Government must bear the burden of proof on the issue of

“taint,” it follows that the issue was not properly raised in the

present case, where the Government is not even a party.

The district court’s rationale for compelling Franey and

Hopkins to testify could be applied to override the fifth

amendment claim of any witness any number of times, so long

as the witness has previously testified under a grant of immu-

nity. A court’s role in the procedure that the district court has

adopted would be to probe the mind of the questioner to

ascertain that he is familiar with the substance of the immu-

nized testimony. Even if the questioner were ignorant of the

prior testimony, the court could ensure “taint,” and thus compel

the witness to answer, by seeing to it—as the court did

here—that the questioner had a transcript of the immunized

testimony on which to “base” his questions. And even if the

court’s finding that the witness’ testimony would be “derived”

from immunized testimony were manifestly wrong, the court’s

order compelling the testimony would operate to immunize the

testimony because of “the well-established rule that if a district

court errs in making a ruling on privilege an after-the-fact

exclusionary rule will apply to prevent the introduction of that

evidence against the witness.” Jn re Folding Carton, 609 F.2d at

872, n. 11.6 The resulting proliferation of “immunized” testi-

6 This “exclusionary” rule does not itself buttress the order

compelling Franey and Hopkins to testify. As the Folding

Carton court emphasized, the rule “is solely remedial and

cannot be used as a rationale to support a judicial decision

which contravenes the fifth amendment’s protection.” Jn re

Folding Carton Antitrust Litigation, 609 F.2d 867, 872, n. 11

(7th Cir. 1979).

l4a

mony would make it almost impossible for the Government, in

a subsequent criminal trial, to sustain its heavy burden of

proving that its prosecution is untainted.

In the absence of the district court’s ruling that their

deposition testimony would be “derived” from immunized

testimony, Franey and Hopkins certainly could have legitima-

tely invoked their privilege to remain silent. It is only the

court’s finding that their testimony will be “tainted” that is

offered to support the abrogation of their fifth amendment

privilege. In effect, then the district court has granted immunity

to Franey and Hopkins of its own accord.’ In addition to being

contrary to the explicit provisions of the immunity statute that

provide for an order of immunity only on the application of a

government attorney, the court’s action undermines the policies

of the statute. As the Seventh Circuit observed in Jn re Daley,

549 F.2d at 478-479 (7th Cir. 1977):

[O]nce the bar of the privilege against self-incrimination

has been raised by the witness, the decision whether to

confer immunity in order to facilitate the government’s

investigation is the product of the balancing of the public

need for the particular testimony or documentary informa-

tion in question against the social cost of granting immu-

nity and thereby precluding the possibility of criminally

prosecuting an individual who has violated the criminal

law. Therefore, the relative importance of particular

testimony to federal law enforcement interesis is a judg-

mental rather than a legal determination: . . .

* * *

7 See Ellis vy. United States, 416 F.2d 791 (D.C. Cir.

1969). In Ellis, a trial court had rejected a witness’ claim of

fifth amendment privilege on the ground that the testimony

could not be used against the witness in a future prosecution,

regardless of the correctness of the court’s ruling. The court of

appeals repudiated the trial court’s ruling, holding that the

ruling, which was “a circular, self-fulfilling prophecy that in

substance can only be viewed as a grant of immunity,” was

outside the scope of judicial authority. Jd. at 796.

15a

Although it is correct ... that federal courts possess

inherent equitable powers over their own process in order

to secure judicial proceedings from abuse, United States v.

United Fruit Company, 410 F.2d 553 (Sth Cir.), cert.

denied sub nom. Standard Fruit and Steamship Co. v.

United States, 396 U.S. 820, 90 S.Ct. 59, 24 L.Ed.2d 71

(1969), the immunity order which is issued pursuant to 18

U.S.C. § 6003 is not a matter of judicial process or judicial

discretion. The immunity power originates in the legisla-

ture, United States v. Bryan, 339 U.S. 323, 70 S.Ct. 724, 94

L.Ed. 884 (1950); its exercise is delegated solely to the

executive ... Consequently, the determination of whether

the conferral of immunity is proper in a particular case

“requires intimate familiarity with the nature and details of

the investigation and the background of the witness.”

Murphy v. Waterfront Commission, 378 U.S. 52, 100, 84

S.Ct. 1594, 1614, 12 L.Ed.2d 678 (1964) (White, J.,

concurring). This is knowledge to which the federal

Prosecutor, and not the federal court, is privy, and it is

therefore the authority of the United States Attorney to

confer such extensive immunity which must be scrutinized.

(Some citations omitted. )

The Supreme Court, also, has indicated that courts have

only a limited role in applying immunity statutes and no

inherent power to grant immunity. In Ullmann v. United

States, 350 U.S. 422, 76 S.Ct. 497, 100 L.Ed. 511 (1956), the

Court rejected the contention that the federal immunity statute

unconstitutionally required a district court to act outside of its

“judicial power”:

Since the Court’s duty under the [predecessor of the

present immunity statute] is only to ascertain whether the

Statutory requirements are complied with by the grand

jury, the United States Attorney, and the Attorney Gener-

al, we have no difficulty in concluding that the district court

is confined within the scope of “judicial power.”

Because the district court’s orders are supported by neither

the immunity statute nor any authority inherent in the court, we

hold that the district court lacked the power to enter the orders

#%

l6a

compelling Franey and Hopkins to answer deposition questions

and adjudging them in contempt for their continued refusal to

answer. Those orders are therefore VACATED.

FRANK M. JOHNSON, Jr., Circuit Judge, dissenting:

There is no question but that the majority opinion is correct

that it is beyond the authority of a district judge unilaterally to

grant immunity to compel deposition testimony. See 18 U.S.C.

§ 6003; In re Daley, 549 F.2d 469, 479 (7th Cir. ), cert. denied,

434 U.S. 829, 98 S.Ct. 110, 54 L.Ed.2d 89 (1977). However, a

grant of immunity under 18 U.S.C. § 6001 ef seg. such as that

received by appellants for their grand jury testimony covers any

information “directly or indirectly derived” from the immu-

nized testimony. The district judge held that because the

appellants’ deposition questions were based entirely on the

earlier immunized testimony, the deposition testimony would

be sufficiently “tainted” by the earlier testimony so as to bar its

use against appellants in any subsequent criminal proceeding.

In other words, the deposition testimony would be precluded as

a derivative use. The majority reverses the district judge

because, according to it, the district court lacked authority to

make that determination.

It has always been for the courts to determine whether an

assertion of the privilege is proper. Hoffman v. United States,

341 U.S. 479, 486, 71 S.Ct. 814, 818, 95 L.Ed. 1118 (1951);

United States v. Melchor Moreno, 536 F.2d 1042, 1046 (Sth Cir.

1976). Courts have also always decided the taint question—

whether evidence should be excluded as derivative of immu-

nized testimony. Murphy v. Waterfront Comm’n, 378 U.S. 52,

79, 84S.Ct. 1594, 1609, 12 L.Ed.2d 678 (1964), and Kastigar

v. United States, 406 U.S. 441, 460, 92 S.Ct. 1653, 1664, 32

L.Ed.2d 212 (1972), place a very high “affirmative duty” upon

the prosecution “to prove that the evidence . .. is derived from

a legitimate source wholly independent of the compelled testi-

mony.” This burden has been interpreted strictly against prose-

cutors. See, e. g., United States v. Nemes, 555 F.2d 51, 55 (2d

17a

Cir. 1977) (lack of access to immunized testimony is not

sufficient); United States v. McDaniel, 482 F.2d 305, 311-12

(8th Cir. 1973). It is my judgment that any prosecutorial use of

the deposition testimony required by the district judge would,

without any question, be barred as derivative of the compelled

evidence.

The majority opinion is correct that the taint issue has

usually arisen when prosecutors tried to introduce evidence in a

criminal trial. That is to be expected. I do not think, however,

that the conclusion ineluctably follows that a prospective

determination of taint such as that the district judge made here

exceeds judicial authority. Such prospective determinations

have in the past been made. See Appeal of Starkey, 600 F.2d

1043, 1046 (8th Cir. 1979); Patrick v. United States, 524 F.2d

1109, 1120 (7th Cir. 1975) (Stevens, J.).8 Since both logic and

prior authority in my judgment dictate a result contrary to that

reached by the majority, I respectfully dissent. -

8 Decisions to the contrary are: Jn re Folding Carton

Antitrust Litigation, 465 F.Supp. 618, 628 ( Northern District of

Ill.) Rev'd on other grounds, 609 F.2d 867 (7th Cir. 1979) (per

curiam ); cf. Ellis v. United States, 416 F.2d 791, 796 (D.C. Cir.

1969).

APPENDIX B

1b

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

IN RE CORRUGATED CONTAINER 1

ANTITRUST LITIGATION

THIS DOCUMENT RELATES TO

ALL ACTIONS EXCEPT: > M.D.L. No. 310

FRANKLIN CONTAINER CO.,

ET AL., CIVIL ACTION

NO. H-78-671

J

PRETRIAL ORDER NO. 40

ORDER ADJUDGING CHARLES JEROME FRANEY

TO BE IN CIVIL CONTEMPT OF COURT

Class plaintiffs have made oral application pursuant to

Title 28, § 1826, United States Code, for an order adjudging

one CHARLES JEROME FRANEY to be held in civil con-

tempt of this court for his refusal, without lawful cause or

excuse, tO answer certain questions posed to him during the

course of his oral deposition duly noticed and taken during the

course of the above entitled litigation. Mr. Franey, on advice of

counsel, has consistently refused to answer deposition questions

as to his possible participation in an alleged price-fixing con-

spiracy in the corrugated container industry on the grounds that

such answers might tend to incriminate him. He is an employee

of Mead, a defendant in this litigation, in their corrugated

division.

Mr. Franey has twice testified under grants of immunity as

to the subject matter of this litigation. In August of 1977, he

submitted to an interview by the Department of Justice in

connection with a grand jury investigation of this industry.

That testimony was given subject to a letter grant of immunity.

He subsequently testified at the trial of several of the entities

indicted by the grand jury, under an additional grant of

immunity pursuant to 18 U.S.C. § 6002. Clearly, Mr. Franey

cannot be prosecuted in either state or federal courts using the

testimony thus elicited. Kastigar v. United States, 406 U.S. 441

(1972); Murphy v. Waterfront Commission, 378 U.S. 52

(1964). The immunized testimony cannot be used against him

either directly or derivatively, as is made clear both by the

Statute itself and by the case law. Kastigar at 560. The

question at issue at this time is whether that use immunity will

be nullified if the witness now repeats his testimony at depo-

sition.

Case law on this narrow point is quite scanty, only two

reported cases having dealt with it. Jn re Order of Civil

Contempt against Carlos Lee Starkey, 600 F.2d 1043 (8th Cir.

1979); In re Folding Carton Antitrust Litigation, 465 F. Supp.

618 (N.D. Ill. 1979), rev'd on other grounds, 609 F.2d 867 (7th

Cir. 1979). In Starkey, the court found there was no possibility

of a prosecutor’s using such deposition testimony, since it was

clearly and thoroughly derived from the immunized testimony

previously given. In Folding Carton, although ruling on other

grounds that the witness had no substantial fear of prosecution,

the court stated in dicta that it was not willing to make a

prospective determination as to whether such deposition testi-

mony was so derived from the immunized testimony as to make

it unusable by some hypothetical later prosecutor.

It is the opinion of this court that it must make that

determination. During the course of the lengthy investigation

into the corrugated container industry and of a three-and a half

month trial in the criminal cases, hundreds of employees in the

industry testified to matters which would possibly be in-

criminating to them if they had not been granted immunity.

There have been blanket invocations of the fifth amendment by

3b

many, many of these same witnesses when called for deposition

in these civil cases. It is essential to the discovery in this case

and to the orderly preparation of the case for trial that the court

make some determination as to the validity of these invocations

of their fifth amendment rights. The court is in no way

extending the previous immunity grants; merely it is determin-

ing the validity of a refusal to answer questions, which refusal is

based on an asserted fear of future prosecution. Zicarelli v.

New Jersey Investigation Commission, 406 U.S. 472 (1972);

United States v. Melchor Moreno, 536 F.2d 1042 (5th Cir.

1976).

The Court has therefore listened to the questions put to Mr.

Franey, has studied the transcripts of his trial testimony and his

interview with the government, and has ruled that all such

questions may be answered without subjecting Mr. Franey to

any possibility of future prosecution. This is because all the

questions are either taken verbatim from the transcripts of his

immunized testimony or are so closely related in subject matter

and so clearly derived from the immunized testimony as to be

thoroughly tainted and inadmissible against him in any con-

ceivable future prosecution. In the extremely unlikely event

that Mr. Franey is ever prosecuted by any sovereignty for

matters raised by his answers to these questions, the prosecutor

will have the heavy burden of proving that his case was derived

wholly from independent evidence, and that burden could not

be met as to this deposition testimony. Here there is no

question as to whether the attorney conducting the deposition

had access to the immunized testimony, a point which clearly

troubled the court in Folding Carton; this court has read the

relevant pages of the immunized testimony and ascertained that

the questions asked were either taken verbatim from it or were

very closely related to it. There is no question either as to

whether Mr. Franey has somehow waived his immunity, as was

done in United States v. Kuehn, 462 F.2d 427 (7th Cir. 1977).

Mr. Franey has asserted his fifth amendment right and refused

=>

4b

to answer, and he will only answer under this court’s order

compelling him to do so.

Finally, this order does not, as has been argued by two

witnesses similarly situated, convert the use immunity granted

Mr. Franey into transactional immunity. Mr. Franey remains

hypothetically liable to prosecution for any crimes he may

reveal in his testimony; merely he cannot be incriminated as to

them by any evidence taken from his testimony or derived from

it, however remotely. This use immunity, which the Supreme

Court has held to be coextensive with the fifth amendment

privilege, is all Mr. Franey is entitled to receive under 18 U.S.C.

§ 6002, and this order neither enlarges nor diminishes the scope

of that immunity.

THEREFORE, the said CHARLES JEROME FRANEY

having knowingly and wilfully refused to obey said order which

was made in the presence of said CHARLES JEROME

FRANEY and his counsel in open court on March 5, 1980, as

more fully appears in the record of these proceedings, and good

cause appearing therefor,

IT IS HEREBY ORDERED, ADJUDGED, AND DE-

CREED that said CHARLES JEROME FRANEY shall be and

hereby is found and determined to be in civil contempt of this

court, under and pursuant to the provisions of Title 28, § 1826,

United States Code, and the Federal Rules of Civil Procedure,

and that said CHARLES JEROME FRANEY shall be and

hereby is ordered to be remanded forthwith to the custody of

the Attorney General of the United States to be confined at a

suitable place for a period of 60 days, or until such time that

said CHARLES JEROME FRANEY is willing to testify and

answer the questions which this court has ordered him to

answer, whichever period may be shorter; provided, however,

that the period of such confinement of the said CHARLES

JEROME FRANEY shall not exceed the life of the above-

entitled litigation.

Sb

IT IS HEREBY FURTHER ORDERED, ADJUDGED,

AND DECREED that said CHARLES JEROME FRANEY

shall be and hereby is fined $5,000.00, which amount shall be

paid at the time this order becomes final, unless said

CHARLES JEROME FRANEY is then willing to testify and

answer the questions which this court has ordered him to

answer.

IT IS HEREBY FURTHER ORDERED, ADJUDGED,

AND DECREED that this order shall be stayed until 5:00 p.m.

CST, March 6, 1980, and shall expire at that time unless said

CHARLES JEROME FRANEY shall have theretofore filed a

notice of appeal from this order to the United States Court of

Appeals for the Fifth Circuit, and shall expeditiously pursue it

to completion, and in the event such notice of appeal is so filed

this stay shall be continued pending such appeal to the date that

said court of appeals files its order or judgment respecting such

appeal, at which time this stay shall expire.

DONE at Houston, Texas, this 6th day of March, 1980

JOHN V. SINGLETON, Jr.

UNITED STATES DISTRICT JUDGE

6b

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

*

IN RE CORRUGATED CONTAINER

ANTITRUST LITIGATION

THIS DOCUMENT RELATES | MDL. No. 310

TO ALL ACTIONS EXCEPT ams

FRANKLIN CONTAINER CORP.

ET AL., C. A. NO. H-78-671

4

PRE-TRIAL ORDER NO. 44

Plaintiffs’ motion to compel production of documents from

the American Paper Institute having been presented to the

court and the court having studied the document requests and

the briefs on this matter, it is ORDERED that American Paper

Institute shall produce within fifteen days all documents not

previously produced, in its possession or control, which are

responsive to paragraphs 4, 6-8, 11-14, 16-21 of the subpoena

duces tecum addressed to and served upon the American Paper

Institute and paragraphs 4, 6-8, 11-14 and 16-23 of the

subpoena duces tecum addressed to the Fourdrinier Kraft

Institute and served upon the American Paper Institute, except

that the documents to be produced shall be limited to those

which refer either to corrugated products or to linerboard, as

that term is defined in the Schedule of Documents. Class

plaintiffs shall reimburse the American Paper Institute for the

reasonable costs of compliance with the subpoenas.

2. The motions to withdraw their requests for exclusion

from the class of Sky View Cooling Company and Cook

Producing, Inc. are GRANTED. Those two entities shall now

be members of the class and subject to the provisions of Pretrial

Order No. 35, paragraph 5(b) and (c).

7b

3. Alex Hopkins, a witness who gave immunized testi-

mony in the grand jury investigation of the corrugated contain-

er industry in Houston and also in the trial of H-78-11 and H-

78-12 in this court, and who has refused to answer on depo-

sition in this civil cause verbatim questions from and questions

derived from the same substantive matters as covered in his

immunized testimony, in spite of this court’s ruling that such

answers would be so clearly and thoroughly derived from the

immunized testimony that they could never be used to prose-

cute Mr. Hopkins and therefore that he has no legitimate fear of

self-incrimination, it is hereby ORDERED, ADJUDGED, and

DECREED that said Alex Hopkins shall be and hereby is

found and determined to be in civil contempt of this court,

under and pursuant to the provisions of Title 28, § 1826, United

States Code, ard the Federal Rules of Civil Procedure, and that

said Alex Hopkins shall be and hereby is ordered to be

remanded forthwith to the custody of the Attorney General of

the United States to be confined at a suitable place for a period

of 60 days, or until such time that said Alex Hopkins is willing

to testify and answer the questions which this court has ordered

him to answer, whichever period may be shorter; provided,

however, that the period of such confinement of the said Alex

Hopkins shall not exceed the life of the above-entitled litiga-

tion.

IT IS HEREBY FURTHER ORDERED, ADJUDGED,

AND DECREED that said Alex Hopkins shall be and hereby is

fined $5,000.00, which amount shall be paid at the time this

order becomes final, unless said Alex Hopkins is then willing to

testify and answer the questions which this court has ordered

him to answer.

8b

IT IS HEREBY FURTHER ORDERED, ADJUDGED,

AND DECREED that this order shall be stayed until 5:00 p.m.

EST, March 20, 1980, and shall expire at that time unless said

Alex Hopkins shall have theretofore filed a notice of appeal

from this order to the United States Court of Appeals for the

Fifth Circuit and shall expeditiously pursue it to completion,

and in the event such notice of appeal is so filed this stay shall

be continued pending such appeal to the date that said court of

appeals files its order or judgment respecting such appeal, at

which time this stay shall expire.

DONE at Houston, Texas, this 20th day of March 1980.

JOHN V. SINGLETON, JR.

UNITED STATES DISTRICT JUDGE

APPENDIX C

Ic

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

OFFICE OF THE CLERK

August 14, 1980

TO ALL PARTIES LISTED BELOW:

NO. 80-1284 —CORRUGATED CONTAINER ANTI

80-1307 TRUST LITIGATION,

80-1338 CHARLES J. FRANEY, ET AL.

Dear Counsel:

This is to advise that an order has this day been entered

denying the petition(s) for rehearing, and no member of the

panel nor Judge in regular active service on the Court having

requested that the Court be polled on rehearing en banc (Rule

35, Federal Rules of Appellate Procedure; Local Fifth Circuit

Rule 16) the petition (__) for rehearing en banc has also been

denied.

See Rule 41, Federal Rules of Appellate Procedure for

issuance and stay of the mandate.

Very truly yours,

GILBERT F. GANUCHEAU, Clerk

By

Deputy Clerk

cc: Mr. Robert H. Singleton

Mr. Harold C. Gaebe, Jr.

Mr. Harold F. Baker

Mr. Stephen D. Susman

Mr. Barry T. McNamara

Mr. Jerry G. Hill