Petitioners Reply Brief — Adams Extract Co. v. Franey

EI we

{rv ences

‘

Supreme Court, a

FILED

No. 80-788 ‘ AN 2 1981

MICHAEL RODAK, JR., CLERK

IN THE

Supreme Court of the United States

Ocroser 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.

REPLY BRIEF IN SUPPORT OF PETITION FOR A WRIT

OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

STePpHeN D. SUSMAN Lowe tt E. SACHNOFF

SuSMAN & McGowan 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

Pandick Press Midwest, Inc, Chicago © 454-7600

i

TABLE OF CONTENTS.

PAGE

Ba. Ee ees WET Getichi tinct Sukie vuidvoicsiebadscsutantvsedicbiaintes l

Ne eee a 3

A. There Is A Direct Conflict Between The

Sic adid success san chahinavavesuaetebicendpinnobebetes 3

B. Respondents’ Arguments On The “Merits”

Are Irrelevant To This Petition....................... 5

BRs RARE aa NPE NT did ts didn ddan iovnnbianhelnasnahucebindchnvdvenceeanantas 9

ii

TABLE OF AUTHORITIES.

Cases.

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

ST EE CURT CF vi vedccssivbcbiahes dnchicudiouwreddacebvulasceie 5

In re Folding Carton Antitrust Litigation, 465

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

GUS Fae BOT © Fen GAP, PITD)acccsccsscdeveccsisccnssettecece a

Hoffman v. United States, 341 U.S. 479, 487

EPPO Nihvasecdaccntueisdgntdocacedntnantadsamionsalassscucousaededabateoss 6,9

Kastigar v. United States, 406 U.S. 441 (1972) ...... 6, 7,9

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

Trade Cases 963,522 (8th Cir. 1980) 0.0.0.0... 3,4

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

OF Ta Puretasiishihsnessoutcdihshauliababececodabadaibbhaiasastdlad vaiadvess 3,

4

Appeal of Starkey, 600 F.2d 1043 (8th Cir. 1979)... 3, 4,

Ullmann v. United States, 350 U.S. 422 (1956)...... 5

United States v. Apfelbaum, 445 U.S. 115 (1980)... 7

United States v. First Western State Bank of

Minot, 491 F.2d 780 (8th Cir.) cert. denied, 419

PAGE

PE EE UPET Dsl ci ccnchs cnvunssacaiacorstoubaseecdeaverveniaas 8

United States v. Kuehn, 562 F.2d 427 (7th Cir.

SNA Miiccssnecedih voli eicib lobes ahaha ihc teldieka iad basen sbamsadosidcesais 7,8

United States v. Kurzer, 534 F.2d 511 (2nd Cir.

RIN Wikies inc Sea iccledd chico Viitadk va Sadaonastbed Saasenahciebewmeabbosesscace 8

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

RP ehiitks cis evateaaatireh nia Nit en snesnalhl Riad eas 3. 8

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

gS ORT AIRS SSR IESERERS COR: ERI |: Sa 8

United States v. Rice, 421 F.Supp. 871 (E.D. Ill.

1976), rev’d on other grounds, sub nom, United

States v. Kuehn, 562 F.2d 427 (7th Cir. 1977)... 7

United States v. Seiffert, 501 F.2d 974 (Sth Cir.

EPP URE Ajsddeidheeaininrudatimbbicabtyveneaiaissyveseuptdaucibeshialeasispaak 7

Pe ee © Er BOI hi ices i scasdsonsenisctiuaponntionneeces passim

No. 80-788

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.

REPLY BRIEF IN SUPPORT OF PETITION FOR A WRIT

OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

I. INTRODUCTION

Respondents have failed to distinguish appellate authority

in direct conflict with the decision of the Fifth Circuit below and

their citation to and discussion of irrelevant authority does not

support the Fifth Circuit’s erroneous decision. Petitioners here

simply point to the direct conflict between the Circuits on the

important issues raised in this Petition and distinguish the

authority relied upon by Respondents.

Petitioners also attach, as Appendix D, the Brief For The

United States of America As Amicus Curiae in Jn re Corrugated

Container Antitrust Litigation, M.D.L. No. 310, Appeal of Philip

.. Fleischacker. As previously noted, (Petition p.3, n.1), the

Fleischacker appeal, now pending before the Second Circuit,

arises from the same factual setting and presents the identical

legal issues as the case at bar. The Second Circuit invited the

Department of Justice to submit an amicus brief in Fleischacker

because the issues raised in these appeals directly impact the

relationship between the executive and the judiciary in the

administration of the federal immunity statute. The amicus

brief, which was received by Petitioners after the Petition was

filed, is reprinted in full and is a thorough statement of the

views of the United States on the important issues raised

herein.

'The Department of Justice did not submit an amicus brief in

support of certiorari because by the time it learned of this Petition, it

did not have sufficient time to prepare a response. The Department

did state, however, that it would consider filing an amicus brief on the

merits should certiorari be granted.

. Il. ARGUMENT

A. There Is A Direct Conflict Between The Circuits

Respondents claim that the Fifth Circuit’s decision below

in ruling that a court lacks authority to compel testimony

derived from previously immunized testimony is not in conflict

with the Eighth Circuit’s decisions in Appeal of Starkey, 600

F.2d 1043 (8th Cir. 1979) and Little Rock School District v.

Borden, Inc., 1980-2 Trade Cases Paragraph 63,522 at p.76,783

(8th Cir. 1980), and with the Seventh Circuit’s decision in

Patrick v. United States, 524 F.2d 1109 (7th Cir. 1975).

However there is no question that the decision below is in

conflict with these decisions with respect to whether a court has

authority to dete-mine derived use in assessing the validity of a

Fifth Amendment claim of privilege.2

Respondents’ claim a lack of conflict between the decision

below and the Eighth Circuit’s decisions arguing that the

testimony in those cases was compelled not because it was

derived from immunized testimony and therefore unavailable

for use in future prosecutions but because the Deputy Attorney

General of Arkansas’ argument that the testimony would be

derived from immunized testimony itself somehow operated as

a grant of immunity. However, even a brief review of the

Eighth Circuit’s opinion in Starkey reveals that it compelled

Starkey’s testimony because the testimony was derived from

® Because it ruled it did not have authority to do so, the Fifth

Circuit below did not reach Petitioners’ Question Presented No. 3,

whether deposition testimony is “derived from” previously immu-

nized testimony under the federal immunity statute, where a transcript

of the immunized testimony is used by deposing counsel to formulate

the deposition questions. Thus, as pointed out by the Department of

Justice, the only court to rule on this issue, the Eighth Circuit in

Starkey, held that the subsequent testimony would be derived. ( App.

17d, n.9.)

4

immunized testimony.’ Indeed, both the Court below and the

Department of Justice+ recognized the direct conflict between

Starkey and the case at bar. In footnote 5 of the opinion below,

cited by Respondent Franey to refute the existence of a conflict,

the Fifth Circuit stated:

In Starkey, the court held that a witness at a civil depo-

sition 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.” (App. lla, n.5) (emphasis supplied. )

If after Starkey there was any doubt as to the Eighth

Circuit’s exercise of its authority to determine derived use in the

context of a motion to compel testimony, that doubt was

dispelled by the decision of a separate Eighth Circuit panel in

Little Rock School District v. Borden, Inc., supra. In that case,

contrary to Respondent Franey’s claim, the court once again

compelled testimony as derived from immunized testimony

without reference to an implied grant of immunity.

Respondent Hopkins’ claim that the Seventh Circuit did

not make a “prospective” determination of “taint” in Patrick v.

United States, supra, is equally unfounded. In Patrick, Judge

3In Starkey, the Eighth Circuit stated:

The state prosecutor was never requested to give Starkey immu-

nity from criminal prosecution. Nevertheless, Starkey clearly has

immunity from criminal prosecution for the deposition testimony

because such testimony would be tainted by the federal grand

jury, testimony for which Starkey received “use” immunity

pursuant to 18 U.S.C. § 6001 ef seq.

Starkey, supra, 600 F.2d at 1046.

4The Department of Justice, recognizing the direct conflict

between the circuits, found the Eighth Circuit’s reasoning as to why a

court does have authority to determine derived use in this context to

be “more persuasive.” (App. 23d-25d. )

(now Justice) Stevens reasoned that a witness would not

incriminate himself by his testimony in a civil suit because the

testimony would be “indirectly derived from” the questioner’s

(in this case, the goverutifent’s) use of the witnesses’ immu-

nized grand jury testimony. Jd. at 1120. As in Starkey and

Borden, the Government's participation as a party to the suit in

Patrick was irrelevant to the determination of derived use.5

Thus this Petition presents a direct conflict between the

decision below and decisions in the Seventh and Eighth Circuits

over the issue of a court’s authority to determine derived use in

assessing the validity of a Fifth Amendment claim.®

B. Respondents’ Arguments On The “Merits” Are

Irrelevant To This Petition

Unable to distinguish appellate authority in direct conflict

with the decision below, Respondents have tried to obscure the

issues in this Petition on their merits through citation of

authority not relevant to this case. For example, Respondents

cite cases such as In re Daley, 549 F.2d 469 (7th Cir.), cert.

denied, 434 U.S. 829 (1977) and Ullman v. United States, 350

U.S. 422 (1956), for the proposition that a court has no power

to grant immunity absent a request from the Department of

Justice. While Petitioners in no way dispute this authority, they

assert that the issue is not whether a court can grant immunity,

5The Department of Justice agreed that the presence of the

Government as a party in Starkey had “no bearing on the question

whether the civil testimony is derived from the immunized testi-

mony.” (App. 19d.) The Department also cited Patrick in support of

the proposition that “a court may—and indeed must—determine the

scope of immunity already granted when necessary to determine

whether a claim of privilege is valid.” (App. 24d. )

® The district court’s refusal to reach the taint issue in Jn re

Folding Carton Antitrust Litigation, 465 F.Supp. 618 (N.D. IIl.),

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

example of the conflict among the courts below concerning these

important issues.

6

but whether under this Court’s decisions in Kastigar v. United

States, 406 U.S. 441 (1972) and Hoffman v. United States, 341

U.S. 479, 487 (1951), a court must determine derived use in

assessing the validity of a Fifth Amendment claim. Petitioners

submit that such a ruling is within the courts’ traditional powers

and does not amount to a judicial grant of immunity.

A court’s determination of “derived use” under the immu-

nity statute is no different from a court’s determination of

statute of limitations or double jeopardy bars, rulings routinely

made in Fifth Amendment proceedings to assess whether a

claim of privilege is valid. Moreover, a court’s decision to

compe! testimony “derived from” immunized testimony will

not frustrate the congressional purpose to grant the executive

branch discretion in conferring immunity. Jn every instance in

which a court finds that testimony will be “derived from”

immunized testimony, the Department of Justice will have al-

ready decided to grant the witness immunity, as was done here

with Respondents Franey and Hopkins. Thus it is the prosecutor,

not the subsequent judge or deposing counsel, who has bal-

anced the public need for testimony against its interest in

criminally prosecuting the individual. Since the prosecutor

makes that decision knowing that any future prosecution will

have to be based on evidence obtained from wholly independ-

ent sources, a court’s requiring testimony derived from prior

immunized testimony can in no way affect the decision to grant

immunity in the first place.

Nor will a decision to compel derivative testimony impede

prosecutions based on independent evidence. As pointed out in

the Justice Department amicus, “if the judge limits the scope of

the questioning to matters within the scope of the immunized

testimony, it is unlikely that prosecutoral efforts will be ham-

pered.” (App. 18d, I1.). Moreover, as the Department noted,

“this interpretation of the immunity statute would have the

beneficial effect of allowing private litigants to obtain relevant

testimony that otherwise might be unavailable because of

witnesses’ claims of Fifth Amendment privilege.” (Jd. )7

Respondents’ also confuse the issues on the merits of this

action through citation of cases such as In re Folding Carton

Antitrust Litigation, supra, United States v. Kuehn 562 F.2d 427

(7th Cir. 1977), and United States v. Seiffert, 501 F.2d 974

(Sth Cir. 1974). In each of those cases it was properly

determined that evidence or testimony was not “derived from”

immunized testimony because the immunized testimony was

not used to produce the subsequent statements.® Here, however,

7 This Court’s decisions in Kastigar v. United States, 406 U.S.

441 (1972) and the recently decided United States v. Apfelbaum, 445

U.S. 115 (1980), quite simply and compellingly demonstrate that the

Fifth Amendment privilege against self-incrimination must be inter-

preted to permit maximum testimony and evidence while simulta-

neously protecting the individual involved from criminal prosecution.

That the need for evidence is paramount and can co-exist with the

legitimate scope of the privilege is demonstrated in Apfelbaum where

this Court noted that a witness must testify even though his immunity

is not coextensive with the protection that would be obtained from

silence:

Such grants of immunity would not provide a full and complete

substitute for a witness’s silence because, for example, they do not

bar the use of the witness’s statements in civil proceedings.

Indeed, they fail to prevent the use of such statements for any

purpose that might cause detriment to the witness other than that

resulting from subsequent criminal prosecution .... such as

threats of liability in civil suits, disgrace in the community, or the

loss of employment.

Id. at 124-125.

® The case of United States v. Rice, 421 F.Supp. 871 (E.D. Ill.

1976), rev’d on other grounds, sub nom, United States v. Kuehn, 562

F.2d 427 (7th Cir. 1977) does, however, illustrate the operation of the

Kastigar requirements of an independent source. In Rice, a state

prosecutor’s reading of immunized federal grand jury transcripts was

found to have influenced his questions in a state grand jury proceed-

ing against the same witness so as to taint the testimony in the state

proceeding. The court’s reasoning in Rice thus fully supports the

(Footnote continued on following page.)

there is no dispute over Petitioners’ use of Respondents’

immunized testimony in developing the sought after deposition

testimony. Thus in deciding the derivative use issues this

Court’s attention will more properly be drawn to cases such as

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

States v. Kurzer, 534 F.2d 511 (2nd Cir. 1976), United States

v. First Western State Bank of Minot, 491 F.2d 780 (8th Cir. ),

cert. denied, 419 U.S. 825 (1977), and United States v.

McDaniel, 482 F.2d 305 (8th Cir. 1973), in which use of

immunized testimony was found to taint evidence or testimony

obtained through that use. (See also App. 15d-20d. )

Finally, Respondents claim that certiorari should be

denied arguing that the District Court did not follow the Eighth

Circuits’ guidelines in Starkey that “only those questions which

are within the same time, geographical and substantive frame-

work of the (immunized) testimony,” need be answered.

Appeal of Starkey, supra, 600 F.2d at 1048. However, the scope

of any taint is a false issue, not properly before this Court since

it was not addressed by the court below. Moreover, any dispute

over the application of the Starkey guidelines does not bear on

the need to grant certiorari on the important issue of a court’s

authority to determine derived use in assessing the validity of a

Fifth Amendment claim.

(Footnote continued from preceding page.)

proposition that where immunized testimony is used to develop

questions in a subsequent proceeding, the testimony in that proceed-

ing will be deemed “derived from” the compelled testimony.

In United States v. Kuehn, supra, the Seventh Circuit reversed,

and in dicta, rejected the district court’s finding not because use of

immunized testimony to frame questions in a subsequent proceeding

would not taint the subsequent testimony, but because the prosecutor

had adequately proved that he did nor use the immunized testimony

but relied instead upon independent sources of information for the

subsequent examination.

9

Ill. CONCLUSION

The Fifth Circuit’s erroneous decision below is in direct

conflict with the decisions of other Courts of Appeals and with

this Court’s decisions in Kastigar v. United States, supra, and

Hoffman v. United States, supra. Witnesses, regardless of the

jurisdiction in which they happen to be found, should be

required to testify if their testimony, because it is derived fom

immunized testimony, can not be used in prosecutions against

them. The Fifth Circuit’s refusal to exercise its inherent judicial

authority to prevent improper invocations of the Fifth Amend-

ment privilege will keep important testimony from the trier of

fact and,-in cases such as this, will frustrate Congressional

policy to encourage vigorous private enforcement of the anti-

trust laws.

For all of the foregoing reasons and those contained in the

Petition, Petitioners respectfully request that a writ of certiorari

be granted.

Respectfully submitted,

STEPHEN D. SUSMAN LOWELL E. SACHNOFF

SUSMAN & McGowan 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 6061 1

(312) 644-2400

APPENDIX

ld

IN THE UNITED STATES COURT OF APPEALS

For THE SECOND CIRCUIT

No. 80-1090

IN RE: CORRUGATED CONTAINER

ANTITRUST LITIGATION,

M.D.L. No. 310

APPEAL OF PHILLIP L. FLEISCHACKER, Deponent.

On Appeal from the United States District Court

for the Southern District of New York,

Honorable John V. Singleton, Jr., Judge, Presiding

Pursuant to 28 U.S.C. 1407(b).

BRIEF FOR THE UNITED STATES OF AMERICA

AS AMICUS CURIAE .

SANFORD M. LITVACK

Assistant Attorney General

ROBERT B. NICHOLSON

Nancy C. GARRISON

Attorneys,

Department of Justice,

Washington, D.C. 20530.

November, 1980

2d

TABLE OF CONTENTS

PAGE

po 8 9 > ee 3d

snl sss ssnesivebeavesnnsevoncceesconeneese 5d

IL Ns Lscabippononssvevesocnesneneds 6d

Nailin Sac) Leccessenbichavinnsbodcccascosseosccessesss 6d

I a nsscccniscbucsacecousssossnsccenssovséecesens 8d

SUMMARY OF ARGUMENT .............cccccceccceessteeeeeeees 9d

I RL ills Linda dcseiccveoseamsvodecsossavhodeeseesecseons lid

I. THE FIFTH AMENDMENT FORBIDS COM-

PELLED TESTIMONY ONLY IF THAT TES-

TIMONY MAY BE USED TO PROSECUTE

iis vn vescesedesdenaciateedsehs v<VtC iseqescesseos lid

Il. IT COULD BE CONCLUDED THAT THE FED-

ERAL IMMUNITY STATUTE PROHIBITS

USE AGAINST FLEISCHACKER OF THE

TESTIMONY SOUGHT, AND THUS THAT

HE HAS NO FIFTH AMENDMENT RIGHT

TRE TRIE E siccnesssecssovencceaissesscessevcsesanss 13d

A. The Federal Immunity Statute Is Coextensive

with the Fifth Amendment in Protecting a

Witness Against Use of His Immunized

pS "ES 14d

B. Testimony Obtained in Response to Ques-

tions Based on and Within the Scope of

Immunized Testimony Is “Derived From”

Immunized Testimony ..............scscccssrscsssseeees 16d

C. Since There Was No Showing That His Testi-

mony Might Incriminate Him by Showing

Perjury in His Prior Testimony, Fleischack-

er Cannot Refuse To Testify on the Ground

That His Testimony Could Be Used in a

Prosecution for Perjury ..........c.csscccccsessecsceses 20d

D. The Order Compelling Fleischacker’s Testi-

mony Was Not a Judicial Grant of Immu-

en a sshd li anenchioecinnepeouberenstoes 23d

Ill. IT COULD ALSO BE CONCLUDED THAT

THE IMMUNITY STATUTE DOES NOT

PROTECT FLEISCHACKER FROM USE OF

HIS OWN SUBSEQUENT TESTIMONY,

AND THUS THAT HE DOES HAVE A FIFTH

AMENDMENT RIGHT TO REMAIN SI-

3d

TABLE OF AUTHORITIES.

Cases.

Blau v. United States, 340 U.S. 159 (1950) .........

Brown v. Walker, 161 U.S. 591 (1896)......ccccccc00

Counselman v. Hitchcock, 142 U.S. 547 (1892)...

In re Corrugated Container Antitrust Litigation,

620 F.26 1086 ( Sth Cir: 1980) sccsscassi.cccoccccecsescee

In re Daley, 549 F.2d 469 (7th Cir.), cert.

denied, 434 U.S. 829 (1977) .o.cccccccccsccscessessceees

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

Lp BESS SCRNIVS POS RRR RGR AP PAE Sa ie Ra

In re Folding Carton Antitrust Litigation, 609

PsP ET 1 WU IS MRED) ccscsciacchssccabcobdsdianseocc heck

Gardner v. Broderick, 392 U.S. 273 (1968) ..........

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

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

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

2 Trade Cas. J 63,522 (8th Cir. 1980)...

In re Master Key Litigation, 507 F.2d 292 (9th

2 RE | SERRA IRCA AEE ST paleo

Malloy v. Hogan, 378 U.S. 1 (1964) coccccccccccceccecees

Maness v. Meyers, 419 U.S. 449 (1975) ...ccccccccceees

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

PTT OD nticclsinsdccakebstwbsbdandancscidantgiedsaies)toteinssbes cc

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

BRP ORD scilaccride sume cae Sede eile

Rogers v. United States, 340 U.S. 367 (1951)...

Smith v. United States, 337 U.S. 137 (1949) .......

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

SAPO ueveiiccaioathd sanspalscbincaidarcethuiic ds Sissies:

Ullmann vy. United States, 350 U.S. 422 (1955 +

Uniformed Sanitation Men Ass’n v. Commission-

er of Sanitation, 392 U.S. 280 (1968) ........0cc00.

“— States v. Apfelbaum, 445 U.S. 115

_REREARR Eee eR AR ee SA

United States v. Catalano, 491 F.2d 268 (2d

Cir.), cert. denied, 419 U.S. 825 (1974)...

United States v. Curcio, 234 F.2d 470 (2d Cir.

the rev'd on other grounds, 354 U.S. 118

SOOT D ssiadnadsinniplthidediiteticsdeasieadinnaiddiitecrostdnan sins

9d, 174d,

23d, 24d

24d

24d

12d

lld

12d, 23d,

24d

passim

17d

12d

15d

24d, 26d

12d, 15d

24d

11d, 12d

lid

16d, 17d,

18d, 23d,

24d, 25d

11d, 24d

lld

11d, 14d,

15d, 21d

16d

12d, 22d

4d

PAGE

United States v. First Western State Bank of

Minot, 491 F.2d 780 (8th Cir.), cert. denied,

SONU BPs ER. 1 LOE ) transi cadssscatectitessabateescesensneets 16d

United States v. Housand, 550 F.2d 818 (2d

Cir. ), cert. denied, 431 U.S. 70 (1977).............. 21d, 22d,

23d

United States v. Kurathanos, 531 F.2d 26 (2d

Cir. ), cert. denied, 428 U.S. 910 (1976)............ 16d

United States v. Kuehn, 562 F.2d 427 (7th Cir.

SIT We clshah nies psasiciad sanliatavdadabaibaniaastdadkaueteniendoicchineses 18d, 26d

United States v. Kurzer, 534 F.2d 511 (2d Cir.

ROPE nih adtis \issocthedciebhadlebdadbthendhokeckssinkecdibeohecnds 16d

United States v. Mandujano, 425 US. 564

A)” SARA EIRBESE GGRNS SEAS i re ARC pO 21d

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

Ce RI hai jd. oss lalla ensue endiananh Mdinecineaienessssasnd’ 16d

United States v. Melchor Moreno, 536 F.2d 1042

PSE MIEET BUPTWE T iichsschecnidseemst dedibdcencapansonasinbeniaee 12d, 22d

United States v. Miranti, 253 F.2d 135 (2d Cir.

Sn SS, RRR RL Se SE OS RRS ER OR 12d

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

BONE Pte takin Schcea is ieiiecisitns taicahcia dai neha haphbsepnanogsdsetvensanons 16d, 20d

United States v. Partin, 552 F.2d 621 (Sth Cir. ),

cert. denied, 434 U.S. 903 (1977) .........ceeeeeeeeeeee 21d

United States v. Tramunti, 500 F.2d 1334 (2d

Cir. ), cert. denied, 419 U.S. 1079 (1974).......... 21d

United States v. Turkish, 623 F.2d 769 (2d Cir.

EE cin bithie iad at Rice Velidad ia’ duicles hh ac delaias dipanaennee 24d

United States v. Wong, 431 U.S. 174 (1977)........ 21d

Zicarelli v. New Jersey Investigation Comm’n,

SG Ti. FETE Boks titasshcbsescinetiaiaason lld

Statutes

Ne RF LI ks \acsncocetbbdccdsapbedecsbecdedbessasiesces Sd, 9d,

14d, 15d

ae eis HIE aatileh sun evickchadasenphivelenoseachiedabesunane passim

Rie BM MD vcs dee cnansdsinnchbscauhecdeetembirnanaeeones 6d, 13d,

. 14d, 24d

Bk EL BIE Nadie ici dentdan senses tiara asd danitaiandn ks 6d

SO Matos SEUIRIE incised etn \adcsasihenaional shadtevenimediails 6d, 7d

Fe Tce NE ata ine <cineasts si otasialaiaiadichn occa tiaies 6d, 8d

Legislative Material.

S. Rep. No. 91-617, 91st Cong., Ist Sess. (1969). 15d

H.R. Rep. No. 91-1549, 9lst Cong., 2d Sess.

CHIR IED siscnsectneveidenennduanbtiainiasnitiliiedilas ial ints 15d

Sd

IN THE UNITED STATES COURT OF APPEALS

For THE SECOND CIRCUIT

No. 80-1090

IN RE: CORRUGATED CONTAINER

ANTITRUST LITIGATION,

M.D.L. No. 310

APPEAL OF PHILLIP L. FLEISCHACKER, Deponent.

On Appeal from the United States District Court

for the Southern District of New York,

Honorable John V. Singleton, Jr., Judge, Presiding

Pursuant to 28 U.S.C. 1407(b).

BRIEF FOR THE UNITED STATES OF AMERICA

AS AMICUS CURIAE

ISSUE PRESENTED

Whether a witness who claims his Fifth Amendment

privilege against self-incrimination may be compelled to answer

questions that are based on and confined to the subject matter,

time and geographic scope of testimony previously given by

that witness under a grant of immunity pursuant to the federal

immunity statute, 18 U.S.C. 6001-6005.

6d

STATEMENT

This is an appeal pursuant to 28 U.S.C. 1291 from an order

issued by the Honorable John V. Singleton, Jr., Judge of the

United States District Court for the Southern District of Texas,

exercising the powers of a district judge in the Southern District

of New York, pursuant to 28 U.S.C. 1407(b), in Corrugated

Container Antitrust Litigation, M.D.L. No. 310. (A. 452-454.)

Judge Singleton held appellant Phillip L. Fleischacker, a non-

party witness, in civil contempt for his refusal, based on a claim

of Fifth Amendment privilege, to answer questions at his

deposition. Fleischacker was ordered confined pursuant to 28

U.S.C. 1826 and fined $5000. The order was stayed by Judge

Singleton pending appeal.

Facts

In August 1977 appellant, Phillip L. Fleischacker, was

subpoenaed to testify before a federal grand jury in the

Southern District of Texas, which was investigating alleged

price-fixing in the corrugated paper container industry. After

Fleischacker invoked his Fifth Amendment privilege against

self-incrimination, he was granted “‘use immunity” and ordered

to testify pursuant to 18 U.S.C. 6002 and 6003. (A. 2.) He

subsequently was interviewed by Department of Justice at-

torneys and gave testimony before the grand jury under that

grant of immunity.

The grand jury returned two indictments charging several

individual and corporate defendants with conspiracy to fix

prices and otherwise restrain trade in the corrugated paper

industry. Thirty defendants pled nolo contendere and were

sentenced. Fleischacker, who was not named as a defendant,

was subpoenaed to appear at the trial of the remaining

defendants. Judge Singleton, presiding over the criminal trial,

entered a second immunity order compelling Fleischacker’s

testimony at trial (A. 212), but Fleischacker was never called

as a witness. The defendants who stood trial were acquitted.

7d

While the grand jury investigation and criminal trial were

in progress, purchasers of corrugated products filed numerous

private treble damage actions alleging Sherman Act violations

by corrugated paper manufacturers, some of whom were

defendants in the criminal proceedings. In November 1977, the

Judicial Panel on Multidistrict Litigation, pursuant to 28 U.S.C.

1407, transferred these private actions to the Southern District

of Texas for consolidated pretrial proceedings. In Re Corru-

gated Container Antitrust Litigation, M.D.L. No. 310.

After the conclusion of the criminal trial, Fleischacker was

subpoenaed for deposition in New York on January 22, 1980,

by the plaintiff class in the consolidated civil actions.’ He

appeared but declined on Fifth Amendment grounds to give

any information except his name and his home address and

telephone number. In February 1980, Judge Singleton ordered

the disclosure of transcripts of grand jury testimony and related

Department of Justice interviews of several witnesses, including

Fleischacker, to counsel for plaintiffs in the consolidated civil

actions.

On February 29, 1980, a second subpoena was issued from

the United States District Court for the District of New Jersey,

requiring Fleischacker to appear in New York on March 10,

1980 for further deposition. (A. 314.) On March 6, 1980,

Judge Singleton issued Preiria! Order 39 (A. 316-317), which

provided that he would preside, by telephone conference call or

in person, at Fleischacker’s deposition in the Southern District

of New York, and, pursuant to 28 U.S.C. 1407, would exercise

the powers of a District Judge for the Southern District of New

York. The order, which was filed in the United States District

Court for the Southern District of New York and served on

Fleischacker, also directed Fleischacker to attend his depo-

sition. On March 10, 1980, Fleischacker appeared for his

' Other witnesses who had appeared before the grand jury were

also subpoenaed for depositions.

8d

deposition in New York. Judge Singleton, in Houston, presided

over the deposition by conference telephone connection.

Most of the questions asked of Fleischacker at his depos-

ition were read verbatim from his immunized interview tran-

script; other questions were asserted by examining counsel to be

derived from the interview or grand jury testimony.? As to each

question, Fleischacker invoked his Fifth Amendment privilege

against self-incrimination. Judge Singleton ordered him to

respond on the ground that Fleischacker could have no legiti-

mate fear of prosecution based on his answers, since they would

be derived from his prior immunized testimony. Each time,

Fleischacker restated his Fifth Amendment objection and per-

sisted in his refusal to answer, and each time Judge Singleton

held him in contempt for his refusal. At the termination of the

deposition, Judge Singleton ordered Fleischacker confined for

sixty days, pursuant to 28 U.S.C. 1826, and imposed a fine of

$5,000. (A. 440.) The contempt order was stayed pending

immediate appeal.

Fleischacker’s Appeal

Because there was uncertainty as to which court of appeals

had jurisdiction (see A. 317), Fleischacker appealed both to

this Court and to the United States Court of Appeals for the

Fifth Circuit. On April 7, 1980, this Court dismissed his appeal

without prejudice to reinstatement if the Fifth Circuit held that

it did not have jurisdiction.

The Fifth Circuit consolidated Fleischacker’s appeal with

the appeals of two other witnesses, Charles Jerome Franey and

2 Counsel present at the deposition, the witness, and the pre-

siding judge had copies of transcripts of Fleischacker’s two Depart-

ment of Justice interviews and his grand jury testimony and referred

to specific interview questions during the deposition. (A. 365-439.)

Transcripts of the interviews, but not of the grand jury testimony

(which consisted of only seven pages of transcript, see A. 436), are

included in the appendix. (A. 3-211.)

9d

Alexander Hopkins, who had been held in contempt by Judge

Singleton for their refusals to answer similar questions in

depositions taken in the Southern District of Texas. On May 7,

1980, the Fifth Circuit reversed the contempt citations against

Franey and Hopkins? and dismissed Fleischacker’s appeal for

lack of jurisdiction. Jn re Corrugated Container Antitrust

Litigation, 620 F.2d 1086 (Sth Cir. 1980).

Fleischacker’s appeal from Judge Singleton’s March 10,

1980, orders holding him in contempt was redocketed here on

May 15, 1980.

SUMMARY OF ARGUMENT

Whether the district court’s order compelling testimony

from appellant Fleischacker over his claim of Fifth Amendment

privilege against self-incrimination should be affirmed or re-

versed depends on the scope of a grant of immunity under the

federal immunity statute, 18 U.S.C. 6001-6005. For the Fifth

Amendment prohibits compulsion of testimony only if the

testimony might tend to show that the witness has engaged in

criminal activity and if there is a possibility that it may be used

against the witness in a criminal prosecution.

One reasonable interpretation of the immunity statute is

that it prohibits use against Fleischacker of the testimony

sought from him in this case. For the statute protects a witness

from use of evidence “derived from” his immunized testimony.

And in this case it is clear that the transcript of testimony given

by Fleischacker under a grant of immunity in a prior proceed-

ing was used by examining counsel during the deposition and

provided the basis for the questions Fleischacker refused to

answer. Those questions were read directly from, or were

3This brief does not address the law of the case arguments

presented by Fleischacker, but we do not believe that the Fifth

Circuit’s decision binds the Second Circuit on this appeal.

-

10d

closely related in subject matter and time to, his immunized

testimony. If this is the correct interpretation of the statute,

Fleischacker had no Fifth Amendment right to remain silent,

and the district court’s order compelling his testimony should be

affirmed.

The other reasonable interpretation of the immunity stat-

ute is that it does not extend to testimony given in a subsequent

proceeding by the immunized witness himself. If the witness

voluntarily answers questions based on his prior immunized

testimony, that testimony is not compelled, and there is no Fifth

Amendment prohibition on its use against the witness. But the

witness need not give any new testimony that might incriminate

him. He has the opportunity to assert his Fifth Amendment

rights when he is asked questions based on his prior testimony,

and if he does so, as Fleischacker did, he cannot be compelled

to give incriminating testimony. Thus, with respect to any

testimony sought from the immunized witness himself in a

subsequent action, the witness’ Fifth Amendment rights are

fully protected by preserving this right to remain silent. There

is, accordingly, no need to interpret the prior grant of immunity

to displace the constitutional privilege. If this is the correct

interpretation of the statute, the district court erred in over-

ruling Fleischacker’s Fifth Amendment claim, and the order

compelling his testimony should be reversed.

= >

lid

ARGUMENT

I. THE FIFTH AMENDMENT FORBIDS COMPELLED

TESTIMONY ONLY IF THAT TESTIMONY MAY BE

USED TO PROSECUTE THE WITNESS.

The duty to provide testimony when called by a court or

grand jury and the corresponding power of the court to compel

testimony are firmly established in American law. See Kastigar

v. United States, 406 U.S. 441, 443-445 (1972). But the Fifth

Amendment limits in an important respect the government’s

power to compel testimony by providing that “[n]o person...

shall be compelled in any criminal case to be a witness against

himself.’ This means not only that a defendant may not be

compelled to take the stand in a criminal trial, but also that the

government may not compel any testimony that might later be

used to prosecute the witness.

If no criminal prosecution of the witness can arise from his

testimony, however, the public interest in obtaining that testi-

mony prevails. The Fifth Amendment does not allow a witness

to remain silent even if his testimony will embarrass him, harm

him in his business, subject him to civil liability, or incriminate

others. See, e.g., United States v. Apfelbaum, 445 U.S. 115,

124-125 (1980); Zicarelli v. New Jersey State Comm’n of

Investigation, 406 U.S. 472 (1972); Gardner v. Broderick, 392

U.S. 273, 279 (1968); Uniformed Sanitation Men Ass’n v.

Commissioner of Sanitation, 392 U.S. 280, 284-285 (1968);

Ullmann yv. United States, 350 U.S. 422, 430-431 (1956);

Rogers v. United States, 340 U.S. 367 (1951); Smith v. United

States, 337 U.S. 137, 147 (1949); Brown v. Walker, 161 U.S.

591, 605-606 (1896).

Because both the public interest in obtaining testimony and

the witness’ Fifth Amendment rights must be protected, a

witness’ claim of privilege does not automatically entitle him to

remain silent. It is for the court, in each case, to determine

whether the privilege is properly invoked. Hoffman v. United

12d

States, 341 U.S. 479, 487 (1951); Rogers v. United States,

supra. The witness may remain silent only if the court

concludes that the testimony sought (1) might provide some

evidence of his involvement in criminal activity and (2) might

be used against him in a criminal prosecution. See Kastigar v.

United States, supra; Murphy v. Waterfront Comm’n, 378 U.S.

52 (1964).

In determining whether testimony sought is potentially

incriminating, the court must look to the questions themselves

and the surrounding circumstances. Hoffman v. United States,

supra, 341 U.S. at 486-489. The witness is not required to

incriminate himself in order to demonstrate the validity of his

claim of privilege, but where the possibility of incrimination is

not evident from the questions, the witness must explain the

basis for his assertion that the answers might be incriminating.

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

1976); United States v. Curcio, 234 F.2d 470 (2d Cir. 1956),

rev'd on other grounds, 354 U.S. 118 (1957). Testimony need

not provide direct evidence of criminal activity in order to be

incriminating; any testimony that might link the witness to

criminal conduct or focus investigation on him is shielded.

Hoffman v. United States, supra, 341 U.S. at 487; Blau v.

United States, 340 U.S. 159, 161 (1950).

If the testimony sought may be incriminating, the witness

need not show that it is likely that the evidence will be used

against him, but there must be some possibility of such use.

United States v. Miranti, 253 F.2d 135 (2d Cir. 1958); Jn re

Master Key Litigation, 507 F.2d 292, 294 (9th Cir. 1974); In re

Folding Carton Antitrust Litigation, 609 F.2d 867, 871-872 (7th

Cir. 1979). Facts that create an absolute bar to use of the

testimony will establish lack of basis for the claim of privilege.

Brown v. Walker, supra.

The parties do not dispute the general principles applicable

to assertions of Fifth Amendment privilege. Rather, what is at

13d

issue is the effect of plaintiffs’ use of appellant Fleischacker’s

prior testimony, given under a grant of “use immunity”

pursuant to 18 U.S.C. 6002 and 6003, on his assertion of

privilege in this case.4

Appellees contend, and Judge Singleton held, that

Fleischacker has no Fifth Amendment right to refuse to answer

the questions asked at his deposition, Because these questions

were based on prior immunized testimony, they concluded that

the statutory grant of immunity would prohibit use of

Fleischacker’s answers against him, Fleischacker contends that

because he has not been granted immunity for any testimony he

may give in this civil action, he is exposed to a risk of

prosecution on the basis of his testimony, and thus that he has a

Fifth Amendment right to remain silent.

il, IT COULD BE CONCLUDED THAT THE FEDERAL

IMMUNITY STATUTE PROHIBITS USE AGAINST

FLEISCHACKER OF THE TESTIMONY SOUGHT,

AND THUS THAT HE HAS NO FIFTH AMEND-

MENT RIGHT TO REMAIN SILENT,

Under the first interpretation of the immunity statute,

prosecutorial use of evidence derived from immunized testi-

mony is prohibited by the immunity statute even when that

evidence is the testimony of the immunized witness himself, If

this is the correct interpretation, then, on the facts of this case,

we agree with appellees that the testimony sought would be

derived, But we emphasize that, to avoid encroaching on the

executive power to control grants of immunity, the court should

compel incriminating testimony over a claim of privilege only

when it is clear that the testimony will be derived from prior

testimony,

4 Neither party disputes that Fleischacker’s interview statements,

as well as the testimony he gave before the grand jury itself, were

covered by the grant of immunity, (See A, 130.)

14d

A. The Federal Immunity Statute Is Coextensive with the

Fifth Amendment in Protecting a Witness Against Use of

His Immunized Testimony.

Under the federal immunity statute, 18 U.S.C. 6001-6005,

when a witness in a federal court proceeding claims his Fifth

Amendment privilege, the government may obtain a court

order compelling the witness to testify in that proceeding. 18

U.S.C, 6003. The witness may not then refuse to testify,

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,

18 U.S.C, 6002.

The Supreme Court held this statute constitutional because

it construed it to provide immunity coextensive with the scope

of the Fifth Amendment privilege not to incriminate one-

self—“immunity from the use of compelled testimony and

evidence derived therefrom.” Kastigar v. United States, supra,

406 U.S. at 443 (1972); see also United States v. Apfelbaum,

supra, 445 U.S, at 123, The Court in Kastigar, while rejecting

the contention that full transactional immunity is the only

constitutionally sufficient substitute for the Fifth Amendment

right to remain silent,6 emphasized that protection against

5 Petitioners in Kastigar had based their argument that transac:

tional immunity was required in Counselman v, Hitchcock, 142 US.

547 (1892), In Counselman, the Court had invalidated a statute that

afforded a witness “protection only against the use of the specific

testimony compelled from him under the grant of immunity” because

it * ‘could not, and would not, prevent the use of his testimony to

search out other testimony to be used against him,’ ” 406 U.S, at 450,

quoting 142 U.S, at 564, The Court added; “In view of the

constitutional provision, a statutory enactment, to be valid, must

afford absolute immunity against future prosecution for the offense to

which the question relates.” 142 U.S. at 585-586,

(Footnote continued on following page.)

15d

direct use of compelled testimony is not sufficient. Immunity

from indirect use is also required.6 The immunity statute is

constitutional only because “[i]t prohibits the prosecutorial

authorities from using the compelled testimony in any respect,

and it therefore insures that the testimony cannot lead to the

infliction of criminal penalties on the witness.” 406 U.S. at 453

(emphasis in original). Like the Fifth Amendment itself, the

statute “assure[s] that the compelled testimony can in no way

lead to the infliction of criminal penalties.” 406 U.S. at 461

(emphasis added),? This constitutional requirement that a

witness compelled to testify under a grant of immunity be fully

protected from prosecutorial use of his compelled testimony

places the burden on the government, in any prosecution of a

witness who has testified previously under a grant of immunity,

to demonstrate that it has relied solely on evidence from

(Footnote continued from preceding page.)

Later cases suggested that while derivative use immunity was

required, full transactional immunity was not. Se .falloy v. Hogan,

378 U.S, 1 (1964); Murphy v. Waterfront Comn 'n, supra, In the

Organized Crime Control Act of 1970, Congress repealed a variety of

immunity statutes—most of which provided transactional im. u-

nity—and enacted more limited use and derivative use immunity

provisions in 18 U.S.C, 6001-6005, See S, Rep, No, 91-617, 91st

Cong,, Ist Sess,, 51-56 (1969); H.R. Rep. No, 91-1549, 91st Cong,, 2d

Sess., 42-46 (1970). In Kastigar, the Court referred to the statement

in Counselman as not essential to the holding in that case, 406 U.S, at

451,

® Transactional immunity, however, “affords the witness consid-

erably broader protection than does the Fifth Amendment privilege

| which] has never been construed to mean that one who invokes it

cannot subsequently be prosecuted,” 406 U.S. at 453, Congress has

the power to grant such broad immunity, but it is not constitutionally

required,

’ The statute does allow use of immunized testimony “in a

prosecution for perjury, giving a false statement, or otherwise failing

to comply with the order [compelling immunized testimony].” 18

U.S.C, 6002, And that exception is constitutional, United States vy,

Apfelbaum, 445 U.S, 115 (1980),

16d

“legitimate independent sources.” Jd. at 460, 462; United States

v. Kurzer, 534 F.2d 511 (2d Cir. 1976); United States v.

Catalano, 491 F.2d 268 (2d Cir.), cert. denied, 419 U.S. 825

(1974),

B. Testimony Obtained in Response to Questions Based on

and Within the Scope of Immunized Testimony Is “De-

rived From” Immunized Testimony.

Evidence or testimony obtained by using a witness’ immu-

nized testimony is not evidence from an “independent source.”

It, therefore, cannot be used in prosecuting that witness.® See,

¢.g., Kastigar v. United States, supra, 406 U.S. at 454; Appeal of

Starkey, 600 F.2d 1043 (8th Cir. 1979); United States v.

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

supra; United States v. Catalano, supra; 268 (2d Cir. 1974);

United States v. First Western State Bank of Minot, 491 F.2d

780 (8th Cir, ), cert. denied, 419 U.S. 825 (1974); United States

v. McDaniel, 482 F.2d 305 (8th Cir. 1973). Indeed, this Court

has held that even testimonial evidence obtained from other

witnesses is “derived” if immunized testimony was used to

obtain it. See, eg., United States v. Kurzer, supra; United

States v. Karathanos, 53\ F.2d 26 (2d Cir.), cert. denied, 428

U.S. 910 (1976),

Thus, in most cases, the close connection between the

immunized testimony and testimony obtained by examining

counsel in a subsequent proceeding, who has that testimony

and uses it in examination covering the same subject matter and

time period, would compel the conclusion that the subsequent

testimony is “derived from” immunized testimony within the

meaning of 18 U.S.C, 6002.

The only court to rule on the issue in the situation

presented in this case-—where the immunized witness is himself

® Use of immunized testimony to obtain derived evidence is not

improper, of course, and such evidence may be used by private parties

or the government for a variety of purposes.

17d

the source of the derived testimony—held that such testimony

would be within the protection afforded by the immunity

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

Starkey had testified before a federal grand jury under a grant

of immunity about matters that were the subject of a civil action

subsequently brought by the State of Arkansas. The state

obtained a transcript of Starkey’s grand jury testimony and

used it in deposing him in the civil action. The state’s attorney

asserted that the deposition questions were derived from the

grand jury transcript, and some of the questions were read

verbatim from the transcript. The Eighth Circuit held that any

answers to questions within the scope of Starkey’s immunized

testimony would be “tainted” by the state’s- use of that immu-

nized testimony. Thus Starkey’s answers could not subject him

to future prosecution, and he had no Fifth Amendment right to

refuse to answer questions that were “within same time,

geographical and substantive framework as the grand jury

testimony.” 600 F.2d at 1048. The court therefore affirmed an

order holding him in contempt for refusal to answer such

questions. '0

®In the Fifth Circuit Corrugated deponents’ appeals, Jn Re

Corrugated Container Antitrust Litigation, 620 F.2d 1086 (5th Cir.

1980) (Charles J. Franey and Alex Hopkins, Appellants ), the court of

appeals, for reasons with which we disagree, never reached the

question whether the testimony would be derived. See pp. 24-26,

infra.

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

Cas. 63,522 (8th Cir. Sept. 9, 1980), the Eighth Circuit again

addressed the question whether a witness has a Fifth Amendment

right to refuse to give allegedly “derived” testimony. In that case it

held that testimony given in a civil action in response to questions

“ ‘within the same time, geographic and substantive framework as

immunized grand jury testimony’ ” would be “derived” from immu-

nized testimony even if the examining party did nor have access to the

grand jury transcripts. This holding is inconsistent with the basic

principle that transactional immunity is not required by the con-

stitution or the immunity statute and that independently obtained

(Footnote continued on following page.)

°*®

18d

. The standard established by the court in Starkey is the

appropriate one for determining whether testimony will be

derived from immunized testimony: It is derived if examining

counsel uses the immunized testimony in conducting the exam-

ination and if the examination is limited to the subject matter,

time period and geographic scope of the immunized testi-

mony."!

In this case Judge Singleton, presiding at the deposition,

correctly determined that each of the questions asked satisfied

this test. The private plaintiffs’ counsel who deposed Fleischac-

ker had access to Fleischacker’s immunized testimony and

admittedly relied on it in questioning him. Most of the

questions asked of Fleischacker were read verbatim from the

immunized interview transcript (see A. 365-449).'2 The only

(Footnote continued from preceding page.)

evidence may be used to prosecute a witness who has testified under a

grant of immunity. See, e.g., Appeal of Starkey, supra, 600 F.2d at

1048, distinguishing United States v. Kuehn, 562 F.2d 427 (7th Cir.

1977) (statements of witness who repeated his immunized grand jury

testimony to a newspaper reporter would be independent source).

But in any event, the issue presented in Little Rock does not arise in

this case because the examining lawyer did have the immunized

testimony.

1! This interpretation of the immunity statute would have the

beneficial effect of allowing private litigants to obtain relevant testi-

mony that otherwise might be unavailable because of witnesses’

claims of Fifth Amendment privilege. As a practical matter, if the

judge limits the scope of the questioning to matters within the scope of

the immunized testimony, it is unlikely that prosecutorial efforts will

be hampered. For the government usually will have no further

interest in prosecuting the witness for any offenses suggested by such

testimony or will be unable to do so in any event because of the

difficulty of establishing that it has not used the immunized testimony

itself.

12 Only the questions, not Fleischacker’s answers, were read as

deposition questions. But we do not understand this to be the basis of

appellant’s argument that the questions are not derived from his

(Footnote continued on following page.)

19d

questions that were not read verbatim dealt with the subject of

any price communications between Fleischacker and repre-

sentatives of other corrugated manufacturers (A. 405-408, 412-

413, 419-420, 423-425).'3 This same subject was covered

extensively in the immunized interviews (A. 7-128, 132-210),

and Judge Singleton limited the questioning to 1970-1975, the

time period covered by the grand jury’s investigation (A. 405-

406, 408, 413, 420, 423).'4

Appellant seeks to distinguish Starkey on the ground that

there the civil action was brought by the state rather than a

private party and it was the state’s attorney rather than counsel

for a private plaintiff who argued that answers to questions

based on prior immunized testimony would be tainted. But this

distinction has no bearing on the question whether the civil

testimony is derived from the immunized testimony. The court

in Starkey held that the testimony sought could not be used in

the subsequent civil action because it was derived from immu-

nized testimony; it did not hold that the argument of the state’s

attorney operated as a separate grant of immunity for the new

testimony. Thus its reasoning is fully applicable to this case.

( Footnote continued from preceding page.)

testimony—nor would this be a reasonable argument. Questions and

answers are, in most cases, so interrelated in the examination of a

witness that the questions themse /es are to some extent derived from

earlier answers. Indeed in overruling objections based on lack of

foundation for questions read verbatim, Judge Singleton apparently

looked to the answers previously given. (See, e.g., A. 388-389, 393.)

Similarly, questions seeking to fill in any gaps in the prior

testimony, even if seeking new information, can reasonably be said to

be based on the immunized answers. (See, e.g., A. 402-409, 412-413,

419-420, 423.)

‘3 Fleischacker was also asked whether he appeared before the

grand jury and was interviewed by the Department of Justice in 1977

(A. 380). The answer to that question does not appear to be derived

from his testimony, but neither does it appear incriminating.

‘No geographic limitation was imposed since the alleged

conspiracies were nationwide.

20d

Appellant admits that the testimony sought would be

derived from immunized testimony “in a definitional sense”

(Supp. Br. for Deponent-Appellant at 20) but contends that it

would not be “derived” as Congress intended that term in

Section 6002 and as the Supreme Court has interpreted it.

Prosecutorial use of the testimony given in the civil action he

asserts, “is not the type of derivative use prohibited by Section

6002 as anticipated in Kastigar’’ because “the connection

[ between the immupized testimony and the civil testimony] is

wholly unrelated to any criminal prosecution or investigation.”

(Id. at 19-20).

Section 6002, however, contains no such limitation on the

protection afforded to a witness whose immunized testimony is

used to develop other evidence, nor is there any other support

for appellant’s contention that the participation of a private

party severs the connection between immunized testimony and

any evidence developed in a subsequent civil case in response to

questions based on that testimony. "5

C. Since There Was no Showing that His Testimony Might

Incriminate Him by Showing Perjury in His Prior Testi-

mony, Fleischacker Cannot Refuse to Testify on the

Ground That His Testimony Could be Used in a Prose-

cution for Perjury.

Fleischacker also contends on appeal that his testimony

cannot be compelled because it might provide evidence that

5 Indeed, in United States v. Nemes, 555 F.2d 51 (2d Cir. 19.7),

this Court suggested that evidence covered by an immunity grant

might be derived through a private source. In that case, the court held

that the government had failed to demonstrate the required independ-

ent source merely by denying that federal officials had seen or used

testimony given by the defendant under a state grant of immunity.

For, said the court, the fact that the federal officials have not seen the

immunized testimony “does not preclude the possibility that someone

who has seen the compelled testimony was thereby led to evidence

that was furnished to federal investigators.” 555 F.2d at 55.

21d

could be used against him in a prosecution for perjury'® or

inconsistency in his prior immunized testimony. We agree that

immunized testimony and information derived from such testi-

mony may be used in a prosecution for perjury or giving a false

statement in the immunized testimony. United States v.

Apfelbaum, supra; United States v. Wong, 431 U.S. 174 (1977);

United States v. Mandujano, 425 U.S. 564 (1976); United

States v. Housand, 550 F.2d 818 (2d Cir.), cert. denied, 431

U.S 970 (1977); United States v. Tramunti, 500 F.2d 1334 (2d

Cir.), cert. denied, 419 U.S 1079 (1974). Thus even if the

testimony sought from Fleischacker would be derived from his

immunized testimony within the meaning of that statute, it

could be used against for that limited purpose. And a witness is

entitled to claim the Fifth Amendment when the crime that

might be revealed by his testimony is perjury in a prior

proceeding. See, e.g., United States v. Housand, supra; United

States v. Partin, 552 F.2d 621, 623 (Sth Cir. ), cert. denied, 434

U.S. 903 (1977).

But Fleischacker never explained to the district court that

the incrimination he feared related to perjury in his earlier

testimony.'? Nor did he show that he was likely to be endan-

‘6 Fleischacker apparently signed statements, under penalty of

perjury, that his interview statements, as transcribed, were true and

correct. (See A. 435.) The sworn statements do not appear with the

copy of the interview transcripts included in the appendix.

17 He argued only that his Fifth Amendment claim was valid

because his testimony would not be information derived from the

immunized testimony. Fleischacker’s counsel, Mr. McNamara, ad-

dressing the court during the deposition, stated:

“In asserting Fifth Amendment privilege Mr. Fleischacker is

concerned that testimony he might give here today would form

the basis for some prosecution of him by either an agency of the

Government of the United States or an agency of the State of

New York, or an agency of the State of New Jersey, and that he

might be charged with a crime premised upon this testimony. It

is our view, your Honor, that his testimony here today is not

(Footnote continued on following page.)

22d

gered by his answers. See United States v. Melchor Moreno,

supra; United States v. Curcio, supra.

There may be a theoretical possibility that a witness’

testimony will show perjury in virtually every case where the

witness has previously testified on the same or a similar subject.

But if this possibility, without any explanation from the witness,

were held sufficient to sustain a Fifth Amendment claim, it

would be virtually impossible to get any testimony from such a

witness.'® To avoid this problem while protecting the witness’

rights, the court, we suggest, should require that the witness—at

the very least—make clear that it is perjury that concerns him

(Footnote continued from preceding page.)

immunized, and that there is no authority to immunize his

testimony here today. . .”

A. 391-392. See also A. 400-401, 403, 405, 413, 420 (objections on

ground that questions are not derived from immunized testimony ).

Mr. McNamara cited United States v. Housand, supra, a case that did

involve possible perjury incrimination. A. 420. But he did not

question or disagree with the Court’s response: “I understand that that

case [Housand] dealt with perjured testimony. We don’t have that

question here.” Jd.

18 In United States v. Curcio, supra, the Second Circuit addressed

a somewhat similar problem. There, the secretary-treasurer of a labor

union was subpoenaed to testify and produce documents before a

grand jury. When he appeared before the grand jury he failed to

produce the subpoenaed records and refused on Fifth Amendment

grounds to answer questions about their whereabouts other than to

state that such records existed but were not in his possession. In

affirming an order holding him in contempt, the Second Circuit found

that his vague contentions about possible incrimination were in-

sufficient. Moreover:

“This requirement to produce [documents] would be no more

than an empty and meaningless form of words if the lawful

custodian of the records could hand over possession to another

and then refuse to say when or where he had last seen them on

the ground that any testimony on the subject would tend to

incriminate him. To sustain the privilege here asserted would

provide an easy method by which any investigation could be

hamstrung from the start.” 234 F.2d at 475.

23d

and give some indication of the basis for his fear of in-

crimination.19 The court would then be in a better position to

fulfill its obligation under Hoffman v. United States, supra, to

determine whether the testimony might provide evidence of

perjury and whether it might be used against the witness in a

perjury prosecution.

Because Fleischacker failed to explain this aspect of his

Fifth Amendment claim, the district court had no opportunity

to determine its validity, and Fleischacker should not be

permitted to make an argument based on possible use of his

testimony to prove perjury for the first time in his appeal to this

Court.

D. The Order Compelling Fleischacker’s Testimony Was

Not a Judicial Grant of Immunity.

Fleischacker argues that the district court’s order com-

pelling his testimony should be reversed because it confers

immunity as to new testimony, and thereby intrudes on the

power of the Department of Justice to control immunity grants.

The Fifth Circuit, in its recent decision, Jn re Corrugated

Container Antitrust Litigation, supra, accepted this argument

and, therefore, refused to compel testimony from witnesses

who, in circumstances identical to Fleischacker’s, claimed Fifth

Amendment privilege. But the Eighth Circuit in Starkey, supra,

expressly rejected this argument. Assuming that an immunized

witness’ own subsequent testimony can be “derived” evidence

within the meaning of the immunity statute, we find more

persuasive the Eighth Circuit’s reasoning as to why a court does

have the power to determine whether the testimony sought will

in fact be so closely connected to the immunized testimony as to

be “derived”.

19In Housand, the witness had made clear that he feared his

testimony would be used in a prosecution for perjury or inconsistent

statements. See United States v. Housand, supra, 550 F.2d at 821.

But in Starkey, where appellant did not raise the perjury issue, the

court did not consider it.

ey

24d

It is true that a court has no power to grant immunity

absent a request by the Department of Justice. See Ullmann v.

United States, supra; United States v. Turkish, 623 F.2d 769

(2d Cir. 1980); Ellis v. United States, 416 F.2d 791, 796-97

(D.C. Cir. 1969); Jn re Daley, 549 F.2d 469 (7th Cir.), cert.

denied, 434 U.S. 829 (1977).20 And it is also true that if a

witness is compelled to testify over a claim of privilege, his

answers may not be used against him. See Maness v. Meyers,

419 US. 449, 474-475 (1975) (White, J., concurring). This

does not mean, however, that a court invades prosecutorial

prerogatives when it determines that a witness’ Fifth Amend-

ment claim is without merit and orders him to testify.

As the Eight Circuit in Starkey and Judge Johnson dis-

senting in Corrugated explained, a court may—and indeed

must—determine the scope of immunity already granted when

necessary to determine whether a claim of privilege is valid.

Appeal of Starkey, supra, 600 F.2d at 1047-1048; Jn re Corru-

gated Container Antitrust Litigation, supra, 620 F.2d at 1095.

See also Hoffman v. United States, supra; Patrick v. United

States, 524 F.2d 1109, 1120 (7th Cir. 1977).

Thus, if a witness’ derived testimony is covered by the

immunity statute, a court faced with a claim of Fifth Amend-

ment privilege by a witness who has formerly testified under a

grant of immunity must determine, for each question, whether

the possibly incriminating testimony sought will be derived. If

the court can determine that it will be, the claim of privilege

must be denied and the witness ordered to testify.2' But if the

20 18 U.S.C. 6003 provides that the United States attorney may

obtain an immunity order for a witness whose testimony is sought “at

any proceeding before or ancillary to a court of the United States of a

grand jury of the United States” if he determines that the testimony

may be necessary tc the public interest. The power is not limited to

actions to which the United States is a party.

21 By not compelling testimony if there is any doubt that it will be

derived, the judge limits any risk of inadvertent judicial creation of

immunity through failure to limit the testimony compelled to that

which will actually be derived.

25d

court finds a possibility that it will not be derived, the court

should permit the witness to remain silent.22 And the court

should not issue a broad order compelling testimony, but

should examine the questions individually to see that each

arises from use of and is within the scope of the immunized

testimony.

Ill. IT COULD ALSO BE CONCLUDED THAT THE

IMMUNITY STATUTE DOES NOT PROTECT

FLEISCHACKER FROM USE OF HIS OWN

SUBSEQUENT TESTIMONY, AND THUS THAT HE

DOES HAVE A FIFTH AMENDMENT RIGHT TO

REMAIN SILENT.

The immunity statute can also be construed, however, as

not prohibiting prosecutorial use of testimony given in a

subsequent proceeding by the immunized witness himself, even

if that testimony is based on the witness’ immunized testimony.

If this is the correct construction of the statute, then Fleischa-

cker should not be compelled to testify since he has asserted his

Fifth Amendment privilege.

The alternative analysis we suggest differs from the argu-

ment made by the witness in this case and has not been

discussed in the decisions construing the immunity statute, but

we believe that it merits this court’s consideration. It is based

on two propositions: that the Fifth Amendment bars use of a

witness’ testimony against him only if that testimony is com-

pelled; and that the immunity statute prohibits use of a witness’

immunized testimony only to the extent necessary to provide

the equivalent of the Fifth Amendment privilege, Kastigar v.

United States, supra.

A witness who has testified under a grant of immunity has

the opportunity, when called to testify in a subsequent action, to

22 Thus the Eighth Circuit ruled in Starkey, supra, that question-

ing would be limited to matters within the scope of the grand jury

testimony. For if questions go beyond this there is reason to doubt

that they result from use of the immunized testimony.

26d

refuse to answer a question if he fears that his answer might

provide incriminating information. Thus the situation where a

witness is questioned using his immunized testimony is different

from that in which evidence is derived from sources which the

witness cannot control.23

If the witness freely chooses to answer questions based on

his immunized testimony, the Fifth Amendment does not

prohibit use of his answers against him, for the testimony has

not been compelled.24 And if he chooses not to testify volun-

tarily, he can assert his Fifth Amendment privilege and thus

assure that no additional incriminating evidence will be

created.?5 In either case, therefore, even if the testimony could

23 That is, whether subsequent testimony is covered by the

immunity statute turns not on how it was obtained or how closely it is

connected with the immunized testimony, but on whether the person

from whom it is obtained is the immunized witness or some other

party.

24 Certainly, if a witness, having given immunized testimony at a

trial, thereafter voluntarily answered questions asked by a reporter on

the basis of that testimony, the previous grant of immunity should not

bar the government from using the witness’ voluntary incriminating

statements against him, even though the questions and answers would

in a sense be “fruits” of the immunized testimony. For it would be the

witness’ election to respond to the questions, rather than any com-

pulsion proscribed by the Fifth Amendment, to which the in-

criminating statements would properly be ascribed. See United States

v. Kuehn, 562 F.2d 427, 432 (7th Cir. 1977). There, as in the case of

a witness who responds to questions based on his prior testimony in a

formal proceeding without claiming his Fifth Amendment privilege, it

could be said in a strict causal sense that the witness’ answers would

be derived from his immunized testimony. But the policies underlying

the Fifth Amendment and 18 U.S.C. 6002 do not require that the

prior immunity be construed to extend to such voluntary statements.

See Maness v. Meyers, supra, 419 U.S. at 466, 470 (Stewart, J.,

concurring ).

25 Under this alternative construction of the statute, the court,

before requiring the witness to testify, must determine whether the

testimony may provide evidence of criminal conduct and whether

(Footnote continued on following page.)

27d

otherwise be deemed derived under the standards discussed in

part II of this brief, it is unnecessary to construe the prior grant

of immunity to displace the witness’ constitutional privilege.2®

In this case, Fleischacker did assert his Fifth Amendment

privilege when the subsequent testimony was sought. There-

fore, if this interpretation of the statute is correct, the court

should not have compelled him to testify but should have

evaluated and ruled on his claim in the usual manner, basing its

decision on the premise that the immunity statute would not

preclude prosecutorial use of any incriminating testimony that

Fleischacker might give.

(Footnote continued from preceding page.)

there is a possibility it may be used to prosecute the witness (see part I

of this brief). If it compels testimony because one or the other of

these requirements is not satisfied, it does not intrude on prosecutorial

control of immunity by doing so. Of course, if the witness receives a

new grant of statutory immunity, his testimony may then be com-

pelled and cannot be used against him.

26 This construction of the statute may make it more difficult for

private parties to obtain testimony, and could also therefore, increase

the number of requests to the Department of Justice for grants of

immunity in private litigation. But it would give the government

greater control over the scope of immunized testimony. For it reduces

any possibility that, through collusion or otherwise, a private party

might elicit immunized testimony that would impede prosecution of

immunized witnesses.

-

28d

CONCLUSION

The federal immunity statute governs the outcome in this

case, and there are two reasonable ways of construing that

Statute. Neither is more clearly compelled by the language of

the statute, its legislative history, or the public interest. There-

fore, while we have suggested how this Court might analyze the

issue presented, the United States takes no position as to

whether this Court should hold that the testimony sought is

within the protection of the immunity statute, and, therefore,

affirm the contempt order, or whether it should hold that the

Statute does not prohibit prosecutorial use of a witness’ own

subsequent testimony, and, therefore, vacate the order.

Respectfully submitted,

SANFORD M. LITVACK

Assistant Attorney General

ROBERT B. NICHOLSON

Nancy C. GARRISON

Attorneys,

Department of Justice,

Washington, D.C. 20530.

November, 1980