Petition for Writ of Certiorari — Caucus Distributors, Inc. v. United States

upreme Court, U.S.

FILED

NOV & 1986

ee JOSEPH F. SPANIOL, JR.

mm wei Sai a 8 08

In the

Supreme Court of the Gnited States

Fall Term 1986

Caucus Distriputors, INC., et. al..

Petitioners

('nerep STATES OF AMERU:A

Respondent

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE FIRST DISTRICT

MATTHEW FEINBERG

Segal, Morgan & Feinberg

210 Commercial Street

Boston, Massachusetts 02109

(617) 720-4444

QUESTIONS PRESENTED

|. Whether a motion filed within ten days of a contempt

judgment which requests that the judgment be vacated is a

motion under F.R.Civ.P. 59(e) which extends the time for ap-

peal pursuant to F.R.App.P. 4(a)(4)?

2. Whether a party may be held in contempt without being

afforded an evidentiary hearing where the party specifically

requests such a hearing in order to present evidence that the

documents which it has been ordered to produce are not within

its control but rather are the personal property of other individ-

uals.

PARTIES

The parties* to the proceeding in the Court of Appeals are as

follows:

Caucus Distributors, Inc.; Campaigner Publications, Inc.;

National Democratic Policy Committee; Fusion Energy Foun-

dation; United States of America.

* Pursuant to Supreme Court Rule 28.1, the corporations herein, Caucus

Distributors, Inc., Campaigner Publications, Inc., Fusion Energy Founda-

tion, represent to this Court that they have no parent companies, subsidiaries,

or affiliates

ill

TABLE OF CONTENTS

SE ee

ee A ahaa ccchancnens seus

Ee SS iach des sacasddaeesaceeve

IN oo as ck sees nt aeedsececsesavaves

Nn ig pase 2s edie aa cps ks vices bdsesneesenes

ste coilix as david nea stadesencosess

Constitutional Provisions and Rules Involved

RINE RT ac cacccncceussacssecsesss

feasons ar (ranting the Writ...........................

I. THE COURT OF APPEALS INCORRECTLY

HELD THAT A MOTION FILED BY

PETITIONERS WITHIN TEN DAYS OF

THE CONTEMPT JUDGMENT DID NOT

EXTEND THE TIME FOR APPEAL, AND

THUS IMPROPERLY AVOIDED

REACHING THE MERITS OF THE

ISSUE OF THE SUFFICIENCY OF THE

SERVICE OF PROCESS WHICH

UNDERLIED THE CONTEMPT

ns re

Il. INUPHOLDING THE DISTRICT COURTS

ORDER HOLDING PETITIONER CDIIN

FURTHER CONTEMPT WITHOUT

GRANTING CDI AN EVIDENTIARY

HEARING ON A CONTESTED FACTUAL

ISSUE RELATIVE TO CDI’ ‘JUST

CAUSE’ DEFENSE TO ITS

NONCOMPLIANCE WITH AN ORDER

TO PRODUCE DOCUMENTS, THE

COURT OF APPEALS SANCTIONED A

VIOLATION OF PETITIONER'S RIGHT

Et ene

| i)

Lo

10

PAGE

ee ee RRO FS ee IARU OI ak SPR APR death, OE IT Are ares neat 15

fon ae aR ry Pe mire gan et amr AN yee Ree ep oes f.—|

A. Opinion and Order of the United States Court

of Appeals for the First Circuit................. A-]

B. Order of the United States Court of Appeals for

the First Circuit Denying Petition for

PINE er ee cuca vite oe ca Laces A-17

C. *Judgment an. | Commitment of Contempt of

the United States District Court............... A-19

D. Motion to Purge Contempt and Sanctions

With Endorsed Order of District Court...... A-2]

E. Order to Compel of the United States District

ee PERPEET Cee POTENT ONE Ay Pe er RED eran ae A-23

F. Further Judgment and Commitment of

Contempt of the United States District

a, REE eae One enein rt tel. Hl vis Neer epee A-24

* The Judgments and Commitments for cach of the four petitioners are

identical, except for the names, and therefore only one is reproduced in the

Appendix.

TABLE OF AUTHORITIES

PAGE

Alley v. Dodge Hotel, 551 F.2d 442

CER Ga ED. sve eka sk chee eh pane ee 7

Bordallo v. Reyes, 763 F.2d 1098 (9th Cir. 1985) ..... 6,5

Brotherhood of Loc. Fire & Eng. v. Bangor &

Aroostock R. Co., 380 F.2d 570 (D.C. Cir. 1967) .. 12

Cohen v. United States, 378 F.2d 751

a Ss as bo en a ea ae a ]2

Covington Industries, Inc. v. Resintex, A.G., 629

ae Fae Ce i is eons ack eases 9)

Dove v. Codesco, 569 F.2d 807 (4th Cir. 1978)........ |

Federal Trade Commission v. Compagnie De Saint-

Gobain-Pont-A-Mousson, 636 F.2d 1300

42 ROAR GES 1 | RA recy mR Ar or Arn bem eer oye g

Foman ©. Draede; Si tC SOTTO A) eres canes dees 11,13

Fremont Energy Corp. v. Seattle Post Intelligencer,

G58 F. 2a: 1553 (Oth Cir. P52) os oe ovine eves cess 13,14

Grand jury Subpoena Duces Tecum Witness v.

United States, 657 F.2d 5 (2d Cir. 1981)............. 12,13

Harris v. United States, 382 U.S. 162 (1965) .......... 12.13

la Re Oloer, 330-05. 257 .. keaeee 1]

Matter of Kitchen, 706 F.2d 1266 (2nd Cir. 1983)..... 1]

St. Paul Fire & Marine Insurance Co. v. Continental

Casualty Co., 648 F.2d 691 (10th Cir. 1982)........ 7

Sierra On-Line, Inc. v. Phoenix Software, Inc., 739

P26 1405 GS Ce. FO. oc oe eee 6,7

Sunstream Jet Express, Inc. v. International Air

Service Co., Ltd., 734 F.2d 1258 (7th Cir. 1984) ... 6

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

2 | i ne re eR creh. obale yh wi bihn, Phir Saga ty. 32

vil

PAGE

United States v. Boe, 491 F.2d 970 (Sth Cir. 1974).... 12

United States v. Powers, 629 F.2d 619 (9th Cir.

RU ak cls eee ee EE a a er eee 13

United States v. (under seal), 745 F.2d 834 (4th Cir

Lt | ene a AAP ath BAe) etn. pci NDR wens ates nV aaron ts oe 14

Vreeken v. Davis, 718 F.2d 343 (10th Cir. 1983)...... 7

Western Industries, Inc. v. Newcor Canada, Ltd..,

TOS Ft Ci Cie. BO her ew kee §

Constitutional Provisions:

United States Constitution, Amendment One ...... 14

United States Constitution, Amendment Five...... 2

Other:

Federal Rule of Appellate Procedure 4(a)(4)......... 2,6

Federal Rule of Civil Procedure 59(e)................ 6,7,8

Federal Rule of Criminal Procedure 17(g)........... 3,13

In the

Supreme Court of the Gnited States

Fall Term 1986

Ee eT ies

In Re Grand Jury Proceedings.

Caucus DISTRIBUTORS, INC., et. al.,

Petitioners

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE FIRST DISTRICT

Opinions Below

The opinion of the United States Court of Appeals for the

First Circuit is reported at 795 F.2d 226 (1st Cir. 1986), and

appears in the appendix hereto at A-1.

The opinion of the United States Court of Appeals for the

First Circuit denying the petition for rehearing was issued on

August 5, 1986, and appears in the appendix hereto at A-17.

Jurisdiction

The Order of the Court of Appeals which is sought to be

reviewed was entered on July 3, 1986. Petitioners’ petition for

rehearing was denied by Order dated August 5, 1986, and this

Petition for Writ of Certiorari is timely filed. This Court’s juris-

diction is invoked pursuant to 28 U.S.C. Section 1254(1).

2

Constitutional Provisions and Rules Involved

United States Constitution, Amendment Five:

No person shall be held to answer for a capital, or

otherwise infamous crime, unless on a presentment

or indictment of a Grand Jury, except in cases arising

in the land or naval forces, or in the Militia, when in

actual service in time of War or public danger; nor

shall any person be subject for the same offense to be

twice put in jeopardy of life or limb; nor shall be

compelled in any criminal case to be a witness against

himself, nor be deprived of life, liberty, or property,

without due process of law; nor shall private property

be taken for public use, without just compensation.

Federal Rules of Appellate Procedure, Rule 4(a)(4):

If a timely motion under the Federal Rules of Civil

Procedure is filed in the district court by any party: (i)

tor judgment under Rule 50(b); (ii) under Rule 52(b)

to amend or make additional findings of fact, whether

or not an alteration of the judgment would be re-

quired if the motion is granted; (iii) «nder Rule 59 to

alter or amend the judgment; or (iv) under Rule 59

for a new trial, the time for appeal for all parties shall

run from the entry of the order denying a new trial or

granting or denying any other such motion. A notice

of appéal filed before the disposition of any of the

above motions shail have no effect.

Statement of the Case

During January 1985, subpoenas were issued seeking docu-

ments from the petitioners in connection with a federal grand

jury investigation into alleged fraudulent credit card activities.

When representatives of the petitioners did not appear before

the grand jury, the government moved for an order to show

cause in the United States District Court for the District of -

Py,

Massachusetts. The district court thereupon issued the order

and scheduled a contempt hearing for March 29, 1985.

On March 29, 1985, the district court, in the absence of any

of the petitioners, entered a Judgment and Commitment hold-

ing each of the petitioners in contempt for failure to comply

with the grand jury subpoenas, and imposed a fine of $10,000

per day on each petitioner until compliance was achieved. (App.,

A-19). The order was stayed until 12:00 noon on April 2, 1955.

Jurisdiction in the District Court was predicated on 28 U.S.C.

Section 1826 and F.R.Civ.P. 17(g).

On April 3, 1985, petitioners filed a motion to vacate the

contempt order and to quash the grand jury subpoenas, alleging

a failure to properly serve the grand jury subpoenas and lack of

notice of the contempt hearing. This motion was denied that

same day by the district court. On the next day, April 4, peti-

tioners filed a motion to purge the contempt and sanctions. In

that motion, the petitioners requested that the contempt order

be vacated. The petitioners stated that while they continued to

assert their claims that proper service of the subpoenas was

never made, and that they were never served with notice of the

March 29 contempt hearing, they would now accept service of

the subpoenas. On April 9, 1985, the district court noted on the

above motion that it was deferring action on this motion based

on petitioners acceptance of service and request for a reason-

able time to respond to the subpoenas. (App., A-21). The district

court has never entered an order denying petitioners’ April 4

motion.

On April 8, 1985, the government filed a motion for partial

judgment against each petitioner, seeking an order of partial

judgment on the contempt sanctions as to each. On April 22,

1985, without hearing or further action on petitioners’ motion

to purge, the district court entered an Order of Partial Judgment

as to each petitioner in the sum of $70,000, covering the period

from April 2—8, 1985.

On May 2, 1985, petitioners filed a motion for reconsideration

of the April 22 partial judgments. On July 19, 1985, the district

4

court denied this motion, as well as two other motions which

had been filed in the interim. Petitioners thereupon filed, on

August 2, 1985, a notice of appeal with respect to the March 29,

1985, contempt judgments, the orders of partial judgment, and

two other matters. On December 4, 1985, the Court of Appeals

for the First Circuit dismissed a portion of petitioners’ appeal

upon the government's motion.

While this initial appeal was pending, the district court en-

tered a second order of partial judgment for $150,000 with

respect to petitioner Caucus Distributors, Inc. (“CDI”). CDI

took a timely appeal of this order, and this appeal was consoli-

dated with the initial appeal.

Also during the pendency of the above appeals, the grand

jury sought to require CDI to produce “index cards” which a

witness had testified were maintained by certain independent

consultants who provided services to CDI. When the govern-

ment insisted that CDI produce said index cards, CDI filed a

motion for a protective order on the ground, inter alia, that the

index cards were not the property of CDI, but rather were the

personal property of the consultants who maintained them. At

the same time that this motion was filed, the government moved

for an order to compel production of the cards.

On November 22, 1985, the district court, without holding an

evidentiary hearing, denied CDI’s motion for a protective or-

der, and also entered an order compelling CDI to produce the

index cards. (App., A-23).

On December 10, 1985, the government filed a motion for

further sanctions against CDI based on its alleged continued

contempt for failure to produce all index cards to the grand jury.

CDI filed an opposition, stating, inter alia, that in response to

the November 22 order, its Keeper of the Records appeared

before the grand jury with several thousand index cards. How-

ever, CDI stated, additional index cards were not produced

because many of the independent consultants had refused to

turn over their cards to CDI to produce to the grand jury.

Attached to CDI's opposition were letters from several attorneys

representing the consultants who stated their clients’ position

5

that they considered the index cards to be their personal prop-

erty. In its opposition, CDI also stated its desire for an eviden-

tiary hearing in which it would call as witnesses several of the

consultants who refused to turn over their cards to CDI.

Oral argument was heard on the government's motion for

further sanctions on January 17, 1986. At that hearing, the

district court specifically rejected CDI’s request for an eviden-

tiary hearing in which it would produce as witnesses several of

the independent consultants. The government's motion was

thus granted without an evidentiary hearing, and an Order for

Further Judgment and Commitment was entered by the district

court on January 22, 1986, increasing the contempt sanctions

against CDI by the sum of $5,000 per day. (App., A-24). A

timely notice of appeal was filed by CDI, and this appeal was

consolidated with the two prior appeals.

On July 3, 1986, the Court of Appeals affirmed the judgments

of contempt and the orders of partial judgment. (App., A-1).

Petitioners’ timely petition for rehearing was denied on August

5, 1986. (App., A-17).

REASONS FOR GRANTING THE WRIT

I. The Court of Appeals Incorrectly Held That A

Motion Filed By Petitioners Within Ten Days Of The

Contempt Judgment Did Not Extend The Time For

Appeal, And Thus Improperly Avoided Reaching The

Merits Of The Issue Of The Sufficiency Of The Ser-

vice Of Process Which Underlied The Contempt

Judgment.

The primary issue raised in petitioners’ appeal to the Court of

Appeals was whether the petitioners were properly served with

the grand jury subpoenas and with notice of the March 29, 1985,

contempt hearing. That issue was fully briefed by both sides,

and was the focus of oral argument before the Court of Appeals.

However, that court.utilized a procedural technicality to avoid

reaching the merits of that issue, and thus rejected petitioners

6

appeal. This Court should not permit such a result where peti-

tioners have raised an issue as fundamental as the validity of the

service which underlies a contempt ruling potentially costing

the petitioners hundreds of thousands of dollars.

In its opinion, the court of appeals held that petitioners’ April

4, 1955, motion to purge contempt was not a motion under

F.R.Civ.P. 59(e) which would serve to toll the time for appeal

under Fed.R.App.P. 4(a)(4). Therefore, the court held that the

appeal of the March 29 contempt judgment was not timely, and

that petitioners could not raise the service of process issue in

connection with their timely appeal of the April 22 and Novem-

ber 22 partial judgments which were based on the original

contempt orders. (App., A -5, 9). Such a holding is an improper

and overly technical reading of the rule, and this Court should

not permit the court below to avoid a decision on the merits of

petitioners claims in such a manner.

Federal Rule of Appeallate Procedure 4(a)(4) provides that

(i]f a timely motion under the Federal Rules of Civil

Procedure is filed in the district court by any party: (i)

for judgment under Rule 50(b); (ii) under Rule 52(b)

to amend or make additional findings of fact, whether

or not an alteration of the judgment would be re-

quired if the motion is granted; (iii) under Rule 59 to

alter or amend the judgment; or (iv) under Rule 59

for a new trial, the time for appeal for all parties shall

run from the entry of the order denying a new trial or

granting or denying any other such motion.

It has been held that substance controls in determining

whether a post-judgment motion is a motion to alter or amend

the judgment under Rule 59(e), Sunstream Jet Express, Inc. v.

International Air Service Co., Ltd., 734 F.2d 1258, 1273 (7th

Cir. 1984), and that nomenclature is not controlling. Bordallo

v. Reyes, 763 F.2d 1098, 1101 (9th Cir. 1985). The motion need

not make reference to Rule 59, Sierra On-Line, Inc. v. Phoenix

Software, Inc., 739 F.2d 1415, 1419 (9th Cir. 1984), and, in

fact, courts have held postjudgment motions that were labeled

as Rule 60(b) motions to have actuaily been Rule 59(e) motions

which tolled the appeal period. Dove v. Codesco, 569 F.2d 807,

809 (4th Cir. 1978); Alley v. Dodge Hotel, 551 F.2d 442, 444

(D.C. Cir. 1977); Vreeken v. Davis, 718 F.2d 343, 345 (10th

Cir. 1983). “In essence, . . . the issue is whether the motion, if

granted, would affect the finality of the court's disposition of the

case.” St. Paul Fire & Marine Insurance Co. v. Continental

Casualty Co., 684 F.2d 691, 693 (10th Cir. 1982).

In the present case, while petitioners’ April 4 motion was

styled a “Motion to Purge Contempt and Sanctions”, what it

specifically asked the district court to do was to vacate the

contempt order and the sanctions. See St. Paul & Marine Insur-

ance Co. v. Continental Casualty Co., supra at 693 (motions to

alter or amend judgment may properly be cast in the form of a

motion to reconsider, to vacate, to set aside, for reargument or

for rehearing); Vreeken wv. Davis, supra at 345 (motion to vacate

judgment may constitute motion to “alter or amend” within

meaning of Rule 59 (e)). Contrary to the court of appeals’ opinion

(App. A-5), the motion was meant to alter the judgment, and

was not a mere “attempt to obey the contempt order and stop

the accumulation of the fine.” Petitioners were not seeking a

cessation of further sanctions based on their compliance, but

rather were seeking the “substantive change of mind by the

court” which is the hallmark of a Rule 59(e) motion. Bordallo cv.

Reyes, 763 F.2d at 1102. While a true motion to purge would

seek a cessation of sanctions based on the fact of compliance,

petitioners motion instead sought to vacate both the contempt

judgment and sanctions. Clearly, if the motion had been granted,

there would have been no need for, nor any basis for, an appeal

by petitioners.

It has been held that

[pjost-judgment motions filed within 10 days should

where possible to construed as Rule 59(e) motions to

avoid otherwise endless hassles over proper charac-

terization.

Western Industries, Inc. v. Newcor Canada, Ltd., 70S F.2d 16,

17 (7th Cir. 1983). See also Sierra On-Line. Inc. v. Phoenix

Software, Inc., 739 F.2d at 1419 (“[wle have consistently held

8

that if a motion is served within ten days of judgment and it

could have been brought under Rule 59(e) it tolls the time for

appeal although it does not expressly invoke Rule 59”); 9 Moo-

res Federal Practice Para. 204.12[1] at 4-67 (1985) (“a motion

labeled under Rule 60(b) but filed within 10 days after the entry

of the judgment is pro tanto a motion under Rule 59(b) or (e),

and the appeal time runs from the date of the order disposing of

the motion’).

Petitioners’ motion was filed within 10 days of the contempt

order, and clearly sought to alter or amend the judgment. In

their motion, petitioners sought to preserve the service issue,

but also sought to have the contempt judgment vacated based

on expected future compliance. Failing to hold that this motion

tolled the appeal period ignores the admonition that

courts examine the real nature of motions so as to

sustain jurisdiction on appeal even where it is not

altogether free of doubt. . . . This comports with the

policy of liberally construing the Federal Rules of

Appellate Procedure to carry out Congress’ desire for

fairness in the administration of justice and a just

determination of litigation.

Bordallo v. Reyes, 763 F.2d at 1102.

It is therefore clear that in ruling that petitioners’ motion to

purge did not toll the time for appeal, the court of appeals

misapprehended the real nature of appellants’ motion and the

case law interpreting F.R.A.P. 4. This motion tolled the appeal

period at least until the district court denied petitioners’ pend-

ing motions on July 19, 1985, and the August 2, 1985 appeal of

the contempt judgment was thus timely.

In Foman v. Davis, 371 U.S. 178 (1962), this Court expressed

its disapproval of the use of procedural technicalities to avoid

decisions on the merits. Foman involved a premature notice of

appeal of a judgment of dismissal, followed by the issuance of

subsequent post-judgment orders, and finally a notice of appeal

which specified only the post-judgment orders and not the

original judgment. Although the parties briefed and argued the

EE

9

merits of the original dismissal as well as the post-judgment

motions, the Court of Appeals for the First Circuit dismissed

the appeal from the original judgment on the ground that the

second notice failed to specify that the appeal was being taken

from the judgment as well as from the later orders.

On a petition for certiorari, this Court reversed the dismissal.

In language pertinent to the present case, the Court stated that

“ltlaking the two notices and the appea! papers together. peti-

tioners’ intention to seek review of both the dismissal and the

denial of the motions was manifest.” Id. at 181. The Court

continued:

It is too late in the day and entirely contrary to the

spirit of the Federal Rules of Civil Procedure for

decisions on the merits to be avoided on the basis of

such mere technicalities. “The Federal Rules reject

the approach that pleading is a game of skill in which

one misstep by counsel may be decisive to the out-

come and accept the principle that the purpose of

pleading is to facilitate a proper decision on the mer-

its.”

Id. at 181-182 (citation omitted).

In the present case, it was clearly petitioners intention to

preserve the service of process issue for appeal. The issue was

briefed by all parties, and was the focus of the Court's attention

during oral argument. Petitioners raised the issue on several

occasions before the district court, and only took an appeal when

the court’s rulings made it clear that the contempt order and

initial monetary sanctions would stand. It would be manifestly

unfair to read the appellate rules in such a manner so as to

foreclose a decision on the merits of the appeal, and this Court

should not permit such a result to stand. Since proper service of

process is necessary to confer personal jurisdiction on a court,

F.T.C. v. Compagnie De Saint-Gobain-Pont-A-Mousson, 636

F.2d 1300, 1319 (D.C. Cir. 1980), and since “[a] judgment

entered against parties not subject to the personal jurisdiction

of the rendering court is a nullity”, Covington Industries, Inc.

v. Resintex, A.G., 629 F.2d 730, 732 (2d Cir. 1980), the con-

10

tempt judgment and subsequent partial judgments are depen-

dent on the propriety of service, and that issue should have

been decided by the court of appeals.

Il. In Upholding The District Court’s Order Holding

Petitioner CDI In Further Contempt Without Granting CDI

An Evidentiary Hearing On A Contested Factual Issue

Relating To CDI's ‘Just Cause’ Defense To Its Noncompliance

With An Order To Produce Documents, The Court Of

Appeals Sanctioned A Violation Of Petitioner's Right To Due

Process.

Petitioner CDI's appeal of the January 22, 1986 Order for

Further Judgment and Commitment raised the issue of whether

CDI was improperly denied an evidentiary hearing before being

adjudged in civil contempt. In upholding the district court's

contempt judgment, the court of appeals, in effect, affirmed a

violation of petitioner's right to due process, and such a ruling

should not be allowed to stand Petitioner's right to due process

was violated because it was adjudged in contempt of an order to

compel the production of documents without being allowed an

evidentiary hearing at which it could present its “just cause”

defense to noncompliance with the court order.

The issue that prompted petitioner's request for an eviden-

tiary hearing was the district court’s determination that index

cards subpoenaed by the grand jury were corporate records and

thus subject to their reach. In response to the government's

motion to compel the index cards, petitioner moved for a pro-

tective order, asserting that the cards were not corporate rec-

ords and were protected from compelled disclosure by the first

and fifth amendment rights of their owners. In addition to this

motion, petitioner had submitted affidavits and letters as docu-

mentary evidence that the index cards were personal property

outside the reach of the grand jury subpoena. On November 22,

1985, the District Court denied the motion for a protective

order and granted the government's motion to compel because

it found the index cards to be corporate records and thus cov-

1]

ered by the grand jury subpoena. (App., A-23). The government

then moved for further sanctions based on an alleged failure to

comply with this Order, and in its opposition, petitioner re-

quested an evidentiary hearing to call witnesses and present its

defense to noncompliance with the order. The court denied this

request, and petitioner was held in contempt and fined for each

day of noncompliance. (App., A-24).

In affirming the contempt judgment, the court of appeals

concluded that petitioner's due process rights were not violated

by the denial of an evidentiary hearing because the basic posi-

tion of the potential witnesses had been set out in the affidavits

submitted. (App., A-16). The court of appeals admitted, how-

ever, that this was a close case. (App., A-15). Considering the

potential violations of constitutional rights of petitioner and

persons not even parties to the grand jury investigation, as well

as the substantial cost to petitioner, due process requires that

petitioner be allowed to present its “just cause” defense through

an evidentiary hearing.

It has been held that party to a civil contempt proceeding has

a due process right to an “uninhibited adversary hearing” at

which he must “be allowed to probe all nonfrivolous defenses to

the contempt charge.” United States v. Alter, 482 F.2d 1016,

1024 (9th Cir. 1973); Matter of Kitchen, 706 F.2d 1266, 1273

(2d Cir. 1983). That right includes an opportunity to present

evidence and call other witnesses in its behalf. In Re Oliver, 333

U.S. 257, 273-275 (1948). “[FJailure to afford the petitioner a

reasonable opportunity to defend himself... [is] a denial of

due process of law.” Id. at 273.

In the present case, Petitioner, having raised the defense that

it did not have possession or control over the documents in

question because they were the personal property of others, and

having submitted documentary evidence to support that de-

fense, requested an evidentiary hearing to present witnesses

and further evidence on the question of ownership or control

over these documents. This is by no means a frivolous defense,

but goes to the very heart of why petitioner was unable to

comply with the court order. See Fremont Energy Corp. v.

12

Seattle Post Intelligencer, 688 F.2d 1285, 1287 (9th Cir. 1982)

(party must be provided an opportunity to show “adequate

excuse for noncompliance with subpoena).

The determination which resulted in the contempt judgment

in the present case was based on motion papers, affidavits, and

letters. This is certainly not what is contemplated by an “unin-

hibited adversary hearing.” See United States v. Alter, 482 F.2d

at 1024 (hearing largely confined to the perfunctory reception of

affidavits, a round of oral argument and some offers for the

record is not the uninhibited adversary hearing contemplated

by section 1§26(a)). This Court has also recognized that “a hear-

ing and only a hearing will elucidate all the facts and assure a

fair administration of justice.” Harris v. United States, 382 U.S.

162, 169 (1965). Therefore, the contempt judgment should be

reversed because petitioner was denied an evidentiary hearing

where it would be allowed a “meaningful opportunity to present

its defense.” United States v. Boe, 491 F.2d 970, 971 (Sth Cir.

1974). |

In a case of civil contempt, “if it can be shown that [petition-

ers] did present a genuine issue of fact regarding their .. .

inability to comply with the District Court’s orders, they [have]

a due process right to a full, impartial hearing with ... an

opportunity to present this defense.” Brotherhood of Loc. Fire

& Eng. v. Bangor & Aroostook R. Co., 380 F.2d 570, 578 (D.C.

Cir. 1967), cert. denied, 389 U.S. 970 (1967). By way of analogy,

the Ninth Circuit's discussion in Cohen v. United States, 378

F.2d 751 (9th Cir. 1967) is instructive in determining the thresh-

hold when an evidentiary hearing is required. In that case, the

appellant raised allegations of illegal monitoring of telephone

calls, the result of which led to his indictment on gambling

charges. In determining the requisite specificity required to

warrant an evidentiary hearing on the allegations, the Ninth

Circuit stated:

The question is whether the allegations in the moving

papers, including affidavits if any are filed, are suffi-

ciently definite, specific, detailed, and nonconjectural

to enable the court to conclude that a substantial claim

13

is presented. If the allegations are sufficient, and fac-

tual issues are raised, a hearing is required.

378 F.2d at 761.

Applying the Ninth Circuit's standard here, it is clear that

petitioner was entitled to an evidentiary hearing. The petition-

ers moving papers, affidavits and letters were sufficiently de-

tailed in presenting its defense of noncompliance with the court

order to enable the court to conclude that a substantial claim

was presented. For example, the affidavits were of the individ-

ual owners of the index cards in question, and made clear that

the index cards are maintained and controlled by them; one

affidavit also states that the affiant does not make the names of

his associates which are maintained on the cards available be-

yond his personal use. These are significant factors indicating

that these cards are the personal property of the individual

owners rather than corporate records of the petitioner. See

Grand Jury Subpoena Duces Tecum Witness v. United States,

657 F.2d 5, 8 (2d Cir. 1981).

At the very least, the documentary evidence submitted to the

district court presented a substantial question concerning

whether the documents at issue were corporate records of peti-

tioner which petitioner was required to produce to the grand

jury. If said documents were not petitioner's records and thus

were not within petitioner's possession, custody, or control,

petitioner would have had “adequate excuse” or “just cause” for

failing to produce the documents pursuant to the grand jury

subpoena and the court's order, and it could thus not properly

be held in continuing contempt for its failure to produce. See

Fremont Energy Corp. v. Seattle Post Intelligencer, 688 F.2d

1285, 1286-1287 (9th Cir. 1982); United States v. Powers, 629

F.2d 619, 629 (9th Cir. 1980); Fed.R.Cr.P. 17(g). It is clear that

a hearing was required to allow petitioner to present all the

evidence to determine the factual issues raised. Only an eviden-

tiary hearing could have provided the court with full insight and

understanding to make a fair decision. See Harris v. United

States, supra at 169.

14

Furthermore, the denial of an evidentiary hearing will violate

the constitutional rights of the owners of the index cards without

allowing them a due process right to be heard. The issue of

whether the index cards are corporate records or personal prop-

erty has not been fairly settled. For example, the affidavits

submitted by petitioner assert that the subpoenaed index cards

are the respective affiants’ personal property. Both the affidavits

and letters submitted to the court by petitioner express concern

that the constitutional rights of the owners will be violated if

they are forced to produce their personal property to the grand

jury. The index cards contain names of political associates of the

owners and, by compelling the production of these cards, the

First Amendment right to free political association will be in-

fringed. The breach of confidentiality and trust by the owners of

the cards to the persons named on those cards will have an

adverse effect on their political associations.

In addition, the compulsion of the index cards potentially

violates the Fifth Amendment rights of the owners. By requiring

petitioner to obtain the personal property of the individual

owners and turn it over to the grand jury, the government

would be permitted to obtain the records at issue through a

subpoena to petitioner and, in effect, negate any potential Fifth

Amendment claims the individual owners might possess. It is

well settled that the Fifth Amendment privilege against self-

incrimination does not extend to corporations. Grand Jury Sub-

poena Duces Tecum Witness v. United States, supra, 657 F.2d

at 6. “[T]he Fifth Amendment prevents the government from

subpoenaing an individual's incriminating papers that are in his

possession and are held by him in an individual, as opposed to

representative capacity.” United States v. (under seal), 745 F.2d

$34, 840 (4th Cir. 1984). If petitioner were required to obtain

these documents from the individual owners and turn them over

to the grand jury, these individuals would be prevented from

claiming whatever protections might be afforded them by the

Fifth Amendment.

From all the foregoing, it is evident that the court of appeals

should have reversed the contempt judgment of the district

court because an evidentiary hearing was improperly denied

15

prior to judgment of contempt, and in violation of petitioner's

right to due process. This court should issue a writ of certiorari

to correct this erroneous ruling.

Conclusion

The Supreme Court of the United States should grant the

Petitioner a Writ of Certiorari to review all of the issues raised

herein.

Respectfully submitted,

MATTHEW FEINBERG

Segal, Morgan & Feinberg

210 Commercial Street

Boston, Massachusetts 02109

(617) 720-4444

A-]

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

No. 85-1762

IN RE GRAND JURY PROCEEDINGS

CAMPAIGNER PUBLICATIONS, INC., ET AL.,

Appellants.

No. 86—1047

No. 86—1170

IN RE GRAND JURY PROCEEDINGS

CAUCUS DISTRIBUTORS, INC.,

Appellant.

APPEALS FROM THE UNITED STATES DISTRICT

COURT

FOR THE DISTRICT OF MASSACHUSETTS

{Hon. A. David Mazzone, U.S. District Judge]

Before

Bownes, Breyer and Torruella,

Circuit Judges.

July 3, 1986

BOWNES, Circuit Judge. These thiee consolidated appeals

have been taken from judgments of civil contempt against ap-

pellants Campaigner Publications, Inc., Fusion Energy Foun-

dation, National Democratic Policy Committee, and Caucus

Distributors, Inc., all organizations associated with Lyndon

LaRouche. The contempt judgments were imposed by the

United States District Court for the District of Massachusetts

due to the failure of the appellants to cooperate with a grand

jury investigation into possible credit card fraud by these and

other LaRouche related entities. These organizations are sus-

pected of obtaining hundreds of thousands of dollars in interest-

A-2

free loans from credit card banks. The loans were allegedly

obtained by fraudulently altering small credit card purchases or

donations from persons interested in Lyndon LaRouche to re-

flect a charge for a large sum. The sums thus obtained were

ultimately returned to the credit card bank sans accrued interest

after the owner of the credit card informed the bank that the

charge was not authorized.

Contempt proceedings began in district court in March of

1985. By late January of 1986, three separate judgements of

contempt had been entered, each relating to a different period

during which certain of the organizations had refused to coop-

erate with the grand jury. Appeal No. 85-1762 was filed by all

four appellants and pertains to the intial contempt judgment

and the first partial judgment, both entered in the spring of

1985. Appeal No. 86-1047 involves the second order of partial

judgment entered in November, 1985. Appeal No. 86-1170

concerns the further judgment and commitment entered in

January, 1986. Appeals Nos. 86-1047 and 86-1170 were brought

by Caucus Distributors only. We shall consider each of these

judgments in turn.

Appeal No. 85-1762

The events leading to the intial contempt order and first

partial judgment began on January 30, 1985, when the United

States Marshals attempted to serve keeper of the records grand

jury subpoenas at the New York headquarters of six LaRouche

related organizations: Campaigner Publications, Inc.; Caucus

Distributors, Inc.; Fusion Energy "oundation; National Demo-

cratic Policy Committee; The LaRouche Campaign; and Inde-

pendent Democrats for LaRouche.; The Treasurer of The

LaRouche Campaign and Independent Democrats for La-

Rouche told the marshals that no one was authorized to accept

service at that time. The next day a news article about the

subpoenas appeared in a Campaigner publication, New Solidar-

itv. On February 6, 1985, one day before the return date of the

subpoenas, the United States Marshals again attempted to serve

the subpoenas. The subpoenas were left with a receptionist who

Nay Hi,

ALA

A-3

would not allow the marshals into the office area but told them

that she was authorized to accept service. At the grand jury

hearing the next.day, no witnesses appeared. On February 5,

1985, the United States Attorney sent letters by overnight mail

to the keepers of the records of the organizations rescheduling

the grand jury appearances for February 14, 1985. Again, no

witnesses for appellants appeared when the grand jury recon-

\ ened.

The government then moved for an order to show cause In

the District Court of Massachusetts and served the motion on

the four organizations. The district court granted the motion

and set a hearing for March 29, 1985. On March 19, 1989, the

order was served on a woman at appellants’ office who stated

that appellants would receive the order from her. Prior to the

March 29 hearing, the district court received correspondence

from attorneys for some of the subpoenaed organizations re-

questing a hearing and claiming that service of process for both

the subpoenas and the show cause order had not been com-

pleted on those organizations. Appellants, however, did not

appear at the March 29 show-cause hearing. At that hearing,

the district court found that appellants had each been served

with the grand jury subpoena and that their failure to comply

was without just cause. The court then found each of the four

organizations in contempt and ordered each ‘to pay the sum of

$10,000 per day to the Clerk of the United States District Court

for Massachusetts until such time as leach organization}

shall fully comply with said subpoena.” The orders were then

stayed until April 2, 1985.

On April 3, appellants, still not in compliance with the sub-

poena, filed a motion to vacate the contempt order and to quash

the subpoenas. A hearing was held that day and the court denied

the motion, finding that adequate service had been made. On

April 4, 1959, appellants filed a motion to purge contempt and

sanctions, which stated that they “hereby accept service to

appear before the grand jury. On April 9, 1955, the court ruled

that “{iln light of the acceptance of service by the respondents

and their request for a reasonable time to respond to the sub-

poenas, | will defer action on this motion pending notice or a

|

A-4

report from either party that a hearing before the Grand Jury

has been scheduled.” Compliance with the subpoena, however,

did not follow and, on April 22, 1985, the district court granted

the government's motion for a partial judgment (the first partial

judgment) in the sum of $70,000 against each appellant for

failure to comply with the subpoena for the seven days between

April 2 and April 8, 1985. Appellants had not paid any of the

$10,000 per day fine imposed by the court.

On May 2, 1985, appellants filed a motion for reconsideration

regarding the orders of partial judgment which indicated that

compliance had commenced on April 18, 1985. On the same

day, May 2, the government obtained from the clerk of the

district court a certification for registration in another district of

the initial contempt judgment issued March 29. The certifica-

tion stated that no notice of appeal had been timely filed as to

the March 29 judgment. This judgment was then registered in

the Soithern District of New York and a restraining notice

obtained freezing a number of appellants’ bank accounts. The

face of the restraining notice states that on March 29. 1985. a

judgment in the amount of $70,000 had been obtained. On May

13, 1985, appellants filed a motion to annul the certification and

for sanctions. On May 21, 1985, appellants filed a motion to

quash the subpoena duces tecum. That same day a hearing was

held on the pending motions. On July 19, 1985, the district

court issued an order denying appellants’ motion to purge con-

tempt, filed April 4, their motion to reconsider the first partial

judgment, filed May 2, their motion to annul certification, filed

May 13, and their motion to quash the subpoena, filed May 21.

On August 2, 1985, appellants appealed the March 29 initial

contempt judgment, the April 22 partial judgment for $70,000.

and the July 19 denials of the motions to reconsider, to annul.

and to quash.

In an order dated December 5, 1985, this court dismissed the

appeal of the March 29 initial contempt judgment as untimely

and the denial of the motion to quash as nonappealable. The

appeal of all the other orders and judgments was permitted to

proceed.

We now focus on the April 22 partial judgment for $70,000.

Appellants’ sole argument against the April 22 judgment is

based upon its attack on the underlying contempt order issued

March 29. Appellants claim that they were never properly served

with either the grand jury subpoena or the order to show cause

and that since the $70,000 partial judgment rests upon an invalid

order, it too is invalid. Appellants also attack this court's deci-

sion to dismiss the March 29 judgment as untimely, arguing that

because the motion to purge contempt was still technically

pending until it was officially denied on July 19, the time for

appeal was tolled during this period under Federal Rule of

Appellate Procedure 4(4).'

Our December 5, 1985 decision to dismiss the appeal of the

March 29 order is binding upon us under the doctrine of the

law of the case. See generally J. Moore, J. Lucas, & T. Currier,

1B Moore’s Federal Practice § 0.404 (1984). To elucidate our

previous order, however, we point oui that while a motion to

alter or amend the judgment under Federal Ryle of Civil Pro-

cedure 59e) will serve to toll the time for appeal under Federal

Rule of Appellate Procedure 4(4), only motions which draw “into

question the correctness of the judgment [are] . . . functionally

a motion under Civil Rule 59(e).” 9 Moore’s Federal Practice

204.12{1] at 4-67. Appellant's motion to purge contempt was

not meant to alter the judgment, rather it was an attempt to

obey the contempt order and stop the accumulation of the fine.

As such, it could not toll the time for appeal.

The consequence of our dismissal of the appeal of the March

29 judgment for appellants is that they are precluded from

arguing the service of process issues either as to the grand jury

subpoenas or the show cause order. Nor can appellants boot-

Federal Rule of Appellate Procedure 4(4) provides in pertinent part:

If a timely motion under the Federal Rules of Civil Procedure is filed in

the district court by any party: (i) for judgment under Rule 50(b), (ii) under

Rule 52(b) to amend or make additional findings of fact, whether or not an

alteration of the judgment would be required if the motin is granted, (iii

under Rule 59 to alter or amend the judgment; or (iv) under Rule 59 for a

new trial. the time for appeal for all parties shall run from the entry of the

order denying a new trial or granting or denying any other such motion

A-6

strap these issues into their appeal of the April 22 partial judg-

ment. That judgment was based on appellants being in contempt

for the period of April 2 through April 8. Since appellants do

not contest the actual contempt finding, their appeal of the April

22 judgment fails.

We turn next to the appeal of the denial of appellants’ motion

to annul the certification. Appellants’ basic argument is that the

district court's certification of the March 29 contempt judgment

was premature. Certification of judgments is governed by 28

U.S.C. § 1963 (1982):

A judgment in any action for the recovery of money

or property now or hereafter entered in any district

court which has become final by appeal or expiration

of time for appeal may be registered in any other

district by filing therein a certified copy of such judg-

ment.

A judgment may not be certified for registration, therefore, if

the time for appeal has not yet expired. Appellants have argued

below and before us that the time for appeal of the March 29

judgment had not expired either because of the pendency of the

motion to purge or because a motion for reconsideration of the

April 22 partial judgment was filed on May 2, the same day as

the certification and within the ten-day appeal period. Neither

of these arguments has any merit. As already discussed, the

pendency of the motion to purge, if indeed it was really pend-

ing, did not serve to toll the time for appeal of the March 29

judgment. Nor could a motion for reconsideration of the April

22 judgment, even if filed within ten days of that judgment,

have any effect upon the appeal period for the March 29 judg-

ment.

Nonetheless, we must find that the certification was prema-

ture. Our finding rests upon the rule, not referred to by any of

the parties, that, where the United States is a party in a civil

case, the time for filing a notice of appeal by any party is

extended to sixty days. Fed.R.App.P. 4(a)(1).2 Since the United

* Federal Rule of Appellate Procedure 4(a)(1) provides:

A-7

States initiated the contempt proceedings and requested the

judgments, it is clearly 4 party to these proceedings. Conse-

quently, the time for appeal of the March 29 judgment had not

expired on May 2 when the clerk’s office certified the judgment.

Although appellants did not specifically point the court to the

sixty-day appeal period, they did make the argument that the

certification was premature because the period for filing a notice

of appeal had not expired. This was sufficient to bring to our

attention what, in any event, must be considered “plain error.”

See, e.g., MacEdward v. Northern Electric Co., Ltd., 595 F.2d

105, 109-10 (2d Cir. 1979) (“an appellate court has the power to

notice fundamental errors at trial even if the parties do not raise

them on appeal”); Harris v. Smith, 372 F.2d 806, 815 (8th Cir.

1967) (“It is within the discretion of this court to notice plain

error in civil appeals”). Cf. Morris v. Travisono, 528 F.2d 856,

859 (Ist Cir. 1976) (court has power to review jury instructions

to which no objection was made, but “rule shouild be applied

sparingly’). We, therefore, find that the certification of the

March 29 judgment was improper. We, of course, do not have

the power to lift the restraining notice issued by the United

States District Court for the Southern District of New York

freezing appellants’ bank accounts. That court, however, should

be informed that the certification received was invalid.

We also note that the restraining notice issued by the South-

ern District of New York indicates that the March 29 judgment

was for $70,000. That judgment, however, was not for $70,000,

but for $10,000 per day starting April 2 until there was compli-

ance with the subpoena. It was not until the April 22 judgment

that there was any definite determination by the court that

In a civil case in which an appeal is permitted by law as of right from a

district court to a court of appeals the notice of appeal required by Rule 3

shall be filed with the clerk of the district court within 30 days after the date

of entry of the judgment or order appealed from; but if the United States or

an officer or agency thereof is a party, the notice of appeal may be filed by

any party within 60 days after such entry. Wa notice of appeal is mistakingly

filed in the court of appeals, the clerk of the court of appeals shall note

thereon the date on which it was received and transmit it to the clerk of the

district court and it shall be deemed filed in the district court on the date so

noted. [Emphasis added. |

A-8

compliance had not occurred and a specific dollar judgment was

issued. The April 22 $70,000 judgment could not be certified on

May 2 under any of the time limits of the rule. It appears that

either the clerk's office or the United States Attorney may have

mistakenly forwarded the April 22 judgment to the Southern

District of New York with the certification of the March 29

judgment, leading that court to believe that the $70,000 judg-

ment was final. This error should be corrected.

Appeal No. 86-1047

In this appeal, Caucus Distributors challenges the district

court's grant of a second partial judgment on November 22,

1985, while the appeal of the initial contempt order and the first

partial judgment were still pending. We begin by setting out

the events leading to the second partial judgment. The United

States‘ first moved on April 25 for a second partial judgment for

noncompliance with the grand jury subpoena during the period

of April 9 through April 24. No action was taken by the district

court on this motion. In the meantime, appellants filed their

notice of appeal as to the contempt judgment and the first partial

judgment. Appellants then unsuccessfully sought a stay of the

judgments and execution on the judgments from both the dis-

trict court and this court. Sometime during the fall of 1985, a

keeper of the records for Caucus Distributors did appear before

the grand jury. The government felt, however, that this still did

not constitute compliance because the witness had only been

appointed to that position a few days before testifying and could

not provide the requested information. The government, there-

fore, renewed its motion for a second partial judgment in the

sum of $150,000 for Caucus’ failure to comply with the subpoena

between April 9 and April 25. This motion was granted by the

district court on November 22. On December 5, this court

issued an order dismissing appellants’ appeal of the March 29

contempt judgment as untimely.

Appellant's challenge the second partial judgment on two

grounds: the same service of process arguments raised against

the first partial judgment and the argument that the district

A-9

court ought not to have issued a second partial judgment while

the appeals of the underlying contempt judgment and the first

partial judgment were pending. As to the first ground, the

service of process issues can no more be raised against the

second partial judgment than they could against the first partial

judgment. This leaves for consideration appellant's claim that

the district court had no authority to issue the second partial

judgment because of the pending appeals.

While the filing of a notice of appeal “divests the district court

of its control over those aspects of the case involved in the

appeal,” Griggs v. Provident Consumer Discount Co., 459 U.S.

56, 58 (1982), an untimely, impermissible or frivolous appeal

does not vest jurisdiction in the court of appeals. United States

v. Ferris, 751 F.2d 436, 440 (1st Cir. 1984); Ruby v. Secretary

of the United States Navy, 365 F.2d 385 (9th Cir. 1966); Benitez

.. Bank of Nova Scotia, 125 F.2d 519, 522 (Ist Cir. 1942). We

have found some authority open to the interpretation that a

timely appeal of the March 29 underlying contempt judgment

would have divested the district court of jurisdiction to issue

further partial judgments stemming from that contempt judg-

ment. Cf. United States v. Thorp, 655 F.2d 997 (9th Cir. 1981)

(district court divested of authority to impose criminal contempt

where appeal of civil contempt for similar conduct in same

proceedings was still pending); but cf. Hoffman, Etc. v. Beer

Drivers & Salesman’s Local Union No. 888, 536 F.2d 1268, 1276

(9th Cir. 1976) (“in the kinds of cases where the court supervises

a continuing course of conduct and where as new facts develop

additional supervisory action by the court is required, an appeal

from the supervisory order does not divest a district court of

jurisdiction to continue its supervision, even though in the

course of that supervision the court acts upon or modifies the

order from which the appeal is taken”). In this case there was

no timely appeal of the March 29 judgmeni. Nor can the timely

appeal of the April 22 judgment be considered to in any way

draw into question the validity of the November 22 judgment.

Each was based on a finding that the appellant was in contempt

during a particular period of time. Appellant's attempt to boot-

strap the service of process issues into its appeal of both partial

A-10

judgments will not work to divest the district court of its contin-

uing authority to enforce the initial contempt order.

Appeal No. 86-1170

In this appeal, Caucus Distributors challenges the further

judgment and commitment issued by the district court on Jan-

uary 22, 1986. finding Caucus in contempt of a court order to

compel and fining it an additional $5,000 per day until full

compliance was reached. The government had moved for the

order to compel on November 12, 1985. At issue was the pro-

duction by Caucus of index cards related to fund raising activi-

ties. Grand jury testimony by the keeper of records had revealed

that fund raisers working at Caucus offices around the country

kept the names of potential and actual donors on index cards,

along with various other information including amounts do-

nated. This information was of particular interest to the grand

jury in its investigation into the possible involvement of Caucus

in the credit card overcharge scneme. The keeper of the rec-

ords, however, did not turn these index! cards over to the grand

jury. He claimed that he could not turn the cards over because

Caucus was not in possession of the cards. The cards were in

the hands of the individual fund raisers, who allegedly consid-

ered themselves and were considered by Caucus to be indepen-

dent consultants rather than employees of Caucus. The fund

raisers claimed the cards as their personal property and asserted

that both their first and fifth amendment rights would be in-

fringed if they were compelled to turn them over. Caucus fully

concurred in and supported the claims of the individual fund

raisers.

The government asserted, as the basis for its motion to com-

pel, that the index cards were corporate documents since they

were used for corporate fund raising by persons working solely

for Caucus and paid a regular salary by Caucus. Caucus re-

sponded to the government's motion to compel with a motion

for a protective order asserting that the cards were not corporate

records and were protected from compelled disclosure by the

first and fifth amendment rights of their owners. This motion

is.

A-l]

was accompanied by two detailed affidavits from Caucus fund

raisers claiming that they were self-employed political consult-

ants and that the index cards were their personal property. The

affidavits stated that some of the cards contained the names of

longtime personal political contacts obtained long before any

association with Caucus and that most of the information on the

cards was personal in nature. The affidavits asserted that having

to reveal this information to the grand jury would invade the

privacy of these contacts, subject them to harassment by the

FBI investigating the credit card scam, violate the first amend-

ment rights of both the fund raisers and the contacts, and

destroy the professional credibility of the fund raisers with their

contacts. The motion also contained affidavits from versons who

had loaned money to the LaRouche campaign and had been

intimidated by visits from FBI agents investigating the credit

card scam.

On November 22, the district court granted the government's

motion to compel, finding that the index cards were corporate

documents covered by the subpoena and that Caucus was re-

quired to produce these cards under penalty of further sanc-

tions. Four days later, the United States Attorney wrote Caucus’

attorney stating that he would not conduct indiscriminate inter-

views with everyone named on the cards and that he would be

willing to review cards which did not contain any fund raising

information and exempt them from production. Caucus then

moved in district court for a protective order limiting the gov-

ernments investigative use of the cards to contributors who

voluntarily contacted the government concerning the commis-

sion of a criminal act. On December 6, the district court entered

a memorandum and order denying Caucus’ second motion for a

protective order. The district court stated:

After several hearings and exchanges of documents, I

am familiar with the grand jury investigation. I have

stated my concern, and T recognize the potential for

improper use of the grand jury. Because of the ex

parte and non-adversarial nature of its proceedings,

and given the importance of the First Amendment

° ’ .

rights asserted here by the movant, I have reviewed

A-12

portions of the grand jury transcripts in camera and

have called for affidavits and representations and I am

satisfied that the grand jury proceedings are directed

to a legitimate inquiry into alleged criminal activity

and the proceedings are being conducted in a preper,

even if irregular course, a course for which the contin-

uing contentions of the movant and others aligned

with it, are at least partially responsible.

On December 11, the government moved for a third partial

judgment on the original contempt order and an additional

$5,000 per day fine for Caucus’ failure to comply with the order

to compel. On December 16, the government moved for an

order to show cause why Harley Schlanger, an officer and direc-

tor of Caucus, should not be held in contempt for failure to

comply with the subpoena and the order to compel. The govern-

ment claimed that Schlanger and Caucus had either sanctioned

or encouraged the refusal of the fund raisers to turn over the

index cards and had not taken any real steps to force the fund

raisers to turn them over, such as disciplining them. A hearing

was scheduled for December 30 on this motion. The motion for

the third partial judgment was granted on December 19.

In its opposition to the government's motion for further sanc-

tions, Caucus requested that the district court reconsider its

November 22 determination that the index cards were corporate

documents. Caucus offered to bring up some of the fund raisers

to testify on this issue, although in a footnote it indicated that

some of the fund raisers had requested a court order prohibiting

the government from serving personal subpoenas upon them

while they were in Boston. The possibility of such subpoenas,

Caucus asserted, would have a chilling effect on its ability to get

these fund raisers to testify. Although both Caucus’ motion for

reconsideration and the show cause order were considered at

the December 39 hearing, no testimonial evidence was taken.

A second hearing was held on January!17, 1986, to consider the

governments motion for further sanctions. The district court

denied Caucus’ request for an evidentiary hearing and granted

the government's motion for an additional $5,000 per day fine

A-13

for Caucus’ continuing failure to either produce the index cards

or seriously attempt to get their fund raisers to release them.

Caucus now argues that the district court violated its due

process rights by adjudging it in contempt of the order to

compel without allowing it an evidentiary hearing at which it

could present the testimony of the fund raisers on the question

of whether the index cards were personal or corporate docu-

ments. Caucus does not present as a question for review the

district court’s determination that the index cards were corpo-

rate documents. It asserts, however, that the evidence it sub-

mitted in the form of affidavits and letters sufficiently cast doubt

upon the ownership of the index cards so as to require the

district court to hold an evidentiary hearing on the question.

There is general agreement that due process requires that a

potential contemnor be given notice and a hearing regardless of

whether the contempt is civil or criminal in nature, In re Oliver,

333 U.S. 257, 275 (1948): In re Sadin, 509 F.2d 1252, 1255 (2d

Cir. 1975); United States v. Alter, 482 F.2d 1016, 1023 (9th Cir.

1973), unless the contempt is committed in open court and

tends to “demoralize” the court’s authority, in which case pun-

ishment can be imposed summarily, In re Oliver, 333 U.S. at

274-75; Ex Parte Terry, 128 U.S. 289 (1888). Whether a con-

temnor has the right to call witnesses at an evidentiary hearing

before being adjudged in civil contempt and subjected to a fine,

however, is a question which has rarely been addressed by the

courts. In the context of crimina! contempt, where the penalty

was imprisonment for a set period of time, the Supreme Court

has said that the right to a hearing included “the assistance of

counsel, if requested, and the right to call witnesses to give

testimony, relevant either to the issue of complete exculpation

or in extenuation of the offense and in mitigation of the penalty

to be imposed.” Cooke v. United States, 267 U.S. 517, 537

(1925). See also In re Green, 369 U.S. 689, 691-93 (1962)

(quoting Cooke). In cases involving the imposition of civil con-

tempt in the grand jury context, where the penalty has been

confinement of the uncooperative witness until there is compli-

ance with the grand jury subpoena, due process has been con-

sidered by many courts to require an “uninhibited adversary

A-14

hearing’ where the witness can “probe all nonfrivolous defenses

to the contempt charge.” United States v. Alter, 482 F.2d 1016,

1024 (9th Cir. 1973).

Nonetheless, in the civil contempt context, less than full

adversary hearings have been held to comport with due process

under certain circumstances. The Second Circuit has held that

a full adversary hearing, including the right to call witnesses, is

not necessary where the facts surrounding the contempt are

undisputed and cannot be further elucidated by evidence. In re

Rosahn, 671 F.2d 690, 695 (2d Cir. 1982) (contempt stemming

from refusal to submit to photographing and fingerprinting and

to provide hair and handwriting samples does not require full

adversary hearing). The Seventh Circuit has also found that an

evidentiary hearing is not required in a civil contempt proceed-

ing where documentary evidence clearly established the con-

tempt and no material issues of fact were raised. Commodity

Futures Trading Commission v. Premex, Inc., 655 F.2d 779,

782 (7th Cir. 1981). It has also been held that failure to request

an evidentiary hearing waives any right to claim a due process

violation on appeal. American Fletcher Mortgage Co., Inc. v.

Bass, 688 F.2d 513, 520 (7th Cir. 1982). A full evidentiary

hearing has been refused by this court when it would seriously

impair the grand jury process. In re Lochiatto, 497 F.2d 803,

807-08 (Ist Cir. 1974) (secret and sensitive nature of surveil-

lance information may require district court to review material

in camera rather than allow defendant access).

A right to call witnesses or to have an evidentiary hearing is

most often found where controverted factual issues lie at the

heart of the contempt. Accord United States v. Alter, 484 F.2d

at 1023; Brotherhood of Locomotive Firemen and Enginemen v.

Bangor & Aroostook Railroad Co., 380 F.2d 570, 578 (D.C.

Cir.), cert. denied, 389 U.S. 970 (1967). In a recent case before

the Second Circuit involving the credibility of a witness who

claimed he could not remember information sought by the

grand jury, the court held that

[t]he witness should also have the right to call any

other witnesses whose testimony might be relevant to

A-15

his defense. Of course, the district judge may require

that before a third party is permitted to take the

stand, an offer of proof demonstrating the relevancy

of the proposed testimony be made and, considering

the exigencies of any grand jury procecding, the dis-

trict judge would have very broad discretion. In ad-

dition, counsel for the allegedly recalcitrant witness

should have the opportunity to present the defense’

view of the evidence and of any legal issues, either by

oral argument or in memoranda. Again, it is within

the discretion of the court to control the extent and

form of these presentations.

In Re Kitchen, 706 F.2d 1266, 1273 (2d Cir. 1983).

We must now determine whether the district court’s denial

of an evidentiary hearing denied Caucus due process or whether

the particular circumstances of this contempt justified less than

a full adversary hearing. It is Caucus’ contention that because

the factual dispute about the nature of the index cards was the

key to its “just cause” defense for noncompliance, the district

court should have allowed some of the fund raisers to testify

concerning their contention that the index cards were personal

property. The government contends that in light of the detailed

affidavits offered by two of the fund raisers, as well as the

numerous attorney letters asserting the personal ownership of

the index cards by various other fund raisers, testimony by such

individuals would not have added anything to Caucus’ defense.

The government also points out that, although Caucus offered

to have these individuals come to Boston to testify, it requested

that the district court protect them from individual subpoenas

and suggested that failure to do so might prevent such testi-

mony. The government suggests that this request for an eviden-

tiary hearing was another of Caucus’ “stonewalling” tactics, that

the witnesses would almost certainly not have appeared, and

that after almost a year of supervising this grand jury investiga-

tion the district court could properly avoid this predictable and

unnecessary delay.

| Although this is a close case, we agree with the government

_ that Caucus’ due process rights were not violated by the denial

A-16

of an opportunity to have the fund raisers testify about the

nature of the index cards. The basic position of the fund raisers

was set out in the affidavits and letters. The fundamental ques-

tion which the court had to decide was whether the cards were

sufficiently involved in Caucus’ business of fund raising so that

they could be considered corporate documents regardless of

their prior uses or ownership. Some courts which have been

faced with a question as to the personal or corporate nature of

documents have resolved the question by an in camera inspec-

tion of the documents themselves. E.g., United States v.

Mackey, 647 F.2d 898, 899 (9th Cir. 1981). This would have

been the best way to determine the status of these documents.

Caucus did not, however, offer to allow the district court to

inspect the index cards. Because of the likely repetitiveness of

the fund raisers’ testimony, the real probability that they would

not appear at all, and the overall delay in the grand jury pro-

ceedings already caused by Caucus’ and the other organizations’

refusal to produce anything until forced to do so, we find the

district court's decision to deny an evidentiary hearing did not

violate Caucus’ due process rights.

Affirmed in part, reversed in part. Remanded to the district

court for further proceedings consistent with this opinion.

Adm. Office, U.S. Courts—Blanchard Press. Inc., Boston, Mass.

A-17

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

No. 85-1762

IN RE GRAND JURY PROCEEDINGS

CAMPAIGNER PUBLICATIONS, INC., ET AL.

Appellants.

No. 86-1047

No. 86-1170

IN RE GRAND JURY PROCEEDINGS

CAUCUS DISTRIBUTORS, INC.,

Appellant.

Before

Bownes, Breyer and Torruella,

Circuit Judges.

| ORDER OF COURT

Entered August 5, 1986

}

rhe petition for rehearing is denied.

.

| Appellants argue that our opinion incorrectly considered the

April 4, 1985 motion to purge contempt as something other than

/ a Rule 59 motion to alter or amend the contempt judgment. If

it had been a Rule 59 motion, the period for appeal might have

been tolled sufficiently so as to preserve their appeal on the

service of process issues. We are convinced that this was not a

| 6 Rule 59 motion. To begin with, a Rule 59 motion to vacate the

contempt order and quash the subpoena was filed and denied

on April 3, 1985. It seems unlikely that appellants would have

filed the exact same motion the very next day. Furthermore,

the motion was not treated as a Rule 59 motion by the district

court: if it had been, it would have been summarily denied

again. The district court viewed it, as we did, as a request to

A-15

avoid che consequences of an acknowledged contempt by obey

ing the subpoena. That is precisely why the district court de

layed its decision. It wanted to see whether compliance woul

follow. Appellants may have intended to preserve their right

on the service of process issues, but those issues were not befor

the district court on April 4, 1985.

Appellants also argue that the service of process issues wer

still before the district court when it granted the partial sur

mary judgments and that these issues were properly brought u

for review through the timely appeal of these judgments. Th

partial judgments were simple monetary awards based upo

noncompliance with the subpoena during a specified period «

time. Once the district court denied the April 3, 1985 motion t

vacate and appellants accepted service as part of their motion t

purge on April 4, 1985, so as to stop the contempt ciock, th

service issue was settled for the district court. Although a finc

ing on appeal of lack of proper service of the subpoena woul

have undercut these judgments, nonetheless, that issue we

decided separately and had to be appealed separately.

By the Court,

FRANCIS P. SCIGLIANO

Clerk.

By: Richard W. Gordon

Chief Deputy Clerk

icc: Messrs. Feinberg, Aronson and Small

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

IN RE GRAND JURY SUBPOENA M.B.D. No. 85-203

‘Campaigner Publications, Inc.)

JUDGMENT AND COMMITMENT

On March 14, 1985, this Court, “Ordered that on or before

the 29th day of March, 1955 at 9:30 a.m. Campaigner Publica-

tions, Inc. shall appear before this Court and show any cause

why he should not be held in contempt of this Court for refusing

to comply with the Grand Jury subpoena duces tecum lawfully

issued and served upon it by failing to appear and to answer

questions or produce decuments before the Grand Jury, pro-

vided that a copy of this Order is served upon Campaigner

Publications, Inc. or its counsel on or before the 26th day of

March, 1955.”

Said Order was served on Campaigner Publications, Inc. on

March 19, 1985, and no response has been received. At the

hearing held pursuant to the Order on March 29, 1985, Cam-

paigner Publications, Inc. failed to appear or otherwise provide

any justification for its continued failure to comply with the

subpoena Having reviewed the record in this case, the Court

finds:

1. The witness, Keeper of the Records of Campaigner Publi-

cations, Inc., has been served with a lawful and proper grand

jury subpoena calling for the production of certain relevant

records.

2. Said witness has refused, without just cause or adequate

excuse, to comply with this subpoena, in that the witness has

repeatedly failed to appear or make any other appropriate re-

sponse.

3. Said witness was served with the government's Motion for

an Order to Show Cause on March 15, 1985, by certified mail.

A-20

4. Said witness received adequate notice pursuant to Rule

42(b), Fed.R.Crim.Proc., when the United States Marshals

served this Court's Order to Show Cause on it on March 19,

19S5.

IT IS THEREFORE ADJUDGED that Campaigner Publica-

tions, Inc. is in direct and continuing contempt of this Court for

its failure to comply with the grand jury subpoena issued on

February 7, 1985.

IT IS THEREFORE ORDERED that Campaigner Publica-

tions, Inc. be and hereby is ordered to pay the sum of $10,000

per day to the Clerk of the United States District Court for

Massachusetts until such time as Campaigner Publications. Inc.

shall fully comply with said subpoena.

This ORDER is stayed until 12:00 noon, Tuesday, April 2,

1955.

Dated March 29, 1985 A. David Mazzone

UNITED STATES DISTRICT COURT

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

IN RE GRAND JURY SUBPOENA M.B.D. NO. 85-204, 205,

206, 203

MOTION TO PURGE CONTEMPT AND SANCTIONS

|

Respondents in the above matter hereby move this Honora-

ble Court for an Order purging the contempt order of March

29, 1985 and to vacate the sanctions ordered therein.

In support of this motion respondents state that:

1. While they continue to assert their factual claims as per

the attached Affidavits of Philip Gallagher, Warren Hamerman,

and Donald Phau they hereby accept service to appear before

the Grand Jury.

In light of respondents’ acceptance of service they respectfully

request that the contempt order be vacated and the imposition

of sanctions be lifted and that they be permitted a reasonable

time to respond to the subpoenas.

Respectfully submitted,

(s) Matthew H. Feinberg

MATTHEW H. FEINBERG

Segal, Moran, Feinberg,

Packham & Lobel

210 Commercial Street

Boston, MA 02109

Tel: (617) 720-4444

(Endorsed)

In light of the acceptance of service by the respondents and

their request for a reasonable time to respond to the subpoenas,

1 will defer action on this motion pending notice or a report

A-22

from either party that a hearing before the Grand Jury has bee

scheduled.

(s) A. David Mazzone

USD]

4/9/85

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

IN RE GRAND JURY M.B.D. NO. 85-204

(CAUCUS DISTRIBUTORS, INC.)

ORDER TO COMPEL

On Motion of the United States, and upon consideration of

the pleadings before it, this Court hereby finds and ORDERS:

(1) That any and all documents relating to fundraising by, for,

through, or on behalf of any entity, including Caucus Distribu-

tors, Inc. (CDI), are records of that entity and not personal

records of the documents’ makers:

(2) That all such documents, including the “index cards” re-

ferred to in Mr. Greenspan's testimony and the government's

Motion to Compel, are therefore covered by the outstanding

grand jury subpoena and contempt;

(3) That CDI, the Keeper of Records of CDI Elliot Green-

span, and Elliot Greenspan personally, are hereby Ordered and

Compelled to produce all such documents to the grand jury on

or before December 2, 1985;

(4) That should CDI, the Keeper of Records of CDI Elliot

Greenspan, or Elliot Greenspan personally, refuse or fail to

comply with this Order and produce all such documents to the

gran jury on or before December 2, 1985, this Court will hear

and receive motions for further contempt sanctions, civil and

criminal, against any of the above.

November 22, 1985 A. David Mazzone

DATE U.S. DISTRICT COURT

TST

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

IN RE GRAND jUR®SSUBBOENA M.B.D. No. 85-204

(CAUCUS DISTRIBUTORS, INC.)

FURTHER JUDGMENT AND COMMITMENT

Upon motion of the United States of America and review of

the record before it, this Court hereby finds:

1. By Order dated March 29, 1985, this Court held Caucus

Distributors, Inc. (“CDI”) in contempt of Court for its failure to

comply with a lawful grand jury subpoena, and Ordered that

CDI pay the sum of $10,000 per day until it fully complied with

the subpoena.

2. CDI has failed to comply with the subpoena and has failed

to pay the fines as ordered.

3. On November 22, 1985, as part of the continuing proceed-

ings in this matter, this Court issued an Order to Compel the

production of certain records, stating that if all such records

were not produced by December 2, 1985, the Court would

consider further sanctions.

4. CDI has failed to comply with the Order to Compel, as

well as the underlying grand jury subpoena and contempt order.

IT IS THEREFORE ADJUDGED that Caucus Distributors,

Inc. remains in direct and continuing contempt of this Court for

its failure to comply with the grand jury subpoena issued on

February 7, 1985.

IT IS THEREFORE ORDERED that Caucus Distributors,

Inc. be and hereby is ordered to pay the additional sun of $5,000

per day to the Clerk of the United States District Court for

Massachusetts until such time as Caucus Distributors, Inc. shall

fully comply with said subpoena.

ILABLE COPY

eee ee

A-25

This ORDER is stayed until 12:00 noon, January 23, 1986.

Dated: January 22, 1986 A. David Mazzone

U.S. DISTRICT COURT