Opposition Brief — National Democratic Policy Committee v. United States

Bry OQ eT-- -*

K

= FILED

SEP 21 1989

JOSEPH F. SRANICL. JR.

—

In the Supreme Court of the Gnited States

OctToBER TERM, 1989

NATIONAL Democratic Poticy CoMMITTEE, PETITIONER

Vv.

Unitep STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

-

KENNETH W. STARR

Solicitor General

Epwarp S.G. Dennis, Jr.

Assistant Attorney General

Patry Merkamp STEMLER

Attorney

Department of Justice

Washington, D.C. 20530

(202) 633-2217

QUESTION PRESENTED

Whether the court of appeals correctly upheld the

district court’s imposition of civil contempt sanctions

against petitioner for refusing to comply with grand jury

subpoenas.

;

. "tas aPeiy Fre ss ae ee oS Pe ee ae ee

TABLE OF CONTENTS

Page

os ome Wars 66 00 0s ee EE ee 1

GEES oe ee oe ee ee ee l

eg es 2 ae ea a 2

EE ee re eee ee ee 9

eee aa a ee ea a ON a oR eS 16

TABLE OF AUTHORITIES

Cases:

Balla v. Idaho State Bd. of Corrections, 869 F.2d

es G55 6. see wee eee 13

Celotex Corp. v. Catrett, 477 U.S. 317 (1986)... . 11-12

Commodity Futures Trading Comm'n v. Premex, Inc.,

ee ES re 11

Grand Jury Impaneled Jan. 21, 1975, In re, 529 F.2d

543 (3d Cir.), cert. denied, 425 U.S. 992 (1976) . 15

Grand Jury Proceedings, In re, 795 F.2d 226 (lst Cir.

1986), cert. denied, 479 U.S. 1064 (1987) .... 2,3

4-5, 10, 11, 14

Grand Jury Witness, In re, 835 F.2d 437 (2d Cir.

EMER aaa wid % b5660b 6 2 6 Ob ew = 14, 15

International Business Machines Corp. v. United States,

493 F.2d 112 (2d Cir. 1973), cert. denied,

gE a 15

Kitchen, In re, 706 F.2d 1266 (2d Cir. 1983) ..... 11

McNeil v. Director, 407_U.S. 245 (1972) ........ 11

NAACP vy. Claiborne Hardware Co., 458 U.S. 886

ee a ee ee we 13

ee, nee, ee SP RUOOD ww ct we ee 11

eee

pe es se ae ee se el le ee ee

iv

Cases—Continued: Page

Perfect Fit Industries, Inc. vy. Acme Quilting Co.,

673 F.2d 53 (2d Cir.), cert. denied, 459 U.S. 832

Pr as ee a ae ae 15

Shillitani v. United States, 384 U.S. 364 (1966) ... 15-16

Stotler & Co. v. Able, 870 F.2d 1158 (7th Cir. 1989) 13

United States v. City of Yonkers, 856 F.2d 444 (2d Cir.

sf 1988), cert. denied, 109 S. Ct. 1527 (1989) ... 15

United States v. Danenza, 528 F.2d 390 (2d Cir. 1975) 11

United States v. United Mine Workers, 330 U.S. 258

CHD Keene oe Te oe Ree awe es 14

Washington-Baltimore Newspaper Guild v. Washington

Post Co., 626 F.2d 1029 (D.C. Cir. 1980) ..... 13

Statutes and rule:

I 6a date ain ate dia ie elbhels a Z,

I ee Sk ea ler Te ewe 2

Se OE oa. os ag eh 0k es eb Waa 8 7

In the Supreme Court of the Gnited States

OcToBER TERM, 1989

No. 89-320

NatTionaL Democratic Poticy ComMITTEE, PETITIONER

v.

Unitep STaTEs OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-15a)

is reported at 871 F.2d 156. The opinion of the district

court (Pet. App. 16a-19a) is unreported.

JURISDICTION

The judgment of the court of appeals (Pet. App. 22a)

was entered on March 29, 1989. A petition for rehearing

was denied on May 30, 1989 (Pet. App. 23a-24a). The

petition for a writ of certiorari was filed on August 24,

1989. The jurisdiction of this Court is invoked under 28

U.S.C. 1254(1).

2

STATEMENT

1. Petitioner was the subject of a criminal investigation

launched several years ago by a federal grand jury sitting

in the District of Massachusetts. The grand jury was

investigating possible violations of federal law, including

credit card fraud and mail fraud, in violation of 18 U.S.C.

1029 and 1341. The investigation related to the activities

of petitioner and others in connection with soliciting

political campaign contributions for Lyndon LaRouche and

other candidates. Petitioner and others were suspected of

fraudulently altering credit card donations to reflect charges

for larger sums in order to obtain and keep the accrued

interest from issuing banks; once the donors informed those

banks that the larger charges were unauthorized, petitioner

and others would return the principal but retain the accrued

interest. See Jn re Grand Jury Proceedings, 795 F.2d 226,

227-228 (ist Cir. 1986), cert. denied, 479 U.S. 1064 (1987);

note 4, infra; Gov’t C.A. Br. 2.

On February 6, 1985, one week after service was first

refused, petitioner was served with a grand jury subpoena

calling for specific documents covering a certain time

period related to the criminal investigation. The subpoena

directed petitioner, through a representative, to appear before

the grand jury on February 7 and produce “[a]ny and all

records relating to fundraising by, through, or on behalf of

[petitioner], including “records and/or correspondence

relating to the use of credit card accounts and/or charges

for fundraising purposes.” C.A. App. 343, 345. Peti-

tioner’s representative did not appear before the grand jury

on February 7, nor did petitioner produce the subpoenaed

records. As a result, petitioner’s grand jury appearance was

rescheduled for February 14. Once again, however, peti-

i

3

tioner ignored the subpoena. /n re Grand Jury Proceed-

ings, 795 F.2d at 227-228; Gov’t C.A. Br. 3.'

On the government’s motion, the district court issued

an order directing petitioner to show cause why it should

not be held in contempt. The court scheduled a hearing for

March 29, 1985. Petitioner did not appear at that hearing.

After finding that petitioner had been served with the

subpoena and that its failure to comply was without just

cause, the district court adjudged petitioner in contempt.

The court ordered petitioner “to pay the sum of $10,000 per

day to the Clerk of the United States District Court for

Massachusetts until such time as [petitioner] shall fully

comply with said subpoena.” Jn re Grand Jury Proceed-

ings, 795 F.2d at 228 (internal quotation marks omitted).

The co stayed its order until April 2. /bid.

On April 3, 1985, petitioner filed a motion to vacate

the contempt order and quash the subpoena. After a |

hearing, the district court denied that motion. In re Grand

Jury Proceedings, 795 F.2d at 228.?

With the coniempt fine mounting for each day of

violation, petitioner in early April suggested that it finally

would appear before the grand jury and comply with the

subpoena. On April 9, the district court therefore deferred:

ruling on petitioner’s motion to purge its contempt pending

‘The grand jury had also issued subpoenas to three other firms

suspected of fraud in connection with soliciting campaign contributions

for Lyndon LaRouche and other candidates. Those firms, Campaigner

Publications Inc., Fusion Energy Foundation, and Caucus Distributors,

Inc., likewise refused to comply with the subpoenas and also were

ultimately subjected to civil contempt sanctions. See generally /n re

Grand Jury Proceedings, 795 F.2d 226 (1st Cir. 1986), cert, denied, 479

U.S. 1064 (1987).

? Petitioner did not file a timely notice of appeal from the

contempt order; that order therefore became final in 1985. Seé In re

Grand Jury Proceedings, 795 F.2d at 229. .

4

its expected appearance before the grand jury, bui petitioner

failed to make arrangements to appear. As a result, the

district court on -April 22 entered an order of partial

summary judgment in the amount of $70,000 against

petitioner for its failure to comply with the grand jury

subpoena from April 2 through April 8. Jn re Grand Jury

Proceedings, 795 F.2d at 229; Gov’t C.A. Br. 4.

In spite of that order, petitioner persisted in its non-

compliance. On May 21, 1985, the district court held a

hearing to determine whether petitioner had started to

comply. The government told the court that petitioner had

produced some, but not all, of the responsive documents

and explained that petitioner had failed to send to the grand

jury a representative capable of verifying that it was in fact

turning over all fundraising records demanded by the

subpoena. The court then directed petitioner to designate

an official who could testify before the grand jury as to

whether petitioner had fully complied with the subpoena.

Petitioner refused to heed the court’s directive and did not

send any official to testify. Accordingly, on July 19 the

district court denied petitioner’s motion to purge its con-

tempt and quash the subpoena. /n re Grand Jury Proceed-

ings, 795 F.2d at 229; Gov’t C.A. Br. 5.

2. On August 2, 1985, with the contempt fine mount-

ing each day in light of petitioner’s continued noncom-

pliance, petitioner appealed from the district court’s initial

contempt order, its partial summary judgment order, and its

most recent order refusing to purge the contempt or quash

the subpoena. In an order dated December 5, 1985, the

court. of appeals dismissed petitioner’s appeal from the

initial contempt order, since petitioner had not filed a timely

notice of appeal from that order. In addition, the court held

that the district court’s denial of the motion to quash was

a nonappealable order. See Jn re Grand Jury Proceedings,

5

795 F.2d at 229. Finally, on July 3, 1986, the court of

appeals affirmed the $70,000 partial summary judgment -

order. /d. at 228-230. _

3- On July 9, 1986, the government contacted petition-

| er in an effort to obtain compliance with the subpoena. By

September 1, however, petitioner still had not acted. The

government therefore filed a second motion for partial

summary judgment in the amount of $5,110,000 against

petitioner for its failure-to comply with the grand jury

subpoena from April 9, 1985, through September 1, 1986.

Petitioner opposed the motion, claiming ti ‘t had fully

complied with the subpoena; petitioner also asked the court

to order the government to produce its evidence of noncom-

pliance at a hearing. Gov't C.A. Br. 9-10.

On October 6, 1986, federal agents executed search

warrants at offices in Quincy, Massachusetts, and Leesburg,

Virginia, that were associated with the suspected illicit

fundraising for Lyndon LaRouche. The agents seized a .

substantial number of documents that had been demanded

by the grand jury subpoena served on petitioner.’ There-

after, on November 12, the government filed an affidavit by

FBI Special Agent Martha Wilkes, substantiating its claim

of petitioner’s noncompliance. Specifically, Agent Wilkes

»

\

> That same day, the federal grand jury returned a 117-count

indictment against Lyndon LaRouche and individuals and firms asso-

ciated with his activities. See Gov't C.A. Br. 10.

On January 27, 1989, LaRouche and six other individuals were

convicted and sentenced to terms of imprisonment for federal criminal

offenses committed in connection with frauduient fundraising activities

in the Eastern District of Virginia. United States v. LaRouche, Crim.

No. 88-243-A (E.D. Va.), appeal pending (4th Cir.). As a result of the

successful prosecution in the Eastern District of Virginia, the govern-

ment has ‘not pursued similar charges in the District of Massachusetts

¢ against those defendants who were convicted in the Virginia criminal

case. ;

ee ee

6

attested that thousands of index cards, which catalogued and

tracked individual donors in order to coordinate fundraising,

were found in those offices; a number of those cards

contained notations to petitioner. Agent Wilkes further

stated that many of the cards contained notations predating

the issuance of petitioner’s subpoena, and that none of the

index cards had previously been produced before the grand

jury. Pet. App. 5a; Gov’t C.A. Br. 10-12; see C.A. App.

482, 487 (samples of cards with notations to petitioner

attached to Agent Wilkes’ affidavit).

On December 12, 1986, the district court denied

petitioner’s motion to stay proceedings on the government’s

partial summary judgment motion, but gave petitioner 20

days (later extended to January 9, 1987) within which to

respond to the government’s proof. On January 19, 1987,

petitioner filed a supplementary memorandum in opposition

to the governmeni’s motion, together with a supporting

affidavit, claiming that it had already “‘produced a wealth

of material,’” and that “no one has ever contended that the

[index] cards belonged to [petitioner].” C.A. App. 512; see

Pet. App. 6a; Gov’t C.A. Br. 14-15.

On February 24, 1987, after reviewing the submissions

filed by both the government and petitioner, the district

court found that “the uncontroverted record shows that the

critical index cards called for by the subpoena were not

produced, although clearly available for production to the

grand jury.” Pet. App. 18a-19a.* The court further found

that “[w]hile a supplemental memorandum in opposition [to

the government’s partial summary judgment motion] was

filed * * * on behalf of [petitioner] * * *, no factual issue

_ “As the district court further noted, “the record * * * shows

that many of the index cards were burned.” Pet. App. 19a.

7

material to this matter was put in dispute.” Jd. at 19a.°

Accordingly, the district court “accept[ed] the verified and

undisputed facts of the Wilkes affidavit,” ibid., and thus

granted the government’s motion for partial summary

judgment against petitioner in the amount of $5,110,000.

Id. at 21a.

Petitioner then moved for reconsideration or, in the

alternative, a stay pending appeal. Petitioner claimed,

among other things, that it could no longer be held in

contempt for failing to comply with the original subpoena

since the term of the grand jury had expired in January

1986. C.A. App. 579-583. On May 31, 1987, the district

court denied petitioner’s motion. /d. at 595.

4. On appeal, petitioner contended that the district

court erred in assessing massive contempt fines in its

February 26, 1987, order, since the government had already

seized the subpoenaed records and the original grand jury

investigation had ended. After finding that petitioner

“overlooks prior history [of this case],” Pet. App. 7a, the

court of appeals rejected that claim, holding that the district

court’s action “was not the imposition of a punitive fine but

the recognition and liquidation of the debt accumulated

during the period of noncompliance.” Jd. at 8a. As the

* The district court also concluded that petitioner’s opposition

to the government’s motion did not comply with the procedure

mandated by Local Rule 18, specifying that “[o)ppositions to motions

for summary judgment shall include a concise statement of the material

facts as to which it is contended that there exists a genuine issue to be

tried, with page references to affidavits, depositions, and other documen-

tation” (D. Mass. R. 18). Pet. App. 19a.

* To the extent that petitioner challenged the aggregate fine as

excessive, the court of appeals concluded that petitioner could not

“tnundle[ } out [that issue] for the first time on this appeal.” Pet. App.

7a. Petitioner had not raised the argument at the appropriate time,

namely, “when the daily rate was set” in the district court’s initial

8

court of appeals. observed, ibid.:

{[T]o allow [petitioner] to avoid the consequences of

[its] civil contempt solely because, at the date of

reckoning, compliance is impossible would only

encourage stonewalling.

The court of appeals also rejected petitioner’s conten-

tion that the Wilkes affidavit was insufficient proof of

petitioner’s noncompliance with the grand jury subpoena.

First, the court noted that petitioner had not raised this

argument before the district court. Second, the court found

that the Wilkes affidavit itself contained assertions that

petitioner had not produced the index cards under subpoena

before the agents seized them, and petitioner had not

submitted any responsive pleading or affidavit contradicting

those assertions. Indeed, as the court of appeals noted,

petitioner had not submitted “any disavowal of references

to [petitioner] in the [index] cards attached to the Wilkes

affidavit.” Pet. App. 9a.

For that reason as well, the court of appeals dismissed

petitioner’s claim that the district court erred in deciding

the government’s summary judgment motion without a

hearing. As the court of appeals concluded, “[{uJnder these

circumstances we see no abuse of discretion or violation of

due process in proceeding, after such an absence of invited

factual response, to decision without an evidentiary hearing.”

Pet. App. 9a.

Finally, the court of appeals agreed with petitioner’s

claim that “a judicial order imposing a continuing per diem

March 29, 1985, order. /bid. Moreover, petitioner had not filed a

timely appeal from the district court’s initial order, and as the court of

appeals observed, petitioner had not even sought to contest the amount

of the contempt fine in its aborted appeal from that order. /bid.

9

fine does not have a longer life than the grand jury for

which the order was issued.” Pet. App. 10a. Since the

grand jury that issued the underlying subpoena to petitioner

expired sometime in January 1986, the court of appeals

vacated the $5,110,000 total judgment against petitioner and

remanded the case to the district court “for computation of

the aggregate fine[].” Jd. at 15a.

5. On April 27, 1989, while a petition for rehearing

was pending in the court of appeals, the government filed

a motion in the district court to compute petitioner’s

aggregate contempt fines in the amount of $2.77 million.

On May 30, the court of appeals denied the petition for

rehearing. Pet. App. la. On June 6, the court of appeals

denied petitioner’s request to stay the mandate pending the

filing of a petition for a writ of certiorari. Appl. App. C1.’

The court issued its mandate on the following day. On

June 23, the government renewed its motion in the district

court to compute petitioner’s fine on remand. Appl. App.

Hl. |

Petitioner then filed an application for a stay of the

court of appeals’ judgment pending the filing and dispos-

ition of a petition for a writ of certiorari. On June 30,

1989, Justice Brennan, sitting as Circuit Justice, denied the

application for a stay.*

ARGUMENT

The court of appeals’ decision correctly applies settled

law and procedures governing the imposition of civil

contempt fines for failing to comply with grand jury

7 “Appl. App.” refers to the appendix filed with petitioner's

application for a stay in this Court.

* The government’s motion to compute petitioner’s fine remains

under advisement in the district court.

10

subpoenas. As the court of appeals recognized, the proced-

ural history of this case itself renders petitioner’s claims

insubstantial. At bottom, petitioner seeks to this day to

avoid responsibility for the consequences of its longstanding

and unjustified refusal to comply with valid grand jury

process.

1. Petitioner first contends (Pet. 6-7) that the court of

appeals’ decision affirming the imposition of contempt

sanctions without requiring a hearing conflicts with settled

law. Petitioner’s contention stems from a misreading of

both the record and relevant case law.

First, the district court adjudged petitioner in contempt

on March 29, 1985, only after holding a hearing in which

it was established that petitioner had been served with the

subpoena and that its failure to comply was without just

cause. Petitioner’s belated challenge rings hollow where the

record shows that despite specific notice, it chose not even

to attend that scheduled show cause hearing. /n re Grand

Jury Proceedings, 795 F.2d at 228.

Moreover, before ultimately rendering its judgment in

February 1987, the district court specifically directed

petitioner to present material evidence contradicting the

government’s Wilkes affidavit, since that affidavit showed

that, by withholding the index cards, petitioner had not fully

complied with the subpoena. Nevertheless, petitioner did

not submit any responsive pleading or affidavit contradicting

the government’s proof. As the court of appeals noted,

petitioner did not submit “any disavowal of references to

[petitioner] in the [index] cards attached to the Wilkes affidavit.”

Pet. App. 9a. Accordingly, while petitioner was given the

opportunity to have a hearing, it in effect chose not to have

one.

Second, although a contemnor is generally entitled to

a hearing before being adjudged in civil contempt, see, é.g.,

11 Ke

In re Oliver, 333 U.S. 257, 275 (1948), that procedure is

not required where the contemnor himself has not alleged

that there is a genuine issue as to any material fact, see,

e.g., In re Grand Jury Proceedings, 795 F.2d at 234-235;

Commodity Futures Trading Comm'n v. Premex, Inc., 655

F.2d 779, 782 n.2 (7th Cir. 198i); United States v.

Danenza, 528 F.2d 390, 392-393 (2d Cir. 1975); see also

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

court may require an offer of proof before conducting a

hearing).® Indeed, as this Court has recognized in a related

context, “district courts are widely acknowledged to possess

the power to enter summary judgments sua sponte, so long

as the losing party was on notice that she had to come

forward with all of her evidence.” Celotex Corp. v.

* In the Kitchen case, 706 F.2d at 1273, the Second Circuit

recognized that a district court need not conduct an evidentiary hearing

if there are no material facts in dispute surrounding the contempt

motion. Thus, petitioner’s claim of conflict (Pet. 6) between the court

of appeals’ decision and the decision in Kitchen is illusory.

Petitioner’s reliance (Pet. 6-7) on decisions of this Court and other

courts of appeals is also misplaced. None of those decisions remotely

suggests that a court must hold a hearing before adjudging a recalcitrant

witness in civil contempt and imposing coercive sanctions where the

witness has not rebutted the government’s proof that he has not

complied with a court order or grand jury process and has no just cause

for such contumacious conduct.

Petitioner's reference to McNeil v. Director, 407 U.S. 245 (1972),

is particularly far afield. In that case, the State of Maryland asserted

the power to confine a “defective delinquent” indefinitely, even after his

sentence expired, “without ever obtaining a judicial determination that

such confinement is warranted.” 407 U.S. at 249. In rejecting the

State’s effort to ground that power on a “theory of civil contempt,” the

Court made clear that “due process requires a hearing to determine

whether [the inmate] has in fact behaved in a manner that amounts to

contempt.” /d. at 251. The Court thus had no occasion to address the

issue petitioner seeks to present—the neéd for such a hearing where the

record contains uncontradicted proof that contumacious conduct has

occurred.

F

12

Catrett, 477 U.S. 317, 326 (1986).

Here, as mentioned above, the government’s proof

showed that petitioner, over a substantial period of time,

withheld from the grand jury index cards used in connection

with the fundraising activities under investigation. See Pet.

App. 2a-4a; Gov’t C.A. Br. 10-12; C.A. App. 482, 487

(samples of cards with notations to petitioner attached to

Agent Wilkes’ affidavit). Despite the district court’s

invitation, petitioner did not contradict a single allegation in

the Wilkes affidavit. To the contrary, petitioner raised only

immaterial claims, namely, that it had already “‘produced

a wealth of material,’” and that “no one has ever contended

that the [index] cards belonged to [petitioner].” (C.A. App.

512." On this record, the district court was compelled to

grant the government’s motion for summary judgment since

there was no factual dispute regarding petitioner’s actions.

Pet. App. 18a-19a. Accordingly, the court of appeals

correctly held that “[u]nder these circumstances we see no

abuse of discretion or violation of due process in proceed-

ing, after such an absence of invited factual response, to

decision without an evidentiary hearing.” Jd. at 9a.

2. Petitioner next contends (Pet. 8-9) that the court of

appeals sanctioned a contempt adjudication without first

‘© Rather than addressing these points, petitioner cites (Pet. 3-

4) a supplemental affidavit that, as both the district court and the coun

of appeals found, does not contradict any material facts regarding

petitioner’s failure to comply with the grand jury subpoena.

Petitioner also suggests (Pet. 2-3) that the grand jury subpoena

itself did not call for the production of the index cards used for

fundraising purposes, and that this omission may have excused

petitioner’s contemptuous conduct. That suggestion is frivolous. The

grand jury subpoena specifically commanded petitioner to produce

“{aJny and all records relating to fundraising by, through, or on behalf

of [petitioner].” C.A. App. 343. The index cards fall within the plain

language of the subpoena.

13

requiring “clear and convincing” evidence, and that this

decision conflicts with other circuits’ decisions."' Petitioner,

however, misconstrues the court of appeals’ decision. The

court of appeals did initially state that petitioner had waived

its challenge to the sufficiency of the Wilkes affidavit. Pet.

App. 8a.” But the court proceeded to review the entire

record to hold that petitioner did not present any evidence

contradicting the government’s proof of failure to comply

with the subpoena. /d. at 8a-9a. The court of appeals

upheld the contempt citation only after concluding that

petitioner had not rebutted the government’s factual submis-

sion, a submission that Gn this record certainly meets the

“clear and convincing” evidence standard."* The court thus

in effect applied that standard, and its decision is therefore

consistent with the decisions of other courts of appeals.

" Stotler & Co. v. Able, 870 F.2d 1158, 1163 (7th Cir. 1989);

Balla v. Idaho State Bd. of Corrections, 869 F.2d 461, 466 (9th Cir.

1989); Washington-Baltimore Newspaper Guild v. Washington Post Co.,

626 F.2d 1029 (D.C. Cir. 1980). ,

" As the court of appeals stated (Pet. App. 8a):

We dispose first of arguments that the affidavit was defective

because of hearsay and because it did not constitute clear and

convincing proof. These arguments were not made in the district

court and we therefore do not deal with them here.

Petitioner suggests that the court of appeais effectively adopted a

new pleading requirement — that “an alleged contemnor [must] specifi-

cally mention that [the clear and convincing standard] is the applicable

standard of proof” (Pet. 8). To the contrary, the court of appeals was

only applying an esiablished principle to the facts, namely, that

petitioner could not challenge defects in the affidavit for the first time

on appeal. Application of that principle does not at all suggest that the

court of appeals ignored an independent legal rule with respect to the

matter of the appropriate burden of proof.

'’ For that reason as well, NAACP v. Claiborne Hardware Co.,

458 U.S. 886 (1982), cited by petitioner (Pet. 8-9), is inapposite.

14

3. Petitioner further contends (Pet. 9-10) that the court

of appeals erred in upholding the contempt sanction without

first requiring the district court to consider petitioner’s

financial resources. But that issue is not presented here.

As the coust of appeals found, petitioner raised this chal-

lenge “for the first time on this appeal.” Pet. App. 7a.

Petitioner did not raise the argument at the appropriate time,

namely, “when the daily rate was set” in the district court’s

initial March 29, 1985, order. Ibid. See In re Grand Jury

Witness, 835 F.2d 437, 442-443 (2d Cir. 1987). Moreover,

petitioner did not file a timely appeal from that initial order,

see Jn re Grand Jury Proceedings, 795 F.2d at 229, and, as

the court of appeals observed, petitioner did not even

contest the amount of the contempt sanction in its aborted

appeal from that order. Pet. App. 7a. As the aggregate

amount of the fine was increasing over a substantial period

of time, petitioner never asked the district court to recon-

sider the fine in light of its financial resources. Under

these circumstances, petitioner is in no position to contest

the amount of that fine now.

In any event, petitioner’s claim is meritless. In

exercising its discretion with respect to civil contempt

sanctions, the district court must consider “the character and

magnitude of the harm threatened by continued contumacy,”

“the probable effectiveness of any suggested sanction in

bringing about the result desired,” and “the amount of

defendant’s financial resources and the consequent serious-

ness of the burden to that particular defendant.” United

States v. United Mine Workers, 330 U.S. 258, 304 (1947).

Here, petitioner’s persistent refusal to comply with the

grand jury subpoena threatened to thwart an ongoing

criminal investigation."* And the imposition of a per diem

“Indeed, although noticeably absent from petitioner’s statement

15

fine, designed only to coerce petitioner to honor the grand

jury subpoena, is an accepted practice well within the

bounds of the district court’s discretion. See, e.g., United

States v. City of Yonkers, 856 F.2d 444, 460 (2d Cir. 1988),

cert. denied, 109 S. Ct. 1527 (1989); In re Grand Jury

Witness, 835 F.2d at 440; In re Grand Jury Impaneled Jan.

21, 1975, 529 F.2d 543, 550-551 (3d Cir.), cert. denied, 425

U.S. 992 (1976).

Finally, the $10,000 per diem fine is not excessive on

this record. By its own earlier admission,'* petitioner raises

at least $400,000 in contributions annually, and thus is not

an insubstantial organization. And petitioner never sought

to show, before either the district court or the court of

appeals, that the daily fine would be unduly burdensome.

Cf. United States v. City of Yonkers, 856 F.2d at 460 (fine

of $1 million per day after 15 days of City’s noncom-

pliance); In re Grand Jury Witness, 835 F.2d at 440 (fine

of $5,000 per day imposed on individual); /nternational

Business Machines Corp. v. United States, 493 F.2d 112,

115-116 (2d Cir. 1973) (fine of $150,000 per day imposed

on corporation), cert. denied, 416 U.S. 995 (1974).

Furthermore, petitioner is in no position to complain now

since it “was given the power to avoid the fine entirely or

to end its accrual.” Perfect Fit Industries, Inc. v. Acme

Quilting Co., 673 F.2d 53, 58 (2d Cir.), cert. denied, 459

U.S. 832 (1982).

4. Lastly, petitioner contends (Pet. 11-12) that the

court of appeals’ decision conflicts with Shillitani v. United

of the case, petitioner never fully complied with the grand jury

subpoena. The grand jury was able to obiain the index cards used for

fundraising, and thus to complete its investigation, only after the

government executed search warrants.

'S See petitioner’s Application For Stay, No. A-1049, at 3.

16

States, 384 U.S. 364 (1966), since “there will be no time

limit on contempt proceedings in connection with a grand

jury whose work has ended.” Pet. 11. That contention is

groundless. The district court’s order granting summary

judgment “was not the imposition of a punitive fine but the

recognition and liquidation of the debt accumulated during

the period of noncompliance” when compliance was still

possible. Pet. App. 8a."© Thus, the court of appeals’

decision is wholly consistent with Shillitani. Indeed, as the

court of appeals succinctly stated, “to allow [petitioner] to

avoid the consequences of [its] civil contempt solely

because, at the date of reckoning, compliance is impossible

would only encourage stonewalling.” bid.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

KENNETH W. STARR

Solicitor General

Epwarp S.G. Dennis, Jr.

Assistant Attorney General

Patry MERKAMP STEMLER

Attorney

SEPTEMBER 1989

‘* In making this claim, petitioner appears to overlook that part

of the court of appeals’ judgment vacating the imposition of the daily

fine for the period after the grand jury expired. See Pet. App. 10a-!Sa.

*y U.S. GOVERNMENT PRINTING OFFICE: 1989—241-699/00516