Court: Court of Appeals for the Third Circuit; May 13, 1999; Federal Appellate Court
The case involves the applicability of the Fifth Amendment privilege against self-incrimination in the context of potential foreign prosecution, following the Supreme Court's ruling in United States v. Balsys. Appellants, who are witnesses with immunity, refused to testify before a grand jury investigating possible antitrust violations in the artificial sausage casings industry, asserting that the immunity did not adequately protect them from foreign prosecution. The grand jury was convened in the District of New Jersey under the Sherman Act to look into allegations of price-fixing.
The appellants indicated they would answer questions regarding U.S. business dealings but resisted inquiries related to foreign markets or activities outside the U.S., citing fears of prosecution abroad. When the government sought to hold them in contempt, the appellants requested a hearing to explore the government's interactions with foreign authorities in relation to the investigation.
In their argument, the appellants referenced the Balsys decision, asserting that their situation met the criteria established therein for invoking Fifth Amendment protections due to the international dimensions of antitrust enforcement. They presented evidence of a policy shift towards increased international cooperation in antitrust matters, including past joint investigations with foreign governments and the existence of penalties for antitrust violations in various countries. They highlighted the role of Mutual Legal Assistance Treaties (MLATs) and the use of grand jury proceedings to assist foreign prosecutions as part of this broader trend.
Appellants contended to the District Court that their cases involved a joint international prosecution, citing evidence such as grand jury witness questioning regarding Canadian and German contacts, efforts by the Antitrust Division to obtain documents from multiple countries, and attempts to interview Mexican and German nationals. They further claimed that contact by Canadian authorities with their counsel indicated a joint prosecution. Appellants argued they faced a "whipsaw" scenario, where they could be compelled to provide information in the U.S. while facing potential foreign prosecutions, asserting that the Antitrust Division aimed to use testimony about foreign impacts to instigate these prosecutions.
They requested a hearing to question government witnesses, claiming they needed to explore their foreign contacts further. In response, the government provided Schofield affidavits, asserting that the compelled testimony was solely for advancing the grand jury's inquiry, not for foreign prosecution purposes. Appellants deemed this insufficient, suggesting it implied prior sharing of information with foreign authorities, and argued due process required clarification of the U.S. relationship with foreign countries and an evidentiary hearing based on their evidence.
The District Court convened several hearings addressing the appellants' Fifth Amendment rights, conducted waiver colloquies, and dealt with contempt issues related to one appellant's refusal to testify. The court considered the relevance of United States v. Balsys and withheld a contempt order pending further argument. It combined the claims of the witnesses for briefing, held a final hearing on contempt and the appellants' motion to compel witnesses, and reviewed both disclosed and in camera Schofield affidavits while questioning prosecutors and the grand jury foreman in camera about the dispute.
The court acknowledged the efforts of the appellants but emphasized the necessity of focusing on the specific proceedings at hand, particularly regarding the potential disclosure of evidence to foreign governments. It accepted the government's assurances, particularly those in the Schofield affidavits, that the information would only be used for U.S. prosecutions. The court found that the appellants did not present a genuine issue of material fact that warranted an evidentiary hearing, leading to the denial of their motion to compel. Subsequently, when the appellants renewed their request for a hearing and disclosure of in camera proceedings, claiming that new disputes had arisen, the court rejected this motion as well, citing the evidence provided by the appellants as "immaterial and inadequate." The court upheld that the government's representations regarding the grand jury evidence were credible and that the circumstances did not support the appellants' claims. Furthermore, the court analyzed the Balsys opinion, concluding it did not support the appellants' Fifth Amendment claims, ultimately holding them in contempt. The appellants are now appealing, arguing that the District Court erred in not recognizing their assertions of privilege and in denying an evidentiary hearing, which they claim violated their due process rights. The appellate court has jurisdiction under 28 U.S.C. 1291, reviewing the District Court's legal analysis de novo while applying an abuse of discretion standard to the decision regarding additional review. The appellants referenced the Balsys case where the Supreme Court ruled that the Fifth Amendment does not apply to foreign prosecutions, which is central to their argument regarding self-incrimination.
The Balsys court determined that fear of foreign prosecution alone does not justify invoking the Fifth Amendment privilege against self-incrimination. Appellants argue that the Balsys opinion implies a "test" for recognizing exceptions to this general rule based on such fear. In Balsys, Justice Souter suggested that if the United States and its allies had significantly similar criminal laws and if the U.S. granted immunity from domestic prosecution to aid foreign prosecutions, then a claim could be made for Fifth Amendment protection. This would imply that fear of foreign prosecution could be seen as fear of prosecution by the U.S. government itself, blurring the lines between the two.
However, the court concluded that this scenario does not apply in the current case because there is no cooperative prosecution or complementary offenses between nations present. The existing interest of the U.S. in foreign prosecutions, as evidenced by treaties and mandates, does not equate to a shared prosecution framework. Consequently, the court found no reason to believe that the privilege would lose its significance without a rule against compelled testimony when there is a substantial risk of its use in foreign criminal proceedings. Appellants propose a test for claiming the privilege that includes: 1) a reasonable fear of foreign prosecution; 2) the fear being grounded in a foreign statute similar to U.S. law; and 3) the testimony intended to be shared with a foreign government.
The court is not persuaded that the case of Balsys establishes a definitive "test" applicable to the current situation, nor does it support the privilege claimed by the appellants based on the facts presented. The language in Balsys is characterized as conditional and hypothetical, rather than providing clear guidelines for applying Fifth Amendment protections. The court disagrees with the appellants' interpretation of the necessary showing required under Balsys, as well as their assertion that their claims are adequate to invoke its principles. Although the appellants argue for a broad policy of international cooperation in antitrust enforcement that fits the Balsys framework, the court finds that the evidence of international contacts and document requests cited does not sufficiently demonstrate a "joint prosecution" as understood in Balsys.
Balsys acknowledges the potential for a Fifth Amendment right to arise when foreign prosecutorial actions effectively convert into domestic prosecutions. In this case, the U.S. had a vested interest in Balsys's foreign prosecutions through treaties and investigative collaborations, such as an agreement with Lithuania for prosecuting war crimes. Despite these connections, the Court determined that this did not constitute a "cooperative prosecution," as there was no alignment of substantive offenses between nations; mere support from one nation for another's prosecution does not equate to a shared prosecution. The appellants cited various actions, such as questioning witnesses and document collection abroad, as evidence of a cooperative prosecution. However, the Court disagreed, stating that isolated instances of evidence gathering do not substantiate a legitimate fear of foreign prosecution equating to a domestic case. Furthermore, the existence of antitrust laws in other countries does not imply coordinated enforcement, especially given that some of these countries do not even criminalize certain antitrust violations. Overall, the Court viewed the appellants' concerns as speculative rather than indicative of a real, ongoing international cooperative prosecution that would implicate domestic legal protections.
Appellants argue for the recognition of a "reasonable" fear of foreign prosecution based on the precedent set in Balsys. However, the government contends that the appellants must first establish a real and substantial fear of prosecution, a requirement not conceded in this case. The District Court expressed uncertainty regarding the reasonableness of the appellants' fears, indicating that while it might revisit the issue, it did not find it necessary to rule on it for the evidentiary hearing. The court's language appeared vague and conditional, raising doubts about its validity as a definitive finding.
The standard for determining a real and substantial fear of foreign prosecution is outlined in the Second Circuit's decision in In re Flanagan, which includes five specific factors: the existence of a foreign prosecution, potential charges, the relationship between testimony and prosecution, extradition rights, and the likelihood of testimony being disclosed to foreign authorities. The Flanagan court emphasized that the fear must be based on objective facts rather than subjective speculation, as the Fifth Amendment privilege only protects against real dangers.
Appellants failed to demonstrate a real and substantial fear of prosecution under the Flanagan standard. Their claims of international investigative efforts do not establish a sufficient nexus or likelihood of prosecution compared to previous cases that met the Flanagan criteria. Furthermore, the assertion that criminal antitrust laws exist in other nations is misleading, as many of those countries do not criminalize price-fixing or have limited prosecutorial practices.
Appellants argue they face a significant risk of prosecution due to Canada's criminal antitrust laws, ongoing investigations, and an existing Mutual Legal Assistance Treaty (MLAT) with the U.S. However, these factors do not sufficiently establish a "real and substantial fear" of prosecution under the Flanagan standards, as mere possibilities of prosecution or inquiries from foreign authorities do not meet the necessary criteria. Furthermore, the existence of extradition treaties with various countries does not inherently create such a fear without additional compelling factors. The appellants’ concerns regarding the use of their testimony by foreign nations are deemed speculative.
Additionally, appellants claim a violation of their due process rights due to the District Court's refusal for an evidentiary hearing to question government officials about their contacts with foreign nations. They contend that such questioning could have demonstrated a case under Balsys. The District Court denied the hearing, asserting that the government’s assurance of witness confidentiality was not sufficiently challenged by the appellants, and even if their evidence were accepted, it would not meet the Balsys standard.
For a witness contesting a grand jury subpoena, the government must provide preliminary affidavits demonstrating the relevance and proper jurisdiction of the information sought. The District Court holds broad discretion to decide if further proceedings are warranted. Factors influencing this discretion include the scope of inquiry into potential abuse of the subpoena process, risks of delay, and the need for additional information that may question the government's credibility. The appellate review of the District Court's decision to deny further review is deferential, allowing for intervention only in cases of abuse of discretion.
Appellants contend that the District Court's refusal to grant a full evidentiary hearing violated their due process rights, arguing that due process necessitates an "uninhibited adversary hearing" for alleged contemnors facing potential incarceration. However, established case law indicates that due process does not universally require a hearing in contempt cases, particularly when there is no genuine factual dispute or when the testimony is not essential to uncovering relevant evidence already on record. The court has broad discretion in determining the process due to alleged contemnors, and it is not mandated by precedent to hold hearings simply because a subpoena is challenged or a constitutional issue is raised.
The appellants specifically claim that alleged information-sharing between the Antitrust Division and foreign investigators created material factual issues warranting an evidentiary hearing. Nonetheless, the District Court found that the allegations and proposed evidence did not sufficiently challenge the government's assertions to justify a hearing. The appellants argued that their unique situation, where necessary evidence is solely in the government's possession, necessitated the opportunity to contest the government's good faith assertions by calling witnesses. The court, however, emphasized the need to balance the grand jury's interests with the rights of witnesses.
After thoroughly considering the evidence and arguments presented by the appellants, the District Court determined that there was no legitimate basis to question the government's affidavits. Absent a genuine factual dispute or sufficient evidence of bad faith to dismiss the government’s claims, the court exercised its discretion and upheld the government's statements without conducting a hearing. Consequently, the denial of the evidentiary hearing was deemed not an abuse of discretion, leading to the affirmation of the District Court's decision.
Appellants express concerns regarding the limitations of Rule 6(e) of the Federal Rules of Criminal Procedure, which governs the secrecy of grand jury proceedings. The Flanagan court acknowledged that Rule 6(e) does not completely mitigate the risk of witness testimony being shared with foreign entities, highlighting that grand jury proceedings are not entirely secure and rely on the discretion of government officials with access to the minutes. The court inquired if the government would need to seek the Court's permission under Rule 6(e) to disclose testimony or evidence to a foreign power, to which the government responded affirmatively. The District Court indicated that if the government were to alter its stance on disclosing materials to foreign authorities, it would apply for a 6(e) order. The District Court also expressed its willingness to reconsider the need for an evidentiary hearing and the relevance of this case to Balsys, but clarified that such a scenario may never arise.
