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United States v. Under Seal 10
Citations: 597 F.3d 189; 2010 U.S. App. LEXIS 3870Docket: Nos. 06-2125, 07-1646, 06-2220, 06-2313
Court: Court of Appeals for the Fourth Circuit; February 23, 2010; Federal Appellate Court
The court affirmed a district decision holding twelve interrelated corporations in civil contempt for refusing to comply with grand jury subpoenas duces tecum. Judge Wilkinson, joined by Judge Seymour, stated that the grand jury enforcement action was not the proper venue to challenge the validity of one corporation's claims of unlawful NSA wiretapping, which it argued justified its noncompliance based on potential constitutional violations and breaches of the Foreign Intelligence Surveillance Act (FISA) and Title III of the Omnibus Crime Control and Safe Streets Act. The other eleven corporations contended that the district court's compliance orders were ambiguous, claiming an abuse of discretion in the contempt ruling. The court, however, found that the district court was well-positioned to interpret its orders and did not abuse its discretion. The case involved corporations suspected of financing terrorism, with prior search warrants executed in March 2002 that resulted in the seizure of documents, which were later returned. In early 2006, a grand jury issued broad subpoenas for corporate records, some of which the appellants acknowledged were included in the previously seized documents. Despite the subpoenas requiring document production by late February 2006, no documents were submitted. After further correspondence regarding electronic surveillance, which the U.S. clarified did not include the corporations under Title III, the district court issued show cause orders due to the lack of compliance. A show cause hearing took place on May 2, 2006, where appellants contended that a contempt finding was premature as grand jury subpoenas are not court orders. The district court chose not to hold them in contempt but ordered compliance with the subpoenas, requiring the appellants to appear before the grand jury on May 4 and produce the requested documents. Despite these orders, the appellants provided only a limited number of documents and sought an extension, which the court denied, mandating full production by May 12, 2006. On May 17, eleven of the twelve appellants submitted responsive documents but withheld those seized in 2002. Appellant 10 did not produce any documents, claiming illegal wiretaps as justification for non-compliance, citing concerns over surveillance due to allegations of terrorist financing. On June 7, Appellant 10 moved to assert it was not in civil contempt, relying on the claim of illegal surveillance. The other eleven appellants argued against contempt unless the government renewed its motion. Although the district court was skeptical, it postponed a decision pending a renewal of the motion. A subsequent hearing on June 28 revealed that while eleven appellants claimed they had produced all documents in their physical control, they had not searched or produced documents stored since 2003. Appellant 10’s attorney acknowledged non-compliance, leading to discussions about the legality of the subpoena and the validity of the appellants' refusal to comply. The appellants argued that the district court's earlier orders were ambiguous, complicating the contempt issue. No documents were produced by the appellants following the June 28 hearing until October 2, 2006, when the district court found both Appellant 10 and eleven other appellants in contempt for failing to comply with a prior order from May 2, 2006. The court dismissed Appellant 10's just cause defense, clarifying that protections under 18 U.S.C. 3504 pertained only to Title III surveillance during the grand jury stage. Furthermore, the court refrained from ruling on the legality of the NSA's surveillance program, citing the appellants' lack of standing to challenge it before complying with the grand jury subpoena. The court imposed a $3,000 immediate fine on all appellants, with an additional $3,000 accruing daily until compliance was achieved, adjusting the accrual start date to October 5, 2006, after the appellants received actual notice of the contempt order. On October 19, 2006, the eleven appellants submitted over 10,000 pages of documents, leading the court to find on November 6 that they had purged their contempt, ordering them to pay $48,000 for sixteen days of contempt, later reduced to $39,000 for thirteen days. Appellant 10 remained in contempt, with a modified citation of $1,000 per day assessed from the contempt order date; Appellant 10 provided the required documents the same day and was ultimately fined $18,000. By June 20, 2007, the court determined that Appellant 10 had purged its contempt but still owed the assessed amount. All twelve corporations appealed their contempt fees. The court addressed arguments from the appellants asserting that the fees constituted criminal fines requiring procedural safeguards. It rejected this claim, clarifying that the contempt fees were remedial and prospective, aimed at inducing compliance rather than punishing past behavior. The court noted that the appellants had ample opportunity to avoid fines and emphasized that the imposition of the fees was within the district court’s discretion, considering the lengthy period since the subpoenas were issued. At the court's invitation, the parties submitted arguments regarding mootness. Despite the twelve appellants purging their contempt by complying with subpoenas, the appeal remains active due to outstanding monetary assessments: $39,000 for eleven corporations and $18,000 for Appellant 10. If the court affirms, the assessments will be upheld; if reversed, they will be canceled. The reasoning from Shuffler v. Heritage Bank is cited, where the Ninth Circuit found that a civil contempt order's purging did not moot the associated financial assessments, as the dispute over their legitimacy persisted. The court intends to examine the merits of the case, reviewing the district court's findings of contempt for abuse of discretion. The appellate review will respect the district court's interpretation of its own orders, but legal interpretations will be reviewed de novo. Appellant 10 presents three arguments against complying with its subpoena: (1) a claim of unconstitutional wiretapping under the Fourth Amendment; (2) alleged violations of the Foreign Intelligence Surveillance Act (FISA); and (3) a violation of 18 U.S.C. § 3504 regarding the government's surveillance disclosures. The government contests Appellant 10's status as an "aggrieved party" under Section 3504(a), but the court finds that even if Appellant 10 were aggrieved, the district court acted within its discretion in holding the corporation in contempt. Appellant 10's claims are addressed sequentially, beginning with the argument that government surveillance conducted by the NSA without a warrant violates the Fourth Amendment, rendering the evidence obtained through subpoenas as "tainted fruit" of this unlawful surveillance. However, the court clarifies that such constitutional arguments are not appropriate for consideration within a grand jury context, as established by Supreme Court precedent. Grand juries can evaluate a wide array of information, regardless of its admissibility at trial, and are not constrained by the evidentiary standards that apply to criminal trials. Significant case law supports this, including U.S. v. Calandra, which affirms that grand juries can utilize unlawfully obtained evidence without applying the Fourth Amendment’s exclusionary rule. The court emphasizes that a grand jury’s role is to determine whether a crime may have occurred, rather than to ascertain guilt, and that an indictment remains valid even if based on improper evidence. Consequently, courts have consistently upheld the broad discretion of grand juries in their investigations, allowing them to consider tips, rumors, and even hearsay evidence. This established principle underscores that the mere unreliability of evidence does not warrant the dismissal of an indictment. Grand juries can utilize a wide range of evidence, whether admissible at trial or not, to fulfill their role in investigating criminal activity. The Supreme Court in Calandra emphasized that restricting evidence for grand juries does not significantly enhance individual rights, as the primary purpose of the exclusionary rule is to deter unlawful police conduct rather than to protect privacy. The Court asserted that the potential for evidence to be inadmissible at trial sufficiently encourages law enforcement to adhere to Fourth Amendment standards, making any further deterrent effect from applying the exclusionary rule to grand jury proceedings questionable. Consequently, there is no constitutional barrier preventing a grand jury from considering subpoenaed documents, even if there are claims of unlawful surveillance. Regarding FISA, the appellant contends that the NSA program violates its provisions, which mandate suppression of unlawfully obtained evidence. However, FISA does not allow challenges to surveillance at the grand jury level. The statute includes notice and suppression procedures for illegally obtained evidence, but notably excludes grand jury proceedings, allowing such motions only in other legal contexts. Thus, the arguments presented about the validity of NSA surveillance do not impede the grand jury's ability to consider the evidence in question. Section 2515 of Title III explicitly prohibits the use of illegal wiretaps in any legal proceedings, including grand juries, as highlighted in 18 U.S.C. 2515. Additionally, Section 3504(a) mandates that the government must affirm or deny the existence of unlawful surveillance in grand jury proceedings. The notable exclusion of grand juries from the Foreign Intelligence Surveillance Act (FISA) suggests a deliberate decision by Congress, indicating that it did not intend to alter established grand jury practices regarding foreign and national security surveillance, as recognized in previous rulings such as Calandra and Costello. Specifically, 50 U.S.C. 1806(c) and (e) limit the litigation of foreign intelligence matters, allowing the government to present FISA evidence in grand jury proceedings without triggering notice requirements. This omission indicates Congress's intention to restrict challenges to FISA surveillance within grand juries. While there may be alternative venues for contesting FISA surveillance, Congress has explicitly excluded grand juries from these proceedings. The distinct drafting of notice and exclusionary provisions in Title III versus FISA underscores this point, with FISA lacking any reference to grand juries. Historically, Congress recognized the need for different guidelines in foreign intelligence contexts, as seen in the original Title III, which stated that it did not limit the President's constitutional powers concerning national security and foreign intelligence. Although this language was later removed to accommodate FISA, it was not due to a shift in understanding of foreign surveillance's unique nature but because FISA comprehensively addressed the issue. FISA was designed to regulate foreign intelligence surveillance, covering various subjects such as agents of foreign powers and terrorism while ensuring individual rights are protected. The omission of grand juries from FISA is significant, reflecting Congress's intent to balance the need for surveillance with civil liberties protection. Any deviation from these established norms would require clear congressional intent. The legal analysis addresses the absence of a clear congressional intent to extend the exclusionary mandate of the Foreign Intelligence Surveillance Act (FISA) to grand jury proceedings. The court emphasizes that Congress intentionally excluded grand jury contexts from FISA's notice and exclusionary requirements, indicating that any expansion of FISA should originate from Congress rather than the judiciary. Previous circuit law supports this view, particularly highlighting a case where it was determined that neither the language nor the legislative history of FISA necessitates notification before grand jury questioning. The excerpt also addresses Appellant 10's claim regarding the government's compliance with 18 U.S.C. § 3504(a)(1). The government had stated that the subpoenaed corporations were not subjects of electronic surveillance under Title III, which Appellant 10 interpreted as insufficiently addressing potential illegal surveillance. The court concludes that the government's denial, which explicitly stated there was no Title III surveillance, fulfills its obligation under § 3504(a). The court reinforces that the emphatic language of the government’s response indicates no surveillance occurred, thereby rejecting Appellant 10's argument that the response was ambiguous or inadequate. Ultimately, the court agrees with the district court’s finding that the government's letter adequately affirmed or denied any violations of Title III, dismissing Appellant 10’s distinctions between "pursuant to" and "in violation of" as unfounded. The government’s response letter addressed a request from Appellant 10 regarding any electronic surveillance under Title III. The distinction between "under" and "pursuant to" Title III is deemed inconsequential, and the government’s assertion that no surveillance occurred "pursuant to" Title III is not viewed as evasive. The letter aimed to clarify that Title III was not the basis for any surveillance, particularly in a context involving suspected foreign connections. The main issue is whether Appellant 10 can contest this denial. The denial eliminates the government’s ability to invoke Title III for future proceedings, even if evidence is inadmissible under other surveillance powers. However, the absence of a procedure to litigate such a denial indicates that Congress did not intend for this issue to be contested immediately. Instead, the appropriate remedy is exclusion under Title III or FISA, which applies when the government attempts to introduce evidence in court. While Congress could have established a litigation mechanism similar to the Classified Information Procedures Act, it did not do so in this case. As a result, Section 3504 lends some presumption of regularity to the government’s denial of Title III surveillance, which the district court upheld. In essence, Appellant 10’s claims regarding unconstitutional surveillance and violations of FISA and Section 3504 are not suitable for litigation at this preliminary stage. Previous rulings indicate that issues of admissibility do not implicate constitutional concerns at the grand jury level, and FISA’s requirements do not apply at this stage either. The district court determined that the government met its obligation under Section 3504 by denying any Title III surveillance, leading to the conclusion that the grand jury is not the proper venue for challenges to this alleged surveillance. The broader claims related to NSA surveillance are deferred for future consideration. Additionally, in Appeal No. 06-2220, the other eleven appellants assert that the district court erred in finding them in contempt of its May 2, 2006 order, arguing that the order was ambiguous and they were unaware of violating a valid decree. Arguments made by the appellants are inconsistent with the established facts. The district court has discretion in evaluating compliance efforts with a subpoena and the reasonableness of compliance timelines. To establish civil contempt, clear and convincing evidence must show: (1) a valid decree known to the alleged contemnor, (2) the decree favoring the movant, (3) violation of the decree by the alleged contemnor with knowledge of such violations, and (4) harm suffered by the movant. The district court's interpretation of its decree is respected due to its superior position. The court’s directives on May 2, 2006, were clear and unambiguous, requiring the appellants to comply with subpoenas and appear before a grand jury, which the court repeated multiple times. Despite these explicit orders, the appellants only produced a few documents and requested an extension without demonstrating adequate efforts to comply. Their claim that the volume of documents was excessive was unsupported by evidence of prior compliance efforts. Arguments of impossibility to comply do not excuse their failure to even attempt compliance. The subsequent written order on May 5, 2006, did not introduce ambiguity, as it reiterated the obligation to produce documents "forthwith" and by May 12, 2006. The court's assessment that contempt was warranted after five months of inaction was reasonable, and the appellants cannot claim ignorance regarding their obligation to turn over documents held by their attorney post-2002 search warrants. Appellants were required by subpoenas to produce all responsive documents within their possession, custody, or control, which included those held by their agents and employees. The subpoenas defined "constructive possession" broadly, encompassing documents physically held by various representatives of the entities. Appellants had received these subpoenas in early 2006 and had ample time to understand their obligations before being held in contempt in October. The explicit language of the subpoenas negated any claims of uncertainty regarding compliance. The district court's decision was upheld, highlighting that the judicial system values patience and procedural fairness but does not tolerate undue delays. The court commended the district court's handling of the situation and affirmed its judgment. The appeal involved grand jury deliberations, thus the appellants' names were not disclosed. Additionally, the excerpt references 18 U.S.C. 3504(a)(1), which addresses the admissibility of evidence related to unlawful acts.