In Re Corrugated Container Antitrust Litigation. Appeal of John Conboy, Deponent

655 F.2d 748, 32 Fed. R. Serv. 2d 606, 9 Fed. R. Serv. 133, 1981 U.S. App. LEXIS 11333

• Court: Court of Appeals for the Seventh Circuit
• Decided: July 17, 1981
• Docket: 81-1960
• Status: Published

Opinions

SWYGERT, Senior Circuit Judge.

This is an appeal from an order holding a non-party deponent in civil contempt for asserting the Fifth Amendment in response to questions read verbatim from or closely tracking transcripts of the deponent’s previously immunized testimony. The district court ordered the deponent to answer the questions apparently on the ground that he would not be subject to future criminal prosecution based on this testimony. For the reasons stated herein, we affirm the order of the district court.

I

Appellant John A. Conboy is a former employee of Weyerhaeuser Company, one of the defendants in this civil antitrust action instituted by plaintiffs, purchasers of corrugated containers who elected to opt out of the class action brought by other purchasers. In January, 1978, Conboy received a letter from the Department of Justice asking him to appear for an interview in connection with a criminal investigation of alleged price fixing in the corrugated container industry. The letter stated that:

the information which you reveal in the course of the interview and the transcript derived therefrom, along with the personal documents which you deliver to us, will be given the same treatment and protections afforded statements made before a grand jury pursuant to a court order compelling testimony and granting immunity.

On January 10, 1978, Conboy submitted to the interview, in which he answered questions concerning his participation in and knowledge of the alleged price fixing.

By court order on January 16,1978, Con-boy was granted use immunity for his testimony before the grand jury pursuant to 18 U.S.C. § 6001 et seq. Conboy then testified before the grand jury, restating the inf or-mation he had provided in the interview and expanding on his knowledge of alleged communications and agreements regarding prices. Several defendants were indicted as a result of the grand jury investigation.

Following the criminal trial, numerous civil antitrust actions were filed in various district courts. These lawsuits were consolidated by the Judicial Panel on Multi-Dis-trict Litigation and assigned to Chief Judge John V. Singleton, Jr. of the Southern District of Texas.¹ The class action plaintiffs have either tried or settled their claims against these defendants, but the cases of eighteen opt-out plaintiffs are still pending.

Pursuant to a subpoena issued by the United States District Court for the Northern District of Illinois, Conboy appeared with counsel for a deposition on May 20, 1981. Counsel for the opt-out plaintiffs asked Conboy questions either taken verbatim from or closely tracking the transcripts of his grand jury testimony and Justice Department interview. Conboy, on advice of counsel, asserted his Fifth Amendment privilege in response to the questions.

Counsel for plaintiffs then telephoned Judge Singleton and moved him to compel Conboy to answer the questions. After hearing arguments of counsel for both sides and questioning Conboy, the judge, expressly invoking his authority to exercise the powers of the District Court for the Northern District of Illinois pursuant to 28 U.S.C. § 1407(b), ordered Conboy to answer the questions. When Conboy continued to assert his Fifth Amendment privilege, the judge held him in contempt of court but stayed the operation of the order pending this appeal.²

II

The Fifth Amendment provides that “[n]o person .. . shall be compelled in any criminal case to be a witness against himself .. .. ” This privilege “can be asserted in any proceeding, civil or criminal, administrative or judicial, investigatory or adjudicatory.” Kastigar v. United States, 406 U.S. 441, 444, 92 S.Ct. 1653, 1656, 32 L.Ed.2d 212 (1972). The Fifth Amendment privilege may be invoked, however, only when “ ‘the claimant is confronted by substantial and “real,” and not merely trifling or imaginary, hazards of incrimination.’ ” United States v. Apfelbaum, 445 U.S. 115, 128, 100 S.Ct. 948, 956, 63 L.Ed.2d 250 (1980) (quoting Marchetti v. United States, 390 U.S. 39, 53, 88 S.Ct. 697, 705,19 L.Ed.2d 889 (1968)). The privilege may be supplanted, and a witness ordered to testify, by a grant of immunity that is co-extensive with the privilege because “the grant of immunity has removed the dangers against which the privilege protects.” Kastigar, supra, 406 U.S. at 449, 92 S.Ct. at 1658.

In the case at bar, Conboy was granted use immunity pursuant to 18 U.S.C. § 6002 ³ for his testimony before the grand jury. The terms of the immunity statute prohibit the use of the immunized testimony or any information “directly or indirectly derived from” it in any criminal case except a perjury prosecution. Id. See also Kastigar v. United States, supra, 406 U.S. at 449, 92 S.Ct. at 1658. Because the questions asked in this deposition were taken verbatim from or closely tracked the transcript of Conboy’s grand jury testimony, we believe that his answers at the deposition would be “derived from” the prior immunized and therefore unavailable for use in any subsequent criminal prosecution.

Two other circuits that considered this question have reached the same conclusion. In In re Corrugated Container Antitrust Litigation, Appeal of Fleischacker, 644 F.2d 70 (2d Cir. 1980), the deponent, like Conboy, was a former employee of one of the defendants in this case. His earlier testimony before the grand jury was immunized pursuant to 18 U.S.C. § 6002, and the examining counsel confined his questions to those taken verbatim from or closely following the transcript of that testimony. When the deponent refused to answer the questions in spite of a court order compelling him to do so, Judge Singleton held him in contempt.

The Second Circuit, in affirming the contempt order, held that:

where a transcript of a witness’ immunized testimony constitutes the source of questions posed to the same witness in a civil proceeding, responsive answers to such questions are necessarily ‘derived from’ the immunized testimony, and thus unavailable for subsequent prosecutorial use. Since answers to questions derived from immunized testimony cannot be used against the witness in any criminal proceeding, it follows that, in such cases, the Fifth Amendment privilege against self-incrimination cannot be properly invoked. Therefore, once a court determines that immunized testimony has provided the source of the questions posed, the court may compel the witness to respond without infringing the Fifth Amendment.

Fleischacker, supra, 644 F.2d at 77.

Appeal of Starkey, 600 F.2d 1043 (8th Cir. 1979) concerned an alleged price-fixing conspiracy in the dairy industry. The deponent appealed from an order holding him in contempt- for asserting his Fifth Amendment privilege at a civil deposition. As in the case at bar, the deponent was asked questions taken from the transcript of his previously immunized testimony before a grand jury. The Eighth Circuit held that as long as the questions were restricted to “the same time, geographical and substantive framework as the grand jury testimony,” then he could not properly invoke the Fifth Amendment. Id. at 1048. The court stated that the deponent “clearly has immunity from criminal prosecution for the [civil] deposition testimony because such testimony would be tainted by the federal grand jury testimony for which [he] received ‘use’ immunity pursuant to 18 U.S.C. § 6001 et seq.” Id. at 1046. Accord, Little Rock School District v. Borden, Inc., 632 F.2d 700 (8th Cir. 1980) (“the immunization of their testimony before the :.. grand jury protects them from any subsequent prosecution, state or federal, in which direct or indirect use of this testimony is made”).

Our holding today is consistent with our opinions in Patrick v. United States, 524 F.2d 1109 (7th Cir. 1975) and In re Folding Carton Antitrust Litigation, Appeal of Brown, 609 F.2d 867 (7th Cir. 1979). In Patrick, the taxpayer challenged a jeopardy assessment that was based on information given by the taxpayer in his immunized testimony before a grand jury. He argued that forcing him to resort to a refund suit to challenge the assessment puts an impermissible burden on his privilege against self-incrimination because in a refund suit he would have the burden of proof and would necessarily have to present incriminating evidence. The court rejected this argument on the ground that “such later testimony would be elicited only because the government could use the grand jury testimony as a basis for the assessment.” 524 F.2d at 1120. Therefore, the testimony in the later proceeding could not be used against the taxpayer in any criminal action because it would be “information ... indirectly derived from” immunized testimony. Id.

In Brown, supra, we held that “[w]hen a witness can demonstrate any possibility of prosecution which is more than fanciful,” then he has the right to invoke his Fifth Amendment privilege.⁴ 609 F.2d at 871. We further stated:

To the extent that an assessment of the probability of prosecution is significant in the trial court’s evaluation of an asserted privilege, it is more properly accomplished through examination of the more traditional tests, viz, statute of limitations, immunity, double jeopardy, short of the existence of one of these indicia of an absolute bar to subsequent prosecution, a judge’s prediction as to the likelihood of a prosecutor filing an indictment is not dis-positive in ascertaining the permissible scope of a claim of fifth amendment privilege.

Id. at 872 (footnotes omitted). Although the issue in Brown differed from the one presented by the case at bar, we recognized then that the question whether the testimony is protected by a grant of immunity should be examined by the court in determining the propriety of the assertion of the privilege.

Ill

Conboy contends that Judge Singleton’s decision is a “de facto” grant of immunity, and that his ruling confuses the standard for proper invocation of the privilege against self-incrimination with the exclusionary rule that prevents the introduction of evidence against a witness when the district court makes an erroneous ruling on privilege.⁵ See Brown, supra, 600 F.2d at 872 n.ll. We cannot agree with that characterization of the district court’s holding.

It is well established that a court, although it may not grant immunity to a witness, may interpret the scope of a grant of immunity. Murphy v. Waterfront Commission, 378 U.S. 52, 79, 84 S.Ct. 1594, 1609, 12 L.Ed.2d 678 (1964); Kastigar, supra, 406 U.S. at 453, 92 S.Ct. at 1661; Fleischacker, supra, 644 F.2d at 78; Starkey, supra, 600 F.2d at 1048. In the case at bar, we must determine if Conboy’s testimony at the deposition would be immunized in order to rule on the propriety of his assertion of the Fifth Amendment privilege. In holding that his deposition testimony could not be used against him in a subsequent criminal prosecution because it would be derived from his previous immunized testimony, we are merely interpreting the scope of that grant of immunity.⁶

The dissenting opinion, relying on Kasti-gar, reasons that compelling Conboy to testify at the deposition would create a new source of evidence and that the coextensive immunity granted for Conboy’s testimony in an earlier proceeding would not protect the deposition testimony because the earlier immunity “protects only the source, not the substance of the information.”⁷ Infra at 19. This statement is followed by a quotation from Kastigar, 406 U.S. at 453, 92 S.Ct. at 1661.

The analysis simply ignores the basic issue in this case and any case involving use immunity granted under section 6002 — that is, whether the deposition testimony is directly or indirectly derived from the immunized testimony. If so, then the testimony receives the same protection as the earlier testimony. The dissenting opinion fails to deal with this issue of statutory construction and merely states that our holding that the later testimony is directly or indirectly derived from the immunized testimony is conclusory. But the analysis of the dissenting opinion fares no better under its own criticism — it concludes that the later deposition would create an independent source and the immunity protects “substance” and not “source.” Unfortunately, this provides little insight into determining when a source is independent or when testimony is directly or indirectly derived from immunized testimony.⁸

The dissenting opinion relies on Kastigar, supra, 406 U.S. at 453, 92 S.Ct. at 1661, as support for its “substance not source” analysis, but Kastigar does not support the proposition. The quoted passage is merely a discussion of the difference between use and transactional immunity — “The privilege has never been construed to mean that one who invokes it cannot subsequently be prosecuted.” Id. This language is fully consistent with our analysis — only testimony directly or indirectly derived from the earlier grand jury testimony is immune. If prosecutors obtained evidence from a source independent of the grand jury testimony, Conboy may still be prosecuted.⁹

For the foregoing reasons, the order of the district court is AFFIRMED.

1 . Judge Singleton previously presided over the federal grand jury investigation of the corrugated container industry, the subsequent criminal trial of corrugated container manufacturers for price fixing, and the class action instituted by corrugated container purchasers.

2 . Both Conboy and the opt-out plaintiffs contend that this court has jurisdiction over the appeal after the Fifth Circuit’s decision in In re Corrugated Container Antitrust Litigation, Appeal of Franey, 620 F.2d 1086 (5th Cir. 1980). Rule 45(d)(2) of the Federal Rules of Civil Procedure provides that a deponent can be required to appear at a deposition only in the county in which he resides or is employed or transacts business. As a non-party witness, Conboy was not subject to the jurisdiction of the district court for the Southern District of Texas. See Franey, supra, 620 F.2d at 1090 & n.3. Rule 37(a)(1) provides: “An application of an order to a deponent who is not a party shall be made to the court in the district where the deposition is being taken.” The Fifth Circuit interpreted that provision to mean that only the court sitting in the district where the deposition was being taken has the power to compel testimony and enter a contempt order against the deponent. Because Judge Singleton, in Franey as well as the case at bar, was exercising the powers of a district judge in the district where the deposition was being taken pursuant to 28 U.S.C. § 1407(b), then according to the Fifth Circuit, the appeal must be taken in “the court of appeals for the circuit embracing the district” in which the contempt order was entered. 28 U.S.C. § 1294.

As the Second Circuit has noted, however, because section 1407 consolidates multi-district cases to achieve greater efficiency, “it is arguable that its purposes would be best served by permitting appeals to only one circuit.” In re Corrugated Container Antitrust Litigation, Appeal of Fleischacker, 644 F.2d 70, 74 n.6 (2d Cir. 1981). Nevertheless, we agree with the parties that under 28 U.S.C. § 1294 we have jurisdiction over this appeal from a contempt order entered by a district judge exercising the power of a district judge in the Northern District of Illinois. See Fleischacker, supra, 644 F.2d at 74 n.6.

3 . 18 U.S.C. § 6002 provides:

Whenever a witness refuses, on the basis of his privilege against self-incrimination, to testify or provide other information in a proceeding before or ancillary to—

(1) a court or grand jury of the United States,

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and the person presiding over the proceeding communicates to the witness an order issued under this part, the witness may not refuse to comply with the order on the basis of his privilege against self-incrimination; but no testimony or other information compelled under the order (or any information directly or indirectly derived from such testimony or other information) may be used against the witness in any criminal case, except a prosecution for perjury, giving a false statement, or otherwise failing to comply with the order.

4 . Conboy contends that because the federal statute of limitations for conspiracy and certain state statutes of limitations for antitrust violations have not yet run, it is still possible that he could be prosecuted for- the activities about which he testified. Our holding today makes it unnecessary for us to consider that question, although Chief Judge Cummings agrees with Judge Singleton’s resolution thereof, but on the ground that any possibility of Conboy’s prosecution is “fanciful.” In re Folding Carton Antitrust Litigation, Appeal of R. Harper Brown, 609 F.2d 867, 871; see also, e. g., United States v. Apfelbaum, 445 U.S. 115, 128, 100 S.Ct. 948, 956, 63 L.Ed.2d 250.

Judge Cummings adds that these plaintiffs are entitled to this testimony because (as the dissent acknowledges) the vagaries of eviden-tiary rulings might otherwise prevent its admission at the coming trial.

5 . The dissenting opinion reasons that our decision today creates a de facto grant of future immunity by determining that the later use of this testimony will be subject to an exclusionary rule. The dissent then quotes from Ellis v. United States, 416 F.2d 791, 796 (D.C.Cir.1969). The analysis condemned in Ellis and in other contexts is that a witness may be ordered to testify regardless of the propriety of the privilege asserted on the ground that the testimony will be excluded in the future. In the case at bar, however, we have not concluded that regardless of Conboy’s claim of privilege, the later testimony must be excluded. Rather, we have concluded that Conboy has no privilege to assert.

6 . As Conboy notes in his brief, he could be subject to prosecution for perjury if his answers at the deposition are inconsistent with those he gave before the grand jury. This does not, however, compel a different conclusion. It is clear that the district court has the authority to inquire into the basis for a witness’s claim of Fifth Amendment privilege. Hoffman v. United States, 341 U.S. 479, 486, 71 S.Ct. 814, 818, 95 L.Ed. 1118 (1951); Brown, supra, 609 F.2d at 871 n.5. If Conboy, by answering truthfully any question at the deposition, would be risking prosecution for perjury, he would of course be permitted to invoke the privilege.

7 . United States v. Kuehn, 562 F.2d 427 (7th Cir. 1977), cited by the dissent, is not to the contrary. In Kuehn, we held that a defendant who voluntarily restates the substance of his prior immunized testimony creates an independent source of incriminatfng evidence that is not protected by the prior grant of immunity. That decision is clearly distinguishable from the instant case in which the court compelled the deponent to testify over his assertion of his Fifth Amendment privilege only as to matters within the scope of his prior immunized testimony.

8 . A recurring problem in the analysis adopted by the dissent is a confusion between transactional and use immunity. This is evident where the dissent, infra at 21 n.14, states that the later deposition creates an independent source, and relies on the fact that separate grants of immunity were provided to Conboy for his initial interview and for his grand jury testimony. Two different grants of immunity may have been necessary because the prosecutor wished to ask questions before the grand jury that were beyond the scope of the Justice Department interview.

A simple hypothetical illustrates the distinction that the dissenting opinion apparently overlooks. Assume that two codefendants engaged in criminal activity. One defendant is called before the grand jury and given use immunity. He testifies and is later deposed in a related civil case. Under our ruling today, he may be compelled to testify as to those matters discussed before the grand jury. If his code-fendant confesses and decides to testify against him at a later criminal trial, nothing in our ruling would prohibit this prosecution. As long as the evidence obtained from the codefendant is independent of the grand jury testimony, the defendant may be tried and convicted for acts which were the subject of the grand jury testimony. Likewise, Conboy may later be prosecuted if independen!, evidence is obtained.

9 . The dissenting opinion discusses the possibility that the deposition testimony may stray from the four comers of the grand jury testimony and that therefore the Government may be prejudiced in any future attempt to prosecute Conboy because all future evidence might be tainted. This speculative prejudice is better solved by a practical solution. If Government prosecutors are concerned about Conboy being “tricked” into discussing other matters, they might come forward and ask to be present at the deposition to protect any interest the Government might have.