In Re: Grand Jury

Opinions of the United
2002 Decisions States Court of Appeals
for the Third Circuit

4-5-2002

In Re: Grand Jury
Precedential or Non-Precedential:

Docket No. 01-4042

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PRECEDENTIAL

Filed April 5, 2002

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 01-4042

IN RE: GRAND JURY

On Appeal from the United States District Court
for the District of New Jersey

District Court Judge: The Honorable Katharine S. Hayden
(D.C. Miscellaneous No. 00-188)

Argued on February 28, 2002

Before: ROTH and FUENTES, Circuit Judges, and
KATZ,* District Judge

(Opinion Filed: April 5, 2002)

Michael B. Himmel [ARGUED]
Robert J. Kipnees
Greenbaum, Rowe, Smith,
Ravin, Davis & Himmel LLP
P.O. Box 5600
Woodbridge, New Jersey 07095

Counsel for Appellant
John Doe
_________________________________________________________________

* Honorable Marvin Katz, United States District Judge for the Eastern
District of Pennsylvania, sitting by designation.

Alain Leibman [ARGUED]
Christopher J. Christie
George S. Leone
United States Attorney’s Office
970 Broad Street
Newark, New Jersey 07102-2535

Counsel for Appellee
United States of America

OPINION OF THE COURT

FUENTES, Circuit Judge:

This case requires us to resolve the conflict that arises
when a grand jury subpoena seeks production of evidence
ostensibly shielded by a civil protective order. Appellant is
a target of a grand jury investigation in the District of New
Jersey. The Government seeks to obtain, by way of a grand
jury subpoena, testimony, documents, and other discovery
material given pursuant to a protective order in a pending
civil case. Appellant filed a motion to quash the subpoena
on the ground that the protective order barred disclosure of
the documents to the Government. The District Court
denied Appellant’s motion and granted the Government’s
cross-motion to compel production of the subpoenaed
documents.

We hold that a grand jury subpoena supercedes a civil
protective order unless the party seeking to avoid the
subpoena demonstrates the existence of exceptional
circumstances that clearly favor enforcement of the
protective order. Appellant cannot meet his burden of
establishing exceptional circumstances in this case, and
therefore we affirm the order of the District Court denying
appellant’s motion to quash the subpoena and granting the
Government’s motion to compel production of the
subpoenaed documents.

I.

In 1998, Appellant John Doe and his wife filed a

2

complaint in the Superior Court of New Jersey ("civil case").1
The defendants in this commercial litigation removed the
case to the District Court for the District of New Jersey. The
parties entered into a Stipulation and Consent Order which
was approved by the District Court in March 1999. The
order included confidentiality provisions which limited
disclosure of deposition transcripts and other documents
produced in discovery. The parties agreed that the
protective order was designed to avoid public disclosure of
sensitive personal and corporate financial information, and
that the case did not involve trade secrets or other
information which normally enjoys a high level of
confidentiality. After Doe added defendants to his case with
whom there was no diversity of citizenship, the case was
remanded to the New Jersey Superior Court in August
1999.

After remand, a Superior Court judge held a case
management conference and entered a Case Management
Order in October 1999 which adopted the earlier protective
order entered by the District Court. Subsequent to the
issuance of the state protective order, depositions,
interrogatory answers, and other discovery were taken of
Doe and several of his associates. The civil case, which also
includes counterclaims against Doe, is still ongoing in state
court and currently awaits trial.

Around April 2000, as discovery was ongoing in the civil
case, the United States Attorney’s Office for the District of
New Jersey commenced a grand jury investigation of Doe
and his wife into alleged mail fraud, wire fraud, income tax
evasion, and falsification of income tax returns. These
matters relate to issues raised in the civil case. On May 29,
2001, the grand jury issued a subpoena to Doe’s civil case
counsel. The subpoena calls for all depositions, related
exhibits, interrogatory answers, and responses to requests
for admissions in the civil case with respect to Doe and
_________________________________________________________________

1. This case has been submitted under seal pursuant to the order of the
District Court under Federal Rule of Criminal Procedure 6(e)(6).
Therefore, our statement of facts is necessarily brief. "John Doe" is a
pseudonym used to prevent disclosure of any matters before the grand
jury.

3

several other deponents. The parties agree that all the
deposition testimony and other discovery sought by the
subpoena was taken after the case was remanded to state
court and under the state protective order.

Doe filed a motion to intervene and moved to quash the
subpoena issued to his civil counsel on June 27, 2001. The
Government filed a cross-motion to compel compliance with
the subpoena and production of the documents.2

The District Court judge presiding over the grand jury
held a hearing on August 14, 2001. In an opinion and order
filed under seal on October 25, 2001, the court denied
Doe’s motion to quash and granted the Government’s
motion to compel production. In its opinion, the court
noted that a circuit split exists on the question of whether
a protective order may trump a grand jury subpoena and
that this Court has not decided the issue. Without the
benefit of clear guidance from this Court, the District Court
declined to adopt a specific rule, but held that even under
the most "protective" circuit law, the protective order
cannot take precedence if it was improvidently granted. The
court found that the protective orders in this case were
improvidently granted and therefore allowed the grand jury
subpoena to override the protective order.3 The court also
questioned the extent of the deponents’ reliance on the
protective order and found that the public interest did not
justify enforcing the protective order in the face of the
grand jury subpoena.

Doe timely appeals the denial of his motion to quash the
subpoena. With the consent of the Government, the District
Court stayed its order pending expedited appeal to this
Court. We granted the parties’ request for expedited appeal
because the grand jury investigation is pending.
_________________________________________________________________

2. The Government did not oppose Doe’s motion to intervene.

3. The District Court held that under our decisions in Glenmede Trust
Co. v. Thompson, 56 F.3d 476 (3d Cir. 1995) and Pansy v. Borough of
Stroudsburg, 23 F.3d 772 (3d Cir. 1994), the protective order was
improperly granted because of the "fatal lack of judicial findings of good
cause" and due to this Court’s discouragement of"umbrella" protective
orders. Dist. Ct. Mem. Op. at 10-12.

4
II.

The District Court had jurisdiction under 28 U.S.C.
S 3231 and Fed. R. Crim. P. 17(c) over Doe’s motion to
quash the grand jury subpoena and the Government’s
motion to compel production. This Court has jurisdiction
over the District Court’s order denying Doe’s motion and
granting the Government’s motion under 28 U.S.C.S 1291.
See In re Grand Jury Proceedings, 604 F.2d 798, 800-01 (3d
Cir. 1979).

Doe challenges the grand jury subpoena as an intervenor
under Federal Rule of Criminal Procedure 17(c), which
states that "[t]he court on motion made promptly may
quash or modify the subpoena if compliance would be
unreasonable or oppressive." The same rule also allows the
court to direct production of subpoenaed documents.

"We review the decision to quash a grand jury subpoena
for abuse of discretion." Impounded, 241 F.3d 308, 312 (3d
Cir. 2001). We have plenary review over the District Court’s
interpretation and application of the relevant legal
standards. See Pansy v. Borough of Stroudsburg , 23 F.3d
772, 783-84 (3d Cir. 1994). The District Court’s factual
determinations are reviewed for clear error. Impounded, 241
F.3d at 312.

III.

We have not previously addressed whether, and under
what circumstances, a civil protective order may shield
information from a grand jury, but our sister circuits have
developed three different approaches to this problem.4 The
_________________________________________________________________

4. We note that all the circuit cases discussed here addressed the issue
in the context of protective orders issued by federal courts under Federal
Rule of Civil Procedure 26(c). Here, the initial stipulated protective order
was approved by the District Court, but all the materials sought by the
grand jury were produced under the state court protective order, which
incorporated and adopted the federal order. The interests implicated by
the clash between a protective order and a grand jury subpoena are
substantially the same whether the order was issued under federal or
state law. Therefore, the circuit cases we discuss below are relevant, and
the rule we announce applies to both federal and state protective orders.

5

Second Circuit has held that, absent a showing of
improvidence in the grant of the protective order, or
extraordinary circumstance or compelling need for the
information, a protective order takes priority over a grand
jury subpoena. Martindell v. International Telephone &
Telegraph Corp., 594 F.2d 291, 296 (2d Cir. 1979). This
presumption in favor of enforcing protective orders against
grand jury subpoenas has been rejected by several courts.
Three courts of appeals have announced a per se rule that
a grand jury subpoena always trumps a protective order. In
re Grand Jury Subpoena Served on Meserve, Mumper &
Hughes, 62 F.3d 1222, 1226-27 (9th Cir. 1995); In re Grand
Jury Proceedings (Williams), 995 F.2d 1013, 1020 (11th Cir.
1993); In re Grand Jury Subpoena, 836 F.2d 1468, 1477
(4th Cir.), cert. denied, 487 U.S. 1240 (1988). Most recently,
the First Circuit declined to adopt either the Second Circuit
standard or the per se rule. It instead established a
rebuttable presumption in favor of grand jury subpoenas.
Under this rule, a grand jury subpoena overrides a
protective order unless the party seeking to avoid the
subpoena demonstrates the existence of "exceptional
circumstances that clearly favor subordinating the
subpoena to the protective order." In re Grand Jury
Subpoena (Roach), 138 F.3d 442, 445 (1st Cir.), cert.
denied, 524 U.S. 939 (1998).5

We benefit from the reasoning of these courts in
announcing our rule today. We join the First Circuit in
concluding that a strong but rebuttable presumption in
favor of a grand jury subpoena best accommodates the
sweeping powers of the grand jury and the efficient
resolution of civil litigation fostered by protective orders.

A.

In considering the tension between a grand jury
subpoena and a civil protective order, we first recognize the
"unique role" played by the grand jury in our system of
justice. See Impounded, 241 F.3d at 312; see also In re
Grand Jury Subpoena, 223 F.3d 213, 216 (3d Cir. 2000)
_________________________________________________________________

5. At oral argument, the Government urged this Court to adopt the First
Circuit’s rule.

6

(noting that grand jury is "essential to the federal criminal
justice system"). The grand jury is "a grand inquest, a body
with powers of investigation and inquisition, the scope of
whose inquiries is not to be limited narrowly by questions
of propriety or forecasts of the probable result of the
investigation . . .". Blair v. United States , 250 U.S. 273, 282
(1919). As the Supreme Court has noted, the grand jury is
"[r]ooted in long centuries of Anglo-American history" and is
"a constitutional fixture in its own right." United States v.
Williams, 504 U.S. 36, 47 (1992) (internal quotations and
citations omitted).6 It may "inquire into all information that
might possibly bear on its investigation until it has
identified an offense or has satisfied itself that none has
occurred." United States v. R. Enterprises, Inc., 498 U.S.
292, 297 (1991). Therefore, "[a]s a necessary consequence
of its investigatory function, the grand jury paints with a
broad brush." Id. A subpoena is perhaps the most
important of the grand jury’s tools of investigation, and its
authority to subpoena witnesses "is not only historic, but
essential to its task . . . [because] ‘the public . . . has a
right to every man’s evidence,’ except for those persons
protected by a constitutional, common-law, or statutory
privilege." Branzburg v. Hayes, 408 U.S. 665, 688 (1972)
(citations omitted).

Courts exercise limited control over the functioning of the
grand jury and extend great deference to this historic
institution and its broad powers. See Impounded , 241 F.3d
at 312. The grand jury "belongs to no branch of the
institutional Government, serving as a kind of buffer or
referee between the Government and the people." Williams,
504 U.S. at 47. As we have acknowledged, the grand jury’s
"great powers of investigation and inquisition" allow it to
" ‘compel the production of evidence or testimony of
witnesses . . . unrestrained by the technical procedural and
evidentiary rules governing the conduct of criminal trials.’ "
In re Grand Jury Subpoena, 223 F.3d at 216 (quoting
_________________________________________________________________

6. "In this country the Founders thought the grand jury so essential to
basic liberties that they provided in the Fifth Amendment that federal
prosecution for serious crimes can only be instituted by ‘a presentment
or indictment of a Grand Jury.’ " United States v. Calandra, 414 U.S.
338, 343 (1974) (citation omitted).

7

United States v. Calandra, 414 U.S. 338, 343 (1974)). While
courts have some authority to limit the grand jury’s power,
see Impounded, 241 F.3d at 312-13, the Supreme Court
has stated that "[g]iven the grand jury’s operational
separateness from its constituting court, it should come as
no surprise that we have been reluctant to invoke the
judicial supervisory power as a basis for prescribing modes
of grand jury procedure." Williams, 504 U.S. at 49-50.

A civil protective order also serves important interests.
Protective orders, authorized under federal law by Federal
Rule of Civil Procedure 26(c) and by analogous provisions in
state rules, are intended " ‘to secure the just, speedy, and
inexpensive determination’ of civil disputes . . . by
encouraging full disclosure of all evidence that might
conceivably be relevant." Martindell, 594 F.2d at 295
(quoting Fed. R. Civ. P. 1). By shielding sensitive
information from third parties and the public at large,
protective orders "offer litigants a measure of privacy" and
"aid the progression of litigation and facilitate settlements."
Pansy, 23 F.3d at 786.

B.

We ultimately conclude, however, that absent exceptional
circumstances, protective orders should not serve to
interfere with the unique and essential mechanism of a
grand jury investigation. Other courts have rejected the
Second Circuit’s rule favoring protective orders because
that test "tilts the scales in exactly the wrong direction" by
"failing to pay proper respect" to the grand jury and its
powers. See In re Grand Jury Subpoena (Roach) , 138 F.3d
at 444; see also In re Grand Jury Subpoena Served on
Meserve, Mumper & Hughes, 62 F.3d at 1226 ("[A]llowing
protective orders to be enforced at the expense of grand
jury subpoenas would yield little benefit, at great cost."); In
re Grand Jury Proceedings (Williams), 995 F.2d at 1017
("Permitting witnesses to rely on civil protective orders to
keep information from a criminal investigation disrupts the
essential grand jury process and threatens the grand jury’s
independence from the judiciary."); In re Grand Jury
Subpoena, 836 F.2d at 1475 ("A civil protective order may
seriously impede a criminal investigation by a grand jury.").

8

While protective orders are in many cases very important
facilitating devices, they are not, as the Second Circuit
describes them, part of the "cornerstone of our
administration of civil justice," and should almost always
yield in the face of a grand jury subpoena. See Martindell,
594 F.2d at 295.

The grand jury itself is a "cornerstone" of our justice
system. The Fourth Circuit has cataloged the ways in which
a protective order may improperly intrude upon the grand
jury’s functioning:

Uncoerced testimony given in a civil action may provide
important and relevant information to a grand jury
investigation. In addition, the government has an
interest in obtaining this information for purposes of
impeachment should the deponents testify in a manner
materially inconsistent with their deposition testimony
in any future criminal trial. Finally, protective orders
may cause the absurd result of shielding deponents
from prosecutions for perjury because, while evidence
of perjury would certainly be cause for modifying a
protective order, the protective order itself impedes an
investigation that might lead to cause for believing that
perjury has occurred.

In re Grand Jury Subpoena, 836 F.2d at 1475.

It is true that under its broad powers, the grand jury may
obtain evidence by means other than subpoenaing civil
discovery materials. For example, it may subpoena
witnesses directly, and the Government could grant these
witnesses immunity if they refuse to testify. Yet in almost
all cases, the grand jury should not be forced to resort to
these imperfect alternatives when relevant evidence may be
found in civil discovery materials. Because we give great
deference to the grand jury’s investigatory methods, we
hesitate to dictate which methods may properly be
employed. In many cases, the relevant witnesses are
themselves targets of the grand jury probe and therefore a
subpoena would not yield the required information because
the witnesses would likely assert their Fifth Amendment
privilege against self-incrimination. Allowing a protective
order to prevail could all too often frustrate the grand jury’s

9
constitutionally and historically protected mission. We do
not wish to allow protective orders, designed to facilitate
private civil litigation, instead to delay criminal
investigations which advance the public interest.

However, allowing a grand jury subpoena to override a
protective order could encourage civil deponents to assert
their Fifth Amendment privilege. This "may disrupt or
thwart civil litigation and discovery in a wide variety of
cases." Id. at 1473. Yet we agree with the Fourth Circuit
that a protective order "cannot effectively deal in all
instances with the problems posed by civil litigants who
plead the fifth amendment during pretrial discovery," so it
is "not therefore a substitute for invocation of the privilege,
and it should not be afforded that status." Id. at 1475. We
have held that "reliance on the Fifth Amendment in civil
cases may give rise to an adverse inference against the
party claiming its benefits." S.E.C. v. Graystone Nash, Inc.,
25 F.3d 187, 190 (3d Cir. 1994) (citing Baxter v.
Palmigiano, 425 U.S. 308, 318 (1976)). Therefore, concern
for the Fifth Amendment right of a deponent "[does] not
require, nor may it depend on, the shield of civil protective
orders." In re Grand Jury Subpoena, 836 F.2d at 1471.

Furthermore, the Fourth Circuit has outlined several
ways by which a court may "ensure [the] successful
resolution of a civil action which is threatened by a
deponent’s privileged silence." See id. at 1476. These
methods to facilitate efficient discovery include: 1) delaying
discovery until any pending grand jury investigation has
been completed; 2) conducting a pretrial hearing to expose
any non-meritorious assertions of the Fifth Amendment
privilege; 3) shifting the burden of proof to the privilege-
asserting party who is in the best position to provide
relevant proof and whose invocation of the privilege
"contributed substantially to a party’s failure of proof "; and
4) excluding testimony given at trial if the same testimony
had been withheld during discovery under an assertion of
privilege. See id.; see also In re Grand Jury Proceedings
(Williams), 995 F.2d at 1018 n.11 (noting several
"precautions" that may be taken to protect civil plaintiffs
fearing criminal prosecution against self-incrimination).

10

A protective order is an important device, but it is also a
limited one, and is subject to modification. See , e.g., Pansy,
23 F.3d at 789-91 (establishing test for modification of
protective orders). As the Fourth Circuit has noted:

Even with a protective order in place, incriminating
statements still create the risk that parties to a civil
action will leak sealed information or materials to
relevant law enforcement authorities. In the event of a
leak, . . . a protective order, unlike a grant of
immunity, provides no assurance that incriminating
statements will not be used against a deponent in a
 criminal proceeding or that the statements will not be
used to obtain other relevant evidence. Moreover, a
protective order . . . is normally subject to modification
under Rule 26 for sufficient cause.

In re Grand Jury Subpoena, 836 F.2d at 1476. A protective
order often "cannot serve as more than a stopgap measure
. . . [because] incriminating information will normally be
disclosed at trial even if the information is effectively
suppressed prior to that time." Id. Protective orders are
limited instruments that are quite useful in facilitating the
efficient disposition of litigation in the many civil cases that
involve potentially embarrassing facts or sensitive
commercial or other private information. Yet deponents who
have reason to fear not just embarrassment or economic
disadvantage, but possible criminal charges as well, should
be aware that a protective order alone cannot protect them
from a grand jury investigation.

Arguing for adoption of an approach akin to the Second
Circuit’s Martindell rule, Doe asserts that the Government
may overcome that rule’s presumption in favor of the
protective order by demonstrating "compelling need" for the
subpoenaed information, and therefore the harm to the
esteemed role and powers of the grand jury is slight. He
further contends that any impediment to the grand jury’s
investigation posed by quashing the subpoena can be
avoided by compelling the witnesses themselves to testify,
and if the witnesses elect to assert their Fifth Amendment
privilege, the Government could then grant them immunity.
This argument, however, does not account for the
consequences that would ensue if the Government declines

11

to grant immunity. Such consequences would likely occur
in cases such as Doe’s where the witness himself is the
target of the grand jury probe. In addition, such a high and
exacting standard as "compelling need" simply does not
comport with the wide-reaching powers of the grand jury
and the judicial deference shown those powers.7

IV.

In the vast majority of cases, a protective order should
yield to a grand jury subpoena. On the other hand, we also
understand that on very rare occasions, the public interest
in speedy resolution of private civil litigation could outweigh
the strong public interest in favor of prosecution of criminal
wrongdoing. The per se approach, adopted by three of our
sister circuits and under which a grand jury subpoena
always trumps a protective order, defers to the sweeping
powers of the grand jury, but does so at the expense of
flexibility. It also forecloses enforcement of a protective
order in the exceptional case in which the public interest
demands that the civil litigation take priority over any
criminal investigation. Such a rigid test ignores
"idiosyncratic circumstances" and fails to understand that
"the confluence of the relevant interests -- generally, those
of society at large and of the parties who are seeking to
keep a civil protective order inviolate -- occasionally may
militate in favor of blunting a grand jury’s subpoena." In re
Grand Jury Subpoena (Roach), 138 F.3d at 445.
_________________________________________________________________

7. Our view of Martindell is strengthened by our prior disapproval of the
Second Circuit’s standard in a related context. We considered the
standard for modification of a protective order by a non-Government
party in Pansy, and we particularly focused on the weight that should be
given to the parties’ reliance in determining whether to modify a
protective order. The Second Circuit test (which applies to all attempts
to modify a protective order) makes the parties’ reliance dispositive, as
such reliance forms the underlying policy rationale for its strong
presumption in favor of protective orders. We joined many other courts
of appeals in rejecting the Second Circuit approach as "too stringent."
See Pansy, 23 F.3d at 789-90 (citing cases from other circuits). Instead,
we considered the parties’ reliance as merely one non-dispositive factor
in a balancing test. See id. at 790. Here, where modification is sought by
way of a grand jury subpoena, the reasons for rejecting the Martindell
rule as far "too stringent" are even more compelling.

12

We therefore join the First Circuit in establishing a strong
presumption that a grand jury subpoena supercedes a
protective order. The party seeking to avoid the subpoena
may rebut that presumption only by showing the existence
of exceptional circumstances that clearly favor enforcing the
protective order against the grand jury subpoena.

A court’s assessment of whether a party has shown
exceptional circumstances requires a case-by-case analysis
of the relevant facts, and is not susceptible to easy
generalization. The First Circuit outlined several factors for
courts to consider in determining whether "exceptional
circumstances" exist. These factors include: 1) the
government’s need for the information (including the
availability of other sources); 2) the severity of the
contemplated criminal charges; 3) the harm to society
should the alleged criminal wrongdoing go unpunished; 4)
the interests served by continued maintenance of complete
confidentiality in the civil litigation; 5) the value of the
protective order to the timely resolution of that litigation; 6)
the harm to the party who sought the protective order if the
information is revealed to the grand jury; 7) the severity of
the harm alleged by the civil-suit plaintiff; and 8) the harm
to society and the parties should the encroachment upon
the protective order hamper the prosecution or defense of
the civil case. Id. at 445. We find these factors to be quite
helpful and we adopt them today. We stress, however, that
this list is not exhaustive; a district court need not weigh
every one of these factors, and it may consider additional
factors as the circumstances warrant.

We cannot overemphasize that the presumption we
announce today in favor of a grand jury subpoena may only
be rebutted in the rarest and most important of cases. As
the First Circuit stated, "[i]n the end, society’s interest in
the assiduous prosecution of criminal wrongdoing almost
always will outweigh its interest in the resolution of a civil
matter between private parties . . . and thus, a civil
protective order ordinarily cannot be permitted to sidetrack
a grand jury’s investigation." Id. (citations omitted)
(emphasis added).

In a University of Chicago Law Review article which
proposed a similar rule and upon which the First Circuit

13

relied, the author offered several illustrative examples of the
kinds of exceptional cases which might warrant enforcing a
protective order against a grand jury subpoena. See Ajit V.
Pai, Comment, Should a Grand Jury Subpoena Override a
District Court’s Protective Order?, 64 U. Chi. L.Rev. 317,
336-39 (1997). Pai proposed that a large bankruptcy case
of major national importance, one which requires swift
resolution to serve the broader interests of many creditors
and thousands of employees’ jobs, might justify enforcing a
civil protective order against a grand jury subpoena. Id. at
337. In such a case, confidentiality could be essential to
ensuring that the parties are forthcoming and the public
interest is served. Pai also suggested cases involving a
failed savings and loan or other financial institution, ones
in which the public interest in settling the institution’s
affairs and avoiding a costly government bailout might
outweigh the prosecutorial interest. Id. at 338. Mass tort
litigation, in which interfering with discovery could threaten
awards of compensation for thousands of plaintiff victims,
could also present a scenario in which the interests served
by the protective order could prevail. Id. These examples
make clear that only in cases in which the public interest
in resolving the civil litigation is overwhelming should
courts consider overriding a grand jury subpoena.

We recognize that the exceptional circumstances rule
sacrifices some of the certainty which forms one of the most
attractive features of the per se rule. However, we do not
wish to eliminate any possibility of a court exercising its
discretion in an extraordinary case. In the vast majority of
cases, a grand jury subpoena should prevail. Almost
always, the public interest in investigating criminal
misconduct will outweigh the public interest in facilitating
private civil litigation. As the Government conceded at oral
argument, however, the per se rule’s inherent inflexibility
fails to allow for the truly exceptional case in which
quashing the grand jury subpoena would be appropriate.

Finally, we share the concerns of the courts that have
approved the per se rule that allowing a protective order to
trump a grand jury subpoena, even in only the rarest of
cases, could amount to a virtual grant of immunity and
could thereby encroach upon the exclusive power of the

14
United States Attorney, under 18 U.S.C. S 6003, to issue
grants of immunity. See In re Grand Jury Proceedings
(Williams), 995 F.2d at 1018 (commenting that"[w]hile a
district court can issue Rule 26(c) protective orders to
encourage the full disclosure of relevant evidence, it cannot
impinge upon the authority of the Executive Branch to
decide who is to be accorded use immunity"); In re Grand
Jury Subpoena, 836 F.2d at 1475 (noting that enforcing a
protective order against a grand jury subpoena would
"usurp the proper authority of the executive branch to
balance the public interest in confidentiality against the
interest in effective criminal investigation").

Our worry is alleviated because again, in almost all
cases, the grand jury subpoena should prevail. We
acknowledge that enforcing a protective order grants a
certain degree of quasi-immunity to a deponent, because
application of the protective order denies the grand jury
access to statements made by the deponent, and the
deponent would likely assert his Fifth Amendment privilege
if subpoenaed directly. Yet a protective order is no
substitute for immunity because, as we have discussed
above, a protective order is inherently modifiable and does
not prevent the Government from prosecuting the deponent
through evidence obtained by other means. Just because
the grand jury might hypothetically obtain the evidence
from other available sources does not mean that it should
have to resort to such imperfect alternatives. But because
these potential alternatives exist, allowing a protective order
to quash a grand jury subpoena in a truly exceptional case
would not bar any prosecution such that enforcement of
the protective order would rise to the level of a de facto
grant of immunity. Concern with the scope of judicial power
ultimately does not dissuade us from allowing some slight
flexibility and entertaining the possibility that a protective
order might prevail in an exceptional case.

We therefore hold that a rebuttable presumption exists in
favor of grand jury subpoenas when they conflict with civil
protective orders. Unless the party seeking to avoid the
subpoena can demonstrate the existence of exceptional
circumstances that clearly favor the enforcement of the
protective order, the grand jury subpoena will supercede. A

15

district court should examine the facts of each case to
determine whether exceptional circumstances have been
shown to exist, while understanding that, in almost all
cases, the grand jury subpoena should trump a civil
protective order.

V.

In this case, we presume that the grand jury subpoena
issued to Doe’s civil counsel for deposition transcripts and
other discovery materials trumps the protective order under
which this evidence was produced. Doe has the burden of
showing the existence of exceptional circumstances that
clearly favor rebutting the presumption and enforcing the
protective order against the grand jury subpoena.

Although we review the District Court’s decision whether
to quash the subpoena for abuse of discretion, our review
over the District Court’s application of the legal standard is
plenary. See Pansy, 23 F.3d at 783-84. We need not
remand this case for further consideration by the District
Court and thereby further delay the pending grand jury
investigation. Because the record is sufficient, we may
ourselves assess whether Doe can show exceptional
circumstances. In any event, the District Court’s opinion
included analysis quite similar to that required by the
exceptional circumstances test. Although the District Court
decided this case without the guidance of a clear rule from
this Court, it expressly held that the public interest would
not be served by enforcing the protective order because
"[t]here is certainly no public interest in protecting the
personal financial dealings of the [Does] in the face of a
criminal investigation." Dist. Ct. Mem. Op. at 12.

We agree. Upon consideration of the facts of this case in
light of the non-exhaustive factors adopted above, we
conclude that Doe cannot overcome the presumption
against enforcing the protective order against the grand
jury subpoena. The Government’s need for the subpoenaed
information is significant. Therefore, allowing the protective
order to prevail could frustrate the grand jury’s power to
obtain evidence. The contemplated criminal charges being
investigated by the grand jury are severe; the potential

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harm to society in allowing extensive tax evasion and fraud,
and the illegal diversion of large amounts of money, without
punishment, is certainly substantial. The value of the
protective order to the timely resolution of the civil case is
limited at best. Discovery appears mostly complete, and the
civil case now awaits trial. Therefore, the protective order’s
value in facilitating discovery has significantly diminished,
and the protected information will likely be disclosed at
trial in any event. Doe may be harmed if his personal and
corporate financial information is revealed to the grand
jury, but because grand jury proceedings are secret, this
information will not become public and risk the burden and
embarrassment to Doe that protective orders are meant to
avoid. Rather, any harm would result instead from the
potentially self-incriminating statements contained in the
subpoenaed materials. Protective orders do not serve to
protect Fifth Amendment interests; any harm to such
interests is comparatively slight.

Counsel for Doe asserted at oral argument that
exceptional circumstances are present here because Doe is
a target of the grand jury investigation which led to the
subpoena. Yet, if this suffices to show exceptional
circumstances, then exceptional circumstances may be
found in every case. We refuse to allow "exceptional
circumstances" to swallow the presumption in favor of
grand jury subpoenas. Doe also contends that the
Government does not have a compelling need for the
subpoenaed information because it has other available
sources for the information. Government need, whether it
be "compelling" or otherwise, is not dispositive. It is simply
one potential factor in the analysis. We have rejected the
Second Circuit’s Martindell rule partly because it placed an
improper burden of showing compelling need on the
Government.

The public interest in enforcing the protective order and
facilitating the civil litigation simply does not outweigh the
public interest in prosecuting potential criminal behavior in
this case. As we stressed above, a grand jury subpoena
should almost always trump a protective order, and we find
no reason to rebut that strong presumption in this private
commercial dispute. Doe cannot show exceptional

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circumstances that clearly favor subordinating the
subpoena to the protective order.

VI.

In conclusion, we hold that a grand jury subpoena
supercedes a protective order unless the party seeking to
quash the subpoena can demonstrate exceptional
circumstances that clearly favor subordinating the
subpoena to the protective order. Doe cannot make such a
showing of exceptional circumstances. Therefore, we will
affirm the District Court’s denial of Doe’s motion to quash
the subpoena and its grant of the Government’s motion to
compel production.

A True Copy:
Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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