dissenting: I respectfully dissent from the majority’s holding for two reasons: (1) The majority’s holding in this case effectively overrules our holding in Kluger1 or renders it meaningless by incorrectly and retroactively applying the Supreme Court’s holdings in Baggot2 and Sells;3 and (2) the majority’s holding places redundant and unnecessary burdens on the court system and the parties.
(1) Kluger. — Confronted with the then recently published Supreme Court opinions in Baggot and Sells,4 we held those opinions “are not to be applied retroactively to invalidate final rule 6(e) orders under collateral attack in this Court.” Kluger at 335. Although our Kluger opinion addressed a specific set of facts, its clear intent was to permit “pre-Baggot-axid-Sells rule 6(e)5 orders” to retain their effectiveness and not to judge them by the newly published standards. Accordingly, if the Commissioner had received an order permitting use of grand jury materials for civil tax purposes, our holding would not force the parties to return to the District Court for a new order unless, of course, the original order was in some way defective (under the pre-Baggot-aad-Sells standards). If, however, the Commissioner intended a use not stated or contemplated in the pre-Baggot-and-Sells order, a new order would be necessary and the Commissioner would have to meet the new standards.
In Kluger, as in this case, respondent obtained a pre-Baggot-and-Sells rule 6(e) order permitting the use of grand jury materials for civil tax purposes.6 Petitioner in Kluger sought, in a pre-trial setting, to suppress the questioned materials or evidence and/or shift the burden of going forward with the evidence to respondent. Our denial of the taxpayer’s motion left respondent in a position to continue using the grand jury materials in the preparation of his case for settlement or trial. In this case, respondent does not seek to offer the questioned materials into evidence or to use, publish, or disclose them other than in the institutional context in which he has already used them and wishes to continue using them.7 Our Kluger opinion addressed the use respondent seeks here, i.e., to publish respondent’s determination to taxpayers in a notice of deficiency and to prepare for and pursue pretrial matters.8 We are herein confronted with substantially the same situation as in Kluger.
The majority would have us believe that the circumstances in this case are different. The majority’s distinctions are that: (1) A long period of time (about 5 years) elapsed during which time respondent neither used nor maintained control of the subject materials; and (2) the agents of respondent who originally used the materials are not the ones who would now use them. The majority sees these differences as constituting new or different disclosures which require a new order under rule 6(e) and, further, a showing of “particularized need” under the Sells case.
These are distinctions without a difference. The original orders under rule 6(e) permitted respondent to use grand jury materials9 for civil tax purposes. The orders under consideration grant access “to transcripts of testimony taken and subpoenaed books and records” to “agents of the Internal Revenue Service and other attorneys and investigative agents of the United States Government * * * to determine * * * whether there is any civil tax liability arising therefrom.” (Emphasis supplied.) The obvious purpose and intent of such orders, issued in the context of a Tpre-Baggot-and-Sells environment, was to permit determination, assessment, and collection of the civil tax liability, if any. To interpret it otherwise, would render such orders meaningless and wholly ineffective.10 Within the context that the instant order was issued, respondent was treated as an institutional entity. Further, it is not unusual for respondent to be involved, for criminal purposes, with other executive enforcement entities, such as the FBI. Such materials are normally shared with the cooperating agencies. To require respondent to maintain absolute control over the material or impose a time limit on its use by respondent or others is unrealistic. Furthermore, a lapse of time within which the materials are not used should not make any difference.
No court has held that Baggot and Sells should be retroactively applied. Two circuit courts have addressed the question of whether Baggot and Sells should be applied prospectively to rule 6(e) orders outstanding at the time of the Supreme Court’s opinions. United States v. (Under Seal), 783 F.2d 450 (4th Cir. 1986), cert. denied sub nom. Raven’s Hollow, Ltd. v. United States, 481 U.S_(1987); In re Grand Jury Proceedings (Henry Kluger, Deceased), 827 F.2d 868 (2d Cir. 1987). Essentially, the Fourth Circuit holds that pre-Baggot-and-Sells rule 6(e) orders may have prospective effect and permit “the continued use of grand jury material.” The Second Circuit holds otherwise. The majority in this case attempts to factually distinguish the Fourth Circuit’s opinion and takes solace in the Second Circuit’s opinion. As discussed above, the majority has not adequately distinguished the facts in this case from Kluger. Moreover, the majority has not distinguished the facts or legal rationale of the Fourth Circuit’s opinion where the grand jury materials were used more than 4 years at the time the taxpayer sought to end respondent’s use.
The majority’s rationale11 results in a retroactive application of Baggot and Sells. The majority has used post-Sells standards to judge a pre-Sells order. By making each subsequent use constitute a new disclosure,12 the majority has effectively overruled our holding in Kluger or rendered it meaningless. The majority’s holding would only permit respondent to determine the amount of a taxpayer’s tax liability without the ability to assess and collect the amount of tax determined.
(2) Majority's approach is redundant and unnecessary.— Prior to Baggot and Sells, a District Court judge properly acted upon respondent’s application for an order under rule 6(e) to permit use of grand jury material for civil tax purposes. We have held the orders pre-dating the new standard will not be judged retroactively. The rule 6(e) order issued in this case is not, on its face, defective, and no showing has been made that the order was in any way deficient in its intent to permit respondent to determine the civil tax liabilities. Now we are asked to determine whether that same order would permit respondent to look at the same materials to prepare for settlement or trial, at a time when trial is far from a certainty. 13 Although the majority’s rationale is not without merit, it is impractical and unnecessary. The majority is forcing respondent to go back to the same District Court14 to review the 70 boxes of material to determine if any of it is “grand jury material” and, if so, whether the Sells standard is met so as to permit the issuance of a new order.15 Following this seemingly unnecessary step, the case will still be before this Court and will be settled or go to trial. If it goes to trial, we will likely have to review or consider the same 70 boxes of materials that a District Court judge will have already reviewed to determine whether a new order was necessary.16
With the extraordinary burden presently upon all courts in this country, I find it curious that the majority would force this matter into another forum based upon a motion in limine on a technical point of law which is generally not appealable because it is interlocutory. We could have, for example, insisted that the parties offer the material for in camera inspection to determine whether any of it was, in fact, “grand jury material.” If none of the material is “grand jury material” or respondent is satisfied with the material he receives because it is not “grand jury material,” the District Court would not have to deal with this matter (of course I do not feel that the majority’s holding is correct, which would also obviate the need for review, ab initio). We should not unnecessarily put this burden on another forum which is not charged with the responsibility of resolving the parties’ ultimate controversy.
Nims, Parker, Swift, and Parr, JJ., agree with this dissent.Kluger v. Commissioner, 83 T.C. 309, 329-336 (1984).
United States v. Baggot, 463 U.S. 476 (1983).
United States v. Sells Engineering, Inc., 463 U.S. 418 (1983).
Those cases changed the standards for civil use of “grand jury materials” by requiring the showing of a more restrictive and specific “particularized need” for “grand jury materials” and redefining the definition of the phrase “preliminary to or in connection with a judicial proceeding.” These opinions changed the standards in all but a few circuits and it is likely that many of the orders already issued by District Courts under rule 6(e) would not have met the new standards.
Rule 6(e) of the Federal Rules of Criminal Procedure (rule 6(e)).
In Kluger, respondent mailed the notice of deficiency prior to Baggot and Sells and the petition was filed subsequent to those opinions. In the cases under consideration, 10 of the notices of deficiency were mailed and petitions were filed, prior to the publication of the Supreme Court’s opinions.
We are not asked to consider here whether respondent may offer the material into evidence and whether the original rule 6(e) order was broad enough for that purpose. We are confronted with respolndent’s request for continued administrative use of or access to the material which was intended by the original rule 6(e) order.
Respondent did not come to us to seek the use of the questioned materials; rather, petitioners seek to deny respondent access to materials that have already been utiized by respondent. We should not treat respondent’s refusal to determine whether in fact the materials are of the proscribed grand jury variety as an admission of weakness because respondent is seeking a pure legal response here and has attempted to force the issue without necessarily conceding his rights, which may include the right to use the material under the original order.
As the majority has alluded, the 70 boxes may not contain any grand jury material within the meaning of rule 6(e).
The prerBaggot-and-Sells environment did not generally require a showing of “particularized need” which would have named a specific agent of respondent or required respondent to maintain cantinous control and/or possession to comply with the order. Moreover, it is reasonable to expect that there would be interruptions in use should the materials be needed for criminal purposes or respondent’s agents be promoted, fired, deceased, etc. Does the majority contend that we will send respondent back to the District Courts each time one of respondent’s civil agents is changed?
I refer here to the majority’s requirements that respondent’s agent remain the same as the one who existed at the time of the rule 6(e) order and that he must maintain absolute control of the material.
For this reason, I respectfully disagree with the Second Circuit in In re Grand Jury Proceedings (Henry Kluger, Deceased), 827 F.2d 868 (2d Cir. 1987). By refusing to apply the order prospectively to a “new disclosure,” in the context of a tax controversy has the same effect as invalidating the prior order and/or retroactively applying the standard.
More than 90 percent of the cases pending in this Court are resolved without the need for a trial.
With the passage of time, it is less likely that the same District Court judge who issued the original order will be available or still sufficiently familiar with the subject matter to avoid the time necessary to understand the principles involved.
Nothing the majority does here would preclude a District Court judge, especially the one who issued the original order, from deciding that the original order is sufficient. Our opinion is not binding on the District Court in those circumstances because we have no authority to issue rule 6(e) orders. We have determined only that we have the jurisdiction to consider whether such an order should result in the suppression of evidence or a change in the burden of going forward with evidence in this Court. Here, in an interlocutory setting, the majority presumptuously sends respondent back to the District Court by deciding that the District Court’s order is inadequate under a retroactively applied Sells ’ standard.
In the Kluger case, we also rejected the taxpayer’s motion to suppres the evidence, notwithstanding the fact the rule 6(e) order did not meet the standards in Baggot and Sells. Kluger, supra at 336-341.