United States Court of Appeals
For the First Circuit
No. 07-2353
IN RE: GRAND JURY INVESTIGATION
(DISTRICT OF MASSACHUSETTS).
__________
ISLAMIC INVESTMENT COMPANY OF THE GULF (BAHAMAS) LIMITED,
Appellant,
v.
GEOFFREY HARPER, ESQUIRE, AND FISH & RICHARDSON P.C.,
Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, Jr., U.S. District Judge]
Before
Howard, Baldock,* and Selya,
Circuit Judges.
James J. McGuire, with whom Timothy J. McCarthy, Sheppard,
Mullin, Richter & Hampton LLP, Nicholas C. Theodorou, and Foley
Hoag LLP were on brief, for appellant.
Richard M. Zielinski, with whom Barbara Van Gorder and
Goulston & Storrs, P.C. were on brief, for appellees.
October 10, 2008
*
Of the Tenth Circuit, sitting by designation.
SELYA, Circuit Judge. This appeal requires us to explore
the parameters of the district court's authority to hold in
contempt those whose actions arguably interfere with judicial
proceedings. The context is this: Islamic Investment Company of
the Gulf (Bahamas) Limited challenges the district court's denial
of its motion to hold in contempt an attorney (Geoffrey Harper) and
the law firm of which Harper is a member (Fish & Richardson P.C.).1
The appellant, whom we shall refer to by the acronym "IICG,"
chiefly asserts that the lower court failed to recognize that it
had inherent power to hold Harper in contempt. Concluding, as we
do, that this assertion lacks merit, we affirm the refusal to hold
Harper in contempt.
The present proceeding traces its roots to a Texas state
court. In that venue Harper, representing a client named Laird
Fairchild, brought a civil action against Fairchild's quondam
employer, Overland Capital Group, Inc., and its corporate parent,
IICG. That case culminated in a settlement agreement under which
Fairchild received money in exchange for, among other things, his
promise neither to disclose certain information nor to disparage
the defendants. The settlement agreement included an arbitration
clause.
1
Inasmuch as the contempt sought against Fish & Richardson is
based exclusively on Harper's conduct, we refer herein only to
Harper. Our decision, of course, disposes of the appeal as to both
Harper and the law firm.
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In April of 2006 — approximately six months after the
consummation of the settlement — IICG invoked the arbitration
clause. It alleged that Fairchild had violated the terms of the
settlement agreement by disclosing confidential information and
making disparaging statements. Fairchild answered the arbitral
complaint, counterclaimed against IICG, and filed third-party
claims against Overland (which, in turn, asserted counterclaims
against Fairchild).
In September of 2006, while the arbitration proceeding
was still pending, the United States Attorney for the District of
Massachusetts empaneled a grand jury. Wishing to learn more about
IICG and Overland, the prosecutors tapped Fairchild as a potential
witness.2 Fairchild began discussions with the prosecutors. When
IICG and Overland found out about these discussions, they concluded
that Fairchild's narrative concerned matters covered by the
settlement agreement's non-disclosure and non-disparagement
provisions. Spurred by this suspicion, Overland moved for a
discovery order in the pending arbitration; its goal was to compel
Fairchild to reveal in haec verba what he had related to the
government.
2
Because an understanding of the nature and scope of the grand
jury probe is not essential to the resolution of this appeal, we
abjure any discussion of those topics. Similarly, we decline to
furnish any details about the reasons for the government's interest
in IICG and/or Overland.
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Fairchild objected to the discovery request on the ground
that a grand jury witness may not be compelled to disclose his
grand jury testimony or to provide information about pre-testimony
interviews. The arbitrator overruled this objection and granted
the discovery request.
Harper, representing Fairchild, then contacted Corey
Smith, the Assistant United States Attorney in charge of the grand
jury investigation. He alerted Smith to the issuance of the
discovery order. Believing that compliance with the discovery
order might compromise the grand jury investigation, Smith asked
the district court to stay the order. The district court granted
the motion and pretermitted production of the information.
Smith contemporaneously forwarded copies of his motion
and the district court's stay order to Harper. By operation of a
local rule of court, the documents were effectively under seal. See
D. Mass. R. 106.1(b) (stipulating that "[a]ll subpoenas, motions,
pleadings, and other documents filed with the clerk [of court]
concerning . . . grand jury proceedings shall be sealed and
impounded unless otherwise ordered by the court"). However, there
was no transmittal letter indicating that fact, nor was the
existence of a seal apparent from the face of the documents.
Shortly after receiving the federal court documents from
Smith, Harper provided them to a reporter from the Wall Street
Journal. He subsequently furnished the same paperwork to at least
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two other journalists. These disclosures led to several news
stories about the investigation.
On February 23, 2007, Harper sought to introduce the
federal court documents at a hearing held in a Texas state court
(ancillary to the subject matter of the ongoing arbitration case).
IICG objected to their introduction on the ground that the motion
and order had been filed under seal. The Texas court sustained the
objection and refused to consider the documents.
Harper claims that this was the first he knew that the
motion and order had been filed under seal. Subsequent to the date
of that hearing, he eschewed any further disclosure of the federal
court documents.
Stung by the negative press that they had received, IICG
and Overland moved in the federal district court to adjudge Harper
in contempt for disclosing the sealed documents and to enjoin any
further dissemination of them. The district court granted
immediate injunctive relief and ordered Harper to show cause why he
should not be held in contempt.
The court convened a show-cause hearing on March 27,
2007. Harper claimed not to have known of the sealing order at the
time the disclosures were made. Thus, to the extent that the
disclosures violated an automatic sealing order, those violations
were unwitting.
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IICG and Overland refused to accept this explanation.
They insisted that the court should hold Harper in contempt because
the disclosures transgressed a local rule that required sealing of
virtually all grand jury documents. See D. Mass. R. 106.1(b). In
their view, even if Harper was not explicitly notified that the
documents he received were filed under seal, he should have known
that grand jury documents were confidential. Relatedly, the
movants asseverated that Harper's conduct was not only in blatant
disregard of the court's seal but also offended the spirit of
Federal Rule of Criminal Procedure 6(e) and the letter of District
of Massachusetts Local Rule 83.2A (both of which are discussed
infra).
The district court took the matter under advisement and,
roughly four months later, issued a thoughtful memorandum opinion
denying the motions for contempt. See In re Grand Jury Investig.,
No. 07-MC-10019, slip op. (D. Mass. July 20, 2007) ("D. Ct. Op.").
IICG filed a timely notice of appeal.
The denial of a motion to adjudge in contempt is reviewed
for abuse of discretion. See Langton v. Johnston, 928 F.2d 1206,
1220 (1st Cir. 1991). "[A] district court abuses its discretion
when a relevant factor deserving of significant weight is
overlooked, or when an improper factor is accorded significant
weight, or when the court considers the appropriate mix of factors,
but commits a palpable error of judgment in calibrating the
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decisional scales." United States v. Roberts, 978 F.2d 17, 21 (1st
Cir. 1992).
The abuse of discretion rubric is not seamless but,
rather, admits of various subtleties. For example, to the extent
that a discretionary decision turns on an abstract legal
proposition, review is de novo. See, e.g., McKenna v. First
Horizon Home Loan Corp., 475 F.3d 418, 422 (1st Cir. 2007). To the
extent that such a decision turns on findings of fact, review is
for clear error. See, e.g., Project B.A.S.I.C. v. Kemp, 947 F.2d
11, 15 (1st Cir. 1991). To find clear error, an inquiring court
must form a strong, unyielding belief, based on the whole of the
record, that a mistake has been made. See Langton, 928 F.2d at
1219.
IICG's attack focuses largely on the district court's
supposed misuse (or, perhaps, non-use) of its inherent power.
Inherent power, sometimes known as supervisory power, is a blanket
term. It encompasses those powers which, although not specifically
conferred by the Constitution or by statute, "are nonetheless
necessary to the exercise of all others." United States v. Horn,
29 F.3d 754, 760 (1st Cir. 1994) (citations and internal quotations
omitted). Among this bundle of inherent powers is the power,
independent of any statute or rule, to sanction for contempt. See
Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991).
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The contempt power is "one of the most potent weapons in
the judicial armamentarium." Project B.A.S.I.C., 947 F.2d at 16.
Due to the strength of the contempt power, courts have fashioned a
number of prudential principles to guide its deployment. We
briefly rehearse those principles.
First, a complainant must prove civil contempt by clear
and convincing evidence. Langton, 928 F.2d at 1220. Second, the
putative contemnor "must have violated a clear and unambiguous
order that left no reasonable doubt as to what behavior was
expected and who was expected to behave in the indicated fashion."
Project B.A.S.I.C., 947 F.2d at 17. Third, "any ambiguities or
uncertainties in such a court order must be read in a light
favorable to the person charged with contempt." Id. at 16. And,
finally, even if all of these conditions are satisfied, the trial
court retains a certain negative discretion; that is, the court
retains the authority to eschew the imposition of a contempt
sanction if it deems such eschewal to be in the interests of
justice in the particular case. See Langton, 928 F.2d at 1221-23
(affirming denial of contempt when, despite noncompliance with
court's order, defendant had made good-faith efforts to comply).
It is against this background that we proceed to the merits.
The centerpiece of IICG's appeal is its complaint that
the district court ignored its request for an exercise of inherent
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power. This omission, IICG says, amounts to a per se abuse of
discretion, requiring a remand.
The premise on which this complaint rests is sound: a
trial court can abuse its discretion by failing to exercise that
discretion. See, e.g., James v. Jacobson, 6 F.3d 233, 239 (4th
Cir. 1993). Here, however, the conclusion that IICG would have us
draw does not follow from the enunciated premise. We explain
briefly.
The district court began its analysis by considering
whether the contempt motions implicated Federal Rule of Criminal
Procedure 6(e), which governs the secrecy of grand jury
proceedings. The court determined that Harper was not within the
defined group of persons to whom Rule 6(e) applies (and, therefore,
that no obligation of secrecy attached to him). See D. Ct. Op. at
4 (citing Fed. R. Crim. P. 6(e)(2)(B)). Thus, Harper was not
subject to contempt on that basis.
Next, the court turned to Local Rule 83.2A.3 It found
that rule inapposite because Harper was not a participant in or
associated with the grand jury investigation. D. Ct. Op. at 5-6.
3
This local rule deals with the release of information by
lawyers in connection with pending litigation. With regard to
grand juries, the rule provides in pertinent part that "a lawyer
participating in or associated with the investigation shall refrain
from making any extrajudicial statement, which a reasonable person
would expect to be disseminated by means of public communication,
that goes beyond the public record or that is not necessary to
inform the public that the investigation is underway [and] to
describe the general scope of the investigation . . . ."
-9-
In all events, Harper's disclosures did nothing more than alert the
public to the investigation and, thus, were permissible under the
rule. Id. at 6.
Although the district court devoted much of its analysis
to the question of whether Harper might be said to have violated
one or both of these rules, it did not stop there. Having
determined that neither rule applied, the court turned to its
inherent power. See id. at 7-8. That the court did so summarily
and without much explication does not mean that it failed to weigh
the possible use of its inherent power in its decisional calculus.
We have held before, and today reaffirm, that brevity alone does
not betoken an abuse of discretion. See Caterino v. Barry, 922
F.2d 37, 40 (1st Cir. 1990) ("Despite limited analysis by the
district court, we are unable to say that its decision . . . fell
outside the wide boundaries of its discretion."). There are no
magic words that a district court must pronounce in order to
convince a reviewing court that it has considered an issue. A
simple reference normally will do. That is the case here.
The question, then, reduces to whether the district
court's refusal to exercise its inherent power to adjudge Harper in
contempt can be said to constitute an abuse of discretion. We
think not.
To begin, IICG does not challenge on appeal either of the
district court's rule-based determinations. We assume, therefore
-10-
— but do not decide — that Harper did not transgress either
Criminal Rule 6(e) or Local Rule 83.2A. See United States v.
Zannino, 895 F.2d 1, 17 (1st Cir. 1990) (holding that points not
contested on appeal may be deemed abandoned). That strips the
inherent power question to its bare essentials.
Relative to those essentials, the district court properly
articulated the principle that the civil contempt sanction requires
the violation of a clear and specific order known to the putative
contemnor and directed at a class of persons that includes him.
See D. Ct. Op. at 7 (citing Project B.A.S.I.C., 947 F.2d at 17).
The court noted that the sealing of the transmitted documents did
not come about as the result of a specific order directed at Harper
or tailored to the particular case but, rather, resulted from the
operation of a local rule. See id. at 7 (citing D. Mass. R.
106.1(b)). Presumably relying on that fact and on the lack of any
evidence that Harper knew of either the local rule or of the seal,
the court declined to hold him in contempt. See id. at 8.
IICG posits that the district court's analysis failed to
recognize that a specific order is not always a prerequisite to a
finding of contempt. It adds that Harper's conduct was so
offensive to the abecedarian concept of grand jury secrecy that the
court could — and should — have exercised inherent power to hold
him in contempt. In our judgment, however, IICG's characterization
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of Harper's conduct as so disrespectful to the court's lawful
authority as to demand a finding of contempt is overblown.
The principal flaw in this characterization is that it
rests on an assumption that Harper knew (or, at least, was
chargeable with culpable knowledge) of the seal when he disclosed
the motion and stay order to the press. But that assumption is
unfounded. The district court determined that Harper, although
aware that grand jury proceedings are highly confidential and that
grand jury materials usually are subject to some sort of
protection, did not have actual knowledge that the transmitted
documents were sealed. See D. Ct. Op. at 3. Here, moreover, the
facts militated strongly against a finding that Harper was
chargeable with culpable knowledge. After all, no willful
violation had occurred, Harper was not a member of either the
Massachusetts bar or the bar of the Massachusetts federal district
court, and nothing in the record indicates that he regularly
practiced criminal law. The documents had been sent to him by
Smith without any restriction, even though Smith knew that Harper
would file them in the arbitration case. Finally, the transmitted
documents — a motion to stay proceedings and a stay order —
reasonably could be thought not to intrude on the secrecy of the
grand jury's proceedings.
To be sure, IICG rails against these findings. But
nothing in the record prompts a belief — let alone a strong,
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unyielding belief — that they are incorrect. Because the findings
are not clearly erroneous, see Langton, 928 F.2d at 1219, we must
accept them.
To cinch matters, the district court determined that
neither the grand jury proceeding nor any other proceeding had been
prejudiced as a result of Harper's disclosures. D. Ct. Op. at 6.
Implicit in that determination is the notion that neither the
district court's authority nor the due administration of justice
was offended by Harper's actions. Where, as here, a trial court
deems its authority unsullied by a putative contemnor's actions and
refuses to hold him in contempt, there is simply no warrant for an
appellate court to second-guess that determination.
To sum up, the district court thoroughly reviewed what
had transpired. It employed its inherent power to enjoin Harper
from further dissemination of the transmitted documents and warned
that any future violation of that injunction could be enforced
through the contempt sanction. D. Ct. Op. at 8 n.2. But the court
also found that Harper had not deliberately violated a known
sealing order and chose not to hold him in contempt for the
original disclosures. That circumspect choice of remedy was within
the court's discretion and in keeping with the prudential
principles that must guide the deployment of a court's inherent
power. See Horn, 29 F.3d at 760 (explaining that "it is
inappropriate for courts to attempt to use the supervisory power to
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justify an extreme remedy when, short of such heroic measures, the
means are at hand to construct a satisfactory anodyne more narrowly
tailored to the objective").
We need go no further. Because we discern neither error
nor abuse of discretion in the lower court's rejection of IICG's
contempt motion, we uphold its order.
Affirmed.
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