Beware of the Reach of the Grand Jury

Beware of the Reach of the Grand Jury

Be careful when you defend a civil suit that was triggered by a government investigation! When you respond to discovery requests and produce material which was previously not within the reach of the grand jury, the government can subpoena these documents! A civil protective order will not do you any good! The defendants in In re Grand Jury Subpoenas had to find that out the hard way.

In In re: Grand Jury Subpoenas the United States conducted an antitrust investigation into alleged criminal conduct of several companies. After the public learned of this investigation, several civil suits were brought by private plaintiffs against the investigated companies. This resulted in the discovery and production of documents by the civil defendants.

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These documents of the defendants originated outside the United States and came into the possession of Law Firms within the U.S. The United States wanted to get a hold of these documents for their investigation of the civil defendants. The Law Firms were directed by a subpoena to give up the documents.

In an attempt to avoid the disclosure of the documents, the Law Firms asked the lower court to quash the subpoenas. However, the lower court said it found no authority that governed this particular case. The court quashed the subpoena, concluding however, that there were more complicated issues at stake and that it would leave it to the Appellate Court to decide these issues.

The Appellate Court rejected the Law Firms’ argument and decided the lower court’s decision was not an exercise of discretion but a request for guidance in a complicated matter. It reversed the order of the lower court.

The court applied its per se rule: A grand jury subpoena takes precedence over a civil protective order! The court decided to apply this rule because it found that:

(1) A collusion between the civil suitors and the government had neither been established nor suggested.

(2) There had been no bad faith tactics on the government’s side.

(3) There was no claim that the documents in question were privileged.

From the government’s point of view, it was Fortuna who brought those documents within the reach of the grand jury. Had it not been for the civil litigation, these documents would have remained overseas and with that outside the grasp of the grand jury. No one can keep the government from closing in on information that is within the jurisdiction of the grand jury.

What we now know is this: If you are under investigation by the government, and if as a result of this investigation you are being sued in civil court, and if you know there are documents subject to discovery which were originally not within the reach of the government….you might want to consider settling the civil lawsuit before discovery. Why? Because, not even a civil protective order can shield you from a grand jury subpoena!

Jessica, a Seton Hall University School of Law student (Class of 2012), focuses her studies in the area of Civil Litigation. She plans to focus on Products Liability Law in the automobile industry. Prior to entering Seton Hall law, she earned her law degree at Georg-August-University Goettingen, Germany and was admitted to the German bar in December 2007.

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