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In re November 1979 Grand Jury Velsicol Chemical Corp.

decided: March 11, 1980.


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. Nos. 76 GJ 2361, 75 G. & J. 1541 -- James B. Parsons, Judge.

Before Cummings, Sprecher and Wood, Circuit Judges.

Author: Cummings

In this consolidated appeal, appellants are seeking to reverse two orders of Chief Judge Parsons denying motions related to a grand jury investigation into certain activities of Velsicol Chemical Corporation. In the first order, Judge Parsons refused to terminate the grand jury investigation or to conduct an evidentiary hearing into alleged continuing misconduct by Government prosecutors. In the second, he denied Velsicol's motion to quash subpoenas ad testificandum issued by the grand jury on November 9, 1979. These subpoenas sought the appearance of Robert L. Ackerly and Charles A. O'Connor, III, members of Sellers, Conner & Cuneo, a Washington, D.C., law firm that formerly served as outside counsel to Velsicol. We affirm with respect to both orders of the district court.

In the early 1970's the United States Environmental Protection Agency (EPA) was investigating whether two chemicals, heptachlor and chlordane, then manufactured exclusively by Velsicol Chemical Corporation, produced tumors and cancer in laboratory animals. Suspecting that Velsicol and certain of its officers, employees and attorneys may have withheld information from the EPA on carcinogenicity studies conducted at Velsicol's behest by outside laboratories, the EPA referred information to the Justice Department, which began investigating the matter with the aid of a grand jury. This Court first had contact with the case during these initial proceedings. Because part of the investigation involved questions about the legal representation of Velsicol during relevant periods, subpoenas were issued to three members of the Sellers firm. Subsequently, Robert L. Ackerly refused to answer certain questions before the grand jury, arguing that the attorney-client privilege and the work product rule precluded disclosure of communications between Velsicol and its outside counsel. We ultimately affirmed a district court order to compel the testimony, finding that Velsicol had waived the privilege through the testimony of Neil Mitchell, Velsicol's General Counsel, about conversations with the Sellers firm. We also held that the testimony was not barred by the work product rule. Velsicol Chemical Corp. v. Parsons, 561 F.2d 671 (7 Cir. 1978), certiorari denied, 435 U.S. 942, 98 S. Ct. 1521, 55 L. Ed. 2d 538.

The present appeal stems from extraordinary facts that came to light once the 1976 grand jury finished its deliberations. That grand jury returned an indictment in December 1977 against Velsicol and six individuals charging them with making false statements to a government agency, conspiracy to make those statements, and violations of the mail fraud statute. The defendants named in the indictment countered by filing various motions charging numerous instances of grand jury abuse by the prosecutors. After an evidentiary hearing, Judge Leighton found that there had been prosecutorial misconduct before the grand jury and, in an unusual decision,*fn1 ordered dismissal of the indictment. United States v. Gold, 470 F. Supp. 1336 (N.D.Ill.1979). Judge Leighton's opinion in Gold focused on the activities of Bingham Kennedy, an EPA official who served as one of the prosecutors before the 1976 grand jury while linked to the agency's consideration of the Velsicol matter. In addition to a conflict of interest, Judge Leighton found that Kennedy's misconduct included improper comments on the exercise of constitutional rights, the withholding of exculpatory evidence, the unauthorized disclosure of grand jury material, the destruction of potentially relevant evidence, procedural irregularities, and improper testimony as a witness before the grand jury.

A week after the dismissal, the Government filed a motion seeking clarification whether the dismissal of the indictment was with or without prejudice. This motion prompted the defendants to request a ruling that the dismissal was with prejudice, arguing that such a ruling would deter future governmental misconduct and serve to acknowledge the "irremediable injury" caused defendants by the passage of time and such acts of misconduct as the destruction of evidence. On July 20, 1979, Judge Leighton held that the prior dismissal needed no further clarification. He explained that he chose not to rule further on the dismissal because the decision whether to present the case to another grand jury properly belonged to the Department of Justice. The Government thereafter appealed the Gold decision, but later elected to seek a voluntary dismissal of that appeal.*fn2 On September 18, 1979, it notified defendants of its decision to re-present the evidence to a new grand jury.

On September 28, 1979, Velsicol filed a motion again requesting Judge Leighton to dismiss the original indictment with prejudice. After entertaining argument on the question, Judge Leighton denied this motion on October 24, 1979, reiterating his view that the judiciary should not interfere with "the discretion vested in the executive branch of the government whether to prosecute, not prosecute, or to abandon a prosecution already started" (Supp. App. Item 3, p. 3). Because this ruling also repeated a statement by the Government that Bingham Kennedy "is no longer assigned to this investigation," the Government wrote to Judge Leighton on October 31 to report that Kennedy had in fact traveled to Chicago twice in October to explain to the current prosecutors the organization and contents of the files assembled in the "Velsicol Room" of the United States Attorney's office during the previous investigation. In an early November response to the Government's letter, appellants again requested dismissal with prejudice, this time citing the lack of candor on the part of the Government regarding Kennedy's role. Judge Leighton took no action in response to these communications.

In the meantime, the Government selected a new team of counsel to handle the re-presentation of the case and adopted elaborate procedures to avoid any repetition of the previous grand jury abuse. On November 5, 1979, another grand jury was empaneled to renew the investigation of Velsicol and those previously indicted with it. Responding to a Government request to transfer the evidence before the 1976 grand jury to the new prosecutors, Judge Parsons ruled on November 19, 1979, that the documents produced before the earlier grand jury should remain in the Government's possession but that the prosecutors must serve subpoenas on the persons to whom the documents belonged so that they might have an opportunity to be heard in opposition to any use of the material. The new grand jury had already issued subpoenas for the testimony and documents in the possession of Robert Ackerly and Charles O'Connor, and Velsicol moved to quash these subpoenas on November 21. At the same time, having previously brought the matter of Kennedy's Chicago trips to Judge Parsons' attention, Velsicol now requested an evidentiary hearing on Kennedy's involvement in the new grand jury proceedings. Eight days later Velsicol formally moved to terminate the grand jury proceedings.

On December 6, Judge Parsons denied each of the Velsicol motions. Regarding the subpoenas, he held that "Velsicol's waiver of its attorney-client privilege during the previous grand jury proceedings remains operative for this one" (App. 14a). As for the motion for grand jury termination and an evidentiary hearing, Judge Parsons acknowledged that former prosecutor Kennedy had twice visited Chicago to explain to the new prosecutors the contents of the "Velsicol Room" in the United States Attorney's office despite the representations that he was no longer assigned to the case. But after considering eight affidavits filed by the Government and three opposing affidavits, the judge concluded

"that Mr. Kennedy's two visits to Chicago were made for the limited purpose of facilitating the transition between the group of attorneys which presented the documents to the first grand jury and those who are endeavoring to present them to the present grand jury sitting in this jurisdiction now. The visits were of a housekeeping nature, intended to enable the new prosecution team to make some sense out of the voluminous mass of documents it had inherited." (App. 7a-8a.)

Consequently, appellants' motion to terminate the present grand jury investigation as well as the request of an evidentiary hearing was denied. Appeals were then taken from both orders.*fn3

Jurisdiction of This Court

In response to an inquiry of this Court, the Government argued initially that the instant appeals are from non-final orders and should be dismissed for lack of jurisdiction. Although as a general matter appeals from orders regarding ongoing grand jury proceedings are not favored (In re Special March 1974 Grand Jury Ingram Corp., 541 F.2d 166, 168-169 (7th Cir. 1976), certiorari denied, 430 U.S. 929, 97 S. Ct. 1547, 51 L. Ed. 2d 773), the Supreme Court has adopted a flexible view of finality that takes account of exceptional circumstances. See Matter of Special April 1977 Grand Jury Appeal of William J. Scott, 587 F.2d 889, 891 (7th Cir. 1978). This case falls within the exceptional category. Given the dismissal of the first indictment under highly unusual circumstances, this appeal is unlike the ordinary case in which a party seeks review of an initial decision whether to terminate grand jury proceedings or hold an evidentiary hearing. See e. g., In re Special March 1974 Grand Jury, supra ; In re April 1977 Grand Jury Subpoenas General Motors Corp., 584 F.2d 1366 (6th Cir. 1978) (en banc ), certiorari denied, 440 U.S. 934, 99 S. Ct. 1277, 59 L. Ed. 2d 492. Appealability now is warranted because Velsicol's arguments raise the prospect of a virtually unique kind of injury arguably not remediable by a future review.

As for review of the subpoenas, we rejected appealability objections similar to those now proffered by the Government in disposing of the 1977 appeal regarding the original subpoenas of members of the Sellers ...

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