APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY. D.C. Misc. No. 75-11.
Seitz, Chief Judge, Gibbons and Rosenn, Circuit Judges.
This is an appeal from an order of the district court adjudging appellant Abraham Freedman in civil contempt for his refusal to obey a court order enforcing a grand jury subpoena duces tecum.*fn1 The subpoena, dated June 16, 1975, requested the production of 26 categories of documents dealing with various aspects of the financial affairs of the Philadelphia law firm of Freedman, Borowsky & Lorry for the previous 10 years. It was addressed to "Any Responsible Officer Freedman, Borowsky & Lorry," was served on Freedman on June 18, 1975, and was returnable before the Grand Jury at Newark, New Jersey on June 23, 1975. By agreement with the United States Attorney the return date was extended to permit disposition of a motion to quash. On July 11, 1975 Freedman moved to quash. The motion asserted that Freedman "owns, possesses and controls the books, papers and records described in said subpoena" and resisted compliance on grounds (1) that there was no showing that the records were relevant to any investigation over which the Newark Grand Jury had jurisdiction, and (2) that the subpoena was unconstitutionally overbroad both in scope and in time. In response to this motion the government filed an affidavit which disclosed that the grand jury was investigating alleged violations of federal criminal law by the National Maritime Union, its officers and employees, including potential violations of the Internal Revenue Code, 26 U.S.C. § 7201 et seq., the Interstate Travel Act, 18 U.S.C. § 1952 and the Federal Conspiracy Statute, 18 U.S.C. § 371. The affidavit states in part:
In essence, the grand jury is investigating allegations that officers and employees who are or were New Jersey residents made and received illegal payments, which payments may not have been reported as income by the recipients and which may have been illegally deducted as business expenses on the income tax returns of the payors.
In the context of this investigation there were allegations of criminal wrongdoing on the part of members of the firm of Freedman, Borowsky and Lorry.
The items sought in the subpoena were relevant and necessary to the Grand Jury investigation and are not sought primarily for another purpose.*fn2
At a hearing on the motion to quash on July 14, 1975, Freedman contended that the government's affidavit was an insufficient compliance with In re Grand Jury Proceedings, 486 F.2d 85 (3d Cir. 1973) (Schofield I) and In re Grand Jury Proceedings, 507 F.2d 963 (3d Cir. 1975) (Schofield II). The district court ruled that the government had satisfied the Schofield criteria, denied the motion to quash, and directed Freedman to "produce at 10 A.M. on Tuesday, July 15, 1975, to the Grand Jury, any and all books, records, documents and correspondence set forth in the Subpoena duly served upon the movant." The order did not direct Freedman to testify, but only to produce specific records.
On July 15, 1975 Freedman appeared before the grand jury but refused to produce the subpoenaed records for the reasons previously asserted, and because the production of such materials would violate his privilege against self-incrimination, and because he suspected that he had been the subject of unlawful electronic surveillance by the United States. On July 16, 1975 the district court entered an order scheduling a hearing on July 23, 1975 to determine (a) whether the law firm of Freedman, Borowsky & Lorry is a sole proprietorship of Freedman, as he contended, and (b) whether the grand jury subpoena was issued as a result of any unlawful electronic surveillance.*fn3
The hearing actually commenced on July 24, 1975. In response to the suggestion that the grand jury subpoena might have been the result of unlawful electronic surveillance, the government produced the affidavit of Frank C. Razzano, an Assistant United States Attorney, and a letter from an official of the Department of Justice.*fn4 The hearing was addressed primarily to Freedman's contention that he had the sole proprietary interest in the subpoenaed records, and that they were covered by his privilege against self incrimination. The district court concluded that the subpoenaed records belonged to the law firm of Freedman, Borowsky & Lorry, an institutional entity separate and apart from Freedman, and thus that the records were not held by Freedman as personal and private effects but in a representative capacity for the entity. The court also concluded that the government's denial of unlawful electronic surveillance satisfied 18 U.S.C. § 3504(a)(1) (Supp. 1973). It denied the motion to quash and ordered Freedman to produce the records to the grand jury on August 12, 1975. As with the July 14, 1975 order, the court directed production only, not testimony. 399 F. Supp. at 679.
When Freedman did not comply the court, on the government's petition, directed that he show cause on September 8, 1975 why he should not be adjudged in criminal and/or civil contempt. In answer to the petition Freedman asserted that he should not be adjudged in contempt because:
"(a) Mr. Freedman is entitled to assert his privilege against self-incrimination with ...