In re Grand Jury Proceedings Empaneled June 2000 ( 2002 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-3215
In the Matter of Grand Jury Proceedings,
(Grand Jury Empaneled June 2000 in
Springfield, Illinois)
Appeal from the United States District Court
for the Central District of Illinois.
No. 01 GJ 28--Joe B. McDade, Chief Judge.
Argued and Decided September 19, 2001
Published February 14, 2002
Before Bauer, Kanne, and Diane P. Wood,
Circuit Judges.
Kanne, Circuit Judge. The district court
found Sergius A. Rinaldi in contempt for
failing to produce documents responsive
to a grand jury subpoena and
conditionally fined and imprisoned him.
On August 13, 2001, the district court
denied Rinaldi’s motion for
reconsideration, and he filed his notice
of appeal on August 20, 2001. Oral
argument on the appeal was heard on
September 19, 2001, and on that day we
summarily affirmed the order of contempt
and denied Rinaldi’s motion for release
pending appeal./1
I. History
Rinaldi is an orthodontist with offices
in Springfield and Edwardsville,
Illinois. On January 23, 2001, the grand
jury issued a subpoena to Rinaldi,
demanding the production of records
related to Rinaldi’s orthodontic practice
by February 7, 2001. The subpoenaed
records included, inter alia, patient
sign-in sheets, daily schedules, calendar
schedules of patients, and patient
charts. Following several informal
conferences between the government and
Rinaldi, numerous documents demanded by
the subpoena remained outstanding.
Specifically, the government required
production of (a) original case files and
claim forms for twenty-five patients; (b)
the original explanation medical benefit
forms for these patients; (c) Rinaldi’s
appointment books for the years 1995-99;
and (d) the sign-in sheets, daily and
weekly appointment logs, and daily
cancellation sheets for the years 1995-
2000. The district court ordered Rinaldi
to appear personally on June 15, 2001 to
show cause why he should not be held in
contempt for failing to comply with the
grand jury subpoena by producing the
documents. On June 15, 2001, the district
court ordered Rinaldi to comply with the
subpoena in full and produce the
documents. Pursuant to an agreement
between Rinaldi and the government,
Rinaldi was granted an extension until
July 6, 2001, but Rinaldi never produced
the documents. On July 10, 2001, the dis
trict court held a contempt hearing
regarding Rinaldi’s failure to comply
with the June 15 order.
At that hearing, FBI Special Agent Kirk
Staats testified that a consensual search
of Rinaldi’s Springfield office was
executed on June 26, 2001, and of his
Edwardsville office on July 3, 2001.
Agent Staats testified that the July 3
search was scheduled to begin at 7:00
a.m. At approximately 6:30 a.m., law
enforcement officials observed Rinaldi
place a box in a dumpster outside of the
McDonald’s restaurant next to his office.
Agent Staats testified that FBI agents
recovered the box from the dumpster and
found within the box several sign-in
sheets covered by the subpoena. Agent
Staats stated that Rinaldi had previously
denied the existence of these sign-in
sheets.
The government also called Judy Keran to
testify. She stated that she has worked
for Rinaldi at his Springfield office
since May 1994, and addressed the
accumulation and storage of sign-in
sheets prior to January 23, 2001. Keran
testified that the sign-in sheets would
initially be left at the Springfield
office’s reception desk. On a daily
basis, Keran would then transfer the
sign-in sheets to a desk drawer. When a
significant amount of sign-in sheets
accumulated in that drawer, Keran dated,
banded, and placed the sign-in sheets in
a closet in the Springfield office. Keran
testified that the sign-in sheets
remained in that closet from May 1994
until approximately March or April 2001.
Keran also testified that appointment
books from 1994 through the current year
were located in the closet prior to
January 23, 2001.
Keran then testified that sometime after
January 23, 2001, Rinaldi removed all the
sign-in sheets and appointment books that
were stored in the closet. Keran noted
that she went into the closet on a daily
basis and that the sign-in sheets and
appointment books were removed from the
closet "definitely after the [issuance of
the] subpoena" on January 23, 2001. Keran
stated that she asked Rinaldi about their
removal, and that Rinaldi told her that
he had removed the sign-in sheets and
appointment books. Keran was then asked
whether Rinaldi had destroyed any records
on any previous occasion. Keran
responded, "[a]bsolutely not. Dr. Rinaldi
did not want us to destroy anything. He
likes . . . to keep everything . . . down
to the simplest items" and that Rinaldi
saved records "just in case" they were
needed in the future.
Rinaldi then testified on his own
behalf. He stated that he had not
destroyed or removed any sign-in sheets
since the service of the subpoena.
Rinaldi testified that he had placed the
box in the dumpster because he deemed the
material "personal" and not responsive to
the subpoena. He then stated that
contrary to Keran’s testimony, all the
sign-in sheets were systematically
destroyed within one or two months after
their creation. Therefore, Rinaldi
concluded, he could not produce any
responsive documents because the
documents no longer existed.
At the conclusion of the hearing, the
court made several factual findings and
credibility determinations. Specifically,
the court noted that it gave "absolutely
no credence" to Rinaldi’s testimony and
found that "Dr. Rinaldi ha[d] lied" and
"h[ad not] been truthful with th[e]
Court." Further, the court found that the
records did exist because "[t]he fact
that . . . [Rinaldi] had been observed
taking a box of records out of his office
and putting them in or by the Dumpster
persuade[d] the Court that [Rinaldi]
ha[d] these . . . records in his
possession [but was] not turning them
over." Further, the court noted that
there had "been no accounting for the
boxes of records that Judy Keran put
together and put in the" Springfield
closet. The court then stated that there
had been "no evidence" that Rinaldi
destroyed the evidence. Therefore, the
court concluded that it found that the
documents were in still existence, that
they were in Rinaldi’s possession or
control, and that Rinaldi would not
produce the records voluntarily.
The court then ordered the following:
I don’t believe [Rinaldi is] ever going
to furnish these records voluntarily,
because [Rinaldi] doesn’t think the
Government has a right to them. And I
think he’s in wilful contempt of this
Court’s order requiring him to produce
these records by July 6th, and the Court
w[ill] sentence the Defendant to the
custody of the Marshal for up to six
months . . . and to be released sooner
upon his furnishing the records called
for to the United States Attorney’s
Office.
(Emphases added). The court also issued
an order fining Rinaldi $1,500.00 per day
"starting 7/10/01 [and continuing] until
[Rinaldi] complie[d] with [the] grand
jury subpoena." The initial order stated
that the district court found Rinaldi in
criminal contempt, but the district court
amended the order to an order of civil
contempt on July 19, 2001.
On August 13, 2001, the district court
denied Rinaldi’s motion for
reconsideration. The district court
reaffirmed its earlier order of civil
contempt and recommitted Rinaldi to
incarceration--subject to his compliance
with the district court’s order to
produce the responsive documents. The
court stated that it did not "want to
keep [Rinaldi] in jail one minute" and
that Rinaldi would be released if he pro
duced the documents or convinced the
court that the documents no longer
existed.
Rinaldi’s appeal argued that he was
found guilty of criminal contempt, not
civil contempt, and was denied the
appropriate criminal procedural
safeguards. In the alternative, Rinaldi
argued that even if he was found in civil
contempt, (a) there was insufficient
evidence to support such a finding; (b)
the imprisonment and fine imposed have
lost their coercive effect, and the
contempt has therefore become criminal;
(c) he may not be both fined and
imprisoned for civil contempt; and (d)
the fine was excessive and arbitrary
under the Eighth Amendment.
II. Analysis
A. Civil or Criminal Contempt
Rinaldi first asserted that the district
court found him in criminal contempt, and
thus that he was denied the appropriate
procedural safeguards afforded a criminal
defendant. We first determined that the
district court found Rinaldi in civil
contempt. We noted that we were not bound
by the trial court’s designation of
whether the sanction was civil or
criminal./2 See United States v.
Lippitt, 180 F.3d 873, 877 n.6 (7th Cir.
1999). The test for determining whether a
contempt order is civil or criminal is
well-established. A contempt order is
considered civil if the sanctions imposed
are designed primarily to coerce the
contemnor into complying with the court’s
demands, and criminal if its purpose is
to punish the contemnor, vindicate the
court’s authority, or deter future
misconduct. See id. at 876. As most
sanctions contain both coercive and
punitive elements, we examine the
character of the relief itself. See id.
at 877. If the contemnor retains the
ability to purge the contempt and obtain
his release by committing an affirmative
act--and thereby "carries the keys of his
prison in his own pocket," Gompers v.
Bucks Stove & Range Co., 221 U.S. 418,
442, 31 S. Ct. 492, 55 L. Ed. 797 (1911)-
-the order is coercive, and therefore
civil. See Lippitt, 180 F.3d at 877.
Thus, "[t]he paradigmatic, coercive,
civil contempt sanction . . . involves
confining a contemnor indefinitely until
he complies with an affirmative command
such as an order to" produce documents or
property. Id. (citation omitted).
Conversely, prison terms of a definite,
pre-determined length without the
contemnor’s ability to purge are
generally considered punitive and
therefore criminal contempt. See id.
In Lippitt, the contemnor failed to pay
a fine imposed by the district court, and
the court found the contemnor in
contempt. See id. at 875. On appeal, the
contemnor argued that the contempt was
criminal and therefore implicated the
Double Jeopardy Clause. See id. at 876.
In determining the nature of the district
court’s contempt order, we noted that the
order did not set a definite term of
imprisonment. See id. at 877. We stated
that the term of imprisonment was
indefinite because the order permitted
the defendant to "purge" the contempt by
complying with the order and paying the
fine or by "making all reasonable
efforts" to pay the fine. See id. We then
held that because the contemnor retained
the ability to purge his contempt by
paying the fine, the contempt order was
civil. See id.
In the present case, the district court
found that the "records did exist" and
that Rinaldi was not "going to furnish
the records voluntarily, because
[Rinaldi] d[id]n’t think the Government
ha[d] a right to them." Therefore, the
district court wanted to coerce Rinaldi
into involuntarily producing the
responsive documents. Further, although
the order stated that Rinaldi could be
imprisoned for up to six months, the
order specified that Rinaldi was "to be
released . . . at any time, upon his
furnishing the records called for by and
to the U.S. Attorney’s Office." (Emphasis
added). Likewise, the fine was to be
imposed only until Rinaldi "complie[d]
with [the] grand jury subpoena." At the
August 13, 2001 hearing, the district
court stated that it did not "want to
keep [Rinaldi] in jail one minute, and
all [he had] to do to get out [was] tell
[the court] what happened to those
records." Therefore, Rinaldi’s "key" to
being released required him to either
produce the documents or to convince the
court that the documents no longer
existed. As in Lippitt, the court did not
order a set prison term, but rather
allowed Rinaldi to be released if he
complied with its order. Therefore,
because Rinaldi retained the ability to
"purge" the contempt, the court’s order
was a paradigmatic, coercive, civil
sanction. See id. at 877.
B. Sufficiency of the Evidence
Rinaldi next contended that there was
insufficient evidence to support the
court’s finding that he wilfully failed
to comply with the court’s order to
produce the documents. Rinaldi asserted
that the evidence failed to show that the
documents still existed, and therefore he
could not be found in contempt for
failing to produce them. When reviewing a
contempt order, we will reverse the
district court only for an abuse of
discretion or if the court’s decision is
clearly erroneous. See In re John Doe
Trader Number One, 894 F.2d 240, 242 (7th
Cir. 1990). Keran testified that the
sign-in sheets and appointment books were
retained in a specific closet at
Rinaldi’s Springfield office from May
1994 until March or April 2001. Keran
stated that after the service of the
subpoena, these records were removed.
Keran further testified that she advised
Rinaldi that the sign-in sheets and
appointment books were missing, and that
Rinaldi replied that Keran should not
worry about these records because he had
taken care of them. She also testified
that Rinaldi would "absolutely not"
destroy the documents. Finally, Agent
Staats testified that Rinaldi was
observed placing a box of records
containing sign-in sheets in a dumpster
shortly prior to the arrival of federal
agents.
Rinaldi attempted to counter this
overwhelming evidence by stating that the
district court should have believed his
denial of the documents’ existence and
not the testimony of Keran. Rinaldi
asserted that because he testified that
he destroyed the documents before the
service of the subpoena on January 23,
2001, there was insufficient evidence to
support the district court’s finding of
contempt. However, "[w]here there are two
permissible views of the evidence, the
factfinder’s choice between them cannot
be clearly erroneous." United States v.
Soto, 48 F.3d 1415, 1420 (7th Cir. 1995)
(citation omitted). Moreover, the
district court found Rinaldi to be
completely incredible, and "[w]e give
special deference to such credibility
determinations, which can virtually never
be clear error." United States v.
Pedroza, 269 F.3d 821, 826 (7th Cir.
2001). Therefore, based on the testimony
of Keran and Agent Staats, we concluded
that the district court’s order was
supported by sufficient evidence.
C. Continuing Effect of Order
Rinaldi next contended that the contempt
order could no longer be coercive because
at the time of his appellate argument, he
had been imprisoned and fined for more
than two months. According to Rinaldi,
even if the contempt order was a civil
sanction on July 10, 2001, it had become
punitive and criminal in nature. A civil
contempt order that starts out as
coercive can become punitive and
therefore criminal. See In re Grand Jury
Proceedings of December, 1989, 903 F.2d
1167, 1170 (7th Cir. 1990). For instance,
a continued contempt order could lose its
coercive force if there were simply no
reasonable possibility that the contemnor
would ever comply with the court’s
demands. See Lippitt, 180 F.3d at 877.
However, "[i]n the absence of unusual
circumstances, a reviewing court should
be reluctant to conclude . . . that a
civil contempt sanction has lost its
coercive impact at some point prior to
the eighteen-month period prescribed as a
maximum by Congress [in 28 U.S.C. sec.
1826]. The district court’s conclusion in
this regard is virtually unreviewable."
In re Grand Jury Proceedings of December,
1989, 903 F.2d at 1170 (quotations
omitted); see also Lippitt, 180 F.3d at
878.
Rinaldi contended that it is "obvious"
that his imprisonment had lost its
coercive effect. However, Rinaldi offered
no evidence in support of his bare
assertion. Keran testified that Rinaldi
"[a]bsolutely [would] not" destroy the
documents and that Rinaldi removed the
sign-in sheets and appointment books from
the Springfield closet several months
after being served with the subpoena. The
district court relied on this testimony
to conclude that it did not "believe
[that Rinaldi was] ever going to furnish
these records voluntarily," and thus the
contempt order was necessary to coerce
Rinaldi into complying with the June 15
order. Barely two months into Rinaldi’s
incarceration, we were unable to conclude
that "unusual circumstances" existed that
warranted a different conclusion.
Additionally, if Rinaldi was unable to
pay the fine, additional fines would
obviously have lost their effect because
Rinaldi would no longer "carry the keys
of his prison in his own pocket."
However, Rinaldi failed to present any
evidence that the imposition of the fine
had lost its coercive effect, and
therefore we also rejected this argument.
D. Imprisonment and Fine
Rinaldi also asserted that he may not be
both imprisoned and fined for civil
contempt pursuant to United States v.
Holloway, 991 F.2d 370, 373 (7th Cir.
1993). In Holloway, we held that a
contemnor may not be both imprisoned and
fined for criminal contempt. See id. at
374. However, in "contrast [with criminal
contempt], a court may punish civil
contempt by both a fine and
imprisonment." Campbell v. Keystone
Aerial Surveys, Inc., 138 F.3d 996, 1005
n.11 (5th Cir. 1998); see also In re
Dinnan, 625 F.2d 1146, 1150 (5th Cir.
1980). Therefore, because the contempt
order in this case was civil, Rinaldi’s
argument was rejected.
E. Excessiveness of Fine
Finally, Rinaldi contended that the
monetary fine imposed violated the
Excessive Fines Clause of the Eighth
Amendment. However, a fine assessed for
civil contempt does not implicate the
Excessive Fines Clause. See United States
v. Mongelli, 2 F.3d 29, 30 (2d Cir.
1993).
III. Conclusion
We therefore AFFIRMED the order of the
district court.
FOOTNOTES
/1 In our order of September 19, 2001, we stated
that an opinion explaining our reasoning would be
forthcoming, and this is that opinion. This
procedure is in accordance with 28 U.S.C. sec.
1826(b) and our practice, which requires that
appeals of orders for civil contempt be decided
within thirty days. See In re Grand Jury Proceed-
ings of August, 1984, 757 F.2d 108, 110 (7th Cir.
1984), cert. denied, Ghibaudy v. United States,
471 U.S. 1018, 105 S. Ct. 2025, 85 L. Ed. 2d 306
(1985).
/2 The fact that the district court initially termed
its order "Criminal Contempt" on July 10, 2001
was irrelevant. See Pabst Brewing Co. v. Brewery
Local Union No. 77, 555 F.2d 146, 149 (7th Cir.
1977). "[W]hat the parties labeled the proceed-
ings or how the court initially regarded defen-
dant’s conduct are not determinative of the
character of the contempt sentence. Rather, we
must discover the purpose of the contempt pro-
ceeding, whether it was to punish or coerce
compliance." Id. (citation omitted). Moreover,
the district court amended its order on July 19,
2001 and classified Rinaldi’s contempt as civil.