In Re State Grand Jury Investigation , 217 N.J. 430 ( 2014 )

SYLLABUS
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized).
In re State Grand Jury Investigation (A-65-12) (072552)
Argued March 17, 2014 -- Decided May 22, 2014
PER CURIUM
In this appeal, the Court addresses whether enforcement of grand jury subpoenas seeking defense attorneys’
records regarding the defendants’ post-indictment activities must await completion of the pending criminal
prosecution.
On May 14, 2010, a State Grand Jury returned Indictment 10-05-00057-S (Indictment 10-05-00057-S)
charging thirty-four defendants with racketeering, money laundering, falsifying records, failing to file tax returns,
failing to pay income taxes, and other related offenses. On May 24, 2010, days after the issuance of that State Grand
Jury Indictment, a separate investigation was initiated.
On June 13, 2011, all of the privately retained defense attorneys who represented defendants in connection
with Indictment 10-05-00057-S were served with grand jury subpoenas duces tecum, specifically seeking the
attorneys’ fee records for all payments received between May 15, 2010 – the day after Indictment 10-05-00057-S
was returned – and the return date of the subpoena. Six of the subpoenaed attorneys (attorneys) filed a motion to
quash the subpoenas, arguing that the subpoenas sought information that could be used improperly in the ongoing
trial proceedings, that the subpoenas infringed on their clients’ right to counsel by requiring the attorneys to provide
evidence against their clients, and that the subpoenas would have a chilling effect on their relationship with their
clients. The court denied the attorneys’ motion to quash, finding that the subpoenas were part of a separate
investigation into acts subsequent to Indictment 10-05-00057-S and that neither the Sixth Amendment nor attorney-
client privilege barred the State from subpoenaing client fee records.
The Appellate Division granted the attorneys’ motion for leave to appeal, but ultimately affirmed the trial
court’s denial of the motion to quash. Nonetheless, the panel was concerned that the service of subpoenas on the
defendants’ attorneys would have a “deleterious inhibiting effect” on the attorney-client relationship, particularly
because the State had served subpoenas on all privately retained attorneys rather than using a more tailored
approach. To that end, and, in order to balance the parties’ interests, the Appellate Division issued, sua sponte, a
stay of enforcement of each subpoena until the charges pending against an individual defendant (i.e., an attorney’s
client) under State Grand Jury Indictment 10-05-00057-S are resolved.
The Court granted the State’s motion for leave to appeal from the imposition of the stay. In re State Grand
Jury Investigation, 214 N.J. 112 (2013). The attorneys did not file a cross-motion for leave to appeal the Appellate
Division’s judgment upholding the subpoenas.
HELD: The stay of enforcement of each subpoena ordered by the Appellate Division shall continue in effect, provided
that the State offers and each defendant executes a statute of limitations tolling agreement. If a defendant fails to
execute a tolling agreement within forty-five days of the State’s offer, the stay shall be lifted in respect of that
defendant.
1. Because the attorneys did not file a cross-motion for leave to appeal the Appellate Division’s judgment upholding
the subpoenas, the Court does not have before it the merits of the attorneys’ original motion to quash. That said, the
Court takes note of the fact that the State did not provide any guidelines or factors under which the Attorney General
reviews and permits the issuance of State Grand Jury subpoenas to attorneys representing previously indicted
defendants. Although the Court is constrained by the current procedural posture from commenting further on the
role to be played by guidelines or factors in the review and approval of State Grand Jury subpoenas to attorneys
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representing previously indicted defendants, the Court acknowledges the importance of such guidelines in the
federal criminal justice system. (p. at 8).
2. With regard to the matter before the Court – the Appellate Division’s imposition of the stay – the Court accepts
the State’s representations that it seeks only attorney payment information, not information about the nature of the
services provided by the attorneys to their clients, and that the statute of limitations for the matters under
investigation is likely to expire before proceedings arising from Indictment 10-05-00057-S are concluded. The
Court also accepts the attorneys’ representation that, in light of the State’s statute of limitations concerns, it would
be reasonable to require the indicted defendants to enter into statute of limitations tolling agreements with the State
as a condition for sustaining the stay of the subpoenas. (p. at 9).
3. The interest of justice would not be served by a stay that substantially hinders the State’s prosecution of the
offenses currently under investigation. Therefore, the stay of enforcement of the subpoenas is appropriate only if the
State is not harmed by the operation of statute of limitations for offenses being investigated and presented to the
State Grand Jury. As such, the stay of enforcement of each subpoena ordered by the Appellate Division shall
continue in effect, provided that the State offers and each defendant executes a statute of limitations tolling
agreement. If a defendant fails to execute a tolling agreement within forty-five days of the State’s offer, the stay
shall be lifted in respect of that defendant. (p. at 9).
The judgment of the Appellate Division is AFFIRMED AS MODIFIED and the matter is REMANDED
to the trial court for further proceedings consistent with the Court’s opinion.
JUSTICES LaVECCHIA, ALBIN, PATTERSON, and FERNANDEZ-VINA, and JUDGES
RODRÍGUEZ and CUFF (both temporarily assigned) join in this opinion. CHIEF JUSTICE RABNER did
not participate.
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SUPREME COURT OF NEW JERSEY
A-65 September Term 2012
072552
IN RE STATE GRAND JURY
INVESTIGATION
Argued March 17, 2014 – Decided May 22, 2014
On appeal from the Superior Court, Appellate
Division.
Frank Muroski, Deputy Attorney General,
argued the cause for appellant State of New
Jersey (John J. Hoffman, Acting Attorney
General, attorney; Mr. Muroski, Mark G.
Eliades, and Christopher S. Romanyshyn, of
counsel and on the briefs).
Vikrant Pawar argued the cause for
respondents John Weichsel, Esq., Robert
Blossner, Esq., Tom Cataldo, Esq., Murray
Richman, Esq., Stacey Richman, Esq., and
Paul Chiaramonte, Esq.
Henry E. Klingeman argued the cause for
amicus curiae The Association of Criminal
Defense Lawyers of New Jersey (Krovatin
Klingeman, attorneys; Mr. Klingeman and
Helen A Nau, on the brief).
PER CURIAM
This unusual matter comes before the Court on leave granted
to the State of New Jersey. In re State Grand Jury
Investigation, 214 N.J. 112 (2013). The appeal arises out of a
motion to quash a subpoena duces tecum that had been issued by
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the State Grand Jury to private criminal defense attorneys for
fee records pertaining to “any defendant named within State
Grand Jury Indictment 10-05-00057-S,” an earlier issued
indictment. The motion to quash was denied and that
determination was affirmed on appeal; however, the Appellate
Division issued, sua sponte, a stay of enforcement of each
subpoena until the charges pending against an individual
defendant under State Grand Jury Indictment 10-05-00057-S are
resolved. The State sought review of the Appellate Division’s
sua sponte action, which impedes law enforcement efforts to
proceed with ongoing State Grand Jury work. We now modify the
Appellate Division’s judgment.
I.
The history of this appeal reveals protracted proceedings
leading up to this Court’s review of the stay of the subpoenas.
We briefly summarize that history.
On May 14, 2010, a State Grand Jury returned Indictment
10-05-00057-S charging thirty-four defendants, who had been
under investigation for involvement in several organized
criminal enterprises, with racketeering, money laundering,
falsifying records, failing to file tax returns, failing to pay
income taxes, and other related offenses. According to an
affidavit filed by the then-Director of the Division of
Criminal, Department of Law and Public Safety, “a separate
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investigation” was initiated on May 24, 2010, days after the
issuance of that State Grand Jury Indictment.
On June 13, 2011, all of the privately retained defense
attorneys who had represented the defendants in connection with
State Grand Jury Indictment 10-05-00057-S were served with grand
jury subpoenas duces tecum, seeking the attorneys’ fee records
for all payments received between May 15, 2010, and the return
date of the subpoena. The affidavit of the former Director of
the Division of Criminal Justice states that he “authorized the
issuance of the State grand jury subpoenas.” The subpoenas were
addressed to the custodians of records at the attorneys’ firms,
and all sought the same data:
[A]ll fee records including but not limited
to: (1) Cash Receipt entries; (2) Bank
Deposit tickets including the cancelled
deposit items; (3) Receipts issued for
payments, including cash, check or any other
form; (4) Payment ledgers; (5) Retained
copies of any checks received and/or
currency tendered; (6) Any documents
identifying the person making the payment;
(7) Currency Transaction Reports; (8) IRS
Forms 8300; (9) Records identifying anything
of value received in lieu of cash or check
and the identity of the person tendering the
things of value relative to legal services
provided or agreed to be provided . . . .
Six of the subpoenaed attorneys (attorneys) filed a motion
to quash the subpoenas. They argued that the subpoenas sought
information that could be used improperly in the ongoing trial
proceedings, that the subpoenas infringed on their clients’
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right to counsel by requiring the attorneys to provide evidence
against their clients, and that the subpoenas would have a
chilling effect on their relationship with their clients.
The motion court refused to quash the subpoenas, finding
that the subpoenas were part of a separate investigation of acts
subsequent to issuance of State Grand Jury Indictment
10-05-00057-S and that neither the Sixth Amendment nor attorney-
client privilege barred the State from subpoenaing client fee
records.
On leave granted to the six attorneys, the Appellate
Division affirmed the trial court’s denial of the motion to
quash, concluding that: (1) the State was using the subpoenas
properly to investigate separate, post-indictment conduct, and
(2) the fee records were not protected by attorney-client
privilege. As to the first point, the Appellate Division
stated:
We have little difficulty in agreeing
with the Law Division that (1) the May 2010
indictment and (2) the investigation into
similar post-indictment conduct of some or
all of the indicted defendants represent
separate spheres of inquiry authorized to
the State. The dominant purpose of the
latter line of inquiry -- including the
payment of counsel fees as outlined in the
challenged subpoenas -- can have no capacity
“to buttress an indictment already returned
by the grand jury.” [State v. Francis, 191
N.J. 571, 591-92 (2007).] The requested
materials, by definition, will have their
genesis in events that occurred after the
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May 2010 indictment was issued, and
necessarily involve circumstances temporally
separate from the subjects of the alleged
“predicate criminal activity [that] occurred
between in or about January 2005, and in or
about April 2010.” Obviously, the State
cannot be prevented from investigating and
later indicting already-indicted individuals
if those individuals continue criminal
conduct after the indictment. A defendant
cannot be immunized from future scrutiny of
a similar offense just because he or she has
already been charged with the prior
misconduct. Nor can the involvement of an
attorney -- unwitting or otherwise --
automatically shield possible wrongdoing.
[(second alteration in original).]
As to attorney-client privilege, the appellate panel concluded
that,
[b]ased upon the record presented to us, the
data sought by the State’s subpoenas --
narrowly tailored to non-communicative, non-
confidential attributes of the parties’
business relationship -- neither invade the
attorney client privilege nor erode the
protections available to indigent and non-
indigent defendants alike.
However, the panel was concerned that the service of
subpoenas on the attorneys would have a “deleterious inhibiting
effect” on the attorney-client relationship, particularly in
this case, in which the State had served subpoenas on all
privately retained attorneys rather than using a more tailored
approach. The panel found that “[s]uch a cover-the-waterfront
inquiry indubitably raises concerns of fairness and the
potential for both misunderstanding by, and intimidation of,
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defense counsel and their clients.” Although the panel
recognized that “[e]ven when trials are pending, a grand jury’s
right to unprivileged evidence may outweigh the right of the
defense bar and its clients not to be disturbed,” the panel
found that here “the State’s broad-stroke-approach tips the
scale in favor of caution in order to ensure that the indicted
defendants are not deprived of counsel of their choice.”
Therefore, “[i]n order to accommodate the disparate interests of
the State, the indictees, and their attorneys,” the panel
imposed a stay on the enforcement of the subpoenas duces tecum
issued to the attorneys. The panel ordered that the stay of
each subpoena remain in place until the conclusion of
proceedings arising from State Grand Jury Indictment 10-05-
00057-S against an attorney’s client.
This Court granted the State’s motion for leave to appeal
from the imposition of that stay, which had not been included in
the attorneys’ request for relief. The attorneys did not file a
cross-motion for leave to appeal the Appellate Division’s
judgment upholding the subpoenas.
II.
Before this Court, the State argues that the Appellate
Division’s stay of the execution of the subpoenas “frustrate[s]
the public’s interest in the fair and expeditious administration
of the criminal law” and should not have been imposed based on a
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finding of potential, as opposed to actual, infringement on the
defendants’ right to counsel. The State particularly emphasizes
its concern that, because the bulk of the pretrial and trial
proceedings relating to State Grand Jury Indictment
10-05-00057-S have yet to take place, the stay is likely to
allow the statute of limitations on the matters under
investigation to run before the subpoenas can be executed. The
State also represents that it seeks only attorney payment
information and does not and will not seek any detail or
information related to the nature or provision of attorney
services.
The attorneys argue that this Court should affirm the stay
imposed by the Appellate Division because it properly balances
the State’s need for the information and the indicted
defendants’ interest in their relationship with their attorneys.
The attorneys assert that the State’s concerns regarding the
operation of the statute of limitations do not require lifting
the stay. Rather, the attorneys suggest that those concerns
could be addressed through individual statute-of-limitations
tolling agreements between the defendants and the State. The
attorneys represent that requiring such tolling agreements as a
condition of the stay would be reasonable.
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III.
Because this case comes before this Court only on the
State’s motion for leave to appeal the imposition of the stay,
the Court does not have before it the merits of the attorneys’
original motion to quash. Therefore, the Court lacks the
ability to probe the circumstances under which the State has
proceeded with these subpoenas duces tecum against defense
counsel. We note that we have not been provided with any
guidelines or factors under which the Attorney General reviews
and permits the issuance of State Grand Jury subpoenas to
attorneys representing previously indicted defendants. That
said, we are constrained by the procedural posture of this
matter from commenting further, at this time, on the role to be
played by guidelines or factors in the review and approval of
State Grand Jury subpoenas to attorneys representing previously
indicted defendants. We are aware nonetheless of the importance
of such guidelines in the federal criminal justice system. See,
e.g., In re Klein, 776 F.2d 628, 634-35 (7th Cir. 1985)
(describing Department of Justice internal guidelines for
issuance of subpoenas to attorneys for information related to
client representation); In re Grand Jury Subpoena to Attorney
(Under Seal), 679 F. Supp. 1403, 1408 nn.15 & 17 (N.D.W. Va.
1988) (quoting full text of federal guidelines and recognizing
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“the validity of the serious concerns addressed by the . . .
guideline[s] and the appropriateness of the criteria”).
As the matter is before us, the State has represented that
it seeks only attorney payment information, not information
about the nature of the services provided by the attorneys to
their clients. The State has also represented that the statute
of limitations for the matters under investigation is likely to
expire before proceedings arising from State Grand Jury
Indictment 10-05-00057-S are concluded. We accept those
representations. We similarly note and accept the attorneys’
representation that, in light of the State’s statute of
limitations concerns, it would be reasonable to require the
indicted defendants to enter into statute of limitations tolling
agreements with the State as a condition for sustaining the stay
of the subpoenas. We agree that the interest of justice would
not be served by a stay that substantially hindered the State’s
prosecution of the offenses currently under investigation.
Therefore, while the Appellate Division judgment properly sought
to balance the interests of the State and the attorneys, we hold
that its stay of execution of the subpoenas is appropriate only
if the State is not harmed by the operation of statute of
limitations for offenses being investigated and presented to the
State Grand Jury.
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Accordingly, we conclude that the stay ordered by the
Appellate Division shall continue in effect, provided that the
State offers and each defendant executes a statute of
limitations tolling agreement. However, if a defendant fails to
execute a tolling agreement within forty-five days of the
State’s offer, the stay shall be lifted in respect of that
defendant.
IV.
The judgment of the Appellate Division is affirmed as
modified by this decision. This matter is remanded to the trial
court for further proceedings consistent with the implementation
of this opinion.
JUSTICES LaVECCHIA, ALBIN, PATTERSON, and FERNANDEZ-VINA,
and JUDGES RODRÍGUEZ and CUFF (both temporarily assigned) join
in this opinion. CHIEF JUSTICE RABNER did not participate.
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SUPREME COURT OF NEW JERSEY
NO. A-65 SEPTEMBER TERM 2012
ON APPEAL FROM Appellate Division, Superior Court
IN RE STATE GRAND JURY
INVESTIGATION
DECIDED May 22, 2014
Justice LaVecchia PRESIDING
OPINION BY Per Curiam
CONCURRING/DISSENTING OPINION BY
DISSENTING OPINION BY
AFFIRM AS
CHECKLIST MODIFIED/
REMAND
CHIEF JUSTICE RABNER ---------------------- ----------------------
JUSTICE LaVECCHIA X
JUSTICE ALBIN X
JUSTICE PATTERSON X
JUSTICE FERNANDEZ-VINA X
JUDGE RODRÍGUEZ (t/a) X
JUDGE CUFF (t/a) X
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