Opinion
No. CV 91-0694.
March 24, 1992
ANDREW J. MALONEY, United States Attorney, (Stuart M. Gerson, Assistant Attorney General, Mark D. Polston, Attorney, Civil Division, U.S. Department of Justice, Stanley N. Alpert, Assistant United States Attorney, of counsel), Brooklyn, New York.
SNITOW PAULEY, (Franklyn H. Snitow, Debra R. Wolin, Stewart J. Epstein, Esqs., of counsel) New York, New York, Attorney for defendants.
MEMORANDUM AND ORDER
Defendants have moved to vacate this court's order, docketed October 2, 1991, granting the government's motion pursuant to Rule 6(e) (3) (C) (i) of the Federal Rules of Civil Procedure giving the attorneys in the Civil Division of the Department of Justice access to records obtained by a grand jury during its investigation of defendants. The court stayed the government from getting access to the records pending determination of the motion.
The action was brought by the United States on behalf of the United States Department of Agriculture. under the False Claims Act, as amended, 31 U.S.C. §§ 3628- 3733, and concerns alleged false claims by defendants for reimbursement.
The background is as follows. The Food and Nutrition Service, a division of the Agriculture Department has responsibility for administering the National School Lunch Program, the National School Breakfast Program, the Special Milk Program, and the Summer Food Program. Defendant Yeshiva Yesoda Hatorah (the Yeshiva) is a private religious school and defendant Camp Adas Yereim (the Camp) serves as a summer retreat for boys. The Yeshiva has owned and operated the Camp and acted as its sponsor for various food and nutrition programs.
The National School Lunch Program provides funding and commodities for the service of meals to eligible children by participating educational institutions. Pursuant to the National School Lunch Act, 42 U.S.C. §§ 1751- 1769, the Secretary of Agriculture has issued regulations for that program. The institutions that participate in it sign agreements and must comply with the agreements and the regulations of the statute. The participants submit claims for reimbursement on forms that report the time covered by the claim, the number of days paid, and the number and cost of free or reduced-cost meals served.
The same general requirements are in effect under the National School Breakfast Program, the Special Milk Program, and the Summer Food Service Program.
The complaint alleges that the Camp under the direction of the Yeshiva participated in the programs from 1981 through 1986. The Yeshiva and the Camp submitted claims and were paid substantial amounts.
The Department of Agriculture determined after an audit and investigation of the Yeshiva and the Camp that they had purposely inflated their claims for reimbursement in order fraudulently to increase payments made to them.
Count one of the complaint asks for treble damages and forfeitures under the False Claims Act, 31 U.S.C. § 3729(a)(1), against the defendants for knowingly presenting false claims to the United States, which made payment.
Counts two and three seek recovery under the theories of payment under mistake of fact and unjust enrichment.
A grand jury in this district investigated the defendants and obtained business records and other documents. The United States seeks access to the business records and to the work papers of the Agriculture Department agents who participated in the investigation.
Defendants' papers in support of the motion to vacate contend that the documents are subject to grand jury secrecy under Rule 6(e) of the Federal Rules of Criminal Procedure, that plaintiff has not shown any particularized need to obtain secret grand jury material, and that, if disclosure is made, it should be to defendants as well as the government.
Rule 6(e) provides in subdivision (2) for the general rule of secrecy with respect to "matters occurring before the grand jury." Rule 6(e)(3)(C)(i) provides, in pertinent part, that disclosure otherwise prohibited by the rule may be made "when so directed by a court preliminary to or in connection with a judicial proceeding."
The United States argues that the records sought are not "matters occurring before the grand jury", and relies on United States v. Interstate Dress Carriers, Inc., 280 F.2d 52 (2d Cir. 1960). That case concerned a trucking company subject to the provisions of the Motor Carrier Act of 1935. The Interstate Commerce Commission was authorized to inspect and copy the financial accounts and other records of persons subject to the Act. It was unable to obtain the records which had been previously subpoenaed by a grand jury in the United States District Court for the Southern District of New York and were in the custody of the Justice Department. The Justice Department then applied to the court for leave to permit the Commission's representatives to examine and make copies of the grand jury records. The trucking company opposed the application contending that disclosure would infringe upon the secrecy of the grand jury process in violation of Rule 6(e).
The Second Circuit held that the inspection would not impinge upon the secrecy of the grand jury proceedings. The court said that Rule 6(e) was "intended only to protect against disclosure of what is said or what takes place in the grand jury room", and that "it is not the purpose of the Rule to foreclose from all future revelation to proper authorities the same information or documents which were presented to the grand jury." 280 F.2d at 54. The court held that when data was sought for its "intrinsic value in the furtherance of a lawful investigation" rather than to "learn what took place before the grand jury" it was not a valid defense to disclosure that the same documents had been or were presently being examined by a grand jury. Id.
The Interstate Dress Carriers, Inc. case has not been questioned in this circuit. See, e.g., United States v.Lartey, 716 F.2d 955, 964 (2d Cir. 1983); United States v.Weinstein, 511 F.2d 622, 627 n. 5 (2d Cir. 1975); United States v. Liberman, 687 F. Supp. 775, 776-77 (E.D.N.Y. 1988).
While the mere presentation of documents to a grand jury does not cloak them in secrecy, they should be kept secret if their disclosure would convey otherwise unavailable information about the nature of the grand jury proceedings. United States v.Liberman, supra, 687 F. Supp. at 776-77; United States v.Lartey, supra, 716 F.2d at 964; United States v.Stanford, 589 F.2d 285, 291 (7th Cir. 1978), cert. denied, 440 U.S. 983, 99 S. Ct. 1794 (1979).
Clearly some of the records sought will not in themselves show the nature of the grand jury proceedings. These include insurance policies, health inoculations records, and New York State Education Department enrollment data, relevant to establish the actual number of campers who attended the camp. Nor will records such as the defendants' agreements with the Department of Agriculture, the claim forms and documents submitted by defendants, and the checks provided to defendants. The United States says that these will show the number of campers claimed to have received meals.
In addition to these records the United States also seeks analyses, summaries, work papers, and witness interview notes. The court cannot determine from the papers submitted to it whether these documents would convey information otherwise unavailable about the nature of the grand jury proceedings. The United States should supply the court with copies of documents which fall into this category so that the court may determine whether they constitute "matters occurring before the grand jury" and, if they do, whether there is "particularized need" for the United States to have access to them.
The parties should also brief the question of whether or not any disclosure should be made to both sides.
The motion to vacate is denied to the extent of the documents above indicated, and the restraining order contained in this court's order dated November 14, 1991 is continued pending determination of the balance of the motion to vacate.
So ordered.