Appeal from a judgment of the District Court for the Southern District of New York (Robert L. Carter, Judge) holding witnesses in civil contempt; witnesses attempt to challenge the District Court's subject matter jurisdiction over the lawsuit in which they have been compelled to furnish evidence. Affirmed.
Before: NEWMAN, KEARSE, and CARDAMONE, Circuit Judges.*fn*
JON O. NEWMAN, Circuit Judge:
This appeal from an adjudication of civil contempt presents the interesting and apparently novel question whether a non-party witness has standing on appeal to challenge district court's subject matter jurisdiction over the lawsuit in which the witness has been compelled to furnish evidence. The issue arises on an appeal by the United States Catholic Conference ("USCC") and the National Conference of Catholic Bishops ("NCCB") (collectively "the witnesses") from orders of the District Court for the Southern District of New York (Robert L. Carter, Judge) entered May 8 and 9, 1986. The witnesses were held in civil contempt and subjected to coercive daily fines for their refusal to comply with discovery orders entered in a lawsuit brought to challenge the federal tax-exempt status of the Roman Catholic Church in the United States. The lawsuit has been brought by various organizations and individuals who contend, among other things, that they are injured by the Government's permitting the Catholic Church to retain its tax-exempt status while engaging in political activities that the plaintiffs contend violate the limitations imposed by section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. § 501(c)(3) (1982). The witnesses challenge the contempt adjudication solely on the ground that the plaintiffs lack standing to bring the lawsuit. Without making any definitive ruling on the standing of the plaintiffs, we conclude that the witnesses have standing to question only whether the District Court has a colorable basis for exercising subject matter jurisdiction, that such colorable basis exists, and that in the absence of any challenge to the discovery orders that implicate personal rights of the witnesses, the orders adjudicating them in civil contempt should be affirmed.
The plaintiffs are nine organizations and twenty individuals, all of whom act in one or more capacities to support the constitutional right of women to choose an abortion. Three of the organizations are active in advocating the right to an abortion. Six of the organizations are health clinics that perform abortions. The individuals include persons identified as officers of or contributors to the advocacy organizations, a physician who performs abortions, clergymen whose religious tenets hold it permissible for women to choose an abortion, and Roman Catholics who contribute to the Roman Catholic Church but oppose the Church's position on abortion. All of the individual plaintiffs are voters and taxpayers. The complaint named as defendants the Secretary of the Treasury and the Commissioner of Internal Revenue ("the federal defendants"), and the USCC and the NCCB, alleged in the complaint to be "the two principal national organizations of the Roman Catholic Church in the United States."
The complaint recites the language of section 501(c)(3) of the Internal Revenue Code, defining a tax-exempt organization as one
which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office.
26 U.S.C. § 501(c)(3). The complaint alleges that this prohibition on political activity by tax-exempt organizations is constitutionally required with respect to religious organizations by the First Amendment. The plaintiffs then allege various activities undertaken by the Roman Catholic Church that are claimed to constitute "intervention in political campaigns to further [the Church's] religious belief that no one should be able to obtain an abortion in the United States." These activities, undertaken without loss of the Church's tax-exempt status, are alleged to have injured the plaintiffs in various ways. The primary injury allegedly sustained is that the plaintiffs are disadvantaged in the political arena with respect to political activity on behalf of pro-abortion or pro-choice candidates because the plaintiffs abide by the political action prohibition of section 501(c)(3) while the Church allegedly does not. Some of the plaintiffs also allege that they are injured as taxpayers on the theory that a tax exemption for a religious organization engaging in political activity constitutes a government expenditure to establish a religion and injured as voters on the theory that the toleration of political activity by the Church while plaintiffs limit their activity in observance of section 501(c)(3) has diminished plaintiffs' right to vote.
The complaint alleges five causes of action. The first claims that the activities of the Roman Catholic Church violate section 501(c)(3) and the First Amendment. The remaining four allege that the failure of the federal defendants to revoke the tax-exempt status of the Catholic Church violate their duties under the Code and various provisions of the Constitution.
All four of the original defendants moved to dismiss on various grounds, including the plaintiffs' lack of standing and failure to state a claim. On July 19, 1982, the District Court granted the motion by the USCC and the NCCB to dismiss Count One for failure to state a claim. Abortion Rights Mobilization, Inc. v. Regan, 544 F. Supp. 471, 487 (S.D.N.Y. 1982). Since this was the only count alleging a cause of action against the two Catholic organizations, that ruling removed them from the case as defendants. The Court denied the motion by the federal defendants, concluding that, except for five health service clinics, all other plaintiffs had standing to sue. The District Judge also denied a motion by the federal defendants to certify his ruling denying their motion to dismiss for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). Abortion Rights Mobilization, Inc. v. Regan, 552 F. Supp. 364 (S.D.N.Y. 1982).
In early 1983, both the plaintiffs and the federal defendants served deposition subpoenas duces tecum on the USCC and the NCCB. The plaintiffs' subpoenas, which were received by the witnesses' counsel on March 2, 1983, have given rise to the pending appeal. These subpoenas seek various documents concerning allegedly political activities engaged in by the USCC and the NCCB, including records of financial support of political candidates and organizations. On April 14, 1984, the District Court denied a motion to quash the plaintiffs' subpoenas. No production of documents occurred, the witnesses apparently anticipating that their obligation to comply might be removed by an anticipated decision of the Supreme Court in litigation concerning the standing of parents of Negro children to challenge the tax-exempt status of racially segregated private schools. See Allen v. Wright, 468 U.S. 737, 104 S. Ct. 3315, 82 L. Ed. 2d 556 (1984). Shortly after the Supreme Court ruled against standing in Allen v. Wright, supra, the federal defendants renewed their motion to dismiss. The District Court denied that motion on March 1, 1985, Abortion Rights Mobilization, Inc. v. Regan, 603 F. Supp. 970 (S.D.N.Y. 1985), and subsequently denied certification for interlocutory appeal under section 1292(b).
On June 18, 1985, the plaintiffs sought enforcement of their subpoenas by moving for an order holding the witnesses in contempt. In subsequent pretrial conferences, the District Court questioned whether two paragraphs of the subpoenas, those calling for production of minutes of internal church meetings, might encounter First Amendment objections. In an order on September 4, 1985, Judge Carter ruled that documents called for by these two paragraphs need not be produced "at this time," and that these requests should be narrowed. At the same time he ordered the witnesses to comply "forthwith" with all other requests of the subpoenas and denied the plaintiffs' motion for contempt, without prejudice to renewal in the event of noncompliance. Thereafter, the plaintiffs withdrew the two questioned paragraphs of their subpoenas and also agreed with the witnesses to the entry of a confidentiality order.
Compliance was delayed pending the outcome of a mandamus petition to this Court, challenging Judge Carter's denial of the federal defendants' renewed motion to dismiss. This Court denied the mandamus petition on January 14, 1986, in an unreported order. In re Banker, No. 85-3056 (2d Cir. Jan 14, 1986). On February 26, 1986, Judge Carter denied plaintiffs' renewed motion to hold the witnesses in contempt, again without prejudice to renewal. However, he directed the witnesses to comply with the subpoenas by March 7, 1986, unless this Court in the interim granted rehearing of the ruling denying mandamus. This Court denied rehearing on March 3, 1986. Thereafter plaintiffs renewed their motion to hold the witnesses in contempt.
On May 8, 1986, Judge Carter issued the ruling that is the subject of this appeal. Abortion Rights Mobilization, Inc. v. Baker, 110 F.R.D. 337 (S.D.N.Y. 1986). Noting the prolonged period during which the witnesses had refused to comply with the subpoenas, a period then extending more than three years, Judge Carter expressed the view that the witnesses had "wilfully misled the court and the plaintiffs and made a travesty of the court process." Id. at 337. The District Court ruled that the witnesses were in civil contempt for refusing to comply with the February 26, 1986, order of the Court requiring document production. Judge Carter imposed a daily fine of $50,000 commencing May 12, 1986, until the witnesses complied. On May 9, 1986, Judge Carter amended his May 8 ruling to entitle the plaintiffs to attorney's fees with respect to designated aspects of the pretrial proceedings, with the amount of fees to be determined after disposition of this appeal. He also stayed the May 8 order until May 16, 1986. This Court subsequently continued that stay pending disposition of this appeal.
A witness adjudicated in civil contempt for failure to comply with discovery orders unquestionably has a right to appeal from the contempt order, notwithstanding the lack of a final judgment in the underlying lawsuit in which discovery was sought. E.g., In re Manufacturers Trading Corp., 194 F.2d 948 (6th Cir. 1952); Fenton v. Walling, 139 F.2d 608 (9th Cir.), cert. denied, 321 U.S. 798, 88 L. Ed. 1086, 64 S. Ct. 938 (1944); see Alexander v. United States, 201 U.S. 117, 122, 50 L. Ed. 686, 26 S. Ct. 356 (1906); see generally 9 Moore's Federal Practice para. 110.13 at 167 (1986 & Supp. 1986-87). In this respect a witness has appellate rights superior to those of a party. A party held in civil contempt in the course of a civil lawsuit may not obtain review of the contempt order prior to an appeal from a final judgment in the underlying lawsuit. International Business Machines Corp. v. United States, 493 F.2d 112, 117-19 (2d Cir.), cert. denied, 416 U.S. 995, 40 L. Ed. 2d 774, 94 S. Ct. 2409 (1974).
In challenging their adjudication of civil contempt, the USCC and the NCCB make no claim whatever concerning the substance of either the orders requiring them to comply with the subpoenas duces tecum or the order holding them in contempt for noncompliance. The only claim made on this appeal is that the District Court lacks subject matter jurisdiction of the plaintiffs' suit against the federal defendants; in urging that jurisdiction is lacking, the witnesses, supported by the federal defendants, argue that the plaintiffs lack standing. Thus, the threshold issue we confront is whether the witnesses have standing to challenge their contempt adjudication on the ground that the District Court lacks subject matter jurisdiction over the lawsuit in which they have been obliged to produce evidence.*fn1 The issue appears to be one of first impression, at least in the context of civil litigation.
The most pertinent authority is the decision of the Supreme Court in Blair v. United States, 250 U.S. 273, 63 L. Ed. 979, 39 S. Ct. 468 (1919). In that case three witnesses were subpoenaed in Michigan to testify and produce records before a federal grand jury in the Southern District of New York. The grand jury was investigating possible violations of federal election laws in connection with a primary to select a candidate for United States Senator from Michigan. The witnesses appeared but refused to testify. They contended that the federal election laws were unconstitutional to the extent that they were sought to be applied to primary elections and that "because of the invalidity of these statutes, neither the United States district court nor the federal grand jury has jurisdiction to inquire into primary elections or to indict or try any person for an offense based upon the statutes. . . ." Id. at 278-79. The witnesses were adjudicated in civil contempt and held in custody until they complied with the subpoenas.
The Supreme Court affirmed the denial of writs of habeas corpus. The Court declined to consider the jurisdictional objections sought to be raised by the witnesses, stating that a witness "is not interested to challenge the jurisdiction of court or grand jury over the subject-matter that is under inquiry." Id. at 279 (emphasis added). Qualifying this statement slightly, the Court said that a witness "is not entitled to challenge the authority of the court or of the grand jury, provided they have a de facto existence and organization." Id. at 282. See In re Maury Santiago, 533 F.2d 727, 730 (1st Cir. 1976).
A party entitled to appeal an interlocutory ruling may challenge the subject matter jurisdiction of the district court over the lawsuit in which the ruling was made, see Delta Coal Program v. Libman, 743 F.2d 852, 854 (11th Cir. 1984) (appeal or order permitting substitution of plaintiffs); San Filippo v. United Brotherhood of Carpenters & Joiners, 525 F.2d 508, 513 (2d Cir. 1975) (appeal of preliminary injunction). But cf. Marrese v. American Academy of Orthopaedic Surgeons, 726 F.2d 1150, 1158 (7th Cir. 1984) (in banc) (party held in criminal contempt for failure to produce required discovery may not challenge on appeal from contempt adjudication a res judicata ruling that would defeat the underlying lawsuit), rev'd on other grounds, 470 U.S. 373, 105 S. Ct. 1327, 84 L. Ed. 2d 274 (1985). However, Blair stands for the proposition that a witness has more limited standing. Though the contempt adjudication of the witness is final and hence appealable, that appeal brings up for review only issues in which the witness is legally "interested," Blair v. United States, supra. Doubtless, these would include any issue that concerns the witness personally, such as the district court's personal jurisdiction over the witness, see United States v. Thompson, 319 F.2d 665, 668 (2d Cir. 1963), or any privilege the witness may have to resist divulging the information sought, see Hickman v. Taylor, 153 F.2d 212, 214 (3d Cir. 1945) (in banc), aff'd, 329 U.S. 495, 91 L. Ed. 451, 67 S. Ct. 385 (1947). With respect to jurisdiction over the underlying action, however, Blair instructs that the witness may make only the limited challenge as to whether there exists a colorable basis for exercising subject matter jurisdiction, and not a full-scale challenge to the correctness of the district court's exercise of such jurisdiction.
The federal defendants contend that Blair should be limited to the context of a grand jury witness. They view Blair as merely an example of the Court's philosophy that "encouragement of delay is fatal to the vindication of the criminal law," Cobbledick v. United States, 309 U.S. 323, 325, 84 L. Ed. 783, 60 S. Ct. 540 (1940). It is true that Blair discusses the traditionally broad scope of a grand jury's authority, 250 U.S. at 282-83. But we think the decision was intended to state a rule of wider application. The Court's opinion surveys a range of statutes imposing a general obligation on witnesses in all proceedings to give testimony, subject only to constitutional and other privileges. Id. at 280-81. Explicit reference is made to witnesses in civil cases. Id. at 280. From this review the Court concludes, "In all of these provisions, as in the general law upon the subject, it is clearly recognized that the giving of testimony and the attendance upon court or grand jury in order to testify are public duties which every person within the jurisdiction of the Government is bound to perform upon being properly summoned. . . ." Id. at 281 (emphasis added). After this discussion the Court states as a rule that a witness "is not entitled to challenge the authority of the court or of the grand jury, provided they have a de factor existence and organization." Id. at 282 (emphasis added). If the Supreme Court in Blair had intended to rely on the broad scope of a grand jury's investigative authority rather than the narrow scope of a witness's permissible challenge to subject matter jurisdiction, one would have expected the Court to entertain the witness's jurisdictional challenge and summarily reject it on its merits. Instead, the Court upheld the contempt adjudication, not because the questions asked of the witness were found to be within the grand jury's far-ranging authority, but because the witness had no standing to complain that subject matter jurisdiction had been exceeded.
Moreover, the federal defendants take a somewhat inconsistent position in urging us to limit Blair to grand jury witnesses because of the strong policy of avoiding delay in criminal cases. Expanding their argument that the witness in this civil case have standing to challenge the subject matter jurisdiction of the District Court in the underlying lawsuit, the federal defendants contend that a witness in a criminal trial could make a similar challenge to a contempt adjudication for failure to testify. Letter from Assistant United States Attorney Gerald T. Ford to Clerk of Court (June 26, 1986). We agree that a witness's standing to challenge subject matter jurisdiction in an underlying lawsuit should be depend on whether that suit is civil or criminal, but we think that such standing is unavailable regardless of the nature of the proceeding to which the witness is called.
Furthermore, we note the interesting citation of Blair by the Supreme Court in Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 70 L. Ed. 2d 700, 102 S. Ct. 752 (1982), a case principally relied on by the witnesses and the federal defendants in support of their challenge to the subject matter jurisdiction of the District Court. In ruling against standing to challenge a governmental donation of property alleged to violate the Establishment Clause, the Court noted that it had regularly "'refrained from passing upon the constitutionality of an act [of the representative branches] unless obliged to do so in the proper performance of our judicial function, when the question is raised by a party whose interests entitle him to raise it.'" id. at 474; the internal quotation is from Blair v. United States, supra, 250 U.S. at 279 (brackets in original; emphasis added). Apparently the Court believed that Blair had relevance to the civil context.
More fundamental than their effort to restrict Blair to the grand jury context is the contention of the witnesses and the federal defendants that the lack of the subject matter jurisdiction over the underlying lawsuit impairs the power of the district court to order the witnesses to produce evidence and to adjudicate them in contempt for their refusal. If the absence of subject matter jurisdiction over the underlying suit would preclude the District Court from ordering a witness to produce evidence and effecting compliance, then we would agree that the witness would have standing to assert such a claim on appeal from an adjudication of contempt. We disagree, however, with the premise.
A lack of subject matter jurisdiction does not disable a district court from exercising all judicial power. It is familiar ground that even a court lacking subject matter jurisdiction may conduct appropriate proceedings to determine whether it has jurisdiction and that such proceedings may include the issuance of an injunction to preserve the status quo and an adjudication of criminal contempt for violation of such an injunction. See United States v. United Mine Workers, 330 U.S. 258, 293, 91 L. Ed. 884, 67 S. Ct. 677 (1947); Gompers v. Bucks Stove & Range Co., 221 U.S. 418, 436-37, 55 L. Ed. 797, 31 S. Ct. 492 (1911); United States v. Shipp, 203 U.S. 563, 573, 51 L. Ed. 319, 27 S. Ct. 165 (1906). At least that is so unless the claim of subject matter jurisdiction is "frivolous and not substantial," United States v. United Mine Workers, supra, 330 U.S. at 293, or the "court is so obviously traveling outside its orbit as to be merely usurping judicial forms and facilities," id. at 309 (Frankfurter, J., concurring).
The Mine Workers principle, though usually stated to apply to a court's "jurisdiction to determine its jurisdiction," is really an illustration of a somewhat broader point: In some circumstances the orderly process of the courts must be observed even if it is subsequently determined by an appellate court that the trial court lacked subject matter jurisdiction. For example, a witness in a civil trial could not disrupt the courtroom and then escape the penalties of criminal contempt by successfully arguing that the court lacked subject matter jurisdiction over the suit between the civil litigants. The proper discharge of the judicial function requires that a court's lack of power to adjudicate the rights of the primary litigants not defeat the court's ability to command the witness to cease his disruption. Compelling a recalcitrant witness to furnish unprivileged evidence is admittedly less vital to the judicial function than maintaining courtroom order, but is sufficiently integral to that function to justify use of such authority despite lack of jurisdiction to adjudicate between primary litigants.
Still, it is arguable that a court's authority to punish courtroom disorder or witness recalcitrance with criminal contempt sanctions does not authorize the imposition of civil contempt sanctions without affording the contemnor an opportunity to contest subject matter jurisdiction over the underlying suit. This argument, which seems inconsistent with the normal rule that civil contempt measures must be used before the more drastic sanctions of criminal contempt are employed, see Shillitani v. United States, 384 U.S. 364, 371 n.9, 16 L. Ed. 2d 622, 86 S. Ct. 1531 (1966), draws some support from the decision in Mine Workers. As the Court there observed,
It does not follow, of course, that simply because a defendant may be punished for criminal contempt for disobedience of an order later set aside on appeal, that the plaintiff in the action may profit by way of a fine imposed in a simultaneous proceeding for civil contempt based upon a violation of the same order. The right to remedial relief falls with an injunction which events prove was erroneously issued . . . and a fortiori when the injunction or restraining order was beyond the jurisdiction of the court.
330 U.S. at 294-95 (citations and footnote omitted). That rule, however, applies to prevent one party to a lawsuit from profiting at the expense of another party in a suit over which the trial court is ultimately determined to lack subject matter jurisdiction. It does not necessarily apply to bar a plaintiff from retaining a fine imposed upon a witness as a coercive sanction to compel the furnishing of unprivileged evidence. However, we need not decide at this stage of the litigation what rights the plaintiffs may ultimately have to any coercive fines the witnesses may pay. Cf. International Business Machines Corp. v. United States, supra, 493 F.2d at 119 (raising possibility that a party-contemnor might pay a civil contempt sanction and later make a claim for return of its money). Since the contempt order has been stayed, no such payments have been made, and we prefer to believe that the witnesses will abide by any orders of the district court once the stay is terminated. We need not speculate about issues that would arise only if recalcitrance continues, coercive fines are paid, and subsequently, on appeal from a final judgment in the underlying action, subject matter jurisdiction is determined to have been lacking.
Even if the witnesses and the federal defendants were correct in urging that Blair decided only that a grand jury witness lacks standing to challenge subject matter jurisdiction, that decision nonetheless strongly supports our basic point that a court's lack of subject matter jurisdiction does not disable it from acting in some matters in addition to the ascertainment of its own jurisdiction. Moreover, there are important practical reasons for concluding that the compulsion of unprivileged evidence is one such matter on which the trial court should be free to act, unimpeded by interlocutory appellate inquiry into its subject matter jurisdiction over the underlying litigation. It is well settled that a party may not take an interlocutory appeal from the denial of its motion to dismiss for lack of subject matter jurisdiction. See Catlin v. United States, 324 U.S. 229, 233, 89 L. Ed. 911, 65 S. Ct. 631 (1945). If a recalcitrant witness had standing to challenge subject matter jurisdiction on an appeal from an adjudication of civil contempt, the way would be open for easy circumvention of this salutary rule. The defendant could reflectively precipitate appellate review of a district court's ruling upholding subject matter jurisdiction by serving a discovery request on a friendly witness, how could obligingly resist solely on the ground that subject matter jurisdiction of the underlying suit was lacking. The witness would realistically be exposed only to the sanction of civil contempt,*fn2 and would be obliged to pay money ...