Bank of Nova Scotia, et al. v. United States
Decided on June 22, 1988; 487 US 250


I. ISSUES II. CASE SUMMARY III. AMICI CURIAE IV. DECISION V. WIN OR LOSS?
I. ISSUES:

A. Issues Discussed: Criminal Justice (procedure), 5th and 6th Amendments

B. Legal Question Presented:

Can a district court invoke its supervisory power to dismiss an indictment for prosecutorial misconduct in a grand jury investigation when the misconduct does not prejudice the defendants?

II. CASE SUMMARY:

A. Background:

The Bank of Nova Scotia is a Canadian chartered bank with branches and agencies in forty-five countries, including the United States and the Bahamas. A federal grand jury conducting a tax and narcotics investigation issued a subpoena to the Bank calling for the production of certain records maintained at the Bank’s main branch or any of its branch offices in Nassau, Bahamas, and Antigua, relating to the bank accounts of a customer of the Bank. The subpoena was served on the Bank’s Miami, Florida agency on September 23, 1981. The Bank declined to produce the documents asserting that compliance with the subpoena without the customer’s consent or an order of the Bahamian courts would violate Bahamian bank secrecy laws.

Eight defendants, including petitioners William A. Kilpatrick, Declan J. O'Donnell, Sheila C. Lerner, and The Bank of Nova Scotia, were indicted on 27 counts. The first 26 counts charged all defendants with conspiracy and some of them with mail and tax fraud. Count 27 charged Kilpatrick with obstruction of justice. The United States District Court for the District of Colorado initially dismissed the first 26 counts for failure to charge a crime, improper pleading, and, as to charges against the bank, for failure to allege that the bank or its agents had the requisite knowledge and criminal intent. Kilpatrick was tried and convicted on the obstruction of justice count.

The Government (respondent) appealed the dismissal of the first 26 counts. Before oral argument, however, the Court of Appeals granted a defense motion to remand the case to the District Court for a hearing on whether prosecutorial misconduct and irregularities in the grand jury proceedings were additional grounds for dismissal.

The District Court ruled in the petitoner's favor and the respondents appealed again. A divided panel of the Court of Appeals reversed the order of dismissal. The court held that the District Court could not exercise its supervisory authority to dismiss the indictment.

The US Supreme Court granted certiorari to resolve the lower courts' dispute. This case was decided together with Kilpatrick v. United States.

B. Counsel of Record:
ACLU Side
(Petitioner/Appellant)
Opposing Side
(Respondent/Appellee)
James E. Nesland argued the cause for petitioners in both cases. With him on the briefs for petitioner in Bank of Nova Scotia v. United States were William B. Pennell, Henry Harfeld, Robert G. Morvillo, and Robert J. Anello. William A. Cohan filed briefs for petitioners in Kilpatrick v. United States. Deputy Solicitor General Bryson argued the cause for the United States in both cases. With him on the brief were Solicitor General Fried, Assistant Attorney General Rose, Robert H. Klonoff, Gary R. Allen, Robert E. Lindsay, and Alan Hechtkopf.
C. The Arguments:
ACLU Side
(Petitioner/Appellant)
Opposing Side
(Respondent/Appellee)
Unavailable Unavailable 
III. AMICI CURIAE:
ACLU Side
(Petitioner/Appellant)
Opposing Side
(Respondent/Appellee)
Briefs of amici curiae urging reversal were filed for the American Civil Liberties Union Foundation et al. by John A. Powell, Helen Hershkoff, Steven R. Shapiro, Richard F. Ziegler, and Martha F. Davis; and for the National Association of Criminal Defense Lawyers by Shelley I. Gilman and Larry S. Pozner. No amici curiae briefs were filed on behalf of Respondent.
IV. THE SUPREME COURT'S DECISION:

"[A]s a general matter, a district court may not dismiss an indictment for errors in grand jury proceedings unless such errors prejudiced the defendants. The customary harmless-error inquiry is applicable where... a court is asked to dismiss an indictment prior to the conclusion of the trial... Under the standard of prejudice that courts should apply, in assessing such claims, dismissal of the indictment is appropriate only ‘if it is established that the violation substantially influenced the grand jury's decision to indict,’ or if there is ‘grave doubt’ that the decision to indict was free from the substantial influence of such violations...

The instances of alleged misconduct identified by the District Court included: '(1) fashioned and administered unauthorized 'oaths' to IRS agents in violation of Rule 6(c); (2) caused the same IRS agents to 'summarize' evidence falsely and to assert incorrectly that all the evidence summarized by them had been presented previously to the grand jury; (3) deliberately berated and mistreated an expert witness for the defense in the presence of some grand jurors; (4) abused its authority by providing 'pocket immunity' to 23 grand jury witnesses; and (5) permitted IRS agents to appear in tandem to present evidence to the grand jury in violation of Rule 6(d).'

In considering the prejudicial effect of the foregoing instances of alleged misconduct, we note that these incidents occurred as isolated episodes in the course of a 20-month investigation, an investigation involving dozens of witnesses and thousands of documents. In view of this context, those violations that did occur do not, even when considered cumulatively, raise a substantial question, much less a grave doubt, as to whether they had a substantial effect on the grand jury's decision to charge... We hold that, as a general matter, a district court may not dismiss an indictment for errors in grand jury proceedings unless such errors prejudiced the defendants...

We conclude that the District Court had no authority to dismiss the indictment on the basis of prosecutorial misconduct absent a finding that petitioners were prejudiced by such misconduct. The prejudicial inquiry must focus on whether any violations had an effect on the grand jury's decision to indict. If violations did substantially influence this decision, or if there is grave doubt that the decision to indict was free from such substantial influence, the violations cannot be deemed harmless. The record will not support the... conclusion that petitioners can meet this standard. The judgment of the Court of Appeals is affirmed."

Justice Vote: 1 Pro vs. 8 Con

  • Kennedy, A. Con (Wrote majority opinion)
  • Rehnquist, W. Con (Joined majority opinion)
  • Brennan, W. Con (Joined majority opinion)
  • White, B. Con (Joined majority opinion)
  • Blackmun, H. Con (Joined majority opinion)
  • Stevens, J. Con (Joined majority opinion)
  • O’Connor, S. Con (Joined majority opinion)
  • Scalia, A. Con (Wrote concurring opinion)
  • Marshall, T. Pro (Wrote dissenting opinion)
V. A WIN OR LOSS FOR THE ACLU?

The American Civil Liberties Union filed a brief as amicus curiae urging reversal. The US Supreme Court affirmed the judgment of the Court of Appeals in an 8-1 vote, giving the ACLU an apparent loss.