United States Court of Appeals Fifth Circuit

REVISED NOVEMBER 2, 2004 F I L E D October 18, 2004 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT Charles R. Fulbruge III ______________________ Clerk No. 03-50254 ______________________

TEXAS ASSOCIATION OF BUSINESS AND WILLIAM O. HAMMOND,

Plaintiffs-Appellants, versus

RONALD EARLE, DISTRICT ATTORNEY, TRAVIS COUNTY, TEXAS,

Defendant-Appellee. ____________________________________________________

Appeal from the United States District Court for the Western District of Texas, Austin Division _____________________________________________________

Before DEMOSS, DENNIS, and PRADO, Circuit Judges.

DENNIS, Circuit Judge:

Plaintiffs-Appellants, Texas Association of Business (TAB) and

William O. Hammond, filed suit in the Western District of Texas

against Defendant-Appellee Ronald Earl, the District Attorney for

Travis County, seeking injunctive and declaratory relief. The

lawsuit arises out of a Travis County grand jury investigation of

TAB for Texas Election Code violations during the 2002 state

election cycle. TAB and Hammond seek an injunction against the

enforcement of subpoenas issued by the grand jury, an order

enjoining the entire grand jury investigation, and a judgment

declaring that TAB’s conduct during the 2002 campaign season

-1- constitutes expression protected by the First Amendment guarantees

of free speech and free association. The district court declined

to consider these requests, citing the abstention doctrine set forth

in Younger v. Harris,

(1971) and its progeny. We

affirm. However, we decline to decide whether an injunction is

necessary to relieve TAB of its obligation to produce documents

under the subpoenas, as the issue has become moot.

I. BACKGROUND

TAB is a non-profit Texas corporation that describes its

purpose as the promotion of the free enterprise system. Hammond is

TAB’s President and Chief Executive Officer. During the 2002

election cycle, TAB promulgated a number of television and print

advertisements highlighting a particular candidate’s view on

specific issues, such as lawsuit reform, healthcare, and taxes. TAB

alleges that these ads were for informational purposes and did not

advocate for the election or defeat of any particular candidate;

although, the ads criticized and praised particular candidates by

name.1 TAB also maintains that the ads were created solely of their

own volition without consultation with, or cooperation from, any

candidate. District Attorney Earle questions TAB’s assertions that

no candidate cooperation or consultation occurred.

1 TAB contends that the ads did not engage in express advocacy of the election or defeat of a clearly identified candidate, or in other words met the so called “magic words” test found in footnote 52 of the Supreme Court’s opinion in Buckley v. Valeo,

(1976).

-2- After the election cycle, five different losing candidates

filed two separate lawsuits against TAB and Hammond in state court,

alleging that TAB violated Texas state election law by illegally

obtaining $2,000,000 and failing to disclose the expenditure of

those funds for campaign purposes. In addition, a complaint was

filed with the Texas Ethics Commission, which enforces the Texas

Election Code, alleging various violations of the Code. The Travis

County’s District Attorney’s office began an investigation into

TAB’s practices and on January 16, 2003, the 147th Travis County

Grand Jury issued three subpoenas to Hammond, Don Shelton, who was

TAB’s Information Systems Director, and Bob Thomas, owner of Thomas

Graphics, who was hired to create TAB’s ads.

TAB claims that all three of the subpoenas seek to compel

information that is protected by its rights to free speech and

freedom of association as guaranteed in the First Amendment to the

United States Constitution. Based on this assertion, TAB and Hammond

filed suit in federal district court seeking: (1) an injunction to

prevent the District Attorney’s office from enforcing the three

grand jury subpoenas, (2) an injunction to prevent the District

Attorney’s office from conducting a grand jury investigation into

TAB’s advertisements, and (3) a declaration that TAB’s conduct

during the 2002 election cycle was protected speech. On February 10,

2003, after conducting an evidentiary hearing, the district court

denied TAB and Hammond’s requests for relief and dismissed the suit,

-3- applying the abstention doctrine set out in Younger v. Harris,

(1971). TAB and Hammond timely appealed.

While TAB and Hammond were seeking relief in federal court they

also sought relief within the state court system, filing a number

of motions with the state district court. First, they filed a

motion to quash the subpoenas, which was denied in a written order

on April 8, 2003. The state court judge held that the TAB ads at

issue “involve ‘speech’ covered by the First Amendment, thereby

requiring the state to regulate in the area with narrow

specificity,” but that the State had offered evidence that TAB

“engaged in express advocacy, improperly coordinated with candidates

and political action committees, improperly mixed T.A.B. and

political action committee business, and failed to properly report

expenditures and contributions.” Based on the above, the state

court judge allowed the grand jury to proceed, but prevented the

grand jury from receiving a list of TAB’s members and donors, and

from subpoenaing any sitting elected official without the court’s

approval. The protective order also forbids the release of any

information obtained under the subpoenas to any outside entity or

individual, including the civil litigants working with the District

Attorney’s office. TAB then filed writs of mandamus challenging the

state court’s order, which the Austin Court of Appeals and the Texas

Court of Criminal Appeals denied.

-4- In addition, after Hammond and Shelton refused to comply with

another subpoena, the state court held a show cause hearing. After

the hearing, both were held in contempt and the court fined them

$500 each. Hammond and Shelton then filed a petition for writs of

mandamus in the Texas Court of Criminal Appeals, which was denied

without opinion on June 25, 2003. When Hammond refused to abide by

the order and to pay the fine, the court ordered him placed into

custody. Hammond filed a writ of habeas corpus. The Texas Court

of Criminal Appeals granted him bail and ordered a response from the

state court on the habeas charge. On October 20, 2003, the

appellants TAB and Hammond partially complied with the contested

subpoenas and turned over to the grand jury the requested documents,

redacted in accordance with the protective order issued by the state

court.

II. MOOTNESS

District Attorney Earle contends that because the appellants

complied with the subpoena request, there is no live case or

controversy and that this case should be dismissed as moot. We

agree that the issue of compliance with the subpoenas’ order to hand

over documents is now moot. There remains, however, a case and

controversy over compliance with the parts of the subpoenas ordering

live testimony before the grand jury, issuance of an injunction

barring the entire grand jury investigation and the granting of

-5- declaratory relief. Thus, we must consider whether the Younger

abstention doctrine applies.

III. STANDARD OF REVIEW

This court applies a two-tiered standard of review in

abstention cases. Nationwide Mut. Ins. Co. v. Unauthorized Practice

of Law Comm.,

(5th Cir. 2002). “Although we

review a district court’s abstention ruling for abuse of discretion,

we review de novo whether the requirements of a particular

abstention doctrine are satisfied.”

“The exercise of

discretion must fit within the narrow and specific limits prescribed

by the particular abstention doctrine involved.” Webb v. B.C.

Rogers Poultry, Inc.,

(5th Cir. 1999). “A court

necessarily abuses its discretion when it abstains outside of the

doctrine’s strictures.”

Thus, we review a district court’s

decision to abstain for abuse of discretion, provided that the

elements for Younger abstention are present.

III. ANALYSIS

Under the rule set out by the United States Supreme Court in

Younger v. Harris, federal courts must refrain from considering

requests for injunctive relief based upon constitutional challenges

to state criminal proceedings pending at the time the federal action

is instituted. Younger v. Harris,

(1971); Doe v. The

-6- Order Desk, Inc.,

, at *2 (N.D.Tex. July 14, 1997).

On the same day that Younger was decided, the Court expanded the

rule to apply to suits for injunctive relief. Samuels v. Mackell,

(1971).

In Younger, the Court identified one primary source of the

policy, saying, “[o]ne is the basic doctrine of equity jurisprudence

that courts of equity should not act, and particularly should not

act to restrain a criminal prosecution, when the moving party has

an adequate remedy at law and will not suffer irreparable injury if

denied equitable relief.” 401 U.S. at 43-44. The Court pointed out

that this rule of equity acts to “prevent erosion of the role of the

jury” and “avoid a duplication of legal proceedings and legal

sanctions where a single suit would be adequate to protect the

rights asserted.” Id. at 44. The Court then went on to name the

most important source for the abstention doctrine it was

enunciating, “Our Federalism.” The Younger Court used this

talismanic phrase to sum up “the notion of ‘comity,’ that is, a

proper respect for state functions, a recognition of the fact that

the entire country is made up of a Union of separate state

governments, and a continuance of the belief that the National

Government will fare best if the States and their institutions are

left free to perform their separate functions in their separate

ways.” Id.

-7- There is a three-prong test for determining whether the Younger

abstention doctrine is applicable: (1) the dispute must involve an

“ongoing state judicial proceeding,” (2) an important state interest

in the subject matter of the proceeding must be implicated, and (3)

the state proceedings must afford an adequate opportunity to raise

constitutional challenges. Wightman v. Tex. Supreme Ct.,

(5th Cir. 1996)

If this test is met, then a federal court may only enjoin a

pending state criminal court proceeding if certain narrowly

delimited exceptions to the abstention doctrine apply.

Specifically, courts may disregard the Younger doctrine when: (1)

the state court proceeding was brought in bad faith or with the

purpose of harassing the federal plaintiff, (2) the state statute

is “flagrantly and patently violative of express constitutional

prohibitions in every clause, sentence, and paragraph, and in

whatever manner and against whomever an effort might be made to

apply it,” or (3) application of the doctrine was waived. Younger,

; Trainor v. Hernandez,

(1977);

DeSpain v. Johnston,

(5th Cir. 1984).

Here, TAB and Hammond contend that the district court abused its

discretion in applying the Younger abstention doctrine because there

is no “ongoing state judicial proceeding” and because the state

proceedings do not afford them an adequate opportunity to raise

constitutional challenges. They essentially concede that the State

-8- of Texas has an important state interest in ensuring that

participants in the electoral process comply with its election laws.

In addition, TAB and Hammond do not argue that any of the narrow

exceptions to Younger apply.

A. Ongoing State Proceedings

The first issue to be decided is whether state grand jury

proceedings in which subpoenas have been issued constitute an

“ongoing state proceeding” such that abstention is warranted. The

circuits are split on this issue, with our colleagues on the Fourth

and Eighth Circuits finding that a grand jury proceeding is an

ongoing state proceeding and the those on the Third Circuit holding

that it is not.2 Kaylor v. Fields

(8th Cir. 1981);

2 In addition, district courts in Texas and New York have weighed in on the issue with most courts finding that a grand jury proceeding is an ongoing state proceeding. Doe v. The Order Desk, Inc.

(N.D.Tex. 1997)(holding that Texas grand jury proceedings constitute ongoing state proceedings for purposes of Younger abstention); Notey v. Hynes,

(E.D.N.Y. 1976)(“when a grand jury has been impaneled and is sitting and investigating, there is a “criminal case” and in New York a criminal proceeding”); Law Firm of Daniel P. Foster, P.C., v. Dearie, 613 F.Supp 278, 280 (E.D.N.Y. 1985)(“Thus, were the court to grant the relief sought, the immediate and direct effect would be to enjoin the state court from enforcing its order to comply with the subpoena and the state from pursing a grand jury investigation, which is a criminal proceeding.”); Cf. Nick v. Abrams,

(S.D.N.Y. 1989)(This case requires and inquiry into whether a “pending state proceeding” exists when a state attorney general executes a search warrant authorized by a judge during a criminal investigation prior to arrest or indictment. For the reasons set forth below, these circumstances constitute a pending state proceeding for Younger abstention purposes.”); but see Brennick v. Hynes, 471 F.Supp 863,867 (N.D.N.Y. 1979)(indicating that the Younger abstention doctrine “does not apply to state grand jury

-9- Craig v. Barney

(4th Cir. 1982); Monaghan v. Deakins

(3rd Cir. 1986).3

The answer to the question of when there is exists an ongoing

state proceeding may turn on a determination of which kinds of state

proceedings are the relevant kind of proceeding for Younger

purposes. The Supreme Court jurisprudence first recognized the need

for abstention where criminal proceedings were ongoing.4 Younger’s

applicability has been expanded to include certain kinds of civil

and even administrative proceedings that are “judicial” in nature.

Ohio Civil Rights Comm’n v. Dayton Christian Schools, Inc.,

(1986)(finding that Younger abstention was appropriate when

matter was before a state commission charged with hearing gender

discrimination claims); Middlesex County Ethics Comm. v. Garden

State Bar Ass’n,

(1982) (applying the Younger doctrine

to intervention in ongoing attorney disciplinary proceedings);

Juidice v. Vail,

(1977) (holding that Younger should

apply in challenges to civil contempt proceedings against a default

judgment debtor who failed to comply with a subpoena).

proceedings where the target for investigation has no immediate recourse to state courts.”). 3 Notably, the U.S. Supreme Court granted certiorari in the case from the Third Circuit, but the issue was mooted before any decision could be rendered. Deakins v. Monaghan,

(1988). 4 Younger, 401 U.S. at 37; Samuels, 401 U.S. at 66. In these cases there had been an indictment or other formal charge filed against the parties seeking relief.

-10- A grand jury proceeding has both administrative functions, like

investigating wrongdoing and making an initial determination of

probable cause to file criminal charges, and judicial functions,

wherein it may summon witnesses and compel the production of

documents. However, both the administrative and judicial functions

pertain directly to the enforcement of the state’s criminal laws.

It is the criminal law arena where the federal courts’ deference to

state courts has been most pronounced. See Middlesex County Ethics

Comm. v. Garden State Bar Ass'n,

(1982); Juidice

v. Vail,

(1977). Other proceedings have been

found to be due the same deference because of analogy to, or nexus

with, criminal proceedings. Middlesex County Ethics Comm.,

. (“The importance of the state interest may be demonstrated

by the fact that the noncriminal proceedings bear a close

relationship to proceedings criminal in nature.”)

In Texas, grand jury proceedings bear a very close relationship

with criminal trial proceedings.5 The grand jury is said to be “an

arm of the court by which it is appointed.” Dallas County Dist.

Attorney v. Doe,

(Tex. App. 1998). The district

court impanels the grand jury after testing the qualifications of

its members, administers the jurors’ oath, and instructs them as to

5 In Texas, a grand jury has the power to indict. Tex Code Crim. P. art. 20.19-22. In Craig, the Fourth Circuit found that an investigation by a Virginia grand jury, which does not have the power to indict, constituted an ongoing state proceeding for purposes of Younger abstention.

.

-11- their duties as grand jurors. Tex. Code Crim. P. art. 19.24, 19.26,

19.32, 19.34, 19.34, 19.35. The grand jury can seek advice from the

district court on any matter it is considering. Tex. Code Crim. P.

art. 10.06. Any subpoena sought to be issued by the grand jury is

issued by the district court and enforced by that court. Tex. Code

Crim. P. art. 24.01; 20.15; 24.05-08. Such subpoenas may also be

challenged in the district court by means of a motion to quash the

subpoena, thus providing a judicial forum in which to raise

constitutional issues.

B. Important State Interest

The plaintiffs concede that the State of Texas’s interest in

the enforcement of its election laws is an important interest. As

there is no dispute as to this issue we move on to the third prong

of the test.

C. Adequate Opportunity to Raise Constitutional Challenges

The third prong of the test for Younger applicability is

whether the state proceeding affords an adequate opportunity to

raise constitutional challenges. Wightman,

. We find

that it does. In this case, the plaintiffs have had ample

opportunity to raise constitutional claims, and have in fact done

so in the district court, an intermediate appellate court, and

Texas’s highest appellate court with jurisdiction over this dispute.

In fact, the trial court judge limited the scope of the challenged

subpoenas on constitutional grounds.

-12- Texas law allows persons served with a grand jury subpoena to

move to quash the subpoena. See Dallas County Dist. Attorney,

. If dissatisfied with the district court’s ruling on

the motion to quash, appellate review is available through mandamus.

Kidd v. Lance,

(Tex. App. 1990). In addition,

the constitutionality of any subpoena and the issue of whether TAB’s

conduct was protected under the First Amendment can be litigated at

any criminal trial arising from the grand jury investigation.6 The

availability of the above opportunities to litigate constitutional

claims in the state courts constitute “an adequate opportunity to

raise constitutional challenges” in the state proceedings such that

this prong of the Younger test is satisfied and abstention is

warranted.

IV. Conclusion In accordance with the abstention doctrine established in

Younger v. Harris and its progeny we AFFIRM the order of the

district court dismissing this action.

6 The opportunity to raise constitutional claims at trial has been held sufficient by the Eighth Circuit. Kaylor,

.

-13-