The Court said
E. Use Immunity ArgumentShould the Government obtain an indictment of the taxpayer, was the Court's resolution in the current appeal would prejudice the indictment? The Government almost certainly will face a Kastigar hearing (Kastigar v. United States, 406 U.S. 441 (1972)) as to whether the defendant had waived his Fifth Amendment privilege (he likely had simply by testifying) and, more persuasively, some equivalent of use immunity because of the inappropriate way the IRS obtained access to the Confidential Information.
The government further argues that by insisting on enforcement of the protective orders, Dr. Gerber is essentially requesting to be granted use immunity for his testimony in the SEC proceedings. Citing In re Grand Jury Subpoena, 836 F.2d 1468 (4th Cir. 1988), it contends that such immunity is unavailable in a civil proceeding. The government further argues that Dr. Gerber has no right to use a protective order as a substitute for either seeking immunity or invoking his Fifth Amendment rights in subsequent proceedings.
These contentions, however, distort Dr. Gerber's position. He has not requested use immunity or even de facto use immunity in this action. He has merely asked the district court to enforce its own protective order in the instant civil suit. Such enforcement does not represent an actual or de facto grant of use immunity.
Moreover, the facts of In re Grand Jury Subpoena are easily distinguished from those in this case. There, the Fourth Circuit, relying in part on "[t]he sweeping power of the grand jury to compel the production of evidence," id. at 1471, ruled that deponents in a civil case could not use a civil protective order to block a grand jury criminal subpoena requiring production of their sealed depositions. But no such criminal subpoena is at issue in this case. n3 The IRS obtained the Confidential Information through the SEC and DOJ's voluntary disclosure, not through a criminal subpoena. This disclosure, unprompted by a grand jury subpoena, clearly violated the plain language of the protective order. The government's "use immunity" argument fails.
n3 The Fourth Circuit noted that the government had two options in seeking to obtain the deposition transcripts: it could subpoena the transcripts as part of a grand jury investigation, or seek permissive intervention in the civil action to request that the protective order be modified or vacated. Grand Jury Subpoena, 836 F.3d at 1470. The government chose the latter option in this case.
At a minimum this case underlines the important of getting such confidentiality orders and having them written as broadly as possible.
I did note that, because of the dates recounted for the underlying events, I am confused as to why the statute of limitations for criminal prosecution was still open (or was perhaps fast expiring).