author: Justice Stevens

text:
    GROGAN et al. v. GARNER
    No. 89-1149.
    Argued October 29, 1990
    Decided January 15, 1991

      Stevens, J., delivered the opinion for a unanimous Court.

      Michael J. Gallagher argued the cause for petitioners. With him on the briefs was J. Michael Dryton.

      Deputy Solicitor General Roberts argued the cause for the United States et al. as amici curiae urging reversal. With him on the brief were Solicitor General Starr, James R. Doty, Paul Gonson, Jacob H. Stillman, Richard A. Kirby, and Alfred J. T. Byrne.

      Timothy K. McNamara argued the cause for respondent. With him on the brief were Jonathan R. Haden and Larry E. Sells.

   Justice Stevens

delivered the opinion of the Court.

Section 523(a) of the Bankruptcy Code provides that a discharge in bankruptcy shall not discharge an individual debtor from certain kinds of obligations, including those for money obtained by “actual fraud.” The question in this case is whether the statute requires a defrauded creditor to prove his claim by clear and convincing evidence in order to preserve it from discharge.

Petitioners brought an action against respondent alleging that he had defrauded them in connection with the sale of certain corporate securities. App. 16-25. Following the trial court’s instructions that authorized a recovery based on the preponderance of the evidence, a jury returned a verdict in favor of petitioners and awarded them actual and punitive damages. Id., at 28-29. Respondent appealed from the judgment on the verdict, and, while his appeal was pending, he filed a petition for relief under Chapter 11 of the Bankruptcy Code, listing the fraud judgment as a dischargeable debt.

The Court of Appeals for the Eighth Circuit reduced the damages award but affirmed the fraud judgment as modified. Grogan v. Garner, 806 F. 2d 829 (1986). Petitioners then filed a complaint in the bankruptcy proceeding requesting a determination that their claim based on the fraud judgment should be exempted from discharge pursuant to § 523. App. 3-4. In support of their complaint, they introduced portions of the record in the fraud case. The Bankruptcy Court found that all of the elements required to establish actual fraud under §523 had been proved and that the doctrine of collateral estoppel required a holding that the debt was therefore not dischargeable. In re Garner, 73 B. R. 26 (WD Mo. 1987).

Respondent does not challenge the conclusion that the elements of the fraud claim proved in the first trial are sufficient to establish “fraud” within the meaning of §523. Instead, he has consistently argued that collateral estoppel does not apply because the jury instructions in the first trial merely required that fraud be proved by a preponderance of the evidence, whereas § 523 requires proof by clear and convincing evidence. Both the Bankruptcy Court and the District Court rejected this argument.

The Court of Appeals, however, reversed. In re Garner, 881 F. 2d 579 (1989). It recognized that the “Bankruptcy Code is silent as to the burden of proof necessary to establish an exception to discharge under section 523(a), including the exception for fraud,” id., at 581, but concluded that two factors supported the imposition of a “clear and convincing” standard, at least in fraud cases. First, the court stated that the higher standard had generally been applied in both common-law fraud litigation and in resolving dischargeability issues before § 523(a) was enacted, and reasoned that it was unlikely that Congress had intended silently to change settled law. Second, the court opined that the general “fresh start” policy that undergirds the Bankruptcy Code militated in favor of a broad construction favorable to the debtor.

The Eighth Circuit holding is consistent with rulings in most other Circuits, but conflicts with recent decisions by the Third and Fourth Circuits. The conflict, together with the importance of the issue, prompted us to grant certiorari, 495 U. S. 918 (1990). We now reverse.

I

At the outset, we distinguish between the standard of proof that a creditor must satisfy in order to establish a valid claim against a bankrupt estate and the standard that a creditor who has established a valid claim must still satisfy in order to avoid dischargeability. The validity of a creditor’s claim is determined by rules of state law. See Vanston Bondholders Protective Comm. v. Green, 329 U. S. 156, 161 (1946). Since 1970, however, the issue of nondischarge-ability has been a matter of federal law governed by the terms of the Bankruptcy Code. See Brown v. Felsen, 442 U. S. 127, 129-130, 136 (1979).

This distinction is the wellspring from which cases of this kind'flow. In this case, a creditor who reduced his fraud claim to a valid and final judgment in a jurisdiction that requires proof of fraud by a preponderance of the evidence seeks to minimize additional litigation by invoking collateral estoppel. If the preponderance standard also governs the question of nondischargeability, a bankruptcy court could properly give collateral estoppel effect to those elements of the claim that are identical to the elements required for discharge and that were actually litigated and determined in the prior action. See Restatement (Second) of Judgments § 27 (1982). If, however, the clear-and-convincing standard applies to nondischargeability, the prior judgment could not be given collateral estoppel effect. §28(4). A creditor who successfully obtained a fraud judgment in a jurisdiction that requires proof of fraud by clear and convincing evidence would, however, be indifferent to the burden of proof regarding nondischargeability, because he could invoke collateral estoppel in any event.

In sum, if nondischargeability must be proved only by a preponderance of the evidence, all creditors who have secured fraud judgments, the elements of which are the same as those of the fraud discharge exception, will be exempt from discharge under collateral estoppel principles. If, however, nondischargeability must be proved by clear and convincing evidence, creditors who secured fraud judgments based only on the preponderance standard would not be assured of qualifying for the fraud discharge exception.

H HH

With these considerations in mind, we begin our inquiry into the appropriate burden of proof under § 523 by examining the language of the statute and its legislative history. The language of §523 does not prescribe the standard of proof for the discharge exceptions. The legislative history of §523 and its predecessor, 11 U. S. C. §35 (1976 ed.), is also silent. This silence is inconsistent with the view that Congress intended to require a special, heightened standard of proof.

Because the preponderance-of-the-evidence standard results in a roughly equal allocation of the risk of error between litigants, we presume that this standard is applicable in civil actions between private litigants unless “particularly important individual interests or rights are at stake.” Herman & MacLean v. Huddleston, 459 U. S. 375, 389-390 (1983); see also Addington v. Texas, 441 U. S. 418, 423 (1979). We have previously held that a debtor has no constitutional or “fundamental” right to a discharge in bankruptcy. See United States v. Kras, 409 U. S. 434, 445-446 (1973). We also do not believe that, in the context of provisions designed to exempt certain claims from discharge, a debtor has an interest in discharge sufficient to require a heightened standard of proof.

We are unpersuaded by the argument that the clear-and-convincing standard is required to effectuate the “fresh start” policy of the Bankruptcy Code. This Court has certainly acknowledged that a central purpose of the Code is to provide a procedure by which certain insolvent debtors can reorder their affairs, make peace with their creditors, and enjoy “a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” Local Loan Co. v. Hunt, 292 U. S. 234, 244 (1934). But in the same breath that we have invoked this “fresh start” policy, we have been careful to explain that the Act limits the opportunity for a completely unencumbered new beginning to the “honest but unfortunate debtor.” Ibid.

The statutory provisions governing nondischargeability reflect a congressional decision to exclude from the general'policy of discharge certain categories of debts — such as child support, alimony, and certain unpaid educational loans and taxes, as well as liabilities for fraud. Congress evidently concluded that the creditors’ interest in recovering full payment of debts in these categories outweighed the debtors’ interest in a complete fresh start. We think it unlikely that Congress, in fashioning the standard of proof that governs the applicability of these provisions, would have favored the interest in giving perpetrators of fraud a fresh start over the interest in protecting victims of fraud. Requiring the creditor to establish by a preponderance of the evidence that his claim is not dischargeable reflects a fair balance between these conflicting interests.

I — I HH

Our conviction that Congress intended the preponderance standard to apply to the discharge exceptions is reinforced by the structure of § 523(a), which groups together in the same subsection a variety of exceptions without any indication that any particular exception is subject to a special standard of proof. The omission of any suggestion that different exemptions have different burdens of proof implies that the legislators intended the same standard to govern the nondischarge-ability under § 523(a)(2) of fraud claims and, for example, the nondischargeability under § 523(a)(5) of claims for child support and alimony. Because it seems clear that a preponder-anee of the evidence is sufficient to establish the nondis-chargeability of some of the types of claims covered by § 523(a), it is fair to infer that Congress intended the ordinary preponderance standard to govern the applicability of all the discharge exceptions.

We are therefore not inclined to accept respondent’s contention that application of the ordinary preponderance standard to the fraud exception is inappropriate because, at the time Congress enacted the current Bankruptcy Code, the majority of States required proof of fraud by clear and convincing evidence. Even if we believed that Congress had contemplated the application of different burdens of proof for different exceptions, the fact that most States required fraud claims to be proved by clear and convincing evidence would not support the conclusion that Congress intended to adopt the clear-and-convincing standard for the fraud discharge exception.

Unlike a large number, and perhaps the majority, of the States, Congress has chosen the preponderance standard when it has created substantive causes of action for fraud. See, e. g., 31 U. S. C. § 3731(c) (False Claims Act); 12 U. S. C. §1833a(e) (1988 ed., Supp. I) (civil penalties for fraud involving financial institutions); 42 CFR § 1003.114(a) (1989) (Medicare and Medicaid fraud under 42 U. S. C. §1320a-7a); Herman & MacLean v. Huddleston, 459 U. S., at 388-390 (civil enforcement of the antifraud provisions of the securities laws); Steadman v. SEC, 450 U. S. 91, 96 (1981) (administrative proceedings concerning violation of antifraud provisions of the securities laws); SEC v. C. M. Joiner Leasing Corp., 320 U. S. 344, 355 (1943) (§ 17(a) of the Securities Act of 1933); First National Monetary Corp. v. Weinberger, 819 F. 2d 1334, 1341-1342 (CA6 1987) (civil fraud provisions of the Commodity Exchange Act). Cf. Sedima, S. P. R. L. v. Imrex Co., 473 U. S. 479, 491 (1985) (suggesting that the preponderance standard applies to civil actions under the Racketeer Influenced and Corrupt Organizations Act). Most notably, Congress chose the preponderance standard to govern determinations under 11 U. S. C. § 727(a) (4), which denies a debtor the right to discharge altogether if the debtor has committed a fraud on the bankruptcy court. See H. R. Rep. No. 95-595, p. 384 (1977) (“The fourth ground for denial of discharge is the commission of a bankruptcy crime, though the standard of proof is preponderance of the evidence”); S. Rep. No. 95-989, p. 98 (1978) (same).

Moreover, as we explained in Part I, supra, Congress amended the Bankruptcy Act in 1970 to make nondischarge-ability a question of federal law independent of the issue of the validity of the underlying claim. Even before 1970, many courts imposed the preponderance burden on creditors invoking the fraud discharge exception. See, e. g., Sweet v. Ritter Finance Co., 263 F. Supp. 540, 543 (WD Va. 1967); Nickel Plate Cloverleaf Federal Credit Union v. White, 120 Ill. App. 2d 91, 93-94, 256 N. E. 2d 119, 120-121 (1970); Gonzales v. Aetna Finance Co., 86 Nev. 271, 275, 468 P. 2d 15, 18 (1970); Beneficial Finance Co. of Manchester v. Machie, 6 Conn. Cir. 37, 41, 263 A. 2d 707, 710 (1969); Budget Finance Plan v. Haner, 92 Idaho 56, 59, 436 P. 2d 722, 725 (1968); Atlas Credit Corp. v. Miller, 216 So. 2d 100, 101 (La. Ct. App. 1968); Household Finance Corp. v. Altenberg, 5 Ohio St. 2d 190, 193, 214 N. E. 2d 667, 669 (1966); MAC Finance Plan of Nashua, Inc. v. Stone, 106 N. H. 517, 521-522, 214 A. 2d 878, 882 (1965). And, following the 1970 amendments, but prior to the enactment of § 523 in 1978, the courts continued to be nearly evenly split over the the appropriate standard of proof. Compare, e. g., Fierman v. Lazarus, 361 F. Supp. 477, 480 (ED Pa. 1973); In re Scott, 1 BCD 581, 583 (Bkrtcy. Ct. WD Mich. 1975), with Brown v. Buchanan, 419 F. Supp. 199, 203 (ED Va. 1975); In re Arden, 75 B. R. 707, 710 (Bkrtcy. Ct. R. I. 1975). Thus, it would not be reasonable to conclude that in enacting § 523 Congress silently endorsed a background rule that clear and convincing evidence is required to establish exemption from discharge.

>

A final consideration supporting our conclusion that the preponderance standard is the proper one is that, as we explained in Part I, supra, application of that standard will permit exception from discharge of all fraud claims creditors have successfully reduced to judgment. This result accords with the historical development of the discharge exceptions. As we explained in Brown v. Felsen, the 1898 Bankruptcy Act provided that “judgments” sounding in fraud were exempt from discharge. 30 Stat. 550. In the 1903 revisions, Congress substituted the term “liabilities” for “judgments.” 32 Stat. 798. This alteration was intended to broaden the coverage of the fraud exceptions. See Brown v. Felsen, 442 U. S., at 138. Absent a clear indication from Congress of a change in policy, it would be inconsistent with this earlier expression of congressional intent to construe the exceptions to allow some debtors facing fraud judgments to have those judgments discharged.

For these reasons, we hold that the standard of proof for the dischargeability exceptions in 11 U. S. C. § 523(a) is the ordinary preponderance-of-the-evidence standard.

The judgment of the Court of Appeals is reversed.

It is so ordered.

      Title 11 U. S. C. §523(a) provides, in pertinent part:
      “Exceptions to discharge.
      “(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt —
      “(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by—
      “(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition . . .

       We therefore do not consider the question whether § 523(a)(2)(A) excepts from discharge that part of a judgment in excess of the actual value of money or property received by a debtor by virtue of fraud. See In re Rubin, 875 F. 2d 755, 758, n. 1 (CA9 1989). Arguably, fraud judgments in cases in which the defendant did not obtain money, property, or services from the plaintiffs and those judgments that include punitive damages awards are more appropriately governed by § 523(a)(6). See 11 U. S. C. § 523(a)(6) (excepting from discharge debts “for willful and malicious injury by the debtor to another entity or to the property of another entity”); In re Rubin, 875 F. 2d, at 758, n. 1.

       The Bankruptcy Court concluded that “there is no real distinction between 'preponderance of the evidence’ and ‘clear and convincing’ as regards Section 523 litigation.” In re Garner, 73 B. R. 26, 29 (WD Mo. 1987).

       The District Court explained:
      “A re-litigation of this case in Bankruptcy Court on the identical fact issues would be to permit the party who loses at a jury trial to have a second day in court on the same issue he and his opponent were fully heard previously. If permitted, all like cases would result in duplicitous litigation resulting in an unreasonable burden on the bankruptcy court.” App. to Pet. for Cert. 28a.

       “While the legislative history is scant on this issue, we feel that it is fair to presume that Congress was aware that the prevailing view at the time of adoption was that fraud, for both section 523 and state common law purposes, had to be proved by clear and convincing evidence.” In re Garner, 881 F. 2d, at 582.

      "This Circuit concluded that the stricter standard was appropriate since the general policy of bankruptcy is to provide the debtor with the opportunity for a fresh start and the courts should, thereby, construe provisions of the Bankruptcy Code favoring the debtor broadly. Matter of Van Home, 823 F. 2d [1285, 1287 (CA8 1987)].” Ibid.

       See In re Phillips, 804 F. 2d 930, 932 (CA6 1986); In re Kimzey, 761 F. 2d 421, 423-424 (CA7 1985); In re Black, 787 F. 2d 503, 505 (CA10 1986); Chrysler Credit Corp. v. Rebhan, 842 F. 2d 1257, 1262 (CA11 1988); In re Hunter, 780 F. 2d 1577, 1579 (CA11 1986); In re Dougherty, 84 B. R. 653 (CA9 BAP 1988).

         In re Braen, 900 F. 2d 621 (CA3 1990); Combs v. Richardson, 838 F. 2d 112 (CA4 1988).

       We use the term “state law” expansively herein to refer to all non-bankruptcy law that creates substantive claims. We thus mean to include in this term claims that have their source in substantive federal law, such as federal securities law or other federal antifraud laws. As the amici point out, many federal antifraud laws that may give rise to nondischargeable claims require plaintiffs to prove their right to recover only by a preponderance of the evidence. See Brief for United States et al. as Amici Curiae 1-3, and n. 2.

       Before 1970, the bankruptcy courts had concurrent jurisdiction with the state courts to decide whether debts were excepted from discharge. In practice, however, bankruptcy courts generally refrained from deciding whether particular debts were excepted and instead allowed those questions to be litigated in the state courts. See Brown v. Felsen, 442 U. S., at 129; 1A Collier on Bankruptcy ¶ 17.28, pp. 1726-1727 (14th ed. 1978). The state courts therefore determined the applicable burden of proof, often applying the same standard of proof that governed the underlying claim. The 1970 amendments took jurisdiction over certain dischargeability exceptions, including the exceptions for fraud, away from the state courts and vested jurisdiction exclusively in the bankruptcy courts. See Brown v. Felsen, 442 U. S., at 135-136; S. Rep. No. 91-1173, pp. 2-3 (1970); H. R. Rep. No. 91-1502, p. 1 (1970).

       Our prior cases have suggested, but have not formally held, that the principles of collateral estoppel apply in bankruptcy proceedings under the current Bankruptcy Act. See, e. g., Kelly v. Robinson, 479 U. S. 36, 48, n. 8 (1986); Brown v. Felsen, 442 U. S., at 139, n. 10. Cf. Reiser v. Woodruff, 327 U. S. 726, 736 (1946) (applying collateral estoppel under an earlier version of the bankruptcy laws). Virtually every Court of Appeals has concluded that collateral estoppel is applicable in discharge exception proceedings. See In re Braen, 900 F. 2d, at 630; Combs v. Richardson, 838 F. 2d, at 115; Klingman v. Levinson, 831 F. 2d 1292, 1295 (CA7 1987); In re Shuler, 722 F. 2d 1253, 1256 (CA5), cert. denied sub nom. Harold V. Simpson & Co. v. Shuler, 469 U. S. 817 (1984); Goss v. Goss, 722 F. 2d 599, 604 (CA10 1983); Lovell v. Mixon, 719 F. 2d 1373, 1376 (CA8 1983); Spilman v. Harley, 656 F. 2d 224, 228 (CA6 1981). Cf. In re Rahm, 641 F. 2d 755, 757 (CA9) (prior judgment establishes only a prima facie ease of nondischargeability), cert, denied sub nom. Gregg v. Rahm, 454 U. S. 860 (1981). We now clarify that collateral estoppel principles do indeed apply in discharge exception proceedings pursuant to § 523(a).

      This indifference would not be shared, however, by a creditor who either did not try, or tried unsuccessfully, to prove fraud in a jurisdiction requiring clear and convincing evidence but who nonetheless established a valid claim by proving, for example, a breach of contract involving the same transaction. See, e. g., In re Black, 787 F. 2d 503 (CA10 1986); In re Rubin, 875 F. 2d, at 758, n. 1.

       See Crandon v. United States, 494 U. S. 152, 158 (1990) (“In determining the meaning of the statute, we look not only to the particular statutory language, but to the design of the statute as a whole and to its object and policy”); K mart Corp. v. Cartier, Inc., 486 U. S. 281, 291 (1988) (“In ascertaining the plain meaning of the statute, the court must look to the particular statutory language at issue, as well as the language and design of the statute as a whole”).

       For example, § 523(a) provides for the nondischargeability of debts not only for child support and alimony, but also for certain fines and penalties, educational loans, and tax obligations. See 11 U. S. C. §§ 523(a)(1), (5), (7), (8).

       Respondent claims that the vast majority of States applied the heightened standard. See Brief for Respondent 8-14. Petitioners and the amici acknowledge that the clear-and-convincing standard applied in many jurisdictions but contend that respondent overstates the number of States that required the heightened standard. See Brief for Petitioners 17-20, and n. 1; Brief for United States et al. as Amici Curiae 21-25. Resolution of this dispute is not necessary for our decision.

       Prior to the enactment of the 1978 Bankruptcy Code, the Courts of Appeals had held that the preponderance standard applied in this situation. See, e. g., In re Robinson, 506 F. 2d 1184, 1187 (CA2 1974); Union Bank v. Blum, 460 F. 2d 197, 200-201 (CA9 1972).


source: Caselaw Access Project

author: Justice O’Connor Justice Stevens,

license: Public Domain

text:
    UNITED STATES v. R. ENTERPRISES, INC., et al.
    No. 89-1436.
    Argued October 29, 1990
    Decided January 22, 1991

      O’Connor, J., delivered the opinion for a unanimous Court with respect to Parts I and II, the opinion of the Court with respect to Parts III-A and IV, in which Rehnquist, C. J., and White, Scalia, Kennedy, and Sou-ter, JJ., joined, and the opinion of the Court with respect to Part III — B, in which Rehnquist, C. J., and White, Kennedy, and Souter, JJ., joined. Stevens, J., filed an opinion concurring in part and concurring in the judgment, in which Marshall and Blackmun, JJ., joined, post, p. 303.

      Deputy Solicitor General Bryson argued the cause for the United States. With him on the briefs were Solicitor General Starr, Assistant Attorney General Dennis, and Lawrence S. Robbins.

      Herald Price Fahringer argued the cause for respondents. With him on the brief were Diarmuid White and Ralph J. Schwarz, Jr.

        Bruce J. Ennis, Jr., filed a brief for Phe, Inc., as amicus curiae urging affirmance.

   Justice O’Connor

delivered the opinion of the Court.

This case requires the Court to decide what standards apply when a party seeks to avoid compliance with a subpoena duces tecum issued in connection with a grand jury investigation.

I

Since 1986, a federal grand jury sitting in the Eastern District of Virginia has been investigating allegations of interstate transportation of obscene materials. In early 1988, the grand jury issued a series of subpoenas to three companies — Model Magazine Distributors, Inc. (Model), R. Enterprises, Inc., and MFR Court Street Books, Inc. (MFR). Model is a New York distributor of sexually oriented paperback books, magazines, and videotapes. R. Enterprises, which distributes adult materials, and MFR, which sells books, magazines, and videotapes, are also based in New York. All three companies are wholly owned by Martin Rothstein. The grand jury subpoenas sought a variety of corporate books and records and, in Model’s case, copies of 193 videotapes that Model had shipped to retailers in the Eastern District of Virginia. All three companies moved to quash the subpoenas, arguing that the subpoenas called for production of materials irrelevant to the grand jury’s investigation and that the enforcement of the subpoenas would likely infringe their First Amendment rights.

The District Court, after extensive hearings, denied the motions to quash. As to Model, the court found that the subpoenas for business records were sufficiently specific and that production of the videotapes would not constitute a prior restraint. App. to Pet. for Cert. 57a-58a. As to R. Enterprises, the court found a “sufficient connection with Virginia for further investigation by the grand jury.” Id., at 60a. The court relied in large part on the statement attributed to Rothstein that the three companies were “all the same thing, I’m president of all three.” Ibid. Additionally, the court explained in denying MFR’s motion to quash that it was “inclined to agree” with “the majority of the jurisdictions,” which do not require the Government to make a “threshold showing” before a grand jury subpoena will be enforced. Id., at 63a. Even assuming that a preliminary showing of relevance was required, the court determined that the Government had made such a showing. It found sufficient evidence that the companies were “related entities,” at least one of which “certainly did ship sexually explicit material into the Commonwealth of Virginia.” Ibid. The court concluded that the subpoenas in this case were “fairly standard business subpoenas” and “ought to be complied with.” Id., at 65a. Notwithstanding these findings, the companies refused to comply with the subpoenas. The District Court found each in contempt and fined them $500 per day, but stayed imposition of the fine pending appeal. Id., at 64a.

The Court of Appeals for the Fourth Circuit upheld the business records subpoenas issued to Model, but remanded the motion to quash the subpoena for Model’s videotapes. In re Grand Jury 87-3 Subpoena Duces Tecum, 884 F. 2d 772 (1989). Of particular relevance here, the Court of Appeals quashed the business records subpoenas issued to R. Enterprises and MFR. In doing so, it applied the standards set out by this Court in United States v. Nixon, 418 U. S. 683, 699-700 (1974). The court recognized that Nixon dealt with a trial subpoena, not a grand jury subpoena, but determined that the rule was “equally applicable” in the grand jury context. 884 F. 2d, at 776, n. 2. Accordingly, it required the Government to clear the three hurdles that Nixon established in the trial context — relevancy, admissibility, and specificity — in order to enforce the grand jury subpoenas. Id., at 776. The court concluded that the challenged subpoenas did not satisfy the Nixon standards, finding no evidence in the record that either company had ever shipped materials into, or otherwise conducted business in, the Eastern District of Virginia. Ibid. The Court of Appeals specifically criticized the District Court for drawing an inference that, because Rothstein owned all three businesses and one of them had undoubtedly shipped sexually explicit materials into the Eastern District of Virginia, there might be some link between the Eastern District of Virginia and R. Enterprises or MFR. Id., at 777. It then noted that “any evidence concerning Mr. Rothstein’s alleged business activities outside of Virginia, or his ownership of companies which distribute allegedly obscene materials outside of Virginia, would most likely be inadmissible on relevancy grounds at any trial that might occur,” and that the subpoenas therefore failed “to meet the requirements [sic] that any documents subpoenaed under [Federal] Rule [of Criminal Procedure] 17(c) must be admissible as evidence at trial.” Ibid., citing Nixon, supra, at 700. The Court of Appeals did not consider whether enforcement of the subpoenas duces tecum issued to respondents implicated the First Amendment.

We granted certiorari to determine whether the Court of Appeals applied the proper standard in evaluating the grand jury subpoenas issued to respondents. 496 U. S. 924 (1990). We now reverse.

II

The grand jury occupies a unique role in our criminal justice system. It is an investigatory body charged with the responsibility of determining whether or not a crime has been committed. Unlike this Court, whose jurisdiction is predicated on a specific case or controversy, the grand jury “can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not.” United States v. Morton Salt Co., 338 U. S. 632, 642-643 (1950). The function of the grand jury is to inquire into all information that might possibly bear on its investigation until it has identified an offense or has satisfied itself that none has occurred. As a necessary consequence of its investigatory function, the grand jury paints with a broad brush. “A grand jury investigation ‘is not fully carried out until every available clue has been run down and all witnesses examined in every proper way to find if a crime has been committed.’” Branzburg v. Hayes, 408 U. S. 665, 701 (1972), quoting United States v. Stone, 429 F. 2d 138, 140 (CA2 1970).

A grand jury subpoena is thus much different from a subpoena issued in the context of a prospective criminal trial, where a specific offense has been identified and a particular defendant charged. “[T]he identity of the offender, and the precise nature of the offense, if there be one, normally are developed at the conclusion of the grand jury’s labors, not at the beginning.” Blair v. United States, 250 U. S. 273, 282 (1919). In short, the Government cannot be required to justify the issuance of a grand jury subpoena by presenting evidence sufficient to establish probable cause because the very purpose of requesting the information is to ascertain whether probable cause exists. See Hale v. Henkel, 201 U. S. 43, 65 (1906).

This Court has emphasized on numerous occasions that many of the rules and restrictions that apply at a trial do not apply in grand jury proceedings. This is especially true of evidentiary restrictions. The same rules that, in an adversary hearing on the merits, may increase the likelihood of accurate determinations of guilt or innocence do not necessarily advance the mission of a grand jury, whose task is to conduct an ex parte investigation to determine whether or not there is probable cause to prosecute a particular defendant. In Costello v. United States, 350 U. S. 359 (1956), this Court declined to apply the rule against hearsay to grand jury proceedings. Strict observance of trial rules in the context of a grand jury’s preliminary investigation “would result in interminable delay but add nothing to the assurance of a fair trial.” Id., at 364. In United States v. Calandra, 414 U. S. 338 (1974), we held that the Fourth Amendment exclusionary rule does not apply to grand jury proceedings. Permitting witnesses to invoke the exclusionary rule would “delay and disrupt grand jury proceedings” by requiring adversary hearings on peripheral matters, id., at 349, and would effectively transform such proceedings into preliminary trials on the merits, id., at 349-350. The teaching of the Court’s decisions is clear: A grand jury “may compel the production of evidence or the testimony of witnesses as it considers appropriate, and its operation generally is unrestrained by the technical procedural and evidentiary rules governing the conduct of criminal trials,” id., at 343.

This guiding principle renders suspect the Court of Appeals’ holding that the standards announced in Nixon as to subpoenas issued in anticipation of trial apply equally in the grand jury context. The multifactor test announced in Nixon would invite procedural delays and detours while courts evaluate the relevancy and admissibility of documents sought by a particular subpoena. We have expressly stated that grand jury proceedings should be free of such delays. “Any holding that would saddle a grand jury with minitrials and preliminary showings would assuredly impede its investigation and frustrate the public’s interest in the fair and expeditious administration of the criminal laws.” United States v. Dionisio, 410 U. S. 1, 17 (1973). Accord, Calandra, supra, at 350. Additionally, application of the Nixon test in this context ignores that grand jury proceedings are subject to strict secrecy requirements. See Fed. Rule Crim. Proc. 6(e). Requiring the Government to explain in too much detail the particular reasons underlying a subpoena threatens tQ compromise “the indispensable secrecy of grand jury proceedings.” United States v. Johnson, 319 U. S. 503, 513 (1943). Broad disclosure also affords the targets of investigation far more information about the grand jury’s internal workings than the Federal Rules of Criminal Procedure appear to contemplate.

Ill

A

The investigatory powers of the grand jury are nevertheless not unlimited. See Branzburg, supra, at 688; Calandra, supra, at 346, and n. 4. Grand juries are not licensed to engage in arbitrary fishing expeditions, nor may they select targets of investigation out of malice or an intent to harass. In this case, the focus of our inquiry is the limit imposed on a grand jury by Federal Rule of Criminal Procedure 17(c), which govérns the issuance of subpoenas duces tecum in federal criminal proceedings. The Rule provides that “[t]he court on motion made promptly may quash or modify the subpoena if compliance would be unreasonable or oppressive.”

This standard is not self-explanatory. As we have observed, “what is reasonable depends on the context.” New Jersey v. T. L. O., 469 U. S. 325, 337 (1985). In Nixon, this Court defined what is reasonable in the context of a jury trial. We determined that, in order to require production of information prior to trial, a party must make a reasonably specific request for information that would be both relevant and admissible at trial. 418 U. S., at 700. But, for the reasons we have explained above, the Nixon standard does not apply in the context of grand jury proceedings. In the grand jury context, the decision as to what offense will be charged is routinely not made until after the grand jury has concluded its investigation. One simply cannot know in advance whether information sought during the investigation will be relevant and admissible in a prosecution for a particular offense.

To the extent that Rule 17(c) imposes some reasonableness limitation on grand jury subpoenas, however, our task is to define it. In doing so, we recognize that a party to whom a grand jury subpoena is issued faces a difficult situation. As a rule, grand juries do not announce publicly the subjects of their investigations. See supra, at 299. A party who desires to challenge a grand jury subpoena thus may have no conception of the Government’s purpose in seeking production of the requested information. Indeed, the party will often not know whether he or she is a primary target of the investigation or merely a peripheral witness. Absent even minimal information, the subpoena recipient is likely to find it exceedingly difficult to persuade a court that “compliance would be unreasonable.” As one pair of commentators has summarized it, the challenging party’s “unenviable task is to seek to persuade the court that the subpoena that has been served on [him or her] could not possibly serve any investigative purpose that the grand jury could legitimately be pursuing.” 1 S. Beale & W. Bryson, Grand Jury Law and Practice §6:28 (1986).

Our task is to fashion an appropriate standard of reasonableness, one that gives due weight to the difficult position of subpoena recipients but does not impair the strong governmental interests in affording grand juries wide latitude, avoiding minitrials on peripheral matters, and preserving a necessary level of secrecy. We begin by reiterating that the law presumes, absent a strong showing to the contrary, that a grand jury acts within the legitimate scope of its authority. See United States v. Mechanik, 475 U. S. 66, 75 (1986) (O’Connor, J., concurring in judgment) (“The grand jury proceeding is accorded a presumption of regularity, which generally may be dispelled only upon particularized proof of irregularities in the grand jury process”). See also Hamling v. United States, 418 U. S. 87, 139, n. 23 (1974); United States v. Johnson, supra, at 512-513. Consequently, a grand jury subpoena issued through normal channels is presumed to be reasonable, and the burden of showing unreasonableness must be on the recipient who seeks to avoid compliance. Indeed, this result is indicated by the language of Rule 17(c), which permits a subpoena to be quashed only “on motion” and “if compliance would be unreasonable” (emphasis added). To the extent that the Court of Appeals placed an initial burden on the Government, it committed error. Drawing on the principles articulated above, we conclude that where, as here, a subpoena is challenged on relevancy grounds, the motion to quash must be denied unless the district court determines that there is no reasonable possibility that the category of materials the Government seeks will produce information relevant to the general subject of the grand jury’s investigation. Respondents did not challenge the subpoenas as being too indefinite nor did they claim that compliance would be overly burdensome. See App. in In re Grand Jury 87-3 Subpoena Duces Tecum, Nos. 88-5619, 88-5620 (CA4), pp. A-333, A-494. The Court of Appeals accordingly did not consider these aspects of the subpoenas, nor do we.

B

It seems unlikely, of course, that a challenging party who does not know the general subject matter of the grand jury’s investigation, no matter how valid that party’s claim, will be able to make the necessary showing that compliance would be unreasonable. After all, a subpoena recipient “cannot put his whole life before the court in order to show that there is no crime to be investigated,” Marston’s, Inc. v. Strand, 114 Ariz. 260, 270, 560 P. 2d 778, 788 (1977) (Gordon, J., specially concurring in part and dissenting in part). Consequently, a court may be justified in a case where unreasonableness is alleged in requiring the Government to reveal the general subject of the grand jury’s investigation before requiring the challenging party to carry its burden of persuasion. We need not resolve this question in the present case, however, as there is no doubt that respondents knew the subject of the grand jury investigation pursuant to which the business records subpoenas were issued. In cases where the recipient of the subpoena does not know the nature of the investigation, we are confident that district courts will be able to craft appropriate procedures that balance the interests of the subpoena recipient against the strong governmental interests in maintaining secrecy, preserving investigatory flexibility, and avoiding procedural delays. For example, to ensure that subpoenas are not routinely challenged as a form of discovery, a district court may require that the Government reveal the subject of the investigation to the trial court in camera, so that the court may determine whether the motion to quash has a reasonable prospect for success before it discloses the subject matter to the challenging party.

<1

Applying these principles in this case demonstrates that the District Court correctly denied respondents’ motions to quash. It is undisputed that all three companies — Model, R. Enterprises, and MFR — are owned by the same person, that all do business in the samé area, and that one of the three, Model, has shipped sexually explicit materials into the Eastern District of Virginia. The District Court could have concluded from these facts that there was a reasonable possibility that the business records of R. Enterprises and MFR would produce information relevant to the grand jury’s investigation into the interstate transportation of obscene materials. Respondents’ blanket denial of any connection to Virginia did not suffice to render the District Court’s conclusion invalid. A grand jury need not accept on faith the self-serving assertions of those who may have committed criminal acts. Rather, it is entitled to determine for itself whether a crime has been committed. See Morton Salt Co., 338 U. S., at 642-643.

Both in the District Court and in the Court of Appeals, respondents contended that these subpoenas sought records relating to First Amendment activities, and that this required the Government to demonstrate that the records were particularly relevant to its investigation. The Court of Appeals determined that the subpoenas did not satisfy Rule 17(c) and thus did not pass on the First Amendment issue. We express no view on this issue and leave it to be resolved by the Court of Appeals.

The judgment is reversed insofar as the Court of Appeals quashed the subpoenas issued to R. Enterprises and MFR, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

Justice Stevens,

with whom Justice Marshall and Justice Blackmun join, concurring in part and concurring in the judgment.

Federal Rule of Criminal Procedure 17(c) authorizes a federal district court to quash or modify a grand jury subpoena duces tecum “if compliance would be unreasonable or oppressive.” See United States v. Calandra, 414 U. S. 338, 346, n. 4 (1974). This Rule requires the district court to balance the burden of compliance, on the one hand, against the governmental interest in obtaining the documents on the other. A more burdensome subpoena should be justified by a somewhat higher degree of probable relevance than a subpoena that imposes a minimal or nonexistent burden. Against the procedural history of this case, the Court has attempted to define the term “reasonable” in the abstract, looking only at the relevance side of the balance. See ante, at 300, 301. Because I believe that this truncated approach to the Rule will neither provide adequate guidance to the district court nor place any meaningful constraint on the overzealous prosecutor, I add these comments.

The burden of establishing that compliance would be unreasonable or oppressive rests, of course, on the subpoenaed witness. This result accords not only with the presumption of regularity that attaches to grand jury proceedings, as the Court notes, see ante, at 300-301, but also with the general rule that the burden of proof lies on “the party asserting the affirmative of a proposition,” see, e. g., Mashpee Tribe v. New Seabury Corp., 592 F. 2d 575, 589 (CA1), cert. denied, 444 U. S. 866 (1979).

The moving party has the initial task of demonstrating to the Court that he has some valid objection to compliance. This showing might be made in various ways. Depending on the volume and location of the requested materials, the mere cost in terms of time, money, and effort of responding to a dragnet subpoena could satisfy the initial hurdle. Similarly, if a witness showed that compliance with the subpoena would intrude significantly on his privacy interests, or call for the disclosure of trade secrets or other confidential information, further inquiry would be required. Or, as in this case, the movant might demonstrate that compliance would have First Amendment implications.

The trial court need inquire into the relevance of subpoenaed materials only after the moving party has made this initial showing. And, as is true in the parallel context of pretrial civil discovery, a matter also committed to the sound discretion of the trial judge, the degree of need sufficient to justify denial of the motion to quash will vary to some extent with the burden of producing the requested information. For the reasons stated by the Court, in the grand jury context the law enforcement interest will almost always prevail, and the documents must be produced. I stress, however, that the Court’s opinion should not be read to suggest that the deferential relevance standard the Court has formulated will govern decision in every case, no matter how intrusive or burdensome the request. See ante, at 301 (“The Court of Appeals accordingly did not consider these aspects of the subpoenas, nor do we”).

I agree with the Court that what is “unreasonable or oppressive” in the context of a trial subpoena is not necessarily unreasonable or oppressive in the grand jury context. Although the same language of Rule 17(c) governs both situations, the teaching of United States v. Nixon, 418 U. S. 683 (1974), is not directly applicable to the very different grand jury context. Thus, I join in Parts I and II of the Court’s opinion, and I am in accord with its decision to send the case back to the Court of Appeals. I also agree that the possible First Amendment implications of compliance should be considered by that court. I would only add that further inquiry into the possible unreasonable or oppressive character of this subpoena should also take into account the entire history of this grand jury investigation, including the series of subpoenas that have been issued to the same corporations and their affiliates during the past several years, see In re Grand Jury 87-3 Subpoena Duces Tecum, 884 F. 2d 772, 774-775 (CA4 1989).

       Justice Scalia joins in all but Part III-B of this opinion.

      See, e. g., In re Grand Jury Subpoena: Subpoena Duces Tecum, 829 F. 2d 1291, 1298 (CA4 1987); In re Grand Jury Subpoena Served upon Doe, 781 F. 2d 238, 250 (CA2) (en banc), cert. denied sub nom. Roe v. United States, 475 U. S. 1108 (1986); In re Grand Jury Matters, 751 F. 2d 13, 19 (CA1 1984); In re Special April 1977 Grand Jury, 581 F. 2d 589, 595 (CA7), cert. denied sub nom. Scott v. United States, 439 U. S. 1046 (1978). Cf.
        Hale v. Henkel, 201 U. S. 43, 76-77 (1906) (applying similar balancing test to determine the “reasonableness” of a subpoena under the Fourth Amendment); In re Grand Jury Impaneled January 21, 1975, 541 F. 2d 373, 382-383 (CA3 1976) (balancing “public’s interest in law enforcement and in ensuring effective grand jury proceedings” and state-created “reports privilege” in deciding whether to quash subpoena).

       See, e. g., In re Grand Jury Subpoena, 829 F. 2d, at 1296-1301 (applying heightened scrutiny in Rule 17(c) balance because of First Amendment concerns); In re Grand Jury Matters, 751 F. 2d, at 18 (requiring Government to show need “with some particularity” because timing of subpoena posed “such potential for harm” to defendants and their right to counsel); In re Grand Jury Proceedings, 707 F. Supp. 1207, 1219 (Haw. 1989) (quashing subpoena because “the government has failed to proffer sufficient evidence of fraud permeating the works of the celebrity artists to justify the great magnitude of the subpoena requests”); In re Grand Jury Proceedings Witness Bardier, 486 F. Supp. 1203, 1214 (Nev. 1980) (quashing subpoena because demand was “so onerous in its burden as to be out of proportion to the end sought”); In re Grand Jury Investigation, 459 F. Supp. 1335, 1343 (ED Pa. 1978) (refusing to quash subpoena because “[court] cannot say that the documentation requested in this instance is excessive relative to the scope of the investigation”).

       The Fourth Circuit, like the Court, conducted the relevancy inquiry without regard to the burden of compliance. Respondents, however, in their affidavits in support of their motions to quash, framed their relevancy arguments in the broader context of the burden imposed by the subpoenas. Respondents noted that the subpoenas required production of virtually all their corporate records. See App. in In re Grand Jury 87-8 Subpoena Duces Tecum, Nos. 88-5619, 88-5620 (CA4), p. A-343, ¶ 18; id., at A-497 to A-498, ¶ 8 (hereinafter App.). Respondents argued that compliance with the subpoenas would violate their rights to privacy and' their rights under the First and Fourth Amendments. See id., at A-342 to A-349, ¶¶ 17, 19-31; id., at A-497, A-500 to A-503, ¶¶7, 14-20. And, as the Court recognizes, ante, at 303, respondents expressly contended that the First Amendment implications of the subpoenas required a heightened level of relevance. App. A-345, ¶22; id., at A-502, ¶ 18.

      See, e. g., Northrop Corp. v. McDonnell Douglas Corp., 243 U. S. App. D. C. 19, 31, 751 F. 2d 395, 407 (1984) (“The need of the party seeking the documents is a relevant factor in considering a claim of oppressiveness, and a case may arise where the need is great enough to overcome a claim [of burdensomeness] such as [the State Department raises] here”) (citation omitted); In re Multi-Piece Rim Products Liability Litigation, 209 U. S. App. D. C. 416, 424-425, 653 F. 2d 671, 679-680 (1981) (“relevance of discovery requests” must be weighed against “oppressiveness” “in deciding whether discovery should be compelled”); United States v. Balistrieri, 606 F. 2d 216, 221 (CA7 1979) (“The district court’s decision to quash Bal-istrieri’s discovery requests was within its discretion under the rule, especially in light of the breadth of the discovery requests in relation to the rather narrow ground of illegal surveillance upon which [his action] was based”), cert. denied, 446 U. S. 917 (1980); Marshall v. Westinghouse Electric Corp., 576 F. 2d 588, 592 (CA5 1978) (plaintiff seeking broad range of documents “must show a more particularized need and relevance”); Litton Industries, Inc. v. Chesapeake & Ohio R. Co., 129 F. R. D. 528, 530 (ED Wis. 1990) (“ ‘If it is established that confidential information is being sought, the burden is on the party seeking discovery to establish that the information is sufficiently relevant and necessary to his case to outweigh the harm disclosure would cause’ ”) (citation omitted); Lloyd v. Cessna Aircraft Co., 430 F. Supp. 25, 26 (ED Tenn. 1976) (requiring “special need” to justify deposition in view of short notice afforded deposed party).