The district court dismissed an indictment charging Sears, Roebuck and Company, Inc. (Sears) with customs fraud because of prosecutorial misconduct in presenting the case to the grand jury. We reverse and remand.

* On February 26, 1980, a grand jury returned an indictment against Sears alleging that Sears had conspired to defraud the United States government by overstating to customs agents the price it had paid for television receivers purchased from Japanese manufacturers. See 18 U.S.C. Secs. 371 and 542 (1976). The indictment charged that customs documents filed by Sears failed to disclose rebates and credits that Sears had privately arranged with its Japanese suppliers, thus misrepresenting the net price Sears had paid for the merchandise. Evidence presented to the grand jury consisted primarily of testimony by Sears employees and documents from Sears' files. The evidence indicated two possible motives for Sears' alleged overstatement of the prices it had paid: first, to bring the declared prices into conformity with the floor or "check prices" established by Japan's Ministry of International Trade and Industry (MITI); and second, to avoid dumping duties for selling imported merchandise in the United States at less than fair value.

The indictment was returned following a long, complex grand jury investigation that began in June 1978. Twenty witnesses testified over the course of thirteen grand jury sessions. Because the indictment alleged that members of the company had conspired with Japanese manufacturers, seventeen of those twenty witnesses were Sears employees or representatives. In fact, only three were not: two were Customs agents and one, John Nevin, was Chairman of the Board of Zenith Radio Corporation.

Sears moved to dismiss the indictment on grounds of prosecutorial misconduct in the treatment of witnesses and the presentation of evidence. After a hearing, Judge Kelleher denied the motion. After Sears' unsuccessful interlocutory appeal, see United States v. Sears, Roebuck & Co., 647 F.2d 902 (9th Cir.1981), the case was transferred to Judge Real, who held that the prosecutor had abused the grand jury process, and granted Sears' renewed motion to dismiss.1 United States v. Sears, Roebuck & Co., 518 F. Supp. 179 (C.D.Cal.1981). The government appeals.

In dismissing the indictment, Judge Real relied upon five separate examples of prosecutorial abuse of the grand jury process. He found that the prosecutor had: (1) failed to control the testimony of John Nevin, thus permitting him to make inflammatory and potentially prejudicial statements, 518 F. Supp. at 189; (2) expressed his personal views by commenting on the evidence, id. at 188, 189; (3) examined the Sears employees and lawyers called as witnesses with excessive hostility, id. at 185-87; (4) failed to offer allegedly exculpatory evidence necessary to permit the grand jury to make an informed judgment about Sears' intent to defraud the United States government, id. at 187 n. 15; and (5) issued forthwith subpoenas in violation of the United States Attorneys' Manual, id. at 182-85.

Judge Real viewed John Nevin's testimony as the "culminat[ion]" of the prosecutor's abuse of the grand jury process. 518 F. Supp. at 188. Nevin, Chairman of the Board of Zenith Radio Corporation, a domestic manufacturer of television receivers and a competitor of Sears, testified "as a complaining witness so to speak, for the American television industry." Grand Jury Transcript, Testimony of John J. Nevin at 21 (September 11, 1979). His 85 pages of testimony were, in the words of the trial judge, "packaged in patriotic fervor by both Mr. Nevin and [the prosecutor]." 518 F. Supp. at 189. Judge Real found that the prosecutor's conduct in presenting Nevin's testimony, including the prosecutor's expression of his own views on Nevin's remarks, precluded the grand jury from making an impartial determination of probable cause.

Judge Real was understandably troubled by Nevin's testimony. The prosecutor allowed Nevin to range far afield and to discourse with patriotic rhetoric on the quality of American workmanship and the devastating effect of Japanese products on the American economy.2 More disturbingly, the prosecutor made no effort to control the testimony3, instead punctuating Nevin's observations with his own thoughts on the profit motive and the American system of government.4 In large part, both Nevin's testimony and the prosecutor's comments were irrelevant to any customs violations by Sears; more importantly, they were at times inflammatory and potentially prejudicial to Sears.

The prosecutor's encouragement of John Nevin was not the only example of his excessive zeal in pursuing the Sears indictment. Judge Real also found that the prosecutor had engaged in a running commentary on the evidence and witnesses, and that "the statements of [the prosecutor] read like a scathing argument giving the personal opinion of a prosecutor on the credibility of a witness that would not withstand attack for misconduct if made to a petit jury during trial." 518 F. Supp. at 185-86. In making this finding, the trial judge pointed to the prosecutor's remark that "I do not want to influence you.... But to me, anyway, and if anybody in the Grand Jury thinks it is different it defies logic in that scenario--he testified to the fact that he knew they were getting that entire overbilling back," id. at 186 n. 11, and to other "comments amounting to unsworn testimony and misstatements of the law." Id. at 188.

Judge Real identified several other instances of improper behavior to support his finding that prosecutorial misconduct permeated the entire grand jury proceeding. He found that the prosecutor had impermissibly harassed the Sears employees called as witnesses: "[the prosecutor's] incessant commands ... ordering SEARS employees to respond 'yes' or 'no' to complex, unintelligible and argumentative questions girded with his sarcastic remarks was calculated to and did deprive the Grand Jury of its ability to fairly view the testimony of SEARS employees." 518 F. Supp. at 187-88. He had already determined that the issuance of forthwith subpoenas to Sears attorneys violated Department of Justice policy5 and "define[d] at the outset the overreaching of the government in its presentation to the Grand Jury." 518 F. Supp. at 185. He had also faulted the government for misrepresenting to the grand jury Sears' willingness to comply with the subpoenas duces tecum issued to it, id. at 182, and for failing to introduce the deposition of Sears' attorney John Rehm. Id. at 187. Rehm's deposition contained allegedly exculpatory statements that Sears did not have the requisite intent to violate the customs laws by falsifying its customs documents because it had formulated its rebate programs on the advice of counsel. Sears here supplements those findings with claims that the prosecutor withheld additional information "vital to the grand jury's informed and independent judgment," United States v. DeMarco, 401 F. Supp. 505, 514 (C.D.Cal.1975), aff'd 550 F.2d 1224 (9th Cir.), cert. denied, 434 U.S. 827, 98 S. Ct. 105, 54 L. Ed. 2d 85 (1977), on the issue whether Sears did in fact report the rebate arrangements to Customs Service officials.

We agree with Judge Real that the prosecutor's behavior before the grand jury was at times abusive, and stress that we cannot condone such excessive prosecutorial zeal. In determining whether such misconduct warrants dismissal of the indictment, however, we must bear in mind that the judicial power to intervene in grand jury proceedings is "frequently discussed, but rarely invoked." United States v. Samango, 607 F.2d 877, 881 (9th Cir.1979). Because the constitutional doctrine of separation of powers mandates judicial respect for the independence both of the grand jury, United States v. Chanen, 549 F.2d 1306, 1312 (9th Cir.), cert. denied, 434 U.S. 825, 98 S. Ct. 72, 54 L. Ed. 2d 83 (1977), and of the prosecutor, id.; see also United States v. Gonsalves, 691 F.2d 1310, 1318-19 (9th Cir.1982), an indictment may be dismissed only in "flagrant case[s]" of prosecutorial misconduct. United States v. Kennedy, 564 F.2d 1329, 1338 (9th Cir.1977).6

With this admonition in mind, we proceed to a consideration of Judge Real's dismissal of the Sears indictment.

* The grand jury clause of the Fifth Amendment provides that "[n]o person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury."7 Implicit in that language is the guarantee that a defendant will be indicted only upon the informed and independent determination of a legally constituted grand jury. See, e.g., Stirone v. United States, 361 U.S. 212, 218-19, 80 S. Ct. 270, 273-74, 4 L. Ed. 2d 252 (1960) ("The very purpose of the requirement that a man be indicted by grand jury is to limit his jeopardy to offenses charged by a group of his fellow citizens acting independently of either prosecuting attorney or judge.... The right to have the grand jury make the charge on its own judgment is a substantial right which cannot be taken away with or without court amendment"). Dismissal of an indictment is therefore warranted on constitutional grounds if prosecutorial misconduct has undermined the grand jury's ability to make an informed and objective evaluation of the evidence presented to it. See, e.g., United States v. Cederquist, 641 F.2d 1347, 1353 (9th Cir.1981) ("It must be shown that the prosecutor's conduct significantly infringed upon the ability of the grand jury to exercise its independent judgment"). The relevant inquiry therefore focuses not on the degree of culpability of the prosecutor, but on the impact of his misconduct on the grand jury's impartiality. See, e.g., United States v. Polizzi, 500 F.2d 856, 887-88 (9th Cir.1974), cert. denied, 419 U.S. 1120, 95 S. Ct. 803, 42 L. Ed. 2d 820 (1975) (defendant [must demonstrate] "a reasonable inference of bias on the part of the grand jury resulting from the comments of the prosecutor [referring to the defendants' alleged association with the Mafia]").

Upon review of the transcript of the grand jury proceedings, we hold that Sears has failed to demonstrate the prejudice necessary to justify dismissal of the indictment against it on constitutional grounds.8 Judge Real found that the prosecutor's misconduct before the grand jury violated Sears's constitutional rights, concluding that

when the conduct of a prosecutor before the Grand Jury so seriously undermines the independence and objectivity of this Constitutional institution that it impinges upon Constitutional due process the Court must intervene in the only way it can to protect a defendant's rights and assure that such conduct will not be repeated. It cannot stand idly by and watch an important American institution misused or permit conduct which can lead to a total abrogation of the Fifth Amendment right to a Grand Jury indictment.

518 F.Supp. at 190 (citation omitted).9 Although it is undeniable that the prosecutor abused his prerogatives in conducting this grand jury investigation--and we stress again that we are dismayed by the tactics he employed--Sears simply has not shown, as required, that the grand jury's independence was so undermined that it could not make an informed and unbiased determination of probable cause.

In assessing the impact of John Nevin's patriotic fervor on the grand jury's impartiality, we must take into account the prosecutor's admonitions to the grand jury that Nevin, as a Sears competitor who complained that he had been victimized by Sears' alleged conspiracy, might be biased. Such warnings, while eminently appropriate, are not required, United States v. Thompson, 576 F.2d 784 (9th Cir.1978) (grand jury need not be informed of evidence bearing on the credibility of witnesses), and undoubtedly tended to neutralize the effect of Nevin's testimony. Further, Nevin was the fifteenth of twenty witnesses to testify over a period of eighteen months, and his testimony lasted only one day. The facts of this case are therefore more comparable to those presented in Coppedge v. United States, 311 F.2d 128, 131 (D.C.Cir.1962) cert. denied, 373 U.S. 946, 83 S. Ct. 1541, 10 L. Ed. 2d 701 (1963) (even assuming testimony of one witness was perjured, dismissal of indictment was not warranted where record showed that grand jury had heard other competent testimony) and United States v. Bracy, 566 F.2d 649, 654 (9th Cir.1977), cert. denied, 439 U.S. 818, 99 S. Ct. 79, 58 L. Ed. 2d 109 (1978) (grand jurors were aware that witness had perjured himself, and his testimony was not material to grand jury's consideration) than to those in United States v. Basurto, 497 F.2d 781 (9th Cir.1974), in which the indictment was dismissed because the prosecutor failed to notify the court and the grand jury that one of only two government witnesses had perjured himself on material facts before the grand jury.

Questions posed by the jurors confirm that they retained a critical perspective on Nevin's testimony. Although Nevin had testified that low-priced imports could adversely affect American television manufacturers and the jobs of American workers, see 518 F. Supp. at 189, jurors volunteered questions and comments clearly indicating that they understood the tradeoff: that lower-priced imports could also benefit American consumers who would be charged lower prices for television receivers10. The grand jury thus seemed to have retained the objectivity necessary to evaluate Nevin's testimony fairly. In sum, while we deplore the prosecutor's conduct in failing to exercise greater control over Nevin and in punctuating Nevin's testimony with expressions of his own views, we do not believe that the Nevin appearance significantly impaired the ability of the grand jury to make an informed and impartial determination of probable cause to indict.

Nor did any other of the prosecutor's actions undermine the grand jury's ability adequately to perform its constitutional function. Although the district court faulted the prosecutor for expressing his personal belief in Sears' guilt, that does not justify dismissal in this case. United States v. Cederquist, 641 F.2d at 1353 (grand jurors are aware that prosecutor believes indictment is warranted). Nothing in the record suggests that the prosecutor forced his views on the jurors or otherwise coerced them to return an indictment. On the contrary, the prosecutor repeatedly advised the jurors that he spoke with two voices and that, although he personally believed the evidence established probable cause, the jury was free to disregard his opinion.11 Compare United States v. Wells, 163 F. 313 (D.Idaho 1908) (dismissing indictment where prosecutor told grand jury it had duty to indict, entered jury room during deliberations, and refused to leave on request).

Nothing in the record indicates, furthermore, that the prosecutor's conduct in examining Sears employees undermined the independence of the grand jury. Although the prosecutor was overly aggressive in his examination of several of the Sears employees, particularly Mr. Flummerfelt and Mr. Allen, he did not engage in "brutal, badgering questioning of the defendant's witnesses,"12 Chanen, 549 F.2d at 1310.

In commenting to the jury after testimony by the Sears employees, furthermore, the prosecutor was acting properly within his role "to furnish guidance to the grand jury on the law and the weight of the evidence," ABA Project on Standards for Criminal Justice, The Prosecution Function and the Defense Function Sec. 3.5 at 88 (1970). The record shows that the prosecutor's explanations were frequently given in response to jurors' questions, see, e.g., 518 F. Supp. at 185 n. 10, and that, although the prosecutor made plain to the jurors his view of the credibility of Sears employees, he carefully pointed out that the jurors might interpret the evidence differently. 518 F. Supp. at 186 n. 11. Thus, although we would prefer that a prosecutor maintain a less aggressive posture when questioning witnesses, we cannot conclude that the prosecutor's treatment of Sears' employees undermined the grand jury's ability to exercise independent judgment on the question of probable cause to indict.

Finally, we disagree with Judge Real's ruling, 518 F. Supp. at 187 & n. 15, that the grand jury could not have returned an informed indictment because the prosecutor failed to introduce a deposition containing allegedly exculpatory evidence. It is well settled that the prosecutor is "not required to present the grand jury with evidence which would tend to negate guilt." United States v. Lasky, 600 F.2d 765, 768 (9th Cir.), cert. denied, 444 U.S. 979, 100 S. Ct. 480, 62 L. Ed. 2d 405 (1979).13 The grand jury does not weigh the guilt or innocence of the accused but acts only to make a preliminary determination whether there is probable cause to believe him guilty of a crime. United States v. Cederquist, 641 F.2d 1347, 1352 (9th Cir.1981).

We hold, therefore, that the prosecutor's misconduct in this case did not subvert the Fifth Amendment mandate that an indictment be returned by an informed and independent grand jury. The case is remanded to the district court for proceedings consistent with this opinion.

NORRIS, Circuit Judge, dissenting in part from the judgment.

Although I agree that Judge Real's dismissal of the Sears indictment should be reversed, I write separately because I would, unlike the majority, expressly leave open on remand the question whether the district court may exercise its discretion to dismiss the indictment on supervisory power grounds. I believe the majority's willingness to rely solely on a constitutional rationale in reviewing the dismissal of the indictment obscures the crucial analytical distinction between that rationale and an alternate ground for dismissing an indictment: a court's exercise of its inherent supervisory power.

That distinction has been recognized in the case law, see, e.g., United States v. Chanen, 549 F.2d 1306, 1309 (9th Cir.), cert. denied, 434 U.S. 825, 98 S. Ct. 72, 54 L. Ed. 2d 83 (1977) ("these dismissals have been based either on constitutional grounds or on the court's inherent supervisory power"), but it has never, to my mind, been satisfactorily explained. In my view, while a constitutional analysis focuses on preserving fairness for the individual defendant and remedying any harm that has been done to his basic rights, the exercise of a court's inherent supervisory power serves two institutional purposes: deterring governmental misconduct and protecting the integrity of the judicial process. See, e.g., United States v. Payner, 447 U.S. 727, 736 n. 8, 100 S. Ct. 2439, 2446 n. 8, 65 L. Ed. 2d 468 (1980) ("the supervisory power serves the 'twofold' purpose of deterring illegality and protecting judicial integrity," although it did not justify excluding tainted evidence when "the illegal conduct did not violate the respondent's [constitutional] rights"); United States v. Loud Hawk, 628 F.2d 1139, 1158 (9th Cir.1979) (Hufstedler, J., dissenting) (in determining whether government's destruction of evidence required dismissal of indictment, court pursued "separate and distinctive interests ...: deterring governmental misconduct, protecting a defendant's right to a fair trial; and preserving the integrity of the judicial process"). The individual defendant thus serves only as a conduit for vindication of the public interest. As with application of the exclusionary rule, the benefit to the defendant when a court exercises its supervisory power to dismiss an indictment is incidental to the primary goal--protection of systemic values by deterring official misconduct and preserving the appearance of fairness.

Because constitutional and supervisory power analyses serve fundamentally different purposes, application of either dictates that different factors be weighed in determining whether dismissal of an indictment is warranted. As noted in the first portion of my opinion, the dismissal of an indictment on constitutional grounds requires a finding that the prosecutor's misconduct biased the grand jury. See supra p. 1391-1392. Dismissal on supervisory power grounds, on the other hand, is based on a combination of different factors: the egregiousness of the prosecutor's misconduct, the need to discipline the particular prosecutor in light of any past misconduct, and the effectiveness of any available sanctions that are less drastic than dismissal of the indictment.

Although the Supreme Court has recently indicated that prejudice to an accused resulting from prosecutorial misconduct at trial should also be considered as part of a supervisory power analysis, United States v. Hasting, --- U.S. ----, 103 S. Ct. 1974, 76 L. Ed. 2d 96 (1983) (court of appeals could not reverse conviction by exercise of supervisory power without considering whether prosecutor's error was harmless), I do not read Hasting as establishing a per se rule against the exercise of supervisory power in the absence of prejudice to the defendant. Hasting, --- U.S. at ----, 103 S. Ct. at 1986 (Brennan, J., concurring in part and dissenting in part). No case has held, furthermore, that a defendant must show that a grand jury is biased before an indictment may be dismissed pretrial on supervisory power grounds.1 In fact, this court has dismissed an indictment based on its concern for the administrative manageability of a trial without making any reference at all to the interests of the accused. United States v. Gonsalves, 691 F.2d 1310 (9th Cir.1982) (complex RICO indictment dismissed because trial based on it would have been administratively unmanageable).

For these reasons, I would remand the case to the district court without prejudice to Sears' right to renew its motion to dismiss the indictment on supervisory power grounds.2