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Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 10, 2001 Decided May 25, 2001

No. 00-5244

United States of America and Leonard Koczur,

Acting Inspector General of the

Legal Services Corporation,

Appellees

v.

Legal Services for New York City,

Appellant

Appeal from the United States District Court

for the District of Columbia

(00ms0241)

Carl W. Riehl argued the cause for appellant. With him on

the briefs was John S. Kiernan.

Michael S. Raab, Attorney, United States Department of

Justice, argued the cause for appellees. With him on the

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brief were Wilma A. Lewis, United States Attorney at the

time the brief was filed, and Mark B. Stern, Attorney.

Laura K. Abel, David S. Udell, and Philip G. Gallagher

were on the brief for amici curiae New York State Bar

Association, et al., in support of appellant.

Before: Ginsburg and Henderson, Circuit Judges, and

Silberman, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

Silberman.

Silberman, Senior Circuit Judge: The Inspector General of

the Legal Services Corporation petitioned for summary enforcement of a subpoena to appellant Legal Services of New

York City. The district court granted the petition, and

appellant now seeks review. We affirm.

I.

Appellant provides legal services to the poor. Each year,

it and other grantees receive multi-million-dollar federal

grants administered through the non-profit Legal Services

Corporation. In a series of audits beginning in 1998, the

Corporation's Inspector General discovered improprieties in

some grantees' reports to the Corporation--most commonly,

overstatement of the number of cases handled and failure to

keep adequate records. That led the General Accounting

Office to audit five grantees, including appellant, and it

concluded that of the 221,000 cases reported by these grantees, "approximately 75,000 ... were questionable." Expressing "concerns" about the inaccuracies in grantees' reports, a

Congressional committee requested that the Inspector General "assess the case service information provided by the grantees" and "report ... no later than July 30, 2000, as to its accuracy."1

The Inspector General then required 30 grantees, including

appellant, to produce for inspection two different sets of data

on the cases they had reported closed during 1999. The first

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1 H.R. Conf. Rep. No. 106-479 (1999).

production, or "data call," required that for each case, identified only by case number, the grantee must select one of 52

"problem codes" to describe the subject matter of the representation. The problem codes vary from the specific--"Parental Rights Termination," "Black Lung"--to the general--

"Education," "Contracts/Warranties"--and the catch-all--

"Other Individual Rights," "Other Miscellaneous." Appellant

complied with the first data call.

The second data call required that for each case, again

identified only by case number, grantees identify their client.

Appellant, along with one other grantee, refused to comply.

It informed the Inspector General that, absent client consent,

both attorney-client privilege and its attorneys' professional

obligations prevented it from disclosing client names associated with case numbers, because to do so would allow the

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Inspector General to match client names with the problem

codes previously produced. That linkage, appellant argued,

would impermissibly reveal the subject matter of clients'

representations. Though the Inspector General disagreed

that production was barred, he nevertheless proposed to set

up a so-called "Chinese wall"--separate staffs, equipment,

storage, etc.--to prevent any linkage. The Inspector General

then issued subpoenas for the data. Appellant refused to

comply, and the Inspector General petitioned the district

court for summary enforcement.

The district court granted the petition. It rejected appellant's blanket claim of attorney-client privilege as insufficient

to demonstrate privilege regarding any given record. The

court also turned aside appellant's claim based on professional obligations, holding that the subpoenas were within

the Inspector General's statutory powers. Appellant had

contended that the subpoenas were in addition unduly burdensome because the same verification could be performed

without the damage this disclosure might cause to clients'

perceptions of confidentiality, but the court deferred to the

Inspector General as to requirements of the audit.2 Appellant renews its arguments here.

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2 See United States v. Legal Services, 100 F. Supp. 2d 42

(D.D.C. 2000).

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II.

The Inspector General contends, and the district court

agreed, that appellant has not made out a valid claim of

privilege. In rejecting appellant's unparticularized assertion

of attorney-client privilege, the court stated that its ruling

was "not intended to foreclose specific claims of privilege as

to individual clients." 100 F. Supp. 2d at 46. In other words,

as to some matters, appellant might be able to introduce

contextual information demonstrating that the representation's subject matter is itself confidential. In its reply brief,

appellant expressly reserves the right to present particularized privilege claims to the district court in the event that we

reject its unparticularized claim. This possibility led us to

question our jurisdiction. Appellant asserts that it lies under

28 U.S.C. s 1291, which authorizes review of district courts'

"final decisions," or in the alternative under 28 U.S.C.

s 1292(a)(1), which provides for interlocutory appeals from

district court orders regarding injunctions.

We find no authority for treating an order enforcing a

subpoena as an injunction appealable under s 1292(a)(1).

Courts have consistently held that grand jury and civil subpoenas are not injunctions appealable under that provision.

See, e.g., United States v. Ryan, 402 U.S. 530, 534 (1971).

Review is instead procured by refusing to comply and litigating the subpoena's validity in the contempt proceeding that

ensues. See id. at 532; Office of Thrift Supervision v. Dobbs,

931 F.2d 956, 957 (D.C. Cir. 1991). Administrative subpoenas

are horses of a slightly different color, since upon noncompliance the issuing agency seeks enforcement in the district

court. See 5 U.S.C. app. 3 s 6(a)(4); Kemp v. Gay, 947 F.2d

1493, 1496 (D.C. Cir. 1991). The ensuing district court order,

either granting or denying enforcement, is appealable under

s 1291 once final. See id. at 1497. In light of that there is

even less reason to regard an administrative subpoena, either

before or after enforcement, as an injunction.

Section 1291, which authorizes appeals of district courts'

final decisions, presents a more viable jurisdictional ground.

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pealable under s 1291 once final. See FTC v. Invention

Submission Corp., 965 F.2d 1086, 1089 (D.C. Cir. 1992).

Here, however, the district court has indicated its willingness

to entertain particularized claims of privilege. See 100

F. Supp. 2d at 46. So it can be asked why the order is final.

The answer lies in the breadth of appellant's claim. It argues

that the privilege properly understood allows it to refuse to

provide any more justification for invoking the privilege than

it has. It is not obliged to offer a particularized showing in

individual situations. Since this argument is phrased so

broadly, it follows that the district judge's rejection of it is

final even though he offers the possibility of more limited

relief in individual cases. That is so because under appellant's view of the scope of the privilege his order would

encroach on the privilege.

The considerations we employ to evaluate finality are more

practical than technical and do not require that the order

appealed be the last order possible in the matter. See

Gillespie v. United States Steel Corp., 379 U.S. 148, 152

(1964); In re Grand Jury Investigation, 604 F.2d 672, 674

(D.C. Cir. 1979) (per curiam).3 In this case, the matters

potentially remaining to be resolved below are substantively

different than the claims disputed on appeal, would arise if at

all only upon rejection of the appealed claims, and would

require of appellant a potentially onerous effort. In other

words, the potential inefficiencies of a piecemeal appeal do

not outweigh the "danger of hardship and denial of justice

through delay." Dickinson v. Petroleum Conversion Corp.,

338 U.S. 507, 511 (1950). Insofar as appellant contends that

the current record justifies an assertion of privilege without

particularized showings, we have jurisdiction over that claim.

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3 See also FTC v. Texaco, Inc., 555 F.2d 862, 873 n.21 (D.C. Cir.

1977) (en banc) (adopting the jurisdictional reasoning of the vacated

panel decision, see FTC v. Texaco, Inc., 517 F.2d 137, 143 n.6 (D.C.

Cir. 1975)). For example, where the district court has ordered a

subpoena's subject either to comply or to produce a privilege log,

we have nonetheless entertained an appeal of claims that would

negate the need for such a decision. See Resolution Trust Corp. v.

Thornton, 41 F.3d 1539, 1541-42 (D.C. Cir. 1994).

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Unfortunately for appellant, although its claim is phrased

broadly enough to provide us jurisdiction, its very breadth is

untenable. Courts have consistently held that the general

subject matters of clients' representations are not privileged.

See, e.g., In re Grand Jury Subpoena, 204 F.3d 516, 520 (4th

Cir. 2000). Nor does the general purpose of a client's representation necessarily divulge a confidential professional communication, and therefore that data is not generally privileged. To be sure, there are exceptions, but as always the

burden of demonstrating the applicability of the privilege lies

with those asserting it. See In re Lindsey, 158 F.3d 1263,

1270 (D.C. Cir. 1998) (per curiam); cf. In re Sealed Case, 877

F.2d 976, 979-80 (D.C. Cir. 1989). That burden requires a

showing that the privilege applies to each communication for

which it is asserted, see Lindsey, 158 F.3d at 1270-71, which,

of course, appellant has not done.

* * * *

We turn to appellant's contention that the subpoena conflicts with its attorneys' professional obligations and is unduly

burdensome, which the district court flatly rejected. Appellant explains that New York State and American Bar Association ethics rules protect both privileged information, discussed above, and unprivileged information deemed "secret."

See Model Rules of Prof'l Conduct 1.6 cmt. 5 (1999); N.Y.

Code of Prof'l Responsibility DR 4-101(A) (2000). Those

rules preclude attorneys from revealing any information--

privileged or not--relating to the representation of a client

who has not consented to the disclosure, particularly where

that information would be embarrassing or detrimental to the

client. See Model Rule 1.6(a); DR 4-101(B)(1).4

The Legal Services Corporation Act of 1974 authorizes the

Corporation to supervise grantees' compliance with applicable

laws. See 42 U.S.C. s 2996e(b)(1)(A). In doing so, however,

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4 Both rules exempt disclosures required by court order. See

Model Rule 1.6 cmt. 20; DR 4-101(C)(2). If the subpoena is within

the Inspector General's power, then disclosure is consistent with

appellant's ethical obligations.

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the Corporation generally must respect the professional responsibilities incumbent on grantees' attorneys:

The Corporation shall not, under any provision of this

subchapter, interfere with any attorney in carrying out

his professional responsibilities to his client as established in the Canons of Ethics and the Code of Professional Responsibility of the American Bar Association

... or abrogate as to attorneys in programs assisted

under this subchapter the authority of a State or other

jurisdiction to enforce the standards of professional responsibility generally applicable to attorneys in such

jurisdiction. The Corporation shall ensure that activities

under this subchapter are carried out in a manner consistent with attorneys' professional responsibilities.

Id. s 2996e(b)(3). The Inspector General, because he bears

the burden of auditing and investigating grantees, is granted

broad subpoena powers. See 5 U.S.C. app. 3 s 4(a)(1),

6(a)(4). He also enjoys a limited exception to s 2996e(b)(3)'s

restrictions:

Notwithstanding section [42 U.S.C. s 2996e(b)(3)], financial records, time records, retainer agreements, client

trust fund and eligibility records, and client names, for

each recipient shall be made available to any auditor or

monitor of the recipient, including any Federal department or agency that is auditing or monitoring the activities of the Corporation or of the recipient, ... except for

reports or records subject to the attorney-client privilege.

Omnibus Appropriations Act of 1996, Pub. L. No. 104-134,

s 509(h), 110 Stat. 1321, 1321-59 (emphasis added).5

The Inspector General contends that s 2996e(b)(3) is not

even applicable because it restricts actions taken under the

Legal Services Corporation Act, while his subpoena authority

arises under the Inspector General Act. We think that

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5 Congress has incorporated s 509(h) by reference into subsequent appropriations bills. See, e.g., Consolidated Appropriations

Act of 2000, Pub. L. No. 106-113.

argument is far-fetched. The Office of the Inspector General

is an arm of the Corporation that "insure[s] the compliance of

recipients and their employees" with applicable law. 42

U.S.C. s 2996e(b)(1)(A); see 5 U.S.C. app. 3 s 8G(b). Although the Office was created after the Corporation, s 2996e

delineated ethical obligations binding on the entire Corporation. See generally 42 U.S.C. s 2996e.

Auditing the Legal Service Corporation's grantees poses

ethical concerns not ordinarily presented to a government

auditor. On the specific question of what materials an auditor of the Corporation's grantees may subpoena, s 509(h) is

our only guidance. Unlike the Inspector General Act, it

focuses on the ethical obligations owed by those who audit the

Corporation's grantees. Since s 509(h) explicitly exempts

auditors of the Corporation from s 2996e(b)(3), which applies

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only to the Corporation, the necessary implication is that

s 2996e(b)(3) applies to auditors of the Corporation that are

themselves part of the Corporation--that is, to the Inspector

General. We therefore read ss 509(h) and 2996e(b)(3) to

impose obligations on the Inspector General with regard to

both privileged and secret materials.

That is hardly the end of the matter. The restrictions in

s 2996e(b)(3) notwithstanding, s 509(h) explicitly authorizes

auditors of the Corporation to compel production of "time

records, retainer agreements, ... and client names." The

Corporation's own regulations require that retainer agreements "shall clearly identify ... the matter in which representation is sought [and] the nature of the legal services to be

provided." 45 C.F.R. s 1611.8(a). Disclosure of retainer

agreements associated with client names would reveal exactly

the sort of information appellant refuses to disclose: the

general matter of individual clients' representations.6

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6 The Corporation's regulation on retainer agreements provides

that a grantee "shall make the agreement available for review by

the Corporation in a manner which protects the identity of the

client." 45 C.F.R. s 1611.8(a) (emphasis added). This is consistent

with s 2996e(b)(3)'s protection of client confidences and secrets and

is therefore the general policy of the Corporation. But s 509(h) is

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Appellant suggests that the required disclosures nonetheless do not require disclosure of retainer agreements in a way

that matches agreement to client. But appellant's construction of s 509(h) is unnatural: if Congress had intended to

require production of "time records, retainer agreements, ...

and client names" only when disassociated from one another,

surely it would have said so in terms different from the

simple conjunctive phrasing in s 509(h). We think this is the

only sensible reading of s 509(h) in the context of the Inspector General's audits of individual representations. Nevertheless, appellant claims that the Inspector General lacks authority to compel production of case numbers. Yet unique

identifiers associating clients with their records are part and

parcel of responsible legal practice. They are an integral

constituent part of the very records to which s 509(h) refers.

See, e.g., 45 C.F.R. s 1635.3(b)(2). The lack of an explicit

statutory reference does not protect them from production.

Since we conclude that grantees' ethical obligations do not

prevent the Inspector General from compelling production of

client names associated with problem codes, we need not

reach the sufficiency of the Chinese wall instituted to prevent

that association.

Appellant's last redoubt is the claim that the subpoena is

unduly burdensome. We enforce subpoenas as long as they

are "reasonably relevant" to the agency's purpose and "not

unduly burdensome." Invention Submission Corp., 965 F.2d

at 1089 (internal quotation marks omitted). Appellant eschews the usual complaint about administrative burden, see,

e.g., Linde Thompson Langeworthy Kohn & Van Dyke, P.C.

v. Resolution Trust Corp., 5 F.3d 1508, 1517 (D.C. Cir. 1993),

and instead has a novel theory: it objects to the harm that

disclosure of client secrets will do to its ability to assure

clients of the secrecy of their communications. It argues that

it could generate an identifier code that is unique to each

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an explicit exception to s 2996e(b)(3), so while the Corporation's

mandate for the contents of retainer agreements informs our analysis, its general regulation regarding protection of client identity

cannot trump a more specific--and contrary--statutory provision.

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client but does not reveal his or her identity, and that these

identifiers would serve the Inspector General's purposes just

as well as client names.

Frequently, concerns over burden are related to relevance:

in determining whether a burden is due, courts often examine

its tailoring to the purpose for which the information is

requested--that is, its relevance. See FTC v. Texaco, 555

F.2d 862, 882 (D.C. Cir. 1977) (en banc); Dow Chem. Co. v.

Allen, 672 F.2d 1262, 1269-70 (7th Cir. 1982). Still, appellant

makes both arguments, and we treat burden and relevance

separately because subpoenas might be relevant but still

unduly burdensome. See In re FTC Line of Bus. Report

Litig., 595 F.2d 685, 704 (D.C. Cir. 1978) (per curiam).

Actually, appellant wishes to undertake a greater administrative burden--production plus creation of unique client

identifiers--in order to lessen the alleged professional detriment created by the subpoena. That "burden" would be

undue if "compliance threatened to unduly disrupt or seriously hinder normal operations." FTC v. Texaco, 555 F.2d at

882. This subpoena does not. As discussed, it is wholly

consistent with the rules governing client secrets and generally consistent with the attorney-client privilege, so it in no way

alters the degree of secrecy appellant can justifiably promise

its clients. The Chinese wall renders unlikely the possibility

that any secrets will be disclosed. Even in that event, the

information disclosed would be only the subject matter of the

representation as stated in broad terms. We cannot say that

the remote possibility of a linkage between client identity and

problem code "unduly disrupts or seriously hinders" appellant's provision of legal services.

To justify its proposed modification, appellant asserts that

actual client names are irrelevant to the Inspector General's

purpose. The Inspector General of course disagrees, and we

defer to his determinations of relevance unless they are

obviously wrong. See Invention Submission Corp., 965 F.2d

at 1089. The Inspector General asserts that "the most

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selves." He further contends that the proposed unique client

identifiers would require expensive and time-consuming independent verification--which would, in any event, probably

reveal the information appellant wishes to conceal. We certainly cannot say that the Inspector General is obviously

wrong.

* * * *

The district court's order granting the petition for summary enforcement is affirmed, and the matter is remanded

for possible further proceedings.

So ordered.

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