Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-05-03126/USCOURTS-caDC-05-03126-0/pdf.json

Parties Involved:
Grand Jury

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 13, 2006 Decided February 9, 2007

No. 05-3126

IN RE: GRAND JURY

Appeal from the United States District Court

for the District of Columbia

(No. 05mc00197)

Richard W. Beckler argued the cause for appellants. With

him on the briefs was John F. Stanton.

Nicholas A. Marsh, Attorney, U.S. Department of Justice,

argued the cause for appellee the United States. With him on

the brief was Matthew C. Solomon, Attorney.

Stuart M. Gerson argued the cause and filed the brief for

appellee.

Before: SENTELLE, Circuit Judge, and EDWARDS and

WILLIAMS, Senior Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge: The appellants, a corporate

executive and his personal attorney, seek to have quashed a

grand jury subpoena issued to the corporation’s corporate

counsel for testimony concerning communications made

between the corporate counsel, and the client and his personal

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attorney. In the proceeding below the district court issued an

order denying the motion to quash. Because we agree that the

communications at issue are not protected by the attorney-client

privilege, we affirm the district court’s order. As this case

involves an ongoing grand jury investigation the parties shall

remain anonymous, and the factual details limited.

I. Background

A corporation held a Board of Directors meeting on

February 7, 2003. At that meeting, appellant John Doe, the

corporation’s Senior Vice President for Business Development,

recommended that the corporation participate in certain planned

political activities. The Board expressly adopted a political

action plan providing that corporate money would be

contributed in specific amounts to named federal political

candidates. Subsequently, in the summer of 2003, the

corporation conducted an internal investigation of whether its

past actions had violated federal campaign finance laws. This

internal investigation was undertaken by the corporation’s law

firm (hereinafter the “law firm”), and in particular one of the law

firm’s partners (hereinafter “corporate counsel”). In September

2003 a report resulting from that internal investigation, alleging

possible federal election law violations, was submitted by the

corporation to the Department of Justice (hereinafter “DOJ” or

“government”).

After receiving the report the DOJ commenced an

investigation into allegations of election fraud at the corporation

and on the part of several of the corporation’s employees.

Pursuant to its investigation, the DOJ issued a subpoena to the

corporation requesting documents related to, among other

things, political contributions made by the corporation or any of

its officers, directors, or employees. The corporation continued

to be represented by the law firm. Appellant Doe in his capacity

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as an executive of the corporation was also represented by the

law firm but in addition retained his own personal attorney.

After the DOJ issued its subpoena, the corporation and its

corporate counsel entered into a Joint Defense Agreement

(“JDA”) with Doe and his personal attorney (hereinafter

collectively “appellants”). The JDA provided for the exchange

of communications and documents between the parties to the

JDA and that such communications and documents would

remain protected by the attorney-client privilege. Corporate

counsel also served as the corporation’s custodian of record and

the principal point of contact with the government.

In response to the DOJ’s subpoena, the corporation

produced, inter alia, an unsigned copy of the minutes of the

February 7, 2003, Board of Directors meeting. These minutes

appeared to show that the political activities plan Doe put forth

at the meeting included illegal corporate contributions to federal

political candidates. The DOJ then requested additional

information from the corporation regarding the Board of

Directors meeting. In response to this request, corporate counsel

sent a letter on December 1, 2004, to Doe’s personal attorney

with a copy of the February 7th unsigned Board Minutes

attached, asking that Doe provide “[a]ny recollections or

information” that he may have in order to address the DOJ’s

concerns. In reply Doe’s personal attorney sent corporate

counsel a fax which stated that enclosed was “a signed copy of

the [February 7, 2003] minutes with [Doe’s] recommendations

attached.” These “recommendations” were typed on a one-page

document which read at the top “Board Meeting,” “February 7,

2003,” and “Assignment Recommendation.” This “Assignment

Recommendation” seemingly indicated that, contrary to the

Board minutes, there were no approved recommendations.

Therefore it was exculpatory as to Doe. According to an

affidavit filed by corporate counsel in the district court, after

corporate counsel received the fax he on three occasions had

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conversations with Doe concerning the Assignment

Recommendation. The first conversation occurred after

corporate counsel contacted Doe and stated that the DOJ would

want to know why the signed copy of the Board minutes and the

Assignment Recommendation had not been previously identified

and produced as responsive to the grand jury subpoena. Doe

replied that only recently had he instructed his assistant to look

at his personal copies of corporate minutes, which apparently

had not been searched previously. Corporate counsel

subsequently submitted the signed Board minutes and the

Assignment Recommendation to the DOJ.

The DOJ then arranged to interview Doe. In the interim

corporate counsel had his second conversation with Doe when

he met with Doe and his personal attorney and informed Doe

that during the interview the DOJ was likely to inquire as to why

the Assignment Recommendation was produced so late. In

reply Doe reiterated his prior explanation. Several days later,

the DOJ informed corporate counsel that it believed that the

Assignment Recommendation was not, as it had been

represented to be, a contemporaneous record of the events that

it described, and was therefore fraudulent. Corporate counsel

then had his third conversation with Doe, at which time Doe

stated that he could not remember the exact date of the

document’s preparation. Soon thereafter, Doe’s personal

attorney informed corporate counsel by telephone that the

Assignment Recommendation was not made contemporaneously

with the February 7, 2003 Board meeting but in fact had been

prepared sometime in December 2004, i.e., the same time period

when Doe stated that his assistant had conducted a search of his

personal files.

Corporate counsel subsequently notified the DOJ that the

Assignment Recommendation should not be considered a

contemporaneous record of the February 7, 2003 Board meeting.

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In response, the DOJ sought from corporate counsel the

circumstances under which the document was obtained as well

as all conversations corporate counsel had with the persons who

had provided the document to him. Corporate counsel initially

claimed attorney-client privilege but later relented after the

government stated that under the circumstances it was its

position that the crime-fraud exception to the privilege was

applicable. The DOJ then interviewed Doe, in his personal

attorney’s presence, regarding the Assignment

Recommendation, at which time Doe told the DOJ that the

document had been created in December 2004 to replicate notes

that he had made around the time of the Board meeting. Doe

also acknowledged that he knew that the Assignment

Recommendation would be provided to the grand jury in

connection with its investigation. When confronted by the DOJ

with his conflicting statements concerning the manner in which

the document had been provided and represented to the

government, Doe’s personal attorney raised the attorney-client

privilege, interjecting that any communications between Doe

and corporate counsel were protected by the JDA and privileged.

Soon thereafter the DOJ began an obstruction-of-justice

investigation into the matter and served corporate counsel with

a grand jury subpoena seeking information concerning his

conversations with Doe on the Assignment Recommendation.

Corporate counsel filed a motion in district court seeking an

order to quash the subpoena or in the alternative directing him

to testify. Attached to the motion was corporate counsel’s

affidavit containing the substance of his conversations with Doe

concerning the Assignment Recommendation. The motion

sought a ruling on whether these conversations between

corporate counsel and Doe were attorney-client privileged. Doe

and his personal attorney intervened, filing a memorandum in

support of the motion to quash in which they requested that the

court, on grounds of attorney-client privilege, not only suppress

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the subpoena but also exclude from discovery the Assignment

Recommendation. After review of the parties’ briefs, including

a government ex parte affidavit, the district court held a hearing

on the motion. The attorneys presented arguments but no

testimony was taken. At the conclusion of the hearing the

district court ruled that the Assignment Recommendation was a

corporate document responsive to the grand jury subpoena and

was not protected from disclosure by the attorney-client

privilege. The court ruled further that the conversations between

the appellants and corporate counsel concerning creation of the

Assignment Recommendation were not protected from

disclosure as the crime-fraud exception to the attorney-client

privilege applied. The court also noted that the Joint Defense

Agreement was a “contractual issue” that was not relevant to

whether the crime-fraud exception applied.

II. Analysis

Doe and his personal attorney now appeal the district

court’s decision. As they did in the proceeding below they seek

to have quashed the subpoena issued to corporate counsel for his

personal testimony and to have destroyed or returned to them

any documents relating to “confidential communications”

between them and corporate counsel.

The government asserts that our review of the district

court’s decision should be for abuse of discretion. See In re

Sealed Case, 950 F.2d 736, 738 (D.C. Cir. 1991); In re Sealed

Case, 754 F.2d 395, 399-400 (D.C. Cir. 1985). Appellants

suggest, however, that we review questions of attorney-client

privilege and/or the applicability of the crime-fraud exception de

novo. See In re Sealed Case, 223 F.3d 778-79 (D.C. Cir. 2000)

(“[Where] the application of the crime fraud exception turns on

a pure question of law” we resolve the question de novo.). We

need not decide between the two, however, as even under the

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stricter standard favored by the appellants we uphold the district

court’s decision.

We observe as a starting point that “the public . . . has a

right to every man’s evidence.” United States v. Nixon, 418

U.S. 683 (1974) (quoting, inter alia, Branzburg v. Hayes, 408

U.S. 665, 688 (1972); United States v. Bryan, 339 U.S. 323, 331

(1941)). In the pursuit of public responsibility, “the law vests

the grand jury with substantial powers.” United States v.

Mandujano, 425 U.S. 564, 571 (1976) (collecting cases)

(“Indispensable to the exercise of its power is the authority to

compel the attendance and the testimony of witnesses . . . and to

require the production of evidence.”) (citations omitted). “When

called by the grand jury, witnesses are thus legally bound to give

testimony.” Id. at 572.

The right of the public to every man’s evidence is, of

course, subject to “except[ion] for those persons protected by a

constitutional, common-law, or statutory privilege.” Nixon, 418

U.S. at 709 (citations omitted). The appellants assert that both

the Assignment Recommendation and any conversations

between corporate counsel and Doe concerning that document

are protected from disclosure by the attorney-client privilege.

According to them the Assignment Recommendation was

provided to corporate counsel by Doe at corporate counsel’s

direction in anticipation of litigation and as such is a privileged

document that was improperly disclosed to the DOJ by

corporate counsel. They further argue that the conversations at

issue were covered by the JDA, which they claim is an extension

of the attorney-client privilege. Asserting that only the client

can waive the attorney-client privilege, they state that neither of

them gave any waiver of any sort to corporate counsel “to

disclose privileged, confidential, or secret materials to the DOJ

at any time.”

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The attorney-client privilege applies only if, inter alia, “the

communication relates to a fact of which the attorney was

informed . . . by his client . . . for the purpose of securing

primarily either (i) an opinion on law or (ii) legal services or (iii)

assistance in some legal proceeding.” In re Sealed Case, 737

F.2d 94, 98-99 (D.C. Cir. 1984) (quoting United States v. United

Shoe Machinery Corp., 89 F. Supp. 357, 358-59 (D. Mass.

1950)). The district court held that the Assignment

Recommendation was not protected by the attorney-client

privilege as it was a corporate document responsive to a

previous subpoena for production. See Braswell v. United

States, 487 U.S. 99, 102 (1988) (“There is no question but that

the contents of subpoenaed business records are not

privileged.”). The document bore the date of February 7, 2003.

It was included in a fax to corporate counsel from Doe’s

personal attorney, at the back of a set of signed minutes of the

Board meeting of the same date. Corporate counsel’s initial fax

to Doe’s personal attorney stated that the Department of Justice,

after reviewing subpoenaed documents, had some concerns

about the Board Meeting, and corporate counsel was therefore

seeking Doe’s “assist[ance] in addressing DOJ’s concerns,” in

particular concerning what Doe had “recommended” at the

meeting. Doe’s personal attorney’s fax in reply to corporate

counsel stated that it was “[i]n response to your request for

additional information about [Doe’s] recommendations at the

February 7, 2003 . . . Board meeting” and that enclosed was “a

signed copy of the minutes with [Doe’s] recommendations

attached . . . [which] should clearly delineate what he

recommended to the Board and what the Board voted to do.”

Under these circumstances it is apparent that Doe and his

personal attorney intended that the Assignment

Recommendation assist corporate counsel in “address[ing]

DOJ’s concerns” by being forwarded to the DOJ along with the

included signed copy of the Board minutes.

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If the document had in fact been the corporate document it

appeared to be, then, as the district court held, there would be no

difficulty in upholding the district court’s ruling. However, this

appeal arises from the fact that the original appearance of the

document may have been the result of a fraud upon the court.

Nonetheless, it is not protected by attorney-client privilege. As

we noted in In re Sealed Case, 877 F.2d 976 (D.C. Cir. 1989),

[a]lthough the attorney-client privilege is of ancient lineage

and continuing importance, the confidentiality of

communications covered by the privilege must be jealously

guarded by the holder of the privilege lest it be waived.

The courts will grant no greater protection to those who

assert the privilege than their own precautions warrant. We

therefore agree with those courts which have held that the

privilege is lost even if the disclosure is inadvertent.

Id. at 980 (internal quotation marks and citations omitted). 

Here the disclosure of the document was more than

inadvertent, its disclosure was actually the result of affirmative

acts by the attorney and client now asserting the privilege. We

therefore have no difficulty in holding that the privilege, if

indeed it ever existed, has been waived. We therefore agree

with the district court that the Assignment Recommendation is

not protected by the attorney-client privilege.

The district court also found that Doe is not shielded by the

attorney-client privilege from disclosure of his conversations

with corporate counsel surrounding the creation of the

Assignment Recommendation because of the crime-fraud

exception to the privilege. Attorney-client communications are

not privileged if they “are made in furtherance of a crime, fraud,

or other misconduct.” In re Sealed Case, 754 F.2d at 399. To

overcome a claim of privilege, the government must “make a

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prima facie showing of a violation sufficiently serious to defeat

the privilege”; such a “violation is shown if it is established that

the client was engaged in or planning a criminal or fraudulent

scheme when it sought the advice of counsel to further the

scheme”; and the government’s burden of proof is satisfied “if

it offers evidence that if believed by the trier of fact would

establish the elements of an ongoing or imminent crime or

fraud.” Id. Here, the government has presented evidence,

including the ex parte affidavit, that the Assignment

Recommendation was a back-dated fraudulent document

produced to mislead the government in connection with its

ongoing grand jury investigation. Corporate counsel’s affidavit

submitted with his motion to quash reveals that following

production of that document Doe told corporate counsel on at

least three occasions that his secretary had found the document

and that he did not know when it was created, even though he

later admitted that he created it at the time the signed minutes

were found in his files. We therefore agree that even if the

conversations at issue were subject to the attorney-client

privilege then a prima facie case has been made by the

government that the crime-fraud exception applies to those

conversations.

The appellants claim that both the Assignment

Recommendation and the conversations they had with corporate

counsel concerning that document are protected by the JDA.

According to them the district court erred when it found that the

JDA was not relevant because it was a “contractual issue”

between the parties. They contend, and the government

apparently does not dispute, that joint defense agreements give

rise to an attorney-client privilege. We need not weigh in on the

issue, however. Even if the JDA did give rise to the privilege,

as noted above a prima facie case has been made that the crimefraud exception applies to that privilege.

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Appellants argue that even if the materials sought by the

subpoena fall outside the attorney-client privilege because of the

crime-fraud exception, the information sought by the subpoena

is protected under the D.C. Rules of Professional Conduct.

Noting that under those Rules an attorney may not reveal a

client’s “confidence or secret,” see D.C. Rule 1.6(a)-(c),

appellants claim that the information disclosed to the DOJ by

corporate counsel concerning the Assignment Recommendation

and the information sought by the DOJ in the grand jury fall into

the category of either a confidence or a secret barred from

disclosure notwithstanding application of the crime-fraud

exception. Even assuming appellants are correct in arguing that

the D.C. Rules cover this evidence, appellants have offered no

authority for the proposition that an exclusionary remedy would

apply. We doubt that one would. Given that the crime-fraud

exception would expose the controverted evidence even in light

of the common law attorney-client privilege, it would be odd

beyond contemplation that a D.C. local bar rule could thwart the

grand jury’s access to the same evidence. 

In short, we agree with the district court that the attorneyclient privilege does not protect those conversations from being

disclosed. Accordingly, the decision of the district court is

Affirmed.

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