Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-98-03032/USCOURTS-caDC-98-03032-0/pdf.json

Parties Involved:
Sealed Case

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 11, 1998 Decided June 19, 1998

No. 98-3032

In re: Sealed Case

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Appeal from the United States District Court

for the District of Columbia

(No. 98ms00003)

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Before: Henderson, Rogers and Tatel, Circuit Judges.

Opinion for the Court filed by Tatel, Circuit Judge.

Tatel, Circuit Judge: Directed by a grand jury subpoena

to produce notes and other written materials prepared in

connection with work for a client, a lawyer claimed that the

attorney work-product privilege protected the materials from

disclosure. The district court, finding that a "specific claim"

had not arisen at the time the lawyer prepared the documents, held the privilege inapplicable. Because the workproduct privilege in this case turns not on whether a specific

claim existed, but instead on whether, under all the circumstances, the lawyer prepared the materials "in anticipation of

litigation," we reverse and remand.

I

Shortly after the Chairman of the Republican National

Committee founded a non-profit think tank called the NationUSCA Case #98-3032 Document #360875 Filed: 06/19/1998 Page 1 of 13
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al Policy Forum, the RNC loaned the newly formed organization over $2.5 million. From the beginning, critics closely

scrutinized the relationship between the two organizations.

A Washington Post editorial argued that the NPF should "be

subject to the usual laws on contributions and disclosures."

Who Paid for Those Ideas?, Wash. Post, Oct. 1, 1993, at A24.

According to the editorial, the watchdog group Common

Cause was "looking into" whether the NPF " 'violat[ed] ...

the campaign laws and whether it should be challenged.' "

Id. (quoting Common Cause's president).

Acting through the Justice Department's Campaign Financing Task Force, the government alleges that in the

summer of 1994, the RNC Chairman arranged to have funds

transferred from a Hong Kong company through an American subsidiary to an American bank to serve as collateral for

a loan the bank made to the NPF. From the proceeds of the

loan, the NPF then paid the RNC $1.6 million. In connection

with this transaction, the RNC consulted a lawyer who,

according to the lawyer's affidavit, prepared, made notes on,

and edited documents "in anticipation of possible litigation."

In August 1995, the Democratic National Committee filed a

complaint with the Federal Election Commission alleging that

the RNC's relationship with the NPF violated the Federal

Election Campaign Act, 2 U.S.C. ss 431-455 (1994). Although nothing in the record tells us what, if anything, the

FEC did with this complaint, two years later a federal grand

jury issued a subpoena directing the lawyer to produce

memoranda, correspondence, notes, and other written materials relating to the 1994 loan transaction. Producing over 140

documents, some of which were redacted, the lawyer withheld

ninety-five pages, claiming they were protected by either the

attorney-client or the work-product privilege. After the government moved to compel, the RNC filed a motion to intervene, which the district court granted.

In a Memorandum Opinion and Order issued on March 10,

1998--and sealed to protect the lawyer's identity, see In re

Motions of Dow Jones & Co., Nos. 98-3033 & 98-3034, 1998

WL 216042, at *8 (D.C.Cir. May 5, 1998) (noting that grand

jury secrecy rules protect the identity of grand jury witUSCA Case #98-3032 Document #360875 Filed: 06/19/1998 Page 2 of 13
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nesses)--the district court ruled that the work-product privilege protected none of the documents prepared by the lawyer

prior to the filing of the DNC's August 1995 complaint. The

district court found that neither the lawyer nor the RNC had

"articulate[d] any specific claim the RNC could have been

facing at the time of the loan transaction" or "explain[ed] with

any particularity how the loan transaction could have led to

litigation." In re Grand Jury No. 95-3, No. 98-003, at 7

(D.D.C. Mar. 10, 1998). For documents prepared after the

filing of the DNC complaint, the court ruled that the privilege

applied, but that since the government can obtain access to

factual information contained in even protected documents by

demonstrating substantial need and inability to obtain the

materials elsewhere, and finding that such a showing had

been made here, it would review the documents in camera to

determine whether they contain only factual information, or

instead represent opinions, judgments, and thought processes

of counsel. Id. at 8.

The RNC appealed, and we granted its motion to stay

pending appeal. Although parties ordinarily may not immediately appeal discovery orders, but must instead disobey and

then appeal a subsequent contempt order, see In re Kessler,

100 F.3d 1015, 1016 (D.C. Cir. 1997), the RNC may proceed

under the Perlman doctrine, which authorizes parties immediately to appeal discovery orders addressed to disinterested

third parties, see Perlman v. United States, 247 U.S. 7, 13-15

(1918). The Perlman doctrine applies here because the lawyer swore in an affidavit an intention to produce the documents rather than submit to a contempt citation. See In re

Sealed Case, 1998 WL 146011, at *2 n.1 (D.C. Cir. Apr. 14,

1998) ("In some cases the attorney will indicate an intention

to comply with the subpoena, and on those facts this circuit

regards Perlman as controlling."). Because the Perlman

doctrine authorizes appeals only by clients, however, we

dismissed the lawyer's appeal. See id. ("Of course that

makes appeal available for the client, not, as here, the attorney.").

We generally review district court decisions enforcing document subpoenas only for arbitrariness or abuse of discretion.

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See In re Sealed Case, 121 F.3d 729, 740 (D.C. Cir. 1997).

But because the RNC argues that the district court applied

the wrong legal standard, our review here is de novo. See In

re Subpoena Served upon the Comptroller of the Currency,

967 F.2d 630, 633 (D.C. Cir. 1992) (court gives no deference if

the ruling "rests upon a misapprehension of the relevant legal

standard or is unsupported by the record").

II

The work-product privilege protects written materials lawyers prepare "in anticipation of litigation." Fed. R. Civ. P.

26(b)(3). By ensuring that lawyers can prepare for litigation

without fear that opponents may obtain their private notes,

memoranda, correspondence, and other written materials, the

privilege protects the adversary process. See In re Sealed

Case, 107 F.3d 46, 51 (D.C. Cir. 1997) ("Like the attorneyclient privilege, work product immunity promotes the rendering of effective legal services."). As the Supreme Court said

in Hickman v. Taylor, 329 U.S. 495 (1947), the source of the

work-product privilege:

[I]t is essential that a lawyer work with a certain degree

of privacy, free from unnecessary intrusion by opposing

parties and their counsel. Proper preparation of a

client's case demands that he assemble information, sift

what he considers to be the relevant from the irrelevant

facts, prepare his legal theories and plan his strategy

without undue and needless interference.

Id. at 510-11; see also 2 Christopher B. Mueller & Laird C.

Kirkpatrick, Federal Evidence 410 (2d ed. 1994) ("Protection

is needed because an attorney preparing for trial must assemble much material that is outside the attorney-client privilege,

such as witness statements, investigative reports, drafts of

pleadings, and trial memoranda."). The interests articulated

in Hickman are present in both criminal and civil cases. See

United States v. Nobles, 422 U.S. 225, 238 (1975) ("Although

the work-product doctrine most frequently is asserted as a

bar to discovery in civil litigation, its role in assuring the

proper functioning of the criminal justice system is even more

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vital. The interests of society and the accused in obtaining a

fair and accurate resolution of the question of guilt or innocence demand that adequate safeguards assure the thorough

preparation and presentation of each side of the case.").

Without a strong work-product privilege, lawyers would keep

their thoughts to themselves, avoid communicating with other

lawyers, and hesitate to take notes. As Hickman put it:

Were such materials open to opposing counsel on mere

demand, much of what is now put down in writing would

remain unwritten. An attorney's thoughts, heretofore

inviolate, would not be his own. Inefficiency, unfairness

and sharp practices would inevitably develop in the giving of legal advice and in the preparation of cases for

trial. The effect on the legal profession would be demoralizing. And the interests of the clients and the cause of

justice would be poorly served.

329 U.S. at 511; see also Restatement (Third) of the Law

Governing Lawyers s 136 cmt. b (Proposed Final Draft No. 1,

1996) ("Restatement") ("The work-product doctrine also protects client interests in obtaining diligent assistance from

lawyers. A lawyer whose work product would be open to the

other side might forgo useful preparatory procedures, for

example, note-taking.").

The "testing question" for the work-product privilege, we

have held, is " 'whether, in light of the nature of the document

and the factual situation in the particular case, the document

can fairly be said to have been prepared or obtained because

of the prospect of litigation.' " Senate of Puerto Rico v. U.S.

Dep't of Justice, 823 F.2d 574, 586 n.42 (D.C. Cir. 1987)

(quoting 8 Charles A. Wright & Arthur R. Miller, Federal

Practice and Procedure s 2024 at 198 (1970)). For a document to meet this standard, the lawyer must at least have had

a subjective belief that litigation was a real possibility, and

that belief must have been objectively reasonable. See Martin v. Bally's Park Place Hotel & Casino, 983 F.2d 1252, 1260

(3d Cir. 1993) (noting that "anticipation of litigation" inquiry

is both subjective and objective); Restatement s 136, cmt. i

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("[T]he immunity covers only material produced with litigation as the primary object of attention and when the apprehension of litigation was reasonable in the circumstances.").

The question presented in this case is whether a "specific

claim" must have arisen at the time the lawyer prepared the

documents before a court can conclude that they were in fact

prepared "because of the prospect of litigation." The RNC

argues that the work-product privilege turns not on the

presence or absence of a specific claim, but rather on whether, under "all of the relevant circumstances," the lawyer

prepared the materials in anticipation of litigation. According to the government, the " 'specific claim' analysis ... is

essential to delimit the boundary" between privileged and

nonprivileged materials.

At first glance, our cases on this issue appear inconsistent.

We required a specific claim in two cases, Coastal States Gas

Corp. v. Department of Energy, 617 F.2d 854, 864-66 (D.C.

Cir. 1980), and Safecard Servs. Inc. v. SEC, 926 F.2d 1197,

1202-03 (D.C. Cir. 1991). We rejected the need for a specific

claim in two other cases, Schiller v. NLRB, 964 F.2d 1205,

1208 (D.C. Cir. 1992), and Delaney, Migdail & Young, Chartered v. IRS, 826 F.2d 124, 126-28 (D.C. Cir. 1987). Properly

read, however, these cases are not in conflict.

In the two cases requiring a specific claim--Coastal States

and Safecard--the documents at issue had been prepared by

government lawyers in connection with active investigations

of potential wrongdoing. The documents in Coastal States

were legal advice memoranda prepared by government lawyers in response to specific requests from agency auditors

examining oil company compliance with certain regulations.

We employed a specific claim requirement to distinguish

memoranda that could be protected by the work-product

privilege because they advised DOE auditors how to proceed

with specific investigations of suspected wrongdoers--i.e., the

lawyers prepared them "in anticipation of litigation"--from

other documents that were "neutral, objective analyses of

agency regulations" and therefore unprotected by the priviUSCA Case #98-3032 Document #360875 Filed: 06/19/1998 Page 6 of 13
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lege. Delaney, 826 F.2d at 127 (quoting Coastal States, 617

F.2d at 863). Safecard dealt with documents prepared by

agency lawyers in connection with an active investigation into

suspected illegal stock trading. We held there that when

government lawyers "prepare[ ] a document in the course of

an active investigation focusing upon specific events and a

specific possible violation by a specific party," they have met

the specific claim test. 926 F.2d at 1203.

Delaney and Schiller dealt with very different situations.

In those cases, government lawyers acted not as prosecutors

or investigators of suspected wrongdoers, but as legal advisors protecting their agency clients from the possibility of

future litigation. Both cases rejected the specific claim requirement and instead focused on whether, under all of the

circumstances, the lawyers prepared the materials "in anticipation of litigation." At issue in Delaney were memoranda

prepared by agency attorneys that analyzed the legal ramifications of a new system of statistical sampling for auditing

large accounts. Observing that the memoranda "advise the

agency of the types of legal challenges likely to be mounted

against a proposed program, potential defenses available to

the agency, and the likely outcome," we characterized Coastal

States' "specific claim" language as an "observation," concluded that Coastal States "did not intend to lay down [a] blanket

rule," and held that the work-product privilege protected the

documents even though no specific claim had yet arisen. 826

F.2d at 127. Schiller concerned lawyer-prepared documents

containing tips and advice for litigating cases under the Equal

Access to Justice Act. Responding to an argument that "the

work-product doctrine requires that the documents be created in anticipation of litigation over a specific claim," we said,

"we have already rejected that argument." 964 F.2d at 1208.

Schiller protected the documents even though no specific

claim had arisen.

We need not decide whether the Coastal States/Safecard

specific claim test has any continued vitality where government lawyers act as prosecutors or investigators of suspected

wrongdoers. Here, as in Delaney and Schiller, the lawyer

acted not as prosecutor or investigator, but rendered legal

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advice in order to protect the client from future litigation

about a particular transaction, even though at the time,

neither the FEC nor the DNC had made any specific claim.

In addition to asserting more than once that the documents

were prepared "in anticipation of litigation," the lawyer's

uncontested affidavit states that by the summer of 1994, "I

was aware that the Federal Election Commission ('FEC') had

the authority to conduct investigations and initiate civil actions ... concerning possible violations of the Federal Election Campaign Act" and that "I was also aware that the

chairman of the FEC had announced that the FEC was

investigating cases involving allegations of illegal contributions in U.S. elections." Most important, the affidavit says

that "I was further aware that the NPF had been criticized in

the press as an organization used by the RNC to evade

federal campaign finance laws, and thus I had a significant

concern that litigation over this issue was probable." Another RNC lawyer said, also in an uncontested affidavit, that

"[F]rom the time the NPF was formed, I and the RNC were

concerned about the substantial likelihood of potential litigation initiated either by the DNC or other entities. Therefore,

the RNC consulted with [the lawyer] to receive advice, counsel, and services in anticipation of such litigation."

Assuming that these affidavits accurately describe the lawyer's materials at issue in this case, denying work-product

protection to the materials would be no more appropriate

than denying protection to the documents at issue in Delaney

and Schiller. To be sure, the lawyers' affidavits could have

been more specific, e.g., they could have stated that the

lawyers believed that the FEC would bring a FECA action

based on the loan transaction or cited particular provisions of

the code. But we think the affidavits sufficiently establish

that, as in Delaney and Schiller, the client asked the lawyer

to review a matter that the client feared could lead to

litigation, and that the lawyer, knowing critics were scrutinizing the RNC-NPF relationship, prepared documents in anticipation of litigation over exactly that relationship. In view of

the intense focus in this city on claims of campaign finance

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NPF relationship, the lawyer's concern that the payment

from one organization to the other from proceeds of a loan

backed by a transfer of funds from a Hong Kong company

might lead to litigation seems as objectively reasonable to us

as the concerns of the government lawyers in Delaney and

Schiller.

Not only do Delaney and Schiller, not Coastal States and

Safecard, control this case, but a contrary ruling would

undermine lawyer effectiveness at a particularly critical stage

of a legal representation. It is often prior to the emergence

of specific claims that lawyers are best equipped either to

help clients avoid litigation or to strengthen available defenses should litigation occur. For instance, lawyers routinely

meet with potential grand jury targets to discuss possible

charges, consider whether business decisions might result in

antitrust or securities lawsuits, analyze copyright and patent

implications of new technologies or works of art, and assess

the possibility that new products might give rise to tort

actions. If lawyers had to wait for specific claims to arise

before their writings could enjoy work-product protection,

they would not likely risk taking notes about such matters or

communicating in writing with colleagues, thus severely limiting their ability to advise clients effectively. A lawyer advising a potential grand jury target, for example, might be

reluctant to write something like "the critical facts which

could harm my client are ..." even though it would help the

lawyer organize complex thoughts, because in the government's hands, such a note could become a powerful weapon

against the client. Likewise, asked by a client to evaluate the

antitrust implications of a proposed merger and advised that

no specific claim had yet surfaced, a lawyer knowing that

work product is unprotected would not likely risk preparing

an internal legal memorandum assessing the merger's weaknesses, jotting down on a yellow legal pad possible areas of

vulnerability, or sending a note to a partner--"After reviewing the proposed merger, I think it's O.K., although I'm a

little worried about ... What are your views?" Nor would

the partner respond in writing, "I disagree. This merger is

vulnerable because ..." Discouraging lawyers from engagUSCA Case #98-3032 Document #360875 Filed: 06/19/1998 Page 9 of 13
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ing in the writing, note-taking, and communications so critical

to effective legal thinking would, in Hickman's words, not

only "demoraliz[e]" the legal profession, but also "the interests of the clients and the cause of justice would be poorly

served." 329 U.S. at 511.

The government relies on Linde Thomson Langworthy

Kohn & Van Dyke, P.C. v. RTC, 5 F.3d 1508 (D.C. Cir. 1993),

our most recent case bearing on this issue, but nothing in that

decision requires a specific claim before lawyers preparing for

the possibility of litigation can claim work-product protection.

Although Linde Thomson quotes the "specific claim" language from Coastal States, id. at 1515, we did not apply the

"specific claim" standard to reject protection for any requested document. Instead, Linde Thomson held that communications between insurer and insured do not "warrant an extension of the federal work-product doctrine beyond its current

confines," id. at 1516, and that the district court had acted

appropriately by allowing the appellant to establish a privilege log for documents arguably protected by the privilege,

id.

Of course, not all work undertaken by lawyers finds protection in the work-product privilege. In some cases, the absence of a specific claim will suggest that the lawyer had not

prepared the materials "in anticipation of litigation." And as

Linde Thomson explained, the privilege has no applicability

to documents prepared by lawyers "in the ordinary course of

business or for other nonlitigation purposes." Id. at 1515.

We hold only that where, as here, lawyers claim they advised

clients regarding the risks of potential litigation, the absence

of a specific claim represents just one factor that courts

should consider in determining whether the work-product

privilege applies.

We would expect the government to support this result.

For one thing, requiring a specific claim would subject to

discovery a great deal of pre-claim work by agency lawyers

that the work-product privilege now protects. If the government's position were to prevail in this case, materials similar

to the documents at issue in Delaney and Schiller would no

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longer enjoy work-product protection. Moreover, lacking

resources to pursue every suspected violation of federal law,

the government must depend on effective, conscientious private lawyers to help clients comply voluntarily. The government might gain some short-term benefit by obtaining the

documents in this case, but the long-range consequences

could be quite damaging. Weakening lawyer ability to represent clients at the pre-claim stage of anticipated litigation

would inevitably reduce voluntary compliance with the law,

produce more litigation, and increase the workload of government law-enforcement agencies.

III

This brings us to the district court's decision and its

reasons for finding that the pre-August 1995 documents are

unprotected by the work-product privilege. According to the

government, the district court employed the "specific claim"

test as only one factor in its analysis. We disagree. Although Delaney and Schiller clearly control this case, the

district court, relying primarily on Coastal States, treated the

absence of a specific claim as dispositive.

The district court's memorandum begins by properly noting

several times that the privilege protects materials prepared

"in anticipation of litigation." In re Grand Jury No. 95-3,

No. 98-003, at 6. Quoting Coastal States, the memorandum

goes on to say that to meet this standard " 'the documents

must at least have been prepared with a specific claim

supported by concrete facts which would likely lead to litigation in mind,' " id. (quoting Safecard, 926 F.2d at 1202

(quoting Coastal States, 617 F.2d at 865)), and that "[t]here

must be 'at the very least some articulable claim, likely to

lead to litigation,' " id. (quoting Coastal States, 617 F.2d at

865). The district court then directly applied this standard to

the facts, concluding that the lawyer's "and the RNC's assertions regarding potential litigation are too vague to support

application of the work product doctrine before August 1995."

Id. at 7. Recognizing that according to the affidavit, the

lawyer knew that the FEC investigated allegations of illegal

contributions and that the NPF had been criticized in the

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press as an organization used by the RNC to evade federal

campaign finance laws, the court nevertheless found that the

work-product privilege did not apply, saying only this:

Despite these averments, [the lawyer] and the RNC have

not presented any concrete facts to the Court "which

would likely lead to litigation" prior to August of 1995.

They do not articulate any specific claim the RNC could

have been facing at the time of the loan transaction nor

do they explain with any particularity how the loan

transaction could have led to litigation.

Id. As these two sentences demonstrate, the district court

based its decision on three findings: that the lawyer (1) failed

to present "concrete facts" "which would likely lead to litigation"; (2) failed to articulate a "specific claim"; and (3) failed

to explain with any particularity how the transaction could

have led to litigation. Although only the second of these

findings mentions the phrase "specific claim," the first comes

directly from the "specific claim" sentence in Coastal States

that the district court quoted in its paragraph setting out the

legal standard. See Coastal States, 617 F.2d at 865 ("[T]he

documents must at least have been prepared with a specific

claim supported by concrete facts which would likely lead to

litigation.") (emphasis added). And the third finding, while

substituting the word "particularity" for the word "concrete,"

the words "loan transaction" for the word "facts," and the

phrase "could have led to litigation" for "would likely lead to

litigation," merely restates the first finding and therefore is

also directly traceable to the "specific claim" standard. When

read in light of the legal standard articulated by the district

court only two paragraphs earlier, this language indicates to

us that the court rejected work-product protection because no

"specific claim" had yet arisen. We think this interpretation

finds further support in the district court's extension of the

privilege to all post-complaint documents, thus suggesting

that the district court focused on the filing of the complaint,

not on whether the lawyer prepared the documents in anticipation of litigation, as the critical difference between protected and unprotected materials.

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At oral argument, the government suggested that because

nothing in the August 1995 complaint related directly to the

loan transaction, the privilege should not protect the precomplaint documents. Taking the government's characterization of the complaint as true--the record does not contain the

complaint--we think this casts even further doubt on the

district court's decision. If the complaint is unconnected to

the transaction, why did the district court conclude that the

post-August 1995 documents were protected by the privilege?

In any event, the contents of the August 1995 complaint have

little if any relevance to the issue before us. The workproduct privilege protects documents prepared in anticipation

of litigation regardless of whether the anticipated litigation

ever occurs. Restatement s 136 cmt. i ("The fact that

litigation did not actually ensue does not affect the immunity.").

IV

Acknowledging the lack of clarity in our own decisions, but

finding that the district court applied the wrong legal standard, we reverse and remand for the court to review the

documents in camera to determine whether, under all the

circumstances, the lawyer prepared them "in anticipation of

litigation," or whether they were prepared in the ordinary

course of business (e.g., to deal with issues such as interest

rates, payment schedules, or collateral). See In re Sealed

Case, 29 F.3d 715, 718 (D.C. Cir. 1994) (remanding case to

district court for application of the "because of the prospect of

litigation" test). With respect to documents the court finds to

have been prepared "in anticipation of litigation," the court

should examine them (as it announced it will with respect to

the post-August 1995 documents) to determine whether they

contain purely factual materials, or instead represent the

opinions, judgments, and thought processes of counsel.

So ordered.

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