1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-13-1998

In Re: Grand Jury

Precedential or Non-Precedential:

Docket 97-7347

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Recommended Citation

"In Re: Grand Jury" (1998). 1998 Decisions. Paper 48.

http://digitalcommons.law.villanova.edu/thirdcircuit_1998/48
Filed March 13, 1998 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 97-7347 

IN RE: GRAND JURY (IMPOUNDED) 

On Appeal from the United States District Court 

for the District of Delaware 

(D.C. Misc. No. 97-00020) 

Argued February 11, 1998 

BEFORE: GREENBERG, NYGAARD, and MCKEE, 

Circuit Judges 

(Filed: March 13, 1998) 

 Charles M. Oberly, III (argued) 

 Oberly, Jennings & Drexler, P.A. 

 800 Delaware Avenue, Suite 901 

 P.O. Box 2054 

 Wilmington, DE 19899 

 Attorneys for Appellant 

 Gregory M. Sleet, United States 

 Attorney 

 Colm F. Connolly (argued), 

 Assistant United States Attorney 

 Chase Manhattan Centre 

 1201 Market Street, Suite 1100 

 P.O. Box 2046 

 Wilmington, DE 19899-2046 

 Attorneys for Appellee 
OPINION OF THE COURT 

GREENBERG, Circuit Judge. 

I. JURISDICTION 

Thomas J. Capano appeals from an order entered in the 

district court on June 27, 1997, holding that he waived the 

attorney work product privilege with respect to certain 

documents he created which the United States seized from 

a third party pursuant to a subpoena.1 The district court 

had jurisdiction under 18 U.S.C. S 3231, and we have 

jurisdiction to review the order of the district court 

pursuant to 28 U.S.C. S 1291. Cf. In re Grand Jury, 111 

F.3d 1066, 1073-77 (3d Cir. 1997) (holding that a denial of 

an order to quash a subpoena not directed to a movant was 

a final order if the movant had no further opportunity to 

challenge the subpoena). 

II. FACTUAL AND PROCEDURAL HISTORY 

In July 1996, the Federal Bureau of Investigation ("FBI") 

and a federal grand jury in Delaware began a kidnaping 

investigation into the disappearance of Anne Marie Fahey, 

who last was seen alive on June 27, 1996. Capano became 

the major target of these investigations. At the time of 

Fahey's disappearance, Capano, who is an attorney, was a 

partner in the Wilmington office of the Saul, Ewing, Remick 

& Saul law firm ("Saul Ewing"), a position he held until his 

resignation on May 31, 1997. 

On June 30, 1996, Capano retained attorneys after police 

officers notified him that they considered him a suspect in 

Fahey's disappearance. One of Capano's attorneys, Charles 

M. Oberly, III, directed him to prepare "a time-line of 

everything he could remember concerning his whereabouts 

_________________________________________________________________ 

1. While the proceedings on this appeal originally were sealed, the 

district court on December 2, 1997, unsealed itsfile in this case. 

Accordingly, in response to our inquiry at oral argument, the parties 

agreed that we need not use ficticious names in our opinion. 

 2 
on June 27, 1996 and immediately thereafter," and to 

"write down his thoughts and notes, as he remembered 

them, of anything he could recall about his relationship 

with Ms. Fahey." App. at 42. Following his attorney's 

instructions, Capano created a time-line and wrote down 

other notes regarding his relationship with Fahey and 

placed them in a legal file. 

Capano then put the file on a bookshelf in the office 

adjacent to his own office at Saul Ewing occupied by of one 

of his law partners, Timothy A. Frey, because he was 

concerned that there could be an unauthorized search of 

his own office leading to an unauthorized seizure of the file. 

Initially Frey was unaware that Capano placed thefile in 

his office; however, in August or September of 1996, 

Capano informed Frey about the location of the file. Within 

the next month, Frey found the file in his office, read it, 

and returned it to its prior location on his bookshelf. 

The file remained in Frey's office until the United States 

seized it on November 4, 1996. On that day, Assistant 

United States Attorney Colm F. Connolly telephoned Frey to 

inform him that an FBI agent would serve him with a grand 

jury subpoena for Capano's file. Frey then re-examined the 

file and determined that it was the same file he had 

examined previously. Connolly also telephoned the 

chairman of Saul Ewing, J. Clayton Undercofler, to notify 

him about the subpoena. Undercofler expressed a concern 

that the production of the file might reveal information 

relating to the law firm's representation of its clients. 

Connolly and Undercofler then agreed that thefile would be 

produced under seal, and that the law firm would have an 

opportunity to screen the file for any confidential

information. 

After these phone calls, FBI Special Agent Kevin Shannon 

arrived at Frey's office and served the subpoena. The file 

was placed in an envelope, sealed, and delivered to

Assistant United States Attorney Patricia Hannigan, who 

had been "walled off " from the investigation to avoid any 

possibility of taint. On November 5, 1996, Hannigan met 

with Undercofler and Saul Ewing's executive partner, 

Frederick D. Strober. After unsealing the envelope, the two 

attorneys from Saul Ewing examined the file and 

 3 
determined that it did not contain any information relating 

to the law firm's representation of its clients. Hannigan 

then examined the file and determined that nothing in it 

arguably was privileged or protected. She then made a copy 

of the file which she gave to Connolly. She, however, 

retained the original file. 

Although the parties dispute exactly when Capano 

learned of the seizure, they agree that Capano and his 

attorneys did not know that the government intended to 

seize the file prior to the service of the subpoena and that 

they were informed of the seizure only after it had occurred. 

Capano asserts that his attorney first learned of the 

disclosure on November 6, 1996, two days after the seizure. 

See br. at 27. In any event, on November 12, 1996, one of 

Capano's attorneys, Bartholomew J. Dalton, sent a letter to 

the United States Attorney advising the government that 

the file contained privileged information. The United States, 

through Connolly, responded on November 26, 1996, by 

telephone and informed Dalton that the United States did 

not believe that the attorney-client privilege or the attorney 

work product doctrine protected the materials contained in 

the file. Connolly told him to "take the issue up with the 

Court." App. at 138. 

On at least two occasions between December 30, 1996, 

and February 1997, Connolly also had telephone 

discussions with Oberly regarding the applicability of the 

attorney work product and the attorney-client privileges to 

the seized documents. In a second letter to the United 

States dated January 22, 1997, Oberly requested that the 

government either return the documents in the file or send 

him a letter stating its opposition to the assertion of the 

privileges. In response, Connolly formally denied the 

production request in a letter dated February 25, 1997, 

contending that the documents were not privileged and 

that, in any event, Capano waived any privilege when he 

placed them in Frey's office. Finally, on March 14, 1997, 

Capano, citing both the attorney-client and the attorney 

work product privileges, filed a motion in the district court 

seeking an order compelling the government to return the 

file. 

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In a memorandum opinion dated June 27, 1997, the 

district court denied Capano's motion. While the district 

court held that the attorney-client privilege did not offer 

any protection to the file, it nevertheless held that the file 

was attorney work product, because Capano acted as his 

attorney's agent in creating the file in preparation of 

litigation. However, the district court determined that 

Capano waived this work product protection based on both 

disclosure and timeliness grounds. In particular, because 

Capano had revealed the presence of the file to Frey and 

had stored it in Frey's unlocked and easily accessible office, 

the district court held that Capano disregarded the risk 

that an adversary might obtain the file, and thus had 

waived the work product privilege. Alternatively, the district 

court held that Capano waived the work product privilege 

by waiting nearly four months to file a motion to compel the 

return of the seized materials. Finally, the district court 

noted in a footnote in its opinion that even if Capano did 

not waive the attorney work product protection of the file, 

the United States had demonstrated sufficient cause to 

overcome that protection. 

Capano filed a timely appeal to this court on July 7, 

1997. Neither party has challenged the district court's 

holdings regarding the applicability of the attorney-client or 

the attorney work product privileges; therefore, we accept 

its determination that the seized file was attorney work 

product, but was not protected by the attorney-client 

privilege. Because we will affirm the district court's holding 

that Capano waived his attorney work product privilege 

with regard to the seized file based on his delay in seeking 

a judicial determination, we do not determine whether 

Capano waived the privilege by disclosing the documents. 

Nor do we decide whether the United States demonstrated 

sufficient cause to overcome the work product protection. 

III. WAIVER OF THE WORK PRODUCT PROTECTION 

In examining the district court's holding that Capano 

waived his work product privilege, we use an abuse of 

discretion standard of review. Cf. Livingstone v. North Belle 

Vernon Borough, 91 F.3d 515, 524 (3d Cir. 1996), cert. 

 5 
denied, 117 S.Ct. 1311 (1997) (using an abuse of discretion 

standard to review a waiver of an attorney-client privilege).2 

The work-product doctrine, first recognized by the 

Supreme Court in Hickman v. Taylor, 329 U.S. 495, 67 

S.Ct. 385 (1947), "shelters the mental processes of the 

attorney, providing a privileged area within which he can 

analyze and prepare his client's case." United States v. 

Nobles, 422 U.S. 225, 238, 95 S.Ct. 2160, 2170 (1975). The 

privilege thus promotes the adversarial system by 

protecting the confidential nature of materials prepared by 

attorneys in anticipation of litigation and "enabl[es] 

attorneys to prepare cases without fear that their work 

product will be used against their clients." Westinghouse 

Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414, 

1428 (3d Cir. 1991). This protection also can extend to 

materials prepared by an attorney's agent, if that agent acts 

at the attorney's direction in creating such documents. See 

Nobles, 422 U.S. at 238-39, 95 S.Ct. at 2170. 

The attorney work product privilege, however, is not 

absolute, and it may be waived. See id. at 239, 95 S.Ct. at 

2170. Thus, we have held that a party may waive the

attorney work product privilege by disclosing protected 

documents in certain circumstances. See Westinghouse, 

951 F.2d at 1428-29. It has been held that a disclosure 

sufficient to waive the work product protection does not 

have to be intentional; therefore inadvertent or 

unintentional disclosures of protected materials also might 

result in the waiver of the privilege. See, e.g., Carter v. 

Gibbs, 909 F.2d 1450, 1451 (Fed. Cir. 1990). However, 

such a disclosure does not automatically forfeit the 

attorney work product privilege. In determining whether a 

party has waived the privilege through an inadvertent or 

involuntary disclosure, courts consider, among other 

_________________________________________________________________ 

2. Capano argues in his brief that we should exercise plenary review. Br. 

at 18-19. We disagree but observe that even exercising plenary review we 

would reach the same result. While we will assume without deciding that 

in some circumstances we would exercise plenary review to determine if 

the work product privilege had been waived, we think that it is 

appropriate to use an abuse of discretion standard here because the 

weighing of various considerations leads us to affirm the district court's 

order. 

 6 
factors, the steps taken by a party to remedy the disclosure 

and any delay in doing so. See, e.g., United States v. 

Keystone Sanitation Co., 885 F. Supp. 672, 676 (M.D. Pa. 

1994); cf. United States v. de la Jara, 973 F.2d 746, 749-50 

(9th Cir. 1992) (holding that a defendant waived his 

attorney-client privilege with regards to a seized letter 

because he waited six months after the seizure to assert his 

privilege). But see Carter, 909 F.2d at 1451 (holding that 

even an inadvertent disclosure automatically waives the 

attorney work product privilege, because to do otherwise 

"would do no more than seal the bag from which the cat 

has already escaped."). Thus, in the case of inadvertent or 

involuntary disclosures, the party asserting the work 

product doctrine must pursue all reasonable means to 

restore the confidentiality of the materials and to prevent 

further disclosures within a reasonable period to continue 

to receive the protection of the privilege. 

It is undisputed that neither Capano nor his attorneys 

knew of the subpoena until after it had been issued and the 

file had been seized. Consequently, Capano had no 

opportunity to challenge the involuntary disclosure of the 

file by seeking to quash the subpoena; instead, his only 

remedy was to assert the attorney work product privilege 

after the United States took possession of the file. Capano 

clearly made a timely assertion of the attorney work 

product privilege to the government; his attorney mailed a 

letter asserting the privilege to the United States within 

eight days after the seizure. However, as of November 26, 

1996, Capano and his attorneys were on notice that the 

United States disagreed with the assertion of the privilege 

and would not relinquish the file voluntarily. In spite of this 

knowledge, Capano waited until March 14, 1997, tofile a 

motion to compel the return of the seized file. Thus, the 

determinative issue on this appeal is whether Capano's 

initial assertion of the privilege to the United States 

sufficiently protected his rights or whether his failure to 

seek a judicial ruling on the issue more promptly waived 

the privilege. 

We hold that the district court did not abuse its 

discretion determining that even though Capano timely 

notified the United States of his claim of the privilege and 

 7 
continued to assert it in subsequent communications, these 

assertions were insufficient to protect his rights. The United 

States was a direct adversary of Capano, and its continued 

use of the documents directly undermined the purpose of 

the attorney work product privilege of protecting 

confidential documents prepared in anticipation of litigation 

from a party's adversary. Capano's repeated admonitions to 

his adversary to return the protected documents did not 

prevent the continuing harm resulting from the disclosure. 

Judicial enforcement of the privilege was the only remedy 

that Capano could have obtained which would have 

foreclosed the United States from further use of the seized 

file. Without such judicial vindication, the United States 

was free to continue to utilize the documents, thereby 

negating their confidential character. 

In the case of such an involuntary disclosure, a 

reasonable person would not only inform his or her 

adversary of the breach of the privilege, but also would seek 

a judicial determination of the controversy if his or her 

adversary took an opposing stance. Merely asserting the 

privilege to an adversary is not sufficient to protect the 

privilege in these circumstances inasmuch as the adversary 

has possession of the materials claimed to be privileged and 

thus can make use of them. Moreover, if the district court 

countenanced Capano's delay in judicially asserting his 

privilege and then upheld his claim of privilege, the grand 

jury's use of the seized file potentially could have tainted its 

investigation.3 

In short, when a party's adversary has obtained 

possession of a party's work product and refuses to

recognize the work product privilege, the party asserting the 

privilege must move expeditiously for relief particularly 

_________________________________________________________________ 

3. In his brief Capano asserts that during the four months before he 

served his motion, the government had possession of the disputed 

documents and "is believed to have used these documents in the grand 

jury proceedings." Br. at 29. He reasons from this belief that there "was 

no prejudice to the Government as a result of the four-month period 

between [his] initial assertion of the . . . work product privilege[ ]" 

and 

the filing of his motion. Id. While the grand jury in fact did not indict 

Capano, clearly his argument overlooks the taint problem we have 

identified. 

 8 
where, as here, the party asserting the privilege does not 

even claim that he had reason to believe that the 

adversarial party was not making use of the work product. 

Indeed, in his brief Capano asserts that in "this entire 

period," i.e., between November 12, 1996, and March 14, 

1997, when he filed his motion, the govenment "used these 

documents to further its grand jury investigation." Br. at 

15-16. While we cannot set an exact time within which 

such a motion must be made, we hold that the district 

court did not abuse its discretion in holding that Capano 

waived the privilege as we are satisfied that Capano acted 

unreasonably in waiting nearly four months to seek a 

judicial vindication of his assertion of the privilege. 

Capano contends that SEC v. Lavin, 111 F.3d 921 (D.C. 

Cir. 1997), supports his position that his assertion of the 

privilege to the United States sufficiently protected his 

rights. In Lavin, the Securities and Exchange Commission 

("SEC") sought to obtain copies of tape recordings of 

conversations between a husband and a wife. These 

recordings were made by and were in the possession of the 

husband's employer, Bankers Trust Company ("Bankers

Trust"). See id. at 924. Initially, Bankers Trust had 

submitted these tapes to the Federal Reserve Board 

("Board") as part of a production request pursuant to the 

Board's examination powers. When Bankers Trust notified 

Lavin, the husband, that it had relinquished the tapes to 

the Board, he immediately asserted his marital 

communications privilege and requested that Bankers Trust 

assert it on his behalf to the Board. Bankers Trust and 

Lavin subsequently entered into an agreement whereby 

Bankers Trust would give him the opportunity to challenge 

any further requests seeking the release of the tapes. 

However, Lavin did not institute any legal proceedings 

against Bankers Trust to obtain the tapes. Subsequently, 

the SEC sought the disclosure of the tapes, and Lavin 

asserted his marital communications privilege. 

In considering whether the privilege had been waived, the 

Court of Appeals for the District of Columbia Circuit held 

that Lavin had no obligation to initiate any legal 

proceedings against Bankers Trust to protect the 

conversations "absent a concrete threat of further 

 9 
disclosure." Id. at 931. There was no such threat in Lavin's 

case, because Bankers Trust continued to abide by its 

agreement. In fact, Lavin had intervened successfully in an 

unrelated civil suit to assert his marital communications 

privilege with respect to the tapes. See id. at 924-25, 931. 

The court also noted that "taking reasonable precautions to 

preserve the confidentiality of privileged materials does not 

require gaining physical possession in cases such as this 

where . . . attempts to gain such possession would have 

been futile because the tapes were not the property of 

[Lavin]." Id. at 932. Thus, Capano argues that like Lavin, he 

should not have been forced to seek an immediate judicial 

determination regarding the return of his file, because the 

disclosure already had occurred and no threat of future 

disclosures existed. 

Aside from the obvious differences in the privileges at 

issue and the purposes behind them, the facts of Lavin 

differ substantially from the present case. In Lavin, Lavin 

took active measures to assure that no one beyond the 

owner of the recordings, Bankers Trust, had access to 

them. More importantly, Lavin took legal action against any 

potential adversary that sought to obtain the recordings, 

and the entity in possession of the tapes, Bankers Trust, 

was not such an adversary. Capano was in a more difficult 

position than Lavin, because the privilege already had been 

breached by the seizure, and his adversary already had 

access to the documents. Thus, unlike Lavin, Capano was 

harmed immediately by the initial disclosure as it was to 

his direct adversary and not to a third party. Repeated 

communications by Capano asserting the privilege to his 

adversary were insufficient to prevent further harm; only 

timely intervention by a court could accomplish that 

objective. 

Therefore, we reiterate that the district court did not 

abuse its discretion in determining that Capano waived his 

attorney work product privilege with regard to the seized 

documents by failing to file a timely motion to compel their 

return. Within a few weeks after the seizure of thefile, 

Capano was on notice both of the seizure and of the

government's unwillingness to recognize his attorney work 

product privilege with regard to the seized file. Yet, he 

 10 
waited nearly four months to seek a judicial vindication of 

his claim of privilege. This delay is inconsistent with the 

purpose behind the attorney work product privilege, and 

thus the district court did not abuse its discretion in 

determining that Capano's delay waived the privilege. 

In view of the aforesaid, we will affirm the order of June 

27, 1997. 

 11 
McKEE, Circuit Judge, concurring. 

I concur with the holding of the majority. I write 

separately for two reasons. First, I think that we should 

reject the assertion that the government has established 

"good cause" to overcome the protection of the privilege. 

Second, I write because I believe that my colleagues' 

apparent concern for eliminating any taint from this 

ongoing investigation is misplaced. 

I. 

The government argues that "[its] need for the file results 

from [Capano's] refusal to testify before the grand jury and 

speak with investigators. The Government attempted to 

secure [Capano's] testimony, but its efforts failed." 

Appellant's Br. at 23. This amounts to nothing more than 

an assertion that failure to waive the privilege against selfincrimination under the Fifth Amendment gives the 

government the right to obtain information that would 

otherwise be protected as work product because it allows 

the government to establish the "good cause" needed to 

defeat that privilege. Surely, one need not waive the 

protections embedded in the Fifth Amendment in order to 

preserve a work product privilege. 

We have historically been quite reluctant to find the good 

cause needed to overcome the protections of the work 

product doctrine. See In re Grand Jury, 633 F.2d 282 (3d 

Cir. 1980); United States v. Armerada Hess Corp., 619 F.2d 

980 (3d Cir. 1985); and In re Grand Jury Investigation, 599 

F.2d 1224 (3d Cir. 1979). We should not be reluctant to 

reject the government's claim of "good cause" insofar as it 

is based upon the argument that assertion of a 

constitutional right defeats the work product privilege. 

II. 

My colleagues note that "if the district court 

countenanced Capano's delay in judicially asserting his 

privilege and then upheld his claim of privilege, the grand 

jury's use of the seized file potentially could have tainted its 

investigation." Maj. Op. at 8. This may well be true, but is 

 12 
irrelevant. The government risked tainting the investigation 

when it decided to proceed in the manner that it did. The 

circumstances here are unique. There is no reason that has 

been pointed out to this court why the government could 

not have sought to have Saul Ewing secure the Capano file, 

and then notified Capano of the government's intent to 

subpoena it. The district court could then have decided the 

motion to quash that Capano would most certainly have 

filed, and there would have been no possibility of taint prior 

to an adjudication of the privilege. The government was 

obviously aware of the problems it was creating by seizing 

the documents and setting up a "Chinese wall" in an

attempt to insulate them. Because the Government chose 

that tactic, we ought not to allow a concern for any taint 

that the seizure may have created to affect our analysis of 

the claim of privilege. "The ultimate aim [of the work 

product privilege doctrine] is to promote the proper 

administration of justice." In re Grand Jury Proceedings, 

604 F.2d 798, 802 (3d. Cir. 1979). That objective is not well 

served if we allow a possible taint that the government itself 

created to influence our inquiry.1 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

_________________________________________________________________ 

1. There is no suggestion that Capano deliberately delayed filing a motion 

to secure an advantage. Where a defendant or target does that, I agree 

that consideration of taint may be appropriate. 

 13