UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 07-1889

In Re: GRAND JURY SUBPOENA #06-1

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UNITED STATES OF AMERICA,

Petitioner - Appellee,

v.

UNDER SEAL #4,

Movant - Appellant,

and

UNDER SEAL,

Party in Interest.

No. 07-2024

In Re: Grand Jury Investigation 07-01 Witness: John Doe No.

A01-246(T-112)(GBL)

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UNITED STATES OF AMERICA,

Petitioner - Appellee,

v.

UNDER SEAL,

Respondent - Appellant.
2

Appeals from the United States District Court for the Eastern

District of Virginia, at Alexandria. Gerald Bruce Lee, District

Judge. (1:06-mc-00001; 1:07-mc-1)

Argued: March 21, 2008 Decided: April 21, 2008

Before MOTZ, TRAXLER, and DUNCAN, Circuit Judges.

No. 07-1889 affirmed; No. 07-2024 vacated and remanded by

unpublished per curiam opinion.

ARGUED: Mitka Tamara Lynn Baker, DLA PIPER US LLP, Washington,

D.C., for Appellant in No. 07-1889; Douglas S. Laird, POLSINELLI

SHALTON FLANIGAN SUELTHAUS PC, Kansas City, Missouri, for Appellant

in No. 07-2024. Gordon Dean Kromberg, OFFICE OF THE UNITED STATES

ATTORNEY, Alexandria, Virginia, for Appellee. ON BRIEF: Nancy

Luque, DLA PIPER US LLP, Washington, D.C., for Appellant in No. 07-

1889. Chuck Rosenberg, United States Attorney, Steven P. Ward,

Special Assistant United States Attorney, OFFICE OF THE UNITED

STATES ATTORNEY, Alexandria, Virginia, for Appellee. 

Unpublished opinions are not binding precedent in this circuit.
1All documents and briefs in this case have been filed under

seal to protect the secrecy of the grand jury proceedings. We

therefore refer to the parties by generic names to avoid disclosing

their identities.

3

PER CURIAM:

These consolidated appeals arise from a series of district

court orders involving production of documents sought by a grand

jury in the Eastern District of Virginia. An attorney (“Counsel”)

refused to turn over some of the materials requested by the grand

jury on the ground that they reflected confidential communications

between Counsel and a former client. The court rejected Counsel’s

assertion of privilege, however, holding that because the former

client (“Parent”) was a defunct corporation, neither it nor an

attorney acting on its behalf was capable of asserting attorneyclient privilege. The court also rejected a motion to intervene

filed by a former subsidiary of Parent (“Subsidiary”), holding that

Parent and Subsidiary did not share a joint privilege in the

communications at issue, and, accordingly, Subsidiary lacked

standing to intervene to quash the subpoena served on Counsel.

Both Counsel and Subsidiary appeal; we consolidated the appeals,

and consider both in this opinion. For the reasons set forth

within, we vacate and remand in the Counsel’s appeal (No. 07-2024),

and we affirm in the Subsidiary’s appeal (No. 07-1889).1
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I.

From 1983 to 2000, Counsel provided legal advice to Parent, a

Virginia corporation, regarding the application of federal laws to

various types of monetary transfers. In 2000, the officers and

directors of Parent decided to dissolve the company and filed

Articles of Termination with state authorities to extinguish the

company’s corporate existence. At this time, Parent also

transferred its stock in Subsidiary to another organization; thus,

Subsidiary’s corporate existence did not cease with Parent’s

termination.

In 2006, a grand jury in the Eastern District of Virginia

convened to investigate monetary transfers made on Parent’s behalf.

The grand jury issued subpoenas duces tecum to various entities,

including Parent, seeking documents related to the transfers. When

no individuals appeared before the court on Parent’s behalf, the

court granted the Government’s motion to hold the company in

contempt.

The grand jury then issued a subpoena duces tecum to Counsel

seeking “any and all documents relating to [Parent].” Counsel

produced some documents but withheld others, citing work-product

and attorney-client privileges. The Government moved to compel

production of the withheld documents, claiming that the attorneyclient privilege does not survive the termination of a corporation

and that, in this case, the crime-fraud exception vitiates any
2The court did not address the Government’s contention that

the crime-fraud exception vitiated any asserted privilege in the

withheld communications. 

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attorney-client privilege. The district court granted the

Government’s motion to compel, holding that Parent “may not assert

the attorney client privilege because the business entity is no

longer in existence and there are no longer any corporate officers

to assert the privilege on the entity’s behalf.”2 The court stayed

its order, however, granting Subsidiary leave to file an ex parte

and in camera memorandum as well as submissions demonstrating that

it had standing to intervene and quash the subpoena served on

Counsel.

After reviewing Subsidiary’s submissions, the district court

denied Subsidiary’s motion to intervene. The court found the

submissions insufficient to show that Parent and Subsidiary were

sufficiently closely related to treat them as a single corporate

entity and noted that, in any event, the companies lacked a common

legal interest in the communications at issue. The court then

ordered Counsel to turn over the withheld materials and granted the

Government’s motion to hold Counsel in contempt, though it stayed

both orders pending appeal. Both Subsidiary and Counsel timely

appealed.
3It is well established that if the client may invoke

attorney-client privilege to protect confidential communications,

then the client’s attorney also may also do so on the client’s

behalf. See Fisher v. United States, 425 U.S. 391, 402 n.8 (1976).

6

II.

We have consistently held that “[t]he burden is on the

proponent of the attorney-client privilege to demonstrate its

applicability.” United States v. Jones, 696 F.2d 1069, 1072 (4th

Cir. 1982); see also In re Grand Jury Subpoena, 341 F.3d 331, 335

(4th Cir. 2003). In this case, the district court held that

Counsel had not met that burden, because Counsel’s argument failed

as a legal matter. The court reasoned that Parent, a defunct

corporation with no corporate officers or directors, was incapable

of asserting the privilege, and thus Counsel could not assert

privilege on Parent’s behalf.3

On appeal, Counsel contends that the district court erred in

this legal determination. Counsel argues that applicable Supreme

Court precedent requires that the attorney-client privilege survive

corporate dissolution, and therefore the district court should have

permitted Counsel to assert the privilege on Parent’s behalf. See

Swidler & Berlin v. United States, 524 U.S. 399 (1998) (holding

that the attorney-client privilege survives the death of the client

when the client is a natural person).

The Government responds, in part, by contending that even if

this court were to adopt the legal rule proposed by Counsel, the
7

communications at issue nevertheless bore a close relationship to

Parent’s violation of federal law, and therefore the crime-fraud

exception applies to vitiate any asserted privilege in the

communications. See Clark v. United States, 289 U.S. 1, 15 (1933);

In re Grand Jury Proceedings #5, 401 F.3d 247, 251 (4th Cir. 2005);

In re Grand Jury Subpoena, 884 F.2d 124, 127 (4th Cir. 1989). The

district court did not make any findings with respect to that

contention, choosing to address only the legal question of whether

the privilege survives corporate termination.

The district court was not obligated to proceed in this

manner. In United States v. Zolin, 491 U.S. 554, 567 (1989), the

Supreme Court specifically explained that “in crime-fraud cases,”

courts are not required to adhere to “a strict progression of

proof.” There, the Court found “no basis for holding that the

[communications at issue] . . . must [first] be deemed privileged

. . . while the question of crime or fraud remains open.” Id. at

568; see also In re Grand Jury Proceedings, 183 F.3d 71, 74 (1st

Cir. 1999) (applying Zolin to conclude that it was “unimportant”

whether the district court had held communications not privileged

because “the communications . . . do not satisfy the requirements

of the privilege” or because “an exception thereto” applied). We

take this language to mean that a district court may, when

considering whether a party must produce communications pursuant to

a subpoena, first assess either whether a privilege applies or
8

whether the crime-fraud exception would nevertheless vitiate any

asserted privilege.

In this case, the Government has made a colorable argument

that the crime-fraud exception would apply to the withheld

communications. We find it appropriate, therefore, to vacate the

district court’s order and remand the case to allow the court to

consider the Government’s contention that “the client was engaged

in or planning a criminal or fraudulent scheme when he sought the

advise of counsel to further the scheme” and that those

communications “bear a close relationship to the client’s existing

or future scheme to commit a crime or fraud.” In re Grand Jury

Proceedings #5, 401 F.3d at 251. Should the district court so

hold, that holding would obviate the need to address the unsettled

legal question of whether the corporate attorney-client privilege

survives dissolution of the corporate entity.

The district court may determine whether the crime-fraud

exception applies in one of two ways. As the Supreme Court

explained in Zolin, the court may examine the assertedly privileged

documents themselves in an in camera hearing, provided that the

party invoking the exception, here the Government, first makes a

threshold “showing of a factual basis adequate to support a good

faith belief by a reasonable person” that the hearing would reveal

evidence of crime or fraud. 491 U.S. at 572 (internal quotation

marks omitted); see also In re Grand Jury Proceedings #5, 401 F.3d
9

at 253 (“Once this [threshold] showing is made, a judge can review

the allegedly privileged documents in camera to assist the court in

determining if the government has presented a prima facie case that

the crime-fraud exception should apply.”). Alternatively, the

district court may “examine[] evidence from the opponent of the

privilege,” here the Government, “ex parte and in camera without

examining the allegedly privileged documents themselves.” In re

Grand Jury Proceedings #5, 401 F.3d at 253. Under this approach,

the Government would not be required to make a threshold showing

regarding the factual basis for application of the exception prior

to making the in camera submission. See id.; see also In re Grand

Jury Proceedings, 33 F.3d 342, 350-51 (4th Cir. 1994). In either

case, however, on remand the Government bears the burden of

establishing a prima facie case demonstrating that the crime-fraud

exception applies. See In re Grand Jury Proceedings #5, 401 F.3d

at 251.

III.

We turn next to Subsidiary’s appeal and address whether

Subsidiary may intervene to assert privilege in the withheld

documents and quash the subpoena served on Counsel. A third party

has standing to intervene in grand jury proceedings and challenge

the validity of a subpoena directed to another person or entity

when the third party has a legally cognizable interest in the
10

materials sought. See, e.g., Gravel v. United States, 408 U.S.

606, 608-609 & n.1 (1972); see also In re Grand Jury Subpoenas, 144

F.3d 653, 658 (10th Cir. 1998) (“If the attorney-client privilege

does exist between Intervenor . . . and [the attorneys subject to

the subpoena], then Intervenor has standing [to assert the

attorney-client privilege].”).

Here, Subsidiary sets forth two arguments in support of its

claim that it is entitled to intervene. First, Subsidiary contends

that the withheld documents reflect confidential communications

concerning Counsel’s provision of legal advice to Subsidiary. That

is, Subsidiary asserts its own -- rather than a joint -- attorneyclient privilege in the communications. The district court did not

explicitly address this argument, though we take its failure to do

so as an implicit determination that Subsidiary did not meet its

burden of establishing that the communications concerned

confidential communications between Counsel and Subsidiary. After

independently reviewing the record, we conclude that that

determination was not in error. Subsidiary has failed to put forth

sufficient evidence to support its claim that the communications at

issue in any way pertained to Counsel’s representation of

Subsidiary. Therefore, Subsidiary may not assert its own attorneyclient privilege -- independent of any joint privilege it may share

with Parent -- in the communications.
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Second, Subsidiary argues that it may assert a joint attorneyclient privilege in the communications between Parent and Counsel

because of its status as a former subsidiary of Parent. See, e.g.,

In re Teleglobe Commc’ns Corp., 493 F.3d 345, 362-63 (3d Cir. 2007)

(describing the “joint client” or “co-client” privilege);

Restatement (Third) of the Law Governing Lawyers § 75(1) (2000)

(“If two or more persons are jointly represented by the same lawyer

in a matter, a communication of either co-client that . . . relates

to matters of common interest is privileged as against third

persons . . . .”). Indeed, a number of courts have held that close

corporate affiliation, including that shared by a parent and a

subsidiary, suffices to render those entities “joint clients” or

“co-clients,” such that they may assert joint privilege in

communications with an attorney pertaining to matters of common

interest. See, e.g., Glidden Co. v. Jandernoa, 173 F.R.D. 459,

472-73 (W.D. Mich. 1997); United States v. Am. Tel. & Tel. Co., 86

F.R.D. 603, 616-18 (D.D.C. 1979); Duplan Corp. v. Deering Milliken

Research Corp., 397 F. Supp. 1146, 1184-85 (D.S.C. 1974). As the

Third Circuit has explained in some detail, however, the scope of

the joint client or co-client privilege is circumscribed by the

“limited congruence of the clients’ interests.” In re Teleglobe

Commc’ns Corp., 493 F.3d at 362-63 (“As the Restatement notes, a

co-client relationship is limited by ‘the extent of the legal

matter of common interest.’” (quoting the Restatement (Third) of
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the Law Governing Lawyers § 75 cmt. c)); see also id. at 366

(“[B]ecause co-clients agree to share all information related to

the matter of common interest with each other and to employ the

same attorney, their legal interests must be identical (or nearly

so) in order that an attorney can represent them all with the

candor, vigor, and loyalty that our ethics require.” (emphasis

added)).

In the present case, the district court held that Subsidiary

failed to demonstrate that the withheld communications pertained to

a matter in which both Parent and Subsidiary shared a common legal

interest, and thus Subsidiary lacked standing to intervene to quash

the subpoena. After reviewing Subsidiary’s ex parte submissions in

support of its claim to the contrary, we conclude that the district

court did not err in its determination. Subsidiary has failed to

demonstrate that the communications reflected any “legal matter of

common interest.” See Restatement (Third) of the Law Governing

Lawyers § 75 cmt. c. Therefore, it has not satisfied its burden of

establishing that the joint client or co-client privilege applies,

and the district court properly denied its motion to intervene.

See Jones, 696 F.2d at 1072.
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IV.

For the foregoing reasons, the judgment of the district court

is 

AFFIRMED IN NO. 07-1889 AND VACATED

AND REMANDED IN NO. 07-2024.