Opinion ID: 800884
Heading Depth: 2
Heading Rank: 3

Heading: Whether the Contempt Route Remains Open to ABC Corp.

Text: ABC Corp. is subject to a court order to produce documents. Unlike Louis Perlman, the company has been required to do something. Appellants nonetheless contend that the contempt route is not open to ABC. While we are sensitive to some of Appellants' practical concerns, we cannot agree that Perlman permits this appeal. Appellants assert that the District Court's order erroneously included ABC Corp. and in fact should not have been directed to [the company] at all. Appellants' Reply Br. at 5. It therefore cannot be held in contempt for disobeying the order. According to Appellants, the District Court should not have ordered ABC Corp. to produce the documents because the Government never properly served the company with a subpoena and, in any event, ABC Corp. does not have custody of the documents. These arguments miss the mark. An order does not become immediately appealable simply because a putative appellant believes that it is, in one way or another, wrong or improper. If ABC Corp. believes that the District Court's order is reversible for whatever reason whether because it was not preceded by proper service of a subpoena, because it is the result of an improper crime-fraud ruling, or for any other reasonand it wishes to present its challenge in an immediate appeal, it must disobey the order and take the contempt route. Until and unless it is vacated, the District Court's ordernot the grand jury's subpoenabinds the company and compels production of the documents. See Brown v. United States, 359 U.S. 41, 49, 79 S.Ct. 539, 3 L.Ed.2d 609 (1959) (A grand jury is clothed with great independence in many areas, but it remains an appendage of the court, powerless to perform its investigative function without the court's aid, because powerless itself to compel the testimony of witnesses.), overruled on other grounds by Harris v. United States, 382 U.S. 162, 167, 86 S.Ct. 352, 15 L.Ed.2d 240 (1965). Appellants then claim that, even if the District Court's order were valid, ABC Corp. could not disobey that order because it does not have custody of the documents. To repeat, Blank Rome is currently holding the requested documents and it holds them at the request of ABC Corp.'s counsel, LaCheen Wittels. The Government's response is simple: ABC Corp. may take the documents from Blank Rome. It is undisputed that Appellants and their respective law firms have a joint-defense agreement in place. If the privilege holder-client ABC Corp. directs its counsel LaCheen Wittels to direct the custodian Blank Rome to transfer the documents to ABC Corp.'s custody, then the agents must oblige the principal. See In re Grand Jury, 821 F.2d 946, 951 (3d Cir. 1987) (noting that, in the context of responding to a subpoena, possession means legal control). We agree with the Government. Appellants contend the Government's position ignores the seriousness of a grand jury subpoena and court order. Appellants' Reply Br. at 8. After all, the law firms are subject to the same court order as the company. According to Appellants, [h]ad Blank Rome, after receipt of a grand jury subpoena, done anything other than preserve the documents, the government would surely charge that [ABC Corp.] and, for that matter, the law firms, were guilty of obstruction of justice by engaging in behavior intended to thwart the grand jury's investigation. See 18 U.S.C. § 1503 (obstruction of grand jury investigation). No law firm, under these circumstances, would transfer documents subject to subpoena to the privilege holder and the government's suggestion that this should be the routine practice finds no support in case law. Id. at 8-9. These concerns are understandable. Indeed we too have not found any case in which a court has approved a transfer of documents between multiple parties subject to a disclosure order so that the privilege holder could take the contempt route to immediate appellate review while leaving the other parties free of contempt fears. But here we put those fears to bed. It would not be obstruction of justice, as the Government conceded at oral argument, if Blank Rome transfers the documents to ABC Corp.after giving the Government and the District Court sufficient notice of the time, place, and other circumstances of the transferso that the company can go down the well-established path of disobeying a disclosure order, suffering contempt, and then appealing any contempt sanctions. Of course, this is not a license for Blank Rome to send the documents out of the jurisdiction or to act in bad faith in any way when transferring the documents to ABC Corp. We have no reason to believe that the firm would do anything of the sort, however. We leave the logistics of how ABC Corp. might take physical custody of documents to the Appellants, the Government, and the District Court if, after considering our opinion here, ABC Corp. wishes to test its luck in a contempt appeal. Should it choose that route, the District Court will exercise its discretion and determine in the first instance the severity of any sanctions it wishes to impose on the company. Although we hold that ABC Corp. must stand in contempt before obtaining pre-conviction appellate review, we do not mean to suggest that the District Court should simply impose a soft sanction on the company so that it may do so with ease. As we discuss above, the contempt rule, though at times a harsh one, was formulated to discourage appeals in all but the most serious cases. In re Grand Jury Proceedings ( Appeal of FMC Corp. ), 604 F.2d at 800. [5] Next, Appellants posit that even if ABC Corp. could take custody of the documents and disobey the District Court's order, Perlman does not require it to do so. Under Appellants' view of the law, what ABC Corp. may be able to do is irrelevant; it is enough in this case that the documents are currently in the custody of a disinterested third-party (Blank Rome) who has made clear that it will not disobey the District Court's order. See Church of Scientology, 506 U.S. at 18 n. 11, 113 S.Ct. 447 (noting in a dictum that under the so-called Perlman doctrine ... a discovery order directed at a disinterested third party is treated as an immediately appealable final order because the third party presumably lacks a sufficient stake in the proceeding to risk contempt by refusing compliance). We disagree. It may be true that the Perlman exception also requires the disclosure order to be directed at a disinterested third party. But we do not need to decide in this appeal whether Blank Rome is a disinterested third party because the contempt route is open to ABC Corp. [6] As we explain above, whatever else the Perlman exception may require, the contempt route must be closed to the objecting privilege holder. That is the very reason the doctrine exists. A privilege holder is not powerless to avert the mischief, Perlman, 247 U.S. at 13, 38 S.Ct. 417, of a disclosure order if it has the power to disobey the order and appeal a contempt sanction. Finally, Appellants caution that dismissing for lack of appellate jurisdiction in this case would signal the death knell of Perlman and its 90-plus years of case law. They say that if a Perlman appeal does not lie here, then privileged documents in the client's possession that are turned over to the attorneys as part of their representation to secure legal advice could never support a claim of appellate jurisdiction under Perlman.  Appellants' Reply Br. at 7. But if the District Court's order applies to the client and the contempt route is open to it, that is precisely the law. As they conceded at oral argument, Appellants have not pointed us to a single case in which a Court of Appeals has allowed a Perlman appeal even though the challenged disclosure order commanded the privilege holder itself to disclose the sought-after documents. This is hardly surprising because such a ruling would undermine the contempt rule first announced in Alexander and its 100-plus years of case law. If this were not the law, as the Government correctly points out, no subpoena recipient would ever have to be held in contempt in order to appeal an adverse privilege determination.... A subpoena recipient could simply give the subpoenaed documents to his lawyer and then invoke Perlman.  Appellee's Br. at 19. [7]