Opinion ID: 800884
Heading Depth: 2
Heading Rank: 4

Heading: Mohawk and its Effect on the Perlman Exception

Text: Although not necessary for the disposition of this case, we would be remiss not to address the Supreme Court's recent decision in Mohawk Indus., Inc. v. Carpenter, ___ U.S. ___, 130 S.Ct. 599, 175 L.Ed.2d 458 (2009). The Government argues that, as several of our sister Courts of Appeals have suggested, the decision narrows the traditionally understood scope of the Perlman exception. We do not have to decide today the effect of Mohawk on the Perlman exception because we hold that Perlman even in its pre-Mohawk formdoes not permit this appeal. Nonetheless, the Mohawk Court's reasoning explains why refusing a Perlman appeal in these circumstances does not make the District Court's crime-fraud ruling effectively unreviewable. The Supreme Court in Mohawk considered whether disclosure orders adverse to the attorney-client privilege qualify for immediate appeal under the collateral order doctrine, and held that they do not. Id. at 603. The Court did not discuss, mention, or even cite Perlman, which is not surprising because the Perlman doctrine and the collateral order doctrine recognize separate exceptions to the general rules of finality under § 1291. The collateral order doctrine, first announced in Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), provides that there is a small class of collateral rulings that, although they do not terminate the litigation, are appropriately deemed final under § 1291. Mohawk, 130 S.Ct. at 605 (quoting Cohen, 337 U.S. at 545-46, 69 S.Ct. 1221). That small category includes only decisions [1] that are conclusive, [2] that resolve important questions separate from the merits, and [3] that are effectively unreviewable on appeal from the final judgment in the underlying action. Swint v. Chambers Cnty. Comm'n, 514 U.S. 35, 45, 115 S.Ct. 1203, 131 L.Ed.2d 60 (1995). Focusing exclusively on the third requirement of the collateral order doctrine, the Mohawk Court held that collateral order appeals are not necessary to ensure effective review of orders adverse to the attorney-client privilege. Mohawk, 130 S.Ct. at 606. Before reaching its conclusion, the Court first pointed out that [p]ermitting piecemeal, prejudgment appeals ... undermines `efficient judicial administration' and encroaches upon the prerogatives of district court judges, who play a `special role' in managing ongoing litigation. Id. at 605 (quoting Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 374, 101 S.Ct. 669, 66 L.Ed.2d 571 (1981)). [8] Mindful of these costs, the Court did not engage in an individualized jurisdictional inquiry based on the facts of the particular case before it, but instead focused on the entire category of disclosure orders adverse to the attorney-client privilege. Id. (quotations omitted). Doing so, the Court concluded that postjudgment appeals generally suffice to protect the rights of litigants and assure the vitality of the attorney-client privilege. Id. at 606. Appellate courts can remedy the improper disclosure of privileged material in the same way they remedy a host of other erroneous evidentiary rulings: by vacating an adverse judgment and remanding for a new trial in which the protected material and its fruits are excluded from evidence. Id. at 606-07. The Court also surveyed other appellate options available to aggrieved privilege holders. It pointed out that, when confronted with an adverse decision from the district court, a party in a civil proceeding can ask the district court to certify, and the court of appeals to accept, an interlocutory appeal pursuant to 28 U.S.C § 1292(b). Id. at 607. In extraordinary circumstances, it also can petition the court of appeals for a writ of mandamus. Id. Importantly, the Court reiterated the long-recognized option ... for a party to defy a disclosure order and incur court-imposed sanctions. Id. at 608. Mohawk's reasoning about the effective reviewability of disclosure orders adverse to the attorney-client privilege may narrow the scope of the Perlman exception. More specifically, we will have to decide whether Mohawk prohibits applying the Perlman exception when the person asserting privilege is a party in the underlying litigation with recourse to other avenues of appellate review, as some other Courts of Appeals either have held or suggested. See Holt-Orsted v. City of Dickson, 641 F.3d 230, 238 (6th Cir.2011) (holding that, after Mohawk, where the privilege holder is a party to the litigation with recourse in a post-judgment appeal, ... Perlman no longer affords jurisdiction to hear [an] interlocutory appeal); Wilson v. O'Brien, 621 F.3d 641, 643 (7th Cir.2010) (noting that  Mohawk Industries calls Perlman and its successors into question, and suggesting that, after-Mohawk, the Perlman exception no longer applies when the person asserting privilege is a litigant in the underlying litigation); see also United States v. Krane, 625 F.3d 568, 573 (9th Cir.2010) (holding, in a case in which neither the privilege holder nor the custodian of the relevant documents [were] parties to the underlying criminal proceedings, that [t]he Perlman rule survives ... Mohawk ). An order requiring the disclosure of privileged materials is as effectively reviewable, absent an immediate appeal, for subjects of a grand jury investigation as it is for parties in civil litigation. If the grand jury's investigation leads to an indictment and later a conviction, we can remedy an improper disclosure of privileged material ... by vacating the adverse judgment and remanding for a new trial in which the protected material and its fruits are excluded from evidence. Mohawk, 130 S.Ct, at 606-07. Of course, a subject of a grand jury investigation may never be indicted. Appellants are correct that [e]ven if the subject is charged, the charges may be dismissed or the subject may be acquitted following trial. In each of these circumstances, there would be no way to vindicate the privilege or protection that has been breached. Appellants' Br. at 27. The Court in Mohawk, however, rejected similar arguments in the civil litigation context. After an unfavorable privilege ruling, a civil litigant may nonetheless settle, obtain summary judgment, or win a favorable verdict, leaving the privilege broken and the District Court's ruling unchallenged. The Court's reasoning in Mohawk underscores how denying ABC Corp. a Perlman appeal will still leave the company with sufficient (though admittedly not perfect) means for making its privilege claims. However, we leave for another day the broader question of whether Mohawk forecloses Perlman appeals when the privilege holder is a subject or target of an underlying grand jury investigation.