Opinion ID: 677013
Heading Depth: 2
Heading Rank: 2

Heading: The District Court's Rejection of the Asserted Privileges

Text: 51 Although the court ruled that several of the documents were discoverable pursuant to the crime-fraud exception, the court also ruled that other documents were discoverable because the asserted privileges simply did not apply. The appellants contest the district court's findings as to the latter group of documents. The district court's decision that certain of the subpoenaed documents were not subject to privilege is a mixed question of law and fact subject to de novo review. Sandberg v. Virginia Bankshares, 979 F.2d 332, 350 (4th Cir.1992). The burden is on the party asserting the privilege to demonstrate the applicability of the asserted privilege. In re Grand Jury 83-2 John Doe No. 462 (Under Seal), 748 F.2d 871, 876 (4th Cir.1984).
52 The district court held that the billing records, expense reports, and travel records of counsel are not generally privileged as attorney-client communications. The attorney-client privilege normally does not extend to the payment of attorney's fees and expenses. United States v. (Under Seal), 774 F.2d 624, 628 (4th Cir.1985), cert. denied, 475 U.S. 1108, 106 S.Ct. 1514, 89 L.Ed.2d 913 (1986). See also United States v. In re Grand Jury Matter, 789 F.Supp. 693, 695 (D. Md.1992) (fee arrangement information revealing the date and amount of payments and the identity of the persons making the payments are not privileged because these facts reveal nothing about the advice sought or given); In re Grand Jury Matter (Special Grand Jury Narcotics) (Under Seal), 926 F.2d 348, 349 (4th Cir.1991) (attorney-client privilege and Sixth Amendment do not prohibit disclosure of fee arrangements between attorneys and clients). After reviewing the appellants' in camera submission summarizing those documents, the court was not convinced that any of them would reveal a confidential communication. As noted in Grand Jury Matter, 789 F.Supp. at 696, the attorney-client privilege does not function to prevent disclosure of damaging or incriminating information, rather, it protects against disclosure of confidential professional communications. The appellants did not carry their burden of establishing that disclosure of the billing records would disclose confidential communications. There was no possibility of a work product claim with respect to those documents.
53 The law firm refused to produce the drafts, notes, and memoranda generated in connection with audit responses to an outside auditor. Subsidiary A refused to produce drafts of securities filings ultimately filed with the Securities Exchange Commission (SEC) and related documents. The government has argued that the attorney-client privilege does not attach to documents prepared with the intention of public disclosure. The appellants have argued that, while the two final audit letters and SEC filings are not privileged, the underlying drafts, notes and memoranda reflecting client communications are protected by the attorney-client privilege. 54 The applicable cases are In re Grand Jury Proceedings, 727 F.2d 1352 (4th Cir.1984), and In re Grand Jury 83-2 John Doe No. 462 (Under Seal), 748 F.2d at 875-76. Grand Jury Proceedings held that the attorney-client privilege does not apply to communications in connection with a proposed public disclosure: 55 [I]f a client communicates information to his attorney with the understanding that the information will be revealed to others, that information as well as the details underlying the data which was to be published will not enjoy the privilege. 56 Under Seal, 748 F.2d at 875 (describing Grand Jury Proceedings' holding, 727 F.2d at 1356). The Grand Jury Proceedings court noted that the loss of the privilege [is not] confined to 'the particular words used to express the communication's content' but extends 'to the substance of a communication,' since the disclosure of ' any significant part of a communication waives the privilege' and requires the attorney to disclose 'the details underlying the data which was to be published.'  Grand Jury Proceedings, 727 F.2d at 1356. 57 Under Seal noted that the mere relationship between the attorney and the client does not warrant a presumption of confidentiality. Yet the attorney-client privilege does protect communications made between attorney and client when the client is only considering publication of a disclosure document and is seeking legal advice regarding that possibility. [W]e must look to the services which the attorney has been employed to provide and determine if those services would reasonably be expected to entail the publication of the client's communications. Under Seal, 748 F.2d at 875. The district court in the instant case found that the allegedly privileged documents revealed matters communicated to the attorneys for their use in connection with public disclosures which made the communications and data underlying them non-privileged under the relevant case law. 58 The appellants suggest that we should adopt the approach set out in Schenet v. Anderson, 678 F.Supp. 1280, 1283 (E.D.Mich.1988). The Schenet court, however, explicitly decline[d] to follow the Fourth Circuit's opinion in [Grand Jury] (as modified by [Under Seal]) and adopted instead the approach suggested by a Nebraska district court. The Schenet court held that the attorney-client privilege applies to all information conveyed by clients to their attorneys for the purpose of drafting documents to be disclosed to third persons and all documents reflecting such information, to the extent that such information is not contained in the document published and is not otherwise disclosed to third persons. Schenet, 678 F.Supp. at 1283. The Schenet court also held that preliminary drafts of documents intended to be made public may be protected by the attorney-client privilege, and that the privilege is waived only as to those portions of the drafts ultimately revealed to third parties. Id. at 1283-84. 59 The Schenet approach cannot be adopted in light of the obvious conflict with Under Seal. Under Under Seal, the only way the appellants can prevail is to demonstrate to the court that they did not retain the services of the attorneys for the purpose of advice on publication. Because SEC filings were actually completed and filed, that endeavor would be fruitless. The district court's decision that the materials connected with the publicly disclosed documents are not protected by the attorney-client privilege is affirmed.