Opinion ID: 800884
Heading Depth: 1
Heading Rank: 2

Heading: Effect of the Order Against ABC Corporation

Text: The majority distinguishes this appeal principally on the grounds that both the law firms and the ABC Corporation are subject to the District Court's order requiring production. Therefore, in the majority's view, ABC Corporation can obtain immediate appellate review by demanding that the law firms return the documents to it and by sustaining a contempt sanction. The majority's argument rests, in part, on its assertion that if the Subjects can appeal under Perlman, then any client will be able to bring an interlocutory appeal by giving its documents to its law firm. I cannot agree with the majority's logic. The purpose of the Perlman doctrine, as discussed in Section I(A) supra, is to enable a privilege holder to appeal an order requiring production when he or she lacks the opportunity to contest the subpoena by disobedience because it is not directed to him or her. In re Grand Jury, 111 F.3d at 1077 (quoting In re Grand Jury Matter ( Dist. Council 33 Health & Welfare Fund ), 770 F.2d 36, 38 (3d Cir.1985)). That is exactly the situation that we now face with respect to the orders compelling production of the contested documents by the law firms. Because Blank Rome, rather than ABC Corporation, has physical custody over the documents, the Subjects cannot unilaterally stand in contempt. Regardless of ABC Corporation's intent to stand in contempt, Blank Rome can comply with the District Court's order and produce the documents. I disagree that ABC Corporation has the option of obtaining jurisdiction by taking physical custody of the documents and refusing to produce them to the Government. Although the majority rules out the possibility of the Government charging the law firms with obstruction of justice, it cannot rule out the possibility that the District Court will hold the law firms in contempt. The Government subpoenaed the law firms individually and moved to compel them to produce the documents. The District Court issued an order requiring production by the law firms directly. Transferring the documents back to ABC Corporation will not negate the law firms' duty to comply with the District Court's order. See Couch v. United States, 409 U.S. 322, 329 n. 9, 93 S.Ct. 611, 34 L.Ed.2d 548 (1973) (The rights and obligations of the parties bec[o]me fixed when [a] summons [is] served, and [a post-summons document] transfer [does] not alter them.) (citations omitted); In re Grand Jury Empanelled, 597 F.2d 851, 865 (3d Cir.1979) (holding that an employer cannot defeat a subpoena served on its employee by taking the requested documents from the employee and claiming that the documents are no longer in the employee's possession); United States v. Asay, 614 F.2d 655, 660 (9th Cir.1980) (stating that a recipient of a summons cannot defeat the summons by relinquishing possession of the requested documents); United States v. Three Crows Corp., 324 F.Supp.2d 203, 206 (D.Me.2004) ([T]he law does not allow a custodian of records to send [the requested documents] away after receiving a summons and then claim he cannot produce them, because they are no longer in his possession.). Accordingly, if the law firms ignore the District Court's order and instead turn over the documents to ABC Corporation, they will be just as much in contempt as ABC Corporation. [4] See Nilva v. United States, 352 U.S. 385, 392, 77 S.Ct. 431, 1 L.Ed.2d 415 (1957) ([A] criminal contempt is committed by one who, in response to a subpoena calling for corporation or association records, refuses to surrender them when they are in existence and within his control.) (citations omitted); Fed. R.Crim.P. 17(g) (The court ... may hold in contempt a witness who, without adequate excuse, disobeys a subpoena issued by a federal court in that district.); 28 U.S.C. § 1826(a) (authorizing district courts to impose civil contempt sanctions when a witness ... refuses without just cause shown to comply with an order of the court to testify or provide other information). I recognize, as the majority highlights, that the Government proposed the document transfer, but I disagree that we can infer from the Government's proposal that it will forego seeking contempt sanctions against the law firms. As an initial matter, the Government has given us no indication that it will ask the District Court to release the law firms from the order. Much to the contrary, Blank Rome informed us following oral argument that it contacted the Government regarding the proposed document transfer, but that the Government refused to permit any transfer until receiving our ruling. The Government's hesitation regarding the document transfer is not surprising. The Government readily admits that it subpoenaed the law firms because it had difficulty serving ABC Corporation. If we effectively relinquish the law firms from the District Court's order by allowing them to turn over the documents to ABC Corporation without the possibility of sanctions, ABC Corporation will presumably again argue that it was never properly served. This argument, if successful, will prevent the Government from demanding the documents from any party, at least until it properly serves ABC Corporation. Given the significance placed by the Government on the order against the law firms, and the Government's apparent refusal to allow a document transfer thus far, I disagree that we can assume, without an express stipulation, that the Government will permit a document transfer without pursuing sanctions against the law firms. [5] The majority emphasizes that the law firms are ABC Corporation's agents, so they have a duty to return the documents to ABC Corporation upon ABC Corporation's demand. Although I agree in general that a client can require his or her attorney to return documents, I disagree that ABC Corporation can do so in light of the District Court's order. A client generally cannot require his or her attorney to violate a district court order to protect his or her privilege. An attorney, after asserting all non-frivolous objections to producing client confidences, may ethically comply with a court order requiring production. See Model Rules of Prof'l Conduct R. 1.6(6) & cmt. 13 (2010); Pa. Rules of Prof'l Conduct R. 1.6 & cmt. 19 (2011); see also In re Grand Jury Proceedings in Matter of Fine, 641 F.2d 199, 202 (5th Cir.1981) (stating that an attorney may ethically reveal client confidences pursuant to a court order). Because the District Court's order requires the law firms to produce the documents, ABC Corporation cannot force the law firms to instead return the documents to it. Moreover, I disagree that applying Perlman when the privilege holder is also subject to the District Court's order will enable any client to take a Perlman appeal by turning over all documents to his or her attorney. As the majority agrees, the Government may request documents by subpoena that are subject to the subpoena recipient's legal control. See In re Grand Jury, 821 F.2d 946, 951 (3d Cir.1987) (A party's lack of possession or legal control over documents requested by a subpoena is normally a valid defense to a subpoena and justification for a motion to quash.). As the Government appears to agree, a client maintains control over documents that he or she turns over to his or her current attorney, because the client may ordinarily request the documents' return. (Appellee's Br. 16) ([T]he subjects [of the grand jury investigation] do not suggest that the privilege-holder corporation no longer has the ability to obtain its documents from [its lawyer].); see also Mercy Catholic Med. Ctr. v. Thompson, 380 F.3d 142, 160 (3d Cir.2004) (holding that control under Fed.R.Civ.P. 34(a) is the legal right or ability to obtain the documents from another source upon demand). In the majority of future cases, the Government will be able to avoid a Perlman appeal by subpoenaing records solely from the client-privilege holder and obligating the privilege holder to request his or her attorney to produce the documents. A Perlman issue arises in this instance only because the Government chose to subpoena the law firms directly, thereby subjecting them to possible contempt sanctions should they refuse to comply. [6] Finally, I am concerned that the majority's rule will effectively eviscerate the Perlman doctrine in all instances where, as here, the privilege holder can direct the custodian to produce the subpoenaed documents, but cannot necessarily prevent the custodian from releasing the documents in the event a court orders production. In such cases, the Government will have every incentive to subpoena both the privilege holder and the custodian, obtain orders against both, and use the order against the privilege holder to artificially prevent the privilege holder from taking a Perlman appeal. Creating such a loop-hole, in my view, is inconsistent with our Court's interpretation of Perlman as enabling privilege holders to obtain jurisdiction when they cannot obtain jurisdiction by standing in contempt.