Court Opinion

ID: 185397
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:31:28+00
Date Added: 2024-06-11T11:52:48.018958
License: Public Domain

249 F.3d 1077 (D.C. Cir. 2001)
United States of America and Leonard Koczur, Acting Inspector General of the    Legal Services Corporation, Appelleesv.Legal Services for New York City, Appellant
No. 00-5244
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 10, 2001Decided May 25, 2001

[Copyrighted Material Omitted]
Appeal from the United States District Court for the District of Columbia, (00ms0241)
Carl W. Riehl argued the cause for appellant.  With him on  the briefs was John S. Kiernan.
Michael S. Raab, Attorney, United States Department of  Justice, argued the cause for appellees.  With him on the brief were Wilma A. Lewis, United States Attorney at the  time the brief was filed, and Mark B. Stern, Attorney.
Laura K. Abel, David S. Udell, and Philip G. Gallagher  were on the brief for amici curiae New York State Bar  Association, et al., in support of appellant.
Before:  Ginsburg and Henderson, Circuit Judges, and  Silberman, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge  Silberman.
Silberman, Senior Circuit Judge:

1
The Inspector General of  the Legal Services Corporation petitioned for summary enforcement of a subpoena to appellant Legal Services of New  York City.  The district court granted the petition, and  appellant now seeks review.  We affirm.

I.

2
Appellant provides legal services to the poor.  Each year,  it and other grantees receive multi-million-dollar federal  grants administered through the non-profit Legal Services  Corporation.  In a series of audits beginning in 1998, the  Corporation's Inspector General discovered improprieties in  some grantees' reports to the Corporation--most commonly,  overstatement of the number of cases handled and failure to  keep adequate records.  That led the General Accounting  Office to audit five grantees, including appellant, and it  concluded that of the 221,000 cases reported by these grantees, "approximately 75,000 ... were questionable."  Expressing "concerns" about the inaccuracies in grantees' reports, a  Congressional committee requested that the Inspector General "assess the case service information provided by the grantees" and "report ... no later than July 30, 2000, as to its accuracy."1

3
The Inspector General then required 30 grantees, including  appellant, to produce for inspection two different sets of data  on the cases they had reported closed during 1999.  The first production, or "data call," required that for each case, identified only by case number, the grantee must select one of 52  "problem codes" to describe the subject matter of the representation.  The problem codes vary from the specific--"Parental Rights Termination," "Black Lung"--to the general-"Education," "Contracts/Warranties"--and the catch-all-"Other Individual Rights," "Other Miscellaneous."  Appellant  complied with the first data call.

4
The second data call required that for each case, again  identified only by case number, grantees identify their client.   Appellant, along with one other grantee, refused to comply.   It informed the Inspector General that, absent client consent,  both attorney-client privilege and its attorneys' professional  obligations prevented it from disclosing client names associated with case numbers, because to do so would allow the  Inspector General to match client names with the problem  codes previously produced.  That linkage, appellant argued,  would impermissibly reveal the subject matter of clients'  representations.  Though the Inspector General disagreed  that production was barred, he nevertheless proposed to set  up a so-called "Chinese wall"--separate staffs, equipment,  storage, etc.--to prevent any linkage.  The Inspector General  then issued subpoenas for the data.  Appellant refused to  comply, and the Inspector General petitioned the district  court for summary enforcement.

5
The district court granted the petition.  It rejected appellant's blanket claim of attorney-client privilege as insufficient  to demonstrate privilege regarding any given record.  The  court also turned aside appellant's claim based on professional obligations, holding that the subpoenas were within  the Inspector General's statutory powers.  Appellant had  contended that the subpoenas were in addition unduly burdensome because the same verification could be performed  without the damage this disclosure might cause to clients'  perceptions of confidentiality, but the court deferred to the  Inspector General as to requirements of the audit.2  Appellant renews its arguments here.

II.

6
The Inspector General contends, and the district court  agreed, that appellant has not made out a valid claim of  privilege.  In rejecting appellant's unparticularized assertion  of attorney-client privilege, the court stated that its ruling  was "not intended to foreclose specific claims of privilege as  to individual clients." 100 F. Supp. 2d at 46.  In other words,  as to some matters, appellant might be able to introduce  contextual information demonstrating that the representation's subject matter is itself confidential.  In its reply brief,  appellant expressly reserves the right to present particularized privilege claims to the district court in the event that we  reject its unparticularized claim.  This possibility led us to  question our jurisdiction.  Appellant asserts that it lies under  28 U.S.C.  1291, which authorizes review of district courts'  "final decisions," or in the alternative under 28 U.S.C.   1292(a)(1), which provides for interlocutory appeals from  district court orders regarding injunctions.

7
We find no authority for treating an order enforcing a  subpoena as an injunction appealable under  1292(a)(1).   Courts have consistently held that grand jury and civil subpoenas are not injunctions appealable under that provision.   See, e.g., United States v. Ryan, 402 U.S. 530, 534 (1971).   Review is instead procured by refusing to comply and litigating the subpoena's validity in the contempt proceeding that  ensues.  See id. at 532;  Office of Thrift Supervision v. Dobbs,  931 F.2d 956, 957 (D.C. Cir. 1991).  Administrative subpoenas  are horses of a slightly different color, since upon noncompliance the issuing agency seeks enforcement in the district  court.  See 5 U.S.C. app. 3  6(a)(4);  Kemp v. Gay, 947 F.2d 1493, 1496 (D.C. Cir. 1991).  The ensuing district court order,  either granting or denying enforcement, is appealable under   1291 once final.  See id. at 1497.  In light of that there is  even less reason to regard an administrative subpoena, either  before or after enforcement, as an injunction.

8
Section 1291, which authorizes appeals of district courts'  final decisions, presents a more viable jurisdictional ground.   As noted, orders enforcing administrative subpoenas are appealable under  1291 once final.  See FTC v. Invention  Submission Corp., 965 F.2d 1086, 1089 (D.C. Cir. 1992).   Here, however, the district court has indicated its willingness  to entertain particularized claims of privilege.  See 100 F. Supp. 2d at 46.  So it can be asked why the order is final.   The answer lies in the breadth of appellant's claim.  It argues  that the privilege properly understood allows it to refuse to  provide any more justification for invoking the privilege than  it has.  It is not obliged to offer a particularized showing in  individual situations.  Since this argument is phrased so  broadly, it follows that the district judge's rejection of it is  final even though he offers the possibility of more limited  relief in individual cases.  That is so because under appellant's view of the scope of the privilege his order would  encroach on the privilege.

9
The considerations we employ to evaluate finality are more  practical than technical and do not require that the order  appealed be the last order possible in the matter.  See  Gillespie v. United States Steel Corp., 379 U.S. 148, 152  (1964);  In re Grand Jury Investigation, 604 F.2d 672, 674  (D.C. Cir. 1979) (per curiam).3  In this case, the matters  potentially remaining to be resolved below are substantively  different than the claims disputed on appeal, would arise if at  all only upon rejection of the appealed claims, and would  require of appellant a potentially onerous effort.  In other  words, the potential inefficiencies of a piecemeal appeal do  not outweigh the "danger of hardship and denial of justice  through delay."  Dickinson v. Petroleum Conversion Corp.,  338 U.S. 507, 511 (1950).  Insofar as appellant contends that  the current record justifies an assertion of privilege without  particularized showings, we have jurisdiction over that claim.

10
Unfortunately for appellant, although its claim is phrased  broadly enough to provide us jurisdiction, its very breadth is  untenable.  Courts have consistently held that the general  subject matters of clients' representations are not privileged.   See, e.g., In re Grand Jury Subpoena, 204 F.3d 516, 520 (4th  Cir. 2000).  Nor does the general purpose of a client's representation necessarily divulge a confidential professional communication, and therefore that data is not generally privileged.  To be sure, there are exceptions, but as always the  burden of demonstrating the applicability of the privilege lies  with those asserting it.  See In re Lindsey, 158 F.3d 1263,  1270 (D.C. Cir. 1998) (per curiam);  cf. In re Sealed Case, 877 F.2d 976, 979-80 (D.C. Cir. 1989).  That burden requires a  showing that the privilege applies to each communication for  which it is asserted, see Lindsey, 158 F.3d at 1270-71, which,  of course, appellant has not done.

11
* * * *

12
We turn to appellant's contention that the subpoena conflicts with its attorneys' professional obligations and is unduly  burdensome, which the district court flatly rejected.  Appellant explains that New York State and American Bar Association ethics rules protect both privileged information, discussed above, and unprivileged information deemed "secret."   See Model Rules of Prof'l Conduct 1.6 cmt. 5 (1999);  N.Y.  Code of Prof'l Responsibility DR 4-101(A) (2000).  Those  rules preclude attorneys from revealing any information-privileged or not--relating to the representation of a client  who has not consented to the disclosure, particularly where  that information would be embarrassing or detrimental to the  client.  See Model Rule 1.6(a);  DR 4-101(B)(1).4

13
The Legal Services Corporation Act of 1974 authorizes the  Corporation to supervise grantees' compliance with applicable  laws.  See 42 U.S.C.  2996e(b)(1)(A).  In doing so, however, the Corporation generally must respect the professional responsibilities incumbent on grantees' attorneys:

14
The Corporation shall not, under any provision of this       subchapter, interfere with any attorney in carrying out       his professional responsibilities to his client as estab     lished in the Canons of Ethics and the Code of Profes     sional Responsibility of the American Bar Association       ... or abrogate as to attorneys in programs assisted       under this subchapter the authority of a State or other       jurisdiction to enforce the standards of professional re     sponsibility generally applicable to attorneys in such       jurisdiction.  The Corporation shall ensure that activities       under this subchapter are carried out in a manner consis     tent with attorneys' professional responsibilities.

15
Id.  2996e(b)(3).  The Inspector General, because he bears  the burden of auditing and investigating grantees, is granted  broad subpoena powers.  See 5 U.S.C. app. 3  4(a)(1),  6(a)(4).  He also enjoys a limited exception to  2996e(b)(3)'s  restrictions:

16
Notwithstanding section [42 U.S.C.  2996e(b)(3)], fi     nancial records, time records, retainer agreements, client       trust fund and eligibility records, and client names, for       each recipient shall be made available to any auditor or       monitor of the recipient, including any Federal depart     ment or agency that is auditing or monitoring the activi     ties of the Corporation or of the recipient, ... except for       reports or records subject to the attorney-client privilege.

17
Omnibus Appropriations Act of 1996, Pub. L. No. 104-134,   509(h), 110 Stat. 1321, 1321-59 (emphasis added).5

18
The Inspector General contends that  2996e(b)(3) is not  even applicable because it restricts actions taken under the  Legal Services Corporation Act, while his subpoena authority  arises under the Inspector General Act.  We think that argument is far-fetched.  The Office of the Inspector General  is an arm of the Corporation that "insure[s] the compliance of  recipients and their employees" with applicable law.  42  U.S.C.  2996e(b)(1)(A);  see 5 U.S.C. app. 3  8G(b).  Although the Office was created after the Corporation, § 2996e  delineated ethical obligations binding on the entire Corporation.  See generally 42 U.S.C.  2996e.

19
Auditing the Legal Service Corporation's grantees poses  ethical concerns not ordinarily presented to a government  auditor.  On the specific question of what materials an auditor of the Corporation's grantees may subpoena,  509(h) is  our only guidance.  Unlike the Inspector General Act, it  focuses on the ethical obligations owed by those who audit the  Corporation's grantees.  Since  509(h) explicitly exempts  auditors of the Corporation from  2996e(b)(3), which applies  only to the Corporation, the necessary implication is that   2996e(b)(3) applies to auditors of the Corporation that are  themselves part of the Corporation--that is, to the Inspector  General.  We therefore read §§ 509(h) and 2996e(b)(3) to  impose obligations on the Inspector General with regard to  both privileged and secret materials.

20
That is hardly the end of the matter.  The restrictions in   2996e(b)(3) notwithstanding,  509(h) explicitly authorizes  auditors of the Corporation to compel production of "time  records, retainer agreements, ... and client names."  The  Corporation's own regulations require that retainer agreements "shall clearly identify ... the matter in which representation is sought [and] the nature of the legal services to be  provided."  45 C.F.R.  1611.8(a).  Disclosure of retainer  agreements associated with client names would reveal exactly  the sort of information appellant refuses to disclose:  the  general matter of individual clients' representations.6

21
Appellant suggests that the required disclosures nonetheless do not require disclosure of retainer agreements in a way  that matches agreement to client.  But appellant's construction of  509(h) is unnatural:  if Congress had intended to  require production of "time records, retainer agreements, ...  and client names" only when disassociated from one another,  surely it would have said so in terms different from the  simple conjunctive phrasing in  509(h).  We think this is the  only sensible reading of  509(h) in the context of the Inspector General's audits of individual representations.  Nevertheless, appellant claims that the Inspector General lacks authority to compel production of case numbers.  Yet unique  identifiers associating clients with their records are part and  parcel of responsible legal practice.  They are an integral  constituent part of the very records to which  509(h) refers.   See, e.g., 45 C.F.R.  1635.3(b)(2).  The lack of an explicit  statutory reference does not protect them from production.   Since we conclude that grantees' ethical obligations do not  prevent the Inspector General from compelling production of  client names associated with problem codes, we need not  reach the sufficiency of the Chinese wall instituted to prevent  that association.

22
Appellant's last redoubt is the claim that the subpoena is  unduly burdensome.  We enforce subpoenas as long as they  are "reasonably relevant" to the agency's purpose and "not  unduly burdensome."  Invention Submission Corp., 965 F.2d  at 1089 (internal quotation marks omitted).  Appellant eschews the usual complaint about administrative burden, see,  e.g., Linde Thompson Langeworthy Kohn & Van Dyke, P.C.  v. Resolution Trust Corp., 5 F.3d 1508, 1517 (D.C. Cir. 1993),  and instead has a novel theory:  it objects to the harm that  disclosure of client secrets will do to its ability to assure  clients of the secrecy of their communications.  It argues that  it could generate an identifier code that is unique to each client but does not reveal his or her identity, and that these  identifiers would serve the Inspector General's purposes just  as well as client names.

23
Frequently, concerns over burden are related to relevance:   in determining whether a burden is due, courts often examine  its tailoring to the purpose for which the information is  requested--that is, its relevance.  See FTC v. Texaco, 555 F.2d 862, 882 (D.C. Cir. 1977) (en banc);  Dow Chem. Co. v.  Allen, 672 F.2d 1262, 1269-70 (7th Cir. 1982).  Still, appellant  makes both arguments, and we treat burden and relevance  separately because subpoenas might be relevant but still  unduly burdensome.  See In re FTC Line of Bus. Report  Litig., 595 F.2d 685, 704 (D.C. Cir. 1978) (per curiam).

24
Actually, appellant wishes to undertake a greater administrative burden--production plus creation of unique client  identifiers--in order to lessen the alleged professional detriment created by the subpoena.  That "burden" would be  undue if "compliance threatened to unduly disrupt or seriously hinder normal operations."  FTC v. Texaco, 555 F.2d at  882.  This subpoena does not.  As discussed, it is wholly  consistent with the rules governing client secrets and generally consistent with the attorney-client privilege, so it in no way  alters the degree of secrecy appellant can justifiably promise  its clients.  The Chinese wall renders unlikely the possibility  that any secrets will be disclosed.  Even in that event, the  information disclosed would be only the subject matter of the  representation as stated in broad terms.  We cannot say that  the remote possibility of a linkage between client identity and  problem code "unduly disrupts or seriously hinders" appellant's provision of legal services.

25
To justify its proposed modification, appellant asserts that  actual client names are irrelevant to the Inspector General's  purpose.  The Inspector General of course disagrees, and we  defer to his determinations of relevance unless they are  obviously wrong.  See Invention Submission Corp., 965 F.2d  at 1089.  The Inspector General asserts that "the most  reliable way to detect errors and irregularities in grantee  case reporting [is] to obtain the actual client names them-selves."  He further contends that the proposed unique client  identifiers would require expensive and time-consuming independent verification--which would, in any event, probably  reveal the information appellant wishes to conceal.  We certainly cannot say that the Inspector General is obviously  wrong.

26
* * * *

27
The district court's order granting the petition for summary enforcement is affirmed, and the matter is remanded  for possible further proceedings.

28
So ordered.

Notes:

1
 H.R. Conf. Rep. No. 106-479 (1999).

2
 See United States v. Legal Services, 100 F. Supp. 2d 42  (D.D.C. 2000).

3
 See also FTC v. Texaco, Inc., 555 F.2d 862, 873 n.21 (D.C. Cir.  1977) (en banc) (adopting the jurisdictional reasoning of the vacated  panel decision, see FTC v. Texaco, Inc., 517 F.2d 137, 143 n.6 (D.C.  Cir. 1975)).  For example, where the district court has ordered a  subpoena's subject either to comply or to produce a privilege log,  we have nonetheless entertained an appeal of claims that would  negate the need for such a decision.  See Resolution Trust Corp. v.  Thornton, 41 F.3d 1539, 1541-42 (D.C. Cir. 1994).

4
 Both rules exempt disclosures required by court order.  See  Model Rule 1.6 cmt. 20;  DR 4-101(C)(2).  If the subpoena is within  the Inspector General's power, then disclosure is consistent with  appellant's ethical obligations.

5
 Congress has incorporated  509(h) by reference into subsequent appropriations bills.  See, e.g., Consolidated Appropriations  Act of 2000, Pub. L. No. 106-113.

6
 The Corporation's regulation on retainer agreements provides  that a grantee "shall make the agreement available for review by  the Corporation in a manner which protects the identity of the  client."  45 C.F.R.  1611.8(a) (emphasis added).  This is consistent  with  2996e(b)(3)'s protection of client confidences and secrets and  is therefore the general policy of the Corporation.  But  509(h) is an explicit exception to  2996e(b)(3), so while the Corporation's  mandate for the contents of retainer agreements informs our analysis, its general regulation regarding protection of client identity  cannot trump a more specific--and contrary--statutory provision.