In Re Grand Jury v.

• Court: Court of Appeals for the First Circuit
• Decided: August 19, 1999
• Docket: 99-1734
• Status: Published

Opinion

USCA1 Opinion

                 United States Court of Appeals

                     For the First Circuit


No. 99-1734



                   IN RE GRAND JURY PROCEEDINGS



                      (GREGORY P. VIOLETTE).



                          ______________



                       GREGORY P. VIOLETTE,



                      Intervenor, Appellant.


APPEAL FROM THE UNITED STATES DISTRICT COURT



                    FOR THE DISTRICT OF MAINE



           [Hon. Morton A. Brody, U.S. District Judge]


Before



                    Selya, Boudin and Lipez,

                                

                        Circuit Judges.


Jeffrey Silverstein and Billings & Silverstein on brief for

appellant.

     Jay P. McCloskey, United States Attorney, and Michael D. Love,

Assistant United States Attorney, on brief for the United States.


AUGUST 19, 1999


SELYA, Circuit Judge.  This matter presents an issue of

first impression:  whether the nascent psychotherapist-patient

privilege encompasses a so-called "crime-fraud exception," parallel

to that which we previously have recognized anent the attorney-

client privilege.  We hold that the privilege entails such an

exception and that the exception applies here.  We therefore affirm

the district court's order enforcing grand jury subpoenas served

upon a pair of psychiatrists.

I.  BACKGROUND

  To protect the secrecy of ongoing grand jury proceedings,

we limit our review of the facts to the bare essentials.  Since at

least October 1997, Gregory P. Violette has been the target of a

federal grand jury investigation focused on possible bank fraud and

related crimes.  The government says that Violette made false

statements to financial institutions (presumably in violation of 18

U.S.C.  1014) for the purpose of obtaining loans and credit

disability insurance; that he trumped up an array of disabilities,

which he communicated to selected health-care providers; and that

he caused information from these providers to be transmitted to the

companies that had underwritten the credit disability policies

(presumably in violation of 18 U.S.C.  1341), thus fraudulently

inducing payments.

  In February 1999, the United States subpoenaed two

licensed psychiatrists, Dr. Carol M. Spencer LeMay and Dr.

Epiphanes K. Balian, to appear before the grand jury and provide

evidence relating to Violette.  The doctors appeared in March and

asserted the psychotherapist-patient privilege on Violette's

behalf.  The government promptly sought enforcement of the

subpoenas and buttressed its effort with an affidavit of the case

agent, Michael Kelly, filed under seal.  Violette countered by

moving to intervene and to secure access to all the investigative

information, or, alternatively, to Kelly's affidavit.

  The district court allowed Violette to intervene but

denied the motion for access.  Violette then opposed enforcement of

the subpoenas.  After hearing argument, the district court enforced

both subpoenas.  Violette appeals, alleging:  (1) that the denial

of access to the investigative materials violates due process; and

(2) that there is no crime-fraud exception to the psychotherapist-

patient privilege, or, alternatively, that the evidence sought by

the government falls outside the scope of any such exception.

  Because the grand jury term is set to expire in early

September and because additional delay threatens to exacerbate

statute-of-limitations problems, we granted the government's

request for expedited review.  We consider Violette's claims in

reverse order inasmuch as the analysis underlying our resolution of

the second claim informs our resolution of the first.


II.  THE PSYCHOTHERAPIST-PATIENT PRIVILEGE

  The Supreme Court recently recognized the

psychotherapist-patient privilege as a matter of federal common

law, holding "that confidential communications between a licensed

psychotherapist and her patients in the course of diagnosis or

treatment are protected from compelled disclosure."  Jaffee v.

Redmond, 518 U.S. 1, 15 (1996).  The Court left the exact

parameters of the privilege to future cases.  See id. at 18.  We

assume that mantle, mindful that Federal Rule of Evidence 501

authorizes federal courts to develop the common law of privileges

"in the light of reason and experience."

  As a general matter, a party asserting a privilege has

the burden of showing that the privilege applies.  See 3 Jack B.

Weinstein & Margaret A. Berger, Weinstein's Federal Evidence 

503.06[7] (2d ed. 1997).  To do so, the proponent of the privilege

must set forth facts sufficient to establish all the elements of

the claimed privilege.  See Holifield v. United States, 909 F.2d

201, 203-04 (7th Cir. 1990); cf. In re Aug., 1993 Regular Grand

Jury, 854 F. Supp. 1392, 1398-99 (S.D. Ind. 1993) (suggesting that

a blanket assertion of the psychotherapist-patient privilege would

be insufficient).  Hence, a party asserting the psychotherapist-

patient privilege must show that the allegedly privileged

communications were made (1) confidentially (2) between a licensed

psychotherapist and her patient (3) in the course of diagnosis or

treatment.  See Jaffee, 518 U.S. at 15.

  The first two of these requirements are not in dispute

here.  The district court found that the information to which the

subpoenas related was confidential, and the government does not now

challenge that finding.  Nor does the government question the

credentials of the two psychotherapists.  The battleground thus

narrows to the privilege's third furculum.

  The district court found that the communications to which

the subpoenas related were not made in the course of diagnosis or

treatment, and that a crime-fraud exception applied.  The court's

implicit rationale appears to have been that because the

communications were made in furtherance of fraud, they could not

have served a bona fide therapeutic purpose.

  We find the district court's logic compelling on the

rather extreme facts of this case.  We nonetheless are constrained

to note that the court blurred two distinct bases for enforcing the

subpoenas.  The court might have reached that result either by

concluding that the communications in question do not satisfy the

requirements of the privilege or by concluding that the

communications satisfy the requirements of both the privilege and

an exception thereto.  Such blurring is understandable and, in this

instance, unimportant.  Cf. United States v. Zolin, 491 U.S. 554,

567 (1989) (suggesting that a strict progression of proof is not

required in crime-fraud cases).  The facts set forth in Kelly's

affidavit afford a basis not only for concluding that the

communications were made outside the course of genuine diagnosis or

treatment, cf. In re Doe, 711 F.2d 1187, 1193 (2d Cir. 1983)

(holding that the psychotherapist-patient privilege did not protect

the records of a sham medical clinic that served as a front for the

illegal sale of drugs, based in large part on a finding that no

genuine therapy took place), but also that the crime-fraud

exception, if applicable to this privilege, extended to these

facts.

  We will not dwell unduly on this largely epistemological

conundrum.  In this appeal, the government offers only the crime-

fraud rationale.  For simplicity's sake, we therefore assume

(without deciding) that Violette's communications can be said to

have been made presumptively in the course of diagnosis or

treatment.  On this assumption, Violette established the essential

elements of the privilege and the communications are protected

unless an exception pertains.  It is to this question that we now

turn.


III.  THE CRIME-FRAUD EXCEPTION

  The government urges wholesale importation of the crime-

fraud exception, as delineated in the context of the attorney-

client privilege, into the emerging jurisprudence of the

psychotherapist-patient privilege.  Violette, in contrast, exhorts

us to refuse to recognize such an exception.

  The Jaffee Court did not envision the psychotherapist-

patient privilege as absolute or immutable.  Rather, the Court

suggested the possibility of exceptions to the operation of the

privilege and prophesied that the details would emerge on a case-

by-case basis.  See Jaffee, 518 U.S. at 18 & n.19.  To our

knowledge, no court since Jaffee has determined whether the

privilege is subject to a crime-fraud exception.  We hold  that the

crime-fraud exception applies to the psychotherapist-patient

privilege.

  We start our exploration of this virgin terrain with a

methodological point.  When a court is called upon to consider

modifying a privilege or adopting a new exception to it, the

appropriate inquiry is whether protecting a particular class of

confidential communications "promotes sufficiently important

interests to outweigh the need for probative evidence."  Trammel v.

United States, 445 U.S. 40, 51 (1980).  Common sense suggests, and

the Evidence Rules make explicit, that this type of judgment must

be made in light of "reason and experience."  Fed. R. Evid. 501. 

In this area of the law, then, it is incumbent upon courts to hold

the often delicate balance between competing interests steady and

true.  Justice Cardozo made this point well:

    [T]he recognition of a privilege does not mean

  that it is without conditions or exceptions. 

  The social policy that will prevail in many

  situations may run foul in others of a

  different social policy, competing for

  supremacy.  It is then the function of a court

  to mediate between them, assigning, so far as

  possible, a proper value to each, and

  summoning to its aid all the distinctions and

  analogies that are the tools of the judicial

  process.



Clark v. United States, 289 U.S. 1, 13 (1933).

  In considering whether to recognize a previously

unannounced privilege, "a court must first decide whether a

qualified privilege exists or should exist before deciding how to

apply it to a particular case."  In re Grand Jury (Granite

Purchases), 821 F.2d 946, 955 (3d Cir. 1987).  We believe that the

task of articulating the scope of an existing privilege calls for

a similar approach.  An inquiring court should first decide whether

a potentially relevant exception exists.  If not, the court's

inquiry ends.  If, however, the exception exists, the court then

must define its parameters sufficiently to ascertain whether the

specific facts of the case fit within its confines.

  Against this methodological backdrop, we ponder the

proposed crime-fraud exception.  This exception grew up in the

shadow of the attorney-client privilege.  It ensures that the

attorney-client privilege will "not extend to communications made

for the purpose of getting advice for the commission of a fraud or

crime."  United States v. Reeder, 170 F.3d 93, 106 (1st Cir. 1999)

(citations and internal quotation marks omitted), petition for

cert. filed, 68 U.S.L.W. 3079 (U.S. July 9, 1999) (No. 99-79). 

"Thus, the attorney-client privilege is forfeited inter alia where

the client sought the services of the lawyer to enable or aid the

client to commit what the client knew or reasonably should have

known to be a crime or fraud."  United States v. Rakes, 136 F.3d 1,

4 (1st Cir. 1998).

  To bring the crime-fraud exception to bear, the party

invoking it must make a prima facie showing:  (1) that the client

was engaged in (or was planning) criminal or fraudulent activity

when the attorney-client communications took place; and (2) that

the communications were intended by the client to facilitate or

conceal the criminal or fraudulent activity.  See United States v.

Jacobs, 117 F.3d 82, 87-89 (2d Cir. 1997).  It is sometimes

suggested that the exception follows as a matter of logic from the

principle that motivates the privilege itself.  After all, the

Supreme Court has stated that the purpose of the attorney-client

privilege is "to encourage full and frank communication between

attorneys and their clients and thereby promote broader public

interests in the observance of law and administration of justice." 

Upjohn Co. v. United States, 449 U.S. 383, 389 (1981).  Using the

privilege to hinder proof of fraudulent or criminal activity would,

the suggestion goes, undermine this core purpose.  See United

States v. Gordon-Nikkar, 518 F.2d 972, 975 (5th Cir. 1975); Diamond

v. Stratton, 95 F.R.D. 503, 505 (S.D.N.Y. 1982); 3 Weinstein &

Berger, supra,  503.16[1]; see also In re Richard Roe, Inc., 68

F.3d 38, 40 (2d Cir. 1995) ("Although there is a societal interest

in enabling clients to get sound legal advice, there is no such

interest when the communications or advice are intended to further

the commission of a crime or fraud.").

  We caution, however, that stating the justification for

the crime-fraud exception in this almost syllogistic fashion is

potentially misleading.  There is more at work than a simple

dichotomy between crime or fraud, on the one hand, and justice, on

the other.  We think that it is essential to clarify the rationale

behind the crime-fraud exception before considering transplantation

of the exception into new soil.

  In the attorney-client environment, this court has

justified the crime-fraud exception on the ground that protecting

communications made in furtherance of crime or fraud withholds

relevant information from the factfinder.  See Reeder, 170 F.3d at

106.  Of course, privileges almost always have this exclusionary

effect.  Hence, the rationale for the exception must be that the

systemic benefits of protecting this category of communications are

outweighed by the costs of foregoing probative evidence of criminal

activity.  The essential building block in the justification of the

exception, then, is the judgment that statements made in

furtherance of a crime or fraud have relatively little (if any)

positive impact on the goal of promoting the administration of

justice.  This understanding is fully consistent with the

balancing approach that governs privilege analysis generally.  See

Trammel, 445 U.S. at 50-51.

  To summarize, the attorney-client privilege exists as

matter of policy, not as a matter of logic.  The benefits of full

and frank communication between clients and attorneys generally

have been deemed to outweigh the costs of probative evidence

foregone.  The balance shifts, however, when a client communicates

for the purpose of advancing a criminal or fraudulent enterprise. 

Because such communications do not create a net benefit to the

system, the rationale that underpins the privilege vanishes (or, at

least, diminishes markedly in force).

  This is not say that courts delude themselves into

thinking that the effects of the crime-fraud exception on the

administration of justice are unambiguously positive.  It surely

can be argued that if the veil of secrecy were totally opaque,

lawyers might have more opportunities to discourage illegal

behavior.  But the crime-fraud exception reflects a policy judgment

that this potential discouragement does not justify the costs of

shielding highly probative evidence of antisocial conduct from the

factfinders' eyes.

  This brings us full circle.  The Jaffee Court justified

the psychotherapist-patient privilege in terms parallel to those

used for the attorney-client privilege.  Indeed, the Court embarked

on its examination of the privilege by noting that, "[l]ike the

spousal and attorney-client privileges, the psychotherapist-patient

privilege is 'rooted in the imperative need for confidence and

trust.'"  Jaffee, 518 U.S. at 10 (quoting Trammel, 445 U.S. at 51). 

"Effective psychotherapy," the Court explained, "depends upon an

atmosphere of confidence and trust in which the patient is willing

to make a frank and complete disclosure of facts, emotions,

memories, and fears."  Id.  But the private interests of

psychotherapists and patients, while entitled to weight, do not

suffice to justify a privilege; that justification depends on a

showing that the privilege also serves the public interest.  See

id. at 11.  The Court, again likening the situation to the

attorney-client privilege, found such a public good in the

psychotherapist-patient context because psychotherapy promotes

mental health.  See id.

  As the Supreme Court has framed the issues, the parallels

are striking.  The attorney-client privilege and the

psychotherapist-patient privilege both exist to foster the

confidence and trust required for effective counseling

relationships (legal and psychiatric, respectively).  The private

interests served by these relationships, however, do not justify a

privilege.  Rather, we customarily respect the confidentiality of

communications made in the course of these relationships because,

on balance, doing so serves the public weal.  The attorney-client

privilege promotes "the observance of law and administration of

justice," Upjohn, 449 U.S. at 389, just as the psychotherapist-

patient privilege promotes "[t]he mental health of our citizenry," 

Jaffee, 518 U.S. at 11.

  This sense of parity carries over to the crime-fraud

exception.  In the attorney-client context, we exclude from the

privilege communications made in furtherance of crime or fraud

because the costs to truth-seeking outweigh the justice-enhancing

effects of complete and candid attorney-client conversations.  In

the psychotherapist-patient context, we likewise should exclude

from the privilege communications made in furtherance of crime or

fraud because the mental health benefits, if any, of protecting

such communications pale in comparison to "the normally predominant

principle of utilizing all rational means for ascertaining truth." 

Trammel, 445 U.S. at 50 (quoting Elkins v. United States, 364 U.S.

206, 234 (1960) (Frankfurter, J., dissenting)).  Several thoughts

inform this conclusion.

  First, it is difficult to conjure up a case in which both

mental health and criminal or fraudulent purposes might

simultaneously be advanced.  In our view, communications that are

intended to further a crime or fraud will rarely, if ever, be

allied with bona fide psychotherapy and, thus, protecting such

communications will not promote mental health.  In this regard, it

is important to emphasize that the crime-fraud exception will apply

only when the patient's purpose is to promote a particular crime or

fraud.  Cf. Jacobs, 117 F.3d at 87-89.  Thus, for example, a career

criminal's confessions to his psychotherapist will not fall within

the exception even though the therapy may generally increase the

patient's professional productivity.  Only when communications are

intended directly to advance a particular criminal or fraudulent

endeavor will their privileged status be forfeited by operation of

this exception.  Consequently, the slit we cut today in the shroud

of psychotherapist-patient secrecy will be slight and will not

chill much, if any, clinically relevant speech.  Cf. In re Grand

Jury Subpoena (Psychological Treatment Records), 710 F. Supp. 999,

1014 (D.N.J.) (hypothesizing, pre-Jaffee, that "[t]he absence of

the privilege when the psychotherapeutic relationship may be

criminal will have . . . no adverse effect on society's interest in

fostering psychotherapeutic treatment"), aff'd, 879 F.2d 861 (3d

Cir. 1989) (table).

  On the other side of the balance, we believe that the

potential for abuse of the psychotherapist-patient privilege,

absent the engrafting of a crime-fraud exception, is a matter of

substantial concern.  Psychotherapists could use the privilege to

deflect investigations into health insurance fraud.  See In re

Zuniga, 714 F.2d 632, 634 (6th Cir. 1983); In re Pebsworth, 705

F.2d 261, 262 (7th Cir. 1983).  Similarly, fraudulent personal

injury cases could find effective refuge under the umbrella of the

privilege.  See In re Grand Jury Subpoena, 710 F. Supp. at 1014. 

Indeed, our quest for examples need not take us so far afield:  the

government's version of the facts in the case at hand vividly

illustrates the potential for abuse should we recognize the

privilege but not the concomitant exception.

  In campaigning for reversal of the district court's

ukase, Violette ascribes great significance to the absence of a

crime-fraud exception from Rule 504 of the proposed Uniform Rules

of Evidence.  In support of this argument by negative implication,

he points to proposed Rule 503(d)(1), the crime-fraud exception to

the attorney-client privilege.  It is true that courts sometimes

look to the proposed rules for guidance, see, e.g., Jaffee, 518

U.S. at 14-15, but Violette offers nothing to show that the

drafters ever considered (let alone rejected) a crime-fraud

exception to the psychotherapist-patient privilege.  Indeed, the

drafters may have thought it self-evident that communications made

for the purpose of furthering a crime or fraud would not be deemed

to be "made for the purposes of diagnosis or treatment."  Unif. R.

Evid. 504(b).  In all events, the sockdolager is that Congress

rejected Rule 504 in favor of the common law approach of Rule 501

(discussed supra).  See H.R. Rep. No. 93-650, at 8 (1974),

reprinted in 1974 U.S.C.C.A.N. 7075, 7082.  When reason and

experience lead us in a different direction than a rejected

provision in the proposed rules, we are bound by law to follow the

former.

IV.  APPLYING THE CRIME-FRAUD EXCEPTION

  Having concluded that an exception to the privilege

exists, we next mull its applicability here.  As explained above,

a party invoking the crime-fraud exception must make a prima facie

showing that the exception applies.  The Supreme Court has

described the required quantum of evidence as "something to give

colour to the charge . . . that has some foundation in fact." 

Clark, 289 U.S. at 15 (citation omitted).

  Although we have not had occasion to flesh out this

rather sketchy standard, other courts of appeals have offered

varying interpretations.  Compare, e.g., In re Grand Jury

Proceedings, 87 F.3d 377, 381 (9th Cir. 1996) ("reasonable cause"),

with In re Antitrust Grand Jury, 805 F.2d 155, 165-66 (6th Cir.

1986) ("probable cause"), with In re Feldberg, 862 F.2d 622, 625-26

(7th Cir. 1988) (evidence sufficient to require an explanation by

the party asserting the privilege, which the court describes as

less than a preponderance), with Haines v. Liggett Group Inc., 975

F.2d 81, 95-96 (3d Cir. 1992) (evidence which, if believed, would

be sufficient to support a finding that the elements of the crime-

fraud exception were satisfied), with In re Grand Jury Proceedings,

641 F.2d 199, 203 (5th Cir. 1981) (same, except that evidence to

the contrary is to be disregarded).  This case presents no

occasion to pick and choose among these sundry formulations of the

standard.  On the facts before us, the district court's

determination that the government carried its burden is

unassailable, regardless of which version of the standard applies.

  We review the district court's determination that

particular communications come within the crime-fraud exception for

abuse of discretion.  See Reeder, 170 F.3d at 106.  Kelly's

affidavit contains a wealth of evidence indicating that Violette's

communications to Drs. LeMay and Balian, respectively, were made as

part of a scheme to defraud lenders and/or disability insurers. 

Thus, the lower court's determination that the government

established the key ingredients of the crime-fraud exception   that

Violette was engaged in or was planning illegal and fraudulent

conduct, and that he obtained assistance from the two doctors in

furtherance of this activity, see Jacobs, 117 F.3d at 87-89

(explicating the elements of the crime-fraud exception)   was not

an abuse of discretion.

  Violette's fallback position is that the district court

erred in applying the crime-fraud exception because the

psychiatrists were not coconspirators, but at most unwitting pawns. 

The argument appears to be that since the psychiatrists believed at

the time that they were engaged in the professional treatment of an

authentic patient, the privilege should remain inviolate.  It is

true that the doctors' innocence distinguishes this case from In re

Grand Jury Subpoena, 710 F. Supp. at 1001, on which the district

court relied   but this is a distinction bereft of a meaningful

difference.  The case law dealing with the crime-fraud exception in

the attorney-client context makes it transparently clear that the

client's intentions control.  See, e.g., Clark, 289 U.S. at 15

("The attorney may be innocent, and still the guilty client must

let the truth come out."); United States v. Ballard, 779 F.2d 287,

292 (5th Cir. 1986) (stating that the exception attaches "when the

lawyer becomes either the accomplice or the unwitting tool in a

continuing or planned wrongful act"); United States v. Calvert, 523

F.2d 895, 909 (8th Cir. 1975) (explaining that "[i]t is the

client's purpose which is controlling, and it matters not that the

attorney was ignorant of the client's purpose").  We see no

credible basis for applying a different rule in the

psychotherapist-patient context.

V.  THE DUE PROCESS CLAIM

  We next consider Violette's contention that the district

court infracted his right to due process because it did not afford

him access to evidentiary materials (in particular, the Kelly

affidavit).  This contention lacks merit.

  The short of it is that denying Violette access to grand

jury materials did not deprive him of due process.  The public

interest in the secrecy of grand jury proceedings generally

outweighs a party's interest in obtaining such materials.  See,

e.g., In re Grand Jury Subpoenas, 144 F.3d 653, 662-63 (10th Cir.),

cert. denied, 119 S. Ct. 412 (1998); In re Grand Jury Proceedings,

Thurs. Special Grand Jury, 33 F.3d 342, 351 (4th Cir. 1994).  That

rule has particular bite when, as now, compelling disclosure would

set the stage for satellite litigation in advance of grand jury

action.  See United States v. Dionisio, 410 U.S. 1, 17 (1973) ("Any

holding that would saddle a grand jury with minitrials and

preliminary showings would assuredly impede its investigation and

frustrate the public's interest in the fair and expeditious

administration of the criminal laws.").

  The law seems well-settled that, in the context of grand

jury proceedings, the government may proffer ex parte the evidence

on which it bases its claim that a particular privilege does not

apply, and that the court may weigh that evidence, gauge its

adequacy, and rule on the claim without affording the putative

privilege-holder a right to see the evidence proffered or an

opportunity to rebut it.  See, e.g., In re Grand Jury Subpoenas,

144 F.3d at 662-63; In re Grand Jury Proceedings, 33 F.3d at 352-

53; In re Antitrust Grand Jury, 805 F.2d at 167-68.  We have no

desire to reinvent the jurisprudential wheel.  Suffice to say that

there is nothing about the psychotherapist-patient privilege which

would impel us to depart from the accepted procedure or to question

its constitutionality.  We conclude, therefore, that the district

court's decision to deny Violette access to the requested materials

did not offend due process.

VI.  CONCLUSION

  We need go no further.  For the reasons stated, we hold

that the psychotherapist-patient privilege, like the attorney-

client privilege, is subject to a crime-fraud exception; that the

district court did not abuse its discretion either in finding the

crime-fraud exception applicable to the subpoenaed evidence or in

enforcing the subpoenas issued to the two psychiatrists; and that

Violette's due process rights have not been abridged by denying him

access to the records of an ongoing grand jury investigation.



  The orders appealed from are affirmed.  Mandate shall

issue forthwith.