In Re: Robinson v.

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT

                                ____________________


          Nos. 97-1002

               97-1003


                            IN RE: GRAND JURY SUBPOENAS


                                ____________________


                    APPEALS FROM THE UNITED STATES DISTRICT COURT


                          FOR THE DISTRICT OF MASSACHUSETTS


                    [Hon. Michael A. Ponsor, U.S. District Judge]


                                ____________________


                                       Before


                               Torruella, Chief Judge,


                            Bownes, Senior Circuit Judge,


                              and Lynch, Circuit Judge.


                                _____________________


               Michael  
                       W.  
                           Reilly, with whom   Tommasino  
                                                          &  
                                                             Tommasino and

          Michael G. West were on joint brief for appellants the Client and

          the Owner.

               John P. Pucci, with whom Jeanne M. Kaiser and Fierst & Pucci

          were on brief for appellant Law Firm.

               Andrea 
                      N. 
                         Ward, Assistant United States Attorney, with whom

          Donald K. Stern
                        , United States Attorney, was on brief for appellee

          United States.


____________________


                                   August 13, 1997

                                ____________________



TORRUELLA, Chief 
                                     Judge. The case before us is a small


          piece in a much larger puzzle. A federal grand jury, sitting in


          Massachusetts, has been investigating possible criminal activity on


          the part of a firm ("firm" or "client") and its owner ("owner").


          The firm was in the business of assisting inventors in promoting


          their discoveries and in obtaining patents. The government


          suspected fraud and began an investigation. During the


          investigation, a search warrant was executed at the business


          offices of the client. As a result of some of the materials seized


          during this search, the government requested and received a grand


          jury subpoena directed at the custodian of records at the office of


          the firm's legal representative ("law firm"). The subpoena sought


          all records "pertaining to charges or billing for legal services"


          performed by the law firm for the client. The information sought


          included:


                    1) all documents relating to the establishment

                    of such entities as clients;

                    2) all diary entries and other summaries

                    indicating the hours worked, the hours

                    charged, the nature or subject of the services

                    performed, and the identity of the client; and

                    3) all invoices or bills of any kind.


          Subpoena to Testify Before Grand Jury, dated August 5, 1996.


                    The client and the firm filed separate motions to quash


          the subpoena, arguing principally that the billing records


On February 5, 1997, a "Consent Motion to Seal and Redact" was

          granted by the district court. In accordance with Federal Rule of

          Criminal Procedure 6(e)(6), no references to the parties have been

          made in this opinion.  See, e.g., United 
                                                   States v. (Under 
                                                                     Seal),

          748 F.2d 871 (4th Cir. 1984).


                                         -2-



contained detailed descriptions of the legal work performed and


          that disclosure thereof would violate the attorney-client


          privilege.


                    On December 18, 1996, the district court denied the


          motions to quash, holding that "records of the sort exemplified by


          Ex. 2 to the Offord Affidavit (attached to the Government's


          Response to the Motion to Quash) are not sufficiently specific to


          be protected by the attorney-client privilege."    See Motion to


          Quash Subpoena, Record Appendix, at 24 (margin order). Both the


          client and the law firm have appealed the denial of the motion to


          quash.


                             I. Appellate Jurisdiction


                    As an initial matter, we must determine whether this


          court has jurisdiction to hear the appeal.


                    It is established that, under normal circumstances, a


          party seeking to quash a subpoena cannot appeal a court order to


          comply without first resisting that order and subjecting itself to


          a citation for contempt. United States
                                                 v. 
                                                    Ryan, 402 U.S. 530, 533


          (1971); Cobbledick v.  United 
                                        States, 309 U.S. 323, 328 (1940);


          Corporacion 
                      Insular 
                              de 
                                 Seguros v. Garcia, 876 F.2d 254, 257 (1st


          Cir. 1989).


                    This rule disposes of the law firm's appeal. The law


          firm has not been cited for contempt and, therefore, we lack


          jurisdiction to hear the appeal. The client's appeal, however,


          implicates a more complex jurisdictional analysis.


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An exception to the rule requiring a contempt citation


          prior to appeal exists when subpoenaed documents are in the hands


          of a third party. In that case, the owner of the documents may


          seek immediate appeal of a district court's order requiring


          production of those documents. This exception, known as the


          "Perlman doctrine," exists because it is unlikely that a third


          party will risk contempt simply to create an appealable order for


          the benefit of the owner of the documents.  See Perlman v. United


          States, 247 U.S. 7, 12-13 (1918). In other words, the district


          court order is effectively final with respect to a party that is


          powerless to prevent compliance with the order.


                    When the third party is the document owner's lawyer,


          however, a different rule applies. In this circuit, the "question


          [of] whether a client may appeal to the court of appeals from a


          district court's order directing his attorney to testify before the


          grand jury with respect to a communication allegedly covered by the


          attorney-client privilege," was decided in In re Oberkoetter, 612


          F.2d 15, 16 (1st Cir. 1980). In that case, an attorney had been


          ordered by the district court to testify before a grand jury. He


          initially declined to do so on the grounds of attorney-client


          privilege. Id. The district court ordered him to testify despite


          the claim of privilege. The attorney's client then filed an appeal


          from the district court order. This court held that it lacked


          appellate jurisdiction until such time as the attorney received a


          contempt citation.


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The facts of the instant case fall squarely with the


          scope of Oberkoetter. We believe, however, that it is time to


          reconsider our holding in that case.


                    We begin by noting the tension between     Perlman and


          Oberkoetter. In Perlman, exhibits belonging to Perlman were in the


          hands of the clerk of the district court in connection with patent


          litigation. The district court subsequently ordered the clerk to


          produce the exhibits for presentation to a grand jury investigating


          charges that Perlman had perjured himself in the patent suit.


          Perlman claimed privilege with respect to the exhibits. The


          district court denied his petition to restrain their presentation


          to the grand jury. Perlman appealed. The Supreme Court ruled that


          his appeal should be allowed on the grounds that "Perlman was


          powerless to avert the mischief of the order."  Perlman, 247 U.S.


Ordinarily, prior panel decisions are binding on future panels

          and it is for an en banc court to reexamine the status of a prior

          opinion. In rare instances, however, where it has become

          relatively clear that a prior precedent of this court was

          erroneously decided or is no longer good law, we have achieved the

          same result more informally by circulating a proposed panel opinion

          that reverses a prior panel to all the active judges of the court

          for pre-publication comment.    See,  e.g., Gallagher v.   Wilton

          Enters., 
                   Inc., 962 F.2d 120, 124 n.4 (1st Cir. 1992);     Trailer

          Marine Transp. Co. v. Rivera Vazquez, 977 F.2d 1, 9 n.4 (1st Cir.

          1992); 
                United States
                              v. 
                                 Bucuvalas, 909 F.2d 593, 598 n.9 (1st Cir.

          1990); see 
                     also Ionics, 
                                  Inc. v.  Elmwood 
                                                   Sensors, 
                                                            Inc., 110 F.3d

          184, 187 n.3 (1st Cir. 1997) (overturning a circuit precedent in

          order to comply with controlling authority). While this practice

          is to be used sparingly and with extreme caution, we have employed

          it in the special circumstances of this case, with the result that

          a majority of the active judges of this court has approved the

          overruling of Oberkoetter on the point at issue. Of course, by

          resorting to this mechanism, we neither foreclose any party from

          filing a formal petition for rehearing en banc nor commit any

          member of the court to a position in respect to any such petition.


                                         -5-



at 13. We believe that the reasoning of      Perlman is directly


          applicable to this case and requires us to accept jurisdiction over


          the instant appeal. Even though it is an attorney that is


          subpoenaed for his or her client's records, the client here has


          been denied the opportunity to avert the mischief of the order by


          allowing himself to be held in contempt. The client is at the


          mercy of his or her attorney and can only gain a review of the


          district court's order if the attorney is prepared to risk a


          contempt citation. The real possibility of a serious conflict of


          interest cannot be overlooked or denied.


                    We also take note of the fact that the Supreme Court has


          not overruled 
                       Perlman. In  Oberkoetter, Judge Wyzanski stated that


          "he expects the Supreme Court to ultimately overrule    Perlman."


          Oberkoetter, 612 F.2d at 18. With the benefit of hindsight we know


          that Perlman has not been overruled and continues to bind this


          court. To whatever extent the    Oberkoetter court believed that


          Perlman's applicability had faded, and to whatever extent this may


          have influenced its ruling, the reasoning in     Oberkoetter was


          incorrect.


                    Most of our sister circuits have interpreted Perlman to


          apply in instances when an attorney is ordered by a court to


          produce client records in the face of a claim of privilege.   See


          Conkling v. Turner, 883 F.2d 431, 433-34 (5th Cir. 1989) (order


          directing the testimony of appellant's attorney is immediately


          appealable); In re Grand Jury Subpoena, 784 F.2d 857, 859-60 (8th


          Cir. 1986) (same); In 
                                 re 
                                    Klein, 776 F.2d 628, 630-32 (7th Cir.


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1982) ("Like several other courts, this one has treated 
                                                                 Perlman as


          a holding that clients always are entitled to appeal as soon as


          their attorneys are required to produce documents."); 
                                                              United States


          v. 
            (Under Seal)
                        , 748 F.2d 871, 873 n.2 (4th Cir. 1984) ("[W]hen the


          one who files the motion to quash, or intervenes, is not the person


          to whom the subpoena is directed, and the movant or intervenor


          claims that production of the subpoena documents would violate his


          attorney-client privilege, the movant or intervenor may immediately


          appeal."); 
                    In re Grand Jury Proceedings
                                                , 722 F.2d 303, 305-07 (6th


          Cir. 1983) (allowing immediate appeal of an order compelling the


          testimony of movant's attorney);  In 
                                               re 
                                                   Grand 
                                                         Jury 
                                                               Proceedings,


          Appeal of Twist, 689 F.2d 1351, 1352 n.1 (11th Cir. 1982) (same);


          In 
             re 
                Grand 
                      Jury 
                           Subpoena 
                                    Served 
                                           Upon 
                                                Doe, 759 F.2d 968, 971 n.1


          (2d Cir. 1985) (same); 
                                In re Grand Jury Proceedings
                                                            , 604 F.2d 798,


          800 (3d Cir. 1979) (same).


                    Only three other circuits have determined that an order


          directing an attorney to testify regarding material that is alleged


          to be privileged is not automatically appealable. The Ninth


          Circuit allows an appeal if the attorney no longer represents the


          owner of the documents, but does not allow immediate appeal where


          the attorney is currently representing the owner. 
                                                           See, 
                                                                e.g., 
                                                                      In re


          Grand 
                Jury 
                     Subpoenas 
                               Dated 
                                     December 
                                               10, 
                                                   1987, 926 F.2d 847, 853


          (9th Cir. 1991). The District of Columbia Circuit has ruled that


          such an order is appealable when "circumstances make it unlikely


          that an attorney would risk a contempt citation in order to allow


          immediate review of a claim of privilege." In re Sealed Case
                                                                      , 754


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F.2d 395, 399 (D.C. Cir. 1985). The Tenth Circuit does not allow


          the appeal of district court orders compelling the testimony of an


          attorney who claims privilege unless the attorney has accepted a


          contempt citation or the owner of the records can "prove that the


          attorney will produce the records rather than risk contempt."  In


          re Grand Jury Proceedings, Subpoena to Vargas
                                                     , 723 F.2d 1461, 1464-


          66 (10th Cir. 1983).


                    No circuit outside of our own has adopted a rule as


          extreme as the Oberkoetter rule, which bars an appeal until the


          lawyer is cited for contempt.


                    In addition to the persuasive case law from other


          circuits, we are troubled by the tenuous logic of 
                                                           Oberkoetter. In


          particular, that opinion assumed that "[a]n attorney, in his


          client's interest and as proof of his own stout-heartedness, might


          be willing to defy a testimonial order and run the risk of a


          contempt proceeding." In re Oberkoetter
                                                 , 612 F.2d at 18. Although


          we do not doubt that some lawyers would accept a contempt citation


          in order to provide their clients with the opportunity to appeal,


          we are persuaded by the following reasoning of the Fifth Circuit:


                      Although we cannot say that attorneys are

                      in general more or less likely to submit

                      to a contempt citation rather than violate

                      a client's confidence, we can say without

                      reservation that some significant number

                      of client-intervenors might find

                      themselves denied all meaningful appeal by

                      attorneys unwilling to make such a

                      sacrifice. That serious consequence is

                      enough to justify a holding that a client-

                      intervenor may appeal an order compelling

                      testimony from the client's attorney.


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In re Grand Jury Proceedings in Matter of Fine, 641 F.2d 199, 203


          (5th Cir. 1981). Mindful that it would be unduly optimistic to


          anticipate that all attorneys will accept contempt rather than


          compromise their clients' appeal, we think it unwise to require


          such an action before permitting an appeal.


                    Oberkoetter relies heavily on the premise that the


          appellate review will interfere with the normal course of


          litigation. The greatest of these concerns, in the eyes of the


          Oberkoetter court, appears to have been the delay caused by an


          appeal. While there is something to this argument, it ultimately


          fails to justify a total bar on appeals in cases such as this. A


          party who accepts contempt is permitted to appeal the contempt


          citation and, thereby, seek review of the order compelling


          testimony. Granting the same opportunity to appeal to a party who


          does not have the option of accepting contempt is unlikely to lead


          to greater delay than exists in cases that have featured a contempt


          citation.


                    Finally, we add that allowing an appeal only if the


          attorney accepts a contempt citation pits lawyers against their


          clients in a manner that we do not believe is in the interests of


          justice. See generally
                                 
                                 United States
                                               v. 
                                                 Edgar, 83 F.3d 499, 507-08


          (1st Cir. 1996). A lawyer should not be required to choose between


          the interests of his or her client and his or her own interests.


          A rule that promotes conflicts of interest hinders the fair


          representation of the client and makes it less likely that clients


          will be well served by their attorneys.


-9-



In light of the above discussion, therefore, we overrule


          In re Oberkoetter, 612 F.2d 15 (1st Cir. 1980). In its place, we


          adopt the majority rule and apply the Perlman exception to those


          cases wherein a client seeks immediate appeal of an order


          compelling production of a client's records from his attorney.


                    Appellee advances one additional argument in support of


          its claim that we lack jurisdiction over this appeal. It claims


          that there is no jurisdiction unless the facts of the case, in


          addition to being an appeal from the denial of a motion to quash a


          subpoena directed at the law firm, meet the requirements of the


          collateral order doctrine. See 
                                         United States
                                                       v. 
                                                          Billmyer, 57 F.3d


          31, 34 (1st Cir. 1995). We are unpersuaded by the government's


          argument. It cites to no authority, nor do we find any, that


          states that the denial of a motion to quash is reviewable only if,


          in addition to meeting the requirements of the 
                                                       Perlman doctrine, it


          also meets the requirements of the collateral order doctrine. We


          decline to adopt such a rule in this context.


                           II. Attorney-Client Privilege


                    Having overturned Oberkoetter, we have jurisdiction to


          entertain this appeal. Upon review of the record and the briefs on


          appeal, we are of the opinion that there is simply not enough


          information for us to form a reasoned judgment as to whether the


          records at issue are privileged.


                    Appellant alleges that the records at issue contain, in


          part, substantive descriptions of legal work rendered. We


          certainly agree that the documents are not per se non-privileged


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merely because they were intended primarily for billing purposes.


          What matters is not the form of the information, but its content.


          See, e.g., United 
                            States v. Olano, 62 F.3d 1180, 1205 (9th Cir.


          1995); 
                In re Grand Jury Proceedings
                                            , 896 F.2d 1267, 1273 (11th Cir.


          1990); Matter 
                        of 
                           Witnesses 
                                     Before 
                                            Special 
                                                    March 
                                                          1980 
                                                               Grand 
                                                                      Jury,


          729 F.2d 489, 495 (7th Cir. 1984). Whatever the form of the


          information, it is privileged if: (1) the client was, or sought to


          be, a client of the law firm; (2) the lawyer acted as a lawyer in


          connection with the information at issue; (3) the information


          relates to facts communicated for the purpose of securing a legal


          opinion, legal services, or assistance in a legal proceeding; and


          (4) the privilege has not been waived.     See  United  
                                                                 States v.


          Wilson, 798 F.2d 509, 512 (1st Cir. 1986).


                    On the other hand, based on the one unredacted invoice


          that was submitted to the district court by appellants, we do not


          believe it is possible to determine whether the documents, as a


          group, are privileged. The submitted invoice includes several


          entries that are clearly not privileged, and one entry that names


          the former accountant and chief financial officer of the client and


          that reads "IRS Power of Atty. forms and corp. penalty abatements;


          Correspondence to client." From this information, appellants urge


          this court to conclude that the records at issue are privileged,


          pointing out that the parties would expect to be able to discuss


          IRS corporate penalty abatements and power of attorney forms


          without the IRS learning about it. Appellee, on the other hand,


          claims that this entry, described as "typical" of the group of


-11-



records, demonstrates that there is no privilege. We cannot agree


          with either argument.


                    It is at least arguable that the entry meets the criteria


          of a privileged communication. Furthermore, when taken as a group,


          it is possible that the bills would reveal considerable privileged


          information. This possibility is compounded by the fact that the


          government has already seized the client's business records, making


          it more likely that the government can deduce the privileged


          substance of the notations of the records.  See In 
                                                             re 
                                                                Grand 
                                                                       Jury


          Proceedings, 517 F.2d 666, 674 (5th Cir. 1975) ("[I]nformation, not


          normally privileged, should also be protected when so much of the


          substance of the communications is already in the government's


          possession that additional disclosures would yield substantially


          probative links in an existing chain of inculpatory events or


          transactions.").


                    We cannot, however, base our decision on this mere


          possibility. We believe that further inquiry into the question of


          privilege is necessary.


                    Given that an 
                                 in camera
                                           review of the documents was never


          conducted, we are uncertain as to how the district court arrived at


          its conclusion that the documents are not privileged. Appellants,


          at bottom, ask us to accept their statements that the records


          contain privileged information, while appellees urge us to assume


          that they do not. We are unwilling to base our decision on such


          assertions. See 
                          United States
                                        v. 
                                          Wujkowski, 929 F.2d 981, 984 (4th


          Cir. 1991).


-12-



Accordingly, we vacate the district court's ruling on the


          privilege issue and remand with instructions that the district


          court conduct a more complete inquiry into the question.      See


          Icicle Seafoods, Inc.
                               v. 
                                  Worthington, 475 U.S. 709, 714 (1986) ("If


          the Court of Appeals believed that the District Court had failed to


          make findings of fact essential to a proper resolution of the legal


          question, it should have remanded to the District Court to make


          those findings."). We also note that, in light of 
                                                           Oberkoetter, the


          parties and the district court may have been operating under the


          assumption that no appeal from the district court's ruling would be


          possible. Based on this reasonable, though ultimately incorrect,


          assumption, those involved may have failed to produce a record


          sufficient for appellate purposes. Our remand allows for the


          production of such a record.   Cf.  Millipore 
                                                        Corp. v.  Travelers


          Indemnity Co., 115 F.3d 21, 34 (1st Cir. May 30, 1997).


                    Appellants also argue that the subpoena is the fruit of


          an impermissible violation of the attorney-client relationship.


          This issue was raised by both parties below but was not decided by


          the district court. Accordingly, we need not reach the issue. We


          leave the issue to be decided, in the first instance, by the


          district court on remand. 


                                  III. Conclusion


                    For the foregoing reasons, we  dismiss the law firm's


          appeal, 
                 vacate the district court ruling as to the client's appeal,


          and remand for further proceedings.


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