In Re Special Grand Jury No. 81-1 (Leon D. Harvey)

676 F.2d 1005, 10 Fed. R. Serv. 1173, 1982 U.S. App. LEXIS 19835

• Court: Court of Appeals for the Fourth Circuit
• Decided: April 23, 1982
• Docket: 81-2187
• Status: Published

Opinions

ERVIN, Circuit Judge:

This appeal raises the question whether the district court should have quashed a subpoena issued by a grand jury to an attorney representing the appellant, Leon D. Harvey, who is a target of an ongoing grand jury investigation. In the motion to quash that the district court denied, Harvey argues that if his attorney is forced to appear before the grand jury, his sixth amendment right to choose his own attorney will be infringed and information protected by the attorney-client privilege will be revealed. We believe that in this situation, where the attorney subpoenaed by a grand jury is in an ongoing attorney-client relationship with a target of the grand jury, the United States Attorney is required to make a preliminary showing of relevance and need before the attorney can be required to appear.

In this preliminary showing, the United States Attorney must demonstrate by affidavit that the information sought is relevant to and needed for its investigation, that the investigation is properly within the grand jury’s jurisdiction, and that the information sought is not primarily for another purpose. Because such a preliminary showing has not been made in this case, we reverse the district court and grant Harvey’s motion to quash the subpoena issued to his attorney.

I.

On October 27, 1981, a subpoena duces tecum was issued, on application of an Assistant United States Attorney for the Eastern District of Virginia, to the law firm of Mark & Moffitt, P. C. This subpoena directed attorneys J. Flowers Mark and William B. Moffitt and the custodian of the records of the law firm to appear before the grand jury on November 4, 1981 with their records of all money and property received from and disbursed on behalf of Leon D. Harvey. Mark and Moffitt have represented Harvey throughout the grand jury proceedings and in prior criminal prosecutions which are also the subject of the grand jury’s investigation.

On November 4, 1981, Mark and Moffitt filed a motion to quash the subpoena in the United States District Court for the Eastern District of Virginia on the ground that the subpoena required disclosure of privileged communications in their representation of Mr. Harvey. The court denied both the motion to quash and another motion by Mr. Moffitt to intervene on behalf of Harvey.¹ This court subsequently granted Harvey’s writ of mandamus directing the district court to permit Harvey to intervene in the motion to quash. This court also stayed Mr.' Mark’s appearance before the grand jury pending a decision on Harvey’s motion to quash. At a hearing before the district court on November 23,1981, Harvey argued that the documents were protected by the attorney-client and work product² privileges as well as the sixth amendment and submitted the documents to the court for in camera inspection.

On December 4, 1981, the district court found that none of the documents “facially disclosed any confidential communication between Harvey and his attorneys,” denied Harvey's motion to quash, and directed Mark to appear before the grand jury with the requested records. The court described the documents as follows:

These in camera records consisted of numerous checks payable to various and sundry persons, including Clerks of Court, printers, consultants, out-of-town attorneys, rail and air transportation, and other similar expenses incurred by Mark & Moffitt, P. C. in re Harvey’s defense of his marijuana convictions in this and in the Georgia federal courts — arid excerpts from their computer printouts listing these payments as charges against their Harvey escrow account.

These excerpts from their computer printouts also listed the dates and the amounts of money they had received from Harvey during the period in question.

On December 7, 1981, Harvey noted his appeal and moved that this court stay Mark’s appearance before the grand jury. We granted the stay and issued orders for an expedited, briefing schedule and submission of the subpoenaed documents for in camera inspection.

II.

The government first challenges the appealability of the denial of Harvey’s motion to quash the subpoena directed to his attorney. Generally, one served with a subpoena may not appeal a denial of a motion to quash without first resisting the subpoena and being found in contempt. Cobbledick v. United States, 309 U.S. 323, 60 S.Ct. 540, 84 L.Ed. 783 (1940). When the subpoena is directed to a third party, however, one who files a motion to quash and v/ho claims that production of the subpoenaed documents. would violate his fifth amendment privilege against self-incrimination is permitted an immediate appeal. Perlman v. United States, 247 U.S. 7, 38 S.Ct. 417, 62 L:Ed. -950 (1818). The theory underlying this exception to the general rule is that in those situations there is a real possibility the third party will not risk being found in contempt and will turn over the subpoenaed documents. If that happens the information will be revealed and the party challenging the subpoena will be denied effective appellate review at a later stage.

Although the first circuit has denied an immediate appeal in a case where a party’s attorney was subpoenaed, see In re Oberkoetter, 612 F.2d 15 (1st Cir.), app. for stay denied, 444 U.S. 1041, 100 S.Ct. 726, 62 L.Ed.2d 727 (1980), the vast majority of the circuits have allowed such appeals. See, e.g., In re Grand Jury Proceedings (Jeffrey Fine), 641 F.2d 199 (5th Cir. 1981); In re Grand Jury Proceedings (Gary Katz), 623 F.2d 122 (2d Cir. 1980); In re November 1979 Grand Jury, 616 F.2d 1021 (7th Cir. 1980); In re Grand Jury Proceedings (Appeal of FMC Corp.), 604 F.2d 798 (3d Cir. 1979); Velsicol Chemical Corp. v. Parsons, 561 F.2d 671 (7th Cir. 1977), cert. denied, 435 U.S. 942, 98 S.Ct. 1521, 55 L.Ed.2d 538 (1978). We agree with the majority of the circuits and hold that identical interests supporting the immediate appeal rule in Perlman support allowing the appeal in this case.

III.

In general, the attorney-client privilege protects from disclosure communications from a client to his attorney made in confidence and concerning legal advice sought from the attorney. See 8 Wigmore, Evidence, § 2292 at 554 (McNaughton Rev. 1961). Payment of fees and expenses generally is not privileged information because such payments ordinarily are not communications made for the purpose of obtaining legal advice. United States v. Davis, 636 F.2d 1028, 1044 (5th Cir. 1981). Cf. National Labor Relations Board v. Harvey, 349 F.2d 900 (4th Cir. 1965) (dicta) (the fact of retainer and terms of employment ordinarily not privileged); Behrens v. Hironimus, 170 F.2d 627, 628 (4th Cir. 1948) (“[T]he existence of the relation of attorney and client is not a privileged communication.”)

An exception to the no privilege rule is recognized “where the person invoking the privilege can show that a strong probability exists that disclosure of such information would implicate that client in the very criminal activity for which legal advice was sought.” United States v. Hodge and Zweig, 548 F.2d 1347, 1353 (9th Cir. 1977). Application of these privilege rules, of course, turns on the particular facts of the ease. In re Grand Jury Proceedings v. Jones, 517 F.2d 666, 671 (5th Cir. 1966); Baird v. Koerner, 279 F.2d 623, 631 (9th Cir. 1960). In order to rule on the privilege issue in this case, however, the court must know what relevance the requested documents have to the grand jury investigation. Unless the nature of the investigation is disclosed, a court cannot determine whether disclosure of the documents “would implicate the client in the very criminal act for which legal advice is sought.”

The government has consistently refused to reveal any details regarding the purpose of the grand jury investigation. It lias disclosed only that the investigation relates to possible tax fraud and drug offenses and indicated-in oral argument that the subpoenaed documents might be used as a basis for a net worth tax evasion prosecution.³ With such sketchy disclosure of the purposes for which the documents are sought, Harvey is unable to articulate, and this court is unable to discern, whether disclosure of the documents would implicate him in the criminal activity for which the representation was sought. Furthermore, unless the district court knows more than we do about the government’s purposes for seeking the documents, it would be in no better position to rule on the privilege issue if we were to remand this case for ruling on the documents item by item. Until the government discloses the relevance of the subpoenaed documents to the grand jury’s investigation, proper ruling on the privilege issue cannot be made.

Not only has the government refused to reveal information necessary for the court to decide whether the attorney-client privilege applies in this case, this subpoena implicates Harvey’s constitutional right to counsel of his choice. When a subpoena is issued against an attorney in an ongoing attorney-client relationship, the attorney may well be placed in the position of becoming a witness against his client or risking contempt. In either case, there is a strong possibility that a wedge will be driven between the attorney and the client and the relationship will be destroyed.⁴ These important private interests should not be sacrificed to the public interest furthered by the grand jury’s criminal investigation unless some preliminary showing is made by the government.

We recognize that normally a subpoena is presumed to be regular, and that the subpoenaed party has the burden of showing that the information sought is privileged or that there has been an abuse of the grand jury process. See, e.g., Beverly v. United States, 468 F.2d 732 (5th Cir. 1972).⁵ Where the attorney for the target of an investigation is subpoenaed, however, attorney-client privilege considerations and sixth amendment interests arise automatically and a preliminary showing must be made by the government before the attorney can be forced to appear before the grand jury.

Grand jury subpoenas are issued pro forma with no prior court approval. As such they are instrumentalities of the United States Attorney’s office although issued under the district court’s name and for the grand jury. Even though in general the need for assistance of counsel at the grand jury is not as great as the need for counsel after indictment and at trial, a witness in the grand jury room faces the experienced counsel of the prosecution and thus in many circuits has the right to consult with his attorney outside the grand jury room in order to protect his fifth amendment right against self-incrimination. See United States v. Mandujano, 425 U.S. 564, 605-06, 96 S.Ct. 1768, 1790-91, 48 L.Ed.2d 212 (1976) (Brennan, J., concurring) (citing United States v. George, 444 F.2d 310, 315 (6th Cir. 1971); United States v. Weinberg, 439 F.2d 743, 745 (9th Cir. 1971); United States v. Capaldo, 402 F.2d 821, 824 (2d Cir. 1968), cert. denied 394 U.S. 989, 89 S.Ct. 1476, 22 L.Ed.2d 764)). Though an unindicted grand jury witness’ sixth amendment right to counsel does not attach at the grand jury stage, the witness nonetheless is “faced with the prosecutorial forces of organized society and immersed in the intricacies of substantive and procedural criminal law.” Kirby v. Illinois, 406 U.S. 682, 689, 92 S.Ct. 1877, 1882, 32 L.Ed.2d 411 (1972). Thus, even though the witness does not have the right to have counsel appointed for him, he has a substantial interest in continuing to receive the assistance of counsel he has already retained for purposes of the grand jury investigation. The interests in maintaining a proper attorney-client relationship and protecting the confidences of that relationship are similar to the sixth amendment right to effective assistance of counsel and fundamental to our adversarial system of justice. In balancing the public interest in effective investigation of criminal activity by grand juries against the substantial private interests of preserving a proper on-going attorney-client relationship and protecting confidential communications, it is not an unreasonable burden to require the government to make a preliminary showing by affidavit.

IV.

In determining what the government must present in its preliminary showing, we are provided guidance by the third circuit in In re Grand Jury Proceedings (Schofield), 486 F.2d 85 (3d Cir. 1973). In that ease, the petitioner, who was a potential target of a grand jury investigation, was held in contempt for refusing to comply with a grand jury subpoena directing her to provide handwriting samples, photographs, and fingerprints. In reversing the conviction for contempt, the court established the broad rule that the government is not entitled to have a subpoena enforced unless it makes a preliminary showing by affidavit that the items sought are “relevant to an investigation being conducted by the grand jury and properly within its jurisdiction, and is not sought primarily for another purpose.” Id. at 93.

This three-pronged requirement is designed to insure that before a private citizen can be forced to testify before a grand jury, the United States Attorney has grounds to believe the subpoena is proper. We note that the relevance requirement of the Schofield standard is appropriate in this case to determine whether the documents fall under the attorney-client privilege. This subpoena, however, also risks the destruction of an ongoing attorney-client relationship. In balancing the public interest in providing the grand jury with the information it may need against the private interest of maintaining a confidential and important professional relationship, it is not enough that the subpoena be shown to be regular. When a grand jury subpoena undermines an ongoing attorney-client relationship, the United States Attorney should also show by affidavit an important need⁶ for the information sought. Thus, in this situation, the United States Attorney must include in his preliminary showing a demonstration that the information sought is relevant to and needed for an investigation being conducted by the grand jury.

We agree with thé court in Schofield that the grand jury secrecy requirement of Fed. R.Crim.P. 6(e) does not necessitate a general rule requiring the government’s threefold preliminary showing be made to the district court in camera. We leave to the district court’s discretion a determination that special circumstances may warrant in camera review of the government’s affidavits. Challenge to the adequacy of the government’s preliminary showing may be made at the enforcement hearing or, as in this case, in a motion to quash the subpoena. We reiterate, however, that we do not adopt the Schofield rule that a preliminary showing must be made for every grand jury subpoena.⁷ We hold only that the threefold preliminary showing by affidavit (including a showing that the information is needed) is required when a subpoena is issued to an attorney who has been retained by the target of the grand jury investigation and important sixth amendment and attorney-client privilege issues are raised.

V.

We are convinced that our holding in this ease is not contrary to the principles laid down by the Supreme Court in United States v. Dionisio, 410 U.S. 1, 93 S.Ct. 764, 35 L.Ed.2d 67 (1973), and United States v. Mara, 410 U.S. 19, 93 S.Ct. 774, 35 L.Ed.2d 99 (1973). In Dionisio, a group of grand jury witnesses were advised that they were targets of a grand jury investigation and were subpoenaed to read the transcript of a lawfully intercepted wire conversation into a recording device. Dionisio refused to comply with the subpoena on the grounds that the procedure violated his fourth and fifth amendment rights. At the enforcement hearing, the government stated that the statements were to be used only for comparison to determine if any of the witnesses was the one whose conversation was intercepted, and stated that the voice exemplars were necessary for the investigation. The seventh circuit denied enforcement because the government had not made a preliminary showing of probable cause. See, Davis v. Mississippi, 394 U.S. 721, 89 S.Ct. 1394, 22 L.Ed.2d 676 (1969). The Supreme Court reversed, holding that the fourth amendment prohibition against unreasonable search and seizure does not require a preliminary showing before a grand jury subpoena can be issued for the purpose of obtaining testimony or voice or handwriting exemplars. The issue in United States v. Mara, supra, was similar.⁸

Dionisio and Mara were based on constitutional challenges to enforcement of the subpoenas. We are convinced, however, that the preliminary showing we now require is a proper exercise of our supervisory power over the administration of justice in this circuit. Courts have refused to enforce subpoenas for a variety of nonconstitutional reasons. See In re Grand Jury Proceedings (Schofield), supra, at 91. This court has supervisory power over the conduct of grand jury proceedings within this circuit and has the power to fashion rules to further the administration of justice when such rules are necessary. See McNabb v. U. S., 318 U.S. 332, 340-41, 63 S.Ct. 608, 612-13, 87 L.Ed. 819 (1943); Fay v. New York, 332 U.S. 261, 297, 67 S.Ct. 1613, 1632, 91 L.Ed. 2043 (1947). We do not hold that the sixth amendment requires a preliminary showing in this case. We do hold, however, that in exercise of our supervisory power over federal grand jury proceedings in this circuit, the preliminary showing described is appropriate to protect a person’s interest in maintaining a proper attorney-client relationship. Requiring such a showing in this limited situation will not impede the effectiveness of the grand jury⁹ and may well facilitate the investigation by providing the basis for a district court’s early ruling on a witness’ assertion of the attorney-client privilege.

VI.

The United States Attorney has failed to disclose the purposes of the grand jury investigation, the relevance of the information sought by the subpoena of Mr. Marks, or any important need to such information. Neither has the government attempted to dissuade us from believing that it is simply on a “fishing expedition.” For the reasons stated, the United States Attorney is required to make the described preliminary showing in order to acquire the subpoenaed documents from Mr. Marks. Accordingly, Harvey’s motion to quash the subpoena is granted and the district court’s denial of such motion is REVERSED.

1 . At this hearing, the subpoena for Moffitt was withdrawn and is no longer at issue.

2 . Because our holding in Harvey’s favor is based on the attorney client privilege and his sixth amendment interests, we decline to rule on whether the work product privilege applies in this case.

3 . When asked if the government had an “expectation” of finding incriminating evidence for a tax evasion prosecution or simply a mere “hope,” government’s counsel at oral argument responded that they had a “hope” of finding such material.

4 . If the attorney resists the subpoena and is found in contempt, the punishment for contempt may totally destroy the attorney-client relationship. Fed.R.Crim.P. 17(g). If the attorney complies with the subpoena and appears before the grand jury behind closed doors, a substantial chilling effect on truthful communications from the client to the attorney thereafter would be likely, especially if the client is indicted.

5 . We also note that the district court, upon motion, “may quash or modify the subpoena [requesting documents] if compliance would be unreasonable or oppressive.” Fed.R.Crim.P. 17(c).

6 . We do not think it necessary to determine at this point what would constitute a showing of an important need. The requirements for such a showing will vary according to the circumstances of each case. We do note, however, that there are two inquiries the prosecution must address when making a showing of need. First, is the information sought necessary or important to the grand jury investigation? Second, is the subpoenaed attorney the best source for the information? A showing that the information cannot be obtained from another source would, of course, be important to, but not necessarily conclusive for, the second inquiry.

7 . In withholding judgment on the issue whether a preliminary showing must be made in every case, we understand that other circuits have declined to adopt such a rule. See, e.g., In re Liberatore, 574 F.2d 78 (2d Cir. 1978); In re Grand Jury Investigation (McLean), 565 F.2d 318 (5th Cir. 1977).

8 . In that case, the government sought enforcement of a subpoena requesting handwriting exemplars without making a showing of probable cause. The court held that enforcement of the subpoena would not constitute an unreasonable search and seizure. The government did, however, supply affidavits showing that the exempIars were essential and necessary to the grand jury investigation and were to be used for a limited purpose.

9 . The Schofield rule “has not caused any serious disruption of grand jury proceedings” in the third circuit. Hearings on H.R. 94 Before the Sub-committee on Immigration, Citizenship, and International Law of the House Committee in the Judiciary, 95th Cong., 1st Sess. 1589 (1977).