UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT
No. 95-8026
UNITED STATES OF AMERICA,
Plaintiff, Appellee,
v.
JOHN W. BILLMYER, ET AL.,
Defendants, Appellees.
AMERICAN HONDA MOTOR COMPANY, INC.,
Appellant.
No. 95-1393
JOHN W. BILLMYER and DENNIS JOSLEYN,
LYON & LYON,
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Joseph A. DiClerico, Jr., U.S. District Judge]
Before
Boudin, Circuit Judge,
Bownes, Senior Circuit Judge,
and Stearns,* District Judge.
Steven M. Gordon with whom Shaheen, Cappiello, Stein & Gordon,
Richard A. Gargiulo, Gargiulo, Rudnick & Gargiulo, Peter G. Callaghan,
Richard J. Inglis and Marielise Kelly were on brief for appellant
American Honda Motor Company, Inc. Jeremiah T. O'Sullivan with whom Christopher H.M. Carter, Nancy
W. Geary and Choate, Hall & Stewart were on brief for appellant Lyon &
Lyon. Paul Twomey with whom Mark L. Sisti was on brief for defendant,
appellee Dennis Josleyn.
June 14, 1995
*Of the District of Massachusetts, sitting by designation.
BOUDIN, Circuit Judge. Two former employees of American
Honda Motor Company, defendants John Billmyer and Dennis
Josleyn, have been on trial in the district court charged
with RICO, conspiracy and mail fraud violations arising from
an alleged commercial bribery scheme involving Honda dealers.
The defendants were indicted by a federal grand jury on March
11, 1994, and trial began in February 1995. About three
weeks into the trial, Josleyn served a subpoena duces tecum
on American Honda, pursuant to Fed. R. Crim. P. 17(c). It is
this demand that gave rise to the present proceeding in this
court.
The Josleyn subpoena demanded that American Honda
produce inter alia a file maintained by Sherry Cameron, an
American Honda vice president, that consists largely of
information received from the company's outside counsel,
notes taken by her during conversations with counsel and
memoranda reflecting such information. American Honda moved
to quash the subpoena on attorney-client privilege and work-
product grounds. Its former law firm, Lyon & Lyon, joined
the motion, asserting that certain of the documents were its
work product and protected under the work-product doctrine.
The district court found that Josleyn had made the
threshold showing required under United States v. LaRouche
Campaign, 841 F.2d 1176 (1st Cir. 1988), to warrant in camera
review of the documents in the Cameron file. After some
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wrangling, American Honda submitted the file to the district
court, but appealed the court's LaRouche ruling. This Court
dismissed that appeal on April 4, 1995, on the ground that
the district court's order was not final. United States v.
Billmyer, No. 95-1324, 95-1325, slip op. at 1 (1st Cir., Apr.
19, 1995). We recognized that American Honda might have
difficulty appealing any subsequent orders rejecting its
privilege claims because it would no longer have possession
of the files and could not automatically provoke a contempt
proceeding. Id.
The district judge then conducted an in camera review of
the Cameron file and issued a 40-page order appraising the
documents page by page. Although he found much of the file
to be protected either by attorney-client privilege or as
work product, the judge found that some of the documents were
unprotected, either because neither doctrine applied or
because the privilege had been waived. American Honda then
moved for the return of the sealed documents, so that it
could test the rulings in a contempt proceeding, but the
district court denied the motion and made ready to reveal the
disputed materials to the defendants.
American Honda and Lyon & Lyon then filed immediate
appeals, challenging the proposed disclosure of the
documents; in the alternative, writs of mandamus were sought
if the appeal were dismissed. American Honda objected to all
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of the disclosures while Lyon & Lyon restricted its claim to
one document. At appellants' request, this court on April
19, 1995, stayed the district court's order pending expedited
review. The district court then suspended the criminal
trial, awaiting a ruling by this court. Briefs were filed
here on April 28, 1995, and oral argument was heard on May 1,
1995.
On May 4, 1995, this court decided the case and released
a brief order in advance of this opinion, so that the
recessed criminal trial could be resumed immediately. Our
order stated that the district court's order directing
disclosure of the disputed materials did not qualify for
review either under the collateral order doctrine or through
mandamus. We directed entry of judgment, issuance of the
mandate forthwith, and dissolution of the April 19 stay.
This opinion is to explain the reasons for our dismissal of
the appeals and denial of mandamus.
The first question is whether American Honda and Lyon &
Lyon may appeal from the discovery order. Surprisingly, the
law in this area is more tangled than one would expect, given
the recurring nature of the problem. From the standpoint of
the proceeding itself--a criminal trial--there is no "final
decision" until the trial ends. Corporacion Insular de
Seguros v. Garcia, 876 F.2d 254, 256 (1st Cir. 1989)
("Garcia"). But the collateral order doctrine recognized in
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Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 545-47
(1949), provides one means for examining issues that arise in
the course of a continuing proceeding; failing that, mandamus
remains a possibility. Appellants invoke both concepts in
this court.
At the threshold Josleyn urges dismissal because a non-
party normally cannot appeal an order enforcing a subpoena
but must provoke a contempt order as the basis for an appeal.
United States v. Ryan, 402 U.S. 530 (1971). That path is no
longer open to American Honda and may never have been
available to Lyon & Lyon. Given the judicial interest in
allowing a trial court to inspect disputed documents in
camera, we decline to hold that a holder of documents
forfeits appeal rights otherwise available by allowing such
an inspection.
Conversely, we do not think that the district court's
discovery order becomes a "final decision" under 28 U.S.C.
1291 simply because contempt is not available as a vehicle
for review. Perlman v. United States, 247 U.S. 7, 13 (1918),
and Cobbledick v. United States, 309 U.S. 323 (1940), might
once have lent some support to such a theory; but Cobbledick
was cited by the Supreme Court in adopting the collateral
order doctrine, Cohen, 337 U.S. at 546, and the Perlman-
Cobbledick line of authority appears to have been absorbed
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into the collateral order doctrine. Garcia, 876 F.2d at 258
n.3.1 See also In re Oberkoetter, 612 F.2d 15, 17-18 (1st
Cir. 1980).
We turn now to the collateral order doctrine as the
primary basis for possible jurisdiction in this case. In
this circuit, to qualify for immediate appeal as a collateral
order, an order must involve
(1) an issue essentially unrelated to the merits of the main dispute, capable of review without disrupting the main trial; (2) a complete resolution of the issue, not one that is `unfinished' or `inconclusive'; (3) a right incapable of vindication on appeal from final judgment; and (4) an important and unsettled question of controlling law, not merely a question of the proper exercise of the trial court's discretion.
United States v. Sorren, 605 F.2d 1211, 1213 (1st Cir. 1979).
In addition, the Supreme Court has warned that interlocutory
appeals "are especially inimical to the effective and fair
administration of the criminal law." Abney v. United States,
431 U.S. 651, 657 (1977).
The instant appeal meets the first three listed
requirements. The privilege and work product issues posed by
1The Fifth Circuit has so held in circumstances very similar to our own case, In re grand Jury Proceedings, 43
F.3d 966, 969-70 (1981), although the Third Circuit some years before treated Perlman-Cobbledick as a separate
doctrine. United States v. Cuthbertson, 651 F.2d 189, 194
(3d Cir.), cert. denied, 454 U.S. 1056 (1981). Further
uncertainty is added by a brief and ambiguous reference in Church of Scientology v. United States, 113 S. Ct. 447, 452
n.11 (1992), not cited to us by anyone.
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the discovery order have little to do with the guilt or
innocence of Billmyer and Josleyn; and the district court's
order is a complete resolution of those issues. As to the
third prong, any disclosure that occurs now will be virtually
unreviewable after a final judgment. In the case of an
acquittal, no appeal can ensue, and in the case of a
conviction, any appeal would be taken by defendants who
either sought or acquiesced in the disclosure.
The remaining, and most daunting, question is whether
this case presents a distinct and important legal issue.
Although not all circuits employ such a test, it enjoys
considerable support. See, e.g., 15A C. Wright, A. Miller &
G. Cooper, Federal Practice and Procedure 3911, 3911.5 (2d
ed. 1992) (citing case law); see also National Super Spuds,
Inc. v. New York Mercantile Exchange, 591 F.2d 174, 180 (2d
Cir. 1979) (Friendly, J.). Ordinarily, a discovery order
will meet the legal-importance test only if it presents a
claim of clear-cut legal error and not merely a challenge to
the district judge's factual determinations or the
application of a settled legal rule to the particular facts.
The requirement of an important legal issue rests in
part on the increased likelihood that such an appeal may be
fruitful; legal rulings are reviewed de novo, while more
deferential standards of review apply to factual findings or
application of known legal rules to specific facts. See In
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re Extradition of Howard, 996 F.2d 1320, 1327-28 (1st Cir.
1992). It is not easy to justify the interruption of an
ongoing proceeding, especially a criminal trial, where
affirmance is very likely because the issues are ones where
the district court is reviewed only for clear error or abuse
of discretion.
In addition, where the appeal occurs during a criminal
trial, a mistrial may result if the appeal process is
prolonged, raising both speedy trial and double jeopardy
concerns. United States v. Horn, 29 F.3d 754, 768 (1st Cir.
1994). Were every factual dispute or law application issue
posed by a privilege claim open to interlocutory review in
mid-trial, it could take weeks to secure the necessary
transcripts, learn background facts that the trial judge has
absorbed over many months, and then replicate and review
district court rulings.
Admittedly, this collateral order test does create a
possibility that disclosure of documents may be ordered based
on a mistake of fact or a misapplication of settled law, and
the error may escape review. But litigation is full of such
instances: a temporary restraining order may cause
irreparable harm; burdensome discovery may be compelled
before review can be secured; a witness whose claim of
privilege is overruled may answer rather than risk contempt.
The finality rule reflects a compromise among competing
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interests. Given the protection afforded by the collateral
order doctrine and mandamus, we think that there is little
chance of any grave miscarriage of justice.
No one can make a seamless web out of all of the
decisions on collateral orders. The circuits are not
unanimous in every nuance, see 15A Wright, supra, 3911, and
even within circuits, a wider scope of review may be
available for some interlocutory orders, such as an order
denying a claim of immunity or an order imposing sanctions on
a non-party for contempt. E.g., Lowinger v. Broderick, 50
F.3d 61, 64 (1st Cir. 1995) (immunity). But we have set
forth the collateral order doctrine in this circuit as it
applies to discovery orders, and must respect our own
precedents.
Turning to the merits, we conclude that the claims made
in these attempted appeals do not reveal any clear error of
law. The district judge at the outset accurately laid out
the rules applicable to the attorney-client privilege and
work-product protection, including the pertinent exceptions
and waiver. He reviewed the documents virtually line by
line, finding some pages or portions to be protected from
disclosure and some unprotected. Most of the arguments
raised on appeal are patently attacks on factual findings or
on the application of legal standards to those facts. To
review each ruling would require a time-consuming effort and
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entail a delay all out of proportion to any likelihood of a
reversal.
But American Honda does raise one issue that involves an
arguable claim of legal error. In examining the Cameron
"legal file," the district judge concluded that, as to
certain portions of the materials protected by attorney-
client privilege, American Honda had waived the privilege.
American Honda says that the district judge misunderstood the
legal standard for an implied waiver of the privilege.
Specifically, the district court found that
American Honda has disclosed to the United States government considerable portions of the information acquired through internal investigation into the conduct comprising the charges against the defendants in this case. . . . In light of American Honda's disclosure of information acquired through internal investigation, the court finds that American Honda has waived the attorney-client privilege with respect to documents containing information acquired through internal investigation.
The court then listed the portions of the materials as
to which American Honda had waived the privilege. American
Honda now contends that waiver results only when the client
reveals privileged communications to a third party, not when
the client reveals "the information" contained in privileged
communications. American Honda argues that the district
court clearly erred by finding a waiver from the company's
disclosure to the government of facts, not of privileged
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communications. E.g., Upjohn Co. v. United States, 449 U.S.
383, 395 (1980).
The district judge may have meant that privileged
communications were disclosed to the government and therefore
privilege as to those topics was waived. On the other hand,
the judge twice referred to American Honda's disclosure of
"information," and did not indicate that any specific
privileged documents had been disclosed. So the judge may
have found waiver because the substance of the communications
had already been revealed to the government by American
Honda. If the court's ruling embraced this latter theory, we
agree that a legal issue is raised, but do not agree that
such a theory constitutes legal error.2
To put the matter in context, we note that the documents
as to which waiver was found appear to be pages or portions
of pages setting forth information gathered by Lyon & Lyon at
the behest of American Honda from sources whose identity is
not revealed. The information consists importantly of
allegations or evidence as to payments made by Honda dealers
to Honda employees. The documents, prepared by Lyon & Lyon,
Cameron or others, reflect the communication of these
2In noting the ambiguity, we intend no criticism. The district judge's careful analysis, detailed order and document-by-document review--undertaken in the middle of a complex trial--were altogether admirable.
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allegations or evidence to Cameron or other executives of
American Honda.
It is fair to read the district court's order as a
finding that the same allegations or evidence were thereafter
disclosed by American Honda to government investigators. The
district court does not describe means of disclosure;
appellants' briefs shed no light upon the matter, but also do
not contest the finding that such a disclosure occurred. We
thus take the case as one in which American Honda received
factual information from its counsel, disclosed those facts
to the government, and now seeks to withhold the documents
that reflect the original communication of that information
to American Honda.
One might ask why there is any basis for a claim of
privilege in the first instance, since the privilege is
primarily designed to protect communications by the client to
the lawyer in order to procure legal advise. See VIII J.
Wigmore, Evidence 2320, at 628-29 (J. McNaughton, ed.
1961). Possibly some of the information was provided to the
law firm by American Honda employees. Or the district court
may have deemed the material privileged (aside from waiver)
because the lawyer's communications to the client are
secondarily protected as needed to prevent inferring what the
client said to the lawyer. Id.
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In all events, the question here is the effect of
American Honda's disclosure of this information to the
government. Wigmore tells us that "[j]udicial decision gives
no clear answer to th[e] question" of what constitutes "a
waiver by implication," and that only a few general instances
are well settled. Wigmore, supra 2327, at 635. For
example, a client's offer of his own testimony as to specific
facts does not waive the privilege as to his communications
with his attorney on the same subject, id. 2327, at 638;
but this rule protects testimony given by the client in
court, in order that the right to testify should not come at
the price of one's ability to consult privately with counsel.
Id. 2327, at 637. Admitting that "authority is scanty,"
McCormick cites a number of cases in which disclosures by the
client, other than those involving in-court testimony, have
been held to be a waiver. I McCormick on Evidence 93, at
377-48 (J. Strong ed., 4th ed. 1992).
Appellants respond that the privilege protects
"communications, not facts," Upjohn, 449 U.S. at 395, so that
American Honda cannot have waived the privilege as to the
notes or memoranda merely by revealing to the government the
allegations or evidence recorded in the notes or memoranda.
The distinction is useful in some circumstances--say, where a
party tries to refuse to testify about an automobile accident
on the ground that he gave his counsel a private description
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of the same accident. But, once again, the distinction
appears to have little to do with the present problem.
Here, the gist of the matter is that counsel informed
the client of detailed evidence and allegations concerning
possible bribes of its employees, and the client chose to
make this same information available to the government. What
is sought by the defense in the criminal trial is merely the
recordations by or for the client of this same information.
The information now having been disclosed by the client to
the government, it is unclear what damage to the attorney-
client privilege can occur from making the corresponding
portions of the file available. the district court carefully
limited the disclosures to the factual allegations, excluding
any commentary on their legal implications.
Indeed, American Honda's disclosure to the government of
the factual information received from its law firm not only
reveals that information, and American Honda's knowledge of
it, but makes an inquiry into the source and basis for the
information hard to avoid. A risk of unfairness is evident
where information is provided to one side in a case (here,
the United States) and then an inquiry into its origin is
shielded by a claim of privilege. In a variety of contexts,
the affirmative use of privileged information has been held
to be a waiver of privilege. See P. Rice, Attorney-Client
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Privilege in the United States 9.34, at 711, 938, 9.40
950, at 752-53 (1993) (collecting cases).
Given the disclosure to the government, the waiver label
is presumptively apt. Waiver doctrine has only a few hard-
edged rules; as to many permutations, it is a fluid body of
precedent reflecting a variety of concerns, including an
insistence on real confidentiality and limitations based on
fairness. See "Developments in the Law--Privileged
Communications," 98 Harv. L. Rev. 1450, 1629-32 (1985). In
this instance, confidentiality has largely been dissolved by
American Honda's own actions.
One argument not made by appellants is that, as a matter
of policy, private revelations to the government of possible
criminal conduct ought not waive the privilege as to third
parties. The concern, of course, is to encourage such
revelations. The general tendency of the law is to treat
waivers as an all-or-nothing proposition, e.g., ALI Model
Code of Evidence, Rule 231, comment (a) (1942); but there is
a trace of support for limited waivers in some cases
involving confidential disclosures to the government.
Diversified Industries, Inc. v. Meredith, 572 F.2d 606 (8th
Cir. 1977). See generally Rice, supra, 9.86-9.87 (collecting
and analyzing the cases).
On the other hand, it is a serious matter to withhold
from a defendant in a criminal case details that have already
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been made available to the government by a person claiming
the privilege. If there were ever an argument for limited
waiver, it might well depend importantly on just what had
been disclosed to the government and on what understandings.
Without intending to preclude such an argument in a future
case, we think that it is enough in this one to say that no
such claim of limited waiver has been argued to us.
This discussion also disposes of the alternative request
for mandamus. Mandamus is a discretionary writ available in
extraordinary circumstances to redress grievous error.
Garcia, 876 F.2d at 260. While it is not restricted to
errors of law, it does require that the error be manifest and
the burden of showing manifest error is upon the applicant
for the writ. No such legal error has been shown and, as to
the district court's fact-findings and applications of
settled rules to particular facts, it is enough to say that
we have found no manifest error.
Judgment has been previously entered. We direct that
this opinion be filed and transmitted to the district court
and the parties to the appeal. Each side shall bear its own
costs.
It is so ordered.
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