445 F.3d 266 (3rd Cir. 2006), 06-1474, In re Grand Jury Investigation

Docket Nº:06-1474.
Citation:445 F.3d 266
Case Date:April 21, 2006
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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445 F.3d 266 (3rd Cir. 2006)


No. 06-1474.

United States Court of Appeals, Third Circuit.

April 21, 2006

Argued March 9, 2006.

On Appeal from the United States District Court for the Eastern District of Pennsylvania, (D.C. No. 03-gj-00123-07), District Judge: Hon. Legrome D. Davis

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William H. Lamb (Argued), Joel L. Frank, James C. Sargent, Jr., Susan C. Mangold, Scott R. Withers, Lamb McErlane PC, Attorneys for Appellant

Patrick L. Meehan, United States Attorney Robert A. Zauzmer, Assistant United States Attorney, Chief of Appeals John J.

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Pease III (Argued), Assistant United States Attorney, Attorneys for Appellee.

Before: SLOVITER, AMBRO and NYGAARD, Circuit Judges


SLOVITER, Circuit Judge.


This matter is before us in the context of an ongoing grand jury investigation of suspected federal criminal activity. To maintain the confidentiality of the investigation, we will refer only to such facts as have been made public by the Assistant U.S. Attorney. Indeed, this panel has not been made aware of the facts in the underlying investigation, nor need we be in order to decide the issues before us. Moreover, because the grand jury is impaneled for only a limited lifetime, we must act expeditiously and limit our analysis to the issues directly before us without digression.


In late 2003, a grand jury began investigating the financial arrangements and business dealings of the individual who we believe may be the Primary Target. Some of his business dealings have apparently been carried out by an entity we call, for want of a better designation, the Organization. The grand jury investigation led to inquiry of Jane Doe, the Executive Director of the Organization, who had, and has, intimate knowledge of and access to the papers and other material of both the Primary Target and the Organization. It appears that Jane Doe is also a target of the grand jury investigation. If she was not at the outset, she certainly has become a target in light of the events with which we are concerned. The Organization, through its counsel ("Attorney"), has entered into a joint-defense agreement with Jane Doe and her counsel in response to the investigation.

On April 27, 2004, the Government issued a grand jury subpoena to the Organization. It requested all documents, including email, from January 1, 1996 to the present, concerning, inter alia: the Organization's document retention and destruction policy; the payment of certain expenses, contributions, or donations to the Primary Target; and all grants, contributions, or donations to the Primary Target. Attorney produced a large number of documents on behalf of the Organization in response to the subpoena. These are not at issue here.

The Government was unsatisfied with the document production, particularly with respect to what it perceived as the Organization's failure to search for and produce email stored on the Organization's computer hard drives. On January 18, 2005, the Government issued a second subpoena to the Organization, requesting essentially the same documents as in its previous subpoena. In a letter dated January 19, 2005, the Government notified Attorney that it wished to have FBI and IRS experts perform a scan of the Organization's computers to recover stored information, including deleted email files.

On February 10, 2005, pursuant to an agreement among the parties, an FBI computer technician went to the Organization's place of business and "imaged" the hard drive on Jane Doe's computer. The Government thus made an exact copy of the contents of the hard drive, including deleted email files. It uncovered numerous stored messages which could be construed to show a conscious effort by the Organization's staff to destroy emails.

Concerned about the potential obstruction of justice by Jane Doe and others at

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the Organization, the Government issued a subpoena duces tecum to Attorney on March 1, 2005. It sought to compel grand jury testimony regarding his discussions with Jane Doe as to her compliance (or apparent non-3 compliance) with the prior subpoenas for production of the Organization's email. The Government also sought production of Attorney's notes concerning his conversation with Jane Doe regarding the Organization's compliance with the two grand jury subpoenas and the January 19, 2005, letter. On March 10, 2005, the Government issued a separate subpoena for production of documents to the custodian of records at Attorney's law firm.

The Government, Attorney and Jane Doe then sought to reach an agreement that would limit the scope of Attorney's testimony before the grand jury. The Government proposed that Attorney testify on five subjects: (1) that he represents the Organization in connection with the April 27, 2004, and January 18, 2005, subpoenas; (2) that he received the January 18, 2005, subpoena and January 19 letter from the Government; (3) that he informed Jane Doe by telephone on January 20, 2005, of his receipt of the January 18 subpoena; (4) that he faxed a cover letter to Jane Doe enclosing the cover letter and subpoena from the Government; and (5) that he advised Jane Doe on January 20 regarding how to comply with the subpoena. Jane Doe voiced no objection to subjects (1)--(4), but she challenged number (5), claiming that Attorney's advice regarding compliance with the subpoena is privileged.

On January 4, 2006, the Government filed a motion to enforce the subpoena and to compel Attorney's testimony. Attorney and Jane Doe were permitted to intervene with regard to the motion, and they filed a motion to quash or to modify the subpoena to the extent that it required disclosure of privileged information.

On January 17, 2006, the District Court held a closed-court hearing on the motions. The Government argued that the crime-fraud exception should overcome the claim of privilege. In support of its position, it submitted an ex parte affidavit from an FBI agent with knowledge of the evidence gathered in the investigation. The District Court also heard testimony from Attorney and from Jane Doe's Attorney (hereinafter "Doe's Attorney"). With the Government absent from the courtroom, the two Attorneys testified essentially to their recollection of the conversations with Jane Doe on January 20, 2005, after receipt of the second subpoena and the Government's cover letter.

The dispute before the District Court was limited to whether Attorney should be compelled to reveal the substance of his January 20, 2005, telephone conversation with Jane Doe and to produce his handwritten notes concerning that conversation. On February 1, 2006, the District Court granted the Government's motion to enforce its subpoena. The Court concluded that although Attorney's advice regarding the subpoena is protected by the attorney-client privilege, and his notes are covered by the work-product doctrine, disclosure was appropriate in light of the crime-fraud exception. Based on its review of the Government's ex parte affidavit, the District Court found sufficient evidence that Jane Doe was in the process of committing obstruction of justice at the time of her January 20 conversation with Attorney, and used the information provided by Attorney in furtherance of the crime.

The Government promptly scheduled Attorney's appearance before the grand jury. The District Court denied a stay pending appeal. Jane Doe timely appealed,

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and this court also denied a stay. On February 7, 2006, Attorney provided the requested documents and testified before the grand jury.


A. Mootness

The Government argues that this court cannot grant any effective relief to Jane Doe because Attorney has testified and the documents it requested have been produced. The appeal, the Government states, is moot and should be dismissed. It relies for support on Church of Scientology v. United States, in which the Supreme Court stated that federal courts are not empowered " 'to give opinions upon moot questions or abstract propositions, or to declare principles or rules of law which cannot affect the matter in issue in the case before [them].' " Church of Scientology v. United States, 506 U.S. 9, 12, 113 S.Ct. 447, 121 L.Ed.2d 313 (1992) (quoting Mills v. Green, 159 U.S. 651, 653, 16 S.Ct. 132, 40 L.Ed. 293 (1895)). The Court explained that if an event occurs during the pendency of an appeal which makes it impossible for the court to render the prevailing party "any effectual relief whatever," the appeal must be dismissed as moot. Id. (quotation marks and citation omitted).

The Court noted, however, that if there is some means by which the court can effectuate even a partial remedy, the case remains a live controversy. See id. at 13, 113 S.Ct. 447. Based on that language, Jane Doe responds to the Government's suggestion of mootness by arguing that she is not without a remedy because "the true harm, which is in the indictment, has not yet occurred." Appellant's Br. at 20. Jane Doe recognizes that the remedy she initially requested, i.e., the quashing of the subpoena directed to Attorney, is no longer available, but she posits a number of remedies that this court could grant. Therefore, she argues, this is not a case where, in the language of Scientology, it is impossible for us to grant her "any effectual relief whatever."

Turning first to the documents, Jane Doe argues that this court could direct the District Court to order the return of Attorney's notes of the conversation he had with Jane Doe on January 20, documents he turned over pursuant to the grand jury subpoenas. This was a remedy expressly recognized by the Supreme Court in Scientology. In that case, a district court ordered a state-court...

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