Special Grand Jury No. 81-1, In re

• Decision Date: 23 April 1982
• Docket Number: No. 81-2187,81-2187
• Citation: 676 F.2d 1005
• Parties: 10 Fed. R. Evid. Serv. 1173 In Re SPECIAL GRAND JURY NO. 81-1 (Leon D. Harvey).
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1005

676 F.2d 1005

10 Fed. R. Evid. Serv. 1173

In Re SPECIAL GRAND JURY NO. 81-1 (Leon D. Harvey).

No. 81-2187.

United States Court of Appeals, Fourth Circuit.

Argued Jan. 5, 1981.

Decided April 23, 1982.

William Moffitt, Arlington, Va., for appellant.

William Otis, Asst. U. S. Atty., Alexandria, Va., for appellee.

Before MURNAGHAN, SPROUSE and ERVIN, Circuit Judges.

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 product ² 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-and 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 who 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 case. 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 has 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...