Grand Jury Proceedings--Gordon, In re

• Decision Date: 05 December 1983
• Docket Number: No. 83-3243,PROCEEDINGS--L,83-3243
• Citation: 722 F.2d 303
• Parties: 14 Fed. R. Evid. Serv. 510 In re GRAND JURYarry GORDON, WITNESS, John DOE, Intervenor-Appellant, v. UNITED STATES of America, Respondent-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 303

722 F.2d 303

14 Fed. R. Evid. Serv. 510

In re GRAND JURY PROCEEDINGS--Larry GORDON, WITNESS,

John DOE, Intervenor-Appellant, v. UNITED STATES of America, Respondent-Appellee.

No. 83-3243.

United States Court of Appeals,

Sixth Circuit.

Argued June 24, 1983.

Decided Dec. 5, 1983.

Arthur M. Schwartz, Denver, Colo., H. Louis Sirkin (argued), Cincinnati, Ohio, for intervenor-appellant.

David O. Bauer, U.S. Dept. of Justice, Cleveland, Ohio, William C. Bryson (argued), Washington, D.C., for respondent-appellee.

Before EDWARDS, and KRUPANSKY, Circuit Judges, and REED, District Judge ^*.

KRUPANSKY, Circuit Judge.

The intervenor-appellant, John Doe (Doe), appeals from an order of the District Court for the Northern District of Ohio which requires Larry S. Gordon (Gordon) to answer certain questions posed by a federal grand jury.

The factual background to this controversy is straightforward. For several years a grand jury sitting in the Northern District of Ohio has been conducting an investigation into possible violations of the Internal Revenue Code by Reuben Sturman (Sturman) and several alleged corporate facades under his control.

Despite continuous efforts, the grand jury has been frustrated in its attempts to secure documented information concerning the stock ownership and/or control of the corporations which are the subject of the grand jury investigation. On May 2, 1980, the grand jury issued a subpoena ad testificandum to Larry S. Gordon (Gordon), an attorney with the law firm of Berkman, Gordon, Kancelbaum & Levy. Gordon appeared on the scheduled date and testified. He identified 12 corporations incorporated by his law firm and also four others as clients of the firm. Gordon further testified that, at some period of time, the corporate record books and stock ledgers for these corporations were kept at his firm's offices. Finally, Gordon acknowledged that Sturman was a client of the firm who was represented by Gordon.

However, when confronted by certain inquiries designed to elicit information concerning the alleged de jure corporate status of the corporations here in issue, Gordon refused to answer, invoking the attorney-client privilege. Accordingly, on January 22, 1982, the government petitioned the district court to compel Gordon to:

1. identify the person or persons who requested each incorporation;

2. identify the person or persons who provided the law firm with information concerning the identity of the officers and shareholders of each corporation; and

3. identify the agent or representative the firm dealt with when legal matters arose concerning each of the named corporations;

4. identify the person or persons who requested and/or received custody of the records of each corporation from the law firm in January, 1978.

The government submitted an affidavit under seal in support of its motion.

Thereafter, Gordon requested that he be permitted to examine his grand jury testimony and the affidavit in support of the aforementioned motion that had been submitted by the government under seal. A motion to intervene was also filed by a "John Doe" asserting that he was the individual the government was attempting to identify through Gordon's interrogation.

On January 18, 1983 the lower court granted Gordon's request to examine his grand jury testimony but denied him access to the affidavit filed by the government in support of its motion to compel answers to the grand jury. The court deferred ruling on Doe's motion to intervene to enable Doe to demonstrate to the court that he was in fact Gordon's client and the target of the inquiries. On March 15, 1983, after reviewing, in camera, an affidavit from Doe, the lower court permitted him to intervene "on the basis of John Doe's claim of attorney-client privilege." Doe had also asserted a right to intervene based on the Fifth Amendment, but the lower court found the reliance "misplaced."

On March 29, 1983, the lower court granted the government's motion to compel Gordon to answer the four identity questions directed to him concluding that the answers would not constitute an invasion of the attorney-client privilege.

The intervenor appealed from this order, execution of which has been stayed by the lower court.

Initially, this Court is confronted with a jurisdictional issue. ¹ Generally, an order compelling testimony or denying a motion to quash a grand jury subpoena is not appealable. United States v. Ryan, 402 U.S. 530, 91 S.Ct. 1580, 29 L.Ed.2d 85 (1971); Cobbledick v. United States, 309 U.S. 323, 60 S.Ct. 540, 84 L.Ed. 783 (1940). A party seeking to contest the validity of the trial court's order must refuse compliance, thereby inviting a contempt citation which, when imposed, becomes an appealable order.

The Supreme Court has recognized an exception to this rule when the party seeking review has a more direct interest in preventing disclosure of the information sought by the grand jury than the individual to whom the subpoena was directed. Perlman v. United States, 247 U.S. 7, 38 S.Ct. 417, 62 L.Ed. 950 (1918). The rationale for the exception recognizes that the subpoenaed party, to avoid a contempt citation, may voluntarily comply with the subpoena thereby depriving the real party in interest of a protected right and appellate review.

Presently there is a conflict within the Circuits as to the application of the Perlman exception, where, as here, a client seeks immediate review of an order compelling testimony or documents from his attorney. The majority view recognizes the exception and permits immediate appellate review. See United States v. Jones, 696 F.2d 1069 (4th Cir.1982); In re Grand Jury Subpoenas Duces Tecum (Marger/Merenbach), 695 F.2d 363 (9th Cir.1982); In re Grand Jury Proceedings (Damore), 689 F.2d 1351 (11th Cir.1982); In re Grand Jury Proceedings (Fine), 641 F.2d 199 (5th Cir.1981); In re Grand Jury Proceedings (Malone), 655 F.2d 882 (8th Cir.1981); In re Katz, 623 F.2d 122 (2d Cir.1980); In re Grand Jury Proceedings (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). The D.C. and First Circuits have decided that the order is not immediately appealable. In re Sealed Case, 655 F.2d 1298 (D.C.Cir.1981); In re Oberkoetter, 612 F.2d 15 (1st Cir.1980).

In concluding that the order is not immediately appealable, the First Circuit stated that a "stout-hearted" attorney may risk a contempt citation in his client's interest. This premise is tenuous. As noted by the Fifth Circuit:

We suspect that the willingness of a lawyer to protect a client's privilege in the face of a contempt citation will vary greatly, and have a direct relationship to the value of the client's business and the power of the client in relation to the attorney. We are reluctant to pin the appealability of a district court order upon such precarious considerations.

* * *

* * *

Although we cannot say that attorneys in general are 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.

In re Grand Jury Proceedings (Fine), supra, at 202-03 (footnote omitted). ²

This Court adopts the above-quoted logic and joins the majority of other Circuits in applying the Perlman exception in those cases wherein a client seeks immediate appeal of an order compelling testimony from his attorney. Accordingly, the Court's appellate jurisdiction is properly invoked in the matter at bar. ³

Addressing the merits of the instant case, it is evident that the four interrogatories directed to Gordon merely seek the identity of his client. This Circuit has acknowledged the "unanimously embraced ... general rule that the identity of a client is ... not within the protective ambit of the attorney-client privilege." In re Grand Jury Investigation No. 83-2-35, at 723 F.2D 447, 451 (6th Cir.1983).

This Court, in In re Grand Jury Investigation No. 83-2-35, supra, has also recognized two exceptions to the general rule. The first exception, characterized as the "legal advice" exception, was defined by the Ninth Circuit in In re Grand Jury Subpoenas Duces Tecum (Marger/Merenbach), supra at 365:

A significant exception to this principle of non-confidentiality holds that [the identity] may be privileged when the person invoking the privilege is able to show that a strong possibility exists that disclosure of [his identity] would implicate the client in the very matter for which legal advice was sought in the first case.

In the case at bar, the district court concluded that the "legal advice" exception was inapplicable to this case. This Court concurs. The record, including the in camera affidavit of Doe, discloses that Doe sought legal assistance to incorporate several companies. There is no criminal implication arising from Doe having directed an attorney to incorporate a number of business enterprises. Accordingly, the legal advice exception is unavailing to Doe.

The second exception recognized in In re Grand Jury Investigation No. 83-2-35, is applicable "where disclosure of the identity would be tantamount to revealing an otherwise confidential communication." In re Grand Jury Investigation No. 83-2-35, supra at 453. As pronounced by the Fourth Circuit:

The privilege may be recognized where so much of the actual communication has already been disclosed that identification of the client amounts to disclosure of a confidential communication.

NLRB v. Harvey, 349 F.2d 900, 905 (4th Cir.1965).

In considering the applicability of the second exception, the Court addresses each of the four inquiries...