Feldberg, Matter of

Decision Date08 November 1988
Docket NumberNo. 88-2503,88-2503
Citation862 F.2d 622
Parties27 Fed. R. Evid. Serv. 178 In the Matter of Michael FELDBERG, a witness before the Special May 1987 Grand Jury. Appeal of Norby WALTERS and World Sports and Entertainment, Inc., Intervenors.
CourtU.S. Court of Appeals — Seventh Circuit

Elliot Silverman, Gold & Wachtel, New York City, for appellant.

Howard M. Pearl, Asst. U.S. Atty., Anton R. Valukas, U.S. Atty., Chicago, Ill., for appellee.

Before COFFEY, EASTERBROOK and KANNE, Circuit Judges.

EASTERBROOK, Circuit Judge.

A grand jury investigating agents who signed amateur athletes to undisclosed contracts issued a subpoena to World Sports and Entertainment in March 1987. The subpoena called for all contracts between World Sports and college football players. World Sports, as a corporation, had no privilege to resist disclosure. See Braswell v. United States, --- U.S. ----, 108 S.Ct. 2284, 101 L.Ed.2d 98 (1988). Norby Walters, the president of World Sports, engaged Michael Feldberg, a partner of Shea & Gould, to represent both of them. Feldberg came into possession of 51 contracts (just how is the principal issue today) and turned them over to the grand jury on behalf of World Sports. All of these contracts were dated after the expiration of the athletes' collegiate eligibility. The grand jury was not satisfied; after it made a further request, Feldberg produced another seven contracts. Six of these pertained to athletes who held themselves out as eligible to participate in the fall 1987 college football season. The contracts had been post-dated to make it appear that they had been signed after the players' college careers ended; the disclosures revealed that World Sports made a practice of surreptitiously contracting with "amateur" athletes. Such contracts terminated the players' amateur status and made them ineligible to compete; the contracts also exposed the players' colleges to the risk that contests in which they participated would be forfeited. The post-dating came to light only because these contracts had been produced in advance of the date they bore. After receiving the post-dated contracts, the grand jury indicted World Sports and Walters for mail fraud. One of the players involved, Cris Carter (now a wide receiver with the Philadelphia Eagles), has pleaded guilty to mail fraud and obstruction of justice. Sports Illustrated 113 (Sept. 26, 1988).

I

The grand jury wants to know why it did not receive the second set of contracts in response to the subpoena. The prosecutor believes that there may have been obstruction of justice. Although the United States Attorney does not suspect Feldberg of wrongdoing, the grand jury summoned him to testify about how he obtained the initial batch of contracts. Feldberg is the obvious source of information, because Walters, if summoned, doubtless would invoke his privilege against self-incrimination. Curcio v. United States, 354 U.S. 118, 77 S.Ct. 1145, 1 L.Ed.2d 1225 (1957).

The subpoena put Feldberg in an uncomfortable position, because he had served World Sports in two capacities. He was on the one hand its agent, a delivery boy in connection with the documents; he was simultaneously the firm's attorney and undoubtedly had supplied legal advice to Walters and World Sports with respect to their obligations under the March 1987 subpoena. File clerks may be required to testify about their search for documents, but lawyers ordinarily may not be required to testify about facts they learned in confidence in the course of rendering legal advice.

Feldberg answered many questions but asserted the attorney-client privilege in response to the ones of greatest interest to the grand jury--such as who searched the files, and how. The prosecutor asked the district court to compel Feldberg to answer. Walters and World Sports intervened to protect their interests. The district court instructed Feldberg to answer; Walters and World Sports immediately filed this appeal.

The parties disagree about the application of the privilege to eight questions.

1. Q. Did you conduct a search of the files for purposes of gathering the information responsive to this subpoena? A. No. Q. Did you direct someone else to do so? A. [Invocation of privilege.]

2. Q. This [list of 51 names] was to your understanding a ... complete list of the players who were under contract to either Walters or World Sports & Entertainment, Inc.? A.... [T]hat is correct. Q. How did you come to that understanding? A. [Invocation of privilege.]

3. [After Walters received the subpoena, he talked for 15 minutes with Feldberg.] Q. And to the best of your recollection, what was said? A. [Invocation of privilege.]

4. Q. Prior to contacting the U.S. Attorney's Office [and offering to supply the contracts in response to the subpoena], you said that you represented World Sports Entertainment and would handle compliance with subpoena that had been served. Did you have a conversation with anyone affiliated with World Sports Entertainment in which you told them that you were going to do that? A. [Invocation of privilege.]

5. Q. [I]t would be your intention to, at the instructions of your clients, not to answer any questions regarding conversations pertaining to the 51, or the contracts pertaining to the 51 athletes were produced on April 6, 1987, is that right? A. Those are my instructions from my former clients. [Shea & Gould ceased representing Walters and World Sports after mid-1987, which is not important for current purposes.]

6. Q. Did you tell [Walters and an associate] that you were going to convey these contracts to the Government, with the representation that they were all contracts called for by the subpoena? A. [Invocation of privilege.]

7. Q. [D]id you direct anyone to produce such a list [of contracts] for disclosure to the Government? A. [Invocation of privilege.]

8. Q. Did you have a conversation in which you asked someone to give those [51 contracts] to you for disclosure to the Government? A. [Invocation of privilege.]

The prosecutor made two arguments in the district court: first, that there was good reason to believe (a "prima facie case") that Walters or World Sports had committed a crime during the course of the legal representation, making the attorney-client privilege inapplicable (the "crime/fraud exception" to the privilege); second, that because Feldberg gathered the documents in order to turn them over, neither lawyer nor client could have had a reasonable expectation that their discussions would remain confidential.

The district court summarily rejected the first argument, stating without explanation that "no prima facie case of fraud or obstruction of justice has been made out". The court did not discuss the second argument. It ordered Feldberg to answer all of the questions on the basis of an argument the prosecutor had not made: that there is a distinction "between communications relating to the act of production on one hand and communications relating to the general subject matter of the grand jury investigation on the other. The pending questions which Feldberg has refused to answer appear to be of the former type, and they should be answered." In this court the prosecutor not only reasserts the two arguments that did not persuade the district court but also defends the ground that court advanced for its decision.

II

We start with the question whether there is reason to believe that a crime occurred. At the time the district court ruled, the grand jury had not decided whether to indict Walters and World Sports for substantive offenses. Learning how the search had been conducted might have helped the grand jury decide whether to continue its investigation in the hope that there might be more documents where the second set came from. After the district judge's decision, the grand jury returned an indictment. The prosecutor is not entitled to use the grand jury after the return of an indictment to obtain discovery in the criminal case. So unless there is some prospect of demonstrating obstruction of justice, there is no need for Feldberg's testimony, and the case is moot.

Although the district judge gave the back of his hand to the prosecutor's suggestion of fraud or obstruction of justice, it is not so easy to dismiss the possibility. World Sports was a small outfit. Although Walters had some aides, he held the firm's principal documents. Walters apparently kept the contracts in his office. Disclosing 51 innocent-seeming contracts, while retaining six highly suspicious ones, is not a common result of random errors, and the compact nature of World Sports' files makes it doubtful that one box was overlooked during a trudge through a mile-long warehouse. Cf. In re Grand Jury Subpoenas, 773 F.2d 204, 206-07 (8th Cir.1985) (omission of two out of 800 relevant documents does not raise suspicion of obstruction of justice). The missing documents reflected the active business of the corporation, so it should have turned to them first (and probably had them ready to hand). The subpoena unquestionably called for these contracts; a misunderstanding (or mistaken legal advice), though conceivable, is not likely. There may of course be an innocent explanation for the problem. Perhaps the folder of current contracts had been misplaced; perhaps a messenger mislaid them. We need not try to figure out whether an innocent explanation is more likely than a culpable one. "To drive the privilege away, there must be 'something to give colour to the charge;' there must be 'prima facie evidence that it has some foundation in fact.' When that evidence is supplied, the seal of secrecy is broken." Clark v. United States, 289 U.S. 1, 15, 53 S.Ct. 465, 469, 77 L.Ed. 993 (1933) (citations omitted). The charge of obstruction has a foundation in fact; the circumstances give color to the charge.

The language "prima facie evidence" has suggested to some courts enough to...

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