906 F.2d 1485 (10th Cir. 1990), 89-5199, In re Grand Jury Subpoenas

Docket Nº:89-5199.
Citation:906 F.2d 1485
Party Name:In re GRAND JURY SUBPOENAS. UNITED STATES of America, Plaintiff-Appellee, v. Scott M. ANDERSON, James G. Walker, John Echols, Tex McConathy, and Stanley Moore, Defendants-Appellants-Relators.
Case Date:July 02, 1990
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

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906 F.2d 1485 (10th Cir. 1990)


UNITED STATES of America, Plaintiff-Appellee,


Scott M. ANDERSON, James G. Walker, John Echols, Tex

McConathy, and Stanley Moore,


No. 89-5199.

United States Court of Appeals, Tenth Circuit

July 2, 1990

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[Copyrighted Material Omitted]

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        Bruce Anton, Dallas, Tex., for defendants-appellants-relators.

        John S. Morgan, Asst. U.S. Atty. (Tony M. Graham, U.S. Atty., with him on the brief), N.D. Okl., Tulsa, Okl., for plaintiff-appellee.

        D. Gregory Bledsoe and Laura E. Frossard, Tulsa, Okl., on the brief, for amicus curiae, American Civil Liberties Union of Oklahoma.

        Michael L. Bender, Denver, Colo., on the brief, for amicus curiae, Nat. Ass'n of Criminal Defense Lawyers.

        Before McKAY, SEYMOUR, and TACHA, Circuit Judges.

        McKAY, Circuit Judge.

        This case involves an emergency appeal by several attorneys who were held in contempt and placed in jail because they refused to reveal the source of payment of their fees incurred during their representation of four defendants on drug charges.

       I. Facts

        Beginning in approximately April of 1989 the grand jury in the Northern District of Oklahoma began investigating James Coltharp and the organization he controlled under a suspicion of connection with illegal drug activity. Mr. Coltharp allegedly employed a "crew" to assist him in his drug efforts. Relators represented four defendants, who were allegedly crew members in the Coltharp organization, on drug charges in the Eastern District of Oklahoma. The grand jury sought fee information from the relators under a suspicion that Mr. Coltharp may have paid the legal fees for his alleged crew members.

        On October 5, 1989, the grand jury issued subpoenas to the relators. The relators' clients had been convicted at trial and at least two of the relators had filed appeals for their clients. Each of the relators filed motions to quash the subpoenas which were finally denied on November 21, 1989. The trial court ordered the relators to appear and testify before the grand jury on December 5, 1989.

        On December 5, 1989, the relators appeared before the grand jury as the trial court had ordered. However, each relator refused to testify or to provide any of the documents requested in the subpoena. The trial court held each of the relators in contempt for their refusal to comply with the subpoenas and had them immediately incarcerated. Relators filed an emergency Motion to Stay Proceedings in this court. Later that same day we granted the stay and released each of the relators on their own recognizance.

        Our issuance of the stay allowed us to hear oral argument on the appeal of this case a few days thereafter. Relators now challenge the contempt holding on several grounds. Relators claim that the fee information sought by the grand jury is subject to the attorney-client privilege, infringes on the sixth amendment rights of their clients, and should not be disclosed because the government failed to make the necessary

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showing of need. In addition, relators claim that the trial court's proceedings leading up to the contempt holding violated their due process rights and that the trial court improperly denied bail pending appeal. We will consider each of these arguments in turn.

       II. Standard of Review

        We review the district court's findings of fact under the clearly erroneous standard. See Fed.R.Civ.P. 52(a); see also United States v. Recalde, 761 F.2d 1448, 1457 (10th Cir.1985). We review the district court's finding of contempt under an abuse of discretion standard.

Under the abuse of discretion standard, a trial court's decision will not be disturbed unless the appellate court has a definite and firm conviction that the lower court made a clear error of judgment or exceeded the bounds of permissible choice in the circumstances. When we apply the "abuse of discretion" standard, we defer to the trial court's judgment because of its first-hand ability to view the witness or evidence and assess credibility and probative value.

        United States v. Ortiz, 804 F.2d 1161, 1164 n. 2 (10th Cir.1986). However, in order to weigh the district court's exercise of its discretion, we must resolve several purely legal questions which we review de novo. Thus, we apply our own independent judgment to the legal questions raised by this appeal. See Ocelot Oil Corp. v. Sparrow Indus., 847 F.2d 1458, 1464 (10th Cir.1988).

       III. Attorney-Client Privilege

        It is well recognized in every circuit, including our own, that the identity of an attorney's client and the source of payment for legal fees are not normally protected by the attorney-client privilege. United States v. Hodgson, 492 F.2d 1175, 1177 (10th Cir.1974); In re Grand Jury Subpoenas, 803 F.2d 493, 496-98 (9th Cir.1986); In re Shargel, 742 F.2d 61, 62 (2d Cir.1984); In re Grand Jury Investigation, 723 F.2d 447, 451 (6th Cir.1983); 84 A.L.R.Fed. 852, 859 (1987). However, some circuit courts have created exceptions to this general rule for unique circumstances. The three major exceptions are known as the legal advice exception, the last link exception, and the confidential communication exception.

  1. Legal Advice Exception

            Several circuit courts have created an exception to the general rule that client identity and fee information are not protected by the attorney-client privilege where there is a strong probability that disclosure would implicate the client in the very criminal activity for which legal advice was sought. United States v. Strahl, 590 F.2d 10, 11-12 (1st Cir.1978), cert. denied, 440 U.S. 918, 99 S.Ct. 1237, 59 L.Ed.2d 468 (1979); In re Grand Jury Investigation, 631 F.2d 17, 19 (3d Cir.1980), cert. denied, 449 U.S. 1083, 101 S.Ct. 869, 66 L.Ed.2d 808 (1981), later questioned by, United States v. Liebman, 742 F.2d 807 (3d Cir.1984); In re Special Grand Jury No. 81-1, 676 F.2d 1005, 1009 (4th Cir.1982), vacated when target became a fugitive, 697 F.2d 112 (4th Cir.1982); In re Grand Jury Proceedings in Matter of Fine, 641 F.2d 199, 204 (5th Cir.1981); In re Grand Jury Investigation No. 83-2-35, 723 F.2d 447, 452 (6th Cir.1983), cert. denied, 467 U.S. 1246, 104 S.Ct. 3524, 82 L.Ed.2d 831 (1984); United States v. Hodge & Zweig, 548 F.2d 1347, 1353 (9th Cir.1977). Some of these holdings are now of questionable validity, although they have not been overruled. For example, the Ninth Circuit has more recently interpreted this exception to prohibit disclosure of the source of fees only when disclosure of the identity of the client would be in substance a disclosure of a confidential communication in the professional relationship between the client and the attorney. See In re Grand Jury Subpoenas, 803 F.2d 493, 497 (9th Cir.1986); In re Osterhoudt, 722 F.2d 591, 593 (9th Cir.1983).

            We need not decide whether this exception will be adopted in this circuit because it does not apply to this case. In order for the legal advice exception to apply, the person seeking the legal advice must be the client of the attorney involved. In this case, the record before us contains no evidence that relators have made a claim that

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    the person paying their fees was a client of any kind. At a minimum relators must assert that the fee was paid by a client.

            Relators must also assert that the client sought legal advice about the very activity for which the fee information is sought. For example, in Baird v. Koerner, 279 F.2d 623 (9th Cir.1960), the Ninth Circuit refused to require an attorney to divulge the identity of his client when that client had consulted him regarding improperly paid taxes, and the attorney had forwarded an anonymous check to the Internal Revenue Service. The IRS sought the name of the client to allow further review of the questionable tax returns. Identifying this client would have implicated the client in the very activity for which the client consulted the attorney--income tax problems. Id.

            The facts of this case dictate that we refuse to adopt the legal advice exception in this case for precisely the same reasons on which the Third Circuit relied in In re Grand Jury Investigation, 631 F.2d 17 (3d Cir.1980). "The fact of an attorney-client relationship between [attorney] and [client] has been freely admitted and no contention has been made that disclosure of the fee arrangement would further implicate [client] in the matter for which he consulted [attorney]. Furthermore, it has never been suggested that individuals who may have made payments on [client's] behalf were clients of [attorney]. Therefore, disclosure of the names of any third parties would not disrupt any other attorney-client relationship." Id. at 19.

  2. Last Link Exception

            Relators argue in this court, and in the district court, that this circuit should adopt the last link exception which has been adopted in at least two other circuits. The last link exception was largely formulated by the Fifth Circuit in two cases. See In re Grand Jury Proceedings, 680 F.2d 1026 (5th Cir.1982) ("Pavlick "), and In re Grand Jury Proceedings, 517 F.2d 666 (5th Cir.1975) ("Jones "). 1 Partially relying on the Baird case, the Jones court held that "information, not normally privileged, should also be protected when so much of the substance of the communications is already in the government's possession that additional disclosures would yield substantially probative links in an existing chain of inculpatory events or transactions." Jones, 517 F.2d at 674. This test was further refined in Pavlick in which the court stated that it "also recognized [in Jones ] a limited and narrow exception to the general rule, one that obtains...

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