Grand Jury Subpoenas Dated Dec. 10, 1987, In re

• Decision Date: 10 December 1987
• Citation: 926 F.2d 847
• Parties: In re GRAND JURY SUBPOENAS DATED
• Court: U.S. Court of Appeals — Ninth Circuit

Page 847

926 F.2d 847

109 A.L.R.Fed. 541

In re GRAND JURY SUBPOENAS DATED DECEMBER 10, 1987.

DOES I THROUGH IV, Appellants, v. UNITED STATES of America, Appellee.

Nos. 88-15193, 88-15268 to 88-15270.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 9, 1990.

Decided Feb. 15, 1991.

John M. Bray and Joseph M. Jones, Schwalb, Donnenfeld, Bray & Silbert, Washington, D.C., for appellant, Doe II.

Ronald J. Yengich and G. Fred Metos, Yengich, Rich, Xaiz & Metos, Salt Lake City, Utah, for appellant, Doe III.

James A. Boevers and Samuel Alba, Prince, Yeates & Geldzahler, Salt Lake City, Utah, for appellant, Doe IV.

Sanford Svetcov, Chief, Appellate Div., Matthew B. Pavone, Asst. U.S. Atty., Organized Crime Drug Enforcement Task Force, San Francisco, Cal., for appellee.

Appeal from the United States District Court for the Northern District of California.

Before CHAMBERS, ALARCON and BRUNETTI, Circuit Judges.

ALARCON, Circuit Judge:

Doe Two, Doe Three, and Doe Four appeal from the district court's partial denial of their motions to quash grand jury subpoenas and for the return of property seized, pursuant to Fed.R.Crim.P. 41(e). We affirm.

FACTUAL AND PROCEDURAL HISTORY

On December 11, 1987, as part of a grand jury investigation into money laundering and drug trafficking, federal agents sought warrants to search two offices of the Doe Four law firm, a firm in the western part of the United States. ¹ The affidavit in support of the search warrants asserted the following facts.

In the summer of 1983, William Isted told Doe One that there were ways to launder money through foreign corporations. Thereafter, Doe One and Isted set up at least one corporation in the principality of Liechtenstein to launder drug money. Isted smuggled $100,000 out of the United States, which was put into the Liechtenstein corporation's accounts. In April, 1985, Isted was arrested at the airport in Vancouver, Canada. He had in his possession $200,000 in cash and documents pertaining to the Liechtenstein corporation. These documents showed that Doe One was involved in the corporation. Isted's luggage contained a letter directed to the attention of Doe Two at the Doe Four law firm involving several other corporations, and an envelope with the name "Doe Two" handwritten on the outside which contained documents regarding these corporations.

The Government searched Doe One's business office, home, bank safety deposit box, storage locker, ranch, and estranged wife's home. These searches revealed drug residue in several places, a drug laboratory at the ranch, and documents indicating that Doe One was involved in drug smuggling.

In January, 1986, Doe One pleaded guilty to currency law violations. In May, 1986, he was indicted for distribution of, and conspiracy to distribute, cocaine.

The Government persuaded Doe One's wife to cooperate in the investigation. She contacted Doe Two several times, seeking information about certain of Doe One's companies. Government agents monitored these calls. Doe One's wife also told the Government that Doe One had met with Doe Two several times to discuss Doe One's money laundering plans and that Doe Two assisted Doe One in setting up dummy corporations to be used in the money laundering.

Phone calls to the Doe Four law firm revealed that Doe Two split his time between two offices of the firm located in separate cities. Doe Two spent up to 40% of his time each week at the firm's satellite office.

Based on this affidavit the court issued warrants to search Doe Two's files in both of Doe Four's offices. The federal agents served the warrants that afternoon. The officers also served forthwith grand jury subpoenas on Doe Four. The warrants and subpoenas sought the same objects: documents containing references to Doe One or any of twenty-one other individuals or business entities which the Government suspected of being involved in the money laundering scheme. The subpoenas required production of the documents from any area in Doe Four's offices outside of Doe Two's files.

At the main office, the federal agents were met by firm attorneys who objected to the execution of the search warrant. As a result of negotiations with the United States Attorney, the firm designated the areas which fell within the warrant. Law firm personnel were allowed to identify the relevant documents and place them in a sealed package, without examination by the agents.

At the satellite location, the federal agents searched Doe Two's office and related work areas. They seized files marked with the names listed in the warrant, but did not read the documents. These documents were subsequently filed, under seal, with the district court.

As to the subpoenas, the firm agreed to segregate all documents described by the warrants and subpoenas which were outside of Doe Two's files and to provide Does One to Four moved the district court to quash the subpoenas. They simultaneously moved for return of the seized documents pursuant to Rule 41(e) of the Federal Rules of Criminal Procedure. These motions were heard April 15, 1988.

copies of them, under seal, to the district court. The time for compliance was eventually extended to January 7, 1988.

The district court found that there was no probable cause to support the issuance of the warrants or to authorize the search of the private papers of Doe Three and eight other individuals or entities named in the warrants and subpoenas. The court found that the subpoenas were overbroad to the same extent, except in regard to Doe Three and his companies, or any documents which also referred to Doe Two. All documents pertaining to those entities for which the court found there was no probable cause to search and no relevancy to the grand jury investigation were returned to Doe Four. The Government has not appealed from that portion of the district court's order.

With respect to the remaining documents, the district court found that there was probable cause to support the warrants and that the subpoenas were not overbroad. The court limited the subpoenas with respect to the documents that could be obtained in reference to Doe Three to certain time periods. The court also found, after an in camera review of the remaining documents, that they were not covered by the attorney-client privilege or the work product doctrine or were admissible under the crime/fraud exception.

Does One to Four appealed from the district court's partial denial of their motions. Doe One has withdrawn his appeal.

DISCUSSION

Appellants advance five arguments in support of their contention that the district court erred in partially denying their motions to quash the grand jury subpoenas and for the return of property seized. They argue that:

One. The original warrants were not supported by probable cause, they were overbroad, and they lacked particularity;

Two. The subpoenas are overbroad, lacking in particularity, irrelevant, and an invalid contrivance to protect an illegal search;

Three. The documents sought are protected by the attorney-client privilege or the work-product doctrine;

Four. The Government failed to make a prima facie showing, independent of the documents themselves, that otherwise protected documents fell within the crime/fraud exception to the attorney-client privilege and work product doctrines;

Five. The affidavit upon which the district court based its findings of probable cause and that the crime/fraud exception applied should be stricken because it was tainted by surreptitious invasions of the marital and attorney-client privileges.

We conclude that none of these contentions is meritorious and affirm.

A. The Motion to Quash the Subpoena

The district court ruled that the search warrants were overbroad as applied to Doe Three. The Government has not appealed from that ruling. The court ruled, however, that the subpoenas were valid as applied to Doe Three. Doe Three is, thus, the only party before us whose documents were surrendered to the court pursuant to the subpoenas.

Doe Two joined Doe Four's motion to quash the subpoenas. The subpoenas do not seek documents pertaining to Doe Two. Neither are the subpoenas directed to him. Thus, he lacks standing to challenge the subpoenas. United States v. Miller, 425 U.S. 435, 444, 96 S.Ct. 1619, 1624, 48 L.Ed.2d 71 (1976) (third party lacks standing to challenge subpoena even if a criminal prosecution is planned against the third party).

1. Jurisdiction

Ordinarily, the denial of a motion to quash a subpoena duces tecum is an interlocutory decree. Cobbledick v. United States, 309 U.S. 323, 60 S.Ct. 540, 84 L.Ed. 783 (1940). This court has no jurisdiction over an appeal from such an order. Id. To obtain appellate review, the person resisting the subpoena must first refuse to comply and be held in contempt. United States v. Ryan, 402 U.S. 530, 532, 91 S.Ct. 1580, 1581, 29 L.Ed.2d 85 (1971). He can then challenge the validity of the subpoena by seeking appellate review of the contempt order. Id. The Government argues that we have no jurisdiction over this appeal because Doe Four complied with the subpoena and the denial of the motion to quash was, thus, an interlocutory decree.

There is a well recognized exception to the rule precluding an appeal from a denial of a motion to quash a subpoena duces tecum when the subpoena is directed to a third party. Perlman v. United States, 247 U.S. 7, 13, 38 S.Ct. 417, 420, 62 L.Ed. 950 (1918). A third party cannot be expected to risk contempt in order to protect the interests of the person whose papers were seized. In re Grand Jury Subpoena Served Upon Niren, 784 F.2d 939, 941 (9th Cir.1986). In such circumstances, the target of the investigation may move to quash the subpoena. The denial of the motion is immediately appealable by the target of the investigation. In re Grand Jury Subpoenas Duces Tecum (Lahodny), 695 F.2d 363, 365 (9th Cir.1982).

This exception is more difficult to apply when...