Admiral Ins. Co. v. U.S. Dist. Court for Dist. of Arizona
| Citation | 881 F.2d 1486 |
| Decision Date | 21 November 1988 |
| Docket Number | No. 88-7345,88-7345 |
| Parties | , Fed. Sec. L. Rep. P 94,545, 14 Fed.R.Serv.3d 562, RICO Bus.Disp.Guide 7289, 28 Fed. R. Evid. Serv. 593 ADMIRAL INSURANCE COMPANY, a Delaware Corporation, Petitioner, v. UNITED STATES DISTRICT COURT for the DISTRICT OF ARIZONA, Respondent, and King Ranch Properties Limited Partnership, an Arizona Limited Partnership, et al., Real Parties in Interest. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
Wm. S. Hawgood, II, Dan M. Durrant, Marcia Horn Yavitz, Streich, Lang, Weeks & Cardon, P.A., Phoenix, Ariz., for petitioner Admiral Ins. Co., a Delaware corp.
Anthony P. Coles, pro hac vice, Slade & Pellman, New York City, and Allan J. Kasen, Sacks, Tierney, Kasen & Kerrick, P.A., Phoenix, Ariz., for real parties in interest Kredietbank, N.V.
John D. Everroad, Jerome B. Shultz, Timothy Berg, Fennemore Craig, Phoenix, Ariz., for real parties in interest, U S West Financial Services, Inc.
Charles L. Chester, Kevin Fallon McCarthy, Ryley, Carlock & Applewhite, Phoenix, Ariz., for real parties in interest, King Ranch Properties Ltd. Partnership, James L. King and Esther Z. King, husband and wife, Gwendolyn King Thompson, Rosemary Harbushka, James L. King, Jr., James L. King and Esther Z. King, as Trustees of the Amended and Restated Declaration and Agreement of Trust dated August 20, 1989 (originally executed June 30, 1972), as amended, Bert and Ann Ferganchick.
Petition for Writ of Mandamus to United States District Court for the District of Arizona.
Before BROWNING, FARRIS and REINHARDT, Circuit Judges.
Admiral Insurance Company petitions this court for a writ of mandamus directing the district court to vacate its order compelling production of statements obtained by Admiral's counsel in anticipation of a securities fraud action. Petitioner contends that these statements are protected from discovery by the attorney-client privilege. The district court ordered the statements produced upon plaintiffs' assertion that the information sought was otherwise unavailable because the witnesses planned to invoke the fifth amendment privilege against self-incrimination at their depositions.
Because the district court's order raises a significant issue of first impression concerning the proper scope of the attorney-client privilege in the corporate context, and the petitioner lacks an alternative avenue for relief, mandamus is an appropriate remedy. We conclude that there is no unavailability exception to the attorney-client privilege. Accordingly, the petition is granted and the district court shall vacate the order compelling production of these statements. 1
During the 1980s, the JNC Companies 2 (JNC) established numerous real estate limited partnerships in which limited partners invested by executing notes in favor of JNC. Admiral Insurance Company (Admiral) guaranteed payment of the notes by issuing bonds to the JNC partnerships. JNC then borrowed money from various lenders and assigned the investor notes to the lenders as collateral.
In June 1987, in anticipation of possible litigation regarding Admiral's transactions with JNC, Admiral retained the Phoenix law firm of Streich, Lang, Weeks and Cardon (Streich, Lang). In July, 1987, lenders and investors involved with the JNC partnerships filed suit in Arizona federal district court against Admiral and others Counsel interviewed Kinney and Gardner separately on July 7, 8, and 9, 1987. At the beginning of each interview, counsel advised the interviewee that Admiral had retained Streich, Lang to investigate the circumstances of Admiral's relationship with JNC in order to render legal advice to Admiral regarding its potential interests and liabilities arising from the JNC transactions; that Streich, Lang's client was Admiral and not the interviewees personally; that Admiral intended to claim for itself the attorney-client privilege and work-product protection with respect to the interviews; that the officers were being interviewed because they were the Admiral employees who knew the most about Admiral's transactions with JNC; and that Kinney and Gardner were to treat the interviews as confidential communications. Kinney resigned from Admiral on July 8, 1987, after completion of his interview. On July 14, 1987, Gardner resigned.
alleging federal and state securities fraud, civil RICO and common law violations. Admiral's senior management directed Streich, Lang to interview the two Admiral officers who were the most knowledgeable about the JNC transactions: Edward B. Kinney, a vice-president, and Robert Gardner, an assistant secretary. A stenographer was engaged to transcribe the interviews.
During the course of discovery, plaintiffs in the securities fraud action scheduled Kinney and Gardner for deposition. Both former officers informed plaintiffs that they would invoke the fifth amendment privilege against self-incrimination at deposition. In response, plaintiffs sought production of the statements given by Kinney and Gardner to Admiral's counsel. Streich, Lang moved to quash a subpoena duces tecum served upon it for production of the statements. Plaintiffs opposed the motion on grounds that their inability to obtain the information from another source rendered the statements discoverable. On June 22, 1988, the district court denied the motion to quash, holding that "under the unique circumstances of [this] case, if Mr. Kinney and Mr. Gardner refuse to answer questions when deposed, then the statements must be produced by Admiral." 3
Admiral then petitioned this court for a writ of mandamus and moved for an emergency stay pending disposition of the writ. This court entered a temporary stay and ordered the real parties in interest, plaintiffs below, to file a response to the petition. Upon due consideration, the court dismissed the petition as premature, concluding that the case was not ripe for review because Kinney and Gardner had not appeared at deposition and actually refused to testify.
The plaintiffs then requested that the district court fashion a procedure to circumvent the need for Kinney and Gardner to appear at deposition as a precondition for compelling production of the statements. The district court ruled that, if counsel for Kinney and Gardner submitted letters indicating that the witnesses intended to invoke the fifth amendment at deposition, the depositions need not go forward and the order compelling production of the statements would become effective. Gardner's attorney submitted such a letter accompanied by Gardner's signed verification. No letter was submitted on behalf of Kinney.
Admiral then renewed its petition for a writ of mandamus and request for an emergency stay. We entered a stay and ordered a further response to the petition.
We exercise jurisdiction pursuant to the All Writs Act, 28 U.S.C. Sec. 1651. Preliminarily, we must determine whether review of this matter is premature because the district court failed to require the witnesses to appear at deposition and to make a particularized showing of entitlement to the fifth amendment privilege 4 and because As to Admiral's claims with respect to the statement given by Kinney, the situation remains unchanged since the court's previous consideration of this matter. Kinney's attorney has not submitted a letter under the procedures fashioned by the district court indicating his client's intent to invoke the fifth amendment if deposed. Accordingly, Admiral's petition with respect to Kinney's statement is premature and must be dismissed.
it failed to determine that the information plaintiffs seek in fact is unavailable from a source other than the statements Admiral claims are privileged. 5
However, all preconditions for imposition of the district court's order requiring production of Gardner's statement--that is, the submission of a letter from his counsel indicating Gardner's intention to invoke the fifth amendment if deposed--have been met. Thus, the order compelling Admiral to produce Gardner's statement is now effective. If Admiral is required to produce a privileged statement, it will suffer immediate, irreparable harm. We therefore find the privilege issue ripe for review. See generally Thomas v. Union Carbide, 473 U.S. 568, 580, 105 S.Ct. 3325, 3332, 87 L.Ed.2d 409 (1985) (). See also 13A C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure Sec. 3532 (1984).
Nonetheless, in reaching the privilege issue, we do not condone the approach adopted by the district court. Specifically, we do not approve of the district court's willingness to excuse Gardner from appearing at deposition or the assumption that Gardner could and would make a showing of entitlement to the fifth amendment privilege when asked specific questions. We also do not presume, as did the district court, that the information sought by plaintiffs is unavailable from a source other than Gardner's statement. Because we hold, however, that Gardner's statement to Admiral's counsel is protected unequivocally by the attorney-client privilege, it is not necessary to consider these issues.
In view of the strong policy against piecemeal appeals, interlocutory review of discovery orders is highly disfavored. United States v. Nixon, 418 U.S. 683, 690-91, 94 S.Ct. 3090, 3098-99, 41 L.Ed.2d 1039 (1974); Newton v. National Broadcasting Co., 726 F.2d 591, 592 (9th Cir.1984). Discovery orders are not final appealable orders under 28 U.S.C. Sec. 1291, and courts have refused interlocutory review of such orders under the collateral order doctrine. See Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 377, 101 S.Ct. 669, 675, ...
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