Federal Grand Jury Proceedings, 89-10 (MIA), In re

• Decision Date: 23 August 1991
• Docket Number: Nos. 91-5258,91-5281,s. 91-5258
• Citation: 938 F.2d 1578
• Parties: , 33 Fed. R. Evid. Serv. 1524 In re FEDERAL GRAND JURY PROCEEDINGS 89-10 (MIA).
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1578

938 F.2d 1578

60 USLW 2190, 33 Fed. R. Evid. Serv. 1524

In re FEDERAL GRAND JURY PROCEEDINGS 89-10 (MIA).

Nos. 91-5258, 91-5281.

United States Court of Appeals Eleventh Circuit.

Aug. 23, 1991.

Aubrey B. Harwell, Jr., Neal & Harwell, James G. Thomas, Delta Anne Davis, Nashville, Tenn., for appellant.

Allan J. Sullivan, Asst. U.S. Atty., Linda Collins Hertz, Harriett R. Galvin, Lynne W. Lamprecht, Miami, Fla., for appellee.

Appeals from the United States District Court for the Southern District of Florida.

Before ANDERSON and DUBINA, Circuit Judges, and ESCHBACH ^*, Senior Circuit Judge.

ANDERSON, Circuit Judge:

In these consolidated cases, Intervenor-Appellant ("Appellant") appeals from two orders of the district court permitting certain grand jury inquiry into his financial activities. ¹ In Case No. 91-5258, Appellant appeals from the district court's order granting the government's motion to compel testimony from his former attorney ("Attorney") and two other witnesses. In Case No. 91-5281, Appellant appeals from the district court's refusal to grant his motion to protect certain memoranda from disclosure pursuant to a grand jury subpoena. ²

FACTS

Appellant is the former chief executive officer and chairman of the board of a federally insured savings and loan association ("Bank"). The Resolution Trust Corporation ("RTC") took control of Bank in late 1989. The government subsequently initiated a grand jury investigation of Appellant's activities in connection with Bank. The grand jury focused its investigation on certain financial transactions effected by Appellant between October 29, 1990, and November 6, 1990, particularly whether any of these transactions violated an administrative cease and desist order issued by the Office of Thrift Supervision ("OTS"). The OTS's order forbade Appellant from transferring funds in excess of $5,000 out of the country.

The grand jury sought to obtain information regarding these financial transactions through the testimony of Attorney, another member of Attorney's law firm, and a law firm employee. The grand jury also sought access to certain communications in the form of memoranda between Appellant and Attorney and between Attorney and other lawyers. Attorney and his law firm had represented Appellant in connection with other matters involving Bank. Appellant directed the witnesses to assert the attorney-client privilege in response to questions or document requests calling for the disclosure of arguably privileged communications. After Attorney and the other witnesses complied with Appellant's instructions, the government filed motions to compel the testimony and document production.

PRIOR PROCEEDINGS

The district court, after conducting the requisite in camera review of materials submitted ex parte by Appellant and the government, issued two orders requiring the testimony and document production before the grand jury. Appellant sought emergency stays of both orders in the district court and in this court. In Case No. 91-5258, Appellant sought an emergency stay of the district court's March 25, 1991 order compelling the testimony. Both the district court and this court denied Appellant's application for an emergency stay. In the absence of a stay, the witnesses proceeded to testify before the grand jury. Appellant now suggests that Case No. 91-5258 is moot as a result of the witnesses' compliance with the district court's order.

Appellant's application for an emergency stay of the district court's April 5, 1991 order compelling the production of documents before the grand jury, Case No. 91-5281, eventually was granted by this court on motion for rehearing. This case involves 11 documents identified by Attorney's counsel as responsive to the grand jury subpoena duces tecum. These documents, submitted to this court in camera, are the memoranda exchanged between Appellant and Attorney and between Attorney and other lawyers. The district court declined to protect these documents from disclosure, except for the first paragraph of "Exhibit 3."

DISCUSSION

A. Case No. 91-5258: The Grand Jury Testimony

Appellant suggests that this case is moot because Attorney and others testified before the grand jury after this court denied an emergency stay pending appeal. The government disagrees, arguing that this case falls within the "capable of repetition yet evading review" exception to mootness, see Weinstein v. Bradford, 423 U.S. 147, 148-49, 96 S.Ct. 347, 348, 46 L.Ed.2d 350 (1975), because the issue of whether this testimony consists of privileged attorney-client communications may recur in a future trial or other proceeding. We reject the government's argument, ³ and we hold that this case is moot.

In United States v. First Am. Bank, 649 F.2d 288 (5th Cir. Unit B 1981), ⁴ the court was faced with an analogous situation. Before the appellate court had a chance to rule on the merits of the bank's resistance to an IRS summons requesting bank records, the IRS obtained the records. Adopting the reasoning from a line of cases beginning with Lawhon v. United States, 390 F.2d 663 (5th Cir.1968), the former Fifth Circuit rejected the argument that the case was not moot because the issue of the summons' validity might recur at a possible future criminal or civil trial. First Am. Bank, 649 F.2d at 289. Quoting from Lawhon, 390 F.2d at 663, the First Am. Bank court stated:

This motion [for reconsideration], in effect, seeks to have this court give an advisory opinion as to the admissibility in evidence of the records or their product in the event of a subsequent criminal trial. Such event may not occur. This court passes no judgment on the question whether, if the mooted records are used in a subsequent prosecution of the taxpayers, if there be one, their introduction would be forbidden as violating the constitutional rights of the defendants.

First Am. Bank, 649 F.2d at 289. See also In re Grand Jury Proceedings (Rabin), 904 F.2d 1498 (11th Cir.1990) (en banc) (case dismissed as moot after witness complied with identical grand jury subpoena); In re Grand Jury Proceedings (Klayman), 760 F.2d 1490, 1491-92 (9th Cir.1985) (fact that attorney-client privilege issue would come up again at trial did not make issue "capable of repetition yet evading review" because issue was "not likely to escape review" and to hold otherwise would be "in total disregard of Article III").

In light of this precedent, we hold that Case No. 91-5258 is moot. Accordingly we vacate the judgment of the district court and remand with instructions to dismiss the case as moot.

B. Case No. 91-5281: The Document Production

Because we granted a stay in Case No. 91-5281, the memoranda, which have been submitted to this court in camera, have not been disclosed to the government. Thus, unlike Case No. 91-5258, this case presents issues appropriate for resolution on the merits. As mentioned above, except for the first paragraph of Exhibit 3, the district court declined to shield the memoranda from the grand jury subpoena. With respect to the rest of Exhibit 3 and the remaining documents, the district court ruled that they are not privileged communications either because they are within the crime-fraud exception to the attorney-client privilege, or because they "do not represent legal advice, legal opinions, or formulations of legal strategy protectible [sic] under the attorney-client or work product privileges." The district court reasoned that the crime-fraud exception applies because the memoranda merely memorialize communications that are themselves not privileged under the crime-fraud exception. After carefully reviewing the documents submitted in camera, however, we cannot agree with the district court's rationale or conclusion.

The attorney-client privilege protects communications between attorney and client from disclosure where:

(1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is [the] member of a bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.

In re Grand Jury Proceedings (Jones), 517 F.2d 666, 670 (5th Cir.1975) (quoting United States v. United Shoe Machinery Corp., 89 F.Supp. 357, 358-59 (D.Mass.1950)). See also 4 J. Moore, Moore's Federal Practice Sec. 26.60, at 26-193 (1989).

However, "[t]he attorney-client privilege does not protect communications made in furtherance of a crime or fraud." In re Grand Jury Investigation (Schroeder), 842 F.2d 1223, 1226 (11th Cir.1987). A determination of whether the crime-fraud exception applies involves application of a two part test:

First, there must be a prima facie showing that the client was engaged in criminal or fraudulent conduct when he sought the advice of counsel, that he was planning such conduct when he sought the advice of counsel, or that he committed a crime or fraud subsequent to receiving the benefit of counsel's advice. Second, there must be a showing that the attorney's assistance was obtained in furtherance of the criminal or fraudulent activity or was closely related to it.

Id. ⁵ Furthermore, as the government concedes, the crime-fraud exception does not operate to remove communications concerning past or completed crimes or frauds from the attorney-client privilege. See In re Sealed Case, 754 F.2d 395, 402 (D.C.Cir.1985); In re Grand Jury Subpoena Duces Tecum (Marc Rich & Co.), 731 F.2d 1032, 1041-42 (2d Cir.1984); United States v. Dyer, 722 F.2d 174, 177 (5th Cir.1983); Garner v. Wolfinbarger, ...