Grand Jury Investigation No. 83-2-35, In re

• Decision Date: 02 March 1935
• Citation: 723 F.2d 447
• Parties: 14 Fed. R. Evid. Serv. 1681 In re GRAND JURY INVESTIGATION NO. 8
• Court: U.S. Court of Appeals — Sixth Circuit

Page 447

723 F.2d 447

14 Fed. R. Evid. Serv. 1681

In re GRAND JURY INVESTIGATION NO. 83-2-35.

No. 83-1290.

United States Court of Appeals Sixth Circuit.

Argued June 23, 1983.

Decided Dec. 7, 1983.

Richard Durant, Detroit, Mich., for appellant.

Leonard R. Gilman, U.S. Atty., Detroit, Mich., F. William Soisson, Asst. U.S. Atty., for appellee.

Before ENGEL and KRUPANSKY, Circuit Judges, and CELEBREZZE, Senior Circuit Judge.

KRUPANSKY, Circuit Judge.

Attorney Richard Durant (Durant) appeals a finding of contempt for failure to disclose to the grand jury upon order of court the identity of his client. On March 1, 1983, Special Agent Edwards (Edwards), of the Federal Bureau of Investigation (FBI), visited Durant's office and explained that the FBI was investigating the theft of numerous checks made payable to International Business Machines, Inc. (IBM). He advised that a number of the stolen checks had been traced and deposited into various banking accounts under names of non-existent organizations, at least one of which included the initials "IBM". Edwards produced a photostatic copy of a check drawn upon one of these ficticious accounts which check was made payable to Durant's law firm. Upon FBI inquiry, Durant conceded that this check for $15,000 had been received and endorsed by his firm for services rendered to a client in two cases, one of which was "finished" and the other of which was "open". Durant refused to disclose the identity of his client to whose credit the proceeds had been applied, asserting the attorney-client privilege.

Durant was subpoenaed to appear before the grand jury the following day, March 2, 1983, where he again refused to identify his client, asserting the attorney-client privilege. The government immediately moved the United States District Court for the Eastern District of Michigan for an Order requiring Durant to provide the requested information. At a hearing that same afternoon, Durant informed the court that disclosure of his client's identity could incriminate that client in criminal activity so as to justify invoking the attorney-client privilege. Citing to the court: In re Grand Jury Appearance (Michaelson), 511 F.2d 882 (9th Cir.), cert. denied, 421 U.S. 978, 95 S.Ct. 1979, 44 L.Ed.2d 469 (1975); Baird v. Koerner, 279 F.2d 623 (9th Cir.1960). Durant additionally stated that "I do not know any of the facts about this theft or anything else", and suggested that the requested information should be obtained through other methods. ¹ The court adjudged that the privilege did not attach and ordered Durant to identify his client. Upon refusal to comply with this Order, Durant was held in contempt. Further proceedings (e.g. bond) were stayed until March 16, 1983, and subsequently stayed until March 22, 1983.

In an obvious attempt to ascertain the identity of Durant's client in an alternate manner, the United States issued a second subpoena to Durant on March 9, 1983, ordering him to appear before the grand jury on March 16, 1983, and produce the following documents:

A listing of all clients of the law firm of Durant & Durant, P.C., and Richard Durant as of February 18, 1983 including all clients with active cases and clients who owe fees or have provided a retainer to the firm and all client ledger cards and other books, records and documents reflecting or recording payments to the law firm for the period February 1, 1983 to March 1, 1983.

Durant moved to quash this subpoena duces tecum, again asserting the attorney-client privilege. At the March 22, 1983 hearing on this motion, Durant re-asserted that production of the subpoenaed documents could implicate his client in criminal activity. He additionally observed that the FBI had admitted before Durant and the district court judge in-chambers that an arrest would be effected by the FBI immediately following disclosure. ² In effect, the identity of Durant's client was the last link of evidence necessary to effect an indictment. The Court was advised for the first time by Durant that on March 2, 1983 the FBI requested, under threat of harassment, that Durant "breach" the attorney-client privilege and identify his client without informing the client. ³

The Court was informed that disclosure of the requested information would not only implicate Durant's client in criminal activity, but it would implicate that client in the very criminal activity for which legal advice had been sought.

COURT: Do you contend and do you submit that the disclosure of the information which is sought by this subpoena, quote, would implicate your client in the very criminal activity for which legal advice was sought?

MR. DURANT: Yes, Your Honor, I do.

COURT: Other than--in what way do you contend that it would?

MR. DURANT: Sir, I'm in a catch-22 position again. I can't tell you. If I tell you, I have explained things that my client obviously doesn't wish to be disclosed.

COURT: All right.

Durant failed to move the court for an ex parte in camera submission of evidence or testimony to establish that his client had indeed sought legal advice relating to past criminal activity involving theft of IBM checks. Nor did the district court, sua sponte, suggest an ex parte in camera submission of evidence to probe Durant's blanket statements.

The United States then introduced the check into evidence in support of the proposition that it was improbable that Durant's client had engaged Durant's services to defend against impending charges of theft. A notation on the lower left hand corner of the check stated "corporate legal services". The United States observed "That doesn't say anything about crimes committed or to be committed or legal services in connection with criminal matters. It is 'corporate legal services'; no suggestion of any criminal investigation." It was additionally noted by the government that the FBI had not initiated the investigation nor had it been informed of the theft of the IBM checks until March 1st, approximately two weeks after the check had been received by Durant. Durant offered the following rebuttal:

I don't know when IBM knew it (i.e. knew that checks had been stolen), but Mr. Edwards, when he appeared at my office, told me that it did involve checks from IBM, and I said that on March 2nd, when I appeared here.

I think the mere fact that the check says for "corporate legal services" when it has been admitted by the U.S. Attorney that such a corporation doesn't even exist, it is a fictional entity, doesn't deny what I am representing to the Court.

The district court, opining that the issues joined in the first and second subpoenaes served upon Durant were "essentially the same", withheld a decision of Durant's motion to quash the second subpoena duces tecum pending appellate resolution of the court's contempt Order of March 2, 1983.

Confronting the applicability of the attorney-client privilege as urged by Durant, it is initially observed that the privilege is recognized in the federal forum. See: Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1975); Rule 501, Federal Rules of Evidence. The burden of establishing the existence of the privilege rests with the person asserting it. See: In re Walsh, 623 F.2d 489, 493 (7th Cir.), cert. denied, 449 U.S. 994, 101 S.Ct. 531, 66 L.Ed.2d 291 (1980); Liew v. Breen, 640 F.2d 1046, 1049 (9th Cir.1981); United States v. Stern, 511 F.2d 1364, 1367 (2nd Cir.1975); United States v. Landof, 591 F.2d 36, 38 (9th Cir.1978); In re Grand Jury Empanelled February 14, 1978 (Markowitz), 603 F.2d 469, 474 (3d Cir.1979); United States v. Hodgson, 492 F.2d 1175 (10th Cir.1974); United States v. Tratner, 511 F.2d 248, 251 (7th Cir.1975); United States v. Demauro, 581 F.2d 50, 55 (2d Cir.1978); United States v. Ponder, 475 F.2d 37, 39 (5th Cir.1973); United States v. Bartlett 449 F.2d 700, 703 (8th Cir.1971), cert. denied, 405 U.S. 932, 92 S.Ct. 990, 30 L.Ed.2d 808 (1972). The attorney-client privilege exists

to protect confidential communications between a lawyer and his client in matters that relate to the legal interests of society and the client.

In re Grand Jury Proceedings (Fine), 641 F.2d 199, 203 (5th Cir.1981). Accord: In re Grand Jury Subpoena (Slaughter), 694 F.2d 1258, 1260 (11th Cir.1982); United States v. Hodge and Zweig, 548 F.2d 1347, 1353 (9th Cir.1977); In re Grand Jury Investigation (Tinari), 631 F.2d 17, 19 (3d Cir.1980), cert. denied, 449 U.S. 1083, 101 S.Ct. 869-70, 66 L.Ed.2d 808 (1981). The policy behind protecting confidential communications is self-evident:

In order to promote freedom of consultation of legal advisors by clients, the apprehension of compelled disclosure from the legal advisors must be removed; hence the law must prohibit such disclosure except on the client's consent.

Hodge & Zweig, supra, 548 F.2d at 1353, citing 8 J. Wigmore, Evidence, Sec. 2291 at 545 (McNaughton Rev.Ed.1961). Accord Fisher, supra, 425 U.S. at 403, 96 S.Ct. at 1577 ("The purpose of the privilege is to encourage clients to make full disclosure to their attorneys"). ⁴ See also: United States v. Goldfarb, 328 F.2d 280 (6th Cir.) cert. denied, 377 U.S. 976, 84 S.Ct. 1883, 12 L.Ed.2d 746 (1964).

Since the attorney-client privilege may serve as a mechanism to frustrate the investigative or fact-finding process, it creates an inherent tension with society's need for full and complete disclosure of all relevant evidence during implementation of the judicial process. See: In re Grand Jury Proceedings (Jones), 517 F.2d 666, 671-72, (5th Cir.1975) ("the purpose of the privilege--to suppress truth--runs counter to the dominant aims of law"). In particular, invocation of the privilege before the grand jury may jeopardize an effective and comprehensive investigation into alleged violations of the law, and thereby thwart that body's dual functions of determining "if there is probable cause to believe that a crime has been committed and of protecting citizens against unfounded...