Grand Jury Proceedings, In re

• Decision Date: 08 February 1984
• Docket Number: No. 84-1058,84-1058
• Citation: 727 F.2d 941
• Parties: 14 Fed. R. Evid. Serv. 1742 In re GRAND JURY PROCEEDINGS. Ray M. VARGAS, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 941

727 F.2d 941

14 Fed. R. Evid. Serv. 1742

In re GRAND JURY PROCEEDINGS.

Ray M. VARGAS, Appellant, v. UNITED STATES of America, Appellee.

No. 84-1058.

United States Court of Appeals, Tenth Circuit.

Feb. 8, 1984.

On Rehearing March 14, 1984.

Leo Romero, Albuquerque, N.M. (William S. Dixon, Rodey, Dickason, Sloan, Akin & Robb, P.A., and R. Raymond Twohig, Jr., Deaton & Twohig, Albuquerque, N.M., with him on the brief), for appellant.

William L. Lutz, U.S. Atty., Albuquerque, N.M. (Richard J. Smith, Albuquerque, N.M., Asst. U.S. Atty., with him on the brief), for appellee.

Dan A. McKinnon, III, of Marron, McKinnon & Ewing, and Michael B. Browde, Albuquerque, N.M., amicus curiae, urging reversal, on behalf of the State Bar of New Mexico.

Before McWILLIAMS, McKAY and SEYMOUR, Circuit Judges.

McKAY, Circuit Judge.

This is an appeal from a final order of the district court in which the appellant, Ray M. Vargas, was cited for contempt of court and ordered confined. His confinement was stayed pending resolution of this appeal. Mr. Vargas, an attorney, was cited for contempt for refusing to produce the files of his client, Sangre de Cristo, Community Mental Health Service, Inc., to the grand jury. The grand jury is investigating fraud involving federal government grants of which Mr. Vargas' client is a recipient. The government has asserted that appellant Vargas is himself a target of the grand jury investigation in connection with allegedly false or excessive billings to his client.

The matter was before us previously when both the attorney and the client challenged the subpoena. See In re Grand Jury Proceedings (Vargas), 723 F.2d 1461 (10th Cir.1983) ("Vargas I "). There we declined to reach the merits of the subpoena duces tecum's validity because the appeal was premature. We also found that the principles of mandamus and prohibition were not properly invoked. Since that time, the client, Sangre de Cristo, has dropped its resistance to the subpoena and directed Mr. Vargas to turn its files over to the grand jury. After further review and the attorney's refusal to surrender the records, the trial court held the attorney in contempt. This timely appeal followed that order. The appeal is governed by the 30-day provisions of 28 U.S.C. 1826(b). ¹

Appellant raises two arguments on appeal. First, he argues that, as an attorney, the production of his client files before the grand jury violates his fifth amendment privilege under Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976). Second, Mr. Vargas alleges that his client files are protected by the attorney work-product privilege. ² We reject both of appellant's assertions.

The primary focus of appellant's first argument is that compulsory surrender of the client's files would be an incriminating act since his possession of those files would form a significant link in the government's proof of fraudulent billings for work actually or purportedly done by him for the client.

The general principle is established in Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976), where the Court recognized that

[t]he act of producing evidence in response to a subpoena nevertheless has communicative aspects of its own, wholly aside from the contents of the papers produced. Compliance with the subpoena tacitly concedes the existence of the papers demanded and their possession or control by the taxpayer. ³

The Fisher court qualified this principle by stating that although the act of production had its own communicative aspects, it was doubtful that an admission of the existence and possession of certain papers rose to the level of "testimony" protected by the fifth amendment. Id. at 411, 96 S.Ct. at 1581. While we share the concerns raised by Judge Friendly ⁴ in In re Dr. Doe, 711 F.2d 1187 (2nd Cir.1983), and Judge Knapp ⁵ in United States v. Karp, 484 F.Supp. 157 (S.D.N.Y.1980), we believe that an analysis of the Supreme Court cases directed to the production of evidence other than oral testimony indicates that the fifth amendment privilege in this regard is very weak. Not only has the Court refused to extend the privilege to the custodian of corporate documents or those belonging to other collective entities such as unions and partnerships, see Fisher, 425 U.S. at 411, 96 S.Ct. at 1581, but it has refused to apply the privilege to a substantial list of other things, of which the act of production would be incriminating in the same sense that the production of these records would be. See, e.g., South Dakota v. Neville, --- U.S. ----, 103 S.Ct. 916, 923, 74 L.Ed.2d 748 (1983) (compelling blood-alcohol test not fifth amendment violation); United States v. Dionisio, 410 U.S. 1, 5-7, 93 S.Ct. 764, 767-768, 35 L.Ed.2d 67 (1973) (compelling production of voice exemplars not fifth amendment violation); Gilbert v. California, 388 U.S. 263, 266-67, 87 S.Ct. 1951, 1953-54, 18 L.Ed.2d 1178 (1967) (compelling production of handwriting exemplars not fifth amendment violation); Schmerber v. California, 384 U.S. 757, 765, 86 S.Ct. 1826, 1832, 16 L.Ed.2d 908 (1966) (compelling blood test not fifth amendment violation); Holt v. United States, 218 U.S. 245, 252-53, 31 S.Ct. 2, 6-7, 54 L.Ed. 1021 (1910) (compelling defendant to try on clothes to demonstrate fit not fifth amendment violation).

We must also view the general principle of Fisher in light of the Court's opinion in Bellis v. United States, 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678 (1974). In Bellis the documents subpoenaed were the books and records of a small law partnership. The Court held that because the individual partner held the partnership records in a representative capacity for the partnership, he could not assert a fifth amendment privilege with reference to those documents. Id. at 100-01, 94 S.Ct. at 2189-90. The thrust of the Court's analysis was that fifth amendment assertions have to focus on the surrender of property which is "the private property of the person claiming the privilege, or at least in his possession in a purely personal capacity." Id. at 90, 94 S.Ct. at 2184 (quoting from United States v. White, 322 U.S. 694, 699, 64 S.Ct. 1248, 1251, 88 L.Ed. 1542 (1944)).

The Court in Bellis did indicate that "[a] different case might be presented if petitioner had been ordered to produce files containing work which he had personally performed on behalf of his clients, even if these files might for some purposes be viewed as those of the partnership." 417 U.S. at 98 n. 9, 94 S.Ct. at 2188 n. 9. The case which the Court explicitly left open in that footnote is now before us.

While the Court in Bellis was dealing with documents relating to the internal management of the law firm, its repeated emphasis was on the absence of an ownership interest, and the representative capacity in which the petitioner in that case held the property. See id. at 88-90, 94 S.Ct. at 2183-2184. The Court supported its holding by noting that the petitioner was accountable to the partnership as a fiduciary, that the other partners at all times had access to the partnership books, and that the other partners in the firm could enforce their rights by demanding production of the records in a suit for a formal accounting. 417 U.S. at 99, 94 S.Ct. at 2188. The Court similarly emphasized the nature of the documents as being subject to the rights of others and not subject to the exclusive control of the person to whom the subpoena was issued.

Whereas the partner in Bellis held documents in a representative capacity for the partnership, the attorney in this case holds the client file in a representative capacity for the client. Any ownership rights which inure in the file belong to the client who has presumably paid for the professional services and preparations made by the attorney. In this regard, we find client files to be indistinguishable in principle from the kinds of files which the court found not subject to the fifth amendment privilege in Bellis. So far as we can determine, it is a general principle of law that client files belong to the client and indeed the court may order them surrendered to the client or another attorney on the request of the client subject only to the attorney's right to be protected in receiving compensation from the client for work done. See, e.g., Restatement (Second) of Agency Sec. 464(b) (1957) and Restatement of Security Sec. 62(b) (1941). See also Prichard v. Fulmer, 22 N.M. 134, 159 P. 39 (1916) (New Mexico's recognition of the common law principle of attorneys' retaining and charging liens). The attorney's interest is only that of a retaining lien ⁶ and his interest at best is a pecuniary one, not an interest of ownership, nor privacy.

Indeed, if the analysis of an expectation of privacy plays any part in the Court's analysis in Bellis, it could hardly be said that the attorney has an expectation of privacy in the client's files at least against a claim of the client for production or surrender of those files. This is not to say that an attorney has no privacy interest in his work product. Rather, whatever privacy interests an attorney may have, they are limited to those established under the work-product immunity doctrine of Hickman v. Taylor, 329 U.S. 495, 510-512, 67 S.Ct. 385, 393-394, 91 L.Ed. 451 (1947), and its progeny.

Hickman, however, is expressly limited to those matters relating to the lawyer's mental processees developed explicitly for litigation. 329 U.S. 495 at 510-12, 67 S.Ct. 385 at 393-94, 91 L.Ed. 451. The Hickman doctrine was designed to protect a lawyer against his adversary taking advantage of his efforts. Analytically, except for that limitation, a client has some rights in those processes because the client has paid for those labors and efforts. In the case before us, even the Bellis Court's indication that a "preexisting relationship of confidentiality", 417 U.S. at 101, 94 S.Ct. at 2189, might present a different case...