Grand Jury Proceedings, In re
| Decision Date | 20 March 1981 |
| Docket Number | No. 81-3019,81-3019 |
| Citation | 641 F.2d 199 |
| Parties | 8 Fed. R. Evid. Serv. 137 In re GRAND JURY PROCEEDINGS IN the MATTER OF Jeffrey FINE. Appeal of UNNAMED GRAND JURY TARGET. Summary Calendar. . Unit A |
| Court | U.S. Court of Appeals — Fifth Circuit |
Richard M. Gale, Michael A. Masin, Miami, Fla., for appellant.
John Volz, U. S. Atty., Patrick Fanning, Asst. U. S. Atty., New Orleans, La., for United States.
Julian R. Murray, Jr., New Orleans, La., for Fine.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before CHARLES CLARK, REAVLEY and WILLIAMS, Circuit Judges.
The United States sought an order from the district court to compel grand jury testimony from attorney Jeffrey Fine. An unnamed client of Fine's, a target of the grand jury investigation, intervened in the proceedings to prevent Fine from being forced to reveal the client's name. The district court granted the motion to compel, and the unnamed target appealed from that order. We vacate the order and remand for further proceedings.
This appeal grows out of the government's efforts to ascertain the ownership of a motor vessel known as the NORDAKRUM, which was used to smuggle between 50 and 75 tons of marijuana into Louisiana in June 1979. The ship was found, scuttled and burning, off the Louisiana coast. The registered owner of the NORDAKRUM is an offshore corporation by the name of Labol Investments (Labol). Labol was formed by a parent company known as Curacao International Trust Company (Curacao), a Netherland Antilles corporation. Curacao apparently is in the business of forming and servicing private offshore corporations, and is not a subject of this investigation. Curacao formed Labol at the request of attorney Jeffrey Fine, acting on behalf of the unnamed client, the appellant in this case and a main target of the grand jury investigation. Mr. Fine testified that he instituted the formation of Labol and had no professional duties relating to the purchase of the NORDAKRUM or its subsequent uses. Curacao's records indicate Labol has been entirely dormant since its formation.
Independent government investigation established that the NORDAKRUM had been previously purchased from a Florida yacht dealer for $250,000 cash. The dealer accepted the cash in a suitcase at a restaurant from a person who gave a name that later proved to be fictitious. The unknown purchaser instructed the yacht dealer to have the NORDAKRUM registered in the name of Labol, and the dealer implemented those instructions. This shady transaction occurred about six months after Labol had been formed in the Netherland Antilles. The yacht dealer apparently is not under further investigation, and the government claims to be at a virtual dead end in its efforts to find out who owned the NORDAKRUM and dictated its movements in June 1979 except, of course, for the information that Fine has about the formation of Labol.
Fine was called as a witness before a grand jury impanelled in October 1979, but he refused to reveal the name of the client at whose request Labol was formed. On July 2, 1980, the government filed a motion to compel testimony, but hearings were not held until December 1980 and January 1981. On January 14, 1981, Fine's unnamed client filed a motion to intervene and a motion to quash service of the subpoena on Fine. The district court granted the motion to intervene and then required the government to make a prima facie showing that Fine could not invoke the attorney-client privilege because the professional relationship was intended to further a criminal enterprise. The government relied upon the short amount of time that elapsed between the formation of Labol and the purchase of the NORDAKRUM, as well as the suspicious events surrounding the purchase itself, to show that the formation of Labol was part and parcel of a criminal enterprise that eventuated in the use of the NORDAKRUM to smuggle marijuana. The district court accepted this as an adequate prima facie showing and granted the motion to compel Fine's testimony.
The unnamed client then filed a notice of appeal of this order, as well as petitions for a writ of mandamus or a writ of prohibition. We imposed a stay upon the order of the district court pending further action. We have earlier denied the petitions for writs of mandamus or prohibition 1 because such writs are reserved for only the most extraordinary cases, or where the error of the district court is clear and indisputable. Miller v. Connally, 354 F.2d 206 (5th Cir.1965). Neither standard was met in this case. But we now face an appeal, which need not meet such an exacting standard if the order of the district court is itself appealable. Accordingly, we turn first to that jurisdictional question.
The general rule is that an order compelling testimony or denying a motion to quash a subpoena is not appealable, based on the reasoning that the expedient administration of criminal justice is best served by putting the person who seeks to resist the subpoena to a choice between compliance or first litigating his claims in contempt proceedings. If the party chooses to risk contempt, the contempt citation is immediately appealable and thus provides an opportunity for appellate review of the district court order. United States v. Ryan, 402 U.S. 530, 533, 91 S.Ct. 1580, 1582, 29 L.Ed.2d 85 (1971).
The Supreme Court has recognized that this reasoning does not hold as firmly when the subpoenaed party is one who has no direct and personal interest in the suppression of the information desired by the grand jury. Such a party would be unlikely to risk a contempt citation in order to allow immediate review of the district court order compelling testimony that will injure only a third party. Perlman v. United States, 247 U.S. 7, 38 S.Ct. 417, 62 L.Ed. 950 (1918). In such circumstances, the order of the district court is considered final as to the injured third party who is otherwise powerless to prevent the revelation. Id. at 13, 38 S.Ct. at 419.
The Perlman exception to the general rule was confirmed in United States v. Nixon, 418 U.S. 683, 691, 94 S.Ct. 3090, 3099, 41 L.Ed.2d 1039 (1974), and has been followed by at least four Courts of Appeals. See, e.g., In Re Berkley and Company, Inc., 629 F.2d 548, 550-52 (8th Cir.1980); In Re Matter of Grand Jury Applicants, 619 F.2d 1022, 1024-26 (3rd Cir.1980); In Re Grand Jury Investigation of Ocean Transportation, 604 F.2d 672, 673-74 (D.C.Cir.), cert. denied, 444 U.S. 915, 100 S.Ct. 229, 62 L.Ed.2d 169 (1979); Velsicol Chemical Corp. v. Parsons, 561 F.2d 671, 673-74 (7th Cir.1977), cert. denied, 435 U.S. 942, 98 S.Ct. 1521, 55 L.Ed.2d 538 (1978). The Second Circuit refused to apply the Perlman exception in an appeal by the Commodity Futures Trading Commission (CFTC) of an order compelling deposition testimony from an assistant administrator of a regional office of the CFTC, based on a claim of government privilege. The CFTC had directed the employee not to testify. National Super Spuds, Inc. v. New York Mercantile Exchange, 591 F.2d 174, 176-82 (2d Cir.1979). 2 The First Circuit subsequently relied heavily upon the Super Spuds opinion to deny the right of appeal in a case that is virtually identical to the one before us now. In Re Oberkoetter, 612 F.2d 15, 16-18 (1st Cir.1980).
The exact question is one of first impression in this circuit: may a client-intervenor take advantage of the Perlman exception to appeal an order compelling testimony from the client's attorney? The factual situation before us certainly fits the outlines of the Perlman exception. An attorney is subpoenaed to give testimony that is subject to a privilege or interest belonging to a third party client. The client is powerless to resist the subpoena personally and put his alleged privilege to the test of a contempt proceeding, and he will lose all right of appeal on that issue if the attorney does not choose to assume such a risk.
The general rule, that orders compelling testimony are non-appealable, is dictated by consideration for the expediency of the administration of criminal justice. Ryan, 402 U.S. at 533, 91 S.Ct. at 1582; Cobbledick v. United States, 309 U.S. 323, 60 S.Ct. 540, 84 L.Ed.2d 783 (1940). The Perlman exception was carved out when the general rule was found inapplicable because the subpoenaed party could not be expected to risk a contempt citation in order to protect the interests of a powerless third party. The Second Circuit opinion in In Re Oberkoetter, 612 F.2d at 18, reasoned that the client-intervenor's should not be able to appeal because a "stouthearted" attorney might be willing to risk a contempt citation to protect his client's interest. Maybe so and maybe not. The Code of Professional Responsibility allows, but does not command, an attorney to reveal client confidences when "required by law or court order." DR 4-101(c)(2). We suspect that the willingness of a lawyer to protect a client's privilege in the face of a contempt citation will vary greatly, and have a direct relationship to the value of the client's business and the power of the client in relation to the attorney. We are reluctant to pin the appealability of a district court order upon such precarious considerations. Moreover, there is a paradoxical element in even looking for indications of the lawyer's intent. If the attorney will submit to a contempt citation rather than testify, the efficient administration of justice is best served by hearing the client-intervenor appeal immediately, rather than wait for an appeal of the contempt judgment against the attorney. If the attorney will testify rather than risk contempt, the client-intervenor's appeal is most certainly proper because there will be no later opportunity to appeal and the order is definitely "final" as to the client.
Although we cannot say that attorneys in general are more...
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