Grand Jury Proceedings, In re
| Decision Date | 16 September 1988 |
| Docket Number | No. 88-1066,88-1066 |
| Parties | In re GRAND JURY PROCEEDINGS. COMPANY X, 1 Appellant, v. UNITED STATES of America, Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Rodney O. Thorson (William J. Guzick and Andrew L. Sandler of Skadden, Arps, Slate, Meagher & Flom, Washington, D.C., and Robert J. Roth and Evan J. Olson of Hershberger, Patterson, Jones & Roth, Wichita, Kan., with him on the briefs), for appellant.
Scott J. Glick (Benjamin L. Burgess, Jr., U.S. Atty., D. Kansas, Guy L. Goodwin and Barbara B. Berman, Criminal Div., U.S Dept. of Justice, Washington D.C., with him on the brief), for appellee.
Before SEYMOUR and McWILLIAMS, Circuit Judges, and BOHANON, Senior District Judge. 2
Subpoenas duces tecum were served on Company X and Company X's former counsel (hereinafter Law Firm Y) requiring the production of documents by both the Company and Law Firm Y for use by a District of Kansas federal grand jury which was investigating possible violations of federal laws. Law Firm Y filed a motion to quash the subpoena duces tecum served on it, claiming that the request was burdensome. The district court denied the motion, but the matter was continued to allow the Company opportunity to assert any objections it might have to production by Law Firm Y of the subpoenaed documents. The Company did file objections to the production by Law Firm Y of certain of the documents on the grounds that they came within the attorney-client privilege and the work-product doctrine. Further, the Company also filed objections to its being required to produce certain documents from its own files and records, again claiming attorney-client privilege and the work-product doctrine.
The government next filed a motion to compel the production of documents by both the Company and Law Firm Y. In support of that motion, the government submitted, in camera, a partial transcript of the grand jury proceedings, as well as affidavits. 3 Based thereon, the district court, after hearing, granted the motion to compel on August 17, 1987, holding that any possible privilege on the part of either the Company or Law Firm Y was vitiated by the "crime-fraud" exception discussed in In re Grand Jury Proceedings (Vargas), 723 F.2d 1461, 1467 (10th Cir.1983). The Company now appeals that order. 4 Law Firm Y, however, has not appealed from that order; it would appear from the record that the present position of Law Firm Y is that it will not run the risk of contempt and will now produce the subpoenaed documents. Hence, the present controversy involves only the government and the Company.
The denial of a motion to quash a subpoena is interlocutory in nature and not an appealable order. United States v. Ryan, 402 U.S. 530, 91 S.Ct. 1580, 29 L.Ed.2d 85 (1971); Cobbledick v. United States, 309 U.S. 323, 60 S.Ct. 540, 84 L.Ed. 783 (1940); In re Grand Jury Proceedings (Vargas), 723 F.2d 1461 (10th Cir.1983). The same rule of non-appealability would appear to apply to an order granting a motion to compel. 5 In Vargas, an attorney was under order of court to appear before a grand jury and at that time produce certain files and records. The appeal by the attorney's client was held by us to be "premature."
The Company argues that the present case comes within an exception to the general rule of non-appealability enunciated in Perlman v. United States, 247 U.S. 7, 38 S.Ct. 417, 62 L.Ed. 950 (1918). The government apparently agrees, as it does not argue that this court is without jurisdiction to address the merits on appeal. Law Firm Y having now indicated to the district court that it is currently willing to produce the documents requested from it for grand jury use, the Company must have the opportunity for appellate review at this time or the opportunity for appellate review of the district court's order to compel prior to actual production of the documents for grand jury use will be lost forever. The fact that Law Firm Y is now willing to produce brings the instant case within the Perlman exception. In Vargas, this court, in holding that the Perlman exception did not apply so as to allow appeal by the client, commented as follows:
Accordingly, we hold that this case is not within that "limited class of cases where denial of immediate review would render impossible any review whatsoever." ... Thus, the appeal by the community health center is premature. Before it can appeal from Judge Campos' order, it must await a contempt citation against its attorney or be able to prove that the attorney will produce the records rather than risk contempt.
Vargas, 723 F.2d at 1466 (emphasis added) (citation omitted).
As indicated, the district court held that any possible privilege that could be claimed by the Company was negated by the "crime-fraud" exception. Specifically, the district court held that the government made a prima facie showing that the Company through its employees committed crimes and then used Law Firm Y to cover up and perpetuate those crimes through the commission of a second series of crimes and frauds. 6 The district court correctly applied this exception. The attorney-client privilege does not apply where the client consults an attorney to further a crime or fraud. Clark v. United States, 289 U.S. 1, 53 S.Ct. 465, 77 L.Ed. 993 (1933). The district court's finding is, in our view, amply supported by the record before us and brings the present case within our pronouncement in Vargas, where, in this connection, we commented as follows:
Petitioner correctly argues that the government must do more than allege that an attorney is a target of a grand jury investigation to vitiate the privilege. Before the privilege is lost "there must be 'prima facie ' evidence that [the allegation of attorney participation in a crime or fraud] has some foundation in fact." Id. Petitioner, however, argues that certain procedures must be followed, including an opportunity for the attorney and client to rebut the prima facie evidence and to be present at any hearing which is intended to establish such a prima facie...
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