Grand Jury Subpoenas, In re

• Citation: 803 F.2d 493,84 A.L.R.Fed. 833
• Decision Date: 27 October 1986
• Docket Number: No. 85-1044,85-1044
• Parties: , 55 USLW 2267, 21 Fed. R. Evid. Serv. 1192 In re GRAND JURY SUBPOENAS. UNITED STATES of America, Appellant, v. Robert J. HIRSCH, Walter B. Nash III, William G. Walker, Natman Schaye, Bertram Polis, and William J. Redondo, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 493

803 F.2d 493

84 A.L.R.Fed. 833, 55 USLW 2267, 21

Fed. R. Evid. Serv. 1192

In re GRAND JURY SUBPOENAS UNITED STATES of America, Appellant, v. Robert J. HIRSCH, Walter B. Nash III, William G. Walker Natman Schaye, Bertram Polis, and William J Redondo, Appellees.

No. 85-1044.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Oct. 8, 1985.

Decided Oct. 27, 1986.

John Roll, Asst. U.S. Atty., Tucson, Ariz., for appellant.

John W. McDonald, Chandler, Tullar, Udall & Rehair, Tucson, Ariz., for appellees.

Appeal from the United States District Court for the District of Arizona.

Before GOODWIN, ALARCON, and POOLE, Circuit Judges.

POOLE, Circuit Judge:

The United States appeals from a district court order quashing a portion of subpoenas duces tecum issued by a grand jury. The subpoenas directed appellees, six attorneys, to identify the party or parties (fee-payer) retaining their legal services to represent five defendants who had been the subject of a joint prosecution and to provide information regarding the fee arrangements associated with that representation. The district court quashed that portion of the subpoenas requiring the attorneys to identify the fee-payer, finding that disclosure would violate the attorney-client privilege. Because we conclude that the fee-payer's identity is not protected by the attorney-client privilege, we reverse and remand.

I.

On March 23, 1984, Guillermo Soto-Leal, Ricardo Bustamonte, Ruben Cruz-Sinotez, Francisco Valles-Valencia and Francisco Villa-Tapia were arrested at a residence in Tucson, Arizona. A search of the premises disclosed approximately 32,000 pounds of marijuana and numerous drug ledgers detailing a multimillion-dollar marijuana conspiracy. According to the ledgers, between June 1983 and March 1984, the organization responsible for the marijuana at the residence distributed approximately 180,000 pounds of marijuana worth an estimated $90 million.

On March 25, 1984, while those arrested were still in custody and before their identities had been publicly disclosed, William Redondo contacted the Drug Enforcement Administration (DEA) and indicated that he represented those arrested at the Tuscon residence. When asked the names of his clients, Mr. Redondo was unable to identify any of the five men in custody. A short time later Mr. Redondo telephoned the DEA and identified two of the five men, Soto-Leal and Bustamonte. On March 26, Mr. Redondo entered a special appearance on behalf of all five defendants at their initial appearance before the United States Magistrate.

On April 5, 1984, attorneys Robert Hirsch (for Villa-Tapia), Walter Nash (for Soto-Leal), William Walker (for Valles-Valencia), Natman Schaye (for Cruz-Sinotez), and Bertram Polis (for Bustamonte), appeared on behalf of their respective clients and completed designation of retained counsel forms. On April 23, 1984, the five defendants were indicted along with two other individuals. Trial commenced in July 1984.

Defendants Villa-Tapia and Cruz-Sinotez and the two other individuals were acquitted. Defendant Soto-Leal was found guilty of conspiracy to distribute, and possession of, over 1000 pounds of marijuana. Defendants Bustamonte and Valles-Valencia were found guilty of possession of over 1000 pounds of marijuana.

At their appearance before the magistrate, all five defendants indicated that they had minimal financial resources. Later, at trial, counsel for Cruz-Sinotez and Villa-Tapia attempted to present evidence regarding the poverty of their clients, stating that the clients had not paid their legal fees and did not know who had.

On November 14, 1984, a DEA agent testified during grand jury proceedings regarding the continuing investigation of the organization which had employed the five defendants. The grand jury indicated that it would be helpful if the government were to issue subpoenas to the six attorneys regarding the identity of the fee-payer and the fee arrangements for representation of the five defendants.

Subpoenas were subsequently served requiring the six attorneys to appear before the grand jury and to bring all records concerning the payment of fees on behalf of their respective clients in the marijuana prosecution, including the amount of fees, form of payments, and payer. Appellees filed a motion to quash the subpoenas, asserting that the requested information was protected by the attorney-client privilege and that disclosure would violate the constitutional rights granted by the Fifth and Sixth Amendments to the attorneys' clients.

The government opposed the motion to quash and the district court held a hearing. At the hearing, attorney Walker testified that he was certain indictments would be issued if the identity of the fee-payer were revealed. Thereafter, the court ordered the six attorneys to furnish in camera affidavits detailing the circumstances surrounding their employment to represent the five defendants and showing the existence of an attorney-client relationship between the attorneys and the third-party fee-payer.

On February 5, 1985, after reviewing the in camera affidavits, the district court found that to force the attorneys to reveal the name of the fee-payer would probably implicate that party in the criminal activity for which he sought legal advice. The court also found that the government had not made out a prima facie case that the attorneys were retained to promote intended or continuing criminal activity. The court quashed that portion of the subpoenas requiring disclosure of the identity of the fee-payer, but ordered the attorneys to submit affidavits to the government regarding the amount of fees paid, and when and how they were paid. The court found it unnecessary to rule upon the other claimed grounds for quashing the subpoenas.

II.

Appellate jurisdiction in this case rests on 18 U.S.C. Sec. 3731 (1982). In re Grand Jury Subpoenas (Kiefaber), 774 F.2d 969, 972-74 (9th Cir.1985). See also In re Witnesses Before Special March 1980 Grand Jury, 729 F.2d 489, 490 n. 3 (7th Cir.1984); In re Grand Jury Subpoena (Kent), 646 F.2d 963, 967 (5th Cir.1981); In re Grand Jury Empanelled (Colucci), 597 F.2d 851, 855-57 (3d Cir.1979); Nixon v. Sirica, 487 F.2d 700, 721 n. 100 (D.C.Cir.1973).

III.

We review the district court's factual determinations under the clearly erroneous rule, and review its decision to quash the grand jury subpoenas for abuse of discretion. See In re Grand Jury Matters, 751 F.2d 13, 16 (1st Cir.1984); In re Grand Jury Subpoenas (Lahodny), 695 F.2d 363, 365 (9th Cir.1982). The district court's conclusion that an attorney-client relationship exists between appellees and the undisclosed fee-payer involves a mixed question of law and fact, and is reviewed de novo. See United States v. McConney, 728 F.2d 1195, 1202 (9th Cir.) (en banc), cert. denied, 469 U.S. 824, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984). The burden is on the party asserting the attorney-client privilege to demonstrate how the information sought fits within it. In re Grand Jury Proceeding (Schofield), 721 F.2d 1221, 1223 (9th Cir.1983); In re Grand Jury Witness (Salas and Waxman), 695 F.2d 359, 362 (9th Cir.1982).

IV.

The in camera affidavits show that two of the attorneys, Walker and Redondo, claim some independent professional relationship with the party or parties who paid the fees in the underlying criminal actions. ¹ Four of the attorneys were paid through Walker and do not know who provided the funds. Appellees admitted at oral argument that the four attorneys who received money through Walker had no legal basis for refusing to disclose that fact. Therefore, we consider only whether the attorney-client privilege bars disclosure of the fee-payer's identity based on the information contained in the affidavits of Walker and Redondo.

The attorney-client privilege protects confidential disclosures made by a client to an attorney in order to obtain legal advice. Fisher v. United States, 425 U.S. 391, 403, 96 S.Ct. 1569, 1577, 48 L.Ed.2d 39 (1976); Schofield, 721 F.2d at 1222. The privilege allows an attorney to avoid what would otherwise be a professional dilemma of cautioning a client against disclosure and rendering perhaps ill-informed legal advice or of learning all the details of a situation and perhaps increasing the perils to the client of disclosure. In re Grand Jury Subpoena Duces Tecum (Shargel), 742 F.2d 61, 64 (2d Cir.1984). The privilege does not permit an attorney to conduct his client's business affairs in secret. Schofield, 721 F.2d at 1222; Matter of Fischel, 557 F.2d 209, 211 (9th Cir.1977).

Generally, the identity of an attorney's client and the nature of the fee arrangement between an attorney and his client are not privileged. In re Osterhoudt, 722 F.2d 591, 592 (9th Cir.1983); Schofield, 721 F.2d at 1222; Lahodny, 695 F.2d at 365; United States v. Sherman, 627 F.2d 189, 190 (9th Cir.1980); United States v. Hodge & Zweig, 548 F.2d 1347, 1353 (9th Cir.1977). The fact of representation and the associated fee arrangement are preliminary, by their own nature, establishing only the existence of the relation between client and counsel, and therefore, normally do not involve the disclosure of any communication arising from that relation after it was created. Osterhoudt, 722 F.2d at 593.

Appellees argue that this case falls within an exception to the general rule that the privilege does not apply, because disclosure of the fee-payer's identity would implicate him in the very criminal activity for which legal advice was sought. The government has admitted that the subpoenas were issued to appellees in an effort to determine whether the fee-payer was involved in the underlying marijuana conspiracy. In addition, Walker testified that he was certain indictments would result if the identity of the fee-payer were revealed. However, the relevant inquiry is not whether disclosure of the fee-payer's identity would be incriminating...