In Re Grand Jury Subpoena

• Decision Date: 25 July 2000
• Docket Number: No. 99-41150,99-41179 and 99-41308,99-41150
• Citation: 220 F.3d 406
• Parties: (5th Cir. 2000) In Re: Grand Jury Subpoena
• Court: U.S. Court of Appeals — Fifth Circuit

Page 406

220 F.3d 406 (5th Cir. 2000)

In Re: Grand Jury Subpoena

No. 99-41150, 99-41179 and 99-41308

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

July 25, 2000

Appeals from the United States District Court For the Southern District of Texas.

Before Garwood, DeMoss and Parker, Circuit Judges.

ROBERT M. PARKER, Circuit Judge:

Three consolidated appeals attack orders from the district court regarding subpoenas issued by a federal grand jury charged with investigating possible criminal violations of the Clean Air Act. We dismiss in part and affirm in part.

I. FACTS AND PROCEDURAL HISTORY

On June 10, 1996, a federal grand jury issued, under seal, a subpoena to the Corporation.¹ In responding to the subpoena, the Corporation inadvertently disclosed a legal memorandum prepared by its in-house counsel. The Corporation and its in-house counsel sought the return of the memorandum but the Government refused. On July 2, 1998, the district court denied a motion for return of the memorandum. Based on the content of the memorandum, the Government moved for production of documents prepared during the course of a corporate environmental compliance investigation. On February 28, 1999, after reviewing the documents in camera, the district court issued an order finding that the documents were protected by the attorney-client privilege and assuming they were protected attorney work product, but holding that the crime-fraud exception applied. The order stated that the district court would turn over the 214 documents in its possession directly to the Government. The Corporation and in-house counsel appealed these orders. See In re Grand Jury Subpoena, 190 F.3d 375 (5th Cir. 1999), cert. denied 120 S. Ct. 1573 (2000). On September 20, 1999, a panel of this court dismissed the consolidated appeals for lack of jurisdiction and issued a writ of mandamus directing the district court to order the Corporation to turn over to the Government the 214 documents, allowing the Corporation to refuse and obtain an appealable order of contempt. See id. at 389.

On September 24, 1999, the district court directed the Corporation to produce the 214 documents, it refused and the district court held it in contempt on October 13, 1999. The contempt order imposed a fine of $ 200,000 per day, beginning the next day. Both the district court and this court declined to issue a stay of the fine pending appeal. On October 14, 1999, the Corporation purged itself of contempt by producing the documents. The in-house counsel moved for an order returning the documents to him, so that he could individually refuse the turn-over order and obtain an appealable contempt order. In-house counsel appeals the denial of his motion for return of the documents in cause number 99-41179. In-house counsel also appeals the district court's September 24, 1999 and October 13, 1999 orders in consolidated cause number 99-41150.

After the Corporation produced the documents, the grand jury issued subpoenas ad testificandum to two employees of a consulting firm that the Corporation had retained to assist in the environmental compliance investigation. The subpoenas require them to testify concerning their communications with in-house counsel during the investigation. The Corporation and in-house counsel moved to quash the subpoenas. On November 18, 1999, the district court denied the motion to quash, reiterating the crime-fraud analysis of its February 18 and September 24 orders. Cause number 99-41308, consolidated with the in-house counsel's appeals described above, attacks the district court's November 18, 1999 order declining to quash the subpoenas directed at the consultants.

II. ANALYSIS

A. In-house Counsel's Standing to Appeal

As a threshold matter, we must determine whether we have jurisdiction over in-house counsel's appeals, that is, whether in-house counsel has a legally protectable interest in the confidentiality of the documents that is independent of the Corporation's interest. See Texans United for a Safe Economy Educ. Fund v. Crown Central Petroleum Corp., 207 F.3d 789, 792 (5th Cir. 2000)("As a threshold matter of jurisdiction, however, we must determine . . . standing.")

The attorney-client privilege is held by the client and not the attorney, and provides no solace to the in-house attorney in this case. See In re Grand Jury Proceedings, 43 F.3d 966, 972 (5th Cir. 1994). However, this circuit has held that an innocent attorney may invoke the work product privilege even if a prima facie case of fraud or criminal activity has been made as to the client. See id. The attorneys in our 1994 In re Grand Jury Proceedings case were in private practice and had been retained by the target-client to obtain the release of property which had been seized by the Government in connection with a civil forfeiture action. See id. at 967. Neither that case nor any other Fifth Circuit jurisprudence informs the question whether the rule extends to an in-house attorney who seeks to invoke the work product privilege in order to oppose a grand jury subpoena that his employer saw fit to waive.

In the context of a federal grand jury, the work product privilege is a common law privilege, although a version of the work product privilege is found in the Federal Rules of Civil Procedure, which may be consulted for guidance as to the scope of the common law privilege. See Fed. R. Civ. P. 26(b)(3); see also In re Sealed Case, 219 U.S. App. D.C. 195, 676 F.2d 793, 808 (D.C. Cir. 1982). The purpose of the work product privilege is to further "the interests of clients and the cause of justice" by shielding the lawyer's mental processes from his adversary. See Hickman v. Taylor, 329 U.S. 495, 511, 91 L. Ed. 451, 67 S. Ct. 385 (1947)(examining the function of discovery and the role of the trial judge in supervising discovery in civil litigation).

No one argues that the Corporation's interests in this case are served by the in-house counsel's assertion of work product privilege. Nevertheless, because the work product privilege looks to the vitality of the adversary system rather than simply seeking to preserve confidentiality, it is not automatically waived by the disclosure to a third party. See United States v. AT&T Co., 206 U.S. App. D.C. 317, 642 F.2d 1285, 1299 (D.C. Cir. 1980). For example, in In re Sealed Case, 219 U.S. App. D.C. 195, 676 F.2d 793 (D.C. Cir. 1982), the District of Columbia Circuit found that documents prepared by an in-house counsel were protected by the work product privilege, noting that the evidence established that the documents were not meant for any eyes but their author's and that the attorney never intended the documents to fall into the hands of his corporate superiors. See 676 F.2d at 811. No such evidence appears in the record before us and we are aware of no alternative basis for holding that the cause of justice would be furthered if in-house counsel could prevent the grand jury from examining the Corporation's documents that it saw fit to turn over in the present case. We therefore conclude that in-house counsel has no work product privilege in the disputed documents and decline to extend our 1984 In re Grand Jury holding to in-house counsel in this case. See id. ("Courts should not frustrate the efforts of a grand jury unless the purpose as well as the letter of the privilege requires it.") Because in-house counsel has no standing to assert a work product privilege, we lack jurisdiction over his appeal of the order to produce documents and the order holding the Corporation in contempt (Cause number 99-41150) as well as the appeal of the denial of his motion to return the documents so he could refuse to produce them (Cause number 99-41179).

B. Order denying motion to quash subpoenas

1. Jurisdiction

The substance of the remaining appeal (Cause number 99-41308) is a challenge to the district court's November 18, 1999 order denying the motion to quash the subpoenas directed at two employees of an outside consulting firm and applying the crime-fraud exception to the Corporation's and in-house counsel's asserted privileges. This court ruled, in the previous appeal of this case, that we had no jurisdiction to hear an interlocutory challenge to the crime-fraud determination. See In Re Grand Jury, 190 F.3d at 385. We must now examine whether the proceedings after remand changed that answer.

The court's jurisdiction is generally limited to "final decisions" of the district court. 28 U.S.C. 1291. One exception to the finality requirement is the Cobbledick doctrine. In Cobbledick v. United States, 309 U.S. 323, 84 L. Ed. 783, 60 S. Ct. 540 (1940), the appellant was subpoenaed to appear and produce documents before a grand jury. He moved to quash the subpoena, but the motion was denied. The Supreme Court held that the order lacked the finality requisite for an appeal and the appellant could...