In re Grand Jury ABC Corp.

Decision Date19 July 2012
Docket Number12-2878.,Nos. 12–1697,s. 12–1697
Citation680 F.3d 328
PartiesIn re GRAND JURY ABC Corp.; John Doe 1; John Doe 2, Appellants.
CourtU.S. Court of Appeals — Third Circuit


Stephen R. LaCheen, Esq. (Argued), LaCheen, Wittels & Greenberg, LLP, Philadelphia, PA, for Appellants ABC Corp. and John Doe 1.

Ian M. Comisky, Esq. (Argued), Matthew D. Lee, Esq., Blank Rome LLP, Philadelphia, PA, for Appellant John Doe 2.

Frank P. Cihlar, Esq., S. Robert Lyons, Esq., Alexander P. Robbins, Esq. (Argued), United States Department of Justice, Tax Division, Washington, DC, Karen L. Grigsby, Esq., Office of the United States Attorney, Philadelphia, PA, for the Government.

Before: AMBRO, HARDIMAN and VANASKIE, Circuit Judges.


AMBRO, Circuit Judge.

ABC Corp., John Doe 1, and John Doe 2 seek to appeal an order of the District Court requiring ABC Corp., Blank Rome LLP, and LaCheen, Wittels & Greenberg, LLP to produce certain documents to the Government as part of an ongoing grand jury investigation.1 The sought-after documents are currently in the custody of Blank Rome, a law firm that represents John Doe 2. Blank Rome is housing the documents at the request of LaCheen Wittels, a law firm representing ABC Corp. and John Doe 1. Appellants claim the attorney-client privilege—ABC Corp. is the privilege holder—and the work product rule shield the documents from disclosure. The District Court disagreed, concluding that the crime-fraud doctrine vitiates any privilege or work product protection.

When a district court orders the production of supposedly privileged documents, its order usually is not an immediately appealable final decision. To obtain immediate appellate review, an objecting privilege holder must disobey the disclosure order, be held in contempt, and then appeal the contempt order. Appellants argue that Perlman v. United States, 247 U.S. 7, 38 S.Ct. 417, 62 L.Ed. 950 (1918), provides an exception to the contempt rule here because the documents are in the custody of a third party (Blank Rome) who is not willing to suffer contempt for the sake of an immediate appeal.

We disagree, and hold instead that Perlman does not allow an immediate appeal of a district court's order mandating the production of supposedly privileged documents when (1) the court's order directs the privilege holder itself to produce the documents and (2) the privilege holder has, or may obtain, custody of the documents. In short, Perlman does not apply when the traditional contempt route is open to the privilege holder. 2 That route is open to ABC Corp. The District Court ordered the company to produce the documents, and it may obtain custody of the documents from its agents. If ABC Corp. wants preconviction appellate review of the District Court's crime-fraud ruling, it must take possession of the documents and defy that Court's disclosure order before appealing any resulting contempt sanctions. Because it has not yet met these preconditions, we dismiss for lack of appellate jurisdiction.

I. Background

ABC Corp. is an administratively “dissolved” corporation. It was formed in early 2004 and it ceased business operations in late 2005. John Doe 1 was the company's President and sole indirect shareholder and John Doe 2 is his son. To repeat, LaCheen Wittels represents ABC Corp. and John Doe 1 while Blank Rome represents John Doe 2. The law firms have, however, a joint-defense agreement with respect to the three Appellants.

In mid–2010, Appellants learned that the Government was investigating the tax implications of ABC Corp.'s acquisition and sale of certain closely held companies. In December 2010, the Government issued a grand jury subpoena to ABC Corp.'s former vice president of corporate acquisitions as the company's custodian of records. The subpoena sought any and all records relating to transactions and business dealings between ABC Corp. and specific entities and individuals.

At some point the Government received access to, or copies of, certain ABC Corp. documents from a law firm that previously represented the company. The firm withheld certain documents it claimed were privileged, but it did not supply the Government with a privilege log. After LaCheen Wittels and Blank Rome assumed their current representations, the former firm of ABC Corp. transferred the documents to Blank Rome. According to Appellants, LaCheen Wittels did not have sufficient space to store the documents, so Blank Rome agreed to hold them as custodian.

In a January 2011 letter, LaCheen Wittels took the position that the Government did not effectively serve the subpoena issued to ABC Corp.'s former vice president. Nonetheless, in March 2011, LaCheen Wittelsand Blank Rome provided the Government with a privilege log, which they revised in April 2011, for the documents ABC Corp.'s former firm once withheld.

Because ABC Corp. refused to accept service of the subpoena issued to its former employee, the Government issued grand jury subpoenas to LaCheen Wittels and Blank Rome in May 2011. The subpoenas sought all documents the two firms received from ABC Corp.'s former law firm relating to ABC Corp. and another entity. In response to these subpoenas, the law firms produced approximately 24 boxes of documents. These were the same documents that ABC Corp.'s former firm had previously produced. They continued to withhold, however, the documents listed on the April 2011 privilege log, and provided the Government with another privilege log in June 2011 for additional documents withheld.

The Government then filed an ex parte motion to compel ABC Corp., Blank Rome, and LaCheen Wittels to produce 171 of the 303 documents identified on the privilege logs. It argued that the documents should be produced based on the crime-fraud doctrine, which provides that evidentiary privileges may not be used to shield “communications made for the purpose of getting advice for the commission of a fraud or crime.” United States v. Zolin, 491 U.S. 554, 563, 109 S.Ct. 2619, 105 L.Ed.2d 469 (1989) (internal quotations omitted).

On March 8, 2012, the District Court granted the Government's motion and, in a two-page order, directed ABC Corp., Blank Rome, and LaCheen Wittels to produce 167 of the 171 requested documents by March 16. The 167 documents comprise roughly 800 pages. In an accompanying 42–page opinion, the District Court concluded that the crime-fraud doctrine barred ABC Corp.'s privilege and work product claims. It did not resolve whether the Government properly served ABC Corp. with a subpoena by serving its former vice president, but noted that [t]his issue is of no moment here. There is no allegation that the subpoenas were served improperly on Blank Rome and LaCheen Wittels[,] who are presently in the possession of the documents the government seeks.” Dist. Ct. Op. at 9.

Five days later, Appellants filed a timely notice of appeal and a motion for a stay pending appeal. We granted the stay and expedited the appeal.3

II. Discussion

The District Court had jurisdiction under 18 U.S.C. § 3231. Our jurisdiction is in dispute, but we have jurisdiction to determine our jurisdiction. Alaka v. Att'y Gen., 456 F.3d 88, 94 n. 8 (3d Cir.2006).

A. Finality and the Contempt Rule

[T]he right to a judgment from more than one court is a matter of grace and not a necessary ingredient of justice....” Cobbledick v. United States, 309 U.S. 323, 325, 60 S.Ct. 540, 84 L.Ed. 783 (1940). Congress has bestowed such grace by granting the Courts of Appeals jurisdiction over “final decisions” of the district courts. 28 U.S.C. § 1291. Whether a decision is “final” depends on its effects. Marcus v. Twp. of Abington, 38 F.3d 1367, 1370 (3d Cir.1994). “Ordinarily, a final decision will have two effects. First, the decision will fully resolve all claims presented to the district court. Second, after the decision has been issued, there will be nothing further for the district court to do.” Aluminum Co. of America v. Beazer East, Inc., 124 F.3d 551, 557 (3d Cir.1997); see also Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 89 L.Ed. 911 (1945) (“A ‘final decision’ generally is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.”).

When a district court orders a witness—whether a party to an underlying litigation, a subject or target of a grand jury investigation, or a complete stranger to the proceedings—to produce documents, the district court's order generally is not considered an immediately appealable “final decision[ ] under § 1291. See United States v. Ryan, 402 U.S. 530, 532–34, 91 S.Ct. 1580, 29 L.Ed.2d 85 (1971); Cobbledick, 309 U.S. at 326–29, 60 S.Ct. 540;Alexander v. United States, 201 U.S. 117, 118–22, 26 S.Ct. 356, 50 L.Ed. 686 (1906). It is well-settled that a witness who “seeks to present an objection to a discovery order immediately to a court of appeals must refuse compliance, be held in contempt, and then appeal the contempt order.” Church of Scientology of Cal. v. United States, 506 U.S. 9, 18 n. 11, 113 S.Ct. 447, 121 L.Ed.2d 313 (1992); see also Ryan, 402 U.S. at 532–34, 91 S.Ct. 1580;Cobbledick, 309 U.S. at 326–29, 60 S.Ct. 540;Alexander, 201 U.S. at 118–22, 26 S.Ct. 356;DeMasi v. Weiss, 669 F.2d 114, 121–23 (3d Cir.1982). A district court's contempt order is itself immediately appealable because it is a final judgment imposing penalties on the willfully disobedient witness in what is effectively a separate proceeding. The Supreme Court has explained that

if the witnesses refuse to comply with [a disclosure order] and the court then exercises its authority either to punish them or to coerce them into compliance, that will give rise to another case or cases to which the witnesses will be parties on the one hand, and the government, as a sovereign vindicating the dignity and authority of one of its courts, will be a party on the other hand.


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