Investigating Grand Jury of Philadelphia County No. 88-00-3503, In re

• Citation: 527 Pa. 432,593 A.2d 402
• Decision Date: 25 June 1991
• Docket Number: No. 63302,63302
• Parties: In re: INVESTIGATING GRAND JURY OF PHILADELPHIA COUNTY NO. 88-00-3503, Search WarrantPetition of: Richard E. MILLER, Esquire, X Company, and Employee A. In re: INVESTIGATING GRAND JURY OF PHILADELPHIA COUNTY NO. 88-00-3505. Petition of: Paul R. ROSEN, Esquire, Richard E. Miller, Esquire and Employee B.
• Court: United States State Supreme Court of Pennsylvania

Page 402

593 A.2d 402

527 Pa. 432

In re: INVESTIGATING GRAND JURY OF PHILADELPHIA COUNTY NO. 88-00-3503, Search Warrant No. 63302 Petition of: Richard E. MILLER, Esquire, X Company, and Employee A In re: INVESTIGATING GRAND JURY OF PHILADELPHIA COUNTY NO 88-00-3505 Petition of: Paul R. ROSEN, Esquire, Richard E. Miller, Esquire and Employee B.

Supreme Court of Pennsylvania.

Argued April 6, 1990.

Decided June 25, 1991.

Paul R. Rosen, Richard E. Miller, for petitioner.

Janet Houser, Asst. Dist. Atty., George S. Leone, Asst. Dist. Atty., Ronald Eisenberg, Chief, Appeals Div., for respondent.

Before NIX, C.J., and LARSEN, FLAHERTY, McDERMOTT, ZAPPALA, PAPADAKOS and CAPPY, JJ.

OPINION

ZAPPALA, Justice.

This is a direct appeal from three orders entered by the Philadelphia County Court of Common Pleas in conjunction with the supervision, administration, and operation of Investigating Grand Jury No. 88-00-3505. The grand jury investigation involved allegations of improper diversion of public funds by officials in the Office of the Clerk of Quarter Sessions and the Sheriff's Department of Philadelphia County through the investment of the funds in certificates of deposit referred to as charitable certificates of deposit ("CDs"). The charitable CDs paid a lower rate of return than other CDs available at the Philadelphia financial institution, with a percentage of the interest on the investment being contributed to a private organization qualifying for a charitable tax deduction.

The record has been sealed in this matter to preserve the confidentiality of the grand jury's inquiry. For that reason, the individuals and financial institution involved in the inquiry will not be identified by name. The Petitioners include the Philadelphia bank that issued the CDs, the president of the bank, an employee of the bank ("Employee B" herein), and their counsel Paul R. Rosen, Esquire and Richard E. Miller, Esquire.

The orders being challenged by the Petitioners include an order entered on June 2, 1989 permitting documents of the bank president seized during a search conducted pursuant to a warrant to be turned over to the Commonwealth for use before the grand jury. The other two orders were entered on July 19, 1989. One disqualified Paul R. Rosen, Esquire and Richard E. Miller, Esquire from representing bank employees, other than the bank president, in the course of the grand jury investigation; the other granted the Commonwealth's petition for immunity for Employee B. A similar request for immunity made by the Commonwealth as to four other bank employees was denied.

As part of the grand jury investigation, an assistant district attorney and Detective Thomas Lyons interviewed the bank president on December 6, 1988. The bank president indicated that the public officials had put the funds into the charitable CDs at the lower rate of return, with 1% contributed to the private organization. During an interview with Detective Lyons on December 8, 1988, Employee B indicated that bank confirmation letters had been sent for the charitable CDs.

While testifying before the grand jury, the bank president claimed that the bank was paying the higher rate of return available as well as the percentage contribution to the private organization, rather than the lower rate of return discussed during the investigative interviews. He referred to an undated document containing handwritten instructions to a bank employee to reissue the CDs to reflect the higher rate of return. He attributed his previous failure to disclose the existence of the undated document during the earlier interview to a memory lapse.

Employee B's testimony before the grand jury supported that of the bank president. She testified that the undated document appeared on her desk several months before and that it superseded the written confirmation of the lower return rate that had been sent to the Clerk's office. She acknowledged that she had never sent a confirmation of the higher rate and that it had never been recorded on the computer or in bookkeeping.

Not wont to view the revelation of the undated document as mere oversight on the part of the witnesses, the Commonwealth secured a search warrant authorizing the seizure of documents maintained at the bank evidencing the bank president's activities subsequent to his December 6, 1988 interview. During the execution of the search warrant on February 14, 1989, four pages of handwritten notes found atop the bank president's desk were seized. The bank president contacted Attorney Miller and advised him that the notes had been confiscated.

Attorney Miller immediately contacted the assistant district attorney supervising the grand jury investigation, asserting that the handwritten notes were protected by the attorney-client privilege and the work product doctrine. The assistant district attorney agreed to place the notes in a sealed envelope before the documents were reviewed. The sealed envelope was presented to the Honorable Eugene H. Clarke, Jr., as the supervising judge. The handwritten notes have been kept under seal since that time and were subject only to the in camera review of Judge Clarke, Jr. This was the appropriate procedure.

The Petitioners moved for return of the handwritten notes. During the hearing on the motion, Attorney Miller indicated that one page of the notes had been prepared by him, and the remainder were the notes of the bank president. Attorney Miller stated that he had written the notes during a session with the bank president after the subpoena to appear before the grand jury had been issued. The notes concerned the documents reviewed and discussions in preparation for the grand jury appearance. The bank president's notes were taken during the discussions also.

The Commonwealth contended that the attorney-client privilege had been waived by the bank president and that the documents fell within the crime-fraud exception to the privilege. The grand jury testimony of the bank president and Employee B was submitted into evidence, along with the Commonwealth's internal memorandum regarding the bank president's interview.

The Petitioners' motion for the return of the handwritten notes was denied on June 2, 1989. The trial judge concluded that the bank president had waived the attorney-client privilege. As to the assertion that the work product doctrine protected the notes, the trial judge held that, assuming it was work product, the crime-fraud exception was applicable.

Immunity for several bank employees was requested by the Commonwealth. The Commonwealth theorized that immunity was necessary, alleging that Employee B had testified falsely as to the existence of the document authorizing the higher rate of return. Believing that a scheme had been developed to whitewash the conduct under investigation, the Commonwealth sought to convince the court that immunity was imperative.

On July 19, 1989, the District Attorney's office's petition for immunity for Employee B was granted. Petitions to grant immunity to other bank employees were denied, although the trial judge indicated that similar requests would be entertained in the future if warranted.

The Commonwealth moved also to disqualify counsel from representing employees of the bank due to their representation of the bank president. The motion for disqualification was granted. The Petitioners' appeal is now before this Court. ¹

No. 99 E.D. Misc. Docket 1989

I. ATTORNEY-CLIENT PRIVILEGE

Petitioners contend that the trial court erred in denying their motion for the return of the handwritten notes, asserting that the notes are protected by the attorney-client privilege as a confidential communication. Petitioners assert further that the attorney-client privilege was not waived. Indeed, Petitioners claim that objection was made immediately to the seizure of the notes and that prompt action was taken to prevent the Commonwealth from conducting any additional review of the notes prior to a determination by the trial court.

The Commonwealth counters with its argument that the attorney-client privilege does not extend to notes that are written for the client's own use. Alternatively, the Commonwealth posits that the notes fall within the crime-fraud exception to the privilege.

The inquiry that must be addressed first is whether a client's memorialization of discussions with his attorney in handwritten notes is a confidential communication subject to the attorney-client privilege.

In Commonwealth v. Maguigan, 511 Pa. 112, 124, 511 A.2d 1327, 1333 (1986), this Court stated that the roots of the attorney-client privilege are firmly entrenched in our common law, described fittingly as "... the most revered of our common law privileges." We noted that the privilege, as it relates to criminal proceedings, has been codified in this Commonwealth at 42 Pa.C.S. § 5916:

In a criminal proceeding counsel shall not be competent or permitted to testify to confidential communications made to him by his client, nor shall the client be compelled to disclose the same, unless in either case this privilege is waived upon the trial by the client.

We noted that the codification of the privilege merely restates the common law privilege and its attendant case law interpretations.

The statement of the rationale underlying the attorney-client privilege oft-quoted with approval by this Court bears repeating:

"The purposes and necessities of the relations between a client and his attorney require, in many cases, on the part of the client, the fullest and freest disclosure to the attorney of the client's objects, motives and acts. This disclosure is made in the strictest confidence, relying upon the attorney's honor and fidelity. To permit the attorney to reveal to others what is so disclosed, would be not only a gross violation of a sacred trust upon his part, but it would utterly destroy and prevent the usefulness and benefits to be derived from professional...