Investigation v. Doe

• Decision Date: 27 July 2020
• Docket Number: No. 19-10187, No. 19-10261,19-10187
• Parties: IN RE GRAND JURY INVESTIGATION, USAO No. 2018R01761 (Grand Jury Subpoenas To Pat Roe), United States of America, Plaintiff-Appellee, v. Doe Company, Defendant-Appellant, v. Pat Roe ; John Doe, Movants. In re Grand Jury Investigation, USAO No. 2018R01761 (Grand Jury Subpoenas To Pat Roe), United States of America, Plaintiff-Appellee, v. Doe Company, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

966 F.3d 991

IN RE GRAND JURY INVESTIGATION, USAO No. 2018R01761 (Grand Jury Subpoenas To Pat Roe),

United States of America, Plaintiff-Appellee,

v.Doe Company, Defendant-Appellant,

v.Pat Roe ; John Doe, Movants.

In re Grand Jury Investigation, USAO No. 2018R01761 (Grand Jury Subpoenas To Pat Roe),

United States of America, Plaintiff-Appellee,

v.Doe Company, Defendant-Appellant.

No. 19-10187

No. 19-10261

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 14, 2019 San Francisco, California

Filed July 27, 2020

Richard M. Strassberg (argued), James D. Gatta, and Elizabeth S. David, Goodwin Procter LLP, New York, New York; Andrew Kim, Goodwin Procter LLP, Washington, D.C.; for Defendant-Appellant.

Adam A. Reeves (argued), William Frentzen, and Robert S. Leach, Assistant United States Attorneys; Merry Jean Chan, Chief, Appellate Section, Criminal Division; David L. Anderson, United States Attorney; United States Attorney's Office, San Francisco, California; for Plaintiff-Appellee.

Before: Kim McLane Wardlaw, William A. Fletcher, and Richard Linn,^* Circuit Judges.

OPINION

W. Fletcher, Circuit Judge:

A federal grand jury has been investigating the acquisition of one company by another. The acquired company, through its officers and shareholders, is alleged to have provided fraudulently misleading information about its true value, leading the acquiring company to pay a substantially inflated price. The grand jury has so far issued two indictments. The grand jury issued subpoenas to a third company, Doe Company ("the Company"), and to Pat Roe, a former officer at the acquired company and a current partner at the Company. The Company moved to quash the subpoenas.¹

The district court denied the Company's motion to quash and ordered compliance by both the Company and by Pat Roe. The Company has appealed that order (No. 19-10187). The district court then ordered the Company and Roe to show cause why they were not in contempt. Roe responded by agreeing to produce the documents in Roe's possession. The Company declined to produce the documents in its possession, and the district court held the Company in contempt. The Company has also appealed that order (No. 19-10261). We consolidated the Company's appeals and stayed the district court's enforcement order against Roe.

We conclude that we lack appellate jurisdiction to review the district court's enforcement order directed to Roe. We dismiss that part of the appeal. We have jurisdiction to review the district court's enforcement orders directed to the Company and holding the Company in contempt. We affirm those orders.

I. Standard of Review

We review a district court's denial of a motion to quash a grand jury subpoena and its order of contempt sanctions for an abuse of discretion. In re Grand Jury Subpoena, No. 16-03-217 , 875 F.3d 1179, 1183 (9th Cir. 2017). Underlying factual findings are reviewed for clear error. Id. "In reviewing decisions of the district court, we may affirm on any basis supported by the record ...." In re Frontier Props., Inc ., 979 F.2d 1358, 1364 (9th Cir. 1992) ; see also Schweiker v. Hogan , 457 U.S. 569, 585 n.24, 102 S.Ct. 2597, 73 L.Ed.2d 227 (1982).

II. Enforcement Order Against Pat Roe

The Company seeks to bring an interlocutory appeal from the part of the district court's enforcement order that is directed to Pat Roe. For the reasons that follow, we do not have appellate jurisdiction.

We generally have jurisdiction to review only "appeals from all final decisions of the district courts." 28 U.S.C. § 1291. Pretrial discovery orders, including denials of motions to quash grand jury subpoenas, are not final decisions under § 1291. United States v. Ryan , 402 U.S. 530, 532–33, 91 S.Ct. 1580, 29 L.Ed.2d 85 (1971). Absent certification by the district court, a party seeking review must either seek mandamus, or disobey the order and then appeal the resulting contempt citation. See , e.g. , Mohawk Indus., Inc. v. Carpenter , 558 U.S. 100, 110–12, 130 S.Ct. 599, 175 L.Ed.2d 458 (2009) (no appellate jurisdiction over a pretrial discovery order seeking information claimed to be protected by the attorney-client privilege); In re Grand Jury Subpoena Issued to Bailin ("Bailin "), 51 F.3d 203, 205 (9th Cir. 1995) (no appellate jurisdiction over denial of motion to quash a subpoena until person subpoenaed refuses to comply and is held in contempt).

The finality requirement is not a mere formality. It is especially important in criminal cases, where interlocutory appeals can impede the speedy and effective administration of the criminal justice system. Ryan , 402 U.S. at 532–33, 91 S.Ct. 1580. "The appealability of the denial of a motion to quash is particularly inappropriate in the grand jury setting." In re Grand Jury Subpoena Dated June 5, 1985 , 825 F.2d 231, 236 (9th Cir. 1987). A grand jury may consider an extraordinarily broad range of evidence, and "the scope of [its] inquiries is not to be limited narrowly." United States v. Calandra , 414 U.S. 338, 343, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974) ; id. at 354–55, 94 S.Ct. 613 (grand jury may consider illegally obtained evidence); Fed. R. Evid. 1101(d) (Federal Rules of Evidence generally do not apply to grand jury proceedings). Moreover, while the subpoena awaits review, "targets are free, memories of other witnesses are fading, evidence is disappearing, the grand jury may have difficulty proceeding against other targets, and events may escape scrutiny as the statute of limitations takes its toll." In re Klein , 776 F.2d 628, 631 (7th Cir. 1985)

A. Perlman

The Company argues that we have appellate jurisdiction over its interlocutory appeal under the so-called Perlman doctrine. see Perlman v. United States , 247 U.S. 7, 38 S.Ct. 417, 62 L.Ed. 950 (1918). We disagree.

The Supreme Court has carved out a "narrow exception" under Perlman for cases in which documents sought by the grand jury are subject to a claim of privilege. Bailin , 51 F.3d at 205. In Perlman , the trial court ordered the clerk of court, who retained possession of Perlman's documents from a previous case, to produce the documents to a grand jury investigating Perlman. Perlman appealed, claiming that disclosure would violate, inter alia, his Fifth Amendment privilege against self-incrimination. The Supreme Court allowed the appeal on the ground that Perlman would otherwise have been "powerless to avert the mischief of the order." Perlman , 247 U.S. at 13, 38 S.Ct. 417. As the Court later explained, to have held otherwise in Perlman "would have made the doctrine of finality a means of denying Perlman any appellate review of his constitutional claim." Cobbledick v. United States , 309 U.S. 323, 328–29, 60 S.Ct. 540, 84 L.Ed. 783 (1940).

"We have interpreted Perlman to mean that a discovery order directed at a disinterested third-party custodian of privileged documents is immediately appealable because the third party, presumably lacking a sufficient stake in the proceeding, would most likely produce the documents rather than submit to a contempt citation." United States v. Griffin , 440 F.3d 1138, 1143 (9th Cir. 2006) (internal quotation marks omitted). Because, as in Perlman , a person seeking to protect privileged information in the hands of a third party cannot expect that third party to submit to a contempt citation, that person is "powerless to avert the mischief of the order" unless an interlocutory appeal is available.

We have sometimes described the Perlman rule in shorthand fashion, omitting recitation of the requirement that the challenged order seeks privileged documents. We have focused, instead, on the question whether the third party to whom the subpoena is issued would be willing to risk contempt. see In re Optical Disk Drive Antitrust Litig. , 801 F.3d 1072, 1076 (9th Cir. 2015) ("The Perlman rule has been formulated as providing a right of immediate appeal by a party aggrieved by a district court discovery order whenever the order requires a third party to produce evidence or documents and that third party cannot be expected to go into contempt merely to create a final appealable order."); In re Grand Jury Subpoenas Duces Tecum , 695 F.2d 363, 365 (9th Cir. 1982) ; cf. 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) (under Perlman , "a discovery order directed at a disinterested third party is treated as an immediately appealable final order"); United States v. Amlani , 169 F.3d 1189, 1192 (9th Cir. 1999) (a third party who is a former attorney, as distinct from a current attorney, cannot be expected to risk a contempt citation).

Despite our abbreviated statements of the doctrine, the rule under Perlman is that we may entertain interlocutory appeals from orders enforcing grand jury subpoenas only when they require production of materials that are claimed to be privileged or otherwise legally protected from disclosure. The vast majority of our cases applying Perlman involve orders issued to attorneys seeking information protected by the attorney-client privilege. Wright & Miller, 15B Federal Practice and Procedure § 3914.23 (2d ed. 2020 update) (noting that these comprise the "largest identifiable category" of Perlman cases); see, e.g. , United States v. Krane , 625 F.3d 568, 571–72 (9th Cir. 2010). Other cases allege other evidentiary privileges. See, e.g. , United States v. Gonzalez , 669 F.3d 974, 977 n.2 (9th Cir. 2012) (joint defense privilege); Griffin , 440 F.3d at 1143 (marital communications privilege); In re Grand Jury Proceedings , 867 F.2d 562, 563 (9th Cir. 1989) (psychotherapist-patient privilege), abrogated on other grounds by Jaffee v. Redmond , 518 U.S. 1, 116 S.Ct. 1923, 135 L.Ed.2d 337 (1996). Some cases, including Perlman , involve a constitutional privilege. Harris v. United States , 413 F.2d 316, 317 (9th Cir. 1969) (Fifth Amendment privilege against self-incrimination). Finally, a few cases involve some other legal claim against...