John Doe, Inc., In re

• Decision Date: 13 January 1994
• Docket Number: No. 2195,D,2195
• Parties: 38 Fed. R. Evid. Serv. 1010 In re JOHN DOE, INC. JOHN DOE, INC. and John Doe, Petitioners-Appellants, v. UNITED STATES of America, Respondent-Appellee. ocket 93-6175.
• Court: U.S. Court of Appeals — Second Circuit

Page 633

13 F.3d 633

38 Fed. R. Evid. Serv. 1010

In re JOHN DOE, INC.

JOHN DOE, INC. and John Doe, Petitioners-Appellants, v. UNITED STATES of America, Respondent-Appellee.

No. 2195, Docket 93-6175.

United States Court of Appeals, Second Circuit.

Argued Aug. 12, 1993.

Decided Jan. 13, 1994.

Jerry S. McDevitt, Pittsburgh, PA (Laura A. Brevetti, Elan Gerstmann, New York City, of counsel), for petitioners-appellants.

Sean F. O'Shea, Asst. U.S. Atty., Brooklyn, NY (Zachary W. Carter, U.S. Atty., E.D.N.Y., Peter A. Norling, Asst. U.S. Atty., of counsel), for respondent-appellee.

Before: WINTER, MINER and WALKER, Circuit Judges.

WINTER, Circuit Judge:

This appeal concerns the appropriate procedures by which a district court may determine the existence of the crime-fraud exception to the attorney-client privilege. John Doe, Inc. and John Doe, ¹ the CEO and sole shareholder of John Doe, Inc., appeal from Judge Sifton's order compelling John Doe, Inc.'s former attorney ("the attorney") to testify before a grand jury on the ground that the crime-fraud exception applied to appellants' assertion of the attorney-client privilege. ² Because the procedures employed by the district court provided due process and because the district court articulated a sufficiently high standard of proof for establishing the exception, we affirm.

In April 1993, the attorney received a subpoena ordering him to give testimony before a grand jury. An Assistant United States Attorney ("AUSA") advised the attorney that he would be questioned about the content of communications with CEO John Doe and that the crime-fraud exception to the attorney-client privilege would apply to those communications because the communications involved an attempt by John Doe to suborn perjury. By letter dated May 14, 1993, current counsel for John Doe and John Doe, Inc. informed the AUSA that neither appellant had waived the privilege and requested that the government respect the privilege unless and until it obtained a final compulsion order from the district court, in compliance with the procedures established in United States v. Zolin, 491 U.S. 554, 109 S.Ct. 2619, 105 L.Ed.2d 469 (1989).

In response to appellants' request, on May 18, 1993, the government moved for a compulsion order and submitted to the district court for in camera review an ex parte sealed affidavit of an FBI agent, which set out the factual basis for the government's invocation of the crime-fraud exception. Appellants objected to this ex parte submission and requested that the district court disclose the contents of the affidavit and provide appellants an opportunity to make their own in camera submission. In response, Judge Sifton stated, "I did not examine the F.B.I. agent's affidavit until I had satisfied myself that this was a grand jury matter [and] [t]hat the grand jury was pursuing a legitimate investigation and that the questions sought to be asked [of the attorney] were relevant to its inquiry." The district court then concluded on the basis of the affidavit that the threshold showing had been made, and it decided to question the attorney in camera. Because of a concern for preserving grand jury secrecy, it denied the requests of the attorney's and appellants' counsel that they be permitted to be present during the examination.

After the in camera examination of the attorney, the district court stated for the record that it had briefly met ex parte with the prosecutor to determine what questions would be asked of the attorney if compelled to testify before the grand jury. The court also instructed appellants' counsel "not to interrogate [the attorney] about what went on in camera unless he asks to talk on the subject with [John Doe] and [John Doe, Inc.'s] counselor and voluntarily discloses these matters." That afternoon, the district court found that the communications at issue were "from an individual seeking to solicit the assistance of the attorney in the commission of a crime," and therefore concluded that the crime-fraud exception had been established. It then granted appellants' application for a stay pending appeal.

On June 18, 1993, appellants moved for a clarification of the standard of proof relied upon by the district court in reaching its conclusion. In an order dated June 30, 1993, the district court responded that a statement of the standard was not required because it had found that the crime-fraud exception had been established "beyond peradventure," and because the conclusion was "not a close question." This appeal followed.

A. THE PROCEDURES USED BY THE DISTRICT COURT DID NOT VIOLATE DUE PROCESS.

Appellants argue that their due process rights were violated by their exclusion from the in camera proceedings. However, taking into account the necessity of preserving the secrecy of the grand jury, we conclude that the district court's procedures did not violate due process.

1. Appellants' Denial of Access to the FBI Affidavit and Inability to Rebut Government Proof Did not

Violate Due Process.

Appellants argue that their inability to inspect and rebut with evidentiary submissions the ex parte affidavit submitted by the government runs afoul of Zolin. The purpose of the attorney-client privilege is to promote open communication between attorneys and their clients so that fully informed legal advice may be given. The crime-fraud exception strips the privilege from attorney-client communications that "relate to client communications in furtherance of contemplated or ongoing criminal or fraudulent conduct." In re Grand Jury Subpoena Duces Tecum Dated September 15, 1983, 731 F.2d 1032, 1038 (2d Cir.1984). That case established that in camera proceedings may be used to determine whether the exception applies to particular communications. Of course, if the attorney were simply called to testify in an open hearing, the privileged communications would be disclosed whether or not the exception applied. Zolin held, however, that prior to an in camera disclosure of the communications, "the judge should require a showing of a factual basis adequate to support a good faith belief by a reasonable person ... that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies." 491 U.S. at 572, 109 S.Ct. at 2630 (internal quotations and citation omitted). Zolin further established that only non-privileged material may be used to make the threshold determination that triggers in camera review. Id. at 574, 109 S.Ct. at 2632.

Appellants argue that under Zolin they should have been able to examine the ex parte affidavit submitted to the court to make the threshold showing. However, nothing in Zolin prohibits ex parte examination of non-privileged threshold material. The cautionary tone of Zolin with respect to the use of in camera proceedings concerns the disclosure of the communications for which the privilege is claimed. It does not address the propriety of ex parte submissions of non-privileged material.

We recognize that an in camera submission "deprive[s] one party to a proceeding of a full opportunity to be heard on an issue," and its use is justified only by a compelling interest. In re John Doe Corp., 675 F.2d 482, 490 (2d Cir.1982); In re Taylor, 567 F.2d 1183, 1188 (2d Cir.1977). However, in In re John Doe Corp., we held that where an in camera submission is the only way to resolve an issue without compromising a legitimate need to preserve the secrecy of the grand jury, it is an appropriate procedure. 675 F.2d at 490. Of course, where concerns for secrecy are weak, an in camera proceeding may not be justified. For example, in Taylor, we concluded that where a party who sought access to an in camera submission would learn the contents of the submission as soon as he was called as a grand jury witness, there was no legitimate concern for secrecy justifying an in...