Sealed Case, In re, 81-1717
| Decision Date | 23 April 1982 |
| Docket Number | No. 81-1717,81-1717 |
| Citation | 676 F.2d 793 |
| Parties | , 82-1 USTC P 9335, Fed. Sec. L. Rep. P 98,647, 10 Fed. R. Evid. Serv. 490 In re SEALED CASE. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from the United States District Court for the District of Columbia (D.C. Miscellaneous No. 81-0140).
Before WRIGHT, TAMM and WALD, Circuit Judges.
Opinion for the court filed by Circuit Judge J. SKELLY WRIGHT.
Circuit Judge WALD filed an opinion concurring in Parts I, II, IV and V of Circuit Judge J. SKELLY WRIGHT's opinion and in the result.
This case requires us to consider how far the "work product" doctrine shields the files of a corporation's in-house lawyer from scrutiny by a federal grand jury investigating corporate abuses. Appellant ("Company") 1 is a multinational, "Fortune 500" corporation whose activities have come under investigation by a grand jury for possible conspiracy to defraud the government and obstruction of justice. The District Court has held Company's agent in contempt of court for refusing to produce before the grand jury eight items from the files of Company's former general counsel, for which the grand jury had issued a subpoena. We conclude that principles of exception and waiver, fundamental to the work product doctrine in this context, strip two of the eight items of the protection they might otherwise deserve.
The following account is taken from the affidavit of one X______, an American citizen with business interests in a specific foreign country. We have excised proper names and other identifying information in order to preserve the confidentiality of grand jury proceedings, but the substance of the story X______ tells-and presumably told to the grand jury-sets the stage for the case before us:
Shortly after the signing of the contract in (the country where X does business) during the first part of Oct. 1974 I received a phone call from (a senior officer at Company). He said they were having difficulty in arranging the pay off to (the senior official of a company owned by the foreign government) and asked me if I could get them an invoice to cover it from a company I was associated with (in the foreign country). He said that once the * * * pay off was taken care of they would then arrange for the financing I needed for my (business).
I arranged for (the Company officer) to get the invoice he needed on the stationery of (the company I owned).
The Date for the pay off was set * * *. (The foreign official and a woman) arrived at my house about 9:30 AM. I left shortly after to pick up (Company's chairman) at the airport. I picked up (Company's chairman) at about 10:30 AM and as we were driving to my House he said that we had to stop first at the (Bank) & pick up the money. He said that he had a check made out to (my company) and that all I had to do was endorse it because the arrangements had already been made with the Bank. I reluctantly agreed, with considerable misgivings about entering the transaction.
We arrived at the Bank where everything was ready, the money was counted out, and we left. (An associate of the chairman) was waiting in his car in front of the Bank and followed us to my House where he remained in his car. (The chairman) and I entered the House where (the woman and the official) were waiting. I placed the Briefcase containing the money on the floor. After the greetings and Handshakes (the chairman) picked up the Briefcase and opened it and said, (The Chairman) then proceeded to count the money. (The official) said no, it's not necessary. (The chairman) then closed the Briefcase and handed it to the official). 2
X's account of this transaction is, of course, just one of many that have emerged in three successive investigations of Company's business practices and candor. The current grand jury investigation follows separate investigations by the Internal Revenue Service (IRS) and the Securities and Exchange Commission (SEC), during which Company and its officers had many opportunities to tell their version of this story. The documents at issue in this case come from the files of Company's former senior vice president and general counsel, Y, and they concern both the matters under investigation and the investigations themselves.
On April 7, 1976 the IRS announced a broad effort to uncover tax evasion by large corporations that had failed to account adequately for bribes, "slush funds," and other practices that might have led to inaccurate computation of their tax liabilities. 3 The IRS instructed the examiners in its Large Case Audit Program to ask top executives in a number of large corporations a series of questions relating to such practices. All questions were to be answered in affidavits, under oath, and signed by the officers to whom they were directed. 4
Shortly thereafter IRS examiners in the city where Company's headquarters are located propounded a list of 19 questions to several of Company's officers, including Company's chairman (who is also its chief executive officer) and the officers responsible for its foreign operations. The Company officers each submitted their affidavits to the IRS in June or July of 1976.
In response to one of the IRS questions concerning bribes or "kickbacks" paid to officials of foreign governments, Company's chairman stated:
The Company, directly or through its subsidiaries or affiliates, retained various persons to act as finders, consultants or sales agents with respect to possible acquisitions and to doing business * * * in and with various foreign countries. * * * To the best of my knowledge, the payments referred to above were not bribes, kickbacks or other such payments to obtain favorable treatment in securing business or otherwise to obtain special concessions, or to pay for favorable treatment for business secured or for special concessions already obtained. 5
The chairman appended a list of "finders" that Company had employed between 1971 and 1976 and the fees paid them. Most of the finders' fees had been paid in connection with the acquisition of relatively small operating companies or properties, almost exclusively in the United States. However, the chairman's list of finders' fees also included two substantial payments to companies associated with X______. According to the chairman's list, this fee was paid in connection with acquisition of certain contracts in the foreign country where one of X______'s companies was incorporated, and the fee had involved two separate transactions, a $200,000 payment by check to the foreign company and a $200,000 loan guarantee in favor of a second company owned by X______. 6
One of Company's vice presidents, who had responsibility for its operations in the country where X______ did business, also responded to the IRS question concerning bribes and kickbacks. This man-the same person who according to X______ arranged the "pay off" at X______'s house-submitted an answer and a list of finders substantially identical to those submitted by Company's chairman. He also submitted a list of "consultants" and their fees, which showed that one Z had been paid $120,000 in 1974 with regard to unspecified "Business Opportunities" in a particular region. 7
Several of the IRS questions concerned payments to political figures and government officials in the United States. With respect to these, Company's chairman stated:
Several Company officers were requested to make and made election campaign contributions to various candidates in the United States. In connection with contributions aggregating approximately $5,000, officers received advances from, or were reimbursed by, the Company. I have been advised that all of such advances have been repaid to the Company. 8
The vice president, however, gave the IRS a substantially different statement under oath. He admitted that he had made political contributions totalling $1,400 and received an advance from Company to cover them. He confirmed that he had repaid the advance. But after he repaid the advance he was reimbursed a second time for the contributions, by means of expense account manipulation. 9
Several months later, while the IRS investigation of Company was still pending, the SEC began an informal investigation of Company's activities that later escalated into a formal investigation and enforcement action. In the informal portion of its investigation the SEC used an innovative technique known as the "voluntary disclosure program" to induce Company to investigate and reform itself, thus saving the government the considerable expense of a full-scale investigation and prosecution. Because the SEC's program significantly affects our view of the work product privilege, we relate its background in some detail.
As early as 1974 the SEC was engaged in investigating the political "slush fund" practices of some corporations. Initially the SEC staff carried out its own investigations, but as the scope of the payments problem became apparent, extending to foreign as well as domestic payments, the SEC realized that it did not have the resources to investigate each case carefully. 10 In several 1974 enforcement actions, the SEC thus sought and obtained consent decrees in which corporate defendants agreed to appoint special committees of their boards of directors-composed entirely of directors unaffiliated with management-to carry out independent investigations of the defendants' payments practices. These investigations were to be performed by outside counsel hired for that purpose and responsible only to the special committee. The results of the investigation would be embodied in a report to the special committee, which would also be shared...
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