Sealed Case, In re

Citation754 F.2d 395
Decision Date08 February 1985
Docket Number84-5389,Nos. 84-5388,s. 84-5388
Parties, 17 Fed. R. Evid. Serv. 600 In re SEALED CASE.
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

Appeals from the United States District Court for the District of Columbia (D.C. Misc. Nos. 84-0144 & 45).

William Gray Schaffer, Washington, D.C., for appellants.

Guy L. Goodwin, Atty., Dept. of Justice, Washington, D.C., of the bar of the Supreme Court of Kansas, pro hac vice, by special leave of court, with whom Joseph E. diGenova, U.S. Atty., Washington, D.C., was on the brief, for appellee.

Before TAMM and MIKVA, Circuit Judges, and MacKINNON, Senior Circuit Judge.

Opinion for the court filed by Circuit Judge TAMM.

Separate concurring opinion filed by Circuit Judge MIKVA.

TAMM, Circuit Judge:

The Synanon Church challenges a district court order compelling its attorneys to appear before the grand jury to answer questions regarding Synanon's alleged violations of federal law. In a memorandum opinion and order issued June 15, 1984, Chief Judge Aubrey E. Robinson of the United States District Court for the District of Columbia held that the attorneys' invocation of the attorney-client privilege to avoid testifying was barred by the crime-fraud exception. Synanon appeals, arguing that 1) the government did not establish the requisite prima facie case of an ongoing crime or fraud sufficiently related to the attorneys' representation to trigger the exception, and 2) even if some disclosure of otherwise privileged communications is required, the district court's order was impermissibly overbroad. For the reasons given below, we affirm the district court's order in all respects.


Appellant is an entity that refers to itself as the Synanon Foundation, Inc. or the Synanon Church (Synanon). It was founded as a tax-exempt, non-profit organization in 1958 by Charles Dederich for the purpose of rehabilitating drug addicts and engaging in research and public education.

Over the years, Synanon began to move out of the rehabilitative business and into a variety of more diverse and extremely lucrative investment and commercial enterprises. A large portion of the wealth generated by these activities eventually found its way into the pockets of the Dederich family and other Synanon leaders. As a result of these activities, the Internal Revenue Service (IRS) commenced an audit of Synanon in 1979 to determine whether to revoke its tax-exempt status.

In addition, Synanon began in the 1970's to employ extreme measures to stifle media or other external scrutiny and to silence disaffected members. These measures have included lawsuits and violent attacks directed at media, former members, attorneys involved in litigation against Synanon, or anyone else viewed as an "enemy."

As a result of the IRS audit and the extensive litigation, Synanon's organization and internal policies became increasingly subject to discovery by opposing litigants. In response, and at the direction of Synanon executives and its legal department, Synanon embarked on a massive and systematic program to destroy and alter subpoenaed evidence or evidence sought pursuant to civil discovery requests. Affidavits of two former Synanon members who participated in this program reveal a scheme that worked substantially as follows.

The principal target of the campaign was an extensive library of tape-recorded speeches of Charles Dederich and other key discussions or pronouncements of Synanon officials. Many of the taped speeches revealed violent plots against those whom Dederich viewed as Synanon's enemies. Others discussed the channeling of the charitable foundation's assets into the hands of the Dederich family and other Synanon officials through salaries, bonuses, and other means.

Synanon's archivist, Steve Simon, prepared lists of incriminating subjects and provided them to those involved in listening to and erasing tapes. In addition, Simon would receive information from Synanon's legal department concerning specific materials being sought by opposing litigants. The archivist would collect the pertinent tapes and erase the incriminating materials, relabel them, and burn the original labels. Others were relabeled with innocuous titles to avoid subpoena and document production requests entirely.

Although most of Synanon's litigation in the late 1970's took place in California, 1 Synanon in July 1978 commenced an action in the District of Columbia Superior Court to recover a $250,000 deposit paid in connection with the planned purchase of a building in the District of Columbia. Synanon Foundation, Inc. v. Bernstein, No. 7189-78 (D.C.Super.Ct. Oct. 12, 1983) (Bernstein ). Synanon also sued the IRS in August 1982 in the United States District Court for the District of Columbia seeking a declaratory judgment that the IRS erroneously revoked Synanon's tax-exempt status. Synanon Church v. United States, 579 F.Supp. 967 (D.D.C.1984) (the tax case). Attorney John Doe 2 has represented Synanon in both suits since September 1981. Attorney James Roe, a member of Doe's law firm, represented Synanon from July to November of 1983.

In July 1983, the defendant in Bernstein moved to dismiss Synanon's complaint on the grounds that Synanon had destroyed relevant evidence. Judge Braman granted the motion. In February 1984, Judge Richey dismissed the complaint in the tax case on grounds that Synanon was collaterally estopped from challenging Judge Braman's prior findings of misconduct and that those findings established a fraud upon the courts.

Information obtained by the government during its audit of Synanon and the ensuing tax case precipitated a grand jury investigation of Synanon for possible violations of 18 U.S.C. Sec. 1505 (1982) (obstruction of justice), 18 U.S.C. Sec. 1001 (1982) (fictitious or fraudulent statements in department or agency matters), 18 U.S.C. Sec. 1503 (1982) (influencing officers or jurors), 18 U.S.C. Sec. 371 (1982) (conspiracy), and 18 U.S.C. Sec. 1962 (1982) (racketeering). On May 17, 1984, the government subpoenaed Doe and Roe to testify before the grand jury regarding Synanon's destruction and alteration of documents and records and perjury by Synanon members in the Bernstein and tax cases. Doe and Roe invoked the attorney-client privilege and refused to testify.

The government on May 18, 1984 filed an amended motion to compel testimony based upon the "crime-fraud" exception to the attorney-client privilege. The government alleged in its motion that false declarations, altered documents, and perjured testimony were presented in both courts during the period of representation by Doe and Roe and that false and altered documents were presented in pleadings filed by Doe. In support of that motion, the government submitted five items of evidence: 1) a sworn declaration dated July 8, 1983 by Bette Fleishman, a Synanon member who, at the direction of Synanon executives, participated in the destruction of subpoenaed evidence; 2) a sworn declaration dated September 12, 1983 by George Farnsworth, a former Synanon member who worked on a secret Synanon project to destroy and alter information in Synanon's computer indices of the tape recordings and transcripts contained in the Synanon archives; 3) Superior Court Judge Leonard Braman's October 12, 1983 ruling and opinion in Bernstein finding that Synanon had willfully destroyed and altered Synanon audio tapes that had been requested by the defense; 4) a ruling and opinion by United States District Court Judge Charles R. Richey dated February 9, 1984 dismissing the tax case because of Synanon's "willful, systematic, and extensive destruction and alteration of documents and tapes relevant to a determination of Synanon's tax-exempt status"; and 5) an in camera submission demonstrating Synanon's continuing concealment of its scheme of evidence destruction and alteration throughout both the Bernstein and the tax cases.

The district court found that the government had made a prima facie showing of ongoing crimes and frauds during the period that Doe and Roe represented Synanon and that the crime-fraud exception to the attorney-client privilege therefore applied. Specifically, the court found that "Synanon perpetrated a continuing fraud connected with, but not limited to, the actual destruction of records. The later cover-up was designed to further an ongoing conspiracy to manipulate the process of the courts for Synanon's own ends." The court also found that this fraud necessarily involved the attorneys. The court therefore ordered Doe and Roe to appear before the grand jury and answer questions in connection with the violations. In response to the order, Doe and Roe filed affidavits with the district court stating that they felt compelled by the Code of Professional Responsibility to comply with the order of the court and would testify over the objections of their client rather than place themselves in contempt. This appeal by Synanon followed.

A. Appealability

An order in an ongoing proceeding to compel testimony or document production ordinarily is not appealable unless the party to whom it is addressed refuses to respond and is held in contempt. In re Sealed Case, 737 F.2d 94, 97 (D.C.Cir.1984) (Sealed Case III ). In cases where the person subpoenaed is not the holder of a privilege, however, appellate review may be available prior to the execution of the order compelling testimony. See Perlman v. United States, 247 U.S. 7, 38 S.Ct. 417, 62 L.Ed. 950 (1918). The Perlman exception is based on the rationale that a witness whose privilege is not at stake has no incentive to preserve the privilege by committing contempt of court.

This court recently held that when circumstances make it unlikely that an attorney would risk a contempt citation in order to allow immediate review of a claim of privilege, the Perlman exception will apply. Sealed Case III, ...

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