United States v. Grand Jury Investigation

• Decision Date: 27 August 1975
• Docket Number: No. Misc. 6211.,Misc. 6211.
• Citation: 401 F. Supp. 361
• Parties: UNITED STATES of America v. GRAND JURY INVESTIGATION.
• Court: U.S. District Court — Eastern District of Pennsylvania

401 F. Supp. 361

UNITED STATES of America v. GRAND JURY INVESTIGATION.

No. Misc. 6211.

United States District Court, W. D. Pennsylvania.

August 27, 1975.

Blair Griffith, U. S. Atty., Stephen I. Goldring, Justice Dept., Pittsburgh, Pa., for plaintiff.

Harold Gondelman, Joseph G. Kanfoush, William F. Manifesto, Donald Hershman, Pittsburgh, Pa., for defendant.

MEMORANDUM OPINION

SNYDER, District Judge.

We are here concerned with problems arising out of a Government Motion to Compel Testimony from attorneys summoned to appear before a Federal Grand Jury in the Western District of Pennsylvania. The attorneys when questioned all invoked the attorney-client privilege at the direction of their clients.

BACKGROUND

A Special Grand Jury has been investigating George Edward Lee and others for possible violations of the Internal Revenue laws of the United States. The Grand Jury narrowed its inquiry to the accuracy of Lee's tax returns for the years 1968 through 1974, to determine whether he had sources of income which were not reported or had made payments in excess of reported income. During the course of the investigation, information was sought concerning various business ventures in which Lee was believed to have a substantial financial interest, and in which businesses he had utilized the services of attorneys Carl M. Janavitz, Paul A. Love, Charles N. Caputo, Stanley D. Kahn II, and Donald S. Hershman.

On March 20 and 21, 1975, these attorneys were summoned by subpoena to appear and bring with them records of various corporations and business activities in which it was believed Lee had an undisclosed financial interest. These subpoenas were in a form requiring production of:

"All books, records, correspondence and memoranda relating to transactions with, by or for George E. Lee in his own name or in the names of * * * or under any other designation known for the years 1968 through and including 1974. In particular, it is requested that you furnish the following:

1. Dates, amounts and purpose of legal fees paid;

2. Settlement sheets, sales agreements, purchase money mortgages, deeds, mortgage bonds, deeds of Trust, Sheriff's deeds, liquor licenses, state and Federal Estate tax records, insurance records, trust account records, bank accounts (ledgers, cancelled checks and deposits), powers of attorney, personal (business) notes and repayment records and escrow accounts; and

3. Incorporating papers, minutes, stock certificates, list of officers, corporate bank records (ledgers, cancelled checks and deposits)."

At the request of both the Government and the attorneys and by Special Order of Court, an in camera inspection of the transcript of the Grand Jury proceedings was ordered. The Court found that the attorneys had refused to identify their clients, and refused to surrender any documents in their possession which might have involved any client. They further refused to reveal whether they represented any individuals believed to be associated with Lee or any corporations named in the subpoena, or discuss fees paid, or even explain matters of public record such as the listing of the attorney's office as the incorporating office. The attorneys were all asked by the Assistant United States Attorney:

"... any questions that I would ask you concerning the individuals or corporations named in the subpoena, you would invoke the attorney-client privilege concerning them and refuse to answer any questions at all concerning them?"

They all answered this question affirmatively, having received a letter dated March 19, 1975 from Alan Brunwasser, Esquire, now representing all of the individuals identified in the subpoena in another related matter, instructing the attorneys that his clients were specifically invoking the attorney-client privilege and that the attorneys were not authorized to disclose any information protected by the privilege.

DISCUSSION

This Court conceives of no purpose in extensively discussing the extremely interesting but difficult question of the extent to which the attorney-client privilege should apply in the Federal Court.¹ It is sufficient here to set forth that in Federal criminal cases there is a Federal interest in the application of a uniform law of Federal privilege, since all of such cases are of necessity grounded upon Federal Statutes. U.S.Code Cong. & Admin.News at p. 7051 (1974); Colton v. United States, 306 F.2d 633 (2d Cir. 1962), cert. denied 371 U.S. 951, 83 S.Ct. 505, 9 L.Ed.2d 499 (1963); In Re Albert Lindley Lee Memorial Hospital, 209 F.2d 122 (2d Cir. 1953), cert. denied, Cincotta v. United States, 347 U.S. 960, 74 S.Ct. 709, 98 L. Ed. 1104 (1954); United States v. Baucus, 377 F.Supp. 468 (D.Mont.1974); J. P. Foley & Co., Inc. v. Vanderbilt, 65 F. R.D. 523, 526, n.1 (S.D.N.Y.1974); Boyd v. Gullett, 64 F.R.D. 169 (D.Md. 1974).

The privilege afforded to confidential communications between client and attorney is well established in the Federal Courts and was recognized at Common Law. Prichard v. United States, 181 F. 2d 326 (6th Cir. 1950), aff'd 339 U.S. 974, 70 S.Ct. 1029, 94 L.Ed. 1380 (1950). Although the law strives to ascertain the truth, there exists a countervailing policy of insuring the right of every person to freely and fully confer with and confide in a person having knowledge of the law and skilled in its practice, so that adequate advice may be received and proper defenses asserted. Baird v. Koerner, 279 F.2d 623 (9th Cir. 1960); United States v. Pape, 144 F.2d 778 (2d Cir. 1944), cert. denied 323 U.S. 752, 65 S.Ct. 86, 89 L.Ed. 602 (1944). Such assistance can be given only when the client is free from the consequences of apprehension or disclosure by reason of the subsequent statements of his own skilled lawyer.

During the appearance before the Special Grand Jury here, and at the Hearing before this Court, the Government recognized the possible existence of an attorney-client relationship, but urged that no privilege applies to the questions put to these attorneys because the answers would "not fall within the proper scope of the attorney-client privilege."

In support of their position, the Government cites United States v. United Shoe Machinery Corporation, 89 F.Supp. 357 (D.Mass.1950), a civil anti-trust suit in which the Government offered in evidence thousands of strictly intra-corporate documents. Judge Wyzanski stated (at pp. 358-359):

"The rule which allows a client to prevent the disclosure of information which he gave to his attorney for the purpose of securing legal assistance is founded upon the belief that it is necessary `in the interest and administration of justice'. Hunt v. Blackburn, 128 U.S. 464, 470, 9 S.Ct. 125, 127, 32 L.Ed. 488. As stated in the Comment to Rule 210 of the A.L.I. Model Code of Evidence: `In a society as complicated in structure as ours and governed by laws as complex and detailed as those imposed upon us, expert legal advice is essential. To the furnishing of such advice the fullest freedom and honesty of communication of pertinent facts is a prerequisite. To induce clients to make such communications, the privilege to prevent their later disclosure is said by courts and commentators to be a necessity. The social good derived from the proper performance of the functions of lawyers acting for their clients is believed to outweigh the harm that may come from the suppression of the evidence in specific cases.' Emphasis added. But the privilege should be strictly construed in accordance with its object. People's Bank v. Brown, 3 Cir., 112 F. 652.

Since this memorandum examines in turn the asserted application of this privilege to different classes of documents, it is unnecessary to try to state at the outset and with precision every qualification necessary to found a justified claim of privilege. It will be enough now to note in general, and later to apply in detail, the main qualifications which are necessary. The privilege applies only if (1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client."

We note the early case of Alexander v. United States, 138 U.S. 353, 11 S.Ct. 350, 34 L.Ed. 954 (1891), where the lower court in a murder trial admitted into evidence a statement made by the defendant to an attorney, given after the death of the victim. The statement, admitted over an objection of confidential communication, was one from which it could be inferred that the defendant stood to profit from the victim's death, and the Court, through Mr. Justice Brown, clearly set forth the parameters of the attorney-client privilege as it was then understood (138 U.S. at p. 357, 11 S.Ct. at p. 352, 34 L.Ed. at pp. 957-960):

"The third assignment relates to the admission of the testimony of J. G. Ralls, an attorney at law, to which objection was made upon the ground that it related to a confidential communication made by the defendant, who had consulted Ralls as an attorney at law, and was therefore privileged. Ralls stated in substance that he was practicing law at Muscogee; that defendant came to his office there between the time of Steadman's disappearance and the finding of his body, `and asked me if I was an attorney; I told him I was; he said his name was Alexander, and he went on to state that he and his partner had some forty head of horses across the river, in partnership, and that some time before that, probably a week before, his

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