United States v. Osborn
Decision Date | 06 November 1975 |
Docket Number | No. 75-479.,75-479. |
Citation | 409 F. Supp. 406 |
Parties | UNITED STATES of America and Russell K. Ward, Special Agent, Internal Revenue Service, Petitioners, v. Harvey J. OSBORN, Respondent, Ben Johnson et al., Intervenors. |
Court | U.S. District Court — District of Oregon |
Sidney I. Lezak, U. S. Atty., William W. Youngman, Asst. U. S. Atty., Dist. of Oregon, Portland, Or., for petitioners.
Harvey J. Osborn, in pro per.
Clyde R. Maxwell, Newport Beach, Cal., and Norman Sepenuk, Portland, Or., for intervenors.
This is a proceeding brought under sections 7402(b) and 7604(a) of the Internal Revenue Code to judicially enforce three Internal Revenue Service summonses. The summonses were served on August 9, 1974, upon Harvey J. Osborn, an attorney, to testify and to produce any documents relating to the federal income tax liabilities for the years 1969 through 1973 of three former clients — Ben Johnson, Sam Linder, and National Inventory Control Systems (NICS), a corporation. Johnson and Linder were shareholders, officers, and directors of NICS during this period. Osborn was also their personal attorney.
Osborn is no longer actively engaged in the practice of law. He has not represented these three clients in any legal matters since early 1973. He has retained his office files pertaining to his representation of them. He still considers himself their attorney with regard to matters on which he formerly represented them.
On September 10 and 13, 1974, Osborn appeared and testified in response to the summonses. He brought with him all his files. As to certain testimony and documents, Osborn refused to comply with the summonses, claiming attorney-client privilege or the client's privilege against self-incrimination.
Because of Osborn's refusal, a petition to enforce Internal Revenue Service summonses was filed on May 20, 1975. On August 13, 1975, the motion of Johnson, Linder, and NICS to intervene was granted. The taxpayers assert on their own behalf the attorney-client privilege and (except NICS) the privilege against self-incrimination.
The transcript of Osborn's testimony is 120 pages long. An analysis of his responses to specific questions in light of the claimed privileges would be exceedingly difficult. The petitioners have simplified my task by designating certain matters for which they request enforcement. I shall limit my consideration to those matters.
Following is a list of the eleven items specified by petitioners. The listing is largely derived from purported copies of statements sent by Osborn to his clients.
Transaction Statement Item Subject Date Date 1 Estate Planning 1-21-71 5- 1-71 2 Ben Johnson Trust 2-17-71 5- 1-71 Trust Agreements 4-12-71 5- 1-71 6-29-71 2-29-72 8-31-72 12-26-72 11-13-72 12-26-72 3 Stock Redemption 2-17-71 5- 1-71 Agreement 4 Two Wills 2-17-71 5- 1-71 5 Property Transaction 4-13-71 5- 1-71 12-31-71 2-29-72 8- 3-72 12-26-72 8-14-72 12-26-72 8-31-72 12-26-72 10-17-72 12-26-72 10-18-72 12-26-72 11-13-72 12-26-72 11-17-72 12-26-72 6 Ben Johnson 4-19-71 5- 1-71 Insurance Co. 6- 9-71 2-29-72 6-15-71 2-29-72 7- 7-71 2-29-72 7- 8-71 2-29-72 7-20-71 2-29-72 8- 5-71 2-29-72 8-23-71 2-29-72 7 World Computer 9-13-71 2-29-72 Corporation 1-31-72 2-29-72 10- 5-72 12-26-72 11-17-72 12-26-72 11-21-72 12-26-72 8 Ben-Frank Co. 11-13-72 12-26-72 9 All statements of services performed for or mailed to NICS by Mr. Osborn for the period 1-1-69 through 12-31-73, excluding those statements on hand dated 3-1-70, 4-1-70, 7-1-70, 12-1-70 5-1-71, 2-29-72, 12-26-72, and 12-31-72 10 All ledger sheets pertaining to National Inventory Control Systems for the period 1-1-69 through 12-31-73 11 Air Conditioners 6- 3-71 2-29-72
As to items 1 through 8 and item 10, intervenors have asserted the attorney-client privilege and/or the privilege against self-incrimination.1 They claim no knowledge as to item 11. They point out that Osborn previously testified (Q-28 to 31 of the transcript) that he has none of the statements described in item 9.
Following a hearing on September 3, 1975, Osborn submitted to the court for in camera inspection all the previously undisclosed documents. The documents furnished pertain to items 1, 2, 3, 5, 6, 7, and 10. No documents were supplied as to items 4, 8, 9, or 11. Osborn reported no files or documents available as to item 4, no files or information available as to item 8, no statements available as to item 9, and no file or other information available as to item 11.
Because of the responses of intervenors and Osborn, I need not consider whether Osborn should produce or testify as to items 9 and 11, nor need I consider whether Osborn should produce any documents relating to items 4 and 8. I must decide whether Osborn should be required to produce documents pertaining to items 1, 2, 3, 5, 6, 7, and 10 and whether he should be required to testify as to those items and items 4 and 8.
Prior to adoption of the new Federal Rules of Evidence, the Ninth Circuit held that the attorney-client privilege must be resolved on the basis of state law. United States v. Cromer, 483 F.2d 99, 101 (9th Cir. 1973); Baird v. Koerner, 279 F.2d 623, 632 (9th Cir. 1960). Under Rule 501, Fed.R.Evid., effective July 1, 1975, such questions are generally governed by the "principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience". Intervenors' claims of privilege will be considered in accordance with this rule.
The case most frequently cited for a statement of the requirements for invocation of the attorney-client privilege is United States v. United Shoe Machinery Corp., 89 F.Supp. 357, 358-359 (D.Mass.1950):
"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."
A somewhat similar formulation of the privilege is found in 8 Wigmore, Evidence § 2292 (McNaughton rev. 1961):
"(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection be waived."
I decide intervenors' claims upon these general principles. The discussion below is limited to specific documents produced for inspection and specific questions asked of Osborn. The same principles shall apply to any further testimony which may be elicited from Osborn.
The only document, Exhibit Z, submitted by Osborn for in camera inspection is a letter from him to Johnson dated February 23, 1971. I find that this letter is protected from disclosure by the attorney-client privilege. The privilege extends to confidential communications from attorney to client as well as to such communications from client to attorney:
8 Wigmore, Evidence § 2320 (McNaughton rev. 1961)
The only document submitted is the same letter described in item 1 above. That letter is privileged.
Osborn submitted two files, designated Exhibits A and B. The first file contains four documents and the second contains one document.2
The first document in the file designated Exhibit A is a stock redemption agreement executed on December 15, 1971, between NICS and Mrs. Johnson. I find that this document is protected from disclosure by the attorney-client privilege. Both NICS and Mrs. Johnson were clients of Osborn. Neither the agreement itself nor the record indicates that the document was ever disclosed to anyone other than NICS and Mrs. Johnson. Under these circumstances, the attorney-client privilege is applicable:
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