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| [1] | U.S. Court of Appeals, Tenth Circuit |
| [2] | No. 97-3389 |
| [3] | 149 F.3d 1146, 1998.C10.821 <http://www.versuslaw.com> |
| [4] | July 15, 1998 |
| [5] | IN RE: GRAND JURY PROCEEDINGS, INTERVENOR, APPELLANT, v. UNITED STATES OF AMERICA, APPELLEE. |
| [6] | Appeal from the United States District Court for the District of Kansas
(D.C. No. 97-2589) |
| [7] | James R. Wyrsch, (Jacqueline A. Cook with him on brief) Wyrsch Hobbs Mirakian
& Lee, P.C., Kansas City, Missouri, for Appellant. Tanya J. Treadway,
Assistant United States Attorney (Jackie N. Williams, United States Attorney),
Kansas City, Kansas, for Appellee. |
| [8] | Before Ebel, Henry and Briscoe, Circuit Judges. |
| [9] | The opinion of the court was delivered by: Ebel, Circuit Judge. |
| [10] | PUBLISH |
| [11] | Intervenor-Appellant appeals from the district court's order denying his
motion to intervene and quash grand jury subpoenas for certain documents
or, in the alternative, for protective orders. We affirm. |
| [12] | BACKGROUND |
| [13] | This case stems from the same grand jury proceeding at issue in In re
Grand Jury Subpoenas (Jane Roe & John Doe), ___ F.3d ___, 1998 WL 247705
(10th Cir. May 15, 1998). Intervenor, along with others, is a target of
an ongoing federal grand jury investigation. The Hospital, which employed
Intervenor as President and Chief Executive Officer during the relevant
time periods, agreed to produce certain documents in response to the grand
jury's subpoenas. Intervenor moved to intervene and quash the subpoenas
or, in the alternative, for protective orders on the grounds of attorney-client
privilege and the work product doctrine. In a December 15, 1997, Order,
the district court denied Intervenor's motion to intervene and ordered production
of the documents. Intervenor filed a timely notice of appeal as well as
motions to stay the district court's order. The court below and this court,
however, denied Intervenor's stay motions, and Hospital produced the disputed
documents on January 21, 1998. At oral argument, the government indicated
that at least some of these documents already have been provided to the
grand jury. |
| [14] | Discussion |
| [15] | In In re Grand Jury Subpoenas (Jane Roe & John Doe), this court affirmed
a district court order compelling the testimony of two of Intervenor's attorneys.
See In re Grand Jury Subpoenas (Jane Roe & John Doe), 1998 WL 247705,
at *10. In this case, on the other hand, Intervenor wishes to bar the production
of certain documents that he claims are covered by the attorney-client privilege
and work product doctrines. |
| [16] | Before addressing the merits, we must first confirm the parties' assertion
of jurisdiction. The denial of a motion to quash a grand jury subpoena generally
is interlocutory and not immediately appealable. See In re Grand Jury Subpoenas
Dated December 7 & 8, Issued to Bob Stover, Chief of Albuquerque Police
Dep't, 40 F.3d 1096, 1099 (10th Cir. 1994). Nevertheless, we may entertain
appellate jurisdiction in such a case if the appeal falls within the special
rule for interlocutory appeals in Perlman v. United States, 247 U.S. 7,
13 (1918). See In re Grand Jury Proceedings (Company X), 857 F.2d 710, 711
(10th Cir. 1988). As this court explained in In re Grand Jury Proceedings
(Company X), the Perlman exception is available only when the party subject
to the subpoena indicates that he or she will comply with the court order
upon a final adjudication of its validity and an interlocutory appeal is
sought by an intervenor who claims a justiciable interest in preventing
the disclosure of such documents. See id. at 711; see also In re Grand Jury
Subpoenas (Jane Roe & John Doe), 1998 WL 247705, at *2 (applying Perlman
doctrine in case where attorneys indicated that they would ultimately comply
if the grand jury subpoena were upheld). In this case, because the disputed
documents already have been turned over to the government, it is clear that
a final decision affirming the district court's order would mean that no
other action would be needed to ensure compliance with the grand jury subpoena,
i.e., the documents would continue to be available to the government and
the grand jury. Thus, although this case is somewhat different from the
traditional Perlman context, we find that we have jurisdiction to hear this
appeal. See Perlman, 247 U.S. at 13. |
| [17] | Though we may properly review this interlocutory appeal under Perlman,
the fact that at least some of the disputed documents already have been
reviewed by the grand jury raises a question of mootness. A case can become
moot during the pendency of an appeal when an event occurs that "makes
it impossible for the court to grant `any effectual relief whatever' to
a prevailing party." See Church of Scientology v. United States, 506
U.S. 9, 12 (1992) (quoting Mills v. Green, 159 U.S. 651, 653 (1895)). In
this case, we conclude that despite the proverbial cat's escape from its
bag, Intervenor's appeal is not moot because, in the event of a successful
decision on the merits, Intervenor still might obtain some modicum of meaningful
relief, e.g., an order requiring the return of the documents and the destruction
of any copies held by the government. See id. at 12-13 (holding appeal of
order requiring production of tape-recorded conversations was not moot despite
fact that tapes had been provided to the government); In re Grand Jury Subpoenas
Dated December 7 & 8, 40 F.3d at 1099-1100 (holding appeal of subpoena
for police department internal affairs reports was not moot despite fact
that reports had been provided to the grand jury). |
| [18] | Turning now to the merits of Intervenor's argument, we note that in In
re Grand Jury Subpoenas (Jane Roe & John Doe) this court adopted the
following five-part test developed by the Second and Third Circuits in In
re Bevill, Bresler & Schulman Asset Mgmt. Corp., 805 F.2d 120, 123 (3d
Cir. 1986), and United States v. International Bhd. of Teamsters, Chauffeurs,
Warehousemen & Helpers, 119 F.3d 210, 215 (2d Cir. 1997), "to determine
whether an officer may assert a personal privilege with respect to conversations
with corporate counsel despite the fact that the privilege generally belongs
to the corporation": |
| [19] | First, they must show they approached [counsel] for the purpose of seeking
legal advice. Second, they must demonstrate that when they approached [counsel]
they made it clear that they were seeking legal advice in their individual
rather than in their representative capacities. Third, they must demonstrate
that the [counsel] saw fit to communicate with them in their individual
capacities, knowing that a possible conflict could arise. Fourth, they must
prove that their conversations with [counsel] were confidential. And, fifth,
they must show that the substance of their conversations with [counsel]
did not concern matters within the company or the general affairs of the
company. |
| [20] | In re Grand Jury Subpoenas (Jane Roe & John Doe), 1998 WL 247705,
at *4 (citations and quotations omitted). |
| [21] | Relying on this five-part test from In re Bevill, the district court found
that Intervenor could not establish the existence of a personal attorney-client
privilege because all of the documents at issue only pertained to "his
acts as a corporate officer" of the Hospital, and thus, they did not
satisfy the fifth prong of the test. See In re Bevill, 805 F.2d at 123.
In addition, the district court held that most of the documents could not
satisfy the fourth prong of In re Bevill because other corporate officers
or other third parties also received copies, and thus confidentiality was
not preserved between Intervenor and the corporate attorneys. See id. |
| [22] | We conclude that the district court erred in finding that Intervenor,
as a matter of law, could not establish the existence of a personal attorney-client
relationship under the fifth prong of In re Bevill simply because the subject
matter of the documents related to corporate activities. The fifth prong
of In re Bevill, properly interpreted, only precludes an officer from asserting
an individual attorney client privilege when the communication concerns
the corporation's rights and responsibilities. However, if the communication
between a corporate officer and corporate counsel specifically focuses upon
the individual officer's personal rights and liabilities, then the fifth
prong of In re Bevill can be satisfied even though the general subject matter
of the conversation pertains to matters within the general affairs of the
company. For example, a corporate officer's Discussion with his corporation's
counsel may still be protected by a personal, individual attorney-client
privilege when the conversation specifically concerns the officer's personal
liability for jail time based on conduct interrelated with corporate affairs.
Such a conversation would satisfy the fifth prong of In re Bevill test because
the officer's potential prison sentence is outside the scope of the corporation's
concerns and affairs. |
| [23] | In In re Grand Jury Subpoenas (Jane Roe & John Doe), this court found
that a limited attorney-client privilege existed between Intervenor and
corporate counsel, but only as to "that very small portion of communications
in which Intervenor sought legal advice as to his personal liability without
regard to any corporate considerations" and did not "extend to
communications made while third parties were present nor does it extend
to communications in which both corporate and individual liability were
discussed." In re Grand Jury Subpoenas (Jane Roe & John Doe), 1998
WL 247705, at *4. Thus, there this court reaffirmed the traditional rule
that a corporate officer, in certain circumstances, could show the existence
of a personal attorney-client privilege for communications with corporate
counsel, even if the subject matter of the communications involved corporate
affairs. See, e.g., Wylie v. Marley Co., 891 F.2d 1463, 1471-72 (10th Cir.
1989) (privilege covered officer's communications with corporate counsel
regarding personal rights under corporate employment agreement). |
| [24] | Nevertheless, such an attorney-client privilege can exist only when the
officer discusses his or her personal liability, legal rights, or actions,
as distinguished from the corporation's rights and responsibilities. In
such circumstances, the officer might have a legitimate expectation of a
confidential attorney-client relationship and might be able to shield those
communications under the attorney- client privilege (assuming the first
four prongs of In re Bevill are satisfied). As a result, Intervenor is not
barred as a matter of law from showing that a personal attorney-client relationship
may have existed simply because the documents in question touched on the
subject matter of corporate actions. |
| [25] | However, whether or not Intervenor might have been able to show the existence
of a personal attorney-client relationship with corporate counsel, he still
had the burden in this case of showing that the privilege actually applies
to the documents at issue. See Motley v. Marathon Oil Co., 71 F.3d 1547,
1550 (10th Cir. 1995), cert. denied, 517 U.S. 1190 (1996). In this respect
he falters for several reasons. First, the appellant has not produced for
our review the particular documents at issue nor has he otherwise adequately
demonstrated in the record that any of the documents ordered produced were
limited to the topic of his individual legal rights and responsibilities.
(In fact, the limited descriptions of the documents provided to us by the
appellant seems to negate such an inference.) Thus, as to the particular
documents at issue, Intervenor has failed to establish that the documents
satisfy the fifth prong of In re Bevill. |
| [26] | In addition, Intervenor has failed to establish that the documents satisfy
the fourth prong of In re Bevill, dealing with confidentiality. The district
court found: |
| [27] | [T]he majority of documents are corporate letters or memoranda sent to
third parties in addition to, or instead of, [Intervenor]. With respect
to these documents . . . [Intervenor] has failed to demonstrate . . . that
the subject matter was confidential. A number of other corporate documents
are letters sent between third parties, where [Intervenor] is not even copied
on the document. Further, [Intervenor] has not attempted to explain how
he can claim a personal attorney-client privilege as to other documents,
which do not reflect either [of his attorneys] as a part to the document.
*fn1 |
| [28] | Nowhere on appeal does Intervenor identify specific documents to demonstrate
that the district court clearly erred in these factual determinations. Because
Intervenor did not meet his burden of showing that the documents at issue
were confidential communications between him and the corporate attorneys
acting in their capacity as his personal lawyer, we affirm the district
court's ruling that Intervenor was not able to demonstrate the existence
of a personal attorney-client privilege with respect to the documents at
issue. |
| [29] | Finally, the district court held that Intervenor "failed to meet
his burden of demonstrating that each of the documents to which he is claiming
work product protection was in fact prepared in anticipation of litigation.
The documents appear to be prepared in the regular course of business."
The work product privilege only extends to documents prepared by an attorney
for the client in anticipation of litigation. See In re Grand Jury Proceedings
(Vargas), 727 F.2d 941, 945 (10th Cir. 1984). The party asserting work product
privilege has the burden of showing the applicability of the doctrine. See
Barclaysamerican Corp. v. Kane, 746 F.2d 653, 656 (10th Cir. 1984). Intervenor
has not established that the district court clearly erred in finding that
the documents were not prepared in anticipation of litigation. |
| [30] | For much the same reasons, we reject Intervenor's arguments concerning
a joint-defense privilege. Intervenor contends that his interest in protecting
the confidentiality of the documents at issue here is protected by the attorney-client
privilege between the Hospital and its lawyers because he had a "joint-defense"
relationship with the Hospital. However, to establish a joint-defense privilege,
the Intervenor was required to demonstrate (1) the documents were made in
the course of a joint-defense effort; (2) the documents were designed to
further that effort; and (3) the underlying attorney-client privilege has
not been waived. See United States v. Bay State Ambulance & Hosp. Rental
Serv., Inc., 874 F.2d 20, 28 (1st Cir. 1989); see also United States v.
Evans, 113 F.3d 1457, 1467 (7th Cir. 1997) (quoting United States v. Schwimmer,
892 F.2d 237, 243-44 (2d Cir. 1989) (noting that the "joint-defense
privilege" is more properly labeled a "common interest rule")).
As the district court correctly found, Intervenor has failed to meet the
elements of a joint-defense privilege because he has failed to produce any
evidence, express or implied, of a joint-defense agreement with the Hospital,
and he has failed to show how the documents at issue here furthered the
putative joint-defense strategy. Furthermore, it appears that the Hospital
has waived its attorney-client privilege with respect to these documents,
and as a result, there is no attorney-client privilege on which Intervenor
can base his joint-defense privilege claim. |
| [31] | Because of our rulings on the issues above, we need not address, and do
not address, the other issues raised by Intervenor. |
| [32] | Conclusion |
| [33] | For these reasons, we AFFIRM the district court's order. |
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| Opinion Footnotes | |
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| [34] | *fn1
As this court noted in In re Grand Jury Subpoenas (Jane Roe & John Doe),
1998 WL 247705, at *3, "We review the factual findings underlying the
court's attorney-client privilege ruling for clear error and purely legal
questions de novo." |
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