In Re Grand Jury Subpoena
2014 U.S. App. LEXIS 2593
| 3rd Cir. | 2014Background
- Corporation (a Pennsylvania consulting firm) and its President (“Client”) were targets of an FCPA grand jury investigation based on payments to a Bank official’s sister following successful financing transactions.
- Client consulted a former in‑office attorney (“Attorney”) in April 2008 about paying the Bank official; Attorney researched the FCPA, asked whether the Bank and banker were governmental, advised against the payment, then provided a copy of the FCPA; Client proceeded and the professional relationship ended.
- The grand jury subpoenaed Attorney to testify; the Government moved to enforce the subpoena invoking the crime‑fraud exception to the attorney‑client privilege.
- The district court, after reviewing the Government’s ex parte affidavit and conducting an in camera examination of Attorney (excluding parties and denying transcript disclosure), concluded the Zolin threshold was met and that the crime‑fraud exception applied; it ordered Attorney to testify. Intervenors appealed.
- The Third Circuit reviewed applicable legal standards de novo, reviewed the district court’s factual/legal application for abuse of discretion, and affirmed the order compelling testimony.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard for in camera examination of attorney | Higher standard needed for oral, unrecorded communications because memories are malleable | Zolin threshold (good‑faith factual basis) should apply equally to oral testimony | Zolin standard governs; district court properly applied it |
| Excluding parties from in camera exam and withholding transcript | Intervenors should attend and receive transcript to challenge the crime‑fraud finding | Exclusion and nondisclosure necessary to protect grand jury secrecy and avoid previewing government theory | District court did not abuse discretion in excluding parties or withholding transcript |
| Whether crime‑fraud exception applies (intent and furtherance) | Client lacked requisite intent at time of consultation; brief advice to not pay cannot be used in furtherance | Evidence (Client’s statements and timing of payment) supports conclusion Client intended illegal payment and could use Attorney’s advice to avoid detection | No abuse of discretion; reasonable basis to suspect Client intended/used advice to further illegal scheme; exception applies |
| Work‑product protection for Attorney’s recollections/research | Attorney’s work product or recollections are protected | Crime‑fraud finding (and absence of litigation context) overcomes work‑product protection | Work‑product doctrine does not shield the communications here (not prepared for litigation and crime‑fraud finding defeats privilege) |
Key Cases Cited
- United States v. Zolin, 491 U.S. 554 (Sup. Ct. 1989) (Zolin threshold for in camera review to test crime‑fraud exception)
- Upjohn Co. v. United States, 449 U.S. 383 (Sup. Ct. 1981) (attorney‑client privilege protects confidential communications made for legal advice)
- In re Grand Jury, 705 F.3d 133 (3d Cir.) (clarifies reasonable‑basis standard for crime‑fraud exception)
- In re Grand Jury Subpoena, 223 F.3d 213 (3d Cir. 2000) (discusses prima facie showing and use of in camera review)
- In re Impounded, 241 F.3d 308 (3d Cir. 2001) (standards of review and district court obligations over grand jury materials)
- United States v. Jacobs, 117 F.3d 82 (2d Cir. 1997) (exception applies where client set upon criminal course before consulting counsel)
- Hickman v. Taylor, 329 U.S. 495 (Sup. Ct. 1947) (work‑product doctrine and concerns about forcing attorneys to recount witness communications)