807 F.3d 451
1st Cir.2015Background
- David Gorski, a non-veteran, allegedly ran Legion Construction as a sham Service-Disabled Veteran Owned Small Business (SDVOSB) to obtain government contracts; indictment charged conspiracy and wire fraud.
- Legion restructured in early 2010 to reflect a veteran majority owner; documents were back-dated and an affidavit swore a false purchase date to defeat new SBA verification rules.
- Mintz Levin (law firm) was retained to effect the 2010 restructuring; Gorski also consulted personal counsel Elizabeth Schwartz.
- The government issued Rule 17(c) subpoenas to Legion and Mintz Levin; both withheld documents as attorney-client privileged.
- The district court conducted an in camera review, found the crime-fraud exception applied to most contested Mintz Levin materials, and ordered production, but excluded communications between Gorski and Schwartz.
- On interlocutory appeal: Gorski, Legion, and the government cross-appealed; the First Circuit addressed jurisdictional questions and application of the crime-fraud exception.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gorski may immediately appeal the district court's disclosure order under the collateral-order doctrine | Gorski: collateral-order doctrine allows immediate review because disclosure would be effectively unreviewable on final judgment | Government: Mohawk bars immediate collateral-order appeals of privilege disclosure; postjudgment remedies suffice | Held: No jurisdiction — Mohawk forecloses collateral-order review of privilege disclosure orders; Gorski's appeal dismissed |
| Whether Legion (a non-party) may immediately appeal the order compelling its counsel (Mintz Levin) to produce privileged materials | Legion: Perlman exception permits immediate appeal by a party claiming privilege when a non-party is ordered to produce | Government: Not raised against Perlman in substance | Held: Court has jurisdiction under Perlman; Legion may appeal the Mintz Levin production order |
| Whether the crime-fraud exception applies to Mintz Levin's documents (i.e., whether prima facie showing was met) | Government: Indictment + document record give reasonable basis to believe Gorski used counsel to further/ conceal fraud | Legion/Mintz Levin: Representation could be legitimate compliance work; district court failed to review documents individually; client lacked intent to use counsel for fraud | Held: Affirmed — prima facie test met (client engaged in fraud and communications intended to facilitate/conceal); production order as to Mintz Levin affirmed |
| Whether communications between Gorski and his personal counsel Schwartz fall outside the crime-fraud exception because Schwartz did not participate in SBA submissions | Government: Whether Schwartz aided submissions is irrelevant; client intent to use counsel to facilitate fraud suffices | District court/Gorski: Schwartz was not involved in SBA filings, so crime-fraud exception does not apply | Held: District court applied incorrect legal reasoning; vacated exclusion of Schwartz materials and remanded to apply correct standard |
Key Cases Cited
- Mohawk Indus. v. Carpenter, 558 U.S. 100 (Sup. Ct.) (collateral-order doctrine does not permit immediate appeal of privilege disclosure orders)
- Zolin v. United States, 491 U.S. 554 (Sup. Ct.) (district courts may conduct in camera review under a good-faith reasonable basis standard)
- Perlman v. United States, 247 U.S. 7 (Sup. Ct.) (non-party discovery orders can be immediately appealable to protect a party's privilege)
- In re Grand Jury Proceedings, 417 F.3d 18 (1st Cir.) (prima facie standard and scope for crime-fraud exception; in camera review standard)
- In re Grand Jury Proceedings (Violette), 183 F.3d 71 (1st Cir.) (crime-fraud exception two-part prima facie test)