In Re Grand Jury Cert Petition

No. _________ ================================================================

In The

Supreme Court of the United States -----------------------------------------------------------------IN RE: GRAND JURY SUBPOENA CORPORATION, CLIENT, Petitioners. -----------------------------------------------------------------On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Third Circuit -----------------------------------------------------------------PETITION FOR A WRIT OF CERTIORARI -----------------------------------------------------------------IAN M. COMISKY* MATTHEW D. LEE BRIDGET E. MAYER BLANK ROME LLP One Logan Square Philadelphia, PA 19103 (215) 569-5646 [email protected] [email protected] STEPHEN ROBERT LACHEEN LACHEEN, WITTELS & GREENBERG, LLP 1429 Walnut Street, 13th Floor Philadelphia, PA 19102 (215) 735-5900 [email protected] Attorneys for Petitioners *Counsel of Record ================================================================ COCKLE LEGAL BRIEFS (800) 225-6964 WWW.COCKLELEGALBRIEFS.COM

i QUESTIONS PRESENTED FOR REVIEW The crime-fraud exception to the attorney-client privilege has not been examined by this Court since its decision in United States v. Zolin, 491 U.S. 554 (1989), over 25 years ago. It is generally agreed that there are two elements to the crime-fraud exception: (1) the client intended to engage in a crime or fraud when consulting the attorney; and (2) the attorneyclient communication was used in furtherance of the crime or fraud. All of the courts of appeals have examined these requirements, but have reached widely differing results. This case thus presents the issue of the proper elements to the crime-fraud exception. The present case also presents the issue of the quantum of proof necessary to satisfy the crime-fraud exception, an issue left unresolved in Zolin, and the proper standard to be met prior to an in camera interview of an attorney-witness for the purpose of determining the applicability of the exception. This case further presents the question of whether grand jury secrecy is violated when a district court conducts an in camera examination of an attorney-witness without the presence of counsel for the target. The questions presented are: 1.

Whether the crime-fraud exception to the attorney-client privilege, last discussed in Zolin, applies solely because the client is later accused of committing a crime or

ii QUESTIONS PRESENTED FOR REVIEW – Continued fraud, even though the attorney who was consulted was unable to provide definitive advice and the client believed that he was acting within the scope of the law. 2.

Whether the government must make a threshold showing higher than that required by Zolin, for the in camera examination of documents, in order for a district court to conduct an in camera examination of an attorney-witness for the purpose of making a crime-fraud finding.

3.

Whether grand jury secrecy requires a district court to exclude counsel for grand jury targets from an in camera judicial examination of an attorneywitness and permits the district court to refuse to furnish either a transcript or a summary of the testimony provided before ruling on the applicability of the crime-fraud exception.

iii LIST OF PARTIES AND CORPORATE DISCLOSURE STATEMENT Per the Court’s direction, these sections are omitted from this bound submission. Because this appeal arises from a grand jury proceeding, Petitioners are identified by the pseudonyms used by the Court of Appeals. A List of All Parties and a Corporate Disclosure Statement describing Petitioners by name is being provided to the Court under seal.

iv TABLE OF CONTENTS Page QUESTIONS PRESENTED FOR REVIEW ........

i

LIST OF PARTIES AND CORPORATE DISCLOSURE STATEMENT .................................

iii

TABLE OF CONTENTS ......................................

iv

TABLE OF AUTHORITIES ................................. vii OPINION BELOW ...............................................

1

JURISDICTION ...................................................

1

CONSTITUTIONAL PROVISION INVOLVED ....

2

INTRODUCTION ................................................

2

STATEMENT OF THE CASE ..............................

5

A.

The Government Serves A Grand Jury Subpoena On Corporation And Client’s Former Counsel And Moves To Compel Compliance ................................................

6

B.

The District Court’s Order ........................

6

C.

The In Camera Examination Of Attorney ...

7

D.

The District Court’s Opinion And Order .....

7

E.

Petitioners’ Appeal .....................................

9

REASONS FOR GRANTING THE WRIT ........... 10 I.

THE THIRD CIRCUIT’S DECISION DEEPENS A CIRCUIT SPLIT WITH RESPECT TO THE INTENT AND IN FURTHERANCE REQUIREMENTS OF THE CRIME-FRAUD EXCEPTION .......... 11

v TABLE OF CONTENTS – Continued Page A. The Third Circuit’s Ruling Results In Application Of The Crime-Fraud Exception So Long As An Attorney Was Consulted And The Client Is Later Accused Of Committing A Crime Or Fraud .................................................... 13 B. The Third Circuit’s “In Furtherance” Ruling Is Contrary To Holdings Of Other Circuits ...................................... 16 C. The Court Should Decide The Unresolved Issue In Zolin Involving The Requisite Standard Of Proof For Application Of The Crime-Fraud Exception ....................................................... 19 II.

THE COURT SHOULD DETERMINE THE APPROPRIATE THRESHOLD STANDARD TO BE APPLIED PRIOR TO THE IN CAMERA EXAMINATION OF A WITNESS FOR THE PURPOSE OF MAKING A CRIME-FRAUD DETERMINATION ..................................................... 25 A. Zolin Does Not Apply With Respect To In Camera Reviews Of Unrecorded Communications .................................. 25 B. The Circuit Courts Are Not In Agreement As To The Procedures Applicable To In Camera Attorney-Witness Interviews .................................................... 29

vi TABLE OF CONTENTS – Continued Page III.

THE COURT SHOULD DECIDE THE PROCESS THAT IS DUE IN CASES WHERE AN IN CAMERA EXAMINATION OF AN ATTORNEY IS PERMITTED ......... 31

CONCLUSION..................................................... 39 APPENDIX Opinion of the United States Court of Appeals for the Third Circuit, dated February 12, 2014 .................................................................. App. 1 Government’s Opposition to Petition for Writ of Certiorari in John Doe 1 v. United States of America, No. 12-1239 ..................................... App. 26 SEALED SUPPLEMENTAL APPENDIX Third Circuit Order Staying Mandate ......Supp. App. 1 Third Circuit Order Denying Rehearing and Rehearing En Banc ................................Supp. App. 2 Third Circuit Oral Argument Transcript ...Supp. App. 3 District Court’s January 18, 2013 Memorandum .......................................................Supp. App. 74 Letter to District Court Enclosing Questions for Attorney ..........................................Supp. App. 82 District Court’s November 13, 2012 Memorandum .......................................................Supp. App. 90

vii TABLE OF AUTHORITIES Page CASES Alabama v. White, 496 U.S. 325 (1990) .....................23 Anaya v. United States, 815 F.2d 1373 (10th Cir. 1987) ...........................................................34, 38 Appeal of Catania, 682 F.2d 61 (3d Cir. 1982) ...........32 Appeal of Hughes, 633 F.2d 282 (3d Cir. 1980) ..........34 Blalock v. United States, 844 F.2d 1546 (11th Cir. 1988) ...........................................................34, 35 Bourjaily v. United States, 483 U.S. 171 (1987) ........23 Clark v. United States, 289 U.S. 1 (1933) .......... passim Cox v. Adm’r U.S. Steele & Carnegie, 17 F.3d 1386 (11th Cir. 1994) ...............................................12 Davies v. Comm’r, 68 F.3d 1129 (9th Cir. 1995) ........34 Hickman v. Taylor, 329 U.S. 495 (1947) ....................29 In re Antitrust Grand Jury, 805 F.2d 155 (6th Cir. 1986) ...........................................................13, 17 In re BankAmerica Corp. Secs. Litig., 270 F.3d 639 (8th Cir. 2001) ............................................12, 13 In re Grand Jury, 705 F.3d 133 (3d Cir. 2012) ...................................................... 20, 21, 22, 24 In re Grand Jury Investigation, 352 F. App’x 805 (4th Cir. 2009) ..................................................12 In re Grand Jury Investigation, 445 F.3d 266 (3d Cir. 2006) .....................................................12, 30

viii TABLE OF AUTHORITIES – Continued Page In re Grand Jury Investigation, 610 F.2d 202 (5th Cir. 1980) ...................................................33, 35 In re Grand Jury Matter, 697 F.2d 511 (3d Cir. 1982) ........................................................................32 In re Grand Jury Proceeding, 68 F.3d 193 (7th Cir. 1995) .................................................................34 In re Grand Jury Proceedings # 5, 401 F.3d 247 (4th Cir. 2005) ....................................... 13, 17, 21, 22 In re Grand Jury Proceedings, 417 F.3d 18 (1st Cir. 2005) ......................................... 12, 13, 15, 21, 22 In re Grand Jury Proceedings, 486 F.2d 85 (3d Cir. 1973) .................................................................27 In re Grand Jury Proceedings, 609 F.3d 909 (8th Cir. 2010) .........................................................21 In re Grand Jury Proceedings, 851 F.2d 860 (6th Cir. 1988) .........................................................38 In re Grand Jury Subpoena, 223 F.3d 213 (3d Cir. 2000) .................................................................22 In re Grand Jury Subpoena, 419 F.3d 329 (5th Cir. 2005) ............................................... 17, 21, 22, 31 In re Grand Jury Subpoena, 920 F.2d 235 (4th Cir. 1990) .................................................................32 In re Grand Jury Subpoena as to C97-216, 187 F.3d 996 (8th Cir. 1999) ..........................................31 In re Grand Jury Subpoenas, 144 F.3d 653 (10th Cir. 1998) ........................................... 17, 22, 34

ix TABLE OF AUTHORITIES – Continued Page In re Grand Jury Subpoenas Duces Tecum, 798 F.2d 32 (2d Cir. 1986) ..............................................17 In re John Doe, Inc., 13 F.3d 633 (2d Cir. 1994) ..................................................................29, 30 In re Napster, Inc. Copyright Litig., 479 F.3d 1078 (9th Cir. 2007) .............................. 12, 17, 19, 22 In re Richard Roe, Inc., 68 F.3d 38 (2d Cir. 1995) ........................................................................12 In re Sealed Case, 107 F.3d 46 (D.C. Cir. 1997) ............................................................ 14, 18, 22 In re Sealed Case, 676 F.2d 793 (D.C. Cir. 1982) .......16 In re Sealed Case, 754 F.2d 395 (D.C. Cir. 1985) ..................................................................12, 17 In re Six Grand Jury Witnesses, 979 F.2d 939 (2d Cir. 1992) ...........................................................34 In re Special March 1981 Grand Jury, 753 F.2d 575 (7th Cir. 1985) ..................................................33 Loughrin v. United States, ___ S.Ct. ___, 2014 WL 2807180 (2014) .................................................22 Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100 (2009) ................................................................. 11, 12 Nara v. Frank, 494 F.3d 1132 (3d Cir. 2007) .............10 Perlman v. United States, 247 U.S. 7 (1918) ...............9 Pritchard-Keang Nam Corp. v. Jaworski, 751 F.2d 277 (8th Cir. 1984) ..........................................15

x TABLE OF AUTHORITIES – Continued Page Senate of Puerto Rico ex rel. Judiciary Comm. v. United States DOJ, 823 F.2d 574 (D.C. Cir. 1987) ........................................................................33 United States v. Bauer, 132 F.3d 504 (9th Cir. 1997) ........................................................................17 United States v. Boender, 649 F.3d 650 (7th Cir. 2011) ............................................................ 21, 22, 30 United States v. Cleckler, 265 F. App’x 850 (11th Cir. 2008)........................................................22 United States v. Clem, 210 F.3d 373, 2000 WL 353508 (6th Cir. Mar. 31, 2000) ..............................21 United States v. Collis, 128 F.3d 313 (6th Cir. 1997) ..................................................................12, 21 United States v. Dynavac, Inc., 6 F.3d 1407 (9th Cir. 1993) ...........................................................33, 38 United States v. Eastern Air Lines, Inc., 923 F.2d 241 (2d Cir. 1991) ............................................32 United States v. Jacobs, 117 F.3d 82 (2d Cir. 1997) ............................................................ 17, 21, 22 United States v. John Doe, Inc. I, 481 U.S. 102 (1987) .......................................................................37 United States v. Phillips, 843 F.2d 438 (11th Cir. 1988) .................................................................35 United States v. Williams, 504 U.S. 36 (1992) ...........27 United States v. Zolin, 491 U.S. 469 (1989) ....... passim

xi TABLE OF AUTHORITIES – Continued Page CONSTITUTION U.S. Const. amend. V ......................................... passim STATUTES 28 U.S.C. § 1254(1) .......................................................1 Foreign Corrupt Practices Act (“FCPA”), 15 U.S.C. § 78dd-1 et.seq. .................................... 5, 9, 16 OTHER AUTHORITIES Cary Bricker, Revisiting the Crime-Fraud Exception to the Attorney-Client Privilege: A Proposal to Remedy the Disparity in Protections for Civil and Criminal Privilege Holders ............................................................................20 Crime-Fraud Ruling Forces Lawyer to Testify in Grand Jury Investigation of Former Clients, BNA Snapshot, February 18, 2014.........................27 Edna Selan Epstein, The Attorney-Client Privilege and the Work Production Doctrine, Volume I at 690 (5th ed. 2007) ...............................15 Fed. R. Crim. P. 6(e)............................................ passim James M. Fischer, The Crime-Fraud Exception to Privilege ...............................................................20 The New Wigmore: Evidentiary Privileges § 6.13.2d ..................................................................24 Winter 2012 American Bar Association .....................20

1 Petitioners Corporation and Client respectfully request that a writ of certiorari issue to review the opinion of the court of appeals.1 ------------------------------------------------------------------

OPINION BELOW The pertinent appellate decision is reported at 745 F.3d 681 and reprinted at App. 1-25. The two memorandum decisions of the district court were filed under seal and have not been published. The memorandum decisions have been submitted to the Court in a sealed Supplemental Appendix. The appellate court mandate was stayed on April 23, 2014. Supp. App. 1. ------------------------------------------------------------------

JURISDICTION The Judgment sought to be reviewed was entered on February 12, 2014. Petitioners’ petition for hearing en banc was denied on April 11, 2014. Supp. App. 2. Jurisdiction lies under 28 U.S.C. § 1254(1), and this petition is timely filed on or before July 10, 2014. ------------------------------------------------------------------

1

Because this appeal arises from a grand jury proceeding, Petitioners are identified by the pseudonyms used by the court of appeals.

2 CONSTITUTIONAL PROVISION INVOLVED U.S. Const. amend V. No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation. ------------------------------------------------------------------

INTRODUCTION 1. The attorney-client privilege is designed to encourage full and frank communication between attorneys and their clients. United States v. Zolin, 491 U.S. 469, 562 (1989). While the crime-fraud exception is traceable to Clark v. United States, 289 U.S. 1 (1933), the Court has never established a clear standard that federal courts should employ to set aside the privilege. The circuit courts, while in disagreement as to the standard to be applied, have recognized that the crime-fraud exception requires an evidentiary showing of both intent to misuse the attorney’s advice and the client’s use of that advice in furtherance of a crime or fraud.

3 The Third Circuit’s decision permits a district court to make a finding of pre-existing wrongful intent whenever a client consults an attorney as to the scope of the law and is later accused of committing a crime or fraud. Because attorneys routinely discuss the law with their clients, the effect of the Third Circuit’s presumption is that the intent element will be found, and the privilege breached, in virtually every case. A circuit conflict exists as to the intent requirement. With respect to the “in furtherance” element of the crime-fraud exception, this Court long ago indicated that an evidentiary showing that attorney advice was used to facilitate a crime or fraud is required. While the circuit courts are in disagreement as to the “in furtherance” element as well, several circuit courts have recognized that the “in furtherance” element is not met when a client ignores, or acts contrary to, attorney advice. The Third Circuit’s decision permits the application of the crime-fraud exception whenever an attorney is consulted and the client is subsequently accused of committing a crime or fraud, regardless of whether the client is provided correct or incorrect advice, or even in a case like this one where no definitive advice was given. The Third Circuit’s holding boils down to a logical fallacy: post hoc, ergo proper hoc. Beyond the elements that must be shown in order to vitiate the privilege, the quantum of proof that must be presented has been left unanswered since Zolin. This issue has been explored by the

4 district and circuit courts for over 25 years. The circuit courts employ a variety of standards resulting in, at least, a tripartite circuit split. The Third Circuit’s application of the “reasonable basis to suspect” standard, one that is significantly less demanding than those adopted in other circuits, was outcome determinative in this concededly “close case.” Additionally, the Third Circuit’s “reasonable basis to suspect” standard is indistinguishable from the threshold standard for in camera review of documents established by this Court in Zolin. See Zolin, 491 U.S. at 572. 2. This case also presents important and unresolved questions concerning the use of in camera proceedings with respect to the appropriate threshold showing required prior to an in camera examination of an attorney-witness for the purpose of reviewing unrecorded oral communications. The Court has held that in camera review may be used to determine whether documented privileged communications fall within the crime-fraud exception, but only upon the presentation of “evidence sufficient to support a reasonable belief that in camera review may yield evidence that establishes the exception’s applicability.” Zolin, 491 U.S. at 574-75. Reviewing unrecorded oral communications is a much more intrusive invasion of the privilege than the mere examination of documents and, as was recognized by the circuit court, significant concerns with respect to the attorney’s memory arise in such circumstances. App. 13.

5 The Third Circuit’s decision invites the district court to assume the role of the prosecutor in the case. 3. The district court’s refusal to permit Petitioners to attend the in camera examination of the attorney-witness, or to review a transcript thereof, was based upon an improper expansion of the scope of grand jury secrecy, resulting in a denial of due process. Circuit courts have generally agreed that Fed. R. Crim. P. 6(e) protects only what is said or takes place in the grand jury room, and not information that exists separate and apart from those proceedings. With this decision, the Third Circuit now holds that information not yet before the grand jury can be protected based on the possibility that such information may reflect evidence to be submitted to the grand jury. This ruling extends grand jury secrecy beyond any other circuit court’s decisions and is inconsistent with this Court’s precedents. ------------------------------------------------------------------

STATEMENT OF THE CASE Petitioners Corporation and Client, a consulting and risk management firm and Corporation’s President and Managing Director, respectively, are targets of a grand jury investigation into an alleged scheme to make corrupt payments in violation of the Foreign Corrupt Practices Act (“FCPA”), 15 U.S.C. § 78dd-1 et seq.

6 A. The Government Serves A Grand Jury Subpoena On Corporation And Client’s Former Counsel And Moves To Compel Compliance On May 25, 2012, the government served a grand jury subpoena on Corporation and Client’s former counsel (“Attorney”), who rented office space at Corporation’s offices and who provided legal advice to Petitioners. Petitioners moved to quash the subpoena. On June 18, 2012, the government filed a motion to enforce the subpoena seeking an order directing Attorney to provide testimony before the grand jury based upon the crime-fraud exception. The government filed an ex parte submission summarizing information allegedly obtained by an FBI agent in the investigation of Petitioners. Petitioners intervened to oppose the motion. B. The District Court’s Order On November 13, 2012, the district court ruled that it would conduct an in camera examination of Attorney, outside the presence of the government and Petitioners, to determine whether the crime-fraud exception applied. Supp. App. 100-101; App. 6. The district court concluded that the standard set out in Zolin for in camera review of documents for the purpose of making a crime-fraud determination also applied to the taking of testimony as to privileged communications. Supp. App. 97-101. The district court held that the government had met its burden

7 for in camera review under Zolin, because the government had “provided enough information in its ex parte declaration to support a good faith belief that examining [Attorney] in camera may reveal evidence that the crime-fraud exception applies.” Supp. App. 97. Petitioners thereafter requested that the district court release the transcript of Attorney’s testimony, or a redacted version, or a summary thereof, to enable Petitioners to respond to the government’s crimefraud assertion. On December 14, 2012, the district court ordered Attorney to appear for an in camera judicial interview. Attorney was permitted to be represented by his own counsel, but Petitioners and the government were excluded. Petitioners and the government were permitted to submit proposed questions; the district court observed that the questions submitted were “substantially similar.” Supp. App. 78; App. 6. C. The In Camera Examination of Attorney On January 8, 2013, the district court conducted an in camera examination of Attorney. On January 15, 2013, Petitioners renewed their request that the district court release to Petitioners the transcript of Attorney’s testimony, or at least a summary thereof. D. The District Court’s Opinion and Order On January 18, 2013, the district court granted the government’s motion to enforce, and directed Attorney to testify before the grand jury. The district

8 court refused to release any of Attorney’s testimony, stating that “the transcript almost certainly reflects a preview of [Attorney]’s eventual grand jury testimony, i.e., for the same reasons that the district court excluded [Petitioners] from the in camera interview of [Attorney], secrecy concerns outweigh any need for [Petitioners] to review the transcript of [Attorney]’s in camera interview.” Supp. App. 78.2 The district court did not hold that Petitioners used the advice of the Attorney to commit a crime or fraud, but found that Petitioners could have done so, stating that “[Client] and [Corporation] intended to commit a crime when [Attorney] was consulted for legal advice regarding the [ ] transaction and could have easily used it to shape the contours of conduct intended to escape the reaches of the law.” Supp. App. 81. The district court concluded that Attorney’s testimony and the government’s ex parte submission provided a “reasonable basis to conclude that [Attorney]’s advice was used by Client and Corporation to fashion conduct in furtherance of that crime.” Id.

2

Because Petitioners have no copy of the transcript of Attorney’s in camera interview, it has not been included in the appendices. Petitioners believe the circuit court has the transcript based upon facts outlined in the panel opinion.

9 E. Petitioners’ Appeal Petitioners timely appealed, and the district court granted a stay of its order.3 On February 12, 2014, the Third Circuit affirmed the district court’s opinion in its entirety. The panel’s opinion set forth certain facts, not contained in the record below, based upon statements apparently made by Attorney in camera to the district court: In April 2008, Client approached Attorney to discuss issues he was having with the project. Client explained that he planned on paying Banker in order to ensure that the project progressed swiftly, as Banker was threatening to slow down the approval process. Attorney did some preliminary research, found the FCPA, and asked Client whether the Bank was a government entity and whether Banker was a government official. Although Attorney could not ascertain given his limited research whether the planned action was legal or illegal, he advised Client not to make the payment. Despite this advice, Client insisted that his proposed payment did not violate the FCPA, and informed Attorney that he would go ahead with the payment. Attorney gave Client a copy of the FCPA.

3

The Third Circuit had jurisdiction pursuant to Perlman v. United States, 247 U.S. 7 (1918), which authorizes an immediate appeal from a discovery order directed at a disinterested thirdparty regarding privileged testimony.

10 App. 5.4 Petitioners’ petition for rehearing and rehearing en banc was denied on April 11, 2014. Significantly, the Third Circuit stayed its mandate pending the disposition of this petition. Supp. App. 1.5 ------------------------------------------------------------------

REASONS FOR GRANTING THE WRIT This is an extraordinary case involving the application of the crime-fraud exception to the attorneyclient privilege. The district court found that the government established a reasonable basis to suspect that Corporation and Client intended to commit a crime when Attorney was consulted, and that Attorney’s advice “could have been used” to shape criminal conduct. Supp. App. 81. The circuit court affirmed despite acknowledging that this was a “close case,” and despite the fact that Client thought his conduct was proper and Attorney did not provide definitive advice. App. 5, 19. This case involves well-developed circuit court conflicts with respect to the application of the crimefraud exception. This case also involves a significant issue of first impression regarding the showing to be 4

The project referenced involved oil and gas deals where Petitioners were retained to provide financing assistance. App. 4-5. 5 The Third Circuit thus found that there was a reasonable probability that this Court would grant certiorari and that at least five Justices would vote to reverse. See Nara v. Frank, 494 F.3d 1132, 1133 (3d Cir. 2007).

11 made prior to a district court’s in camera examination of a live attorney-witness for purposes of determining the applicability of the crime-fraud exception; coupled with a circuit split regarding the permissible scope of grand jury secrecy. The Court should grant certiorari because the circuit court’s resolution of these issues serves to all but destroy the privilege in the grand jury setting. I.

THE THIRD CIRCUIT’S DECISION DEEPENS A CIRCUIT SPLIT WITH RESPECT TO THE INTENT AND IN FURTHERANCE REQUIREMENTS OF THE CRIME-FRAUD EXCEPTION

This Court has long recognized the paramount importance of the attorney-client privilege. See, e.g., Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100, 108 (2009) (“We readily acknowledge the importance of the attorney-client privilege.”) (internal quotation omitted). The privilege is primarily concerned with “encourag[ing] full and frank communication between attorneys and their clients and thereby promot[ing] broader public interests in the observance of law and administration of justice.” Zolin, 491 U.S. at 562 (quoting Upjohn v. United States, 449 U.S. 383, 389 (1981)). This Court first mentioned the crime-fraud exception – that “[a] client who consults an attorney for advice that will serve him in the commission of a fraud will have no help from the law” – almost a

12 century ago in Clark, 289 U.S. at 15. In Zolin, the Court stated that the crime-fraud exception applies when “attorney-client communications were made in furtherance of a future crime or fraud.” 491 U.S. at 563. The courts of appeals generally agree that there are two elements that the government must establish in order invoke the crime-fraud exception: (1) the client was committing or intended to commit a fraud or crime (the “intent element”), and (2) the client used the attorney-client communication in furtherance of the alleged crime or fraud (the “in furtherance element”). See, e.g., In re Grand Jury Proceedings, 417 F.3d 18, 22 (1st Cir. 2005); In re Richard Roe, Inc., 68 F.3d 38, 40 (2d Cir. 1995); In re Grand Jury Investigation, 445 F.3d 266, 274 (3d Cir. 2006); In re Grand Jury Investigation, 352 F. App’x 805, 808 (4th Cir. 2009); United States v. Collis, 128 F.3d 313, 321 (6th Cir. 1997); In re BankAmerica Corp. Secs. Litig., 270 F.3d 639, 642 (8th Cir. 2001); In re Napster, Inc. Copyright Litig., 479 F.3d 1078, 1090 (9th Cir. 2007), abrogated on other grounds by Mohawk, 558 U.S. at 106 n.1; Cox v. Adm’r U.S. Steele & Carnegie, 17 F.3d 1386, 1416 (11th Cir. 1994); In re Sealed Case, 754 F.2d 395, 399 (D.C. Cir. 1985). The Third Circuit’s decision in this case deepens the circuit split with respect to both the intent and in furtherance elements of this test.

13 A. The Third Circuit’s Ruling Results In Application Of The Crime-Fraud Exception So Long As An Attorney Was Consulted And The Client Is Later Accused Of Committing A Crime Or Fraud Prior to the Third Circuit’s decision, circuit courts and commentators recognized that the crime-fraud exception required evidence of specific client intent to utilize attorney advice in furtherance of a crime or fraud. See, e.g., In re Grand Jury Proceedings, 417 F.3d at 23 (“The crime-fraud exception requires the client’s engagement in criminal or fraudulent activity and the client’s intent with respect to attorney-client communications.”); In re Grand Jury Proceedings # 5, 401 F.3d 247, 251 (4th Cir. 2005) (“[W]e have held that it is the client’s knowledge and intentions that are of paramount concern. . . .”); In re BankAmerica Corp. Secs. Litig., 270 F.3d at 642 (“[I]t is the client’s intent to further a crime or fraud that must be shown.”); In re Antitrust Grand Jury, 805 F.2d 155, 168 (6th Cir. 1986) (“[M]erely because some communications may be related to the crime is not enough . . . ; the communication must have been made with an intent to further the crime.”). The Third Circuit’s decision departed from these well-settled principles. Although the panel initially recognized that the crime-fraud exception does not apply where a client consults an attorney about a possible course of action and later forms the intent to commit a crime, App. 19, it created a presumption of

14 pre-existing wrongful intent whenever a client consults an attorney and is later accused of a crime or fraud. App. 21. This holding is extraordinary. The district court did not find that the advice was employed improperly, but that the advice “could have easily [been] used” by the Client in furtherance of a crime. The circuit court stated that the Client informed the Attorney of his belief that the proposed payment was not in violation of the law and the Attorney did not provide definitive advice, but nonetheless held that the exception applied. App. 5. The Third Circuit’s decision conflicts with the rulings of other circuit courts. In In re Sealed Case, the D.C. Circuit found that government evidence that a grand jury target discussed campaign finance laws at a meeting was insufficient to show the requisite intent. In re Sealed Case, 107 F.3d 46, 50 (D.C. Cir. 1997). The court reasoned that: One cannot reasonably infer from the meeting that the Company was consulting its general counsel with the intention of committing a crime, or even that the vice president was then doing so. . . . There is nothing necessarily suspicious about the officers of this corporation getting such advice. True enough, within weeks of the meeting about campaign finance law, the vice president violated that law. But the government had to demonstrate that the Company sought the legal advice with the intent to further its illegal conduct.

15 The Eighth Circuit has held an alleged fraud that occurs after sharing a report with counsel is insufficient to breach the privilege. Pritchard-Keang Nam Corp. v. Jaworski, 751 F.2d 277, 283 n.5 (8th Cir. 1984) (“That the fraud merely follows the attorney-client communication does not alone support discovery.”). The First Circuit also has held that consultation with counsel is insufficient to establish a wrongful intent. In re Grand Jury Proceedings, 417 F.3d at 24 (“[t]here is scant evidence that these clients’ purpose in retaining Lawyer II was to use his services in furtherance of a crime or fraud.”). It is hornbook law that “if the purpose for which the communications were made and the advice sought was innocent, it will not be discoverable, even if the client subsequently committed some fraud.” Edna Selan Epstein, The Attorney-Client Privilege and the Work Product Doctrine, Volume I at 690 (5th ed. 2007). The Third Circuit’s decision effectively eliminates the intent element of the crime-fraud exception because the requisite intent will be found in every case in which a client consults an attorney about a course of action and is later accused of committing a crime or fraud.6 Indeed, as recognized at oral 6

One member of the Third Circuit panel recognized the danger of assuming “bad intent” by a client whenever a consultation is followed by an alleged violation of the law. Supp. App. 38. The Third Circuit nevertheless held that the crime-fraud exception applied, failing to explain how its decision did not run afoul of this proposition.

16 argument, any time an attorney provides information to support a legal assessment, an intelligent client can figure out a better way to commit a crime whether they had a pre-existing intent to violate the law or not. Supp. App. 67. The error in the Third Circuit’s ruling is particularly evident because there appears to have been no evidence of criminal or fraudulent intent on the part of Corporation or Client at the time Attorney was consulted. The only information presented was the government’s ex parte assertion of a later FCPA violation. More must be required if the privilege is to remain viable. See Clark, 289 U.S. at 15 (“It is obvious that it would be absurd to say that the privilege could be got rid of merely by making a charge of fraud.”). The Court should grant the writ to prevent the continuing erosion of the privilege. B. The Third Circuit’s “In Furtherance” Ruling Is Contrary To Holdings Of Other Circuits This Court has stated that an attorney’s advice must be used to facilitate a crime or fraud in some way in order for the “in furtherance” element to be met. Clark, 289 U.S. at 15. The circuits have stated the “in furtherance” element in different ways. See In re Sealed Case, 676 F.2d 793, 815 (D.C. Cir. 1982) (recognizing that district courts have disagreed with respect to the “degree of relatedness required” to meet the “in furtherance” element and citing cases).

17 The Fourth Circuit requires a “close relationship” between the communications and the alleged violation. In re Grand Jury Proceedings # 5, 401 F.3d at 251. The Second Circuit requires a “purposeful nexus.” In re Grand Jury Subpoenas Duces Tecum, 798 F.2d 32, 34 (2d Cir. 1986). The Ninth Circuit requires that the communications be “sufficiently related to” and made “in furtherance of ” the intended crime. In re Napster, Inc., 479 F.3d at 1090 (emphasis in original); see also In re Grand Jury Subpoena, 419 F.3d 329, 347 (5th Cir. 2005) (requiring that communications be “reasonably related” to the furtherance of crime or fraud); In re Antitrust Grand Jury, 805 F.2d at 168 (communications must be shown to be “related to” crime or fraud); In re Grand Jury Subpoenas, 144 F.3d 653, 660 (10th Cir. 1998) (requiring evidentiary showing that “assistance was obtained in furtherance of the conduct or was closely related to it.”); In re Sealed Case, 754 F.2d at 399 (requiring showing of “some relationship between the communication and the prima facie violation”). These differing approaches should be resolved by the Court. Several circuit courts have held that the crimefraud exception does not apply if a client simply ignores attorney advice. See, e.g., United States v. Bauer, 132 F.3d 504, 509-10 (9th Cir. 1997) (rejecting application of crime-fraud exception when client “did precisely the opposite” of what he was told); United States v. Jacobs, 117 F.3d 82, 88 (2d Cir. 1997) (“A wrongdoer’s failure to heed the advice of his or her lawyer does not remove the privilege. The

18 attorney-client privilege is strongest where a client seeks counsel’s advice to determine the legality of conduct before taking action.”); In re Sealed Case, 107 F.3d at 50 (crime-fraud standard not met when “from the material before the district court, there was no way of knowing or even guessing whether the vice president was on a frolic of his own, against the advice of Company counsel, when he reimbursed the donors with corporate funds.”). The Third Circuit’s decision to affirm application of the crime-fraud exception, as crafted by the district court, deepens the circuit split with respect to the “in furtherance” element. In its opinion, the Third Circuit noted that Attorney was unable to determine whether the proposed action of Client was legal, but that Attorney advised Client not to make the payment. App. 5. The Third Circuit noted that Client still thought the payment would be legal, and Attorney did not dispute this belief, but concluded, contrary to the holdings of other circuit courts, that the crimefraud exception applied. App. 5, 21. It is far too easy for a district court to assert, post hoc, that the advice could possibly have been used to shape the client’s alleged misconduct. Not only has the Third Circuit departed from the well-reasoned decisions of other circuits that crime-fraud does not apply if the client ignores the attorney’s advice, but it went a step further by holding that even when an attorney fails to provide definitive advice, the “in furtherance” element can be met so long as some law was discussed with the client. App. 5, 21.

19 Under the Third Circuit’s view, bad intent can be divined no matter if the attorney provides correct advice that is ignored, incorrect advice, or no advice at all. The Third Circuit’s conclusion therefore falls into the logical fallacy of post hoc, ergo proper hoc, and conflicts with the law of other circuits. C. The Court Should Decide The Unresolved Issue In Zolin Involving The Requisite Standard Of Proof For Application Of The Crime-Fraud Exception In Clark, this Court discussed the crime-fraud exception in a case arising out of juror misconduct, stating that the party seeking to overcome the attorney-client privilege must make a “prima facie” showing. 289 U.S. at 15 (“[t]o drive the privilege away . . . there must be prima facie evidence that it has some foundation in fact.”) (internal citation omitted). Over fifty years later, in Zolin, this Court addressed the standard for reviewing documents in camera in order to determine the applicability of the crimefraud exception, but left unanswered the question of the quantum of proof necessary to ultimately satisfy the exception. 491 U.S. at 565 n.7. In the 25 years since Zolin, the quantum of proof issue has been examined by numerous district and circuit courts. Each circuit court has addressed this issue, but no consensus has been reached. See, e.g., In re Napster, Inc., 479 F.3d at 1091, 1093 (“Despite the fundamental importance and long history of the attorney-client privilege and the crime-fraud

20 exception, the procedures for preserving the privilege against a crime-fraud challenge are surprisingly unclear. . . . Both before and after Zolin, the lower courts have struggled with the meaning of ‘prima facie case’. . . .”). The disagreement amongst the circuits is well-recognized by courts and commentators alike. See, e.g., In re Grand Jury, 705 F.3d 133, 152 (3d Cir. 2012) (“courts of appeals are divided as to the appropriate quantum of proof necessary to make a prima facie showing.”); James M. Fischer, The CrimeFraud Exception to Privilege, 41-WTR BRIEF 30, at *33 (Winter 2012 American Bar Association) (“Courts have identified different thresholds for establishing a prima facie case.”); Cary Bricker, Revisiting the CrimeFraud Exception to the Attorney-Client Privilege: A Proposal to Remedy the Disparity in Protections for Civil and Criminal Privilege Holders, 82 Temple L. Rev. 149, 174 (2009) (“the current scheme [is one] where uncertainty caused by the [current] lack of uniform standards and procedures surrounding the application of the crime-fraud exception leaves [that] exception vulnerable to abuse”) (internal quotation omitted). The Third Circuit recognized that there is at least a tripartite split with respect to the quantum of proof required to pierce the privilege: Courts of appeals have articulated the proper measure of proof in different ways. Some require there to be probable cause or a reasonable basis to suspect or believe that the client was committing or intending to

21 commit a crime or fraud and that the attorney-client communications were used in furtherance of the alleged crime or fraud. See In re Grand Jury Proceedings, 417 F.3d at 23 & n.4; United States v. Jacobs, 117 F.3d 82, 87 (2d Cir. 1997); United States v. Collis, 128 F.3d 313, 321 (6th Cir. 1997); In re Grand Jury Proceedings, 87 F.3d 377, 381 (9th Cir. 1996). Other courts call for evidence sufficient to compel the party asserting the privilege to come forward with an explanation for the evidence offered against the privilege. See United States v. Boender, 649 F.3d 650, 65556 (7th Cir. 2011); In re Grand Jury Subpoena, 419 F.3d 329, 336 (5th Cir. 2005). Still other courts demand a showing of evidence that, if believed by a trier of fact, would establish that some violation was ongoing or about to be committed and that the attorneyclient communications were used in furtherance of that scheme. See In re Grand Jury, 475 F.3d 1299, 1305 (D.C.Cir. 2007); In re Grand Jury Proceedings # 5 Empanelled January 28, 2004, 401 F.3d 247, 251 (4th Cir. 2005); In re Grand Jury Investigation, 842 F.2d 1223, 1226-27 (11th Cir. 1987). In re Grand Jury, 705 F.3d at 152.7 7

Petitioners believe that the split is even greater. Some circuits require either probable cause or a reasonable basis to suspect that the client was committing or intended to commit a crime or fraud and that attorney advice was used in furtherance thereof. See In re Grand Jury Proceedings, 609 F.3d 909, 912 (8th Cir. 2010); United States v. Clem, 210 F.3d 373, 2000 WL (Continued on following page)

22 Until recently, the Third Circuit had stated that the quantum of proof consists of “evidence which, if believed by the fact-finder, would be sufficient to support a finding that the elements of the crime-fraud exception were met.” In re Grand Jury Subpoena, 223 F.3d 213, 217 (3d Cir. 2000) (quoting Haines v. Liggett Group Inc., 975 F.2d 81, 95-96 (3d Cir. 1992)). However, in 2012, the Third Circuit purported to clarify its approach, finding that the standard for ultimate vitiation of the privilege is “a reasonable basis to suspect that the privilege holder was committing or intending to commit a crime or fraud and that attorney-client communications or attorney work product were used in furtherance of the alleged crime or fraud.” In re Grand Jury, 705 F.3d at 153. This standard departs from those of many of the other circuits, and conflicts with Zolin.

353508, at *3 (6th Cir. Mar. 31, 2000) (table); Jacobs, 117 F.3d at 87, abrogated on other grounds by Loughrin v. United States, ___ S.Ct. ___, 2014 WL 2807180 (2014). Other courts require a showing of “reasonable cause” or “reasonable basis.” See In re Napster, Inc., 479 F.3d at 1094; In re Grand Jury Proceedings, 417 F.3d 18, 23 (1st Cir. 2005). Others contemplate burden shifting. See Boender, 649 F.3d at 655-56; In re Grand Jury Subpoena, 419 F.3d 329, 336 (5th Cir. 2005); In re Grand Jury Proceedings # 5, 401 F.3d 247, 251 n.2 (4th Cir. 2005). Still others require “evidence if believed by the trier of fact” or a “foundation in fact.” See In re Sealed Case, 107 F.3d at 50; United States v. Cleckler, 265 F. App’x 850, 853 (11th Cir. 2008); In re Grand Jury Subpoenas, 144 F.3d 653, 660 (10th Cir. 1998).

23 The Third Circuit’s “reasonable basis to suspect” standard is equivalent to the reasonable suspicion standard applied in stop and frisk cases – the lowest standard of proof in federal court matters. This Court has explained that reasonable suspicion is significantly less demanding than probable cause because it can be established “with information that is different in quantity or content than that required to establish probable cause” and with “information that is less reliable than that required to show probable cause.” Alabama v. White, 496 U.S. 325, 330 (1990). Given this parallel, it is apparent that the Third Circuit’s crime-fraud standard is significantly less demanding than those adopted in other circuits.8 In addition, the Third Circuit’s standard is functionally indistinguishable from this Court’s “factual basis adequate to support a good faith belief by a reasonable person” standard for in camera review of documents. Such a standard is fundamentally at odds with the Court’s holding in Zolin that the ultimate crime-fraud standard must be higher than that for in camera review. Zolin, 491 U.S. at 572. With no obvious difference between the Third Circuit’s crime-fraud standard and the in camera 8

Petitioners argued in the circuit court that the In re Grand Jury ruling was not a clarification, but a new standard requiring en banc review. Petitioners had contended in In re Grand Jury that the standard should be a preponderance of the evidence, relying on this Court’s opinion in Bourjaily v. United States, 483 U.S. 171 (1987).

24 standard set out in Zolin,9 the result is that once the standard for in camera review is met, the ultimate crime-fraud standard will also be satisfied. The differing standards of the circuit courts with respect to crime-fraud require the Court to definitively set out the quantum of proof required to vitiate the attorney-client privilege.10 The differing standards mean that similarly situated parties will be treated differently depending upon where they find themselves subject to litigation – an untenable state of affairs – until this Court takes action.

9

The government maintains there is a difference. In its opposition to a petition for writ of certiorari following the Third Circuit’s decision in In re Grand Jury, the government took the position that the Zolin standard is distinguishable from the “reasonable basis to suspect” standard for the ultimate vitiation of the privilege, because the Zolin standard merely requires that in camera review be “useful” to the determination of the ultimate crime-fraud issue. App. 46. Whether in camera review would be “useful” cannot possibly be the standard, not only because in camera review of the actual communications at issue will always be useful to determining crime-fraud, but because this Court recognized in Zolin that there must be some evidence of wrongdoing to justify in camera review. Zolin, 491 U.S. at 571. 10 The issue of the ultimate crime-fraud standard frequently arises before the lower courts and shows no signs of becoming less important. One commentator has explained that the crimefraud “exception has grown in importance because the federal prosecutors appear to be invoking the exception ‘[m]ore and more often.’ ” The New Wigmore: Evidentiary Privileges § 6.13.2d (citations omitted).

25 II.

THE COURT SHOULD DETERMINE THE APPROPRIATE THRESHOLD STANDARD TO BE APPLIED PRIOR TO THE IN CAMERA EXAMINATION OF A WITNESS FOR THE PURPOSE OF MAKING A CRIME-FRAUD DETERMINATION A. Zolin Does Not Apply With Respect To In Camera Reviews Of Unrecorded Communications

In its opinion, the Third Circuit held that the standard for in camera review of materials documenting attorney-client communications, formulated by this Court in Zolin, applied with respect to unrecorded oral attorney-client communications. App. 14. This decision conflicts with the principles set out in Zolin. In Zolin, this Court determined that a party invoking the crime-fraud exception must make a threshold showing before a district court may review documented attorney-client communications in camera. 491 U.S. at 570-72. In settling upon the required showing, the Court focused on “the detrimental effect” of in camera review “on the policies underlying the privilege and on the orderly administration of justice.” In particular, the Court was concerned with (1) the potential erosion of the privilege, (2) due process implications, and (3) additional burdens on the district courts. Zolin, 491 U.S. at 570-71. In finding that the Zolin standard for in camera review of documented communications applied to oral communications, the panel purported to focus on concerns with in camera examinations articulated in

26 Zolin. App. 11-13. The opinion, however, ignored the principles set out, concluding that these concerns were no weightier in cases involving witness examinations than they are in cases involving documents. With respect to the first concern, Zolin emphasized the significance of the attorney-client privilege, noting that “examination of the evidence, even by the judge alone, in chambers might in some cases jeopardize the security which the privilege is meant to protect[,]” and that “[t]oo much judicial inquiry into the claim of privilege would force disclosure of the thing the privilege was meant to protect[.]” Zolin, 491 U.S. at 570. Despite this concern, the panel concluded, without analysis, that “a district court’s examination of a witness does no more to erode the protection than examination of written or recorded communications.” App. 12. The panel’s conclusion ignores the fact that delving into unrecorded oral communications is a much more intrusive invasion of the privilege than the mere examination of documents. One cannot ask a document or other recorded communication for information not contained therein, as such materials have closed content. In interviewing an attorney, however, one can ask for information in any number of ways, probing thoughts and impressions, and even prompting the attorney to look at communications from a different perspective.11

11

This type of probing may have occurred here. Otherwise, it is difficult to fathom the district court’s view that Client (Continued on following page)

27 With respect to the second concern, Zolin held that in camera proceedings necessarily implicate due process because such proceedings deprive a party to a proceeding of a full opportunity to be heard on an issue. Zolin, 491 U.S. at 571 (citing In re John Doe Corp., 675 F.2d 482, 489-90 (2d Cir. 1982)). The panel dismissed this concern, stating that “a district court can properly be entrusted” to consider due process and fashion a proper procedure for an in camera examination, App. 12, again failing to consider the differences between oral communications and documents. In cases involving in camera examination of documents, the documents are generally produced by possessed a “bad intent” when no definitive advice was given and Client stated that he did not believe he was violating the law. Because of the potential for the district court to act as an advocate for the government in undertaking an in camera examination of an attorney-witness, see In re Grand Jury Proceedings, 486 F.2d 85, 90 (3d Cir. 1973) (grand jury subpoenas are “almost universally instrumentalities of the United States Attorney’s office or of some other investigative or prosecutorial department of the executive branch.”); Crime-Fraud Ruling Forces Lawyer to Testify in Grand Jury Investigation of Former Clients, BNA Snapshot, February 18, 2014 (recognizing that the Third Circuit’s decision could damage the judge’s role as neutral arbiter), Petitioners argued below that such an examination would violate the constitutional separation of powers. Both the district court and the Third Circuit rejected even the possibility of such a problem. Supp. App. 100; App. 10 n.2. But this Court has recognized that although district courts oversee grand juries, the relationship between a court and a grand jury is one at “arm’s length” with the grand jury conducting its investigations independently of the judiciary. United States v. Williams, 504 U.S. 36, 47 (1992).

28 the party asserting the privilege, and that party can make a complete argument with respect to the applicability of the crime-fraud exception. In the case of oral communications, the due process implications of in camera examinations are more significant if the privilege proponent is excluded from the examination (as occurred here) because no party has full information as to what information is reported. The party asserting the privilege simply has no way of knowing what questions were asked, how they were asked, what information was reported, and how the situation may have colored the witness’ recollections. Moreover, questioning an attorney about past unrecorded communications is subject to serious risks of inaccuracy due to the limits of recollection and the passage of time. With respect to the third concern, Zolin recognized that significant burdens would be placed upon district courts in conducting in camera reviews of documents. Zolin, 491 U.S. at 571. The Third Circuit acknowledged that in camera examinations of witnesses are more burdensome than examinations of documents, but held that this did not require that such an examination be undertaken only after a higher showing. App. 12-13. To the contrary, Zolin indicated that burden on the district courts is relevant to the standard for a threshold showing prior to in camera review. The Third Circuit’s analysis significantly expands the scope of the crime-fraud exception. The Third Circuit’s speculation that clients would avoid

29 committing any attorney-client communications to writing to obtain a higher in camera review standard simply does not reflect the reality of a legal consultation; lawyers normally document their advice and, indeed this Court has generated numerous cases on attorney work product based on such writings. See, e.g., Hickman v. Taylor, 329 U.S. 495, 508-11 (1947) (recognizing work product protection for attorney notes and memoranda). The reality of attorney-client communications is that counsel will not hesitate to create a record of a client consultation based upon a concern that his or her notes, emails, or other writings would later be subject to grand jury subpoena. The fact that no notes or other documents from the Attorney were at issue here reflects only the limited nature of Petitioners’ consultation. In short, the Third Circuit failed to consider the reality of unrecorded oral communications versus documented communications and how this difference impacts the standard to be applied for in camera review, thereby ignoring the teachings of Zolin. B. The Circuit Courts Are Not In Agreement As To The Procedures Applicable To In Camera Attorney-Witness Interviews While the issue of in camera examination of live attorney-witnesses has arisen in a handful of cases, no court has taken into account the vastly different circumstances prior to applying the Zolin standard for documented communications. See In re John Doe,

30 Inc., 13 F.3d 633, 635, 637 (2d Cir. 1994) (approving a district court’s conduct of an in camera interview of an attorney-witness after the Zolin standard had been met, but never considering the material differences between documented communications versus live testimony); Boender, 649 F.3d at 656, 658 (finding that the district court was justified under the Zolin standard in holding, post-indictment, an in camera adversarial hearing involving testimony from two attorneys of the defendant to determine the application of the crime-fraud exception). Not only have the circuit courts ignored Zolin on this issue, but they disagree with respect to whether the client of the attorney to be interviewed in camera may participate in the examination. Only the Second Circuit (and now the Third Circuit) have affirmatively approved of the procedure adopted by the district court here, involving a pre-indictment in camera examination of an attorney excluding the target’s counsel. See In re John Doe, Inc., 13 F.3d at 634-35, 636-37. Other circuit courts have sanctioned the participation of counsel for the target in such an examination. See In re Grand Jury Investigation, 445 F.3d at 269 (affirming district court’s crime-fraud finding, which was based in part on an in camera examination of the grand jury target’s former counsel, which the target’s attorney was permitted to attend); Boender, 649 F.3d at 653, 656, 658 (approving a postindictment in camera examination of two attorneys of the defendant to determine the applicability of the crime-fraud exception when both the government and

31 the defense were permitted to take part in the examination).12 The circuit conflict on this issue warrants review by this Court. III. THE COURT SHOULD DECIDE THE PROCESS THAT IS DUE IN CASES WHERE AN IN CAMERA EXAMINATION OF AN ATTORNEY IS PERMITTED According to the Third Circuit, “[t]he District Court did not abuse its discretion in excluding [Appellants] from the interview [of Attorney] or declining to release a transcript or summary of the testimony” because “there appears to be a significant amount of information before the grand jury that is not known to [Appellants],” and if Appellants “were privy to the in camera examination, they could preview not only [Attorney’s] grand jury testimony, but also evidence already submitted to the grand jury, as reflected in the Government’s questions, and the Government’s eventual trial evidence and strategy,” which “is entitled to protection as a grand jury secret.” App. 16-17. The Third Circuit’s holding conflicts with the Court’s

12

Other circuit courts have declined to review such procedures. See In re Grand Jury Subpoena, 419 F.3d at 335-36 (no review of in camera examination of an attorney because the procedure was not challenged); In re Grand Jury Subpoena as to C97-216, 187 F.3d 996, 997-98 (8th Cir. 1999) (declining to review decision to conduct an in camera examination of the appellant’s former attorney without the grand jury target’s counsel present when the appellant had not objected to the procedure).

32 interpretation of grand jury secrecy, and also conflicts with the rulings of other circuit courts. Federal Rule of Criminal Procedure 6(e) generally provides that matters occurring before a grand jury may not be disclosed, and are protected as secrets. Prior to its ruling in this case, the Third Circuit’s decisions were in line with those of other circuits, holding that Rule 6(e) protects only what is said or takes place in the grand jury room, but not information existing separate and apart from those proceedings. See In re Grand Jury Matter, 697 F.2d 511, 513 (3d Cir. 1982) (“documents do not automatically become ‘matters occurring before a grand jury’ when they are subpoenaed by or transmitted to a grand jury.”); Appeal of Catania, 682 F.2d 61, 64 (3d Cir. 1982) (“The disclosure of information obtained from a source independent of the grand jury proceeding, such as a prior government investigation, does not violate Rule 6(e)”; disclosure of prior investigative materials and draft indictment not governed by Rule 6(e)(2)); see also United States v. Eastern Air Lines, Inc., 923 F.2d 241, 244 (2d Cir. 1991) (Rule 6(e) not violated by disclosure of a search warrant affidavit, even if that information might later be presented to the grand jury, where it was obtained independently from the grand jury and did not disclose matters occurring before the grand jury); In re Grand Jury Subpoena, 920 F.2d 235, 241-42 (4th Cir. 1990) (Rule 6(e)(2) protects from disclosure “only the essence of what takes place in the grand jury room” and information produced by criminal investigations

33 paralleling grand jury investigations do not constitute matters “occurring before the grand jury”); In re Grand Jury Investigation, 610 F.2d 202, 217 (5th Cir. 1980) (“[T]he disclosure of information obtained from a source independent of the grand jury proceedings, such as a prior government investigation, does not violate Rule 6(e).”); In re Special March 1981 Grand Jury, 753 F.2d 575, 578 (7th Cir. 1985) (“The principle has therefore emerged that ‘matters occurring before the grand jury’ do not include every document of which the grand jury happens to have custody.”); United States v. Dynavac, Inc., 6 F.3d 1407, 1413 (9th Cir. 1993) (only information that “reveal[s] some secret aspect of the inner workings of the grand jury” is protected; business records previously submitted to grand jury as part of criminal investigation, but created for independent reasons not protected); Senate of Puerto Rico ex rel. Judiciary Comm. v. United States DOJ, 823 F.2d 574, 584 (D.C. Cir. 1987) (rejecting the position that material that has been presented to the grand jury makes it exempt from disclosure to the target of an investigation). With its decision in this case, the Third Circuit has reversed its position: now holding, in conflict with other circuit courts, that (1) information obtained in camera from an attorney-witness, with his counsel present, and not yet before the grand jury, is protected as a “preview” of grand jury testimony; and (2) questions prepared by the government for purposes of establishing the crime-fraud exception are protected because they may reflect evidence submitted to the

34 grand jury, or the government’s trial evidence and strategy. Three circuits have specifically held that interviews of witnesses that do not take place before the grand jury are not protected by Rule 6(e). See, e.g., Davies v. Comm’r, 68 F.3d 1129, 1130 (9th Cir. 1995) (“Rule 6(e) simply does not apply to information voluntarily provided by [attorney] because a witness’s ‘knowledge and information’ is not covered by the rule.”); Blalock v. United States, 844 F.2d 1546, 1551 (11th Cir. 1988) (finding no violation of Rule 6(e) despite agents permitting third-parties to be present during the questioning of potential grand jury witnesses; “The Rule does not protect from disclosure information obtained from a source other than the grand jury, even if the same information is later presented to the grand jury.”); Anaya v. United States, 815 F.2d 1373, 1380 (10th Cir. 1987) (“There is a clear distinction between a memorandum of the testimony given by a witness before the grand jury and a memorandum of what that person told an investigator outside the grand jury room.”).13

13

Indeed, several circuits have publicly reviewed questions posed to witnesses before a grand jury to determine whether they implicate the privilege without any concern that this might reveal grand jury secrets. See, e.g., In re Grand Jury Subpoenas, 144 F.3d 653, 662 (10th Cir. 1998); In re Grand Jury Proceeding, 68 F.3d 193, 196 (7th Cir. 1995); In re Six Grand Jury Witnesses, 979 F.2d 939, 945-46 (2d Cir. 1992); Appeal of Hughes, 633 F.2d 282, 291-92 (3d Cir. 1980).

35 Information that has not yet been presented to the grand jury, with very limited exceptions, is simply not subject to protection. Compare United States v. Phillips, 843 F.2d 438, 441 (11th Cir. 1988) (financial documents obtained via grand jury subpoena but not submitted to grand jury and not indicating “pattern of the grand jury investigation” were not matters occurring before grand jury); Blalock, 844 F.2d at 1551 (questioning of witness did not reveal grand jury matters) with In re Grand Jury Investigation, 610 F.2d at 216-17 (grand jury secrecy provisions can apply to information that will be presented to the grand jury in the future such as “statements which reveal the identity of persons who will be called to testify or which report when the grand jury will return an indictment.” However, “the disclosure of information obtained from a source independent of the grand jury proceedings, such as a prior government investigation, does not violate Rule 6(e).”). To Petitioner’s knowledge, no other circuit court has approved this protection in circumstances, such as those in this case, where there was no indication that the inner workings of the grand jury would be revealed. The Third Circuit’s determination that Petitioners were properly excluded from the in camera examination of Attorney is not based upon any determination that the questions asked of, or the answers provided by, Attorney in camera in any way reflected grand jury information unknown to Petitioners. Rather, both the Third Circuit and district court merely presumed that such information could somehow be

36 gleaned from the interview. This presumption was made despite the district court’s claim that Petitioners should have been aware of their communications with Attorney, Supp. App. 78, and its recognition that Petitioners’ counsel and the government submitted substantially similar questions to be posed to Attorney at the in camera interview. Id. Petitioners’ questions consisted of the “what,” “where,” and “how” of the interaction between Attorney and Client. Supp. App. 87-88. With the government’s “substantially similar” questions, no grand jury information could possibly have been disclosed. It is also important to note that counsel for Attorney was permitted to attend the in camera proceeding with Attorney. Counsel for Attorney could not, of course, be present at the actual grand jury proceeding. The presence of counsel for the Attorney, who is under no grand jury secrecy obligations, further supports the conclusion that there was no grand jury secrecy issue in this case.14 The Third Circuit’s decision thus creates a clear circuit split with respect to the scope of grand jury secrecy. The Third Circuit’s approval of Petitioners’ exclusion from the in camera interview was also inconsistent this Court’s rationale for protecting 14

Rule 6(e)’s secrecy provisions do not apply to witnesses or their counsel. Fed. R. Crim. P. 6(e)(2). It is difficult to fathom how grand jury secrecy was involved since the alleged “review” had already been disclosed to a third-party that would not be permitted to be present during grand jury proceedings.

37 grand jury secrecy. The Court has indicated that grand jury secrecy must be protected to (1) prevent the escape of those whose indictment may be contemplated; (2) insure the utmost freedom to the grand jury in its deliberations; (3) prevent subornation of perjury or tampering with witnesses who may testify before the grand jury and later appear at the trial of those indicted by it; (4) encourage free and untrammeled disclosures by persons who have information with respect to the commission of crimes; and (5) protect an innocent accused who is exonerated from disclosure of the fact that he has been under investigation. United States v. John Doe, Inc. I, 481 U.S. 102, 110 n.5 (1987). None of these concerns are at issue here. Petitioners were well aware of the existence and nature of the grand jury investigation prior to the in camera examination of Attorney. Indeed, the government acknowledged that grand jury secrecy concerns were reduced in this case. See In re Grand Jury Subpoena, No. 2010-0127, Docket Entry 19, at 18 (E.D. Pa.). The government further acknowledged the lack of secrecy interest here, in that it did not object to Petitioners attending and participating in the in camera proceeding prior to the district court’s determination that neither party should be present. Id. at 17-18. The disclosure of the district court’s examination of Attorney would not permit Petitioners to access or influence in any way, the grand jury. Any concern that Petitioners would suborn perjury or otherwise

38 affect testimony before the grand jury would not be heightened by Petitioners’ attendance at the examination of Attorney (or by the release of the transcript), as Petitioners have known all along that the government subpoenaed Attorney and the nature of the inquiry. There is simply no reason to believe that Petitioners’ presence at the in camera examination would have affected the contents of Attorney’s testimony. Finally, protecting Petitioners from disclosure of the fact that they have been under investigation is not at issue when Petitioners themselves seek the disclosure. Because this case implicates none of the rationales for grand jury secrecy, such secrecy provides no basis for excluding Petitioners from the in camera examination of Attorney. Given the significant disagreement with respect to the scope of grand jury secrecy, see Anaya, 815 F.2d at 1378 (“the use of the term ‘grand jury materials’ in connection with Rule 6(e) disclosures has become misleading and shibbolithic.”),15 the Court should clarify the scope of this secrecy to ensure that grand jury targets are afforded due process prior to the vitiation of their privilege. Specifically, the Court should hold that grand jury secrecy does not protect 15

See also In re Grand Jury Proceedings, 851 F.2d 860, 86466 (6th Cir. 1988) (noting four different approaches that circuit courts take to address whether documents subpoenaed by a grand jury are grand jury secrets); Dynavac, Inc., 6 F.3d at 141213 (describing various approaches to the treatment of documents viewed by the grand jury).

39 factual information existing separate and apart from the grand jury proceedings that has not yet been presented to the grand jury, including examinations of potential grand jury witnesses. ------------------------------------------------------------------

CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted, IAN M. COMISKY* MATTHEW D. LEE BRIDGET E. MAYER BLANK ROME LLP One Logan Square Philadelphia, PA 19103 (215) 569-5646 STEPHEN ROBERT LACHEEN LACHEEN, WITTELS & GREENBERG, LLP 1429 Walnut Street, 13th Floor Philadelphia, PA 19102 (215) 735-5900 Attorneys for Petitioners *Counsel of Record

App. 1 PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT -----------------------------------------------------------------------

No. 13-1237 -----------------------------------------------------------------------

IN RE: GRAND JURY SUBPOENA -----------------------------------------------------------------------

On Appeal from the United States District Court for the Eastern District of Pennsylvania (E.D. Pa. No. 2-10-gj-00127-002) District Judge: Honorable Gene E. K. Pratter -----------------------------------------------------------------------

Argued September 25, 2013 Before: AMBRO, FISHER and HARDIMAN, Circuit Judges. (Filed: February 12, 2014) Ian M. Comisky (ARGUED) Matthew D. Lee Blank Rome 130 North 18th Street One Logan Square Philadelphia, PA 19103 Stephen R. LaCheen (ARGUED) LaCheen Wittels & Greenberg 1429 Walnut Street, Suite 1301 Philadelphia, PA 19102 Counsel for Appellant, John Doe

App. 2 Michelle Morgan (ARGUED) Peter F. Schenck Office of United States Attorney 615 Chestnut Street, Suite 1250 Philadelphia, PA 19106 Counsel for Appellee, United States -----------------------------------------------------------------------

OPINION OF THE COURT -----------------------------------------------------------------------

FISHER, Circuit Judge. Corporation and Client (together, “Intervenors”) are targets of an ongoing grand jury investigation into alleged violations of the Foreign Corrupt Practices Act (“FCPA”). The grand jury served a subpoena on Intervenors’ former attorney (“Attorney”) and the Government moved to enforce this subpoena and compel Attorney’s testimony, based upon the crimefraud exception to the attorney-client privilege. Intervenors sought to quash the subpoena by asserting the attorney-client privilege and work product protection. After questioning Attorney in camera, the District Court found that the crime-fraud exception applied and compelled Attorney to testify before the grand jury. Intervenors appeal, challenging the District Court’s decision to conduct an in camera examination, the procedures it fashioned for the examination, and the court’s ultimate finding that the crime-fraud exception applies. We hold that the standard announced in United States v. Zolin, 491 U.S. 554, 572

App. 3 (1989), applies to determine whether to conduct an in camera examination of a witness. We also find that the District Court did not abuse its discretion in applying this standard, in determining procedures for the examination, or in ultimately finding that the crime-fraud exception applies. We therefore affirm the District Court’s order enforcing the grand jury subpoena. I. A. This matter is before us in the context of an ongoing grand jury investigation. To maintain confidentiality, we will refer only to the facts that have been made public and will refer to those involved as “Corporation,” “Client,” and “Attorney” in order to maintain their anonymity. We also note that we and the District Court had access to information pertaining to the alleged criminal violations via the Government’s Ex Parte Affidavit, which set forth the basis for the Government’s belief that the Intervenors committed FCPA violations. Intervenors were not apprised of this information. Additionally, we were informed by Attorney’s account of the communications at issue, which were divulged to the District Court during the in camera examination. Neither the Government nor the Intervenors were privy to this account. As such, we are hampered in our ability to articulate the background information underlying our conclusions.

App. 4 Intervenors are the targets of an ongoing grand jury investigation in the Eastern District of Pennsylvania seeking to determine whether they made corrupt payments to obtain business in violation of the FCPA. Corporation is a consulting firm headquartered in Pennsylvania and Client is Corporation’s President and Managing Director. The grand jury investigation stems from Intervenors’ business transactions with a financial institution (“the Bank”) headquartered in the United Kingdom and owned by a number of foreign countries. Between 2007 and 2009, Corporation was retained as a financial advisor by five companies to provide assistance in obtaining financing from the Bank for oil and gas projects. Two of the five projects were approved and financed by the Bank, resulting in the payment of nearly $8 million in success fees to Corporation. For all five projects, “Banker,” an official and banker at the Bank, was the operation leader responsible for overseeing the financing process. In 2008 and 2009, Corporation made payments totaling more than $3.5 million to Banker’s sister. The payments occurred within months of the success-fee payments to Corporation. No evidence showed that Banker’s sister worked on or was involved in any of the projects or meaningfully contributed to any of Corporation’s other ventures. Attorney worked out of Corporation’s office but practiced law independently. In exchange for permitting Attorney to work out of the office rent-free, Client would periodically consult Attorney on ordinary legal matters. Attorney had several brief interactions with

App. 5 Client regarding one of the successful financing projects. In April 2008, Client approached Attorney to discuss issues he was having with the project. Client explained that he planned on paying Banker in order to ensure that the project progressed swiftly, as Banker was threatening to slow down the approval process. Attorney did some preliminary research, found the FCPA, and asked Client whether the Bank was a government entity and whether Banker was a government official. Although Attorney could not ascertain given his limited research whether the planned action was legal or illegal, he advised Client not to make the payment. Despite this advice, Client insisted that his proposed payment did not violate the FCPA, and informed Attorney that he would go ahead with the payment. Attorney gave Client a copy of the FCPA. After this communication, Attorney and Client ended their relationship.1 In February of 2010, the Bank began an internal investigation into the transactions between Intervenors and Banker’s sister. The Overseas AntiCorruption Unit (“the Unit”) in the United Kingdom was informed of the situation, and the Unit informed the Federal Bureau of Investigation (“FBI”). The Unit arrested Banker and Banker’s sister in the United 1

We recognize that even this vague recitation of the communications between Attorney and Client would ordinarily be covered by the attorney-client privilege. We reveal this account of the communications only because we have found that the crime-fraud exception applies.

App. 6 Kingdom; their prosecution is ongoing. The FBI began its investigation into Intervenors in February 2010. Due to the parallel prosecution of Banker and Banker’s sister in the United Kingdom, Intervenors have some knowledge of the nature of the grand jury investigation of which they are subjects. B. The grand jury served Attorney with a subpoena. On June 18, 2012, the Government moved to enforce the subpoena, seeking an order directing Attorney to appear and testify before the grand jury. On September 4, 2012, Corporation and Client moved to intervene, and the District Court granted this request. After briefing, the District Court determined that it would conduct an in camera examination of Attorney outside the presence of Intervenors and the Government to determine the applicability of the crime-fraud exception to the communications between Attorney and Client. The District Court invited Intervenors and the Government to submit questions for the District Court to ask Attorney, which both did. On January 8, 2013, the District Court questioned Attorney in camera, with only Attorney’s own counsel present. After this examination, Intervenors requested that the District Court release a transcript of Attorney’s testimony so that they could argue that the communications were not subject to the crimefraud exception. On January 18, 2012, the District Court issued a memorandum and order granting the

App. 7 Government’s motion to enforce the subpoena and directing Attorney to testify before the grand jury. Based upon its review of the Government’s Ex Parte Affidavit and Attorney’s in camera testimony, the District Court found a reasonable basis to suspect that Intervenors intended to commit a crime when Client consulted Attorney and could have used the information gleaned from the consultation in furtherance of the crime. The District Court also declined to release a transcript of the testimony. Intervenors timely appealed and the District Court granted a stay of its order compelling Attorney’s grand jury testimony pending resolution of this appeal. II. The District Court had jurisdiction under 18 U.S.C. § 3231. Ordinarily, this Court has jurisdiction only over final decisions of district courts. 28 U.S.C. § 1291. When a district court orders a witness to testify or produce documents, the order is generally not immediately appealable; rather, the witness who wishes to object “must refuse compliance, be held in contempt, and then appeal the contempt order.” In re Grand Jury, 705 F.3d 133, 143 (3d Cir. 2012) (internal quotation marks and citation omitted). However, under Perlman v. United States, 247 U.S. 7 (1918), a privilege holder may immediately appeal an adverse disclosure order when the privileged information is controlled by a “disinterested third party who is likely to disclose that information rather than be held in contempt for the sake of an immediate appeal.” In re

App. 8 Grand Jury, 705 F.3d at 138. Attorney is a disinterested third party controlling allegedly privileged information. As such, this Court has jurisdiction to hear the appeal brought by Intervenors, the privilege holders. “We exercise de novo review over the legal issues underlying the application of the crime-fraud exception to the attorney-client privilege.” In re Impounded, 241 F.3d 308, 312 (3d Cir. 2001). “Once the court determines there is sufficient evidence of a crime or fraud to waive the attorney-client privilege, we review its judgment for abuse of discretion.” Id. at 318. We review procedures used by the district court for abuse of discretion. See In re Grand Jury Subpoena, 223 F.3d 213, 219 (3d Cir. 2000) (“We conclude that the District Court did not abuse its discretion in denying Appellant and/or his attorney access to this information to protect grand jury secrecy.”). III. Central to the issues in this case is the attorneyclient privilege, the “oldest of the privileges for confidential communications known to the common law.” Upjohn Co. v. United States, 449 U.S. 383, 389 (1981). The “privilege protects from disclosure confidential communications made between attorneys and clients for the purpose of obtaining or providing legal assistance to the client.” In re Grand Jury, 705 F.3d at 151. Although the communications are often relevant and highly probative of the truth, they are protected

App. 9 in order “to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.” Upjohn Co., 449 U.S. at 389. Despite their importance, the protections afforded by the privilege are not absolute. “[T]he reason for that protection . . . ceases to operate at a certain point, namely, where the desired advice refers not to prior wrongdoing, but to future wrongdoing.” Zolin, 491 U.S. at 562-63 (internal quotation marks, alterations, and citations omitted). “To circumvent [the attorney-client] privilege[ ] under the crime-fraud exception, the party seeking to overcome the privilege . . . must make a prima facie showing that (1) the client was committing or intending to commit a fraud or crime, and (2) the attorney-client communications were in furtherance of that alleged crime or fraud.” In re Grand Jury, 705 F.3d at 151 (quoting In re Grand Jury Subpoena, 223 F.3d at 217) (internal quotation marks omitted). Because it is often difficult or impossible to prove that the exception applies without delving into the communications themselves, the Supreme Court has held that courts may use in camera review to establish the applicability of the exception. Zolin, 491 U.S. at 568-69. We explore the contours of in camera review and the ultimate crimefraud finding in this appeal.

App. 10 A. Intervenors raise issues with: the standard that the District Court applied to determine whether to conduct an in camera examination, its decision to hold an examination in this case, and the procedures that it used in that examination.2 We hold that the District Court applied the proper standard and did not abuse its discretion in finding that the standard applied or in fashioning procedures for the examination. 1. In Zolin, the Supreme Court announced the inquiry that should precede an in camera review of documents to determine the applicability of the crime-fraud exception. 491 U.S. at 572. The Court stated that a district court “should require a showing of a factual basis adequate to support a good faith 2

Intervenors also argue that the District Court’s examination of the Attorney violated the separation of powers doctrine. This claim plainly misunderstands the roles of the grand jury in investigating independently from any branch of government and of the district court in ensuring that the grand jury does not infringe upon common law privileges. The grand jury belongs to no branch of the government, instead “serving as a kind of buffer or referee between the Government and the people.” In re Impounded, 241 F.3d at 312 (quoting United States v. Williams, 504 U.S. 36, 47 (1992)) (internal quotation marks omitted). The District Court was fulfilling its obligation to check the grand jury’s investigative power by reviewing the grand jury subpoena in order to protect the attorney-client privilege. See id. at 313.

App. 11 belief by a reasonable person that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies.” Id. (internal quotation marks and citation omitted). In Zolin, the government sought to compel the production of tapes of communications and documents covered by the attorney-client privilege under the exception. Id. at 557. Intervenors assert that due to key differences between documented materials and the oral examination of an attorney, the latter should be subject to a more stringent standard than that announced for the former in Zolin. In determining the standard that should apply to in camera examination of a witness about oral communications, we first note that the Supreme Court did not exclude oral communications from the ambit of its holding. Id. at 574. Nevertheless, in camera examination of a witness implicates different concerns than examination of documents or recordings, so we must determine whether we should adopt the Zolin standard where unmemorialized oral communications are at issue. In determining whether there ought to be a threshold showing for in camera review, the Supreme Court articulated three concerns with the use of in camera examinations: erosion of the privilege that is aimed at fostering disclosure between attorney and client, due process implications, and additional burdens on the district courts. Id. at 571. Intervenors present an additional concern – the malleability of witness recollections. We will weigh these concerns

App. 12 against the need to prove the applicability of the crime-fraud exception. While the “policy of protecting open and legitimate disclosure between attorneys and clients” is of the utmost importance, id. at 571, a district court’s examination of a witness does no more to erode the protection than examination of written or recorded communications. Applying the same standard in both situations allows for equal accountability when the communications, whether at the behest of the client or not, were never chronicled. If we were to apply a heightened standard to oral communications, wouldbe criminals could use the differing standards to avoid the proper application of the crime-fraud exception. A client could seek to take advantage of the higher showing necessary to delve into oral communications by instructing the attorney not to record the communications in any way. We do not want to incentivize circumventing the proper application of the crime-fraud exception. As for the due process implications, we believe that a district court can properly be entrusted to consider the due process interests and circumstances in each case, and use its discretion to fashion a proper procedure for the in camera examination. With respect to the third concern, an in camera examination of a witness is more burdensome on the district court than examination of documents. The district court must fashion procedures for the examination, bring the witness into court, and conduct the hearing. However, the concern that the examination may be more burdensome does not indicate to us that

App. 13 such an examination should only be undertaken on a higher showing. This would serve to insulate some oral communications from the crime-fraud exception – an “intolerably high” cost. Id. at 569. Intervenors’ concern about the pliability of a witness’s memory is a substantial one. An attorney’s memory about the interaction with the client could be influenced by the mere fact that the crime-fraud exception is implicated, and the circumstances of how a question is asked can affect how the information is remembered and reported. There are also “dangers of inaccuracy and untrustworthiness” in probing into the memory of an attorney regarding past communications that do not occur with documented communications. Hickman v. Taylor, 329 U.S. 495, 512-13 (1947) (“Under ordinary conditions, forcing an attorney to repeat or write out all that witnesses have told him and to deliver the account to his adversary gives rise to grave dangers of inaccuracy and untrustworthiness.”). Despite these concerns, we are confident that district courts will be able to question an attorney-witness in a way that ensures that the attorney accurately recounts the communications with the client. The risk of inaccuracies is mitigated by the fact that the attorney will be under oath and face questioning from a judge rather than an adversary. The concern over the malleability of witness memory does not outweigh the importance of ensuring that abuses of the privilege are exposed. Some abuses of the privilege cannot be demonstrated by extrinsic evidence, so forbidding consideration of the communications would be “too great an impediment to the

App. 14 proper functioning of the adversary process.” Zolin, 491 U.S. at 569. For these reasons, we hold that district courts should use the Zolin standard to determine whether to examine a witness in camera. Before a district court can undertake an in camera examination of an attorney-witness to determine the applicability of the crime-fraud exception, the party seeking to overcome the privilege must make a “showing of a factual basis adequate to support a good faith belief by a reasonable person that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies.” Id. at 572 (internal quotation marks and citation omitted). This conclusion is not inconsistent with previous decisions of this Court. See In re Grand Jury Investigation, 445 F.3d 266, 280 (3d Cir. 2006) (affirming the district court’s finding that the crime-fraud exception applied where the district court had examined attorneys in camera); In re Grand Jury Subpoena, 223 F.3d at 216 (observing that use of in camera proceedings or ex parte affidavits is a procedure consistently endorsed to preserve grand jury secrecy). Nor is it inconsistent with decisions from other courts of appeals. See, e.g., In re John Doe, Inc., 13 F.3d 633, 637 (2d Cir. 1994) (finding that a district court’s in camera examination of an attorney after the threshold Zolin showing was made comported with due process).

App. 15 The District Court properly applied the Zolin standard and the Government’s Ex Parte Affidavit sufficiently fulfilled this standard. The Ex Parte Affidavit contained details from the FBI investigation into the projects involving the Bank for which Corporation served as an advisor. The Affidavit also contained Attorney’s statement to the FBI that Attorney was consulted about a financing project, although Attorney did not reveal the details of this communication. For these reasons, the District Court did not err in concluding that there was a factual basis to support a good faith belief that in camera examination of Attorney might reveal evidence establishing the applicability of the crime-fraud exception and in conducting an in camera examination of Attorney. 2. Intervenors contest the District Court’s decision to exclude them from the in camera examination of Attorney and its refusal to release a transcript or summary of the examination. In considering Intervenors’ request to attend the in camera examination, the District Court concluded that the balance between the need for grand jury secrecy and protection of the attorney-client privilege could only be met if neither Intervenors nor the Government were present during the examination of Attorney. The District Court denied Intervenors’ request for a transcript, redacted transcript, or summary of the examination testimony for similar reasons. The District Court explained, “[b]ecause the grand jury

App. 16 proceeding here is ongoing and because the transcript almost certainly reflects a preview of [Attorney’s] eventual grand jury testimony, . . . secrecy concerns outweigh any need for Intervenors to review the transcript of [Attorney’s] in camera interview.” Intervenors argue that what transpired in camera is not a grand jury secret, because Attorney’s recollections exist separate and apart from the grand jury investigation. The Government responds that Intervenors are not precluded from interviewing Attorney about his conversation with Client, if Attorney is willing. In this way, Attorney’s recollections are not grand jury secrets. The Government argues, on the other hand, that the questions posed by the District Court, some of which were submitted by the Government, do constitute grand jury secrets. The Government maintains that the Intervenors should be prevented from uncovering what the Government wished to ask Attorney. Intervenors respond that they already know what the grand jury is investigating due to the parallel prosecution in the United Kingdom. The District Court did not abuse its discretion in excluding the Intervenors from the interview or declining to release a transcript or summary of the testimony. The District Court noted that even though secrecy concerns are minimized by the parallel case in the United Kingdom, “there appears to be a significant amount of information before the grand jury that is not known to the Intervenors.” The District Court

App. 17 did not err in so concluding. Intervenors are not aware of how much the Government knows. But if they were privy to the in camera examination, they could preview not only Attorney’s grand jury testimony, but also evidence already submitted to the grand jury, as reflected in the Government’s questions, and the Government’s eventual trial evidence and strategy. Even though some information regarding the investigation is public, the content of this interview is entitled to protection as a grand jury secret. See In re Grand Jury Subpoena, 233 F.3d at 219 (“Given the acknowledged need for secrecy in grand jury proceedings, we reject Appellant’s argument that the ‘unique facts and circumstances in this case,’ including . . . the fact that the nature of the investigation has already been made public in several contexts, required the District Court to order disclosure of the government’s ex parte affidavit.”). We therefore conclude that the District Court did not abuse its discretion in adopting these procedures for the in camera proceeding. B. Intervenors challenge the District Court’s determination that the crime-fraud exception applies to their communications with Attorney. In this circuit, the crime-fraud exception to the attorney-client privilege applies “[w]here there is a reasonable basis to suspect that the privilege holder was committing or intending to commit a crime or fraud and that the attorney-client communications or attorney work

App. 18 product were used in furtherance of the alleged crime or fraud. . . .” In re Grand Jury, 705 F.3d at 153.3 We review the District Court’s determination that there is sufficient evidence for the crime-fraud exception to apply for an abuse of discretion. In re 3

Intervenors argue on appeal that the District Court erred in applying this standard for the crime-fraud exception. They maintain that the panel in In re Grand Jury improperly overruled prior precedent to create this standard. In In re Grand Jury Subpoena, we held that “to invoke the exception, the government must make a prima facie showing that (1) the client was committing or intending to commit a fraud or crime, and (2) the attorney-client communications were in furtherance of that alleged crime or fraud.” 223 F.3d at 217 (internal citations omitted). We then clarified that “[a] ‘prima facie showing’ requires presentation of ‘evidence which, if believed by the factfinder, would be sufficient to support a finding that the elements of the crime-fraud exception were met.’ ” Id. (quoting Haines v. Liggett Grp., Inc., 975 F.2d 81, 95-96 (3d Cir. 1992)). The In re Grand Jury panel observed that “sufficient to support” was “not particularly helpful,” as it “begs the quantumof-proof question because it does not quantify what evidence is sufficient.” 705 F.3d at 152. The Court sought to clarify the standard, and examined Third Circuit precedent to conclude “that our precedent is properly captured by the reasonable basis standard.” Id. at 153. The In re Grand Jury panel followed what was “binding,” see IOP 9.1; “sufficient to support” was not a holding, but part of a standard that we clarified. The panel further clarified that for a presentation of evidence to be “sufficient,” there must be a “reasonable basis to suspect” that the elements of the crimefraud exception are fulfilled. The In re Grand Jury Court did not improperly overrule the holding from a prior opinion; rather, it clarified an applicable precedent to delineate a more specific standard. Therefore, we adhere to the “reasonable basis to suspect” standard.

App. 19 Impounded, 241 F.3d at 318. We begin by acknowledging that this was a close case. The communication between Attorney and Client was brief, and consisted mainly of informing Client of the applicable law and advising that he not make the payment. However, we believe that the questions posed by Attorney to Client and the information that Client could gain from those questions are sufficient for us to conclude that the District Court did not abuse its discretion in determining that the advice was used in furtherance of a crime or fraud. For the crime-fraud exception to apply, the client must be “committing or intending to commit a crime or fraud” at the time he or she consults the attorney. In re Grand Jury, 705 F.3d at 153. This requirement is stated in the present tense, and does not by its terms apply to a situation where a client consults an attorney about a possible course of action and later forms the intent to undertake that action. We have also observed that the attorney-client privilege “is not lost if the client innocently proposes an illegal course of conduct to explore with his counsel what he may or may not do.” United States v. Doe, 429 F.3d 450, 454 (3d Cir. 2005). The exception does not apply where the client forms the intent to engage in criminal or fraudulent activity after the consultation. Other courts of appeals have specifically clarified when the client must have developed the requisite intent. The Second Circuit explained that because the exception only applies where the communications “were intended in some way to facilitate or to conceal

App. 20 the criminal activity,” United States v. Jacobs, 117 F.3d 82, 88 (2d Cir. 1997) (quoting In re Grand Jury Subpoenas Duces Tecum, 798 F.2d 32, 34 (2d Cir. 1986)) (internal quotation marks omitted), it is required “to show that the wrong-doer had set upon a criminal course before consulting counsel.” Id. (emphasis in original). See also In re Grand Jury Subpoenas, 144 F.3d 653, 660 (10th Cir. 1998) (“The evidence must show that the client was engaged in or was planning the criminal or fraudulent conduct when it sought the assistance of counsel. . . .”); In re Grand Jury Proceedings, 87 F.3d 377, 381 (9th Cir. 1996) (“To trigger the crime-fraud exception, the government must establish that ‘the client was engaged in or planning a criminal or fraudulent scheme when it sought the advice of counsel to further the scheme.’ ” (quoting In re Sealed Case, 754 F.2d 395, 399 (D.C. Cir. 1985)). A hypothetical question posed by Judge Ambro at oral argument highlights the importance of the timing of intent. A client consults with an attorney, intending at the time to go as close to the line of illegality as possible but to remain within the realm of legal conduct. The client tells the attorney of a possible course of conduct and asks for advice on the applicable law. The attorney gives advice, explaining which actions would be legal and which actions would be illegal. A year later, the client decides that he or she will cross the line from legal to illegal. Here, the crime-fraud exception would not apply, because the client was not committing a crime or fraud or intending

App. 21 to commit a crime or fraud at the time he or she consulted the attorney. Even if the client clearly used the advice obtained a year earlier in furtherance of the crime or fraud, the exception would not apply because the client did not have the requisite intent at the time of the consultation. In this case, the District Court did not abuse its discretion in determining that Client intended to commit a crime at the time he consulted with Attorney in April 2008. The evidence shows Client’s intent to make a payment to Banker in order to ensure that the project was approved in a timely manner. We can infer Client’s pre-existing intent to make the payment in part from his statement to Attorney that he was going to make the payment anyway, after Attorney advised him that he should not do so. This suggests that Client had already considered the advisability of making the payment, and determined that it was in his best interest to do so. The fact that the payment occurred in the same month that the Bank approved the project financing also indicates that Client planned on making the payment when he consulted with Attorney. Given the information available to the District Court, we cannot say that it abused its discretion in concluding that Client “set upon an illegal course before seeking [Attorney’s] advice about the scheme’s legality.” Jacobs, 117 F.3d at 89. In delineating the connection required between the advice sought and the crime or fraud, we have repeatedly stated that the legal advice must be used “in furtherance” of the alleged crime or fraud. We

App. 22 have rejected a more relaxed “related to” standard, In re Grand Jury Investigation, 445 F.3d at 277, and explained that the legal advice must “ ‘give[ ] direction for the commission of future fraud or crime,’ ” In re Grand Jury Subpoena, 223 F.3d at 217 (quoting Haines, 975 F.2d at 90). Most recently, in In re Grand Jury, we observed, “[a]ll that is necessary is that the client misuse or intend to misuse the attorney’s advice in furtherance of an improper purpose.” 705 F.3d at 157. It is therefore clear from prior precedent that for advice to be used “in furtherance” of a crime or fraud, the advice must advance, or the client must intend the advice to advance, the client’s criminal or fraudulent purpose. The advice cannot merely relate to the crime or fraud. If the attorney merely informs the client of the criminality of a proposed action, the crime-fraud exception does not apply. For example, consider the situation where a client, intending to undertake an illegal course of action, consults a first attorney, tells the attorney the proposed course of action, and the attorney advises that the course of action is illegal. The client, dissatisfied with the first attorney’s answer, then consults a second attorney. The client tells the attorney the same proposed course of action, but this attorney says yes, that course of action is legal. Both of these consultations would remain privileged, because the attorneys merely opined on the lawfulness of a particular course of conduct, and this advice cannot be used “in furtherance” of the crime.

App. 23 The situation here is different. In addition to the advice Attorney provided to Client that he should not make a payment, Attorney also provided information about the types of conduct that violate the law. We cannot say that the District Court abused its discretion in determining “that there is a reasonable basis to conclude that [Attorney’s] advice was used by [Intervenors] to fashion conduct in furtherance of [their] crime.” Specifically, Attorney’s questions about whether or not the Bank was a governmental entity and whether Banker was a government official would have informed Client that the governmental connection was key to violating the FCPA. This would lead logically to the idea of routing the payment through Banker’s sister, who was not connected to the Bank, in order to avoid the reaches of the FCPA or detection of the violation. Of course, it is impossible to know what Client thought or how he processed the information gained from Attorney. But the District Court did not abuse its discretion in determining that Client “could easily have used [the advice] to shape the contours of conduct intended to escape the reaches of the law.” For these reason, we affirm the District Court’s finding that the crime-fraud exception applies and its order compelling Attorney to testify before the grand jury. C. Intervenors assert that Attorney’s testimony is protected by the work product doctrine. The District Court did not address this issue; however, it was fully

App. 24 briefed before the District Court. “The work-product doctrine . . . protects from discovery materials prepared or collected by an attorney ‘in the course of preparation for possible litigation.’ ” In re Grand Jury Investigation, 599 F.2d 1224, 1228 (3d Cir. 1979) (quoting Hickman, 329 U.S. at 505). The burden of proving the applicability of the work product privilege rests upon the party asserting the privilege. Haines, 975 F.2d at 94. A lawyer “may assert the work product privilege,” and “[t]o the extent a client’s interest may be affected, he, too, may assert the work product privilege.” In re Grand Jury Proceedings, 604 F.2d 798, 801 (3d Cir. 1979). Intervenors have attempted to assert the work product privilege on their own behalf and on Attorney’s behalf, arguing that an innocent attorney can prevent disclosure of work product even if the client used it to further a crime or fraud. Attorney did not raise the work product issue before the District Court and Intervenors cannot assert the privilege on his behalf. Therefore, we need not address whether an innocent attorney may raise the privilege when there is a crime-fraud finding. A crime-fraud finding overcomes the work product privilege. “Where there is a reasonable basis to suspect that the privilege holder was committing or intending to commit a crime or fraud and that the . . . attorney work product w[as] used in furtherance of the alleged crime or fraud, this is enough to break the privilege.” In re Grand Jury, 705 F.3d at 153. Because, as discussed supra, we affirm the District Court’s crime-fraud finding, the work product privilege

App. 25 does not apply. Nevertheless, even without the crimefraud finding, the communications between Intervenors and Attorney do not qualify as protected work product because they were not made “in the course of preparation for possible litigation.” In re Grand Jury Investigation, 599 F.2d at 1228 (quoting Hickman, 329 U.S. at 505). “Work product prepared in the course of business is not immune from discovery.” Holmes v. Pension Plan of Bethlehem Steel Corp., 213 F.3d 124, 138 (3d Cir. 2000). Although the “legal theories, research, and fact material gathered” here could be considered intangible work product, In re Grand Jury Proceedings, 604 F.2d at 801, Attorney’s recollections and research are not protected because they were not made in preparation for possible litigation. When Intervenors consulted Attorney in April 2008, there was no litigation on the horizon. Investigation into the transactions that led to the grand jury investigation began nearly two years later. The consultation was made in the ordinary course of a business transaction; therefore, Attorney’s recollections are not protected work product. IV. For the foregoing reasons, we affirm the order of the District Court enforcing the grand jury subpoena.

Other Relevant Material

App. 26 No. 12-1239 In the Supreme Court of the United States ----------------------------------JOHN DOE 1, JOHN DOE 2,

AND

ABC CORPORATION,

PETITIONERS

v. UNITED STATES

OF

AMERICA

----------------------------------ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ----------------------------------BRIEF FOR THE UNITED STATES IN OPPOSITION ----------------------------------DONALD B. VERRILLI, JR. Solicitor General Counsel of Record KATHRYN KENEALLY Assistant Attorney General FRANK P. CIHLAR GREGORY VICTOR DAVIS ALEXANDER P. ROBBINS Attorneys Department of Justice Washington, D.C. 20530-0001 [email protected] (202) 514-2217

App. 27 [I] QUESTIONS PRESENTED 1. Whether petitioner ABC Corporation’s attorneyclient privilege was vitiated in grand-jury proceedings where the district court found a reasonable basis to suspect that petitioner had used the privilege to commit a crime or fraud. 2. Whether the court of appeals had jurisdiction over petitioner ABC Corporation’s interlocutory appeal of the district court’s order requiring petitioner and two law firms to produce documents in response to a grand-jury subpoena, where petitioner, to whom the documents could be transferred, did not first refuse to comply with the order and go into contempt of court. [III] TABLE OF CONTENTS Page Opinions below.....................................................

1

Jurisdiction ..........................................................

1

Statement ............................................................

1

Argument .............................................................

9

Conclusion............................................................ 19 TABLE OF AUTHORITIES Cases: Alexander v. United States, 201 U.S. 117 (1906) .......16 Antitrust Grand Jury, In re, 805 F.2d 155 (6th Cir. 1986) ........................................................... 11, 13

App. 28 Bourjaily v. United States, 483 U.S. 171 (1987) ........12 Church of Scientology v. United States, 506 U.S. 9 (1992) ........................................................5, 16 Clark v. United States, 289 U.S. 1 (1933) ..............7, 10 Cobbledick v. United States, 309 U.S. 323 (1940) .................................................................16, 19 Di Bella v. United States, 369 U.S. 121 (1962) ..........19 Grand Jury Proceedings, In re, 87 F.3d 377 (9th Cir.), cert. denied, 519 U.S. 945 (1996) .................. 11 Grand Jury Proceedings, In re, 417 F.3d 18 (1st Cir. 2005), cert. denied, 546 U.S. 1088 (2006) ................................................................. 10, 11 Grand Jury Proceedings, In re, 609 F.3d 909 (8th Cir. 2010) .........................................................13 Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100 (2009) ...................................................................6, 18 Perlman v. United States, 247 U.S. 7 (1918) .....5, 9, 16 Sealed Case, In re, 676 F.2d 793 (D.C. Cir. 1982) ........................................................................10 Sealed Case, In re, 754 F.2d 395 (D.C. Cir. 1985) .................................................................. 11, 13 Sealed Case, In re, 107 F.3d 46 (D.C. Cir. 1997) ........13 United States v. Calvert, 523 F.2d 895 (8th Cir. 1975), cert. denied, 424 U.S. 911 (1976) .................10 [IV] United States v. Clem, 210 F.3d 373 (6th Cir. 2000), cert. denied, 531 U.S. 1154 (2001) ........13 United States v. Dionisio, 410 U.S. 1 (1973) ..............12

App. 29 United States v. Jacobs, 117 F.3d 82 (2d Cir. 1997) .................................................................. 11, 13 United States v. Johnston, 268 U.S. 220 (1925) ........12 United States v. Ryan, 402 U.S. 530 (1971) .........16, 19 United States v. Zolin, 491 U.S. 554 (1989) .........10, 15 Statutes and rules: 28 U.S.C. 1291 ............................................................16 Fed. R. Evid. 104(a) ....................................................12 [1] In the Supreme Court of the United States ----------------------------------No. 12-1239 JOHN DOE 1, JOHN DOE 2,

AND

ABC CORPORATION,

PETITIONERS

v. UNITED STATES

OF

AMERICA

----------------------------------ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ----------------------------------BRIEF FOR THE UNITED STATES IN OPPOSITION -----------------------------------

App. 30 OPINIONS BELOW The opinion of the court of appeals (Pet. App. 1-76) is reported at 705 F.3d 133. The relevant orders of the district court are unreported and sealed. JURISDICTION The judgment of the court of appeals was entered on December 11, 2012. A petition for rehearing was denied on January 17, 2013 (Pet. App. 77-78). The petition for a writ of certiorari was filed on April 11, 2013. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). STATEMENT Petitioner ABC Corporation (petitioner), a nowdissolved corporation, invoked the attorney-client privilege to withhold documents demanded by grand-jury subpoenas issued to petitioner, its outside counsel, and [2] three individuals who were previously employed as petitioner’s in-house counsel.1 1

Petitioner John Doe 1 was ABC Corporation’s president and sole shareholder. Petitioner John Doe 2 is John Doe 1’s son and is also affiliated with ABC Corporation. Pet. App. 7. The court of appeals dismissed their appeal, holding that they lacked standing to assert ABC Corporation’s attorney-client privilege. Id. at 13-14; id. at 61 (Vanaskie, J., concurring in part and dissenting in part). The petition contends in a footnote (Pet. 9-10 n.8) that the court of appeals should not have rejected the claims of John Doe 1 and John Doe 2 without first requesting briefing from the parties on standing or remanding to the district court. (Continued on following page)

App. 31 The government moved to enforce the subpoenas with respect to some of the withheld documents on the grounds that the documents were not privileged or that any privilege was vitiated by the crime-fraud exception. The district court granted the motions in part and ordered petitioner, its outside counsel, and its former in-house counsel to produce certain documents demanded by the subpoenas. The court of appeals dismissed petitioner’s interlocutory appeal with respect to the subpoenas issued to petitioner and its outside counsel for lack of jurisdiction, and the court affirmed the district court’s decision with respect to the subpoenas issued to petitioner’s former in-house counsel. Pet. App. 1-76. 1. Petitioner is the subject of a federal grandjury investigation in the Eastern District of Pennsylvania that seeks to determine whether petitioner and individuals affiliated with petitioner participated in a tax-evasion scheme. According to evidence submitted to the grand jury, petitioner acquired companies “with large [3] cash accounts, few or no tangible assets, and considerable tax liabilities,” transferred the assets of those companies into two limited liability companies, and then “engage[d] in various transactions that had the effect of fraudulently eliminating the target The petition does not, however, ask this Court to review the standing issue. For that reason, and because any privilege claims that John Doe 1 and John Doe 2 may have would be derivative of ABC Corporation’s privilege, this brief refers to petitioner ABC Corporation as “petitioner.”

App. 32 companies’ tax liabilities.” Pet. App. 7-8. John Doe 1 and John Doe 2 “would then divert the target companies’ cash assets to themselves and their family members.” Id. at 8, 47. 2. a. In December 2010, the grand jury issued a subpoena to petitioner’s custodian of records. Pet. App. 8. The subpoena demanded all records relating to transactions between petitioner and the two limited liability companies implicated in the alleged criminal scheme. Ibid. After petitioner asserted that the grand jury had not properly served its custodian of records, and to avoid any problems arising from the alleged service error, the grand jury later issued subpoenas for those documents to two law firms that had physical custody of the documents. Id. at 8-9. Petitioner and the law firms responded to the subpoena but withheld 303 documents as privileged. Id. at 9. The government moved to enforce the subpoenas with respect to 171 of the withheld documents, arguing that the documents were either not privileged or that any privilege was vitiated by the crime-fraud exception. Ibid. In March 2012, the district court granted the government’s motion in part. Pet. App. 10; Pet. 5. In the March order, the district court concluded that the crime-fraud exception vitiated petitioner’s claims of attorney-client and work-product privilege with respect to 167 of the withheld documents and ordered petitioner and the law firms to produce those documents to the grand jury. Pet. App. 10. Petitioner filed an interlocutory appeal, and the court of appeals

App. 33 dismissed the ap-[4]peal for lack of jurisdiction. Ibid. The court explained that petitioner “could receive immediate appellate review [only] by taking possession of the documents, refusing to produce them, and then appealing any contempt sanctions imposed by the [d]istrict [c]ourt.” Ibid. b. In December 2011, while the first set of subpoenas was being litigated in the district court, the grand jury issued subpoenas for documents and testimony to three lawyers who were formerly employed by petitioner as in-house counsel. Pet. App. 12. Those individuals refused to comply fully with the subpoenas, invoking petitioner’s attorney-client privilege and their own work-product privileges to withhold 45 documents. Id. at 1213. The government moved to enforce the subpoenas, and petitioner intervened in the district court to oppose the government’s motion. Id. at 13. In June 2012, the district court granted the government’s motion in part and ordered the individuals to produce 11 of the subpoenaed documents and to testify before the grand jury. Pet. App. 4, 13; Pet. 7. In the June order, the district court concluded, after reviewing the records in camera, that the crime-fraud exception vitiated petitioner’s attorney-client privilege with respect to communications about certain transactions that the district court determined were part of a tax-evasion scheme. Pet. App. 13, 47-48 n.23. Petitioner filed an interlocutory appeal. The court of appeals granted a petition for rehearing of

App. 34 its decision on petitioner’s first interlocutory appeal and consolidated the two cases. Id. at 12-13. 3. The court of appeals held that it lacked jurisdiction over petitioner’s interlocutory appeal with respect to the subpoenas issued to petitioner and its outside counsel, and it affirmed the district court’s decision with [5] respect to the subpoenas issued to petitioner’s former in-house counsel. Pet. App. 1-76. a. The court of appeals explained that an order requiring a witness to produce documents or to testify is generally not considered an appealable final order and that [i]t is well settled that a witness who ‘seeks to present an objection to a discovery order immediately to a court of appeals must refuse compliance, be held in contempt, and then appeal the contempt order.’ ” Pet. App. 15-16 (quoting Church of Scientology v. United States, 506 U.S. 9, 18 n.11 (1992)). The court further explained that in Perlman v. United States, 247 U.S. 7 (1918), this Court created an exception to that general rule where “a disclosure order * * * is directed at a disinterested third party lacking a sufficient stake in the proceeding to risk contempt by refusing compliance.” Pet. App. 19 (citing Church of Scientology, 506 U.S. at 18 n.11). Under those circumstances, the contempt route is not an option because “the privilege holder cannot itself disobey the disclosure order and the third party to whom the disclosure order is directed is unlikely to do so on [the privilege holder’s] behalf.” Id. at 19.

App. 35 Applying those precedents, the court of appeals concluded that it lacked jurisdiction over petitioner’s appeal from the district court’s March order “because the contempt route remains open to [petitioner]” with respect to the subpoenas issued to petitioner and the law firms. Pet. App. 25. The court explained that although the documents demanded by those subpoenas were in a law firm’s possession, “they are [petitioner’s] documents and are under its legal control,” and “[petitioner] is responsible for deciding whether to produce or withhold the documents, and could properly be held in contempt for directing the law firms to withhold them.” Id. at 25-26. [6] The court acknowledged that “[t]he situation is complicated” because the district court’s order “is also directed at [petitioner’s] outside counsel, exposing them to potential contempt sanctions.” Id. at 26. But the court explained that because the documents could be transferred to petitioner’s possession and the law firms would not be targeted for contempt for making such a transfer under court order, “there is no need for us to allow a Perlman appeal.” Id. at 27, 31. The court of appeals further concluded that the Perlman exception did apply to petitioner’s appeal of the district court’s June order because that order was “directed solely at the three former * * * in-house attorneys” and “the contempt route [was] [therefore] not open to [petitioner].” Pet. App. 31. The court found “no basis to believe that these former employees are anything but disinterested third parties who are unlikely to stand in contempt to vindicate [petitioner’s]

App. 36 alleged privilege.” Ibid. The court rejected the government’s argument that this Court’s decision in Mohawk Industries, Inc. v. Carpenter, 558 U.S. 100 (2009), which held that disclosure orders adverse to the attorneyclient privilege in civil litigation are not immediately appealable under the collateral order doctrine, id. at 108-109, narrowed the scope of the Perlman doctrine to exclude interlocutory appeals by subjects of grandjury investigations. Pet. App. 20-25, 32. b. On the merits of the district court’s June order requiring petitioner’s former in-house counsel to produce documents and to testify, the court of appeals agreed that the crime-fraud exception vitiated petitioner’s attorney-client privilege. Pet. App. 34-52.2 The court [7] explained that a party seeking to overcome the attorney-client privilege must make a prima facie showing that (1) the client was committing or intending to commit a crime or fraud, and (2) the attorney-client communications were in furtherance of the alleged crime or fraud. Id. at 36. After surveying a variety of verbal formulations used by the courts of appeals, the court stated that its prior decisions describing a prima facie showing as “evidence which, if believed by the fact-finder, would be sufficient to support a finding that the elements of

2

The court of appeals rejected petitioner’s arguments based on the work-product privilege because that privilege belonged to petitioner’s former in-house counsel, not to petitioner, and the former in-house counsel did not appeal. Pet. App. 53-54.

App. 37 the crime-fraud exception were met” were “not particularly helpful” because that formulation “does not quantify what evidence is sufficient.” Pet. App. 39 (internal quotation marks and citations omitted). The court explained, however, that its precedents were consistent with the “reasonable basis standard” applied by other courts of appeals and that the standard “is intended to be reasonably demanding; neither speculation nor evidence that shows only a distant likelihood of corruption is enough.” Id. at 39-41 (internal quotation marks and citation omitted). Under the reasonable-basis standard, the attorneyclient privilege is vitiated “[w]here there is a reasonable basis to suspect that the privilege holder was committing or intending to commit a crime or fraud and that the attorney-client communications or attorney work product were used in furtherance of the alleged crime or fraud.” Pet. App. 41. The court of appeals stated that the reasonable-basis standard was consistent with this Court’s statement in Clark v. United States, 289 U.S. 1, 15 (1933), that “there must be something to give colour [8] to the charge” that a communication was used in furtherance of a crime or fraud. Pet. App. 41 (internal quotation marks omitted). The court noted that although the district court used the court of appeals’ “sufficient to support” language from prior cases, the district court “also concluded that the Government had met its burden by establishing that there was a ‘reasonable basis to suspect’ that [petitioner] had committed a crime or fraud.” Id. at 39.

App. 38 The court of appeals rejected petitioner’s argument that the court should “modify the standard to establish crime-fraud by requiring the government to demonstrate by a preponderance of the evidence that the privilege has been employed to commit a crime or fraud.” Pet. App. 42 (citation omitted). The court explained that, “particularly * * * in the grand jury context, where the need for speed, simplicity, and secrecy weighs against imposing a crime-fraud standard that would require adversarial hearings or the careful balancing of conflicting evidence,” the policy concerns served by the attorney-client privilege are appropriately protected by the reasonable-basis standard. Id. at 43-44. The court of appeals further concluded that, in the particular circumstances presented here, the crime-fraud exception applied. Pet. App. 45-52. The court stated that, having reviewed unredacted versions of the district court’s orders and ex parte submissions from the government, “we cannot say that the [d]istrict [c]ourt’s detailed factual findings constituted clear error or that it abused its discretion in determining that there was a reasonable basis to suspect that [petitioner] was engaged in a criminal scheme” and that petitioner “used the legal advice it obtained in connection with these [9] transactions to further its criminal scheme.” Id. at 47, 50. c. Judge Vanaskie concurred in part and dissented in part. Pet. App. 61-76. He agreed that the court of appeals had jurisdiction over the district court’s June order, but in his view, the court of

App. 39 appeals also had jurisdiction over petitioner’s appeal from the March order to the extent that it required production of documents by the law firms. Id. at 6275. Judge Vanaskie would have therefore reached the merits of both orders. He would nevertheless have affirmed on the grounds that the crime-fraud exception vitiated petitioner’s attorney-client privilege. Id. at 75-76. 4. After the court of appeals issued its decision, the law firms produced the previously withheld documents, as required by the March order. Pet. 10. Petitioner’s former in-house counsel also produced the documents they had previously withheld, as required by the June order. Ibid. ARGUMENT Petitioner contends (Pet. 11-30) that the courts below used the wrong standard in holding that the crime-fraud exception vitiated its attorney-client privilege with respect to specific materials demanded by grand-jury subpoenas issued to petitioner, two outside law firms, and three individuals who were formerly employed as petitioner’s in-house counsel. Petitioner further contends (Pet. 31-39) that the court of appeals had jurisdiction over petitioner’s interlocutory appeal of the district court’s order requiring petitioner and the two law firms to produce documents in response to subpoenas pursuant to Perlman v. United States, 247 U.S. 7 (1918). The court of appeals applied a correct standard to assess the

App. 40 crime-fraud exception and correctly found Perlman [10] inapplicable on the specific facts presented. Its decision does not conflict with any decision of this Court or another court of appeals and further review is unwarranted. 1. a. Attorney-client communications that facilitate a present or future crime or fraud are not protected by the attorney-client privilege. Clark v. United States, 289 U.S. 1, 15 (1933). The crime-fraud exception ensures that the “ ‘seal of secrecy’ between lawyer and client does not extend to communications ‘made for the purpose of getting advice for the commission of a fraud’ or crime.” United States v. Zolin, 491 U.S. 554, 563 (1989) (citations omitted). The exception applies regardless of whether the attorney was a knowing participant in the client’s misconduct. See In re Sealed Case, 676 F.2d 793, 812 (D.C. Cir. 1982); United States v. Calvert, 523 F.2d 895, 909 (8th Cir. 1975), cert. denied, 424 U.S. 911 (1976). In Clark, this Court stated that “a mere charge of illegality, not supported by any evidence,” is insufficient to vitiate the privilege. 289 U.S. at 15. Rather, “there must be ‘something to give colour to the charge’; there must be ‘prima facie evidence that it has some foundation in fact.’ ” Ibid. (citation omitted). Although the Court has not further defined what quantum of proof would satisfy the prima facie standard, the courts of appeals have concluded that the privilege is vitiated where “there is a reasonable basis to believe that the lawyer’s services were used by the client to foster a crime or fraud.” In re Grand

App. 41 Jury Proceedings, 417 F.3d 18, 23 (1st Cir. 2005), cert. denied, 546 U.S. 1088 (2006). As the First Circuit has explained, “[t]he circuits * * * all effectively allow piercing of the privilege on [11] something less than a mathematical (more likely than not) probability that the client intended to use the attorney in furtherance of a crime or fraud.” In re Grand Jury Proceedings, 417 F.3d at 23; see also United States v. Jacobs, 117 F.3d 82, 88 (2d Cir. 1997) (privilege is vitiated where “a prudent person would have a reasonable basis to suspect the perpetration of a crime or fraud and that defendant’s communications to his attorney were in furtherance thereof ”) (citation omitted); In re Grand Jury Proceedings, 87 F.3d 377, 381 (9th Cir.) (district court must find “reasonable cause to believe” that the attorney’s services were used “in furtherance of [an] ongoing unlawful scheme”) (internal quotation marks and citation omitted), cert. denied, 519 U.S. 945 (1996); In re Antitrust Grand Jury, 805 F.2d 155, 165-166 (6th Cir. 1986) (government must present evidence that raises “more than a strong suspicion that a crime was committed,” but not necessarily strong enough “to effect an arrest or secure an indictment”); In re Sealed Case, 754 F.2d 395, 399 n.3 (D.C. Cir. 1985) (requiring a showing “that a prudent person have a reasonable basis to suspect the perpetration or attempted perpetration of a crime or fraud, and that the communications were in furtherance thereof ”) (internal quotation marks and citation omitted).

App. 42 The court of appeals applied that general standard and concluded, based on its review of unredacted versions of the district court’s orders and ex parte submissions from the government, that it “[could] not say that the [d]istrict [c]ourt’s detailed factual findings constituted clear error or that it abused its discretion in determining that there was a reasonable basis to suspect that [petitioner] was engaged in a criminal scheme” and that petitioner “used the legal advice it obtained in con-[12]nection with these transactions to further its criminal scheme.” Pet. App. 47, 50. The court of appeals applied a correct standard and its fact-bound conclusion on that issue does not warrant this Court’s review. See United States v. Johnston, 268 U.S. 220, 227 (1925) (“We do not grant * * * certiorari to review evidence and discuss specific facts.”). The court of appeals correctly rejected petitioner’s argument (Pet. 28) that the government must prove a criminal or fraudulent purpose by a preponderance of the evidence to vitiate the attorney-client privilege in the context of a grand-jury investigation. Pet. App. 44. Federal Rule of Evidence 104(a), upon which petitioner relies, does not expressly set forth any standard of proof. Nor does this Court’s decision in Bourjaily v. United States, 483 U.S. 171 (1987), require a preponderance standard in grand-jury investigations. In Bourjaily, the Court applied a preponderance standard to admissibility determinations for hearsay evidence at trial because the Court had “traditionally required” that such trial determinations “be

App. 43 established by a preponderance of proof.” Id. at 175. By contrast, “in the grand jury context,” the Court has declined to impose rules “that would saddle a grand jury with minitrials and preliminary showings,” which “would assuredly impede its investigation and frustrate the public’s interest in the fair and expeditious administration of the criminal laws.” United States v. Dionisio, 410 U.S. 1, 17 (1973). The court of appeals correctly adhered to those precedents. b. Petitioner contends (Pet. 12-24) that the decisions of the courts of appeals “are in disarray” on the standard required for a prima facie showing that the crime-[13]fraud exception vitiates the attorneyclient privilege. That is incorrect. Petitioner states (Pet. 17-19) that the Second, Sixth, and Eighth Circuits have required a showing of “probable cause to believe that a fraud or crime has been committed and that the communications in question were in furtherance of the fraud or crime.” Pet. 17 (quoting Jacobs, 117 F.3d at 87); see also In re Grand Jury Proceedings, 609 F.3d 909, 912 (8th Cir. 2010); United States v. Clem, 210 F.3d 373 (6th Cir. 2000) (Table), cert. denied, 531 U.S. 1154 (2001).3 3

Petitioner contends (Pet. 20) that the First and Ninth Circuits apply a “reasonable cause” standard, but petitioner acknowledges that the standard is “analogous to ‘probable cause.’ ” Petitioner also acknowledges (Pet. 22) that the D.C. Circuit has described the standard of proof it applies to vitiate the attorney-client privilege as of “little practical difference” from the probable-cause standard applied by other courts. In re (Continued on following page)

App. 44 As the Sixth Circuit has explained, however, “there are not practical differences between the probable cause standard and the prima facie standards formulated in the [other] circuits.” In re Antitrust Grand Jury, 805 F.2d at 165-166. Courts applying a probablecause standard have defined “probable cause” as “a reasonable basis to suspect the perpetration or attempted perpetration of a crime or fraud, and that the communications were in furtherance thereof.” Jacobs, 117 F.3d at 87 (emphasis added); see In re Antitrust Grand Jury, 805 F.2d at 165-167 (probablecause standard “require[s] that a prudent person have a reasonable basis to suspect the perpetration of a crime or fraud”) (emphasis added; citation omitted); In re Sealed Case, 754 F.2d at 399 n.3 (noting that its prima facie standard “require[s] that a prudent person have a [14] reasonable basis to suspect the perpetration or attempted perpetration of a crime or fraud, and that the communications were in furtherance thereof ”) (emphasis added). The court of appeals thus did not, as petitioner suggests (Pet. 24-28), create a new “reasonable suspicion” standard for vitiating the attorney-client privilege that entails a less stringent showing than probable cause. Moreover, petitioner does not even advocate for the adoption of a probable-cause standard, and it identifies no authority in support of its position (Pet. 28) that the government should be Sealed Case, 754 F.2d at 399 n.3; see also In re Sealed Case, 107 F.3d 46, 50 (D.C. Cir. 1997).

App. 45 required to establish the applicability of the crimefraud exception by a preponderance of the evidence in a grand-jury investigation. Petitioner has failed to identify any conflict among the courts of appeals warranting this Court’s review. c. Petitioner perceives (Pet. 29-30) “disagreement in the circuits” as to whether a district court is categorically barred from considering evidence from the alleged privilege holder rebutting a crime-fraud claim. Any such disagreement is not implicated in petitioner’s case. The district court explicitly considered and rejected the declarations that petitioner submitted as rebuttal evidence. See Pet. App. 51-52 (stating that the district court was not “required to credit [a] bald statement * * * from a grand jury subject” that petitioner did not seek legal advice that was used to commit a crime or fraud). To the extent that petitioner contends (Pet. 30 & n.18) that it was entitled to “oral argument or a hearing” on its rebuttal evidence, it identifies no authority in support of that position. d. Petitioner further contends (Pet. 11-12, 2428) that application of a reasonable-basis standard to vitiate the attorney-client privilege conflicts with this Court’s [15] statement in Zolin, supra, that the showing required to vitiate the privilege is more stringent than the showing required to justify in camera review of allegedly privileged materials. The quantum of proof required by the court of appeals to vitiate the attorney-client privilege is more stringent

App. 46 than the standard adopted in Zolin, and the decisions therefore do not conflict. The issue in Zolin was “whether the applicability of the crime-fraud exception must be established by ‘independent evidence’ (i.e., without reference to the content of the contested communications themselves), or, alternatively, whether the applicability of that exception can be resolved by an in camera inspection of the allegedly privileged material.” 491 U.S. at 556. The Court held that the applicability of the crimefraud exception could be established through in camera review if the party opposing the privilege makes “a showing of a factual basis adequate to support a good faith belief by a reasonable person that in camera review of the [disputed] materials may reveal evidence to establish the claim that the crimefraud exception applies.” Id. at 572 (emphasis added; citation omitted). The Court stated that this showing is “not * * * a stringent one” and that “a lesser evidentiary showing is needed to trigger in camera review than is required ultimately to overcome the privilege.” Ibid. The object of the Zolin inquiry is thus not to determine whether the privilege has been vitiated but whether in camera review of the disputed materials would be useful in making that determination. Once that minimal threshold is satisfied, the district court will review the materials and make a further determination whether the evidence is sufficient to vitiate the privilege, i.e., whether “there is a reasonable basis to suspect that the privi-[16]lege holder was

App. 47 committing or intending to commit a crime or fraud and that the attorney-client communications or attorney work product were used in furtherance of the alleged crime or fraud.” Pet. App. 41. Although both inquiries employ a reasonableness test, the object of the Zolin inquiry is whether in camera review would be useful to determine whether the crime-fraud exception applies, which is different – and less stringent – than the further inquiry into whether the exception in fact applies and vitiates the privilege. 2. Petitioner contends (Pet. 31-39) that the court of appeals had jurisdiction over petitioner’s interlocutory appeal from the district court’s March order requiring petitioner and its outside counsel to produce documents in response to subpoenas. Further review of that question is not warranted. a. An order to testify or to produce documents to a grand jury is generally not a “final decision of the district court” subject to immediate appellate review under 28 U.S.C. 1291. The usual route for appellate review of a district court order compelling document production or testimony demanded by a subpoena is thus for the subpoena recipient to go into contempt of court and appeal the contempt citation. See Church of Scientology v. United States, 506 U.S. 9, 18 n.11 (1992); United States v. Ryan, 402 U.S. 530, 534 (1971); Cobbledick v. United States, 309 U.S. 323, 327-328 (1940); Alexander v. United States, 201 U.S. 117, 121 (1906). An exception to that general rule applies when a disclosure order is directed at a disinterested third party who lacks a sufficient stake in

App. 48 the proceeding to risk contempt by refusing compliance. See Perlman, 247 U.S. at 13-15. Those legal principles are not in dispute. Rather, petitioner disputes whether the Perlman exception applies [17] on the facts of this case, where the grand jury issued subpoenas to both petitioner’s custodian of records and its outside counsel who had physical custody of the documents. The court of appeals held that, in those particular circumstances, a Perlman appeal was not warranted. The court explained that “[a]lthough the documents [we’re in the physical possession” of a law firm, “they are [petitioner’s] documents and are under its legal control,” that petitioner “is responsible for deciding whether to produce or withhold the documents,” and that petitioner “could properly be held in contempt for directing the law firms to withhold them.” Pet. App. 25-26. The court addressed the concern that the law firms may feel compelled to produce the documents to avoid contempt sanctions by explaining that the law firms should instead transfer custody of the documents to petitioner and would in those circumstances not face contempt sanctions for good-faith actions. Id. at 26-30. The court of appeals’ application of Perlman was sound. Perlman applies when a third party who has custody of allegedly privileged documents would likely choose to produce them rather than face contempt in order to allow an appeal. In that situation, the privilege holder has no power to protect the privilege by going into contempt. But petitioner was not “powerless to prevent” (Pet. 32) the law firms

App. 49 from producing the documents. As the court of appeals explained, the documents belonged to petitioner, and petitioner could prevent disclosure by taking custody of the documents and refusing to produce them, thereby allowing the normal contempt route of appeal to operate. Pet. App. 10, 25, 29. Petitioner contends (Pet. 34) that the court of appeals’ decision gives the government a path to avoiding [18] Perlman appeals by subpoenaing the privilege holder in addition to whatever third party has physical custody of the documents demanded by the subpoena. That concern is unfounded. As the court of appeals explained, its decision “would only prevent an appeal where a privilege holder subject to a disclosure order retains legal control of the documents that are in the physical possession of another and the Government has agreed that the documents can be transferred to the privilege holder without the transferor risking contempt.” Pet. App. 30-31. The court of appeals’ conclusion that a Perlman appeal was warranted to review the district court’s order requiring petitioner’s former in-house counsel to produce documents and to testify illustrates the narrow scope of its jurisdictional holding. b. Petitioner further contends (Pet. 37-39) that the Court “should grant the writ and decide whether Perlman survives” the Court’s decision in Mohawk Industries, Inc. v. Carpenter, 558 U.S. 100 (2009), in which the Court held that disclosure orders adverse to the attorney-client privilege in civil proceedings are not immediately appealable under the collateral

App. 50 order doctrine because “postjudgment appeals generally suffice to protect the rights of litigants and ensure the vitality of the attorney-client privilege.” Id. at 109. But the court of appeals agreed with petitioner that the Perlman exception survives the Court’s decision in Mohawk with respect to alleged privilege holders who are the subjects of grand-jury investigations (Pet. App. 20-25), and there is thus no reason for the Court to grant certiorari in petitioner’s case to review that question. 3. Finally, petitioner has not received a final judgment of conviction, making its current claim of harm extremely abstract. Assuming petitioner is indicted and [19] convicted, petitioner can present its attorney-client privilege claim (together with any other legal claims) in a petition for review from any direct appeal. See Ryan, 402 U.S. at 532 n.3. This Court has often noted that “encouragement of delay is fatal to the vindication of the criminal law” and that intermediate appeals in criminal investigations and trials are for that reason particularly disfavored. Cobbledick, 309 U.S. at 325; see also Di Bella v. United States, 369 U.S. 121, 126 (1962) (“[T]he delays and disruptions attendant upon intermediate appeal are especially inimical to the effective and fair administration of the criminal law.”). That policy fully applies in this case, and further review here is therefore especially unwarranted.

App. 51 CONCLUSION The petition for a writ of certiorari should be denied. Respectfully submitted. DONALD B. VERRILLI, JR. Solicitor General KATHRYN KENEALLY Assistant Attorney General FRANK P. CIHLAR GREGORY VICTOR DAVIS ALEXANDER P. ROBBINS Attorneys JULY 2013