In re: Grand Jury Matter 3 v. ( 2016 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 15-2475
_____________
IN RE: GRAND JURY MATTER #3
John Doe,
Appellant
_____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(No. 2:14-gj-631-3)
District Judge: Honorable R. Barclay Surrick
_____________
Argued: January 12, 2016
Before: McKEE, Chief Judge1, AMBRO and SCIRICA,
Circuit Judges
(Opinion filed: October 28, 2016)
_____________
SCOTT A. RESNIK, ESQUIRE (Argued)
MICHAEL M. ROSENSAFT, ESQUIRE
Katten Muchin Rosenman LLP
575 Madison Avenue
New York, New York 10022
1
Judge McKee was Chief Judge at the time this appeal was argued.
Judge Mckee concluded his term as Chief Judge of the United
States Court of Appeals for the Third Circuit on September 30,
2016.
KARL S. MYERS, ESQUIRE
ANDREW K. STUTZMAN, ESQUIRE
Stradley, Ronan, Stevens & Young
2005 Market Street
Suite 2600
Philadelphia, PA 19103
Counsel for Appellant
MARK B. DUBNOFF, ESQUIRE (Argued)
JOEL M. SWEET, ESQUIRE
Office of the United States Attorney
615 Chestnut St., Suite 1250
Philadelphia, PA 19106
Counsel for Appellee
McKEE, Chief Judge.
Company A, John Doe 1, John Doe 1’s lawyer, and
John Doe 2 are the subjects of an ongoing grand jury
investigation into an allegedly fraudulent business scheme.2
John Doe 1 brought this appeal after the government obtained
access to an email he claimed was privileged. Before
presenting the email in question to the grand jury, the
government asked the district court for permission to do so.
The district court granted permission, finding that although
the email was protected by the work product privilege, the
crime-fraud exception to that doctrine applied. John Doe 1
then filed an interlocutory appeal, requesting that our Court
reverse the district court’s order.
On January 12, 2016, when we heard oral argument in
this case, the grand jury had not yet issued any indictments.
However, while this appeal was still pending, the district
court permitted the grand jury to view the email in question.
2
We use pseudonyms to refer to the grand jury subjects to
protect the secrecy of the grand jury investigation and the
anonymity of the subjects.
2
On March 31, 2016, the grand jury returned a seventeen-
count indictment, charging John Doe 1, John Doe 1’s lawyer,
and John Doe 2 with conspiracy to violate the Racketeer
Influenced and Corrupt Organizations Act, conspiracy, mail
fraud, wire fraud, and money laundering. For the reasons that
follow, we hold that we do not have jurisdiction to hear the
present appeal.
I.
A. John Doe 1, John Doe 2, and Company A
Company A, John Doe 1, and John Doe 2 were
subjects of an ongoing grand jury investigation that sought to
determine whether they and others undertook fraudulent
business transactions in order to launder money and settle
lawsuits under false pretenses. Company A was incorporated
in Florida in 2008. John Doe 1 was the president and the “sole
proprietor” of that company.3 Nonetheless, a November 2008
document purports to memorialize John Doe 1’s sale of one
hundred percent of the shares of Company A to a corporation
we will call Company B for $10,000. John Doe 2 is the sole
owner of Company B. Following this purchase agreement,
John Doe 1 claims that John Doe 2 engaged John Doe 1 and
his associates to be responsible for Company A’s day-to-day
operations. However, numerous filings and tax documents
suggested that John Doe 1 maintained control and ownership
of Company A even after Company A was purportedly
transferred.
Since at least 2000, multiple individuals have sued
John Doe 1 and his businesses in state courts around the
country based on John Doe 1’s business practices. One such
lawsuit was a class action filed against Company A in Indiana
state court. In this class action, the plaintiffs alleged that
Company A’s business practices violated various Indiana
state laws. They sought to hold John Doe 1 accountable for
these violations. However, during this litigation, John Doe 1
averred in a deposition that he had transferred ownership of
Company A to Company B. John Doe 2 then represented that
3
January J.A. at 6, 32.
3
Company A was no longer in business and had limited assets.
Shortly after John Doe 1’s deposition, the Indiana plaintiffs
settled their lawsuit for approximately $260,000, about ten
percent of the value that attorneys for the plaintiffs had put on
the lawsuit.
B. District Court Grand Jury Proceedings & Interlocutory
Appeal
Thereafter, the government empaneled a grand jury to
investigate John Does 1 and 2. In the course of this
investigation, a grand jury subpoena was sent to John Doe 1’s
accountant requesting that he provide the government with
John Doe 1’s personal and corporate tax returns. Among
other things, these tax documents revealed that John Doe 1
had claimed one hundred percent ownership of Company A
every tax year from 2008 through 2012. The accountant also
told an IRS agent that, at some point in 2013, John Doe 1’s
lawyer informed him that John Doe 1 had sold Company A to
John Doe 2 in 2008. He also informed investigators that he
might have taken notes on this conversation. The government
requested those notes, and the accountant’s attorney sent the
government three documents.
One of these documents was an email John Doe 1 had
sent to the accountant on July 16, 2013, forwarding an email
that John Doe 1’s lawyer had sent to John Doe 1 four days
earlier. The contents of this email could be read to incriminate
John Doe 1, John Doe 1’s lawyer, and John Doe 2. The email
instructs John Doe 1 of the steps he should take to correct his
records so that they reflect that John Doe 2, not John Doe 1,
owned Company A since 2008. When John Doe 1 forwarded
this email to his accountant, he simply wrote: “Please see the
seventh paragraph down re; my tax returns. Then we can
discuss this.” Thus, the email can be interpreted as evidence
of John Does 1 and 2’s fraudulent scheme.
The day after the accountant provided this email to the
government, the accountant’s attorney sought to recall it on
the ground that it was privileged and had been inadvertently
included in his client’s production. The accountant’s counsel,
however, also told the government that his client believed the
email was asking the accountant to perform an accounting
4
service, not a legal service. The government argued that under
such circumstances, John Doe 1 waived any privilege that
might have otherwise attached to his lawyer’s email.
Nonetheless, based on this dispute, the government
temporarily refrained from presenting the email to the grand
jury. Instead, the government moved for permission to show
the email on January 23, 2015. John Doe 1 opposed this
motion.
The district court ruled that the government could
present the email to the grand jury on June 1, 2015. As the
district court explained in its memorandum opinion, John Doe
1 did not forward this email to his accountant to seek legal
advice or obtain such advice. Accordingly, his forwarding of
the email destroyed the attorney-client privilege attached to
this document. Nevertheless, the district court did find that
the work-product privilege attached to the email because the
accountant could not be considered an adversary. The court
then concluded that the crime-fraud exception to the work-
product privilege applied. On this basis, the court permitted
the government to present the email to the grand jury.
Immediately after the district court handed down its
decision, John Doe 1 filed an interlocutory appeal, requesting
that we reverse this order. We heard oral argument on January
12, 2016. While the appeal to our Court was pending,
however, the grand jury returned a seventeen-count
indictment charging John Doe 1, his lawyer, and John Doe 2,
with conspiracy to violate the Racketeer Influenced and
Corrupt Organizations Act, conspiracy, mail fraud, wire
fraud, and money laundering.
After this indictment, we requested supplemental
briefing from the parties on whether this appeal was moot in
light of the indictment. We also asked the government to
inform us whether the grand jury had been discharged.
In response, the government explained that the grand
jury had been discharged shortly after it returned the
indictment. However, the government also informed us that a
new grand jury has been empaneled and is investigating new
charges against John Doe 1 and others. The government is
also considering a superseding indictment. The government
5
has informed us that if it seeks a superseding indictment from
the newly empaneled grand jury, it will present the disputed
email to the grand jury in support of charges that would be
contained in the superseding indictment. Accordingly, both
John Doe 1 and the government agree that the appeal is not
moot due to the continuing investigation.
Nonetheless, the government now contends that we
lack jurisdiction over this appeal under In re Grand Jury
Proceedings, 631 F.2d 1033 (3d Cir. 1980). John Doe
disagrees. For the following reasons, we agree with the
government and hold that we lack jurisdiction over this
appeal.
II.
This appeal presents a complicated and novel procedural fact
pattern, which complicates the issue of our jurisdiction.
Nonetheless, as we shall explain, we conclude that we lack
jurisdiction over this appeal.4 This conclusion is guided, in
part, by the decisions of our sister circuits, which have dealt
with cases more analogous to the present appeal.
A. The Finality Rule
“[T]he right to a judgment from more than one court is
a matter of grace and not a necessary ingredient of justice.”5
Congress has determined that courts of appeals shall only
have jurisdiction over “final decisions” of the district courts.6
As our Court has acknowledged, two attributes ordinarily
define a final decision. “‘First, the decision will fully resolve
all claims presented to the district court. Second, after the
decision has been issued, there will be nothing further for the
district court to do.’”7 Thus, “[w]hen a district court orders a
4
The district court had jurisdiction over this case pursuant to
18 U.S.C. § 3231.
5
Cobbledick v. United States, 309 U.S. 323, 325 (1940).
6
28 U.S.C. § 1291.
7
In re Grand Jury, 705 F.3d 133, 142 (3d Cir. 2012) (quoting
Aluminum Co. of Am. v. Beazer East, Inc., 124 F.3d 551, 557
6
witness—whether a party to an underlying litigation, a subject
or target of a grand jury investigation, or a complete stranger
to the proceedings—to testify or produce documents, its order
generally is not considered an immediately appealable final
decision under § 1291.”8 Therefore, disclosure orders are
generally not final and cannot normally be challenged by an
immediate, i.e. interlocutory, appeal.
Three considerations generally justify this finality
requirement. First, the finality rule “helps preserve the respect
due trial judges.”9 “Permitting piecemeal appeals would
undermine the independence of the district judge, as well as
the special role [they] play[] in our judicial system.”10
Second, this requirement “minimizes a party’s opportunities
to defeat the valid claims of his opponents through an endless
barrage of appeals.”11 As Justice Frankfurter once explained,
the finality rule “avoid[s] the obstruction to just claims that
would come from permitting the harassment and cost of a
succession of separate appeals from the various rulings to
which a litigation may give rise, from its initiation to entry of
judgment.”12 Lastly and relatedly, the rule promotes
efficiency by removing obstacles that would otherwise
impede judicial process. “To be effective, judicial
administration must not be leaden-footed. Its momentum
would be arrested by permitting separate reviews of the
component elements in a unified cause.”13
(3d Cir. 1997) (citing Catlin v. United States, 324 U.S. 229,
233 (1945))).
8
Id. (internal alterations and quotation marks omitted) (citing
United States v. Ryan, 402 U.S. 530, 532-34 (1971),
Cobbledick, 309 U.S. at 326-29, and Alexander v. United
States, 201 U.S. 117, 118-22 (1906)).
9
Flanagan v. United States, 465 U.S. 259, 263 (1984).
10
Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 374
(1981).
11
In re Grand Jury Subpoena, 190 F.3d 375, 379 (5th Cir.
1999).
12
Cobbledick, 309 U.S. at 325.
13
Id.
7
These concerns are especially robust in criminal cases.
14
As the Supreme Court has emphasized, “the delays and
disruptions attendant upon intermediate appeal are especially
inimical to the effective and fair administration of the
criminal law.”15 The particular importance of the finality
requirement to criminal cases flows both from the accused’s
Sixth Amendment right to as well as from society’s
independent interest in a speedy trial:
As time passes, the prosecution’s ability to meet
its burden of proof may greatly diminish:
evidence and witnesses may disappear, and
testimony becomes more easily impeachable as
the events recounted become more remote.
Delay increases the cost of pretrial detention
and extends “the period during which
defendants released on bail may commit other
crimes.” Delay between arrest and punishment
prolongs public anxiety over community safety
if a person accused of a serious crime is free on
bail. It may also adversely affect the prospects
for rehabilitation. Finally, when a crime is
committed against a community, the
community has a strong collective
psychological and moral interest in swiftly
bringing the person responsible to justice.
Prompt acquittal of a person wrongly accused,
which forces prosecutorial investigation to
continue, is as important as prompt conviction
and sentence of a person rightly accused. Crime
inflicts a wound on the community, and that
14
See United States v. Hollywood Motor Car Co., 458 U.S.
263, 265 (1982) (“This Court has long held that [the doctrine
of finality] . . . is inimical to piecemeal appellate review of
trial court decisions which do not terminate the litigation, and
that this policy is at its strongest in the field of criminal law . .
. .”); Cobbledick, 309 U.S. at 325 (“These considerations of
policy are especially compelling in the administration of
criminal justice.”).
15
DiBella v. United States, 369 U.S. 121, 126 (1962).
8
wound may not begin to heal until criminal
proceedings have come to an end.16
As a result, the finality rule takes on particular importance in
criminal adjudications.
B. The Contempt Rule
To obtain immediate appellate review of a disclosure
order, the order’s target must ordinarily comply with what is
known as the “contempt rule”: He “must refuse compliance,
be held in contempt, and then appeal the contempt order.”17
The party may immediately appeal the district court’s
contempt order because that order is a final judgment
imposing penalties on the willfully disobedient party in what
is effectively a separate proceeding.18
The contempt route “is a firmly established feature of
federal appellate procedure, . . . but the decision to travel that
route must not be made lightly.”19 The rule, “though at times
a harsh one, was formulated to discourage appeals in all but
the most serious cases.”20 Requiring a person who objects to a
disclosure order to “‘refuse to comply, be subjected to
sanctions in contempt, and then appeal from the sanctions . . .
[,] puts the objecting person’s sincerity to the test by attaching
a price to the demand for immediate review.’”21
16
Flanagan v. United States, 465 U.S. 259, 264-65 (1984)
(quoting United States v. MacDonald, 435 U.S. 850, 862
(1978) and citing Barker v. Wingo, 407 U.S. 514, 520
(1972)).
17
Church of Scientology v. United States, 506 U.S. 9, 18 n.11
(1992) (citing United States v. Ryan, 402 U.S. 530 (1971));
see also Cobbledick, 309 U.S. at 326-29; Alexander v. United
States, 201 U.S. 117, 118-22 (1906).
18
In re Grand Jury, 705 F.3d 133, 143 (3d Cir. 2012).
19
Id.
20
In re Grand Jury Proceedings, 604 F.2d 798, 800 (3d Cir.
1979).
21
In re Grand Jury, 705 F.3d at 143 (alteration in original)
(quoting Wilson v. O’Brien, 621 F.3d 641, 643 (7th Cir.
2010)).
9
C. The Perlman Exception to the Contempt Rule
Nevertheless, an exception to this contempt rule does
exist for a limited class of parties. In Perlman v. United
States,22 the Supreme Court declined to apply the contempt
rule to a party who did not have control over the target of the
district court’s disclosure order. That case centered on the
seized exhibits of a patent holder, Louis Perlman. These
exhibits first came into the possession of a district court when
Perlman testified on behalf of his company in a patent
infringement trial.23 When the company moved to dismiss its
suit without prejudice, the district court granted the
company’s motion. Nonetheless, it ordered the court clerk to
impound the exhibits Perlman used during his testimony and
to maintain them under seal.24 Soon after this infringement
suit ended, the government initiated a grand jury investigation
of Perlman, suspecting that he had committed perjury during
the patent trial.25 To assist in the investigation, the
government sought an order from the district court directing
the court clerk to produce the exhibits Perlman used during
his testimony.26 Perlman objected, claiming that such use of
his exhibits would constitute an unreasonable search and
seizure and render him a compulsory witness against himself
in violation of the Fourth and Fifth Amendments.27 The
district court disagreed with Perlman and ordered the clerk to
produce the exhibits to the government.28
Perlman then appealed to the Supreme Court. There,
the government argued that the district court’s disclosure
order was not appealable.29 The Supreme Court disagreed.
The Court reasoned that because “Perlman was powerless to
avert the mischief,” he should not be required to “accept its
22
247 U.S. 7 (1918).
23
Id. at 8.
24
Id. at 8-9.
25
Id. at 9-10.
26
Id.
27
Id. at 10, 13.
28
Id. at 10-11.
29
Id. at 12.
10
incidence and seek a remedy at some other time and in some
other way.”30 In other words, because the exhibits were not in
his possession, he could not refuse to produce them, standing
in contempt to obtain an immediate appeal. Because the
contempt route was unavailable to him, he was “powerless to
avert the mischief” of their production.31
As our Court has explained, “though the Perlman
doctrine’s reach has not been set precisely by the Supreme
Court, it generally permits an interlocutory appeal of a
disclosure order if [that order] is directed at a disinterested
third party lacking a sufficient stake in the proceeding to risk
contempt by refusing compliance.”32 In such a circumstance,
the privilege holder is permitted to appeal immediately
without suffering contempt sanctions. Because the privilege
holder himself cannot disobey the disclosure order and the
third party at whom the disclosure order is directed is unlikely
to do so on his behalf, the privilege holder is permitted an
immediate appeal.33
Despite the general acceptance of the Perlman
exception, the Supreme Court clarified in 2009 that disclosure
orders averse to the attorney-client privilege do not qualify
for immediate appeal under the collateral order doctrine.
After the Supreme Court handed down Mohawk Industries,
Inc. v. Carpenter,34 appellate courts grappled with the
question of whether and to what extent Mohawk narrowed the
Perlman exception.
30
Id. at 13.
31
Id.
32
In re Grand Jury, 705 F.3d at 144 (citing Church of
Scientology, 506 U.S. at 18 n.11 and United States v. Nixon,
418 U.S. 683, 691 (1974)).
33
See id.; In re Grand Jury Empanelled Aug. 14, 1979, 638
F.2d 1235, 1237 (3d Cir. 1981); In re Grand Jury Applicants,
619 F.2d 1022, 1025 (3d Cir. 1980); In re Grand Jury
Proceedings, 604 F.2d 798, 800-01 (3d Cir. 1979).
34
558 U.S. 100, 112 (2009); see also Cohen v. Beneficial
Indus. Loan Corp., 337 U.S. 541 (1949).
11
For our part, we declined “to hold that the Supreme
Court narrowed the Perlman doctrine—at least in the grand
jury context—sub silentio.”35 As we noted in In re Grand
Jury,
the Mohawk Court gave no clear indication that
[overruling Perlman] was a consequence of its
intended holding. It did not discuss, mention, or
even cite Perlman, a fact that is not that
surprising given that the Perlman doctrine and
the collateral order doctrine recognize separate
exceptions to the general rule of finality under §
1291.36
Therefore, we concluded that “the Perlman exception remains
viable.”37
D. Application of the Perlman Exception to the Present
Appeal
The Perlman exception generally applies to disclosure
orders only when they are directed at disinterested third
parties who lack sufficient stake in the proceedings to risk
contempt.38 Examples of such disinterested third parties
include former counsel39 or court clerks.40 However, where
current counsel or employees hold the targeted documents,
we have held that the party claiming the privilege can take
possession of those documents, refuse to comply with a
subpoena, and invite the sanction of contempt, which would
then afford an avenue for appeal.41
In the present appeal, John Doe 1’s accountant was an
agent of John Doe 1. Therefore, John Doe 1 could have taken
possession of the email in question and risked contempt
sanctions himself. However, before he had the opportunity to
35
In re Grand Jury, 705 F.3d at 145.
36
Id. at 46.
37
Id.
38
Id. at 144.
39
Id. at 148.
40
Perlman v. United States, 247 U.S. 7, 12-13 (1918).
41
In re Grand Jury, 705 F.3d at 148.
12
take such an action, the accountant produced the email in
question to the government. Therefore, this appeal presents a
slightly different fact pattern than the normal Perlman
exception. John Doe was not stripped of the opportunity to
stand in contempt of the district court’s order by some
disinterested third party; rather, his own agent’s error led to
this result. Therefore, it is not clear that, given the opportunity
to seize the email in question, John Doe 1 would have been
willing to stand in contempt of this order. He did not have to
pay the price normally exacted in exchange for immediate
review.42
Two other courts of appeals have already examined the
question of whether a party’s inadvertent production of
privileged documents disqualifies it from seeking the
Perlman exception’s protection; they reached different
results. First, in In re Grand Jury Investigation of Ocean
Transportation,43 the D.C. Circuit held that the Perlman
exception applied to an inadvertent production of documents
that the party’s former counsel specifically marked
“privileged.” In the course of its investigation into Sea-Land
Services, the Antitrust Division of the United States
Department of Justice sought certain records from the
company.44 In August 1976, the district court issued a
subpoena to Sea-Land, and Sea-Land instructed its counsel to
withhold from production all documents that might be
covered by the attorney-client privilege.45 In response, the
company’s attorney marked certain privileged documents
with a “P.” Nonetheless, counsel turned over both these
marked documents as well as non-marked documents to the
government.46 Because counsel turned over Sea-Land’s
documents contrary to Sea-Land’s express instructions, the
D.C. Circuit held that the Perlman exception applied.47
42
See Wilson v. O’Brien, 621 F.3d 641, 643 (7th Cir. 2010).
43
604 F.2d 672 (D.C. Cir. 1979) (per curiam).
44
Id. at 673.
45
Id. at 674.
46
Id.
47
Id. at 673.
13
The second appellate court decision regarding the
Perlman exception’s applicability to inadvertently produced
documents is more akin to the present appeal. In In re Grand
Jury Subpoena,48 the Fifth Circuit distinguished Ocean
Transportation and held that a party’s inadvertent production
of documents did not fall under the Perlman exception.
There, the corporate appellant produced approximately 5000
documents in response to a subpoena.49 After this production,
the appellant learned that a document that was marked
privileged was handed over as part of this production dump.50
But the Fifth Circuit held that the Perlman exception did not
apply to this document. As that court explained, “[t]his is not
a case where a disinterested third party controlled the fate of
the documents disclosed, nor is it a case where the documents
were stolen or seized.”51 The court reasoned the appellants
“themselves controlled the fate of the documents at issue,”
and, therefore, “the criminal justice system should not be
made to bear the brunt of their inadequate precautions.”52
The Fifth Circuit decision is instructive for one other
reason. The district court had also engaged in a procedural
misstep related to the in camera review of other documents.53
District courts often review documents in camera to assess
whether they must be produced to the opposing party. If a
court determines that documents should be produced, it must
order the party to whom the documents belong to produce
them to its adversary. The owner of the documents can obtain
immediate appellate review of such an order by refusing to
hand over the documents and standing in contempt of the
district court’s order. In the Fifth Circuit case, however, the
district court itself made the documents available to the
government following the in camera review, thereby robbing
48
190 F.3d 375, 385-87 (5th Cir. 1999).
49
Id. at 377.
50
Id.
51
Id. at 386 (citing Perlman v. United States, 247 U.S. 7, 10
(1918) & In re Grand Jury Proceedings Involving Berkley
and Co., 629 F.2d 548, 550 (8th Cir. 1980)).
52
Id.
53
Id. at 387-88.
14
the appellants of the contempt route.54 The corporate
appellants urged the Fifth Circuit to work around the district
court’s procedural misstep by “applying the Perlman
exception and collateral order doctrine to determine
jurisdiction.”55 The Fifth Circuit declined this invitation,
explaining that “employing that approach in this case would
plunge us into the very difficult issue of deciding whether, in
determining if the acts Corporate Appellants are alleged to
have committed even constitute a crime for purposes of
applying the crime-fraud exception.”56 The Fifth Circuit
found it improper to “reach[] the merits of a secret, ongoing
grand jury investigation.”57 Therefore, the court decided
against the work-around the appellants requested. Instead, the
court chose to correct this procedural flaw by granting
mandamus and ordering the district court to return the
documents to the appellants so that they had the option of
standing in contempt of court.58
Such a writ would have also been acceptable in the
present appeal, before the grand jury had a chance to view the
email and issue its indictment. Had the email been returned to
John Doe 1, and then ordered produced, John Doe 1 would
have had the option to stand in contempt of court, testing his
willingness to produce the email in question. Because John
Doe 1 did not obtain such a writ, we must decide whether the
Perlman exception applies.
The purpose of the Perlman doctrine is to protect
defendants from the government using privileged documents
before a grand jury. It is necessary because, in situations
where the doctrine applies, defendants are unable to subject
themselves to the contempt of court that would ordinarily
grant them standing to challenge the disclosure. In Perlman,
the Court stated “Perlman contends that the proposed use by
the United States before the grand jury of the exhibits as a
basis for an indictment against him constitutes an
54
Id.
55
Id. at 388.
56
Id. at 388-89.
57
Id. at 389.
58
Id.
15
unreasonable seizure . . . .”59 The purpose of the doctrine,
therefore, is to protect against the use of privileged
documents “as a basis for an indictment.” Accordingly,
where, as here, an indictment is returned that relies upon
purportedly privileged documents, the doctrine’s purpose is
no longer served.
At least one other court of appeals is in accord. In
United States v. Calandra,60 the Court of Appeals for the
Seventh Circuit explained that “[i]t is the possibility of
disclosure of information which is thought to be confidential
that is central to the Perlman exception.”61 There, the
information at issue had also already been disclosed to
government agents. As a result, the Seventh Circuit reasoned
that there was no need for immediate appellate review62:
Disclosure of information confounds the very purpose of the
Perlman exception. As Calandra explained,
In the event that the present trial results in a
conviction, this jurisdictional ruling on the
interlocutory appeal does not foreclose raising
the privilege issue again on direct appeal. It
obviously would then be too late to retrieve the
alleged privileged testimony from further
exposure, but not too late to consider its impact,
if any, upon the conviction.63
Similarly, the disclosure of the email to the grand jury
prior to the indictment here undermines the very purpose of
the Perlman exception. The grand jury has already seen the
email at issue in this appeal. Deciding now that the disclosure
of that email was improper will not repair the breach of
confidentiality that already occurred: The jurors cannot un-
see that email any more than the proverbial bell can be un-
59
Perlman v. United States, 247 U.S. 7, 13 (1918) (emphases
added).
60
706 F.2d 225 (7th Cir. 1983).
61
Id. at 228.
62
Id.
63
Id.
16
rung. Therefore, in this case, immediate appeal is not required
under Perlman.
E. Application of the Collateral Order Doctrine to the
Present Appeal
We find that the March indictment sufficiently tips the
scales such that we do not have jurisdiction over this appeal
pursuant to the collateral order doctrine. Reviewing Supreme
Court and appellate court precedent on interlocutory appeals,
two relevant principles become evident. First, and most
importantly, where an appellant will have an opportunity for
later review of his claims, the law disfavors interlocutory
appeals. The Supreme Court has repeatedly emphasized that
interlocutory appeals should only be accepted in “the limited
class of cases where denial of immediate review would render
impossible any review whatsoever of an individual’s
claims.”64
Similarly, we have held that interlocutory appeals
during grand jury proceedings are inappropriate where
appellants will have later opportunities to appeal the
purportedly flawed grand jury proceedings. In In re Grand
Jury Proceedings (Johanson),65 our Court held that we did
not have jurisdiction under the collateral order doctrine to
hear an appeal of a district court order denying an evidentiary
hearing. That appeal arose from multidistrict litigation
investigating the Abscam scandal. After the press identified
Louis C. Johanson as the target of the pending Abscam
investigation, Johanson moved the district court to hold an
evidentiary hearing to determine which federal employees
released this confidential information.66 Johanson stated that
he sought their identities so that he could move to disqualify
them from participating in the grand jury proceedings in his
case (his theory was that their participation in these
proceedings would violate his Fifth Amendment right to an
impartial grand jury).67
64
United States v. Ryan, 402 U.S. 530, 533 (1971).
65
632 F.2d 1033 (3d Cir. 1980).
66
Id. at 1035-36.
67
Id. at 1036-37.
17
Nonetheless, the district court denied Johanson’s
motion and allowed the grand jury investigation to proceed.
Johanson then appealed the district court’s denial of his
motion for an evidentiary hearing to our court and requested
that we stay the grand jury proceedings to prevent his being
indicted before resolution of his appeal.68 We refused to grant
a stay of the grand jury proceedings, declining “to interrupt
the grand jury’s investigation or to delay its decision.”69 The
grand jury then returned an indictment against Johanson
before we were able to rule on his appeal.70
When we did issue our decision, after Johanson’s
indictment, we determined that we no longer had jurisdiction
to rule on Johanson’s appeal of district court’s denial of his
motion for an evidentiary hearing.71 Although we
acknowledged that the grand jury proceedings in Johanson’s
case may have been flawed, we recognized that any such
flaws could be corrected on appeal after his trial, if he was
convicted.
[F]lawed grand jury proceedings can be
effectively reviewed by this court and remedied
after a conviction has been entered and all
criminal proceedings have been terminated in
the district court. Because delayed appellate
review will not irreparably deny Johanson his
right to an impartial grand jury (his conviction
could be reversed if at a later stage we conclude
the grand jury was tainted), the order is not
reviewable immediately as a collateral order.72
Because the indictment of Johanson had already issued, and,
therefore, the criminal trial was “fairly in train,”73 we found
68
Id. at 1038.
69
Id.
70
Id.
71
Id. at 1039-40.
72
Id. (citing Costello v. United States, 350 U.S. 359 (1955)).
73
Di Bella v. United States, 369 U.S. 121, 131 (1962).
18
that we no longer had the requisite jurisdiction to hear his
appeal of the evidentiary hearing motion.
The same logic applies here. Any flaw in the grand
jury proceedings stemming from the disclosure of the email
can be corrected on appeal if the appellants are convicted. In
this case, John Doe 1 will have another opportunity to seek
review of his claim. If he does not take a plea agreement, he
will face trial, whether on the indictment that issued in March
or on a superseding indictment that issues in the near future.74
Therefore, “the criminal trial is [] fairly in train,” and John
Doe 1’s appeal here is “truly interlocutory.”75 A party “is
entitled to a single appeal, to be deferred until final judgment
has been entered, in which claims of district court error at any
stage of the litigation may be ventilated.”76 John Doe 1 is
asking us to peek into the merits of his case to determine
whether the crime-fraud exception applies. But he can go to
trial—whether on this indictment or the next—and, if
convicted, appeal this email issue. The collateral order
doctrine simply does not give us jurisdiction in such
circumstances.
In response to this point, the Dissent argues that our
holding undermines judicial efficiency.77 As a general matter,
we agree with our dissenting colleague that “in cases where
we accept an appeal when it is filed, efficiency favors
74
Moreover, even if John Doe 1 were to decide that a guilty
plea was in his best interest, he could still seek to preserve his
right to appeal this issue by tendering a conditional guilty
plea. We know of nothing that would suggest such an offer
would be rejected by the government or by the district court.
Of course, we note this only as part of our academic
discussion of finality and jurisdiction. We in no way intend to
suggest anything about the merits of the prosecution or the
propriety of any course of action that the appellant may wish
to pursue.
75
Id.
76
Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863,
868 (1994).
77
Dissent at 9-11.
19
finishing what we started.”78 However, we do not agree that
this general principle applies to the novel circumstances of
this appeal.
The Dissent is correct that there is a possibility that
this matter could someday return to us on appeal, which could
result in some duplication of effort. However, the Dissent
fails to acknowledge that there is also a possibility that John
Doe 1 will neither be convicted at trial nor accept a plea
agreement. In either event, John Doe 1 would no longer have
reason to appeal the purported breach of privilege, and the
case would not return to us. Moreover, though a newly
empaneled jury continues to investigate John Doe 1, we can
only speculate as to whether that proceeding will implicate
the contested email or trigger another appeal on the same
grounds. In the Dissent’s own words, the Government “may
make further use of the email that Doe is asking us to keep
confidential.”79
Basing our exercise of jurisdiction on a mere
possibility that this case will return to us, or on the chance
that the document will be used to support additional charges,
would open the door to numerous interlocutory challenges.
This is precisely the sort of fractured “leaden-footed[ness]”80
that the finality rule seeks to prevent. The Dissent’s approach
would also create line-drawing problems: How strong of a
possibility is sufficient to create jurisdiction, and how do we
quantify that possibility? In our view, where a question can
just as well be answered after a final ruling, and, indeed, may
no longer require an answer at that time, the efficient path is
to not arrest the momentum of trial court proceedings.
The Dissent also argues that our position conflicts with
two of our prior cases.81 In response to our discussion of
78
Id. at 10.
79
Id. at 4 (emphasis added).
80
Cobbledick v. United States, 309 U.S. 323, 325 (1940).
81
The Dissent also explains that it would reverse the district
court and conclude that the crime-fraud exception to the
attorney work product doctrine does not apply to the email at
issue. Dissent at 11-15. We express no opinion on the merits
20
Johanson, the Dissent points out that the government’s
investigation of John Doe 1, his lawyer, and John Doe 2 is
ongoing.82 The government has notified our Court that it has
empaneled a new grand jury that is “continuing to investigate
unindicted persons, and considering whether additional
charges should be brought against persons already
indicted.”83 Although the existence of this ongoing
investigation does slightly distinguish this case from
Johanson’s, it does not undermine the applicability of
Johanson to this appeal or create a difference. A new grand
jury is considering a superseding indictment. This new
indictment has not yet come to fruition. But if it does not, the
government will go forward with the indictment it has already
secured. The government has not suggested that it intends to
dismiss the current indictment and every indication is to the
contrary. Therefore, this case will go to trial (barring any plea
agreement), either on the existing indictment or on a
superseding indictment. Accordingly, the logic of Johanson
applies, removing our jurisdiction over this appeal.
In addition, the Dissent claims that In re Search of
Elec. Commc’ns in the Account of chakafattah@gmail.com at
Internet Serv. Provider Google, Inc. (“Fattah”) undercuts our
position.84 There, while under investigation by a grand jury,
Congressman Chaka Fattah filed an appeal contesting a
warrant to search his email account. We held that we had
jurisdiction under Perlman despite the fact that an indictment
had issued before our decision.85 We also held that the
collateral order rule did not apply. We reasoned that it did not
apply, in part, because we found that the district court’s order
denying Fattah’s motion to quash the search warrant was not
effectively unreviewable on appeal.86 According to the
Dissent, Fattah is a prime example of how in a single case,
post-proceedings review can be sufficient under the collateral
because we find that we do not have jurisdiction over this
appeal.
82
Id. at 4.
83
Gov’t May Br. at 1.
84
802 F.3d 516 (3d Cir. 2015).
85
Id. at 521 n.2, 529-30.
86
Id. at 525-26.
21
order rule yet immediate appeal is still warranted under
Perlman.87
However, a crucial fact distinguishes Fattah from the
present appeal: the grand jury in that case never had access to
the documents at issue.88 Here, the email has already been
produced, the grand jury has already seen it, and it has
returned an indictment—no doubt at least partly because of
that email. Therefore, while the grand jury proceedings in
Fattah had not been tainted by the document disclosure, the
grand jury proceedings in this case potentially have. Whether
this email should have been allowed to reach the grand jury,
and, if not, whether it tainted the proceedings can just as
easily be decided in a direct and final appeal of conviction
(should the appellants be convicted) as in this interlocutory
appeal. Therefore, because a party “is entitled to a single
appeal,”89 we must wait for that final appeal to speak on the
email disclosure issue.90
Here, the damage of disclosure has already been done,
and considerations of finality and judicial efficiency dictate
that we wait until the final appeal from conviction, should one
occur, to decide the email issue. Should a jury convict the
appellants, they will certainly have another, equally adequate,
87
Dissent at 7.
88
Fattah, 802 F.3d at 521, 531.
89
Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863,
868 (1994).
90
The Dissent also suggests that we have jurisdiction because
we retained jurisdiction pursuant to Perlman over a similar
appeal in In re Grand Jury (ABC Corp.), 705 F.3d 133
(2012). Dissent at 8. However, we are unpersuaded for the
same reasons we are not convinced by the Dissent’s reliance
on Fattah. In ABC Corp., the district court ordered disclosure
of certain documents, and the targets of the grand jury
investigation appealed. At the appellants’ request, we stayed
the disclosure order. ABC Corp., 705 F.3d at 140-42, 148.
Thus, in ABC Corp., as in Fattah, the grand jury had not yet
seen the documents, and exercising jurisdiction pursuant to
Perlman could prevent potential harm. That is not the case
here.
22
opportunity to present their privilege claims. Under the
circumstances here, we hold that we lack jurisdiction to
address this interlocutory appeal.
23
In re Grand Jury Matter No. 3
No. 15-2475
_________________________________________________
AMBRO, Circuit Judge, dissenting
My colleagues concede the possibility that we had
jurisdiction at the beginning of this appeal but conclude that
we lost it after John Doe 1 (“Doe”) was indicted. In my view,
this fails to follow two of our previous decisions where we
exercised post-indictment jurisdiction. Moreover, even if we
were writing on a clean slate, I am concerned that the
majority undermines the very efficiency interests it seeks to
promote. Finally, our dismissal of Doe’s appeal leaves in
place, at least for now, a decision on the merits that unduly
erodes the protection of the attorney work product doctrine. I
therefore respectfully dissent.
I.
Because Doe’s criminal case has not yet proceeded to
a final judgment, my colleagues conclude that his appeal is
premature. However, this is not the typical instance of a court
telling a litigant he has appealed too soon. That is because my
colleagues do not conclude that the appeal was premature at
the time it was filed. Rather, they leave open the possibility
that, prior to the indictment, the Supreme Court’s decision in
Perlman v. United States, 247 U.S. 7 (1918), provided us with
jurisdiction.1 What they fail to explain is how an appeal, like
1
There is no need to leave that question unresolved. Perlman
certainly provided jurisdiction at the beginning of the case.
As discussed later in this opinion, Perlman applies when a
“disinterested” third party controls a privilege holder’s
documents and is ordered to produce them. See In re Grand
1
Benjamin Button, can age in reverse, losing the maturity it
previously had.
Jury (ABC Corp.), 705 F.3d 133, 138 (3d Cir. 2012). The
email at issue here was produced in response to a subpoena
addressed to Doe’s accountant. My colleagues suggest that he
would have been disinterested if he had been Doe’s former
accountant at the time of the subpoena. However, because
Doe still employed him at that time, they say he was not
disinterested. They are nonetheless willing to posit the
possibility that Perlman applied, but only because the
accountant inadvertently produced the email. Maj. Op. at 14–
15. They derive the proposition that an appellant’s current
agents are not disinterested (whereas his former agents are)
from our decision in ABC Corp. However, as Judge Vanaskie
noted in his partial dissent in that case, the majority opinion
did not address that question. 705 F.3d at 166 (Vanaskie, J.,
dissenting in part). As he persuasively explained, it does not
make sense to distinguish between current and former agents,
and the “majority of . . . circuits that have addressed this
issue” do not make such a distinction. Id. at 166–67. Indeed,
we have previously applied Perlman to a subpoena addressed
to an accounting company without asking whether it was a
current or former agent. See Wm. T. Thompson Co. v. Gen.
Nutrition Corp., 671 F.2d 100, 103 (3d Cir. 1982). Rather
than relying on a current/former dichotomy, what we instead
held in ABC Corp. is that Perlman does not apply when an
appellant and his agents are jointly subject to a court order
mandating disclosure. 705 F.3d at 138 (majority opinion).
Because Doe was never a party to the subpoena addressed to
his accountant, this was a Perlman case even before the
inadvertent production.
2
On at least two occasions we have continued to
exercise jurisdiction even after grand juries returned
indictments. The majority’s approach conflicts with both of
those prior cases. In the first case, the Government appealed
an adverse ruling on a grand jury subpoena. At the outset of
the appeal, our jurisdiction was clear because Congress had
specifically given the Government the right to seek
immediate review. See In re Grand Jury Proceedings
(Johanson), 632 F.2d 1033, 1040 (3d Cir. 1980) (citing 18
U.S.C. § 3731). As the appeal was pending, however, the
grand jury returned an indictment. We nonetheless concluded
that, as long as the indictment did not render the appeal moot,
we had jurisdiction to reach the merits. Because in that case
the indictment “did not bring the grand jury’s proceedings to
[their] conclusion,” a live controversy remained and our
jurisdiction was intact. Id.2
The second decision, which involved Congressman
Chaka Fattah and was issued just last year, is even more
compelling because it, like our case, arose under Perlman. At
the time Fattah filed his Perlman appeal, he was, like Doe,
being investigated by a grand jury. Just as in our case, his
status changed when the grand jury, after oral arguments in
our Court but before we reached a decision, returned an
indictment. See In re Search of Elec. Commc’ns in the
Account of chakafattah@gmail.com at Internet Serv. Provider
Google, Inc., 802 F.3d 516, 521 n.2 (3d Cir. 2015)
(“Fattah”). However, because his appeal related to the still-
ongoing review of his emails (thus giving us a live
2
My colleagues rely on our discussion in Johanson of a
separate appeal that was filed by the target of the grand jury
investigation. As I discuss below, however, this has no
bearing on Doe’s appeal.
3
controversy), we continued to exercise Perlman jurisdiction
even after the indictment. Id. at 529–30.
To be sure, an intervening indictment can (and often
will) moot a grand jury appeal. For instance, Doe through this
appeal asks us to prevent the grand jury from relying on an
email that he says is confidential. If after the indictment the
grand jury investigation had ended, any harm from exposure
to the email already had occurred. It would make sense in
those circumstances to hold off until after the criminal
proceedings are over before determining whether the grand
jury was tainted. That is because there could be no ongoing
violations—i.e., further use of the email by the grand jury—in
the interim.
However, those are not our facts. Even after the
indictment a newly empaneled grand jury continues to
investigate Doe and may bring additional charges. In deciding
whether to do so, it may make further use of the email that
Doe is asking us to keep confidential. In our case, as in
Johanson, the indictment “did not bring the grand jury’s
proceedings to [their] conclusion,” so there is still potential
harm we can prevent. Johanson, 632 F.2d at 1040. The
purpose of this appeal thus remains the same as when it was
first filed: deciding whether an email should be used as part
of an ongoing grand jury investigation. Tellingly, both Doe
and the Government agree that the appeal is not moot, and my
colleagues do not take issue with that assessment. As a result,
both Johanson and Fattah require us to reach the merits.
Instead of explaining why, despite our contrary case
law, an indictment automatically cuts off jurisdiction that
once existed and prevents us from deciding a live
controversy, the majority looks at decisions that answer a
different question: whether jurisdiction was ever proper under
the collateral order rule. It relies primarily on a quote from
4
Johanson. That case involved two separate appeals. As
discussed, one was filed by the Government, and we
continued to exercise jurisdiction even after an indictment.
The second appeal was filed by the target of the grand
jury investigation (who became an indicted defendant as the
appeal was pending). Unlike the Government, the target did
not have the benefit of a statute providing pre-indictment
jurisdiction. Nor was Perlman available. Instead, the target
relied exclusively on the collateral order rule. That doctrine
allows us to hear an appeal of an interlocutory order that “(1)
conclusively determine[s] the disputed question; (2)
resolve[s] an important issue completely separable from the
merits of the action; and (3) [is] effectively unreviewable on
appeal from a final judgment.” Bines v. Kulaylat, 215 F.3d
381, 384 (3d Cir. 2000) (internal quotation marks omitted). In
explaining why the target could not meet the third
requirement, we made the statement on which my colleagues
rely: that “flawed grand jury proceedings can be effectively
reviewed by this court and remedied after a conviction has
been entered and all criminal proceedings have been
terminated in the district court.” Johanson, 632 F.2d at 1039.
The context for this statement makes all the difference.
Importantly, we did not hold that we had jurisdiction under
the collateral order rule before the indictment but lost it
afterward. Instead, we concluded that we never had
jurisdiction—even pre-indictment—to hear the target’s
interlocutory appeal. Our reasoning would have been the
same had he never been indicted.3
3
In a separate passage, we held that the target’s appeal was
also moot. Id. at 1039–40. This was in contrast to the
Government’s appeal, which still presented a live
controversy. Id. at 1040. The case thus stands for the
5
So what is different here? In short, this case was never
about the collateral order rule. From the outset it has been
about Perlman. And in cases like ours, where jurisdiction was
proper at the outset, we cannot say that deferred review is
sufficient. If a post-trial appeal were a panacea, the statute
that authorized the Government’s immediate appeal in
Johanson (18 U.S.C. § 3731) would not exist. And neither
would Perlman. My colleagues, by acknowledging the
possibility that Perlman may have applied when the appeal
was filed, have effectively conceded that we cannot force Doe
to wait. That is because the Supreme Court has instructed us
to assume in Perlman cases that an appeal “at some other
time” is not good enough. Perlman, 247 U.S. at 13.
At first glance it might seem incongruous to say that
review of Doe’s case after the criminal proceedings is
sufficient under the collateral order rule but is not under
Perlman. But there is a reason for this apparent anomaly, and
it relates to Perlman’s origins. Perlman arose as an exception
to the contempt rule. That rule applies when a privilege
holder seeks review of an order to disclose information. It
allows him to “disobey the court’s [disclosure] order, be held
in contempt, and then [immediately] appeal the contempt
order” rather than having to wait until the end of the case. See
In re Grand Jury (ABC Corp.), 705 F.3d 133, 138 (3d Cir.
2012). Sometimes, however, this option is unavailable
because the court order is directed exclusively at a
disinterested third party who is in control of the privilege
holder’s documents. Because the privilege holder cannot
uncontroversial point that often an indictment will moot an
appeal, but other times it will not. Here, as discussed, Doe’s
appeal falls into the latter category.
6
refuse to obey a court order to which he is not subject,
Perlman allows him to take an immediate appeal. Id.4
When a litigant relies on the collateral order rule alone,
there is a presumption that, having not stood in contempt, he
does not truly believe the dispute is worth immediate review.
After all, the purpose of requiring contempt is to make sure
that only “momentous” and “consequential” issues get an
expedited appeal. Mohawk Indus., Inc. v. Carpenter, 558 U.S.
100, 112 (2009). However, when, as in Perlman cases, the
contempt rule is unavailable, we do not know how strongly a
party values the issue and how necessary prompt review is.
As a result, we err on the side of caution and assume that an
appeal after the trial is inadequate. Perlman, 247 U.S. at 13.
Our decision in Fattah is a prime example of these
dynamics. Fattah argued that we had jurisdiction under both
the collateral order rule and Perlman. We held that the
collateral order rule did not apply because, among other
considerations, any error that occurred was “reviewable upon
appeal” after the criminal proceedings ended. 802 F.3d at
526. Even though post-trial review was sufficient for our
analysis under the collateral order rule, we nonetheless
concluded that Perlman allowed for an immediate appeal. Id.
at 529.
4
My colleagues suggest that Doe could have availed himself
of the contempt rule by getting the email from his accountant
and then refusing to produce it. That suggestion would make
sense if the subpoena had been directed at both Doe and the
accountant. However, because it was addressed only to the
latter, my colleagues’ proposed solution goes beyond what
our case law requires of an appellant. See infra n.1.
7
Similarly, in ABC Corp. we exercised Perlman
jurisdiction even as we conceded that, had the case come to
us under the collateral order rule, the “opportunity for post-
conviction review” would have been sufficient. 705 F.3d at
145. We noted that Perlman and the collateral order rule are
“separate” doctrines, meaning that the unavailability of the
latter does not mean we cannot invoke the former. Id. at 145–
46. This observation applies with equal force here.
Put another way, my colleagues’ arguments
persuasively demonstrate why we never at any stage of this
case had jurisdiction under the collateral order rule. But the
case law they cite, which does not turn on the presence or
absence of an indictment, does not explain why, once
jurisdiction is proper under a completely different theory
(Perlman), we can be divested of our ability to decide a live
controversy. As long as we had jurisdiction at the outset,
Doe’s case is governed by our analysis of the Government’s
appeal in Johanson and by our decision in Fattah. As in those
cases, the indictment did not destroy jurisdiction that properly
existed beforehand.
My colleagues have two responses to this critique. The
first is their suggestion that Perlman itself was focused on
pre-indictment jurisdiction. They note that the litigant in that
case was attempting to prevent the “proposed use by the
United States before the grand jury of [materials] as a basis
for an indictment.” Perlman, 247 U.S. at 13. However, if
Perlman only applied pre-indictment, then we could not have
relied on it in Fattah. Moreover, Perlman is not limited to
grand jury matters or even to criminal cases. See, e.g., Wm. T.
Thompson Co. v. Gen. Nutrition Corp., 671 F.2d 100, 103 (3d
Cir. 1982) (applying Perlman in a civil case). It simply
cannot be that a doctrine that also applies to civil lawsuits
turns on whether there has been an indictment.
8
Next my colleagues, relying on the Seventh Circuit’s
decision in United States v. Calandra, 706 F.2d 225 (7th Cir.
1983), note that the grand jury already saw the email that Doe
claims is privileged. In their view, this makes it futile to apply
Perlman. They say that the “jurors cannot un-see that email
any more than the proverbial bell can be un-rung.” Maj. Op.
at 16. However, this only applies to the first grand jury, which
has already been discharged. As far as we are aware, the
newly empaneled grand jury (the one that may charge Doe
with additional offenses) has not yet seen it. Use of the email
by this second, untainted grand jury is the outcome that Doe
seeks to prevent. There is therefore no bell that needs to be
un-rung.
In sum, my colleagues suggest that it is inappropriate
for Doe to ask us to “peek into the merits” of his case at this
early stage. Id. at 19. But that is what would have happened
had we decided the case before the indictment. I know no
reason for taking a different approach now.
II.
My colleagues also argue that their position promotes
judicial efficiency, as forcing parties to wait until final
judgments “minimizes . . . opportunities to defeat . . . valid
claims . . . through an endless barrage of appeals.” In re
Grand Jury Subpoena, 190 F.3d 375, 379 (5th Cir. 1999).
And they observe that, “[t]o be effective, judicial
administration must not be leaden-footed. Its momentum
would be arrested by permitting separate reviews of the
component elements in a unified cause.” Cobbledick v.
United States, 309 U.S. 323, 325 (1940).
The problem is that these are arguments for why we
should not have had jurisdiction at the outset of this appeal.
When we are able to dismiss an appeal for lack of jurisdiction
9
as soon as it is filed, we achieve the benefits the majority
notes. Specifically, the process continues uninterrupted in the
trial court, and we are able to wait until all the appellate
issues are neatly wrapped in a bow for us after a final
judgment.
The same does not hold true here. Even under my
colleagues’ approach, we will continue to accept pre-
indictment Perlman appeals. And, once we take them, we
must begin to decide them, knowing all the while that we
might have to put our pencils down at any moment if there is
an indictment. Consider our case, which has been on our
docket since June 2015. By the time Doe was indicted nearly
ten months had passed, and the parties had fully briefed the
case and presented oral arguments to us.
We must now disregard all of this and send the case
back to the District Court. However, there is a very real
possibility that it will be back. For instance, if Doe is
convicted and files an appeal, the parties will need to re-brief
and re-argue the same issue that we could have resolved
already. And if we agree with Doe at that time, we may need
to order a new trial (but see infra Part III)—another result that
could have been avoided. Thus, in cases where we accept an
appeal when it is filed, efficiency favors finishing what we
started.
In response, my colleagues say that we “can only
speculate” as to whether the issue will be back in front of us a
second time. Maj. Op. at 20. If the potential harm truly were
too speculative, we would have dismissed Doe’s appeal as
moot. See, e.g., Rio Grande Silvery Minnow v. Bureau of
Reclamation, 601 F.3d 1096, 1117 (10th Cir. 2010) (“A case
ceases to be a live controversy if the possibility of recurrence
of the challenged conduct is only a speculative contingency.”)
(internal quotation marks and alteration omitted). As
10
discussed, the parties agree that the existence of the second
grand jury means that the possible harm to Doe is not too
speculative, and my colleagues do not challenge that
assessment. They cannot have it both ways. If the controversy
is live enough that the case is not moot, we should decide it.
III.
Having dismissed the appeal for lack of jurisdiction,
my colleagues were not permitted to reach the substance of
Doe’s appeal. Because I disagree with their conclusion,
however, I am not similarly constrained. On the merits, I
would reverse the District Court and conclude that the crime-
fraud exception to the attorney work product doctrine does
not apply to the email at issue. In particular, I believe that one
of the exception’s two requirements—the use of the
communication in furtherance of a fraud—is lacking. The
use-in-furtherance requirement provides a key safeguard
against intrusion into the attorney-client relationship, and I
am concerned that the District Court’s reasoning erodes that
protection.
The introduction to the majority opinion provides
much of the relevant background. To recap briefly, Company
A was a defendant in a class action lawsuit. The plaintiffs in
the suit were talking about trying to pierce the corporate veil.
That means that, in addition to going after Company A’s
assets, they would attempt to hold the owner of the company
personally liable. The Government’s theory is that Doe
owned Company A but tricked the plaintiffs into thinking that
he had sold it to a business associate. The Government alleges
that the reason for this deceit was to encourage the plaintiffs
to settle for a lower value. This relies on the premise that,
while Doe has deep pockets, the business associate does not.
11
While the lawsuit was pending, Doe’s attorney sent
him the email at the heart of this appeal. The attorney wrote
that, although there was a “good faith transfer” to the business
associate, Doe’s tax returns did not reflect the change in
ownership. The email noted that, in order to “correct the
record as best we can at this stage,” it “would be helpful” for
Doe’s accountant to “correct [the] tax returns” by
retroactively amending them. Doe then forwarded the email
to his accountant and said, “Please see the seventh paragraph
down re; [sic] my tax returns. Then we can discuss this.”
There is no evidence that Doe ever amended his returns or did
anything else, apart from forwarding the email, to follow up
on his attorney’s suggestion. The accountant’s recollection is
that Doe’s attorney later said not to go through with the
amendments. The lawyer told the accountant to “stand by” for
further guidance, which never came.
Everyone agrees that, barring the application of the
crime-fraud exception, the email from Doe’s lawyer is
protected by the attorney work product doctrine. That
doctrine, which is the sibling of the attorney-client privilege,
preserves the confidentiality of legal communications
prepared in anticipation of litigation. Shielding work product
from disclosure “promotes the adversary system by enabling
attorneys to prepare cases without fear that their work product
will be used against their clients.” Westinghouse Elec. Corp.
v. Republic of Philippines, 951 F.2d 1414, 1428 (3d Cir.
1991). Though Doe waived the attorney-client privilege by
forwarding the email to his accountant, the document still
retained its work product status. See id.
Work product protection, though fundamental to the
proper functioning of the legal system, is not absolute. As
relevant here, the crime-fraud exception operates to prevent
the perversion of the attorney-client relationship. It does so by
allowing disclosure of certain communications that would
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otherwise be confidential. “[A] party seeking to apply the
crime-fraud exception must demonstrate that there is a
reasonable basis to suspect (1) that the [lawyer or client] was
committing or intending to commit a crime or fraud, and (2)
that the . . . attorney work product was used in furtherance of
that alleged crime or fraud.” ABC Corp., 705 F.3d at 155.
The Government can readily satisfy the first
requirement. Though ultimately it will be up to a jury to
determine whether Doe committed fraud, there is at least a
reasonable basis to believe he did. Even setting aside the
email, the Government has a recording where Doe allegedly
brags about defrauding the class action plaintiffs. He
purportedly admits in that recording to telling his associate—
the same one who was supposed to have already purchased
Company A—“I’ll pay you ten grand a month if you will step
up to the plate and say that you [own the company] and upon
the successful completion of the lawsuit [I’ll] give you fifty
grand.”
This evidence is strong, but it is not sufficient by itself
to pierce the work product protection. We have been clear
that “evidence of a crime or fraud, no matter how compelling,
does not by itself satisfy both elements of the crime-fraud
exception.” In re Chevron Corp., 633 F.3d 153, 166 (3d Cir.
2011). Rather, the second requirement—use in furtherance—
exists for the same reason that certain conspiracy statutes
require proof that a defendant engaged in an overt act to
further the crime. In both settings we want to make sure that
we are not punishing someone for merely thinking about
committing a bad act. Instead, as Justice Holmes noted in the
conspiracy context, we ask for evidence that the plan “has
passed beyond words and is [actually] on foot.” Hyde v.
United States, 225 U.S. 347, 388 (1912) (Holmes, J.,
dissenting).
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In that sense, requiring an act in furtherance
distinguishes between situations where the attorney-client
relationship works and those where it malfunctions. For
instance, if a client approaches a lawyer with a fraudulent
plan that the latter convinces the former to abandon, the
relationship has worked precisely as intended. We therefore
reward this forbearance by keeping the work product
protection intact. If, by contrast, the client uses work product
to further a fraud, the relationship has broken down, and the
lawyer’s services have been “misused.” In re Grand Jury
Investigation, 445 F.3d 266, 279 (3d Cir. 2006). Only in that
limited circumstance—misuse of work product in furtherance
of a fraud—does the scale tip in favor of breaking
confidentiality.
Here the only purported act in furtherance identified
by the District Court was Doe forwarding the email to his
accountant. If Doe had followed through and retroactively
amended his tax returns, I would have no trouble finding an
act in furtherance. Even if he had told the accountant to
amend them and later gotten cold feet and called off the plan,
there would still be a case to be made. That is because the
Government “does not have to show that the intended crime
or fraud was accomplished, only that the lawyer’s advice or
other services were misused.” Id. (quoting In re Public
Defender Serv., 831 A.2d 890, 910 (D.C. 2003)).
As it is, however, none of that happened. Doe merely
forwarded the email to the accountant and said he wanted to
“discuss” it. There is no indication that he had ever decided to
amend the returns, and before the plan could proceed further
the lawyer apparently pulled the plug by telling the
accountant to hold off. Thus Doe at most thought about using
his lawyer’s work product in furtherance of a fraud, but he
never actually did so. What happened here is not so different
from Doe merely writing a private note, not sent to anyone,
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reminding himself to think about his lawyer’s suggestion. The
absence of a meaningful distinction between these scenarios
shows why finding an act in furtherance here lacks a limiting
principle and risks overcoming confidentiality based on mere
thought.
The District Court gave two reasons for its conclusion
that Doe used his lawyer’s work product in furtherance of a
fraud. Both are flawed. First, the Court suggested that Doe, in
forwarding the email to his accountant, “took [his lawyer’s]
advice” about amending the tax returns. Joint Appendix 16. It
is not clear what the Court meant by this because, as it
acknowledged, Doe “never followed through with amending”
the returns. Id. Second, the Court said that the failure to
follow through “is of no consequence” as long as Doe
intended, as of the time he forwarded the email, to amend the
returns. Id. This is no doubt an accurate statement of the law.
See ABC Corp., 705 F.3d at 155. The problem is that there is
simply no record evidence suggesting that Doe had ever made
up his mind.
None of this suggests that, in the event Doe is
convicted and appeals, he should automatically get a new trial
based on the Government’s use of protected work product.
That is because the Government could avoid a retrial by
showing the error was harmless. Bank of Nova Scotia v.
United States, 487 U.S. 250, 255–56 (1988). I express no
opinion on this harmlessness question.
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* * * * *
Many grand jury appeals will become moot after the
return of an indictment. Indeed, the presence of a new grand
jury that is continuing to investigate makes this case out of
the ordinary. But where, as here, a live controversy remains,
an indictment should not automatically preclude us from
deciding it. The majority, however, has crafted a rule that
risks divesting us of jurisdiction in all Perlman cases where
there is an indictment, even ones where our pre-indictment
jurisdiction is ironclad. I believe this rule is foreclosed by our
precedent and, in any event, is counterproductive. It also has
the unfortunate effect of preventing us, at least for the time
being, from correcting what I view as a mistaken decision on
the merits. I therefore respectfully dissent.
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