I did not watch the full testimony of the baseball players panel appearing before the House Government Reform Committee, but as best I can tell Mark McGwire took the Fifth without taking the Fifth — a neat trick. Clearly the Committee members decided not to push the issue of requiring McGwire to answer affirmatively whether he has ever taken steroids or assert his right not to incriminate himself, otherwise the gloss on the hearing as an investigation of baseball’s current steroids policy would have been blown. McGwire’s prepared statement (available here) which he read to the Committee does a bit of a fast shuffle, never coming out and saying he will refuse to answer questions by asserting the privilege against self-incrimination, presenting himself instead as a "stand-up" guy who does not want to implicate friends and former teammates: "I have been advised that my testimony here could be used to harm friends and respected teammates, or that some ambitious prosecutor can use convicted criminals who would do and say anything to solve their own problems, and create jeopardy for my friends . . . My lawyers have advised me that I cannot answer these questions without jeopardizing my friends, my family, or myself." Of course, the Fifth Amendment cannot be asserted to protect family, friends, or anyone other than the witness, and asserting that the reason for not answering questions is because of ambitious — which apparently means unscrupulous or unethical — prosecutors shifts the focus away from the real reason for not answering questions. It’s all a sideshow, and asking McGwire whether he used steroids is hardly worth the time of a congressional committee. His lawyers did a nice job of protecting him without the need to announce to the world that he believes his answer may be used to incriminate him in a criminal proceeding. (ph)
Category: Privileges
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An interesting Fourth Circuit decision on March 11 deals with the crime-fraud exception and discusses the different standards to be applied to attorney opinion work product and fact work product. The case, In re: Grand Jury Proceedings #5 (opinion here), has few facts beyond noting that the grand jury sought to compel the production of documents and testimony from an attorney in connection with the representation of two individuals and their corporation. Typical of such cases, the government submitted grand jury information ex parte and in camera describing the alleged crime or fraud perpetrated by the clients and the use of their counsel as part of that crime or fraud — the opinion contains no hint of what was involved, for good reason. The Fourth Circuit dealt with two issues. First, the attorney asserted the work product protection for the documents subpoenaed, and the court had to deal with the issue of how to apply the crime-fraud exception to fact v. opinion work product. Since Upjohn, courts have been highly resistant to ordering the production of attorney opinion work product, and usually demand a clear showing of attorney involvement in the client’s misconduct for an application of the crime-fraud exception to opinion work product; fact work product, however, received lesser protection, essentially on a par with communications protected by the attorney-client privilege. Distinguishing the two, the Fourth Circuit held:
Because fact work product enjoys less protection than opinion work product, it may be discovered upon prima facie evidence of a crime or fraud as to the client only and thus even when the attorney is unaware of the crime or fraud. While the attorney, along with the client, holds the fact work product privilege, the discovery of facts furnished to an attorney does not implicate the same concerns as does invading the necessary privacy of an attorney’s opinion work product, an invasion only justified if the attorney himself knows of the fraud. We thus use similar standards when applying the crime-fraud exception to attorney-client and fact work product privileges.
The second issue concerned the district court’s finding that the crime-fraud exception applied without ever reviewing the communications and work product, and even without a description of the contents of the documents and testimony. In effect, once the district court found sufficient evidence that the clients were engaged in an ongoing or future crime or fraud, and the attorney was in the vicinity, that was sufficient. The Fourth Circuit remanded for an actual review of the documents and testimony so that the second step in the analysis — that the clients consulted with the attorney for the purpose of assisting in the crime or fraud — could be determined on more than an assumption.
The crime-fraud exception is difficult for both sides, because it is based on assumptions and conclusions without a complete evidentiary basis and no real adversary testing. That courts some times just cut to the chase ignores how important the process is to protecting the attorney-client privilege and work product protection. (ph)
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During the government’s investigation of former Connecticut Governor John Rowland, the grand jury subpoenaed the counsel to the Governor to testify regarding conversations she had with Rowland and members of his staff about the receipt of gifts, which was the focus of the investigation and the basis for the charge to which Rowland eventually pled guilty. The district court enforced the subpoena, but on appeal the Second Circuit (on Aug. 26, 2004) issued a summary order quashing the subpoena on attorney-client privilege grounds. On Feb. 22, the court issued its written opinion in In re: Grand Jury Investigation (available here on court website) explaining the basis for its decision. The Second Circuit rejected the approach of the Seventh, Eighth, and D.C. Circuits and upheld the attorney-client privilege assertion by a government attorney advising an official in relation to that person’s duties. The other circuits have found the government’s interests in investigating wrongdoing through the grand jury overcame the protections of the privilege when the investigation concerned the conduct of officials in the office. The D.C. and Eighth Circuit cases involved the Independent Counsel investigation of Whitewater (and "related" conduct) and the consultation by the President and First Lady with White House counsel. The Second Circuit rejected a balancing test, explaining
In arguing that we ought not "extend" the attorney-client privilege to the present situation, the Government asks us, in essence, to assign a precise functional value to its protections and then determine whether, and under what circumstances, the costs of these protections become too great to justify. We find the assumptions underlying this approach to be illusory, and the approach itself potentially dangerous. The Government assumes that "the public interest" in disclosure is readily apparent, and that a public official’s willingness to consult with counsel will be only "marginally" affected by the abrogation of the privilege in the face of a grand jury subpoena. Because we cannot accept either of these assumptions, we decline to abandon the attorney-client privilege in a context in which its protections arguably are needed most.
The court acknowledged that its decision conflicted with the Seventh Circuit’s position and was in "sharp tension" with the Eighth and D.C. Circuit analysis, but it decided that the protections of the privilege outweighed the need of the grand jury to obtain evidence. While uncommon, cases involving the governmental attorney-client privilege do arise — especially with the federal government’s efforts to combat state and local corruption– so that at some point the Supreme Court may have to intervene to settle the scope of the privilege.(ph)
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Martha Stewart’s sale of ImClone Systems stock has spawned a cottage industry of cases beyond the criminal prosecution (and now appeal), including the SEC’s civil action alleging insider trading and a shareholder lawsuit against her company, Martha Stewart Living Omnimedia, alleging violations of Rule 10b-5 for failing to make proper disclosure about her legal situation. The attorneys for the securities class action plaintiffs, the well-known Milberg Weiss firm, sought to discover otherwise privileged communications with Wachtell Lipton, the company’s counsel during the period of the SEC/U.S. Attorney investigation into her stock sales in 2002. An article in the New York Times (Feb. 8 here) discusses a ruling by U.S. District Judge John Sprizzo permitting discovery of the communications by the company with Wachtell Lipton but not Stewart’s communications with her own lawyers. The ruling appears to follow the shareholder exception to the privilege, which in limited circumstances allows shareholders to gain access to communications with the company’s lawyers if there is "good cause" (see the venerable decision in Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970)). Certainly, Stewart’s communications with her personal attorney would not be subject to that exception, which is limited to corporate counsel. An interesting question, which is not clear from the article but hinted at, is whether Wachtell Lipton represented both the company and Stewart personally during the government’s investigation. If the firm represented Stewart personally, that could create a potential conflict for the firm and, more importantly, a very sticky situation for analyzing whether her communications with corporate counsel were in her personal or corporate capacity. The usual rule is that communications by a corporate officer are made on behalf of the company and only protected by the organization’s attorney-client privilege, but personal representation of the officer changes the analysis. (ph)
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