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In In re Grand Jury Investigation, No. 06-1474 (3d Cir. Apr. 21, 2006), the court, applying the crime-fraud exception, upheld a grand jury subpoena to a lawyer to testify about a conversation that otherwise would have been privileged under a common-interest agreement and to produce his hand-written notes of that conversation. The basis for application of the exception was evidence that the individual with whom the lawyer spoke (an individual separately represented but participating in the common-interest agreement) was culpably involved in the destruction of e-mails under subpoena. The government’s theory was that the conversation furthered the obstruction by informing the individual as to “the type of material the Government sought.” Slip Op. 19 (citing U.S. v. Quattrone, No. 04-5007-CR, 2006 WL 700978 (2d Cir. March 20, 2006). There was no evidence that the lawyer did anything improper or was aware of any obstruction. A close look at the conversation at issue Because the grand jury investigation was ongoing, the court masked the detailed facts and the real names of the parties on the defense side. There was a common interest agreement among Jane Doe (executive director of Organization and a target of the investigation), her lawyer, the Organization, and its lawyer (called “Attorney” by the court). On April 24, 2004, the government issued a grand jury subpoena to the Organization. Thereafter, the government was dissatisfied with the Organization’s production of e-mails. So, on Jan. 18, 2005, it issued a second subpoena, essentially the same as the first. On Jan. 20, 2005, Attorney initiated a phone conversation with Doe about how to comply with the new subpoena. Thereafter, pursuant to what the court described as an agreement among the parties, the FBI imaged the hard drive on Doe’s computer and “uncovered numerous stored messages which could be construed to show a conscious effort by the Organization’s staff to destroy e-mails.” Id. at 3. Perhaps to avoid revealing evidence before the grand jury, the court did not provide particulars as to the nature of the “conscious effort” or Doe’s role in it. Presumably, the Organization’s employees referred to were conscious not only of the destruction but also of the fact that the grand jury had subpoenaed the e-mails. In March 2005, the government issued a subpoena to Attorney for testimony about his Jan. 20 conversation with Doe, and a subpoena to his law firm for records. The parties were unable to agree on the scope of the testimony and document production. Invoking the crime-fraud exception, the government moved to compel. Attorney and Doe opposed and cross-moved to quash or modify. The district court held a closed hearing on whether to compel Attorney to testify about the conversation and to produce his handwritten notes of the conversation. The government presented ex parte an affidavit of an FBI agent. The defense presented ex parte testimony by Attorney and Doe’s lawyer about “the conversations [sic: plural] with Jane Doe on January 20, 2005.” Id. at 4. From the sketchy facts in the court’s opinion, there is no indication that Doe’s lawyer participated in the conversation between Attorney and Doe. Perhaps Doe’s lawyer drew on a conversation between himself and Doe on Jan. 20 to give hearsay testimony about the Attorney-Doe conversation. The giving of such testimony by Doe’s lawyer ex parte should not waive the privilege protecting Doe’s conversations with her lawyer, which, in any event, the government was not seeking to invade. The district court ruled for the government on the ground that the FBI affidavit presented sufficient evidence that “Doe was in the process of committing obstruction of justice at the time of her Jan. 20 conversation with Attorney, and used the information provided by Attorney in furtherance of the crime.” Id. at 5. The government scheduled Attorney’s appearance before the grand jury. The district court denied a stay. Doe appealed. The 3d U.S. Circuit Court of Appeals denied a stay. Attorney then testified before the grand jury and produced his notes. Doe appealed on the merits. The court of appeals held that the appeal was not moot because it could still provide Doe some relief: an order directing the grand jury to return the notes, and, possibly, an injunction against the future use of Attorney’s testimony. The court did not decide whether a future-use injunction could be issued; the arguable possibility prevented mootness as to the testimony. Although the absence of a stay did not make Doe’s appeal on the merits moot, it did deny her the possibility of complete relief-preserving the confidentiality of her communication by preventing Attorney’s testimony and notes from reaching the prosecutors and the grand jury at all, and protecting the Organization (and, in view of the common-interest agreement, Doe) from concern about what Attorney said in the grand jury. See, e.g., In re Grand Jury Investigation (Sturgis), 412 F. Supp. 943, 946 (E.D. Pa. 1976). That concern is particularly relevant here because Attorney was not Doe’s lawyer; but Doe, the Organization and their lawyers believed that the sharing of information pursuant to the common-interest agreement would advance their common interests in the investigation. Attorney’s appearance in the grand jury could undermine the trust necessary for proper functioning of the agreement. Although the court of appeals affirmed the district court, it did not say that Doe’s claim of privilege was not fairly litigable. There also is no indication that a stay would have prejudiced any interest of the government. At least without more facts, the denial of the stay seems unduly harsh. The court of appeals easily rejected Doe’s argument that, because she did not initiate the conversation with Attorney, the crime-fraud exception was inapplicable. What is necessary and sufficient for the exception to apply is that the conversation between client and lawyer be in furtherance of a crime or fraud on the part of the client. If that circumstance is present, the client is abusing the attorney-client relationship. It does not matter who initiates the conversation. Regardless of the client’s intent at the time of the conversation, however, if the crime or fraud is stopped by the conversation, there is no “furtherance” of the crime or fraud and no abuse of the attorney-client relationship, and the crime-fraud exception does not apply. In re Public Defender Service, 831 A.2d 890 (D.C. 2003). One publication headlined its report of the decision, “Failure to Stop Deletion of E-Mail Triggered Crime-Fraud Exception to Attorney Privilege.” 4 Corporate Accountability Rep. 483 (BNA) (May 5, 2006). The decision does not necessarily go quite that far. The opinion contains several not entirely consistent descriptions of Doe’s conduct: (i) the district court’s finding quoted above; (ii) a further district court finding that, at the time of the conversation, “Doe was . . . participating in a scheme to delete emails on the computers of the Organization, its officers, and staff,” Slip Op. 14; (iii) the 3d Circuit’s determination that “there was sufficient evidence to support the District Court’s finding that Jane Doe could be found to have engaged in the ongoing crime of obstruction . . . ,” Id. at 15; (iv) the 3d Circuit’s inference that the obstruction under investigation “is the deletion of potentially relevant email files with knowledge of their relevance to the grand jury’s investigation,” Id. at 17; (v) the government’s reference at oral argument to “an attorney/client relationship that was used and abused by a person who was directly involved in destroying evidence to thwart an investigation,” Id. at 20; (vi) the court’s statement: “If, with knowledge of the Government’s interest in retrieving any remaining emails, Jane Doe continued to receive emails that were arguably responsive to the subpoena and failed to use her position as an executive of the Organization to direct that all email deletions stop immediately, she may be viewed as furthering the obstruction of the grand jury’s investigation or the obstruction of justice,” Id. at 21; and (vii) “if Jane Doe learned of the Government’s interest in certain documents from her conversation with Attorney . . . and subsequently acquiesced in the deletion or destruction of those documents, the second prong of the crime-fraud exception would be satisfied,” Id. at 21-22. Participation in scheme to obstruct is suggested The first five descriptions, taken together, strongly suggest active participation by Doe in a scheme to obstruct. The last two, however, refer to inaction with knowledge of what the government was seeking; the sixth description does not attribute to Doe even knowledge that destruction was occurring; the seventh description’s use of the verb “acquiesced” makes it unclear on that point. The opinion ought not be read as if it contained only the last two descriptions. However read, the decision underscores the need for counsel in a grand jury investigation to advise clients to preserve, and prevent destruction of, all potentially relevant documents and otherwise avoid conduct that might be construed as an obstruction. Because destruction of e-mails is routine in organizational life, particular focus on preservation of e-mails may be appropriate. Because a client who senses the walls closing in may panic and obstruct, it may also be prudent to repeat to clients the advice against obstruction from time to time as circumstances may warrant, particularly when discussing new developments or newly acquired information relating to the focus of an investigation. Richard Cooper is a partner at Williams & Connolly in Washington. He can be reached via e-mail at [email protected].

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