Friday, June 22, 2012

Third Circuit Does Not Have Jurisdiction To Hear Direct Appeals Of Orders To Produce Supposedly Privileged Documents.

      The Third Circuit reaffirmed the jurisdictional requirements for appealing an order to produce allegedly privileged documents in In Re: Grand Jury, ABC Corp.; John Doe 1; John Doe 2, No. 12-1697 (3d Cir. May 24, 2012).  A party cannot directly appeal a district court’s order to produce documents which the party believes are privileged.  Instead, a party must first refuse to comply with the production order, be held in contempt and then appeal the contempt order, asserting its claim of privilege.  The only exception was set forth in Perlman v. United States, 247 U.S. 7 (1918), where the Supreme Court held that when a custodian of records, who is not the privilege holder, is ordered to produce supposedly privileged documents, the privilege holder may directly appeal the order if the holder cannot otherwise disobey the order.  Since the privilege holder cannot personally disobey the order and then challenge a contempt finding, the holder must be allowed to immediately appeal the court order or they would have no other opportunity to assert their claim of privilege.  In Perlman the subpoena was directed to the court clerk and not Mr. Perlman, the only person who could invoke privilege.  There was no production order for Mr. Perlman to refuse compliance with, so without a direct appeal he would have had no remedy. 

    Appellants  ABC Corp., John Doe 1 and John Doe 2, argued that they could not be held to the contempt standard because the documents were in the possession of a third party, the law firm of Blank Rome, which was not willing to be held in contempt in order to be able to file an appeal. The government initially attempted to subpoena ABC Corp., but they refused to accept service.  Therefore the subpoenas were served on Appellants’ law firms.  Blank Rome represented John Doe 2, and had a joint-defense agreement with ABC Corp.’s and John Doe 1's counsel.  The Third Circuit ruled that the Perlman exception did not apply in this case because the Appellants could take the documents back from the law firm and then disobey the order, be found in contempt and appeal that decision.  Since the contempt route was available for Appellants to assert their claim of privilege over the documents, the Third Circuit ruled it lacked jurisdiction to hear the immediate appeal. 

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