Friday, March 07, 2014

In context of Grand Jury investigation, District Court followed and correctly applied proper standard to determine whether and how to conduct in camera examination of grand jury target’s former attorney to consider whether attorney’s testimony before grand jury could be compelled under the crime-fraud exception to attorney-client privilege, and did not abuse its discretion in concluding that there was sufficient evidence for the crime-fraud exception to apply.

In In Re: Grand Jury Subpoena, No. 13-1237 (3d Cir. Feb. 12, 2014), a grand jury, investigating alleged violations of the Foreign Corrupt Practices Act, served a subpoena on the former attorney of a target of the investigation, and the Government moved to enforce the subpoena and compel the attorney’s testimony based on the crime-fraud exception to the attorney-client privilege. The target sought to quash the subpoena by asserting the attorney-client privilege and work-product protection. The District Court, after questioning the attorney in camera, with only the attorney’s counsel present, found a reasonable basis to suspect that the target intended to commit a crime when it consulted the attorney and could have used the information gleaned from the consultation in furtherance of the crime. The court concluded that the crime-fraud exception applied and issued an order compelling the attorney to testify before the grand jury.

The target appealed, challenging the standard that the District Court applied to determine whether to conduct an in camera examination, it’s decision to hold an in camera examination and the procedures that it used in that examination, and whether the crime-fraud exception applied to the target’s communication with their attorney.

The Third Circuit held, first, that the District Court applied the proper standard to determine whether to conduct an in camera examination, based on the Supreme Court’s decision in United States v. Zolin, 491 U.S. 554, 572 (1989): that the District Court find a factual basis adequate to support a good faith belief by a reasonable person that in camera review may reveal evidence to establish the claim that the crime-fraud exception applies, and that such factual basis can include unmemorialized oral communications.

The Court next held that the District Court properly applied the Zolin standard when it relied on the Government’s Ex Parte Affidavit, which provided details of the FBI’s examination sufficient to permit the District Court to conclude that the Zolin standard was met. In addition, the District Court did not abuse its discretion in excluding the target from the in camera interview or in declining to release a transcript or summary of the testimony.

Further, the Court held that the District Court did not abuse its discretion in determining that there was sufficient evidence to conclude that the target was committing or intending to commit a crime or fraud when it consulted the former attorney, and that the target used the attorney’s advice in furtherance of a crime or fraud, and therefore the crime-fraud exception applied.

Finally, the Court held that the former attorney’s testimony was not protected by the work-product doctrine because it does not apply in light of a crime-fraud finding, and because the communications at issue were not made in the course of preparation for possible litigation.

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