Wednesday, February 01, 2017
Vacating October Decision, Court Holds Return of Indictment Not Necessarily Fatal to Appellate Jurisdiction over Grand Jury Matters
On rehearing, a unanimous panel changes course in In re Grand Jury Matter #3, No. 15-2475 (Jan. 27, 2017), holding in this “out-of-lane” case that appellate jurisdiction survived the return of an indictment against a target-turned-defendant challenging a document's presentation to the grand jury. Reaching a question that had escaped review under its original decision, the Court now concludes that the district court erred in holding the crime-fraud exception to have vitiated work product protection for the document, an email the target had received from his attorney and forwarded to his accountant.
Identifying the target as John Doe, the opinion’s discussion of the underlying investigation is relatively spare, framing the email’s relevance in relation to the government’s theory that Doe executed a sham transfer of his company to a third party in order to mitigate liability in a class action suit challenging the company’s practices. The accountant produced the email in response to a subpoena, but the next day the accountant’s attorney sought to recall the email on the ground that its disclosure had been inadvertent. The government, however, retained the email and asked the district court for authorization to present it to the grand jury. The court granted permission, reasoning that while the email constituted attorney work product, it was subject to disclosure under the crime-fraud exception. Doe then filed an interlocutory appeal.
While Doe’s appeal was pending, the government presented the email to the grand jury and secured an indictment on RICO and other charges. Following oral argument but before decision, the government presented the email again to a second grand jury weighing a superseding indictment. Writing for a split panel, Judge McKee reasoned in an October 28 decision that the email’s presentation, along with the return of the indictment, had mooted the controversy, requiring dismissal of the appeal. Judge Ambro dissented on the view that the decision was contrary to precedent and counterproductive from the standpoint of judicial efficiency.
Doe petitioned for rehearing in November, and in December the second grand jury returned a superseding indictment. Last week, a unanimous panel granted the rehearing petition and adopted Judge Ambro’s analysis in a per curiam opinion. “[B]ecause in limited circumstances we take pre-indictment appeals and begin to decide them,” the Court reasons, “we should not reflexively dismiss those appeals — wasting the parties’ effort as well as ours — simply because an indictment is filed.” Instead, the Court holds, appellate jurisdiction survives so long as “grand jury proceedings continue.” In Doe's case, the Court relates, they do: the second "grand jury is still investigating other charges relating to ownership of [the putatively transferred company], though the Government represents that it currently has no plans to seek additional charges based on the email."
Having confirmed jurisdiction, the unanimous panel proceeds to hold that presentation of the email to the grand jury was error. The crime-fraud exception did not apply because “an actual act to further the fraud is required before attorney work product loses its confidentiality.” This act-in-furtherance requirement, the Court stresses, “provides a key safeguard against intrusion into the attorney-client relationship, and we are concerned that contrary reasoning erodes that protection.” As Doe had done no more than forward the email to his accountant proposing “to discuss” the matter further, the record showed only that he "at most thought about using his lawyer’s work product in furtherance of a fraud, but he never actually did so."
In closing, the Court offers several cautionary remarks. "[M]any appeals involving grand jury proceedings" will still "become moot after the return of an indictment" because grand jury proceedings will have concluded. And in the event Doe is convicted and appeals, the error will not automatically guarantee him a new trial, but be subject to review for harmlessness.
The District Court's indication of the sentence it would impose before the defendant allocuted was not reversible plain error.
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