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Klitzman, Klitzman and Gallagher v. Krut

September 17, 1984

KLITZMAN, KLITZMAN AND GALLAGHER
v.
ROBERT J. KRUT, VERNON HOLMES, W. HUNT DUMONT, MICHAEL MILNER, APPELLANTS



Appeal from the United States District Court for the District of New Jersey - Newark.

Aldisert, Chief Judge, Weis, Circuit Judge, and Re, Judge.*fn*

Author: Aldisert

Opinion OF THE COURT

ALDISERT, Chief Judge

The government has appealed from the grant of a preliminary injunction commanding the return of documents and records seized at a law office pursuant to a search warrant. The district court held that the search and seizure violated the fourth amendment because the search was overbroad, and granted that injunction. After the government announced its intention to appeal immediately, the district court placed the seized materials under seal. The government then petitioned this court for relief from the injunction and requested a stay of the order and an expedited briefing schedule. We granted the stay, preserved the status of the materials under seal, and expedited the appeal. Because we agree that the search was overbroad, we now affirm the judgment of the district court granting the preliminary injunction, lift the stay, and order the return of the seized materials to the law office.

I.

Charles Klitzman, an attorney, was the target of a grand jury investigation of an alleged conspiracy to use the U.S. Mail to defraud insurance companies by submitting fraudulent medical reports and inflated medical bills in personal injury cases. As part of the investigation, U.S. Postal Inspectors searched Klitzman's law office, Klitzman, Klitzman and Gallagher, in Asbury Park, New Jersey.

There is no dispute as to the facts. The postal inspectors accomplished the search pursuant to three search warrants. The first warrant authorized the seizure of all closed or non-active files of personal injury claimants, business bank account records of the firm, ledger books concerning trust accounts, retainer and compensation agreements and financial records pertaining to personal injury clients, records reflecting payments to attorneys, investigators, and other third parties, case registers, legal diaries, telephone message books and pads, visitors logs, telephone toll records, and any other evidence of a conspiracy to defraud insurance companies. The magistrate issued the warrant based on the affidavit of Postal Inspector Robert Krut detailing particular examples of false or inflated medical bills submitted on behalf of Klitzman's clients.

The second warrant authorized the seizure of certain open files of personal injury claimants. The third warrant extended the scope of the search to include the storage room of the law firm. The affidavits of Postal Inspector Vernon Holmes formed the basis for these latter two warrants.

Government agents occupied Klitzman's office for a full day while performing the search, resulting in the closing of the office to clients. The postal inspectors required two trucks to haul away 2,000 files and numerous financial documents seized at the law firm.

II.

In seeking a preliminary injunction to compel the government to return the seized materials, plaintiff, the Klitzman firm, argued that: (1)there was no probable cause for the issuance of the warrants; (2) the warrants lacked sufficient particularity; (3) a search of a law office is per se unreasonable; and (4) the search was overbroad. The district court rejected plaintiff's first three contentions, implicitly resting its finding that plaintiff was likely to succeed on the merits on the conclusion that the search was overbroad.

The government contended that the search warrant properly was limited "to closed personal injury files which contained reports and bills for professional services by medical practitioners, and other records associated with the preparation and presentation of closed personal injury claims." Dist. ct. op. at 22, reprinted in app. at 170. The district court, however, concluded that the warrant permitted a far broader search, encompassing materials and documents from the entire range of Charles Klitzman's individual law practice and also from much of the rest of the firm's practice. The court found that the inspectors examined and seized materials irrespective of their relationship to the alleged conspiracy, and regardless of whether the files searched were open or closed. The court also determined that the warrant allowed the seizure of files that contained potentially privileged information, and many financial records that, even if not privileged, could not be regarded as necessary or relevant to proving the alleged scheme to defraud insurance companies.

The warrant undeniably allowed the seizure of all file lists and appointment books without regard to whether the materials had any connection to particular alleged crimes or to personal injury cases in general. Moreover, as the district court determined, the warrant required the impoundment of all closed personal injury files, without requiring the postal inspectors to make any effort to segregate the files according to physicians involved, types of personal injury claims at issue, or other indicia that would protect the privacy interest of uninvolved lawyers and clients. Dist. ct. op. at 23, reprinted in app. at 171. The district court, therefore, held that the search violated both the attorney-client privilege and the Privacy Protection Act, ...


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