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IN RE GRAND JURY MATTER

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


October 28, 1987

In Re Grand Jury Matter Number 86-525-5; In Re Grand Jury Matter Number 86-525-6

E. Mac Troutman, Senior United States District Judge.

The opinion of the court was delivered by: TROUTMAN

MEMORANDUM AND ORDER

HON. E. MAC TROUTMAN, SENIOR UNITED STATES DISTRICT JUDGE

 Presently before us are two Motions to Quash Subpoenas issued pursuant to a grand jury investigation upon application of the United States Attorney's Office. The subjects of the grand jury investigation are the alleged members of an illegal narcotics organization whom the grand jury is investigating for possible violations of federal narcotics laws as well as income tax evasion. (See Motion to Quash, Grand Jury Matter No. 86-525-5, Doc. #1, Schofield affidavit attached thereto as Exhibit "C".)

 The government seeks to obtain from two law firms all records reflecting the amount of fees and/or costs received by the firms from or on behalf of individuals named in the grand jury subpoenas. Specifically, the government seeks seven(7) discrete categories of information, which are as follows: (1) Cash Receipts entries; (2) Bank deposit tickets; (3) Cash Receipts issued for payments (including cash or check); (4) Payment ledgers; (5) Retained copies of any checks received; (6) Any documents identifying the person making the payment; and (7) Records identifying things of value received in lieu of cash or check and the identity of the person tendering the things of value. (See id. at Exhibit "A" and Motion to Quash, Grand Jury Matter No. 86-525-6, Doc. #1, Exhibit "A".) The subpoena in Grand Jury Matter No. 86-525-5 is directed to the "Custodian of Records" of the law firm. The grand jury in this subpoena seeks the documents and information described above with regard to twenty-four(24) different individuals who are designated by their first and last names only. Of these twenty-four(24) individuals, counsel for the law firm to which the subpoena is directed represents that the firm has in the past represented eleven(11) people with names matching those on the list, and of those eleven(11), continues to represent six(6) of them in an undisclosed capacity. The subpoena in Grand Jury Matter No. 86-525-6 is directed to either the firm's senior partner or the firm's designated "Custodian of Records". Here, the grand jury seeks the documents and information listed above with regard to but a single individual. The individual is described not only by his first and last name, but also by an address.

 The law firms to which the subpoenas are directed have raised a variety of objections, constitutional and otherwise, which they claim require that the subpoenas be quashed. Those challenges may be summarized as follows:

 (a) the subpoenas intrude upon the ongoing lawyer/client relationship of the six(6) individuals currently represented by the law firm subpoenaed in Grand Jury Matter No. 86-525-5 and the single individual currently represented by the firm subpoenaed in Grand Jury Matter No. 86-525-6 in violation of the Sixth Amendment to the United States Constitution;

 (b) the subpoenas intrude upon the aforementioned ongoing lawyer/client relationships in violation of the Due Process Clause of the Fifth Amendment to the United States Constitution;

 (c) the subpoenas intrude upon individual client's choice of representation in violation of the Sixth Amendment and the Due Process Clause of the Fifth Amendment;

 (d) the act of producing the documents sought by the grand jury may tend to implicate the individuals in the commission of the very acts for which they have sought representation;

 (e) the government has failed to proffer any reason why the information sought cannot be obtained through other means, thereby avoiding interference with ongoing lawyer/client relationships;

 (f) the use of a grand jury subpoena in these matters to secure the information sought by the government violates Rule 17(c) of the Federal Rules of Criminal Procedure and this court should quash the subpoenas pursuant to its supervisory power over the operations of the grand jury; and

 (g) the subpoena issued in Grand Jury Matter No. 86-525-5 violates Rule 17(c) of the Federal Rules of Criminal Procedure in that it is overbroad, unspecific and might require the law firm to produce information unnecessary and unwanted by the Grand Jury since the subpoena only identifies the individuals by their first and last names and provides no other information which would demonstrate that these are, in fact, the individuals which the Grand Jury seeks such information with regard to. *fn1"

 Counsel argue that before an attorney for an unindicted target of a grand jury investigation may be compelled to produce the documents and information delineated above, the government should be required to make a preliminary showing of: (1) the relevance of the attorney's testimony and records; (2) an important need for the testimony and documents; and (3) the lack of an alternative source from which the information sought may be obtained. *fn2"

 Counsel first attempt to anchor their argument that such a preliminary showing should be required upon the Fifth and Sixth Amendments to the United States Constitution, and more specifically, an individual's purported right to counsel of his or her own choosing. As is admitted by counsel for both law firms, the right to counsel specified in the Sixth Amendment does not attach at the grand jury stage. An individual subpoenaed to testify before a grand jury has neither a right to have counsel appointed to "represent" him, nor a right to have counsel he has retained on his own accompany him into the grand jury room. See, e.g., In re Grand Jury Subpoena Served Upon Doe, 759 F.2d 968 (2d Cir. 1985), rev'd. en banc, 781 F.2d 238. Thus, with the possible exception of the six(6) individuals the law firm in Grand Jury Matter No. 86-525-5 asserts that it continues to represent, Motion to Quash, Doc. #1, para. 7, and the single individual in Grand Jury Matter No. 86-525-6 who has retained that firm to represent him with regard to this grand jury investigation, Motion to Quash, Doc. #1, para. 3, the Sixth Amendment and the rights that it provides thereunder at present provide no basis for the firms' argument. As to the six(6) individuals in Grand Jury Matter No. 86-525-5 just mentioned, with the exception of one(1), the firm has failed to offer any explanation as to the nature of its continuing representation of these individuals. It is unclear whether it represents them in civil or criminal litigation, and if the latter, whether these individuals have sought the firm's legal counsel only with regard to this grand jury investigation or some other criminal prosecution. As shall be seen, only in the latter situation would the firm possess some basis for its argument that the subpoena should be quashed. As to the one individual the firm subpoenaed in Grand Jury Matter No. 86-525-5 has offered some explanation as to the nature of its continuing representation and the single individual represented by the firm subpoenaed in Grand Jury Matter No. 86-525-6, it is clear that such representation does not pertain to, e.g., an impending state criminal prosecution. See, e.g., In Re Grand Jury Matters, 751 F.2d 13 (1st Cir. 1984). Thus, we are not presented with a situation where the attorneys' compliance with the subpoenas at issue here might result in their disqualification in another case. Therefore, we find no basis in the Sixth Amendment to quash the subpoenas as they pertain to any of the individuals either firm claims to represent.

 The firms' next line of attack upon the subpoenas is the Due Process Clause of the Fifth Amendment. Relying heavily upon Judge Rosenn's opinion in In Re Grand Jury Subpoena Served Upon Doe, 759 F.2d 968, counsel argue that under the Due Process Clause, a right to counsel of one's choice may exist regardless of whether formal criminal proceedings have been instituted against the individual. In In Re Grand Jury Subpoena Served Upon Doe, Judge Rosenn, sitting in the Second Circuit by designation, concluded that,

 

when a subpoena is issued to an attorney to testify before a grand jury investigating his client whom he has heretofore represented, and where the attorney will be disqualified if he testifies, the Government should make a preliminary showing of relevance and reasonable need.

 759 F.2d at 975.

 In reaching this conclusion, Judge Rosenn explicitly stated that, "This case does not involve the . . . status of sixth amendment rights during the grand jury proceedings". Id. at 971. Rather, according to Judge Rosenn, the case involved "a (c)lient's right to have counsel of his choosing in the event an indictment is returned against him -- a point at which the sixth amendment unquestionably becomes applicable". Id. at 972. Based on this reasoning, the court concluded that if the "potential" right was not protected in such a situation at the grand jury stage, it would be rendered meaningless by the time the right did attach.

 In In Re Special Grand Jury No. 81-1 (Leon D. Harvey), 676 F.2d 1005 (4th Cir. 1982), a panel of the Fourth Circuit Court of Appeals similarly concluded that, "When a grand jury subpoena undermines an ongoing attorney-client relationship, the United States Attorney should also show by affidavit an important need for the information sought". Id. at 1011.

 Both panel decisions in In Re Grand Jury Subpoena Served Upon Doe and Harvey have been vacated. In the latter, the Fourth Circuit Court of Appeals, sitting en banc, vacated and withdrew the panel's opinion when Harvey was indicted and became a fugitive from justice. See In Re Special Grand Jury No. 81-1 (Leon D. Harvey), 697 F.2d 112 (4th Cir. 1982). The panel opinion in In Re Grand Jury Subpoena Served Upon Doe, however, was reversed on the merits by the Second Circuit Court of Appeals sitting en banc by a 9-2 vote. See In Re Grand Jury Subpoena Served Upon Doe, 781 F.2d 238.

 On review, the Second Circuit Court of Appeals concluded that neither existing or potential Sixth Amendment rights nor the Fifth Amendment's Due Process Clause require a preliminary showing of "need" before a subpoena served upon an attorney whose client is an unindicted target of a grand jury investigation may be enforced. As to the target's Sixth Amendment arguments, the court concluded that his "interest in continuing to be represented by his present counsel was not of constitutional dimensions", id. at 244, since his Sixth Amendment rights had not attached. Regarding the target's argument that enforcement of the subpoena would "chill" his "potential" Sixth Amendment rights, the court declined to adopt a per se rule that an attorney's testimony before a grand jury as to benefactor payments would inevitably lead to the disqualification of that attorney, thereby chilling the target's potential Sixth Amendment rights. As to the target's Fifth Amendment due process argument, the court reasoned that, even if one accepted the "perceived" view of the Third Circuit Court of Appeals that an individual's right to counsel of choice was protected by the Fifth as well as the Sixth Amendment, there is no basis for a conclusion that the former protects this right more than the latter in either a "qualitative or a quantitative sense". Id. at 246. *fn3" See also, Matter of Klein, 776 F.2d 628 (7th Cir. 1985); United States v. (Under Seal), 774 F.2d 624 (4th Cir. 1985); In Re Grand Jury Investigation, 769 F.2d 1485 (11th Cir. 1985); and In Re Osterhoudt, 722 F.2d 591 (9th Cir. 1983).

 Upon initial review of the motions and memoranda of law submitted to us by the government and both law firms, we believed that we were faced with a Hobson's choice between Judge Rosenn's opinion in In Re Grand Jury Subpoena Served Upon Doe, supra, and the great weight of authority to the contrary, including the Second Circuit Court of Appeals en banc review of that opinion. Closer examination, however, revealed that we are not, in fact, faced with such a difficult decision since the facts presented to us are distinguishable from those Judge Rosenn faced.

 First, under Judge Rosenn's analysis, he believed that both parties had conceded that the target's attorney would ultimately be disqualified if he complied with the subpoena. 759 F.2d at 975 n.9; but see, 781 F.2d at 245 n.1. Judge Rosenn specifically stated that he expressed no opinion as to the standard to be applied in a case where the prospective disqualification of the attorney was only "speculative". 759 F.2d at 975 n.9. Here, there is no agreement that either firm will probably be disqualified if and when their clients are indicted.

 Second, it is also highly speculative whether such disqualifications will result. The subpoenas at issue here do not require that any attorney appear before the Grand Jury. *fn4" Full compliance with the subpoenas may be accomplished by the appearance of the firms' bookkeepers before the Grand Jury. No attorney need "testify" before the Grand Jury. See, e.g., United States v. (Under Seal), supra.

 These facts lead us to the conclusion that neither the Fifth nor Sixth Amendments require the government to demonstrate an important, compelling or reasonable need for an attorney's "fee" records pertaining to an unindicted target of a grand jury investigation before it may enforce a subpoena for such records pursuant to a grand jury investigation where the attorney is not required to appear before the grand jury and give testimony and the subpoena may be complied with simply by the appearance of the firm's bookkeeper. The only showing, therefore, that need be made is one of relevance.

 The law firms next argue that the subpoenas should be quashed since production of the records may tend to implicate the individuals in the commission of the very acts for which they sought representation. We find this argument to be without merit as well. Neither the Fifth Amendment's privilege against self-incrimination nor the attorney-client privilege prevent the disclosure of the fee records sought by the government. Clearly, enforcement of the subpoenas would not violate the targets' Fifth Amendment privilege against self-incrimination since it is the attorney, rather than the target, who is being compelled to produce the records. No target is being compelled to take any action. See, e.g., United States v. (Under Seal), supra.

 Likewise, the common law attorney-client privilege provides no basis for quashing either subpoena. The general rule is that neither a client's identity nor the payment of attorney's fees and expenses fall within the privilege. An exception to the general rule is recognized, however, where the possessor of the privilege demonstrates "that a strong probability exists that disclosure of such information would implicate that client in the very criminal activity for which legal advice was sought". Id. at 628, quoting, United States v. Hodge and Zweig, 548 F.2d 1347, 1353 (9th Cir. 1977). This exception has been interpreted narrowly. Further, it has had a gloss put on it in that even where the client meets his or her burden of demonstrating that disclosure of the information would have such an effect, the exception may not apply where the information will not provide the "last link" in the chain of evidence against the client. See, e.g., In Re Grand Jury Subpoenas Duces Tecum, 695 F.2d 363 (9th Cir. 1982). Here, no showing has been made by either firm that production of the records sought by the government would implicate any of their clients, past or present, in the criminal activities for which they sought representation, nor has it been demonstrated that such information would in any way provide the "last link" in a chain of incriminating evidence against such clients. Thus, the information sought by the government is not protected by the attorney-client privilege.

 The firms' final challenge is to the validity of the subpoenas under Federal Rule of Criminal Procedure 17(c). Counsel initially argue that pursuant to our supervisory powers over the grand jury, we should require the government to demonstrate that it cannot obtain the information it seeks from other sources. This argument does perhaps possess some merit, for if the government could obtain the information from elsewhere, its efforts to obtain it from a target's attorney would constitute a "needless" intrusion upon the attorney/client relationship. It is unclear to us, however, how counsel is defining the term "information". It appears that they are arguing that the government should be required to attempt to obtain other "evidence" against their clients before they may resort to subpoenaing their records to demonstrate the existence of a criminal "organization", "benefactor" status or tax evasion, and only if no such other evidence is available may the government then seek to prove its case by resort to an attorney's fee records. Thus, if a law firm's fee records only provide "cumulative" incriminating evidence against a client, the firm should not be compelled to comply with the subpoena. We do not view the concept so broadly, for if we did, the only time the grand jury would be entitled to obtain such fee records would be where the government could state that such information would perhaps provide the "only" evidence against the target. Under our analysis, we define the term as encompassing the "specific" information sought by the grand jury, i.e., if the government can, e.g., obtain information that an individual paid X number of dollars to an attorney on behalf of another person from a source other than the attorney, then the government should perhaps be required to seek the information from that alternative source. Even if we were to impose such a requirement, however, no showing has been made here that such an alternative source for the specific information the government seeks exists. Counsel for the firm subpoenaed in Grand Jury Matter No. 86-525-6 argues that the information sought by the grand jury may be obtained from the Internal Revenue Service, since the firm, in compliance with federal statute and IRS regulations, has reported cash payments in excess of $ 10,000.00 from clients to the IRS. As pointed out by the Assistant United States Attorney, however, the information submitted by the firm to the IRS does not indicate who made the payments, nor does it reflect payments of less than $ 10,000.00. Further, the Grand Jury has also sought "records identifying things of value received in lieu of cash or check"; this information also would not be available from the IRS. As can be seen, the Grand Jury will not be able to obtain much of the information it seeks by resort to this alternative source.

 The firm subpoenaed in Grand Jury Matter No. 86-525-5 also argues that the subpoena served upon it contravenes Rule 17(c) of the Federal Rules of Criminal Procedure in that it is impossible to discern whether the individuals listed in the subpoena are, in fact, the individuals who are presently under investigation by the Grand Jury. We agree. Although, as stated above, we find no constitutional, statutory or common law privilege which protects the information sought by the Grand Jury from disclosure, we see no reason why such information should be disclosed when the individual to whom it pertains may not even be the person the Grand Jury is investigating. In such a case, the information would, in fact, be irrelevant to the Grand Jury's investigation. We decline, however, to adopt a per se rule that the government must always be able to somehow identify the individual under investigation in a case such as this by something more than just the person's first and last name in order to demonstrate the relevance of the information it seeks to the grand jury's investigation. There may be situations where it is impossible for the government to make such a showing. In such a case, no further identification of the individual may be justified. We need not address this scenario, however.

 Under the facts presented to us, we will initially require the government to attempt to somehow provide additional identifying information to the firm subpoenaed in Grand Jury Matter No. 86-525-5. We leave it to the Assistant United States Attorney, who has already apparently indicated a willingness to do such, see Government's Response to Motion to Quash, Grand Jury Matter No. 86-525-5, Doc. #2, para. 6, to decide how this may best be accomplished. If the government believes it is impossible for it to provide such further identifying information to the objectively reasonable satisfaction of counsel for the firm, it should so inform us by an appropriate affidavit. At that time, we will then be required to re-examine the issue.

 Appropriate orders follow.

 IN RE GRAND JURY MATTER NUMBER 86-525-5

 ORDER - October 28, 1987

 AND NOW, this 28th day of October, 1987, in accordance with the attached memorandum, IT IS ORDERED that:

 (1) all Motions and accompanying Memoranda of Law filed in this matter are SEALED and IMPOUNDED as matters pertaining to a grand jury investigation;

 (2) the government shall within fifteen(15) days of the date of this Order in the form of an affidavit supply counsel for the firm of (Under Seal), with the identifying information described and discussed in the attached memorandum. The firm shall comply with the subpoena served upon it within fifteen(15) days of the receipt of such information; and

 (3) (Under Seal) Motion to Quash Grand Jury Subpoena, Doc. #1 is DENIED.

 IN RE GRAND JURY MATTER NUMBER 86-525-6

 ORDER - October 28, 1987

 AND NOW, this 28th day of October, 1987, in accordance with the attached memorandum, IT IS ORDERED that:

 (1) all Motions and accompanying Memoranda of Law filed in this matter are SEALED and IMPOUNDED as matters pertaining to a grand jury investigation;

 (2) (Under Seal), Esq., or the designated Custodian of Records of (Under Seal) and Associates shall comply with the subpoena served upon it within fifteen(15) days of the date of this Order; and

 (3) (Under Seal) Application to Quash Grand Jury Subpoena, Doc. #1, is DENIED.


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