Rehearing and Rehearing En Banc Denied September 29, 1975.
THORNBERRY, Circuit Judge:
With this opinion we discharge the obligation that we undertook in our earlier per curiam Order. There we reversed the judgment of the district court whereby the relators-appellants had been sentenced to jail for civil contempt. The district judge found relators in contempt after they disobeyed his directive to answer certain questions propounded by the Assistant United States Attorney before the grand jury.
Our decision to reverse rests on what we conclude is the proper resolution of a discrete issue concerning the privilege of a client to require an attorney to maintain silence about the client's confidential disclosures, commonly known as the "attorney-client" privilege in the law of evidence. Our circuit has not spoken heretofore on the problem presented by this case, although situations bearing some resemblance have arisen elsewhere. In all candor, we need not and do not purport to reach a result which may be reconciled in all respects with every decision by every other court. Nevertheless, we emphasize our satisfaction that the facts and circumstances revealed by this record amply justify the availability of the privilege. Other cases must turn on their own merits.
In April of 1975 the federal grand jury for the Southern District of Texas, Laredo Division, was investigating possible narcotics and income tax violations on the part of certain suspected individuals who reside in south Texas—in McAllen among other places. This investigation was conducted under the guidance of the United States Attorney's office, and it appears that one or more prosecutors were engaged in related investigations ancillary to the grand jury proceedings.
Each of the relators is a duly-licensed Texas attorney of unchallenged standing before state and federal bars. Around the first of April, each was served with a subpoena commanding him to appear and testify at the grand jury's meeting scheduled for April 7. In addition, the subpoenas directed relators to bring with them "all records, retainer agreements, books, records, and/or receipts showing payment of attorneys' fees" for the accounts of specific, named clients who had either recently been convicted or were then under arrest or indictment for large-quantity marijuana offenses.
The relators responded to the subpoenas but filed motions to quash. They asserted that compulsion of their testimony
Thereafter each relator appeared before the grand jury; each answered some questions—for example, the amount of a given fee or who physically posted bond money for a named, known client; but each refused to answer questions regarding the identities of third parties who might have furnished bond money or paid (or promised to pay) attorneys' fees for the known clients. Each relator based his refusal on the claimed privilege of an unidentified client.
Subsequently, in another session before the district court, the prosecutor and counsel for relators reached agreement about the nature of the information which was claimed to be privileged. The court ordered relators to return to the grand jury room and answer these four questions:
The ensuing rounds of questioning and refusals to testify before the grand jury left essentially numbers (2), (3), and (4) unanswered. Once again the relators claimed the attorney-client privilege of an undisclosed client. The government moved the court to declare relators in contempt. Another hearing took place, at which time relators testified that they had been sought out by persons seeking legal services around the times when they were employed by the clients named in the subpoenas. It was further established or stipulated that those undisclosed persons made communications to relators in an atmosphere of confidentiality. Counsel for relators asked the court to propound additional questions to relators in chambers, with only the court reporter present. Counsel proposed to allow the court to take further testimony from the relators in order to develop in greater detail the asserted attorney-client relationships between relators and the undisclosed individuals. The district judge denied this request, and warned against further pursuit of the matter in open court on pain of full cross-examination by the government. The court also refused to allow relators' counsel to question the prosecutor about the nature of the government and grand jury investigations. The relators were found in contempt, and the district court issued its unpublished memorandum opinion shortly thereafter.
This appeal presents the narrow but always elusive problem of determining whether an attorney-client privilege attaches to such matters as the fact of retention, the identity of the client, and information surrounding fee and bonding arrangements executed by or on behalf of a client. At the outset, we agree with the parties that the question is governed
The basic elements which are necessary in order to establish a claim of the client's privilege are the following:
United States v. United Shoe Machinery Corp., D.Mass.1950, 89 F.Supp. 357, 358-59. We utilize this description solely because of Judge Wyzanski's comprehensiveness, and not because it is any more accurate than a number of other widely-accepted general formulations. E. g., 8 Wigmore, Evidence § 2292 (McNaughton rev. 1961); C. McCormick, Evidence §§ 87-88 (Cleary ed. 1972).
The true difficulty comes not in listing the necessary ingredients, but in applying the usual tests to unique fact situations. Along with many other courts,
Despite the general rule, we have clearly recognized, albeit in dicta, that an exception exists. "Under certain circumstances, an attorney must conceal even the identity of a client, not merely his communications, from inquiry." American Can Co. v. Citrus Feed Co., 5 Cir. 1971, 436 F.2d 1125, 1128, citing Baird v. Koerner, 9 Cir. 1960, 279 F.2d 623, 635. The well-known Baird case, which involved an IRS summons seeking disclosure of the identity of the client on whose behalf the witness-lawyer had made an anonymous tax payment, was followed in Tillotson v. Boughner, 7 Cir. 1965, 350 F.2d 663, and NLRB v. Harvey, 4 Cir. 1965, 349 F.2d 900. Our cases have split with Baird only to the extent that the Ninth Circuit has followed state law in deciding issues of evidentiary privilege. E. g., In re Michaelson, 9 Cir. 1975, 511 F.2d 882, cert. denied, 421 U.S. 978, 95 S.Ct. 1979, 44 L.Ed.2d 469 (1975). The exception announced in Baird, where applicable, is as much a part of this circuit's federal law of evidence as is the normal rule of no privilege. We so hold.
The cases applying the exception have carved out only a limited and rarely available sanctuary, which by virtue of its very nature must be considered on a case-to-case basis. It could hardly be otherwise, since the purpose of privilege—to suppress truth—runs counter to
That is not the law. We quote from the portion of the Baird decision which states the essence of the analysis, and demonstrates that the correct approach is a matter of logical relevance and probative value—not quantum sufficiency:
279 F.2d at 633 (emphasis added). In Baird the Ninth Circuit took counsel in Wigmore's admonitions that "much ought to depend on the circumstances of each case," and that the privilege should be held to protect the client from disclosure by the attorney of the client's "ultimate motive" for seeking legal advice. Id. at 630. In Harvey the Fourth Circuit refined the exception another degree: "The privilege may be recognized when so much of the actual communication has already been disclosed [not necessarily by the attorney, but by independent sources as well] that identification of the client amounts to disclosure of a confidential communication." 349 F.2d at 905. There the first link in the chain of evidence had been supplied by a private detective who, on pain of contempt, admitted that he had been hired by attorney Harvey to spy on a union organizer. This revelation indicated the obvious— that a third party had hired Harvey. It was the third party's identity which the Labor Board sought to compel Harvey to disclose, but which the court thought was in all likelihood privileged because "upon identification of the client, it will be known that the client wanted information about [the organizer]. More than the identity of the client will be disclosed by naming the client." Id. Yet it was far from certain that the client, if identified, would be found guilty of an unfair labor practice—to use the words of the district judge in this case—"as night follows day."
We turn now to an examination of the issue of privilege in the context of the particular circumstances presented by the record in this appeal. Preliminarily, we have no complicating problem of self-incrimination. The relators are not, at least as principals, the immediate subjects of investigation. Correspondingly, their sole reliance is upon the attorney-client privilege—not the Fifth Amendment, either for themselves or vicariously for their undisclosed clients. Similarly, no grants of immunity are involved here.
We have, instead, a situation in which it is readily apparent that the relators were called to testify before the grand jury for the purpose of incriminating their undisclosed clients as to privileged
The record contains an entirely different set of representations and paints an entirely different picture. Grand jury proceedings are secret, and therefore we shall not mention any names, but before the grand jury the government questioned each relator about his relationship with four specific individuals, none of whom was named in the subpoenas. The relators claimed the privilege in response to these questions. Earlier, during the hearing on the motions to quash the subpoenas, government counsel (the same attorney who made the above-quoted representations to us) explained to the district judge why the subpoenas had been issued, and why the government sought the relators' testimony:
The district judge diverted the line of discussion at this point. He assumed that the payor might have "a million dollar trust fund in the bank," and therefore income tax violations "wouldn't necessarily follow." The court was far more interested in the ethical problem presented by the attorneys' potential conflicts of interest, which in the district judge's view gave rise to law enforcement difficulty in securing plea bargains with named "mule" clients in return for their cooperation with the government in its efforts to prosecute undisclosed "patron" clients.
Government counsel's statements to the district court, and later to this court, are plainly inconsistent. Assuming arguendo that the Department of Justice may legitimately use the grand jury for the comparatively benign purpose of policing the ethics of the criminal bar, and that the general rule of no privilege would then apply, this record reflects a clearly prosecutorial, rather than disciplinary, objective. In this country the privilege has belonged traditionally to the client, not the lawyer. It is a creature of public policy
In this case the government sought to compel the relators to tell the grand jury the names of unidentified persons who had arranged for bonds and legal fees on behalf of known persons. The amounts of these bonds were high in some cases—as much as $100,000, thus necessitating large cash deposits. The amounts of those deposits were a matter of public record. In addition, the subpoenas required the relators to produce records as to the fees they had charged certain of the known clients. Some of these fees were also high—for example, $12,000 in the case of one named defendant. The prosecutor asked each relator about his acquaintanceship with four individuals who were not among the named clients. The relators claimed the privilege in response to questions about those individuals. Finally, the prosecutor had already represented to the district court that the government possessed "information" about certain individuals who had paid out money to attorneys in excess of reported income. In the totality of these circumstances, and in the words of Baird, "[t]he names of the clients are useful to the government for but one purpose." Disclosure by the relators of the unidentified "patrons'" names would be directly relevant to corroborating or supplementing already-existent incriminating information about certain persons suspected of income tax offenses, regardless of those persons' possible complicity in marijuana traffic. If relators were compelled to disclose the sought-after items before the grand jury, the unidentified clients—having been linked by their lawyers to payments in excess of reported income (the prosecutor need only produce their tax returns)—might very well be indicted. In any event, the income tax aspects of the government's inquiry demonstrate a strong independent motive for why the unidentified clients could be expected to (1) seek legal advice, and (2) reasonably anticipate that their names would be kept confidential. The attorney-client privilege protects the motive itself from compelled disclosure, and the exception to the general rule protects the clients' identities when such protection is necessary
We need not say a great deal more in order to decide this case on its peculiar facts. Some suggestion has been injected by the government that the relators do not actually represent the unnamed parties as clients—i. e., that the relators were not really employed for the purpose of rendering legal services. This argument is raised for the first time on appeal, and we consider the point waived. In the court below, the district judge remarked on the matter to relators' counsel:
Accordingly, we do not perceive a serious issue in this appeal with respect to the basic fact of representation. The district court adverted to no such issue in its memorandum opinion. In turn, the case in this posture raises no problem relating to the public policy factors listed by the Baird court, particularly factor (b) (identification relating to employment by a third party who is not a client or the client's agent), which might lend weight to a contrary result. See 279 F.2d at 632.
In conclusion, two brief notes of caution are in order. First, our decision should not be taken as any indication of how we would decide a similar question if the inculpatory value of sought-after testimony were less obvious or largely attenuated. Each of these cases must turn on its own facts. But second, and conversely, the government should not read this opinion as an invitation to tighten the web of secrecy surrounding its objectives and the nature and extent of information already in its hands when it calls lawyers to testify before prosecutorial bodies. The courts in this circuit will be ever vigilant to insure that they have adequate opportunities and sufficient helpful material in order to rule intelligently on these matters. Cf. United States v. Johnson, 5 Cir. 1972, 465 F.2d 793.
For the reasons herein discussed, the judgment of the district court is