Submitted Without Argument.
Opinion for the court filed by Circuit Judge J. SKELLY WRIGHT.
Circuit Judge TAMM concurs in the result.
Circuit Judge WALD filed an opinion concurring in Parts I, II, IV and V of Circuit Judge J. SKELLY WRIGHT's opinion and in the result.
J. SKELLY WRIGHT, Circuit Judge:
This case requires us to consider how far the "work product" doctrine shields the files of a corporation's in-house lawyer from scrutiny by a federal grand jury investigating corporate abuses. Appellant ("Company")
The following account is taken from the affidavit of one X______, an American citizen with business interests in a specific foreign country. We have excised proper names and other identifying information in order to preserve the confidentiality of grand jury proceedings, but the substance of the story X______ tells — and presumably told to the grand jury — sets the stage for the case before us:
X______'s account of this transaction is, of course, just one of many that have emerged in three successive investigations of Company's business practices and candor. The current grand jury investigation follows separate investigations by the Internal Revenue Service (IRS) and the Securities and Exchange Commission (SEC), during which Company and its officers had many opportunities to tell their version of this story.
A. The IRS Investigation
On April 7, 1976 the IRS announced a broad effort to uncover tax evasion by large corporations that had failed to account adequately for bribes, "slush funds," and other practices that might have led to inaccurate computation of their tax liabilities.
Shortly thereafter IRS examiners in the city where Company's headquarters are located propounded a list of 19 questions to several of Company's officers, including Company's chairman (who is also its chief executive officer) and the officers responsible for its foreign operations. The Company officers each submitted their affidavits to the IRS in June or July of 1976.
In response to one of the IRS questions concerning bribes or "kickbacks" paid to officials of foreign governments, Company's chairman stated:
The chairman appended a list of "finders" that Company had employed between 1971 and 1976 and the fees paid them. Most of the finders' fees had been paid in connection with the acquisition of relatively small operating companies or properties, almost exclusively in the United States. However, the chairman's list of finders' fees also included two substantial payments to companies associated with X______. According to the chairman's list, this fee was paid in connection with acquisition of certain contracts in the foreign country where one of X______'s companies was incorporated, and the fee had involved two separate transactions, a $200,000 payment by check to the foreign company and a $200,000 loan guarantee in favor of a second company owned by X______.
One of Company's vice presidents, who had responsibility for its operations in the country where X______ did business, also responded to the IRS question concerning bribes and kickbacks. This man — the same person who according to X______ arranged the "pay off" at X______'s house — submitted an answer and a list of finders substantially identical to those submitted by Company's chairman. He also submitted a list of "consultants" and their fees, which showed that one Z______ had been paid $120,000 in 1974 with regard to unspecified
Several of the IRS questions concerned payments to political figures and government officials in the United States. With respect to these, Company's chairman stated:
The vice president, however, gave the IRS a substantially different statement under oath. He admitted that he had made political contributions totalling $1,400 and received an advance from Company to cover them. He confirmed that he had repaid the advance. But after he repaid the advance he was reimbursed a second time for the contributions, by means of expense account manipulation.
B. The SEC Investigation
Several months later, while the IRS investigation of Company was still pending, the SEC began an informal investigation of Company's activities that later escalated into a formal investigation and enforcement action. In the informal portion of its investigation the SEC used an innovative technique known as the "voluntary disclosure program" to induce Company to investigate and reform itself, thus saving the government the considerable expense of a full-scale investigation and prosecution. Because the SEC's program significantly affects our view of the work product privilege, we relate its background in some detail.
As early as 1974 the SEC was engaged in investigating the political "slush fund" practices of some corporations. Initially the SEC staff carried out its own investigations, but as the scope of the payments problem became apparent, extending to foreign as well as domestic payments, the SEC realized that it did not have the resources to investigate each case carefully.
As the benefits of this method of investigation became apparent, the SEC began to encourage corporations to come forward voluntarily and perform the same type of independent investigation that the consent decrees had required.
The voluntary disclosure program was well developed by early 1977, when the staff of the SEC contacted Company and suggested that it make use of the voluntary method to clear the air about any payments of questionable legality in the United States or abroad. Accordingly, Company's board of directors retained a large law firm to act as special investigative counsel and set up a special committee of independent directors to oversee the investigation. During the summer of 1977 lawyers from the firm examined hundreds of documents in Company's files and interviewed 52 persons, all officers, directors, employees, or consultants hired by Company.
In May 1978 the investigative counsel submitted its final report to the special committee.
Of particular relevance here is the report's discussion of Company's dealings with X______. The full discussion is quite lengthy, but we summarize its high points: According to the report, the finder's fee arrangement with X______ was never reduced to writing. In October 1974 Company issued a check for $200,000 to X______'s company. Company's chairman then flew halfway across the continent to hand-deliver the check to X______, on a day when he knew the foreign official — whose jurisdiction included valuable property owned by Company — would be visiting X______. The chairman met X______ at a bank office where the check was cashed by X______ "with the assistance" of Company's chairman. The two men then drove to X______'s home, where they met with the official and a woman friendly with both X______ and the official.
Approximately one month later Company's board of directors authorized a $200,000 loan guarantee to another company owned by X______. The report also disclosed that there had been little or no investigation of the company in favor of which the guarantee was executed. In fact, it had been suspended as a corporation in good standing by its state of incorporation. The guaranteed loan was never repaid.
The investigative counsel's report concludes its discussion of the X______ episode with a disclaimer:
Nevertheless, the report does not explain why the lawyers performing the investigation were not able to interview X______. Neither does it explain what X______ might have done to earn $400,000, except to note that some Company officers were introduced to a number of officials of the foreign government involved (including its President) through a person whom the woman "claimed as a distant relative."
The investigative counsel's report also contains a section on domestic political contributions. It states:
When the report was complete, a copy was given to the SEC. Company also provided the SEC staff access to a number of black three-ring binders containing all of the extensive, uncoded notes taken by the lawyers during their interviews as well as
On the basis of the report, notes, and other material gathered in its investigation, the SEC filed a civil complaint against Company. The complaint alleged violations of the securities laws in connection with Company's dealings in three foreign countries, including the dealings with X______ and Z______. Without admitting guilt, Company entered into a consent decree with the SEC on the day the complaint was filed. The SEC also reported the case to the Department of Justice for investigation of possible criminal violations.
C. The Grand Jury Investigation and Subpoena
In October 1978 a grand jury was convened in the District of Columbia to consider indictment of Company and those connected with it. The record in this case discloses the type of criminal violation under investigation by the grand jury:
Within a few weeks the grand jury subpoenaed and received, without objection by Company, copies of the material that had previously been received by the SEC. The grand jury also heard testimony from a number of present and former Company employees, as well as from X______ and the foreign government official to whom the October 1974 payment may have been made.
In December 1979 the grand jury directed a subpoena duces tecum to Y______, who had been Company's in-house general counsel from 1971 to August 1978 (approximately
The lawyer and Company both moved to quash the subpoena on the ground that the 38 documents were protected by attorney-client and work product privilege. After inspecting the documents in camera the District Court granted the motion to quash for all but eight specific portions of the documents, as to which it held that Company had waived both attorney-client and work product privileges.
By this point the original grand jury's term had expired, and Company had retained a new law firm to represent it in connection with the grand jury investigation. The 38 documents had passed into the hands of a partner in the new law firm, and, in due course, a new grand jury issued a subpoena for the documents addressed to their current possessor. The District Court denied Company's motion to quash in a brief order that referred to its prior opinion; when the lawyer holding the documents indicated his unwillingness to produce them before the grand jury, the District Court held him in contempt and sentenced him to confinement until he produced the eight unprivileged items.
D. The Documents
All of the 38 documents that come within the terms of the subpoenas in this case come from Y______'s files for the years 1976 through 1978. All but two of the documents were dictated or handwritten by Y______, the exceptions being a very brief telex message sent to Y______ from an officer in one of Company's foreign subsidiaries and a handwritten list prepared for Y______ by an auditor employed by Company.
Six of the 38 documents date from June 1976, while Y______ was involved in accumulating information relevant to the IRS questions and in counseling Company's officers on how they should respond to the questions. Of these six documents, the District Court ordered that substantial portions of two, numbered 2 and 3, be produced before the grand jury. Document No. 2 is a transcript of a casette tape dictated by Y______ to preserve his recollection of a series of meetings in late May and early June, at which Company's chairman, president, and several officers discussed both its dealings with X______ and the campaign contribution reimbursement issue, as well as how the affidavits to be submitted to the IRS should deal with these subjects. Document No. 3 is a typed memorandum recording the substance of a telephone conversation between Y______ and two of Company's outside counsel. In this conversation, which took place two days after Y______ recorded the tape described above, the three lawyers discussed X______ and the campaign contribution issue.
The remaining 32 documents were generated by Y______ during the voluntary investigation and preparation of the investigative counsel's final report, in 1977 and early 1978. Twelve of these are in fact pages from Y______'s personal desk calendar, upon which Y______ scribbled brief notes; the remainder (with the exception of the telex) are all handwritten notes on legal-size paper. Y______ had been designated as liaison between the special committee of Company's board of directors and the law firm performing the investigation, and most of the notes reflect conversations between Y______ and various lawyers involved in the investigation. The District Court held that portions of six of these documents — on some, a single line of notes or less — must be produced before the grand jury.
Nowhere is the public's claim to each person's evidence stronger than in the context of a valid grand jury subpoena.
Each of the recognized privileges protects a substantial individual interest or a relationship in which society has an interest, at the expense of the public interest in the search for truth.
Nevertheless, even though privileges usually provide categorical protection, two common law doctrines give courts a limited ability to make sure that privileges do not serve ends for which they were not intended. These doctrines are exception and implied waiver. Exception comes into play when a privileged relationship is used to further a crime, fraud, or other fundamental misconduct. The leading case on exception, Clark v. United States,
Thus, as an initial proposition: when a grand jury issues a valid subpoena for documents, they must be produced unless protected by a recognized privilege. If privileged, they need not be produced unless
Company has argued that two privileges excuse its agent from producing any part of Y______'s files before the grand jury: the attorney-client privilege, and the work product privilege. Both are common law privileges in the context of a federal grand jury, although versions of the work product privilege are found in the Federal Rules of Civil and Criminal Procedure, which may be consulted for guidance as to its scope.
To the extent that they overlap, the work product privilege is the broader of the two.
The work product privilege, on the other hand, is not limited to communications. At the very least, it applies to material "obtained or prepared by an adversary's counsel" in the course of his legal duties, provided that the work was done "with an eye toward litigation."
The seminal case for the modern work product privilege is Hickman v. Taylor, 329 U.S. 495, 67 S.Ct. 385, 91 L.Ed. 451 (1947). In Hickman the Supreme Court read into the Federal Rules of Civil Procedure then in effect a two-tiered protection from discovery for attorney work product, in order to accommodate the liberal deposition-discovery policies of the Rules and the need to provide confidentiality for attorneys' files.
The Hickman Court, however, scrupulously avoided recognizing a general privilege for work product.
In recent years the Supreme Court has recognized a privilege for work product in criminal discovery and in the context of IRS tax-investigation subpoenas.
Applying the foregoing principles to the case before us, we find that a grand jury has issued a valid subpoena for 38 documents, and the District Court has held that eight portions of the documents must be disclosed.
In short, the eight items on appeal are all opinion work product. Since the government has not yet attempted to make the extraordinary showing of necessity that would be required to remove the work product privilege under Hickman and Upjohn Co. v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981),
The status of the eight items under the attorney-client privilege is slightly more problematic. Most but not all reflect attorney-client communication. But Company has already disclosed the fact that these communications took place, as well as their substance, to both the SEC and the grand jury by releasing the extensive notes of a formal interview between Y______ and the lawyers performing the voluntary investigation. The District Court therefore held
In the case before us we do not confront the applicability of the work product privilege to the files of nonlawyers or qualifications to the work product privilege. Without such difficulties we may assume that the attorney-client privilege applies. An exception or waiver of the work product privilege will also serve as an exception or waiver of the attorney-client privilege, since the coverage and purposes of the attorney-client privilege are completely subsumed into the work product privilege.
Accordingly, we turn to the questions whether the doctrines of exception or implied waiver apply to the eight items of attorney work product before us.
According to Clark, no privilege applies "where the relation giving birth to it has been fraudulently begun or fraudulently continued."
Despite this state of the record, the District Court rejected the government's argument that the exception for crime or fraud applied to this case. It gave no reasons for the rejection, however, beyond a one-sentence conclusion:
While the determination whether the government has made a sufficient showing to invoke the exception is committed to the sound discretion of the District Court in the first instance,
First, the government did allege that the lawyers were consulted for the purpose of furthering a crime or fraud; indeed, it was one of the government's principal arguments below.
When a grand jury's subpoena is at stake, the standard for evaluating an exception argument must be simple enough for courts to administer swiftly and efficiently, without obstructing the grand jury's mission or squandering judicial resources. The point is not to convict anyone of a crime or to anticipate the grand jury, but only to determine whether the possibility that a privileged relationship has been abused is sufficient to alter the balance of costs and benefits that supports the privilege. In making this determination courts will not be able to receive a complete adversary presentation of the issues, since one of the parties will not be privy to the information at issue. Any system that requires courts to make highly refined judgments — perhaps concerning volumes of documents — will most likely collapse under its own weight.
Accordingly, courts do not require proof beyond a reasonable doubt that someone has committed a crime or fraud. Rather, they undertake a simplified two-step inquiry. First, there must be a prima facie showing of a violation sufficiently serious to defeat the work product privilege.
The first condition may be met by a showing that the client was engaged in planning a criminal or fraudulent scheme when it sought the advice of counsel, or that the client actually committed or attempted a crime or fraud subsequent to receiving the benefit of counsel's work product.
Courts have disagreed on the degree of relatedness required to meet the second stage of the inquiry.
The record in this case has been described above, and it more than satisfies the prima facie violation requirement, especially as to the work Y______ did in connection with the IRS investigation. The possibility that Company's chairman lied to or attempted to mislead the IRS with his affidavit is enough to pass the first stage of the inquiry.
Only one of the six items that come from the period of the SEC investigation clearly relates to a possible violation.
None of the other five items come within the exception for crime, fraud, or serious misconduct. They were all created after the IRS affidavits, which provide the clearest prima facie evidence of a violation. Only one of the items, part of Document 35, mentions X______, illegal contributions undisclosed in the IRS affidavits or SEC report, or anything else suspicious. That item is merely a list of subjects under investigation; it contains no information not already before the grand jury in many forms.
Therefore, the District Court was correct in its holding, if not its reasoning, with respect to the portions of Documents 2, 3, and 29 that it ordered Company to produce. There is a substantial likelihood that the work reflected in these items was performed in furtherance of a crime or fraud by Company or its officers, and therefore a court need not withhold them from a grand jury on the ground that they are protected by the work product or attorney-client privilege.
We next consider an alternative basis for upholding the grand jury's subpoena: implied waiver. The doctrine of implied waiver allows courts to retain some discretion to ensure that specific assertions of privilege are reasonably consistent with the purposes for which a privilege was created. The District Court found that Company had waived its work product privilege with respect to the eight items on appeal, essentially because it had already disclosed much of the information they contained, and the undisclosed information exposed "the enchanted nature of [the] tale" in the report provided to the SEC and the grand jury.
While we differ with some of the District Court's reasoning and its application to several of the documents,
The question with respect to implied waiver is whether Wigmore's "objective consideration" of fairness negates Company's assertion of privilege.
A simple principle unites the various applications of the implied waiver doctrine. Courts need not allow a claim of privilege when the party claiming the privilege seeks to use it in a way that is not consistent with the purpose of the privilege.
The purposes of the work product privilege are more complex, and they are not inconsistent with selective disclosure — even in some circumstances to an adversary. Yet at some point acceptable tactics may degenerate into "sharp practices" inimical to a healthy adversary system. When that occurs — when a party seeks greater advantage from its control over work product than the law must provide to maintain a healthy adversary system — then the balance of interests recognized in Hickman and Duffy shifts, and the courts need not impede a grand jury's legitimate efforts in the name of protecting the adversary system.
The circumstances of this case convince us that respecting Company's claim to work product privilege is not required to maintain a healthy adversary system. We evaluate in turn three general factors that justify an implied waiver as to some of the documents in this case: the basic conditions of the SEC's voluntary disclosure program, the express assurances Company offered regarding the completeness of the final report given to the SEC and the grand jury, and the importance of specific documents for a fair evaluation of Company's voluntary disclosure.
1. Ground rules of the SEC's voluntary disclosure program.
Realistic appraisal of the circumstances surrounding Company's claim of privilege requires some understanding of the basic features of the SEC's voluntary disclosure program. As the many cases concerning companies that participated in the program attest,
It would have been completely unreasonable, however, for the SEC to accept corporations' voluntary disclosures at face value. The gravity of the problem and the likelihood that — left to their own devices — corporations would prefer not to investigate their own misdeeds with vigor demanded that the SEC establish a mechanism to ensure that corporations' voluntary disclosures were truly full disclosures. The best check on corporate good faith would be to retrace the steps of the independent investigations, but that would have strained the SEC's available staff. Nevertheless, by making certain that its staff could have access to the background material in corporations' files, the SEC could ensure a high level of accuracy in the reports it received.
Thus SEC access to corporate records concerning the matters under investigation was a logical, even necessary, feature of the voluntary disclosure program. No corporation could have reasonably expected to submit a report to the SEC and receive lenient treatment in return unless the SEC could check the accuracy of the report. It taxes credulity to suggest otherwise. And the SEC did not leave corporations to speculate as to whether it would demand to see corporate files. Responsible SEC officials stressed this aspect of the program at every opportunity, and it was widely discussed by the bar.
The SEC's demand for access to underlying documentation had obvious implications for the attorney-client and work product privileges. Every document relating to a voluntary investigation was potentially privileged. It had generally passed from a corporation to the investigating attorneys,
Many companies were able to reach agreements with the SEC, either informally or through formal consent decrees, to prevent the SEC from disclosing privileged documents to third parties.
There is no information in the record as to whether Company ever reached an explicit agreement with the SEC, but it is clear that the SEC availed itself of access to documents, such as the investigators' notes of their interviews, that would have been within the work product privilege under other circumstances. Furthermore, the SEC searched through Company's files, at least thoroughly enough to uncover evidence of abuses that had been omitted from the report.
2. Express representations concerning Y______'s files.
When the lawyers retained by Company to perform its voluntary investigation interviewed Company's officers and employees, they followed a standard interview format. That format had been developed in advance, and it was reprinted as Exhibit 1 to the investigative counsel's final report. Question 10 on the standard format asked:
The investigators' notes confirm that they asked this question of all but one or two of the 52 persons interviewed during the investigation. Y______ himself was among those who had formal interviews with the investigators. At his interview on July 6, 1977 Y______ was asked and responded to Question 10. Two of the lawyers present took notes, and both recorded Y______'s response: "Yes — made work files available at this time"
The investigative counsel's final report made much of the cooperation of the interviewees with respect to their files. "[W]e were advised by all persons interviewed that all their files relating to matters which were discussed or which might be relevant to the subject matter of this investigation had been made available to us."
Company provided both the report and the investigators' notes containing Y______'s assurances to the SEC and the grand jury. Under the basic conditions of the voluntary disclosure program, anyone reading the report could thus expect it to reflect any relevant material in files that Y______ should have provided to the investigators. And they could also expect that the report could be checked against the files themselves.
3. Importance of Y______'s files for a fair evaluation.
It appears, then, that there was a category of documents that the final report of Company's investigative counsel should have reflected, and that clearly came within the scope of Y______'s express assurances, that could not be withheld from the SEC on a claim of privilege. Technically, all of Y______'s files relating to the subject matter of the investigation come within that category. But for purposes of the fairness element of the implied waiver doctrine there are relevant differences among the eight items on appeal in this case.
Some of the items on appeal are notes of Y______'s conversations with the investigators regarding their interviews with third parties. The information in these notes is fully reflected in the investigators' extensive notes of the interviews themselves.
But those two documents bear directly on the core subject matter of the investigation, and they contain information in such quantity and detail that the investigative record could not be complete without them. Moreover, the report and notes do not fully reflect what the documents reveal about the attitude of Company's highest officers toward investigating the truth about Company's business practices. Nothing could be more relevant to the main purpose of the voluntary investigation — providing Company's board and stockholders with information about management's policies and practices regarding bribery and corruption.
Company has promulgated a carefully worded story in the form of a full disclosure, and its apparent consent to letting the SEC staff evaluate its disclosure, by examining the relevant underlying material, has lent credence to its representation of full candor. Yet at the same time it has withheld crucial documents that reveal a different, highly embarrassing, version of events. If we were to allow corporations to use the work product privilege to accomplish such a sleight-of-hand, it would severely limit the effectiveness of voluntary disclosure programs.
The purposes of the work product privilege do not require us to acquiesce in Company's manipulation. When a corporation elects to participate in a voluntary disclosure program like the SEC's, it necessarily decides that the benefits of participation outweigh the benefits of confidentiality for all files necessary to a full evaluation of its disclosures.
Company argues that, even if it impliedly waived its work product privilege vis-á-vis the SEC, the doctrine of "limited waiver" advanced in Diversified Industries, Inc. v. Meredith, 572 F.2d 596, 611 (8th Cir. 1977) (en banc), prevents us from extending that waiver to the grand jury. In Diversified a civil litigant attempted to obtain discovery of a voluntary disclosure program final report and an underlying memorandum. Id. at 599. Diversified Industries had waived its attorney-client privilege by giving the documents to the SEC, but the Eighth Circuit held that disclosure to the SEC did not constitute a waiver as to anyone but the SEC. It reasoned:
Id. at 611.
We do not apply the Diversified limited waiver doctrine to this case. As an initial matter, we note that this circuit rejected the limited waiver theory as an unnecessary expansion of the attorney-client privilege in Permian Corp. v. United States, 665 F.2d 1215, 1220-1222 (D.C. Cir. 1981). Furthermore, a grand jury's claim to disclosure is stronger than that of a civil litigant.
We nevertheless share the Diversified court's basic concerns — promoting effective voluntary disclosure programs and respecting legitimate claims of privilege.
In the final analysis, Diversified goes much farther than necessary to accomplish its objective. The SEC or any other government agency could expressly agree to any limits on disclosure to other agencies consistent with their responsibilities under law. But courts should not imply such agreements on a categorical basis.
In conclusion, we imply a waiver of work product and attorney-client privileges with respect to Documents 2 and 3. When Company submitted its investigative counsel's report and notes to the SEC and otherwise complied with the ground rules of the voluntary disclosure program, it bound itself to provide the SEC access to any documentation necessary to evaluate the report. Any claim of privilege should have been made with particularity at that time. Documents 2 and 3 come within a category of documents clearly identified in the report and notes as material to the investigation, and our own review reveals that they are necessary for a fair evaluation of the representations in the report. If we allowed Company to withhold them under a claim of privilege, we would encourage further games of cat-and-mouse between corporations and their regulators. Protecting the adversary system does not require that result. It would strain equity and sound policy to allow corporations to withhold records that are properly characterized as underlying documents of their reports to the SEC. Corporations and their lawyers surely enter voluntary disclosure programs with the understanding that privilege will not force the government to take them at their word.
The lawyer's work product privilege was conceived by lawyers who succeeded in having lawyers-become-judges accept the idea. The basis for that acceptance was that, while honesty, full disclosure, and fair dealing are indispensable to justice, our judicial system — an adversary system, in most instances — should function more effectively where the work product of the lawyer is
Some 55 years ago Judge Learned Hand aptly stated what we regard as the fundamental issue in this case:
The vitality of the adversary system is of great concern to us, as it is to all courts, and we have due regard for the importance of privilege in maintaining that vitality. It would ill serve the adversary system, however, if we were to exalt the form of privilege over its substance. Through the doctrines of implied waiver and exception, the law entrusts the courts with a duty to guard that the offices of lawyers, and the respect which we have for the bar, are not used for unfair or corrupt purposes.
In the exercise of that duty, we have determined that there is a substantial likelihood that the multinational corporation before us has attempted to manipulate its privilege, by withholding vital documents while making a great pretense of full disclosure of their contents. It does not deserve the protections enjoyed by those who use the adversary system for its legitimate ends. Therefore, we have held that the District Court did not err in ordering Company's attorney to disclose two portions of its former general counsel's files, because Company has waived its privilege as to those portions of Documents 2 and 3 that the District Court directed Company's attorney to produce before the grand jury. Because the District Court held Company's attorney in contempt for refusing to produce documents that remain privileged as well as documents as to which there is no privilege, we vacate the District Court's order of June 20, 1981, and remand for expeditious proceedings not inconsistent with this opinion.
WALD, Circuit Judge, concurring:
I concur in Parts I, II, IV and V of Judge Wright's opinion as they relate to documents 2 and 3. Within the context of the SEC's voluntary disclosure program, it would be inequitable to allow a corporation to foster the appearance of full disclosure, and later withhold records that are properly characterized as underlying documents of its report to the SEC. Documents 2 and 3 clearly fall within this category of underlying documents. Under the ground rules set up by appellant ("Company"), outside counsel was authorized to interview in-house counsel. In this interview, in-house counsel recounted discussions with top Company officials that are described in documents 2 and 3, and expressly agreed (in accordance with standard procedures) to hand over files relating to these discussions. Having relied on the appearance that all relevant documents were available to both outside counsel and SEC investigators, Company cannot now hide behind a cloak of privilege.
See note 92 infra.
Document No. 14 is a page of legal paper covered with notes and dated August 24, 1977; the District Court held that Company must produce the first item on the page, which summarizes Y______'s conversation with investigative counsel about their interview with one of Company's officers concerning Company's business in a foreign country, what documents the investigators should examine, and how Company should conduct its business in that country in the future. Document No. 16 is an appointment calendar page with notes apparently summarizing a report by one of the investigating lawyers about what one of the persons they interviewed — not an employee of Company — had said; it also contains brief notes relating to the tax problems associated with Company's compensation of its American employees working abroad. The District Court held that the entire document was not privileged. Document No. 21 is a page of undated notes, of which the District Court held that part of one item, which described discussions in a telephone meeting of Company's board of directors, was not privileged.
Document No. 29 is a desk calendar page with several brief notes. The District Court held only one line unprotected by privilege; it apparently summarizes a conversation with Company's president about Company's dealings with X______. Document No. 35 is a handwritten list of matters under investigation prepared for Y______ by one of Company's auditors. The District Court held that the bottom two-thirds of the page was not privileged. Document No. 38 is a page of cryptic notes; the District Court held that the first item — four words and a date, apparently relating to favors provided by Company to a politician from the state where it is located — was not privileged.
Federal Rule of Criminal Procedure 16(b)(2) states that "this subdivision does not authorize the discovery or inspection of reports, memoranda, or other internal defense documents made by the defendant, or his attorneys or agents[,] in connection with the investigation or defense of the case * * *."
There is some uncertainty as to the precise status of Rule 26(b)(3) in this case. Federal Rule of Civil Procedure 81(a)(3) makes the Federal Rules applicable to "proceedings to compel the giving of testimony or production of documents in accordance with a subpoena issued by an officer or agency of the United States * *." Few cases address the meaning of Rule 81 for proceedings to enforce grand jury subpoenas, but as a general proposition it seems to apply in that context. See, e.g., In re Grand Jury Subpoena Duces Tecum Issued to First Nat'l Bank of Md., 436 F.Supp. 46, 48 (D. Md. 1977). The Supreme Court has held that Rule 81 makes the Federal Rules applicable to proceedings to enforce IRS summonses, see Donaldson v. United States, 400 U.S. 517, 91 S.Ct. 534, 27 L.Ed.2d 580 (1971), a context roughly analogous to proceedings to enforce grand jury subpoenas, although more certainly within the language of Rule 81.
In Upjohn Co. v. United States, 449 U.S. 383, 398-399, 101 S.Ct. 677, 687, 66 L.Ed.2d 584 (1981), the Court seemed to assume, without firmly holding, that Rule 26(b)(3) rather than the common law restricted the scope of the IRS's power to summons work product. But cf. United States v. Moon, 616 F.2d 1043, 1047 (8th Cir. 1980) (discovery not normally available in summons enforcement proceedings). But it is not clear that Rule 26, which by its terms applies only to discovery, should govern non-discovery applications of the work product privilege. A better interpretation might be that the Federal Rules dictate the procedures to be applied in proceedings to enforce IRS summonses, or grand jury subpoenas, but that Rule 26 does not in itself supply a substantive restriction on what the IRS or a grand jury may seek to obtain by compulsory process. See In re Grand Jury Subpoena (John Doe, Inc.), 599 F.2d 504, 509 (2d Cir. 1979); Fed.R.Evid. 1101(d)(2).
In any event, Rule 26(b)(3) does not preclude application of the exception or waiver doctrines in this context. See cases cited in note 67 infra; cf. United States v. Nobles, 422 U.S. 225, 239, 95 S.Ct. 2160, 2170, 45 L.Ed.2d 141 (1975) (Fed.R.Crim.P. 16(b)(2) does not preclude waiver of work product protection).
329 U.S. at 508, 67 S.Ct. at 392.
329 U.S. at 511, 67 S.Ct. at 393. But requiring production of opinion work product or (much the same thing) answers to interrogatories seeking information that would reveal attorney thought processes
Id. at 513, 67 S.Ct. at 394.
In this case the attorney who prepared the critical documents, Y______, has relinquished all his independent claims to preserving their confidentiality by turning them over to his former client's new lawyers. Although one of the parties now before the court is an attorney who could not have been involved in any crime or fraud by Company at the time these documents came into being, he is involved in the case only as the holder of the documents and representative of his client. Neither he nor his firm had anything to do with the work reflected in the documents before us. In our earlier opinion in this controversy, In re Sealed Case, supra note 34, we noted the difference between those who hold documents and share the interests of the party claiming privilege and those who do not share those interests. 655 F.2d at 1301. For all relevant purposes, then, the attorney now in possession of the documents has interests identical to those of his client and no independent stake in the confidentiality of the documents. Therefore, we need only consider those arguments available to Company, and this opinion does not discuss claims Y______ could have raised had he not surrendered his files to Company after leaving its employ.
Several other prima facie violations appear on the face of the record. Several Company employees seem to have told different stories to the grand jury from what they related privately at the time of the events. The documents at issue in this case provide evidence from which a reasonable person could infer that the chairman and other high officers at Company influenced them to alter their accounts of the facts, in violation of the prohibition in 18 U.S.C. § 1503 (1976) against influencing a grand jury witness corruptly or by threats. Furthermore, material in Documents 2 and 3, considered in light of what the persons Y______ was advising ultimately stated to the IRS, might lead one to believe that Y______ failed to advise his client in an independent manner as required by Canon 5 of Code of Professional Responsibility. See Diversified Industries, Inc. v. Meredith, 572 F.2d 596, 610 (8th Cir. 1977) (en banc); Block & Barton, supra note 13, at 44-45.
The evidence in the record before us would not be sufficient to convict Company's chairman or anyone else of any crimes, but that is not important at this stage. All that is required is that the likelihood of a violation be sufficient as a prima facie matter to warrant abridging any work product privilege that would normally attach to documents relating to the possible violation.