DONALD RUSSELL, Circuit Judge:
The petitioner John Doe seeks a writ of mandamus requiring the vacation and reversal of an order of the Southern District of West Virginia directing him to testify concerning conversations between him and three individuals, Margolin, Kimball and Chernack pursuant to a subpoena issued by a duly convened grand jury of such district court and denying him access to the affidavit of the Internal Revenue Service [IRS] agent on whose testimony the Government relies to establish the "crime/fraud exception".
The petitioner is an attorney at law licensed to practice in the States of Massachusetts and California, with offices located in San Francisco. He specializes in business and securities law. In his professional capacity, he has been retained on a number of occasions by Margolin, who was engaged in the securities business in San Francisco. In late September, 1977, he was retained by Margolin in connection with a proposed private placement of limited partnership interests in the leasing of coal mining equipment. Under the proposed arrangement, Margolin was to market the partnership
On May 2, 1983, the petitioner was advised by the Government that he would be subpoenaed to testify before the grand jury investigating the 1977 proposed joint venture with reference to his conversations with Margolin, Kimball and Chernack. The petitioner immediately informed Margolin "and attempted [by letters addressed to each at what the petitioner, after inquiries, had ascertained was their addresses]
The petitioner appeared before the grand jury as required by its subpoena and "asserted the attorney-client privilege with respect to all communications between himself and Messrs. Kimball and Chernack either individually, with each other, or in the presence of Mr. Margolin." The United States Attorney thereupon moved the district court to compel petitioner's testimony, contending (1) that Kimball and Chernack were not clients of the petitioner; (2) such communications as were made were not intended to be kept confidential; and (3) that, if the two were clients, the crime/fraud exception applied. In support of the third ground, the United States Attorney submitted the affidavit of the IRS agent John Bowen. A hearing on this motion was had by the District Judge. The petitioner demanded at the hearing access to the affidavit of the IRS agent, which had been examined in camera by the Judge. At the conclusion of the hearing, the District Judge granted the Government's motion on all grounds but denied petitioner's request for access to the Bowen affidavit.
It seems appropriate at the outset to observe that the Government does not identify the petitioner as a "target" of the grand jury investigation and, in the hearing in the district court, the United States Attorney represented to that court that "Mr. ... [is not] in any way ... involved in the perpetration of ... fraud." This circumstance, however, does not deny him standing
The attorney-client privilege as traditionally recognized at common law and as now incorporated in the Federal Rules of Evidence, controls in all federal judicial proceedings.
And we have adopted this view in United States v. Jones, 696 F.2d 1069 (4th Cir.1982) that the "essence" of the privilege is the protection of what was "expressly made confidential" or should have been "reasonably assume[d] ... by the attorney as so intended." In determining whether it was to be reasonably "assume[d] that confidentiality was intended," it is the unquestioned rule that the mere relationship of attorney-client does not warrant a presumption of confidentiality.
As McCormick put it: "A mere showing that the communication was from client to attorney does not suffice, but the circumstances indicating the intention of secrecy must appear." § 91 at pp. 187-88.
United States v. Jones, supra, is an excellent illustration of the rule that the privilege does not apply to the situation where it is the intention or understanding of the client that the communication is to be made known to others, either in the form of an offering brochure or income tax returns. In that case, the targets of a grand jury investigation were several individuals and entities who had promoted and sold a tax shelter scheme involving coal leases, a venture very similar to that involved here. The venturers had consulted three attorneys for purposes of securing an opinion on the taxability of such participations. This legal tax opinion was to be used in soliciting investors in the venture. All the attorneys were subpoenaed to testify about their conferences and the information supplied them during those conferences by the venturers;
In Jones, we cited with approval United States v. Cote, supra, 456 F.2d 142, which in turn, cited with approval and relied on United States v. Tellier, supra, 255 F.2d 441. The cases of Jones and Cote arose out of claims to the attorney-client privilege relating to information supplied by the defendants to attorneys retained to assist in preparing the defendant's tax return or a stock or partnership offering prospectus. In all of the cases the claims of privilege were dismissed. In its opinion sustaining such dismissal, the Court in Tellier said (255 F.2d at 447:
It is true that in both Cote and Jones, the venturers had later actually published the opinion prepared by the attorneys (Jones) or filed the tax return prepared by the attorney (Cote). The parties in this venture, though originally intending to publish, had abandoned the project before any publication was actually made. In this circumstance this case is similar to Tellier. In Tellier, the defendant (Tellier) was the head of an underwriting firm. He was engaged to raise funds through a public offering on behalf of an independent telephone and electric power system in Alaska. He (Tellier) employed an attorney, Cahn, to handle the processing of such offering before the Securities & Exchange Commission. At least two issues of debentures were marketed before a third issue was proposed by Tellier. Cahn warned Tellier against such issue, describing it at this point as a "Ponzi" scheme. It was agreed that Cahn would write a letter addressed to Tellier but with copies to two others expressing his opinion. All the letters, however, were sent to Tellier, and there was no evidence he ever mailed the letters to the others. The venture thereafter filed in bankruptcy and Tellier, along with certain officers of the corporation, was indicted for security fraud. At the trial, the primary witness against Tellier was the attorney, Cahn. Tellier objected to Cahn's testimony of his warning to Tellier in connection with the proposed third debenture issue, contending that the discussion "was intended as a confidential communication between an attorney and his client concerning the legal affairs of the client" and thus within the attorney-client privilege. The Court, in sustaining a denial of the objection, said (255 F.2d at 447):
Similarly, here, it is irrelevant that no prospectus was ever actually issued in this case. The significant fact is that the information given the petitioner was to assist in preparing such prospectus which was to be published to others and was not intended to be kept in confidence. That is the critical circumstance, to wit, the absence of any intent that the information was to be kept confidential. Remembering that the privilege itself is not "favored" and is to be "strictly confined within the narrowest possible limits," we have no difficulty in concluding under the admitted facts of this case that all information given the petitioner by any of the joint venturers connected with the subject-matter of the proposed issuance of participations is without the protection of the attorney-client privilege.
Since we find the privilege does not exist in this case because confidentiality was not intended, it is unnecessary to consider the other grounds on which the district court rested its decision. Neither do we find it necessary to consider whether Kimball and Chernack have, by their failure to respond to the petitioner's request for instruction, waived any right to assert the attorney-client privilege.
In conclusion, we repeat again that the petitioner has acted with becoming respect for his obligation as an attorney in this matter and we find he has fully discharged his responsibility to Kimball and Chernack, whether they be his clients or not. He has given notice to them by the best means available to him, of his situation. They apparently received that notice for his letters to them have not been returned. Presumably this inaction on their part could be construed as a waiver of the privilege by them. As we have said, however, we choose to rest our decision on the absence of an intention that the communications with the petitioner should be confidential as a basis for denial of the writ.
The petition for a writ of mandamus is denied and judgment below is affirmed.
See, also, United States v. Nixon, 418 U.S. 683, 691, 94 S.Ct. 3090, 3099, 41 L.Ed.2d 1039 (1974).
This procedure, as suggested by Professor McCormick, seems particularly appropriate in this case, where, as here, counsel has given notice in the regular way presumably to the possible clients and has been favored with no expression of interest by them.
See also, Fisher v. United States, 425 U.S., at 402, n. 8, 96 S.Ct. at 1577; Wm. T. Thompson v. General Nutrition Corp., 671 F.2d 100, 104 (3d Cir.1982); United States v. Krol, 374 F.2d 776, 778 (7th Cir.1967), cert. denied, 389 U.S. 835, 88 S.Ct. 46, 19 L.Ed.2d 97.