In Re Grand Jury Subpoena Duces Tecum

The Office of Independent Counsel (OIC) appeals from an order of the District Court denying the OIC's motion to compel the production of documents subpoenaed by a federal grand jury. We reverse and remand.

The task assigned to Independent Counsel Kenneth W. Starr is to investigate and prosecute matters "relating in any way to James B. McDougal's, President William Jefferson Clinton's, or Mrs. Hillary Rodham Clinton's relationships with Madison Guaranty Savings & Loan Association, Whitewater Development Corporation, or Capital Management Services, Inc." In re Madison Guar. Sav. & Loan Ass'n, Div. No. 94-1, Order at 1-2 (D.C.Cir.Sp.Div. Aug. 5, 1994). Mr. Starr also is charged with the duty of pursuing evidence of other violations of the law developed during and connected with or arising out of his primary investigation, known generally as "Whitewater." See id. See generally United States v. Tucker, 78 F.3d 1313 (8th Cir.), cert. denied, --- U.S. ----, 117 S.Ct. 76, 136 L.Ed.2d 35 (1996).

On June 21, 1996, as part of its investigation, the OIC directed to the White House a grand jury subpoena that required production of "[a]ll documents created during meetings attended by any attorney from the Office of Counsel to the President and Hillary Rodham Clinton (regardless whether any other person was present)" pertaining to several Whitewater-related subjects. Subpoena Rider at 1. The White House identified nine sets of notes responsive to the subpoena but refused to produce them, citing executive privilege, attorney-client privilege, and the attorney work product doctrine.

On August 19, 1996, the OIC filed a motion before the District Court to compel production of two of the nine sets of documents identified by the White House. The first set of documents comprises notes taken by Associate Counsel to the President Miriam Nemetz on July 11, 1995, at a meeting attended by Mrs. Clinton, Special Counsel to the President Jane Sherburne, and Mrs. Clinton's personal attorney, David Kendall. The subject of this meeting was Mrs. Clinton's activities following the death of Deputy Counsel to the President Vincent W. Foster, Jr. The documents in the second collection are notes taken by Ms. Sherburne on January 26, 1996, during meetings attended by Mrs. Clinton, Mr. Kendall, Nicole Seligman (a partner of Mr. Kendall's), and, at times, John Quinn, Counsel to the President. These meetings, which took place during breaks in and immediately after Mrs. Clinton's testimony before a federal grand jury in Washington, D.C., concerned primarily the discovery of certain billing records from the Rose Law Firm in the residence area of the White House.

The White House abandoned its claim of executive privilege before the District Court, relying solely on the attorney-client privilege and the work product doctrine. Mrs. Clinton also entered a personal appearance through counsel in the District Court and asserted her personal attorney-client privilege. The District Court found it unnecessary to reach the broadest question presented by the OIC, whether a federal governmental entity may assert the attorney-client privilege or the work product doctrine in response to a subpoena by a federal grand jury. Instead, the court concluded that because Mrs. Clinton and the White House had a "genuine and reasonable (whether or not mistaken)" belief that the conversations at issue were privileged, the attorney-client privilege applied. Memorandum Opinion and Order at 20. In addition, the court held that the work product doctrine prevented disclosure of the notes to the grand jury. See id. at 22.

The OIC appealed, and we granted expedited review. Mrs. Clinton moved to intervene formally, and we granted her motion. The case was submitted following oral arguments in a closed session. The District Court did not find it necessary to examine the disputed materials in camera, see id. at 18 n. 10, and neither do we.2

At the request of the White House, and in order to preserve the secrecy of the grand jury's proceedings, we filed our opinion under seal on April 9, 1997, intending to publish a redacted opinion shortly thereafter. Since we filed our opinion, however, press reports have related some of the substance of our decision. Believing that these disclosures have portrayed the White House in an unfairly negative light, the White House and Mrs. Clinton moved this Court to publish its opinion and to unseal the briefs and appendices filed in this Court, and the OIC joined in the motion. The motion is granted. Accordingly, this opinion, as amended, together with Judge Kopf's dissent, is released for publication, and the briefs and appendices are ordered unsealed.

We first consider our jurisdiction to entertain this appeal. An order of a district court denying a motion to quash a grand jury subpoena--that is, an order requiring compliance with the subpoena--is not immediately appealable. See Cobbledick v. United States, 309 U.S. 323, 327-28, 60 S.Ct. 540, 542-43, 84 L.Ed. 783 (1940). But see United States v. Nixon, 418 U.S. 683, 691-92, 94 S.Ct. 3090, 3099-3100, 41 L.Ed.2d 1039 (1974) (determining that, in unique context of case, President could appeal without first being cited for contempt). This case presents the opposite situation: an order refusing to require compliance with a subpoena. An order granting a motion to quash a subpoena is an appealable order, either under 18 U.S.C. § 3731 (1994) (permitting government to appeal from an order "excluding evidence ... in a criminal proceeding"), or under 28 U.S.C. § 1291 (1994) (permitting appeals from "all final decisions of the district courts"). See In re Grand Jury Subpoena (Kent), 646 F.2d 963, 967-68 (5th Cir. Unit B June 1981); In re Grand Jury Empanelled Feb. 14, 1978 (Colucci), 597 F.2d 851, 854-58 (3d Cir.1979). It makes no practical difference that the instant case involves the denial of a motion to enforce a subpoena rather than the grant of a motion to quash a subpoena. We conclude that we have jurisdiction over this appeal.

Although this case is a dispute between two entities of the federal government, i.e., the White House and the OIC, it presents a justiciable controversy. See Nixon, 418 U.S. at 697, 94 S.Ct. at 3102.

We will address first the issue that the District Court found it unnecessary to decide: whether an entity of the federal government may use the attorney-client privilege to avoid complying with a subpoena by a federal grand jury. Before we confront the merits of this question, however, we believe it is important to identify what is not at issue in this case. The OIC does not seek to invade the attorney-client relationship existing between Mrs. Clinton, in her personal capacity, and Mr. Kendall, her personal lawyer. The privilege set up by the White House is strictly a governmental privilege, with the White House (or the Office of the President, alternatively) as client and Ms. Sherburne and Ms. Nemetz as attorneys. Accordingly, the White House is the real party in interest in this case, although Mrs. Clinton presents arguments similar to those of the White House in her capacity as an intervenor.

The discussion that follows can be summed up rather simply. We need not decide whether a governmental attorney-client privilege exists in other contexts, for it is enough to conclude that even if it does, the White House may not use the privilege to withhold potentially relevant information from a federal grand jury.

"[T]he privilege of a witness, person, government, State, or political subdivision thereof [is] governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience." Fed.R.Evid. 501. We must therefore apply the federal common law of attorney-client privilege to the situation presented by this case. See In re Bieter Co., 16 F.3d 929, 935 (8th Cir.1994).

The OIC and the White House have taken strikingly different rhetorical approaches to the question presented here. The OIC argues that recognizing an attorney-client privilege in these circumstances would be tantamount to establishing a new privilege, which courts ordinarily undertake with great reluctance. The White House, in contrast, argues that the attorney-client privilege is already the best-established of the common-law privileges and that, furthermore, it is an absolute privilege. The White House is correct, of course, in its assertion that the attorney-client privilege is the oldest known to the common law. See Upjohn Co. v. United States, 449 U.S. 383, 389, 101 S.Ct. 677, 682, 66 L.Ed.2d 584 (1981). But the lengthy roots of the privilege do not necessarily mean that it must apply in this dispute within the federal government, especially because the privilege has not previously been so applied. Nor does the White House advance its case significantly by arguing that the attorney-client privilege is absolute, in the sense that it cannot be overcome by a showing of need. See, e.g., Admiral Ins. Co. v. United States Dist. Court, 881 F.2d 1486, 1493-94 (9th Cir.1989). This argument merely begs the true question, whether a governmental attorney-client privilege exists at all in the context of a federal criminal investigation.

We address this question by beginning with Proposed Federal Rule of Evidence 503, which we have described as "a useful starting place" for an examination of the federal common law of attorney-client privilege. In re Bieter Co., 16 F.3d at 935. As promulgated by the Supreme Court in 1972, Proposed Rule 503 would have defined "client" to include "a person, public officer, or corporation, association, or other organization or entity, either public or private." Proposed Fed.R.Evid. 503(a)(1), reprinted in 56 F.R.D. 183, 235 (1972). The commentary makes it clear that "[t]he definition of 'client' includes governmental bodies." Id. advisory committee's note. But neither the proposed rule nor the commentary has anything to say about the particular situation before us in this case; they represent only the broad proposition that a governmental body may be a client for purposes of the attorney-client privilege.3

Other compilations of the general law have taken similar approaches. See Restatement (Third) of the Law Governing Lawyers § 124 (Proposed Final Draft No. 1, 1996) [hereinafter Restatement] ("[T]he attorney-client privilege extends to a communication of a governmental organization.");4 Unif.R.Evid. 502(a)(1) (defining "client" in terms similar to Proposed Fed.R.Evid. 503). Each of these authorities, however, expresses at least some concern about applying the privilege broadly to governmental entities. Uniform Rule 502 limits the governmental privilege to situations involving a pending investigation or litigation and requires a finding by the court that disclosure will "seriously impair" the agency's pursuit of the investigation or litigation. See Unif.R.Evid. 502(d)(6).5 Language in the Restatement addresses even more directly the concerns relevant in the instant case:

More particularized rules may be necessary where one agency of government claims the privilege in resisting a demand for information by another. Such rules should take account of the complex considerations of governmental structure, tradition, and regulation that are involved.

Restatement § 124 cmt. b. We agree with this language from the Restatement and accordingly look to the case law for further guidance.

The White House has located only two cases involving a clash between a grand jury and a claim of governmental attorney-client privilege. In In re Grand Jury Subpoenas Duces Tecum (Farber), 241 N.J.Super. 18, 574 A.2d 449 (App.Div.1989), a New Jersey intermediate appellate court considered two subpoenas issued by a county grand jury to private lawyers who had been retained to represent a county agency. The court concluded that "the privilege is fully applicable to communications between a public body and an attorney retained to represent it," id. 574 A.2d at 454, but reversed the lower court's order quashing the subpoenas because the attorneys should have been required to appear before the grand jury and invoke the privilege in response to specific questions, see id. at 458. In In re Grand Jury Subpoena (Doe), 886 F.2d 135 (6th Cir.1989), the Sixth Circuit considered a subpoena issued by a federal grand jury to the city of Detroit. The court vacated the district court's finding that the city council was not the client of the city's corporation counsel but concluded that the application of the attorney-client privilege depended on the confidentiality of the communications, which in turn depended on the proper application of the state open-meetings law. See id. at 138. The court remanded the case to allow the district court to resolve that issue. See id. at 139.

For several reasons, we do not find these cases particularly persuasive. First, neither court actually applied a governmental attorney-client privilege to block a grand jury's investigation; both found it necessary to remand for further proceedings. We hesitate to ignore judicial pronouncements too readily as mere dicta, however, for we must find guidance somewhere in the parties' proffered authorities, none of which is directly in point. Several significant factual distinctions between the aforementioned cases and the case at bar are therefore also relevant. The New Jersey case involved the interaction between a county grand jury and a county agency, a subject which is undoubtedly of considerable importance to the state of New Jersey but does not bear directly on the relationship of a federal grand jury to a federal entity. In addition, that case involved private attorneys hired as special counsel to the county agency, and the court recognized that the private lawyers were not subject to a state statute requiring all public employees to testify before any grand jury in exchange for use immunity. See In re Grand Jury (Farber), 574 A.2d at 455. It is, of course, impossible for us to determine how the New Jersey court would have harmonized this statute with the asserted governmental attorney-client privilege if the attorney involved had been a public employee. The Sixth Circuit case, involving a standoff between a federal grand jury and a city government, implicates potentially serious federalism concerns not present in the case before us. The court's brief opinion is also rather unpersuasive legally, as it contains no acknowledgment that to extend the privilege to a governmental body where individuals within the government are being scrutinized by a grand jury for criminal activity poses anything but a routine concern. (The court cited only two privilege cases, neither of which had anything to do with government lawyers.)

Moving somewhat further afield, the White House cites a number of cases in which courts have applied a governmental attorney-client privilege in civil actions. These cases, all of which involved either the sui generis jurisprudence of the Freedom of Information Act (5 U.S.C. § 552 (1994))6 or a situation in which the party seeking information was a private litigant adversarial to the government,7 are not particularly persuasive in the circumstances of this case. Even if we were to conclude that the governmental attorney-client privilege ordinarily applies in civil litigation pitting the federal government against private parties, a question that we need not and do not decide, we believe the criminal context of the instant case, in which an entity of the federal government seeks to withhold information from a federal criminal investigation, presents a rather different issue. See Nixon, 418 U.S. at 712 n. 19, 94 S.Ct. at 3109 n. 19 (suggesting that executive privilege may apply differently in criminal and civil cases); Cervantes v. Time, Inc., 464 F.2d 986, 992-93 n. 9 (8th Cir.1972) (recognizing that reporter's privilege may apply differently in criminal and civil cases), cert. denied, 409 U.S. 1125, 93 S.Ct. 939, 35 L.Ed.2d 257 (1973); Zerilli v. Smith, 656 F.2d 705, 711-12 (D.C.Cir.1981) (same).

Lacking persuasive direction in the case law, we turn to general principles.

"For more than three centuries it has now been recognized as a fundamental maxim that the public (in the words sanctioned by Lord Hardwicke) has a right to every man's evidence. When we come to examine the various claims of exemption, we start with the primary assumption that there is a general duty to give what testimony one is capable of giving, and that any exemptions which may exist are distinctly exceptional, being so many derogations from a positive general rule."

United States v. Bryan, 339 U.S. 323, 331, 70 S.Ct. 724, 730, 94 L.Ed. 884 (1950) (quoting 8 J. Wigmore, Evidence § 2192 (3d ed. 1940)). Privileges, as exceptions to the general rule, "are not lightly created nor expansively construed, for they are in derogation of the search for truth." Nixon, 418 U.S. at 710, 94 S.Ct. at 3108. It is appropriate to recognize a privilege " 'only to the very limited extent that permitting a refusal to testify or excluding relevant evidence has a public good transcending the normally predominant principle of utilizing all rational means for ascertaining truth.' " Trammel v. United States, 445 U.S. 40, 50, 100 S.Ct. 906, 912, 63 L.Ed.2d 186 (1980) (quoting Elkins v. United States, 364 U.S. 206, 234, 80 S.Ct. 1437, 1454, 4 L.Ed.2d 1669 (1960) (Frankfurter, J., dissenting)).

Federal common law recognizes a privilege only in rare situations. See, e.g., Jaffee v. Redmond, --- U.S. ----, ----, 116 S.Ct. 1923, 1931, 135 L.Ed.2d 337 (1996) (adopting psychotherapist-patient privilege); University of Pa. v. EEOC, 493 U.S. 182, 189, 110 S.Ct. 577, 582, 107 L.Ed.2d 571 (1990) (rejecting academic peer review privilege); United States v. Arthur Young & Co., 465 U.S. 805, 817, 104 S.Ct. 1495, 1502-03, 79 L.Ed.2d 826 (1984) (rejecting work product immunity for accountants); Upjohn, 449 U.S. at 390, 397, 101 S.Ct. at 683, 686 (assuming, and effectively deciding, that corporation may assert attorney-client privilege); United States v. Gillock, 445 U.S. 360, 373, 100 S.Ct. 1185, 1193-94, 63 L.Ed.2d 454 (1980) (rejecting speech-or-debate privilege for state legislators); Trammel, 445 U.S. at 51-53, 100 S.Ct. at 912-14 (rejecting privilege against adverse spousal testimony, but continuing to recognize privilege for confidential marital communications); Nixon, 418 U.S. at 705-13, 94 S.Ct. at 3106-10 (recognizing qualified executive privilege); Couch v. United States, 409 U.S. 322, 335, 93 S.Ct. 611, 619, 34 L.Ed.2d 548 (1973) (rejecting accountant-client privilege); Branzburg v. Hayes, 408 U.S. 665, 690-91, 92 S.Ct. 2646, 2661, 33 L.Ed.2d 626 (1972) (rejecting news reporter's privilege);8 In re Grand Jury (Virgin Islands), 103 F.3d 1140, 1146-47 (3d Cir.1997) (rejecting, like eight other circuits, parent-child privilege); Petersen v. Douglas County Bank & Trust Co., 967 F.2d 1186, 1188 (8th Cir.1992) (rejecting insurer-insured confidentiality privilege); United States v. Holmes, 594 F.2d 1167, 1171 (8th Cir.) (rejecting probation officer-parolee privilege), cert. denied, 444 U.S. 873, 100 S.Ct. 154, 62 L.Ed.2d 100 (1979).

The White House does not dispute that a grand jury has broad investigatory powers.9 As the Supreme Court has recognized, the principle that the public is entitled to "every man's evidence" is "particularly applicable to grand jury proceedings." Branzburg, 408 U.S. at 688, 92 S.Ct. at 2660. "[O]ur historic commitment to the rule of law," and particularly to the twin goals of criminal justice " 'that guilt shall not escape or innocence suffer,' " are strong factors weighing against the applicability of a privilege. Nixon, 418 U.S. at 708-09, 94 S.Ct. at 3108 (citation omitted).

In essence, the parties' arguments center on two cases, neither of which is directly analogous to this case, but each of which has relevance to our decision: Nixon and Upjohn. In Nixon, a special prosecutor directed a subpoena duces tecum to President Nixon, seeking tapes and other materials for use in the criminal trial of seven defendants, including former White House officials. The President refused to comply with the subpoena, claiming executive privilege. After concluding that the special prosecutor had made the showing required by Federal Rule of Criminal Procedure 17(c) for a trial subpoena, see id. at 700, 94 S.Ct. at 3103-04, the Supreme Court considered the President's claim of privilege. The Court recognized that the need for confidential presidential communication "can be said to derive from the supremacy of each branch within its own assigned area of constitutional duties," id. at 705, 94 S.Ct. at 3106, and that the privilege for presidential communications "is fundamental to the operation of Government and inextricably rooted in the separation of powers under the Constitution," id. at 708, 94 S.Ct. at 3107. Despite the strong constitutional foundations of the privilege, however, the Court concluded that it had to give way to the special prosecutor's subpoena:

A President's acknowledged need for confidentiality in the communications of his office is general in nature, whereas the constitutional need for production of relevant evidence in a criminal proceeding is specific and central to the fair adjudication of a particular criminal case in the administration of justice. Without access to specific facts a criminal prosecution may be totally frustrated. The President's broad interest in confidentiality of communications will not be vitiated by disclosure of a limited number of conversations preliminarily shown to have some bearing on the pending criminal cases.

Id. at 712-13, 94 S.Ct. at 3110.

The OIC argues that under the logic of Nixon, the White House's claim of privilege must give way here, for if the governmental attorney-client privilege exists at all, it is certainly not constitutionally based. It is true, as the White House responds, that the President did not assert an attorney-client privilege in Nixon, and so the case is not directly controlling. We agree with the OIC, however, that Nixon is indicative of the general principle that the government's need for confidentiality may be subordinated to the needs of the government's own criminal justice processes.

The White House counters by pointing out that Nixon itself recognized the importance of common-law privileges, including the attorney-client privilege. See id. at 709-10, 94 S.Ct. at 3108-09. No one, the White House argues, would suppose that the special prosecutor could compel the production of notes made by a private lawyer concerning a conversation with a private client about even the most routine traffic ticket. Why then, the argument continues, should the benefit of this important privilege not be available to the White House?

Our discussion of the White House's primary argument, revolving around Upjohn, should demonstrate why we believe the private-attorney analogy is inapposite. The White House proffers Upjohn as emblematic of the wide sweep of the attorney-client privilege, and we agree with that characterization, to a point. In Upjohn, the IRS attempted to subpoena records of an internal investigation conducted by Upjohn's general counsel. The court of appeals rejected Upjohn's claim of privilege to the extent that the communications at issue involved lower-level employees outside the so-called "control group." The Supreme Court rejected the "control group" test as unnecessarily restrictive, recognizing that if the attorney-client privilege is to have any value, it must encompass communications between attorneys and lower-level employees possessing relevant information:

In the case of the individual client the provider of information and the person who acts on the lawyer's advice are one and the same. In the corporate context, however, it will frequently be employees beyond the control group as defined by the court below--'officers and agents ... responsible for directing [the company's] actions in response to legal advice'--who will possess the information needed by the corporation's lawyers. Middle-level--and indeed lower-level--employees can, by actions within the scope of their employment, embroil the corporation in serious legal difficulties, and it is only natural that these employees would have the relevant information needed by corporate counsel if he is adequately to advise the client with respect to such actual or potential difficulties.

Upjohn, 449 U.S. at 391, 101 S.Ct. at 683 (alterations by Supreme Court). The Court did not specify the precise extent of the privilege but specifically rejected the "control group" test. Id. at 396-97, 101 S.Ct. at 686.

As the White House points out, Upjohn contains strong language about the importance of the attorney-client privilege in encouraging the full and frank presentation of legal advice to corporations, which helps to insure that corporations will act within the law. See id. at 389, 392, 101 S.Ct. at 682, 684. And the Court recognized that "if the purpose of the attorney-client privilege is to be served, the attorney and client must be able to predict with some degree of certainty whether particular discussions will be protected." Id. at 393, 101 S.Ct. at 684. Nevertheless, we believe that important differences between the government and nongovernmental organizations such as business corporations weigh against the application of the principles of Upjohn in this case. First, the actions of White House personnel, whatever their capacity, cannot expose the White House as an entity to criminal liability. (No one suggests that any of the conduct under investigation by the OIC could expose the White House to civil liability.) A corporation, in contrast, may be subject to both civil and criminal liability for the actions of its agents, and corporate attorneys therefore have a compelling interest in ferreting out any misconduct by employees. The White House simply has no such interest with respect to the actions of Mrs. Clinton.

We also find it significant that executive branch employees, including attorneys, are under a statutory duty to report criminal wrongdoing by other employees to the Attorney General. See 28 U.S.C. § 535(b) (1994). Even more importantly, however, the general duty of public service calls upon government employees and agencies to favor disclosure over concealment. The difference between the public interest and the private interest is perhaps, by itself, reason enough to find Upjohn unpersuasive in this case. The importance of the public interest in questions of disclosure versus privilege is not unique to this case, for it was a key reason the Supreme Court rejected the concept of work product immunity for accountants:

By certifying the public reports that collectively depict a corporation's financial status, the independent auditor assumes a public responsibility transcending any employment relationship with the client. The independent public accountant performing this special function owes ultimate allegiance to the corporation's creditors and stockholders, as well as to the investing public. This 'public watchdog' function demands that the accountant maintain total independence from the client at all times and requires complete fidelity to the public trust. To insulate from disclosure a certified public accountant's interpretations of the client's financial statements would be to ignore the significance of the accountant's role as a disinterested analyst charged with public obligations.

Arthur Young,