In Re: Grand Jury

Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit

3-13-1998

In Re: Grand Jury
Precedential or Non-Precedential:

Docket 97-7347

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Filed March 13, 1998

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 97-7347

IN RE: GRAND JURY (IMPOUNDED)

On Appeal from the United States District Court
for the District of Delaware
(D.C. Misc. No. 97-00020)

Argued February 11, 1998

BEFORE: GREENBERG, NYGAARD, and MCKEE,
Circuit Judges

(Filed: March 13, 1998)

Charles M. Oberly, III (argued)
Oberly, Jennings & Drexler, P.A.
800 Delaware Avenue, Suite 901
P.O. Box 2054
Wilmington, DE 19899
Attorneys for Appellant

Gregory M. Sleet, United States
Attorney
Colm F. Connolly (argued),
Assistant United States Attorney
Chase Manhattan Centre
1201 Market Street, Suite 1100
P.O. Box 2046
Wilmington, DE 19899-2046
Attorneys for Appellee
OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. JURISDICTION

Thomas J. Capano appeals from an order entered in the
district court on June 27, 1997, holding that he waived the
attorney work product privilege with respect to certain
documents he created which the United States seized from
a third party pursuant to a subpoena.1 The district court
had jurisdiction under 18 U.S.C. S 3231, and we have
jurisdiction to review the order of the district court
pursuant to 28 U.S.C. S 1291. Cf. In re Grand Jury, 111
F.3d 1066, 1073-77 (3d Cir. 1997) (holding that a denial of
an order to quash a subpoena not directed to a movant was
a final order if the movant had no further opportunity to
challenge the subpoena).

II. FACTUAL AND PROCEDURAL HISTORY

In July 1996, the Federal Bureau of Investigation ("FBI")
and a federal grand jury in Delaware began a kidnaping
investigation into the disappearance of Anne Marie Fahey,
who last was seen alive on June 27, 1996. Capano became
the major target of these investigations. At the time of
Fahey's disappearance, Capano, who is an attorney, was a
partner in the Wilmington office of the Saul, Ewing, Remick
& Saul law firm ("Saul Ewing"), a position he held until his
resignation on May 31, 1997.

On June 30, 1996, Capano retained attorneys after police
officers notified him that they considered him a suspect in
Fahey's disappearance. One of Capano's attorneys, Charles
M. Oberly, III, directed him to prepare "a time-line of
everything he could remember concerning his whereabouts
_________________________________________________________________

1. While the proceedings on this appeal originally were sealed, the
district court on December 2, 1997, unsealed itsfile in this case.
Accordingly, in response to our inquiry at oral argument, the parties
agreed that we need not use ficticious names in our opinion.

2
on June 27, 1996 and immediately thereafter," and to
"write down his thoughts and notes, as he remembered
them, of anything he could recall about his relationship
with Ms. Fahey." App. at 42. Following his attorney's
instructions, Capano created a time-line and wrote down
other notes regarding his relationship with Fahey and
placed them in a legal file.

Capano then put the file on a bookshelf in the office
adjacent to his own office at Saul Ewing occupied by of one
of his law partners, Timothy A. Frey, because he was
concerned that there could be an unauthorized search of
his own office leading to an unauthorized seizure of the file.
Initially Frey was unaware that Capano placed thefile in
his office; however, in August or September of 1996,
Capano informed Frey about the location of the file. Within
the next month, Frey found the file in his office, read it,
and returned it to its prior location on his bookshelf.

The file remained in Frey's office until the United States
seized it on November 4, 1996. On that day, Assistant
United States Attorney Colm F. Connolly telephoned Frey to
inform him that an FBI agent would serve him with a grand
jury subpoena for Capano's file. Frey then re-examined the
file and determined that it was the same file he had
examined previously. Connolly also telephoned the
chairman of Saul Ewing, J. Clayton Undercofler, to notify
him about the subpoena. Undercofler expressed a concern
that the production of the file might reveal information
relating to the law firm's representation of its clients.
Connolly and Undercofler then agreed that thefile would be
produced under seal, and that the law firm would have an
opportunity to screen the file for any confidential
information.

After these phone calls, FBI Special Agent Kevin Shannon
arrived at Frey's office and served the subpoena. The file
was placed in an envelope, sealed, and delivered to
Assistant United States Attorney Patricia Hannigan, who
had been "walled off " from the investigation to avoid any
possibility of taint. On November 5, 1996, Hannigan met
with Undercofler and Saul Ewing's executive partner,
Frederick D. Strober. After unsealing the envelope, the two
attorneys from Saul Ewing examined the file and

3
determined that it did not contain any information relating
to the law firm's representation of its clients. Hannigan
then examined the file and determined that nothing in it
arguably was privileged or protected. She then made a copy
of the file which she gave to Connolly. She, however,
retained the original file.

Although the parties dispute exactly when Capano
learned of the seizure, they agree that Capano and his
attorneys did not know that the government intended to
seize the file prior to the service of the subpoena and that
they were informed of the seizure only after it had occurred.
Capano asserts that his attorney first learned of the
disclosure on November 6, 1996, two days after the seizure.
See br. at 27. In any event, on November 12, 1996, one of
Capano's attorneys, Bartholomew J. Dalton, sent a letter to
the United States Attorney advising the government that
the file contained privileged information. The United States,
through Connolly, responded on November 26, 1996, by
telephone and informed Dalton that the United States did
not believe that the attorney-client privilege or the attorney
work product doctrine protected the materials contained in
the file. Connolly told him to "take the issue up with the
Court." App. at 138.

On at least two occasions between December 30, 1996,
and February 1997, Connolly also had telephone
discussions with Oberly regarding the applicability of the
attorney work product and the attorney-client privileges to
the seized documents. In a second letter to the United
States dated January 22, 1997, Oberly requested that the
government either return the documents in the file or send
him a letter stating its opposition to the assertion of the
privileges. In response, Connolly formally denied the
production request in a letter dated February 25, 1997,
contending that the documents were not privileged and
that, in any event, Capano waived any privilege when he
placed them in Frey's office. Finally, on March 14, 1997,
Capano, citing both the attorney-client and the attorney
work product privileges, filed a motion in the district court
seeking an order compelling the government to return the
file.

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In a memorandum opinion dated June 27, 1997, the
district court denied Capano's motion. While the district
court held that the attorney-client privilege did not offer
any protection to the file, it nevertheless held that the file
was attorney work product, because Capano acted as his
attorney's agent in creating the file in preparation of
litigation. However, the district court determined that
Capano waived this work product protection based on both
disclosure and timeliness grounds. In particular, because
Capano had revealed the presence of the file to Frey and
had stored it in Frey's unlocked and easily accessible office,
the district court held that Capano disregarded the risk
that an adversary might obtain the file, and thus had
waived the work product privilege. Alternatively, the district
court held that Capano waived the work product privilege
by waiting nearly four months to file a motion to compel the
return of the seized materials. Finally, the district court
noted in a footnote in its opinion that even if Capano did
not waive the attorney work product protection of the file,
the United States had demonstrated sufficient cause to
overcome that protection.

Capano filed a timely appeal to this court on July 7,
1997. Neither party has challenged the district court's
holdings regarding the applicability of the attorney-client or
the attorney work product privileges; therefore, we accept
its determination that the seized file was attorney work
product, but was not protected by the attorney-client
privilege. Because we will affirm the district court's holding
that Capano waived his attorney work product privilege
with regard to the seized file based on his delay in seeking
a judicial determination, we do not determine whether
Capano waived the privilege by disclosing the documents.
Nor do we decide whether the United States demonstrated
sufficient cause to overcome the work product protection.

III. WAIVER OF THE WORK PRODUCT PROTECTION

In examining the district court's holding that Capano
waived his work product privilege, we use an abuse of
discretion standard of review. Cf. Livingstone v. North Belle
Vernon Borough, 91 F.3d 515, 524 (3d Cir. 1996), cert.

5
denied, 117 S.Ct. 1311 (1997) (using an abuse of discretion
standard to review a waiver of an attorney-client privilege).2

The work-product doctrine, first recognized by the
Supreme Court in Hickman v. Taylor, 329 U.S. 495, 67
S.Ct. 385 (1947), "shelters the mental processes of the
attorney, providing a privileged area within which he can
analyze and prepare his client's case." United States v.
Nobles, 422 U.S. 225, 238, 95 S.Ct. 2160, 2170 (1975). The
privilege thus promotes the adversarial system by
protecting the confidential nature of materials prepared by
attorneys in anticipation of litigation and "enabl[es]
attorneys to prepare cases without fear that their work
product will be used against their clients." Westinghouse
Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414,
1428 (3d Cir. 1991). This protection also can extend to
materials prepared by an attorney's agent, if that agent acts
at the attorney's direction in creating such documents. See
Nobles, 422 U.S. at 238-39, 95 S.Ct. at 2170.

The attorney work product privilege, however, is not
absolute, and it may be waived. See id. at 239, 95 S.Ct. at
2170. Thus, we have held that a party may waive the
attorney work product privilege by disclosing protected
documents in certain circumstances. See Westinghouse,
951 F.2d at 1428-29. It has been held that a disclosure
sufficient to waive the work product protection does not
have to be intentional; therefore inadvertent or
unintentional disclosures of protected materials also might
result in the waiver of the privilege. See, e.g., Carter v.
Gibbs, 909 F.2d 1450, 1451 (Fed. Cir. 1990). However,
such a disclosure does not automatically forfeit the
attorney work product privilege. In determining whether a
party has waived the privilege through an inadvertent or
involuntary disclosure, courts consider, among other
_________________________________________________________________

2. Capano argues in his brief that we should exercise plenary review. Br.
at 18-19. We disagree but observe that even exercising plenary review we
would reach the same result. While we will assume without deciding that
in some circumstances we would exercise plenary review to determine if
the work product privilege had been waived, we think that it is
appropriate to use an abuse of discretion standard here because the
weighing of various considerations leads us to affirm the district court's
order.

6
factors, the steps taken by a party to remedy the disclosure
and any delay in doing so. See, e.g., United States v.
Keystone Sanitation Co., 885 F. Supp. 672, 676 (M.D. Pa.
1994); cf. United States v. de la Jara, 973 F.2d 746, 749-50
(9th Cir. 1992) (holding that a defendant waived his
attorney-client privilege with regards to a seized letter
because he waited six months after the seizure to assert his
privilege). But see Carter, 909 F.2d at 1451 (holding that
even an inadvertent disclosure automatically waives the
attorney work product privilege, because to do otherwise
"would do no more than seal the bag from which the cat
has already escaped."). Thus, in the case of inadvertent or
involuntary disclosures, the party asserting the work
product doctrine must pursue all reasonable means to
restore the confidentiality of the materials and to prevent
further disclosures within a reasonable period to continue
to receive the protection of the privilege.

It is undisputed that neither Capano nor his attorneys
knew of the subpoena until after it had been issued and the
file had been seized. Consequently, Capano had no
opportunity to challenge the involuntary disclosure of the
file by seeking to quash the subpoena; instead, his only
remedy was to assert the attorney work product privilege
after the United States took possession of the file. Capano
clearly made a timely assertion of the attorney work
product privilege to the government; his attorney mailed a
letter asserting the privilege to the United States within
eight days after the seizure. However, as of November 26,
1996, Capano and his attorneys were on notice that the
United States disagreed with the assertion of the privilege
and would not relinquish the file voluntarily. In spite of this
knowledge, Capano waited until March 14, 1997, tofile a
motion to compel the return of the seized file. Thus, the
determinative issue on this appeal is whether Capano's
initial assertion of the privilege to the United States
sufficiently protected his rights or whether his failure to
seek a judicial ruling on the issue more promptly waived
the privilege.

We hold that the district court did not abuse its
discretion determining that even though Capano timely
notified the United States of his claim of the privilege and

7
continued to assert it in subsequent communications, these
assertions were insufficient to protect his rights. The United
States was a direct adversary of Capano, and its continued
use of the documents directly undermined the purpose of
the attorney work product privilege of protecting
confidential documents prepared in anticipation of litigation
from a party's adversary. Capano's repeated admonitions to
his adversary to return the protected documents did not
prevent the continuing harm resulting from the disclosure.
Judicial enforcement of the privilege was the only remedy
that Capano could have obtained which would have
foreclosed the United States from further use of the seized
file. Without such judicial vindication, the United States
was free to continue to utilize the documents, thereby
negating their confidential character.

In the case of such an involuntary disclosure, a
reasonable person would not only inform his or her
adversary of the breach of the privilege, but also would seek
a judicial determination of the controversy if his or her
adversary took an opposing stance. Merely asserting the
privilege to an adversary is not sufficient to protect the
privilege in these circumstances inasmuch as the adversary
has possession of the materials claimed to be privileged and
thus can make use of them. Moreover, if the district court
countenanced Capano's delay in judicially asserting his
privilege and then upheld his claim of privilege, the grand
jury's use of the seized file potentially could have tainted its
investigation.3

In short, when a party's adversary has obtained
possession of a party's work product and refuses to
recognize the work product privilege, the party asserting the
privilege must move expeditiously for relief particularly
_________________________________________________________________

3. In his brief Capano asserts that during the four months before he
served his motion, the government had possession of the disputed
documents and "is believed to have used these documents in the grand
jury proceedings." Br. at 29. He reasons from this belief that there "was
no prejudice to the Government as a result of the four-month period
between [his] initial assertion of the . . . work product privilege[ ]"
and
the filing of his motion. Id. While the grand jury in fact did not indict
Capano, clearly his argument overlooks the taint problem we have
identified.

8
where, as here, the party asserting the privilege does not
even claim that he had reason to believe that the
adversarial party was not making use of the work product.
Indeed, in his brief Capano asserts that in "this entire
period," i.e., between November 12, 1996, and March 14,
1997, when he filed his motion, the govenment "used these
documents to further its grand jury investigation." Br. at
15-16. While we cannot set an exact time within which
such a motion must be made, we hold that the district
court did not abuse its discretion in holding that Capano
waived the privilege as we are satisfied that Capano acted
unreasonably in waiting nearly four months to seek a
judicial vindication of his assertion of the privilege.

Capano contends that SEC v. Lavin, 111 F.3d 921 (D.C.
Cir. 1997), supports his position that his assertion of the
privilege to the United States sufficiently protected his
rights. In Lavin, the Securities and Exchange Commission
("SEC") sought to obtain copies of tape recordings of
conversations between a husband and a wife. These
recordings were made by and were in the possession of the
husband's employer, Bankers Trust Company ("Bankers
Trust"). See id. at 924. Initially, Bankers Trust had
submitted these tapes to the Federal Reserve Board
("Board") as part of a production request pursuant to the
Board's examination powers. When Bankers Trust notified
Lavin, the husband, that it had relinquished the tapes to
the Board, he immediately asserted his marital
communications privilege and requested that Bankers Trust
assert it on his behalf to the Board. Bankers Trust and
Lavin subsequently entered into an agreement whereby
Bankers Trust would give him the opportunity to challenge
any further requests seeking the release of the tapes.
However, Lavin did not institute any legal proceedings
against Bankers Trust to obtain the tapes. Subsequently,
the SEC sought the disclosure of the tapes, and Lavin
asserted his marital communications privilege.

In considering whether the privilege had been waived, the
Court of Appeals for the District of Columbia Circuit held
that Lavin had no obligation to initiate any legal
proceedings against Bankers Trust to protect the
conversations "absent a concrete threat of further

9
disclosure." Id. at 931. There was no such threat in Lavin's
case, because Bankers Trust continued to abide by its
agreement. In fact, Lavin had intervened successfully in an
unrelated civil suit to assert his marital communications
privilege with respect to the tapes. See id. at 924-25, 931.
The court also noted that "taking reasonable precautions to
preserve the confidentiality of privileged materials does not
require gaining physical possession in cases such as this
where . . . attempts to gain such possession would have
been futile because the tapes were not the property of
[Lavin]." Id. at 932. Thus, Capano argues that like Lavin, he
should not have been forced to seek an immediate judicial
determination regarding the return of his file, because the
disclosure already had occurred and no threat of future
disclosures existed.

Aside from the obvious differences in the privileges at
issue and the purposes behind them, the facts of Lavin
differ substantially from the present case. In Lavin, Lavin
took active measures to assure that no one beyond the
owner of the recordings, Bankers Trust, had access to
them. More importantly, Lavin took legal action against any
potential adversary that sought to obtain the recordings,
and the entity in possession of the tapes, Bankers Trust,
was not such an adversary. Capano was in a more difficult
position than Lavin, because the privilege already had been
breached by the seizure, and his adversary already had
access to the documents. Thus, unlike Lavin, Capano was
harmed immediately by the initial disclosure as it was to
his direct adversary and not to a third party. Repeated
communications by Capano asserting the privilege to his
adversary were insufficient to prevent further harm; only
timely intervention by a court could accomplish that
objective.

Therefore, we reiterate that the district court did not
abuse its discretion in determining that Capano waived his
attorney work product privilege with regard to the seized
documents by failing to file a timely motion to compel their
return. Within a few weeks after the seizure of thefile,
Capano was on notice both of the seizure and of the
government's unwillingness to recognize his attorney work
product privilege with regard to the seized file. Yet, he

10
waited nearly four months to seek a judicial vindication of
his claim of privilege. This delay is inconsistent with the
purpose behind the attorney work product privilege, and
thus the district court did not abuse its discretion in
determining that Capano's delay waived the privilege.

In view of the aforesaid, we will affirm the order of June
27, 1997.

11
McKEE, Circuit Judge, concurring.

I concur with the holding of the majority. I write
separately for two reasons. First, I think that we should
reject the assertion that the government has established
"good cause" to overcome the protection of the privilege.
Second, I write because I believe that my colleagues'
apparent concern for eliminating any taint from this
ongoing investigation is misplaced.

I.

The government argues that "[its] need for the file results
from [Capano's] refusal to testify before the grand jury and
speak with investigators. The Government attempted to
secure [Capano's] testimony, but its efforts failed."
Appellant's Br. at 23. This amounts to nothing more than
an assertion that failure to waive the privilege against self-
incrimination under the Fifth Amendment gives the
government the right to obtain information that would
otherwise be protected as work product because it allows
the government to establish the "good cause" needed to
defeat that privilege. Surely, one need not waive the
protections embedded in the Fifth Amendment in order to
preserve a work product privilege.

We have historically been quite reluctant to find the good
cause needed to overcome the protections of the work
product doctrine. See In re Grand Jury, 633 F.2d 282 (3d
Cir. 1980); United States v. Armerada Hess Corp., 619 F.2d
980 (3d Cir. 1985); and In re Grand Jury Investigation, 599
F.2d 1224 (3d Cir. 1979). We should not be reluctant to
reject the government's claim of "good cause" insofar as it
is based upon the argument that assertion of a
constitutional right defeats the work product privilege.

II.

My colleagues note that "if the district court
countenanced Capano's delay in judicially asserting his
privilege and then upheld his claim of privilege, the grand
jury's use of the seized file potentially could have tainted its
investigation." Maj. Op. at 8. This may well be true, but is

12
irrelevant. The government risked tainting the investigation
when it decided to proceed in the manner that it did. The
circumstances here are unique. There is no reason that has
been pointed out to this court why the government could
not have sought to have Saul Ewing secure the Capano file,
and then notified Capano of the government's intent to
subpoena it. The district court could then have decided the
motion to quash that Capano would most certainly have
filed, and there would have been no possibility of taint prior
to an adjudication of the privilege. The government was
obviously aware of the problems it was creating by seizing
the documents and setting up a "Chinese wall" in an
attempt to insulate them. Because the Government chose
that tactic, we ought not to allow a concern for any taint
that the seizure may have created to affect our analysis of
the claim of privilege. "The ultimate aim [of the work
product privilege doctrine] is to promote the proper
administration of justice." In re Grand Jury Proceedings,
604 F.2d 798, 802 (3d. Cir. 1979). That objective is not well
served if we allow a possible taint that the government itself
created to influence our inquiry.1

A True Copy:
Teste:

Clerk of the United States Court of Appeals
for the Third Circuit
_________________________________________________________________

1. There is no suggestion that Capano deliberately delayed filing a motion
to secure an advantage. Where a defendant or target does that, I agree
that consideration of taint may be appropriate.

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