United States v. Leg Svc NY

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 10, 2001 Decided May 25, 2001

No. 00-5244

United States of America and Leonard Koczur,
Acting Inspector General of the
Legal Services Corporation,
Appellees

v.

Legal Services for New York City,
Appellant

Appeal from the United States District Court
for the District of Columbia
(00ms0241)

Carl W. Riehl argued the cause for appellant. With him on
the briefs was John S. Kiernan.

Michael S. Raab, Attorney, United States Department of
Justice, argued the cause for appellees. With him on the

brief were Wilma A. Lewis, United States Attorney at the
time the brief was filed, and Mark B. Stern, Attorney.

Laura K. Abel, David S. Udell, and Philip G. Gallagher
were on the brief for amici curiae New York State Bar
Association, et al., in support of appellant.

Before: Ginsburg and Henderson, Circuit Judges, and
Silberman, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge
Silberman.

Silberman, Senior Circuit Judge: The Inspector General of
the Legal Services Corporation petitioned for summary en-
forcement of a subpoena to appellant Legal Services of New
York City. The district court granted the petition, and
appellant now seeks review. We affirm.

I.

Appellant provides legal services to the poor. Each year,
it and other grantees receive multi-million-dollar federal
grants administered through the non-profit Legal Services
Corporation. In a series of audits beginning in 1998, the
Corporation's Inspector General discovered improprieties in
some grantees' reports to the Corporation--most commonly,
overstatement of the number of cases handled and failure to
keep adequate records. That led the General Accounting
Office to audit five grantees, including appellant, and it
concluded that of the 221,000 cases reported by these grant-
ees, "approximately 75,000 ... were questionable." Express-
ing "concerns" about the inaccuracies in grantees' reports, a
Congressional committee requested that the Inspector Gener-
al "assess the case service information provided by the grant-
ees" and "report ... no later than July 30, 2000, as to its ac-
curacy."1

The Inspector General then required 30 grantees, including
appellant, to produce for inspection two different sets of data
on the cases they had reported closed during 1999. The first

__________
1 H.R. Conf. Rep. No. 106-479 (1999).

production, or "data call," required that for each case, identi-
fied only by case number, the grantee must select one of 52
"problem codes" to describe the subject matter of the repre-
sentation. The problem codes vary from the specific--"Pa-
rental Rights Termination," "Black Lung"--to the general--
"Education," "Contracts/Warranties"--and the catch-all--
"Other Individual Rights," "Other Miscellaneous." Appellant
complied with the first data call.

The second data call required that for each case, again
identified only by case number, grantees identify their client.
Appellant, along with one other grantee, refused to comply.
It informed the Inspector General that, absent client consent,
both attorney-client privilege and its attorneys' professional
obligations prevented it from disclosing client names associat-
ed with case numbers, because to do so would allow the
Inspector General to match client names with the problem
codes previously produced. That linkage, appellant argued,
would impermissibly reveal the subject matter of clients'
representations. Though the Inspector General disagreed
that production was barred, he nevertheless proposed to set
up a so-called "Chinese wall"--separate staffs, equipment,
storage, etc.--to prevent any linkage. The Inspector General
then issued subpoenas for the data. Appellant refused to
comply, and the Inspector General petitioned the district
court for summary enforcement.

The district court granted the petition. It rejected appel-
lant's blanket claim of attorney-client privilege as insufficient
to demonstrate privilege regarding any given record. The
court also turned aside appellant's claim based on profes-
sional obligations, holding that the subpoenas were within
the Inspector General's statutory powers. Appellant had
contended that the subpoenas were in addition unduly bur-
densome because the same verification could be performed
without the damage this disclosure might cause to clients'
perceptions of confidentiality, but the court deferred to the
Inspector General as to requirements of the audit.2 Appel-
lant renews its arguments here.

__________
2 See United States v. Legal Services, 100 F. Supp. 2d 42
(D.D.C. 2000).

 II.

The Inspector General contends, and the district court
agreed, that appellant has not made out a valid claim of
privilege. In rejecting appellant's unparticularized assertion
of attorney-client privilege, the court stated that its ruling
was "not intended to foreclose specific claims of privilege as
to individual clients." 100 F. Supp. 2d at 46. In other words,
as to some matters, appellant might be able to introduce
contextual information demonstrating that the representa-
tion's subject matter is itself confidential. In its reply brief,
appellant expressly reserves the right to present particular-
ized privilege claims to the district court in the event that we
reject its unparticularized claim. This possibility led us to
question our jurisdiction. Appellant asserts that it lies under
28 U.S.C. s 1291, which authorizes review of district courts'
"final decisions," or in the alternative under 28 U.S.C.
s 1292(a)(1), which provides for interlocutory appeals from
district court orders regarding injunctions.

We find no authority for treating an order enforcing a
subpoena as an injunction appealable under s 1292(a)(1).
Courts have consistently held that grand jury and civil sub-
poenas are not injunctions appealable under that provision.
See, e.g., United States v. Ryan, 402 U.S. 530, 534 (1971).
Review is instead procured by refusing to comply and litigat-
ing the subpoena's validity in the contempt proceeding that
ensues. See id. at 532; Office of Thrift Supervision v. Dobbs,
931 F.2d 956, 957 (D.C. Cir. 1991). Administrative subpoenas
are horses of a slightly different color, since upon noncompli-
ance the issuing agency seeks enforcement in the district
court. See 5 U.S.C. app. 3 s 6(a)(4); Kemp v. Gay, 947 F.2d
1493, 1496 (D.C. Cir. 1991). The ensuing district court order,
either granting or denying enforcement, is appealable under
s 1291 once final. See id. at 1497. In light of that there is
even less reason to regard an administrative subpoena, either
before or after enforcement, as an injunction.

Section 1291, which authorizes appeals of district courts'
final decisions, presents a more viable jurisdictional ground.
As noted, orders enforcing administrative subpoenas are ap-

pealable under s 1291 once final. See FTC v. Invention
Submission Corp., 965 F.2d 1086, 1089 (D.C. Cir. 1992).
Here, however, the district court has indicated its willingness
to entertain particularized claims of privilege. See 100
F. Supp. 2d at 46. So it can be asked why the order is final.
The answer lies in the breadth of appellant's claim. It argues
that the privilege properly understood allows it to refuse to
provide any more justification for invoking the privilege than
it has. It is not obliged to offer a particularized showing in
individual situations. Since this argument is phrased so
broadly, it follows that the district judge's rejection of it is
final even though he offers the possibility of more limited
relief in individual cases. That is so because under appel-
lant's view of the scope of the privilege his order would
encroach on the privilege.

The considerations we employ to evaluate finality are more
practical than technical and do not require that the order
appealed be the last order possible in the matter. See
Gillespie v. United States Steel Corp., 379 U.S. 148, 152
(1964); In re Grand Jury Investigation, 604 F.2d 672, 674
(D.C. Cir. 1979) (per curiam).3 In this case, the matters
potentially remaining to be resolved below are substantively
different than the claims disputed on appeal, would arise if at
all only upon rejection of the appealed claims, and would
require of appellant a potentially onerous effort. In other
words, the potential inefficiencies of a piecemeal appeal do
not outweigh the "danger of hardship and denial of justice
through delay." Dickinson v. Petroleum Conversion Corp.,
338 U.S. 507, 511 (1950). Insofar as appellant contends that
the current record justifies an assertion of privilege without
particularized showings, we have jurisdiction over that claim.

__________
3 See also FTC v. Texaco, Inc., 555 F.2d 862, 873 n.21 (D.C. Cir.
1977) (en banc) (adopting the jurisdictional reasoning of the vacated
panel decision, see FTC v. Texaco, Inc., 517 F.2d 137, 143 n.6 (D.C.
Cir. 1975)). For example, where the district court has ordered a
subpoena's subject either to comply or to produce a privilege log,
we have nonetheless entertained an appeal of claims that would
negate the need for such a decision. See Resolution Trust Corp. v.
Thornton, 41 F.3d 1539, 1541-42 (D.C. Cir. 1994).

 Unfortunately for appellant, although its claim is phrased
broadly enough to provide us jurisdiction, its very breadth is
untenable. Courts have consistently held that the general
subject matters of clients' representations are not privileged.
See, e.g., In re Grand Jury Subpoena, 204 F.3d 516, 520 (4th
Cir. 2000). Nor does the general purpose of a client's repre-
sentation necessarily divulge a confidential professional com-
munication, and therefore that data is not generally privi-
leged. To be sure, there are exceptions, but as always the
burden of demonstrating the applicability of the privilege lies
with those asserting it. See In re Lindsey, 158 F.3d 1263,
1270 (D.C. Cir. 1998) (per curiam); cf. In re Sealed Case, 877
F.2d 976, 979-80 (D.C. Cir. 1989). That burden requires a
showing that the privilege applies to each communication for
which it is asserted, see Lindsey, 158 F.3d at 1270-71, which,
of course, appellant has not done.

* * * *

We turn to appellant's contention that the subpoena con-
flicts with its attorneys' professional obligations and is unduly
burdensome, which the district court flatly rejected. Appel-
lant explains that New York State and American Bar Associa-
tion ethics rules protect both privileged information, dis-
cussed above, and unprivileged information deemed "secret."
See Model Rules of Prof'l Conduct 1.6 cmt. 5 (1999); N.Y.
Code of Prof'l Responsibility DR 4-101(A) (2000). Those
rules preclude attorneys from revealing any information--
privileged or not--relating to the representation of a client
who has not consented to the disclosure, particularly where
that information would be embarrassing or detrimental to the
client. See Model Rule 1.6(a); DR 4-101(B)(1).4

The Legal Services Corporation Act of 1974 authorizes the
Corporation to supervise grantees' compliance with applicable
laws. See 42 U.S.C. s 2996e(b)(1)(A). In doing so, however,

__________
4 Both rules exempt disclosures required by court order. See
Model Rule 1.6 cmt. 20; DR 4-101(C)(2). If the subpoena is within
the Inspector General's power, then disclosure is consistent with
appellant's ethical obligations.

the Corporation generally must respect the professional re-
sponsibilities incumbent on grantees' attorneys:

The Corporation shall not, under any provision of this
subchapter, interfere with any attorney in carrying out
his professional responsibilities to his client as estab-
lished in the Canons of Ethics and the Code of Profes-
sional Responsibility of the American Bar Association
... or abrogate as to attorneys in programs assisted
under this subchapter the authority of a State or other
jurisdiction to enforce the standards of professional re-
sponsibility generally applicable to attorneys in such
jurisdiction. The Corporation shall ensure that activities
under this subchapter are carried out in a manner consis-
tent with attorneys' professional responsibilities.

Id. s 2996e(b)(3). The Inspector General, because he bears
the burden of auditing and investigating grantees, is granted
broad subpoena powers. See 5 U.S.C. app. 3 s 4(a)(1),
6(a)(4). He also enjoys a limited exception to s 2996e(b)(3)'s
restrictions:

Notwithstanding section [42 U.S.C. s 2996e(b)(3)], fi-
nancial records, time records, retainer agreements, client
trust fund and eligibility records, and client names, for
each recipient shall be made available to any auditor or
monitor of the recipient, including any Federal depart-
ment or agency that is auditing or monitoring the activi-
ties of the Corporation or of the recipient, ... except for
reports or records subject to the attorney-client privi-
lege.

Omnibus Appropriations Act of 1996, Pub. L. No. 104-134,
s 509(h), 110 Stat. 1321, 1321-59 (emphasis added).5

The Inspector General contends that s 2996e(b)(3) is not
even applicable because it restricts actions taken under the
Legal Services Corporation Act, while his subpoena authority
arises under the Inspector General Act. We think that

__________
5 Congress has incorporated s 509(h) by reference into subse-
quent appropriations bills. See, e.g., Consolidated Appropriations
Act of 2000, Pub. L. No. 106-113.

argument is far-fetched. The Office of the Inspector General
is an arm of the Corporation that "insure[s] the compliance of
recipients and their employees" with applicable law. 42
U.S.C. s 2996e(b)(1)(A); see 5 U.S.C. app. 3 s 8G(b). Al-
though the Office was created after the Corporation, s 2996e
delineated ethical obligations binding on the entire Corpora-
tion. See generally 42 U.S.C. s 2996e.

Auditing the Legal Service Corporation's grantees poses
ethical concerns not ordinarily presented to a government
auditor. On the specific question of what materials an audi-
tor of the Corporation's grantees may subpoena, s 509(h) is
our only guidance. Unlike the Inspector General Act, it
focuses on the ethical obligations owed by those who audit the
Corporation's grantees. Since s 509(h) explicitly exempts
auditors of the Corporation from s 2996e(b)(3), which applies
only to the Corporation, the necessary implication is that
s 2996e(b)(3) applies to auditors of the Corporation that are
themselves part of the Corporation--that is, to the Inspector
General. We therefore read ss 509(h) and 2996e(b)(3) to
impose obligations on the Inspector General with regard to
both privileged and secret materials.

That is hardly the end of the matter. The restrictions in
s 2996e(b)(3) notwithstanding, s 509(h) explicitly authorizes
auditors of the Corporation to compel production of "time
records, retainer agreements, ... and client names." The
Corporation's own regulations require that retainer agree-
ments "shall clearly identify ... the matter in which repre-
sentation is sought [and] the nature of the legal services to be
provided." 45 C.F.R. s 1611.8(a). Disclosure of retainer
agreements associated with client names would reveal exactly
the sort of information appellant refuses to disclose: the
general matter of individual clients' representations.6

__________
6 The Corporation's regulation on retainer agreements provides
that a grantee "shall make the agreement available for review by
the Corporation in a manner which protects the identity of the
client." 45 C.F.R. s 1611.8(a) (emphasis added). This is consistent
with s 2996e(b)(3)'s protection of client confidences and secrets and
is therefore the general policy of the Corporation. But s 509(h) is

 Appellant suggests that the required disclosures nonethe-
less do not require disclosure of retainer agreements in a way
that matches agreement to client. But appellant's construc-
tion of s 509(h) is unnatural: if Congress had intended to
require production of "time records, retainer agreements, ...
and client names" only when disassociated from one another,
surely it would have said so in terms different from the
simple conjunctive phrasing in s 509(h). We think this is the
only sensible reading of s 509(h) in the context of the Inspec-
tor General's audits of individual representations. Neverthe-
less, appellant claims that the Inspector General lacks au-
thority to compel production of case numbers. Yet unique
identifiers associating clients with their records are part and
parcel of responsible legal practice. They are an integral
constituent part of the very records to which s 509(h) refers.
See, e.g., 45 C.F.R. s 1635.3(b)(2). The lack of an explicit
statutory reference does not protect them from production.
Since we conclude that grantees' ethical obligations do not
prevent the Inspector General from compelling production of
client names associated with problem codes, we need not
reach the sufficiency of the Chinese wall instituted to prevent
that association.

Appellant's last redoubt is the claim that the subpoena is
unduly burdensome. We enforce subpoenas as long as they
are "reasonably relevant" to the agency's purpose and "not
unduly burdensome." Invention Submission Corp., 965 F.2d
at 1089 (internal quotation marks omitted). Appellant es-
chews the usual complaint about administrative burden, see,
e.g., Linde Thompson Langeworthy Kohn & Van Dyke, P.C.
v. Resolution Trust Corp., 5 F.3d 1508, 1517 (D.C. Cir. 1993),
and instead has a novel theory: it objects to the harm that
disclosure of client secrets will do to its ability to assure
clients of the secrecy of their communications. It argues that
it could generate an identifier code that is unique to each

__________
an explicit exception to s 2996e(b)(3), so while the Corporation's
mandate for the contents of retainer agreements informs our analy-
sis, its general regulation regarding protection of client identity
cannot trump a more specific--and contrary--statutory provision.

client but does not reveal his or her identity, and that these
identifiers would serve the Inspector General's purposes just
as well as client names.

Frequently, concerns over burden are related to relevance:
in determining whether a burden is due, courts often examine
its tailoring to the purpose for which the information is
requested--that is, its relevance. See FTC v. Texaco, 555
F.2d 862, 882 (D.C. Cir. 1977) (en banc); Dow Chem. Co. v.
Allen, 672 F.2d 1262, 1269-70 (7th Cir. 1982). Still, appellant
makes both arguments, and we treat burden and relevance
separately because subpoenas might be relevant but still
unduly burdensome. See In re FTC Line of Bus. Report
Litig., 595 F.2d 685, 704 (D.C. Cir. 1978) (per curiam).

Actually, appellant wishes to undertake a greater adminis-
trative burden--production plus creation of unique client
identifiers--in order to lessen the alleged professional detri-
ment created by the subpoena. That "burden" would be
undue if "compliance threatened to unduly disrupt or serious-
ly hinder normal operations." FTC v. Texaco, 555 F.2d at
882. This subpoena does not. As discussed, it is wholly
consistent with the rules governing client secrets and general-
ly consistent with the attorney-client privilege, so it in no way
alters the degree of secrecy appellant can justifiably promise
its clients. The Chinese wall renders unlikely the possibility
that any secrets will be disclosed. Even in that event, the
information disclosed would be only the subject matter of the
representation as stated in broad terms. We cannot say that
the remote possibility of a linkage between client identity and
problem code "unduly disrupts or seriously hinders" appel-
lant's provision of legal services.

To justify its proposed modification, appellant asserts that
actual client names are irrelevant to the Inspector General's
purpose. The Inspector General of course disagrees, and we
defer to his determinations of relevance unless they are
obviously wrong. See Invention Submission Corp., 965 F.2d
at 1089. The Inspector General asserts that "the most
reliable way to detect errors and irregularities in grantee
case reporting [is] to obtain the actual client names them-

selves." He further contends that the proposed unique client
identifiers would require expensive and time-consuming inde-
pendent verification--which would, in any event, probably
reveal the information appellant wishes to conceal. We cer-
tainly cannot say that the Inspector General is obviously
wrong.

* * * *

The district court's order granting the petition for sum-
mary enforcement is affirmed, and the matter is remanded
for possible further proceedings.

So ordered.