FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 07-50100
Plaintiff-Appellee, D.C. No.
v. CR-04-00492-
JAMES L. GRAF, MMM-1
Defendant-Appellant.
OPINION
Appeal from the United States District Court
for the Central District of California
Margaret M. Morrow, District Judge, Presiding
Argued and Submitted
May 5, 2010—Pasadena, California
Filed July 7, 2010
Before: Diarmuid F. O’Scannlain and Richard C. Tallman,
Circuit Judges, and Frederic Block,* District Judge.
Opinion by Judge Tallman
*The Honorable Frederic Block, Senior United States District Judge for
the Eastern District of New York, sitting by designation.
9605
UNITED STATES v. GRAF 9609
COUNSEL
Mark C. Krause (argued), Jill T. Feeney (argued), Michael J.
Raphael, Christine C. Ewell, United States Attorney’s Office,
9610 UNITED STATES v. GRAF
Los Angeles, California; George S. Cardona, Acting United
States Attorney, for plaintiff-appellee United States of Amer-
ica.
Mary F. Gibbons (argued), Toms River, New Jersey; Phillip
A. Treviño, Law Offices of Phillip A. Treviño, Los Angeles,
California, for defendant-appellant James L. Graf.
OPINION
TALLMAN, Circuit Judge:
Once again we examine the complex relationship between
corporate employees and corporate counsel—a delicate issue
that can become particularly problematic when the latter are
called to testify in opposition to the former during a criminal
trial against the corporation’s former officers. Defendant-
Appellant James L. Graf was a founder of, and ostensible con-
sultant to, Employers Mutual LLC (“Employers Mutual”), a
Nevada corporation that purported to provide health care ben-
efits coverage to more than 20,000 plan members. In reality,
the company was part of an elaborate scheme to defraud the
individuals and small businesses who purchased Employers
Mutual health insurance plans.
Graf was indicted for his involvement in the fraudulent
operation of Employers Mutual. The district court held an evi-
dentiary hearing on Graf’s motion in limine to exclude the
attorneys’ testimony and, after evaluating the briefing, written
declarations, and oral testimony presented, issued an order
allowing several attorneys who had represented Employers
Mutual to testify against Graf at his criminal trial. The court
found as fact that the attorneys represented only Employers
Mutual and that Graf had no individual attorney-client rela-
tionship to establish a privilege that would be violated by the
proffered testimony.
UNITED STATES v. GRAF 9611
After the month-and-a-half long jury trial in Los Angeles,
Graf moved for a judgment of acquittal pursuant to Federal
Rule of Criminal Procedure (“Rule”) 29 challenging the ten
counts charging misappropriation in connection with a health
care benefit program in violation of 18 U.S.C. § 669. The dis-
trict court reserved ruling on the motion until after the jury
returned its verdict. The jury found Graf guilty of conspiracy,
mail fraud, misappropriation, conducting unlawful monetary
transactions, and obstruction of justice. The district court then
denied Graf’s Rule 29 motion and sentenced Graf to 300
months’ imprisonment, with three years of supervised release,
ordered a $2,300 special assessment, and imposed restitution
of $20,458,419.47.
Graf now appeals his convictions. We have jurisdiction
under 28 U.S.C. § 1291, and we affirm.
I
A
In the fall of 2000, Graf, William Kokott, and Graf’s then-
girlfriend, Kari Hanson,1 formed Employers Mutual and six-
teen related trade associations (the “Trade Associations”).
Although the companies were organized under the laws of
Nevada, Kokott, Graf, and Hanson all lived in California, and
Graf originally operated Employers Mutual out of his home
in Canyon Lake, California. Kokott filed all of the paperwork
to incorporate the various entities; Graf was not listed as an
employee, officer, or director of any of the companies. This
is likely because Graf had previously been banned from insur-
1
The grand jury that indicted Graf also indicted Kokott and Hanson.
Because Kokott is now deceased, all charges against him have been dis-
missed. Hanson pled guilty, cooperated with the government investigation
of Employers Mutual, and testified against Graf at his trial.
9612 UNITED STATES v. GRAF
ance work in the state of California for misconduct in viola-
tion of state insurance laws.2
Evidence at trial nonetheless showed Graf was heavily
involved in all facets of the corporation’s operations. Between
fall 2000 and December 2001 Graf, Kokott, and Hanson sold
health care coverage to more than 20,000 people who joined
health care benefit plans that Employers Mutual offered to
members of the Trade Associations (the “Plans”). The Plans
were designed as multiple employer welfare arrangements
(“MEWAs”), which allow small businesses to band together
to purchase health insurance for their employees at lower
rates than the businesses could arrange individually.3 See 29
U.S.C. § 1002(40). According to promotional materials pre-
pared by Graf, customers who joined the Trade Associations,
which were loosely based around a number of industries,
could obtain low-cost medical benefits through the Associa-
tion’s health benefits plan.4
2
On October 19, 1998, the California Insurance Commissioner ordered
Graf and his company, Prime Care Health Network, Inc., to cease and
desist from transacting insurance business in California and ordered Graf
to pay all outstanding claims. On October 5, 2000, the California Insur-
ance Commissioner again ordered Graf to stop soliciting people to join
unauthorized health insurance programs, to stop transacting insurance
without a license, and to pay all outstanding claims.
3
MEWAs are governed by the Employee Retirement Income Security
Act (“ERISA”), 29 U.S.C. § 1001 et seq. Most plans governed by ERISA
are exempt from state regulation, id. § 1144(a); however, MEWAs must
comply with both ERISA and relevant state insurance laws, see id.
§ 1144(b)(6).
4
The Trade Associations included: American Association of Agricul-
ture, LLC; Association of Automotive Dealers and Mechanics, LLC;
Association of Barristers and Legal Aids, LLC; Communication Trade
Workers Association, LLC; Construction Trade Workers Association,
LLC; American Coalition of Consumers, LLC; Association of Cosmetolo-
gists, LLC; Culinary and Food Services Workers, LLC; Association of
Educators, LLC; Association of Health Care Workers, LLC; National Alli-
ance of Hospitality and Innkeepers, LLC; Association of Manufacturers
and Wholesalers, LLC; Association of Real Estate Agents, LLC; National
Association of Transportation Workers, LLC; and National Association of
Independent Truckers, LLC.
UNITED STATES v. GRAF 9613
Graf and Employers Mutual marketed the Plans to insur-
ance agents, who in turn sold the Plans to individuals and
employers. To convince the agents to purchase Employers
Mutual’s health care coverage, Graf misrepresented to insur-
ance agents and the public that the Plans were insured through
Sun Life of Canada, United Wisconsin Life Insurance Co., or
Golden Rule Insurance Co. None of these companies ever
insured Employers Mutual or any of the Plans. In making
these misrepresentations, Graf ignored advice given by
Employers Mutual’s attorneys that the marketing of the Plans
violated state and federal law.
In connection with his operation of Employers Mutual,
Graf incorporated Colombia Health Network, Inc.
(“Colombia”). Colombia was created to appear to be a pre-
ferred provider organization (“PPO”), an entity that contracts
with doctors, hospitals, and other health care providers to
arrange discounted payments for services for the PPO’s cus-
tomers. This allowed Graf and Hanson to funnel money from
Employers Mutual into Colombia in exchange for services the
company allegedly rendered to Employers Mutual. Colombia
was actually a shell company designed to hide the diversion
of approximately three-quarters of a million dollars in premi-
ums paid to Employers Mutual. Graf and Hanson then used
this money to purchase jewelry, a sports car, and a house.
In May 2001, Employers Mutual came to the attention of
the Employee Benefits Security Administration of the U.S.
Department of Labor (the “DOL”), which began investigating
the company. Graf obstructed the DOL investigation in sev-
eral ways. He told attorneys representing Employers Mutual
to inform the DOL that the marketing of the Plans had ceased,
even though Graf knew that to be false. He also told Employ-
ers Mutual employees to hide documents and information
from DOL investigators conducting an on-site visit in October
2001. In response to DOL subpoenas to Colombia, Graf pro-
duced documents that purported to show that Colombia was
9614 UNITED STATES v. GRAF
a PPO, run by Hanson, that provided services to Employers
Mutual. Graf knew this information to be false.
In December 2001, the DOL filed a civil suit in the District
of Nevada to: (1) remove Graf and Kokott from Employers
Mutual; (2) install an independent fiduciary to operate the
company; and (3) freeze the assets of Employers Mutual,
Graf, and Kokott. On December 13, 2001, the Nevada district
court installed an independent fiduciary, Thomas Dillon, to
run Employers Mutual, and froze the assets of, among others,
Employers Mutual, the Trade Associations, Colombia, Graf,
and Kokott.
During its year of operation, Employers Mutual collected
about $14 million in payments from individuals and employ-
ers for medical coverage. Of that amount, only $1,749,725.63
was used to pay medical providers who treated patients cov-
ered by the Plans. The amount of unpaid claims as of Decem-
ber 10, 2001, was a little over $20 million.
That $20 million represents thousands of victims whose
medical bills were not paid by Employers Mutual. People who
had purchased health insurance expecting to receive benefits
instead received collection notices. A kidney dialysis patient
was unable to receive a kidney transplant because Employers
Mutual refused to process the request or even pay for his
required dialysis. A woman suffering from breast cancer
almost had her life-saving chemotherapy cancelled, and her
reconstructive surgery was postponed for over a year due to
Employers Mutual’s failure to pay her medical bills. Several
victims testified that they were unable to receive health care
from their regular doctors because of thousands of dollars in
unpaid medical bills. Others had trouble renting homes
because of their ruined credit.
UNITED STATES v. GRAF 9615
B
Graf was indicted for his role in the Employers Mutual
fraud on April 29, 2004. Dillon, the independent fiduciary,
waived Employers Mutual’s attorney-client privilege with
regard to all communications between Employers Mutual and
the company’s legal counsel: (1) Hugh Alexander and Ste-
phen Fitzsimmons, (2) Michael Connors, and (3) Ralph
Agnello.5 Graf moved to exclude the testimony of these
named attorneys,6 arguing that he was a joint holder of the
attorney-client privilege and had not waived the privilege.
The district court held a hearing on October 4, 2005, to hear
testimony and argument regarding the privilege issue.
After the hearing, U.S. District Judge Margaret M. Morrow
denied Graf’s motion to exclude the attorneys’ testimony in
a thoughtful and considered twenty-five page order issued
October 11, 2005. First, she determined that Graf did not have
a personal attorney-client relationship with the named attor-
neys to support his assertion of privilege over the relevant tes-
timony because he had not sought personal legal advice from
the corporate attorneys. Second, Judge Morrow determined
that Graf’s subjective belief that Employers Mutual’s attor-
neys represented him personally was insufficient to create a
personal privilege because that belief was either unreasonable
or was not manifested to those attorneys.
C
Graf’s jury trial began on October 5, 2005. The government
presented over 100 witnesses, including Fitzsimmons, Con-
nors, and Agnello. Alexander did not testify. During his testi-
mony, Connors twice mentioned that Graf’s behavior with
5
The waiver also named other attorneys not at issue in this appeal.
6
Other attorneys were addressed in the motion in limine but are not rele-
vant to the appeal.
9616 UNITED STATES v. GRAF
regard to Employers Mutual violated state law. Graf did not
object to that testimony at the time.
The government rested its case on November 3, 2005. At
the close of the government case, Graf moved for a judgment
of acquittal pursuant to Rule 29 on, inter alia, Counts 7
through 16, charging misappropriation in connection with a
healthcare benefit program in violation of 18 U.S.C. § 669.7
Graf presented no evidence and immediately rested his own
case, at which time he renewed his Rule 29 motion. In his
motion, Graf argued that the government had failed to present
evidence that the money diverted from Employers Mutual to
Colombia was from insurance premiums rather than from
Trade Association membership fees. Graf contended that
because the Trade Associations were not health care benefit
programs, but were instead membership associations, misap-
propriation of membership fees would not qualify as misap-
propriation from a health care benefit program under § 669.
The district court reserved ruling on the motion until the jury
returned with a verdict pursuant to Rule 29(b).
The jury verdict came on November 16, 2005. The jury
found Graf guilty of: Count 1, conspiracy to commit mail
fraud in violation of 18 U.S.C. § 371; Counts 2 through 6,
mail fraud in violation of 18 U.S.C. § 1341; Counts 7 through
16, misappropriation in connection with a health care benefit
program in violation of 18 U.S.C. § 669; Counts 17 through
21 and 26, conducting unlawful monetary transactions in vio-
lation of 18 U.S.C. § 1957; and Count 29, obstruction of jus-
tice in violation of 18 U.S.C. § 1503. The jury failed to reach
a verdict on a tax evasion charge, Count 30, and the unlawful
monetary transaction charges alleged in Counts 22, 23, 24, 27,
and 28.
7
The Rule 29 motion was also made as to several other counts not rele-
vant to this appeal.
UNITED STATES v. GRAF 9617
The district court accepted written submissions on the Rule
29 motion and heard oral argument on November 23, 2005.
The court denied the motion from the bench at the close of the
hearing. On February 5, 2007, the district court sentenced
Graf to 300 months imprisonment and three years of super-
vised release; it also imposed a $2,300 special assessment and
$20,458,419.47 in restitution.
Graf now appeals his convictions arguing that: (1) the attor-
ney testimony presented at trial was privileged; (2) attorney
Connors gave improper lay opinion testimony; (3) the district
court erred in denying his Rule 29 motion as to Counts 7
through 16 for violation of 18 U.S.C. § 669; and (4) the dis-
trict court should have unsealed various documents filed
under seal by the government and reviewed in camera by
Judge Morrow.
II
[1] “[A] party asserting the attorney-client privilege has
the burden of establishing the [existence of an attorney-client]
relationship and the privileged nature of the communication.”
United States v. Ruehle, 583 F.3d 600, 607 (9th Cir. 2009)
(quoting United States v. Bauer, 132 F.3d 504, 507 (9th Cir.
1997)). “Because it impedes full and free discovery of the
truth, the attorney-client privilege is strictly construed.” Id.
(quoting United States v. Martin, 278 F.3d 988, 999 (9th Cir.
2002)).
[2] An eight-part test determines whether information is
covered by the attorney-client privilege:
(1) Where legal advice of any kind is sought (2)
from a professional legal adviser in his capacity as
such, (3) the communications relating to that pur-
pose, (4) made in confidence (5) by the client, (6) are
at his instance permanently protected (7) from dis-
9618 UNITED STATES v. GRAF
closure by himself or by the legal adviser, (8) unless
the protection be waived.
Id. (quoting In re Grand Jury Investigation, 974 F.2d 1068,
1071 n.2 (9th Cir. 1992)). “The party asserting the privilege
bears the burden of proving each essential element.” Id. at 608
(citing United States v. Munoz, 233 F.3d 1117, 1128 (9th Cir.
2000), superceded on other grounds as stated in United States
v. Van Alstyne, 584 F.3d 803, 817 (9th Cir. 2009)).
[3] We here examine the fifth element, the identity of the
client. It can be particularly challenging to determine the iden-
tity of the client in the corporate context. “The administration
of the attorney-client privilege in the case of corporations . . .
presents special problems. As an inanimate entity, a corpora-
tion must act through agents. A corporation cannot speak
directly to its lawyers.” Commodity Futures Trading Comm’n
v. Weintraub, 471 U.S. 343, 348 (1985); accord Admiral Ins.
Co. v. U.S. Dist. Court, 881 F.2d 1486, 1492 (9th Cir. 1989)
(“As fictitious entities, corporations can seek and receive
legal advice and communicate with counsel only through indi-
viduals empowered to act on behalf of the corporation.”). One
of these special problems is that corporate officers, directors,
and employees who communicate with corporate counsel on
behalf of the corporation may later attempt to claim a personal
attorney-client privilege regarding those communications
after the corporation has waived its own privilege. A second
problem is also raised in this case: whether an outside consul-
tant’s discussions with corporate counsel even fall within the
corporation’s attorney-client privilege.
The government asserts that any attorney-client privilege in
this case belonged to Employers Mutual and was properly
waived by the independent fiduciary. See United States v.
Plache, 913 F.2d 1375, 1381 (9th Cir. 1990) (stating that
when a corporation is placed in receivership the power to
waive the attorney-client privilege on behalf of the corpora-
tion passes to the receiver). The district court agreed. It first
UNITED STATES v. GRAF 9619
found that Graf had not sought personal legal advice from the
corporate attorneys. See In re Bevill, Bresler & Schulman
Asset Mgmt. Corp., 805 F.2d 120, 123 (3d Cir. 1986). The
court then determined that Graf did not have a reasonable sub-
jective belief, communicated to the named attorneys, that he
was represented by the attorneys in his individual capacity.
Graf challenges these findings and claims that his commu-
nications with the named attorneys could not be disclosed to
the government without his waiver. Graf’s arguments on
appeal center on his claimed status as an independent consul-
tant to Employers Mutual. We hold that, on this record, as a
matter of law Graf was a “functional employee” of Employers
Mutual. We then adopt and apply the Bevill test to determine
whether Graf held a personal attorney-client privilege with
respect to his communications with the subject attorneys. We
hold that he did not.
A
A district court’s conclusion regarding whether “statements
are protected by an individual attorney-client privilege is ‘a
mixed question of law and fact which this court reviews inde-
pendently and without deference to the district court.’ ” Rue-
hle, 583 F.3d at 606 (quoting Bauer, 132 F.3d at 507). “We
also review de novo the district court’s rulings on the scope
of the attorney-client privilege.” Id. (citing Bauer, 132 F.3d at
507). The district court’s “[f]actual findings are reviewed for
clear error.” Id. (citing Al-Haramain Islamic Found., Inc. v.
Bush, 507 F.3d 1190, 1196 (9th Cir. 2007)). A finding is
clearly erroneous if it is illogical, implausible, or without sup-
port in the record. United States v. Hinkson, 585 F.3d 1247,
1261 (9th Cir. 2009) (en banc) (quoting Anderson v. City of
Bessemer City, 470 U.S. 564, 577 (1985)).
B
Graf contends on appeal that he was not a director, officer,
or employee of Employers Mutual, but was instead an outside
9620 UNITED STATES v. GRAF
consultant. Although his briefing is far from clear, there
appear to be two potential consequences of his status as an
independent consultant. First, Graf argues that, because he
was not an employee of Employers Mutual, his conversations
with the attorneys should not have fallen within the compa-
ny’s corporate privilege under Upjohn Co. v. United States,
449 U.S. 383 (1981). Second, Graf contends that, because he
was an independent but interested or related third party, he
was a joint client of the named attorneys.
[4] Graf’s arguments ignore his actual role at Employers
Mutual. Although he had no official title, Graf regularly com-
municated with insurance brokers and others on behalf of
Employers Mutual, marketed the company’s insurance plans,
managed its employees, and was the company’s voice in its
communications with counsel. The district court explicitly
found that Graf was an agent of Employers Mutual and was
authorized by Employers Mutual to communicate with its
attorneys regarding legal matters that concerned the company.
This factual finding is based on the evidence presented at the
hearing that Graf was the attorneys’ primary contact at
Employers Mutual and that he discussed with them the legal
affairs of the corporation.
Graf challenges this finding by referencing the terms of the
California cease-and-desist orders, which provide that he
could not lawfully act as Employers Mutual’s agent or
employee. The fact that Graf’s actions were in violation of
these administrative orders and state law is not determinative
of his position as an agent in fact of Employers Mutual. The
district court’s conclusion is plausible, rational, and based on
the record; therefore, it is not clearly erroneous. See Hinkson,
585 F.3d at 1261.
The district court next found that Graf’s communications
with Employers Mutual’s counsel fell within the company’s
corporate attorney-client privilege under Upjohn and In re
Bieter Co., 16 F.3d 929 (8th Cir. 1994). In Upjohn, the
UNITED STATES v. GRAF 9621
Supreme Court held that a corporation’s privilege extends to
communications between corporate employees and corporate
counsel as long as the communications are “made at the direc-
tion of corporate superiors in order to secure legal advice.”
United States v. Chen, 99 F.3d 1495, 1502 (9th Cir. 1996)
(citing Upjohn, 449 U.S. at 390-94). The Eighth Circuit has
applied Upjohn to cover communications between corporate
counsel and outside consultants. Bieter, 16 F.3d at 937-38.
The Bieter court reasoned that “too narrow a definition of
‘representative of the client’ will lead to attorneys not being
able to confer confidentially with nonemployees who, due to
their relationship to the client, possess the very sort of infor-
mation that the privilege envisions flowing most freely.” Id.
The consultant at issue in Bieter was “involved on a daily
basis with the principals of Bieter and on Bieter’s behalf in
the unsuccessful development that serve[d] as the basis for
th[e] litigation,” therefore, he was “precisely the sort of per-
son with whom a lawyer would wish to confer confidentially
in order to understand Bieter’s reasons for seeking representa-
tion.” Id. at 938 (citing Upjohn, 449 U.S. at 389). The court
concluded that “he was in all relevant respects the functional
equivalent of an employee.” Id. (citing McCaugherty v. Siffer-
mann, 132 F.R.D. 234, 239 (N.D. Cal. 1990)).
Several district courts in the Ninth Circuit have already
applied Bieter to determine whether communications between
an outside consultant and an entity’s attorneys are covered by
the entity’s attorney-client privilege. See Kelley v. Microsoft
Corp., No. C 07-475 MJP, 2009 WL 168258, at *2-3 (W.D.
Wash. Jan. 23, 2009) (considering and ultimately rejecting
Microsoft’s claim that a consultant was the functional equiva-
lent of an employee under Bieter); Davis v. City of Seattle,
No. C06-1659Z, 2007 WL 4166154, at *2-4 (W.D. Wash.
Nov. 20, 2007) (applying Bieter to protect communications
between an outside investigator and the City Attorney’s
Office for the purpose of securing legal advice for the City);
ASU Students for Life v. Crow, No. CV-06-1824-PHX-MHM,
2007 WL 2725252, at *3 (D. Ariz. Sept. 17, 2007) (adopting
9622 UNITED STATES v. GRAF
Bieter and applying it to extend attorney-client privilege to
communications between attorneys and all members of stu-
dent groups that were “directly involved” in the relevant proj-
ect); Memry Corp. v. Ky. Oil Tech., N.V., No. C04-03843
RMW (HRL), 2007 WL 39373, at *2-3 (N.D. Cal. Jan. 4,
2007) (adopting Bieter and finding that communications
between an advisor/agent to the company and corporate coun-
sel were covered by the company’s attorney-client privilege);
Residential Constructors, LLC v. Ace Prop. & Cas. Ins. Co.,
No. 2:05-cv-01318-BES-GWF, 2006 WL 3149362, at *12-16
(D. Nev. Nov. 1, 2006) (discussing and applying Bieter,
among other cases, to protect communications between an
insurer’s counsel and an independent insurance adjuster per-
forming the same functions performed by an “in-house”
claims employee); cf. McCaugherty, 132 F.R.D. at 238-29
(relied upon by the Bieter court and holding that the outside
consultants had information necessary to allow corporate
counsel to give the corporation fully informed legal advice
and were, therefore, covered by the corporate attorney-client
privilege).
[5] We find the reasoning in Bieter persuasive and adopt
its principles in the Ninth Circuit. We hold that Graf’s role at
Employers Mutual was that of a functional employee. As dis-
cussed above, Graf communicated with insurance brokers and
agents on behalf of Employers Mutual, and managed com-
pany employees. More importantly, Graf was the company’s
primary agent in its communications with corporate counsel.
As we have previously noted, “[a]s fictitious entities, corpora-
tions can seek and receive legal advice and communicate with
counsel only through individuals empowered to act on behalf
of the corporation.” Admiral Ins. Co., 881 F.2d at 1492. The
district court correctly held that Graf was that person.
[6] It appears that the sole reason Graf was not explicitly
named a director, officer, or employee of Employers Mutual
was because of the outstanding California cease-and-desist
orders preventing him from lawfully being employed by an
UNITED STATES v. GRAF 9623
insurance company in the State of California. We decline to
define his relationship with Employers Mutual based on his
own self-serving, fraudulent representations made to evade
his legal restrictions and to avoid discovery by the California
Insurance Commissioner. Because the record establishes that
Graf was a functional employee, not an independent outside
consultant to Employers Mutual, we reject his claim of enti-
tlement to a jointly held attorney-client privilege with the
company’s attorneys. We must now consider whether Graf, as
a functional employee of Employers Mutual, held a personal
attorney-client privilege over any or all of his communica-
tions with the named attorneys.
C
[7] We have yet to adopt a particular standard by which to
determine whether a corporate employee holds a joint privi-
lege over communications with corporate counsel. See Rue-
hle, 583 F.3d at 608 n.7 (stating that we did not need to adopt
such a test in that case because the statements at issue were
not privileged); see also Munoz, 233 F.3d at 1128 n.2 (declin-
ing to adopt, due to an insufficient record, the rule that an
attorney-client privilege may exist where a party reasonably
but mistakenly believes that an attorney represents him). The
district court considered Graf’s claim of privilege under two
alternate theories used in other circuits: (1) whether Graf
sought personal legal advice from the corporate attorneys
under the test announced in Bevill, 805 F.2d 120 (the “Bevill
test”); and (2) whether Graf had a reasonable subjective belief
that the corporate attorneys represented him in his individual
capacity. The court answered “no” to both questions and held
that none of the proffered attorney testimony was privileged
as to Graf.
[8] The government asks that we adopt the five-part test
established in Bevill and applied by the district court in this
case to help us determine whether Graf holds a personal
attorney-client privilege. We think the issue is squarely pres-
9624 UNITED STATES v. GRAF
ented here, and it is time to address it. In Bevill, the Third Cir-
cuit made clear that “any privilege that exists as to a corporate
officer’s role and functions within a corporation belongs to
the corporation, not the officer.” Id. at 124. Under the Bevill
test, individual corporate officers or employees seeking to
assert a personal claim of attorney-client privilege must affir-
matively show five factors:
First, they must show they approached counsel for
the purpose of seeking legal advice. Second, they
must demonstrate that when they approached coun-
sel they made it clear that they were seeking legal
advice in their individual rather than in their repre-
sentative capacities. Third, they must demonstrate
that the counsel saw fit to communicate with them in
their individual capacities, knowing that a possible
conflict could arise. Fourth, they must prove that
their conversations with counsel were confidential.
And fifth, they must show that the substance of their
conversations with counsel did not concern matters
within the company or the general affairs of the
company.
Id. at 123, 125 (quoting In re Grand Jury Investigation, 575
F. Supp. 777, 780 (N.D. Ga. 1983)) (brackets omitted and
emphases added).
The Bevill test has been adopted and applied by several of
our sister circuits. The First, Second, and Tenth Circuits have
expressly done so. See, e.g., In re Grand Jury Subpoena
(Newparent), 274 F.3d 563, 571-72 (1st Cir. 2001); In re
Grand Jury Subpoenas (Roe and Doe), 144 F.3d 653, 659
(10th Cir. 1998); In re Grand Jury Proceedings, 156 F.3d
1038, 1040-41 (10th Cir. 1998); United States v. Int’l Bhd. of
Teamsters, 119 F.3d 210, 214-15 (2d Cir. 1997). The Sixth
Circuit has implied that it too applies this test in the corporate
context or, at the very least, that a corporate employee must
make it clear to counsel that he seeks advice on personal mat-
UNITED STATES v. GRAF 9625
ters. See Ross v. City of Memphis, 423 F.3d 596, 605 (6th Cir.
2005) (“Our court, like many others, requires that the individ-
ual officer seeking a personal privilege ‘clearly claim[ ]’ he
is seeking legal advice in his individual capacity.” (citing,
inter alia, Bevill, 805 F.3d at 123)).8
Moreover, several district courts in our circuit, including
the district court in this case, have applied the Bevill test to
determine privilege issues involving corporate employees. See
SEC v. Nicita, No. 07CV0772 WQH (AJB), 2008 WL
170010, at *4 & n.8 (S.D. Cal. Jan. 16, 2008) (rejecting cor-
porate officers’ claim of privilege because they failed to sat-
isfy the fourth and fifth Bevill factors); Tuttle v. Combined
Ins. Co., 222 F.R.D. 424, 429 (E.D. Cal. 2004) (holding that
“none of the Bevill factors which support the existence of an
attorney/client relationship are present”); see also United
States v. Ferrell, No. CR07-0066MJP, 2007 WL 2220213, at
*4 (W.D. Wash. Aug. 1, 2007) (citing Bevill favorably);
Grassmueck v. Ogden Murphy Wallace, PLLC, 213 F.R.D.
567, 571-72 (W.D. Wash. 2003) (applying the Bevill test).
[9] There are strong policy reasons to adopt the Bevill test.
As noted above, any time a corporation retains counsel, coun-
sel will have to talk to individual employees to represent the
company effectively. The Bevill test responds to this reality
by ensuring that a corporation is free to obtain information
from its officers, employees, and consultants about company
matters and then control the attorney-client privilege, waiving
it when necessary to serve corporate interests. The test also
8
Other circuits have cited Bevill favorably without adopting the five-
factor test. See In re Sealed Case, 29 F.3d 715, 719 n.5 (D.C. Cir. 1994).
The Fourth Circuit, for example, has considered adopting the Bevill test,
but ultimately reserved decision on the issue. In re Grand Jury Subpoena:
Under Seal, 415 F.3d 333, 340 n.6 (4th Cir. 2005) (“It is unnecessary to
decide whether we find Bevill fully consistent with our views on this mat-
ter because based on the circumstances we have identified, it would not
have been objectively reasonable for appellants to believe that the investi-
gating attorneys represented them personally.”).
9626 UNITED STATES v. GRAF
preserves the individual’s ability to claim a personal attorney-
client privilege when the individual makes clear he or she is
seeking personal legal advice and the communications relate
to personal legal affairs, not to the company’s business. More-
over, there are reasons to look to other circuits when contem-
plating the proper standard in this arena. As the Supreme
Court cautioned in Upjohn, “[a]n uncertain privilege, or one
which purports to be certain but results in widely varying
applications by the courts, is little better than no privilege at
all.” 449 U.S. at 393. For these reasons, we adopt the Bevill
test in the Ninth Circuit.
[10] Applying the five-part Bevill test in this case, Graf
must establish: (1) he approached the attorneys for the pur-
pose of seeking legal advice; (2) when he did so, he made it
clear to the attorneys that he was seeking legal advice in his
individual rather than in his representative capacity; (3) the
attorneys saw fit to represent him personally, knowing a con-
flict could arise; (4) his conversations with the attorneys were
in confidence; and (5) “the substance of [his] conversations
with [the attorneys] did not concern matters within [Employ-
ers Mutual] or the general affairs of [Employers Mutual].”
Bevill, 805 F.2d at 123. We agree with the district court that
Graf fails to meet factors two, three, and five as to all of the
named attorneys.9
1
Both Hugh Alexander and Stephen Fitzsimmons worked
for Alexander & Crabtree, P.C., which later became known as
the Alexander Law Firm, P.C. (the “Alexander Firm”). The
9
The district court also found that Graf failed the first factor because he
sought legal advice on behalf of Employers Mutual, not on his own behalf.
However, because Graf and Employers Mutual likely had similar legal
concerns we here focus on the other factors, which are sufficient to dem-
onstrate that Graf does not hold a personal attorney-client privilege with
the named attorneys.
UNITED STATES v. GRAF 9627
Alexander Firm was retained to represent Employers Mutual
on February 12, 2001. The attorney retainer agreement was
signed by Kokott on behalf of Employers Mutual. Both Alex-
ander and Fitzsimmons indicated in sworn declarations that,
although Graf was the primary person from whom they
received information regarding Employers Mutual, Graf was
not the firm’s client. Neither attorney ever informed Graf that
he was their client. Nor did they specifically inform Graf that
he was not their client.
All matters discussed with Graf related to the Alexander
Firm’s representation of Employers Mutual. Employers
Mutual paid the firm’s bills and all the checks were signed by
Kokott. The Alexander Firm stopped representing Employers
Mutual on October 12, 2001, when the Firm sent a letter to
Kokott terminating the relationship.
Fitzsimmons further indicated in his declaration that “Graf
never discussed with [him] nor sought [his] advice about any
personal legal matter or any personal liability he might have
in connection with Employers Mutual or any other matter.”
Alexander acknowledged that in 1996 and 1997 Alexander
had represented Prime Health Systems, Inc. (“Prime Care”).10
He explained that the prior matter was unrelated to his repre-
sentation of Employers Mutual and covered a completely dif-
ferent subject matter; the representation of Prime Care related
to the potential acquisition of an insurance company, whereas
Employers Mutual hired the Alexander Firm to review insur-
ance policies that Employers Mutual planned to use in con-
nection with its employer welfare program, and to determine
whether the policies met federal and state law requirements.
There was some disagreement regarding whether Alexander
had represented Graf personally during this earlier representa-
tion; for the purposes of this opinion, we assume that he did.
10
This company is alternately referred to as Prime Care Health Network,
Inc., Prime Health Systems, Inc., and Prime Healthcare. For ease of refer-
ence, we refer to it as Prime Care.
9628 UNITED STATES v. GRAF
Graf testified that he believed that his conversations with
Fitzsimmons and Alexander were covered by attorney-client
privilege. He believed that he was the holder of the privilege,
and no one ever indicated that this belief was incorrect. How-
ever, Graf acknowledged that he never paid the Alexander
Firm during the 2001 representation. Finally, Graf testified
that Fitzsimmons and Alexander had, on one occasion, dis-
cussed Graf’s personal legal issues with him. In support of
this claim Graf pointed to a single billing entry which listed
a telephone conference between Graf and Fitzsimmons to dis-
cuss “Jim Graf issues,” which he stated were issues personal
to him. However, the district court found that the billing entry
did not pertain to personal legal advice rendered to Graf, but
rather described a conference between Alexander and Fitz-
simmons regarding “Jim Graf’s questions and concerns re
structuring association as a union and having its plan estab-
lished in connection with a collective bargaining agreement.”
Having examined the billing entry in question, we hold that
this finding is not clearly erroneous.
[11] Graf’s admission at the pre-trial motion hearing that
he never requested that the Alexander Firm represent him per-
sonally causes him to fail the second and third Bevill factors.
He never made it clear to the attorneys that he was seeking
legal advice in his individual capacity; thus, neither attorney
could choose to represent him, knowing that a conflict could
arise. See Bevill, 805 F.2d at 123. Both Alexander and Fitz-
simmons believed they represented only Employers Mutual.
The fact that the retainer agreement was signed by Kokott on
behalf of Employers Mutual and the firm’s bills were paid by
the company supports the attorneys’ understanding.
[12] Finally, Graf fails the fifth Bevill factor because the
substance of his conversations with both Alexander and Fitz-
simmons related to his official duties at Employers Mutual
and the general affairs of the company. Graf’s testimony
regarding the billing entry referring to “Jim Graf issues” is
rebutted by the billing statement itself, which related to the
UNITED STATES v. GRAF 9629
operation of Employers Mutual. No other testimony or evi-
dence supports Graf’s assertion that he sought advice on mat-
ters unrelated to his duties at Employers Mutual. Alexander’s
previous representation of Graf does not alter these determi-
nations. Alexander did not ultimately testify at trial. Nor did
Graf rebut Alexander’s hearing testimony that the subject
matter of the two representations was different and that they
were separated by several years.
2
Michael Connors is one of the founding partners of Smith
& Downey in Hauppauge, New York. Employers Mutual
retained Smith & Downey on April 17, 2001. The engage-
ment letter was sent to Kokott as Chairman of Employers
Mutual, as were all bills, and all payments to Smith & Dow-
ney were signed by Kokott on behalf of Employers Mutual.
Connors explained that Graf was his primary source of infor-
mation about Employers Mutual. However, he stated that
“[n]either I, nor my firm, Smith & Downey have ever repre-
sented James Graf.” All discussions between Connors and
Graf related to the firm’s representation of Employers Mutual
and Graf indicated in his communications to Connors that the
advice was sought “in the best interest of Employers Mutual.”
Connors acknowledged that he never told Graf that he was not
the holder of the attorney-client privilege. He asserted, how-
ever, that he would have refused to represent Graf personally
had he ever been asked.
Graf testified that he believed his conversations with Con-
nors were privileged and that he was the holder of the privi-
lege “[b]ecause of the work [Graf] did on behalf of the
corporation.” However, he acknowledged that he never per-
sonally paid Smith & Downey.
[13] Graf’s own testimony dooms his claim of personal
attorney-client privilege as to Connors. Graf testified that he
believed he held the privilege “[b]ecause of the work [he] did
9630 UNITED STATES v. GRAF
on behalf of the corporation,” and that he understood that he
was getting legal advice on behalf of the corporation. This
alone causes him to fail the second, third, and fifth Bevill
factors—Graf was not seeking personal legal representation,
therefore, he did not make it clear to Connors that he was;
Connors did not decide to represent him individually; and he
and Connors discussed only the company’s business.
3
Ralph Agnello was Employers Mutual’s general counsel
from approximately January to June 2001. Agnello stated in
his sworn declaration that, as general counsel, his client was
Employers Mutual, not any of its directors, officers, employ-
ees, or consultants. He was paid by Employers Mutual, not by
Graf. Agnello stated that he did not represent Graf personally
while he was general counsel for Employers Mutual, and he
and Graf did not discuss Graf’s personal liability during that
time. In fact, Agnello testified that he did “exceptionally lit-
tle” as general counsel for Employers Mutual.
However, Agnello did represent Graf personally both
before and after he was general counsel for Employers
Mutual. Starting in the mid-1980s and continuing until the
late-1990s, Agnello intermittently represented Graf in an indi-
vidual capacity on a variety of matters, including family law,
bankruptcy, and business matters related to the California
Department of Insurance’s investigation of Prime Care. None
of these personal matters was legally or factually related to
the matters Agnello handled at Employers Mutual. After
Employers Mutual was shut down by the DOL, Agnello
advised Graf regarding complaints he was drafting pro se
against representatives of the DOL.
[14] Graf presented no evidence that he ever asked
Agnello to represent him personally while Agnello was gen-
eral counsel for Employers Mutual, or that Agnello agreed to
the dual-representation after considering potential conflicts.
UNITED STATES v. GRAF 9631
This failure to meet the second and third Bevill factors can
perhaps be forgiven considering Agnello’s long history with
Graf. However, the district court found that there was no evi-
dence that Graf spoke with Agnello about anything other than
Employers Mutual’s business during Agnello’s time as gen-
eral counsel. This finding is supported by the record, which
demonstrates that Graf did not testify, or present other evi-
dence, that he sought personal legal advice from Agnello in
2001. Therefore, the finding is not clearly erroneous and noth-
ing about which Agnello could testify regarding his role as
general counsel to Employers Mutual could impose on any
individual attorney-client privilege held by Graf.
[15] We hold that under the Bevill test Graf does not hold
a personal attorney-client privilege over any of his communi-
cations with the above attorneys. Therefore, we need not
examine the government’s remaining arguments regarding
waiver and harmless error.
III
Graf’s second argument on appeal relates to attorney Con-
nors’s trial testimony. Connors twice stated that marketing the
Plans would be a criminal offense because they did not com-
ply with federal or state law, which Graf argues is inadmissi-
ble lay opinion evidence. During direct examination, Connors
testified that the Employers Mutual insurance program did not
comply with all applicable laws. Connors explained that he
was first contacted by Graf after Connors advised a client not
to market Employers Mutual’s Plans. He explained to Graf
that he had given this advice to his client because marketing
non-compliant plans is a crime. Upon admitting a letter writ-
ten by the Smith & Downey firm to Employers Mutual indi-
cating that the Plans did not fully comply with ERISA, the
court issued a limiting instruction, informing the jury that the
information was admitted “only for the purpose of what infor-
mation was communicated to the defendant and to Employers
Mutual regarding these matters of federal and state law, not
9632 UNITED STATES v. GRAF
for the truth of the opinions or the information stated in the
letter.”
Connors also testified that he had only agreed to represent
Employers Mutual after Graf had assured him that the com-
pany would cease marketing the Plans until they complied
with all relevant federal and state laws. During cross-
examination, Graf’s counsel attacked Connors’s credibility,
arguing that there was no documentation to support his claim
that he refused to represent Employers Mutual unless it
ceased marketing the non-compliant Plans. Thus, on redirect,
Connors clarified that he remembered making Employers
Mutual promise not to market the Plans while he represented
the company because he believed it would be criminal to par-
ticipate in marketing a non-compliant product.
[16] Graf contends that Connors’s testimony11 was
improper lay opinion testimony in violation of Federal Rule
of Evidence (“FRE”) 701, which states,
If the witness is not testifying as an expert, the wit-
ness’ testimony in the form of opinions or inferences
is limited to those opinions or inferences which are
(a) rationally based on the perception of the witness,
(b) helpful to a clear understanding of the witness’
testimony or the determination of a fact in issue, and
(c) not based on scientific, technical, or other spe-
cialized knowledge within the scope of [FRE] 702.
Fed. R. Evid. 701. The parties agree that Connors was not tes-
tifying as a legal expert.
Graf did not object to this testimony at trial; therefore, we
review the admission of the testimony for plain error. United
11
Graf only challenges the admission of Connors’s statements that mar-
keting the Plans was criminal. He does not object to the testimony that the
Plans failed to comply with state and federal law.
UNITED STATES v. GRAF 9633
States v. Sioux, 362 F.3d 1241, 1244 n.5 (9th Cir. 2004). To
merit reversal under the plain error standard, “[t]here must be
an ‘error’ that is ‘plain’ and that ‘affect[s] substantial
rights.’ ” Id. (quoting United States v. Olano, 507 U.S. 725,
732 (1993)) (second alteration in original). The decision to
correct such an error rests within the court’s discretion, which
should not be exercised “unless the error ‘seriously affect[s]
the fairness, integrity or public reputation of judicial proceed-
ings.’ ” Olano, 507 U.S. at 732 (quoting United States v.
Young, 470 U.S. 1, 15 (1985)) (alteration in original).
[17] We hold that there was no plain error in admitting
Connors’s testimony. The statement on direct examination
that the Plans did not comply with state and federal law and
that marketing them would be a crime was admissible to show
that Graf was on notice that his conduct was illegal. See
United States v. McLennan, 563 F.2d 943, 946 (9th Cir. 1977)
(noting that attorney’s statement that he told the defendant
that his actions were illegal was admitted not to prove that the
actions were illegal, but to show that the defendant had been
warned of the illegality). The second statement was admissi-
ble to show why Connors remembered the substance of his
testimony.
Graf’s reliance on United States v. Henke, 222 F.3d 633
(9th Cir. 2000), is misplaced. In Henke, we held that the
admission of lay opinion testimony that the defendant “must
have known” about a false revenue reporting scheme was
error. Id. at 641-42. Connors did not testify that Graf “must
have known” his conduct was illegal, he testified that he per-
sonally told Graf the conduct was illegal. It is the jury’s job
to determine what the defendant knew. See id. at 642. Con-
nors did not invade the province of the jury when he testified
regarding what he told Graf; his testimony merely aided the
jury in making the determination as to whether Graf know-
ingly violated federal and state law by persisting in his con-
duct after receiving Connors’s advice. Thus, Connors’s
testimony was rationally based on his own perception and
9634 UNITED STATES v. GRAF
“helpful to . . . the determination of a fact in issue.” See Fed.
R. Evid. 701. The jury by its verdict credited Connors’s warn-
ing to Graf. Its admission was not error; certainly not plain
error.
IV
Graf’s third argument on appeal relates to his conviction
under Counts 7 through 16 for misappropriation in connection
with a health care benefit program in violation of 18 U.S.C.
§ 669. The ten counts correspond to ten checks drawn on an
Employers Mutual bank account and made payable to Graf’s
shell company, Colombia. Graf moved for a judgment of
acquittal on these Counts at the close of both the government
and defense cases pursuant to Rule 29, which provides, “After
the government closes its evidence or after the close of all the
evidence, the court on the defendant’s motion must enter a
judgment of acquittal of any offense for which the evidence
is insufficient to sustain a conviction.” Fed. R. Crim. P. 29(a).
The district court reserved ruling on the motion under Rule
29(b) until after the jury verdict and then, after briefing and
argument, denied the motion.12
Graf presents two bases to support his Rule 29 argument on
appeal. First, Graf argues that the language of § 669 unam-
biguously requires the existence of a valid, non-fraudulent
health care benefit program. Second, Graf renews his defense
pressed before the district court, without citation to any
authority or any facts in the record, that the diverted funds
were Trade Association membership fees rather than health
care benefit program funds.
12
Rule 29(b) provides, “The court may reserve decision on the motion,
proceed with the trial (where the motion is made before the close of all
the evidence), submit the case to the jury, and decide the motion either
before the jury returns a verdict or after it returns a verdict of guilty or is
discharged without having returned a verdict. If the court reserves deci-
sion, it must decide the motion on the basis of the evidence at the time the
ruling was reserved.” Fed. R. Crim. P. 29(b).
UNITED STATES v. GRAF 9635
“A motion for Judgment of Acquittal is reviewed on a
sufficiency-of-the-evidence standard.” United States v. Stod-
dard, 150 F.3d 1140, 1144 (9th Cir. 1998). “Under that stan-
dard, evidence supports a conviction, if, viewed in the light
most favorable to the government, it would allow any rational
trier of fact to find the essential elements of the crime beyond
a reasonable doubt.” Id. A defendant need not state specific
grounds to support a Rule 29 motion, United States v.
Navarro Viayra, 365 F.3d 790, 793 (9th Cir. 2004); however,
when a Rule 29 motion is made on a specific ground, other
grounds not raised are waived, United States v. Quintana-
Torres, 235 F.3d 1197, 1199 (9th Cir. 2000). We may review
a waived ground for acquittal only “to prevent a manifest mis-
carriage of justice.” Id.
We hold that Graf’s first argument is waived because he
failed to raise it before the district court. See id. We review
it only “to prevent a manifest miscarriage of justice.” See id.
The second argument appears to have been mostly abandoned
on appeal, as Graf refers to it in only two sentences in his
opening brief, without citation to law or to the record. Argu-
ments made in passing and not supported by citations to the
record or to case authority are generally deemed waived.
United States v. Williamson, 439 F.3d 1125, 1138 (9th Cir.
2006) (citing Fed. R. App. P. 28(a)(9)(A)). We, therefore,
likewise review it only “to prevent a manifest miscarriage of
justice.” See Quintana-Torres, 235 F.3d at 1199.
A
“In construing the provisions of a statute, we first look to
the language of the statute to determine whether it has a plain
meaning.” Satterfield v. Simon & Schuster, Inc., 569 F.3d
946, 951 (9th Cir. 2009) (citing McDonald v. Sun Oil Co., 548
F.3d 774, 780 (9th Cir. 2008)). When the language is unam-
biguous, the court’s inquiry begins and ends with the statutory
text. Id. (quoting McDonald, 548 F.3d at 780).
9636 UNITED STATES v. GRAF
Both Graf and the government agree that the language of
§ 669 is unambiguous and that we need look no further than
the statutory language in our analysis. We agree. Section 669
provides in relevant part:
Whoever knowingly and willfully embezzles, steals,
or otherwise without authority converts to the use of
any person other than the rightful owner, or inten-
tionally misapplies any of the moneys, funds, securi-
ties, premiums, credits, property, or other assets of a
health care benefit program, shall be fined under this
title or imprisoned not more than 10 years, or both
....
18 U.S.C. § 669(a). A “health care benefit program” is “any
public or private plan or contract, affecting commerce, under
which any medical benefit, item, or service is provided to any
individual . . . .” Id. § 24(b).
[18] By its plain language, the statute prohibits misappro-
priating funds from a plan or contract that provides any medi-
cal benefit to any individual. Graf’s testimony in the related
civil case established that Graf had developed the Plans to sell
health insurance. And ultimately, about $1.7 million in medi-
cal claims were actually paid by Employers Mutual. These
payments were a medical benefit to the few lucky individual
beneficiaries for whom they were made. Because Graf had
underinsured the risk, it was inevitable that the house of cards
would ultimately collapse, leaving thousands of individuals
without health care coverage. However, Employers Mutual
did sell health care plans, affecting commerce, which pro-
vided medical benefits to some of the individual insureds.
[19] Graf does not explain what part of the statutory lan-
guage precludes a violation when the health care benefit pro-
gram is primarily a fraudulent entity. We see no such
language. Nor do Graf’s citations to cases in which courts
have found violations of § 669 when individuals have
UNITED STATES v. GRAF 9637
defrauded legitimate insurance companies and medical care
providers convince us that Employers Mutual is not a health
care benefit program. Employers Mutual meets the unambigu-
ous statutory definition of a health care benefit program, even
though it was primarily a vehicle for major health care fraud.
By finding Graf guilty on all counts under § 669, the jury
apparently agreed. Graf’s convictions under § 669 do not con-
stitute a manifest miscarriage of justice.13 See Quintana-
Torres, 235 F.3d at 1199.
B
Before the district court Graf argued that the government
had failed to distinguish between membership fees paid to the
Trade Associations and insurance premiums paid to Employ-
ers Mutual. He contends that only the latter could qualify as
health care benefit program funds. Graf concludes that the
government’s failure to demonstrate conclusively the prove-
nance of the transferred funds was fatal to the charges brought
pursuant to § 669, and that the district court should, therefore,
have granted his Rule 29 motion. We reject Graf’s argument.
First, a rational trier of fact could reasonably have deter-
mined that, however labeled, membership fees were “moneys,
funds, securities, premiums, credits, property, or other assets
of a health care benefit program.” 18 U.S.C. § 669(a). Second,
even assuming, for the sake of argument, that Graf’s distinc-
tion between insurance premiums and Trade Association
membership fees is valid, a rational trier of fact could have
found that the government presented sufficient evidence to
establish that the funds were actually insurance premiums.
Viewing the evidence in the light most favorable to the gov-
13
At several points in his brief, Graf contends that the government has
taken inconsistent positions regarding Employers Mutual’s status as both
a fraudulent entity and a victim of Graf’s embezzlement. Because Graf’s
conviction under § 669 does not require proof that Employers Mutual is
a legitimate company, there is no inconsistency between these positions.
9638 UNITED STATES v. GRAF
ernment, as we must, the evidence demonstrates that Employ-
ers Mutual failed to segregate its bank accounts to maintain
even an artificial distinction between insurance premiums and
membership fees, that the company’s invoices referred only to
premiums, and that the victims’ checks referred only to pre-
miums. A rational trier of fact could have concluded, based on
this evidence, that the money Graf transferred to Colombia
was entirely made up of insurance premiums. Graf cannot
show that no rational juror could have found him guilty of a
violation of § 669 based on the evidence presented, and his
convictions under that statute were not a manifest miscarriage
of justice. See Quintana-Torres, 235 F.3d at 1199.
V
Graf’s final argument on appeal is that the district court
erred in its May 14, 2009, order denying Graf’s motion to
provide his counsel with documents submitted by the govern-
ment under seal and in camera.14 Graf argues that filing these
documents under seal and maintaining them under seal vio-
lates his First Amendment right of access and his Sixth
Amendment right to confront the witnesses against him. He
also contends that the filings might implicate the Jencks Act,
18 U.S.C. § 3500, and the Canons of Judicial Ethics.
“Although [Graf] creatively argue[s] for a constitutional
right of access, [he is] clearly challenging the district court’s
discovery [and trial management] rulings regarding sealed
14
The procedural history of this claim is somewhat unusual. Instead of
filing an opening brief with us on November 10, 2008, Graf filed a motion
to have the record corrected and to unseal pleadings. On January 22, 2009,
we remanded the case to the district court to decide, in the first instance,
whether the relevant documents should be unsealed. The district court
denied the motion on May 14, 2009. The case then returned to us and
Graf’s renewed motion was denied without prejudice on August 17, 2009,
by a two judge panel. Graf has now renewed his argument regarding the
sealed documents for a third time in the supplemental opening brief and
excerpts of record.
UNITED STATES v. GRAF 9639
and in camera documents.” United States v. Shryock, 342 F.3d
948, 983 (9th Cir. 2003). “We review a district court’s discov-
ery rulings for an abuse of discretion.” Id. (citing United
States v. Chon, 210 F.3d 990, 994 (9th Cir. 2000)).
The government and the district court have divided the rel-
evant documents into three categories: (1) a government
request for judicial notice and related pleadings; (2) govern-
ment witness statements; and (3) a “trial strategy document”
listing the witnesses and briefly summarizing their anticipated
testimony, filed by the government at the request of the dis-
trict court. The district court found that the request for judicial
notice was served on Graf’s trial counsel. It also found that
the request was properly filed under seal pursuant to Rule 6(e)
because it contains information from grand jury proceedings.
See Fed. R. Crim. P. 6(e) (providing that an attorney for the
government may not disclose a matter occurring before the
grand jury except under circumstances not occurring here).
We have reviewed the documents and the record and con-
clude that the district court did not abuse its discretion in seal-
ing the request for judicial notice and maintaining the
documents under seal.
The district court found that the witness statements for
those who testified were disclosed to Graf and his counsel
during pre-trial discovery and that these materials were prop-
erly filed under seal. Some of the statements contain grand
jury testimony covered by Rule 6(e), and others contain sensi-
tive personal information pertaining to potential witnesses,
some of whom never even testified. Graf can point to no wit-
ness who testified to matters not disclosed to him prior to
trial. We hold that the district court did not abuse its discre-
tion in sealing the remaining witness statements and maintain-
ing them under seal.
Finally, on September 22, 2005, faced with a trial involving
more than 100 witnesses that would take several weeks of
courtroom time, the district court ordered the government to
9640 UNITED STATES v. GRAF
provide the court with a summary description of the testimony
anticipated from each witness and the substance of the exhib-
its the government intended to introduce in its case-in-chief.
The district court employed this tool after determining that it
needed a preview of the government’s case to manage a
lengthy trial by making sure that “the government did not
intend to adduce evidence that was only tangentially relevant
or duplicative.” It permitted the government to file the docu-
ment under seal to prevent disclosure of the government’s
trial strategy. In its May 14, 2009, order, the district court
concluded that unsealing the information was unnecessary to
aid Graf in his appeal, and inappropriate because if Graf pre-
vails on appeal the government may need to retry some or all
of the case.
[20] Graf alleges that the district court was improperly
influenced by this trial strategy document and that his inabil-
ity to review the document has prevented him from bringing
additional claims on appeal. A district court has broad author-
ity to enter pretrial case management orders to ensure that the
trial proceeds efficiently. United States v. W.R. Grace, 526
F.3d 499, 508-09 (9th Cir. 2008) (en banc). Further, judges
are presumed to not be prejudiced by impermissible factors,
such as the examination of evidence which the jury may never
see. United States v. Howard, 480 F.3d 1005, 1012 (9th Cir.
2007) (citing United States v. Zuber, 118 F.3d 101, 104 (2d
Cir. 1997)). After having examined the trial strategy docu-
ment, we cannot see how it could have improperly influenced
the district court. In combination with the presumption that
the district court was not impermissibly influenced, Graf’s
argument must fail.
[21] We hold that the district court did not abuse its discre-
tion in requesting, for case management purposes, the govern-
ment’s summary document, in allowing it to be filed under
seal, or in maintaining it under seal. We have examined
Graf’s remaining arguments for access to the sealed records
and find none persuasive.
AFFIRMED.