It is late Friday afternoon and you are already thinking about your plans for the weekend at Lake Tahoe. As you pack your briefcase to leave the office a few minutes early, the telephone rings. You answer the phone only to find a hysterical client on the other end. The client tells you that a federal agent just served a grand jury subpoena on him. What do you tell him?

The grand jury occupies a unique role in our criminal justice system. It is an investigatory body charged with the responsibility of determining whether or not a crime has been committed. Unlike the court, whose jurisdiction is predicated on a specific case or controversy, the grand jury “can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not.” United States v. Morton Salt Co ., 338 U.S. 632, 642-43 (1950). The function of the grand jury is to inquire into all information that might possibly bear on its investigation until it has identified that might possibly bear on its investigation until it has identified an offense or has satisfied itself that none has occurred. As a necessary consequence of its investigatory function, the grand jury paints with a broad brush.

United States v. R. Enterprises , 498 U.S. 292, 297 (1991)

It is not in any client's best interest to ever be “painted on” by the big brush of a federal grand jury. The news media have chronicled stories of federal grand juries making life quite difficult for many public figures and companies.

As opposed to Shakespeare's questionable advice to “kill all the lawyers”, the arrival of a grand jury subpoena makes it more prudent for the person to contact counsel experienced with grand jury investigations before saying or doing anything. Otherwise, the person who simply gathers up a stack of documents and blindly sends them out the door to the U.S. attorney's office can create considerable problems for himself (and/or his employer if it concerns his job) if compliance with the subpoena is untimely, incomplete, or inaccurate. Such action or inaction may exacerbate problems and even trigger civil or criminal contempt proceedings. Moreover, if the person voluntarily releases confidential information that is covered by attorney-client privilege or the work product doctrine, the results may be equally disastrous. If the person shows up and makes statements, he may find that he is the target of the investigation and possibly incriminate himself. And if the person is foolish enough to ignore the subpoena, he will have a follow-up visit by the federal agent that includes shiny wrist bracelets and a federal escort to the courthouse.

Seeking the advice of experienced defense counsel is the prudent first step to take. While the federal grand jury has broad authority and power to subpoena records for a federal investigation [1] , the grand jury's authority and power is not unlimited. [2] White collar defense counsel should be consulted to analyze the subpoena for its legal validity. There may be a sound legal basis to challenge the subpoena rather than blindly hand over documents.

Attorney Client Privilege and Work Product Protections

The attorney-client privilege is one of the oldest and most sacred privileges in the legal 

profession. [3] In the famous Upjohn decision, the Supreme Court stated the purpose of the privilege “is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.” [4] For the privilege to apply, (1) the holder must be a client (or seek to be one); (2) the person to whom the communication is made must be a lawyer and, in connection with the communication, is acting as a lawyer; (3) the communication relates to a fact which the attorney was informed about without the presence of strangers for the purpose of seeking legal advice; and (4) not be waived. [5] Accordingly, experienced legal counsel must make a determination of applicability if the privilege before it is unwittingly waived.

Material that does not fall within the strictures of attorney-client privilege may be covered by the work product doctrine. This doctrine reflects a “strong public policy underlying the orderly prosecution and defense of legal claims” and protects material prepared by counsel acting for the client in anticipation of litigation. [6] For obvious reasons, the doctrine is not available to protect ongoing fraud by the client. [7] However, even if fraud is alleged, the work product doctrine may still protect the attorney's mental impressions, opinions, and legal theories. [8]

Experienced defense counsel should review the corporate documents to analyze and assess whether or not the contents of documents are privileged under either of the above legal arguments. However, defense counsel has other legal mechanisms to viably challenge a federal grand jury subpoena.

Motion to Quash Subpoena

There are a variety of reasons why counsel may elect to challenge the grand jury subpoena rather than simply direct a corporate client hand over the documents. For example, a motion to quash a grand jury subpoena is appropriate under Rule 17(c) of the Federal Rules of Criminal Procedure “if compliance would be unreasonable or oppressive.” The subpoena may be quashed if it seeks information that is privileged. The subpoena may not be overly broad. [9] The subpoena must call for information that is relevant to the crimes under investigation. [10] The subpoena must encompass a reasonable time frame.” [11] The subpoena must describe the information with sufficient particularity to allow for a response. [12]

If the subpoena is being used to harass or intimidate, the subpoena may also be quashed.” [13] The judge may quash grand jury subpoenas in the proper exercise of the court's Rule 17(c) supervisory powers even though the subpoenaed materials are not covered by a statutory, constitutional, or common law privilege. [14] Under Rule 17(c), the district court is called upon to determine whether the subpoenas are “unreasonable and oppressive,” not just whether they are privileged. [15]

The district court may require the government to initially demonstrate the relevance of the subpoenaed documents to a legitimate grand jury investigation once the subpoena is challenged. In one federal circuit, the government's initial burden may be satisfied by the government's in camera filing of a “Schofield” affidavit containing a brief description of the nature or purpose of the grand jury investigation and general relevance of the subpoenaed documents to the investigation. [16] However, other federal circuits do not require the government to make an initial showing of relevancy. [17]

While a motion to quash may be appropriate, the client should never simply ignore, refuse, or fail to produce documents in defiance of a subpoena. If that occurs, then the person may face civil or criminal contempt proceedings under Rule 17(g). It is not a strict liability standard. There is a requirement for the government to prove the party failed to obey the subpoena “without adequate excuse” in order for the party to be held in contempt. However, if the government meets its burden, the consequences can be dire. By statute, the federal court has the power and discretion to punish contempt by fine or imprisonment if the misbehavior obstructs the administration of justice. [18]

Words of Wisdom

If a person is served with a federal grand jury subpoena or has the misfortune of learning that he or she is the subject of a federal grand jury investigation, it is prudent for the corporation to consult with experienced legal counsel. White collar defense counsel can provide legal advice to assist the person in making an informed decision regarding the validity of the subpoena, on what documents should be produced, as well as whether or not to cooperate with federal agents who come knocking at the door next time.

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Craig S. Denney is counsel with Downey Brand LLP. He works out of the firm's Reno office and practices in the areas of white collar criminal defense and civil litigation in state and federal courts in Nevada and California. Prior to entering private practice, he served as a federal prosecutor in the U.S. Attorney's Office in Nevada for seven years. Mr. Denney is a NTLA member and board certified by the National Board of Trial Advocacy (NBTA) in criminal trial advocacy.

 

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[1] See In re Grand Jury , 286 F.3d 153, 159 (3d Cir. 2002)(subpoena is most important tool of grand jury investigation); Fed. R. Crim. P. 17(c)(1)(grand jury can subpoena persons to produce documents, other physical evidence, and data);

[2] “Grand juries are not licensed to engage in arbitrary fishing expeditions, nor may they select targets of investigation out of malice or an intent to harass.” United States v. R. Enterprises , 498 U.S. 292, 299, 111 S.Ct. 722, 727 (1991);

[3] Upjohn v. United States , 449 U.S. 383, 389 (1976);

[4] Id .

[5] See United States v. United States Machinery Corp ., 89 F.Supp. 357 (D. Mass. 1950);

[6] Hickman v. Taylor , 329 U.S. 495, 514-15 (1947);

[7] In re Special September 1978 Grand Jury II , 640 F.2d 49 (7 th Cir. 1980);

[8] In re Grand Jury Proceedings (FCM Corp.), 599 F.2d 1224 (3d Cir. 1979);

[9] Brown v. United States , 276 U.S. 134 (1928); In re November 1975 Grand Jury , 433 F. Supp. 1094, 1097 (N.D. Ill. 1977);

[10] United States v. R. Enterprises , 498 U.S. 292 (1991); Hale v. Henkel , 201 U.S. 43, 71 (1906); In re Grand Jury Matters , 751 F.2d 13, 18 (1 st Cir. 1984);

[11] Brown , 276 U.S. at 143; In re Grand Jury Matters , 751 F.2d at 18;

[12] Id .

[13] See United States v. (Under Seal ), 714 F.2d 347, 349 (4 th Cir. 1983); United States v. Doe , 541 F.2d 490, 492 (5 th Cir. 1976);

[14] See United States v. Winner , 641 F.2d 825 (10 th Cir. 1981)(subpoenaed materials not sufficiently relevant to warrant production); United States v. Wencke , 604 F.2d 607 (9 th Cir. 1979)(subpoena overbroad); United States v. Daly , 481 F.2d 28 (8 th Cir.)(subpoena quashed as overbroad, unreasonable, oppressive and lacking in particularity and relevance), cert. denied, 414 U.S. 1064, 94 S.Ct. 571 (1973); United States v. R Enterprises , 498 U.S. 292, 301-02 (1991)(evaluate subpoena on “reasonableness” standard); Margoles v. United States , 402 F.2d 450 (7 th Cir. 1968)(subpoena clearly overbroad and therefore unreasonable);

[15] See Matter of Special April 1977 Grand Jury, 581 F.2d 589 (7 th Cir.)(considering privilege question and Rule 17(c) reasonableness question separately), cert. denied, 439 U.S. 1046, 99 S.Ct. 721 (1978);

[16] In re Grand Jury Proceedings (Schofield I), 486 F.2d 85, 93 (3d Cir. 1973); In re Grand Jury Proceedings (Schofield II), 507 F.2d 963, 966 (3d Cir. 1975);

[17] See In re Pantoljas, 628 F.2d 701, 704 (1 st Cir. 1980); In re Grand Jury Investigation (McLean), 565 F.2d 318 (5th Cir. 1977); In re Grand Jury Proceedings (Hellman), 756 F.2d 428, 431 (6 th Cir. 1986);

[18] See 18 U.S.C. § 401;