745 F.3d 681 (3d Cir. 2014)
Corporation, a Pennsylvania consulting firm, and its President and Managing Director Client are targets of an ongoing grand jury investigation in the Eastern District of Pennsylvania into alleged Foreign Corrupt Practices Act violations.1
Between 2007 and 2009, Corporation advised five companies on financing from a United Kingdom-headquartered Bank for oil and gas projects. Two projects were approved, generating nearly $8 million in success fees to Corporation.2
Corporation made payments totaling more than $3.5 million to the sister of Banker, the Bank official overseeing the financing, within months of receiving those fees.3 No evidence showed that Banker's sister worked on the projects or contributed to Corporation's other ventures.4
In April 2008, Client consulted Attorney, who maintained an office at Corporation's headquarters rent-free in exchange for occasional legal advice, about a planned payment to Banker to expedite project approval.5 Attorney researched the FCPA, asked whether the Bank was a government entity and Banker a government official, and advised against making the payment.6 Client stated he would proceed anyway, received a copy of the FCPA from Attorney, and ended the professional relationship after this exchange.7
In February 2010, the Bank began an internal investigation into the transactions with Banker's sister. The United Kingdom's Overseas Anti-Corruption Unit learned of the matter, informed the FBI, and arrested Banker and his sister.8 The FBI opened its investigation into Intervenors that same month.9
A grand jury subpoena issued to Attorney in 2012.10 On June 18, 2012, the Government moved to enforce the subpoena and compel Attorney's grand jury testimony.11 Corporation and Client moved to intervene on September 4, 2012, and the District Court granted intervention.12
After briefing, the District Court determined that it would conduct an in camera examination of Attorney outside the presence of Intervenors and the Government to determine the applicability of the crime-fraud exception.13 The District Court invited Intervenors and the Government to submit questions for the District Court to ask Attorney, which both did.14 On January 8, 2013, the District Court questioned Attorney in camera, with only Attorney's own counsel present.15
On January 18, 2013, the District Court issued a memorandum and order granting the Government's motion to enforce the subpoena and directing Attorney to testify before the grand jury.16 Based upon its review of the Government's Ex Parte Affidavit, the District Court found a reasonable basis to suspect that Intervenors intended to commit a crime when Client consulted Attorney and could have used the information gleaned from the consultation in furtherance of the crime.17 The District Court also declined to release a transcript of the testimony.18
Intervenors timely appealed and the District Court granted a stay of its order compelling Attorney's grand jury testimony pending resolution of this appeal.19 The appeal challenges the decision to conduct the in camera examination, the procedures used for it, the finding that the crime-fraud exception applies, and work product protection for Attorney's recollections.20
Whether the standard announced in United States v. Zolin applies to determine whether to conduct an in camera examination of an attorney-witness to assess the crime-fraud exception?21
The Zolin standard requires a showing of a factual basis adequate to support a good faith belief by a reasonable person that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies.22 This standard governs examinations of both documents and oral communications with an attorney-witness.23
Yes. The court weighed concerns over erosion of the privilege, due process, burdens on district courts, and malleability of witness memory against the need to expose abuses of the privilege that cannot be shown by extrinsic evidence alone.24 The same standard avoids creating an incentive for clients to keep communications oral only, which would otherwise insulate them from the crime-fraud exception.25
Applying the rule to the established facts, the Government's Ex Parte Affidavit supplied details from the FBI investigation into the Bank financing projects and Attorney's statement to the FBI confirming consultation on a financing project. This supplied the required factual basis.26 The District Court therefore properly invoked the Zolin threshold before examining Attorney in camera.27
The Zolin standard applies to the in camera examination of Attorney.28
Whether the District Court abused its discretion in applying the Zolin standard and deciding to conduct an in camera examination of Attorney based on the Government's Ex Parte Affidavit?29
Once a district court determines that the Zolin threshold has been met, its decision to conduct an in camera examination and its choice of procedures for that examination are reviewed for abuse of discretion.30
No. The Ex Parte Affidavit contained sufficient details from the FBI investigation and Attorney's limited statement to the FBI to support a good-faith belief that examination might reveal evidence of the crime-fraud exception.31
Applying the rule to the established facts, the affidavit described the timing of the more than $3.5 million payments to Banker's sister within months of the nearly $8 million success fees. It also noted the absence of any evidence that Banker's sister performed work on the projects.32 The District Court therefore acted within its discretion when it scheduled and conducted the January 8, 2013 examination after inviting questions from both sides.33
The District Court did not abuse its discretion in applying the Zolin standard or in deciding to conduct the in camera examination.34
Whether the District Court abused its discretion in excluding Intervenors from the in camera examination and declining to release a transcript or summary of Attorney's testimony?35
No. The District Court balanced the ongoing grand-jury investigation against the parallel public prosecution in the United Kingdom and concluded that significant undisclosed information remained before the grand jury.38
Applying the rule to the established facts, release of the transcript would have allowed Intervenors to preview both Attorney's eventual grand-jury testimony and the Government's questions reflecting evidence already presented to the grand jury.39 The District Court therefore properly excluded Intervenors and denied them any transcript or summary while still permitting them to interview Attorney independently if he agreed.40
The District Court did not abuse its discretion in excluding Intervenors from the examination and in refusing to release a transcript or summary.41
Whether the District Court abused its discretion in determining that the crime-fraud exception applies to the communications between Client and Attorney?42
The crime-fraud exception applies where there is a reasonable basis to suspect that the client was committing or intending to commit a crime or fraud at the time of the consultation and that the attorney-client communications were used in furtherance of that crime or fraud.43 A district court's finding on this issue is reviewed for abuse of discretion.44
No. The District Court did not abuse its discretion in determining that the crime-fraud exception applies to the communications between Client and Attorney.
Client approached Attorney in April 2008 already intending to make a payment to Banker to expedite project approval, as shown by Client's insistence on proceeding after Attorney advised against it and by the fact that the payment occurred in the same month the Bank approved the financing.45
Applying the rule to the established facts, Attorney's questions about whether the Bank was a government entity and whether Banker was a government official supplied Client with information that could be used to route payments through Banker's sister, thereby advancing the suspected FCPA violation.46 The District Court therefore did not abuse its discretion in finding a reasonable basis to conclude that the communications were used in furtherance of the crime.47
The District Court did not abuse its discretion in determining that the crime-fraud exception applies.48
Whether Attorney's recollections of the communications qualify as protected work product?49
No. The consultation occurred in April 2008 in the ordinary course of a business transaction, nearly two years before any investigation began, and therefore was not prepared in anticipation of litigation.52
Applying the rule to the established facts, Attorney's recollections and research concerned only the proposed payment to Banker and the text of the FCPA, none of which was generated for possible litigation.53 Because the crime-fraud finding independently overcomes work-product protection, Attorney's recollections are not shielded from disclosure to the grand jury.54
Attorney's recollections do not qualify as protected work product.55