Tuesday, November 16, 2010

Decision of Interest: Mohawk, Perlman, and the Appealability of Privilege Rulings (U.S. v. Krane)

As covered earlier here, the Supreme Court decided last year that an order compelling disclosure of a document despite a claim of attorney-client privilege is not immediately appealable under the collateral order doctrine. Mohawk Industries, Inc. v. Carpenter, 130 S. Ct. 599 (2009). A recent decision in the Ninth Circuit, United States v. Krane, No. 10-30247, 2010 WL 4260978, 2010 U.S. App. LEXIS 22605 (Oct. 29, 2010), holds that Mohawk does not abrogate the so-called Perlman rule, which derives from Perlman v. United States, 247 U.S. 7 (1918). The Ninth Circuit writes (some citations omitted): 

Under Perlman, a discovery order directed at a disinterested third-party custodian of privileged documents is immediately appealable because the third party, presumably lacking a sufficient stake in the proceeding, would most likely produce the documents rather than submit to a contempt citation.

The Perlman rule survives the Supreme Court's recent decision in Mohawk. In Mohawk, the Supreme Court held that “disclosure orders adverse to the attorney-client privilege” are not subject to interlocutory review under the Cohen “collateral order” exception to the final-judgment rule of 28 U.S.C. § 1291.

Perlman and Mohawk are not in tension. When assessing the jurisdictional basis for an interlocutory appeal, we have considered the Perlman rule and the Cohen collateral order exception separately, as distinct doctrines.

Mohawk forecloses interlocutory appeal of some district court orders in reliance on the fact that “postjudgment appeals generally suffice to protect the rights of litigants and assure the vitality of the attorney-client privilege.” 130 S.Ct. at 606; see also id. at 607-08 (surveying “several potential avenues” by which “litigants confronted with a particularly injurious or novel privilege ruling” might seek its immediate review “apart from collateral order appeal,” including by not complying with a disclosure order and then receiving, and appealing, a contempt citation). In contrast, the Perlman rule applies only when the privilege holder is powerless to avert the mischief of a district court's discovery order because the materials in question are held by a disinterested third party. Such third parties . . . may be likely to forgo suffering a contempt citation and appealing in favor of disclosure. . . . Further, in this case, neither the privilege holder nor the custodian of the relevant documents are parties to the underlying criminal proceedings. Thus, for all practical purposes, this appeal is [the privilege holder’s] only opportunity to seek review of the district court's order adverse to its claims of attorney-client privilege.

For more information on the case, see U.S. Law Week (79 USLW 1599).



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