April 22, 2013
Will the "Public Safety Emergency Exception" Apply in White-Collar Cases?
The government decision to delay Miranda warnings, and also the first appearance before a judge and the assignment of counsel, for Dzhokhar Tsarnaev, the surviving alleged Boston Marathon bomber, was a tactical one, no doubt based largely on an evaluation that any admission Tsarnaev makes is unnecessary to a government case (eyewitnesses, an admission, videotapes, possession of explosives, flight, etc.) which appears to be overwhelming.
The broad "public safety emergency exception" which the government asserts is a questionable Department of Justice attempt to expand the narrow exception announced in New York v. Quarles, 467 U.S. 649 (1984). The government's aggressive stance is based in part on a belief that Miranda does not prescribe a procedural requirement for police questioning, but is only a prerequisite for the admissibility at trial of statements made by a defendant. Under such reasoning, government agents are free to violate the dictates of Miranda (and perhaps other constitutional rights) with no harm to their case except a return to the status quo ante.
Aggressive law enforcement tactics against criminal suspects accused of particular heinous crimes, such as terrorism, murder, kidnapping and large-scale drug dealing, gradually work their way into the general law enforcement toolbox. Tactics used against drug dealers and organized crime figures, such as extensive electronic surveillance, undercover agents, forfeiture of assets and disallowance of attorneys' fees, and exceedingly high bail requests, for instance, are no longer uncommon in white collar cases.
I wonder whether the "public safety emergency exception" is so far off. If it is acceptable under this exception to allow the government to disregard Miranda and Federal Rule of Criminal Procedure 5(a)(1)(A) (requiring agents to bring one arrested before a court "without necessary delay") in order ostensibly to prevent future terrorist crimes, will it also become acceptable to detain for 48 hours and question without Miranda warnings, for instance, those who have provided inside information about unknown persons to whom they might have provided such information in order to deter imminent or future insider trading or those who have hacked computers about accomplices or others who might commit imminent or future computer crimes?
October 07, 2012
Defense Witness Immunity & Global Tech - Important Issues on Cert
An interesting issue is presented to the Supreme Court on cert - defense witness immunity. The case of Walton v. the United States presents an issue that has plagued many a defense counsel - what do you do when you have a critical defense witness who will not testify without immunity. The government has the ability to give a witness immunity and often they do so in criminal cases to secure cooperation for the prosecution. But shouldn't the defense also be allowed this immunity when the evidence that would be offered is exculpatory to the defendant? This cert petition presents strong arguments showing the differing views among the circuits on defense witness immunity.
The Walton Petition also has a post-Global Tech issue. (for background on Global Tech, see here and here). The obvious is argued - Global Tech applies to criminal cases. The Court used criminal law doctrine in deciding the case, so of course it should apply to criminal law decisions. I am covering Global Tech in both criminal law and white collar crime classes because it summarizes the law on willful blindness. If the Court was using this criminal standard for a civil case and remarking that this is how it gets handled criminally, therefore, of course, it must be the appropriate standard for a criminal case. Even in his dissent, Justice Kennedy notes that "[t]he Court appears to endorse the willful blindness doctrine here for all federal criminal cases involving knowledge." He didn't like that they were doing this, but it was pretty clear that this is what they did. This cert petition, if granted, will send this message loudly and clearly to the Fifth Circuit.
Filing a separate cert petition is James Brooks. Argued here by attorneys Gerald H. Goldstein and Cynthia Eve Hujar Orr are that "[t]he jury instructions here not only failed to require that Brooks take deliberate steps to blind himself to the illegal purpose of his conduct, but additionally instructed the jury that he did not need to 'know' or even suspect that his conduct was unlawful."Global Tech clearly requires both.
Petition for Cert for Brookes - Download Brooks Petition for Writ of Certiorari
May 30, 2012
Ninth Circuit Looks at Selective Waiver
In In re: Pacific Pictures the Ninth Circuit looks at "whether a party waives attorney-client privilege forever by voluntarily disclosing privileged documents to the federal government." The court starts with the principle that "voluntarily disclosing privileged documents to third parties will generally destroy the privilege." The court rejects the petitioners argument that disclosing documents to the government is different from disclosing them to civil litigants and that a selective waiver should apply. The court notes that legislative attempts to change the evidence rules to allow for selective waiver have failed so far.
The court also does not enforce a confidentiality letter between the corporation and the government. The court states:
"The only justification behind enforcing such agreements would be to encourage cooperation with the government. But Congress has declined to adopt even this limited form of selective waiver."
The court rejected a claim that "adopting such a rule will drastically impair law enforcement attempts to investigate espionage against 'attorneys, financial institutions, medical providers, national security agencies, judges, large corporations, or law firms.'"
Entities provide significant materials to the government as part of deferred and non-prosecution agreements. Not having a privilege needs to be considered by corporate counsel in deciding what to give to the government.
May 03, 2012
Prosecutorial Discretion Went Awry in Nullification Case
Two weeks ago Judge Kimba Wood of the Southern District of New York dismissed the indictment in one of the sillier prosecutions brought in that court in recent years. See article here and opinion here - Download Opinion. Julian P. Heicklen, an 80 year-old retired professor, was charged with jury tampering (18 U.S.C. 1503) for distributing at the courthouse steps pamphlets of the Fully Informed Jury Association ("FIJA") that advocated jury nullification.
The pamphlet stated, in part: "You may choose to vote to acquit, even when the evidence proves that the defendant 'did it,' if your conscience so dictates." It also suggested that jurors may choose to be less than candid when asked questions during jury selection about their ability to follow the law as instructed by the judge. It is "your moral choice," the pamphlet stated, whether to "give answers that are likely to get you excused from serving, or say whatever it takes to be selected, so you can do your part to see that justice is served."
Jury nullification, as commonly understood, goes only one way. It allows jurors to ignore their oaths and acquit a defendant even if they are convinced that her guilt has been proven beyond a reasonable doubt. The potential effect of Heicklen's pamphleteering -- if it were to have any, which I question -- would be acquittals (or hung juries) in cases that otherwise would have resulted in jury verdicts of guilty.
The prosecutors in the Southern District were understandably upset. Heicklen was in a sense treading on their turf -- both the courthouse and the law. The prosecutors reacted aggressively, investigating by using an undercover agent and indicting based on an apparently unclear statute and in a bedrock area of First Amendment protection. In court, a prosecutor called Heicklen's advocacy "a significant and important threat to our judicial system."
Rather than the crucial decision to prosecute being made by independent, disinterested prosecutors, as it should always be, here it was made and carried out by the very prosecutors who were in a practical sense themselves the aggrieved parties or "victims." It was their cases -- their convictions -- that Heicklen arguably put in jeopardy by suggesting that jurors might still acquit even if they believed the defendant had been proven guilty beyond a reasonable doubt. The Southern District prosecutors were too conflicted and too involved to be allowed to make the decision whether to prosecute Heicklen (and they were too conflicted and too involved to make a reasoned, dispassionate and intelligent decision). The conflict here was not the potential or hypothetical conflict that prosecutors often argue should disqualify defense counsel, but an actual one. If the prosecutors felt Heicklen should have been prosecuted, they should have referred the ultimate decision to the Department of Justice in Washington. (While I do not know definitively that the Southern District prosecutors did not, if they had, I would have expected that the case would have been prosecuted by Central DOJ lawyers.)
There is an obvious imbalance in the criminal justice system. One litigant, the prosecutor, may charge the opposing litigant with perjury, the litigant's lawyer with obstruction and the litigant's advocate with jury tampering. The other litigant, the defendant (and his counsel), can only howl about agents who lie and prosecutors who secure convictions and jail sentences by concealing evidence. The power of one litigant to protect his case (or cases) by charging one seeking to undermine it (or them) is a drastic one that should be used with care and extreme caution. Here, prosecutorial discretion went awry.
Judge Wood's decision was calm, deliberate, and thorough, considering statutory construction, legislative history, judicial rulings and constitutional implications, and not, at least directly, criticizing the prosecution. Granting the defendant's pre-trial motion to dismiss under Fed. R. Crim. P. 12(b) on the grounds that the facts did not state an offense, she ruled that the statute was limited to advocacy relating to a specific case, not a general philosophy, as here. Although Judge Wood ultimately relied on a plain language analysis and did not explicitly rule on the First Amendment issue, she indicated that Heicklen's conduct was constitutionally protected free speech.
The case represents governmental overreaching in a sensitive free speech area. Perhaps if the decision whether to prosecute were made at Central DOJ, it would have been different, and the Office of the United States Attorney for the Southern District of New York, a highly respected and effective office, would have been spared an embarrassing defeat (and Mr. Heicklen spared a prosecution, although I suspect he rather enjoyed it).
The ultimate result may be that FIJA now has a license (in the form of a district court decision) to distribute literature suggesting nullification on the steps of federal courthouses, or nearby, throughout the nation. (Judge Wood did recognize that reasonable restrictions on such distribution under other laws may apply.)
April 04, 2012
DOJ's Lafler/Frye Motion Goes Too Far
In companion cases decided two weeks ago, Missouri v. Frye and Lafler v. Cooper, the Supreme Court held that the Sixth Amendment right to effective assistance of counsel applies to the plea bargaining process and that a defendant who rejected a favorable plea bargain based on incompetent advice from his attorney may be entitled to relief even though he was subsequently convicted at trial.
In Frye, the defense attorney failed to relay a plea offer from the prosecution. The uncommunicated offer expired and the defendant later accepted a plea deal that involved a substantially greater sentence than did the original offer. The Court held that "as a general rule" defense counsel is required to communicate to his client a "formal offer" that is favorable in that it may result in a lesser sentence, a conviction of a lesser crime or crimes, or both.
In Cooper (the name of the defendant), the attorney conveyed the plea offer but advised the client to reject it based on the attorney's constitutionally defective assessment of the strength of the case. The Court held that such advice in plea-bargaining discussions was ineffective assistance and was not rendered irrelevant by a later conviction at trial. Both decisions were by a 5-4 majority with the opinion written by Justice Kennedy.
Thus, in sum, the Supreme Court has held that in the plea bargaining process, the defense attorney must convey a favorable plea offer (Frye) and must not give ineffective advice relating to the decision to accept or reject it (Cooper). Either failure may result in relief even if the defendant were later convicted after trial and sentenced accordingly.
The Department of Justice, understandably and reasonably concerned in protecting convictions in pending cases headed for trial from later appellate and collateral attack on the grounds that a plea offer was not communicated or was rejected because of unsound advice, has responded, at least in one jurisdiction, with a motion to make a record of "plea negotiation activity." See here - Download Motion Pursuant to Lafler and Frye. This "pro-active" motion essentially contains two prongs.
First, the defense counsel should report the plea offer to the Court in the presence of the prosecutor, and the defendant should acknowledge having rejected it. That prong appears to me generally unobjectionable, although I see no reason why the prosecutor, the offeror, should not state the offer, rather than the defense counsel, the offeree.
Second, DOJ requests that the defense counsel's advice concerning whether to accept or reject the plea also be placed in the record. Recognizing that this advice may be privileged, as Frye states, DOJ asks that this be done in a "sealed ex parte document" signed by the defendant and defense counsel. That prong is highly objectionable, and DOJ should withdraw it. If not, defense counsel should challenge it and courts should reject it.
Information that is "privileged" as attorney-client confidences should not be disclosed to anyone, including the judge, unless absolutely necessary (as it might be in a challenge as to whether the communication is actually privileged). Such disclosure, for instance, might reveal the defense trial strategy so that the judge might be influenced in her trial rulings. It might reveal uncharged crimes about which the judge is unaware. It might suggest that the defendant's arguably unreasonable refusal to accept the attorney's strong advice to plead guilty reflects a lack of acceptance of responsibility that the judge might consider negatively at sentence. It might also reveal the attorney's candid view of the judge's ability, fairness and decency, a factor in many plea decisions.
To be sure, a failure to make a record of an attorney's advice whether to plead guilty might lead to an increased number of appeals or collateral proceedings based on alleged unsound advice, although, as pointed out in Cooper, past history does not support this conclusion. This standard argument, that the floodgates will be opened, however, applies equally to the failure to make a record as to the attorney's advice whether a defendant should testify, or should forego for tactical reasons a motion to suppress, or should call certain witnesses, or any number of issues in a criminal proceeding.
DOJ should reconsider its request that the attorney divulge, even ex parte, confidential plea bargaining discussions between lawyer and client beyond merely that the offer was communicated and not accepted. In the absence of a withdrawal of this request by DOJ, defense lawyers should not voluntarily comply (unless it is to their clients' advantage, and I can think of many instances where a defense lawyer would seize the opportunity to give his evaluation of the case to the judge ex parte), and courts should not enforce such an intrusive requirement.
December 09, 2011
Corzine Surprises and Testifies
Former MF Global chief executive Jon Corzine chose not to invoke his constitutional right to silence and yesterday testified before a House committee. While Corzine's decision to testify surprised me (see here), his testimony was what I would have expected of a corporate officer in his position -- he saw no evil, heard no evil and did no evil. Indeed, Corzine was "stunned" when he was told that MF Global could not account for a reported $1.2 billion missing from customer funds.
Perhaps previewing a defense he may later present in a courtroom, Corzine said it was possible, although improbable, that his employees might have moved customer funds at what they believed was a direction from him. If so, however, he testified they must have misunderstood or misinterpreted what he said.
December 06, 2011
Will Corzine Take the Fifth?
Former MF Global chief executive and former Senator and Governor Jon Corzine has reportedly been subpoenaed to testify this Thursday, December 8 before the House Agricultural Committee concerning MF Global.
The ostensible primary purpose of Congressional committee hearings is to gain information so that the Congresspersons can enact appropriate legislation. Cynics, however, might contend that a major purpose is to let the folks back home know that their Congressperson is tough on Wall Street.
In any case Corzine, on advice of his low-key high-quality counsel, Andrew Levander, will most likely assert his Fifth Amendment privilege against self-incrimination and decline to answer questions. MF Global reportedly "borrowed" customer funds to support its precarious positions in foreign sovereign debt, commingling these funds with its own funds. Although I do not venture to state whether any crime was committed, or whether Corzine was involved in or knowledgeable of any wrongful activity, most criminal defense lawyers representing a hands-on head of a less-than-giant entity against which such accusations have been bruited at this stage would take a conservative approach and advise their client to remain silent. On the other hand, public figures, concerned with their political and public futures (although Corzine's future political career does not look rosy) and often with high estimations of their own powers of persuasion, sometimes feel that they must present their side of the story or else look like "criminals," and that they can do so effectively.
The obvious dangers of testifying are that the witness, whatever his culpability or lack of culpability, may make statements that may later be used as admissions in a criminal or other proceeding or, as in Roger Clemens' case, as the basis for a perjury charge. Of course, although the Supreme Court has pronounced that the protection of the Fifth Amendment applies to the innocent as well as the guilty, a refusal to answer questions is viewed by most people as an indication of guilt. Thus, the decision whether to testify is a "damned if you do, damned if you don't" situation.
Corzine, if he does not wish to testify, through his lawyers will likely seek, or has sought already, to eliminate the necessity of his physical appearance by submitting a letter explaining his intention to invoke his constitutional privilege. That request almost certainly has been or will be refused. Letters do not make good TV. Alternatively, Corzine likely will seek, or has already sought, to limit his appearance to a short statement stating his assertion of his constitutional right against self-incrimination. That request might also be refused. The Congresspersons may want Corzine to undergo a public flogging by "Q&R" -- question and refusal. That does make good TV.
Corzine could conceivably be granted use immunity and, since his resulting testimony could not then be used against him, be deprived of his Fifth Amendment protection and required to testify. However, since Oliver North's conviction was overturned based on the taint from his immunized Congressional hearing testimony, Congress has been extremely wary of using its immunity power.
September 25, 2011
Solyndra Execs: The Best Week Possible
The Washington Post's Chris Cillizza thinks Solyndra had the worst week in Washington, because its CEO and CFO invoked the Fifth Amendment's Privilege Against Self-Incrimination in front of the House Energy and Commerce Committee. According to Cillizza, the silence of the executives "won't win them any allies in Washington." What allies? These guys already have bruises all over their bodies from where politicians have been touching them with eleven foot poles. Cillizza believes that their taking five "ensures that the probe into how Solyndra won the initial loan in 2009...will not only continue...but grow." This is silly. A vigorous criminal investigation is already assured. If the execs had talked they only would have made the DOJ's job easier.
The first place a bank looks when a big loan goes bad is the borrower's application, including the financial statement. For decades the DOJ has operated as a criminal collection agency for our country's financial institutions. It only gets worse if the loan, in this case about a half billion, is guaranteed by Uncle Sugar. Add in the DC gang mentality attendant upon what has become a political scandal and you would have to be a cretin to open yourself up to possible charges of false statements, perjury, or obstruction of justice. This one was a no-brainer. Kudos to the executives and their attorneys for not being idiots.
August 24, 2011
Norris Amicus Brief Filed
The National Association of Criminal Defense Lawyers (NACDL) filed an amicus brief in the Ian Norris case - Download Norris v United States (11-91) Brief of NACDL as Amicus Curiae in Support of Petitioner_FINAL It highlights some of the important issues in this case. (for background see here). It brings out important issues such as:
- "[T]he Third Circuit's ruling renders effective representation of both the corporate and individual clients ensnared in a government investigation impossible, and encroaches on the rights embodied in the Sixth Amendment."
- "The decision endorses Government efforts to compel counsel to testify against their clients."
The Supreme Court raised in footnote 7 of Arthur Andersen LLP that there was a split in interpreting "corruptly persuades"in 18 USC 1512(b). The Court did not resolve this split in Andersen.
The NACDL brief places front and center the question of what should be the scope of the Bevill test. It also shows the ramifications of continuing with this test, a test that runs counter an important constitutional principle. Lower courts have been looking to the Third Circuit Bevill test, but it has yet to be endorsed in any Supreme Court opinion. Norris, presents this issue with an added dimension of a statute that has mixed interpretations.
August 22, 2011
Petition for Cert Filed by CEO Ian Norris
The Norris case provides an opportunity to consider the role of corporate counsel in dealing with a CEO, in addition to resolving a circuit split with the witness-tampering statute - 18 USC 1512(b). The defense raises the issue as to "whether a person 'corruptly persuades' another in violation of the statute by persuading him or her to decline to provide incriminating information to authorities, where the other person enjoys a privilege or right to so decline."
The underlying factual basis that sets the stage for this issue raises concerns that could use Supreme Court clarification. As noted here and here, the Third Circuit ruled that the district court "did not legally err in applying" the Bevill test. Deferring to the district court, the Third Circuit held that permitting the company's former counsel to testify at trial was not error as Norris had not met "his burden in asserting his privilege pursuant to the five-factor test set forth in Bevill. The defendant had argued that the Bevill standard should not "apply here, as here, both the individual and the corporation have an express attorney-client relationship with counsel."
Ian Norris, CEO of Morgan Crucible, originally faced three counts of obstruction of justice. He was acquitted of two counts following his extradition and trial in the United States, but was convicted of conspiracy to tamper with grand jury witnesses. A key witness against the defendant was corporate counsel. The trial court allowed corporate counsel to testify despite the defendant's argument that corporate counsel had represented Norris. Some of the evidence offered by the defense is included in the attachments to the cert petition. For example, the Antitrust Division explicitly asked counsel who he represented, saying "if your representation is limited to the corporation only, I would greatly appreciate your confirming that fact for me so that there are no misunderstandings as to the scope of your representation." (p. 181-82a). The exchange of letters has counsel telling the Antitrust Division that "[w]e presumptively also represent all current employees of the companies in connection with the matter." It also states - "[s]hould you wish to call other current employees, I assume that we would also represent those individuals." (p. 185a). Norris presents many other documents in the appendix to support his argument that corporate counsel represented him.
Norris Cert Petition - Download Norris Cert Petition (efile)
The government did not file a responsive brief and the Supreme Docket has the case distributed for a conference of September 26, 2011. See here.
See also Sue Reisinger, Corporate Counsel, Jailed CEO Ian Norris Appeals His Conviction to SCOTUS; D. Daniel Sokol, Antitrust & Competition Policy Blog, Norris Cert Petition to the Supreme Court
July 01, 2011
Brady From Heaven For Strauss-Kahn
Dominique Straus-Kahn has received from the district attorney what most defendants never get -- early Brady material. Today's New York Times reports that "Strauss-Kahn Case Seen as Near Collapse" because prosecution investigators have discovered "major holes in the credibility" of the housekeeper who claims he sexually attacked her.
The District Attorney should be commended for the early disclosure of the purported victim's credibility problems. I cannot help wonder, however, whether such disclosure would have been made -- certainly so early -- in a case where the defendant did not have such considerable legal and investigative firepower that it could be predicted that his team would itself eventually discover at least some of the victim's credibility problems. I also would love to know, and am sure I never will, what the discussions were in the prosecutor's office about whether and when to disclose this Brady material. In this connection, I also wonder whether the resignation of the head of the sex crimes unit a few days ago is just a coincidence.
Brady revelations by prosecutors are rarely easily made, especially when they are serious enough, as may well be the case here, to destroy the prosecution case. It goes against the grain for any competitor -- and most prosecutors are competitors trying to win -- to provide information that will hurt his case, let alone destroy it. And I have no doubt that at least some of the prosecutors involved in this case still firmly believe that Strauss-Kahn did sexually attack the housekeeper and that all this stuff about money laundering and the like is besides the point or, in legal parlance, immateriaL.
Experienced prosecutors know that they can almost always get away with Brady violations. The number of prosecutions or disciplinary actions against prosecutors for Brady violations is miniscule. Appellate courts are generally loathe to reverse convictions for anything but egregious Brady violations, generally finding that the withheld information was immaterial. There are certainly generally well-meaning prosecutors who would have withheld the exculpatory information here to increase their chances of achieving what they believe is the just result. And there are others less well-meaning, and far fewer, who would have withheld the information to advance their own careers.
Response by Professor Larry Ribstein here. (esp)
May 10, 2011
Hon. Titus Calls for Acquittal in Lauren Stevens Case
Hon. Roger Titus (nominated by George W. Bush) provides a moving statement in granting an acquittal of Lauren Stevens:
"I take my responsibility seriously. I practiced law for a long time and made a number of Rule 29 motions that -- or in the state system equivalent of them. I don't have a very good track record with those motions. In my seven and a half years as a jurist I have never granted one. There is, however, always a first."
The judge noted how attorney-client privilege material had been used in trial as a result of the prosecution obtaining them via a claim under the crime-fraud exception. He notes -
"With the 20/20 vision of hindsight, and that's always the place to be in terms of wisdom, the Massachusetts Order was an unfortunate one, because I now have benefitted from a trial in which these documents that were ordered produced were paraded in front of me and the prosecutors were permitted to forage through confidential files to support an argument for criminality of the conduct of the defendant.
"What those records demonstrate to the Court is, first of all, that access should not have been granted to them in them in the first place. . . But they also show that this was a client that was not engaged to assist a client to perpetrate a crime or fraud. Instead, the privileged documents in this case show a studied, thoughtful analysis of an extremely broad request from the Food and Drug Administration and an enormous effort to assemble information and respond on behalf of the client."
"The responses that were given by the defendant in this case may not have been perfect; they may not have satisfied the FDA. They were, however, sent to the FDA in the course of her bona fide legal respresentation of a client and in good faith reliance of both external and internal lawyers for GlaxoSmithKline."
The court notes near the end of the Order:
"I conclude on the basis of the record before me that only with a jaundiced eye and with an inference of guilt that's inconsistent with the presumption of innocence could a reasonable jury ever convict this defendant."
"There is an enormous potential for abuse in allowing prosecution of an attorney for the giving of legal advice. I conclude that the defendant in this case should never have been prosecuted and she should be permitted to resume her career."
Transcript of Hearing - Download 110510STEVENS (hat tip to Ronald Levine- Post & Schell)
May 02, 2011
Privilege in Jeopardy
April 11, 2011
En Banc Petition Filed in Norris case
The Third Circuit recently ruled in a closely watched case, on the issue of whether corporate counsel had in fact represented an individual within the corporation and as such the attorney-client privilege should apply. (see here) The unpublished opinion of the court found no error on the part of the district court. Counsel for Appellant Norris has now filed for a rehearing en banc. Three issues are presented in this Petition:
"I. The Panel Decision Squarely Conflicts With Shramm, Arthur Andersen, and Aguilar as to the Requisite Specific Intent for a Conspiracy to Obstruct a Grand Jury Proceeding;
II.The Panel Decision Squarely Conflicts with Farrell's Holding that 'Corrupt Persuasion' Does Not Include Persuading an Alleged Co-Conspirator to Withhold Incriminating Information;
III. The Panel Decision Misapplied Bevill to Permit the Evisceration of a Corporate Officer's Personal Attorney-Client Privilege."
Petition for Rehearing En Banc - Download 2011-04-06 Petition for Rehearing En Banc
March 23, 2011
Third Circuit Rules - OK for Corporate Counsel to Testify Against CEO
In a closely watched case (see here), the Third Circuit was asked to consider whether corporate counsel had in fact represented an individual within the corporation and as such the attorney-client privilege should apply. Defendant had argued that the Bevill standard should not "apply here, as here, both the individual and the corporation have an express attorney-client relationship with counsel." Reply Brief of Ian P. Norris - Download 2011-02-25 Norris Reply Brief.
The Third Circuit issued an unpublished opinion that resolves this issue in a paragraph, stating in part that:
"[t]he District Court in this case held an evidentiary hearing and ultimately determined that Norris failed to meet his burden in asserting his privilege pursuant to the five-factor test set forth in In the Matter of Bevill, Bresler & Schulman Asset Management Corp., 805 F.2d 120, 123 (3rd 1986). The District Court did not legally err in applying this test, and we see no clear error in the District Court's holding based on the facts elicited in the evidentiary hearing."
To all the corporate executives that are cooperating with corporate counsel thinking that the individual is representing them - beware....
Opinion- Download Opinion
March 14, 2011
Third Circuit Looking at Attorney-Client Privilege Case in a Corporate Setting
Sue Reisinger, Corporate Counsel, has a wonderful article titled, Court to Rule in Case of Imprisoned U.K. Exec That Carries Major Privilege Implications.
This case is another interesting one with a dilemma on whether corporate counsel has in fact represented an individual within the corporation. There are unusual twists to this case, that may exceed the confines of the existing 5-part Bevill standard (805 F.2d 120 (3d Cir. 1986)). Defendant argues that the Bevill standard should not "apply here, as here, both the individual and the corporation have an express attorney-client relationship with counsel." Reply Brief of Ian P. Norris - Download 2011-02-25 Norris Reply Brief Defendant is represented on appeal by Christopher M. Curran, J. Mark Gidley, Eileen M. Cole, and Claire A. DeLelle of White & Case. This case and others are being watched closely by individuals within corporations and also corporate counsel. Many put the obligation on corporate counsel to clarify who they represent and more importantly, who they do not represent. But should the government also have an obligation here?
August 31, 2010
Roger's Reputational Dilemma
As expected, Roger Clemens pled not guilty on Monday to charges of perjury, false statements, and obstruction of Congress. He is represented by two of the ablest white collar criminal defense attorneys in the country—Rusty Hardin of Houston and San Diego’s Mike Attanasio. I know these men and their work. They are stellar lawyers.
The government asked Judge Reggie Walton to make Clemens surrender his passport in order to reduce the risk of flight. Honest. They really did. Give me a break. Walton didn’t buy it.
It is generally assumed that Clemens could have taken five before Congress and was therefore foolish to testify and subject himself to possible perjury charges. I’m not completely convinced of this, since the activity Congress was investigating at the time appears to have been beyond the statute of limitations. How can you incriminate yourself by truthfully admitting to something that you can no longer be prosecuted for?
At any rate, Clemens appeared without a subpoena, so there was no question of him not testifying. His attorneys will be able to argue to the jury that he had everything to lose and nothing to gain by appearing and testifying. Ergo, he must have been telling the truth. This can be a powerful argument in skilled hands, particularly in front of a DC jury, but it is better not to be forced to make it at all-better not to be indicted in the first place.
Roger's dilemma is the dilemma of the client with exposure, even limited exposure, who cannot or will not do the prudent thing and shut the hell up. It is best not to testify under oath, or even talk to the government, if you face potential criminal prosecution. Just ask Martha Stewart. But some high profile clients cannot take the perceived damage to their reputations involved in invoking the privilege. Clemens had the example of Mark McGwire in front of him. McGwire’s reputation was permanently and severely damaged by his refusal, on Fifth Amendment grounds, to answer a Congressional panel’s questions.
I know, I know; the privilege protects the innocent as well as the guilty. But nobody believes that in television land. Had Clemens publicly invoked the privilege, he would have been scarred for life. And he is not some dime-a-dozen, $40 million bonus CEO. He is one of the immortals.
The reputational dilemma is not confined to high-profile clients or the decision to invoke the Fifth Amendment. As a prosecutor, I saw defendants refuse to take plea offers, including misdemeanors with no jail time, because they could not admit wrongdoing to a spouse or child. It is a reminder that the strategy and tactics of criminal defense work are not always confined to logical analysis. The human, emotional element is ever present.
August 31, 2010 in Celebrities, Congress, Current Affairs, Defense Counsel, Martha Stewart, News, Perjury, Privileges, Prosecutions, Prosecutors, Sports, Statutes | Permalink | Comments (6) | TrackBack
June 11, 2010
The Constitution (and its Confrontation Clause): An Inconvenience Pact
GUEST BLOGGER-SOLOMON L. WISENBERG
The Boston Globe carries this article today by John R. Ellement, echoing Massachusetts prosecutors' complaints that defense lawyers in the Bay State are "exploiting" the Supreme Court's 2009 Confrontation Clause decision in Melendez-Diaz v. Massachusetts. (Melendez-Diaz applied the Supreme Court's earlier Crawford v. Washington holding to forensic analysts' laboratory reports.) According to the article, "the state’s 35 chemists have been ordered to prepare for court 1,606 times, but actually testified only 184 times." Allegedly, some defense attorneys insist that state chemists appear for trial in hopes that scheduling conflicts will prevent their attendance and result in dismissal. Imagine that.
Although the story is generally well-written, Ellement fails to explain, in even the most rudimentary form, the Confrontation Clause principles behind the high Court's ruling. Thankfully, he does quote Massachusetts Association of Criminal Defense Lawyers' President John H. Cunha Jr., who reminds Ellement that "[t]o just come in there with a piece of paper that says somebody is guilty is contrary to our system,’’ and that “[c]ross-examination is supposed to test the evidence. . . . The U.S. Constitution is not a technicality.’’ No doubt Cunha made the Confrontation Clause point in more detail that failed to make its way into print.
The article is not without some irony. One of the bellyachers who Ellement quotes, concerning the supposed deleterious effects of Melendez-Diaz, is John A. Grossman, "the Patrick administration’s top specialist on forensic sciences." Grossman seems to have spoken to the press as part of an official effort to negatively assess Melendez-Diaz. Yet Ellement also reports, near the tail end of the piece, that, "yesterday, the Patrick administration announced it had appointed a UMass Memorial Medical Center official to take over the State Police lab, a job that has been vacant since 2007 after mismanagement of forensic evidence was discovered." (emphasis added).
June 02, 2010
DA Vance on Attorney-Client Privilege and Fees
As noted here, New York County District Attorney Cyrus R. Vance issued via his Chief Assistant District Attorney Daniel R. Alonso a Memo pertaining to charging organizations. One aspect caught my eye - privileges and attorney fees. The Memo states:
"... although the Office will not ordinarily request that an organization waive valid claims of attorney-client privilege or work product protection in order to be credited for its cooperation, where an organization relies on the attorney-client privilege or the work product doctrine to obstruct the investigation, or when it refuses to disclose relevant facts that will further the investigation, these factors will militate against cooperation credit. Similarly, although the Office will not ordinarily be influenced by an organization’s decision to provide for the legal expenses of its directors, officers, employees, or agents, or its decision to enter into an appropriate joint defense agreement, if such practices are made as part of an effort to obstruct, in any way, an investigation or prosecution, or if they result in relevant information’s becoming unavailable to the investigation, they will be considered in any decision whether to prosecute the organization." (footnote omitted)
On a brighter note, the policy does recognize the importance of collateral consequences in making a decision to charge a corporation.
Being corporate counsel seems to be more challenging these days in that the individual needs to be apprised of all the laws in the applicable jurisdictions - which these days can be international. He or she also has to be familiar with the policy guidelines for the different entities they operate within - which could be many states.
October 01, 2009
NACDL's 5th Annual Defending the White Collar Case Seminar - "Choppy Waters - The Ethics of Privilege and Disclosure," Thursday, October 1, 2009
Guest Blogger: Peter D. Hardy, Post & Schell, P.C. (Philadelphia, PA)
Moderator: Gerald B. Lefcourt
Gerald Lefcourt noted that it has been over 46 years since the Brady decision was issued, yet we still have no firm definition of Brady that most federal prosecutors can follow. There are varying and conflicting practices amongst prosecutors in regards to definitions and the proper time frame for disclosures. Moreover, incidents of Brady violations or potential violations are not uncommon.
Robert Cary represented Senator Ted Stevens. The heart of the defense was a note that Senator Stevens had sent to Bill Allen, the key government witness and the builder making improvements on the Senator’s chalet, which stated in part that the Senator wanted to make sure that Allen got fully paid, and that “friendship is one thing, but compliance with these ethics rules is another[.]” The government responded to this note by eliciting testimony from Allen that the note was just the Senator trying to concoct a cover story. After the guilty verdict, the second FBI agent on the case filed a self-described whistleblower complaint regarding conduct by the prosecution team. The Court ordered the government to provide discovery regarding the complaint, and a new prosecution team was put in place. New discovery contradicted directly the government’s theory and evidence at trial that Allen regarded the note as a mere cover story. Carey described the Attorney General as a hero for moving to dismiss the case. All of this happened only after a long trial and post-trial process (as well as Senator Stevens losing his re-election bid). Judge Sullivan, who oversaw the case, is to be commended for being careful and not simply taking the government’s word.
So, what should be done? Judge Gertner explained that the solution needs to involve the rules (ethical, court, and criminal procedure). The case law has slid into an outcome-determinative approach, which makes it very hard for the prosecutor to predict. The materiality standard is colliding with the harmless error doctrine. Brady had more to do with a failure to turn over evidence impugning the system, rather than predictions regarding potential outcomes. The definition of Brady should be re-assessed, and there also should be deadlines set for when information should be turned over: for example, 28 days before.
Professor Green described how the ABA code of ethics set forth in the 1970s a discovery rule for prosecutors: you must turn over information that would tend to negate the guilt of the accused. Everyone had assumed that this rule overlapped with Brady. But, the rule is not co-extensive with Brady – for example, it does not have a materiality standard. Rather, it categorically requires the disclosure of favorable information, or information which might lead to favorable evidence. A materiality test is really directed at post-conviction review, and is not well suited to govern the conduct of prosecutors at the time they are making their discovery decisions. Defense attorneys also need to know about exculpatory information in order to assess a case and decide whether or not to proceed to trial.
Paul Shechtman described federal plea agreements in New York which require waivers by the defendant of either impeachment and/or all exculpatory information. These plea waivers apparently run afoul of the rules just described by Professor Green. Current cases strongly suggest that prosecutors need more education regarding their obligations under Brady, in order to be better able to appreciate the exculpatory value of evidence. We need to reassess Brady, which has been hijacked by the materiality doctrine. The burden now is on the defendant to show materiality. In Brady, Justice Marshall wrote in dissent that the test instead should be harmless error, in which the government has the burden to show that the conviction should not be reversed. The materiality requirement invites courts to preserve convictions, despite poor decisions and poor decision-making processes by prosecutors.
Larry Thompson described a case in Detroit in which the prosecutor made false statements to the Court, and actually was prosecuted himself. Judge Gertner noted that part of the problem here is lack of meaningful remedies. There is professional discipline, but discipline is unlikely.
The panel then turned to attorney client privilege. Gerald Lefcourt noted that internal investigations, performed not by agents but corporation lawyers, can be disastrous for employees. No company wants to go to trial and become the next Arthur Anderson, so companies will go out of their way to avoid prosecution. The DOJ in effect has “outsourced” its investigations to corporation lawyers. Indeed, at least one employee has been prosecuted for obstruction of justice for allegedly lying to corporate counsel performing an internal investigation.
Larry Thompson stated that the strict application of the doctrine of respondeat superior is a problem for both employees and companies. If just one person acts as rogue employee, then all of the training and compliance efforts by the company may be for naught. Corporations really cannot go to trial, because the collateral consequences can be terrible. In an investigation, as corporate counsel, you need to find out what happened and you need your employees to talk to you. In the wake of the dismissals in the US v. Stein case (the KPMG criminal tax case), DOJ will be reluctant now to get involved in how a corporation deals with its own employees during its internal investigations.
The DOJ has changed what it has said about what constitutes cooperation by a corporation. Knowing or feeling that it has all the power, DOJ has imposed great demands upon corporations and its employees, and threatened the corporation with its own destruction. Gerald Lefcourt asked, is the government thereby coercing employees to speak, sometimes against their own interest? Are the protections provided by the warnings under Upjohn sufficient?
Paul Shectman represents many high-level employees of corporations. When he is asked to represent an employee, he sometimes finds that his client already has incriminated himself. The question is, does the employee know at the time that he is making statements that anything he says can be turned over by the corporation, and therefore nothing is confidential?
Judge Gertner asked about waiving the privilege for one purpose, but not for another. The panel responded that the doctrine of selective waiver is dead. So, if no privilege attaches, what is the purpose of hiring outside counsel?
Gerald Lefcourt asked, shouldn’t the employee be told by the corporation that he should obtain his own lawyer, now, because anything he says can be turned over later and used (by prosecutors, regulators, and civil litigants). Sometimes employees hire their own “shadow counsel,” because they want their own lawyer, but are reluctant to say “no” to the lawyer recommended by the corporation.
Robert Cary stated that the hardest decision for an individual is whether to cooperate or not during the first interview with corporate counsel. There is also a question regarding how many documents an employee can or should obtain from the corporation, particularly before any interview.
A question was posed: now that internal investigation lawyers in effect have been “deputized,” are there conflict of interest issues because the lawyers should advise the employees that they can turn over the information to the government. Paul Schectman suggested that statements/warnings by the corporation’s attorneys to interviewed employees that the information is covered by privilege (held by the corporation), and that the information might be disclosed by the company, likely gives employees a false sense of comfort, because the company may have decided long ago that any notable information will be turned over.
Professor Green argued that you cannot look to the court or ethics rules to solve this problem, because enforcement is rare. Echoing the comment above, the problem with the warnings is the “delusion” by an employee that, at the end of the day, the corporation or its lawyers will care about the employee’s interests.
The Filip Memo of the DOJ now provides that, in lieu of an impermissible request by the government for a company to waive privilege, the company can cooperate by providing the facts obtained during an internal investigation. This is a thin line. Is it purely semantics? Is it “incoherent?” Larry Thompson, however, noted that shareholders of a corporation expect cooperation with the government.
Gerald Lefcourt wrapped up by asking how a fair trial for an individual can take place when a cooperating company retains all of the potentially exculpatory documents? In KPMG, the defense theory was that the company was an instrument of the government, and therefore the government’s own disclosure obligations required KPMG to disgorge its documents to the individuals.