Third Circuit Endorses Use Of In Camera, Ex Parte Witness Interview By Judge To Determine Whether Crime-Fraud Exception Justifies Compelling Attorney To Disclose Privileged Conversation

Twenty-five years ago, the Supreme Court in United States v. Zolin, 491 U.S. 554 (1989) endorsed the use by district judges of in camera and ex parte review of privileged documents in order to determine whether the privilege was vitiated by the crime-fraud exception. The Court held that a factual predicate to any document review by the district court was a demonstrable good faith belief by the party seeking the materials that the judge's review could establish the privilege had been abused by the client in furtherance of a crime or fraud.

The Third Circuit recently confronted an effort by the government in the grand jury context to compel an attorney to testify about privileged communications with his client on the basis of an alleged crime-fraud exception to the privilege. In re Grand Jury Subpoena, 2014 WL 541216 (3rd Cir., Feb. 12, 2014). The grand jury was investigating alleged violations of the Foreign Corrupt Practices Act, or FCPA, by a loan consultant entity which had aided other companies in obtaining financing from a British bank for overseas ventures. The company's president had sought legal guidance in payments to be made for the benefit of a representative of the bank, in order to facilitate the granting of financing from that bank. The attorney was subpoenaed for testimony about the communications, and the company and its president intervened, moving to quash the subpoena on privilege grounds. The government made a showing of crime-fraud by ex parte affidavit and sought a Zolin review by having the district judge conduct a private interview of the attorney.

Extending the Zolin protocol to go beyond documents to live witness testimony would not seem to be much of a stretch, but the intervenors argued that the was a substantial difference between a court reviewing and assessing cold documents and interviewing and evaluating the more fluid answers of a live witness, and they argued for a more rigorous preliminary showing by the government to trigger the protocol. The Court of Appeals refused to implement a different and higher standard for examining oral communications and rejected the intervenors' concern that the dynamic of a witness interview, given the different ways in which questions could be framed and in which verbalized answers could be understood, differentiated this case from the document review of Zolin. The intervenors' request that they be present during the examination of their attorney was also rejected, on the...